Report to:

TREVALI MINING CORP.

Halfmile Lake-Stratmat Preliminary Economic Assessment

Document No. 0987190100-REP-R0003-00

0987190100-REP-R0003-00 Report to:

TREVALI MINING CORP.

HALFMILE LAKE - STRATMAT PRELIMINARY ECONOMIC ASSESSMENT

EFFECTIVE DATE: OCTOBER 18, 2010 FILING DATE: OCTOBER 4, 2011

Prepared by Mike McLaughlin, P.Eng. Paul Daigle, P.Eng. David Tyson, M.Sc., R.P. Bio. Peter Broad, P.Eng. Pacifico Corpuz, P.Eng. Daniel Sweeney, P.Eng. Aleksandar Zivkovix, P.Eng.

MM/vc

Suite 900, 330 Bay Street, Toronto, Ontario M5H 2S8 Phone: 416-368-9080 Fax: 416-368-1963

0987190100-REP-R0003-00

TREVALI MINING CORP.

HALFMILE LAKE - STRATMAT PRELIMINARY ECONOMIC ASSESSMENT

EFFECTIVE DATE: OCTOBER 18, 2010 FILING DATE: OCTOBER 4, 2011

"Original document signed by Mike Prepared by Date October 4, 2011 McLaughlin, P. Eng." Mike McLaughlin, P. Eng.

"Original document signed by Peter Reviewed by Date October 4, 2011 Broad, P. Eng." Peter Broad, P. Eng.

"Original document signed by Mike Authorized by Date October 4, 2011 McLaughlin, P. Eng." Mike McLaughlin, P. Eng. MM/vc

Suite 900, 330 Bay Street, Toronto, Ontario, M5H 2S8 Phone: 416-368-9080 Fax: 416-368-1963

0987190100-REP-R0003-00

REVISION HISTORY

REV. PREPARED BY REVIEWED BY APPROVED BY NO ISSUE DATE AND DATE AND DATE AND DATE DESCRIPTION OF REVISION Original technical report readdressed to Trevali 00 2011/10/04 Mike McLaughlin Peter Broad Mike McLaughlin Mining Corp.

0987190100-REP-R0003-00

TABLE OF CONTENTS

1.0 SUMMARY ...... 1-1 1.1 LOCATION AND REGIONAL GEOLOGY ...... 1-1 1.2 RESOURCE ESTIMATE ...... 1-2 1.3 HALFMILE LAKE ...... 1-2 1.3.1 STRATMAT ...... 1-3 1.4 MINING ...... 1-4 1.4.1 HALFMILE LAKE ...... 1-4 1.4.2 STRATMAT ...... 1-5 1.4.3 TAILINGS MANAGEMENT FACILITY ...... 1-9 1.5 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 1-10 1.5.1 METALLURGICAL TEST PROGRAMS ...... 1-10 1.5.2 MILL TONNAGE ...... 1-11 1.5.3 MILL LOCATION ...... 1-11 1.5.4 PROCESS FLOW SHEET ...... 1-12 1.6 MARKETS AND CONTRACTS ...... 1-13 1.7 ENVIRONMENTAL ...... 1-14 1.7.1 GEOCHEM ...... 1-15 1.7.2 WATER QUALITY ...... 1-15 1.7.3 HYDROGEOLOGY ...... 1-15 1.7.4 MINE CLOSURE ...... 1-15 1.8 FINANCIAL ANALYSIS ...... 1-16 1.8.1 CAPITAL AND OPERATING COSTS ...... 1-17 1.9 RISKS AND OPPORTUNITIES ...... 1-18 1.9.1 UNDERGROUND MINING ...... 1-18 1.9.2 METALLURGY ...... 1-19 1.9.3 ENVIRONMENTAL ...... 1-19 1.10 RECOMMENDATIONS ...... 1-19 1.11 CONCLUSIONS ...... 1-19 2.0 INTRODUCTION ...... 2-1

3.0 TERMS OF REFERENCE ...... 3-1 3.1 TERMS OF REFERENCE ...... 3-1 4.0 PROPERTY DESCRIPTION AND LOCATION ...... 4-1 4.1 LOCATION ...... 4-1 4.2 PROPERTY DESCRIPTION ...... 4-4 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 5-1

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5.1 ACCESSIBILITY ...... 5-1 5.2 CLIMATE ...... 5-2 5.3 LOCAL RESOURCES ...... 5-2 5.4 INFRASTRUCTURE ...... 5-3 5.5 PHYSIOGRAPHY ...... 5-3 6.0 HISTORY ...... 6-1 6.1 HISTORICAL PROPERTY OWNERSHIP ...... 6-1 6.1.1 HALFMILE LAKE ...... 6-1 6.1.2 STRATMAT ...... 6-2 6.2 HISTORICAL WORK COMPLETED ...... 6-3 6.2.1 HALFMILE LAKE ...... 6-3 6.2.2 STRATMAT ...... 6-10 6.3 HISTORICAL RESOURCE ESTIMATE ...... 6-11 6.3.1 HALFMILE LAKE ...... 6-11 6.3.2 STRATMAT ...... 6-11 7.0 GEOLOGICAL SETTING ...... 7-1 7.1 REGIONAL GEOLOGY...... 7-1 7.2 PROPERTY GEOLOGY ...... 7-3 7.2.1 HALFMILE LAKE ...... 7-3 7.2.2 STRATMAT ...... 7-7 8.0 DEPOSIT TYPE...... 8-1

9.0 MINERALIZATION ...... 9-1 9.1 HALFMILE LAKE ...... 9-1 9.2 STRATMAT ...... 9-1 10.0 EXPLORATION ...... 10-1 10.1 INTRODUCTION ...... 10-1 10.2 EXPLORATION EXPENDITURES ...... 10-1 11.0 DRILLING ...... 11-1 11.1 HALFMILE LAKE ...... 11-1 11.1.1 PRE-1987 DRILLING ...... 11-1 11.1.2 NORANDA DRILLING ...... 11-1 11.2 STRATMAT ...... 11-7 11.2.1 STRATMAT LTD., PRE-1961 ...... 11-7 11.2.2 COMINCO, 1961 – 1981 ...... 11-8 11.2.3 NORANDA, 1986-1991 ...... 11-9 11.2.4 XSTRATA, 2005 ...... 11-11 12.0 SAMPLING METHOD AND APPROACH ...... 12-1 12.1 HALFMILE LAKE ...... 12-1 12.2 STRATMAT ...... 12-1

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13.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY ...... 13-1 13.1 INTRODUCTION ...... 13-1 13.2 SAMPLE PREPARATION...... 13-1 13.3 SAMPLE REDUCTION ...... 13-1 13.4 ASSAY LABORATORY ...... 13-2 13.5 ANALYSES ...... 13-2 13.6 DETERMINATION OF METALS BY FLAME ATOMIC ABSORPTION SPECTROSCOPY ...... 13-3 13.6.1 SAMPLE DIGESTION ...... 13-3 13.6.2 CALIBRATION AND MEASUREMENT OF THE ANALYTE ...... 13-4 13.6.3 CONFIDENTIALITY OF DATA AND DATA SECURITY ...... 13-4 13.7 STATEMENT OF SAMPLE PREPARATION AND ANALYTICAL PROCEDURES ...... 13-5 14.0 DATA VERIFICATION ...... 14-1 14.1 HALF MILE LAKE - DATA VERIFICATION ...... 14-1 14.1.1 SAMPLE ANALYSIS CHECK...... 14-1 14.2 STRATMAT DATA VERIFICATION ...... 14-2 14.2.1 SAMPLE ANALYSIS CHECK...... 14-3 15.0 ADJACENT PROPERTIES ...... 15-1

16.0 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 16-1 16.1 INTRODUCTION ...... 16-1 16.2 METALLURGICAL TEST PROGRAMS HALFMILE LAKE ...... 16-1 16.2.1 REVIEW OF THE METALLURGICAL RESULTS ...... 16-2 16.3 MILL TONNAGE ...... 16-2 16.4 CONCENTRATES RECOVERIES AND GRADES ...... 16-3 16.5 MILL LOCATION ...... 16-3 16.6 PROCESS FLOWSHEET ...... 16-6 16.6.1 CRUSHING ...... 16-0 16.6.2 GRINDING ...... 16-0 16.6.3 FLOTATION AND REGRIND ...... 16-0 16.6.4 CONCENTRATE DEWATERING ...... 16-1 16.6.5 REAGENTS ...... 16-1 16.6.6 TAILINGS DISPOSAL ...... 16-1 16.7 CONCENTRATE MARKETING ASSUMPTIONS ...... 16-1 17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ...... 17-1 17.1 INTRODUCTION ...... 17-1 17.1.1 DATABASE ...... 17-1 17.1.2 SPECIFIC GRAVITY ...... 17-1 17.2 EXPLORATORY DATA ANALYSIS ...... 17-2 17.2.1 RAW ASSAYS ...... 17-2 17.2.2 CAPPING ...... 17-2 17.2.3 COMPOSITES ...... 17-3 17.3 GEOLOGICAL INTERPRETATION ...... 17-3

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17.3.1 HALFMILE LAKE ...... 17-3 17.3.2 STRATMAT ...... 17-5 17.4 BLOCK MODEL ...... 17-7 17.4.1 HALFMILE LAKE ...... 17-7 17.4.2 STRATMAT ...... 17-10 17.5 VALIDATION ...... 17-14 17.5.1 HALFMILE LAKE ...... 17-14 17.5.2 STRATMAT ...... 17-15 18.0 OTHER DATA AND INFORMATION ...... 18-1

19.0 MINING OPERATIONS ...... 19-1 19.1 HALF MILE LAKE OPEN PIT MINING – NORTH ZONE ...... 19-1 19.1.1 INTRODUCTION ...... 19-1 19.1.2 MINING METHOD ...... 19-3 19.1.3 OVERALL PIT SLOPE ANGLE ...... 19-3 19.1.4 OPEN PIT OPTIMIZATION ...... 19-4 19.1.5 NORTH ZONE - MINE PLANNING ...... 19-8 19.1.6 OPEN PIT SENSITIVITY ANALYSES ...... 19-11 19.2 HALF MILE LAKE UNDERGROUND MINING ...... 19-13 19.2.1 SUMMARY ...... 17 19.2.2 UNDERGROUND MINE DESIGN ...... 17 19.2.3 MINING METHODS ...... 18 19.2.4 EQUIPMENT FLEET ...... 22 19.3 HALF MILE LAKE INFRASTRUCTURE ...... 27 19.3.1 MINING INFRASTRUCTURE ...... 27 19.3.2 ELECTRICAL INFRASTRUCTURE ...... 29 19.4 STRATMAT UNDERGROUND MINING ...... 31 19.4.1 SUMMARY ...... 31 19.4.2 PHASE 1: 5181 L TO SURFACE ...... 32 19.4.3 PHASE 2: 5055 TO 5181 L ...... 33 19.4.4 PHASE 3: 4845 TO 5055 L ...... 33 19.4.5 PHASE 4: 4593 TO 4845 L ...... 33 19.4.6 UNDERGROUND MINE DESIGN ...... 33 19.4.7 STRATMAT MINING METHODS ...... 37 19.4.8 STRATMAT EQUIPMENT FLEET ...... 38 19.5 STRATMAT INFRASTRUCTURE ...... 42 19.5.1 MINING INFRASTRUCTURE ...... 42 19.5.2 STRATMAT ELECTRICAL INFRASTRUCTURE ...... 44 19.5.3 ROADS AND SITE PREPARATIONS ...... 47 19.6 HML/STRATMAT GEOTECHNICAL REVIEW ...... 48 19.6.1 INTRODUCTION ...... 48 19.6.2 ROCKMASS CLASSIFICATION SYSTEMS ...... 49 19.6.3 ROCKMASS CLASSIFICATION ...... 51 19.7 STRATMAT SURFACE WATER MANAGEMENT PLAN ...... 52 19.8 TAILINGS MANAGEMENT FACILITY ...... 53 19.8.1 INTRODUCTION ...... 53

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19.8.2 SITE CHARACTERIZATION ...... 54 19.8.3 DESIGN BASIS ...... 55 19.8.4 CONCEPTUAL DESIGN OF TMF EXPANSION ...... 55 20.0 PROCESS METAL RECOVERIES ...... 20-1

21.0 ENVIRONMENTAL CONSIDERATIONS ...... 21-1 21.1 INTRODUCTION ...... 21-1 21.2 ENVIRONMENTAL SETTING ...... 21-1 21.2.1 HALFMILE LAKE ...... 21-1 21.2.2 STRATMAT ...... 21-1 21.3 ENVIRONMENTAL ASSESSMENT AND PERMITTING ...... 21-2 21.3.1 PROVINCIAL PROCESS ...... 21-2 21.3.2 FEDERAL PROCESS ...... 21-4 21.4 COMMUNITY AND ABORIGINAL ENGAGEMENT ...... 21-4 21.5 GEOCHEMISTRY ...... 21-5 21.5.1 ASSESSMENT OF AMD/ML POTENTIAL ...... 21-6 21.5.2 WATER QUALITY MANAGEMENT ...... 21-7 21.6 HYDROGEOLOGY ...... 21-8 21.6.1 GROUNDWATER MANAGEMENT...... 21-9 21.6.2 MINE CLOSURE AND RECLAMATION PLAN ...... 21-10 22.0 MARKETS AND CONTRACTS ...... 22-1 22.1 CONCENTRATE MARKETING ASSUMPTIONS ...... 22-1 22.2 SMELTER TERMS ...... 22-1 22.2.1 TERMS - ZINC CONCENTRATE ...... 22-2 22.2.2 TERMS - COPPER CONCENTRATE ...... 22-2 22.2.3 TERMS - LEAD CONCENTRATE ...... 22-3 22.3 NET SMELTER RETURNS ...... 22-4 23.0 TAXES ...... 23-1

24.0 CAPITAL AND OPERATING COST ESTIMATES ...... 24-1 24.1 SUMMARY ...... 24-1 24.1.1 DIRECT CAPITAL ...... 24-1 24.1.2 INDIRECT CAPITAL ...... 24-2 24.2 PROCESSING CAPITAL COSTS ...... 24-3 24.2.1 PROCESSING OPERATING COSTS ...... 24-4 24.3 UNDERGROUND MINE ...... 24-7 24.3.1 CAPITAL COSTS ...... 24-7 24.3.2 OPERATING COSTS ...... 24-9 25.0 ECONOMIC ANALYSIS ...... 25-1 25.1 METAL PRICING ...... 25-1 25.2 FINANCIAL ANALYSIS ...... 25-1 25.3 SENSITIVITY ANALYSIS ...... 25-2

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25.4 COMPARISON TO HML PEA DATED JULY, 2009 ...... 25-6 26.0 PAYBACK ...... 26-1

27.0 MINE LIFE ...... 27-1 27.1 HALF MILE LIFE OF MINE PLAN ...... 27-1 27.1.1 PROJECT SCHEDULE ...... 27-1 27.1.2 DEVELOPMENT SCHEDULE ...... 27-1 27.1.3 PRODUCTION SCHEDULE ...... 27-1 27.2 STRATMAT LIFE OF MINE PLAN ...... 27-2 27.2.1 PROJECT SCHEDULE ...... 27-2 27.2.2 DEVELOPMENT SCHEDULE ...... 27-2 27.2.3 PRODUCTION SCHEDULE ...... 27-2 28.0 RISKS AND OPPORTUNITIES ...... 28-1 28.1 MINING ...... 28-1 28.1.1 RISKS ...... 28-1 28.1.2 OPPORTUNITIES...... 28-2 28.2 METALLURGY ...... 28-4 28.2.1 RISKS ...... 28-4 28.2.2 OPPORTUNITIES...... 28-4 28.3 ENVIRONMENTAL ...... 28-4 28.3.1 RISKS ...... 28-4 28.3.2 ADDITIONAL RISKS ASSOCIATED WITH OPEN PIT OPPORTUNITY AT HML ...... 28-5 28.3.3 OPPORTUNITIES...... 28-6 28.4 TMF ...... 28-6 29.0 INTERPRETATIONS AND CONCLUSIONS ...... 29-1 29.1 GEOLOGY AND RESOURCES ...... 29-1 29.1.1 HALFMILE LAKE ...... 29-1 29.1.2 STRATMAT ...... 29-1 29.2 MINING ...... 29-2 29.2.1 HALFMILE LAKE ...... 29-2 29.2.2 STRATMAT ...... 29-2 29.3 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 29-3 29.4 PRELIMINARY ECONOMIC ASSESSMENT ...... 29-4 30.0 RECOMMENDATIONS ...... 30-1 30.1 STRATEGIC RECOMMENDATIONS ...... 30-1 30.2 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 30-2 30.3 MINING ...... 30-4 30.3.1 GEOTECHNICAL ...... 30-4 30.3.2 TMF ...... 30-4 31.0 REFERENCES ...... 31-1

32.0 STATEMENT OF QUALIFIED PERSONS ...... 32-1

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32.1 CERTIFICATE FOR DAVID TYSON, M.SC., R.P. BIO ...... 32-1 32.2 CERTIFICATE FOR PACIFICO VIRGIL CORPUZ, P. ENG...... 32-2 32.3 CERTIFICATE FOR ALEKSANDAR ZIVKOVIC, P. ENG...... 32-3 32.4 CERTIFICATE FOR DANIEL J. SWEENEY, P. ENG...... 32-5 32.5 CERTIFICATE FOR MIKE MCLAUGHLIN, P. ENG...... 32-6 32.6 CERTIFICATE FOR PAUL DAIGLE, P. GEO...... 32-7 32.7 CERTIFICATE FOR PETER BROAD, P. ENG...... 32-8

LIST OF APPENDICES

APPENDIX A DATA VERIFICATION APPENDIX B RESOURCE ESTIMATES APPENDIX C SITE PLANS APPENDIX D PWC CANADIAN MINING TAXATION APPENDIX E ORE GEOMETRICS APPENDIX F DEEP ZONE PLANS APPENDIX G BACKFILL SCHEDULE APPENDIX H ELECTRICAL SINGLE LINE DIAGRAMS APPENDIX I CAPITAL COSTS APPENDIX J ECONOMIC ANALYSIS APPENDIX K MINE LIFE SCHEDULES APPENDIX L VERTICAL SECTION DEEP ZONE APPENDIX M SHAFT SINKING COSTS APPENDIX N PROPOSED MINE SCHEDULE

LIST OF TABLES

Table 1.1 Summary Statistics for Specific Gravity Data ...... 1-2 Table 1.2 Halfmile Lake Property Indicated Resource Estimate at 5% ZnEQ Cut-Off ..... 1-2 Table 1.3 Halfmile Lake Property Inferred Resource Estimate at 5% ZnEQ Cut-Off ...... 1-3 Table 1.4 Capping Levels Summary ...... 1-3

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Table 1.5 Stratmat Property Inferred Resource Estimate at 5% ZnEQ Cut-Off ...... 1-3 Table 1.6 Net Present Value and Internal Rate of Return ...... 1-16 Table 1.7 Capital Cost Summary ...... 1-18 Table 4.1 Halfmile Project Mineral Claim Blocks ...... 4-4 Table 6.1 Summary of Work Completed on the Halfmile Lake South and Central Claim Group ...... 6-8 Table 6.2 Summary of Work Completed on the Halfmile Lake North – Mattagami Claim Group ...... 6-9 Table 6.3 Summary of Work Completed on Stratmat Property ...... 6-10 Table 6.4 Halfmile Lake Property Historical Resource Estimate (not NI 43-101 Compliant – Undiluted at US$0.60 Zn) ...... 6-11 Table 6.5 Stratmat Property Historical Resource Estimate (Not NI 43-101 Compliant) . 6-12 Table 1.1 Summary Statistics for Specific Gravity Data ...... 1-2 Table 1.2 Halfmile Lake Property Indicated Resource Estimate at 5% ZnEQ Cut-Off ..... 1-2 Table 1.3 Halfmile Lake Property Inferred Resource Estimate at 5% ZnEQ Cut-Off ...... 1-3 Table 1.4 Capping Levels Summary ...... 1-3 Table 1.5 Stratmat Property Inferred Resource Estimate at 5% ZnEQ Cut-Off ...... 1-3 Table 1.6 Net Present Value and Internal Rate of Return ...... 1-16 Table 1.7 Capital Cost Summary ...... 1-18 Table 14.1 Validation of the Digital Database to Original Logs ...... 14-1 Table 14.2 Comparison of Check Assay Results to the Original Assay Results ...... 14-2 Table 14.3 Comparison of Check Assay Results to the Original Assay Results ...... 14-4 Table 16.1 Metallurgical Forecast – Halfmile Lake Composite No. 2 ...... 16-3 Table 16.2 Process Concentrates Grades and Recoveries ...... 16-3 Table 16.3 Mill Trade-Off Study Cost Areas ...... 16-4 Table 16.4 Mill Location Costs Summary ...... 16-5 Table 17.1 Summary of the Stratmat Drilling Data Records ...... 17-1 Table 17.2 Halfmile Lake Raw Assay Statistics (Excluding Zeroes) ...... 17-2 Table 17.3 Stratmat Statistics on the Raw Assay Values (Excluding Zeros) ...... 17-2 Table 17.4 Stratmat Capping Levels Summary ...... 17-3 Table 17.5 Stratmat Assay Sample Length Statistics ...... 17-3 Table 17.6 Solid Names and Explanation ...... 17-4 Table 17.7 Zone and Deposit Names ...... 17-5 Table 17.8 Search Ellipse Parameters ...... 17-8 Table 17.9 Zinc Equivalency Factors ...... 17-8 Table 17.10 Indicated Resource Estimate for Halfmile Lake by Zone...... 17-9 Table 17.11 Indicated Resource Estimate at 5% ZnEQ Cut-Off for all Halfmile Lake ...... 17-9 Table 17.12 Inferred Resource Estimate for Halfmile Lake by Zone ...... 17-10 Table 17.13 Inferred Resource Estimate at 5% ZnEQ Cut-Off for all Halfmile Lake ...... 17-10 Table 17.14 Stratmat Block Model Coordinate Settings ...... 17-11 Table 17.15 Statistics on the Distances to the Nearest Composite Sample ...... 17-11 Table 17.16 Search Ellipse Parameters ...... 17-12 Table 17.17 Stratmat Property Inferred Resource Estimate at 5% ZnEQR Cut-Off ...... 17-14 Table 17.18 Halfmile Lake Volume Comparison between Wireframe Solid Models and Block Models ...... 17-14 Table 17.19 Halfmile Lake Comparison of Composite Values to ID2 and NN Values ..... 17-15 Table 17.20 Stratmat Volume Comparison between Wireframe Solid Models and Block Models ...... 17-15 Table 17.21 Stratmat Comparison of ID2 and NN Interpolation Values at 5% ZnEQR Cut-Off 17-16 Table 19.1 Open Pit Optimization (Overall Pit Angle = 45°, Discounted Rate = 8%) ...... 19-6

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Table 19.2 Ultimate Pit Shell Parameters ...... 19-7 Table 19.3 Mine Planning (Overall Pit Angle = 45°, Discounted Rate = 8%) ...... 19-10 Table 19.4 Summary of Diluted Mineral Resources ...... 17 Table 19.5 List of Mobile Equipment ...... 23 Table 19.6 Mine Personnel and Crews ...... 24 Table 19.7 Summary of Diluted Mineral Resources ...... 31 Table 19.8 List of Mobile Equipment - Stratmat ...... 39 Table 19.9 Mine Personnel and Crews ...... 40 Table 19.10 Estimated Electrical Load ...... 46 Table 19.11 Estimate of Electrical charges for Kria- Stratmat Mines ...... 46 Table 19.12 Road Sections ...... 48 Table 19.13 Rockmass Quality Categories ...... 50 Table 19.14 Summarized Halfmile Lake Geotechnical Properties...... 51 Table 19.15 Rock Mass Classification of the Halfmile Lake Deposit ...... 52 Table 19.16 Heath Steele TMF Structures – Existing Cindytion Tailings Dams in Heath Steele Mines ...... 55 Table 19.17 Basic Design Criteria...... 55 Table 19.18 Elements of Staged Construction ...... 56 Table 21.1 Metal Mining Effluent Regulations, SOR/2002-222 – Authorized Limits of Deleterious Substances ...... 21-8 Table 22.1 Net Smelter Return (NSR) Calculation Summary ...... 22-4 Table 23.1 Tax Rate Reduction Extension ...... 23-1 Table 23.2 Capital Tax Deduction ...... 23-2 Table 24.1 Capital Cost Summary ...... 24-1 Table 24.2 Indirect Costs ...... 24-3 Table 24.3 Processing Capital Costs ...... 24-4 Table 24.4 Plant Operating Costs ...... 24-4 Table 24.5 Reagents and Supplies ...... 24-5 Table 24.6 Process Plant Labour ...... 24-5 Table 24.7 Power ...... 24-6 Table 24.8 HML and Stratmat Underground Development Capital Costs ...... 24-7 Table 24.9 HML and Stratmat Main Ramp and Lateral Development Unit Costs ...... 24-8 Table 24.10 HML Underground Mobile Equipment ...... 24-8 Table 24.11 Stratmat Underground Mobile Equipment ...... 24-9 Table 24.12 HML Personnel Requirements ...... 24-10 Table 24.13 Stratmat Personnel Requirements ...... 24-11 Table 24.14 Mine Production Indirect Costs ...... 24-11 Table 24.15 Mine Production Avoca/LH Stoping Costs ...... 24-12 Table 24.16 Mine Production MCF Stoping Costs ...... 24-12 Table 24.17 Mine Production Backfill ...... 24-13 Table 25.1 Metal Prices ...... 25-1 Table 25.2 Net Present Value and Internal Rate of Return ...... 25-2 Table 25.3 Operating and Capital Cost Sensitivity ...... 25-4 Table 25.4 NSR Sensitivity ...... 25-5 Table 29.1 Halfmile Lake Indicated Resource Estimate at 5% ZnEQ Cut-Off ...... 29-1 Table 29.2 Halfmile Lake Inferred Resource Estimate at 5% ZnEQ Cut-Off ...... 29-1 Table 29.3 Stratmat Property Inferred Resource Estimate at 5% ZnEQR Cut-Off ...... 29-2

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LIST OF FIGURES

Figure 1.1 Stratmat Deposit (Grade shell @4.8% ZnEQ cut off) Vertical Section Looking North ...... 1-6 Figure 1.2 Mine Longitudinal View ...... 1-7 Figure 1.3 NPV vs. Discount Rate...... 1-17 Figure 4.1 Location Map – Halfmile Lake Property ...... 4-1 Figure 4.2 Halfmile Lake Property and Stratmat Property Location Map ...... 4-2 Figure 7.1 Regional Geology of New Brunswick with respect to the Halfmile Lake Property ...... 7-2 Figure 7.2 Regional Geology of New Brunswick with respect to the Stratmat Property .... 7-3 Figure 7.3 Geological Map of the Halfmile Lake Area ...... 7-4 Figure 7.4 Structural Block Model through Halfmile Lake Showing Recumbent F1 Anticline Fold Structure and Related Axial Planar Thrust Faulting ...... 7-6 Figure 7.5 Geological Map of the Stratmat Area ...... 7-7 Figure 11.1 Longitudinal Section of the 1956 Drilling Campaign ...... 11-8 Figure 1.1 Stratmat Deposit (Grade shell @4.8% ZnEQ cut off) Vertical Section Looking North ...... 1-6 Figure 1.2 Mine Longitudinal View ...... 1-7 Figure 1.3 NPV vs. Discount Rate...... 1-17 Figure 16.1 Process Flowsheet ...... 16-8 Figure 17.1 Halfmile Lake Solids and Drill Holes (Looking East) ...... 17-4 Figure 17.2 Stratmat Zones Looking West Down Strike ...... 17-5 Figure 17.3 Long Sectional View of the Multiple Solids used for the Resource Estimate looking Towards the North ...... 17-6 Figure 19.1 Halfmile Lake Solids and Drill Holes (Looking Towards East) ...... 19-2 Figure 19.2 North Massive Sulphide Lens and Drill Holes (Looking towards Northeast) .. 19-3 Figure 19.3 Section of Nested Pit Shells (Overall Pit Angle = 45°) ...... 19-5 Figure 19.4 Two Mining Phases ...... 19-9 Figure 19.5 Sensitivity Analysis for Overall Slope Angles and Discount Rates ...... 19-11 Figure 19.6 Sensitivity Analysis for Zn, Cu, Pb and Ag Metal Prices ...... 19-12 Figure 19.7 Sensitivity Analysis for Zn Metal Price, Processing Cost and Discount Rate ...... 19-13 Figure 19.8 Halfmile Lake Deposit Vertical Section Looking North ...... 19-14 Figure 19.9 Halfmile Lake Deposit Top View of Ore Zones ...... 19-14 Figure 19.10 Halfmile Lake Deposit Longitudinal Section Looking West ...... 19-15 Figure 19.11 Mine Vertical Section ...... 19-16 Figure 19.12 Typical Layout for MCF Method (500 Elev Plan) ...... 19 Figure 19.13 Typical Layout for MCF Method (320 Elev Plan) ...... 19 Figure 19.14 MCF Mining Method - Typical ...... 20 Figure 19.15 Modified Avoca Mining Method Longitudinal Retreat ...... 21 Figure 19.16 Longhole Mining Method - Typical ...... 21 Figure 19.17 Longhole Mining Longitudinal and Transverse Sectional Views ...... 22 Figure 19.18 Ventilation Schematic...... 26 Figure 19.19 Mine Dewatering Diagram ...... 27 Figure 19.20 Stratmat Deposit Top View of Ore Zones ...... 31 Figure 19.21 Stratmat Deposit (Grade shell @4.8% ZnEQ cut off) Vertical Section Looking North ...... 32

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Figure 19.22 Stratmat Deposit Crown Pillars and Mine Phases - Vertical Section Looking North ...... 33 Figure 19.23 Mine Longitudinal View ...... 34 Figure 19.24 Zone 51, 5202 Elev Plan - Layout for Transverse LH Method ...... 36 Figure 19.25 Main Zone, 4866 Elev Plan - Layout for Longitudinal LH Method ...... 37 Figure 19.26 Ventilation Schematic Airflows ...... 41 Figure 19.27 Mine Dewatering Diagram ...... 43 Figure 19.28 HSM - TMF Stage Storage Curve ...... 56 Figure 25.1 NPV vs. Discount Rate for Base Case ...... 25-2 Figure 25.2 Capital and Operating Cost, and NSR Sensitivity ...... 25-3 Figure 25.4 IRR Sensitivity ...... 25-5

GLOSSARY

UNITS OF MEASURE Above mean sea level ...... amsl Acre ...... ac Ampere ...... A Annum (year) ...... a Billion ...... B Billion tonnes ...... Bt Billion years ago ...... Ga British thermal unit ...... BTU Centimetre ...... cm Cubic centimetre ...... cm3 Cubic feet per minute ...... cfm Cubic feet per second ...... ft3/s Cubic foot ...... ft3 Cubic inch ...... in3 Cubic metre ...... m3 Cubic yard ...... yd3 Coefficients of Variation ...... CVs Day ...... d Days per week ...... d/wk Days per year (annum) ...... d/a Dead weight tonnes ...... DWT Decibel adjusted ...... dBa Decibel ...... dB Degree ...... ° Degrees Celsius ...... °C Diameter ...... ø Dollar (American) ...... US$

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Dollar (Canadian) ...... Cdn$ Dry metric ton ...... dmt Foot ...... ft Gallon ...... gal Gallons per minute (US)...... gpm Gigajoule ...... GJ Gigapascal ...... GPa Gigawatt ...... GW Gram ...... g Grams per litre ...... g/L Grams per tonne ...... g/t Greater than ...... > Hectare (10,000 m2) ...... ha Hertz ...... Hz Horsepower ...... hp Hour ...... h Hours per day ...... h/d Hours per week ...... h/wk Hours per year ...... h/a Inch ...... " Kilo (thousand) ...... k Kilogram ...... kg Kilograms per cubic metre ...... kg/m3 Kilograms per hour ...... kg/h Kilograms per square metre ...... kg/m2 Kilometre ...... km Kilometres per hour ...... km/h Kilopascal ...... kPa Kilotonne ...... kt Kilovolt ...... kV Kilovolt-ampere ...... kVA Kilovolts...... kV Kilowatt ...... kW Kilowatt hour ...... kWh Kilowatt hours per tonne (metric ton) ...... kWh/t Kilowatt hours per year ...... kWh/a Less than ...... < Litre ...... L Litres per minute ...... L/m Megabytes per second ...... Mb/s Megapascal ...... MPa Megavolt-ampere ...... MVA Megawatt ...... MW Metre ...... m Metres above sea level ...... masl Metres Baltic sea level ...... mbsl

xiii 0987190100-REP-R0003-00

Metres per minute ...... m/min Metres per second ...... m/s Metric ton (tonne) ...... t Microns ...... µm Milligram ...... mg Milligrams per litre ...... mg/L Millilitre ...... mL Millimetre ...... mm Million ...... M Million bank cubic metres ...... Mbm3 Million bank cubic metres per annum ...... Mbm3/a Million tonnes ...... Mt Minute (plane angle) ...... ' Minute (time) ...... min Month ...... mo Ounce ...... oz Pascal ...... Pa Centipoise ...... mPa·s Parts per million ...... ppm Parts per billion ...... ppb Percent...... % Pound(s) ...... lb Pounds per square inch ...... psi Revolutions per minute ...... rpm Second (plane angle) ...... " Second (time) ...... s Specific gravity ...... SG Square centimetre ...... cm2 Square foot ...... ft2 Square inch ...... in2 Square kilometre ...... km2 Square metre ...... m2 Thousand tonnes ...... kt Three Dimensional ...... 3D Three Dimensional Model ...... 3DM Tonne (1,000 kg) ...... t Tonnes per day ...... t/d Tonnes per hour ...... t/h Tonnes per year ...... t/a Tonnes seconds per hour metre cubed ...... ts/hm3 Volt ...... V Week ...... wk Weight/weight ...... w/w Wet metric ton ...... wmt Year (annum) ...... a

xiv 0987190100-REP-R0003-00

1 . 0 SUMMARY

1.1 L OCATIONAND R EGIONAL G EOLOGY

The Halfmile Lake Property is located in Northumberland County in northeast New Brunswick and is situated approximately 60 km southwest of Bathurst, and 70 km northwest of Miramichi. The Property covers three mineral claim groups known as Halfmile Lake Central, Halfmile Lake South and Halfmile Lake North, and covers an area of 1104.8 ha.

The Stratmat Property is located in Northumberland County in northeast New Brunswick and is situated approximately 45 km southwest of Bathurst, and 55 km northwest of Miramichi. The Property consists of 54 mineral claims in one mineral claim block located in northeast New Brunswick and covers an area of 828.6 ha.

Geologically, the Halfmile Lake and Stratmat areas are underlain by rocks of Ordovician age of the Tetagouche Group within the Miramichi Zone of northern New Brunswick. The Tetagouche Group is composed primarily of dacitic to rhyolitic volcanic rocks disconformably underlain by quartz-wackes and pelites of the Miramichi Group. Thin-bedded feldspathic wacke/shale and alkali basalts of the Boucher Brook Formation conformably overlie the felsic package. The Ordovician rocks of the Bathurst Camp have undergone greenschist facies metamorphism and a complex history of polyphase folding and faulting.

Mineralization of the deposits consists of banded pyrite-rich massive sulphides, breccia-matrix pyrrhotite-rich sulphides (semi-massive), black argillite and chert. Banded sulphides tend to contain the highest zinc concentrations. The stratigraphy hosting the Halfmile Lake deposit is overturned such that the sulphide sheet is structurally overlain by a pyrrhotite-chalcopyrite-quartz stringer zone that locally contains high copper values.

Within the Bathurst Mining Camp, most deposits are zoned vertically and laterally due to high temperature, vent proximal, veined and brecciated core to vent-distal hydrothermal sediments. Metal zoning consists of:

1. Vent complex pyrrhotite, magnetite, pyrite, chalcopyrite, ±sphalerite, ±galena. 2. Bedded pyrite, sphalerite, galena, ±chalcopyrite. 3. Bedded pyrite, ±sphalerite, ±galena. The vent complex is commonly underlain by a highly deformed sulphide stringer zone that can extend hundreds of meters and cuts hydrothermally altered volcanic and sedimentary rocks. Hydrothermal alteration is zoned and laterally widespread (1-5 km).

Trevali Mining Corp. 1-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Kria Resources Ltd. (Kria) commissioned Wardrop Engineering (Wardrop) to produce a National Instrument 43-101 (NI 43-101) compliant Preliminary Economic Assessment (PEA) and Technical Report. The technical report is presented in this document and conforms to the standards set out in NI 43-101, Standards and Disclosure for Mineral Projects and is in compliance with Form 43-101F1.

1.2 R ESOURCE E STIMATE

1.3 H ALFMILE L AKE

Wardrop carried out an internal validation from the original assay and the drill hole database on five (4.4%) of the 113 drill holes used by Noranda. Wardrop validated the dataset by comparing the original assay certificates and associated data against the digital dataset. In total, 124 samples were checked. Data verification was completed on silver, gold, copper, lead, and zinc values.

Table 1.1 is a summary of the specific gravity data used for the resource model.

Table 1.1 Summary Statistics for Specific Gravity Data

Average Minimum Maximum Standard Deviation Count 3.48 2.05 5.38 0.69 1,577

The final resource estimate is interpolated using the inverse distance (ID2) method, the nearest neighbour (NN) method was also completed as a check. The results of the resource estimate are presented in Table 1.2 and Table 1.3, at a 5% zinc equivalent (ZnEQ) cut-off. The following metallurgical recoveries were applied to the ZnEQ for the resource estimate: 89.7% zinc (Zn), 72% lead (Pb), 60% copper (Cu), and 48.6% silver (Ag).

Table 1.2 Halfmile Lake Property Indicated Resource Estimate at 5% ZnEQ Cut- Off

Location Tonnes ZnEQ %Zn %Pb %Cu Ag (g/t) UpperZone 1,192,700 7.96 6.72 2.31 0.43 16.95 LowerZone 4,472,200 9.65 8.68 2.81 0.12 37.94 DeepZone 0 0.00 0.00 0.00 0.00 0.00 NorthZone 597,200 7.56 6.78 1.40 0.49 4.84 Totals 6,262,100 9.13 8.13 2.58 0.22 30.78

Trevali Mining Corp. 1-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 1.3 Halfmile Lake Property Inferred Resource Estimate at 5% ZnEQ Cut-Off

Location Tonnes ZnEQ %Zn %Pb %Cu Ag (g/t) UpperZone 156,100 8.08 7.20 2.64 0.17 6.19 LowerZone 1,071,000 9.01 8.06 2.76 0.08 38.55 DeepZone 4,825,700 6.86 6.37 1.60 0.15 17.04 NorthZone 25,400 7.46 6.19 1.55 0.73 6.19 Totals 6,078,200 7.27 6.69 1.83 0.14 20.51

The resource estimate was completed using Gemcom GEMS™ 6.14 modelling software. The geological interpretation was made based on a combination of geology (massive sulphide intervals) and a ZnEQ grade limit of 3%. Grades were interpolated in 5 m x 5 m x 5 m blocks using ID2.

Capping levels were set at 27% for zinc, 4% for copper, 9% for lead, and 200 g/t for silver. Table 1.4 is a summary of the capping effects of the data set used in the resource model.

Table 1.4 Capping Levels Summary

Element Capped Value Number of Samples Capped Zn (%) 27 18 Cu (%) 4 6 Pb (%) 9 15 Ag (g/t) 200 9

Wardrop concludes that the above resource estimate indicates the possibility of hosting an economic deposit and warrants further investigation and development.

1.3.1 STRATMAT

The results of the NI 43-101 compliant resource estimate are presented in Table 1.5 at a 5% zinc equivalent (ZnEQ) cut-off. The following metallurgical recoveries were applied to the zinc equivalent for the resource estimate: 89.7% zinc, 72% lead, 60% copper, 48.6% silver and 70% gold.

Table 1.5 Stratmat Property Inferred Resource Estimate at 5% ZnEQ Cut-Off

Location Tonnes ZnEQ %Pb %Zn %Cu Ag (g/t)* Au* (g/t) Stratmat 5,524,500 8.16 2.59 6.11 0.40 54.21 0.62 All Zones

The resource estimate was conducted using MineSight 4.5 modelling software. The geological wireframes were constructed based on a combination of geology (massive and semi-massive sulphides) and a zinc equivalent grade cut-off of 2%. The mineral

Trevali Mining Corp. 1-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment resource was estimated by interpolating grades into 3 m cube blocks using inverse distance weighting.

Wardrop concludes that the above resource estimate indicates the possibility of hosting an economic deposit and warrants further investigation and development.

Wardrop recommends that a comprehensive review of the drill hole database be conducted to verify the integrity of the dataset. As part of the review of the historical data, Wardrop also recommends that a drilling program be established to increase the level of confidence in the historical data. Chain of custody and drill data are lacking. To this end, Wardrop recommends the drill program include a minimum of seven drill holes for an approximate total of 3,000 m. These holes will twin several historic holes to confirm survey and/or assay data. Also these holes will serve to further define the interior of the deposit, and to delineate the deposit longitudinally where drilling is scarce. The budget is estimated at approximately $600,000.

1.4 M INING

1.4.1 HALFMILE LAKE

The Upper, Lower and Deep Zones at Halfmile Lake will produce 11.6 million tonnes of ore over a 20-year mine life, at a nominal rate of 2,000 t/d (714,000 t/a). The mine design is based on using a combination of three underground mechanized mining methods - Mechanized Cut and Fill (MCF) 75.4%, Avoca 9.3% and Long Hole (LH) 15.3% . The Upper Zone will provide the source of earliest ore and will be mined entirely using the MCF method.

The mine will operate on two, 11-hour shifts per day, seven days per week.

Access to the zones will be provided by the main ramp driven at a grade of -15%, using a 2-boom electric/hydraulic jumbo drill, 8 yd3 scooptram and one 50 t haul truck, from a surface elevation of 531 m above sea level. Initially, waste from ramp development will be trucked to surface and dumped at a pad, which will be used for both ore and waste handling. A crusher will be located at the dump pad to process the ore, which will then be trucked off-site to a new mill located at the HSM site. The crusher will also crush waste to be used as backfill, which will then be backhauled to the stopes with the haul trucks. When production begins in the Upper Zone, 60% of the waste will be trucked directly to the mined-out stopes as backfill material.

A scissor lift truck will be used for rock bolting and installing mine services. The ramp will be equipped with permanent mine services for compressed air, dewatering, process water, power, instrumentation and controls and ventilation. Re-mucks and truck load-outs will be cut at 150 m and 300 m intervals respectively. Storage space and temporary sump facilities will be located at inactive re-muck cut-outs. Level access drifts will be excavated at vertical intervals of 30 m. Electrical sub stations will also be excavated at 550 m intervals along the ramp.

Trevali Mining Corp. 1-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Once the ramp reaches the 200 Level horizon, an exploration drift will be driven in order to undertake definition diamond drilling of the Lower Zone. Similarly, at the -70 Level, another exploration drift will be driven to conduct a diamond drilling program for the Deep Zone. Access to diamond drilling horizons will also be excavated at the 200, 94, 65, and -70 Levels.

The MCF method will be used in areas where the ore dips at less than 40 to 45°. The Upper Zone dips at an average of 32° and will be mined using the MCF method. A sill pillar will be left in the center of the zone in order to establish two concurrent mining levels.

The Avoca method will be used in areas where the ore dips at more than 32 to 40° but not steep enough for practical LH mining.

Drilling for both the Avoca and LH methods will involve the use of in-the-hole (ITH) drills for 3.5 inch holes. Ammonium nitrate fuel oil (ANFO) will be the prime blasting agent supplemented by the use of packaged emulsions (15%). All mucking will be executed with 8 yd3 load-haul-dump (LHD) units equipped for remote mucking operations.

The main ventilation infrastructure for the Halfmile Lake Project will consist of main Fresh Air Raises (FAR) and Return Air Raises (RAR) to the zones, and will be interconnected with designated levels to service ramp, development, and productions operations. At a steady state, 680 kcfm will be delivered underground to be distributed to the working areas. Two surface fans at each of the FAR (2 x 800 hp) and RAR (2 x 700 hp) will be controlled with Variable Frequency Drives (VFD’s) to provide an increasing volume of air at various stages of the Life-of-Mine (LOM). A heater house with propane burners, rated at 9.5MM BTU/hr, will be provided to heat the fresh air during the winter months.

Submersible and centrifugal electric pumps, with an overall installed capacity of 800 gallons per minute (gpm), will be used to pump mine water from ramp and drift headings and designated sumps on the levels.

The main underground shop will be located in the Lower Zone at the -70 Level and will be equipped with a 25 t overhead crane, hose reel assemblies and lubricant dispensing equipment, welding bay and equipment, hydraulic presses, tire changing area, lube and warehouse areas, and a complete set of non-personal mechanics tools and boxes. The shop will be equipped with a fire suppression system, fire doors, communications center, and offices.

A satellite shop will be provided in the Upper Zone at the 200 elevation (330 Level) with similar facilities as the main shop, but with reduced office space and work areas.

1.4.2 STRATMAT

The two ore zones in the Stratmat site, Main Zone and Zone 51, are 1000 m apart and will be mined separately. Extraction of the 6,672,816 t of Stratmat ore will be

Trevali Mining Corp. 1-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment planned at a rate (peaking at 2000 t/d) to complement the Halfmile Lake production for a total 4000 t/d (1,428,000 t/a) feed to the mill at Heath Steele Mine (HSM). The Stratmat ore will last 11 years.

The ore zones consist of stringers and blobs. Those in Zone 51 are reasonably clustered whereas those in the Main Zone are spaced vertically and laterally, see Figure 1.1.

Figure 1.1 Stratmat Deposit (Grade shell @4.8% ZnEQ cut off) Vertical Section Looking North

To sustain the planned production, the Main Zone is sub-divided into four zonal mining phases separated by crown pillars to allow mining to proceed concurrently from any two or more phases. A description of boundary and estimated resource of each phase are as follows:

 Phase 1 : Surface to 5181 el - 642,895 t at 7.866 ZnEq  Phase 2 : 5181 el to 5055 el - 772,120 t at 8.175 ZnEq  Phase 3 : 5055 el to 4845 el - 3,241,304 t at 8.773 ZnEq  Phase 4 : 4845 el to 4593 el - 1,073,146 t at 9.653 ZnEq Overlain by minimal overburden, the economic reserves extends to 127 m below surface in Zone 51, 773 m in the Main zone (Figure 1.2).

Trevali Mining Corp. 1-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 1.2 Mine Longitudinal View

Trevali Mining Corp. 1-7 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The mining methods to be employed are the same as those at Halfmile Lake excluding the Avoca method because of no apparent suitable ore zone. Approximately 80% of the Stratmat reserves will be mined by LH and 20% by MCF. These methods are described in Section 1.4.1 above.

Separate ramps, identical in size and grade (nominal -15%) will be driven simultaneously to access the Main Zone and Zone 51. As in Halfmile Lake, conventional equipment will be used – 2-boom jumbo drill, 8 yd³ load-haul-dump, 50-t truck, scissor lift and support vehicles.

As a ramp reaches the elevation of a sub-level, the main crosscut on that sub-level will be collared a short distance to provide a temporary re-muck bay.

A service/escape raise will be driven in leapfrog fashion with a main ramp, i.e., the raise will be driven from a collared sub-level to the one above. Permanent mine services for compressed air, dewatering, process water, power, instrumentation and controls and ventilation will be installed in this raise. The immediate advantage of this raise is the provision of an escape way, a ventilation airway and shorter lengths of service lines during ramp development. Once the raise is equipped, the ventilation tubing and service lines installed in the ramp section above will be removed and re- used on the ramp being driven below.

On every second sub-level, a truck load out will be cut as well. Storage space and temporary sump facilities will be established in unused cross cuts.

Upon reaching the 5181 elevation, lateral development to the ore zones will be carried out, followed by infrastructure and pre-production development. Production will start in an area as soon as the required infrastructure and safety amenities are in place. Pre-production development will continue until the total mine production rate has ramped up to 2,000 t/d and sustained.

As the Main Zone ramp reaches the 5055 elevation (305 Level), an exploration drift will be developed for a diamond drilling program.

While production is in progress above the 5181 elevations in both zones, the ramp in the Main Zone will be continued to the lower levels. Upon reaching the 5055 elevation (bottom of Phase 2), lateral and infrastructure development will be done in the same concept as described above. The rate of such development will be geared to the timely replacement of exhausted resources in the upper zone. This strategy will be repeated down to the Phase 3 and Phase 4 of the Main Zone.

Ventilation fresh air, 156 kcfm, will be delivered to the Zone 51 workings. One x 120 hp fan on each of the FAR and RAR will control the airflow. In the Main Zone, 730 kcfm will be required during the peak production period. Two 670 hp fans on the FAR and two 500 hp fans with VFD drives will be installed. To heat the fresh air during the winter months, a heater house will be built in each zone equipped with propane heaters with a capacity of 9.5 MM BTU/hr for the Main Zone and 2.2 MM BTU/hr for Zone 51.

Trevali Mining Corp. 1-8 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Backfill for Zone 51 and Phase 1 of the Main Zone will be delivered by ore haulage trucks on the return trip from surface. For the zones below Phase 1, backfill will be dumped into a backfill raise, retrieved and hauled to empty stopes by a dedicated fleet of trucks equipped with ejector box.

Mine water in Zone 51 will be pumped directly to the water retention pond on surface by a 150 hp pump at the rate of 400 gpm. In the Main Zone, an identical pump arrangement will be established in each of the mining phases and linked. Thus when the mining has progressed to Phase 4, water will be pumped to surface in 4 stages.

Running repairs will be done in a small shop underground. All major repairs and preventive maintenance work will be done in the shop on surface. 1.4.3 TAILINGS MANAGEMENT FACILITY

This PEA follows recommendations to expand the existing Heath Steele Tailings Management Facility (TMF) in order to accommodate combined Half Mile Lake and Stratmat tailings production. The HSM site previously underwent closure and reclamation and this includes the existing TMF.

The options study for the HSM’s TMF expansion was completed in 1994 (Geocon Atlantic, 1994). At the time of the study the HSM operation was expected to cease in 1997. This was to be followed by the start of the discharge of tailings from the HML operations. A total of five expansion options were studied and “Option 5” was recommended, and followed herein, as a preferred option on the basis of the lowest estimated cost and most favorable classification of merits and demerits. This option consists of:

 Constructing a powerline dam to establish a north cell (enclosed by the dam and surrounding high ground).  Raising the north road embankment, old tailings dam and internal dam to increase the storage capacity of the upper cell. The actual cessation of the HSM operations took place in 1999 due to a change of the HSM mine plan. The Powerline dam was constructed and the north cell was established in 1996 in order to accommodate additional tailings produced by HSM operations.

