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Wigu Hill Rare Earth Element Project, Eastern Tanzania NI 43-101 Technical Report

Submitted to: Montero Mining and Exploration Ltd. Effective Date: 25 August 2011 From: Ted Eggleston, PGeo, SME Registered Member Edmund Sides, EurGeol, PGeo Project Number: 7879010012 Report Reference Number: A012-11-R1093

N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

IMPORTANT NOTICE

This report was prepared as a National Instrument 43-101 (NI 43-101) Technical Report for Montero Mining and Exploration Limited (Montero) by AMEC Earth & Environmental UK Ltd. (AMEC). The quality of information, conclusions and estimates contained herein are consistent with the level of effort involved in AMEC's services and based on: i) information available at the time of preparation, ii) data supplied by outside sources and iii) the assumptions, conditions and qualifications set forth in this report. This report is intended for use by Montero subject to the terms and conditions of its contract with AMEC. Except for the purposes legislated under Canadian provincial securities law, any other uses of this report by any third party is at that party's sole risk.

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CERTIFICATE OF QUALIFIED PERSON

TED EGGLESTON, SME REGISTERED MEMBER

I, Ted Eggleston, Ph.D., PGeo., as an author of this report entitled "Wigu Hill Rare Earth Element Project, Tanzania, N.I. 43-101 Technical Report" (the Technical Report) prepared for Montero Mining and Exploration Limited, with an effective date of 25 August 2011, do hereby certify that: I am a Principal Geologist with AMEC E&C Services, 780 Vista Blvd., Sparks, Nevada. I am a Registered Member of the Society for Mining, Metallurgy, and Exploration (SME #4115851) and licensed as a Professional Geologist in the states of Wyoming and Georgia. I am a Fellow of the Society of Economic Geologists and a member of American Institute of Professional Geologists and the Association of Applied Geochemists. I graduated from Western State College of Colorado, Gunnison, Colorado, in 1976 with a B.A. degree in geology and from New Mexico Institute of Mining and Technology, Socorro, New Mexico, in 1987 with a Ph.D. in geology. I have practiced my profession for over 30 years. In that time I have been directly involved in exploration for a variety of base, precious, and industrial mineral deposits including rare earth elements. I have also provided reviews and technical assistance for exploration, geological modelling, exploration data acquisition, sampling, sample preparation, assaying and other analyses, quality assurance-quality control, databases, and resource estimates for a variety of mineral deposits, including rare earth element deposits. As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43­101 Standards of Disclosure for Mineral Projects (NI 43­101). I visited the Wigu Hill Project between 9 and 13 December, 2010. I am responsible for Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22, 23, and 24 and related content in Sections 1, 25, and 26 of the Technical Report. I am independent of Montero Mining and Exploration Limited as independence is described by Section 1.5 of NI 43­101. I have not previously been involved with the Wigu Hill Project. I have read NI 43­101 and this report has been prepared in compliance with that Instrument. As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

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"Signed" Ted Eggleston Ph.D., PGeo, SME Registered Member Dated: 19 October 2011

19 October 2011

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CERTIFICATE OF QUALIFIED PERSON

EDMUND SIDES, EURGEOL

I, Edmund John Sides, Ph.D., EurGeol, PGeo, as an author of this report entitled "Wigu Hill Rare Earth Element Project, Tanzania, N.I. 43-101 Technical Report" prepared for Montero Mining and Exploration Limited, effective date of 25 August 2011, do hereby certify that: I am a Principal Resource Geologist with AMEC Earth & Environmental UK Limited of International House, Dover Place, Ashford, Kent, TN23 1HU, United Kingdom. I graduated from Trinity College, University of Dublin, Ireland in 1976 with a B.A. degree in Geology and of Imperial College, the University of London with an M.Sc. in Mineral Exploration in 1977 and with a Ph.D. in Economic Geology in 1992. I am registered as a Professional Geologist with the Institute of Geologists of Ireland (Reg.#116) and as a European Geologist with the European Federation of Geologists (Reg.#201). I have worked as a geologist for over 25 years. My relevant experience for the purpose of this Technical Report is: · · · · I have reviewed and reported on numerous exploration and mining projects over the past 7 years. I have over 20 years experience with computer assisted geological modelling and resource estimation using a variety of different software packages. I have extensive experience of a variety of different types of mineral deposits in Europe, Africa and Latin America. I have worked on a variety of different commodities including REEs and other industrial minerals over the past 6 years.

I have read the definition of "qualified person" set out in Section 1.1. of the National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a "qualified person" for the purposes of this Technical Report. I have not visited the Wigu Hill project area. I am responsible for the supervision of the Mineral Resource estimate and preparation of Sections 14, 17.1, 17.2, 27 and related content in Sections 1, 25 and 26 of this Technical Report. I am independent of the Issuer in accordance with the requirement set out in Section 1.5 of NI 43-101. Prior to this technical report, I had no involvement with the Wigu Hill property. I have read NI 43­101 and this report has been prepared in compliance with that Instrument.

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As at the effective date of the this Technical Report, to the best of my knowledge, information, and belief, the content of the Sections of this Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

"Signed" Edmund Sides, Ph.D., PGeo, EurGeol.

Dated: 19 October 2011

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CONTENTS

1.0

SUMMARY .................................................................................................................... 1 1.1 Conclusions ......................................................................................................... 1 1.1.1 Principal Outcomes 1 1.1.2 Property Description and Ownership 1 1.1.3 Geology and Mineralisation 2 1.1.4 Exploration Work 2 1.1.5 Mineral Resources 3 1.1.6 Other relevant information 5 1.2 Recommendations ............................................................................................... 5 1.2.1 General 5 1.2.2 Phase 1 - Scope of work 6 1.2.3 Budget and Decision Point ­ Phase 1 8 1.2.4 Phase 2 - Scope of work 8 1.2.5 Budget and Decision Point ­ Phase 2 8 INTRODUCTION ........................................................................................................ 10 2.1 Qualified Persons .............................................................................................. 10 2.2 Property Inspections by AMEC ........................................................................ 10 2.3 Effective Dates .................................................................................................. 10 2.4 Previous Technical Reports .............................................................................. 11 2.5 References ......................................................................................................... 11 RELIANCE ON OTHER EXPERTS ........................................................................... 12 3.1 Legal ................................................................................................................. 12 PROPERTY DESCRIPTION AND LOCATION ........................................................ 13 4.1 Location ............................................................................................................ 13 4.1.1 General Location 13 4.1.2 Coordinate System and Topographic Data 13 4.2 Tanzanian Mining Legislation .......................................................................... 15 4.2.1 Relevant legislation 15 4.2.2 Licence types 15 4.2.3 Royalties and other relevant aspects 17 4.3 Mineral Tenure.................................................................................................. 18 4.3.1 Tenure history 18 4.3.2 Current Mineral Rights Status 18 4.4 Company Structure and Obligations ................................................................. 21 4.4.1 General 21 4.4.2 Intercorporate Relationships 21 4.5 Agreements ....................................................................................................... 22 4.5.1 Introduction 22 4.5.2 The Wigu Hill Option Agreement 22 4.6 Surface Rights and Access ................................................................................ 23 4.7 Additional Permitting Requirements ................................................................ 24

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4.7.1 Environmental 4.7.2 Other Permitting Requirements 5.0

24 24

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY .............................................................................................. 25 5.1 Introduction ....................................................................................................... 25 5.1.1 Physiography 25 5.1.2 Climate 25 5.1.3 Accessibility 26 5.1.4 Local Resources 26 5.1.5 Infrastructure 26 HISTORY ..................................................................................................................... 28 6.1 Introduction ....................................................................................................... 28 GEOLOGICAL SETTING AND MINERALIZATION .............................................. 29 7.1 Regional Geology ............................................................................................. 29 7.2 District Geology ................................................................................................ 29 7.3 Local Geology ­ The Wigu Hill Complex........................................................ 29 7.3.1 Host-rocks 29 7.3.2 Carbonatites 30 7.3.3 Lithologies 32 7.3.4 Alteration 33 7.4 Target Geology ................................................................................................. 33 7.4.1 Twiga Target 33 7.4.2 Tembo Target 37 7.4.3 Tumbili Target 40 7.4.4 Chui Target 42 7.5 Mineralisation ................................................................................................... 42 7.6 Geology Comment ............................................................................................ 45 DEPOSIT TYPES ......................................................................................................... 47 EXPLORATION........................................................................................................... 50 9.1 Regional Geochemical Sampling ...................................................................... 50 9.2 Radiometric Survey .......................................................................................... 50 9.3 Trench Sampling ............................................................................................... 52 9.4 Prospecting Licence PL4834/2077 ................................................................... 65 9.5 Exploration Comment ....................................................................................... 65 DRILLING .................................................................................................................... 66 10.1 General .............................................................................................................. 66 10.2 Exploration Drilling by Montero ...................................................................... 66 10.3 Drilling Data and Results .................................................................................. 70 10.3.1 Twiga 74 10.3.2 Tembo 78 10.3.3 Tumbili 81 10.4 Core Logging .................................................................................................... 81 10.5 Core Recovery .................................................................................................. 83

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10.6 Core Sampling .................................................................................................. 84 10.7 Comment on Drilling ........................................................................................ 85 11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY .................................... 87 11.1 Sample Preparation ........................................................................................... 87 11.2 Geochemical Analysis ...................................................................................... 87 11.2.1 Regional Geochemical Analysis 87 11.2.2 Trench Sample Analysis 89 11.2.3 Core Sample Analysis 90 11.3 Density Measurements ...................................................................................... 92 11.4 Sample Security ................................................................................................ 93 11.5 Quality Control ­ Quality Assurance (QA-QC) ............................................... 93 11.5.1 Montero Standards 93 11.5.2 Blank Data 95 11.5.3 Duplicate Data 96 11.6 Comment ........................................................................................................... 97 DATA VERIFICATION .............................................................................................. 99 12.1 Database Compilation and Validation .............................................................. 99 12.2 Comment on Data Verification ......................................................................... 99 MINERAL PROCESSING AND METALLURGICAL TESTING .......................... 100 13.1 Testwork ......................................................................................................... 100 13.2 Comment ......................................................................................................... 100 MINERAL RESOURCE ESTIMATES ..................................................................... 102 14.1 Overview ......................................................................................................... 102 14.2 Evaluation Database........................................................................................ 102 14.3 Geological Controls ........................................................................................ 103 14.3.1 Overview 103 14.3.2 Structural domains 103 14.3.3 Mineralised domains and mineralisation indicator 104 14.3.4 Geological Controls on Resource Estimation 105 14.4 Exploratory Data Analysis .............................................................................. 105 14.4.1 Raw data: statistics 105 14.4.2 Raw data: distributions 106 14.4.3 Compositing 108 14.4.4 Composites: statistics 109 14.4.5 Composites: distributions 113 14.5 Block Modelling ............................................................................................. 113 14.5.1 Block model definition 113 14.5.2 Estimation parameters 113 14.5.3 Block grade estimation 114 14.6 Model Results and Validation ......................................................................... 115 14.6.1 General 115 14.6.2 Cross-Sections and plans 115 14.6.3 Global statistics 118 14.7 Classification and Reporting ........................................................................... 119

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14.0

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14.7.1 General 119 14.7.2 Assessment of Reasonable Prospects for Economic Extraction 119 14.7.3 Cut-off grade 120 14.7.4 Mineral Resource Classification Considerations 121 14.8 Mineral Resource Statement ........................................................................... 122 14.9 Other Aspects .................................................................................................. 124 14.9.1 Risk Factors 124 14.9.2 Grade-tonnage distribution 124 14.10 AMEC Comments ........................................................................................... 126 14.10.1 Database and Resource Estimation Methodology 126 14.10.2 Mineral Resource Estimate 126 15.0 16.0 17.0 18.0 19.0 20.0 21.0 22.0 23.0 24.0 MINERAL RESERVE ESTIMATES......................................................................... 128 MINING METHODS ................................................................................................. 128 RECOVERY METHODS ........................................................................................... 128 INFRASTRUCTURE ................................................................................................. 128 MARKET STUDIES AND CONTRACTS ................................................................ 128 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ........................................................................................... 128 CAPITAL AND OPERATING COSTS ..................................................................... 128 ECONOMIC ANALYSIS .......................................................................................... 128 ADJACENT PROPERTIES ....................................................................................... 129 OTHER RELEVANT DATA AND INFORMATION .............................................. 130 24.1 Rare Earth Element Definitions and Terminology ......................................... 130 24.1.1 General 130 24.1.2 Lanthanides and REEs 130 24.1.3 Rare Earth Oxides 130 24.1.4 Light /Heavy and Medium REEs 131 24.1.5 Combined Analyses (TREE/TREO) 132 24.2 REE Marketing ............................................................................................... 134 24.2.1 General 134 24.2.2 Usage 134 24.2.3 Demand 134 24.2.4 Supply 136 24.2.5 Prices 137 24.2.6 Important Factors 137 24.2.7 Comment 138 24.3 Environmental and Social Aspects ................................................................. 138 24.4 Radiation Aspects ........................................................................................... 139 INTERPRETATION AND CONCLUSIONS ............................................................ 140 25.1 Geological Setting........................................................................................... 140

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25.2 25.3 25.4 25.5 25.6 25.7 26.0

Deposit Types ................................................................................................. 141 Exploration...................................................................................................... 141 Drilling ............................................................................................................ 141 Sample Preparation, Analyses, and Security .................................................. 141 Data Verification ............................................................................................. 143 Resource Estimation ....................................................................................... 143

RECOMMENDATIONS ............................................................................................ 145 26.1 General ............................................................................................................ 145 26.2 Scope of Work - Phase 1 ................................................................................. 145 26.2.1 Geology and Evaluation Sampling 145 26.2.2 Resource Estimation 146 26.2.3 Mining Related Studies 146 26.2.4 Metallurgical Studies 146 26.2.5 Environmental 147 26.3 Budget and Decision Point ­ Phase 1 ............................................................. 147 26.3.1 Budget 147 26.3.2 Decision Point 148 26.4 Scope of Work - Phase 2 ................................................................................. 148 26.5 Budget and Decision Point ­ Phase 1 ............................................................. 148 26.5.1 Budget ­ Phase 2 148 26.5.2 Decision Point ­ Phase 2 149 REFERENCES ........................................................................................................... 150 27.1 References ....................................................................................................... 150 27.2 Measurement units .......................................................................................... 152 27.3 List of Abbreviations ...................................................................................... 153 FIGURES

27.0

LIST

OF

Figure 4-1: Map of Tanzania Showing the Location of the Wigu Hill Project ................... 14 Figure 4-2: Map Showing Current Wigu Hill Prospecting Licences and Applications ...... 20 Figure 4-3: Montero Mining and Exploration Limited (Montero) Corporate Structure ..... 21 Figure 5-1: Average Climate Data for Morogoro, Tanzania ............................................... 26 Figure 7-1: Reconnaissance Geological Map of Wigu Hill Showing Identified Mineralized Area .............................................................................................. 31 Figure 7-2: Sketch Geological Map of the Twiga Area ...................................................... 34 Figure 7-3: Typical Twiga SW Cross-Section .................................................................... 36 Figure 7-4: Sketch Geological Map of the Tembo Area ..................................................... 38 Figure 7-5: Carbonatite Ridge at Tembo ............................................................................. 39 Figure 7-6: Mineralized Dyke at Tembo (bastnaesite after burbankite crystals at pencil point) ...................................................................................................... 39 Figure 7-7: Polymict, Matrix Supported Carbonatite Breccia with Mostly Angular Breccia Fragments. ........................................................................................... 40

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Figure 7-8: Sketch Outline of the Tumbili Carbonatite ....................................................... 41 Figure 7-9: Mineralized Clast at Tumbili ............................................................................ 41 Figure 7-10: Twiga Mineralization (a ­ note coarse (longer than hammer head), hexagonal pseudomorphs after burbankite; b ­ pegmatitic and massive replacements of burbankite; c ­ coarse hexagonal pseudomorphs after burbankite in ferruginous carbonatite dyke) ..................................................... 44 Figure 7-11: Typical Twiga Dyke With Components ( A ­ coarse dolomite carbonatite; B ­ coarse ferruginous carbonatite; C ­ fine-grained ferruginous carbonatite; D ­ coarse, pegmatitic mineralization; E ­ massive mineralization; material between outlined blocks is more or less all mineralized with fine-grained bastnaesite(?)) ............................................. 45 Figure 9-1: Regional Geochemical Sample Locations at Wigu Hill (values in boxes are %TREO) ..................................................................................................... 50 Figure 9-2: Radiometric Map of Wigu Hill (legend is in counts per second (CPS)) .......... 51 Figure 9-3: Trench at Tumbili (a) and Sample Channel at Tembo (b) ................................ 53 Figure 9-4: Trench Locations at Twiga ............................................................................... 54 Figure 9-5: Trench Locations at Tembo .............................................................................. 55 Figure 9-6: Trench and drillhole Locations at Tumbili ....................................................... 56 Figure 10-1: Drill Hole Location Map for the Twiga and Tembo prospects.................... 68 Figure 10-2: Drilling Standard Operating Procedures ...................................................... 69 Figure 10-3: Typical Cross-Section at Twiga Southwest ................................................. 76 Figure 10-4: Typical Twiga Northwest Cross-Section ..................................................... 77 Figure 10-5: Tembo Target Cross-Section ....................................................................... 80 Figure 10-6: Summary of Overall Core Recovery............................................................ 83 Figure 10-7: Summary of Core Sample Lengths ............................................................. 85 Figure 14-1: Map showing the Limits of the Mineralised Domains and Drillhole and Trenches used for the Resource Estimate. ............................................... 104 Figure 14-2: All Data ­ Original Sample LREE5 Values: Log-Scaled Histogram ........ 107 Figure 14-3: All Data ­ Original Sample LREE5 Values: Log-Scaled Cumulative Frequency Curve ............................................................................................. 107 Figure 14-4: All Data ­ Original Sample LREE5 Values: Comparison of Cumulative Frequency Curves for Drillhole and Trench Data ....................... 108 Figure 14-5: All Data: Cumulative Frequency Curve for Original Sample Lengths...... 109 Figure 14-6: Twiga Cross-Section 4: Block Model Results ........................................... 116 Figure 14-7: Twiga Cross-Section 8: Block Model Results ........................................... 117 Figure 14-8: Comparison of Mineral Resource Estimate Grades for the Four Separate Domains ........................................................................................... 123 Figure 24-1: Periodic Table Showing the Rare Earth Elements as Defined in this Report ............................................................................................................. 131 Figure 24-2: Sources of REE Production from 1950 to 2000 (from USGS, 2002) ........ 136

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LIST

OF

TABLES

Table 1-1: Wigu Hill Inferred Mineral Resource Statement (Cut-off 1% LREO5)............. 5 Table 4-1: Summary of Key Elements of the Relevant Tanzania Mining Acts (1998 and 2010) .......................................................................................................... 16 Table 4-2: Summary of Current Prospecting Licences (based on EALC, 2011) ............... 19 Table 4-3: Summary of Licence Applications (based on EALC, 2011) ............................ 19 Table 6-1: Historic Exploration Activities on Wigu Hill (Siegfried, 2010)....................... 28 Table 7-1: Description of Lithologies Identified at Wigu Hill........................................... 32 Table 7-2: Minerals Identified at Wigu Hill....................................................................... 42 Table 8-1: Carbonatite-hosted REE deposits with >1% TREO (after Berger et al, 2009) ................................................................................................................. 47 Table 9-1: Locations of Twiga and Tembo trenches.......................................................... 57 Table 9-2: Locations of Tumbili Trenches ......................................................................... 59 Table 9-3: Summary of Significant Results from the Twiga and Tembo trenches ............ 60 Table 9-4: Summary of Sample Results from the Tumbili trenches (assay results as received up to end of July 2011)....................................................................... 64 Table 10-1: Drilling Summary (up to early May 2011) ....................................................... 66 Table 10-2: Drill Hole Locations at Twiga and Tembo ....................................................... 67 Table 10-3: Drill Hole Locations at Tumbili ....................................................................... 67 Table 10-4: Summary of Significant Intercepts from Tembo and Twiga drill holes ........... 71 Table 10-5: Results for sampled intervals from Tumbili drill holes (as received up to end July 2011)................................................................................................... 73 Table 10-6: Twiga Target Drilling Statistics........................................................................ 75 Table 10-7: Tembo Target Drilling Statistics ...................................................................... 78 Table 10-8: Summary of Dyke Intercepts at Tembo ............................................................ 79 Table 10-9: Core Processing Procedures ............................................................................. 82 Table 10-10: Core Recovery by Core Size. ....................................................................... 84 Table 11-1: Analytical Methods and Lower and Upper Detection Limits for SGS South Africa [* SANAS accredited analyses] .................................................. 88 Table 11-2: Analytical Methods and Lower and Upper Detection Limits for Genalysis, Perth ................................................................................................ 90 Table 11-3: Analytical Methods and Lower and Upper Detection Limits for ALS Chemex, Johannesburg ..................................................................................... 91 Table 11-4: Summary of Density Data by Rock Type (See Section 7.2 for lithology descriptions) ...................................................................................................... 93 Table 11-5: Summary of Genalysis AMIS0185 Analyses ................................................... 94 Table 11-6: Summary of ALS Chemex AMIS0185 Analyses (with sample submission) ....................................................................................................... 94 Table 11-7: Summary of ALS Chemex AMIS0185 Analyses (individual submission) ...... 95 Table 11-8: Summary of Genalysis Blank Data................................................................... 95

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Table 11-9: Summary of ALS Chemex Blank Data ............................................................ 96 Table 11-10: Summary of Genalysis Duplicate Data ........................................................ 96 Table 11-11: Summary of ALS Chemex Duplicate Data.................................................. 97 Table 14-1: Summary of Trench and Drillhole Sample Data used for the Resource Estimate. ......................................................................................................... 103 Table 14-2: Structural Domain Orientations ...................................................................... 104 Table 14-3: Original Samples: Statistical Summary of Assay Results .............................. 106 Table 14-4: Composites ­ Mineralised Indicator: Statistical Summary ............................ 110 Table 14-5: Composites - Grades of Mineralised Material: Statistical Summary for all Composites. .................................................................................................... 111 Table 14-6: Composites - Grades of Mineralised Material: Statistical Summary for Composites with TREE15 <10%. ................................................................... 112 Table 14-7: Block Model Parameters Used for the Current Study .................................... 113 Table 14-8: Search Ellipsoid Orientations ......................................................................... 114 Table 14-9: Search Ellipsoid Dimensions and Sample Selection Criteria ......................... 114 Table 14-10: Grades of Mineralised Material: Comparison of Estimated Block Values against Uncut and Cut Composite Values. ......................................... 118 Table 14-11: Parameters used for Generation of Pit Shell to Constrain the Reported Mineral Resource. ........................................................................................... 122 Table 14-12: Wigu Hill Inferred Mineral Resource Statement (Cut-off 1% LREO5) .... 123 Table 14-13: Sensitivity Case Subset of Mineral Resources Reported at a 0.7 Mineralised Indicator Cut-Off. ....................................................................... 125 Table 24-1: Oxide Conversion Factors for the REEs, Showing Both Commercial and Laboratory Conventions ................................................................................. 133 Table 24-2: REE Usage and Applications by Industry (after Castor and Hedrick, 2006) ............................................................................................................... 135 Table 24-3: REE Demand in 2008 and 2014 (BGS, 2010 after Kingsnorth, 2009)........... 135 Table 24-4: Status of the Selected REE Development Projects Outside China (modified after Scott Wilson, 2010) ............................................................... 137 Table 26-1: Phase 1 ­ Resource Definition: Expected Budget .......................................... 147 Table 26-2: Phase 2 ­ PEA: Expected Budget ................................................................... 149

Please refer to Section 24.1 for a discussion of abbreviations and acronyms used in this report.

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1.0

SUMMARY

This Technical Report has been prepared by AMEC on behalf of Montero Mining and Exploration Limited (Montero) in accordance with National Instrument 43-101 (NI 43-101) Standards of Disclosure for Mineral Projects. This Technical Report has been prepared to support the reporting of an initial Mineral Resource for the Wigu Hill property in a press release issued by Montero on 12 September 2011. The Technical Report provides a description of the rare earth element (REE)-bearing mineralisation in carbonatite dykes of the Wigu Hill complex, Tanzania. The REE Terminology and abbreviations used in this Technical Report are discussed in Section 24.1.

1.1

1.1.1

Conclusions

Principal Outcomes

The principal outcomes of the work completed by Montero on the Wigu Hill project, to date, include the following: · · Exploration has discovered rare earth-bearing carbonatites with grades that are similar to other carbonatite-hosted REE deposits that are being, or have been, mined. Results obtained from sampling of trenches and drillholes completed by Montero during 2010 and early 2011 were used to generate a resource estimate for the Twiga and Tembo zones. Assay results for 1,722 samples representing a total sampled length of 1,617 m from 21 drill holes and 63 trenches were used for the mineral resource estimate. A total Inferred Resource of 3.3 Mt averaging 0.82% La, 1.04% Ce, 0.08% Pr, 0.21% Nd and 0.01% Sm (corresponding with average grades of 2.2% LREE5 or 2.6% LREO5). This resource estimate is reported according to CIM Definition Standards (2010). The effective date of this resource estimate is August 25, 2011; the cut-off date for assay data used in the resource estimate was 8 May 2011. The Qualified Person responsible for this resource estimate is Edmund Sides, EurGeol, PGeo. A cut-off grade sensitivity analysis indicates that this Inferred Resource contains a higher grade portion consisting of 510,000 tonnes averaging 3.7% LREE% (corresponding to 4.4% LREO5) which may be amenable to selective mining. Initial results from trenching and drilling on the Tumbili target have given encouraging results; as yet insufficient data are available to make a resource estimate for this target. Continuing exploration of additional targets that have been identified will likely delineate additional mineralized zones within the main carbonatite complex at Wigu Hill.

·

·

· ·

1.1.2

Property Description and Ownership

Montero's property is located approximately 200 km WSW of Dar-es-Salaam in eastern Tanzania. The property is referred to as Wigu Hill and consists of two contiguous Prospecting Licences which cover an area of 55.65 km2, having been reduced from an original area of 142 km2 in order to comply with renewal requirements. Applications for three additional

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Prospecting Licences, which cover the relinquished areas previously held under the original licences, have been submitted to the Ministry of Energy and Minerals.

1.1.3

Geology and Mineralisation

The Wigu Hill area is located on the southern parts of the Uluguru massif which is underlain by Ubendian age (Paleoproterozoic) metasedimentary rocks consisting of high-grade gneisses and generally clean carbonate rocks (Siegfried, 2010). The Uluguru massif is truncated on its southern side by a major Karoo age (Permian?) rift that is still active today. Wigu Hill itself is underlain by fresh to relatively fresh, but oxidised, quartz feldspar gneisses and biotite quartz feldspar gneisses as well as occasional amphibole and pyroxene gneisses, amphibolites and garnet-rich amphibolites. A strong fabric is pervasive throughout these rocks although little evidence of folding is noted. All of these lithologies are cross cut by a network of narrow pegmatite veins and veinlets. The Wigu Hill gneisses are also intruded by numerous carbonatite dykes, most of which are dolomitic in composition. Dyke sizes and compositions vary considerably across the Wigu Hill Complex. REE-mineralisation is primarily hosted by dolomitic carbonatite dykes intruding the gneisses and amphibolites that underlie the Wigu Hill area. The predominant REE-bearing minerals are bastnaesite, monazite, and synchysite. Many of the dykes in the Wigu Hill area form anastomosing zones rather than single, continuous dykes. The anastomosing nature of the dykes observed in outcrop is expected to continue in the depth, and therefore it is likely not possible to correlate a single dyke for any significant distance. The rare earth element (REE) deposits at Wigu Hill are typical of carbonatite-hosted REE deposits world-wide, which include Bayan Obo in China (the current dominant source of global REE output) and Mountain Pass, California, USA (a previous dominant supplier of global REE production). Montero's exploration activities on Wigu Hill have identified four target areas: Twiga, Tembo, Tumbili, and Chui. Each of these target areas contains confirmed rare earth mineralization with grades likely adequate to support mining if adequate tonnages can be discovered. The geological knowledge at Wigu Hill is improving with the geological mapping, trenching, and drilling completed to date. The general geology is well understood; however, significant additional work is required before the geology of the deposit is thoroughly understood.

1.1.4

Exploration Work

There have been several phases of exploration activities in and around Wigu Hill between the years 1955 and 2000. Much of the exploration activity comprised surface mapping and grab sampling and pitting. Montero's exploration activities started in 2009 and have involved prospect mapping, detailed mapping, and grab and trench sampling. No drilling is reported prior to Montero's exploration studies.

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To date, Montero's reconnaissance mapping and sampling have identified several priority exploration targets at Wigu Hill. Anomalous, high-grade REE historical values have been confirmed by the Montero sampling and mapping. Total rare earth oxides (TREO) values to a maximum of 26.2% TREO have been returned from sampling with an average of these TREObearing samples calculated to be 7.4% TREO. Montero recently completed a drill program on the Twiga and Tembo targets. AMEC believes that drilling procedures are adequate to support resource estimation. Core recovery is adequate. Geological logging and sampling are consistent with industry-standard procedures. Samples were sent to SGS in Mwanza for preparation and pulps were sent to the appropriate laboratory from there. AMEC believes the sample preparation methods employed were adequate. Various samples were assayed at SGS, Genalysis, and ALS Chemex. Assay procedures are consistent with industry-standard procedures and are adequate to support resource estimation. Assay results indicate that REE mineralization occurs with grades that are similar to those found at other REE mines in the world. Density data have been determined using industry-standard procedures and are adequate to support resource estimation. AMEC believes that sample security is consistent with accepted industry practices. Accuracy and precision of assays are believed by AMEC to be adequate to support resource estimation. The database was extensively reviewed and any errors noted were corrected. AMEC observed surveying, geological logging, sampling, and sample security and believes them to be adequate to support resource estimation. AMEC considers the database to be adequate for resource estimation. The cut-off date for the assay data used to support the resource estimate was 8 May 2011. Drilling has since recommenced on the Twiga but no new assay data have yet been received; initial results from the new drilling are consistent with the interpretation used as the basis for the resource estimate.

1.1.5

Mineral Resources

Results obtained from sampling of trenches and drillholes completed by Montero during 2010 and early 2011 were used to generate a resource estimate for the Twiga and Tembo zones. Assay results for 1,722 samples representing a total sampled length of 1,617 m from 21 drill holes and 63 trenches were used for the mineral resource estimate. The database used for the resource estimate was a digital database received from Montero that included trench and drillhole collar orientations, downhole surveys, geological logging information for the trenches and drillholes completed by Montero, and assay results for those samples. The approach used for resource estimation included the following steps: · The digital database of all relevant trench and drillhole data was compiled and validated.

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· · ·

The data were then transferred to statistical and resource modelling software packages to allow the calculation of sample coordinates and additional analysis. Exploratory data analysis including preparation of histograms, cumulative frequency plots, boxplots and calculation of summary statistics was completed. The trench and drillhole data were visualised on cross-sections and plans in order to assess the vertical and lateral continuity of the mineralisation and to assist in domain identification. Based on the results obtained in the three previous steps an indicator approach was selected for use in resource estimation, A mineralised indicator value of 1.0 represents 100% mineralised dyke, a value of 0.0 represents 0% mineralised dyke (i.e. 100% weakly- or un-mineralised wallrock). Regular 1 m downhole composites were prepared for use in resource estimation. A regular 3-dimensional block model was established and block values were estimated for the mineralised indicator, grades of mineralised material and grades of wallrock material (weakly- to un-mineralised). Grades were estimated for lanthanum, cerium, praseodymium, neodymium, samarium, LREE5, thorium, and uranium. The estimated block values were validated using statistical analysis and display on crosssections and plans. Final block grades were then determined as a weighted combination of the estimated grades of mineralised and wallrock material, based on the relative proportions of mineralised and wallrock material present. In order to ensure that the reported resource has reasonable prospects for economic extraction, a pit shell was generated using optimistic economic parameters in order to eliminate isolated mineralised blocks and material at depth that does not have realistic prospects of being mined economically. Resource summaries were then tabulated and grade-tonnage curves generated.

·

· ·

· ·

·

·

Based on considerations of the evaluation database used, geological and grade continuity and economic factors, the reported resource has been classified as an Inferred Mineral Resource. The Mineral Resource obtained from this work is summarised in Table 1-1.

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Table 1-1:

Tonnage Zone Mt Twiga - NE Twiga - SW Tembo - NW Tembo - SE TOTAL Notes: 1 1.6 0.5 0.9 0.2 3.3

Wigu Hill Inferred Mineral Resource Statement (Cut-off 1% LREO5)

Resource grades (REEs) LREE5 % 2.2 2.9 1.8 1.8 2.2 La % 0.84 1.13 0.67 0.59 0.82 Ce % 1.03 1.40 0.89 0.90 1.04 Pr % 0.08 0.11 0.07 0.08 0.08 Nd % 0.19 0.26 0.20 0.23 0.21 Sm % 0.01 0.02 0.01 0.01 0.01 Corresponding oxide grades (REOs) LREO5 % 2.6 3.5 2.2 2.2 2.6 La2O3 % 0.98 1.33 0.78 0.69 0.96 CeO2 % 1.26 1.71 1.09 1.10 1.27 Pr6O11 % 0.10 0.13 0.09 0.10 0.10 Nd2O3 % 0.23 0.30 0.23 0.27 0.24 Sm2O3 % 0.01 0.02 0.02 0.01 0.02

2 3 4 5

The effective date for this resource estimate is 25 August 2011. The Qualified Person responsible for this resource estimate is Edmund Sides, EurGeol, PGeo. The resource is reported according to CIM Definition Standards (2010). A selective mining unit (SMU) size of 3m by 3m by 3m was assumed when creating the resource block model. Reported grades are based on consideration of the grades of mineralised material and weakly to non-mineralised wallrock material estimated to fall inside each SMU. The reported Mineral Resource is based on a grade cut-off of 1.0% LREO5 (sum of estimated grades of La2O3, CeO2, Pr6O11, Nd2O3 and Sm2O3). The Mineral Resources for the Twiga and Tembo deposits have been constrained by an optimised pit shell defined by the following assumptions; slope angles of 50º; a mining recovery of 100% and mining dilution of 0% (already incorporated in the SMUs); a mining cost of USD2.85/t; process operating costs of USD12.0/t; G&A costs of USD 3.0/t resource, with 90% recovery of REOs to a 45% LREO5 bastnaesite concentrate; and a concentrate price of USD10/kg.

