Technical Report Argexpeani43101eng

PRELIMINARY ECONOMIC ASSESSMENT ON THE

LA BLACHE FE-TI-V PROJECT

Quebec, Canada

Yves Buro, Eng, Met-Chem Canada Inc.

Patrice Live, Eng., BBA Inc.

Murray Brown, Eng., BBA Inc.

NI 43-101 TECHNICAL REPORT

Effective Date: October 12, 2011

Issue Date: December 12, 2011

PREPARED BY: IN COOPERATION WITH:

Argex Mining Inc.

NI 43-101 Technical Report - PEA on the La Blache Fe-Ti-V Project

December 2011

DATE AND SIGNATURE PAGE

This report is effective as of the 12th day of October 2011, which is the cut-off date for all scientific

and technical information included in the technical report. The effective date for all geology-related

scientific and technical information is May 18th, 2011.

Original signed December 12, 2011

Yves Buro, Eng., Senior Geologist MET-CHEM CANADA INC.

Original signed

Date

December 12, 2011

Patrice Live, Eng., B.Sc. Manager-Mining, Mining and Metals BBA INC.

Original signed

Date

December 12, 2011

Murray J. Brown, Eng., B. Eng., M. Eng. Project Manager, Mining and Metals BBA INC.

Date

December 2011

CERTIFICATE OF QUALIFIED PERSON

Certificate for Yves A. Buro, Eng.

I, Yves A. Buro, Eng., do hereby certify:

I am a Senior Geologist with Met-Chem Canada Inc. (Met-Chem), with an office situated at Suite 300, 555 René-Lévesque Blvd West, Montréal, Québec;

I am a graduate of the University of Geneva, Switzerland, with the equivalent of a B.Sc. and a M.Sc. in Geology, obtained in 1976;

I have worked as a geologist continuously since my graduation from university. As an exploration geologist, I have gained direct experience with iron-titanium deposits similar to La Blache, in Canada, and with iron deposits in the USA, Africa, India, and South America;

I am a registered member, in good standing, of the Ordre des Ingénieurs du Québec (reg. 42279);

I have read the definition of “Qualified Person”, set out in the National Instrument 43-101 Standards of Disclosure for Mineral Project (NI 43-101), and certify that by reason of my education, affiliation with a professional association (as defined by NI 43-101) and past relevant work experience, I fulfill the requirement to be a “Qualified Person” for the purpose of NI 43-101;

I have participated in the preparation of the report entitled “Technical Report NI 43-101 on the Preliminary Economic Assessment of the La Blache Property” (the “Technical Report”), dated December 10, 2011. I am responsible for sections 1, 2-12, 14 and 15 of the Technical Report;

I visited the La Blache property and I spent the day of May 19, 2010 in the field. I have reviewed all available and pertinent documents and technical data regarding the La Blache project;

I have no prior involvement with the La Blache project of Argex Mining Inc. (Argex), which is the subject of the Technical Report, except for the preparation of technical reports dated June 30, 2011 entitled “Technical Report NI 43-101 on the Mineral Resources of the La Blache Property, Quebec, Canada”, prepared in accordance with NI 43-101;

I state that, as of the date of this certificate, and to the best of my qualified knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to not make the Technical Report misleading;

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

I am independent of Argex, as defined by Section 1.5 of the NI 43-101;

I have read the NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with the NI 43-101.

Signed in Montréal, Québec, on the 12th day of December, 2011.

- ORIGINAL SIGNED AND SEALED -

_____________________________________

Yves A. Buro, Eng.

Certificate of Qualified Person

40-XFO-020005_EN Date: December 10, 2011

Page: 4 of 293

All rights reserved. © 2011 BBA

I, Patrice Live, Eng., do hereby certify that: 1) I am a Manager-Mining, working in the Mining & Metals Department in the consulting firm BBA Inc. 630 René-Lévesque Blvd West, Suite 2500, Montréal, Quebec, Canada, H3A 1S6;

2) I graduated from Université Laval, Quebec, Canada with a B.Sc. (Mining) in 1976;

3) I am a registered member, in good standing, of the Ordre des Ingénieurs du Québec (reg. 38991);

4) I have worked as a mining engineer continuously since my graduation from university. 5) I have read the definition of “Qualified Person”, set out in the National Instrument 43-101 Standards of

Disclosure for Mineral Project (NI 43-101), and certify that, by reason of my education, affiliation with a professional association, and past relevant work experience, I fulfill the requirements to be an independent qualified person for the purposes of NI 43-101;

6) I am responsible for the preparation of Sections 1 and 16 of the report entitled “Technical Report NI 43-101 for

the Preliminary Economic Assessment of the La Blache Fe-Ti-V Property”, (the “Technical Report”).

7) I have had no prior involvement with the properties that are the subject of the Technical Report; 8) I have not visited the La Blache property;

9) I state that, as of the date of this certificate, and to the best of my qualified knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to not make the Technical Report misleading;

10) I have no personal knowledge, as of the date of this certificate, of any material fact or change, which is not

reflected in this report; 11) Neither I, nor any affiliated entity of mine, is at present under an agreement, arrangement or understanding or

expects to become an insider, associate, affiliated entity or employee of Argex Mining Inc. (Argex), or any associated or affiliated entities;

12) Neither I, nor any affiliated entity of mine, own directly or indirectly, nor expect to receive, any interest in the

properties or securities of Argex, or any associated or affiliated companies; 13) Neither I, nor any affiliated entity of mine, have earned the majority of our income during the preceding three

years from Argex, or any associated or affiliated companies. 14) I have read NI 43-101 and Form 43-101F1 and have prepared the technical report in compliance with NI 43-

101 and Form 43-101F1; and have prepared the report in conformity with the generally accepted Canadian Mining Industry practice and, as of the date of the certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to not make the technical report misleading.

This December 12, 2011 - ORIGINAL SIGNED AND SEALED –

___________________________________ Patrice Live, Eng., B. Sc. Manager-Mining, Mining and Metals BBA Inc.

BBA Project Number: 3039002

Certificate of Qualified Person

40-XFO-020005_EN Date: December 10, 2011

Page: 5 of 293

All rights reserved. © 2011 BBA

I, Murray J. Brown, Eng., do hereby certify that: 1) I am a Metallurgical Engineer working in the Mining & Metals Department in the consulting firm BBA Inc. 630 René-Lévesque Blvd West, Suite 2500, Montréal, Quebec, Canada, H3A 1S6;

2) I graduated from McGill University with a B. Eng. (Metallurgy) in 1987 and M. Eng. (Metallurgy) in 1990;

3) I am a registered member, in good standing, of the Ordre des Ingénieurs du Québec (reg. 107077);

4) I have worked as a Metallurgical Engineer continuously since my graduation from university. 5) I have read the definition of “Qualified Person”, set out in the National Instrument 43-101 Standards of

Disclosure for Mineral Project (NI 43-101), and certify that, by reason of my education, affiliation with a professional association, and past relevant work experience, I fulfill the requirements to be an independent qualified person for the purposes of NI 43-101;

6) I am responsible for the coordination of the complete Technical Report and for the preparation of Sections 1-3,

13, 17-26 of the report entitled “Technical Report NI 43-101 for the Preliminary Economic Assessment of the La Blache Fe-Ti-V Property”, (the “Technical Report”)..

7) I have had no prior involvement with the properties that are the subject of the Technical Report; 8) I have not visited the La Blache property;

9) I state that, as of the date of this certificate, and to the best of my qualified knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to not make the Technical Report misleading;

10) I have no personal knowledge, as of the date of this certificate, of any material fact or change, which is not

reflected in this report; 11) Neither I, nor any affiliated entity of mine, is at present under an agreement, arrangement or understanding or

expects to become an insider, associate, affiliated entity or employee of Argex Mining Inc. (Argex), or any associated or affiliated entities;

12) Neither I, nor any affiliated entity of mine, own directly or indirectly, nor expect to receive, any interest in the

properties or securities of Argex, or any associated or affiliated companies; 13) Neither I, nor any affiliated entity of mine, have earned the majority of our income during the preceding three

years from Argex, or any associated or affiliated companies. 14) I have read NI 43-101 and Form 43-101F1 and have prepared the technical report in compliance with NI 43-

101 and Form 43-101F1; and have prepared the report in conformity with the generally accepted Canadian Mining Industry practice and, as of the date of the certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to not make the technical report misleading.

This December 12, 2011 - ORIGINAL SIGNED AND SEALED – ___________________________________ Murray J. Brown, Eng., B. Eng., M. Eng. Project Manager, Mining and Metals BBA Inc. BBA Project Number: 3039-002

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December 2011 i

TABLE OF CONTENTS

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

1.1 Principal Outcomes ...........................................................................................1-1

1.2 Property and Ownership ....................................................................................1-3

1.3 Geology, Deposit Type, Mineralization ..............................................................1-3

1.4 Permits ..............................................................................................................1-4

1.5 History and Exploration .....................................................................................1-4

1.6 Drilling ...............................................................................................................1-4

1.7 Data Verification and Site Visit ..........................................................................1-5

1.8 Metallurgical Testwork .......................................................................................1-6

1.9 Resource Estimation .........................................................................................1-6

1.10 In-Pit Resources and Mining .............................................................................1-8

1.11 Process Design, Materials Handling, and Processing ...................................... 1-11

1.12 Environmental Considerations ......................................................................... 1-13

1.13 Project Permitting ............................................................................................ 1-14

1.14 Estimated Operating Costs .............................................................................. 1-15

1.15 Estimated Capital Costs .................................................................................. 1-17

1.16 Financial Analysis ........................................................................................... 1-20

1.17 Risks and Opportunities .................................................................................. 1-22

1.18 Interpretation and Conclusions ........................................................................ 1-24

1.19 Recommendations .......................................................................................... 1-25

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

2.1 Qualified Persons ..............................................................................................2-3

2.2 Site Visits ..........................................................................................................2-3

2.3 Effective Dates ..................................................................................................2-4

2.4 Previous Technical Reports ...............................................................................2-4

2.5 Information Sources ..........................................................................................2-5

3. RELIANCE ON OTHER EXPERTS ..............................................................................3-1

3.1 Introduction .......................................................................................................3-1

3.2 Mineral Tenure ..................................................................................................3-1

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3.3 Surface Rights, Access, and Permitting .............................................................3-1

3.4 Mineral Resources ............................................................................................3-2

3.5 Metallurgical Process Development ..................................................................3-2

3.6 Market Analysis .................................................................................................3-2

3.7 Permitting and Environment ..............................................................................3-3

4. PROPERTY DESCRIPTION AND LOCATION ............................................................4-1

4.1 Property Description and Location .....................................................................4-1

4.2 Letter and Purchase Agreements ......................................................................4-8

4.3 Ancestral Territory ........................................................................................... 4-10


5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ........................................................................................................5-1

6. HISTORY .....................................................................................................................6-1

7. GEOLOGICAL SETTING AND MINERALIZATION .....................................................7-1

7.1 Regional Geology ..............................................................................................7-1

7.2 Local Geology ...................................................................................................7-1

7.3 Geology of the La Blache Property ....................................................................7-3

7.3.1 Lithologies .........................................................................................................7-3

7.3.2 Deformation.......................................................................................................7-5

7.4 Mineralization ....................................................................................................7-5

8. DEPOSIT TYPES .........................................................................................................8-1

9. EXPLORATION ...........................................................................................................9-1

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

10.1 Introduction ..................................................................................................... 10-1

10.2 Hervieux-Est Sector ........................................................................................ 10-1

10.3 Hervieux-Ouest Sector .................................................................................... 10-5

10.4 Verification by Met-Chem ................................................................................ 10-6

10.4.1 Site Visit .......................................................................................................... 10-6

10.4.2 Core Examination ............................................................................................ 10-7

10.4.3 Conclusions..................................................................................................... 10-7

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11. SAMPLE PREPARATION, ANALYSES AND SECURITY ......................................... 11-1

11.1 Introduction ..................................................................................................... 11-1

11.2 Sample Shipment, chain of Custody ................................................................ 11-1

11.3 Sample Preparation and Assay Method .......................................................... 11-2

11.4 Density Determinations ................................................................................... 11-2

11.5 QA/QC Program .............................................................................................. 11-3

11.5.1 Laboratory QA-QC System .............................................................................. 11-3

11.5.2 Argex’s QA-QC System ................................................................................... 11-3

11.6 Verifications by Met-Chem of Argex’s QA-QC Results .................................... 11-3

12. DATA VERIFICATION ............................................................................................... 12-1

13. MINERAL PROCESSING AND METALLURGICAL TESTING .................................. 13-1

13.1 Laboratory Scale Testwork .............................................................................. 13-1

13.1.1 Comminution and Head Assay ........................................................................ 13-3

13.1.2 Leaching ......................................................................................................... 13-4

13.1.3 Solvent Extraction ........................................................................................... 13-5

13.1.4 TiO2 Recovery ................................................................................................. 13-6

13.2 Mini-plant Testing Program ............................................................................. 13-7

13.2.1 Leaching and Solid-Liquid Separation ............................................................. 13-8

13.2.2 Iron Solvent Extraction .................................................................................. 13-10

13.2.3 Titanium Solvent Extraction ........................................................................... 13-12

13.2.4 TiO2 Product .................................................................................................. 13-12

13.2.5 By-Product Recovery .................................................................................... 13-15

13.2.6 Reagent Recycle ........................................................................................... 13-15

13.2.7 Bleed Treatment ............................................................................................ 13-16

13.3 On-going and future work at PRO ................................................................. 13-16

13.4 METSIM mass balance ................................................................................. 13-17

13.5 Conclusions on PRO Testwork ...................................................................... 13-18

14. MINERAL RESOURCE ESTIMATES ......................................................................... 14-1

14.1 Introduction ..................................................................................................... 14-1

14.2 Drill Holes Database ........................................................................................ 14-1

14.2.1 Content of the Database ................................................................................. 14-1

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14.2.2 Database Validation ........................................................................................ 14-3

14.2.3 Statistical Analysis (all assays) ........................................................................ 14-3

14.2.4 Titanium – Iron Correlation .............................................................................. 14-6

14.3 Compositing .................................................................................................... 14-8

14.4 Variograms .................................................................................................... 14-15

14.5 Geological Interpretation ............................................................................... 14-24

14.5.1 Introduction ................................................................................................... 14-24

14.5.2 Methodology.................................................................................................. 14-25

14.6 Block Modeling .............................................................................................. 14-25

14.6.1 Model Definition ............................................................................................ 14-25

14.6.2 Density .......................................................................................................... 14-27

14.6.3 Mineralized Envelopes .................................................................................. 14-28

14.6.4 Grade Interpolation........................................................................................ 14-31

14.6.5 Block Model Validation .................................................................................. 14-33

14.7 Mineral Resources Classification ................................................................... 14-45

14.8 Conclusions................................................................................................... 14-47

15. MINERAL RESERVE ESTIMATES ............................................................................ 15-1

16. MINING METHOD ...................................................................................................... 16-1

16.1 Resource Block Model .................................................................................... 16-1

16.1.1 Model Coordinate System ............................................................................... 16-2

16.2 Open-pit Optimization ...................................................................................... 16-2

16.2.1 Density ............................................................................................................ 16-3

16.2.2 Mill Cut-Off Grade ........................................................................................... 16-3

16.2.3 Theoretical Pit Shell ........................................................................................ 16-3

16.3 Detailed Mine Designs .................................................................................... 16-4

16.4 In-Pit Resources Estimate ............................................................................. 16-11

16.4.1 Dilution and Loss Factors .............................................................................. 16-11

16.4.2 In-Pit Resources in Engineered Pit Design .................................................... 16-11

16.5 Mine Production Schedule ............................................................................. 16-13

16.6 Waste Material Management ......................................................................... 16-16

16.6.1 Waste Pile Design ......................................................................................... 16-16

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16.7 Mine Operation .............................................................................................. 16-19

16.7.1 Drilling ........................................................................................................... 16-20

16.7.2 Blasting ......................................................................................................... 16-20

16.7.3 Loading and Hauling ..................................................................................... 16-20

16.7.4 Equipment Annual Fleet Requirements ......................................................... 16-21

16.7.5 Mine Personnel Requirements ...................................................................... 16-23

17. RECOVERY METHODS............................................................................................. 17-1

17.1 Introduction ..................................................................................................... 17-1

17.2 General Overview of Recovery Method ........................................................... 17-1

17.3 Process Design ............................................................................................... 17-4

17.3.1 Primary Crushing and Transportation .............................................................. 17-5

17.3.2 Secondary Crushing and Grinding ................................................................... 17-5

17.3.3 Leaching ......................................................................................................... 17-6

17.3.4 Solvent Extraction ........................................................................................... 17-7

17.3.5 Iron Solvent Extraction .................................................................................... 17-9

17.3.6 Titanium Solvent Extraction ........................................................................... 17-10

17.3.7 Iron Processing ............................................................................................. 17-10

17.3.8 Titanium Processing ...................................................................................... 17-12

17.3.9 Vanadium Processing ................................................................................... 17-14

17.3.10 Acid Recovery ........................................................................................... 17-17

17.3.11 Water Management ................................................................................... 17-19

17.3.12 Solid Waste Management ......................................................................... 17-20

17.3.13 Reagents .................................................................................................. 17-20

17.3.14 Utilities ...................................................................................................... 17-22

18. INFRASTRUCTURE .................................................................................................. 18-1

18.1 La Blache Site – Infrastructure & Services ...................................................... 18-1

18.1.1 Access Road ................................................................................................... 18-1

18.2 Baie-Comeau - Infrastructure & Services ........................................................ 18-4

18.3 TiO2 Industrial Plant Infrastructure ................................................................... 18-4

18.3.1 Location .......................................................................................................... 18-4

18.3.2 Labour ............................................................................................................. 18-4

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18.3.3 Electricity ......................................................................................................... 18-5

18.3.4 Natural gas ...................................................................................................... 18-5

18.3.6 Water .............................................................................................................. 18-6

18.3.7 Hydrochloric Acid ............................................................................................ 18-6

18.3.8 Port, Rail, and Road Network .......................................................................... 18-6

18.3.9 Waste Material and Effluent ............................................................................ 18-7

18.3.10 Telecommunications ................................................................................... 18-8

19. MARKET STUDIES AND CONTRACTS .................................................................... 19-1

19.1 Commodity Price Assumptions ........................................................................ 19-1

19.2 Titanium Dioxide Market .................................................................................. 19-2

19.2.1 End-use Applications ....................................................................................... 19-3

19.2.2 TiO2 Demand Drivers ...................................................................................... 19-3

19.2.3 TiO2 pigment supply and demand ................................................................... 19-6

19.2.4 Global supply forecast to 2015 ........................................................................ 19-8

19.2.5 Global demand forecast to 2015...................................................................... 19-9

19.2.6 Global TiO2 Supply and Demand forecast ..................................................... 19-10

19.3 Vanadium Markets ........................................................................................ 19-11

20. ENVIRONMENTAL CONSIDERATIONS, PERMITTING AND SOCIAL OR COMMUNITY INTEREST ........................................................................................... 20-1


20.1.1 Aquatic Resources .......................................................................................... 20-1

20.1.2 Forest Resources ............................................................................................ 20-1

20.1.3 Presence of Threatened, Endangered or Vulnerable Species ......................... 20-2

20.1.4 Archaeological, Cultural or Sites of Interest ..................................................... 20-2

20.1.5 First Nations .................................................................................................... 20-3

20.1.6 Environmental Management System ............................................................... 20-3

20.2 Mine Closure ................................................................................................... 20-4

20.2.1 Site Security .................................................................................................... 20-4

20.2.2 Open Pit Wall Stability ..................................................................................... 20-5

20.2.3 Flooding .......................................................................................................... 20-5

20.2.4 Waste Rock Piles ............................................................................................ 20-5

20.2.5 Dismantling of buildings and supporting infrastructure ..................................... 20-6

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20.3 Controlled Products ....................................................................................... 20-10

20.3.1 Petroleum Products ....................................................................................... 20-10

20.3.2 Chemicals ..................................................................................................... 20-10

20.3.3 Hazardous wastes ......................................................................................... 20-10

20.3.4 Financial Guarantee ...................................................................................... 20-11

20.4 Permitting – La Blache Mine Site ................................................................... 20-11

20.4.1 Permitting – La Blache Mine Site ................................................................... 20-12

20.4.2 Permitting - Bécancour TiO2 Industrial Plant .................................................. 20-12

21. CAPITAL AND OPERATING COSTS ........................................................................ 21-1

21.1 Capital Costs ................................................................................................... 21-1

21.1.1 Mine Capital Cost ............................................................................................ 21-3

21.1.2 Process Plant Capital Costs ............................................................................ 21-3

21.2 Operating Costs .............................................................................................. 21-7

21.2.1 Mine ................................................................................................................ 21-9

21.2.2 Transportation to Bécancour ......................................................................... 21-10

21.2.3 Process Plant ................................................................................................ 21-10

21.2.4 Waste Product Handling ................................................................................ 21-13

21.2.5 Product Shipping ........................................................................................... 21-13

21.2.6 Royalties ....................................................................................................... 21-14

21.2.7 General and Administrative ........................................................................... 21-14

21.2.8 Environmental and Closure Costs ................................................................. 21-14

21.2.9 Road Maintenance ........................................................................................ 21-14

22. ECONOMIC ANALYSIS ............................................................................................. 22-1

22.1 Financial Analysis ........................................................................................... 22-1

22.2 Sensitivity Analysis .......................................................................................... 22-3

23. ADJACENT PROPERTIES ........................................................................................ 23-1

24. OTHER RELEVANT INFORMATION ......................................................................... 24-1

24.1 Future Work .................................................................................................... 24-1

25. INTERPRETATION AND CONCLUSIONS ................................................................ 25-1

25.1 Additional Sources of TiO2 sources ................................................................ 25-1

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25.2 Plant Capacity ................................................................................................. 25-2

25.3 Other Risks and Opportunities ........................................................................ 25-4

26. RECOMMENDATIONS .............................................................................................. 26-1

27. REFERENCES ........................................................................................................... 27-1

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December 2011 ix

LIST OF FIGURES

Figure 1.1: Life-of-Mine Operating Costs Breakdown .............................................................................. 1-16

Figure 1.2: Sensitivity of the Internal Rate of Return to Key Input Variables ........................................... 1-21

Figure 1.3: Sensitivity of the Net Present Value to Key Input Variables .................................................. 1-21

Figure 4.1: Location Map of the La Blache Property ................................................................................ 4-3

Figure 4.2: Claim Location Map ................................................................................................................ 4-4

Figure 7.1: Regional Geology .................................................................................................................... 7-2

Figure 7.2: Compilation Map ...................................................................................................................... 7-4

Figure 7.3 : Hervieux-Est and Hervieux-Ouest, Fe/Ti Correlation (all assays) .......................................... 7-7

Figure 8.1: Geological Survey of Canada .................................................................................................. 8-3

Figure 10.1: Hervieux-Ouest 2010 Drill hole Location Map ..................................................................... 10-3

Figure 10.2: Hervieux-Est – 2010 Drill hole Location Map ...................................................................... 10-4

Figure 11.1: Hervieux-Est and Hervieux-Ouest. Results from Fe Analysis of Blanks ............................. 11-5

Figure 11.2: Hervieux-Est and Hervieux-Ouest. Results from Ti Analysis of Blanks .............................. 11-5

Figure 11.3: Hervieux-Est and Hervieux-Ouest. Results from V Analysis of Blanks ............................... 11-6

Figure 11.4: Hervieux-Est & -Ouest – Results from Duplicate Sample Analysis for Fe .......................... 11-9

Figure 11.5: Hervieux-Est & -Ouest – Results from Duplicate Sample Analysis for Ti ......................... 11-10

Figure 11.6: Hervieux-Est & Ouest - Duplicate Samples - Fe Analyses > 40% .................................... 11-11

Figure 11.7: Hervieux-Est & Ouest - Duplicate Samples - Ti Analyses > 8%........................................ 11-11

Figure 11.8: Hervieux - Est & Ouest - Duplicate Samples - V Analyses > 0.15% ................................. 11-12

Figure 11.9: Correlation of the Fe% between the Original Samples...................................................... 11-14

Figure 11.10: Correlation of the Ti% between the Original Samples and the Check Samples ............. 11-15

Figure 11.11: Correlation of the V% between the Original Samples and the Check Samples .............. 11-16

Figure 13.1: Testing flow sheet for the recovery of high purity TiO2 ........................................................ 13-2

Figure 13.2: XRD pattern of calcined TiO2 product from bench scale testing ......................................... 13-7

Figure 13.3: Particle diameter profile of mini-plant TiO2 before micronizing.......................................... 13-13

Figure 13.4: Particle diameter profile of mini-plant TiO2 after micronizing ............................................. 13-13

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Figure 14.1: Distribution of Titanium (Ti%) .............................................................................................. 14-4

Figure 14.2: Distribution of Vanadium (V%)............................................................................................. 14-5

Figure 14.3: Distribution of Iron (Fe%) ..................................................................................................... 14-6

Figure 14.4: Ti%-Fe% Correlation within the Mineralized Envelope (Hervieux-Est) ............................... 14-7

Figure 14.5: Ti%-Fe% Correlation within the Mineralized Envelope (Hervieux-Ouest) ........................... 14-7

Figure 14.6: Histogram – Ti% (Hervieux-Est) .......................................................................................... 14-9

Figure 14.7: Histogram – Ti% (Hervieux-Ouest) .................................................................................... 14-10

Figure 14.8: Histogram – V% (Hervieux-Est) ......................................................................................... 14-11

Figure 14.9: Histogram – V% (Hervieux-Ouest) .................................................................................... 14-12

Figure 14.10: Histogram – Fe% (Hervieux-Est) ..................................................................................... 14-13

Figure 14.11: Histogram – Fe% (Hervieux-Ouest) ................................................................................ 14-14

Figure 14.12: Variogram on Major Axis (Hervieux-Est) ......................................................................... 14-17

Figure 14.13: Variogram on Semi-Major Axis (Hervieux-Est) ................................................................ 14-18

Figure 14.14: Experimental Variogram on Minor Axis (Hervieux-Est) ................................................... 14-19

Figure 14.15: Variogram on Major Axis (Hervieux-Ouest) ..................................................................... 14-20

Figure 14.16: Variogram on Semi-Major Axis (Hervieux-Ouest) ........................................................... 14-21

Figure 14.17: Experimental Variogram on Minor Axis (Hervieux-Ouest) ............................................... 14-22

Figure 14.18: Density Results ................................................................................................................ 14-28

Figure 14.19: Plan View (Hervieux-Est) ................................................................................................. 14-29

Figure 14.20: 3D View (Hervieux-Est) ................................................................................................... 14-29

Figure 14.21: Plan View (Hervieux-Ouest) ............................................................................................ 14-30

Figure 14.22: 3D View (Hervieux-Ouest) ............................................................................................... 14-31

Figure 14.23: Histogram – Ti% (Hervieux-Est) ...................................................................................... 14-33

Figure 14.24: Histogram – Ti% (Hervieux-Ouest) .................................................................................. 14-35

Figure 14.25: Histogram – V% (Hervieux-Est) ....................................................................................... 14-37

Figure 14.26: Histogram – V% (Hervieux-Ouest) .................................................................................. 14-39

Figure 14.27: Histogram – Fe% (Hervieux-Est) ..................................................................................... 14-41

Figure 14.28: Histogram – Fe% (Hervieux-Ouest) ................................................................................ 14-43

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Figure 16.1: LG 3D Optimized Pit Shell ................................................................................................... 16-4

Figure 16.2: Detailed Pit Design for Hervieux-Ouest ............................................................................... 16-6

Figure 16.3: Detailed Pit Design for Hervieux-Est ................................................................................... 16-7

Figure 16.4: Hervieux-Ouest Pit and LG Optimization Typical Cross Section ......................................... 16-8

Figure 16.5: Hervieux-Est 1 Pit and LG Optimization Typical Cross Section .......................................... 16-9

Figure 16.6: Hervieux-Est 2 Pit and LG Optimization Typical Cross Section ........................................ 16-10

Figure 16.7: Hervieux-Ouest Detailed Mine Design and Starter Pit ...................................................... 16-14

Figure 16.8: Mine Site Plan View ........................................................................................................... 16-17

Figure 16.9: Mine Site 3D View ............................................................................................................. 16-18

Figure 17.1: Simplified flowsheet for CTL metallurgical plant .................................................................. 17-3

Figure 17.2: Conventional mixer-settler design ....................................................................................... 17-8

Figure 17.3: Conventional SX circuit ........................................................................................................ 17-9

Figure 18.1: Proposed Access Road for the La Blache Project............................................................... 18-3

Figure 19.1: Relationship between TiO2 pigment price and real GDP (1960-2006) ................................ 19-4

Figure 19.2: TiO2 consumption (in pounds) per capita in 2010 for global economic regions and for select

countries .......................................................................................................................................... 19-5

Figure 19.3: Regional TiO2 Demand Compound Average Growth Rates (2000-2010) ........................... 19-5

Figure 19.4: TiO2 Supply and Demand Balance by Region in 2010 ........................................................ 19-6

Figure 19.5: World TiO2 Supply & Demand Balance (30 year – 1980-2010) .......................................... 19-7

Figure 19.6: World TiO2 Supply – Demand Balance ................................................................................ 19-9

Figure 19.7: Global TiO2 Supply & Demand Balance (5 year forecast – 2010-2015) ........................... 19-11

Figure 21.1: Life of Project Operating Costs Breakdown ......................................................................... 21-8

Figure 21.2: Processing Cost Breakdown .............................................................................................. 21-12

Figure 22.1: Cash flow and Revenue from the Financial Analysis ......................................................... 22-2

Figure 22.2: Sensitivity of the Internal Rate of Return to Key Input Variables ......................................... 22-3

Figure 22.3: Sensitivity of the Net Present Value to Key Input Variables ................................................ 22-4

Figure 24.1: La Blache Project – Mine and Concentrator Development Schedule. ................................ 24-5

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LIST OF TABLES

Table 1.1: Mineral Resources Estimate Summary for Hervieux-Est ......................................................... 1-7

Table 1.2: Mineral Resources Estimate Summary for Hervieux-Ouest ..................................................... 1-7

Table 1.3: Operating Costs Summary ...................................................................................................... 1-15

Table 1.4: Capital Cost Disbursement over First 25 Years of Operation ................................................. 1-18

Table 1.5: Hydrometallurgical Process Plant Capital Cost Breakdown ................................................... 1-19

Table 1.6: Financial Analysis Summary ................................................................................................... 1-20

Table 2.1: Qualified Persons (QPs) for the Technical Report .................................................................... 2-3

Table 4.1: La Blache Property Coordinates – Center of the Claim Block .................................................. 4-1

Table 4.2: La Blache Property – List of Claims .......................................................................................... 4-5

Table 6.1: Sample Results of the La Blache Property (L. Kish, 1969) ...................................................... 6-2

Table 11.1: Range of Detection Limits for the Analytical Methods Used ................................................. 11-2

Table 11.2: Samples Probably Erroneously Labeled as Blanks .............................................................. 11-4

Table 11.3: Samples removed from the Calculation of the Basic Statistical Parameters. ....................... 11-8

Table 11.4: Duplicate Samples Inserted by Consul-Teck during the Drilling Program ............................ 11-8

Table 11.5: Basic Statistics, Original and Check Samples Selected by Met-Chem .............................. 11-17

Table 13.1: Head Assay of La Blache titaniferous magnetite used for test work .................................... 13-4

Table 13.2: Initial bench scale leaching conditions. ................................................................................. 13-4

Table 13.3: Final optimized leach conditions. .......................................................................................... 13-4

Table 13.4: Bench scale extraction of Ti, Fe, and V by improved leach conditions. ............................... 13-5

Table 13.5: Assay of calcined TiO2 product produced in bench scale testing ......................................... 13-7

Table 13.6: Solids dissolution in Stage 1 and Stage 2 leaching .............................................................. 13-9

Table 13.7: Mini-plant leaching extractions .............................................................................................. 13-9

Table 13.8: Final leach residue analysis ................................................................................................ 13-10

Table 13.9: Initial organic solution for iron solvent extraction ................................................................ 13-10

Table 13.10: Preferred organic solution for iron solvent extraction ....................................................... 13-10

Table 13.11: Primary Iron streams assays ............................................................................................ 13-11

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Table 13.12: Primary Titanium streams assays ..................................................................................... 13-12

Table 13.13: L*, a*, and b* CIELAB colour space values. Note that PRO-Batch 1 and PRO-Batch 2 are

uncoated TiO2 products. CIELAB values expected to improve further after coating .................... 13-14

Table 13.14: Third party analysis of MgCl2 solution ............................................................................... 13-15

Table 13.15: Untreated Bleed stream assay. Note that Al, Ca, K, and Na come primarily as contaminants

from the MgCl2 used in the process .............................................................................................. 13-16

Table 13.16: Expected bleed stream solution after MgO treatment, prior to MgCl2 pyrohydrolysis ...... 13-16

Table 14.1: Contents of the Drill Holes Database Imported into MineSight ............................................ 14-2

Table 14.2: Samples and Assay Results in the Database ....................................................................... 14-2

Table 14.3: Composites - 5 m (average) (arg09.005) .............................................................................. 14-8

Table 14.4: Basic Statistics – Ti% (Hervieux-Est) ................................................................................. 14-10

Table 14.5: Basic Statistics – Ti% (Hervieux-Ouest) ............................................................................. 14-11

Table 14.6: Basic Statistics – V% (Hervieux-Est) .................................................................................. 14-12

Table 14.7: Basic Statistics – V% (Hervieux-Ouest) .............................................................................. 14-13

Table 14.8: Basic Statistics – Fe% (Hervieux-Est) ................................................................................ 14-14

Table 14.9: Basic Statistics – Fe% (Hervieux-Ouest) ............................................................................ 14-15

Table 14.10: Correlation coefficient between Fe%, Ti% and V% on La Blache Project, based upon a fixed

length (3 m) composite (no tolerance on length) ........................................................................... 14-16

Table 14.11: Variogram Model for Hervieux-Est and Hervieux-Ouest (3 m composites) ...................... 14-23

Table 14.12: Block Model Parameters ................................................................................................... 14-26

Table 14.13: Block Model Content ......................................................................................................... 14-27

Table 14.14: Grade Interpolation Parameters........................................................................................ 14-32

Table 14.15: Basic Statistics – Ti% (Hervieux-Est) ............................................................................... 14-34

Table 14.16: Basic Statistics – Ti% (Hervieux-Ouest) ........................................................................... 14-36

Table 14.17: Basic Statistics – V% (Hervieux-Est) ................................................................................ 14-38

Table 14.18: Basic Statistics – V% (Hervieux-Ouest) ............................................................................ 14-40

Table 14.19: Basic Statistics – Fe% (Hervieux-Est) .............................................................................. 14-42

Table 14.20: Basic Statistics – Fe% (Hervieux-Ouest) .......................................................................... 14-44

Table 14.21: Resource Estimation Summary for Hervieux-Est ............................................................. 14-46

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Table 14.22: Resources Estimation Summary for Hervieux-Ouest ....................................................... 14-46

Table 16.1: Preliminary Pit Optimization Parameters .............................................................................. 16-2

Table 16.2: Detailed Mine Design Parameters ........................................................................................ 16-5

Table 16.3: La Blache In-Pit Resources Estimate ................................................................................. 16-12

Table 16.4: Mine Plan: 195,000 tpy of TiO2 ........................................................................................... 16-15

Table 16.5: Annual Major Mine Equipment Requirements .................................................................... 16-22

Table 16.6: Annual Hourly Personnel Requirements ............................................................................. 16-24

Table 16.7: Salaried Personnel Requirements ...................................................................................... 16-25

Table 17.1: TiO2 Production Capacity of Hydrometallurgical Modules .................................................... 17-1

Table 17.2: La Blache Process Design Criteria ....................................................................................... 17-4

Table 18.1: Distance from Bécancour to several major North-American cities ....................................... 18-7

Table 19.1: Global TiO2 supply forecast to 2015 ..................................................................................... 19-8

Table 19.2: Global TiO2 demand forecast to 2015 ................................................................................. 19-10

Table 21.1: Capital Costs Disbursement over 25 Year Life of Mine ........................................................ 21-2

Table 21.2: Hydrometallurgical Process Plant Capital Cost Breakdown ................................................. 21-4

Table 21.3: Operating Costs Summary .................................................................................................... 21-7

Table 21.4: Process Plant Costs for 15,000 tpy and 60,000 tpy Plants ................................................ 21-11

Table 22.1: Key Parameters Used in Discounted Cash Flow .................................................................. 22-1

Table 22.2: Financial Analysis Summary ................................................................................................. 22-1

Table 22.3: Natural Gas Price and Secondary Product Recovery Sensitivity ......................................... 22-5

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1. SUMMARY

Argex Mining Inc. (Argex) commissioned BBA Inc. (BBA) to prepare a Technical Report

(the Report) on its wholly owned La Blache Project (the Project) in the Province of

Quebec, Canada. The Report incorporates a previously reported mineral resource

estimate (1) for the Project, which was completed by Met-Chem Canada Inc. (Met-Chem),

and provides information on a Preliminary Economic Assessment (PEA) that was based

on those mineral resources.

The PEA is preliminary in nature and it includes inferred mineral resources that are

considered too speculative geologically to have the economic considerations applied to

them that would enable them to be categorized as mineral reserves. There is no

certainty that the conclusions reached in the PEA will be realized. Mineral resources that

are not mineral reserves do not have demonstrated economic viability.

1.1 Principal Outcomes

The in-pit mineral resources calculated by BBA, using a 11.76% Ti-equivalent cut-off

grade, total 7.8 million tonnes grading 10.69% Ti, 41.92% Fe and 0.24% V in the

measured category, 16.9 million tonnes grading 10.69% Ti, 41.95% Fe and 0.24% V

in the indicated category, and an additional 4.7 million tonnes grading 10.67% Ti,

41.76% and 0.25% V in the inferred category. The mineral resource estimate was

completed by Met-Chem and reported in an Argex news release dated May 18,

2011(2).

The conceptual mine plan was developed using only open-pit methods. Mining would

be at an average rate of 1.06 Mtpy over a 25-year or more mine life.

Taking into consideration the initial expansion and ramp-up stages of the Project, the

rated TiO2 production capacity, after full expansion which will take place over the first

six years of operation, would be 195,000 tpy with an average annual rate of

production of 158,950 tpy over the 25-year Project. Similarly, the average annual

forecast production of iron oxide (Fe2O3) is 537,900 tpy, and vanadium pentoxide

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(V2O5) would be 3,892 tpy. This assumes 87% recovery of TiO2 from the La Blache

ore, and recoveries of 90% each for iron and vanadium.

The conceptual process design uses the novel CTL Process technology, which is

based on a hydrochloric acid (HCl) and magnesium chloride (MgCl2) brine leach, to

produce TiO2 as synthetic rutile (milled and coated) suitable for use as colouring

agents or pigments. Marketable by-products of iron and vanadium are also

produced. Iron oxide will be agglomerated in a form that is suitable for raw material

feed to steelmaking operations, while a high-grade vanadium chemical, either

ammonium metavanadate (NH4VO3) or technical grade vanadium pentoxide (V2O5),

will be produced.

Operating costs over the life-of-mine total C$586.00 per tonne of TiO2 produced,

after by-product credits for iron and vanadium.

Total life-of-mine capital costs are estimated at C$844.7 million. This does not

include an after-tax investment tax credit refund of C$43.4 million on new equipment

invested in the Bécancour region of Québec. The Capex including the credit is

$801.3M as per Table 1.4.

Pre-tax cumulative cash flow is C$8.1 billion with an internal rate of return (IRR) of

31.9%. The cash flow analysis shows that the Project will generate a positive cash

flow in 6.9 years on a pre-tax basis; however, this is based on a progressive

investment of capital to expand production in Years 2 and 4, which will involve the

installation of one 60,000 tpy TiO2 production module in Year 2, and two 60,000 tpy

modules in Year 4, with the initial capital investment of a 15,000 tpy TiO2 (Pre-

Commercial Demonstration Plant) beginning in the two years prior to Year 0 of the

Project.

At an 8% discount rate, the net present value (NPV) of the Project is C$2.2 billion.

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December 2011 1-3

1.2 Property and Ownership

The La Blache Property of Argex is located in the Manicouagan region in the Province of

Quebec, approximately 120 km northwest of the city of Baie-Comeau. The La Blache

Property is composed of one claim block made up of 73 contiguous claims and covers

an area of 40.35 km2. All claims are in good standing and registered as 100% under the

name of Argex Silver Capital Inc.

Argex Mining Inc. was incorporated on March 17, 2005, and on October 30, 2009, Argex

acquired titanium, vanadium and iron ore mining claims on Quebec North Shore from

7013833 Canada Corp. The Company changed the name from Argex Silver Capital Inc.

to Argex Mining Inc. on June 21, 2010.

The titaniferous magnetite from the La Blache Property is hosted in three lenses;

Hervieux-Ouest, Hervieux-Est and Schmoo Lake, for which historical tonnages and

grades of mineralized material have been published. Met-Chem was retained by Argex

in March 2010 to prepare a mineral resources estimate of the Hervieux-Ouest and

Hervieux-Est deposits, and an independent Technical Report compliant with National

Instrument 43-101, Standards of Disclosure for Mineral Projects (NI 43-101) has

previously been issued (1).

1.3 Geology, Deposit Type, Mineralization

The La Blache Property is part of the Grenville Geological Province. The Fe-Ti-V

mineralization on the Property is hosted in the La Blache Anorthosite Complex and

belongs to the type of massive titaniferous magnetite associated with anorthosite.

Numerous iron-titanium oxide lenses, several hundred meters long, occur within a 15 km

long ENE-WSW corridor in the central portion of the anorthosite.

The two deposits of interest on the La Blache Property, Hervieux-Ouest and Hervieux-

Est, are made up of massive to semi-massive titaniferous magnetite with aggregates of

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December 2011 1-4

anorthosite. The main mineral species is an intergrowth of approximately 60% of

ulvöspinel (Fe2TiO4) and magnetite (Fe3O4) exsolutions. The contact between the

titaniferous magnetite and the host rocks is usually fairly sharp.

The dominant feature on the property is the E-NE orientation of the lithological units, not

unlike the general alignment of the La Blache Anorthosite Complex. Although the rocks

from the anorthosite suite appear to be generally undeformed, large-scale folds have

been interpreted.

1.4 Permits

Should any future application be made for a mining lease on the La Blache Property, it

would be possible to obtain all necessary surface rights and permits from the Ministère

des Ressources Naturelles et de la Faune de Québec (MRNFQ).

1.5 History and Exploration

Exploration in the sector of the La Blache Property began in 1951, after the discovery of

titaniferous magnetite outcrops in the anorthosite of Schmoo Lake by Anglo-Canadian

Pulp and Paper Mills Ltd., which later became Bersimis Mining.

A large amount of geoscientific data has since been generated by both the government

and mining companies. Exploration work includes mapping, sampling, geophysical

surveying, metallurgical testing, drilling and preliminary resources estimates. Argex has

recently carried out a magnetic survey, electromagnetic (EM-VLF) survey, a

spectrometric helicopter-borne survey (November 2009), and a total of 20,294 m of

detailed diamond drilling on the Hervieux-Ouest and Hervieux-Est deposits.

1.6 Drilling

A total of 20,294 m were drilled on 50 m nominal spacing on the La Blache Property,

including 10,936 m on Hervieux-Est and 9,358 m on Hervieux-Ouest. The program was

principally aimed at confirming the historical values of the 1964 drilling. Drilling was

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December 2011 1-5

completed by Major Drilling of Val-d’Or, Quebec, under the supervision Jean-Sébastien

Lavallée of Consul-Teck, acting as the Qualified Person (QP) for the program.

The holes were located in the field by Consul-Teck using a hand-held GPS and cut lines.

