September 2014 Mineral Resource Estimate Report of the Islands of Nonoc, Awasan, and Hanigad and Part of South Dinagat for Pacific Nickel Philippines Inc. (PNPI) MPSA No. 072-1997-XIII Provinces of Surigao del Norte and Dinagat Islands ROGEL A. SANTOS, PhD Geochemist/Economic Geologist Geologist – PRC No. 1022 Competent Person – CP No. 12- 10-12 INERAL RESOURCE ESTIMATE REPORT FOR PACIFIC NICKEL PHILIPPINES INCORPORATED (PNPI) September 2014 CERTIFICATE AND CONSENT OF THE COMPETENT PERSON I, Rogel A. Santos, B.S. Geo, M.S. and Ph.D. Geochemistry and Economic Geology; post- PhD in Environmental Geochemistry, hereby certify that: I am a Registered Professional Geologist under the Philippine Professional Regulatory Commission (PRC) with license number PRC-1022 and am an active member of the Geological Society of the Philippines since 1985; I am a Competent Person (CP) under the Philippine Mineral Reporting Code (PMRC) system with CP number - 12-10-12 and recently elected as Secretary of the Competent Person Accreditation Committee (CPAC); I am continuously practicing my profession for more than 25 years and my expertise is further supplemented by my graduate degrees, Master of Science, Doctor of Science, and post- Doctoral Fellowship, at the University of Tokyo after having my Bachelor of Science degree in Mapua Institute of Technology; For the purposes of this Technical Report I serve as a Competent Person as defined in the PMRC with business address at 106 Cotabato St., Bago Bantay, Quezon City, Phillipines and email address and mobile number – [email protected]; +639399155580; I am responsible for the preparation of the entirety of this report though geostatistical runs of analytical data are on a contracted basis with my full supervision. I have based the geological observations mainly from my routine visits to the property being the Project Manager for the PNPI nickel exploration project contract since April of 2014 and throughout the preparation of this report. The contents and substance of this report have been peer reviewed by a fellow Competent Person under the PMRC. To this date, to the best of my knowledge, information, and belief, this PMRC-Compliant Report contains all the scientific and technical information that is required to be disclosed to make this Technical Report not misleading; I consent for the public filing of this Technical Report for stock exchange purposes, business publication, or as part of the requirements by any regulatory authority. Dated this 30 September 2014 at Quezon City, Philippines. Rogel A. Santos, PhD Professional Geologist and Competent Person Competent Person Report | RASantos 2 INERAL RESOURCE ESTIMATE REPORT FOR PACIFIC NICKEL PHILIPPINES INCORPORATED (PNPI) September 2014 EXECUTIVE SUMMARY This technical report discloses the mineral resource estimate of a part of the Mineral Production Sharing Agreement (MPSA) of the Pacific Nickel Philippines Incorporated (PNPI) denominated as MPSA 072-1997-XIII. This work made use of all the historical data for test pitting, auger drilling, and mechanized drilling since the inception of the areas in consideration as part of the Surigao Mineral District sometime in 1939. Bulk of the data were generated through the series of exploration and geological studies initiated by the Philippine Bureau of Mines (PBM), the present Mines and Geosciences Bureau (MGB) of the Department of Environment and Natural Resources (DENR) between the years 1953 to 1958. Succeeding activities were conducted by Marinduque Mining and Industrial Corporation (MMIC) which later initiated the mining and the nickel processing plant operation from 1977 to 1986. The nickel resources herein declared include only that portion of the saprolite layer which was drilled during the previous exploration works. The present exploratory drilling programme is intended to cover the entire laterite section portion – from the top limonite horizon through the saprolite profile until bedrock. The whole MPSA has an aggregate area of 23,877 hectares which covers almost a third of the mainland Dinagat Island (17,729 hectares) and the three adjacent islands in the south namely Nonoc (4,265.5 hectares), Hanigad (976 hectares), and Awasan (916 hectares). The latter islands and the South Dinagat peninsula (4,816 hectares) were the areas considered in this report. The database covers 35,214 drill holes and test pits location and an enormous amount of analytical assays at 256,950 mainly for the elements Ni and Fe and to a minor extent for Co, Mg, and Si. The database was built–up and compiled to a much later date by Minproc (1998) and its subsidiary, Vantage Mining Group (1996), for the purpose of reviving the mine and plant operation as commissioned by PNPI. The mineral resource estimation