A cut-off grade sensitivity analysis indicates that this Inferred Resource contains a higher grade portion consisting of 510,000 tonnes averaging 3.7% LREE% (corresponding to 4.4% LREO5) which may be amenable to selective mining; in particular in the Twiga SW domain. More detailed investigation of the high-grade portions of the resource is warranted in the next phase of evaluation to try to better define their continuity and extent.

1.1.6

Other relevant information

Additional information on REE terminology and marketing is provided in Section 24.0 of the Technical Report.

1.2

1.2.1

Recommendations

General

AMEC recommends two phases of work in order to fully assess the economic potential of the Wigu Hill project, as follows: · Phase 1: Additional drilling, resource estimation and related studies in order to better define the overall magnitude of the mineral resource at Wigu Hill and to improve the level of detail on some of the higher-grade zones that have already been defined. On conclusion of this phase of work a decision would be made as to whether to proceed with a preliminary economic assessment (PEA) of the project.

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·

Phase 2: A PEA of the project in order to assess its overall technical and economic viability and to identify favourable development scenarios for more detailed investigation. This phase of work is contingent on the results obtained from Phase 1. At the conclusion of this phase of work a decision would be made on whether to proceed with more detailed studies of the project including, if considered appropriate, pre-feasibility stage studies.

1.2.2

Phase 1 - Scope of work

The scope of work for Phase 1 should include the following items: Geology and Evaluation Sampling Significant additional work is required and is ongoing. There are a number of targets at Wigu Hill that have not been investigated beyond reconnaissance exploration. Those targets need to be evaluated with the aim of increasing tonnages. Specific recommendations include: · Regional mapping and outcrop sampling ­ Several target areas have been identified but because of access limitations, much of the Wigu Hill area has not been adequately mapped on a regional scale. AMEC recommends that the regional mapping be completed with the goal of filling gaps in the geological knowledge and producing additional targets if such exist. Detailed mapping and associated outcrop sampling ­ Detailed mapping and sampling of the known target areas should be completed in the next round of exploration. Trenching and detailed channel sampling ­ The most advanced targets, Chui, for example, should be trenched and sampled to determine grades in the carbonatites and provide information to target exploration drilling. Tumbili drilling ­ AMEC recommends that the Tumbili target be explored with additional mapping, trenches, and exploration drilling to determine the nature of the carbonatite occurrence there. Twiga drilling ­ A programme of infill drilling should be completed on the Twiga target to establish a small but high grade resource on the "EW" shallow dipping, high grade Twiga dyke and the closely associated vertical dikes. Tembo drilling ­ A drilling programme designed to test the continuity of the dykes in the southeast portion of Tembo should be completed. This area has been trenched and returned interesting grades, but the vertical extent of the dykes is not known.

· ·

·

·

·

Resource Estimation The drillhole and trench database used on site should be reviewed and updated to incorporate some of the changes made by AMEC during the resource estimation work. The difference in LREE grades between the trench and drillhole samples should be investigated in more detail in the next phase of the project in order to confirm that there no sampling or analytical biases are present and to try to identify whether there are any geological or mineralogical differences that may account for the difference. Re-analysis of retained coarse rejects and/or pulps from samples from trench and drillholes which are located close to one another should be done at a single laboratory in a single batch to confirm that no analytical bias

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is present. Close spaced infill drilling directly below some of the high grade trench samples should be considered in order to obtain more detailed information on changes in grade with depth below the surface, and to assess the possibility of sampling biases being present. AMEC recommends that the methodology and structural interpretations used for the current resource estimate should be reviewed on site with the project geologists prior to any future resource updates. In particular the indicator cut-off used should be reviewed in conjunction with the geological logging data to determine whether the geological basis used for separating mineralised and wallrock material can be refined. Regularly spaced sets of plans and cross-sections of the resource model should be prepared in order to assist in planning future drilling programmes. Such drilling should be aimed at infill drilling in high grade areas in order to improve the confidence category of the resources, and additional drilling along strike and down dip from mineralised zones in order to increase the overall resource tonnage. On conclusion of additional drilling a new resource model should be generated order to incorporate the new assay data and updated geological domain interpretations. Changes to the estimation methodology may also be applied if considered necessary following a more detailed review of the results of the current resource model. Mining Related Studies AMEC recommends that geotechnical data continue to be collected from the core as it is drilled. Metallurgical Studies The initial metallurgical tests are encouraging but it is not possible at this early stage in the evaluation process to estimate recoveries or produce a process flowsheet. Significant additional testwork is required to identify an optimised process flowsheet and should be completed with the next phase of work at Wigu Hill with the goal of a preliminary process flowsheet that will allow estimation of operating and capital costs. This work should include metallurgical studies including separation, liberation, and flotation studies. Mineralogical investigations should be performed to better understand the association between the carbonatites in the east and central parts of Wigu Hill. Environmental and Social Montero has engaged a local environmental consultant who has commenced an Environmental Management plan to be carried through to the end of 2011. A number of site visits have been made by environmental officials; to date feedback on work undertaken has been positive. Montero has been engaging with local communities and land owners on the development of the Wigu Hill project. This work should continue with the goal of having the data required for an environmental impact assessment (EIA) within the next year. The full EIA could then commence with minimal additional data required.

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1.2.3

Budget and Decision Point ­ Phase 1

The total budget for this phase of work is estimated to be approximately US$ 2.65 million. Details are presented in Section 26.3. On conclusion of the work recommended for Phase 1 a decision would be made as to whether to proceed with a preliminary economic assessment (PEA) of the project. The conclusions of the work done in Phase 1 should include recommendations on the likely production scenarios that should be investigated during Phase 2. Proceeding with a PEA would be contingent on adequate resource tonnage and grades having been defined to support the likely scale of mining operation required.

1.2.4

Phase 2 - Scope of work

At this stage only a generalised scope of work for Phase 2 can be defined; a more detailed scope of work would be one of the results obtained from Phase 1. Based on current information it is envisaged that the scope of work for Phase 2 would include the following elements: · Additional trenching, drilling and resource estimation in order to upgrade the project resources to higher confidence categories and to assess whether there is an adequate resource base to support the likely project life of mine. Mining studies, including geotechnical studies, waste management assessment, preliminary mine design and scheduling in order to provide input for the financial analysis of the project. Metallurgical studies, including additional laboratory testwork in order to confirm the nature and characteristics of the mineral products to be produced, expected recoveries and information to support project-specific marketing studies. Preliminary process design and scheduling would also be completed in order to provide input for the financial analysis of the project. Marketing studies. A project-specific marketing study would be required in order to confirm that a market exists and to obtain details of market constraints and prices for use in the financial model. Environmental and social studies. Baseline studies should be continued and/or initiated as required. A thorough review of the project and planning for a full ESIA to support a mining application should be prepared. Other related work. Other studies would include an assessment of infrastructure requirements to develop a mining project, and any necessary work required in order to maintain the mineral licences and initiate work required to support applications for mining licences.

·

·

·

·

·

1.2.5

Budget and Decision Point ­ Phase 2

At this stage it is not possible to define a detailed scope of work for the above items, since this will be dependent in part on the size of mineral resource and mining project to be assessed during this phase. Consequently, AMEC has estimated the possible cost for Phase 2 as ranging from US$3.1 million to US$ 5.3 million, as presented in more detail in Table 26-2. A more

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detailed scope of work and better defined costs would be prepared as part of the recommended Phase 1. At the conclusion of the proposed Phase 2 PEA a decision would be made on whether to proceed with more detailed studies of the project including, if considered appropriate, prefeasibility stage studies for those development scenarios that have been identified as having reasonable prospects of being technically and economically viable.

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2.0

INTRODUCTION

AMEC Earth and Environment Ltd (AMEC) was commissioned by Montero Mining and Exploration Limited (Montero) to generate and report a resource estimate (the Report) to NI 43101 standards for the Wigu Hill rare earth element (REE) project (the Project) in Tanzania. This Technical Report has been prepared to support the reporting of an initial Mineral Resource for the Wigu Hill property in a press release issued by Montero on 12 September 2011. Unless otherwise stated all measurement units in this Report are metric as provided in Section 27.2, and currency is expressed in US dollars. An explanation of the definitions and terminology specific to rare earth element projects, as used in this report, is provided in Section 24.1.

2.1

Qualified Persons

The following people served as the Qualified Persons (QPs) as defined in the National Instrument 43-101, Standards of Disclosure for Mineral Projects (NI 43-101), and in compliance with Form 43-101F1. The QPs responsible for the preparation of this Technical Report are: · · Dr. Ted Eggleston, Ph.D., PGeo. and SME Registered Member, AMEC Principal Geologist, USA. Dr Edmund Sides, Ph.D, PGeo. EurGeol, AMEC Principal Geologist, UK.

2.2

Property Inspections by AMEC

Dr. Ted Eggleston conducted a site visit to the Project between December 9 and 13, 2010. During the site visit carbonatite lithologies and REE mineralisation at the Twiga, Tembo and Tumbili areas were inspected. Dr. Eggleston also observed drilling procedures and core handling at the drill, core logging, sample marking, and sample security. Drilling, trenching, and related activities continued after the site visit but are not considered to be new material information since the site visit.

2.3

Effective Dates

The effective date for this report is 25 August 2011 which is the date of completion of the mineral resource estimation. The database used for the resource estimate was closed on 8 May 2011. As no new assay data were acquired from the Tembo and Twiga deposits between 8 May and 25 August, the effective date for the mineral resource estimate is 25 August 2011. Since the closing of the database used for resource estimation, further trenching and drilling has been done on the Tumbili target (May-July 2011) and infill drilling restarted on the Twiga SW zone in August 2011. Assay results for samples taken from Tumbili received by the effective date are included in this report. Additional assay results have since been received for the

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Tumbili trenches and drillholes and are still being assessed. Complete assay results for the infill drillholes at Twiga SW were still awaited at the date of this report. Initial geological and assay results from these new holes have been inspected by AMEC and are considered to be consistent with the interpretations of the Tumbili and Twiga SW zones as presented in the Technical Report. Geological interpretations and resource estimates should be updated once the additional drilling is completed and assay results for all the new samples have been received.

2.4

Previous Technical Reports

Montero previously filed the following technical report on the Project: Siegfried P.R. (2010) NI 43-101 Technical Review Report on the Wigu Hill Rare Earth Element (REE) Property, Kisaki District, Tanzania. Report prepared by Geoafrica Prospecting Services for Montero Mining and Exploration Ltd. (effective date 12 December 2010).

2.5

References

The 2010 Technical Report and the reports and documents listed in Section 3.0 (Reliance on Other Experts) and Section 27.1 (References) of this Technical Report were used to support the preparation of the Technical Report. Additional details of Montero's corporate structure were obtained from Montero's prospectus as published on 25 January 2011, and a summary provided in Montero's 2010 Annual Report.

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3.0

RELIANCE ON OTHER EXPERTS

The QPs have relied upon, and believe there is a reasonable basis for this reliance, the following reports that provided information regarding mineral tenure, surface rights, company incorporation and ownership details, inter-company agreements relating to the Project, environmental obligations, permitting requirements and applicable mining act data relevant to the Project in sections of this Technical Report as noted below.

3.1

Legal

The QPs have not reviewed the mineral tenure, nor independently verified the legal status, ownership of the Project area, underlying property agreements, environmental obligations or permits. AMEC has fully relied upon, and disclaims responsibility for, information derived from legal experts retained by Montero for this information through the following document: · East African Legal Chambers (EALC) 2011: Legal Opinion Wigu Hill NI 43-101 Report, dated September 2, 2011.

This information is used in the following sections · · · · · · · Current Mineral Rights Status, Section 4.3.2. Company details; details of relevant companies incorporated in Tanzania, Section 4.4. Inter-company Agreements; in Section 4.5. Environmental Obligations, Section 4.7. Surface rights and access, Section 4.6. Additional permitting Requirements, Section 4.7. Mining Law, details of the applicable Mining Act Section 4.2.

The polygons used to define the limits of the prospecting licences held by Montero and current licence applications by Montero provided in the Report have been obtained from two scanned renewal applications and three applications for five adjoining licence areas. These scanned documents were provided to AMEC by Montero. This information was used to obtain the prospecting licence and application boundaries shown on Figure 4-2.

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4.0

4.1

4.1.1

PROPERTY DESCRIPTION AND LOCATION

Location

General Location

Wigu Hill is located approximately 10 km north-east of Kisaki and 200 km southwest of Dar es Salaam in east-central Tanzania (Figure 4-1). The centre of the property is located at approximately latitude 7°24'30" S and longitude 37°33'45" E.

4.1.2

Coordinate System and Topographic Data

The coordinate system used for the definition of licence boundaries is the same as that used on the national topographic maps. This is based on a Universal Transverse Mercator (UTM) projection; Zone 37, Datum Arc1960, Clarke 1880 Ellipsoid. Topographic data were supplied by PhotoSat Information Ltd as 1m and 5m contour intervals. These data are also based on UTM Zone 37, Datum Arc1960, Clarke 1880 Ellipsoid.

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Figure 4-1:

Map of Tanzania Showing the Location of the Wigu Hill Project

Notes: Map prepared by AMEC, July 2011. Scale is approximate due to map projection used. The Democratic Republic of the Congo is denoted as DRC.

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4.2

4.2.1

Tanzanian Mining Legislation

Relevant legislation

Mineral Rights in Tanzania are currently governed by the Mining Act, 20101 which replaced and repealed the earlier Mining Act of 1998. The Mining Act, 2010 was enacted by the Tanzanian Parliament on 23 April 2010 and came into operation on the first day of November, 2010. Licences are issued and administered by the Ministry of Energy and Minerals headquartered in Dar es Salaam. Under the Mining Act, 2010 rare earth metals come under the classification of "metallic minerals" which are defined as: "a group of minerals comprising of gold, silver, copper, iron, nickel, cobalt, tin, tungsten, zinc, chromium, manganese, titanium, aluminium, platinum group of metals and other metallic minerals;"

4.2.2

Licence types

The following Mineral Rights defined in the Mining Act, 2010, are, or may be in future, relevant to Montero's activities: · · Mining Licence: a licence for a medium-scale mining operation, whose capital investment is between US$ 100,000 and US$ 100,000,000 or its equivalent in Tanzanian shillings; Prospecting Licence: as granted under Division A of Part IV; the granting of a prospecting licence confers on the holder the exclusive right, to perform prospecting operations in the prospecting area for minerals to which the licence applies. It also allows the holder to enter upon the prospecting area and erect camps and temporary buildings; Retention Licence as granted under Division A of Part IV. This is used in cases where the holder of a prospecting licence has identified a mineral deposit which is potentially of commercial significance, but which cannot be developed immediately due to technical constraints, adverse market conditions or other economic factors which are, or may be, of a temporary character; Special Mining Licence as granted under Division B of Part IV: a licence for a large scale mining operation, whose capital investment is not less than US$100,000,000 or its equivalent in Tanzanian shillings.

·

·

A comparison between some of the key elements of the Mineral Rights defined by the 1998 and 2010 Acts is presented in Table 4-1.

1

http://www.parliament.go.tz/Polis/PAMS/Docs/14-2010.pdf

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Table 4-1:

Summary of Key Elements of the Relevant Tanzania Mining Acts (1998 and 2010) 1998 Act Valid for 2 years Valid for an initial period of 3 years. Two subsequent renewals of 2 years each are allowed. Maximum area of 200 km2 Not defined 2010 Act No longer applicable Valid for an initial period of 4 years. Two subsequent renewals of 3 years and then 2 years are allowed. No maximum area specified. Valid for 5 years; may be renewed for a single period of 5 years if certain conditions are fulfilled. Granted for the estimated life of the mine as indicated in the feasibility report, or such period as the applicant may request, whichever period is shorter.

Licence type PLR (Reconnaissance) PL (Prospecting Licence)

Retention Licence

SML (Special Mining Licence)

Granted for a maximum of 25 years, or the estimated life of the proposed mine, whichever is the shorter;

Relevant requirements for Prospecting Licence are given in the 2010 Act in Part IV, Division A, and include: · commence prospecting operations within a period of three months, or such further period as the licensing authority may allow, from the date of the grant of the licence or such other date as is stated in the licence on commencement period; give notice to the licensing authority of the discovery of any mineral deposit of potential commercial value; adhere to the prospecting programme appended to the prospecting licence; and expend on prospecting operations not less than the amount prescribed.

· · ·

Relevant requirements for a Special Mining Licence are given in the 2010 Act under Part IV, Division B, and include: · develop the mining area and perform mining operations in substantial compliance with the programme of mining operations and his environmental management plan and commence production in accordance with the programme of mining operations; employ and train citizens of Tanzania and implement succession plan on expatriate employees in accordance with his proposals as appended to the special mining licence; demarcate and keep demarcated in the prescribed manner the mining area; prepare and update mine closure plans for making safe the mining area on termination of mining operations in a manner as prescribed in the relevant regulations; implement proposed plan for relocation, settlement and payment of compensation to people within the mining area in accordance with the Land Act;

· · · ·

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·

provides for the posting of a rehabilitation bond, to finance the costs of rehabilitating and making safe the mining area on termination of mining operations where the holder of the special mining licence has failed to meet his obligations relating to the mine closure plan or updated mine closure plan, as the case may be.

The 2010 Act indicates that although the 1998 Mining Act was repealed, any licences issued under the 1998 Act are automatically assumed to have been issued under the 2010 Act. Specifically it states that: · · The Mining Act is hereby repealed. Notwithstanding the repeal of the Mining Act, under subsection (1) any subsidiary legislation made under the repealed Act shall continue to have effect as if made or done under this Act until they are revoked or replaced. Notwithstanding the repeal of the Mining Act, under subsection (1), all mineral rights, licences, permits and authorisations granted or issued and Agreements entered in accordance with the provisions of the repealed Act shall be deemed to have been granted, issued or authorised under this Act, subject to the modifications as may be determined under this Act in respect of the particular grant or authorisation. All Agreements made and entered in terms of the repealed Act, all appointments and decisions made under the repealed Act shall be deemed to have been made under this Act, until terminated, surrendered, reviewed, removed, cancelled or expired.

·

·

AMEC understands this to mean that the Wigu Hill licences which were issued prior to the date on which the Mining Act, 2010 came into force are still valid, but are now governed by the specific terms of the Mining Act, 2010.

4.2.3

Royalties and other relevant aspects

Other aspects of the 2010 Act which would have to be taken into consideration during the evaluation of the Wigu Hill property include the following: · Royalties: The 2010 Act requires that "every authorised miner shall pay to the Government of the United Republic a royalty on the gross value of minerals produced under his licence". Different rates apply to different commodities; a rate of 4% is specified for metallic minerals (which includes the REEs). Government Stake: The 2010 Act also includes a provision for a Development Agreement whereby the government of Tanzania may obtain a free carried stake in a mining operation when a Special Mining Licence is issued. Specifically it states that: "The level of free carried interest and State participation in any mining operations under a special mining licence shall be negotiated upon between the Government and a mineral rights holder depending on the type of minerals and the level of investment."

·

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4.3

4.3.1

Mineral Tenure

Tenure history

AMEC is unaware of any historical licences held for the Wigu Hill area prior to those held by Montero. A summary of historic exploration activities in the Wigu Hill area is provided in Siegfried (2010) and is discussed in Section 6 of this Report.

4.3.2

Current Mineral Rights Status

The Wigu Hill Property consists of two contiguous Prospecting Licenses that were issued to RSR Exploration and Management Limited in 2005 and 2007, respectively. These two licences originally covered an area of 142 km2, but following release of portions of the areas after the initial exploration periods were completed they now cover a combined area of 55.65 km2 as indicated in Table 4-2 and shown on Figure 4-2. Applications for additional prospecting licences have been submitted by RSR and affiliated companies for the areas of the original licences that were relinquished on renewal of the original prospecting licences; these applications cover a total area of 86.07 km2. Details of these applications are provided in Table 4-3, and their geographic limits are shown on Figure 4-2. AMEC was informed that these applications are still being processed. The majority of the exploration work performed by Montero for which results are presented in this Technical Report was carried out within the limits of PL3379/2005.

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Table 4-2:

Prospecting licence number (date of issue) 3379/2005 (01-Jul-05) Status

Summary of Current Prospecting Licences (based on EALC, 2011)

Fees (US$/year) Minimum expenditure requirement (US$/km2) 6,000 Area (km2)

Active; second renewal granted on 01-Jul-2010; valid until 01-Jul-2012. First exploration period completed on 09-Nov-2010; First renewal application number HQ-G16740 was submitted on 09-Nov-2010. If granted will be valid until 09Nov-2012.

Annual rent for 2nd renewal of 908.40 paid on 13-Jul-2011 (60.00 per km2) Annual rent of 2,025.00 payable for 1st renewal (50.00 per km2)

15.14

4834/2007 (09-Nov-07)

500

40.51

Total: Notes:

55.65 Both of these licences were issued to and are currently held by RSR Exploration and Management Limited.

Table 4-3:

Application number

Summary of Licence Applications (based on EALC, 2011)

Fees (US$/year) Minimum expenditure requirement (US$/km2) 500 Area (km2)

Status and submission date

HQ-P18736

HQ-P21911

HQ-P22806

Application at the Ministry of Energy and Minerals in process. Submitted 01 July 2011. Application at the Ministry of Energy and Minerals in process. Submitted 01 July 2011. Application submitted on 9 November 2010

Annual rent of 1,269.60 payable upon successful grant (40.00 per km2) Annual rent of 570.40 payable upon successful grant (40.00 per km2) Annual rent of 1,602.80 payable for initial period upon successful grant (40.00 per km2)

31.74

500

14.26

500

40.07

Total Notes: 1. Preparation fees of 200 US$ are payable upon successful granting of a licence application. 2. Application number HQ-P18736 was submitted by RSR (Tanzania) Limited. 3. Applications numbered HQ-P21911 and HQ-P22806 were submitted by Assalam Almasi Ltd. a company affiliated to RSR (Tanzania) Limited.

86.07

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Figure 4-2:

Map Showing Current Wigu Hill Prospecting Licences and Applications

KEY: Prospecting licence names are indicated in red. Areas covered by prospecting licence applications are indicated by cross-hatching. Boundaries of both are indicated by the solid red lines. Solid blue dots indicate exploration targets discussed in text. NOTES: This map was prepared by AMEC, September 2011. Coordinate system used is UTM projection zone 37, Arc1960 datum, Clarke 1880 Ellipsoid.

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4.4

4.4.1

Company Structure and Obligations

General

The following details are based on information provided in Montero's prospectus as published on 25 January 2011. Montero Mining and Exploration Ltd. was registered and incorporated in British Columbia, Canada on October 5, 2006. The Corporation's registered office is located at 1900-1040 West Georgia Street Vancouver, B.C. V6E 4H3, and its head office is located at 20 Adelaide Street East, Suite 400, Toronto, Ontario, M5C 2T6.

4.4.2

Intercorporate Relationships

Overall Company Structure Figure 4-3 shows the corporate structure of Montero and its subsidiaries, including the jurisdiction in which each subsidiary was formed, and the percentage of shares of each of the subsidiaries owned, controlled or directed by its parent company. Figure 4-3: Montero Mining and Exploration Limited (Montero) Corporate Structure MONTERO MINING AND EXPLORATION LTD. (British Columbia)

100% MONTERO RESOURCES LIMITED (Tanzania)

100% MONTERO RESOURCE HOLDING LIMITED (British Virgin Islands) 100% MONTERO PROJECTS LIMITED (British Virgin Islands)

Montero has a wholly-owned subsidiary operating in Tanzania, Montero Resources Limited, ("MRL") and incorporated in Tanzania on November 5, 2007, and two British Virgin Island subsidiaries, namely: · · Montero Resource Holding Limited ("MRHL") incorporated on April 26, 2010, wholly owned by Montero; and Montero Projects Limited, ("MPL") incorporated on May 3, 2010 and wholly owned by MRHL.

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Montero Resources Limited (MRL) The following information on MRL is provided by EALC (2011): · · · · · MRL is a limited liability company duly organized and is in the good standing under the laws of the United Republic of Tanzania. MRL is duly incorporated and validly existing under the laws of the United Republic of Tanzania. MRL has all requisite corporate power and authority to carry on business as now conducted by it and to own, lease and operate its properties and assets. The authorized capital of the Company is Tanzania Shilling One Hundred Million only divided into 100,000 Ordinary Shares of Tanzania Shillings One Thousand each. These shares were duly and validly issued to Montero and Baldwin Lema (in trust for Montero) on a proportion of 99,999 ordinary shares and 1 ordinary share respectively.

RSR (Tanzania) Limited and affiliates (RSR) The following information was provided by EALC (2011). RSR (Tanzania) Limited is a private family-owned business registered in Tanzania and engaged in exploration of mineral properties. Its affiliates include RSR Exploration & Management Limited, Assalam Contracting Agencies Limited, and Assalam Almasi Limited all of which are owned and controlled by the same family.

4.5

4.5.1

Agreements

Introduction

The Wigu Hill Property was initially held 100% by RSR and its affiliates. Montero has now earned the right to acquire 60% of the property with the remaining 40% being retained by RSR and its affiliates; a joint venture company is currently being incorporated to provide for future exploration and development of the property. A summary of the joint venture agreement between Montero and RSR, based on the legal opinion provided by EALC (2011) and a description of the agreement provided in Montero's audited financial statement of 31st December 2010, is given below.

4.5.2

The Wigu Hill Option Agreement

On May 26, 2008, Montero and RSR (Tanzania) Limited ("RSR") entered into an agreement whereby RSR granted Montero an exclusive option to earn an initial 60% interest in the Wigu Hill project. This agreement provided for two stages, namely: · The "First Option" which provides the right to earn an initial 60% interest in the property can be exercised by incurring exploration expenditures of US$3.5 million over a three year period (or alternatively complete a pre-feasibility study) and making option payments of US$20,000 on each six month anniversary of the agreement.

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·

The "Second Option" provides for the right to earn an additional 10% interest in the project for a US$2 million payment (payable in cash or, by mutual agreement, publicly traded shares of Montero).

After the First Option is exercised, a joint venture will be formed, the terms of which will provide for dilution subject to a deemed expenditure formula and, where a party's interest is diluted to less than 10%, conversion of such interest to a 2.5% net smelter returns royalty ("NSR"). Montero has the right to purchase all or part of the NSR for US$1 million per each 0.5%. On June 30, 2009, an addendum to the agreement was signed whereby an 18 month extension for the First Option period was agreed to expire November 28, 2012 and the exclusive right payments were increased from US$20,000 to US$30,000 on the bi-annual (6-monthly) anniversaries. On April 27, 2010, Montero signed another amendment to the Wigu Hill Project agreement amending the First Option such that Montero, in order to exercise the option, must make a final payment of US$150,000 to RSR on or before April 30, 2010 (paid). No other option payments or exploration expenditures are required in order for Montero to exercise the First Option. After the exercise of the First Option, RSR will transfer the prospecting licenses comprising the Wigu Hill Project (the "Licences") to the newly-formed joint venture and Montero will concurrently pay RSR US$50,000 (paid). After transfer of the Licences, Montero shall become obligated to incur exploration expenditures of US$3.5 million (or alternatively complete a prefeasibility study) on or before November 28, 2012. The terms remain unchanged for Montero to earn an additional 10% interest in the project, except that the date by which Montero has to complete these requirements was extended to January 27, 2013. EALC (2011) has confirmed that as of 3rd August, 2011, Montero was in the process of incorporating the joint venture company and together with the terms outlined in the RSR Option Agreement transferring the Licences.

4.6

Surface Rights and Access

The following information was provided by EALC (2011). A holder of a mineral right has automatic access to surface and access rights to land provided that such land does not fall within restricted areas which are specified under section 95 of the Mining Act, in which case the written consent of the Minister is required. Such areas include any land set apart for any public purpose other than mining, land forming part of a licensed or Government aerodrome, any land on which there is military installation or within 100 m of the boundaries thereof, any reserved or protected area etc. All land in Tanzania is public land which is held by the President as trustee for the land on behalf of all citizens of Tanzania. As such, the land tenure system in Tanzania is leasehold whereby holders of rights occupancy have the right to occupy and to use such land. Similarly,

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holders of mineral rights have the right to exercise the rights contained in their licences/applications as provided therein. There is no difference in management/treatment of land where right of occupancy/mineral rights is held by the Government (through its various agencies) and where such right of occupancy/mineral right is held by private persons or entities.

4.7

4.7.1

Additional Permitting Requirements

Environmental

EALC (2011) states that "The project operations are subject to the provisions of the Environmental Management Act 2004, the Mining Act 2010 and the applicable regulations made respectively there under". The 2010 Mining Act requires that any application for a Special Mining Licence must be accompanied by "the applicants' environmental certificate issued in terms of the Environment Management Act". The Environmental Management Act, 2004 states that an Environmental Impact Assessment is required in such situations and must be undertaken by the applicant at his own cost (Pallangyo, 2007)." There has been no previous mining activity on the property and AMEC is not aware of any existing environmental liabilities with respect to the property beyond possible reclamation requirements for roads and drill pads.

4.7.2

Other Permitting Requirements

EALC (2011) states that "no additional permits (such as for drilling, environmental permits for putting in drill access tracks, drill pads, trenches or other excavations, etc) will be required in order to continue the exploration work."

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5.0

5.1

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

Introduction

Wigu Hill is located about 65 km south of Morogoro, Tanzania and about 200 km southwest of Dar es Salaam (Figure 4-1) in south-eastern Tanzania. Montero has constructed an exploration camp which is a tent camp with a permanent office/mess building and storage buildings on concrete slabs. Satellite internet service is in place and is available. Electrical power is provided by generator that operates from about 09:00 to about 22:00.

5.1.1

Physiography

Wigu Hill is a steep, prominent hill rising 550 m above the surrounding coastal plain which is generally at 250 m above sea level while the highest peak is 796 m above sea level (Siegfried, 2010). The area south of Wigu Hill is mainly plains with open bush and farmland. The area in the west consists of small hills. The Mgeta River is as close as 1 to 2 km from the base of Wigu Hill. Seasonal swamp surrounds both banks of this river.

5.1.2

Climate

The climate is tropical. The nearest reporting station is Morogoro which averages about 935 mm/year of precipitation2. Temperature variations are small with an average high temperature of about 30.1o C and average low temperature of about 19o C (Figure 5-1). Temperatures are remarkably stable, but there is a distinct cool, dry season from June to October and a warmer, wet season from November to May with April the wettest month. Much of the precipitation comes as single, large events. In 2010, the largest one-day event was 85.1 mm. In 2010, no precipitation was reported for the months of July through September in Morogoro. Field activities such as drilling are not possible during the rainy season months of March and April; the field season for exploration activities is therefore from May through to February.

2

Climate data from: http://www.climatedata.eu/climate.php?loc=tzzz0020&lang=en

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Figure 5-1:

35 30

Temperature (oC)

Average Climate Data for Morogoro, Tanzania2

250 200

Precipitation (mm)

25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 50 0 150 100

Mean High Temperature Mean Low Temperature Average Precipitation

Month

5.1.3

Accessibility

The area can be accessed by all-weather road from Dar es Salaam to Morogoro and secondary roads from Morogoro (Siegfried, 2010). The Dar es Salaam to Wigu Hill trip normally takes more than 5 hours to complete. The area is traversed by the railroad from Zambia that can be accessed at the Kisaki siding 12 km from the project. Kisaki-Kituoni is the nearest large village with several hundred to possibly a few thousand residents. Other population centres are the villages of Nyarutanga and part of Zongomero and Sessenga which are within a few kilometres of Wigu Hill. Air access is via the airfield at Matambwe, headquarters for the Selous Wildlife Reserve. Matambwe is about one hour's drive from the project. Local roads are in generally poor repair compared to western standards.

5.1.4

Local Resources

The project is logistically remote, which has been, and will continue to be, a challenge. Roads are generally in poor condition and there are few local resources. Kisaki-Kituoni has a number of small shops that provide basic services including groceries, a guest house, and a clinic, but all other supplies, including fuel, must be trucked from Dar es Salaam. Kisaki-Kituoni has its own generator that is operational from 19:00 to 23:00 daily. Montero has recently appointed a Sustainability Manager who will be assessing the impact of the project on the local communities as work progresses. This will include an assessment of the potential workforce that could be supplied by local villages as the project progresses.

5.1.5

Infrastructure

The location of the Wigu Hill Project, although not too distant from Dar es Salaam, is relatively remote. However, despite this there is some excellent infrastructure in the area. The Tanzam railway line which runs between Kapiri Mposhi in Zambia and Dar es Salaam is the main

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infrastructural link in the region. The access link for Wigu Hill is the siding at Kisaki which is only 12 km from the project site. A reliable passenger service runs on the line four times a week. Twice to Dar es Salaam to Kisaki and twice from Kisaki to Dar es Salaam using diesel engines, There is a good national road from Morogoro to Kisaki, a distance of 150 km (138 km to the Wigu site). It is mainly dirt, but three sections through steep terrane are tarred. Roads in the region are in generally poor repair, but most are readily upgradeable. There is no air service to site; however, the air strip at Matambwe, approximately one hour by road from site, is in good repair and has scheduled charter service. Communication coverage by cell phone is quite good; however, certain areas have a weak signal reception and only a single provider operates here. There are no dams in the area, but the Mgeta River runs past the western and southern edges of Wigu Hill and flows throughout the year. This river could be the source of water for the project in the future, but more research on securing supplies would be needed. There is no electric power in the immediate area and any power provided is via generator. Hot springs 4 km south of Kisaki could theoretically be a source of geothermal power, but there is no business that could support such a venture locally at this stage.