The collar location is within the accuracy of the hand-held GPS, which is not ideal but

adequate, considering the distance of 50 m between the holes and the relatively massive

geometry of the deposit.

Core recovery was excellent (approximately 99%). The La Blache anorthosite massif

and the titaniferous magnetite zone are both highly competent, with no major faults or

deformation corridors.

The results from the drill program of 2010 confirmed the grades defined in former drill

programs and met the target set by Argex.

1.7 Data Verification and Site Visit

The Property was visited by Y. A. Buro, Eng., Senior Geologist, Met-Chem Canada Inc.,

on May 19, 2010. Mr. Buro was accompanied by Argex representatives and Jean-

Sébastien Lavallée, Géo., Project Manager, Consul-Teck, acting as Argex’s QP on the

La Blache Project.

A few outcrops were examined; the drill rig and a series of drill sites were visited in the

Hervieux-Est zone. The Hervieux-Ouest zone was observed by flying over with a

helicopter. The collar location and azimuth of 13 drill holes completed in the Hervieux-

Est and Hervieux-Ouest zones were checked in the field using a hand-held GPS. The

geology of the deposit an (lower case d the exploration model were discussed with

Consul-Teck’s geologists. The core from a few holes was examined; contacts of the

samples and the rock units as well as the lithological descriptions were checked against

the drill logs.

Met-Chem selected 210 samples for independent check assays at a second laboratory.

These samples came from mineralized intervals in different holes across the two

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December 2011 1-6

deposits. The check samples represent about 5% of all of the samples grading 9% Ti or

more.

1.8 Metallurgical Testwork

The PEA incorporates information generated from both bench scale and pilot scale

testing programs. The focus of these programs has been to demonstrate the major

components of a hydrometallurgical flowsheet, including leaching, iron solvent

extraction, and titanium solvent extraction. All three steps were demonstrated through

semi-continuous mini-plant operation. The leaching was optimized through the

implementation of a two-stage leach using hydrochloric acid and magnesium chloride

brine solution as the lixiviant at a nominal 70oC and under atmospheric conditions.

Levels of dissolution for iron (Fe), titanium (Ti) and vanadium (V) in excess of 90% were

realized with 2-hr residence times in each stage. The pilot plant demonstrated that both

iron and titanium could be isolated as relatively pure solutions, which could then be

processed for recovery of products and the regeneration of hydrochloric acid (HCl) for

re-use.

Titanium dioxide hydrate (TiO2.H2O) was produced by heating a titanium-bearing

raffinate to 95-100oC. This product was then converted to synthetic rutile (TiO2) by

heating to 900oC. Chemical analysis showed that the product was 99.8% pure and

possessed excellent colour properties. A technique called micronizing demonstrated that

the product could be reduced to 200-400 nanometers (nm), bringing it into the particle

size range for use as pigment . To be considered as a pigment, a surface coating of

alumina and sodium silicate is still required. This will be the subject of future work.

The bench scale testing program also demonstrated the ability to recover vanadium from

solution using solvent extraction. An ammonium metavanadate (NH4VO3) product was

recovered by stripping the vanadium from the organic phase using ammonium chloride

(NH4Cl), followed by pH adjustment using ammonium hydroxide (NH4OH).

1.9 Resource Estimation

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The resource estimate was performed in accordance with NI 43-101 Standards and the

CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM

Council (2005).

Basic geological interpretation, numerical modeling and resource estimation were

performed using Mintec MineSight (Version 5.50-07) software. Met-Chem used a Ti-

equivalent cut-off of 11% for the mineralization.

The resources in each block are classified through grade interpolation using the

geostatistical study results (i.e. variograms). Mineral resources for Argex based on these

interpolation parameters are presented in Table 1.1 and Table 1.2.

Table 1.1: Mineral Resources Estimate Summary for Hervieux-Est

(Using a Ti-equivalent cut-off of 11%)

Resources Categories Volume Tonnes Ti% V% Fe%

Measured 538 000 2 458 000 11.10 0.24 44.18

Indicated 2 265 000 10 343 000 11.07 0.24 43.99

Measured + Indicated 2 803 000 12 801 000 11.08 0.24 44.02

Inferred 2 189 000 9 883 000 10.93 0.23 43.41

Table 1.2: Mineral Resources Estimate Summary for Hervieux-Ouest

(Using a Ti-equivalent cut-off of 11%)

Resources Categories Volume Tonnes Ti% V% Fe%

Measured 1 275 000 5 822 000 11.28 0.25 43.97

Indicated 3 003 000 13 648 000 11.26 0.26 43.98


Inferred 1034000 4700000 11.17 0.27 43.36

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Met-Chem cautions that mineral resources have no demonstrated economic viability. In

addition, there is no certainty that all or part of the mineral resources will be converted

into reserves. No mineral reserves were declared in this report.

1.10 In-Pit Resources and Mining

The resource block model, as prepared by Met-Chem and presented in this report in the

sections on Geology and Mineral Resources, has formed the basis of the pit optimization

and the determination of the in-pit resources for the La Blache Property. In accordance

with the guidelines of the National Instruments NI 43-101 on Standards of Disclosure for

Mineral Projects and the Canadian Institute of Mine Metallurgy and Petroleum Definition

Standards for Mineral Resources and Mineral Reserves adopted on August 20, 2000,

the open-pit optimization has used all material classified in the measured, indicated and

inferred categories in the block model. The pit optimization .for the La Blache Property

was carried out using the true pit optimizer algorithm called Lerchs-Grossman

3D (LG 3D) in MineSight. The LG 3D algorithm is based on the calculation of a net value

for each ore block in the model (i.e. profit and loss statement per block). Given the

mining and processing costs, pit wall slope and the block weight recovery values, the

computer program generates an “optimum” pit shell with highest undiscounted cash flow.

Typical preliminary pit optimization parameters used for the La Blache deposits have

included the following:

Mining – Rock 2.50 ($/t mined)

Mining – Overburden N/A ($/t mined)

Processing 400 ($/t milled)

Trucking Cost 15.00 ($/t milled)

General and Administration 2.00 ($/t milled)

Fe2O3 Price 100 ($US/t)

TiO2 Price 2,500 ($US/t)

V2O5 Price 14,500 ($US/t)

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Exchange Rate 1 ($US to $C)

The final engineered pit geometry was adjusted to include a haulage ramp sized for the

selected mining fleet, practical wall positions with appropriate pit slope stability, and

benching arrangement as follows:

Ramp Width for 2-lane traffic 25 (m)

Ramp Width for 1-lane traffic 20 (m)

Maximum Ramp Grade 10 (%)

Inter-Ramp Angle 50 (degrees)

Bench Face Angle 75 (degrees)

Benching Arrangement 2 x 10 (m)

Berm Width 11.4 (m)

Based on a cut-off grade of 11.76% Ti equivalent (%TiEq), the La Blache engineered

open-pit design for both Hervieux-Est and Hervieux-Ouest contains a total of 24.6 Mt of

mineral resources in the measured and indicated categories at an average grade of

10.7% Ti, 41.9% Fe and 0.24 V. The inferred resources amount to a total of 4.7 Mt at an

average grade of 10.7% Ti, 41.8% Fe and 0.25% V. The total in-pit resources are

sufficient to cover a mine life of up to 30 years based on the production ramp-up and

construction targets as established by Argex. Total waste material amounts to 69.4 Mt of

waste for a stripping ratio of 2.36 tonnes of waste per tonne of ore. The table below

presents a detailed summary of the in-pit resources for the La Blache project.

La Blache – In-Pit Mineral Resources by Category in Engineered Pit Design

Hervieux-Est and Hervieux-Ouest

Resources Category Tonnage (Mt) Ti(%) Fe(%) V (%)

Measured 7.81 10.69 41.92 0.24

Indicated 16.85 10.69 41.95 0.24

M+I Total Resources 24. 66 10.69 41.94 0.24

Inferred 4.73 10.67 41.76 0.25

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December 2011 1-10

Waste 69.43

Overburden

Strip Ratio 2.36

Notes

1. In-Pit mineral resources are exclusive of mineral reserves. Mineral resources that are not

mineral reserves do not have demonstrated economic viability.

2. In-Pit resources have been estimated using a cut-off grade of 11.76% TiEquiv

3. In-Pit resources have been estimated using a dilution rate of 5% and an ore loss factor of

5%

The La Blache deposits will be mined by conventional open-pit mining techniques using

trucks and shovels on a 10 m bench height. The mining will be carried out with a typical

cycle of drilling, blasting, loading and hauling using a mining fleet that is leased,

operated and maintained by the owner’s personnel. Run-of-Mine (ROM) and waste

material will be drilled and blasted. Mining operations will be conducted 24 hours per

day, 7 days per week and 365 days per year at full capacity. The RoM will be directly

dumped into the primary crusher and stockpiled and loaded on trucks for transportation

to the port at Baie-Comeau.

After an initial review of the mining strategy and access, it was agreed that initial mining

will begin in the Hervieux-Ouest zone as large in-pit resources are available at a low

stripping ratio. The Hervieux-Est pits would be developed as the Hervieux-Ouest pit is

being depleted, ensuring a smooth transition. A movable crusher will be used to

maximize efficiency of the Project. To optimize the operational stripping ratio in the early

years of the Project and to increase the net present value (NPV) of the project, an

optimized pit shell for a starter-pit, representing approximately four years of mining, was

used.

The mining schedule is based on a processing rate as follows:

Years 1-3: After ramp-up of pre-commercial demonstration module

Approximately 95,000 tpy of RoM is required to produce 15,000 tpy of TiO2

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Years 4-5: After ramp-up of one commercial module (Expansion 1)

Approximately 480,000 tpy of RoM is required to produce 75,000 tpy of TiO2,

Year 6+: After ramp-up of two commercial modules (Expansion 2)

Approximately 1,250,000 tpy of RoM is required to produce195,000 tpy TiO2

The selection of the major mining fleet was made using the following criteria:

The total combined RoM and waste production starts at approximately 320,000 tpy in

Year 1 and ramps up to a maximum production rate of 5.7 M tonnes in Year 10;

Dump truck with a payload of 50 tonnes;

Hydraulic excavators with a bucket capacity of 6 m3 to load RoM and waste material;

DTH drilling rigs to drill 5 ½ inch diameter blast holes.

1.11 Process Design, Materials Handling, and Processing

The TiO2 Industrial Plant is to be located at the Bécancour Waterfront and Industrial

Park. This site was chosen as a baseline for the purpose of the PEA; however, many

sites remain under consideration. The crushed La Blache RoM is to be received at the

port, where the self-unloading vessel will discharge its load to a stockpile, which will then

be transferred by truck to the plant site. The crushed RoM must undergo a second stage

of crushing using a high-pressure grinding role (HPGR), followed by grinding in a ball mill

to an 80% passing 200 mesh (P80 = 75 µm).

The process concept is based upon a two-stage hydrochloric acid (HCl) and magnesium

chloride (MgCl2) brine leach, wherein practically all of Fe, Ti and V are dissolved from the

titaniferous magnetite, which is mix of magnetite (Fe3O4) and ulvöspinel (Fe2TiO4) that

cannot be separated by physical means. The vanadium exists in solid solution within the

magnetite and is thus also dissolved in the process.

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December 2011 1-12

Following leaching, the residue, about 15% of the original mass of the raw material feed,

is discarded. The brine solution, containing Fe, Ti, and V in the form of chlorides,

undergoes a series of separation steps, in which Fe is recovered as a synthetic hematite

(Fe2O3) and Ti is recovered as synthetic rutile (TiO2). Iron is first removed from the brine

using solvent extraction, which recovers iron in both the ferrous (Fe+2) and ferric (Fe+3)

forms. A relatively pure iron chloride solution is then recovered by stripping the organic.

The strip solution is then concentrated by evaporation prior to spray roasting

pyrohydrolysis, a unit operation in which the synthetic hematite is generated in powder

form and hydrochloric acid (HCl) is regenerated. The HCl is captured and returned to the

leaching step, while the synthetic hematite is further processed to make an

agglomerated product, which Argex intends to market as an equivalent to lump ore to the

steelmaking industry.

Titanium follows a similar route after the iron is extracted from the brine. It too is

removed using solvent extraction, following which it is isolated by stripping to its own

aqueous stream. In the absence of ferric iron (Fe+3), the titanium will form a hydrated

titanium dioxide (TiO2.H2O) of very high purity upon heating the solution to 95-100oC.

This TiO2.H2O is recovered by settling, filtration and washing. It is then passed through a

rotary kiln (900oC) to drive off bound (water of hydration) and unbound water (moisture),

making a synthetic rutile (TiO2) in the process. This product must be milled and coated

with alumina and silica to make different formulations of pigment. The product is bagged

and shipped to market as either 25 kg bags placed on pallets or as 1,000 kg bags

(supersacks) also placed on pallets. A hydrochloric acid rich stream is recovered from

the titanium circuit, which is also returned to the leach.

Vanadium is allowed to build in the brine solution that is continually being recycled to the

leaching step in a closed loop. Magnesium also builds in the brine, due to new inputs

being dissolved from the titaniferous magnetite. To counteract the build-up of

magnesium in the circuit, which would otherwise contribute to a bulk (volume) issue, a

small stream, approximately 3.5-5% of the circulating brine solution, must be bled and

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December 2011 1-13

processed for the recovery of vanadium, magnesia (MgO) and HCl. The vanadium is

recovered through a solvent extraction step and subsequently stripped using ammonium

chloride (NH4Cl) to form an ammonium-vanadium complex that is then precipitated from

solution as ammonium metavanadate (NH4VO3). This precipitate can be dried, packed

into poly-lined barrels and sold as is; or further processed to make technical grade

vanadium pentoxide (V2O5). The magnesia (MgO) is recovered from the brine through

pyrohydrolysis, which also regenerates HCl that will be scrubbed and returned to the

leaching process. The MgO may also be marketable, but this was not reflected in the

current PEA. Instead, it was assumed that the leach residue and MgO were considered

as waste and sent to a non-hazardous waste landfill. The recovery of accumulated

chromium (Cr) from the bleed stream is also a possibility, but this was not considered in

the PEA.

1.12 Environmental Considerations

The environmental aspects of the La Blache Project area were assessed by Genivar Inc.

(Genivar) in the summer of 2011, which addressed the following key environmental

disciplines; 1) Aquatic and Forest Resources, 2) Presence of Threatened, Endangered

or Vulnerable Species, 3) Archaeological, Cultural or Sites of Interest, and 4) First

Nations. The aquatic resources (brook trout, white suckers and lake chub) on the Project

site are consistent with Quebec North Shore fish populations. The forest resources of the

southern sector of the Project area are regenerating, following harvesting in the 1990s,

and include black spruce, balsam fir, white birch and trembling aspen populations, while

in the northern sector grey pine dominates the forests as a result of the massive

1991 forest fire. According to the Ministère du Développement Durable de

l’Environnement et des Parcs (MDDEP), there are no threatened, endangered or

vulnerable plant species on the Project site; however, one vulnerable bird species

identified as the Barrow’s Goldeneye, a diving duck, has been recorded in the Project

area. One prehistoric Indian site (DIEI-1) is located southwest of the La Blache Project

area. Otherwise, no archaeological or cultural sites have been identified on the actual

Project site to date that would require the relocation of any infrastructure. The Project

site is located on First Nation Nitassinan de Pessamit territory, whose traditional

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December 2011 1-14

activities of hunting, fishing and trapping have been impacted by the forestry operations.

Argex and the Innu of Pessamit concluded an agreement in 2010 to allow exploration at

the Project site, which is subject to their ancestral land claims. In addition, both have

agreed that the Innu shall have the right of first participation in the financing of future

development projects on the Pessamit Territory.

1.13 Project Permitting

The federal environmental assessment process does not apply to the La Blache

Property; however, once operational, Argex will be required to conduct environmental

effects monitoring under the Metal Mining Effluent Regulations (MMER) included in the

Fisheries Act.

The ore mining rate proposed for the La Blache Project is less than the current threshold

of 7000 tpd in the Quebec Environmental Quality Act (QEQA) – Environmental Impact

and Assessment regulations, and less than the proposed new threshold published in the

Quebec Mineral Strategy released June 29, 2009 (3,000 tpd), therefore an

environmental impact assessment (EIA) is not required. Under Article 22 of the QEQA, a

Certificate of Approval is required to bring the La Blache Property into operation and has

to be submitted to the Sept-Îles regional offices of the MDDEP. This application will be

accompanied by an environmental assessment, sufficiently detailed to meet the

requirements of Directive 019 for the mining industry so that the MDDEP can rule on the

acceptability of the La Blache Project.

Bécancour Industrial Site

The first phase of the TiO2 Industrial Plant at the Bécancour Waterfront and Industrial

Park, located on the south shore of the St. Lawrence River, is less than the current

threshold of 100,000 tpy for new chemical plants that require a QEQA environmental

impact assessment, therefore it is not required. However, to bring the plant into

operation, a Certificate of Approval (CoA) will be required under Article 22 of the QEQA,

and must be issued by the Trois-Rivières regional office of the MDDEP. The CoA

application will include a site environmental assessment with soil characterization

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December 2011 1-15

studies, air and noise modelling, and effluent characterization that are sufficiently

detailed for the MDDEP to issue a CoA. An off-network Industrial Discharge Permit

including the wastewater release environmental targets for the TiO2 Industrial Plant will

be issued by the MDDEP. No municipal effluent discharge standards apply to the plant.

Applications for the other provincial and municipal permits required to construct and

operate will not affect the critical timing of the Project.

1.14 Estimated Operating Costs

Due to the three-stage approach chosen for the Project, the operating costs per tonne of

TiO2 are variable and depend upon the stage of production. Because of this, operating

costs have been broken down into three-production rates:

Pre-Commercial Demonstration;

Expansion 1;

Expansion 2.

The overall operating costs are shown in Table 1.3.

Table 1.3: Operating Costs Summary

Area

Years 1-3

(15,000 tpy)

Years 4-5

(75,000 tpy)

Years 6-25

(195,000 tpy)

Average

LOM

$/ t TiO2

Mine 132.68 88.22 63.81 65.10

Crushing 18.77 20.40 15.59 15.76

Transportation from Mine to Bécancour 245.46 266.90 203.96 206.08

Processing 1414.63 1273.37 942.15 955.56

Process Waste Handling Cost 60.96 66.29 50.65 51.18

Iron Oxide Port Handling and Shiploading 10.22 10.33 10.15 10.15

Process Royalties 56.92 56.92 56.92 56.92

Royalty Buy-Back 42.64 0.00 0.00 0.38

NSR Site 67.32 75.78 74.65 74.62

General and Administrative 326.90 81.29 23.51 27.81

Mine Environmental Monitoring and Closure Cost 7.20 4.22 0.98 1.13

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December 2011 1-16

Road Maintenance 135.64 28.73 8.31 10.01

Opex ($/t TiO2) 2519.32 1972.46 1450.69 1474.69

Opex ($/t TiO2) with by-product credits (Fe, V) 1572.93 1029.45 564.05 585.95

As a result of the economies of scale, the cost per tonne of TiO2 decreases significantly

as production increases, with costs per tonne of TiO2 (after by-product credits)

decreasing from $1572.93 to $564.05 when increasing from 15,000 tpy to 195,000 tpy

for a life-of-project average of $585.95 $/tonne TiO2.

A breakdown of life-of-project operating costs can be seen in Figure 1.1.

Figure 1.1: Life-of-Mine Operating Costs Breakdown

It can be seen that the largest operating cost for the Project is the processing, which

accounts for approximately 65% of the Project’s operating costs. The raw materials

handling (i.e. crushing and transportation to the TiO2 Industrial Plant) are another

Mine 4%

Crushing 1%

Transportation from Mine to Bécancour

14%

Processing 65%

Process Waste Handling Cost

3%

Briquette Port Handling and Shiploading

1%

Process Royalties 4%

Royalty Buy-Back 0%

NSR Site 5% G/A

2% Environmental

0% Road Maintenance

1%

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December 2011 1-17

significant cost, representing an additional 15%, while the mining costs are around 4%.

Other significant costs are the Net Smelter Return (NSR), mining, royalties for the

process and process waste handling.

1.15 Estimated Capital Costs

For the purpose of this PEA, the ultimate production objective of the Project is 195,000

tpy TiO2. To reduce the risk associated with the implementation of a new process, a

three-stage approach was utilized to steadily increase production. The 15,000 tpy plant

will be built in Years -1 and 0 for production starting in Year 1. A 60,000 tpy module will

be constructed and commissioned in Years 2 and 3 for production starting in Year 4. An

additional 120,000 tpy of capacity will be constructed in Years 4 and 5 for production

starting in Year 6.

The capital cost disbursement is shown in Table 1.4.

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December 2011 1-18

Table 1.4: Capital Cost Disbursement over First 25 Years of Operation

Area Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Years

6-25 Total

Costs

Road Construction $4.5 M - - - - - - - $4.5 M

Pre-Stripping - $1.7 M - - - - - - $1.7 M

Mine Equipment Purchase - - - - - $0.7 M - $7.6 M $8.3 M

Mine Equipment Lease - $1.2 M $1.2 M $1.2 M $1.2 M $1.2 M $1.2 M $1.2 M $8.3 M

Pre-Commercial Demonstration $39.8 M $49.8 M $10.0 M - - - - - $99.5 M

Expansion 1 - -

$119.2 M $119.2 M - - - $238.5 M

Expansion 2 - -

- - $242.0 M $242.0 M - $483.9 M

Costs Subtotal $44.3 M $52.6 M $11.1 M $120.4 M $120.4 M $243.9 M $243.2 M $8.8 M $844.7 M

Savings

$0.0 M

Tax Credits $2.1 M $2.7 M $0.5 M $6.3 M $6.3 M $12.7 M $12.7 M - $43.4 M

Savings Subtotal $2.1 M $2.7 M $0.5 M $6.3 M $6.3 M $12.7 M $12.7 M $0.0 M $43.4 M

Net Costs $42.2 M $50.0 M $10.6 M $114.1 M $114.1 M $231.2 M $230.4 M $8.8 M $801.3 M

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December 2011 1-19

The most significant costs of the Project are associated with the TiO2 Industrial Plant. A

detailed cost analysis was done for each of the three processing plants. The capital cost

breakdown is summarized in Table 1.5.

Table 1.5: Hydrometallurgical Process Plant Capital Cost Breakdown

Area

Pre-Commercial

Demonstration

15,000 tpy

Expansion 1

60 ktpy

Module

Expansion 2

2×60 ktpy

Modules

Direct Costs

Crushing and Grinding $8.4 M $0.0 M $12.7 M

Hydrometallurgical Circuits (Ti, Fe) $9.3 M $27.2 M $54.3 M

Pyrohydrolysis (Fe, Mg) $18.5 M $75.0 M $150.0 M

Evaporation Circuits $9.0 M $17.2 M $34.5 M

Product Finishing (Fe, Ti, V) $8.3 M $11.1 M $20.2 M

Utilities, Site Works and Others $4.8 M $9.0 M $13.5 M

Wash Water Treatment Plant $1.1 M $3.1 M $6.2 M

Direct Costs Subtotal $59.4 M $142.6 M $291.6 M

Indirect Costs

EPCM $4.1 M $5.1 M $8.5 M

Owner’s Cost $4.2 M $9.3 M $19.0 M

Spare Parts $1.9 M $3.5 M $7.0 M

Freight $1.6 M $2.7 M $5.7 M

Temporary Facilities and Operation $3.6 M $8.6 M $17.5 M

Mobile Equipment $0.2 M $0.5 M $1.0 M

Chemical Initial Loads $4.6 M $18.5 M $37.0 M

Indirect Costs Subtotal $20.2 M $48.1 M $95.6 M

Contingency $19.9 M $47.7 M $96.8 M

Total $99.5 M $238.5 M $483.9 M

Note: Figures have been rounded and as a result, some rounding errors have been introduced.

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December 2011 1-20

1.16 Financial Analysis

A pre-tax cash flow and financial analysis were performed for the PEA study. The key

outputs from the discounted cash flow are presented in Table 1.6.

Table 1.6: Financial Analysis Summary

Description Value

IRR 31.9%

NPV @ 0% $8 094.2 M

NPV @ 5% $3 496.2 M

NPV @ 8% $2 185.2 M

NPV @ 10% $1 612.9 M

Payback Period 6.9 years

From a financial standpoint, the analysis suggests that the La Blache Project has

reasonable prospects of economic recovery. The IRR is high at 31.9%, while the non-

discounted cash flow is above $8.0 billion over the first 25-yr project life. Net Present

Value (NPV) is $2.2 billion at an 8% discount rate. Because of the three stages of

production implementation, the payback period is fairly long at 6.9 years. This is

because there is construction throughout the first five years of production and full

capacity is only achieved in Year 6.

A sensitivity study was undertaken to determine the effect of varying the operating costs,

capital costs and revenue of the Project. Variations in revenue can be attributed to

fluctuations in either metal recovery or price.

The sensitivity analysis for the IRR and the NPV @ 8% are shown in Figure 1.2 and

Figure 1.3.

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December 2011 1-21

Figure 1.2: Sensitivity of the Internal Rate of Return to Key Input Variables

Figure 1.3: Sensitivity of the Net Present Value to Key Input Variables

15%

20%

25%

30%

35%

40%

45%

-40% -30% -20% -10% 0% 10% 20% 30% 40%

IRR

Sensitivity

CapEx

OpEx

Revenue

$0.5B

$1.0B

$1.5B

$2.0B

$2.5B

$3.0B

$3.5B

$4.0B

-40% -30% -20% -10% 0% 10% 20% 30% 40%

NP

V @

8%

Sensitivity

CapEx

OpEx

Revenue

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December 2011 1-22

It can be seen that both the IRR and NPV are most sensitive to variations in the revenue.

The operating costs had a significant effect on both the IRR and NPV, while the capital

costs had a significant effect on the IRR and was less of an important variable for the

NPV.

1.17 Risks and Opportunities

The study that has been carried out is preliminary in nature and largely based upon

factored estimates. The capital and operating cost estimates are believed to be accurate

within +/-30%; however, several risks and opportunities have been identified, which may

impact upon costs.

Iron control between the two phases of FeCl2 and FeCl3 combined poses a risk for

the pyrohydrolysis units. Vendors have confirmed that a solution for one or the other

will not be a problem for their supply and guarantees. Converting all of the iron to

one or the other form should be investigated further, but was outside of the scope of

this study, although we understand that Argex has continued to work on this front.

Assuming that this can be accomplished at relatively little additional cost, there

remains the sensitivity to the price of natural gas that must be taken into

consideration. There is also the marketability of the agglomerated iron oxide that

Argex intends to produce and sell to the steelmaking industry. Total %Fe in a typical

lump ore is 68%. While falling well within specification for a lump ore with respect to

iron content, concerns may still linger in regards to the residual chloride content of

the product. This might be overcome through induration.

Argex plans to carry out a sensitivity analysis on titanium head grade and the

titanium ratio to iron. Iron control represents the highest cost to the process and a

proper evaluation of different feed materials with different ratios is recommended.

Another risk to the Project is the marketability of the TiO2 product. Large pigment

producers such as DuPont have, over the course of many years, developed an array

of formulations (surface coatings) that are proprietary and meet the needs of paint

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December 2011 1-23

manufacturers and plastics producers. The ability to penetrate this market

represents a sizable risk to the Project, despite the fact that the synthetic rutile that

has been produced is of excellent quality and can be milled to a particle size (200-

400 nanometers) that is within range of pigment.

To mitigate the market penetration risk, Argex has embarked upon the construction

of a larger scale pilot plant that will be capable of producing up to 10 kg/day of TiO2.

One of the primary objectives of this exercise is to produce sufficient sample to

encourage market evaluation and downstream testing of the product by prospective

end-users, with the idea of developing market feedback as early as possible in the

Project. Similar exercises must be undertaken with the iron and vanadium products,

and the larger pilot plant (20-40 times the size of the original mini-plant) will permit

the initiation of these activities at relatively low cost. The new pilot plant can also be

used to evaluate other potential feed materials as part of any alternative feeds

strategy that Argex may wish to investigate.

Full advantage of the siting of the TiO2 Industrial Plant at the Bécancour Waterfront

and Industrial Park has not been taken. Whereas package boiler and

demineralization plant allowances were made in the capex and opex for the Project,

these expenses can be delayed (or eliminated) in preference to using low and

medium grade steam that is made available to the industrial park users by

TransCanada Québec, which operates a 550 MW co-generation plant. This will be

investigated in the upcoming pre-feasibility study (PFS).

The sale of magnesia (MgO) represents another potential opportunity for enhancing

the economics of the Project, while at the same time eliminating a landfill cost that

was assumed for this by-product; however, further work is required to establish its

quality and marketability.

Opportunities also exist to further rationalize the unit operations that were assumed

in this PEA. One technology in particular, from the cement industry, may allow the

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December 2011 1-24

secondary crushing and grinding steps to be combined. A fourth solvent extraction

step, acid recovery, which is mentioned in this report, can be eliminated from the

flowsheet as it was made redundant once the decision was made to adopt

pyrohydrolysis for treatment of the bleed stream. While not presented in any

schematics of the process, an allowance had been retained for this unit operation in

the capital cost estimate.

One very significant opportunity that is currently being challenged is the titanium

recovery. A loss of nearly 5% titanium to the iron solvent extraction circuit was

identified as a result of running the mini-plant. This loss takes place in a scrubbing

stage that uses iron chloride solution to scrub titanium, which is co-loaded to some

extent into the organic phase. For the purpose of the present PEA, this titanium was

considered unrecoverable; however, the configuration that was developed assumed

that the iron chloride scrubbing solution would be bled to a Wash Water Treatment

Plant. An alternative arrangement would see the scrub solution returned to the

leaching step. Process Research Ortech (PRO), developer of the CTL Process, has

also begun to experiment with other organic extractants that may perform a similar

task without co-loading titanium, thereby eliminating the scrubbing stage altogether.

Through this one alteration to the process, it may be possible to raise the recovery

of titanium from 87% to 90% or higher, which would positively impact the net

operating cost per tonne of TiO2 produced.

1.18 Interpretation and Conclusions

Met-Chem believes that the density of geological and analytical data and the

understanding and definition of the deposits on the La Blache Property are adequate for

the preparation of a 3D model and for the mineral resources estimate of the two

deposits. The reliability of the data rests on the QA/QC procedures applied at the

exploration stage, the supervision of Consul-Teck, acting as the QP for Argex, and Met-

Chem’s independent verifications and check samples for duplicate analysis at a second

laboratory. Met-Chem is of the opinion that the La Blache Property has sufficient merit to

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December 2011 1-25

warrant further exploration and development to fully develop its iron, titanium and

vanadium potential.

BBA is satisfied that the laboratory and mini-plant testing programs that have been

carried out by PRO have met the requirements of a Preliminary Economic Assessment.

Originally, the intent had been to publish a PEA based solely on laboratory testwork;

however, the decision to delay the PEA was largely based on the rapid progress of the

mini-plant. Demonstration of the chemistry of the CTL Process on a sustained, semi-

continuous basis represents an important milestone in the development of the Project.

What the mini-plant has demonstrated is that the principal components of the

hydrometallurgical process, namely leaching and solvent extraction of iron and titanium

are technically valid and that the process can be operated at the mini-plant scale. The

recovery of vanadium from brine has also been demonstrated, albeit at the bench scale.

The ability to produce synthetic rutile of very good quality at the desired particle size has

also been demonstrated. For all intents and purposes, a sufficient body of information

has been developed to warrant BBA’s recommendation to continue with the next stage

of development work and a pre-feasibility study of the Project.

1.19 Recommendations

Several recommendations for future work are put forward in this Report. The results of

the work will help to determine a path for the La Blache Project as well as the TiO2

Industrial Plant.

BBA endorses the idea of performing a sensitivity analysis of the Project’s

economics as a function of titanium head grade. This is all the more important,

given Argex’s recently acquired interest in Lac Brûlé, another titaniferous magnetite

deposit located on the Quebec North Shore. This particular sensitivity exercise was

not completed as part of the present PEA; however, through this exercise, it will be

possible to develop a better understanding of how such variables as natural gas

price will impact economic sensitivity when raw materials of higher titanium head

grade and lower iron content are considered. The analysis will need to take into

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December 2011 1-26

consideration a re-sizing of plant equipment, but should either be based on a fixed

production of TiO2 or a constraint related to a maximum iron throughput to ensure a

meaningful comparison. The analysis should be performed on the basis of a stand

alone industrial plant treating different sources of raw materials that will be supplied

at arm’s length.

BBA also endorses Argex’s efforts to build a larger mini-plant with capacity of 10

kg/day. This effort will touch off several other activities related to developing market

acceptance and confirming various engineering parameters through vendor

involvement. The current mini-plant was unable to produce sufficient TiO2 for

particle size optimization and coating trials. BBA endorses the involvement of

vendors in the coming pre-feasibility study to help further de-risk and take full

advantage of lessons learned from actual practice. The larger size of mini-plant will

also permit the opportunity to integrate the vanadium circuit with the other

components of the hydrometallurgical plant.

BBA endorses the idea of working in partnership with companies with TiO2 coating

expertise as a strategy for developing market acceptance.

Market development for by-products is another element for de-risking this Project.

As such it will be important to determine market acceptance for the agglomerated

iron oxide and vanadium products. BBA recommends that for iron and vanadium,

the simpler the better. For example once the purity of the ammonium metavanadate

(NH4VO3) is established, Argex should evaluate the possibility of selling this product

to a vanadium chemicals manufacturing specialist as a way of establishing at least a

baseline outlet and price for the vanadium, following which the marketability of other

products can be established.

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December 2011 2-1

2. INTRODUCTION

Argex Mining Inc. (Argex) commissioned BBA Inc. (BBA) and Met-Chem Canada Inc.

(Met-Chem) to prepare a Technical Report (the Report) on its wholly-owned La Blache

Project (the Project) in the Province of Québec, Canada. The Project comprises the

Hervieux-Est and Hervieux-Ouest deposits, as well as a third exploration target known

as Schmoo Lake, on which no exploration activities were performed in relation to this

study and for which there is no reporting.

The Report incorporates the latest mineral resource estimate (1) for the Project and

provides information on a Preliminary Economic Assessment (PEA) that was based

upon those mineral resources. More specifically, the objective of the study was to

develop a scoping level assessment of a novel hydrometallurgical process (the CTL

Process) as it would be applied to the La Blache Property’s titaniferous magnetite

deposit for the recovery of titanium as high-grade titanium dioxide (TiO2), suitable for use

as colouring agents and pigments, as well as marketable iron and vanadium by-

products. The iron oxide (hematite or Fe2O3) powder derived from the CTL Process is

intended to be formed into agglomerates and sold as a raw material feed for steelmaking

operations. Similarly, the intent is to produce a marketable vanadium chemical, such as

ammonium metavanadate (NH4VO3) or vanadium pentoxide (V2O5). The PEA was

developed on a pre-tax basis only; however, one investment tax credit for new

equipment, applicable to chemical processing (manufacturing) plants, was applied.

Argex was incorporated under the Canada Business Corporations Act on March 17,

2005. On July 8, 2008, the Company completed its Initial Public Offering (IPO) and on

July 14, 2008, the common shares of the Company began trading as a Capital Pool

Company on the TSX Venture Exchange (TSX-V or “Exchange”) under the symbol

RGX.P.

On October 30, 2009, Argex completed its Qualifying Transaction by acquiring titanium,

vanadium, and iron ore mining claims on the Quebec North Shore from 7013833 Canada

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December 2011 2-2

Corporation. The common shares resumed trading on the TSX-V on November 9, 2009

under the symbol RGX.

At its annual and special meeting of shareholders held on June 21, 2010, the

shareholders of Argex agreed to change the name of the company from Argex Silver

Capital Inc. to Argex Mining Inc. Argex’s only reportable segment and all of its assets are

located in Canada.

On September 28, 2011, Argex announced that it had entered into a definitive Share

Purchase Agreement with the shareholders of privately-owned Canadian Titanium

Limited (CTL) to acquire a 50.1% ownership interest in the company. CTL is a private

company that owns technology and underlying patents, which Argex will use through

their License and Royalty Agreement, to process titanium-bearing ore. The consideration

for the purchase of 50.1% of the outstanding shares of CTL consisted of payment by

Argex to the selling shareholders of 1 M$ as well as two million Argex common shares.

CTL has granted Argex an exclusive license in the Province of Quebec and a non-

exclusive license for the rest of the world to use the licensed technology for the recovery

of titanium dioxide (TiO2). CTL will provide Argex with all of the know-how and

information, which is applicable to the licensed technology and products. Argex will pay

CTL a 2% royalty on its production of titanium dioxide (TiO2).

CTL is based in Mississauga, Ontario, Canada, and was incorporated in 2005 by the

principals of Process Research Ortech Inc. (PRO) with the specific goal of

commercializing the proprietary technology developed for the production of high purity

TiO2 suitable for pigment production. The new share structure will see 49.9% retained by

PRO.

This report has been prepared in compliance with National Instrument 43-101,

Standards for Disclosure for Mineral Projects (NI 43-101) and was prepared to support a

Preliminary Economic Assessment (PEA).

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December 2011 2-3

The report uses the metric system and all dollar figures cited are Canadian dollars,

unless otherwise noted. The assumed exchange rate for the report was C$1 to US$1.

2.1 Qualified Persons

The independent Qualified Persons (QPs), as defined in NI 43-101 and in compliance

with Form 43-101F1 (the Technical Report), who are responsible for the preparation of

the technical report include:

1. Yves Buro, Eng., Met-Chem Canada Inc.;

2. Patrice Live, Eng. (Mining), BBA Inc.;

3. Murray Brown, Eng. (Metallurgy), BBA Inc.

2.2 Site Visits

Table 2.1: Qualified Persons (QPs) for the Technical Report

Qualified Person Site Visits Report Sections of Responsibility

(or Shared Responsibility)

Yves Buro Yes 1, 2-12, 14, 15

Patrice Live No 1,16

Murray Brown No 1, 2, 13,17-26 (Report Integrator)

The Property was visited by Y. A. Buro, Eng., Senior Geologist, Met-Chem Canada Inc.,

on May 19, 2010. Mr. Buro was accompanied by Argex representatives and Jean-

Sébastien Lavallée, Géo., Project Manager, Consul-Teck, who at the time was acting as

Argex’s QP on the La Blache Project. Argex has since retained André Laferrière, Géo.,

as its qualified person. Mr. Laferrière has been involved in the critical review and

discussion relating to the contents of this report.

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December 2011 2-4

2.3 Effective Dates

The effective date of the Report is October 12, 2011, which represents the date of

the most recent scientific or technical information included in the Report.

The effective date of the Mineral Resource estimate is May 18, 2011, which

corresponds to the public disclosure date.

There have been no material changes to the scientific and technical information of the

Project between the effective date of the Report and the signature date of the Report.

2.4 Previous Technical Reports

Previous technical reports submitted by Argex are as follows:

Lavallée, J.-S., Cloutier, M.-A., and Lafleur, J., December 4, 2008: National

Instrument Technical Report 43-101, Mouchalagane and La Blache Properties, NTS

Sheets 22N/11, 22N/13, 22N/14, and 22K/04, prepared by Consul-Teck Exploration

Inc. for Argex Silver Capital.

Lavallée, J.-S., November 4, 2010: National Instrument 43-101 Technical Report,

Mouchalagane, Lac Brûlé, and La Blache Properties, NTS Sheets 22N/11, 22N/13,

22N/14 and 22K/04, prepared by Consul-Teck Exploration Inc. for Argex Mining Inc.

Lavallée, J.-S., January 4, 2011: National Instrument 43-101 Technical Report, La

Blache Property, NTS Sheets 22K/04, prepared by Consul-Teck Exploration Inc. for

Argex Mining Inc.

Technical Report NI 43-101 on the Mineral Resources of the La Blache Property,

Quebec, Canada, Yves A. Buro, Eng., Issued June 29, 2011.

Argex Mining Inc.


December 2011 2-5

2.5 Information Sources

In preparing this report, Met-Chem relied on geological reports, maps, and

miscellaneous papers listed in Section 27 of the Report (3-89)

, as well as on the

documentation supporting the information used by various qualified persons in

preparation of previous technical reports related to the Project (see Section 2.4).

The BBA QPs have relied upon a block model supplied by Met-Chem, which served as

the basis for developing the in-pit mineral resource estimate and mine plan for the La

Blache Property. Other information sources included testing results and a process

flowsheet and mass balance, which was provided by Process Research Ortech. BBA’s

QPs also received information, comprised of schematics, an itemized equipment list, and

factored cost estimate, which was provided by Mr. Ernie Burga, P. Eng., of Andeburg

Consulting. Mr. Burga is experienced in the preparation of cost estimates for

hydrometallurgical processing plants.

Argex Mining Inc.


December 2011 3-1

3. RELIANCE ON OTHER EXPERTS

3.1 Introduction

The authors of this Technical Report state that they are independent qualified persons

(QPs) for those areas that are identified in the appropriate “Certificate of Qualified

Person” attached to this report.

The authors have relied upon, and believe there is a reasonable basis for this reliance,

the following reports that provided information regarding mineral rights, surface rights,

permitting, metallurgical testing, marketing and environmental issues in the sections of

the Technical Report as noted below.

3.2 Mineral Tenure

The QP for Met-Chem (Yves Buro) has carefully reviewed the available information from

the La Blache Property and the immediate surrounding area. The QP has relied largely

on the Technical Reports issued by Jean-Sébastien Lavallée, Géo., Consul-Teck, acting

as the QP for Argex on its La Blache Project who has previous work experience on

similar deposits. Mr. Buro has relied upon and disclaims the documents, reports and

other data available, and assumes that these are substantially accurate and complete in

all material aspects.

3.3 Surface Rights, Access, and Permitting

Mr. Buro has not researched legal ownership information such as property title and

mineral rights, or possible environmental liabilities. The Met-Chem QP has validated the

ownership of the claims using the GESTIM on-line database via the Internet. Consul-

Teck previously stated that it had not verified the legality of any underlying agreements

that may exist concerning the mineral property of other agreements between third

parties.

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December 2011 3-2

3.4 Mineral Resources

It should be understood that the mineral resources presented in this report are estimates

of the size and grade of the Hervieux-Est and Hervieux-Ouest deposits, based upon core

drilling, sampling, and the assumptions and parameters currently available. The level of

confidence in the estimates depends upon a number of uncertainties, which is reflected

by the classification of the resources in the various categories. The Met-Chem and BBA

QPs caution that the mineral resources, while suggesting reasonable prospects of

economic viability at the level of a Preliminary Economic Assessment, have not yet been

demonstrated to be economically viable and there is no certainty that all or part of the

mineral resources estimated for the Hervieux-Est and Hervieux-Ouest deposits will be

converted into reserves.

3.5 Metallurgical Process Development

The BBA QP (Murray Brown) has relied upon and disclaims information provided by Dr.

Lucky Lakshmanan and Dr. Ram Sridhar of Process Research Ortech (Mississauga,

Ontario), who co-developed the CTL Process. Both Dr. Lakshmanan and Dr. Sridhar

have extensive experience in metallurgical process development and are experts in the

field of chloride hydrometallurgy. The CTL Process is based upon a magnesium chloride

brine leaching approach. No metallurgical test work was carried out by BBA, nor was it

supervised by the QP responsible for the Mineral Processing and Metallurgical Testwork

section of this report. As such, the results were not independently verified. However, the

QP has visited the pilot facilities while in operation and is satisfied that all work has been

completed as described. The information provided in Section 13 of this report was

largely written by Process Research Ortech.

3.6 Market Analysis

Murray Brown has relied upon the following document and disclaims responsibility for a

titanium dioxide market analysis (92)

, which was used in Section 19 of this report.

Confidential report from Ti Insight, LLC to Argex Mining Inc., titled Global TiO2 Pigment

Report Profile dated December 2010 and authored by Mr. Gary L. Cianfichi.

