Appendix Iii Competent Person’S Report

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DRAFT

KAZNICKEL LLP

GORNOSTAY IN SITU RECOVERY NICKEL-COBALT PROJECT

Competent Persons’ Report

Report Nº R433.2019 [●]

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Report Prepared For

Client Name KazNickel LLP Project Name/Job Code KZNCPR01 Contact Name Margulan Abekov (cc Marat Taishibayev) Contact Title Director Office Address 99B Abaya Street, Semey, Kazakhstan

Report issued by

CSA Global Office CSA Global (UK) Ltd First Floor, Suite 2, Springfield House Springfield Road Horsham, West Sussex, RH12 2RG UNITED KINGDOM T +44 1403 255 969 F +44 1403 240 896 E [email protected] Division Corporate

Author and Reviewer Signatures

Principal Author Maxim Seredkin PhD (Geology), BSc (Hons) Geology, FAusIMM, MAIG, MPONEN Coordinating Graham Jeffress Author BSc(Hons), FAIG, RPGeo, FAusIMM, FSEG, MGSA Contributing Anthony Donaghy Author BSc (Hons), Associate Diploma of Civil Engineering, PGeo Peer Reviewers Brendan Clarke PhD, BSc (Hons), FSSA, Pr.Sci.Nat Karl van Olden BSc (Eng) (Mining) Grad Dip Eng (Mining Economics), MBA, FAusIMM Paul Heaney MSc Hydrogeology, BSc Natural Science CSA Global Galen White Authorisation BSc(Hons), MSc, FGS, FAusIMM

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EXECUTIVE SUMMARY

CSA Global Pty Ltd (an ERM Group company) (“CSA Global”) was engaged by KazNickel LLP (“KazNickel”, “the Client” or “the Company”) to compile a Competent Persons Report (CPR or the “Report”) in accordance with Chapter 18 of the Listing Rules of the Stock Exchange of Hong Kong (HKEX) for the Gornostay Nickel-Cobalt Project (“the Project”).

KazNickel is a wholly-owned subsidiary of Battery Metals Technologies Ltd. (BMT), which is a wholly-owned subsidiary of Ferronickel Plant Ertis Limited Liability Partnership (FP Ertis or FNK), which is in turn controlled by Fincraft Resources Joint Stock Company (93.44% interest). Following a proposed [REDACTED] of BMT on the Hong Kong Stock Exchange and the Astana International Exchange, FNK is expected to hold a 70% interest in BMT, with the balance to be held by public shareholders.

Location and Access

The Gornostay Project is located in the Beskaragay district in Vostochno-Kazakhstanskaya oblast (Eastern Kazakhstan) between the regional centres of Ust-Kamenogorsk (Oskemen) (320 km distance by road) and Pavlodar (250 km distance by road). The Project has excellent infrastructure being adjacent to a major highway, railroad, and is located between two nearby towns, Kurchatov and Semey, with populations of 12,000 and 360,000 respectively. The distance from the Project to Kurchatov is 25 km, and to Semey is 110 km. The Irtysh River flows between the two areas of the project.

The Project comprises two separate areas:

• A larger area south of the Irtysh River called the “Left River Side”; and,

• A smaller area north of the Irtysh River called the “Right River Side”.

These two project areas are planned to support two developments in the near-to-medium term.

Tenure

KazNickel holds the SSU Contract for the Gornostay nickel-cobalt deposits, which gives the Company rights to explore and produce cobalt and nickel. The Company has been actively undertaking exploration and evaluation activities since 2004 at Gornostay.

The Company recognised the potential to exploit the Gornostay Project using in situ recovery techniques, which are widely deployed in Kazakhstan for the extraction of uranium, and has been actively assessing this approach since gaining control of the project.

The Contract for Exploration and Production of Nickel and Cobalt Ore at Gornostay (the “Contract”) was executed between the Ministry of Energy and Mineral Resources (the “Competent Authority”) and the Company on the 26th of February 2004, and registered with the Ministry of Energy and Mineral Resources on the same day under Registration Number 1349. The Contract was awarded as a result of the tender that was held by the Competent Authority in 2001. In accordance with the Contract the Company has an exclusive right to explore and produce cobalt and nickel within the area.

History

The potential of the Gornostay area to host economic nickel-cobalt mineralisation was first recognised in 1959. Since then, substantial work has been undertaken at Gornostay by different parties

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In 2018, a new team a KazNickel (with experience of ISR from their time in Kazakhstan’s substantial uranium ISR sector) recognised the potential of applying ISR at Gornostay. The new team commenced construction of a pilot ISR test block and laboratory leaching investigations.

In situ Recovery

The in situ recovery (ISR) method of mining, also known as in situ leaching (ISL), is potentially one of the most effective methods of addressing the operating costs of conventional mining. A unique feature of ISR is the ability to transfer a sizeable proportion of the processing of mineralised bodies to the subsurface, and thereby directly obtain solutions of the metals of interest. Importantly, this approach also has the potential to minimise effects on the natural environment when well managed.

The ISR method uses solutions which are pumped through a mineralised body in situ (underground) to recover metals by leaching them directly from the host rocks. Typical ISR mines comprise a well field/s and an extraction process plant. Leaching solutions are pumped into the mineralised zone/s through a network of injection bores and extracted by production wells. In the process, the leaching solution dissolves the metals of interest, which are brought to the surface in a ‘pregnant solution’. The pregnant solutions are treated at an extraction plant to produce a chemical concentrate of the target metal/s. As a result, there is little surface disturbance, and minimal tailings or waste rock is generated.

However, for ISR to be effective, the mineralised body needs to be permeable (either naturally or artificially) and located such that the leaching solutions cannot contaminate surrounding groundwater. Target minerals need to be readily soluble by the leaching solutions in a reasonable period, and there should be a reasonable consumption of leaching reagents.

As a result, there is little surface disturbance and no tailings or waste rock are generated at ISR mines.

In comparison to other types of mining operations, ISR offers a number of distinct advantages:

• Lower development costs for the mine, processing plant and infrastructure;

• The ability to start production at low capital cost with a following increase in production; this allows profits from cash flow to fund development of the mine instead using debt financing; and,

• Greater flexibility in production capacity (easier reduction of capacity during lower price periods and increased capacity during higher price times). This can be achieved by decreasing pumping evenly at each wellfield block and/or stopping pumping at certain mining sites.

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The economics of ISR mines primarily depend on following the parameters:

• Flow rate capacity of the wellfields (input capacity of injection wells and extraction capacity of production wells);

• Concentration of extracted component(s) in pregnant solutions;

• Overall level of extraction of mined component(s); and,

• Ratio of Liquid to Solid (L:S) required to achieve the desired extraction of the mined component(s). This ratio is calculated based on volume of solutions passed through the operational block over the whole period of operation and on the tonnage of the operational block.

The technological schemes for leaching and processing of solutions are approximately same for different commodities. This feature of ISR operations can be used to provide an estimation of the potential financial performance of new ISR projects based on the well-known economics of established uranium ISR mines.

ISR can allow profitable exploitation of deposits with low grades of metals, and/or small resources, unsuitable for conventional mining operations.

There are three critical parameters that must be met for a deposit amenable to ISR:

• mineralisation must be located in permeable environment;

• possible management of leaching solutions; and,

• the lixiviant should be suitable for selective leaching of a specific component from the deposit.

Evaluation of the suitability of deposits for application of ISR requires different and modified approaches compared to traditional mining/extraction techniques. Furthermore, some deposits that are currently uneconomic to exploit using traditional mining methods have the potential to be profitable as ISR operations.

Nickel and cobalt in laterite deposits are considered highly amenable to ISR and ISR may become a significant method of extraction, as in the uranium industry.

The economic advantages of ISR include:

• Lower costs on the development of mine, processing plant and infrastructure in comparison with conventional open pit and underground mines;

• The ability to start production at low capital cost with following increase a production. This stage allows produce a concentrate and use profitable cash flow to development of mine instead using a borrowed funds; and

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• Flexibility of production capacity: reducing capacity during lower prices and increasing capacity during higher prices.

ISR allows the extraction the mineralisation with minimal disturbance of the existing natural conditions. In contrast to conventional mining, there are no large open pits, rock dumps and tailings dams; or dewatering of aquifers. ISR produces substantially smaller volumes of mining, and has lower volumes effluents that can contaminate the surface, air and water supply sources. As a result, the impact of ISR on the surface environment is much less than for conventional mining methods as long as projects are properly planned, and operated and closed using best practice.

Regional Geology

The Ural-Kazakhstan province contains zones of ultramafic massifs of various ages and genesis, which in turn host lateritic nickel-cobalt deposits. In the Jurassic Period, Kazakhstan and the Urals were a regional peneplain with a hot humid climate, and as a result widespread lateritic weathering crusts developed on all types of rocks. In the Late Cretaceous – Neogene Period, the area was submerged, and the Jurassic weathering crusts were covered by younger marine, coastal and alluvial sediments. These weathering crusts were silicified, like the process of silicification observed for other bauxite weathering crusts covered by younger sediments. Jurassic weathering crusts were exposed during the most recent period of modern (Alpine) folding. Nickel- cobalt weathering crusts were preserved as relict bodies and are located sporadically through the ultramafic massifs of the Urals and Kazakhstan.

Local Geology

The Gornostay Project is located in the Northern Zaysan District, where it is represented by the Chingiz volcanic island arc complex. Deep regional faults with north-northwest trends cross the Zaysan district. Ultramafic complexes are located along these faults. The Gornostay belt with a strike length of over 100 km is one of such ultramafic belts which lies along a major regional fault.

The in situ weathering crust in the Gornostay belt is unevenly distributed, but is preserved almost everywhere to a degree, apart from where limestones occur. Zonation of the weathering crust above the bedrock serpentinite of the ultramafic belt is as follows, geologically from top to bottom:

• redeposited weathering crust (where the crust has been physically redistributed);

• in situ ochre zone, in some places with siliceous birbirite rock;

• nontronite clay, locally with manganese concentrations as well as coloured birbirite;

• nontronitised serpentinite;

• fractured (disintegrated) serpentinite;

• serpentinites with magnesite veins;

• fresh serpentinites.

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Elevated grades of nickel and cobalt are typical for all altered rocks formed on serpentinites (excluding silicified rock types (birbirites, opalised serpentinite) and carbonatised serpentinite and magnesite). At Gornostay, the highest grades of nickel and cobalt are associated with nontronite, nontronitised serpentinite, and ochres. Isolated mineralised bodies with grades of interest are also located in parts of the redeposited weathering crust. Mineralisation with Ni >0.33% is present (Yusupov et al., 1968).

Hydrogeology

Groundwater around the Gornostay Deposit is mostly contained within open fissures, which exist throughout the underlying basement rocks. This basement aquifer is hydraulically connected with aquifer horizons within modern overlying alluvial Quaternary sediments, with hydraulic interconnectivity being especially strong in fault and fissure zones. Recharge of the groundwater at Gornostay occurs primarily along large faults associated with the Kempir mountains located to the south of the deposit. Direct recharge due to infiltration from precipitation is limited due to the overlying cover sediments forming an aquiclude.

Successful ISR requires favourable hydrogeological conditions including:

• Availability of underground water;

• Mineralisation being either below the water table, or no more than 20–50 m above the water table;

• No aquicludes/barriers between injection and pumping areas; and,

• Sufficient permeability of mineralised rocks for circulation of solutions with a reasonable filtration rate.

Specific hydrogeological investigations for ISR are not yet completed at the Gornostay Project. However, existing hydrogeological information obtained during the conventional open pit mining investigations was available.

Based on this data, and our technical experience in ISR, CSA Global conclude that the Gornostay Project is suitable for ISR.

However, additional hydrogeological works focused on ISR and environmental issues are still required to provide sufficient information to declare ISR Ore Reserves.

Early stages of hydrogeological and hydrometallurgical investigations have been completed by the Company. This work has shown positive results in terms of the deposit amenability to ISR, as follows:

• The aquifer of the Gornostay Deposit is a ‘horizon’ with open fissures.

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• The aquifer of the Gornostay deposit is hydraulically connected with aquifer horizons within the adjacent Quaternary sediments, which are the source of recharge to the underground water complex through submeridional faults.

• The aquifer of the underground water horizon is continuous, with the water table located from 18 m to 31 m below the land surface.

• Approximately 78% of mineralisation in the Left River Side area is in the aeration zone above the underground water level and about 22% is below the underground water level. Therefore, the main ISR method will be infiltration, and only 22% of mineralisation will be able to be mined by common ISR filtration methods. Almost 100% of mineralisation of the Right River Side area is located below the water table.

• The zone of fractured serpentinites is interpreted to extend to the underground water table, which can ensure hydraulic water conductivity for ISR in an infiltration regime.

• The permeability of mineralised weathering crust is highly variable, from 0.003 m/day to 5.4 m/day.

ISR Mineral Resources

CSA Global has prepared a new ISR Mineral Resource estimate for the areas inside the granted Gornostay tenements as shown in Table 1 below.

Table 1: Gornostay Project Mineral Resource estimates (as of 30 March 2021)

JORC Code Bulk classification Mt density Ni Co GT Ni GT Co Ni Co (t/m³) % % (m%) (m%) (kt) (kt) Left River Indicated 82.4 1.3 0.57 0.04 4.7 0.31 470 32 Side area Inferred 19.1 1.3 0.57 0.04 4.2 0.31 109 8.3 Indicated + 101.6 1.3 0.57 0.04 4.6 0.31 580 41 Inferred Right River Inferred 4.9 1.3 0.97 0.03 18.3 0.62 48 1.6 Side area TOTAL Indicated 82.4 1.3 0.57 0.04 4.7 0.31 470 32 Inferred 24.1 1.3 0.65 0.04 7.1 0.37 157 10 Indicated + 106.5 1.3 0.59 0.04 5.3 0.33 628 42 Inferred

• cut-off GT 1.0 m% Ni

• inside granted tenements

• Tonnes and grades have been rounded to reflect the relative accuracy and confidence level of the estimate, thus the sum of columns/subtotals may not reflect the individual parts.

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The Mineral Resource estimates have been classified based on the guidelines specified in the JORC Code. The classification level is based upon an assessment of geological understanding of the deposit, geological and mineralisation continuity, drill hole spacing, quality control results, search and interpolation parameters and an analysis of available density information.

Clause 20 of the JORC (2012) Code requires that all Mineral Resources must have reasonable prospects for eventual economic extraction, regardless of the classification of the Mineral Resource. The Competent Person is of the view that the Mineral Resources estimated at the Gornostay Project have reasonable prospects for eventual economic extraction on the following basis:

• Similar nickel-cobalt deposits have been mined by conventional methods in the Urals since the beginning of the 20th century; these mines were closed recently due to depletion of their Mineral Resources and changing economic conditions.

• ISR is a relatively cost effective process for the extraction of suitable metals, and the potential amenability of ISR at the Project has been demonstrated by hydrogeological, laboratory and field pilot ISR tests.

• An independent Scoping Study with positive NPV from the cash flow model was prepared in 2020 by the Competent Person for ISR mining of the Gornostay Project.

CSA Global notes that the available drilling database also shows that there is good potential for substantial additional Ni-Co mineralisation amenable to ISR mining outside the current tenement and that the Company has initiated the process to acquire these areas.

Metallurgy and Processing

Acid leaching is the proposed method for ISR of nickel and cobalt at the Gornostay Project. Therefore, the distribution of carbonates is an important parameter for estimation of Mineral Resources. ISR operations at uranium deposits show that mineralisation with carbonate grades <0.3% does not require special actions with regard to acid ISR. A carbonate grade of 2% is regarded as the upper limit for acid ISR, with grades in between requiring special acidification conditions. However, where the carbonate is associated with dolomite the carbonate grade is not as critical for acid ISR.

Apart from some areas associated with limestones, in CSA Global’s professional opinion, the content of carbonate at Gornostay appears suitable for application of acid leaching.

The most important properties in relation to hydrometallurgical processes are recovery of useful components, acid consumption, pH, and redox potential (Eh).

Laboratory investigations to assess the suitability of ISR at Gornostay were carried out on a composite metallurgical sample taken from wells of the ISR field cluster.

Agitation leaching was used to define the most suitable composition of leaching solutions for further filtration tests. The best leaching result was obtained with sulphuric acid and thiourea. Nickel recovery reached 90% in tests, and the leaching dynamic was close to linear.

Following the screening by agitation leaching, filtration leaching test work was also carried out which is more representative for the ISR process and provides better data on likely reagent consumption

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The results of the laboratory work were followed up with a field test site established in 2018 by KazNickel, including the construction of the ion exchange pilot plant in 2019. Pilot operation started in August 2019 and is in process now. KazNickel has successfully leached nickel at expected grades and has produced the first nickel hydroxide product in the pilot plant.

Data from these tests was used to inform the CSA Global Scoping Study ISR mine plan.

Processing of the pregnant solution obtained from in situ leaching of Ni-Co laterite mineralisation is complex, and based on the following processes:

• Sulphuric or sulphurous acid leaching:

• Ion exchange process on resin (IX);

• Solvent Extraction (SX);

• Eluate/Solution Neutralisation (EN);

• Pressure Oxidation Leach (POX); and then,

• Crystallisation or Electrowinning.

Tests completed by KazNickel demonstrate selective loading of nickel and cobalt to resin TP-207. Extraction of nickel and cobalt is more than 80%. Extraction of iron, alumina, magnesium is less than 10%.

The average nickel grade in pregnant solutions in ISR at the Project is around 100 – 300 mg/L, so nickel loading on to resin is expect to range from 5.5 – 16 kg/t. These grades of nickel in resin give nickel grades in eluate from2–6g/L, with 90% recovery of nickel to eluate, a liquid:solid (L:S) ratio of 2.5.

Cost effective capture of nickel and cobalt from the IX resin is critical step in the proposed process at Gornostay. Clean TeQ uses a proprietary ion exchange technology (Clean-iX®) for extraction and purification of metals and for industrial water treatment. The development of the base technology for the Clean-iX® process was developed out of the All Russian Research Institute of Chemical Technology (ARRICT) over a period of 40 years, with further enhancement by Clean TeQ. This technology is currently in use at the Sunrise Nickel- Cobalt Project in New South Wales.

The final processing technology for Gornostay is still evolving as work is completed. But in CSA Global’s opinion, the proposed recovery plant at the Gornostay Nickel-Cobalt Project could be designed on combinations of processes researched by KazNickel and described in public domain technical literature.

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Scoping Study Outcomes

CSA Global completed a Scoping Study (SS) for the Gornostay Project addressing the proposed use of ISR mining to exploit the project.

The proposed Gornostay processing plant is based on a hydrometallurgical processing flowsheet using ISR by sulphurous acid to leach nickel and cobalt. The leached nickel and cobalt would be recovered through continuous ion exchange and solvent extraction before the final nickel sulphate and cobalt sulphate products are crystallised, dried, packaged and transported to market. The final slurry/solutions after metal recovery are neutralised with limestone and sent to a tailings storage facility (TSF).

The key features of the SS comprised:

• Sulphurous acid being produced from sulphuric acid at the beginning of the project, before switching to production from lump sulphur on site, as the project matures.

• Sulphurous acid leaching solution is pumped into the mineralised laterite zone through a network of injection wells. The acid dissolves nickel and cobalt, as well as impurity components such as iron.

• Nickel, cobalt and impurity components are brought to surface in a pregnant solution by pumping from production (extraction) wells.

• These pregnant solutions are delivered to the Processing (Sorption) Plant via a small pond which allows removal of the small proportion of suspended solids in the pregnant solutions.

• Nickel/cobalt captured onto ion exchange resins and then stripped from the resins in U-shaped desorption columns (Processing Plant).

• Nickel/cobalt sulphate extraction, purification and recovery (refinery plant).

• Tailings neutralisation and storage.

• Ammonium sulphate crystallisation.

• Barren solutions after processing are returned to the acid plant for re-acidification and then recycled for leaching of nickel and cobalt again.

The proposed process plant allows production of high-purity Class 1 hydrated nickel sulphate

(NiSO4*6H2O) and Class 1 hydrated cobalt sulphate (CoSO4*7H2O) products. The process is well suited to the battery sector, which requires sulphates for precursor production. Waste ammonium sulphate solutions will be converted to a crystalline ammonium sulphate by-product for sale locally as fertiliser to Kazakhstan’s substantial agricultural sector.

Scoping Study Capital Expenditure (CAPEX) was estimated based on conceptual design of mine, processing facilities, supporting infrastructure, costs from CSA Global’s database, and the Sunrise project (Fairfield et al, 2018).

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Scoping Study Operating Expenditure (OPEX) was estimated based on the mining and processing flowsheet, as well as costs from CSA Global’s database, and the Florence and Sunrise projects (Zimmerman et al., 2013; Fairfield et al., 2018).

CSA Global completed an analysis of all available information concerning:

• Geology/mineralogy;

• Hydrogeology;

• Hydrometallurgy/geometallurgy;

• Processing; and

• Infrastructure.

CSA Global assessed three different scenarios in the Scoping Study. The Scoping Study showed that the best scenario for project development, involved commencement of ISR using sulphurous acid produced from sulphuric acid, and then following construction of sulphurous acid plant on site.

The operating costs for the Gornostay ISR Project as estimated by the Scoping Study are highly attractive, and likely to be in the lowest quartile of producers. This outcome is a significant advantage for the project, and suggests that a project based on ISR will be robust and highly competitive.

In CSA Global’s professional opinion, the Gornostay Project has the potential to be developed into an economically viable and profitable mining and processing operation.

The findings of the Scoping Study are that further investment and project development is warranted.

Pilot Test Outcomes

KazNickel started construction of a pilot ISR operation in 2018 including:

• Household and administrative camps.

• Wellfield polygon including pipes, injection and pumping wells.

• Pilot plant in a shed (details below in this section).

• Wellhouse with all measurement tools in the pilot plant shed.

• Acid reservoirs.

• Barren and pregnant solutions ponds.

• 0.4 kW electrical powerline and substation.

• Unpaved road from the pilot polygon to paved Kurchatov – Semey road.

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All operational wells were constructed above the water table or in the “dry” zone outside the horizon of fractured serpentinite. Hydrogeological wells were used for raising the water table. Additional pumping wells were drilled in end-2019 and in 2020 for installing filters below raised water table. Cells with pumping wells were used for the ISR pilot test.

The principal stages of the ISR operational field test comprised:

• Stage 1. Raising of water table by pumping water from fault/fractured zones and injection into the operational test block. This stage commenced at Gornostay at the end of July 2019.

• Stage 2. Continuation of raising the water table by pumping water from fault/fractured zones and injection into the operational test block of leaching reagents and surfactants. Leaching and surfactant reagents increase effective permeability of weathering crust rocks and injectivity of wells. This stage started at the end of August 2019.

• Stage 3. Realising ISR process with sorption of nickel and cobalt to resin in IX pilot plant (Kantbekuly M., 2020).

CSA Global has reviewed the data from the Gornostay ISR pilot testwork and concludes that KazNickel has demonstrated the following:

• The possibility of successful ISR of nickel-cobalt mineralisation with production of nickel hydroxide.

• Geometallurgical parameters from the pilot operation are not representative due to the imbalanced leaching and the substantial disruption to the work by multiple, extended, shutdowns due to pandemic restrictions.

• Importantly, the nickel grades in pregnant solutions were comparable to the levels predicted from laboratory tests and analogous projects.

• Cobalt grade remains low in pregnant solutions. KazNickel is focused on nickel production, but cobalt potentially adds importance co-product credits and KazNickel will seek to understand why there are low grades of cobalt in pregnant solutions from the pilot testwork. The most probable explanation is that the initial leaching by sulphuric acid was not favourable for extracting cobalt. These interim results should not be considered definitive.

• Nickel loading to resin in the pilot processing was close to theoretical maximum values, and the nickel grade in eluate reached 3 g/L.

• High-quality nickel hydroxide with a nickel grade up to 48% Ni was successfully produced by the pilot plant.

• Groundwater monitoring in observation wells around the pilot ISR block demonstrated that no contamination of groundwater by leaching and/or pregnant solutions occurred.

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Environmental, Social and Permitting/Approvals

ISR allows the extraction of mineralisation with minimal disturbance to the existing natural conditions. As a result, the impact of ISR projects on the environment is much less than for conventional mining methods, as long as projects are properly planned, operated and closed, using best practice.

In ISR, the primary risk of contamination for soils, surface waters and aquifers, is from the reagents used for leaching, and from the metals in pregnant solutions. Although the risk of such contamination is local, it has the potential to impact the regional economy, flora and fauna.

When ISR is finished and the artificial cone of depression around the production well is abandoned, the hydrogeology returns to the natural groundwater flow. This can cause residual lixiviant to move away from the ISR site for distances up to several hundred metres. Farther movement of the residual lixiviant is limited due to chemical reactions between the solutions and the geological substrate which neutralise the solutions. In situ permeability and the adsorption/capacitive properties of rocks should be determined, and a hydrogeological model created prior to commencement of ISR operations. This model will allow an estimate of the likely migration of residual solutions within groundwater post operations.

The relevant environmental, social and approvals (ESA) information provided in the previous reports and studies reviewed by CSA Global, though fairly limited, does not reveal any significant environmental or social issues at this stage. More work is planned by the Company to address ESA issues now that the potential viability of the ISR approach has been demonstrated.

In summary, mitigation actions may be required to protect or to minimise impacts on the surface water system, underground water horizons, air quality, flora and fauna. In general, the level of environmental and social data used for assessment will need to be improved upon significantly to meet international best practice standards, as KazNickel progresses towards commencement on site.

In taking the Project forward, CSA Global understands that KazNickel plans to complete an Environmental and Social Impact Assessment (ESIA), which entails detailed baseline data collection and rigorous analysis across themes, supported by a number of dedicated site visits by environmental and social specialists. The ESIA process will include the preparation of:

• An Environmental and Social Action Plan (ESAP), and an Environmental and Social Management and Monitoring Plan (ESMMP).

• A framework Mine Closure and Rehabilitation Plan (MCRP) This will not be a detailed plan but will set out the main environmental and social provisions for closure and rehabilitation.

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• A framework Community Development Plan (CDP): This would include community liaison, community support for social infrastructure, and sustainability post-closure.

• Any other specific studies that arise from the ESIA process.

Technical Risks and Opportunities

All mining operations are undertaken in an environment where not all events are predictable. While an experienced and effective project management team can identify the known risks and take measures to manage and mitigate these risks, there is still the possibility for unexpected and unpredictable events to occur.

It is therefore not possible to reduce or eliminate all risks, or state with certainty that an event that may have a material impact on the operation of a mine, will not occur.

There are additional economic risks associated with the development and mining of nickel/cobalt deposits due broader market factors beyond the control of the Company.

The achievability of the estimates and projections as included in the CPR are neither warranted or guaranteed by CSA Global. They are necessarily based on technical and economic assumptions, many of which are beyond the control of KazNickel or CSA Global. Future cash flows and profits derived from such estimates and projections are inherently uncertain and actual results may be significantly more or less favourable.

The Gornostay Project is in an early stage of evaluation and substantial uncertainties are characteristic of a Scoping Study. To assist potential investors in understanding the possible risks associated with an ISR operation at Gornostay, the following overview of risks has been prepared.

The technical basis of the Scoping Study has been demonstrated by a pilot operation at the Gornostay Project. A wellfield block has been development, lixiviant circulated and pregnant solutions with required contents of nickel produced, with a pilot plant successfully capturing nickel on resin which was then stripped to produce a nickel hydroxide product. This demonstration of the proposed production process provides an important reduction on technical risks for the project.

The remaining risks to the project comprise:

• Uncertainty about the likely market demand for nickel and cobalt. But the project operating cost of the project provides are significant mitigation to the risk.

• The uncertainties associated with moving from Scoping Study to full production, but unlike most mining projects the completion of the pilot well block and processing plant have shown that ISR of nickel (and cobalt) is technically feasible.

• Lack of information in hydrogeology and in situ geometallurgy (consistent with the Scoping Study stage of the project).

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• Incomplete (though planned) environmental work and ongoing community engagement.

• The typical project implementation risks and uncertainty associated with developing a mining operation.

The risks discussed above all have identified mitigation strategies, based on the knowledge gained in ISR projects elsewhere (notably including within Kazakhstan). In the professional opinion of CSA Global, the project technical risks are manageable to a low status provided appropriate regulatory requirements continue to be met, appropriate technical studies are completed in a timely fashion, and suitable management and control measures continue to be implemented by the Company.

Concomitant with the risks discussed above there a range of opportunities to enhance and optimise the project.

• As more in situ tests are completed and the geological modelling is refined in greater detail, the potential to reduce acid consumption from the Scoping Study assumptions is considered likely.

• Similarly, field tests and optimisation of the L:S ratio based on in situ tests may lead to better metal recoveries than Scoping Study assumptions.

• There is an opportunity to improve the stability or concentration of impurity concentrations in solutions (with better understanding of L:S ratios), leading to lower processing costs, and smaller tailings volumes.

• Cobalt recovery has not yet been considered at Gornostay. The optimisation of sulphurous acid is expected to deliver better cobalt recovery.

• There are opportunities to recover additional co-products and by-products than used in the Scoping Study, for example scandium, magnesium, and manganese.

• Temporary artificial enhancement of water table levels may allow enhanced in situ leaching of material currently above the water table, and thereby increasing the “Mineable” Mineral Resources as well as decreasing Operation Cost.

• As increased hydrogeological data is available and a better understanding of the permeability is achieved, the spacing wells may be able to be increased reducing the costs of developing each block of the project.

• Additionally, better hydrogeological data in combination with more and better data on leaching rates, provides the opportunity to reduce the time needed for ISR, require less acid, and reduce the number of operational blocks to achieve the same outputs assumed in the Scoping Study.

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Summary of Short-term KazNickel Technical Developments Strategy, post [REDACTED]

As part of the Scoping Study work completed by CSA Global, a three-year timeline for development was outlined to first commercial production. This schedule is considered not a definitive program for project advancement. Such an optimal indicative timeline is predicated on the assumption that all Project risks (including those above) are identified, assessed and mitigated with optimal outcomes in the timeliest manner possible. Actual future outcomes and timelines may vary from that depicted herein. KazNickel believe that a shorter timeline may be possible and intends focusing on those aspects of the project likely to identify the optimal way forward.

For example, options for alternative lixiviants and processing pathways have been flagged by the Company subsequent to the completion of the Scoping Study. These alternatives may provide better CAPEX and OPEX outcomes, with shorter timelines to production. Similarly, identifying the key market segments to target, will be critical to advancing the project. Selection of final products has a direct bearing on the processing pathway, and therefore the CAPEX and OPEX. The Scoping Study was predicated on ISR and the production of Class 1 purity sulphates, but intermediate products such as hydroxides of nickel-cobalt, or metallic nickel/cobalt could also be identified as the optimal product to pursue as more work is completed. Such options potentially reduce CAPEX costs, but at the cost of delivering less valuable final products.

KazNickel has identified the following high priority investigations below to advance the Gornostay Project and reach a Pre-Feasibility Study level of understanding:

• Continue pilot operation with optimisation of the ISR regime, sulphurous acid production, and processing pathway/s.

• Laboratory investigations of natural eluate to assist development of the processing flowsheet of eluate; leading to better understanding of reagent consumption, composition of intermediate products, and optimisation of processing.

• Hydrogeological investigations — continuity and level of groundwater table, variability of permeability, zones without groundwater, pump tests, neutral tracer tests, detailed structural modelling, assessment of the natural flow of groundwaters, and preparation of detailed hydrogeological and hydrodynamic models.

• Exploration of initial blocks for the first years of operation — conversion of Inferred Resources to Indicated.

• Laboratory investigation of representative samples in columns, to provide more information on leaching parameters, consumption of reagents, and composition of solutions.

• “Ideal” multi-well natural tests based on calibrated technology are required where the initial composition should be measured before acidification and all possible logs of the tests should be completed. These tests will be used for estimation of the leaching dynamics, and levels of nickel and cobalt recovery.

• Ongoing pilot tests, including development of a new test block, to improve understanding of data from balanced injection/extraction both above and below the water table to better

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understand performance in both settings; a full test cycle using sulphurous acid for the entire test; all with detailed ongoing monitoring.

• Enhanced and expanded environmental, and social performance, investigations are planned.

The Gornostay Project is a Pre-development Project that requires ongoing work to reduce project risks and move to full operation. CSA Global considers, however, that the identification and acquisition of the Gornostay Project was based on sound technical merit. The project is considered to be sufficiently advanced, based on the technical work and Scoping Study completed to date, subject to varying degrees of technical and development risk, to warrant further development, testwork, and assessment of economic potential, particularly Pre-Feasibility stage studies, consistent with the proposed programs.

In CSA Global’s opinion the project is typical in terms of risks and uncertainties for a Scoping Study stage project. More detailed work, at a Pre-Feasibility level of confidence, will identify the optimal development route for the project. Completing this type of work is the focus of the Company.

Over the next 18–30 months laboratory and field studies will optimise the ISR regime and flowsheet design. New hydrogeological and geometallurgical data will increase confidence in the Mineral Resources, together with more drilling in the planned production areas will support the declaration of Ore Reserves. At this same time more environmental studies and community consultation will allow finalisation of the project’s environmental and social action plan.

Based on the proposed work and analysis presented in this CPR (and summarised above), CSA Global conclude that the Company’s mine development plans and working schedule are realistic, though likely a best case in terms of project timeline, and are attainable. In CSA Global’s professional opinion, the development of a commercial scale operation is reasonable, with any current uncertainties consistent with the Scoping Study stage of the project.

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Page CONTENTS Report Prepared For ...... III-2 Report issued by ...... III-2 Author and Reviewer Signatures ...... III-2

EXECUTIVE SUMMARY ...... III-3 Location and Access ...... III-3 Tenure ...... III-3 History ...... III-3 In situ Recovery ...... III-4 Regional Geology ...... III-6 Local Geology ...... III-6 Hydrogeology ...... III-7 ISR Mineral Resources ...... III-8 Metallurgy and Processing ...... III-9 Scoping Study Outcomes ...... III-11 Pilot Test Outcomes ...... III-12 Environmental, Social and Permitting/Approvals ...... III-14 Technical Risks and Opportunities ...... III-15 Summary of Short-term KazNickel Technical Developments Strategy, post [REDACTED] ...... III-17 1 INTRODUCTION ...... III-32 1.1 Context, Scope and Terms of Reference ...... III-32 1.2 Reporting Standard and Compliance ...... III-32 1.3 Principal Sources of Information and Reliance on Other Experts ...... III-33 1.3.1 Site Visits and Inspections ...... III-33 1.4 Authors of the Report — Qualifications, Experience and Competence ...... III-34 1.5 Prior Association and Independence ...... III-36 1.6 Declarations ...... III-36 1.6.1 The Purpose of this Document ...... III-36 1.6.2 Effective Date ...... III-36 1.6.3 Limitations ...... III-37 1.6.4 Copyright ...... III-38 1.6.5 Precedence of English version of CPR ...... III-38 1.6.6 Practitioner/Competent Person’s Statement and Consent ...... III-38 1.7 Units and Currency ...... III-39

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Page

2 MARKET OVERVIEW ...... III-39

2.1 Nickel Overview ...... III-40

2.1.1 Introduction ...... III-40

2.1.2 Industry Value Chain ...... III-40

2.1.3 Global Nickel Resources ...... III-42

2.1.4 Global Nickel Production ...... III-43

2.1.5 Nickel Production Companies ...... III-43

2.1.6 Nickel Market Demand ...... III-43

2.2 Cobalt Overview ...... III-46

2.2.1 Introduction ...... III-46

2.2.2 Industry Value Chain ...... III-47

2.2.3 Global Cobalt Resources ...... III-50

2.2.4 Global Cobalt Production ...... III-51

2.2.5 Cobalt Production Companies ...... III-52

2.2.6 Cobalt Market Demand ...... III-52

2.3 Market Growth Drivers and Restraints ...... III-54

2.4 Nickel and Cobalt Market Price Analysis ...... III-61

2.4.1 Global Nickel Prices ...... III-61

2.4.2 Global Cobalt Prices ...... III-63

2.5 CSA Global View on Metal Prices ...... III-65

2.6 Prices used by CSA Global in the Scoping Study ...... III-66

2.7 COVID-19 ...... III-66

3 IN SITU RECOVERY ...... III-66

3.1 What Is In Situ Recovery? ...... III-67

3.2 Features of in situ extraction projects ...... III-69

3.3 Types of In Situ Extraction Projects ...... III-72

3.3.1 Different Approaches for In Situ Extraction ...... III-72

3.3.2 Different Approaches for Processing of Pregnant Solutions ...... III-72

3.4 Areas of Investigation for In Situ Recovery Projects ...... III-73

3.5 Conclusions ...... III-75

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Page

4 GORNOSTAY PROJECT OVERVIEW ...... III-76

4.1 Project Location and Access ...... III-76

4.1.1 Geography and Climate ...... III-77

4.1.2 Industry, Regional and Local Infrastructure ...... III-78

5 LICENCES AND PERMITS ...... III-81

5.1 General ...... III-81

5.2 Subsoil Use Contracts and Licences ...... III-81

5.3 KazNickel Tenure ...... III-83

6 PROJECT HISTORY ...... III-88

6.1 Exploration History ...... III-88

6.1.1 Research and Mapping Works Up Until the 1960s ...... III-88

6.1.2 Exploration for and Evaluation of Nickel-Cobalt Mineralised Laterites . III-89

6.2 Mining History ...... III-91

7 GEOLOGY ...... III-91

7.1 Geology and Mineralisation ...... III-91

7.1.1 Basement Rocks ...... III-91

7.1.2 Structure of Weathering Crusts ...... III-92

7.1.3 Mineralogy ...... III-98

7.1.4 Overburden (Cover) Sediments ...... III-103

7.1.5 Geomorphology ...... III-103

7.2 Mineralisation Controls ...... III-104

8 HYDROGEOLOGY ...... III-109

8.1 General Requirements for Hydrogeological Investigations for In Situ Recovery . . III-109

8.2 Aquifer Systems and Horizons ...... III-110

8.3 Hydrogeological Tests in Single Wells ...... III-113

9 MINERAL RESOURCE ESTIMATION ...... III-118

9.1 Data Verification ...... III-118

9.1.1 Drilling and Pitting Techniques ...... III-118

9.1.2 Sampling Techniques and Sample Preparation ...... III-122

9.1.3 Analytical Methods ...... III-123

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Page 9.1.4 Location of Data Points ...... III-123 9.1.5 Orientation in Relation to Geological Structure, Data Spacing and Distribution ...... III-123 9.1.6 Sample and Data Security ...... III-124 9.1.7 Quality Assurance and Quality Control ...... III-124 9.1.8 Final Data Selection ...... III-125 9.2 Mineral Resource Estimation ...... III-127 10 METALLURGICAL TESTS AND ISR PILOT WORK ...... III-133 10.1 Rock Composition and Key Factors for Leaching ...... III-133 10.2 Laboratory Hydrometallurgical Investigations for In Situ Recovery ...... III-136 10.2.1 Preliminary Laboratory Tests ...... III-136 10.2.2 Agitation Leaching Tests With Different Lixiviants ...... III-137 10.2.3 Filtration Leaching Laboratory Test ...... III-138 10.2.4 Reagent Consumption ...... III-139 10.2.5 Leaching by Sulphurous Acid or Sulphur Dioxide ...... III-140 10.3 Pilot ISR Operation ...... III-142 10.3.1 Location and Construction of Pilot ISR Polygon ...... III-142 10.3.2 Principal Scheme of Pilot ISR Operation ...... III-147 10.3.3 Pilot ISR operation ...... III-149 10.3.4 Production of Nickel Concentrate ...... III-153 10.3.5 Results and discussion of pilot testwork ...... III-157 10.3.6 Monitoring of Pilot In-Situ Recovery Operations ...... III-158 10.3.7 Conclusions from Pilot In Situ Recovery testwork ...... III-159 10.4 Other Hydrometallurgical Investigations for In Situ Recovery ...... III-161 10.4.1 Industrial Analogues ...... III-161 10.4.2 Field Operation in situ Recovery Tests on Other Projects ...... III-162 10.5 Initial Geometallurgical Parameters for Economic Model ...... III-163 10.6 Producing Final Product from Pregnant Solutions ...... III-164 10.6.1 Product Types and Usage ...... III-164 10.6.2 Hydrometallurgical Processing of Solutions for the Gornostay Project . III-165 10.6.3 Purification of Nickel-Cobalt Solutions from Iron and Alumina ...... III-167 10.6.4 Purification of Nickel-Cobalt Solutions from Other Impurity Components ...... III-168 10.6.5 Australian Flowsheets of Processing for Nickel-Cobalt-Scandium Laterite Projects ...... III-169

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10.6.6 Clean TeQ Testwork for Nickel-Cobalt-Scandium Sunrise Project .... III-173

10.7 Proposed KazNickel Flowsheet for IX and refinery plant ...... III-173

11 MINING ...... III-175

11.1 Mining Method ...... III-175

11.2 Life of Mine Plan ...... III-175

11.2.1 Estimation of Life of Mine ...... III-175

11.2.2 Operational Blocks Preparation for the Mine Plan ...... III-176

11.2.3 Mine Schedule ...... III-176

11.3 Mine Infrastructure and Equipment ...... III-183

11.3.1 List of Mine Infrastructure ...... III-183

11.3.2 Tailings Storage Facility (TSF) ...... III-184

11.3.3 Location of Mine Infrastructure ...... III-184

11.4 Mine Equipment ...... III-186

11.5 Mineral Resource Estimation for Mineralisation Included in Mine Plan ...... III-187

12 PROCESSING ...... III-188

12.1 Overview of Flowsheet ...... III-188

12.2 Processing and Refinery ...... III-190

12.2.1 Nickel/Cobalt Extraction from Pregnant Solutions by Ion Exchange . . . III-190

12.2.2 Eluate Neutralisation ...... III-192

12.2.3 Nickel/Cobalt Sulphate Purification and Recovery ...... III-192

12.2.4 Tailings Neutralisation, Storage and Evaporation ...... III-192

12.3 Reagents and Utilities ...... III-193

12.3.1 Sulphurous Acid Production and Distribution ...... III-193

12.3.2 Limestone ...... III-193

12.3.3 Resin and Other Reagents ...... III-194

12.4 Products ...... III-194

12.4.1 Hydrated Nickel and Cobalt Sulphates ...... III-194

12.4.2 Ammonium Sulphate ...... III-194

13 GORNOSTAY ISR SCOPING STUDY ...... III-195

13.1 Types of Expenses for ISR Process ...... III-196

13.2 Typical Units for Measurement Parameters in ISR Process ...... III-197

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13.3 General Approach for Estimation of Economic Parameters and Cash Flow Model for ISR Project ...... III-197

13.4 Modelling of Operational Cells Based on Resource Block Model ...... III-198

13.4.1 Features of ISR Process for Nickel-Cobalt Mineralisation in Weathering Crusts ...... III-198

13.5 Wellfield Construction and Operation ...... III-200

13.5.1 Wellfield Construction ...... III-200

13.5.2 Wellfield Operation (Incl. Geometallurgical Parameters) ...... III-204

13.5.3 Summary ...... III-206

13.6 Sulphurous Acid Preparation ...... III-207

13.6.1 Sulphurous Acid Plant ...... III-208

13.6.2 Production of Sulphurous Acid by Special Block Designed by KazNickel ...... III-209

13.7 Processing of Pregnant Solutions ...... III-209

13.7.1 Cost of Processing Plant with Supporting Mine Infrastructure ...... III-209

13.7.2 Consumption and Cost of Reagents and Electricity for Processing .... III-210

13.7.3 Recovery of Nickel and Cobalt in Processing ...... III-211

13.8 Electrical Balance ...... III-211

13.9 Cost of Supporting Infrastructure ...... III-212

13.9.1 Cost of Mine Infrastructure per 15-20 kt/yr Nickel ...... III-212

13.9.2 Transport Infrastructure ...... III-213

13.10 Manpower and Administration ...... III-213

13.11 Closure and Remediation ...... III-214

13.12 Parameters for Estimating Revenue ...... III-214

13.12.1 Nickel ...... III-214

13.12.2 Cobalt ...... III-214

13.12.3 Ammonium Sulphate ...... III-214

13.12.4 Scandium ...... III-215

13.12.5 Electricity ...... III-215

13.12.6 Other Products ...... III-215

13.13 Estimation of Cut-off Grade ...... III-215

13.13.1 Types of Cut-off Grades for ISR Projects ...... III-215

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Page 13.13.2 Application Cut-off Grades and Selection of Operating Cells for the Mine Plan ...... III-216 13.14 Project Infrastructure ...... III-218 13.14.1 Roads ...... III-218 13.14.2 Powerlines ...... III-218 13.14.3 Water Supply ...... III-219 13.14.4 Limestone ...... III-220 13.14.5 Sulphuric acid and Sulphur ...... III-220 13.14.6 Manpower and Camp Site ...... III-220 13.14.7 Railway ...... III-221 13.14.8 CSA Global Comment on Adequacy of Regional Infrastructure ...... III-221 13.15 Capital and Operating Costs ...... III-221 13.15.1 Capital Costs ...... III-221 13.15.2 Operating Costs ...... III-227 13.15.3 Patent Royalty ...... III-230 13.16 Financial Analysis ...... III-231 13.16.1 Inputs and Assumptions ...... III-232 13.16.2 Scoping Study Cash Flow Analysis ...... III-235 13.17 Barriers to Market Entry ...... III-235 13.18 Market Share and Cost Competitiveness Analysis ...... III-236 13.19 Sensitivity Analysis ...... III-241 13.20 Discussion of the Outcomes of the Scoping Study ...... III-242 14 PERMITTING, ENVIRONMENTAL IMPACT, AND COMMUNITY PERFORMANCE ...... III-245 14.1 Environmental Discussion ...... III-245 14.1.1 Environmental Features of In Situ Recovery Projects ...... III-245 14.1.2 Environmental Investigations of Initial Conditions of the Gornostay Project ...... III-248 14.1.3 SSU Contract Environmental Requirements ...... III-250 14.1.4 Project Status, Activities, Effects, Releases and Controls ...... III-250 14.1.5 Emergency Response ...... III-252 14.1.6 Environmental Management ...... III-253 14.1.7 Closure and Remediation ...... III-254 14.1.8 Post-Closure Monitoring ...... III-254 14.1.9 Estimation Cost of Closure and Remediation ...... III-255

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Page 14.2 Social ...... III-256 14.2.1 General ...... III-256 14.2.2 Local Conditions ...... III-258 14.3 Climate Change and Greenhouse Gas Emissions ...... III-258 14.3 Conclusions and Recommendations for Further Environmental Work ...... III-258 14.3.1 Hydrogeological Modelling and Monitoring ...... III-260 15 TECHNICAL RISKS AND OPPORTUNITIES DISCUSSION ...... III-260 15.1 Opportunities ...... III-261 15.2 Risks ...... III-262 15.2.1 Risk Mitigation ...... III-267 16 DISCUSSION AND DEVELOPMENT TIMELINE ...... III-271 16.1 Exploration Program ...... III-271 16.2 Engineering Works ...... III-275 16.3 Minimal Works to Advance to PFS ...... III-279 17 CONCLUSIONS ...... III-282 18 REFERENCES ...... III-284 19 GLOSSARY, ABBREVIATIONS AND UNITS OF MEASUREMENT ...... III-288

APPENDIX 1: COMPETENT PERSON/PRACTITIONER CONSENT FORMS ...... III-302

APPENDIX 2: JORC CODE TABLE 1 ...... III-309 Section 1 — Sampling Techniques and Data ...... III-310 Section 2 — Reporting of Exploration Results ...... III-316 Section 3 — Estimating and Reporting of Mineral Resources ...... III-323

FIGURES Figure 1: Simplified nickel industry value chain ...... III-41 Figure 2: 2020 cost curve of reported nickel operations ...... III-44 Figure 3: 2019 Global published nickel resources ...... III-44 Figure 4: 2014–2019 global nickel metal unit production ...... III-45 Figure 5: 2019 nickel metal unit production — top 10 companies ...... III-45 Figure 6: 2014–2019 global nickel consumption by first use application ...... III-46 Figure 7: Global supply of cobalt as a by-product of nickel and copper mining ...... III-47 Figure 8: Simplified cobalt industry value chain ...... III-48 Figure 9: 2020 C3 cost curve of reported cobalt operations...... III-49 Figure 10: 2019 Global published cobalt resources ...... III-50

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Page Figure 11: 2014-2019 global cobalt metal unit production ...... III-51 Figure 12: 2019 cobalt metal unit production – top 10 companies ...... III-52 Figure 13: Lithium-Ion Battery chemistry and technology use ...... III-52 Figure 14: Lithium-Ion Battery chemistry versus energy density ...... III-53 Figure 15: Lithium-Ion Battery chemistry adoption and market share through time ...... III-53 Figure 16: 2014-2019 global cobalt consumption by first use application ...... III-54 Figure 17: Current and Projected Electric Vehicle Sales Scenarios Based on Climate Policy Scenarios ...... III-56 Figure 18: Current and Projected Electric Vehicle Sales by Type ...... III-57 Figure 19: Current and Projected Electric Vehicle Sales by Geography ...... III-58 Figure 20: Demand vs Current and Projected Productive Capacity in Nickel Sulphate (kt Contained Nickel) ...... III-58 Figure 21: Current and Projected Cobalt Demand from EV’s ...... III-60 Figure 22: LME nickel spot prices and estimated price ranges ...... III-61 Figure 23: LME nickel trade positions as at August, 2019 ...... III-62 Figure 24: Chinese Battery Grade Nickel Sulphate price differential relative to LME Nickel price ...... III-62 Figure 25: LME cobalt spot prices and estimated price ranges ...... III-63 Figure 26: Schematic representation of an ISR operation ...... III-64 Figure 27: Location of the Gornostay Project ...... III-65 Figure 28: chematic infrastructure map of the Gornostay Project ...... III-68 Figure 29: Plan of SSU Contract areas for the Gornostay Project ...... III-77 Figure 30: Geological map of the Zaysan district ...... III-80 Figure 31: Regolith map of the Gornostay Project (Left River Side area) ...... III-86 Figure 32: Regolith map of the Gornostay Project (Right River Side area) ...... III-93 Figure 33: Regolith section through the Gornostay belt (vertical exaggeration x4) ...... III-94 Figure 34: Morphology of mineralised bodies (Ni >0.33%) at the Gornostay Project ...... III-95 Figure 35: General scheme of mineral composition of in situ weathering crusts (Yusupov et al., 1968) ...... III-95 Figure 36: Geomorphological control of the distribution of weathering crust ...... III-99 Figure 37: Stylised generic nickel-cobalt laterite profile ...... III-102 Figure 38: Comparison of classical Ni-bearing laterite crusts of tropics with Gornostay Project profiles ...... III-104 Figure 39: Regional hydrogeological map for Left River Side area ...... III-106 Figure 40: Regional flow of underground water in faults zones ...... III-108

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Page Figure 41: Hydrogeological schematic map of the Left River Side area of the Gornostay Project ...... III-111 Figure 42: Schematic hydrogeological section ...... III-112 Figure 43: Location of water table of the Gornostay Project ...... III-115 Figure 44: Permeability in laterite weathering crusts through fissures/cavities and porous matrix ...... III-116 Figure 45: Summary exploration works at the Gornostay Project ...... III-116 Figure 46: Summary exploration works at the Left River Side (Main) block of the Gornostay Project ...... III-117 Figure 47: Mineral Resource classification for southern part of the Gornostay Project ..... III-120 Figure 48: Mineral Resource classification for northern part of the Gornostay Project ..... III-121 Figure 49: Left River Side area deposit thickness, Ni & Co grades ...... III-130 Figure 50: Gornostay Right River Side area deposit thickness, Ni & Co grades ...... III-131 Figure 51: Distribution of carbonates at Gornostay Project (Left River Side area) ...... III-132 Figure 52: Results of filtration leaching ...... III-132 Figure 53: Comparison of leaching tests by sulphurous acid versus sulphuric acid — recovery of metals ...... III-135 Figure 54: Comparison of leaching tests by sulphurous acid versus sulphuric acid — acid consumption ...... III-139 Figure 55: Location of the pilot operation block ...... III-141 Figure 56: Gornostay Pilot operation block ...... III-141 Figure 57: Pilot operation ISR polygons — wellfield and plant ...... III-143 Figure 58: Principal components of a pilot plant ...... III-144 Figure 59: Principal scheme of ISR operation field test ...... III-145 Figure 60: Parameters of pilot operation test on the Gonostay in 2019-2020 ...... III-146 Figure 61: Preparation leaching solutions with sulphurous acid from sulphuric acid by cavitation ...... III-148 Figure 62: Nickel grades in pregnant solutions from pilot operation ISR block ...... III-151 Figure 63: Nickel grades in pregnant and barren solutions (mg/l) ...... III-152 Figure 64: Production of nickel-rich eluate and nickel hydroxide ...... III-153 Figure 65: Geometallurgical parameters of heap leaching on the Murrin Murrin Project .... III-155 Figure 66: Field operation test on the Rogozhinsky deposit, S. Urals ...... III-156 Figure 67: Operation block in field ISR test on the Ekibastuz-Shiderty project, photo of site . III-162 Figure 68: General view of field ISR test on the Ekibastuz-Shiderty project, photo of site . . III-166 Figure 69: Nickel-cobalt cathode produced in ISR pilot test on the Ekibastuz-Shiderty project ...... III-167 Figure 70: Recovery of metals from multi-component pregnant solution to resin TP-207 .... III-168

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Page Figure 71: Nickel loading to resin TP-207 from ferrous pregnant solutions ...... III-170 Figure 72: Precipitation of iron and alumina in process of neutralisation nickel-bearing solutions ...... III-170 Figure 73: Principal processing flow sheet developed for the Ni-Co-Sc Sconi Project ..... III-171 Figure 74: Principal processing flowsheet developed for the Ni-Co-Sc Sunrise Project ..... III-178 Figure 75: Principal processing flowsheet developed for the nickel-cobalt NIWEST heap leaching project ...... III-180 Figure 76: Distribution of operating cost (without closure & remediation) for cells of the Gornostay Project ...... III-181 Figure 77: Forecast Mine schedule for Left River Side area ...... III-182 Figure 78: Mine schedule number of blocks in construction ...... III-182 Figure 79: Forecast Gornostay annual production of nickel and cobalt sulphates ...... III-185 Figure 80: Location of mine infrastructure ...... III-191 Figure 81: Processing flowsheet ...... III-196 Figure 82: Principal layout of processing plant of ISR mine for extraction nickel and cobalt . III-196 Figure 83: Filtration and infiltration method of ISR depending on location of mineralisation . III-198 Figure 84: Operational model of the Gornostay Left River Side area ...... III-200 Figure 85: Standard configuration of operation blocks for ISR in plan ...... III-200 Figure 86: Proposed wellfield pattern for mineralisation above the water table at Gornostay (section view) ...... III-202 Figure 87: Proposed wellfield pattern for mineralisation below the water table at Gornostay (section view) ...... III-202 Figure 88: Well configurations for the Gornostay Project ...... III-203 Figure 89: Dependence of grades in pregnant solutions & extraction level on L:S ratio (≈ time of leaching) ...... III-205

Figure 90: Comparison of conceptual sulphuric (H2SO4) and sulphurous (SO2*H2O) plant layouts ...... III-208 Figure 91: ISR Cut-off & Breakeven grades compared with extraction ...... III-216 Figure 92: Gornostay Project infrastructure ...... III-218 Figure 93: Project infrastructure (see legend on the Figure 28) ...... III-223 Figure 94: Capital cost estimate for the Gornostay Project ...... III-225 Figure 95: Operating cost estimate and distribution of costs for Gornostay Project ...... III-230 Figure 96: Comparison of cash operating cost for nickel at the Gornostay Project with world nickel projects ...... III-238 Figure 97: Economic model of the Gornostay Project (US$) ...... III-238 Figure 98: Discounted (8%) free cash flow of the Gornostay Project (US$) ...... III-239 Figure 99: Sensitivity spider chart ...... III-242 Figure 100: Example of observation wells for aquifer monitoring (from a uranium mine) .... III-246

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Page Figure 101: Approaches to cleaning of solutions in ISR ...... III-247 Figure 102: Example of uranium ISR mine in Southern Kazakhstan — wellfield area and processing plant ...... III-249 Figure 103: Potential accidents with pollution of air and contamination of underground water and surface ...... III-253 Figure 104: Self-cleaning and self-neutralisation of pregnant acid solutions on the Irkol deposit ...... III-255 Figure 105: Forcing of cleaning/neutralisation of solutions by artificial penetration through fresh rocks ...... III-256 Figure 106: Proposed location exploration works ...... III-274 Figure 107: Indicative optimal pre-production development timeline to first production. .... III-281

PHOTOGRAPHS Photo 1: Landscape of the Left River Side area of the Gornostay Project ...... III-78 Photo 2: Infrastructure at the Gornostay Project ...... III-79 Photo 3: Open test pit at the Gornostay Deposit ...... III-91 Photo 4: Structure & mineralogy of laterite weathering crust at Gornostay ...... III-96 Photo 5: Gornostay cover sediments (1) and redeposited weathering crust (2) ...... III-100 Photo 6: Photographs of Ni-Co mineralisation within the weathering crust at Gornostay . . III-101 Photo 7: Gornostay serpentinites in drill core ...... III-103 Photo 8: Photos from pilot ISR operation polygon (April and November 2019) ...... III-145 Photo 9: Photos inside pilot plant for the ISR operation polygon (November 2019) ...... III-147 Photo 10: Mining site of the Murrin Murrin Project, Western Australia ...... III-161 Photo 11: Desorption U-columns at one of the uranium mines in South Kazakhstan ...... III-172

TABLES Table 1: Mineral Resource estimation for the Gornostay Project as at 30th March 2021 . . III-8

Table 2: Recent nickel sulphate (NiSO4*6H2O) demand estimate (kt contained nickel). . . III-55

Table 3: Nickel sulphate (NiSO4*6H2O) demand estimate and forecast (kt of contained nickel) ...... III-57 Table 4: SSU Contract 1349 details ...... III-83 Table 5: Coordinates of corner points of the SSU Contract areas for the Gornostay Project . III-87 Table 6: Examples of chemical composition of main zones of weathering crust ...... III-96 Table 7: Summary of drilling and pitting metres for each phase of exploration drilling . . . III-119 Table 8: Summary of sampling for each phase of exploration ...... III-122

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Page Table 9: Summary of database used for modelling ...... III-125 Table 10: Mineral Resource estimation for the Gornostay Project as at 30th March 2021 . . III-128 Table 11: Mineral Resources of Left River Side area, inside tenement held by KazNickel . . III-133 Table 12: Intervals of sampling for composite metallurgical sample ...... III-136 Table 13: Results of agitation leaching tests for measurement of maximum level of metal extraction ...... III-137 Table 14: Result of filtration leaching tests ...... III-138 Table 15: Acid and thiourea consumption from time of leaching in agitation tests: ...... III-139 Table 16: Composition of pregnant solutions from pilot ISR block ...... III-153 Table 17: Composition of nickel hydroxide concentrate ...... III-156 Table 18: Summary parameters of pilot test ...... III-157 Table 19: Composition of groundwater from monitoring wells around pilot ISR block .... III-158 Table 20: Specification target for nickel and cobalt products ...... III-165 Table 21: Composition of eluate of Sunrise project ...... III-172 Table 22: Parameters of sites (groups of operational blocks) ...... III-179 Table 23: Mineral Resources and waste material included in mine plan ...... III-187 Table 24: Process design criteria assumption summary ...... III-189 Table 25: Grade-tonnage of operational blocks in full mining model ...... III-199 Table 26: Parameters of operational wells ...... III-204 Table 27: Recovery of impurity components ...... III-206 Table 28: Parameters for wellfield operation for the Gornostay Project ...... III-207 Table 29: Geometallurgical parameters for wellfield operation for the Gornostay Project . . . III-207 Table 30: Cost of Processing Plant on capacity 5,000 t/yr for nickel ...... III-210 Table 31: Consumption of reagents and electricity for processing of pregnant solutions . . . III-211 Table 32: Mine plan based on ‘profit in cells’ >US$0 and excluding cells with limestones . III-217 Table 33: Capital cost indicative estimate (nominal capacity 20,000 t/yr Ni) ...... III-226 Table 34: Operating cost parameters assumptions ...... III-229 Table 35: Gornostay valuation model key inputs ...... III-233 Table 36: Summary of economic outputs of the Gornostay Project Scoping Study ...... III-240 Table 37: Gornostay Sensitivity Analysis NPV8% (nickel price with sulphate premium) . . . III-262 Table 38: Consequence of risk rating guidance ...... III-262 Table 39: Likelihood of risk occurring in a 7 year timeframe ratings guidance ...... III-263 Table 40: Risk/Opportunity Rating Summary ...... III-263 Table 41: Current Gornostay Project risks (after Scoping Study) ...... III-264 Table 42: Mitigation of Medium-Risk Technical issues ...... III-268

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1 INTRODUCTION

1.1 Context, Scope and Terms of Reference

KazNickel LLP (KazNickel, “the Client” or “the Company”) was incorporated to enable the development of nonferrous deposits, with a particular focus on nickel and cobalt. KazNickel holds the Subsoil Use Contract (SSU Contract) for the Gornostay nickel-cobalt deposits, located in Eastern Kazakhstan region of the Republic of Kazakhstan, which gives the Company rights to explore and produce cobalt and nickel. The Company has been actively undertaking exploration and evaluation activities since 2004 at Gornostay.

The Company recognised the potential to exploit the Gornostay Project using in situ recovery techniques, which are widely deployed in Kazakhstan for the extraction of uranium, and has been actively evaluating the application of this approach since acquiring control of the project.

CSA Global Pty Ltd (CSA Global), an ERM Group company, was engaged by KazNickel to compile a Competent Persons Report (CPR or the “Report”) as defined by Chapter 18 of the Rules Governing the Listing of Securities (the “Listing Rules”) on the Stock Exchange of Hong Kong (HKEX).

The Report will be a Public Report and form part of the [REDACTED] document, to support an initial [REDACTED]([REDACTED]) of shares for the Company to enable a [REDACTED]onthe HKEX.

The funds raised will be used for the purpose of ongoing evaluation of the project areas.