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6.0

6.1

HISTORY

Introduction

Prior to Montero's activities in the Wigu Hill area there have been several phases of exploration activities by different organisations. These activities, completed between 1955 and 2000, are summarised in Table 6-1. Table 6-1: Year 1955 1957 1973 1987 2000 2008 2009 2009 2010 Historic Exploration Activities on Wigu Hill (Siegfried, 2010) Company Geological Survey of Tanganyika New Consolidated Goldfields United Nations Tanzanian Canadian Agrogeology Taren Mining Montero Mining BGR

3

Exploration activities Mapping, grab sampling Detailed mapping and survey, limited pitting Reconnaissance mapping, grab sampling Grab sampling Grab sampling Grab sampling Grab sampling Prospect mapping, grab sampling Detailed mapping, trench sampling

Montero Mining Montero Mining

Exploration activity was constrained to surface mapping, grab sampling, and pitting until 2010. The results and locations of grab samples taken by previous operators have not been obtained by Montero. No drilling was reported to have been done prior to 2010 (Siegfried, 2010). During 2011, additional trenching and cored diamond drilling has been carried out on the Twiga, Tembo and Tumbili targets, as described in Section 10.0.

3 Bundesanstalt für Geowissenschaften und Rohstoffe (BGR) in Hannover; Germany. [German Federal Institute for Geosciences and Natural Resources].

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7.0

7.1

GEOLOGICAL SETTING AND MINERALIZATION

Regional Geology

The Wigu Hill area is located on the southern parts of the Uluguru massif which is underlain by Ubendian age (Paleoproterozoic) metasedimentary rocks consisting of high-grade gneisses and generally clean carbonate rocks (Siegfried, 2010). Wigu Hill itself is underlain by quartz feldspar gneisses, biotite quartz feldspar gneisses as well as occasional amphibole and pyroxene gneisses. A strong fabric is pervasive throughout these rocks although little evidence of folding is noted. The Uluguru massif is truncated on its southern side by a Karoo age (Permian?) rift that is still active today. The hills to the south of Wigu Hill are also underlain by Ubendian metasedimentary rocks. The thickness of valley fill between the two uplands is not known, but a marked magnetic anomaly within this zone suggests that the surficial sediments may be thin.

7.2

District Geology

The hills to the north, east and south-west of Wigu Hill largely comprise weathering resistant quartzo-feldspathic gneisses. Little exploration has been undertaken in these areas, but to date no evidence of major carbonatite intrusion appears to occur in these rocks away from Wigu Hill itself. Limited reconnaissance traverses in the area SW of Wigu did locate narrow intrusive carbonatite breccia bands cutting the gneisses. In view of the limited amount of work done away from Wigu Hill itself, it is not possible to expand on the description of the district geology.

7.3

Local Geology ­ The Wigu Hill Complex

Wigu Hill is an imposing feature that stands out clearly from the coastal plain which lies at an elevation of 200 m amsl. Situated on the southern edge of the Uluguru massif, it rises steeply above the pain to an elevation of just under 800 m amsl. It is 6.2 km in length from east to west and just over 3 km in width (Figure 7-1).

7.3.1

Host-rocks

Outcrops of gneisses are sparse. Very well foliated, light reddish cream to light brown gneiss outcrops are evident on ridges and spurs, in valleys and cuttings and on cliff faces. The reddish colours are due to iron oxide staining, much of it hematite. Fresh to relatively fresh, but oxidised gneisses consist mainly of the following: · · · · feldspathic gneisses quartzo-feldspathic gneisses hornblende and clinopyroxene-rich quartzo-feldspathic gneisses amphibolites and garnet­rich amphibolites (contains abundant small red garnets)

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All of these lithologies are cross cut by a network of narrow pegmatite veins and veinlets, a few centimetres to about one metre in width, and also narrow aplite dykes one to 20 cm in width.

7.3.2

Carbonatites

The gneisses of the Wigu Hill complex have been intruded by abundant narrow to broader carbonatite dykes. Most of these are dolomitic in composition and are mineralised with varying concentrations of bastnaesite [(REE)(CO3)F] plus small amounts of monazite and apatite. Iron is present in varying amounts, mainly as goethite, but also as limonite after pyrite. In addition, there are some later cross-cutting, unmineralised carbonatite dykes with biotite porphyroblasts that are quite distinctive texturally. Carbonatite dyke sizes and compositions vary considerably across Wigu Hill. Strike lengths of up to 200 m have been measured on an individual dyke and the maximum true with of a dyke measured to date is just over 10 m. . Recent exploration on the southern and eastern flanks of Wigu Hill (Tumbili Target) has discovered the presence of an extensive carbonatite breccia unit. This breccia consists of finegrained, tuffaceous breccia to coarse breccias with tuffaceous matrices. Clasts consist of angular polymict carbonatite fragments >10 cm to 3.0 m in size containing of bastnaesite-rich carbonatite. The breccia zone has been traced from the western edge of the Tumbili area onto the Tembo Target to the east, a distance of approximately 1,000 m. The width of the breccia zone is between 200 m to 350 m. To date the full extent and nature of the breccia has not been defined.

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Figure 7-1:

Reconnaissance Geological Map of Wigu Hill Showing Identified Mineralized Area

Original map prepared by Montero Mining and Exploration Limited. Coordinate system used (added by AMEC) is UTM projection zone 37, Arc1960 datum, Clarke 1880 Ellipsoid. The resource model limits are indicated the grey rectangle enclosing the Twiga and Tembo zones.

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7.3.3

Lithologies

A summary of the lithologies that have been identified at Wigu Hill is provided in Table 7-1. Table 7-1:

Code Scr Cbr

Description of Lithologies Identified at Wigu Hill.

Lithology Boulder Bed / Scree Breccia/ Conglomerate Description Non-lithified material formed from an amalgamation of material from weathering of various lithologies. Lithology formed of poorly sorted reworked fragments of various lithologies. Fine matrix component. Can be matrix or clast supported. Fragments can show any standard of roundness. Cbr-gn is usually a monomict, clast supported gneiss breccia with carbonated matrix. Cbr-rm is a matrix supported, moderately sorted breccia with resistant matrix (carbonate-silica-pyrite) and negatively weathering clasts. Narrow 10 cm to 1 m intrusions of breccia with rounded spherical clasts usually concentrated in the central axial plane of the dyke. Conspicuous feldspar-mica porphyry texture except when texture obscured by flow bedding and can contain clasts, when weathered it looks like a tuffaceous breccia (!) Carbonatite intrusive containing >15% bastnaesite bearing mineral assemblage (bastnaesite-calcite-barite-strontianitequartz-synchysite), regardless of matrix composition. Carbonatite Intrusive with >50% white calcitic/dolomitic matrix. Typically contains small a mounts of bastnaesite mineralisation and sulphides. Carbonatite Intrusive with >50% dark/dull red-brown carbonate matrix. Typically displays small amounts of bastnaesite mineral assemblage. Foliated gneiss showing leucocratic (feldspars) and melanocratic (amphibolites, pyroxenes) liner mineral concentrations. No reaction to dilute hydrochloric acid (HCl). Foliated amphibolite gneiss showing macroscopic garnets (>2mm). No reaction to dilute HCl. Amphibolite gneiss showing minor sericitisation and alteration of plagioclases to albite. Amphiboles show minor alteration to goethite, Limonite and secondary acicular amphiboles. Weak to no reaction with dilute HCl. Feldspars show strong calcite-dolomite alteration or replacement. Amphiboles show alteration to secondary pale clay minerals. Strong reaction to dilute HCl. Coarse mineralisation of quartz and feldspar often showing well developed cleavage planes in feldspar mineralisation. Typically shows interim darker minerals as subhedral additions.

Pbdy

Pebble Dyke

Phy

Porphyry Intrusions Bastnaesite Bearing Carbonatite Calcio Carbonatite Ferruginous Carbonatite Amphibolite Gneiss (nongarnet bearing) Garnet Bearing Amphibolite Gneiss Fenitized Gneiss

Cba

Cca

Cfe

Gna

Gng

Gnf

Gnc

Carbonated Gneiss QuartzFeldspar Pegmatite

QFP

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7.3.4

Alteration

Fenitisation, which typically consists of an assemblage of alkalic feldspar, with some aegirine, subordinate alkali-hornblende, and accessory sphene and apatite is ubiquitous in the Wigu Hill Area but is generally weak and can be (and frequently is) very difficult to identify. Exposed rocks at Wigu Hill display fenitisation consisting of potassium-feldspar and ferric iron oxide replacement of the country rock gneisses with almost total preservation of the original gneissic banding. This alteration appears to be ubiquitous in the area of Wigu Hill and is cut by the carbonatite dykes, An assemblage of carbonate, chlorite, clay, and epidote (carbonate alteration) is typically associated with the carbonatite dykes. Near the dykes, carbonate alteration is typically intense and decreases in intensity away from carbonatite dykes. The width of the alteration selvages varies from a few centimetres to a several tens of metres with weak carbonate alteration as far as 100 m from some carbonatite dykes at Twiga and Tembo. This alteration overprints the older fenitisation.

7.4

Target Geology

Exploration activities on Wigu Hill have been focussed on the following four target areas with a view to identifying the best area on which to conduct detailed exploration: · · · · Twiga (Giraffe)Target Area Tembo (Elephant) Target area Tumbili (Monkey) Target Area Chui (Leopard) Target Area

These four areas are shown on Figure 7-1 and are discussed below. 7.4.1

Twiga Target

The Twiga target is the easternmost area of interest where bastnaesite-rich carbonatite dykes have been identified. There, reconnaissance exploration grab sampling included 9 samples assaying 5.8% to 16.4% TREO. Figure 9-1 shows the location of the samples. Mapping at Twiga identified a set of carbonatite dykes which together extend over a width of 28.5 m, but which are separated by narrow zones of carbonate altered gneiss (Figure 7-2). These dykes strike at approximately 300º. They are fresh, crystalline and dolomite-rich and contain abundant, often euhedral, hexagonal burbankite pseudomorphs. Some narrow intrusive zones consist almost exclusively of these burbankite pseudomorphs. Detailed mapping of this zone established that the carbonatite dykes branch away from this broad zone and the widths narrow to the NW and SE. A set of dykes has been mapped paralleling this direction over a width of 80 m and these are traceable over a strike length of >200 m. The dykes are all near vertical with a consistent dip to the NE at between 85º to 70º. Up the hill to the NW the dykes narrow significantly. To the SE at the base of the hill the dykes are obscured beneath the thick soil and alluvium cover more than 5 m deep and cannot be followed by trenching.

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Figure 7-2:

Sketch Geological Map of the Twiga Area

NOTES: Map prepared by Montero Mining and Exploration Limited. TW001 etc indicate the drillhole locations and orientations.

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Reconnaissance mapping to the southwest discovered a second dyke set, the "EW" carbonatite dyke set, which can be traced over a strike length of >200 m and reaches a true thickness of over 7 m. The cross cutting dykes at or near the end of the dyke set are very well mineralised and are interpreted to have the same origin as the EW dyke. This dyke set is unusual in that the dip is much shallower than any of the other dykes mapped to date varying in dip from as little as 35o to between 40 and 47o to the NW (Figure 7-3). The EW dyke set is characterised by abundant subhedral to euhedral hexagonal burbankite pseudomorphs. The range in size is from millimetres to centimetres with a maximum of about 15 cm in diameter and 50 cm in length. Initial trenching designed to cut the 300o strike trend ran sub-parallel to this trench due to its different strike trend and a number of cross trenches were needed to expose the upper and lower contacts and define the structure and composition.

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Figure 7-3:

Typical Twiga SW Cross-Section

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7.4.2

Tembo Target

The Tembo Target is located approximately 600 m to the west-north-west of the Twiga Target. The two targets are separated by a ridge on which some narrow carbonatite dykes and carbonatite breccia were mapped. Figure 7-4 shows the distribution of dykes at Tembo. The dykes are more or less continuous, but locally they anastomose and form multiple dykes, only to rejoin up or down the hill. These carbonatite dykes have weak radiometric signatures possibly due to the thorium content of small amounts of monazite present in the dykes. Mapping and trenching focused in the area where the regional reconnaissance high grade TREO results were obtained. A set of anastomosing, sub-parallel dolomitic, bastnaesite-rich carbonatite dykes was mapped over a strike distance of >300 m up the eastern slopes of Wigu on a strike of 320º. The dykes vary in thickness from 0.5 m to 6.45 m, but in areas where they coalesce, the combined thickness is in excess of 10 m. Carbonatite breccia occurs as selvages on some dykes and in places occupies the entire zone between adjacent dykes. The NW-trending dykes are near vertical with dip measurements showing some steep dips to the NE and some to the SW. At the north end of the mapped area, the strike of the dykes is more easterly at between 070º to 080º. Here three sets of carbonatite dykes are separated by between 25 to 50 m of carbonate altered gneisses. The main set of dykes form a prominent ridge, being highly resistive (Figure 7-5). They can be traced over a strike distance of >150 m on the top of the ridge Three types of carbonatite dyke and a carbonatite breccia were identified. These can be described briefly as follows: · Calcite/dolomite-rich carbonatite. These dykes are fresh, very compact and finely crystalline consisting mainly of dolomite, with subordinate amounts of bastnaesite and iron. Colour white to yellowish in places. Bastnaesite-rich carbonatite. Bastnaesite is dominant in a matrix of dolomite and small amounts of iron. The colour is a light to darkish cream. The bastnaesite occurs as fine massive dissemination, masses of sub-parallel crystals or large hexagonal prismatic crystals 1 cm to 3 cm in diameter (Figure 7-6). Iron-rich carbonatite. These carbonatites contain a fair proportion of bastnaesite in soft matrix of hematite-goethite being supported by dolomite. Colour is dark reddish, purplish brown. Carbonatite breccia. This has a fine tuffaceous matrix and both angular and rounded polymict clasts including white quartz pebbles. These breccias infill between some of the dykes, especially on the EW trending dykes.

·

·

·

The host gneisses are highly weathered on this ridge and in the trenches only weathered and carbonated gneisses were exposed. Lower down on the ridge where the dykes narrow down and pinch out, fresher gneissic outcrops occur.

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Figure 7-4:

Sketch Geological Map of the Tembo Area

Original map by Montero Mining and Exploration Limited. Legend edited by AMEC.

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Figure 7-5:

Carbonatite Ridge at Tembo

Figure 7-6:

Mineralized Dyke at Tembo (bastnaesite after burbankite crystals at pencil point)

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7.4.3

Tumbili Target

The Tumbili target (Figure 7-1) was discovered by the higher radiometric background values recorded in this area during reconnaissance exploration. This higher background extends over an area of about 500 m along strike and 200 m to 250 m upslope from the roadway and is located about 700 m to the west of the Tembo target. The area investigated is almost exclusively underlain by polymict carbonatite breccia (Figure 7-7) of unknown origin. Figure 7-7: Polymict, Matrix Supported Carbonatite Breccia with Mostly Angular Breccia Fragments.

The Tumbili area contains what may be the central carbonatite intrusive in the area. As it is presently known, this carbonatite exposure is on the order of 1 km long and 0.5 km wide (Figure 7-8) and it may be found to be larger because it has not yet been mapped in detail. The body consists of a carbonatite breccia that has a pyroclastic appearance. The matrix consists of a rather fine-grained fragmental "tuffaceous" carbonatite with mainly angular and some rounded clasts of carbonatite and country rocks. AMEC noted a number of mineralized clasts in the carbonatite breccia (Figure 7-9). Most were concentrated high on the hill, possibly close to the margin of the carbonatite, but AMEC did not traverse completely across the body so the inferred position of these clasts relative to the margin of the body is based on interpretation only. Locally, small carbonatite bodies that were not obviously clasts may be later mineralized carbonatite intrusives within the larger breccia carbonatite body. This is a very tentative observation. The nature of these mineralized bodies was not absolutely ascertained.

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The contact along the west edge of the deposit consists of a progressive breccia with wall rock clasts included in the carbonatite. Near the contact, the wall rock gneiss was more or less intact with narrow carbonatite veinlets. The size of the carbonatite veins increased away from the contact to the point a few metres from the contact where wall rock clasts were floating in carbonatite. Figure 7-8: Sketch Outline of the Tumbili Carbonatite

Figure 7-9:

Mineralized Clast at Tumbili

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7.4.4

Chui Target

The Chui target lies on the north-western side of Wigu Hill. It occurs at an elevation of approximately 400 m above the coastal plain and access is difficult. It was chosen for evaluation because of the concentration of a number of relatively wide carbonatite dykes on this ridge. Mapping of the area confirmed the presence of at least 6 significant dykes between 3 m and 20 m wide. Many smaller narrow dykes occur in-between these larger dykes, over an area of 150 m wide by >250 m along strike. The dykes are very fresh, crystalline and very compact. Their resistance to weathering is preserving the high ridge. The composition is largely dolomitic with fine disseminated bastnaesite. No iron-rich dolomite was observed and neither was there evidence for the bastnaesite-rich carbonatite material as observed in the east. Two 1 m2 panel samples of carbonatite were taken from this ridge during the regional sampling programme. Results returned were 5.50% and 5.70% TREO (see Figure 9-1 for sample locations).

7.5

Mineralisation

Carbonatite dykes are generally straight edged and have sharp contacts with the surrounding gneisses. Contacts are locally brecciated and mineralisation may be present in the wallrocks. Some of the dykes have obviously experienced periodic or episodic intrusion as witnessed by the often parallel, multiple zones of rare earth element (REE) mineralisation. Crystallisation of the characteristic columnar `fingers' of an unidentified mineral (tentatively identified as pseudomorphs after burbankite) occurred fairly early in each intrusion because fragments or xenoliths of these already crystallised minerals occur as clasts in later carbonatite intrusives. These large pseudomorphs are a mix of fine grained quartz, synchysite and bastnaesite surrounded by dolomite. Table 7-1 lists the minerals found at Wigu Hill to date (Siegfried, 2010). Table 7-2:

Mineral Bastnaesite Synchysite Parisite Goyazite Strontianite Barite Monazite Apatite Florencite Xenotime Ancylite Rhabdophane Kainosite Britholite Allanite Loparite Burbankite

Minerals Identified at Wigu Hill

Formula (REE)(CO3)F Ca(REE)(CO3)2F Ca(REE)2(CO3)3F2 SrAl3(PO4)2(OH)5·H2O SrCO3 BaSO4 (REE)PO4 Ca5(PO4)3(F,Cl,OH) (REE)Al3(PO4)2(OH)6 YPO4 Sr(REE)(CO3)2(OH)·H2O (REE)PO3·H2O Ca2(Y,REE)2(Si4O12)CO3·H2O (REE,Ca)5(SiO4,PO4)3(OH,F) +3 (REE,Ca,Y)2(Al,Fe )3(SiO4)(OH) (REE,Ca,Na)(Ti,Nb)O3 (Na,Ce)3(Sr,Ba,Ce)3(CO3)5 % REE 78.4 52.6 Density 4.95 - 5 3.9 - 4.15 4.36 3.22 3.78 4.48 5.15 3.19 3.58 4.75 3.9 4 3.5 4.4 3.75 4.77 3.5

69.7 32.0 61.4 48.0 64.8 ~38 ~60 <17 <30

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REEs occur predominantly in the minerals bastnaesite, monazite, and synchysite, although others such as parisite and goyazite have also been encountered (Siegfried, 2010). These minerals cannot yet be individually distinguished in the field but areas of enrichment are noted by a characteristic greenish-yellow colouration and a significant increase in density. Pale yellow to buff colours generally indicate bastnaesite ­synchysite mineralization; greenish yellow colours generally indicate bastnaesite with monazite. The most well mineralized REE bearing dykes are composed of intergrown carbonate grains which enclose and are enclosed by radiating crystals of REE-minerals dominated by bastnaesite (approximately 20%) and synchysite (approximately 10%). Monazite and apatite are important accessory constituents and are the common phosphate minerals identified at present. Pyrite and sphalerite are associated with very late stage veins of barite, quartz, and carbonate. Much of the bastnaesite appears as polycrystalline aggregates intimately crystallized with barite, strontianite, synchysite, dolomite and quartz replacing columnar, hexagonal crystals that weather positively (Figure 7-10a). Some of these columnar pseudomorphs exceed 5 cm in length and 2 cm in width with some pseudomorphs as long as 30 cm. Although the original mineral is replaced and no evidence of its nature other than the habit is visible, the original mineral has tentatively been identified as burbankite (Wall, et. al, 2006) and that the crystallization occurred during quenching forming pegmatitic textures. Some of the pegmatitic textures are similar to graphic textures in granitic pegmatites (Figure 7-10b). Two distinct end-member types of carbonate have been noted ­ white dolomite carbonatite and dark brown to black ferruginous carbonatite. Figure 7-11 shows a typical massive dyke at Twiga where the two end-member types are found in a breccia-like dyke. The two types were injected into the dykes at different times. Indeed, there appear to be multiple injections of each type of carbonatite. Most of the dykes show a pseudo-foliation that likely represents different injections of carbonatite with the "foliation" being the quenched rims of the latest injected carbonatite that are sub-parallel to the dyke edges. In many cases, the burbankite feathers appear to grow into the dyke symmetrically from both sides where a single injection of material was not disrupted by a later injection, a rather rare occurrence. Much of the mineralization appears to have initially formed as coarse burbankite that grew in liquid perpendicular to the dyke surfaces. Figure 7-10a shows a very coarse grained example. Most of the mineralization occurs as 0.1 ­ 2 cm feathery crystals that are intergrown with pegmatitic textures. Figure 7-10b shows graphic textures on the left side of the sample and massive mineralization on the right side of the sample. Figure 7-10c shows coarse, pegmatitic pseudomorphs after burbankite. Original burbankite was pseudomorphically replaced by a mix of fine-grained bastnaesite, strontianite, and barite with variable amounts of synchysite. The nature of that replacement is, as yet, not clearly understood. It may have been a cooling phenomenon with exsolution of the constituents of burbankite and formation of new carbonate and sulphate minerals, or, it may have been due to late-stage fluid migration through the carbonatite and deuteric alteration of the burbankite. While the pseudomorphed crystals form spectacular mineralization, large quantities of finegrained, massive mineralization are present in all of the targets. This mineralization is

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volumetrically significant and is not clearly related to the event(s) that formed the coarsely crystalline mineralization (see Figure 7-10b). Figure 7-10: Twiga Mineralization (a ­ note coarse (longer than hammer head), hexagonal pseudomorphs after burbankite; b ­ pegmatitic and massive replacements of burbankite; c ­ coarse hexagonal pseudomorphs after burbankite in ferruginous carbonatite dyke)

a

c

b

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Figure 7-11:

Typical Twiga Dyke With Components ( A ­ coarse dolomite carbonatite; B ­ coarse ferruginous carbonatite; C ­ fine-grained ferruginous carbonatite; D ­ coarse, pegmatitic mineralization; E ­ massive mineralization; material between outlined blocks is more or less all mineralized with fine-grained bastnaesite(?))

7.6

Geology Comment

The geological knowledge at Wigu Hill is improving with the geological mapping, trenching, and drilling completed to date. Significant additional work is required and is ongoing. Additional drilling is planned. In outcrop, carbonatite dykes at Wigu Hill form anastomosing zones rather than single, continuous dykes. The anastomosing nature of the dykes is obvious in outcrop and is expected to continue in the depth dimension, thus it is not likely possible to correlate a single dyke for any significant distance. The zones appear to correlate quite well in some cases. The drilling strategy has been to intersect these dyke zones at two and locally three places on individual cross-sections. An example is Cross-Section 4 which was drilled to intersect the large, shallow dipping, SW-NE trending dyke at Twiga. The dyke was trenched along this cross-section and

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was intersected in holes TW002 (16.9-30.7m), TW005 (72.9-87.7 m), and TW006 (114-128.3 m). Other cross-sections typically have a trench and two drill hole intersections. At this stage of the project, this is appropriate. Twiga The geology and mineralisation at Twiga is reasonably well understood at this time. The surface geology is well described and drilling has confirmed downward continuation of many of the dykes. Many of the carbonatite dykes form zones of dykes rather than individual dykes. This is obvious on the surface and in the drill core. AMEC believes that this zone concept will be important for future modelling of these deposits. Tembo The surficial geology at Tembo is well known but drilling on the Tembo SW zone did not confirm continuation of the mapped dykes in the subsurface. Drill intercepts in a down-dip direction are at approximately 40 m intervals, suggesting that dyke continuity is less than this. As with Twiga, these dykes form zones within which individual dykes appear to anastomose. Tumbili Tumbili is a large carbonatite breccia with little in the way of geological mapping and sampling. Significant additional work is required to understand the geology and potential of this body. Tumbili may be a large carbonatite intrusive. Similar carbonatites in other countries are not significantly mineralized, but locally produce various commodities, primarily as a result of weathering of the carbonatite. AMEC noted a number of mineralized clasts and one possible mineralized dyke within the larger body was seen. Chui The Chui area known from reconnaissance only and requires significant additional work to fully understand the geology there.

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8.0

DEPOSIT TYPES

Many carbonatites are rich in REEs; with REE minerals reported from more than 100 carbonatite occurrences worldwide (Castor and Hedrick, 2006; Birkett and Simandl, 1999; Orris and Grauch, 2002, Wall et al, 1997). Mineralisation at Wigu Hill is located within a carbonatite intrusion and can be classed as belonging to the carbonatite-hosted REE deposit type. Similar deposits include Bayan Obo in China (Smith, 2001), Mountain Pass, California (Castor and Hedrick, 2006), and Oka, Quebec (Zurevinski and Mitchell, 2004). The Bayan Obo deposit is the source of more than 90% of the total world-wide rare earth element production. Berger et al (2009) provides a database of tonnages and grades for those carbonatite deposits which have been investigated. Details of those deposits with reported TREO grades of more than 1% are given in Table 8-1. Table 8-1: Carbonatite-hosted REE deposits with >1% TREO (after Berger et al, 2009)

Rare Earth Niobium REE2O3 Nb2O5 Seis Lagos 2898 1.5 2.81 Bayan Obo 800 6 0.13 Chuktukonskoye 455 3.78 0.62 Mabounie 380 2.52 1.02 Mushgai-Khudag 367 1.6 0 Mountain Pass 90 5 0 Miaoya 71.5 1.7 0.25 Maoniuping 62.3 2.89 0 Sandkopfsdrif 57 1 0.15 Catalao I 46 1.3 0.34 Kizilcaören 30 3.14 0 Wet Mountains 13.96 1.01 0.017 Amba Dongar 11.6 1.06 0 Bear Lodge 10.7 3.6 0 Ondurukurume 8 3 0.3 Ruri 3.75 3.92 0 Cummins Range 3.55 2 0 Tundulu 3.225 2.4 0.53 Dalucao 0.76 5 0 Lugiingol 0.72 3.2 0 Chilwa Island 0.375 5 0.95 Karonge 0.2 1.59 0 Bou Naga 0.1 4.4 0 Eureka 0.03 6.3 0 1. Based on Berger et al (2009); USGS open file report 2009-1139 2. Includes only those deposits with reported TREO grades > 1%; based on `laboratory' convention for REO compositions. Deposit Name Tonnage

Country Brazil China Russia Gabon Mongolia United States China China South Africa Brazil Turkey United States India United States Namibia Kenya Australia Malawi China Mongolia Malawi Burundi Mauritania Namibia Notes:

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Birkett and Simandl (1999) provide the following description of this class of deposit. Carbonatites are igneous rocks with more than 50% modal carbonate minerals; calcite, dolomite and Fe-carbonate varieties are recognized. Intrusive carbonatites occur commonly within alkalic complexes or as isolated sills, dykes, or small plugs that may not be associated with other alkaline rocks. Carbonatites may also occur as lava flows and pyroclastic rocks. Only intrusive carbonatites (in some cases further enriched by weathering) are associated with mineralization in economic concentrations. REE-bearing minerals occur as primary igneous minerals, replacement deposits (intra-intrusive veins or zones of small veins, extra-intrusive fenites or veins) or supergene-type deposits formed by the enrichment of primary sub-economic concentrations of mineralisation by weathering. Pyrochlore, apatite and rare earth-bearing minerals are typically the most sought after mineral constituents; however, a wide variety of other minerals including magnetite, fluorite, calcite, bornite, chalcopyrite and vermiculite can occur in economic concentrations in at least one carbonatite complex. Host rocks are varied, including calcite carbonatite (sovite), dolomite carbonatite (beforsite), ferroan or ankeritic calcite-rich carbonatite (ferrocarbonatite), magnetite-olivine-apatite ± phlogopite rock, nephelinite, syenite, pyroxenite, peridotite and phonolite. Carbonatite lava flows and pyroclastic rocks are not known to contain economic mineralization. Country rocks are of various types and metamorphic grades. Carbonatites are small, pipe-like bodies, dykes, sills, small plugs or irregular masses. The typical pipe-like bodies have subcircular or elliptical cross sections and are up to 3-4 km in diameter. Magmatic mineralization within pipe-like carbonatites is commonly found in crescent-shaped and steeply-dipping zones. Metasomatic mineralization occurs as irregular forms or veins. Residual and other weathering-related deposits are controlled by topography, depth of weathering and drainage development. REE minerals found in carbonatite-hosted deposits include bastnaesite, pyrochlore, apatite, anatase, zircon, baddeleyite, magnetite, monazite, parisite, and fersmite (Birkett and Simandl, 1999). Associated minerals in veins include fluorite, vermiculite, bornite, chalcopyrite and other sulphides, and hematite. Residual REE-bearing minerals include anatase, pyrochlore, apatite, and crandallite-group minerals containing REE. Gangue minerals include calcite, dolomite, siderite, ferroan calcite, ankerite, hematite, biotite, titanite, olivine, and quartz. Typical alteration includes a fenitisation halo (alkali metasomatised country rocks) that commonly surrounds carbonatite intrusions. Alteration mineralogy depends largely on the composition of the host rock (Birkett and Simandl, 1999). Typical minerals are sodic amphibole, wollastonite, nepheline, mesoperthite, antiperthite, aegerine-augite, pale brown biotite, phlogopite and albite. Most fenites are zones of desilicification with addition of Fe3+, Na and K. Magmatic mineralization may be linked either to fractional crystallization or immiscibility of magmatic fluids (Birkett and Simandl, 1999). Metasomatism and replacement are important. Not all mineralization types are associated with any individual carbonatite intrusion. In general, it is believed that economic niobium, REE, and primary magnetite deposits are associated with late, fluid-rich igneous phases, but understanding of the majority of deposits is not advanced enough to propose any general relationship of timing.

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The characteristics and geological setting of the REE mineralisation at Wigu Hill confirm that the deposit can be classed as a carbonatite-hosted REE deposit. AMEC considers that it reasonable to plan future exploration and evaluation work on this basis. Berger et al (2009) provides a comprehensive summary of the characteristics of known deposits of this type which may provide useful information to guide future exploration work at Wigu Hill.

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9.0

9.1

EXPLORATION

Regional Geochemical Sampling

Reconnaissance mapping and sampling by Montero identified several priority exploration targets at Wigu Hill. A total of 209 grab samples from various outcrops were collected and analyzed for REEs. TREO values to a maximum of 26.2% TREO were returned with an average of these TREO-bearing samples calculated to be 7.4% TREO. This sampling served to confirm the anomalous high TREO values reported historically, but also established that these high values could be traced across the entire 6.2 km east-west strike of Wigu Hill (Figure 9-1), with some of the better values including the highest value of 26.2% occurring on the eastern part of the hill. Figure 9-1: Regional Geochemical Sample Locations at Wigu Hill (values in boxes are %TREO)

Original map prepared by Montero; modified by AMEC in September 2011 to add licence boundaries and grid. Licence boundaries shown as solid red lines. Base map is topographic map printed by Surveys and Mapping Division, Ministry of Lands, Housing and Urban Development, Tanzania, 1982. Projection is UTM Zone 37, Arc1960 Datum, Clarke 1880 Ellipsoid.

9.2

Radiometric Survey

As part of the reconnaissance exploration, a hand-held scintillometer was utilized to measure the total gamma flux at a number of stations across the deposit (Figure 9-2). This work was performed because of the common association of thorium (Th) and the infrequent association of uranium (U) with REE deposits. At each station, the total counts per second (CPS) were recorded. Stations were located using hand-held GPS units which are accurate to about 10 m east and west. The results were plotted and when combined with the regional geochemical results, resulted in a number of targets for additional exploration. On Figure 9-2, warmer colours indicate higher CPS readings which have been well correlated with carbonatite outcrops.

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Figure 9-2:

Radiometric Map of Wigu Hill (legend is in counts per second (CPS))

Original map prepared by Montero Mining & Exploration; modified by AMEC in September 2011 to add licence boundaries.