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December 2011 3-3

The author of this report, Mr. Gary Cianfichi, has extensive experience in titanium

dioxide markets and is independent of Argex. Recently retired, he was a business

executive with Cristal Global and worked for the same company for 27 years through

several owners, including SCM, Millennium, Lyondell, and Cristal. During his career, he

held several challenging executive positions in Sales, Marketing, Business Management,

Supply Chain, and Corporate Communications. He holds a Bachelor of Science Degree

in engineering from The State University of New York College of Environmental Science

and Forestry at Syracuse and has a B.S. degree from Syracuse University. As a partner

with Ti Insight, he is a co-founding member of a titanium dioxide and chemical industry

consulting company. He conducts M&A target, due diligence analyses, and industry

supply, demand, and pricing forecasts for clients globally.

3.7 Permitting and Environment

Murray Brown has relied upon and disclaims information provided by Mr. Craig Wood,

B.Sc., Environmental Scientist (GENIVAR Inc.), who has over 34 years of experience in

all environmental aspects of the mining cycle, from the exploration phase through

construction, operation and closure, and post-closure monitoring in Quebec, including

collaborating with First Nations communities. Mr. Wood has provided the environmental

baseline data and the permitting process required for the La Blache Project. The

information provided by Mr. Wood has been used in Section 20 of this report.

Argex Mining Inc.


December 2011 4-1

4. PROPERTY DESCRIPTION AND LOCATION

4.1 Property Description and Location

The La Blache Property is located in the Manicouagan region in the Province of Québec,

approximately 120 km to the northwest of the city of Baie-Comeau.

The Property lies within NTS map sheet 22K/04 and the claim block is centered on the

coordinates listed in Table 4.1 and displayed in Figure 4.1.

Table 4.1: La Blache Property Coordinates – Center of the Claim Block

Latitude Longitude SNRC

50° 03’ 30” N 69° 38’ 02” W 22K/04

The La Blache Property has not been legally surveyed, but the claims were acquired by

map designation. The boundaries of each claim are defined in the Ministère de

Ressources naturelles et de la Faune de Québec (MRNFQ) website and the GESTIM

claim management system. All the claims from the La Blache Property are active, in

good standing, and registered as 100% under the name of Argex Silver Capital Inc.

The renewal fees for all of the claims of the La Blache Property are $3,869 and the

required assessment work amounts to $94,800. An excess exploration work credit of

$3,888,791.21 is available (September 15, 2011). To maintain ownership of the claims,

expenditure work must be completed within 60 days of the expiry of every two-year

period, unless an equivalent amount is paid by the owner of the claims.

Should any future application be made for a mining lease on the La Blache Property, it

would be possible to obtain all necessary surface rights and permits from the MRNFQ.

Details on claim renewals, work credits, claim access rights, allowable exploration,

development and mining works, as well as site rehabilitation are summarized in the

Mining Act of Quebec, which can be accessed via the MRNFQ website.

Argex Mining Inc.


December 2011 4-2

The La Blache Property is composed of one claim block made up of 73 contiguous

claims and covers an area of 4,035.28 hectares. The claims are listed in Table 4.2 and

are shown in Figure 4.2.

Argex Mining Inc.


December 2011 4-3

Figure 4.1: Location Map of the La Blache Property

Argex Mining Inc.


December 2011 4-4

Figure 4.2: Claim Location Map

Argex Mining Inc.


December 2011 4-5

Table 4.2: La Blache Property – List of Claims

Claim

Number

Registration

Date

Expiration

Date

Number

of

Renewals

Area

(Ha) Work Credit

Required

Statutory

Work

CDC-25176 23/06/2004 22/06/2012 3 55.27 $457,718.18 $1,800.00

CDC-25177 23/06/2004 22/06/2012 3 55.27 $942,234.65 $1,800.00

CDC-25178 23/06/2004 22/06/2012 3 55.27 $197,005.48 $1,800.00

CDC-25179 23/06/2004 22/06/2012 3 55.27 $604.48 $1,800.00

CDC-25181 23/06/2004 22/06/2012 3 55.27 $604.48 $1,800.00

CDC-25182 23/06/2004 22/06/2012 3 55.28 $529,924.43 $1,800.00

CDC-25183 23/06/2004 22/06/2012 3 55.28 $604.48 $1,800.00

CDC-25185 23/06/2004 22/06/2012 3 55.29 $29,486.98 $1,800.00

CDC-25186 23/06/2004 22/06/2012 3 55.29 $128,9780.61 $1,800.00

CDC-25187 23/06/2004 22/06/2012 3 55.30 $250,149.28 $1,800.00

CDC-25188 23/06/2004 22/06/2012 3 55.30 $190,073.68 $1,800.00

CDC-25226 23/06/2004 22/06/2012 3 55.27 $604.48 $1,800.00

CDC-2175576 10/12/2008 09/12/2012 1 55.31 $0.00 $1,200.00

CDC-2175577 10/12/2008 09/12/2012 1 55.31 $0.00 $1,200.00

CDC-2175578 10/12/2008 09/12/2012 1 55.31 $0.00 $1,200.00

CDC-2175579 10/12/2008 09/12/2012 1 55.31 $0.00 $1,200.00

CDC-2175580 10/12/2008 09/12/2012 1 55.31 $0.00 $1,200.00

CDC-2175581 10/12/2008 09/12/2012 1 55.31 $0.00 $1,200.00

CDC-2175582 10/12/2008 09/12/2012 1 55.31 $0.00 $1,200.00

CDC-2175583 10/12/2008 09/12/2012 1 55.30 $0.00 $1,200.00

CDC-2175584 10/12/2008 09/12/2012 1 55.30 $0.00 $1,200.00

Argex Mining Inc.


December 2011 4-6

Claim

Number

Registration

Date

Expiration

Date

Number

of

Renewals

Area

(Ha) Work Credit

Required

Statutory

Work

CDC-2175585 10/12/2008 09/12/2012 1 55.30 $0.00 $1,200.00

CDC-2175586 10/12/2008 09/12/2012 1 55.30 $0.00 $1,200.00

CDC-2175587 10/12/2008 09/12/2012 1 55.30 $0.00 $1,200.00

CDC-2175588 10/12/2008 09/12/2012 1 55.30 $0.00 $1,200.00

CDC-2175589 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175590 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175591 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175592 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175593 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175594 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175595 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175596 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175597 10/12/2008 09/12/2012 1 55.29 $0.00 $1,200.00

CDC-2175598 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175599 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175600 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175601 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175602 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175603 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175604 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175605 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175606 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

Argex Mining Inc.


December 2011 4-7

Claim

Number

Registration

Date

Expiration

Date

Number

of

Renewals

Area

(Ha) Work Credit

Required

Statutory

Work

CDC-2175607 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175608 10/12/2008 09/12/2012 1 55.27 $0.00 $1,200.00

CDC-2175609 10/12/2008 09/12/2012 1 55.27 $0.00 $1,200.00

CDC-2175610 10/12/2008 09/12/2012 1 55.27 $0.00 $1,200.00

CDC-2175611 10/12/2008 09/12/2012 1 55.26 $0.00 $1,200.00

CDC-2175612 10/12/2008 09/12/2012 1 55.26 $0.00 $1,200.00

CDC-2175613 10/12/2008 09/12/2012 1 55.26 $0.00 $1,200.00

CDC-2175614 10/12/2008 09/12/2012 1 55.26 $0.00 $1,200.00

CDC-2175615 10/12/2008 09/12/2012 1 55.26 $0.00 $1,200.00

CDC-2175616 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175617 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175618 10/12/2008 09/12/2012 1 55.28 $0.00 $1,200.00

CDC-2175619 10/12/2008 09/12/2012 1 55.27 $0.00 $1,200.00

CDC-2175620 10/12/2008 09/12/2012 1 55.27 $0.00 $1,200.00

CDC-2175621 10/12/2008 09/12/2012 1 55.27 $0.00 $1,200.00

CDC-2175622 10/12/2008 09/12/2012 1 55.26 $0.00 $1,200.00

CDC-2175623 10/12/2008 09/12/2012 1 55.26 $0.00 $1,200.00

CDC-2175624 10/12/2008 09/12/2012 1 55.26 $0.00 $1,200.00

CDC-2175625 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175626 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175627 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175628 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

Argex Mining Inc.


December 2011 4-8

Claim

Number

Registration

Date

Expiration

Date

Number

of

Renewals

Area

(Ha) Work Credit

Required

Statutory

Work

CDC-2175629 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175630 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175631 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175632 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175633 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175634 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175635 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

CDC-2175636 10/12/2008 09/12/2012 1 55.25 $0.00 $1,200.00

Total

4,035.28 $3,888,791.21 $94,800.00

4.2 Letter and Purchase Agreements

The La Blache Property is subject to the following agreements:

A purchase agreement dated August 1, 2008, between 7013833 on the one hand and

Fancamp Exploration Ltd. (“Fancamp”) and The Sheridan Platinum Group Ltd.

(“Sheridan”) (Fancamp and Sheridan, collectively, the “Sheridan Vendors”) on the other

hand. Pursuant to the agreement, 7013833 acquired a 100% interest in 46 claims,

comprising part of the Mouchalagane and La Blache Properties owned by the Sheridan

Vendors by: 1) issuing an aggregate of 1,500,000 redeemable preferred shares to the

Sheridan Vendors, each having a par value of $1.00 (preferred shares were exchanged

for 6,000,000 common shares of Argex at the closing of its Qualifying Transaction); 2)

paying an aggregate amount of $175,000 to the Sheridan Vendors over a two-year

period; 3) entering into a net smelter return royalty agreement with the Sheridan

Vendors, granting a 2% net smelter return royalty, which will increase to 4% in favour of

the Sheridan Vendors after two years of commercial production and 4) making an

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December 2011 4-9

advance royalty payment of $100,000 on the third anniversary date of the agreement.

Pursuant to the net smelter return royalty agreement, 7013833 may repurchase from the

Sheridan Vendors, at any time, up to 50% of the net smelter return royalty for a total

amount of $1,500,000.

A purchase agreement dated August 1, 2008, between 7013833 and Fancamp.

Pursuant to the agreement, 7013833 acquired a 100% interest in 18 claims comprising

part of the La Blache Property owned by Fancamp by: 1) issuing an aggregate of

1,500,000 of redeemable preferred shares to Fancamp, each having a par value of

$1.00 (preferred shares were exchanged for 6,000,000 common shares of Argex at the

closing of its Qualifying Transaction); 2) paying an aggregate amount of $175,000 to

Fancamp over a two-year period; 3) entering into a net smelter return royalty agreement

with Fancamp, granting a 2% net smelter return royalty, which will increase to 4% in

favour of Fancamp after two years of commercial production and 4) making an advance

royalty payment of $100,000 on the third anniversary date of the agreement. Pursuant to

the net smelter return royalty agreement, 7013833 may repurchase from Fancamp, at

any time, up to 50% of the net smelter return royalty for a total amount of $1,500,000.

An acquisition agreement dated November 10, 2008, and amended on February 23,

2009, between Argex and 7013833. Pursuant to the agreement, Argex acquired a 100%

interest in the Mouchalagane and La Blache Properties, upon the completion of its

qualifying transaction on October 30, 2009 (the “Qualifying Transaction”) by: 1) issuing

an aggregate of 17,000,000 common shares to 7013833; 2) paying an aggregate

amount of $580,000 to 7013833; 3) issuing 8,000,000 common share purchase warrants

(the “First Milestone Warrants”) to 7013833; 4) issuing 8,000,000 common share

purchase warrants (the “Second Milestone Warrants”) to 7013833. The foregoing

17,000,000 common shares of Argex are subject to an escrow agreement providing for a

gradual release over a period of 48 months from the closing date of the Qualifying

Transaction.

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December 2011 4-10

Each First Milestone Warrant will entitle the holder thereof to subscribe for one additional

common share of Argex, for no additional consideration, upon the completion of a

technical report prepared by an independent qualified person and compliant with

Regulation 43-101, demonstrating at least 80 million tonnes of measured resources (as

defined under CIM standards) averaging 30% Fe (iron) and 10% Ti (titanium) in the

Mouchalagane and La Blache Properties.

Each Second Milestone Warrant will entitle the holder thereof to subscribe for one

additional common share of Argex for no additional consideration, upon the completion

of a technical report prepared by an independent qualified person and compliant with

Regulation 43-101, demonstrating at least 300 million tonnes of measured resources (as

defined under CIM standards) averaging 30% Fe (iron) and 10% Ti (titanium) in the

Mouchalagane and La Blache Properties.

The description of the agreements to which the La Blache Property is subjected has not

been verified by Met-Chem. The above description is copied verbatim from the Consul-

Teck 2011 technical report.

4.3 Ancestral Territory

The Lac La Blache sector is subject to ancestral rights claims of the Innu of Pessamit, as

it is part of the Nitassinan Ancestral Territory of Pessamit. Argex has signed a mining

exploration agreement with the Innu Council of Pessamit (Argex’s Press Release of

May 4, 2010) (93).

The agreement provides Argex with the consent of the Innu to carry out its mineral

exploration campaign on lands that are the subject of ancestral rights claims of the Innu

of Pessamit. Additionally, the Innu extend to Argex an exclusive right to mining

exploration and development on the territory within a 100 km radius of any Argex claims.

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December 2011 4-11

Argex agrees to communicate with the Innu of Pessamit with respect to its exploration

plans and results, and to give them a right of first participation in the financing of Argex’s

future development projects on Pessamit territory.

The Pessamit territory, which is near Argex’s La Blache Property, covers an area of

135,000 km2 and includes 4,000 members of the Innu Nation.

In a Press Release dated June 22, 2011 (94)

, Argex announced the completion of a

preliminary “Aboriginal Issues, Archaeological and Sites of Interest” study for its La

Blache Property. The study was conducted by Genivar, in collaboration with the Innu of

Pessamit, with the purpose of identifying the location of any archaeological sites at or

near the proposed mine site, road corridor and potential industrial sites. No

archaeological sites have been identified, either by this study or by the Innu of Pessamit,

on Argex’s proposed mine site, road corridor or other sites reviewed, nor was there any

evidence of any significant heritage or cultural site that may impede development of the

La Blache Property.


Met-Chem is not aware of any specific environmental liabilities to which the La Blache

Property may be subjected. In a January 28, 2011 press release, Argex announced it

had engaged Genivar to complete an environmental assessment for the proposed

mining site to be located on the La Blache Property. The environmental assessment to

be prepared by Genivar will provide Argex with a baseline environmental survey for its

La Blache Property, a feasibility study on the extension of the forest road to the mine site

to reduce both travel time and the possibility of accidents. Genivar is proposing to work

with the people in the Pessamit community during the field activities.

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December 2011 5-1

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The La Blache Property is located approximately 120 km to the north of the city of Baie-

Comeau. The claim block is accessible by helicopter, float plane or via a network of

forest roads.

The Manicouagan region is situated at the intersection of Highways 138 and 389.

Provincial Highway 138 links Montreal and Natashquan and follows the north shore of

the St. Lawrence River. Highway 389 provides access to the mining towns of the

northeast and links Baie-Comeau to the Labrador border.

Few local resources are available near the property, since the area is not inhabited. The

nearest city is Baie-Comeau, which is located on the north shore of the St. Lawrence

River. The main employer in Baie-Comeau is the Alcoa Aluminum Plant. The economic

and industrial development in the region is based on mineral, forest and hydroelectric

resources. The area is served by the shipping port of Baie-Comeau, which is navigable

all year and handles alumina and other trades. Forestry activities are very intense and

major hydroelectric facilities exist in the region.

The climate along the north coast of the Gulf of St. Lawrence is one of contrast. The

summer is short, warm (an average of 14.5°C in July) and humid with frequent rain.

Winter is long, with heavy snowfalls, strong winds, and an average temperature of minus

25°C.

Mineral exploration of all types, including drilling, can be done throughout the year on the

La Blache Property. Moving heavy equipment is easier in winter, across frozen lakes and

rivers, and causes less damage to the land surface.

The drilled area at the Hervieux-Est deposit is located in low-lying land, at an average

elevation of 450 m above sea level (ASL), between hills culminating at 525 m ASL. The

topography in the Hervieux-Ouest deposit area is rugged and the drill collars are located

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December 2011 5-2

in a valley, along a stream, and on the northwest-facing slope of a steep hill. The

elevations in the west sector vary from 490 m to 605 m ASL. Small lakes, streams, and

swampy grounds are present around the Hervieux-Est sector, whereas a lake with a

northwesterly elongation lies at the eastern end of the Hervieux-Ouest deposit.

The fauna and flora in the region are typical of the boreal forest. Coniferous trees

dominated by sparse spruce cover the La Blache area. Other tree species like balsam

fir, larch and pine, as well as clumps of broadleaved birch, poplar, willow, alder and

mountain ash, are also found. The local forest is home to about forty species of

mammals, including wolves, lynxes, foxes, bears and moose. Ducks, Canada geese,

snow geese, snowy owls, eagles, falcons, ptarmigans and loons are among the bird life

of the region. The aquatic fauna is mainly represented by lake trout, walleye, brook trout

and pike.

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December 2011 6-1

6. HISTORY

Exploration in the sector of the La Blache Property began in the 1950s, after the

discovery of iron and titanium mineralization.

The first titaniferous magnetite outcrops were discovered in 1951 in the anorthosite of

Schmoo Lake (GM02209-A) by Anglo-Canadian Pulp and Paper Mills, which eventually

became Bersimis Mining.

From 1951 to 1954, Bersimis Mining conducted aeromagnetic and dip-needle surveys,

geological mapping, surface sampling, assaying and metallurgical testwork (GM02209-B

and GM02671). Four mineralized lenses were uncovered over a distance of 15 km;

Hervieux-Ouest, Hervieux-Est, Schmoo Lake and La Blache Est (GM06409).

In 1954, three claim blocks held by Bersimis Mining were visited by the MRNFQ

(GM03107). A report and map were jointly published by the MRNFQ and Bersimis

Mining, describing the Hervieux-Est and Hervieux-Ouest occurrences (RP374) of

medium- to coarse-grained magnetite in anorthosite. According to estimates made by

Bersimis Mining at the time, the “average content of the mineral resources was of 49%

iron and 21% TiO2”. This estimate cannot be discussed since the details on the

methodology used and the investigated area are lacking. This estimate was not

completed in accordance with the NI 43-101 Mineral Resources and Mineral Reserves

standards, and therefore should not be relied upon.

A ground magnetic survey was completed by Prospecting Geophysics in 1959

(GM08681). Bersimis Mining completed 20 drill holes in 1964 (GM15462, GM15667 and

GM15992), intersecting significant iron and titanium (more than 45% Fe and 15% TiO2.).

The MRNFQ examined approximately 300 m of drill core and sampled seven holes, as

well as two outcrops, for petrographic and chemical analyses. Three lenses were

identified and apparently lined up over a distance of 6 km. The lenses vary from 100 m

to 1,130 m in length and 45 m to 215 m in width (RG2002-01 and GM37408).

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December 2011 6-2

Geochemical analyses tended to be consistent from one lens to the other (GM37408),

averaging 50.4% Fe; 20.1% TiO2; 0.36% V2O5; 0.70% SiO2; 7.41% Al2O3; 1.26% CaO;

4.05% MgO; 0.19% Cr; 0.03% P; and 0.02% S.

The mineral resource estimate was reported by Bersimis Mining in 1964 (GM37408), as

79 million tonnes grading 48% Fe; 20.5% TiO2; 0.19% Cr; and 0.36% V2O5. Met-Chem’s

opinion is that the historical resources reported are irrelevant for the purpose of this

report and are completely outdated. These estimates cannot be discussed since the

details on the methodology used and the investigated area are lacking. This estimate

was not completed in accordance with the NI 43-101 Mineral Resources and Mineral

Reserves standards, and therefore should not be relied upon.

An aeromagnetic map (2083G), covering La Blache, was published in 1968 by the

Geological Survey of Canada.

The La Blache sector was mapped at a regional scale during the MRNFQ’s Grenville

project in 1968-1969 (DP127 and RG162). The name La Blache Anorthosite Pluton first

appeared on published maps. A geotechnical site investigation was completed in 1969

by L. Kish, who collected four mineralized samples (GM26833, DP127 and RG162). The

results are presented in Table 6.1.

Table 6.1: Sample Results of the La Blache Property (L. Kish, 1969)

Sample Location SiO2

(%)

Fe

(%)

TiO2

(%)

V

(%)

Hervieux Ouest 0.53 50.12 20.84 0.20

Hervieux Ouest 49.22 6.01 2.42 0.016

Hervieux-Schmoo 0.91 49.74 19.35 0.20

Hervieux Est 0.66 51.34 20.09 0.21

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A major exploration campaign, the Manic Project, was undertaken by the Société

Québécoise d'exploration minière (SOQUEM) in 1976, covering 34,700 km2 (GM49156,

GM49162, GM49164 and GM49165), that included lake-bottom sediment geochemistry,

airborne spectrometry and a geological survey. Following this campaign, SOQUEM

outlined 66 areas of interest for base metals and other minerals, without retaining the La

Blache occurrence (DP86-18, MB86-58 and MB89-58).

In 1980, three concession blocks, totaling nine claims, were staked by Les Ressources

Camchib (GM37408), covering the Hervieux-Ouest, Hervieux-Est and Schmoo Lake

occurrences. They concluded that the titaniferous magnetite occurrences at La Blache

represented an important source of titanium, iron and possibly of chromium and

vanadium. In 1982, the three claim blocks were explored by Services Exploration

(GM39253, GM39254, GM39255 and GM39256) who completed a geological and dip

needle survey at Schmoo Lake, without the discovery of any massive titaniferous

magnetite. A geological survey uncovered 25 to 30 m of massive magnetite at Hervieux-

Est. Ten samples of titaniferous magnetite contained between 49.20% Fe and

50.58% Fe, and between 18.40% TiO2 and 21.86% TiO2 at Hervieux-Ouest.

Metallurgical testwork on the ilmenite mineralization was performed in 1992 (GM51848)

at the Hervieux-Ouest occurrence, as part of the concession then owned by Gaspésie

société d’exploration pétrolière et minière. The testing was completed by BHP-UTAH

and produced a heavy mineral concentrate of ilmenite, containing 46% TiO2 to

50% TiO2.

In 1993, Gaspésie société d’exploration pétrolière et minière prospected the Hervieux-

Est and Hervieux-Ouest occurrences. The deposits contained 5% to 10% ilmenite, were

deemed uneconomic at the time, and no further work was recommended.

The Lake La Blache area was mapped in 2000 by the MRNFQ (RG2002-01). The La

Blache anorthosite and the iron and titanium mineralization (mPbla5) were outlined on

the new geological map (unit mPbla1).

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A geological field excursion guidebook (MB2003-03) on the La Blache mineralization

was published in 2003.

In 2005, the MRNFQ (PRO2003-03) published new geochemical data from lake-bottom

and stream sediments covering La Blache. Numeric data of airborne geophysical

surveys were made available in 2006 (DP2006-06).

In 2006, Fancamp Exploration Ltd. performed metallurgical tests (GM62464) on two

samples of titaniferous magnetite from the Hervieux-Est occurrence (GM62465). The two

samples analyzed by COREM contained an excess of 22% TiO2 and more than 67% of

Fe2O3.

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7. GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional Geology

The La Blache Property is located in the North Shore region of Québec and is part of the

Grenville Geological Province. The Archean rocks of the Superior Province and the

Proterozoic rocks of the Otish Basin are separated from the Grenville Province by the

Grenville Front.

The Grenville Front extends for more than 2,000 km in length and skirts the north shore

of the St-Lawrence River. Its width varies from 300 to 600 km (Figure 7.1) and it forms

the south-eastern segment of the Canadian Shield.

The Grenville consists of gneiss domes and basins forming complex and irregular

structural patterns, and of intrusive rocks of composition ranging from gabbroic to

alkaline.

The tectonic fabric of the Grenville is predominantly northwest-southeast trending.

The circular Manicouagan Structure, located in proximity to the La Blache Property, is

generally interpreted as the result of a meteorite impact some 214 million years ago.

7.2 Local Geology

The De La Blache Anorthosite Complex is formed by a core of anorthosite,

leucotroctolite and leuconorite, surrounded by an envelope of gabbronorite and norite,

with subordinate peridotite, pyroxenite and Fe-Ti oxide-bearing gabbro. The plutonic

suite is hosted by the Hulot gneisso-plutonic complex. The batholith shows an overall

dome structure, but appears mostly undeformed, with only weak recrystallization locally

observed.

The anorthosite is cut by variously oriented granite and pegmatite dykes, ranging in

width from a few centimeters to several meters.

Several Fe-Ti oxide lenses of several hundred meters long, occur within a 15 km long

ENE-WSW corridor in the central portion of the anorthosite.

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Figure 7.1: Regional Geology

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7.3 Geology of the La Blache Property

7.3.1 Lithologies

The description of the geology can be found in public documents from mining companies

and government reports (GM02671, GM52690, RG162 and RG2002-01).

The lithologies and mineralization of the La Blache Property (RG2002-02) are divided

into three major units (Figure 7.2):

a) Gneissic and intrusive rocks of varied composition of the Hulot Complex;

b) Intrusive rocks, including the east-west trending La Blache Anorthosite Complex;

c) Late, crosscutting bodies of norite, gabbro, diabase, mangerite, granite and

pegmatite.

Four lenses of titaniferous magnetite (Hervieux-Ouest, Hervieux-Est, Schmoo Lake and

De La Blache Est) are present as tabular bodies that line up over a 17 km long arc

(RG2002-01) located at the center of the anorthosite. The lenses are sub-parallel to the

axis of the large interpreted antiform defined by the anorthosite that is slightly discordant

with the host lithologies.

The La Blache Anorthosite Complex is represented by anorthosite, garnetiferous

anorthosite, gabbroic anorthosite, titaniferous magnetite and pegmatite. A detailed

description of these lithologies is provided below:

Anorthosite

The anorthosite at the core of the La Blache Anorthosite Complex is composed of at

least 90% andesine to labradorite plagioclase megacrysts with minor pyroxene,

titaniferous magnetite, ilmenite, garnet, biotite, olivine, chlorite and pyrrhotite.

The anorthosite occupies 75% of the total surface of the La Blache Property. It is

massive, medium- to coarse-grained, equigranular and automorphic. It is weakly

deformed, non-altered, non-foliated, but occasionally cataclastic. The anorthosite is grey

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on fresh surfaces, and the labradorite is recognizable by its bluish tinge. The anorthosite

is weakly magnetic.

Garnetiferous anorthosite

Similar to the typical anorthosite, but contains between 5% and 15% garnet. The garnets

form cumulates of 5 to 15 cm associated with magnetite and ilmenite. The unit is located

in direct contact with the iron oxides and is up to 25 m wide.

Figure 7.2: Compilation Map

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Gabbroic anorthosite

The gabbroic anorthosite is distinguished from anorthosite by its content of 5% to 25% of

mafic minerals. The two units are in gradational contact.

Titaniferous magnetite

The titaniferous magnetite is easily identifiable by its metallic luster, black colour with a

bluish hue, in contrast to the grey anorthosite. It is a massive rock, in contact with

anorthosite, and also contains aggregates of anorthosite. The typical composition of the

rock is 80% titaniferous magnetite, 10% spinel, 5% to 10% ilmenite, 5% pyroxene and/or

plagioclase.

Pegmatite

Dykes of pink pegmatite cut all the other units. They are composed of quartz and

potassic feldspar with minor biotite and magnetite.

7.3.2 Deformation

The dominant feature on the property is the E-NE orientation of the lithological units, like

the general alignment of the La Blache Anorthosite Complex. Although the rocks from

the anorthosite suite appear to be mostly undeformed, large-scale folds have been

interpreted. The mineralization is interpreted to occur at the flanks of a probable antiform

at Hervieux-Est, but no major fold has been observed at the Hervieux-Ouest occurrence.

7.4 Mineralization

The Hervieux mineralization lies in the La Blache Anorthosite Complex. The host rock is

an anorthosite containing over 90% labradorite and/or a gabbroic anorthosite richer in

amphibole and/or pyroxene.

The titaniferous magnetite from the La Blache Property is hosted in three lenses:

Hervieux-Ouest, Hervieux-Est and Schmoo Lake. A fourth lens (La Blache East), located

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in the extension of the three other lenses east of La Blache, lies outside of the property

boundaries.

The three lenses are aligned over a distance of 6 km. The lenses vary from 100 to

1,130 m in length and 45 to 215 m in width (RG2002-01 and GM37408). The drill holes

recently completely by Argex show that the Hervieux-Est deposit is in large parts open at

depth. This partly applies to Hervieux-Ouest.

The two deposits on the La Blache Property are made up of massive titaniferous

magnetite, with a high density of around 4.5. Greenish, semi-massive zones are also

found, likely consisting of serpentine. The main mineral species of the La Blache

occurrence is an intergrowth of approximately 60% of very fine ulvöspinel (Fe2TiO4) and

magnetite (Fe3O4) exsolutions (GM16464). The contact between the titaniferous

magnetite and the host rocks is usually fairly sharp.

Geochemical analyses tend to be consistent from one lens to the next (GM37408),

averaging 50.4% Fe; 20.1% TiO2; 0.36% V2O5; 0.70% SiO2; 7.41% Al2O3; 1.26% CaO;

4.05% MgO; 0.19% Cr; 0.03% P; and 0.02% S. This was confirmed by the present

resource estimate that showed little difference in the Fe, Ti and V content between the

Hervieux-Est and Hervieux-Ouest deposits.

The distribution of the mineralization in the Hervieux-Est and Hervieux-Ouest deposits is

bimodal, with one population centered on about 10% Fe and the second one at 45% Fe.

A low percentage of intermediate values were obtained. The correlation between the Fe

and Ti values is very high, at 0.988, calculated from 8,938 analyses (Figure 7.3).

A few dykes were intersected by the drill holes, but no major fault was present. The

locally abrupt changes in the geometry of the deposits have been attributed to the

presence of large-scale folds. However, if present, the folds are ill-defined, owing to the

massive nature of the rocks and the lack of a marker.

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Figure 7.3 : Hervieux-Est and Hervieux-Ouest, Fe/Ti Correlation (all assays)

0

2

4

6

8

10

12

14

16

18

20

0 5 10 15 20 25 30 35 40 45 50

Ti%

Fe%

Hervieux-Est & -Ouest - Correlation Fe% vs Ti%

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8. DEPOSIT TYPES

The mineralization at the La Blache Property belongs to the type of massive titaniferous

magnetite associated with anorthosite. The mineralization contains iron, titanium and

vanadium mineralization.

The De La Blache Plutonic Suite is a massif-type Grenville anorthosite characterized by

igneous bodies of large dimensions and plagioclase of restricted composition. A gravity-

induced emplacement (diapiric uprise) is usually invoked for the formation of the

anorthositic suite.

Acidic rocks associated with anorthosites are generally interpreted as originating from

the fractional crystallization of the magma.

A mechanism of gravity-controlled accumulation of dense magnetite-ilmenite crystals

sinking in a plagioclase-bearing crystal mush forms lenses or pods of irregular shapes.

The mineralization of the Tio Mine is associated with andesine anorthosite and is the

best known deposit of this type. The Magpie Deposit, located in the North Shore region,

like the Hervieux deposits, is associated with labradorite-bearing anorthosite.

The magnetite of the Lac Doré Anorthosite Complex of Archean age (Daigneault and

Allard, 1990), in the Chibougamau region of Quebec, contains vanadium. The vanadium

occurs as an exsolution phase in the magnetite and, in lesser quantities, in the ilmenite

and certain silicates. Vanadium is commonly found with titaniferous magnetite,

phosphate and uranium.

The main Fe-Ti deposits associated with anorthosite-gabbro, in Quebec and Labrador,

are illustrated in Figure 8.1 drawn from the MRNFQ files.

The De La Blache Plutonic Suite may have developed in an incipient back-arc (or intra-

arc) setting, resulting from subduction under the continental margin. Alternatively, the De

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La Blache and Nain plutonic suites could be linked to the same magmatic event, inferred

to be related to a plume event (Ryan, 1997), which occurred at a distal location from the

continental-margin arc (Constantin, M.; Giroux, F.; Clark, T.; American Geophysical

Union, Spring Meeting, 2004).

Typically, the Grenville type anorthosites are deformed due to a regional tectonic event.

However, part of the deformation may be caused by the emplacement process (syn-

emplacement deformation).

The exploration model used by Argex to define mineral resources for the Hervieux

deposits rests on comparison with similar deposits and the results from surface mapping,

complemented by a helicopter-borne survey of the La Blache Property. The results from

the magnetic, electromagnetic (VLF) and spectrometric survey were used by Argex for

the follow-up with diamond drilling. In addition, several outcrops of the titaniferous

magnetite are present on the property and the mineralization was picked up by regional

mapping and geophysical surveys completed since 1951.

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Figure 8.1: Geological Survey of Canada

(Source: Mineral Deposits of Canada, Regional Metallogeny, Prospective Metallogenic Settings of the Grenville Province, by

Louise Corriveau, Serge Perreault1 and Anthony Davidson).

http://www2.nrcan.gc.ca/dpspub/index.cfm?fuseaction=phonedir.empldet&userlang=e&userid=8607

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9. EXPLORATION

The initial exploration work carried out by Argex consisted of a helicopter-borne survey

on the La Blache Property. This 418.5-line-km survey conducted in November 2009 by

Géophysique GPR International Inc. of Longueuil, Quebec, included magnetic,

electromagnetic (EM-VLF) and spectrometric readings.

The Hervieux-Est showing returned a negative magnetic anomaly 1,700 m long by

300-500 m wide, striking NE-SW, surrounded by magnetic highs. This anomalous

contrast is produced by the refractory effect of ilmenite. The presence of ilmenite

explains the 700 m long by 700 m wide conductor seen on the EM-VLF survey. The

holes drilled on the Hervieux-Est deposit were targeted at the contact between this

negative anomaly and the magnetic highs, as well as at the negative anomaly itself. The

holes are oriented toward the southeast, perpendicular to the dip of the mineralized

zones, with a -50° plunge, except for nine holes oriented northwest due to topographical

constraints, and five holes oriented either toward the north or the south to test for the

presence of new mineralized zones.

The geophysical survey detected a magnetic anomaly with a different shape on the

Hervieux-Ouest showing. This anomaly is oriented north-south, and is 700 m long by

400 m wide. Magnetic highs lining up with the regional structure lie on either side. The

electromagnetic survey did not reveal any conductors corresponding to the ilmenite

mineralization. The drill holes were oriented toward the northwest or southeast,

depending on the topography. Hole HW-10-043 was drilled toward the east to investigate

whether the mineralization might extend under the lake. The plunge was generally at

50°, with the exception of a few holes plunging at -70° or -87° to test for mineralization at

depth.

The diamond drilling program was largely based on analysis of the geophysical survey

results in the Hervieux-Est and Hervieux-Ouest sectors.

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10. DRILLING

10.1 Introduction

A total of 20,294 m were drilled on 50-m nominal spacing on the La Blache Property,

including 10,936 m on Hervieux-Est and 9,358 m on Hervieux-Ouest (Figure 10.1 and

Figure 10.2). The program was principally aimed at confirming the historical values of the

1964 drilling. Drilling was completed by Major Drilling of Val-d’Or, Quebec, under the

supervision of Consul-Teck, acting as the QP.

The holes were located in the field by Consul-Teck using a hand-held GPS and cut lines.

The collar location is within the accuracy of the hand-held GPS, which is not ideal but

adequate, considering the distance of 50 m between the holes and the relatively massive

geometry of the deposit.

Core recovery was excellent, approximating 99%. The La Blache anorthosite massif and

the titaniferous magnetite zone are both highly competent, with no major faults or

deformation corridors. The only serious problem was encountered in Hole HE-10-058,

which had to be re-drilled due to a zone of poor ground intersected at 96 m. Hole HE-

10-058A was repositioned 20 m north of Hole HE-10-058 and drilled with a plunge

of -60° instead of -65°. The hole was successful in achieving its objective.

The results from the drill program of 2010 confirmed the grades defined in former drill

programs and met the target set by Argex.

In contrast to the generally longer and narrower Hervieux-Est deposit, Hervieux-Ouest is

more rounded and compact.

10.2 Hervieux-Est Sector

76 holes totaling 10,936 m were drilled at Hervieux-Est. The holes were drilled over a

distance of 1,300 m along a northeast-southwest axis between sections 7+00W and

5+50 E. Five holes were drilled on sections 7+50 E, 8+25 E and 9+00 E to test for

possible extensions. Most of the holes were drilled with an azimuth of N154°,

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perpendicular to the mineralized structure, with a -50° plunge. A few holes had to be

drilled in a N334° direction due to topographical constraints. A few holes were drilled with

a plunge of -70° or -87° to test the continuity of the mineralization at depth.

No mineralization was found by drilling in the western part of the Hervieux-Est deposit

between sections 7+00W and 5+50W. The mineralization occurs sporadically between

sections 5+00W and 3+50W indicating the start of the mineralized zone. Drilling

intercepted the core of the mineralized zone on sections 3+00W to 0+50W.

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Figure 10.1: Hervieux-Ouest 2010 Drill hole Location Map

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Figure 10.2: Hervieux-Est – 2010 Drill hole Location Map

The mineralized zone narrows from section 0+00 to section 2+00 E, primarily at section

1+50 E, and then thickens again between sections 2+50 E and 5+50 E. The zone

remains open to the East.

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In the main zone, the average thickness intersected is 45 m. The mineralized body lies

between sections 5+50 E and 4+00W from surface to a maximum depth of 250 m

reached by drilling, with the zone remaining open at depth.

10.3 Hervieux-Ouest Sector

The 60 holes drilled on Hervieux-Ouest represented a total of 9,352 m. These holes

were drilled over a distance of 950 m, along a northeast-southwest axis between

sections 3+50W and 7+50 E. The topography of the block is rugged, with many hills,

which forced the drilling of some holes in the interpreted direction of the dip of the

mineralization. The holes were either oriented N334° or N154° with a plunge of -50°. As

on Hervieux-Est, selected holes were drilled at a plunge of -70° or -87° to test the

continuity of the mineralization at depth.

The drilling program was carried out in two phases: Phase I consisted of holes HW-10-

001 to HW-10-040 drilled in winter, and Phase II consisted of holes HW-10-041 to HW-

10-060 drilled in the summer months. The full program could not be completed due to

constraints related to the rugged topography and wet ground, which restrict access to

the site in the summer time.

The mineralization lies between sections 1+00 W and 6+00 E. Drilling in the western part

of the showing between sections 3+50 W and 1+50 W failed to intersect mineralization.

The mineralization occurs between sections 1+00 W and 6+00 E and the core of the

mineralized zone lies between sections 1+50 E and 4+00 E. The mineralized body

appears smaller than the Hervieux-Est deposit in its lateral extension, but is thicker.

The mineralized body is 700 m long and about 100 m wide, with maximum thickness

intersected of 105 m, and was drilled to a depth of 220 m.

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10.4 Verification by Met-Chem

10.4.1 Site Visit

The property was visited by Yves A. Buro, Eng., Senior Geologist, Met-Chem Canada

Inc., on May 19, 2010. Y. Buro was accompanied by Argex representatives and Jean-

Sébastien Lavallée, Géo., Project Manager, Consul-Teck, acting as Argex’s QP on the

La Blache Project.

The site was accessed from Baie-Comeau with a chartered helicopter and the complete

day was spent visiting the camp, the core shed, the field office and discussing the project

with the site geologist, Robert Corbeil, Géo. One drill rig from Major Drilling Group

International Inc. was operating at the time of the visit.

Parts of the Hervieux-Est sector were walked and a few outcrops were examined, the

drill rig and a series of drill sites were visited. The titaniferous magnetite unit crops out on

surface at several locations.

Considering the difficult access and the distance between the zones, the Hervieux-Ouest

zone was observed by flying over with the helicopter.

The collar location and azimuth of 13 drill holes completed in the Hervieux-Est and

Hervieux-Ouest sectors were checked in the field using a hand-held GPS. The location

of the holes in the Hervieux-Ouest sector was picked up by GPS from the helicopter,

while hovering over the drill sites.

The drill hole collars are identified by a steel casing and a cap painted in red with a rod

welded onto the cap. A steel plate with an aluminum tag bearing the hole number

scribed on it is welded at the top end of the rod.

All the GPS coordinates and the orientations measured in the field matched the master

database entries and the plot on the maps and sections, within the accuracy of the GPS

instrument used.

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10.4.2 Core Examination

The core from a few holes was examined, the contacts of the samples and the rock units

as well as the lithological descriptions were checked against the drill logs. No

discrepancies were found between the observed core and the entries into the database.

Met-Chem agrees that the lithologies of the core examined were correctly described and

the contacts were well located. The mineralization can be visually estimated by the

amount of magnetite.

The geology of the deposit and the exploration model were discussed with the Consul-

Teck geologists, and a series of outcrops and drill sites were examined.

No samples were collected at the time of the visit as all the samples are shipped to Val-

D’Or, where the pulps and rejects are saved.

10.4.3 Conclusions

The field activities were under the supervision of a senior geologist, P. Corbeil, Géo.,

assisted by junior geologist Yacuba Fumba and a qualified technician.

The field activities were found to be well organized. The core boxes were stored in racks

and clearly identified with embossed metal strips stapled at the ends of the boxes. Core

logging was done by entering the observations and measurements directly into a

template prepared using a Microsoft Excel spreadsheet.

The core sampling was completed using a core splitter, rather than cutting it with a rock

saw. The author agrees that this practice is acceptable in the case of the La Blache

mineralization, considering the massive nature of the mineralization and the relative

ease to split the rock cleanly.

The database was quickly examined and the collar coordinates for all the drill holes were

supplied to Y. Buro who compared with his GPS readings and checked the entries in the

final database.

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The observations from the site visit did not indicate any errors associated with the

database entries or the plot of the collar locations on the map and drill sections. Met-

Chem believes the coordinates of the hole collars have been determined with sufficient

accuracy and reliability to be used in a resource estimation.

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11. SAMPLE PREPARATION, ANALYSES AND SECURITY

11.1 Introduction

All the massive and semi-massive zones and intervals with over 5% disseminated ilmenite

were sampled and analyzed for iron, titanium and vanadium. The samples were bracketed

by a 1 m barren sample, both in the hanging wall and the footwall. A few of the poorly

mineralized zones were sampled locally to check the low grade mineralization as well.

One blank sample was inserted for every 18 samples and one duplicate sample was

analyzed for every 20 samples. Consul-Teck believes the analyses met the NI 43-101

Quality Assurance and Quality Control (QA/QC) standard. The samples were identified with

numbered labels provided by ALS-Chemex laboratory in Val-d’Or. A total of 8,960 samples

were collected in all, including 5,049 on the Hervieux-Est showing and 3,911 on the

Hervieux-Ouest showing.

In general, the samples were 1 m long. However, the sample lengths ranged from 20 cm to

1.5 m to be able to honour the contacts between the lithologies or the mineralized and un-

mineralized zones.

The sample intervals were selected by a Qualified Geologist, a member to the Ordre des

Géologues du Québec, employed by Consul-Teck. The drill core was split using a hydraulic

splitter at the Consul-Teck camp by a qualified geological technician.

11.2 Sample Shipment, chain of Custody

Each sample was assigned a unique number, using a pre-printed label from a sample book

inserted into a plastic bag. A copy of the numbered tag was stapled inside the core box with

the saved half of the core sample. A total of 3,911 samples were selected from Hervieux-

Ouest, and 5,049 samples came from Hervieux-Est.

The samples were double-bagged for security reasons and sealed with fibrous tape. The

samples were placed in lined burlap bags packed in wooden boxes with a screwed lid and

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transported to the ALS-Chemex facilities in Val-d’Or, Quebec. All the samples were

handled by the employees of Consul-Teck only, to preserve the chain of custody.

Consul-Teck certified that all the necessary measures were taken to ensure that the

samples were collected and handled in accordance with QA/QC standards.