1.2 Reporting Standard and Compliance

The Report has been prepared in accordance with the VALMIN Code 20151, which is binding upon Members of the Australian Institute of Geoscientists (AIG) and the Australasian Institute of Mining and Metallurgy (AusIMM), the JORC2 Code and the rules and guidelines issued by such bodies as the Stock Exchange of Hong Kong Limited, including the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (with specific emphasis on Chapter 18 which sets out additional [REDACTED] conditions, disclosure requirements and continuing obligations for Mineral Companies) and Guidance Note 7 (Suggested Risk Assessment for Mineral Companies).

1 Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets. The VALMIN Code, 2015 Edition. Prepared by the VALMIN Committee, a joint committee of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists.

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

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1.3 Principal Sources of Information and Reliance on Other Experts

The Report has been based upon information available up to and including 30th November 2020.

The information was provided to CSA Global by the Company, together with technical reports prepared by previous consultants, government agencies and past tenement holders, and other relevant published and unpublished data sourced by CSA Global. CSA Global has also relied upon discussions with the Company’s management and technical staff for the information contained within this assessment.

The authors have endeavoured, by making all reasonable enquiries within the timeframe available, to confirm the authenticity and completeness of the technical data upon which this CPR is based. Unless otherwise stated, information and data contained in this technical report, or used in its preparation, has been provided by the Company in the form of documents and digital data. CSA Global cannot guarantee the authenticity or completeness of such third-party information. In preparing this Report, Dr Seredkin has extensively relied on information derived and collated by third parties.

In preparing this Report, CSA Global has extensively relied on information collated by other parties, as described above. The authors have critically examined this information, made our own enquiries and applied our general geological competence to conclude that the information presented in this CPR complies with the definitions and guidelines of the JORC and VALMIN Codes.

Please note these works have been referenced throughout this document using appropriate scientific refencing conventions, but the authors of the referenced material have not specifically provided their consent to be quoted.

CSA Global has completed the scope of work based on information provided by the Client, and on reports completed during an ongoing engagement over the past two years resulting in a Mineral Resource estimate for the project (Seredkin 2019), a Scoping Study (Seredkin and Donaghy 2019), which was updated in early 2020 (Seredkin et al. 2020), a market study into nickel and cobalt (Donaghy 2020), and an opinion on the current Technical Value of the Gornostay Project (Jeffress et al, 2020).

CSA Global has relied on the Company’s representation that it will hold adequate security of tenure for evaluation, exploration and assessment of the Gornostay Project to proceed. With regards to the current legal status of the tenements, CSA Global has relied on information provided by the Company’s independent legal advisers. CSA Global makes no other assessment or assertion as to the legal title of tenements and is not qualified to do so. Further information concerning Kazakh mining law and the Company’s mineral tenure is included in the “Business” section of the document.

1.3.1 Site Visits and Inspections

The first visit of Dr Maxim Seredkin (Competent Person) on the Gornostay Project (Left River Side area) was on the on 5 April 2019. During the site visit, the following items were inspected/reviewed:

• Historical test pits, which were collapsed and now remain in traces as small hills.

• Drillhole locations from 2004 to 2012; however, all drill holes were collapsed and cannot be found. Only hydrogeological wells are available for observation.

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• Drill core from operational wells drilled in 2018.

• Block of the ISR field test.

• Open test pit where all types of mineralisation are available for investigation.

The second visit of Dr Maxim Seredkin (Competent Person) on the Gornostay Project (Left River Side area) was together with Graham Jeffress on the on 26 November 2019. During the site visit, the pilot plant was inspected/reviewed including:

• Pilot plant infrastructure, comprising the acidification block, the block for the production of sulphurous acid, wellfield house, sorption/desorption columns, purification and precipitation tanks, and final filter- press.

• Pregnant and barren solutions pods.

• Acid storages.

• Supporting infrastructure.

The Competent Person is of the opinion that all data/equipment corresponds to the information provided by KazNickel.

1.4 Authors of the Report — Qualifications, Experience and Competence

This Report has been prepared by CSA Global, an ERM Group company, which has been operating for over 35 years; with its headquarters in Perth, Western Australia.

CSA Global provides multidisciplinary services to a broad spectrum of clients across the global mining industry. Services are provided across all stages of the mining cycle from project generation, to exploration, resource estimation, project evaluation, development studies, operations assistance, and corporate advice, such as valuations and independent technical documentation.

The principal author of this Report is Dr Maxim Seredkin PhD (Geology), BSc (Hons), FAusIMM, MAIG, MPONEN, has over 20 years’ experience in the mining industry, including 15 years in ISR, gold, copper, nickel, cobalt and other metals proposed to be extracted by ISR and has worked with laterite projects since 2001. Maxim has prepared numerous Mineral Resource estimation reports for laterite nickel-cobalt deposits in Australia, Guinea, Indonesia and Turkey.

Maxim is a specialist in ISR and a Competent Person for ISR Mineral Resources and Ore Reserves. The information in this Report that relates to the Technical Assessment of ISR Mineral Assets reflects information compiled and conclusions derived by Dr Maxim Seredkin, CSA Global ISR Coordinator/ Principal Consultant and a technical specialist in ISR.

Dr Seredkin has sufficient experience relevant to the Technical Assessment of the Mineral Assets under consideration and to the activity which they are undertaking to qualify as Practitioners as defined in the 2015 edition of the “Australasian Code for the Public Reporting of Technical Assessments and Valuations of Mineral Assets”. Formal CP/Practitioner statements are in section 1.6.5.

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The industry overview content was prepared by Tony Donaghy BSc (Hons), AssocDip CivEng, PGeo, is an internationally recognised expert in the global search for nickel, copper, cobalt and platinum group elements (PGEs) and a skilled exploration geologist who is familiar with most geological environments and a broad variety of mineral commodities. He has more than 25 years’ experience covering all continents and all aspects of the industry — from leading continental-scale grassroots targeting exercises, through greenfields and brownfields exploration project design and execution, mining, property evaluation and due diligence, board- level strategy development and guidance, to independent regulatory technical reporting and project valuation.

Additional technical content and compliance was provided by Graham Jeffress BSc (Hons), FAIG, RPGeo, FAusIMM, FSEG, MGSA, is a geologist with over 30 years’ experience in exploration geology and management in Australia, PNG and Indonesia. He is Principal Geologist with CSA Global in Perth and manages the corporate services work undertaken by CSA Global. He has worked in exploration (ranging from grassroots reconnaissance through to brownfields, near-mine, and resource definition), project evaluation and mining in a variety of geological terrains, commodities, and mineralisation styles within Australia and internationally. He is competent in multidisciplinary exploration, and proficient at undertaking prospect evaluation and all phases of exploration. Graham has completed numerous independent technical reports (IGR, CPR, QPR) and valuations of mineral assets. He now coordinates and participates in CSA Global’s activities providing expert technical reviews, valuations, and independent reporting services to groups desiring an improved understanding of the value, risks, and opportunities associated with mineral investment opportunities.

Peer review of this Report was completed by Karl van Olden (CSA Global Manager — Mining), Paul Heaney (CSA Global Manager — Ireland), and Brendan Clarke (CSA Global Manager — Africa).

Mr Karl van Olden is a mining engineer with more than 25 years’ experience in planning, development and operation of a diverse range of open pit and underground resources assets across Africa and Australia. Karl’s broad expertise includes mining engineering, business process development, business and mine planning, Ore Reserves, financial analysis and project management

Mr Paul Heaney has over 27 years’ consulting experience in water resources assessment, development and management. Paul has managed and directed hydrogeological and hydrological studies associated with mine water supply, mine dewatering/depressurisation, mine closure, water quality, site water balance modelling, groundwater/surface water modelling and site-wide mine water management on projects across Africa, Australia, Asia, Commonwealth of Independent States (CIS), Europe and the Middle East. Paul has extensive experience in mine water management in a wide range of climatic and hydrogeological environments, ranging from extreme cold to extreme heat, and from arid desert to tropical rainforest. His experience includes both the underground and open pit mining of a wide range of minerals. Paul is currently managing the hydrological, hydrogeological and hydro-geochemical aspects of numerous mining studies across the globe.

Dr Brendan Clarke is a Geologist with over 18 years’ experience in the minerals industry. He has specialist skills in the design, execution and management of exploration projects globally, with a specific focus on the management of exploration projects in Africa and the Middle East. He has a strong commercial acumen and a track record of delivering high-quality services and products to clients in addition to building and developing strong teams. Brendan holds a PhD in Structural Geology.

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1.5 Prior Association and Independence

CSA Global is an independent geological consultancy. This Report is prepared in return for professional fees based upon agreed commercial rates and the payment of these fees is in no way contingent on the results of this Report, and CSA Global will receive no other benefit for the preparation of this Report. CSA Global does not have any pecuniary or other interests that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion about the Mineral Assets, estimates of Mineral Resources, and the projections and assumptions presented and opined on by CSA Global and reported in this Report.

The fee for the preparation of this CPR is approximately US$150,000.

No member or employee of CSA Global is, or is intended to be, a director, officer or other direct employee of KazNickel. There is no formal agreement between CSA Global and KazNickel to CSA Global conducting further work for KazNickel after the CPR.

Neither CSA Global, nor the remaining authors of this Report, have or have had previously, any material interest in KazNickel, or its related entities, or in the mineral properties in which KazNickel has an interest, other than the carrying out of individual consulting assignments as engaged. CSA Global does not have any relationship with the advisers to the [REDACTED], and has had no part in the formulation of the Admission, or interest in the outcome of the [REDACTED].

CSA Global’s relationship with KazNickel is solely one of professional association between a client and an independent consultant.

Consequently, CSA Global and the authors of this Report consider themselves to be independent of KazNickel and its related parties.

CSA Global notes that over the past two years it has been involved in an ongoing consulting role for the Company completing various back to back and overlapping technical tasks that have culminated in this CPR. The work CSA Global has completed comprises a Mineral Resource estimate for the project (Seredkin 2019), a Scoping Study (Seredkin and Donaghy 2019), which was updated in early 2020 (Seredkin and Donaghy, 2020), a market study into nickel and cobalt (Donaghy 2020), and an opinion on the current Technical Value of the Gornostay Project (Jeffress et al, 2020).

1.6 Declarations

1.6.1 The Purpose of this Document

This CPR has been prepared by CSA Global at the request of, and for the sole benefit of, the Company. Its purpose is to provide an independent technical assessment of the Company’s Gornostay Project.

The CPR is to be included in its entirety or in summary form within a document to be prepared by the Company in connection with an initial [REDACTED]([REDACTED]) for a [REDACTED] on the HKEX. It is not intended to serve any purpose beyond that stated and should not be relied upon for any other purpose.

1.6.2 Effective Date

The statements and opinions contained in this Report are given in good faith and in the belief that they are not false or misleading. This Report has been compiled based on information available up to and including the date of this CPR.

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The statements, conclusions, and opinions in this CPR are effective at the reference date of 30th March 2021 and could alter over time depending on exploration results, mineral prices and other relevant market factors.

To the knowledge of CSA Global, and as informed by KazNickel, there is no material change in respect of the Mineral Asset or the declared Mineral Resources since this date.

Those conclusions may change in the future with changes in relevant product prices, exploration and other technical developments regarding the Mineral Asset and the market for nickel and cobalt products.

1.6.3 Limitations

The Company has agreed to indemnify CSA Global for any liability arising as a result of, or in connection with, the information provided by or on behalf of it being incomplete, incorrect, false, or misleading in any material respect.

The Company has confirmed in writing to CSA Global that, to its knowledge, the information provided by it (when provided) was complete and not incorrect or misleading in any material respect. CSA Global has no reason to believe that any material facts have been withheld and the Company has confirmed in writing to CSA Global that it believes it has provided all material information available to it.

The opinions expressed in this Report have been based on the information supplied to CSA Global by KazNickel. The opinions in this Report are provided in response to a specific request from KazNickel to do so. CSA Global has exercised all due care in reviewing the supplied information.

While CSA Global has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data.

CSA Global does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them.

The interpretations and conclusions reached in this CPR are based on current scientific understanding and the best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they are founded on an assessment of probabilities and, however high these probabilities might be, they do not claim absolute certainty.

CSA Global considers that its opinion must be considered as a whole and that presentation of selected parts off this Report in isolation could create a misleading view of the opinions presented in this Report. The CPR should always be presented and read in full. The preparation of a technical Report is a multifaceted process and does not lend itself to partial analysis or summary given the complex multidisciplinary nature of mining projects.

CSA Global’s assessments concerning the estimation of Mineral Resources are based on primary data and also key financial information provided by KazNickel throughout CSA Global’s work, which in turn reflect various technical-economic conditions prevailing at the Effective Date.

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In particular, the Scoping Study outcomes and economic assessments are based on expectations regarding the product prices and exchange rates prevailing at the Effective Date. CSA Global notes that commodity prices for nickel and cobalt can change significantly over relatively short periods. Should these change materially, the estimates and assessments could be materially different in these changed circumstances.

Opinions presented in this Report apply to the site conditions and features, as they existed at the time of CSA Global’s investigations, and those reasonably foreseeable. These opinions do not necessarily apply to conditions and features that may arise after the date of this Report, about which CSA Global had no prior knowledge nor had the opportunity to evaluate.

Additionally, CSA Global has no obligation or undertaking to advise any person of any change in circumstances which comes to its attention after the date of the CPR or to review, revise or update the CPR or opinion.

The CPR includes technical information, which requires subsequent calculations to derive subtotals, totals and weighted averages. Such calculations may involve a degree of rounding and/or presentation consistent with the accuracy of the data and consequently introduce an error. Where such errors occur, CSA Global does not consider them to be material.

1.6.4 Copyright

Copyright of all text and other content in this document, including the manner of presentation, is the exclusive property of CSA Global. It is an offence to publish this document or any part of the document under a different cover, or to reproduce and/or use, without written consent, any proprietary technical procedure and/or technique contained in this document. The intellectual property reflected in the contents resides with CSA Global and shall not be used for any activity that does not involve CSA Global, without the written consent of CSA Global.

1.6.5 Precedence of English version of CPR

In the event of conflict between the Chinese translation of this CPR (provided as part of the [REDACTED] process) and the English version, the original English-language version the CPR takes precedence in the case of any question over content, interpretation and intent.

1.6.6 Practitioner/Competent Person’s Statement and Consent

The information in this CPR, and the BMT document, that relates to the technical assessment of the Gornostay Project Mineral Assets, Mineral Resources, Exploration Targets, or Exploration Results, metallurgy and ISR is based on, and fairly reflects, information compiled and conclusions derived by Dr Maxim Seredkin, a Fellow of the AusIMM; and a Competent Person for ISR as defined in the JORC Code.

Dr Seredkin is an independent consultant employed by CSA Global, independent mining industry consultants, who were engaged to prepare the CPR.

Dr Seredkin has sufficient experience that is relevant to the Technical Assessment of the Mineral Assets under consideration, the style of mineralisation and types of deposit under consideration and to the activity being undertaken to qualify as a Practitioner as defined in the 2015 Edition of the “Australasian Code for the public reporting of technical assessments and Valuations of Mineral Assets”, and as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

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Dr Seredkin consents to the inclusion in the Battery Metals Technologies Ltd. Document this CPR of the matters based on their information in the form and context in which it appears.

[formal written consent to be supplied with FINAL report]

The Company was provided with drafts of the CPR to enable correction of any factual errors and notation of any material omissions.

CSA Global has consented to the inclusion of this CPR in the Document in the form and context in which it is included. [formal written consent to be supplied with FINAL report] At the date of this CPR this consent has not been withdrawn. CSA Global has not authorised the issue of the Document. Accordingly, CSA Global makes no representation regarding, and takes no responsibility for, any other statements in, or material omissions from, the Document.

CSA Global is responsible for the CPR as part of the Document and for all of the information in the Document that has been extracted directly from the CPR and declares that it has taken all reasonable care to ensure that the CPR and the information extracted therefrom and included in the Document is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import.

CSA Global confirms that the presentation of information contained elsewhere in the Document which relates to information in the CPR is accurate, balanced and not inconsistent with the CPR. CSA Global notes that the CPR has undergone regulatory review.

CSA Global has given and has not withdrawn its written consent to the inclusion of this covering letter and the CPR in the Document and references to the CPR in each case and its name in the form and context in which they are included in the Document.

1.7 Units and Currency

All units used in the CPR are defined in the Glossary and conform to the International System of Units (SI).

All operating costs (OPEX), capital expenditure (CAPEX), revenue and cash flow entries are expressed in United States Dollars (USD), except where explicitly noted in the text as being local currency.

2 MARKET OVERVIEW

The information and statistics set forth in this section have been independently prepared by CSA Global (Donaghy, 2020). In addition, certain information is based on, or derived or extracted from, among other sources, publications of government authorities and internal organisations, market data providers, communications with various government agencies or other independent third-party sources unless otherwise indicated.

In compiling and preparing the research, CSA Global assumed that the global social, economic and political environment is likely to remain stable and related industry key drivers are likely to continue drive the market over the life of the Gornostay Project.

CSA Global believes that the sources of such information and statistics are appropriate and has taken reasonable care in extracting and reproducing such information.

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CSA Global has no reason to believe that such information and statistics are false or misleading in any material respect or that any fact has been omitted that would render such information and statistics false or misleading.

In this section, all reference to “dollars” or “$” are US dollars.

2.1 Nickel Overview

2.1.1 Introduction

Nickel is a chemical element with the symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel belongs to the transition metals, is hard and ductile, and exhibits a mixture of ferrous and nonferrous metal properties. The ionic radius of the most common elemental form of nickel is close to that of iron and magnesium, allowing the three elements to substitute for one another in the chemical lattice of some minerals, chemical compounds and metallic alloys. Nickel is primarily sold for first use as refined metal (cathode, powder, briquet, etc.) or ferronickel (iron-nickel alloy). Nickel when alloyed with other metals increases the resistance against corrosion and oxidation.

The current primary use of nickel is to make austenitic stainless steel. The next most common use is to make superalloys or nonferrous alloys. Both families of alloys are widely used because of their corrosion resistance and heat tolerance. The aerospace industry is a leading consumer of nickel-base superalloys. Turbine blades, discs and other critical parts of jet engines are fabricated from superalloys. Nickel-base superalloys are also used in land-based combustion turbines, such as those found at electric power generation stations. The remaining consumption is divided between alloy steels, rechargeable batteries, catalysts and other chemicals, coinage, foundry products, and plating. The principal commercial chemicals are compounds of carbonate (NiCO3), chloride (NiCl2), divalent oxide (NiO), and sulphate (NiSO4*6H2O). Nickel sulphate usage in power batteries for new electric vehicles and other batteries is increasing

2.1.2 Industry Value Chain

The bulk of the nickel mined globally comes from two basic, yet fundamentally different, types of ore deposits:

• laterites, formed by weathering and breakdown of the mineral olivine [(Fe,Mg)2SiO4] contained in magmatic rocks, formed in the weathering profile at the earth’s surface immediately overlying the original olivine-bearing bedrock, where the principal ore minerals are nickeliferous limonite [(Fe,Ni)O(OH)] and hydrated Mg-Ni silicates (serpentine and garnierite), or

• magmatic sulphide deposits associated with volcanic and intrusive olivine-bearing

magmatic rocks, where the principal ore mineral is pentlandite [(Ni,Fe)9S8] formed by certain anomalous conditions during the cooling magmatic rock crystallisation process, at any depth within or on the earth’s crust.

The United States Geological Survey (USGS) estimates that 60% of known nickel mineralisation globally is hosted in laterite deposits; while the remainder is hosted in magmatic sulphide deposits.

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A simplified industry value chain for nickel is depicted in Figure 1. While far from comprehensive, it serves to illustrate that a key factor in nickel production is process technology and the types of nickel product that can be economically extracted from the different types of nickel ore deposit.

Not exhaustive Laterite ore Hydromet Sulphide ore

Hydromet Roasting Concent- ration Roasting

Smelting Ni sulphide concs Mixed hydroxide Mixed sulphide precipitates precipitates (MHP) (MSP) Smelting

NPI FeNi

Sulphide- sation

Matte

Ni oxide Stainless conc steel Ni oxide NFA, alloy Refining steel Acid leaching Other, chemical Purification, Cathode Briquettes Powder/ leaching pellets

Crystallisation Acid dissolution Leaching, Nickel purification sulphate

Refining Nickel Purification hydroxide

Nickel Precursor wastes

Cathode Legend materials Products Processes End uses NiMH NMC/NCA Plating Modelled routes Less common/novel Batteries Batteries to sulphate routes to sulphate

Figure 1: Simplified nickel industry value chain Source: CRU, CSA Global

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Nickel sulphide deposits, and laterite deposits amenable to sulphuric acid or ammonia leach process operations, typically can produce intermediate nickel products capable of being ultimately refined to produce a Class-1 nickel product, defined as containing 99.8% or more nickel metal. Not all such deposits can carry the economics of high-purity nickel refining, instead of producing a Class-2 nickel product with less than 99.8% nickel metal content. This will vary on a case by case basis between deposits depending on many local factors. Class-1 nickel products are typically used in superalloys and the high-purity chemical/energy applications of nickel usage, as well as in stainless steel. Class-2 products have many chemical and alloy uses where high-purity is not a key performance criterion, however, Class-2 products are typically used in the stainless steel industry. Laterite deposits that can only be processed via a pyrometallurgical smelting route generally produce a type of Class-2 nickel product known as a ferronickel alloy, that can only be used as input into the stainless steel industry. However, it is possible to produce a sulphide matte product by smelting which can be further refined to produce Class-1 or Class-2 nickel.

Nickel production from sulphide deposits typically benefits from substantial by-product credits from copper and cobalt production. Some sulphide deposits also benefit from Platinum Group Element (PGE), gold and/or silver production credits. Nickel laterite deposits amenable to acid or ammonia leach process routes typically can also extract cobalt products as a by-product. Laterite deposits that are processed via pyrometallurgical processes do not produce or receive any by-product credits.

Since 2009, Class-2 nickel production has risen in market share from 25% of global supply to approximately 50%. This has been driven by increased demand for lower-cost nickel metal units by Chinese stainless steel manufacturers to offset the more expensive Class-1 nickel product usage. Nickel Pig Iron (NPI) as it is termed, is derived from direct smelting of laterite nickel material to produce a low-structural grade stainless steel product. NPI laterite feed material has been supplied predominantly from Indonesia and the Philippines, with direct shipment of laterite ore to smelter complexes in China.

The C3 cost curve (fully allocated cost of production without by-product credits) of nickel producers also reflects different deposit styles and amenable process options. The lower half of the cost curve (Figure 2) typically comprises sulphide nickel producers that benefit from cheaper OPEX and a relatively simple and robust sulphide process route. The higher half of the cost curve typically comprises the various laterite nickel operations where OPEX processing costs are relatively higher compared to sulphide operations.

2.1.3 Global Nickel Resources

The global published resources of nickel deposits have been estimated at approximately 95 Mt of contained nickel metal (Figure 3), of which the known nickel laterite deposits of Kazakhstan make-up approximately 1% of that global figure. Not all the published resources used in those figures represent current economic development scenarios or are compliant with reporting codes such as JORC, and many currently dormant or sub-economic deposits are included in the estimated total. The country breakdown of nickel supply is also a proxy for ore type distribution, with countries such as Canada, China, Russia, South Africa, United States and Finland producing from sulphide deposits; while New Caledonia, Indonesia, Philippines, Cuba, Guatemala, Colombia and Madagascar are exclusively laterite nickel producers. Countries such as Australia and Brazil produce nickel from both sulphide and laterite deposits.

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2.1.4 Global Nickel Production

2019 global production of nickel amounted to approximately 2.7 Mt of nickel metal (Figure 4). The country breakdown of nickel supply is also a proxy for ore type distribution, with countries such as Canada, China, Russia, South Africa, United States and Finland producing from sulphide deposits; while New Caledonia, Indonesia, Philippines, Cuba, Guatemala, Colombia and Madagascar are exclusively laterite nickel producers. Countries such as Australia and Brazil produce nickel from both sulphide and laterite deposits.

2.1.5 Nickel Production Companies

The 2018 top 50 global mining company producers of nickel (where data on production is available) are tabulated in Figure 5. This data encompasses approximately 75% of estimated total nickel production. The remainder 25% represents production where no reliable figures or estimates are possible on an individual company basis. It should be noted that these figures relate to primary mine production, and that many of the companies mentioned also toll treat the concentration, smelting and/or refining of third-party company mine production offtake.

Analysis of market share by revenue of mining companies that produce nickel is rendered meaningless due to several factors, such as:

• Many of the mining companies for nickel are also diversified across other commodity streams (e.g. Vale, Glencore, BHP etc.) where reported company revenue is also based upon operations and sales of other metals that are not part of the company’s nickel project portfolio;

• Many of the larger nickel companies (e.g. Noril’sk, Vale, Glencore, BHP, Jinchuan etc.) are fully integrated in terms of nickel production from mining through to sale of refined product. Many of these companies either toll treat other companies’ nickel ore or purchase other companies nickel material to feed excess capacity in their integrated processing supply chain of material. Revenues reported for such integrated operations from the sale of final product include the onward sale of such treated third-party material;

• The great majority of nickel operations include revenue from sale of recovered significant by-products commodities (e.g. copper, cobalt, platinum group elements, gold etc.) and do not report a detailed breakdown of revenue stream by commodity.

2.1.6 Nickel Market Demand

Based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on global nickel market demand is that between approximately 2,400 kt and 2,425 kt will be consumed in 2019, with a slight nickel supply deficit of between 30 kt and 80 kt of nickel expected in each of 2019 and 2020.

Historically, about 68-70% of the global consumption of nickel is used to make austenitic stainless steel (Figure 6). Another 15-16% goes into superalloys or nonferrous alloys. Both families of alloys are widely used because of their corrosion resistance and heat tolerance. The remaining 15-16% of

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2019 Nickel Production Ranked on Total Cash Cost* Scenario: Market Intelligence 2018 Constant USD

Production (%) 0 25 50 75 100 700

600

500

400

Gornostay SS Cost +40%

300 Total Cash Cost (¢/lb) Total Gornostay SS Cost

200 Gornostay SS Cost -20%

100

0 0 317 635 952 1,270 Paid Nickel (000 tonnes)

Labor Energy Reagents Other Onsite TCRC+Shipment Royalty

Figure 2: 2020 cost curve of reported nickel operations. Paid Nickel (’000 t) represents global cumulative production of reported operations, approximately 50% of total global nickel metal production. Source: S&P Global Market Intelligence, CSA Global

Global Published Resources 25,000

20,000

15,000

10,000 kilotonnes Contained Nickel 5,000

uba hina frica orld razil anada C C W ussia B C A R olombia aledonia ustralia C uatemala hilippines A Indonesia adagascarG P C M outh est of S R ew N

Figure 3: 2019 Global published nickel resources Source: USGS, CSA Global (Actual on 31 December 2019. No annual data yet available post 2019.)

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800 800

700

600

500 2014 420 2015 400 370 2016 2017 300 2018

Kilotonnes Contained Nickel 270 2019 220 200 180 180

110 100 67 51 0 0 0 0 0 14 0

ba u C orld ascar Brazil China ussia W g Finland atemala ustralia Canada R th Africa u hilippines u Colombia G A Caledonia P Indonesia Mada So United States w Rest of Ne

Figure 4: 2014–2019 global nickel metal unit production Note: 2019 production for Madagascar, Columbia, South Africa, Finland and Guatemala were not available at time of writing and are estimated and captured within the Rest of World total for that year. Source: USGS, CSA Global (Actual on 31 December 2019. No annual data yet available post 2019.)

250,000 8.425 2018 Attributable Production (tonnes of nickel metal) 10.0 7.241 6.403 4.380 207,602

200,000 3.036 2.756 2.719 178,429 2.568 ction u 157,775 1.748 1.717 1.502 1.502 rod 1.318 P

150,000 1.277 1.265 1.247 1.119 1.111 1.015 1.009

0.882 1.0 Tonnes 0.852 0.848 0.844 0.817 0.800 0.785 0.765 0.751 0.730 107,930 0.713 0.696 0.689 percentage 0.642 0.629 0.623 0.606 e of Global Tonnes nickel Tonnes 0.587 0.586 100,000 g 0.511 0.474 0.472 0.451 0.441 0.410 0.408 74,806 0.341 ercenta 67,010 67,925 0.320 63,270 P 0.303 0.291 43,074 50,000 42,300 37,000 37,000 32,480 31,471 31,175 30,740 27,573 27,377 25,000 24,868 21,732 20,989 20,907 20,800 20,142 19,720 19,336 18,855 18,500 18,000 17,573 17,152 16,970 15,819 15,496 15,354 14,921 14,466 14,433 12,600 11,689 11,633 11,121 10,110 10,864 10,043 8,400 7,164 7,884 7,467 0.1 0

Figure 5: 2018 nickel metal unit production — top 50 companies Source: S&P Global Market Intelligence, CSA Global. (Actual on 31 December 2019. No annual data yet available post 2019.)

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Percentage of nickel demand by first use 80

0 Stainless Steel Alloy Steel Non-Ferrous Plating Castings Batteries Other Alloy 2014 2015 2016 2017 2018

Figure 6: 2014-2018 global nickel consumption by first use application Sources: Natural Resources Canada, CRU, Wood Mackenzie, Roskill, ICICI Securities, Macquarie Research. Vale, BHP, CSA Global (Actual on 31 December 2019. No annual data yet available post 2019.)

2.2 Cobalt Overview

2.2.1 Introduction

Cobalt is a chemical element with the symbol Co and atomic number 27. It is a hard, lustrous, silver-grey metal. Cobalt belongs to the transition metals, is hard and brittle, and exhibits a mixture of ferrous and nonferrous metal properties. The ionic radius of the most common elemental form of cobalt is close to that of iron and magnesium, allowing the three elements to substitute for one another in the chemical lattice of some minerals, chemical compounds and metallic alloys. Cobalt is primarily sold for first use as refined metal (cathode, powder, briquet, etc.). Cobalt when alloyed with other metals increases the resistance against severe temperature and mechanical stress.

Cobalt has historically been used primarily in metallurgical and chemical applications. The high durability and high-temperature resistant properties of cobalt make it ideal for the manufacture of magnetic, wear-resistant and high-strength superalloys and hardened components that retain these properties at severe temperatures and mechanical stress such as jet engine turbine blades, power generation turbines and military uses. Chemical usage includes catalysts in petrochemical and plastics industries; pigments in paints, glass and ceramics; and adhesives. Cobalt usage in 3C batteries, energy storage batteries, power batteries for new electric vehicles and other batteries is increasing.

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2.2.2 Industry Value Chain

The bulk of the cobalt mined globally comes from two basic, yet fundamentally different, types of ore deposits (Figure 7):

• A by-product of nickel production from nickel sulphide, and nickel laterite operations processed via acid or ammonia leach;

• A by-product of copper sulphide production from sedimentary copper deposits in the Democratic Republic of Congo (D.R.C.) and, to a lesser extent, Zambia.

Only 2% of globally mined cobalt is derived from ore deposits where cobalt is the primary commodity.

2% Primary Cobalt Mining

37% Nickel Mining By-product

Copper Mining By-product 61%

Source: CRU

Figure 7: Global supply of cobalt as a by-product of nickel and copper mining Source: Commodity Research Unit (CRU), CSA Global

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From the estimates, it is readily apparent that the sedimentary copper deposits of the D.R.C. dominate global supply of cobalt. A simplified typical industry value chain for cobalt is depicted in Figure 8 and Figure 9.

Cobalt Chloride Cobalt upgraded ~24% to concentrate/ intermediate Metal Refineries Chemical refineries Cobalt Oxide ~72% products: Cobalt Sulphate Cobalt hydroxide 20.5%-21.0% Cobalt intermediate 1.Tricobalt Tetraoxide Cobalt concentrate Alliage blanc Vale Rounds 2.Nickel Cobalt etc Recycling Manganese Hydroxide** Sherritt briquettes

SMM cut cathodes Cobalt mining Cathode Material Copper-cobalt mine 1.Lithium Cobalt Oxide Nickel-cobalt mine Etc... Artisanal 2.Li(NiCoMn)O Primary (2%) 2 Super Alloys Catalysts Hard facing Li-ion battery

Figure 8: Simplified cobalt industry value chain Source: Benchmark Mineral Intelligence, CSA Global

Cobalt is sourced as a by-product and supplies into a limited market that is several orders of magnitude smaller than the primary metals with which it is mined (nickel and copper). Thus, the typical supply and demand scenarios for other metals do not readily apply to cobalt markets. It is a small volume market dominated by factors associated with those primary metals and not related to cobalt end-use.

Cobalt has historically been used primarily in metallurgical and chemical applications. The high durability and high-temperature resistant properties of cobalt make it ideal for the manufacture of magnetic, wear-resistant and high-strength super alloys and hardened components that retain these properties at severe temperatures and mechanical stress such as jet engine turbine blades, power generation turbines and military uses. Chemical usage includes catalysts in petrochemical and plastics industries; pigments in paints, glass and ceramics; and adhesives. Market share of battery storage demand for cobalt has increased.

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The C3 cost curve of cobalt producers (Figure 10) reflects the dominance of D.R.C. copper producers in the cobalt supply chain.

Human rights abuses and child labour at artisanal cobalt mines in the D.R.C. have led to calls for increasing supply chain transparency from NGOs who are pushing major end users of lithium-ion batteries to focus on the auditability of the cobalt supply chain, moving away from jurisdictions with problems of corruption, conflict and child labour.

In addition to mine supply being concentrated heavily into one country in the D.R.C., some 50% of global refined cobalt is produced in China.

2019 Cobalt Production Ranked on Total Cash Cost* Scenario: Market Intelligence 2018 Constant USD

Production (%) 0 25 50 75 100 4,000

3,500

3,000

2,500

2,000

1,500 Total Cash Cost (¢/lb) Total

1,000

500

0 02754 81 108 Paid Nickel (000 tonnes)

Labor Energy Reagents Other Onsite TCRC+Shipment Royalty

Figure 9: 2020 C3 cost curve of reported cobalt operations. Paid Cobalt (’000 t) represents global cumulative production of reported operations, approximately 77% of total global cobalt metal production. Source:S&P Global Market Intelligence, CSA Global

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2.2.3 Global Cobalt Resources

The global published resources of cobalt deposits have been estimated at approximately 7 Mt of contained cobalt metal (Figure 11). Not all the published resources used in that figure represent current economic development scenarios or are compliant with reporting codes such as JORC, and many currently dormant or sub-economic deposits are included in the estimated total.

Global Published Resources 4,000,000

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

Tonnes Contained Cobalt Tonnes 1,000,000

500,000

Cuba P.N.G. China Russia D.R.C. Morocco Canada Australia Madagascar Philippines South AfricaUnited States Rest of World

Figure 10: 2019 Global published cobalt resources Source: USGS, CSA Global (Actual on 31 December 2019. No annual data yet available post 2019.)

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2.2.4 Global Cobalt Production

2018 global production of cobalt amounted to approximately 140,000 t of cobalt metal (Figure 12). The country breakdown of cobalt supply from other countries is also a proxy for ore type distribution, with countries such as Canada, China, Russia, South Africa, United States and Morocco producing from nickel sulphide deposits; while PNG, Philippines, Cuba and Madagascar are exclusively laterite nickel producers. Countries such as Australia produce cobalt from both nickel sulphide and nickel laterite deposits. Morocco is the only country with an operating stand-alone primary cobalt mine (Bou Azzer). Cobalt produced in the D.R.C. is a by-product of copper sulphide mining.

2017-2019 Production

120,000 100,000 100,000

80,000 2017 60,000 2018 2019

40,000 Tonnes Contained Cobalt Tonnes

20,000 5,700 6,100 5,100 4,600 3,000 3,100 3,300 3,500 2,400 1,600 2,000 2,100 500 0

China Cuba Canada P.N.G. Russia D.R.C. Morocco Australia Madagascar Philippines United States South Africa New Caledonia Rest of World

Figure 11: 2017-2019 global cobalt metal unit production Source: USGS, CSA Global (Actual on 31 December 2019. No annual data yet available post 2019.)

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2.2.5 Cobalt Production Companies

The 2018 top 50 global mining company producers of cobalt (where data on production is available) are tabulated in Figure 13. This data encompasses approximately 85% of estimated total cobalt production. The remainder 15% represents production where no reliable figures or estimates are possible on an individual company basis. It should be noted that these figures relate to primary mine production, and that many of the companies mentioned also toll treat the concentration, smelting and/or refining of third-party company mine production offtake.

2018 Attributable Production (tonnes of cobalt metal) 40,000 100.000 35,444 35,000 25.543

30,000 10.000 7.566 6.014 6.006 4.792 4.103 3.329 3.242 ction 2.708

25,000 u 2.101 rod 1.412 1.345 1.300 P 1.212 1.165 1.138 1.059 0.980 0.871 0.793

20,000 0.714 1.000 0.691 0.626 0.595 0.562 0.462 0.445 0.441 0.441 Tonnes Cobalt 0.290 e of Global Global e of 0.264 0.261 0.259 0.252

15,000 g 0.202 0.163 0.151 0.144 0.121 10,498

0.093 Tonnes ercenta 0.077 0.076 0.074 10,000 0.100 P 8,345 8,334 0.061 0.061 0.059 0.059 0.057 0.056 Percentage 6,650 0.038 5,694 4,619 4,499

5,000 3,758 2,915 1,959 1,866 1,803 1,682 1,617 1,579 1,470 1,360 1,208 1,101 991 825 959 869 780 642 618 612 612 403 366 362 360 280 350 226 210 200 168 129 107 105 102 0 84 84 82 82 79 78 52 0.010

Figure 12: 2018 cobalt metal unit production — top 50 companies Source: S&P Global Market Intelligence, CSA Global. (Actual on 31 December 2019. No annual data yet available post 2019.)

2.2.6 Cobalt Market Demand

While cobalt is still used in nickel-cadmium (NiCd) and nickel metal hydride (NiMH) batteries, over 90% of current consumption in the battery industry is bound to the production of lithium-ion batteries (LIB), particularly NCA and NMC technologies (Figure 14).

Chemical Name Material Abbreviation Applications

Lithium cobalt oxide LiCoO2 LCO Cell phones, laptops, cameras

Lithium manganese oxide LiMn2O4 LMO Power tools, EVs, medical, hobbyist

Lithium iron phosphate LiFePO4 LFP Power tools, EVs, medical, hobbyist Lithium nickel manganese LiNiMnCoO NMC Power tools, EVs, medical, hobbyist cobalt oxide 2

Lithium nickel cobalt LiNiCoAIO NCA EVs, grid storage aluminum oxide 2

Lithium titanate Li4Ti5O12 LTO EVs, grid storage

Figure 13: Lithium-Ion Battery chemistry and technology use. Source: Batteryuniversity.com, CSA Global

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Although consumer electronics has traditionally driven demand for LIB, within the rechargeable batteries market, the greater demand growth is currently driven by the automotive industry. In the electric vehicles market, cobalt consumption is boosted by the usage of NMC (nickel-manganese-cobalt) cathode materials. An increasing number of automakers are choosing full NMC chemistry to achieve higher energy density (Figure 15), and thus longer distances per charge. The industry standard is evolving to an NMC 811 battery chemistry (Figure 16).

Li Ni Co Mn Al

LCO

NCA

NMC 111

NMC 622

NMC 811

0 0.5 1 1.5

kg/kWh

Figure 14: Lithium-Ion Battery chemistry versus energy density. Source: Research Interfaces, CSA Global

NCM 111 NCM 523 NCM 622 NCM 811 NCA LCO LFP LMO

100%

75%

50%

25%

0% 2016 2017 2018 2023 2028

Figure 15: Lithium-Ion Battery chemistry adoption and market share through time. Source: Benchmark Mineral Intelligence, CSA Global

Also, Electrical Storage Systems (ESS), both for residential (smaller systems below 10 kWh) and professional or utility use are increasingly using lithium-ion batteries, because of inherent advantages such as dynamic charge acceptance, longer shelf life, reliability and total cost of ownership. As with the EVs market, a growing number of producers are developing ESS batteries based on NMC chemistries.

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In 2018, global cobalt demand totalled approximately 125,000 t of cobalt metal. More than 50% of the global consumption of cobalt is attributable to the materials for 3C batteries, energy storage batteries, power batteries for new electric vehicles and other batteries (Figure 17). Battery materials accounted for about 80% of 2018 cobalt consumption in China.

Percentage of cobalt demand by first use 70

0 Lithium lon Super Alloy Other Ceramics and Hard Materials Batteries Pigments 2015 2016 2017 2020e

Figure 16: 2014-2018 global cobalt consumption by first use application Source: Darton Commodities, Global Energy Metals, LiCo Energy Metals Inc., Benchmark Mineral Intelligence, CSA Global (Actual on 31 December 2019. No annual data yet available post 2019.)

2.3 Market Growth Drivers and Restraints

The Project will be a supplier of high-purity nickel and cobalt sulphate products to target cathode manufacturers supplying the lithium-ion battery market. Hence, the uptake of lithium-ion batteries and demand in that market will be the main driving force of growth.

Within the commercial market, the nickel sulphate compound is available in different grades, such as (in order of increasing purity) plating grade, so-called “EN” grade and high-purity grade. The plating grade nickel sulphate is generally used in electroplating applications. Also, nickel coatings offer better durability, hardness and resistance to corrosion in aggressive environmental conditions. The “EN” grade and high-purity grades of nickel sulphate find relatively higher adoption in the chemicals industry and in formulation of batteries. High- purity nickel sulphate needed for battery manufacture requires Class-1 nickel metal units for production. Currently, Class-1 nickel supply sufficient to meet battery demand represents approximately half of global nickel supply, although at present only some 350 kt of nickel supply is available to be processed into powder or briquette form suitable for processing into nickel sulphate.

Demand for nickel sulphate primarily for battery use has grown from 47,000 t (in contained nickel metal units) to an estimated 100,000 t (contained nickel metal units) in 2019 (Table 2).

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Table 2: Recent nickel sulphate (NiSO4*6H2O) demand estimate (kt contained nickel).

Demand area 2016 2017 2018 2019 Plating 12 13 13 13 Catalysts 6666 Batteries 47 60 78 100 Total 65 79 97 119

Source: Wood MacKenzie, CSA Global

As previously mentioned, the primary demand for cobalt has been steadily increasing based on LIB take-up in the automotive sector.

The uptake of lithium-ion batteries (LIB) and demand in that market will be the main driving force of growth of high-purity nickel and cobalt sulphate products.

Growth in the lithium battery market is being primarily driven by demand for electric vehicles. Sales of light- duty electric vehicles (EVs, the sum of battery-powered [BEVs], plug-in hybrids [PHEVs]) and Fuel Cell EV’s (FCEVs) expanded by 67% YoY in 2018, with two million-unit sales achieved for the first time. The EV share of total light vehicle sales increased to 2.3%, up from 1.4% in calendar year 2017.

Slightly more than half of all EV sales in 2018 were in China, where consumers rushed to beat the reduction in subsidies. The EV fleet in China surpassed 2 million in 2018, with sales growth of 85% YoY. Over the year China’s share of global EV sales increased by 5% to 53%.

The new regulatory environment in China, whereby fiscal resources previously deployed on subsidies will instead be directly applied towards eco-system bottlenecks, most importantly charging infrastructure, is a positive signpost for EV take-up.

The following scenarios and targets on global EVs deployment are put forward by the International Energy Agency:

• Reference Technology Scenario (RTS) — reflects projections that respond to policies on energy efficiency, energy diversification, air quality and decarbonisation that have been announced or are under consideration.

• 2DS Scenario (2DS) — reflects the ambition for 160 million electric cars in 2030 in a context consistent with a 50 % probability of limiting the expected global average temperature increase to 2°C.

• B2DS Scenario (B2DS) — projects around 200 million electric cars in 2030, targeting the achievement of net-zero GHG emissions from the energy sector shortly after 2060.

• Paris Declaration on Electro-Mobility and Climate Change (announced at COP21) — expresses the ambition to exceed the global threshold of 100 million electric cars and 400

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million electric two-wheelers by 2030 — about a third below the number of electric cars projected in the 2DS and half the EV stock of the B2DS.

The following assumptions were adopted in analysing projected EV uptake (Figure 18):

• The envisaged world EV fleet may include partially electrified vehicles (PHEV) and full EV’s (BEV, FCEV). For the present assessment it is assumed that until 2030, new EV sales will rely on battery technologies and basic car system configurations (either BEV or PHEV).

• Throughout the relevant period, no relevant deployment of FCEVs will occur to the extent necessary to affect the future consumption of cobalt by reducing the market share of battery vehicles.

To meet the most stringent emission targets set out in the 2DS and B2DS scenarios, the global electric car stock would need to increase from an estimated 3.2 million in 2017 to 23 – 25 million by 2020, and 156 – 204 million in 2030, with annual sales growing by a CAGR of around 30%.

More conservative projections can be inferred from the IEA-RTS scenario. Under the assumptions made in this scenario, the size of the EV fleet is estimated to be around 9 million electric cars in 2020, increasing to 56 million in 2030. Albeit more moderate, a significant scale-up by 2030 would also arise under this scenario, for which a CAGR of 19% between 2017 and 2030 may be inferred from annual sales.

30.0 IEA B2DS IEA 2DS Paris Declaration IEA RTS 25.0 nits) u 20.0

15.0 sales (million V 10.0 al E u

Ann 5.0

0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Figure 17: Current and Projected Electric Vehicle Sales Scenarios Based on Climate Policy Scenarios Source: International Energy Agency, European Commission, CSA Global

Based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on EV uptake into the market is that by 2025 EVs will constitute around 2.5% of the light-duty vehicle fleet (approximately 90 million EVs - Figure 19) and close to 14% of annual sales of light vehicles (Figure 20), and by 2035 EVs will constitute around 14% of the light-duty vehicle fleet and close to 30% of annual sales of light vehicles, representing approximately 275 million EVs on the road.

As the uptake of electric vehicles intensifies the demand for nickel is expected to increase significantly, aided by the move to high nickel low cobalt cathodes (primarily NCM 811). Based on our

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Based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on demand for nickel sulphate primarily for battery use is that it may grow at an annual rate of 22.5% from 47,000 t (in nickel units) in 2016 to 293,000 t (nickel units) in 2025, representing a CAGR of around 20% from 2016 to 2025, and that the current projected nickel sulphate supply is unlikely to satisfy that demand.

As a result, based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on the market for nickel sulphate is that it is likely to be in supply deficit by 2022 (Figure 21, Table 3).

Table 3: Nickel sulphate (NiSO4*6H2O) demand estimate and forecast (kt of contained nickel)

Demand area 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Plating 12 13 13 13 13 14 14 14 15 15 Catalysts 6666666666 Batteries 47 60 78 100 132 154 179 210 247 293 Total 65 79 97 119 151 174 199 230 268 314

Source: Wood Mackenzie, CSA Global

16 90 HEV sales 14 PHEV sales 80 EV sales 70 12 Global EV Stock 60 10 50 8 40 6 30 4 20

2 10

0 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Figure 18: Current and Projected Electric Vehicle Sales by Type Source: Wood MacKenzie, CSA Global

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16 Other* * Africa, FAU & Middle East 14%

North America 14 12% Latin America

12 Europe 10% Asia Pacific 10 % EV 8% 8

million vehicles 6% 6

4% 4

2 2%

0 0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Figure 19: Current and Projected Electric Vehicle Sales by Geography Source: Wood MacKenzie, CSA Global

350 300

250

200

kt Ni 150

100 50

0 2017 2018 2019 2020 2021 2022 2023 2024 2025 Current Chinese capacity Current non Chinese capacity Jinchuan Pinghan Xinhai Umicore Chancsun Lonmin - Thakadu BHP - Nickei West Alpha Esperance Sunrise BHP Ph II Original demand line

Figure 20: Demand vs Current and Projected Productive Capacity in Nickel Sulphate (kt Contained Nickel) Source: Wood Mackenzie, CSA Global

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Continued development of the electric vehicle industry is, in the long-term, likely to support higher nickel prices. It is predicted that the nickel market may become a two-tier nickel pricing scenario: the more common Class-2 nickel trading into the stainless steel market and other conventional uses for lower-purity nickel products; and the less common Class-1 nickel trading at a premium price into the battery sector as well as other high-purity superalloys.

Constraints on Class-1 nickel supply are:

• the ageing existing nickel sulphide mines globally and a general lack of recent discovery of new nickel sulphide resources capable of meeting the projected demand for Class-1 nickel products. While abundant low-grade nickel sulphide systems are known globally, they will require significant incentive pricing of nickel to be a viable source of metal units to offset ageing existing high-grade nickel mines.

• the typically large CAPEX requirements for acid and/or ammonia leach nickel laterite operations, representing large capital risk with long lead times to full production and requiring long payback periods.

The production capacity of cobalt from operating mines worldwide is currently estimated at 160,000 t. In 2030, considering additional exploration projects under late-stage development, cobalt mining may provide for around 193,000 – 237,000 t. While some projects are expected to bring significant cobalt into the market by 2025, additional supply will most likely come from the expansion of existing producers, led by D.R.C. In the future, nickel production in countries such as Australia and Canada are expected to gain additional importance as cobalt producing countries, helping to reduce the concentration of supply and the risk of disruption.

Substitution of cobalt in Li-ion batteries, although possible, has not taken place. Lately, it has even gone in the opposite direction, as the majority of automakers switch to cobalt-intensive chemistries, drawing on its comparative advantages in terms of energy density and range. Although the present trend is expected to continue until 2020, leading to further increases in cobalt demand of up to 6%, there is broad consensus over the reduction of cobalt consumption in batteries from 2020 onwards. Until 2025, cobalt can be reduced by 17%, and by another 12 % between 2025 and 2030, on account of changes in the EV battery chemistry mix. Nickel is likely to be the main substitute in such applications.

Based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on cobalt demand for use in batteries is that it is likely to grow at an annual rate of 15.6% to 200,000 t by 2025 (Figure 22), and that total global cobalt demand is likely to increase to 274,000 t by 2025.

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Bloomberg scen. (2018) IEA RTS scen. Paris Declaration scen. IEA 2DS scen. IEA B2DS scen.

450,000 400,000 350,000 300,000 250,000 200,000 150,000

Cobalt demand in EVs (tonnes) 100,000 50,000 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Figure 21: Current and Projected Cobalt Demand from EV’s Source: Bloomberg, International Energy Agency, European Commission, CSA Global

However, given the dominance of D.R.C. supply in cobalt markets, and the expected uptake of cobalt production through nickel mining, cobalt future pricing will be governed by a trade-off between increasing supply to meet demand from the abundant resources in the D.R.C., and substitution to more nickel-rich and cobalt-poor battery technology should cobalt pricing be at a significant premium compared to nickel.

Given current projects in development and in advanced studies moving towards development, over 75% of global cobalt production by 2025 is likely to be sourced from the D.R.C. This represents a significant risk to global cobalt supply. Any geopolitical, sovereign or social instability in the region will have significant impacts on cobalt supply, causing supply and price shock. Some analysts predict end users may move towards supply chain security by locking in long-term direct supply contracts with miners in jurisdictions with less risk, even if such contracts are at a premium price to D.R.C. derived products.

Based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on these various factors is that they will likely result in a stable cobalt supply in the medium to long-term, and only in the most optimistic predictions of EV take-up is there potential for a significant supply gap in cobalt in the medium to long-term. The primary constraint on cobalt supply will be refinery capacity, as increased mine supply will rapidly bottleneck existing refinery infrastructure without the addition of extra refinery capacity. Total global cobalt demand is forecast to increase to 274,000 t by 2025 (Wood MacKenzie, 2019; McKinsey, 2019).

However, given the dominance of D.R.C. supply in cobalt markets, cobalt future pricing will be governed by a trade-off between increasing supply to meet demand from the abundant resources in the D.R.C., and substitution to more nickel-rich and cobalt-poor battery technology should cobalt pricing be at a significant premium compared to nickel.

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Given over 75% of global cobalt production by 2025 is predicted to be sourced from the D.R.C. (S&P Global Market Intelligence, 2019; USGS, 2019), this represents a significant risk to global cobalt supply. Any geopolitical, sovereign or social instability in the region will have significant impacts on cobalt supply, causing supply and price shock. Some analysts predict end users may move towards supply chain security by locking in long-term direct supply contracts with miners in jurisdictions with less risk, even if such contracts are at a premium price to D.R.C. derived products.

Media and non-government organisation (NGO) reports have documented accusations of human rights abuses and child labour at artisanal cobalt mines in the D.R.C. Calls for increasing supply chain transparency from NGOs is pushing major end users of lithium-ion batteries including Apple Inc., Tesla Inc., General Motors Company and Volkswagen AG, to focus on the auditability of the cobalt supply chain, moving away from jurisdictions with problems of corruption, conflict and child labour.

2.4 Nickel and Cobalt Market Price Analysis

2.4.1 Global Nickel Prices

Over the past decade, the global nickel price has traditionally been driven by stainless steel demand in China, the largest producer globally of stainless steel using both high-purity Class-1 and lower-purity Class-2 nickel products. Significant expansion of Class-2 NPI production in China from material sourced from Indonesia and the Philippines drove nickel prices lower from a price of $29,000/t in 2011 to an average of $10,000/t in 2017. Since 2017 the primary driver of price has been a reduction in nickel stocks (Figure 23), and volatility introduced by trade tariffs between the USA and China, as well as speculation over potential enforcement (or not) of the currently suspended Indonesian raw export ban affecting NPI ore shipments to China.

Figure 22: 5-year monthly LME nickel spot prices and LME stocks as at 4th May, 2020 Source: S&P Global Market Intelligence

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Since September 2019, the nickel price has fallen from approximately $18,000/t to a low of just over $11,000/t in March. The September nickel price was based largely on speculative buying of long nickel positions on LME traded stocks (Figure 23) triggered by reports that Indonesia would reinstate and bring forward its proposed 2022 ban on raw materials exports. A $18,000/t nickel price was not sustained by the market fundamentals in the short to medium term, and a correction to nickel price in the short term was expected. The Indonesian export ban in January 2020 was somewhat offset by COVID shutdowns globally, particularly the Philippines. The nickel market since March 2020 has been underpinned by a resurgence in Chinese steel production backed by stimulus spending, and speculative buying based on leading EV manufacturer Tesla citing potential future demand for nickel in the EV battery sector. Unknowns in 2021 are centred on the continuation of Chinese stimulus beyond 2022 for EV sales, the effects of increased nickel production capacity in Indonesia, and potential for COVID recovery stimulus strategic focus on “Green” energy transport and infrastructure projects in Europe. Despite the outbreak of COVID-19 and the resultant effects it had on economic activity in countries around the world, prices of nickel and cobalt had remained relatively stable and even rose over the period from March 2020 to February 2021. In fact, government-led COVID recovery stimulus focusing on “green” energy, particularly in China and Europe, coupled with the impact on supply reduction in major producing regions such as the Philippines, has had a positive effect on commodities associated with the “green” energy sector, such as nickel and cobalt.

Based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on 2021 average nickel metal prices supported by market fundamentals is that they will likely be in the range of $13,500/t to $14,500/t.

Long positions Short positions Net position

1,500

1,000

500

0 sand tonnes u

Tho -500

-1,000

-1,500 Jan 18 Apr 18 Jul 18 Oct 18 Jan 19 Apr 19

Figure 23: LME nickel trade positions as at August, 2019. Source: S&P Global Market Intelligence, CSA Global

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Typically, nickel sulphate is produced from intermediate or refined nickel products that have been subject to multiple complex metallurgical processes. These additional processes have resulted in nickel sulphate trading at a premium to the LME nickel metal price. The quantum of the premium is largely driven by market supply and demand, quality and provenance. The premium attached to the price of nickel sulphate relative to LME nickel between 2010 and 2017 averages at approximately an increase in price of $2200/t of contained nickel metal units (Figure 24), with a slight increase in average premium over the past several years since 2015. In recent trading of nickel sulphate on the Shanghai Metals Market from August 2019 to the 9th April 2021, nickel sulphate has traded at between $2000t penalty to $7,000/t premium to LME spot nickel. The price of nickel sulphate on the Shanghai Metals Market as of 9th of April 2021 was $4,296/t of sulphate (net of VAT), approximately equivalent to $19,350/t of contained nickel metal, giving a premium of approximately $2,770/t over LME nickel spot nickel of $16,580/t on the same date.

Figure 24: Chinese Battery Grade Nickel Sulphate price differential relative to LME Nickel price (cost per tonne of nickel metal unit). Source: Wood MacKenzie, CSA Global

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Forecast nickel prices are set out in Figure 26.

100,000

90,000

80,000

70,000

60,000

Historic 50,000 Estimated Price Maximum Estimate US$/Tonne Minimum Estimate 40,000

30,000

20,000

0 1/01/2014 1/01/2015 1/01/2016 31/12/2016 1/01/2018 1/01/2019 1/01/2020 31/12/2020 1/01/2022 1/01/2023 1/01/2024

Figure 25: LME cobalt spot prices and estimated price ranges Source: S&P Global Market Intelligence (historical data, CSA Global forecasts)

2.4.2 Global Cobalt Prices

Due to a small volume market, cobalt prices have exhibited historic volatility in response to relatively minor perturbations in demand and supply. From a relatively constant price of $26,000/tonne in early 2016, the price of cobalt escalated to a peak of $95,000/tonne in early 2018, before falling again by almost 80% to $25,084/tonne in August 2019, followed by a slight recovery to an LME price of oscillating between $29,000- $34,000/tonne to the December 2020, rallying to $50,000/tonne in recent months (Figure 25). This volatility was caused by uptake of cobalt feeding into the battery materials market coinciding with slump in copper and nickel demand leading to decreased production of those metals, and consequently decreased production of cobalt causing the 2018 price spike. Increased demand for copper through 2018 led to increased production in the D.R.C., which in turn created oversupply in cobalt and dropped the price to present levels. Present price largely reflects perturbations in supply as a response to COVID shutdowns against a background of relatively constant demand until December 2020. Post December 2020, increasing demand from increased EV sales globally started to encounter DRC cobalt supply problems due to COVID, leading to the recent price spike to $50,000/tonne.

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There is not any current price premium for cobalt sulphate over LME cobalt. The price of cobalt sulphate as of 12th April 2021, was $11,897/t.

2.5 CSA Global View on Metal Prices

Based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on:

• Nickel prices is that they will likely be in the range of:

o US$14,000 to US$14,500 per tonne, rising to a range of US$15,700 to US$17,800 per tonne, in the medium term over the period 2021 to 2025;

o US$17,800 to US$18,800 per tonne by 2028 to 2030.

• Cobalt prices is that they will likely be in the range of:

o US$42,700 to US$44,100 per tonne, rising to a range of US$47,400 to US$52,900 per tonne, in the medium to long-term over the period 2021 to 2028.

For the life of the Project in the economic analysis and Scoping Study, CSA Global has taken a conservative estimate for long-term prices on projected timelines for commissioning and operation of the Project. These prices are used for benchmarking minimum cut-off grade estimates for what constitutes ore within the project.

CSA Global assumes that the mine will start operation at an industrial-scale in 2023 after three years of research and development, PFS completion (and Feasibility for processing plant) and construction of the first stage of the mine and plant.

2.6 Prices used by CSA Global in the Scoping Study

Correspondingly, based on this view, CSA Global concluded that it was appropriate to use a flat London Metal Exchange price of US $16,500/t (USD$7.5/lb) for nickel metal and US $47,000/t (USD$21.3/lb) for cobalt metal for the life of the Project in the economic analysis and Scoping Study.

Likewise, based on our review of market trends, industry sentiment and consensus forecasts, CSA Global’s view on battery grade is as follows:

• nickel sulphate produced at the Project is that it may likely attract a premium of 15% or US $2,475/t (US $1.12/lb) more than the London Metal Exchange nickel price;

• cobalt sulphate produced at the Project will likely sell for the London Metal Exchange cobalt price of contained cobalt.

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2.7 COVID-19

CSA Global confirms, after taking reasonable care, that there was no adverse change in the market information in the writing of the Industry Report which may have qualified, contradicted or had an impact on the information disclosed in this section up to the report date of 25th of February, 2020. However, the global economic outlook has clearly been affected by the international spread of the COVID-19 pandemic and the responses of various governments to the pandemic. This has resulted in a highly dynamic and fluid situation with yet unknown consequences for world trade and subsequent commodity demand. Data does not yet exist which can accurately track, let alone be used to reliably predict, the effects of this situation on the world economy. Consequently, this report represents a snapshot of the situation immediately before the advent of COVID-19.

Nonetheless, in CSA Global’s opinion, given the time still needed to advance the project through required mining studies, the COVID-19 situation is likely to have stabilised and the supply and demand outlook will be largely unchanged from the analysis presented above.

3 IN SITU RECOVERY

In situ extraction, also commonly referred to as in situ recovery (ISR) or in situ leaching (ISL), is one of the most effective methods to address the operating costs of conventional mining. The critical feature of ISR is transferring a significant proportion of metallurgical processing to mineralised bodies in the subsurface to directly obtain solutions of metals of interest (Figure 29). This minimises effects on the natural environment.

ISR technology has been in existence for 65 years. Early development was in USSR and the USA in the late 1950s to early 1960s. It was developed in both countries using similar engineering and technological approaches. However, the Soviets adopted the acid leach system, while the US specialists employed an alkaline, primarily carbonate-based, system. (Seredkin et al. 2016). The first commercial production of uranium began in the early 1970s at the Uchkuduk deposit in what is now Uzbekistan. At the same time ISR was developed at uranium mines in Wyoming and Texas. The strongest development of ISR occurred during the 2000s and 2010s. Uranium production share by ISR in the world increased from 20% in 2005 to 51% in 2014, with widespread adoption of the technology in South Kazakhstan. This technology has been used for copper for 40 years. Copper and gold mines have operated successfully over the last 10 – 15 years in Russia building on the uranium ISR experience (Seredkin et al 2016).

The evaluation of the suitability of deposits for ISR requires different and/or modified approaches compared to traditional mining/extraction techniques. Furthermore, some deposits that are currently uneconomic to extract using traditional mining methods may be profitable as ISR operations.

Evaluation of the suitability of deposits for ISR requires different and modified approaches compared to traditional mining/extraction techniques. Furthermore, some deposits that are currently uneconomic to extract using traditional mining methods may be potentially profitable as ISR operations.

An important reason for the slow uptake of ISR technology is the lack of experience and expertise in ISR and the need for a somewhat more complex approach to Mineral Resource estimation. Each deposit, or even a part of the deposit, requires a specific approach. Operators sometimes experience challenges during production; however, these issues can often be resolved.

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The overview provided here is based on Seredkin et al., 2019 (ALTA-2019) and Seredkin et al., 2016.

