Report Riacho Dos Machados-Fs-43-101-2011 - Oct 2011 (v1)

Technical Report on the
RESOURCE ESTIMATE UPDATE AND THE FEASIBILITY STUDY FOR
RIACHO DOS MACHADOS GOLD DEPOSIT,
MINAS GERAIS STATE, BRAZIL
Prepared by:
Tecnomin Projetos e Consultoria Ltda.
NCL Brasil Ltda.
Golder Associates Brasil Consultoria e Projetos Ltda.
YKS Servicos Ltda
M2 Environmental and Consulting Services Ltd.
Lawrence Consulting Ltd.
John A Wells Metallurgical Consultant
Prepared for:
Carpathian Gold Inc.
May 20, 2011 (Effective Date of April 6, 2011)
[Amended November 15, 2011 with updated QP certificates]

TECHNICAL REPORT ON THE RESOURCE ESTIMATE UPDATE AND THE FEASIBILITY
STUDY FOR RIACHO DOS MACHADOS GOLD DEPOSIT,
MINAS GERAIS STATE, BRAZIL Minerao Riacho dos Machados Lt da.
PROJETOS E CONSULTORIA LTDA
Table of Contents
1. SUMMARY ...........................................................................................................................1
1.1 Introduction................................................................................................................................................... 1
1.2 Property Description, Location, Access and Physiography ..................................................................... 2
1.3 History ........................................................................................................................................................... 3
1.4 Geology and Mineralization ......................................................................................................................... 6
1.5 Exploration .................................................................................................................................................... 7
1.6 Metallurgy Summary .................................................................................................................................... 8
1.7 Mineral Resources Estimation..................................................................................................................... 9
1.8 Mining & Mineral Reserves ........................................................................................................................ 11
1.9 Summary Cost Estimates and Economic Analysis ................................................................................. 14
1.10 Conclusions & Recommendations............................................................................................................ 18
2. INTRODUCTION AND TERMS OF REFERENCE ..............................................................20
2.1 Introduction................................................................................................................................................. 20
2.2 Terms of Reference .................................................................................................................................... 21
3. RELIANCE ON OTHER EXPERTS ....................................................................................26
4. PROPERTY DESCRIPTION AND LOCATION ...................................................................27
4.1 Location....................................................................................................................................................... 27
4.2 Company Ownership and Agreements ..................................................................................................... 28
4.3 Title Agreements and Ownership .............................................................................................................. 29

4.4 Surface Rights ............................................................................................................................................ 30
4.5 Royalties...................................................................................................................................................... 31
4.6 Environmental and Socio-Economic Issues ............................................................................................ 32
5. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

33
5.1 Accessibility................................................................................................................................................ 33
5.2 Climate, Phisiograpyhy, Flora and Fauna ................................................................................................ 34
5.3 Local Resources and Infrastructure ......................................................................................................... 36
6. HISTORY ............................................................................................................................38
6.1 Project Exploration ..................................................................................................................................... 38
6.2 Open Pit Mining .......................................................................................................................................... 40
6.3 Underground Exploration .......................................................................................................................... 41
6.3.1 Deep Diamond Drilling Program ............................................................................................................... 41
6.3.2 Underground Exploration Development .................................................................................................... 42
6.4 Metallurgical Sampling............................................................................................................................... 42
6.5 Historical Underground Resource Estimation ......................................................................................... 42
7. GEOLOGICAL SETTING ...................................................................................................47
7.1 Regional Geology and Tectonic Evolution ............................................................................................... 47
7.2 Local Geology ............................................................................................................................................. 50
7.2.1 Biotite (quartz-oligoclase-sericite) schist with staurolite and garnet .......................................................... 51
7.2.2 Quartz-feldspar schist ............................................................................................................................... 52
7.2.3 Quartz-muscovite schist............................................................................................................................ 52

7.2.4 Quartz-sericite/muscovite-biotite/chlorite schist ........................................................................................ 52
7.3 Structural Geology ..................................................................................................................................... 52
8. DEPOSIT TYPES ...............................................................................................................57
9. DEPOSIT GEOLOGY AND MINERALIZATION .................................................................59
9.1 General Considerations ............................................................................................................................. 59
9.2 Alteration ..................................................................................................................................................... 59
9.3 Mineralization .............................................................................................................................................. 61
10. EXPLORATION ...............................................................................................................63
10.1 MRDM Exploration Program 2008 to Present ........................................................................................... 63
10.2 Coordinates and Datum ............................................................................................................................. 64
10.3 Magnetic Declination .................................................................................................................................. 65
10.4 Other Local Grids ....................................................................................................................................... 66
10.5 Historical Exploration................................................................................................................................. 66
10.6 Targets on the Riacho dos Machados Shear Zone .................................................................................. 66
10.6.1 RDM Mine South Extension .................................................................................................................. 66
10.6.2 RDM Mine ............................................................................................................................................. 67
10.6.3 RDM Mine North Extension .................................................................................................................. 67
10.6.4 Mombuco East Target Area .................................................................................................................. 68
10.6.5 Manguinha Target Area ........................................................................................................................ 68
10.6.6 Confisco Target .................................................................................................................................... 68
10.6.7 Targets South of the Riacho dos Machados Mine ................................................................................ 69
10.6.8 Passagem Nova Target ........................................................................................................................ 70

11. DRILLING........................................................................................................................75
11.1 Introduction................................................................................................................................................. 75
11.2 Historical Drilling ........................................................................................................................................ 76
11.2.1 Historical Drilling Statistics .................................................................................................................... 77
11.2.2 Historical Drilling Techniques................................................................................................................ 78
11.2.3 Historical Drill hole Survey .................................................................................................................... 79
11.2.4 Historical Drilling Data Base ................................................................................................................. 79
11.3 Carpathian Drilling...................................................................................................................................... 80
11.4 Carpathian Drilling Statistics ..................................................................................................................... 80
11.5 Carpathian Drilling Techniques ................................................................................................................. 81
12. SAMPLING METHODS AND APPROACHES ................................................................84
12.1 Carpathian Core Handling, Logging, Sampling ....................................................................................... 84
12.2 Carpathian Re-Sampling of Historical Holes ............................................................................................ 86
12.3 Carpathian Reverse Circulation Drilling Logging and Sampling Methods ............................................ 87
12.4 Carpathian Trenches and Surface Channel Sampling and Logging ...................................................... 90
12.5 Historical Surface Samples ....................................................................................................................... 92
12.6 CVRD/DOCEGEO Historical Drill Samples ............................................................................................... 92
13. SAMPLE PREPARATION, ANALYSIS AND SECURITY................................................94
13.1 Sample Custody and Security ................................................................................................................... 95
13.2 Carpathian Sample Preparation ................................................................................................................ 95
13.3 Carpathian Sample Analyses..................................................................................................................... 96
13.4 Carpathian QA/QC Procedures.................................................................................................................. 97

13.5 Review of QA/QC 2008 Phase I Program Results .................................................................................... 98
13.5.1 Pulp Blank 2008.................................................................................................................................... 99
13.5.2 Coarse Blank 2008 ............................................................................................................................... 99
13.5.3 Pulp Duplicates 2008 .......................................................................................................................... 100
13.5.4 Coarse Duplicates 2008...................................................................................................................... 102
13.5.5 Certified Reference Material 2008 ...................................................................................................... 103
13.6 Review of QA/QC 2009 Phase II Program Results ................................................................................ 105
13.6.1 Pulp Blank 2009.................................................................................................................................. 106
13.6.2 Coarse Blank 2009 ............................................................................................................................. 107
13.6.3 Pulp Duplicates 2009 .......................................................................................................................... 107
13.6.6 Check assay program 2009 ................................................................................................................ 113
13.7 Review of QA/QC 2010 Phase III Program Results ............................................................................... 114
13.7.1 Pulp Blank 2010.................................................................................................................................. 114
13.7.2 Coarse Blank 2010 ............................................................................................................................. 115
13.7.3 Pulp Duplicates 2010 .......................................................................................................................... 115
13.8 Database Content and Integrity ............................................................................................................... 122
14. DATA VERIFICATION ..................................................................................................123
14.1 Data Examination...................................................................................................................................... 123
14.2 Site Visit .................................................................................................................................................... 123
14.3 NCL Independent verification sampling ................................................................................................. 123

15. ADJACENT PROPERTIES ........................................................................................... 125
16. MINERAL PROCESSING AND METALLURGICAL TESTING .....................................126
16.1 Historical Oxide Gold Production ........................................................................................................... 126
16.2 Historical Studies of Sulphide Gold Mineralization ............................................................................... 126
16.3 MRDM Metallurgical Test work ................................................................................................................ 127
16.3.1 2008 Test work ................................................................................................................................... 127
16.3.1.1 Metallurgical Test Samples ............................................................................................................. 127
16.3.1.2 Grinding .......................................................................................................................................... 128
16.3.1.3 Cyanide Leaching Kinetics.............................................................................................................. 129
16.3.1.4 Cyanide Leaching with Carbon (CIL) .............................................................................................. 133
16.3.2 2010 Test work ................................................................................................................................... 134
16.3.2.1 Metallurgical Test Samples ............................................................................................................. 134
16.3.2.2 Cyanide Leaching ........................................................................................................................... 138
16.3.2.3 Cyanide Destruction Tests .............................................................................................................. 147
16.3.2.4 Sedimentation Tests ....................................................................................................................... 148
16.3.3 Metallurgical Test Work Discussion .................................................................................................... 150
16.4 Plant Design .............................................................................................................................................. 150
16.4.1 Crushing Circuit .................................................................................................................................. 163
16.4.2 Grinding Circuit ................................................................................................................................... 163
16.4.3 Carbon-In-Leach ................................................................................................................................. 164
16.4.4 Cyanide Destruction............................................................................................................................ 166
16.4.5 Adsorption, Desorption and Recovery Plant (ADR) .......................................................................... 166
16.4.6 Process Plant Operating Cost............................................................................................................. 167
16.4.7 Tailing Disposal and Impoundment ..................................................................................................... 168

17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATION ............................... 171
17.1 Software Used ........................................................................................................................................... 171
17.2 Data Base .................................................................................................................................................. 171
17.3 3D Modelling ............................................................................................................................................. 172
17.4 Selection of Representative Samples ..................................................................................................... 173
17.5 Population Analysis ................................................................................................................................. 173
17.6 Outlier Analysis ........................................................................................................................................ 173
17.7 Compositing .............................................................................................................................................. 175
17.8 Exploratory data analysis ........................................................................................................................ 175
17.9 Specific Gravity Measurements............................................................................................................... 177
17.10 Block Model Parameters ...................................................................................................................... 178
17.11 Variography ........................................................................................................................................... 179
17.12 Kriging Strategy .................................................................................................................................... 181
17.13 Block Model Construction ................................................................................................................... 182
17.14 Mineral Resource Classification.......................................................................................................... 182
17.15 Model Validation ................................................................................................................................... 183
17.16 Resource Reporting Criteria ................................................................................................................ 184
17.17 Results ................................................................................................................................................... 185
17.18 Dilution and Ore Losses....................................................................................................................... 186
17.19 Mineral Reserve Estimate .................................................................................................................... 188
17.19.1 Operating Parameters and Criteria ..................................................................................................... 188
17.19.2 Pit Optimization................................................................................................................................... 188

17.19.2.1 Whittle Pit Optimization Model Construction ............................................................................... 188
17.19.2.2 Base Parameters ........................................................................................................................ 189
17.19.2.3 Slope Angles ............................................................................................................................... 189
17.19.2.4 Whittle Four-X Economic Shells Results..................................................................................... 191
17.19.3 Open Pit Design.................................................................................................................................. 194
17.19.3.1 Final Pit Designs ......................................................................................................................... 194
17.19.3.2 Mining Phases Designs............................................................................................................... 195
17.19.3.3 Tabulation of Pit Contained Resources....................................................................................... 202
17.19.4 Mine Production Schedule .................................................................................................................. 205
17.19.5 Mineral Reserve.................................................................................................................................. 207
18. OTHER RELEVANT DATA AND INFORMATION.........................................................209
18.1 Mining Study ............................................................................................................................................. 209
18.1.1 Mine Design ........................................................................................................................................ 209
18.1.2 Open Pit Design.................................................................................................................................. 209
18.1.3 Mine Production Schedule .................................................................................................................. 210
18.1.4 Waste Rock Stockpile ......................................................................................................................... 214
18.1.5 Mine Equipment .................................................................................................................................. 215
18.1.5.1 Equipment Selection Criteria .......................................................................................................... 217
18.1.5.2 Production Fleet Requirement ........................................................................................................ 218
18.1.5.3 Main Characteristics of the Rock .................................................................................................... 219
18.1.5.4 Operating Time Definition ............................................................................................................... 220
18.1.5.5 Drilling ............................................................................................................................................. 222
18.1.5.6 Blasting Design Parameters ........................................................................................................... 224
18.1.5.7 Loading ........................................................................................................................................... 225
18.1.5.8 Hauling............................................................................................................................................ 226

18.1.5.9 Truck Speeds .................................................................................................................................. 228
18.1.5.10 Fixed Times in Truck Cycle ......................................................................................................... 229
18.1.5.11 Trucks Requirement .................................................................................................................... 229
18.1.5.12 Auxiliary Equipment Requirement ............................................................................................... 234
18.1.5.13 Auxiliary Support Equipment ....................................................................................................... 238
18.1.5.14 Total Mine Fleet Requirement ..................................................................................................... 239
18.1.6 Mine Personnel ................................................................................................................................... 240
18.1.6.1 Salaried Staff .................................................................................................................................. 240
18.1.6.2 Hourly Labour ................................................................................................................................. 240
18.1.6.3 Mine Operations.............................................................................................................................. 240
18.1.6.4 Mine Maintenance........................................................................................................................... 241
18.1.6.5 Vacation Sickness & Absenteeism Allowance (VS&A) ................................................................... 241
18.1.7 Mine Capital Cost ............................................................................................................................... 243
18.1.7.1 Mine Major Equipment .................................................................................................................... 247
18.1.7.2 Mine Support Equipment ................................................................................................................ 248
18.1.7.3 Initial Spare Parts and Shop Tools.................................................................................................. 248
18.1.7.4 Mine Engineering and Geology Equipment ..................................................................................... 248
18.1.7.5 Mine Development .......................................................................................................................... 249
18.1.8 Mine Operating Cost ........................................................................................................................... 250
18.1.8.1 Grade Control Drilling ..................................................................................................................... 252
18.1.8.2 Drilling ............................................................................................................................................. 252
18.1.8.3 Blasting ........................................................................................................................................... 252
18.1.8.4 Loading ........................................................................................................................................... 252
18.1.8.5 Hauling............................................................................................................................................ 252
18.1.8.6 Auxiliary .......................................................................................................................................... 252
18.1.8.7 Hourly Labour ................................................................................................................................. 252

18.1.8.8 General Mine .................................................................................................................................. 252
18.1.8.8.1 General Maintenance ............................................................................................................... 253
18.1.8.8.2 Mine General and Administrative (G&A)................................................................................... 253
18.1.8.8.3 Parts and Consumables ........................................................................................................... 255
18.1.9 Major Mine Equipment ........................................................................................................................ 257
18.1.9.1 Blasting Supplies ............................................................................................................................ 263
18.1.9.2 General Mine .................................................................................................................................. 264
18.1.9.3 General Maintenance...................................................................................................................... 267
18.1.9.4 Operating Labour ............................................................................................................................ 268
18.1.9.5 Salaried Staff .................................................................................................................................. 268
18.1.9.6 Hourly Labour ................................................................................................................................. 268
18.1.9.7 Mine Operating Costs by Commodity ............................................................................................. 269
18.2 Geotechnical/Structural Studies ............................................................................................................. 271
18.3 Geomechanical Characterization ............................................................................................................ 272
18.4 Geomechanical Drill Core Characterization ........................................................................................... 273
18.5 Strength Parameters ................................................................................................................................ 275
18.6 Failure Mechanism ................................................................................................................................... 277
18.6.1 Circular failure..................................................................................................................................... 277
18.6.2 Plane failure ........................................................................................................................................ 277
18.6.3 Wedge failure...................................................................................................................................... 277
18.6.4 Plane-circular failure ........................................................................................................................... 277
18.7 Groundwater Conditions.......................................................................................................................... 278
18.8 Stability Analysis ...................................................................................................................................... 278
18.9 Waste Rock Stockpile .............................................................................................................................. 278

18.10 Tailing Dam ........................................................................................................................................... 281
18.11 Water Dam and Reservoir .................................................................................................................... 283
18.12 Hydrology And Hydrogeology ............................................................................................................. 284
18.13 Infrastructure ........................................................................................................................................ 285
18.13.1 Gold Transport .................................................................................................................................... 285
18.13.2 Power Supply...................................................................................................................................... 286
18.13.3 Water Supply and Management ......................................................................................................... 286
18.13.4 Communications ................................................................................................................................. 289
18.13.5 Buildings and Facilities ....................................................................................................................... 289
18.13.5.1 Explosive Storage ....................................................................................................................... 292
18.13.5.2 Site Building ................................................................................................................................ 292
18.13.5.3 Laboratory ................................................................................................................................... 292
18.13.5.4 Gatehouse .................................................................................................................................. 292
18.13.5.5 Fuel Station ................................................................................................................................. 292
18.13.5.6 Warehouse.................................................................................................................................. 293
18.13.5.7 Drill Core Storage Building .......................................................................................................... 293
18.13.6 Infrastructure and Process Plant Capital Cost Estimate ..................................................................... 293
18.14 Personnel .............................................................................................................................................. 295
18.15 Proposed Project Implementation....................................................................................................... 300
18.16 Environmental Considerations ............................................................................................................ 302
18.16.1 Environmental Impact Assessment (EIA), EIA Report, and Environmental Control Program (PCA) .. 302
18.16.2 Principal Environmental Baseline Findings ......................................................................................... 302
18.16.3 Main Environmental and Social Issues for the Project ........................................................................ 306
18.16.3.1.1 Water Availability for Project ................................................................................................... 307
18.16.3.1.2 Soil and In-Ground Water Contamination ............................................................................... 307

18.16.3.1.3 Noise and Dust ....................................................................................................................... 308
18.16.3.1.4 Acid Rock Drainage (ARD)................................................................................................... 308
18.16.4 Socio-economic Potential Impacts ...................................................................................................... 310
18.16.5 Licensing............................................................................................................................................. 311
18.16.6 Closure and Abandonment Stage ....................................................................................................... 317
18.16.7 Risk analysis and Opportunities.......................................................................................................... 319
18.16.7.1 Risk Analysis............................................................................................................................... 319
18.16.7.2 Opportunities............................................................................................................................... 321
18.17 Economic Analysis ............................................................................................................................... 322
18.17.1 Capital Cost ........................................................................................................................................ 322
18.17.2 Owners Capital Cost Estimate ............................................................................................................ 323
18.17.3 Mine Closure Capital Costs ................................................................................................................ 323
18.17.4 Contingency Provisions ...................................................................................................................... 323
18.18 Operating Cost Estimate ...................................................................................................................... 323
18.18.1 General and Administrative Costs ...................................................................................................... 324
18.18.2 Taxes and Royalties ........................................................................................................................... 324
18.18.3 Federal Incentive on Reinvestment .................................................................................................... 325
18.18.4 Discounted Cash Flow Model ............................................................................................................. 325
18.19 Gold Market ........................................................................................................................................... 333
18.19.1 Industry Trends and Pricing ................................................................................................................ 333
18.19.2 Sale Strategy ...................................................................................................................................... 333
19. REQUIREMENTS FOR TECHNICAL REPORTS ON PRODUCTION AND

DEVELOPMENT PROPERTIES ............................................................................................. 334
20. INTERPRETATION AND CONCLUSIONS....................................................................335

20.1 Geology and Resources........................................................................................................................... 335
20.2 Mining and Reserves ................................................................................................................................ 336
20.3 Metallurgical Information and Process Design ...................................................................................... 337
20.4 Geotechnical Investigations .................................................................................................................... 338
20.5 Hydrology .................................................................................................................................................. 338
20.6 Power Supply ............................................................................................................................................ 339
20.7 Water Supply ............................................................................................................................................. 340
20.8 Environmental and Social Issues ............................................................................................................ 340
20.9 Economic Analysis ................................................................................................................................... 340
20.10 Project Implementation Plan................................................................................................................ 341
21. RECCOMENDATIONS ..................................................................................................343
22. REFERENCES ..............................................................................................................345
23. CERTIFICATE OF AUTHORS.......................................................................................348
23.1 Certificate of Pierre Desautels ................................................................................................................. 348
23.2 Certificate of Carlos Guzmn................................................................................................................... 349
23.3 Certificate of Richard Lawrence .............................................................................................................. 350
23.4 Certificate of Roy Lopes .......................................................................................................................... 352
23.5 Certificate of John Wells .......................................................................................................................... 353
24. APPENDICES ...............................................................................................................355
24.1 Sustainability Program ............................................................................................................................. 355
24.2 Golder Report............................................................................................................................................ 355

24.3 Metallurgical Test Work ........................................................................................................................... 355
24.4 Capital Cost Estimate Details .................................................................................................................. 355
24.5 Operating Cost Estimate Details ............................................................................................................. 355
24.6 Acid Rock Drainage .................................................................................................................................. 355
24.7 EMR Report ............................................................................................................................................... 355
24.8 Drawings ................................................................................................................................................... 355

List of Figures
Figure 1-1 Project Location .......................................................................................................................3
Figure 4-1 Map of licences ......................................................................................................................28
Figure 4-2 Map of MRDM surface rights ownership ...............................................................................31
Figure 5-1 Access map of the project .....................................................................................................34
Figure 5-2 Average Climate Conditions ..................................................................................................35
Figure 5-3 Cerrado Flora .........................................................................................................................36
Figure 5-4 Caatinga Flora........................................................................................................................36
Figure 7-1 Regional Geology Map ..........................................................................................................49
Figure 7-2 Geologic Map - Location of the RDM Gold Project ...............................................................51
Figure 7-3 Stereo nets of planar and linear structural fabric from all measured domains .....................55
Figure 7-4 Comparison of mapped structural elements..........................................................................56
Figure 9-1 Geology map with drill hole locations at the RDM Mine-site .................................................61
Figure 9-2 Geological cross section at RDM Mine-site...........................................................................62
Figure 10-1 Exploration target areas on the RDM Gold Project ...........................................................72
Figure 10-2 Exploration target areas north of the RDM mine ...............................................................73
Figure 10-3 Exploration target areas south of the RDM mine...............................................................74
Figure 11-1 Drill hole locations around mine site ..................................................................................76
Figure 11-2 Diamond drill rigs operating on the RDM Mine-site June 2009 .........................................82
Figure 11-3 Cleaning the cyclone-splitter of the RC drill rig, RDM Project, Jun 2009..........................83
Figure 12-1 Example core-photograph from Carpathian 2008 drill program at the RDM Mine-site ....86
Figure 12-2 Comparison Carpathian re-sampling vs. CVRD results ....................................................87
Figure 12-3 Carpathian reverse circulation sampling flow sheet. .........................................................90
Figure 12-4 Trench in the South Extension zone with view westward .................................................92
I
Figure 13-1 Control plot of Pulp blank ...................................................................................................99
Figure 13-2 Control plot of Coarse blank 2008 ...................................................................................100
Figure 13-3 Linear regression plot of Pulp duplicates 2008................................................................101
Figure 13-4 HARD graph for Pulp Duplicates 2008 ............................................................................101
Figure 13-5 Linear regression plot of coarse duplicates 2008 ............................................................102
Figure 13-6 HARD graph for coarse duplicates 2008 .........................................................................103
Figure 13-7 CRM gold accuracy plots vs. time for the 2008 program ................................................105
Figure 13-8 Control plot of Pulp blank 2009 ........................................................................................106
Figure 13-10 Linear regression plot of Pulp Duplicates 2009 ...............................................................108
Figure 13-12 Linear regression plot of coarse duplicates 2009 ............................................................109
Figure 13-13 CRM gold accuracy plots vs. time for the 2009 program ................................................113
Figure 13-14 Check assay linear regression plot 2009 .........................................................................114
Figure 13-15 Control plot of Pulp Blank 2010 .......................................................................................115
Figure 13-17 Linear regression of Pulp Duplicates 2010 ......................................................................116
Figure 13-19 Linear regression plot for coarse duplicates 2010...........................................................118
Figure 13-20 HARD graph for coarse duplicates 2010 .........................................................................118
Figure 13-21 CRM gold accuracy plots vs. time, for the 2010 program ...............................................121
Figure 16-1 Graph Grind Time vs P80 of 74 microns ............................................................................129
Figure 16-2 Gold Extraction vs Time (Sample RDM-3).......................................................................130
II
Figure 16-5 Chemical Composition of The Eleven Discrete Samples ................................................137
Figure 16-6 Summary of Bond Work Index Test data .........................................................................138
Figure 16-7 RDM-1 ..............................................................................................................................139
Figure 16-8 RDM-2 ..............................................................................................................................139
Figure 16-9 RDM-3 ..............................................................................................................................140
Figure 16-10 RDM-4 ..............................................................................................................................140
Figure 16-11 RDM-5 ..............................................................................................................................141
Figure 16-12 RDM-6 ..............................................................................................................................141
Figure 16-13 RDM-7 ..............................................................................................................................142
Figure 16-14 RDM-8 ..............................................................................................................................142
Figure 16-15 RDM-9 ..............................................................................................................................143
Figure 16-16 RDM-10 ............................................................................................................................143
Figure 16-17 RDM-11 ............................................................................................................................144
Figure 16-18 1st Series Cyanidation Standard Conditions ................................................................144
Figure 16-19 2nd Series Cyanidation Lead Nitrate Addition ..............................................................145
Figure 16-20 3rd Series Cyanidation Lead Nitrate & Carbon Addition ..............................................146
Figure 16-21 Sedimentation Tests.........................................................................................................149
Figure 16-22 Project Layout...................................................................................................................154
Figure 16-23 Plant Layout replace with one from executive summary report ......................................155
Figure 16-24 Crushing Plant Flow Sheet...............................................................................................156
Figure 16-25 Grinding Circuit Flowsheet ...............................................................................................157
Figure 16-26 Carbon-In-Leach Flowsheet .............................................................................................158
Figure 16-27 Cyanide Destruction Flow Sheet......................................................................................159
III
Figure 16-28 Acid Wash and Stripping ADR Flow Sheet ......................................................................160
Figure 16-29 Carbon Regeneration ADR Flow Sheet ...........................................................................161
Figure 16-30 Gold Smelting Flow sheet ................................................................................................162
Figure 16-31 Section of Tailing Dam .....................................................................................................169
Figure 16-32 Plan View of Tailing Dam .................................................................................................170
Figure 17-1 Probability plot, for identification of outliers, for the four different domains ....................174
Figure 17-2 Histogram Au Composites OP model All veins ........................................................176
Figure 17-3 Variogram, calculated for 1 m composites.......................................................................181
Figure 17-4 Floating window along West-East ....................................................................................183
Figure 17-5 Floating window along South-North .................................................................................184
Figure 17-6 Floating window along levels (height) ..............................................................................184
Figure 17-7 Areas for Dilution Criteria .................................................................................................187
Figure 17-8 Slopes Angles for Pit Optimization...................................................................................191
Figure 17-9 Final Pit Design ................................................................................................................195
Figure 17-10 Phases Design on 801 Bench..........................................................................................196
Figure 17-11 Phases Design on North Section .....................................................................................197
Figure 17-12 Phases Design on Central Section ..................................................................................198
Figure 17-13 Phases Design on South Section ....................................................................................199
Figure 17-14 Mining Phases 01 & 02 ....................................................................................................200
Figure 18-1 MRDM Mine Schedule .....................................................................................................211
Figure 18-2 MRDM Mine Schedule Total Material Handling by Mining Phases..............................211
Figure 18-3 MRDM Mine Schedule Total Mined Benches by Mining Phases .................................212
IV
Figure 18-4 MRDM Mine Schedule Mining Photos PP to Y02 ........................................................212
Figure 18-5 MRDM Mine Schedule Mining Photos Y03 to Y05 .......................................................213
Figure 18-6 MRDM Mine Schedule Mining Photo Y06 to Y08 .........................................................213
Figure 18-7 Waste Dump Configuration ..............................................................................................215
Figure 18-8 Total Hauling Distance .....................................................................................................228
Figure 18-9 Summary of Required Trucks ..........................................................................................230
Figure 18-10 Final Pit Design Showing Geotechnical Drill Hole Locations ..........................................274
Figure 18-11 Spatial Distribution of Slant Holes....................................................................................275
Figure 18-12 Construction Method and Final Geometric Arrangement ................................................280
Figure 18-13 Hydrological Patterns near the RDM Site .......................................................................284
Figure 18-14 Water Balance and Distribution Diagram ........................................................................288
Figure 18-15 Facility layout plan ............................................................................................................291
Figure 18-16 General Management and Administration Organization Chart .......................................297
Figure 18-17 Mine Area Organization Chart .........................................................................................298
Figure 18-18 Process Plant Area Organization Chart ...........................................................................299
Figure 18-19 Master Schedule .............................................................................................................301
Figure 18-20 State Environmental Organization ...................................................................................313
Figure 18-21 LP Acquisition ...................................................................................................................314
Figure 18-22 LI Acquisition ....................................................................................................................314
Figure 18-23 LO Acquisition .................................................................................................................315
V
List of Tables
Table 1-1 Drilling and Sampling Statistics ...............................................................................................8
Table 1-2 Resource Database .................................................................................................................9
Table 1-3 NI 43-101 Mineral Resource Estimate for RDM ....................................................................11
Table 1-4 Mineral Reserve Estimate......................................................................................................13
Table 1-5 LOM Open Pit Mine Production Plan.....................................................................................14
Table 1-6 Plant Feed Schedule..............................................................................................................14
Table 1-7 Total Capital Cost Summary ..................................................................................................15
Table 1-8 Total Mine Operating Cost Summary (US$ per tonne) .........................................................16
Table 1-9 Summary Plant Operating Cost Estimate..............................................................................16
Table 1-10 Economic Parameters............................................................................................................16
Table 1-11 Economical Evaluation Results Summary.............................................................................18
Table 1-12 Sensitivity Gold Price and Discount Rate Pre-Tax ................................................................18
Table 1-13 Sensitivity Gold Price and Discount Rate After-Tax ..............................................................18
Table 2-1 Carpathian completed NI 43-101 compliant reports on the property. ...................................21
Table 4-1 Boundaries of project area.....................................................................................................27
Table 4-2 Mineral properties of the Riacho dos Machados gold project ..............................................28
Table 6-1 Riacho dos Machados Mine - Open pit Mine Production records.........................................40
Table 6-2: Historical Underground Gold Resource Estimate -CVRD 1996............................................44
Table 10-1 Local-grid to UTM reference points 2008. ............................................................................65
Table 10-2 Rotation point of origin for local-grid translation ...................................................................65
Table 10-3 Selected Exploration Drill Hole Intercepts - RDM Mine South Extension Target .................67
Table 10-4 Selected Exploration Drill Hole Intercepts, RDM Mine North Extension Target ..................68
Table 10-5 Selected Exploration Drill Hole Intercepts, Manguinha Target ............................................68
Table 10-6 Selected Exploration Drill Hole Intercepts, Confisco Target .................................................69
VI
Table 11-1 Historical drilling tabulation for the RDM project ...................................................................78
Table 11-2 Carpathian drilling program statistics. ...................................................................................81
Table 13-1 QA-QC sample types and rates of insertion.........................................................................97
Table 13-2 Certified reference materials from Rocklabs and inserted in routine sample
submittals. 98
Table 13-3 CRM gold value vs. mean, ALS Brasil gold value and standard deviation from the mean,
2008. ..................................................................................................................................................104
Table 13-4 CRM gold value vs. mean SGS GEOSOL Brasil gold value ..............................................110
Table 13-5 CRM gold value vs. mean SGS GEOSOL Brasil gold value ..............................................119
Table 14-1: Control samples......................................................................................................................124
Table 16-1 Global Assays of Test Samples ..............................................................................................128
Table 16-2 Grind Time vs P80 Particle Size ..........................................................................................128
Table 16-3 Bench Scale Ball Mill Grinding Test Results ......................................................................129
Table 16-4 Gold and Silver Assays - Leach Residue ........................................................................132
Table 16-5 Gold Percentage Extracted .....................................................................................................133
Table 16-6 Results of CIL Cyanide Bottle Roll Test Work .....................................................................133
Table 16-7 Test work Sample Location .................................................................................................135
Table 16-8 Test Work Sample Location and Grades ............................................................................135
Table 16-9 Met Sample composition......................................................................................................136
Table 16-10 Summary of Cyanide Destruction Test work ...................................................................147
Table 16-11 Operating Criteria .............................................................................................................152
Table 16-12 ADR Operating Criteria ....................................................................................................152
Table 16-13 Consumables....................................................................................................................153
Table 16-14 Summary Plant Operating Cost Estimate ........................................................................168
Table 17-1 General stats of drilling used in this evaluation, separated by type ...................................171
VII
Table 17-2 Statistics of samples inside the OP model, before and after capping .............................174
Table 17-3 Statistics of samples inside the UG model, before and after capping.............................175
Table 17-4 Basic statistics for raw samples inside the OP model separated by vein .......................175
Table 17-5 Basic statistics for composites inside the OP model separated by vein, after capping ..176
Table 17-6 Comparison between samples and composites for UG model .......................................176
Table 17-7 Density values adopted for the different rock types Block Model Parameters.......................178
Table 17-8 Block model parameters Variography .....................................................................................179
Table 17-9 Variogram parameters .........................................................................................................180
Table 17-10 Kriging strategy for RDM project ...........................................................................................182
Table 17-11 Parameters used for Whittle.............................................................................................185
Table 17-12 Riacho dos Machados Mineral Resources Table ............................................................185
Table 17-13 Grade-Tonnage tables for OP mineral resources............................................................186
Table 17-14 Grade-Tonnage tables for UG mineral resources ...........................................................186
Table 17-15 Lerch-Grossman Optimization Parameters .....................................................................189
Table 17-16 Slopes Angles for Pit Optimization...................................................................................190
Table 17-17 Lerch-Grossman Economic Shells Results (1/2) .............................................................193
Table 17-18 Lerch-Grossman Economic Shells Results (2/2) .............................................................193
Table 17-19 Resources in Final Pit at Various Cut-off Grades ............................................................203
Table 17-20: Resources Contained in Mining Phases at Various Cut-off Grades ...................................204
Table 17-21 Mine Production Schedule ...............................................................................................206
Table 17-22 Plant Feed Schedule ........................................................................................................207
Table 17-23 Proven & Probable Mineral Reserves current as at March 2011 ....................................208
Table 18-1 Mine Production Schedule ...................................................................................................210
Table 18-2 Plant Feed Schedule............................................................................................................214
VIII
Table 18-3 Peak Fleet Requirements for First Year and Commercial Production ................................216
Table 18-4 Mine Major Equipment Fleet Requirement ..........................................................................217
Table 18-5 Mine Production Schedule Owner and Contract Mining ..................................................219
Table 18-6 Material Characteristics .......................................................................................................219
Table 18-7 Annual Scheduled Mine Days and Shifts ............................................................................220
Table 18-8 Summary of Operating Time per Day ..................................................................................222
Table 18-9 Utilization and Availability of Mining Equipment ..................................................................222
Table 18-10 Drilling Design Parameters ...................................................................................................223
Table 18-11 Drilling Requirement Estimate..........................................................................................224
Table 18-12 Blasting Design Parameters..................................................................................................225
Table 18-13 Loading Productivity Estimate ..........................................................................................226
Table 18-14 Loading Requirement Estimation (1/2) ............................................................................227
Table 18-15 Loading Requirement Estimation (2/2) .................................................................................227
Table 18-16 Haulage Distances Summary...........................................................................................228
Table 18-17 Average Speeds (km/hr) .......................................................................................................229
Table 18-18 Trucks Productivity and Units Required (Loading with Liebherr 984C L Ore) ................231
Table 18-19 Trucks Productivity and Units Required (Loading with L580 2+2 FEL) ..........................232
Table 18-20 Trucks Productivity and Units Required (Loading with Liebherr 984C L Waste) .................233
Table 18-21 Summary of Required (Units) Trucks....................................................................................233
Table 18-22 Major Auxiliary Equipment - Active Work Areas ..............................................................235
Table 18-23 Assigned Auxiliary Equipment Units Per Work Area .......................................................235
Table 18-24 Major Auxiliary Equipment Requirement .........................................................................236
Table 18-25 Grade Control Design Parameters...................................................................................237
Table 18-26 Grade Control Drilling Requirement - Explorac R50 .......................................................238
IX
Table 18-27 Support Equipment Requirement.....................................................................................238
Table 18-28 Mine Equipment Fleet Requirement Summary................................................................239
Table 18-29 Mine Equipment Operating Hours Requirement Summary ..................................................239
Table 18-30 Salaried Staff Labour Requirements ................................................................................242
Table 18-31 Mine Hourly Labour Requirements .......................................................................................243
Table 18-32 Summary of Mine Capital Costs ($US x 1000) ................................................................245
Table 18-33 Mine Equipment Capital Cost................................................................................................246
Table 18-34 Mine Major Equipment Salvage Values ................................................................................247
Table 18-35 Basis for Mine Equipment Capital Costs ..............................................................................247
Table 18-36 Engineering & Geology Equipment .......................................................................................249
Table 18-37: Contractor Mine Development .............................................................................................250
Table 18-38: Summary of Total and Unit Mining Costs ............................................................................251
Table 18-39 Summary of Mine Operating Costs - Total Dollars ($US x 1000) ........................................253
Table 18-40 Summary of Mine Operating Costs - Per Total Tonne ($US/tonne) ....................................253
Table 18-41 Mine Operating Cost by Costs Centres (US$x1000 & US$/tonne) (1/3) .............................254
Table 18-44 Summary of Total and Unit Mining Parts and Consumables Costs .....................................256
Table 18-45 Summary of Mine Parts and Consumables Total Dollars ($US x 1000) ..............................257
Table 18-46 Summary of Mine Parts and Consumables - Per Total Tonne ($US/tonne) ........................257
Table 18-47 Mine Equipment Operating Hours Requirement Summary .............................................258
Table 18-48 Major Equipment Cost Per Operating Hour (US$/h) .......................................................259
Table 18-49 Hourly Cost for Atlas Copco ROC L8-30 Drill ..................................................................259
Table 18-50 Hourly Cost for Liebherr R984C Excavator .....................................................................260
X
Table 18-51 Hourly Cost for Liebherr L580 2+2 Wheel Loader ...........................................................260
Table 18-52 Diesel Consumption for Haul Trucks ...............................................................................261
Table 18-53 Hourly Cost for CAT D9T Track Dozer ............................................................................261
Table 18-54 Hourly Cost for CAT 16M Grader.....................................................................................262
Table 18-55 Hourly Cost for Scania Water Truck (20000 litre) ............................................................262
Table 18-56 Hourly Cost for Atlas Copco Explorac R50 Grade Control..............................................263
Table 18-57: Blasting Cost Explosives and Accessories .......................................................................264
Table 18-58 Support Equipment Hourly Cost (US$/hr)........................................................................265
Table 18-59 Pumping Cost per Year ....................................................................................................266
Table 18-60 Topsoil Stripping Cost per Year .......................................................................................267
Table 18-61 Summary of Total and Unit Mine Labour Costs....................................................................268
Table 18-62 Mine Operating Costs by Commodity (1/2)...........................................................................270
Table 18-63 Mine Operating Costs by Commodity (2/2)...........................................................................271
Table 18-64 Summary Mine Operating Costs by Commodity ..................................................................271
Table 18-65 Key Structural Data from Previous Reports .....................................................................272
Table 18-66 Geomechanical Parameters Obtained.............................................................................276
Table 18-67 Factors of Safety Obtained through Stability Analyses ...................................................278
Table 18-68 Summary Aspects of the Tailing Impoundment. ..............................................................283
Table 18-69 Process Plant and Infrastructure Summary Capital Cost Estimate.................................294
Table 18-70 Tail Dam & Waste Pile Capital Costs Summary ..............................................................295
Table 18-71 Arsenic Concentrations ....................................................................................................306
Table 18-72 Licenses and Permits .......................................................................................................317
Table 18-73 Project Risks..........................................................................................................................321
Table 18-74 Total Capital Cost Summary .................................................................................................322
XI
Table 18-75 Total Mine Operating Cost Summary (US$ per tonne) ...................................................324
Table 18-76 Economic Parameters ......................................................................................................326
Table 18-77 Economical Evaluation Results Summary .......................................................................326
Table 18-78 Sensitivity Gold Price and Discount Rate Pre-Tax ..........................................................327
Table 18-79 Sensitivity Gold Price and Discount Rate After-Tax ........................................................327
Table 18-80 Economic Sensitivity Chart ..............................................................................................328
XII
List of Abbreviations
Abbreviation Unit or Term