11.3 Sample Preparation and Assay Method

On arrival at the ALS-Chemex laboratory in Val-d’Or, all the core samples are dried and

crushed to 70% passing 10 mesh (2 mm). The samples are then split into 1 kg sub-

samples and further reduced to -200 mesh (75 microns). Part of the prepared pulp is

analyzed for iron and titanium using the ME-ICP 81 method, and for vanadium using the V-

XRF 10 method.

The analytical precision and detection limits are provided in Table 11.1.

Table 11.1: Range of Detection Limits for the Analytical Methods Used

Chemical Elements and Ranges (%)

Fe 0.05-100 Ti 0.01-30 V 0.01-100

Thirty-seven (37) selected samples were submitted for multi-elements analyses by four-

acid digestion, followed by inductively coupled plasma - atomic emission spectrometry

(ICP-AES) technique (Code ME-MS81; 51 elements) by ALS Chemex.

11.4 Density Determinations

The density of the rocks on the La Blache property was determined by ALS Chemex on 37

selected core intervals (Code OA-GRA08).

The density was calculated by the weight-in-water, weight-in-air technique using pieces of

half core. The samples were predominantly selected among those containing in excess of

40% Fe as well as low grade samples with less than 10% Fe.

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The average density of the samples with the higher Fe values is 4.57, while all the other

samples yielded an average density of 3.03.

11.5 QA/QC Program

11.5.1 Laboratory QA-QC System

ALS Chemex is accredited to ISO standards and operates under the Laboratory

Information Management System (LIMS). The QA protocol includes routine insertion of

standards, blanks and duplicates, and audits are carried out both internally and by outside

parties.

11.5.2 Argex’s QA-QC System

Consul-Teck inserted one blank (not certified) and one duplicate for every 20 samples, as

part of the Quality Assurance and Quality Control (QA/QC) protocol for Argex. Consul-Teck

did not insert Standard Reference Material into the field samples, although a fair number of

samples are labeled as “standard” in Consul-Teck’s database.

The blank samples test for possible laboratory contamination or sample mix-ups. The

duplicate samples monitor the sample heterogeneity and sample preparation variance.

The blanks used by Consul-Teck are not certified blanks and consist of Standard

Reference Material (blank for Au, Pt and Pd) CDN-BL-4 and CDN-BL-7 purchased from

CDN Resource Laboratories Ltd., Langley, B.C., Canada. These standards are prepared

from granitic material containing approximately 6.0% Fe2O3 (4.2% Fe), 0.6% TiO2 (0.36%

Ti) in BL-4 and 4.0% Fe2O3 (2.8% Fe), 0.4% TiO2 (0.24% Ti) in BL-7.

A total of 498 duplicate samples were prepared by splitting the core halves, producing

quarter core samples.

11.6 Verifications by Met-Chem of Argex’s QA-QC Results

Both standards and blanks, the latter labeled as “Stérile”, were entered as QC samples in

the database supplied by Consul-Teck. However, very similar analytical results were

Argex Mining Inc.


December 2011 11-4

obtained for the two types of QC samples, and Consul-Teck confirmed that they did not

include the use of Standard Reference Materials in their sample stream.

Three samples identified as blanks in the database returned Fe values of 47.5%, 45.0%

and 33.0% (Table 11.2). These are probably the results of sample mix-up or mis-labeling.

The average Fe content of the blanks, excluding the three highest values, is 3.58%, and

the maximum and minimum values are 5.32 and 2.19% Fe.

Table 11.2: Samples Probably Erroneously Labeled as Blanks

Hole ID Sample Number Sample Label Ti% Fe% V%

HE-10-006 878258 BLANK 12.25 47.50 0.25

HE-10-055 666059 BLANK 9.30 33.20 0.15

HE-10-039 665078 STANDARD 11.15 45.00 0.24

It is clear from the graphs in Figure 11.1 to Figure 11.3 that two different batches of blanks

were used. Consul-Teck confirmed that a second lot of blank material, which had a slightly

lower percentage of iron, was purchased at some point in the drill program (CDN-BL-4 and

-7).

Argex Mining Inc.


December 2011 11-5

Figure 11.1: Hervieux-Est and Hervieux-Ouest. Results from Fe Analysis of Blanks

(time sequence)

Figure 11.2: Hervieux-Est and Hervieux-Ouest. Results from Ti Analysis of Blanks

(time sequence)

0.20

0.30

0.40

0.50

0.60

0.70

0.80

Ti (%

)

Hervieux-Ouest, Blank Samples (Ti%)

Argex Mining Inc.


December 2011 11-6

Figure 11.3: Hervieux-Est and Hervieux-Ouest. Results from V Analysis of Blanks

(time sequence)

This material is obviously not blank material in its Fe and Ti contents. Consequently, it

cannot be determined whether the moderate variations in grades originate from the

heterogeneity of the sample or from the sample preparation or analytical procedures.

However, the results indicate that no excessive contamination occurred at the preparation

stage and the three samples returning high iron values were probably attributed a wrong

label or were the result of sample mix-up.

The duplicate sample analyses for Fe and Ti correlate well with the original results, except

for a few samples (Table 11.3 and Table 11.4). The full range of Fe-Ti values intersected in

the Hervieux deposits is represented by the systematic duplicate samples inserted into the

sample stream during the drilling program.

The graphs of Figures 11.4 and 11.5 display the two populations of grades within the

duplicate pairs and the higher variability apparent in the lower-grade population. The

0.00

0.01

0.02

0.03

0.04

V (

%)

Hervieux-Ouest, Blank Samples (V%)

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December 2011 11-7

calculated basic statistical parameters for Hervieux-Ouest and Hervieux-Est were restricted

to the samples grading a minimum grade of 40% Fe, corresponding to about 8% Ti, and

are provided in Table 11.2 and illustrated in the graphs of Figures 11.6 to 11.8.

Three pairs of duplicate samples, for which the numbers seemed to have been in error

were removed from the calculations (Table 13.3).

Very few pairs exhibit a relative difference, calculated as the absolute difference between

the two analyses of the individual pair over their average, exceeding 10%, for the samples

grading 40% Fe and more (1 for Fe, 4 for Ti and 3 for V). Met-Chem believes the

reproducibility of the Fe-Ti-V values for these samples is high.

Argex Mining Inc.


December 2011 11-8

Table 11.3: Samples removed from the Calculation of the Basic Statistical Parameters.

Original

Sample ID

V-

XRF10_V_%

ME-

ICP81_Fe_%

ME-

ICP81_Ti_%

Duplicate

Sample

ID

V-

XRF10_V_%

ME-

ICP81_Fe_%

ME-

ICP81_Ti_%

877578 0.03 4.25 0.4 877580 0.12 30.7 7.05

878519 0.27 44.7 11.85 879520 0.02 10.2 1.82

879559 0.31 45.9 11.95 877560 0.1 25.9 6.19

Table 11.4: Duplicate Samples Inserted by Consul-Teck during the Drilling Program

(40% Fe minimum)

Original Samples Duplicate Samples

V-

XRF10_V

_%

ME-

ICP81_Fe_

%

ME-

ICP81_Ti_

%

V-

XRF10_V_

%

ME-

ICP81_Fe

_%

ME-

ICP81_Ti_

%

Number of Samples 214 214 214 214 214 214

Mean 0.26 45.54 11.68 0.26 45.65 11.71

Standard Deviation 0.03 1.93 0.91 0.03 1.93 0.90

Maximum 0.35 49.50 16.20 0.35 50.70 16.45

Minimum 0.16 40.00 8.06 0.17 39.30 8.16

Median 0.26 46.00 11.80 0.26 46.00 11.80

Mean + 2 StDev 0.33 49.40 13.51 0.33 49.52 13.51

Mean - 2 StDev 0.19 41.69 9.86 0.19 41.78 9.90

Correlation Coefficient 0.961 0.855 0.912

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December 2011 11-9

Met-Chem found the absence of standard and the use of blank material containing about

2.8 to 4.2% Fe and 0.24 to 0.36% Ti not to be the best practice. However, the results from

the duplicate samples prepared with the original field samples and the check analysis

requested by Met-Chem on the rejects strongly suggest that the analytical results are

adequate for the purpose of estimating the mineral resources of the Hervieux-Est and

Hervieux-Ouest deposits.

Figure 11.4: Hervieux-Est & -Ouest – Results from Duplicate Sample Analysis for Fe

0

10

20

30

40

50

0 10 20 30 40 50

Dup

lica

ted

(F

e%

)

Original (Fe%)

Hervieux-Est & -Ouest - Duplicate Samples - Fe% Analyses

1:1 Line

+10%

-10%

Argex Mining Inc.


December 2011 11-10

Figure 11.5: Hervieux-Est & -Ouest – Results from Duplicate Sample Analysis for Ti

0

2

4

6

8

10

12

14

16

18

-2 3 8 13 18

Du

pli

ca

ted

(T

i%)

Original (Ti%)

Hervieux-Est & -Ouest - Duplicate Samples - Ti% Analyses

1:1 Line

+10%

-10%

Argex Mining Inc.


December 2011 11-11

Figure 11.6: Hervieux-Est & Ouest - Duplicate Samples - Fe Analyses > 40%

Figure 11.7: Hervieux-Est & Ouest - Duplicate Samples - Ti Analyses > 8%

35

40

45

50

55

35 40 45 50 55

Du

plicta

e F

e%

Original Fe%

Hervieux-Est & -Ouest - Duplicate Samples - Fe Analyses >40%

1:1 Line

+2StDev

-2 StDev

6

8

10

12

14

16

18

6 8 10 12 14 16 18

Du

plicate

Ti%

Original Ti%

Hervieux-Est & -Ouest - Duplicate Samples - Ti Analyses >8%

+2 StDev

-2StDev

1:1 Line

Argex Mining Inc.


December 2011 11-12

Figure 11.8: Hervieux - Est & Ouest - Duplicate Samples - V Analyses > 0.15%

11.7 Check Samples Selected by Met-Chem

A suite of 205 samples analyzed at ALS-Chemex were selected by Met-Chem for check

assays at a second laboratory, Acme Analytical Laboratories, Langley, British Columbia.

The samples were chosen from drill holes on three sections in the Hervieux-Ouest sector

(85 samples) and three sections in the Hervieux-Est sector (125 samples) and at different

depths to represent a fair general geographic distribution in the deposits.

The 205 samples were selected to represent about 5% of all the samples (4,314) grading

9% Ti or more that were drilled in the two zones.

Met-Chem requested Consul-Teck to retrieve the rejects stored at Val-d’Or from these

samples, to add the control samples (standards and blanks, total of 21) as was done during

the drill program. The check samples were shipped to a second laboratory (umpire

laboratory) under the original number for re-assay by the same method applied to the

original samples.

0.15

0.20

0.25

0.30

0.35

0.40

0.15 0.20 0.25 0.30 0.35 0.40

Du

plicate

V%

Original V%

Hervieux-Est & -Ouest - Duplicate Samples - V Analyses >0.15%

1:1 line

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December 2011 11-13

Appendix A in the recent resources estimate (1)

provides the results from the analysis of the

205 samples selected by Met-Chem and are not reproduced here.

The ten blanks inserted into the sequence of Met-Chem’s check samples returned values

between 2.49 and 2.56% Fe, which confirmed that no excessive contamination and no

sample mix-up occurred.

The duplicate samples exhibit a fair variability, as illustrated in the graphs of Figure 11.9 to

Figure 11.11, if a pass threshold of ±10% is used. The fact that the duplicate samples were

prepared from the rejects and that a second laboratory was used account for part of the

variability. However, if the relative differences between the two samples of each pair over

the average for the pair are used as a criterion to test the results from rejects analyzed at

two laboratories, five samples out of 205 show a ratio of 20% or more, either for Fe or Ti,

which is excellent. The difference between the averages of the two populations is less than

5%, which is considered good. The basic statistics for the two populations, the original

samples and the check samples, do not show any significant differences.

Met-Chem believes the check samples generally confirmed the Fe and Ti values obtained

in the original samples. It appears that the variability obtained in the check samples

selected by Met-Chem is not much higher than that in the original QC duplicates inserted

by Consul-Teck during the drilling program.

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December 2011 11-14

Figure 11.9: Correlation of the Fe% between the Original Samples

and the Check Samples

10

15

20

25

30

35

40

45

50

55

10 15 20 25 30 35 40 45 50 55

Du

plic

ate

Fe%

Original Fe%

Check Samples - Original vs Duplicate - Fe%

1:1 Line

+10%

-10%

Argex Mining Inc.


December 2011 11-15

Figure 11.10: Correlation of the Ti% between the Original Samples and the Check Samples

0

2

4

6

8

10

12

14

16

18

-2 3 8 13 18

Du

plic

ate

Ti%

Original Ti%

Check Samples - Original vs Duplicate - Ti%

1:1 Line

10%

-10%

Argex Mining Inc.


December 2011 11-16

Figure 11.11: Correlation of the V% between the Original Samples and the Check Samples

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35

Du

plic

ate

V%

Original V%

Check Samples - Original vs Duplicate - V%

1:1 Line

Argex Mining Inc.


December 2011 11-17

Table 11.5: Basic Statistics, Original and Check Samples Selected by Met-Chem

Fe (%)

Original

Fe (%)

Dup

Ti (%)

Original

Ti (%)

Dup

V (%)

Original

V (%)

Dup

Number of

Samples 205 205 205 205 205 205

Mean 44.63 45.70 11.29 11.92 0.24 0.22

Standard

Deviation 4.99 5.64 1.58 1.83 0.05 0.04

Maximum 49.50 55.41 14.05 16.31 0.33 0.26

Minimum 14.40 14.69 2.64 2.66 0.03 0.03

Median 45.90 46.39 11.85 12.28 0.25 0.23

Mean + 2 StDev 54.61 56.99 14.44 15.59 0.34 0.29

Mean - 2 StDev 34.64 34.41 8.14 8.25 0.15 0.15

Correlation

Coefficient 0.888 0.912 0.857

Argex Mining Inc.


December 2011 12-1

12. DATA VERIFICATION

Consul-Teck completed a thorough filter verification of the La Blache database (drill log

descriptions) using the Gemcom software, prior to sending it to Met-Chem. No major

errors were identified by Consul-Teck, except for a few typographical errors. Consul-

Teck noted the consistency of the assays results and interpreted it to reflect the good

quality of the assays.

Met-Chem carried out additional validation of the database, using various functions

available in Excel and while importing the data into MineSight.

The errors found in the database by Met-Chem were few and of the type that would have

little impact on the resource estimate. As an illustration, the following discrepancies were

noted:

Deviational survey for hole HE-10015 (100W) showing changes from AZ 175 to 154

and plunge of -70 to 51.1 degrees between 0 and 51 m;

Y coordinate in HW-10-025 entered as 554368 rather than 5543468;

A few mis-spelled sample numbers, e.g. 264261 entered into one of the columns

labeled as SAMPLE instead of 664261 in holes HE-10-024, HE-10-033 and HW-10-

054;

QC sample type 877838 mis-spelled as STANDRD;

A few blank cells in the QA-QC sample type in HE-10-001, HE-10-011, HW-10-012,

HW-10-027 and HW-10-043.

A list of the errors found by Met-Chem was sent to Consul-Teck and they were

corrected.

Met-Chem found the database to be in good order and adequate to be used for a

resource estimate.

Argex Mining Inc.


December 2011 13-1

13. MINERAL PROCESSING AND METALLURGICAL TESTING

Treatment of the La Blache RoM using a whole ore leach approach stems from the fact

that the raw material does not lend itself well to physical separation; for example,

through gravity or magnetic separation. Smelting of the titaniferous magnetite to make a

pig iron and titanium slag, while technically feasible, was also discounted for several

reasons, among these; 1) low TiO2 content and comparatively low volume of the La

Blache deposit relative to ilmenite deposits that are currently processed for that purpose,

2) high initial capital investment for smelting and infrastructure, 3) relatively low grade of

TiO2 slag produced from smelting, and 4) inability to produce a marketable vanadium by-

product.

Well known processing methodologies, such as the Becher process, were also

discounted due to the high iron content of the mineral. The Becher process involves a

reduction of the iron, followed by oxidation in a rotary kiln, rendering the resulting iron

oxide relatively easy to separate by air separation and acid digestion; leaving an

upgraded, acid-insoluble TiO2 product behind. This well-established process does not

generate a marketable iron product and the resulting TiO2 product must be further

upgraded to make pigment. The cost of treating La Blache RoM using the Becher

process would have been prohibitive.

The objective of the testwork has been to develop a more direct, low-temperature route

for producing high-purity TiO2, while at the same time developing a process that would

permit the derivation of by-product credits from iron and vanadium.

13.1 Laboratory Scale Testwork

Laboratory scale testwork performed at PRO on La Blache titaniferous magnetite has

encompassed leaching, solvent extraction and product precipitation. Bench scale testing

was initially performed to optimize leaching and then to select organic reagents and

operating conditions for solvent extraction.

Argex Mining Inc.


December 2011 13-2

The flow sheet presented in Figure 13.1 shows the sequence of processing that was

developed for the treatment of La Blache ROM.

Figure 13.1: Testing flow sheet for the recovery of high purity TiO2

from La Blache titaniferous magnetite

Residue

MgCl2 and HCl Addition

H2O

Fe Liquor1

2N HCl

Bleed Stream

1Fe Liquor will be collected and fresh acid added to leaching circuits. In operation, it will be sent to

pyrohydrolysis and regenerated HCl will be recycled to leach circuit.

Loaded Org.

Stripped Org.

Stripped Org.

LA BLACHE ORE

CRUSHING

(-10 MESH)

MILLING

(P80 200 MESH)

PRIMARY

LEACH

SECONDARY

LEACH

IRON

EXTRACTION

TITANIUM

EXTRACTION

S

L

S

L

EVAPORATION

Loaded Org.

Ti Liquor.

TiO2

PPTN

TiO2 MILLING /

PROCESSING

TITANIUM

STRIPPING

S

L

IRON

STRIPPING

Product for

Market Evaluation

Fe Raffinate.

Ti Raffinate.

Argex Mining Inc.


December 2011 13-3

In the proposed flowsheet, the removal of iron precedes the extraction of titanium. This

is to ensure that the possibility of iron carryover to the titanium dioxide hydrate

(TiO2.H2O) precipitation stage, designated as TiO2 PPTN, is mitigated. In-situ

precipitation of TiO2.H2O in the presence of iron was considered counter-productive, due

to the potential for ferric iron and titanium to form a compound. U.S. Patent 3903239

requires that all ferric be reduced to ferrous prior to the thermal precipitation of TiO2.H2O

for this reason (95)

.

Previous experimental work on the La Blache, Lac Brûlé, Magpie, and Lac Allard

deposits had considered the use of hydrochloric acid for dissolving the iron-titanium

bearing mineral (96)

, but the proposed leaching method uses a magnesium chloride and

hydrochloric acid brine mixture. The MgCl2 enhances the strength of the proton (H+ or

H3O+) in the acid and permits sub-azeotropic acid (less than about 20 wt% HCl) to be

used. This opens up the possibility of regenerating acid by conventional pyrohydrolysis,

making this a closed loop process.

Incidentally, the previous work on HCl leaching of La Blache ore and the other titanium

deposits tested indicated excellent dissolution in all cases.

The advantage to the proposed process is that it provides recycling of chlorides with no

liquid effluents, which effectively eliminates a permitting issue.

13.1.1 Comminution and Head Assay

The La Blache titaniferous magnetite (as received) was crushed and then ground to an

80% passing level of 200 mesh (P80 = 75 µm).

The material was assayed for iron (Fe), titanium (Ti), vanadium (V), and chromium (Cr)

and the results are presented in Table 13.1.

Argex Mining Inc.


December 2011 13-4

Table 13.1: Head Assay of La Blache titaniferous magnetite used for test work

Ti Fe Cr V

11.7% 46.3% 0.12% 0.18%

13.1.2 Leaching

Laboratory scale leaching was conducted in 2-litre glass reactors, fitted with agitators

and water cooled condensers. All leaching takes place at atmospheric pressure. The

initial optimum leach conditions determined from bench scale testing are presented in

Table 13.2

Table 13.2: Initial bench scale leaching conditions.

Percent

Solids

[HCl] [MgCl2] Temperature Residence

Time

10 wt% 6N 225 gpl 70°C 4 hrs

With these conditions, the extraction of Fe, Ti, and V were 97.4%, 85.6%, and greater

than 95%, respectively; however, an improved (two-stage) co-current leach was later

chosen, when it demonstrated better titanium extractions. The conditions arrived at for

the optimized two-stage leach are presented in Table 13.3. Recoveries achieved with

these conditions are presented in Table 13.4.

Table 13.3: Final optimized leach conditions.

Leach Stage [HCl] [MgCl2] Temperature Residence

Time

1 5.2N 220 gpl 70°C 2 hrs

2 5.8N 220 gpl 70°C 2 hrs

Argex Mining Inc.


December 2011 13-5

Table 13.4: Bench scale extraction of Ti, Fe, and V by improved leach conditions.

Element Ti Fe V

% Extraction 91.5 94.5 95

It is important to note that the improved titanium recovery was achieved with lower acid

concentrations.

13.1.3 Solvent Extraction

Iron Removal

The initial focus of solvent extraction bench studies was to selectively remove iron from

the pregnant leach solution. With this goal in mind, two organic extractants that will be

designated Extractant A and Extractant B were initially screened. Extraction of iron from

the pregnant leach solution (PLS) by both organics was studied. Extractant B was

capable of extracting ferric iron (Fe+3), but not ferrous (Fe+2), while Extractant A was able

to extract both ferrous and ferric iron. Extractant B was found to have unacceptable co-

extraction of titanium from the solution, and Extractant A was chosen as the reagent for

iron removal. Modifier C and Diluent D were found to be suitable as modifier and diluent,

respectively. Iron chloride was stripped from Extractant A using 0.05N HCl.

Titanium Removal

Low iron raffinate from Extractant A solvent extraction was used for scoping tests to

select an extractant for titanium extraction and concentration. Two reagents were tested

for the extraction of Ti; Extractant E and Extractant F. While both reagents demonstrated

selectivity for Ti, phase disengagement and difficulty in stripping were encountered with

Extractant E. Extractant F was chosen for extraction of titanium. Stripping of the loaded

Extractant F was effective with 2N HCl.

Argex Mining Inc.


December 2011 13-6

Vanadium Removal

A number of flow sheet options for vanadium recovery from La Blache titaniferous

magnetite have been studied in the lab and are awaiting mini-plant testing to finalize the

design. In bench scale testing, vanadium that has been loaded onto Extractant F has

been stripped using ammonium chloride (NH4Cl). The strip solution is then pH adjusted

with ammonium hydroxide (NH4OH) to precipitate vanadium as ammonium

metavanadate (NH4VO3). The precipitate is centrifuged, washed and dried. Calcining at

550°C produces a solid that x-ray diffraction confirms as primarily vanadium pentoxide

V2O5.

13.1.4 TiO2 Recovery

After completing the initial test work for solvent extraction, bench scale testing of thermal

precipitation of hydrated titanium dioxide (TiO2.H2O) was conducted. Titanium dioxide

was precipitated from titanium-containing strip liquor, generated from the stripping of

loaded Extractant F, using agitated vessels fitted with condensers. The reaction was

conducted at 95-100°C for 1 hour, resulting in precipitation of hydrated titanium dioxide,

which was then filtered and dried. The precipitated and dried sample was then calcined

in a muffle furnace at 900°C for 2 hours to produce a high purity product. Independent

chemical analysis of the calcined product is presented in Table 13.5. The analysis shows

a very pure TiO2 product with total impurity content less than 2000 ppm or over 99.8%

TiO2. An XRD pattern of the calcined product is presented in Figure 13.2 and shows an

excellent match for the rutile form (tetragonal crystals) of TiO2.

Argex Mining Inc.


December 2011 13-7

Table 13.5: Assay of calcined TiO2 product produced in bench scale testing

Al Ca Co Cr Fe K Mg Mn

% % ppm ppm % % % ppm

<0.01 0.01 171 8.5 <0.01 0.01 <0.01 19

Mo Na Ni Si Ti V Zn

ppm % ppm ppm % ppm ppm

0.3 0.02 0.9 <0.5 Balance TiO2 <0.05 172

Figure 13.2: XRD pattern of calcined TiO2 product from bench scale testing

13.2 Mini-plant Testing Program

After initial bench scale test work was completed in January 2011, PRO transitioned to

mini-plant testing in February 2011. Eight mini-plant campaigns have been operated

since February 2011.

Argex Mining Inc.


December 2011 13-8

13.2.1 Leaching and Solid-Liquid Separation

The mini-plant plant leaching circuit was initially operated under the conditions

determined with bench scale testing and presented in Table 13.2, but transitioned to the

two-stage, co-current arrangement (conditions in Table 13.3), after this was first

developed in the laboratory.

In mini-plant scale leaching, 20-litre polypropylene vessels fitted with water-cooled

condensers, air-powered agitators, and 2 kW Teflon-coated immersion coil heaters are

used to complete the first stage of leaching (Stage 1). When cycling of solution is

performed to simulate the flow sheet, the bulk of the MgCl2 used in the leach comes from

the evaporated process solution, which is discussed in Section 13.2.6.

Upon adding a 2.7 kg charge of ore to the 20-litre vessel, the reaction exotherm will raise

the solution temperature from 50°C to 70°C. A thermocouple and temperature controller

is used to maintain the leach temperature at 70°C over a 2-hour residence time. When

the leach is complete, the solution is drained from the vessel and proceeds to filtration.

In solid-liquid separation, an air-powered diaphragm pump with Teflon internals is used

to pump the solution into a small plate and frame filter press. Four 5” × 5” (12.7 cm ×

12.7 cm) frames provide a total of 121 in2 (780 cm2) of surface area for the Stage 1

filtration.

The wet residue from Stage 1 is washed with 2N HCl and charged to the Stage 2 leach

with the conditions presented in Table 13.3.

Stage 2 leaching is performed in glass reaction kettles fitted with agitators and water-

cooled condensers. After the Stage 2 leach, filtration to remove the remaining solids is

performed using a Buchner funnel and vacuum flask. A 2N acid wash of the Stage 2

residue is also performed.

Argex Mining Inc.


December 2011 13-9

Typical solids dissolution details for Stage 1 and Stage 2 are presented in Table 13.6.

Table 13.6: Solids dissolution in Stage 1 and Stage 2 leaching

Stage 1

Charge

Stage 1

Dry Residue

Stage 1

Dissolution

Overall

Dissolution

2700 g 700 g 75%

88% Stage 2

Charge

Stage 2

Dry Residue

Stage 2

Dissolution

700 g 320 g 54%

Typical extractions of Ti, Fe, and V achieved in the mini-plant, using two-stage, co-

current leaching are presented in Table 13.7.

Table 13.7: Mini-plant leaching extractions

Element Ti Fe V

% Extraction 92.0* 95.2* >95%**

* By material balance method.

** By Head/Residue method.

In mini-plant testing, the filtered pregnant liquor and acid wash from Stage 1 and Stage 2

is combined to form a feed (PLS) to iron solvent extraction.

Final leach residues are dried, collected and sent for assay. These solids represent less

than 15% of the solid feed to the system and are expected to be environmentally inert.

Final leach residue analysis is presented in Table 13.8.

Argex Mining Inc.


December 2011 13-10

Table 13.8: Final leach residue analysis

Element Al Ca Fe Mg Mn K Si S Ti

Weight % 16.0 1.0 14.9 5.0 0.13 0.39 8.9 0.23 6.8

Over 1,250 litres of PLS has been produced through the operation of the mini-plant to

date.

13.2.2 Iron Solvent Extraction

Iron solvent extraction was first commissioned in the mini-plant with the mixtures of

organics shown in Table 13.9.

Table 13.9: Initial organic solution for iron solvent extraction

Extractant A Modifier C Diluent D

Vol % 35 20 45

The first mini-plant campaign did not achieve the target iron raffinate concentration of

less than 1 ppm. In addition, operational difficulties caused in part by the viscosity of

35% Extractant A led to a decision to change the mixture. Some interface level crud

generation was also observed in the iron extraction mixer-settlers. Changing the modifier

to the more stable Modifier G has dramatically reduced crud and gel formation at the

interface. The preferred organic solution now used in iron removal is presented in Table

13.10.

Table 13.10: Preferred organic solution for iron solvent extraction

Extractant A Modifier C Diluent D

Vol % 20 20 60

Argex Mining Inc.


December 2011 13-11

Using the improved organic mixture and after optimization of mixer box residence time

as well as the number of extraction and stripping stages, iron levels in the raffinate of

less than 1ppm were achieved over long periods of operation (i.e. greater than 2 weeks).

In some cases, organics used in the iron SX circuit of the mini-plant have seen over 100

organic cycles. There has been over 1400 hrs total iron circuit operation.

Early testwork with Extractant A showed some losses of titanium to the iron strip liquor,

and in this PEA this is considered as titanium that is not recovered as product. In the

two most recent mini-plant campaigns (7 and 8), scrubbing of the loaded Extractant A

with a solution of iron chloride was effective in crowding titanium from the organic.

Scrubbing was so effective that the pregnant scrub liquor could be sent back as feed to

the iron removal circuit.

As a result of the earlier losses of titanium to the iron strip liquor a recovery of 87% TiO2

was suggested in the flow sheet; however, with these new findings, it is suggested that

an overall titanium recovery of 90% or greater can be achieved.

Work to optimize iron strip liquor concentrations and reduce the required evaporation

duty is on-going. Iron strip liquor from the process is being collected for further testwork.

A sample assay set from operation of the iron extraction circuit is presented in Table

13.11.

Table 13.11: Primary Iron streams assays

Stream Fe (mg/L) Ti (mg/L)

PLS Feed 61,700 11,780

Raffinate 0.65 11,050

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December 2011 13-12

13.2.3 Titanium Solvent Extraction

In mini-plant operation of the titanium solvent extraction circuit, low iron raffinate from the

iron removal circuit is contacted with Extractant F to remove titanium. Extractant F is

then stripped with 2N HCl to produce concentrated titanium strip liquor, suitable for

precipitation of high purity TiO2.H2O. In the course of operating the mini-plant there have

been numerous adjustments made to optimize titanium extraction and stripping. As in

the case of iron extraction, the modifier used in the organic solution was also changed

from Modifier C to Modifier G. A sample assay set from the titanium circuit is provided in

Table 13.12.

Table 13.12: Primary Titanium streams assays

Stream Fe (mg/L) Ti (mg/L)

Low Iron Feed 0.65 11,050

Raffinate 0.5 36

Strip Liquor 2.1 37,100

Recent work shows the ability to scrub loaded Extractant F with a concentrated titanium

solution to reduce impurity levels further. The high purity TiO2.H2O product produced

from the mini-plant has come from titanium liquor associated with stripping the un-

scrubbed organic. Addition of the scrub circuit is likely to further increase product purity

and the colour space parameters of the final product.

13.2.4 TiO2 Product

Titanium strip liquor produced in the titanium SX circuit is transferred to a heated glass

vessel that is fitted with an agitator and condenser. The strip liquor is heated to 95-100°C

for 2 hours to precipitate over 99% of the titanium contained in the solution. This high

recovery is consistently achieved in the precipitation reaction. Solids are washed and pH

adjusted prior to calcining. The purity and quality required for the paint industry was

consistently produced; however, titanium pigment undergoes a coating process, which

was not part of this phase of testwork.

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December 2011 13-13

The particle diameter of precipitated titanium dioxide (TiO2) bulk samples by Laser

Scattering Analysis, performed in October 2010, is presented in Figure 13.3. Bulk

samples of product were then micronized to produce a final product with a size

distribution that was heavily weighted between 200-400 nanometers (nm). This final

distribution is presented in Figure 13.4. Note that a small population of larger particles

remains and the goal of future optimization studies would be to confirm that these can be

eliminated.

Figure 13.3: Particle diameter profile of mini-plant TiO2 before micronizing

Figure 13.4: Particle diameter profile of mini-plant TiO2 after micronizing

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December 2011 13-14

A major achievement has been the high product purity and excellent CIELAB L*, a*, and

b* values, used to evaluate the lightness and colour of the final product.

L* is a measure of the lightness of the final product, while a* and b* are measurements

of colour.

Analysis of the uncoated final product for these parameters, with comparison to coated

TiO2 that is commercially available, is presented in Table 13.13. Coating of the final

product for use in the pigment industry is expected to further improve L, a, and b values.

L* values increase with higher lightness, and higher b* values indicate a more yellow

product. High L* values and low b* values are desirable.

Table 13.13: L*, a*, and b* CIELAB colour space values. Note that PRO-Batch 1 and PRO-Batch 2

are uncoated TiO2 products. CIELAB values expected to improve further after coating

Sample

I.D

Standard

White

Commercial

Pigment 1

Commercial

Pigment 2

Commercial

Pigment 3

PRO-

Batch 1

PRO-

Batch 2

L 95.72 99.65 99.4 99.56 99.82 99.68

L 95.75 99.5 99.43 99.69 99.84 99.69

L 95.75 99.52 99.44 99.63 99.96 99.7

Avg L* 95.74 99.56 99.42 99.63 99.87 99.69

a -0.75 -0.25 -0.36 -0.11 -0.46 -0.3

a -0.75 -0.16 -0.37 -0.01 -0.46 -0.3

a -0.75 -0.11 -0.37 -0.19 -0.22 -0.36

Avg a* -0.75 -0.17 -0.37 -0.10 -0.38 -0.32

b -0.33 1.65 1.91 1.84 1.69 1.78

b -0.33 2.31 1.91 1.7 1.63 1.78

b -0.33 1.66 1.9 1.64 1.77 1.64

Avg b* -0.33 1.87 1.91 1.73 1.70 1.73

The most important properties of TiO2 pigment are the particle size, L*, and b* values.

Product generated from the mini-plant met the particle size requirements and exceeds L*

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December 2011 13-15

and b* measurements of commercially-available TiO2 pigment. It must be re-iterated,

however, that the PRO-Batch 1 and 2 products are uncoated.

13.2.5 By-Product Recovery

The by-products of the process will be Fe2O3, V2O5, and MgO. Iron oxide will be

produced by pyrohydrolysis of the iron strip liquor generated from the iron SX circuit.

Vanadium will be recovered in a solvent extraction system that has not yet operated in

the mini-plant. Magnesium oxide will be produced by pyrohydrolysis of the bleed stream

solution to recover the MgCl2 solution as MgO and regenerate hydrochloric acid. This,

like iron pyrohydrolysis, is operated on a commercial scale.

13.2.6 Reagent Recycle

In mini-plant testing, the iron and titanium depleted brine is recycled to the leach circuit

as the MgCl2 source. A glass-lined autoclave is used as an evaporator to pre-

concentrate the solution. The concentrated solution is returned to the leaching section,

where hydrochloric acid and La Blache feed material are added. No significant build-up

of contaminants has been observed in mini-plant cycling. A number of contaminants,

which were originally thought to be leaching from the La Blache titaniferous magnetite,

have since been found to be associated with the MgCl2 reagent used in the system. This

reagent was contaminated with calcium (Ca), sodium (Na), and potassium (K).

Third-party analysis of MgCl2 solution, made two concentration and used in the Argex

mini-plant operation is presented in Table 13.14.

Table 13.14: Third party analysis of MgCl2 solution

Element Ca K Na

Concentration (mg/L)

4090 1030 1440

Hydrochloric acid has not yet been recycled in the course of the mini-plant tests.

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December 2011 13-16

13.2.7 Bleed Treatment

The bleed from the primary process stream will first have vanadium recovered from

solution. MgO can then be added to raise the pH to precipitate chromium (Cr), following

which the filtered solution can be sent for MgCl2 pyrohydrolysis. An assay of bleed

stream solution is presented in Table 13.15. Table 13.16 presents expected

concentrations in the solution after MgO treatment. As mentioned above, Al, Ca, K and

Na were found to be associated with the MgCl2 used in the mini-plant and are not

expected in the commercial plant at the levels shown in Table 13.15. As all of the

solution is evaporated by pyrohydrolysis, no liquid effluent from the process is expected.

Table 13.15: Untreated Bleed stream assay. Note that Al, Ca, K, and Na come primarily as

contaminants from the MgCl2 used in the process

Element Al Ca Cr K Mg Na Ni S Ti V

Concentration

(mg/L) 1600 4000 2000 650 57000 1150 150 75 40 4200

Table 13.16: Expected bleed stream solution after MgO treatment, prior to MgCl2

pyrohydrolysis

Element Al Ca Cr K Mg Na Ni S Ti V

Concentration

(mg/L) <200 <200 <200 <200 60000 <200 <200 <75 <40 <100

It is anticipated that the MgO produced will meet market requirements and provide

added revenue for the project, although this has not been reflected in the current PEA.

13.3 On-going and future work at PRO

Future work will involve scaling up production rates in the mini-plant from approximately

0.3 kg TiO2/day to up to 10 kg TiO2/day. Scale-up planning is already underway. In

addition, a scrubbing SX circuit will be introduced into the titanium removal circuit to

further increase titanium strip liquor purity. Continued work to improve iron strip liquor

concentrations is also ongoing. Higher concentrations of iron in the strip liquor will lower

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December 2011 13-17

the evaporation requirement in the pre-concentration step that precedes pyrohydrolysis.

This would translate into energy savings.

To simulate high levels of V and Cr that will be observed after many operational cycles,

leach solution has been spiked with these elements in mini-plant Campaign 8. These

solutions will be used to operate a vanadium solvent extraction circuit in the mini-plant to

produce a high purity V2O5. In initial mini-plant testing, the vanadium that was available

in solution was too low to make V2O5 and hence the spiked solutions will be used for this

test work.

13.4 METSIM mass balance

METSIM software was used by BBA to develop a general mass balance and perform an

audit of the proposed flowsheet and mass balance provided by PRO. METSIM is an

analytical tool for creating heat, mass and water balances involving multiple unit

operations. While Excel can be used to create a simplified mass balance with a limited

number of elements, METSIM allows for a more detailed tracking of minor elements in

recirculating streams. At this relatively early stage of process development, the model

was built using many assumptions that will require rigorous challenge through the course

of further testing. In effect, it is intended that the model will be refined as each element

of the process becomes better understood. Used as such, the METSIM model can be

applied to rapid prototyping and scale-up exercises.

The main uses of METSIM for this study were to determine fresh water addition, reagent

make-up, the amount of bleed required to control magnesium levels, and the energy

requirements for the pyrohydrolysis units. Reagent make-up was determined based on

assumptions related to reagent losses from dewatering, degradation, evaporation,

general consumption and losses to the bleed stream. The were in turn used to calculate

certain operating expenses presented in Section 21.

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December 2011 13-18

The bleed requirement was determined on the basis of balancing MgCl2 in the circuit to

maintain a leach circuit feed concentration of 225 gpl MgCl2. The output in the bleed

stream was balanced against new inputs being dissolved from the La Blache feed.

Additionally, METSIM was used to determine heat balances around two of the major

energy consuming processes; pyrohydrolysis of iron and magnesium chloride. The iron

pyrohydrolysis energy requirement was determined and validated against published

figures (97, 98)

, while the MgCl2 pyrohydrolysis energy requirement was estimated, but not

validated.

METSIM was also used for troubleshooting during the development of PRO’s process

flowsheet.

13.5 Conclusions on PRO Testwork

The BBA QP responsible for this section is satisfied that the laboratory and mini-plant

testing programs that have been carried out by Process Research Ortech have met the

requirements of a Preliminary Economic Assessment. Originally, the intent had been to

publish a PEA based solely on laboratory testwork; however, the decision to delay the

PEA can be attributed to the rapid progress of the mini-plant.

Demonstration of the chemistry of the CTL Process on a sustained, semi-continuous

basis represents a major milestone in the development of the Project. What the mini-

plant has demonstrated is that the principal components of the hydrometallurgical

process, namely leaching and solvent extraction of iron and titanium are technically valid

and that the process can be operated on a small scale. The recovery of vanadium from

the brine solution has also been demonstrated, albeit in a laboratory setting. The ability

to produce synthetic rutile of very good quality at the desired particle size has also been

demonstrated. For all intents and purposes, a sufficient body of information has been

developed to warrant BBA’s recommendation to continue with the next stage of

development work.

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December 2011 14-1

14. MINERAL RESOURCE ESTIMATES

14.1 Introduction

Met-Chem was requested by Argex Mining to perform a 3D model and to estimate the

resources of the Hervieux-Est and Hervieux-Ouest deposits. The methodology and

results of the resource estimation for the project are described in this chapter.

The resource estimate was performed in accordance with National Instrument 43-101,

Standards of Disclosure for Mineral Projects and the CIM Definition Standards on

Mineral Resources and Mineral Reserves adopted by CIM Council (2005).

Basic geological interpretation, numerical modeling and resource estimation were

performed by M. A. Brulotte, Géo., using Mintec MineSight (Version 5.50-07) mining

software, and were validated by Y. Buro, Eng. and D. Gagnon, Eng.

A preliminary variogram analysis was performed by A. Peralta, Ph.D., Eng., and a

complete variogram analysis was later performed by S. Ibrango, Ph.D., Géo.



into reserves.

14.2 Drill Holes Database

14.2.1 Content of the Database

The present resource estimation is based on the data obtained from drill holes

completed by Consul-Teck Exploration, and includes the results from the last drill

program ended on August 10, 2010. The results from diamond drilling were used in the

geological interpretation and the mineral resource estimate. Met-Chem extracted the

data required for the present 3D modeling and resource estimate from the master

database provided by Consul-Teck Exploration in MS-Excel format (Collar and Assays).

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December 2011 14-2

Table 14.1: Contents of the Drill Holes Database Imported into MineSight

File Fields

Alteration HoleID; From; To; ALT1 (major alteration); ALTC1 (alteration code);

ALT2 (minor alteration); ALTC2

Assays HoleID; From; To; V%; Fe%; Ti%; Sample

Header HoleID; LocationX; LocationY; LocationZ; Lenght; Collar_Dip;

Collar_Azimut; Proj_Loc (project location); Claim_No; Logged_by

Lithology HoleID; From; To; LMRT (major lithology rock type); LMRC (major

lithology rock code); LMLD (major lithology long description)

Minor

lithology

HoleID; From; To; LMIRT (minor lithology rock type); LMIRC (minor

lithology rock code); LMILD (minor lithology long description)

Structure HoleID; From; To; Coreangle1

Survey HoleID; Distance, Azimut, Dip

The Consul-Teck drill holes database contains 137 drill holes, which were all used for

the resource estimate. Table 14.2 presents a summary of the number of samples and

the total length in the main files in the database.

Table 14.2: Samples and Assay Results in the Database

Deposits Number Total Length (meters)

East 77 11 082.8

West 60 9 202.6

East 4 764 4 596.7

West 4 182 4 096.5

East 1 854 1 685.7

West 2 765 2 546.5

East 1 851 1 684.2

West 2 763 2 545.8

East 1 854 1 685.7

West 2 765 2 546.5Fe% Assayed (in ENVLP)

Assays (arg11.005)

Drill holes

Samples (all)

Ti% Assayed (in ENVLP)

V% Assayed (in ENVLP)

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December 2011 14-3

14.2.2 Database Validation

The integrity of the drill holes database was protected by Consul-Teck by restricting

access to it and was validated essentially by using the Gemcom software. The accuracy

of the data entries of the database was checked by Met-Chem with MS-Excel and MS-

Access. Further checking on the soundness of the database was completed by the

validation process built into MineSight when importing the data.

14.2.3 Statistical Analysis (all assays)

Since iron, titanium and vanadium are the major elements of interest for the project, Met-

Chem performed a basic statistical analysis on these. As shown on the graphs, Figure

14.1 and Figure 14.2, two populations of each element are present, one with a low

percentage and one with higher percentage. The values for Hervieux-Est and Hervieux-

Ouest are presented on the same graphs, since the distribution of iron, titanium and

vanadium is identical. As no excessively high value was found, Met-Chem did not use a

capping value.