3.1 What Is In Situ Recovery?

Conventional mining in open pit and underground mines involves removing ore (and waste) from the ground and then processing it to extract the metals of interest.

In situ recovery (ISR) uses solutions that are pumped through the mineralised body in situ (underground) to recover metals by leaching. In situ mining is the “removal of the valuable components of a mineral deposit without physical extraction of the rock”.

Operations at typical ISR mines comprise well field/s and an extraction process plant/s. Leaching solutions are pumped into the mineralised zone/s through a network of injection bores and extracted by production bores. In the process, the leaching solution dissolves the metals of interest, which are brought to surface in a pregnant solution (Figure 29).

The pregnant solutions are treated at an extraction plant producing a chemical concentration of the target metal/s.

As a result, there is little surface disturbance and no tailings or waste rock are generated at ISR mines.

However, for ISR to be effective the mineralised body needs to be permeable (either naturally or artificially) to the solutions used, and located such that the solutions do not contaminate groundwater away from the mineralised body. Target minerals need to be readily soluble in the leaching solutions for recovery in a reasonable period of time, and these should be a reasonable consumption of leaching reagents.

In comparison to other types of mining operations, ISR offers a number of distinct advantages:

• Lower development costs for the mine, processing plant and infrastructure;

• The ability to start production at low capital cost with a following increase in production; this allows profits from cash flow to fund the development of the mine instead of using debt financing; and,

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Figure 28: Schematic representation of an ISR operation

The economics of ISR mines primarily depend on following the parameters:

• Flow rate capacity of the wellfields (input capacity of injection wells and extraction capacity of production wells);

• Concentration of extracted component(s) in pregnant solutions;

• Overall level of extraction of mined component(s); and,

• Ratio of Liquid to Solid (L:S) required to achieve the desired extraction of the mined component(s). This ratio is calculated based on the volume of solutions passed through the operational block over the whole period of operation and on the tonnage of the operational block.

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L:S ratio is a key parameter for ISR mines and depends on the dynamics of leaching. The smaller this ratio, the better the economy of the project.

The flow rates of solutions and the concentrations of leached component(s) in pregnant solutions are related to each other. Concentrations of leached components can be increased by decreasing the flow rate of solutions, but at the cost of an increased time to reach the desired extraction level of mined component(s). This means that production should be undertaken from a larger number of blocks with a concomitant increase in mining costs. Optimising these different parameters if critical for successful ISR operations.

The concentration of metals in pregnant solutions is not stable during the operation of blocks. Concentration reaches the maximum relatively quickly followed by a gradual decrease. The shape of the curve depends on the leachability of the mineralisation. The economics are estimated based on the average concentrations, which is achieved by a combination of blocks in the early and late stages of mining.

The technological schemes for leaching and processing of solutions are approximately the same for different commodities. This feature of ISR operations can be used to provide an estimation of the potential financial performance of new ISR projects based on the well-known economics of established uranium ISR mines.

3.2 Features of in situ extraction projects

ISR can allow profitable exploitation of deposits with low grades of metals, and/or small resources, unsuitable for conventional mining operations.

Three critical parameters must be met for a deposit amenable to ISR:

• mineralisation must be located in a permeable environment;

• possible management of leaching solutions; and,

• the lixiviant should be suitable for selective leaching of a specific component from the deposit.

Permeability is the most critical parameter for ISR. The lixiviant must be able to move between injection and pumping wells/stopes. This is possible both below the water table by filtration, and above the water table by infiltration. In the latter case, the level of the water table should be close to sites of injection/surface. Traditionally (in sandstone ISR uranium), the best permeability for ISR is 1–5 m/day, however, in practice, the permeability may be much less or more. The most favourable geological situation for ISR is an artesian or confined aquifer, for example as found in the sandstone-hosted uranium deposits in South Kazakhstan.

Low permeability (<0.3 – 0.5 m/day) is not a prohibiting factor for ISR, especially for deposits close to the surface, or if fracturing can be applied to artificially increase permeability. Acceptable permeability is dependent on a grid of operational wells. A high number of operational wells allows the extraction of metals by ISR from low permeability rocks.

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Variability of permeability is also important for ISR and can lead to the formation of stagnant, non-leaching zones and/or channelling of solutions. The management of leaching and the correct installation of screens in the injection and pumping wells can help to solve this issue.

A more critical situation is when the permeability of the mineralised rocks is much less than in surrounding waste rocks; ISR is not applicable in these situations.

Selective leachability of target compounds is the second most critical parameter for ISR. Leaching of harmful components or strong leaching of rock-forming elements can be a serious obstacle to using ISR. Correct selection of lixiviant and oxidant, as well as calibration of the leaching and acidification regime is important for the dynamics of leaching and extraction of metals. In addition, selective extraction of useful components from pregnant solutions or/and well-organised processing of eluate is very important.

The distribution and style of mineralisation (the location and exposure of target mineral grains) strongly affects ISR. Location of ore minerals inside inert minerals is a prohibiting factor for ISR. The most favourable positions for ore minerals are in open pores and fissures in strongly altered rocks. The absorption properties of rocks is also a critical parameter. ISR in rocks with high absorption such as peat or coal is not possible.

Other characteristics of mineralisation and host rocks can affect the profitability of ISR projects or prevent the use of ISR at the current level of technology development. For example, the need for aquicludes, especially below mineralisation, was a critical parameter in the earlier years of ISR development. However, the evolution of the technology now allows the Budenovskoye Deposit, which does not have a continuous aquiclude below the mineralised bodies, to be one of the best ISR uranium projects in the world (Seredkin, Bergen, 2013).

When undertaking resource estimation for deposits to be exploited using ISR, it is important to model mineralisation and select “cut-offs” using the grade-thickness product (GT), or productivity, of mineralised bodies, rather than the simple grade distribution of mineralisation.

Mineralisation with higher thickness and lower grades is more favourable for ISR than mineralisation with low thickness and high grades. For example, the mineralised interval with 0.04% U × 10 m is better for ISR than 0.10%U×4m(Seredkin et al., 2014).

ISR is well suited to particular types of deposits, for example, some deposits which are not economically viable by conventional mining, technogenic deposits (tails, ash, flooded underground mines), and inaccessible parts of deposits (flanks of deposits outside pits, or mineralisation below the pit floor). ISR can currently be considered auxiliary to conventional mining. However, the ongoing evolution of ISR methodology will gradually increase the share of ISR operations as has been observed in the uranium industry.

The economic advantages of ISR include:

• Lower mine development costs, including processing plant and infrastructure, in comparison with conventional open pit and underground mines.

• The ability to commence production with low capital costs and subsequently increase production. Early cash flow from concentrate production is used to further develop the mine rather than using borrowed funds.

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• Flexibility of production capacity. Production can be reduced during periods of lower prices and increased when prices are higher.

• Lower grades are not necessarily a critical factor for ISR. The size of the deposit is also much less important for ISR operations. Grade-thickness (metal accumulation) of mineralised bodies is more important than grades for successful economic extraction.

The economics of ISR mines primarily depend on the following parameters:

• Flow rate capacity of the wellfields (input capacity of injection wells and extraction capacity of production wells).

• Concentration of extracted component(s) in pregnant solutions.

• The overall level of extraction of mined component(s).

• The ratio of Liquid to Solid (L:S) required to achieve the desired extraction of the mined component(s). This ratio is calculated based on the volume of solutions passed through the operational block over the whole period of operation and on the tonnage of the operational block. The L:S ratio is a key parameter for ISR and is dependent on the dynamics of leaching. The lower the ratio, the more favourable the economics of the project.

ISR allows the extraction of mineralisation with minimal disturbance to the existing natural conditions. In contrast to underground and open pit mining, there are no:

• Large open pits;

• Rock dumps and usually no tailings storage;

• Dewatering of aquifers;

• Much smaller volumes of mining and hydrometallurgical effluents (that could contaminate the surface, air and water supply sources); or

• No exhaust pollution.

ISR mines successfully operate in a range of settings, including near populated areas, and in different climatic regions. For example, the Dalur ISR Mine (Russian Federation) is in the agricultural TransUral region and the Gagarka Mine (the Middle Ural) in the populated area near the water intake point for the town of Zarechny and adjacent to the Yekaterinburg–Tyumen Highway. The Khiagda Mine (Transbaikal area, Russian Federation) is in a region with permafrost whereas mines in Kazakhstan and Australia are operated in hot, arid desert conditions.

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3.3 Types of In Situ Extraction Projects

3.3.1 Different Approaches for In Situ Extraction

ISR projects are represented by different applications of the methodology which depends on the location of the mineralisation:

• For “Classical” ISR projects with a wellfield and processing plant, the location of the mineralised body/ies is below water table in a “filtration regime”. This option is the best for management of leaching/pregnant solutions. Examples of this type of operation are all ISR uranium mines in Kazakhstan, and the Florence copper mine in Arizona.

• ISR projects with wellfield and processing plant, location of mineralised body above water table — leaching in “infiltration regime” with collection of pregnant solutions on underground water table. Typical situation for mineralisation in weathering crust – Ni-Co laterite projects, Gagarka and Dolgy Mys gold mines, Uralhydrocopper copper mine (Gumeshevskoye deposit).

• ISR projects with trenches, irrigation system, wellfield and processing plant, location of remains of mineralised body in open pit walls above water table — leaching in “infiltration regime” with collection of pregnant solutions on bottom of pit or in underlay underground mine or on underground water table. San Manuel copper mine is typical example of this type of ISR operation.

• ISR projects with irrigation system, trenches/ponds and processing plant, location of mineralisation in waste or tailing dams — leaching in “infiltration regime” with collection of pregnant solutions in trenches/ponds around waste or tailing dams. Gaysky (Russia), Kounrad (Kazakhstan) and Erdenet (Mongolia) mines are example of this type of ISR. Difference of ISR in this type from heap leaching is not specially prepared bottom, leaching in “natural” condition.

• ISR with irrigation system in underground mine — leaching of crashed ore or mineralisation in natural conditions. This method used in test regime in some mines, for example in Priargunsky uranium mine.

• The most progressive and one of the most effective approaches of hypothetical ISR is using Fe(III) as an oxidant by regeneration of Fe(II) to Fe(III) by oxygen of natural air in bioreactors. This is recommended for oxidisation of copper sulphides such as chalcopyrite.

3.3.2 Different Approaches for Processing of Pregnant Solutions

Processing of pregnant solutions depends on composition of pregnant solutions and final product which required to market/customers.

Final product for some commodities is obvious, for example pure copper (cathode), gold or silver metals. For other commodities may be variations: uranium — triuranium octoxide (U3O8) or yellow cake of different composition; nickel and cobalt — sulphates, cathode metals, carbonates or hydroxides.

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The most typical processing of pregnant solutions is sorption on resin (ion exchange technology or “IX”) with following precipitation concentrate (for uranium is yellow cake, for example) and drying this concentrate (filter-press and final drying).

Solvent extraction process (“SX”) is less popular process due to more complexity, higher cost and fire/explosion danger, however very often more selective than IX and very popular for copper pregnant solutions.

Electrowinning (“EW”) is popular method for producing final product from eluate instead precipitation chemical concentrates.

Pregnant solutions have a complex composition often, for example copper pregnant solutions contain iron, aluminium, calcium, magnesium. Nickel-cobalt solutions contain iron, aluminium, silica, magnesium, manganese, zinc, copper, scandium. In this situation refining of eluate is required often.

Maximising selectivity extraction useful component in the first circuit of flowsheet (IX or SX) is very important for reducing cost of final product.

3.4 Areas of Investigation for In Situ Recovery Projects

Exploration, estimation and development of ISR projects requires the investigation of specific characteristics and features. Projects for ISR should be checked for compliance with ISR amenability criteria from the earliest stages of evaluation and exploration. Hydrogeological investigations are the most important and strongly recommended at a very early stage of evaluation.

Often projects which have been evaluated based on conventional mining methods are later considered for ISR. In this situation, additional exploration works should be completed, even for projects at an advanced stage of evaluation.

The following hydrogeological aspects should be investigated and measured at the earliest stages of evaluation:

• Regional hydrogeological map/sections/3D model

• Local hydrogeological map/sections/3D model

• Permeability and other hydrogeological parameters of mineralised zones/horizons.

Hydrogeological parameters include:

• Aquifer horizons/complexes

• Regimes (pressurised or non-pressurised) of aquifer complexes

• Connections between aquifer complexes

• Faults, fissure zones

• Rivers, channels, intake wells

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• Intake (recharge) and discharge of water for each horizon/complex

• Direction and speed of natural water flow for each horizon/complex

• Chemical composition of the water for each horizon/complex for different deposit parts

• Hydrological conditions including anisotropy: transmissibility (m2/day), permeability (m/day), porosity/cavernous of rocks.

Filtration properties including permeability of rocks should be defined taking account of the anisotropy of the geological environments.

The mineralogical, phase and granulometric composition of mineralisation should be investigated focusing on ISR. Laboratory filtration tests are recommended from early in the evaluation stages of the project. Some ordinary leaching tests should be included as part of the exploration program (e.g. acid soluble copper measurements).

Field tests carried out under natural conditions are required for advanced stages of evaluation.

Field tests should be located in the most representative area of deposit (and not the area of highest yield). The maximum number of parameters should be measured in a test, including:

• The tonnage of test cell/block and grades of all beneficial and deleterious components

• Concentrations of different components in pregnant, barren and leaching solutions over the full period of the ISR test

• Consumption of reagents during dynamic testing

• The relationship between the extraction of the target commodity, and the L:S ratio.

Results of the field test form the basis of the economic assessment of ISR projects; after recalculation to the full period of leaching and the real composition of each block of the deposit, based on comparisons with laboratory tests for different compositions of mineralisation. These include:

• Time/dynamic of leaching (mining plan)

• Extraction of useful components (uranium or others) for different compositions of mineralisation/ dynamics of leaching

• Consumption of reagents (usually in kg/t ore)

• Dynamics of changing concentrations of different components in pregnant solutions.

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3.5 Conclusions

In situ recovery (ISR) is the one of the most effective methods available to reduce the cost of production for certain deposits or parts of deposits. One feature of ISR is transferring part of hydrometallurgical processing to mineralised bodies below the surface and directly obtaining solutions of metals.

Uranium industry is the first experience of absolutely successful using ISR for mining. Uranium production share by ISR in the World reached 51% in 2014. Experience of ISR in the uranium industry may be used for development of ISR for other commodities.

ISR is well suited to mining particular types of deposits such as those which are not economically viable by conventional mining. ISR can currently be considered auxiliary to conventional mining. However, the ongoing evolution of ISR methodology will gradually increase the proportion of ISR operations, as observed in the uranium industry.

Nickel and cobalt in lateritic deposits are considered highly amenable to ISR, and ISR may become a significant method of extraction, as in the uranium industry.

The two most critical geological/methodological parameters that must be met for a deposit to be suitable for ISR are:

• that mineralisation must be located in permeable environment (natural or artificial); and,

• the lixiviant should be suitable for selective leaching of a specific component from mineralised bodies of deposit.

The economic advantages of ISR include:

• Lower costs on the development of mine, processing plant and infrastructure in comparison with conventional open pit and underground mines;

• Flexibility of production capacity: reducing capacity during lower prices and increasing capacity during higher prices.

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4 GORNOSTAY PROJECT OVERVIEW

4.1 Project Location and Access

The Gornostay Project is located in the Beskaragay district in the Vostochno-Kazakhstanskaya oblast (Eastern Kazakhstan) between regional centres Ust-Kamenogorsk (Oskemen) (320 km away by road) and Pavlodar (250 km away by road) (Figure 30).

The project consists of two separate areas:

• A larger, southern area called the “Left River Side” which extends 15 km in an approximate north-south direction (Figure 32). The width of this area ranges from 0.3 km to 3.4 km and covers a total area of 26.25 km2 centred at approximately Longitude 78°50’E and Latitude 55°33’20’’N.

• A smaller, northern area, called the “Right River Side” which extends 4.6 km in an approximate north- south direction (Figure 32). The width of this area is 1.9 km and covers a total area of 8.61 km2 centred at approximately Longitude 78°38’10’’E and Latitude 50°54’N.

The SSU Contract corner points are shown in Figure 32 and Table 5.

There are two nearby towns, Kurchatov and Semey, with populations of approximately 12,000 and 360,000 respectively. The distance from the Project to Kurchatov is 25 km, and to Semey is 110 km (Figure 32). The northern flank of the Left River Side area is accessible by paved road connecting Kurchatov with Semey. Other parts of the Project are accessible by 4WD vehicles by unpaved roads.

Kurchatov is connected with Pavlodar, Semey and Ust’-Kamenogorsk by roads R174 and R24. Semey is connected with Pavlodar by highway M38.

The nearest local airport is located near Chagan town, 40 km from the Project. The closest airport with regularly scheduled services is at Semey, approximately 110 km from the Project. An international airport with scheduled flights to all regional centres of Kazakhstan and many other countries is located at Nur-Sultan (Astana), approximately 875 km distance by road.

Kurchatov is connected with Nur-Sultan (Astana) by regular trains. The main unpowered single line railway (Pavlodar-Semey) passes through the northern flank of the Left River Side area, 5 km from the main project area.

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Figure 29: Location of the Gornostay Project

4.1.1 Geography and Climate

The area has subdued relief with isolated higher hills, wide valleys and rounded depressions (Photo 1). Absolute elevations are between 150 m and 260 m above sea level.

The hydrographic system is represented by the navigable Irtysh River, which divides the Gornostay Project into Left River Side and Right River Side areas. Ephemeral streams, and small salt lakes, are developed around the project area (Figure 30). Drinking water is sourced from local underground sources and the Irtysh River (Danilov et al., 2010).

The area is located in the dry steppe climatic zone. The thickness of soil does not exceed 10 – 20 cm on hills and 30 – 40 cm in valleys.

The climate in Eastern Kazakhstan is continental and semi-arid, with a marked difference in seasonal temperature.

The temperature during the winter months (December to March) ranges from -40°C to -5°C, with an average of -16°C. The mean temperature during the summer months (June to September) is 23°C and ranges from 15°C to 40°C.

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The average annual precipitation is 330 mm, most of which falls in spring and autumn. During the winter months, the thickness of snow cover is 25 – 30 cm up to 1.0–1.5 m in valleys (Danilov et al., 2009).

Winds are frequent, with wind speed up to 18 – 20 m/s and higher (Demin, 2007).

Vegetation is limited to grasses, and very occasional low bushes (Photo 1). Relict pine tree forests are developed on the right side of the Irtysh River (Photo 2).

Photo 1: Landscape of the Left River Side area of the Gornostay Project Source: CSA Global

The area has a diverse mix of fauna including saiga (antelope), wolves, foxes, rabbits and small-size mammals such as marmot, gopher, jerboa, field mice and others. Birds are typically represented by golden eagles, kites, goshawks, owls, ducks, geese and sandpipers.

The air quality at the mine site is considered by Kazakhstan Hydrometeorological Research Institute to be generally unfavourable for pollution dispersion, and therefore relatively sensitive to emissions (Broadbent, 2011).

Under the Soviet system, the area is classed as seismically inactive. No natural disasters were recorded during a one-year observation period (Broadbent, 2011).

4.2.2 Industry, Regional and Local Infrastructure

The infrastructure at and around the Project is shown in Figure 31.

The main (unpowered) single line railway (Pavlodar-Semey) passes through the northern flank of the Left River Side area (Figure 31 and Photo 2).

Highway M38 (Pavlodar-Semey) is located to the north of the Right River Side area (Figure 31). A locally sealed road (Semyonovka-Semiyarka) is located to the north of the Right River Side area (Figure 31). Sealed road R174 (Pavlodar-Kurchatov-Semey) passes through the northern flank of the Left River Side area (Figure 31 and Photo 2). A network of dirt roads is developed throughout the Project; however, these roads are only available to 4WD vehicles during the wet seasons.

A high-voltage powerline crosses the south flank of the Left River Side area. Another high-voltage powerline is located to the north of the Right River Side area (Figure 31). Medium-voltage powerlines cross the Project areas. A test block on the Left River Side area is connected with the power grid (Photo 2).

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In addition to the nickel-cobalt laterites, there are also deposits of limestone, brown coal (lignite) with amber, ceramic clay, and sands and gravels close to the Project (Danilov et al., 2010).

The population is employed mainly in the industrial sector in Semey and Kurchatov, as well as in agriculture at nearby farms, although agriculture is not well developed.

Semey is a large industrial centre and Kurchatov is a scientific centre where the National Nuclear Centre is located.

In CSA Global’s opinion the project is well situated with respect to existing infrastructure. The existence and availability of infrastructure will expedite the commencement of operations at Gornostay. The suitability and capacity of the infrastructure will be investigated in planned technical studies (e.g. PFS).

Photo 2: Infrastructure at the Gornostay Project

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Figure 30: Schematic infrastructure map of the Gornostay Project

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5 LICENCES AND PERMITS

Descriptions of the mineral tenure; tenure agreements, encumbrances and environmental liabilities were provided to CSA Global by the Client or its legal advisers. The Company has warranted to CSA Global that the information provided for preparation of this report correctly represents all material information relevant to the Project.

CSA Global does not have the necessary qualifications or expertise to determine the legal status of tenements or comment on local legislation and its potential effect on the operations of the project. However, as required in Clause 7.2 of the VALMIN Code, a discussion of tenure issues is required. CSA Global provides this discussion for information only.

The summary in this section is based on material provided by the Company’s independent legal advisers in Almaty. Further material is included in the Business section of the document.

5.1 General

In Kazakhstan, all subsoil resources are owned by the state. A temporary right to explore and/or use certain subsoil resources may be granted to a qualified investor-subsoil user. There are two governmental bodies regulating and competent in subsoil use (each the “Competent Authority” with respect to their relevant areas of jurisdiction):

• the Ministry of Energy is the Competent Authority in respect of hydrocarbons and uranium; and,

• the Ministry of Industry and Infrastructural Development is the Competent Authority in respect of solid minerals.

The Competent Authorities represent the state interests and grant, on behalf of the state, subsoil use rights to explore and/or produce minerals within certain land area.

Subsoil use rights are limited in term — subject to possible extension before the expiration of the applicable subsoil use contract or licence (whichever is applicable). Subsoil use rights may be terminated by the relevant Competent Authority if, for example, a subsoil user has not rectified, in a timely fashion, a breach of the contractual or licence obligations.

Foreign investment in the mining industry is not restricted. Foreign companies (acting through branches or entities in Kazakhstan), and individuals, may enter into subsoil use contracts with, or receive subsoil use licences, from the relevant Competent Authority and have the same rights and obligations as local subsoil users.

5.2 Subsoil Use Contracts and Licences

Prior to August 1999, subsoil use rights were granted under a licence and parallel execution of a subsoil use contract. In August 1999, the government, in an attempt to simplify the procedure, abolished this two-tier process, and since then subsoil use rights were obtained by execution of a contract awarded as a result of a tender or direct negotiations with the Competent Authority.

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A subsoil user could enter into one of the following three types of contracts with the Competent Authority:

(i) an exploration contract;

(ii) a production contract; or

(iii) an exploration and production contract.

An exploration contract permits a subsoil user to conduct exploration works only (seismic survey and interpretation, appraisal and test production), and a separate production contract is required to conduct production per results of the exploration work.

A production contract permits a subsoil user to conduct production only, with limited exploration works, and requires exploration results being available prior to commencement of production works.

A combined exploration and production contract allows a subsoil user to conduct exploration and production works without the need to enter into separate contracts at each stage.

With effect from 29th June 2018 — when the Subsoil Use Code (the “SSU Code”) came into force — subsoil use rights for new mining projects (except for uranium and oil and gas) are granted under licence only, to the first applicant based on “first come, first served” principle.

The SSU Code has significantly simplified the application process for obtaining subsoil use rights. There are now two types of licences:

1. Exploration Licences (which include exploration and appraisal works); and,

2. Production Licences (which include mining, mineral processing and operational exploration).

The holder of an exploration licence has an exclusive right to receive a production licence, but only if such exclusivity right is exercised while the exploration licence is still in effect.

In respect of the subsoil use contracts executed before the SSU Code entered into force, the general rules under the SSU Code are as follows:

• Subsoil use licences and subsoil use contracts concluded before the SSU Code entered into force remain in effect;

• Subsoil use contracts concluded before the SSU Code entered into force may be amended by an agreement between the parties (i.e. the subsoil user and the Competent Authority), or in cases required by relevant subsoil use contracts or law;

• Certain procedural rules (type and approval of project documents, term extension, etc.) under the SSU Code apply to subsoil use licences and subsoil use contracts concluded before the SSU Code entered into force.

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5.3 KazNickel Tenure

The Contract for Exploration and Production at the Gornostay Field of Nickel and Cobalt Ore in Beskaragay Region of East-Kazakhstan Oblast in Republic of Kazakhstan (the “Contract”) was executed between the Ministry of Energy and Mineral Resources (the “Competent Authority”) and Shagan LLP on 26 February 2004, and registered with the Ministry of Energy and Mineral Resources the same day under Registration Number 1349.

Table 4: SSU Contract 1349 details

Owner of SSU Contract KazNickel Limited Liability Partnership Address Semey City, 137A Parhomenko Str. Name of Mine Gornostayevskoye deposit of cobalt-nickel ore situated in the Beskaragay district in the Vostochno-Kazakhstanskaya oblast Type of Minerals Cobalt; Nickel Production Volume up to 20,000 t of nickel within three years of test production in the exploration stage1 Area of Mining rights The contract area for exploration is currently stated at 34.86 square kilometres. Period of Validity Exploration — till 26 February 2022 Production — till 26 February 2026 Issuing Authority the Ministry of Industry and Infrastructural Development of Kazakhstan

Notes: Current approved production volume is for the exploration stage. The approved production volume for the production stage will be determined by the Competent Authority based on the project design documentation we will submit, subject to their own review of reserves, and formalised by the stated date as addendum to the SSU Contract

The Contract was awarded as a result of the tender that was held by the Competent Authority in 2001. In accordance with the Contract, the contract holder had an exclusive right to explore and produce cobalt and nickel within the area.

KazNickel became a party to the Contract on 22nd April 2004 as a result of its acquisition of subsoil use rights under the Contract from Shagan LLP and the execution of “Addendum No.1” of the Contract with the Competent Authority.

The area for exploration is determined in the Geological Allotment that is a part of the Contract, and such area may be changed for production purposes upon completion of the exploration stage. In accordance with Kazakhstan Law, the Contract is a basis for seeking relevant land use rights within the determined contract area for mining.

Currently, the Company holds a right to use a certain land plot within a part of the contract area for exploration works, including pilot production.

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If the SSU Contract is extended for more than 10 years and the Gornostay field falls into the category of “major field” (if the total volume of the nickel in resources under the SSU Contract is greater than 50 kt), the Competent Authority may require that KazNickel undertakes any or all of the following obligations to be performed during the extended period:

1. construction of a new refining processing facility;

2. upgrading or reconstruction of an existing production facility;

3. upgrading or reconstruction of an existing processing facility;

4. delivery of produced minerals to the domestic market for processing; and/or

5. undertaking of additional investment on social projects.

In addition, if the Gornostay field falls into the category of “major field” the Competent Authority has the following additional grounds (that do not apply to “non-major fields” with the nickel metal in resources less than 50 kt) to terminate the SSU Contract for national security purposes:

1. loss of the economic interest balance for Kazakhstan or

2. failure to obtain permission of the Competent Authority for any transfer of subsoil use right (or a part of it) under the SSU Contract or any direct or indirect interest (including, initial [REDACTED] of shares) in KazNickel, if such permission is required under the SSU Code.

Initially, the Contract granted a right to conduct exploration until 26th February 2006 and production — until 26 February 2026. Kazakhstan law and the Contract permit extension of exploration stage and/or production stage.

There are nine amendments to the Contract that provide mostly for

1. extension of exploration stage; and

2. changing terms and conditions of the Contract in accordance with the changed relevant mandatory provisions of Kazakhstan Law (e.g. taxation, local content, etc.).

The latest amendment (No.9)wasmadeinMay2019 to extend the exploration stage until 26 February 2022 for the pilot production of 20,000 t of nickel, while the production stage under the Contract remains until 26 February 2026. Within three years of the extended exploration stage the Company must invest around US$2.5 million. This value may be changed due to new addendums to subsoil use contract as well as expansion area according KazNickel application.

The key obligations of the Company to the Competent Authority under the Contract are:

• Safe and sustainable exploration and production at the contract area;

• Payment of all taxes and other mandatory payments requited by law and the Contract; and

• Compliance with local content requirements in hired contractors and employees.

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In accordance with the Contract, the Company is obliged to invest:

• 1% of annual exploration costs on social economic development of the region;

• 0.5% of total annual investment obligations — on training of local employees; and

• 1% of annual profit on research and development.

Upon expiry of the Contract, the Company will have to clean the whole contract area and liquidate all exploration and production facilities. In accordance with the Contract, the Company therefore invests 1% of the annual exploration costs into the liquidation fund — a deposit bank account with a domestic bank, and will spend such money on liquidation and cleaning works when required.

KazNickel started the expansion procedure of the Mineral Tenure area to include additional Mineral Resources reported in the ISR Mineral Resource estimate report (Seredkin, 2019).

KazNickel received responses to letters dated 24/09/2019 (No 54) and 20/08/2019 (No.34) that expansion of Mineral Tenure area by 50% is reasonable according to Subsoil Use laws, and these new areas are available from rights of third parties. The response by the Deputy Chairman of the Committee of Geology is dated 21/10/2019 (No. 27-7/9226).

In addition, in accordance with the SSU Code (art. 278.16) it is possible for the Company to expand the area of their mining rights for up to 50% of the existing area permitted for mining under the SSU Contract. The expansion can be completed by in either of two ways. One way is by making an addendum to the SSU Contract. In accordance with clause 4.2 of the SSU Contract the Company can apply to make such an addendum to the SSU Contract without any tender. In letter No. 27-7/9226-ng dated 21 October 2019, the Geology Committee confirmed the right to apply to make such addendum. Alternatively, the Company can apply for a separate exploration licence for such expanded area. Kaznickel are considering applying to expand our mining area under the existing SSU contract or applying for an additional license covering an additional approximately 17.37 square kilometres of adjacent land in the Left River Side and the Right River Side areas.

An application for expansion of Mineral Tenure is planned for the second half of 2021. The Company expects that as a result of the application there will be a further amendment to the SSU Contract expanding the current mining allotment to include the additional (adjacent) area.

The extended area will be increased from the current 34.86 km2 to 52.13 km2.

The proposed expanded SSU Contract areas are shown in Figure 32.

According to the Company’s legal advisers there should be no material legal impediment for the renewal or extension of the SSU Contract beyond 26th February 2026, provided the Company complies with relevant requirements prescribed by Kazakh laws, and completes relevant procedures prescribed by Kazakh law and Competent Authorities.

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Figure 31: Plan of SSU Contract areas for the Gornostay Project (projected coordinates are estimates derived from the geographicals using public commercial GIS software)

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Table 5: Coordinates of corner points of the SSU Contract areas for the Gornostay Project

WGS 84 Pulkovo 1942 Local system used Geographic coordinates (Zone 44U) (Zone 14) in the Report NN North East North East North East North East Left River Side area 1 50°36’44’’ 78°48’4’’ 5,609,011.7 344,429.7 5,611,318.8 14,344,408.1 41,318.8 44,408.1 2 50°37’0’’ 78°48’36’’ 5,609,487.2 345,073.1 5,611,794.5 14,345,051.7 41,794.5 45,051.7 3 50°37’1’’ 78°48’54’’ 5,609,507.6 345,427.7 5,611,814.9 14,345,406.5 41,814.9 45,406.5 4 50°36’41’’ 78°49’30’’ 5,608,869.2 346,116.9 5,611,176.2 14,346,096.0 41,176.2 46,096.0 5 50°36’12’’ 78°49’47’’ 5,607,963.7 346,424.8 5,610,270.4 14,346,403.9 40,270.4 46,403.9 6 50°35’46’’ 78°49’42’’ 5,607,163.6 346,303.0 5,609,470.0 14,346,282.1 39,470.0 46,282.1 7 50°35’56’’ 78°50’19’’ 5,607,451.2 347,039.3 5,609,757.7 14,347,018.7 39,757.7 47,018.7 8 50°33’30’’ 78°52’14’’ 5,602,876.7 349,170.3 5,605,181.4 14,349,150.5 35,181.4 49,150.5 9 50°33’30’’ 78°51’48’’ 5,602,891.5 348,658.8 5,605,196.2 14,348,638.8 35,196.2 48,638.8 10 50°33’52’’ 78°51’5’’ 5,603,595.3 347,832.5 5,605,900.3 14,347,812.2 35,900.3 47,812.2 11 50°33’52’’ 78°0’53’’ 5,603,602.2 347,596.5 5,605,907.2 14,347,576.1 35,907.2 47,576.1 12 50°33’31’’ 78°50’48’’ 5,602,956.5 347,479.3 5,605,261.2 14,347,458.9 35,261.2 47,458.9 13 50°33’21’’ 78°50’40’’ 5,602,652.2 347,312.9 5,604,956.8 14,347,292.4 34,956.8 47,292.4 14 50°32’18’’ 78°51’5’’ 5,600,692.3 347,748.4 5,602,996.1 14,347,728.1 32,996.1 47,728.1 15 50°32’5’’ 78°50’56’’ 5,600,296.0 347,559.6 5,602,599.6 14,347,539.3 32,599.6 47,539.3 16 50°31’26’’ 78°50’53’’ 5,599,093.3 347,465.7 5,601,396.4 14,347,445.2 31,396.4 47,445.2 17 50°31’26’’ 78°51’3’’ 5,599,087.6 347,662.5 5,601,390.7 14,347,642.2 31,390.7 47,642.2 18 50°31’39’’ 78°51’3’’ 5,599,489.0 347,674.2 5,601,792.4 14,347,653.8 31,792.4 47,653.8 19 50°31’46’’ 78°51’18’’ 5,599,696.6 347,975.7 5,602,000.1 14,347,955.5 32,000.1 47,955.5 20 50°31’32’’ 78°51’24’’ 5,599,260.9 348,081.3 5,601,564.1 14,348,061.1 31,564.1 48,061.1 21 50°31’20’’ 78°51’16’’ 5,598,894.8 347,913.1 5,601,197.9 14,347,892.9 31,197.9 47,892.9 22 50°30’39’’ 78°51’45’’ 5,597,612.1 348,447.6 5,599,914.7 14,348,427.6 29,914.7 48,427.6 23 50°29’0’’ 78°52’25’’ 5,594,532.0 349,147.7 5,596,833.4 14,349,128.0 26,833.4 49,128.0 24 50°29’0’’ 78°51’50’’ 5,594,551.8 348,458.1 5,596,853.3 14,348,438.1 26,853.3 48,438.1 25 50°29’38’’ 78°51’15’’ 5,595,745.3 347,802.3 5,598,047.2 14,347,782.1 28,047.2 47,782.1 26 50°30’2’’ 78°51’18’’ 5,596,484.9 347,882.9 5,598,787.0 14,347,862.6 28,787.0 47,862.6 27 50°30’10’’ 78°51’46’’ 5,596,716.0 348,441.5 5,599,018.2 14,348,421.5 29,018.2 48,421.5 28 50°30’23’’ 78°51’42’’ 5,597,119.7 348,374.3 5,599,422.1 14,348,354.2 29,422.1 48,354.2 29 50°30’34’’ 78°51’32’’ 5,597,465.1 348,187.1 5,599,767.6 14,348,167.0 29,767.6 48,167.0 30 50°30’51’’ 78°51’11’’ 5,598,002.1 347,788.8 5,600,304.8 14,347,768.5 30,304.8 47,768.5 31 50°31’17’’ 78°50’34’’ 5,598,826.2 347,083.5 5,601,129.2 14,347,062.9 31,129.2 47,062.9 32 50°31’39’’ 78°50’33’’ 5,599,506.2 347,083.6 5,601,809.5 14,347,063.0 31,809.5 47,063.0 33 50°32’4’’ 78°50’11’’ 5,600,290.8 346,673.0 5,602,594.5 14,346,652.3 32,594.5 46,652.3 34 50°32’34’’ 78°49’57’’ 5,601,225.4 346,424.5 5,603,529.4 14,346,403.7 33,529.4 46,403.7 35 50°32’34’’ 78°49’45’’ 5,601,232.3 346,188.3 5,603,536.3 14,346,167.4 33,536.3 46,167.4 36 50°32’41’’ 78°49’42’’ 5,601,450.2 346,135.6 5,603,754.3 14,346,114.7 33,754.3 46,114.7 37 50°32’41’’ 78°49’28’’ 5,601,458.3 345,860.1 5,603,762.4 14,345,839.1 33,762.4 45,839.1 38 50°33’8’’ 78°49’23’’ 5,602,295.0 345,786.2 5,604,599.5 14,345,765.1 34,599.5 45,765.1 39 50°33’37’’ 78°48’29’’ 5,603,222.0 344,750.2 5,605,526.7 14,344,728.7 35,526.7 44,728.7

(projected coordinates are estimates derived from the geographicals using public commercial GIS software)

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WGS 84 Pulkovo 1942 Local system used Geographic coordinates (Zone 44U) (Zone 14) in the Report NN North East North East North East North East 40 50°35’0’’ 78°48’30’’ 5,605,784.6 344,845.6 5,608,090.5 14,344,824.2 38,090.5 44,824.2 41 50°35’9’’ 78°48’6’’ 5,606,076.6 344,382.0 5,608,382.5 14,344,360.3 38,382.5 44,360.3 Right River Side area 1 50°55’30’’ 78°37’25’’ 332,990.9 5,644,174.1 5,646,495.0 14,332,964.7 76,495.0 32,964.7 2 50°55’30’’ 78°39’0’’ 334,845.2 5,644,114.7 5,646,435.6 14,334,819.8 76,435.6 34,819.8 3 50°53’0’’ 78°39’0’’ 334,697.7 5,639,482.0 5,641,801.1 14,334,672.2 71,801.1 34,672.2 4 50°53’0’’ 78°37’25’’ 332,841.7 5,639,541.4 5,641,860.6 14,332,815.4 71,860.6 32,815.4

6 PROJECT HISTORY

6.1 Exploration History

6.1.1 Research and Mapping Works Up Until the 1960s

Geological investigation of the Gornostay area commenced after the discovery of a coal deposit by Permin in 1854. Further investigations lead to the preparation of the first geological map of the area in 1880 (Yusupov et al., 1968).

The first geological survey and mapping work — completed at a scale of 1:200,000 — was by N. Gornostayev. Ultramafic rocks were discovered during this work. The original geological map prepared by Gornostayev was used up until the 1960s (Yusupov et al., 1968).

Research work related to limestones was completed in 1931, with preparation of an alternate geological map at a scale of 1:100,000 by Levin (Yusupov et al., 1968).

Nickel-bearing weathering crusts were discovered by Shlygin in the period from 1932 to 1933. Afanasyev and Mashkara completed a geological survey to support preparation of map sheet M-44-50 at a scale of 1:100,000 (Yusupov et al., 1968).

Prospecting work for bauxite was completed by Bok in 1936 with negative results. Prospecting work for gold was completed by Malykh in 1949 with encouraging results (Yusupov et al., 1968).

Prospecting work for bauxite and nickel-cobalt mineralisation completed by Dorokhova in 1954 revealed low grades of nickel and cobalt in weathering crust of the Gornostay belt, and as a result, the potential of this complex to host economic nickel-cobalt mineralisation was downgraded (Yusupov et al., 1968).

However, in 1959 Stusnitsyn identified weathering crusts prospective for nickel-cobalt mineralisation on the Gornostay serpentinite complex (Yusupov et al., 1968).

Drill holes were completed in 1959 by Semenov and Tsygankov to identified weathering crusts with nickel and cobalt mineralisation on the northern side of the Irtysh River (Yusupov et al., 1968).

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Geophysical investigations of the area were carried out between 1948 and 1959, and focused on the investigation of Mesozoic-Cenozoic sediments that cover the Palaeozoic basement, as well as prospective structures, for coal and oil deposits (Yusupov et al., 1968).

Electromagnetic geophysical investigations were completed by the Siberian Expedition in 1950 which aimed to aid in the discovery of iron-skarn deposits (Yusupov et al., 1968).

Further geophysical works in the 1950s were focused on investigations of depressions for identifying “bauxite prospective structures” as well as potential depressions associated with oil (Yusupov et al., 1968).

6.1.2 Exploration for and Evaluation of Nickel-Cobalt Mineralised Laterites

Systematic prospecting and evaluation work associated with nickel±cobalt-bearing lateritic weathering crusts commenced in 1960 (Yusupov et al., 1968) and included:

• Magnetic and electrical survey Geophysical works of an area totalling 4,500 km2. These geophysical works allowed mapping of the Gornostay and Bayguzin-Bulaksky ultramafic belts.

• Geological survey and mapping at a scale of 1:200,000 of map sheets M-44-XIII and M-44-XIV.

The nickel-cobalt mineralisation at the Gornostay Project was investigated in six stages (Danilov et al., 2010, KazNickel, 2019) as follows:

1. Historical prospecting and evaluation work from 1960 to 1968:

o The Left River Side area of the Gornostay belt was explored with an exploration drill grid of 200 – 400 m x 100 – 200 m. Depth of core holes was from 4.7 m to 300 m (average 42.8 m). Drillholes with a depth of more than 100 – 150 m were drilled for identification of the Gornostay ultramafic complex. Control trial pits were used for verification of core drilling.

o Right River Side area of the Gornostay belt was explored on an exploration drill grid 200 – 800 m x 50 – 200 m for the southern part, and on an exploration drill grid of 1,600 – 4,000 m x 200 – 800 m for the northern part. The depth of core holes was up to 200 m (average 55.8 m) for the southern part and from 49.7 m to 191 m (average 100 m) for the northern part.

o Metallurgical testwork conducted by Local Engineering Institute “VNIITSVETMET” for three different processes:

■ Electro-smelting for production of ferronickel

■ Electro-smelting on ferronickel stein (sulphides)

■ Hydrometallurgical leaching by sulphuric acid and ammonia carbonates.

2. Economic assessment of the Gornostay Deposit in 1999 based on new metallurgical tests by VNIITSVETMET based on the ‘Bloomery metallurgical process’ and following re-estimation of resources on both the Left Side River and Right Side River areas. Alternate metallurgical tests based on electro- smelting were completed by Shagan in 2000.

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3. Exploration work completed by KazNickel from 2004 through 2007:

o Left River Side area from 2004 through 2005 on an exploration drill grid of 50 m x 100 m for the central part and 100 m x 100 m for the northeast part. From 2006 through 2007 on an exploration drill grid of 50mx50mforthecentral part and 100 m x 100 m for other parts of the area, excluding the southern flank. Depth of core holes was from 6.8 m to 103 m (average 25.8 m). Control trial pits were used for verification of core drilling.

o Hydrogeological and geotechnical investigations by the Geophysics Institute of National Nuclear Centre in 2007 (Demin, 2007).

o Metallurgical test work by Gypronickel (2000 – 2008) and “Eurasian science-technological centre Metals and Materials” (2010) based on producing ferronickel in a Vanyukov oven used in industrial conditions in YouzhUralNickel from 2004 to 2005. Mintek approved the flowsheet process in 2011 (Mpisana, 2011).

o Open test pitting in the central part of the deposit from 2004 to 2006.

o Scoping Study and Mineral Resource estimation prepared by Wardell Armstrong in 2007, reported in accordance with the 2004 Edition of the JORC Code (Newall et al., 2007).

o Feasibility Study assessment (to Kazakhstan standard requirements) for open pit mining and producing ferronickel using a Vanyukov oven was prepared by Kazgyprotscvetmet in 2010.

4. Exploration works completed by KazNickel from 2011 to 2012:

o Left River Side area in 2012 on an exploration drill grid of 100 m x 100 m for the southern flank. Depth of core holes was from 11 m to 104.8 m (average 25 m).

o Right River Side area in 2011 on an exploration drill grid of 100 – 200mx100–200 m for the central part. Depth of core holes was from 71 m to 130 m (average 96 m).

5. The Project was on standby from 2012 through 2018 due to low prices of nickel and uneconomic parameters for the proposed pyrometallurgy method of processing and ferronickel production.

6. Development of an ISR methodology by a new team, with substantial ISR industry experience, from 2018 to 2019:

o construction of a pilot test block and laboratory leaching investigations (a more detailed account of this information is provided elsewhere in this Report).

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6.2 Mining History

There has not been any historical mining at the Gornostay Project. Test open pits were constructed in the central part of Gornostay Deposit (Photo 3) for the purpose of collecting metallurgical bulk samples; however, reconciliation information with drilling is unavailable.

Photo 3: Open test pit at the Gornostay Deposit Source: CSA Global

7 GEOLOGY

7.1 Geology and Mineralisation

7.1.1 Basement Rocks

The Gornostay Deposit comprises silicate nickel-cobalt mineralisation, and is located within the Gornostay belt, which is composed of a tectonised ophiolite complex, associated with the Carboniferous age Arkalyk and Bukonsky Groups (Figure 33).

Serpentinites are located in an anticline structure. Grey reef limestones of the lower part of the Arkalyk Group (Visean stage) are the most oldest rocks and form the anticlinal core (Figure 34, Figure 35), and often underlie the serpentinite complex.

The western anticlinal limb is consists of grey-coloured sand-, silt- and claystones or shales of the upper part of Arkalyk Group (Visean stage). The eastern flank of the Gornostay belt is represented by sandstones, conglomerates, silt- and claystone of the Bukonsky Group (Middle Carboniferous), which have faulted contact with the Arkalyk Group and serpentinites.

Listvenite3 zones are developed along the contacts of serpentinites with their host rocks, as well as inside serpentinite bodies. The continuity of listvenite zones reaches several kilometres. The occurrence of listvenite corresponds with gold mineralisation discovered mid-last century. Talc-carbonate zones in serpentinites occur along fault zones and as contact zones between serpentinite and listvenite.

3 Metasomatic rocks comprising quartz, fuchsite (Cr-sericite), and dolomite-magnesite.

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The serpentinite complex is divided to several massifs (Figure 33):

• Southern massif in the Left River Side;

• Central Massif, most part in the Left River Side and northern flank in the Right River Side; and

• Northern massif in the Right River Side.

Gabbroic dykes and small intrusive complexes occur in the northern part of the Central Massif.

Redeposited weathering crust is located in local depressions. The thickness of this type of weathering crust varies from0–84m.

7.1.2 Structure of Weathering Crusts

Silicate nickel-cobalt deposits in weathering crusts are formed due to lateritic weathering of ultramafic rocks. The weathering crust on serpentinites is relict, and silicified below young cover sediments.

A zonation of the superficial weathering crust is as follows, geologically from top to bottom (Figure 36, Photo 4, Table 6):

• Redeposited weathering crust

• In situ ochre zone (not named as limonite zone because many samples from this zone contain Fe<20 – 25%), in some places with birbirite (siliceous rock)

• Nontronite clay, locally with manganese concentrations as well as coloured birbirite

• Nontronitised serpentinite

• Fractured (disintegrated) serpentinite

• Serpentinites with magnesite veins

• Fresh serpentinites.

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Figure 32: Geological map of the Zaysan district

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Figure 33: Regolith map of the Gornostay Project (Left River Side area)

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Figure 34: Regolith map of the Gornostay Project (Right River Side area)

Figure 35: Regolith section through the Gornostay belt (vertical exaggeration x4)

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Table 6: Examples of chemical composition of main zones of weathering crust

Item Redeposited weathering crust in situ ochre zone in situ nontronite zone Samples 20 29 720 Element Average Minimum Maximum Average Minimum Maximum Average Minimum Maximum

Fe2O3 25.4 6.6 55.7 38.7 12.6 65.3 22.8 6.1 59.5 (Fe)* 17.8 4.6 39.0 27.1 8.8 45.7 16.0 4.3 41.6

Al2O3 5.8 1.1 13.9 3.9 1.1 11.8 3.0 0.4 18.9

SiO2 46.7 24.5 64.4 39.6 18.3 53.5 51.9 24.2 74.0 MgO 7.0 0.9 15.4 4.3 0.7 25.5 8.9 0.5 40.5 MnO 0.52 0.04 2.42 0.27 0.07 1.70 0.52 <0.005 3.87 CaO 2.3 0.3 13.9 0.8 0.5 2.9 1.0 <0.05 16.5 cal (CO2 )** 1.8 0.2 10.9 0.6 0.4 2.3 0.8 <0.05 12.9

Cr2O3 0.66 <0.005 2.16 1.30 0.48 2.25 0.86 0.00 2.41 Ni 1.09 0.63 1.83 0.85 0.65 1.62 0.91 0.15 2.83 Co 0.054 0.025 0.115 0.048 0.018 0.092 0.070 <0.0005 0.870 Cu 0.03 0.01 0.08 0.02 0.01 0.21 0.02 <0.005 0.21

* Calculated based Fe2O3.

** CO2 in calcite based on CaO with assumption that all CaO is in calcite.

Source: KazNickel database, 2019

Photo 4: Structure & mineralogy of laterite weathering crust at Gornostay Source: (photo and interpretation by CSA Global in open test pit). The description of the superficial weathering profile is considered typical for the region; however, it differs from the classical profile observed in tropical zones due to the presence of silicification zones, as seen in birbirites (more detail is provided in Section 7.1.3) in both ochre and nontronite zones. Other differences are discussed in Seredkin (2019).

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Zonation of the weathering crust is often incomplete with the following situations commonly present:

• Zone of nontronite clays is often absent. In some cases, the limonite-siliceous zone directly overlies disintegrated or fresh serpentinite.

• Nontronitised or disintegrated serpentinites often directly underlie the soil horizon.

• Zones of weathering crust are almost completely eroded in some areas. In these cases, magnesite lenses and veins inside slightly altered serpentinites are evidence of eroded weathering crust.

The thickness of the superficial weathering crust varies from5–40m.

Fracture-linear weathering crust is located in zones of stronger fractures and/or faults, which have two main directions:

• north and north-northwest along the direction of the suture zone; and

• east-west transverse direction.

The thicknesses of linear-fissured weathering crusts reaches up to 190 m depth.

Zonations of linear-fissured weathering crust are similar to the superficial type; however, zones are located vertically or obliquely to the direction of the fissure or fault zones. Ochre zones are located in the centre of tectonic zones, which change to zones of nontronite, nontronitised serpentinite and disintegrated serpentinite, on both sides of the limonite zones and grading into fresh rock.

Linear-fissured weathering crust is formed along a series of parallel faults/fissure zones often with alteration of weathering crust zones.

Redeposited weathering crust occurs in local depressions over all substrates in the Gornostaevsky belt: serpentinites, silt- and claystone as well as limestones.

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7.1.3 Mineralogy

Higher grades of nickel and cobalt are typical for all altered rocks formed on serpentinites, excluding silicified rock types (birbirites, opalised serpentinite) as well as of carbonatised serpentinite and magnesite.

The highest grades of nickel and cobalt are associated with nontronite, nontronitised serpentinite and ochres. Isolated mineralised bodies are located in redeposited weathering crust too. Mineralisation with Ni ≥0.33% is present in Central and Northern massif whereas the highest grade of nickel in Southern Massif is 0.34% (Yusupov et al., 1968).

Nickel-cobalt mineralised bodies have lenticular, blanket-like, or sheet-like forms, with meandering morphology when observed in plan view (Figure 47). The boundaries of mineralised bodies are gradual and can be defined by assaying, but can be sharp if there is a lithological contact. The location and morphology of mineralised bodies of superficial weathering crusts is usually conformable to the topographic surface (Figure 36).

Mineralised bodies in linear-fissured weathering crust are typically presented by steeply dipping lenses (Figure 36).

Mineralised bodies are usually separately located in redeposited and in situ weathering crust (Figure 34, Figure 35, Figure 36). Mineralised bodies in in situ weathering crust are solid and sometimes associated with satellite fragmental mineralised lenses (Figure 36).

The mineralogical composition of nickel-cobalt mineralisation is complex, with finely dispersed and amorphous-crystalline distribution of metals in some mineral compounds of weathered rocks, such as limonite, nontronite and fractured serpentinites.

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Figure 36: Morphology of mineralised bodies (Ni >0.33%) at the Gornostay Project

The Zone of redeposited weathering crust is represented by brecciated rocks composed by all types of material from the in situ weathering crust. The colour varies from light yellow and green to dark brown and black (Photo 5). The mineral composition depends on the different types of debris.

An example of the chemical composition of a sample from this zone is provided in Table 6. Composition is intermediate between ochre and silicate (nontronite) due to the presence of debris of different composition from different zones. A higher grade of CaO is due to common location of redeposited crust on limestone basement (Figure 34, Photo 5).

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Photo 5: Gornostay cover sediments (1) and redeposited weathering crust (2) Source: photo of core Z-16. Source: CSA Global

The Ochre zone is composed of light, porous, and loose rocks, with colours varying from light yellow to dark brown (Photo 6a). The mineral composition is mainly represented by iron hydroxides (goethite, hydrohaematite, and haematite) (Figure 38), psilomelane, and minor amounts of magnesite, chalcedony, and relict chrome spinels.

The proportion of birbirites in the limonite zone ranges from 5% to 80%. Birbirites are represented by large lenses of rock that are composed of quartz, chalcedony and brown iron oxides Photo 6b). The colour of birbirites varies from white to dark brown, depending on the percentage of iron oxides present.

Relicts of the nontronite zone are common in the ochre zone (Photo 6c), furthermore limonitisation is very often weak and leads to development of brown and yellow colours, whereas chemical and mineralogical composition remains similar to nontronite zone (Table 6). Atypical, higher, silica grades are observed in the limonite zones due to presence of birbirites. The presence of birbirites is also the cause of decreasing grades of nickel in the limonite zone.

The Nontronite zone is represented by waxy and flaky rocks of yellow to green colour of varying saturation, sometimes almost black with violet hues. The black colour is usually due to the presence of lenses of manganese minerals (Photo 6d).

The mineral composition is mainly represented by nontronite (Figure 38), psilomelane, quartz, chalcedony, calcite, dolomite, magnesite, serpentine and relict chrome spinels.

An example of the chemical composition of samples from the nontronite zone is provided in Table 6. The composition is similar to composition of saprolite observed in the classical lateritic weathering crust in tropical zones. Silica grades are, however, higher and are associated with the presence of coloured birbirites and zones of silicification (Photo 6e, f), developed as veins in the nontronite zone. Birbirites are composed of quartz, chalcedony, and the colour is due to the minor amounts of fine particles of nontronite and hydrated oxides of iron and manganese.

The Zone of nontronitised serpentinite is represented by loose or cemented, pale greenish and yellowish rocks. These rocks often preserve a texture of the primary rocks (Photo 6g). The main part of these rocks consists of serpophite crossed by veins of cross-fibre chrysotile, as well as opal, chalcedony, calcite, dolomite, magnesite, nontronite, relict pyroxenes and chrome spinels. An example of chemical composition of a sample from the limonite zone is provided in Table 6.

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Photo 6: Photographs of Ni-Co mineralisation within the weathering crust at Gornostay a – limonite in ochre zone; b – birbirite from ochre zone;c–relict of nontronite in limonite in ochre zone, d – nontronite with lens of manganese mineralisation, e – nontronite with silicification, f – silicified nontronite (green opal), g – nontronitised serpentinite. Photo of all samples (excluding birbirite) is from an open test pit; the photo of the birbirite from adjacent deposit in Kazakhstan.

– III-101 – oprsno rcue n oi epniie ssoni ht 7. Photo gradual. in is shown underground serpentinites is the fractured serpentinites to of solid distribution and up the fractured distributed of of are border comparison serpentinites lower A The Fractured of below. process. direction usually the ISR and of table the understanding water in the for solutions important of is flow zone this the of structure and morphology location, the iue3:Gnrlshm fmnrlcmoiino nst eteigcut Yspve l,1968) al., et (Yusupov crusts weathering situ in of composition mineral of scheme General 37: Figure IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS PEDXIICMEETPRO’ REPORT PERSON’S COMPETENT III APPENDIX

rcue n ece serpentinite leached and Fractured Fresh Desintegrated Nontronitised Nontronite Ochre serpentinities serpentinites serpentinites zone zone %5%100% 50% 0% iron h y

carbonates droxides aeycnan ihrgae fnce n oat However, cobalt. and nickel of grades higher contains rarely I-0 – III-102 – siliceo nontronite serpentine u minerals s minerals g ro u p THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT

Photo 7: Gornostay serpentinites in drill core Nontronitised (1), fractured (2) and fresh (solid) (3) serpentinites; photo of core from Z-15 (upper figures) and Z-16 (lower figure). Source: CSA Global

7.1.4 Overburden (Cover) Sediments

Cenozoic sediments overlie the weathering crust almost everywhere (Figure 36).

These sediments are represented by alluvial and diluvial-proluvial (sands, sandy loams, loams, clay) and lacustrine (sands, gravel, sandy loams, silt) sediment.

The thickness of cover sediments on the Central massive is up to 118 m (average 10 m), and on the Northern massive varies from 43 m to 152 m (average 69 m).

7.1.5 Geomorphology

The denudation relief of the Mesozoic stage of peneplanation is preserved within the Zaysan district (Figure 39). Relief is typical of a denudation plain, being a peneplain with residual hills, and represented by hills extending in a north direction. Terraces are common for the both sides of the Irtysh River.

Geomorphological control of mineralisation in the weathering crusts is not clear at the Gornostay Project, which is considered atypical for these types of deposits. However, some patterns are observed:

• The best geomorphological control is observed at the Central Massif where located the main mineralised body occurs where the thickness of cover sediments is limited (≈10 m). A peneplain, marked by the weathering crust (limonite-birbirite and nontronite), is located in the Central Massif. Areas with weathering crusts are located higher with5–10mofrelief with kaolinite weathering crusts (Figure 39). The residual nature of the relief with weathering crusts indicates a previously existing uniform topographic surface of the weathering crust. Hard birbirites contribute to the preservation of the weathering crust.

• There is no apparent geomorphological control of the Northern massif due to high thickness of cover sediments (43 – 152 m).

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• Most of the Southern Massif is in an unfavourable geomorphological position, which together with the low thickness of cover sediments has led to poor development of nickel-cobalt mineralisation.

L E G E ND

Elevation of topographic surface

105,000 >240m 230-240m 220-230m 210-220m 200-210m 190-200m Northern massive 180-190m 80,000 170-180m 160-170m 150-160m

Right River 140-150m Side area <140m

Border of serpentinite complex 55,000 Irt y sh Ri Limit of Tenements v er

Central massive Left River Side area Geomorphological 30,000 control of distribution of regolith

0510 20 km Southern massive

NORTH 50,000 25,000

Figure 38: Geomorphological control of the distribution of weathering crust

7.2 Mineralisation Controls

The following factors affect the localisation and distribution of nickel-cobalt mineralisation:

• Bedrock should be ultramafic lithologies.

• Local positive forms of relief usually mark areas with preserved relicts of weathering crusts upon serpentinites.

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• Areas with young cover sediments are usually flat and appear similar in relief as surrounding unmineralised areas.

• Weathering crusts with greatest thickness are usually developed in fissures or fault zones.

Classic laterite deposits of nickel and cobalt found in the tropical zone (Indonesia, New Caledonia, Australia, Guinea, South America), where the formation of laterite weathering crusts is a current geological process, or represent palaeodeposits where deposits that formed during past epochs of tropical weathering have been preserved into modern times.

Ni-Co laterites are supergene deposits formed from the pervasive chemical and mechanical weathering of olivine-rich ultramafic rocks.

Unweathered olivine-rich ultramafic rocks can contain as much as 0.3% Ni, the nickel and cobalt residing in the olivine mineral lattice. These rocks occur within komatiites and intrusive complexes as peridotites and dunites.

The extreme weathering breaks down all susceptible primary minerals and releases the nickel and cobalt into solution. The released chemical components are dispersed in groundwater or become incorporated into altered or new minerals that are stable in the weathering environment.

Nickel-cobalt laterites are classified based on their mineralogical characteristics. The factors involved in the development of the weathering profile are key to the concentration of nickel and cobalt into certain minerals. The mineralogical characteristics subdivide the nickel-bearing ores into subtypes, which have critical differences in their profile development, structure and chemistry that affect extraction and processing techniques.

Typically, laterite zones represent a condensing or collapse of the original profile, occupying a smaller volume than the original rock that has weathered to form the laterite, with the material lost having been leached away by groundwater resulting in residual concentration of the elements that are left behind.

In basic terms, two different ore types are the most commonly developed, limonite types and silicate types:

• Limonite-type laterites (or oxide type) are highly enriched in iron due to very strong leaching of magnesium and silica. They consist largely of goethite and contain 1–2% Ni incorporated in goethite. Absence of a limonite zone in these deposits is usually due to erosion.

• Silicate-type (or saprolite type) nickel ores are formed beneath the limonite zone. It contains generally 1.5–2.5% Ni, and consists largely of magnesium-depleted serpentine, in which nickel is incorporated. In pockets and fissures of the serpentinite rock — green garnierite can be present in minor quantities, but with high nickel contents — mostly 20 – 40%. It is bound in newly formed phyllosilicate minerals. All the nickel in the silicate zone is leached downwards from the overlying goethite zone.

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All mineralogical types of ore may be present in a single nickel-cobalt laterite deposit (Figure 40). The relative proportions in a single laterite profile between limonite and silicate depends on several interplaying factors such as water table depth, past climate, regolith chemistry/rates of chemical weathering, drainage and tectonics.

Mamedov et al. (2010) discovered that the boundary between limonite and clay (nontronite upon ultramafic rocks) zones is controlled by groundwater level (Figure 41). The location of the transition zone of weathering crust relates to zones of seasonal fluctuations of groundwater level (Figure 41). A feature of the transition zone from clay to laterite is sharply decreasing silica and magnesium grades as well as increasing ferric oxide grade. Thus, the zonation of the weathering crust depends on the groundwater level. Higher concentrations of nickel are located around the boundary between the clay and limonite zones and usually form continuous mineralised bodies (Figure 41).

SCHEMATIC LATERITE APPROXIMATE ANALYSIS PROFILE COMMON (%) EXTRACTION NAME PROCESS Ni Co Fe Mgo

RED LIMONITE <0.8 <0.1>50 <0.5 ACID LEACH

0.8 0.8 40 0.5 YELLOW to to to to LIMONITE 1.5 0.2 50 5 CARON PROCESS

1.5 25 5 TRANSITION to to to SMELTING 4 40 15 0.02 to SAPROLITE/ 1.8 0.1 10 15 GARNIERITE/ to to to SERPENTINE 3 25 35

35 FRESH 0.3 0.01 ROCK 5 to 45

Figure 39: Stylised generic nickel-cobalt laterite profile Source: CSA Global

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However, at the Gornostay Project there is no clear relationship between the zonation of the weathering crust and the current groundwater level for lateritic weathering crusts.