% Percent
degrees of longitude, latitude, compass bearing or
< di than
Less t
> Greater than
AA Atomic absorption
m.a.s.l. Metres above sea level
Au Gold
oC Degrees Celsius
3-D Three-dimensional
CIL Carbon-in-leach
cm Centimetre(s)
cm3 Cubic centimetre(s)
E East
g Gram(s)
g/cm3 Grams per cubic centimetre
g/t Grams per tonne
GPS Global positioning system
ha Hectare(s)
in Inch(es)
kg Kilogram(s)
Koz Thousand ounces
kg/t Kilograms per tonne
km Kilometre(s)
M Million(s)
m Metre(s)
m3 Cubic metre(s)
N North
ppb Parts per billion
ppm Parts per million
RC Reverse circulation
s Second(s)
S South
SG Specific gravity
t Tonne(s)
US United States
US$ US dollar(s)
UTM Universal Transverse Mercator
W West
XIII
1. SUMMARY
1.1 Introduction
Carpathian Gold Inc (Carpathian), through its wholly owned subsidiary Minerao Riacho dos
Machados Ltda (MRDM) commissioned a consortium of engineering firm and environmental firms to
complete an updated Resource Estimate (2011 Resource Estimate) Feasibility Study (the Technical
Report) in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects,
and in compliance with Form 43-101F1 on the Riacho dos Machdos (RDM) Gold Project, located in
the Minas Gerais State, Brazil. The Feasibility Study was performed solely on the open pit portion of
the deposit. The Technical Report is based on information as of March 31st, 2011.
The members of the consortium comprise Tecnomin Projetos e Consultoria Ltda. (Tecnomin) lead
consultant, NCL Brasil Ltda. (NCL), Golder Associates Brasil Consultoria e Projetos Ltda. (Golder),
YKS Servicos Ltda (YKS), M2 Environmental and Consulting Services Ltd. (M2), Lawrence
Consulting Ltd. and John A Wells, Metallurgical Consultant. Hatch Brasil (Hatch) assisted with the
overview of the Feasibility Study in accordance with their contract to provide, Project, Procurement,
and Construction Management for the development of the project, as well as determining the project
development timeline.
The following outlines the major responsibilities for the Technical Report:
Tecnomin: Principle consultant for the Technical Report and responsible for the design of the
infrastructure and process plant and their capital and operating cost estimates.
NCL: Mineral resource and reserve estimate, open pit mine and mine infrastructure design,
production plan and scheduling, mine capital and operating costs estimates.
Golder: Geotechnical studies, overall water balance, pit slopes, waste rock stockpile, tailing
impundment and dam design and all associated capital and operating cost estimates.
Lawrence Consulting Ltd.: Acid Rock Drainage (ARD) studies.
John A. Wells, Metallurgical Consultant & MRDM: Metallurgy, processing design, and process flow
sheet development in conjunction with Tecnomin.
YKS with input from MRDM: Environmental Impact Assessment and Report,
environmental control program, LP licence.
1
M-2 with input from MRDM: PCA supplementary information, permitting of water usage and Li and LO
project development licence.
1.2 Property Description, Location, Access and Physiography

As of the date of this Technical Report, the Riacho dos Machados property is currently composed of
one mining concession, 17 exploration licenses totalling 28,151 hectares of area. The majority of the
2011 Resources Estimate is located on the mining concession (nr. 831005/1982), covering 1,000
hectares. A small part of the 2011 Resource Estimate is located on an exploration license
(nr.833480/2006), immediately south of the mining license. This exploration license is in the process
of being converted as an addition to the current mining concession.
The Project is located approximately 145 kilometres by road northeast of the city of Montes Claros
(population 400,000) in Minas Gerais State, southeastern Brazil.
Access to the Project from Monte Claros is by 130 kilometres of paved road and 15 kilometres of all-
weather gravel road. The nearest town is Riacho dos Machados (population 11,000) about 25
kilometres NE from the Project.
Figure 1-1 below shows the location of the RDM Gold Project.
2
Figure 1-1 Project Location
The Project area consists of rolling hills and drained by sparse intermittent streams. Elevations at the
site range from 770 to 900 metres a.s.l.
The climate is semi-arid tropical with two seasons: a dry winter and a rainy summer, with the main
period of rains occurring between November and March. Annual rainfall is about 1,100 mm.
The prevailing vegetation is a brushy land with open grassy fields. The area supports only limited
agriculture, mainly subsistence cattle farming.
1.3 History
The Riacho dos Machados Mine (RDM Mine) was discovered by DOCEGEO, the exploration branch
of Companhia Vale do Rio Doce (CVRD - currently renamed as VALE) through regional geologic
3
investigations along the north-south trending eastern margin of the Sao Francisco Craton. In 1986,
DOCEGEO discovered a surface oxide gold oxide deposit known as the Ouro Fino Deposit, while
investigating gold anomalies on highly metamorphosed volcano-sedimentary rock sequences of
probable archean to early proterozoic age.
The RDM Mine opened in 1989 as an open pit oxide gold operation with ore processed by cyanide
heap leaching. It operated until 1997, producing 155,000 ounces of gold from 3.2 million tones of
oxide ore (1.89 g/t Au) mined to an approximate depth of 30-60 metres.
Exploration continued in the district during the mining period for additional oxide gold mineralization
and depth extensions of the mine into the sulphide mineralization. Evaluation of the sulphide
mineralization included drilling, underground exploration, and completion of prefeasibility studies until
1997 when the mine was closed as a result of low gold prices, exhaustion of oxide ore, and changing
focus away from gold by CVRD.
From 1997 to 2008 the property was submitted to reclamation and environmental monitoring activities
by Vale, attending the requirements of the Minas Gerais environmental agency. No exploratory or
mining activity occurred during this period. The mining concession was maintained as suspended for
re-evaluation and existing infrastructure, such as 13.8 kV power transmission line, access road, and
various minesite buildings, were maintained. Documentation has been submitted to the DNPM for the
re-activation of the mining concession.
A NI 43-101 compliant Technical Report for the RDM Gold Project was completed on February 29th,
2008 (BK Exploration Associates). This report provided a summary of the historical operational
information, previous exploration activities, and outlined the potential of the project.
In mid 2008, an exploration program based on the CVRD historical information was developed and
carried out to define better the mineralized zone within the limits of CVRD historic open pits. From
August to November 2008, MRDM completed 64 drill holes for a total of 11,277 m. Samples were
extracted from the core of the drill holes and sent to a certified laboratory to analyze for gold, iron, and
sulphur. The core of 102 drill holes previously completed by CVRD representing 20,017 m of drilling
was re-sampled to check the quality of the CVRD assays and utilize the assays for incorporation on
the resource model. The results from this drill program, termed, Phase I drilling campaign, was
utilized by MRDM to generate geologic and grade-shell models from which NCL completed an initial
NI 43-101 compliant resource estimate released May 18, 2009. This resource estimate was utilized by
a consortium of engineering companies, led by NCL, to complete a NI 43-101 compliant Preliminary
4
Economic Assessment (PEA) of the project that was released on August 12, 2009. The PEA
showed positive economics for the project. MRDM then embarked on a Phase II drilling campaign in
2009 with the principle objective of evaluating and upgrading the open pit inferred resources utilized in
the PEA to measured + indicated resources. The results from the Phase I and Phase II drilling
campaigns were used to develop a NI 43-101 compliant resource estimate update that was released
on July 26, 2010. Other exploration activities were completed to examine, on a preliminary basis, the
potential of the satellite areas consisting of extensions to the south and north of the RDM Mine.
During 2010, the services of a consortium of engineering companies (listed above) were retained to
complete a NI 43-101 compliant Feasibility Study of the open pit mine, infrastructure, and process
plant, based only on the open pit portion of the 2011 Resource Estimate. In addition, Hatch, Brasil
and Lyon Engineering were contracted separately to provide procurement and project management
services.
A Phase III drilling program was completed in the last quarter of 2010 to increase measured and
indicated resources and convert pockets of inferred resources to the measured plus indicated
categories. The results of this drilling program, together with Phase I and Phase II drilling programs
were used to develop the 2011 Resource Estimate that was utilized to develop the mineral reserves
that were utilized to develop the Feasibility Study.
A geotechnical test work program was performed in 2010 to establish the slopes of the open pit walls
and determine the strengths of materials underlying the tailing dam, the layout of the waste rock
stockpile, and site facilities to enable the design and engineering of the respective foundations to be
completed. The results of this work are included within the body of the Technical Report.
Acid Rock Drainage (ARD) test work was initiated in August 2010 to test the ARD potential of the
tailing material and the waste rock of the open pit. The results to date of the test work show that the
tailing material has no potential to generate ARD whereas some of the waste rock near the mineral
zone has the potential to generate ARD. The ARD test work will continue for several months until a
trend is established.
In April 2010, MRDM received the environmental license, Licena Previa. The environmental control
document (PCA), required to obtain the LI (license to construct the project) was submitted to the
state environmental agency SUPRAM in July 2010. Subsequent to the submittal of the PCA,
SUPRAM has requested supplemental information that is currently being consolidated for submittal to
the agency as of the date of this Technical Report.
5
1.4 Geology and Mineralization

The mine is located near the eastern margin of the So Francisco Craton, which is a tectonic unit
affected by the BrasilianoPan-African event (locally denominated Brasiliano). The region is made up
of Palaeoproterozoic granitegneisses and amphibolites, Mesoproterozoic Espinhao Supergroup
units (continental rift-related rocks and shallow-water marine sequences), Neoproterozoic glacial units
of the Macabas Group, Neoproterozoic shallow-water, carbonate-bearing Bambu Group and
Brasiliano granites. The RDM gold deposit occurs in a shear zone hosted in the meta-volcano-
sedimentary rocks of the Riacho dos Machados Group.
The local geology is composed of the following lithostratigraphic units:
Basal migmatite gneiss complex with associated bodies of basic rocks;
Meta-volcano-sedimentary rocks of the Riacho dos Machados Group (RMG),host to gold

mineralization;
Supracrustal rocks of the Macabas Group;
Granitic intrusives.
The meta-volcano-sedimentary (RMG Group) sequence, which hosts the mineralization, is composed
of the following units: Biotite (quartz-oligoclase-sericite) schist with staurolite and garnet Quartz-
feldspar schist Quartz-muscovite schist this unit is the principal host for the gold mineralization at
the Riacho dos Machados Mine (QMX). Quartz-sericite/muscovite-biotite/chlorite schist (BMX/CMX).
The metamorphism is typical amphibolite facies mineral association that is progressively

retrogradealtered to greenschist facies assemblage proximal to, and within the gold mineralized
zones. Gold mineralization is associated with disseminated pyrite, pyrrhotite, and arsenopyrite within
this alteration zone.
The gold mineralized body occurs as stacked tabular horizons that are mostly concordant with the
principal rock foliation and within a wide ductile (mylonite) shear zone. The tabular mineralized zones
typically consist of a main zone (2-10 m true thickness) occasionally accompanied by a thinner
footwall and hanging wall zones (1-5 m true thickness) separated by 3-10 m of non-mineralized rock.
Mineralization at the Riacho dos Machados (RDM) Mine occurs in a belt of hydrothermally-altered
rock developed along a district-scale shear zone that extends almost 30 kilometres along strike in a
N20E strike direction and dips 40-45 east. The RDM deposit is considered to be a Orogenic gold
deposit type (or lode gold type), which occur in metamorphic terranes and are hosted in first-or
6
second-order regional-scale structures within collision orogens. Orogenic gold deposit type (or lode
gold type), which occur in metamorphic terranes and are hosted in first-or second-order regional-
scale structures within collision orogens.
1.5 Exploration
The exploration activities in the RDM area were of regional-scale consisting of geological
reconnaissance mapping and sampling, including stream sediment sampling and soil geochemistry
(1978 to 1981) until the discovery of gold mineralization by CVRD. From 1982 to 1987, geological
mapping, heavy mineral geochemical sampling and regional airborne geophysical magnetic and
electromagnetic surveys were completed, leading to the definition of four targets. The Ouro Fino
target was defined as higher priority, and followed-up with detailed soil geochemistry surveys and
trenching programs with results that highlighted the potential of this target. Following shallow RC and
diamond drilling that defined the Ouro Fino target as a viable gold deposit, several drilling campaigns
were performed, totalling 497 drill holes, for 40,487 metres of core and RC, distributed along the RDM
Mine area and satellite targets. Prior to this discovery by Vale, no gold deposits or artisanal workings
were known in this area. CVRDs focus was on the oxide gold mineralization, though during mine
operation, evaluation of the sulphide mineralization was completed through drilling and underground
exploration via excavation of a 117 m deep shaft, followed by 730 m of galleries along the ore body.
Mapping, underground drilling and channel sampling were used for prefeasibility level studies of
sulphide ore mining completed before closing the project in 1997 due to low gold prices and changing
focus away from gold for CVRD.
The focus since acquiring the RDM Gold Project in 2008 has been to define and evaluate sulphide
gold resources below and along strike of the existing shallow open pit left by CVRD. The bulk of work
completed has been related to resource definition and includes drilling, geologic interpretation and
modeling, and resource estimation. Three Phases of drilling have been completed and three NI 43-
101 Resource Estimates completed as well (including the present Technical Report). The present
total database includes 229 diamond drill holes completed by MRDM (37,622 m), 157 CVRD diamond
drill holes re-sampled (24,727 m), and 58 MRDM Reverse-Circulation drill holes (4,566 m) totalling
444 drill holes (66,915 m). The de-commissioned heap-leach pile from CVRD was sampled utilising a
pattern of auger drill holes to define the low grade resource.
7
MRDM Drill Average

Number of
Programs and Key Type Metres Depth
Drill holes
Reports (metres)
Initial NI 43-101 Technical Report (February, 2008)
Phase I Drilling Core 11,277 64 176
Re-sampling CVRD drill 20,017 102 196
core
NI 43-101 Initial Resource Estimate (July, 2009)
NI 43-101 Preliminary Economic Analysis (September, 2009)
Phase II Drilling Core 15,980 94 170

core
Reverse circulation 4,566 58 78
Trenches 663 20 33
Channel sample traverses 168 6 28
NI 43-101 Resource Estimate Update (September, 2010)
Phase III Drilling Core 10,365 71 146

Re-sampling CVRD drill 392 7 56
core
Trenches/channel 297 13 23
Traverses
Auger Drill holes 275 35 8
Phase I + II + III Core 37,622 229 164

Drilling
core
Reverse Circulation drilling 4,566 58 79
Subtotal: Drilling 66,915 444 151
Trenches/channel 960 33 29
traverses
Auger Drill holes 275 35 8
Total: all 68,150 512
NI 43-101 Update Resource Estimate and Feasibility Study

Table 1-1 Drilling and Sampling Statistics
1.6 Metallurgy Summary

The metallurgical test work performed by SGS, Brazil and G&T Laboratories of Kamloops, B.C.,
Canada showed that an average of 90% of the gold can be recovered from the ore by utilizing a
conventional crush, grind, CIL, and ADR process plant. The maximum gold extraction was achieved
after about 24 hours of leaching with bottle rolls at a P80 particle size of 54 microns. The cyanide
8
consumption for the test work was about 1.8 kg cyanide per tonne of ore; however, as is generally the
case once a project goes into a production, it is possible that the cyanide consumption for the plant
operation could be lower because of the increased efficiency of the oxygenation of the pulp and the
cyanidation of the slurry.
The cyanide detoxification tests performed by SGS Lakefied in Ontario, Canada showed that the SO2
and air system is an effective method to reduce the total cyanide concentration in the final tailing
product to less than 1.0 ppm.
The results of the sedimentation or thickening tests performed by G&T Laboratories indicated that the
addition of anionic flocculant at a rate of 10 ppm to the slurry was effective to increase the slurry
density of the cyclone overflow to greater than 40% and produce a clear supernatant. The cationic
flocculant at similar dosage rates provided a higher terminal density than the anionic flocculant. The
tests were conducted at a pH of about 10.
The work index of the sulphide ore ranges from 14.5 to 18.0 kWh/tonne as determined by CVRD
(underground bulk samples) and G&T Laboratories
1.7 Mineral Resources Estimation

The database utilized to prepare the 2011 Resource Estimate for the RDM deposit is composed of
core drill holes, RC holes and channel samples taken from trenches dug in the surface. Part of the
database is based on holes realized by MRDM and part was obtained from the re-sampling of old drill
core left by CVRD.
Type No. of Holes No Metres Drilled No of Samples

CH 40 1,133.1 1,107
DD 164 25,034.0 15,207
RC+DD 65 12,296.1 N/A
Auger 35 275.2 279
Total MRDM 363 43,384.4 2,039.7
CVRD
DD 134 23,486 6,548
DD Sub 22 1,174 997
Subtotal CVRD 156 68,044 2,7942
Total 519 68,044 27,942

Table 1-2 Resource Database
9
All routine sample preparation and analyses used in this estimate were performed either by ALS
Chemex Brasil (ALS) or by SGS Geosol (SGS), near the city of Belo Horizonte, Brazil. A
comprehensive Quality Assurance/Quality Control (QA/QC) program, which involved the use of
coarse blanks, pulp blanks, standards and crusher-reject duplicates, was instigated. The current
QA/QC program meets the standard industry practices.
Prior to 2011 Resource Estimate, NCL conducted data verification consisting of a site visit and
database verification and audit of a minor portion of it, selected randomly. NCL found the database to
be acceptably accurate and error free to be used in mineral resource estimation. A group of 15
samples were selected randomly by NCL to check the assay results, finding adequate agreement with
the originals.
To determine the appropriate in-situ bulk density values, a total of 116 measurements were collected,
both related to lithologies, grades, and oxidation (weathering) in order to be representative of the
deposit. From these, 109 were taken from drill core and 7 measurements were taken from surface,
using bulk sampling. Waste and mineralization were estimated separately.
Geologic interpretation of cross-sections and plans, along with the gold grade obtained in the drill
holes, were used to build 3-D geologic solids. They grossly correspond to a grade shell of 0.3 g/t Au.
NCL utilized the GEMS and GSLib softwares for 3-d variography studies, grade interpolation of
block models using ordinary kriging and validation procedures.
To define the portion of the block model with reasonable prospects of being economic (as per the CIM
definition for mineral resources) NCL used optimization software (Whittle 4X) for the portion amenable
to open pit mining, using parameters obtained from the ongoing data generation for the Feasibility
Study, and a basic interpretation for the underground model, The gold price reference used was
US$1,100/oz. The cut-off grade of 0.32 g/t Au is used for the open pit resource estimate, for definition
of mineral resource blocks contained within the Whittle envelope. To define the mineral resources
below the open pit resource envelope, a 1.0 g/t Au grade shell was built and a separate block model
was prepared, excluding a 10 m crown pillar immediately below the resource open pit. A basic
engineering analysis was additionally used to exclude from the underground resource table the zones
seemed as too isolated or low-grade to justify development.
The total open pit plus underground NI 43-101 Resource Estimate (2011 Resource Estimate)
includes 936,600 ounces of gold in the measured plus indicated categories and 587,300 ounces of
gold in the inferred category at a gold price of US$1,100/ounce as shown in Table 1-3.
10
Open Pit Measured Indicated Measured plus Inferred

Indicated
Ktonne Au (g/t) Au (koz) Ktonne Au Au (koz) Ktonne Au (g/t) Au (koz) Ktonnes Au (g/t) Au (koz)
(g/t)
Oxide 274 1.13 10.0 1,965 1.08 68.1 2,239 1.09 78.1 175 1.31 7.3
Mixed 219 1.29 9.0 1,515 1.35 65.8 1,733 1.34 74.8 64 1.32 2.7
Fresh Rock 1,573 1.64 82.7 13,762 1.57 695.6 15,335 1.58 778.3 4,378 1.64 230.6
TOTAL 2,065 1.53 101.7 17,242 1.50 829.5 19,308 1.50 931.3 4,617 1.62 240.7
Underground Measured Indicated Measured plus Inferred

Indicated
Ktonne Au (g/t) Au (koz) Ktonne Au Au (koz) Ktonne Au (g/t) Au (koz) Ktonne Au Au (koz)
(g/t) (g/t)
Total - - - 52 3.18 5.3 52 3.18 5.3 4,830 2.23 346.6
Total Open Measured Indicated Measured plus Inferred

pit & Indicated
Underground
Ktonne Au (g/t) Au (koz) Ktonne Au Au (koz) Ktonne Au (g/t) Au (koz) Ktonne Au Au (koz)
(g/t) (g/t)
Total 2,065 1.53 101.7 17,294 1.50 834.4 19,360 1.50 936.6 9,557 1.92 587.3
Table 1-3 NI 43-101 Mineral Resource Estimate for RDM
Base case cut-offs grades used in the mineral resource are 0.32 g/t Au for the open pit and 1.0 g/t Au
for the underground component of the mineralization.
Open pit resources are constrained within a pit shell utilizing appropriate mining and processing costs
and US$1,100/oz gold (see parameters listed below). The US$1,100 gold price is less than the two-
year trailing average gold price
Rounding of tonnes as required by reporting guidelines may result in apparent differences between
tonnes, grade and contained metal content.
The oxide portion of the open pit Resource includes the de-commissioned cyanide heap leach pile
from the previous mine operator (Vale) and includes 541,170 tonnes at an average grade of 0.56 g/t
gold. This resource is defined by an auger drill program and is classified as an indicated resource.
This material will be used for process-plant commissioning and low-grade stockpile.
1.8 Mining & Mineral Reserves

The current mining plan is based on developing the ore deposit with conventional open pit mining
techniques using excavators of 5.0 cubic metre capacity and trucks with a capacity of 40 tonnes for
the ore in 6 metre passes, and 6.7 cubic metre capacity excavators with 40 tonnes trucks capacity for
the waste in 12 m benches. This type of equipment is able to develop the require productivity to
11
achieve an annual total material movement of 30M tonnes and also to have good mining selectivity
with the minor excavators as defined by the grade control activities. The sizing of the equipment can
be consider small for a project of this size for a peak annual material movements of 2.555 million
tonnes of ore with 27.7 million tonnes of waste; however, the current situation at mines in Brazil is that
contractors are using this type of equipment at lower costs for material movement at about the same
mining rate. The advantage of the smaller equipment is that it provides flexibility for mining, most of
them are fabricated in Brazil, and does not have the large transportation costs and import duties
associated with large offshore equipment and spare parts. This aspect, combined with availability of
spare parts, local labour rates and same type of fleets currently operating in other projects, make the
use of this equipment an attractive alternative to traditional larger capacity open pit mining equipment.
The fleet is complemented with blast hole drills for ore and waste, as 64% of material is defined as
hard rock.
Auxiliary equipment includes track and wheel dozers, motor graders, water truck, and a reverse
circulation drill rig is included for grade control purposes.
Optimization work led to the current pit design which is based on a final pit depth corresponding to a
Whittle Pit Shell utilizing a gold price of US$950 per ounce. A diluted resource block model was used
for pit optimization and estimating the mineable reserves. The resource block model was originally
generated using the percentage technique, where the ore percent is stored for every block and then
used for reporting. Within the ore zone occurs some internal waste, but because of Selective Mining
Units (SMU) size, some waste will be mined together with the ore. A statistical analysis was carried
out to determine the distribution of the width of these internal waste zones, concluding that two zones,
one of about 350m in extent and the other, about 90 m in extent, show excessive presence of internal
waste zones thinner than three meters. For these zones a fully diluted block approach was applied,
which means that the portion of the blocks within the ore zone, at a certain estimated grade, is diluted
with the rest of the block flagged as waste, giving a final diluted grade for the block. For the rest of the
zones, waste corresponding to a maximum of 15% of the block was considered possible to be mined
selectively. Only blocks with ore percent lower than 85% were diluted.
Grade of the diluting material was estimated by inverse of squared distance technique. Composites up
to 3 m distance to the contact with mineralized zone were selected for this purpose. A capping value
of 0.3 g/t was used. Average grade of diluting material is estimated as 0.11 g/t. With this approach a
22% dilution was obtained, but only a minor ore loss, lower than 1%, on the contained gold.
12
Mining reserve analyses were carried out with a diluted resource model and with Whittle 4X, a Lerchs-
Grossman based package, to develop a series of nested pits for the mineral resource area,
considering the full open pit option and end initial topography. Optimized shells obtained only with
measured and indicated resources were selected as guides for mine designs. The mineral reserves
are defined as diluted mineral resources constrained by the pit, above the internal cut-off grade of
0.37 g/t gold. Contained measured resources are transformed to proven reserves and contained
indicated resources are transformed into probable reserves. Inferred mineral resources are not
converted to mineral reserves and are instead treated as waste for mine planning purposes.
The mine production schedule defines the mineral reserve for a mining project. The mineral reserve
for the RDM Gold Project (based on US$950 gold price) is 20.9M tonnes at a grade of 1.24 g/t Au for
a total of 830,200 oz of contained gold.
Table 1-4 summarizes the mineral reserve estimate.
Category MM tonnes Gold (g/t) Gold Contained

(Koz)
Proven 2.3 1.30 97.5

Probable 18.5 1.23 732.7
Total 20.9 1.24 830.2
Table 1-4 Mineral Reserve Estimate
The final pit contains an estimated 20.9 million tonnes of ore at a mill feed grade of 1.24 g/t Au and
185.2 million tonnes of total material (waste plus ore) for an open pit mine life of approximately 8
years. The final pit is 1.8 kilometres long in the north south direction and 0.6 kilometres wide in the
east west direction. The highest wall is about 270 metres on the southeast side of the pit and the
total area impacted by the pit is approximately 92 hectares.Table 1-5 below presents the open pit life
of mine plan (LOM).
Mining Ore Low-grade Ore Waste Total Strip

Year Cut-Off Ktonnes Au (g/t) Au Cut-Off Ktonnes Au (g/t) Au Ktonnes Ktonnes Ratio
Au (g/t) (koz) (koz)
Au (g/t)
PP 0.56 704 1.195 27.0 0.37-0.56 354 0.462 5.3 17,942 19,000 16.96
Y01 0.56 1,836 1.356 80.1 0.37-0.56 425 0.463 6.3 27,739 30,000 12.27
Y02 0.58 2,742 1.401 123.5 0.37-0.58 864 0.475 13.2 26,394 30,000 7.32
Y03 0.56 2,420 1.388 108.0 0.37-0.56 516 0.463 7.7 27,065 30,000 9.22
Y04 0.37 2,494 1.163 93.3 - - - - 27,506 30,000 11.03
Y05 0.37 2,555 1.224 100.5 - - - - 17,269 19,824 6.76
13
Y06 0.37 2,555 1.403 115.3 - - - - 14,051 16,606 5.50

Y07 0.37 2,555 1.285 105.6 - - - - 5,815 8,370 2.28
Y08 0.37 846 1.632 44.4 - - - - 515 1,361 0.61
Total 18,707 1.326 797.6 2,159 0.468 32.5 164,295 185,161 7.87
Table 1-5 LOM Open Pit Mine Production Plan
The run-of mine (ROM) ore will be hauled from the open pit with 40 tonne haul trucks and dumped
directly into the hopper that feeds the jaw crusher at a rate of 7,000 tonnes per calendar day or 2.555
million tonnes per year. Three stages of crushing and screening will be utilized to produce a product
with a P100 particle size of 19 millimetres. A 5,000 tonne capacity storage silo will receive the final
product of the crushing plant from where the material will be fed at 7,000 tpd into a single stage ball
mill. The final slurry product from the ball mill circuit will contain mineral particles with a P80 particle
size of 54 microns and this product will feed a CIL circuit at a slurry density of about 40% solids by
weight. It shoul dbe noted that MRDM has purchased a process plant that has a capicity of 9,000
tonnes per calander day or 3.285 million tonnes per year. Table 1-6 shows the plant feed schedule
based on the LOM plan and taking into account an overall average 90% plant recovery rate.
Plant Feed
Mining Mined Ore Stockpile Rehandle Total Plant Feed

Year Gold
Au Au Recovered
Ktonnes Ktonnes Au (g/t) Ktonnes Au (g/t) Recovery
(g/t) (Koz) Gold (Koz)
(%)
Y01 2,512 1.31 106 95 90
1,836 1.36 676 1.20
(*)
Y02 2,555 1.40 - - 2,555 1.40 115 90 104
Y03 2,369 1.39 186 1.37 2,555 1.39 114 90 103
Y04 2,494 1.16 531 0.61 3,025 1.07 104 90 93
Y05 2,555 1.22 - - 2,555 1.22 101 90 90
Y06 2,555 1.40 - - 2,555 1.40 115 90 104
Y07 2,555 1.29 - - 2,555 1.29 106 90 95
Y08 846 1.63 1,708 0.47 2,554 0.85 70 90 63
Total 17,766 1.33 3,100 0.70 20,866 1.24 830 90 747
(*) Y01 considers one month at 80% throughput and 11 months at 100% throughput (7,000 tonnes per
day)
Table 1-6 Plant Feed Schedule
1.9 Summary Cost Estimates and Economic Analysis

