The Mineral Resources and Proven and Probable Mineral Reserves are reported in accordance with Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves and their Guidelines, and are prepared in accordance with NI 43-101.

The Mineral Resource estimate for the Kami Project is set out below. Mr. Michael Kociumbas, P.Geo is a Qualified Person as defined by NI 43-101 and is responsible for reviewing and approving this Mineral Resource estimate and the QA/QC associated with the estimate. He has verified, reviewed and approved the technical data contained in this news release and underlying sampling, analytical and test data. The Mineral Resource estimate has been prepared using a 15% Total Fe cut-off grade, is effective December 17, 2012 and inclusive of Mineral Reserves.

Zone

Category Tonnes (Million) TFe% MagFe% HemFe%
Rose Central Measured 249.9 29.4 17.6 8.1
  Indicated 294.5 28.5 17.7 5.9
  Total M&I 544.4 28.9 17.7 6.9
           
  Inferred 160.7 28.9 16.9 7.1
           
Rose North Measured 236.3 30.3 13.0 14.7
  Indicated 312.5 30.5 11.8 17.1
  Total M&I 548.8 30.4 12.3 16.1
           
  Inferred 287.1 29.8 12.5 15.5
           
Mills Lake Measured 50.7 30.5 21.5 7.0
  Indicated 130.6 29.5 20.9 3.9
  Total M&I 181.3 29.8 21.1 4.8
           
  Inferred 74.8 29.3 20.3

2.7

MagFe% = percentage of the Fe present as magnetite; HemFe% = percentage of the Fe present as hematite.

The Mineral Resource estimate for the Kami Project was completed in GemcomTM using block sizes of 15 m x 15 m x 14 m for Rose Central and Rose North and 5 m x 20 m x 5 m for Mills Lake and is based on results from 209 diamond drill holes at Rose Central and Rose North (170 holes) and Mills Lake (39 holes) zones totaling 62,247 m. These holes were drilled within the iron mineralization for approximately 2,000 m of strike length and a range of 200 to 400 m of width for Rose Central and Rose North. The holes were drilled on section lines that were spaced 100 m apart for both deposits in the main area of mineralization. For the geological modelling, 3-D bounding boxes defining the maximum extents of the Rose and Mills Lake deposit areas were created. The boxes extended approximately 200 m along strike from the outermost drill holes in each area. Mineralized boundaries extended up to a maximum of about 400 m on the ends of the zones and at depth where there was no/little drill hole information, but only if the interpretation was supported by drill hole intersections on adjacent cross sections or by solid geological inference.

Proven and Probable Mineral Reserves

The mining engineering work performed for this updated FS was based on the 3-D block model provided by Alderon. Pit optimizations were performed on the Measured and Indicated Resources and the pit shell that resulted in the maximum discounted NPV was selected as a guide for the pit design. The final Mineral Reserves were estimated after applying engineering and operational design parameters and include mining dilution and ore losses. BBA is of the opinion that the Mineral Reserve estimate derived in this updated FS reasonably quantifies the economical ore mineralization of the Rose Deposit. The Mineral Reserve estimate is effective as of August 12, 2018. The Proven and Probable Mineral Reserves presented in the table below are derived from the December 17, 2012 Mineral Resource estimate set out above. Only the Measured and Indicated Resources within the Rose Central and the Rose North Deposits have been considered in the updated FS and have been used for the estimation of Proven and Probable Mineral Reserves. The Mineral Resources within the Mills Lake Deposit have not been considered in the FS.

Material Tonnes (Millions) TFe% WREC% MagFe MAG%
Proven Mineral Reserve 392.7 29.0 34.7 15.0 20.8
Probable Mineral Reserve 124.5 28.2 32.0 11.1 15.3
Total Mineral Reserve 517.2 28.8 34.1 14.1 19.4
TFe = total Fe grade; WREC% = the weight recovery; MagFe = Fe present as magnetite; MAG% = the percentage of magnetite in the Proven and Probable mineral reserves.