The groundwater level passes through any zone (limonite, nontronite, nontronitised or disintegrated serpentinites) of the lateritic weathering crust (Figure 41). Perhaps the lowest possible location of the groundwater level is associated with distribution and localisation of the disintegration zone where rainwater can infiltrate (Figure 41).

A feature of the lateritic weathering crusts at the Gornostay Project is the development of silicification (including birbirites), which is commonly caused by the imprint of a later arid climate on laterites developed in a humid climate. This process could develop during stages of overlapping by overlying sediments on top of the weathering crust. The process is well-known for bauxite-bearing weathering crusts. In the present arid climate, silica is not leached, but recrystallises with the formation of birbirites.

An additional feature of weathering crust in the Gornostay belt is development of the limonite (ochre) zone over other zones due to the arid climate. This contributes to the spread of the oxidised aeration zone to the level of groundwater (Figure 41), which leads to the development of the limonite zone over other zones. However, this process is weak due to the presence of overburden sediments in comparison to outcropping weathering crusts at the Ekibastuz-Shiderty Project (Figure 41).

Thus, the lateritic weathering crust of the Gornostay Project is similar to a classically zoned weathering crust, but with an overprinting stage of later degradation and destruction. This feature leads to a more complex distribution of nickel in the weathering crust and silicification (birbiritisation) of limonite and nontronite zones.

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CLASSICAL URAL - KAZAKHSTAN PROVINCE

Tropical Zone Gornostay Gornostay Ekibastuz-Shiderty Ekibastuz-Shiderty

emerging young classical superficial areal fissure-linear superficial areal fissure-linear weathering crust weathering crust weathering crust weathering crust weathering crust below overburden below overburden sediments sediments Soil Soil Soil Soil ;O Soil CO2 2 Limonite Overburden sation Cuirasse zone Nickel sediments minerali-

Redeposited aeration zone Limonite Overburden Nontronite weathering Nickel Nickel isation zone zone crust mineral- sediments mineralisation CO Limonite 2 zone (±CO) Ochre zone Nickel el v nd Nontronitised mineralisation u ation serpentinites u ro Transition g ct ater le zone of zone u of fl w O O O O 2 Nontronite 2 2 2 aeration zone aeration zone aeration zone zone aeration zone Nickel Nickel

Nontronite Mineralisation I-0 – III-108 –

zone mineralisation

Nontronitised

ater table Ground serpentinites Desintegrated w water serpentinites

the Nontronite Nontronite w serpentintes zone

zone belo Nontronite

Desintegrated Nickel zone

serpentinites Nickel Desintegrated mineralisation mineralisation serpentinites

Ground Fresh Ground Ground water water Nontronitised serpentinites water ater table ater table ater table ater table

Fresh w

Ground w w w serpentinites serpentinites Fresh water Nontronitised the the the the

serpentinites w w w w serpentinites

Desintegrated Desintegrated zone belo zone belo zone belo zone belo serpentinites serpentinites

Based on materials from Based on materials from Based on materials from Seredkin, Urbisino Mamedo Danilo Danilo v v, 2018 v et al., 2010 : et al., 2010 : v et al., 2010 :

Figure 40: Comparison of classical Ni-bearing laterite crusts of tropics with Gornostay Project profiles (prepared by CSA Global based different sources) Seredkin, Urbisino

v, 2018

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8 HYDROGEOLOGY

8.1 General Requirements for Hydrogeological Investigations for In Situ Recovery

The Gornostay Project is considered amenable for ISR.

ISR requires favourable hydrogeological conditions, some of which are mandatory (Seredkin et al., 2016), including:

• Availability of underground water and location of mineralisation:

o below the underground water table, or

o in dry rocks above the underground water level, but no more than 20 – 50 m above.

• Continuity of the underground water horizon (lack of aquicludes) between injection and pumping areas.

• Sufficient permeability of mineralised rocks for circulation of solutions with a reasonable filtration rate.

The distribution of permeability, natural flow direction and flow rate, distribution of (or absence of) zones of solution losses, as well as many other factors, are also important considerations for ISR. Therefore, an assessment of the hydrogeological regime is critical for Mineral Resource estimates or more advanced stages of ISR projects.

The requirements for hydrogeological assessments for ISR and conventional mining are different.

Hydrogeological investigations for conventional mining are focused on estimation of water inflows into operational pits or voids.

For ISR, an understanding is required of aquifer locations and continuity, distribution and variation of permeability, definition of injectivity of wells/pits/trenches, and possible pumping rate of production wells without draw down of the underground water level, as well as other individual parameters.

Specific hydrogeological investigations for ISR assessment have not been completed fully at the Gornostay Project.

The Company has conducted certain hydrogeological investigations (as described in Section 8.3). Specific hydrogeological investigations will be continued as part of the PFS as the project moves to full scale production. Analysis of existing hydrogeological information obtained based on a conventional open pit mining scenario was useful for evaluation of ISR amenability.

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8.2 Aquifer Systems and Horizons

The following underground water complexes were identified for the Project (Figure 42) (Danilov et al., 2009):

• Aquifers in modern alluvial Quaternary sediments, hydraulically connected with the Irtysh River which is the biggest River in Eastern Kazakhstan (Figure 30). Underground water level depths of 0.5 m to 5 m. Pumping of wells at 0.3 – 0.7 L/sec resulted in depression of the water level by 0.6 – 1.0 m. The water in the alluvial Quaternary sediments is fresh with total mineral content of 0.3 g/L. This water is extracted for use by the local population and agricultural industry.

• Aquifers in Quaternary lacustrine and proluvial-deluvial sediments with a water level depth of 0.5 – 5.0 m. Water in these complexes is weakly saline with total mineral content up to 3 – 5 g/L.

• Aquifers in Middle-Upper Oligocene sediments are widely distributed in the region and located in palaeovalleys. The depth to the top of these aquifers is from9–20mandthebase is from 50 – 78 m. Sometimes water in the Oligocene horizon is under pressure. The total mineral content of Oligocene aquifers is3–11g/Landwater use is limited.

• Underground water in open fissures is present in different complexes; however, most water is distributed in open fissures within Lower Carboniferous sediments.

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Aquifers in alluvial sediments: 1 - Holocene, 2 - Late Pleistocene - Holocene, 3 - Late Pleistocene, 4 - Middle Pleistocene Sporadic aquifers in lacustrine sediments: 5 - Late Pleistocene - Holocene, 6 - Late Pleistocene Sporadic aquifers in deluvial-ploluvial sediments: 7 - Late Pleistocene - Holocene, 8 - Late Pleistocene Aquicludes: 9 - clays of Middle Miocene, 12 - Upper Cretaceous - Paleocene Weathering crusts upon Paleozoic Rocks 10 - Aquifer of Middle-Upper Oligocene Underground waters of open fissures: 11 - Upper Permian sediments (Daubay Group), 13 - Middle-Upper Carnonoferous (Maytubinsky Group), 14 - Middle Carnonoferous (Bukonsky Group), 15 - Lower Carnonoferous, 16 - Grnitoids of Late Paleozoic Tectonic: 17 - Faults, 18 - Faults with water flow Water points: 19 - Hydrogeological wells, 20 - Water supply wells; 21 - Water springs Chemical composition of underground waters: 22 - no information, 23 - with prevailing of chloride ion, 24 - with prevailing of sulphate ion, 25 - with prevailing of hydrocarbonate ion, 26 - waters of mixed composition 27 - Parameters of hydrogeological wells: a - number, b - geological indes, c - pump rate (dm3/sec), d - depression (m), e - depth of water level (m), f - mineralisation g/l 28 - Zones of nickel-cobalt mineralisation, 29 - border of tenement

Figure 41: Regional hydrogeological map for Left River Side area

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Underground water around the Gornostay Deposit is largely contained within open fissures which exist throughout the Lower Carboniferous sediments. The Lower Carboniferous aquifer is hydraulically connected with aquifer horizons within the modern alluvial Quaternary sediments, with hydraulic interconnectivity being especially strong in fault and fissure zones.

Recharge of the Gornostay Deposit occurs primarily along the sub-meridional faults associated with the Kempir mountains located to the south of the deposit (Figure 43). Underground water flows from the south to the north towards (and discharging to) the Irtysh River. Underground water also flows towards the base of the local hill (the Central Massif) from east to west on the western part of the Central Massif and from west to east on the eastern part of the Central Massif.

Direct recharge due to infiltration by precipitation is limited due to the presence of an aquiclude in overlying cover sediments. Water mineralisation varies from 0.7 – 1.0 g/L (fresh water) to2–8g/L (saline water). Therefore, underground water of the project has limited use for agriculture and drinking due to the elevated salinity levels.

The target underground water complex is in ultramafic rocks with a mineralised weathered zone. However, investigation of other hydrogeological complexes is also important due to potential environmental issues.

The volume of the ultramafic underground water complex is significant due to intensive zones of fractures, and major faults. Investigation of the hydraulic conductivity of faults which intersect the Irtysh River is also very important.

Figure 42: Regional flow of underground water in faults zones Left picture is a multispectral satellite image (Demin, 2007) (white arrows are regional direction of underground water flow). Right picture is geomorphological map (legend is on the Figure 39).

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8.3 Hydrogeological Tests in Single Wells

Single hydrogeological wells were drilled from 2006 to 2007, and from 2018 to 2020. The depth of these holes is 50 m to 85 m, with hole diameters ranging from 93 – 114 mm for the 2006 – 2007 holes, and ranging from 132 – 159 mm for the 2018 – 2019 holes. The location of hydrogeological wells is shown in Figure 44 (Demin, 2007; Kantbekuly, 2019).

Drilling was completed using the coring technique with the primary purpose of collecting appropriate geotechnical samples. The holes were geologically logged, including intervals of flushing fluid loss. Flushing of wells (after drilling completion) was carried out until clean water was observed. CSA Global notes that there is no information regarding the cleaning of hole walls, which is important for ensuring the determination of accurate permeability measurements.

All pumping tests were undertaken by airlifting the hole with the aim of maximising the depression (drawdown) in the underground water table. The results of these pumping tests are provided in Table 8. Underground water in hydrogeological wells H1, H3, H4 and H5 is non-pressurised, while H2 is under pressure (artesian).

Permeability was calculated using the Dupuis formula (Table 8) (Kantbekuly, 2018).

Screens were positioned within the hydrogeological wells in different lithological/structural horizons and the following permeability was derived (Figure 44):

• Overburden sediments (over fault zones): 0.03 – 0.05 m/day (wells H3 and H5).

• Weathered serpentinite within fault and fractured zone: 5.4 m/day (wells H1), not representative for weathered zone outside fault zones.

• Fractured rocks (siltstone, serpentinite): 0.10 – 0.19 m/day (wells H2 and G2).

• Fresh serpentinite: 0.003 m/day (well H4).

• Well G1 is dry, this hole comprises an in situ weathered zone overlying fresh serpentinite. It is most likely that underground water flow is restricted to the fractured zone at the base of the weathered material, with the weathered zone being dry where this fractured zone is absent (Figure 45).

Fluctuation of the underground water table, as well as temperature variation were monitored from January 2007 to September 2007 in all the single wells. The water level table varied from 0.5 m to 3.8 m (average 1.8 m) (Demin, 2007). Temperature varied from 8.5°C in mid-March to 12°C in mid-April.

Additional measurements of the injectivity of operational wells within the ISR test block (Figure 44) were completed in June 2019. Injectivity varied from 0.01 to 0.9 m³/hr, average 0.27 m³/hr. This injectivity correlates to permeability values from 0.009 to 0.54 m/day, average 0.17 m/day.

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These values were measured for the weathered zone due to the screened intervals within the holes. This value of permeability for the weathered zone is typical for other nickel-cobalt lateritic deposits in Kazakhstan.

Underground water mineralisation is from 0.4 g/L to 5.2 g/L (Kantbekuly, 2018). The prevailing anions are chlorides and sulphates in all wells, excluding H2 where hydrocarbonate prevails. Sodium and potassium are the prevailing cations.

Measurements of drilling mud losses reflect potential permeability of the weathered zone. The lack of drilling mud losses may indicate impermeable zones (Figure 44). The largest potential impermeable zone is located on the south of Left River Side area (Figure 44).

CSA Global prepared a grid surface of the depth of the groundwater level for the serpentinite complex using the Minimum Curvature method, and then calculated the elevations of the groundwater level based on the topographic surface grid (Figure 45). This map does not take account of zones without fractured serpentinites and potentially without groundwater in serpentinites and weathered zones within these units, due to the absent of logging of fractured serpentinites in exploration drillholes.

Hydrogeological investigations were not completed for the Right River Side area due to the fact that the project is in the early stages of evaluation. The Right River Side area is not included in the Scoping Study.

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LEGEND mineralisation in redeposited weathering crust mineralisation in in-situ weathering crust in-situ weathering crust fault and fissure zones

Hydrogeological wells: a - number b - underground water level, m c - permeability, m/day

Block for pilot ISR test

General natural direction of underground water flow (recharge of massive)

General natural direction of underground water flow (discharge massive)

Additional natural directions of underground water flow (discharge of massive)

Exploration holes with measures of drilling mud: a - full or partial loss b - no losses Potential zones of extremely low permeability (based on drilling mud measurements)

Left River Side ares tenement

NORTH

Figure 43: Hydrogeological schematic map of the Left River Side area of the Gornostay Project Source: Based on Demin, 2007; Kantbekuly, 2019; KazNickel database, 2019

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fresh serpentinite redeposited underground weathering crust water fractured serpentinite overburden fractured and fault weathering crust upon sediments zones serpentinite

Figure 44: Schematic hydrogeological section showing location of underground water in fault zones, in fractured serpentinites and weathering crustabove fractured serpentinite. Source: Based on Demin, 2007; Kantbekuly, 2019

42,500 40,000 37,500 35,000 32,500 30,000

42,500

27,500

50,000

25,000

47,500 NORTH 0 0.625 1.25 2.5km 42,500 40,000 45,000

Mineralisation in Mineralisation in redeposited weathering in-situ weathering Underground water table crust crust

Figure 45: Location of water table of the Gornostay Project

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direction of water flow in cavities or limonite zone between blocks of serpentinite (a) and along fissures (b) - high permeability direction of water flow in porous matrix nontronite/nontronitised of rocks (a) and water front on certain serpentinite zone period (b) - low permeability

fractured serpentinite zone Movement of the water front over time: from short (a) to long (d)

direction of water flow between blocks cavities and open fissures of serpentinite below the water table

Figure 46: Permeability in laterite weathering crusts through fissures/cavities and porous matrix

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9 MINERAL RESOURCE ESTIMATION

9.1 Data Verification

9.1.1 Drilling and Pitting Techniques

Exploration of the Gornostay Deposits was completed by drilling of core holes, with verification by test pits.

Drilling

There is limited information on drilling methods employed prior to 1960 (Section 6.1.2).

The depth of drill holes during the 1960s was up to 300 m. Mechanical core drilling was used in this period.

From 2004 through 2007, and in 2012, core drilling was carried out by SKB-4 drill rigs using “Boart Longyear” wireline tools.

Holes were drilled to infill along earlier Soviet profiles as well as extending both between and beyond existing defined mineralisation. All holes are vertical with depths between 7 m and 105 m on the Left River Side and between 71 m and 130 m on the Right River Side. The drilling was managed to intersect the ore zones in full and then to continue for a few metres into the barren serpentinites. Drilling diameter varies between 93 mm and 76 mm and core recovery appeared to average better than 95%.

Hydrogeological wells were drilled in period from 2004 through 2007 in the Left River Side area to support a Pre-Feasibility Study and definitive Feasibility Study based on open pit mining; however, these results are useful for ISR also. Drilling diameter varies between 93 mm and 114 mm.

Operational wells for field ISR tests were completed in 2018, though the test did not commence until 2019. The completed works are summarised in Table 7, Figure 48 and Figure 49.

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Table 7: Summary of drilling and pitting metres for each phase of exploration drilling

Scope of works, stages of exploration 2004– 2006– 2011– Type of work Area Units 1960s 2005 2007 2012 2018 Total Core drilling Left River Side holes 1,386 636 693 224 – 2,939 including (Main) m 59,169 16,684 17,601 5,590 – 99,044 deep Left River Side holes N/A – – – – N/A structural (South) m 4,706 – – – – 4,706 drilling in Right River Side holes 108 – – – – 108 1960s (South) m 6,022 – – – – 6,022 Right River Side holes 118 – – 28 – 146 (Central, North) m 11,789 – – 2,696 – 14,486 Test pits Left River Side pits 48 14 – – 62 (Main) m 579 183 – – 761 Hydrogeological Left River Side holes – 11 – – 11 drilling (Main) m – 270 – – 270 Drilling for field Left River Side holes – – – – 32 32 ISR test (Main) m – – – – 592.7 592.7

Sources: Yusupov et al., 1968; Danilov et al., 2010; KazNickel, 2019

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L E G E N D

Historical exploration core drill holes, 1960s

Kaznickel exploration core drill holes, 2004-2012

Others exploration sections

topographic isolines

tenements

name of tenements

name of mineralised areas

EXPLORATION WORKS

Summary Gornostay project

NORTH

Figure 47: Summary exploration works at the Gornostay Project Sources: Yusupov et al., 1968; Danilov et al., 2010; KazNickel, 2019

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LEGEND Historical exploration core drill holes, 1960s test pits, 1960s Kaznickel exploration core drill holes, 2004-2005 core drill holes, 2006-2007 core drill holes, 2012 test pits

hydrogeological holes

open pit

pilot ISR block

Others

exploration sections

topographic isolines

tenement

EXPLORATION WORKS

Left River Side area Gornostay project

Figure 48: Summary exploration works at the Left River Side (Main) block of the Gornostay Project Sources: Yusupov et al., 1968; Danilov et al., 2010; KazNickel, 2019

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Pitting

Pitting was completed in the 1960s and in period from 2004 through 2007 (Figure 49, Table 7) at the Left Side River (Main) block. Work included the collection of bulk metallurgical samples, investigation of geological features of weathering crust, and the verification of representativity of core drilling by comparing assays in channel samples in test pits with core samples. The test pits were square and 1.25 m2 in area, with a depth which varied from 4.8 m to 24.6 m.

9.1.2 Sampling Techniques and Sample Preparation

The sampling by exploration stages and types of works is summarised in Table 8.

Table 8: Summary of sampling for each phase of exploration

Stages of exploration Type of 2004– 2006– 2011– samples Area Units 1960s 2005 2007 2012 2018 Total Core samples Left River Side samples 16,845 8,434 10,038 2,757 – 38,074 (Main) m 23,567 11,137 13,083 3,729 – 51,517 Right River Side samples 1,374 – – – – 1,374 (South) m 1,836 – – – – 1,836 Right River Side samples 1,620 – – 237 – 1,857 (Central, North) m 5,149 – – 382 – 5,530 Channel Left River Side samples 375 117 – – 492 samples (Main) m 330 115 – – 445 in pits Composite Left River Side samples 286 244 225 15 – 770 samples (Main) m 1,244 960 992 50 – 3,247 Bulk density Left River Side samples 21 43 – – 64 samples (Main) in pits – 15 – – 15 Geotechnical Left River Side samples – 72 – – 72 samples (Main) Geometallurgical Left River Side samples – – – – 11 11 samples for (Main) ISR tests Metallurgical Left River Side samples 2 Opentestpit – – 2 samples (Main)

Sources: Yusupov et al., 1968; Danilov et al., 2010; Demin, 2007; KazNickel, 2019

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In the 1960s, the samples were treated in the sample preparation laboratory of the Semipalatisky expedition, Semey.

From 2006 to 2007, the samples were treated in the LLP “SemGeo”, Semey.

Prior to treatment, all samples were dried at a temperature of 110°C to remove capillary moisture.

9.1.3 Analytical Methods

In the 1960s, all samples were assayed in the laboratory of Semipalatinsky Expedition, Semey. All samples were assayed by spectral assay and then samples with Ni >0.3% were chemically (titrimetric method) assayed for Ni. Assays with Ni >0.4% were chemically assayed for Co.

From 2004 to 2005, all samples were assayed in the laboratory of VNIITCVETMET, Ust-Kamenogorsk (Oskemen). All samples were assayed by spectral assay and then samples with Ni ≥0.3% were assayed for Ni and Co by atomic absorption spectroscopy (AAS) as well as Fe by photometric methods.

From 2006 to 2007, all samples were assayed in the laboratory of LLP “Tcentrgeoanalyt”, Karaganda. All samples were assayed by spectral assay and then samples with Ni ≥0.3% were assayed for Ni and Co by AAS as well as Fe by photometric methods.

In 2012, all samples were assayed in the laboratory of LPP “Labwork Mining”, Almaty. All samples were assayed for Ni and Co by AAS as well as Fe by photometric methods.

Additionally, composite samples were assayed for SiO2,Fe2O3,Al2O3, CaO, MgO, MnO, Ni, Co,

Cu and Cr2O3 in all periods of exploration.

9.1.4 Location of Data Points

Topo-geodetic work completed at the Project in the coordinate system of 1942 year and the Baltic elevation system. A digital topographic plan was prepared for the Left River Side area at a scale of 1:10,000 in MapInfo software. A topographic surface for other areas was prepared based on OpenTopoMap (www.zalma.ru).

Surveying work was performed by automatic electronic tacheometer with measurements of horizontal and vertical angles, polar coordinates, and the results are presented in the form of horizontal distances and elevations, as well as in orthogonal grid.

Surveying at the sites were completed by theodolite traverses at a scale of 1:1,000.

All drillholes and pits are vertical and downhole surveying was not required, with minimal deviation of drillholes anticipated.

9.1.5 Orientation in Relation to Geological Structure, Data Spacing and Distribution

During exploration at the Project, a drillhole and test pit spacing of up to 50 m x 100 m was used to define resources in category C1, and an up to 100 m x 200 m grid used to define resources in category C2. Drillholes are typically from5mto300mdeep. The mineralised horizons are close to sub-horizontal, hence all drilling is vertical.

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9.1.6 Sample and Data Security

Data for all exploration periods is complete.

Drill core from the 1960s is not available. From 2004 to 2012, drill core was completely sampled and therefore not preserved. Drill core from 2018 is available for investigations of the site area.

All hard copy and digital information are stored at the KazNickel office in Semey.

CSA Global has not carried out independent assays to verify the data provided for the MRE.

9.1.7 Quality Assurance and Quality Control

All assays correlated well with the primary assays, however outliers which occur outside ±20% confidence control lines occur for the both internal and external control assays. However, this effect may reflect the very strong variability of laterite weathering crust composition. Similar outliers are typical for other laterite nickel- cobalt projects such as Sunrise in New South Wales in Australia (Fairfield et al., 2018). The scatter for 2011 – 2012 samples for all components (Ni, Co and Fe) is much higher however than for other periods. This demonstrates low repeatability of assays (both internally and externally) in 2011–2012, when the assays were completed at Labwork Mining LLP.

Slight bias between routine and duplicate samples was identified from the external duplicates for the 2004 – 2005 and 2006 – 2007 periods. Slight underestimation of nickel (approximately 8.1%) and overestimation of cobalt (around 12.5%) was identified for the 2004 – 2005 period as well as slight overestimation of nickel (on 5.1%) was identified for the 2011 – 2012 period.

Therefore, CSA Global completed additional analyses of the controls which shows that results from the both internal and external control is of acceptable confidence without biases (excluding nickel for the 1960s where there appears to be significant low bias) — underestimation of nickel by 4.8%. Potential underestimation of nickel in historical assays was identified Wardell Armstrong in 2007 (Newall et al., 2007).

Certified reference materials (CRMs) shows that reasonable confidence exist in assays for the 2004 to 2007 period, with no biases or strong scatter outside the ±3 standard deviation (SD) range. Only CRM GBM 300-9 demonstrates overestimation of cobalt for low grades, whereas another CRMs do not demonstrate biases.

Blank assays demonstrate the absent of any contamination in sample preparation:

• Nickel grades in blanks are from 0.0002 to 0.015%

• Cobalt grades in blanks are from 0.0001 to 0.002%.

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Comparison of Channel and Core Samples for Verification Drilling

A total of 761 twin pairs4 of channel and core samples were used to verify core sampling results. Holes were drilled along trenches to compare channel and core samples. Channel samples are more reliable for sampling and assaying of laterite weathering crust compared to drill core which can suffer from excess selectivity of sampling focusing on large pieces of core.

Statistical test and plots showed that correlation of the grades between pits and holes is highly scattered, showing the typical high variability of laterite weathering crust, well-known for other regions and deposits (Mamedov et al., 2010). There is adequate comparability of the data from holes and pits for both to be used in the estimation work.

Based on an assessment of the data, the Competent Person considered the entire dataset to be acceptable for Mineral Resource estimation, with assaying posing moderate risk to the overall confidence of the MRE.

Generally, nickel, cobalt grades and share of ochre (limonite) mineralisation are slightly underestimated in core samples by in the order of5–10%.

9.1.8 Final Data Selection

The database that was available for Mineral Resource estimation is summarised in Table 9.

Table 9: Summary of database used for modelling

Exploration stages 2004– 2006– 2011– Category Area Unit 1960s 2005 2007 2012 2018 Total Core drillholes Left River Side number 1,386 636 693 224 – 2,939 (Main) m 59,169 16,684 17,601 5,590 – 99,044 Core drillholes Right River Side number108––––108 (South) m 6,022 ––––6,022 Core drillholes Right River Side number 118 – – 28 – 146 (Central, North) m 11,789 – – 2,696 14,486 Exploration pits Left River Side number 48 14 – – 62 (Main) m 579 183 – – 761 Hydrogeological Left River Side number – 11 – – 11 holes and pits (Main) m – 270 – – 270 Operational wells Left River Side number––––3131 for natural test (Main) m ––––556.7556.7

4 Intervals of channel samples were not match to core samples and interval compositing was applied for the two batches of samples

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Exploration stages 2004– 2006– 2011– Category Area Unit 1960s 2005 2007 2012 2018 Total Surveys number N/A (vertical holes) Assays in core Left River Side intervals 17,179 8,437 10,064 2,774 – 38,454 drillholes (Main) – with Ni 16,845 8,434 10,037 2,757 – 38,073 – with Co 13,407 8,434 10,002 2,680 – 34,523 – with Fe 55 4,882 3,221 2,772 – 10,930 – composite 286 244 225 15 – 770 (10 components) Assays in core Right River Side intervals 1,917 ––––1,917 drillholes (South) – with Ni 1,374 ––––1,374 –withCo445––––445 –withFe–––––– Assays in core Right River Side intervals 1,622 – – 246 – 1,868 drillholes (Central, North) – with Ni 1,620 – – 237 – 1,857 – with Co 1,477 – – 237 – 1,714 – with Fe – – – 122 – 122 Assays in pits, Ni, Left River Side intervals 387 117 – – 504 Co (Main) – with Ni 375 117 – – 492 – with Co 373 117 – – 490 – with Fe – 82 – – 82 Sections (rasters) Left River Side number 76 115 – 191 (Main) Right River Side number16––––16 (South) Right River Side number 18 – – 10 – 28 (Central, North) Lithological Left River Side intervals – 4,343 3,527 – – 7,870 logging (in (Main) length – 16,494 14,621 – – 31,115 drillhole passports) Lithological Left River Side intervals – 8,442 9,818 2,774 21,034 logging (in (Main), holes length – 11,171 12,430 3,768 – 27,369 lithological Left River Side intervals – 134 – – 134 codes) (Main), pits length – 133 – – 133 Right River Side intervals – – – 149 – 149 (Central) length – – – 217 – 217 Measurements of In number – 35 – – 35 underground hydrogeological level wells In exploration number – 1,146 – 1,146 drillholes

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9.2 Mineral Resource Estimation

Mineral Resources at the Gornostay Project have been reported in accordance with the JORC Code (Seredkin, 2020).

A ‘Mineral Resource’ is a concentration or occurrence of a material of economic interest in or on the earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

The term ‘reasonable prospects for eventual economic extraction’ implies an assessment (albeit preliminary) by the Competent Person in respect of all matters likely to influence the prospect of economic extraction including the approximate mining parameters. In other words, a Mineral Resource is not an inventory of all mineralisation drilled or sampled, regardless of cut-off grade, likely mining dimensions location or continuity. It is a realistic inventory of mineralisation which, under assumed and justifiable technical, economic and development conditions, might, in whole or in part, become economically extractable.

An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to an Ore Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to assume geological and grade (or quality) continuity between points of observation where data and samples are gathered. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Ore Reserve.

All material in mineralised bodies could potentially be leached in the ISR process; however, a minimum thickness of 3 m is required (Seredkin et al., 2018). A cut-off grade-thickness (GT) of 1.0 m% (0.33% at 3 m) was used for Mineral Resource reporting at the Project (Table 10).

For the reporting of GT, a gridded model was generated for each horizon in order to estimate nickel and cobalt GT based on the block models. The vertical extent of the cells of the gridded model depends on the thickness of mineralisation.

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Table 10: Mineral Resource estimation for the Gornostay Project as at 30 March 2021

JORC Bulk classification Volume Mt density Ni Co GT Ni GT Co Ni Co (’000 m³) (t/m³) % % (m%) (m%) (kt) (kt) Left River Side area Indicated 63,423 82.4 1.3 0.57 0.039 4.7 0.31 470.3 32.33 Inferred 14,727 19.1 1.3 0.57 0.043 4.2 0.31 109.2 8.29 Indicated + Inferred 78,150 101.6 1.3 0.57 0.040 4.6 0.31 579.5 40.62 Right River Side area Inferred 3,796 4.9 1.3 0.97 0.033 18.3 0.62 48.0 1.61 Total Indicated 63,423 82.4 1.3 0.57 0.039 4.7 0.31 470.3 32.33 Inferred 18,523 24.1 1.3 0.65 0.041 7.1 0.37 157.2 9.90 TOTAL 81,946 106.5 1.3 0.59 0.040 5.3 0.33 627.6 42.23

• The Mineral Resource has been classified based on the guidelines specified in the JORC Code.

• cut-off GT 1.0 m% Ni

• Minerals Resources within the granted tenements

• Tonnes and grades have been rounded to reflect the relative accuracy and confidence level of the estimate, thus the sum of columns/subtotals may not reflect the individual parts.

Appendix 3 presents the JORC Table 1, with detailed information on the sampling techniques and data, reporting of Exploration Results, and Estimation and Reporting of the Mineral Resource estimates.

The classification level is based upon an assessment of geological understanding of the deposit, geological and mineralisation continuity, drillhole spacing, quality control results, search and interpolation parameters and an analysis of available density information.

The accuracy of the Mineral Resource is communicated through the classification assigned to various parts of the deposit. The Mineral Resource has been classified using a qualitative approach.

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The following approaches were used for Mineral Resource classification:

• Indicated Mineral Resources (Figure 50):

o Regular exploration grid up to 50 – 100 m x 50 – 100 m and continuity of mineralisation

o Ni and Co grades were estimated directly, without any regression formulae

o Hydrogeological conditions were estimated by hydrogeological wells

o ISR amenability was demonstrated by laboratory tests.

• Inferred Mineral Resources (Figure 50, Figure 51):

o Regular exploration grid up to 100 – 400mx400–800m

o Nickel grades were estimated directly; however, cobalt grades were interpolated directly or calculated by regression.

The potential for additional resources is recognised for the Right River Side; these areas with sparse exploration drilling (200 – 400 m x 1,600 – 4,000 m) are shown in Figure 51. These potential areas were identified by preparation of a block model similar to where Mineral Resources were estimated.

CSA Global notes that the currently estimated Mineral Resources for the Gornostay Project makes it one of the largest nickel deposits in Kazakhstan, with the potential to increase in size.

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Mineralisation in in-situ weathering crust Mineralisation in redeposited weathering crust

Right River Right River Side (South) Side (South)

lrtysh River lrtysh River

Left River Left River Side area Side area Left River Left River Side (Main) Side (Main)

Indicated Mineral Resources Inferred Mineral Resources

NORTH km

Figure 49: Mineral Resource classification for southern part of the Gornostay Project Source: CSA Global

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Mineralisation in in-situ weathering crust Mineralisation in redeposited weathering crust

Right River Right River Side (North) Side (North)

Right River Right River Side area Side area

Right River Right River Side (Central) Side (Central)

Inferred Mineral Resources Exploration Target

NORTH

Figure 50: Mineral Resource classification for northern part of the Gornostay Project Source: CSA Global

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The distribution of thicknesses, as well as nickel and cobalt grades composited to the full thickness of the nontronite and limonite zones, is shown in Figure 52 and Figure 53.

40,000 40,000 40,000

35,000 35,000 35,000 30,000 30,000 30,000

30,000 30,000 30,000 <3m <0.33% <0.01% 3-6m 0.33-0.40% 0.01-0.025% 6-9m 0.40-0.50% 0.025-0.05% 9-12m 0.50-0.50% 0.05-0.075% 12-15m 0.60-0.70% 0.075-0.10% 15-21m 0.70-1.0% 0.10-0.15% >21m >1.0% >0.15% 35,000 35,000 35,000

NORTH

Figure 51: Left River Side area deposit thickness, Ni & Co grades calculated across the full thickness of the in situ weathering crust

75,000 75,000 75,000

Thickness Nickel Cobalt <3 m <0.33% <0.01% 3 - 6 m 0.33-0.40% 0.01-0.025% 6 - 9 m 0.40-0.50% 0.025-0.05% 9 - 12 m 0.50-0.60% 0.05-0.075% 72,500 12 - 15m 72,500 0.60-0.70% 72,500 0.075-0.10% 15 - 21 m 0.70-1.0% 0.10-0.15% >21 m >1.0% >0.15% 35,000 35,000 32,500 35,000 32,500 32,500 01 2 4 km NORTH

Figure 52: Gornostay Right River Side area deposit thickness, Ni & Co grades calculated across the full thickness of the in situ weathering crust

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The Scoping Study was focused on Mineral Resources located on the Left River Side where hydrogeological and hydrometallurgical information is available.

Mineral Resources inside tenement on the Left River Side area used for cash flow model preparation are shown in the Table 11.

Table 11: Mineral Resources of Left River Side area, inside tenement held by KazNickel

Bulk JORC classification Volume Tonnage density Ni Co GT Ni GT Co Ni Co (’000 m3) (Mt) (t/m3) % % m% m% (kt) (kt) Left River Side area Indicated 63,423 82.4 1.3 0.57 0.039 4.7 0.31 470.3 32.33 Inferred 14,727 19.1 1.3 0.57 0.043 4.2 0.31 109.2 8.29 Indicated + Inferred 78,150 101.6 1.3 0.57 0.040 4.6 0.31 579.5 40.62 cut-off 1.0 m% Ni GT

The potential for additional resources is recognised for the Right River Side; these areas with sparse exploration drilling (200 – 400 m x 1,600 – 4,000 m) as shown in Figure 50, Figure 51, Figure 52, and Figure 53. These potential areas were identified by preparation of a block model similar to where Mineral Resources were estimated.

CSA Global notes that the currently estimated Mineral Resources for the Gornostay Project makes it one of the largest nickel deposits in Kazakhstan, with the potential to increase in size.

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10 METALLURGICAL TESTS AND ISR PILOT WORK

10.1 Rock Composition and Key Factors for Leaching

The chemical and mineralogical composition of weathering crusts is described in Section 7.1.2 and Table 6 above.

Acid leaching has been identified as the most appropriate method for ISR of nickel and cobalt at the Gornostay Project. This being the case, any minerals that might consume acid and reduce leaching effectiveness are important to understand. Carbonate minerals are the most common acid consuming mineral and carbonate are common product of the serpentinisation process of ultramafic rocks that are the precursors of the laterites hosting nickel and cobalt at Gornostay. Therefore, the distribution of carbonate is an important parameter for estimation of Mineral Resources. The most unfavourable carbonate for acid ISR is calcite, whereas the presence of dolomite and magnesite are not as critical. CaO can be used as a readily measured proxy for estimation of carbonate grades, which shows the upper limit of carbonate effect (some CaO is in dolomite/ankerite which is not critical for acid leaching).

Experience from ISR operations at uranium deposits shows that mineralisation with associated with calcite carbonate grades <0.3% CaO does not require special actions with regard to acidic ISR. Mineralisation with calcite carbonate from 0.3% – 1% CaO requires special acidification conditions, which suppresses of gas formation as the acid reacts with the calcite (producing CO2). Mineralisation with calcite carbonate grades from 1% – 2% CaO is borderline for acidic ISR because although part of the mineralisation may be leached by acid using special acidification conditions others parts cannot be leached due to gas colmatation decreasing the permeability of the rock (depending on the size and morphology of carbonates). A calcite carbonate grade of 2% CaO is regarded as the upper limit for acid ISR (though carbonate grades may be higher for dolomite).

A summary of the carbonate grades at the Gornostay Project is provided below:

• The carbonate grades in redeposited weathering crust vary from 0.2% – 10.9% (average 1.76%). 95% of samples contain carbonate >0.3% and 20% samples contain carbonate >2%. The high grades of carbonate in redeposited crust is mainly due to location of this mineralisation type on limestone substrates (Figure 51, Figure 31). Mineralisation in redeposited weathering crust is composed 12% from total Mineral Resources (Seredkin, 2019), so mineralisation potentially unfavourable for ISR is composed only 2.4%.

• The carbonate grades in the ochre zone vary from 0.4% to 2.3% (average 0.6%). All samples contain carbonate >0.3% and 7% single samples contain carbonate >2%. Higher carbonate grade will not affect to ISR most probably due to sparse distribution as well as low share of ochre mineralisation (Seredkin, 2019).

• The carbonate grades in the nontronite zone are from 0.02% to 12.9% (average 0.8%). 97% samples contain carbonate >0.3% and 5% samples contain carbonate >2%. Higher carbonate grades in nontronite zone are mostly dependent with zones of listvenites where dolomite/ankerite predominates over calcite usually.

The distribution of carbonate grades is shown in Figure 51.

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Mineralisation in redeposited weathering crust Mineralisation in in-situ weathering crust In-situ weathering crust

CO2 <0.3%

CO2 0.3-1%

CO2 1-2%

CO2 >2%

Left River Side ares tenement

NORTH

Figure 51: Distribution of carbonates at Gornostay Project (Left River Side area)

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10.2 Laboratory Hydrometallurgical Investigations for In Situ Recovery

The most important properties in relation to hydrometallurgical processes are recovery of useful components, acid consumption, pH and redox potential (Eh). Other metallurgical properties depend on these parameters.

10.2.1 Preliminary Laboratory Tests

Laboratory investigations for ISR were carried out on a composite metallurgical sample taken from wells of the ISR field cluster (Table 12). The composite sample was prepared from the initial samples after crushing to –2 mm.

Table 12: Intervals of sampling for composite metallurgical sample

Well From To Ni Co (%) (%) O-1 2 11 0.67 0.032 Z-16 3.3 6.9 N/A N/A Z-15 7.3 9.9 0.57 0.024 Z-15 9.9 10.5 0.25 0.015 O-5 4.9 9.7 0.42 0.020 O-2 6.2 10.8 0.42 0.025 O-3 3 6.3 0.70 0.042 O-4 3.9 5 0.54 0.018 O-6 4.8 5.5 0.92 0.064 O-1 6 9.8 0.67 0.032 Composite sample 0.561 0.029

Source: Zhatkanbaev, 2019

Agitation leaching was used to identify the most suitable composition of solutions for further filtration tests. Agitation leaching returns the “maximum” recovery of metal in certain conditions.

All agitation leaching tests were completed in the laboratory of the Institute of Polymer Materials & Technology. The chemical used for these tests are well-known from previous investigations (e.g. patent No. 2006115189, see Grebnev et al., 2011) where leaching liquors comprise different combinations of

• Sulphuric acid (H2SO4) for leaching

• Reducing components for control of Eh (sulphamic acid — NH2SO2OH, thiourea —

CS(NH2)2, and Urea — CO(NH)2)

• Fluorine or chlorine reagents for activation kinetics of reactions (sodium chloride — NaCl,

ammonium hydrogen fluoride — NH4F*HF, and ammonium chloride — NH4Cl)

Additionally, a surfactant was added to leaching solutions. Surfactants are used for increasing the wettability of the surface of grains and increasing of effective permeability of rocks. However,

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10.2.2 Agitation Leaching Tests With Different Lixiviants

Agitation leaching tests by different lixiviants were completed using the following parameters: L:S ratio = 3 for leaching solutions, and L:S ratio = 2 for following washing by water. The total duration of the tests is 24 hours

The best result was obtained from the agitation leaching was from using sulphuric acid and thiourea. However the the most likely favourable lixiviant agent sulphurous acid (H2SO3) or sulphur dioxide (SO2) was not used for agitation leaching tests (Seredkin and Savenya, 2019). However, results from other work lead the Company to assess H2SO3. Description of these tests with sulphurous acid as lixiviant is provided below. KazNickel started use sulphurous acid for pilot operation in September 2019 (10.3.3).

Nickel recovery reaches 90% in both tests (Table 13), and leaching dynamic is close to linear. Cobalt was not assayed in the initial sample and cakes. Recovery of aluminium and iron reaches 70 – 90% due to using highly concentrated sulphuric acid for tests. Recovery of silica is only 14 – 35%.

Table 13: Results of agitation leaching tests for measurement of maximum level of metal extraction

Sample 1

Test Weight (g) Parameters Ni Co Fe2O3 Al2O3 SiO2 MgO pH Eh Sample 25 wt% 0.73 23.04 8.59 30.09 0.68 Cake 12.6 wt% 0.14 13.81 2.13 51.72 0.06 Recovery % 91% 70% 88% 14% 96%

Dynamic of recovery based pregnant solution normalised to cake L/S (based Dynamic on leach of test solution) Parameters Ni Co Fe Al Si Mg pH Eh Stage 1 3 % 19% 17% 14% 25% Stage 2 6 % 52% 36% 21% 38% Stage 3 9 % 68% 53% 44% 62% Stage 4 12 % 91% 70% 88% 96%

Sample 2

Test Weight (g) Parameters Ni Co Fe2O3 Al2O3 SiO2 MgO pH Eh Sample 25 wt% 0.73 23.04 8.59 30.09 0.68 Cake 11.6 0.10 12.62 1.40 42.22 Recovery % 93% 75% 92% 35%

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Dynamic of recovery based pregnant solution normalised to cake L/S (based Dynamic on leach of test solution) Parameters Ni Co Fe Al Si Mg pH Eh Stage 1 3 24% 18% 10% 24% Stage 2 6 50% 35% 31% 39% Stage 3 9 69% 52% 52% 65% Stage 4 12 92% 70% 94% 101%

Source of initial data: Mamytbekov, 2019

10.2.3 Filtration Leaching Laboratory Test

This section is prepared based on the report and initial information provided in (Mamytbekov, 2019)

A filtration leaching test is more representative for the ISR process, but the duration of filtration tests is much longer than for agitation leaching tests.

The filtration leaching test was completed on the same sample material as the agitation leaching tests. Filtration leaching test was completed in four stages. The duration of each stage was three days (total duration of test 12 days). The L:S ratio = 1 for each stage. Total L:S ratio = 4. Results of filtration tests are shown in Table 14.

Table 14: Result of filtration leaching tests

Weight

Test (g) Parameters Ni Fe2O3 Al2O3 SiO2 MgO Sample 100 wt% 0.73 23.04 8.59 30.09 0.68 Cake 86.1 0.53 17.12 4.46 26.20 0.36 Stage 1 1 % 6% 9% 15% 15% Stage 2 2 % 15% 17% 32% 30% Stage 3 3 % 28% 27% 48% 43% Stage 4 4 % 37% 36% 55% 54% Recovery % 37% 36% 55% 25% 54%

Source of initial data: Mamytbekov, 2019

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The achieved recovery of nickel is 37% for L:S ratio = 4 and may reach up to 80% for L:S ratio = 10 – 12. Recovery of other components are also high (Figure 52).

100% 90% 80% 70%

y 60% er v 50%

Reco 40% 30% 20% 10% 0% 01234567891011 Liquid to Solid ratio Ni Fe AI Mg

Figure 52: Results of filtration leaching

10.2.4 Reagent Consumption

Sulphuric acid and thiourea consumption for different time durations is shown in Table 15 for sulphuric acid concentration = 100 g/L and thiourea concentration = 15 g/L, L:S ratio = 5.

Estimation of sulphuric acid and thiourea consumption for 70% nickel recovery (eight days) shows

345 kg H2SO4/t ore and 375 kg CH4N2S/t ore.

Table 15: Acid and thiourea consumption from time of leaching in agitation tests:

Sulphuric acid Thiourea

(H2SO4) consumption

NN Time consumption (CH4N2S) (hours) (kg/t ore) (kg/t ore) 1 2 18 22 2 206143 3 265443 4 447986 sulphuric acid (H2SO4) 100 g/L, thiourea (CH4N2S) 15 g/L, L:S ratio = 5 Source: Zhatkanbaev, 2019

Acid consumption measured for agitation leaching tests is as follows:

• Sample 1: 260.4 kg/t for nickel recovery 91%

• Sample 2: 279.6 kg/t for nickel recovery 92%.

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10.2.5 Leaching by Sulphurous Acid or Sulphur Dioxide

The lixiviants to be used by KazNickel are complex:

• Sulphuric acid is required for leaching of nickel and cobalt;

• Thiourea is required to control the Eh of solution for reducing of Fe3+ grades which suppresses sorption of nickel on resin and leads to increase of acid consumption;

• Sodium chloride and/or hydrochloric acid are required for more intense kinetics of reactions; and

• Surfactant is required for increasing of effective permeability.

The cost of leaching by complex solutions is relatively high, though when the CAPEX of HPAL plants are considered, the attraction of relatively low CAPEX ISR approaches become apparent. The Scoping Study investigated the option with using sulphuric acid as a lixiviant (Seredkin et al., 2020) and demonstrated that this approach had negative economic outcomes compared to sulphurous acid leaching.

The Company has recognised that sulphurous acid is provides an important alternate to lixiviants based on sulphuric acid for the following reasons:

• Sulphurous acid is a reducing reagent and additional reagents such as expensive thiourea are not required for leaching

• Sulphurous acid is weaker acid than sulphuric acid and leaching of nickel and cobalt may be at pH 3 – 4 instead pH 1 for sulphuric acid. The working pH ranges of resin Lewatit TP-207 (“TP-207”) (used for selective sorption of nickel and cobalt) is from 2 to 12. More detail information see below (Section 12.2.1) and in the Scoping Study (Seredkin et., 2020)

Comparison of results of leaching tests for lixiviants based on sulphurous acid and sulphuric acid is shown in Figure 53 (Grebnev et al., 2011).

Lixiviants based on sulphuric acid shown in Figure 53 consist of mixture of sulphuric acid, reducing and fluorine reagents as well as surfactant and are very close in composition to lixiviants used by KazNickel for tests. So, the results of comparison based on Figure 53 may be used for correction of KazNickel results to ultimately inform the economic assessment of the Project.

Recovery of nickel by sulphurous acid is 15% higher (from 9 to 28%) than by sulphuric acid. Recovery of cobalt by sulphurous acid is 22% higher (from 12 to 35%) than by sulphuric acid. Recovery of iron by sulphurous acid is less for pH 2.5 – 4.0 (target for ISR process) than by sulphuric acid. Consumption of sulphurous acid is lower than sulphuric acid at 133 kg/t (from 121 to 140 kg/t) (Figure 54).

Solutions based on sulphurous acid demonstrated the best parameters for leaching of nickel and cobalt in the ISR process.

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A mixture of sulphurous and sulphuric acids can be used for this process also. This is important because sulphuric acid will react with Fe3+ and transform to sulphuric acid during the ISR process by the following reaction:

2H2SO3 + 2Fe2O3 -> 2H2SO4 + 4FeO

100% 90% 80% 70%

y 60% er v 50%

Reco 40% 30% 20% 10% 0% 1.0 1.5 2.5 3.0 4.0 4.5 5.0 pH Solutions based on Sulphurous acid Ni Co Fe Al L/S Solutions based on Sulphuric acid Ni Co Fe Al

Figure 53: Comparison of leaching tests by sulphurous acid versus sulphuric acid — recovery of metals (based on Grebnev et al., 2011)

600

500 /t g 400

300 mption, k u

200 Acid cons 100

0 1.0 1.5 2.5 3.0 4.0 4.5 5.0 pH

Solutions based on Sulphurous acid Solutions based on Sulphuric acid

Figure 54: Comparison of leaching tests by sulphurous acid versus sulphuric acid — acid consumption (based on Grebnev et al., 2011)

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10.3 Pilot ISR Operation

10.3.1 Location and Construction of Pilot ISR Polygon

KazNickel started construction of a polygon for a pilot ISR operation in 2018. The location and design of the pilot polygon is shown in Figure 55 and Figure 56 respectively. The KazNickel team constructed supporting infrastructure for the ISR pilot test (Figure 57, Photo 8) including:

• Household and administrative camps.

• Wellfield polygon including pipes, injection and pumping wells.

• Pilot plant in a large hangar-style building.

• Wellhouse with all measurement tools in the pilot plant shed.

• Acid reservoirs.

• Barren and pregnant solutions ponds.

• High-voltage electrical powerline and substation.

• Unpaved road from the pilot polygon to paved Kurchatov — Semey road.

All operational wells were constructed above the water table or in the “dry” zone outside the horizon of fractured serpentinite (more detail is provided in Section 8). Hydrogeological wells G1, G2, G3, G5 are used for raising the water table. More detailed information is provided in Section 10.3.2.

Additional pumping wells were drilled in end-2019 and in 2020 for installing filters below raised water table (Figure 55). Cells with pumping wells dO10, dO11, dO12 was used for ISR pilot test (Figure 55). Hydrogeological investigations in hydrogeological Cluster 1, Cluster 2, single hydrogeological wells G05, G06, G07 were used for identification raised water table which was identified on the depth from 18 to 27 m from surface.

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Figure 55: Location of the pilot operation block

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Figure 56: Gornostay Pilot operation block Note: Black wells are operational, purple — filters, orange wells are for monitoring, red holes are exploration, green bodies — in situ mineralisation, orange bodies — relocated WC mineralisation. Water level is approximate without taking account of “dry” zones without fractured serpentinites. Source: KazNickel database, 2019; Kantbekuly, 2019, 2020

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Figure 57: Pilot operation ISR polygons — wellfield and plant (base imagery from GoogleEarth dated September 2019)

Photo 8: Photos from pilot ISR operation polygon (April and November 2019)

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The principal components of the pilot plant are as follows (Figure 58, Photo 9):

• An acidification block, where barren solutions are mixed with sulphuric acid from external acid storage.

• Special block designed by KazNickel where sulphuric acid is transformed to sulphurous acid — more detailed information see the Scoping Study (Seredkin et al., 2020).

• Wellfield, where leaching solutions are distributed via polypipes to each injection well, and pregnant solutions are collected from each pumping (extraction) well.

• Pregnant solution pond (outside pilot plant shed) where suspended fine solids are cleaned from the pregnant solutions.

• Sorption columns — ion exchange (IX) block. These columns work in a rotation regime — two columns are in sorption and one column (the first from the line) is in the desorption regime with subsequent washing and transferral to the end of the line. This is possible without physically moving columns using special connections of tubing.

• Barren solution pond (outside pilot plant shed) where any suspended solids are cleaned from the pregnant solutions following acidification.

• Eluate after desorption is purified from impurity components — aluminium, iron, silica.

• Precipitation and filtration using a filter-press with production of Mg-Ni or Co-Mg-Ni hydroxides.

barren solutions desorbate pregnant solutions solution mn mn mn mn wellhouse barren u u u u solutions pond col col col col rotation sorption sorption sorption nant tions g u pre sol

pregnant solutions pregnant solution s acid tions u

u pond ro u sol

neutralisation & g lph

punication u leaching solution pilot plant shed ith s leachin w

barren solutions filter press cavitation block acidification block

hydroxide sulphuric concentrate acid

from pumping well to injection wells acid storage

Figure 58: Principal components of a pilot plant Source: Based on Kantbekuly, 2020

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Photo 9: Photos inside pilot plant for the ISR operation polygon (November 2019) Source: CSA Global

10.3.2 Principal Scheme of Pilot ISR Operation

The principal stages of the ISR operation field test are shown in Figure 59 and described below:

• Stage 1. Raising of water table by pumping water from fault/fractured zones and injection into the operational test block (pers. comm. M. Kantbekuly). A similar approach was used in Mongolia for two ISR tests. This stage commenced at Gornostay at the end of July 2019.

• Stage 2. Continuation of raising the water table by pumping water from fault/fractured zones (wells G1, G2, G3, G5) and injection into the operational test block but adding

leaching reagents and surfactants: 5% sulphuric acid (H2SO4),1–2%hydrochloric acid (HCl) and 1% surfactants. Leaching and surfactant reagents increase effective permeability of weathering crust rocks and injectivity of wells. This stage started at the end of August 2019 (Kantbekuly M., 2020).

• Stage 3. Realising ISR process with sorption of nickel and cobalt to resin in IX pilot plant (Kantbekuly M., 2020). This stage is described in more detail in Section 10.3.3.

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Figure 59: Principal scheme of ISR operation field test (based on description of Kantbekuly M., 2020); legend is on Figure 33

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10.3.3 Pilot ISR operation

Pilot ISR operations were completed as follows:

• August 2019. Drilling hydrogeological wells for supply of water for raising the water table in the operation block. The initial injection rate was4–8m3/hr (Figure 60). Leaching

reagents 5% sulphuric acid (H2SO4), 1% – 2% hydrochloric acid (HCl) and 1% surfactants were added to injected solutions after mid-August with purpose of acidification.

• September 2019. Drilling new hydrogeological wells, increasing capacity of injection of solutions to 12 – 15 m3/hr (Figure 60). Installation of cavitation equipment for production of sulphurous acid. A mixture of sulphuric and sulphurous acid was produced in this period. Eh is the best indicator to measure composition of solutions (Figure 61). Sulphuric acid is an oxidation agent, the typical Eh is more than 550 mV. Sulphurous acid is a reducing agent, the typical Eh is less than 250 mV. Values between 250 mV and 550 mV are typical for a mixture of sulphuric and sulphurous acids. The first nickel in pregnant solutions was 28 mg/L (Figure 62, Table 16). The iron grade is low (Table 16).

• October 2019. Continue test with parameters reached in September 2019.

• November 2019. Improving process with more efficient production of sulphurous acid (Figure 61): Eh 100 – 250 mV, pH >2.5. Nickel grades in pregnant solutions reached up to 73 – 76 mg/L (Figure 62, Table 16). Iron grades were low (Table 16). Comparison of acidification logs and nickel grades in pregnant solutions demonstrate that production of sulphurous acid could influence the intensity of nickel dissolution from rocks to pregnant solutions (Figure 61, Figure 62).

• December 2019. Start of processing of pregnant solutions, increase rate of pumping from 1 m3/hr to 4 m3/hr (Figure 60).

• January 2020. Increase concentration of nickel in pregnant solutions up to 143 mg/L; this value is close to the estimated value needed for industrial-scale production (150 – 250 mg/L). Iron grades raised to 307 mg/L (expected value) in February only (Table 16), whereas cobalt grade remained low at <2 mg/L (Table 16). This is difficult to understand because cobalt should dissolve more actively than nickel in sulphurous acid solutions (see more detail in Section 10.2.5). It may be explained by initial leaching of mineralisation by sulphuric acid which is not favourable for cobalt, and cobalt may redeposit in more persistent phases. Rate of pumping and processing pregnant solutions was raised to almost 7 m3/hr and then deceased to 1.5–2m3/hr (Figure 60) for calibration of parameters for leaching and processing.

• February 2020. Stand by acidification and leaching for technical reasons (Figure 60).

• March 2020. The second pass of acidification for purpose of restoration pilot block parameters (Figure 60).

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• March – April 2020. Standby of acidification and leaching due to some technical issues and planned standby (Figure 60).

• April 2020. The third pass of acidification for purpose of restoration pilot block parameters (Figure 60).

• April – May 2020. Return to leaching of nickel (Figure 60) however parameters of Ni grades in pregnant solutions were not returned to reached in the first pass of leaching in period December-January 2020. Nickel grades is pregnant solutions were from 15 to 65 mg/l, average 39 mg/l (Figure 60). CSA Global considers this difference to the initial parameters is due to the standby period and the several passes of acidification. Ideally the ISR process should be implemented without standby periods, otherwise nickel and iron may be redeposited in new less soluble phases and also reduce the permeability of mineralised horizon and thereby limit effective leaching.

• June – August 2020. Standby pilot block again with weak acidification (Figure 60).

• September 2020. Short period of acidification and leaching with reaching nickel grade in pregnant solutions 57-67 mg/l (average 61 mg/l) (Figure 60).

• October – December 2020. Standby pilot block again (Figure 60).

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/hr 25 3

10 Injection rate, m

0 25 y 20

15 mption l/da u

0 8.0

7.0

/hr6.0 Add cons 2

5.0

rate, m 4.0 g

3.0 mpin

Pu 2.0

1.0

0.0 160

/l 140 g

120

tions, m 100 u

80 nant sol

g 60

Ni in pre 20

0 2020 2020 2020 2020 y y y y st 2019 st 2020 l ne 2020 ar ar u u J u u Ma J April 2020 ugu ugu ember 2020 ember 2019 March 2020 A A v v Jan October 2020 October 2019 Febr December 2020 December 2019 No No September 2020 September 2019 g y y Raising water table Leaching Leaching Stand by Stand by and acidification Stand b Stand b Leachin Acidification Acidification Acidification

Figure 60: Parameters of pilot operation test on the Gonostay in 2019-2020 Source: Based on initial information from Kantbekuly M., 2020

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Eh, mV 600 prevailing of sulphuric acid 500

400 mixture of sulphuric and sulphurous acid

300

200 prevailing of sulphurous acid 100

September October November 0

pH 3.0

2.5

2.0

1.5

1.0

0.5

0 September October November

Figure 61: Preparation leaching solutions with sulphurous acid from sulphuric acid by cavitation Source: Based on initial information from Kantbekuly M., 2020

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160 mixture sulphuric and prevailing of sulphurous acid sulphurous acid 140 143 129 /l g 120

107

tions, m 100 u

nant sol 73.4 g 76.3 60

40 September Nickel in pre Nickel

28.6 20 28.3 28.3

October November December January - February 0

Figure 62: Nickel grades in pregnant solutions from pilot operation ISR block Source: Based on initial information from Kantbekuly M., 2020

Table 16: Composition of pregnant solutions from pilot ISR block

Date of Date of sampling assaying Ni (mg/L) Fe (mg/L) Co (mg/L) 22/09/2019 23/09/2019 28.3 0.5 29/09/2019 30/09/2019 28.6 0.8 11/11/2019 11/11/2019 28.3 0.4 1.77 14/11/2019 15/11/2019 73.4 21/11/2019 21/11/2019 76.3 0.5 1.68 unknown 07/02/2020 107 <0.01 <0.01 129 42.7 0.51 143 307 1.45

Source: Test laboratory for testing products (Semey branch) of National Centre for Expertise and Certification JSC (2019); test laboratory of LLP “Alpha-Lab”, Semey (2020)

10.3.4 Production of Nickel Concentrate

Kaznickel has demonstrated production of nickel concentrate from pregnant solutions (Kantbekuly, 2020):

• Sorption of nickel to resin TP-207. Nickel loading to resin was 2 kg/m3 for columns with ratio height to diameter 1.5 and reached 7.5 kg/m3 for columns with ratio height to diameter 3.7. Sorption was in series consecutive columns

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• Desorption of nickel was after saturation of resin when appear nickel in barren solutions in concentrations comparable with pregnant solutions (Figure 63). Nickel desorption from

resin was completed by sulphuric acid solution 50-100 g/l H2SO4, L:S = 1.2. Nickel grade (Figure 64) in eluate was 1.5 – 2 g/L, up to 3 g/L.

• Resin regeneration was done by alkaline with concentration 40 g/L

• Processing of eluate was in two stages:

o Precipitation of iron and alumina at pH = 4-6

o Precipitation of nickel concentrate at pH = 9 (Figure 64)

• As a result, Kaznickel produced nickel hydroxide with nickel grade from 24 to 49% and magnesium grade from 3 to 11% (Table 17). Calcium and iron grades are less than 1% and other components less than 0.1% (Table 17). Very low cobalt grade (~0.01%) reflects low cobalt grades in pregnant solutions because cobalt and nickel are precipitated together to hydroxide concentrate at pH = 9. This feature may be explained by used sulphuric acid for ISR instead sulphurous acid (cavitation process was not used after February 2020).

70 desorption desorption desorption desorption desorption desorption

50 /l g 40 Ni, m 30

0 14/04/20 18/04/20 23/04/20 28/04/20 03/05/20 08/05/20 13/05/20 18/05/20 23/05/20 28/05/20 02/09/20

Ni in pregnant solutions Ni in barren solutions

Figure 63: Nickel grades in pregnant and barren solutions (mg/l) Source: Based on initial information from Kantbekuly M., 2020

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Figure 64: Production of nickel-rich eluate and nickel hydroxide Photo provided by Kantbekuly M., 2020

Table 17: Composition of nickel hydroxide concentrate

As Ca Cd Co Cr Cu Mg Mn Fe Ni Pb Zn % %%%%%%%%% %% 0.010 0.680 0.022 0.008 0.051 <0.001 11.08 0.007 0.23 37.75 0.054 0.149 0.010 0.780 0.026 0.009 0.066 <0.001 9.50 0.011 0.39 24.50 0.036 0.111 0.023 0.578 0.041 0.011 0.077 N/A 2.62 0.011 0.26 48.48 0.014 0.030

Source: Test laboratory for testing products (Semey branch) of National Centre for Expertise and Certification JSC (February 2020)

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10.3.5 Results and discussion of pilot testwork

Summary parameters of pilot test are summarised in the Table 18.