The final crests of raised containment structures are set at El. 2376.2m and these accounts for 12,2M m3 of tailings storage (15% contingency included), a 0.9 m deep closure water cover and 1.5 m of freeboard. The construction of containment structures will be carried out in stages in order to avoid expensive upfront capital spending. Stages 1, 2 and 3 raises are planned in years -1, 6 and 16, and their costs are estimated at $7.4 million, $7.2 million and $5.6 million respectively.

Uncertainties remain in costs of foundation treatment measures that may be required to address shared environmental liability issues that may arise. Future site evaluations should be carried out with the ultimate goal in seeking a reduction of

Trevali Mining Corp. 1-9 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment financial effects of potential future liabilities with respect to environmental impacts in addition to historic disturbance.

The internal dam overflow spillway modification or relocation may be required based on extent of encroachment of the raised internal dam into the west abutment. Furthermore, capacities of the main dam overflow spillway (north abutment) and emergency spillway (west abutment) should be re-evaluated to account for any changes in the lower cell water balance impacted by any changes within upper and north cells resulting from the subject TMF expansion. These potential changes may have an impact on overall capital cost.

Other significant risks related to economic items revolve around site uncertainties such as reliability of information from former studies/designs used herein, availability of borrow materials, volume estimates, expected density of tailings and topography.

1.5 M INERAL P ROCESSINGAND M ETALLURGICAL T ESTING

This section is based on historical data and no new metallurgical tests have been performed. Wardrop’s primary source of information comes from several Noranda Feasibility Studies (1995, 1998, and 2000). Additional reports on metallurgical testing at SGS Lakefield and various tailings studies and closure plans were also reviewed to obtain the necessary information for the process flow sheet and metallurgical parameters.

Wardrop has conducted a trade-off study for the mill location and investigated various mill production rate options, as well as developing the process capital and operating cost evaluations. Wardrop also reviewed potential smelter terms for the concentrates. Under the terms of the option agreement that Kria has with Xstrata, Xstrata has first right of refusal on the concentrates. At the time of this report no smelter agreements were in place with Xstrata, therefore it was chosen to include the cost of shipping to an overseas smelter in Asia along with relative Net Smelter Returns (NSR) world terms.

For the scope of this report the emphasis was placed on options involving the current tailings management facilities located at Heath Steele Mines which Kria Resources has a property option on. Further studies are warranted on investigating options of locating the tailings management facilities on site at Halfmile Lake or utilization of other existing tailings and/or milling sites. The Noranda feasibility studies all presented scenarios using the Heath Steele site for metallurgical processing, thus this direction was chosen to be utilized given the design scope for this report. Further work is warranted to accurately evaluate the location of the metallurgical processing facilities including the TMF.

1.5.1 METALLURGICAL TEST PROGRAMS

Metallurgical test programs were conducted at the Brunswick Mines and the Lakefield (now SGS Lakefield) Laboratories by Noranda. Several batch tests and lock cycle tests were performed at both facilities. Furthermore, a mineralogical

Trevali Mining Corp. 1-10 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment evaluation was completed at Noranda to provide additional information to help characterize the metallurgical response. Pilot plant testing was not considered necessary at this time.

Based on the lock cycle tests assay results, the bulk zinc-lead concentrate contained 19.26% lead and 35.7% zinc at a favourable zinc/lead ratio of 1:9. The silver content was 205 g/t.

The copper in the copper concentrate was 20.13%, the lead in the lead concentrate was 46.24%, and the zinc in the zinc concentrate was 53%. Most of the silver was distributed to the lead concentrate with 307.7 g/t of silver (Noranda, 1998).

Lock cycle test results also indicated that the Halfmile Lake ore will yield total recoveries of 25.96% for copper, 89.72% for zinc, 48.56% for silver and 72.07% for lead. A lead concentrate of 46% lead and a zinc concentrate of 53% zinc are anticipated (Noranda, 1998).

The mineralogical studies on the Halfmile Lake ore samples showed good potentials for the zinc concentrate. With a zinc concentrate containing 53% zinc and recovery of nearly 85%, the iron levels of 8%, lead levels of 2%, low copper levels and relatively low arsenic, cadmium, manganese and cobalt levels, a good quality concentrate was expected to be produced from the Halfmile Lake ore (Noranda, 1998).

1.5.2 MILL TONNAGE

Mine production capacity from both the open pit and underground operations at HML was assessed to be between 1,500 to 1,900 t/d. For the purposes of this study, only the underground mining volume will be considered in the operational costs for the mill. However, the HML mill feed was calculated at 2,000 t/d in consideration of the potential combined capacity for the open pit and underground operation.

The mine production schedule for Stratmat shows an initial capacity of 1,500 t/d for the first two years of mine production and 2,000 t/d for the subsequent 5 years and returning to 1,500 t/d until the end of the mine life. In order to accommodate the maximum mine production in the peak years the mill feed from Stratmat has been estimated to be 2,000 t/d.

The combined mill feed from the two properties is expected to peak in the range of 4,000 t/d, therefore this is assumed as the proper capacity of the processing facility.

1.5.3 MILL LOCATION

Wardrop conducted a trade-off study for the mill location. The options considered were to build the mill either at Halfmile Lake or at the previously operated HSM site. For both cases, a new mill complex is considered. In addition, the trade-off study considered the cost effect of including Stratmat.

Trevali Mining Corp. 1-11 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The initial comparison between the two options shows $13.6 million difference in favour of building the mill at Heath Steele. There is some additional potential savings in terms of infrastructure capital costs if the mill is built at Heath Steele, which may increase that difference even further. Furthermore, installing and maintaining a 22 km pumping and piping system to pump the Halfmile Lake mill tailings to the Heath Steele tailings dam will affect the mill water balance and would increase the project risk significantly, particularly from an environmental aspect.

Based on these Trade-Off Study results, Wardrop recommends that the optimum location to build the mill is at the Heath Steele site, close to the tailings dam and to the Stratmat property. The Heath Steele location would require hauling the Halfmile Lake ore 22 km and the Stratmat ore 5 km via the existing Otter Brook Road. Safety issues also support using the Heath Steele Mill site, as the daily travel time for operations personnel would be substantially reduced.

Further studies are warranted to review other milling and tailings management facilities options. Other options include locating both the milling and tailings management facilities at the Halfmile Lake site or utilizing other existing milling and tailings management facilities on a toll basis. For the scope of this Preliminary Economic Assessment report the direction taken was to utilize the historical processing and tailings option by locating a metallurgical process facility on the Heath Steele Mines site.

1.5.4 PROCESS FLOW SHEET

The process flow sheet is based on the Noranda Feasibility Study, 1998. At the time, it was developed with the idea of processing the Halfmile Lake ore either at HSM or at Brunswick Mines, therefore it is very similar to the flow sheets employed Brunswick mines.

The flow sheet uses a standard crushing process with a rock breaker provided to support the crushing process. The crushed ore is fed to the grinding circuit, which consists of a SAG mill, followed by a Ball mill. The calculated grinding time is 30 to 32 minutes, with a primary grind target of 70-80% passing 400-mesh. This is derived by applying the power input used in standard tests at the Brunswick Mines.

The flotation area consists of a copper-lead (rougher flotation followed by two cleaners and a scavenger flotation) and subsequent zinc circuit (rougher zinc flotation, followed by three cleaners and a scavenger flotation).

The copper separation circuit includes conditioning, followed by rougher and cleaner stages. The cleaner concentrate is the final copper concentrate and the rougher tailings returns to bulk rougher and cleaner stages. The bulk rougher tailings are the final lead concentrate and the bulk cleaner concentrate.

Further work is warranted to investigate if there is a possibility of eliminating the bulk concentrate and obtaining only 3 concentrate streams as this would simplify the mill flow sheet.

Trevali Mining Corp. 1-12 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Based on the metallurgical tests performed at the SGS Lakefield Laboratory, the

process will use the following reagent types: sulphur oxide (SO2) and soda ash in the grinding circuit; xanthate, frother and soda ash for the copper-lead conditioning; soda

ash for the copper-lead regrind; xanthate, frother, lime and copper sulphate (CuSO4) for the zinc conditioning; starch, SO2 and collector for the copper separation conditioning; xanthate, frother, lime and CuSO4 for the bulk conditioning.

1.6 M ARKETSAND C ONTRACTS

The following assumptions regarding concentrate marketing have been made:

 Concentrates will be transported to the port of Bathurst, New Brunswick and from there shipped to a smelter in Asia.  Bulk concentrates experience a re-handling loss of 0.3%; whereas it is assumed that the gravity concentrates will be bagged, a lesser loss of 0.10% is assumed.  Concentrates to Asia will be shipped in 10,000 t lots.  It is assumed that the moisture content of the concentrates will be 8% and below the Transportable Moisture Limit (TML). In some cases, this TML may be below the trigger point for a smelter moisture penalty.

Based on these assumptions, Wardrop has generated assumptions for “world smelter terms” with respect to treatment charges, penalties, accountability, and other areas. These were reviewed in light of the current market, as well as historic and future expected trends. In addition, there were discussions with smelters in order to determine current trends and the long-term outlook on capacity availability, and the minor element impact. Elements within the concentrate may also add a positive cash flow, as recoverable by-products have not been included in this preliminary study.

It must be recognized that smelters in different market areas may use different formulas with respect to metal accountability and charges and this is not reflected in the presented terms. Under the option agreement between Xstrata and Kria for Halfmile Lake, Xstrata has the first right of refusal for the concentrates. At the time of issuing this report there was no smelting agreement in place between Xstrata and Kria. For purposes of this PEA study, smelting terms have been assumed to be overseas in Asia

It is also expected that, on final negotiations for concentrate contracts, the terms could be expected to vary due to shifts in the world market conditions.

Once a full suite of assays is established and the freight rates are more definitive, the detailed estimate of the NSR can be refined. All NSR and freight calculations are in US$/dmt since all the smelter contracts will be written in $US/dmt and are estimated to be $665.94 for the zinc concentrate; $1,135.80 for the copper concentrate; and $426.24 for the lead concentrate.

Trevali Mining Corp. 1-13 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1.7 E NVIRONMENTAL

The environmental setting for the Halfmile Lake property was previously described and assessed by BEAK Consultants Ltd. (BEAK) for similar project proposed by a previous owner of the property. A biological study was initiated by Kria in 2010 to update the environmental information for the property. The existing environment at Heath Steele was also previously described and assessed by BEAK for the Heath Steele Mine closure plan (BEAK 1997). Since then, mine closure activities have been undertaken including the removal of surface infrastructure, however the TMF remains licensed and is currently under care and maintenance.

The environmental assessment and permitting process for a development in New Brunswick is managed by the Environmental Assessment Branch of the Department of Environment (DENV). The proponent of a mining project is required to register details of their proposed project with the Minister of DENV. Registration involves a one-time fee of $5,000 and the submission of an environmental impact assessment (EIA) registration document which describes the project, the existing environment potentially affected by the project, the anticipated environmental impacts and any proposed mitigative measures that, if implemented, would lessen, eliminate, or avoid such impacts. Updated environmental information for both sites must be collected for project approval. This type of data gathering is typically conducted over the course of a year (four seasons – i.e., April to April).

Throughout the registration process the proponent is also required to conduct community and Aboriginal engagement to ensure that the potentially affected stakeholders are aware of the project and are able provide input for consideration in project planning. A report summarizing the outcome of any public engagement must be submitted to DENV within 60 days of registration submission. Aboriginal consultation on part of the Province is handled by the Aboriginal Affairs Secretariat (AAS).

During the registration review, federal agencies will determine if a federal environmental assessment is necessary. A federal environmental assessment is typically triggered when a federal authority determines it must provide a license, permit or an approval that enables a project to be carried out (such as an authorization under the Fisheries Act). If a federal agency determines that it must issue a permit or approval for the project, the federal family would then determine the level of environmental assessment to be applied to the project.

After reviewing the registration document, the Minister of DENV will make a decision regarding approval of the project including the issuance of a Certificate of Determination (project approval); requirement for further study or the project may be denied. If the Minister approves the project to proceed, certificates for Approval to Construct and Approval to operate will be issued and other permits necessary for operation can be applied for through the appropriate licensing agency. If further study is required an environmental impact statement must be prepared and undergo regulatory and public review.

Trevali Mining Corp. 1-14 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1.7.1 GEOCHEM

Historic waste rock and tailings properties from nearby mines together with the high sulphide content of the ore at Halfmile Lake and Stratmat strongly suggests that waste rock and tailings produced from the latter deposit will likely be a potential source of acid mine drainage (AMD) as well as potential metal leaching (ML). Assessment of AMD/ML potential includes both static and kinetic testing.

1.7.2 WATER QUALITY

Site-specific water quality modeling (WQM) may be necessary to evaluate the implications of any discharge to natural surface waters on quality and quantity and identify appropriate management and control measures to prevent degradation of water quality or disruption of aquatic habitat. Effluents discharged to surface water from mining activities must at minimum meet MMER regulations. Discharge from the project site should not cause a parameter increase in a receiving water body, outside the mixing zone, that would cause a receiving water guideline to be exceeded. Site specific approvals of effluent quality may be assigned after application to the New Brunswick Ministry of the Environment if simple compliance with the MMER regulations will not provide adequate protection of receiving water quality.

1.7.3 HYDROGEOLOGY

Site specific or local hydrogeological data for the Halfmile Lake and Stratmat properties are not available. Groundwater will infiltrate mine workings at both deposits. Based on the hydrogeology reported for the HSM area, and the anticipated relatively similar geology of the Halfmile Lake and Stratmat property, water volumes should be manageable, and may contain high concentrations of heavy metals due to the nature of the deposit. Standard dyke, grouting, and/or pumping practices would likely be required.

At Halfmile Lake, groundwater will be directed to a surface storage pond where the water will be held and treated, if necessary, before discharge to the Moody Brook watershed. No water treatment will occur at the Stratmat site. Collected water at the Stratmat site will be transported via a buried pipeline approximately 5km to the Heath Steele tailings management facility. Surface water will be captured from the run off of all hard surface areas via a ditching system. The surface ditches will be lined with a synthetic liner due to the lack of known available natural clay material.

1.7.4 MINE CLOSURE

The intention of mine site reclamation after closure is to return land to a use at least equal to its previous value and to ensure that the long term ecological and environmental stability of the land and watershed is sustained. Mine closure is considered by the Province to be complete once any requirement for environmental monitoring and/or water treatment has ceased. The Halfmile Lake/Stratmat Mining and Reclamation Plans must include an estimate for mine closure and reclamation costs and an anticipated schedule for these activities to occur. Reclamation security

Trevali Mining Corp. 1-15 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment will be required from the proponent and held by the Province to cover the cost of performing site reclamation if the proponent is unable to fulfill its obligation. The reclamation security may be released once reclamation is complete. A site is deemed in a walk-away condition when no further environmental monitoring and water treatment is necessary, and the site does not contain public safety hazards.

1.8 F INANCIAL A NALYSIS

Using NSR values of US$665.94/dmt for zinc, US$1,135.80/dmt for copper, and US$655.83/dmt for lead, an exchange rate of $1.042 Cdn$/US$, and an operating cost of $57.62/t of ore, the pre-tax Internal Rate of Return (IRR) for the project has been calculated at 20.86%.

Overall, the total capital and operating expenditures will be $471.1 million and $1.052 billion, respectively. Additionally, the total cash flow before taxes from metal sales will be $824.7 million during a LOM of 20 years.

Table 1.6 Net Present Value and Internal Rate of Return

Item Amount Pre-tax & Pre-finance NPV @ 6% $343,050,357 Pre-tax & Pre-finance NPV @ 8% 253,403,020 Pre-tax & Pre-finance NPV @ 10% 184,310,634 Pre-tax & Pre-finance NPV @ 12% 130,584,175 Pre-tax & Pre-finance NPV @ 15% 70,883,749 Pre-tax & Pre-finance NPV @ 20% 7,754,985 Project IRR 20.86%

The graph below (Figure 1.3) shows the Net Present Value (NPV) in Canadian dollars for the various discount rates for the base case scenario, as defined by the above metal prices, NSR and currency exchange.

Trevali Mining Corp. 1-16 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 1.3 NPV vs. Discount Rate

NPV vs DiscountRate for Base Case

$400,000,000

$350,000,000

$300,000,000

$250,000,000 ) $ (

$200,000,000 V P

N $150,000,000

$100,000,000

$50,000,000

$0 5% 7% 9% 11% 13% 15% 17% 19% Discount Rate (%)

1.8.1 CAPITALAND OPERATING COSTS

The capital costs are divided into direct capital costs and indirect capital costs. The direct capital cost breakdown consists of the following major category descriptions:

 site development  utilities  mining underground  infrastructure, non-process  process  mobile equipment  tailings management facility  closure and reclamation. The indirect capital cost breakdown consists of the following major category descriptions:

 owner’s cost  indirect cost  contingency  salvage. Table 1.7 is a summary table, which details the capital costs for this project.

Trevali Mining Corp. 1-17 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 1.7 Capital Cost Summary

Direct Capital Costs (million$) Site Development $25.8 Utilities $12.6 Mine Underground HML $130.7 Mine Underground Stratmat $130.2 MobileEquipmentHML $41.7 Mobile Equipment Stratmat $37.7 Infrastructure Non Process $12.3 Process $54.8 TailingsManagementFacility $20.1 Closure/Reclamation $4.0 Sub Total $470 Indirect Capital Costs Owner's Costs $14.1 Indirect $13.1 Salvage $(26,000,000) Sub Total $1.2 TotalCapitalCosts $480.6

1.9 R ISKSAND O PPORTUNITIES

1.9.1 UNDERGROUND MINING

The underground mining methods require further detailed engineering to more accurately define the level of effort necessary to mine the ore bodies.

Potential mining risks exist at both deposits regarding dilution and mining recoveries, the prevalence of remote mucking resulting in additional access drifts, the requirements for backfill raises at Halfmile Lake rather than backhauling from surface with ore trucks and the utilization of shotcrete for ground stabilization at both Halfmile Lake and Stratmat.

Potential mining opportunities exist at Halfmile Lake through optimizing the mining method resulting in a higher percentage of LH mining and the potential justification of a shaft for recovery of ore to surface. As well the North zone is a potential open pit deposit that has yet to be adequately defined or investigated in terms of financial viability.

The defined resource at Stratmat is classified as 100% inferred. There is both a risk and opportunity that requires further drilling and assaying to ascertain what risk or opportunity exists for mining Stratmat.

Trevali Mining Corp. 1-18 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1.9.2 METALLURGY

Metallurgy has the potential for opportunities primarily resulting from the completion of a new metallurgical test program. Significant improvements to the process flow sheet for a green field mill will result in improved metallurgical recoveries, elimination of the bulk concentrate presented in the Halfmile Lake PEA and reduced capital and operating costs. Another opportunity is presented through a proposed detailed evaluation of the mill location and through-put design with consideration to include ore from the Halfmile Lake North Zone and/or Kria’s Stratmat deposit.

1.9.3 ENVIRONMENTAL

There are no uncommon environmental risks associated with the project. A walk- away closure plan to satisfy the jurisdiction of New Brunswick must be developed and implemented. The Halfmile Lake and Stratmat waste rock dumps are potentially acid generating and will require planning, operation, and closure to effectively control acid generation and metal leaching.

The Heath Steele Mines requires a more detailed assessment of the site, including the current operation of the TMF. This should be conducted to identify and avoid any existing environmental liabilities.

1.10 R ECOMMENDATIONS

Wardrop recommends the following activities with approximate scheduled start and stop dates.

Estimated Estimate Phase Description Start End

1 Preparation for Halfmile Early Works Jan. 2010 Jan. 2011 2 HalfmileEarlyWorksDevelopmentandProduction Oct.2010 Nov.2012 3 ExplorationandDefinitionDrillingc/wResourceUpdates March2011 Oct.2012 4 EconomicEvaluationUpdate Jul.2012 Dec.2013 5 Environmental Studies Oct.2012 Sept. 2014 6 EPCM May. 2014 June. 2017

1.11 C ONCLUSIONS

The PEA is favourable with a pre-tax IRR of 20.86% and a NPV of Cdn$253.4 million at an 8% discount rate. The IRR will drop following tax considerations. Achieving this return will require a capital investment of Cdn$471.1 million. The capital expended prior to achieving commercial production would occur in Years -2 and -1, and would total Cdn$187 million.

Positive cash flows are shown in Year 2 following commercial production. Payback will take approximately six years after start of mine production.

Trevali Mining Corp. 1-19 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 2 . 0 INTRODUCTION

The Halfmile Lake and Stratmat Properties are located in Northumberland County in northeast New Brunswick. Halfmile Lake is situated approximately 60 km southwest of Bathurst, and 70 km northwest of Miramichi. It covers three mineral claim groups known as Halfmile Lake Central, Halfmile Lake South and Halfmile Lake North. The Stratmat Property is located in Northumberland County in northeast New Brunswick and is situated approximately 45 km southwest of Bathurst, and 55 km northwest of Miramichi. It covers one mineral claim group named Stratmat.

Kria Resources is a publicly traded (TSX-V: KIA) Canadian base metal exploration and development company focused on high quality base metal assets including lead, zinc, copper, gold and silver in New Brunswick and Manitoba, Canada.

The claims are currently held by Xstrata Zinc Canada In July 2008, Kria entered into an agreement with Xstrata to acquire full ownership of the claims, subject to the following conditions:

 As of July 21, 2008, Kria paid to Xstrata US$1,000,000 and issued 3,500,000 shares at a value of Cdn$1.00 per Unit (one Unit is equal to one common share and one half Warrant) Filled;  On July 16, 2009 the agreement was amended: On August 17, 2009, Kria paid to Xstrata $500,000 and CDN$2,500,000 worth of additional shares. - Filled  On or before January 16, 2010, Kria paid to Xstrata US$1,000,000. - Filled  On or before July 16, 2010, Kria paid to Xstrata US$2,5000,000 and CDN$1,000,000 worth of additional shares. - FIlled  On or before January 16, 2011, Kria will pay to Xstrata US$8,000,000.  On or before July 16, 2011, Kria will pay to Xstrata US$5,000,000. Under the terms of the Agreement, Xstrata has first right and option to purchase all or any portion of concentrates and other mineral products produced from the Properties. Xstrata will retain a 2% NSR royalty. A portion of the Stratmat Property has a 2.5% NSR to Teck Cominco Limited (Teck).

Included in the Agreement are underlying rights to the Halfmile Lake North claim group. Kria will acquire a 61.51% interest on certain claims in the north portion of the Halfmile Lake Property due to underlying ownership rights. Part (ii) of the “Underlying Rights” states that:

Trevali Mining Corp. 2-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment the following undivided ownership interests in the north portion of the Halfmile Lake Property:

Vista Gold 23.07% Prospectors Alliance 11.53% North American Rare Metals Ltd. 3.89%

as parties to, or successors to parties to, a letter agreement dated June 17, 1975 between Kevin J. McDonough, Mattagami Lake Mines Limited, Noranda Exploration Company, Limited, Granges Exploration Aktiebolag, North American Rare Metals Limited, Rich Point Mines Limited and Trinova Cobalt Silver Mines Limited. The aforesaid interests are based on the most recent information available to Xstrata but it is possible that the individual interests and names of the entities entitled thereto may vary somewhat, however the aggregate interest of all such entities does not exceed that indicated above.

Also included in the agreement, Kria has the exclusive right to negotiate with Xstrata the purchase of 100% interest in the Heath Steele Mining Lease, that is, the former Heath Steele Mine.

Trevali Mining Corp. 2-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 3 . 0 TERMSOFREFERENCE

3.1 T ERMSOF R EFERENCE

Kria previously commissioned Wardrop to produce a NI 43-101 compliant resource estimate and technical report for the Halfmile Lake and Stratmat Properties to determine the mineral potential of the Properties and whether a PEA Study was warranted. Wardrop completed a NI 43-101 compliant Technical Reports on the Halfmile Lake Property and the Stratmat Property in February 2009. The reports were issued at the time under the name Beartooth Platinum Corp. as part of a reverse take over between the privately held Kria and the publicly traded Beartooth. The reports have subsequently been re-issued under the Kria name in March 2010.

Kria also commissioned Wardrop to produce an NI 43-101 compliant PEA and Technical Report on the Halfmile Lake Property. This report was completed in July 2009 and is posted on SEDAR. The Halfmile Lake PEA results are included in this report which combines the PEA evaluation of the Stratmat deposit with the previously Halfmile Lake PEA evaluation. Technical Report is presented in this document and conforms to the standards set out in NI 43-101, Standards and Disclosure for Mineral Projects and is in compliance with Form 43-101F1.

The designated Qualified Personnel for this PEA are listed below.

Mining and Tailings: Virgil Corpuz, P. Eng.

Process and Metallurgy: Peter Broad, P. Eng.

Project Management: Mike McLaughlin

The site visit to Halfmile Lake and Stratmat Properties was conducted from April 28- 29, 2009 by Dan Sweeney, P. Eng., lead mining engineer with Wardrop, Aleksandar Zivkovic, P. Eng., lead geotechnical engineer with Wardrop, Garth Graves, consulting geologist with Kria and Steve Davies, Vice President and Chief Operating Officer for Kria.

Trevali Mining Corp. 3-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 4 . 0 PROPERTYDESCRIPTIONAND LOCATION

The Halfmile Lake Property is defined by the mineral rights to 73 mineral claims, currently 100% of the claims for the Upper, Lower and Deep Zones are held by Xstrata, and claims making up the North Zone have shared ownership between Kria and Xstrata. The total property covers an area of 1104.8 ha.

The Stratmat Property is comprised of 54 contiguous mineral claims that are 100% held by Xstrata, and covers an area of 828.6 ha.

4.1 L OCATION

The Halfmile Lake Property is situated as shown in Figures 4.1. Figure 4.2 illustrates the position of both Halfmile Lake and Stratmat in relation to Heath Steel.

Figure 4.1 Location Map – Halfmile Lake Property

Trevali Mining Corp. 4-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 4.2 Halfmile Lake Property and Stratmat Property Location Map

STRATMAT PROJECT

The HML Property is located:

 Within National Topographic System (NTS) map sheet 21O/8W.  At approximately 47°19’ N and 66°19’ W in northeast New Brunswick, in eastern Canada.  Approximately 155 km north of Fredericton, the provincial capital city of New Brunswick.  Approximately 70 km northwest from Miramichi and 60 km southwest from Bathurst, New Brunswick.  In the County of Northumberland.  Approximately 20 km west of the former Heath Steele Mine site.

Trevali Mining Corp. 4-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The Stratmat Property is situated as shown in Figures 4.3 below.

Figure 4.3 Property Location Map

The Stratmat Property is located:

 Within NTS map sheet 21O/8W.  At latitude 4713’ N and 6607’ W in northeast New Brunswick, in eastern Canada.  Approximately 155 km north of Fredericton, the provincial capital city of New Brunswick.  Approximately 45 km southwest from Bathurst and 55 km northwest from Miramichi, New Brunswick.  In the County of Northumberland.  Adjacent to the former Heath Steele Mine.

Trevali Mining Corp. 4-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 4.2 P ROPERTY D ESCRIPTION

On July 28, 2008, Kria entered into an agreement with Xstrata to purchase its mineral rights to the Halfmile Lake and Stratmat Properties. The Halfmile Lake Property is comprised of the following claims as listed in Table 4.1 and illustrated in Figure 4.3 below, whereas the Stratmat Property is comprised of the claims listed in Table 4.2 and illustrated in Figure 4.4. . More information on the mineral claims may be found in Appendices C1 (Halfmile Lake) and C2 (Stratmat).

Table 4.1 Halfmile Project Mineral Claim Blocks

Number Area Mineral Claim Block Date Recorded Date of Expiry of Claims (ha) Halfmile Lake Central November 18, November 18, 25 312.1 No. 1681 1983 2009 Halfmile Lake North – Mattagami 18 307.4 November8,1984 November8,2009 No. 1850 Halfmile Lake South 30 485.3 January4,1985 January4,2010 No. 1900 Total 73 1104.8 Source: Government of New Brunswick, Ministry of Natural Resources

Trevali Mining Corp. 4-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 4.3 Halfmile Lake Property Mineral Claim Map

Table 4.2 Stratmat Project Mineral Claim Block

Mineral Claim Number of Area Date Date of Block Claims (hectares) Recorded Expiry Stratmat 54 774.2 July27,1983 July27,2010 No. 1613 Mining Lease n/a 54.4 N/A N/A No. 253 Total 828.6 Source: Government of New Brunswick, Ministry of Natural Resources

Trevali Mining Corp. 4-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 4.4 Stratmat Property Mineral Claim Map

Source: Government of New Brunswick, Department of Natural Resources

The mineral claims have been in good standing for a number of years through various owners. The mineral rights to all surrounding mineral claims are held exclusively by Xstrata. The surface rights to the Property area are owned by the federal government, known as Crown lands, and these have been leased to Miramichi Pulp and Paper for timber.

For the Halfmile Lake deposit, the mineralized zones are situated across all three mineral claim groups. The mineralized zones known as Upper, Lower and Deep are located across claim groups Halfmile South and Halfmile Central. The mineralized zone known as North is situated in the claim group Halfmile North – Mattagami. For the Stratmat deposit, the mineralized zones are situated within Stratmat property’s mineral claim block boundaries and a historic open pit mine is situated in the mining lease. Wardrop is not aware of any liabilities on the Property. According to the purchase agreement between Xstrata and Kria, all liabilities will remain with Xstrata until such time as a liability is caused by Kria.

Trevali Mining Corp. 4-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 5 . 0 ACCESSIBILITY,CLIMATE,LOCAL RESOURCES,INFRASTRUCTUREAND PHYSIOGRAPHY

5.1 A CCESSIBILITY

The Halfmile Lake Property is situated 60 km southwest from the city of Bathurst, the business hub for northeastern New Brunswick. It is easily accessible from Bathurst or from the City of Miramichi. The Stratmat Property is situated 45 km southwest from the city of Bathurst, the business hub for north-eastern New Brunswick, and is easily accessible south from Bathurst, or north from Miramichi, on Highway 430. Further access to the Property is gained via numerous small logging roads that branch off Highway 430.

There are limited flights to Bathurst, although there are several regular daily flights to both Moncton and Fredericton.

From Fredericton airport the Properties can be accessed by following:

 Lincoln Road west for approximately 12 km to join;  Highway 8 north and northeast for approximately 190 km to Miramichi to join;  Highway 430 northwest for approximately 70 km to Heath Steele Mine to join; several logging roads that allow access to the Stratmat Property;  Otter Brook Road west-northwest for approximately 20 km to the Halfmile Lake Property. Several logging roads allow further access to the Property. From Moncton airport the Property can be accessed by following:

 Highway 15 northeast for approximately 13 km to Shediac to join;  Highway 11 northwest for approximately 120 km northwest to Miramichi to join;  Highway 8 west for approximately 9 km to join;  Highway 430 northwest for approximately 70 km to Heath Steele Mine to join; and to several logging roads that allow access to the Stratmat Property.;  Otter Brook Road west-northwest for approximately 20 km to the Halfmile Lake Property. Several logging roads allow further access to this Property.

Trevali Mining Corp. 5-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The drive from either Fredericton or Moncton to the Halfmile Lake Property is typically three hours, whereas the drive from Bathurst to the Property is roughly one hour. The drive from either Fredericton or Moncton to the Stratmat Property is typically two and a half hours, whereas the drive from Bathurst to the Property is roughly half an hour.

5.2 C LIMATE

The description of climate is taken from Cullen and Barr, 2005:

Northeastern New Brunswick is characterized by northern temperate zone climatic conditions. Distinct seasonal variations occur, with winter conditions of freezing temperatures and substantial snowfall expected from late November through late March. Spring and fall seasons are cool, with frequent periods of rain. Summer conditions can be expected to prevail from late June through early September. Environment Canada records for the 1971 to 2000 period for nearby Bathurst show modest rainfall and daily mean temperatures in the 13 degrees Celsius (°C) to 19°C range during the summer months with an average extreme summer maximum daily temperature of 36°C. Average winter temperature minimums in the -30°C to -38°C range also occur.

Average yearly precipitation for the period is 1,059 millimetres with an average of 314 centimetres (cm) of snowfall accumulation. Weather and site conditions during the spring breakup period can prevent some exploration activities from being carried out due to high water levels in streams, unsafe ice conditions and impassable forestry access roads. For this reason, scheduling of field activities to avoid this period is advisable.

5.3 L OCAL R ESOURCES

Bathurst is the business and service hub for northeastern New Brunswick and is located approximately 50 km to the northeast of the Property. Bathurst has a well- developed mining infrastructure and a skilled workforce since the development of large lead-zinc deposits in the area in the mid-1950’s.

Currently, the only operating mine and concentrator working at, or near, full capacity is Brunswick #12, owned and operated by Xstrata. This facility operates at 10,000 t/d from underground operations. Xstrata also owns Brunswick Mining and Smelting Limited, which operates a lead smelting facility at the port of Belledune located 20 km east of the Property. This smelter processes concentrate from the Brunswick #12 Mine.

Up until October 2008, Blue Note Mining Inc. (Blue Note) operated a 3,000 t/d concentrator at their Caribou zinc mine, located 30 km north of the Property. The concentrator at the mine may provide additional support for possible future mining operations for the Property.

Trevali Mining Corp. 5-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 5.4 I NFRASTRUCTURE

The area has a well-developed network of paved highways and secondary roads. The property also has several unpaved logging roads that allow access to various areas of the property.

There is a railway that passes along the coast of New Brunswick with rail yards located in Bathurst and Belledune. Belledune also has a deep water port to permit the shipment of concentrate ore. Electricity is available from the electrical generating station located in Belledune. The Belledune station is coal powered and has a capacity of 458 MW. Water sources are abundant on and adjacent to the Property.

5.5 P HYSIOGRAPHY

The description of the physiography is adapted from Brown, 2007:

The area is situated on a gently rolling plateau with the highest elevations at 450 m along a north-south trending ridge in the central part of the Property. Drainage is predominantly to the southwest with sharp relief into the headwaters of the Northwest Miramichi River flowing along the west boundary of the Property at an elevation of 350 m. The eastern-most section of the Property is drained by a system of small brooks which empties into the Nepisiguit River 4 km to the north. The Property is dominantly covered by a thin layer of glacial till (less than 2 m thick) with abundant rock outcroppings.

Vegetation throughout the Property consists mainly of spruce and balsam fir boreal forest. Almost all of the Property has been clear-cut in the past and areas have been replanted.

Trevali Mining Corp. 5-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 6 . 0 HISTORY

6.1 H ISTORICAL P ROPERTY O WNERSHIP

6.1.1 HALFMILE LAKE

The description of historical Halfmile Lake Property ownership is taken from Graves, 2008:

Halfmile Lake South was originally staked in 1954 by Middle River Mining Company, a subsidiary of Texas Gulf Sulphur Company (Texas Gulf) and in 1956 the claims were converted to Mining Lease (M.L.) 998. Halfmile Lake Central was staked by Bay Copper Mines, a subsidiary of Conwest Exploration Co. Ltd. (Conwest) in 1955 and converted to Mining Lease 1010 in 1956.

Texas Gulf optioned the Conwest Mining Lease 1010 in 1974 to acquire 100% ownership subject to a 10% net profit royalty. Billiton Exploration Canada Ltd optioned both the Texas Gulf and Conwest properties in 1979 and returned both leases to their respective owners in 1984.

The Halfmile Lake North area was staked in 1955 by Great Sweet Grass Oils and the claims were subsequently dropped in 1960. Later in 1960, six claims were staked by Ivan Stairs to cover part of the area that was dropped and an additional nine claims were staked in 1964. The claims inadvertently lapsed in 1974 and 18 claims were subsequently staked by the McDonough Grubstake Syndicate (McDonough) with Mattagami Lake Mines as a syndicate member and operator. These claims formed Halfmile Lake North and were later converted to M.L. 1281.

In 1979, Noranda Ltd. (Noranda) acquired Mattagami Lake Mines Ltd and became operator of McDonough when work resumed on the Halfmile Lake North block in 1987. As of January 2001, the ownership of McDonough was: Noranda - 61.51%, Vista Gold - 23.07%, Prospectors Alliance - 11.53%, and North American Rare Metals - 3.89%.

In 1985, Brunswick Mining and Smelting (BM&S) signed an agreement with Conwest to option M.L. 1010 (Halfmile Lake Central).

Ownership of the Halfmile Lake South claims became part of Kidd Creek Mines Ltd. during 1981, a subsidiary of Canada Development Corp. Also in 1985, Falconbridge Limited (Falconbridge) acquired Kidd Creek Mines Ltd. and took control of Halfmile Lake South.

Trevali Mining Corp. 6-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment In 1988, M.L. 1281 was re-staked by BM&S as claims and the claim block was named Halfmile Lake North. Mining Lease 1010 was also re-staked by BM&S as claims in 1988 and named Halfmile Lake Central.

In 1989, Falconbridge re-staked M.L. 998 as a contiguous block of claims and surveyed their north boundary with the Noranda block optioned from Conwest. Noranda optioned the claim block from Falconbridge in 1992 and named it Halfmile Lake South.

In 2005, Noranda purchased Falconbridge and subsequently changed their name to Falconbridge. In 2006, Noranda was bought out by Xstrata. The claim blocks, Halfmile North, Halfmile Central and Halfmile South are currently owned by Xstrata.

On October 23, 2008, Beartooth Platinum Corporation (Beartooth) and Kria signed an agreement whereby Beartooth will acquire all of the outstanding common shares of Kria in exchange for common shares of Beartooth. In effect this is a reverse takeover of Beartooth by Kria where the merged companies shall be registered under the name of Kria Resources Incorporated1. It was proposed in the agreement that Beartooth common shares will be consolidated on the basis of one new common share for every 20 old common shares.

Beartooth has agreed to issue one post-consolidation common share for each Kria common share. Each outstanding Kria convertible security will be exercisable for Beartooth common shares based on the exchange ratio. Upon completion of the merger Kria shareholders will hold approximately 82.5% of the issued and outstanding common shares of the combined company. Following completion of the merger, the Kria board of directors and management team will become the board and management team of the new combined company (Press Release, October 2008). The NI 43-101 compliant reports for the resource model of HML and Stratmat were initially issued under the Beartooth name and subsequently re-issued under Kria’s name at the completion of the reverse take over transaction.

On April 7, 2011, Trevali Mining Corp. completed a plan of arrangement with Kria Resources Ltd. and changed its name to “Trevali Mining Corporation”. Pursuant to the plan of arrangement, the Company acquired all of the issued and outstanding common shares of Kria in consideration of 0.2 of Common Share for each common share of Kria. The acquisition was approved by shareholders on March 30, 2011, received final court approval on April 6, 2011, and closed effective April 7, 2011. Following closing, 87,663,745 Common Shares were issued and outstanding, of which 20,992,250 Common Shares were issued to Kria shareholders (representing 23.95% of the issued and outstanding Common Shares). On June 8, 2011, the Company filed a business acquisition report, a copy of which is available at www.SEDAR.com.

Trevali Mining Corp. 6-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 6.1.2 STRATMAT

The area covered by the Stratmat mineral claim group and mining lease 253 has been the focus of exploration work since the staking rush of the early to mid-1950’s.

The Property was originally staked by Strategic Materials Limited, that is, Stratmat Ltd., during the Heath Steele staking rush of 1954 and subsequently sold to Cominco in 1959. From 1959 to 1985, Cominco held the mineral rights to the Property. On January 1, 1986, Noranda optioned the Property from Cominco. In 2005, Noranda was taken over by Xstrata in 2006.

The Property historically consisted of 51 contiguous mineral claims referred to as Group 61. The mineral claims were converted to Mining Leases 1007 and 1008 sometime before 1958. The Mining Leases 1007 and 1008, which were restaked and recorded on July 27, 1987 into mineral claims 327300 to 327355 inclusive around the time Noranda acquired the property. During 1989, two claims, 327314 and 327315, and portions of claims 327309, 327310, 327313 and 327316 were transferred to Mining Lease 253 to facilitate the development of the Boundary Deposit. An agreement between Noranda and Cominco in 1986 allowed Noranda to earn an interest subject to 25% net proceeds of production (NPP) to Cominco.

A 1989 agreement with Noranda/Brunswick Mining and Smelting Co. (BM&S) extinguished Cominco’s 25% NPP in exchange for a 2.5% royalty on the property. In July 2001, Cominco and Teck merged companies to form Teck Cominco Ltd. Mining Lease 253 was excluded, for which Noranda paid Cominco cash to buy out the royalty. Noranda negotiated an option agreement including the Property claim block 1613 with SLAM Exploration Ltd. covering the period November, 2003 to 2006. In 2005, Noranda changed their name to Falconbridge Ltd. and, in 2006, was subsequently acquired by Xstrata. Xstrata negotiated an option agreement in 2006 with El Niño Ventures Inc. which again included the Stratmat claim block 1613. This agreement was terminated in 2008.

6.2 H ISTORICAL W ORK C OMPLETED

6.2.1 HALFMILE LAKE

SEISMIC SURVEYS

1995 – 1996 Seismic Surveys The following is taken from Assessment Report 475039 (Websites: Assessment Reports):

In 1995 Noranda Mining and Exploration decided to test the viability of seismic reflection surveying as an exploration tool. Following limited success with the 1995 seismic reflection survey, another survey was performed in 1996. The orientation of the 12.6 km, 1996 line is roughly perpendicular to the 1995 line and crosses 6 adjacent properties (Halfmile Lake North, Halfmile Lake Central,

Trevali Mining Corp. 6-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Moody Brook, Emery Gulch, Acadians Group and Little Bald Mountain) as can be seen in the enclosed map. Of the 12.6 km approximately 1.7 km or 13.5% falls within the Moody Brook claim group.

The data and graphical traces produced from this survey were sent to Calgary for processing and interpretation. Three reflectors with amplitudes indicative of massive sulphides were identified. Due to the depths involved it was decided to drill test the second strongest reflector.

1997 – 1999 Seismic Survey The following is taken from Assessment Report 475317 (Websites: Assessment Reports):

As a result of the successful 2D seismic reflection surveys performed in 1995 and 1996 in the Halfmile Lake area, a follow-up 3D seismic acquisition program was planned and recorded in the fall of 1998. A 3D seismic approach was necessary to accurately locate and spatially position any acoustic impedance reflectors. The purposes of the survey were to spatially define the large impedance anomaly lead on the 1996 2D line; hopefully find additional impedance anomalies at depth; and test the downdip geology associated with the Upper and Lower Halfmile lenses. Consequently, an 18 km survey was centered on the 1996 impedance anomaly which was targeted in 1997 by hole NMB97-1B.

The raw field records were forwarded to Calgary for processing and interpretation. There it underwent careful analysis and was transformed into a final migrated data volume ready for interpretation on a geophysical workstation. Analysis of the processed data resulted in the definition of 3 significant reflectors with amplitudes and other characteristics suggesting the possibility of massive sulphides as their source. Each was drill tested.

The most extensive of the 3 reflectors is located 3.5 km northwest of the Lower Halfmile Deposit on the former Emery Gulch claim group. It ranges in depth from ~1200 – 1900 m and is dipping from SW to NE. This reflector was drill tested with details reported in the 2000 Acadians (formerly Emery Gulch) assessment report.

The second reflector is located 800 m southeast of the Lower Halfmile Lake Deposit at a vertical depth of ~1400 m. This reflector was also drill tested with results reported in the 2000 Halfmile Lake South assessment report.

The most interesting and highest amplitude reflector was centered 0.5km northwest of the Lower Halfmile Lake Deposit at a vertical depth of 1100 - 1400m. This target was also drill tested and resulted in an intensive program of 9 new holes and 2 hole deepenings. More complete details are included in the 2000 Halfmile Lake Central assessment report.

Trevali Mining Corp. 6-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment GEOPHYSICS

For geophysical data prior to 1987, reports were not available at the time this report was written.

1991 Exploration The following is taken from Assessment Report 474150 (Websites: Assessment Reports):

A downhole PEM survey on DDH HN 91-26 was attempted however the hole was blocked below the casing. A surface survey was instead run around the drill hole totalling 1.1 km. No significant responses were returned.

1993 Exploration The following is taken from Assessment Report 474300 (Websites: Assessment Reports):

One diamond drill hole was surveyed. Attempts to re-enter and survey HN 87-7 failed due to extreme caving between 1700 - 2400 feet. The program is summarized as follows:

HN 92-27 logged to 2821’ (TD 2849) HN 87-7 cancelled due to caving The following TX Loop parameters were used:

HN 92-27 7200E - 8400E; 11600N - 12800N All surveys were performed by Crone Geophysics using a multicomponent (X, Y and Z) downhole EM probe.

1995 Exploration The following is taken from Assessment Report 474691 (Websites: Assessment Reports):

During the course of the drill program, five (5) holes were surveyed using downhole Pulse EM. The holes selected were as follows: HN95-102, HN95-108, HN95-111, HN95-113, and HN93-58. Responses obtain from the last two holes warrant further investigation.

1997 Exploration The following is taken from Assessment Report 475039 (Websites: Assessment Reports):

Hole NMB97-1B was surveyed twice at different stages of drilling, by Eastern Geophysics using a Crone system with a 20 channel receiver and a 4.8kW

Trevali Mining Corp. 6-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment transmitter. The first survey performed in April tested the hole from surface to a depth of 1,400 m using a 500 x 500 m loop centered southeast of the collar. The next survey tested the hole from 1,150 m to the bottom of the hole at 1,734 m using a 1,000 x 1,000 m loop centered on the collar. No significant responses were obtained in either survey.

2000 Exploration – Halfmile North The following is taken from Assessment Report 475395 (Websites: Assessment Reports):

Trevali Mining Corp. 6-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Bore Hole Pulse-EM (Phase 1) During the winter of 2000, in order to better define and locate the outlined conductor, Noranda recommended a multi-directional Pulse-EM survey in four of the five historical holes. Only hole HN90-23 was still open. HN90-23 was surveyed to a depth of 614 m. Results confirm the historical strong off hole anomaly trending south-westerly and plunging at approximately 45° in the south direction.

Bore Hole Pulse-EM (Phase 2) A program of multi-directional Pulse-EM, in both holes HN00-129A and HN00- 130, to detect the down dip and lateral expressions along the Halfmile Lake North Horizon was completed by Eastern Geophysics, Profiles, instrumentation and logistics are provided in Appendix C. Three in-hole anomalies were encountered in hole HN00-129A at 531, 652 and 73 3 m. These three anomalies coincide with pyrrhotite mineralization, the middle anomaly being a 30 cm band of massive pyrrhotite grading 9.33% Pb and 11.05% Zn. One narrow down-dip off-hole anomaly was encountered in HN00-130 at 895 m. This corresponds to a section in the hole of 5-20% pyrrhotite mineralization. This anomaly is not considered indicative of significant massive sulphides.

2000 Exploration – Halfmile South and Central The following is taken from Assessment Report 475386 (Websites: Assessment Reports):

Halfmile Lake South (HN99-121) The pulse-EM survey performed on this hole showed no significant conductivity. The Z component is essentially flat.

Halfmile Lake Central (HN99-120, HN99-122, 11N99-126, HN99-127) Holes HN99-120, 122,126 and 127 were selected to be pulsed because none of these holes intersected significant widths of massive sulphides, all contained stringers or narrow bands of sulphide and all formed a northern boundary around the massive sulphide bearing holes. The resulting profiles all show very strong in hole responses and indicate continuity toward the southeast portion of the reflector where massive sulphides were encountered.

Gyroscopic Surveys In preparation for downhole geophysical work and as a check on the single shot survey data three holes were selected to be gyroed. These holes are HN99-120, 121 and 122. In addition a third survey tool known as a reflex Maxibor was tested on drill hole HN99-122.

Trevali Mining Corp. 6-7 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The result of this comparative surveying was that the Sperry Sun Gyro data matched quite well with the Wellnav/Sperry Sun Single Shot data but the Maxibor tool encountered some technical difficulties.

SUMMARYOF HISTORIC WORK

The following is a summary of work completed on the Property (Table 6.1 and Table 6.2). For a more detailed description, please refer to individual property assessment reports available on the Government of New Brunswick, Department of Natural Resources website (Websites: Assessment Reports).