The total estimated initial capital cost of the project is US$177.6 million, which includes the capital
allowance for the pre-strip, sustaining capital, owners cost, closure costs and salvage credit. The
14
initial capital requirement is approximately US$160.3 million (PP cost plus 75% of Y01 mining
equipment as initial upfront capital). Table 1-7 summarizes the capital cost estimate for the project.
Pre-Production Capital Sustaining

Capital Total Capital
PP Cost Production Y1
Description $US (000s)
$US (000s)
$US (000s)
Site Preparation 2,758.0 2,758.0
Mine Development (includes
related earthworks & contractor
costs) 25,650.0 25,650.0
Mine Equipment* 27,095.5 4,386.5 13,789.4 45,271.4
Civil Works 6,494.7 6,494.7
Equipment and Bulk Materials 35,324.5 35,324.50
Tailing Dam 6,087.1 3,363.1 9,450.2
Waste Rock Stockpile 1,711.6 2,976.4 4,688.0
Construction, Commissioning and
Vendor Support 13,017.6 13,017.6
Engineering and Project
Management 13,240.0 13,240.0
Owners Cost 6,800.0 6,800.0
Logistics and Transport 1,875.0 1,875.0
Taxes (equipment and services) 6,382.1 6,382.1
34.5 kV Power Transmission Line 3,200.0 3,200.0
Contingency 10,700.0 10,700.0
Subtotal 160,336.1 4,386.5 20,128.9 184,851.5
Closure Cost 8,200.0
Salvage Credit (15,492.4)
Total 160,336.1 4,386.5 20,128.9 177,559.10
Table 1-7 Total Capital Cost Summary
*For initial capital requirement, MRDM assumes that taking into account the order period and payment
schedule that 75% of Y1 mining capital will be required as payment upfront for early delivery of the
majority of the mining equipment at the beginning of Y1 of operations, with the balance to be paid in
Y1.
Mine operating costs were estimated as an average of US$ 1.40 per total material mined (see
Table 1-8). Processing operating cost was estimated as US$ 7.76 per ore tonne feed to the plant
(see Table 1-9).
15
Total
Mining Material Hourly General General
Year (kt) Contra. Drilling Blasting Loading Hauling Auxiliary Labour Mine Maint. G&A TOTAL
PP 19,000 0.63 0.06 0.02 0 0.02 0.13 0.14 0.04 0.14 0.04 0.01 0.12 1.35
Y01 30,000 - 0.02 0.02 0.02 0.1 0.22 0.27 0.09 0.27 0.02 0.01 0.14 1.16
Y02 30,000 - 0 0.03 0.05 0.21 0.22 0.27 0.08 0.27 0.02 0.01 0.1 1.25
Y03 30,000 - 0 0.02 0.05 0.2 0.22 0.28 0.09 0.28 0.02 0.01 0.1 1.28
Y04 30,000 - - 0.02 0.06 0.28 0.22 0.29 0.08 0.28 0.02 0.01 0.1 1.36
Y05 19,824 - - 0.03 0.08 0.34 0.22 0.36 0.11 0.34 0.03 0.01 0.12 1.64
Y06 16,606 - - 0.03 0.08 0.35 0.22 0.41 0.1 0.37 0.04 0.01 0.14 1.75
Y07 8,370 - - 0.06 0.11 0.45 0.22 0.42 0.13 0.38 0.06 0.01 0.24 2.08
Y08 1,361 - - 0.03 0.17 0.6 0.31 0.6 0.13 0.58 0.1 0.01 0.22 2.74
Total 185,161 0.06 0.01 0.02 0.05 0.22 0.21 0.29 0.09 0.28 0.03 0.01 0.12 1.4
Percent 4.60% 0.70% 1.70% 3.50% 15.80% 15.00% 20.80% 6.20% 20.20% 2.00% 0.70% 8.70% 100.00%
Table 1-8 Total Mine Operating Cost Summary (US$ per tonne)
Tonnage/Year 2,555,000 (US$/t) (%)

(US$)
Manpower 1,750,064 0.68 8.8 %
Reagents 6,638,098 2.60 33.5 %
Electrical & 1,839,600 0.72 9.3 %
Mechanical
Maintenance
Energy 9,176,754 3.59 46.3 %
Laboratory 424,238 0.17 2.1 %
Total 19,828,754 7.76 100%
Table 1-9 Summary Plant Operating Cost Estimate.
Table 1-10 shown below summarizes the economic parameters used for the cash flow model.
Item Unit
Average Mining Cost US$/tonne mined 1.40
Processing Cost US$/ore tonne 7.76
G&A US$//ore tonne 1.01
Reclamation fee US$ per year 90,000
Closure Cost US$ 8,200,000
Transport, Freight, Insurance, Refining US$/oz 13.00
Metallurgical Recovery % 90.0
Discount Rate % 5.0
Taxes payable % 15.25
Royalty % 2.0
Exchange rate R$/US$ 2.0
Table 1-10 Economic Parameters
Base case gold price for the financial model was a constant US$1,150 per ounce for all the life of
mine, provided by MRDM. This gold price represents the approximately two-year trailing average for
16
gold and was established as the base case given the current gold trend and the near term production
profile of the project.
The exchange rate set for the project was established at the beginning of the study and reflects the
possible currency hedge that could be applicable to the project at that time from a senior bank debt
lender according to early discussions as provided to the consortium by Carpathian.
The cash flow financial model was created utilizing the mine production schedule, associated gold
grades, gold recoveries and capital and operating costs as set out above. The study entails a 7,000
tonnes per day to an industry standard carbon in leach and ADR, producing a total of 747,000 ounces
of recoverable gold over the mine life of 8 years.
The total cost (not including capital re-payment and royalty) is US$558 per ounce (US$593 per ounce
including royalty payment) and including capital re-payment is US$828 per ounce at the financial base
case gold price.
The cash flow is considered on a 100% equity basis, i.e. no account has been taken of financing
arrangements and associated costs.
A summary of the economic evaluation of the project is shown below (Table 1-11) at US$1,150 gold,
along with gold prices ranging from US$1,150 to US$1,350.
Financial Model US$1,150 US$1,200 US$1,250 US$1,300 US$1,350

Gold Gold Gold Gold Gold
NPV5 pre-tax (US$ $150.8 $179.2 $207.6 $236.0 $264.4
MM)
NPV5 (after tax) (US$ $123.8 $147.8 $171.9 $196.0 $220.1
MM)
IRR pre-tax 24.9% 28.4% 31.8% 35.2% 38.5%
IRR (after tax) 21.9% 24.6% 27.6% 30.5% 33.4%
Payback (yr) 3.8 3.4 3.0 2.8 2.6
17
Table 1-11 Economical Evaluation Results Summary
Table 1-12 and Table 1-13 show the NPV at various discount rates and gold prices, pre-tax and after
tax, respectively.
NPV (US$ MM) pre-tax

Gold Price & GOLD PRICE (US$/oz)
Discount Rate 1,150 1,200 1,250 1,300 1,350
Discount Rate
0.0% $237.6 $274.2 $310.8 $347.5 $384.0

2.5% $190.0 $222.1 $254.3 $286.4 $318.6
5.0% $150.8 $179.2 $207.6 $236.0 $264.4
7.5% $118.4 $143.7 $168.9 $192.2 $219.4
10.0% $91.5 $114.1 $136.6 $159.2 $181.7
IRR (%) 24.9% 28.4% 31.8% 35.2% 38.5%
Table 1-12 Sensitivity Gold Price and Discount Rate Pre-Tax
NPV (US$ MM) after-tax

Discount Rate 1,150 1,200 1,250 1,300 1,350
Discount Rate
0.0% $202.5 $233.5 $264.5 $295.6 $326.6

2.5% $159.2 $186.5 $213.7 $241.0 $268.2
5.0% $123.8 $147.8 $171.9 $196.0 $220.1
7.5% $94.5 $115.9 $137.3 $158.6 $180.0
10.0% 70.2 $89.3 $108.4 $127.5 $146.6
IRR (%) 21.6% 24.6% 27.6% 30.5% 33.4%
Table 1-13 Sensitivity Gold Price and Discount Rate After-Tax
Sensitivity analyses were undertaken to measure the operational variance of grade, recovery, capital
cost and operating cost. The results obtained indicates that the project is most sensitive to grade and
recovery.
1.10 Conclusions & Recommendations

The economic analysis for the project is positive at a financial base case of $1,150 gold price with a
good NPV (discounted 5%), IRR and payback period. This gold price for the financial model is
considered realistic given the current gold trend and the near term nature of the production profile of
the project. At higher gold prices the project becomes more robust. In order to protect any possible
unforeseen gold depreciation in price it may be prudent to consider a hedging program to protect the
downside.
18
There is a risk that the currency exchange rate used for the project will not be met, as it was applied
on the basis of the prevailing exchanges rate when the study commenced.. Should this exchange
rate not be met then there would be an escalation of project costs as the vast majority of the costs are
in Brazilian currency (Reais).
The Project investment may be further optimized, as when fixed contracts are negotiated there may
be some price improvement. Also, leasing of initial mining equipment should be considered to reduce
the upfront funds that will be required. Operating cost may also be reduced in the event where the
balance of the hydropower is brought to the project in sufficient quantity so as to eliminate the use of
diesel generated power (for the supplemental power requirement) as currently provided for in the
study. Additionally, the detailed monthly mining schedule may show an optimization of providing
higher feed grade to the mill. Also additional metallurgical test work should be completed to optimize
the reagent consumption and metabusflite for the process plant.
Additional drilling along strike of the RDM deposit is also recommended to evaluate for additional feed
to the process plant thereby increasing current capacity without the need for additional capital
investment.
It is recommended that this Project proceed to construction and production.
19
2. INTRODUCTION AND TERMS OF REFERENCE

2.1 Introduction
The Riacho dos Machados Mine (RDM Mine) is located in the northern part Minas Gerais State,
Brazil, in semi-tropical savannah and open grassland. The nearest town is Riacho dos Machados
(population 11,000) 15 kilometres from the RDM Mine with access via an all-weather gravel road. The
RDM Mine was discovered by DOCEGEO, the exploration branch of Companhia Vale do Rio Doce
(CVRD - recently renamed as VALE) through regional geologic investigations along the north-south
trending eastern margin of the Sao Francisco Craton. In 1986, DOCEGEO discovered a surface oxide
gold oxide deposit known as the Ouro Fino Deposit, while investigating gold anomalies on highly
metamorphosed volcano-sedimentary rock sequences of probable Archean to early Proterozoic age.
The RDM Mine opened in 1989 as an open pit oxide gold operation with ore processed by cyanide
heap leaching. It operated until 1997, producing 155,000 ounces of gold from 3.2 million tones of
oxide ore (1.89 g/t Au) mined to an approximate depth of 30-60 metres.
Exploration continued in the district during the mining period for additional oxide gold mineralization
and depth extensions of the mine into the sulphide mineralization. Evaluation of the sulphide
mineralization included drilling, underground exploration, and completion of prefeasibility studies until
1997 when the mine was closed as a result of low gold prices, exhaustion of oxide ore, and changing
focus away from gold by CVRD.
From 1997 to 2008 the property was submitted to reclamation and environmental monitoring activities
by Vale, attending the requirements of the Minas Gerais environmental agency. No exploratory or
mining activity occurred during this period. The mining concession was maintained as suspended for
re-evaluation and existing infrastructure, such as 13.8 kV power transmission line, access road, and
various minesite buildings, were maintained.
Carpathian Gold Inc. (Carpathian) acquired 100% interest of the Riacho dos Machados property in
2008 which is presently composed of one Mining Concession (includes the RDM Mine) and 17
Exploration Licenses, covering a total area of 28,150 ha adjacent to and along strike of the Mining
Concession. Documentation has been submitted to the DNPM for the re-activation of the Mining
Concession.
Since acquiring the property, Carpathian, through its subsidiary Minerao Riacho dos Machados
Ltda (MRDM) has drilled 41,991 metres and re-sampled previously drilled diamond core by Vale
representing an additional 24,659 metres drilling. MRDMs efforts have been directed at evaluating
20
the gold mineralisation below the existing shallow open pit predominantly in the un-weathered
sulphide bearing zone. Carpathian has completed the following NI 43-101 Compliant Technical
Reports on the property in collaboration with the listed independent consultant groups with the reports
available on the SEDAR document retrieval system:
Independent Consultant
Year Report Title
Group
Technical Report for the Riacho dos
February 2008 Machados Gold Project, Minas Gerais State, BK Exploration Associates
Brazil
Mineral Resource Estimate for Riacho dos
July 2009 Machados Gold Deposit, Minas Gerais State, NCL
Brazil,
Riacho dos Machados Gold Project:
NCL, Tecnomin, Golder,
September 2009 Preliminary Economic Assessment Technical
YKS
Report NI 43-101
Mineral Resource Update for Riacho dos
September 2010 Machados Gold Deposit, Minas Gerais State, NCL
Brazil,
Table 2-1 Carpathian completed NI 43-101 compliant reports on the property.
In 2010, Carpathian, through MRDM, commissioned a consortium of engineering and enviromental

firms to complete an updated resource estimate and a Feasibility Study on the open pit portion of the
deposit in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects,
and in compliance with Form 43-101F1 on the Riacho dos Machados (RDM) Gold Project. The
Technical Report is based on information as of March 31st, 2011. The principle members of the
consortium comprise Tecnomin Projetos e Consultoria Ltda. (Tecnomin) lead consultant, NCL
Brasil Ltda. (NCL), Golder Associates Brasil Consultoria e Projetos Ltda. (Golder), YKS Servicos
Ltda (YKS), M2 Environmental and Consulting Services Ltd. (M2), Lawrence Consulting Ltd. and
John A Wells, Metallurgical Consultant. Hatch Brasil (Hatch) was also involved in assisting on the
overview of the Feasibility Study in accordance with their mandate to provide, Project, Procurement,
and Construction Management for the development of the project, as well as determining the project
development timeline.
2.2 Terms of Reference

This Technical Report presents the results of an updated Resource Estimate (2011 Resource
Estimate) and summarizes the data, QA-QC, engineering and methods applied and is intended for
disclosure standards set forth by the Canadian Securities Administration. Carpathian is a publically
traded company listed on the Toronto Stock Exchange. Mr. Dino Titaro, President and Chief
21
Executive Officer of Carpathian requested the preparation of this Technical Report. Mr. Dino Titaro,
P.Geo ( Association of Professional Geoscientists of Ontario, # 0677) and Mr. Dan Kivari, P.Eng
(Association of Professional Engineers and Geoscientists of British Columbia, # 17294), who is the
COO of Carpathian are Qualified Persons under NI 43-101, but are not deemed to be independent for
purposes of this Technical report, provided overall supervision for the report. This Technical Report
includes a Mineral Resource Estimate update from the September 2010 estimate and supports the
information published by Carpathian in a news release dated April 5th, 2011 regarding the new
resource estimate. This 2011 Resource Estimate update is utilized by the various mining studies to
conclude the Feasibility Study for the open pit portion of the deposit and is presented in this report,
and from which results were published by Carpathian in a news release dated April 6th, 2011. The
principal consultants of the Feasibility Study consortium were also involved with completing the
Preliminary Economic Assessment of September 2009.
Parts of this report are based on information and data supplied by other parties and where necessary,
Tecnomin, the lead consultant, has assumed that the supplied data and information is accurate and
complete and has no reason not to rely on such data and information. The report is to the standard of
a Feasibility Study regarding the design criteria, engineering and costs of the project to 15%.
The following outlines the major responsibilities for the Feasibility Study and relevant Sections of this
Technical Report from the consortium:
Tecnomin: Principle consultant for the overall Technical Report and responsible for the
design of the infrastructure and process plant and their capital cost and operating cost.
(Sections 1.6, 1.9, 1.10, 16.4, 18.13, 18.13.6, 18.14, 18.15, 18.17, 18.18, 20.6, 20.7, 20.9,
24.4 and 24.5).
NCL: Resource and reserves, open pit mine design, production plan and scheduling, mine
capital and operating cost.
Golder: Geotechnical, water balance, pit slopes, waste rock stockpile, and tailing disposal
design and all associated capital and operating costs..
Lawrence Consulting Ltd.: Acid Rock Drainage (ARD) .
John A. Wells, Metallurgical Consultant & MRDM: Metallurgy and processing design and
process flow sheet development in conjunction with Tecnomin..
22
YKS (Mr. Carlos Eduardo Orsini Nunes de Lima, CREA No. 5157/D) and M2 (Mr. Marco
Antonio Fernandez Piereira da Silva, CREA No. 48.701?0 MG) with input from MRDM:
Environmental Impact Assessment and Report, environmental control program,
supplementary information, and permitting. (Section 18.16, 20.8 and 24.1).
The assembled consortium group worked with Carpathian/MRDMs technical team both on the RDM
Mine site and from Carpathians Belo Horizonte office. The independent consultants that worked on
the Feasibility Study are listed below.
Tecnomin: under the direction of Altair Nolasco da Rocha (Project Co-coordinator, CONFEA/CREA
53.779/D MG) along with Jose Eustaquio Graziosi (CREA 8.766/D) and Jackson Oliveira Braganca
(CREA 19.590/D MG) as co-authors (lead consultants for the overall Technical Report and
responsible for the design of the infrastructure and process plant and their capital cost and operating
cost).
NCL: Carlos Guzmn, General Manager and Principal Mining Engineer (MAusIMM and a Registered
Member of the Comision Calificadora de Competencias en Recursos y Reservas Mineras (Chilean
Mining Commission), (mineral reserves, open pit mine design, production plan and scheduling, mine
capital and operating cost) and Rodrigo Mello, Consulting Geologist (MAusIMM) (mineral resources).
Mr. Guzmn is responsible for Sections 1.1, 1.8, 2, 3, 17.18, 17.19, 18.1, 18.14, 18.17, 19, 20.2, 20.9
and 21 of the Technical Report, and have reviewed the materials prepared by Altair Nolasco da
Rocha, Jose Eustaquio Graziosi and Jackson Oliveira Braganca from Tecnomin in respect of sections
1.9, 1.10, 18.15, 18.18, 18.19 and 20.10 and has no reason to believe that they cannot be relied upon.
Mr. Guzmn is an Independent Qualified Person, as defined by NI 43-101.
Mr. Mello (MAsuIMM) , of NCL is responsible for Sections 1.2, 1.3, 1.4, 1.5, 1.7, 4 to 15, 17.1,
17.17.and 20.1, Mr. Pierre Desautels, P.Geo of AGP Mining Consultants, Canada, has reviewed the
sections prepared by Mr. Mello, namely Sections 1.2, 1.3, 1.4, 1.5, 1.7, 4 to 15, 17.1, 17.17. and 20.1
and has no reason to believe that they cannot be relied upon. Mr. Desautels is an Independent
Qualified Person, as defined by NI 43-101.
Golder: Jose Mario Mafra, M.Sc., Civil and Geotechnical Engineer (CREA-MG - 18006/D)
(geotechnical, water balance, pit slopes, waste rock stockpile, and tailing disposal design and all
associated capital and operating costs). Mr. Roy Lopes, P.Eng., Senior Principal for Golder
Associates, Mississauga,Canada, has reviewed the sections prepared by Mr. Mafra, namely Sections
18.2, 18.3, 18.4, 18.5, 18.6, 18.7, 18.8, 18.9, 18.10, 18.11, 18.12, 20.4, 20.5 and 20.7 and has no
23
reason to believe that they can not be relied upon. Mr. Lopes is an Independent Qualified Persons, as
defined by NI 43-101.
John A. Wells, Metallurgical Consultant: Metallurgical Engineer (FSAIMM) (metallurgy and processing
design and process flow sheet development in conjunction with Tecnomin). Mr Wells is responsible
for Sections 16.3 ,16.4 and 20.3 and Sections 16.1 and 16.2 and also for Sections 1.6, 18.13, 18.14,
24.4 and 24.5 of the Technical Report and have reviewed the materials prepared by Altair Nolasco da
Rocha, Jose Eustaquio Graziosi and Jackson Olivera Braganca in respect of Sections 18.13, 18.14,
20.6, 24.4 and 24.5 and has no reason to believe that they can not be relied upon. Mr. Wells is an
Independent Qualified Person, as defined by NI 43-101.
Mr. Lawrence, a practising mining engineer registered with the Association of Professional Engineers
and Geoscientists of British Columbia, is responsible for Sections 18.16.3.1.4, 24.6, and also for
Sections 18.16 and 20.8 of the Technical Report and have reviewed the materials prepared by Carlos
Eduardo Orsini Numes de Lima and Marco Antonio Fernandez Pereira da Silva in respect of Sections
18.16, 20.8 and 24.1 and has no reason to believe that they can not be relied upon. Mr. Lawrence is
an Independent Qualified Person, as defined by NI 43-101.
Site Visits: Mr. Rodrigo Mello, Consulting Geologist from NCL Brasil, completed the initial site visit
from September 29th to October 1st 2008. In this visit, he became familiarized with the geology and
site conditions. The core yard was visited and aspects of Quality Control were discussed. Mr. Carlos
Guzmn, Principal Mining Engineer of NCL Brasil Ltda, conducted a site visit from June 23rd to June
24th 2009 to be familiar with the project site, existing infrastructure and drill core. Mr. Rodrigo Mello
completed follow-up site-visits from October 26th to 29th 2009 and July 5th to 9th, 2010. The purpose
of these visits were to monitor and evaluate Carpathians drilling, sampling and logging practices,
survey control and assay QA-QC practices. Representatives from Golder, M2 and YKS have
conducted extensive field work at the site related to Geotechnical and Environmental aspects
throughout 2010 and early 2011. Site visit dates for Mr. Marco Antonio Fernandez Piereira da Silva of
M2 include November 16 and 29, 2010, Decmeber 20, and 23, 2010, January 11, 12, 25 and 27,
2011 and February 17 and 21, 2011. Mr. Carlos Eduardo Orsini Nunes de Lima of YKS visited the
site and regional officals in relations to enviromental and permiiting throughout numerous times in
2010 and early 2011, including January 1924,, 2010, May 35, 2010, June 15-16, 2010, Septeber
22-23, 2010 and Febreuary 1-3, 2011. Various Golder repersentatives (Mr., Marcus Dilasco, Aloysio
Saliba, Marcelo Cotta, Roberto Saturnino, Rodrigo Cardoso and Mr. Marcelo Rost) visited the project
24
site at various times during 2010 in relations to their work on the tailing, waste rock and geotechincal
investigations during the periods January 25-27, 2010, April 14-19, 2010, May 12, 31, 2010, June 23-
24, 2010 and July 7-10, 2010. Mr. Lawrence in connection with his work on acid mining drainage and
environment conducted site visits on September 29, 2010, and October 1, 15, and 20, 2010. Mr. Wells
in connection with his work on infrastructure has previously visited the site on July 14, 2009.
Tecnomin or any other of the designated independent consultants and specialist that form the
Technical Report consortium are not an associate or affiliate neither of Carpathian or MRDM, nor of
any associated company, or any joint-venture company. The fees for this Technical Report are not
dependent in whole or in part on any prior or future engagement or understanding resulting from the
conclusions of this report. These fees are in accordance with standard industry fees for work of this
nature, and previously provided estimates are based solely on the approximate time needed to assess
the various data and reach appropriate conclusions. This report is based on information known to the
consortium as of March 31st, 2011.
As of the date of the Technical Report, Carpathian/MRDM and certain members of the consortium are
in the process of completing basic and detailed engineering, permitting, and financing. The
engineering work is being completed by NCL, Golder, and Hatch. In addition, Hatch has been
mandated with development of the project implementation plan and the Project, Procurement, and
Construction Management contract for project implementation.
25
3. RELIANCE ON OTHER EXPERTS

The results and opinions expressed in this report are based on the various authors field observations
and the geological and technical data listed in the References (Section 21). While the authors have
carefully reviewed all of the information provided by Carpathian/MRDM and believe the information to
be reliable, the authors have not conducted an in-depth independent investigation to verify its
accuracy and completeness.
The authors have not reviewed any legal issues regarding the land tenure, or Carpathians corporate
structure nor independently verified the legal status or ownership of the Property, except for the
verification at the public information made available at the DNPMs site, the Brazilian authority for
mining titles.
The authors have not reviewed issues regarding Surface Rights, Permits and the environmental
status of the Property and has relied upon opinions supplied by Carpathian/MRDM representatives.
The results and opinions expressed in this report are conditional upon the aforementioned geological,
costing and legal information being current, accurate, and complete as of the date of this report, and
the understanding that no information has been withheld that would affect the conclusions made
herein. The authors reserve the right, but will not be obliged, to revise this report and conclusions if
additional information becomes known subsequent to the date of this report. The authors do not
assume responsibility for Carpathian/MRDMs actions in distributing this report.
26
4. PROPERTY DESCRIPTION AND LOCATION

4.1 Location
The Riacho dos Machados Gold Project is located in southeastern Brazil in the northern part of Minas
Gerais State, approximately 145 kilometres by road northeast of the city of Montes Claros (population
336,000).
The Project includes 18 mining and exploration properties covering an area of 28,150 hectares. The
approximate boundaries of this Project area are as follows (with UTM coordinates using datum SAD
69, Zone 23S) in Table 4-1.
Lat-Lon UTM
North boundary 155500 S 8,239,000m N
South boundary 161500 S 8,200,000m N
West boundary 430000 W 695,000m E
East boundary 431500 W 711,000m E
Table 4-1 Boundaries of project area
The mineral properties are mostly contiguous and elongate in a north-south direction covering a 40
km length of favourable geologic domain. The properties include a mining concession from the
previous operator (Vale) and shown in red on the Mineral License Figure 4-1.
27
Figure 4-1 Map of licences
The balance of the mineral properties are Exploration Licenses of various official status with the
Departamento National de Produo Mineral (DNPM) (see Section 4.3 below) which is the
responsible government agency in Brazil for mineral license management.
Boundaries of the project area are located by means of GPS measurements, except by the mining
concession, which was established by total station survey. The limits of such concession are stacked
with concrete marks in the field.
4.2 Company Ownership and Agreements

The 18 mineral properties which comprise the Riacho dos Machados Project consist of a single
Mining Concession, 17 Exploration Licenseslisted below in Table 4-2. The DNPM reference number is
shown in the Mineral License Map (Table 4-2).
DNPM N TITLE HECTARES ISSUE DATE EXPIRY DATE Status Updated

831005/1982 MINING CONCESSION 1,000.00 MARCH-18-1992 Requested PAE aproval
833478/2006 EXPLORATION LICENSE 1,612.33 may-24-2011 may-24-2014 renewal for 3 years approved
833480/2006 EXPLORATION LICENSE 1,940.37 APRIL-04-2008 APRIL-04-2011 Exploration Final Report submitted
834013/2006 EXPLORATION LICENSE 812.88 may-24-2011 may-24-2014 renewal for 3 years approved
834017/2006 EXPLORATION LICENSE 785.00 may-24-2011 may-24-2014 renewal for 3 years approved
831869/2008 EXPLORATION LICENSE 116.72 DECEMBER-22-2009 DECEMBER-22-2012 Available for exploration
832689/2009 EXPLORATION LICENSE 1,443.53 JUNE-01-2010 JUNE-01-2013 Available for exploration
831630/2010 EXPLORATION LICENSE 1,999.71 APRIL-20-2011 APRIL-20-2014 Available for exploration
831631/2010 EXPLORATION LICENSE 1,999.77 APRIL-20-2011 APRIL-20-2014 Available for exploration
831632/2010 EXPLORATION LICENSE 718.39 APRIL-20-2011 APRIL-20-2014 Available for exploration
Table 4-2 Mineral properties of the Riacho dos Machados gold project
These properties form a mostly contiguous block extending north and south of the central-positioned
Mining Concession and cover 28,150 hectares. The properties are controlled by MRDM, incorporated
under the laws of Brazil and registered with the Federal Taxpayers Roll under No. 08.832.667/001-
62, and is a wholly owned subsidiary of Carpathian. Carpathian acquired 100% of the mineral rights
telated to the Mining Concession and the Exploration Licenses dated 2006 from Minerao Brilhante
Ltda (a company of Santa Elina Group) through completion and closing of a Definitive Purchase
Agreement on October 30th, 2008. Since the closing of this agreement, official title of the Mining
28
Concession has been transferred to MRDM along with 12 Application for Exploration Licenses, later
converted to Exploration Licenses.
The law firm of Veirano Advogados in Rio de Janeiro has carried out due diligence for Carpathian on
the status of the Mineral Properties at the Departamento National de Produo Mineral (DNPM) and
assisted with title transfer procedures. The July 2009 Technical report brings a statement from this
law firm, dated July 2nd, 2009, confirming the good standing of the above listed Mineral Properties as
per the official public record of the DNPM
Subsequent to the above referred acquisition, MRDM applied for and received five additional
Exploration Licenses dated 2008, 2009, and 2010 in Table 4-2. The bulk of the current mineral
resource lies within the Mining Concession with a small part extending south onto an Exploration
License (nr. 833480/2006). A PAE Report (Feasibility Report for purposes of the DNPM) has been
submitted to the DNPM on October 8th 2010, to re-activate the Mining Concession. In addition, a final
report for the Exploration License 833480/2010, has been submitted to the DNPM on April 4th, 2011.
This will be followed-up with a PAE Report to convert to a Mining Concession. All exploration work
reports for the Explorations Licenses listed as Renewal Requested in Table 4-2 above, have been
submitted to the DNPM for a three-year extension and are pending notification in the Official Monitor
from the DNPM.
Exploration permits are subject to annual payments to DNPM, calculated according to the area in
hectares of the permit, and its status, if initial or extension. The values are R$ 2.02 and R$ 3.06 per
hectare/annum, respectively.
4.3 Title Agreements and Ownership

Carpathian, through MRDM, controls 100% of the above listed Mineral Properties (exclusive of the
Application for Exploration areas) following completion, closing, and regulatory approval of a
Definitive Purchase agreement on October 30th, 2008, with Zoneplan Limited and Repalla Inc.
(collectively, the Vendors) who owned 100% of the Riacho dos Machados gold project through
Melbourne Ventures Fund LLC. Subsequent to this agreement, MRDM has obtained the additional
exploration licneses listed above under the designation of Application for Exploration License.
Carpathian/MRDM has informed the consortium that no encumbrances exist on the ownership of the
mineral rights.
29
4.4 Surface Rights

In Brazil, surface rights are distinct from mining rights and must be acquired separately. The authors
have been advised by Carpathian/MRDM that the single Mining Concession on the Riacho Dos
Machados Project comes with surface rights ownership for 266.6 hectares at the RDM mine site,
which will allow future mining operations to proceed quickly with no royalty, as the mineral rights
owner and surface rights owner are the same. In addition, Carpathian/MRDM has informed the
consortium that a further, approximately 310 hectares of surface-right ownership contiguous with the
previous surface rights has been acquired by Carpathian in early 2009. In addition,
Carpathian/MRDM has informed the consortium that further land parcels have been purchased, or in
the process of being purchased, that will cover the surface affected by the envisioned mine site plan.
To date of this report MRDM informs the consortium that a total of 744.4 ha of surface rights have
been purchased with a further 177.1 ha of surface rights under purchase agreement pending final
sign-off of the owners for a total of 921.5 ha as shown in Figure 4-2. The 17 areas of the Exploration
Licenses with exception of part of the Exploration License nr. 833480/2006 over which MRDM has
purchased surface rights - carry no surface ownership rights and access to the properties and
reclamation of disturbed areas must be negotiated with the individual surface owners. This is
commonly not a significant encumbrance as Brazils Mining Code sets the limits of compensation to
be paid to the surface owner.
30
Figure 4-2 Map of MRDM surface rights ownership
4.5 Royalties
Certain royalties are levied on mineral production in Brazil in accordance with Federal law. The
current statutory royalty imposed by the federal government on gold properties is 1% of sales
proceeds less sales tax, transportation and insurance costs. In addition to the government royalty, a
royalty must be paid to the landowner if the surface rights do not belong to the mining titleholder. This
landowner royalty is equal to one-half the government royalty, which in the case of gold would amount
to an additional 0.5%. The RDM Project has the surface right ownership (as shown above) for an
area covering the footprint of the deposit and infrastructure so any mineral production from this portion
of the project area, or any surface area subsequently acquired by Carpathian/MRDM will carry no
landowner royalty.
Carpathian/MRDM has informed the consortium members that the RDM Project additionally carries a
1% royalty on gold and a 2% royalty on base metals payable by Minerao Riacho dos Machado to
Minerao Brilhante Ltda. The mineralization in the project area currently carries no base metals
credits.
31
4.6 Environmental and Socio-Economic Issues

The Mining Concession within the RDM Gold Project includes an open pit gold mine operated by
CVRD until closing in 1997. This mine exploited gold ore from the weathered zone using cyanide
heap-leach for gold recovery. After mine closure, CVRD completed a well-designed rehabilitation
program and initiated an environmental maintenance program which has been continued to the
present time. The rehabilitation program consisted of reshaping the mining land-forms, installation of a
drainage system and re-vegetation of the disturbed areas. The continuing maintenance program
consists of water monitoring (17 to 26 stations sampled at 3-month intervals), monitor and control of
any detected of acid mine drainage, and removal of arsenic from contaminated water.
Carpathian retained the services of Multigeo of So Paulo, Brazil, to carry out a preliminary
environmental evaluation on the Riacho dos Machados mine site (Multigeo Consulting Group, 2008).
The work entailed a detailed literature search, mine visit, examination of the historical documents on
file at the Minas Gerais State Environmental Agency (FEAM), critical analysis of all information
gathered highlighting any possible liabilities, and preparation of a final report which was completed on
February 8, 2008.
According to Carpathian, Multigeos report indicates that the project is in good condition and is in
accordance with FEAM. The report provides recommendations for on-going monitoring to reduce any
unexpected impacts and details the steps and timeframe to obtain environmental permits necessary to
re-open the mining operation. Should the operation be re-opened, Multigeo suggests it would receive
support from the local community and municipal authorities due to the current lack of economic
activity and weak labour market in the region.
MRDM has retained the services of YKS Ltda. of Belo Horizonte, for Environmental and Social Impact
Studies related to the potential re-opening of the Riacho dos Machados Mine as well as M2
Environmental and Consulting Services Ltd.. MRDM obtained the Ad Referendum (technical
approval) of the Licena Prvia (environmental license) to develop the Riachos dos Machados mine in
April, 2010 with final approval granted on June 2nd, 2010. This license is granted by the Brazilian
environmental agency, COPAM, and approves the environmental impact of the proposed mining
development, depending on two more licenses: to approve construction (Licena Instalao) and mine
operation (Licena Operao).
32
5. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY
5.1 Accessibility
The Riacho dos Machados Project is approximately 145 kilometres by road northeast of Monte Claros
in the northern part of Minas Gerais State, southeastern Brazil. Monte Claros (population 400,000) is
the regions largest industrial city, offering full service facilities and daily commercial air flights to the
major Brazilian cities of Belo Horizonte (560 km from project), Braslia and Salvador. Access to the
Project from Monte Claros is by 130 kilometres of paved road and 15 kilometres of all-weather gravel
road. The nearest town is Riacho dos Machados (population 11,000) about 25 kilometres northeast
from the Project (Figure 5-1).
33
Figure 5-1 Access map of the project
5.2 Climate, Phisiograpyhy, Flora and Fauna