Table 18: Summary parameters of pilot test

Target Parameters Pilot cell parameters Tonnage (mineralisation) 12,382 Total tonnage 20,205 Dilution, % 163 Ni % 0.40 Ni t 80.7 Co % 0.024 Co t 4.95 Acid consumption, t 1,564 Leaching solutions, m3 135,816 L/S (injected), m3/t 6.72 12 Pregnant solutions, m3 6,050 L/S (pumped), m3/t 0.30 12 Solution imbalance 22 1 Ni m/L (average) 84.3 233 Ni m/L (maximum) 143 Co m/L (average) N/A 15 Ni in pregnant solutions, kg 510 Ni recovery, % 0.6 70 Acid consumption, kg/t 77.4 300 Acid consumption, kg/kg Ni 3,065 88

Source: Parameters estimated based on initial data provided by Kantbekuly M., 2020; target parameters are based on Scoping Study (Seredkin, 2020); grade-tonnage parameters for pilot cell estimated based on resource model and location of filters in production wells

The pilot test work to date has demonstrated the possibility of ISR of nickel, however interim parameters are far from target parameters due to various aspects of work completed so far in the pilot testing:

• Pilot testing was completed with a strong imbalance, with the volume of injected solutions substantially more than extracted solutions (Table 18). The imbalance was largely due to the necessity of starting the pilot testing in well field block with almost no groundwater. This required 3 months of injection with no matching extraction at the start of the pilot testing. As a result, L/S estimated based on injected and extracted solutions is very different from the target balanced situation.

• The Company and CSA Global note that a balance between injected and extracted solutions is very important for successful ISR operations, and that the pilot result is not considered typical of the planned operational balance. For the ongoing operational phases when production is scaled up and continuous, the L/S ratio is expected to be in balance on average.

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• ISR pilot activity was intermittent; with leaching alternating with standby periods. At least, four cycles of acidification / leaching were realised last year. As a result, nickel grades in pregnant solutions are much less than target due to redeposited nickel in more persistent phases and blockage of mineralised horizon. Acid consumption is also higher than expected due to the multiple stages of acidification.

• High acid consumption estimated on the basis of nickel production as well as very low nickel recovery in later pregnant solutions is large interpreted to be due to the large imbalance between injected and extracted solutions. CSA Global concludes that the compromised testing regime most probably lead to redeposition of nickel in the productive horizon.

• The absence of cobalt in the hydroxide concentrate and most probably in pregnant solutions is interpreted to be due to the initial use of sulphuric acid as a lixiviant rather than sulphurous acid. The initial use of sulphuric acid delivered low nickel in solution, and prompted the switch to sulphurous acid, which was delivering satisfactory results until the disruption of the testwork by the pandemic.

• Incomplete data collection during the disrupted testwork has limited the geometallurgical parameters that can be derived from the work.

10.3.6 Monitoring of Pilot In Situ Recovery Operations

Kaznickel tests groundwater composition on a regular basis. The last assays of groundwater from monitoring wells around pilot ISR block are shown in Table 19.

Composition of the groundwater around the ISR pilot block is no different to the natural composition, hence no contamination of groundwater by leaching solutions has occurred.

Table 19: Composition of groundwater from monitoring wells around pilot ISR block

Parameter Sample 1 Sample 2 Sample 3 Ph 7.3 7.3 7.5 2- Sulphate ion SO4 mg/L 729.6 1,104.0 2,548.8 Chloride mg/L 1,330.0 42.0 2,065.0 Hydrocarbonate mg/L 341.6 not detected 122.0 2- Carbonate ion CO3 mg/L not detected not detected not detected Oil products mg/L 1.3 3.8 0.1 Cyanide mg/L not detected not detected not detected Thiocyanate mg/L not detected not detected not detected

Source: Test laboratory for testing products (Semey branch) of National centre for expertise and certification JSC (February 2020)

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10.3.7 Conclusions from Pilot In Situ Recovery testwork

CSA Global has reviewed the data from the Gornostay ISR pilot testwork and concludes that Kaznickel has demonstrated the following:

• The possibility of successful ISR of nickel-cobalt mineralisation with production of nickel hydroxide.

• Geometallurgical parameters from the pilot operation are not representative due to the imbalanced leaching and the substantial disruption to the work by multiple, long, shutdowns.

• Importantly, the nickel grades in pregnant solutions were comparable to the levels predicted from laboratory tests and analogous projects.

• Cobalt grade remains low in pregnant solutions. Kaznickel is focused on nickel production, but cobalt potentially adds importance co-product credits and Kaznickel will seek to understand why there are low grades of cobalt in pregnant solutions from the pilot testwork. The most probable explanation is that the initial leaching by sulphuric acid was not favourable for extracting cobalt. These interim results should not be considered definitive.

• Nickel loading to resin in the pilot processing was close to theoretical maximum values, and the nickel grade in eluate reached 3 g/L.

• Quite high-quality nickel hydroxide with nickel grade up to 48% was successfully produced by the pilot plant.

• Groundwater monitoring in observation wells around the pilot ISR block demonstrated that no contamination of groundwater by leaching and/or pregnant solutions occurred.

Comments and recommendations by CSA Global regarding the ISR operation field test are provided below. In order to yield the most meaningful ISR test results and reduce environmental risks:

• Hydrogeological investigations remain limited; however, the understanding of hydrogeological conditions of the Gornostay Project is improving.

• More detailed hydrogeological investigations are strongly recommended for properly planning and executing field tests. These investigations include cluster pumping tests in fault zones and zones with mineralisation, and flowmetry of all hydrogeological wells for understanding of the variability of permeability in the mineralised horizons.

• Special investigations of the natural flow of groundwater, especially in faults and fracture zones that cross the Irtysh River Valley are needed to ensure that there are no losses of pregnant and leaching solutions, especially to Irtysh River.

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• Preparation of a hydrodynamic model for the operational test area, because an increasing water table in selected areas is likely to lead to flow of water from these areas into adjacent areas (especially when using surfactants).

• Properly designed filtration laboratory tests are recommended before the ISR field test or concurrently if the ISR test has commenced at the Project. This is especially important to investigate the influence of surfactants on the effective permeability influence on the hydrogeological regime of the deposit including the natural flow of groundwater.

• CSA Global notes that drilling multiple monitoring wells (with filter installation) to solid serpentinite bedrock (depth up to 70 m) are required around all operational blocks, and also in the nearest fault/fractured zones, especially below the flow of groundwater.

• Ongoing pilot testwork must be completed on a new well field block to provide critical parameters for PFS studies, comprising:

o Selection of a well block in a zone with continuous groundwater horizon to allow balanced operation of injection and pumped solutions.

o Construction of operational wells with filters set above water table in the injection wells, and below the water table in extraction wells.

o Comprehensive sampling and analysis of Ni, Co, Fe, SiO2,Al2O3, MgO, CaO, CO2, Cu, Zn and Sc of the in situ composition of mineralised zones in the operational wells. The variability of the composition of the weathering crust is high and grade-tonnage estimation for the operational test block is strongly recommended to assist in estimation of geometallurgical parameters.

o Continuous ISR test using sulphurous acid as the lixiviant.

o Regular measurements (at least on daily basis) of the volumes of solutions injected to injection holes and pumped from extraction holes, consumption of all reagents, composition of leaching, pregnant and barren solutions. Measurements of pH and Eh is mandatory, recommended on hourly basis. Composition of pregnant and barren solutions as well as in eluate must be measured on daily basis on all components: Ni, Co, Fe, Al, Si, Mn, Mg. Zn. Cu and Sc are recommended also.

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10.4 Other Hydrometallurgical Investigations for In Situ Recovery

While novel, the application of hydrometallurgical processing of lateritic nickel-cobalt ores is not without precedent. Heap leaching is a close analogy to ISR, and has been successfully demonstrated at Murrin Murrin in Western Australia, in the Urals, and elsewhere in Kazakhstan.

10.4.1 Industrial Analogues

The heap leach process is the closest analogue to ISR. Heap leaching is used for mining at the Murrin Murrin Project, Western Australia (ALTA 2018), for example Photo 10.

Photo 10: Mining site of the Murrin Murrin Project, Western Australia Source: ALTA 2018

Heap leaching of low-grade nickel-cobalt mineralisation was applied in the Murrin Murrin Project commercially to produce 2,000 t per annum nickel (not currently operating). Heap leaching of ore was slower but proved to be feasible. The high iron content in pregnant solutions was the biggest issue with the heap leaching process (ALTA 2018).

The initial targets of 75 – 80% Ni and Co recovery were reduced to 70 – 72% based on findings from the demonstration heaps. However, this is compensated by an increased leaching rate. Any +100 mm material was removed, then the ore was agglomerated and stacked to a height of 4 m. Mineralisation contained 26% moisture, 1.2% Ni, 0.1% Co and 24.7% Fe (ALTA 2018).

A series of probes were inserted into the ore heap to assess the degree of saturation, temperature and oxidation-reduction potential (ORP) of the mineralised heap, and to ensure that the heap remained geotechnically stable. The ore proved to be geotechnically stable and it was possible to heap leach at application rates of5–20L/hr/m2 without saturating the heap (ALTA 2018).

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Nickel recovery is 70% for a L:S ratio of 12 m3/t. Acid consumption is 420 kg/t (Figure 65).

MURRIN MURRIN ORE HEAP LEACHING (Ref: Minara presentation, ALTA 2009)

100% 500 90% 450 80% Acid Kg/t 400 /t) 70% Actual Recov. 350 g 60% Predicted Recov. 300 tion (%) u

50% 250 mption (k u 40% 200 30% 150 Ni Dissol

20% 100 Acid Cons 10% 50 0% 0 0 5 10 15 20 25 30 35 Solution Application (kL/t)

Actual recoveryPredicted recovery Total Acid Cons., kg/t

Figure 65: Geometallurgical parameters of heap leaching on the Murrin Murrin Project Source: Short course, 2019 — initially from Minara presentation, ALTA, 2009

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10.4.2 Field Operation In Situ Recovery Tests on Other Projects

Successful field pilot ISR tests were completed at several Urals deposits including: Tochilnogorskoe ([REDACTED] group), Kungurskoye and Rogozhinskoe (Cheremshanskaya group) (Figure 66) (Seredkin et al., 2016). Leaching of nickel-cobalt mineralisation was completed by Sulphuric acid with concentration up to 50 – 100 g/L. The recovery of nickel was up to 70 – 75% (Seredkin et al., 2016)

Figure 66: Field operation test on the Rogozhinsky deposit, S. Urals Source: https://uralmines.ru

The first ISR pilot test using sulphurous acid was completed on the Ekibastuz-Shiderty deposit in Kazakhstan in 2016 – 2017 (Figure 67 to Figure 69) (Seredkin et al., 2019; Seredkin et al., 2018).

Tests by sulphurous acid are complicated and expensive because sulphurous acid is prepared from sulphuric dioxide gas supplied in balloons. Sulphuric dioxide gas is used for preserving of vegetables and fruits and never was used for leaching at the industrial-scale. However, sulphurous acid may be produced directly on site by a special plant.

Results of laboratory and natural pilot ISR tests on the Ekibastuz-Shiderty deposit were described in the paper Seredkin et al., 2020 (ALTA-2020).

In laboratory column tests with bulk samples leached extraction of Ni from limonite mineralisation is 97% in agitation tests and 80% in column filtration tests, and from nontronite mineralisation is 95% in agitation tests and 43% in column filtration tests (tests were incomplete). Leaching of Ni and Co from nontronite mineralisation continued at a steady rate. An advantage of higher acid concentration is higher

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Leaching tests of fresh serpentinites were completed due to infiltration of leaching/pregnant solutions through serpentinites below the weathering crust to water table level. The test for leaching of serpentinites was carried for 970 days: Ni recovery was 18%, and sulphur acid consumption 280 kg/t. Approximately 50% of total volume of serpentinite was altered in the leaching test (Seredkin et al., 2020).

Investigations of ISR amenability showed the following geometallurgical parameters (Seredkin et al., 2020):

• Limonite sample. 1.45% Ni (14.5 kg Ni / t).

o Liquid to Solid = 15

o Ni recovery 82% (recovered 11.89 kg Ni)

o Acid consumption 25 kg acid / kg Ni or 297 kg acid / t mineralisation

• Silicate sample. 0.83% Ni (8.3 kg Ni / t).

o Liquid to Solid = 15

o Ni recovery 62% (recovered 5.146 kg Ni)

o Acid consumption 55 kg acid / kg Ni or 283 kg acid / t mineralisation

Nickel and Cobalt pilot ISR test was by injection of leaching solutions to the wells with large diameter and pumping pregnant solutions from the production central and corner observation wells. The field test cell was tied by a system of plastic pipes and shut-off and control equipment. Pumping was carried out by a Grundfos SQ 2-35 submersible pump with a flow rate of 1.0 – 3.2 m3/hr. Test duration was 2.5 months. Initial sulfurous acid concentration was 50-60 g/l with subsequent decreasing to 15-20 g/l. The acid supply was controlled titrimetrically (Seredkin et al., 2020).

Nickel grades of5–30mg/lwereachieved in the first month, and up to 116 mg/l in the second month of ISR operations. At the first stage, the Fe form was completely bivalent and Fe grade was comparable with Ni grade. The bivalent form of Fe is favourable for Ni and Co sorption on resin TP-207. In the second stage, the proportion of trivalent Fe increased, and the ratio Fe/Ni reached5–6,which is typical for the mature stage of solution evolution (Seredkin et al., 2020).

Liquid to solid ratio reached 0.4 – 0.6 at the termination of the test. The achieved acid consumption was 15 – 20 kg/t of mineralisation. However, accurate estimates are complicated due to the small-scale and incomplete test (Seredkin et al., 2020).

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The pregnant solutions were transferred to sorption and further processing by the following steps (Seredkin et al., 2020):

• Concentration of solutions by IX process with production eluate

• Preparation of solutions to produce of final products (purification of impurities)

• Production of collective Ni and Co final products

• Separation of Ni and Co to produce of individual products.

The following products were obtained on the Ekibastuz-Shiderty ISR test (Seredkin et al., 2020):

• Collective Nickel-Cobalt cathode

• Collective Nickel-Cobalt hydroxide

• Cobalt cathode

• Cobalt chloride

• Nickel cathode

• Nickel carbonate

Figure 67: Operation block in field ISR test on the Ekibastuz-Shiderty project, photo of site Blue arrows — leaching solution; red arrows — pregnant solution. Source: Seredkin et al., 2019 — ALTA, 2019

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Figure 68: General view of field ISR test on the Ekibastuz-Shiderty project, photo of site Source: Seredkin et al., 2019 — ALTA, 2019

Figure 69: Nickel-cobalt cathode produced in ISR pilot test on the Ekibastuz-Shiderty project Source: Seredkin et al., 2018 — MINEX, 2018

10.5 Initial Geometallurgical Parameters for Economic Model

Based on the Gornostay pilot test results described above the following parameters were selected for economic model estimation in the Scoping Study:

• The ISR process is considered without raising the water level in whole deposit, only in local “dry” zones without fractured serpentinites. Raising the water table in the whole deposit requires a huge volume of water and this option should be considered with special investigations. The infiltration mechanism of ISR (above the water table) has been proven at an industrial-scale at the Gagarka, Gumeshevsky and San Manuel deposits.

• Lixiviants based on sulphurous acid.

• Nickel recovery in the ISR process is 70%.

• Cobalt recovery is the ISR process is 75%, 5% higher than nickel (see Figure 53).

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• Sulphurous acid consumption is 290 kg/t. Sulphuric acid consumption was estimated in laboratory agitation leaching tests as 260 kg/t, 280 kg/t and 345 kg/t (average 295 kg/t). Sulphuric acid consumption in the heap leaching process is 420 kg/t. A correction factor from sulphuric acid to sulphurous acid is –30 kg/t, resulting acid consumption is 290 kg/t.

• L:S ratio = 12 based on agitation leaching tests and results of heap leaching.

10.6 Producing Final Product from Pregnant Solutions

Nickel-cobalt hydrometallurgical processing plants have been constructed in Cuba, Australia, Philippines and Papua New Guinea (Fairfield et al., 2018).

Recent development projects with the most modern processing layouts are planned in Australia. These include Ni-Co-Sc Sunrise project (Clean TeQ) in New South Wales, Ni-Co-Sc Sconi Project (Australian Mines) in Queensland, Ni-Co-Sc Flemington Project (Australian Mines) in New South Wales, Sc Nyngan Project (Scandium International Mining Corporation) in New South Wales, and Scandium Owendale Project (Platina) in New South Wales (Fairfield et al., 2018).

10.6.1Product Types and Usage

The specification targets for final nickel and cobalt products are shown in Table 20.

The type of final product depends on consumer requirements; however, nickel in sulphate form is more expensive to produce by approximately 15% than in metallic form, whereas the requirements for purity of product are less onerous in metallic form than in sulphate form.

Some companies produce nickel and cobalt in carbonate products, oxides of nickel and cobalt, nickel-manganese-cobalt products in hydroxide form and others. Final products depend on the demand and cost of these products.

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Table 20: Specification target for nickel and cobalt products

Sulphate specification Class 1 (target products for the Project) Metal specification

Component NiSO4*6H2O CoSO4*7H2O Nickel metal Cobalt metal As per Umicore and AML Source (Alpha Fine Chemicals) LME Nickel Ni wt%/ppm 22.3% – 99.8% 100–1,700 Cobalt Co wt%/ppm 10 20.5% <1,500 99.95% Copper Cu ppm 2 <10 <200 2–100 Iron Fe ppm 5 <10 <200 8–100 Cadmium Cd ppm 2 <5 – 1–50 Zinc Zn ppm 2 <10 <50 10–70 Lead Pb ppm 2 <10 <50 8–100 Aluminium Al ppm 5 – – 10–30 Calcium Ca ppm 5 50–100 – 10–50 Magnesium Mg ppm 5 50–100 – 10–50 Manganese Mn ppm 5 <5 <50 8–100 Carbon C ppm – – <300 50–200 Sulphur S ppm – – <100 10–100 Phosphorus P ppm – – <50 5–10 Silicon Si ppm – – <50 10–30 Arsenic As ppm – – <50 2–7 Antimony Sb ppm – – <50 3–6 Bismuth Bi ppm – – <50 3–5 Tin Sn ppm – – <50 3–5 Potassium K ppm – 50–100 – Sodium Na ppm – 50–100 –

Source: J. Deventer et al., 2019

The target products of the Gornostay Project are nickel and cobalt sulphates: NiSO4*6H2O and

CoSO4*7H2O.

10.6.2 Hydrometallurgical Processing of Solutions for the Gornostay Project

Nickel and cobalt adsorb more strongly onto the imino-diacetic acid (IDA) chelating functional resin such as Lewatit® MonoPlus TP 207 in a dilute sulphuric acid matrix (pH of ≈4) than many other metals (Fairfield et al., 2018). The order of magnitude for loading of divalent metals onto the IDA ion exchange resin is (Fairfield et al., 2018):

Cu2+ >Ni2+ >Co2+ /Zn2+ >Fe2+ >Mn2+ >Ca2+ >Mg2+

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However, in the presence of trivalent cations such as Al3+,Fe3+ and Sc3+, the IDA resin will load these ions before Ni2+ and Co2+ (Fairfield et al., 2018). That is why sulphurous acid is more favourable for leaching nickel and cobalt due to the pH of ≈2–3inpregnant solutions and in reduced conditions (sulphuric acid is a strong oxidant).

Ion exchange resin TP-207 was used for sorption tests for pregnant solutions obtained in agitation leaching tests for mineralisation of the Gornostay Project (Mamytbekov, 2019).

The result of sorption tests is shown in Figure 70 for different ratios of volumes of pregnant solutions and resin. Extraction of nickel to resin from pregnant solutions is from 95 to 99.9%, and recovery of cobalt to resin from pregnant solutions is from 88 to 99.8%. Nickel loading to resin is up to 0.71 kg/t and cobalt up to 0.02 kg/t.

These values are much less than potential loading of nickel to resin (Figure 71) and these results may be explained by a small volume of pregnant solutions. In a commercial processing plant, pregnant solutions will flow through IX columns with resin for maximum loading.

Tests completed by KazNickel demonstrate selective loading of nickel and cobalt to resin TP-207. Extraction of nickel, cobalt, copper, zinc and chromium is more than 80%. Extraction of iron, alumina, magnesium is less than 10%. Iron, alumina, magnesium will return to barren solutions and in mineralised bodies, so concentrations of these components are likely to be stabilised, and consumption of acid may be less than in laboratory leaching tests.

100% 90% 80% 70% y er

v 60% 50% Reco 40% 30% 20% 10% 0% Ni Co Fe Mg Al Cu Mn Zn Cr Volume of pregnant solution, ml 50 75 100 125

Figure 70: Recovery of metals from multi-component pregnant solution to resin TP-207 for different volume of pregnant solution with fixed volume of resin (based on Mamytbekov, 2019)

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55 5,000 mg/l in pregnant solutions 50

45 2,500 mg/l in pregnant solutions ) 3

/m 40 g

35 1,000 mg/l in pregnant solutions

to resin (k 30 g 500 mg/l in pregnant solutions 25

Nickel loadin Nickel 250 mg/l in pregnant solutions 15

10 100 mg/l in pregnant solutions 5

0 0 5101520 Time of sorption

Figure 71: Nickel loading to resin TP-207 from ferrous pregnant solutions (Fe 10 g/L) for different grades of nickel. Source: Jahromi, 2011

The average nickel grade in pregnant solutions in ISR at the Project is around 100 – 300 mg/L, so nickel loading on resin from 5.5 kg/t to 16 kg/t (Figure 71) is expected. These grades of nickel in resin lead to nickel grades in eluate from 2 g/L to 6 g/L with 90% recovery of nickel to eluate, L:S ratio = 2.5.

Increasing the nickel grade in eluate is possible in two ways:

• Saturation of resin by nickel-reach eluate; or

• Sequential fractional desorption carried out by small volumes of desorb solutions.

Both ways are effectively used in the uranium industry.

10.6.3Purification of Nickel-Cobalt Solutions from Iron and Alumina

The simplest and cheapest option for purification of nickel-cobalt solutions by extraction of iron and alumina is lime milk (Alenichev et al., 2013).

Purification of solutions from iron and alumina occurs in the pH range 3 – 4.5, and effectiveness of this process depends on temperature. An increase in temperature contributes to a sharp decrease of residual iron and alumina grades in solutions. Simultaneously, loss of nickel during the precipitation process decreases significantly with increasing temperature (Figure 72) (Alenichev et al., 2013).

Nickel loss can be minimised in purification at pH ≈4 and a temperature of 60°C. Nickel loss at these parameters is less than4–5%(Figure 72) (Alenichev et al., 2013). Also, precipitation of iron and alumina at high temperatures (60 – 80°C) allows reduction of the time of the process and consumption of reagents of up to 13 – 18%.

– III-169 – at e rlinaerqie nsm nutis hr r eea datgso sn Xrsn instead resins IX using of (Deventer advantages several including are precipitation, There or industries. SX some of in required are trillion per parts 10.6.4 solutions nickel-bearing neutralisation of process in alumina and iron of Precipitation 72: Figure IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS PEDXIICMEETPRO’ REPORT PERSON’S COMPETENT III APPENDIX • • • • • • Xrsn r ieyue ormv muiist eylwlvl,tpcly< gL u slwas low as but mg/L, <2 typically levels, low very to impurities remove to used widely are resins IX Components Impurity Other from Solutions Nickel-Cobalt of Purification Nickel losses with precipitant, % Share of precipitated iron, % 100 10 20 30 40 50 60 70 80 90 10 15 20 25 30 35 40 0 5 0 ore lnce ta. 2013 al., et Alenichev Source: 0 246 1234567 1234567 o egn oscmae ihSX. with compared loss reagent Low low very to need levels subsequent streams; the impurity recycle and decreasing large metal for valuable in of efficient co-extraction more minimising whilst is concentrations, IX precipitation, to Relative SX; with compared fire of risk reduced — safety and Health intervention; operator minimal requiring automated, fully be Can footprint; Small engineering; well-known and use of Ease 1 2 3 pH pH 4 5 tal., et 67 I-7 – III-170 – 2019):

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Existing commercial IX resins are limited in their ability to target some impurities from concentrated cobalt and nickel streams. Organic solvents exist that can fill that gap. Combining the functionality of an appropriate organic solvent with the engineering advantages of an IX resin provides industry with an attractive option.

10.6.5 Australian Flowsheets of Processing for Nickel-Cobalt-Scandium Laterite Projects

Processing flowsheets developed during Feasibility Study stages of the nickel-cobalt-scandium Sconi Project and the nickel-cobalt-scandium Sunrise project are shown in Figure 73 and Figure 74 respectively.

Both projects are developed by conventional open pit mining followed by HPAL with subsequent hydrometallurgical processing of solutions using different methodologies as follows:

• Concentration of cobalt and nickel in the flowsheet of the Sconi Project based on sulphide precipitation followed by oxidation and solvent extraction of cobalt from collective solution (Figure 73) (Australian Mines, 2018). A similar flowsheet cannot be used for the Gornostay Project due to low grades of nickel and cobalt in pregnant solutions and required initial pre-concentration of solutions.

• Flowsheet for processing of solutions of the Sunrise project includes an IX stage where resin is used for sorption and followed by desorption of nickel-cobalt solutions (Figure 74) (Fairfield et al., 2018). This methodology allows strong concentrate solutions and is widely used in uranium ISR industry. Part of the Sunrise flowsheet, after the RIP process, can be used for processing of solutions for ISR at the Gornostay Project (Figure 74).

• A flowsheet generally similar to the Clean TeQ flowsheet was developed for the NIWEST heap leaching project (Figure 75). Heap leaching is a close analogue of the ISR process.

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H2SO4 MINED ORE SCANDIUM CRUSHING AND HIGH SCANDIUM Sc2O3 FROM SCONE GRINDING OF PRESSURE SOLVENT PRECIPITATION ORE ACID LEACH EXTRACTION (HPAL) (ScSX)

COBALT SULPHATE CRYSTALLISATION

IRON REMOVAL MIXED PRESSURE SOLVENT CoSO4 (FeR) SULPHIDE OXIDATION LEACH EXTRACTION Steam PRECIPITATE (POX) (SX) Limestone (MSP)

H2S NICKEL SULPHATE CRYSTALLISATION

NiSO4 Figure 73: Principal processing flow sheet developed for the Ni-Co-Sc Sconi Project Source: Australian Mines

Limestone Slurry

Resin-in Pulp Mined Ore Final Neutralisation

Ore Preparation Partial Rejects Neutralisation Scandium Tailings storage & Refinery Evaporation Ponds Scandium cLX Scandium Oxide Pressure Acid Leaching Eluate Neutralisation Power Generation Sulphuric Acid & Impurity & Grid Connection High Pressure Steam Solvent Extraction Cobalt Cobalt Sulphate Solvent Extraction Cobalt Crystallisation Sulphur Sulphuric Acid Plant Nickel Nickel Sulphate Solvent Extraction Nickel Crystallisation

Limestone Limestone Milling & Slurrying Ammonia Ammonium Sulphate Crystallisation Ammonium Sulphate possible use for treatment of solutions after ISR

Figure 74: Principal processing flowsheet developed for the Ni-Co-Sc Sunrise Project Source: Fairfield et al., 2018

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ROM Ni Laterite Ore

Crushing Acid Agglomeration & Stacking Water

Heap LeachSpent Ore Residue Disposal

Acid Fe/Al Residue Heat Regeneration Residue Disposal

Solution Limestone Neutralisation & Fe Residue Fe Removal Residue Disposal

Ni/Co SX

Co Carbonate Co SX Precipitation

Power Co EW

LME Ni Co Carbonate Cathode Product

Figure 75: Principal processing flowsheet developed for the nickel-cobalt NIWEST heap leaching project Source: Short course..., 2019 — initially from Mworx/GME paper, ALTA, 2015

Nickel grades in eluate of the Sunrise project are much higher (Table 21) than potential nickel grades in eluate of the Gornostay Project; however, saturation of resin by nickel-rich eluate and following fractional desorption allows a strong increase in nickel grades in eluate at the Gornostay Project (see Section 10.6.2).

Fractional desorption was developed in the uranium industry using desorption U-columns (Photo 11). Clean TeQ has used a similar approach for the Sunrise Project (see details in Section 10.6.6).

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Table 21: Composition of eluate of Sunrise project

Sunrise solutions after desorption Synthetic Ore-based Component eluate eluate (mg/L) Fairfield et al., 2018 Ni 41,557 31,014 Co 13,381 3,149 Al 536 2,953 Ca 568 668 Cr 78 182 Cu 349 41 Fe 148 4,230 Mg 354 350 Mn 2,113 718 Si N/A 95 Zn 2,922 1,150

H2SO4 10,000 47,000

Photo 11: Desorption U-columns at one of the uranium mines in South Kazakhstan

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10.6.6 Clean TeQ Testwork for Nickel-Cobalt-Scandium Sunrise Project

The work published by Clean Teq regarding their Sunrise Project provides an important template for how pregnant solutions can be processed.

Clean TeQ uses a proprietary ion exchange technology (Clean-iX®) for extraction and purification of metals and for industrial water treatment (Fairfield et al., 2018). The development of the base technology for the Clean-iX® process was developed out of the All Russian Research Institute of Chemical Technology (ARRICT) over a period of 40 years, with further enhancement by Clean TeQ.

ARRICT was founded in April 1951 in Moscow, Russia, with the basic themes of research connected with the creation and development of chemical technologies for the processing of uranium and rare-metal ores and production of nuclear-pure structural materials. It carries out a complete cycle of scientific research and development works aimed at creating profitable highly effective technologies for the production of uranium and nuclear-pure metals (lithium, beryllium, zirconium, hafnium, tantalum, niobium, etc.) for the atomic industry and other industries. The technologies have been adapted for processing gold-bearing, molybdenum, tungsten and other ores. ARRICT’s continuous ion exchange technology for extracting metals from leached slurries and solutions has been used in many full-scale mining operations, including 22 uranium mines and six gold mines, mainly in the Former Soviet Union.

In 2000, Clean TeQ obtained the exclusive 99-year licence for all technical information relating to ion exchange resin, ionic membranes, organic solvent extractants, including manufacturing know-how and plant design, for all countries outside the former USSR. Since that time Clean TeQ has further developed the base technology for several metal applications. The former Director General of ARRICT’s Sorption Division, Dr Nikolai Zontov is currently the Principal Scientist at Clean TeQ, bringing significant knowledge and experience in continuous ion exchange design and operation.

All processes in this section correspond to processes in Figure 74 after RIP.

10.7 Proposed KazNickel Flowsheet for IX and refinery plant

The nickel-cobalt plant proposed in the Scoping Study is a hybrid model based on combinations of processes researched by KazNickel (Section 10.6.2) and Clean TeQ (Section 10.6.6). The point of connection of the two processes is the desorption of resin.

The following processes are required for a nickel-cobalt plant:

• Ion Exchange (IX) Plant:

o Sorption of metals from pregnant solutions to resin TP-207 at ambient temperature, pH 2 – 3. KazNickel demonstrated effective sorption for pregnant solutions without any preliminary processes. Preliminary estimation demonstrates that period of sorption is 10 hr. Target (Ni, Co, Sc) and waste (Mn, Fe, Al, Cu, Zn, Mg, Ca, Si) adsorb to resin whereas some waste components (Mn, Mg, Ca, Si, Fe) are in barren solutions.

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o Desorption of metals from resin TP-207 by eluant H2SO4 = 100 g/L in U-columns which allow the moving of resin and enrichment of eluate by target components: Ni, Co, Sc. Some waste components (Ca, Mg, Mn) can be desorbed to impurity liquor.

o Purification of barren solutions after sorption is currently under discussion. This process is complicated due flow capacity of barren solutions (up to 3,500 m³/hr) and potential neutralisation of solutions up to pH = 10 – 11 for precipitation of Ca and Mg. It could be the cause of high consumption of acid in following acidification. However, it is likely that concentration of waste components will be stabilised in ISR process similar to uranium and copper ISR.

• A refinery plant will take nickel and cobalt-rich solutions (eluate) from the IX circuit:

o EN and ISX are required to purify the eluate from impurity components: Al, Fe, Cr, Si, Cu, Zn, Ca, Mg. These processes are not selective and some impurity components (Mn, Cu, Zn, Mg) remain in nickel and cobalt-rich solution as well as ≈3% of nickel and ≈4% of cobalt will be lost in waste solutions.

o CSX by Cyanex-272 allows the separation of cobalt and nickel with magnesium to raffinate. This process is standard for nickel-cobalt industry.

o The cobalt extract should be cleaned from remaining impurity components (Cu, Zn, Mn) to allow for production of cobalt sulphate of required composition.

o Scandium Liquid ion exchange with following desorption by Na2CO3 at pH 7.5,

refinery and producing the final product Sc2O3. This process is optional because Sc was not estimated in Mineral Resources due to absent of assays of this component (Seredkin et al., 2018); however, the most likely this process is required due to leaching Sc from mineralisation to pregnant solutions.

o NSX by Versatic Acid (V10) is used for separation of magnesium and nickel to allow for the production of nickel sulphate of the required composition.

• All waste components will be concentrated in dewatering pond and then in the tailings storage facility (TSF).

• Final products are included high-purity Class 1 nickel sulphate (NiSO4*6H2O), Class 1

cobalt sulphate (CoSO4*7H2O) (and potentially scandium oxide (Sc2O3), as well as an ammonium sulphate (Amsul) by-product suitable for fertiliser applications). Decisions the final product mix are subject to detailed market analysis, additional technical studies (as part of the PFS and FS), and final design decisions by KazNickel.

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11 MINING

11.1 Mining Method

Details of the proposed extraction methods are discussed elsewhere in this report as follows:

• ISR is regarded as the most favourable method for the Gornostay Project.

• A detailed description of the construction and operation of the wellfield is provided in Section 13.4 and 13.5.

• Production of sulphurous acid is discussed in Section 13.6.

• Estimation and application of a cut-off grade is discussed in Section 13.13.

11.2 Life of Mine Plan

11.2.1 Estimation of Life of Mine

Life of Mine (LoM) is 30 years including the period from 24 to 30 years at finalisation of operation.

The Taylor formula5 is generally used for the preliminary estimation of the LoM and maximal capacity for the mine plan:

4 LOM = 0.25 * tonnage

Preliminary LoM estimated by Taylor formula is close to the estimate from the analysis of the cashflow models – 26 years.

The maximum nominal capacity was estimated for purpose of mine plan preparation: 20,000 t/yr nickel or 10,800 m3/hr pregnant solutions with available plant/blocks 87.5% (based on Fairfield, 2018) or 319 days per year. At other times, wells, plant and other infrastructure may be on care and maintenance.

The mine plan was prepared to not exceed pregnant solution capacity and nickel capacity together. If capacity was reached maximum for nickel, the capacity for pregnant solutions may be less than maximal value and opposite if the capacity is reached for pregnant solutions. The capacity for nickel may be less than the maximal value.

11.2.2 Operational Blocks Preparation for the Mine Plan

All operational cells were grouped to operational blocks. Each block was comprised up to 400 cells (average 230 cells). Some single remote cells with a profit >US$0 were excluded from operational blocks because they were too isolated. A total of 642 operational blocks were created.

5 This formula is rough for LOM; however, suitable for preliminary estimation and maximum capacity of mine. The real LOM is based on a schedule of mining.

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These 642 operational blocks were used for preparation of the mine plan.

Operational blocks comprised ten sites (parts of deposit) for the purpose of reporting (Figure 75, Table 22). The site parameters (groups of operational blocks or parts of deposit) are shown in Table 22. The distribution of indicative operating cost for each cell is shown in Figure 75. The average operating costs for each site are shown in Table 22.

11.2.3 Mine Schedule

The mine schedule was prepared based on the following:

• Nominal maximal annual capacity in pregnant solutions is 8,400 m3/hr (Section 11.2.1).

• Nominal maximal annual capacity in nickel contained in pregnant solutions is 20,000 t/yr (Section 11.2.1)

• Maximal annual capacity is reached in the 17th year for the tenement area (gradual growth in capacity using own cash flow), reaching maximal capacity may be more aggressive.

• The operational schedule is based on the value of operational cells/blocks.

• Leaching of blocks below the water table starts before blocks above the water table for priority blocks and opposite after blocks above the water table for other parts of the Project. This inversion is due to blocks below water table being more profitable (due to less dilution) however monitoring of these blocks are required if blocks above water table are in operation longer than blocks below water table.

• L:S ratio = 12 is used for each block, however in real mining this parameter depends on reaching of the breakeven cut-off grade in solutions (Table 29).

• Time of leaching is estimated based on Life of Block (LOB) calculated using geological, geometallurgical and hydrogeological parameters. LOB is from one to six years (average 2.5 years) and depends on tonnage (volume of solutions) and flow rate of extraction wells. The period of leaching from each operational cell in blocks will be different in reality; however, an average parameter was used for this Scoping Study stage. In real conditions, an irregular grid of operational wells will be used based on special hydrodynamic and geometallurgical modelling.

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• Nickel and cobalt grades in solutions as well as annual production of these metals were estimated based on the linear dynamics of nickel and cobalt extraction (refer Section 10.5). In real conditions, it is probable that the dynamics of nickel and cobalt leaching will be higher in early production periods and lower in later periods of blocks operation. Cobalt may be extracted in the earliest periods’ operation on each block.

• A block construction and acidification period of a year is added for each block before commencement of leaching.

• A block remediation period of a year added for each block after finalisation of leaching of each block.

• An area remediation period of one year is added for each area after finalisation of leaching of all blocks within each area.

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upper ground water table below ground water table north-east part north-east part north-west part north-west part

central- central-east central- central-east west part west part part part

south south part part

NORTH NORTH OPEX, US$ / kg Ni + 2.5 kg Co

< 2 US$ 4 - 5 US$ Tenement border

2 - 3 US$ 5 - 6 US$ Proposed expanded Tenement border

3 - 4 US$ > 6 US$ Parts of the Left River Side Area

Figure 74: Distribution of operating cost (without closure & remediation) for cells of the Gornostay Project

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Table 22: Parameters of sites (groups of operational blocks) REPORT PERSON’S COMPETENT III APPENDIX

Overburden Total, Operational average MineralisationParameters of solutions Solutions,cost Ni + Co eff eff eff 3 m3 SiteMt Location BlocksNi% Cells Co%thicknessNi (kt) Co (kt)/hr Ni (kt) Co (kt) NiMm mg/L(Co=2.5 Co* Ni) mg/L Central West Above WT 86 23,844 10.3 39.4 0.39 0.025 152.76 9.93 473.3 28,613 106.93 7.45 226 16 4.6 part Below WT 26 5,350 34.6 3.7 0.60 0.035 22.44 1.32 44.9 6,420 15.71 0.93 350 21 3.5 North-West part Above WT 54 14,355 9.1 17.7 0.46 0.031 80.79 5.50 212.5 17,226 56.55 4.13 266 19 4.1 Below WT 60 14,967 29.4 9.9 0.60 0.045 59.61 4.41 118.6 17,960 41.73 3.09 352 26 3.4 Central East part Above WT 69 12,991 11.8 20.9 0.32 0.025 66.73 5.14 251.1 15,589 46.71 3.86 186 15 5.0 Below WT 14 1,425 35.1 0.9 0.56 0.028 4.88 0.25 10.5 1,710 3.42 0.17 326 16 3.7 Central West Above WT 34 7,361 9.4 10.8 0.36 0.024 39.34 2.63 129.5 8,833 27.54 1.97 213 15 4.7 part Below WT 17 3,141 41.4 2.6 0.69 0.037 17.63 0.95 30.8 1 12.34 0.67 401 22 3.3 South part Above WT 76 8,383 10.6 17.7 0.28 0.023 49.97 3.98 212.0 10,060 34.98 2.99 165 14 5.4 Below WT 12 1,049 46.2 0.7 0.59 0.034 3.98 0.23 8.1 1,259 2.79 0.16 342 20 3.5 Total Above WT 319 66,934 10.3 106.5 0.37 0.026 389.59 27.19 1,278.4 80,321 272.71 20.39 213 16 4.7 Below WT 129 25,932 32.9 17.7 0.61 0.040 108.56 7.16 213.0 27,350 75.99 5.01 357 24 3.4 TOTAL 448 92,866 16.6 124.3 0.40 0.028 498.14 34.35 1,491.4 107,671 348.70 25.40 234 17 4.5 I-8 – III-181 –

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Year Part Location

Central-West Above WT part Below WT North-West Above WT part Below WT Central-East Above WT part Below WT North-East Above WT part Below WT Above WT South part Below WT

Construction & acidification Leaching (mining) Monitoring Site remediation Area remediation

Figure 75: Forecast Mine schedule for Left River Side area

The mine plan (only for areas inside the granted tenement) is shown in:

• Figure 76 — Mine schedule based on production areas for the whole Left River Side area and inside tenement only respectively.

• Figure 77 — Mine schedule for nickel and cobalt tonnage in pregnant solutions.

• Figure 78 — Mine schedule for number of blocks in construction.

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Left River Side Area inside tenement tions, tpa u nant sol g nickel in pre nickel

year tions, tpa u nant sol g cobalt in pre

year

Central-West part Central-East part South part

North-West part North-East part

Figure 76: Mine schedule showing nickel and cobalt tonnage in pregnant solutions

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Left River Side area inside tenement 180

160 140

120 100 80

US$ million 60 40

20 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 -20 years Sulphurous acid Water supply

Electrical power supply Resin Reagents excl limestone Manpower and ammonia Administration Limestone Maintenance Ammonia – excluded from OPEX due to excluded sulphate ammonia from Revenue

Figure 77: Mine schedule number of blocks in construction

25,000 Commercial production Commercial production development stage full capacity stage e ction, g 20,000 u ction u

lphate, tonnes 15,000 pilot prod u finalisation sta Commercial prod

10,000

5,000 Nickel and Cobalt in s Nickel

0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 Pilot production Ni tpa Co tpa

[Chart]

Figure 78: Forecast Gornostay annual production of nickel and cobalt sulphates assuming the development timeline in Section 16 is achieved

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11.3 Mine Infrastructure and Equipment

11.3.1 List of Mine Infrastructure

Proposed mine infrastructure includes:

• Equipment for production sulphurous acid from sulphuric acid for the first 6 years and later the sulphurous acid plant (refer Section 13.6):

o Annual capacity ≈0.4 Mt acid for initial 6-year period.

o Annual capacity will gradually reach ≈2.35 Mt. Capacity estimated based on annual capacity of solutions and acid consumption of 24.2 kg/m3. Some sulphurous acid may be used for production of sulphuric acid for processing and refinery plants. Acid plant will be constructed by modules with capacity of 100 kt/yr acid.

o Turbo-generator for producing electrical power, preliminary capacity (per 100 kt/yr acid module) is estimated at 3.2 MW, 1.2 MW will be used for the sulphurous acid plant, 1.2 – 1.6 MW for mining and processing (depends on using electrowinning) and remaining 0.4 – 0.8 MW may be sold.

o Substation for connection of Acid Plant with power grid.

o Steam generator for refinery plant and central heating.

• Processing and Refinery Plant (refer Section 12 for details).

• Thickener and TSF.

• Small-scale back-up electrical generators.

• Acid storage tanks, and Acid distribution system.

• Fuel storage.

• Other reagent storage tanks.

• Process piping to and from wells.

• Pregnant and barren solution ponds.

• Compressed air plant.

• Cantilever pumps.

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• Electrical power lines to wellfield sites.

• Unsealed roads to wellfield sites.

• Monitoring wells around wellfield sites and especially towards Irtysh River.

• Repair shops, garage et al.

• Refuelling area.

• Railway station (on existing railway line).

• Offices and dry facilities.

• Laboratory.

• Telephone and internet communications.

• Camp site area.

11.3.2 Tailings Storage Facility (TSF)

Typically, one of the main benefits of ISR projects is the absence of waste piles and tailings dams.

However, the composition of pregnant solutions for a nickel-cobalt ISR project are complex and impurity components extracted in the refinery plant require storage in a TSF. Approximately up to 27% of the total tonnage of operational blocks may be dissolved and then removed as impurity components to the TSF (refer Section 13.5.2).

11.3.3 Location of Mine Infrastructure

Preliminary analysis shows that the best place for the processing and refinery plants as well as the administration facility is the northwest flank of the deposit, close to the most productive operational blocks and existing infrastructure.

The location of the TSF should be defined by special engineering investigations.

The proposed location of central wellfield houses, main pipes for leaching and pregnant solutions and lines of location of monitoring wells around wellfield sites and towards to Irtysh River is shown in Figure 80.

Mine roads and local powerlines to wellfield sites will be located along main pipe routes.

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operational blocks

border of tenement

border of proposed expanded tenement

parts of the Lefe River Side Area

central well field 4 houses

main pipes between plant and sites

lines of monitoring wells around mine

lines of monitoring wells toward lrtysh River

Figure 79: Location of mine infrastructure

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11.4 Mine Equipment

There is little major equipment associated with an ISR operation. Key equipment comprises:

• drilling rigs;

• rework equipment;

• light vehicles; and

• small forklifts for handling concentrate bins, supplies, and reagents.

In the wellfields, there are pump and flow control units generally built inside sea containers, and there are pumps in each production well and the associated electrical power distribution and motor controls.

The plant yards will be paved to reduce problems with dust and mud.

The operation will maintain a “workover” equipment fleet, which consists of a small derrick to set up over wells, compressors and pipe carriers to provide the equipment needed to work over wells by flushing, airlifting, or moving screens to improve flow in the wells.

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11.5 Mineral Resource Estimation for Mineralisation Included in Mine Plan

Mineral Resources and waste material included in the mine plan are shown in Table 23.

Table 23: Mineral Resources and waste material included in mine plan

Classification Mt Mteff Ni% Co% Ni%eff Co%eff Ni (t) Co (t) Above water table Indicated 51.7 51.7 0.58 0.040 0.58 0.040 300,877 20,475 Inferred 8.7 8.7 0.57 0.046 0.57 0.046 49,453 4,004 Waste material (weathering crust) 22.9 22.9 0.17 0.012 0.17 0.012 39,259 2,707 Waste material (fractured fresh rocks) 46.3 23.1 –––––– Total 129.6 106.5 0.30 0.021 0.37 0.026 389,588 27,186 Below water table Indicated 10.4 10.4 0.63 0.039 0.63 0.039 65,470 4,061 Inferred 6.7 6.7 0.63 0.045 0.63 0.045 41,929 3,024 Waste material (weathering crust) 0.7 0.7 0.17 0.012 0.17 0.012 1,167 81 Total 17.7 17.7 0.61 0.040 0.61 0.040 108,567 7,166 TOTAL Indicated 62.0 62.0 0.59 0.040 0.59 0.040 366,347 24,536 Inferred 15.4 15.4 0.59 0.046 0.59 0.046 91,382 7,028 Waste material (weathering crust) 23.6 23.6 0.17 0.012 0.17 0.012 40,426 2,787 Waste material (fractured fresh rocks) 46.3 23.1 –––––– TOTAL 147.4 124.2 0.34 0.023 0.40 0.028 498,155 34,352

Note: Effective tonnage and Ni-Co grades were estimated by using a multiplication coefficient x 0.5 for fresh rocks.

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12 PROCESSING

12.1 Overview of Flowsheet

The Gornostay Project was progressed from 2018 to 2019 by KazNickel as an ISR project (Seredkin, 2019) and this has been advanced by CSA Global in 2019 by a proposal to integrate KazNickel ISR methodology with processing of solutions using a method proposed by Clean TeQ (Fairfield et al., 2018). Clean TeQ has been developing a nickel, cobalt and scandium processing and refinery technology since 2002 based on existing ion exchange technology developed by the All Russian Research Institute of Chemical Technology (ARRICT) over a period of 40 years (Fairfield et al., 2018).

The Clean TeQ technology adopted in the Scoping Study was derived from public domain sources (Fairfield et al., 2018). However if KazNickel were to decide to use of this technology it might require an agreement with Clean TeQ. However, KazNickel may well develop alternate technology, due to the highly specific nature of the Gornostay eluate, and the need to customise the IX process to match.

The proposed Gornostay processing plant is based on a hydrometallurgical processing flowsheet using ISR by sulphurous acid to leach nickel and cobalt. The leached nickel and cobalt are recovered through continuous ion exchange (IX) and solvent extraction (SX), before the final nickel sulphate and cobalt sulphate products are crystallised, dried, packaged and transported to market. The final slurry/solutions after metal recovery are neutralised with limestone and sent to a TSF.

The process plant will produce high-purity hydrated nickel and cobalt sulphate products. Waste ammonium sulphate solutions will be converted to a crystalline ammonium sulphate product for the local fertiliser industry.

Conventional nickel laterite hydrometallurgical flowsheets used in the industry today use counter current decantation followed by precipitation of either a mixed sulphide or hydroxide intermediate, re-leaching and solvent extraction to recover the metals from leached slurries. This process has several disadvantages compared to the use of IX, including higher capital and operating costs, larger footprint, as well as lower metal recoveries. The use of IX technology addresses many of these issues (Fairfield et al., 2018). IX resins are ideal for recovery and concentration of lower concentration metals, which is the case with ISR process.

The conceptual flowsheet is shown in Figure 81. The process steps can be broadly defined as:

• Sulphurous acid produced from lump sulphur

• ISR on the wellfield

• Nickel/cobalt sorption and following desorption in U-columns (Processing Plant)

• Nickel/cobalt sulphate extraction, purification and recovery (refinery plant)

• Tailings neutralisation and storage

• Ammonium sulphate crystallisation.

Reagents and utilities include sulphurous acid, sulphuric acid, steam, electrical power, water, limestone, lime, ammonia, and others.

The key process design criteria assumptions are shown in Table 24. More detailed descriptions of the proposed processing approach are provided below.

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Table 24: Process design criteria assumption summary

Item Units Quantity Maximum capacity by solutions m3/hr 15,540 Average capacity by solutions m3/hr 8,290 Operating hours per year hr/a 7,665 Availability Plant and wells % 88 LoM years 35 Period of full capacity years 11 Sulphurous acid consumption kg/t ore 290 Average Annual sulphurous acid production 1,500,000 Maximum Annual sulphurous acid production t/a 2,900,000 Average product production in period of full capacity Contained nickel t/a 25,100 Contained cobalt t/a 1,800

Nickel sulphate NiSO4*6H2O t/a 112,383

Cobalt sulphate CoSO4*7H2O t/a 8,584 Average product production Contained nickel t/a 15,700 Contained cobalt t/a 1,130

Nickel sulphate NiSO4*6H2O t/a 70,295

Cobalt sulphate CoSO4*7H2O t/a 5,389 Nickel grade in pregnant solutions mg/L 246 Cobalt grade in pregnant solutions mg/L 17 Estimated ISR extractions Nickel % 70 Cobalt % 75 Estimated processing/refinery metal recovery Nickel % 97 Cobalt % 96 Estimated overall recoveries Nickel % 68 Cobalt % 72 Estimated overall production Contained nickel t 516,335 Contained cobalt t 36,974

Nickel sulphate NiSO4*6H2O t 2,311,835

Cobalt sulphate CoSO4*7H2O t 176,317

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12.2 Processing and Refinery

12.2.1 Nickel/Cobalt Extraction from Pregnant Solutions by Ion Exchange

Nickel and cobalt contained in pregnant solutions after ISR are recovered by the IX process which, whilst adopted by other metal processing flowsheets including uranium and gold and developed for nickel laterites to a pilot level of operation, is not yet fully commercialised for the latter application. The process includes two stages — sorption and desorption. Nickel and cobalt adsorb onto an IX resin in sulphurous acid matrix (pH ≈ 2– 3). The time of sorption is approximately 10 hr. Resin saturation for nickel will be6–15kg/m3 due to relatively low grades of nickel and cobalt in pregnant solutions (see more detail Section 12.2.1 and Figure 70).

Loaded resin undergoes desorption using weak sulphuric acid, generating a pregnant liquor or eluate (nickel and cobalt sulphate liquor). The desorption system uses U-shaped continuous counter current IX columns where a small portion of the resin in each column is periodically transferred to the succeeding column, using external airlifts. Desorption solution (eluant) flows down the resin filled leg of the “U” and the nickel and cobalt are stripped off the resin into the solution. The pregnant solution (containing nickel, cobalt) accumulates at the bottom of the U-shaped desorption column and is removed as a concentrated nickel/cobalt liquor product (Fairfield et al., 2018).

The eluant liquor continues to rise through the resin inlet leg of the U-column, removing impurities from the resin, notably calcium, magnesium, and manganese (Fairfield et al., 2018).

The barren resin leaving the desorption U-column is washed with water to remove the residual desorption solution. The wash water leaving the column contains an appreciable amount of acid and is used in preparing nickel/cobalt eluant make-up. The barren resin is passed over a screen to remove any undersize and transferred to the nickel/cobalt neutralisation where barren resin is partially neutralised with limestone to replace hydrogen ion on the resin with calcium. This ensures that the barren resin recycled back from desorption to adsorption does not disturb the pH level in the nickel/cobalt adsorption (Fairfield et al., 2018).

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Leaching solutions

Pregnant solutions Sulphur

Barren Acid Solutions Eluate Acidification Sulphurous Acid Plant Eluate Desorption Substantion Neutralisation Waste solution Thickener

Limestone Impurity Solvent Cobalt Solvent Extraction Ammonia Extraction Cobalt Sulphate

Ammonia

Ammonia Nickel Solvent Nickel Sulphate Reagents In Extraction Final Product out Internal processes Ammonium Sulphate

Figure 80: Processing flowsheet

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12.2.2 Eluate Neutralisation

The nickel/cobalt eluate is heated and then treated with slaked lime in the first three of four agitated neutralisation tanks to raise the pH of the liquor to 4.0–4.2 prior to SX. Low pressure air is sparged into each tank to promote the oxidation of ferrous to ferric ions. Precipitated solids are recycled from downstream to act as seed to promote formation of larger gypsum particles that facilitate more efficient downstream solid/liquid separation. Re-pulped solids from the downstream polishing filter are also added to the first EN tank. The slurry is then discharged to the eluate neutralisation clarifier. The clarifier underflow is filtered before sending the solids to the partial neutralisation area. The filtrate is recycled back to the clarifier. The overflow of the clarifier is sent to a polishing filter to remove any suspended solids before proceeding downstream (Fairfield et al., 2018).

12.2.3 Nickel/Cobalt Sulphate Purification and Recovery

The neutralised nickel/cobalt eluate would be purified and processed in three sequential SX circuits. The ISX circuit removes zinc, iron, aluminium, manganese and some copper and the raffinate is sent to the CSX circuit (Fairfield et al., 2018).

The CSX circuit extracts cobalt, leaving the nickel in its raffinate. The cobalt-bearing organic is sent to a scrub stage to remove impurities and small amounts of nickel before stripping the cobalt from the organic using dilute sulphuric acid (Fairfield et al., 2018).

The cobalt-bearing strip liquor is sent to the cobalt purification stage, to remove minor manganese, copper and zinc, before going to a pre-concentrator and a subsequent cobalt sulphate crystalliser to produce high- purity hydrated cobalt sulphate (CoSO4*7H2O). The supernatant from the crystalliser is recycled back to the cobalt stripping stage (Fairfield et al., 2018).

The nickel-bearing raffinate is fed to the NSX step where it is extracted, scrubbed and stripped to produce a concentrated nickel sulphate solution. The product is sent to a nickel sulphate crystalliser to produce high- purity hydrated nickel sulphate (NiSO4*6H2O). The supernatant from the crystalliser is recycled back to NSX, as it contains nickel (Fairfield et al., 2018).

The raffinate from the NSX is sent to the ammonium sulphate crystalliser to produce an ammonium sulphate by-product, which is then dried and packaged for the fertiliser market (Fairfield et al., 2018).

The nickel, cobalt and ammonium sulphate products are each run through a rotary dryer and stored in product bins prior to packaging (Fairfield et al., 2018).

12.2.4 Tailings Neutralisation, Storage and Evaporation

Tailings are neutralised with lime slurry and air addition to remove free acid and precipitate the metal ions as stable hydroxides prior to discharge to the tailing storage. The metals are thus captured in the solids, minimising any environmental impact through leaching from the tailings. This is undertaken in two agitated tanks. The discharging slurry is thickened in a tailings thickener to increase the slurry density to 42% before being pumped through a single pipeline to a TSF for final storage. The tailings thickener overflow is recycled back to the process water tank (Fairfield et al., 2018).

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12.3 Reagents and Utilities

Key reagents and utilities include:

• Sulphuric acid

• Limestone

• Lime

• Ammonia

• Sodium carbonate

• Resin

• Other reagents

• Water

• Power

• Steam.

12.3.1 Sulphurous Acid Production and Distribution

Sulphur can be transported to site from Western Kazakhstan, via rail trains, where it can be stockpiled or conveyed to the sulphur melting vessel at the required rate.

The sulphur sent to sulphur melting is mixed with hydrated lime to neutralise any acid present in the sulphur or generated in the melting process. It is then melted in a sulphur melting vessel using steam heating coils, mixed with a small amount of filter aid and subsequently filtered. Filtered liquid sulphur is transferred to the sulphurous acid plant where it is burned in a sulphur combustor.

Sulphurous acid is used for acidification of barren solutions after sorption and preparation of leaching solutions which are pumped to the wellfield for injection into the mineralised body for ISR.

Sulphurous acid is a source of steam and electrical power for the mine, processing and refinery plants. Furthermore, the surplus electrical energy is 18 MW, or 132,000,000 kW*hr in year.

12.3.2 Limestone

Limestone will be mined by a contractor and delivered to the limestone run-of-mine (ROM) stockpile where will be crushed to 100% passing 200 mm. The Limestone Plant produces limestone slurry at an estimated 35% solids, ground to a P80 of 45 μm using a simple impact crusher, overflowing ball mill

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12.3.3 Resin and Other Reagents

There are several other reagents required by the plant. Slaked lime, sodium meta-bisulphite and sodium carbonate will be sourced by bulk delivery. Ammonia and sodium hydroxide will be trucked in as liquids and stored on site. Hydrogen peroxide (to make-up Caro’s acid on site) will be delivered in dangerous goods containers.

Solvent extraction reagents (e.g. D2EHPA, CYANEX 272 and VERSATIC 10) will be stored in intermediate bulk containers. Solvent extractant diluent will be delivered in tankers and stored in tanks on site.

Filter aid (in powder form), boiler and water treatment chemicals will be trucked in as solids and stored.

Flocculant will be used in thickener operations in the leach ore feed thickener, tailings thickener and refinery. Flocculant for the leach ore feed thickeners and tailings thickener will be bulk delivered. Refinery flocculant will be delivered in bags.

12.4 Products

12.4.1 Hydrated Nickel and Cobalt Sulphates

The process plant allows production of high-purity Class 1 hydrated nickel sulphate

(NiSO4*6H2O) and Class 1 hydrated cobalt sulphate (CoSO4*7H2O) products. The process is suited to the battery sector, which requires sulphates for precursor production.

Key nickel and cobalt product specifications in the target grade and in the maximum grade products are shown in Table 20.

12.4.2 Ammonium Sulphate

An ammonium sulphate by-product can be made, primarily targeting the fertiliser market. Ammonium sulphate products have a mean product size above 1.5 mm and a target size range of 40% w/w between 1 mm and 3 mm and are dried to below 1% moisture. The product would contain minimum nitrogen and sulphur concentrations of 21% w/w and 24% w/w respectively. Cadmium and mercury impurities are targeted to be below 10 ppm and 5 ppm respectively. Lead will be maintained below 500 ppm.

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13 GORNOSTAY ISR SCOPING STUDY

KazNickel elected to commission a Scoping Study on the viability of applying ISR to the Gornostay Project, because previous studies into conventional mining and processing showed the project to be uneconomic.

A Scoping Study is an order of magnitude technical and economic study of the potential viability of Mineral Resources. It includes appropriate assessments of realistically assumed Modifying Factors together with any other relevant operational factors that are necessary to demonstrate at the time of reporting that progress to a Pre-Feasibility Study can be reasonably justified.

This Scoping Studies is the first economic evaluation of ISR at the Gornostay Project and is based on a combination of directly gathered project data together with assumptions borrowed from similar deposits or operations to the case envisaged. The following section of the CPR provides an overview of the Scoping Study work and outcomes.

In order to address the future economic potential of the Gornostay Project in the Scoping Study, all categories of Mineral Resources where considered for the economic assessment. CSA Global notes that this is the standard approach for Scoping Study, and economic parameters derived from the Scoping Study are not forecasts.; they are financial metrics to illustrate the potential economic outcomes of advancing the Gornostay Project.

The Scoping Study referred to in this report is based on low-level technical and economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised.

The proposed Gornostay nickel-cobalt ISR operation addressed in the Scoping Study is summarised below and shown in (Figure 82):

• Sulphurous acid will be produced from lump sulphur by burning at a Sulphurous Plant or from sulphuric acid by the custom process designed by KazNickel.

• Sulphurous acid leaching solution is pumped into the mineralised zone through a network of injection wells (boreholes). In the process, the acid dissolves the nickel, cobalt, scandium, and impurity components such as iron, alumina, magnesium, silica, manganese, copper, zinc, calcium.

• Nickel, cobalt and impurity components are brought to surface in solution by extraction by production (extraction) wells.

• Pregnant production solutions are delivered to the Processing (Sorption) Plant via a pond for removing suspended solids from the pregnant solutions.

• Barren solutions post processing are returned to Sulphurous Plant for re-acidification and are then recycled for leaching of ISR of nickel and cobalt again.

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• Ni/Co-rich eluate from the Processing (Sorption) Plant is transferred to the refinery plant for producing the final products (Figure 82): nickel and cobalt sulphate. As option, products of manganese and magnesium may be produced on mine. Small quantities of impurity components in the waste solutions are dewatered in a thickener and then transferred to a TSF.

processing plant

Ni-Co eluate final product wellfield limestone, ammonia leaching solution waste dewatering leaching solution producing pregnant sorption refinery solution plant barren solution sulphurous acid plant tailing pregnant solution dam ell ell

w topographic surface w pregnant tion barren u ells solution solution w pond g pond nant sol injection pit- injection pit- g leaching pre monitorin ground water table tion u ell w sol g injection leachin ell w

leaching extraction extraction

screens

Figure 81: Principal layout of processing plant of ISR mine for extraction nickel and cobalt

13.1 Types of Expenses for ISR Process

Technical and economic analysis of the ISR process can be divided into the following areas:

• Wellfield – extraction of nickel and cobalt by ISR:

o Capital expenditure (CAPEX): Construction of wells, operation cells and blocks, wellhouses, connection to processing plant.

o Operation expenditure (OPEX): Reagent (sulphurous acid) for extraction nickel and cobalt by ISR, electrical power consumption for pumping solutions, manpower.