Trevali Mining Corp. 6-8 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 6.1 Summary of Work Completed on the Halfmile Lake South and Central Claim Group

Assessment Description Year Report Halfmile Lake South & Central Middle River Mining Company, a subsidiary of Texas Gulf – staked claims after regional 1954 geological work indicated a favourable environment for mineralization. 471562 Conwest – three diamond drill holes (DDH), ground Electromagnetic (EM) Survey (Central)

1955 – 1956 Bay Copper Mines (subsidiary of Conwest) – acquired ground immediately to the north based on the presumed extension of mineralization and drilled 28 holes from 1955 and 1956. Middle River Mining Co. (Middle River) – Ground EM and Magnetic (Mag) Surveys, Soil 471618 Geochemistry (South) 1955 – 1956 Middle River – drilled 93 holes after airborne EM and ground follow-up. The Upper AB Zone was discovered. M.L. 998 was established (surveyed in 1956). Texas Gulf surveyed by Newmont Exploration Ltd. –EM, Mag, Resistivity, and Gravity 1956 472118 geophysical surveys Texas Gulf Sulphur Co. – Audio-frequency magnetic (AFMAG), Inverse polarity (IP), 1959 471668 Resistivity geophysical surveys 1960 470541 BayCopperMines–one DDHdrilledonM.L.1010 1961 C.F. Cheriton – mapped the area around the Halfmile Lake Deposit. 1961 471542 BayCopperMines- GeologySurvey–M.L.1010 1962 471620 Texas Gulf– drilled five holes (1,003 feet) for a metallurgical test (South) 1966 TexasGulf–drilledsevenholes,fiveintheupperABZoneandthreeintheLowerABZone. 1967 471669 TexasGulf–eightDDHdrilledonM.L.998 1969 BayCopperMines–oneDDHdrilledonM.L.1010 1974 Texas Gulf signed an agreement with Bay Copper to explore M.L. 1010 (Central Group). 1974 71 claims were staked north and south of the original properties (lapsed in 1978) Drilling commenced to obtain metallurgical samples (Upper AB Zone) and to explore the 1974 471665 deposit at depth. A total of 18 metallurgical (HQ) holes were drilled in the Upper AB Zone. One drill hole was completed on the Conwest property, M.L. 1010 1975 471666 TexasGulf–eightdrillholesonM.L.1010 471663 Texasgulf Canada Ltd. (Texasgulf) - Airborne Magnetic and EM Continued drilling, ground EM and Mag surveys were completed over 160 line km of grid of 1975 which 120 line km was mapped. Reserves at the end of 1975 were 7,840,000 tonnes (t) grading 0.20% Cu, 2.47% Pb, 7.06% Zn and 27 g/t Ag.2 Texasgulf - Line Cutting, Mag, Very Low Frequency Electromagnetic (VLFEM), Horizontal 1976 471664 Loop Electromagnetic (HLEM), Soil Geochemistry (South & Central) Five stratigraphic drill holes were completed to investigate the extension of the Halfmile 1977 Lake mineralized horizon to the east and west of the Upper AB Zone. Billiton Canada optioned the properties from Texasgulf in May. At the end of the 1981 season, 30 holes had been drilled with three wedging operations off original holes. Mineral 1 1979 reserves now stood at 12.0 million tonnes of 0.15% Cu, 2.37% Pb, 7.37% Zn and 25 g/t Ag. Drilling 1979-1980 established continuity between upper (A) and lower (B) zones which subsequently referred to as the AB Zones. Two drill holes were completed into the Lower AB Zone and two drill holes were completed 1980 into the Upper AB Zone. 1981 Drilling continued in an effort to extend reserves. Drilling focused on East Boundary Zone. Regional exploration for lithological or structural 1982 repetitions of mineralization was carried out. Metallurgical testing of core from the Lower AB Zone conducted by Brunswick Mining and 1983 Smelting. Agreement signed between Brunswick Mining and Smelting and Conwest to option M.L. 1010 1985 A new grid was cut for better orientation of drill sections along the eastern lines. A small gravity survey was completed over the east boundary zone. 1986 473241 Falconbridge (Kidd Creek Mines) – completed seven trenches on M.L. 998 1986 473318 Noranda - Line cutting, Gravity survey, Collar Survey on M.L. 1010 Noranda – drilled 10 DDH on the Central Group (Conwest Option). Mineralization in the “contact horizon” was discovered. 1987 - 1988 473442 Noranda - completed seven trenches and eight drill holes on M.L. 1010 Upper AB Zone gossan evaluated for precious metal content. Reserve 13,600 tonnes @ 1.7 g/t gold (Au), 43 g/t Ag.1 1987-1988 473735 Noranda - 10 DDH - Central Group 1987 473485 Falconbridge Ltd. – completed nine trenches on M.L. 998 1988 Noranda - drilled eight holes on the Central Group Noranda - drilled two holes on the Central Group. 1989 473841 Noranda - drilled three holes with borehole surveys on (Central) Falconbridge Ltd. - M.L. 998 re-staked as claims and named Halfmile South. 1989 473798 Former boundary partly re-established by survey (South) 1989 BM&S optioned the Halfmile Lake South (former M.L. 998). 1991 Grid mapping (1:5000), Ground geophysics (Mag, VLF, HLEM) additional soil sampling. Noranda - established a surveyed surface grid and conducted HLEM, Mag and VLF surveys 1992 over the entire property. A total of twelve diamond drill holes were completed on the property. Re-establishment of survey boundary completed. Noranda - conducted a gravity survey of the property and a total of thirteen DDH were 1993 completed.

2 Not classified as reserves under CIM definition. These estimates are historical and are no longer relevant; the estimates should not be relied upon and are only quoted for historical completeness.

Trevali Mining Corp. 6-9 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Assessment Description Year Report Halfmile Lake South & Central Reserves in the Upper and Lower AB Zones (Falconbridge portion) were re-evaluated in light of new reserves indicated in the Lower AB Zone by 1993 drilling. Survey of the 1956-57 drill holes drilled into the Upper AB Zone 1994 Noranda - completed 15 DDH and two hole deepenings in the Lower Halfmile Zone. 1995 BM&S – prepared Feasibility Study (non NI 43-101 compliant) 1995 Seismic Survey, whole rock geochemistry. 2D Seismic Survey along Otter Brook road; includes drilling, surveying and line cutting (see 1996 1997 Moody Brook, assessment report). DDH #NMB97-1 to 1B to test seismic reflector, borehole PEM, Rock Chip Geochemistry, and 1997 Trenching (see 1997 Moody Brook, assessment report). 1998 Noranda - prepared resource estimate and feasibility study (non NI 43-101 compliant)

Table 6.2 Summary of Work Completed on the Halfmile Lake North – Mattagami Claim Group

Description Year Assessment Report Halfmile Lake North 1967 – 1969 471595 Keevil Mining - Line cutting; IP, Radem, Magnetics, two drill holes 1971 471596 Keevil Mining - Line cutting; Magnetics, Self Potential (SP) geophysical surveys 1975 471608 Mattagami Lake Mines - IP, magnetic geophysical surveys 1976 Mattagami Lake Mines – three drill holes 1976 471609 Mattagami Lake Mines - Soil samples; IP, Magnetic, Geology 1961 472099 Ivan Stairs -HLEM, Magnetic, Geology 1977 472158 Mattagami Lake Mines - four drill holes 1987 473431 Noranda -Collar survey; Relogging of three drill holes 1989 473784 Noranda - Geology Noranda - HLEM, Mag, VLFEM geophysical surveys; Soil sampling, two trenches; four 1990 474014 drill holes and Pulse EM Noranda - one drill hole; two trenches; surface Pulse EM geophysical surveys and 1991 474150 prospecting 2000 475395 Noranda – three drill holes, Pulse EM

Trevali Mining Corp. 6-10 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 6.2.2 STRATMAT

The property has been heavily explored by Xstrata, and its predecessor companies, since the 1960’s. The Property was again extensively explored during the 1980’s and 1990’s when the Heath Steele and Stratmat Mines were in production.

The following is a summary of work completed on the Property (Table 6.3). For a more detailed description, please refer to individual property assessment reports available on the Government of New Brunswick, Department of Natural Resources website (Websites: Assessment Reports).

Table 6.3 Summary of Work Completed on Stratmat Property

Geology, ground Electromagnetic (EM) and 1957 471509 Stratmat Cominco Magnetic (Mag) geophysical surveys, 36 diamond drill holes (DDH) 1962 470989 ML1007-8 Cominco 18DDH 1963 472386 ML1007-8 Cominco 7DDH 1964 470991 ML1007 Cominco 2DDH 1964 471574 ML1007 Cominco Geologyandsoilgeochemistry 1966 471515 StratmatGP61 Cominco 5DDH 1971 470999 ML1008 Cominco Gravitysurvey 1975 471355 ML1008 Cominco 15DDH 1981 472679 ML1007-8 Cominco Geologicalsurvey,10diamonddrilllogs 1986 473286 Stratmat Group Noranda Three trenches, assays Very Low Frequency (VLF), Horizontal Loop EM 1987 473385 Stratmat Group Noranda (HLEM), gravity, and geochemical surveys, 98 drill logs, ore reserve calculations VLF, HLEM, Geochemical surveys, 76 drill logs, 1988 473544 Stratmat Group Noranda ore reserve calculations, cross-sections University of Toronto EM (UTEM 3) survey, elevation, contour, till geochemistry, Pionjar 1989 473748 Stratmat Group Noranda overburden survey, 37 drill logs, mise à la masse/Self-Potential (SP) survey, borehole Pulse EM survey Stratmat Group; downhole EM, mise à la masse and gravity surveys, Pionjar overburden survey, 1990 474129 Stratmat Group Noranda 53 diamond drill holes, reserve calculations, petrographic analyses 1990- 474408 Stratmat Group Noranda 30 drill holes, whole rock geochemistry 1991 1996- Internal 5holesdrilledtotalling1347.9m 1997 54 line kilometres of MegaTEM II Airborne 2004 Stratmat Noranda Geophysical survey

Trevali Mining Corp. 6-11 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 6.3 H ISTORICAL R ESOURCE E STIMATE

6.3.1 HALFMILE LAKE

NORANDA

The following historical resource estimate was prepared by Noranda as part of a Feasibility Study that was completed in 1998. These estimates are historical and are no longer relevant; the estimates are only quoted for historical completeness. These resource estimates do not conform to the CIM Standards for Reporting Mineral Reserves, that is, mineral resource or reserve categories, as defined under NI 43- 101 and they should not be relied upon.

Table 6.4 Halfmile Lake Property Historical Resource Estimate (not NI 43-101 Compliant – Undiluted at US$0.60 Zn)

NSR value Location Tonnes %Pb %Zn %Cu Ag (g/t) (1998 Study) North Zone n/a UpperZone 1,007,853 2.54% 7.59% 0.44% 48.27 54.57 Lower Zone 7,510,194 2.83% 8.94% 0.10% 38.80 61.58 DeepZone n/a Totals 8,518,047 2.80% 8.78% 0.14% 39.92 60.75 Source: Noranda, 1998

The Noranda 1998 resource estimates were calculated using the polygonal method based on detailed cross-sections at 20 m intervals (Upper Zone) and 15 m intervals (Lower Zone). Stope outlines were digitized on sections and merged with the resource layer to acquire grades for each stope. NSR values were calculated for each stope.

WARDROP ENGINEERING INC.

In February 2009, Wardrop Engineering completed an NI 43-101 compliant resource estimate for Kria Resources/Beartooth Platinum Corp. (Wardrop, 2009). A summarized methodology and the results of this estimate are included in Section 17.0 of this report for HML.

6.3.2 STRATMAT

NORANDA

The following historical resource estimate (Table 6.2) was prepared in 1998 by Noranda, later taken over by Xstrata. These resource estimates are historical, and were prepared before the implementation of the CIM Standards for Reporting Mineral Resources and Mineral Reserves. These estimates do not all follow the categories

Trevali Mining Corp. 6-12 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment as defined under NI 43-101 and should not be relied upon. Wardrop has not verified these historical resource estimates.

Table 6.5 Stratmat Property Historical Resource Estimate (Not NI 43-101 Compliant)

Location Tonnes %Pb %Zn %Cu Ag (g/t) Au (g/t) CentralZones 712,984 4.21% 8.45% 0.84% 58.78 0.26 MainZoneCu 152,233 0.07% 0.43% 3.21% 18.76 0.00 MainZonePb/Zn 725,947 3.08% 7.35% 0.32% 79.90 0.00 S1Probable 1,504,828 3.15% 7.91% 0.32% 75.36 0.89 S1Probable 1,146,695 3.22% 7.58% 0.50% 50.43 0.64 Totals 4,242,787 3.22% 7.55% 0.56% 64.58 0.53 Source: Dupras, Sandison

WARDROP ENGINEERING INC.

In February 2009, Wardrop Engineering completed an NI 43-101 compliant resource estimate for Kria Resources/Beartooth Platinum Corp. (Wardrop, 2009). A summarized methodology and the results of this estimate are included in Section 17.0 of this report for Stratmat.

Trevali Mining Corp. 6-13 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 7 . 0 GEOLOGICALSETTING

7.1 R EGIONAL G EOLOGY

This portion of the report was taken from Davies et al, 1985, van Staal and Langton, 1990. The regional geology is also shown in Figure 7.1 and 7.2

The Halfmile Lake and Stratmat areas are underlain by rocks of Ordovician age that are known as the Tetagouche Group; they form part of the Miramichi Zone of northern New Brunswick. The Tetagouche Group is composed primarily of dacitic to rhyolitic volcanic rocks that have been subdivided into aphyric/feldspar-phyric rhyolites of the Flat Landing Brook Formation and quartz-feldspar porphyries of the Nepisiguit Falls Formation. These units are disconformably underlain by quartz- wackes and pelites of the Miramichi Group. Thin-bedded feldspathic wacke/shale and alkali basalts of the Boucher Brook Formation conformably overlie the felsic package. The Tetagouche Group rocks have been metamorphosed to the greenschist facies

The Ordovician rocks of the Bathurst Mining Camp have undergone a complex history of polyphase folding and faulting. At least five deformational events are

recognized based on overprinting relationships. D1 is evidenced by a dominant, layering parallel foliation which is locally mylonitic and is interpreted to represent

progressive deformation associated with thrusting. The D1 structures are refolded by F2 folds into tight structures defining flat and steep belts. These are refolded again by open recumbent F3 folds. F4 and F5 folds and kinks at various scales overprint and refold the initial three phases. This deformation can be attributed to orogenic movements in the Appalachians during the Taconic and Acadian orogenies.

Trevali Mining Corp. 7-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 7.1 Regional Geology of New Brunswick with respect to the Halfmile Lake Property

Trevali Mining Corp. 7-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 7.2 Regional Geology of New Brunswick with respect to the Stratmat Property

7.2 P ROPERTY G EOLOGY

7.2.1 HALFMILE LAKE

The following brief descriptions of the major lithologies located within the Halfmile Lake property are taken from various Assessment Reports from Noranda (Websites: Assessment Reports).

Figure 7.3 shows the geological map of the Halfmile Lake area.

Trevali Mining Corp. 7-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 7.3 Geological Map of the Halfmile Lake Area

Source: Noranda, 1998

QUARTZ FELDSPAR PORPHYRY (QFP)

Commonly, the QFP on the property is generally light in color and consists of quartz and feldspar phenocrysts supported in a well-foliated (banded?) felsic matrix. Phenocrysts range in size up to 5 millimetres (mm) with feldspars being the larger of the two types. The matrix appears tuffaceous in part due to the apparent well banded texture, although it is difficult to decide if this texture is due to a tectonic foliation.

CHERTY TUFF

Generally fine grained, banded felsic tuffs with dominantly felsic bands up to 3 mm separated by sericite/pyrite partings.

ARGILLITEAND GREYWACKE

Argillites are fine grained and usually dark olive green reflecting their sericite and chlorite composition. Interbanded layers of cherty tuff are common along with abundant quartz flooding. Locally, well defined thin bedding, and/or laminations can be observed.

A black chloritic argillite occurs within the sulphide horizon. It generally contains weak sulphides along with local calcite.

Trevali Mining Corp. 7-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Greywackes are medium to coarse grained and are composed of lithic, quartz and feldspar grains up to 1 mm.

FELSIC LAPILLI TUFF (CHLORITIZED)

A characteristic lithology of the Halfmile Lake North property, medium chloritized lapilli tuffs occur structurally above the massive sulphide horizon. The rock type consists of pale brown, calcareous, felsic fragments up to 3 cm supported by a grey- green chloritized felsic matrix. Fragments are often stretched or flattened along the main foliation. Angularity and size are variable and poorly defined grading can locally be observed.

The matrix is chloritic and is banded due both to interlaminated cherty tuff and the

development of the S1 foliation. Substantial calcite occurs in bands and veinlets.

STOCKWORK

Stringer pyrrhotite and chalcopyrite occur up to 20% in dark chloritic sediments immediately above and below the massive sulphide horizon. This rock type is considered to be the plumbing zone to the massive sulphide.

MASSIVE SULPHIDES

Massive sulphides are dominated by the breccias matrix variety which consist of black chloritic argillite fragments supported by a pyrrhotite – dominated, sulphide matrix. Sediment fragments are stretched and flattened along the primary foliation. Weak amounts of sphalerite and galena occur with minor pyrite and chalcopyrite.

Banded pyrite-pyrrhotite sulphides occur locally but are subordinate to breccias matrix varieties.

QUARTZ EYE CRYSTAL TUFF

Quartz eye tuffs consist of rounded blue quartz eyes supported in a banded cherty tuff matrix. Strong light green sericite occurs within the matrix and is characteristic of the rock type.

STRUCTURE

The stratigraphy for Halfmile Lake is overturned as shown by the presence of stockwork pyrrhotite-chalcopyrite mineralization on top of the massive sulphides.

Well-developed S1 foliation/cleavage is easily observed in most drill core samples. In general, the enveloping surface for this cleavage is oriented northeast with a dip of

40 to 60 to the northwest. An S2 crenulation cleavage accompanied by small parasitic kink folds is oriented at a high angle to the S1 foliation in the nose of folds. Detailed interpretations are difficult to assess due to poor documentation in old holes and difficulty in assessing structure from drill data.

Trevali Mining Corp. 7-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Faulting is poorly documented in pre-1970 drilling, however, later interpretation alludes to the influence faults have on the sulphide horizon. A single thrust fault is readily observed immediately above or within the sulphide horizon. This fault occurs in about the same stratigraphic position on all three properties. Local small-scale sheath folds may increase the thickness and grade within the Main Zone as a result of thrust faulting.

A structural block model is given in Figure 7.4.

Figure 7.4 Structural Block Model through Halfmile Lake Showing Recumbent F1 Anticline Fold Structure and Related Axial Planar Thrust Faulting

Upper Zone

Both higher grade and thicker sulphide lenses appear to rake across the dip of the

sulphide horizon to the north. There may be some indication that poorly defined F2 isoclinal (sheath folds?) folds might be responsible for the grade and width enhancement.

CORRELATION

The Halfmile Lake Horizon, which contains the Upper and Lower AB Zones, and the Mattagami (Halfmile North) horizon, which contains the Main Zone, had previously been interpreted as two stratigraphically separate sulphide horizons.

Shallow drilling on the adjacent Conwest property (Central Group) indicates multiple fold and fault repetitions of a single sulphide horizon which is manifested by the

Trevali Mining Corp. 7-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment apparent separation of the two horizons at surface. Deeper drilling shows that the multiple horizons are fault and fold repetitions of the Halfmile Lake Horizon. With depth, the Halfmile North Horizon can be shown to be a continuation of a single sulphide sheet and associated stockwork system with a marked steepening in the dip.

Thrust faulting appears to be a major influence on structural relationships, however, the true sense of displacement is difficult to determine from drilling.

7.2.2 STRATMAT

The Property is underlain by a magnetic east-west trending sequence of predominantly felsic volcanic rocks and lesser sedimentary rocks which are host to all massive sulphide deposits on the property. Recent Provincial Government regional mapping projects have classified the rocks as belonging to the Flat Landing Brook Formation of the Middle Ordovician Tetagouche Group, which places the deposits stratigraphically above the Nepisiguit Falls Formation hosted Heath Steele Deposits (Wilson, 1992) located 3 to 5 km to the south. Regional metamorphism is lower greenschist facies.

Figure 7.5 shows the geological map of the Stratmat area.

Figure 7.5 Geological Map of the Stratmat Area

Source: Clark, 2006

Trevali Mining Corp. 7-7 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Sulphide mineralization at Stratmat is hosted almost exclusively within argillites and cherts of the Stratmat Sequence metasedimentary unit. The Stratmat Sequence metasediments conformably overlie “Southwall” (footwall) lithologies which consist of fine to coarse varieties of felsic lapilli tuff, argillaceous tuff and, more commonly in the S-1 area, banded pyritic siliceous/cherty tuff. The metasediments are capped by “Northwall” (hanging wall) rocks which comprise dominantly of dacitic feldspar crystal tuff (with or without quartz shards) and locally, bedded pyroclastic rocks. Narrow, locally sulphide hosting argillite partings in common within Northwall lithologies, although they rarely host significant widths or tonnages of mineralization. A large, predominantly aphyric rhyolite dome occurs immediately to the north of the Boundary Deposit and is bounded to the south by Northwall crystal tuffs and a thin, mostly barren sedimentary horizon (“Northlimb”, and possibly North Zone Horizon) at the contact.

Coarse felsic fragmentals mantle the dome to the west whereas to the east the rocks appear to grade into Northwall crystal tuffs (feldspar phyric rhyolites?) and fragmental rocks observed north of the North Zone. This rhyolite has been called the Tomogonops rhyolite and added to the rock code.

Coeval foliated gabbro intrusives are common in the eastern half of the property and crosscut and locally assimilate portions of the favourable stratigraphy including parts of the Main Zone. Narrow, magnetic to non-magnetic discordant diabase dykes intrude western portions of the property, with many aligned parallel to or along east- southeast trending fault structures. A red to green unfoliated Silurian syenite dyke trends east-southeast, west of the Boundary Deposit and cuts stratigraphy at least as far south as the Heath Steele ACD Zones. The syenite dyke also displays a magnetic signature. A quartz-feldspar porphyry dyke, reminiscent in many respects of Heath Steele hanging wall rocks, was intersected in one hole northwest of the Boundary Deposit. Distinctive intrusive rock types now number four.

STRUCTURE

Structurally, the property is highly complex with five periods of deformation being documented in the area (McBride, 1976; de Roo et al 1990; Park, 1992). Tectonic thickening and repetition of the mineralized horizon has both enhanced grades and produced mineable widths of ore at the Boundary Deposit and N-5 Zones. In cross-

section, property scale F2 folds manifest themselves as the Boundary antiform, S- 1/North Zone synform and the synform/antiform fold repetition of the favourable horizon at depth, below the Boundary open pit. Best grades and widths of economic mineralization at the S-1 Deposit tend to occur along the limbs of the major folds, adjacent to the closure areas. The detailed structural study conducted by Adrian Park on the N-5 and Boundary Deposits has indicated extremely complex structure on the mine scale. Structures that exist at Boundary/N-5 no doubt persist elsewhere along the Horizon and complicate the rudimentary interpretations of drill hole date.

Two consistent fault orientations have been documented. The Stratmat fault trends east-northeast, and overall movement appears to be dextral strike-slip, with a small

Trevali Mining Corp. 7-8 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment dip slip component, down to the south (Park, 1992). Parallel structures are interpreted at the S-1 Deposit and along with Stratmat fault, are believed to be the earliest generation fault structures. A certain periodicity seems to be displayed by these faults.

Periodic east-southeast trending faults are the second and presumably younger orientation observed. Sinistral movement can be implied based upon ground geophysics (Mag). Locally, these fault zones appear to be intruded by diabase and, west of the Boundary Deposit, by syenite dykes. Although not believed to disrupt stratigraphy, evidence from drilling suggests that a major fault crossing the baseline at approximately 12300E appears to be a pivot or scissor fault because of dip changes immediately east and west of the structure.

Trevali Mining Corp. 7-9 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 8 . 0 DEPOSITTYPE

The Bathurst Mining Camp hosts more than 45 massive sulphide deposits. These deposits belong to a subgroup of seafloor hydrothermal deposits referred to as volcanic-sediment-hosted massive sulphide deposits (VSHMS). The deposits occur in the California Lake, Tetagouche and Sheephouse Brook structural blocks. High heat flow due to extension and/or rifting of the Popelogan arc combined with anoxic bottom conditions in the associated basins seem to be a prerequisite for formation of the large massive sulphide deposits. Up to three deposit styles may exist in the camp: Brunswick type, Caribou type and (proposed style) Halfmile type.

The large massive sulphide deposits of the Tetagouche Group, referred to as Brunswick type deposits, are typically hosted by, or intimately associated with, the pyroclastic and sedimentary rocks that occur near the top of the Nepisiguit Falls Formation (469-468 Ma). Brunswick type deposits are thought to have formed during extension rather than rifting of the Tetagouche block from the Popelogan arc because mafic volcanism does not accompany felsic volcanism in the Nepisiguit Falls Formation. Included in this set are the Brunswick #6 and #12, Key Anacon and Heath Steele deposits

The Caribou-type deposits lie within or along the lower contact of the Boucher Brook Formation sediments. Examples include the Nepisiguit A, B and C, Canoe Landing Lake, Orvan Brook, Murray Brook and the Caribou deposits.

A proposed third type is the Halfmile Lake-type deposits (van Staal, 1990). These are hosted in phyllitic units along the Tetagouche/Miramichi Group contact and have no associated iron formation.

The Bathurst Mining Camp deposits are typically closely associated with the felsic volcanic and epiclastic rocks of the Nepisiguit Falls and Flat Landing Brook Formations. Reduced sulphur in the ambient water column of the restricted basins played a major role in the precipitation of sulphides. Reduced and stagnant bottom waters enhanced the efficiency of sulphide precipitation near hydrothermal vents. Metals carried in buoyant hydrothermal plumes in an anoxic water column would precipitate as sulphides and settle to the sea floor to form sedimentary sulphide deposits. Most Bathurst sulphide deposits are associated with felsic volcanic rocks. This association may be controlled as much by the ambient sea floor environment as by the supply of metals from hydrothermal sources.

Two hydrothermal events have been recognized in the Tetagouche Group, the Brunswick (469-468 Ma) and Stratmat (467-465 Ma) horizons. The Caribou horizon (472-470 Ma) occurs within the California Lake Group. The Stratmat property is host to three known, delineated mineral deposits and numerous showings occurring along

Trevali Mining Corp. 8-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment the favourable horizon. Of the three deposits, only the Boundary Deposit has been exploited to date. Reserves were depleted on June 30, 1993. The two remaining deposits, the S-1 and Main Zone, remain unexploited due to lower grades, unfavourable metal prices and engineering parameters which rendered them uneconomic at the time of study. The S-1 Deposit is host to the largest mineral inventory on the property.

Trevali Mining Corp. 8-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 9 . 0 MINERALIZATION

9.1 H ALFMILE L AKE

Mineralization of the deposit consists of banded pyrite-rich massive sulphides, breccia-matrix pyrrhotite-rich sulphides (semi-massive), black argillite and chert. Banded sulphides tend to contain the highest zinc concentrations. The stratigraphy hosting the deposit is overturned such that the sulphide sheet is structurally overlain by a pyrrhotite-chalcopyrite-quartz stringer zone that locally contains high copper values.

Within the Bathurst Mining Camp, most deposits are zoned vertically and laterally from a high temperature, vent proximal, veined and brecciated core to vent-distal hydrothermal sediments. Metal zoning consists of:

1. Vent complex pyrrhotite, magnetite, pyrite, chalcopyrite, ±sphalerite, ±galena 2. Bedded pyrite, sphalerite, galena, ±chalcopyrite 3. Bedded pyrite, ±sphalerite, ±galena The vent complex is commonly underlain by a highly deformed sulphide stringer zone that can extend hundreds of meters and cuts hydrothermally altered volcanic and sedimentary rocks. Hydrothermal alteration is zoned and laterally widespread from 1 to 5 km.

All three types of mineralization are present on the Property. The copper-rich feeder zone of the vent complex has been deformed into a planar unit, rather than a cross- cutting unit. Direct observation was made during the site visit of the latter two mineralization types in the drill core.

9.2 S TRATMAT

The ore minerals consist of disseminated and massive sphalerite-galena-pyrite and chalcopyrite. The sulphides are fine to medium-grained, and are coarser than those typically found in deposits of the Bathurst-Newcastle district.

In contrast to most deposits of the region, the Boundary and N-5 deposits have relatively low iron content, averaging 15% to 20% pyrite, and have an abundance of talc and chlorite associated with the ore. The talc, confirmed by X-ray diffraction, occurs as disseminated in phyllites directly associated with the ore, and as monomineralic layers.

Trevali Mining Corp. 9-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Disseminated mineralization, commonly of ore grade, occurs in the phyllitic sediments as well as in the talc layers which locally grade into layers of massive sulphides. A layer of massive pyrite-chalcopyrite, typically <1 m thick, occurs locally on the stratigraphic footwall side of the ore zone. Copper grades in this unit average 1% to 2% with local intersections with copper grades as high as 10%. The stratigraphic sequence is commonly overprinted by complex folding and shearing that are commonly more intense within the ore and sedimentary package.

Stratigraphic relationships are based on observations of drill and rock exposures. The copper-rich layer may be in contact with, or grade into pyrite-poor massive sphalerite-galena ore that locally is up to a few meters thick (grades average 5% to 15% lead and 15% to 35% zinc). Gangue minerals include muscovite, talc, chlorite, quartz, and carbonates. Many of the copper-rich and lead-zinc-rich massive sulphide layers are separated by talcose or phyllitic sediments that commonly carry disseminated ore-grade mineralization. A carbonate layer is locally associated with the ore and generally contains disseminated sulphides. Calcite is the most common carbonate, but ferroan dolomite and siderite also are present.

Overlying the ore is sedimentary layer, up to several meters thick, which is similar to the greenish gray phyllites of the footwall. Disseminated pyrite constitutes 1% to 2% of these hanging-wall metasediments. A brecciated and intensely quartz-veined zone oriented sub-parallel to the contacts occurs in the hanging-wall sediments at

the Boundary zone. This zone may be a brittle zone associated with D1.

Trevali Mining Corp. 9-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 0 . 0 EXPLORATION

10.1 I NTRODUCTION

Exploration has taken place on the Property by various companies since the 1950’s up to 2001. Exploration programs included soil geochemical and geophysical surveys and geological mapping and diamond drilling.

There are few details regarding the exploration programs prior to Noranda’s involvement in the Property in 1990.Since 2001, there has been no exploration conducted by Noranda, or subsequently Xstrata, to the time of writing of this report.

In February 2009, Wardrop completed an NI 43-101 technical compliant resource estimate, based on historical exploration programs.

In April, 2010, Kria drilled 4 holes targeting the Upper Zone to obtain fresh sample for metallurgical testing to determine if Halfmile Lake sulphides were compatible in the Brunswick Mill. Kria contracted SGS Lakefield to carry out the tests. Three drill hole intercepts were split and half sent for assay, half sent for metallurgical testing. The fourth drill hole was used to establish continuity of the Upper Zone ore lens.

See Historical Work Completed, Section 6.2, for details of exploration history.

10.2 E XPLORATION E XPENDITURES

Kria Resources have not incurred expenses for exploration on the Properties. Expenditures incurred by Kria to date include the completion of the NI 43-101 technical compliant resource report for both properties, a Preliminary Economic Assessment for the HML property, an Environmental Impact Assessment for a portion of the HML deposit and a Biological Study plan involving field work for the HML property.

Trevali Mining Corp. 10-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 1 . 0 DRILLING

11.1 H ALFMILE L AKE

11.1.1 PRE-1987 DRILLING

Reports of work performed by various companies before 1987 are available on the government website and are summarized in Table 6.1 in Section 6.

11.1.2 NORANDA DRILLING

1987 DIAMOND DRILLING

The following is taken from Assessment Report 473442 (Websites: Assessment Reports):

Drilling to the end of November 1987 encompassed the completion of the above eight diamond drill holes. Attempts to increase both grade and tonnage to date have met with limited success. The best results in the vicinity of the “Lower A-B zone” suggest that substantial areas of similar grade and thickness are not developed at depth, or in the immediate vicinity of the zone. Some key areas remain to be tested.

Three interesting new areas of encouragement have come to light. Firstly, it now appears that substantial grade and thicknesses in the Lower A-B zone are partly the result of structural thickening as observed in the case of the Brunswick 12 Mine and the Heath Steele Mine. Layered horizons are still found in some cases; however, multiple intersections now appear to have result of complex folding. Secondly, the boundary zone has been intersected by (Billiton) and our HN 87-1 suggesting that a similar structure exists to the north east of the “Lower AB” zone… Cross-sections indicate that the potential of the boundary zone is up dip to surface, encompassing 2,000 feet (ft) of up dip stratigraphy and approximately 1,400 feet of strike length.

Thirdly, the discovery in three holes of the “Contact horizon” has added good potential to all areas of the property up the holes where it was discovered. Grades of up to 16% Pb-Zn have been intersected over four feet in DDH HN[87]-10. A zone of similar grade and thickness is separated by 20 ft of lower grade. These two mineralized horizons produced the best silver assays to date.

Trevali Mining Corp. 11-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1988 DIAMOND DRILLING

The following is taken from Assessment Report 473735 (Websites: Assessment Reports):

A total of 10 holes were -completed in 1988 bringing the total to 18 since 1986. Results were more encouraging in the latter half of this program when the emphasis was shifted to an investigation of existing reserves in the Lower AB Zone. As a result of this investigation, a high grade core was defined and enhanced. A more detailed understanding of smaller scale structure was developed; however, drill spacing remains large and interpretations unclear.

1989 DIAMOND DRILLING

The following is taken from Assessment Report 473841 (Websites: Assessment Reports):

Three diamond drill holes were completed into the Halfmile Lake Horizon during the first three months of 1989. Results were encouraging but of subeconomic value. All holes intersected the stockwork stringer zone and associated massive sulphides. Results did not change the overall interpretation from 1988.

1990 DIAMOND DRILLING

The following is taken from Assessment Report 474014 (Websites: Assessment Reports):

All four holes were successful in intersecting sulphide mineralization in the Halfmile horizon. Two factors directly influence the sulphide horizon.

1) A D1 thrust fault occurs in the mineralized horizon and can be seen to truncate a portion of the sequence in DDH’s HN 90-22, 23 and 24.

2) Lateral facies changes from metasedimentary rocks to felsic volcanic rocks in the mineralized horizon can be shown from south to north in the drilled area. HN 90-22 and HN 90-24 intersected sulphides developed in metasedimentary rocks while HN 90-23 intersected thin massive sulphides associated with minor metasedimentary rocks enveloped in felsic volcanics. HN 90-25 intersected heavy disseminated and stringer sulphides hosted only in felsic volcanics. This strongly implies that mineralization was inhibited by impermeable felsic rock.

Stratigraphic and structural analysis indicates that mineralization is best developed in the sedimentary package. Fault related thickening associated with folding (F2 and F2) can be seen to favourably enhance sulphide thickness and grade in the North Zone and on other parts of the deposit area. Such structures are, however, difficult to predict away from drilled areas.

Trevali Mining Corp. 11-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Results indicate the best potential for economic mineralization associated with favourable structures and sedimentary rocks lies down-dip from HN 90-22 and HN 90-24.

1991 DIAMOND DRILLING

The following is taken from Assessment Report 474150 (Websites: Assessment Reports):

DDH HN 91-26 was completed to a depth of 525 feet (160.1 m) as a test of a coincident Mag/VLF/soil geochem anomaly. The hole intersected a sequence of felsic tuff and metasedimentary rocks hosted by a sequence of mafic volcanic rocks. The magnetic response was explained by weak magnetic susceptibility in the mafic rocks and the VLF response is explained by the metasedimentary horizon. The soil geochemical anomaly was not explained and no significant mineralization was encountered. Six samples were submitted for whole rock geochemistry. The geochemical signatures of the samples did not fall within known fields of alteration typical of felsic rocks at Heath Steele and Halfmile Lake.

1992 DIAMOND DRILLING

The following is taken from Assessment Report 474282 (Websites: Assessment Reports):

Ten of the eleven holes drilled on the property were targeted toward expanding existing reserves around the Falconbridge portion of the Lower AB Zone and to investigate potential downdip and along strike from the Upper AB Zone. One hole was drilled to investigate a geophysical anomaly west of the Upper AB Zone.

All holes were successful in intersecting sulphide mineralization in the Halfmile Lake horizon and the structurally overlying stockwork zone. Three holes were extended to the contact horizon with one hole (HN 92-34) intersecting massive sulphides. A number of holes intersected stringer mineralization indicative of the structural hanging wall to the contact horizon below the Halfmile lake horizon (HN 92-31, 40, 32, 35). Intersections and assays are listed below.

1993 DIAMOND DRILLING

The following is taken from Assessment Report 474438 (Websites: Assessment Reports):

Diamond drilling successfully identified additional reserves in the Lower Halfmile Zone with the intersection of thick, high grade sulphides in DDH’s HN 92-45 and HN 92-52. A new mineralized zone returning low-grade zinc values over widths exceeding 9.6 metres was discovered 800 metres west of the Upper and Lower Halfmile Zone. Four drill holes (HN 93-54, 57, 59 and 61) have outlined this

Trevali Mining Corp. 11-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment mineralized zone over approximately 200 metres (700 ft) of strike length. The zone was encountered between 250 (800 ft) and 500 m (1,600 ft) vertical depth. This horizon appears to be open in all directions. It correlates with the Halfmile Horizon to the east.

Stratigraphic drilling on the west end of the property (HN 93-59) intersected moderate grade over 0.3 m. One hole (HN 93-62) was drilled south of the Upper Halfmile Zone to investigate gossan discovered in surface trenching. Minor mineralization was encountered.

Deep stratigraphic drilling (HN 93-51) intersected thick sequences of heavy stringer mineralization from 400 to 570 metres (1300-1870 ft) depth. Faulted, low grade sulphides were encountered from 565.9 to 566.3 m. This hole was drilled to follow-up a strong off-hole PEM response in HN 93-49.

1994 DIAMOND DRILLING

The following is taken from Assessment Report 474638 (Websites: Assessment Reports):

Fifteen diamond drill holes and two hole deepenings were completed in 1994. The drill holes were delineation holes designed to investigate potential for additional reserves hi the Lower Halfmile Zone. One drill hole tested the western strike extension of the Halfmile sulphide sheet. This hole stopped in stringer sulphides due to caving problems and did not penetrate the sulphide horizon. A larger drill will be required to set a wedge and complete this hole.

Two hole deepenings were completed to investigate potential stacking (stratigraphic or structural) of sulphide horizons below the Halfmile Horizon.

1995 DIAMOND DRILLING

The following is taken from Assessment Report 474691 (Websites: Assessment Reports):

Sixteen diamond drill holes and two hole deepenings were completed for a total meterage of 7501.3 m. Three of the holes (HN 95-112, 114, and 115) were drilled into the Upper Halfmile Zone to provide data on the lateral strike extent of the sulphide sheet. The remainder of the drilling concentrated on the delineated reserves in the Lower Halfmile Zone.

1999 DIAMOND DRILLING

The following is taken from Assessment Report 475386 (Websites: Assessment Reports):

Following the processing and interpretation of the 1998-99 3D seismic survey, three reflectors were identified of which two are located on the Halfmile Lake

Trevali Mining Corp. 11-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Properties. These, three reflectors are described further in a multi-property 2000 assessment report.

Halfmile Lake South (HN99-121) One of the reflectors is located 800 m southeast of the Lower Halfmile Lake Deposit at a vertical depth of 1,400 m on the Halfmile Lake South Property. This reflector was tested with a 1,765.1 m drill hole (HN99-121). The hole required three wedges due to westward deviation, uncharacteristic of normal Halfmile drilling. The first 100 m of the hole intersected porphyry, cherty tuff and argillite before encountering the eastward extension of Upper Halfmile at 187.5 m. This zone was defined by stockwork mineralization without base metals. At 237.0 m the hole entered the andesite unit of the Flat Landing Brook Formation which normally marks the shutdown rock for Halfmile drilling. The hole passed through a thick sequence of andesite and intermediate lapilli tuff up to 1,523 m then encountered a fault. From the fault to the end of the hole rhyolites, felsic tuffs and cherty tuffs comprised the main lithologies. This change from intermediate tuffs and andesite to more felsic rocks and the fault that separates the two packages coincides with the projected depth of the seismic reflector.

A gyro survey, a downhole pulse-EM survey, and velocity/density measurements were made on this hole in addition to 12 lithogeochemical analyses. These are discussed in the corresponding sections in this report.

Halfmile Lake Central (HN99-119 – HN99-128, HB81-5, HN95-86A) The most interesting of the three reflectors outlined by the seismic survey turned out to be one centered 0.5 km northwest of the Lower Halfmile Deposit at a vertical depth of 1,100-1,400 m. This reflector had the highest amplitudes and following success of the initial test hole (HN99-119) resulted in a drill program of nine holes and two hole deepenings.

The first hole (HN99- 119) was targeted on the highest amplitude portion of the 1.0 x 0.6 km reflector which is oriented NE-SW and dips to the north (Map 1). Hole HN99-119 intersected 49 m of massive sulphides with an average grade of 2.72% Zn. The best zone was a 4.52 m section of 10.6 1% Zn. The stratigraphy of this hole matches well with that of the Lower Halfmile Drilling. Following this initial success, rock velocities were recalibrated and other parts of the reflector were targeted according to spacing and relative amplitude.

2000 DIAMOND DRILLING

The following is taken from Assessment Report 475395 (Websites: Assessment Reports):

The Halfmile North drilling program aimed to drill test the down dip extension of the Halfmile North Deposit with an initial hole (HN00-129) southwest of HN90-23 to test an off-hole Pulse-EM anomaly. A second hole (HN00-130) to test the

Trevali Mining Corp. 11-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment favourable horizon 150 m to the north and 200 m deeper was also drilled. The first of these holes (HN00-129) had to be recollared after 192 m due to severe deviation and was renamed HN00-l29A. The new hole was drilled to a depth of 826.0 m. A sequence of typical Halfmile Lake porphyry intercalated with thin intervals of cherty tuff and meta-sediment was intersected up to 550.7 m. Minor pyrrhotite stringers and disseminated pyrite was observed within the argillite from 53 1.65 to 532.95 m. Beneath the Nepisiquit QFP, is a sequence of variably altered (sencitized and chloritized) metasediment and cherty tuff with trace to 5% finely disseminated Pyrite up to a depth of 756.9 m. A narrow interval of fine-grained, high-grade massive sulphide containing 75% mixed sulphides and 25% chloritized metasediment was intersected from 652.0 to 652.38 m. Upper and lower contacts are sharp but not faulted. Assay results returned 0.29% Cu, 9.3% Pb, 11.0% Zn and 267.8 g/t Ag over 0.38 m (core length). Heavily disseminated sulphides (20% Po) were observed from 732.8 to 734.0 m and stringers of sphalerite and galena were observed from 745.1 to 756.9 m. Assay results from this zone returned 0.23% Pb and 0.5% Zn from 746.0 to 749.0 m. Below that, the hole intersected the Flat Landing Brook andesite up to a final depth of 826.0 m.

Hole HN00-130, also deviated but was allowed to continue and came in 50 m south of the target. The hole was drilled to a depth of 991.0 m and ended in unmineralized chloritized argillite after intersecting an 18.0 m interval of good stockwork mineralization (895 – 913 m) followed by 60 m of disseminated and stringer sulphides intersected at target depth (912-972 m). The stockwork mineralized zone contains 5-20% patchy pyrrhotite with minor sphalerite, chalcopyrite and 5% Pyrite. An 8 m interval of heavily disseminated pyrite (20- 30% from 947 to 955 m) could represent the Halfmile Lake horizon. No significant assays were returned from HN00-130.

2010 DIAMOND DRILLING

The following is an excerpt from a Kria issued press release dated May 26, 2010 regarding drilling activity located at Halfmile Lake.

Kria drilled 4 holes totalling 495 meters targeting the Upper Zone of the multi- zone deposit. Trhe purpose of the drilling was two fold. The primary purpose was to obtain fresh core samples for the purpose of conducting metallurgical bench test work to simulate Xstrata’s Brunswick 12 milling facility. These bench tests will be used to determine recoveries and concentrate grades when toll processing the ore from the Half Mile Lake property, and will allow the mill to be tuned for to the specifics of the Half Mile ore. The second objective was to confirm the continuation of the mineralized zone in the area of the deposit where historic diamond drill holes were used for historic metallurgical testing and as a result, previously did not have grades represented in the database.

Trevali Mining Corp. 11-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 11.2 S TRATMAT

The following description of drilling is adapted from Graves, 2008. Diamond drilling on the Stratmat Property was carried out by four companies:

 Stratmat Ltd. completed one drill campaign from August 1956 to January 1957 with drill holes numbered 61-1 to 61-36.  Cominco carried out nine or more drill campaigns from June 1961 through to April 1980 with drill holes numbered DDH ST-1 through ST-119.  Noranda (for BM&S) carried out five large drill campaigns from June 1986 through December 1991. The ST series of drill holes was started by Cominco and continued by Noranda from DDH ST-120 discontinuously to ST-701.  Xstrata completed one drill campaign during March 2005 with two holes numbered BJV-05-057 and BJV-05-059. Underground drilling was carried out from the Boundary Deposit decline to complete the feasibility study in preparation for mining. Details of this drilling are not included.

Following is a summary of drill results filed taken from filed Assessment Reports with the New Brunswick Department of Natural Resources (Websites: Assessment Reports).

11.2.1 STRATMAT LTD., PRE-1961

The original drilling by Stratmat Ltd was follow-up to airborne and ground EM surveys and soil geochemical surveys conducted in 1955 which led to the discovery of the Main Zone in 1956. A total of 14,156 ft (approximately 4,300 m) was reported in 36 diamond drill holes (Assessment File number 471509) and was conducted by Boyles Bros. The drill holes are numbered 61-1 through 61-36 and include footage intervals with geology description and assays for Au, Ag, Cu, Pb, Zn for mineralized zones. Core size is not indicated in the drill logs.

Stratmat Ltd. began drilling in the summer of 1956. The Main Zone is described as an elliptical body of fine grained massive pyrite replacing fractured, chloritized and silicified intermediate volcanics. The massive sulphide dips between 40° and 80° to the south, strikes N 45 E with a length of 500 ft and a highly variable width up to 100 ft. Massive sulphides have been delineated to a maximum depth of 450 ft. The deposit displays zoning with a distinct copper rich zone (pyrite/chalcopyrite ±pyrrhotite) on the west and lead/zinc zone (pyrite with blebs and stringers of sphalerite and galena) to the east. Specific gravity analysis are reported using samples from four drill holes and one trench resulting in a general tonnage factor of 6.93 cubic feet per ton (ft3/t).

Trevali Mining Corp. 11-7 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 11.1 Longitudinal Section of the 1956 Drilling Campaign

Source: Mineral Assessment Report 471509-MAPS

11.2.2 COMINCO, 1961 – 1981

Drilling on the Stratmat Trend by Cominco began in 1961 (Assessment File 470989). The first Cominco report describes diamond drill holes numbered ST-1 through ST- 11 for a total of 6,369.5 ft (approximately 1,940 m), drilled to test the West Zone or Turam Anomaly, and located 300 m east of the Boundary Deposit, with a coincident weak lead soil geochemical anomaly. The core size is not specified in the drill logs but work reports from that era indicate the core size is predominantly AXT or AQ. The drill logs describe geology intervals and mineralized zones with metal value estimates but no core intervals are indicated as sampled and assays are not included. Massive sulphide intervals up to 12 ft are reported, principally with pyrite and up to 30% sphalerite and 10% galena. The logs indicate sulphides are associated with argillite horizons within a felsic volcanic sequence of rocks.

A report submitted in 1963 describes a ground geophysical EM survey and seven diamond drill holes for a total of 1,131 ft (approximately 345 m) (Assessment File 472386). The drill holes are numbered ST-12 through ST-18 and are targeted on the

Trevali Mining Corp. 11-8 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment extension of the West Zone described in the first Cominco report. A total of 45 core samples are indicated on the drill logs as collected, however no assays are included with the report. The sample intervals of the drill core are generally ten feet or less often five feet.

Two drill holes numbered ST-28 and ST-29 were drilled in 1963 for a total of 1,002 ft (approximately 305 m) (Assessment File 470991). No significant mineralization is reported and no samples are reported as collected for analysis.

Five drill holes are reported as completed in the spring of 1964 numbered ST-56 through ST-60 for a total of 674 ft (approximately 205 m) (assessment file 471574). A total of 32 core samples are indicated as collected ranging from 1 to 6 ft with most samples 5 ft. No assay results are reported. Also included in the report are induced polarity (IP) pseudo-sections and soil geochemical results with anomalous lead results highlighted. Assessment File 471515 contains the same drill logs as Assessment File 471574.

Fifteen diamond drill holes numbered ST-61 through ST-75 are reported in 1975 on Mining Lease 1008 for a total of 9,892 ft (approximately 3,015 m) (Assessment File 471355). Assay results for all sulphide mineralized intervals are included for copper, lead, zinc and silver. Some samples are also assayed for gold, cadmium and bismuth. Core size is indicated as AQ.

Ten diamond drill holes completed in 1980 and numbered ST-110 through ST-119 are reported in 1981 on Mining Lease 1007 and 1008 for a total of 2,426.6 m of BQ core (Assessment File 472679). Sample length is generally 1.5 m but can be 0.5 m. Assay results for mineralized zones are reported for copper, lead, zinc, silver and iron. Occasional samples are analyzed for gold. Seven holes were drilled into the North Zone to explain coincident geophysical and geochemical anomalies. Three holes were drilled to extend the Central zone.

11.2.3 NORANDA, 1986-1991

Noranda, operating for BM&S, began diamond drilling on the Property in 1986 (Assessment File 473385). A total of 79 NQ diamond drill holes totalling 14,171.5 m were completed numbered ST-120 through ST-217. The drill program focused mainly on the Boundary Deposit to define geological reserves. Five metallurgical HQ holes totalling 447.14 m were completed on the Boundary Zone numbered ST-M1 through ST-M5. Twelve of the 79 holes are located on the Central Zone for a total of 3,142.6 m to evaluate mineralization located in previous work by Cominco. The S-1 lens was first intersected in this program with ST-206 and ST-207. Three holes were also completed on the North Zone with disappointing results.

Delineation of the Boundary Deposit continued in 1987-1988 (Assessment File 273544) with drill holes numbered ST-242 to ST-281 and ST283 to ST-288. Additional drilling included:

Trevali Mining Corp. 11-9 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Main Zone: ST-218 to ST-224; 61-17 deepened; and ST-233 to ST-239 Central Zone: ST-225 to ST-232, Boundary East Lens: ST-282, Boundary Fold Closure: ST-83, HS-627 deepened, and Turam Zone: ST-230, ST-231, ST-240.

Diamond drilling totalled 11,402.3 m of NQ and BQ core in 31 holes. Results for diamond drilling plus the exploration decline into the Boundary Deposit and 3,000 tonnes bulk sample were used for the feasibility study for Boundary Deposit and evaluation of the other zones to determine geologic reserves.

Diamond drilling during 1988 and 1989 totalled 39 holes for a cumulative total of 23,791.2 m of predominantly NQ core in drill holes numbered ST-196 through ST- 345 and N-3-19 (Assessment File 473748) and included the deepening of some holes. Most of the drilling targeted the Central Zone area including S-1. It was noted that structure and stratigraphy of the Property is complex making it difficult to correlate ore zones from section to section. Three holes were drilled on the North Zone and five holes were deepened to continue the 200 m spaced evaluation. Additional drilling to extend significant mineralized intercepts was not successful. One hole each was drilled into the Main Zone and Turam Zone to extend the mineralization at depth. Results are generally negative.

Diamond drilling during 1989 and 1990 (assessment file 474129) including wedges and deepening of various holes totalled 30,147.3 m in 53 holes with DDH numbers in the sequence of ST-192 to ST-385. Drilling is directed at the S-1 deposit which represents the largest mineral inventory on the property and the focal point of the exploration program. Deep drill holes targeting the S-1 Deposit and drilled to the north are collared on the Heath Steele mining lease. A detailed reserve calculation for the S-1 Deposit was completed. Seven holes were drilled on the Main Zone and five holes on the Central Zone #2 Lens to test for extensions of mineralization. The principal problem reported with drilling is excessive deviation caused by the S2 foliation. The problem can be severe on deeper holes.

Thirty seven diamond drill holes including wedge cuts and deepening were completed for a total of 15,877.8 m of predominantly NQ core during the period of August, 1990 to December 31, 1991 at which time exploration work was suspended (assessment file 474408). A large percent of the drilling targeted the down dip extension of the S-1 deposit and the stratigraphic horizon between the S-1 deposit and the Boundary Deposit as well as Pulse EM geophysical anomalies. Reserve summaries for S-1 and Central Zones are presented with the conclusion that continued exploration at the S-1 zone be suspended unless it can be shown that the deposit from surface to 600 m vertical is economic based on current drill results. An economic study of the Central Zone #2 Lens is recommended to determine the feasibility of a standalone small underground mining operation.