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9.3

Trench Sampling

Based on results of the regional geochemical sampling and mapping project, trenches were hand-cut across several of the dykes (Figure 9-3a). Trench locations are shown in Figure 9-4 (Twiga) and Figure 9-5 (Tembo). Coordinates for trenches are in Table 9-1. Significant intercepts of carbonatite in trenches were sampled from channels created by sawing two parallel cuts (~6 cm apart) with a power concrete saw to a depth of about 6 cm (Figure 9-3b) and chipping the sample from between the cuts. Trench sample lengths were predominantly in the 0.5 ­ 1 m range and are appropriate for this type of deposit. Samples were split on lithological boundaries. All of the material was removed from the channel and bagged for transport to camp. All samples were assigned unique sample numbers from pre-printed sample books which were printed on the sides of the bags. A sample tag was placed inside the bag. Significant intercepts are summarized in Table 9-3. A total of 33 trenches were excavated, mapped and sampled at the Twiga Target. A total of 39 trenches were dug at Tembo, each with differing lengths ranging from only a few metres to a maximum of 68 m and at least 10 trenches being between 50 m to 65 m long. The trenches have been sampled comprehensively as this is the first area from which detailed data could be obtained. The trenching can be divided into two sections, the lower slopes (Trenches 1 ­ 18) and the upper slopes (Trenches 19 to 39). A total of fourteen trenches have been excavated at Tumbili, as listed in Table 9-2. Trenches TU01 and TU08 were excavated in the southern (lower) part of the area in early 2011; the other trenches were excavated and sampled during the second and third quarters of 2011. The full length of all trenches were not sampled; a summary of the results for all of the sampled intervals from trenches TU01, TU08, WTRT001, WTRT002, WTRT003 and WTRT004 are presented in Table 9-4. Trenches WTRT005, WTRT007 and WTRT008 were not sampled. Results for samples taken from trenches WTRT006, WTRT009 and WTRT012 were received after the effective date of this report.4 Results for samples taken from trenches WTRT010 and WTRT011 are still pending. On the basis of the current geological knowledge of the Tumbili target, the lengths of the sampled intervals presented in Table 9-4 are considered to be close to the true widths of the mineralisation; however, this may change as further information on the mineralised structures is obtained. The carbonatite breccia contains fragments from 1 cm to 4 cm in diameter however, it also hosts numerous, medium (+10 cm) to large sized, (+50 cm) rounded carbonatite clasts highly mineralised with bastnaesite. The results obtained from the trench samples indicated the presence of mineralisation of potential economic interest and this has since been followed up by drilling. No trenching was undertaken at Chui. After completion of the mapping, a set of 20 panel samples was taken over the dykes over a square metre surface area to assess an average grade

4

These results have been inspected by AMEC and are unlikely to result in any major change to the interpretations or conclusions presented here.

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from a large number of the dykes. The results returned range from 1.62% to 5.52% TREO; the thicknesses of the mineralised features that these represent is not known at this early stage of exploration. These results tie in closely with the regional grab samples. It may be concluded from this preliminary assessment that these samples are fairly representative of the grade that can be expected at this site.

Figure 9-3: a

Trench at Tumbili (a) and Sample Channel at Tembo (b) B

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Figure 9-4:

Trench Locations at Twiga

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Figure 9-5:

Trench Locations at Tembo

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Figure 9-6:

Trench and drillhole Locations at Tumbili

Map prepared by AMEC, October 2011. Grid shown is based on UTM Zone 37, Datum Arc1960, Clarke 1880 Ellipsoid. Trenches are indicated by the prefixes TU and WTRT; drillholes have the prefix TUM.

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Table 9-1:

Type Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench BHID CC1 CC2 CC3 CC4 CC5 CC6 CC7 CC8 CC9 CT10A CT10B CT10C CT11-12 CT11B CT11C CT11F CT12A CT12B CT13A CT14-15 CT14A CT15-16 CT17A CT18A CT18B CT5A CT7A CT7B CT8A CT8B CT9A CT9B CT9C CT9D TR1 TR10 TR11 TR12 Target Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Tembo Tembo Tembo Tembo

Locations of Twiga and Tembo trenches

UTM East 343601.22 343587.18 343567.71 343551.47 343519.03 343523.64 343524.71 343575.42 343537.64 343621.32 343680.21 343614.31 343634.76 343645.76 343563.27 343531.74 343603.33 343541.01 343613.44 343569.64 343565.09 343542.20 343554.75 343531.88 343565.24 343699.89 343653.45 343683.45 343705.92 343663.96 343652.34 343557.89 343639.09 343693.51 342930.24 342929.90 342961.00 342976.41 UTM North 9180529.89 9180519.89 9180502.62 9180489.81 9180488.86 9180459.41 9180429.59 9180568.02 9180553.89 9180627.51 9180721.73 9180617.66 9180734.31 9180719.79 9180566.86 9180508.17 9180641.23 9180548.67 9180762.72 9180756.03 9180719.55 9180742.31 9180853.07 9180856.73 9180922.27 9180508.19 9180541.81 9180593.14 9180665.79 9180605.62 9180629.53 9180481.49 9180611.46 9180701.44 9180949.99 9180710.05 9180708.31 9180688.44 Elevation 203.00 203.69 202.11 200.87 206.28 201.98 193.45 210.62 216.96 219.25 233.74 218.10 244.80 239.04 213.37 207.45 227.71 213.98 262.31 276.97 272.15 284.27 303.43 311.62 308.51 187.11 197.51 202.31 214.98 211.67 214.58 200.30 211.88 225.88 429.55 338.46 331.57 320.85 Total Length 19.60 16.50 16.31 14.21 37.80 22.64 29.00 5.73 7.15 16.55 25.66 3.53 5.83 53.97 11.40 19.86 17.87 24.35 58.52 14.39 24.39 29.05 20.73 23.64 12.27 25.80 57.00 111.50 29.80 82.39 45.45 143.50 13.25 16.42 25.00 63.00 29.00 31.00 Azimuth 144.00 150.00 158.00 160.00 138.00 134.00 134.00 328.00 285.00 30.00 30.00 30.00 36.00 26.00 30.00 30.00 45.00 237.00 25.00 30.00 26.00 30.00 25.00 27.00 30.00 34.00 32.00 31.00 33.00 32.00 39.00 26.00 29.00 30.00 120.00 50.00 50.00 50.00 Inclination -9.26 8.72 -12.44 17.25 -8.69 9.00 -16.18 9.29 13.73 -0.46 -2.20 -13.41 26.03 -3.30 -3.39 -4.09 6.07 3.30 -0.72 0.38 -0.58 2.91 2.25 -8.60 -5.71 16.11 4.83 3.87 -10.14 -7.35 12.55 4.54 12.91 2.31 10.35 8.23 5.92 3.99

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Type Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench Trench

BHID TR13 TR14 TR15 TR16 TR17 TR18 TR19 TR2 TR20 TR21 TR22 TR23 TR24 TR25 TR26 TR27 TR28 TR29 TR3 TR30 TR30B TR31 TR32 TR33 TR34 TR35 TR36 TR37 TR38 TR39 TR4 TR40 TR41 TR5 TR6 TR7 TR8 TR9 WR1

Target Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Tembo Twiga

UTM East 342994.83 342962.15 342932.02 342929.57 342939.74 342943.58 342837.15 342926.89 342805.08 342818.15 342791.67 342805.39 342779.41 342748.48 342787.34 342770.99 342755.59 342753.74 342900.20 342752.98 342742.96 342770.53 342791.76 342816.31 342830.32 342849.49 342869.59 342801.19 342800.95 342822.24 342900.49 342851.00 342881.44 342928.33 342905.33 342924.65 342917.10 342930.17 343480.18

UTM North 9180677.10 9180655.53 9180644.60 9180671.14 9180690.58 9180698.57 9180932.86 9180924.59 9180953.72 9180975.79 9180974.94 9180997.87 9180955.27 9180948.64 9180936.51 9180912.44 9180907.06 9180896.91 9180870.59 9180876.21 9180877.61 9180880.45 9180879.30 9180880.64 9180856.09 9180854.69 9180851.13 9180815.16 9180790.77 9180780.38 9180837.52 9180953.13 9180967.48 9180829.91 9180776.30 9180796.12 9180760.71 9180740.11 9180487.03

Elevation 312.12 319.45 318.15 324.91 329.48 332.77 429.83 420.90 428.32 441.15 441.19 445.60 426.67 420.03 419.33 415.34 409.28 406.27 406.99 405.21 403.38 406.11 409.55 408.55 402.13 400.02 395.16 389.31 377.47 367.80 393.76 434.57 434.58 389.89 367.52 377.14 359.28 348.13 210.76

Total Length 31.60 14.80 10.20 36.00 6.00 6.00 21.00 25.00 28.00 24.00 21.60 6.00 6.50 5.80 20.00 8.00 25.10 10.00 56.00 11.00 5.00 8.00 19.10 23.50 8.00 40.00 5.80 3.75 3.50 6.00 50.00 13.38 12.78 55.00 51.00 48.50 65.00 63.00 7.22

Azimuth 50.00 120.00 120.00 30.00 322.00 322.00 0.00 120.00 160.00 174.00 156.00 220.00 154.00 166.00 166.00 144.00 176.00 228.00 50.00 68.00 205.00 15.00 50.00 200.00 17.00 202.00 347.00 90.00 64.00 200.00 50.00 320.00 320.00 50.00 20.00 50.00 50.00 50.00 60.00

Inclination 2.92 17.21 -10.46 3.56 23.76 2.97 21.23 2.38 -2.27 -9.67 -36.91 57.82 -4.77 53.12 -4.77 -10.52 -13.35 -19.14 6.09 -9.56 -44.96 -18.02 14.94 -13.22 9.06 -28.61 55.61 -14.34 4.67 -49.91 10.16 22.30 3.56 10.45 23.80 2.51 7.75 9.41 2.25

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N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

Type Trench Trench Trench Trench Trench Trench

BHID WR2 WR3 WR4 WR5 WR6 WR7

Target Twiga Twiga Twiga Twiga Twiga Twiga

UTM East 343481.00 343465.00 343495.00 343455.00 343474.00 343474.00

UTM North 9180467.00 9180508.00 9180452.00 9180525.00 9180499.00 9180525.00

Elevation 217.00 230.00 224.00 239.00 215.00 235.00

Total Length 9.15 8.90 8.25 12.00 5.55 4.25

Azimuth 56.00 60.00 70.00 34.00 80.00 114.00

Inclination 0.00 0.00 0.00 0.00 10.38 0.00

Table 9-2: Trench ID Type

Locations of Tumbili Trenches UTM East UTM North Elevation (DTM) Elevation (GPS) Total Length Azimuth Dip

TU01 TU08 WTRT001 WTRT002 WTRT003 WTRT004 WTRT005 WTRT006 WTRT007 WTRT008 WTRT009 WTRT010 WTRT011 WTRT012 Notes:

Trench 341547 9180082 226 n.a. 50.0 360 10 Trench 341882.8 9180275 257 n.a. 110.0 180 30 Trench 341856.7 9180716 446 512 114.8 180 10 Trench 341828 9180711 456 466 120.4 180 10 Trench 341744.3 9180642 452 466 126.1 162 9 Trench 341643.5 9180537 445 468 106.8 190 8 Trench 342292 9180283 217 n.a. 50.0 135 15 Trench 341902 9180077 198 207 115.6 138 9 Trench 341832 9180031 193 n.a. 50.0 135 10 Trench 341765 9179990 186 n.a. 50.0 135 10 Trench 341562 9180423 425 440 38.0 180 0 Trench 341463 9180319 384 419 18.0 160 20 Trench 341610 9180460 427 469 27.0 160 0 Trench 341511 9180364 409 418 37.0 160 10 1. Coordinates are based on data from handheld GPS receivers. 2. Elevation (DTM) and Dip values have been revised using the DTM for the project area.

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N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

Table 9-3:

Trench

Summary of Significant Results from the Twiga and Tembo trenches

From To Interval (m) True Width (m) LREE55 (%) La (%) Ce (%) Pr (%) Nd (%) Sm (%) Dip (degrees) UTM East UTM North Elev.

CC1 CC1 CC2 CC3 CC4 CC5 CC6 CC7 CC7 CC9 CT10A CT10B CT11B CT11F CT13A CT13A CT13A CT14-15 CT14A CT15-16 CT18A CT7A CT7A

55

4.1 14.8 2.15 4.8 0 18.3 5.4 7.5 18 3 4 22.9 6.6 6 2 10.58 49.2 5.8 17.5 25.5 7.2 8.75 26.1

11.1 18.8 16.15 13.8 11.4 36 9.1 13 29 6 12.6 25.3 9 9 4.58 18.2 54.9 10 22.3 27 8.2 22.45 31.95

7.0 4.0 14.0 9.0 11.4 17.7 3.7 5.5 11.0 3.0 8.6 2.4 2.4 3.0 2.6 7.6 5.7 4.2 4.8 1.5 1.0 13.7 5.9

6.9 4.0 13.8 8.8 10.9 17.5 3.7 5.3 10.6 2.9 8.6 2.4 2.4 3.0 2.6 7.6 5.7 4.2 4.8 1.5 1.0 13.7 5.8

12.2 5.1 11.3 6.4 5.9 10.5 13.5 7.8 5.2 3.0 4.7 5.1 2.6 6.4 4.9 2.9 7.3 5.9 2.3 5.1 7.1 6.5 1.4

4.92 2.15 4.59 2.52 2.31 4.12 4.95 2.98 2.00 1.04 1.81 2.05 1.00 2.31 1.96 1.16 2.76 2.26 0.89 1.94 2.27 2.64 0.56

5.93 2.35 5.38 3.07 2.85 5.15 6.67 3.80 2.54 1.47 2.24 2.40 1.27 3.24 2.31 1.37 3.60 2.85 1.10 2.45 3.61 3.13 0.69

0.37 0.18 0.35 0.23 0.22 0.32 0.44 0.29 0.19 0.13 0.17 0.17 0.10 0.21 0.18 0.12 0.27 0.22 0.08 0.20 0.30 0.21 0.05

0.95 0.41 0.88 0.52 0.51 0.91 1.32 0.72 0.46 0.32 0.43 0.41 0.24 0.62 0.43 0.22 0.64 0.52 0.21 0.46 0.81 0.50 0.12

0.05 0.03 0.05 0.03 0.03 0.05 0.08 0.05 0.03 0.02 0.03 0.02 0.02 0.04 0.03 0.01 0.05 0.03 0.02 0.03 0.06 0.03 0.01

9.3 9.3 8.7 12.4 17.3 8.7 9 16.2 16.2 13.7 0.5 2.2 3.3 4.1 0.7 0.7 0.7 0.4 0.6 2.9 8.6 4.8 4.8

343606 343611 343592 343571 343553 343537 343529 343532 343541 343533 343625 343692 343649 343535 343615 343620 343635 343574 343574 343555 343535 343662 343669

9180524 9180516 9180512 9180494 9180485 9180469 9180454 9180423 9180414 9180555 9180635 9180743 9180727 9180515 9180766 9180776 9180810 9180763 9180737 9180765 9180864 9180555 9180566

202 200 205 200 203 202 203 191 187 218 219 233 239 207 262 262 262 277 272 286 310 199 200

LREE5 = La + Ce + Pr + Nd + Sm

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N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

Trench

From

To

Interval (m)

True Width (m)

LREE55 (%)

La (%)

Ce (%)

Pr (%)

Nd (%)

Sm (%)

Dip (degrees)

UTM East

UTM North

Elev.

CT7A CT7B CT8A including CT8B CT8B CT8B CT9A CT9A CT9B CT9B CT9C TR1 TR10 TR10 TR11 TR11 TR12 TR12 TR12 TR13 TR14 TR15 TR16 TR19 TR19 TR20

19 October 2011

41.15 81.3 3.6 9.8 16.7 48.5 75 1.6 15.05 45.5 101.6 2.6 17 45 53 14.5 25 0.7 7.3 24 20.5 7.7 2 34.8 11 16.7 12.8

51.8 93.2 29.8 13.1 34.5 50 77.5 11.2 20.1 47.5 120.55 8 20 48 54.7 15.6 28 5 9.5 27 30 10 10.2 35.6 14 18.5 14

10.7 11.9 26.2 3.3 17.8 1.5 2.5 9.6 5.1 2.0 19.0 5.4 3.0 3.0 1.7 1.1 3.0 4.3 2.2 3.0 9.5 2.3 8.2 0.8 3.0 1.8 1.2

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10.6 11.9 25.8 3.3 17.5 1.5 2.5 9.4 4.9 2.0 18.9 5.3 3.0 3.0 1.7 1.1 3.0 4.3 2.2 3.0 9.5 2.2 8.2 0.8 2.8 1.7 1.2

8.7 3.6 4.1 8.1 7.9 14.3 4.3 3.5 4.4 11.1 6.9 8.1 4.0 3.2 2.9 0.8 4.4 4.8 3.1 8.0 2.3 4.2 3.8 1.0 6.0 4.9 5.3

3.50 1.41 1.61 3.22 3.21 5.47 1.81 1.37 1.71 4.60 2.84 3.09 1.32 1.07 0.90 0.21 1.45 1.64 1.01 2.53 0.70 1.30 1.14 0.28 2.32 1.84 2.03

4.18 1.73 1.93 3.81 3.80 6.98 1.99 1.67 2.10 5.30 3.19 3.98 2.01 1.61 1.51 0.40 2.27 2.42 1.53 4.07 1.14 2.16 1.92 0.51 2.92 2.45 2.59

0.25 0.12 0.16 0.29 0.23 0.50 0.15 0.13 0.16 0.31 0.24 0.24 0.17 0.14 0.14 0.04 0.20 0.29 0.13 0.37 0.11 0.20 0.18 0.05 0.21 0.19 0.20

0.68 0.30 0.37 0.71 0.59 1.24 0.37 0.33 0.41 0.82 0.55 0.73 0.49 0.35 0.36 0.12 0.48 0.47 0.36 0.92 0.29 0.51 0.50 0.15 0.51 0.45 0.45

0.04 0.02 0.02 0.04 0.03 0.07 0.02 0.02 0.02 0.05 0.03 0.04 0.04 0.02 0.03 0.01 0.03 0.03 0.03 0.07 0.02 0.04 0.04 0.01 0.03 0.03 0.03

4.8 3.9 10.1 10.1 10.1 7.4 7.4 12.6 12.6 4.5 4.5 12.9 10 8 8 6 6 4 4 4 3 17 4 3.6 21 21 10.5

343678 343728 343715 343712 343677 343690 343704 343656 343663 343578 343606 343642 342946 342965 342971 342972 342981 342979 342983 342996 343014 342969 342937 342947 342837 342837 342810

9180581 9180668 9180680 9180675 9180627 9180647 9180670 9180634 9180643 9180523 9180581 9180616 9180941 9180740 9180744 9180718 9180725 9180690 9180694 9180705 9180693 9180651 9180642 9180702 9180945 9180949 9180941

201 208 212 213 208 205 202 216 218 204 209 213 433 345 346 333 334 321 321 323 313 322 317 327 434 436 428

N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

Trench

From

To

Interval (m)

True Width (m)

LREE55 (%)

La (%)

Ce (%)

Pr (%)

Nd (%)

Sm (%)

Dip (degrees)

UTM East

UTM North

Elev.

TR20 TR21 TR22 TR23 TR24 TR26 TR27 TR28 TR28 TR29 TR3 TR3 TR3 TR30 TR30B TR31 TR32 TR34 TR35 TR36 TR38 TR4 TR6 TR6 TR7 TR7 TR7

19 October 2011

17.8 1 10 0 0.4 13.9 2.5 5 16.8 0 2 18 36 3 0 2.85 0.7 3.85 3 0.8 0.7 16 1.8 28.5 2.25 9 14

22 4 12.5 1 6.8 16.7 5.7 9.3 22 7.15 3 24 38 6.5 5 4.3 6 6 22.5 5.8 2.3 21 3.8 30 4 12.5 15.5

4.2 3.0 2.5 1.0 6.4 2.8 3.2 4.3 5.2 7.2 1.0 6.0 2.0 3.5 5.0 1.5 5.3 2.2 19.5 5.0 1.6 5.0 2.0 1.5 1.8 3.5 1.5

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4.2 3.0 2.0 0.6 6.4 2.8 3.2 4.2 5.1 6.8 1.0 6.0 2.0 3.5 5.0 1.4 5.1 2.1 17.1 2.8 1.6 4.9 1.8 1.4 1.8 3.5 1.5

4.8 5.8 6.9 2.0 7.3 7.5 4.7 2.7 3.7 5.3 5.3 3.3 8.9 5.0 4.4 10.3 1.4 4.3 2.7 7.2 1.1 6.8 3.1 4.6 4.2 8.5 3.7

1.90 2.22 2.63 0.78 2.89 3.01 1.86 1.01 1.37 2.00 1.70 0.95 3.57 1.90 1.68 4.03 0.46 1.29 0.92 2.61 0.37 2.22 1.06 1.50 1.29 3.11 1.32

2.28 2.81 3.41 0.99 3.53 3.56 2.27 1.28 1.80 2.58 2.70 1.85 4.28 2.37 2.09 4.95 0.71 2.24 1.34 3.57 0.55 3.47 1.57 2.28 2.15 4.27 1.83

0.16 0.21 0.25 0.07 0.26 0.26 0.17 0.10 0.14 0.21 0.23 0.15 0.32 0.18 0.17 0.37 0.07 0.20 0.11 0.28 0.05 0.30 0.13 0.20 0.20 0.34 0.15

0.39 0.50 0.61 0.18 0.59 0.61 0.40 0.25 0.36 0.53 0.60 0.37 0.73 0.48 0.42 0.87 0.19 0.57 0.31 0.74 0.14 0.74 0.34 0.55 0.51 0.76 0.36

0.02 0.03 0.04 0.01 0.03 0.04 0.02 0.02 0.02 0.03 0.04 0.03 0.05 0.03 0.03 0.05 0.02 0.05 0.02 0.05 0.01 0.06 0.02 0.05 0.04 0.04 0.02

2.2 2.2 37 56 5 5 10.5 13.4 13.4 19.1 6.1 6.1 6.1 6.1 6.1 18 14.9 9 28.6 55.6 9 10.2 23.8 23.8 2.5 2.5 2.5

342812 342818 342795 342805 342781 342791 342773 342756 342757 342751 342902 342916 342928 342757 342742 342771 342794 342832 342845 342869 342802 342914 342906 342914 342927 342933 342936

9180935 9180973 9180967 9180998 9180952 9180922 9180909 9180900 9180888 9180895 9180872 9180884 9180894 9180878 9180876 9180884 9180881 9180861 9180844 9180853 9180791 9180849 9180779 9180801 9180798 9180803 9180806

428 441 434 446 426 418 415 408 405 405 407 409 411 404 402 405 410 403 394 398 378 397 369 379 377 378 378

N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

Trench

From

To

Interval (m)

True Width (m)

LREE55 (%)

La (%)

Ce (%)

Pr (%)

Nd (%)

Sm (%)

Dip (degrees)

UTM East

UTM North

Elev.

TR7 TR9 TR9 TR9 WR1

38.5 24.5 29 39.65 1.8

40 27 33 41 6.8

1.5 2.5 4.0 1.4 5.0

1.5 2.5 4.0 1.3 5.0

5.1 3.0 3.7 6.8 9.7

1.55 0.94 1.12 2.19 3.65

2.59 1.54 1.85 3.42 4.73

0.24 0.14 0.17 0.31 0.34

0.62 0.38 0.47 0.83 0.91

0.06 0.03 0.04 0.06 0.07

2.5 9.4 9.4 9.4 2.3

342955 342950 342954 342961 343484

9180821 9180756 9180760 9180766 9180489

379 352 353 355 211

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N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

Table 9-4:

Trench

Summary of Sample Results from the Tumbili trenches (assay results as received up to end of July 2011)

From To Interval (m) LREE5 (%) La (%) Ce (%) Pr (%) Nd (%) Sm (%) UTM East UTM North Elev.

TU01 TU01 TU01 TU08 WTRT001 WTRT001 WTRT001 WTRT001 WTRT001 WTRT002 WTRT002 WTRT002 WTRT002 WTRT003 WTRT003 WTRT004 Notes:

0 12 12.0 2.5 0.85 1.25 0.11 0.29 0.02 341547 9180088 227 39 48 9.0 2.8 1.09 1.32 0.10 0.23 0.02 341547 9180125 234 48 51 3.0 0.4 0.14 0.19 0.02 0.05 0.01 341547 9180131 235 17.4 21.9 4.5 1.3 0.44 0.60 0.06 0.15 0.02 341883 9180258 247 0 7.4 7.4 0.3 0.07 0.13 0.01 0.04 0.00 341852 9180709 445 7.4 33.1 25.7 1.3 0.41 0.65 0.06 0.18 0.01 341852 9180693 442 33.1 44.3 11.2 0.5 0.17 0.26 0.02 0.06 0.00 341852 9180675 439 44.3 84.1 39.8 2.8 0.99 1.38 0.11 0.30 0.02 341852 9180650 435 84.1 115.08 31.0 0.3 0.10 0.17 0.02 0.05 0.00 341852 9180615 429 0 29.6 29.6 0.5 0.15 0.22 0.02 0.06 0.01 341826 9180690 453 29.6 67 37.4 1.8 0.63 0.89 0.08 0.21 0.01 341826 9180657 447 67 85 18.0 0.8 0.28 0.41 0.04 0.11 0.01 341826 9180630 442 85 121.9 36.9 0.4 0.12 0.20 0.02 0.07 0.01 341826 9180603 438 2 16 14.0 1.3 0.48 0.62 0.05 0.15 0.01 341748 9180632 450 37.5 126 88.5 0.7 0.23 0.37 0.04 0.10 0.01 341770 9180563 438 0 105.7 105.7 0.6 0.19 0.30 0.03 0.09 0.01 341636 9180487 438 1. Interval lengths are considered to be equal to or slightly less than the widths of the mineralised structures. Trenches have been planned to intersect mineralised structures at a steep angle, but as yet insufficient structural information is available to confirm the orientation of the mineralised structures. 2. Elevations are based on intersecting drillhole collars with digital terrain model derived from satellite data. Eastings and Northings are based on handheld GPS measurements. 3. Grades shown are based on length-weighted intervals for all of the intervals sampled.

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N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

9.4

Prospecting Licence PL4834/2077

Most of the work described above has been carried out on Prospecting Licence PL3379/2005. This is bounded immediately to the south by the Nyaruntanga Prospecting Licence (PL4384/2007) as shown in Figure 4-2. The access road to the western parts of Wigu Hill crosses over PL 4834/2007 and some of the exploration work described above overlaps onto the northern portion of PL4384/2007 on the southern flanks of Wigu Hill, as illustrated in Figure 9-1 and Figure 9-2. This includes work on parts of the Lower Tumbili target where one of the trenches (WTRT008) is located on PL4384/2007. Some additional initial reconnaissance work has been carried out on other parts of PL4384/2007, including radiometric traverses across the basin sediments in the flat terrain to the south of Wigu Hill and into the hills on the western parts of the licence. Results from these were generally very low apart from some slightly higher values adjacent to outcrops in a meander on the Mgeta River and within the foothills in the western part of the licence. Reconnaissance follow up within the foothills located a narrow band of carbonatite breccias intruding the Uluguru gneisses. Intense silicification of the gneisses was noted locally, accompanied in places by the presence of pyrite. As yet, no rare earth mineralisation has yet been defined within PL4384/2007. It is planned to carry out more detailed follow up exploration in the western foothills.

9.5

Exploration Comment

AMEC is of the opinion that exploration to date on the Wigu Hill property has been appropriate. That work has identified a number of high-quality targets for additional exploration. Trench data indicate that significant volumes of REE-bearing mineralization occur at Wigu Hill. Grades are similar to the grades of other REE-bearing carbonatites of economic interest, as presented in Table 8-1. Locations of the trenches and the type of sampling are consistent with industry-standard practices. AMEC believes that the trench data are adequate to be used to support mineral resource estimation. On the basis of the geological continuity seen in surface mapping and the drilling done to date, AMEC recommends that grades obtained from trench samples should not be extrapolated more than 50 m down-dip during resource estimation.

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N.I. 43-101 TECHNICAL REPORT WIGU HILL RARE EARTH ELEMENT PROJECT, TANZANIA

10.0

10.1

DRILLING

General

Based on favourable indications of mineralization from trenches and grab samples, a single core drill was mobilised to Wigu Hill in late 2010. Drilling continued through the dry season and was suspended at the beginning of the wet season for safety and logistical reasons.

10.2

Exploration Drilling by Montero

A total of 21 core holes (2,223.75 m) were completed at Wigu Hill in between late 2010 and May 2011. Drilling was done by a contractor Tandrill Limited, based in Mwanza, Tanzania (a subsidiary of Geosearch Limited of South Africa). Drilling was accomplished by a Boyles 56 track-mounted core drilling machines utilizing primarily HQ (63.5 mm) core but NQ (47.6 mm) core was utilized when problems were encountered with HQ core. A small amount of PQ3 (83.1 mm) and HQ3 (61.1 mm) core was drilled. Table 10-1 summarizes the core drilled up to early May 2011 at Wigu Hill and Table 10-2 lists all drill holes from Twiga and Tembo with collar locations and orientations. Figure 10-1 shows the locations of the drill holes that have been completed at Twiga and Tembo. Table 10-1: Area Twiga Tembo Total Drilling Summary (up to early May 2011) Number of Holes 15 6 21 Total Metres 1,648.80 574.95 2,223.75

The location of six drillholes that have since been completed at Tumbili (May-July 2011) are shown in Figure 9-6; their collar locations and orientations are provided in Table 10-3. Infill drilling at Twiga started in August 2011 and was in progress at the effective date of this report6. AMEC visited the drill to observe operations in December 2011. The drill was operating normally and AMEC observed two pulls of core. The core was handled properly and well cleaned prior to boxing. Run blocks were properly marked. AMEC is of the opinion that the core will be adequate to support resource estimation. Figure 10-2 is a digital photograph of a well-used copy of Montero's standard operating procedures for core drilling. AMEC found that the procedures are adequate for this type of project and that the procedures were followed closely during drilling operations.

Geological logs of the first two infill holes, which have been inspected by AMEC, are consistent with the results from the earlier drilling programme presented in this report. At the date of this report, assay results from the Twiga infill holes were still awaited.

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Table 10-2:

BHID TE001 TE002 TE003 TE004 TE005 TE005R TW001 TW002 TW003 TW003R TW004 TW005 TW006 TW007 TW008 TW009 TW010 TW011 TW012 TW013 TW014 Target Tembo Tembo Tembo Tembo Tembo Tembo Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga Twiga

Drill Hole Locations at Twiga and Tembo

UTM East 342830.40 342854.38 342841.95 342811.41 342811.41 342811.41 343551.68 343576.56 343623.12 343622.08 343509.15 343533.69 343532.30 343708.05 343680.92 343743.16 343722.70 343653.79 343650.97 343686.56 343608.14 UTM North 9180961.80 9181004.28 9181047.56 9181006.26 9180959.15 9180959.15 9180523.67 9180557.76 9180595.53 9180595.40 9180569.46 9180601.16 9180602.60 9180628.10 9180652.36 9180685.47 9180714.24 9180677.16 9180784.50 9180734.26 9180663.09 Elevation 435.48 444.58 453.35 441.99 426.38 426.38 207.64 208.24 211.38 211.38 226.39 228.71 228.99 209.26 218.83 210.78 220.30 227.29 253.55 231.44 232.11 Total Depth 89.20 72.80 124.75 133.60 24.60 130.00 29.10 41.20 43.04 66.25 120.00 100.00 142.00 90.67 89.02 155.25 172.65 95.75 146.09 201.50 156.28 Azimuth 150.00 150.00 150.00 150.00 150.00 150.00 140.00 145.00 170.00 170.00 140.00 140.00 140.00 210.00 210.00 220.00 210.00 198.00 210.00 210.00 170.00 Inclination -50.00 -50.00 -50.00 -50.00 -50.00 -55.00 -50.00 -50.00 -50.00 -50.00 -50.00 -50.00 -90.00 -50.00 -50.00 -50.00 -50.00 -50.00 -50.00 -50.00 -50.00

Table 10-3: Hole ID Type

Drill Hole Locations at Tumbili UTM East UTM North Elevation (DTM) Elevation (GPS) Total Length Azimuth Dip

TUM001 TUM002 TUM003 TUM004 TUM005 TUM006 Notes:

DDH 341860 9180360 311 312 200.4 150 DDH 342028 9180469 312 309 253.8 150 DDH 342152 9180593 300 305 165.2 150 DDH 341670 9180540 441 405 334.1 150 DDH 341460 9180320 384 451 298.3 150 DDH 341890 9180720 429 448 273.3 150 1. Coordinates are based on data from handheld GPS receivers. 2. Elevation (DTM) and Dip values have been revised using the DTM for the project area.

50 50 50 50 50 50

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Figure 10-1:

Drill Hole Location Map for the Twiga and Tembo prospects

Map prepared AMEC.

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Figure 10-2:

Drilling Standard Operating Procedures

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10.3

Drilling Data and Results

Drilling of the Twiga and Tembo carbonatite dykes zones was designed to test the continuity of the bastnaesite-rich carbonatite dykes down to a vertical depth of approximately 100 m with a view to supporting a first-time mineral resource estimate. Table 10-4 summarizes the significant drill intercepts encountered in the drillholes from Twiga and Tembo. Average grades for the sampled intervals from the first three holes drilled at Tumbili are presented in Table 10-57.

7

Assay results for holes TUM004 and TUM005 were received at the end of August and were still being assessed at the date of this report; initial results inspected by AMEC appear to be consistent with those from the first three holes. Assay results from hole TUM006 were still awaited at the end of September

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Table 10-4:

Hole

Summary of Significant Intercepts from Tembo and Twiga drill holes

From To Interval (m) 10.4 12.4 2.3 19.3 14.8 5.2 7.5 13.9 13.9 21.5 9.1 3.2 15.3 2.7 33.5 2.5 3.9 1.4 48.0 2.4 3.1 4.1 1.4 2.9 17.0 True Width (m) 10.3 12.2 2.3 19.1 14.7 5.1 7.4 13.7 13.7 21.2 8.9 3.1 14.3 2.6 33.3 2.5 3.9 1.3 47.8 2.4 3.0 4.0 1.4 2.6 17.0 LREE58 (%) 1.2 2.7 3.5 2.3 1.7 1.9 2.3 2.3 2.3 2.3 5.2 8.3 3.0 9.1 3.1 8.7 5.5 14.5 3.3 7.2 10.2 10.1 14.2 3.6 4.2 La (%) TEMBO Ce (%) Pr (%) Nd (%) Sm (%) UTM East UTM North 9180993 9180980 9181013 9180984 9180994 9180969 9180962 9180953 9180953 9180930 9180517 9180516 9180545 9180543 9180579 9180589 9180577 9180574 9180575 9180589 9180583 9180578 9180574 9180534 9180563 Elev.