• Processing Plant – processing of solutions with production of final product (nickel and cobalt sulphate):

o CAPEX: Construction of processing plant, reagent storages, supporting infrastructure.

o OPEX: Consumption of reagents for processing, electrical consumption, manpower.

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• Acid Production – acid plant or block for production sulphurous acid from sulphuric acid are optional for producing sulphurous acid:

o CAPEX: Cost of acid plant or block for production sulphurous acid from sulphuric acid with supporting infrastructure.

o OPEX: Lump sulphur or sulphuric acid, water, manpower. An acid plant is an electrical power producer, this electrical power may be sold or used for own needs on mine/processing plant.

• General:

o CAPEX: Supporting infrastructure – roads, electrical powerlines, camp site, hydrogeological wells plant, office etc.

o OPEX: Administration, closure and remediation, maintenance.

13.2 Typical Units for Measurement Parameters in ISR Process

All costs/consumptions are indicatively estimated using the following parameters:

• Per tonne of mineralisation, for example, consumption of acid in kilograms per tonne of mineralisation (kg/t)

• Per cubic metre of leaching/pregnant solutions (e.g. kWt*h/m3)

• Per kilogram or pound of nickel in pregnant solutions – usually for processing plant (e.g. kg/lb Ni)

13.3 General Approach for Estimation of Economic Parameters and Cash Flow Model for ISR Project

The following approach was used for estimation of economic parameters and cash flow modelling:

• Modelling of operational cells is based on the resource block model.

• Estimation of OPEX, wellfield costs and revenue for each operational cell, deriving an estimate of profit for that cell.

• Application of cut-offs to exclude cells with negative profit.

• Grouping cells into operation blocks.

• Estimation of geometallurgical parameters, dynamics of leaching, and other technical parameters for each operation block.

• Preparation of a mine schedule with operations commencing in the most profitable blocks.

• Preparation of a schedule of CAPEX investments.

• Preparation of a cash flow model.

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13.4 Modelling of Operational Cells Based on Resource Block Model

13.4.1 Features of ISR Process for Nickel-Cobalt Mineralisation in Weathering Crusts

In the Gornostay Project area, 75% of nickel-cobalt Mineral Resources are in the aeration zone above the water level with the remaining 25% below the water table. The main ISR method will therefore be infiltration, with the Mineral Resource below the water table being mined by the more common ISR filtration method6 (Figure 83).

The filtration method allows selective mining by ISR whereas the infiltration method is required for leaching of both mineralised and waste material between and below mineralised bodies to the water table (Figure 83). Pregnant solutions may be collected on and below the water table only.

Therefore, a full block model is required for preparation of a mining plan for ISR of nickel-cobalt mineralisation in the weathering crust.

cover sediments Ni-Co mineralisation overburden in redeposited weathering crust redeposited weathering crust Ni-Co mineralisation mining in infiltration regime ISR in in-situ weathering crust (above water table) in-situ weathering crust upon mining in filtration regime ISR serpentinite water table (below water table)

fresh serpentinites direction of natural direction of solution flow in ISR mining: water flow a - in infiltration regime (above water table) in-situ weathering crust upon b - in filtration regime (below water table) shale

fresh shales

limestone

Figure 82: Filtration and infiltration method of ISR depending on location of mineralisation (vertical exaggeration x4)

6 The project team has considered raising the level of underground water to increase the proportion of Mineral Resources below the water table. This requires further investigation as part of PFS studies.

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Both Mineral Resources and waste materials are involved in the ISR process, hence modelling of both mineralisation and waste material outside the mineralised bodies is important for the correct estimation of ISR parameters.

The full Mineral Resource block model was converted to a mining model that was used for analysis and preparation of a mining plan using the following approach:

• The final full block model was separated to three domains:

o Domain 1. Overburden blocks above the mineralisation.

o Domain 2. Operational blocks including both mineralised bodies and all waste material between the top of the mineralisation and the water table.

o Domain 3. Parts of mineralised bodies located below the water table.

• Domains 2 and 3 were converted to model of operational cells by converting 3D models to 2D grid models using 10mx10mcells and a variable vertical size.

The total grade-tonnage of the mining model is shown in Table 25, and an example of a 3D operational model is shown in Figure 84.

Table 25: Grade-tonnage of operational blocks in full mining model

Type of blocks Mt Mteff Ni% Co % Ni%eff Co%eff Ni (t) Co (t) Above water table 289.8 209.9 0.19 0.013 0.26 0.019 545,478 38,903 Below water table 18.6 18.6 0.60 0.040 0.60 0.040 111,677 7,347 Total 308.4 228.5 0.21 0.015 0.29 0.020 657,155 46,249

Notes:

• Cut-off was not applied.

• Mteff Effective tonnage and nickel-cobalt grades were estimated by using a multiplication coefficient x 0.5 for fresh rocks and x 1 for weathering crust rocks.

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0 0.625 1.25 2.5km

NORTH cells above water table cells below water table (inside tenement) (inside tenement) limits of cells above water table cells below water table tenement (outside tenement) (outside tenement)

Figure 83: Operational model of the Gornostay Left River Side area (vertical exaggeration X 4)

13.5 Wellfield Construction and Operation

The mining method is described in detail in Section 11.

13.5.1 Wellfield Construction

The typical configuration of ISR operation blocks is hexagons or raw systems, although sometimes a square configuration may be used (e.g. Florence Copper Project, R. Zimmerman et al., 2013) (Figure 85). The distance between wells depends on the permeability and dynamic of leaching as well as the cost of drilling and well construction. This distance is 35–45 m in uranium ISR mines in Kazakhstan and 70-ft (21 m) in Wyoming.

Square configuration Hexagon configuration Raw configuration

Production wells Injection wells

Figure 84: Standard configuration of operation blocks for ISR in plan

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An operation cell size of 10mx10mwasadopted.

Flow rate for extraction (production) wells was estimated to be 1.2 m3/hour based on permeability 0.15 – 0.20 m/day and results of the pilot operation. However higher values were identified for fissure and fault zones which may be identified by a linear distribution of weathering crusts. The average rate of the injection wells is around 0.3 m3/hour based on direct measurements of injectivity in injection wells (Section 8). Injectivity may also be higher in linear zones of faults.

Additionally, surfactants may increase permeability and injectivity of mineralisation (refer Section 10.2 and 10.3).

Therefore, four injection wells should be used on one extraction (production) well for mineralisation above the water table. A high-density grid for injection pit-wells above the water is required for equal leaching of mineralisation from vertically flowing solutions (Figure 86).

A standard configuration of operational blocks may be used for mineralisation below the water table (Figure 87). Furthermore, higher permeability in fault and fissure zones is common.

Monitoring wells are required for observation of spreading of leaching/pregnant solutions in the mineralised body and host rocks.

The proposed configuration of operational wells for commercial production is based on these parameters and construction of wells for uranium ISR in Kazakhstan (Seredkin, Bergen, 2013; 2014) is shown in Figure 88.

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water table

pregnant solutions filter (screen)

leaching solutions

5 0 5 10 15 20m

Figure 85: Proposed wellfield pattern for mineralisation above the water table at Gornostay (section view)

water table

pregnant solutions

leaching solutions

filter (screen)

5 0 5 10 15 20m

Figure 86: Proposed wellfield pattern for mineralisation below the water table at Gornostay (section view)

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Extraction Injection & Injection pit-well (production) well Observation wells

Cement Cement Cement d=295mm PVC d=290mm

PVC Cement d=90mm PVC d=90mm

Filter Cement d=320mm Cement

Settler

d=350mm

Filter Filter d=118mm

Settler Settler

d=132mm d=132mm

Figure 87: Well configurations for the Gornostay Project (modified after wells for ISR uranium projects, for example, Seredkin et al., 2014)

Construction of the wellfield consists of the following operations:

• Design of wellfield

• Drilling of operational wells

• Grade control by measurements of Ni, Co and Fe in slime by a properly calibrated portable XRF instrument

• Identification of mineralised interval(s), permeability of sediments (last is possible by calibrate electro-logging)

• Casing of operational wells including screens

• Construction of the collar area

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• Installing pumps into operational wells.

After construction of wells, a network of pipes and cables is required for the field. Power is required for the submersible pumps and is provided from local substations installed in the wellfield. Piping is required for the acid feed to the wells, production solutions from the wells, and barren solutions to the wells. The piping consists of a system of larger main lines fed by small lines from the production areas. Wellhouses are built using sea cargo containers as the building and contain the injection and production well manifolds and valves for a given block. Flow meters are employed at all wellhouses to provide operating information. Drip samplers are used to collect solution composite samples at the wellhouses (Photo 9).

Parameters used for the estimation of the cost of construction of operational blocks are shown in Table 26.

Table 26: Parameters of operational wells

Above water table Below water table Injection Extraction Observation Injection Extraction Observation Unit pit-well well well well well well Count per cell 4 1 0.1 1 1 0.1 Filter (screen), m 3 5 3 3 – 8 3 – 8 3 Settler, m 333333 Cost, US$/m 40 35 35 35 35 35 Construction wells, US$/m 555555 Construction wells, US$/ct 200 500 300 300 500 300 Cost of pump, US$/ct – 3,600 – – 3,600 – Construction cell, US$ 2,000 2,000 Cell size, m 10x10 10x10 Main pipes between blocks 50 and plant, US$/m Powerline between blocks 10 and plant, US$/m Roads between blocks and 50 plant, US$/m Capital monitoring wells 670 at US$8,500

Note: Costs are estimated based on prices of local contractors

13.5.2 Wellfield Operation (Incl. Geometallurgical Parameters)

The following parameters are the most important for assessing ISR project economics:

• Liquid to Solid ratio (L:S)

• Injectivity of injection wells and production of pumping wells

• Recovery of nickel and cobalt

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• Reagent(s) consumption

• Dynamic of leaching

• Electrical power for ISR process – injection and pumping solutions

• Wellfield availability.

Liquid to Solid Ratio

L:S ratio is the key parameter for ISR which reflects how much solution (m3) is required to reach the target extraction of a specific commodity for one tonne of ore. Recovery increases with increasing L:S until a certainvalue or up to a plateau L:S ratio where extraction increases are marginal or absent (Figure 89). This L:S ratio is used for the estimation of geometallurgical and economic parameters for the Project. In the example provided in Figure 89, the target L:S ratio is 2 for blocks A and B and 1.5 for block C, despite the obtained extraction being around 50%.

Block A, extraction Block A, U grade

Block B, extraction /| U g rade, m g tion Block C, extraction u Extraction, %U Block B, U grade nant sol g re P

Block C, U grade

Liquid: Solid ratio

Figure 88: Dependence of grades in pregnant solutions & extraction level on L:S ratio (≈ time of leaching) Source: Seredkin et al., 2016

The dependence of nickel recovery on the L:S ratio was defined as linear – refer Section 10.2.3), similar to other nickel-cobalt ISR projects in Kazakhstan, due to low leaching dynamics of nickel and cobalt.

The L:S ratio parameter was defined as 12 m3/t (refer Section 10.5).

Pumping and Injectivity Rates

Pumping and injectivity rates are described in Section 13.5.1.

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Acid Consumption

Sulphurous acid consumption was defined as 290 kg/t ore for all types of rocks: redeposited weathering crust, limonite, nontronite and fresh serpentinite. This value was calculated for 70% nickel recovery — refer Section 10.5 for more detail.

Sulphurous acid consumption (for estimation options for sulphuric acid consumption) was defined as 420 kg/t ore for all types of rocks: redeposited weathering crust, limonite, nontronite and fresh serpentinite. This value was calculated for 65% nickel recovery – refer Section 10.5 for more detail.

The leaching dynamics of serpentinites is much lower than weathering crust and a coefficient of 0.5 was therefore applied to the tonnage of serpentinite (teff) (Figure 47).

Recovery of Nickel and Cobalt

Recovery of nickel at L:S ratio = 12 was defined as 70% for all types of mineralisation for sulphurous acid process (refer Section 10.5). The dynamics of cobalt extraction by sulphurous acid are better than nickel, and recovery was defined as 75% (refer Section 10.5). Recovery of nickel and cobalt at L:S ratio = 12 was defined as 65% for all types of mineralisation for sulphuric acid process (refer Section 10.5).

Recovery of Impurity Components

The recovery of impurity components, based on composition of weathering crust (Table 6) and agitation leaching tests (refer Section 10.2.2 and Section 10.2.5) is shown in Table 27.

27% of total tonnage will be leached in ISR; however, grades of iron and alumina may be stabilised in the process and actual tonnage of leached components may be less.

Table 27: Recovery of impurity components

Component Recovery % Limonite Nontronite Fe 69 25 Mg 53 57 Mn 98 86 Al 35 15 Si 71 Cr Unknown Unknown

13.5.3 Summary

All geometallurgical parameters, reagent costs and consumption values are summarised in Table 28 and Table 29. Electrical consumption, and maintenance consumables and the shutdown laboratory were estimated based on indicative parameters for the Florence Project (Zimmerman et al., 2013), and cost of electricity from open sources. Other parameters are described in Sections 13.5.1 and 13.5.2.

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Table 28: Parameters for wellfield operation for the Gornostay Project

in situ in situ Redeposited weathering weathering weathering crust crust Fractured Parameter unit crust (ochre) (nontronites) serpentinites Pump rate m3/hr 1.2 1.2 1.2 1.2 Permeability m/day 0.17 0.17 0.17 0.15 Coefficient to tonnage 1 1 1 0.5 L:S m3/t 12 12 12 12 Dynamic of leaching linear linear linear linear Wellfield availability % 87.5 87.5 87.5 87.5 Electrical power kWt*h/m3 1.75 1.75 1.75 1.75 Electricity power cost US$/kWt*h 0.04 0.04 0.04 0.04 Maintenance consumables and shutdown lab US$/m3 0.08 0.08 0.08 0.08

Table 29: Geometallurgical parameters for wellfield operation for the Gornostay Project

in situ in situ Redeposited weathering weathering weathering crust crust Fractured Parameter unit crust (ochre) (nontronites) serpentinites Sulphurous acid process Leaching agent Sulphurous acid Sulphurous acid Sulphurous acid Sulphurous acid Acid consumption kg/t 290 290 290 290 Recovery to pregnant solutions: – Ni % 70 70 70 0 – Co % 75 75 75 0

13.6 Sulphurous Acid Preparation

Sulphurous acid (H2SO3) is an atypical product for the industry and may be produced from SO2.

SO2 can be supplied in special gas cylinders which are expensive.

13.6.1 Sulphurous Acid Plant

SO2 may be produced using part of a sulphurous plant layout which consists of the following stages (Figure 90):

• Reception of lump sulphur

• Melting of lump sulphur, filtration and subsequent burning of liquid sulphur in the furnace,

producing SO2

• Catalytic conversion of SO2 to SO3 using a vanadium catalyst

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• Absorption of SO3 and production of sulphuric acid

• Dilution of sulphuric acid to commercial concentration.

SO2 is the intermediate product of a sulphuric acid plant layout and may be dissolved in water directly, without a special absorption block. Steam is the by-product of the sulphurous plant layout and is used directly for heating solutions in a processing plant, and electrical power generation by a turbo-generator for the purpose of mine and external consumers.

SO2 is used in industry for preservation of vegetables and fruits. SO2 is packed as liquid in cylinders for this industry. However, the most efficient way for an ISR mine is dissolving SO2 in water for production of sulphurous acid. Detailed technical solutions for this process should be developed in the PFS.

Another issue is instability and volatility of sulphurous acid. All pipe connections with need to be sealed and ponds for pregnant and barren solutions should be covered. Ponds for pregnant and barren solutions should potentially be replaced by a system of elbow pipes.

sulphuric plant layout sulphurous plant layout converter air sulphur SO furnace 2 1100°C catalyst SO2 SO2 SO2+SO3

SO2+SO3 catalyst water steam SO3+SO2 sulphur water SO3+SO2 melting H2SO4 catalyst water SO3+(so2) sulphur SO3+(so2) steam SO2 power turbo- * catalyst SO absorption H2SO4 SO H2SO4 generator 2 3 SO +(so ) 3 2 SO3+(so2) H2SO4

steam (so2)

Figure 89: Comparison of conceptual sulphuric (H2SO4) and sulphurous (SO2*H2O) plant layouts

The cost of a sulphuric acid plant with a 600 t per day (200,000 t/yr) capacity is ≈US$30 million (based on Ballestra estimation in the CSA Global database). The cost of a turbo-generator is approximately US$10 million.

An indicative estimate of the cost of a sulphuric acid plant is US$20 million/100,000 t/yr. The cost of a Sulphurous Acid plant was estimated indicatively as 40% of the sulphuric acid plant (US$8 million/100,000 t/yr).

13.6.2 Production of Sulphurous Acid by Special Block Designed by KazNickel

Production of sulphurous acid from sulphuric acid was discovered and tested by KazNickel team (refer Sections 10.3.1 to 10.3.3).

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The cost of equipment was estimated based on actual costs for the pilot plant scalable to production at 100,000 t/yr sulphurous acid.

The cost of equipment for production of sulphurous acid from sulphuric acid is US$800 thousand/100,000 t/yr.

13.7 Processing of Pregnant Solutions

Detail surrounding the processing of pregnant solutions is provided in Section 12.

13.7.1 Cost of Processing Plant with Supporting Mine Infrastructure

The following infrastructure is required for processing of pregnant solutions:

• Processing plant:

o Ion exchange plant for processing of pregnant solutions with production of nickel-cobalt rich eluate with impurity components

o Refinery plant for processing of nickel-cobalt rich eluate with impurity components with production of nickel and cobalt sulphates

• Tailings storage facility for collection of tails after processing

13.7.1.1 Cost of Processing Plant per 5,000 t/yr of Nickel

Cost of ion exchange (IX) Plant

The main parts of IX plants are sorption and desorption columns with initial loading of resin and some other equipment such as preparation desorption solution, columns for washing resin, tubes, and measurement tools.

The cost of equipment and buildings was estimated directly by KazNickel based on offers from suppliers. This estimation is very close to the estimation based on indicative parameters (refer the first Scoping Study for the Gornostay Project – Seredkin, 2019).

The volume of initial loading of resin was estimated based on loading of nickel to resin 10 kg Ni/m3 and a sorption cycle of 10 hr (refer Section 10.6.2). Total initial volume of resin is 650 m3, cost of TP-207 is 22 US$/l.

Cost of Refinery (SE-EX) Plant

The cost of a refinery plant was estimated indicatively based on estimation of a refinery plant for the Sunrise project (Fairfield et al., 2018) with recalculation from capacity 35,000 t/yr Ni to 5,000 t/yr Ni. For building and equipment, a correction coefficient of 0.75 was applied for local suppliers instead Australian suppliers. Cost of reagents was not corrected.

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Cost of Infrastructure for Processing Plant

Infrastructure of processing plant includes:

• Storages for reagents and fuel – US$2 million

• Barren and Pregnant solution ponds – US$1 million

• General communications and fitting – US$2 million.

Summary

• Cost of the Central Processing Plant (CPP) based on nickel capacity of 5,000 t/yr is shown in Table 30.

Table 30: Cost of Processing Plant on capacity 5,000 t/yr for nickel

Cost for Position Unit solutions† IX plant US$M 32 Incl. building and equipment US$M 18 Incl. initial loading resin US$M 14 Supporting mine infrastructure US$M 36 Incl. building and equipment US$M 16 Incl. initial loading reagents US$M 20 Others US$M 5 TOTAL US$M 73

† based on sulphurous acid (resin TP-207)

13.7.1.2 Cost of Tailings Storage Facility

Estimation of tailing storage costs is the most unpredictable due to possible calibration sorption process for minimising concentration of impurity components in eluate.

An indicative cost for a TSF is US$8 million per one module 5,000 t/yr Ni, based on preliminary estimates by KazNickel, however this cost depends on the ultimate IX process, eluate composition after this processing, and how much solid material is residual.

13.7.2 Consumption and Cost of Reagents and Electricity for Processing

The consumption and cost of reagents and electricity associated with processing of pregnant solutions is provided in Table 31. Ammonia credit was estimated based on assumption of ammonia sulphate production and excluded from revenue.

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Table 31: Consumption of reagents and electricity for processing of pregnant solutions

Cost for Reagents/materials Unit solutions Resin l/kg Ni 20 US$/l 22 US$/lb Ni 0.20 Electricity kWt*h/lb Ni 2.88 US$/KWt*h 0.04 US$/lb Ni 0.1152 Limestone&quicklime US$/lb Ni 0.14 Ammonia US$/lb Ni 0.22 Ammonia credit US$/lb Ni -0.22 Water supply US$/lb Ni 0.044 Other reagents US$/lb Ni 0.34 TOTAL US$/lb Ni 0.72

† based on sulphurous acid (resin TP-207)

Source: Kazatomprom experience for resin consumption, direct offers for resin cost and Fairfield et al. (2018) for other reagents and electricity

13.7.3 Recovery of Nickel and Cobalt in Processing

The following values were estimated for nickel and cobalt recovery in processing (Fairfield et al., 2018):

• Nickel 97%

• Cobalt 96%.

13.8 Electrical Balance

Electrical consumption at ISR mines consists of:

• ISR extraction (mining) – 1.75 kWt*h/m3 pregnant solutions (refer Section 13.5.3).

• Processing of pregnant solutions – 2.88 kWt*h/kg U (refer Section 13.7.2).

• Other (lightning, camp site etc.) – indicative consumption of electricity for mining and processing.

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• Electrical power may be:

o purchased in external sources

o produced by the sulphurous acid plant if a turbo-generator is installed, as planned in the acid plant construction (refer Section 13.6.2).

• Electrical capacity of the turbo-generator on the SKZ-U in Kazakhstan with annual acid capacity 500,000 t/yr is 16 MWt. 6 MWt is used for plant needs and 10 MWt is electric profit which may be used for mining and processing of pregnant solutions (information from open sources).

• Indicative estimation of external capacity of a turbo-generator at the sulphurous acid plant is 0.1752 kWt*h/kg acid.

13.9 Cost of Supporting Infrastructure

13.9.1 Cost of Mine Infrastructure per 15-20 kt/yr Nickel

The following mine infrastructure costs were used for the Project:

• Central pump station: US$2 million

• Compressor: US$1 million

• Plumbing and Sewerage: US$1 million

• Household building: US$1 million

• Administration building: US$2 million

• Diesel generator: US$1 million

• Dewatering pond: US$1 million

• Vehicles (summary): US$1 million

• Drilling rigs (summary): US$3 million

• Repair shops, garage et al.: US$2 million

• Camp for personnel on site: US$4 million

• Substation: US$0.5 million/1 MWt

• Others: US$2 million

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13.9.2 Transport Infrastructure

• Transport infrastructure:

• Main roads: US$0.2 million/km

• Local roads: US$0.05 million/km

• Powerline to Plant: US$0.05 million/km

• Water supply pipes: US$0.1 million/km

13.10 Manpower and Administration

Manpower and administration expenses were estimated for mining and processing together.

The indicative cost for administration and manpower is based on Kazatomprom experience was used for estimation of cut-offs for operation cells:

• Administration – US$0.07/m3

• Manpower – US$0.31/m3.

The typical staffing of the ISR mine in Kazakhstan, estimated based on capacity of pregnant solutions of 2,000 m3/hr is as follows:

• Administration office and management: 30 persons

• Engineers at mine and processing plant: 80 persons

• Workers at mine and processing plant: 280 people.

Work is carried out on a rotation basis in three shifts. The main engineers and management work on a permanent basis.

The following staffing was estimated for different capacity of mine:

• 0 – 100 m3/hr: 50 persons

• 100 – 500 m3/hr: 250 persons

• 0 – 100 m3/hr: 400 persons

• 500 – 2,000 m3/hr: 500 persons

• 2,000 – 2,500 m3/hr: 600 persons

• >2,500 m3/hr: 800 persons

Average salary is US$1,500/month

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13.11 Closure and Remediation

Closure and remediation costs is required for restoration of groundwater and surface after depletion of the operation blocks/areas/mine.

The range of these expenses is from 1 to 10% of OPEX. 10% is used for USA projects where groundwater must be restored by artificial circulation of fresh water.

Experience from ISR mining in Kazakhstan demonstrates that a combination of different methods may be used for groundwater restoration. More detail on this matter is provided in Sections 14.1.7, and 14.1.9.

3% of OPEX was taken for closure and remediation as follows:

• 1% during operation on an annual basis as payments to the special governmental fund, and also to a Company fund designated for remediation works (scheduled or unplanned).

• 1% after closure of an operation block/area for active groundwater cleaning.

• 1% after closure of mine for long-term monitoring.

The EISA phase of the proposed PFS will better estimate these costs.

13.12 Parameters for Estimating Revenue

13.12.1 Nickel

CSA Global assumed a flat LME nickel price of US$16,500/t (US$7.5/lb) on a real basis for the life of the Project.

CSA Global has assumed that battery grade nickel sulphate produced at the Project will sell for a premium of 15% or US$2,475/t (US$1.125/lb) more than the LME nickel price.

More detailed information is provided in Section 2.6.

13.12.2 Cobalt

CSA Global assumed a flat LME cobalt price of US$47,000/t (US$21.4/lb) on a real basis for the life of the Project.

CSA Global assumed a cobalt sulphate price (metal equivalent basis) will be equal to the LME price of cobalt. More detailed information is provided in Section 2.6.

13.12.3 Ammonium Sulphate

Ammonium sulphate will be produced as final product and cost of this product was estimated by excluding ammonia from the operating cost (refer Section 13.7.2).

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13.12.4 Scandium

Scandium may be produced as by-product (refer Sections 10.6.5, 10.6.6, and 10.7 ) however additional investigations are required for estimation of scandium grade in mineralisation and pregnant solutions. Scandium is not included in the revenue stream for the Project.

13.12.5 Electricity

Electricity will be produced for the external market as excess between production from the sulphurous acid plant and consumption for mining and processing. Excess of electricity was taken into account in the operating cost.

13.12.6 Other Products

KazNickel may produce some other products from impurity components including:

• Manganese dioxide;

• Magnesium oxide or hydroxide; and

• These products are not included in the revenue stream for the Project.

13.13 Estimation of Cut-off Grade

13.13.1 Types of Cut-off Grades for ISR Projects

The following cut-off grades in pregnant solutions are defined for ISR projects (Figure 91):

• The breakeven cut-off grade in pregnant solutions is based on the operating cost without the cost of operation block construction. Breakeven cut-off grades should be used for termination of the operation of blocks/production wells if the cost of processing and leaching is higher than revenue from metals in solutions.

• The full cut-off grade in pregnant solutions is based on the full cost of mining and processing solutions – wellfield construction and OPEX. The full cut-off grade is used for selection of cells/blocks for the Mine Plan (operation).

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Cut off in pregnant solution based on average grade Extraction, %

nant sol for selection of operation blocks for mining and g calculation cut off grade in mineralisation re P

Breakeven cut off in pregnant solution − termination of mining of operation block

Liquid:Solid ratio

Figure 90: ISR Cut-off & Breakeven grades compared with extraction L:S ratio vs metal leaching with comparison of average and breakeven cut-off grades in pregnant solutions. Source: CSA Global

13.13.2 Application Cut-off Grades and Selection of Operating Cells for the Mine Plan

The best way to estimate the full cut-off grade and selection of mineralisation for the mine plan and cash flow model is based on profit of each operational cell >US$0. This is calculated using the following formula adopting parameters provided in Sections 13.5, 13.6, 13.8, 13.10, 13.11 and 13.12:

Profit of cell = Revenue – OPEX – cost of cell construction

Where:

• Revenue is net value of recoverable nickel and cobalt to pregnant solutions in cell

• OPEX is cost of pregnant solutions based on geometallurgical parameters and cost of solutions without cost of cell construction

• Cost of cell construction was estimated individually for each cell.

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Profit is the best option for estimation of the full cut-off grade due to the variable depth of operation cells (injection and production wells), and also given OPEX and revenue depends on different parameters – OPEX mainly depends on tonnage of the cell and L:S ratio, and revenue depends on nickel and cobalt grade and recovery from each operation cell.

The following three basic scenario were estimated in Scoping Study:

• Scenario 1. ISR by sulphurous acid produced on the own sulphurous acid plant from lump sulphur;

• Scenario 2. ISR by sulphurous acid produced on the own special equipment from sulphuric acid;

• Scenario 3. ISR by sulphuric acid;

• The first two scenarios were combined for estimation final basic scenario in Scoping Study:

• Initial capacity of mine is 5,000 t/yr nickel in the first period 6 years. Production of sulphurous acid by KazNickel designed equipment from Sulphur Acid – based on Scenario 2;

• Expansion of processing and construction of the own sulphurous acid plant are in the 7th year – realising Scenario 1.

Tonnage and grades of mineralisation for the mining plan based on profit in cells >US$0 and excluding cells with limestones for three scenarios are shown in Table 32

Table 32: Mine plan based on ‘profit in cells’ >US$0 and excluding cells with limestones

Type of blocks Mt Mteff Ni% Co% Ni%eff Co%eff Ni (t) Co (t) Above water table 129.6 106.5 0.30 0.021 0.37 0.026 389,588 27,186 Below water table 17.7 17.7 0.61 0.040 0.61 0.040 108,555 7,164 Total 147.4 124.3 0.34 0.023 0.40 0.028 498,144 34,350

Note: Effective tonnage and nickel-cobalt grades were estimates by using multiply coefficient x 0.5 for fresh rocks andx1for weathering crust rocks.

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13.14 Project Infrastructure

The Gornostay Project already has substantial infrastructure in place. A satellite image from summer 2019 (Figure 92) shows the location of the regional infrastructure in relation to the pilot well field blocks and cells, the administrative, accommodation, and pilot plant buildings, the acid storage and the barren and pregnant solution ponds.

Figure 91: Gornostay Project infrastructure (base imagery from GoogleEarth dated September 2019)

13.14.1 Roads

The road network in the project area is well developed. The paved Pavlodar-Semey Road is located along the north flank of Left River Side area of the Project (Figure 31, Figure 93).

A network of dirt roads is developed throughout the Project; however, these roads are only accessible by 4WD during the wet seasons.

A sealed road length of approximately 5 km to the mine from the existing Pavlodar-Semey Road should be considered as part of proposed PFS studies by the Company as part of the next stages of work (Figure 93).

13.14.2 Powerlines

High-voltage powerlines cross the Project area in the southern and northern parts of the Left River Side area (Figure 93). The available supply is understood to be at least 10 MW.

The mine should be connected with the existing grid for delivery of excess electrical power, as well as for a reserve source of power if the turbo-generator of the sulphurous plant is under maintenance.

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The shortest distance from the mine site to the powerlines is along the proposed paved road to the mine (Figure 93), a length of 5 km.

Substations at the mine and at connection points with the existing power grid should be constructed.

In CSA Global’s opinion, and based on discussions with the Company, the power supply is stable, reliable, and of sufficient capacity to supply the operations at Gornostay. CSA Global notes that the power requirements of an ISR operation are much less than for a conventional mine where comminution of ore requires significant power requirements.

13.14.3 Water Supply

Raw Water

A reliable supply of water is required for hydrometallurgical extraction of nickel and cobalt.

Water will be extracted from local boreholes outside of mining area to provide enough water for this process. A water supply pipeline will be constructed. The maximum length of the pipeline is 7 km because the Irtysh River is located this distance from the mine site (Figure 93).

The water will largely be lost to tailings and evaporation. All required water treatment facilities will be sourced by ion exchange technology.

Rainwater will be collected in special water storage dam for additional supply to the mine. This includes potable water, fire water and mine utility water.

The raw water will be treated on site to produce filtered water, reverse osmosis water, demineralised water, cooling water and potable water for a range of duties in the processing plant and refineries.

Water for ISR process

Additional water supply for ISR is not required if operations will be in water balance: the quantity of injected solutions will be similar to extracted solutions. Otherwise, the water level will drop and the ISR process for some blocks will be uneconomic or even impossible.

However, the Project team considers a potential water table rise of 15–20 m and water balance should be estimated for this option.

Process Water Treatment

Water will be recycled from the tailings facility to reduce raw water consumption. Magnesium build up in the system can have adverse effects however on slurry rheology and acid consumption. This water will be treated to remove metals and sulphates, returning it to the equivalent of raw water quality.

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Process water will be treated in a high-density sludge process to remove any solids or dissolved metals, in particular magnesium and manganese. Ammonia will then be stripped from the treated water before it proceeds to an IX process. The treated process water will then be transferred to the start of the processing facility.

Subject to confirmation as part of ongoing technical studies at PFS level, CSA Global concludes that ground water together with supplementary pumping from the Irtysh River (as required) will be sufficient to supply to Gornostay Project requirements.

13.14.4 Limestone

The limestone quarry is located on the northern flank of the Left River Side area, between the railway line and Irtysh River (Figure 31, Figure 93). This mine may be used for limestone supply to the refinery plant.

13.14.5 Sulphuric acid and Sulphur

In the initial 6-year period of the production period it is proposed that KazNickel will produce sulphurous acid from sulphuric acid. KazNickel has offers from suppliers for delivery of sulphuric acid on site at a cost of ≈US$70/t, with a volume of up to 2 Mt.

Sulphur will be used after construction of sulphurous acid plant. Sulphur is produced as by-product from an oil refinery in Western Kazakhstan. The cost of sulphur is around US$22–26/t. Sulphur will be delivered to the mine by railway and used for production of sulphurous acid.

13.14.6 Manpower and Camp Site

The population is employed mainly in the industrial sector of Kurchatov and Semey, as well as in agriculture at nearby farms, although agriculture is not well developed.

There are two nearby towns, Semey and Kurchatov, with populations of 360,000 and 12,000 respectively. The distance from the Project to Kurchatov is 25 km, and to Semey is 110 km (Figure 30, Figure 93). Personnel can be hired from these towns on a rotational basis.

The camp site and cottage village may be located northeast of the mine on the banks of Irtysh River (Figure 93).

Highly qualified specialists may be hired in Nur-Sultan (formerly Astana) and South Kazakhstan. Kazakhstan is a global leader in ISR technology, and all required specialists may be hired from the local market.

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13.14.7 Railway

The main unpowered single line railway Pavlodar-Semey passes through northern flank of the Left River Side area of the Project (Figure 31, Figure 93).

These railways can be used for delivery of sulphur, reagents and other loads. A railway station or siding should be investigated during PFS studies for unloading, storage and following transportation to the mine site by vehicles.

Railway capacity should be checked by the Project team, potentially slight improvements are required for reach the goal capacity.

Additionally, the distance between the existing railway and mine site is 5 km, and construction of a railway may be a good alternative to the complex procedure of load delivering, however KazNickel is planning to construct railway station on existing line (Figure 93).

All reagent storages may be constructed on site.

13.14.8 CSA Global Comment on Adequacy of Regional Infrastructure

In CSA Global’s professional opinion, the regional infrastructure is likely to be sufficient to support the forecast production rates in the Scoping Study. However, detailed studies, as proposed by the Company as part of the next stages of work, are required to accurately document the capacity of the infrastructure, the availability and costs of using the infrastructure, and any permitting, approvals or agreements needed to use the infrastructure.

13.15 Capital and Operating Costs

13.15.1 Capital Costs

Capital expenditure (CAPEX) was estimated based on conceptual design of the mine, processing facilities, supporting infrastructure, costs from KazNickel investigations/offers from suppliers, CSA Global’s database, Kazatomprom experience and the Sunrise project (Fairfield et al., 2018).

• Detailed descriptions of the initial parameters are provided in Sections 13.5.1, 13.7.1, and 13.9.

The Project consists of the following facilities:

• Wellfield areas/blocks:

o Operational (injection, extraction and observation) wells including pumps.

o Facilities for operational cells: well houses, local pipes for connection wellhouses with operational cells, air lift (if required) for injection solutions.

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o Facilities for connection of wellfields with the mine site, including:

• pipes between wellfield areas and the sulphurous acid plant for leaching solutions and the processing and refinery Plant for pregnant solutions

• unsealed roads with connection to the mine site

• powerlines for wellfield houses, pumps and air lift system.

• Equipment for producing sulphurous acid from sulphuric acid in the initial 6 years of production and sulphurous acid plant with electrical power turbo-generator and steam generator for other periods of processing.

• Processing and Refinery Plant including initial loading of reagents:

o IX Plant for sorption and desorption nickel and cobalt

o Refinery Plant for purification of eluate after IX Plant

o Storages for reagents and fuel.

• Mine Infrastructure:

o Barren and pregnant solutions ponds

o Central pump station with cantilever pumps

o Diesel generator for reserve electrical power generation

o Compressor

o Thickener

o Tailings storage facility

o General fitting – connection of all facilities at the mine site by pipes and electrical lines/wires.

• Administration houses and laboratory.

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Figure 92: Project infrastructure (see legend on the Figure 31)

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• Project infrastructure:

o Powerline-to-powerline grid and substation;

o Water supply system;

o Options for a rail spur and/or railway station at mine or close to mine, as well as a paved road for connection with road grid should be investigated.

• Transport including vehicles, drilling rigs, repair shops, garages etc;

• Ancillary services.

Total CAPEX is:

• US$1,531 million for development of mineralisation inside the tenement only (Table 33);

o US$563 million for processing plant, acid plant, infrastructure;

o US$968 million for wellfield development;

• Development of the mine will be based on the following modules;

• Processing plant for pregnant solutions (IX and refinery plants) based on modules 5,000 t/yr nickel and maximum capacity of 2,700 – 3,000 m3/hr for pregnant solutions;

• Tailings storage facility for each module of processing plant 5,000 t/yr nickel;

• Acid plant with turbo-generator based on modules 100 kt/yr acid;

• Mine infrastructure based on modules 15 – 20 kt/yr nickel; and

• CAPEX depends on the mine plan (Figure 94).

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Left River Side Area inside tenement 30,000 3,000

25,000 acid, Mtpa 2,500

20,000 2,000 Wellfield construction 15,000 1,500 nickel, tpa Mtpa acid Special equipment for tpa nickel production sulphurous 10,000 1,000 acid from sulphuric 5,000 500

Acid plan construction 0 0 1 3 5 7 9 11131517192123252729313335 Processing plant years construction 250 Tailing dam development CAPEX, M US$

Mine infrastructure 200

General infrastructure 150 R&D, earth works

US$ million 100

0 1357911131517192123252729313335 years

Figure 93: Capital cost estimate for the Gornostay Project

CAPEX has been separated into the following stages (Table 33, Figure 94):

• Stage 1. Year 1. Construction of the processing plant with capacity of 5,000 t/yr nickel, installation of equipment for producing sulphurous acid from sulphuric acid, construction of initial mining infrastructure, using existing infrastructure developed for the pilot plant, construction of initial wellfield block.

• CSA Global notes that the Company will begin some of the capital expenditure shown here prior to Year 1, following completion of necessary technical studies and other preparatory work. Such expenditure may include long lead time items of plant and equipment, as well as well field development activities that are capitalised. The telescoped nature of ISR development means the front end engineering and design work on some aspects of the project will be possible, while other aspects of the project remain at an earlier stage (e.g. the refinery plant design need not be finalised before the IX plant).

• In other words, some costs will be incurred in the two years preceding Year 1, but have been captured in Year 1 in Figure 94.

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• Stage 2. Years 2–7. Construction of additional processing infrastructure with capacity of 5,000 t/yr nickel, sulphurous acid plant, full mine infrastructure, general infrastructure, development of wellfield. Most of the capital costs in this stage are expected to come at the end of the stage.

• Stage 3. Years 8–20 for whole area and Years 8–17 for tenement area. Construction of two modules of processing plant to reach full capacity of 20,000 Ni. Development of acid plant based on acid consumption requirements, developing mine infrastructure and wellfield.

• Stage 4. Years 18–30 for. Continue wellfield construction to Year 25 for sustaining production.

Initial CAPEX is US$103 million (Table 33, Figure 94).

Closure costs are included with the operational costs.

Table 33: Capital cost indicative estimate (nominal capacity 20,000 t/yr Ni)

Stage 2 Stage 4 Acid plant Stage 3 Developing and Increasing sustainable Stage 1 increasing capacity production Total Initial capacity Years Years Item cost Year 1 Years2–7 8–17 18–30 US$ M US$ M US$ M US$ M US$ M Research & Development, earth works 5.0 2.0 3.0 – – Processing Plant (IX and refinery) 292 73 73 146 – Tailings storage 32 1.6 14.4 16 – Equipment for producing sulphurous acid from sulphuric acid 3.2 3.2 – – – Acid plant 184 – 56 128 – Mine infrastructure 44.2 6.5 9.1 28.6 – General Infrastructure 2.8 – 2.8 – – Subtotal 563 86 158 319 – Wellfield development 968 17 127 411 413 Total 1,531 103 285 730 413

1. Stages are presented in terms of time from commencement of construction of the first production well field block (which is planned for the second quarter of 2023).

2. The Company will begin Stage 1 capital expenditure beginning in the two years prior to Year 1, but for simplicity it is all shown in Year 1.

3. Stage 2 capital costs are expected to mostly occur at the end of the stage.

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4. To manage capital outlays at the commencement of the Project when sulphurous acid requirements remain relatively low, the Company plans to produce the sulphurous acid they need from sulphuric acid purchased from third-party suppliers. As the Project matures, after about six years, the Company plans on switching to production of sulphurous acid directly on site from lump sulphur using a dedicated acid plant they will construct.

13.15.2 Operating Costs

Operating expenditure (OPEX) was estimated based on the mining and processing flowsheet as well as costs from KazNickel investigations/offers from suppliers, CSA Global’s database, Kazatomprom experience, and the Florence and Sunrise projects (Zimmerman et al., 2013; Fairfield et al., 2018).

• A detailed description of initial parameters is provided in Sections 13.5.2, 13.7.2, 13.8, 13.10, 13.11.

The Project flowsheet includes the following main operations (Table 34 and Figure 95):

• Production of sulphurous acid, electrical power and steam;

o Sulphuric acid in the initial 6-year period of production and sulphur for following periods; and

o Manpower.

• ISR operations – injection leaching solutions, ISR of mineralisation, extraction of pregnant solutions:

o Sulphurous acid consumption;

o Electrical power;

o Manpower; and

o Workover.

• Processing of pregnant solutions on the IX Plant:

o Resin TP-207 (or similar);

o Eluant – concentrated sulphuric acid;

o Electrical power;

o Manpower; and

o Maintenance and laboratory costs.

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• Refinery of eluate after desorption:

o Steam for heating eluate;

o Limestone, lime and ammonia for calibration of pH;

o Other different reagents: flocculants, SX diluent (Exxol D80 or other), SX extractants (Cyanex 272, D2EHPA, Versatic 10); organic acids (formic acid, oxalic acid), soda ash, caustic, sulphuric acid, hydrochloric acid, hydrogen peroxide, resin;

o Water supply;

o Electrical power;

o Manpower; and

o Maintenance and laboratory costs.

• Dewatering and thickening of waste material:

o Electrical power; and

o Manpower.

• General and administration costs:

o Haulage;

o Sales;

o General management;

o Health, safety and general environment;

o Finance, human resources and logistics;

o Town administration; and

o Insurances.

• Closure and remediation (refer Section 14.1.9).

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The total estimated OPEX from the Scoping Study is shown in Table 34 and Figure 95:

• The average annual OPEX is estimated to be US$70 million (US$5.4/kg NiEq7 or US$2.4/lb NiEq), while the average OPEX at full mine capacity is estimated to be US$115 million.

Table 34: Operating cost parameters assumptions

OPEX in cash flow model Estimate of unit cost of Item OPEX for LoM for LoM nickel-cobalt production M US$ M US$ US$/kg (NiEq) US$/lb (NiEq) Sulphurous acid 1,148 1,148 2.87 1.30 Resin 153 153 0.38 0.17 Limestone and quicklime 108 108 0.27 0.12 Ammonia 169 Excluded due to excluded Ammonium Sulphate from Product Other reagents 261 261 0.65 0.30 Maintenance consumables and shutdown lab 119 119 0.30 0.13 Water supply 33 33 0.08 0.04 Power supply & Steam –45 –45 –0.11 –0.05 Manpower without administration 218 218 0.54 0.25 General and administration 101 101 0.25 0.11 Closure and remediation 63 63 0.16 0.07 Total 2,328 2,159 5.40 2.45

7 NiEq = nickel equivalent = Ni + 2.5 Co

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Left River Side Area inside tenement 180

160 140

120 100 80

US$ million 60 40

20 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 -20 years Sulphurous acid Water supply

Electrical power supply Resin Reagents excl limestone Manpower and ammonia Administration Limestone Maintenance Ammonia – excluded from OPEX due to excluded sulphate ammonia from Revenue

Figure 94: Operating cost estimate and distribution of costs for Gornostay Project (without closure and remediation)

13.15.3 Patent Royalty

The flowsheet of ISR mining and subsequent processing was prepared using the following patented technologies:

• Patent of the Russian Federation No. 2465449 dated 01.02.2011 which belongs to UGTC “Method for extracting nickel and cobalt from silicate nickel-cobalt ores” for extracting nickel and cobalt from lateritic mineralisation by ISR using sulphur dioxide.

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• Clean TeQ has the exclusive 99-year licence for all technical information relating to IX resin, ionic membranes, organic solvent extractants, including manufacturing know-how and plant design, for all countries outside the former USSR. Also, Clean TeQ has developed a processing scheme of purification of eluate for nickel-cobalt laterite projects. Clean TeQ has the patent for development of extraction and purification of scandium from laterite ores.

• CSA Global has not regarded jurisdiction issues and related royalty payments for patented technologies, especially the final flowsheet which should be tested in following study stages.

13.16 Financial Analysis

A financial analysis of the Gornostay Project – based on a mine producing nickel sulphate and cobalt sulphate – has been untaken as part of the Scoping Study via an assessment of the discounted cash flow for the life of the Project.

The Project is estimated to generate discounted cash flows totalling US$735 million for mineralisation inside the tenement only based on a discount rate of 8%8 (post-tax and real), assuming full project funding by shareholder equity. The post-tax real, ungeared IRR of the Project is expected to be 38% with payback in 4.1 years from start of construction.

This analysis has been based on several assumptions, which include:

• Nominal maximum capacity of nickel 20,000 t/yr for the tenement area together with capacity on pregnant solutions of 8,400 m3/hr for the tenement area.

• LoM is 30 years for mineralisation inside the tenement.

• Initial CAPEX of US$103 million for both scenarios for construction of the first stage of the mine with capacity of 5,000 t/yr nickel.

• Full CAPEX: US$1,531 million including US$563 million for infrastructure and processing facilities and US$968 million for wellfield development for 25 years (Figure 94).

• OPEX: Scenario for mineralisation in the tenement only: US$5.4/kg NiEq (US$2.5/lb Ni + 2.2 Co) for contained nickel in sulphate products.

8 An 8% discount rate was selected as this is a rate commonly used in reported Scoping Studies and readily allows comparison with other studies. The Company advises (pers. comm. Taishibayey, 2019) that in their opinion this is not an unrealistic cost of capital for the parent company of KazNickel

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• Average weighted pricing received for:

o Nickel in nickel sulphate of US$16.5/kg (US$7.5/lb). Nickel in nickel sulphate including a nickel sulphate premium of US$2.475/kg (US$1.125/lb) nickel.

o Cobalt in cobalt sulphate of US$47/kg (US$21.4/lb) cobalt.

13.16.1 Inputs and Assumptions

The valuation assumes a full project life. The model is developed based on an estimate of the real cost of operations and therefore does not include any allowances for inflation of either costs or revenues. This provides a more accurate estimate for the long-term average cost and revenue for the Project.

The operating cost is inclusive of all activities required for ISR and processing of pregnant solutions. This includes all maintenance activity for infrastructure and support facilities. It also includes all management costs for both site operations.

The capital and operating costs for the processing plant assume that the plant is owned and operated by KazNickel.

Depreciation (non-cash) expenses for each aggregated capital item are calculated using prescribed accounting depreciation rates with a straight line methodology. For calculation of corporate tax payments, a reducing-balance methodology has been applied for tax depreciation of assets when calculating taxable income.

All capital items excluding wellfield blocks were assumed to have a 10-year operating life with any residual capital value existing at the end of this period written-off from a tax perspective by the company. Wellfield blocks were assumed to have a one-year operating life based on ISR uranium industry experience in Kazakhstan.

The key assumptions for the Scoping Study cash flow model are shown in Table 35.

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Table 35: Gornostay valuation model key inputs

Item Units Quantity Maximum capacity by solutions m3/hr 12,650 LoM years 30 Reach full capacity year 17 Annual sulphurous acid production t/a Up to 2,350,000 Estimated overall recoveries Nickel % 68 Cobalt % 72 Estimated overall production Contained nickel kt 338 Contained cobalt kt 25

Nickel sulphate NiSO4*6H2O kt 1,514

Cobalt sulphate CoSO4*7H2O kt 118 Long-term price assumptions LME nickel US$/kg 16.5 Nickel sulphate premium US$/kg 2.475 LME cobalt US$/kg 47 Discount rate assumptions Discount rate % 8 Taxes Income tax % 20 Property tax % 1 MET nickel % 6 MET cobalt % 6 Depreciation Type Straight line Wellfield period years 1 Plant and Infrastructure years 10 Capital cost Development capital cost US$ M 563 Wellfield capital cost US$ M 968

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Taxes

The following taxes were taken into account:

• MET or royalty for mined metals depside on positive or negative cash flow:

o Nickel 6%

o Cobalt 6%.

• Property tax – 1%

• Corporate tax – 20%.

For financial evaluation and taxation purposes, the Project is assumed to be an incorporated legal entity. GST has been excluded from all cost estimates.

Discount Rate Assumptions

A post-tax, real, discount rate of 8% has been applied for evaluation purposes.

Pricing Assumptions

A set of weighted average prices for each product has been assumed as follows:

• Nickel in nickel sulphate of US16.50/kg (US$7.50/lb). Nickel in nickel sulphate including a nickel sulphate premium of US$2.475/kg (US$1.125/lb) nickel.

• Cobalt in cobalt sulphate of US$47/kg (US$21.40/lb) cobalt.

• Electrical power of US$0.04/kW*hr (profit of electrical power is included to operation cost – see Figure 95).

• Ammonium sulphate excluded from revenue stream (Figure 95).

The total revenue for the LoM is:

• US$7,581 million for mineralisation inside the tenement only.

Escalation and Inflation

Financial modelling was principally undertaken in real terms US$ (February 2020) with key price and cost input assumptions assumed to remain constant in real terms.

Working Capital

Working capital was not estimated for the conceptual model.

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13.16.2 Scoping Study Cash Flow Analysis

Summary Non-Discounted Economic Model

Figure 97 presents the projected annual and cumulative post-tax non-discounted free cash flow generated by the Scoping Study cash flow model. The base case total non-discounted free cash flows (post-tax) generated by the Project is expected to be US$2,708 million based on Scoping Study assumptions.

Discounted Cash Flow Analysis

Table 36 presents the annual and cumulative post-tax discounted (8%) free cash flow generated by the Scoping Study cashflow model. The base case total discounted free cash flow (post-tax) generated by the Project is expected to be US$735 million based on a discount rate of 8% (post-tax and real), assuming full project funding by shareholder equity.

The post-tax real, ungeared IRR of the Project is projected to be 38% with payback in 4.1 years from start of construction.

When making forecasts for the operating cash costs and the production costs of the project, the Company and the Competent Person have used the scoping study completed by CSA Global as the basis of the forecasts. Major assumptions include:

• no significant increase in third party contracting fees,

• no significant increase in benchmark interest rates,

• no significant increase in consumable and energy cost, and

• no significant increase in labor costs.

Forecasts of operation costs in the scoping study were based on analogous processes from operating mines/plants, from published feasibility studies, or were directly estimated based on material balances and costs/prices; specifically:

• Operation costs:

o Wellfield operations:

o Electrical power consumption was based on the Florence copper project (like Gornostay a project exploiting weathering crust hosted mineralisation), and from ISR uranium data.

o Acid consumption was based on laboratory tests, and the cost of acid was based on the market cost for sulphuric acid (initial period) and lump sulphur (after construction of acid plant) and took into account the costs of production and transport.

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o Manpower, administration costs were derived from ISR uranium project examples.

o Acid plant – production of electrical power balance is based on typical sulphuric acid plant costs including the current costs of reagents.

o Processing plant

o Ion-Exchange plant – resin and other reagent consumption rates were based on ISR uranium experience, with the costs provided by the supplier (LANXESS).

o Refinery plant costs from derived from the published SunRise Ni-Co laterite Project feasibility study.

o Closure and remediation were assumed to be 3 of OPEX, based on the authors industry experience.

The major assumptions informing the forecast financial information are considered appropriate for a scoping level study.

13.17 Barriers to Market Entry

Once an project produces a nickel or cobalt product, there are no barriers to entry into the marketplace to sell that product. The marketplace is open and internationally competitive. Typically, projects have offtake agreements in place for their final product well before initial metal production. In the absence of dedicated offtake contracts for product sale, metals can also be sold into metal exchanges such as the London Metal Exchange or Shanghai Metals Market.

At the project initiation level, the only barriers to entry into the nickel and cobalt production markets are those of:

1. Project economics. The proposed producing asset must be capable of delivering metals to market and meet economic criteria that produce the desired return on the capital employed to develop that asset through the commodity price cycle. Obviously, those projects with lesser capital development costs, lesser operational costs, and greater operating margins in all commodity cycles will have the greatest competitive advantage relative to peers.

and

2. Site specific geopolitical factors that vary from country to country, and from project site to project site, such as: royalties, imposition by countries of any export restrictions (for instance, the Indonesian raw materials export ban), foreign ownership restrictions, environmental conditions, social licence and community acceptance of mining and/or processing facilities in their locality.

These factors will vary on a project by project basis, with varying impact (if any) on the ability for that project to bring a nickel and/or cobalt metal product to market.

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13.18 Market Share and Cost Competitiveness Analysis

The Gornostay Project represents a new and as yet unproven in situ recovery method at the full commercial scale for extraction of nickel and cobalt. Should the project continue to be successful in commissioning and operating a mine, it will represent one of the first ISR Ni-Co operations anywhere. As such, direct competitiveness analysis is predicated on a series of assumptions as to viability and performance of the project without the benefit of existing similar operations for benchmarking performance. These assumptions are detailed within the Scoping Study conducted by CSA Global (Seredkin 2019). The Scoping Study represents a high-level analysis with significant uncertainty, typically quoted in the range of ±35% on all parameters and outcomes.

Based on the results of the Scoping Study, CSA Global estimate that over the Life of Mine (“LoM”) operation the Project may produce approximately (within the ranges of uncertainty) 400,000 t of nickel and 30,000 t of cobalt.

Annualised over the LoM of 27 years, this represents (within the ranges of uncertainty) an approximate nominal average annual production of 14,800 t of nickel and 1,100 t of cobalt.

Based on the 2018 global production of nickel (2.3 Mt) and cobalt (135,700 t) as a benchmark, this represents approximately 0.6% of global nickel production and 0.8% cobalt production.

Given the project is planned to directly feed into the battery cathode market for nickel and cobalt sulphate and the estimated timeline to commence production in 2023 with an additional three years to full production (as detailed in the CPR), the project is estimated to provide approximately 5% of 2025 global battery nickel sulphate demand and 0.5% of 2025 global battery cobalt demand.

Cash costs are a standard metric used in mining as a reference point to denote the basic cash costs of running a mining operation to allow a comparison across the industry. Although producers are not bound to adhere strictly to any convention, the most widely accepted definition is that cash costs are direct costs, which include costs incurred in mining and processing (labour, power, reagents, materials) plus local general and administrative expenses, freight and realisation and selling costs.

For the benefit of comparison to other operations (net of by-product credits), allowances must be made for operational costs to extract that by-product before deduction of the by-product sales credit from the operational cost.

In estimating the Gornostay costs, all operation costs have been related to nickel extraction because it is estimated that any additional operation cost related to cobalt extraction is comparatively very low (not more than 5% of the total cost). After processing division of the nickel and cobalt liquors, the purification of a cobalt — rich liquor to produce cobalt sulphate only involves the removal of small residual amounts of manganese, copper and zinc that were removed mostly earlier in the process stream. The cobalt sulphate represents about 7% of the total tonnage of final products.

Thus, the comparative by-product net cash cost estimation for Gornostay is arrived at by subtracting the cobalt metal unit revenue from the total operating cost, divided by the tonnage of nickel metal in the final product.

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This gives an operating cash cost per nickel metal unit (net of by-product credit) of US$3.00/kg or US$1.36/lb.

Examination of the global cost curve comparison of operating costs for nickel mines presented in Figure 96 shows the typical costs for nickel production range from US$2.65/kg to US11.00/kb (US$1.20/lb to US$5.00/lb).

This would place the Gornostay Project just into in the second quartile cash cost of world nickel projects using 2019 projects as a benchmark (Figure 96). Though it should be noted that the large negative cost of the Norilsk operation due to substantial PGE credits is a distorting factor on the percentiles.

Aside from factors indicated in Section 13.17, the only barrier to entry to market for the final products of the operation in Kazakhstan will be cost of freight to port/rail facilities for shipment to end users and shipment onto site of consumables. In the Scoping Study, CSA Global does not see this transport cost as a significant barrier to market entry given the proximity of good road and rail infrastructure to the project.

In CSA Global’s professional opinion, should the Scoping Study base case assumptions and inputs be valid, then the Gornostay Project would be just above the first quartile of world nickel projects for operating cost with US$3.00/kg or US$1.36/lb (NiEq) nickel metal (net of by-product credit).

Note that in comparison with other nickel laterite producers, the Scoping Study suggests that the Gornostay Project would likely be among the most profitable/lowest cost producer. Furthermore, this analysis does not consider additional by-product credits for products such as scandium, manganese or ammonium sulphate, the production of which is possible but not yet assessed.

The lowest cost producers of nickel are operations exploiting sulphide deposits that typically have a substantially greater endowment of by-product metals such platinum, palladium, gold and copper, and these operations dominate the left-hand side/first quartile of the cost curve. The value of the by-products is such that for the best deposits the cost of nickel production is negative, with the Norilsk operations (the first operation on the left-hand side of the cost curve) providing a dramatic demonstration of this.

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Production (%) 0 25 50 75 100 1,000 25th percentile 50th percentile 75th percentile

500

-500 Total Cash Cost (¢/lb) Total

-1,000

-1,500 0 310 621 931 1,241 Paid Nickel (000 tonnes)

Gornostay SS OpEx, 136 (¢/lb) Gornostay SS OpEx + 50%, 204 (¢/lb)

Figure 95: Comparison of cash operating cost for nickel at the Gornostay Project with world nickel projects Source: S&P Global Market Intelligence, CSA Global

Revenue: Left River Side Area inside tenement Nickel Sulphate 600 Cobalt Sulphate Expenses: 400 OPEX Closure & Remediation 200 Taxes 0

Wellfield construction US$ million Processing plant & mine site -200 Cash Flow model: -400 EBITDA 13579 11 13 15 17192123252729313335 Non-Discount Cash Flow years

Figure 96: Economic model of the Gornostay Project (US$)

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Left River Side Area inside tenement 1,000

800

600

400 US$ million 200

-200 13 579 11 13 15 17192123252729313335 years

Discount (8%) cash flow

Discount (8%) Net Present Value (NPV8)

Figure 97: Discounted (8%) free cash flow of the Gornostay Project (US$)

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Table 36: Summary of economic outputs of the Gornostay Project Scoping Study

Item Units Quantity Full CAPEX US$ M 1,531 – including construction CAPEX US$ M 563 – including wellfield CAPEX US$ M 968 – including initial CAPEX US$ M 103 LoM years 30 Period to reaching full capacity years 17 Overall production, contained nickel kt 338 Overall production, contained cobalt kt 25 Overall production, nickel sulphate

NiSO4*6H2O kt 1,514 Overall production, cobalt sulphate

CoSO4*7H2O kt 118 LME nickel US$/kg 16.5 Nickel sulphate premium US$/kg 2.475 LME cobalt US$/kg 47.0 Operational Ni + Co cost (Co = 2.5 * Ni) US$/kg 5.4 Operational Ni + Co cost (Co = 2.5 * Ni) US$/lb 2.5 Revenue (not discounted) US$ M 7,581 Maximal annual EBITDA US$ M 323 Average annual EBITDA US$ M 181 IRR (prior taxes) % 54 IRR (post taxes) % 38 NPV0% US$ M 2,708 NPV8% US$ M 735 Payback period after start construction years 4.1

Note:

• CSA Global in preparing the financial analysis, followed methodology and procedures, and exercised due care consistent with the intended level of accuracy, being a Scoping Study, using its professional judgement and reasonable care. All estimates and other values are only valid as at the date of the Report and will vary thereafter.

• These economic outputs are based on low-level technical and economic assessments that are insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised.

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13.19 Sensitivity Analysis

Multiple hypothetical scenarios have been considered in which selected critical assumptions are flexed within a given range.

The sensitivity analyses summarised in

+50% +35% +30% +15% 0% –15% –30% –35% –50% Operating expenditure 451 536 565 650 735 820 905 934 1,019 Capital expenditure 598 639 653 694 735 776 817 831 872 Wellfield cost 585 630 645 690 735 780 825 840 885 Nickel sales price 1,532 1,292 1,212 974 735 497 258 178 –58 Cobalt sales price 878 835 821 778 735 692 649 635 592 Nickel recovery rate 1,532 1,292 1,212 974 735 497 258 178 –58 Cobalt recovery rate 878 835 821 778 735 692 649 635 592

Figure 99 have been completed using the net present value (NPV) result of US$735 million (discounted at 8% post-tax) as the baseline comparison result.

Sensitivities were conducted on OPEX, CAPEX, wellfield cost, product prices, and metal recoveries.

The sensitivity analysis calculated a positive NPV under all scenarios and supports the potential viability of the Gornostay ISR Project, though the large range associated with nickel prices/recovery is not unexpected for a Scoping Study.

1,800 1,600 1,400 Ni recovery or price 1,200 1,000

800 , US$ million CAPEX 8% 600 Co recovery or price [735] wellfield

PV 400 OPEX N 200 0 -50 -35 -30 -15 0 +15 +30 +35 +50 relative %

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Figure 98: Discounted (8%) NPV sensitivity diagram (nickel price with sulphate premium)

On a finer scale, the results reveal the following changes:

• 1% increase in operating expenditure will result in a 0.77% decrease in NPV.

• 1% increase in capital expenditure will result in a 0.37% decrease in NPV.

• 1% increase in wellfield cost will result in a 0.40% decrease in NPV.