Trevali Mining Corp. 11-10 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 11.2.4 XSTRATA, 2005

In 2005 two diamond drill holes were targeted on airborne MegaTEM anomalies adjacent to the Main Zone along strike from the deposit (Assessment File 476044) for a total of 708 m. The mineralized horizon was intersected in both holes with negative results.

11.2.5 KRIA DRILLING

In the spring of 2010, the Company conducted a four hole (495 meter) diamond drill program to obtain sample for metallurgical testing of Halfmile ores compatibility in the Xstrata’s Brunswick 12 processing facility. Drill results were as expected and metallurgical testing showed good compatibility. Results from this diamond drill program are listed below.

DHID Zone Length %Zn %Pb %Cu g/t Ag g/t Au HK10-01 MainMS 7.07 4.00 1.10 0.30 24.25 0.42 HK10-02 MainMS 13.74 7.20 2.49 0.28 75.40 0.72 HK10-03 MainMS 5.83 7.00 2.69 0.17 53.23 0.30 HK10-04 MainMS 29.25 6.87 2.23 0.46 52.01 0.86

During the winter of 2011, the Company carried out a 13 hole (2224 meter) diamond drill program to confirm resource location and grades for mine planning purposes. Drill holes were arranged throughout the deposit for appropriate coverage to facilitate gold and silver interpolations for the entire deposit. Historic drilling did not always analyse for precious metals. A fourth purpose of the drilling was to obtain additional sample for further metallurgical testing with the idea to fine-tune the plant processes and performance for ultimate recoveries in a batch milling scenario. Upon completion of this drill program, a fairly consistent copper rich hanging wall zone was recognized and reported. See list below for results.

Trevali Mining Corp. 11-11 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment DHID Zone Length %Zn %Pb %Cu g/t Ag g/t Au HK10-01 MainMS 7.07 4.00 1.10 0.30 24.25 0.42 HK10-02 MainMS 13.74 7.20 2.49 0.28 75.40 0.72 HW Cu 3.63 0.12 0.04 2.71 15.63 0.37 HK10-03 MainMS 5.83 7.00 2.69 0.17 53.23 0.30 HW Cu 6.06 0.07 0.01 1.23 3.71 0.05 HK10-04 MainMS 29.25 6.87 2.23 0.46 52.01 0.86 HW Cu 2.03 0.25 0.07 0.92 4.91 0.00 HK11-05 MainMS 2.00 2.81 0.39 1.02 12.57 0.24 HW Cu 6.00 0.05 0.04 0.86 4.24 0.25 HK11-06B MainMS 1.06 0.53 0.26 0.10 6.00 <0.03 HK11-07 MainMS 15.11 5.88 1.65 0.61 40.62 0.41 HW Cu 1.19 0.22 0.05 2.97 12.00 0.19 HK11-08 Main MS 23.32 6.43 1.92 0.34 42.80 0.47 HK11-09 Main MS 6.69 2.61 0.63 0.54 112.28 0.81 HW Cu 8.00 0.08 0.03 1.43 6.13 0.22 HK11-10 MainMS 8.94 8.80 3.54 0.43 78.61 0.37 HW Cu 7.00 0.12 0.03 2.63 9.69 0.11 HK11-11B MainMS 0.83 2.06 1.01 0.24 12.00 0.00 HK11-12 MainMS 5.94 2.32 0.53 0.67 14.08 0.41 HW Cu 5.00 0.06 0.02 1.43 6.25 0.08 HK11-13 MainMS 3.97 8.34 2.61 0.48 55.31 0.49 HW Cu 1.68 0.13 0.03 2.43 7.20 0.24 HK11-15 MainMS 2.63 10.28 3.30 0.26 72.28 0.53

Information from these two diamond drill campaigns were not included in the NI 43-101 Resource Estimate reported in this document.

Trevali Mining Corp. 11-12 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 2 . 0 SAMPLINGMETHODANDAPPROACH

12.1 H ALFMILE L AKE

There is no detailed information on historical sampling methods and approach conducted by previous mineral rights holders of the Halfmile Lake Property available to the author for review. Historic drilling appears to have been focused on geophysical targets. Based on observations of the historical drill logs, samples of the drill core were taken where the drill core intersected zones of massive sulphide mineralization with up to 2 m beyond the mineralized zone.

In 1998, Noranda proposed an infill drill program to increase overall confidence for their (non NI 43-101 compliant) mineral resource. Noranda determined that drill spacing at the time was not sufficient to warrant a firm level of confidence in the overall mineral resource, specifically, in the lower part of the deposit where mineralization was determined on wide, greater than 75 m, drill spacings (Noranda Memo, 1998). Information on sampling method and approach on subsequent drilling in 1999 and 2000 was not available at the time of writing.

12.2 S TRATMAT

From Graves, 2008:

There is no reference in the work [government assessment] reports of Stratmat Ltd. and Cominco Ltd. [of the description of the] sampling methodology employed. The drill core directory for the Heath Steele core storage site does not make reference to drill core from these operations. It is assumed that the core is no longer available.

The Stratmat program was contracted to Boyles Bros. and resulted in 36 drill holes for a total of 14,156 feet. The core size is not indicated in the logs or the reports but was very probably AXT which was typical of that era. Drill core selected for sampling was based on sulphide content and economic mineralization, which is evident from the lithology description. The preferred sample length is five feet with only a few of the samples of as little as one foot. Sludge samples were often collected in massive sulphide zones with one sample representing an entire interval. Eight holes did not intersect significant mineralization and were not sampled.

Core size, where noted in the Cominco drill program, is AQ except for their last drill campaign in 1980 when they went with BQ. This was probably split with a hand operated core splitter with half of the core sample bagged and sent to the lab. Sample size was variable with most being 5 feet or 1.5 m when logging was

Trevali Mining Corp. 12-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment in meters. Sampling of sulphide zones is consistent based on the lithology description.

Sampling method and approach is also not documented for the work carried out by Noranda Exploration Company Limited on behalf of Brunswick Mining and Smelting. It is known that a core logging and storage facility was operated at the Heath Steele mine site and this was used to process the Stratmat core. The NQ core samples were identified and marked by the geologist to be split [by diamond saw (pers. comm Moreton, C. Feb. 2, 2009)]. Core sample length is highly variable dependent on the mineralization. Samples are mostly less than or equal to 1.5 m. Half of the core sample would be bagged and samples would probably be transported by truck to one of the lab facilities operated by Noranda, Brunswick Mine or Custom Lab, a local lab adjacent to the Noranda office. The drill core for most of the Noranda drilling is stored at the Heath Steele core storage facility. The core is cross piled in the open and is in deteriorating condition.

Xstrata operated a core facility at the Brunswick 12 Mine. A building was dedicated for this use and was clean and well organized with experienced personnel handling the samples. Samples of all sulphide mineralized zones were split with a saw generally in sample lengths of one meter. The samples were transported to the prep lab and later to the assay lab on the mine site by mine personnel. Drill core is stored in the core storage facility at the Brunswick 12 Mine.

Trevali Mining Corp. 12-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 3 . 0 SAMPLEPREPARATION,ANALYSES, ANDSECURITY

13.1 I NTRODUCTION

Details on prior programs were not available at the time this report was written. No current work by Kria has been reported on.

13.2 S AMPLE P REPARATION

The following information is taken from a Noranda Ltd memo written by Côté (2001):

The sample preparation room is an enclosed area located in the basement of the concentrator building. One permanent technician is assigned to the sample preparation and the housekeeping of the workshop. To reduce the risk of sample contamination and provide a healthier work environment, the sample room is equipped with a proper dust control system in which crushing and grinding equipment is virtually completely enclosed. Only the drill core samples provided by the geology department of Brunswick Mine are processed in this room. Therefore, the samples are of the same matrix type, reducing the probability of contamination.

The drill core samples are delivered from the core shack to the sample preparation room by the core shack [sampling technician]. Each core sample plastic bag was previously identified with a plastic bar code system tag by the [sampling technician] of the geology department. The plastic tag includes the sample number and the location of the sample (diamond drill hole number, from- to in meters). The samples are recorded in a logbook upon reception at the sample room. The weight of the sample is variable (5 to 10 kilograms (kg)) depending of the length of the core sample, its nature (massive sulphides, chloritic waste rocks,…) and depending if the core sample has been split in two.

13.3 S AMPLE R EDUCTION

The following information is taken from a Noranda memo written by Côté (2001):

All samples are crushed in a jaw crusher and reduced to approximately 4 Mesh. Each sample is then transferred to a roll crusher and the materials reduced from 4 to 20 Mesh. The material is separated in a riffle splitter to obtain a homogenous split. One portion of the sample is labelled with a bar code number, named "Reject" and is sent back to the core shack for storage. Rejects are normally saved for a period of six to seven years.

Trevali Mining Corp. 13-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The other portion of the sample is further reduced with a disc pulverizer to obtain a size of about 100 Mesh. Depending on the sample hardness, typically 90 seconds for pulverization is sufficient. The discs are adjusted regularly to get a constant size. To minimize contamination during sequential sample preparation, the pulverizer is cleaned with a high-pressure air hose after passing each sample though the pulverizer. About 50 grams of rock powder ("the pulp") is then transferred to a previously labelled pulp bag. A record is kept of the sequence in which the samples are ground, and of the identity number of the container used for each sample. The labelled pulp samples are then sent to the mine assay laboratory for analysis.

The following is taken from Assessment Report 474129 for Custom Laboratories Ltd (Websites: Assessment Reports):

Rock and drill core preparation and analysis method for Cu, Pb, Zn, Ag, arsenic (As), antimony (Sb), Ni, bismuth (Bi), cobalt (Co), and cadmium (Cd):

Preparation: All Samples crushed to less than ¼ inch (“) riffled down to approximately 200 gram (g) cut, then pulverized to less than 100 mesh and rolled.

13.4 A SSAY L ABORATORY

The laboratory building is located on the mine property and was erected in 1983. The laboratory is housed in 5,200 square feet on three floors. The basement is dedicated for the sample receiving, storage of samples, chemical products and supplies. On the second floor are located the X-Ray Spectroscopy section, the Atomic Absorption Spectroscopy section, the Fire-Assay room, the balance room, the wet laboratory and finally the environmental room. The laboratory is well-equipped with modern, state-of-the-art equipment.

The Brunswick Mine’s assay laboratory provides analytical services to the following departments: Geology, Concentrator, Metallurgical Research and Environment. Work is also done for external groups such as Exploration, Noranda Technology Center, McGill University, University of New Brunswick and the Mattagami Mine.

The zinc, lead, copper and bulk concentrates produced by Brunswick Mine are sold in Canada, Europe and Japan. The assay laboratory is responsible for analysis and assay exchanges with all the customers. Therefore, the quality of the analysis is very important, to reduce the umpire costs and to maintain good relations with the customers. The assay laboratory department has acquired an excellent reputation on international markets for accurate analyses and low umpire costs.

13.5 A NALYSES

The diamond drill samples are assayed for the following elements: Pb, Zn, Cu and Ag. The gold is analyzed occasionally, when requested by the geologists. The

Trevali Mining Corp. 13-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment analytical procedures are standard in sulphide minerals. All the samples are analyzed by flame atomic absorption spectroscopy (FAAS) for Pb, Zn, Cu and Ag.

For those samples which exceed the upper calibration limits, titrametric or gravimetric methods are used, as outlined below. These procedures from International System Organization (ISO) are recognized and standard in base metal industries.

 Pb > 10%, Pb determined by EDTA titration (ISO Method 11441)  Zn > 20%, Zn determined by EDTA Titration (ISO Method TC 183N 489E)  Cu > 3%, Cu determined by Short Iodide Titration (ISO Method 10258)  Ag > 480 g/t, Ag assay fusion and cupellation (ISO/TC 183 N 490 E)  Au pre-concentration by Fire-Assay and completed by atomic absorption spectroscopy.

13.6 D ETERMINATIONOF M ETALSBY F LAME A TOMIC A BSORPTION S PECTROSCOPY

13.6.1 SAMPLE DIGESTION

The purpose of any sample dissolution technique is to provide a homogeneous solution of the elements of analytical interest. A 1 gram portion of sample is

accurately weighed and digested in acid (HCl and HNO3) and analyzed by FAAS. Calculations of results are based on calibration curves produced from in-house reference materials. Samples with concentration of the element greater than the upper limit of its calibration are analyzed by gravimetric or titrametric ISO methods as described above.

The following is taken from Assessment Report 474129 for Custom Laboratories Ltd (Websites: Assessment Reports):

Rock and drill core preparation and analysis method for Cu, Pb, Zn, Ag, arsenic (As), antimony (Sb), Ni, bismuth (Bi), cobalt (Co), and cadmium (Cd):

Method: A sample weight of 1 g or 0.5 g. digested with HCl and nitric, taken to dryness, picked up with H and water, brought to volume and read on Atomic Absorption (AA).

Rock and drill core preparation and analysis method for Au:

Method: All Au samples at Custom Laboratories Ltd. are done with standard Fire Assay Method, using 1/2 Assay Ton (14.60 g), fused at 2000 F, cupelled at 1680 F with AA finish, gravimetric when applicable with AA check.

Trevali Mining Corp. 13-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The following is taken from Assessment Report 473544 for Noranda Exploration Company Ltd (Websites: Assessment Reports):

1. Manganese (Mn), Cu, Pb Zn Ag, Ni - A 0.5 gram sample is attached with 1:1 Nitric acid on hot plate for one hour. Sample is cooled, diluted and stirred. Elements are determined directly from digest with conventional atomic absorption spectrometric procedure.

2. Arsenic - An aliquot from Cu digest is diluted with potassium iodide and analyzed with a Varian Hydride.

3. Antimony - A 0.5 gram sample is attacked with 1:1 hydrochloric acid. An aliquot from digest is diluted with potassium iodide and analyzed with a Varian Hydride.

4. Gold - A 10 gram sample is digested with aqua regia. Gold is extracted with MIBK from the aqueous solution. AA is used to determine gold.

13.6.2 CALIBRATIONAND MEASUREMENTOFTHE ANALYTE

The atomic absorption spectrometer is calibrated with three in-house reference materials prepared as solutions in the same manner as that used for the samples. These reference materials have been prepared by Brunswick Laboratory technician and previously analyzed by external laboratories, along with titration or gravimetric ISO procedure. The material used for the preparation of these standards is ore from Brunswick Mine. The advantage of this procedure is that these standards include all the matrix effects, and therefore minimize the interferences. These reference materials are kept in a freezer to prevent oxidation. A small portion of reference material is transferred into desiccators for current use.

13.6.3 CONFIDENTIALITYOF DATAAND DATA SECURITY

The results of any analysis generated by the assay laboratory are strictly confidential and the sole property of the client. Furthermore, all internal documents, reports, lists, files and methods may not be disclosed or photocopied without permission. Information stored in the computer system is available only to authorized staff and clients, all of whom have password-protected access to a drive.

The Zn (%), Pb (%), Cu (%) and Ag (oz/st) analysis results are recorded in an Excel spreadsheet (bmscore.xls) which is available to the geologists via the mine’s computer network. The results are then imported in the Gemcom drill hole database (Ag values are converted into g/t during the resource and reserve estimation).

Trevali Mining Corp. 13-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 13.7 S TATEMENTOF S AMPLE P REPARATIONAND A NALYTICAL P ROCEDURES

The sample preparation is the most critical part. The potential risk for contamination is greater in the sample preparation process than any other part of laboratory operations. For this particular reason, only samples from Brunswick Mine are processed in the sample preparation room, as previously mentioned.

The sample preparation facilities at Brunswick Mine use old equipment, particularly the disc pulverizers. Such equipment would not be considered to be acceptable for use in gold analysis. Gold is not assayed routinely at the mine since the ore contains only traces of gold (0.002 to 0.005 oz/st Au in average). However, Brunswick Mine’s sample preparation equipment is considered very acceptable when used to prepare massive sulphide samples from the mine for analysis of base metals.

Trevali Mining Corp. 13-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 4 . 0 DATAVERIFICATION

14.1 H ALF M ILE L AKE - D ATA V ERIFICATION

Wardrop carried out an internal validation from the original drill logs and the drill hole database on 5 (4.4%) of the 113 drill holes used by Noranda. Wardrop validated the dataset by comparing the original assay certificates and associated data against the digital dataset. In total, 124 samples were checked. Data verification was completed on Ag, Au, Cu, Pb, and Zn values. Minor errors are present and appear to relate to mistakes in rounding. The assay values were not checked against signed assay certificates.

Details of the verification are set out in Table 14.1. An example of a typical data verification error can be viewed in Appendix A. Overall, the precious metal data verification had less than 1% error and based on the nature of the errors Wardrop recommends proceeding with a resource estimate. A summary of data verification can be found in Appendix A.

Table 14.1 Validation of the Digital Database to Original Logs

Sample Ag Au Cu Pb Zn Hole-ID Notes Total Errors Errors Errors Errors Errors All error values HN92-29 53 1 n/a 21 8 6 are off by 0.01 All error values HN92-38 6 0 0 3 1 1 are off by 0.01 HN95-87 51 0 0 0 0 0 HN95-98 5 0 0 0 0 0 HN95-114 9 0 0 0 0 0 Total 124 1 0 24 9 7 % Error 0.81% 0.00% 19.35% 7.25% 5.65%

14.1.1 SAMPLE ANALYSIS CHECK

During the site visit, Wardrop collected four samples from historic drill core for the purpose of verifying the presence of lead and zinc mineralization. These four samples were collected from available half split drill core as part of an assay results check for quality assurance.

The samples from the Halfmile Lake deposit were sent to ALS Chemex in North Vancouver (ISO 9001:2000). Wardrop is of the opinion that ALS Chemex is a reputable laboratory and believes that quality assurance/quality control (QA/QC)

Trevali Mining Corp. 14-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment standards are adequate. Wardrop is unaware of the QA/QC standards undertaken by Noranda.

Overall, results from this sampling showed a decrease of 11.71% lead, 17.61% zinc and 99.85% gold while copper and silver showed an increase of 56.76% and 25,770.97% respectively (Table 14.2). Although the sample set is too small to draw any significant conclusions it may indicate further work is warranted.

Table 14.2 Comparison of Check Assay Results to the Original Assay Results

Hole-ID Sample # Pb (%) Zn (%) Cu (ppm) Ag (ppm) Au (ppb) Client 5.32 16.60 862.00 0.20 71.90 HN88-16B 84059 Wardrop 4.78 13.60 1400.00 54.86 0.00 Difference 89.85% 81.93% 162.41% 27024.63% 0.00% Client --- 3.30 124.00 0.25 5.64 HB79-9C --- Wardrop 1.84 4.04 300.00 0.96 0.00 Difference --- 122.42% 241.94% 377.95% 0.00% Client 5.41 18.50 633.00 0.23 67.60 HN88-16D 17207 Wardrop 0.32 2.40 1000.00 9.60 0.00 Difference 5.91% 12.97% 157.98% 4155.84% 0.00% Client 3.56 11.60 618.00 0.16 50.10 HB79-4 14727 Wardrop 6.02 13.02 400.00 115.80 0.30 Difference 169.10% 112.24% 64.72% 71,925.47% 0.60% Overall -11.71% -17.61% 56.76% 25,770.97% -99.85%

It must be noted that only one of the check samples from HN88-16D, out of the four taken by Wardrop, was confirmed to match the same sample interval taken by Noranda. Also, the samples collected by Wardrop were heavily oxidized which may also have an effect on assay results. However, since Noranda’s sample procedures were unavailable for review, a comparison between sample preparation and analysis cannot be made between ALS Chemex and Noranda.

It must also be stated that modern assay analysis techniques from an independent laboratory found a marked increase in silver values. This may indicate that the presence of silver may be higher than originally thought. A more thorough review and investigation of silver may be warranted.

14.2 S TRATMAT D ATA V ERIFICATION

Wardrop carried out an internal validation from the original assay and the drill hole database on 25 (4.55%) of the 505 drill holes in the total dataset provided by Kria. Wardrop validated the dataset by comparing the original assay certificates against the digital dataset. During the initial data verification it was found that the error percentage was greater than 1%. As a result, a complete 100% check of the database was performed by Wardrop.

Trevali Mining Corp. 14-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment In total only 382 drill holes were found to be of usable quality (75.64% of the dataset) for the geological interpretation. Errors and missing values in the database were corrected with values from their original sources (signed assay certificates and drill logs) provided by the client.

Holes ST-1 to ST-109 have no assays recorded in the original logs and therefore, Wardrop did not use them in the resource estimation. These holes were used in the wireframe interpretation because the hole locations and geological logs could be validated. Kria supplied Wardrop with assays for these holes electronically, but because original certificates could not be located, the holes were not used in the resource estimation. Transcription errors within the database in the collar, survey and assay databases were corrected during the 100% data verification.

Wardrop was not able to validate any of the collar elevations provided in the dataset. The collar elevations recorded on the original logs were based on an old survey which has since changed. Prior to 1997, the elevations were relative to the survey monument, which was given a value of 10,000 feet (ft) or 554 m. In 1997, elevations were changed to reflect sea level. The elevations in the dataset provided by Kria are recorded relative to sea level. Wardrop suggests a complete survey check be completed on all the Stratmat collar locations.

Assay verification was completed on Ag, Au, Cu, Pb and Zn values. These values were check against the values in the validation sample within the Access database.

14.2.1 SAMPLE ANALYSIS CHECK

Wardrop re-assayed historical half split core from five drill holes to verify the range of historical values. The samples from the Stratmat deposit were sent to ALS Chemex in North Vancouver (ISO 9001:2000). Wardrop is unaware of the QA/QC standards undertaken by Noranda.

Wardrop was unable to locate the exact sample numbers for samples ST350, ST329, and ST331. Based on the information available to Wardrop, an estimation of the correct sample numbers was made. The two remaining sample numbers (ST362a and ST362b) could not be determined. This sample population is too small to draw any definite conclusions; however, it does indicate that Pb and Zn mineralization are present on the Property.

Overall, results from this sampling showed a decrease of 0.77% lead, 1.14% zinc, 258 ppm copper, 19.04 ppm silver and 0.47 gold copper (14.3).

Although the sample set is too small to draw any significant conclusions it does indicate further work is warranted. The samples do confirm the presence of base metal mineralization.

Trevali Mining Corp. 14-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 14.3 Comparison of Check Assay Results to the Original Assay Results

Hole-ID Sample # Pb (%) Zn (%) Cu (ppm) Ag (ppm) Au (ppm) Client ------ST362a --- Wardrop <1 <1 7450.00 5.86 0.65 Difference ------Client ------ST362b --- Wardrop 5.18 10.30 2620.00 86.00 0.64 Difference ------Client 0.81 3.21 6800.00 96.34 1.65 ST350 113929 Wardrop <1 2.92 5220.00 64.40 1.45 Difference --- 9.03% 23.24% 33.15% 12.12% Client 2.80 6.00 2700.00 65.14 1.47 ST329 114601 Wardrop 2.62 5.39 2800.00 59.00 0.95 Difference 6.43% 10.17% -3.70% 9.43% 35.37% Client 5.71 14.62 700.00 131.29 1.37 ST331a 124532 Wardrop 4.35 12.10 1405.00 >100 0.68 Difference 23.82% 17.24% -100.71% --- 50.36% Overall 15.12% 12.15% -27.06% 21.29% 32.62%

Trevali Mining Corp. 14-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 5 . 0 ADJACENTPROPERTIES

With respect to the Halfmile Lake Property, there are no significant mineral claims or mineral exploration work conducted adjacent to the Property.

All mineral rights adjacent to the Property are held by Xstrata.

All up to date claim information can be found online at the Government of New Brunswick, Department of Natural Resources website: http://www.gnb.ca/0078/minerals/Main_Menu_Descrip-e.aspx#Databases

Adjacent to the south of the Stratmat Property is the former Heath Steele lead-zinc mine. The Heath Steele mining lease is 100% owned by Xstrata and is a volcanogenic massive sulphide (VMS) lead zinc deposit similar to that of Stratmat.

The Heath Steele deposit was discovered in 1952 by prospectors working for Matthew James Boylen and was the first discovery in Canada of a deposit by means of an airborne EM geophysical survey.

American Metals Climax Inc. (American Metals) had financed Mr. Boylen's exploration and, as a result of a 1953 agreement with (then) International Nickel Company of Canada Ltd. (Inco), acquired a 75% ownership of the new mine. By 1957, a mine and milling operation were established to extract copper, lead and zinc from the ore. Due to low metal prices and metallurgical issues, the mining operation was suspended in April 1958. Mining resumed in June 1962. In 1969, the mine started an ambitious expansion, and by 1979 was producing over 185,000 tonnes of mineral concentrates per year.

As the ore body was gradually depleted, operations were increasingly dependent on strong metal prices. In 1979, Noranda purchased American Metals 75% share in the operation. In April 1983, it was forced to suspend operation due to declining metal prices. In 1986, Noranda purchased all of the remaining interest in the mine. T he mine operated sporadically between: 1989-1991; 1992-1993, and; finally, 1994-1999. The underground mine was finally closed and allowed to flood in 1999 (Gallagher, 1999).

Trevali Mining Corp. 15-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 6 . 0 MINERALPROCESSINGAND METALLURGICALTESTING

16.1 I NTRODUCTION

This section is based on historical data and no new metallurgical tests have been performed. Wardrop’s primary source of information regarding the Halfmile Lake property comes from several Noranda Feasibility Studies (1995, 1998 and 2000). Additional reports on metallurgical testing at SGS Lakefield and various tailings studies and closure plans were also reviewed to obtain the necessary information for the process flow sheet and metallurgical parameters. As there is no metallurgical data available for the Stratmat property, Wardrop assumes that due to the close proximity in terms of distance between Halfmile Lake and Stratmat and regional gelology, the same parameters used for Halfmile Lake should be applicable to Stratmat.

Wardrop has conducted a trade-off study for the mill location and investigated various mill production rate options, as well as developing the process capital and operating cost evaluations. Wardrop also reviewed potential smelter terms for the concentrates.

16.2 M ETALLURGICAL T EST P ROGRAMS H ALFMILE L AKE

Metallurgical test programs were conducted at the Brunswick Mines and the Lakefield (now SGS Lakefield) laboratories by Noranda. Several batch tests and lock cycle tests (LCT) were performed at both facilities. Furthermore, a mineralogical evaluation was completed at Noranda to provide additional information to help characterize the metallurgical response. Pilot plant testing was not considered necessary at this time.

A comprehensive 600 kg metallurgical sample was used to provide a representative sample of the massive sulphide mineralization on the Property. In addition to mineralized samples, waste materials representative of the hanging wall and footwall rocks were used to simulate dilution effects.

This metallurgical sample was split for testing between the Brunswick Mines and SGS Lakefield laboratories.

Bench scale tests were conducted at the Brunswick Mines to establish the basic grinding and flotation conditions, followed by lock cycle testing to determine the impact of the re-circulated middlings products.

Trevali Mining Corp. 16-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment This test program was repeated at SGS Lakefield laboratories to provide an independent assessment of the metallurgical response (Noranda, 1998, 2000).

16.2.1 REVIEWOFTHE METALLURGICAL RESULTS

Based on the lock cycle tests assay results, the bulk Zn-Pb concentrate contained 19.26% lead and 35.7% zinc at a favourable zinc/lead ratio of 1:9.

The copper in the copper concentrate was 20.13%, the lead in the lead concentrate was 46.24% and the zinc in the zinc concentrate was 53%.

The silver content was 205 g/t in the bulk Zn-Pb concentrate (Table 16.1). Most of the silver was distributed to the lead concentrate with 307.7 g/t of silver (Noranda, 1998).

Lock cycle test results also indicated that the Halfmile Lake ore will yield total recoveries of 25.96% for copper, 89.72% for zinc, 48.56% for silver and 72.07% for lead. A lead concentrate of 46% Pb and a zinc concentrate of 53% Zn are anticipated (Noranda, 1998).

The mineralogical studies on the Halfmile Lake ore samples showed good potentials for the zinc concentrate. With a zinc concentrate containing 53% zinc and recovery of nearly 85%, the iron levels of 8%, lead levels of 2%, low copper levels and relatively low arsenic, cadmium, manganese and cobalt levels, a good quality concentrate was expected to be produced from the Halfmile Lake ore (Noranda, 1998).

16.3 M ILL T ONNAGE

Mine production capacity from both the open pit and underground operations at Halfmile Lake was assessed to be between 1,500 to 1,900 t/d. For the purposes of this study, only the underground mining volume will be considered in the operational costs for the mill. However, the mill feed was calculated at 2,000 t/d in consideration of the potential combined capacity for the open pit and underground operation.

The mine production schedule for Stratmat shows an initial capacity of 1,500 t/d for the first couple of mine production years and possible 2,000 t/d for the subsequent 4 to 5 years and then decrease to 1,500 t/d and less until the end of the mine life. In order to be able to accommodate the maximum mine production in the peak years the mill feed from Stratmat should be 2,000 t/d.

The combined mill feed from the two properties is expected to be in the range of 4,000 t/d in the peak years of production, therefore this is assumed as the proper capacity of the processing facility.

Trevali Mining Corp. 16-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 16.4 C ONCENTRATES R ECOVERIESAND G RADES

Four concentrate products are planned for the Halfmile Lake-Stratmat Mill:

 Copper concentrate – containing payable Copper and Silver.  Lead concentrate – containing payable Lead and Silver.  Zinc concentrate – containing payable Zinc.

Table 16.1 Metallurgical Forecast – Halfmile Lake Composite No. 2

Assays, % Distribution, % Products Wt, % Pb Zn Cu Ag g/t Pb Zn Cu Ag Feed 100.00 2.90 9.16 0.13 40.00 100.00 100.00 100.00 100.00 CuCon 0.17 3.60 8.18 20.13 300.00 0.21 0.15 25.96 12.27 BulkCon 1.26 19.26 35.70 0.23 205.00 8.39 4.92 2.23 6.31 Pb Con 3.99 46.24 2.29 0.37 307.71 63.68 1.00 11.45 29.98 ZnCon 14.66 1.90 53.00 0.19 57.00 9.60 84.80 21.42 20.38 Tailings 79.92 0.66 1.05 0.06 15.94 18.12 9.13 38.94 31.07 Total Payable Recovery, % 72.07 89.72 25.96 48.56 Source: Noranda Halfmile Lake Project Feasibility Study, 2000.

Based on the results from the different metallurgical test programs conducted at SGS Lakefield and Noranda laboratories, and considering the process flowsheet design, the following concentrates grades and recoveries are expected:

Table 16.2 Process Concentrates Grades and Recoveries

Products Concentrate Grades, % Recoveries, %

Cu Concentrate 20.13 25.96 → 85.00 Pb Concentrate 46.24 63.68→ 85.00 ZnConcentrate 53.00 84.80→ 90.00

Metallurgical recovery of copper, for purposes of this PEA, was well below that of similar deposits within the Bathurst Mining Camp. Wardrop determined that until independent metallurgical testing can be conducted on the Property, a copper metallurgical recovery of 85% should be used in this report. This is based on the anticipated head grade and the residual copper in the Noranda LCT tailings (0.06% Cu). This will need to be investigated further in subsequent test work. In addition the recoveries of lead and zinc used in the report will be 85% and 90% respectively for the same reasons.

16.5 M ILL L OCATION

Wardrop also conducted a Trade-Off Study for the mill location. The options considered were to build the Halfmile Lake-Stratmat mill either at Halfmile Lake or

Trevali Mining Corp. 16-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment at the previously operated Heath Steele Mine site. For both cases, a new mill complex is considered.

The cost areas for both cases are shown in the Table 16.3.

Table 16.3 Mill Trade-Off Study Cost Areas

Mill at Halfmile Lake Mill at Heath Steele 1. New mill to be installed. 1. New mill to be installed. 2. Concentrates hauling to Market from 2. Ore hauling from Halfmile Lake to Heath Halfmile Lake via Heath Steele – 22 km Steele – 22 km (existing road will be used). (existing road will be used). 3. Raising the existing Heath Steele Tailings 3. Tailings pumping from Halfmile Lake to Dam to accommodate the Halfmile Lake Heath Steele – 22 km (New piping/pumping Tailings. system is required). 4. Raising the existing Heath Steele tailings dam to accommodate the Halfmile Lake tailings. Additional Costs Including Stratmat 5. Hauling the Stratmat ore from Heath Steele to Halfmile Lake. 6. Piping system upgrades to pump the Stratmat tailings from Halfmile Lake to Heath Steele. 7. Hauling the Stratmat concentrates from Halfmile Lake to Heath Steele.

The design criteria established for the Trade-Off Study evaluation includes:

 Utilization of 22 km of paved road from Halfmile Lake to Heath Steele.  The existing Otter Brook Road (with upgrades) will be used to haul the ore/concentrates from Halfmile Lake to Heath Steele. Road upgrades will be the same regardless of mill location.  Concentrates shipment via Bathurst.  Utilization of the existing Heath Steele tailings dam. For both scenarios, the tailings dams must be modified to the same scope of work.  Installation of a new 22 km pipeline/pumping system to pump the Halfmile Lake tailings to the Heath Steele dam is required if the mill is at Halfmile Lake. The new pipeline will be required to support 87% of the mill feed which has been identified as going to the tailings and 13% will be concentrates. These results are based on the 1994 Tailings Study information.  The capital costs for building the mill at Halfmile Lake and at Heath Steele are considered to be equivalent. There are, however, potential savings in terms of capital costs if the mill is built at Heath Steele due to the previous site operations. These potential savings have not been considered for this Preliminary Economic Assessment (PEA) Report from a cash flow perspective, but are presented here as opportunity considerations that would require further evaluation. The potential savings should consider the following; installed power, existing mill

Trevali Mining Corp. 16-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment building infrastructure, such as concrete, structural steel, insulation, installation labour and equipment. Potential further savings that should be considered for the Heath Steel location deal with the avoidance of costs associated with installing a “Green Field” mill at Halfmile Lake. These costs include items such as permitting, Governmental regulations, closure, schedule implications, etc. The current availabilities are not known, so for the purposes of the Trade-Off Study, such savings cannot be quantified. Based on this data, Wardrop allocated the following costs for the different cost areas:

Table 16.4 Mill Location Costs Summary

Mill Location No. Item Halfmile Lake Heath Steele CAN$ CAN$ Halfmile Lake Ore Building a new mill at Halfmile Lake or at 1. same same Heath Steele. Hauling the ore from Halfmile Lake to Heath 2. $0 $46,390,561 Steele. Total Cost (for the 20 years mill life) $0 $46,390,561 Total Cost (per year) $0 $2,319,528 Stratmat Ore Hauling the Stratmat ore from Heath Steele 3. $27,002,690 $0 to Halfmile Lake. Piping System upgrades to pump the 4. Stratmat tailings from Halfmile Lake to Heath $6,606,649 $0 Steele. Total Potential Cost (for the 20 years mill $27,002,690 $0 life) Total Potential Cost (per year) $1,680, 467 $0 Halfmile Lake and Stratmat Ore Raising the existing HSM Tailings Dam to 5. same same accommodate the HML-Stratmat Tailings Pumping the combined HML-Stratmat 6. $26,426,598 tailings from HML to HSM $0 Hauling the HML and Stratmat concentrates 7. $0 to the Market (Difference HML and HSM) $0 Total Cost (for the 20 years Mill life) $26,426,598 $0 Total Cost (per year) $1,321,330 $0 TOTAL COST (for the 20 years mill life) $60,035,937 $46,390,561 TOTAL COST (per year) $3,001,797 $2,319,528

Mill location costs summary notes:

Trevali Mining Corp. 16-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1. Building a new mill at Halfmile Lake or at Heath Steele – costs are assumed the same with possible savings if the mill is at Heath Steele (existing power/infrastructure may be available). 2. Hauling the ore from Halfmile Lake to Heath Steele – over 20 years of mill life (assuming 4,000 t/d mill); fuel at $0.73/litre; equipment 500-600 horsepower road HD road tractors with A-trail trailers and B-trail tanker used; 8% of the equipment costs allocated for maintenance; $24.00/hour rate used for mechanics; $23.00/hour rate used for drivers. 3. Pumping the tailings from Halfmile Lake to Heath Steele – Based on the same parameters. 4. Raising the existing Heath Steele tailings dam to accommodate the Halfmile Lake Tailings – the same in both cases. 5. Concentrate haul to market (difference Halfmile Lake and Heath Steele) – 13% of hauling the ore costs used. Additional 25% allocated for concentrates handling. 6. Hauling the Stratmat ore from Heath Steele to Halfmile Lake – Hauling the ore costs as a basis assuming total tonnage of 6.7Mt for the Stratmat ore. 7. Piping System upgrades to pump the Stratmat tailings from Halfmile Lake to Heath Steele – 25% of the pumping the tailings costs allocated for upgrades. 8. Hauling the Stratmat concentrates from Halfmile Lake to Heath Steele – Assuming empty trucks from No. 6 will be used.

The initial comparison between the two options shows $13.6M difference in favour of building the mill at Heath Steele. In addition, as explained above, there are some potential savings in terms of capital costs if the mill is built at Heath Steele, which may increase even further that difference. Furthermore, installing and maintaining a 22 km pumping and piping system to pump the Halfmile Lake mill tailings to the Heath Steele tailings dam will affect the mill water balance and would increase the project risk significantly, particularly from an environmental aspect.

Based on these Trade-Off Study results, Wardrop recommends that the optimum location to build the mill is at the Heath Steele site, close to the tailings dam and to the Stratmat property. The Heath Steel location would require hauling the Halfmile Lake ore 22 km via the existing Otter Brook Road. Safety issues also support using the Heath Steele Mill site, as the daily travel time for operations personnel would be substantially reduced.

16.6 P ROCESS F LOWSHEET

The process flowsheet is based on the Noranda Feasibility Study, 1998. At the time, it was developed with the idea of processing Halfmile Lake ore either at Heath Steele or Brunswick mill., Therefore the Halfmile Lake flowsheet is very similar to the Heath Steele and Brunswick flowsheets.

Trevali Mining Corp. 16-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 16.1 Process Flowsheet

Trevali Mining Corp. 16-8 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 16.6.1 CRUSHING

The flowsheet uses a standard crushing process. The ore is fed by a loader into a Jaw Crusher to reduce the particle size to 125 mm. A rock breaker is provided to support the crushing process.

16.6.2 GRINDING

The crushed ore is fed to the grinding circuit, which consists of a SAG mill, followed by a Ball mill. The Ball mill operates in close cycle with a cluster of cyclones and the cyclone overflow reports to the flotation circuit.

The calculated grinding time is 30 to 32 minutes, with a primary grind target of 70-80% passing 400-mesh. This is derived by applying the power input used in standard tests at the Brunswick Mines.

16.6.3 FLOTATIONAND REGRIND

The flotation area consists of a Copper-Lead and subsequent zinc circuit.

The Copper-Lead circuit starts with conditioning and rougher flotation followed by two cleaners and a scavenger flotation.

The rougher concentrate goes to a regrind circuit and then reports to the first cleaner flotation. The first cleaner tails go to the scavenger circuit and the first cleaner concentrate goes to the second cleaner flotation.

The scavenger concentrate returns to the regrind and the scavenger tailings reports to the Zinc circuit. The second cleaner concentrate reports to the Copper separation flotation area. This Copper-Lead primary concentrate also contains Silver values.

The Zinc circuit starts with conditioning and a rougher Zinc flotation, followed by three cleaners and a scavenger flotation. The rougher concentrate goes to a regrind circuit and then reports to the first cleaner flotation.

The first cleaner tails go to the Zinc scavenger circuit and the first cleaner concentrate reports to the second cleaner flotation. The scavenger concentrate returns to the regrind and the scavenger tailings go to the final tailings. The second cleaner product is additionally floated in a third cleaner circuit to produce the final Zinc concentrate.

The Copper separation circuit begins with conditioning, followed by rougher and cleaner stages. The cleaner concentrate is the final Copper concentrate and the rougher tailings returns to bulk rougher and cleaner stages. The bulk rougher tailings is the final Lead concentrate and the bulk cleaner concentrate is the final bulk concentrate.

Trevali Mining Corp. 16-0 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The bulk flotation has been reported to respond extremely well, to the extent that the separation is achieved without pretreatment of the pyrite, which simplifies the operational and control requirements of the flowsheet.

16.6.4 CONCENTRATE DEWATERING

All four concentrates are dewatered in conventional thickeners and dried in filter presses. These four separate concentrates are stockpiled and prepared for shipment.

16.6.5 REAGENTS

Based on the metallurgical tests performed at the SGS Lakefield laboratory, the process will use the following reagent types:

 SO2 and Soda Ash in the grinding circuit.  Xanthate, Frother and Soda Ash for the Copper-Lead conditioning.  Soda Ash for the Copper-Lead regrind.

 Xanthate, Frother, Lime and CuSO4 for the Zinc conditioning.

 Starch, SO2 and collector for the Copper separation conditioning.

 Xanthate, Frother, Lime and CuSO4 for the bulk conditioning.

The reagents types and consumptions applied for the purposes of the Noranda Feasibility Study are based on the assumption that the Halfmile Lake ore will be processed either at the Brunswick Mines or at Heath Steele mill and they correspond to experiences at either mill.

16.6.6 TAILINGS DISPOSAL

Based on historical information from the Tailings Basin Expansion for Halfmile Lake Project (April 25, 1994), the mill operation will generate approximately 87% of the mill feed as tailings. This is estimated to be 15.9Mt of tailings over the mill life. The existing Heath Steele tailings dam, which is presently closed, will require raising to accommodate the Halfmile Lake tailings.

16.7 C ONCENTRATE M ARKETING A SSUMPTIONS

The following assumptions regarding concentrate marketing have been made:

 Concentrates will be transported to the port of Belledune New Brunswick, and from there, shipped to a smelter in Asia.  Bulk concentrates experience a re-handling loss of 0.3%; whereas it is assumed that the gravity concentrates will be bagged, therefore, a lesser loss of 0.10% is assumed.  Concentrates to Asia will be shipped in 10,000 ton lots.

Trevali Mining Corp. 16-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment  It is assumed that the moisture content of the concentrates will be 8% and below the Transportable Moisture Limit (TML). In some cases, this TML may be below the trigger point for a smelter moisture penalty.

Trevali Mining Corp. 16-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 7 . 0 MINERALRESOURCEANDMINERAL RESERVEESTIMATES

17.1 I NTRODUCTION

National Instrument 43-101 compliant resource estimates were completed by Wardrop for the Halfmile Lake deposit in February 2009 and for Stratmat in March 2010 respectively. These estimates are contained in a report titled “Halfmile Lake Technical Report and Resource Estimate”, submitted to Beartooth Platinum Corporation (see Kria Resources press release dated February 23, 2009), and the report titled “Stratmat Technical Report and Resource Estimate” (see Kria Resources press release dated March 31, 2010).

The Halfmile Lake resource estimate was completed for four massive sulphide zones on the property: the Upper, Lower, Deep and North. The Stratmat resource estimate was completed for eleven interpreted zones of massive sulphide mineralization. A summary of the methodologies for the resource estimates is included below.

17.1.1 DATABASE

The database provided by Kria was originally supplied by Xstrata as part of their option agreement. The Halfmile Lake dataset included 432 drill holes with 5,802 survey readings and 7,364 assayed samples. Table 17.1 (below) summarizes the Stratmat data records supplied to Wardrop.

Table 17.1 Summary of the Stratmat Drilling Data Records

Assay Drill Total Collar Survey Entries Data Set Holes Length Readings Readings (all elements) RawData 505 143,310 505 3,407 10,544 After100%verification 505 165.226 505 3,379 15,466 Datausedininterpretation 382 122,654 382 2,623 12,179

17.1.2 SPECIFIC GRAVITY

There are 1,577 specific gravity readings in the Halfmile Lake database with values ranging from 2.05 g/cm3 to 5.38 g/cm3 and an average reading of 3.48 g/cm3. In the block model, the specific gravity readings are interpolated from the values in the database and non-interpolated blocks are given a value of 3.5.

A tonnage factor of 3.5 g/cm3 was used to estimate the resource for Stratmat. This is an estimated value based on experience with sulphide types within the area such as

Trevali Mining Corp. 17-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Technical Report and Resource Estimate the Heath Steele B-Zone. Density determinations will have to be carried out on the various types of mineralization encountered within the Stratmat deposit as part of future work programs on the project.

17.2 E XPLORATORY D ATA A NALYSIS

Exploratory data analysis is the application of various statistical tools to elucidate the characteristics of the data set. In this case, the objective is to understand the population distribution of the grade elements through the use of such tools as histograms, descriptive statistics and probability plots.

17.2.1 RAW ASSAYS

Raw assay statistics from validated datasets are shown in Table 17.2 and Table 17.3. Only those values greater than zero were used in the statistical analysis. Note that Stratmat values for silver and gold have been converted from ounces per (short) ton to grams per (metric) tonne.

Table 17.2 Halfmile Lake Raw Assay Statistics (Excluding Zeroes)

Minimum Maximum Average Standard Deviation Count Zn(%) 0.007 37.24 3.42 4.76 5,639 Cu(%) 0.001 9.3 0.324 0.627 6,792 Pb (%) 0.001 17.98 1.12 1.75 5,263

Table 17.3 Stratmat Statistics on the Raw Assay Values (Excluding Zeros)

Element Minimum Maximum Average Standard Deviation Count Zn(%) 0.01 28.00 1.33 2.74 9855 Pb (%) 0.01 40.86 3.01 5.78 10121 Cu(%) 0.01 29.66 0.27 0.64 9166 Ag(g/t) 0.34 884.61 24.29 46.89 9349 Au(g/t) 0.03 71.49 0.31 1.38 6277

17.2.2 CAPPING

Cumulative probability plots were used to assess the need for capping in both the Halfmile Lake and Stratmat deposits. Typically, a step in the profile or a separation of the data points is present if there are different populations in the dataset. High value outliers will show up in the last few percent of a cumulative probability plot (in the 97% to 100% range) and the break in the population is used to set a capping level.

Capping levels for Halfmile Lake were set at 27% for zinc, 4% for copper, 9% for lead, and 200 g/t for silver. This resulted in a reduction of 18, 4.15, and 9 samples

Trevali Mining Corp. 17-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Technical Report and Resource Estimate respectively. Assays were capped before compositing. Capping levels for Stratmat were set at 29% for Zn, 4% for Cu, 18% for Pb, 356.6 g/t for Ag and 5.14 g/t for Au. Table 17.4 summarises the capping effects for the dataset for the Stratmat property.

Table 17.4 Stratmat Capping Levels Summary

Element Capped Value Number of Samples Capped Zn (%) 29 102 Cu (%) 4 33 Pb (%) 18 23 Ag (g/t) 356.6 22 Au (g/t) 5.14 16

17.2.3 COMPOSITES

For Halfmile Lake, a composite length of 1.5 m was selected based on the assay length statistics (min - 0.3, max – 10, average – 1.25). This ensures that at least three composite samples are available for each block during the interpolation. A total of 1,754 composites samples were used for the block modeling.

For Stratmat, a composite length of 1 m was chosen to ensure that at least three composite samples are available for each block during the interpolation.

Table 17.5 Stratmat Assay Sample Length Statistics

Minimum Maximum Average Standard Deviation Count Length(m) 0.01 7.6 1.03 0.71 8400

The number or “count” of composite samples used for block modelling is given in Table 17.5 (above).

17.3 G EOLOGICAL I NTERPRETATION

17.3.1 HALFMILE LAKE

The Halfmile Lake geological interpretation and block model were completed using Gemcom software version 6.1.4.Three dimensional wireframes were created for all zones using a combination of uncapped zinc equivalent values of greater than 3% ZnEQ (zinc equivalent value) and logged massive sulphide intervals. Shoulder samples with values of less than 3% ZnEQ were included where appropriate. The zinc equivalency formula used here is given below. Metallurgical recoveries were not taken into account at this stage. For details of metal prices see Section 17.4.3.

ZnEQ = [(Zinc Price * Zinc Grade * 22.04622) + (Copper Price* Copper Grade * 22.04622) + (Lead Price * Lead Grade * 22.04622)] / [Zinc Price / 22.04622]

Trevali Mining Corp. 17-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Technical Report and Resource Estimate Seven wireframes were created as the Lower Zone of Halfmile Lake. These were subdivided into four sub-zones (Table 17.6).

Table 17.6 Solid Names and Explanation

RockCode GeologicalCode Zone 10 K_UPPER Upper Zone 22 K_LOWER22 Lower 22 Zone 23 K_LOWER23 Lower 23 Zones 24 K_LOWER24 Lower 24 Zones 29 K_LOWER29 Lower 29 Zone 30 K_DEEP Deep Zone 40 K_NORTH North Zone

Figure 17.1 (below) is a perspective view of the multiple solids used for the resource estimate looking towards the east.

Figure 17.1 Halfmile Lake Solids and Drill Holes (Looking East)

Trevali Mining Corp. 17-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Technical Report and Resource Estimate 17.3.2 STRATMAT

Three dimensional polygons were created for all eleven zones interpreted at Stratmat. These zones were determined by using uncapped ZnEQ values greater than 2% as a modelling cut-off. Shoulder samples with values of less than 2% ZnEQ were included where appropriate. Solids were then created by linking these polygons together by using a linker tool in MineSight and then the solids were validated. Validation of the solid models confirms the solids do not contain errors. The formula used for the ZnEQ values is the same as that discussed in Section 17.5.3 of this report assuming 100% recovery. The end rings for each solid were extruded for a distance of 12.5 m so that the values from drill holes on the edges of the solids could be included. Note that multiple solids had to be created due to the complexity of the geological relationships in this area (see Table 17.7, below).

Table 17.7 Zone and Deposit Names

Deposit(Historical) ZonebyWardrop Stratmat Central 40, 50 Stratmat S-1 10, 15, 20, 21, 22, 25, 30, 45 Stratmat Main 51

The following figures (Figures 17.2 and 17.3, below) illustrate the final geological interpretation created from the three-dimensional polygons.

Figure 17.2 Stratmat Zones Looking West Down Strike

Trevali Mining Corp. 17-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Technical Report and Resource Estimate Figure 17.3 Long Sectional View of the Multiple Solids used for the Resource Estimate looking Towards the North

Trevali Mining Corp. 17-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Technical Report and Resource Estimate 17.4 B LOCK M ODEL

17.4.1 HALFMILE LAKE

A single block model was created to cover all of the four zones, that is, all seven massive sulphide lenses. Separate models were created to hold interpolated values for each grade element, capped and uncapped, and for each interpolation method. Additional special models were created to facilitate the resource estimation and classification including pass number, distance, category and zinc equivalency.