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December 2011 14-4

Figure 14.1: Distribution of Titanium (Ti%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

500

1000

1500

2000

2500

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

All Assays Cumulative %

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Figure 14.2: Distribution of Vanadium (V%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200

400

600

800

1000

1200

1400

1600

0.0

1

0.0

3

0.0

5

0.0

7

0.0

9

0.1

1

0.1

3

0.1

5

0.1

7

0.1

9

0.2

1

0.2

3

0.2

5

0.2

7

0.2

9

0.3

1

0.3

3

0.3

5

0.3

7

0.3

9


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Figure 14.3: Distribution of Iron (Fe%)

14.2.4 Titanium – Iron Correlation

As shown in Figures 14.4 and 14.5, the correlation between Ti% and Fe% (all assays) in

Hervieux-Est (R2 = 0.965) and Hervieux-Ouest (R2 = 0.986) are excellent.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200

400

600

800

1000

1200

1400

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51


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December 2011 14-7

Figure 14.4: Ti%-Fe% Correlation within the Mineralized Envelope (Hervieux-Est)

Figure 14.5: Ti%-Fe% Correlation within the Mineralized Envelope (Hervieux-Ouest)

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December 2011 14-8

14.3 Compositing

Met-Chem composited all the assays by 10 m benches, but this method did not generate

enough data for the purpose of preliminary variogram analysis. To overcome this issue,

Met-Chem did a composite by length of 5 m (average), which generated a sufficient

number of composites for a preliminary variogram analysis. Classical statistical analysis

was repeated for Ti%, V%, and Fe%, within the main mineralized envelope (I4ZM:

titaniferous magnetite). Table 14.3 presents a summary of the number of 5 m

composites (average) and their total length.

Table 14.3: Composites - 5 m (average) (arg09.005)

Deposits Number

Total Length

(meters)

Drill holes East 77 11 082.8

West 60 9 202.6

Ti% composites (in ENVLP) East 357 1 683.2

West 523 2 544.5

V% composites (in ENVLP) East 357 1 683.2

West 523 2 544.5

Fe% composites (in ENVLP) East 357 1 683.2

West 523 2 544.5

No significant differences were observed in the statistical parameters calculated on the

complete set of assays or on the composites.

For Hervieux-Est, the means of 10.74 Ti%, 0.227 V% and 42.98 Fe% obtained before

compositing compare well with 10.94 Ti%, 0.231 V% and 43.67 Fe% after compositing.

The same observation can be made of Hervieux-Ouest, with means of 11.11 Ti%,

0.252 V% and 43.34 Fe% before compositing, and means of 11.25 Ti%, 0.257 V% and

43.86 Fe% obtained after compositing.

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December 2011 14-9

Figure 14.6: Histogram – Ti% (Hervieux-Est)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Assays 5m Composites

Assays cumulative % Composites cumulative %

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December 2011 14-10

Table 14.4: Basic Statistics – Ti% (Hervieux-Est)

Assays 5 m Composites

Count 1854 357

Mean 10.741 10.947

Standard Error 0.056 0.077

Median 11.6 11.44

Mode 11.9 11.62

Standard Deviation 2.413 1.447

Sample Variance 5.822 2.094

Range 16.06 12.78

Minimum 0.14 0.62

Maximum 16.2 13.4

Confidence Level (95.0%) 0.110 0.151

Figure 14.7: Histogram – Ti% (Hervieux-Ouest)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200

400

600

800

1000

1200

1400

1600

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17Assays 5m Composites


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Table 14.5: Basic Statistics – Ti% (Hervieux-Ouest)


Count 2765 523

Mean 11.111 11.255


Median 11.75 11.7

Mode 12 12.04



Range 16.06 13.79

Minimum 0.09 0.36

Maximum 16.15 14.15


Figure 14.8: Histogram – V% (Hervieux-Est)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800



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Table 14.6: Basic Statistics – V% (Hervieux-Est)


Count 1851 357

Mean 0.227 0.231


Median 0.24 0.24

Mode 0.25 0.25



Range 0.34 0.33

Minimum 0.01 0.01

Maximum 0.35 0.34


Figure 14.9: Histogram – V% (Hervieux-Ouest)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800

900



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Table 14.7: Basic Statistics – V% (Hervieux-Ouest)


Count 2763 523

Mean 0.253 0.257


Median 0.26 0.26

Mode 0.25 0.25



Range 0.37 0.32

Minimum 0.01 0.02

Maximum 0.38 0.34


Figure 14.10: Histogram – Fe% (Hervieux-Est)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800

0

2.5 5

7.5 10

12

.5 15

17

.5 20

22

.5 25

27

.5 30

32

.5 35

37

.5 40

42

.5 45

47

.5 50



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Table 14.8: Basic Statistics – Fe% (Hervieux-Est)


Count 1854 357

Mean 42.986 43.678


Median 45.6 44.98

Mode 46.4 46.36



Range 49.06 46.81

Minimum 1.24 2.45

Maximum 50.3 49.26


Figure 14.11: Histogram – Fe% (Hervieux-Ouest)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200

400

600

800

1000

1200

1400

1600

1800

0

2.5 5

7.5 10

12

.5 15

17

.5 20

22

.5 25

27

.5 30

32

.5 35

37

.5 40

42

.5 45

47

.5 50



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December 2011 14-15

Table 14.9: Basic Statistics – Fe% (Hervieux-Ouest)


Count 2765 523

Mean 43.340 43.866


Median 45.9 45.53

Mode 46.1 46.32



Range 49.93 47

Minimum 0.57 2.12

Maximum 50.5 49.12


14.4 Variograms

A first variography analysis was made during winter 2011 by A. Peralta, PhD., Senior

Mining Engineer at Met-Chem, and the derivate search parameters were used for

resources estimations stated in the report titled “Technical Report NI 43-101 on the

Mineral Resources of the La Blache Property” of May 18, 2011.

This variography study has been revised in September 2011 and only the final results

are reported here. That work has been completed by S. Ibrango, Géo., Ph.D., and

Senior Geologist at Met-Chem. The study provides a comparison between different

composite lengths.

Three scenarios of composite lengths were considered to evaluate the sensitivity of the

model depending upon composite size. The first and second scenarios considered

composites with strict lengths of 5 m and 3 m, respectively, while the third scenario deals

with composites of 5 m length with a tolerance of ± 0.5 m. Due to the good linear

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December 2011 14-16

correlation between iron and titanium, as shown in Table 14.10, only iron was used in

this analysis. New variograms were generated using GemCom’s Surpac (version 6.2)

software. It has been found that experimental variograms based on composites of a fixed

length of 3 m were graphically close and better than those using a composite of fixed-

length of 5 m or a composite of 5 m with a tolerance of ± 0.5 m. Furthermore, a

composite with a fixed length of 3 m provided a sample population with more data, which

gives more accuracy to the results.

Table 14.10: Correlation coefficient between Fe%, Ti% and V% on La Blache Project,

based upon a fixed length (3 m) composite (no tolerance on length)

Fe%-Ti% Fe%-V% Ti%-V%

Hervieux-Est 0.90 0.75 0.80

Hervieux-Ouest 0.90 0.72 0.66

Figure 14.12 to Figure 14.17present the new variograms of major, semi-major and minor

axes for the La Blache Project. For Hervieux-Est and Hervieux-Ouest the continuity of

the mineralization is relatively better defined on the major axis as compared to the two

other axes. Furthermore, the best continuity exists in the major axis of Hervieux-Ouest,

with a range of 106.5 m, as compared to Hervieux-Est, which shows a range of 73 m.

The semi-major axis is relatively better defined on Hervieux-Ouest with a range of 20 m

on a dipping direction of -70° toward a north-west direction, while on Hervieux-Est a

range of 24.4 m was obtained on a dipping direction of -65° toward the northwest, but

with a higher variance as compared to the major axis.

It was not possible to use the sill and the nugget of the semi-major axis to determine the

range of the minor axis, as the gamma values on the minor axis were not of the same

order of magnitude. The variance in this direction is much smaller compared to the

variance in the two other directions that were analyzed. This is due to the lack of

sufficient data for the minor axis, especially so in the case of the Hervieux-Est deposit.

For that axis, the determination of the range was based on the sill of each best

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December 2011 14-17

experimental variogram, without consideration to the sill and the nugget of the semi-

major axis. A range of 20 m has been considered as being appropriate.

Figure 14.12: Variogram on Major Axis (Hervieux-Est)

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Figure 14.13: Variogram on Semi-Major Axis (Hervieux-Est)

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Figure 14.14: Experimental Variogram on Minor Axis (Hervieux-Est)

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Figure 14.15: Variogram on Major Axis (Hervieux-Ouest)

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December 2011 14-21

Figure 14.16: Variogram on Semi-Major Axis (Hervieux-Ouest)

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Figure 14.17: Experimental Variogram on Minor Axis (Hervieux-Ouest)

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The main results of the analysis that was conducted are summarized in Table 14.11. The

nugget effect, which is normally strongly influenced by the used lag is null, while once

again, the range on the major axis is greater in Hervieux-Ouest than in Hervieux-Est.

Considering that the two deposits were drilled with the same spacing, this difference on

the major axis suggests that the mineralization is more continuous on Hervieux-Ouest

than on Hervieux-Est.

Table 14.11: Variogram Model for Hervieux-Est and Hervieux-Ouest (3 m composites)

Total Ranges Orientations

Number of

3 m

composites

Nugget Sill %

Nugget

Major

(m)

Semi

(m)

Minor

(m)

Major

(°)

Semi

(°)

Minor

(°)

Hervieux-

Est 527 0 16.15 0 73 24.4 20 050/00 320/-65 320/25

Hervieux-

Ouest 789 0 19.52 0 106.5 20.5 20 055/00 325/-70 325/20

The anisotropy ratio between the major and semi-major axes is 2.99 in the case of

Hervieux-Est and 5.19 for Hervieux-Ouest. The ratio between the major and the minor

axes is 3.65 on the Hervieux-Est deposit and 5.32 for Hervieux-Ouest.

Due to differences between the two analyses (Preliminary and Detailed), Argex

mandated SGS on September 30, 2011 to review the variography analysis made by Met-

Chem. This review was completed by Michel Dagbert, who examined the variograms

that were based on 3 m composites from both bodies combined and with normalized

gamma values. He concluded on the possibility to use the same variogram parameters

for the two bodies, although in 3D. The recommended parameters for both bodies are

ranges of 50 m along the N60° horizontal strike, 30 m along the average 60° dip to the

N330° and 20 m across dip and strike. However, he commented that the 30 m / 20 m

anisotropy for directions of vertical section planes was not well established.

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Met-Chem is of the opinion that both variogram analyses made on the La Blache

Property after the release of the first version of the technical report on June 2011 give

results with no very significant differences that could strongly influence the resource

estimation. These differences could be used in a next step as part of a sensitivity

analysis, which is ideally applied in any resource estimation process.

14.5 Geological Interpretation

14.5.1 Introduction

Met-Chem completed the geological interpretation on the vertical drill sections of the

Hervieux-Est and Hervieux-Ouest deposits directly on screen in the MineSight software

using the 3D view to assist with the interpretation.

The lithological unit logged as Titaniferous Magnetite was used to draw the contacts of

the mineralized envelope, considering the excellent correlation between this unit and the

Fe, Ti and V values. The contacts of the mineralization with the host anorthosite are

generally sharp.

The bulk of the mineralization in the Hervieux-Est deposit consists of several closely

spaced, discrete, elongate zones, dipping steeply to the SE. Several isolated pods or

lenses were also intersected by the drill holes. Abrupt changes in the width of the

mineralization are observed locally between adjacent sections and are interpreted by

Argex to be controlled by folds.

The Hervieux-Ouest mineralization is essentially contained in two sub-horizontal, rod-

shaped lenses, more massive and rounded than the zones at Hervieux-Est.

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14.5.2 Methodology

The collar elevation was taken by the Consul-Teck geologists using a hand-held GPS,

resulting in a lack of accuracy in the collar elevations. To correct the elevation, the

collars were draped to the topographic surface available from the Ministry of Natural

Resources, Canada (Canadian Digital Elevation Data, 1:50,000 maps). This is

considered as a better way of defining the collar elevations.

The hole-to-hole correlations were guided by a lithological horizon, since a nearly perfect

correlation exists between the iron-titanium mineralization and the titaniferous magnetite.

The interpretation was made on sections 50 m apart. The off-section drill holes were

projected to section using a 25 m projection. Where possible and reasonably expected,

the mineralized envelopes reach the surface or the overburden as defined by the

drill holes.

14.6 Block Modeling

14.6.1 Model Definition

A block model was constructed by Met-Chem to estimate the mineral resources of the

Hervieux-Est and Hervieux-Ouest deposits. The block size is 10 m (major axis, along

strike) by 10 m (minor axis) by 10 m (elevation). In Met-Chem’s opinion, this block size is

considered adequate for the current estimate of narrow mineralized zones.

Table 14.12 presents the details of the block model.

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Table 14.12: Block Model Parameters

Model Limits Minimum Maximum Size (m) Number

X 0 4950 10 495

Y 0 1500 10 150

Z -280 600 10 88

Project Bounds Minimum Maximum

Easting 450448.44 455541.94

Northing 5542658.5 5546234

Elevation -280 600

Model Rotation Origin Angles

Easting 451126.38 333.13

Northing 5542658.5 0

Elevation 0 0

Density,

Mineralization 4.57

Density,

Waste 3.03

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Table 14.13: Block Model Content

Files Name Descriptions

Assays Arg11.003 For interpretation purposes

Assays Arg11.005 For statistical purposes

Composites (5 m) Arg09.005 For interpolation purposes

Composites (3m) Arg09.010 For statistical purposes

Block Model Arg15.005

Gridded Surface Arg13.001 Topographic data

Ellipses N054˚

For interpolation purposes (X rotation) 0˚

Dip -70˚

Partial Tool mspartE.out &

mspartW.out

14.6.2 Density

A density has been calculated from 37 samples selected by Consul-Teck. A density of

3.03 g/cm3 for the non-mineralized rocks and 4.57 g/cm3 for the titaniferous magnetite

were used to convert the volumes into tonnes, based upon testing conducted by Consul-

Teck in 2011(Figure 14.18). Met-Chem recommends carrying out an additional program

of density determinations.

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December 2011 14-28

Figure 14.18: Density Results

14.6.3 Mineralized Envelopes

The mineralized zones were defined by envelopes (ENVLP); Code 1 for the Hervieux-

Est deposit, and Code 2 for the Hervieux-Ouest deposit.

The titaniferous magnetite envelope of Hervieux-Est has an elongate shape dipping at

70° (Figure 14.19 and Figure 14.20). The mineralized body is oriented N054 and was

defined to a depth of about 250 m.

3.03

4.57

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Figure 14.19: Plan View (Hervieux-Est)

Figure 14.20: 3D View (Hervieux-Est)

N

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The titaniferous magnetite envelope of Hervieux-Ouest has an oval shape. The

mineralized body is oriented N054, is about 180 m wide, and was defined to a depth of

about 200 m (Figure 14.21 and Figure 14.22)

Figure 14.21: Plan View (Hervieux-Ouest)

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Figure 14.22: 3D View (Hervieux-Ouest)

14.6.4 Grade Interpolation

The mineralized envelopes were coded into the block model and each block was

assigned a topographic percentage (TOPO %) corresponding to the portion of the block

below the topography as well as a parameter equivalent to the fraction of the block

inside the envelope (ORE %).

The grade interpolation was performed on the preliminary variogram study results, using

the inverse distance weighted squared (IDW2).

The resources in the measured category are defined by blocks that are coded using

four (4) drill holes (minimum of 12 composites) within a search ellipse of 80 m (major) ×

20 m (minor) × 20 m (vertical). The indicated resources are in the blocks that are coded

using three (3) drill holes (minimum of 9 composites), within a search ellipse of 120 m

(major) x × 30 m (minor) × 30 m (vertical). The resources classified as inferred are the

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blocks coded using one (1) drill hole (minimum of 1 composite), within a search ellipse of

180 m (major) × 45 m (minor) × 45 m (vertical).

Table 14.14 presents the parameters used for the grade interpolation.

Table 14.14: Grade Interpolation Parameters

Items Description

Grade interpolation Inverse distance weighted square

Composite By fixed-length of 5 m

Capping of high values N/A

Resources categories Measured Indicated Inferred

Minimum number of composites per block 12 9 1

Maximum number of composites per

block 15 15 15

Maximum number of composites per hole 3 3 3

Ellipse size (major axe) 80 120 180

Ellipse size (minor axe) 20 30 45

Ellipse size (vertical axe) 20 30 45

Number of holes 4 3 1

Ellipse Dip Location

Mineralized envelope – East, striking

N054° -70 Entire model

Mineralized envelope – West, striking

N054° -70 Entire model

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14.6.5 Block Model Validation

To validate the soundness of the block model that was generated, Met-Chem did a basic

statistical analysis of the assays, composites and blocks values within the mineralized

envelopes of the Hervieux-Est and Hervieux-Ouest deposits.

The following figures and tables present Ti%, V% and Fe% distributions (histogram) and

basic statistics. No significant bias seems to have been introduced in the block model.

Figure 14.23: Histogram – Ti% (Hervieux-Est)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17


Block Model Assays cumulative %

Composites cumulative % Block Model cumulative %

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Table 14.15: Basic Statistics – Ti% (Hervieux-Est)

Assays 5 m Composites Block Model

Count 1854 357 1560

Mean 10.741 10.947 10.990

Standard Error 0.056 0.077 0.019

Median 11.6 11.44 11.1

Mode 11.9 11.62 11.38

Standard Deviation 2.413 1.447 0.755

Sample Variance 5.822 2.094 0.570

Range 16.06 12.78 5.04

Minimum 0.14 0.62 7.63

Maximum 16.2 13.4 12.67

Confidence Level (95.0%) 0.110 0.151 0.037

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Figure 14.24: Histogram – Ti% (Hervieux-Ouest)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

500

1000

1500

2000

2500

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17




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Table 14.16: Basic Statistics – Ti% (Hervieux-Ouest)


Count 2765 523 3151

Mean 11.111 11.255 11.215


Median 11.75 11.7 11.46

Mode 12 12.04 11.56



Range 16.06 13.79 7.07

Minimum 0.09 0.36 5.37

Maximum 16.15 14.15 12.44


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Figure 14.25: Histogram – V% (Hervieux-Est)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800

900




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Table 14.17: Basic Statistics – V% (Hervieux-Est)


Count 1851 357 1560

Mean 0.227 0.231 0.234


Median 0.24 0.24 0.23

Mode 0.25 0.25 0.23



Range 0.34 0.33 0.17

Minimum 0.01 0.01 0.16

Maximum 0.35 0.34 0.33


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Figure 14.26: Histogram – V% (Hervieux-Ouest)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800

900

1000




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Table 14.18: Basic Statistics – V% (Hervieux-Ouest)


Count 2763 523 3151

Mean 0.253 0.257 0.260

Standard Error 0.001 0.002 0.0005

Median 0.26 0.26 0.26

Mode 0.25 0.25 0.26



Range 0.37 0.32 0.19

Minimum 0.01 0.02 0.14

Maximum 0.38 0.34 0.33


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Figure 14.27: Histogram – Fe% (Hervieux-Est)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800




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Table 14.19: Basic Statistics – Fe% (Hervieux-Est)


Count 1854 357 1560

Mean 42.986 43.678 43.808


Median 45.6 44.98 44.23

Mode 46.4 46.36 43.7



Range 49.06 46.81 18.51

Minimum 1.24 2.45 30.32

Maximum 50.3 49.26 48.83


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Figure 14.28: Histogram – Fe% (Hervieux-Ouest)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200

400

600

800

1000

1200

1400

1600

1800




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Table 14.20: Basic Statistics – Fe% (Hervieux-Ouest)


Count 2765 523 3151

Mean 43.340 43.866 43.688


Median 45.9 45.53 44.38

Mode 46.1 46.32 45.23



Range 49.93 47 27.57

Minimum 0.57 2.12 21.01

Maximum 50.5 49.12 48.58


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14.7 Mineral Resources Classification

As requested by Argex, Met-Chem used a cut-off grade of 11% Ti-equivalent to estimate

Hervieux-Est and the Hervieux-Ouest resources.

Metal Equivalent formulas developed by BBA for the Hervieux project are as follows:

Titanium Grade Equivalent (Iron)

Titanium Grade Equivalent (Vanadium)

Overall Titanium Grade Equivalent

= + + Ti% grade

In this analysis, recovery factors of 90% for iron, 85% for titanium, and 90% for

vanadium were assumed. Met-Chem did not verify the process and cannot comment on

the metallurgical process.

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The stoichiometric factors used to convert TiO2 (1.6685), V2O5 (1.7852) and Fe2O3

(1.4297) are in accordance with the Mendeleïev Table (molecular weight / atomic

weight).

Prices for TiO2 (2,500 US$/t), V2O5 (14,500 US$/t) and iron ore (100 US$/t) were applied

to the work described in this section. Please note that these numbers do not match those

used for the preliminary economic analysis (Sections 19, 22).

The resources in each block are classified through grade interpolation, using the

preliminary geostatistical study results (i.e. variograms). Mineral resources for Argex

based on these interpolation parameters are presented in Table 14.21 and Table 14.22.

Table 14.21: Resource Estimation Summary for Hervieux-Est (Using a Ti metal equivalent cut-off of 11%)

Resources Categories Volume Tonnes TI% V% FE%

Measured 538 000 2 458 000 11.10 0.24 44.18

Indicated 2 265 000 10 343 000 11.07 0.24 43.99


Inferred 2 189 000 9 883 000 10.93 0.23 43.41

Table 14.22: Resources Estimation Summary for Hervieux-Ouest (Using a Ti metal equivalent cut-off of 11%)

Resources Categories Volume Tonnes TI% V% FE%

Measured 1 275 000 5 822 000 11.28 0.25 43.97

Indicated 3 003 000 13 648 000 11.26 0.26 43.98


Inferred 1034000 4700000 11.17 0.27 43.36

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into reserves.

14.8 Conclusions

The classification of the mineral resource for the Hervieux-Est and Hervieux-Ouest

project was based on the geological and grade continuity of the titaniferous magnetite

zones. The CIM Definitions, Standards on Mineral Resources and Mineral

Reserves (2010) have been used for the resource classification.

Based on verifications in the field and on the information provided for this assessment,

Met-Chem believes that the geological interpretation and the data are valid. Overall, it is

Met-Chem’s opinion that the parameters assumptions, geological model and data reflect

a reasonable approach, and are representative of the type and setting of iron-titanium

mineralization in the deposit of the La Blache property. Met-Chem believes that the

resources estimate is reasonable and appropriate.

Met-Chem is unaware of any environmental, marketing, or other relevant issues that

may materially affect the present mineral resources estimate completed by Met-Chem.

No mining, metallurgical or other factors are known to Met-Chem that may materially

affect the present resources estimate completed by Met-Chem for the Hervieux-Est and

Hervieux-Ouest deposits.

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15. MINERAL RESERVE ESTIMATES

No mineral reserves are declared in this Technical Report.

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16. MINING METHOD

The mining of Argex’s La Blache Fe-Ti-V deposit will follow the standard practice of an

open-pit operation with the conventional drill and blast, load and haul cycle, using a

drill / truck / excavator mining fleet, and supported by a fleet of auxiliary equipment. The

run-of-mine (RoM) will be drilled, blasted and loaded by hydraulic excavators and

delivered by trucks to a mobile jaw crusher or temporary stockpiles located near the

crusher. The crushed ore will then be loaded onto transport trucks and delivered to the

shipping port located in Baie-Comeau, approximately 120 km from the mine site. Waste

rock material will be hauled to the waste disposal areas near the pits.

It has been assumed that the mining of the La Blache deposit will be carried out by a

mining fleet that will be leased and maintained by the Owner. An alternative option would

be to contract out all activities related to mining, but this was not incorporated into the

PEA.

The La Blache deposit is divided into two mineralized areas; Hervieux-Est and Hervieux-

Ouest, which are located approximately 2 km apart.

16.1 Resource Block Model

The mining engineering work required for the PEA, including the pit optimization,

engineered pit design, mine planning and economic analysis, is based on the MineSight

integrated mine software using the block model prepared by Met-Chem. Met-Chem also

provided BBA with the topographic contour lines at every 4 m.

The block size used in the model is 10 m x 10 m x 10 m and contains data for each ore

block, including Fe%, Ti%, V%, density, and resource classification; more specifically,

measured, indicated or inferred resources, as well as other related variables such as the

geological interpretation of the deposit (e.g. envelopes, composites, etc.)

After importing the block model into MineSight, a verification of the total mineral resources

by category was performed to validate the total resources provided by Met-Chem.

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16.1.1 Model Coordinate System

The model coordinate system used by BBA in MineSight is the UTM NAD83.

16.2 Open-pit Optimization

To develop an optimal engineered pit design for the La Blache deposit, an optimized pit

shell was first prepared using the Lerchs-Grossman 3D routine in MineSight (LG 3D).

The LG 3D pit optimizer algorithm is a true pit optimizer, based on dynamic programming

of the graph theory that is used to generate an optimized pit shell from the 3D block

model. The basic optimization principle of the algorithm operates on a net value

calculation for each block in the model, in other words revenue from sales less total

operating cost, including; mining cost, processing and transportation costs, and general

and administration costs (G/A).

In accordance with the guidelines of the National Instruments NI 43-101 on Standards of

Disclosure for Mineral Projects and the Canadian Institute of Mine Metallurgy and

Petroleum Definition Standards for Mineral Resources and Mineral Reserves, blocks

classified in the measured, indicated and inferred categories are allowed to drive the pit

optimizer for a PEA study. The initial pit optimization parameters used in the LG 3D

routine are listed in Table 16.1.

Table 16.1: Preliminary Pit Optimization Parameters

Type of Activity Costs ($/t)

Mining Cost($/t mined) 2.50

Metallurgical Processing ($/t milled) 400.00

Transportation Cost ($/t milled) 15.00

General and Administration ($/t milled) 2.00

Additional parameters used to define the pit optimization included a selling price of

$US 100/t for Fe2O3, $US 2,500/t for TiO2 and $US 14,500/t for V2O5. The selling prices

were later revised for the financial analysis (see Section 19), without a reiteration of the

model. The assumed recoveries that were used were 90% for Fe2O3 and V2O5 and 87%

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December 2011 16-3

for TiO2. The currency exchange rate was assumed to be C$1.00= US$1.00. An overall pit

slope of 48 was used for the pit optimization.

16.2.1 Density

According to the specific gravity tests supervised by Met-Chem on 37 pieces of half core

using the weight-in-water and weight-in-air techniques, densities of 3.03 t/m3 and

4.57 t/m3 were determined for waste rock and mineralized rock, respectively.

16.2.2 Mill Cut-Off Grade

The breakeven cut-off grade or milling cut-off grade (CoG) is used to classify the material

inside the pit limits as in-pit resource or waste. Since the material is located inside the pit,

the breakeven cut-off grade excludes the mining cost and corresponds to the grade

required to cover the costs of processing, G/A, and other costs related to transport and

ship loading only.

16.2.2.1 Titanium Grade Equivalence (%TiEq)

La Blache is a titanium project with both iron and vanadium contents. To take into account

the economic values of the vanadium and iron products in the calculation of the cut-off

grade and to simplify the design aspect of the mine, all grades have been converted to a

titanium equivalent grade. Titanium grade equivalence (%TiEq) was calculated as per the

equations presented in Section 14 for %TiEq.

Using the economic parameters shown in Table 16.1, as well as the selling prices and

recoveries presented in this section, the mill cut-off was calculated at 11.76%TiEq.

16.2.3 Theoretical Pit Shell

Using the parameters presented above, the LG 3D pit optimizer was carried out to

generate an optimum pit shell having the highest undiscounted cash flow. A plan view of

the resulting LG 3D pit shells for the Hervieux-Est and Hervieux-Ouest areas is shown in

Figure 16.1. As can be seen in this figure, the Hervieux-Ouest sector is the main mining

area, while the Hervieux-Est sector is divided into two separate and smaller mining areas.

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December 2011 16-4

The theoretical pit shell resulting from the LG 3D optimization is only preliminary in nature

and does not represent a practical design for mining, since it does not include an access

ramp system or proper detailed pit slope and benching arrangement. The optimized pit

shell will be used to serve as a guide for the engineered mine design, completed with the

required operational haulage ramp, proper pit slope, and benching arrangement as

presented in this section.

Figure 16.1: LG 3D Optimized Pit Shell

16.3 Detailed Mine Designs

The engineered mine designs were carried out using the LG 3D pit shell as a guide. The

proposed pit designs include the entire practical geometry required in a mine, including pit

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December 2011 16-5

access and haulage ramp to all pit benches, pit slope design, benching configurations,

smoothed pit walls and catch berms as described in Table 16.2.

Table 16.2: Detailed Mine Design Parameters

Parameter Value

Benching Arrangement 2 x 10 m

Berm Width 11.42 m

Inter-Ramp Angle (IRA) 50°

Bench Face Angle (BFA) 75°

Ramp Width (1-lane) 20 m

Ramp Width (2-lane) 25 m

Gradient 10%

The in-pit haulage ramp is designed at 25 m wide to accommodate 46-tonne class off-

highway trucks, with allocation for safety berms and drainage ditch. This ramp will provide

sufficient room for two-way traffic to maximize the truck cycle time and productivities. A

single lane ramp of 20 m wide will be used for the last benches in the pit bottom, where

double lane traffic is not required. This is to minimize the overall stripping ratio of the pit.

All in-pit ramps have been restricted to a 10% grade. The ramps exit to the north side of

the pit to facilitate an easy and short access to the waste rock piles.

The Hervieux-Ouest pit is approximately 800 m long by 400 m wide and 130 m deep. The

western pit of Hervieux-Est, designated Hervieux-Est 1, is approximately 500 m long by

350 m wide by 120 m deep, while the eastern pit of Hervieux-Est, designated Hervieux-

Est 2, is approximately 650 m long by 275 m wide and 100 m deep. Figure 16.2 and

Figure 16.3 show plan views of the Hervieux-Ouest pit, as well as Hervieux-Est 1 and

Hervieux-Est 2 pits. Figure 16.4 to Figure 16.6 present cross-sections of the detailed pits

versus the optimized pit for the Hervieux-Est and Hervieux-Ouest areas. In-pit resource

blocks above a cut-off grade of 11.76%TiEq are shown in grey color.

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Figure 16.2: Detailed Pit Design for Hervieux-Ouest

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Figure 16.3: Detailed Pit Design for Hervieux-Est

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Figure 16.4: Hervieux-Ouest Pit and LG Optimization Typical Cross Section

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Figure 16.5: Hervieux-Est 1 Pit and LG Optimization Typical Cross Section

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Figure 16.6: Hervieux-Est 2 Pit and LG Optimization Typical Cross Section

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16.4 In-Pit Resources Estimate

16.4.1 Dilution and Loss Factors

Given the size and geometrical characteristics of the deposit, the dilution and loss factors

have been assumed both at 5% for the PEA. These assumptions are based on a

comparison of the characteristics of the deposit and the mining method with similar

projects.

16.4.2 In-Pit Resources in Engineered Pit Design

Based upon a cut-off grade of 11.76% TiEq, the total in-pit resources have been estimated

at 24.7 Mt in the measured and indicated categories at an average grade of 10.69%Ti,

41.94%Fe and 0.24%V, and 4.7 Mt of in-pit resources in the inferred category at an

average grade of 10.67%Ti, 41.76%Fe and 0.25%V. The total waste material amounts to

69.4 Mt of waste, resulting in a stripping ratio of 2.36 tonnes of waste per tonne of RoM.

Table 16.3 presents a detailed summary of the in-pit mineral resources for Hervieux-Est

and Hervieux-Ouest pits by material classes.

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Table 16.3: La Blache In-Pit Resources Estimate

Resources Tonnage Ti Fe V

Category (kt) (%) (%) (%)

Pit Design Hervieux-Ouest

Measured 5 390 10.74 41.84 0.24

Indicated 10 078 10.74 41.89 0.25

M+I (In-Pit Resources) 15 468 10.74 41.87 0.25

Inferred 3 109 10.66 41.46 0.26

Rock 36 145

Strip Ratio (t/t) 1.95

Pit Design Hervieux-Est 1

Measured 1 582 10.63 42.30 0.24

Indicated 3 840 10.56 42.08 0.23


Inferred 369 10.44 41.68 0.22

Rock 20 226


Pit Design Hervieux-Est 2

Measured 840 10.46 41.70 0.22

Indicated 2 928 10.67 41.99 0.22


Inferred 1 251 10.76 42.56 0.23

Rock 13 059


Total In-Pit Resources

Measured 7 811 10.69 41.92 0.24

Indicated 16 846 10.69 41.95 0.24


Inferred 4 729 10.67 41.76 0.25

Rock 69 430


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Notes

1. In-Pit Mineral Resources are exclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability;

2. Cut-Off Grade of 11.76% TiEq;

3. In-Pit Resources estimates include 5% dilution at 0% Ti, 0% Fe and 0% V;

4. In-Pit Resources are calculated using 95% of mine recovery.

16.5 Mine Production Schedule

A mine production schedule was prepared for the development and the operation of the

Project. The mining production schedule for the pit is based on a pre-stripping period of

approximately 9 to 12 months. According to the total in-pit resources available, the life of

mine should extend up to 30 years, but the financial analysis for the PEA was limited to 25

years and consequently the production schedule was developed for this time period only.

After careful scrutiny of the mining strategy and access, it was agreed that initial mining

will begin in the Hervieux-Ouest area as large in-pit resources are available at a low

stripping ratio. The Hervieux-Est pits would be developed as the Hervieux-Ouest pit is

being depleted to ensure a smooth transition. A mobile crusher will be used to maximize

efficiency of the project.

The mining schedule is based on a processing rate as follows:

Years 1-3: after ramp-up of pre-commercial demonstration plant

Approximately 95,000 tpy of RoM is required to make 15,000 tpy of TiO2

Years 4-5: after first expansion (Expansion 1)

Approximately 480,000 tpy of RoM is required to make 75,000 tpy of TiO2,

Year 6+: after second expansion (Expansion 2)

Approximately 1,250,000 tpy of RoM is required to make 195,000 tpy TiO2

Argex Mining Inc.


December 2011 16-14

To optimize the operational stripping ratio in the early years of the project and to increase

the net present value of the project, an optimized pit shell for a starter-pit, representing

approximately four years of mining, was generated using the LG 3D MineSight routine.

This optimized starter-pit pit shell is presented in Figure 16.7 and was used as a guide to

prepare the first few years of the mine plan.

The total combined RoM and waste production starts at approximately 360,000 tpy in

Year 1, and ramps up to a maximum production rate of 5.7 M tonnes in Year 10.

The production schedule is presented in Table 16.4.

Figure 16.7: Hervieux-Ouest Detailed Mine Design and Starter Pit

Argex Mining Inc.


December 2011 16-15

Table 16.4: Mine Plan: 195,000 tpy of TiO2

Cut-Off Grade of 11.76% Ti Equivalent 5% Dilution and 5% Resource Loss

Year ROM (1) Ti Eq. Ti V Fe WASTE STRIP

(tonnes) (%) (%) (%) (%) (tonnes) RATIO

Y0 0 366 098

Y1 91 525 14.67 11.28 0.28 42.82 228 811 2.5

Y2 93 512 14.38 11.03 0.28 42.46 256 223 2.7

Y3 93 512 14.38 11.03 0.28 42.46 265 574 2.8

Y4 473 527 14.13 10.85 0.27 42.10 1 515 287 3.2

Y5 479 668 14.01 10.76 0.26 41.81 1 554 123 3.2

Y6 1 281 593 13.63 10.48 0.25 40.88 4 165 177 3.3

Y7 1 263 430 13.80 10.64 0.25 41.45 4 358 835 3.5

Y8 1 255 750 13.88 10.71 0.25 41.66 4 332 339 3.5

Y9 1 246 012 13.93 10.76 0.25 41.80 4 585 324 3.7

Y10 1 262 374 13.79 10.65 0.25 41.48 4 481 429 3.6

Y11 1 263 882 13.74 10.60 0.25 41.31 4 196 087 3.3

Y12 1 275 490 13.65 10.54 0.25 41.03 4 145 343 3.3

Y13 1 272 056 13.63 10.53 0.24 41.02 3 879 772 3.1

Y14 1 262 256 13.74 10.63 0.24 41.50 3 660 543 2.9

Y15 1 243 669 13.88 10.76 0.24 41.98 3 432 526 2.8

Y16 1 237 597 13.98 10.85 0.24 42.32 3 279 632 2.7

Y17 1 226 796 14.09 10.94 0.24 42.71 2 981 114 2.4

Y18 1 220 232 14.19 11.01 0.25 43.02 2 830 939 2.3

Y19 1 254 380 14.15 10.97 0.25 43.01 2 809 810 2.2

Y20 1 260 978 13.73 10.68 0.23 42.13 2 711 103 2.2

Y21 1 248 452 13.85 10.77 0.23 42.42 2 621 749 2.1

Y22 1 261 242 13.74 10.65 0.23 42.53 2 497 259 2.0

Y23 1 299 541 13.31 10.32 0.19 35.94 2 313 183 1.8

Y24 1 275 285 13.29 10.37 0.13 25.07 1 581 353 1.2

Y25 1 273 898 13.48 10.54 0.22 41.62 804 055 0.6

TOTAL 26 416 657 13.79 10.68 0.24 40.78 69 853 688 2.64

Note:

1. Production rate of TiO2 : Y1-Y3 = 15,000 tpy, Y4-Y5 = 75,000 tpy, Y6+ = 195,000 tpy;

2. Recovery of TiO2 = 87%;

Argex Mining Inc.


December 2011 16-16

16.6 Waste Material Management

During the pre-production and production stages of the Project, waste material will be

removed and placed onto rock piles close to the pit areas. The design of the rock piles for

the PEA was carried out on the basis of the total amount of waste excavated from all of

the pits. No assumptions were made in regards to the waste rock being put to other uses.

At this stage of the study, no overburden material is included in the block.

16.6.1 Waste Pile Design

Considering the distance between the two Hervieux zones, two waste rock piles were

designed according to the respective waste requirements of each mining area, which have

been designated West rock pile and East rock pile. Each rock pile is located close to the

mine to minimize the haulage distance and to reduce costs. The West and East waste

piles have a total capacity of 15.5 Mm3 (36.2 Mt) and 14.3 Mm3 (33.3 Mt), respectively,

using the following design parameters:

Face angle: 35°

Bench height: 10 m

Berm width: 8 m

Swell factor: 30%

Number of benches: 7

The proposed location of the rock piles and the surface infrastructure with the engineered

pit designs are shown in Figure 16.8 in a plan view and in Figure 16.9 in 3D view.

Argex Mining Inc.


December 2011 16-17

Figure 16.8: Mine Site Plan View

Argex Mining Inc.


December 2011 16-18

Figure 16.9: Mine Site 3D View

Argex Mining Inc.


December 2011 16-19

16.7 Mine Operation

The La Blache deposits will be mined using conventional open-pit mining methods, based

on a truck / excavator operation. All equipment will be diesel powered.

Using the production schedule presented in Table 16.4, the mining fleet requirement was

calculated. All equipment is assumed to be owned by Argex and operated and maintained

by Argex personnel. The mine will operate on 2 × 12-hour shifts per day, 7 days per week

and 360 days per year, with two crews rotating on a 1-week (in / out) schedule. The

selection of the primary mining fleet is based on the production rate, mechanical availability

and utility factors of the equipment, as well as the average cycle time estimates based on

annual haulage profiles.

The primary mining fleet consists of the following:

The main loading equipment is the hydraulic excavator CAT 390D or equivalent with

a rated bucket capacity of 6 m3;

The support loading equipment is a wheel loader CAT 988H class or equivalent. The

flexibility of the loader, with its fast response time, justifies its use in replacing a

shovel. It will also be used to support the auxiliary loader around the stockpile areas

as well as for the loading of the crushed material onto transport trucks;

The dump truck fleet is based on the CAT 772 or equivalent, with a 46-tonne

payload (50-tonne trucks), which is well matched with the 6 m3 hydraulic excavator;

Production drilling will be accomplished using a fleet of 5½ inch diesel blast hole

drilling rigs.

Argex Mining Inc.


December 2011 16-20

16.7.1 Drilling

The mineralized zones will be drilled with 5-½ inch diameter holes on a drilling pattern of

4.0 m spacing x 4.5 m burden. Waste rock areas will use the same hole diameter, but a

slightly larger drilling pattern of 5.0 m x 5.5 m. The spacing and burden for the

mineralized zone is made tighter to produce better fragmentation and selectivity.

Holes will be drilled to a total depth of 6.0 m, including 1.0 m of sub-drilling. A stemming

height of approximately 1.5 m will be used to maximize the explosive column’s

effectiveness. Based on the production schedule, only one drill is required.

16.7.2 Blasting

Blasting will be executed under a contract with an explosive company that will supply

blasting materials and technology, as well as ensure the storage and delivery of explosive

products. Blasting will be accomplished using 100% emulsion type explosive production

with an average density of 1.25 g/cm3.

Based on the drilling patterns listed above, the powder factor is estimated to be

0.21 kg/tonne. The explosives will be trucked from a local facility owned by the explosives

supplier on a just-in-time basis. The explosives contractor will be responsible for the

trucking of the explosives as well as providing a down-the-hole service.

The total cost per tonne, including explosives manufacturing, transport, down the hole

service and related labour fees has been estimated at $0.24 per tonne of blasted material.

16.7.3 Loading and Hauling

Production will be carried out using a fleet of 46-tonne capacity dump trucks and hydraulic

excavator with a bucket capacity of 6 m3. This fleet combination should allow for 2 pass

loading of trucks hauling ore and 3-4 pass loading of trucks hauling waste. The number of

trucks operating at any given time is dependent upon the annual production rate and

varies over the course of the life of mine.

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December 2011 16-21

Loading operations will also be assisted by a wheel loader to maximize the flexibility of the

operation. The loader will be used as a replacement for the excavator in down-time

situations as well as for other tasks involving material displacement, such as assisting the

auxiliary loader with the loading of crushed material onto transport trucks destined for the

ship loading port in Baie-Comeau.

16.7.4 Equipment Annual Fleet Requirements

Based upon dump truck specifications, excavator and drill productivity data, as well as

equipment availability, haulage distances and production requirements, the annual fleet

requirements for the major mine equipment types were determined.

The requirements for auxiliary support equipment were determined primarily based on the

scale of the operation, the size and number of active waste rock piles, and length of haul

roads to be maintained. The main auxiliary fleet will consist of the following:

CAT D7 track type dozer;

CAT 14M motor graders;

Water truck.

The complete list of major mine and auxiliary support equipment is listed in Table 16.5.

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December 2011 16-22

Table 16.5: Annual Major Mine Equipment Requirements

Type PP Yr1 Yr2 Yr3 Yr4 Yr5 Yr6 Yr7 Yr8 Yr9 Yr10 Yr11 Yr12 Yr13 Yr14 Yr15 Yr16 Yr17 Yr18 Yr19 Yr20 Yr21 Yr22 Yr23 Yr24 Yr25

Hydraulic Excavator 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Wheel Loader 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Haul Truck 1 1 1 1 2 2 3 3 3 3 3 3 2 2 2 2 2 2 4 5 5 5 5 5 5 5

Drill Dth 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Track Dozer 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Motor Grader 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Water Truck 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Wheel Loader/Stockpile 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Prime Mover for Low Bed 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Service Truck 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Tire Handler Attachment 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Crew Cab, Pick up 3/4 t 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Single Cab Pick-up 3/4 t 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1

Lighting Tower 4 Post 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2

Total Fleet 14 14 14 14 17 17 18 18 18 18 18 18 17 17 17 17 17 17 19 20 20 20 20 20 20 20

Argex Mining Inc.