TE002 TE002 TE003 TE003 TE004 TE004 TE004 TE005 TE005R TE005R TW001 including TW002 including TW003 including including including TW003R including including including including TW004 TW005

15.71 39.7 55.61 95.05 14.7 63.4 73.05 4.45 4.45 44.6 9.85 14.2 16.28 26.8 8.64 8.64 26.75 33.55 8.35 8.35 18.54 25.9 33.2 73.6 70.68

26.08 52.05 57.95 114.36 29.5 68.55 80.55 18.3 18.3 66.05 18.93 17.4 31.54 29.54 42.09 11.13 30.68 34.9 56.31 10.77 21.6 29.95 34.6 76.51 87.71

0.42 1.01 1.06 0.84 0.61 0.7 0.89 0.85 0.81 0.86 TWIGA 2.47 3.96 1.19 3.68 1.22 3.52 2.14 6.06 1.33 2.91 4.22 4.12 5.84 1.28 1.71

0.61 1.28 1.73 1.09 0.81 0.91 1.08 1.08 1.11 1.08 2.07 3.37 1.45 4.32 1.45 4.12 2.63 6.83 1.57 3.4 4.74 4.74 6.68 1.79 1.96

0.05 0.1 0.17 0.09 0.07 0.08 0.09 0.09 0.09 0.09 0.18 0.28 0.11 0.31 0.11 0.31 0.2 0.5 0.12 0.26 0.35 0.37 0.5 0.15 0.15

0.15 0.28 0.52 0.25 0.19 0.2 0.26 0.27 0.25 0.24 0.44 0.69 0.27 0.75 0.26 0.73 0.51 1.1 0.3 0.64 0.85 0.87 1.14 0.39 0.37

0.009 0.017 0.052 0.017 0.017 0.017 0.017 0.017 0.017 0.017 0.026 0.034 0.017 0.034 0.017 0.043 0.034 0.052 0.017 0.034 0.043 0.043 0.052 0.026 0.017

342862 342871 342852 342861 342818 342831 342833 342815 342815 342823 343558 343558 343585 343587 343626 343624 343626 343627 343626 343623 343624 343625 343626 343542 343568

429 410 410 373 425 391 383 418 417 381 197 196 190 187 192 204 189 185 187 204 196 190 185 169 169

8

LREE5 = La + Ce + Pr + Nd + Sm

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Hole including TW006 TW006 TW007 including TW008 TW009 TW009 TW010 TW011 including TW012 TW013 TW014 including TW014 TW014 including TW014 TW014 including TW014 TW014 TW014 TW014 including TW014

From 71.56 115.05 123.85 9.55 9.55 50.5 87 113.1 83.16 19.28 76 105.57 none 10.7 17.7 24.4 24.4 24.4 63.73 64 65.5 67 82.4 85.7 92.06 92.06 137.2

To 76.83 119.2 128.25 74.78 13.24 56.37 90.85 115.84 84.77 88.06 77.35 108.34 22.07 22.07 40.1 29.4 29.4 81.55 73 67.4 69.2 93.86 87.2 93.86 93.86 150

Interval (m) 5.3 4.2 4.4 65.2 3.7 5.9 3.9 2.7 1.6 68.8 1.4 2.8 11.4 4.4 15.7 5.0 5.0 17.8 9.0 1.9 2.2 11.5 1.5 1.8 1.8 12.8

True Width (m) 5.2 2.9 3.1 64.6 3.7 5.8 3.8 2.7 1.6 5.3 1.0 2.5 11.3 4.3 12.6 3.0 4.0 17.6 7.2 1.9 2.2 9.2 1.5 1.8 1.4 10.2

LREE58 (%) 7.4 2.9 3.7 1.7 3.0 1.7 1.7 1.9 2.0 1.8 9.4 0.9 3.4 5.6 2.5 4.7 5.5 2.1 1.6 6.5 4.3 2.7 4.8 8.4 9.8 3.6

La (%) 3.01 1.14 1.46 0.67 1.2 0.64 0.49 0.61 0.61 0.7 3.73 0.34 1.25 2.14 0.98 2.2 2.18 0.8 0.58 2.71 2.06 1.09 2.24 3.9 4.07 1.38

Ce (%) 3.44 1.37 1.74 0.8 1.38 0.8 0.83 0.94 0.96 0.85 4.44 0.44 1.65 2.73 1.18 1.87 2.58 0.99 0.75 3.09 1.61 1.26 1.92 3.47 4.58 1.75

Pr (%) 0.26 0.1 0.13 0.06 0.1 0.06 0.09 0.09 0.09 0.07 0.34 0.03 0.13 0.21 0.09 0.18 0.21 0.08 0.06 0.21 0.16 0.09 0.17 0.29 0.33 0.14

Nd (%) 0.63 0.25 0.31 0.15 0.27 0.16 0.26 0.25 0.27 0.16 0.82 0.09 0.33 0.53 0.25 0.46 0.54 0.2 0.16 0.52 0.44 0.23 0.41 0.66 0.77 0.35

Sm (%) 0.034 0.017 0.026 0.009 0.017 0.009 0.026 0.017 0.026 0.009 0.043 0.009 0.017 0.034 0.017 0.026 0.034 0.009 0.017 0.017 0.026 0.017 0.026 0.034 0.043 0.017

UTM East 343566 343533 343533 343695 343704 343664 343705 343693 343696 343642 343637 343613 343610 343611 343612 343611 343611 343618 343618 343617 343618 343621 343621 343622 343622 343632

UTM North 9180565 9180601 9180601 9180604 9180622 9180622 9180642 9180630 9180667 9180644 9180630 9180724 9180653 9180651 9180643 9180646 9180646 9180618 9180620 9180621 9180620 9180608 9180609 9180605 9180605 9180574

Elev. 172 112 103 177 201 178 143 124 156 186 169 174 220 217 207 211 211 176 180 181 180 165 166 161 161 122

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Table 10-5:

Trench TUM001 TUM001 TUM001 TUM001 TUM001 TUM002 TUM002 TUM002 TUM002 TUM002 TUM002 TUM002 TUM002 TUM002 TUM002 TUM002 TUM002 TUM003 TUM003 TUM003 TUM003 Notes:

Results for sampled intervals from Tumbili drill holes (as received up to end July 2011)

From 0 4 96 106 120 0 8 61.5 62.6 89 104 111 114 124 128 178 215 0 8 139 To 4 96 106 120 200.4 8 61.5 62.6 89 104 111 114 124 128 178 215 253.8 8 139 144.1 Interval (m) 4.0 92.0 10.0 14.0 80.4 8.0 53.5 1.1 26.4 15.0 7.0 3.0 10.0 4.0 50.0 37.0 38.8 8.0 131.0 5.1 LREE5 (%) 1.3 0.3 0.9 0.5 0.9 1.1 0.3 2.3 0.5 0.8 0.4 2.2 0.4 1.9 0.4 0.9 0.3 0.1 0.2 1.2 La (%) 0.40 0.08 0.25 0.15 0.28 0.34 0.11 0.81 0.16 0.28 0.12 0.88 0.12 0.64 0.12 0.29 0.09 0.04 0.07 0.40 Ce (%) 0.63 0.14 0.45 0.25 0.43 0.53 0.16 1.13 0.23 0.39 0.19 1.05 0.18 0.90 0.17 0.41 0.14 0.06 0.11 0.61 Pr (%) 0.06 0.01 0.05 0.03 0.04 0.05 0.02 0.10 0.02 0.04 0.02 0.08 0.02 0.08 0.02 0.04 0.02 0.01 0.01 0.05 Nd (%) 0.21 0.05 0.15 0.08 0.12 0.15 0.05 0.27 0.07 0.11 0.06 0.21 0.06 0.23 0.05 0.12 0.05 0.02 0.04 0.16 Sm (%) 0.02 0.00 0.02 0.01 0.01 0.01 0.00 0.02 0.01 0.01 0.01 0.01 0.01 0.02 0.00 0.01 0.01 0.00 0.00 0.01 UTM East 341861 341878 341896 341899 341910 342029 342035 342040 342041 342042 342042 342042 342042 342042 342043 342048 342057 342154 342166 342178 UTM North 9180359 9180334 9180307 9180300 9180272 9180467 9180448 9180431 9180422 9180409 9180402 9180399 9180394 9180390 9180372 9180345 9180322 9180591 9180556 9180520 Elev. 309 273 233 224 187 308 285 264 254 238 229 226 221 215 195 162 133 297 242 189

144.1 165.2 21.1 0.3 0.08 0.13 0.01 0.04 0.00 342182 9180513 179 1. Interval lengths are considered to be equal to or slightly less than the widths of the mineralised structures. Drillholes have been planned to intersect mineralised structures at a steep angle, but as yet insufficient structural information is available to confirm the orientation of the mineralised structures. 2. Elevations are based on intersecting drillhole collars with digital terrain model derived from satellite data. Eastings and Northings are based on handheld GPS measurements. 3. Grades shown are based on length-weighted intervals for all of the intervals sampled.

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10.3.1

Twiga

A total of 15 drill holes were completed at Twiga. All but one of the holes were inclined at 50° to cut the steeply-dipping dykes. One hole (TW006) was drilled at -90º on a shallowly-dipping dyke. Drilling largely confirmed that the REE mineralization encountered on the surface continues at depth. The results obtained from the Twiga holes are summarized in Table 10-6; grades of significant intercepts are given in Table 10-4. At Twiga Southwest, continuity of the EW carbonatite dyke encountered in trenches CC1 (4m to 11m; 7 m @ 12% LREE5) and CC2 (2m to 16m; 14 m @ 11% LREE5) was confirmed by drill holes TW002 (16m to 32 m; 162 m @ 3% LREE5) and TW005 (71 m to 88 m 186 m @ 4% LREE5), but the dyke was not encountered in hole TW006 at its expected location. A second, parallel dyke was encountered deeper in TW005 and apparently continues on to TW006 (Figure 7-2). On a parallel cross-section 50 m to the southwest, TW001 (10 m to 19 m; 9 m @ 5% LREE5) encountered the EW dyke and TW004 (74 m to 77 m; 3 m @ 4% LREE5) may have encountered the same dyke, but if so, it has thinned significantly (Figure 10-3). Shallow mineralization in TW003R (8 m to 56 m; 48 m @ 3% LREE5) correlates well with mineralization identified in trench CT9B (102 m to 12 m; 19 m @ 7% LREE5) and deeper mineralization appears to correlate with a deep intercept in TW014 (Figure 10-4) suggesting that mineralisation continues at depth. Unfortunately, mineralization encountered in trenches CT8B and TC8A do not appear to continue at depth in TW011, TW010, or TW013. The reason for this lack of correlation is under investigation. Drilling largely confirmed that REE mineralisation extends at depth and that the grades and thicknesses at depth at Twiga are similar to those encountered on the surface. That said, there were significant numbers of dykes that were known from surface trenching that did not appear to correlate with dykes intercepted in the subsurface (the right hand, northern eastern end of the cross-section in Figure 10-4 is a very good example). The reasons for this apparent lack of correlation are not known and are being investigated.

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Table 10-6:

Twiga Target Drilling Statistics

BH No

Angle

Total Depth (m)

Dyke Intercepted (m)

Dyke Core recovery (%)

Overall Core recovery (%)

Twiga Southwest TW001 TW002 TW003R TW003 TW004 TW005 TW006 TW014 Total ­ Twiga SW Twiga Northeast TW007 TW008 TW009 TW010 TW011 TW012 TW013 Total ­Twiga NE Total -50° -50° -50° -50° -50° -50° -50° 90.67 89.02 155.25 172.65 95.75 146.09 201.50 950.93 1,648.80 16.06 10.7 14.47 23.05 13.88 4.67 5.56 88.39 195.02 80.67 98.32 96.27 92.89 96.76 88.44 93.17 92.27 92.41 85.60 93.49 97.77 93.78 92.04 96.70 95.23 94.20 93.26 -50° -50° -50° -50

o

29.10 41.20 43.04 66.25 120.00 100.00 142.00 156.28 697.87

5.9 10.64 12.77 18.14 5.47 9.02 12.13 32.56 106.63

98.48 96.62 96.16 92.56 85.19 96.90 97.94 86.67 92.53

97.39 86.04 93.42 93.79 90.97 91.44 97.96 87.08 91.98

-50° -50° -90° -50°

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Figure 10-3:

Typical Cross-Section at Twiga Southwest

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Figure 10-4:

Typical Twiga Northwest Cross-Section

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10.3.2

Tembo

A total of six holes were drilled at Tembo (574.95 m), after which the drilling was curtailed at the end of the dry season. Significant intercepts are summarized in Table 10-3 and locations of the holes are presented in Table 10-2. Drilling statistics for these holes are summarized in Table 10-7. Table 10-7: Tembo Target Drilling Statistics

Hole TE001 TE002 TE003 TE004 TE005 TE005R Totals

Angle (degrees) 50 50 50 50 50 50

Total Depth (m) 89.20 72.80 124.75 133.60 24.60 130.00 574.95

Dyke Intercepted (m)

14.80 7.59 11.00 11.15 4.35 19.8

Dyke Core Recovery (%) 95.69 96.12 94.69 92.43 75.52 92.30 92.30

Overall Core Recovery (%) 89.36 92.23 91.57 93.93 81.72 90.69 90.55

All six boreholes were drilled at an inclination of 50º to intersect the north north-easterly, steeply dipping carbonatite dykes. Depths of the holes ranged from 73 m to 134 m. Overall core recovery for the six boreholes was an acceptable 90.55% and for the carbonatite intrusives, 92.30%. The Tembo drill holes are on three cross-sections separated by about 50 m. Figure 10-5 has incorporated all of the drill holes to show continuity of the mineralisation vertically and horizontally. The dykes anastomose and form a zone of dykes which typically includes significant host rock separating individual carbonatite dykes. On Figure 10-5, three such zones are shown. The main dyke zone (#1 on Figure 10-5) has been mapped along strike for >150 m on the surface. The dip of the dyke zone and associated breccia zone is consistent to the north at between 85º to 70º. Grades in the main dyke zone average 3% TREE with widths of 6.5 to 12.8 m (Table 10-8). Dyke zone 2 is thinner and about the same grade as dyke zone 1, but note that individual dykes are not continuous within the zone. Dyke zone 3 is somewhat conceptual and based on correlation of thick, similar intervals in two drill holes. This dyke zone has somewhat lower average grades than the other two dyke zones but is much thicker if it is indeed a single dyke zone. Individual carbonatite dykes within dyke zone 3 do not correlate well.

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Numerous occurrences of individual carbonatite dykes occur outside the interpreted dyke zones. These dykes do not correlate well from hole to hole and most do not correlate from the surface to subsurface. These interpreted zones indicate that the larger dyke zones at Tembo are reasonably continuous and mappable even though individual dykes are not very continuous. Dyke zone 3 is an interesting, unconfirmed target that must be tested with additional drilling. Many smaller dykes occur between the identified zones but do not correlate well and do not appear to form mappable zones. Table 10-8: Summary of Dyke Intercepts at Tembo

Intercept (m) 7.5 9.2 10.8 6.5 7.0 12.8 9.0 3.0 3.9 4.7 2.1 18.2 21.4 TREE (%) 3.59 2.26 3.34 2.94 3.51 1.40 2.99 5.77 0.75 2.10 3.46 2.02 2.29

Hole/Trench Dyke Zone 1 TR19 TR20 TE001 TE005R TE002 TE004 TE003 Dyke Zone 2 TR21 TE002 TE004 TE003 Dyke Zone 3 TE001 TE005R

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Figure 10-5:

Tembo Target Cross-Section

2

1 3

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10.3.3

Tumbili

A total of six holes have been completed at Tumbili; their locations are shown in Figure 9-6. For reporting purposes, Montero has sub-divided the Tumbili target into separate Lower and Upper Zones, which are separated approximately by the 300 m contour line shown in Figure 9-6. Assay results for the first three holes (from lower Tumbili) had been received and checked at the date of this report; summaries for the mineralised and non-mineralised intersections in these three holes are presented in Table 10-5. These results showed some zones with significant thickness potential, including an average of 0.9% LREE5 over 80.4 m in TUM001 and 0.9% LREE5 over 37.0 m in TUM002, with a narrower mineralised intercept averaging 1.2% LREE5 over 5.1 m in TUM003. The full sampled interval for hole TUM001 gives an average grade of 0.59% LREE5 over 200 m and for TUM002 0.54% LREE5. The drillholes are oriented approximately normal to the presumed geological structures that are thought to control mineralisation so the intercept lengths reported here are considered to be close to the likely true width of the mineralised structures. Nevertheless, since evaluation is at an early stage this interpretation could change as more drilling and trenching results are obtained. These results are lower grade than anticipated from the results of initial trenching; nevertheless they indicate that the zone has potential for a bulk tonnage resource. Assay results for TUM004 and TUM005 were received after the effective date of this report and are still being checked. AMEC has inspected these results and considers that they are consistent with the interpretation of the results discussed above.

10.4

Core Logging

Table 10-9 summarizes Montero's core logging procedures. This is a very good guide for core handling and logging. AMEC reviewed core logging and found it to be generally adequate. AMEC reviewed core from all of the holes and generated a number of quick logs to compare with Montero logging. Those logs compare well. Exact locations of some contacts are difficult to determine because of intense alteration and some intervals require interpretation of complex geology. Those sorts of differences are to be expected in AMEC's opinion. Montero routinely logs lithology, mineralisation, alteration, structure, rock quality designation (RQD), fracture density, and fracture fillings. Overall, core logging is believed to be adequate. Logging will likely improve with additional drill holes. Additional logging may also indicate that additional codes or columns in the logs are required to capture all of the data. This is a normal progression in a new project in unfamiliar rocks.

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Table 10-9:

Core Processing Procedures

Core Processing Procedures No Task 1 2 3 4 5 6 7 Ensure that the core is clean Orient the core Measure the core loss and add metre markings to the core Measure RQD Quick rough log of holes to define main zones Radiometric Readings Detailed geological logging

Responsibility Field officer & Geologist

Comments

Geologist Field officer & Geologist Geologist Geologist Geologist

The principal geological features are the main dykes. Orient at right angles to these

8

Mark the proposed areas for sampling

Geologist

This process must be consistent. Hence all geologists should review & discuss the initial sampling & then later sampling should be consistently the same.

9 10 11 12 13 14 15 16

Magnetic susceptibility and SG measurements Split the core with the diamond saw Prepare sample sheet & document all the measurements, sample no's, QC, sample positions, etc Sample the core Weigh the bags Keep batches together Send batches of samples to Mwanza to ALS Chemex Record the samples and sample movement to Mwanza on a tracking list

Geologist Core cutting man Geologist Geologists or field officers Field officer Geologist Geological supervision needed

For transport purposes Tembo samples to be kept separate from Twiga samples in batches

Geologist

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10.5

Core Recovery

Core recovery is generally good, averaging about 89% or better in most intervals, but some critical intervals have experienced poor recovery (Figure 10-6; Table 10-10). This is the reason for re-drilling TW003. Several metres of mineralized core were not recovered in TW003 but were recovered in TW003a. Currently, core recovery is adequate but future drilling programs should focus on improving recovery. Significant learning has occurred at the drill and will continue with additional drilling. AMEC is of the opinion that core recovery will not be a problem in the future, but recovery must be monitored closely and drilling fluids adjusted to optimize recovery. The fact that mineralized core was preferentially lost when some soft carbonatite was encountered is an indication that extreme care must be taken in all mineralized zones to ensure recovery of the mineralized portions. AMEC is of the opinion that core recovery is adequate to support mineral resource estimation. Figure 10-6: Summary of Overall Core Recovery

Moments Mean Std Dev Std Err Mean upper 95% Mean lower 95% Mean N Variance Skewness Kurtosis CV N Missing 88.62 24.6092 0.5982 89.792 87.442 1691 605.61 -1.21 5.46 27.8 0

Quantiles 100.0% 99.5% 97.5% 90.0% 75.0% 50.0% 25.0% 10.0% 2.5% 0.5% 0.0% maximum 290.0 148.6 119.7 106.0 100.0 97.0 83.0 53.0 17.3 0.0 -22.0

quartile median quartile

minimum

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Table 10-10: Core Size HQ HQ3 NQ PQ3

Core Recovery by Core Size. N Rows 419 471 532 211 Mean 91.46 93.01 88.44 86.96 Std Dev 21.14 18.32 22.68 29.45 Min 0 0 0 0 Max 182 180 165 290

10.6

Core Sampling

Core was first logged for geology. Sample splits were then made based on lithology and alteration. Samples were designed to be 1 m or less in length and break at lithological boundaries. Samples were marked by the geologist responsible for the specific core hole. The maximum length of samples is thus about 1.5 m (five samples are > 1.5 m). The minimum length is 0.2 m. The average length of samples is about 0.9 m (Figure 10-7). Samples were cut with a specially designed core cutting saw by a trained geo-technician. The right half of the core was bagged as a sample. The left half was archived in the core shed on site. Samples were stored in a locked room awaiting transport to the sample preparation facility in Mwanza, Tanzania.

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Figure 10-7:

Summary of Core Sample Lengths

Moments Mean Std Dev Std Err Mean upper 95% Mean lower 95% Mean N Variance Skewness Kurtosis CV N Missing 0.89 0.25 0.01 0.91 0.88 914.00 0.06 -0.65 1.47 28.39 0.00

Quantiles 100.0% 99.5% 97.5% 90.0% 75.0% 50.0% 25.0% 10.0% 2.5% 0.5% 0.0% maximum 2.33 1.50 1.30 1.10 1.00 1.00 0.75 0.49 0.30 0.20 0.15

quartile median quartile

minimum

10.7

Comment on Drilling

AMEC is of the opinion that drilling procedures are adequate to support mineral resource estimation. Core recovery is adequate. Geological logging and sampling are consistent with industry-standard procedures and are adequate to support mineral resource estimation. Drilling results indicate that REE mineralization occurs with grades that are similar to those found at carbonatite-hosted REE deposits elsewhere in the world (see Table 8-1). Carbonatites occur as individual, anastomosing dykes that sometimes form zones containing numerous individual dykes. Some dyke zones are locally correlative from hole to hole and cross-section to cross-section; however, individual dykes within those zones do not correlate well. AMEC believes that the lack of correlation may be due to incomplete understanding of the deposit or possibly because the dykes do not form large, continuous dykes and the anastomosing, discontinuous nature of the dykes at the surface is typical of the dykes in all three dimensions.

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Many dykes do not correlate well at all and do not appear to form recognizable zones. For this reason, AMEC did not attempt to model each dyke individually

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11.0

11.1

SAMPLE PREPARATION, ANALYSES, AND SECURITY

Sample Preparation

All samples were shipped to SGS in Mwanza for preparation. Sample preparation at SGS in Mwanza is not accredited. Sample preparation consisted of: · · · · · · · · · · Samples are sorted and weighed and loaded into an oven to dry at 60o C for 12 hr put into stainless steel trays and

The sample is crushed to better than 85% passing 2 mm The sample is riffle split and a 1 kg split is pulverised to better than 85% passing 75 µm Approximately Analysis 200 g of sample is packed into a sample packet for

A pulp duplicate is taken for one in 20 samples Montero certified QC samples are inserted where indicated The samples are packed into boxes and dispatched A 5% QC is done on crushed material (i.e. every 20 samples) A 10% QC is done on pulverized material (i.e. every 10 samples) A barren granite wash is done between every sample on the crushers and pulverisers.

11.2

11.2.1

Geochemical Analysis

Regional Geochemical Analysis

Regional geochemical analyses were performed at SGS South Africa (Pty) Ltd in Johannesburg. Table 11-1 summarizes the methods and detection limits for assaying at SGS. SGS South Africa is accredited by South African National Accreditation System (SANAS) and conforms to the requirements of ISO/IEC 17025 for specific tests which, in this case, are the major elements which were determined by XRF following fusion of the sample in a lithium metaborate flux (Method XRF79V). Trace elements, including the REE, were determined by Inductively Coupled Plasma Mass Spectrometry (ICPMS) after fusion in lithium metaborate flux (Method IMS95A). Both methods are commonly used in the industry.

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Table 11-1:

Analytical Methods and Lower and Upper Detection Limits for SGS South Africa [* SANAS accredited analyses]

Lower Detection 0.1 0.05 0.05 0.05 0.05 0.05 0.05 0.1 0.05 0.1 0.05 0.1 0.05 0.05 0.5 0.1 0.05 0.05 0.01 0.05 0.01 0.01 0.01 0.05 0.01 0.01 0.01 0.01 0.03 0.03 0.01 0.03 0.03 0.03 0.01 0.01 0.01 0.01 0.03 0.03 0.01 0.01 -50 0.01 Upper Detection 100000 1000 1000 1000 10000 1000 1000 100000 100000 100000 1000 1000 1000 1000 1000 1000 100 100 100 100 100 100 100 100 100 100 50 100 100 100 100 100 100 100 20 20 100 100 5 5 100 20 100 120

Element Ce Dy Er Eu Gd Ho Lu Nd Pr Sm Tb Th Tm U Y Yb SiO2* Al2O3* CaO* MgO* Fe2O3* K2O* MnO* Na2O* P2O5* TiO2* Cr2O3* V2O5* Nb2O5 BaO SrO La2O3 Ce2O3 Nd2O3 Sm2O3 Pr2O3 ZrO2 Y2O3 ThO2 U3O8 Rb2O HfO2 LOI* Total

SGS Method IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A IMS95A XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V XRF79V

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11.2.2

Trench Sample Analysis

Genalysis in Perth, Western Australia, performed the assays for many of the trench samples. ALS Chemex performed the remainder (see section 11.2.3). Genalysis utilized sodium peroxide fusion (in nickel crucibles) and hydrochloric acid to dissolve the melt. Elements were determined by Inductively Coupled Plasma Mass Spectrometry (DX/MS) or Inductively Coupled Plasma Optical Emission Spectrometry (DX/OES). These are common methods in the mining industry. Method codes and detection limits are summarized in Table 11-2. Genalysis is ISO/IEC 17025, ISO 9001:2000, and National Association of Testing Authorities Australia (NATA) accredited. The ISO/IEC 17025 accreditation ensures international standards are maintained in the laboratories' procedures, methodology, validation, QA/QC, reporting and record keeping. National Association of Testing Authorities Australia (NATA) has accredited Genalysis Laboratory Services Pty Ltd, following demonstration of its technical competence, to operate in accordance with ISO/IEC 17025 which includes the management requirements of ISO 9001:2000. The Perth facility is accredited in the field of Chemical Testing for the tests, calibrations and measurements shown in the Scope of Accreditation issued by NATA (Accreditation No. 3244).

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Table 11-2:

Analytical Methods and Lower and Upper Detection Limits for Genalysis, Perth

Units % % % % % % % % ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm Lower Detection Limit 0.02 0.2 0.01 0.05 0.01 0.2 0.01 0.1 1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.05 10 0.1 0.05 0.5 0.1 20 0.05 0.1 0.1 0.1 0.5 0.1 Upper Detection Limit 100 100 100 100 100 100 100 100 20,000 300,000 50,000 50,000 50,000 50,000 20,000 200,000 10,000 300,000 200,000 100,000 50,000 10,000 20,000 20,000 20,000 10,000 600,000 500,000 50,000

Element Al Ca Fe K Mg Mn P Si Ba Ce Dy Er Eu Gd Ho La Lu Nb Nd Pr Rb Sm Sr Tb Th Tm U Y Yb

Method DX/OES DX/OES DX/OES DX/OES DX/OES DX/OES DX/OES DX/OES DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS DX/MS

11.2.3

Core Sample Analysis

ALS Chemex South Africa (Pty) Ltd. (ALS) analyzed all of the core samples and many of the trench samples. Method codes and detection limits are summarized in Table 11-3. ALS method ME-MS81h for REEs includes a lithium borate fusion prior to acid dissolution. REEs are determined by ICPMS. For high-grade REE samples, the samples are fused in lithium borate flux, dissolved in acid and finished by ICP-AES. Samples for major element analyses were fused in lithium metaborate, dissolved in acid, and finished by ICP-AES. These methods are common in the mining industry.

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Table 11-3:

Analytical Methods and Lower and Upper Detection Limits for ALS Chemex, Johannesburg

Method ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-ICP06 ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h ME-MS81h La-OGREE Ce-OGREE Pr-OGREE Units % % % % % % % % % % % % % % ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm % % % Lower Detection Limit 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 3 2 1 1 2 1 1 1 1 1 2 1 1 1 5 1 1 1 1 1 5 3 1 10 0.01 0.01 0.01 Upper Detection Limit 100 100 100 100 100 100 100 100 100 100 100 100 100 100 50,000 5,000 5,000 5,000 5,000 50,000 5,000 50,000 5,000 5,000 50,000 5,000 50,000 5,000 50,000 5,000 5,000 5,000 5,000 5,000 50,000 5,000 5,000 20,000 30 30 30

Element SiO2 Al2O3 Fe2O3 CaO MgO Na2O K2O Cr2O3 TiO2 MnO P2O5 SrO BaO LOI Ce Dy Er Eu Gd Hf Nb Nd Pr Ho La Lu Rb Sm Sn Ta Tb Th Tm U W Y Yb Zr La Ce Pr

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The ALS Quality Management System (QMS) complies with the requirements of International Standards ISO 9001:2008. In addition, individual procedures at specific labs have undergone more detailed technical audits and are accredited to ISO/IEC 17025:2005 (via SANAS). From the ALS documentation, it is not clear which elements are actually ISO17025:2005 accredited.

11.3

Density Measurements

A significant number (1,200) of density measurements have been determined for samples from trenches and core. These data were determined by immersion methods. Density measurements were completed on fresh rock from both surface trenches and core. In the case of the trench samples, the sample used for SG determination was taken using a 4 lb or 8 lb hammer to secure material that was as fresh as possible. For the SG sample (and also magnetic susceptibility measurements), the most representative and freshest fragment was selected in the weight range of 1 kg to just under 3 kg. Portions of core most representative of the sample intervals with a dry weight in the range of 1 kg to 3 kg were chosen. Three kilogram samples were preferred, but smaller samples were used on occasion. The core was weighed dry using a scientific scale before being submerged in clean water and weighed while submerged. The data were recorded and input into a spreadsheet for calculation of a density value for each sample interval. The calculation is as follows: Density = dry weight/dry weight-weight in water No attempt was made to measure the density for weathered and friable material as submerging it in water would clearly cause the core to crumble and fall apart. The data when calculated were input into the main database. AMEC reviewed the data and confirmed the density assignments in Table 11-4. Although the samples were not sealed with wax or similar coating, AMEC is of the opinion that the data are acceptable because of the very low porosity of fresh samples. Weathering is generally <2 m and is thus not a significant concern. AMEC is of the opinion that the density data are adequate to support mineral resource estimation.

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Table 11-4:

Major Lithology Cba Cbr Cca Cfe Cbr-gn Gna Gnc Gnf Gng QFP Scr Total

Summary of Density Data by Rock Type (See Section 7.2 for lithology descriptions)

N 319 168 50 86 1 223 322 4 18 7 2 1,200 Mean 2.81 2.52 2.83 2.62 2.70 2.62 2.46 2.63 2.64 2.67 2.35 2.62 Std Dev 0.306 0.266 0.300 0.248 0.226 0.228 0.158 0.248 0.197 0.056 0.294 Minimum 1.65 1.87 1.99 1.80 2.70 1.92 1.77 2.40 2.32 2.40 2.31 1.65 Maximum 4.23 3.39 3.87 3.21 2.70 3.20 3.21 2.75 3.14 3.01 2.39 4.23 CV 10.89 10.55 10.61 9.47 8.61 9.26 6.02 9.37 7.40 2.39 11.22

11.4

Sample Security

All samples were stored in a locked building on site from the time they arrived at camp until they were shipped to Mwanza for sample preparation. Because of the high grades and the difficulty of obtaining raw materials with the proper elemental ratios, AMEC believes that sample tampering is very unlikely, and that the security measures employed are consistent with accepted industry practices.

11.5

Quality Control ­ Quality Assurance (QA-QC)

Montero employed standards and duplicates as the primary quality control (QC) measures. Each of the laboratories used standards, duplicates, and blank samples for internal QC. AMEC reviewed the Montero standard and duplicate data from Genalysis and ALS Chemex because those data were to be used to support resource estimation. The following section is summarized from AMEC (2011).

11.5.1

Montero Standards

Standard samples are inserted into the sample stream to monitor accuracy of the analyses and possible trends with time. Montero utilized a single standard, AMIS0185, which was prepared from material from Wigu Hill. The laboratories utilized a number of other standards. AMIS0185 is certified for La, Ce, Pr, Sm, and Nd with provisional values for Eu, Dy, and Y. AMEC reviewed the round robin data and believes that Nd should be a provisional rather than certified. Montero sent a 400 kg sample from the Tembo area to AMIS to prepare a certified standard (AMIS0185). AMIS0185 was certified on 8th March 2011. This sample is considered to be representative of the carbonatite dyke material at Wigu Hill.