BLOCK MODEL SIZE

A block size of 5 m x 5 m x 5 m was used to estimate the resources. These parameters were chosen as mining units that may be mined by underground methods.

INTERPOLATION PLANAND SPATIAL ANALYSIS

The Interpolation Methods used for populating the block models and determining resource classification were Nearest Neighbour (NN) and Inverse Distance Squared (ID2). For NN interpolation a single pass was used. For the ID2 interpolation three passes on the zinc and lead data and two passes on the copper and silver data were used.

For the initial pass, Pass 0 on the zinc and lead data only, a minimum of four composite samples and a maximum of six composite samples were used to interpolate a block. Pass 1 and Pass 2 used the same number of composite samples for all metals, zinc, lead, copper and silver. For Pass 1 the minimum number of composite samples used to estimate a block is six while the maximum is 15. For Pass 2 the minimum number of samples used is lowered to three, but the maximum remains unchanged. For both passes the maximum number of samples per hole is limited to three in the case of zinc and lead and to five in the case of copper and silver; this means that at least two drill holes are used to interpolate the block grade for both Pass 0 and Pass 1.

The search ellipses for this resource estimate are shown in Table 17.8 (below).

Trevali Mining Corp. 17-7 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 17.8 Search Ellipse Parameters

Profile Search Rotation Rotation Rotation X Y Z Search Name Anisotropy About Z About X About Z Range Range Range Type Rotation HM_ULDP0 30° -40° 0° 60 m 25 m 20 m Ellipsoidal ZXZ Rotation HM_ULDP1 30° -40° 0° 80 m 50 m 20 m Ellipsoidal ZXZ Rotation HM_ULDP2 30° -40° 0° 160m 100m 20m Ellipsoidal ZXZ

EQUIVALENCY FORMULA

The final zinc equivalent model was calculated based on the capped metal values from the NN and ID2 block model folders for zinc, lead, copper and silver. A slightly different formula was used here than that used to generate the wireframes. Metallurgical recoveries were incorporated at this stage as shown in the formula below:

ZnEQ_C = (((Zinc Price * Zinc Grade Capped * 22.04622 * Zinc Recovery) + (Copper Price * Copper Grade Capped * 22.04622 * Copper Recovery) + (Lead Price * Lead Grade Capped * 22.04622 * Lead Recovery) + (Silver Price * Silver Grade Capped / 34.2857 * Silver Recovery) / (Zinc Price)) / 22.04622

The metal prices and metallurgical recoveries used in this calculation are given below in Table 17.9 (below). The metal prices listed are based on four-year moving averages (September 2004 to September 2008) taken from a database maintained by Wardrop. The same metal prices were used in the ZnEQ formula used to generate the geological wireframes.

Table 17.9 Zinc Equivalency Factors

Metal Price Metallurgical Recovery Zn $1.11/lb Zn 89.7% Cu $2.75/lb Cu 60% Pb $0.78/lb Pb 72% Ag $11.70/oz Ag 48.6% PoundsperTonne 2,204.622

MINERAL RESOURCE CLASSIFICATION

The mineral resource was classified into Indicated or Inferred Resources based on the number of drill holes and distance. Individual blocks were classified as Indicated if one hole was located within 20 m or if two holes were located within 40 m of the block center. The remainder of the blocks within the 100 m by 160 m by 20 m search ellipse was classified as Inferred. Any remaining blocks were unclassified.

Trevali Mining Corp. 17-8 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The ID2 resource estimates for all four zones were made at ZnEQ_C cut-offs from 5% to 10% and presented in Tables 17.10 and 17.12 (below). Base case resource estimates for the entire Halfmile Lake area were made at a 5% ZnEQ_C cut-off and are shown in Tables 17.11 and 17.13 (below). These cut-off values are believed to be appropriate for a potential mine in northern New Brunswick.

Table 17.10 Indicated Resource Estimate for Halfmile Lake by Zone

ZnEQ Cut-off Zone Tonnes ZnEQ_C (%) Zn (%) Pb (%) Cu (%) Ag (g/t) Upper 1,192,700 7.96 6.72 2.31 0.43 16.95 Lower 4,472,200 9.65 8.68 2.81 0.12 37.94 5% Deep 0 0.00 0.00 0.00 0.00 0.00 North 597,200 7.56 6.78 1.40 0.49 4.84 Upper 931,200 8.66 7.37 2.57 0.42 18.05 Lower 3,727,500 10.48 9.43 3.10 0.12 41.65 6% Deep 0 0.00 0.00 0.00 0.00 0.00 North 435,700 8.32 7.50 1.63 0.49 5.84 Upper 723,300 9.28 7.95 2.80 0.41 18.23 Lower 3,139,600 11.22 10.10 3.35 0.11 45.05 7% Deep 0 0.00 0.00 0.00 0.00 0.00 North 279,900 9.36 8.49 2.01 0.46 7.83 Upper 511,200 10.02 8.63 3.10 0.40 17.58 Lower 2,578,800 12.05 10.83 3.62 0.11 48.66 8% Deep 0 0.00 0.00 0.00 0.00 0.00 North 164,100 10.71 9.71 2.63 0.40 11.22 Upper 372,300 10.62 9.17 3.34 0.40 16.87 Lower 2,123,800 12.80 11.53 3.86 0.10 51.95 9% Deep 0 0.00 0.00 0.00 0.00 0.00 North 108,300 11.90 10.83 3.08 0.36 14.38 Upper 213,500 11.49 9.94 3.73 0.40 14.32 Lower 1,714,900 13.59 12.27 4.08 0.10 55.09 10% Deep 0 0.00 0.00 0.00 0.00 0.00 North 84,100 12.59 11.44 3.36 0.34 16.28

Table 17.11 Indicated Resource Estimate at 5% ZnEQ Cut-Off for all Halfmile Lake

Tonnage ZnEQ Zn (%) Pb (%) Cu (%) Ag (g/t) (t x 1,000) 6,262.043 9.13 8.13 2.58 0.22 30.78

Trevali Mining Corp. 17-9 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 17.12 Inferred Resource Estimate for Halfmile Lake by Zone

ZnEQ Cut-off Zone Tonnes ZnEQ_C (%) Zn (%) Pb (%) Cu (%) Ag (g/t) Upper 156,100 8.08 7.20 2.64 0.17 6.19 Lower 1,071,000 9.01 8.06 2.76 0.08 38.55 5% Deep 4,825,700 6.86 6.37 1.60 0.15 17.04 North 25,400 7.46 6.19 1.55 0.73 6.19 Upper 129,200 8.62 7.69 2.88 0.15 5.74 Lower 941,700 9.48 8.48 2.94 0.07 41.31 6% Deep 2,497,500 8.21 7.65 2.05 0.12 19.14 North 16,400 8.56 7.16 2.03 0.71 8.09 Upper 106,200 9.06 8.09 3.08 0.14 5.08 Lower 783,800 10.08 9.02 3.12 0.07 44.83 7% Deep 1,484,400 9.36 8.75 2.33 0.13 20.59 North 8,000 10.66 8.72 3.19 0.76 14.18 Upper 83,000 9.51 8.49 3.31 0.13 3.85 Lower 623,000 10.76 9.64 3.34 0.07 47.72 8% Deep 1,107,100 9.97 9.29 2.58 0.12 21.94 North 4,700 12.89 10.77 4.24 0.64 19.22 Upper 59,300 9.94 8.85 3.54 0.13 4.13 Lower 474,600 11.47 10.26 3.59 0.07 50.64 9% Deep 859,900 10.41 9.67 2.79 0.12 22.52 North 4,600 13.01 10.85 4.28 0.66 19.42 Upper 24,300 10.59 9.35 3.93 0.14 0.68 Lower 350,500 12.16 10.87 3.87 0.06 52.82 10% Deep 631,600 10.73 9.85 3.10 0.11 23.52 North 3,900 13.60 11.44 4.53 0.61 20.39

Table 17.13 Inferred Resource Estimate at 5% ZnEQ Cut-Off for all Halfmile Lake

Tonnage ZnEQ Zn (%) Pb (%) Cu (%) Ag (g/t) (t x 1,000) 6,078,200 7.27 6.69 1.83 0.14 20.51

17.4.2 STRATMAT

One block model was created to cover all of the massive sulphide lenses at Stratmat. Table 17.14 (below) shows the MineSight coordinates for the model.

Trevali Mining Corp. 17-10 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 17.14 Stratmat Block Model Coordinate Settings

Stratmat Minimum Maximum Cell Size Easting 10621 13000 3 Northing 9850 10876 3 Elevation 4476 5400 3

BLOCK MODEL SIZE

A block model size of 3 m x 3 m x 3 m was used to estimate the resources. This size was chosen because portions of the deposit may be mined by underground methods.

INTERPOLATION PLANAND SPATIAL ANALYSIS

In total, four interpolations were run to calculate the resources for Stratmat. The four interpolations used were as follows:

 Inverse Distance Squared (ID2) capped.  ID2 uncapped.  Nearest Neighbour (NN) capped.  NN uncapped. For all inverse distance weighted interpolations run on Stratmat, there was a minimum of three composite samples and a maximum of six composite samples used to estimate a block. Two separate search ellipses were defined: for Pass 1 the X, Y and Z ranges were set at 120 m, 120 m and 120 m respectively while the ranges for Pass 2 are outlined in Table 17.9.

The statistics on the distances to the nearest composite sample are given in Table 17.15 (below).

Table 17.15 Statistics on the Distances to the Nearest Composite Sample

Minimum Maximum Average StdDev Count 0.19 158.6 44.8 31.79 69,718

The search ellipse parameters for this resource estimate are shown in Table 17.16 (below). Note that the dips in red were measured from a vertical position so 10° is really 80° (90°-10°).

Trevali Mining Corp. 17-11 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 17.16 Search Ellipse Parameters

Zone Azimuth Dip (90-x) Plunge Major (m) Minor (m) Vertical (m) 10 65 10 0 50 15 80 15 70 10 0 50 15 70 20 80 15 -20 80 20 40 21 240 3 0 50 50 50 22 83 3 0 60 30 10 25 65 15 45 55 15 80 30 85 10 20 80 15 40 40 50 40 30 80 25 50 45 65 15 70 55 10 80 50 60 40 30 70 20 40 51 60 30 0 40 20 80

Table 17.16 (above) exhibits two distinct methods of measuring dips. The dips recorded in red have been measured from a vertical orientation while the dips in black have been measured from a horizontal orientation. The two dip measurement types are relative to the azimuth orientation.

EQUIVALENCY FORMULA

The metal prices are four-year moving averages (September 2004 to September 2008) taken from a database maintained by Wardrop. A 2% ZnEQ value was used as a nominal cut-off to model the geological, or wireframe, solid models.

In order to create the wireframe models for the Stratmat deposit, a ZnEQ value was created based on the raw, uncapped assay values. Metallurgical recoveries were not employed in creating the ZnEQ values. The formula is given below:

ZnEQ = [Zinc Grade + (Copper Price * Copper Grade) / Zinc Price] + [(Lead Price * Lead Grade) / Zinc Price] + [(Silver ounces per tonne / 0.9071487 * Silver Price) / Zinc Price*22.046] + [(Gold ounces per tonne / 0.9071487 * Gold Price) / Zinc Price * 22.046]

ZnEQ: Zinc equivalency Zn price: $1.11/lb Cu price: $2.75/lb Pb price: $0.78/lb Ag price: $11.70/oz Au price: $639.91/oz Pounds per tonne: 2,204.622 1 ton = 0.971487 t

Trevali Mining Corp. 17-12 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment For reporting purposes, metallurgical recoveries were applied in the calculation of the Zn equivalency (ZnEQR). The recovery factors used were derived from the Half Mile Lake Project (Daigle, 2009).

ZnEQR = (Zinc Capped Grade * Zinc Recovery) + ((Copper Price * Copper Capped Grade * Copper Recovery) / Zinc Price) + ((Lead Price * Lead Capped Grade * Lead Recovery) / Zinc Price) + ((Silver ounces per tonne Capped / 0.9071487) * Silver Price * Silver Recovery) / (Zinc Price*22.046) + ((Gold ounces per tonne Capped / 0.9071487) * Gold Price * Gold Recovery) / (Zinc Price * 22. 046)

ZnEQR: Zinc equivalency recovery capped Zn price: $1.11/lb Zn recovery: 89.7% Cu price: $2.75/lb Cu recovery: 60% Pb price: $0.78/lb Pb recovery: 72% Ag price: $11.70/oz Ag recovery: 48.6% Au price: $639.91/oz Au recovery: 70% Pounds per tonne: 2,204.622 1 ton = 0.971487 t

Assay values were capped based on the capping levels from Table 17.4.

MINERAL RESOURCE CLASSIFICATION

Both ID2 and NN methods were used to interpolate the data in the block model. The NN method is used as a cross-check for the ID2 method. The resource classification is determined by drill density and spatial continuity, however, the mineral resource for the Stratmat area was classified as an Inferred Resource based on the degree of confidence in the raw data.

The ID2 resource estimates for all eleven zones were made at ZnEQR cut-offs from 5% to 10% and may be found in Appendix B. These cut-off values are believed to be appropriate for a potential mine in northern New Brunswick. The following metallurgical recoveries were applied to the zinc equivalent for the resource estimate: 89.7% zinc, 72% lead, 60% copper, 48.6% silver and 70% gold.

The base case resource estimate was made at 5% ZnEQR cut-off and is shown in Table 17.17 (below).

Trevali Mining Corp. 17-13 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 17.17 Stratmat Property Inferred Resource Estimate at 5% ZnEQR Cut-Off

ZnEQR Zone Tonnes Zn EQ (%) Zn (%) Pb (%) Cu (%) Ag (g/t) Au (g/t) Cut-Off 10 266,800 7.07 5.20 2.17 0.32 60.59 0.63 15 215,700 6.65 5.03 2.67 0.36 28.06 0.09 20 1,474,000 8.41 6.33 2.53 0.34 62.57 0.83 21 106,100 7.44 5.98 2.86 0.07 44.71 0.33 22 139,400 8.17 5.99 2.77 0.26 60.67 0.93 5% 25 676,100 6.92 5.20 2.49 0.36 40.40 0.28 30 157,200 7.61 6.22 2.16 0.21 45.91 0.47 40 836,700 9.58 7.13 3.14 0.41 64.49 0.85 45 88,400 10.25 7.45 4.07 0.74 44.53 0.15 50 737,800 8.65 6.48 2.68 0.60 39.55 0.49 51 826,200 7.55 5.56 2.13 0.45 60.76 0.63 Totals 5,524,500 8.16 6.11 2.59 0.40 54.21 0.62

17.5 V ALIDATION

17.5.1 HALFMILE LAKE

The Halfmile Lake block model volumes were validated against the initial wireframe model volumes and all differences were found to be within a tolerance of less than 0.01%. The results of these comparisons are shown in Table 17.18 (below).

Table 17.18 Halfmile Lake Volume Comparison between Wireframe Solid Models and Block Models

Wireframe Total Block Model Total Zone % Difference (m3) (m3) Upper 512,340 512,373 -0.0064% Lower 1,930,999 1,930,908 0.0047% Deep 2,699,507 2,699,513 -0.0002% North 323,604 323,584 0.0062% Total 5,466,450 5,466,378 0.0013%

A comparison was made between the composited values and those populated into the block model. Although the final resource estimate is based on the ID2 method, the NN method was also done as a check. The comparison between these three values is shown in Table 17.19 (below).

Trevali Mining Corp. 17-14 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 17.19 Halfmile Lake Comparison of Composite Values to ID2 and NN Values

Zn (%) Pb (%) Cu (%) Ag (g/t) Composite 6.23 1.91 0.25 23.31 ID2 5.91 1.77 0.21 21.61 NN 6.05 1.82 0.24 22.40

17.5.2 STRATMAT

The volume of the deposit was validated by comparing the Stratmat block model volumes against the initial wireframe model volumes. The differences were found to be within a tolerance of less than 1.4% between all interpreted zones. Over the entire deposit the comparison between the block model volume and the wireframe model volume lies within a tolerance of 0.11%. The results of these comparisons are shown in Table 17.20 (below).

Table 17.20 Stratmat Volume Comparison between Wireframe Solid Models and Block Models

Wireframe Block Model - Wireframe

# of Zone Volume Tonnes Code % Tonnes % Difference Blocks 10 514,998.54 1,802,500 27,725 0.687777 1,802,000 0.03% 15 299,335.77 1,047,700 21,199 0.522697 1,047,100 0.06% 20 1,972,833.06 6,904,900 95,103 0.766626 6,889,800 0.22% 21 80,295.96 281,000 4,535 0.65228 279,500 0.53% 22 286,369.49 1,002,300 14,187 0.737707 989,000 1.33% 25 1,500,849.90 5,253,000 89,922 0.61796 5,251,200 0.03% 30 351,159.91 1,229,100 20,725 0.627334 1,228,600 0.04% 40 2,138,539.75 7,484,900 124,368 0.636632 7,482,200 0.04% 45 245,760.35 860,200 16,068 0.566253 859,800 0.05% 50 1,294,440.22 4,530,500 62,123 0.771575 4,529,600 0.02% 51 844,394.47 2,955,400 42,291 0.739308 2,954,600 0.03% Total Tonnes 33,351,500 TotalTonnes 33,313,400 0.11%

The assay values were validated by making the comparison between the composited values and those populated into the block model. The final resource estimate is based on the ID2 method; however, the NN method was also made as a check. The comparison between these three methods is shown in Table 17.21 (below).

Trevali Mining Corp. 17-15 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 17.21 Stratmat Comparison of ID2 and NN Interpolation Values at 5% ZnEQR Cut-Off

Au Zn (%) Pb (%) Cu (%) Ag (g/t) (g/t) ID2 6.11 2.59 0.40 54.21 0.62 NN 6.00 2.49 0.38 51.09 0.58

As an additional validation, a comparison was made between all the raw zinc assay values to the composite values, those values populated into the block model by ID2 method and the NN method. This comparison is shown in Table 17.22 (below).

Table 17.22 Stratmat Comparison of all Zn Composited Assay Values to ID2 and NN Values

Composites Block Model NN Block Model ID2 Stratmat Zn % 2.58 2.30 2.43 All Zones

Trevali Mining Corp. 17-16 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 1 8 . 0 OTHERDATAANDINFORMATION

This section is not applicable.

Trevali Mining Corp. 18-1 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment 1 9 . 0 MININGOPERATIONS

19.1 H ALF M ILE L AKE O PEN P IT M INING – N ORTH Z ONE

The open pit mining of the HML North Zone section of this report is presented as a future opportunity only. The opportunity presented for open pit mining of the North Zone is mutually independent from the proposed underground mining of the Upper, Lower and Deep zones.

The resource from the North Zone open pit mining was not included in the revenue calculations used in the financial analysis for this report. As well, capital expenditures and operating expenditures for the open pit mining of the North Zone are excluded from the financial analysis in this report.

The North Zone was excluded from the financial analysis of this report due to drill hole data integrity. Poor data integrity, particularly concerning North Zone silver content, resulted in abnormal pit shell optimization. For this reason the open pit mining of the North Zone was not included in the overall mine plan. Based on the future opportunity analysis conducted for the open pit, it is recognized that the North Zone does contain potential resources, which merit further exploration and investigation. There is a risk to the economic contribution from the North Zone resource if the majority of the waste rock is determined to be acid rock draining (ARD). As well, additional drilling is warranted to perform open pit geotechnical analysis which would result in better open pit optimization.

19.1.1 INTRODUCTION

There are seven massive sulphide lenses in the Halfmile Lake Property as shown in Figure 19.1. The North massive sulphide lens has the potential to be mined using open pit methods; the other lenses will be mined using the underground method.

The North massive sulphide lens is located at the northeast 1.1 km of the Upper massive sulphide lens. The strike direction is from southwest to northeast, the dip direction is toward the northwest and the dip angle is about 45° (see Figure 19.1 and Figure 19.2 for details).

The maximum length of the North massive sulphide lens is 410 m along the strike direction, the typical horizontal width is 5 to 8 m along the dip direction, and the buried depth is 50 to 240 m below the ground surface.

Travali Mining Corp. 19-1 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.1 Halfmile Lake Solids and Drill Holes (Looking Towards East)

Travali Mining Corp. 19-2 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.2 North Massive Sulphide Lens and Drill Holes (Looking towards Northeast)

19.1.2 MINING METHOD

Mining will be carried out using the conventional open pit method. Drilling will be performed for all ore and waste with conventional in-the-hole hammer rigs with single pass drilling capability. Blasting operations will use an emulsion-ANFO blend and a delay initiation system. Pre-split and buffer holes will be used for improving high wall stability. Hydraulic face-shovels and a front-end-loader will be used to load rigid haulage trucks.

Haulage trucks will haul ore and waste from pit to waste dump and ore stockpile; another fleet of haulage trucks will then transfer ore approximately a 22 km distance from the ore stockpile to the Owner’s mill site.

19.1.3 OVERALL PIT SLOPE ANGLE

Wardrop assumed an overall pit slope angle of 45° for this study. No geotechnical data was available for open pit mining of the North massive sulphide lens. Further work to define the open pit geotechnical data is warranted. In the absence a conservative value of 45° was chosen. A sensitivity analysis of the pit slope has been included with the slope angles of 42° and 48°. The results are presented graphically further in this section of the report.

Travali Mining Corp. 19-3 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment 19.1.4 OPEN PIT OPTIMIZATION

The purpose of pit optimization was to seek a pit shell that could create a maximum economical profit for the Owner, based on the prepared open pit block model and economical parameters. GEMSTM 6.1.4 3D mining plan software and WhittleTM 4.1.3 pit optimization software were used to complete pit optimization for the Halfmile Lake Project.

WhittleTM utilizes the 3D Lerchs-Grossmann (LG) algorithm to generate nested pit shells for an open pit. The LG algorithm can create a series of nested pit shells based on a block model, revenue factors, economical parameters, and pit slope constraints. Each pit shell includes blocks that are "worth mining”, and excludes blocks that are not "worth mining”, when waste stripping is taken into account.

Parts of parameters are explained here.

MINING COST

Wardrop assumed that a contract mining cost was Can$1.65 per tonne. The Owner will not buy equipment to conduct the open pit mining operation due to a short mine life.

MILL THROUGHPUT

A mill throughput of 2,000 t/d has been assumed starting in the second year.

MINING CAPACITY

A maximum mining capacity of 1,500,000 t/y had been assumed starting in the second year based on the ore production schedule and the pit stripping ratio. Pre- stripping will take place in the first year, so stripping tonnage will be lower than maximum mining capacity due to limited working space.

The results of the pit optimization show that no pit shell is generated when revenue factors are below 0.45, as shown in Table 19.1 and Figure 19.3.

Travali Mining Corp. 19-4 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.3 Section of Nested Pit Shells (Overall Pit Angle = 45°)

Revenue Factor = 0.82

Revenue Factor = 2.0

Revenue Factor = 1.8

Revenue Factor = 1.0 North Massive Sulphide Lens

Revenue Factor = 0.83

Accompanying that the revenue factor is increased from 0.45 to 2.0, the ore reserves and stripping ratio gradually increase in the generated pit shells.

Pit Shell No.17 is defined as the base case since the revenue factor is equal to 1.0, but it is not necessary to be an optimal pit shell.

Although Pit Shell No.16 generated a highest discounted NPV, valued at Can$14,455,000 with the best mining case, it is not an optimal pit shell, because it is not a practical mining scenario.

Pit Shell No.10 is determined as an optimal pit shell. Major advantages are that it uses two practical mining phases with a fixed lag of four benches (40 m) comparing with all pit shells of the best case, and it generates the highest discounted NPV, valued at Can$13,746,000 comparing with other pit shells of the specified mining case (see Table 19.1).

 Mill throughput constraint 690,000 t/a  Mining capacity constraint 1,500,000 t/a  Discount rate 8%  General and administrative cost is considered as the time cost.

Travali Mining Corp. 19-5 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment  No capital costs or replacement costs for open pit mining equipment are included in the pit optimization because Wardrop assumes that this project will use contract mining. Table 19.1 Open Pit Optimization (Overall Pit Angle = 45°, Discounted Rate = 8%)

Discounted Pit Cash Flow Tonnage Final Mine Life Revenue Best Specified Worst Waste Pit Ore Best Specified Factor Case Case Case Best No. x1000 Case Years x1000 x1000 x1000 x1000 1 0.45 5,899 5,899 5,899 98 1,565 0.3 2 0.50 6,428 6,428 6,428 108 1,739 0.4 3 0.55 7,401 7,401 7,401 129 2,181 0.4 4 0.60 7,508 7,508 7,508 132 2,235 0.4 5 0.65 7,558 7,558 7,558 134 2,273 0.4 6 0.70 8,056 8,056 8,056 152 2,728 0.5 7 0.75 8,096 8,096 8,096 155 2,778 0.5 8 0.81 8,330 8,330 8,330 170 3,175 0.6 9 0.82 8,330 8,330 8,330 171 3,175 0.6 10 0.83 13,746 13,200 12,770 685 28,002 3.4 11 0.84 13,784 13,185 12,753 690 28,165 3.5 12 0.86 13,789 13,187 12,756 691 28,192 3.5 13 0.87 13,789 13,187 12,756 692 28,195 3.5 14 0.89 13,943 13,054 12,601 700 29,106 3.6 15 0.90 13,942 13,053 12,600 701 29,107 3.6 16 0.90 14,455 12,612 11,577 757 33,585 3.9 17 1.00 14,442 12,426 11,406 775 34,212 4.0 18 1.10 14,224 12,144 10,859 798 35,344 4.1 19 1.20 14,075 11,982 10,552 808 35,898 4.1 20 1.30 13,761 11,641 9,989 825 36,697 4.2 21 1.40 13,617 11,478 9,752 830 37,008 4.2 22 1.50 13,343 11,173 9,315 841 37,498 4.2 23 1.60 12,893 10,681 8,648 854 38,279 4.3 24 1.70 11,887 9,435 7,010 881 40,027 4.3 25 1.80 11,458 8,911 6,346 893 40,736 4.4 26 1.90 11,051 8,420 5,733 900 41,384 4.4 27 2.00 8,429 4,601 1,926 958 45,307 4.7

The ultimate pit shell or the optimal Pit Shell No.10 is defined by the following major parameters (Table 19.2).

Travali Mining Corp. 19-6 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Table 19.2 Ultimate Pit Shell Parameters

Characteristics Parameters Ore 685,000 t Waste 28,002,000t Stripping Ratio 41 Pit Top Elevation 490 to 545 m Pit Bottom Elevation 320 m Typical Pit Depth 190 m MaximumWidthintheEast-West 390m MaximumLengthintheNorth-South 480m Perimeter at the top Edge of the Pit 1,428 m Area at the Top Edge of the Pit 147,087 m2

OPTIMIZATION ANALYSIS

Figure 19.3 demonstrates that a gap of nested pit shells appears between 0.82 and 0.83 of revenue factors. This type of gap between adjacent pit shells is not a normal occurrence under the condition of a large massive orebody. Upon analysis, Wardrop recognized that the following specific conditions caused the gap between adjacent Pit Shells No. 9 and 10.

 Ore tonnage significantly increases from 3,345,000 t to 28,696,000 t (as shown in Table 19.1).  Silver ore grade significantly increases from 1 g/t to 33 g/t . Table 19.3 indicates that the optimal pit (No.10) has an average stripping ratio that is 41. Once again, there is a large gap in strip ratio between adjacent pit shells which is not a normal occurrence under the condition of a large massive orebody. However, the North massive sulphide lens is a relative narrow lens (see Figure 19.2), so a higher stripping ratio will result from extracting deeper ore. The higher grades, particularly for silver, and good metal prices can create a high ore block value to pay the necessary waste stripping.

The overall pit slope was assumed as 45° without geotechnical data available. Generally speaking, it may be a conservative parameter.

To further confirm the above unusual characters, Wardrop recommends that Kria complete the following explorations of the North Zone before starting a higher level study.

 Conduct more drilling work for promoting Inferred resource to higher grade in the open pit part.

Travali Mining Corp. 19-7 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment  Perform more assay campaigns to verify ore grades and ore body perimeter, particularly for the silver values that have a marked and unusual stepped change in assay values.  Log and collect geotechnical data for determining open pit design parameters.

19.1.5 NORTH ZONE - MINE PLANNING

In this study, Wardrop utilized WhittleTM to generate a mine plan. The major procedure is to run the mining width module for creating a minimum operation space between two pushbacks.

Two mining phases were used for the mine planning. The mining Phase 1 is within Pit Shell No.9, while the mining Phase 2 is the part below the Pit Shell No. 9 and within the Pit Shell No.10 that is the ultimate pit. (see Fig. 19.4)

The mine planning was generated upon the specified mining case that includes the following constraints:

 Overall pit angle 45°  Minimum mining width 60 m  Mining phases 2  Mill throughput constraint 690,000 t/a  Mining capacity constraint 1 ,500,000 t/a  Discount rate 8%  General and administrative cost is considered as the time cost.  No capital costs or replacements cost are included in the pit optimization, because Wardrop assumes that this project will use the contract mining. Table 19.3 lists the results of the mine planning on a yearly basis. Approximately 10,000,000 t of pre-stripping will be conducted in the first year for exposing ore. As a result the stripping ratio is very high. Full capacity operation will take place during the second year for supporting mill operation and generating quick cash flow. Higher value return will be gained in the third and fourth years due to high ore production and low stripping ratio.

Open pit mine life is about 3.4 years, as shown in Table 19.3.

Travali Mining Corp. 19-8 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.4 Two Mining Phases

Travali Mining Corp. 19-9 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Table 19.3 Mine Planning (Overall Pit Angle = 45°, Discounted Rate = 8%)

Ore Tonnage Grade Grade Grade Grade Open Pit Open Pit Cash Annual Period Waste Tonnage in Input (t x Input Input Input Input Cash Flow Flow Can$ Stripping Year Place (t x 1000) 1000) Zn% Cu% Pb% Ag% Can$ x 1 000 Disc x 1000 Ratio 1 10,000 58 4.418 0.655 0.689 0.101 (12,112) (11,215) 171 2 15,000 195 4.228 0.600 0.427 0.230 (11,280) (9,671) 76 3 3,302 300 5.595 0.838 0.439 1.014 23,783 18,880 10 4 394 131 7.113 2.045 0.228 11.366 19,603 15,046 2 28,696 684 5.396 0.986 0.416 2.696 19,994 13,040 41

Trevali Mining Corp. 19-10 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment 19.1.6 OPEN PIT SENSITIVITY ANALYSES

It is noted that the following analyses are just for relative comparison, and are independent from the project financial analysis of a later chapter regarding capital costs of underground mining, mill, infrastructures and tailing facilities. The following graphs are reflective of the sensitivity of the following variables to the open pit mining results exclusively. The variables included in the sensitivity analyses are slope angle, discount rate and processing costs.

Figure 19.5 exhibits the sensitivity analysis for overall slope angles. To do this, Wardrop conducted nine different runs in WhittleTM through varying overall pit slope angles and discount rates. When each specific case was run, holding all else equal. The results show:

 At a given rate of discount, the discounted pit value is higher with increasing overall pit slope angles.  At a given angle of overall slope, the discounted pit value is lower with increasing discount rates. Figure 19.5 Sensitivity Analysis for Overall Slope Angles and Discount Rates

Figure 19.6 displays the sensitivity analysis for metal prices. The results show that for the base case of slope angle (45°)and discount rate (8%), the discounted pit value is most sensitive to zinc price. It is less sensitive to copper price, relatively insensitive to lead price and silver price.

Trevali Mining Corp. 19-11 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.6 Sensitivity Analysis for Zn, Cu, Pb and Ag Metal Prices

Figure 19.7 illustrates the sensitivity analysis for metal prices, processing cost and discount rate. The results demonstrate that for the base case of slope angle (45°) and discount rate (8%), the discounted pit value is most sensitive to zinc price. It is less sensitive to processing cost and discount rate.

Trevali Mining Corp. 19-12 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.7 Sensitivity Analysis for Zn Metal Price, Processing Cost and Discount Rate

19.2 H ALF M ILE L AKE U NDERGROUND M INING

A combination of three underground mechanized mining methods at the Halfmile Lake Project will provide mill feed at a nominal rate of 2000 t/d (714,000 t/a). The mine design is based on using MCF, Avoca, and LH methods at metal prices of $1.91/lb for copper, $0.56/lb for lead, $0.80/lb for zinc and $10.59/oz for silver at an exchange rate of 1.182 (US$ to Cdn$).

The Upper, Lower and Deep Zones at Halfmile Lake will produce 11.6 million tonnes of ore over a 20-year mine life where 75.4% of production will be from MCF, 9.3% from Avoca and 15.3% from LH methods. The Upper Zone will provide the source of earliest ore and will be mined entirely using the MCF method. The general geometry of the ore zones is shown on the vertical section (Figure 19.8) and in Figures 19.9 and 19.10.

Trevali Mining Corp. 19-13 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.8 Halfmile Lake Deposit Vertical Section Looking North

Figure 19.9 Halfmile Lake Deposit Top View of Ore Zones

Trevali Mining Corp. 19-14 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.10 Halfmile Lake Deposit Longitudinal Section Looking West

Access to the zones will be provided by the main ramp driven from a surface elevation of 531 m above sea level. Initially, waste from ramp development will be trucked to surface and dumped at a pad, which will be used for both ore and waste handling. A crusher will be located at the dump pad to crush the ore, which will then be trucked off-site to a new mill located at the Heath Steele site. The crusher will also crush waste to be used as backfill.

When production begins in the Upper Zone, 60% of the waste will be trucked directly to the mined-out stopes as backfill material.

The ramp will be driven using a 2-boom electric/hydraulic jumbo, 8 yd3 scooptram and one 50 t haul truck. A scissor lift truck will be used for rock bolting and installing mine services.

Once the ramp reaches the 200 level horizon, an exploration drift will be driven in order to undertake definition diamond drilling of the Lower Zone. Similarly, at the (–) 70 level, another exploration drift will be driven to conduct a diamond drilling program for the Deep Zone

Trevali Mining Corp. 19-15 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Figure 19.11 Mine Vertical Section

Trevali Mining Corp. 19-16 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment 19.2.1 SUMMARY

UNDERGROUND MINEABLE RESOURCES – ALL CLASSIFICATIONS

The underground mineable resources for the Upper, Lower and Deep Zones were calculated using a zinc equivalent (ZnEQ) cut off grade of 5%. A mining recovery of 90% as well as a dilution factor of 10% was applied to the underground resource. The mineable resource summary (tonnes) is shown in Table 19.4.

Table 19.4 Summary of Diluted Mineral Resources

Tonnes ZnEQ Zn% Cu% Pb% Ag

Upper Zone Indicated 1,180,773 7.236 6.109 0.391 2.100 15.409 Inferred 153,931 7.374 6.571 0.155 2.409 5.649 Lower Zone Indicated 4,427,478 8.773 7.891 0.109 2.555 34.491 Inferred 1,055,732 8.226 7.359 0.073 2.520 35.197 Deep Zone Inferred 4,779,941 6.237 5.792 0.136 1.451 15.491 Total 11,597,855 7.499 6.778 0.147 2.048 24.383

The Upper and Lower Zone ore geometries (sections and plans) are shown in Appendix E.

The Deep Zone plans and sections are illustrated in Appendix F.

19.2.2 UNDERGROUND MINE DESIGN

MAIN ACCESS

The main access to the three underground zones will be via a 5 m x 5 m ramp driven at a maximum grade of –15%. The ramp will be equipped with permanent mine services for compressed air, dewatering, process water, power, instrumentation and controls and ventilation. Re-mucks and truck load-outs will be cut at 150 meter and 300 meter intervals respectively. Storage space and temporary sump facilities will be located at inactive re- muck cut-outs. Level access drifts will be excavated at vertical intervals of 30 meters. Electrical sub-stations at 550 m intervals along the ramp as well as access to diamond drilling horizons will be excavated at the 200, 94, 65, and (-) 70 elevations.

FOOTWALL DRIFTS

In order to install the support infrastructure and provide access to the mining zones, 4.6 m x 4.6 m footwall drifts will be driven from the level access drift off the ramp. Footwall drifts will be driven at a grade of –2% to +2% to provide proper drainage to the sump location. Infrastructure facilities such as sumps, electrical sub stations, refuge stations, storage

Trevali Mining Corp. 17 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment areas, fuel stations, and explosive storage areas will be excavated along the footwall drifts at the appropriate levels. Access cross-cuts (x-cuts) will be driven into the ore zones from the footwall drift at locations dependent on the mining method selected. Truck load- outs for production will be located in the level access drifts between the ramp and the footwall drift.

19.2.3 MINING METHODS

MECHANIZED CUTAND FILL

The MCF method will be used in areas where the ore dips at less than 40 to 45°. The Upper Zone dips at an average of 32° and will be mined using the MCF method. A sill pillar will be left in the center of the zone in order to establish two concurrent mining levels. One attack ramp will be driven at –20% from the footwall drift to intersect the ore on each level. The first horizontal cut will be mined from the bottom of the attack ramp with a full face jumbo round and slashing. When the cut has been mined, development waste rock will be hauled into the stope to establish a floor from which to mine the next cut. Subsequent cuts will be mined by slashing the back of the attack ramp to provide access to the next cut and the sequence, repeated for a total of six cuts or “lifts” covering a vertical interval of 30 m. The second and subsequent cuts will also be mined using a mobile jumbo where the ore headings will be slashed (breasting) to the opening above the fill below. In the Upper Zone, an allowance has been made to install cable bolts covering 50% of the exposed hangingwall on every cut. In areas where the ore is wider than stable spans, ore pillars will be left in place to support the hanging wall. Primary ground support includes 2.1 m long mechanical bolts on a1.2 m x 1.2 m pattern. Resin rebar may be an effective method for ground support and should be investigated based on future geotech evaluation. Shotcrete and screen may be needed in some areas and grouted cable bolting can be used to support large wedges or allow for wider mining spans. Explosives will consist of a combination of ANFO and packaged emulsion products (90% / 10% respectively). Typical MCF level plans for the Upper Zone are shown in Figures 19.12 and 19.13.

The MCF method will also be used in the Lower and Deep zones in shallow dipping areas of the orebody. In wide areas, ore pillars will be left in place to support the hanging wall. A sill pillar has also been left in the center of the Lower zone in order to allow early access to the ore and establish a 2nd (concurrent) mining level. In the Deep Zone three sill pillars will allow concurrent mining on three levels. Sill pillars are recovered by extending the MCF cut sequence to extract those cuts that had been left in place as sill pillars. This is accomplished by using the same attack ramp that was used to mine the previous cuts on the level. The MCF method is illustrated in Figure 19.14.

Trevali Mining Corp. 18 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 19.12 Typical Layout for MCF Method (500 Elev Plan)

Figure 19.13 Typical Layout for MCF Method (320 Elev Plan)

Trevali Mining Corp. 19 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 19.14 MCF Mining Method - Typical

AVOCAAND LONGHOLE

The Avoca method will be used in areas where the ore dips at more than 32 to 40° but not steep enough for practical long hole mining. This has been identified in two areas of the Lower Zone for vertical intervals of 75 and 15 m. Avoca mining requires access to the center and extremities of the ore on a mining level to allow drilling and filling operations. Unconsolidated backfill will be utilized in the Avoca mining areas. A typical Avoca layout is presented in Figure 19.15 where vertical mining heights will vary from 10 to 15 meters.

In one area of the Lower Zone, the LH mining method will be used over a vertical height of 145 m. The backfill requirements for Longhole mining will be as follows; consolidated cemented rockfill (CRF) will be utilized in the primary stopes with unconsolidated rockfill being used in the secondary stopes. A typical LH mining sequence is shown in Figure 19.16 and 19.17.

Trevali Mining Corp. 20 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 19.15 Modified Avoca Mining Method Longitudinal Retreat

Figure 19.16 Longhole Mining Method - Typical

Trevali Mining Corp. 21 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 19.17 Longhole Mining Longitudinal and Transverse Sectional Views

In the Lower Zone a combination of all three methods are utilized between the 125 and (-) 115 elevations, over a vertical interval of 240 meters.

Drilling for both the Avoca and LH methods will involve the use of in-the-hole (ITH) drills for 3.5 inch holes. ANFO will be the prime blasting agent supplemented by the use of packaged emulsions (15%). All mucking will be with 8 yd3 load-haul-dump (LHD) units equipped for remote mucking operations.

UPPERS

At the top of the three zones, and in two locations in the Lower Zone, uppers are used to extract ore in a longitudinal retreat sequence where access to upper extremities of a stope is limited or impractical.

19.2.4 EQUIPMENT FLEET

The fully trackless mining operation at Halfmile Lake requires the mobile equipment fleet, as listed in Table 19.5, for ramp and level development and production from MCF and Avoca LH stopes.

Trevali Mining Corp. 22 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 19.5 List of Mobile Equipment

MobileEquipment No.ofUnits Make Model* Underground Equipment Trucks – 50 t 6 Sandvik Sandvik 50 Trucks – 30 t w/ Ejector Box 1 Sandvik Sandvik 530 LHD's–8cy 5 Sandvik LH514 LHD's–6cy 1 Sandvik LH410 Jumbos 5 Sandvik DD420 Scissor Lifts 5 MacLean SL - 3 Boom Truck 1 Sandvik TH205L Fuel Truck 1 MacLean Jeeps / Tractors 4 Toyota Grader 1 Miller Personnel Carrier 1 Toyota ITH Drill 2 Sandvik DL310-7 Surface Equipment Front End Loader - 966 1 Cat 966H Grader 1 Cat 120H Water Truck 1 Dozer - D6 1 Cat D6R Pick-up Trucks 4 Various Various Fork Lift 1 Cat 930G * or equivalent

MINE PERSONNELAND CREWS

The mine personnel required for the Halfmile Lake operation consists of the crews and staff listed in Table 19.6.

Trevali Mining Corp. 23 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 19.6 Mine Personnel and Crews

No of Persons per day

Ramp Development MCF Avoca/LH Total Off Direct Mining Jumbo 2 44 1010 ITH 444 LHD 2 44 41414 Bolters 4 8 8 20 20 Blasters 2 2 4 4 Services 2 2 4 4 Indirect Mining Superintendent - Mining 1 0 Superindendent – Maintenance 1 0 General Foreman 1 0 Supervisors 6 6 Mechanics 1212 Welders 2 2 Electricians 44 Materials Handling 2 2 Trucking 12 12 Backfill LHD/Truck Operators 4 4 PlantOperator 22 Loader/DozerOperator 2 2 Total Contingent 105 102

DRILLING

The drilling requirements for ramp and level development, MCF production, LH overcut/undercut excavations and Avoca sills will be fulfilled using 2-boom electric hydraulic jumbo drills to drill nominal 1¾ inch (45 mm) holes with 14 ft and 16 ft feeds. The average hole length will be 12 ft (3.7 m).

Long hole and Avoca stopes will be drilled using ITH track mounted drills with on-board booster compressors. The units will drill 3.5 inch holes from 10 m to 30 m in length.

BLASTING

Overall explosive consumption has been based on the use of ANFO (90%) and packaged emulsions (10%) at a powder factor of 0.95 for mine development. For Long Hole blasting operations the powder factor used was 0.21 with a packaged emulsion content of 15%.

Trevali Mining Corp. 24 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment An explosive storage facility will be located on surface and a day’s use storage will be established at a designated location in each mining zone. Explosives and accessories will be delivered to the underground work areas via utility trucks.

LOADING OREAND WASTE

When the ramp is being driven 50 t trucks will be loaded at designated truck loading stations in the ramp using the 8 yd3 LHD units. Muck is loaded from remuck bays and from newly blasted rounds. Ore and waste are handled in a similar fashion from loading stations located on the levels.

HAULAGEAND RAMP MAINTENANCE

Ore and some of the waste is hauled to surface using 50 t trucks and dumped at a crushing pad where the ore is crushed to feed the mill processing operation. Waste is crushed for backfill to be returned to the stopes. The ramp is maintained using both run of mine development and crushed waste with regular grading and water applications for dust control.

VENTILATION

The main ventilation infrastructure for the Halfmile Lake project will consist of main Fresh Air Raises (FAR) and Return Air Raises (RAR) to the zones and will be interconnected with designated levels to service both ramp, development and productions operations. At steady state, 680 kcfm will be delivered underground to be distributed to the working areas. Two surface fans at each of the FAR (2 x 800 hp) and RAR (2 x 700 hp) will be controlled with Variable Frequency Drives (VFD’s) to provide an increasing volume of air at various stages of the LOM. A heater house with propane burners with a heating capacity of 9.5MM BTU/hr will be provided to heat the fresh air during the winter months.

An air flow of 110 kcfm will be provided via two 48-inch diameter metal ducts and 125 hp fans to ventilate the ramp over a length of 1,100 m. Once the ramp has reached designated elevations, such as 440, 350 and 200 in the Upper Zone, a connection will be made with the main FAR from which fresh air will be drawn to advance the ramp to the next interconnecting level. Between interconnecting levels, the metal ducts will deliver fresh air to the face. This method of advancing the main ventilation will be used throughout the development of the ramp.

A secondary system of raises will be provided to deliver and exhaust air between most of the levels. Bulkheads, regulators and 75 to 100 hp fans will control the air flow at each level. At some of the levels the air will be drawn from, and exhausted directly to, the main FAR and RAR raises. The schematic for the main ventilation system is shown in Figure 19.18.

Trevali Mining Corp. 25 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 19.18 Ventilation Schematic

SECONDARY EGRESS

A secondary egress will be provided from the underground workings through the FAR and/or RAR raises, which will be established early in the raising program. This system of FAR and RAR will allow for placement of mine services such as power, communications, water and compressed air. These raises will allow for these services to be maintained as close to the deepening mine front as possible.

BACKFILL

All of the stopes at the Halfmile Lake mine will be backfilled with waste rock delivered from development headings and/or backhauled from the surface crusher pad. Due to the sequencing of development and backfill operations, 60% of the development waste will be hauled directly to the stopes. In order to supply the required amount of fill to the stopes, the development volume will be supplemented by waste rock quarried from the vicinity of the North Zone deposit. The backfill schedule is presented in Appendix G.

As a result of establishing sill pillars in all on the zones, a 5 to 10 m lift of Cemented Rock Fill (CRF) is poured above the pillar. This will facilitate recovery of the pillars, from the last cut on the level below, later in the mining sequence. Five such pillars are located in the MCF mining areas. CRF will also be required for two transitions between mining methods and the establishment of one undercut sill in the Lower Zone. CRF will also be required in 50% of the Longhole stopes.

A mixing plant located on surface will provide the slurry for CRF and will be distributed to designated underground locations through a system of slick lines and boreholes.

Trevali Mining Corp. 26 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 19.3 H ALF M ILE L AKE I NFRASTRUCTURE

19.3.1 MINING INFRASTRUCTURE

REFUGE STATIONS

At steady state production, one twenty-five person portable refuge station will be located in each of the three zones. The units will be located in inactive re-muck stations or other excavations that have become redundant (such as exploration headings or associated cut-outs).

EXPLOSIVE STORAGE

Daily explosives and detonator storage will be provided at one location in each of the ore zones. Utility vehicles will be used to transport explosives and accessories directly to the work areas or to the designated underground storage locations.

MINE DEWATERING

Submersible and centrifugal electric pumps will be used to pump mine water from ramp and drift headings and designated sumps on the levels. The water will be pumped in stages from/to sumps to a surface discharge location for treatment. The overall pumping capacity will be 800 gpm delivered to surface via 8-inch and 4-inch steel pipelines in the ramp. On the levels, 4-inch steel pipelines will be used to handle mine water pumping requirements. Air operated diaphragm pumps (2-inch, 3-inch) will be used in some of the active headings during mine development. The main sumps will be designed to collect dirty water and allow settling of the solids with the decanted overflow being pumped to final disposal with centrifugal pumps (see Figure 19.19).

Figure 19.19 Mine Dewatering Diagram

Trevali Mining Corp. 27 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment PROCESS WATER

Process water, for drilling, dust suppression and washing purposes will be delivered from a storage tank location on surface to the underground workings via a 4-inch line in the ramp. The delivery system will include pressure reducing stations at regular intervals to maintain a water pressure of ±60 psi. On the levels distribution will be provided through 2- inch steel pipelines.

COMPRESSED AIR

Compressed air, for drilling and equipment maintenance, will be delivered from a compressor plant on surface, consisting of three (2 operating, 1 stand-by) 1500 cfm rotary screw compressors. Air will be delivered at a nominal pressure of 100 psi via 6-inch steel pipelines in the ramp and 2-inch steel pipelines on the levels.

FUEL HANDLINGAND STORAGE

Diesel fuel will be delivered to three designated underground storage locations (one in each of the zones) from a surface storage facility using a fuel truck. The underground storage (fuel bay) will consist of large SatStat (9000 liter) dispensing stations in the vicinity of exhaust air raises. Packaged lubricants will be transported to underground storage locations with the utility vehicles.

MAINTENANCE SHOPS

The main underground shop will be located in the Lower Zone at the (-) 70 elevation and will be equipped with a 25 tonne overhead crane, hose reel assemblies and lubricant dispensing equipment, welding bay and equipment, hydraulic presses, tire changing area, lube and warehouse areas and a complete set of non-personal mechanics tools and boxes. The shop will be equipped with a fire suppression system, fire doors, communications center and offices.

A satellite shop will be provided in the Upper Zone at the 200 elevation with similar facilities as the main shop but with reduced office space and work areas.

STORAGEAREAS

Redundant development headings and/or cut-outs such as re-mucks, diamond drill stations, exploration drifts and truck loadouts will be used as material storage areas.

MANWAYS

Steel manways complete with ladders and platforms will be provided for the second egress through a combination of the main and secondary FAR and RAR raises.

Trevali Mining Corp. 28 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 19.3.2 ELECTRICAL INFRASTRUCTURE

POWER SUPPLY

Power for the Half Mile Lake Mine site will be provided by a new 69 kV primary feeder from New Brunswick Hydro. Although the present Hydro distribution network cannot support a new 15 MVA load, planned upgrades to the system over the next two and a half years will result in sufficient capacity becoming available for the proposed mine. Twenty one kilometres of new overhead distribution line will also need to be installed between the mine site and the Newcastle Terminal near the Heath Steele mill, which is the closest location of available power.

A new 15 MVA substation complete with 4.8 MVA capacitor and self contained E-House will be constructed at the Half Mile Lake site to supply power. The substation will step the power down from 69 kV to 13.8 kV. The E-house will contain a 13.8 kV switchgear which will distribute power to the entire mine site.