of the historical data yields the following results: For Nonoc Island and adjacent areas of South Dinagat peninsula, Hanigad and Awasan Islands at 0.70%Ni cut-off for Measured Resource for all matrices yield a total resource of 143M Mt at 1.25%Ni average grade and iron contents averaging at 35%Fe: AREA CATEGORY Cut-off %Ni Volume Resource Ni Wt% Fe wt % Nonoc Area 1 measured 0.7 11,512,600 11,374,528 1.26 39.73 Nonoc Area 2 measured 0.7 27,636,094 37,861,448 1.24 46.44 Gaboc Area measured 0.7 1,807,200 1,959,177 1.10 28.70 Nonoc Areas 3 & 4 measured 0.7 20,856,000 24,271,373 1.30 34.65 Nonoc Area 5 measured 0.7 26,581,100 32,979,946 1.43 34.35 Nonoc Sub- 0.7 88,392,994 108,446,472 1.27 36.77 TOTAL Competent Person Report | RASantos 3 INERAL RESOURCE ESTIMATE REPORT FOR PACIFIC NICKEL PHILIPPINES INCORPORATED (PNPI) September 2014 AREA CATEGORY Cut-off %Ni Volume Resource Ni Wt% Fe wt % South Dinagat measured 0.7 24,602,700 30,487,065 1.45 34.72 Hanigad Island measured 0.7 1,137,500 1,218,674 1.09 32.95 Awasan Island measured 0.7 2,311,500 3,058,205 1.18 35.87 Islands Sub-TOTAL 0.7 28,051,700 34,763,944 1.24 34.51 Grand TOTAL 116,444,694 143,210,416 1.25 35.64 For Indicated Resource at 0.70% cut-off the total resource yields 92M Mt with 1.23% Ni average grade and an average iron contents of 33%Fe broken down as follows: AREA CATEGORY Cut-off %Ni Volume Resource Ni Wt% Fe wt % Nonoc Area 1 indicated 0.7 3,987,200 4,432,616 1.17 32.68 Nonoc Area 2 indicated 0.7 27,585,898 30,395,880 1.31 33.99 Gaboc Area indicated 0.7 3,023,700 2,769,141 1.09 26.73 Nonoc Areas 3 & 4 indicated 0.7 5,786,200 6,525,154 1.13 34.63 Nonoc Area 5 indicated 0.7 9,010,600 11,098,219 1.38 35.68 Nonoc Sub-TOTAL 0.7 49,393,598 55,221,010 1.21 32.74 AREA CATEGORY Cut-off %Ni Volume Resource Ni Wt% Fe wt % South Dinagat indicated 0.7 25,297,100 28,218,422 1.41 35.21 Hanigad Island indicated 0.7 3,077,000 1,967,376 1.15 26.65 Awasan Island indicated 0.7 5,119,900 6,708,704 1.20 32.22 Islands Sub-TOTAL Resource 0.7 33,494,000 36,894,502 1.26 31.36 Grand TOTAL 82,887,598 92,115,512 1.23 32.05 The combined resources (measured and indicated) of all the areas in consideration are at 235M Mt at an average of 1.25%Ni and the Fe average at 35%. The overall resource at a similar cut-off of 0.70%Ni yields 314M Mt at a weighted average grade of 0.95%Ni, thus, the inferred resource is at 79M Mt. The latter resource may progress to indicated or measured category upon further exploration. AREA Cut-Off: %Ni Tonnes Grade: %Ni Nonoc Island 0.70 193,481,124 0.97 South Dinagat 0.70 94,561,908 0.91 Hanigad 0.70 5,825,977 0.90 Awasan 0.70 20,647,930 0.95 Total Resource 0.70 314,516,939 0.95 Competent Person Report | RASantos 4 INERAL RESOURCE ESTIMATE REPORT FOR PACIFIC NICKEL PHILIPPINES INCORPORATED (PNPI) September 2014 TABLE OF CONTENTS EXECUTIVE SUMMARY List of Tables ---------------------------------------------------------------------------------------------- 7 List of Figures --------------------------------------------------------------------------------------------- 8 1.0 INTRODUCTION --------------------------------------------------------------------------------- 11 1.1 Terms of Reference ----------------------------------------------------------------------- 11 1.2 Purpose and Compliance with PMRC ------------------------------------------------- 11 1.3 Data Verification and Field Visits ------------------------------------------------------- 11 2.0 RELIANCE ON OTHER EXPERTS --------------------------------------------------------- 12 2.1 PNPI Technical Personnel --------------------------------------------------------------- 12 2.2 GIS Expert and Geostatistics Expert -------------------------------------------------- 12 3.0 DISCLAIMERS ----------------------------------------------------------------------------------- 13 4.0 TENEMENT AND MINERAL RIGHTS ----------------------------------------------------- 14 4.1 Description and Location of Mineral Rights ------------------------------------------ 14 4.2 Brief History and Ownership of Mineral Rights -------------------------------------- 14 5.0 GEOGRAPHIC FEATURES ------------------------------------------------------------------ 18 5.1 Location and Accessibility ---------------------------------------------------------------- 18 5.2 Physiography, Climate, and Vegetation ---------------------------------------------- 18 5.3 Land Use and Infrastructures ----------------------------------------------------------- 23 5.4 Socio-Economic Environment ----------------------------------------------------------- 23 5.5 Environmental Features ------------------------------------------------------------------ 24 6.0 PREVIOUS WORKS ----------------------------------------------------------------------------