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The following discussion reflects that preference. Genalysis Analyses Table 11-5 summarizes the results of Genalysis analyses of AMIS0185. These data are from a second round of assaying. The first round produced significantly biased data that were problematical. The problem was brought to the attention of Genalysis and the procedures were adjusted and improved to produce results with little or no bias (Table 11-5). Note that one Sm result was outside three standard deviations from the mean of the Genalysis data (Failures in Table 11-5). That result was reviewed and is believed to be a statistical aberration. Table 11-5:

Element La Ce Pr Sm Nd Eu Dy Y

Summary of Genalysis AMIS0185 Analyses

Certified Value 2.99 4.11 0.347 556 Provisional Value 9.24 94.2 27.1 60.8 N 16 16 16 10 16 16 5 16 Mean 3.00 4.14 0.342 546 9.11 91.9 27.3 61.0 Bias 1.00 1.01 0.99 0.98 0.99 0.98 1.01 1.00 Std Dev 0.074 0.113 0.012 6.90 0.039 1.96 0.67 1.92 CV 2.5 2.7 3.6 1.3 0.0 2.1 2.5 3.1 Failures 0 0 0 1 0 0 0 0

The Genalysis standards data indicate that the certified elements in AMIS0185 are adequately accurate to support mineral resource estimation. Nd, Eu, and Dy are adequate to support resource estimation at the Inferred Resources classification. ALS Analyses ALS analyzed all of the core samples and some of the trench samples. Results for AMIS0185 submitted with those samples are summarized in Table 11-6. Those results show no significant bias for the four certified elements. Nd is biased about 6% low relative to the Provisional Value. Eu is biased about 12% high relative to the Provisional Value. Table 11-6:

Element La Ce Pr Sm Nd Eu Dy Unit % % % ppm % ppm ppm

Summary of ALS Chemex AMIS0185 Analyses (with sample submission)

Certified Value 2.99 4.11 0.35 556 Provisional Value 0.92 94.2 27.1 N 31 31 31 31 31 31 31 Mean 2.95 4.06 0.33 558 0.87 105.2 28.6 Bias 0.99 0.99 0.96 1.00 0.94 1.12 1.05 Std Dev 0.12 0.15 0.01 21.59 0.04 3.34 0.87 CV 4.04 3.71 3.42 3.87 4.58 3.18 3.03

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Montero submitted 88 additional aliquots of AMIS0185 to ALS Chemex for analysis. Those results are summarized in Table 11-7. These data confirm the results of the samples submitted with the core samples. Nd is biased about 5% low which AMEC considers acceptable. Eu bias is confirmed to be about 12% low relative to the Provisional Value. Table 11-7:

Element La Ce Pr Sm Nd Eu Dy Unit % % % ppm % ppm ppm

Summary of ALS Chemex AMIS0185 Analyses (individual submission)

Certified Value 2.99 4.11 0.35 556 Provisional Value 0.92 94.2 27.1 N 88 88 88 88 88 88 88 Mean 2.92 4.03 0.34 556 0.88 105.1 28.5 Ratio 0.98 0.98 0.97 1.00 0.95 1.12 1.05 Std Dev 0.11 0.19 0.01 23.4 0.04 5.38 1.06 CV 3.62 4.68 4.20 4.20 4.86 5.11 3.71

The ALS standards data indicate that the certified elements in AMIS0185 are adequately accurate to support mineral resource estimation. Nd and Dy are adequate to support resource estimation at the Inferred Resources classification. Eu accuracy is questionable and is not adequate to support mineral resource estimation.

11.5.2

Blank Data

Blank samples are inserted into the sample stream to monitor possible sample contamination due to improper cleaning of sample preparation equipment, contaminated reagents, and other sources of contamination. Those data are summarized in the following sub-sections. AMEC considers that blank data greater than five times the lower detection limit (LDL) are suspect and indicative of contamination. Genalysis Blank Data Genalysis blank data are summarized in Table 11-8. Those data indicate that only one result was outside the five times LDL limit. AMEC reviewed that result and is of the opinion that it is not significant. Table 11-8:

Element La Ce Pr Nd Sm Eu Dy

Summary of Genalysis Blank Data

N 12 12 12 12 12 12 12 5 x LDL 0.5 0.5 0.25 0.5 0.5 0.5 0.5 Number >5x LDL 0 0 1 0 0 0 0

Units % % % % ppm ppm ppm

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ALS Chemex Blank Data ALS Chemex blank data are summarized in Table 11-9. A small number of data were outside the five times LDL limit. Two samples were responsible for failures of La, Ce, Nd, and Dy. In all cases, those two samples exhibited elevated values. None of the other samples were questionable. AMEC believes that two failures in 88 results is normal for most analytical programs and that there is no indication of systematic contamination at ALS Chemex. Table 11-9:

Element La Ce Pr Nd Sm Eu Dy

Summary of ALS Chemex Blank Data

Units % % % % ppm ppm ppm N 63 63 63 63 63 63 63 5 x LDL 10 15 5 5 5 5 10 Number >5x LDL 2 2 0 1 0 0 1

11.5.3

Duplicate Data

Duplicate samples are inserted into the sample stream at various points to monitor analytical precision of the process. Montero routinely inserted duplicate samples into the sample streams at Genalysis and ALS Chemex. The results are summarized below. AMEC uses the 90th percentile of the absolute relative difference of duplicate data that exceed 30 times the lower detection as the estimated precision. AMEC is of the opinion that precision should be better than ±10% for all elements at Wigu Hill. Genalysis Duplicate Data Genalysis duplicate results are summarized in Table 11-10. Estimated precision in all cases is better than ±10%. Table 11-10:

Element La Ce Pr Nd Sm Eu Dy

Summary of Genalysis Duplicate Data

Units % % % % ppm ppm ppm N 19 19 19 19 19 19 19 Estimated Precision (±%) 5.7 7.1 5.1 5.1 3.4 3.2 6.3

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ALS Chemex Duplicate Data ALS Chemex duplicate data are summarized in Table 11-11. In this case, Montero had duplicate samples routinely inserted at the sample preparation laboratory and ALS Chemex routinely inserted pulp duplicate samples at the analytical laboratory. In all cases, analytical precision is better than ±10%. Table 11-11:

Duplicates Element La Ce Pr Nd Sm Eu Dy Unit % % % % ppm ppm ppm N 52 52 52 56 56 56 56

Summary of ALS Chemex Duplicate Data

ALS Estimated Precision (%) 6.90 6.39 6.92 5.58 7.53 7.29 7.06 N 48 48 48 48 48 48 48 Montero Estimated Precision (%) 6.64 7.50 6.61 7.15 6.12 7.25 7.25

11.6

Comment

Sample Preparation Sample preparation is typical of the industry and is adequate to support mineral resource estimation. Sample Analysis Assay procedures at SGS, Genalysis, and ALS Chemex are consistent with industry-standard procedures and are adequate to support mineral resource estimation. Density Analysis Density data have been determined using industry-standard procedures and are adequate to support mineral resource estimation. Sample Security AMEC is of the opinion that sample security is consistent with accepted industry practices. QA-QC A single certified standard, AMIS0185, was used for all of Montero's analytical work. The material was collected at Wigu Hill, prepared by African Mineral Standards (AMIS), and sent to other laboratories for round robin analyses. After a round robin, AMIS certified best values for Ce, La, Sm, and Pr. Certified best values are adequate for QA-QC at all resource classification levels. AMIS also certified the Nd best value, but, after an independent review of the round

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robin data by AMEC, AMEC believes that the Nd best value should be a "Provisional Certification" rather than "Certified" which indicates a lesser confidence in the best value. Dy and Eu are provisionally certified by AMIS. Provisionally certified best values are, in AMEC's opinion, adequate to support Inferred Mineral Resources. Genalysis data for AMIS0185 indicate that La, Ce, Pr, and Sm determined for routine samples are sufficiently accurate to support resource estimation at all resource classifications. Nd, Eu, and Dy, because of the provisional certification of the best values for AMIS0185, are adequate to support Inferred Mineral Resources. ALS data for AMIS0185 indicate that La, Ce, Pr, and Sm determined for routine samples are sufficiently accurate to support resource estimation at all resource classifications. Nd and Dy, because of the lesser confidence in the best value, are adequate to support Inferred Mineral Resources. Eu accuracy at ALS is not adequate to support classified mineral resource estimation. Blank sample results for Genalysis indicate no systematic contamination and AMEC is of the opinion that the data are adequate to support mineral resource estimation. Blank sample results for ALS Chemex indicate no systematic contamination and AMEC is of the opinion that the data are adequate to support mineral resource estimation. Precision for all elements at Genalysis is better than ±10%. Precision at Genalysis is considered by AMEC to be adequate to support mineral resource estimation. Precision for all elements at ALS Chemex is better than ±10%. Precision at ALS Chemex is considered by AMEC to be adequate to support mineral resource estimation.

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12.0

12.1

DATA VERIFICATION

Database Compilation and Validation

During the site visit, numerous trenches and drill sites were visited to verify that these corresponded with the locations and extent given on the maps and data files provided. Surveying of trenches at Tembo was in progress during the site visit and discussions with the survey team indicated that the procedures and equipment used were adequate for the purpose. During the site visit, AMEC verified that geological logging was being performed properly and observed sampling and sample security. Montero compiled the assay database which was extensively checked by AMEC. AMEC compiled a separate assay database using data from assay certificates obtained directly from the assay laboratories and compared that to the Montero database. Geological information was checked by comparing the database to original logs, copies of which are in AMEC's possession. During the data verification process, AMEC noted several discrepancies which were corrected and re-verified. The database was considered adequate and closed for mineral resource estimation purposes by AMEC on 8 May 2011.

12.2

Comment on Data Verification

The data have been extensively reviewed and any errors noted were corrected. AMEC observed surveying, geological logging, sampling, and sample security and believes them to be adequate. AMEC considers the database to be adequate for support of mineral resource estimation.

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13.0

13.1

MINERAL PROCESSING AND METALLURGICAL TESTING

Testwork

Preliminary metallurgical testwork has begun using Mintek in Johannesburg, South Africa as the contractor. Approximately 500 kg of bastnaesite-rich carbonatite from Wigu Hill was selected from the Tembo target in March, 2010. This sample was transported to SGS Lakefield in Johannesburg and 400 kg was forwarded to AMIS to prepare a certified standard. The standard was certified on 8th March 2011. The remaining 100 kg of bastnaesite-rich carbonatite was sent to Mintek, South Africa's national mineral research organisation. Mintek specialises in mineral processing, extractive metallurgy, and related research and development. Mintek undertook preliminary research and associated testwork on the 100 kg sample described here with a view to ultimately preparing a high purity mixed rare earth oxide. The sample was taken from the Tembo Target area (Easting 343048; Northing 9180627). The carbonatite dyke contains abundant creamy-yellow coloured burbankite pseudomorphs in a matrix of dolomite and goethite, both of which are present in minor quantities. Exploration on the Tembo and Twiga target areas has confirmed that the intrusive carbonatite dykes are more or less identical in composition, texture and appearance to the material sampled at Tembo (Figure 7-10; Figure 7-11). Hence there is a high degree of confidence that the sample material selected for the preliminary metallurgical testwork is representative of the eastern area of the Wigu Hill complex. Initial testwork has demonstrated that an acid leach of the Wigu Hill material is a viable option to move the rare earth oxides from the rock into solution. Various leaching options and techniques have had mixed results but have enabled the Mintek team to refine their ideas and to develop a leaching option that can produce a mixed REE solution. Initial test results are encouraging, but it is not possible at this early stage in the evaluation processes to estimate recoveries or produce a process flowsheet. No deleterious elements have been defined to date. Uranium and thorium are present in the carbonatites, but the levels are quite low and those elements are not believed to be deleterious at this time. Additional testwork is required to determine if uranium and/or thorium will pose process challenges.

13.2

Comment

AMEC believes that the preliminary testwork has demonstrated that the REEs can be extracted from the Wigu Hill material using common extractive metallurgical procedures. Significant additional testwork is required to identify an optimized process flowsheet.

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Such testwork should included flotation studies to confirm the technical viability of producing a bastnaesite concentrate which could either be sold directly or provide feed for subsequent metallurgical processing.

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14.0

14.1

MINERAL RESOURCE ESTIMATES

Overview

Using the results of the trenching and drilling campaigns completed by Montero during 20102011, an initial resource estimate was prepared for the Twiga and Tembo deposits. The approach used included the following steps: · · · · · · · · Digital database preparation and validation Exploratory data analysis Geological interpretation and wireframe modelling Compositing of drillhole and trench results Block model generation Estimation of block grades using an indicator approach, with separate estimation of grades for mineralised dykes and weakly to un-mineralised wallrocks. Validation of resource model. Classification and reporting of Mineral Resources.

The different steps are discussed in more detail in the following sections.

14.2

Evaluation Database

A database file received from Montero included the following information: · · · · Trench and drillhole collar orientations. Downhole surveys where available. Geological logging information for trenches and drill holes. Assay results for trench and drill hole samples.

Additional assay data, including re-assays of some of the trench samples, were subsequently received by AMEC and incorporated directly into the database. Other modifications to the database included standardisation of trench and drill hole identifiers, correction of any data entry errors that were noted, and selection of the most appropriate assay result for each sample (taking into account the presence of more than one assay for some samples). In addition combined grade values were calculated for use in the subsequent data analysis and mineral resource estimation stages. Assay results for 1,722 samples representing a total sampled length of 1,617 m from 21 drill holes and 63 trenches were used for the mineral resource estimate, as summarised in Table 14-1.

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Table 14-1:

Summary of Trench and Drillhole Sample Data used for the Resource Estimate. Domain Twiga NE Twiga SW Tembo NW Twiga NE Twiga SW Tembo NW Tembo SE Code 11 22 33 11 22 33 44 No. Of holes 10 5 6 21 16 12 21 14 63 No of samples 446 151 317 914 307 114 168 219 808 1722 Sampled length 399 134 283 816 359 123 188 131 801 1617

Type DDH DDH DDH Sub-total TRENCH TRENCH TRENCH TRENCH Sub-total TOTAL

AMEC conducted checks on portions of the assay database to verify its accuracy and completeness for this stage of the study. This included a check of 5% of the total drill hole assay data (124 assay samples), chosen at random, against original assay certificates. No discrepancies were found.

14.3

Geological Controls

14.3.1 Overview

As discussed in Section 10.0, the carbonatites occur as individual, anastomosing dykes that sometimes form zones containing numerous individual dykes. Although some dyke zones correlate reasonably well from hole to hole and cross-section to cross-section, it is very difficult to interpret individual dykes along strike and down dip. Consequently, AMEC adopted an indicator approach to allow the proportion of mineralised dyke material to be estimated within broad zones corresponding with the interpreted dyke zones. Composites and blocks were also assigned to different structural zones in order to allow the orientation of search prism and weighting anisotropies to be aligned with the dominant trends in each zone. These aspects are discussed separately in the following subsections.

14.3.2

Structural domains

The orientations used for each structural domain were obtained by inspecting the drill hole and trench assay data on cross-sections and plans in order to obtain an `average' orientation for use during grade interpolation. The orientations of the four structural domains used are indicated in Table 14-2; their locations are shown in Figure 14-1.

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Table 14-2:

Structural Domain Orientations

Dip direction Twiga NE (11) Twiga SW (22) Tembo NW (33) Tembo SE (44) 030 325 330 060 Dip 60 50 90 90

Figure 14-1:

Map showing the Limits of the Mineralised Domains and Drillhole and Trenches used for the Resource Estimate.

Map prepared by AMEC, August 2011.

14.3.3

Mineralised domains and mineralisation indicator

A mineralisation indicator value of 1 (mineralised) or 0 (unmineralised wallrock) was assigned to all trench and drill holes as follows: · · All intervals with a major lithology code indicating a carbonatite lithology were coded as 1. All other intervals were coded as 0.

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·

Any of the intervals coded as 1 which had not been assayed were re-coded as 0 in order to account for the fact that some of these intervals included obviously un-mineralised intercepts of carbonatite, or wrongly coded intervals, which had not been assayed. Any of the intervals coded as 0 which had a grade of TREE15 >1% were re-coded as 1 in order to account for the fact that some mineralisation occurs in non-carbonatite lithologies or intervals with carbonatite lithologies that may had been wrongly coded.

·

The criteria used for assigning the mineralised and un-mineralised codes were based on the inspection of the drill hole database values; AMEC notes that ideally these should be reassessed on the basis of inspection of core and geological logging data. The value of 1% used to re-code some of the wallrock samples was based on inspection of the distribution of TREE15 grades, as discussed in Section 14.4.2. Within each structural domain a separate mineralised envelope was defined to represent the main "dyke zone". These envelopes were interpreted manually in order to encompass the majority of the mineralised intercepts in the trenches and drill holes. Figure 14-1 shows the mineralised envelopes used in the study.

14.3.4

Geological Controls on Resource Estimation

Geological controls were applied during mineral resource estimation as follows: · Three separate composite files based on 1 m regular downhole composites were used, namely: o o o · · · · mineralised indicator; grades of mineralised material; and grades of waste material;

The composites and blocks were coded according to the structural domain and the mineralised domain within which they fall. Hard boundary controls were applied during estimation such that the blocks within a given domain were estimated using only samples from the same domain. The search ellipsoid orientations and weighting anisotropies used were defined to follow the dominant trend within each domain. No block values were estimated outside the limits of the structural domains.

14.4

Exploratory Data Analysis

14.4.1 Raw data: statistics

Statistical summaries and box plots were generated for different sub-sets of the original data values in order to investigate grade differences between the different structural domains and between the drillhole and trench results. A statistical summary for all of the data values is presented in Table 14-3.

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Table 14-3:

Statistic La Ce Pr Nd Sm Eu Gd Tb Dy Ho Er Tm Yb Lu Y Nb Th U LREE5 TREE15

Original Samples: Statistical Summary of Assay Results

Number 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 1,722 Minimum 19 32 4 14 3 1.1 2.4 0.4 1.9 0.2 0.4 0.0 0.4 0.0 7.0 4 2 0 72 93 Maximum 94,600 112,000 8,000 17,950 1,265 260 462 50.4 146 16.3 40.4 4.3 19.8 3.1 429 29,282 1,515 47 233,199 233,696 Average 9,138 11,518 908 2,284 152 32.4 47.6 5.1 15.5 2.0 3.8 0.4 2.2 0.3 45.4 338 97 2 23,999 24,154 Std.dev 15,511 19,095 1,429 3,470 212 43.5 60.2 6.3 16.1 1.8 2.9 0.3 1.3 0.2 37.3 1,206 152 3 39,555 39,691 CV 1.70 1.66 1.57 1.52 1.39 1.34 1.26 1.22 1.04 0.89 0.78 0.67 0.62 0.57 0.82 3.57 1.57 1.78 1.65 1.64

Units ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm

Results of the preliminary investigation confirmed the very low grades for the HREEs (the nine heavier lanthanide elements and yttrium). Subsequent studies were therefore focussed on the results for lanthanum, cerium, praseodymium, neodymium, samarium and LREE5 (the sum of the analyses for these five elements) as well as uranium and thorium which could be significant from a waste characterisation perspective. AMEC notes that some high values for niobium are present and this should be investigated further in the next stage of the project to assess whether niobium is of interest as a possible byproduct.

14.4.2

Raw data: distributions

Histograms and cumulative frequency curves were generated for the main elements of interest, using length weighting to account for the variable sample lengths that are present. A log scaled histogram and cumulative frequency plot for the original LREE5 sample values are presented in Figure 14-2 and Figure 14-3, respectively. The results presented in these graphs illustrate the presence of two separate populations of strongly mineralised and weakly- to un-mineralised populations.

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Figure 14-2:

All Data ­ Original Sample LREE5 Values: Log-Scaled Histogram

Figure 14-3:

All Data ­ Original Sample LREE5 Values: Log-Scaled Cumulative Frequency Curve

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Histograms and cumulative frequency plots for the individual lanthanum, cerium, praseodymium, neodymium and samarium results show similar bimodal distributions. Thorium and uranium also show similar bimodal patterns; although for uranium this is not as obvious since the lower grade population seems to be close to the analytical detection limit. In addition to examination of the variation in grades by deposit, the results obtained from the trench samples were compared to those obtained from the drill hole samples. Comparison of the distribution of LREE5 values from the two sample types indicated that the trench samples are generally higher grade for both mineralised and wallrock material, as illustrated by the results presented in Figure 14-4. There is no evidence that this difference is related to differences in sampling or analysis of the two sets of samples. Likewise, no obvious geological factors such as up-grading of mineralisation by weathering processes have yet been identified. It is therefore possible that this difference may be due to the particular combination of geology and mineralisation that is exposed at surface. Figure 14-4: All Data ­ Original Sample LREE5 Values: Comparison of Cumulative Frequency Curves for Drillhole and Trench Data

14.4.3

Compositing

A statistical analysis of the original sample lengths was carried out in order to assist in the choice of composite length to be used for resource estimation. The distributions of original sample

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lengths for the trench and drill hole samples are shown in Figure 14-5. This graph illustrates the wider spread of sample lengths for the trench samples, and the fact that the around 80% of the samples have lengths <= 1m. A plot of LREE5 grade against sample length indicated that the majority of the longer samples are from weakly- or un-mineralised material, with grades for all samples >2 m in length being <15,000 ppm LREE5. A 1 m length was subsequently selected for compositing purposes. Figure 14-5: All Data: Cumulative Frequency Curve for Original Sample Lengths

Three separate sets of downhole composites with a standard 1 m length were prepared for use in the resource estimation, namely: · 1. Carbonatite indicator o o · · = 1 for carbonatite lithologies + samples with >1% LREE5 Proportionate approach used (e.g. 0.6 = 60% dyke)

2. Carbonatite grades 3. Non-carbonatite grades

Unsampled intervals were assigned indicator values and grades of zero prior to compositing, based on the assumption that as they were unsampled they were also likely to be un-mineralised. No unsampled intervals were included in carbonatite grade composites.

14.4.4

Composites: statistics

Summary statistics for the mineralised indicator value are presented in Table 14-4. The not coded domain indicates composites that fall outside the mineralised envelope wireframes; all of which appear to have been unsampled. The average value of the mineralised indicator value

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gives an indication of the proportion of the overall sampled length that has been classed as mineralised; this ranges from 18% to 31% for the four separate structural domains. These values are generally lower than the proportions of mineralised values indicated by the percentile value corresponding to 1% LREE5 on cumulative frequency plots for the four domains; this probably reflects the preferential clustering of samples in areas where mineralisation is more abundant. Table 14-4:

Value LENGTH

Composites ­ Mineralised Indicator: Statistical Summary

Units M M M M M M Number 339 1895 731 890 539 4394 339 1895 731 890 539 4394 Min. 0.15 0.10 0.10 0.10 0.20 0.10 0.00 0.00 0.00 0.00 0.00 0.00 Max. 1.00 1.00 1.00 1.00 1.00 1.00 0.00 1.00 1.00 1.00 1.00 1.00 Mean 0.98 0.99 0.99 0.99 1.00 0.99 0.00 0.18 0.21 0.31 0.16 0.19 Std.Dev. 0.11 0.06 0.08 0.07 0.05 0.07 0.00 0.35 0.38 0.43 0.33 0.36 CV 0.12 0.06 0.08 0.07 0.05 0.07 0.00 1.95 1.85 1.37 2.05 1.88

Indicator

Domain Not coded Twiga NE Twiga SW Tembo NW Tembo SE Total Not coded Twiga NE Twiga SW Tembo NW Tembo SE Total

Statistical summaries for the composite grades are presented in Table 14-5 and Table 14-6. The results presented in Table 14-5 are for all composites of mineralised material while those presented in Table 14-6 are for the composites of mineralised material with the 98 high-grade samples (TREE15 > 10%) excluded. The first set of composites was used with a restricted search to estimate local high grade areas; the second set of composites was used to estimate grades of mineralised material in the remaining portion of the deposits. The following points are noted from these results: · · Overall higher grades for the sample results were obtained from the Twiga deposit, with the highest average LREE5 values occurring in Twiga SW. The CVs for most of the rare earth elements are between 0.9 and 1.1 for all of the data, but drop to 0.8 to 0.9 when the high-grade values are excluded. Coefficients of variation (CVs) for uranium are higher, but this reflects in part the fact the majority of the uranium values are close to the detection limit. When compared with the results for the original sample data presented in Table 14-3, it is noted that the CVs for the composites are generally around 60% lower than those for the original data, reflecting both the separation of data into mineralised and unmineralised domains as well as the smoothing effect of compositing. Overall average grades for the most abundant REEs and LREE5 drop by about 25% (relative to the original average) when the high values are excluded.

·

·

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Table 14-5:

Element La Domain Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total

Composites - Grades of Mineralised Material: Statistical Summary for all Composites.

Units ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm % % % % % Number 421 171 320 113 1025 421 171 320 113 1025 421 171 320 113 1025 421 171 320 113 1025 421 171 320 113 1025 421 171 320 113 1025 421 171 320 113 1025 421 171 320 113 1025 421 171 320 113 1025 Min. 35 185 236 250 35 62 258 140 363 62 8 24 26 32 8 21 70 75 98 21 2 6 8 9 2 1 3 5 11 1 0.0 0.0 0.3 0.3 0.0 137 544 498 752 137 0.01 0.05 0.05 0.07 0.01 Max. 84900 93600 59479 48288 93600 104500 112000 67727 66484 112000 7400 8000 5014 5902 8000 16450 17350 12413 16622 17350 981 1167 878 1177 1177 1070 1433 702 728 1433 46.8 15.1 44.1 29.3 46.8 213934 232010 145306 133932 232010 21.44 23.27 14.57 13.43 23.27 Mean 16299 26185 10254 9343 15294 19775 32232 13379 14369 19260 1512 2401 1095 1301 1507 3644 5767 2916 3710 3778 229 346 197 281 244 173 172 101 160 149 2.1 1.6 3.1 2.9 2.4 41459 66931 27841 29004 40084 4.16 6.72 2.80 2.92 4.03 Std.Dev. 17337 21731 9937 9712 16578 20689 26953 12376 14103 20181 1497 1919 949 1247 1474 3445 4499 2449 3421 3504 197 265 154 234 209 189 179 87 134 159 3.8 2.2 3.9 3.6 3.6 43076 55231 25736 28531 41766 4.32 5.54 2.58 2.87 4.19 CV 1.06 0.83 0.97 1.04 1.08 1.05 0.84 0.93 0.98 1.05 0.99 0.80 0.87 0.96 0.98 0.95 0.78 0.84 0.92 0.93 0.86 0.77 0.78 0.83 0.86 1.09 1.04 0.86 0.84 1.07 1.76 1.33 1.28 1.26 1.49 1.04 0.83 0.92 0.98 1.04 1.04 0.82 0.92 0.98 1.04

Ce

Pr

Nd

Sm

Th

U

LREE5

TREE15

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Table 14-6:

Element La Domain Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total Twiga NE Twiga SW Tembo NW Tembo SE Total

Composites - Grades of Mineralised Material: Statistical Summary for Composites with TREE15 <10%.

Units ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm % % % % % Number 374 129 314 109 926 374 129 314 109 926 374 129 314 109 926 374 129 314 109 926 374 129 314 109 926 374 129 314 109 926 374 129 314 109 926 374 129 314 109 926 374 129 314 109 926 Min. 35 185 236 250 35 62 258 140 363 62 8 24 26 32 8 21 70 75 98 21 2 6 8 9 2 1 3 5 11 1 0.0 0.0 0.3 0.3 0.0 137 544 498 752 137 0.01 0.05 0.05 0.07 0.01 Max. 39600 41402 38419 41122 41402 46200 48228 48700 45537 48700 3640 3615 4070 3653 4070 9650 9206 11100 11347 11347 603 667 878 889 889 1070 839 702 593 1070 46.8 15.1 44.1 29.3 46.8 98144 99097 98748 99474 99474 9.84 9.93 9.93 9.99 9.99 Mean 11507 15859 9598 8162 11072 14060 19236 12567 12677 14112 1106 1482 1034 1154 1140 2738 3631 2769 3326 2942 180 225 189 258 199 148 121 99 151 128 2.2 1.7 3.0 2.9 2.5 29591 40432 26157 25578 29465 2.97 4.06 2.63 2.58 2.96 Std.Dev. 10623 11516 8758 7569 10075 12573 13686 10959 11092 12222 944 1010 846 994 937 2290 2464 2216 2787 2374 139 146 145 200 152 171 114 86 120 135 4.0 2.4 3.9 3.7 3.8 26485 28688 22788 22452 25566 2.66 2.88 2.29 2.26 2.57 CV 0.92 0.73 0.91 0.93 0.91 0.89 0.71 0.87 0.87 0.87 0.85 0.68 0.82 0.86 0.82 0.84 0.68 0.80 0.84 0.81 0.77 0.65 0.77 0.77 0.77 1.16 0.94 0.87 0.79 1.06 1.83 1.45 1.29 1.26 1.52 0.90 0.71 0.87 0.88 0.87 0.89 0.71 0.87 0.88 0.87

Ce

Pr

Nd

Sm

Th

U

LREE5

TREE15

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14.4.5

Composites: distributions

Cumulative frequency curves for the composite grades of the mineralised material confirm that these are dominated by a single population of values. A smaller proportion of low-grade and unmineralised values is still present; around 25% of the composite grades for mineralised material have values < 1% LREE5. Comparison of boxplots of LREE5 values for the four domains indicates that the values from the Twiga SW domain are significantly higher grade than the distribution of values from the other three structural domains.

14.5

Block Modelling

14.5.1 Block model definition

The parameters used to define the block model are summarised in Table 14-7. Table 14-7: Block Model Parameters Used for the Current Study

East Origin Extent (m) Block Size (m) Blocks Far Corner 342,600 1,290 3 430 343,890 North 9,180,300 801 3 267 9,181,101 Elevation (m) 0.0 600 3 200 600

The following values were estimated for each block: · Geological domain codes were assigned to each block using the surface topography wireframe and the manually interpreted wireframes that defined the structural domains and carbonatite domains. Carbonatite indicator value: An estimate of the proportion of mineralised material in each block, 1 = 100% mineralised dyke; 0 = 100% wallrock (weakly to unmineralised) Bulk density: fixed values of 2.54 g/cm3 for wallrock and 2.71 g/cm3 for mineralised material Estimated block grades for the five light rare earth elements (La, Ce, Nd, Pr, Sm), LREE5, TREE15, uranium and thorium.

· · ·

14.5.2

Estimation parameters

Block values for the carbonatite indicator and grades of mineralised and wallrock material were determined using inverse distance squared weighting. The orientations of the four search ellipsoids used for sample selection and anisotropic weighting, were defined so as to follow the dominant orientation of known mineralised dykes within each of the four indicator domains, as presented in Table 14-8.

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Table 14-8:

Domain Twiga 1 Twiga 2 Tembo 1 Tembo 2

Search Ellipsoid Orientations

Bearing (Z) 120 55 60 150 Plunge (Y) 0 0 0 0 Dip (X) 60 50 90 90

Criteria used for sample selection during estimation of the indicator and grade values are summarised in Table 14-9. A short range search was used with the full set of composites so as to allow for the occurrence of some localised very high grade mineralisation of limited lateral and vertical extent. Grades for the majority of the mineralised dykes were estimated using a larger search and a composite file from which samples with very high grades (TREE15 > 10%) had been removed. Table 14-9:

Value(s) estimated Carbonatite indicator High-grade dyke grades `Normal' dyke grades Waste grades

Search Ellipsoid Dimensions and Sample Selection Criteria

Major Axis (m) 60 15 60 60 Semi_Major Axis (m) 40 15 40 40 Minor Axis (m) 10 3 10 10 Minimum Samples 1 1 1 1 Maximum Samples 10 10 10 10 Max samples from same hole or trench 5 5 5 5

14.5.3

Block grade estimation

As indicated above, three separate sets of block grades were initially estimated, namely: · · · Grades for high-grade mineralised material Grades for `normal' mineralised material Grades for weakly- to un-mineralised wallrock

In all three instances, block grades were estimated for the five light rare earth elements (La, Ce, Nd, Pr and Sm), LREE5, TREE15, uranium and thorium using inverse distance squared (ID2) weighting. The final block grades were obtained by post-processing of the initial estimates as follows: · The block grades for mineralised material were obtained by taking the estimated grade for high-grade material where present, and elsewhere using the estimated grade of the `normal' mineralised material. Weighted average densities and grades were calculated as follows:

·

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o o o o o o o ·

density = [carb_ind]*2.71+(1-[carb_ind])*2.54 la = ([carb_ind]*2.71*[la_c]+(1-[carb_ind])*2.54*[la_w])/([density]) carb_ind = estimated block value for mineralised indicator (1 = 100% mineralised, 0 = 100% wallrock) density = block density la_c = estimated lanthanum grade for mineralised material la_w = estimated lanthanum grade for wallrock material la = overall block grade for lanthanum

where:

The weighted average grade of the estimated LREE5 values was also calculated and used as a cross check against the sum of the individual grade estimates

The calculations indicated above were performed in MS-Access; the block values were then transferred to other software packages for validation, and additional database queries were created in order to provide resource summaries.

14.6

Model Results and Validation

14.6.1 General

The final block model was validated using the following approaches: · · Display on cross-sections and plans together with the original drillhole and trench data Preparation of statistical summaries and comparison of statistics with those for the raw data and composites used to generate the resource model.

The results obtained are discussed briefly in the following subsections.

14.6.2

Cross-Sections and plans

Block model results for two representative cross sections from the Twiga deposit are shown in Figure 14-6 and Figure 14-7. Twiga Cross-Section 4, which is shown in Figure 14-6, illustrates the results from the Twiga SW structural domain where one main, fairly continuous, dyke which is reasonably well reproduced in the model.