POWER DISTRIBUTION

Power will be supplied using TECK cable run underground from the switchgear in the E- House to the various building locations at 13.8 kV. Each of the main buildings will have outdoor switchgear and dry type distribution transformers which will step the voltages down to the proper utilization voltage for the building. Utilization voltages for the surface fan and compressor buildings will be 4160 V whereas all other buildings will be 600 V. An electrical single line diagram for distribution on the Half mile site is located in Appendix H. The costs for a potential headframe/hoist and shaft electrical infrastructure is not included in the design. However, the location of the primary transformer is located close to the proposed headframe location for ease of future design implementation. The following surface transformers are included in the electrical distribution design:

 process water treatment plant (1 MVA)  compressor/garage building (1 MVA)  fresh air fan building (2 MVA)  mine dry and admin building (1 MVA)  crusher and pumphouse (1 MVA)  exhaust air fan building (2 MVA).

EMERGENCY POWER

A skid mounted self contained 800 kW diesel generator will supply essential loads in the event of a Utility power outage. The 600 V generator will be connected to emergency distribution panels through an automatic transfer switch, which will ensure isolation of the generator from the utility supply. The generator will be located near the administration building and mine dry to provide power to those locations via two individual transfer switches.

Trevali Mining Corp. 29 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment An uninterruptable power supply (UPS) for the underground mining to provide backup power to the leaky feeder and surface communication systems will also be installed on surface.

SURFACE EXHAUSTAND INTAKEFAN BUILDINGS

Power for the surface fan buildings will be supplied from the E-House at the substation. Each of the fan buildings will have 1500 kVA, 13.8 kV to 4160 V transformers which will distribute power to the 4160 V switchgear line-up in the buildings. Each switchgear line- up will have an incoming fused disconnect switch and two Variable Frequency Drives (VFD) to start and run the fans.

GROUNDINGNETWORK

The main ground system will be achieved through an engineered ground grid at the new incoming substation location. From the ground grid, insulated ground conductors will be run to all buildings and be bonded to the building ground electrodes. Individual buildings and metal tanks shall have two separate ground connections to ensure grounding integrity. Additionally all equipment enclosures, motors, water tanks and structural members will be connected to this ground network.

UNDERGROUND POWER DISTRIBUTION

Power will be distributed underground at 13.8 kV from the switchgear in the surface substation E-house. Power will be run in the ramps to self contained underground mine power centres (MPCs), comprised of incoming fused load-break switch, dry type transformer, control and 600 V feeder breakers. The transformers in the ramp MPC’s will be rated at 800 kVA while those in the stope areas will be rated at 600 kVA. There will be a total of 15 MPC’s purchased on the project with units being relocated in ramps and stopes as sources of power are no longer required. The MPC feeder breakers will feed power to portable racks which house the fan, pump and jumbo starters.

COMMUNICATIONS

Underground and surface communications will primarily be done through VHF radios (leaky feeder). A fiber optic network composed of fiber cable, switches and servers shall also be installed on surface and underground to select areas such as shops, fuel bays, compressors rooms, electrical rooms and office areas. VOIP phones will be installed throughout the plants, electrical rooms, controls rooms, refuge stations, shops and offices. A LAN network for process and business will be provided both underground and on surface.

External communications will be done by telephone. A new telephone line will be run along the new High voltage overhead distribution line from the Heath Steele mill.

Trevali Mining Corp. 30 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 19.4 S TRATMAT U NDERGROUND M INING

19.4.1 SUMMARY

There are two distinct ore zones in the Stratmat site - Zone 51 and Main Zone. Zone 51 lies approximately 1,000 meters northeast of the upper part of the Main Zone .Both zones consist of stringers and blobs. There is no known major geological structure in the deposit.

The mineable tonnage of each zone is shown in Table 19.7 below. The tonnage of Zone 51 is made up of blobs that are reasonably closely clustered, whereas the tonnage of the Main Zone is an aggregate of widely spaced numerically designated sub-zones (10, 15, 20, 21, 22, 25, 30, 40, 45, and 50). Figure 19.20 depicts the distribution of the resources.

Table 19.7 Summary of Diluted Mineral Resources

Diluted Minable Mine Zone Tonnes ZnEQ (%) Cu (%) Au (oz/t) Ag (oz/t) Pb (%) Zn (%) MainZone 5,729,465 8.755 0.363 0.015 0.134 2.212 5.132 Zone51 943,351 7.904 0.375 0.016 1.319 2.143 5.026 Total 6,672,816 8.635 0.365 0.015 0.302 2.202 5.117

Figure 19.20 Stratmat Deposit Top View of Ore Zones

Trevali Mining Corp. 31 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 19.21 Stratmat Deposit (Grade shell @4.8% ZnEQ cut off) Vertical Section Looking North

The underground mineable resources shown in Table 19.7 were calculated using a zinc equivalent (ZnEQ) cut off grade of 4.8%. A mining recovery of 90% and a dilution factor of 10% were applied to the underground resource.

The apex of Zone 51 is at Elev. 5328, some 6 meters below surface. The economic zone extends to elev. 5181, a total depth of 147 meters. In The Main Zone, the apex is at the same elevation, 5328 but 38 meters below surface. The economic zone goes down to Elev. 4593, a total depth of 735 meters.

The planned combined production from both the Kria Halfmile Lake and Stratmat properties is 4,000 tonnes per day (t/d), 1,428,000 tonnes per year (t/a) at 357 work days per year. The production will be sourced equally, i.e. 2,000 t/d from each property.

A combination of underground mining methods - Long Hole Stoping (LH), 80% and Mechanized Cut & Fill (MCF) 20%, will provide mill feed at a peak rate of 2000 t/d (714,000 t/a). Zone 51 will be mined entirely using the LH method. For LH mining, sub- level interval is 21 meters.

In order to start early production, the Main Zone is separated into four phases

19.4.2 PHASE 1: 5181 L TO SURFACE

Phase 1 will start production from 5181 elevation (the top of crown pillar of Phase 2, see Figure 19.22). It will be mined concurrently with Zone 51and will produce 1500 t/d for first two years. Cemented rockfill (CRF), 7-8% cement, will be used for all stopes on 5181 elevation, in order to facilitate the future recovery of the crown pillar of Phase 2 below.

Trevali Mining Corp. 32 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 19.4.3 PHASE 2: 5055 TO 5181 L

Phase 2 will start production in year three from 5055L (that is the top of crown pillar of Phase 3). Production will begin for the timely replacement of the exhaustion of the reserves in Phase 1 - to sustain the rate of production. CRF (7-8% cement) will be used for all stopes on 5055 elevation, in order to facilitate the recovery of the crown pillar of phase 3 below.

19.4.4 PHASE 3: 4845 TO 5055 L

To maintain the production rate of 2,000 t/d, Phase 3 will start production as the production in Phase 2 starts to decline, in year four. Production will commence on 4845 Elev. As in Phase 2, CRF will be used on all stopes on 4845 Elev to facilitate the recovery of the Phase 4 crown pillar.

19.4.5 PHASE 4: 4593 TO 4845 L

Phase 4 will be mined concurrently with Phase 3 to maintain the production rate. Production from Phase 4 will start in year five from 4593 Elev. For its relatively lower resource, production in Phase 4 will cease two years before that in Phase 3.

Figure 19.22 below illustrates the different phases of the Main Zone and the required crown pillars. Sub-levels will have a 21 meter interval. Zone 51 does not require a pillar; mining will be limited to the 5181 Elev because the deposit below this elevation is uneconomical.

Figure 19.22 Stratmat Deposit Crown Pillars and Mine Phases - Vertical Section Looking North

Trevali Mining Corp. 33 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 19.4.6 UNDERGROUND MINE DESIGN

Figure 19.23 below shows a longitudinal overview of the mine design.

Figure 19.23 Mine Longitudinal View

A ramp at a nominal grade of -15% is the main access to the Zone 51 underground workings. Likewise, a 15% ramp will be the main access to the Main Zone workings. The Main Zone is sub-divided vertically into four zones to designate mining phases. . A crown pillar 21 meters thick (equivalent to one sub-level in a longhole stoping area) will be left at the top of each phase, and will be recovered later according to the production schedule. A description of boundary and estimated resource of each phase are as follows:

 Phase 1 : Surface to 5181 Elev - 642,895 tonnes at 7.866 ZnEq  Phase 2 : 5181 Elev to 5055 Elev - 772,120 tonnes at 8.175 ZnEq  Phase 3 : 5055 Elev to 4845 Elev - 3,241,304 tonnes at 8.773 ZnEq  Phase 4 : 4845 Elev to 4593 Elev - 1,073,146 tonnes at 9.653 ZnEq

DEVELOPMENTAND PRODUCTION STRATEGY

The development strategy hinges on the planned mining methods, mainly LH. Sub-levels will be established at 21 meter interval.

Both ramps will be driven simultaneously. As the ramp reaches the elevation of a sub- level, the main crosscut on that sub-level will be collared a short distance to provide a temporary re-muck bay.

Trevali Mining Corp. 34 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment A service/escape raise will be driven in leapfrog fashion with a main ramp, i.e., the raise will be driven from a collared sub-level to the one above. Permanent mine services for compressed air, dewatering, process water, power, instrumentation and controls and ventilation will be installed in this raise. The immediate advantage of this raise is the provision of an escapeway, a ventilation airway and shorter lengths of service lines during ramp development. Once the raise is equipped, the ventilation tubing and service lines installed in the ramp section above will be removed and re-used on the ramp being driven below.

On every second sub-level, a truck loadout will be cut as well. Storage space and temporary sump facilities will be established in unused collars.

Upon reaching the 5181 Elev, lateral development to the ore zones will be carried out, followed by infrastructure and pre-production development. Production will start in an area as soon as the required infrastructure and safety amenities are in place. Pre- production development will continue and maintained until the total mine production rate has ramped up to 2,000 t/d and sustained.

While production is in progress above the 5181 Elev in both zones, the ramp in the Main Zone will be continued to the lower levels. Upon reaching the 5055 Elev (bottom of Phase 2), lateral and infrastructure development will be done in the same concept as described above. The rate of such development will be geared to the timely replacement of exhausted resources in the upper zone. This strategy will be repeated down to the Phase 3 and Phase 4 of the Main Zone.

MAIN ACCESS

Access to underground workings will be via a 5.0m by 5.0m decline driven at a maximum grade of -15% from surface. Each zone, Zone 51 and Main Zone, will be accessed by a separate ramp.

Zone 51: The ramp will be driven from a surface elevation of 5334m (334 m above sea level) to 5181 elevation with a total length of 1060m.

Main Zone: The ramp will be driven from a surface elevation of 5366m (366 m above sea level) to the bottom of phase 4, 4593 elevation with a total length of 5360m.

Electrical sub-stations at 550 m intervals along the ramp as well as access to diamond drilling horizons will be excavated at the 4887, 4600, and 4580 elevations.

The ramp will be driven using a 2-boom electric/hydraulic jumbo, 8 yd3 scooptram and one 50 t haul truck. A scissor lift truck will be used for rock bolting and installing mine services.

Initially, waste from ramp development will be trucked to surface and dumped on a storage pad. The pad will be used for both ore and waste handling. A crusher will be located at the dump pad to crush the ore, which will then be trucked off-site to a new mill located at the Heath Steele site. The crusher will also crush waste to be used as backfill.

Trevali Mining Corp. 35 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment When production begins in Zone 51 and the Main Zone, the ramp development waste will be trucked directly to mined-out stopes as backfill material.

FOOTWALLDRIFTS

Figures 19.24 and 19.25 below show a general level plan in each zone.

In order to install the support infrastructure and provide access to the stoping areas, 4.5 m x 4.5 m footwall drifts will be driven from the level Main cross-cut (x-cut) off the ramp. Footwall drifts will be driven 20-30m from the ore contact at a grade of –2% to +2% to provide proper drainage to the sump location. Stope x-cuts will be driven into the orebody from the footwall drift at locations and spacing dependent on the mining method selected. Truck load-outs for production will be located in the Main x-cut between the ramp and the footwall drift, or in the footwall drift, depending on the travelling distances of ore handling equipment.

Infrastructure facilities such as sumps, electrical sub stations, refuge stations, storage areas, fuel stations, and explosive storage areas will be excavated along the footwall drifts at the appropriate levels.

Figure 19.24 Zone 51, 5202 Elev Plan - Layout for Transverse LH Method

Trevali Mining Corp. 36 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 19.25 Main Zone, 4866 Elev Plan - Layout for Longitudinal LH Method

19.4.7 STRATMAT MINING METHODS

LONGHOLE (LH)

The LH open stoping with backfill will be used to mine approximately 80% of ore reserves in the Main Zone and Zone 51. Transverse stopes will be employed where the orebody width exceeds 15 meters. Primary and secondary stopes (or stopes and pillars), 16m and 18m respectively will be laid out across the strike of the ore body. In places where the width of ore is less than 15m, longitudinal stopes will be applied.

A slot raise will be driven in the hanging wall of each stope and pillar. Stopes will be mined the full height of the sub-level, starting from the longitudinal ends of the orebody, retreating towards the center. Depending on ground condition, a stope on the next level above will be mined before backfilling.

Secondary stopes will be mined in the same sequence as the primary stopes.

The backfill requirements for LH mining will be as follows: consolidated cemented rockfill (CRF) will be utilized in the primary stopes, and unconsolidated rockfill in the secondary stopes. A typical LH mining sequence is shown in Figures 19.11 and 19.12 on page 21- 22, Section 19.2.3.

Drilling for LH method will involve the use of in-the-hole (ITH) drills for 3.5 inch holes. ANFO will be the prime blasting agent supplemented by the use of packaged emulsions (15%). All mucking will be done with 8 yd3 load-haul-dump (LHD) units equipped for remote mucking operations.

Trevali Mining Corp. 37 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Transverse stope size will be 15-16 m wide, 21m high and 25-30 m long. In cases of longitudinal LH stope, outlines extend to the limit of the ore body.

Uppers: uppers are used to extract ore in a longitudinal retreat sequence where access to upper extremities of a stope is limited or impractical.

MECHANIZED CUTAND FILL (MCF)

The MCF method will be used in areas where the ore dips at less than 40 to 45°. This method will be applied in some areas of Main Zone, especially phases 3 and 4, and will be used for approximately 20% of the ore reserves. A sill pillar will be left in order to establish two concurrent mining levels.

This method is described in detail in Section 19.2.3 and illustrated in Figures 19.19, 19.20 and 19.21, pages 19-27 to 19-29.

PRODUCTION RATE

Development will be geared for a peak production rate of 2,000 t/d. Production will start in year 2012 at an average 1,260 t/d. The rate will ramp up to 1500 t/d in year 2013 and finally to the peak rate in year 2015.

19.4.8 STRATMAT EQUIPMENT FLEET

The trackless mobile equipment fleet for mining operation at Stratmat is listed in Table 19.8. The list includes equipment for ramp and level development and production from LH and stopes. Upon mining completion of Zone 51, equipment will be re-used in the Main Zone.

Trevali Mining Corp. 38 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 19.8 List of Mobile Equipment - Stratmat

No. of Units Underground Equipment Ore Haulage Trucks – 50 t** 9 RockfillHaulageTrucks–30t 6 FaceJumbos*** 3 LHD's – 8 cy 5 ITH Longhole Drill 2 ITH Longhole Drill (refurbished) 2 Support Fleet Scissor Lifts 3 Rockbreaker 1 Boom Truck 2 Explosivetruck 1 Fuel Truck 1 Grader 1 Personnel Carrier 1 Surveyors ‘Jeeps 1 Supervisors ‘Jeeps 4 Surface Equipment Front End Loader - Cat 966H 1 Grader cat 120H 1 Water Truck 1 Dozer-catD6R 1 Pick-up Trucks 4 Fork Lift Cat 930G 1 *or equivalent **Five units to be refurbished ***One unit to be refurbished

MINE PERSONNELAND CREWS

The mine personnel presented in Table 19.9 for the Stratmat operation is based on an analysis for the year 2016 which represents the maximum required manpower based on active production faces and ongoing development.

Trevali Mining Corp. 39 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 19.9 Mine Personnel and Crews

No of Persons per day

Ramp Development MCF LH Total Off Direct Mining Jumbo 2 10 6 18 18 ITH 4 4 4 LHD 4 2 6 6 Bolters 8 8 8 Blasters 4 4 4 Services 14 14 14 Trucking 18 18 Backfill Truck Operators 12 12 Plant Operator 2 2 Loader/DozerOperator 2 2 Indirect Mining Super’s - Mining 1 0 Super’s - Mtce 1 0 General Foreman 1 1 Supervisors 3 3 Mechanics 88 Welders 2 2 Electricians 4 4 Mat'lsHandling 2 2 Total Contingent 110 106

METHODS

Methods of drilling, blasting, loading of ore and waste, and, haulage and ramp maintenance will be the same as in the Halfmile Lake operations as described in Section 19.2.4..

VENTILATION

The main ventilation infrastructure for the Stratmat project will consist of main Fresh Air Raises (FAR) and Return Air Raises (RAR) to the zones and will be interconnected with designated levels to service both ramp, development and production operations. Main Zone: At steady state, 730K cfm will be delivered underground to be distributed to the working areas. Two surface fans at each of the FAR (2 x 670 hp) and RAR (2 x 500 hp). Zone 51: A FAR will be used to deliver156K cfm underground to working areas. Two surface fans at the ramp portal will provide downcast air flow and at the FAR, two 150 Hp fans will be installed. Due to the downcast air flow in the ramp, vent doors will be required.

All the surface fans will be controlled with Variable Frequency Drives (VFD’s) to provide an increasing volume of air at various stages of the LOM. Two heater house with

Trevali Mining Corp. 40 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment propane burners with a heating capacity of 9.5MM BTU/hr (main Zone) and 2.2MM BTU/hr (Zone 51) will be provided to heat the fresh air during the winter months.

An air flow of 80 kcfm will be provided via two 52-inch diameter metal ducts and 75 hp fans to ventilate the ramp over a length of maximum 200m. Once the ramp has reached a sub-level, for both ore zones, a connection will be made with the Service/Escape raise from which fresh air will be drawn to advance the ramp to the next interconnecting level. Between interconnecting levels, the metal ducts will deliver fresh air to the face. This method of advancing the main ventilation will be used throughout the development of the ramp.

A secondary system of raises will be provided to deliver and exhaust air between levels if necessary. Bulkheads, regulators and 75 to 100 hp fans will control the air flow at each level. At some of the levels the air will be drawn from, and exhausted directly to, the main FAR and RAR raises. The schematic for the main ventilation system is shown in Figure 19.26.

Figure 19.26 Ventilation Schematic Airflows

SECONDARY EGRESS

A secondary egress will be provided from the underground workings through the Service/Escape raises, which will be established early parallel with ramp development. This system of service raises will allow for placement of mine services such as power, communications, water and compressed air. These raises will allow for these services to be maintained as close to the deepening mine front as possible.

Trevali Mining Corp. 41 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment BACKFILL

All of the stopes at the Stratmat mine will be backfilled with waste rock delivered from development headings and/or backhauled from the surface crusher pad. Cemented Rock Fill (CRF) will be used for primary LH stopes and RF for secondary LH stopes. For MCF stopes RF will be used. Due to the sequencing of development and backfill operations the development waste will be hauled directly to the stopes. In order to supply the required amount of fill to the stopes, the development volume will be supplemented by waste rock taken from the existing rock pile at site.

As a result of establishing crown pillars in the Main Zone, CRF with 7-8% cement is used in all stopes directly above the pillar. This will facilitate recovery of the pillars, from the last cut on the level below, later in the mining sequence. Three such pillars are located in the LH mining areas. CRF will also be required for transitions between mining. A mixing plant with 50m³/h capacity located on surface will provide the cement slurry for CRF and will be distributed to designated underground locations through a system of slick lines and boreholes.

19.5 S TRATMAT I NFRASTRUCTURE

19.5.1 MINING INFRASTRUCTURE

REFUGE STATIONS

At steady state production, one twenty-five person portable refuge station will be located in each of the mining phases. The units will be located in inactive re-muck stations or other excavations that have become redundant (such as exploration headings or associated cut-outs).

EXPLOSIVE STORAGE

Daily explosives and detonator storage will be provided at one location in each of the mining phases. Utility vehicles will be used to transport explosives and accessories directly to the work areas or to the designated underground storage locations.

MINE DEWATERING

There will be four main pumping stations for the Main Zone and one for Zone 51. The station in Zone 51 will be located on 5181 Elevation. Mine water will be pumped to the surface water detention pond in one flight.

The pump stations in the Main Zone are located on 5181Elev, 5055Elev, 4845Elev and 4593Elev. Based on preliminary analysis, the pumping rate is determined to be 240 US gallons per minute (gpm). In checking the mining phases, a 100 hp pump will be required in each phase to deliver water against a maximum 850 feet of dynamic head via 4-inch pipeline in the Service raise.

Trevali Mining Corp. 42 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment During the mining of Phase 1, water will be pumped directly from the 5181 Elev station to the surface water treatment plant. When mining progresses to the Phase 2 area, the pump station on 5055 Elev will be linked to the 5181 Elev station for a staged pumping to surface. The same will be done for Phases 3 and 4. Finally, water from Phase 4 will be pumped to surface in four stages. When mining of Zone 51 is finished, the pump will be re-used in the Main Zone.

On the levels, 4-inch steel pipelines will be used for mine water pumping. Submersible centrifugal electric pumps will be used to pump mine water from ramp and drift headings to designated sumps on the levels. Air operated diaphragm pumps (2-inch, 3-inch) will be used in some of the active headings during mine development. (see Figure 19.27).

Figure 19.27 Mine Dewatering Diagram

PROCESS WATER

Process water, for drilling, dust suppression and washing purposes will be delivered from a storage tank location on surface to the underground workings via a 3-inch line in the service raise. The delivery system will include pressure reducing stations at regular intervals to maintain a water pressure of ±60 psi. On the levels distribution will be provided through 4-inch steel pipelines.

COMPRESSED AIR

Compressed air, for drilling and equipment maintenance, will be delivered from a compressor plant on surface, consisting of three (2 operating, 1 stand-by) 1500 cfm rotary screw compressors. Air will be delivered at a gauge pressure of 125 psi via 8-inch steel pipelines in the service raise and 4-inch steel pipelines on the levels.

Trevali Mining Corp. 43 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment FUEL HANDLINGAND STORAGE

Diesel fuel will be delivered to three designated underground storage locations (one in each of the Phases 2, 3 and 4) from a surface storage facility using a fuel truck. The underground storage (fuel bay) will consist of large SatStat (9000 liter) dispensing stations in the vicinity of exhaust air raises. Packaged lubricants will be transported to underground storage locations with the utility vehicles.

MAINTENANCE SHOPS

There will be no major maintenance shop underground. All major repairs of equipment will be done in the surface shop. Running repairs will be done in abandoned openings.

STORAGEAREAS

Redundant development headings and/or cut-outs such as re-mucks, diamond drill stations, exploration drifts and truck loadouts will be used as material storage areas.

MANWAYS

Ladders and platforms installed in the service raise will provide for second egress

19.5.2 STRATMAT ELECTRICAL INFRASTRUCTURE

POWER SUPPLY

Power for the Stratmat Mine site will be provided by a new 13.8 kV primary feeder from Heath Steele Mill. It is assumed that adequate capacity is available at the Heath Steele Mill power source to accommodate a peak load of approximately 10 MVA for Stratmat Mine. Six kilometres of new overhead distribution line (5 km to Main Zone and 1km from Main Zone to Zone 51) will also need to be installed between Heath Steele mill and Stratmat mine. A 13.8 kV switchgear will distribute power to the entire mine site.

POWER DISTRIBUTION

Power will be supplied using TECK cable run underground from a13.8 kV switchgear to various building locations at 13.8 kV. Each of the main buildings will have outdoor switchgear and dry type distribution transformers which will step the voltages down to the proper utilization voltage for the building. Utilization voltages for the intake and exhaust fans (surface fans) buildings will be 4160 V whereas all other buildings will be 600 V. An electrical single line diagram for distribution on the Stratmat mine site is located in Appendix H. The following surface transformers are included in the electrical distribution design:

Main Zone

 Compressor/garage building (1 MVA)  Fresh air fan building (2 MVA)

Trevali Mining Corp. 44 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment  Mine dry and Admin building (1 MVA)  Rock dump pump house (0.5 MVA)  Exhaust air fan building (1.5 MVA). Zone 51

 Fresh air fan building (0.5 MVA)  Exhaust air fan building (0.5 MVA).  Compressor /garage building (0.5 MV)

EMERGENCY POWER

Two skid mounted self contained diesel generators 800 kW and 300 kW will supply essential loads in the event of a Utility power outage. The 600 V generators will be connected to emergency distribution panels through an automatic transfer switch, which will ensure isolation of the generator from the utility supply. The generator will be located near the administration building and mine dry to provide power to those locations via two individual transfer switches.

An uninterruptable power supply (UPS) for the underground mining to provide backup power to the leaky feeder and surface communication systems for both zones will also be installed on surface.

SURFACE EXHAUSTAND INTAKEFAN BUILDINGS

Power for the surface fan buildings will be supplied from the13.8 kV switchgear. Each of the fan buildings will have 2 MVA and 1 MVA, 13.8 kV to 4160 V transformers respectively which will distribute power to the 4160 V switchgear line-up in the buildings. Each switchgear line-up will have an incoming fused disconnect switch and two Variable Frequency Drives (VFD) to start and run the fans.

GROUNDINGNETWORK

The main ground system will be achieved through an engineered ground grid at the new incoming location. From the ground grid, insulated ground conductors will be run to all buildings and be bonded to the building ground electrodes. Individual buildings and metal tanks shall have two separate ground connections to ensure grounding integrity. Additionally all equipment enclosures, motors, water tanks and structural members will be connected to this ground network. A similar system will be installed at the Zone 51 mine location.

UNDERGROUND POWER DISTRIBUTION

Power will be distributed underground at 13.8 kV from the switchgear on the surface. Power will be run down the vent raise to 5181 Elev then along the ramps to self contained underground mine power centres (MPCs), comprised of incoming fused load- break switch, dry type transformer, control and 600 V feeder breakers. The transformers in the ramp MPC’s and stopes areas will be rated at 1 MVA, 0.8 MVA and 0.6 MVA as per

Trevali Mining Corp. 45 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment load requirements. There will be a total of 6 MPC’s purchased on the project with units being relocated in ramps and stopes as sources of power are no longer required. The MPC feeder breakers will feed power to portable racks which house the fans, pump and jumbo starters.

COMMUNICATIONS

Underground and surface communications will primarily be done through VHF radios (leaky feeder). A fibre optic network composed of fibre cable, switches and servers shall also be installed on surface and underground to select areas such as shops, fuel bays, compressors rooms, electrical rooms and office areas. VOIP phones will be installed throughout the plants, electrical rooms, controls rooms, refuge stations, shops and offices. A LAN network for process and business will be provided both underground and on surface.

External communications will be done by telephone. A new telephone line will be run along the new 13.8 kV overhead distribution line from the Heath Steele mill.

LOAD ESTIMATE

Estimated electrical load for Kria-Stratmat Mine is in Table 19.10

Table 19.10 Estimated Electrical Load

Area Location Load (MVA) % MainZone 6.6 67.35 Zone51 1.7 17.35 Misc. 1.5 15.3 Total 9.8 100

The load analysis for the Stratmat Mine is based on representative information from the data generated from process, mining and mechanical engineers . Characteristics of the individual equipment were generated. These consistently satisfied the load requirements of the system according to the schedule of Life of Mine (LOM)

Table 19.11 Estimate of Electrical charges for Kria- Stratmat Mines

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $150,066.82 $153,048.28 $156,029.74 $159,011.2 $161,992.66 $164,974.12 Energy Consumption = 24,845.5 MWh

The energy consumption (kWh), hence electrical charges was calculated based on load data submitted and would increase with additional loads.

Trevali Mining Corp. 46 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment FIRE PROTECTION

The main fire alarm panels (at Surface) would be equipped with fiber optic communication modules to facilitate connection between panels from underground and all other buildings for final installation. Addressable detectors and zone modules would be installed at areas outside of main location. Fire detection and alarm equipment include heat, smoke, duct smoke, rate of rise temperature detectors, pull stations, sprinkler flow and pressure switches, fire alarm panels, bells and gongs, end of line resistors, circuit breakers, junction boxes and a other relevant equipment. All installation must comply with New Brunswick Electrical Code and New Brunswick Building and Fire Code.

19.5.3 ROADSAND SITE PREPARATIONS

ROADSAND SITE PREPARATION

The consideration given to roads and site preparations have been based on the preliminary site layout provided in Appendix C. The site plan includes the waste rock storage areas.

ROADS

The site roads for the Kria Stratmat Property have been aligned on the site layout taking the following considerations into account:

 surface contours and water course features  power line and pipeline installation and service  access to the Main Haulage Road leading to Health Steele  size and type of vehicles that will be using these roads  separation (as much as possible) of light vehicles from heavy construction or mine haulage vehicles. All roads are expected to be constructed from run of pit Aggregate material from the historical open pit waste dumps locally available from the Stratmat site with a 150 mm top running surface of compacted and graded A-gravel. No special consideration has been given to any further geotechnical support materials such as Geo-fabric or Geo-Grid as it is assumed that the majority of the road alignments are on relatively stable ground from a geotechnical perspective.

Two basic widths of road have been considered:

 A Class- For light vehicle and highway type tractor trailers: . 9-10 m wide clear and Grub, 8 m wide road base, 6 m top running surface.  B Class- For heavy equipment and mine haulage vehicles:

Trevali Mining Corp. 47 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment . 20 m wide clear and Grub, 18 m wide road base, 16 m top running surface, with 0.5 m safety berm. Road sections considered are shown in Table 19.12.

Table 19.12 Road Sections

Length Description Class From To (m) MainAccessRoad B MainHaulageRoad MainZoneRampPortal 800 Zone 51 Road B Main Access Road Zone 51 Portal 700

MainZoneRoad A Zone51Road MainZoneFARRAR 450

Road to Explosive A Zone51Road ExplosiveMagazine 350 Magazine Zone 51 Waste Rock Zone51WasteRockRoad B Zone51Road 100 Storage Total (km) 3.8

SITE PREPARATION

Costs for the preparation of site for surface infrastructures features for this mine property have been estimated. These sites would include:

 equipment lay down areas  parking lots  mine portal, office, dry, and garage area  mine fuel storage area  main power transformer area  pumping station locations  surface water treatment facility areas  mine backfill and ventilation raise areas  mine ore and crushing pad area The total area considered for clearing, grubbing and preparation for construction is 245,000 m2 or roughly 60 acres.

19.6 HML/S TRATMAT G EOTECHNICAL R EVIEW

19.6.1 INTRODUCTION

The design of underground openings, ground support, and mining sequences in this report are based largely on the rock mechanics assessment reports produced by the Noranda Technology Centre (NTC) in 1994, 1996 and 1998 (see references).

Trevali Mining Corp. 48 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment This work has been done on the data from Half Mile Lake.

The scarcity of data for Stratmat has indicated that the design basis for a PEA will be done on the below commentary. It was decided on the absence of indicators at this stage, that all mining would be longhole at 15m stope widths. Stopes more than 20 long will be taken in two panels.

The operating cost for Stratmat has been escalated slightly (based on HML operating costs) to cater for the potential of a 20% cut and fill mining (the mine design basis has not been altered).

Also it should be noted that the potential cost of cable bolting has not been included in the operating costs for either Half Mile Lake or Stratmat.

To take Stratmat to a feasibility level study it will be necessary to perform geotechnical investigations similar to the Noranda work on Half Mile Lake.

19.6.2 ROCKMASS CLASSIFICATION SYSTEMS

The rockmass classification at Half Mile Lake was performed with the use of the Tunnelling Quality Index (Q) developed by Barton in 1974, to allow the determination of rock mass quality, support estimation and stope dimensioning by Stability Graph Analysis. The Q classification parameters are based on the block size, shear strength and active stress.

Barton’s Q is defined as:

 RQD  Jr  Jw  Q   x x   Jn   Ja  SRF

Where:

RQD/Jn = Block Size Jr/Ja = Inter-block Strength Jw/SRF = Active Stress And, RQD = Rock Quality Designation Jn = Joint Set Number Jr = Joint Roughness Number Ja = Joint Alteration Number Jw = Joint Water Reduction Factor SRF = Stress Reduction Factor

The rockmass classification proposed by Barton to describe the rock conditions based on Q classification is defined in Table 19.13.

Trevali Mining Corp. 49 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 19.13 Rockmass Quality Categories

RockmassQuality RangeofQ ExceptionallyPoor lessthan0.01 Extremely Poor 0.01 to 0.1 Very Poor 0.1 to 1 Poor 1 to 4 Fair 4 to 10 Good 10 to 40 Very Good 40 to 100 ExtremelyGood 100to400 ExceptionallyGood 400to1000

The modified stability number, N' is based on the Barton’s Tunneling Index (Q) with alteration to the active stress factor (Jw/SRF) on Q. The conditions in most underground mining environment are relatively dry, thus the Jw factor is considered to be 1.0. The Stress Reduction Factor (SRF) is set to 1.0 for moderate stress environment where moderate clamping of the joints are expected, but not overly stressed.

This alteration yields the Modified Tunneling Index (Q') where:

 RQD  Jr  Q'   x   Jn   Ja 

The modified stability number (N') is defined as:

N'=Q'xAxBxC

Where:

Q’ = Modified Tunneling Quality Index A = Rock Stress Factor B = Joint Orientation Adjustment Factor C = Gravity Adjustment Factor

The shape factor, commonly known as the hydraulic radius, for the stope surface under consideration is calculated as follows:

m)(sq.Area hxw S   (m)Perimeter   hw2 

Trevali Mining Corp. 50 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Where:

S = Shape factor (m) w = Width of Stope or Openings (m) h = Height or Length of Stope (m)

The method proposed by the stability graph is based on Canadian case histories. It provides a preliminary guideline for open stope dimensioning. Modifications of its parameters are required to reflect the site conditions at Halfmile Lake and as detailed geotechnical information is available. Back analysis of the stope performance is essential to alter the parameters to suit the underground conditions.

19.6.3 ROCKMASS CLASSIFICATION

Twelve drill holes were geotechnically logged for rockmass properties in 1994 by Ecobichon at NTC to identify the rockmass domains of Halfmile Lake orebody. These holes were selected to obtain representative sample of the rock mass conditions. The rockmass domains identified during the geotechnical data collection campaign are: hangingwall and footwall rock units, sulphide zone (ore) units and fault zones. No distinction was made between the Upper, Middle, Lower and Deep Zones.

Logging of an additional 11 holes was performed in April 1994 to increase the level of understanding of the rock mass conditions (Econbichon et al, 1994) and the results of this additional logging did not significantly modify the original interpretation of the rockmass classification.

The geotechnical data collected were classified using Barton’s Tunnelling Quality Index (Q), which led to a rock mass quality determination and support estimation. The Q classification parameters are based on the block size, shear strength, and active stress.

The geotechnical values for the Halfmile Lake orebody are summarized in Table 19.14. The rockmass classification is summarized in Table 19.15.

Table 19.14 Summarized Halfmile Lake Geotechnical Properties.

RockmassDomain RQD FractureFrequency Hardness Ja 10-30 cm Hangingwall 50-75% R3 1.5 medium 10-30 cm Footwall 75-90% R3 1.5 medium 30-100+ cm Ore1 90-100% R4-5 1.5 n/a 0-10 cm Fault Zones 0-25% R2 2 very close - crushed Source: D. Ecobichon Oct. 1994 1Estimated from limited data – needs to be verified

Trevali Mining Corp. 51 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 19.15 Rock Mass Classification of the Halfmile Lake Deposit

RockType RQD Jn Jr Ja Q’ RockmassQuality Hangingwall 50 9 1 1.5 3.7 Poor Footwall 75 9 1 1.5 5.6 Fair Ore1 90 9 1 1.5 6.7 Fair FaultZones 25 9 1 1.5 1.9 Poor 1Estimated from limited data – needs to be verified

19.7 S TRATMAT S URFACE W ATER M ANAGEMENT P LAN

This section presents a very preliminary surface water management plan for the Stratmat mine site. The mine has two independent mining zones, the Main Zone and Zone 51. The water management plan will cover the ground water discharge from both mining zones and surface water collected from all the areas impacted by the mining activities which will include two waste rock storage areas, crusher pad and ore storage. Both the groundwater discharge and surface water from the impacted areas are presumed to be acid generating.

No water treatment occurs at the mine site, water will be collected into a detention basin before being pumped to the Heath Steel tailings impoundment. The water management plan considered the following design criterea:

 Estimation of water volume to be pumped for the average year, using available climatic data and average underground mine water discharge,  Estimation of the peak flow of 1 in 10-year, 24-hour storm, 1 in 25 year, 24-hour storm and 1 in 100-year, 24-hour storm,  Design of a single detention basin for the both mines for the underground and surface water discharge,  Preliminary design of water collection and diversion ditches The water management plan was design to meet the following specification:

 Stormwater water collection system design criteria 1 in 10-year, 24-hour storm, based on the mine life of 10 years. Also with sufficient capacity to route 1 in 100- year, 24-hour storm without overflowing the ditches  Detention basin 1 in 10-year, 24-hour storm or capacity to contain 24-hour of combined average inflow (which is greater),  Surface water flow volume will be estimated based on historical average year precipitation and Intensity/Duration/Frequency curves (Environment Canada, Website)  Sizes of impact areas – Waste Rock Storage 1&2 – 5,000 m2, Crusher Pad and Ore Storage = 10,000 m2. The hydrogeology pumping rate was 240 gallons per minute. This is based on the value established for HML for the Environmental

Trevali Mining Corp. 52 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Impact Assessment prepared for Kria in June 2009. These numbers were based on historical data from Heath Steel Mines.  To contain a peak design storm from surface water, it was assumed that the total inflow from the peak storm is stored in the pond. A simplified triangular hydrograph was assumed, with the maximum flow as peak flow (Qp) estimated using the Rational Method (see below). The duration of the storm was assumed to be equivalent to 2 times the time of concentration (Tc) (also estimated in 2 above). The detention basin was estimated to be equivalent to the area under the hydrograph (Qp x 2 x Tc).  The peak discharge of the selected storms was estimated using the Rational equation. The Rational equation is the simplest method for determining peak discharge from drainage basin runoff. . Rational Equation: Q=kCiA . The Rational equation requires the following units: Q = Peak discharge, cubic meters per second k = conversion factor equal to 0.00278 from imperial to metric units c = Rational method runoff coefficient. Assumed as 1 i = Rainfall intensity, mm/hour A = Drainage area, hectares The average surface water volume discharge was estimated as (0.005 m3/s), based on average climatic data and the underground water discharge rate was provided as 0.015 m3/s. The peak discharge of the selected storms was estimated using the Rational Method, 1 in 10-year, 24-hour storm (0.6 m3/s) and 1 in 100-year, 24-hour storm (0.96 m3/s). The dimensions of the detention basin were estimated to be 2.0 m (depth) x 45 m (length and width). The collection ditches were assumed to be trapezoidal with bottom width of 1.0 m, depth of 0.5 m and side slopes of 2 to 1.

19.8 T AILINGSMANAGEMENT F ACILITY

19.8.1 INTRODUCTION

This PEA follows recommendations from the previous studies to use the existing Heath Steele mill for processing the future combined Half Mile Lake and Stratmat mine ore productions. The ore from these mining operations will be transported to the Heath Steele mine (HSM) and tailings produced will be discharged in the expanded existing tailings management facility (TMF). The HSM site previously underwent closure and reclamation and this includes the existing TMF.

The site plan showing the existing TMF is presented in Appendix C and, according to the HSM Closure Plan (Noranda,1997), the Facility consists of the following components:

 North, upper and lower cells;  Old tailings area, divided into the east and west cells and the old tailings dam;  Main, internal, north and power line dams;

Trevali Mining Corp. 53 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment  West diversion ditch and till plug;  Internal dam overflow spillway;  Main dam overflow spillway (north abutment)  Main dam emergency spillway (west abutment);  Three lower cell decant structures (east, west, center); and,  Two seepage collection facilities. The upper and lower cells originally formed a single tailings disposal pond in the valley between the main dam and the north dam. The north dam was constructed over a saddle between the South Branch Tomogonops River and Little South Tomogonops River watersheds. The internal dam was constructed subsequently to separate the upper and lower cells. The upper cell then became the main tailings basin and the lower cell acted as a polishing pond.

The options study for the HSM’s TMF expansion was completed in 1994 (Geocon Atlantic, 1994). At the time of the study the HSM operation was expected to cease in 1997. This was to be followed up by the start of the discharge of tailings from the HML operations. A total of five expansion options were studied and “Option 5” was recommended as a preferred option on the basis of the lowest estimated cost and most favorable classification of merits and demerits. This option consists of:

 Constructing a powerline dam to establish a north cell (enclosed by the dam and surrounding high ground).  Raising the north road embankment, old tailings dam and internal dam to increase the storage capacity of the upper cell. The actual cessation of the HSM operations took place in 1999 due to a change of the mine plan. The Powerline dam was constructed and the north cell was established in 1996 in order to accommodate additional tailings produced by HSM operations. This has displaced the available capacity for the proposed Halfmile Lake operation. It is estimated that approximately a 1,7M m3 of tailings were discharged into the north cell between 1998 and 1999. This was not considered in the Geocon 1994 but is factored herein.

19.8.2 SITE CHARACTERIZATION

The site geomorphology is characterized by gently rolling hills with numerous swamps and U-shaped valleys underlain by volcanic and sedimentary rock. Overall drainage pattern from the tailings basin site is generally towards the south and east to the South Branch Tomogonops River (SBTR), however, a small portion of the tailings basin run-off drains north from the old tailings area towards Camp Brook Pond and the Little Branch Tomogonops River (LBTR).

The overburden generally consists of silt till ranging in thickness from 2 to 3 m. A thin layer of peat (0.5 m) was found over the silt till in some locations. The upper bedrock is weathered and fractured. Packer testing indicates permeability of the upper bedrock (0 to 10 m) is in the range of 10-3 cm/s.

Trevali Mining Corp. 54 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 19.8.3 DESIGN BASIS

CURRENT CONDITIONSOFTHE EXISTING DAMSIN HSM

Literature review of Heath Steele Mines Tailings Basin Closure Plan (Noranda, 1997) and Construction Project Area Site Plan for Heath Steele Mines Closure Project (Venture Engineering and Construction, 2007) indicate that the main dam, internal dam, old tailings dam, north road embankment and powerline dam were constructed to crest elevations and linear extents outlined in Table 19.16.

Table 19.16 Heath Steele TMF Structures – Existing Cindytion Tailings Dams in Heath Steele Mines

Item Length (m) Crest Elevation (m) Maindam 1,981 2,724.9 Internaldam 1,3101 2,726.4 Oldtailingsdam 579 2,726.4 North dam 762 Varied North road embankment 426 2,731.6 Powerline dam 823 2,728.6

The basic design criteria relevant for geotechnical designs of the HSM’s TMF expansion are listed in Table 19.17.

Table 19.17 Basic Design Criteria

Item Value Life of mill (years) 20 Total tailings throughput from Half Mile Lake (tonnes) 11,597,855 TotaltailingsthroughputformStratmat(tonnes) 6,672,816 Totalcombinedtailingsthroughputs(tones) 18,270,671 Estimated average tailings final dry density (tonnes/m3) 1.5 Required tailings storage (m3) 10,596,989 Required tailing storage (m3)with15% contingency 12,186,537

19.8.4 CONCEPTUAL DESIGNOF TMF EXPANSION

Expansion “Option 5” proposed as the preferred option in Geocon Atlantic 1994 is followed herein. This option assumed raises for the internal dam, old tailings dam, north road embankment and powerline dam, and no raises for the main and north dams. The stage storage curve for the north cell and the combined north cell and upper cells, as presented in Geocon Atlantic 1994, is used as a basis for extrapolation allowing for additional storage required to accommodate combined future HML and Stratmat tailings throughputs (Figure 19.28).

Trevali Mining Corp. 55 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Figure 19.28 HSM - TMF Stage Storage Curve

Notes: 1. Stage 1 dam raises are not required for Road embankment and Powerline dam. 2. No volume below El. 2,726 m was included in the upper cell.

The final crests of raised containment structures are set at El. 2376.2m and these accounts for a 0.9 m deep closure water cover and 1.5 m of freeboard as per the closure plan (Noranda, 1997). The construction of containment structures will be carried out in stages as outlined in Table 19.18

Table 19.18 Elements of Staged Construction

Stage Item Previous Raised Total Raisest Crest El. Crest El. El. (m) (m) (m) 1. Internaldam 2,726.4 2729.5 3.1 OldTailingsdam 2,726.4 2729.5 3.1 NorthRoadembankment 2,733.5 2733.5 0 Powerline dam 2,729.5 2729.5 0 2. Internaldam 2729.5 2733.5 4.0 OldTailingsdam 2729.5 2733.5 4.0 NorthRoadembankment 2,731.6 2733.5 1.9 Powerline dam 2,728.6 2733.5 4.9 3. Internaldam 2733.5 2736.2 2.7 Oldtailingsdam 2733.5 2736.2 2.7 NorthRoadembankment 2733.5 2736.2 2.7 Powerline dam 2733.5 2736.2 2.7

Trevali Mining Corp. 56 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Design sections of the raised containment structures generally follow design configurations shown on Drawing F2878-2 in Geocon Atlantic 1994. The only noteworthy configuration change will be in the inclined orientation of the low permeability core within the raised portion of the Powerline dam as compared with vertical core within the existing dam structure. This adjustment is influenced by a much higher raise than it was originally anticipated.

WATER MANAGEMENT

The cessation of tailings deposition will be followed by the reinstatement of the water cover as per the closure plan (Noranda 1996) to be updated in the subsequent design stages to account for the impacts of the raised containment structures. Major impacts envisaged are summarized as follows:

 Increased amount of seepage from the Powerline dam reporting to the buffer pond;  The internal dam overflow spillway modification or relocation based on the encroachment of the dam into the west abutment;  Modification or relocation of west diversion ditch directing the runoff into the upper cell;  Runoff from the north cell, upper cell and old tailings, west watershed, and water treatment plant (WWTP) will continue to report to the lower cell and water balance re-calibration will be required in the subsequent design stages to account for any changes potentially impacting minimum closure freeboard requirements in the lower cell.  Capacities of the main dam overflow spillway (north abutment) and emergency spillway (west abutment) should be re-evaluated to account for any changes in the lower cell water balance impacted by any changes within upper and north cells resulting from subject TMF expansion.

Trevali Mining Corp. 57 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 2 0 . 0 PROCESSMETALRECOVERIES

Please see Section 16.0 for information on process metal recoveries.

Trevali Mining Corp. 20-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 2 1 . 0 ENVIRONMENTALCONSIDERATIONS

21.1 I NTRODUCTION

This section of the preliminary economic evaluation examines environmental issues, including:

 Environmental Baseline Studies (EBS) carried out to date  Environmental Assessment and Permitting Process  Community and Aboriginal engagement

21.2 E NVIRONMENTAL S ETTING

21.2.1 HALFMILE LAKE

The environmental setting was previously described and assessed by BEAK Consultants Ltd. (BEAK) for similar project proposed by a previous owner of the property. The study presented information regarding terrestrial resources (soils, vegetation, and wildlife), water resources (hydrology, water quality, and sediment quality) and aquatic biota (habitat, benthos, and fish community; BEAK 1995). The environmental assessment report (EAR) focused on the Halfmile/Moody Brook watershed, draining north into the Nepisiguit River, and two small unnamed watersheds draining south into the Northwest Miramichi River (BEAK 1996). An EBS was initiated in 2010 by Kria to update the environmental information for the property.

21.2.2 STRATMAT

The existing environment at Heath Steele was previously described and assessed by BEAK for the Heath Steele Mine closure plan (BEAK 1997). The study presented terrestrial resources (soils, vegetation, and wildlife), water resources (hydrology, water quality, and sediment quality) and aquatic biota (habitat, benthos, fish community, and in situ toxicity; BEAK 1997). Since then, mine closure activities have been undertaken. Surface infrastructure has been removed but the tailings management facility (TMF) remains licensed and is currently under care and maintenance.

An EBS will be required to update the environmental information for the site. This would normally require about a year (usually April to April) to complete. An environmental impact assessment (EIA) registration document will be required for review by provincial and federal agencies prior to permitting. If required, a full Environmental Impact Statement (EIS) must be submitted for approval by provincial

Trevali Mining Corp. 21-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment and possibly federal authorities. The EIS usually requires about four months to prepare following completion of an EBS.

21.3 E NVIRONMENTAL A SSESSMENTAND P ERMITTING

An EIA registration document was prepared by Wardrop using the existing environmental information for Phase I of the project at the Halfmile Lake property. The Phase I project includes underground mining of the near surface zone and exploration drilling. The ore will be toll-milled offsite. The EIA registration document was submitted to the provincial and federal agencies and is currently under review. Phase II, full-scale operation of the mine and the potential inclusion of an open pit component, would result in a larger surface footprint including the open pit and waste rock storage. Further environmental assessment and permitting will be required by provincial and possibly federal agencies in order for the project to proceed to Phase II and to include mining at the Stratmat property. This stage will include a new mill and potential to use the existing tailings management facility at the Heath Steele Mines site. An EIA registration document will be required by the federal and provincial agencies for environmental assessment and permitting.

There is no formal agreement for the cooperation of the provincial and federal environmental assessment processes however there have been initiatives to improve cooperation.

21.3.1 PROVINCIAL PROCESS

The environmental assessment and permitting process for a development in New Brunswick is managed by the Environmental Assessment Branch of the Department of Environment (DENV). New Brunswick’s Environmental Impact Assessment (EIA) Regulation falls under the Clean Environment Act. Commercial extraction and/or processing of a mineral is considered a Class 1 undertaking under the Act, Environmental Impact Assessment Regulation (87-83). A proponent of a mining project is therefore required to register details of their proposal with the Minister of the New Brunswick Department of the Environment. This registration involves a one- time registration fee of $5,000. The EIA registration document filed by the proponent must describe the project, the existing environment potentially affected by the project, the anticipated environmental impacts and any proposed mitigative measures that, if implemented, would lessen, eliminate, or avoid such impacts.

The submission of the EIA registration document initiates a determination review by DENV to determine if further study and a full environmental assessment are required. During the determination review, the EIA registration document is circulated by DENV to a technical review committee which consists of interested provincial agencies. The provincial agencies are provided with a timeline for review and comment.

The determination review includes a public consultation component. The onus is on the proponent to conduct the consultation and to demonstrate to the Department that

Trevali Mining Corp. 21-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment the potentially affected public and other stakeholders have been given meaningful opportunity to comment. The public consultation/involvement must be conducted in accordance with the minimum standards outlined in the EIA Registration Guide. Evidence of the conduct of public consultation must be provided to the Department within 60 days of project registration.