• 1% increase in nickel price or recovery rate will result in a 2.20% increase in NPV.

• 1% increase in cobalt price or recovery rate will result in a 0.39% increase in NPV.

13.20 Discussion of the Outcomes of the Scoping Study

The objective of a Scoping Study is to:

• Identify if the opportunity has a realistic business justification.

• Assess major assumptions to a confidence level of ±45% or better.

• Confirm alignment with the business strategy.

• Justify further work and expense on realising the opportunity.

• Identify any significant impediments to realising the opportunity and assess mitigations.

• Identify further work requirements – e.g. Exploration, testwork, base line studies, research to improve confidence in assumptions and analysis.

• Establish a plan for the Pre-Feasibility Study.

CSA Global completed a Scoping Study (SS) on the Gornostay nickel-cobalt deposits addressing the potential use of ISR mining to exploit the project.

The proposed Gornostay processing plant is based on a hydrometallurgical processing flowsheet following ISR by sulphurous acid to leach nickel and cobalt. The leached nickel and cobalt would be

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The key features of the Scoping Study comprise:

• Sulphurous acid being produced from sulphuric acid at the beginning of the project, before switching to production from lump sulphur on site, as the project matures.

• Nickel, cobalt (and impurity components) are brought to surface in a pregnant solution by pumping from production (extraction) wells.

• These pregnant solutions are delivered to the Processing (Sorption) Plant via a small pond which allows removal of a proportion of suspended solids in the pregnant solutions.

• Nickel/cobalt captured onto ion exchange resins and then stripped from the resins in U-shaped desorption columns (Processing Plant).

• Nickel/cobalt sulphate extraction, purification and recovery (refinery plant).

• Tailings neutralisation and storage.

• Ammonium sulphate crystallisation.

• Barren solutions after processing are returned to the acid plant for re-acidification and then recycled for leaching of nickel and cobalt again.

The proposed process plant allows production of high-purity Class 1 hydrated nickel sulphate

Scoping Study Capital Expenditure (CAPEX) was estimated based on conceptual mine design, processing facilities, supporting infrastructure, costs from CSA Global’s database, and data from Fairfield et al, 2018.

Scoping Study Operating Expenditure (OPEX) was estimated based on the conceptual mining and processing flowsheet, as well as costs from CSA Global’s database, and other public domain data (Zimmerman et al., 2013; Fairfield et al., 2018).

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CSA Global completed an analysis of all available information concerning:

• Geology/mineralogy;

• Hydrogeology;

• Hydrometallurgy/geometallurgy;

• Processing; and

• Infrastructure.

CSA Global prepared three basic scenarios that were assessed in the Scoping Study:

1. ISR by sulphurous acid produced on sulphurous acid plant from sulphur (options – own sulphurous acid plant or third-party plant).

2. ISR by sulphurous acid produced from sulphuric acid.

3. ISR by sulphuric acid.

A combination of the first two scenarios provided the best scenario for project development, with commencement of ISR using sulphurous acid produced from sulphuric acid, and then following construction of sulphurous acid plant.

CSA Global’s Scoping Study showed that scenario three was unlikely to be economic.

The operating costs for the Gornostay ISR project as estimated by the Scoping Study are highly attractive, and likely to be in the lowest quartile of producers. This outcome is a significant advantage for the project, and suggests that a project based on ISR will be robust and highly competitive.

In CSA Global’s professional opinion:

The Gornostay Project has the potential to be developed into an economically viable and profitable mining and processing operation.

The findings of the Scoping Study are that further investment and project development is warranted.

Work following the Scoping Study has outlined the steps necessary to progress the project, the plan for conducting the Pre-Feasibility Study/Ore Reserve estimation and moving to the development of the mine is discussed in the next section of this report.

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14 PERMITTING, ENVIRONMENTAL IMPACT, AND COMMUNITY PERFORMANCE

14.1 Environmental Discussion

14.1.1 Environmental Features of In Situ Recovery Projects

ISR allows the extraction of mineralisation with minimal disturbance to the existing natural conditions. In contrast to underground and open pit mining, there are (Seredkin et al., 2016):

• No open pits.

• No rock dumps and only limited requirements for tailings storage; (the Gornostay Nickel-Cobalt Project will be the first ISR with a TSF. The volume of tails will be much less however than in conventional mining and processing.)

• No dewatering of aquifers.

• Much smaller volumes of mining and hydrometallurgical effluents (that could contaminate the surface, air and water supply sources).

• Very limited exhaust pollution.

As a result, the likely impact of ISR projects on the environment is much less than for conventional mining methods, as long as projects are properly planned, operated and closed, using best practice.

ISR mines successfully operate in a range of situations, including near populated areas, and in different climatic regions (Seredkin et al., 2016), for example:

• Dalur ISR mine (Russian Federation) operates in the agricultural TransUral region.

• Gagarka mine is in the populated area near the water intake point for the town of Zarechny and adjacent to the Yekaterinburg – Tyumen highway.

• Gumeshevsky mine is in the town of Polevskoy, next to the town water reservoir.

• Khiagda deposit (Russian Federation) is operated in a region with permafrost.

• ISR mines in Kazakhstan and Australia are in a hot deserts.

• Gumeshevsky ISR copper mine (Russian Copper Company), Gagarka and Dolgy Mys ISR gold mines in the Urals are operating successfully where mineralisation is in weathering crust (Seredkin et al., 2016). San Manuel ISR copper mine (BHP) in Arizona used ISR for recovery of copper from weathering crust. The Florence copper ISR project in Arizona is also focused on the extraction of copper from weathering crusts and this project is currently in the pre-construction and pre-mining stage (Seredkin et al., 2016; Zimmerman et al., 2013).

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Therefore, ISR operations should remain under strict surveillance both during the ISR process and during the subsequent reclamation of the site. In some cases (especially in populated areas) it will be necessary to restore the contaminated groundwater and/or long-term monitoring programmes must be established to ensure that the contamination does not spread into uncontrolled aquifers or other areas (Seredkin et al., 2016).

The most serious environmental risk from ISR operations is surface contamination and damage to soils. Surface contamination may result from leaching solutions leaking from defective pipelines, spills from open injection wells, pumping of wells for cleaning or sampling, or when production solutions are just dumped on the ground instead of into special reservoirs.

Contamination during an ISR operation will be minimal with good environmental control services. Nevertheless, there will likely be some degree of surface contamination, and planning for final clean-up should be included from the outset (Seredkin et al., 2016).

Acid leaches are the most widespread ISR approach. In a properly designed wellfield, the extent of the leachant halo is limited by hydrodynamic balance within the wellfield.

In these cases, groundwater contamination takes place within a relatively small zone (usually less than 100 m) of hydraulic influence near leaching wells and does not move along the water horizon (away from the wellfield) (Figure 100) (Seredkin et al., 2016). Monitoring wells around of ISR polygons allows control of conditions within the aquifer.

LEGEND Production wells Injection wells Monitoring wells Sulphate ion halo 0 25 50 75 100m

Figure 99: Example of observation wells for aquifer monitoring (from a uranium mine) (Seredkin et al., 2016)

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When ISR is finished and the artificial cone of depression around the production well is removed, the hydrogeology returns to the natural flow of groundwater. Unless managed, this can cause contamination to move away from the ISR site for distances up to several hundred metres (Seredkin et al., 2016). This distance is limited due to the neutralising interaction of solutions with the geological substrate.

In situ permeability, and the adsorption/capacitive properties of deposit and host rocks must be determined, and a hydrogeological model created, prior to commencement of ISR operations. This model will allow an estimate of the likely migration of residual solutions within groundwater post operations (Seredkin et al., 2016), and is a critical management tool.

Decisions regarding the potential need for cleaning an aquifer post operations is taken based on these studies and on the availability of water intakes. Cleaning of aquifers may be a condition of permitting, and may involve active cleaning and/or self-cleaning, with monitoring required for periods up to ten years (Figure 101).

Reclamation (restoration) of groundwater

Cleaning solution on the surface Cleaning solution in-situ

By-product during Cleaning of By-product during Forced (special) processing leaching of Self-cleaning solutions residual solutions operation blocks cleaning ith ith w w g rock ents y g tside acidification u g ents g rea rin y u b sorption rea u y y cementation rocks o e to interaction e to interaction y y special methods u u tralisation y tside blocks b u d d u u u tion to closed pores u Bio-ne operational blocks recipitation b recipitation b recipitation on sorbents tralisation b P P P recipitation b u P recipitation in-sit recipitation b Re-distrib Ne P Sorption be rocks after leachin P recipitation o P rocks in depleted operational blocks recipitation in-sit recipitation in-sit P P rocks in operational blocks d

Figure 100: Approaches to cleaning of solutions in ISR

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14.1.2 Environmental Investigations of Initial Conditions of the Gornostay Project

In 2011, Wardell Armstrong prepared a Feasibility Study for conventional mining (open pit) and pyrometallurgical processing of ore to produce ferronickel (Broadbent, 2011). Wardell Armstrong reviewed the pre-OVOS9 documentation, and a preliminary report prepared on the Gornostay Project in 2007, in order to produce preliminary analysis, comment and recommendations where necessary.

Surface Water Resources

While there are no natural water courses or water bodies on the site itself, the Irtysh River, a significant regional water system, is located nearby. The river is a source of domestic water for urban populations in the region and also supports a commercial fishing industry. The flood plain of the river contains a number of former riverbeds, small lakes, and swamp patches, which typically ebb and flow seasonally. The proposed mine site lies on the left bank of the river and is slightly inclined towards the riverbed (Broadbent, 2011).

The location of Irtysh River immediately to north from the deposit is the most critical issue, especially with the presence of large faults, which are located in mineralised zones, and cross the Irtysh valley. Higher permeability and water transmissivity are common for fault zones (refer to Sections 4 and 7 for further detail).

The Irtysh River and its tributaries have high concentrations of heavy metals at large urban or industrial discharge points (Broadbent, 2011). However, the surface water quality in the area of the mine site is currently evaluated as satisfactory, although the water has a high content of organic compounds and is drinkable only after treatment (Broadbent, 2011).

Industrial water for the project is to be obtained from the Irtysh River and stored in process-fire fighting reservoirs. Process water will be recycled, and the reservoir will be able to top up the recycling system when needed (Broadbent, 2011).

The Irtysh River is considered to be a sensitive receptor in the vicinity of the site due to its domestic and commercial use value. The surface water system in the area appears to be extensive and complex. No discharges are currently planned, but even occasional discharges, apart from accidental spills or flow pregnant solutions along fault/fissure zones, may affect the surface water system.

Underground Water Resources

The underground water level is located in the zone of fractured serpentinites usually, although sometimes in nontronite or even redeposited weathering crust zones. Generally, the location of the water table is controlled by the physical conditions of rocks of the weathering crust.

The aquifer is filled due to infiltration of atmospheric precipitation. An underground water horizon is observed in all hydrogeological wells despite an unfavourable arid climate and demonstrates continuity in plan.

9 OVOS is essentially an Environmental and Social Impact Assessment.

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Underground water of the Project has limited use for drinking and agriculture due to salinity levels (see Section 8).

Fault/fissure zones are the most permeable zones and contain the most water in the Gornostay Deposit (Figure 43). These zones may be cause of flow contaminated solutions to direction of Irtysh River and to flanks of deposit (Figure 44). More detail hydrogeological information is provided in the Section 8.

Direct measurement of flow direction and flow speed for underground water is required for advanced stages of the project and is immediately required for the ISR field test.

Land Use and Vegetation

Vegetation is limited to grass and very occasional low bushes. Relict pine forests occur outside the tenement areas and some relict forests (Figure 31).

The area is characterised by grassland; it is predominantly covered by fescue grasses of various types, as well as sandy needle grass, read feather grass, Kyrgiz feather grass, and different types of wormwood. Forests with trees, farmlands (apart from pasture lands) and rare or endangered species listed in the Red Book of Kazakhstan are reported to be absent (Broadbent, 2011).

ISR is the least intrusive form of mining for land use and vegetation (Figure 102).

Figure 101: Example of uranium ISR mine in Southern Kazakhstan – wellfield area and processing plant.

Wildlife

In terms of wildlife the region is classified as “desert-steppe” and typically contains small rodents, birds, and reptiles. These commonly include jerboas and mole lemmings, as well as populations of wolf, fox, polecat, and Persian gazelle. Bird species include pin-tailed and black-bellied sandgrouse, chat, lark, sparrow, magpie, and raven. Steppe eagle, long-legged buzzard, brown-necked raven, and some species of plover are also found in the area. Reptiles include agama, moccasin, and Orsini’s viper.

According to the pre-OVOS, rare and endangered species recorded in the Red Book of Kazakhstan are absent (Broadbent, 2011).

The influence of an ISR mine on wildlife will be minimal due to preservation of landscape outside plant area and the immediate areas of wells and pipelines.

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14.1.3 SSU Contract Environmental Requirements

The SSU Contract stipulates that 0.1% of the operational costs should be paid to a special Closure and Remediation Fund during the extraction phases of the operation, while during the exploration phase it is 1% of the costs. These funds will be used after closure of the Project for removal of all buildings, well tamponage, soil restoration, and vegetation and cleaning and monitoring of underground water.

However, in a situation where a higher cost of closure and remediation work is required, the deficit of the fund will need to be covered by KazNickel. On the other hand, the remaining budget will be returned to KazNickel if the cost of closure and remediation is less than the fund.

14.1.4 Project Status, Activities, Effects, Releases and Controls

The Project is a green field site and KazNickel is currently in early stages of project development, with exploration in an advanced stage. Therefore, the descriptions below of activities, effects, releases and controls, are based on current best estimations of future work stages.

Flora and Fauna

Land clearance will involve destruction of vegetation and soil cover on the area of camp site, plant and tailing storage facility location (Figure 93). Within this area plant communities are to be destroyed completely, and the animals will mostly be excluded. Other areas of the Project will be mostly preserved (Figure 102).

Soils

Construction and operational activities at the plant will affect soils within the contract area. KazNickel proposes the following industry standard steps to prevent soil contamination:

• Removal and store in special mounds of topsoil and potentially fertile layer

• Construction of roads connecting the industrial site with existing paved roads

• Construction of paved access roads and sites on the plant territory

• Surface water drainage management

• Landscaping and planting within the mining licence area

• Mechanised garbage collection, irrigation of roads and sites in summer, and snow removal in winter.

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Air Quality

The most significant possible exhaust agent is sulphur dioxide. Sulphurous acid differs from sulphuric acid by degassing sulphur dioxide. Sulphur dioxide will degas from open ponds of pregnant and barren solutions which cannot be used in process with sulphurous acid solutions. Ponds should be hermetically covered by a roof or located underground, whereas the uranium industry generally uses open ponds for sulphuric acid solutions. Additionally, all connections between pipes must be sealed.

Monitoring of sulphur dioxide grade in the atmosphere is required for operational processes.

Waste

An integrated sewage system is planned for site, including:

• Tails after processing plant will be collected in tailing storage facility (Figure 81).

• Domestic sewage: Domestic sewage discharged from the site to a suitable facility.

• Sewage and stormwater will be collected and conducted to a stormwater reservoir and treatment facility. Once treated, this water will be used to recharge recycling systems, thereby reducing the use of fresh and reservoir water.

• Discharges into natural waterways are not planned.

• Other types of domestic waste are to be temporarily stored on site and periodically removed by subcontracted third parties.

Tailings Storage Facility (TSF)

A tailings storage facility is part of the current project design as investigated in the project Scoping Study. The TSF is needed to store material resulting from the purification of eluate from impurities. The main components will be iron (and probably magnesium, depending on final plant designs) after definition of impurity components in eluate and barren/leaching solutions. Concentration of these components will probably be stabilised in the process and the volume of the tailings requiring storage is expected to be small. The likely volume of material to be stored will not be known until the particular processing path and chemistry is better defined, but it will be orders of magnitude less than would be produced by a conventional mining project.

Design of the TSF in the Scoping Study is based on the Sunrise project (Fairfield et al., 2018) due to the potential to use a similar flowsheet of eluate purification at the Gornostay Project.

The TSF comprises three cells, Cell 1 to 3. Tailings will be pumped to the TSF as a slurry with a solid concentration of approximately 42% by weight. Tailings dump design has not been considered at this early study stage. The tailings slurry would be deposited through a series of spigots located at the perimeter of the cells and a decant pond will be maintained in the corner of each cell. Withdrawal of water from the decant ponds will be managed with weir-plate controlled steel decant inlets, laid on the upstream slope of the cell embankment. The decant inlets from all three cells will be connected to a decant pipe buried below the embankments, which will discharge into a solution sump. The decanted water will be pumped from the sump to the water storage dam, for eventual reuse in the process plant (Fairfield et al., 2018).

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The important conceptual aspects of the decommissioning of the TSF include placement of granular cover material over the final tailings surface temporarily to store infiltrated water arising from incident rainfall, reshaping of surfaces to allow for water shedding, and then adding topsoil and vegetation to all surfaces (Fairfield et al., 2018).

Underground Water

Underground water is an integral part of the environment for ISR operations. Properly designed cells/blocks with balance of injection and pumping, as well as with monitoring wells leads to very local contamination of underground water by leaching components and metals, with a maximum distance of hundreds of metres (Figure 100). The presence of metals in underground water in monitoring wells around operational cells/blocks leads to the requirement to change the mode of well from observation to pumping and construction of new monitoring wells.

An additional barrier of monitoring wells will be constructed around mineralised areas especially towards to Irtysh River to limit the potential for accidental contamination of Irtysh River by pregnant solutions (Figure 80).

Special software was developed for modelling the hydrodynamics of leaching/pregnant solutions in ISR by several teams in France, Germany, Russia and Kazakhstan. This software is used successfully in Dalur, Khiagda (Russia), Beverly (Australia) and Kazatomprom (Kazakhstan) mines.

Final cleaning of underground water after blocks/sites and mine closure is described in Section 14.1.7 (Closure and Remediation).

14.1.5 Emergency Response

Wardell Armstrong (Broadbent, 2011) rates the risk of natural disasters as low, since the proposed plant location is in a non-seismic area, hence the risks of landslides and flooding is considered low. The terrain and layout are seen to inherently rule out risks related to stormwater runoff.

According to the Wardell Armstrong report (Broadbent, 2011), due to the design quality of all site features, any potential operational emergencies are considered to be local in nature. Timely maintenance and training have been referred to, as means of reducing the chances of an emergency. Significantly more detail will be applied to these aspects of the project during later stages of study work.

Contamination of ISR blocks is an inevitable process, but it is localised and limited to operational blocks within adjacent areas.

In ISR operations, the primary risk of contamination of the environment surrounding the operation (primarily within the footprint of the operational blocks and along pipelines) is:

• To soils and surface waters due to damaged pipes

• Air pollution by sulphur dioxide due to damaged sealed connections

• Contaminated aquifers outside ISR blocks, especially above ISR blocks due to damaged operational wells

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• Contamination sources are the reagents used for leaching, and from the metals in pregnant solutions.

Although the risk of such contamination is localised, it has the potential to impact the local economy, as well as flora and fauna in the immediate area.

Figure 102: Potential accidents with pollution of air and contamination of underground water and surface Source: Mudd, 1998

Reducing impact and contamination during the ISR process can be achieved the following ways:

• Soil cover, especially for agricultural purposes, can be stock piled and maintained during operations to facilitate final rehabilitation.

• Berms around ISR blocks prevent the distribution of any potential contamination from potential leaks and spills.

• Reliable construction of operational wells will greatly reduce the risk of contaminations of aquifers outside ISR blocks. Simple but effective measures such as protective collars, and active monitoring programmes, have been shown to be effective approaches at other ISR operations.

14.1.6 Environmental Management

KazNickel will carry out air, water and soil monitoring to national standards. A program of “industrial environmental monitoring” is to be implemented during operation.

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14.1.7 Closure and Remediation

The mine closure requirements require restoring the affected property and aquifer to pre-mining conditions unless certain facilities are required to remain to support the post mining land use.

Surface Restoration

Reclamation activities generally relate to reclaiming surface disturbances and structure removal, including injection and recovery wells; pregnant and barren solution ponds as well as multiple water impoundments. The wells will be closed by removing the downhole pumps and electrical equipment. The wells will be filled with Portland cement and the surface hole will then be backfilled and levelled out. All pipelines, electronics, pumps, and other material will be removed off-site for reuse, recycling, or landfill disposal.

Underground Water

Self-restoration of underground water will be due to reactions of the solutions with geological substrate: neutralisation, oxidation and sorption of dissolved components, as well as microbiological activity. This process should be monitored by old and new observation wells. However, this process is usually slow, and its duration reaches 10 to 16 years (Figure 104) (Solodov, 2018).

Solodov (2018) discusses how the restoration process may be accelerated by:

• Artificial forcing of cleaning/neutralisation of solutions by artificial penetration through fresh rocks (Figure 105)

• Rinsing the portion of the mineralised zone in which injection and recovery has occurred, injecting sodium bicarbonate or other agents as needed to initial neutralize the groundwater, neutralising the rinse solution with quicklime or other agents, and evaporating excess water not used for other purposes.

Final restoration of underground water will be much quicker due to reactions of the remain solutions with geological substrate: neutralisation, oxidation and sorption of dissolved components, as well as microbiological activity.

Modelling of restoration of leaching/pregnant solutions after closure of blocks/sites can take place using special software.

Investigations focused on post-closure interaction of solutions with geological substrate were completed for the uranium industry in Uzbekistan, Kazakhstan and Russia (Solodov, 2018).

14.1.8 Post-Closure Monitoring

A groundwater monitoring program will be conducted at selected observation wells. This monitoring will continue for 5–10 years during the post-closure period, or until such times as the groundwater is restored to its initial composition.

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14.1.9 Estimation Cost of Closure and Remediation

Based on the operational experience of CSA Global, we have used a closure and remediation cost of 3% of the operational costs despite the SSU contract requirements being only 0.1%:

• 1 % during operation for emergency responses and collection money in special protection fund for scheduled and any unanticipated remediation works;

• 1% after closure of operational blocks/sites for cleaning groundwater; and

• 1% after closure of mine including long-term post-closure monitoring.

As part of the EISA phase of the PFS work these costs will be estimated more accurately.

Figure 103: Self-cleaning and self-neutralisation of pregnant acid solutions on the Irkol deposit (Solodov, 2018) – example from uranium ISR industry. Upper figures – initial conditions, lower figures – conditions after nine years; area of

contaminated waters reduced by 85%; pH increased from 1.5 to 3.5- 6.5; NO3 grade decreased from 700 mg/L to 6.1 mg/L.

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Stage 1. 9 months Stage 2. 11 months

Natural flow Natural flow of water of water

Artificial flow of water Artificial flow of water

Figure 104: Forcing of cleaning/neutralisation of solutions by artificial penetration through fresh rocks (Solodov, 2018) – example from uranium ISR industry. Period 2 months, L:S ratio = 0.32, replaced 2.6 times the volume of porous solutions (700 Km3), pH increased to 6.5 – 7.0; mineralisation decreased to 3 g/L; sulphate grade decreased to 1.3 g/L, nitrate to 7 mg/L, U to 3 mg/L.

14.2 Social

14.2.1 General

The Project is located in the Beskaragay district in the Vostochno-Kazakhstanskaya oblast (Figure 30, Figure 31). So, social partnerships will be concentrated in the Beskaragay district.

The following principles for sustainable community development are endorsed by the Company:

• Adopt a strategic approach:

o link the long-term company objectives by aligning these with the local, regional and state development plans.

• Ensure consultation and participation:

o Local communities are actively involved in all stages of the project conception, design and implementation including closure and post-closure.

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• Work in partnership:

o Private, governmental, NGO and community organisations bring different skills and resources but shared interests and objectives. Together these organisations can achieve more through working together than individually. Formal or informal partnerships can also reduce costs, avoid duplication of existing initiatives and reduce community dependency on the copper operation.

• Strengthen capacity:

o Programs that emphasise strengthening local community and government capacity are more sustainable in the long-term than cash, materials or infrastructure without a properly designed forward-looking participatory framework.

General objectives of the local community outreach program include the following:

• Disseminate factual information and enhance the community’s awareness and understanding about the Project

• Build local, regional, and state-wide understanding and support for the Project

• Provide ongoing opportunities for two-way dialogue with project stakeholders through a wide range of communication programs and channels

• Ensure local stakeholders have access to up-to-date and accurate information about the Project

• Meaningfully engage local residents, landowners, governments, institutions, and special interests in the process by which the company is being planned, permitted, built, and operated

• Better understand local interests, priorities and concerns, and ensure they are adequately addressed through project design and mitigation

• Optimise local benefits associated with the Project, including training and employment opportunities, business and contracting opportunities, infrastructure development and partnership opportunities, and community investment.

The Company reports (Taishebayev pers. comm., 2020) that it has conducted hearings with the local communities to discuss the proposed Gornostay Project. CSA Global reviewed the minutes from these meetings about the pilot operation and notes that no objections were recorded.

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14.2.2 Local Conditions

There are not any farms, villages, towns on the Left River Side area addressed in the Scoping Study report.

The nearest towns/villages to the project are following (direct distance):

• Bodene, population of 578 (Wikipedia, 2019, estimation on 2009), 22 km to east from the Project.

• Chagan, population of 725 (Wikipedia, 2019, estimation on 2009), 30 km to east from the Project.

• Mostik, population of 434 (Wikipedia, 2019, estimation on 2009), 22 km to northeast from the Project, on the right side of the Irtysh River.

• Kurchatov, population of 12,000 (Wikipedia, 2019, estimation on 2009), 25 km to northwest from the Project.

Other villages/towns/cities are located far than 50 km from the Project.

The nearby towns/cities may be sources of manpower:

• Kurchatov, with population of 12,000 is the local centre with National Nuclear Centre. The distance from the Project to Kurchatov is 25 km (Figure 32).

• Semey, with populations of 360,000 is the large industrial centre. The distance from the Project to Semey is 110 km (Figure 32).

• Ust-Kamenogorsk (Oskemen), with populations of 341,000 (regional centre) is the large mining and metallurgy centre. The distance from the Project to Ust-Kamenogorsk (Oskemen) is 320 km (Figure 32).

Development of the Project will clearly have an influence on the local district and region due to new employment opportunities for totally 600 specialists for three shifts of workers.

Appropriate measures will be needed to address the impacts of this development, and this work will be part of the proposed PFS.

14.3 Greenhouse Gas Emissions

As well as the main environmental benefits for ISR of reduced impacts on visual amenity, lower energy use, much lower costs compared with conventional mining (both OpEx and CapEx), and the ability to extract lower grade resources, ISR mining has a major benefit in delivering lower emissions of greenhouse gases.

The GHG emission intensity of a mining operation is largely linked to the energy used, and therefore the source of the energy has a major effect on the emission intensity of a mining operation (Ulrich et al., 2020).

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Conventional mining uses substantial amounts of energy to extract the ore and waste rock, and in the comminution of the ore to extract the metal. Mobile plant, light vehicles, trucks and excavation equipment all add to the emissions of conventional mining.

ISR mining has none of these issues. The only emissions are related to the well field construction, operating the wellfield – essentially running pumps; and in the processing plant to make the products.

There is little actual data available on the GHG emissions intensity of ISR operations but Haque and Norgate (2013) provide a discussion, albeit somewhat dated, of the greenhouse gas footprint of in-situ leaching of uranium, gold and copper in Australia (from a life cycle assessment study). This research clearly showed that ISR operations for uranium produced approximately 40–70% of the emissions of various conventional operations which use (coal fired) grid power. More recent company reporting (Taseko 2020) provides information on ISR copper operations in North America. They report that for copper ISR operations, energy consumption is reduced by 70%, water by 90%, greenhouse gas emissions by 80% compared to conventional opencut mining.

There is no data available for nickel-cobalt ISR operations because none are yet in operation. However, given the shallow depth of the Gornostay Ni-Co laterites and relatively easy drilling conditions, CSA Global would expect materially lower energy requirements to install and operate the ISR wellfield blocks at Gornostay certainly lower than the figures reported for uranium or copper (ISR) operations.

Moreover, once constructed the Gornostay sulphurous acid plant will produce power for the entire site, alleviating the need for much external power use. The sulphurous acid plant is a closed system, with only negligible emissions. This configuration further enhances the overall lower GHG emissions of ISR Ni-Co production at Gornostay.

14.4 Conclusions and Recommendations for Further Environmental Work

The relevant information reviewed, though fairly limited as is typical of a Scoping Study level project, does not reveal any significant environmental or social issues at this stage. In the comments above, areas have been highlighted where further investigation may identify or resolve potential issues.

In taking the Project forward, KazNickel will carry out an Equator Principles-compliant Environmental and Social Impact Assessment (ESIA), which entails detailed baseline data collection and rigorous analysis across themes, supported by a number of dedicated site visits by environmental and social specialists.

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Typically, an ESIA is broken down into various stages:

• Screening

• Scoping

• Environmental baseline program

• Impact assessment and mitigation.

The full ESIA process typically takes 12 to 18 months to complete, the most time-consuming part being designing the program for, and collecting, seasonal environmental baseline data (necessitating a full annual collection cycle).

The ESIA process typically includes the preparation of:

• An Environmental and Social Action Plan, and Environmental and Social Management and Monitoring Plan:

o These plans will form part of the ESIA documentation and will include a basic environmental management system; a monitoring scheme for emissions, releases and ambient environment; reporting procedures; and an outline of response procedures for non-compliance or emergencies.

• An Framework Mine Closure and Rehabilitation Plan:

o This will not be a detailed plan but will set out the main environmental and social provisions for closure and rehabilitation, which will form the basis of the full plan that should be prepared during the early stages of mine development. During the period of design, Feasibility Study, approval, operating plan development and evaluations of the framework Mine Closure and Rehabilitation Plan, there will be iterative modifications to the designs and operating procedures until a fully revised plan is agreed.

• An Framework Community Development Plan:

o This would include community liaison, community support for social infrastructure, and sustainability post-closure. In accordance with recognised, best international practice, the detailed objectives of the Community Development Plan are not specified at this early stage but should be defined and implemented through full ongoing consultation and partnership with the community members themselves, and their evolving perceptions and requirements throughout project life.

• Any other specific studies that arise from the ESIA process.

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14.4.1 Hydrogeological Modelling and Monitoring

A special program for investigations of the underground water should be completed given the Project will be subject to ISR.

Best practices of ISR operations include:

• Preparation of a regional hydrogeological model at the Pre-Feasibility or Feasibility stage.

• Preparation hydrodynamic and geochemical models of the ISR process including environmental issues at the Feasibility stage. This model can be used for optimal design of the wellfield including location of monitoring wells.

• Monitoring of underground water flow and composition during ISR operation, especially in fault and fissure zones as well as in directions of natural underground water flow.

• If pregnant solutions appear in the monitoring well, this well should be used as an extraction well and new monitoring wells should be constructed.

15 TECHNICAL RISKS AND OPPORTUNITIES DISCUSSION

To assist potential investors to understand the possible risks associated with an ISR operation at Gornostay, the following overview of risks has been prepared. The format of this overview is in accordance with the requirements of Guidance Note 7 of the Hong Kong Stock Exchange.

Mining, and the development of a mining project, is a relatively high risk business compared to other industrial and commercial businesses. Every project has unique features and local complexities in geology, mining and processing, which are not able to be forecast with total reliability due to the intrinsic complexity of each project and the reliance of sampling a relatively small population of data points upon which the project assessment necessarily depends.

The Gornostay Project is in an early stage of evaluation and substantial uncertainties are characteristic of a Scoping Study. As noted in the JORC Code, a “Scoping Study ... is [a] low-level technical and economic assessment, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised.

In CSA Global’s opinion, based on the technical work completed on the Gornostay Project (resource estimation and Scoping Study), the risk profile is typical of pre-development ISR projects at similar levels of resource estimation, mine planning and development in Kazakhstan. Furthermore, the pilot well field and processing plant have provided data that reduces (but not eliminates) the risk level compared with typical Scoping Study stage projects.

The main uncertainties are summarized in Table 40. Further assessment may either worsen or improve project economics. Furthermore, potential risks are not limited to those included in Table 40.

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15.1 Opportunities

CSA Global considers there to be a range of opportunities with excellent potential to reduce uncertainty and enhance the Gornostay Project Mineral Resources and planned production through ongoing and new evaluation and testing work.

CSA Global is understands that the primary goal of the Company management is to achieve commercial production in the quickest time possible, while optimising the development and processing solutions.

Key opportunities include:

• Several options have been identified to optimise the processing of eluate after sorption/desorption of pregnant solutions and offer potential cost savings due to lower reagent use.

• As more in situ tests are completed and the geological modelling is refined in greater detail, the potential to reduce acid consumption from the Scoping Study assumptions is considered likely.

• Similarly, field tests and optimisation of the L:S ratio based on in situ tests may lead to better metal recoveries than Scoping Study assumptions.

• Cobalt recovery has not yet been considered at Gornostay. The optimisation of sulphurous acid is expected to deliver better cobalt recovery.

• Assumptions about water table may prove overly pessimistic.

• There are opportunities to recover additional co-products and by-products than used in the Scoping Study, for example scandium, magnesium, and manganese.

• Temporary artificial enhancement of water table levels may allow enhanced in situ leaching of material currently above the water table, and thereby increasing the “mineable” Mineral Resources as well as decreasing OPEX.

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15.2 Risks

The list of risks in Table 40 is considered sufficient however for further investigations, and risks should be re- assessed during future studies.

A systematic approach was used to identify and assess each risk and opportunity. Project risks/opportunities can be approximately prioritized or ranked by the product of (i) probability/likelihood and (ii) impact/consequence, as outlined below. The following tables describe the probability and impact ratings assigned to each risk/opportunity.

Table 37: Consequence of risk rating guidance

Technical Performance Operating Cost Capital Cost Project Schedule Rating Impact Impact Impact Impact 1. Negligible Minor difficulties Small change in < 1 % cost < 3% delay in operating costs overrun Project completion 2. Minor 100% of design <10% increase in 1 % to 5% cost 3% to 8% delay capacity not operating costs overrun in Project achieved completion 3. Moderate 100% of design 10% to 30% 5% to 15% cost 8% to 17% delay capacity not increase in overrun in Project achieved operating costs completion 4. Major 80% of design > 50% increase in 15% to 30% cost 17% to 50% capacity not operating costs overrun delay in Project achieved completion 5. Severe 60% of design > 100% increase > 30% cost > 50% delay in capacity not in operating overrun Project achieved costs completion

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Table 38: Likelihood of risk occurring in a 7 year timeframe ratings guidance

Probability Indicative Rating Indicative Frequency Probability 1. Rare Very low likelihood, but not impossible, unlikely to occur <2% during the next 40 years. A similar event has occurred elsewhere in the world in this industry. 2. Unlikely Plausible, unlikely to occur during the Project, could occur over 2% to 10% the next 10 to 40 years. A similar event has occurred on other similar projects in this industry. 3. Possible Possible, reasonable probability that it may occur at least once 10% to 50% ina1to10year period. A similar event has occurred at some time on other similar projects for this organization. 4. Likely High probability, likely to occur approximately once per year. 50% to 80% Similar event has occurred several times on similar projects for this organization. 5. Almost Very high probability of occurrence could occur several times > 80% Certain per year. Has occurred several times on similar projects at this location.

Table 39: Risk/Opportunity Rating Summary

Impact/Consequence 1. Negligible 2. Minor 3. Intermediate 4. Major 5. Severe Likelihood/ 5. Almost Medium Medium High High High Probability Certain 4. Likely Low Medium Medium High High 3. Possible Low Low Medium Medium High 2. Unlikely Low Low Low Medium Medium 1. Rare Low Low Low Low Medium

CSA Global notes that in most instances it is likely that through enacting controls identified though additional technical studies as recommended, detailed review of the pilot programmes, existing documentation, and management controls, that the risks identified can be mitigated.

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Table 40: Current Gornostay Project risks (after Scoping Study) REPORT PERSON’S COMPETENT III APPENDIX

Risk Comments Likelihood Consequence Risk Factor Geological Mineral Resources tonnage Unexpected decrease in Mineral Resources. Unlikely Intermediate Low Nickel and cobalt grades Unexpected lower grades of nickel and cobalt than estimated. Unlikely Intermediate Low Higher grades of carbonates Some zones of Mineral Resources would be excluded from acid Likely Minor Medium in weathering crust than ISR. expected Hydrogeology Permeability of serpentinites Part or all of the serpentinites below mineralised weathering Unlikely Major Medium above the water table may crusts may be impermeable and inhibit collection of pregnant be inadequate solutions at the water table, potentially reducing recoverable Mineral Resources. No continuity of Pregnant solutions may not be able to be collected in the water Likely Minor Medium I-6 – III-268 – underground water horizon table, potentially reducing recoverable Mineral Resources, in fractured serpentinites may be managed by watering of these zones. Risk of lowering water table Possible lowering of water table level due to acidification and Possible Intermediate Medium level as part of ISR leaching not in balance with injection/pumping – would result process in an increase in the of volume of serpentinites which need to be leached. Low permeability of Permeability and rate of leaching may be less than assumed in Possible Intermediate Medium mineralisation and/or Scoping Study, necessitating a longer period of ISR and/or reduced rate of leaching more blocks being in operation. Mining/Geometallurgy Oxidation of sulphurous acid Decreasing pH, and oxidation of Fe(II) to Fe(III), may Possible Intermediate Medium to sulphuric acid in ISR potentially require pH adjustment of pregnant solutions before process sorption on resin TP-207. This risk may lead to increased OPEX. This risk will likely be excluded after first ISR nickel-cobalt blocks provide operational data. Sweep Factor is lower than Lower recoveries of nickel and cobalt due to channeling effects Possible Major Medium expected and development of zones that are not accessed by the lixiviants HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Risk Comments Likelihood Consequence REPORT PERSON’S COMPETENT Risk Factor III APPENDIX Higher Acid consumption Acid consumption in situ may be higher than that estimated Possible Intermediate Medium from laboratory tests Lower nickel recovery Nickel recovery in the real ISR process may be lower than Possible Intermediate Medium defined in laboratory tests Lower Cobalt recovery Only very limited cobalt testwork available; so factors in Likely Intermediate Medium Scoping Study are assumptions Higher impurity components Potential increase in impurity (Ca, Mg, Fe) concentrations in Possible Intermediate Medium in solutions pregnant solutions with increasing L:S ratios (cycles of leaching). Neutralisation and precipitation of impurity components from barren solutions may be required. Dilution of pregnant Potential decrease in nickel and cobalt grade in pregnant Likely in Minor Medium solutions by surrounding solutions, especially for edge cells. some water areas Higher volume of leaching of Serpentinites may be more permeable that expected due to Possible in Intermediate Medium I-6 – III-269 – serpentinites greater fracturing for example some areas Increased numbers of Planned grid density may be not enough for leaching of full Possible Minor Low operational wells required volume of mineralisation, leading to a decrease in metal recovery. May be managed by increasing injection wells. Processing Processing of eluate after The refinery process used in the Scoping Study was developed Unlikely Intermediate Low desorption from resin may for eluate after HPAL and there is risk associated with not match that assumed in processing of poorer eluate after sorption/ desorption of the Scoping Study pregnant ISR solutions. There are alternate technologies of processing. Actual Processing/Handling Lower yields. Possible Minor Low volumes and costs may Lower plant production levels. Possible Intermediate Medium vary from the Scoping Higher plant production costs. Possible Intermediate Medium Study Plant reliability. Possible Intermediate Medium Handling system. Unlikely Intermediate Low HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Risk Comments Likelihood Consequence REPORT PERSON’S COMPETENT Risk Factor III APPENDIX Environmental/social Losses of pregnant solutions Potential losses of pregnant solutions along faults and in other Possible Intermediate Medium unpredictable ways – losses of metals and impact on environment including Irtysh River – managing by monitoring wells. Air pollution Potential air pollution risks; should be managed by monitoring Unlikely Intermediate Low (but note much lower than for conventional mining) Tenure/permitting issues Potential for cancellation of tenement/s due to issues in Unlikely Major Medium compliance with contract conditions, or due to tenement extensions being delayed or denied. Community opposition Community, internal and external stakeholders. Unlikely Intermediate Low Operational Management Staffing and ‘key man’ risks Unlikely Major Medium problems Water discharge non-compliance. Possible Minor Low Significant unpredicted subsidence. Possible Minor Low I-7 – III-270 – Regulatory consent/variation delays. Possible Minor Low Costs and implementation Capital and operating costs Project timing delays. Possible Intermediate Medium Mine management – plan. Unlikely Minor Low Capital cost increases – start-up. Possible Intermediate Medium Capital costs – ongoing. Unlikely Minor Low Operating costs underestimated. Possible Intermediate Medium Project implementation Critical path delays. Possible Intermediate Medium Commodity Price over recent years, there has been considerable volatility in Ni Likely Minor Medium fluctuations and Co prices. In addition to traditional markets such as stainless steel, there potentially expanding new markets in batteries particular driven by an expected expansion in electric vehicles. as such the risk to the profit sensitivity

The medium-risk items are largely focused on the geohydrological, environment and hydrometallurgical dynamics and inform the required technical work required to advance the Project further, or are related to the uncertainties associated with progressing a Pre-development Project to full operation. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT

Given the Project is currently at a Scoping Study level, the risks outlined above, will be addressed in greater detail, and mitigating strategies developed as part of Pre-Feasibility work.

15.2.1 Risk Mitigation

The risks discussed above all have identified mitigation strategies, based on the knowledge gained in ISR projects elsewhere (notably including within Kazakhstan). In the professional opinion of CSA Global, the Project technical risks are manageable to a low status provided appropriate regulatory requirements continue to be met, appropriate technical studies are completed in a timely fashion, and suitable management and control measures continue to be implemented by the Company.

More detailed discussion of the type of technical work being planned to address the risks discussed above are provided in sections 0 and 0.

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Table 41: Mitigation of Medium-Risk Technical issues REPORT PERSON’S COMPETENT III APPENDIX

Risk Summary Mitigation Status of Mitigation implementation Mitigated Risk/Opportunity Likelihood Impact Risk rating Mitigating action risk rating Geological Higher grades of carbonates in Likely Minor Medium Gradual regime of acidification for slow Low The Copmany will monitor carbonate weathering crust than expected dissolution of carbonate content. content during development of operation Additional investigations of carbonate wells. The drilling contracts will include distribution to exclude high carbonate a requirement to measure carbonate zones from operation. content. This data can be added to the geological block models for the deposit. Hydrogeology Permeability of serpentinites above Unlikely Major Medium Artificially increasing permeability by Low The Company has not yet commenced this the water table may be hydrofracturing or raising water table by mitigation. Work on this mitigation will inadequate external source of water (fault be part of planned ongoing technical zones/Irtysh River). studies.

I-7 – III-272 – No continuity of underground water Likely Minor Medium Creation of artificial groundwater horizon Low The Company has determined that the horizon in fractured serpentinites or raising natural ground water table in serpentinite lies immediately below the these zones by external source of water level of the mineralisation, directly (fault zones/Irtysh River). under the mineralisation layer, which is a natural lower aquiclude. The spreading of solutions beyond the contour boundaries of the production block will flood and acidify future potential blocks for their further development We do not expect to need to take any further action to raise the ground water table. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS PEDXIICMEETPRO’ REPORT PERSON’S COMPETENT III APPENDIX

Risk Summary Mitigation Status of Mitigation implementation Mitigated Risk/Opportunity Likelihood Impact Risk rating Mitigating action risk rating Risk of lowering water table level Possible Intermediate Medium Operate ISR in balance, with extraction Low The Company has not yet commenced this as part of ISR process pumping rate equal to injection rate mitigation.

The water table will be controlled by managing pumping rates. Low permeability of mineralisation Possible Intermediate Medium Optimisation of spacing of operational Low The Company has not yet commenced this and/or reduced rate of leaching wells by hydrodynamic modelling. mitigation. Using surfactants for artificial increasing permeability. Mining/Geometallurgy/Processing Oxidation of sulphuric acid to Possible Major Medium Using cavitation equipment for treatment Low The Company has developed technology to sulphurous acid in ISR process of solutions by conversion sulphuric manage this issue. acid to sulphurous acid. Sweep factor – lower recovery Possible Major Medium Optimisation of operational well grid, Low The Company has not yet commenced this nickel and cobalt due to parameters of injection and pumping, mitigation. Work on this mitigation will I-7 – III-273 – channelling effect and zones regular logging for identification of be part of planned ongoing technical without access of lixiviants zones with inadequate leaching and studies. following drilling new operation wells Higher acid consumption Possible Intermediate Medium investigation of acid consuming Low Acid consumption is constantly being components and excluding blocks with monitored. high acid consumption. Also, additional mitigation — “soft” acidification with Ongoing work on this mitigation will be low concentration acid with following part of planned ongoing technical increasing concentration. studies.

Working in balance between injection and pumping rates HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS PEDXIICMEETPRO’ REPORT PERSON’S COMPETENT III APPENDIX

Risk Summary Mitigation Status of Mitigation implementation Mitigated Risk/Opportunity Likelihood Impact Risk rating Mitigating action risk rating Lower nickel recovery Possible Intermediate Medium Decreasing distance between operation Low The Company has not yet commenced this wells, intensification leaching by mitigation. Work on this mitigation will surfactants, preparation hydrodynamic be part of planned ongoing technical model. studies. Lower cobalt recovery Likely Intermediate Medium Calibration of composition of lixiviant for Low The Company has commenced intensification cobalt recovery. investigations of this issue. Work on this mitigation will be part of planned ongoing technical studies. Higher volume of leaching of Possible Intermediate Medium Artificial colmatation of some fissure Low The Company has not yet commenced this serpentinites zones. mitigation. Work on this mitigation will be part of planned ongoing technical studies. Higher grades of impurity Possible Intermediate Medium Calibration of sorption regime. Production Low The Company has not yet commenced this components in solutions of manganese dioxide and magnesium mitigation. Work on this mitigation will oxide/hydroxide as final products. be part of planned ongoing technical I-7 – III-274 – studies. Dilution of pregnant solutions by Likely Minor Medium Preparation properly designed Low surrounding water hydrodynamic model. Risk of losses of pregnant solutions Possible Intermediate Medium Organising grid of monitoring wells with Low option to convert these wells to extraction wells. The Company has not yet commenced these mitigations. Work on these Working in balance between injection and mitigations will be part of planned pumping rates ongoing technical studies. Density of operational wells grid is Unlikely Intermediate Medium Optimisation density of operation wells by Low not enough hydrodynamic modelling. Actual Processing/Handling Possible Intermediate Medium Complete PFS; additional technical studies Low volumes and costs may vary from the Scoping Study THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT

16 DISCUSSION AND DEVELOPMENT TIMELINE

KazNickel is currently permitted to produce up to 20,000 t of nickel as part of the pilot production.

In order to obtain a permit for commercial production in accordance with Kazakhstani legislation, the following stages of approval by the state authorities are required:

• Complete the period of exploration and evaluation work.

• Develop/approve the design of the mining diversion.

• Develop/confirm the mining plan, develop a work program for the mining period.

• Develop and agree with the draft Environmental Impact Assessment with the issuance of an Emission Permit (issued together with the State Environmental Expert Review report on the draft EIA).

• It is also necessary to hold public hearings on the EIA project before the State Environmental Expert Review.

• Carry out the approval of the mining plan by the industrial safety control body.

• Elaboration of the liquidation plan and its comprehensive expertise at the authorized body in the field of solid minerals, the body for industrial safety and environmental protection control.

• Signing a contract in the Contract for Transition to the Mining Phase.

16.1 Exploration Program

The working programme in the latest amendment (No. 9) to the SSU Contract requires 16,000 m of drilling with all related sampling and assaying works in the second year (planned to start in 2020 and continue to 2021).

To address this requirement, the Company is planning an extensive infill drilling programme. The priority areas for the required infill drilling are the Central West and North West parts of the Left River Side area (Figure 106).

Such work is hoped to improve the conversions of Inferred Resources to Indicated. Further holes are proposed in the Central, East and North-East areas.

Additional exploration works are required for southern part of the Left River Side area, as well as in the Right River Side area.

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To provide an appreciation of the eventual total quantity of drilling required at Gornostay, the following overview of potential exploration drilling is provided (the actual final scope depends on results of previous drilling):

• Pre-production Stage

o Left River Side area:

■ Central and North West parts: approximately 180 holes, ≈10,800 m (estimated cost ≈US$1.6 million)

o Right River Side area:

■ Stage 1: 400x200 m approximately 65 holes,≈5,900 m (estimated cost ≈US$0.9 million)

o Total: ≈US$2.5 million

• During production

o Left River Side area:

■ Central and North East parts: approximately 120 holes, ≈7,200 m (estimated cost ≈US$1.1 million)

■ Southern part: approximately 30 holes at 1,800 m at (estimated cost ≈US$0.3 million)

o Right River Side area:

■ Stage 2: 200x200 m (incl. detailed 100x100 m) approximately 65 holes, ≈5,900 m (estimated cost ≈US$0.9 million)

■ Stage 3: 100x100 m approximately 200 holes, ≈18,000 m (estimated cost ≈US$2.7 million)

o Total: ≈US$5 million

Should this total program for infill drilling be completed the cost is estimated to be ≈US$7.5 million including pre-production stage ≈US$2.5 million. Most of this program would be completed using cash flow from KazNickel’s operational activity following full-scale production.

In CSA Global’s opinion, before the start of production, at least 3,000 – 4,000 m of drilling (costing an US$0.4 – 0.6 million) is required.

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However, the SSU Contract amendment No. 9 requires 16,000 m be completed. Much of the additional metres of drilling will be required for other tasks, including:

• Additional investigations parameters of ISR:

o Infill drilling for some areas, to allow assaying of gangue and potential by-product

components (Fe, Al, Si, Ti, Mn, Ca, Mg, Cu, Zn, CO2 and Sc); and

o Measurement of fracture frequency and rock quality designation in serpentinites and the weathering crust to estimate permeability, and locate aquifer/s.

• Hydrogeological investigations:

o Measurements of the water table in all exploration holes to define the location of the water table with the purpose to preparing a hydrogeological model and models of operation blocks;

o Classical cluster tests in different areas of the deposit, and a grid of single hydrogeological tests to direct estimation permeability of rocks and calibration of wireline electrical geophysical methods (which may be used for estimates of permeability);

o Investigation of injectivity and pumping rates of wells in different zones of the deposit to estimate initial parameters for mining plan and economic model on the PFS level;

o Investigation of the direction and rate of natural underground water flow within different zones to estimate zones of location for monitoring wells and potential flow contaminated solutions;

o Preparation of hydrogeological and hydrodynamic models based on updated and improved hydrogeological understanding for preparation mining plan and economic model;

o Develop an improved structural model of the deposit inform a robust hydrogeological model preparation as well as for environmental investigations;

o Completion of tests with neutral tracers to assess the nature, direction and velocity of underground water flows for hydrogeological model preparation as well as for environmental investigations;

o More in situ tests with using acidification and surfactants in different zones for comparison of the results with classical hydrogeological data. Minimal requirements is “ideal” ISR test for measurements recovery of nickel on cobalt as well as dilution of pregnant solutions “Modifying Factors” for Ore Reserve Estimation.

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faults

pilot ISR proposed block exploration holes

existing exploration holes

operational blocks redeposited minerlisation

in-situ mineralisation

Figure 105: Proposed location exploration works

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16.2 Engineering Works

The field work and tests carried out at the Gornostay Deposit thus far have allowed KazNickel to develop a satisfactory understanding of the deposit in terms of planning further exploration, hydrogeology, and application of ISR in ongoing field work.

During preparation and implementation of the mine construction strategy on a commercial scale, the recommended works include activities focused on decreasing uncertainty and risks, as well as in realising potential opportunities associated with the Project.

CSA Global recommends the following path for developing the Gornostay Project:

• A full program of laboratory tests should be completed before commencing any acidification and leaching on the ISR polygon as follows:

o Agitation tests with sulphurous acid (15–25 g/L) as the lixiviant with duration times of 10, 25 and 50 days. Eh, pH, Ni, Co, Fe, Si, Al, Mg, Mn and acid concentration should be measured in solutions during the test.

o Column filtration tests up to nickel and cobalt recoveries of at least 40–50%, potential duration of test 300–400 days.

o Sorption tests for choosing optimal resins. The most popular resin for extracting nickel and cobalt is TP-207 (Fairfield et al., 2018).

o Tests for processing of synthetic nickel-cobalt solutions with composition close to eluate which should be produced in column tests with following sorption and desorption.

o Sampling of operational blocks for correct estimation of initial Mineral Resources and geometallurgical parameters.

• Significant hydrogeological works focused to ISR and environmental issues/risks as follows:

o Preparation of a detailed tectonic scheme of the deposit.

o Classical cluster tests in different areas of the deposits (2–3 tests).

o A grid of single hydrogeological test (8–12 tests).

o Investigation of the permeability variability.

o Investigation of injectivity and pumping rates of wells in different zones.

o Investigation of the direction and rate of natural underground water flow in different zones, especially in fault zones.

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o Tests with neutral tracers.

o Preparation of hydrogeological and hydrodynamic models.

• Pilot test on new operation test block must be completed for investigation initial parameters for PFS as following:

o Choose proper pilot block in zone with continuous groundwater horizon for operation in balance of injection and pumped solutions.

o Construction of operation wells with settling filters above water table in injection wells and below water table in pumping wells.

o Proper sampling and assaying for Ni, Co, Fe, SiO2,Al2O3, MgO, CaO, CO2, Cu, Zn and Sc of the initial composition of mineralisation in operation wells. Variability of the composition of the weathering crust is high and grade-tonnage estimation for the operational block is strongly recommended for estimation of geometallurgical parameters.

o Realising continuous ISR test using sulphurous acid as lixiviant.

o Regular measurements (at least on daily basis) volume of solutions injected to injection holes and pumped in pumping holes, consumption of all reagents, composition of leaching, pregnant and barren solutions. Measurements of pH and Eh is mandatory, recommended on hourly basis. Composition of pregnant and barren solutions as well as in eluate must be measured on daily basis on all components: Ni, Co, Fe, Al, Si, Mn, Mg, Zn, Cu and Sc are recommended also.

CSA Global also recommends that a standardised drilling procedure be adopted for all future exploration campaigns undertaken by Kaznickel. The following comments are made to support the ongoing exploration effort:

• Robust quality assurance procedures are critical for all drilling to be used in MREs:

o CRMs must be randomly submitted along with the drill samples at a rate of one in 10 to 20 samples to assess sample preparation and analytical procedures. These should be blind samples.

o CSA Global recommends adding field blanks using purpose-drilled core barren of cobalt-nickelscandium, but with mineralogical compositions close to the host rocks for mineralised zones.

o Field duplicates samples must be taken and added in all stages of sampling and assaying at a rate of approximately one in 10 to 20 samples.

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o External controls are recommended: CRMs should be chosen to mimic the composition of mineralised zones and should cover low, medium and high-grade ranges.

o Documentation of core recovery is mandatory, and CSA Global would also recommend completing a basic geotechnical log, including rock quality designation, a fracture count and some structural measurement to orientate key features such as joints, faults or bedding.

o QAQC reports should be prepared monthly to enable any issues to be resolved immediately.

• Accurate location of data points, including downhole survey data for inclined holes, is strongly recommended.

• Adhering to core logging and core management procedures should ensure that the data collection process is optimised.

• The use of physical core libraries (split-core examples of individual rock, weathering and mineralisation types) is strongly recommended to ensure that consistency of geological interpretations is maintained when different members of staff are logging the same deposit.

• Comparison of core sampling with channel sampling in trenches for following exploration works.

• Full assaying of samples on Ni, Co, Mn, Sc, Fe, Al2O3, SiO2, MgO, Fe, TiO2, LOI. CSA Global recommends the use of ICP assays.

• Measurements of the water table depth in exploration holes which should be completed on a regular grid.

• Potential zones of linear-fissure weathering crust should be identified, with inclined holes used in these zones to test the mineralisation at an angle that is as high as possible.

• Kaznickel should transfer all relevant data to a centralised industry standard relational database and staff should adopt core database administrative practices. This should be extended to provide a centralised system for professional management of the exploration data that Kaznickel controls where the data is accurate and up to date.

• Marketing investigations:

o Marketing investigations are required for identification of the final products for the operation to deliver. This requires negotiation with potential consumers. The final product may be in sulphate or metallic form. It may be sulphate for nickel and metal for cobalt or vice versa, for example.

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o The form of the final products defines the requirements for solution purity for production of this final product. The requirements for a metallic form are easier for production, as solutions in the electrowinning process are also simpler than for precipitation of sulphates. On the other hand, the cost of nickel contained in nickel sulphate is higher than metallic nickel by approximately 15%.

o Decisions on products will affect final plant design and thereby CAPEX.

• Processing investigations:

o Produce artificial solutions with composition maximum close to composition of real eluate for testwork.

o Real eluate obtained in laboratory and field tests.

o Requirements for the final product.

o Processing of solutions is required for definition of the optimal flowsheet for the refining of eluate including pH and temperature conditions for each stage, the list and consumption of all required reagents for each stage of the flowsheet following direct estimation of operating cost.

o Production of the final product for demonstration to investors/customers.

• Environmental investigations:

o The full environmental and social impact assessment (ESIA) process typically takes 12-18 months to complete, the most time-consuming part being designing the program for, and collecting, seasonal environmental baseline data (necessitating a full annual collection cycle).

o However, KazNickel collected initial data for ESIA as part of preparations for the Feasibility Study into conventional mining/processing. If this information is suitable, time for ESIA preparation may be reduced.

o The ESIA process will also include the preparation of:

■ An Environmental and Social Action Plan (ESAP), and Environmental and Social Management and Monitoring Plan (ESMMP).

■ These plans will form part of the ESIA documentation and will include:

• a basic environmental management system;

• a monitoring scheme for emissions, releases and ambient environment;

• reporting procedures; and

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• an outline of response procedures for non-compliance or emergencies.

■ A Mine Closure and Rehabilitation Plan (MCRP) framework. This will not be a detailed plan but will set out the main environmental and social provisions for closure and rehabilitation, which will form the basis of the full plan that should be prepared during the early stages of mine development. During the period of design, Feasibility Study, approval, operating plan development and evaluations of the MCRP framework, there will be iterative modifications to the designs and operating procedures until a fully revised plan is agreed.

■ A Community Development Plan (CDP) framework. This would include community liaison, community support for social infrastructure, and sustainability post-closure. In accordance with recognised, best international practice, the detailed objectives of the CDP are not specified at this early stage but should be defined and implemented through full ongoing consultation and partnership with the community members themselves, and their evolving perceptions and requirements throughout the Project life.

■ Any other specific studies that arise from the ESIA process.

16.3 Minimal Works to Advance to PFS

The required investigations described above are considered necessary for a complete understanding of the Project. However, KazNickel may choose to prioritise the following investigations that are the key aspects of the Project needed for a PFS (Figure 107):

• Continue pilot operation with calibration of the ISR regime, sulphurous acid production, sorption with producing eluate.

• Laboratory investigations of eluate with flowsheet development including eluate processing with estimation of reagent consumption, composition of intermediate products, optimisation of processing.

• Hydrogeological investigations – continuity and level of groundwater table, variability of permeability, zones without groundwater, natural flow of groundwater.

• More detailed exploration of those operational blocks identified for mining in the first years of operation – which will allow conversion Inferred Resources to Indicated Resources, only 50 to 70 drill holes are required.

• Laboratory investigation of several different samples in columns with detail logs of initial composition of samples, leaching parameters, consumption of reagents, composition of solution to estimation variability of geometallurgical properties.

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• Completion of “ideal” multi-well natural tests based on calibrated technology is required where initial composition should be measured before acidifications as well as all possible logs of test should be completed. This test will be used for estimation of ISR dynamics and level of nickel and cobalt recovery.

• Environmental investigations are required over 15 months due to initial investigations in 12 months, and at least 3 months for processing of results and report preparation. However initial environmental data prepared for the Gornostay conventional mining FS may be used for the new ESIA report, and provide a shorter timeline.

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I-8 – III-285 – Sulphurous acid plant design 0.1 Ion eXchange plant design 0.1 Processing plant design 0.1 Wellfield design 0.1 Mine site design Total 1 Technical reports Prefeasibility Study (PFS) 0.4 Feasibility Study (to Kazakh standards) (FS) tbc Total 0.4 Start operation Building plant, stage 1 tbc Wellfield construction tbc Start of operation Total tbc Grand total 3.4

Figure 106: Indicative optimal pre-production development timeline to first production THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT

17 CONCLUSIONS

The Gornostay Project held by KazNickel is a nickel-cobalt laterite project which provides an opportunity to develop an economically viable is situ recovery project.

The ISR project (if well executed) provides the lowest environmental impact opportunity to extract nickel, cobalt and potentially other metals from the Gornostay Deposits in a commercially rewarding fashion, with operating costs projected by the Scoping Study being in the lowest quartile of global nickel producers.

Exploration so far, since discovery of the lateritic weathering crusts on the ultramafic rocks of the Gornostay Belt, has defined substantial Mineral Resources of nickel and cobalt. Conventional mining approaches have been shown to be sub-economic, but the application of ISR has been demonstrated via a Scoping Study to provide potentially economically viable means of developing a nickel and cobalt mining and processing operation.

The detailed work of the Scoping Study has allowed the declaration of ISR Mineral Resources for the Gornostay Project, of which a substantial proportion are considered to be Indicated by the Competent Person.

Work completed so far at the Gornostay Project has demonstrated the amenability of the Project to ISR. An initial well field block has been developed and lixiviant solutions successfully circulated and recovered. Nickel concentrations in the field trial have corresponded with the laboratory predictions. A pilot processing plant has been built and successfully produced nickel hydroxides. Proof of concept has been shown for ISR at Gornostay.

The proposed Gornostay processing plant underpinning the Scoping Study is based on a hydrometallurgical processing flowsheet following ISR by sulphurous acid to leach nickel and cobalt. The leached nickel and cobalt would be recovered through continuous ion exchange and solvent extraction before the final nickel and cobalt products are crystallised, dried, packaged and transported to market. The residual slurry after metal recovery are neutralised with limestone and sent to a tailings storage facility (TSF), with the barren solutions re- processed, acidified and re-injected to continue the leaching process. The technology and processes to complete the plant design have been describe and used elsewhere. The Company needs to optimise these for the specific aspects of Gornostay.

The key features of the Scoping Study comprise:

• Sulphurous acid being produced from sulphuric acid at the beginning of the Project, before switching to production from lump sulphur on site, as the Project matures.