December 2011 16-23

16.7.5 Mine Personnel Requirements

The manpower requirements for the mine include all of the hourly staff working in open-pit

operations that are required for the operation, and maintenance of all of the equipment

involved with or supporting mining activities, as well as the salaried engineering, geology

and supervisory staff.

The number of hourly personnel reaches a peak of 49 in Year 21. A complete list of the

hourly personnel requirements are listed in Table 16.6.

The number of salaried employees is 18. The mine salaried staff requirements over the

life of mine are presented in Table 16.7.

The number of operators required for the major mining equipment (haul trucks, shovels,

and dozers) was determined according to the number of operating units and the number of

rotations, during which the equipment is in operation. Most of the operators for the major

mine equipment are based on a four crew rotation. Hourly maintenance employee

requirements were determined based on the number of equipment that must be

maintained.

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December 2011 16-24

Table 16.6: Annual Hourly Personnel Requirements

Mine Hourly Staff PP Yr1 Yr2 Yr3 Yr4 Yr5 Yr6 Yr7 Yr8 Yr9 Yr10 Yr11 Yr12 Yr13 Yr14 Yr15 Yr16 Yr17 Yr18 Yr19 Yr20 Yr21 Yr22 Yr23 Yr24 Yr25

Open pit operations

Shovel / Loader Operator 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Haul Truck Operator 2 2 2 2 7 7 9 9 8 8 7 7 7 7 7 6 7 6 13 15 15 17 17 16 15 15

Drill Operator 1 1 1 1 2 2 2 2 2 2 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2

Track Dozer Operator 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Grader Operator 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Water Truck Operator 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Other Auxilliary Equip. 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

General Labour 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Janitor 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal

16 16 16 16 21 22 23 24 23 22 21 22 21 21 21 20 21 20 28 30 30 32 32 31 30 30

Mine Maintenance

Field General Mechanic 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Field Welder 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Field Electrician 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Shovel Mechanic 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Shop Mechanic 2 2 2 2 2 2 3 3 3 2 2 2 2 1 1 1 1 1 2 3 3 3 3 3 3 3

Mechanic Helper 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Welder-machinist 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Fuel/Lube/Service Truck 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

General Labour 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2

Janitor 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Tool Crib Attendant 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Subtotal

12 12 12 12 15 15 16 16 16 15 15 15 15 14 14 14 14 14 15 17 17 17 17 17 17 17

Total Hourly Labor 28 28 28 28 36 37 39 40 39 37 36 37 36 35 35 34 35 34 43 47 47 49 49 48 47 47

Argex Mining Inc.


December 2011 16-25

Table 16.7: Salaried Personnel Requirements

MINE SALARIED STAFF No.

Open-Pit Operations

Mine Superintendant 0

Mine Shift Foreman 4

Drill and Blast Foreman 1

Blaster 0

Dispatcher 0

Production / Mine Clerk 2

Mine Maintenance

Maintenance Superintendant 0

Maintenance Planner 0

Maintenance Foreman 2

Maintenance Clerk 1

Mine Engineering

Chief Engineer 0

Senior Mine Planning Engineer 1

Pit Engineer 1

Env. / Water Management Eng. 0

Technician (Mining Software) 1

Surveyor 1

Clerk 0

Geology

Chief Geologist 0

Geologist 1

Grade Control Geologist 1

Technician 1

Sampler 1

Clerk 0

TOTAL 18

Argex Mining Inc.


December 2011 17-1

17. RECOVERY METHODS

17.1 Introduction

A concept for exploiting the La Blache resource was developed, based upon the staged

implementation of processing plant modules. The first module is a pre-commercial

demonstration plant, designed to produce upwards of 15,000 tpy of TiO2. This capacity

of plant was selected on the basis of a single, large, commercially-available spray

roaster pyrohydrolysis unit. This technology is used to recover iron oxide and

hydrochloric acid (HCl) from the iron chloride solution generated by the process. Upon

successful demonstration of the pre-commercial plant, the current plan calls for the

construction of three 60,000 tpy TiO2 modules. The initial 15,000 tpy plant was assumed

to continue to be operated during the entire life of the Project, which was assumed to run

for 25 years for the purpose of the economic analysis. Over the course of a six year

ramp-up phase, the production capacity will grow to an overall 195,000 tpy TiO2. The

following table presents the expected production capacity with increasing number of

modules brought into service.

Table 17.1: TiO2 Production Capacity of Hydrometallurgical Modules

Year Years 1-3 Years 4-5 Years 6-25

15,000 tpy Module 15,000 15,000 15,000

60,000 tpy Module - 60,000 60,000

Two 60,000 tpy Modules - - 120,000

Total Annual TiO2 Production 15,000 75,000 195,000

17.2 General Overview of Recovery Method

As described in Section 16, the run-of-mine (RoM) from the La Blache deposit is crushed

using a movable crusher located at site. The crushed RoM is then trucked to Baie-

Comeau, where a stockpile is maintained for ship-loading at the Port of Baie-Comeau.

Transport of the crushed La Blache RoM to the Bécancour Waterfront and Industrial

Park will be by self-unloading barge (approx. 25,000 dwt). At Bécancour, the feed

material is again transferred to trucks, which will bring it to a stockpile at the TiO2

Industrial Plant.

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December 2011 17-2

Figure 17.1 outlines the proposed metallurgical flowsheet. The process (CTL Process)

for recovering titanium dioxide (TiO2), iron and vanadium co-products is based upon an

atmospheric leach of the La Blache RoM, which will have been further crushed and

ground to 80% passing 200 mesh (P80 = 75 µm). Leaching takes place at 70oC using a

mixed chloride brine solution comprised of hydrochloric acid (HCl) and magnesium

chloride (MgCl2). This acid/brine mixture dissolves the titaniferous magnetite; leaching

practically all of the iron, titanium, and vanadium into solution, leaving little in terms of

residue for disposal (~15%). Each of these components is recovered as the pregnant

leach solution (PLS) is passed through successive extraction stages. This recovery

process involves the use of solvent extraction technology, where the PLS is contacted

with successive organic extractants to selectively load the metal species into the organic

phase. This is then followed by their extraction (or stripping) back into an aqueous

phase. In this manner the iron (Fe) and titanium (Ti) are separated from the PLS. These

solvent extraction steps produce concentrated and purified aqueous solutions, which are

then processed for metal recovery and acid regeneration. An iron oxide (Fe2O3) powder

is recovered from iron chloride solution by spray roasting pyrohydrolysis. Hydrated

titanium dioxide (TiO2.H2O) is recovered by thermal hydrolysis (precipitation) from a

titanium chloride solution. Similarly, vanadium is recovered by solvent extraction of a

bleed stream from the main circuit and is precipitated from solution as ammonium

metavanadate (NH4VO3)

In due course of these recovery steps, the acid/brine mixture is regenerated and

returned to the leaching step. In the CTL Process, evaporation is also required to

maintain the overall water balance and desired brine chemistry. These two components,

regeneration and evaporation, are the principal energy drivers in this process. A bleed

treatment strategy is also needed to control the build-up of salts in the process (e.g.

MgCl2, CaCl2, AlCl3). In so doing, other potentially deleterious elements, for example

chromium (Cr), are also eliminated. Solid waste from the process includes the leach

residue and a by-product of magnesium oxide (MgO), which will also contain the Ca, Al,

and other minor elements that are bled from the process. At this stage of process

development, liquid effluent from the TiO2 Industrial Plant is assumed to be confined to

excess wash-down water and precipitation collected from the site.

Argex Mining Inc.


December 2011 17-3

Crushing &

Grinding

Leaching 1 & 2

S/L

Fe SX (Loading) Fe SX (Stripping)

Ti SX (Loading) Ti SX (Stripping)

V SX (Loading) V SX (Stripping)

Iron

pyrohydrolysis

Titanium

Hydrolysis

Vanadium

Crystallization

Solid

Residue

Loaded

organic

Stripped organic

Stripped organic

Stripped organic

Loaded

organic

Loaded

organic

Ra

ffin

ate

Ble

ed

Ble

ed

Le

ach

Liq

uo

r

Fe solution

Ti solution

V solution

Fe2O3 treatmentFe2O3

TiO2 pigment

production

TiO2

V2O5 Chemical

production

MgCl2

pyrohydrolysisMgO residue

Regenerated HCl to leaching

Raffinate to leaching



A

A

B

A

C

B

A Regenerated HCl to leaching

Raffinate bleed to leaching

Fresh reagents to leaching

Figure 17.1: Simplified flowsheet for CTL metallurgical plant

Argex Mining Inc.


December 2011 17-4

17.3 Process Design

The overall process design criteria is presented in Table 17.2.

Table 17.2: La Blache Process Design Criteria

Criteria 15,000 tpy

Plant Expansion 1 Expansion 2 Unit

General:

Throughput 92 000 460 000 1 196 000 tpy

11.4 57.1 148.4 tph

Utilization 92 92 92 %

Head Grades:

Ti Grade 11 %

Fe Grade 42 %

V Grade 0.25 %

Recovery:

Ti Recovery 87 %

Fe Grade 90 %

V Recovery 90 %

Production:

Nominal TiO2 15 000 75 000 195 000 tpy

Design TiO2 15 000 75 000 195 000 tpy

Nominal Fe2O3 50 000 249 000 646 000 tpy

Design Fe2O3* 700 000 tpy

Nominal V2O5 370 1 850 4 800 tpy

Design V2O5* 5 000 tpy

* Fe2O3 briquetting and V2O5 production circuits were designed for full production

What follows is a description of each of the operating areas required for the

transformation of the RoM from La Blache into titanium dioxide pigment, agglomerated

iron oxide, and a vanadium chemical product. Unless otherwise noted, throughputs and

volumetric flows are shown for the 15,000 tpy TiO2 pre-commercial demonstration plant.

Argex Mining Inc.


December 2011 17-5

17.3.1 Primary Crushing and Transportation

At the mine site, a mobile jaw crusher will be used to crush the RoM. The crusher will be

supplemented with a rock breaker unit, capable of breaking down any large boulders that

cannot be processed directly by the jaw crusher and a front-end loader is used to

transfer the RoM to a conveyor that feeds the crusher. The crushed RoM is then

transferred by the same front-end loader to 40-tonne capacity trucks, equipped with 20-

tonne capacity pups (“B-trains”) for transport to Baie Comeau. The transportation

distance is roughly 120 km from the La Blache site to Baie Comeau. The transfer of

crushed RoM to Bécancour using self-unloading vessels of nominal capacity of 25,000

dwt and transfer to the plant site stockpile was described in Section 16.

17.3.2 Secondary Crushing and Grinding

Secondary crushing of the ore is performed with a high pressure grinding roll (HPGR)

that will reduce the ore to a nominal 100% passing 1 mm. The product from the HPGR

circuit will feed a ball mill circuit. The product from the ball mill circuit will have 80%

passing (P80) 75 µm. A dry process for these two steps, as opposed to one that is slurry-

based, was initially envisaged as a means of reducing water inputs to the CTL Process;

however, dusting may present as an important issue at the industrial park site, which will

need to be controlled through a well-designed dust collection system and/or the adoption

of a wet grinding approach. In the present arrangement, the crushed ore is transferred

to a storage bin, which will feed the leaching process by way of a rotary valve and screw

conveyor. An allowance for a bucket elevator is included in the cost estimate; however,

pneumatic transfer with a baghouse located atop the storage bin should be considered.

An alternative to the crushing-grinding approach may come from the cement industry, in

which the two operations are combined into one technology. This possibility will be

investigated in the course of the planned pre-feasibility study.

Argex Mining Inc.


December 2011 17-6

17.3.3 Leaching

Following grinding, 11.4 tpd of ore is fed to the leaching circuit, which is comprised of

two stages. In the primary leaching step (Stage 1) the ground feed material is reacted

with the 5.2 N HCl acid-brine solution at 70oC. A 2-hour residence time is needed in

Stage 1 and depending upon the size of the plant, 15,000 versus 60,000 tpy TiO2, either

two or three reactors operated in series are envisioned.

The base reactions during leaching can be written as follows:

(eq. 1)

(eq. 2)

(eq. 3)

(eq. 4)

The overall reactions describing the leaching of ulvöspinel (Fe2TiO4) can be written as

follows:

(eq. 5)

Leach slurry leaving the final reactor in the Stage 1 will be pumped to a thickener, which

will settle out the solids. The underflow from the thickener is pumped through a filter

press, which will recover the leach residue. These solids are the feed to the secondary

leaching step (Stage 2), which recovers residual Fe, Ti, and V under slightly more

aggressive conditions (5.8 N), but still under atmospheric conditions at 70oC. The

overflow from the Stage 1 thickener is collected in a surge tank along with the filtrate

from the Stage 1 filter press and the filtrate coming from the Stage 2 filtration step. Prior

to pumping the leach liquor from the surge tank to the first stage of solvent extraction for

iron extraction, the solution will undergo a polishing step to remove any remaining

suspended solids. Leaching is deliberately not carried out at higher temperatures to

avoid the thermal hydrolysis of titanium in solution, which would result in the premature

precipitation of titanium as an impure product that could not be separated from the leach

residue.

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December 2011 17-7

In Stage 2, either one or two reactors operated in series will be used to dissolve much of

the remaining Fe, Ti, and V. A continuous process is envisioned for Stage 1 and either

batch or continuous for Stage 2. Considering that the remaining solids from Stage 2

settle easily, the leach residue could be dewatered with the use of a holding tank, from

which the solids would be withdrawn and pumped through a filter press. The solids will

be washed to remove residual chloride and acid. In this PEA, it is assumed that the

leach residue from Stage 2, which represents approximately 15% of the original volume

of the raw material feed, will be collected and trucked to a non-hazardous waste landfill

site.

17.3.4 Solvent Extraction

After leaching, the pregnant leach solution (PLS), which will be collected in a surge tank,

will pass through the first of three solvent extraction (SX) steps. Solvent extraction is a

unit operation that relies upon the ability to bring into contact an aqueous phase, in this

case PLS, with an organic extractant that will bring about the preferential transfer of a

particular metal component(s) from the aqueous phase to the organic phase through a

loading step. These systems are designed such that the aqueous and organic phases

(both liquids) are brought into intimate contact in a mixer compartment but then

subsequently separated due to their immiscibility, once allowed to stand in a settler

compartment (mixer-settler). The loaded organic phase can then be separated from the

aqueous phase, resulting in two streams (aqueous and organic), which are sent on

separate paths for further processing. A typical mixer-settler design is illustrated in

Figure 17.2 and a conventional SX circuit with two stages of loading and one stage of

stripping is presented in Figure 17.3.

Iron is preferentially loaded into an organic phase in the first SX operation. In the CTL

Process, the loading of iron to the organic represents the first in a series of steps that

leads to the regeneration of acid through a process called pyrohydrolysis, which coupled

with the production of iron oxide powder that will subsequently be converted into

agglomerates. The iron-depleted PLS solution leaving the loading step (raffinate)

becomes the feed stream to the second SX step used for titanium recovery.

Argex Mining Inc.


December 2011 17-8

Figure 17.2: Conventional mixer-settler design

Argex Mining Inc.


December 2011 17-9

Figure 17.3: Conventional SX circuit

17.3.5 Iron Solvent Extraction

Iron in the form of both ferrous (FeCl2) and ferric (FeCl3) chloride are co-extracted

(loaded) in the organic that has been selected for iron solvent extraction. Some titanium

is also co-loaded, which must be scrubbed in a separate stage (scrubbing), prior to

stripping the iron and isolating it as a relatively pure solution of iron chloride with an

assumed ferric (Fe+3) to ferrous (Fe+2) ratio of 1:1. This ratio is of significance and is

discussed in a later section outlining future work.

The strip solution contains approximately 68 gpl Fe to be recovered by pyrohydrolysis,

while the stripped organic will be washed with water at a 10:1 organic-to-water ratio to

remove any entrained solution. The organic is returned in a closed loop to the loading

step.

Ext 1

Ext 2

Loaded organic surge

tank

Strip

Loaded organic

Strippedorganic

Pregnant solution Raffinate

P.E. surge tank

Pregnantstrip solution

Spent strip solution

Metal recovery

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17.3.6 Titanium Solvent Extraction

The iron depleted leach solution, still rich in Ti and V, with respective concentrations of

approximately 14 and 5.5 g/l, subsequently undergoes titanium solvent extraction. In this

part of the process, titanium is preferentially loaded from the brine using an organic

extractant.

Following solvent extraction to extract titanium, the iron and titanium-depleted brine will

be split off in one of two directions to either; 1) for contact with the gas stream for HCl(g)

recovery in the venturi scrubber and absorber steps following pyrohydrolysis, or 2) bleed

from the process for magnesium control, both of which are described later in this section

of the report.

The titanium-loaded organic is subsequently scrubbed and then the titanium stripped

from the organic using a solution containing hydrochloric acid. The resulting titanium-rich

strip solution, which contains approximately 35 gpl Ti and 2 N HCl, becomes the feed

solution to the first in a series of steps leading to the manufacture of titanium dioxide

(TiO2) pigment.

17.3.7 Iron Processing

In the CTL Process, the iron chloride solution derived from iron SX is transformed into a

co-product (agglomerated iron oxide), which Argex Mining intends to sell as an

equivalent to lump ore. Iron recovery is comprised of the following processing steps;

Pre-concentration

An evaporation unit will concentrate the pregnant iron strip solution, which is assumed to

have an iron concentration of approximately 68 gpl and will be raised to 140 gpl. The

condensate that is collected from the evaporation unit will be collected and recycled to

the process as process water, while the concentrated iron chloride solution will be

pumped to pyrohydrolysis.

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Pyrohydrolysis

The concentrated iron chloride solution is processed using a spray-roaster type

pyrohydrolysis unit to convert the iron chloride into hematite (Fe2O3), regenerating

hydrochloric acid in the process. Pyrohydrolysis uses natural gas to provide the

necessary heat for the conversion. The recovery of HCl(g) is covered later in a section

outlining acid recovery. For the 15,000 tpy TiO2 plant, 6.2 tph (80.2 tph for the 195,000

tpy operation) of iron oxide powder will be recovered to a storage silo that will feed the

briquetting operation.

Briquetting

The iron oxide powder is too fine a product to be marketed directly; however, Argex

proposes to agglomerate the fines, converting these into a marketable product that is

easily handled. The iron oxide powder will be mixed with a binding agent and water in a

mixer, following which it will be fed to a agglomerating machine that will compact the

mixture into a form that will hold and strengthen with time.

Product packaging & handling

The agglomerated iron oxide will be collected in a storage bin and transferred by front-

end loader to a truck, which will bring the product to the port at Bécancour, for loading

onto a self-unloading barge. The product will be packaged and sold as a lump ore and

the assumption is that it will be priced on the basis of FOB (Port of Bécancour). The

most likely outlet for this product will be steelmakers in the Great Lakes region.

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17.3.8 Titanium Processing

The desired titanium dioxide product will have a nominal particle size of 250 nanometers

and will be coated according to client requirements. To achieve such product quality,

titanium dioxide (TiO2) pigment production requires several unit operations, which can be

outlined as follows;

Precipitation of hydrated titanium dioxide (TiO2.H2O)

The titanium strip solution from the titanium SX step is subjected to thermal hydrolysis.

This process is carried out using steam heating in a lightly-agitated tank, which will raise

the temperature of the solution to 90-100oC. In so doing, TiOCl2 is hydrolyzed to

hydrated titanium dioxide (TiO2.H2O) by the following equation (eq. 6):

TiOCl2 Hydrolysis (eq. 6)

Any evaporate coming off the reactor will be condensed and returned to the reactor. Any

residual vanadium that may have transferred from the organic to the raffinate will not be

hydrolyzed, thus a second stage purification is achieved through this thermal hydrolysis

step. In the absence of iron, the titanium does not form compounds containing both iron

and titanium and this is the reason for the very high purity of the end product. It is

assumed that thermal hydrolysis is carried out in batches.

Solid / liquid separation – solids handling

Once a batch is complete, the slurry containing the TiO2.H2O is pumped through a filter

press and washed with clean water, prior to discharge into a chute that feeds a conveyor

that feeds a rotary kiln. The rotary kiln is operated at 900oC and serves two purposes.

The first is to drive off any moisture and bound water. The second is to fully convert the

resulting TiO2 product into synthetic rutile, which has an acicular (tetragonal crystal)

form. From the kiln, the solids are discharged into a cooler that then discharges into a

bin that feeds the micronizing (milling) unit through a rotary valve and screw conveyor

arrangement.

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Micronizing (ultrafine milling)

Micronizing (ultrafine milling) of the synthetic rutile will be carried out using a Jet mill.

The Jet mill must pulverize the TiO2 to a nominal 250 nanometers, before sending the

milled product to a day bin, which will feed the TiO2 coating section. Jet mills rely on

particle-to-particle impact to bring about size reduction. The energy to these systems is

imparted through the introduction of superheated steam or compressed air to the Jet

mill’s chamber, in which the synthetic rutile particles are circulating.

Surface treatment

The ground synthetic rutile requires coating with sodium silicate and alumina to convert it

into a marketable pigment product. These are applied in a wet process and in

succession. A thin surface coating imparts characteristics that are specific to the clients’

requirements, after which the product is recovered by filtration and discharged into a

surge bin that feeds a conveyor leading to a drying operation.

Drying & Finishing

The coated product must be dried a second time, which will be accomplished using an

indirectly-heated rotary kiln (200oC), following which it is transferred to a day bin, which

will feed a second micronizing unit that will be used to break up the coated product to

make it free-flowing. The finished product will be pneumatically conveyed to an enclosed

storage silo equipped with baghouse that will serve as the product bin for packaging and

handling.

Packaging & handling

The product will be bagged in 25 kg paper bags, then stacked onto heavy duty shipping

pallets (40 per pallet). Cardboard protective sheets are placed onto the pallet and the

top layer of bags, all of which is then wrapped with a protective cellophane wrap. Pallets

will be placed onto trucks or into railcars. Each bag will be coded with lot and palletload

information.

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December 2011 17-14

The product will also be made available in bulk quantities in the form of larger woven

intermediate bulk containers (IBCs or “supersacks”) holding 2000 lb or 1000 kg, and

placed one per shipping pallet.

Pallets will allow four-way access with a forklift and shipment is assumed to be by rail or

by truck. The product is assumed to be sold FOB (Plant). For the 15,000 tpy TiO2 pre-

commercial demonstration plant, an average production rate of 1.9 tph (24.2 tph for the

195,000 tpy plant) of the TiO2 final product is anticipated.

17.3.9 Vanadium Processing

Vanadium is recovered from a solution stream that is bled from the main

hydrometallurgical circuit. This bleed stream is necessary to maintain a balance of

MgCl2, eliminate other salts (e.g. CaCl2, AlCl3), and possibly remove deleterious minor

element impurities that might otherwise build up in the circuit as a result of entering with

the RoM. Simply based upon the relative amounts of the different components leaching

into solution, it is assumed that magnesium (Mg) will be the driver for the bleed. Without

this bleed the magnesium levels will accumulate in the circuit. If a strategy of

maintaining a constant MgCl2 level in solution is assumed, these new inputs of Mg from

the RoM will contribute to a bulk (or volume) issue in the hydrometallurgical plant. Thus,

a control strategy of both maintaining MgCl2 levels and controlling volume must be

adopted. The two can be de-coupled somewhat by evaporation or dilution to control the

MgCl2 concentration in the brine and bleeding the brine to control volume. The bleed

management strategy is described in a later section on acid recovery; however, it is

mentioned here, due to its relevance to the vanadium circuit. Based upon Mg inputs

from the leaching of the La Blache RoM, it is anticipated that a bleed not to exceed 3.5 to

5% of the overall volume circulating in the main hydrometallurgical circuit will be

necessary.

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December 2011 17-15

The corollary of the 5% bleed assumption is that 95% of the brine is continually being

recirculated. This provides the opportunity for vanadium levels to build within the main

brine loop. Once bled from this loop, the expectation is that it will have concentrated by

a factor of twenty times (20x). The vanadium is recovered from the bleed stream in the

third solvent extraction step, herein described.

Vanadium SX Circuit

The bleed stream, which is expected to contain vanadium levels in the order of 5.5 g/L

based on a METSIM mass balance analysis, is first processed through the vanadium SX

circuit.

Following the separation of the organic phase from the acid phase in the settler, the

organic phase is pumped to the stripping reactor, where the loaded organic is contacted

with 1.5 N NH4Cl solution, into which the vanadium is transferred. The purified and

concentrated vanadium-rich strip solution is subsequently neutralized with ammonium

hydroxide (NH4OH) to recover ammonium metavanadate (NH4VO3).

Vanadium Production

It is anticipated that three potential vanadium products could be manufactured with

relative ease. These are as follows:

Ammonium metavanadate (NH4VO3)

Vanadium pentoxide (V2O5) powder (Technical Grade)

Vanadium pentoxide (V2O5) fused flakes

Precipitation of NH4VO3

The neutralization of the vanadium strip solution with NH4OH favors the formation of

ammonium metavanadate (NH4VO3). The precipitate is then filtered and washed with

cold NH4OH solution to mitigate redissolution that might otherwise result from washing

by some other washing agent. The crystals can be dried and subsequently cooled using

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two hollow-flight screw conveyors arranged in series, the second of which will discharge

directly into poly-lined steel drums.

Calcining of V2O5

The ammonium metavanadate crystals can also be fed to a small rotary kiln using a

feeder bin and screw feeder arrangement, where ammonia gas (NH3) will be removed at

between 400-500oC according to the following reaction (eq. 7):

(eq. 7)

The powder exiting the kiln will enter a surge bin, which will lead to a small hollow-flight

screw conveyor that will cool and churn the powder, before discharging into poly-lined

steel barrels. This product can be marketed as technical-grade V2O5.

V2O5 Flake

A fused V2O5 flake can be produced from the technical-grade V2O5 powder through a

melting operation; however, no allowance was made for making this product and will not

be described.

Ammonia recovery

The calcination by-product from the heating of NH4VO3 is ammonia gas (NH3), which is

scrubbed at the kiln exit. The scrubbed ammonia gas must either be recovered for re-

use, converted into a marketable by-product or destroyed. In the present PEA, recovery

and re-use was assumed; however, one of the most effective means of scrubbing NH3 is

to contact it with sulphuric acid to make an ammonium sulphate (NH4)2SO4, which might

be marketed as a fertilizer; however, quantities will be small. This was not considered in

the present study and more work is required to better define how the recycle and re-use

strategy might be put into place. In the interest of streamlining the start-up of the pre-

commercial plant, it will be recommended to Argex that efforts be directed initially to

marketing an ammonium metavanadate product to an existing producer.

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December 2011 17-17

Product handling and shipping

The poly-lined steel barrels will be placed onto pallets and wrapped with a cellophane

wrapping. Drums ranging from 25 to 50 kg holding capacity are fairly typical for the

industry. Each drum will be coded with lot and palletload information. The pallets can be

loaded onto either trucks or railcars. It is assumed that the product is sold on the basis

of FOB (Plant). Production rates of approximately 45 kg per hour (600 kg/h for the

195,000 tpy operation) are anticipated.

17.3.10 Acid Recovery

In the CTL Process, there are three mechanisms, by which hydrochloric acid is

recovered for re-use in the process. These are; 1) iron pyrohydrolysis, 2) titanium

dioxide hydrolysis, and 3) magnesium chloride pyrohydrolysis. A fourth method involving

acid recovery through SX was also identified at an earlier stage of the study, but this was

rendered redundant with the decision to adopt pyrohydrolysis to treat the process bleed

stream.

Iron pyrohydrolysis

Pyrohydrolysis will be applied to convert concentrated iron chloride solution into hematite

(Fe2O3) and HCl(g). Pyrohydrolysis is a commercially-proven technology, used primarily

in the steel industry, which has been in existence for over 40 years. In steel mill

applications it is normally used to recover HCl(g) from spent steel mill pickle liquor

containing predominantly ferrous chloride (FeCl2). The heat required to drive the reaction

is produced by the combustion of natural gas in a spray roaster, which results in the

production of a very fine hematite powder. The internal temperature of the spray roasting

process is around 600oC, with an exhaust temperature of approximately 400oC. Prior to

absorbing the HCl(g), the off-gas passes through a hot gas cyclone to recover dust, which

is then followed by adiabatic cooling in a venturi scrubber. Both the venturi scrubber and

HCl(g) absorber tower that follows the adiabatic cooling step circulate the Fe/Ti-depleted

brine coming from the titanium SX circuit. In this manner, the acid-brine mixture is

regenerated and made ready for re-use in the leach circuit.

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Thermal energy requirements of 3000 kJ/L of feed solution to the circuit have been

calculated by BBA for spray roasting using METSIM and have been substantiated by

literature (1) (2).

The acid-brine solution regenerated by iron pyrohydrolysis is combined with other

process streams such as evaporated titanium hydrolysis filtrate and acid recovered from

the pyrohydrolysis of the process bleed stream. The acid-brine solution is targeted to

contain 6 N HCl and 225 g/L MgCl2.

Titanium dioxide hydrolysis

As it was explained earlier, the strip solution from the titanium SX circuit is subjected to

thermal hydrolysis (90-100oC) to produce hydrated titanium dioxide (TiO2.H2O). In a

batch reactor, steam heating is applied to the TiOCl2 solution. The elevated temperature

favours the formation of hydrated-TiO2 and regeneration of hydrochloric acid. Following

the recovery of the hydrated-TiO2 in a filtration step, the filtrate will undergo evaporation

to further concentrate the acid.

Magnesium chloride pyrohydrolysis

Similar to iron pyrohydrolysis, MgCl2 can also be pyrohydrolyzed using either spray

roasting or a fluid bed pyrohydrolysis approach. In the present concept, magnesium is

assumed to be the primary driver for a bleed from the hydrometallurgical process loop,

due to its relative levels of input in the La Blache feed material. The following reaction is

favoured in pyrohydrolysis (eq. 8):

(eq. 8)

The reaction takes place at 800oC, generating magnesium oxide (MgO) particles and at

the same time liberating HCl(g). A similar gas handling train to that described for iron

pyrohydrolysis is required for gas cleaning and capture of HCl(g). This system will also be

equipped with a hot gas cyclone, venturi scrubber, and absorption tower, en-route to

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releasing the combustion gases and water vapour to atmosphere. In the present PEA it

was assumed that the MgO will be shipped to a non-hazardous landfill.

Thermal energy requirements of 8500 kJ/L of feed solution to the circuit have been

calculated by BBA using METSIM. This value is considered conservative and will be

validated by suppliers in the next stage of the project.

17.3.11 Water Management

Water is used in many areas of the process and must be managed in such a manner

that it is in large part kept segregated from the circulating brine. This is to minimize

dilution of the brine and avoid unnecessary evaporation. Relatively clean water

(containing some HCl) will be generated from the iron chloride pre-concentration step

and the evaporation / concentration of the filtrate from the titanium thermal hydrolysis

step. The evaporate from both stages will be condensed and collected at a centralized

collection tank, from which any unit operation requiring clean process water will draw.

This tank will also be equipped with a water make-up that will be operated on level

control.

Water that is used in the solvent extraction stripping operations for iron and titanium will

come from the clean process water tank. In so doing, it completes – at least partially – a

closed loop. The overall process will require a net input of fresh water as water vapour

exits the process by way of pyrohydrolysis.

Water that is used in the solvent extraction washing operations for iron and titanium will

circulate in closed loops, and for the most part be kept segregated from both the brine

and clean water circuits. Any wash water bleed from these closed loops will be

transferred to a wash water treatment plant (WWTP), which will consist of a skimmer

tank for solvent removal. Some allowance for a neutralization plant to precipitate metals

by pH adjustment has also been made; however, this was conceived in mind of also

returning bleeds from the iron and titanium solvent extraction scrubbing stages. The

scrubbing operation is used to scrub any titanium and vanadium from the respective

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December 2011 17-20

organics in the iron and titanium SX circuits. These steps help to reduce the co-

entrainment (i.e. losses) of titanium and vanadium into the iron and titanium SX raffinate

solutions. While these scrubbing solutions are envisioned to operate in closed loops,

there is no reason to think that any bleed from these loops could not be returned to the

leach circuit, thereby greatly eliminating the need for a neutralization plant.

De-mineralized water is also needed for the boiler and has been recommended for the

washing of the hydrated-TiO2 precipitate. This is to reduce the potential for

contamination of the TiO2 product through the introduction of dissolved or suspended

solids by way of the filter wash water. In the present concept an allowance has been

made for a water de-mineralization package.

17.3.12 Solid Waste Management

The two solid materials considered as waste in the present PEA are the leach residue,

which represents approximately 15% of the original mass of the incoming La Blache feed

material, as well as the MgO generated from the pyrohydrolysis of the MgCl2 bleed

stream. For the purpose of the PEA, both are considered non-hazardous waste

materials, although it is a possibility that the MgO may be marketable. The MgO product

may also contain Al2O3 and non-pyrohydrolyzable salts, such as CaCl2, NaCl, and KCl,

and various other minor components that were dissolved from the La Blache feed

material (e.g. Cr). Further evaluation is required.

17.3.13 Reagents

Hydrochloric Acid

At the Bécancour Waterfront and Industrial Park, Olin, a manufacturer of hypochlorite

and hydrochloric acid, has a short pipeline leading to another manufacturing facility,

delivering 37% HCl on demand. A similar arrangement may be possible; however, an

allowance to receive hydrochloric acid by 32-tonne trucks as a 32% (10.1 N) HCl product

has been made. A storage capacity of 1.25 trucks will be used, representing a 40.4 m3

reservoir. A 3.5 x 4.0 m tank will be used to allow for a sufficient freeboard.

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Organic Reagents

The hydrometallurgical plant will use five different organic reagents; three extractants,

one modifier and one diluent. The reagents will be delivered to site in 1000 kg

intermediate bulk containers (IBC). For the 15,000 tpd plant, one IBC of each of the

extractants and three IBCs of the diluent will be kept by the SX circuit for make-up. The

additional IBC containers will be stored near the SX area to minimize handling of the

reagents. The organics will be added to the circuit individually with no pre-mixing to allow

for concentration control.

Magnesium Oxide

Magnesium oxide (MgO) will be received as a powder in 500 kg bags. MgO addition will

act only as a make-up and so large consumptions are not anticipated; however, a

reserve will be maintained in the event of short-term, large quantity make-up

requirements. MgO will be mixed with 12 N HCl to dissolve into solution as MgCl2 prior to

being added to the process plant.

Ammonium Chloride

Ammonium chloride will be delivered in 1000 kg bulk bags. Delivery of the ammonium

chloride will be done in bulk to allow for reserves of thirty or more days. A bulk bag

feeder will feed the mixing tank to produce the 1.5 N NH4Cl solution used in the

vanadium circuit. Additional bags will be stored in the vanadium processing area.

Sodium Silicate

Sodium silicate will be delivered as a powder in 1000 kg bulk bags. Due to the relatively

high consumption of sodium silicate, delivery will be done in bulk to allow for 30 or more

days of reserve. The sodium silicate will be added as a solid to the TiO2 coating circuit.

A reserve of around ten to fifteen bags will be kept at the TiO2 coating area, while the

remaining inventory will be stored in the warehouse.

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Alumina

Alumina will be delivered as a powder in 1000 kg bulk bags. Due to the relatively high

consumption of alumina, delivery will be done in bulk to allow for 30 or more days of

reserve. The sodium silicate will be added as a solid to the TiO2 coating circuit. A reserve

of around fifteen to twenty bags will be kept at the TiO2 coating area, while the remaining

inventory will be stored in the warehouse.

Binding Agent

Binding agent for agglomerate production will be delivered by bulk-carrier equipped with

pneumatic transfer. The binding agent will be delivered to a vented mass flow bin

equipped with a baghouse. A rotary valve at the base of the bin will dispense the

binding agent in a 2% ratio with the iron oxide powder generated from pyrohydrolysis.

Flocculant

Flocculant will be delivered to the plant in bulk bags of 700 kg. The flocculant bags will

be stored indoors. Five to ten bags will be kept in the mixing area. The flocculant will be

transferred to solution by way of a bulk bag feeder. The solution will be diluted and

mixed in an agitated mixing tank and then transferred to a flocculant holding tank by a

progressive cavity type pump.

17.3.14 Utilities

Process Water

All process water for the plant will be provided by the Bécancour Waterfront Industrial

Park.

Potable Water

The potable water demand of the facilities will be supplied by the fresh water treatment

plant of the town of Bécancour that has reservoirs of a total capacity of 15 910 m3 and by

the additional 5600 m³ reservoir connected to the municipal water system built by the

Bécancour Waterfront Industrial Park.

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De-mineralized Water

An allowance for a de-mineralized water package has been made.

Steam

Low and medium-pressure steam is available and provided by a 550 MW co-generation

plant owned by TransCanada Québec in the Bécancour industrial park; however, an

allowance for a package boiler has been made.

Compressed air

An allowance for a compressed air package has been made.

Instrument air

An allowance for an instrument air package has been made.

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18. INFRASTRUCTURE

18.1 La Blache Site – Infrastructure & Services

Activity at the La Blache site up to and during the pre-commercial demonstration phase

will amount to a seasonal quarrying operation, producing at most 90,000 tpy of crushed

La Blache RoM. The infrastructure and services needed at the mine during this phase

are minimal, amounting to a few ATCO trailers, camp facilities for 10-15 people, a fuel

depot, and possibly a temporary dome structure for a mine garage, plus smaller ancillary

buildings. Electricity requirements will be met using a diesel generator set. Explosives

management will be by contractor, with the overall intention to minimize capital expense

at the mine in this early stage of the project. Contract mining may be considered for the

first few years of the mine plan, at least until the decision is made to expand production

with the first 60,000 tpy TiO2 production module or possibly even later. This would

further reduce capital expenditures, but at a higher operating cost per tonne mined. The

expense of a permanent facility at the mine site should not be anticipated until at least

Year 4 or 5 of the Project.

18.1.1 Access Road

Current access to the La Blache property from Baie-Comeau is by Abitibi-Bowater’s C-

901 gravel forest haul road (Class 1 with 70 km/h speed limit) over a distance of 182,5

kilometres, then along 26 kilometers of an old Class 4 forest road (average speed limit

45 km/h) that enters between the Hervieux Est and Ouest deposits from the north. This

Class 4 forest road that enters the site from the north has steep slopes and sharp curves

that are not conducive to long term trucking of heavy loads.

Alternatively, 29.3 km of a Class II forest road with a useable width of 9 m to allow for

continuous trucking and the transport of heavy equipment is planned to be built to

access the mine site. The new road will begin at kilometer 143 of Abitibi-Bowater’s C-

901 (Class I) road then extend up to the northwest to the mine site passing below Lac La

Blache. The new access road will reduce the distance to the mine site by 36 kilometers

and 45 minutes travel time will be taken off each way between the La Blache site and

Baie-Comeau.

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In March 2011, a detailed survey was conducted to site this new access road to the mine

site. In addition, the plans and specifications were produced and then submitted to the

Quebec Minister of Natural Resources for a construction permit. A schematic of the

proposed road system is shown in Figure 18.1.

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Figure 18.1: Proposed Access Road for the La Blache Project

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18.2 Baie-Comeau - Infrastructure & Services

At Baie-Comeau, trucks carrying the crushed La Blache RoM will bring the material to a

site near the port where it can be accumulated, until such a time that a sufficient amount

has been collected for transfer to a self-unloading barge. It has been assumed that this

area is available and that the contractor who owns and operates the site (an existing

quarry) will manage the stockpile and its transfer to the Port of Baie Comeau’s bulk ship-

loading equipment. No capital expenditures for the port were foreseen; operating

expenses for contractor services, only.

18.3 TiO2 Industrial Plant Infrastructure

Several sites in Quebec have been and remain under consideration for the TiO2

Industrial Plant; however, one of the prime considerations for the location of such a plant

is the availability of natural gas, which is required for the pyrohydrolysis units. Other

considerations include the availability of a skilled workforce as well as proximity to port

and other transportation infrastructure. For the purpose of this PEA, the Bécancour

Waterfront and Industrial Park was selected as the baseline.

The information presented in this section is based largely on the Société du Parc

Industriel et Portuaire de Bécancour website (www.spipb.com). It has been assumed

that suitable sites at the industrial park are available and that these sites are fully

serviced. This implies that the electricity, natural gas, and water are available at the

battery limits of the facility, which is not necessarily the case for certain other sites that

are being considered.

18.3.1 Location

The Bécancour Waterfront Industrial Park is located in Bécancour, on the South shore of

the St. Lawrence River, half-way between Montreal and Quebec City.

18.3.2 Labour

The Bécancour - Trois-Rivières region relies on a large pool of qualified workers due to

the large number of chemical and mineral processing plants, which have operated in the

http://www.spipb.com/

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area for over 30 years. Many processing plants handling chlorides in some form or other

are operating or have operated in the area, such as the Olin Bécancour plant and the

Norsk Hydro plant. This suggests that a labour force having experience with processes

involving chlorides exists in the area.

The work environment is a positive one and industrial workers have a reputation for high

productivity. The companies and educational institutions of the region, along with the

university, work together to ensure a workforce adapted to the needs of the industry.

18.3.3 Electricity

Located at the crossroads of three electrical power transmission networks, the industrial

park is recognized as one of the most reliable sites of hydroelectric power in Quebec. It

is fed by three different hydroelectric sources; Churchill Falls and James Bay, which are

among the world's largest power stations, as well as the network of power stations along

the St. Maurice River. In addition, a 550 MW co-generation plant is located in the

industrial park and nearby is the Gentilly-2 nuclear power station (685 MW), as well as a

352 MW gas turbine plant.

As a result, Hydro-Québec is able to provide electricity at highly competitive rates to all

industries in the industrial park. The following voltages are available; 230 kV, 120 kV,

25 kV and 600 V.

18.3.4 Natural gas

The Bécancour Waterfront Industrial Park is serviced by a 2 400 kPa high-pressure

natural gas line, as well as an underground distribution network that supplies its

industrial users. At the present time, industries consume 153 000 m³/hour and the

residual capacity is 60 000 m³/hour, although capacity can be increased as required.

18.3.5 Steam

Low and medium-pressure steam is available in the industrial park. It is provided by a

550 MW co-generation plant owned by TransCanada Québec. This will allow Argex to

reduce capital expenditure by avoiding the purchase of a package boiler and

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demineralization plant, although an allowance for both was included in the capital cost

estimate.

18.3.6 Water

The town of Bécancour owns a fresh water treatment plant that has reservoirs of a

total capacity of 15,910 m³. To meet the demand during peak periods and to increase

fire protection, the industrial park has built an additional 5,600 m³ reservoir connected to

the municipal water system. The pumping installations for this reservoir are equipped

with a diesel-powered back-up system that can deliver 16 m³ per minute. This installation

meets the requirements of the most demanding insurer.

The industrial park operates a screened raw water distribution network for industrial

water purposes. The water is taken from the St. Lawrence River and is analyzed

regularly. It typically meets industrial requirements for cooling and other various

processes. The pumping station has a capacity of 250,000 m³/day.

18.3.7 Hydrochloric Acid

The Olin Corporation operates a plant at Bécancour with significant bleach and

hydrochloric acid (HCl) production capabilities. The HCl purchased from Olin could be

sent to the CTL Process plant through a pipeline, owing to the short distance, thus

reducing transportation and storage costs, as well as the risk of supply interruption.

18.3.8 Port, Rail, and Road Network

The industrial park is extremely well connected to transportation networks, allowing for a

high degree of logistical flexibility. The park includes port facilities located in fresh water,

which are accessible year round and include the following features:

5 berths and a roll on - roll off (Ro-Ro) ramp;

a goods handling and storage area that covers 61 hectares (151 acres), of which 14

hectares (35 acres) are paved, lit and located close to the berths;

two pneumatic ship unloaders belonging to the Aluminerie de Bécancour inc.;

a gatehouse to control access to the port and a scale to weigh handled goods.