The climate is semi-tropical with two seasons: a dry winter and a rainy summer, with the main period
of rains occurring between November and March. Annual rainfall for the last several years has
averaged about 1,100 mm with temperatures ranging from 17C to 30C. The prevailing vegetation is
overgrown semi-tropical savanna known as cerrado, consisting of brushy forest land interspersed
with open grassy fields. The area supports only limited agriculture, mainly subsistence cattle grazing
in the mine-site area, and more widely includes sparse Eucalyptus tree farms for use principally as
charcoal in metallurgical ovens.
34
The Project is within the Espinhao Mountains (Serra do Espinhao) that divide the So Francisco
and Jequitinhonha river basins. The terrain consists of rolling hills, locally steep and drained by sparse
intermittent streams, mainly active in the wet season. Elevations range from 770 to 900 metres above
sea level.
The relatively flat topography allows good availability of waste and tailings storage areas, as detailed
in the Section 18. Water sourcing is also discussed in detail in Section 18.
Figure 5-2 Average Climate Conditions
35
Figure 5-3 Cerrado Flora
Figure 5-4 Caatinga Flora
5.3 Local Resources and Infrastructure

During the years when CVRD operated the Riacho dos Machados mine (also known as the Ouro Fino
Mine), labour was provided from the nearby towns of Riacho dos Machados and Porteirinha.
Infrastructure remaining in place at the mine site includes an active 13.8 kilovolt power line and right-
of-way, a 120-metre deep exploration shaft (2.8-metre diameter) with head frame, warehouses,
housing facilities and various other buildings, including core storage. The old open pits and
underground workings are now filled with water, and the waste dumps and leach pads have been
reclaimed and re-vegetated. Water monitoring stations that CVRD installed are utilized to measure the
water quality in the area of the mine.
36
Within the state of Minas Gerais, many mining related services are available ranging from drilling and
mining contractors to technical geological and engineering consulting firms which operate at world-
class standards.
37
6. HISTORY
The Riacho dos Machados Mine lies in a scantly explored area with no previous mining production. It
was discovered through regional geologic investigations along the north-south trending eastern
margin of the Sao Francisco Craton. The only other known mineral deposit in the area is a small un-
mined massive sulphide deposit (Salobro) about 30 kilometres north of the mine, but the nearest
producing mines are 150 kilometres north in the greenstone belts of the Capim and Urandi-Licino de
Almeida areas and 300 kilometres south in the Iron Quadrangle.
6.1 Project Exploration

In 1976, the Brazilian government in partnership with Prospec S.A. and Companhia Vale do Rio Doce
(CVRD) completed a geological mapping study covering parts of several states in southeastern Brazil
including the northern part of Minas Gerais State. Based on the results of this regional geological
program, DOCEGEO, the exploration branch of CVRD, initiated a geological reconnaissance program
in northern Minas Gerais in 1978 in order to identify geological environments potentially favourable for
gold and base metals mineralization associated with the regions greenstone belt sequences.
DOCEGEOS reconnaissance in this region, referred to as the Riacho Dos Machados Project, focused
on several highly metamorphosed volcano-sedimentary rock sequences of probable Archean age
exposed in a basement window through low-grade metamorphic Proterozoic-age supracrustal rocks.
In 1986, DOCEGEO discovered a surface oxide gold deposit known as the Ouro Fino Deposit. This
discovery was subsequently opened in 1989 as the Riacho dos Machados Mine utilizing open pit
mining and heap-leach recovery of gold. Exploration continued in the district until 1997 when the mine
was closed as a result of low gold prices and the changing of focus of CVRD to iron ore and base
metals.
As outlined in Section 4.3, the mineral rights of the exploration area, including the mining concession
covering the Riacho dos Machados mine, are currently held by Minerao Riacho dos Machado Ltda,
which is a 100% owned subsiduary of Carpathian.
The following is a chronological summary of the exploration work carried out by DOCEGEO/CVRD in
the Project area:
1978 to 1981 Geological reconnaissance mapping and sampling, including stream sediment
sampling and soil geochemistry. This work identified several arsenic and gold anomalies including the
Ouro Fino and Passagem Nova targets.
38
1982 to 1987 Follow-up work focused on the Ouro Fino target and greenstone sequence. Geologic
mapping at 1:25,000 scale, heavy mineral geochemical sampling of major drainages, reconnaissance
rock sampling and mapping, and petrographic studies were all carried out during this period.
Additionally, a regional airborne geophysical magnetic and electromagnetic (EM) survey was flown in
1984-1985. These programs identified four principal target areas: Ouro Fino, Passagem Nova,
Malhada Vermelha (Mato da Roca) and Rochedo.
Detailed soil sampling initiated in 1985 over the Ouro Fino target area delineated a pronounced NNE-
SSW trending gold anomaly, 1,700 m long x 100 m wide and carrying up to 7.65 g/t gold. This soil
anomaly together with results in follow-up trenching marks the discovery of the Ouro Fino gold
deposit.
The Ouro Fino anomaly trend was subdivided into five blocks I, II, III, IV, and V (from south to
north) and then mapped, sampled and trenched in detail. More than 1,700 soil samples, 100 rock
chip samples and more than 3,700 trench channel samples along the anomaly trend were collected
and analysed. The trenches were each 20 to 3 metres40 metres long across the strike and spaced 25
to 50 metres apart from which channel samples were collected. In blocks III, IV and V, this trenching
together with shallow diamond core and reverse circulation (RC) drilling, was used to define the oxide
gold zone that was later mined in the Riacho dos Machados open pit operation.
1988 to 1994 Based on results of the Ouro Fino target drilling and evaluation program, CVRD
determined the shallow oxide gold zone was a viable gold deposit. Drilling was initiated in 1987 and
continued until 1993-1994. Several drilling phases were completed, including: (a) RC drilling to define
the oxide gold reserve definition and test other exploration targets, (b) diamond core drilling to explore
and deeper sulphide mineralization, and (c) underground development accessed by a vertical shaft
and drifting along the mineralized zone with drilling in the south part of the open pit area (block III) to
further define the deeper sulphide gold zone. A total of 339 drill holes (32,364 metres) were drilled. An
additional 102 shallow holes ( 50 metres depth) are also mentioned as having been drilled to help
define the oxide gold ore reserve. Details of the drilling completed on the Riacho dos Machados
Project are provided in Section 11 of this report.
1994 to 1998 Concurrent with mine development and mining (discussed in Section 6.2 below),
CVRD/DOCEGEO conducted exploration with two objectives:
Find additional near-surface oxide gold resources in outlying areas within a 30-kilometre radius of the
mine.
39
Define and evaluate sulphide gold resources extending below the Riacho dos Machados Mine oxide
gold open pit operation.
Most of the outlying shallow targets examined during this period appear to require further work. The
results of the exploration on these targets are discussed in the Exploration Section of this report. The
results of the sulphide gold resource exploration are discussed in this Section 6.3 of the report.
6.2 Open Pit Mining

CVRD began the Riacho dos Machados Mine operation in 1989. Oxidized gold ore was mined and
processing by cyanide heap-leach until 1997 when operations ceased. The mine began as a hillside
mine and eventually developed into an open pit 1,350 metres long x 110 metres wide x 30 - 60 metres
deep. It opened with an estimated reserve of 2.7 million tonnes of ore averaging 2.22 g/t Au, but the
actual production over life of the mine was 3.2 million tonnes of ore at an average head grade of 1.89
g/t Au (Table 6-1). The larger tonnage and lower grade are attributed to a lack of mining selectivity
because of unexpected hardness of the rock. The average waste-to-ore strip ratio over the life of the
mine was 2.14. The ore was processed by heap leaching with an alkaline solution of sodium cyanide
and adsorption in activated carbon columns. The leaching cycle for each 6-metre high ore pile was 2
months, including cyanidation, washing and neutralization. According to the historical records, the
average gold recovery over the life-of-mine was 79%.
Year Ore Head Waste Strip Total contained Total Au Average

tonnes grade tonnes ratio Au produced Au
(g/t Au) Recovery
(%)
ratio kg troy oz. kg troy oz.
1989 11,852 2.46 1,585 0.13 29 932 - - -
1990 333,624 1.89 320,670 0.96 631 20,287 447 14,371 71%
1991 505,816 2.12 962,528 1.9 1,072 34,466 858 27,585 80%
1992 516,792 1.93 1,175,140 2.27 997 32,0545 829 26,653 83%
1993 627,906 1.98 1,592,892 2.54 1,243 39,963 952 30,607 77%
1994 567,694 1.68 1,377,734 2.43 954 30,672 798 25,656 84%
1995 362,414 1.68 961,480 2.65 609 19,580 511 16,429 84%
1996 293,930 1.88 486,710 1.66 553 17,779 399 12,828 72%
1997 - - - - - - 31 997 -
3,220,028 1.89 6,878,739 2.14 6,088 195,733 4,825 155,126 79%
Table 6-1 Riacho dos Machados Mine - Open pit Mine Production records
40
6.3 Underground Exploration

During the open pit operation, CVRD did considerable exploration to evaluate potential beneath the
shallow oxide gold zone for a non-oxidized sulphide gold deposit that might be amenable to an
underground mining operation. This work, consisting of deep surface drilling combined with
underground sampling and drilling, resulted in defining a sulphide gold resource. Studies of the
metallurgy, mining and economics of this underground resource were subsequently carried out by
CVRDs exploration team and SUTEC (Superintendencia de Tecnologia da CVRD) with assistance
from Minere Engenharia Ltda., Paulo Abib & Kilborn Ltda., and Sermin Servios de Minerao Ltda.
during the period 1993 to 2001.
6.3.1 Deep Diamond Drilling Program

Several campaigns of diamond core drilling identified as F, SUF, SU and FD were used to
evaluate the deep gold mineralization below the open pit. DOCEGEO carried out the F campaign,
CVRD carried out the other campaigns. The F campaign, initiated in 1987, was designed to examine
the continuity of the surface oxide gold mineralization defined by surface trenching and previous
drilling. This campaign consisted of 140 drill holes spaced 50 to 150 metres apart in four long
sections. A fifth section consisting of 5 deep holes was done to test continuity of mineralization down
to the 540 m level, approximately 360 metres below the bottom of the open pit (elevation of 800
metres). Of the 145 total holes drilled in the F campaign, 86 holes (13,849 metres) were used to
evaluate the deeper underground mineralization; 77 of these were vertical holes (12,925 metres) and
9 were inclined (-60, 924.5 metres, -60).
The SUF campaign was a detailed pre-mining evaluation of the oxide surface reserves. Of the 102
core holes drilled in this campaign, only 7 holes (359 metres) were used in the underground resource
evaluation; 2 of these were vertical (190 metres) and 5 were inclined (169 metres, -60).
The SU campaign consisted of core holes drilled from underground galleries and were used to guide
the heading and openings of the underground workings. A total of 64 holes were drilled (2,330 metres)
of which 10 holes (436 metres, variable orientation) were used in the underground resource
evaluation.
The FD core holes, drilled in 1992 to 1994, were the last to be drilled on the Project. They were
designed to provide in-fill detail to the previous drilling and to extend the mineralization between the
540 m and 250 m levels, approximately 360 to 550 metres beneath the bottom of the open pit. A total
of 27 holes were drilled (9,138 metres) of which 18 holes (2,932 metres) were vertical and 9 holes
(6,206 metres) were sub-vertical (-75 to -85).
41
6.3.2 Underground Exploration Development

A program of underground exploration was launched in 1993 and 1994 to examine and verify the
deeper gold mineralization beneath the southern portion (block III) of the open pit. Block III was
chosen for this program because of the amount of available information and its regular structural and
geologic features. The work consisted of a vertical access shaft and a series of underground
exploration galleries, as described below:
Exploration Access Shaft Access for the underground exploration was via a 117-metre deep
vertical shaft (2.8-metres diameter) located 80 metres east of the open pit (local coordinates 9774N-
5219E). The shaft bottomed at the 730 m level, approximately 60 metres below the bottom of the
open pit. A 16-metre tall metal head frame is still in place on the property at the site of the shaft. The
winch and hoist (no longer in place) were reportedly capable of moving 260 tonnes of material per
day.
Underground Galleries A total of 730 metres were excavated from the 730m level underground,
including the level gallery, crosscuts and drifts. The workings averaged 2.5 metres wide x 2.2 metres
high, sufficient for the use of LHD equipment. The mineralized zone was reached from the bottom of
the shaft at the 730 m level via a 65-metre long crosscut tunnel. From that point, a drift tunnel tending
approximately N20E was driven 199 metres north and 267 metres south along the mineralized zone.
Short crosscut tunnels were made at various places along the drift for additional sampling and drill
stations. A total of 64 directional core holes (33 mm diameter) totalling 2,330 metres were drilled from
these underground workings. The workings were mapped and sampled from hanging wall to footwall
across the mineralized zone with 8-centimetre wide channels spaced 2.0 metres apart along the zone.
The length of each sample varied from 0.3 to 1.0 metres depending on geological criteria.
6.4 Metallurgical Sampling

Six bulk samples from various parts of the underground workings were collected and submitted for
metallurgical testing. Initial test work was completed in 1994 with follow-up work completed in 1995-
1996. Results of this work are described in Section 16 of this report.
6.5 Historical Underground Resource Estimation

During the period 1994 to 1998, CVRD conducted or commissioned a number of pre-feasibility studies
regarding the metallurgy, mining methods and capital-operating costs for the underground sulphide
gold resource. In 1996, CVRD completed a resource estimation for the sulphide gold zone in
conjunction with a preliminary economic assessment for an assumed underground mining operation.
42
The resource calculation was done manually by polygonal methods in long section, typical of methods
then used to estimate resources in thin tabular bodies such as shear-controlled deposits or vein
systems. A geologic model of the mineralization occurring within a tabular shear-zone striking 20 and
dipping 35 - 45 southeast as several steep plunging shoots with an average strike of 142 and dip of
38 was built using drill and underground data plotted on a series of close-spaced cross-sections. The
parameters used include the following:
Minimum grade cut-off of 2.0 g/t Au.
Minimum thickness cut-off of 1.50 metres.
Ore density of 2.8 g/cm3.
Resource area limited to maximum 550 metres vertical extent (from the pit bottom at 800
metre elevation to 250 metre elevation).
CVRD categorized the resource as Measured, Indicated and Inferred according to the
following criteria:
Measured Resource Restricted to the area from the base of the open pit (800 metres
elevation) to 30 metres below the 730 m underground drift a total vertical range of
approximately 100 metres.
Indicated Resource Includes blocks located at the base of the open pit (800 metres
elevation) to the 500m level with information from the open pit mining and diamond core
drill holes which lies outside the area of influence of the 730m level gallery drifts.
Inferred Resource Represents mineralization intersected in drill holes between the

500m and 250m elevation levels.
The results of this historical resource estimate are tabulated in the Table 6-2 below.
43
CATEGORIES AREA III AREA IV AREA V TOTAL
Tonnes 360,440 0 0 360,440

Avg. grade (Au g/t) 4.41 0 0 4.41
MEASURED Avg. thickness (m) 2.54 0 0 2.54
Contained Au (kg) 1,590 0 0 1,590
Contained Au (oz) 51,102 0 0 51,102
Tonnes 749,561 480,207 996,265 2,226,033
Avg. grade (Au g/t) 5.33 5.6 4.37 4.96
INDICATED Avg. thickness (m) 3.01 1.95 3.97 3.21
Contained Au (kg) 3,995 2,689 4,354 11,038
Contained Au (oz) 128,447 86,458 139,974 354,880
Tonnes 1,110,001 480,207 996,265 2,586,473
Avg. grade (Au g/t) 5.03 5.6 4.37 4.88
TOTAL M+I Avg. thickness (m) 2.86 1.95 3.97 3.12
Contained Au (kg) 5,585 2,689 4,354 12,628
Contained Au (oz) 179,550 86,458 139,974 405,982
Tonnes 259,518 369,852 556,686 1,186,056
Avg. grade (Au g/t) 3.67 3.83 4.28 4.01
INFERRED Avg. thickness (m) 1.67 3.5 3.37 3.04
Contained Au (kg) 952 1,417 2,383 4,752
Contained Au (oz) 30,621 45,543 76,603 152,767
Table 6-2: Historical Underground Gold Resource Estimate -CVRD 1996
Cautionary statement: The resource categories used above do not necessarily conform to the
categories of the same name as used in the CIM Definition Standards (2004) and are therefore not
compliant with the reporting standards of NI 43-101. The resource estimates by CVRD provided in the
following table are reported here for historical purposes only.
Along with the above historical resource estimation, a significant amount of technical pre-feasibility
and economic studies was also complete by or for CVRD, including:
Pre-feasibility Study for Underground Mining at the R.D.M. Mine, CVRD, September, 1994
Underground Access Alternatives, SERMIN, January 1995
R.D.M. Underground Mining, Paulo Abib-Kilborn, January 1995
Underground Evaluation, CVRD, May 1996
Economic Analysis for Verona Minerals, by Roscoe Pestle Associates, 1996
44
The following is a very brief summary of the major results or conclusions of these technical pre-
feasibility and economic studies done by or for CVRD regarding possible development of the assumed
resource in the sulphide gold zone at the RDM Mine:
Access : An inclined ramp (-15) was determined to be the most feasible means to gain
access to the underground deposit, although access via a vertical shaft showed some
economic advantages at depths below the 500m level.
Mining method Cut-and-fill with hydraulic filling was shown to be appropriate for the type
of equipment envisioned and for either an inclined ramp or vertical shaft scenario.
Ore processing Metallurgical tests (summarized in Section 16 of this Technical Report)

indicated that a substantial portion of the gold is enclosed in quartz and in sulphide
minerals, requiring the ore to be crushed to minus 2 mm to allow efficient recovery by
cyanide heap leaching. Cyanide column leach tests suggested gold recoveries for this
material would be 81%. In 24-hour cyanide bottle roll tests of much finer grind (200 mesh
= 0.074 mm) recoveries up to 92.8% were achieved. The work suggested that a CIP
process could be used for gold extraction, but this option was rejected by CVRD as being
too expensive at the time.
Economic analysis CVRD did an economic evaluation based on: (a) an 11.4-year
underground mine producing 340,000 tonnes of ore per year; (b) an assumed geologic
resource of 3.77 million tonnes with a head grade of 4.61 g/t Au; (c) mining dilution of 10%;
and (d) ore processed by cyanide heap-leaching. Initial capital costs were estimated to be
approximately US$15 million and operating costs were assumed to be about the same as
CVRDs other comparable operations, approximately US$25/tonne.
Roscoe Pestle Associates (RPA) was contracted by Verona Minerals Corp. in 1996 to reassess
CVRDs evaluation for a possible purchase of the RDM Mine from CVRD. In evaluating the sulphide
resource, RPA reduced the head grade to 3.50 g/t Au believing that the CVRD grade was over-
estimated by 20% and the dilution factor was under-estimated by 10%. RPA based this on a
reconciliation of historical production vs. reserves in the oxide gold operation and a comparison of
underground sampling grades vs. drill-indicated gold grades.
Using only slightly higher initial capital costs and operating costs than in the CVRD evaluation, and
based on a gold price of US$386/ounce, the RPA analysis indicated that the RDM operation, using a
45
heap leach processing scenario, would generate only a very slight profit (IRR of 0.38%), and using a
CIP processing scenario it would operate at a loss.
46
7. GEOLOGICAL SETTING
7.1 Regional Geology and Tectonic Evolution
The Riacho Dos Machados Gold Project occurs in the north-south trending Araua Fold-Thurst Belt
along the eastern margin of the So Francisco Craton, a major Archean-age basement block which
underlies more than one million square kilometres in eastern Brazil.
The Araua Fold Belt is 15 to 45 kilometres wide and comprised of a series of metavolcanic-
metasedimentary rocks of late Archean to late Proterozoic age which were deposited in a broad
intracontinental to oceanic rift-type basin that existed between the So Francisco Craton and the
Congo Craton (now part of Africa). Subsequent closure of this rift basin by prolonged continental
collision strongly deformed the rock strata and the units were metamorphosed, folded, intruded and
thrust westward against the So Francisco Craton forming the Aracuai Fold-Thrust Belt during the
late-Protereozoic Brasiliano orogeny. (Alkmim, et.al., 2001, Monteiro, 2004). Mineralization along the
Araua Fold Belt is thought to be the result of hydrothermal fluids generated by syntectonic igneous
and metamorphic activity.
Immediately east of the Aracuai Fold Belt occurs a North-south trending structural window (300km
long) cored by an Archean-aged migmatites (Porteirihna Complex) and flanked by apparent
dcollemont structures and Proterozoic supracrustal sequences (Espinhao and So Francisco
Supergroups) forming a regional antiformal structure. This structural window has been termed the
Guanambi-Corretina Block by Barbosa (1996) or the Porteirinha Complex by DOCEGEO (1994). At
the Riacho dos Machados Mine, basement gneissic-granitic rocks are interpreted to be overthrust
westward on the supra-crustal rocks of the Riacho dos Machados group as part of the Brasiliano-Pan-
African event. The tectonic superposition of basement rocks over supracrustal sequences is described
along the entire eastern border of the Sao Francisco Craton with mineral occurrences known along
this lineament.
The major Precambrian rock sequences included in the Araua Fold Belt, in order of oldest to
youngest, are as follows:
Porteirinha Complex (also known as the Crrego do Cedro metamorphic complex) Archean age
granite-gneiss and migmatite basement complex, includes minor meta-mafic intercalations and tight
N-S folds, part of a poorly understood tectonic block immediately east of the So Francisco Craton;
Riacho dos Machados Group Late Archean to Early Proterozoic age strongly metamorphosed
volcanic-sedimentary rock sequence comprised of mafic to ultramafic rocks with mica schist and
47
quartz-feldspar schist; this sequence contains a local rock sequence, the Ouro Fino Sequence
(discussed in Section 7.2, below) which is the principal host for gold deposits in the Riacho dos
Machados Project;
Paciencia Intrusive Suite Early to Middle Proterozoic age bodies of granite, quartz monzonite,
quartz-diorite, diorite and gabbro which intrude the Riacho do Machados Sequence; syn-to-late
metamorphic deformation;
Espinhao Supergroup a thick supracrustal sequence of Middle Proterozoic age moderately

metamorphosed sedimentary-volcanic rocks, mainly sericitic quartzite, phyllite, conglomerate and
schistose felsic volcaniclastics;
Salinas, Macabas and Bambu Groups sequences of Late Proterozoic age weakly
metamorphosed sedimentary rocks, variably consisting of slates, meta-siltstones, phyllites, meta-
arenites, quartzite (locally iron rich) and greenstone.
Riacho dos Machados Group (RMG)- The supracrustal late-Archean to early-Proterozoic rocks of the
RMG are hosted within the Crrego do Cedro Archean gneissic-dome complex. The RMG is highly
sheared and exhibits sheared contacts. The protoliths for the RMG are interpreted predominantly as
meta-sedimentary (metapelite), meta-volcanic and undifferentiated Meta-volcanosedimentary Units
host the Ouro Fino Gold Deposit.
The meta-sedimentary Unit is dominated by pelitic schists (quartz-biotite) with variable portions of
plagioclase, garnet, staurolite and kyanite. Quartzofeldspathic schists occur in subordinate proportions
and are composed essentially of plagioclase, quartz, phlogopite and microcline, according to Fonseca
(1993) this lithology type corresponds to a metamorphosed volcanoclastic rock.
The undifferentiated meta-volcanosedimentary unit consists of intercalated metasediments and

metavolcanic rocks in the form of titanite-bearing amphibolites and chlorite-talc-tremolite-, garnet-
biotite-chlorite- and carbonate-serpentine-chlorite-tremolite schists. Fine-grained amphibolites and
mafic/ultramafic schists are also intercalated with the metapelites and shearing has produced
schistose rocks predominantly composed of chlorite and muscovite.
48
Figure 7-1 Regional Geology Map
49
7.2 Local Geology

In the project area and proximal to the Riacho dos Machados gold deposit, the following
lithostratigraphic units occur from older to younger: (1) middle Archean basal migmatite gneiss of the
Porteirinha complex with associated bodies of basic rocks; (2) late-Archean metavolcano-sedimentary
rocks of the Riacho dos Machados Group (RMG), host to gold mineralization; (3) early Proterozoic
granitic intrusive of the Pacienca Intrusive suite syn-to-late deformation and may cut part of the RDM
Group; and (4) late-Proterozoic supracrustal rocks of the Macabas Group outcropping west of the
mineralised areas consisting of meta-diamictites, quartzites and phyllitic meta-siltstones.
50
Figure 7-2 Geologic Map - Location of the RDM Gold Project
7.2.1 Biotite (quartz-oligoclase-sericite) schist with staurolite and garnet

This is a medium to coarse-banded unit (bands up to metres thick) consisting of chloritized biotite (25-
30% including 5-15% muscovite), moderately to strongly sericitized oligoclase (15-30%), and quartz
(35-40%). Staurolite and garnet occur in separate bands. The staurolite clasts (up to 1 cm or more in
size) are moderately to strongly sericitized and occasionally chloritized. Other Accessory minerals
include tourmaline, rutile, apatite, ilmenite and epidote, with rare zircon and carbonate crystals.
Petrographic studies suggest the protolith (original rock) for this unit was a pelitic sediment.
51
7.2.2 Quartz-feldspar schist

This unit has a more restricted occurrence the other units in the central-north portion of the area,
consists of quartz, sericitized and kaolinized oligoclase (40-47%), phlogopite mica (2-8%), microcline
(3-5%), and muscovite (altered from phlogopite). The schist is gray (white when weathered) and has
sparse fine-grained pyrphyro-clastic texture within moderate to well developed mylonitic foliation. The
protolith is considered to have been a felsic volcaniclastic rock.
7.2.3 Quartz-muscovite schist

This unit is the principal host for the gold mineralization at the Riacho dos Machados Mine. It is
considered to have formed by hydrothermal activity in a shear zone from potassic alteration of the
biotite schist and quartz-feldspar schist units. The rock is white to clear greenish in color (yellowish-
white when weathered) and consists predominantly of approximately equal, but variable, amounts of
quartz and muscovite. Chlorite is also present in variable amounts, together with small amounts of
siderite or calcite and up to 5% sulphide minerals occurring as pyrrhotite, pyrite, arsenopyrite and rare
chalcopyrite, sphalerite.
7.2.4 Quartz-sericite/muscovite-biotite/chlorite schist

This unit is probably a transition zone lithologic unit formed from the partial hydrothermal alteration of
the biotite schist and quartz-feldspar schist units. Contacts with the other units are gradational.
7.3 Structural Geology

The regional geology map patterns of the Riacho dos Machados Group (RMG) consists intercalated
bands or beds up to 6 kilometres long within the gneissic basement and elongated north-south,
parallel to strike of the Araua Fold Belt. The mica schists of the RMG, which host the gold
mineralization, demonstrate a well developed planar foliation with mylonitic shear fabrics common
throughout the mine area. The predominant shear fabric and foliation strike 20 and dip 35-45
southeast. Previous workers have suggested gold mineralization occurs within a shear zone of 200 m
wide bounded by generally concordant thrust faults dipping between 30 and 40 toward 115 (Belo,
1992 in Fonseca, 1993). In general the lithological contacts are parallel to these thrust faults with wall
rocks consisting of biotite schist, gneisses, and granitic rocks. Rock units along the shear zones are
silicified, sericitized and sulphidized. Gold mineralization occurs as distinct tabular zones concordant
with metamorphic and shear foliation with a present know continuous strike extent of 2,000 m at the
mine site. Geologic mapping and a linear trend of anomalous Arsenic-in-soil extends northward from
the mine for a further 10 km along structural strike.
52
Three major thermal-tectonic events are recognized in the area: a) Archean, b) Middle Proterozoic
(Transamazonic), and c) Late Proterozoic (Brasiliano). The oldest event is related to migmatization of
the gneissic basement rocks (Porteirinha Complex), the second event possibly resulted in the
structural deformation of the Riacho dos Machados sequence, and the third event resulted in thin-
skinned dcollemont tectonics and development of the west-verging Araua fold-thrust belt.
Gold mineralization at the Ouro Fino Mine (terminology from previous workers, in other parts of this
report referred to as the Riacho dos Machados deposit) is spatially related to highly sheared rocks of
the RMG group of rocks. In Brazil, many gold deposits are hosted in shear zones that commonly
impart distinct structural controls to gold mineralization. A structural and alteration study as the topic
of a Ph.D. dissertation by R.N. Monteiro (unpublished, 1996), under the supervision of W.S. Fyfe at
the University of Western Ontario, provides information on the structural architecture and relation to
gold mineralization at the Ouro Fino Mine. Importantly, Monteiros structural-mapping field work was
completed when the open pit was active providing fresh exposures. The following is summarized from
Monteiro et al. (2004).
Planar elements mapped include well developed mylonite S-C fabrics; plots of C planes as maximum
down-dip vectors shown an overall average of 111/49. Monteiro notes a progressive counter-
clockwise rotation of the C-plane dip vectors from 119/50 (Area III), 112/46 (Area IV) and 82/50 (Area
V) from south to north. The S-C pair intersects at 45 towards 143. Quartz veinlet surfaces generally
follow the C surface. Linear elements mapped include mineral stretching lineations of staurolite with
two main concentrations: one at 45/146 (plunge/trend) and the other at 45/123. Monteiro notes that in
shear-zones with monoclinic fabric (i.e. steady-state stress-strain ellipse) the stretching lineation
should be perpendicular to the S-C pair however, changing stress-strain fields can cause migration of
the S-C pair. In addition, the 55-78 rake of stretching lineation over the C surface is interpreted to
represent a complex shear zone behaviour consistent with transpersonal convergence.
Folds range from crenulations to outcrop scale (several metres). Crenulations are considered third-
order parasitic folds related to first-order larger folds. Three main intersection lineation styles related
to these third-order folds are recorded with their average spatial orientations of Li (3) 39/139; Li(2)
39/124 (less evident); and Li(3) 10/195 02/030. A stereo net plot that includes all intersection
lineations forms a girdle that mimics the spatial orientation of the average C surface. Field
observations suggested these crenulation sets cross-cut each other. Vergence of the crenulation sets
is left-lateral and reverse toward the Sao Francisco Craton.
53
Second-order intra-folia folds are rarely observed. The measured first and second-order folds are
comparable with the crenulation orientations of Li(1) and Li(3) respectively. Microscopic observation
notes gold-bearing arsenopyrite preferentially occurs along crenulation axes.
Analysis and interpretation of structural features and kinematic indicators suggests an estimated
vector of tectonic transport of 300-325, with a shear-zone displacement and vergence of left-lateral
and reverse toward the Sao Francisco Craton developed over a slightly oblique thrust-reverse ramp.
The estimated tectonic transport vector is in agreement with that defined for the overlying cover rocks
of the Araua fold-and-thrust belt suggesting that the fabric elements overprinting biotite mylonites
may have been produced during the Brasiliano reactivation of the basement shear zones.
In Monteiros study, a key objective was to compare mapped structural fabrics of the shear-zone
hosted Ouro Fino gold mine and compare with gold-grade distribution utilizing 3-D variography of the
mine-site assay database. This would allow evaluation of structural controls on gold-grade
distribution. For this part of the study, two adjacent contiguous areas were sub-domained within Area
III, termed Z1 (south) and Z2(north) with each area including a sampled area of 200 m N-S, 100 m E-
W, and 100 m Z. A total of 5,728 sample assays are used including 881 from drill holes. Monteiro
use this data to model best-fit ellipsoids. Monteiro considered two ranges, a small range (short
distance) and the sill range (maximum reliable distance). Evaluation of the best-fit search ellipsoids
from the sill range highlights the following: Anisotropy is only moderate with the length-ratio of long-
to-intermediate axes approximately 1.5 for both domains and 2) a sub horizontal and strike parallel
direction is a prominent trend in gold grades, even if this direction is the principal axis in domain Z1
and the intermediate axis in domain Z2. The results of 3-d variography of mine-site gold assay data
from two contiguous structural subdomains in Area III is presented below.
Monteiro compared the geometry of the best-fit search ellipses with the mapped structural fabrics in
these two domains. Monteiro concludes that in sub-domain Z1, the major mineralization vector (long
axes) plots near the sub-horizontal intersection lineation (Li(3)) and along the direction of the C
surface. This is consistent with the sub horizontal fabric relating to the micro-, meso, and macro-scale
asymmetric folds within the shear-zone. The intermediate mineralization vector plots near a cluster of
structural fabrics including stretching lineation, mineral lineation and other sets of intersection
lineations (Li(1) and Li(2)). In sub-domain Z2, the same general pattern was observed however, the
major mineralization vector plots near the prominent cluster of structural fabric elements while the
intermediate vector plot near the shallower dipping folds and crenulations (Li(3)). In both cases the
ellipsoids are conformable with the C surface
54
These results suggest the gold mineralization is closely related to the structural fabric. Particularly,
the C-plane spatial orientation seems to have been the main percolation duct in which the mineral and
stretching lineation orientations, along with the intersection lineations (Li(1) and Li(2)) greatly
facilitated fluid flow along shear surfaces. The striking coincidence of sub-horizontal intersection
lineation (Li(3)) with the major mineralization vector in sub-domain Z1 and the intermediate
mineralization vector in sub-domain Z2 indicates this structural fabric played a key role in
mineralization trapping. In sum, the main mineralizing fluid up flow was possibly upward along the
thrust movement direction with lateral escape along interconnecting sub-horizontal structural fabric.
Monteiro notes the mine geologists previously did not recognize a sub-horizontal structural control and
rather, relied fully on the stretching lineation.
Brittle deformation at the Riacho dos Machados gold deposit is limited to poorly defined cross-faults
which may have anomalous geochemistry but do not host gold mineralization. These cross-structures
may however be important in compartmentalization of ductile deformation.
Figure 7-3 Stereo nets of planar and linear structural fabric from all measured domains
C-Surface is plotted as maximum down-dip vectors; lm is mineral stretching lineation; li is all fold-
related intersection lineations; li(2) is less common intersection lineation; and li(3) is more commonly
55
observed in the open pit ranging 10/195 to 02/030 The structural mineralization model interprets
fluid up flow along lineations in the C-surface plane with traps at li(3) fold hinges (Monteiro et. al.
2004).
Figure 7-4 Comparison of mapped structural elements
Comparison of mapped structural elements shown in synoptic steronets with spatial distribution of
gold mineralization determined from 3-d variography of mine-assay data. The Z1 and Z2 Domains are
adjacent sub-domains within Area III; each approximately 200 m along strike length. The
mineralization axes represent the major and intermediate directions of related gold mineralization from
variography. C1 and Chill are short and long-range results respectively. The long-range results are
considered more reliable for consideration in Resource Estimation. At Z1: C (125/52), li (48/158
02/034 03/213). lm (60/126 26/217); S (all domains 151/50); ls (all domains 45/146
45/123). At Z2: C (114/46). li (37/154 02/013 08/186), lm (38/137 02/028
02/209), S (all domains 151/50) and ls (45/146 45/123). Considering the Csill range, note
the good correlations of the following: At Z1 the major mineralization axis with li (comparable with fold-
axes) and the intermediate axis with a cluster linear elements within the C-surface. At Z2, the major
mineralization axes nearby a cluster of linear elements in the C-surface and the intermediate axis with
the li.
56
8. DEPOSIT TYPES
The deposit at Riacho dos Machados Gold Project is considered to be a classic orogenic gold deposit
type in a sheared and deformed Archean to Proterozoic age greenstone belt sequence comprised of
metamorphosed volcanic-sedimentary rocks units intruded by slightly younger post-tectonic igneous
bodies.
According to Goldfarb et al. (2005), the term orogenic gold deposit is used for a class of deposits that
were formed during compressional to transpressional deformation processes at convergent plate
margins in accretionary or collisional orogens. The single most consistent characteristic of this type of
deposit is their association with deformed metamorphic terrains of all ages. Observations from
preserved Archaean greenstone belts and most recently-active Phanerozoic metamorphic belts
throughout the world indicate a strong association of gold and greenschist-facies rocks, however
some significant deposits occur in higher metamorphic-grade terrains. Pre-metamorphic protoliths for
the auriferous Archaean greenstone belts are predominantly volcano-plutonic terrains of oceanic
back-arc basalt and felsic to mafic arc rocks; terrains dominated by clastic marine sedimentary rocks
that were metamorphosed to metagreywacke, slate, phyllite, and mica schist. Studies carried out in
the Riacho dos Machados area (Fonseca et al. 1997) concluded that the gold deposit is classified as
a mesothermal orogenic gold type in view of its key characteristics.
Orogenic gold deposits are among the most important sources of gold production in the world. The
geology of the Riacho dos Machados area and its gold occurrences are strikingly similar to many
other gold-bearing greenstone belts throughout the world. Orogenic gold deposits collectively
account for more than 20 percent of the worlds total gold production.
This class of mineralization is normally controlled by first-order faults that act as conduits for the
auriferous fluids; and second- and third-order faults are the sites of mineral deposition (Robert et al.,
2005). Additional favourable areas with low or minimum mean stress zones include regional fault
intersections, areas of regional uplift or anticlines, and zones of competency contrast, such as along
granitoid margins (Robert, 1989; Vearncombe et al., 1989; Groves et al., 2000). In compressional
regimes, reverse faults in these zones have the highest degree of disorientation and the highest levels
of fluid overpressure, making them most susceptible to a high fluid flux and the deposition of gold
(Sibson et al., 1988).
The mineralization generally classified as mesothermal, means it is thought to have formed under
relatively high temperature at considerable depth in the earths crust by hydrothermal and/or
57
metamorphic processes. The deposits of this type may have great vertical extents (down-plunge),
commonly two kilometres or more. In many deposits, the gold occurs in fissure veins, veinlets,
stockworks and altered wall rock.
The mineralization at Riacho dos Machados gold deposit is a sheet-like mineralized horizon controlled
by a shear zone dipping 36 in which occurred hydrothermal alteration with gold precipitation. A linear
fabric dominated by intersection and mineral lineation seems to control mineralization and represents
the direction of minor variability in grade and thickness throughout the area.
All the targets in the property area have similar characteristics to the Riacho dos Machados deposit
and are explored considering these features. However, at the Passagem Nova Target the
mineralization is characterized by injections in the form of quartz/sulphide veinlets with kaolin. These
veinlets are late kinematics and occur in volcanic rocks altered in the green schist facies, intensely
propylitized. The Au/Cu, mineral paragenesis, the proximity of dioritic intrusive rocks sin to late
kinematics related to Pacincia Suite and the intense propylitization eventually with tourmaline and
hematite, could serve to establish a genetic vinculum between the mineralizing event and the intrusion
of granitoids.
Still a third type of mineralization occurs in the region of Riacho dos Machados in a target named
Salobro, which is not included in the Minerao Riacho dos Machados block of areas. It is located
about 30 Km to north of Riacho dos Machados mine and is also hosted in the Riacho dos Machados
Group. The Salobro type mineralization is characterized by zones of massive sulphide intercalated in
metavolcanic intermediate/acidic rocks with associated chemical metasediments, near the Pacincia
Suite. The mineralization is formed mainly by pyrite and pyrrhotite, with chalcopyrite and subordinated
sphalerite. The sulphide interval, including disseminated portions, reaches deca-metric thicknesses.
The massive portions are characterized by breccia type aspect, including centi-metric fragments of
chloritic rock. Locally the massive sulphide intercepts orthogonally the banded sulphide portions,
indicating clearly the existence of more than one phase of sulphidation.
NCL has been unable to verify the information regarding the mineralization types found on the
properties adjacent to the Riacho dos Machados area and cautions that they are not necessarily
correlated to the mineralization which has been covered by the present report.
58
9. DEPOSIT GEOLOGY AND MINERALIZATION