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Figure 14-6:

Twiga Cross-Section 4: Block Model Results

NOTES: Solid brown line = pit shell used for resource reporting; Downhole bar size is proportional to LREE5 sample grade

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Figure 14-7:

Twiga Cross-Section 8: Block Model Results

NOTES: Solid brown line = pit shell used for resource reporting Downhole bar size is proportional to LREE5 sample grade

Twiga Cross-Section 8, as presented in Figure 14-7, illustrates the results for the Twiga NE structural domain where there are multiple individual mineralised dykes; in this case the

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estimation approach used has also given a geologically realistic representation of the mineralisation.

14.6.3

Global statistics

Global statistical comparisons with the final block model were complicated by the fact that it was built up in several stages. In order to confirm that there were no obvious errors in the initial estimation and subsequent processing steps used to obtain the grades for the mineralised material, statistical comparisons were made between the block `mineralised' grade, and both the uncut and cut composite values for mineralised material. Summary statistics for this comparison are presented in Table 14-10. Table 14-10: Grades of Mineralised Material: Comparison of Estimated Block Values against Uncut and Cut Composite Values.

Number Element Domain Units Blocks Comps. (uncut) Comps. (cut) Blocks Mean Comps. (uncut) 39812 15190 19130 1497 3752 243 Comps. (cut) 29465 11072 14112 1140 2942 199 Difference [BlocksUncut]/ [Uncut] -5% -6% -5% -3% -2% -1% [BlocksCut]/ [Cut] 29% 29% 29% 27% 25% 21%

LREE5 La Ce Pr Nd Sm Twiga + Tembo

ppm ppm ppm ppm ppm ppm 77397 1032 926

37870 14298 18223 1445 3664 240

The following points are noted from the results presented in Table 14-10: · · For all of the REE estimates, the overall average block grades fall between the uncut and cut values as would be expected. The high grade samples, which account for 10% of the total number of composites, have a significant impact on the overall estimated block grades even though a maximum extrapolation distance of 15 m was applied when using the uncut composite data set. The consistency in pattern between the individual REEs and the combined LREE5 and TREE15 values indicates that the estimation process has functioned in the same manner for all elements as is to be expected.

·

More detailed analysis on a zone by zone basis showed some discrepancies with respect to the overall pattern, with local apparent over-estimation in parts of the Tembo deposit. These discrepancies are explained by sparser composite data in this zone; local clustering of the composite data; and the limited number of drillholes available from Tembo to support the estimation. In other areas, the simplified structural control was noted to cause some abrupt grade changes at the boundaries between the different structural zones. Overall the results were considered to be acceptable for this early stage in the evaluation of the project. Additional infill and extension drilling are recommended for the next phase of work

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together with improved geological control on the estimation in order to reduce the uncertainties associated with resource estimation.

14.7

Classification and Reporting

14.7.1 General

NI 43-101 requires that reporting of Mineral Resources and Exploration Results should adhere to the definitions established in the CIM Definition Standards (CIM, 2010). Key elements of the current definitions include the following: · · · A Mineral Resource should only be reported for a concentration of minerals that are "of such a grade or quality that it has reasonable prospects for economic extraction". Mineral Resources should be classified according to increasing level of geological confidence into Inferred, Indicated and Measured categories. Key considerations to be taken into account during classification of resources include the amount and quality of sampling data that provide information on the geological and grade continuity of the mineralisation.

Aspects relevant to these considerations are discussed separately below.

14.7.2

Assessment of Reasonable Prospects for Economic Extraction

The following project concept was considered in assessing whether the REE mineralisation at Wigu Hill has reasonable prospects for economic extraction: · · Small scale open-pit mining operation; drilling and blasting required; mineralisation exposed from surface. Selective mining unit (SMU) size of 3 m by 3 m by 3 m assumed for resource modelling purposes; block model grades were based on proportions of mineralised material and weakly- to un-mineralised wallrock contained within each SMU. Mineral processing using flotation to produce a bastnaesite concentrate. Sale of a bastnaesite concentrate with an LREO5 content of around 45%.

· ·

As the Wigu Hill project is at an early stage of investigation, as yet no detailed technical studies of mining and mineral processing aspects have been completed. The project parameters defined above are therefore based on consideration of the available geological data, and consideration of parameters associated with open pit mines using similar processing methods elsewhere. In order to obtain an informed opinion on whether this scenario has a reasonable expectation of being economically viable, AMEC reviewed information on REE markets (as presented in Section 24.2) and costs obtained from public domain information on other REE projects, information supplied by Montero and the information presented in earlier Sections of this report. On the basis of this review, AMEC concluded that: · There is currently a significant and growing demand for REO products. Prices for these products are dependent on the overall quality with much higher prices for high-purity REOs.

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· ·

Production of high purity REO products requires capital intensive specialist metallurgical processing. REE mineralisation at two of the largest historic and current producers of REEs, namely Mountain Pass and Bayan Obo, is largely in the form of bastnaesite and there is established technology for extracting REOs from this mineral. Grades for thorium and uranium are relatively low and should not result in a significant cost disadvantage relative to other similar deposits. The Wigu Hill deposit is located in a reasonably accessible location in a country with an established mining industry.

· ·

On the basis of the considerations summarised above, AMEC concluded that the Wigu Hill mineralisation has reasonable prospects for economic extraction.

14.7.3

Cut-off grade

Given the current level of knowledge of the Wigu Hill deposit, it has not been possible to carry out a detailed technical and financial assessment to support the choice of cut-off grade. For the mineral resource estimate reported in this Technical Report, the choice of cut-off grade has been based on the results of the resource modelling studies and consideration of relevant public domain information on other REE deposits. Specific aspects taken into consideration in the determination of an appropriate cut-off for this initial resource estimate included the following: · Exploratory data analysis indicated the presence of two separate high- and low-grade populations for the REE assays, from trenches and drill holes at the Twiga and Tembo deposits. A breakpoint between the two populations is present at around 2.5% LREE5 (corresponding with approximately 3.0% LREO5), such that the majority of the high grade population is likely to have grades greater than 1.0% LREO5. An upper threshold of 1.0% TREE15 (containing more than 95% LREE5) was used when assigning composites to the unmineralised wall-rock category for the purposes of mineral resource grade estimation, such that this grade threshold is effectively built in to the current resource model. Mineral resource estimates for other publicly reported hard-rock REE deposits are mostly reported using cut-offs in the range 0.5% to 2.5% TREO, although it is noted that the mineral resources for Mountain Pass are quoted at a cut-off of between 3-5% TREO (Technology Metals Research, 2011)9. At present no additional by-product or co-product minerals have been identified at Wigu Hill.

·

·

·

On the basis of these considerations AMEC has applied a cut-off grade of 1.0% LREO5 for the Mineral Resource statement given below.

·

9

http://www.techmetalsresearch.com/metrics-indices/tmr-advanced-rare-earth-projects-index/

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14.7.4

Mineral Resource Classification Considerations

The following factors were taken into account in considering the classification of the Wigu Hill Mineral Resource: · Geological and grade continuity. The carbonatite lithologies which host the majority of the mineralisation occur as individual, anastomosing dykes that sometimes form zones containing numerous individual dykes. Although some dyke zones correlate reasonably well from drill hole to drill hole and cross-section to cross-section, it is very difficult to interpret individual dykes along strike and down dip. Nevertheless, the mineralization occurs within broader dyke-zones which have been modeled using an indicator approach. The irregularity of individual dykes has been taken into account in the resource model by incorporating the expected dilution that is likely to occur for a 3 m by 3 m by 3 m SMU size. Number and spacing of trenches and drill holes used in the estimation. The main dyke zones at Twiga and Tembo have been sampled at regular intervals by surface trenches; drilling on these features is still at an early stage with a limited amount of information being available to assist in three-dimensional interpretation of the deposits. Repeatability of the physical and chemical measurements. The results obtained from duplicate samples and analyses indicate that the database is suitable for use in estimation of an Inferred Resource. Accuracy of the chemical analyses. The standard reference material used for quality control is only certified for cerium, lanthanum, praseodymium and samarium; neodymium is classed as marginal. Hence, the accuracy of the analyses for the other REEs cannot be confirmed; in any event these elements constitute a very low proportion of the overall REE content and are considered unlikely to have a significant impact on the overall economic potential of the project for mineral resource estimation purposes. Metallurgical testwork is still at an early stage and there is as yet no project specific information on likely costs, product specifications and REE recoveries. The mineral resource was constrained within an optimum pit shell obtained using optimistic price and cost information. This was done so as to exclude isolated mineralized blocks and continuations of the mineralisation at depth, both of which would not be amenable to economic extraction from an open-pit operation. The parameters used for the pit optimization run are presented in Table 14-11.

·

·

·

· ·

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Table 14-11:

Parameters used for Generation of Pit Shell to Constrain the Reported Mineral Resource.

Design Criteria Mining: Open Pit Slopes Average Mining Cost Processing: Processing Cost

Value 50 2.85 12

Units º US$/t US$/t mineralized material % % LREO5

Comments Open pit - hardrock Overall pit slope Concentrator Plant (flotation)

Processing Recovery Concentrate grade

90 45

Bastnaesite Concentrate Price: 10 · Selling Price 0.2 · Selling Cost General and Admin 3 Cost

US$/kg US$/kg US$/t ore

In light of the considerations listed above, AMEC considers the existing evaluation database and information available for the Wigu Hill deposits to be adequate to support reporting an Inferred Mineral Resource for the Twiga and Tembo zones. Grades for the heavier REEs and yttrium are not quoted as part of the Mineral Resource estimate due to uncertainties related to the accuracy of the analytical results for these elements, together with uncertainty about their prospects for eventual economic extraction.

14.8

Mineral Resource Statement

Mineral Resources take into account geologic, mining, processing and economic constraints, and have been confined within appropriate pit shells, and therefore are classified in accordance with the 2010 CIM Definition Standards for Mineral Resources and Mineral Reserves. The Qualified Person for the estimate is Edmund Sides, EurGeol PGeo; the effective date of the resource estimate is 25 August 2011. Based on application of the criteria discussed above, an overall Inferred Mineral Resource totalling 3.3 Mt averaging 2.16 % LREE5 (based on a cut-off of 1.0 % LREO5), has been estimated, as presented in Table 14-12. Tonnages and grades for the four separate geological domains used during resource modelling are also indicated in Table 14-12. The results presented in Table 14-12 show a higher overall tonnage and grade for the Twiga deposit, reflecting in part the greater amount of drilling that has been completed there. Grades for the different zones are compared graphically in Figure 14-8, which highlights the significantly higher grade for the Twiga SE domain compared to the other three domains.

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Table 14-12:

Tonnage Zone Mt Twiga ­ NE Twiga ­ SW Tembo ­ NW Tembo ­ SE TOTAL Notes: 1 2 3 4 5 1.6 0.5 0.9 0.2 3.3

Wigu Hill Inferred Mineral Resource Statement (Cut-off 1% LREO5)

Resource grades (REEs) LREE5 % 2.15 2.91 1.84 1.80 2.16 La % 0.84 1.13 0.67 0.59 0.82 Ce % 1.03 1.40 0.89 0.90 1.04 Pr % 0.08 0.11 0.07 0.08 0.08 Nd % 0.19 0.26 0.20 0.23 0.21 Sm % 0.01 0.02 0.01 0.01 0.01 LREO5 % 2.58 3.49 2.21 2.17 2.59 Corresponding oxide grades (REOs) La2O3 % 0.98 1.33 0.78 0.69 0.96 CeO2 % 1.26 1.71 1.09 1.10 1.27 Pr6O11 % 0.10 0.13 0.09 0.10 0.10 Nd2O3 % 0.23 0.30 0.23 0.27 0.24 Sm2O3 % 0.01 0.02 0.02 0.01 0.02

The effective date for this resource estimate is 25 August 2011. The Qualified Person responsible for this resource estimate is Edmund Sides, EurGeol, PGeo. A selective mining unit (SMU) size of 3m by 3m by 3m was assumed when creating the block model. Reported grades are based on consideration of the grades of mineralised material and weakly to non-mineralised wallrock material estimated to fall inside each SMU. The reported Mineral Resource is based on a grade cut-off of 1.0% LREO5 (sum of estimated grades of La2O3, CeO2, Pr6O11, Nd2O3 and Sm2O3). The Mineral Resources for the Twiga and Tembo deposits have been constrained by an optimised pit shell defined by the following assumptions; slope angles of 50º; a mining recovery of 100% and mining dilution of 0% (already incorporated in the SMUs); a mining cost of USD2.85/t; process operating costs of USD12.0/t; G&A costs of USD 3.0/t ore, with 90% recovery of REOs to a 45% LREO5 bastnaesite concentrate; and a concentrate price of USD10/kg.

Figure 14-8:

Comparison of Mineral Resource Estimate Grades for the Four Separate Domains

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14.9

14.9.1

Other Aspects

Risk Factors

Based on the information available at the present stage of the project, AMEC notes the following important risk factors which may affect the inherent value of the Mineral Resource reported here: · To date, LREE grades obtained from the trench samples are significantly higher than those obtained from the drillholes that have been used for the resource estimate. The result of this difference is that trench results may lead to over-estimation of the grades of the underlying mineralisation at depth. No obvious explanation for this difference has been identified at present, but it is obviously an issue that needs to be investigated in more detail in the next stage of the project. Three-dimensional geological continuity of the individual mineralised dykes is poor, although zones containing multiple small mineralised dykes have been identified and traced along strike by mapping and confirmed at depth by drilling. The estimation approach used for this estimate has incorporated wallrock dilution into the resource model on the assumption that a high degree of selectivity during mining will not be possible if the current geological interpretation reflects the true characteristics of the deposit. Future exploration work should attempt to identify and evaluate any larger more continuous mineralised dykes which would allow for definition of higher grade mineralised zones where more selective mining may be possible. AMEC notes that the overall economics are likely to be strongly influenced by the nature of the REE products, prices, recoveries and processing costs. Completion of the metallurgical testwork and a project specific marketing study are important elements in the next phase of work in order to develop a clearer picture of the overall economics of the project and to identify key factors that could be addressed to assist in advancing the project. The current resource model is based on a relatively limited amount of drilling, particularly on the Tembo zones. The results obtained from additional drilling are likely to result in changes to the current resource models. The project is at an early stage and technical studies on mining and mineral processing aspects of the project have not yet been completed. The assumptions made to support reasonable prospects for economic extraction will need to assessed by such studies as the project goes forward; although the parameters used are considered realistic it is considered likely that these will change as more information becomes available.

·

·

·

·

14.9.2

Grade-tonnage distribution

Summary tables and graphs were prepared in order to investigate the sensitivity of the resource tonnages and grades to changes in cut-off. Initial studies looked at the impact of applying changes in the LREO5 cut-off. Subsequently, variations in the grade-tonnage distribution with respect to the changes in the `mineralised indicator' block values were investigated. Where the mineralized indicator is close to 1.0 it indicates that a higher proportion of the block is made up of mineralized material. An analysis was carried out of the distribution of tonnage and grade for the blocks on which the

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reported Inferred Mineral Resource is based (i.e. blocks having LREO5 >1% and falling inside the pit shell used to constrain the reported Mineral Resource). Based on consideration of the factors used to assess the prospects for economic extraction of the reported Mineral Resource, AMEC considers that applying a mineralised indicator cut-off of 0.7 (>=70% mineralised material within SMU) would define a subset of the mineral resource estimate that would consist of smaller, higher-grade mineralised volumes that would also have realistic prospects for economic extraction. This sensitivity case has the sub-set mineral resources as tabulated in Table 14-13. Table 14-13: Sensitivity Case Subset of Mineral Resources Reported at a 0.7 Mineralised Indicator Cut-Off.

Resource grades (REEs) Tonnage Zone Mt Twiga - NE Twiga - SW Tembo - NW TOTAL Notes: 1 The tonnages and grades quoted above are for a high-grade sensitivity sub-set of the total Inferred Mineral Resource and are not additive to it. The tonnages and grades given above are based on selection of only those blocks (SMUs) with >70% mineralised material. Isolated SMUs which could not realistically be mined separately have been excluded from the tonnage reported in this table. The effective date for the resource estimate on which these figures are based is 25 August 2011. The Qualified Person responsible for this resource estimate is Edmund Sides, EurGeol, PGeo. The resource is reported according to CIM Definition Standards (2010). An SMU size of 3m by 3m by 3m was assumed when creating the resource block model. Reported grades are based on consideration of the grades of mineralised material and weakly to non-mineralised wallrock material estimated to fall inside each SMU. A cut-off grade of 1.0% LREO5 (sum of estimated grades of La2O3, CeO2, Pr6O11, Nd2O3 and Sm2O3) has also been applied to the totals given in this table. The Mineral Resources for the Twiga and Tembo deposits have been constrained by an optimised pit shell defined by the following assumptions; slope angles of 50º; a mining recovery of 100% and mining dilution of 0% (already incorporated in the SMUs); a mining cost of USD2.85/t; process operating costs of USD12.0/t; G&A costs of USD 3.0/t resource, with 90% recovery of REOs to a 45% LREO5 bastnaesite concentrate; and a concentrate price of USD10/kg. 0.21 0.09 0.21 0.51 LREE5 % 4.3 5.4 2.2 3.7 La % 1.68 2.12 0.82 1.41 Ce % 2.05 2.59 1.08 1.76 Pr % 0.16 0.19 0.09 0.14 Nd % 0.38 0.47 0.24 0.34 Sm % 0.02 0.03 0.02 0.02 LREO5 % 5.2 6.5 2.7 4.4 La2O3 % 1.97 2.48 0.96 1.66 CeO2 % 2.52 3.18 1.32 2.16 Pr6O11 % 0.19 0.23 0.11 0.17 Nd2O3 % 0.44 0.55 0.28 0.39 Sm2O3 % 0.03 0.03 0.02 0.02 Corresponding oxide grades (REOs)

2

3 4 5 6

The sensitivity case presented in Table 14-13 highlights the fact that the Mineral Resource contains some higher-grade areas which may be amenable to selective mining; in particular in the Twiga SW domain. More detailed investigation of these zones is warranted in the next phase of evaluation to try to better define the continuity and extent of such high-grade zones.

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14.10

AMEC Comments

14.10.1 Database and Resource Estimation Methodology

The preliminary database received by AMEC contained a number of inconsistencies and a few minor errors which were corrected during the validation process. Validation of the assay data against original laboratory record sheets did not detect any errors. AMEC considers that the drill hole database accurately represents the original field records that were available for review and is acceptable for use in mineral resource estimation. Current mapping and cross-sectional interpretations of the mineralised zones indicate that individual carbonatite dykes display a considerable degree of pinching and swelling, splitting and anastomosing and changes in strike. There is no obvious consistency in the dip continuity of dykes, suggesting that similar patterns may be present in the vertical sense as well. AMEC was unable to inspect the core after the assays became available and consequently the mineral resource estimation approach used had to be selected on the basis of information obtained during the site visit and inspection of the assay data and geological codes within the modelling software. AMEC concluded that it was not practicable to interpret individual dykes and that an indicator-type approach to estimation appeared to be more suitable given the present level of knowledge of the deposits. Obvious changes in general orientation of the mineralised dykes within the deposits were accounted for by defining four broad structural zones. Hard boundary controls were applied in order to prevent extrapolation of composite grades obtained from dykes within one structural zone into the neighbouring zones. Statistical comparison of the results for the LREE5 assays from the trench and drill hole assays indicate that the trench samples show consistently higher grades for both the mineralised and wallrock materials. At present there is no evidence to suggest that this relates to a sampling or analytical bias between the two different sample types, nor has any obvious geological reason for the difference been identified yet. AMEC considers that the difference may simply reflect the particular distribution of the samples with respect to the overall geology of the deposit. This aspect should be investigated in more detail in the next phase of the project in order to confirm that there no sampling or analytical biases are present and to try to identify whether there are any geological or mineralogical differences that may account for the differences. Close-spaced infill drilling directly below some of the high-grade trench samples should be considered in order to obtain more detailed information on changes in grade with depth below the surface.

14.10.2

Mineral Resource Estimate

Comparison of the final resource model against the original trench and drill hole data used, indicated that in general the approach used provides a reasonably realistic representation of the interpreted geology and grade distributions. Most of the discrepancies that were noted are related to areas of the deposit where more limited, wider spaced, sampling is available. AMEC concluded that the resource model was acceptable for reporting of an Inferred Resource for the Twiga and Tembo deposits.

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The Mineral Resource identified to date is relatively small and, due to the discontinuous nature of the mineralised dykes, the reported grades incorporate a considerable amount of weakly to unmineralised wall-rock material. The deposits remain open along strike and at depth. An additional exploration target would be to identify larger more continuous individual mineralised dykes where selective mining of higher-grade mineralisation might be possible. These aspects should be investigated in the next stage of the project. Grades for Sm2O3 are very low, such that despite a higher commodity price it is unlikely to contribute significantly to the overall economics of the deposit; likely project economics will be more dependent on recovery and prices of the four light REEs. The higher average grade for the Twiga SW domain is considered to be related to the presence of a thicker, more continuous, ENE-WSW trending dyke zone with consequent lower dilution, rather than necessarily higher in-situ grades for the mineralised dyke intercepts. An analysis of the grade-tonnage distribution for the blocks used as the basis for the reported Inferred Mineral Resource indicates that the Twiga SW domain contains a smaller higher-grade portion which warrants further investigation. This portion of the deposit is in part related to the higher-grade samples which are more common in the trench samples and as such may reflect near surface mineralisation which could be extracted at an early stage during the development of any future mining operation. AMEC recommends that the methodology and structural interpretations used for the current mineral resource estimate should be reviewed on site with the project geologists prior to any future resource updates.

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15.0

MINERAL RESERVE ESTIMATES

As the Wigu Hill project is not an advanced property, this Item is not relevant for this Technical Report.

16.0

MINING METHODS

As the Wigu Hill Project is not an advanced property, this Item is not relevant for this Technical Report.

17.0

RECOVERY METHODS

As the Wigu Hill project is not an advanced property, this Item is not relevant for this Technical Report.

18.0

INFRASTRUCTURE

As the Wigu Hill project is not an advanced property, this Item is not relevant for this Technical Report.

19.0

MARKET STUDIES AND CONTRACTS

As the Wigu Hill project is not an advanced property, this Item is not relevant for this Technical Report.

20.0

ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT

As the Wigu Hill project is not an advanced property, this Item is not relevant for this Technical Report.

21.0

CAPITAL AND OPERATING COSTS

As the Wigu Hill project is not an advanced property, this Item is not relevant for this Technical Report.

22.0

ECONOMIC ANALYSIS

As the Wigu Hill project is not an advanced property, this Item is not relevant for this Technical Report.

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23.0

ADJACENT PROPERTIES

This Item is not relevant for this Technical Report as there are no adjacent properties that are relevant to the type of mineralisation being evaluated on the Wigu Hill property.

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24.0

24.1

24.1.1

OTHER RELEVANT DATA AND INFORMATION

Rare Earth Element Definitions and Terminology

General

AMEC completed a review of the terminology used in Technical Reports prepared under NI 43101 on other REE properties, and in other public domain information on REEs. This review identified significant variation in the terminology used and a lack of consistency between different reports, and sometimes within individual reports. The terminology adopted for this report is discussed below together with comments on alternative definitions used elsewhere.

24.1.2

Lanthanides and REEs

Lanthanides: The 15 elements with atomic numbers from 57 to 71 (La, Ce, Pr, Nd, Pm, Sm, Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu). Rare earth elements (REEs): In this report, this term is defined as including the 14 naturally occurring lanthanides plus yttrium, as illustrated in Figure 24-1. IUPAC defines rare earth metals to include the lanthanides plus yttrium and scandium (IUPAC, 2005); however, the majority of reports on other REE properties, reviewed by AMEC, exclude scandium from this grouping of elements. AMEC notes that since promethium does not occur naturally in any significant amounts and is not reported in laboratory analyses, it is also excluded from this grouping.

24.1.3

Rare Earth Oxides

The review of other reports completed by AMEC revealed two alternative approaches to the definitions of rare earth oxide compositions, namely: · · The "laboratory oxide convention" which uses an oxide formula of the form REE2O3 for all of the REEs. The "commercial oxide convention" which uses different formulae for the oxides of cerium (CeO2), praseodymium (Pr6O11) and terbium (Tb4O7).

Use of these alternative approaches requires the application of different conversion factors to convert from elemental values (normally reported by analytical laboratories) to oxide content, as summarised in Table 24-1. AMEC has been unable to find any discussion of this issue in other technical reports, and the formulae of the rare earth oxides are not given on the main sources for prices of rare earth oxides (i.e. Asian Metal and Metal pages). However, searches on the internet suggest that the "commercial oxide convention" is more widely used and is likely to reflect the composition of oxides that are marketed.

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In light of these uncertainties, AMEC believes it preferable to report assay results and the resource statement in terms of the REE content. Corresponding commercial oxide totals are provided for information purposes. Figure 24-1: Periodic Table Showing the Rare Earth Elements as Defined in this Report

24.1.4

Light /Heavy and Medium REEs

Reports on REE projects frequently split the REEs into light (LREE) and heavy REE (HREE) groups, and sometimes include a third group referred to as the medium or intermediate group (MREE). Such splits appear to have two objectives, namely: · The lanthanides with lower atomic numbers (LREE) are naturally more abundant and as a consequence tend to be lower in value than the lanthanides with higher atomic number (HREE) which tend to be scarcer and more valuable. During metallurgical processing of REE concentrates, these groups of elements tend to be separated out together during different parts of the process.

·

In the review of other reports, AMEC it was noted that there is as yet no industry standard for the definition of these groupings. The LREE group always includes at least four elements (lanthanum, cerium, neodymium and praseodymium), with optionally one to three additional elements (samarium, gadolinium and europium). In some reports these three additional elements

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are allocated to the intermediate or medium group. The HREE group consists of the remainder of the naturally-occurring lanthanides plus yttrium. In addition, Gupta and Krishnamurthy (2005) present three alternative classifications. Due to the lack of any industry standard definitions on these groupings, AMEC has tried to avoid the use of these terms in this report. Where it is necessary to apply such definitions, AMEC favours the use of the following groupings: · · LREEs: The lanthanides with atomic numbers from 57 to 60 (i.e. lanthanum, cerium, neodymium and praseodymium). MREEs: the lanthanides with atomic numbers from 62 to 64 (i.e. samarium, gadolinium and europium). These should be combined with the HREEs in situations where only two groupings are used. HREEs: The lanthanides with atomic numbers from 65 to 71 (i.e.) plus yttrium. Yttrium is included in the HREE group since, although it has a lower atomic number than the lanthanides, chemically it behaves in a similar fashion to the heavier lanthanides.

·

24.1.5

Combined Analyses (TREE/TREO)

For data analysis and resource reporting, the analytical values of the different rare earth elements are often combined into a single value referred to as total REE (TREE), total rare earth oxides (TREO), total light REE (TLREE), etc. A review of reports on other properties suggests that as yet there is no agreed-upon industry standard to use as a basis for such combinations and consequently, AMEC has tried to minimise the use of such terms in this report. As the relative proportions of the REEs tends to vary less than the overall content, AMEC has found it useful to estimate combinations of the elements as a way of cross checking the estimations of individual REEs. In order to distinguish these combinations from the general terms which as yet do not have agreed definitions, AMEC has used a suffix to indicate the number of elements that are combined. In this report the following variables have been used in this manner: · LREE5: the sum of the analyses of lanthanum, cerium, praseodymium and samarium (La + Ce + Nd + Pr + Sm). In the case of the Wigu Hill deposit, these five lighter lanthanides are the most abundant and are also the only five elements for which a certified standard has been used during analysis. TREE15: the sum of the analyses of the 14 naturally occurring lanthanides plus yttrium (as indicated on Figure 24-1).

·

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Table 24-1:

Oxide Conversion Factors for the REEs, Showing Both Commercial and Laboratory Conventions

Calculated conversion factors

Element

Symbol

Atomic No.

Atomic weights*

Oxide formulae

Molecular weight

Element to oxide Oxygen O 16.0

Oxide to element

Oxide formulae and conversion factors (commercial convention) Yttrium Lanthanum Cerium Praseodymium Neodymium Promethium Samarium Europium Gadolinium Terbium Dysprosium Holmium Erbium Thulium Ytterbium Lutetium Y La Ce Pr Nd Pm Sm Eu Gd Tb Dy Ho Er Tm Yb Lu 39 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 88.9 138.9 140.1 140.9 144.2 150.4 152.0 157.3 158.9 162.5 164.9 167.3 168.9 173.1 175.0 Y2O3 La2O3 CeO2 Pr6O11 Nd2O3 Sm2O3 Eu2O3 Gd2O3 Tb4O7 Dy2O3 Ho2O3 Er2O3 Tm2O3 Yb2O3 Lu2O3 225.81 325.81 172.11 1021.44 336.48 348.72 351.93 362.50 747.70 373.00 377.86 382.52 385.87 394.11 397.93 1.2699 1.1728 1.2284 1.2082 1.1664 1.1596 1.1579 1.1526 1.1762 1.1477 1.1455 1.1435 1.1421 1.1387 1.1372 78.7% 85.3% 81.4% 82.8% 85.7% 86.2% 86.4% 86.8% 85.0% 87.1% 87.3% 87.5% 87.6% 87.8% 87.9%

Alternative oxide formulae and conversion factors (laboratory convention) Cerium Praseodymium Terbium Ce Pr Tb 58 59 65 140.1 140.9 158.9 Ce2O3 Pr2O3 Tb2O3 328.23 329.81 365.85 1.1713 1.1703 1.1510 85.4% 85.4% 86.9%

Associated elements Scandium Thorium Uranium Sc Th U 21 90 92 44.955912 232.0 238.0 Sc2O3 ThO2 U3O8 137.91 264.04 842.08 1.5338 1.1379 1.1792 65.2% 87.9% 84.8%

Note: * Wieser, M.E. and Berglund, M. (2009): Atomic weights of the elements 2007 (IUPAC Technical Report), Pure Applied Chemistry, Volume 81, No. 11, pp2131-2156

Due to the lack of standardisation on oxide formulae, AMEC has tried to avoid working with summations of oxide contents. In any tables or text where this has been necessary, separate footnotes will be provided to indicate the oxide convention used (as described in Section 24.1.3).

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24.2

24.2.1

REE Marketing

General

A project-specific marketing study has not yet been completed because the Wigu Hill project is still at an early stage. For the purposes of this report a review of public domain information has been performed in order to confirm the presence of a market for the REE mineral products that might be produced from Wigu Hill and to obtain some indicative prices to support reporting of a mineral resource estimate. The summary provided below is based mainly on a mineral commodity summary produced by the British Geological Survey (BGS, 2010) plus presentations made by Dudley Kingsnorth of IMCOA (Kingsnorth, 2009, 2010), and other sources listed in the References provided in Section 27.0.

24.2.2

Usage

The REEs have unique properties which make them suitable for specialist applications in a wide range of industries, as illustrated in Table 24-2.

24.2.3

Demand

Demand in several of the applications listed in Table 24-2 is forecast to increase in future years, for example: · · · Rechargeable batteries used in electric cars. Permanent magnets for use in electric motors in hybrid and electric motor vehicles and wind turbines. Powerful magnets for use in small electronic devices such as computer hard drives and personal digital assistants (PDAs).

The wide range of applications in which REEs are used, and the lack of suitable substitutes, means that global demand for REEs is likely to continue to grow over the coming years. The estimated demand for each major application area in 2008, and a forecast of the anticipated demand for these applications in 2014, is presented in Table 24-3. An updated dated version of this forecast presented in the prospectus recently published by Molycorp (Molycorp, 2011) provides similar trends, with the main growth anticipated for magnets, metal alloys, and polishing applications.

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Table 24-2:

Industry Automotive Ceramics Chemicals Defence

REE Usage and Applications by Industry (after Castor and Hedrick, 2006)

Usage Catalysts for pollution control; catalytic converter catalyst substrate; rechargeable batteries; fuel cells; coloured plastics Oxygen sensors; structural ceramics for bearings; jet engine coatings; investment moulds; refractories; pigments Oil refinery fluid cracking catalysts; pharmaceuticals; water treatment; catalysts; moisture control, dryers, and detection Lasers; missile guidance and control; visual displays; radar; electronic countermeasures; communication; shielding Capacitors; cathodes; electrodes; semiconductors; thermistors; travelling wave tubes (TWTs); radio frequency circulators and toroids; yttrium iron garnet (YIG) ferrites Polishing compounds; decolorizing; colorizing; increase refraction; decrease dispersion; radiation stabilization; absorber Trichromatic fluorescent lamps; mercury lamps; carbon arc lamps; gas mantles; auto headlamps; long-glow phosphors Speakers and headphones; linear motors; antilock braking systems; tape and disk drives; gauges; electric motors; pumps; ignition Sonar systems; precise actuators; precision positioning; vibratory screens; speakers; ultrasonics to kill bacteria Contrast agents; magnetic resonance imaging (MRI); positron emission tomography (PET); radioisotope tracers and emitters Alloying agents in aluminium, magnesium, iron, nickel, and steel alloys; superalloys; pyrophoric alloys; lighter flints; armaments Cathode-ray tubes (CRTs); fluorescent lighting; radar and cockpit displays; x-ray intensifying screens; temperature sensors Simulated gemstones; textiles; magnetic refrigeration; hydrogen fuel storage; lubrication; photography; nuclear uses

Electronics Glass Illumination Magnets Magnetostrictive Medical Metallurgy Phosphors Other

Table 24-3:

REE Demand in 2008 and 2014 (BGS, 2010 after Kingsnorth, 2009)

Consumption REO (tonnes) 2008 23,000 12,500 15,000 22,500 26,500 9,000 7,000 8,500 124,000 2014 (forecast) 28-30,000 12-13,000 19-21,000 43-47,000 39-43,000 11-13,000 8-10,000 10-12,000 170-190,000 Annual Growth Rate % 6-8 Negligible 6-8 15-20 10-15 7-10 7-9 7-9 8-11

Application

Catalysts Glass Polishing Metal alloys Magnets Phosphors and pigments Ceramics Other Total/Range

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24.2.4

Supply

In reality, rare earth elements are not that scarce, being much more common in the earth's crust than elements such as platinum and gold. Nevertheless, historic production has been dominated by production from a limited number of countries, as illustrated in Figure 24-2. Early production came mostly from monazite in heavy mineral placer deposits. Subsequently, between 1965 and 1985 over half the world's production came from the Mountain Pass deposit in California, USA. Since 1985, China has become a major producer and was estimated to produce roughly 97% of global rare earth oxide production in 2008 (Molycorp, 2011). Over the past two decades, China has encouraged the development of industries based on the use of REEs and is recently reported to have concerns about the depletion of the country's own REE resources. Export quotas and export tariffs have been applied to REE production in order to encourage and protect the development of the industry within China. Over the past two to three years this has led to increasing concerns about the security of supply among users of REEs outside China. Indeed, in mid-2010, China administratively blocked exports of REEs to Japan as part of a diplomatic dispute which disrupted some commercial contracts (New York Times, 23 September 2010) but had little serious impact because of stockpiles in Japan (Wall Street Journal, 15 October 2010). This uncertainty has resulted in a boom in the exploration for and evaluation of REE projects outside China. Figure 24-2: Sources of REE Production from 1950 to 2000 (from USGS, 2002)

A summary of some of the main REE projects currently under development outside China is presented in Table 24-4. The forecast supply from these new operations would significantly increase the non-Chinese supply of REEs and is a factor which needs to be taken into account when forecasting likely demand and prices outside China over the next decade.