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December 2011 18-7

The site is also served daily by the Canadian National Railway (CN). This network allows

shipments to be sent anywhere on the continent, from coast to coast. It is also

connected to the Transportación Ferroviaria Mexicana (TFM) that reaches Mexico.

The park can also be accessed via Provincial Highway 30, which crosses the industrial

park and is connected to Highways 20 and 40 via the Highway 55 segment, thereby

linking Montreal and Quebec City. The distances from the Bécancour industrial park to

several major North-American cities are presented in Table 18.1 below.

Table 18.1: Distance from Bécancour to several major North-American cities

From Bécancour to: Distance (km)

Québec City 130

Montréal 170

Boston 360

Toronto 710

New York 770

Detroit 1,080

Chicago 1,540

Winnipeg 2,580

Regina 3,150

Calgary 3,910

Vancouver 4,970

18.3.9 Waste Material and Effluent

With the written authorization of the Ministère de l'Environnement du Québec,

companies may acquire land to operate a landfill for industrial waste.

Domestic wastewater is evacuated through underground pipes. Once treated, the water

is discharged into the St. Lawrence River. Rainwater is evacuated via a surface network

of ditches and is discharged directly into the St. Lawrence.

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December 2011 18-8

In conformity with the regulations of the Ministère de l’Environnement du Québec

(Quebec's environmental department), industrial wastewater must be treated before

evacuation to eliminate all risks of pollution.

18.3.10 Telecommunications

An optical fibre network set up in the industrial park provides industries with access to a

high-speed data transmission service. In addition, the installation of this cable has been

made in loops to maximize the efficiency of the telecommunications service. A high-

speed Internet link and the presence of wireless communication towers complete the

range of existing means of communication in the industrial park.

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December 2011 19-1

19. MARKET STUDIES AND CONTRACTS

This section outlines the commodity pricing assumptions that were used in the economic

analysis presented in Section 22 and summarizes certain findings, which were extracted

from a confidential report (92)

written by Mr. Gary Cianfichi of Ti Insight, LLC. Mr.

Cianfichi’s qualifications as an expert in the field of TiO2 marketing were outlined in

Section 3.6.

19.1 Commodity Price Assumptions

The commodity price assumptions that were used in this PEA were based on a 3-year

moving average, which were then adjusted, as will be explained.

TiO2 Pigment

A report on major chemicals by Credit Suisse (99)

, dated October 13, 2011, presented a

price history for TiO2 pigment (source: Reuters), from which the 3-year moving average

was estimated at $2,846 $US/tonne. This was for the period dating back three years

from September 26, 2011. Over the past three years, there has been a steady rise in

the price of pigment and Mr. Cianfichi expects this trend to continue to at least 2015.

Agglomerated Iron Oxide

A drop in world iron ore prices has been anticipated and as a result, the 3-year moving

average was discounted. A price of $115.00 US$/tonne with a premium of

$20.00 US$/tonne for the agglomerated product was assumed. It is assumed that the

product, a mixture of binding agent, water and iron oxide powder shaped into a suitable

form using an agglomerating machine will have the physical properties necessary to

withstand direct feeding to a steelmaking blast furnace as an auxiliary feed; market

acceptance must be demonstrated, through the course of further testwork and marketing

of the product.

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December 2011 19-2

Vanadium Chemicals

Vanadium is not traded on the open market; instead, negotiated contracts are privately

concluded between buyers and sellers. The London Metal Bulletin has reported prices

for V2O5 that ranged from $17.00 $US/lb in the summer of 2008, when one of South

Africa’s vanadium mines was off-line due to electricity issues, to a low of US$4.50/lb in

August 2009 during the global meltdown. In the absence of reliable pricing information, a

value of US$8.00/lb was assigned for the technical grade V2O5 that was assumed

produced in the baseline economic analysis. This price has not been rigorously

researched and the sensitivity of a production scenario involving zero vanadium

production has been addressed in Section 22.

19.2 Titanium Dioxide Market

Approximately 90% to 95% of titanium ore extracted from the Earth is destined for

refinement into titanium dioxide (TiO2), an intensely white permanent pigment powder

that is chemically inert, resists fading in sunlight, and is very opaque. The balance of

titanium ore extracted is used to produce titanium metal, for the manufacture of welding

rods, and in pig iron production. Although it was discovered much earlier, it was not until

about 1918 that modern technology had progressed to the point where titanium dioxide

pigment could be mass produced.

Titanium dioxide pigment is a permanent pigment used in paints, plastics, rubber,

ceramics, cosmetics, food, and in toothpaste. Titanium dioxide is the best performing

white pigment available because of its high optical index of refraction. It provides for

maximum whiteness and opacity in the materials that it is used in. It gives paint high

hiding power, meaning the ability to mask or hide a substrate. It does this more

effectively than any other commercially available white pigment. Today, titanium dioxide

pigment is by far the most important material used by the paints and plastics industries

for whiteness and opacity.

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December 2011 19-3

The most important attribute of TiO2 is its remarkably high refractive index, which gives it

the potential for producing opacity or hiding power far greater than that of any other

white pigment.

19.2.1 End-use Applications

In 2010, global demand for TiO2 was approximately 4.9 M tonnes, having a value in the

vicinity of US$12 billion. The principal TiO2 consuming industries in 2010 were the paint

and coatings industry with approximately 62% of world demand, the plastics industry

with approximately 26% of demand, and the paper industry with 7% of world demand.

The balance of 5% of world demand was consumed in a variety of end-use applications

including rubber, ceramics, inks, food, cosmetics, pharmaceuticals, toothpaste,

fibres/textiles, and many other miscellaneous applications.

The number of companies buying TiO2 products is estimated to be over 20,000

worldwide, a number that includes many small volume buyers of the product. In 2010,

the top ten buyers of TiO2 represented approximately 20% of global demand as noted in

the Figure 19.1. Seven of the world’s top ten buyers of TiO2 are paint companies that

have a large portion of their TiO2 consumption going into architectural (house) paints.

19.2.2 TiO2 Demand Drivers

Growth in the demand for TiO2 is a function of economic activity. TiO2 is considered to

be a quality-of-life product, where demand is driven by rising economies and standards

of living. The correlation between TiO2 demand and world gross domestic product (GDP)

has been noted by many TiO2 companies and is strong, as is illustrated in Figure 19.1.

This correlation holds because most of the products that TiO2 or TiO2-containing

products go into are basic building blocks of economies, including housing materials,

automobiles, industrial equipment, and consumer packaging and construction materials.

When these segments are doing well, country economies (GDP) are doing well, which

drives TiO2 demand growth.

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December 2011 19-4

Figure 19.1: Relationship between TiO2 pigment price and real GDP (1960-2006)

The rate of growth in TiO2 demand is also related to how developed a country or region

is. The more developed regions tend to have lower growth rates, while leading,

developing countries show much higher TiO2 demand compound annual growth rates

(CAGR). The chart in Figure 19.2 shows estimated TiO2 consumption per capita in 2010

for global economic regions and for select countries.

y = 0.13x - 70.85

R² = 0.99

-

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5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

TiO

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an

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k M

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Real GDP (in 2000 Billion U.S.$)

TiO2 Demand vs Real GDP (1960-2006)

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December 2011 19-5

Figure 19.2: TiO2 consumption (in pounds) per capita in 2010 for global economic regions and for select countries

Regional TiO2 demand compound average growth rates for the period of 2000 to 2010,

shown below (Figure 19.3), confirms the trend that TiO2 demand growth is highest in

developing countries. Compound growth in demand has been strongest in the Asia-

Pacific region for many years, due primarily to economic growth in China.

Figure 19.3: Regional TiO2 Demand Compound Average Growth Rates (2000-2010)

0.2 0.21.1

1.6 1.6 1.7 1.7 2.1

3.94.6 4.9

5.66.1

9.2

0.01.02.03.04.05.06.07.08.09.0

10.0

2010 TiO2 Lbs. Per Capita

2000 to 2010 TiO2 Demand

Region CAGR

N America -2.5%

W Eur -0.6%

EEMEA 4.4%

C&SA 5.1%

AP 7.5%

WorldWide 2.2%

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December 2011 19-6

19.2.3 TiO2 pigment supply and demand

TiO2 is a chemical product that is traded quite widely across the globe. Countries or

regions with more supply than demand typically still import significant quantities of TiO2,

either because other country/region suppliers wish to establish or maintain a market

position or because the local TiO2 plants do not make or produce enough volume of the

specific products needed in end-use applications. Since strategies on where to make

products and where to sell them are quite specific to producers’ manufacturing

capabilities and marketing plans, understanding the global TiO2 total supply and demand

balance (Figure 19.4), rather than regional balances, is the key to understanding both

past and future titanium business dynamics. In this respect, TiO2 is similar to commodity

products, where supply and demand factors largely explain product pricing and producer

profitability trends.

Figure 19.4: TiO2 Supply and Demand Balance by Region in 2010

Most producers comment on their perspectives of titanium dioxide supply and demand

dynamics in a number of ways, including quarterly earnings review calls, during industry

conferences, or in customer meetings. Industry observers understand that a tight supply

and demand balance often results in increased TiO2 prices, while a loose or long market

often results in declining TiO2 pricing, with both trends impacting producer profitability.

27%

1%20%

44%

7%

TiO2 Supply by Region in 2010

NA C&SA W Eur AP EEMEA

21%

7%

23%40%

10%

TiO2 Demand by Region in 2010

NA C&SA W Eur AP EEMEA

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December 2011 19-7

The chart below shows the historical relationship between global TiO2 supply and

demand for the 30-year period starting in 1980 and ending in 2010. The TiO2 industry

has experienced cycles of supply constraints and supply abundance during this period,

due primarily to the economics, scale and period of time required for adding supply. It is

worth noting that for the 25-year period from 1980 to 2005, supply and demand changes

were nearly equivalent in volume terms at +2.6 M tonnes each. From 2005 through

2010, however, supply growth exceeded demand growth by approximately

800,000 tonnes. This surge in capacity resulted in a significant oversupply situation,

which prevented TiO2 producers from raising their prices to offset cost increases,

thereby hurting industry profitability. This capacity surplus weakened the producers’

ability to withstand the impact of the recession and led to plant closures as well as the

bankruptcy of Tronox. The 30-year compound growth rates for TiO2 supply and demand

were 3.1% and 3.0%, respectively (Figure 19.5).

Figure 19.5: World TiO2 Supply & Demand Balance (30 year – 1980-2010)

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World TiO2 Supply - Demand Balance1000's Metric Tons/Year

Name Plate capacity

Demand

Operating rate

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December 2011 19-8

19.2.4 Global supply forecast to 2015

To develop a forecast of TiO2 supply out to 2015, Mr. Cianfichi has accounted for public

statements made by producers about their TiO2 supply intentions and then adjusted

those statements based on current and generally accepted, most likely scenarios.

Mr. Cianfichi carefully reviewed Chinese statements about future supply scenarios and

discounted some of the stated public announcements due to their aggressive nature. He

assumed that Chinese nameplate capacity was overstated and that real (available)

Chinese TiO2 capacity would be approximately 60% of nameplate figures.

Based upon the producers’ stated capacity announcements and Mr. Cianfichi’s

estimates of what they may actually build, the industry may add approximately 1.3 M

tonnes of nameplate capacity between 2010 and 2015. Chinese producers will account

for approximately 75% of nameplate capacity additions with “western” producers

accounting for the balance of 25% of capacity additions. Given that the Chinese have

historically significantly overstated their nameplate levels, one must carefully review

forecasted Chinese capacity additions when looking at the availability of supply to meet

global demand.

The global supply forecast out to 2015 indicates that nameplate capacity is forecast to

increase by 1.3 M tonnes from 2010 to 2015 (Table 19.1).

Table 19.1: Global TiO2 supply forecast to 2015

2008-2015 2009-2015 2010-2015

Region 2009 2010 2011 2012 2013 2014 2015 CAGR CAGR CAGR

N America 1901 1831 1841 1856 1906 2006 2006 0.4% 0.9% 1.8%

C&S America 55 55 55 55 55 55 55 0.0% 0.0% 0.0%

W Europe 1386 1376 1376 1376 1376 1376 1376 -0.2% -0.1% 0.0%

EEMEA 475 475 485 525 525 525 525 1.4% 1.7% 2.0%

Asia/Pacific 2430 2660 2976 3256 3356 3551 3736 7.4% 7.4% 7.0%

Total 6247 6397 6733 7068 7218 7513 7698 3.3% 3.5% 3.8%

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December 2011 19-9

This increase equates to an available capacity increase of approximately

874,000 tonnes, due in large part to Chinese capacity overstatements. The chart below

reconciles stated nameplate capacity levels to available capacity figures for the forecast

period out to 2015.

Figure 19.6: World TiO2 Supply – Demand Balance

19.2.5 Global demand forecast to 2015

TiO2 demand is forecast to grow at above the recent historical CAGR of 3% in 2010,

through 2011, primarily due to the emergence of economies out of the global recession.

Forecasted demand by region with CAGR levels are as follows for the period 2009 to

2015 (Table 19.2).

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World TiO2 Supply - Demand Balance1000's Metric Tons/Year

Name Plate capacity

Demand

Operating rate

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December 2011 19-10

Table 19.2: Global TiO2 demand forecast to 2015

Demand for TiO2 in China is expected to reach between 1 M and 1.1 M tonnes in 2010.

With a CAGR of 7% per year, Chinese TiO2 demand is forecasted to reach 1.4 M tonnes

in 2015. The United States, the second largest TiO2 consuming country in the world with

an estimated 850,000 tonnes of demand in 2010, is forecast to grow at a CGAR of 1.6%

and reach 920,000 tonnes in 2015.

19.2.6 Global TiO2 Supply and Demand forecast

Accounting for the nameplate capacity increases noted above, assuming that Chinese

capacity is only capable of operating at approximately 60% of nameplate levels, and that

“western” producers are capable of operating at 95% of their stated nameplate levels,

global capacity utilization levels are forecast in the low 90% range (Figure 19.7).

Historically, based on some work initially published by Donald Borst, then CEO of

Millennium Chemicals (now Cristal Global), utilization rates above the mid-80% levels

resulted in a rising TiO2 price environment. Borst showed by analysis that when surplus

TiO2 pigment capacity increased to a level above 15% of demand, which correlates to an

industry operating rate of 87%, downward pressure on prices occurs. This analysis,

which others subsequently confirmed, became a TiO2 industry rule-of-thumb and today

is still considered to be a good guide to industry pricing and profitability trends.

2008-2015 2009-2015 2010-2015

Region 2009 2010 2011 2012 2013 2014 2015 CAGR CAGR CAGR

N America 935 1008 1039 1059 1075 1086 1091 0.4% 2.6% 1.6%

C&S America 281 323 339 356 370 385 400 4.6% 6.1% 4.4%

W Europe 1049 1123 1157 1180 1197 1209 1215 1.3% 2.5% 1.6%

EEMEA 421 475 499 518 544 566 586 4.4% 5.7% 4.3%

Asia/Pacific 1711 1969 2077 2181 2290 2405 2525 5.5% 6.7% 5.1%

Total 4397 4898 5110 5294 5477 5651 5818 3.3% 4.8% 3.5%

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December 2011 19-11

Figure 19.7: Global TiO2 Supply & Demand Balance (5 year forecast – 2010-2015)

Based on this analysis and given the time it takes for new capacity to be designed, built

and started up, Mr. Cianfichi drew the conclusion that industry utilization levels will be at

high enough levels over the next five years to allow TiO2 producers to further raise their

prices in the coming years.

19.3 Vanadium Markets

Vanadium is recovered from deposits that are mined specifically for the production of

vanadium, the contents of which range from 0.5-2% V2O5. It is also recovered from

steelmaking slags that are rich in vanadium, containing in the order of 20-24% V2O5 as

well as through secondary recycling of vanadium catalysts. In 2005, 64% of vanadium

production was from steelmaking slag; 18% from primary production; 16% from

secondary recycling and 2% unclassified.

Vanadium pentoxide (V2O5) has a variety of applications. One of the primary uses is in

the production of ferrovanadium alloy, which is used in steelmaking. Vanadium present

in small amounts in steel imparts high tensile strength. In the United States, the steel

industry accounted for 94% of the vanadium consumption in 2009, principally in the form

of ferrovanadium. Vanadium pentoxide (V2O5) can be used to make a 75-80%

vanadium-content ferrovanadium for use in steel manufacturing.

89%90%

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2010 2011 2012 2013 2014 2015

Global Supply - Demand BalanceAvailable Capacity Forecast

Utilization Rate Demand Available Supply

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December 2011 20-1

20. ENVIRONMENTAL CONSIDERATIONS, PERMITTING AND SOCIAL OR COMMUNITY INTEREST


The preliminary environmental baseline conditions of the La Blache site project area

were assessed by Genivar inc. (Genivar) in the summer of 2011. The studies undertaken

to date have addressed the following key environmental disciplines:

Aquatic resources;

Forest resources;

Presence of threatened, endangered or vulnerable species;

Archaeological, cultural or sites of interest;

First Nations.

The preliminary findings have been summarized in the following sections.

20.1.1 Aquatic Resources

A total of four lakes and six streams in the immediate La Blache site Project area were

assessed for fish and aquatic resources in 2011. The tributaries of the four lakes were

found to be medium quality habitats typical of Quebec North Shore water courses. A

total of three freshwater species occur or potentially occur within the lakes and streams

in the proposed La Blache site area. All fish species potentially occupy the lakes in the

study area during the reproduction stage, as well as the fry, juvenile and/or adult stages;

however, fish were only found in one on-site tributary. Brook trout (Salvelinus fontinalis)

and white sucker (Catastomas commersoni) were found in Lakes A, B, C and D, and in

Tributary 3 with Lake Chub (Couesius plumbeus) being found only in Lake D (refer to

Figure 18.1 in Section 18).

20.1.2 Forest Resources

The south sector of the La Blache site, near Lake Boily, is a forest undergoing

regeneration, following harvesting in the 1990s. The forest regeneration is primarily

composed of black spruce, balsam fir, white birch and trembling aspen.

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December 2011 20-2

In the northern section near Lac La Blache, the forest is undergoing regeneration due to

a massive forest fire in 1991. The regenerating forest is made up of grey pine on the

sand deposits and very few black spruce and trembling aspen.

Based on discussions with Abitibi Consolidated, there are no plans to harvest any wood

in either of these two sectors in the immediate future.

20.1.3 Presence of Threatened, Endangered or Vulnerable Species

According to the information obtained from the Quebec Ministry of Sustainable

Development, Environment and Parks (MDDEP)*, there is no mention of the presence of

any threatened, endangered or vulnerable plant species or likely to be so designated

within the La Blache project area.

The Quebec Ministry of Natural Resources and Wildlife (MRNFQ)** have identified the

presence of one vulnerable bird species within the La Blache Project area on four

occasions (90, 92)

. This species is the Barrow’s Goldeneye, a diving duck that breeds in

Quebec.

As part of the permitting processes, on-site terrestrial and bird inventories, including

threatened and endangered species, are planned as part of future work.

* MDDEP - Ministère du Développement durable, de l’Environnement et des Parcs

** MRNFQ - Ministère des Ressources naturelles et de la Faune

20.1.4 Archaeological, Cultural or Sites of Interest

The La Blache site is located on the Nitassinan de Pessamit territory (255.4 km2). A total

of 145 archaeological heritage sites have been identified in the southern section of the

Nitassinan de Pessamit territory (banque de l’inventaire des sites archéologiques du

Québec). Most sites are located on the coastline and near the mouths of rivers or in the

lower sections of the major rivers. One prehistoric Indian site (DlEl-1) was discovered

southwest of the La Blache site. It is located at the mouth of the Praslin River, which

empties into the Pessamit River. No archaeological sites have been identified to date on

the proposed mine site.

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December 2011 20-3

The knowledge of the location of the archaeological sites discovered on the Manic-3

reservoir, the Outardes River, Pessamit River, and on the shores of Lake Boucher

permitted the siting of the access road corridor away from these important areas. None

of the heritage and cultural sites identified by the Innu of Pessamit under the “Approche

Commune” (see below) is located in designated spaces of the La Blache site. The study

results indicated that there is no significant heritage or cultural site on the proposed mine

site that would require the relocation of any infrastructure at this time.

20.1.5 First Nations

The Nitassinan de Pessamit territory has been subject to land claims for several years. A

tentative agreement called the Approche Commune (Common Approach) was signed in

2004 between the four Innu communities involved; Essipit, Mashteuiatsh, Pessamit and

Nutashkuan. The Pessamit Innu’s traditional activities, such as hunting, fishing and

trapping, have been changed by forestry practices. The main economic activities of the

community include crafts, services, tourism, fishing and forestry. The main employers

include different Innu companies and the Pessamit Band Council, the latter representing

an important economic lever for the community. Residential construction generates

seasonal employment and efforts are being made in the field of recreational tourism.

Training of the workforce and access to the labour market is a major challenge for the

community. The unemployment rate was 33.5% in 2006. Argex concluded an agreement

in 2010 with the Innu of Pessamit to carry out its mining exploration campaign on lands

that are the subject of ancestral rights claims. As part of their collaboration to develop

any such mining resources, Argex and the Innu of Pessamit have agreed that the latter

will have a right of first participation in the financing of future development projects on

Pessamit territory.

20.1.6 Environmental Management System

An Environmental Management System will be implemented to provide systematic

approaches for effectively managing the expected and potential interactions of the La

Blache Property and the Bécancour TiO2 Industrial Plant with the receiving environment.

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December 2011 20-4

This plan will incorporate two key elements; 1) the Environmental Management Plan and

2) the Environmental Monitoring Program. The Environmental Management Plan will

identify how the La Blache Property and the Bécancour TiO2 Industrial Plant will be

operated to manage the interactions between project components, activities, and the

receiving environment to prevent or mitigate potentially significant adverse impacts.

The Environmental Monitoring Program will be integrated into the Environmental

Management Plan as a tool to provide feedback on how well impacts at both sites have

been predicted and to allow appropriate corrective actions to be taken in the event that

unexpected or unacceptable impacts occur. In addition, the monitoring program will allow

Argex to fulfill the federal and provincial regulatory compliance monitoring that will be

required.

20.2 Mine Closure

The La Blache Project will be developed, operated and closed in accordance with the

Quebec Mining Act (L.R.Q., C. M-13.1) guidelines for preparing a mining site

rehabilitation plan, and according to generally accepted mining site rehabilitation

requirements. The La Blache mine site rehabilitation and restoration plan will have to be

prepared and submitted to the Quebec MRNFQ for approval, prior to commencing

mining activities.

Wherever possible, the rehabilitation and restoration activities will be carried out

concurrently with the mining operations and final closure and reclamation measures will

be implemented at the time of final mine closure. The following highlights some of the

main activities that will be included in the final mine closure plan submitted to the

MRNFQ. This is by no means an exhaustive list.

20.2.1 Site Security

To ensure the safety of the site, all access roads to the open pits will be prevented by

building a 2 m high berm built with waste rock. Trilingual signs in English, French and

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December 2011 20-5

Innu that indicate the danger will be posted on these berms. No fences or barriers will be

installed around the open pits as these areas are not generally visited.

During the site restoration work and environmental monitoring, barricades will be set up

to secure potentially dangerous areas and to minimize the risks by reducing the traffic

flow to areas of the site that are infrequently visited. The barricades will be concrete

Jersey barriers or blocks of waste rock combined with gravel.

20.2.2 Open Pit Wall Stability

Before flooding the open pits, the pit walls will be evaluated for their physical stability.

Any risk of walls collapsing will be reduced by blasting the sections of pit wall that are at

risk.

20.2.3 Flooding

Once the mining operations have ceased, the dewatering of the pits will stop; allowing

the water in the pits to return to the pre-mining water table levels.

Surface water drainage ditches will be constructed just outside and upstream of the pits

to direct the surface water to the open pits. Directing the surface water to the open pits

will allow the suspended solids to settle to the bottom of the pit. Confirmation of this will

be done through the surface water quality monitoring program at the discharge points.

20.2.4 Waste Rock Piles

The East and West waste rock piles will be progressively built through the course of

mining operations and restored when mining operations are completed.

Measures to protect the groundwater will be specified once the geochemical analyses of

the non-acid generating waste rock have been completed.

Argex will implement a progressive closure strategy during mining operations to reduce

the overall closure costs at the end of the mine’s life. Following confirmation of the

method of waste rock placement, the waste rock dumps will be covered with at least 300

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December 2011 20-6

mm of loose materials removed during mining operations and seeded to restore the site

to a visually acceptable condition. In addition, the slope stability will be verified, validated

and corrected, if required.

Surface water collector ditches will not be dismantled to allow for environmental

monitoring of the water quality during the first 5-10 years following mine closure.

The sedimentation ponds will be maintained to ensure that the open pit water quality

meets the effluent discharge limits, before being discharged to the environment.

20.2.5 Dismantling of buildings and supporting infrastructure

Buildings such as offices, garage, and storage, as well as infrastructure such as any

conveyors or pumping stations that were built for the mining operation will be dismantled

to leave the site in a state that is compatible with the existing environment. Some key

infrastructure, for example camp and security buildings, will either be maintained for the

benefit of the local communities or to prevent any actions that could have a negative

impact on the receiving environment.

As part of the phase of the dismantling and disposal of the mine site buildings, all the

buildings and infrastructure on the project site that will not be used for post-closure

monitoring will be dismantled by a certified contractor. The decommissioning waste will

either be buried on site and/or transported to Baie-Comeau for shipment by truck or

shipped to authorized recycling centers in Quebec.

Buildings and Infrastructure

The demolition of the buildings and all surface infrastructures will include the

following:

Recyclable materials and equipment will be put aside and either given away or sold

for their recovery and/or re-use;

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December 2011 20-7

If there is an interest in these materials and equipment by the local people, Argex

will promote the creation of an organization that will give a second life to these

recyclable materials;

All the process production and service equipment, such as silos, tanks, pipes and

pumps will be drained and cleaned. The wash waters will be collected and treated

(sedimentation, oil and water separation, and pH adjustment), if necessary, before

being discharged to the environment;

All the equipment containing oil or any other liquids that have the potential to

contaminate, such as electrical equipment and vehicles, will be drained of their fluids

before being disposed of. The recovered oils will be used for heating the remaining

buildings or recovered by vacuum truck and sent to an authorized recycler.

Management and disposal of all chemical waste and hazardous materials will be done

safely, while respecting the applicable standards and regulations in force at the time of

closure. Any solids, liquids, and mud found within the buildings on site will be

characterized as required. The disposal method will be done using MDDEP-certified

Waste Handlers as approved by Argex’s Environmental Manager.

The walls and floors of the buildings will be cleaned, if necessary, prior to dismantling.

The wash waters will be collected and processed (sedimentation, oil and water

separation, and pH adjustment), if necessary, before being discharged to the environme

Foundations

Foundations constructed of backfilled rock and gravel and/or triangular supports for

light industrial use buildings, such as the water treatment plant, camp, cafeteria,

garage and warehouses, will be levelled to blend in with the site topography;

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December 2011 20-8

Any concrete slabs for buildings that require more stability will be broken up with a

mechanical jackhammer, crushed and then levelled to blend in with the site

topography;

Any contaminated concrete will be scarified and the layer of contamination removed

so that the remaining concrete meets the existing regulations and can be left in

place.

All crushed and/or broken concrete is to be levelled then covered with 1 m of

overburden, followed by seeding to establish the vegetation.

Demolition of Transportation Infrastructure

The main access roads to the La Blache Property are located on Crown lands and are in

the public road system administered by the MRNFQ. These main access roads will not

be restored following the closure of the La Blache mining operations. Only the roads that

access the various mining operations will be re-graded, capped with top soil where

needed, and fertilized and seeded with native species.

Mining Camp

Upon termination of the La Blache mining operations, all the remaining camp

infrastructure will be offered to the Innu, outfitters, or the local community. In the event

that no one is interested in the mining camp, it will be demolished at the end of the

mining operations. Demolition materials will be sorted and then sent for recycling or

disposal in Baie-Comeau.

Heavy Machinery and Mobile Equipment

Wherever possible, all mobile equipment and heavy machinery will be sold as used

surface equipment and removed from the site prior to final closure. Any unsold

equipment will be transported to Baie-Comeau and sold for scrap or disposed of in a

certified landfill.

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December 2011 20-9

The mobile mining equipment, for example trucks, loaders, shovels, and drills as well as

heavy surface machinery located in the different open pits will be returned to the surface,

emptied of all liquids and identified as being saleable or recyclable. All liquids will be

recovered and transported by a certified waste disposal contractor. Used equipment and

machinery parts that are too worn or old will be sent to Baie-Comeau for scrap or

disposed of on site.

Borrow Pits and Quarries

All borrow pits and quarries used for construction, maintenance and restoration work of

the La Blache Mine site will be re-profiled and restored. The restoration measures will

meet the requirements of the MDDEP borrow pit and quarry restoration regulations.

All debris, inoperable equipment, pieces of machinery and any other wastes will be

collected and disposed of on site during the restoration work or sent to Baie-Comeau for

recycling.

The slopes of the borrow pits and quarries will be stabilized to prevent any land

subsidence and erosion.

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December 2011 20-10

20.3 Controlled Products

20.3.1 Petroleum Products

The use of petroleum products, including gasoline, diesel fuel, hydraulic oils and grease

will be planned to ensure that there are minimum quantities on site at the end of mining

operations. Suppliers will be responsible for recovering all remaining volumes on site

after operations have ceased and restoration work is completed.

The fuel storage tanks on site (2 tanks of 50 000 litres) and associated piping will be

drained, cleaned and dismantled. The soils adjacent to the storage tanks will be

characterized, and the contaminated soils will be rehabilitated as required by The

Quebec Environmental Quality Law, Section IV.2.1 - Soil Protection and Rehabilitation of

Contaminated Sites Policy.

20.3.2 Chemicals

The use of all reagents and other chemicals will be planned to ensure that there are

minimum quantities on site at the end of mining operations, with the exception of

essential water treatment chemicals. Reagents and residual chemicals will be placed in

containers and transported to Baie-Comeau for recycling for disposal by a certified waste

disposal Contractor.

20.3.3 Hazardous wastes

The management of hazardous waste disposal is regulated in Quebec and must meet

the Quebec Environmental Quality (Laws of the Hazardous Waste Regulations)

standards. No hazardous materials will be present at the mine site after the cessation of

Argex’s mining operations. All remaining hazardous wastes will be collected, packaged

and transported to Baie-Comeau for disposal by a certified hazardous waste disposal

contractor.

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December 2011 20-11

20.3.4 Financial Guarantee

Under the Quebec Mining Act (RSQ, c M-13.1 Section 96.5 to 96.16), Argex will provide

a financial guarantee equal to 70% of the anticipated closure costs for the ore pads,

waste rock piles, mine water sedimentation and polishing ponds, and post-closure

environmental monitoring.

20.4 Permitting – La Blache Mine Site

Federal Government

The federal environmental review procedures are incorporated into the Canadian

Environmental Assessment Act (S.C. 1992, c. 37) (CEAA). Application of the federal

environmental assessment process is only required under certain conditions. The only

condition that could be applied to the La Blache Project is related to the federal

agencies’ requirements for issuing permits, licenses and / or approvals as required

through various federal acts or regulations. The one federal regulation that could trigger

the environmental assessment review process could be the Fisheries Act; however, a

detailed and comprehensive assessment of the La Blache Property, conducted for Argex

by Genivar, identified locations where the various mining infrastructures (e.g. ore pads,

waste rock pads, camp, garage, overburden pads, truck loading facility, and fuel storage)

could be placed, while not directly affecting any watercourses on the property. Therefore,

the federal CEAA process will not apply to the La Blache Project.

Metal Mining Effluent Regulations

The Metal Mining Effluent Regulations (MMER) included in the Fisheries Act require that

the Owner or Operators of metal mines implement Environmental Effects Monitoring

studies on the potential effects of their effluent on the fish populations, on fish tissue, and

on the benthic invertebrate community. The requirements of the program are specified in

Schedule 5 of the MMER, and include effluent characterization and sub-lethal toxicity

testing, water quality monitoring, and biological studies on fish and benthic invertebrate

communities. Argex will develop a monitoring program and reporting schedule that

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December 2011 20-12

complies with the MMER requirements as the fishery baseline studies have indicated

this requirement, and the application of the MMER is confirmed by federal authorities.

20.4.1 Permitting – La Blache Mine Site

Provincial Government

Initially, the RoM mining rate proposed for the La Blache Project is less than the current

threshold of 7000 t/d and less than the proposed new threshold published in the Quebec

Mineral Strategy, released June 29, 2009 (3,000 t/d), which requires an Environmental

Impact Assessment under the QEQA and the Environmental Impact Assessment

regulation. Therefore, the environmental impact assessment process will not be

applicable to the La Blache Project. However, to bring the La Blache Project into

operation, an application for a Certificate of Approval (CoA) will be prepared as per

Article 22 of the QEQA and submitted to the Sept-Îles Regional offices of the MDDEP.

This application will be accompanied by an environmental assessment of sufficient detail

to meet the requirements of Directive 019 for the mining industry so that the MDDEP can

rule on the acceptability of the La Blache Project. Any expansion of the mine production,

possibly in Year 6, which results in a production greater than 3,000 tpd, will require

Argex to prepare an environmental impact assessment for the increase in production.

20.4.2 Permitting - Bécancour TiO2 Industrial Plant

Provincial Government

Argex is planning to site the TiO2 Industrial Plant in the Bécancour Waterfront and

Industrial Park located on the south shore of the St. Lawrence River. The 75,000 tpy

TiO2 processing rate proposed for the first 60,000 tpy expansion is less than the current

threshold of 100,000 tpy for new chemical plants requiring an environmental impact

assessment under the QEQA and the Environmental Impact Assessment regulation.

Therefore, the Quebec environmental impact assessment process will not be applicable

to the Bécancour TiO2 Industrial Plant. Any future expansion above the 100,000 tpy

capacity, assumed to be Year 6 in this PEA, will require Argex to prepare and submit an

environmental impact assessment for the increase in production.

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December 2011 20-13

However, to bring the Bécancour TiO2 Industrial Plant into operation, a CoA will be

required under Article 22 of the QEQA, and be issued by the Trois-Rivières Regional

office of the MDDEP. The CoA application will include a site environmental assessment

with soil characterization studies, air and noise modelling, and effluent characterizations,

sufficiently detailed for the MDDEP to issue the CoA.

Regulation of the effluents in the Bécancour Waterfront and Industrial Park falls under

the responsibility of the MDDEP; therefore Argex will prepare a precondition notice for an

off-network industrial discharge, including the waste water release environmental targets

for the TiO2 Industrial Plant. There are no municipal effluent discharge standards that

apply to the Bécancour Waterfront and Industrial Park.

In addition, the following provincial and municipal permits and certificate of approvals will

be required for the TiO2 Industrial Plant in the Bécancour Waterfront and Industrial park,

which can be requested in parallel to or after the submission of the CoA to operate. Note

that none of these applications will affect the critical timing of the project:

Plant construction;

Plant operation;

Effluent treatment facilities;

Water/oil separation system;

Dust collectors, scrubbers, etc.;

Certificate of compliance with existing Ville de Bécancour municipal bylaws;

Ville de Bécancour Construction permit;

Petroleum products storage.

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December 2011 21-1

21. CAPITAL AND OPERATING COSTS

21.1 Capital Costs

BBA was provided with an equipment list and cost estimate developed by Mr. Ernie Burga,

P.Eng., Andeburg Consulting. Mr. Burga worked closely with Process Research Ortech to

size the equipment, also taking into account the equipment required to move solution and

solids through the various areas of the plant; process flow schematics were also provided

and the QP responsible for this section is satisfied that the major cost items have been

captured through this exercise.

At full capacity, the production objective of the Project is 195,000 tpy TiO2. To reduce the

risk associated with the implementation of a new process, a three-stage approach was

developed to steadily increase production over the course of several years. As a result, the

capital costs for the process plants have been disbursed over Years -1 to 5. The

construction of the first 15,000 tpy plant, the pre-commercial demonstration plant, has been

disbursed as follows; 40% in Year -1, 50% in Year 0, and 10% in Year 1, where Year 1 is

the first year of production.

A 60,000 tpy production module will be constructed and commissioned in Years 2 and 3, for

production starting in Year 4. An additional 120,000 tpy (2 modules) will be constructed in

Years 4 and 5, for production starting in Year 6.

The capital cost disbursement, incorporating capital required at both the La Blache Property

and the TiO2 Industrial Site is presented in Table 21.1.

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December 2011 21-2

Table 21.1: Capital Costs Disbursement over 25 Year Life of Mine

Area Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Years

6-25 Total

Costs

Road Construction $4.5 M - - - - - - - $4.5 M

Pre-Stripping - $1.7 M - - - - - - $1.7 M

Mine Equipment Purchase - - - - - $0.7 M - $7.6 M $8.3 M

Mine Equipment Lease - $1.2 M $1.2 M $1.2 M $1.2 M $1.2 M $1.2 M $1.2 M $8.3 M

Pre-Commercial Demonstration (15,000 tpy) $39.8 M $49.8 M $10.0 M - - - - - $99.5 M

Expansion 1 (1 × 60,000 tpy module) - -

$119.2 M $119.2 M - - - $238.5 M

Expansion 2 (2 × 60,000 tpy modules) - -

- - $242.0 M $242.0 M - $483.9 M

Costs Subtotal $44.3 M $52.6 M $11.1 M $120.4 M $120.4 M $243.9 M $243.2 M $8.8 M $844.7 M

Savings

$0.0 M

Tax Credits $2.1 M $2.7 M $0.5 M $6.3 M $6.3 M $12.7 M $12.7 M - $43.4 M

Savings Subtotal $2.1 M $2.7 M $0.5 M $6.3 M $6.3 M $12.7 M $12.7 M $0.0 M $43.4 M

Net Costs $42.2 M $50.0 M $10.6 M $114.1 M $114.1 M $231.2 M $230.4 M $8.8 M $801.3 M

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December 2011 21-3

21.1.1 Mine Capital Cost

The mine capital cost estimate is based upon budget prices submitted by equipment

suppliers and BBA’s own internal database. Assuming the mine equipment list presented in

Section 16, the total mine initial capex is 6.4M$. This amount is spread over 7 years at 7%

(leased) for a total of $1.2 million per year from Year 0 to Year 6.

Sustaining mine equipment capex amounted to $8.3 million.

Mine pre-production cost includes equipment operating cost, labour cost, blasting and

different mining costs incurred during the pre-production year (Year 0). The pre-production

(pre-stripping) of 367,000 tonnes of material in Year 0 amounts to 1.7M$.

21.1.2 Process Plant Capital Costs

The most significant costs of the Project are associated with the TiO2 Industrial Site. A cost

analysis was done for each of the three phases of expansion; Pre-Commercial

Demonstration, Expansion 1, and Expansion 2. The capital cost breakdown by area is

presented in Table 21.2.

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December 2011 21-4

Table 21.2: Hydrometallurgical Process Plant Capital Cost Breakdown

Area

Pre-Commercial

Demonstration

15,000 tpy

Expansion 1

60 ktpy

Module

Expansion 2

2×60 ktpy

Modules

Direct Costs

Crushing and Grinding $8.4 M $0.0 M $12.7 M

Hydrometallurgical Circuits (Ti, Fe) $9.3 M $27.2 M $54.3 M

Pyrohydrolysis (Fe, Mg) $18.5 M $75.0 M $150.0 M

Evaporation $9.0 M $17.2 M $34.5 M

Product Finishing (Fe, Ti, V) $8.3 M $11.1 M $20.2 M

Utilities, Site Works and Others $4.8 M $9.0 M $13.5 M

Wash Water Treatment Plant $1.1 M $3.1 M $6.2 M

Direct Costs Subtotal $59.4 M $142.6 M $291.6 M

Indirect Costs

EPCM $4.1 M $5.1 M $8.5 M

Owner’s Cost $4.2 M $9.3 M $19.0 M

Spare Parts $1.9 M $3.5 M $7.0 M

Freight $1.6 M $2.7 M $5.7 M

Temporary Facilities and Operation $3.6 M $8.6 M $17.5 M

Mobile Equipment $0.2 M $0.5 M $1.0 M

Chemical Initial Loads $4.6 M $18.5 M $37.0 M

Indirect Costs Subtotal $20.2 M $48.1 M $95.6 M

Contingency $19.9 M $47.7 M $96.8 M

Total $99.5 M $238.5 M $483.9 M

Note: Figures have been rounded and as a result, some rounding errors have been introduced.

Basis of Estimate

The mechanical equipment costs for the 60,000 tpy module formed the basis of the Pre-

Commercial Demonstration, Expansion 1 and Expansion 2 capital cost estimates. Factored

cost estimates were developed by Mr. Ernie Burga of Andeburg Consulting. These costs

were reviewed by BBA and some adjustments have been made.

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December 2011 21-5

The equipment costs for the Pre-Commercial Demonstration Plant (15,000 tpy TiO2) were

scaled for size. Various exceptions to this have been noted under Assumptions (see

below).

All civil, structural, electrical, automation and piping costs were factored based on the

mechanical equipment cost. The building size was based on a factored estimate and no

layout work was initiated in this phase of the study. The installation costs were factored on

the basis of 35% of the equipment cost.

A turnkey budget figure for an iron spray roaster pyrohydrolysis unit was obtained

independent of Mr. Burga’s estimate, with which multiples were applied for multiple units.

The 15,000 tpy Pre-Commercial Demonstration Plant requires one spray roaster, while the

60,000 tpy production modules require four. This turnkey quote was scaled for the MgCl2

pyrohydrolysis unit. EPCM for these units is included in the direct costs and not in the

indirect costs. As a general observation, it is difficult to obtain a breakout of equipment

costs from the vendors of pyrohydrolysis systems, possibly owing to the nature of how

these units are typically sold (i.e. all inclusive).

BBA adjusted certain factors for the indirect costs, which were also calculated as

percentages:

EPCM: 10% of the direct costs (except the pyrohydrolysis units);

Owner’s costs: 7% of the direct costs;

Spare parts: 6% of the direct costs (except the pyrohydrolysis units);

Freight: 4% of the direct costs (except the pyrohydrolysis units);

Temporary facilities and operation: 3.25% and 2.75% of the direct costs, respectively;

Mobile equipment: 0.35% of the direct costs;

Contingency: 25% of the direct and indirect costs.

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December 2011 21-6

Initial fills were calculated on the basis of equipment sizing and prices for the organic

reagents, hydrochloric acid (37wt% HCl), and the MgO required to start the plant.

Assumptions

The following assumptions were made when calculating the costs for the processing plants:

The crushing will be done by a mobile jaw crusher at the La Blache site. The initial jaw

crusher will be sized for full capacity of 195,000 tpy. No additional crushing equipment

at the mine will be required after the initial investment for the 15,000 tpy plant.

The grinding circuit for the 15,000 tpy plant will be sized for 75,000 tpy and as result no

grinding costs are associated with Expansion 1;

The first iron oxide briquetting system will be sized for full scale operation. No further

expansion is required after the initial investment for the 15,000 tpy plant;

An allowance has been made for vanadium production in the initial outlay for the Pre-

Commercial Demonstration Plant. A further allowance of $1 million is made during

Expansion 1 for upgrades and automation;

An allowance for sustaining capital of 50 $M for the TiO2 Industrial Site was assumed

for the life of the Project, which was evenly spread over a 20 year period, starting in

Year 6.

A 15% tax credit for the Bécancour region has been included in the financial analysis.

This tax credit is applicable to all new mechanical, electrical and instrumentation

equipment that is installed in a manufacturing plant. This cost is not shown in Table

21.2; however, it can be seen in the capital cost disbursement, shown in Table 21.1.

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December 2011 21-7

21.2 Operating Costs

A result of the three-stage approach that was chosen for the project is that the operating

costs per tonne of TiO2 produced changes with increasing plant capacity. To illustrate this,

operating costs have been broken down as follows:

Pre-Commercial Demonstration – (Years 1, 2, 3);

Expansion 1 – (Years 4, 5);

Expansion 2 – (Years 6 to 25).