9.1 General Considerations
Mineralization at the Riacho dos Machados (RDM) Mine occurs in a belt of hydrothermally-altered
rock developed along a district-scale shear zone that extends almost 30 kilometres along strike in a
N20E strike direction and dips 40-45 east. The mineralization has a typical amphibolite facies
mineral association which is progressively altered to greenschist facies assemblage. The gold
mineralized body, considering the a marginal cut-off of 0.3 g/t, occurs as stacked tabular horizons
that are mostly concordant with the principal rock foliation (shear zone). These tabular zones typically
consist of a main zone which may be sided by a thinner footwall or hanging wall zones, separated by
3-10 m of un-mineralised rock. Continuity along strike and at depth is good with gold mineralization
occurring continuously over 2000 m strike length at RDM and up to 1000 m down dip. Previous
workers at RDM have noted individual mineralized bodies containing >2.0 g/t gold pinch-and-swell
along this zone, ranging from 20 to 150 metres in length, 1 to 5 metres or more in width, and plunge
S40E at an angle of -38 (Fonseca, et. al., 1997 and various CVRD documents). However, a
structural study by Monteiro et. al. (2004) concludes a sub-horizontal strike-parallel control is also very
important (see Section 7.3).
9.2 Alteration
At RDM, amphibolite-grade garnet-staurolite-biotite schist is retrograde altered to greenschist facies
proximal to the mineralized shear zones within a broader 200 m wide mylonitic zone.
Petrochemical studies completed by E. da Fonseca et. al. (1998) at RDM concluded the range of mica
schists represent retrograde reactions of a common protolith at varying fluid:rock ratios during late-
stage shearing and uplift. Mass balance analysis indicated the following the following elements were
added to the biotite schist; K2O, SiO2, S, LOI, and H2O and the following elements were depleted;
CaO, NaO, and MgO with the following stable; FeO and Fe2O3.
The proximal alteration is characterized by intense bleaching and K-metasomatism with consumption
of the iron-magnesian silicates such as biotite, garnet and staurolite giving place to sericite,
muscovite, quartz, sulphides and gold precipitation. Outward, chlorite is an intermediate alteration
phase grading to biotite only. The alteration halo ranges from a total of 20 m thick to 50-60 m thick
and symmetric around a sulphide+gold mineralized zone which commonly but not always correlates
with the advanced alteration product of a quartz-muscovite schist. Carpathian drill core logging has
59
recognized and recorded a zonation of alteration as follows (xxx = logging code) from the core
outward:
Quartz-muscovite schist (qmx) - chlorite-muscovite-quartz schist (cmx) -chlorite-biotite-quartz schist

(cbx) -biotite-feldspar schist (bx).
In general sulphide content and gold-mineralization correlates with the qmx and cmx; however,
exceptions are not uncommon where sulphides and gold occur in the cbx and rarely in the bx.
Alteration is fairly homogenous with little variation along strike, however, where the shear crosses the
localized quartz-feldspar schist (part of Area IV and V) the leucocratic nature of the host rock
suppresses chlorite formation.
60
Figure 9-1 Geology map with drill hole locations at the RDM Mine-site
9.3 Mineralization
Mineralization occurs in the hydrothermal/shear zone and gold grades are closely related to the
sulphide content, especially arsenopyrite. Gold occurs as microscopic native-gold grains (typically
finer than 400 mesh) at contacts between recrystallised quartz grains, muscovite grains and as
inclusions in arsenopyrite, and less commonly in pyrrhotite, quartz-veinlets, tourmaline, and pyrite
(Fonseca, E. da, et.al., 1998). Monteiro et. al. (2004) notes native-gold occurrences in euhedral
arsenopyrite in micro-structural traps (pressure-shadows) as possible evidence for late introduction of
gold into the shear-zone.
61
Detailed drill-core logging and reporting by MRDM indicates the following minerals and features are
correlated to gold mineralization (Note, these minerals/features occur as assemblages):
High Importance to low importance: Arsenopyrite (both anhedral and euhedral needles) pyrrhotite
abundant quartz veinlets (sheared into foliation plane) pyrite crenulation folding tourmaline
veins (fine-grained massive intergrown).
The arsenic content of the mineralization is quite high with an average of 3,935 ppm As for samples
> 1.0 g/t gold (note, some samples over detection limit). Silver contents are very low with the average
Ag/Au ratio = 0.5 for samples > 1.0 g/t gold. Antimony, Copper, lead, and zinc are mostly non-
anomalous.
The spatial association of hydrothermal alteration and its relationship with shear zone as well the ore
grade distribution is shown in the cross section below.
Figure 9-2 Geological cross section at RDM Mine-site
62
10. EXPLORATION
10.1 MRDM Exploration Program 2008 to Present
All exploration activities described in this Section of the report were developed by Carpathian.
Contracted services were limited to activities typically performed by contractors, such as drilling and
geophysics.
Concurrent with, and following the business acquisition of the Riacho dos Machados gold project by
Carpathian on October 30th, 2008 (See Section 4.3), the following work programs were initiated and
completed at the RDM Mine-site:
Compilation and computerization of historic CVRD data from hard-copy format. This includes
exploration and drilling data from 423 drillholes completed between 1989 and 1993 (Ruff 2008).
Carpathian diamond drilling program completed 64 drill holes between August 1st and October 29th
2008 for a total of 11,277 m (referred to as Phase I drill program).
Carpathian re-sampling of CVRD drill core from on-site storage facility. A total of 102 drill holes were
re-sampled (5,144 m) through the mineralized sections (part of Phase I drill program).
A thorough QA/QC program was implemented for evaluation of precision and accuracy of assay lab
sample preparation and analyses.
Surveying control included all Carpathian drill collars, and downhole surveying. In addition, for
validation purposes, 46 CVRD drill collars were located and surveyed for comparison with CVRD
documents.
Geologic interpretation and modelling of Carpathian detailed core logging and assay results (Stefanini,
2008).
The objective of these work programs was for project evaluation (Ruff, 2008) and for completing the
initial NI 43-101 compliant, Resource Estimate focusing on the sulphide-bearing gold mineralization
below the shallow historic open pits. NCL was commissioned by Carpathian to complete this resource
estimate and is addressed in detail within the Technical Report entitled, Mineral Resource Estimate
for Riachos do Machados Gold Deposit, Minas Gerais State, Brazil (Mello, 2009). The results of this
initial Resource Estimate were released in May, 2009.
NCL was commissioned by Carpathian, supported by a consortium of engineering companies, to

complete a Preliminary Economic Assessment study which is addressed in detail within the Technical
63
Report entitled Riachos dos Machados Gold Project Preliminary Economic Assessment Technical
Report NI 43-101 (Guzman, Mello, and Wells, 2009). The results of this Preliminary Economic
Assessment were released in August, 2009.
Carpathian initiated a Phase II drill program of predominantly infill drilling in June 2009 to upgrade
resource categories. The data from the Phase I and Phase II drill programs was utilized to complete a
Resource Estimate Update which was released on July 2010 to upgrade resource categories. From
June to October 2010 Carpathian started a final (Phase III) drill program. Results from Phase I, Phase
II and Phase III drill programs were used to compile a resource calculation which is the principle topic
of this Technical Report with details included in Section 17. The results of this Resource Estimate
Update were released in April 2011.
Carpathian has converted the 12 Application for Exploration Licenses to Exploration Licenses in late
2008 (Section 4.2). An exploration work program is planned for these licenses to evaluate targets
generated by CVRD and described below in Section 10.6. For this work, Carpathian has acquired
Ikonos Satellite image coverage with 1 metre of spatial resolution. In addition, maps of regional
airborne magnetic and radiometric where acquired over the area.
This program is planned to include geological recognition in the whole area with mapping and chip
sampling (2000 samples), about 25km2 of soil sampling and an initial drilling campaign with 40
diamond drill holes in the known targets.
10.2 Coordinates and Datum

The Riacho dos Machados (RDM) Project lies within the UTM Zone 23 South using the SAD 69
Datum which refers to the 1967 International Ellipsoid (SGR-67). The project is centered
approximately at 16 10 South and 43 07 West. During the exploration phase and ore-definition
phase, DOCEGEO/CVRD established a local grid with grid north rotated 19 East of true-North to
match the strike trend of the mineralized RDM shear-zone and surrounding tectono-stratigraphic
trend.
This grid covers an area of about 6000 m in a NNE-SSW direction and a width ranging from 900m to
3000m in a WNW-SES direction. The extent of this grid covers the RDM mine, the targets of NW,
Confisco, and Mombuca to the north of the RDM mine, and the South target to the South of RDM
mine. This main local grid has a base line established at line 5000E with survey monuments.
64
All historical survey data in the mine-area (including drillhole collars) is reported in local-grid
coordinates. In 2008 Carpathian re-established and validated the local grid and thus all surface survey
data refers to the local-grid.
In 2008, Carpathian contracted the Company SETA, specialized in topographic surveying, to establish
8 geodesic marks, with coordinates in UTM system (Sad 69) to work as reference to convert the local
grid coordinates to UTM coordinates system and shown in Table 10-1.
Reference point Local Grid Coordinates UTM Coordinates (23South-SAD 69) Area
N E Z N E
M1 9,763.5356 5,223.9493 835.006 8223182.642 699138.79 857.945 Shaft
M2 9,252.8020 5,263.3153 855.756 8222687.051 699009.163 878.689 Area South
M7 10,027.0310 5,323.8580 877.847 8223399.095 699318.926 900.747 Fita Zebr.
M14 10,221.8074 5,376.5486 872.242 8223566.008 699432.318 895.138 Restaurant
M3 12,474.4867 3,969.5382 848.865 8226154.389 698837.993 871.861 Mumbuca
M8 11,227.9200 4,563.6370 854.758 8224782.282 698992.443 877.652 Mumbuca
M4 12,569.1567 3,551.3654 906.110 8226380.426 698473.705 929.102 Mumbuca
M5 12,790.4229 3,526.8259 909.159 8226597.565 698522.748 932.129 Mumbuca
Table 10-1 Local-grid to UTM reference points 2008.
In addition, a rotational transformation has been established based on the calculated rotation origin
point of the local grid and a spreadsheet have been developed for easy application by technicians.
This point of origin for rotation is shown in Table 10-2.
LOCAL GRID UTM (SAD 69)

NORTH 0 8215661.0636
SOUTH 0 691012.1589
ELEVATION 0 22.939
Table 10-2 Rotation point of origin for local-grid translation
For conversion between local grid and UTM in computer software, Carpathian utilizes two methods: 1)
from local grid to UTM, a +19.0654 degree rotation from origin point M1 (see Table 6) and 2) use two
common points (known UTM and Local Grid coordinates) M1 and M2 (see Table 6).
10.3 Magnetic Declination

Historic information from CVRD indicates a magnetic declination of 20 to the west has been used at
the RDM project. In the original CVRD drill logs, azimuth of the holes were recorded in three different
columns as Magnetic North (MN), True North (TN) and Local Grid North for the RDM mine (LGN).
TN=MN +20
LGN=TN+20
65
LGN=MN+40
A check of current magnetic declination maps indicates a magnetic declination as of 2009 is 22 24

West.
10.4 Other Local Grids

The exploration targets of Manguinha (to the NW of RDM mine) were covered by another local grid
oriented 358.5E from True North (or 21.5 degrees east from main local grid. The Manguinha grid is
2040m in NS direction and 1150m in WE direction. The exploration target of Piranga was covered by
a third local grid oriented 003E from true North (or 17 from main grid) and extends for 1800m NS by
600 WE. These three local grids are shown in CVRD archive file SQRM008.
10.5 Historical Exploration

The historical exploration activities by CVRD in the Riacho dos Machados Project area were briefly
summarized in the Section 6.0 of this report. Those activities resulted in the discovery of the Ouro
Fino gold deposit (later renamed the Riacho dos Machados Mine) and also the discovery of a number
of outlying gold targets which have not yet been completely tested. Because most of these outlying
areas remain viable exploration targets and fall within the ground covered by the Exploration Licenses
included in the current Riacho dos Machados Project, we present the results of the historical
exploration in this Exploration Section. For continuity of discussion, the exploration target summaries
in this Section also include results of the drilling that was done on the targets.
10.6 Targets on the Riacho dos Machados Shear Zone

The Riacho dos Machados Shear (RDMS) is a 14-kilometre long mineralized structure cutting
metasediments of the Riacho dos Machados Group. It strikes 2030 and dips 35 to 45 east. The
Riacho dos Machados Mine is hosted in this structure with a presently known strike length of 2,000
near the southern end of the RDMS. Historic work demonstrates the presently known gold
mineralization and is marked by coincident gold and arsenic soil anomalies. Soil geochemistry and
geologic mapping indicate the RDMS shear extends for at least another 8 kilometres (and possibly 12
kilometres) to the north beyond the mine. At least six exploration targets have been identified and
tested with trenches and shallow drilling on the RDMS structure, as described in the following
sections.
10.6.1 RDM Mine South Extension

A 660-metre extension of mineralization on the RDMS south of the mine was tested with surface
trenches and 54 shallow RC drill holes (29 metres average depth) on drill fences spaced 25 metres
66
apart. Several holes intersected shallow, but apparently discontinuous, oxide gold mineralization.
Some mineralized intercepts of selected drill holes from the RDM Mine South Extension exploration
drilling are as follows Table 10-3:
Drill Hole Northing From To (m) Length Gold

(m) (m) (m) (g/t)
RC-30 8910 3.5 9.5 6.0 0.81
7.0 9.5 2.5 1.10
12.0 14 2.0 4.83
15.5 16 0.5 24.38
RC-21 9060 4.0 10 6.0 0.76
14.5 15.5 1.0 2.99
17.5 18 0.5 3.00
RC-99 9280 26.0 29 3.0 1.64
32.0 26 4.0 4.26
Table 10-3 Selected Exploration Drill Hole Intercepts - RDM Mine South Extension Target
Carpathian has drill tested this target, and during the Phase II drilling, has drilled at a suitable spacing,
and along with results from Carpathians trenching program, a shallow gold resource is defined from
this target (see Section 17 for details).
10.6.2 RDM Mine

The RDM Mine exploited shallow oxide gold mineralization to a depth of 60 metres or less. The
sulphide gold mineralization, which extends to depth beneath the oxide gold zone, was explored in
detail by CVRD as described in Section 6.0 of this report. The sulphide mineralization persists to a
depth of approximately 360 metres below the bottom of the open pit and remains open at greater
depth.
An area 500 metres west of the mine was tested with five shallow RC drill holes, one of which
intersected 2 metres of 1.12 g/t Au at 2.0 metres depth. This shallow oxide mineralization, which may
be controlled by a cross-structure or splay off the main shear zone, has apparently not been followed
up.
10.6.3 RDM Mine North Extension

A 365-metre extension of mineralization on the RDMS north of the mine was tested with 27 shallow
RC drill-holes (42 metres average depth) on drill fences spaced 25 to 50 metres apart. Several holes
intersected shallow, but apparently discontinuous, oxide gold mineralization. Mineralized intercepts of
selected drill holes from the RDM Mine North Extension exploration drilling are as follows Table 10-4:
67
Drill Northing (m) From (m) To Length Gold

Hole (m) (m) (g/t)
RC-40 10880 17.5 19.5 2.0 6.92
RC- 10960 21.5 24.0 2.5 1.46
177
54.5 57.0 1.5 2.01
RC-53 10970 0.0 2.5 2.5 2.58
7.0 8.5 1.5 1.40
17.0 18.0 1.0 3.71
20.5 22.0 1.5 4.18
Table 10-4 Selected Exploration Drill Hole Intercepts, RDM Mine North Extension Target
10.6.4 Mombuco East Target Area

Consists of a 4-kilometre long soil arsenic anomaly interspersed with a few gold anomalies parallel to
the RDMS. Three areas along the anomaly were tested with 15 shallow RC holes (60 metres average
depth). One hole intersected 1 metre of 2.65 g/t Au at 30.5 metres depth. No further work has been
done.
10.6.5 Manguinha Target Area

The Manguinha target is along a cross-structure (80 strike) 2.5 kilometres north of the Rio dos
Machados Mine and west of the Confisco Target. Soil sampling found gold anomalies (104 ppb and
665 ppb) with coincident arsenic anomalies. Results of trenching across the anomaly trend were
disappointing, but seven closely spaced RC drill holes (56 metres average depth) encountered
anomalous to high-grade gold mineralization over a 30- to 50-metre area. The three best intercepts in
this limited drilling program are as follows Table 10-5:
Drill Hole Northing From To Length Gold

(m) (m) (m) (m) (g/t)
RC-174 13090 14.0 19.0 5.0 1.68
RC-135 13090 33.5 40.0 6.6 1.62
RC-136 13080 16.5 20.0 3.5 10.22
Including 19.5 20.0 0.5 58.00
Table 10-5 Selected Exploration Drill Hole Intercepts, Manguinha Target
10.6.6 Confisco Target

The Confisco Target, east of the Manguinha target, is 3 kilometres long and is underlain by a
sequence of weakly metamorphosed chlorite schists, amphibolites, meta-chert, iron formations, meta-
rhyolites and manganiferous rocks. The rocks have well-developed mylonitic foliation developed by
simple shearing and are intruded and cut by apophyses of granite, pegmatite veins and numerous
quartz veins.
68
Five zones of soil geochemical anomalies were identified in reconnaissance and were followed by
trenching and drilling. Two of twelve trenches along 300 metres of strike intersected significant gold
over narrow intervals 1 metre with 3.27 g/t Au and 1.5 metres with 25.26 g/t Au, plus three separate
1-metre zones containing 6.43 g/t Au, 1.23 g/t Au and 1.55 g/t Au. The target was tested with 5 RC
drill holes (69 metres average depth), of which 4 hit significant gold mineralization (>1.0 g/t Au). The
mineralized intercepts in these holes are as follows Table 10-6:
Drill Northing From To Length Gold

(m) (m) (m) (m) (g/t)
FP-01 13600 4.0 13.0 9.0 1.04
20.0 21.0 1.0 1.35
FP-03 13560 22.0 23.0 1.0 1.02
FP-04 13535 22.0 24.0 2.0 1.38
FP-05 13620 41.0 42.0 1.0 1.32
Table 10-6 Selected Exploration Drill Hole Intercepts, Confisco Target
10.6.7 Targets South of the Riacho dos Machados Mine

Three targets south of the Riacho dos Machados Mine Piranga Sul, Mato da Roa (1, 2, and 3),
and Ara have geology and mineralization quite similar to the promising Passagem Nova target
and may therefore be worthy targets for further exploration The Mato da Roca 2, 3 and Ara targets
also contain permissive metasediments of the Riacho dos Machados Group which are the host rocks
at the Riacho dos Machados Mine.
Piranga Sul Target Explored with soil geochemistry, geological mapping and drilling. Dioritic rocks
have been metasomatically altered in shear zones. Soil geochemistry and two shallow RC drill holes
had no significant gold values.
Mato da Roa 1 Target Explored with soil geochemistry, geological mapping and trenching. Rocks
consist of Archean basement, quartz-feldspar-amphibole schist which has been tectonically
intercalated and intruded by granite and diorite, and laterite cover. Soil geochemistry defined four gold
anomalies, one of which was examined by four surface trenches. Two of the trenches intersected
significant gold mineralization over narrow intervals 0.5 metres with 2.24 ppm, 0.9 metres with 1.38
ppm, and 1.1 metres with 1.98 ppm Au.
Mato da Roa 2 Target Explored with soil geochemistry and geological mapping. Rocks consist of
quartz-biotite-schists intercalated with quartz-feldspar-amphibole schists belonging to the Riacho dos
Machados Group and granitic rocks. Soil geochemistry identified three soil gold anomalies.
69
Mato da Roa 3 Target Explored with soil geochemistry and geological mapping. Rocks consist of
quartz-biotite-schists and quartz-tourmaline veins. Soil geochemistry had no significant gold, arsenic
or zinc values.
Ara Target Explored with soil geochemistry and geological mapping. Rocks consist of
metasedimentary and metavolcanic rocks of the Riacho dos Machados Group. Two soil gold
anomalies areas were identified 150 and 300 metres long containing up to 281 ppb and 223 ppb
gold, respectively. The anomalies are coincident with a banded iron formation (BIF).
The Rochedo target is 15 kilometres north of the Riacho dos Machados mine, immediately north of
the Confisco target. The host rocks are silty slates, quartzites, carbonaceous meta-pelite and meta-
diamictites. This area has structural features characterized by a shear zone with more than 2
kilometres displacement, corresponding to the contact between diamictites/quartzites and
carbonaceous pelitic rocks, marked by sericitization, silicification and pyritization, and delineated by
airborne and ground EM geophysical surveys. Results of RC drilling to evaluate the shear zone were
inconclusive.
10.6.8 Passagem Nova Target

An exception to the homogenous alteration and mineralization system at the Riacho Dos Machados
Mine is the Passagem Nova target area 10 kilometres east of the mine. At Passagem Nova, the
mineralization is characterized by injections of quartz sulphide veinlets and veinlet stockworks
associated with kaolinite. The mineralization occurs in metavolcanic rocks adjacent to a dioritic
intrusive body, probably belonging to the Paciencia Intrusive Suite. The country rocks surrounding the
intrusive are intensely propylitized and mineralized with tourmaline, hematite and quartz sulphides
veinlets containing gold and copper minerals.
The Passagem Nova target is underlain by mafic to ultramafic volcanic rocks of uncertain age
(possibly Archean?) intercalated to the north with meta-chert, iron formations, and carbonaceous
schists. Late diorites and granites of the Paciencia Intrusive Suite intrude this volcanic sequence. The
target area is cut by shear zones related to thrust faults and is dissected by younger, steep dipping
faults.
The target was explored with stream sediment geochemistry, soil geochemistry, geophysics, trenches,
and geological mapping. Two mineralized gold zones, 50 metres long and 7 metres wide, were found
with an average grade of about 3.0 g/t Au. The lateral extent of these zones has not yet been
70
determined. Soil samples collected to extend mineralization to the south found two gold anomalies
170 ppb gold and 1,326 ppb gold.
The Passagem Nova mineralization is associated with a 30-metre wide zone of mylonitized ultramafic
rocks with intense hydrothermal propylitic alteration. Quartz/iron-oxide veining occurs in a silicified
zone containing gold and copper mineralization and is associated with kaolinite veins. Gossans are
locally present; these contain limonite and micro-crystalline silica associated with local malachite and
rare preserved casts after pyrrhotite, chalcopyrite, and ilmenite.
The target was tested with 31 RC drill holes, of which apparently only 2 holes were analyzed or
assayed. Both of these holes intersected significant mineralization 1 metre of 12.5 g/t Au and 1
metre of 4.3 g/t Au demonstrating some continuity of mineralization.
Despite being the outlying target having probably the largest amount of historical exploration work,
Passagem Nova remains one of the most interesting, if not promising, targets for further exploration.
The occurrence of gold and copper, together with anomalous amounts of zinc, within a mafic-
ultramafic sequence intruded by granite is a very different setting from the RDMS hosted
mineralization to the west. These are favourable lithologies, strongly altered and strongly mineralized.
71
Figure 10-1 Exploration target areas on the RDM Gold Project
72
Figure 10-2 Exploration target areas north of the RDM mine
73
Figure 10-3 Exploration target areas south of the RDM mine
74
11. DRILLING
11.1 Introduction
Approximately 51,764 m of historical drilling has been completed on the project by VALE/DOCEGEO
from 1987 to 1995. Most of this drilling has been concentrated on the RDM mine site and its Southern
extension (43,699 m), however smaller reconnaissance programs have been drilled on a few
exploration targets (8065 m). A summary of historical drilling is provided in. Location of historical drill
holes and Carpathian drill holes is shown on . Historical project data includes drillhole logs with assay
data, and importantly, drill core stored in secure buildings on-site.
Since acquiring the RDM project in 2008, Carpathian has completed Phase I Phase II and Phase III
drill programs. Results from Phase I drill program, which includes diamond drilling and re-sampling of
Vale drill core following validation, was utilized in the initial 43-101 compliant Resource Estimate for
the RDM Project released in May, 2009 (Mello, 2009).
Carpathians Phase II drill program included diamond drilling, reverse circulation drilling, surface
trenching, channel sampling traverses, and re-sampling of historical drilling.
Carpathian's Phase III drill program includes diamond drilling, limited re-sampling of historical drilling,
surface trenching, channel sampling traverses and auger drilling over the leach pads utilized by
CVRD. For the Resource Estimate Update, (Section 17), assay data from Carpathians Phase I,
Phase II and Phase III drilling programs is utilized.
75
Figure 11-1 Drill hole locations around mine site
11.2 Historical Drilling

The historical drilling which was done by CVRD, the only previous explorer and operator of the
Project, is summarized in the History Section (Section 6) of this report, and the results of that drilling
are discussed in the Exploration Section (Section 10). What follows in this Section is a discussion of
76
logistics, statistics and other general information regarding those historical drilling programs and
activities.
DOCEGEO, the exploration branch of CVRD, discovered the Ouro Fino Gold deposit (later renamed
the Riacho dos Machados Mine) through a generative exploration program in 1986 in an area without
previous mining or exploration activity. Most of the drilling on the project was focused on this deposit,
with some reconnaissance drilling of outlying targets carried on before and during the mining
operation, which closed in 1997. This reconnaissance drilling targeted shallow oxide gold
mineralization proximal to the operating mine for potential mine-feed. Several drilling phases were
completed during the period 1987 to 1994. No further drilling was completed on the project until
Carpathians drilling program in August, 2008.
11.2.1 Historical Drilling Statistics

Drilling programs on the Riacho dos Machados Project included:
Shallow RC drilling to define oxide gold reserves at the Ouro Fino deposit and to explore a number of
outlying targets; diamond core drilling to define deeper sulphide mineralization beneath the Riacho
dos Machados Mine; and underground exploration core drilling in the south part of the open pit mine.
A total of 282 holes totalling 30,845 metres were drilled at the Riacho dos Machados (RDM) Mine, and
215 holes totalling 9,633 metres were drilled on various exploration targets. All of the historical drill
holes are within the Mining Concession and the 12 areas of Exploration License Applications included
in the Riacho dos Machados Gold Project land package acquired by Carpathian.
The surface and underground drilling campaigns carried out at the RDM are summarized in Section 6
of this report and the results of drilling carried out on the various outlying exploration targets are
included in the Section 10.
77
Area Series Company Year(s) Total Type Metres Avg.

holes depth
(m)
RDM F Series DOCEGEO 1987 90 Core 14,368 160
Mine SUF Series* CVRD 1988 102 RC 5,100 50
FD Series CVRD 1994-95 26 Core 9,038 348
SU Series; CVRD 1993-94 64 Core 2,348 37
underground
Total Historical 282 30,854 109
Drilling
Explora RDM Mine South CVRD 1989- 54 RC 1,568 29
tion Extension 1993
Target RDM Mine North CVRD 1989- 27 RC 1,130 42
Area Extension 1993
RDM Mine West CVRD 1989- 5 RC 300 60
1993
Confisco CVRD 1989- 74 RC 3,338 45
1993
Manguinha CVRD 1989- 7 RC 391 56
1993
Mombuca Lest CVRD 1989- 15 RC 890 59
1993
Piranga Sul CVRD 1989- 2 RC 156 78
1993
Passagem Nova* CVRD 1989- 31 RC 1,860 60
1993
Total Historical 215 9,633 45
Drilling
Total 497 40,487 81
Table 11-1 Historical drilling tabulation for the RDM project
11.2.2 Historical Drilling Techniques

Core holes with an "F" prefix (surface diamond drilling) were collared with HQ-size core (76 mm
diameter) in the saprolite and weathered rock and reduced to NQ-size core (54 mm diameter) after
the hole intercepted fresh rock. The shorter holes in this series ranged from 30 to 80 metres depth
with the deeper holes from 300 to 416 metres depth. The "FD" series core holes were drilled in the
same manner as the F holes except the core was reduced to BQ-size (36 mm diameter) below the
540m level. The shorter holes in this series ranged from 95 to 150 metres depth with the deeper holes
from 700 to 900 metres depth. The "SU" series core holes were drilled from the underground workings
with AQ-size core (33 mm diameter). These holes ranged from 10 to 90 metres length.
78
Most of the RC drill holes were less than 50 metres in depth to a maximum of 80 metres depth. Given
the climate and local water table, it is assumed that the bulk of these holes were drilled under dry
conditions.
11.2.3 Historical Drill hole Survey