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Table 24-4:

Status of the Selected REE Development Projects Outside China (modified after Scott Wilson, 2010)

Project Mountain Pass Mount Weld Dubbo Dong Pao Ulba Pitinga Steenkampskraal Orissa Location USA Australia Australia Vietnam Kazakhstan Brazil South Africa India Target Start (as of 2010) 2012 2011 2011-2012 2011 2010? 2011? 2011 2011 Capacity (t REO) 20,000 11,000 2,500 6,000-7,000 3,000 ? 2,500 7,000

Company Molycorp Lynas Corp Alkane Resources Vincamin Sumitomo/ Kazatomprom Neo Materials/ Mitsubishi Great Western Minerals Toyota

Note: REO = rare earth oxide; convention not stated but will not have a significant impact on these totals.

24.2.5

Prices

The market for rare earths products is small and forecasting prices is difficult. Prices from subscription services, including Asian Metals and Metal-Pages, are commonly used as the basis for determining historic prices of REEs in China and trying to forecast price trends (see for instance Scott Wilson, 2010). Since this is a specialist market, many projects are likely to rely on off-take agreements with users who wish to ensure security of supply for the sales of some of their products. AMEC notes that account needs to be taken of the fact that the relative proportions of the REE products produced from a specific deposit, such as Wigu Hill, are likely to be fairly inflexible such that a company may have to stockpile products for some elements that are in over supply and may not be able to take full advantage of price increase in other scarcer products. In order to fully assess the impact of such issues, a project-specific marketing study will be required in order to determine realistic prices on which to base an economic evaluation during the next phase of evaluation.

24.2.6

Important Factors

In considering the technical and economic viability of REE projects, the following marketing factors should be borne in mind: · The dominant role of China in the production and processing of REE mineral concentrates. China is likely to continue to use export quotas, export tariffs and other measures to protect its domestic industry with significant impacts for non-Chinese producers. Such impacts might have positive or negative effects on the prices of REE minerals and products.

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· ·

Usage of REEs in many high technology applications where demand is forecast to continue increasing over the next decade. Planned REE projects under development outside of China could meet much, if not all, of the forecast production shortfall for several of the REEs leading to over-supply and downward pressure on prices. The USA, European and Japan have identified security of supply of several of the REEs as an issue of concern for their economies. They may take steps to encourage and support the development of REE projects outside of China. REEs are essentially co-products contained in the same minerals which are produced together in mineral concentrates during the initial mining and processing phases. This means that the relative proportions of the individual REEs produced by a mine does not vary significantly and producers do not have the flexibility to increase or decrease the production of specific REEs in response to market changes. Prices for the REEs are mostly quoted for the oxides and metals rather than the mineral concentrates which form the initial product from an REE mine. The metallurgical processing required to produce individual or mixed rare earth oxide products is generally a complex and costly process that has to be tailored to the specific ore and gangue mineralogy of individual deposits. This means that sales of REE mineral concentrates would obtain a much lower price than would the equivalent oxide or metal content of the concentrate.

·

·

·

24.2.7

Comment

AMEC believes that potential products from Wigu Hill are, at this time, marketable and will continue to be marketable in the foreseeable future. China has tried to reduce the amount of raw REEs that leave the country and the price has increased significantly for all REEs as a result of Chinese activity. There are a number of projects in the pipeline that may alleviate some of the supply problems. AMEC also believes that a marketing study is an integral part of the next phase of the Wigu Hill project.

24.3

Environmental and Social Aspects

The company has engaged a local environmental consultant who has commenced an Environmental Management plan to be carried through to the end of 2011. Ornithological and fauna studies have been undertaken and a flora study is in progress. Communications with the local environmental officials are progressing well and a number of site visits have been made by environmental officials to become conversant with the work being undertaken on the site. To date, feedback on these visits has been positive and the officials are satisfied with the manner in which work is being undertaken on the site and with the reclamation operations following excavation and drilling activities, etc. Although the project is at exploration stage, the company has engaged with the elders and management committees of the three neighbouring local villages to keep them informed of the nature and duration of the exploration work being undertaken at Wigu Hill. The company has assisted each village with a project of their own choosing. The project for the nearest village, Sessenga is to assist with the construction of a clinic for the village. To date the floor slab has

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been finalised and the next stage in the planning stage is construction of the walls. At Gomero village, a plan to repair school infrastructure and pride desks is being planned and at Nyarutanga village, repairs to the administrative offices and provision of furniture are being planned. In addition to this, close contact is maintained with the farmers close to the project area such that any damage to crops or access difficulties that affect them are discussed and where applicable compensation is paid. There is no requirement during the exploration stage to acquire land as such, so no agreements have been concluded with land owners in this regard. Negotiations at a commencement level will be instigated in the second half of the year.

24.4

Radiation Aspects

The REE mineralization at Wigu Hill contains elevated thorium, and to a lesser degree uranium, contents relative to the surrounding unmineralised rocks. Due to the natural radioactivity associated with these elements and their decay series, and the fact that these may be concentrated during the extraction and beneficiation of the REE mineralization, consideration will need to be given to potential radiation issues as the project advances. Both activity levels (from materials containing thorium and uranium) and exposure levels (of individuals in contact with such materials) need to be taken into consideration with respect to regulatory control. Materials are often classified according to the associated activity level (Bequerels (Bq) per gram) whilst legislation is also directly concerned with preventing harmful exposure levels for those working with or exposed to such materials (expressed in Effective Dose in milliSieverts (mSv) per year). Such regulation will include both national regulations provided by the Tanzanian authorities and international regulations provided by the International Atomic Energy Association (IAEA) of which Tanzania is a member.

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25.0

25.1

INTERPRETATION AND CONCLUSIONS

Geological Setting

The geological knowledge at Wigu Hill is improving with the geological mapping, trenching, and drilling completed to date. However, significant additional work is required and is ongoing, with additional drilling currently in progress. The Wigu Hill complex is composed of fresh to relatively fresh, but oxidised, gneisses consisting mainly of feldspathic, quartzo-feldspathic, hornblende and clinopyroxene-rich quartzofeldspathic gneisses, and amphibolites and garnet-rich amphibolites. All of these lithologies are cross cut by a network of narrow pegmatite veins and veinlets. The Wigu Hill gneisses are also intruded by abundant narrow to broader carbonatite dykes, most of which are dolomitic in composition and mineralised with varying concentrations of bastnaesite and minor amounts of monazite and apatite. Dyke sizes and compositions vary considerably across the Wigu Hill Complex. Twiga Twiga is reasonably well understood at this time. The surface geology is well described and drilling has confirmed downward continuation of many of the dykes. Many of the carbonatite dykes form zones of dykes rather than individual dykes. This is obvious on the surface and in the drill core. AMEC believes that this zone concept will be important for future modelling of these deposits. Tembo The surficial geology at Tembo is well known but drilling did not confirm continuation of the mapped dykes in the subsurface. As with Twiga, these dykes form zones within which individual dykes appear to anastomose. Tumbili Tumbili is a large carbonatite intrusive with little in the way of geological mapping and sampling. Significant additional work is required to understand the geology and potential of this body. Tumbili is, AMEC believes, the core carbonatite at Wigu Hill (there may be others). Similar carbonatites in other countries are not significantly mineralized, but locally produce various commodities, primarily as a result of weathering of the carbonatite. AMEC noted a number of mineralized clasts and one possible mineralized dyke within the larger body was seen. This is an attractive target and should have additional trenches excavated and must be drilled to test its potential.

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Chui The Chui area known from reconnaissance only and requires significant additional work to fully understand the geology there.

25.2

Deposit Types

The rare earth element (REE) deposits at Wigu Hill are typical of carbonatite-hosted REE deposits world-wide (Castor and Hedrick, 2006; Birkett and Simandl, 1999; Wall et al, 1997). Similar deposits include Bayan Obo in China (Smith, 2001), Mountain Pass, California (Castor and Hedrick, 2006), and Oka, Quebec (Zurevinski and Mitchell, 2004). The Bayan Obo deposit is the source of more than 90% of the total world-wide rare earth element production.

25.3

Exploration

Exploration work to date includes regional geochemical sampling, regional radiometric surveying, and local trenching. AMEC is of the opinion that exploration on the Wigu Hill property has been appropriate. That work has identified a number of high-quality targets for additional exploration. Locations of the trenches and the type of sampling are consistent with industry-standard practices. AMEC is of the opinion that the trench data are adequate to be used to support mineral resource estimation.

25.4

Drilling

AMEC is of the opinion that drilling procedures are adequate to support resource estimation. Core recovery is adequate. Geological logging and sampling are consistent with industrystandard procedures. Drilling results indicate that REE mineralization occurs with grades that are similar to those found at other REE mines in the world. However, although the dykes occur in broad zones which can be traced along strike and at depth, most of the individual carbonatite dykes do not correlate well and for this reason AMEC did not attempt to model each dyke individually.

25.5

Sample Preparation, Analyses, and Security

Sample Preparation Samples were sent to SGS in Mwanza for preparation and pulps were sent to the appropriate laboratory from there. AMEC is of the opinion the sample preparation methods employed were adequate to provide an acceptable level of accuracy and precision for use of the analytical results in mineral resource estimation.

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Sample Analysis Assay procedures at SGS, Genalysis, and ALS Chemex are consistent with industry-standard procedures and are adequate to support mineral resource estimation. Density Analysis Density data have been determined using industry-standard procedures and are adequate to support mineral resource estimation. Sample Security All samples were stored in a locked building on site from the time they arrived at camp until they were shipped to SGS in Mwanza for sample preparation. AMEC is of the opinion that sample security is consistent with accepted industry practices. QA-QC A single certified standard, AMIS0185, was used for all of Montero's analytical work. The material was collected at Wigu Hill, prepared by African Mineral Standards (AMIS), and sent to other laboratories for round robin analyses. After a round robin, AMIS certified best values for Ce, La, Sm, and Pr. Certified best values are adequate for QA-QC at all resource classification levels. AMIS also certified the Nd best value, but, after an independent review of the round robin data by AMEC, AMEC believes that the Nd best value should be a "Provisional Certification" rather than "Certified" which indicates a lesser confidence in the best value. Dy and Eu are provisionally certified by AMIS. Provisionally certified best values are, in AMEC's opinion, adequate to support Inferred Mineral Resources. Genalysis data for AMIS0185 indicate that La, Ce, Pr, and Sm determined for routine samples are sufficiently accurate to support resource estimation at all resource classifications. Nd, Eu, and Dy, because of the provisional certification of the best values for AMIS0185, are adequate to support Inferred Mineral Resources. ALS data for AMIS0185 indicate that La, Ce, Pr, and Sm determined for routine samples are sufficiently accurate to support resource estimation at all resource classifications. Nd and Dy, because of the lesser confidence in the best value, are adequate to support Inferred Mineral Resources. Eu accuracy at ALS is not adequate to support classified mineral resource estimation. Blank sample results for Genalysis indicate no systematic contamination and AMEC believes that the data are adequate to support mineral resource estimation. Blank sample results for ALS Chemex indicate no systematic contamination and AMEC believes that the data are adequate to support mineral resource estimation. Precision for all elements at Genalysis is better than ±10%. Precision at Genalysis is believed by AMEC to be adequate to support mineral resource estimation.

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Precision for all elements at ALS Chemex is better than ±10%. Precision at ALS Chemex is believed by AMEC to be adequate to support mineral resource estimation.

25.6

Data Verification

The data entries have been extensively reviewed and any errors noted were corrected. AMEC observed surveying, geological logging, sampling, and sample security and considers them to be adequate. AMEC considers the database to be adequate for mineral resource estimation; it was closed by AMEC for resource estimation purposes on 8 May 2011.

25.7

Resource Estimation

The basis for the mineral resource estimate was a digital database received from site (Montero) that included trench and drillhole collar orientations, downhole surveys, geological logging information for the trenches and drillholes completed by Montero, and assay results for those samples. Following review and validation of the digital database AMEC concluded that it was suitable to support estimation of Mineral Resources for the Twiga and Tembo deposits. Current mapping and cross-sectional interpretations of the mineralised zones indicate that individual carbonatite dykes display a considerable degree of pinching and swelling, splitting and anastomosing and changes in strike. There is no obvious consistency in the dip continuity of dykes suggesting that similar patterns may be present in the vertical sense as well. AMEC was unable to inspect the core after the assays became available and consequently the mineral resource estimation approach used had to be selected on the basis of information obtained during the site visit and inspection of the assay data and geological codes within the modelling software. AMEC concluded that it was not practicable to interpret individual dykes and that an indicator type approach appeared to be more suitable given the present level of knowledge of the deposits. Obvious changes in general orientation of the mineralised dykes within the deposits were accounted for by defining four broad structural zones. Hard boundary controls were applied in order to prevent composites obtained from dykes within one structural zone into the neighbouring zones. Statistical comparison of the results for the LREE5 assays from the trench and drillhole assays indicate that the trench samples show consistently higher grades for both the mineralised and wallrock materials. At present there is no evidence to suggest that this relates to a sampling or analytical bias between the two different sample types, nor has any obvious geological reason for the difference been identified. AMEC considers that the difference may simply reflect the particular distribution of the samples with respect to the overall geology of the deposit. Comparison of the final resource model against the original trench and drillhole data used, indicated that in general the approach used provides a reasonably realistic representation of the interpreted geology and grade distributions. Most of the discrepancies that were noted are

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related to areas of the deposits where more limited, wider spaced, sampling is available. AMEC concluded that the resource model was acceptable for reporting of an Inferred Resource for the Twiga and Tembo deposits. The Mineral Resource identified to date is relatively small and, due to the discontinuous nature of the mineralised dykes the reported grades incorporate a considerable amount of weakly to unmineralised wall-rock material. There is scope for increasing the overall tonnage potential of the deposit, or alternatively trying to identify larger more continuous individual mineralised dykes where selective mining of higher-grade mineralisation might be possible. These aspects should be investigated in the next stage of the project. Grades for Sm2O3 are very low such that despite a higher price it is unlikely to contribute significantly to the overall economics of the deposit. Deposit economics are likely to be dependent on recovery and prices of the four light REEs. The higher average grade for the Twiga SW domain is considered to be related to the presence of a thicker more continuous ENE-WSW trending dyke zone with consequent lower dilution, rather than necessarily higher in-situ grades for the mineralised dyke intercepts. An analysis of the grade-tonnage distribution for the blocks used as the basis for the reported Inferred Mineral Resource indicates that it contains a smaller higher grade portion which warrants further investigation. This mineral resource is in part related to the higher grade samples which are more common in the trench samples and as such reflect near-surface mineralisation which could be extracted at an early stage during the development of a mining operation. Based on considerations of the evaluation database used, geological and grade continuity and economic factors, the reported resource estimate has been classified as an Inferred Mineral Resource. As the project is still at an early stage, changes in the geological interpretation and resource models are likely as more drilling information is obtained. In the absence of project-specific mining and mineral processing studies, several of the parameters used to assess the prospects for economic extraction are based on analogy with mines elsewhere. Changes in these parameters are likely as more information is obtained specific to the Wigu Hill project and this may results in changes in resource estimate parameters such as cut-off grade.

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26.0

26.1

RECOMMENDATIONS

General

AMEC recommends a two phases of work in order to fully assess the economic potential of the Wigu Hill project, as follows: · Phase 1: Additional drilling, resource estimation and related studies in order to better define the overall magnitude of the mineral resource at Wigu Hill and to improve the level of detail on some of the higher-grade zones that have already been defined. On conclusion of this phase of work a decision would be made as to whether to proceed with a preliminary economic assessment (PEA) of the project. Phase 2: A PEA of the project in order to assess its overall technical and economic viability and to identify favourable development scenarios for more detailed investigation. This phase of work is contingent on the results obtained from Phase 1. At the conclusion of this phase of work a decision would be made on whether to proceed with more detailed studies of the project including, if considered appropriate, pre-feasibility stage studies.

·

26.2

26.2.1

Scope of Work - Phase 1

Geology and Evaluation Sampling

Significant additional work is required and is ongoing. There are a number of targets at Wigu Hill that have not been investigated beyond reconnaissance exploration. Those targets need to be evaluated with the aim of increasing tonnages. Specific recommendations include: · Regional mapping and outcrop sampling ­ Several target areas have been identified but because of access limitations, much of the Wigu Hill area has not been adequately mapped on a regional scale. AMEC recommends that the regional mapping be completed with the goal of filling gaps in the geological knowledge and producing additional targets if such exist. Detailed mapping and associated outcrop sampling ­ Detailed mapping and sampling of the known target areas should be completed in the next round of exploration. Trenching and detailed channel sampling ­ The most advanced targets, Chui, for example, should be trenched and sampled to determine grades in the carbonatites and provide information to target exploration drilling. Tumbili drilling ­ AMEC recommends that the Tumbili target be explored with additional mapping, trenches, and exploration drilling to determine the nature of the carbonatite occurrence there. Twiga drilling ­ A programme of infill drilling should be completed on the Twiga target to establish a small but a relatively higher grade resource on the "EW" shallow dipping, high grade Twiga dyke and the closely associated vertical dikes. Tembo drilling ­ A drilling program designed to test the continuity of the dykes in the southeast portion of Tembo should be completed. This area has been trenched and returned economically interesting grades, but the vertical extent of the dykes is not known.

· ·

·

·

·

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·

Access planning and establishment plus maintenance of roads ­ Many of the target areas and drill locations do not have ready road access and roads must be designed and built to those area.

26.2.2

Resource Estimation

The drillhole and trench database used on site should be reviewed and updated to incorporate some of the changes made by AMEC during the resource estimation work. The difference in LREE grades between the trench and drillhole samples should be investigated in more detail in the next phase of the project in order to confirm that there no sampling or analytical biases are present and to try to identify whether there are any geological or mineralogical differences that may account for the difference. Re-analysis of retained coarse rejects and/or pulps from samples from trench and drillholes which are located close to one another should be done at a single laboratory in a single batch to confirm that no analytical bias is present. Close-spaced infill drilling directly below some of the high grade trench samples should be considered in order to obtain more detailed information on changes in grade with depth below the surface, and to assess the possibility of sampling biases being present. AMEC recommends that the methodology and structural interpretations used for the current resource estimate should be reviewed on site with the project geologists prior to any future resource updates. In particular the indicator cut-off used should be reviewed in conjunction with the geological logging data to determine whether the geological basis used for separating mineralised and wallrock material can be refined. Regularly spaced sets of plans and cross-sections of the resource model should be prepared in order to assist in planning future drilling programmes. Such drilling should be aimed at infill drilling in high grade areas in order to improve the confidence category of the resources, and additional drilling along strike and down dip from mineralised zones in order to increase the overall resource tonnage. On conclusion of additional drilling a new resource model should be generated order to incorporate the new assay data and updated geological domain interpretations. Changes to the estimation methodology may also be applied if considered necessary following a more detailed review of the results of the current resource model.

26.2.3

Mining Related Studies

AMEC recommends that geotechnical data continue to be collected from the core as it is drilled.

26.2.4

Metallurgical Studies

Preliminary metallurgical testwork has begun using Mintek in Johannesburg, South Africa. Initial results indicate that an acid leach of the Wigu Hill material may be a viable option to move the rare earth oxides from rock into solution. Various leaching options and techniques have had mixed results but have enabled the Mintek team to refine their ideas and to develop a leaching option that can produce a mixed REE solution.

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Although these initial tests are encouraging it is not possible at this early stage in the evaluation process to estimate recoveries or produce a process flowsheet. Significant additional testwork is required to identify an optimised process flowsheet and should be completed with the next phase of work at Wigu Hill with the goal of a preliminary process flowsheet that will allow estimation of operating and capital costs. This work should include metallurgical studies including separation, liberation, and flotation studies. Mineralogical investigations should be performed to better understand the association between the carbonatites in the east and central parts of Wigu Hill.

26.2.5

Environmental

Montero has engaged a local environmental consultant who has commenced an Environmental Management plan to be carried through to the end of 2011. A number of site visits have been made by environmental officials; to date feedback on work undertaken has been positive. Montero has been engaging with local communities and land owners on the development of the Wigu Hill project. This work should continue with the goal of having the data required for an environmental impact assessment (EIA) within the next year. The full EIA could then commence with minimal additional data required.

26.3

26.3.1

Budget and Decision Point ­ Phase 1

Budget

Table 26-1 is the proposed budget for additional work at Wigu Hill. Estimated administrative and labour costs are included with each category and are not budgeted separately. Table 26-1: Phase 1 ­ Resource Definition: Expected Budget

Budget in US $ 125,000 46,000 100,000 15,000 39,000 50,000 1,500,000 250,000 150,000 195,000 180,000 2,650,000

Expenditure Category Detailed mapping and associated outcrop sampling Trenching and detailed channel sampling Regional mapping and outcrop sampling Mineralogical investigations Baseline environmental studies Access planning & establishment plus maintenance of roads Drilling (30 holes, 6,000 m @US$250/m) Trench and drill assays and QC Resource estimation studies and NI 43-101 reporting Optimisation metallurgical leach testwork at Mintek Research metallurgical studies (separation, liberation, flotation studies) Total Estimated Budget

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26.3.2

Decision Point

On conclusion of the work recommend for Phase 1 a decision would be made as to whether or not to proceed with a preliminary economic assessment (PEA) of the project. Conclusions of this phase of work should include recommendations on the likely production scenarios that should be investigated during Phase 2. Proceeding with a PEA would be contingent on adequate resource tonnage and grades having been defined to support the likely scale of mining operation required.

26.4

Scope of Work - Phase 2

At this stage only a generalised scope of work for Phase 2 can be defined; a more detailed scope of work would be one of the results obtained from Phase 1. Based on current information it is envisaged that the scope of work for Phase 2 would include the following elements: · Additional trenching, drilling and resource estimation in order to upgrade the project resources to higher confidence categories and to assess whether there is an adequate resource base to support the likely project life of mine. Mining studies, including geotechnical studies, waste management assessment, preliminary mine design and scheduling in order to provide input for the financial analysis of the project. Metallurgical studies, including additional laboratory testwork in order to confirm the nature and characteristics of the mineral products to be produced, expected recoveries and information to support project-specific marketing studies. Preliminary process design and scheduling would also be completed in order to provide input for the financial analysis of the project. Marketing studies. A project-specific marketing study would be required in order to confirm that a market exists and to obtain details of market constraints and prices for use in the financial model. Environmental and social studies. Baseline studies should be continued and/or initiated as required. A thorough review of the project and planning for a full ESIA to support a mining application should be prepared. Other related work. Other studies would include an assessment of infrastructure requirements to develop a mining project, and any necessary work required in order to maintain the mineral licences and initiate work required to support applications for mining licences.

·

·

·

·

·

26.5

26.5.1

Budget and Decision Point ­ Phase 1

Budget ­ Phase 2

At this stage it is not possible to define a detailed scope of work for the above items, since this will be dependent in part on the size of mineral resource and mining project to be assessed during this phase. Consequently AMEC has estimated a range of costs for each of the above items, as presented in Table 26-2. A more detailed scope of work and better defined costs would be prepared as part of the recommended Phase 1.

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Table 26-2:

Phase 2 ­ PEA: Expected Budget

Budget in US $ 2,000,000 to 3,500,000 250,000 to 350,000

Expenditure Category Trenching, drilling and sampling Mining studies, including geotechnical, waste management and mine planning, fieldwork, engineering design and review. Metallurgical studies, including laboratory testwork, engineering design and review Marketing studies Environmental and social studies; including initiation of baseline studies, review of existing data and planning for next phase of work Other studies, including infrastructure assessment Contingency (c.15%) Total Estimated Budget

250,000 to 400,000 50,000 to 100,000

50,000 to 80,000

100,000 to 200,000 400,000 to 670,000 3,100,000 to 5,300,000

26.5.2

Decision Point ­ Phase 2

At the conclusion of the proposed Phase 2 PEA a decision would be made on whether to proceed with more detailed studies of the project including, if considered appropriate, pre-feasibility stage studies for those development scenarios that have been identified as having reasonable prospects of being technically and economically viable.

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27.0

27.1

REFERENCES

References

Berger, V.I., Singer, D.A., and Orris, G.J. (2009) Carbonatites of the World, Explored Deposits of Nb and REE--Database and Grade and Tonnage Models. USGS Open-File Report 20091139. Birkett, T.C. and Simandl, G.J., 1999, Carbonatite-Associated Deposits: Magmatic, Replacement, and Residual; in G.J. Simandl, Z.D. Hora and D.V. Lefebure, editors, Selected British Columbia Mineral Deposit Profiles, Volume 3, Industrial Minerals, British Columbia Ministry of Energy and Mines, Open File 1999-10. British Geological Survey (2010). Rare Earth Elements. Commodity profile published in June 2010. Available from: http://www.bgs.ac.uk/news/NEWS/Rare_Earth_Element_profile.pdf Castor, S.B. and Hedrick, J.B., 2006, Rare Earth Elements; in Kogel, J.E., Nikhil, N.C., and Barker, J.M., editors, Industrial Minerals and Rocks, Society for Mining, Metallurgy and Exploration, pp. 769-792. Government of the United Republic of Tanzania (2010) Mining Act, 2010. Available from: http://www.parliament.go.tz/Polis/PAMS/Docs/14-2010.pdf Gupta, C.K. and Krishnamurthy, N. (2005) Extractive Metallurgy of Rare Earths. CRC Press, 484 pp. IUPAC (2005) Nomenclature of Inorganic Chemistry: IUPAC Recommendations 2005. Edited by N.G. Connelly, T. Damhus, R.M. Hartshorn and A.T. Hutton. The Royal Society of Chemistry, 2005 [ISBN 0 85404 438 8]. Available from: http://old.iupac.org/publications/books/rbook/Red_Book_2005.pdf Kingsnorth, D. (2009) The rare earths market: can supply meet demand in 2014. Presentation given at PDAC in March, 2009. Kingsnorth, D. (2010) Rare earths: Facing new challenges in the New Decade. Presentation to the SME Annual meeting. Lynas (2010) Information and Investors Presentation. March 2010. Montero (2010) Annual Report. Molycorp Inc. (2011) Prospectus filed pursuant to Rule 424(b)(4). Filed on 10-Jun-11. Natural Earth: Public domain map dataset, source of Tanzanian vector data. Available from: http://www.naturalearthdata.com/ Orris, G.J., and R.I. Grauch. 2002. Rare Earth Element Mines, Deposits, and Occurrences. USGS Open-File Report 02-189. Pallangyo, D.M. (2007) Environmental law in Tanzania; how far have we gone? 3/1 Law, Environment and Development Journal (2007), 26pp, available at: http://www.lead-journal.org/content/07026.pdf

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Scott Wilson (2010) Technical report on the Thor Lake project, Northwest Territories, Canada. NI 43-101 Report for Avalon Rare Metals. Dated July 29, 2010. Siegfried P.R. (2010) N.I. 43-101 Technical review report on the Wigu Hill rare earth element (ree) property, Kisaki District, Tanzania. Report prepared by Geoafrica Prospecting Services for Montero Mining and Exploration Ltd. Smith, M., 2001, The Bayan Obo Fe-REE-Nb Deposit, Inner Mongolia, China: Comparisons with Carbonatite-Related and Fe-Oxide-Type Deposits (abstract); 5-8 November, 2001, Geological Society of America Annual Meeting 2001. USGS (2002) Rare Earth Elements--Critical Resources for High Technology. Fact sheet fs08702. Available from: http://pubs.usgs.gov/fs/2002/fs087-02/ Wall, F., Wall, F., Zaitsev, A., Jones, A. P.., and Mariano, A. N (2006) 1997, Rare earth rich carbonatites, a review and latest results. Publication of the MAEGS ­ 10. pp. 49 ­ 50. Zurevinski, S.E., and Mitchell, R.H., 2004, Extreme Compositional Variation of PyrochloreGroup Minerals at the Oka Carbonatite Complex, Quebec: Evidence of Magma Mixing?; The Canadian Mineralogist, v. 42, pp 1159-1168.

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27.2

Measurement units Symbol Description

M m m3 m3/hr Ma Mm mm Mt Mt/a NQ º ºC p pH ppb ppm PQ t t/a t/d t/h t/m3 wt% million metre cubic metre cubic metres per hour million years ago million metres millimetre/millimetres million tonnes million tonnes per annum 47.6 mm size core degrees degrees Celsius passing measure of the acidity or alkalinity of a solution parts per billion parts per million 85 mm size core metric tonne tonnes per annum (tonnes per year) tonnes per day tonnes per hour Tonnes per cubic metre weight percent

Symbol Description

' " # % / < > µm a Å Asl BQ c. D d/wk G g/cm3 g/m3 Ga Ha HQ kg/m3 Km km2 kW seconds (geographic) minutes (geographic) number percent per less than greater than micrometre (micron) annum/ year angstroms above sea level 36.5 mm size core circa day days per week gram Grams per cubic centimetre Grams per cubic metre billion years ago hectares 63.5 mm size core kilograms per cubic metre kilometre square kilometres kilowatt

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27.3

List of Abbreviations

Full name ALS Chemex South Africa (Pty) Ltd AMEC Earth & Environmental UK Ltd African Mineral Standards Certified standard Cerium Cerium oxide Canadian Institute of Mining, Metallurgy and Petroleum Counts per second Cathode-ray tubes Digital Elevation Model Inductively Coupled Plasma Mass Spectrometry Inductively Coupled Plasma Optical Emission Spectrometry Dysprosium Dysprosium oxide East African Legal Chambers Erbium Erbium oxide Europium Europium oxide Iron Iron oxide Gadolinium Gadolinium oxide Holmium Holmium oxide 63.5 mm core 61.1 mm Heavy rare earth element Inductively coupled plasma atomic emission spectroscopy Inductively coupled plasma mass spectrometry Industrial Minerals Company of Australia Pty Ltd International Union of Pure and Applied Chemistry Lanthanum Lanthanum oxide Lower detection limit Light rare earth element Sum of the analyses of the five LREEs (La, Ce, Nd, Pr, Sm) Lutetium Lutetium oxide Fusion in lithium metaborate flux Fusion of the sample in a lithium metaborate flux Montero Mining and Exploration Limited Montero Projects Limited Medium or intermediate group

Abbreviation ALS AMEC AMIS AMIS0185 Ce CeO2 CIM CPS CRTs DEM DX/MS DX/OES Dy Dy2O3 EALC Er Er2O3 Eu Eu2O3 Fe Fe2O3 Gd Gd2O3 Ho Ho2O3 HQ HQ3 HREE ICP-AES ICPMS IMCOA IUPAC La La2O3 LDL LREE LREE5 Lu Lu2O3 Method IMS95A Method XRF79V Montero MPL MREE

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Abbreviation MRHL MRI MRL NATA Nb Nb2O5 Nd Nd2O3 NI 43-101 NQ NSR PDA PET PL PLR PQ3 Pr Pr6O11 QC QMS QP Rb Rb2O REE RQD RSR SANAS Sc Sc2O3 SG Sm Sm2O3 SML Tb4O7 Th ThO2 Ti TLREE Tm Tm2O3 TREE15 TREO TWTs U U3O8 XRF

Full name Montero Resource Holding Limited Magnetic resonance imaging Montero Resources Limited National Association of Testing Authorities Australia Niobium Niobium pentoxide Neodymium Neodymium oxide National Instrument 43-101 47.6 mm core Net smelter returns royalty Personal digital assistant Positron emission tomography Prospecting Licence Reconnaissance Licence 83.1 mm Praseodymium Praseodymium oxide Quality Control Quality Management System Qualified Person Rubidium Rubidium oxide Rare Earth Element ?? RSR (Tanzania) Limited South African National Accreditation System Scandium Scandium oxide Specific gravity Samarium Samarium oxide Special Mining Licence Terbium oxide Thorium Thorium dioxide Titanium Total light REE Thulium Thulium oxide Sum of the analyses of the 14 naturally occurring lanthanides plus yttrium Sum of the rare earth element oxides Travelling wave tubes Uranium Triuranium octoxide X-ray fluorescence

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Abbreviation Y Y2O3 Yb Yb2O3 YIG Zr ZrO2

Full name Yttrium Yttrium oxide Ytterbium Ytterbium oxide Yttrium iron garnet Zircon Zirconium dioxide

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