Technical Report Resource Update of the IRON-T VANADIUM-TITANIUM-IRON Property MATAGAMI AREA, QUEBEC, CANADA Respectfully submitted to: Apella Ressources Inc. By : Maxime Dupéré P.Geo. SGS Canada inc. - Geostat Date: May 19th, 2011 Geostat 10 boul. de la Seigneurie Est, Suite 203, Blainville, Québec Canada SGS Canada Inc. t (450) 433 1050 f (450) 433 1048 www.geostat.com www.met.sgs.com Member of SGS Group (SGS SA) Technical Report, vanadium-titanium-iron Resource Estimation of the IRON-T Property Matagami, (QC) Canada Page ii Table of Contents Table of Contents .............................................................................................................................................. ii List of tables ....................................................................................................................................................... v List of Figures .................................................................................................................................................... vi 1- Summary (Item 3).......................................................................................................................................... 1 2- Introduction (Item 4) .................................................................................................................................... 5 2.1 General ...................................................................................................................................................... 5 2.2 Terms of Reference ................................................................................................................................. 5 2.3 Units and Currency .................................................................................................................................. 7 2.4 Disclaimer ................................................................................................................................................. 7 3- Reliance on Other Experts (Item 5) ........................................................................................................... 8 4- Property Description and Location (Item 6) ............................................................................................ 9 4.1 Location .................................................................................................................................................... 9 4.2 Property Description ............................................................................................................................. 10 4.2.1 Audet Option Claims ..................................................................................................................... 10 4.2.2 Environmental Liabilities ............................................................................................................... 11 4.2.3 Permits .............................................................................................................................................. 11 5- Accessibility, Climate, Local Resources, Infrastructure and Physiography (Item 7) ......................... 13 5.1 Accessibility ............................................................................................................................................ 13 5.2 Climate..................................................................................................................................................... 13 5.3 Local Resources ..................................................................................................................................... 13 5.4 Infrastructure .......................................................................................................................................... 13 5.5 Physiography .......................................................................................................................................... 14 6- History (Item 8) ........................................................................................................................................... 15 6.1- Regional Airborne Magnetic and Electromagnetic Survey ............................................................ 15 6.2 Previous Exploration ............................................................................................................................ 15 7- Geological Setting (Item 9) ........................................................................................................................ 20 7.1 Regional geology .................................................................................................................................... 20 7.2 Property geology .................................................................................................................................... 21 8- Deposit Types (Item10) ............................................................................................................................. 24 8.1- Introduction .......................................................................................................................................... 24 8.2- Importance ............................................................................................................................................ 25 8.3- Geological features ............................................................................................................................... 25 8.4- Geological setting ................................................................................................................................. 25 8.5- Ages of host rocks and ore ................................................................................................................. 26 SGS Canada Inc. Technical Report, vanadium-titanium-iron Resource Estimation of the IRON-T Property Matagami, (QC) Canada Page iii 8.6- Form of deposits and relation to host rock ...................................................................................... 27 8.7- Ore mineralogy, composition, and texture ....................................................................................... 27 8.8- Alteration ............................................................................................................................................... 28 8.9- Definitive characteristics of ore ......................................................................................................... 28 8.10- Genetic models for mafic intrusion-hosted titanium-non deposits ............................................ 29 9- Mineralization (Item 11) ............................................................................................................................. 32 9.1- Ilmenite .................................................................................................................................................. 33 9.2- Magnetite ............................................................................................................................................... 33 9.3- Hercynite ............................................................................................................................................... 34 10- Exploration (Item 12) ............................................................................................................................... 36 10.1- 2008 Stripping and Channel sampling............................................................................................. 36 10.2- 2010 Stripping, mapping and Channel sampling ........................................................................... 37 10.2.1- Discovery Zone T-3 .................................................................................................................... 37 10.2.2- Discovery Zone T-2 .................................................................................................................... 39 10.2.3- Discovery Zone T-1 .................................................................................................................... 41 10.3- 2010 Ground Magnetic Survey ........................................................................................................ 42 10.4- 2010 Detailed Topo Mapping .......................................................................................................... 42 11- Drilling (Item 13) ...................................................................................................................................... 43 11.1 Historical Drilling ................................................................................................................................ 43 11.2 2009-2010 Drilling ............................................................................................................................... 45 12- Sampling Method and Approach (Item 14) .......................................................................................... 46 12.1- Historical Sampling ............................................................................................................................ 46 12.2- Recent Sampling and Logging .......................................................................................................... 47 13- Sample Preparation, Analyses and Security (Item 15) ......................................................................... 49 13.1- Als-Chemex Sample Preparation and analysis Methodology Description ................................