Drill holes were surveyed for deviation in dip and azimuth using a Tropari survey instrument, a down
hole single shot instrument with azimuth determined magnetically (the rocks in the area are not
strongly magnetic). The FD holes that were drilled below the 540 metres, were surveyed using a
Reflex-Fotobor DDI, a mechanical-optical instrument. Except for the deep drill holes (FD series, in
particular FD-31 to FD-39), Carpathian has not obtained any records of the down-hole surveys for the
CVRD drill holes. The data appears to have been lost by CVRD during a series of archive moves.
Nevertheless there are many old sections, cross sections and longitudinal sections, in which the trace
of the drill holes represent deviations recorded in the original down-hole surveys. For the drill holes
with no survey records, Carpathian used these sections as a basis to simulate the down-hole surveys.
The changing of dip estimation was based on the cross sections for different sectors of the deposit
and the azimuth estimation was based on the pierce point registered in the longitudinal section.
Therefore Carpathian assumed that the drill holes deviate following a local pattern along the dip and
made sure that the ore zone was not displaced with regards to the azimuth recorded in the
longitudinal section. A spreadsheet containing all the geometric parameters necessary to simulate the
behaviour of the each drill hole was developed by Carpathian, resulting in deviation reports for the
drill-hole database. The final result shows that the simulated deviations are very similar to those
observed in the new holes that have been drilled during the current campaign. This, along with
utilizing pierce-points from CVRD long-sections, serve to validate the derived method. These drill
holes were then re-sampled and utilized in the current Resource Estimate (Section 17). NCL has
reviewed the technique used and concurs with the method used to restore the missing information.
11.2.4 Historical Drilling Data Base

The historical files containing drill collar and survey information are in good state. All exploration data
around the mine, including drill holes, trenches and soils are in a local grid, oriented 20E from true
north. The original geologic drill logs which contain sample numbers, gold assay results, collar
coordinates and hole orientation for all core and RC holes drilled in the mine area are available in
paper format and have been captured by Carpathian into an electronic database. The database
includes 33,527 m of drilling, 256 m of underground channel sampling, and a total of 29,663 assay
79
entries. The geology logging requires some further sorting or classification to be highly useful as it
contains a confusingly large number of lithology codes.
11.3 Carpathian Drilling

Since acquiring the project in October 2008, Carpathian has completed Phase I, Phase II and Phase
III drilling and sampling programs focused on the Riacho Dos Machados mine area. Phase I drilling
program was completed between July 28th and October 29th 2008 with drill hole positioned on 30 east-
west oriented (090) 50 to 100 m spaced sections, over an area of approximately 400 m east-west by
1740 m north-south; (orientations are with respect to the local grid) as shown in Figure 11-1. The
southern extension, which extends to the south for about 460 m from the edge of the existing open pit,
was only drilled to test the continuity of the mineralization and the drill sections comprise only one or
two holes.
Phase II drill program was completed between May 23rd to December 13th 2009. This drill program
was designed to upgrade the resource estimate confidence based on the Phase I program and thus is
predominantly an infill drill program. Based on results from the initial resource estimate, the Phase II
drill program targeted a drill hole spacing of 50 x 40 m to obtain indicated category of confidence. The
Phase III drill program was conducted between June and October 2011 and had as objective the final
conversion of the resources to an indicated category or better. The current resource estimate update
(see Section 17) utilizes data from the three drilling programs, re-sampling of Vale diamond drill holes,
surface trenching and channel sample traverses, and finally auger drilling over the CVRD de-
commissioned leach pads.
11.4 Carpathian Drilling Statistics

The total average depth of the drilling for Phase I was 176 metres with holes drilled vertically or
dipping to the West. The shorter holes in this series ranged from 70 to 120 metre in depth and the
deeper holes from 200 to 350 metres in depth. This campaign consisted of 64 holes identified with an
"FRM-" prefix, with drill hole numbers FRM-1 to FRM 64. All of these drill holes are diamond core. In
addition, this program included re-sampling of 102 historic diamond drill holes from Vale following
validation procedures . The program was planned to check previous CVRD information, to expand the
known limits of the mineralization and to increase the information density especially in the shallower
part of the deposit for future open pit optimization.
The Phase II drill program was an infill drilling comprised of 152 drill holes with prefix FRM and hole
numbers FRM-65 to FRM-216. This program included diamond core and reverse circulation drilling,
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re-sampling of historic Vale drill core, and sampling from Carpathian trenches and surface channel
sample traverses .
Phase III drill program was another infill drilling comprised of 71 diamond drill holes with prefix 'FRM'
and hole numbers FRM-217 to FRM-295 excluding holes from FRM-279 to 2281, from FRM-287 to
288, and from FRM-292 to 294 (see summary in Table 11-2).
Drill Programs Type metres Nr. Drill Average

holes Depth (m)
Phase I Core 11,277.00 64 176
Re-sampling CVRD drill core 20,017.00 102 196
Phase II Core only 3,684.00 29 127

Re-sampling CVRD drill core 4,250.00 47 90
RC+DD (RC precollar) 4,996.50 65 77
RC+DD (DD tail) 7,299.60 65 112

Reverse circulation 4,646.00 59 78
Trenches 663.00 20 33
Cahnnel Sample Traverses 168.00 6 28
Phase III Core 10,087.00 71 142
Re-sampling CVRD drill core 392.00 7 56
Trenches 135.00 6 24
Channel sample traverses 170.00 8 21
Total AUGER 275.20 35 8
Total drill holes by CPN (FRM 41,991.00 288
prefix)
Re-sampling CVRD drill core 24,659.00 156
Trenches 798.00 26
Channel sample traverses 338.00 14
Auger 275.00 35
TOTAL DH all type in resource 444

Table 11-2 Carpathian drilling program statistics.
11.5 Carpathian Drilling Techniques

All holes were drilled from surface and Carpathian has predominantly utilized diamond drilling.
Diamond drill holes are collared with HQ-size core (76 mm diameter) in the saprolite and weathered
rock and reduced to NQ-size core (54 mm diameter) after the drill hole intercepted fresh rock. Each
run of the drill rigs are approximately 3 metre and the average core recovery in each hole ranged from
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84 to 99% with a total average of 95%. In the Phase II program, reverse circulation (RC) drilling was
utilized as pre-collars for the deeper diamond drill holes in zones where there is no known
mineralization. A total of 65 diamond drill holes have RC pre-collars with depths ranging from 43 to
100 m and average depth of 77 m.
RC drilling was utilized for a portion of the short drillholes in Phase II to intersect the mineral zone at
shallow depths either above the water table or in zones with very little ground water. Where infiltration
of water into the RC drillhole occurred, if dry-drilling could not be resumed, the drillhole was stopped,
and finished with a diamond core drill rig. All RC drillholes targeting the mineral zone had a
Carpathian geologist on-site to monitor drilling operations, sampling, and conduct geologic logging.
This drilling was conducted by Servitec Sondagem Geolgica with industry standard MACH 320 and
MACH 1200 drill rigs, produced by Maquesonda of Rio de Janeiro, Brazil. In addition, for the Phase II
drill program a new trailer-mounted Atlas Copco diamond drill rig was utilized. A photograph of the
Atlas Copco drill rig with a MACH 1200 drill rig in the background operating at RDM project is shown
in Figure Figure 11-2. Rock quality and drilling ground conditions are very good resulting in no
technical drilling complications or specialized techniques required.
Figure 11-2 Diamond drill rigs operating on the RDM Mine-site June 2009
RC drilling was completed using a new Atlas Copco track-mounted drill rig with a 3 metre mast, 3
metre drill-rods, and attached combination cyclone-reducer splitter. Downhole hammers with face-
82
centered sample returns and an industry-standard 750/350 air compressor were utilized. A
photograph of the RC drill rig is shown in Figure 11-3 below.
Figure 11-3 Cleaning the cyclone-splitter of the RC drill rig, RDM Project, Jun 2009
The drill holes locations are previously defined by geologists using cross sections, longitudinal
sections and maps. Points are checked in the field to ensure about the possibility to drill at the given
position therefore drill pads and access are provided using D-6 tractors when needed. To drill inclined
holes a CPN technician stretches a cord between two stakes along the azimuth direction so the drill
rig is aligned with it. Dip inclinations are determined using the clinometer of a Brunton compass over
the drill mast.
After the completion of the drill hole, the absolute collar location is determined by a Carpathian
technician using a Topcon Total Station model 102N. All drillholes are surveyed downhole to
document deviations. In the 2008 (Phase I) drilling program 3 holes were surveyed for deviations in
dip and azimuth using the REFLEX Maxibor, 35 holes were surveyed with REFLEX Ez-Shot
instruments and 26 holes were surveyed with REFLEX Pewee instruments. In the 2009 and 2010
(Phase II and III) drill program all drill holes were down-hole surveyed using the REFLEX Ez-Shot.
Peewee and Ez-Shot measurements are done every 30 metres and Maxibor measurements are done
every 3 metres. The use of magnetic instruments for the downhole survey is believed to be reliable as
the rocks in the area are not strongly magnetic.
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12. SAMPLING METHODS AND APPROACHES

For the Resource Estimate Update, the principle topic of this report (Section 17), assay data from
Carpathian Phase I drilling in 2008, Phase II drilling in 2009, Phase III drilling in 2010, surface
trenches, channel sample traverses and Carpathian re-sampling of CVRD diamond drillholes in 2008,
2009 and 2010 is utilized (see Table 13 and 13b). The original CVRD assay results lack QA-QC
control suitable for a NI43-101 Resource estimate. The sampling method and analysis of Carpathian
drill hole sampling and the CVRD drill core re-sampling are the same. Carpathians Phase I and
Phase III drill program was 100% diamond drill core while the Phase II drill program was
predominantly diamond drill core with Reverse Circulation drilling utilized for pre-collars and some of
the short drill holes through the mineralized zone. In table 13b are reported number of samples per
each sample type and their relative percentage.
12.1 Carpathian Core Handling, Logging, Sampling

At the drill rig, the drilling contractor removes the core from standard core barrels, cleans, and places
into labelled wooden boxes. The drillers use wood core-blocks with imprinted metal tags marking drill-
run depth from-to, drill length, and recovered length. When received from the drilling contractor, the
drill core is photographed. An example of the core photos with identification of hole, box and depths is
shown in the Figure below. During core logging, the geologist marks in the boxes the beginning and
end of the interval to be sampled and note in the log sheet the samples and QAQC identifications to
be inserted. Sampling is done within the known ore zones and surrounding altered rock, however
extra hydrothermal alteration zones and intervals with abundant sulphides are also sampled if
occurring. Adjacent to the mineralized zones, sampling brackets approximately 10 metres on each
side. Sampling is conducted on a metre-by-metre basis. The material outside the mineralized zones is
considered waste and not sampled.
Samples are collected by a trained sampler under the supervision of a technician or a geologist. The
core is split lengthwise using a diamond core saw in the competent zones and a specially designed
scoop in the highly weathered zones. The sample is placed in a plastic bag with a sample tag. The
plastic sample bag is further marked in two places on the outside with the sample identification. The
sample bags are then sealed and sent to the laboratory for physical preparation and chemical
analysis. The laboratory is internationally recognized and industry standard sample preparation and
analytical techniques are used (Section 13). The remaining core is archived for future reference.
Prior to cutting and sampling core, all core is logged for geotechnical features on a separate logging
form by a geotechnician. This logging includes recovery, RQD, maximum length, hardness, fracture
84
surfaces and fracture fills. The drill core is then logged by a geologist into a standardized paper form
incorporating a project-specific coding scheme developed by Carpathian based on the historical
CVRD drilling results and detailed re-logging examples. Within the mineralized zone, geologic logging
is completed in detail at a metre-by-metre scale recording the following information:
Lithology
Alteration intensity
Sulphide content and proportions of sulphide mineral types
Abundance of quartz veining (typically sheared in the mineralised zone)
Structural measurements and notes (i.e. Crenulation folding)
Additional mineralization features (i.e. Tourmaline veins)
Weathering state
During core logging, the geologist marks in the boxes the beginning and end of the interval to be
sampled and note in the log sheet the samples and QAQC identifications to be inserted. Sampling is
done within the known ore zones and surrounding altered rock, however extra hydrothermal alteration
zones and intervals with abundant sulphides are also sampled if occurring. Adjacent to the
mineralized zones, sampling brackets approximately 10 metres on each side. Sampling is conducted
on a metre-by-metre basis. The material outside the mineralized zones is considered waste and not
sampled.
Samples are collected by a trained sampler under the supervision of a technician or a geologist. The
core is split lengthwise using a diamond core saw in the competent zones and a specially designed
scoop in the highly weathered zones. The sample is placed in a plastic bag with a sample tag. The
plastic sample bag is further marked in two places on the outside with the sample identification. The
sample bags are then sealed and sent to the laboratory for physical preparation and chemical
analysis. The laboratory is internationally recognized and industry standard sample preparation and
analytical techniques are used (Section 13). The remaining core is archived for future reference.
Prior to cutting and sampling core, all core is logged for geotechnical features on a separate logging
form by a geotechnician. This logging includes recovery, RQD, maximum length, hardness, fracture
surfaces and fracture fills.
85
Figure 12-1 Example core-photograph from Carpathian 2008 drill program at the RDM Mine-site
12.2 Carpathian Re-Sampling of Historical Holes

All of the core from the Project is believed to be stored on-site. An inspection of the core storage
facility in one of the buildings at the mine site shows it to be a secure, solid enclosed structure
protected from the elements. The core is stored in labelled wood boxes in good condition. A review of
core from selected drill hole intercepts indicates the core is in good condition. The rock in the intervals
we examined appears to be competent and the core recoveries were apparently quite good. The
drillers marking blocks are clear and concise. Sample number tags are loosely inserted, but markings
on the boxes clearly indicate top and bottom directions of the samples.
Validation of historical drill core integrity was enabled through comparison with original paper geologic
logs with sample numbers and assays. Carpathian re-sampling compares reasonably well with
original assay results, reflecting the same mineralized intervals with adequate similarity in grade and
thickness, although on a sample per sample comparison, the differences may be significant. The
comparison between the population of historical assays compared with the population of re-sampling
assays show similar statistical behaviour, as demonstrated in Figure 12-2.
Carpathian re-sampled 156 of the historic CVRD drill holes using proper QA-QC procedures (Section
13) for use in the current Resource Estimate. The re-sampling program was carried out on a metre by
metre basis through the mineralized zone and surrounding altered rock. For the F and FD series
86
drillholes, either HQ or NQ-size core (76 and 54mm, respectively), the re-sampling utilizes mostly
quarter-core samples. For the deeper FD core and for the SU series, with BQ and AQ-size core (36
and 33mm respectively), half-core is being re-sampled. The sample is placed in a plastic bag with a
sample tag. The plastic sample bag is further marked in two places on the outside with the sample
identification. The sample bags are then sealed and sent to the laboratory for physical preparation and
chemical analysis. The laboratory is internationally recognized and industry standard sample
preparation and analytical techniques are used (Section 13). The remaining core is archived for future
reference.
Carpathian Re-sampling x CVRD Results
90.00%
80.00%
70.00%
60.00%
Frenquency
50.00% CPN
40.00% cvrd
30.00%
20.00%
10.00%
0.00%
0 0.5 1 1.5 2 2.5 3
Au g/t
Figure 12-2 Comparison Carpathian re-sampling vs. CVRD results
12.3 Carpathian Reverse Circulation Drilling Logging and Sampling Methods

Logging of the RC chip samples was performed during drilling at the drill site by a geologist. The
information was recorded by the geologist into a standardized paper form incorporating a project-
specific coding scheme developed by Carpathian. Geologic logging is completed in detail at a metre-
by-metre scale on washed chips utilizing a hand lens and recording the following information:
Lithology
Colour
Alteration/Intensity of alteration
Sulphide content and proportions of sulphide mineral types
87
Abundance of quartz veining
Additional mineralization features (i.e. Tourmaline veins)
Weathering state
In addition, the on-site geologist notes if any samples are not completely dry and on occasion notes
depths of drill-rod changes for follow-up evaluation of assay-results QA-QC.
The objective of Carpathians RC sampling procedure is to provide well homogenized samples for
every metre and subsamples for assay. In addition, five-metre composites are made for first-pass
assays. All RC drill samples are collected and weighed at the drill site to monitor sample recovery.
To minimize the possibility of sample contamination, the drill-rig cyclone and splitter are cleaned
regularly during operation. RC samples are collected over one metre intervals in a numbered 50 kg
plastic bag, which is held underneath the cyclone by a sampler. In normal conditions of recovery, each
metre of sample weighs between 15 and 35 kg. The Servitec RC rig is equipped with a small-size
cyclone which has an attached 1 to 8 splitter-reducer. Samples are collected by Servitec
helpers/samplers at the same time in both big numbered (weighing 30-40kg) and small numbered
(reduced, weighing 3-5kg) plastic sample bags. Printed labels showing the sampling intervals are
inserted both in the big and small bags. At the rig site, the small bag is closed and stored inside the
correspondent big sample bag. Both sampling bags are transported to the RDM mine site.
At the RDM mine site, the small sample bag is first emptied into its correspondent bigger sample bag.
The entire 1m sample (bigger bag) is emptied into a Gilson SP1 Sample Splitter (or equivalent). Each
metre is homogenised by three passes through the splitter. The fourth time the sample is split until it is
reduced to about 3-5 kg for each metre. The 3-5 kg sample is emptied into the original smaller
numbered and labelled plastic bag. The remainder of the split sample is re-bagged in the original large
plastic bag. This is will be later used for eventual 1m interval sampling. The splitter is cleaned with air
from a compressor after each operation.
Sampling was performed on both 1m intervals and 5m composites. The 1m interval sample was
collected at certain depths taken into account the geological observations (log sheet) and the
expected ore intersection depths (from the geological cross-sections). The 5m composite samples
were collected for the remainder of the hole in the barren rock, from the hanging-wall, foot-wall and
inter-ore material.
The 5m composite sampling procedure is the following:
88
The 3-5 kg 1 m samples for each hole are arranged in consecutive number order;
Each 5 consecutive samples are all emptied in a Gilson SP 2 Porta Splitter (or equivalent) and passed
4 times through the splitter for homogenisation. The fifth time, the homogenised sample is split down
to 2.5 kg, and bagged in a labelled (lab number) geochemical sample bag, representing the 5m
composite sample for analysis.
The sample is kept in the locked storage room until being sent to the laboratory. The homogenised 5
m composite reject is kept for reference in the same storage facility.
The 1m interval sampling procedure is the following:
1m interval samples collected from ore zones are taken from the original large sample bag (the rig
cyclone sample bag). The same procedure is followed for homogenisation and splitting as above, with
the exception that it is only made for 1 m samples.
The RC sampling flowchart, both for 5m composites and 1m interval samples, is shown below:
89
RC SAMPLING FLOW CHART

5m composites & 1m samples
Original sample bag

1m (15-35kg)
Homogenise through splitting

2-3 times
Small sample bag

1m (3-5kg) Original sample bag
Homogenise through splitting Homogenise through splitting

2-3 times
2-3 times
1m sample bag
(2.5kg)
Small sample bag
1m (500g) Send to Lab for assays
Mix 5 samples, each 1m Original small

sample bag
Assay sample bag

5m composite
(2.5kg)
Homogenise through splitting

2-3 times
Assay sample bag Storage sample bag

5m composite 5m composite
(500g) (2.0kg)
Send to Lab for assays
If good assay results
Figure 12-3 Carpathian reverse circulation sampling flow sheet.
12.4 Carpathian Trenches and Surface Channel Sampling and Logging

During the 2009 Phase II drill program, Carpathian excavated 20 trenches and 6 lines of surface
channel sampling totalling 808 metres sampled. The purpose of the trenching and surface channel
sampling is to quantify the surface expression of the mineral zone up-dip from drill holes. This data
adds confidence to the current resource estimate in the accessible areas that do not have previous
mining disturbance, mainly in the South Extension and the Area V north extension. The location of
trenches and channel sampling lines is a nominal 40m apart in the South Extension each other
90
oriented east-west across the strike of the mineral zone. The trenches were dug orthogonal to the
rock foliation and depths were generally between 2 and 3 metres or shallower depending on the depth
of hard rock. The average length of the trenches was about 30-40m. Depending of the natural terrain
topography and vegetation a backhoe was used to open the trenches however when it wasnt possible
the trenches were manually excavated. The surface channel sampling lines were located in the
position of planed trenches when weathered rock was exposed in surface as available faces such as
drill pad, road cuts, natural drainage valley or previous CVRD mining slopes.
Systematic geologic mapping was completed at a 1:100 scale by logging lithology and structure of the
north wall of each trench and the surface of the channel sampling lines. All the trenches and channel
lines were surveyed by total station, including the beginning and end of samples.
For sampling the trenches small channels of 5.0 cm x 1.0 m were done in the bottom of the north wall
of each trench and the same size pattern was used for the surface channel sampling lines generating
3-4 kg of material for each sample. Carpathians standard drill sample QA-QC control sample
procedures were inserted prior to assay lab submittal. A photograph of one trench from the South
Extension is shown in Figure 12-4 with view to the west; note the one-metre spaced sample pegs in
the north bottom wall of the trench.
Results from trenches and surface channel samples were utilized in the present resource estimate.
91
Figure 12-4 Trench in the South Extension zone with view westward
12.5 Historical Surface Samples

DOCEGEO/CVRD collected numerous soil samples, surface rock chip and trench samples from the
Riacho dos Machados Project; results of this sampling are discussed in the Exploration Section of this
report. Maps showing the sample location and analytical results were reviewed in the office at the
Riacho Dos Machados mine site. It appears most of the surface sampling was focused on areas
exhibiting relatively conspicuous mineralization or alteration. Many details regarding size of the
samples, methods, etc. are not known, however it is apparent that much of the sampling represents
channel samples taken along trenches and across outcrops. NCL has not utilized any of the historical
surface sample data in the resource estimation.
12.6 CVRD/DOCEGEO Historical Drill Samples

The drill core consists of both NQ-size (47.6 mm diameter) and BQ-size (36.5 mm diameter) core. The
core was logged by a geologist, the sample intervals marked, and then sawed in half with a diamond-
blade rock saw. A one-half split of the core for each interval was then bagged, labelled and sent for
assay to either DOCEGEOs own laboratory in Araci, Bahia State, Brazil or CVRDs laboratories in
Santa Luzia, Minas Gerais State, Brazil. Apparently no blanks, standards or blind duplicates were
introduced into the sample/analytical stream prior to sending them to the laboratory. A mixture of
analytical techniques were used during the different drilling campaigns. Original assay lab reports are
92
not available and assays hand-entered on geologic logs consist the source of the historic drill assay
database. The remaining one-half split of core was returned to the original core box and retained for
archival purposes.
This drill core was stored on-site under secure, sheltered conditions in well labelled wood boxes. A
review of core from selected drill hole intercepts indicates the core is in good condition. Competent
core and good recoveries are typical. The drillers marking blocks are clear and concise. Sample
number tags are loosely inserted, but markings on the boxes clearly indicate top and bottom directions
of the samples. The good integrity of this historic drill core and the recorded assays have been
validated through Carpathians re-sampling program (Section 12.2). Drill cuttings from the RC drilling
were not archived.
93
13. SAMPLE PREPARATION, ANALYSIS AND SECURITY

This Section addresses the sample preparation, analyses, and security of Carpathian samples
collected and submitted during the Phase I 2008 drilling campaign, for use in the Resource Estimate
dated May 18th, 2009 (NCL, Mello, 2009),the Phase II drill campaign completed in 2009, and the
Phase III drill campaign completed in 2010. The current Resource Estimate Update includes Phase I
+ II + Phase III drilling and is presented in Section 17. The RDM project contains gold as the only
economic element and thus the present resource estimate addresses gold only. The Phase III
program comprised diamond drill core, surface channel sample traverses and trench samples. See
Section 12 for details on sampling methods and approaches. All samples followed the same protocol
for sample preparation and analysis for both Carpathian drill holes and the re-sampling of CVRD drill
core and is presented below. For information regarding historic CVRD analytic procedures, the reader
is referred to the Technical report prepared by BK Associates (February, 2008). NCL did not utilize
any historic assay data in any past Resource Estimate at RDM including the current Resource
Estimate Update.
Carpathian uses independent and internationally recognized laboratories for sample preparation and
analysis. The primary laboratories utilized are as follows:
2008 Phase I drilling campaign; ALS Brasil Ltda., Vespasiano, Brasil (near Belo Horizonte) and as
part of the ALS group complies with requirements of the international standards ISO 9001:2000 and
ISO 17025:2005.
2009 Phase II and 2010 Phase III drilling campaign; SGS-Geosol Laboratorios, Vespasiano, Brazil
(near Belo Horizonte) which complies with the requirements of the international standards ISO
9001:2000 and ISO 17025:2005.
Carpathian changed primary laboratory for the Phase II and Phase III campaign based on commercial
considerations. Both laboratories are internationally recognized and used industry standard sample
preparation and fire-assay procedures for Carpathians gold analyses (Section 13.3 and 13.4).
Carpathian routinely inserts several types of QA/QC samples in laboratory submittals to evaluate lab
precision and accuracy (Section 13.4). Because of the change in primary laboratory between the two
drilling phases, the analysis of the QA-QC performance is presented separately below. The
secondary laboratory utilized by Carpathian for check assays is SGS GEOSOL for phase I and IALS
Brasil for phase II.
94
13.1 Sample Custody and Security

Samples are collected by a trained sampler under the supervision of a technician or a geologist with
QA/QC samples inserted within a sequential numbered sequence and recorded. Prior to shipment to
the laboratory, samples are stored in a secure locked room. Samples are shipped by truck from RDM
site directly to the principle laboratory in Belo Horizonte using the transporting company TNT
Transportes LTDA. After arriving at the lab the samples are checked with the submission sheet, each
sample is weighted and receives a new code with barcode labels that are attached to them. If any
problem is identified with the samples, the lab would specify the discrepancies to the geologists on
site. The rejects and the prepared pulps are stored in the lab and returned to the RDM site in the next
available transport.
A new core-shed was constructed at site to adequately store the core boxes from Carpathian drilling;
this building is also used for geotechnical and geological logging and sampling.
13.2 Carpathian Sample Preparation

Samples used in the current Resource Estimate Update are drill-core from the 2008 Phase I drill
campaign, from the 2009 Phase II drill campaign which is mostly diamond drill core iplus reverse
circulation drill samples, and from the 2010 Phase III drill campaign. Besides drill samples, the
resource update also includes surface samples from trenches and traverses which represents 4% of
the total sample population (from both Phase II and Phase III drilling campaign). All samples were
prepared at the principle labs noted above. The laboratory utilizes industry standard drying ovens,
jaw crushers and pulverisers which are well ventilated for dust control.
The equipment consists of two large drying ovens with automatic temperature control, one jaw
crusher, and six 5 kg capacity LM5 pulverisers. Each of these has forced air extraction and
compressed air for cleaning the crushers and pulverisers.
The preparation protocol for Carpathian samples as followed by both principle labs:
coding: an internal laboratory code is assigned to each sample at reception and any
discrepancy with the sample submittal are notified to Carpathian
weighing: all samples are weighed
drying: the samples are dried for as much as 24 hours
crushing: the entire sample is crushed in a jaw crusher to obtain >70% passing 2 mm
followed by homogenisation.
95
Pulverization.
Phase I 2008 program, ALS Brasil, prep code Prep31B; 1 kg split of -2 mm crushed sample is
obtained using a riffle splitter which is pulverised to achieve better than 85% passing 75 microns 200
mesh). A 150 to 200 g sample was collected from the pulveriser.
Phase II 2009 and Phase III 2010 programs, SGS GEOSOL prep code PRP102_E; 250 300 g split
of -2 mm crushed sample is obtained rolling and quartering which is pulverised to achieve better than
95% passing 150 mesh). A 150 to 200 g sample was collected from the pulveriser.
Storing and submitting: The coarse rejects, pulps and pulp rejects are stored on site for 30 days and
then returned to Carpathian.
Note, for the Reverse circulation drill samples the crushing stage is skipped. Sieve checks are
conducted regularly by the lab (every 15 to 20 samples). A sterile rock is passed through the crushers
and pulveriser to clean the equipment on a regular basis. In addition the lab completes the following
internal QA/QC protocols during sample preparation:
pulp blank: 1 inserted every 20 samples
Certified Reference Material (CRM): 2 inserted every 20 samples (3 CRMs in use ranging
between 0.20 and 6.87 g/t Au)
pulp duplicates: 1 every 20 samples
All pulps are automatically labelled with the job number, sequence number, and sample number.
Crusher and pulp rejects are returned to Carpathian.
13.3 Carpathian Sample Analyses

All sample analyses utilized in the current resource estimate utilized the industry standard 50 g fire
assay with AAS finish method for gold assay. Sample digestion is made by fire assay fusion and the
analytical method used is atomic absorption spectroscopy (AAS). The prepared samples (50g) are
fused with a mixture of lead oxide, sodium carbonate, borax, silica, mixed with 6 mg of gold-free silver
and fused. The resulting lead button is placed in a cupel and a ventilated oven to distil, yielding a
precious metal bead. The bead is digested in 0.5 ml dilute nitric acid in the microwave oven. 0.5 mL
concentrated hydrochloric acid is then added and the bead is further digested in the microwave at a
lower power setting. The digested solution is cooled, diluted to a total volume of 10 mL with de-
mineralized water, and analyzed by atomic absorption spectroscopy against matrix-matched
standards. The fire assay methods for gold analysis are as follows:
96
2008 Phase I program: ALS Brasil 50 gram fire assay code AA26 with detection limit 0.01 ppm Au.
2009 Phase II and 2010 Phase III programs: SGS GEOSOL 50 gram fire assay code FAA505 with
detection limit 5 ppb Au.
In addition, all samples from the 2008 Phase I were analyzed for a multi-element suite (33 elements)
using ICP-AES from ALS Chemex, Lima, Peru with analytical code ME-ICP-61. This data provides an
important baseline of contained trace elements for exploration and environmental considerations.
13.4 Carpathian QA/QC Procedures

Carpathian routinely inserted five different types of quality control-assurance (QA-QC) materials in
assay submittals to monitor laboratory precession and accuracy. Approximately 4% of each quality
control material is inserted at random intervals into the sampling number sequence by the logging
geologist (for total of 20% quality control samples). This procedure is used for all submitted samples
by Carpathian including the re-sampling of CVRD drill core. The types of quality control samples and
rates of insertion in routine submittals are shown in Table 13-1. 2008 Phase I drill program included
10,677 submitted core samples; 2009 Phase II program included 12,109 submitted samples and 2010
Phase III program included 6,146 submitted samples.
*CRM = Certified Reference material
QA-QC 2008 Phase I: 2009 Phase II: % 2010 Phase III:

sample type % of submitted of submitted % of submitted
samples samples samples
Pulp blank 4.60% 4.6% 4.6%
Coarse 4.90% 4.60% 4.4%

blank
CRM* 4.90% 4.40% 4.60%
Pulp 2.30% 4.60% 4.64%
duplicate
Coarse 3.30% 4.40% 4.30%
duplicate
Total 20.00% 22.30% 22,5%

Table 13-1 QA-QC sample types and rates of insertion.
Approximately 60 g of the Certified Reference Material (CRM), pulp blanks and pulp duplicates, is
weighed and placed into a small plastic bag, sealed and submitted to the laboratory with the rest of
97
the sample shipment as part of a continuous numbered sequence. The CRMs used in the project are
supplied by Rocklabs and are shown in Table 13-2.
2010
Accepte 95% 2008 2009
Certificate
Reference d Gold Confidenc Phase I Phase II
Matrix date Phase III
nr. value e limit nr. nr.
(m/d/yr) nr.
(ppm) (ppm) analyses analyses
analyses
OxC72 0.205 +/- 0.003 Oxide 8/26/08 70
SE29 0.597 +/- 0.007 Sulphide 9/6/06 173 44
SE44 0.606 +/- 0.006 Sulphide 8/26/08 45 79
SF30 0.832 +/- 0.008 Sulphide 1/26/07 64 17
OxH55 1.282 +/- 0.015 Oxide 6/20/07 32 34
OxH66 1.285 +/- 0.012 Oxide 8/26/2008 22
SH35 1.323 +/- 0.017 Sulphide 6/22/07 78
SH41 1.344 8/26/2008 60
SJ39 2.641 +/- 0.033 Sulphide 10/23/07 84 15
SK43 4.086 +/- 0.036 Sulphide 3/12/08 176 68 41
SL46 5.867 +/- 0.066 Sulphide 3/12/08 44
SN38 8.573 +/- 0.061 Sulphide 10/23/07 178
Table 13-2 Certified reference materials from Rocklabs and inserted in routine sample submittals.
The CRMs are selected for appropriate grade range and matrix suitable for the RDM project. The
pulp and coarse duplicates are obtained from the sample rejects returned from the lab. The coarse
blank is obtained from crushed granite obtained from a single outcrop in the vicinity of the mine site
and known to be absent of gold mineralization. The pulp blank is this same material but pulverised.
A secondary independent laboratory, SGS-Geosol in 2008 Phase I program, and ALS Brasil in 2009
Phase II program is used to perform check assays on returned pulps from the primary laboratory.
Approximately 3% of the prepared pulps (287 samples) returned from ALS has been re-submitted to
be analyzed using standard 50 g fire-assay AAS-finish for gold for the 2008 program. For the 2009
program, approximately 3% of the prepared pulps returned from SGS-GEOSOL were re-submitted to
ALS Brasil. Correlation between the two laboratories is considered excellent, with the correlation
coefficient of 0.98.
13.5 Review of QA/QC 2008 Phase I Program Results

Below are plots of the following QA/QC sample results, along with the analysis of the results:
98
13.5.1 Pulp Blank 2008

The analysis of 496 pulp blank samples (4.6% of the samples included in the regular submission
batches) did not show any appreciable Au cross-contamination during the assaying process at ALS
Chemex. Note, most samples are at detection limit of 0.01 ppm gold (Figure 13-1).
0.400
Phase I drilling - Pulp Blanks
Time yyyymmdd -----> From 2009 06 15 to 2010 08 06
0.350 ALS CHEMEX BH
0.300
0.250
Au ppm
0.200
0.150
0.100
0.050
0.000
0 100 200 300 400 500
Samples
Figure 13-1 Control plot of Pulp blank
13.5.2 Coarse Blank 2008

The analysis of 355 coarse blank samples (4.9% of the valid samples, included in the regular
submission batches) yielded five minor contamination events for Au. NCL is of the opinion that no
appreciable cross-contamination was produced during the preparation process at ALS Chemex
(Figure 13-2).
99
0.10
Phase I drilling - Coarse Blanks
0.09 Time yyyymmdd -----> From 2009 06 15 to 2010 08 06
ALS CHEMEXl BH
0.08
0.07
0.06
Au ppm
0.05
0.04
0.03
0.02
0.01
0.00
0 100 200 300 400 500
Samples
Figure 13-2 Control plot of Coarse blank 2008
13.5.3 Pulp Duplicates 2008