The Aboriginal Affairs Secretariat (ASS) requires proponents to consult with any and all Aboriginal groups that may be impacted by the project. A Traditional Knowledge Study (TKS) is required by ASS unless an agreement with interested Aboriginal groups is planned

The Minister will make a decision regarding the project within 30 days of the receipt of sufficient information regarding the project, which includes the EIA registration document and documentation of public and stakeholder concerns. Three decisions are possible: a Certificate of Determination may be issued; Further Study may be required; or, the project may be denied (subject to assent of the Provincial Cabinet). A Certificate of Determination indicates that the project may proceed subject to the terms and conditions of the certificate, which are posted in the public registry. If further study is required, the project must undergo a provincial Comprehensive Review.

A Comprehensive review involves the following stages in sequence:

 Development of Guidelines and Terms of Reference  Community Engagement  Preparation and submission of an Environmental Impact Statement  Preparation and submission of a Mining and Reclamation Plan  Government and public review and decisions. If after the determination/comprehensive review, the Minister approves the project to proceed under the Clean Environment Act, certificates for Approval to Construct and Approval to Operate will be issued and other permits necessary for operation can be applied for through the appropriate licensing agency. Among the approvals is a Mining Lease. Following determination approval, the proponent is expected to submit a feasibility study (or an appropriate presentation of the economic viability of the project) and a detailed mining and reclamation plan, including an estimate of required financial security to the Standing Committee on Mining and the Environment (SCME). The SCME operate under the direction of the Minister of Natural Resources. Other project related approvals may include a Mining Lease, License of Occupation, Crown Land Lease, Harvest Permit, Quarry Permit, Development and Building Permit, Approval and License for Petroleum Storage, approval to install an On-site Sewage Disposal System, and a Watercourse and Wetland Alteration Permit.

Trevali Mining Corp. 21-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 21.3.2 FEDERAL PROCESS

The Canadian Environmental Assessment (CEA) Agency is included in the distribution of EIA Registration document by DENV and in turn distributes the document to federal authorities such as Environment Canada, Health Canada, Fisheries and Oceans Canada, and Transport Canada. During this time, the federal agencies will determine if a federal environmental assessment is necessary. A federal environmental assessment is typically triggered when a federal authority determines it must provide a license, permit or an approval that enables a project to be carried out (such as an authorization under the Fisheries Act).

If a federal agency determines that it must issue a permit or approval for the project, the federal family would then determine the level of environmental assessment to be applied to the project. As the project proposes a 4,000 t/d mill, this may trigger a minimum of a federal comprehensive study under the Canadian Environmental Assessment Act (CEAA). A comprehensive study, the level above a screening, involves a more detailed environmental assessment of the project. Permits or approvals can not be issued until the federal agencies complete and sign off on a comprehensive study report. The normal timeline for a Federal EA is 4 years.

MAJOR PROJECTS MANAGEMENT OFFICE

As the proposed project is considered a natural resource development, the Major Project Management Office (MPMO) would provide overarching project management for the federal environmental assessment process. The MPMO is administered by Natural Resources Canada whose role is to provide guidance to project proponents and other stakeholders, coordinate project agreements and timelines between federal departments and agencies, and to track and monitor the progression of major resource projects through the federal regulatory review process.

METAL MINING EFFLUENT REGULATIONS

The proposed project will be required to comply with the Metal Mining Effluent Regulations (MMER). The MMER, administered by Environment Canada, were developed under section 36 of the Fisheries Act to regulate the discharge of water to the environment. The MMER apply to both existing and new mines. The MMER will require the development of an environmental effects monitoring program and annual reporting for performance monitoring.

21.4 C OMMUNITYAND A BORIGINAL E NGAGEMENT

Community and Aboriginal engagement has been initiated for the Phase I Halfmile Lake Project and has included communities within Northumberland and Gloucester counties as well as Aboriginal communities within a 100 km radius of the project site. Further community and Aboriginal engagement will need to be initiated by Kria during early stages of the Phase II project. Public input in relation to the conceptual project description, must be sought, addressed, and documented during the determination

Trevali Mining Corp. 21-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment review. Engagement must be conducted, at minimum, according to the Guide to Environmental Impact Assessment in New Brunswick. Community engagement opportunities must be provided by Kria throughout the environmental assessment process to provide project specific information and seek out issues, concerns, and ideas for inclusion in the environmental impact statement.

The community engagement phase of the project will ideally be initiated as early as possible and requires very careful thought and planning. It is usually best to present a complete plan to the community and to have answers ready for expected questions. If only the exploration phase is certain, it would be preferable to present this as a standalone project initially and address the later phases of mining on an ongoing basis. Proof of community engagement is required throughout the environmental assessment process. If mining plans are likely to change as the project commences it is usually wise to keep the community on-side and well informed at carefully prepared information meetings.

Aboriginal consultation on part of the Province is handled by the Aboriginal Affairs Secretariat (AAS). The AAS should be consulted early in the process to help determine which Aboriginal communities or organizations should be included in Kria’s public engagement program. For the Halfmile Lake Project, Kria has engaged the five Mi’kmaq communities within the counties of Northumberland and Gloucester including the First Nations of Eel Ground, Pabineau, Metepenagiag (Red Bank), Burnt Church, and Eel River Bar. Kria has also engaged the New Brunswick Aboriginal Peoples Council.

The AAS will require a Traditional Knowledge Study (TKS) to be completed prior to approval of the project. The objective of the TKS is to gather information regarding traditional uses of the land within the project footprint, to identify the locations of any interests that need protection, identify any impacts to traditional or current Aboriginal interests and culture, and to provide solutions to mitigate any negative impacts. At a minimum a TKS will take several months to complete depending on the willingness of the surrounding communities to share information and the availability of Elders, in most cases, to supply the information. In the case of the Phase I Halfmile Lake Project, AAS has indicated that the requirement for a TKS may be waived if an agreement is reached between Kria and the First Nations with respect to mitigation measures such that Aboriginal and Treaty rights are not affected by the project.

21.5 G EOCHEMISTRY

Historic waste rock and tailings properties from nearby mines together with the high sulphide content of the ore at Halfmile Lake and Stratmat strongly suggests that waste rock and tailings produced from the latter deposit will likely be a potential source of acid mine drainage (AMD) as well as potential metal leaching (ML). Assessment and management of AMD/ML should include the following:

 Assessment of AMD/ML potential using standard geochemical methods.

Trevali Mining Corp. 21-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment  Evaluation of mine water and surface runoff treatment requirements for project components during operations.  Design of temporary waste rock disposal areas at Halfmile Lake and Stratmat and of the tailings disposal area at Heath Steele, and of the related operating plans, to minimize, contain, or control, as required, contaminant releases to the natural environment.  Hydrogeological investigation of the study area, including an ongoing monitoring program.  Closure planning design at both Halfmile Lake and Heath Steele to provide effective stabilization and long term control of AMD/ML at minimum project costs to allow production permitting and eventual walk-away mine closure.

21.5.1 ASSESSMENTOF AMD/ML POTENTIAL

Assessment of AMD/ML potential includes both static and kinetic testing. Static testing is usually conducted on a relatively large number of samples (50+) as it is much less expensive than kinetic testing and comprehensive static testing reduces the possibility of poor sample selection for the more expensive kinetic tests. Price (1997) recommends a minimum of three samples per rock unit with total mass less than 10,000 tonnes or eight samples per rock unit with total mass less than 100,000 tonnes for preliminary static testing. The sampling rate for lithologies exceeding 100,000 tonnes usually depends on the variability of the rock unit. Static tests commonly include solid phase total element analysis using a four-acid digestion and determination by inductively coupled plasma mass spectroscopy (ICP-MS) as well as acid-base accounting (ABA) and shake flask testing. Quantitative XRD and petrological analyses are also typically carried out on selected samples of principal lithologies. Data obtained using static geochemical testing assists in identification of critical lithologies that should be sampled for kinetic testing (Price, 1997). AMD/ML assessment is required for both waste rock, if it remains aboveground after mine closure, and tailings.

Kinetic test are carried out using a cell or column that operate over a period of typically 1 year, whereas the static tests are a onetime measurement to determine the acid producing potential and neutralization potential (NP) when exposed to weathering, but cannot provide information on reaction rates (Jambor et al., 2002; Blowes et al., 2003). Kinetic testing usually includes humidity cell tests where a sample of either rock or tailings is leached by water under controlled temperature and humidity conditions in order to ascertain rates of sulfide and buffering mineral reactions. Additional tests that are often helpful in specific circumstances include tailings aging testing, column testing, field test pads and in certain situations wall rock testing. The combination of static and kinetic testing allows characterization of potential contaminants of concern, their probable release rates into the environment and the likely time period to the onset of AMD.

Trevali Mining Corp. 21-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 21.5.2 WATER QUALITY MANAGEMENT

Site-specific water quality modeling (WQM) may be necessary to evaluate the implications of any discharge to natural surface waters on quality and quantity and identify appropriate management and control measures to prevent degradation of water quality or disruption of aquatic habitat. The WQM should include parameters such as ammonia and nitrate as well as probable contaminants of concern (COC’s) along with major anion and cation species. Comparison of published rock geochemistry from historic mines in the vicinity of the Halfmile Lake Project with five times crustal abundance data allow preliminary assessment of probable contaminants of concern (COCs). Probable COCs include arsenic, copper, lead, zinc, cadmium, molybdenum and silver as well as unionized ammonia and nitrate from ANFO residues.

BEAK (1996) documents concentrations of up to 1000 mg/kg zinc and lead in soils in the vicinity of the sulphide horizon. All soil borrow sources should therefore be tested for metal content and leaching potential prior to use as a borrow source, when the soil is to be used in a situation where erosion or leaching is a possibility.

At HML and Stratmat, waste rocks derived from the advanced exploration portal and ramp will be temporarily stored on a prepared surface pad located in close proximity to the portal(s). By the end of the project, all waste rock will be returned underground and used as stope fill. Should the open pit (North Zone) opportunity be taken advantage of, resulting in storage of waste rock at surface, AMD/ML testing will be needed. The Halfmile Lake and Stratmat mine plan includes collection of all site runoff, including the temporary waste rock dumps, with water pumped to a storage pond. At HML, water will be treated and discharged to the Moody Brook watershed. At Stratmat, water will be pumped to the Tailings Management Facility located at Heath Steel mine site.

Effluents discharged to surface water from mining activities must at minimum meet MMER regulations (Table 21.1). Discharge from the project site should not cause a parameter increase in a receiving water body, outside the mixing zone, that would cause a receiving water guideline to be exceeded. Site specific approvals of effluent quality may be assigned after application to the New Brunswick Ministry of the Environment if simple compliance with the MMER regulations will not provide adequate protection of receiving water quality.

Trevali Mining Corp. 21-7 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Table 21.1 Metal Mining Effluent Regulations, SOR/2002-222 – Authorized Limits of Deleterious Substances

Item Deleterious Maximum Maximum Maximum Substances Authorized Monthly Authorized Authorized Mean Concentration in a Concentration in a Concentrations Composite Sample Grab Sample 1. Arsenic 0.50mg/L 0.75mg/L 1.00mg/L 2. Copper 0.30mg/L 0.45mg/L 0.60mg/L 3. Cyanide 1.00mg/L 1.50mg/L 2.00mg/L 4. Lead 0.20mg/L 0.30mg/L 0.40mg/L 5. Nickel 0.50mg/L 0.75mg/L 1.00mg/L 6. Zinc 0.50mg/L 0.75mg/L 1.00mg/L 7. Total Suspended 15.00mg/L 22.50mg/L 30.00mg/L Solids 8. Radium 226 0.37 Bq/L 0.74 Bq/L 1.11 Bq/L Note: All concentrations are total values. Current version as posted between Apr 3, 2009 and Apr 15, 2009. SOR/2006-239, s. 24.

21.6 H YDROGEOLOGY

Site specific or local hydrogeological data for the Halfmile Lake and Stratmat properties are not available. Limited hydrogeological data were located in the Heath Steele Mine (HSM) Closure Plan dated February 1997 and New Brunswick Department of Natural Resources provincial geological maps. The HSM site is located approximately 20 km east of the Halfmile Lake property and approximately 5 km east of Stratmat and is reported to have a similar geological stratigraphy to HML and Stratmat. It has therefore been assumed that the sites have a high probability to be hydrogeologically similar.

The properties reportedly contains areas of glacial till, up to 2 m thick, which overlies bedrock that frequently outcrops to surface (Wardrop, 2009). The till deposits are expected to overlie mixed felsic and mafic volcanic rock and siliceous sedimentary rock. The upper 30 m of bedrock is believed to be highly fractured, while at depths below 30 m below grade, the fracture density likely decreases. Groundwater is reportedly present in the till overburden and the fracture zones of the upper bedrock units. Limited groundwater movement is also likely in the lower bedrock units.

Groundwater gradient values and flow directions are not reported but are expected to follow a similar, although less pronounced, trend as the rolling surface topography. Surface topography is characterized by gently rolling hills, numerous swamps, and U-shaped valleys. With the upper bedrock being highly fractured, and therefore highly permeable, groundwater infiltration generally occurs on hill tops and valley sides, and discharges to the surface as artesian conditions in valley bottoms. Measurements of the piezometric surface elevation at the HSM site indicate seasonal variations up to 14.5 m in the fractured rock unit. Groundwater infiltration

Trevali Mining Corp. 21-8 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment reportedly increases in the spring and fall, whereas the summer and winter produces lower infiltration rates. The seasonal groundwater level variation is most notable in areas without constant head controls such as rivers or ponds.

Hydraulic conductivity tests were not reported for any of the water bearing units; however, published hydraulic conductivity values for sandy glacial till typically range from 10-6 to 10-8 m/s (Freeze and Cherry, 1979), while the fractured rock may be in the range of 10-5 m/s and 10-6 m/s. The underlying less fractured rock would have a hydraulic conductivity of 10-7 m/s or less.

Baseline groundwater chemistry varies significantly across the HSM site, which has been attributed to proximity to sulphide zones (Heath Steele Mines Limited, 1989; Noranda, 1998). It is therefore not recommended to extrapolate this to the Halfmile Lake property due to spatially derived variability.

The Stratmat hydrogeology pumping rate was estimated at 240 gallons per minute for both the Main zone and Zone 51. This is based on the value established for HML for the Environmental Impact Assessment prepared for Kria in June 2009. These numbers were based on historical data from Heath Steel Mines.

21.6.1 GROUNDWATER MANAGEMENT

Groundwater will infiltrate mine workings at both deposits. Based on the hydrogeology reported for the HSM area, and the anticipated relatively similar geology of the Halfmile Lake and Stratmat property, water volumes should be manageable, and may contain high concentrations of heavy metals due to the nature of the deposit. Standard dyke, grouting, and/or pumping practices would likely be required. A surface and groundwater management and discharge plan for Halfmile Lake has been included in the EIA registration document. Groundwater will be directed to a surface storage pond where the water will be held and treated, if necessary, before discharge to the Moody Brook watershed. Refer to the Halfmile Lake site plan located in Appendix C.

The Stratmat deposit has two independent mining zones, the Main Zone and Zone 51. The water management plan will cover the ground water discharge from both mining zones and surface water collected from all the areas impacted by the mining activities which will include two waste rock storage areas, crusher pad and ore storage. Both the groundwater discharge and surface water from the impacted areas are presumed to be acid generating. The groundwater and surface run off will be directed to a retention pond located on the mine site. No water treatment will occur at the Stratmat site. From here it will be transported via a buried pipeline approximately 5km to the Heat Steel tailings management facility. Surface water will be captured from the run off of all hard surface areas via a ditching system. The surface ditches will be lined with a synthetic liner due to the lack of available clay material natural.

Trevali Mining Corp. 21-9 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment The retention basin is designed to have the capacity to withstand a 1 in 10-year, 24- hour storm average inflow. Surface water flow volume will be estimated based on historical average year precipitation and Intensity/Duration/Frequency curves. (Environment Canada, Website)

21.6.2 MINE CLOSUREAND RECLAMATION PLAN

The intention of mine site reclamation after closure is to return land to a use at least equal to its previous value and to ensure that the long term ecological and environmental stability of the land and watershed is sustained, which is described in the Guide to the Development of a Mining and Reclamation Plan in New Brunswick. Ideally this includes minimizing the mining operations footprint and in that planning reclamation that will allow for a situation that is a “walk away” scenario. A site is deemed walk away when no further environmental monitoring and water treatment are necessary and the site does not contain public safety hazards (New Brunswick Department of Natural Resources, 2005).

Mine closure is considered to be complete by the Province once any requirement for environmental monitoring and/or water treatment has ceased. The Halfmile Lake/Stratmat Mining and Reclamation Plans must include an estimate for mine closure and reclamation costs and an anticipated schedule for these activities to occur. These two items are considered by the Minister of Natural Resources in determining the reclamation security that will be required from the proponent and held by the Province to cover the cost of performing site reclamation if the proponent is unable to fulfill its obligation. Securities may be required for the payment of cost with respect to protection, reclamation and rehabilitation of the environment as required by any provision of the Mining Act of New Brunswick (Section 111.1.a), and these securities would be credited into the Mine Reclamation Fund (Section 111.2 (1)).

The reclamation security may be released once reclamation is complete, although in a case involving long-term water treatment and/or site maintenance, all or part of the reclamation security may be withheld according to the expected annual operational cost and estimated duration of treatment. A site is deemed in a walk-away condition when no further environmental monitoring and water treatment is necessary, and the site does not contain public safety hazards.

It is recognized that a practical reclamation strategy may change from the inception of a mining project due to unforeseen changes in the mining plan, site conditions or improving technology. A proponent is required to revise and resubmit the reclamation strategy in the event that a project deviates from the documented development plan.

Trevali Mining Corp. 21-10 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 2 2 . 0 MARKETSANDCONTRACTS

22.1 C ONCENTRATE M ARKETING A SSUMPTIONS

The following assumptions regarding concentrate marketing have been made:

 Concentrates will be transported to the port of Bathurst, Port of Belledune New Brunswick, and from there, shipped to a smelter in Asia.

 Bulk concentrates experience a re-handling loss of 0.3%, whereas it is assumed that the gravity concentrates will be bagged. Therefore, a lesser loss of 0.10% is assumed.

 Concentrates going to Asia will be shipped in 10,000 ton lots.

 It is assumed that the moisture content of the concentrates will be 8% and below the Transportable Moisture Limit (TML). In some cases, this TML may be below the trigger point for a smelter moisture penalty.

22.2 S MELTER T ERMS

In the absence of letters of interest or letters of intent from potential smelters to further define the potential terms for the concentrates, Wardrop has generated assumptions for “world smelter terms” with respect to treatment charges, penalties, accountability and other areas. These were reviewed in light of the current market, as well as historic and future expected trends. In addition, there were discussions with smelters in order to determine current trends and the long-term outlook on capacity availability and the minor element impact. Elements within the concentrate may also add a positive cash flow, as recoverable by-products have not been included in this preliminary study.

It must be recognized that smelters in different market areas may use different formulas with respect to metal accountability and charges and this is not reflected in the presented terms.

It is also expected that, on final negotiations for concentrate contracts, the terms could be expected to vary due to shifts in the world market conditions.

Samples might be requested for testing prior to acceptance.

Trevali Mining Corp. 22-1 0987190100-REP-R0002-00 Halfmile Lake Preliminary Economic Assessment 22.2.1 TERMS - ZINC CONCENTRATE

PAYABLE METALS

Zinc Pay for 85% of content (minimum deduction 8%).

Silver Pay for 95% of the silver at the London price.

DEDUCTIONS

Treatment Charge: $180 US (CIF world port) per dmt at basis price of $1400/mt.

Price Plus 16% and minus 13% for a Zinc price US$1400/mt participation

PENALTIES

Iron $1.50 per 1% over 8%.

Mercury US 15 cents per 10 ppm over 100 ppm to 500 ppm and then 30 cents per 10 ppm over 500 ppm.

Arsenic US $2 per 0.1% over 0.1%.

Antimony $3.00 per 0.1% over 0.5%.

Cadmium US $1.00 per 0.01% over 0.3%.

Fluorine US $1.00 per 0.012% over 0.015%.

Selenium US $1.00 per 0.01% over 0.03%.

22.2.2 TERMS - COPPER CONCENTRATE

PAYABLE METALS

Copper Pay for the copper content less 1.0 unit at the London metal price.

Silver Pay for 95% of the silver at the London price.

DEDUCTIONS

Refining Charges

Trevali Mining Corp. 22-2 0987190100-REP-R0002-00 Halfmile Lake Preliminary Economic Assessment Copper: US 8.5 cents per pound plus, when the payable Copper price exceeds US 90 cents per pound, add 10% of the excess price to the refining charge to a maximum of US 10 cents.

Silver: US 35 cents per troy oz.

Treatment Charge: US $85 (CIF World Port) per dmt.

PENALTIES

Arsenic If the content is greater than 0.2%, a penalty of US $4.00 per 0.1% excess per dmt.

Antimony If the content is greater than 0.1%, a penalty of US 50 cents per 0.01% excess per dmt.

Zinc If the content is greater than 3.0%, a penalty of US $1.50 per dmt for each 1.0% excess.

Lead If the content exceeds 0.6%, a penalty of US 20 cents per dmt for each 0.1% excess.

Selenium US $1.00 per 0.01% over 0.05%.

22.2.3 TERMS - LEAD CONCENTRATE

PAYABLE METALS

Lead Pay for 95% of content (minimum deduction 3%).

Silver 95% of content (minimum deduction 50 grams per dmt) with refining charge of US 35 cents per ounce.

DEDUCTIONS

Treatment Charge: US $140 (CIF World Port) per dmt basis US $800/mt Lead price.

Price Participation: Plus 15% for a lead price > US $800/mt.

PENALTIES

Arsenic US $1.50 per 0.1% over 0.5%.

Antimony US $1.50 per 0.1% over 0.5%.

Trevali Mining Corp. 22-3 0987190100-REP-R0002-00 Halfmile Lake Preliminary Economic Assessment Bismuth US $1.50 per 0.01% over 0.15%.

Mercury US $1 per 10 ppm over 50 ppm.

Zinc US $1 per 1% over 8%.

22.3 N ET S MELTER R ETURNS

The Net Smelter Returns (NSR) were established on the basis of the following:

1. Life of mine average prices: Zinc US $1.03/lb. Copper US $3.03/lb. Lead US $0.92/lb. Silver US $15.08/oz. Gold US $887.92/oz. 2. An US/CAN$ exchange rate of 1.042. 3. Concentrate grades as per Section 16.4. 4. Representation costs are assumed to be US $0.25/ wmt. 5. Freight to destinations as $US29.00, assuming concentrates will be transported to the port of Belledune, New Brunswick and from there shipped by vessel to a smelter in Asia. Once a full suite of assays is established and the freight rates are more definitive, the detailed estimate of the NSR can be refined.

All NSR and freight calculations are in $US per dry metric ton (dmt) since all the smelter contracts will be written in $US/dmt.

The following Table 22.1 provides the summary of the NSR calculations:

Table 22.1 Net Smelter Return (NSR) Calculation Summary

NSR per dmt Net NS Payables, Deductions, of Con Value Revenue from No. Con Value, USD USD Shipped, per lb of ore, USD USD USD Ore

1. Zn $1,022.98 $325.61 $697.36 $665.94 $0.51 $1,373,793,691

$1,167.2 2. Cu $1,410.01 $242.79 $1,135.80 $1.53 $160,336,073 2

3. Pb $1,026.49 $335.61 $687.26 $655.83 $0.46 $420,809,860

Trevali Mining Corp. 22-4 0987190100-REP-R0002-00 Halfmile Lake Preliminary Economic Assessment 2 3 . 0 TAXES

The federal government imposes income tax on mining income at the same basic rate of tax that is applicable to other types of income.

The 2006 net rate of corporate income tax applicable to taxable income is 29.12%, calculated as follows:

Basic Rate 38.00% Provincial Abatement (10.00%) Federal Rate Before Surtax 28.00% Federal Surtax (4%) 1.12% Net Federal Rate 29.12%

Note: Federal legislation (Bill C-13) eliminates the corporate surtax on January 1, 2008, for all corporations. As well, this legislation extends the eligible tax rate reduction for Canadian resource profits in years 2007 to 2010. This extension is detailed below in Table 23.1 (Reference PricewaterhouseCoopers Canadian Mining Taxation, 2007).

Table 23.1 Tax Rate Reduction Extension

Year 2003 2004 2005 2006 2007 2008 2009 2010 Corporate Income Tax 27% 26% 25% 23% 21% 20.5% 20% 19% Rate

The 10% provincial abatement of federal tax is designed to give the provinces and territories room to impose corporate income taxes.

The provinces levy provincial income taxes on business income, at rates that range from 9.9% to 16%. Generally, these tax rates are levied on federal taxable income allocated to the particular province. The 2006 corporate income tax rate applicable to mining in the province of New Brunswick was 13.0% (Reference PricewaterhouseCoopers Canadian Mining Taxation, 2007).

Corporations in New Brunswick are subject to a declining rate of capital tax as per the following schedule. New Brunswick’s legislation (Bill 77) reduces the capital tax

Trevali Mining Corp. 23-1 0987190100-REP-R0002-00 Halfmile Lake – Stratmat Preliminary Economic Assessment rate to nil by January 1, 2009 (Reference PricewaterhouseCoopers Canadian Mining Taxation, 2007).

Table 23.2 Capital Tax Deduction

From % To % Effective Date 0.25 0.20 January1,2007 Capital Tax Deduction 0.20 0.10 January1,2008 0.10 Nil January 1, 2009

Federal tax deductions for Canadian exploration expenses (100%) and resource development expenses (30%) exist. Federal investment tax credit program (ITC) applicable to new equipment and structures used for mining and mineral processing. Research and development expenditures eligible for ITC's can include research relating to metallurgy, processing, and similar activities. No duty is applied on most imported manufacturing equipment (Reference http://www.gnb.ca/0078/minerals/Mineral_Rights_Tax-e.aspx).

Details for federal taxation credits concerning Investment Tax Credits, Loss Carryover, Capital Cost Allowance, Canadian Exploration Expense, Canadian Development Expense are detailed in the PricewaterhouseCoopers Canadian Mining Taxation, 2007 document located in Appendix D)

New Brunswick has a competitive and stable provincial mineral taxation framework.

The Metallic Minerals Tax Act includes a 2% royalty based on the annual "net revenue" derived from the mining operations, plus a 16% levy on "net profit" in excess of $100,000.

 Two-year holiday from 2% royalty for new mines.  Special deductions from 16% tax include: . One hundred and fifty percent of eligible exploration expenditures. . Allowances for depreciation, financing expenses (8%) and processing (8-15%); depreciation of up to 100% of the cost of new or expanded mine and processing assets.  Sixteen percent tax further reduced by tax credit equal to 25% of eligible process research expenditures.  Land/rental costs and property taxes are low, no water taxes.  No payroll tax or mandated health insurance premiums.  Combined provincial and federal sales tax at a rate of 14%.

Trevali Mining Corp. 23-2 0987190100-REP-R0002-00 Halfmile Lake – Stratmat Preliminary Economic Assessment 2 4 . 0 CAPITALANDOPERATINGCOST ESTIMATES

24.1 S UMMARY

Table 24.1 presents a detailed summary of the capital costs for the project. These costs are calculated at Cdn$471.1 million (2010 base year). Pre-production capital costs are Cdn$187 million including contingencies. The capital cost is separated into direct and indirect costs. Detailed capital costs can be found in Appendix I.

Table 24.1 Capital Cost Summary

Direct Capital Costs (million$) Site Development $25.8 Utilities $12.6 Mine Underground HML $130.7 Mine Underground Stratmat $130.2 MobileEquipmentHML $41.7 Mobile Equipment Stratmat $37.7 Infrastructure Non Process $12.3 Process $54.8 Tailings Management Facility $20.1 Closure/Reclamation $4.0 Sub Total $470 Indirect Capital Costs Owner's Costs $14.1 Indirect $13.1 Salvage $(26) Sub Total $1.1 TotalCapitalCosts $471.1

24.1.1 DIRECT CAPITAL

The direct capital cost breakdown consists of the following major category descriptions:

 site development  utilities  mining underground

Trevali Mining Corp. 24-1 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment  infrastructure, non-process  process  mobile equipment  tailings management facility  closure and reclamation costs. Open pit capital costs are not included in this analysis as the open pit is presented in this report as a future opportunity only.

The direct capital costs are further defined by areas which compose the major components of each category. The package definition is the level of detail which capital costs were determined. In some instances costs were determined based on historical data from projects of similar size and in other instances engineering first principles were used to determine equipment and labour requirements, and thus capital costs. The capital costs for the mill were based on published costs from Western Mines Engineering Inc., cost data (2004 edition).

Sustaining capital includes any non-operating costs that will be required after production begins and will include construction or equipment replacement costs. $22.5 million of sustaining capital is included in the direct capital total and is spread over the life of the mine. The detailed direct capital expenditures for the project over the life of mine are presented in Appendix I.

24.1.2 INDIRECT CAPITAL

The indirect capital costs breakdown consists of the following major category descriptions:

 owner’s cost  indirect cost  contingency  salvage. Owner’s costs were estimated at 3% of the total direct capital cost. This was allocated in the same year as the direct capital cost. The indirect costs were defined as per Table 24.2 below. The cost values were determined based on historical data from projects as well as engineering estimates. For this study, spare parts and first fill costs have not been considered.

Trevali Mining Corp. 24-2 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Table 24.2 Indirect Costs

No. Item Cost Construction Facilities 1.1 Temporary Construction Equipment $60,000 1.2 SiteConstruction,Communications $24,000 1.3 Storage Facilities $36,000 1.4 SiteMaintenanceDuringConstruction $240,000 $360,000 Commissioning and Startup 2.1 Owner'sCommissioningTeam $500,000 2.2 Third Party Consultants $112,500 2.3 VendorRepresentatives $225,000 $837,500 Spares and First Fill 3.1 Construction Fuel $240000 3.2 Spare Parts $0 3.3 First Fill $0 3.4 Reagents First Fill $0 $240,000 Professional Fees 4.1 Engineering, Procurement & Construction Management (4.3%) $11,520,000 4.2 MiscellaneousConsultants $112,500 $11,632,500 Total Indirect Costs $13,070,000

24.2 P ROCESSING C APITAL C OSTS

Plant capital costs for processing 4,000 t/d ore from both Halfmile Lake and Stratmat, are estimated to be $54.8M (Table 24.3). Costs for the equipment are based on a typical equipment list considering the applied flowsheet. Costs for concrete and electrical are calculated based on comparison with other similar Wardrop projects and factored to a production rate of 4,000 t/d.

Trevali Mining Corp. 24-3 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Table 24.3 Processing Capital Costs

No. Area Can$, 2010 1. Mill Equipment $27,725,000 2. Concrete Work $2,000,000 3. Piping $4,950,000 4. Structural Steel $2,300,000 5. Instrumentation $1,425,000 6. Insulation $550,000 7. Electrical $2,200,000 8. CoatingsandSealants $350,000 9. Mill Building $3,650,000 10. Installation Labour $9,650,000 TOTAL CAPITAL $54,800,000

24.2.1 PROCESSING OPERATING COSTS

Operating costs consists of labour, supplies and power. They are estimated to be $15.8M per annum or $10.80 per tonne ore (Table 24.4).

Labour costs are based on a required manpower and rates to operate the plant. The suggested scheme employs 34 persons for the plant operations and 20 persons for mill maintenance – a total of 54 people. The total annual cost is $4.8M and the cost per tonne ore is $3.31.

The total annual costs for the supplies are $6.2M and the cost per tonne ore is $4.27 in total and include the required reagents types and consumptions, as well as grinding steel, mill liners, maintenance supplies, etc.

The power cost is based on a $0.0654/kWH rate quoted by New Brunswick Power for the purposes of the combined Halfmile Lake-Stratmat Project. It includes a base usage cost, as well as a demand charge. For the plant, this is determined to be $4.7M per annum or $3.22 per tonne ore with a total of 8,250 kW installed.

Table 24.4 Plant Operating Costs

Total Annual Cost, Cost, CAN$/t Operating Cost Area % CAN$ Labour 30.63 $4,830,000 $3.31 Supplies 39.51 $6,230,331 $4.27 Power 29.85 $4,707,370 $3.22 TOTAL OPERATING COST 100.00 $15,767,701 $10.80

Trevali Mining Corp. 24-4 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment REAGENTS

The reagents and supplies types and consumptions are based on the results from the 1998 Noranda Feasibility Study as well as an imput from the current reagent usage at the Brunswick mill. They are listed below in Table 24.5:

Table 24.5 Reagents and Supplies

Consumption Consumption Total Annual Reagents and Supplies Cost, CAN$/t , t/year , kg/t ore Cost, CAN$ Collectors 467 0.32 887,680 0.61 Frothers 219 0.15 613,200 0.42 Depressants 248 0.17 719,780 0.49 pH Regulators 3,066 2.10 766,500 0.53 Flocculents 124 0.09 558,450 0.38 Total Reagents 4,125 2.83 3,545,610 2.43 Grinding Steel 1,421 0.97 1,349,551 0.92 Mill Liners 949 0.65 901,550 0.62 Maintenance Supplies 88 0.06 433,620 0.30 Total Consumables 2,457 1.68 2,684,721 1.84 TOTAL REAGENTS AND SUPPLIES 6,582 6,230,331 4.27

LABOUR

The labour details are prepared and estimated by Wardrop for the purposes of this study, based on the required personnel for a 4,000 t/d plant considering the proposed process flowsheet. Rates from other similar Wardrop projects in the area are considered for the purposes of the PEA. Additional 30% (25%+5%) is considered to be the salaries for health benefits, pension, overtime, training, etc.

Table 24.6 Process Plant Labour

Annual Cost Total Annual Position Number Cost, CAN$/t per Person Cost, CAN$ Mill Operations Mill Superintendent 1 $110,000 $110,000 0.08 Metallurgist 1 $80,000 $80,000 0.05 Metallurgical Technician 1 $75,000 $75,000 0.05 Instrument Technician 1 $70,000 $70,000 0.05 Plant Foreman 1 $85,000 $85,000 0.06 Assayer 2 $65,000 $130,000 0.09 Sampler 2 $60,000 $120,000 0.08 Mill Clerk 1 $55,000 $55,000 0.04 Crusher Operator 2 $70,000 $140,000 0.10 Crusher Helper 2 $60,000 $120,000 0.08 table continues...

Trevali Mining Corp. 24-5 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Grinding Operator 4 $70,000 $280,000 0.19 Flotation Operator 4 $70,000 $280,000 0.19 Reagents Operator 1 $70,000 $70,000 0.05 Dewatering and Loadout Operator 2 $70,000 $140,000 0.10 Control Room Operator 1 $70,000 $70,000 0.05 Labourer 8 $60,000 $480,000 0.33 Subtotal 34 $2,305,000 1.58 Mill Maintenance Mill Maintenance Foreman 1 $85,000 $85,000 0.06 Millwright 7 $80,000 $560,000 0.38 Electrician/Instruments 2 $70,000 $140,000 0.10 Welder 4 $65,000 $260,000 0.18 Helper 6 $55,000 $330,000 0.23 Subtotal 20 $1,375,000 0.94 TOTAL 54 $3,680,000 2.52 Benefits: Health Pension: 25% $920,000 0.63 Addition: Overtime, Training: 5% $230,000 0.16 TOTAL LABOUR 54 $4,830,000 3.31

POWER

The cost for power 0.0654 CAN$/kWh is obtained from NB Power Distribution and Customer Service Corporation for the purposes of the project. The installed kW are based on the requirements for a 4,000 t/d plant producing 3+1 concentrates. The data is collected from other similar Wardrop projects. The costs for diesel fuel of $0.73 CAN$/L fuel oil $0.55 CAN$/L are fixed for the purposes of this project.

Table 24.7 Power

Energy Charge, Installed Total Annual Power Area Cost, CAN$/t CAN$/kWH kW Cost, CAN$ Electricity 0.0654 8,250 4,337,982 2.97 DieselFuel,l/y 0.73 10,050 7,337 0.01 FuelOil,l/y 0.55 658,275 362,051 0.25 TOTAL POWER 4,707,370 3.22

ORE HAULAGE

The costs for hauling the ore from Halfmile Lake to Heath Steele (22 km) and from Stratmat to Heath Steele (Assumed 5 km) are calculated to be $46.4 million for the 20 years of mine life, or $2.54 per tonne.

Trevali Mining Corp. 24-6 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment 24.3 U NDERGROUNDMINE

24.3.1 CAPITAL COSTS

The mining underground development capital costs for the combined HML and Stratmat sites incurred by year are summarized in the Table 24.8 below.

Table 24.8 HML and Stratmat Underground Development Capital Costs

Capital Expenses Life of Mine Year Halfmile Lake Stratmat Total -2 $5,322,256 $11,120,632 $16,442,888 -1 $11,053,316 $14,964,690 $26,018,006 1 $17,500,360 $17,905,153 $35,405,513 2 $15,711,440 $19,985,336 $35,696,776 3 $17,858,700 $19,993,315 $37,852,015 4 $17,579,050 $12,079,225 $29,658,275 5 $18,509,510 $10,509,785 $29,019,295 6 $20,524,580 $8,724,445 $29,249,025 7 $6,310,086 $4,852,905 $11,162,991 8 $367,675 $5,931,713 $6,299,388 9 $3,989,585 $3,989,585 10 $61,425 $61,425 11 $61,425 $61,425 Total $130,736,973 $130,179,634 $260,916,607

BASISOF ESTIMATE

The basis for underground equipment, infrastructure, and mine services costs was derived from a combination of equipment manufacturer’s price lists, quotations and the Western Mines Engineering data base. These costs were escalated to 2009 dollars and adjusted with the exchange rate selected for this PEA where applicable. The detailed capital expenditures for the underground mine is presented in Appendix I.

QUANTITY ESTIMATESAND PRICING

For both HML and Stratmat, the ramp and lateral development quantities (meters) were estimated from the anticipated level layouts in all of the zones for the full depth of the deposit. Allowances were made for typical grade changes in the ramp, re- mucks, load-outs, sub stations, sumps, level and raise access drifts and diamond drill cutouts. The prices estimated for ramps and lateral development were based on the advance rates and utility costs selected for the PEA and materials costs used on other similar projects. Table 24.9 lists the unit cost for main ramp and lateral development.

Trevali Mining Corp. 24-7 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Table 24.9 HML and Stratmat Main Ramp and Lateral Development Unit Costs

Main Ramp Lateral Development Cost Description $/day $/m $/day $/m Labour-Direct $5,151 $1,145 $5,151 $937 Fuel $287 $64 $323 $59 Tires/Repairs/PM $563 $25 $633 $115 Drilling $186 $163 Blasting $241 $213 U/G Services Vent $161 $23 Ground Support $161 $133 Indirects $1,154 $971 Trucking $601 $506 Sub Total (per m) $3,838 $3,120

Raise quantities were based on raise dips of 70°. The prices used for driving raises were based on firm contract prices used on recent projects.

The Table 24.10 and 24.11 identifies the underground mobile equipment and the surface equipment included in the capital expenditures for the HML and Stratmat projects respectively. The capital purchases of the equipment will be phased in as the mine production ramps to full capacity by Year four of the mine life.

Table 24.10 HML Underground Mobile Equipment

Equipment # of Units Make Model* Mobile Equipment - Underground Trucks - 50t 6 Sandvik Sandvik 50 Trucks - 30t w/ Ejector Box 1 Sandvik Sandvik 530 LHD's-8cy 5 Sandvik LH514 LHD's-6cy 1 Sandvik LH410 Jumbos 5 Sandvik DD420 Scissor Lifts 5 MacLean SL - 3 Boom Truck 1 Sandvik TH205L Fuel Truck 1 MacLean Jeeps / Tractors 4 Toyota Grader 1 Miller Personnel Carrier 1 Toyota ITH Drill 2 Sandvik DL310-7 Surface Equipment Front End Loader - 966 1 Cat 966H Grader 1 Cat 120H Water Truck 1 Dozer - D6 1 Cat D6R

Trevali Mining Corp. 24-8 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Pick-up Trucks 4 Various Various Fork Lift 1 Cat 930G * or equivalent

Table 24.11 Stratmat Underground Mobile Equipment

MobileEquipment No.ofUnits Make Model* Underground Equipment: Ore Haulage Trucks – 50 t (new) 9 Sandvik Sandvik 50 Ore Haulage Trucks – 50 t (refurbished) 5 RockfillHaulageTrucks–30t 6 Sandvik Sandvik530 Face Jumbos (new) 3 Sandvik DD420 Face Jumbos (refurbished) 1 Sandvik DD421 LHD's–8cy 5 Sandvik LH514 LHD's–6cy 0 Sandvik LH410 ITH Longhole Drill 2 Sandvik DL310-7 ITH Longhole Drill (refurbished) 2 Sandvik DL310-8 Support fleet: Scissor Lifts 3 MacLean SL - 3 Rockbreaker 1 MacLeanSL-4 Boom Truck 2 Sandvik TH205L Explosivetruck 1 Fuel Truck 1 MacLean Grader 1 Miller Personnel Carrier 1 Toyota Surveyors'Jeeps 4 Toyota Supervisors'Jeeps 15 Toyota Surface Equipment: Front End Loader - Cat 966H 1 Cat 966H Gradercat120H 1 Cat 120H Water Truck 1 Dozer-catD6R 1 Cat D6R Pick-up Trucks 4 Various Various ForkLiftCat930G 1 Cat 930G

24.3.2 OPERATING COSTS

The production tonnage for HML and Stratmat was calculated from the Minesight™ model and adjusted for mining recovery and dilution. For HML, the tonnage associated with the three different mining methods was apportioned by analyzing the ore geometry in the model. For Stratmat, the calculation of tonnage considered longhole (LH) mining method only. For operating costs purposes, 80% of the Stratmat tonnage was assigned the LH operating cost and 20% was assigned the

Trevali Mining Corp. 24-9 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment MCF operating cost. This introduced a conservative element to the operating cost, in consideration of the fact that the current potential mineable resource for Stratmat is classified as 100% inferred.

In the MCF method, allowances were made for operating development which comprises the waste development for attack ramps and take-down-backs (TDBs).

The prices estimated for mine operating costs were based on the production rate and utility costs selected for the PEA, and materials costs used on other similar projects.

Table 24.12 summarized the HML mining personnel requirements for direct operational labour, indirect labour, trucking, and backfill. Table 24.13 is the Stratmat summary.

Table 24.12 HML Personnel Requirements

No of Persons per day

Ramp Development MCF Avoca/LH Total Off Direct Mining Jumbo 2 44 1010 ITH 444 LHD 2 44 41414 Bolters 4 8 8 20 20 Blasters 2 2 4 4 Services 2 2 4 4 Indirect Mining Superintendent - Mining 1 0 Superindendent – Maintenance 1 0 General Foreman 1 0 Supervisors 6 6 Mechanics 1212 Welders 2 2 Electricians 44 Materials Handling 2 2 Trucking 12 12 Backfill LHD/Truck Operators 4 4 PlantOperator 22 Loader/DozerOperator 2 2 Total Contingent 105 102

Trevali Mining Corp. 24-10 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Table 24.13 Stratmat Personnel Requirements

Ramp Devel'mt LH Total OFF Direct Mining Jumbo 2 106 18 18 ITH 4 4 4 LHD 4 2 6 6 Bolters 8 8 8 Blasters 4 4 4 Services 14 14 14 Trucking 18 18 Indirect Mining Super't - Mining 1 0 Super't - Mtce 1 0 General Foreman 1 1 Supervisors 3 3 Mechanics 88 Welders 2 2 Electricians 4 4 Mat'lsHandling 2 2 Backfill Surface Truck Op'trs 12 12 Plant Operator 2 2 Loader/dozerOp'tr 2 2 TotalContingent 110 108

The indirects and trucking components were also applied to mine operating costs in the manner (tonnage basis) outlined for the capital cost estimate (see Table 24.14).

Table 24.14 Mine Production Indirect Costs

Item CostComponent $/d $/y $/t Operating Labour 1 IndirectMining 6,076,115 7.77 Operating Maintenance 2 General 1,980.91 0.90 3 MobileEquipment 1,213.00 0.55 4 Compressed Air 129,676.00 0.17 5 Dewatering 344,398.00 0.44 6 Process Water 110,954.00 0.14 7 Power&fuel 6,210.00 2.84 8 Propane (Mine Air) 989,863.00 1.27 Total 14.08

Trevali Mining Corp. 24-11 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment The mining operational unit cost for the Avoca/LH mining methods are shown below in Table 24.15. These values were used for HML and Stratmat.

Table 24.15 Mine Production Avoca/LH Stoping Costs

Item CostComponent $/day $/y Avoca/LH Operating Labour 1 DirectMining 2,650,258 6.19 Operating Maintenance 2 Fuel 641.00 0.53 3 MobileEquipment 893.00 0.74 4 Operating Indirects 14.08 5 Drilling 0.46 6 Explosives 0.24 7 Backfill 6.78 7.33 8 Trucking Total 36.35

The mining operational unit cost for MCF mining method is shown below in Table 24.16. These values were used for HML and Stratmat.

Table 24.16 Mine Production MCF Stoping Costs

Item CostComponent $/day $/y $/tMCF Operating Labour 1 DirectMining 4,427,944 10.34 Operating Maintenance 2 Fuel 782.00 0.65 3 MobileEquipment 1,124.00 0.94 4 Operating Indirects 14.08 5 Drilling 1.76 6 Explosives 1.69 Ground Support 7 Bolts & Screen 1.46 8 Cablebolting 0.84 9 Backfill 4.74 10 Trucking 7.33 11 OperatingDevelopment 3.08 Total 46.91

The mining operational costs for backfill for all three mining methods are detailed in Table 24.17.

Trevali Mining Corp. 24-12 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment Table 24.17 Mine Production Backfill

LH Item Cost Component $/day* $/y** Base ($/t) MCF ($/t) Avoca ($/t) ($/t) Operating Labour 1 DirectMining 3,487.93 1,245,190 1.74 1.74 1.74 1.74 Operating Maintenance 2 Fuel 811.00 0.41 0.41 0.410.41 3 MobileEquipment 737.00 0.37 0.37 0.37 0.37 4 Cement(CRF) 1.24 0.53 1.904.43 5 Quarrying Material 0.52 0.52 0.52 0.52 6 Crushing 1.12 1.12 1.121.12 7 Set-Ups & Moves 0.05 0.05 0.05 0.05 Total 5,035.93 5.45 4.74 6.108.63 *$/day is based on 2000 t/d **$/year is based on 782,000 t/y.

Trevali Mining Corp. 24-13 0987190100-REP-R0003-00 Halfmile Lake – Stratmat Preliminary Economic Assessment 2 5 . 0 ECONOMICANALYSIS

25.1 M ETAL P RICING

Currently metal prices are set twice a year, in February and August. The prices are based on the Consensus Economic Energy and Metal Forecast Group (EMCF) of London. This group provides quarterly forecast for a variety of metals based on a selection of analysts and the EMCF averages the 20 or 30 projections in a single average (consensus) forecast.

To set the metal prices, Wardrop uses the average of three quarterly reports. The reason for averaging three periods is to avoid any single outlier forecast, and to make sure there is not a big fluctuation between the February and August prices.

Table 25.1 below details metal price used in the economic analysis.

Table 25.1 Metal Prices

Metal Metal Price Units Zinc (Zn) $1.03 US$/lb Copper(Cu) $3.03 US$/lb Lead (Pb) $0.92 US$/lb Silver (Ag) $15.08 US$/oz

25.2 F INANCIAL A NALYSIS

The financial analysis considered a total of 11.6 million tonnes of ore. This represents the inferred and indicated resource from the Upper, Lower and Deep zones as defined in Section 17 of this report. This analysis excludes revenue contributions or costs from the open pit mining of the North Zone. A detail report of the financial analysis and cash flow by year is provided in Appendix J.

Using NSR values of US$665.94/dmt for zinc, US$1135.8/dmt for copper, US$655.83/dmt for lead and US$780.51/dmt for bulk, an exchange rate of $1.182 Cdn$/US$, and an operating cost of $57.62 per ton of ore, the pre-tax IRR for the project has been calculated at 20.86%.

Overall, the total capital and operating expenditures will be $471 million and $1 billion, respectively. Additionally, the total revenue before taxes from metal sales will be $2.3 billion during a life-of-mine of 20 years.

Trevali Mining Corp. 25-1 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment Table 25.2 illustrates the NPV for the project at variable discount rates. As well the IRR is shown as 16.24%.

Table 25.2 Net Present Value and Internal Rate of Return

Item Amount Pre-tax & Pre-finance NPV @ 6% $343,050,357 Pre-tax & Pre-finance NPV @ 8% $253,403,020 Pre-tax & Pre-finance NPV @ 10% $184,310,634 Pre-tax & Pre-finance NPV @ 12% $130,584,175 Pre-tax & Pre-finance NPV @ 15% $70,883,749 Pre-tax & Pre-finance NPV @ 20% 7,754985 Project IRR 20.86%

Figure 25.1 shows the NPV for the various discount rates for the base case scenario, as defined by the above metal prices, NSR and currency exchange.

Figure 25.1 NPV vs. Discount Rate for Base Case

NPV vs Discount Rate for Base Case

$400,000,000

$350,000,000

$300,000,000

$250,000,000 ) $ (

$200,000,000 V P

N $150,000,000

$100,000,000

$50,000,000

$0 5% 7% 9% 11% 13% 15% 17% 19% Discount Rate (%)

25.3 S ENSITIVITY A NALYSIS

Several parameters were varied by ±10% to examine the sensitivity of the net present value of the project as the discount rate changes. The capital and operating costs, as well as the NSR, were individually increased and reduced by 10% off the base case, and the pre-tax results plotted as shown in Figure 25.2.

Trevali Mining Corp. 25-2 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment Figure 25.2 Capital and Operating Cost, and NSR Sensitivity

Pre-Tax NPV vs Discount Rate - Sensitivity $500,000,000

+10% NSR $400,000,000

-10% NSR

-10% CAPEX $300,000,000

+10% CAPEX ) N D

C $200,000,000 $

-10% Op Costs 9 0 0 2 ( +10% Op Costs V P

N $100,000,000

Base Case

$0

-$100,000,000 5% 8% 11% 14% 17% 20% Discount Rate (%)

The analysis shows that the project is most sensitive to variations in the NSR. Wardrop ran several sensitivity analyses to determine the effect on key financial statistics if the following basic parameters change:

 the operating costs increased and decreased by 10%

 the capital costs increased and decreased by 10%

 the NSR increased and decreased by 10%

 the NSR for zinc only increased and decreased by 10%. For ease of reference, the results are summarized in Table 25.3 and 25.4. In addition, the IRR Sensitivity is shown in Figure 25.3.