The breakdown of operating costs is presented in Table 21.3.

Table 21.3: Operating Costs Summary

Area

Years 1-3

(15,000 tpy)

Years 4-5

(75,000 tpy)

Years 6-25

(195,000 tpy)

Average

LOM

$/ t TiO2

Mine 132.68 88.22 63.81 65.10

Crushing 18.77 20.40 15.59 15.76

Transportation from Mine to Bécancour 245.46 266.90 203.96 206.08

Processing 1414.63 1273.37 942.15 955.56

Process Waste Handling Cost 60.96 66.29 50.65 51.18

Briquette Port Handling and Shiploading 10.22 10.33 10.15 10.15

Process Royalties 56.92 56.92 56.92 56.92

Royalty Buy-Back 42.64 0.00 0.00 0.38

NSR Site 67.32 75.78 74.65 74.62

General and Administrative 326.90 81.29 23.51 27.81

Mine Environmental Monitoring and Closure Cost 7.20 4.22 0.98 1.13

Road Maintenance 135.64 28.73 8.31 10.01

Opex ($/t TiO2) 2519.32 1972.46 1450.69 1474.69

Opex ($/t TiO2) with by-product credits 1572.93 1029.45 564.05 585.95

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December 2011 21-8

As a result of the economies of scale, the cost per tonne of TiO2 decreases significantly as

production increases, with costs per tonne of TiO2 (after by-product credits) decreasing

from $1572.93 to $564.05 when increasing from 15,000 tpy to 195,000 tpy for a life-of-

project average of $585.95 per tonne TiO2. This translates to an average life-of-project total

operating cost of about $222 / tonne (milled).

A breakdown of life-of-project (25 year) operating costs is illustrated in Figure 21.1.

Figure 21.1: Life of Project Operating Costs Breakdown

It can be seen that the largest operating cost for the project is the processing, which

accounts for about 65% of the total. The raw materials handling (i.e. crushing and

transportation to the hydrometallurgical plant) are another significant cost, representing an

additional 15%, while the mining costs are around 4%. Other significant costs are the Net

Smelter Return (NSR), mining, royalties for the process and process waste handling.

Mine 4.4%

Crushing 1.1%

Transportation from Mine to Bécancour

14.0%

Processing 64.8%

Process Waste Handling Cost

3.5%

Briquette Port Handling and Shiploading

0.7%

Process Royalties 3.9%

Royalty Buy-Back 0.0%

NSR Site 5.1% G/A

1.9% Environmental

0.1% Road Maintenance

0.7%

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December 2011 21-9

21.2.1 Mine

Mine operating costs were estimated using the list of equipment and manpower

requirements presented in the preceding sections of this Report. Mining operating costs

include the equipment operating cost, the salaries, the cost for blasting and other services.

The equipment cost and blasting cost are based on Supplier’s budgeted price and a fuel

price of C$0.90 per liter of fuel.

Average salaries are based on the 2010 Canadian Mine Salaries and Wages Survey results

and/or similar size mining operations, and include an average of 35% fringe benefits.

Equipment unit operating and maintenance costs were developed from quotations received

from Supplier cost estimation guides and from experience and personal contacts within the

mining industry; other sources of information are from an internal database on similar

projects.

The blasting cost, including explosives manufacturing, transport, down-the-hole service

and the related labour fees has been estimated at an average of C$0.24 per tonne of

blasted material.

The average annual mine unit operating cost is presented as follows:

Years 0 to 3 (Pre-Commercial Demonstration) = 4.55 M$

Years 4 to 6 (Expansion 1) = 2.33 M$

Years 6 to 25 (Expansion 2) = 2.77 M$

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December 2011 21-10

21.2.2 Transportation to Bécancour

The costs of transportation to Bécancour includes truck loading from the crusher,

transportation to the Baie-Comeau Port, stockpiling at Baie-Comeau, shiploading at Baie-

Comeau, transportation from Baie-Comeau to Bécancour by self-unloading vessel, and port

handling and ship unloading at Bécancour. The relative breakdown of the life of mine

transportation costs are as follows:

Transportation to Baie-Comeau: 50%;

Port and shiploading at Baie-Comeau: 17%;

Transportation from Baie-Comeau to Bécancour: 23%;

Port handling and ship unloading at Bécancour: 10%.

Overall, transportation from the mine to Bécancour represents 14% of the total operating

costs.

21.2.3 Process Plant

The process opex costs were calculated on the basis of two sizes of module; Pre-

Commercial (15,000 tpy TiO2) and Commercial (60,000 tpy TiO2). The overall costs at

15,000 tpy, 75,000 tpy and 195,000 tpy were calculated on the basis of having a single

15,000 tpy module, then adding a 60,000 tpy module for Expansion 1, and two such

modules for Expansion 2.

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December 2011 21-11

The operating costs for the process plant are shown in Table 21.4 and Figure 21.2.

Table 21.4: Process Plant Costs for 15,000 tpy and 60,000 tpy Plants

Cost 15,000 tpy

($/ t TiO2)

60,000 tpy

($/ t TiO2)

Reagents

Organics 85.83 85.83

Leaching Reactants 11.78 11.78

Flocculant 16.15 16.15

Product Handling Reagents 115.17 115.17

Consumables

Liners and Maintenance 184.39 122.05

Product Packaging 2.72 2.72

Manpower

Labour 227.41 56.85

Utilities

Electricity 72.13 72.13

Natural Gas 375.86 375.86

Water 0.03 0.03

Total ($/t TiO2) 1091.46 858.56

Total ($/ t Milled) 180.03 141.62

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December 2011 21-12

Figure 21.2: Processing Cost Breakdown

The processing costs were based on reagents, main plant consumables and maintenance

parts, manpower and utilities. The organic reagents include:

Three Extractants used in iron, titanium, and vanadium extraction;

One Modifier;

One Diluent.

Leaching reagents include magnesium oxide (MgO) and hydrochloric acid (HCl).

Flocculants are used for aiding dewatering and thickening. Product handling reagents are

all agents used for preparation of the final products and include, for example; ammonium

chloride (NH4Cl), binding agent, aluminum oxide (Al2O3) and sodium silicate (Na2SiO3).

Organics 8%

Leaching Reactants

1%

Flocculant 2%

Final Product Reagents

11%

Maintenance 15%

Packaging 0%

Labour 21%

Electricity 7%

Natural Gas 35%

Water 0%

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December 2011 21-13

Utilities include natural gas for the two pyrohydrolysis steps and general plant requirements,

electricity and water. The prices of consumables were taken from Vendor quotes in Q3

2011. Electricity cost was taken as $0.048/kWh, which was confirmed to be accurate based

on the location and power consumption of the plant. Natural gas prices were based upon

Gaz Métro contract pricing posted on their web site. Maintenance parts were estimated as

being 6% of the total mechanical equipment cost.

The largest cost is associated with natural gas consumption for the plant. Both

pyrohydrolysis circuits consume large amounts of energy and so it is important to develop

ways to minimize consumption through various strategies that will be described in Section

25.

21.2.4 Waste Product Handling

Leach residue and MgO product from pyrohydrolysis are assumed to be collected and

hauled to a non-hazardous landfill site. There are currently no provisions in the capital

expenditures for a waste holding facility. It has been assumed that the tonnages of waste

product produced can be handled by the current infrastructure.

The process waste handling cost is based on a figure of $30.00 per tonne of material

hauled away.

21.2.5 Product Shipping

Shipping of iron oxide briquettes has been taken into account in this study. The costs

include only the port handling and shiploading fees, and a flat rate of $3/tonne of briquettes

was used. The briquettes are assumed to have been sold at the Port of Bécancour

(i.e. FOB – Bécancour).

The titanium dioxide and vanadium chemical compounds are assumed to have been sold at

the TiO2 Industrial Site’s loading dock (i.e. FOB – Plant).

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December 2011 21-14

21.2.6 Royalties

Process Royalties

The basis of this study is a propriety process owned by Canadian Titanium Limited, which is

50.1% owned by Argex Mining and 49% owned by the principals of Process Research

Ortech. Royalties for the process will be paid as a function of TiO2 produced. The value

used for this study is 2% of total TiO2 revenues.

Net Smelter Return

The value used for this study is 2% of total revenues.

21.2.7 General and Administrative

General and administrative costs were factored from similar projects. These costs include:

Human resources;

Administration and management;

Health and safety;

Laboratory costs;

Information technology;

Security;

Insurance and legal;

Corporate spending.

A value of $3.5 million was taken for Years 1-3, with an increase to $4.0 million and $4.5

million in Years 4 and 6, respectively.

21.2.8 Environmental and Closure Costs

21.2.9 Road Maintenance

Maintenance costs have been taken into consideration for the road connecting the La

Blache deposit to existing forestry road. For the purpose of this study, it has been assumed

that Argex will cover 100% of the road maintenance cost.

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December 2011 22-1

22. ECONOMIC ANALYSIS

22.1 Financial Analysis

A pre-tax cash flow and financial analysis were performed for the PEA. The capital and

operating costs discussed in Section 21 were used to calculate the discounted cash flow.

The other following key parameters were also used Table 22.1.

Table 22.1: Key Parameters Used in Discounted Cash Flow

Description Value Unit

Titanium dioxide (TiO2) 2846 $/tonne

Ti recovery 87 %

Iron oxide briquettes (Fe2O3) 135 $/tonne

Fe recovery 90 %

Vanadium Pentoxide (V2O5) 17,637 $/tonne

V Recovery 90 %

Based on these numbers, the discounted cash flow was developed for the first 25 years

of the mine life and any production after Year 25 was ignored for the purpose of the

analysis. The key outputs from the discounted cash flow are presented in Table 22.2.

Table 22.2: Financial Analysis Summary

Description Value

IRR 31.9%

NPV @ 0% 8 094.2M

NPV @ 5% 3 496.2M

NPV @ 8% 2 185.2M

NPV @ 10% 1 612.9M

Payback Period 6.9 years

The analysis suggests that the La Blache deposit has reasonable prospects of economic

recovery. The Internal Rate of Return (IRR) is high at 31.9%, while the non-discounted

cash flow is above $8.0 B over 25 years. The Net Present Value (NPV) is $2.2 B at a

discount rate of 8%. A direct result of the three stages of production being implemented

over a six (6) year period is that the payback period is fairly long at 6.9 years. This is

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December 2011 22-2

simply because there is construction throughout the first five years of production and full

production is only expected to begin in Year 6. This can be seen in the cash flow

illustration shown in Figure 22.1.

Figure 22.1: Cash flow and Revenue from the Financial Analysis

Figure 22.1 illustrates the impact of a gradual production increase as each phase of the

Project is implemented. The operation does not begin to make a profit until Year 6, due

to the construction costs associated with each 60,000 tpy module. This conservative

approach was implemented to allow for sufficient time to optimize the process after start-

up. It has currently been assumed that each module will require between 9 and 12

months to achieve design rates, which has been reflected as a discounting in the

production from the given module in the first year that it is brought on line.

-$600M

-$400M

-$200M

$0M

$200M

$400M

$600M

$800M

$1 000M

-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Year

Cashflow Revenue Cum. Cashflow

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December 2011 22-3

22.2 Sensitivity Analysis

A sensitivity study analysis was performed to assess the relative impact of varying the

operating costs, capital costs and revenue of the project. Variations in revenue can be

attributed to fluctuations in either metal recovery or price.

The sensitivity analyses for the IRR and NPV at 8% are shown in Figure 22.2 and Figure

22.3.

Figure 22.2: Sensitivity of the Internal Rate of Return to Key Input Variables

15%

20%

25%

30%

35%

40%

45%

-40% -30% -20% -10% 0% 10% 20% 30% 40%

IRR

Sensitivity

CapEx

OpEx

Revenue

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December 2011 22-4

Figure 22.3: Sensitivity of the Net Present Value to Key Input Variables

It can be seen that both the IRR and NPV are most sensitive to variations in the revenue.

The operating costs had a significant effect on both the IRR and NPV, while the capital

costs had a significant effect on the IRR, but was less of an important variable for the

NPV.

Based on these results, further sensitivity analyses were performed to determine the

effect of key variables that affect the operating costs and revenues. It was determined

that one of the key variables driving the operating costs is the price of natural gas. The

factors that affect the revenue of the Project are the price and recovery of iron, titanium

and vanadium. Since the recovery of titanium will be the main production parameter, it

was decided to see what effect varying the recovery of iron and vanadium would have on

the Project financials at a titanium recovery of 87%.

$0.5B

$1.0B

$1.5B

$2.0B

$2.5B

$3.0B

$3.5B

$4.0B

-40% -30% -20% -10% 0% 10% 20% 30% 40%

NP

V @

8%

Sensitivity

CapEx

OpEx

Revenue

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December 2011 22-5

The results from this second sensitivity are presented in Table 22.3.

Table 22.3: Natural Gas Price and Secondary Product Recovery Sensitivity

Parameter Sensitivity 87% Ti Recovery

NPV @ 8% IRR

Natural Gas Price

100% $1 641 M 26.6%

50% $1 913 M 29.3%

0% $2 185 M 31.9%

-50% $2 457 M 34.5%

-100% $2 729 M 37.0%

TiO2 Price

30% $3 221 M 40.0%

15% $2 703 M 36.1%

0% $2 185 M 31.9%

-15% $1 668 M 27.3%

-30% $1 150 M 22.3%

Iron Recovery

10% $2 240 M 32.4%

0% $2 185 M 31.9%

-15% $2 102 M 31.1%

-30% $2 020 M 30.4%

-100% $1 633 M 26.8%

Vanadium Recovery

10% $2 241 M 32.4%

0% $2 185 M 31.9%

-15% $2 101 M 31.2%

-30% $2 018 M 30.4%

-100% $1 627 M 26.9%

The natural gas price, which is primarily driven by the amount of iron that must be

pyrohydrolyzed, has a significant impact on the economics of the Project. It can be seen

that doubling the price of natural gas results in a decrease in IRR from 31.9% to 26.6%

and a decrease in the 8% discounted NPV from $2 185 M to $1 641 M. This indicates

that the Project economics are sensitive to fluctuations in the price of natural gas.

The recoveries of both vanadium and iron had similar impacts on the economics of the

Project. When the vanadium production drops by 100% (i.e. no production), the 8%

discounted NPV drops from $2.2 B to $1.6 B, and the IRR decreases from 31.9% to

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December 2011 22-6

26.9%. This is an important value as it can help determine whether and when a

vanadium recovery circuit is to be implemented. If no vanadium circuit is implemented,

then the vanadium will be removed from the circuit in the bleed to the MgCl2

pyrohydrolysis unit. For this study it has been assumed that there would not be a

significant change in operating and capital cost in the event that the vanadium circuit

was not implemented; there would, however, be a slight decrease in both operating and

capital costs and a trade-off study should be conducted in the next phase of the Project

Based upon the sensitivity analysis, it appears that both Fe and V production are

important to the La Blache Project economics; however, small variations in recovery do

not have as much of an impact as variations in titanium recovery. One sensitivity

analysis that has not yet been performed is the sensitivity of Project economics to raw

materials containing higher titanium head grade. This is discussed further in Section 25.

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December 2011 23-1

23. ADJACENT PROPERTIES

Nevado Resources Corporation (Nevado), with a business address in Montreal, Quebec,

holds 25 claims (1,357 hectares) in three blocks completely imbedded within Argex’s La

Blache property and referred to by Nevado as the La Blache 1 Property. Another block

held by Nevado comprised of 548 mining claims (30,140 hectares) completely surrounds

Argex’s claims.

Nevado announced (Press Release of January 26, 2011) the start of a 10,000-m

diamond drilling program and published significant results from the first analytical results

received (Press Release, February 3, 2011). Nevado reported a 32.9-m intersection

grading 45.1% FeT, 17.7% TiO2 and 0.07% V2O5 in hole FT-10-01. Incidentally, in the

same Press Release, Nevado denied allegations that their drilling campaign infringed on

any of the ancestral rights of the Innu of Pessamit.

The Qualified Person and author of this report has been unable to verify any of the

information provided under this section. The information and analytical results published

by Nevado are not necessarily indicative of the mineralization on Argex’s La Blache

property that is the subject of this Technical Report.

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December 2011 24-1

24. OTHER RELEVANT INFORMATION

24.1 Future Work

As part of future work leading to the construction of a pre-commercial demonstration

plant (15,000 tpy TiO2), there are some clearly identified project milestones that must be

reached. Argex next intends to commission a mini-plant capable of producing at a rate of

up to 10 kg/day of TiO2, which will be a more cost effective means of generating samples

for market evaluation by prospective end-users and to test the performance of other

titanium-bearing raw materials. This size of plant will also permit the incorporation of the

vanadium solvent extraction circuit on the bleed stream, as well as the generation of

sufficient volumes of solution for the pilot testing of the pyrohydrolysis of MgCl2 and iron

chloride solution.

Confirmation by vendors of a configuration to pyrohydrolyze ferric chloride (FeCl3)

represents another significant milestone in the de-risking of the project. Early indications

by major equipment suppliers in this domain suggest that while the technology was

designed to treat ferrous chloride (FeCl2), the operating conditions can be adjusted to

overcome the more volatile FeCl3. Equipment suppliers have previously worked on this

issue and the challenge is not viewed as insurmountable.

Some suggestion has been made that alternatives to iron pyrohydrolysis be considered.

Specifically, a low temperature process suitable to both FeCl2 and FeCl3 has been

proposed. This involves the hydrolysis of iron in a concentrated chloride solution that

produces hematite and regenerates hydrochloric acid at around 180oC. Argex is aware

of various groups that have demonstrated this technology in the laboratory; however,

until such a system has been reliably demonstrated on the scale needed for this Project,

in the interest of reducing risk, the decision has been made not to pursue its

incorporation into the CTL Process at the present time; choosing instead a technology

that has been in commercial use for the past 40 years.

Setting aside issues that deal primarily with any outstanding issues of a chemical nature,

the chemical engineering design of the process will begin to take precedence in these

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December 2011 24-2

next stages of development. The selection and testing of materials of construction

represents another important milestone in the design of the pre-commercial

demonstration plant. In this area, the expertise from equipment manufacturers familiar

with chloride-based hydrometallurgical operations and chemical processing plants will be

sought. In Quebec, and specifically in the Bécancour region, there exists a level of

operational and fabricating expertise that will be tremendously helpful. Gasket materials,

protective surface coatings, and building materials must be selected with the aim of

minimizing premature failure. Leach reactor design must be initiated and long lead-time

items must be identified. The transfer of both liquids and solids through the plant must be

developed in sufficient detail and a basic overall layout must be developed, beginning as

early as the prefeasibility study.

Coupled with these activities will be the development of an Environmental Management

Plan, along with the development and execution of a plan for completing all requirements

for permitting the plant. The Environmental Management Plan must cover such elements

as procedures for managing and containing spills, training of plant personnel, an

occupational health & safety program, chemical handling procedures, fire protection,

start-up procedures, emergency shutdown procedures, among a list of many other items.

Further work is also required to better characterize plant emissions and the means of

protecting both plant personnel and the environment. A basic design for ventilation and

capture of dusts, aerosols containing HCl, and volatile organic compounds (VOCs) must

also be elaborated.

Market evaluation of the TiO2 product must also be initiated, with further efforts to

establish the acceptability of a micronized product. Over the course of the coming year,

Argex is also initiating a coatings program with PRO, along with a development program

to determine whether the particle size of the titanium dioxide hydrate (TiO2.H2O) can be

better controlled during precipitation, possibly avoiding the first stage of micronizing

altogether.

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December 2011 24-3

24.2 Project Schedule

The design stages leading to the pre-commercial demonstration plant will include; 1)

prefeasibility, 2) feasibility, and 3) detailed engineering design. Each naturally leads to

progressively more detail, more precision on costs, and further precision of the

implementation schedule. Construction, successful start-up, and operation of the plant

will point to further enhancements for the design of the commercial-scale plant. The pre-

feasibility study can be expected to take at least 9 months to complete and the feasibility

study will take upwards of 12 months.

Permitting typically proceeds through the pre-feasibility and feasibility stages of study,

with all necessary permitting completed prior to the start of mine development and

construction of the TiO2 Industrial Plant. An allocation of one year has been made for the

environmental permitting process, but this assumes that no Environmental Impact

Assessment will be required for the La Blache Property. An allocation of one year has

also been made to complete the Environmental Management Plan and permitting

activities (6 months), which will be required for the TiO2 Industrial Plant.

Metallurgical testing will also proceed in parallel with the prefeasibility and feasibility

stages, following which the decision of whether or not to proceed with the pre-

commercial demonstration plant would take place. Detailed engineering would follow,

coupled with the preparation of bid documents and purchasing activities for long lead

items. The entire EPCM cycle is anticipated to take two years to complete. A reasonable

estimate would be that the commissioning and start-up of the pre-commercial

demonstration plant would be 3.5 years from the date that this report has been issued.

Opportunities may be identified to shorten this schedule and reduce start-up costs;

however, de-risking of the process will not occur through the elimination of any of the

steps noted. For example, BBA cannot recommend a “fast-track” approach by

eliminating the pre-feasibility study stage; proceeding directly to a feasibility study,

instead. Execution of the project and the avoidance of delay will only come about

through detailed planning and by correctly timing the involvement of the vendor /

suppliers, coupled with clear definition of the handover points between all parties

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December 2011 24-4

involved. Every opportunity to shorten the schedule will be explored and Argex is

already in discussions with vendor / suppliers who are familiar with the hydrochloric acid

manufacturing industry as well as specialists who are familiar with other segments of the

process. Reference site visits will form part of the strategy of rapidly prototyping the

design of the pre-commercial demonstration plant.

A preliminary schedule outlining the above is presented in Figure 24.1

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December 2011 24-5

Figure 24.1: La Blache Project – Mine and Concentrator Development Schedule.

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December 2011 24-6

24.2.1 Budget

Preliminary budget figures for the next stages of work, up to and including feasibility, are

presented below. In the next stages, most spending will be directed towards further

development of the CTL Process’ modules and the environmental aspects so that

resources can be converted into reserves; product requirements with prospective clients

must also be developed as part of this process. An allowance for exploration drilling is

also included for any additional work required for Hervieux-Est and Hervieux-Ouest has

been made, as well as exploration drilling and sampling for the Lac Schmoo deposit,

although the latter may be maintained as an exploration target for the Project.

Metallurgical Testing

Mini-plant & Vendor Testing 2.0 $M

TiO2 Milling & Coating Program 1.0 $M

Engineering Design

Pre-feasibility 1.0 $M

Feasibility 2.0 $M

Environmental Considerations

Environmental Permitting (La Blache) 1.0 $M

Environmental Management System 0.5 $M

Exploration Program

Drilling & Sampling 5.0 $M

Grand Total 10.5 $M

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December 2011 25-1

25. INTERPRETATION AND CONCLUSIONS

BBA is satisfied that the laboratory and mini-plant testing programs that have been

carried out by Process Research Ortech have met the requirements of a Preliminary

Economic Assessment. Originally, the intent had been to publish a PEA based solely on

laboratory testwork; however, the decision to delay the PEA can be attributed to the

rapid progress of the mini-plant. Demonstration of the chemistry of the CTL Process on a

sustained, semi-continuous basis represents a major milestone in the development of

the Project. What the mini-plant has demonstrated is that the principal components of

the hydrometallurgical process, namely leaching and solvent extraction of iron and

titanium are technically valid and that the process can be operated on a small scale.

The recovery of vanadium from the brine solution has also been demonstrated, albeit in

a laboratory setting. The ability to produce synthetic rutile of very good quality at the

desired particle size has also been demonstrated. For all intents and purposes, a

sufficient body of information has been developed to warrant BBA’s recommendation to

continue with the next stage of development work and a pre-feasibility study of the

Project.

25.1 Additional Sources of TiO2 sources

A second important point that must be explained is that the size of the TiO2 Industrial

Plant will more likely be driven by the needs of the end user as opposed to a need to

optimize mine production over some defined period of time. Economics and practical

size for the plant is deemed to be between 30,000 to 60,000 tonnes. This allows the

combination of best economics to produce the TiO2 rutile economically and produce

multiple finishes for the end users.

Titanium dioxide pigment is a specialized commodity. While traded in bulk quantities,

large pigment producers, for example DuPont, have many proprietary formulations for

coating synthetic rutile to make TiO2 pigment for different applications. Paint

manufacturers have worked closely with the pigment suppliers over the course of many

years and at this stage of their development, Argex should not expect to independently

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December 2011 25-2

develop a full complement of formulations to offer to compete in the market. Whereas a

coating plant allowance has been developed in this study, more out of a need to justify

the use of published TiO2 prices, the more likely scenario for Argex may be to develop

across-the-fence relationships with paint and/or plastics manufacturers that are seeking

a secure source of supply with a limited offering of coatings.

Options that are already being investigated are working with providers of proprietary

coating technologies to make a High Quality product for the architectural industry. BBA

encourages these efforts and other similar opportunities to accelerate the development

cycle and further de-risk the project.

An alternate business model might see the transfer of the synthetic rutile to the end-user

after the point that it has been micronized, but prior to coating. In this model, the end-

user would take responsibility for coating and the production capacity might be

established by a take-or-pay contractual arrangement. Alternatively, the coating plant

might be developed jointly. By not assuming the full cost of a TiO2 coating plant, there

will be a corresponding reduction in the capital and operating costs, as well as reduced

assumption of risk; naturally, to some extent, at the cost of the full value of the TiO2

produced.

Part of Argex’s strategy to de-risk this aspect of the Project is to work with prospective

end-users. Beginning in 2012, with the commissioning of the 10 kg/day capacity TiO2

pilot plant, interested paint and plastics manufacturers will be invited to test the product

with Argex’s aim to obtain market feedback at relatively low cost. Similar marketing

efforts must also be initiated for both the iron and vanadium co-products.

25.2 Plant Capacity

A second important point that must be explained is that the size of the TiO2 Industrial

Plant will more likely be driven by the needs of the end user as opposed to a need to

optimize mine production over some defined period of time. Titanium dioxide pigment is

a specialized commodity. While traded in bulk quantities, large pigment producers, for

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December 2011 25-3

example DuPont, have many different proprietary formulations for coating synthetic rutile

to make TiO2 pigment. Paint manufacturers have worked closely with the pigment

suppliers over the course of many years and at this stage of their development, Argex

should not (cannot) expect to independently develop a full complement of formulations to

offer to compete in the market. Whereas a coating plant allowance has been developed

in this study, more out of a need to justify the use of published TiO2 prices, the more

likely scenario for Argex may be to develop across-the-fence relationships with paint

and/or plastics manufacturers that are seeking a secure source of supply with a limited

offering of coatings. Discussions with one potential end-user led Argex to conclude that

an appropriately sized plant should produce in the order of 30,000 to 60,000 tpy of TiO2

to meet their particular needs.

An alternate business model might see the transfer of the synthetic rutile to the end-user

after the point that it has been jet milled, but prior to coating. In this model, the end-user

would take responsibility for coating and the production capacity might be established by

a take-or-pay contractual arrangement. Alternatively, the coating plant might be

developed jointly. By not assuming the full cost of a TiO2 coating plant, there will be a

corresponding reduction in the capital and operating costs, as well as reduced

assumption of risk; naturally, to some extent, at the cost of the full value of the TiO2

produced.

Part of Argex’s strategy to de-risk this aspect of the Project is to work with prospective

end-users, coating specialists in joint venture efforts and their own trials which have

been initiated. Beginning in 2012, with the commissioning of the 45 kg/week TiO2 pilot

plant, interested paint and plastics manufacturers will be invited to test the product with

Argex’s aim to obtain market feedback at relatively low cost while working in joint

ventures for coating development. Similar marketing efforts must also be initiated for

both the iron and vanadium co-products.

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December 2011 25-4

25.3 Other Risks and Opportunities

In the course of completing the preliminary economic analysis and this NI 43-101 report,

certain other key elements of risk and opportunity became self-evident. These are

summarized in bullet form below.

Full advantage of the siting of the TiO2 industrial plant at the Bécancour Waterfront

and Industrial Park has not been taken. Whereas package boiler and

demineralization plant allowances were made in the capex and opex for the Project,

these expenses may be delayed (or eliminated) by using low and/or medium grade

steam that is made available to the industrial park users by TransCanada Québec,

which operates a 550 MW co-generation plant. This will be investigated in the

upcoming pre-feasibility study (PFS).

The sale of magnesia (MgO) represents another potential opportunity for enhancing

the economics of the Project, while at the same time eliminating a landfill cost that

was assumed for this by-product; however, further work is required to establish its

quality and marketability.

The marketability of the iron oxide briquette must be established. Whereas it is

anticipated that the iron content will fall well within specification for a lump ore,

concerns may still linger in regards to the residual chloride content of the product.

Historically, iron oxide from spray roasting pyrohydrolysis has been deemed

unacceptable as feed material for certain unit operations of the steelmaking process

(i.e. as feed to a pellet plant or sinter machine), it is hoped that by producing a feed

that is suitable to blast furnaces, this issue can largely be overcome.

Opportunities also exist to further rationalize the unit operations that were assumed

in this PEA. One technology from the cement industry may allow the secondary

crushing and grinding steps to be combined. A fourth solvent extraction step, acid

recovery, which is mentioned in this report, can be eliminated from the cost estimate

as it was made redundant once the pyrohydrolysis of a bleed stream was adopted.

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December 2011 25-5

While not presented in any schematics of the process, an allowance had been

retained for it in the capital cost estimate.

One very significant opportunity that is currently being challenged is the titanium

recovery. A loss of 5% titanium to the iron solvent extraction circuit was identified as

a result of running the mini-plant. This loss takes place in a scrubbing stage that

uses iron chloride solution to scrub titanium that is co-loaded into the organic phase.

In the current PEA this titanium was considered unrecoverable; however, the

configuration that was developed assumed that the iron chloride scrubbing solution

would be bled to a Wash Water Treatment Plant, where the bleed solution would be

neutralized and the solids lost. An alternative arrangement would see the scrub

solution returned to the leach. PRO has also begun to experiment with other organic

extractants that may perform a similar task, but not co-load titanium in the process,

thereby eliminating the scrubbing stage altogether. Through this one alteration to the

process, it may be possible to raise the recovery of titanium from 87% to nearly

91.5%, which would positively impact the operating cost per tonne of TiO2 produced.

This too must be evaluated as part of the prefeasibility study.

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December 2011 26-1

26. RECOMMENDATIONS

Three recommendations are to be discussed in this section. The results of the work to

be outlined will help to determine a path for the La Blache Project as well as the TiO2

Industrial Plant.

BBA endorses the idea of performing a sensitivity analysis of the Project’s

economics as a function of titanium head grade as part of a Pre-Feasibility Study.

This is all the more important, given Argex’s recently acquired interest in Lac Brûlé,

another titaniferous magnetite deposit located on the Quebec North Shore. This

particular sensitivity exercise was not completed as part of the present PEA;

however, through this exercise, it will be possible to develop a better understanding

of how such variables as natural gas price will impact economic sensitivity when raw

materials of higher titanium head grade and lower iron content are considered. The

analysis will need to take into consideration a re-sizing of plant equipment, but

should either be based on a fixed production of TiO2 or a constraint related to a

maximum iron throughput to ensure a meaningful comparison. The analysis should

be performed on the basis of a stand alone industrial plant treating different sources

of raw materials that will be supplied at arm’s length.

BBA also endorses Argex’s efforts to build a larger mini-plant with capacity of 10

kg/day. This effort will touch off several other activities related to developing market

acceptance and confirming various engineering parameters through vendor

involvement. The current mini-plant was unable to produce sufficient TiO2 for particle

size optimization and coating trials. BBA endorses the involvement of vendors in the

coming pre-feasibility study to help further de-risk and take full advantage of lessons

learned from actual practice. The larger size of mini-plant will also permit the

opportunity to integrate the vanadium circuit with the other components of the

hydrometallurgical plant.

BBA endorses the idea of working in partnership with companies with TiO2 coating

expertise as a strategy for developing market acceptance.

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December 2011 27-1

27. REFERENCES

(1) Technical Report NI 43-101 on the Mineral Resources of the La Blache Property, Quebec,

Canada, Yves A. Buro, Eng., Issued June 29, 2011.

(2) Argex Mining Inc., “Argex Announces Resource Estimate for the La Blache Property”,

press release dated May 18, 2011.

(3) Anorthosite, Gabbronorite, Peridotite of the De La Blache Plutonic Suite, Grenville

Province, Quebec. American Geophysical Union, Spring Meeting 2004, abstract.

(4) Avramtchev, L., 1984. Carte des minéraux du Québec: Région de la Côte-Nord, Ministère

des ressources naturelles, DV83-14, 19 pages, 19 cartes.

(5) Avramtchev, L., PICHÉ, G., 1981. Catalogue des gîtes minéraux du Québec : Région De

Laurentie-Saguenay, Ministère des. Ressources naturelles et de la Faune du Québec

(MRNFQ), 62 p. and 12 maps, DPV 809.

(6) Bérard, J., 1963. Rapport géologique sur les régions du lac Matonipi et du cours supérieur

de la rivière aux Outardes, comtés de Saguenay et de Chicoutimi., Ministère des richesses

naturelles, DP174, 45 pages, 2 cartes.

(7) Bérard, J., 1964. Géologie sur la région de lac Matonipi, comté de Saguenay, Ministère des

richesses naturelles, RP521, 13 pages, 1 carte.

(8) Beaumier, M. et Leduc, M., 2005. Nouvelles analyses géochimiques de sédiments sur la

Côte-Nord et à la Baie James. Ministère des ressources naturelles et de la faune,

PRO2005-03, 8 pages.

(9) Beaumier, M, et Leduc, M, 2005. New geochimical results for sediments from the Côte-

Nord and James Bay regions. Ministère des Ressources naturelles et de la Faune,

PRO2005-04, 8 pages.

(10) Brent,E., Owens And Dymek Robert F., 2001. Petrogenesis of the Labrieville Alkalic

Anorthosite Massif, Grenville Province, Québec; journal of petrology, Vol.42, no.8, p. 1519-

1546.

(11) Choinière, J., 1987. Géochimie des sédiments de lacs - Région de Manicouagan.,

Ministère des ressources naturelles, DP86-18, 11 plans.

(12) Choinière, J., 1986. Géochimie des sédiments de lacs - Région de Manicouagan, Ministère

des ressources naturelles, MB86-64, 97 pages.

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December 2011 27-2

(13) Clark, T. et al., 2003. Livret guide d’une excursion sur les minéralisations de sulfures et

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parcs, MB2003-03, 18 pages.

(14) Commission Géologique Du Canada (CGC), 1968b. Carte Aéromagnétique 2083G (1 : 63

360), Lac Praslin.

(15) Corriveau, L., Perreault, S. and Davidson, A.; Mineral Deposits of Canada, Regional

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(16) Daigneault, R. ET Allard, G. O., 1990. Le complexe du Lac Doré et son environnement

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des Ressources, Québec, MM89-03, 275 pages.

(17) Dion, D.J., 2006. Données numériques des levés géophysiques aéroportés versés aux

travaux statutaires, région du Grenville et basses terres du Saint-Laurent. (à l’ouest de la

longitude 68)., Ministère des Ressources naturelles et de la Faune., DP2006- 06.

(18) Franconi, A., et al., 1971. Géologie de la région des rivières Bersimis, Papinachois, aux

Outardes, Manicouagan, Sainte- Margueritte et Moisie (comté de Saguenay) : projet

Grenville 1968- 1969. Ministère des Richesses naturelles, DP127, 138 pages, 4 cartes.

(19) Franconi, A., Sharma, K.N.M., Laurin, A.F., 1975, Région des rivières Betsiamites

(Bersimis) et Moisie, (Grenville 1968-1969), Ministère des Ressources Naturelles de la

Faune du Québec. (MRNFQ). 138 p. 4 maps, DP127.

(20) Franconi, A., Sharma, K.N.M., Laurin, A.F., 1975, Région des rivières Betsiamites

(Bersimis), Papinachois, Aux Outardes, Manicouagan, Sainte-Marguerite et Moisie (Comté

de Saguenay), (Projet Grenville 1968-1969). Ministère des Ressources Naturelles de la

Faune du Québec (MRNFQ). 138 p. 4 maps, DP127.

(21) Franconi, A, et al., 1975. Région des rivières Betsiamites (Bersimis) et Moisie, (Grenville

1968-1969). Ministère des Richesses naturelles, RG162, 149 pages, 6 cartes.

(22) GM 02209-A, 1952. Preliminary report, Schmoo Lake titaniferous magnetite deposit, Anglo-

Canadian pulp & paper mills ltd., 11 pages.

(23) GM 02209-B, 1953. Dip needle survey, deposit MA 3, Anglo-Canadian pulp & paper mills

ltd, 2 pages.

(24) GM 02665, 1954. Geological map, L. La blache area, Bersimis Mining Co, 1 plan.

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(25) GM 02671, 1953. Titaniferous magnetite deposits of the La Blache area, Bersimis Mining

Co, 16 pages.

(26) GM 03107, 1955. Propriété de la Bersimis Mining Company, 6 pages, 1 carte.

(27) GM 03155, 1955. Plan of Matonipi lake area, W.S. Moore Co, 3 plans.

(28) GM03203A, 1955, Preliminary Report Lake Brulé Area Ilmenite Deposits, 8 p., 2 maps,

Ministère des Ressources Naturelles de la Faune Québec (MRNFQ) by Goldsmith, P.J.

(29) GM04849-A, 1956, Magnetometer Survey Lac Brulé Deposit, 3 p., 1 map, Ministère des

ressources Naturelles de la Faune du Québec (MRNFQ), by Goldsmith, P.J.

(30) GM04849-B, 1956, Diamond drill Record, Brule property, 24 p., 1 map, Ministère des

Ressources Naturelles et de la Faune du Québec (MRNFQ). By Goldsmith, P.J.

(31) GM06082, 1956, Gisement d’ilmenite (Lac Lise), 2 p. Ministère des Ressources Naturelles

et de la Faune du Québec (MRNFQ) BY Morin, M.

(32) GM 06409, 1958. Information report compiled from 1951 to 1957, Ministère des

Ressources naturelles, Bersimis Mining Co, 2 pages.

(33) GM 06791-A, 1958. Geological report and assessment work report. Wabush iron Co ltd, 34

pages, 9 cartes.

(34) GM 06791-B, 1958. Report on magnetic survey, Pickands Mather & Co, 2 pages.

(35) GM 06791- C, 1957. 11 DDH Logs and assessment report, 29 pages.

(36) GM 06791-D, 1958. Report on metallurgical tests. Erie Mining Co, Pickands Mather & Co,

Wabush iron Co Ltd, 46 pages.

(37) GM 07583, 1958. Report on the magnetometer survey of a property in lac La roque area.

Argor expls ltd ARGOR, Consolidated Morrison Explorations Ltd, 13 pages.

(38) GM 07618, 1958. Geological report, lac La Roque area. Argor expls ltd ARGOR,

Consolidated Morrison Explorations Ltd, 71 pages.

(39) GM 08681, 1959. Report on magnetic survey. Prospecting geophysics Ltd, 11 pages,

3 cartes.

(40) GM 10162, 1960. Gravimetric surveys, lac La Roque area. Sulmac Exploration Services

Ltd, Consolidated Morrison Exploration Ltd, 12 pages, 13 cartes.

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(41) GM 10774, 1960. Report on magnetic and gravity surveys. Sulmac Exploration Services

Ltd, 22 pages.

(42) GM 10824-A, 1960. Test results on core & samples, Matonipi lake. Pickands Mather & co,

53 pages.

(43) GM 10824-B, 1960. Magnetic concentration tests – samples from Matonipi Lake area,

Pickand Mather & Co., 67 pages.

(44) GM 11162-A, 1960. Geological plan. Claims Moore, 1 plan.

(45) GM 11162-B, 1960. Index plan showing location of claims and survey grid. Claims Moore,

1 plan.

(46) GM 12431, 1963. Plans (1 geological and topographical, 1 magnetic and 1 gravity), Claims

Moore, Hanna Mining Co, 3 plans.

(47) GM 12882, 1963. Plans (1 geological, topographical, magnetic and gravity, 2 gravity,

1 geological, 2 magnetic, 2 geological and topographical), Claims Moore, Hanna Mining

Co, Matonipi Mines Ltd, 9 plans.

(48) GM 12883, 1962. Plans (1 geological, 1 magnetic and gravity surveys), Everett lake.

Claims Moore, Hanna Mining Co, Matonipi Mines Ltd, 2 plans.

(49) GM 12884, 1962. Plans (2 geological and topographical, 2 magnetic, 2 gravity). Claims

Moore, Hanna Mining Co, Matonipi Mines Ltd, 6 plans.

(50) GM 12885, 1962. Plans (1 geological and topographical, 1 gravity, 1 magnetic). Claims

Moore, Hanna Mining Co, Matonipi Mines Ltd, 3 plans.

(51) GM 13207, 1963. Report on mineralogical preliminary metallurgical study of samples,

Hanna Mining Co, Matonipi Mines Ltd, 61 pages.

(52) GM 14067, 1963. 4 DDH logs, Hanna Mining Co, Matonipi Mines Ltd, 8 pages.

(53) GM 14068, 1963. 3 DDH logs, Hanna Mining Co, Matonipi Mines Ltd, 5 pages, 1 carte.

(54) GM 14204, 1963. Diamond drill record, Matonipi lake, South Par lake property. Matonipi

Mines Ltd, 38 pages, 2 cartes.

(55) GM 15462, 1964. Diamond drill hole logs, Bersimis Mining, 3 pages.


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(58) GM 16464, 1964. Report on the Lake La Blanche, ulvospinel-magnetite deposit, Ministère

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(59) GM 26833, 1971. Gisement de fer dans la région du lac La Blache. Ministère des

Richesses Naturelles, 2 pages.

(60) GM 31180, 1975. Preliminary metallurgical results, Matonipi drill core composites & general

process studies & equipment evaluation, Matonipi Mines Ltd, 37 pages, 4 cartes.

(61) GM32036, 1976, Geomines Ltd., Geological and Mining Feasibility Study of the Study of

the Lac Brulé ilmenite deposit, 87p., 32 borehole logs and maps

(62) GM 37408, 1981. Report on the La Blache, titaniferous magnetite, C Salamis & Associates

Inc., 6 pages.

(63) GM39070, 1977, The Grenville Reconnaissance Project a compilation and proposal, 43 p.,

2 maps, Ministère des Ressources Naturelles de la Faune du Québec (MRNFQ), by

Wilson, B.H.

(64) GM 39253, 1982. Levé géologique, projet lac Schmoo, Services exploration enrg., 6 pages,

1 carte.

(65) GM 39254, 1982. Levé magnétique, projet lac Schmoo, Services exploration enrg.,

6 pages, 2 cartes.

(66) GM 39255, 1982. Levé géologique, projet Hervieux-Est, Services exploration enrg.,

6 pages, 1 carte.

(67) GM 39256, 1982. Levé géologique, projet Hervieux-Ouest, Services exploration enrg.,

7 pages, 1 carte.

(68) GM 49156, 1977. Rapport sur la campagne d’exploration, été 1977, Baie-Comeau, Port-

Cartier, Manicouagan, projet Manic 22-2001. Metriclab inc, 465 pages, 14 cartes.

(69) GM 49162, 1976. Report on a geochemical lake sediment survey, project Manic 22-100.

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(70) GM 49164, 1976. Radiométrie, projet Manic 22-100, 1 carte.

(71) GM 49165, 1977. Campagne d’exploration, été 1976, projet Manic 22- 100, 558 pages,

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(72) GM 51848, 1992. Projet d’échantillonnage, de traitement du minerai et d’analyses sur le

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(93) CNW-Telbec news release, May 4, 2010, Argex and Innus sign mining exploration

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