Carpathian used 255 Pulp Duplicates returned from the primary laboratory, ALS Chemex, and sent to
the secondary laboratory, SGS. To verify the consistency between the two sets of results, NCL used
the scatter plot and the HARD graph. This is the acronym for Half Average Relative Difference. The
limit recommended by NCL for gold is to have less than 20% of samples with more than 20% of
relative difference. And the parameters which best reflect a good similarity between two duplicates in
the scatter plot are the R2 , preferably close to 1, and the equation of the linear curve which best fits
the cloud of distribution. In the equation y= ax + b, a needs to be as close to 1 as possible, and b
close to 0, in order to define good repeatability. The R2 of 0.9692 and the equation y = 1.0517x -
0.0265 are indicative of good quality (Figure 13-3). The HARD graph, in Figure 13-4, demonstrates
that the duplicates are below the hurdle of less than 20% of samples with less than 20% difference.
100
70
Coarse Duplicates - Phase I drilling
60
50
Duplicate Result (ppm)
y = 1.1808x - 0.1621
40
30
20
10
0
0 10 20 30 40 50 60 70
Original Result ALS CHEMEX (ppm)
Figure 13-3 Linear regression plot of Pulp duplicates 2008
HARD (Half Absolute Relative Difference) Plot

Pulp Duplicates Original vs. Repeat
140
Abs % Difference (Au original vs. Au repeat)
120
100
80
60
40
20
0
0 10 20 30 40 50 60 70 80 90 100
Percentage Rank (81 Samples)
Figure 13-4 HARD graph for Pulp Duplicates 2008
101
13.5.4 Coarse Duplicates 2008

Carpathian submitted 354 Coarse duplicates to SGS, 3.3% of the valid samples. Likewise, for coarse
duplicates the HARD graph and the scatter plot are used to verify adequacy. The equation of the
linear curve that best fits the distribution cloud, in the scatter plot, is also good not showing any bias.
The R2 is also close to 1, indicating lower dispersion (Figure 13-5). The HARD graphs indicate that for
coarse duplicates, less than 80% of the samples have relative difference lower than 20%, which is
below the hurdle used by NCL to accept the quality of duplicates (Figure 13-6).
Scattergram Coarse Duplicates
60
50
40
30 Scattergram coarse Duplicates
Linear (Scattergram coarse

20 Duplicates)
y = 0.9919x + 0.0603
Linear (Ideal)
10
0
0 10 20 30 40 50 60
Original Result (ppm)
Figure 13-5 Linear regression plot of coarse duplicates 2008
102
HARD (Half Absolute Relative Difference) Plot

Coarse Duplicates Original vs. Repeat
140
Abs % Difference (Au original vs. Au repeat)
120
100
80
60
40
20
0
0 10 20 30 40 50 60 70 80 90 100
Percentage Rank (81 Samples)
Figure 13-6 HARD graph for coarse duplicates 2008
13.5.5 Certified Reference Material 2008

Carpathian submitted, during the 2008 campaign166 samples of the low grade standard (S1), 172
samples of medium grade (S2), and 177 samples of high grade (S3), representing in total 4.8% of the
submitted samples included in the regular submission batches. Most of the assays were within the
AV2*SD range or very close to those limits, without appreciable bias (Table 13-3). Accuracy plots for
Au were plotted, where the returned laboratory (ALS) values are plotted vs. Time with the certified
value as reported by Rocklabs is shown for reference (Figure 13-7). The error bars represent the
standard deviation x 2 of the returned laboratory values from the mean value. Mean Values obtained
for each of the standards and .2x standard deviation are shown in Table 13-3.
The accuracy plots provide information about the overall accuracy for the studied element. Except for
a short interval for the high grade standard in late November 2008, the graphs yielded an acceptable
overall accuracy. On the basis of these results, NCL concludes that the Au accuracy at ALS Chemex
during the exploration campaign was acceptable.
103
CRM Au Value Lab mean value % difference Lab Standard deviation

(ppm) (ppm) x2
0.597 0.577 -3.3% 0.107
4.086 4.068 -0.4% 0.279
8.573 8.467 -1.2% 0.689
Table 13-3 CRM gold value vs. mean, ALS Brasil gold value and standard deviation from the mean,
2008.
104
13.6
Au ppm Au ppm
20
Au ppm 20
08
20
0
Figure 13-7
08
1 08
0.40
0.50
0.60
0.70
0.80
0.90
1.00
20 82
5.50
6.00
6.50
7.00
7.50
8.00
8.50
9.00
9.50
10.00
10.50
20 01 0 08 8
08 4 0
3.00
3.50
4.00
4.50
5.00
5.50
20 82
1 08 8 20 82
20 01 08 9
0 0
08 5
1 20 82 20 82
20 02 08 9 08 9
08 3
1 1 20 82
0
20 02 20 01
08 7 08 4 08 9
1 1 1
20 02 20 02 20 01
08 9 08 4
1 08 3 1
20 03 1 20 01
08 5
08 0 20 02
1 08 9 1
20 10 20 02
08 5 1 08 2
1 20 03 1
20 10 08 0 20 02
08 5 1 08 7
1 20 10 1
20 10 20 02
08 7 08 5 08 9
1 1 20 02
1
20 11 20 10
08 2 08 5 08 9
1 1
20 11 20 110 20 10
08 5 08 4
1 08 5 1
20 11
08 7
1 20 10
08 5
20 10
1 08 6 1
20 11 20 10
08 7 1 08 5
1 20 11 1
20 11 08 0 20 10
08 8 1 08 5
1 20 11 1
20 11 20 10
08 8 08 3 08 6
1 1 1
20 11 20 11 20 10
08 8 08 6
1 08 5
1
20 11 1 20 10
08 8 20 11 08 7
1 08 7 1
20 12
08 1 1 20 10
08 7
1 20 11
1
20 12 08 7 20 10
08 4
1
1 08 8
20 12 20 11 1
08 5 08 8 20 11
1 1 08 0
20 12 20 12 1
08 5 20 11
1 08 1
1
08 7
20 12 1
20 12
4.086
08 5 20 12
1 08 7 08 8
20 12 1 1
08 7 20 12 20 12
1 08 8
20 12 08 8 1
1 20 12
2 STDEV = 0.689
2 STDEV = 0.279
08 8
1
2 STDEV = 0.107
20 12 08 8
1
Au STD 8.573 ppm Au

20 12
mean = 8.4673 ppm Au

mean = 4.068 ppm Au
Au STD 4.086 ppm Au
08 8
mean = 0.577 ppm Au
Au STD 0.597 ppm Au
08 8 20 20
1 1
Reporting Date ------->
08 1

20 12 20 12 1
08 8 08 8 20 20

1 1 08 1
20 20 20 12 1
08 1 20 20
1 08 8 08 1
20 20 1 1
08 1 20 20 20 20
1 08 1 08 2
20 20
08 2 1 1
20 20
determine if parts of assay batches are required to be re-assayed:

1 20 20 08 3
20 20
08 3
08 1 1
1 1 20 20
08 3
20 20 20 20
08 4 08 2 1
20 20
CRM gold accuracy plots vs. time for the 2008 program
1 1 08 4
20 20 20 20 1
08 4 20 20
1 08 3
20 20 08 5
Review of QA/QC 2009 Phase II Program Results

08 5 20 120 1
1
20 20
20 20
08 4 08 5
08 5 1 1
1 20 20 20 20
20 20 08 5 08 5
08 8 1 1
1 20 20 20 20
08 5
20 20
08 8 08 5 1
1 1 20 20
08 5
20 20 20 20
08 8 08 5 1
1 1
20 20
20 20 08 8
08 8 20 20 1
1 08 8 20 20
20 21
08 0 1 08 8
1
1
20 20 20 20
20 21 08 8 08 8
08 1 1 1
1 20 21 20 20
20 21 08 0 08 8
08 1 1 1
1 20 21 20 21
20 21 08 0
08 3 08 0 1
1 1 20 21
20 21 20 21 08 0
08 5
12 08 1 1
20 21
15 12 08 1
15 12
11
In 2009, the QA-QC sample protocol was very similar to that used by Carpathian in 2008. QA-QC
time-monitoring was formalized into a set of rules based on previous experience in 2008 regarding
laboratory performance and standard samples. The following rules have been suggested by NCL to
105
Minerao Riacho dos Machados Lt da.
Rule 1: A result of a standard which is three Standard Deviations (SD) from the mean is a failure. The
SD is taken from the Certificate of the standard. It means a loss of accuracy
Rule 2: Two adjacent standards that are greater than 2 SDs from the mean, on the same side of the
mean, is a failure. This failure may indicate bias.
Rule 3: A blank sample which is the above the warning limit is a failure. For RDM, a value of 0.05 g/t
Au is considered adequate as warning limit.
The idea is to repeat, as soon as the failure is detected, the analysis of all samples between the
failure and the previous control sample which passed the rules of acceptance. A new control sample
should be provided to the lab for testing together with the batch to be repeated. The new results
should be used only if this new result of the control sample does not fail the established rules.
Applying these rules has resulted in several batches of assays being re-assayed to meet the QA-QC
monitoring requirements.
Below are plots of the following QA/QC sample results, along with the analysis of the results for the
2009 Phase II drill program. SGS-GEOSOL is the principal lab for this period:

The analysis of 561 pulp blank samples (4.6% of the submitted samples included in regular
submission batches) did not show any appreciable Au cross-contamination during the assaying
process at SGS GEOSOL. Note, most samples are less than of 0.01 ppm gold with very few samples
over 0.02 ppm gold (Figure 13-8).
0.100
Phase II drilling - Pulp Blanks
0.090
0.080 SGS Geosol BH
0.070
0.060
Au ppm
0.050
0.040
0.030
0.020
0.010
0.000
0 100 200 300 400 500
Samples
Figure 13-8 Control plot of Pulp blank 2009
106

The analysis of 560 coarse blank samples (4.6% of the submitted samples, included in the regular
submission batches) yielded four minor contamination events for Au while the remaining samples are
very similar to the pulp blanks. NCL is of the opinion that no appreciable cross-contamination was
produced during the preparation process at SGS GEOSOL (Figure 13-9).
0.40
Phase II drilling - Coarse Blanks

0.35
0.30
SGS Geosol BH
0.25
Au ppm
0.20
0.15
0.10
0.05
0.00
0 100 200 300 400 500
Samples

Carpathian re-submitted 561 pulp rejects to the primary laboratory, SGS-GEOSOL as Pulp Duplicate
samples. The Pulp Duplicate sample purpose is to verify laboratory analytical precision within the
context of pulp sample heterogeneity. To evaluate the consistency between the two sets of results,
NCL used the scatter plot with best-fit line and the HARD graph, with the same criteria, as explained
in the item 13.4.1.
The R2 of 0.9301 and the equation y = 0.9561x - 0.0574 (Figure 13-10) are indicative of good quality.
The HARD graph, Figure 13-11 demonstrates that the Pulp Duplicates are below the hurdle of less
than 20% of samples with less than 20% difference. The actual number is 15.4% of the samples have
greater than 20% relative difference.
107
Pulp Duplicates - Phase II drilling
25.000
y = 0.9561x + 0.0574
2
R = 0.9301
20.000
15.000
10.000
5.000
0.000
0.000 5.000 10.000 15.000 20.000 25.000
Original Result (ppm)
Figure 13-10 Linear regression plot of Pulp Duplicates 2009
Absolute % Relative difference Plot

Pulp duplicates Original vs. duplicate
90
Abs % Rel Difference (Au Originalvs. Au repeat)
80
70
60
50
40
30
20
10
0
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Rank

Carpathian re-submitted 531 of the Coarse rejects to SGS GEOSOL, 4.4% of the submitted samples.
The Coarse Duplicate sample serves to evaluate the precision of the pulverising step of the sample
preparation and the analytical precision within the context geologic variability. Likewise, for coarse
108
linear best fit for the distribution cloud, in the scatter plot, is also good and importantly not showing
significant bias (Figure 13-12). The R2 is also close to 1, indicating lower dispersion. The HARD graph
indicates that for coarse duplicates, less than 80% (actual 71% of the samples) of the samples have
relative difference lower than 20%, which does not meet the hurdle used by NCL to accept the quality
of duplicates which is 80% of the samples. The Coarse Duplicates show a 15% increase of variability
(defined as percentile of samples > 20% relative difference) over the Pulp Duplicates. This is likely in-
part explained by sample heterogeneity difference between the crushed and pulverised sample
reflecting geologic occurrence of gold but also highlights the need for sample preparation diligence to
procedures.
Coarse Duplicates - Phase II drilling
40
35 y = 0.9384x + 0.0207
R2 = 0.9247
30
25
20
15
10
0
0 5 10 15 20 25 30 35 40
Original Result ALS CHEMEX (ppm)
Figure 13-12 Linear regression plot of coarse duplicates 2009

Carpathian submitted during the 2009 campaign 529 certified reference gold standards in regular
submission batches representing 4.4% of the total submitted samples. Mean Values obtained for
each of the standards and 2x standard deviation are shown in Table 13-4. Mean values as compared
to the CRM values can provide a measure of accuracy whereas the standard deviation can provide a
measure of precision on a global data set. The results in Table 13-4 indicate an acceptable level of
accuracy and precision.
109
CRM Au Value Lab mean Au Lab Standard deviation

% difference
(ppm) value (ppm) x2
0.205 0.209 +1.9% 0.024
0.597 0.600 +0.5% 0.063
0.606 0.608 +0.3% 0.060
0.832 0.811 -2.5% 0.106
1.282 1.285 +0.2% 0.081
1.323 1.283 -3.0% 0.217
2.641 2.645 +0.2% 0.196
4.086 4.073 -0.3% 0.191
5.867 5.997 +2.2% 0.353
Table 13-4 CRM gold value vs. mean SGS GEOSOL Brasil gold value
CRM control plots (CRM assay results) evaluate laboratory analytical accuracy over time. Accuracy
control plots for Au are plotted (Figure 13-13), where the returned laboratory (SGS-GEOSOL) values
are plotted vs. Time with the certified value as reported by Rocklabs is shown for reference. The error
bars represent the standard deviation x 2 of the returned laboratory values. Mean values obtained for
each of the standards and the limits using 2x standard deviation are shown in Table 13-4 above and
in each of the control plots. These control plots provide information on lab accuracy over time and at
different grade ranges. Most of the assays were within the AV2*SD range or very close to those
limits, without appreciable bias and with no significant time events.
On the basis of these results, NCL concludes that the Au accuracy at SGS GEOSOL during the 2009
exploration campaign was acceptable.
110
Au ppm
Au ppm Au ppm
20
20 09
0.15
0.17
0.19
0.21
0.23
0.25
0.27
09 20 06
0.45
0.55
0.65
0.75
0.85
0.95
1.05
1.15
1.25
09 09 20 17
20 30 09 09
0.35
0.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
09 15 06
10 20 20 18
20 02 09 09
09 09 06
20 18
10 14
20 22 09
20 06
09 09 20 19
10 09 09
20 21 18 06
09 20 19
20
10 09 09
20 23 06
09 20 22
09 18
12 09
07 20 06
20 22
09 09 20
12 09 09
18 06
20 04 22
20 20
09 09
12 09 06
20 09 09 20 22
09 18 09
12 20 06
10 09 20 22
20
09 09 09
12 18 06
20 22
20 10 20 09
09 09 06
12 09 20 23
20 18 29 09
09 20 06
12 20 24
18 09 09
20 09
09 06
12 28 20 24
20 18 20 09
09 06
09 24
12 09 20
22 30 09
20 06
09 20 29
12 09 20
09
20 29 10 06
10 01 20 29
01 20 09
0.832
20 07 09 06
20 29
10 10
01 02 10
01
20 18 20 15
10 20
2 STD DEV = 0.024
09 10
01 01
2 STDEV= 0.106
mean = 0.209 ppm Au
10
20 18 22 20 15
10 10
20
mean = 0.811 ppm Au

Au STD 0.832 ppm Au
01 01
2 STDEV= 0.060
17 09 16
20 20

10
10 10
Mean = 0.608 ppm Au
21 01
Au STD 0.606 ppm Au
01
18 20 20 16
20
Au STD 0.205 ppm Au - Phase II drilling
09 10

10 01
01 10 16
20 16 21 20
20 10
10 01
01 09 20 18
20 18 12 10
10 09 01
01 20 20 18
20 18 09 10
10 12 01
02 20 18
04 10
20 08 20 01
10 09 20 18
02 12 10
20 04 07 01
10 20 18
02 20 10
20 04 09 01
10 12 20 18
02 09 10
05 20 01
20 18
10 09 20
02 12 10
18 01
20 05 18
20 20
10 10
02 09 01
20 05 12 20 18
10 22 10
02 20 02
20 05 20 04
09
10 12 10
02 02
16 20 05
20 05 20 10
10 10 02
07 08 08
15 06
111
Au ppm
Au ppm 20 Au ppm
09
0.25
0.50
0.75
1.00
1.25
1.50
1.75
20 20
09 20 0 92
2.00
2.20
2.40
2.60
2.80
3.00
3.20
3.40
09 8 09
0.95
1.05
1.15
1.25
1.35
1.45
1.55
20 0 63
09 0 20 0 92 20 0 61
20 0 71 09 9 09 7
09 6 20 0 92
20 0 71 09 8 20 0 61
09 7 20 0 92
09 7
20 0 71 09 9 20 0 61
09 7 09 8
20 0 92
20 0 73 09 9
09 1 20 0 61
20 0 93 09 7
20 0 72 09 0
09 1 20 0 61
20 0 73 20 1 00
09 1 09 1 09 8
20 0 80 20 1 00 20 0 61
09 3 09 2 09 8
20 0 73 20 1 00 20 0 61
09 1 09 2
20 0 82
09 9
20 1 02
09 8 09 2 20 0 61
20 0 81 20 1 02 09 8
09 3 09 1
20 0 81 20 0 61
09 4 20 1 02 09 9
20 0 82
09 1
20 0 61
09 7 20 1 02 09 5
20 0 83 09 2
09 1 20 1 02 20 0 61
20 0 81 09 3 09 5
09 4 20 1 02 20 0 61
20 0 81 09 3 09 6
09 7
20 1 20
20 0 83 09 4 20 0 62
09 1 09 2
20 0 83
20 1 21
09 1 09 0 20 0 62
20 0 82 20 1 20 09 3
09 8 09 9 20 0 61
20 0 83 20 1 20 09 9
09 1 09 4
20 0 83 20 1 21 20 0 62
09 1 09 0 09 3
20 0 91 20 1 21 20 0 62
09 4
2 STDEV = 0.196
09 1 09 4
20 0 91
mean = 2.645 ppm Au

20 1 22
2 STDEV = 0.217
09 4
Au STD 2.6413 ppm Au

09 1 20 0 62
2 STDEV = 0.081
20 0 91 09 4
mean = 1.283 ppm Au
Au STD 1.323 ppm Au
09 8 20 1 21
20 0 91 09 8 20 0 62
mean = 1.285 ppm Au
Au STD 1.282 ppm Au
09 8 20 1 22 09 2

20 0 91 09 1
20 0 62

09 6 20 1 22 09 2
20 0 91 09 2
09 8 20 1 22
20 0 62
20 0 91 09 9 09 2
09 8
20 1 22 20 0 62
20 0 91 09 9 09 2
09 8
20 0 91 20 1 22 20 0 62
09 8 09 9 09 2
20 0 92 20 1 23
09 8 10 0 20 0 62
20 0 93 20 0 10 09 4
09 0 10 7 20 0 62
20 0 93 20 0 11 09 3
09 0 10 2
20 0 92 20 0 62
09 9 20 0 11 09 9
10 6
20 1 01 20 0 62
09 4 20 0 11
10 6 09 9
20 1 01
09 5 20 0 11 20 0 62
20 1 22 10 6 09 9
09 2 20 0 11
20 1 22 10 5 20 0 62
09 2 20 0 11
09 9
20 1 21 10 8 20 0 62
10 6 20 0 11 09 9
20 0 20 10 8
10 8 20 1 21
20 0 20
20 0 20 09 6
10 5 10 4 08
07 02
12 04 03
112
4.55
Au STD 4.086 ppm Au
mean = 4.073 ppm Au
4.35
2 STDEV = 0.191
4.15
3.95
Au ppm
3.75
3.55
3.35
3.15
09 7
09 7
09 8
09 8
09 6
09 9
09 2
09 3
09 3
09 4
09 2
09 2
09 2
09 4
09 4
09 9
09 0
09 1
09 2
09 4
09 4
09 1
09 9
09 4
09 0
09 2
09 9
10 0
10 8
10 8
09 4
10 8
10 4
03
20 0 61
20 0 61
20 0 61
20 0 61
20 0 61
20 0 61
20 0 62
20 0 62
20 0 62
20 0 62
20 0 62
20 0 62
20 0 62
20 0 62
20 0 62
20 0 62
20 0 63
20 1 00
20 1 00
20 1 01
20 1 01
20 1 02
20 1 20
20 1 20
20 1 21
20 1 22
20 1 22
20 1 23
20 0 11
20 0 11
20 0 20
20 1 21
20 0 20
02
09
20
6.95
Au STD 5.867 ppm Au
mean = 5.997 ppm Au
2 STDEV = 0.353
6.25
Au ppm
5.55
4.85
4.15
30
16
16
13
21
31
31
28
11
13
27
27
27
31
28
31
31
17
15
18
16
32
06
07
07
08
07
07
07
08
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12
07
09
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20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Figure 13-13 CRM gold accuracy plots vs. time for the 2009 program
13.6.6 Check assay program 2009

The check assay program in 2009 comprised of 318 pulp samples sent to ALS Brasil lab to compare
with the primary lab gold assay results (SGS GEOSOL). Comparison of the two laboratories shows
good agreement. The scatter plot and linear regression demonstrates only a very little bias
(Figure 13-14) toward the secondary lab (ALS). A HARD plot analysis shows that only 16% of the
check assays have a greater than 20% relative difference (compares to a reference hurdle of 20% or
less of the assays) which demonstrates acceptable interlab accuracy. Note, the Pulp Duplicates
113
(SGS to SGS) returned a similar HARD plot analysis with only 15% on the samples greater than 20%
relative difference.
Check assays Phase II Drilling
14
y = 1.0188x + 0.0316
12
Secondary Lab (ALS CHEMEX)Au ppm
10
0
0 2 4 6 8 10 12 14
Primary Lab (SGS) Au ppm
Figure 13-14 Check assay linear regression plot 2009
13.7 Review of QA/QC 2010 Phase III Program Results

In 2010 the QA-QC sample protocol matched that used by Carpathian in 2009. QA-QC time-
monitoring was formalized into the same set of rules based on previous experience in 2009 regarding
laboratory performance and standard samples. The rules suggested by NCL in 2009 to determine if
parts of assay batches are required to be re-assayed were the same (see item 13.6).
Applying these rules has resulted in several batches of assays being re-assayed to meet the QA-QC
monitoring requirements. Below are plots of the following QA/QC sample results, along with the
analysis of the results for the 2010 Phase III drill program. SGS-GEOSOL is the principal lab for this
period:

The analysis of 281 pulp blank samples (4.57% of the submitted samples included in regular
submission batches) did not show any appreciable Au cross-contamination during the assaying
process at SGS GEOSOL. Note, most samples are less than of 0.01 ppm gold with very few samples
over 0.01 ppm gold (Figure 13-15).
114
0.050
0.045 Phase III drilling - Pulp Blanks

from yyyy mm dd From 2010 06 09 to 2010 12 02
0.040
0.035
SGS Geosol BH
Au ppm
0.030
0.025
0.020
0.015
0.010
0.005
0.000
20100714 20100826 20100729 20100811 20100812 20100916 20100916 20100921 20101012 20101020 20101105 20101030
Time yyyymmdd
Figure 13-15 Control plot of Pulp Blank 2010

The analysis of 269 coarse blank samples (4.38% of the submitted samples, included in the regular
submission batches) yielded five minor contamination events for Au while the remaining samples are
very similar to the pulp blanks. NCL is of the opinion that no appreciable cross-contamination was
produced during the preparation process at SGS GEOSOL (Figure 13-16).
0.800
0.700
Phase III drilling - Coarse Blanks
from yyyy mm dd From 2010 06 09 to 2010 12 02
0.600
SGS Geosol BH
0.500
Au ppm
0.400
0.300
0.200
0.100
0.000
20100712 20100716 20100730 20100920 20100812 20101005 20100922 20100923 20101008 20101103 20101111 20101130
Time yyyymmdd

Carpathian re-submitted 285 pulp rejects to the primary laboratory, SGS-GEOSOL as Pulp Duplicate
samples. The Pulp Duplicate sample purpose is to verify laboratory analytical precision within the
115
context of pulp sample heterogeneity. To evaluate the consistency between the two sets of results,
NCL used the scatter plot with best-fit line and the HARD graph, with the same criteria, as explained
above.
The R2 of 0.904 and the equation y = 0.904x, are indicative of good quality (Figure 13-17). The HARD
graph, (Figure 13-18), demonstrates that the Pulp Duplicates are below the hurdle of less than 20% of
samples with less than 20% difference. The actual number is 16.2% of the samples have greater than
20% relative difference.
20.000
18.000 Pulp Duplicates - Phase III drilling

Assay Duplicates Au ppm
16.000
14.000 y = 0.9044x
R2 = 0.8643
12.000
10.000
8.000
6.000
4.000
2.000
0.000
0.000 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 18.000 20.000
Assays originals Au ppm
Figure 13-17 Linear regression of Pulp Duplicates 2010
116
HARD Plot
Pulp Duplicates Phase III drilling
120.00
Abs% Difference (Au original vs Au
100.00
80.00
repeat)
60.00
40.00
20.00
0.00
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage Rank (285 samples)

Carpathian re-submitted 264 of the Coarse rejects to SGS GEOSOL, 4.3% of the submitted samples.
The Coarse Duplicate sample serves to evaluate the precision of the pulverising step of the sample
preparation and the analytical precision within the context geologic variability. Likewise, for coarse
linear best fit for the distribution cloud, in the scatter plot, is also good and importantly not showing
significant bias (Figure 13-19). The R2 is also close to 1, indicating lower dispersion. The HARD graph
indicates that for coarse duplicates, less than 80% (actual 74% of the samples) of the samples have
relative difference lower than 20%, which does not meet the hurdle used by NCL to accept the quality
of duplicates which is 80% of the samples (Figure 13-20). The coarse duplicates, as happened in the
previous drilling campaigns, show a larger variability with respect to the Pulp Duplicates. This is likely
partly explained by sample heterogeneity difference between the crushed and pulverised sample
reflecting geologic occurrence of gold but also highlights the need for sample preparation diligence to
procedures.
117
16.000
Coarse Duplicates - Phase III drilling

14.000
Assay Duplicates Au ppm
12.000 y = 1.0257x
2
R = 0.8743
10.000
8.000
6.000
4.000
2.000
0.000
0.000 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000
Assays originals Au ppm
Figure 13-19 Linear regression plot for coarse duplicates 2010
HARD Plot
Coarse Duplicates Phase III drilling
Abs% Difference (Au original vs Au repeat
100
80
60
40
20
0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage Rank (264 samples)
Figure 13-20 HARD graph for coarse duplicates 2010

Carpathian submitted during the 2010 campaign 283 certified reference gold standards in regular
submission batches representing 4.6% of the total submitted samples. Mean Values obtained for
each of the standards and 2x standard deviation are shown in Table 13-5 below. Mean values as
compared to the CRM values can provide a measure of accuracy whereas the standard deviation can
provide a measure of precision on a global data set. The results indicate an acceptable level of
accuracy and precision.
118
CRM control plots (CRM assay results) evaluate laboratory analytical accuracy over time. Accuracy
control plots for Au are plotted (Figure 13-21), where the returned laboratory (SGS-GEOSOL) values
are plotted vs. Time with the certified value as reported by Rocklabs is shown for reference. The error
bars represent the standard deviation x 2 of the returned laboratory values. Mean Values obtained for
each of the standards and the limits using 2x standard deviation are shown in Table 13-5 and in each
of the control plots (Figure 13-21). These control plots provide information on lab accuracy over time
and at different grade ranges. Most of the assays were within the AV2*SD range or very close to
those limits, without appreciable bias and with no significant time events.
On the basis of these results, NCL concludes that the Au accuracy at SGS GEOSOL during the 2010
exploration campaign was acceptable.
CRM Au Value Lab mean Au Lab Standard deviation

% difference
(ppm) value (ppm) x2
0.606 0.590 -2.64% 0.131
0.832 0.800 -3.85% 0.028
1.282 1.271 +0.85% 0.064
1.285 1.249 -2.75 0.055
1.344 1.305 -2.90% 0.095
2.641 2.530 -4.20% 0.164
4.086 4.065 -1.17% 0.175
Table 13-5 CRM gold value vs. mean SGS GEOSOL Brasil gold value
119
Au ppm Au ppm Au ppm
20
1.100
1.150
1.200
1.250
1.300
1.350
1.400
1.450
20 10
0
0.700
0.750
0.800
0.850
0.900
0.950
0.520
0.540
0.560
0.580
0.600
0.620
0.640
0.660
0.680
0.700
10 20 7 2
20100811 07 10 9
09 0
20 8 0
20100811 20 10 2
10 0
20100812 07 20 8 0
12 10 9
08
20100812 20 20 1
10 10 1
20100812 07 0
12 20 8 1
10 1
20100812 20 0
10 20 8 1
20100812 07 10 2
0
12 20 8 1
20100812 20 10 2
10 0
20100812 07 20 8 1
14 10 2
08
20100813 20 20 1
10 10 2
20100813 07 0
20 8 1
14 10 3
20100813 20 0
10 20 9 0
10 1
20100916 07 0
15 20 9 0
20100916 20 10 9
0
10 20 9 1
20100916 07 10 6
16 0
20 9 2
20100916 20 10 1
10 0
20100916 07 20 9 2
16 10 1
20100916 20 0
20 9 2
10 10 3
20100921 07 0
16 20 9 2
10 4
20100921 20 09
10 20 2
20100924
07 10 4
20 0
20 9 2
20101006 20 10 5
10 0
20101007 07 20 9 2
20 10 5
1
20101012 20 20 0 0
10 10 5
20101030 1
07 20 0 0
20 10 7
20101030 20 1
10 20 0 0
20101030 10 8
07
22 1
20 0 1
20101102 20 10 8
10 1
20 1 0
20101103 07 10 3
22 1
20101103 20 1 0
20 10 4
10 1
Phase III drilling 2010 - Au STD 0.832 ppm Au - Mean = 0.800 - 2 STDV = 0.028
20101104 07 20 1 1
23 10 6
20101105 1
20 20 1 2
10 10 8
20101105 07 11
20101105 Phase III drilling 2010 - Au STD 1.282 ppm Au - Mean = 1.271 - 2 STDV = 0.064 29 30
120
Phase III drilling 2010 - Au STD 0.1.285 ppm Au - Mean = 1.249 - 2 STDV = 0.055
1.450
1.400
1.350
Au ppm 1.300
1.250
1.200
1.150
1.100
30
30
21
22
23
25
25
25
25
25
25
20
20
05
05
08
10
12
12
16
16
1
08
08
09
09
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20
20
20
1.600
1.500
1.400
Au ppm
1.300
1.200
1.100
1.000
20100729
20100802
20100809
20100809
20100809
20100809
20100811
20100812
20100812
20100813
20100826
20100901
20100908
20100909
20100913
20100921
20100925
20101004
20101005
20101007
20101015
20101030
20101103
20101103
20101105
20101105
20101108
20101110
20101110
20101116
20101126
20101128
20101130
20101202
3.000
2.900
2.800
Au ppm
2.700
2.600
2.500
2.400
2.300
09
14
14
15
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4.600
4.400
4.200
Au ppm
4.000
3.800
3.600
3.400
3.200
3.000
20
22
29
30
09
12
12
12
01
01
09
13
16
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Figure 13-21 CRM gold accuracy plots vs. time, for the 2010 program
121
13.8 Database Content and Integrity

Carpathian has entered all of their downhole geological and geotechnical data (including relevant
historical data) into a combination of Excel and Micromine databases. The Micromine database is
the master database and was maintained by a single, experienced Resource Geologist (a Carpathian
employee). Micromine database has the typical features of relational databases including validation
procedures and specific QA/QC applications for exploration-resource data. GIS software is used for
relevant historical maps, satellite imagery and historical CVRD autocad drawings. Drillhole sampling
data is recorded on-site and entered into standardized Excel spreadsheets. Assay data are not
manually entered on site because they are digitally sent from the laboratory to Carpathian and
imported via merging into the Micromine database. Carpathian visually reviews assays on the signed
paper certificate against that in the digital databases. Select geological data from the geological logs
are entered from the hardcopy logs into Excel spreadsheets by the geologist, subsequently imported
into the Micromine data. Downhole survey data is entered from hardcopies supplied by the drill
contractor. Drill hole collar survey data are imported into Excel spreadsheets as sent by the surveyor
to the database manager.
Carpathian presents the data in up-to-date drill sections. Section interpretations are reconciled to
level plans and longitudinal sections to ensure that domains (solids) are properly constructed and
interpretations are sound. Sections and levels are reviewed on a regular basis to ensure that all holes
have crossed the target where planned, and that sufficient data density exists to make an appropriate
interpretation.
NCL is of the opinion that procedures for sample preparation, security and laboratory analysis are
adequate. The rate of control samples insertion is sufficient for quality determination, and the
procedures of re-submitting samples which failed the criteria adopted assure a good quality for
sample preparation and analysis. Inspection of the QA/QC results indicate that the drilling database
used for resource estimation is adequate.
122
14. DATA VERIFICATION

14.1 Data Examination
The overall integrity and internal consistency of the database was checked when preparing the data
for estimation. As commented previously, only assay data from the Carpathian campaign was verified,
and from the CVRD campaign, the collar and survey information was verified. NCL checked the
computerized records (drillhole collars, down the hole surveys, assays, and geologic coding) against
original information for ten holes selected randomly from the Carpathian campaign. NCL reviewed all
the records of them, not finding any discrepancy with the original records.
Very little adjustment was necessary to adjust some items of the database found incorrect. All
problems were corrected with the prompt help of the site personnel.
In general, the database is considered adequate and in accordance to international standards.