Trevali Mining Corp. 25-3 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment Table 25.3 Operating and Capital Cost Sensitivity

Discount NPV NPV Difference IRR Rate Base Case 6% $343,050,357 - 8% $253,403,020 - 10% $184,310,634 - 16.24% 12% $130,584,175 - 15% $70,883,749 - 20% 7,754,985 - Operating Cost 6% $327,118,520 ($15931837) 8% $240,012,401 ($13390619) Increase 10% $172,947,301 ($11,363,333) 14.65% 10% 12% $120,856,381 ($ 9,727,794) 15% $63,064,095 ($7,819,654) 20% $2,133,204 ($5,621,781) 6% $358,982,194 $ 5,931,837.00 8% $266,793,638 $13,390,619 Decrease 10% $195,673,967 $11,363,333 17.78% 10% 12% $140,311,969 $9,727,794 15% $78,703,404 $7,819,655 20% $13,376,766 $5,621,781 Capital Cost 6% $305,239,154 ($37,811,203) 8% $218,088,663 ($35,314,357) Increase 10% $151,238,256 ($33,072,378) 15.73% 10% 12% $99,527,632 ( $31,056,543) 15% $42,484,324 ($28,399,425) 20% ($17,009,025) ($24,764,010) 6% $380,861,560 $37,811,203 8% $288,717,376 $35,314,356 Decrease 10% $217,383,012 $33,072,378 16.79% 10% 12% $161,640,718 $31,056,543 15% $99,283,175 $28,399,426 20% $32,518,995 $24,764,010

Trevali Mining Corp. 25-4 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment Table 25.4 NSR Sensitivity

Discount Rate NPV NPV Difference IRR NSR 6% $213,225,480 ($129,824,877) 8% $144,411,634 ($108,991,386) 10% $91,914,995 ($92,395,639) Decrease 10% 15.64% 12% $51,558,903 ($79,025,272) 15% $7,432,966 ($63,450,784) 20% ($37,795,212) ($45,550,197) 6% $472,875,234 $129,824,877 8% $362,394,406 $108,991,386 10% $276,706,272 $92,395,639 Increase 10% 25.76% 12% $209,609,447 $79,025,272 15% $134,334,533 $63,450,784 20% $53,305,182 $45,550,197

Figure 25.3 IRR Sensitivity

IRR Sensitivity 26.00% 25.00% 24.00% 23.00% 22.00% 21.00% 20.00% 19.00% 18.00% 17.00% 16.00% 15.00% -10% +10% Base Case Operating Costs Capital Costs NSR Zn NSR

Based on the sensitivity analysis results, it is clear that the project is most sensitive to the NSR, much less sensitive on capital costs and least sensitive on operating cost. A sensitivity analysis for exclusively zinc concentrate NSR is also included.

This shows that the project is most sensitive to zinc NSR rather than capital and operating costs. Moving forward, an attempt should be made to refine and improve the smelter terms, through discussions with Xstrata and any local smelters, to

Trevali Mining Corp. 25-5 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment decrease the shipping costs to a minimum and improve the smelter term conditions. This could lead to much improved project financials.

Based on the sensitivity analysis results, it is clear that the project is most sensitive to the NSR, much less sensitive on capital costs and least sensitive on operating cost. A sensitivity analysis for exclusively zinc concentrate NSR is also included. This shows that the project is most sensitive to zinc NSR rather than capital and operating costs. Moving forward, an attempt should be made to refine and improve the smelter terms, through discussions with Xstrata and any local smelters, to decrease the shipping costs to a minimum and improve the smelter term conditions. This could lead to much improved project financials.

25.4 C OMPARISONTO HML PEA DATED J ULY , 2009

Wardrop completed an NI 43-101 compliant Preliminary Economic Assessment on the Half Mile Lake property for Kria Resources in July 2009. This report evaluated the economics of the HML deposit based on the same option of locating a milling operation at Heath Steel. The Stratmat deposit was not included in the design or financial evaluation in the 2009 project.

The PEA presented in this report includes the 2009 HML design and operating cost presented in the 2009 report, as well as the Stratmat deposit and its corresponding design, capital costs and operating costs. The PEA presented in this report, which includes HML and Stratmat, has the following economic fundamentals updated since the 2009 PEA:

 Cdn$/US$ exchange

 Metallurgical recoveries

 Metal prices

 Capital costs contingency

 Elimination of bulk con from the NSR

To enable a relative comparison of the two PEA reports and evaluate the effect of the addition of the Stratmat deposit, a “relative” economic assessment is presented in Appendix J. The “relative” economic assessment uses the 2009 HML PEA values for the economic fundamentals listed above and applies them within the HML/Stratmat PEA. This product does not reflect the actual results of the present PEA, which is based on updated economic fundamentals; however it does serve as an indicative comparison to the addition of Stratmat to the Economic analysis. The addition of the Stratmat deposit has a positive effect on the HML PEA project’s financial return with a 2.05% improvement in IRR, using the 2009 HML PEA economic fundamentals.

Trevali Mining Corp. 25-6 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment 2 6 . 0 PAYBACK

The project has a positive payback in the sixth year from the start of the mining operations. In the third year, the project will realize a positive cash flow from operations and this will remain as annual positive cash for the remaining years of mine operation. The cumulative pre-tax cash flow over the twenty-year life of mine for this project is $824.6 million.

Trevali Mining Corp. 26-1 0987190100-REP-R0002-00 Halfmile Lake – Stratmat Preliminary Economic Assessment 2 7 . 0 MINELIFE

27.1 H ALF M ILE L IFEOF M INE P LAN

27.1.1 PROJECT SCHEDULE

The life of mine plan is defined by the Project Execution Schedule, located in Appendix K, as well as the Ramp, Development, and Production Schedules. Mine development begins with driving the ramp from surface near the end of the first year of construction (Year – 2), after sufficient surface infrastructure has been constructed to support mine development. This will include site roads, waste pad, water treatment facilities, maintenance shop, power supply and distribution, process water, compressed air, and mine dry and office facilities. Some of these, such as power supply and distribution, and mine dry and office facilities, will be of a temporary nature to satisfy the initial requirements for driving the ramp.

27.1.2 DEVELOPMENT SCHEDULE

Level development begins towards the end of the 2nd year of construction on the 350 Level. This will allow access to the first level (380 Level) for pre-production development and ventilation raise access for ramp connections in Years 1 and 2. The ramp will reach the bottom of the Upper Zone in Year 1 and the first exploration drift (200 Level) is completed in Year 2. Subsequent milestones for the Lower and Deep Zones are shown on the Project Schedule. The ramp advance is scheduled at 4.5 m/d and the level development is scheduled at 5.5 m/d where generally two headings are available on a level. Ramp and level development equipment includes two boom electric hydraulic jumbos, 8 yd3 load-haul-dump units, 50 t trucks and scissor lifts for the installation of ground support and mine services. The ramp and development schedule is shown in Appendix XX.

27.1.3 PRODUCTION SCHEDULE

Production begins with an MCF stope on the 380 Level in Year 1 and a second stope is brought on stream in Year 2 from the 200 Level. Steady state production is attained in Year 4 at a rate of 2,000 tonnes per day from three MCF stopes, Avoca sills and LH overcuts/undercuts. The production rate is reduced to an average of 1,300 tonnes per day in Years 15 to 20 with MCF mining on 2 to 4 horizons in the Lower and Deep Zones. The production tonnage schedule outlining the ore produced by year for the life of mine is located in Appendix K.

Trevali Mining Corp. 27-1 0987190100-REP-R0003-00 Halfmile Lake -Stratmat Preliminary Economic Assessment 27.2 S TRATMAT L IFEOF M INE P LAN

27.2.1 PROJECT SCHEDULE

A Gantt Chart summary of the Development and Production schedule in Appendix K shows a 13-year life of the Stratmat project. This includes about one year of construction of surface infrastructure sufficient to support mine development. This will include site roads, waste pad, water treatment facilities, maintenance shop, power supply and distribution, process water, compressed air, and mine dry and office facilities. Some of these, such as power supply and distribution, and mine dry and office facilities, will be of a temporary nature to satisfy the initial requirements for driving the ramps.

Mine development begins with driving the ramps concurrently in Zone 51 and in the Main Zone from surface. The Zone 51 ramp portal is at elevation 5335, the Main Zone ramp at elev. 5366.

27.2.2 DEVELOPMENT SCHEDULE

Level development in Zone 51 begins on 5202 L and on 5181 L when the ramp reaches those levels, on month 12th and 13th respectively. Similarly, level development in the Main Zone will begin on 5202 L and 5181 L on month 15th and 16th . This will allow access to the first two sub-levels in each zone for pre-production development and ventilation raise access.

Ramp advance is scheduled at 4.5 m/d and level development is scheduled at 5.5 m/d where generally two headings are available on a level. Ramp and level development equipment includes two boom electric hydraulic jumbos, 8 yd3 load- haul-dump units, 50 t trucks and scissor lifts for the installation of ground support and mine services.

27.2.3 PRODUCTION SCHEDULE

Production begins on the 5181 Levels in both Zone 51 and the Main Zone in Year 1 and a second stope is brought on stream late in the same year. The peak Steady state production is attained in Year 3 at a rate of 2,000 tonnes per day from three LH stopes,LH overcuts/undercuts and from development drifts in ore. The peak production rate remains at a steady state for five years, after which the rate will decrease to 1,500 tpd for three years. The production rate is further reduced to an average of 1,432 tonnes per day in the final year, year 12. The production tonnage schedule outlining the ore produced by year for the life of mine is located in Appendix K.

Trevali Mining Corp. 27-2 0987190100-REP-R0003-00 Halfmile Lake -Stratmat Preliminary Economic Assessment 2 8 . 0 RISKSANDOPPORTUNITIES

28.1 M INING

28.1.1 RISKS

MINING METHODS

The mining methods selected for the PEA of both the Halfmile Lake and the Stratmat properties were based largely on orebody shapes. The selection of methods was not optimized, the objective was to use mechanized techniques to the fullest extent possible. This means that, in several areas of the deposits, the dip of the ore is shallow and the MCF method was deemed to be the most appropriate to implement. The shallow dipping areas pose a risk to extraction with the potential for higher dilution, requirement of more intricate ground support and lower mining recoveries with any of the methods.

REMOTE MUCKING

In some areas of the deposits, a longitudinal uppers retreat may be the only method of extraction. These situations will require the use of remote LHD equipment for mucking the ore. The strike length of the ore may require additional access drifts into the ore to make remote mucking practical, and hence additional costs.

BACKFILL RAISE

For the Halfmile Lake operations, truck backhauls from surface were assumed to be the manner of delivering waste to the stopes as backfill. Consequently, backfill raise(s) were not included in the capital costs or financial analysis. It is possible that sequencing the development and backfill cycles may require the use of a raise plus a dedicated fleet of backfill trucks as is planned for the Startmat operations, instead of backhauls with the ore trucks.

MUCK HANDLING

The highly mechanized operations in both properties require a heavy demand for diesel fuel. Fluctuations in the price of fuel will certainly affect the economics of the operations accordingly.

Trevali Mining Corp. 28-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment VENTILATION NETWORK

A full scale ventilation network analysis was not done for this level of study of both Halfmile Lake and Stratmat.. The optimizations carried out for ore and waste haulage were used to determine the steady state air volume of 680,000 cfm for HML and 156,000 cfm for Stratmat Zone 51 and 730,000 for Stratmat Main Zone. Fan static pressure was generally selected at 16” to estimate fan motor hp.

NO SHOTCRETE

No allowances were made for shotcrete with the use of cable bolts in the HW’s of the HML Upper Zone, Stratmat Main Zone Phase 1 and Zone 51. More detailed geotechnical investigations may dictate the use of shotcrete for permanent or temporary support in any of the Zones.

HML DEEP ZONE ACCESS

In reference to HML, for the purposes of the PEA, it was assumed that the main ramp was extended to access the Deep Zone. Results of a future underground exploration program for the Deep Zone will determine the parameters of a mine plan and method of access for the zone. A full scale study at a Prefeasibility level would determine the economics of shaft versus ramp access at the depths confirmed by the exploration program.

28.1.2 OPPORTUNITIES

CONVERTMORE MCF TO MAXIMIZE LH MINING METHOD

All of the mining methods should be optimized at a next stage of study to examine level intervals, attack ramp approaches in the HW, maximum spans and pillar configurations - the overall mining method. This may result in the conversion of MCF and Avoca mining areas into LH stopes. This is applicable to both HML and Stratmat.

STRATMAT ADDITIONAL RESOURCES

The area below 5181 L in Zone 51 is presently below the cut-off grade. Excavations on that level might prove otherwise. In the Main Zone, additional resources might turnout intrinsically within the ore blobs.

HML SHAFT CONSIDERATIONS

A shaft sunk to access the Deep Zone may reduce operating costs for ventilation (power) and costs associated with truck haulage. The estimated cost for a shaft to access the Deep Zone is detailed in Section 24.0. This cost was not be included in the financial analysis for this PEA. Further exploration of the deep zone resource is

Trevali Mining Corp. 28-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment required to justify the costs presented for the shaft sinking. The recommendations section of this report outlines activities and engineering required to further develop the Deep Zone of the Halfmile Lake Deposit. This will be used to determine if a trade off study is favourable for a future shaft or ramp access to the deep zone.

The cost for the excavation requirements for the shaft is Cdn$24.6 million. This cost includes the following items:

 shaft sinking – monolithic concrete lined

 shaft stations

 mine level development for the lower zone (-70L, -370L)

 mine level development for the deep zone (-568L, -748L)

 raises

 pump rooms

 ramp to shaft bottom

 loadout level development (-788 Level)

 crusher station (-748 Level). The cost for the shaft equipment and installation is Cdn$26.2 million. This cost includes the following items:

 shaft equipment including headframe

 collar house

 hoist skip and rope

 shaft concrete

 crusher c/w conveyors, feeders

 cage hoist. The vertical section showing the head frame, shaft, and drift access to the Deep zone from the shaft is located in Appendix L. The detail costs of shaft sinking to the deep zone to provide a method of ore to surface is presented in Appendix M.

HALFMILE LAKE NORTH ZONE

Improvement of geological data for the North Zone should recognize that the North Zone does contain potential resources, which merit further exploration and

Trevali Mining Corp. 28-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment investigation. Currently the North Zone is not included in the mine plan or the financial analysis for HML.

28.2 M ETALLURGY

28.2.1 RISKS

 The current report is based mostly on data from previous studies. Most of them were prepared considering different conditions and the test data is well outdated and therefore, may not be reliable.

 The preferred process flowsheet is applied at the time when the Heath Steele mill was operational with the idea to evaluate the feasibility of adding the Halfmile Lake ore to the existing Heath Steele processing line. It may not be the best approach now when a completely new “green field” mill is required.

 By-product elements may exist that had little or no value in 1995, but now have viable markets.

28.2.2 OPPORTUNITIES

 Based on a future detailed evaluation on the existing Heath Steele infrastructure, additional savings in terms of capital costs may apply.

 A new metallurgical test program may improve significantly the process flowsheet and therefore, the capital and operating costs for the project.

 Potential contract with Xstrata Copper Limited (or other Smelters i n North America) may improve the smelter terms and NSR for the project.

28.3 E NVIRONMENTAL

28.3.1 RISKS

ENVIRONMENTAL PERMITTING

The existing TMF at Heath Steal Mines is licensed and operated in care and maintenance by Xstrata. The environmental permitting process by which the TMF can be activated and expanded to receive tailings from the proposed project should be explored in more detail through consultation with the appropriate federal and provincial agencies.

Trevali Mining Corp. 28-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment HEATH STEELE MINES SITE

The Heath Steele Mines site was a previously operating mine which has undergone partial reclamation. A more detailed assessment of the site, including the current operation of the TMF, should be conducted to identify and avoid any existing environmental liabilities.

COMMUNITYAND ABORIGINALENGAGEMENT

 There is a medium level of risk of not obtaining social acceptance for the Halfmile Lake Project. Lack of social acceptance for the project could result in extensive delays, negative attention to the project, and/or difficulties in permitting. This risk can be mitigated by careful preparation and execution of an early, thorough and documented public engagement program, conducted, at a minimum, according to the Guide to Environmental Impact Assessment in New Brunswick.

GEOCHEMISTRY

 There is reason to expect that acid drainage and metal leaching may require appropriate controls but there is uncertainty regarding the magnitude of any acid mine drainage and metal leaching from tailings in terms of permitting and closure. A thorough assessment of tailings geochemistry, mine design, closure and reclamation plans with respect to eventual walk-away closure and maintaining an updated closure plan congruent with evolving mine planning

HYDROGEOLOGY

 There is an uncertainty regarding the expected quantities of groundwater that may be encountered during operations. Risk evaluation mainly involves site studies involving data review, on-site reconnaissance, test well drilling and testing, water sample analyses, and ongoing water level monitoring. Following evaluation, risk mitigation likely involves standard dyke, grouting, and/or pumping practices. Opportunities

28.3.2 ADDITIONAL RISKS ASSOCIATEDWITH OPEN PIT OPPORTUNITYAT HML

Development of an open pit mine for the North Zone of the HML deposit would involve a larger footprint of site disturbance and more onsite management of waste rock and acid drainage/metal leaching sources. Closure will be more involved, requiring the implementation of long-term effective controls on acid generation and metal leaching.

Trevali Mining Corp. 28-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 28.3.3 OPPORTUNITIES

COST CAP INSURANCE

The applicability of cost cap insurance should be studied at the Prefeasibility stage as method to address risks associated with the reclamation and closure of the proposed project, particularly with respect to the existing TMF.

28.4 TMF

The major risk identified in the in the quantity and quality of seepage passing Heath Steele Mine’s expanded TMF containment structures and related impacts on the extent of treatment of bedrock below their respective alignments relative to the closure water cover requirements. Uncertainties therefore remain in costs of foundation treatment measures that may be required to address shared environmental liability issues that may arise. Future site evaluations should be carried out with the ultimate goal in seeking a reduction of financial effects of potential future liabilities with respect to environmental impacts in addition to historic disturbance.

The internal dam overflow spillway modification or relocation may be required based on extent of encroachment of the raised internal dam into the west abutment. Furthermore, capacities of the main dam overflow spillway (north abutment) and emergency spillway (west abutment) should be re-evaluated to account for any changes in the lower cell water balance impacted by any changes within upper and north cells resulting from the subject TMF expansion. These potential changes may have an impact on overall capital cost.

Other significant risks related to economic items revolve around site uncertainties such as reliability of information from former studies/designs used herein, availability of borrow materials, volume estimates, expected density of tailings and topography. The remaining noteworthy concern is related to:

 Impacts of raised internal dam break analyses on the stability of the main dam; and,

 Costs related to any configuration modifications, if required.

Trevali Mining Corp. 28-6 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 2 9 . 0 INTERPRETATIONSANDCONCLUSIONS

29.1 G EOLOGYAND R ESOURCES

29.1.1 HALFMILE LAKE

The results of the NI 43-101 compliant technical resource estimate are presented in Tables 29.1 at a 5% zinc equivalent cut-off and 29.2 at a 5% zinc equivalent cut-off. The following metallurgical recoveries are applied to the resource estimate: 89.7% zinc, 72% lead, 60% copper and 48.6% silver.

Table 29.1 Halfmile Lake Indicated Resource Estimate at 5% ZnEQ Cut-Off

Ag Location Tonnes ZnEQ %Zn %Pb %Cu (g/t) UpperZone 1,192,700 7.96 6.72 2.31 0.43 16.95 LowerZone 4,472,200 9.65 8.68 2.81 0.12 37.94 DeepZone 0 0.00 0.00 0.00 0.00 0.00 NorthZone 597,200 7.56 6.78 1.40 0.49 4.84 Totals 6,262,100 9.13 8.13 2.58 0.22 30.78

Table 29.2 Halfmile Lake Inferred Resource Estimate at 5% ZnEQ Cut-Off

Ag Location Tonnes ZnEQ %Zn %Pb %Cu (g/t) UpperZone 156,100 8.08 7.20 2.64 0.17 6.19 LowerZone 1,071,000 9.01 8.06 2.76 0.08 38.55 DeepZone 4,825,700 6.86 6.37 1.60 0.15 17.04 NorthZone 25,400 7.46 6.19 1.55 0.73 6.19 Totals 6,078,200 7.27 6.69 1.83 0.14 20.51

There are no Indicated resources for the Deep Zone.

Wardrop concludes that the above resource estimates indicate the possibility of hosting an economic deposit and warrants further investigation and development.

29.1.2 STRATMAT

Wardrop has completed an NI 43-101 compliant Inferred resource estimate for the Stratmat Project. The results of the resource estimate are presented in Table 29.3 (below) at a 5% zinc equivalent cut-off. The following metallurgical recoveries were

Trevali Mining Corp. 29-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment applied to the zinc equivalent for the resource estimate: 89.7% zinc, 72% lead, 60% copper, 48.6% silver and 70% gold. Table 29.3 presents the resource for Stratmat which is 100% inferred as per the Ni 43-101 compliant technical report.

Table 29.3 Stratmat Property Inferred Resource Estimate at 5% ZnEQR Cut-Off

Location Tonnes ZnEQ %Pb %Zn %Cu Ag (g/t) Au (g/t) Stratmat 5,524,500 8.16 6.11 2.59 0.40 54.21 0.62 All Zones

Wardrop concludes that the above resource estimates indicate the possibility of hosting an economic deposit and warrants further investigation and development.

29.2 M INING

29.2.1 HALFMILE LAKE

A combination of three underground mechanized mining methods at the Halfmile Lake Project will produce a nominal rate of 2000 t/d (714,000 t/a). The methods are mechanized cut-and-fill (MCF), Avoca, and longhole (LH) with backfill. The cut off grade was determined from metal prices of, in US funds, $3.03/lb for copper, $0.92/lb for lead, $1.03/lb for zinc and $15.08/oz for silver. The exchange rate is 1.042 (US$ to Cdn$).

The Upper, Lower and Deep Zones at Halfmile Lake will produce 11.6 million tonnes of ore over a 20-year mine life where 8.74 million tonnes (75.4%) of production will be from MCF, 1.08M t (9.3%) from Avoca and 1.78M t (15.3%) from LH methods. The Upper Zone will provide the source of earliest ore and will be mined entirely using the MCF method.

Access to the zones will be provided by the main ramp driven from surface, elevation of 531 m above sea level. Initially, waste from ramp development will be trucked to surface and dumped at a pad which will be used for both ore and waste handling. A crusher will be located at the dump pad to crush the ore, which will then be trucked off-site to a new mill located at the Heath Steele site. The crusher will also crush waste to be used as backfill.

29.2.2 STRATMAT

There are two distinct ore zones at Stratmat approximately 1,000 meters apart – Zone 51 with 0.94M t mineable resource and Main Zone with 5.73M t for a mine total of 6.67M t. Zone 51 extends from surface, elev. 5328 (328 m above sea level), down 147 meters to elev. 5181. The Main zone extends from surface down 735 meters to elev. 4593.

Trevali Mining Corp. 29-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Two mining methods will be employed at Stratmat to extract ore – LH and MCF. Productions from those methods are 5.34M t (80%) and 1.33M t (20%) respectively.

A ramp will be driven in each zone, at a nominal grade of 15%, to access the underground workings. As in the Halfmile operation, ore brought to surface will be trucked to a mill at Heath Steele.

An existing waste muck pile at Stratmat will be used for backfill. The quantity is reported to be sufficient for the LOM backfill requirements.

29.3 M INERAL P ROCESSINGAND M ETALLURGICAL T ESTING

Based on the historical data for metallurgical and processing work performed, reviewed by Wardrop, these are the following major conclusions:

 The historical data from the metallurgical test program shows concentrate grades as follows: copper concentrate - 20.13%, lead concentrate - 46.24%, zinc concentrate - 53%. Most of the silver is distributed to the lead concentrate with 307.7 g/t of silver.  Metallurgical testing has also indicated that the Halfmile Lake ore will yield total recoveries of 90% for zinc, 85% for copper and lead, and 48.56% for silver.  The mineralogical studies conducted for the Halfmile Lake ore samples showed good potentials for the zinc concentrate. With a zinc concentrate containing 53% zinc and recovery of nearly 85%, the iron levels of 8%, lead levels of 2%, low copper levels and relatively low arsenic, cadmium, manganese and cobalt levels, a good quality concentrate is expected to be produced from the Halfmile Lake ore.  The mill feed is determined to be 4,000 t/d based on the maximum capacity of the mining production from both the open pit and underground operations of 1,500 to 1,900 t/d for Halfmile Lake, and 2,000 t/d from the peak production years from Stratmat.  Based on a Trade-Off Study performed by Wardrop, it is determined that the mill should be built at the old Heath Steel mill site, close to the tailings dam. This would require trucking the ore 22 km from Halfmile Lake and 5 km from Stratmat..  Three concentrate products will be produced out of the Heath Steel mill: o Copper concentrate – containing payable Copper and Silver. o Bulk concentrate – contains payable Lead, Zinc, and Silver. o Lead concentrate – containing payable Lead and Silver.  The plant capital costs are estimated to be $56M. The operating costs are estimated to be $15.8M per annum or $10.80 per tonne ore.

Trevali Mining Corp. 29-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 29.4 P RELIMINARY E CONOMIC A SSESSMENT

The preliminary economic assessment is favourable with a pre-tax IRR of 20.86% and a NPV of Cdn$253.4 million at an 8% discount rate. The IRR will drop following tax considerations. To achieve this return will require a capital investment of Cdn$471.1 million.

Payback will take approximately 6 years after start of mine production.

This study is the first in a series of development studies for the project that assesses the viability of developing the Half Mile Lake and Stratmat deposits and construction of a mill on the Heath Steel mine site. The project considers utilizing the existing tailings management facility (TMF) located on the Heath Steel mine site. This study quantifies the project’s cost parameters and identifies the additional exploration and detailed engineering work required to ultimately define the optimal scale of the operation for a completed Feasibility Study.

Future studies on mill and TMF sites will look at increasing the resources based on the exploration potential and finding ways to reduce capital and operating costs.

Trevali Mining Corp. 29-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 3 0 . 0 RECOMMENDATIONS

30.1 S TRATEGICRECOMMENDATIONS

Wardrop recommends the following activities and engineering be completed. The identified work is separated into five logical phases. The phased work is defined by activities recommended to be executed chronologically by Kria. The recommendations reflect KRia’s intent to develop the HML and Stratmat deposits into operable mines. It also reflects Kria’s current strategy to develop HML’s Upper and Lower zones for early works development and production through a toll milling opportunity at Xtrata’s Brunswick 12 mill, A brief description and definition breakdown of each phase is detailed below.

Phase 1 – Preparation for HML Early Works HML Upper and Lower Zones Geotech and Metallurgical test work for compatability with Brunswick 12 ore, Environmental Impact Assessment for the planned early works development and production of HML ore.  Kria is currently undertaking metallurgical test work for HML based on the premise of mining ore from HML and toll milling at Xstrata’s Brunswick 12 mill.  In support of the early works development and production plan, Kria has undertaken the completion of a phase 1 Environmental Impact Assessment (EIA) for the HML deposit.  Kria is currently undertaking field biological study work to meet compliance requirements outlined by the Government of New Brunswick for the HML EIA phase 1. Phase 2 – HML Early Works Development and Production

Early work development and production at HML upper and Lower zones for toll milling at Xstrata’s Brunswick 12 mill

Phase 3 – Exploration and Defintion Drilling c/w Resource Updates

Exploration and definition drilling for HML Lower, Deep and North zones as well as the Stratmat deposit. Completion of NI 43-101 complaint resource updates for HML and Stratmat. Feasibility level metallurgical test work for process flow sheet definition and design including the production of three concentrates (Zn, Pb, Cu) and the elimination of a bulk concentrate.

Trevali Mining Corp. 30-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Phase 4 – Economic Evaluation Study updates.

 Prefeasibility or Feasibility Study for mining combined resource deposits of Halfmile Lake and Stratmat.

Phase 5 – Environmental Studies Baseline studies and Impact Assessments. Permitting process for construction activities. Phase 6 – Mine Construction At the successful completion of the above 5 phases, Kria will be required to finance and plan for full Engineerin, Procurement and Construction Management (EPCM) execution including construction of permanent mine works, a new mill and permanent infrastructure such as power, haulage roads, Tailings Management Facility (TMF) etc. Due to the amount of detail required for this activity, the schedule is indicative purposes. A proposed schedule for the above phases of recommended work is located in Appendix N.

30.2 M INERAL P ROCESSINGAND M ETALLURGICAL T ESTING

Proceeding into the next stage of the project (assuming Pre-Feasibility Study), Wardrop recommends the following activities:

 A completely new metallurgical testing program, including QEMSCAN analysis on representative samples from the upper, lower and North zones, Halfmile Lake, and Stratmat property, led by Wardrop to build a better and more reliable flowsheet and to better define the metallurgical parameters. The program itself will cost approximately $250,000 plus additional $90,000 for Wardrop to lead and manage it. Such a test program will include: . Characterization of the ore  Chemical Characterization - A representative sub-sample of the master composite should be submitted for Cu, Pb, Zn, S, Au, Ag and a multi-element ICP scan.  Grindability Characterization - Charge from the master composite prepared to 6-mesh should be subjected to a standard bond ball mill work index (BWI) test at a closing mesh size of 200-mesh. The BWI is a measure of the resistance of the material to crushing and grinding. The results will be compared against the SGS database. Laboratory mill calibration tests would be carried out to develop a laboratory mill grind time versus product size relationship for the master composite. Two batch Titan laboratory rod mill tests would be completed and a particle size analysis performed on each grind.

Trevali Mining Corp. 30-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment . Mineralogy - A representative sample of the master composite should be ground in a laboratory ball mill to a target grind size of 80% passing 100 microns and submitted for mineralogical characterization using Particle Mineral Analysis (PMA) by QEMSCAN. The size fractions produced from the ground sample will be combined to produce three size fractions for analysis. Sub-samples of each fraction will be submitted for chemical analyses for data validation purposes. These include Cu, Pb, Zn and whole rock analyses. Polished sections from the three fractions will then be submitted for Particle Mineral Analysis (PMA). The PMA is a two- dimensional mapping analysis aimed at resolving liberation and locking characteristics of a generic set of particles. PMA provides information on spatial relationships of minerals, including liberation and association data with a visual representation of mineral textures. . Flotation Testwork - It is anticipated that the ore will be processed using a bulk Cu/Pb rougher-cleaner followed by a Cu-Pb separation and a Zn rougher-cleaner to give saleable Cu, Pb and Zn concentrates.  Rougher Kinetics Flotation Tests - A total of six to ten rougher kinetics tests will be conducted. These tests will briefly explore flotation variables such as the effects of primary grind size, collector scheme and dosage and depressant type and dosage on rougher kinetics. It is assumed that each test would generate seven products, which would be assayed for Cu, Pb, Zn and S. Particle sizing will be completed as required.  Cleaner Flotation Tests - A total of ten cleaner flotation tests will assess the possibility of producing saleable Cu, Pb and Zn concentrates. The major variables of consideration will be regrind size, collector scheme and dosage, depressants scheme and dosage, as well as pH. These tests will generate 11 products to be assayed for Cu, Pb, Zn and S.  Locked-Cycle Tests - Two locked-cycle tests will be conducted to determine the overall performance of the optimum flowsheet. These tests will allow us to determine the expected recovery and grade of each concentrate and to estimate reagent consumption. It is estimated that each 6-cycle locked cycle test will produce 31 products to be assayed for Cu, Pb, Zn and S.  A metallurgical and Geo-technical site visit to obtain additional information for the current Heath Steele mill site condition to consider and quantify the potential savings if the mill is to be built there.  Expanding to the next stage of the project, further opportunities should be considered. There may be equipment and site facilities available from the nearby Caribou mill that will fit the requirements of the proposed Halfmile Lake flowsheet. This will lead to considerable savings in terms of mill capital

Trevali Mining Corp. 30-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment costs. Wardrop thus recommends an inspection of the Caribou mill facilities to evaluate and define the potential savings.

30.3 M INING

30.3.1 GEOTECHNICAL

Geotechnical data is very limited and is at a Scoping Study level. Data available is from Halfmile Lake only. The data has been assumed to be similar for the Stratmat deposit. The level of data is virtually nil at this point for Stratmat, and so even more work is required for Stratmat, compared HML.

Assumptions such as number of joint sets, joint roughness, joint alteration, and rock strengths need to be confirmed. Accurate strength data or joint characteristics for the ore zone could not be obtained as the core was sent for assay. Estimates had to be made for the ore zone geotechnical properties and it is critical that these estimates be confirmed through future geotechnical drilling or exploration, as the success of a man-entry mining method such as MCF is dependent on maximizing stable spans. In order to bring the study up to the next level (Prefeasibility) the following work would need to be performed:

1. The existing geologic model should include regional and major faults to better define the continuity of these features. 2. Drilling of additional core holes (or logged if core is still available) into the critical areas lacking information, including the ore zone and collection of geotechnical data. Further evaluation is required to determine the number of holes required. 3. Classify geotechnical data into further zones such as Upper, Middle, Lower and Deep. 4. Additional rock testing of major rock types including triaxial compression and uniaxial compression tests. 5. Generate a numerical model to estimate pillar and development stresses and to evaluate stoping sequence and mining methods. 6. Determine crown pillar and sill pillar thicknesses. 30.3.2 TMF

Recommendations for future design work in relatioin to Heath Steele mine TMF expansion discussed in Sections 19 and 28 herein are summarized as followes:

 A condition survey (geodetic and bathymetry) of the existing Heath Steele mine containment structures and basins.  Detailed review of the existing site geotechnical and hydrogeological/contaminant transport conditions.

Trevali Mining Corp. 30-4 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment  Detailed review of existing TMF designs and closure plans; An additional geotechnical site investigation might be warranted depending on the results of the review.  Update of existing closure plan to account for conditions at closure of expanded TMF at a conceptual design.level.  Development of conceptual design sections (including details of zoning and assessment of bedrock/foundation treatment requirements) for all expanded TMF containment and hydrotechnical structures. design for the selected expansion option will be required.  Preliminary engineering analyses (stability, seepage, hydrogeological / contaminant transport modeling, and settlement) analyses in support of conceptual configurations of expanded containment structures.  Assessment of impacts of TMF expansion on the overall site water balance as well as impacts of the changes in the existiung water balance on existing containment and hydrotechnical structures.  Preliminary assessment of potential impacts of the internal dam break analysis on the stability and coinfiguration of the main tailings dam and related appurtenant structures,Conceptual design of hydrogeotechnical structures (e.g. overflow spillways/emergency spillways).  Identify borrow sources for tailings dams expansion.  Plan and schedule construction for the selected expansion option and develop detail quantity take-off’s and construction costs.

Trevali Mining Corp. 30-5 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 3 1 . 0 REFERENCES

BEAK Consultants Limited. 1995. Halfmile Lakes Environmental Baseline Report. Report prepared for Brunswick Mining and Smelting Corporation, Bathurst, New Brunswick.

BEAK Consultants Ltd. 1996. Halfmile Lake Project Environmental Assessment Report (Draft). Prepared for Brunswick Mining Division – Noranda Mining and Exploration Inc. by BEAK Consultants Ltd., April 1996.

Blowes, D.W., Ptacek, C.J., Jambor, J.L. Weisener, C.G. 2003. The geochemistry of acid mine drainage. In Environmental Geochemistry (ed. Lollar, B.S.) Vol. 9 Treatise on Geochemistry (eds. Holland, H.D.; Turekian, K.K.), Vol. 9, Elsevier-Pergamon, Oxford, pp. 149-204.

Ecobichon, D. Internal report to Noranda Mining and Exploration Inc. “Rock Mechanics Assessment – Half Mile Lake Project,” Noranda Technology Centre, Mar. 31, 1994.

Ecobichon, D., Nickson, S., Potvin, Y. Internal report to Noranda Mining and Exploration Inc. “Stope Design Proposals – Half Mile Lake Project,” Noranda Technology Centre, Oct. 12, 1994.

Environment Canada. Understanding the Metal Mining Environmental Effects Monitoring Program. http://www.ec.gc.ca/esee-eem/2DAFFC56-95EE-4A77-8FB7- E50D7B9BAC64/MMunderstandingEn.pdf

Freeze, R.A., and Cherry, J.A. 1979. Groundwater. Prentice-Hall Inc., Englewood Cliffs, N.J.

Geocon Atlantic, 1994, Heath Steele Mines on Feasibility Study – Tailings Basin Expansion for Halfmile Lake Project

Geocon Department (Kilborn SNC-Lavalin), 1997, Heath Steele Mines Closure Plan – Part 1: Tailings Basin Closure Plan Document

Heath Steele Mines Limited. 1989. Heath Steele - Stratmat Closure Plan.

Hutchinson, D. and Diederichs, M. “Cablebolting in Underground Mines,” BiTech Publishers Ltd., Richmond B.C., March 1996.

Jambor, J. L., Dutrizac, J. E., Groat, L. A., and Raudsepp, M. 2002. Static tests of neutralization potentials of silicate and aluminosilicate minerals. Environmental Geology. 43: 1-17.

Trevali Mining Corp. 31-1 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Jacques Whitford Environmental Limited (JWEL). 1993. Halfmile Lake benthic survey, final report. Report prepared for Brunswick Mining and Smelting Corporation, Bathurst, New Brunswick.

Lang, B., Pakalnis, R. and Vongpaisal, S. “Span Design in Wide Cut and Fill Stopes at Detour Lake Mine,” 93rd Annual General Meeting of CIM 1991, Apr. 28, 1991.

New Brunswick Department of Environment. 2007. Guide to Environmental Impact Assessment in New Brunswick. http://www.gnb.ca/0009/0377/0002/07-12-05-e.pdf

New Brunswick Department of Environment. Additional Information Requirements for Mining and Mineral Extraction Projects. http://www.gnb.ca/0009/0377/0002/0001/0012-e.pdf

New Brunswick Department of Natural Resources, Mineral, Planning and Policy Division, Lithological Map of New Brunswick, Plate 2007-18.

New Brunswick Regulation 87-83 under the Clean Environment Act. 1987. Environmental Impact Assessment Regulation - Clean Environment Act. 1987 http://www.gnb.ca/0062/PDF-regs/87-83.pdf

New Brunswick Department of Natural Resources: Minerals and Petroleum Development Branch. 2005. Guide to Mine Approval Process in New Brunswick. Section 4. Site Closure.

Nickson, S. Internal Memo Noranda Technology Centre “Review of Half Mile Lake Stope Design,” Noranda Technology Centre, May 1, 1998.

Noranda Mining and Exploration Inc. 1997. Heath Steele Mine Closure Plan. Noranda Mining and Exploration Inc, a Heath Steele Division, Miramichi, New Brunswick, February, 1997.

Noranda Inc. 1998. Part 2: Mine and Mill Site Closure Plan Document. Heath Steele Mine. Miramichi, New Brunswick. November 1998.

Noranda Technology Centre (NTC). 1989. Field Report for Halfmile Lakes Survey.

Noranda Technology Centre (NTC). 1992. Field Report for Halfmile Lakes Survey.

Price, W.A. 1997. Draft: Guidelines and Recommended Methods for the Prediction of Metal Leaching and Acid Rock Drainage at Minesites in British Columbia. British Columbia Mine Reclamation Services (MRS). British Columbia Ministry of Employment and Investment, Energy and Minerals Division, Smithers, BC (April) 143 pgs.

Province of New Brunswick, Department of Natural Resources, and Minerals and Petroleum Development Branch. Guide to the Mine Approval Process in New Brunswick. http://www.gnb.ca/0078/Minerals/PDF/Guide_Mine_Approval-e.pdf

Trevali Mining Corp. 31-2 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment Venture Engineering and Construction, 2007, Heath Steele Mine Closure Project – Construction Project Area Site Plan (Drawing No. 200)

Wardrop Engineering Inc. 2009. Halfmile Lake Technical Report and Resource Estimate. Prepared by Wardrop Engineering Inc. for Beartooth Platinum Corporation, February 2009.

Water Survey of Canada. 2009. National Water Quantity Survey Program: Archived hydrometric data from HYDAT. Created: 2003-12-22. Modified: 2009-03-13. Reviewed: 2009-03-13. http://www.wsc.ec.gc.ca/hydat/H2O/index_e.cfm

Trevali Mining Corp. 31-3 0987190100-REP-R0003-00 Halfmile Lake - Stratmat Preliminary Economic Assessment 3 2 . 0 STATEMENTOFQUALIFIEDPERSONS

32.1 C ERTIFICATEFOR D AVID T YSON , M.S C ., R.P. B IO

I, David Tyson, M.Sc., R.P.Bio., of Winnipeg, Manitoba, do hereby certify

 I am an Environmental Scientist with Tetra Tech with a business address at 400-161 Portage Avenue East, Winnipeg, MB, R3B 0Y4.  This certificate applies to the technical report entitled Halfmile Lake-Stratmat Preliminary Economic Assessment, with an effective date of October 18, 2010 (the “Technical Report”).  I am a graduate of the University of Manitoba, with a Bachelor of Science, Zoology, 1990, and a Master of Science, 1996. I am a member in good standing of the College of Applied Biology, British Columbia, as a Registered Professional Biologist (License #1013). My relevant experience includes the environmental assessment, permitting, operations, and closure of mineral exploration and mining projects. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).  I have not completed a personal inspection of the Property that is the subject of this Technical Report.  I am responsible for Section 21 of the Technical Report.  I am independent of Trevali Mining Corp. as defined by Section 1.5 of the Instrument.  I have no prior involvement with the Property that is the subject of the Technical Report.  I have read the Instrument and the parts of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.  As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Signed and dated this 19th day of August, 2011 at Winnipeg, Manitoba.

“Original document signed and sealed by David Tyson, M.Sc., R.P. Bio.” David Tyson, M.Sc., R.P. Bio.

Trevali Mining Corp. 32-1 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment 32.2 C ERTIFICATEFOR P ACIFICO C ORPUZ , P. E NG .

I, Pacifico Corpuz, P.Eng. of Stoney Creek, Ontario, do hereby certify

 I am a Senior Mining Engineer with Wardrop Engineering Inc. with a business address at 900-330 Bay Street, Toronto, Ontario, M5H 2S8.  This certificate applies to the technical report entitled Halfmile Lake-Stratmat Preliminary Economic Assessment, with an effective date of October 18, 2010 (the “Technical Report”).  I am a graduate of Mapua Institute of Technology with a degree of Bachelor of Science in Mining Engineering, 1961. I am a member in good standing of the Professional Engineers of Ontario (License # 9428509). My relevant experience with respect to mine planning includes over 40 years of international experience in mine operation and planning from conceptual stage to project implementation. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).  I have not completed a personal inspection of the Property that is the subject of this Technical Report.  I am responsible for Sections 19 and 27 of the Technical Report.  I am independent of Trevali Mining Corp. as defined by Section 1.5 of the Instrument.  I have no prior involvement with the Property that is the subject of the Technical Report.  I have read the Instrument and the parts of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.  As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Signed and dated this 19th day of August, 2011 at Toronto, Ontario.

“Original document signed and sealed by Pacifico Corpuz, P.Eng.” Pacifico Corpuz, P.Eng.

Trevali Mining Corp. 32-2 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment 32.3 C ERTIFICATEFOR A LEKSANDAR Z IVKOVIC , P. E NG .

I, Aleksandar Zivkovic, P.Eng. of Toronto, Ontario, do hereby certify

 At the effective date of this report I was a Manager, Geotechnical Engineering/Chief Discipline with Wardrop Engineering with a business address at 900-330 Bay Street, Toronto, Ontario, M5H 2S8.  This certificate applies to the technical report entitled Halfmile Lake-Stratmat Preliminary Economic Assessment, with an effective date of October 18, 2010 (the “Technical Report”).  I am a graduate of University of Belgrade, (dipl. ing., B.A.Sc. Geological Option of Geological Engineering. 1986). I am a member in good standing of the Association of Professional Engineers and Geoscientists of Ontario (license #90375882), Association of Professional Engineers and Geoscientists of British Columbia (License #25771), Association of Professional Engineers and Geoscientists of Manitoba (License #32434), Association of Professional Engineers and Geoscientists of Saskatchewan (License #16969), and Association of Professional Engineers, Geologists and Geophysicists of Alberta (License # 113119). My relevant experience includes geotechnical engineering design aspects of the development of mine infrastructure and mine waste management including numerous projects in Canada, United States, Europe, Australasia, Latin America and Africa for the past 24 years. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).  My most recent personal inspection of the Property was on April 28, 2009 for 2 days.  I am responsible for Section 19.8 of the Technical Report.  I am independent of Trevali Mining Corp. as defined by Section 1.5 of the Instrument.  I have no prior involvement with the Property that is the subject of the Technical Report.  I have read the Instrument and the parts of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.  As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Signed and dated this 19th day of August, 2011 at Toronto, Ontario.

“Original document signed and sealed by Aleksandar Zivkovic, P.Eng.” Aleksandar Zivkovic, P.Eng.

Trevali Mining Corp. 32-3 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment 32.4 C ERTIFICATEFOR D ANIEL J. S WEENEY , P. E NG .

I, Daniel Sweeney, P.Eng. of Sudbury, Ontario, do hereby certify

 I am a Senior Mining Engineer with Wardrop Engineering Inc. with a business address at 101-957 Cambrian Heights, Sudbury, Ontario, P3C 5M6.  This certificate applies to the technical report entitled Halfmile Lake-Stratmat Preliminary Economic Assessment, with an effective date of October 18, 2010 (the “Technical Report”).  I am a graduate of McGill University, (B. Eng, Mining, 1974). I am a member in good standing of the Association of Professional Engineers Ontario (License # 45203015). My relevant experience is in underground mine design and construction of associated mining infrastructure, in several provinces, over a period of 35 years. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).  My most recent personal inspection of the Property was on April 28, 2009 for 2 days.  I am responsible for Sections 19 and 27 of the Technical Report.  I am independent of Trevali Mining Corp. as defined by Section 1.5 of the Instrument.  I have no prior involvement with the Property that is the subject of the Technical Report.  I have read the Instrument and the parts of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.  As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Signed and dated this 19th day of August, 2011 at Sudbury, Ontario.

“Original document signed and sealed by Daniel Sweeney, P.Eng.” Daniel Sweeney, P.Eng.

Trevali Mining Corp. 32-4 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment 32.5 C ERTIFICATEFOR M IKE M C L AUGHLIN , P. E NG .

I, Mike McLaughlin, P.Eng. of Barrie, Ontario, do hereby certify

 I am a Project Manager with Wardrop Engineering Inc. with a business address at 900-330 Bay Street, Toronto, ON M5H 2S8.  This certificate applies to the technical report entitled Halfmile Lake-Stratmat Preliminary Economic Assessment, with an effective date of October 18, 2010 (the “Technical Report”).  I am a graduate of McMaster University, B.Eng. in Mechanical Engineering, 1990. I am a member in good standing of the Association of Professional Engineers Ontario (License #10084932). My relevant experience includes over 14 years of engineering experience. I have successfully managed projects involving front end mining resource models and economic evaluation studies involving full mining plans, processing, infrastructure and geotechnical components. I am well versed in the requirements of NI 43- 101 compliant reports. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).  I have not completed a personal inspection of the Property that is the subject of this Technical Report.  I am responsible for Sections 1, 2, 3, 18, 23, 24, 25, 26, 28, 29, and 30 of the Technical Report.  I am independent of Trevali Mining Corp. as defined by Section 1.5 of the Instrument.  I have no prior involvement with the Property that is the subject of the Technical Report.  I have read the Instrument and the parts of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.  As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Signed and dated this 19th day of August, 2011 at Toronto, Ontario.

“Original document signed and sealed by Mike McLaughlin, P.Eng.” Mike McLaughlin, P.Eng.

Trevali Mining Corp. 32-5 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment 32.6 C ERTIFICATEFOR P AUL D AIGLE , P. G EO .

I, Paul Daigle, P.Geo. of Toronto, Ontario, do hereby certify

 I am a Senior Geologist with Wardrop Engineering Inc. with a business address at 900-330 Bay Street, Toronto, ON M5H 2S8.  This certificate applies to the technical report entitled Halfmile Lake-Stratmat Preliminary Economic Assessment, with an effective date of October 18, 2010 (the “Technical Report”).  I am a graduate of Concordia University, Montréal, Québec, Canada, with a B.Sc. in Geology, Specialization. I am a member in good standing of the Association of Professional Geoscientists of Ontario (Registration #1592) and the Association of Professional Engineers and Geoscientists of Saskatchewan (Registration #10665). My relevant experience is based upon over 19 years of experience in a wide variety of geological settings. I have not made a site visit to the Property. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).  I have not completed a personal inspection of the Property that is the subject of this Technical Report.  I am responsible for Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, and 17 of the Technical Report.  I am independent of Trevali Mining Corp. as defined by Section 1.5 of the Instrument.  I have no prior involvement with the Property that is the subject of the Technical Report.  I have read the Instrument and the parts of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.  As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Signed and dated this 19th day of August, 2011 at Toronto, Ontario.

“Original document signed and sealed by Paul Daigle, P.Geo.” Paul Daigle, P.Geo.

Trevali Mining Corp. 32-6 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment 32.7 C ERTIFICATEFOR P ETER B ROAD , P. E NG .

I, Peter Broad, P.Eng. of London, Ontario, do hereby certify

 I am a Lead Metallurgist with Wardrop Engineering Inc. with a business address at 900-300 Bay Street, Toronto, Ontario, M5H 2S8.  This certificate applies to the technical report entitled Halfmile Lake-Stratmat Preliminary Economic Assessment, with an effective date of October 18, 2010 (the “Technical Report”). I am a graduate of Manchester University (UK), with a Honours BSc Degree, in Metallurgy, 1969. I am a member in good standing of the Ontario Professional Engineers (Licence 90344227). My relevant experience includes twelve years as a base-metal metallurgist and/or Mill Superintendent and 20 years as a consultant engineer in precious and base metals. This includes process design, operations, and construction. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).  I have not completed a personal inspection of the Property that is the subject of this Technical Report.  I am responsible for Sections 16, 20 and 22 of the Technical Report.  I am independent of Trevali Mining Corp. as defined by Section 1.5 of the Instrument.  I have no prior involvement with the Property that is the subject of the Technical Report.  I have read the Instrument and the parts of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.  As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Signed and dated this 19th day of August, 2011 at Toronto, Ontario.

“Original document signed and sealed by Peter Broad, P.Eng.” Peter Broad, P.Eng.

Trevali Mining Corp. 32-7 0987190100-REP-R0003-00 Halfmile Lake Preliminary Economic Assessment