• Nickel, cobalt (and impurity components) are brought to surface in a pregnant solution by pumping from production (extraction) wells.

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• These pregnant solutions are delivered to the Processing (Sorption) Plant via a small pond which allows removal of a proportion of suspended solids in the pregnant solutions.

• Nickel/cobalt captured onto ion exchange resins and then stripped from the resins in U-shaped desorption columns (Processing Plant).

• Nickel/cobalt sulphate extraction, purification and recovery (refinery plant).

• Tailings neutralisation and storage.

• Ammonium sulphate crystallisation.

• Barren solutions after processing are returned to the acid plant for re-acidification and then recycled for leaching of nickel and cobalt again.

The proposed process plant allows production of high-purity Class 1 hydrated nickel sulphate

The operating costs for the Gornostay ISR project as estimated by the Scoping Study are highly attractive, and likely to be in the lowest quartile of producers. This outcome is a significant advantage for the Project, and suggests that a project based on ISR will be robust and highly competitive.

The Scoping Study has provided a preliminary positive cashflow based on the operating and capital costs and mining schedule. While still subject to the uncertainty typical of a Scoping Study, these results are very encouraging.

In CSA Global’s professional opinion:

The Gornostay Project has the potential to be developed into an economically viable and profitable mining and processing operation.

The findings of the Scoping Study are that further investment and project development is warranted.

The remaining risks to the Project comprise:

• Uncertainty about the likely market demand for nickel and cobalt. But the project operating cost of the Project provides are significant mitigation to the risk.

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• Lack of information in hydrogeology and in situ geometallurgy (consistent with the Scoping Study stage of the Project).

The risks discussed above all have identified mitigation strategies, based on the knowledge gained in ISR projects elsewhere (notably including within Kazakhstan).

In the professional opinion of CSA Global, the project technical risks are manageable to a low status provided appropriate regulatory requirements continue to be met, and suitable management and control measures continue to be implemented by the Company. Project development risks have been significantly reduced by the successful pilot scale well field and processing plant development.

As part of the Scoping Study a clear path to production has been outlined. This path comprises a set of technical and administrative phases to progressively reduce risks. Unlike a conventional mining project, ISR projects can simultaneously cover exploration, pre-development and production activities. Such is the case at Gornostay where pilot production will continue as a major means of addressing the project uncertainties. Over the next 18 – 36 months laboratory and field studies will optimise the ISR regime and flowsheet design. New hydrogeological and geometallurgical data will increase confidence in the Mineral Resources, together with more drilling in the planned production areas will support the declaration of Ore Reserves. At this same time more environmental studies and community consultation will allow finalisation of the projects environmental and social action plan.

Based on the proposed work and analysis presented in this CPR (and summarised above), CSA Global concludes that the Company’s mine development plans and working schedule are realistic, though likely a best case in terms of project timeline. In CSA Global’s professional opinion, the development of a commercial scale operation is reasonable, with any current uncertainties consistent with the Scoping Study stage of the project.

18 REFERENCES

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ALTA 2018 Treatment of Nickel-Cobalt Laterites, ALTA Short Course, April 2018. 374pp. ALTA Metallurgical Services, Melbourne Australia.

Australian Mines, 2018. “Bankable Feasibility Study supports strong commercial case for developing Sconi Cobalt-Nickel Scandium Project, located in North Queensland”. Australian Mines Limited ASX announcement posted 20 November 2018., available < https://www.asx.com.au/asxpdf/20181120/pdf/440gbvp6dg25s6.pdf >, viewed 13/3/2020.

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Broadbent C.P., 2011. “Feasibility Study. Gornostay nickel project, Northern Kazakhstan, September 2011”. Unpublished report prepared by Wardell Armstrong for Yertis Ferronickel works LLP.

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Demin, V., 2007. “Report on geotechnical and hydrogeological conditions of the Gornostaevsky deposit. Kurchatov, 2007”. In Russian.

Donaghy, A., 2020. “Industry Report — Nickel and Cobalt Markey Overview for the Gornostay Project”. Unpublished CSA Global Report R486.2020. 53pp.

Deventer J. and McDevitt W., 2019. “Application of solvent-impregnated resins for production of high-purity nickel and cobalt liquors”. ALTA 2019 (24th Annual Conference Proceedings, Perth, Western Australia, 18 – 25 May, 2019. Available < https://www.purolite.com/ro/dam/jcr:d9786349-c45d-406d-bdd8-f3b97c83ad97/VanDeventer- NCC056%20(002)_ALTA%202019.pdf > accessed 15/3/2020.

Fairfield P, Longley R., Widenbar L., McEwing S., & Kyle J., 2018. “Sunrise Nickel Cobalt Project, New South Wales, Australia NI 43-101 Technical Report”, SRK consulting, Perth, 2018, available http://clients3.weblink.com.au/pdf/CLQ/02007212.pdf, viewed 13/3/2020

GKZ Statement 1024-11A, 2011. in Russian.

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Government of Kazakhstan. Subsoil Use Contract for Gornostaevsky cobalt-nickel deposit with Addendums, 2004–2018. in Russian.

Grebnev G.S., Savenya N.V., Savenya M.N., Sukleta S.A., 2011. “Method of extraction nickel and cobalt from silicate nickel- cobalt mineralisation”. The Patent of the Russian Federation No. 2465449. February, 2011.

Gulyakin, V.A., 2004. “Project for preliminary exploration of mineralised bodies 1 and 14 of the Gornostaevsky silicate cobalt-nickel mineralisation, Ust-Kamenogorsk (Oskemen), 2004”. In Russian.

Haque, N., Norgate, T., 2013. “The greenhouse gas footprint of in-situ leaching of uranium, gold and copper in Australia”, Journal of Cleaner Production (2013), http://dx.doi.org/10.1016/j.jclepro.2013.09.033

International Atomic Energy Agency, 2001. Manual of Acid in situ Leach Uranium Mining Technology. 294 pp, IAEA- TECDOC-1239, IAEA, Vienna

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Jahromi P.S.A., 2014. “Application of an Ion Exchange Loading Correlation for Nickel Recovery from a Ferrous Containing Solution”, April, 2014

Jeffress G.M., Naidoo T. & Ulrich S., 2020. “Technical Value of the Gornostay Project in Kazakhstan”. March 2020. Confidential unpublished CSA Global memorandum R155.2020.

JORC, 2012. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. [online]. Available from < http://www.jorc.org > (The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists, and Minerals Council of Australia).

Kantbekuly M., 2019. “Hydrogeological tests on the Gornostay deposit”. Astana. August, 2019. Unpublished internal company memorandum. In Russian

Kantbekuly, M. 2018. “Feasibility Study (Kazakhstan standard) for test operation of silicate nickel mineralisation by in situ recovery on the Gornostay cobalt-nickel deposit. Astana, 2018. In Russian.

Kantbekuly M., 2020. Pilot operation on the Gornostay deposit. February 2020. The memorandum was written in Russian

KazNickel, 2019. Database for the Gornostay project. Left river side. Confidential Internal Company database.

Mamedov V., Boufeev Y., & Nikitine Y., 2010. Geologie de la Republique de Guinee, Geoprospects Ltd, Moscow, Russia. In French, available < https://mines.gov.gn/assets/uploads/2017/03/tom1.pdf >, viewed 14/3/2020.

Mamytbekov G., 2019. “Laboratory metallurgical tests for Ni-Co mineralisation of the Gornostay deposit”. Unpublished memorandum by the Institute of Polymer Materials & Technology. Almaty. August, 2019. In Russian

Mpisana, T., 2011. “Characterisation of Gornostaevskoye ore and converting of synthetic Fe-Ni-Co alloy. Unpublished report by Mintek for KazNickel. Randburg, 2011.

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NAEN, 2011. “Russian Code for the public reporting of exploration results, mineral resources and mineral reserves (Code NAEN). Moscow, 2011.

Newall P., Kornitskiy A., Owen M.L., & Coppin N.J., 2007. “Scoping Study and Preliminary Resource Estimation of the Gornostai Ni-Co deposit, Northern Kazakhstan”. Unpublished report by Wardell Armstrong for KazNickel.

Okunev E.V., Levandovsky G.S., & Sukhorukov A.A., 1998. “Report on preliminary exploration of the Gornostaevsky cobalt- nickel deposit with resource estimation as of 01.01.98. Semey”. In Russian.

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Seredkin M., Savenya M., & Duseybayev B. 2018. “Current situation and prospective of ISR for non-uranium metals”. MINEX Russia 2018 (The 14th Mining and Exploration Forum,2–4October 2018, Moscow, Russia). (The presentation is in Russian)

Seredkin M., Zabolotsky A., & Jeffress G.M., 2016. “In situ recovery, an alternative to conventional methods of mining: Exploration, resource estimation, environmental issues, project evaluation and economics”. Ore Geology Review, 79, pp 500-514.

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Zhatkanbaev, E., 2019. “Short memorandum for agitation leaching of samples from Gornostaevsky cobalt-nickel project. Kurchatov, 2019. In Russian.

Zimmerman R., Young M. & Hoag C., 2013. “NI 43-101 Technical Report. Pre-Feasibility Study. Florence, Pinal County, Arizona”. Prepared by M3 Engineering & Technology Corporation for HDICURIS. March 2013

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19 GLOSSARY, ABBREVIATIONS AND UNITS OF MEASUREMENT

$/t Dollar per tonne

% Per cent

° Degrees of plane angle

°C Degrees Celsius

2D two-dimensional

3D three-dimensional

a annum (or year)

AAL Atmospheric Acid Leaching–alowpressure leaching technique

AAS Atomic Absorption Spectroscopy - a spectroanalytical procedure for the quantitative determination of chemical elements using the absorption of optical radiation by free atoms in the gaseous state

Ag silver

AI Abrasion Index

AMD Acid Mine Drainage – the outflow of acidic water from mines

Amsul ammonium sulphate

Anticline A ridge or fold of stratified rock in which the strata slope downwards from the crest

AP aminophosphonic

ARRICT All Russian Research Institute of Chemical Technology

AXT Ammonium sulphate crystallisation

BEV Battery-Powered Electric Vehicle

BFS Bankable Feasibility Study

birbirite A brownish siliceous rock derived from the hydration and silicification of olivine-bearing rocks

CAPEX Capital Expenditure

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CDP Community Development Plan

chalcedony a microcrystalline type of quartz

chrome spinels A common accessory mineral in ultramafic rocks and their serpentinised derivatives

chrysotile a fibrous form of the mineral serpentine

CIS The Commonwealth of Independent States (CIS) is a regional intergovernmental organization of originally ten post-Soviet republics in Eurasia formed following the dissolution of the Soviet Union.

Clean TeQ Clean TeQ Holdings Limited (Company)

CLP Cobalt liquor purification

cLX continuous Liquid Exchange

cm centimetre(s)

Co cobalt

coefficient of Statistical measure of the degree of similarity between two parameters correlations

coefficient of In statistics, the normalised variation value in a sample population variation (CV)

colmatation Clogging of pores

compositing In sampling and resource estimation, process designed to carry all samples to certain equal length

core sampling In exploration, a sampling method of obtaining ore or rock samples from a drillhole core for further assay

CP Competent Person

CPR Competent Persons Report

CRM Certified Reference Material

CRU Commodity Research Unit

CSA Global CSA Global (UK) Ltd

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CSX Cobalt Solvent Extraction

Cu copper

cut-off grade The threshold value in exploration and geological resources estimation above which ore material is selectively processed or estimated

CV coefficient of variation

CXT Cobalt sulphate crystallisation

d diameter

dB decibels

denudation the mechanical, biological and chemical processes of erosion, weathering and mass wasting leading to a reduction in elevation and in relief of landforms and of landscapes

DFS definitive Feasibility Study

Diluvial deposits created as a result of catastrophic outbursts of Pleistocene giant glacier-dammed lakes in intermontane basins of the Altai

diluvial Relating to deposits created as a result of catastrophic outbursts of Pleistocene giant glacier-dammed lakes in intermontane basins of the Altai

D.R.C. Democratic Republic of Congo

dunites Plutonic igneousrock, of ultramafic composition, with coarse-grained texture, comprising greater than 90% olivine

dykes a sub-vertical cross-cutting sheet of rock that is formed in a fracture of a pre-existing rock body

EBITDA earnings before interest, taxes, depreciation and amortisation

Eh Redox Potential

EIA Environmental Impact Assessment

EM electromagnetic

EN Eluate Neutralisation

ESAP Environmental and Social Action Plan

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ESIA Environmental and Social Impact Assessment

ESMMP Environmental and Social Management and Monitoring Plan

EV Electric Vehicle

EWMP Extractive Waste Management Plan

Fe Iron

flagging Coding of cells of the digital model

FPE LLP FP Ertis

FS Feasibility Study

FSU Former Soviet Union

g gram(s)

g/t grams per tonne

Gabbroic a coarse-grained, mafic, intrusive igneous rock formed from the slow cooling of magnesium-rich and iron-rich magma

garnierite a general name for a green nickel ore which is found in pockets and veins within weathered and serpentinized ultramafic rocks

geochemical sampling In exploration, the main method of sampling for determination of presence of mineralisation. A geochemical sample usually unites fragments of rock chipped with a hammer from drillhole core at a specific interval.

geometric mean The antilog of the mean value of the logarithms of individual values. For a logarithmic distribution, the geometric mean is equal to the median. For a logarithmic distribution, the geometric mean is equal to the median.

GKZ Russian State Commission on Mineral Resources

group sampling In exploration and mining, method of sampling by means of union of the material of individual samples characterising an independent orebody

GT Grade-thickness

ha hectare(s)

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HEV Hybrid Electric Vehicle

histogram Diagrammatic representation of data distribution by calculating frequency of occurrence

HKEX Hong Kong Stock Exchange

HPAL High Pressure Acid Leach, primarily used for the extraction of nickel from laterite

hr hour(s)

hydrohaematite Goethite, α-Fe3+O(OH); The most common simple iron oxide mineral. A weathering product of numerous iron-bearing minerals

hydrometallurgy the use of aqueous chemistry for the recovery of metals from ores, concentrates, and recycled or residual materials.

IBCs Intermediate Bulk Containers

ICP-MS inductively coupled plasma (ICP) — mass spectrometry — a type of mass spectrometry that uses an Inductively coupled plasma to ionize the sample. It atomizes the sample and creates atomic and small polyatomic ions, which are then detected.

ICP-OES inductively coupled plasma (ICP) — optical emission spectrometry — a variation of ICP-MS above

IDA imino-diacetic acid

IDW2 Inverse Distance Weighted Squared — A linear grade interpolation technique which accounts for the sample to distance relationship from an unknown point.

imino-diacetic acid Chelating resins are a class of ion exchange resins. Chelating resins have (IDA) chelating the same bead form and polymer matrix as usual ion exchangers. Their functional resin main use is for pre-concentration of metal ions in a dilute solution.

in situ leach in situ leaching (ISL), also called in situ recovery (ISR) or solution mining, is a mining process used to recover minerals through boreholes drilled into a deposit, in situ.

IRR Internal rate of return

ISR In Situ Recovery or in situ leaching (ISL)

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ISX Impurity Solvent Extraction

IX Ion Exchange resin/polymer

JORC Joint Ore Reserves Committee. The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

JSC Joint Stock Company

kg kilogram(s)

kg/t kilogram(s) per tonne

km kilometre(s)

km2 square kilometre(s)

komatiites a type of ultramafic mantle-derived volcanic rock defined as having crystallised from a lava with ≥ 18 wt% MgO

kriging Method of interpolating grade using variogram parameters associated with the samples’ spatial distribution. Kriging estimates grades in untested areas (blocks) such that the variogram parameters are used for optimum weighting of known grades. Kriging weights known grades such that variation of the estimation is minimised, and the standard deviation is equal to zero (based on the model).

kW kilowatts

L:S liquid to solid ratio

lag The chosen spacing for constructing a variogram

lateritic weathering Tropical weathering (laterisation) is a prolonged process of chemical weathering formed from the leaching of any parent rocks which leaves the more insoluble ions, predominantly iron and aluminium.

lb pounds

leaching Leaching is the process of extracting substances from a solid by dissolving them in a liquid, naturally.

LHS left-hand side

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lixiviant a liquid medium used in hydrometallurgy to selectively extract the desired metal from the ore or mineral. It assists in rapid and complete leaching. The metal can be recovered from it in a concentrated form after leaching

LLP Limited Liability Partnership

LME London Metal Exchange

LMO Battery Type – Lithium Manganese Oxide

LoB Life of Block

lognormal Relates to the distribution of a variable value, where the logarithm of this variable is a normal distribution

LoM Life of Mine

LPP LLP FP Ertis

M million or mega

m metre(s)

M million(s)

m/s metres per second

m3 cubic metre(s)

m3/t cubic metres per tonne

magnesite a mineral with the chemical formula MgCO3 (magnesium carbonate)

MCRP Mine Closure and Rehabilitation Plan

mean Arithmetic mean

median Sample occupying the middle position in a database

MET mineral extraction tax

mg/L milligram per litre

MICROMINE Software product for exploration and the mining industry

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Mineral Resources A ‘Mineral Resource’ is a concentration or occurrence of solid material of economic interest in or on the earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral Resources are sub- divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

ml millilitre

ml/l millilitre per litre

Mlb millions of pounds

Mm millimetre(s)

Mm3 million cubic metre(s)

Moz millions of ounces

MRE Mineral Resource Estimate

Mt million tonnes

Mt/a million tonnes per annum

MW Megawatt(s)

NCA Battery Type – Lithium Nickel-Cobalt Aluminium Oxide

NGO Non-Governmental Organisation

Ni nickel

NI 43-101 National Instrument 43-101 (Canadian CIM code)

NiS nickel sulphide

NIWEST NiWest Ltd. (Company)

NMC Battery Type — Lithium Cobalt Manganese Oxide

NMR nuclear magnetic response

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Nontronite Nontronite is the iron(III) rich member of the smectite group of clay minerals. Nontronites typically have a chemical composition consisting

of more than ≈30% Fe2O3 and less than ≈12% Al2O3.

NPI Nickel Pig Iron

NPV net present value

NSX Nickel Solvent Extraction

nugget effect Measure of the variability during repeat analysis of a sample due to a measurement error or the presence of natural, small-scale variability. Although the variogram value at 0 spacing should be equal to zero, these factors may affect the values of samples taken at a very short distance from each other such that their values may vary. A vertical jump from the zero value at the origin of a variogram with very small spacing is called the nugget effect.

NXT Nickel sulphate crystallisation

ochre Limonitic iron oxides, generally yellow to red or brown in colour

OK Ordinary Kriging (see kriging)

OPEX Operational Expenditure

ophiolite complex a section of the earth’s mafic oceanic crust and the underlying ultramafic upper mantle that has been uplifted and exposed above sea level and often emplaced onto continental crustal rocks

Ore Reserves An ‘Ore Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.

ORP Oxidation-reduction potential

overburden rock or soil overlying a mineral deposit

OVOS an Environmental and Social Impact Assessment

oz ounce(s)

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PAL Pressure Acid Leaching

peneplain a low-relief plain formed by protracted erosion

percentile In statistics, one one-hundredth of the data. It is generally used to break a database down into equal sized groups.

peridotites a dense, coarse-grained igneous rock consisting mostly of the minerals olivine and pyroxene. Peridotite is ultramafic, as the rock contains less than 45% silica

PFS A Preliminary Feasibility Study (Pre-Feasibility Study) is a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for a Competent Person, acting reasonably, to determine if all or part of the Mineral Resources may be converted to an Ore Reserve at the time of reporting. A Pre-Feasibility Study is at a lower confidence level than a Feasibility Study

PGE platinum group element

PGM platinum group mineral

PHEV Plug-in Hybrid Electric Vehicle

population In geostatistics, a population formed from grades having identical or similar geostatistical characteristics. Ideally, one given population is characterised by a linear distribution.

POX pressure oxidation — an extractive technology where high-purity oxygen mixes with an ore slurry, oxidising the original sulphides and releasing trapped metals

ppm parts per million

Pregnant (solution) The generally acidic, metal-laden water generated from leaching.

Project Gornostay Nickel-Cobalt Project

Proluvia complex, friable, deltaic sediment accumulated at the foot of a slope as a result of an occasional torrential washing of fragmental material

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proluvial A sediment at the foot of a slope, typically of fractured rock, carried by an occasional torrent

psilomelane Any hard, black hydrous manganese oxide with variable amounts of barium and potassium

pyrometallurgy a branch of extractive metallurgy. It consists of the thermal treatment of minerals and metallurgical ores and concentrates to bring about physical and chemical transformations in the materials to enable recovery of valuable metals.

QA quality assurance

QAQC quality assurance/quality control

QC quality control

Q-Q quantile-quantile

quantile In statistics, a discrete value of a variable for the purposes of comparing two populations after they have been sorted in ascending order

quantile plot Diagrammatic representation of the distribution of two variables. It is one of the control tools, e.g. when comparing grades of a model with sampling data. It is one of the control tools, e.g. for comparing model grades with sampling data.

R&D Research and Development

raffinate The residual liquid from which metals of interest have been extracted

range Same as Influence Zone; as the spacing between pairs increases, the value of corresponding variogram as a whole also increases. However, the value of the mean square difference between pairs of values does not change from the defined spacing value, and the variogram reaches its plateau. The horizontal spacing at which a variogram reaches its plateau is called the range. Above this spacing there is no correlation between samples.

RiP Resin in Pulp

RL Elevation of the collar of a drillhole, a trench or a pit bench above the sea level

ROM run-of-mine

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RQD rock quality designation-ameasure of quality of rock core taken from a borehole. RQD signifies the degree of jointing or fracture in a rock mass expressed as a percentage

S sulphur

sample Specimen with analytically determined grade values for the components being studied

Sc scandium

scatterplot Diagrammatic representation of measurement pairs about an orthogonal axis

Scoping Study A Scoping Study is an order of magnitude technical and economic study of the potential viability of Mineral Resources. It includes appropriate assessments of realistically assumed Modifying Factors together with any other relevant operational factors that are necessary to demonstrate at the time of reporting that progress to a Pre-Feasibility Study can be reasonably justified.

SD standard deviation - a measure of the amount of variation or dispersion of a set of values

serpentinite a metamorphic rock that is mostly composed of serpentine group minerals. Serpentine group minerals antigorite, lizardite, and chrysotile are produced by the hydrous alteration of ultramafic rocks. These are igneous rocks that are composed of olivine and pyroxene (peridotite, pyroxenite).

serpentinite a metamorphic rock composed of serpentine minerals formed by the hydration of ultramafic rocks

serpophite Serpentine minerals

SG specific gravity — the ratio of the density of a substance to the density of a reference substance; equivalently, it is the ratio of the mass of a substance to the mass of a reference substance for the same given volume. In geological use, the reference material is usually water which has a density of 1 g/cm3 and SG is therefore essentially a density measure

sill Variation value at which a variogram reaches a plateau

SIPX sodium isopropyl xanthate

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SNK Student-Newman-Keuls (tests)

sparged also known as gas flushing in metallurgy, is a technique in which a gas is bubbled through a liquid in order to remove other dissolved gas(es) and/or dissolved volatile liquid(s) from that liquid. It is a method of degassing

SSU Code Subsoil Use Code

standard deviation Statistical value of data dispersion around the mean value

supergene supergene processes or enrichment are those that occur relatively near the surface as opposed to deep hypogene processes. Supergene processes include the predominance of meteoric water circulation with concomitant oxidation and chemical weathering.

SX Solvent Extraction-Electrowinning (SX-EW)

t tonne

t/m3 tonnes per cubic metre

t/yr tonnes per year

tectonised Modified by a tectonic process; deformed

tpa tonnes per annum (also t/a); tonnes per year

TSF Tailings Storage facility

UGTC Ural Geotechnical Company

ultramafic Ultramafic rocks are igneous and meta-igneous rocks with a very low silica content (less than 45%), generally >18% MgO, high FeO, low potassium, and are composed of usually greater than 90% mafic minerals (dark coloured, high magnesium and iron content).

Urals The mountain range that runs approximately from north to south through western Russia, from the coast of the Arctic Ocean to the Ural River and northwestern Kazakhstan. The mountain range forms part of the conventional boundary between the continents of Europe and Asia.

US$ United States dollars

US$ M million US dollars

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USGS United States Geological Survey

VALMIN The VALMIN Code is a companion to the JORC Code that addresses both the technical assessment and valuation of mineral assets.

variation In statistics, the measure of dispersion around the mean value of a dataset

variogram Graph showing variability of an element by increasing spacing between samples

variography The process of constructing a variogram

VMS volcanogenic massive sulphide

WACC Weighted average cost of capital

wireframe model 3D surface defined by triangles

XRF x-ray fluorescence — the emission of characteristic secondary x-rays from an energised sample that allow its composition to be determined.

y year

μm micrometre(s)

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Appendix 1: Competent Person/Practitioner Consent forms

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Competent Person/Practitioner’s Consent Form

Pursuant to the requirements of HKEX Listing Rules, Clause 9 of the JORC Code 2012 (Written Consent Statement), and section 12 of the VALMIN Code 2015 (Declarations).

REPORT DESCRIPTION

[REDACTED] Document (insert name or heading of report to be publicly released) (“Report”)

Battery Metals Technologies Ltd. (incorporated in the Republic of Singapore with limited liability) (insert name of company releasing the Report)

Gornostay Ni-Co Project (insert name of the deposit to which the Report refers)

date [●] (Date of Report)

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STATEMENT

I, Dr Maxim Seredkin PhD, BSc (Hons), FAusIMM, MAIG, Expert OERN, Member PONEN confirm that:

• I have read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code, 2012 Edition”).

• I am a Competent Person as defined by the 2012 JORC Edition, having five years experience which is relevant to the style of mineralisation and type of deposit described in the Report, and to the activity (Mineral Exploration) for which I am accepting responsibility.

• and I have sufficient experience relevant to the Technical Assessment of the Mineral Assets under consideration and to the activity I am undertaking to qualify as a Practitioner as defined in the 2015 edition of the VALMIN Code.

• I am a Fellow of The Australasian Institute of Mining and Metallurgy and of the Australian Institute of Geoscientists.

• I have reviewed the Report to which this Consent Statement applies.

• I am a full time employee of CSA Global Pty Ltd, a member of the ERM Group of companies.

• and have been engaged by KazNickel LLP to prepare a Competent Persons Report on the Gornostay Project in Kazakhstan on which the Report is based.

I have disclosed to the reporting company the full nature of the relationship between myself and the company, including any issue that could be perceived by investors as a conflict of interest.

I verify that the Report is based on and fairly and accurately reflects in the form and context in which it appears, the information in my supporting documentation relating to Exploration Targets, Exploration Results, Mineral Resources and/or Ore Reserves (select as appropriate).

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CONSENT

I consent to the release of the Report and this Consent Statement by the directors of:

Battery Metals Technologies Ltd.

Signature of Competent Person: Date:

Professional Membership: Membership Number: (insert organisation name)

Signature of Witness: Print Witness Name and Residence (eg. Town/Suburb):

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Competent Person/Practitioner’s Consent Form

Pursuant to the requirements of HKEX Listing Rules, Clause 9 of the JORC Code 2012 (Written Consent Statement), and section 12 of the VALMIN Code 2015 (Declarations).

REPORT DESCRIPTION

[REDACTED] Document (insert name or heading of report to be publicly released) (“Report”)

Battery Metals Technologies Ltd. (incorporated in the Republic of Singapore with limited liability) (insert name of company releasing the Report)

Gornostay Ni-Co Project (insert name of the deposit to which the Report refers)

date [●] (Date of Report)

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STATEMENT

I, Graham Mark Jeffress BSc (Hons), FAIG, RPGeo, FAusIMM, FSEG, MGSA confirm that:

• I have read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code, 2012 Edition”).

• I am a Fellow of The Australasian Institute of Mining and Metallurgy and of the Australian Institute of Geoscientists.

• I have reviewed the Report to which this Consent Statement applies.

• I am a full time employee of CSA Global Pty Ltd, a member of the ERM Group of companies.

• and have been engaged by KazNickel LLP to prepare a Competent Persons Report on the Gornostay Project in Kazakhstan on which the Report is based.

I have disclosed to the reporting company the full nature of the relationship between myself and the company, including any issue that could be perceived by investors as a conflict of interest.

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CONSENT

I consent to the release of the Report and this Consent Statement by the directors of:

Battery Metals Technologies Ltd.

Signature of Competent Person: Date:

Professional Membership: Membership Number: (insert organisation name)

Signature of Witness: Print Witness Name and Residence (eg. Town/Suburb):

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Appendix 2: JORC Code Table 1

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Section 1 – Sampling Techniques and Data REPORT PERSON’S COMPETENT III APPENDIX

Criteria JORC Code explanation Commentary Sampling techniques Nature and quality of sampling (e.g. cut channels, random chips, or Test pits and core drillholes were used for sampling. specific specialised industry standard measurement tools There were four stages of exploration: 1960s (drillholes, test pits), 2004–2007 (drillholes, test appropriate to the minerals under investigation, such as downhole pits, hydrogeology), 2011–2012 (drillholes) and 2018 to present (investigations focused on in gamma sondes, or handheld XRF instruments, etc.). These examples situ recovery – ISR). should not be taken as limiting the broad meaning of sampling. The most reliable samples were collected in test pits by 10 cm x 5 cm x 50–200 cm channels along core drillholes. In the 1960s, core was split in two halves manually, with one half of core sampled at 1 m intervals taking into account the lithological types. Sampling occurred 5–10 m either side of mineralised intervals. From 2004 through 2007, and in 2012, full core samples were collected for sample analysis through all potential mineralised intervals defined by geological logging, and 5–10 m into unmineralised rocks. The average sampling interval was 1–2 m and the weight of the core sample was 2.0–9.8 kg. Samples were assayed for Ni and Co. Fe, MgO, Al I-1 – III-314 – 2O, SiO2,TiO2, and Sc, and LOI was determined in composite samples only.

Include reference to measures taken to ensure sample representivity The most reliable sampling was in channels in test pits because of no loss of material. and the appropriate calibration of any measurement tools or systems 761 twinned core and channel samples from test pits were compared from data collected in the used. 1960s and from 2004 to 2007. A small underestimation (5-10 rel.%) of Ni and Co was identified in core samples.

Aspects of the determination of mineralisation that are Material to Sampling and sample preparation meet industry standards for laterite weathering crust. the Public Report. In cases where ‘industry standard’ work has been Verification of the representativity of core samples was demonstrated by channel samples in done this would be relatively simple (e.g. ‘reverse circulation test pits. drilling was used to obtain 1 m samples from which 3 kg was However, assaying of Ni and Co only does not meet to industry standards. Fe, MgO, Al pulverised to produce a 30 g charge for fire assay’). In other cases, 2O, more explanation may be required, such as where there is coarse SiO 2,TiO2, Sc LOI should be assayed for laterite nickel-cobalt deposits because these gold that has inherent sampling problems. Unusual commodities or components have influence on the geo-metallurgical properties of mineralisation. mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Drilling techniques Drill type (e.g. core, reverse circulation, open-hole hammer, rotary Drilling was completed along exploration sections by a 50–100 m x 50–200 m grid for Left air blast, auger, Bangka, sonic, etc.) and details (e.g. core diameter, River Side area and by a 50–400 m x 200–800 m grid for Right River Side for resource triple or standard tube, depth of diamond tails, face-sampling bit or estimation, and up to 1,600–4,000 m elsewhere. other type, whether core is oriented and if so, by what method, etc.). Information on the method of drilling before 2004 is limited. The depth of drillholes in the period 1960s was up to 300 m. The exploration core drilling carried out from 2004 to 2012 was completed by mobile drilling rigs such as SKB-4 with Boart Longyear wireline tools. The depth of holes was from 7 m to 130 m. All drillholes were vertical. Drilling diameter varies between 93 mm and 76 mm.

Drill sample Method of recording and assessing core and chip sample recoveries Core recovery appeared to average better than 95% from 2004 to 2012. No information is recovery and results assessed. available for the 1960s period.

Measures taken to maximise sample recovery and ensure Drilling was completed using double-core pipe, carbide and diamond tips with a diameter of representative nature of the samples. 93 mm without or with very limited use of flushing fluid (“dry” drilling). Full core samples increased representativity of sampling from 2004 to 2012.

Whether a relationship exists between sample recovery and grade No relationship between sample recovery and grade has been identified.

I-1 – III-315 – and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

Logging Whether core and chip samples have been geologically and Core logging was carried out from 2004 to 2012 during drilling as well as after completion of geotechnically logged to a level of detail to support appropriate drillholes using standardised forms, collected in special logging books. Mineral Resource estimation, mining studies and metallurgical Information recorded included drilling intervals, core recovery, description of lithology, studies. lithological column, sample numbers and intervals of sampling, Ni and Co grades. No photographing of core was completed. Logging for historical periods is not available.

Whether logging is qualitative or quantitative in nature. Core (or Logging is qualitative in nature. costean, channel, etc.) photography.

The total length and percentage of the relevant intersections logged. All intervals in core drillholes and tests pits completed in from 2004 to 2012 was logged. Logging for historical test pits is provided in historical reports. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Subsampling If core, whether cut or shown and whether quarter, half or all core From 2004 to 2007, full-core samples were collected. In the 1960s, core was split in two techniques and taken. halves manually and half of core was sampled at 1 m for mineralised intervals and 1 m to 3 m sample preparation intervals for waste rocks.

If non-core, whether riffled, tube sampled, rotary split, etc. and Test pits were sampled by 10 cm x 5 cm x 50–200 cm channels along core drillholes and at the whether sampled wet or dry. bottom of trenches. Test pits were sampled by vertical 10 cm x 5 cm x 100 cm channels in two walls. Mixing of different lithological types was avoided.

For all sample types, the nature, quality and appropriateness of the All samples were dried at a temperature of 110°C to remove capillary moisture. The sample sample preparation technique. treatment flowsheet is shown below.

initial sample, Q = 3.1-5.3 kg, d = 50 mm

roll-jaw crusher, d = 3.5 mm screen, d = ≤3.5 mm

rolls crusher, d = 1 mm screen, d = ≤1 mm

I-1 – III-316 – mixing

reducing, Q = 2.1 kg

reducing, Q = 1.05 kg

reducing, Q = 0.525 kg

waste abrasion, d = 0.074 mm

screen, d = ≤0.074 mm mixing dividing

Q = 0.262 kg Q = 0.262 kg

duplicate sample

judge external internal composite internal ordinary control control control sample control assaying HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Quality control procedures adopted for all sub-sampling stages to Field duplicates (“internal control”) were collected in the sample preparation laboratory for maximise representivity of samples. verification assaying at the same laboratory where ordinary samples were assayed. Note that all duplicates from crushed material in sample preparation laboratory are termed “field” duplicates in this report. This is not consistent with most reporting jurisdictions where field duplicates refer to duplicate samples taken at the drill rig (i.e. reverse circulation splits) or core processing facility (i.e. sampling the second half of the core). “External control” in this report refers to assaying of field duplicates in independent laboratory which was completed at the Project. Certified reference materials (CRMs) and blanks were used from 2004 to 2007 only Quality assurance procedures are not consistent with typical industry standards. Duplicates (field and laboratory), CRMs and blank materials are required in all stages: from sampling, to sample preparation, and analysis.

Measures taken to ensure that the sampling is representative of the 761 twinned core and channel samples from test pits were compared from data collected in the in situ material collected, including for instance results for field 1960s and from 2004 to 2007. A small underestimation (5-10 rel.%) of Ni and Co was duplicate/second-half sampling identified in core samples.

Whether sample sizes are appropriate to the grain size of the Ni and Co are concentrated in fine material mainly as gravimetric assay has shown. The I-1 – III-317 – material being sampled weight of initial sample weight was calculated using a formula with a coefficient of irregularity which was applied given the very uneven distribution of mineralisation. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX

Quality of assay The nature, quality and appropriateness of the assaying and Samples were assayed for Ni and Co only. Fe, Mn,2O, MgO, SiO2 Al,TiO2, Sc LOI were data and laboratory laboratory procedures used and whether the technique is consideredassayed in composite samples only. This approach does not meet industry standards because tests partial or total. all major and by-product components should be assayed in all primary samples of the mineralisation. A titrimetric chemical method was used in the 1960s and atomic absorption spectroscopy (AAS) was used from 2004 to 2012 for assaying of Co and Ni. Inductively coupled plasma (ICP) is more optimal for Ni and Co assaying and is recommended in the future. Generally existing assays can be used for Mineral Resource estimation; however, more complete assaying should be carried out in the next exploration stages.

For geophysical tools, spectrometers, handheld XRF instruments, Portable x-ray fluorescence (XRF) was used for field measurements of nickel in core or etc., the parameters used in determining the analysis including hydrogeological and ISR test holes. No geophysical hole tools were used in other exploration instrument make and model, reading times, calibrations factors periods. applied and their derivation, etc.

Nature of quality control procedures adopted (e.g. standards, blanks, Quality assurance procedures are not consistent with typical industry standards, as discussed duplicates, external laboratory checks) and whether acceptable above. However internal and external control as well as CRMs for the 2004 to 2007 period did levels of accuracy (i.e. lack of bias) and precision have been not identify issues and any significant bias with the data. I-1 – III-318 – established. However, a small underestimation (5-10 rel.%) of Ni and Co was identified in core samples. Based on an assessment of the data, the Competent Person considered the entire dataset to be acceptable for Mineral Resource estimation, with assaying posing moderate risk to the overall confidence of the Mineral Resource estimate (MRE).

Verification of The verification of significant intersections by either independent or No verification by an independent or alternative company personnel has been carried out. sampling and alternative company personnel. However, twinned samples were used for verification of intersections. The test open pit assaying validated the mineralisation.

The use of twinned holes. Twinned channel samples collected in test pits validate the drill core results.

Documentation of primary data, data entry procedures, data Information collected includes drilling intervals, core recovery, description of lithology, verification, data storage (physical and electronic) protocols. lithological column, sample numbers and intervals of sampling, Ni, Co and Fe grades. No photographing of core was completed. Logging for historical periods was not available. Initial logging was included in a Microsoft (MS) Excel database. Core was sampled in full and is no longer available. Core from operational wells drilled for pilot ISR block is available on site.

Discuss any adjustment to assay data. No adjustments were carried out. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Location of data Accuracy and quality of surveys used to locate drillholes (collar and Surveying work was performed by automated electronic tacheometer with measurements of points downhole surveys), trenches, mine workings and other locations horizontal and vertical angles, polar coordinates. Results were presented in the form of used in Mineral Resource estimation. horizontal distances and elevations, as well as in the form of orthogonal grid. The coordinate system is Pulkovo-1942, however transformed to local system in the report. Collars of test pits, drillholes as well as lines of profiles were digitised from raster maps in Micromine software. Raster images from the geophysical report were tied to the Micromine project. Correction coefficients for converting coordinates from the local coordinate system to the 1942 coordinate system were calculated based on a comparison of collar positions. Comparison of corrected collars with traces on Google earth satellite imagery has shown an accuracy ± 10 m although some trenches are shifted by larger distances.

Specification of the grid system used. The final block model and report were prepared in the Pulkovo-1942 coordinate system.

Quality and adequacy of topographic control. Topographic control is adequate.

Data spacing and Data spacing for reporting of Exploration Results. A grid of 50–100 m x 100 m was used for exploration with some detailed blocks 50 m x 50 m distribution and 100 m x 200 m on flanks of the Left River Side area and 50–400 m x 200–800 m for the I-1 – III-319 – Right River Side area.

Whether the data spacing and distribution is sufficient to establish Exploration grid 100 m x 100 m is sufficient to establish the degree of geological and grade the degree of geological and grade continuity appropriate for the continuity appropriate for the Mineral Resource classification categories applied. Mineral Resource and Ore Reserve estimation procedure(s) and Downgrading of Mineral Resource classification was applied for noncontinuous mineralisation classifications applied. in redeposited weathering crust.

Whether sample compositing has been applied. Sample compositing was not applied for Ni, Co, and Fe. Major components (SiO

2,Al2O3, TiO 2, MgO, LOI) as well as Sc were assayed in composite samples only. Orientation of data Whether the orientation of sampling achieves unbiased sampling of The mineralised horizons are close to sub-horizontal; hence all drilling is vertical. Drillholes in relation to possible structures and the extent to which this is known, are typically from 2 m to 50 m up to 300 m deep (average 50 m). However, sub-vertical holes geological structure considering the deposit type. are not adequate for exploration of zones of fracture-linear type of weathering crust where inclined drillholes are recommended. The exploration grid is square; however, it is aligned along strike of the ultramafic complex.

If the relationship between the drilling orientation and the Not applicable orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

Sample security The measures taken to ensure sample security. No adequate information; exploration was mainly completed from 2004 to 2012. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Audits or reviews The results of any audits or reviews of sampling techniques and No independent audits have been conducted; however, an exploration report was approved by data. GKZ in local system prior to Mineral Resource estimation.

Section 2 – Reporting of Exploration Results

Criteria JORC Code explanation Commentary Mineral tenement Type, reference name/number, location and ownership including On 26 February 2004, KazNickel LLP (Kaznickel) concluded a Subsoil Use Contract with the and land tenure agreements or material issues with third parties such as joint Ministry for Investments and Development of the Republic of Kazakhstan. status ventures, partnerships, overriding royalties, native title interests, In accordance with the Contract, Shagan LLP (the original project owners) gained the Ni-Co historical sites, wilderness or national park and environmental exploration and mining rights over the Gornostay Deposit (two areas2 on 6.16 the km left side settings. of the Irtysh River). The Contract was valid for a period of 22 years until 2026, which includes from two years of exploration and 20 years of mining Ni-Co. The Contract may be extended to accommodate full depletion of the deposit. Addendums were made during the exploration periods, with the most recent finished in 2017 for ISR test operation. A Subsoil Use Contract gives the contractor a right to use the surface of the property while I-2 – III-320 – exploring, mining and reclaiming the land. However, such rights must be set forth in a surface lease agreement with the applicable local administrative authority (“Akimat”). A surface lease agreement must be entered for the same period as the relevant underlying subsoil use contract including any extensions.

The security of the tenure held at the time of reporting along with There are no critical issues. any known impediments to obtaining a licence to operate in the area.

Exploration done by Acknowledgment and appraisal of exploration by other parties. Government expeditions explored the Project until 1992 and KazNickel completed exploration other parties after 2004.

Geology Deposit type, geological setting and style of mineralisation. Mineralisation is represented by Co-Ni bearing weathering crusts, both superficial-areal and linear-fissured. Zonation is presented (from top to bottom) by an ochre zone, nontronite zone, nontronitised serpentinite, fractured serpentinite, serpentinite with magnesite and fresh serpentinite. Sometimes some zones may be absent. Redeposited weathering crust occurs almost everywhere. Ni mineralisation forms separate mineralised bodies in redeposited crust and in situ weathering crust. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Drillhole A summary of all information material to the understanding of the The accuracy of collars coordinates is around 1–2 m; RL coordinates were corrected using the information exploration results including a tabulation of the following topographic surface. information for all Material drillholes: Drillholes are vertical. Depth (length) of some holes (not mineralised) is not available and was • easting and northing of the drillhole collar appliedas0.01m. • elevation or RL (Reduced Level – elevation above sea level in Mineralisation is represented by sub-horizontal bodies and the mineralised intervals length is metres) of the drillhole collar the true thickness; however, in fissure zones some mineralised bodies may be steeply-dipping, • dip and azimuth of the hole but there is not enough information for the robust identification of these type of bodies. • downhole length and interception depth • hole length.

If the exclusion of this information is justified on the basis that the Not applicable information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

Data aggregation In reporting Exploration Results, weighting averaging techniques, A Ni cut-off 0.33% was used for interpretation of mineralisation. Top-cuts for Ni and Co were methods maximum and/or minimum grade truncations (e.g. cutting of high not applied.

I-2 – III-321 – grades) and cut-off grades are usually Material and should be A cut-off of 1.0 m% Ni grade x thickness (GT) was used for reporting Mineral Resources. stated. Co was estimated as by-product without any other reporting constraints. In some historical holes, Co was estimated based on regression from the Ni grade.

Where aggregate intercepts incorporate short lengths of high-grade For modelling used cut-off grade Ni >0.33%, for multiply intervals – composite intervals with results and longer lengths of low-grade results, the procedure used >= 1.0 %/m GT were included internal waste material up to 3 m. for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

The assumptions used for any reporting of metal equivalent values Metal equivalents were not used. should be clearly stated.

Relationship These relationships are particularly important in the reporting of Drillholes and pits perpendicular to the topographic surface are adequate to define the laterite between Exploration Results. crust. mineralisation If the geometry of the mineralisation with respect to the drillhole Exploration results are not being reported. widths and intercept angle is known, its nature should be reported. lengths If it is not known and only the down hole lengths are reported, there Exploration results are not being reported. should be a clear statement to this effect (e.g. ‘downhole length, true width not known’). HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Diagrams Appropriate maps and sections (with scales) and tabulations of W Left River side area (Section 71) E intercepts should be included for any significant discovery being m220 220m reported. These should include, but not be limited to a plan view of 200 200 180 180 drillhole collar locations and appropriate sectional views. 160 160 140 140

120 500 m 120 100 100 345,000 346,000 347,000 W Right River side area (Section 144) E m200 200m 180 180 160 160 140 140 120 120 100 100 80 80 60 60 40 40 20 500 m 20 0 0 333,000 334,000 335,000 336,000 337,000 LEGEND Overburden complexes Weathering crust in-situ upon serpentinite Host rocks Minerlisation Kaolinite weathering Overburden Limonite zone crust upon silicate Nickel-cobalt sediments rocks of Visean stage mineralised bodies Redeposited Nontronite zone Fresh silicate Water table weathering crust rocks of Visean stage (for Left River side only) Proposed lower Reef limestone of border of fractured Water table serpentinite Visean stage Fresh serpentinite I-2 – III-322 – HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX

LEGEND

Redeposited weathering crust

Weathering crust upon serpentinite. Ocher zone Weathering crust upon serpentinite. Nontronite zone

Fresh and fractured serpentinite

Wealhering crust upon jasperoid, basalt porphyrite, sand- and siltslons of Arkalyk group Fresh jaspercid, basalt porphyrite, sand- and siltstone of Arkalyk group

Reef limestone of Arkalyk group

Gabbro-dorite, andesite and basalt porphyrite

Faults and fissure zones

Tenement (Left River Side area) I-2 – III-323 –

Regolith map (covering sediments excluded) Left River Side area

NORTH 0 0.5 1.0 2.0 km

Prepared based on Danilov et al., 2010 HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX

LEGEND

Redeposited weathering crust

Weathering crust upon serpentinite. Ocher zone

Weathering crust upon serpentinite. Nontronite zone

Fresh and fractured serpentinite

Weathering crust upon jasperoid, basalt porphyrite, sand- and siltstone of Arkalyk group

Fresh jasperoid, basalt porphyrite, sand- and siltstone of Arkalyk group

Reef limestone of Arkalyk group

Tenement (Right River Side area)

Regolith map (co verin Prepared g s based Ri ediment Danilo on ght Ri v et al., ver Si s exclu 2010 A geological section andde pan ofde thed Project are provided above for completeness. More area ) diagrams are available in the full technical report. I-2 – III-324 – Balanced reporting Where comprehensive reporting of all Exploration Results is not Exploration results are not being reported. practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Other substantive Other exploration data, if meaningful and material, should be Early stages of hydrogeological and hydrometallurgical investigations have shown positive exploration data reported including (but not limited to): geological observations; results for ISR amenability as follows: geophysical survey results; geochemical survey results; bulk samples • The aquifer of the Gornostay Deposit is an underground water horizon in open fissures of – size and method of treatment; metallurgical test results; bulk the Lower Carboniferous complex and ultramafic rocks. density, groundwater, geotechnical and rock characteristics; • The aquifer in open fissures is connected with aquifers in Quaternary sediments, which is potential deleterious or contaminating substances. the source of charging the underground water complex through sub-meridional faults. • The aquifer of the underground water horizon is continuous, with the water table located 18 m to 31 m from the topographic surface. • 78% of mineralisation of the Left River Side area is in the aeration zone above the underground water level and 22% is below the underground water level, therefore the main ISR method will be infiltration, and only for 22% of mineralisation will be able to be mined by common ISR filtration methods. • The zone of fractured serpentinites is interpreted to extend to the underground water table, which can ensure hydraulic water conductivity for ISR in an infiltration regime. • The permeability of mineralised weathering crust is highly variable, from 0.003 m/day to 5.4 m/day. The last value was measured in a fault zone, more typical values of

I-2 – III-325 – permeability are up to 0.1 m/day (average 0.05 m/day without taking account fissure and fault zones). Some potential impermeable zones in mineralised zones were identified by observation of drilling mud loss. • KazNickel completed agitation, column leaching and natural pilot tests which demonstrate the amenability to ISR. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Further work The nature and scale of planned further work (e.g. tests for lateral A full relevant program of laboratory tests should be completed before commencing any extensions or depth extensions or large-scale step-out drilling). acidification and leaching on the ISR polygon as follows: • Agitation test with sulphurous acid (15–25 g/L) as the lixiviant with duration times of 10, 25 and 50 days. Eh, Ph, Ni, Co, Fe, Si, Al, Mg, Mn and acid concentration should be measured in solutions during the test. • Column filtration tests up to Ni and Co recoveries of at least 40–50%, potential duration of test 300–400 days. • Sorption tests for choosing resin. The most popular resin for extracting Ni and Co is TP-207 (Fairfield et al., 2018). • Tests for processing of synthetic Ni-Co solutions with composition close to eluate which should be produced in column tests with following sorption and desorption. • Sampling of operational blocks for correct estimation of initial Mineral Resources and geometallurgical parameters. Significant hydrogeological works focused to ISR and environmental issues/risks as follows: • Preparation of a detailed tectonic scheme of the deposit • Classical cluster tests in different areas of the deposits (2–3 tests) I-2 – III-326 – • A grid of single hydrogeological test (8–12 tests) • Investigation of the permeability variability • Investigation of injectivity and pumping rates of wells in different zones • Investigation of the direction and rate of natural water flow in different zones, especially in fault zones • Tests with neutral tracers • Preparation of hydrogeological and hydrodynamic models • A Preliminary Economic Assessment, or Scoping Study, focusing on ISR mining. A Preliminary Economic Assessment, or Scoping Study should be completed, focusing on ISR mining.

Diagrams clearly highlighting the areas of possible extensions, Not applicable including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS

Section 3 – Estimating and Reporting of Mineral Resources REPORT PERSON’S COMPETENT III APPENDIX

Criteria JORC Code explanation Commentary Database integrity Measures taken to ensure that data has not been corrupted by, for The following sources of initial information were used for compilation of the database: example, transcription or keying errors, between its initial collection KazNickel Database (2019) including the following information: and its use for Mineral Resource estimation purposes. • Tables with initial data (collars, assays) in MS Access format for the both Left River Side and Right River Side areas • Database in Micromine format prepared for PFS (Kazakhstan standard) for evaluation of conditions for estimation of resources for silicate Ni-Co mineralisation of the Gornostaevsky deposit in Eastern-Kazakhstan area (Danilov et al., 2010) • Tables in MS Excel spreadsheets with assays and lithological codes for exploration stages 2004 to 2007 and 2012 • Initial geological logging of core drillholes drilled from 2004 to 2007 for completion of lithological and assays tables • Geological sections with exploration drillholes. Topographic map was prepared based on two sources: • Topographic map at 1:10,000 scale with horizontals every 0.5–1 m in MapInfo format for I-2 – III-327 – the Left River Side area • Topographic map with horizontals every 10 m based on OpenTopoMap (http://www.zalma.ru/) for other parts of the Project. Geological maps from Danilov et al. (2010) and Yusupov et al. (1968): • Geological sections for all exploration profiles. All data was exported to Micromine data format for import into Micromine 2018 software for use in the MRE.

Data validation procedures used. Assay data was used to validate the geology after assay data characterisation of the geology was undertaken. Standards were evaluated by data validation software.

Site visits Comment on any site visits undertaken by the Competent Person and Dr Maxim Seredkin, Competent Person, completed a site visit on 4 April 2019. the outcome of those visits. It is the Competent Person’s opinion that this data could be used to support an MRE and there are reasonable prospects for eventual economic extraction at the Gornostay Project.

If no site visits have been undertaken indicate why this is the case. Not applicable. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Geological Confidence in (or conversely, the uncertainty of) the geological There is a reasonable level of confidence in the geological interpretation of Co-Ni bearing interpretation interpretation of the mineral deposit. laterite crust that is traceable over numerous drillholes and test pits.

Nature of the data used and of any assumptions made. Geological logging, exploration sections and drillhole assays were used for geological interpretation.

The effect, if any, of alternative interpretations on Mineral Resource No significant downside changes to the interpreted mineralised volume are anticipated. estimation. Potential additional mineralisation may be identified in linear-fissure zones by more detailed exploration. I-2 – III-328 – HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX The use of geology in guiding and controlling Mineral Resource The Gornostay Project is a typical laterite deposit. estimation. The main features of such deposits, which define the appropriate exploration methods, are: The factors affecting continuity both of grade and geology. • Sub-horizontal and sub-conformable (to topographic surface) position of laterite horizons with linear-fissure zones where thickness of laterite crusts is increased very strongly. • The lithological and geomorphological control of distribution of mineralisation. Lithological control is serpentinite or ultramafic should be as substrate. • Lithological models were prepared for the substrate: 1. Overburden (cover) sediments. 2. Redeposited weathering crust. 3. Serpentinite substrate: 3.1. Ochre zone (based on assays with Fe > 25% and lithological logging). 3.2. Nontronite and nontronitised serpentinites zone. 3.3. Fractured and fresh serpentinites. Fresh and fractured serpentinites cannot be divided due to lack of reliable logging for these types due to limited information available in hydrogeological wells only.

I-2 – III-329 – 4. Limestone. 5. “Shale” (greycoloured sand-, silt- and claystones or shales) substrate 5.1. Kaolinite weathering crust 5.2. Fractured and fresh serpentinites “Shale”. 6. Basic substrate (dykes and small intrusives): 6.1. Weathering crust 6.2. Fractured and fresh basic rocks. • Lithological model of weathering crust developed in serpentinites: limonite zone, nontronite zone, nontronitised serpentinites, fractured/fresh serpentinite. • The cut-off grade for interpretation of mineralised bodies is >0.33% Ni. A minimum width of 3 m was applied. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Dimensions The extent and variability of the Mineral Resource expressed as The laterite crust is uniform along strike and highly variable with depth. in situ laterite length (along strike or otherwise), plan width, and depth below weathering crust consists of several zones from top to bottom: surface to the upper and lower limits of the Mineral Resource. • Redeposited crust • Ochre zone • Nontronite zone • Nontronitised serpentinites • Fractured/fresh serpentinite. The continuity of laterite zones depends on the size of ultramafic complex. High vertical variability is typical for laterite crust. Thicknesses of Ni-Co mineralised bodies from1mto32m.

Estimation and The nature and appropriateness of the estimation technique(s) Ordinary kriging was used for interpolation of Ni and Co for the Left River Side area and modelling applied and key assumptions, including treatment of extreme grade inverse distance weighted squared (IDW techniques values, domaining, interpolation parameters and maximum distance 2) method was used for interpolation of nickel for the of extrapolation from data points. If a computer assisted estimationRight River Side area. Dimensions of search ellipsoid were chosen based on the exploration method was chosen include a description of computer software andgrid. No top cuts were applied. Micromine software was used for all block modelling and grade estimation. I-3 – III-330 – parameters used

The availability of check estimates, previous estimates and/or mine There are no previous reports prepared in accordance with the JORC Code for the Gornostay production records and whether the Mineral Resource estimate takes Project. However, Wardell Armstrong estimated Mineral Resources which were reported as appropriate account of such data. “Preliminary Mineral Resources reported in accordance with the JORC Code (2004)” (Newall et al., 2007). Historical resource estimates in accordance with GKZ classification were completed in 1968, 1999 and 2011. No comparison is made with these estimates given additional drilling has been subsequently completed and limited value would have been gained.

The assumptions made regarding recovery of by-products. Not applicable.

Estimation of deleterious elements or other non-grade variables of Only Ni and Co were estimated due to non-complete data for Fe and absent information for economic significance (e.g. sulphur for acid mine drainage SiO characterisation). 2,Al2O3,TiO2, MgO, LOI, Sc from primary sample intervals (only in composite samples). HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX In the case of block model interpolation, the block size in relation to The block model was constructed using: the average sample spacing and the search employed. • 10 mE x 10 mN x 1 mRL parent block size, without sub-celling for Left River Side area and south block of Right River Side area. • 25 mE x 25 mN x 1 mRL parent block size, without sub-celling for Right River Side area (Central and Northern block). The parent cell size was chosen on the basis of the general morphology of the mineralised bodies, and minimal distance between exploration holes/trial pits of 50 m. The block model was flattened. The search radii were determined by ranges of semi-variograms, vertical variability of mineralisation and exploration grids. Directional semi-variograms have been generated for each element. Grade interpolation parameters were based on the exploration grid.

Any assumptions behind modelling of selective mining units. No assumptions have been made regarding selective mining units.

Any assumptions about correlation between variables The correlation between Co and Ni was used to calculate Co grades in historical pits as follows:

I-3 – III-331 – • in situ weathering crust: Co (%) = 0.069139 * Ni (%) – 0.000834 • Redeposited weathering crust: Co (%) = 0.041029 * Ni (%) + 0.09784.

Description of how the geological interpretation was used to control Mineralisation in redeposited and in-situ weathering crust was estimated separately. the resource estimates.

Discussion of basis for using or not using grade cutting or capping. Industry practise of modelling ISR deposits shows that grade-thickness (GT) is better parameter for Mineral Resource estimation than simply grades of metals. All material in mineralised bodies may be potentially leached in the ISR process; however, a minimal thickness 3 m is required. A cut-off GT of 1.0 m% (0.33% @ 3 m) was used for Mineral Resource estimation at the Gornostay Project. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX The process of validation, the checking process used, the Model validation was completed as follows: comparison of model data to drillhole data, and use of 1. Visual validation. reconciliation data if available. 2. The completed model was checked using an alternative interpolation method2). (IDW 3. The model was compared with composites (resources vs summary length of composites and grades) for series of sections on the different directions (north, east) – SWATH analysis. Validation shows the robust grade interpolation.

Moisture Whether the tonnages are estimated on a dry basis or with natural The tonnages are estimated on a dry basis. Moisture has been defined based on waxed samples moisture, and the method of determination of the moisture content. from trial pits. Moisture is from 12% to 41%.

Cut-off parameters The basis of the adopted cut-off grade(s) or quality parameters Mineralisation with Ni >1 m% Ni was modelled and included in the MRE. applied.

Mining factors or Assumptions made regarding possible mining methods, minimum ISR is regarded as the mining method. More detailed information is provided in the Section 2. assumptions mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider I-3 – III-332 – potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

Metallurgical The basis for assumptions or predictions regarding metallurgical ISR is regarded as the mining method. More detailed information is provided in the Section 2. factors or amenability. It is always necessary as part of the process of assumptions determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Environmental Assumptions made regarding possible waste and process residue Environmental risks at in Gornostay Deposit include: factors or disposal options. It is always necessary as part of the process of • Potential flow solutions by sub-meridional faults to the Irtysh River assumptions determining reasonable prospects for eventual economic extraction • Connections between aquifer horizons of mineralised bodies with aquifers in Quaternary to consider the potential environmental impacts of the mining and sediments which is the source of water intake. processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields Further investigation is required. project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

Bulk density Whether assumed or determined. If assumed, the basis for the Bulk density of laterite weathering crust at the Gornostay Project was measured: assumptions. If determined, the method used, whether wet or dry, the • In trial pits completed from 2004 to 2007, 15 intervals frequency of the measurements, the nature, size and • In samples taken during the 1960s drilling, 21 samples representativeness of the samples. • In samples taken during the 2004 to 2007 drilling, 43 samples. The average moisture is 28% (range is from 12% to 41%), and the average wet bulk density in

I-3 – III-333 – drill samples is 1.80 t/m 3 (the range is from 1.41 t/m3 to 2.34 t/m3). The average dry bulk density is 1.30 t/m3 (1.80 t/m 3 * 0.72).

The bulk density for bulk material must have been measured by Bulk density was measured adequately because the both options were used – in trial pits and methods that adequately account for void spaces (vugs, porosity, samples of drillholes. etc.), moisture and differences between rock and alteration zones within the deposit.

Discuss assumptions for bulk density estimates used in the Bulk density is similar to other laterite Co-Ni deposits. evaluation process of the different materials. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Classification The basis for the classification of the Mineral Resources into The following approaches were used for Mineral Resource classification: varying confidence categories. • Indicated Mineral Resources: Regular exploration grid up to 50–100 m x 50–100 m and continuity of mineralisation Ni and Co grades were estimated directly, without any regression formulae. Hydrogeological conditions were estimated by hydrogeological wells. ISR amenability was demonstrated by laboratory tests. • Inferred Mineral Resources: Regular exploration grid up to 100–400 m x 400–800 m Ni grades were estimated directly; however, Co grades were interpolated directly or calculated by regression. Semi-variogram ranges are not representative for classification of Mineral Resources for this Project due to the low variance of composition.

Whether appropriate account has been taken of all relevant factors The classification has taken into account all available geological and sampling information, (i.e. relative confidence in tonnage/grade estimations, reliability of and the classification level is considered appropriate. input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).

I-3 – III-334 – Whether the result appropriately reflects the Competent Person’s The Mineral Resource classification appropriately reflects the view of the Competent Person. view of the deposit.

Audits or reviews The results of any audits or reviews of Mineral Resource estimates. Internal audits were completed by CSA Global which verified the technical inputs, methodology, parameters and results of the estimate. No external audit of the MRE has been undertaken. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS ERA IN READ BE MUST DOCUMENT. INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IS DOCUMENT THIS Criteria JORC Code explanation Commentary REPORT PERSON’S COMPETENT III APPENDIX Discussion of Where appropriate a statement of the relative accuracy and The relative accuracy of the MRE based on geological and geostatistical data is reflected in relative confidence level in the Mineral Resource estimate using an approach the reporting of the Mineral Resource to an Inferred and Indicated as per the guidelines of the accuracy/confidence or procedure deemed appropriate by the Competent Person. For JORC Code (2012). example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

The statement should specify whether it relates to global or local The statement refers to global estimation of tonnes and grade. estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

These statements of relative accuracy and confidence of the estimate No production data is available. should be compared with production data, where available. I-3 – III-335 –