Carpathian continues to maintain an orderly database and filing systems with all the relevant
information separated by drill hole.
14.2 Site Visit

The QP responsible for the mineral resource estimate, Rodrigo Mello, realized a site visit from
September 29th to October 1st 2008, becoming familiarized with the geology, the local conditions and
exploration methodology used. Rodrigo Mello completed follow-up site-visits from October 26th to
29th 2009 and July 5th to 9th, 2010. The purpose of these visits were to monitor and evaluate
Carpathians drilling, sampling and logging practices, survey control and assay QA-QC practices.
Issues related to the available information were discussed there and in several other meetings at the
Carpathian Brazils Head office, in Belo Horizonte.
14.3 NCL Independent verification sampling

NCL selected a group of fifteen samples for independent preparation and assaying. They were
selected using random numbers in Excel, but seeking to establish a good match with the distribution
of samples. The company origin, sample type and oxidation level. Other considerations were related
to grade (six bins were used to reproduce the original distribution) and depth. The samples were
analyzed in the ALS laboratories, close to Belo Horizonte, Brazil. The results showed a good match
with the originals, ALS frequently reported a higher grade than the original SGS grade. Table 14-1
shows this:
123
Hole From To LENGTH Type Auorig Au ALS Difference

FRM-142 172.00 173.00 1 DD 6.77 5.64 -17%
F46 50.00 51.00 1 DD 2.07 2.07 0%
FRM-75 149.70 150.70 1 DD 3.91 4.71 20%
F115 139.00 140.00 1 DD 1.87 1.87 0%
F37 56.00 57.00 1 DD 1.63 1.46 -10%
F97 46.00 47.00 1 DD 0.81 0.69 -15%
F105 126.00 127.00 1 DD 4.63 0.13 -97%
FRM-262 229.00 230.00 1 DD 3.70 4.55 23%
F142 127.90 128.90 1 DD 0.98 1.18 21%
F97 56.00 57.00 1 DD 0.58 0.54 -6%
FRM-32 70.00 71.00 1 DD 0.40 0.4 0%
FRM-102 34.00 35.00 1 RC 3.57 3.28 -8%
FRM-51 101.00 102.00 1 DD 19.80 34.8 76%
FRM-177 163.00 164.00 1 DD 0.63 2.84 352%
FRM-151 24.00 25.00 1 RC 1.43 1.18 -18%
Average 3.52 4.36 21%
Table 14-1: Control samples
124
15. ADJACENT PROPERTIES

There are no adjacent properties which are material for the present Technical Report on the Riacho
dos Machados Property.
125
16. MINERAL PROCESSING AND METALLURGICAL TESTING

16.1 Historical Oxide Gold Production
Rocks at the RDM Mine are intensely weathered to variable depths of 30 to 80 metres below which
they transition quickly into fresh rocks of the sulphide gold zone. The ore from the oxide zone was
mined by open pit methods, crushed to 1/2 inch and placed in 6 metre high pads where gold was
leached over a 75 to 90-day period with cyanide solution and then adsorbed from solution with
activated carbon in a series of columns. After being stripped from the carbon and recovered by
electrowinning, the gold was smelted on site to produce gold bullion.
The sodium cyanide (NaCN) reagent consumption in this process was a reasonable 200 g/t. Over the
life of the operation, 3.2 million tonnes of ore with an average grade of 1.89 gt Au were processed on
the leach pads, from which 4.825 tonnes of gold were produced for an average recovery rate of 79%.
Recoveries declined near the end of the operation as a result of the ore becoming harder, less
oxidized and becoming increasingly mixed with sulphide mineralization.
16.2 Historical Studies of Sulphide Gold Mineralization

CVRD completed communition and metallurgical test work on several samples as part of their pre-
feasibility study for the treatment of the sulphide gold ore below the open pit. In 1994, they collected
six bulk samples from an underground exploration gallery and crosscuts of 16 tonnes each, ranging in
grade from 1.57 to 4.78 g/t Au (average 3.25 g/t Au) and spaced over a 380 metre strike length from
the exploration underground development drift, approximately 70 m below the bottom of the south
open pit in Area III. These samples were sent to Superintendencia de Tecnologia Centro de
Pesquisas (SUTEC), the metallurgical branch of CVRD, for metallurgical study including major
element analyses, mineralogy, gold grade vs. crushed grain size analysis, gravity concentrate, and
cyanide-leach gold recoveries for various size fractions. The purpose of the study was to assess the
possibility of heap-leach and CIP vat leach for gold recovery of the sulphide bearing ore.
The test work showed that gold mineralization in the deeper sulphide responded reasonably well to
cyanide extraction. In column leach tests of the six samples, gold recoveries averaged 67% for a
2mm crush size and 71% for 1mm crush. A high pressure Roller Press crusher was used to optimize
gold extraction from one sample to 81% for the 2 mm crush size. In bottle roll tests on the same
samples, gold recovery averaged 81% for a 0.074mm (200 mesh) grind and was increased with an
even finer grind. Reagent consumptions were low. The test work was not optimized for CIP vat leach
126
conditions, and a review of this test work in 1996 by Roscoe Postle and Associates tentatively
concluded that gold recoveries from a production plant would be in the range of 84% to 88%.
16.3 MRDM Metallurgical Test work

16.3.1 2008 Test work
The SGS-Geosol Brazil metallurgical test work report is contained in Appendix 24.3.
MRDM will develop an industry standard, crushing, grinding (single-stage ball mill), CIL (carbon in
leach) circuit with and ADR (adsorption, desorption, and recovery) process plant to extract and
recover gold from the sulphide and oxide mineralization at the RDM Gold Project. To evaluate this
process, three composite drill core samples were submitted to the SGS-Geosol Metallurgical
laboratory in Belo Horizonte, Brazil, for grinding and cyanide leaching test work.
Results from this test work were presented to MRDM in a report dated January 15, 2009 entitled
Leaching Kinetics of Three RDM Samples.
Three composite drill core samples of approximately 50 kg each were collected from MRDMs 2008
drilling campaign. These samples were all in sulphide gold mineralization from three discrete along-
strike zones from south to north as follows: Met-3 from Area III; Met-4 from Area IV; and Met-5 from
Area V.
The following is summarized from the SGS-Geosol report to MRDM.
16.3.1.1 Metallurgical Test Samples

One of each of the 2 kg sub-samples was pulverized to 100% below 106 microns (150 mesh). Three
aliquots of 50 grams were then separated with a splitter from that material and sent to chemical
analyses for gold (fire assay / atomic absorption), silver (multi-acid digestion / atomic absorption), iron
(XR fluorescence) and sulfur (infra red / Leco). Table 16-1 shows the global assays of the samples in
triplicate.
127
Table 16-1 Global Assays of Test Samples
16.3.1.2 Grinding
Each sample was crushed to 100% passing 1.70 mm (10 mesh) and thoroughly mixed. A 2 kg sub-
sample was charged into a 10x10 inch ball mill to evaluate time required to reach standard size of P80
75 microns (200 mesh). Table 16-2 and Figure 16-1 below show the results of the grind time versus
P80 of 74 microns test work.
TIME (min) RDM-3 South RDM-4 Central RDM-5 North

0 25.4 33.7 30.3
10 64.8 68.2 59.4
20 84.6 87.9 73.1
40 94.3 94.9 95.4
Table 16-2 Grind Time vs P80 Particle Size
128
Figure 16-1 Graph Grind Time vs P80 of 74 microns
The tests Met-3 and Met-4 showed a similar grinding time whereas Met-5 needed longer time to reach
the target as shown in Table 16-3.
Sample Time to reach P80=75 microns
(minutes)
Met-3 16
Met-4 14
Met-5 26
Table 16-3 Bench Scale Ball Mill Grinding Test Results
16.3.1.3 Cyanide Leaching Kinetics

Six kilograms of each mineral sample were ground at a pulp density of about 62.5% solids (by weight)
in a batch mill to achieve a P80 particle size of 75 microns. The ground material was then transferred
to a stirred tank where water and lime were added to adjust pulp density to 44% (by weight) and the
pH to 10 respectively. Four aliquots of 2.23 kg wet (1 kg dry) were then siphoned into their respective
bottles for leaching with cyanide. Three bottle roll leach tests were performed to determine the leach
kinetic curves of each sample, while the fourth bottle roll test was used for CIL test work i.e leaching
with carbon.
Test work to determine the leaching kinetics was conducted in triplicate, starting with a total cyanide
concentration of the 1000 ppm in the liquor (time zero). The liquor was sampled after 4, 8, 10, 24, 48
and 72 hours of leaching, with the concentration of free cyanide being monitored by titration with silver
nitrate and rodanine indicator. An aliquot of 100 ml of liquor was then separated for chemical analysis
129
of gold and replaced with fresh cyanide solution, whose concentration was adjusted to maintain a
minimum of 100 ppm free cyanide in the bottle. Titration results are shown in Figures 16-2 16-3 and
16-4. The pH in the bottles was also monitored and maintained at 10.5 using milk of lime. The
following figures show the extraction of gold versus time.
Figure 16-2 Gold Extraction vs Time (Sample RDM-3)
130
131
After 72 hours of leaching, the bottles were completely emptied and the contents filtered. The cake
was neutralized with hydrogen peroxide, dried and pulverized. Three aliquots of 50 grams were then
separated for chemical analysis. Results of gold (fire assay / with atomic absorption finish) and silver
(multi-acid digestion / atomic absorption) in the solid residue are shown in Table 16-4.
Table 16-4 Gold and Silver Assays - Leach Residue
Based on the assays of the leach residue, the gold extraction of the samples is shown in Table 16-5.
132
Table 16-5 Gold Percentage Extracted
16.3.1.4 Cyanide Leaching with Carbon (CIL)

CIL test work was conducted using one bottle roll per sample at the same conditions of the kinetic
tests, except for the addition of 30 grams of carbon (Carbomafra 141-S 8x30) to the feed. Prior to the
test work, the carbon was screened at 300 microns (48 mesh) to eliminate the fines. Leaching was
conducted for 72 hours, after which the bottles were completely emptied and the contents filtered to
separate the liquor from the solids. An aliquot of 100 ml of the liquor was sent to chemical analysis;
the remaining volume was used for wet screening the solids at 212 microns (70 mesh) to capture the
gold bearing carbon.
Free cyanide concentration was monitored by titration with silver nitrate and rodanine. Cyanide
consumption during the CIL test work followed the same trends observed in kinetic tests. The
obtained gold extractions were: Met-3 with 91.9%; Met-4 with 91.6%; and Met-5 with 88.6%
(Table 16-6).
Table 16-6 Results of CIL Cyanide Bottle Roll Test Work
Additional test work to confirm the results of the 2008 test work plus optimization tests. Seven
samples were collected as follows from drill core that were within the open pit mine as per the mine
plan: three samples extracted from the upper and three samples from the lower mineral zones for the
133
pit areas II (south), III (central), and IV (north) and one oxide sample extracted from the pit area III.
The seven samples will be subjected to the same test procedure as the 2008 test work plus
composites of each of the three pit areas will be prepared to determine the gold extraction at a finer
P80 particle size of 53 microns. Previous test work by Vale indicated that an additional 3 -5 % gold
extraction could be obtained with a finer grind.
16.3.2 2010 Test work

The complete G&T test work report is contained in Appendix 24.3.
In 2010, MRDM contracted G&T Metallurgical Services Limited (G&T) of Kamloops, British Columbia,
Canada to perform grinding, leaching, cyanide destruction, and sedimentation test work utilizing
eleven discrete samples that were extracted from the core of the 2010 drilling campaigns. Four
composites of the core samples were prepared to perform Bond grinding tests to determine the work
indices of the ore for each area of mine.
The test work showed that the average gold extraction achieved was 91% after 72 hours of reaction in
a bottle roll with a cyanide concentration of 500 ppm. The particle fineness of the leach feed material
was a P80 of about 55 60 microns. The Bond work index ranged from 16.5 to 18.5 kW-h/t. The
following write-up is extracted from the test work report prepared by G&T.
16.3.2.1 Metallurgical Test Samples

The locations and grades of the core samples utilized for the test work program are shown in
Table 16-7and Table 16-8.
134
METALLURGICAL TEST WORK - SAMPLE LOCATION AND

LITHOLOGY
Lithology (number of samples)

Sample qmx cmx cbx qfx bmx bx
2010_3_FR_B qmx-5 cmx-7 cbx-14 bmx-1
2010_3_FR_T qmx-4 cmx-13 cbx-4
2010_4_FR qmx-2 cmx-5 cbx-17 qfx-1 bx-2
2010_4_OX qmx-4 cmx-5 cbx-2 bx-9
2010_4_TR qmx-2 cmx-3 cbx-14 qfx-4
2010_5_FR qmx-4 cmx-7 cbx-11 bx-1
2010_5_OX qmx-4 cbx-15 qfx-1 bx-1
2010_5_TR qmx-8 cmx-7 cbx-12 qfx-1
2010_South qmx-6 cmx-7 cbx-6 bx-6
2010_LG1 qmx-5 cmx-9 cbx-7 bmx-3
2010_LG2 qmx-7 cmx-7 cbx-8 bx-1
Table 16-7 Test work Sample Location
METALLURGICAL TESTWORK - SAMPLE GRADES AND LOCATION

Sample Lab_ID Area Portion Pit zone Ox Head Grade Au_ppm Sulphides
metal. Calcul Measur Py (%) Cp(%) Po(%) As (%) Total (%)
2010_3_F
RDM-1 3 south lower 1.52 1.36 1.65 0.84 0.14 1.34 0.99 3.31
R_B
2010_3_F
RDM-2 3 south upper 1.58 1.64 1.55 0.94 0.05 0.20 0.74 1.93
R_T
2010_4_F
RDM-3 4 central fr 1.93 1.55 1.70 1.02 0.00 0.34 0.21 1.57
R
2010_4_O
RDM-4 4 central ox 0.79 0.96 1.01 0.12 0.00 0.00 0.10 0.22
X
2010_4_T
RDM-5 4 central tr 1.12 1.10 1.11 0.61 0.00 0.00 0.11 0.72
R
2010_5_F
RDM-6 5 north fr 2.20 2.16 2.00 1.22 0.10 0.46 0.64 2.42
R
2010_5_O
RDM-7 5 north ox 1.14 1.16 1.25 0.22 0.00 0.00 0.00 0.22
X
2010_5_T
RDM-8 5 north tr 1.16 1.11 1.20 1.11 0.00 0.05 0.46 1.62
R
2010_Sout
RDM-11 3 south 1.24 0.95 1.19 0.08 0.00 0.00 0.00 0.08
h
2010_LG1 RDM-9 0.61 0.57 0.63 1.29 0.08 0.85 0.75 2.97
Lower grade (overall pit)
2010_LG2 RDM-10 0.68 0.80 0.82 0.68 0.00 0.33 0.47 1.48
Notes
3 Area 3 or South Zone
4 Area 4 or Central Zone
5 Area 5 or North Zone
South Surface material south extension
bmx biotite muscovite schist
qmx quartz muscovite schist
bx biotite schist
qfx quartz feldspatic schist
Table 16-8 Test Work Sample Location and Grades
135
Each of the eleven discrete samples as per above was blended thoroughly in the laboratory and sub-
samples of each discrete sample was removed for assaying. The following Table 16-9 and
Figure 16-5 show the composition of the eleven samples that were utilized for the test work.
Table 16-9 Met Sample composition
The average grade of the ore reserve of the open pit mine is estimated at 1.27 gAu/t versus the
average grade of 1.24 gAu/t for the eleven discrete samples ; consequently, the samples provide a
good comparison for the average gold extraction of the ore.
136
Figure 16-5 Chemical Composition of The Eleven Discrete Samples
The grinding tests performed were the standard tests to determine the Bond Work Index of the ore
plus calibration tests of particle size versus grinding time to determine the grinding time necessary to
achieve a particle size of P80=54 microns for the leaching.
Figure 16-6 show the results graphically of the Bond grinding tests.
The Bond ball mill work index tests were conducted utilizing four composites samples prepared from
the eleven discrete core samples as shown above. The average Bond work index is 17.7 kW-h/tonne
with a range of 16.5 to 18.5 kW-h/t.
137
Figure 16-6 Summary of Bond Work Index Test data
16.3.2.2 Cyanide Leaching

Figure 16-7 to Figure 16-17 below show the rate of gold extraction of the samples during the bottle roll
tests. The kinetics of the 2010 tests show a slower rate than the 2009 tests mainly because the air
supply for the 2009 tests was by a tube inserted in the opening of the bottle cap to allow low pressure
compressed air to enter the bottle whereas the air addition for 2010 tests was by a small circular
opening in the cap to allow ambient air to enter. The lack of dissolved oxygen in pulp at the beginning
of the bottle roll is shown by the measured values of 4.0 to 6.0 ppm. At the 24 hour mark of the
leaching, the dissolved oxygen content was about 8.0 ppm which is a level required for efficient gold
extraction with cyanide.
138
Figure 16-7 RDM-1
Figure 16-8 RDM-2
139
Figure 16-9 RDM-3
Figure 16-10 RDM-4
140
Figure 16-11 RDM-5
Figure 16-12 RDM-6
141
Figure 16-13 RDM-7
Figure 16-14 RDM-8
142
Figure 16-15 RDM-9
Figure 16-16 RDM-10
143
Figure 16-17 RDM-11
The summary of the results of the gold extraction utilizing a standard cyanidation test is shown in the
following figures from Figure 16-18 to Figure 16-20.
Figure 16-18 1st Series Cyanidation Standard Conditions
The standard leach test included grinding the solids to a particle size of P80 = 54 microns and
leaching with a bottle rollat 45% solids for a period of 72h with an initial 500 ppm cyanide addition.
The cyanide consumption and concentration was monitored and adjusted as required.
144
Since the gold is associated with sulphides, a second series of tests were conducted to deteremine
the effect of the gold extraction with lead nitrate addition. The following Figure 16-19 below shows the
results of this test work.
Figure 16-19 2nd Series Cyanidation Lead Nitrate Addition
The above histograms show that there was no appreciable improvement of gold extraction with the
lead nitrate addition; however, the lead nitrate mobilized the arsenic contained in the aresenopyrite so
that the concentration of arsenic in the leach tailings increased a level of about 28 ppm.
Another test utilizing lead nitrate addition was conducted with addition of activated carbon. The
results of this test are show in Figure 16-20.
145
Figure 16-20 3rd Series Cyanidation Lead Nitrate & Carbon Addition
The results of this test show that the gold extraction decreased slightly and the arsenic contained in
the arsenopyrite was mobilized with the addition of lead nitrate and achjieved a concentration of about
30 ppm.
Based on the results of the leaching test work, lead nitrate will not be utilized in the commercial leach
circuit because of the lack of improvement with the gold extraction and the dissolution of arsenic by
the slurry.
The average cyanide consumption for first series, second series, and third series tests were 2.1
kg/tonne, 2.2 kg/tonne and 2.3 kg/tonne, respectively. The average lime consumption for first series,
second series, and third series tests were 3.3 kg/tonne, 3.9 kg/tonne and 3.0 kg/tonne, respectively.
The test work has shown that 24 hours of leach time is required to achieve a gold recovery of
90%. The total of the two leach aeration tanks (holding tanks) and the six CIL tanks provide a
residence time of 26 hours. The leach kinetics of the tests performed by SGS and G&T laboratories
gave somewhat different results because of the oxygen deficiency of the G&T tests,. The aeration of
the slurry at the two leach tanks should resolve this issue; however, confirmatory tests that will be
performed in June 2011 need to be completed.
G&T recommended that test work be performed to optimize the leaching and sedimentation conditions
including reagent usage.
146
16.3.2.3 Cyanide Destruction Tests

The first series of cyanide destruction tests were carried out by G&T laboratories. The equipment that
was utilized by G&T to mix and aerate the slurry was a standard flotation cell that proved to be
inadequate to provide the necessary intimate mixing of the air, slurry, and reagents to achieve the
oxidation of the cyanide. As a result of this, composite samples of the South, Central , and North ore
zones were sent to SGS Canada Inc in Lakefield, Ontario (SGS) to perform cyanide destruction on
slurry samples that were leached with cyanide.
The following is a write-up based on the test work report developed by SGS. The full report can be
found in the Appendix 24.3.
The cyanide pulp from leaching of the composite samples responded well to treatment using the
SO2/air cyanidation oxidation process. The tests indicated that it was possible to treat pulps from
cyanide leaching of the combined composite sample with SO2/air to reduce the CNT concentration to
1 mg/l or lower. The test work results are shown in Table 16-10.
Table 16-10 Summary of Cyanide Destruction Test work
For the desired target of <1 mg/L CN(WAD), Test CND 5 (the last stage of the continuous test
operation) is the most promising at this stage, requiring a retention time of 125 minutes, 0.24 g Cu/g
CN(WAD) and 4.98g SO2/g CN(WAD).
147
The typical SO2/air retention time is 1 hour for each 250 mg/L CNwad, and is usually shorter for an
oxide
cyanidation tailing and longer for a sulphide cyanidation tailing. The retention time of 125 minutes was
on the higher end of the range and will have to be optimized.
Typical SO2 consumption is 4-5 g equivalent SO2 per gram CNwad in the feed. Again the value
obtained for CND 5 (4.98 g SO2/g CNwad) is on the higher end of the range. This might be due to co-
oxidation of some CNS (180 mg/L in the feed solution) and other reducing components of the solid
phase.
Once the cyanide leach conditions have been optimized, the cyanide tailing will likely have lower
CNwad in solution, which in turn will require shorter retention time and lower reagent addition per
amount of CND feed (ie; gram equivalent SO2 per litre of feed or per kg of solids), but may not be
different in terms of reagent per gram of CNwad in the CN tailing.
SGS recommended that additional test work be performed to optimize the conditions of the cyanide
destruction reaction.
16.3.2.4 Sedimentation Tests

Composite samples were prepared for each of the mine areas utilizing the eleven discrete samples of
the drill core.
The scoping level sedimentation or thickening tests showed anionic flocculant Superfloc A-130 to
have the best effect in terms of clarity to the overflow solution, while the cationic flocculant C-496 to
have the best performance in terms of producing a higher underflow density. Initial settling rates
improved slightly when increasing the flocculant dosages from 10 g/tonne to 20 g/tonne and improved
the clarity of the supernatants. It is recommended that further testing and optimization work be
performed prior to carrying out engineering for the solids-liquids separation system.
The results of the sedimentation tests are shown in the figures below (Figure 16-21).
148
Figure 16-21 Sedimentation Tests
149
16.3.3 Metallurgical Test Work Discussion

For the CVRD test work that was performed on sulphide samples with grades that varied from about
1.1 to 3.5 g/t Au, the tests achieved an average gold extraction in the range of 88% to 96% at particle
sizes between 80% and 90% passing 74 microns. These were achieved with low cyanide
consumption, reported by CVRD to be generally between 0.12 and 0.6 kg/t cyanide. This historic
information was taken into consideration to determine the cyanide consumption that is used for this
report. It should be noted that this work was not witnessed by the current authors and therefore we
have accepted in good faith the quality of the CVRD work and the accuracy of their numbers.
The more recent work by SGS Brasil and G&T consistently achieved higher gold extractions, that
support and give confidence to the selection of 90% gold recovery shown in this report. However, as
described elsewhere in this Section 16, this more recent work reported significantly higher cyanide
consumption, in the range of 0.2 to 2.0 kg/t cyanide at a cyanide concentration of 500 ppm. The
authors of this report believe that this high cyanide consumption may be the result of the high
concentration of cyanide utilized for the leach test work and unoptimized leach conditions for the tests.
This view is supported by the mineralogical observations and assays of the various samples of the ore
and tailing pulp show low levels of cyanacides (cyanide consuming minerals) such as the presence of
sulphides and base metals.
As a result of the SGS Brasil and G&T results, the cyanide consumption , and by inference, operating
cost, are regarded by the Metallurgical QP, to represent an element of risk. For example, should the
cyanide consumption increase by 1.0 kg/t, then the operating cost would increase by 1.5 - 2.0 $/t, a
not insignificant number, with current cyanide prices.
A proposal has been received by SGS, to carry out a further series of leach tests to attempt to provide
greater confidence , and to optimize the leaching conditions including the cyanide consumption. At
the time of writing this report, this work is scheduled to commence in the near future and be
completed by about the end of July. It is considered essential to carry out and complete this work,
followed by a thorough review of the results.
16.4 Plant Design

The process plant utilizes a standard gold processing circuit that includes three stages of crushing, a
single stage wet grinding ball mill in closed circuit with hydrocyclones, one slurry thickener, eight leach
and carbon in leach (CIL) tanks, two cyanide detoxification reactor tanks, and a gold adsorption,
desorption, and recovery (ADR) plant. The final tailing product will be pumped from the
150
detoxification tanks to the tailing impoundment area and dam from where the supernatant of the tailing
pond will be recovered and recycled to the plant for re-use.
The treatment rate of the plant will be 7,000 dry tonnes per calendar day and will produce about
92,000 ounces of gold per year as gold bars at an average gold recovery of 90% over an eight year
mine life. It should be noted that MRDM has purchased a plant that has a capacity of 9,000 dry
tonnes per calander day.
The operating times will be 80% for the crushing circuit and 94% for the grinding and leaching circuits.
To recover the gold from the activated carbon contained in the CIL circuit, the ADR plant will operate
12 hours per day. A fine ore silo will be installed ahead of the grinding circuit to store 5,000 tonnes of
final crushed product to provide continuous feed to the grinding mill when the crushing circuit is
stopped for clean-up and maintenance.
The electrical power supply to the operation will be provided by an overhead 34.5 kV transmission line
and one 2.25 MW generator. The peak demand of power is estimated at 8.3 MW with an average
demand of 7.7 kW.
The fresh water required by the plant for make-up will be about 50 cubic metres per hour and will be
obtained from nearby wells, rainfall drainage, and the drainage from the pit. The remainder of the
water needed to operate the plant will be obtained from the supernatant of the tailing pond.
The summary Table 16-11 below shows the summary of the operating criteria for the plant:
151
PROCESS PLANT OPERATING CRITERIA

Description Crushing Grinding CIL and
Circuit Detox
Nominal Throughout - dt/cal day

7,000 7,000 7,000
Nominal Throughout - dt/year
2,555,000 2,555,000 2,555,000
Average Grade of Ore g/t Au
1.23 1.23 1.23
Operating Time 80% 94% 94%
Operating Hours per Year
7,008 8,234 8,234
Average Operating Hours per Day
19.2 22.6 22.6
Nominal Throughput - dt/ op day
8,750 7,447 7,447
Nominal Throughput - dt/ op hour
365 310 310
Table 16-11 Operating Criteria
The summary Table 16-12 below shows the summary operating criteria for the ADR plant:
ADR PLANT OPERATING CRITERIA

Description ADR
Plant
Nominal Throughout - dt Carbon/op day 3

Average Grade of Ore g/t Au 3,500
Operating Time - % 50%
Operating Hours per Year 4,380
Average Operating Hours per Day 12
Average Gold Recovery 90%
Table 16-12 ADR Operating Criteria
The reagent consumptions for the process plant is shown in the following Table 16-13.
152
Consumables Units/t Units/year
Grinding Media (kg) 0.75 1,916,250

Sodium Cyanide (kg) 0.50 1,277,500
Sodium Metabisulphite (kg) 1.43 3,653,650
Caustic Soda (kg) 0.06 143,080
Lime (kg) 2.00 5,110,000
Activated Carbon (kg) 0.02 51,100
Hydrochloric Acid (kg) 0.10 255,500
Copper Sulphate (kg) 0.10 255,500
Electrical Energy (MW-h) 0.026 66,553
Table 16-13 Consumables
Figure 16-22 through Figure 16-30 show the project and plant layout and the flow sheets developed
by Tecnomin for the project. Detailed drawings are found in Appendix 24.8.
153
TECHNICAL REPORT ON THE RESOURCE ESTIMATE UPDATE AND THE FEASIBILITY STUDY FOR RIACHO DOS
MACHADOS GOLD DEPOSIT,
Figure 16-22 Project Layout
154
Figure 16-23 Plant Layout replace with one from executive summary report
155
Figure 16-24 Crushing Plant Flow Sheet
156
Figure 16-25 Grinding Circuit Flowsheet
157
Figure 16-26 Carbon-In-Leach Flowsheet
158
Figure 16-27 Cyanide Destruction Flow Sheet
159
Figure 16-28 Acid Wash and Stripping ADR Flow Sheet
160
Figure 16-29 Carbon Regeneration ADR Flow Sheet
161
Figure 16-30 Gold Smelting Flow sheet
162
16.4.1 Crushing Circuit

The open pit run of mine (ROM) ore with a maximum size of 1.0 metre diameter will be transported by
truck and discharged into the 60 tonne capacity feed hopper at the jaw crusher plant or onto the ROM
ore 5,000 tonne stockpile. A variable speed 1,000 mm wide by 6,000 mm long apron feeder driven by
a 30kW hydraulic system will reclaim the ore from the hopper at 365 dry tonnes per hour (dtph) and
discharge the ore onto a 1,200 mm wide by 3,000 mm long vibrating grizzly screen fitted with a 13kW
drive. The oversize material will discharge from the grizzly into the 1,250 mm by 950 mm primary jaw
crusher fitted with a 160 kW drive. The undersize from the grizzly will discharge onto the 0.80 m wide
by 23.6 m long transfer conveyor fitted with a 10kW drive. The product at a size of 80% passing 150
millimetres will discharge from the jaw crusher and will combine with the grizzly screen undersize
material. The combined material will discharge from the conveyor onto a 0.60 m wide by 71.6m long
conveyor that will discharge into the vibrating screen feed box to feed onto the double deck 1,800mm
wide by 4,800 mm long primary vibrating screen driven with a 15 kW motor.
The undersize product at a size of 100% passing 19 millimetres from the primary vibrating screen will
discharge onto the 0.80 m wide by 117.5 m long conveyor fitted with a 10kW drive that will transport
the product to the fine ore bin.
The secondary screen oversize product will discharge directly into the tertiary HP500 cone crusher
driven with a 355 kW motor. The tertiary crusher product will discharge onto the transfer conveyor and
the product will combine with the primary screen oversize material. The transfer conveyor will feed
onto the secondary screen feed conveyor via a chute where the material will combine with the
secondary crusher product.
The ore from 5,000 tonne fine ore storage bin will be reclaimed at a total rate of 310 dry tonnes per
hour utilizing four 0.500 m by 4 m long belt feeders fitted with variable speed drives and discharge the
ore onto the 0.60 m wide by 117.5 m long grinding mill feed conveyor.
The area around the crushing plant and storage bin will have sufficient access to be able to clear the
area of spills with a small front end loader and perform maintenance work.
16.4.2 Grinding Circuit

The grinding circuit will comprise a single 6.7 metre diameter by 11.1 metre long ball mill with twin
pinion drives that will be in closed circuit with 8-20 inch diameter classifying hydrocyclones. The ore
feeding the mill will be sampled with an automatic sampler to measure the feed grade of the ore and
this information will be utilized to peform the metallurgical performance of the plant.
163
Ore at a feed rate of 310 dtph will be mixed with water to produce a slurry at density of 72% solids by
weight to feed the mill. The slurry will feed directly into the fixed speed ball mill fitted with twin 4,650
kW drives each complete with an air operated clutches. A mixture of grinding media consisting of four,
three, and two inch diameter steel balls will be utilized to reduce the particle size of the fresh ore from
100% passing 19mm to 80% passing 54 microns. The slurry will discharge from the ball mill into the
grinding mill pump box where it will be diluted with process water to a density of about 45% solids and
transported to the hydrocyclones with a 14 by 12 slurry pump fitted with a 120kW drive. The cyclone
underflow at a density of about 70% solids by weight will feed directly by gravity from the cyclone
cluster into the grinding mill thereby closing the grinding circuit.
The cyclone overflow discharge slurry at about 18% solids by weight containing the fine ore particles
will be transported via a gravity feed pipeline to a linear screen to remove the trash material. From this
screen, the pulp will feed directly by gravity into a thickener feed box where a solution of flocculant will
be added to produce floccules of solids to induce rapid separation of the solids and liquid in the
thickener. The linear screen oversize material containing the trash will discharge directly into a
portable holding bin.
The thickener underflow slurrty at a density of 45% will be pumped to one of the two 13.5 m dia by
14.3m tall holding tanks at the head of CIL circuit. The clear overflow solution of the thickener will be
recovered and pumped to the process water tank.
Sumps in the grinding area will reclaim slurry spills and transport the spills to the grinding mill pump
box for processing. Sufficient access will be provided in the design so that ore spills at the feed end of
the primary mill can been cleared with a small loader.
Areas to store liners and other maintenance materials will be provided near the mill so that routine and
planned maintenance activites can be performed efficiently.
16.4.3 Carbon-In-Leach
The slurry from one of the two holding tanks fitted will be pumped with a 10 by 8 variable speed pump
fitted with a 60 kW drive into the first tank of a train of six 13.5 m dia by 14.3 m tall tanks. Each of of
the holding tanks will have sufficient live capacity to store 3 hours of production slurry so that the
leaching can continue in spite of minor stoppages of the grinding circuit. The six CIL tanks will be
arranged in a nested pattern to optimize the foot print of the tank area will provide 18 hours of
retention time to leach the gold with a weak cyanide solution. Fresh cyanide solution and milk of lime
will be added into the CIL circuit to maintain a WAD cyanide concentration of about 200 ppm and a pH
164
of 10.5. The slurry of the first CIL tank will flow by gravity into the second tank. The slurry of the
second CIL tank will flow into the third CIL tank and so on until the slurry discharges from the sixth or
last tank onto the carbon safety screen.
Each of the CIL tanks will contain activated carbon at a concentration of about 25kg per cubic metre of
slurry. The carbon contained in the CIL tanks will be advanced counter currently to the slurry flow into
the previous tank by pumping slurry containing the carbon with vertical 4 inch diameter recessed
impellor pumps into the previous tank for a duration about 45 minutes of each shift. The carbon
advance sequence will begin at the sixth tank and will proceed to the first tank where the slurry
containing the loaded carbon will be transported to the loaded carbon recovery screen by a 4 inch
vertical recessed impeller pumps to extract the loaded carbon for processing in the ADR plant. The
gold content or loading of the carbon in the sixth CIL tank will be the lowest and the gold content of
the carbon of the first CIL tank will be the highest. The screen overflow containing the loaded carbon
will be washed with spray water after which the loaded carbon will discharge into the loaded carbon
holding bin. The screen undersize containing the ore slurry will flow by gravity back to the first or
second CIL tank.
Each of the CIL tanks will be fitted with a slurry bypass system so that maintenance can be performed
on the equipment without stopping the CIL circuit. In the event that the first CIL tank needs to be
bypassed, the slurry from the holding tank will be pumped directly into the second CIL tank. In
addition, the slurry of the second tank containing the loaded carbon will be pumped to the loaded
carbon recovery screen as per the description above.
In the event that the sixth tank is stopped, the slurry of the fifth tank will flow directly via the bypass
system to the carbon safety screen to recover the transient carbon from the slurry prior to discharging
the slurry to the tailing impoundment.
Each of the CIL tanks will contain carbon retention screens to avoid uncontrolled flow of carbon from
one tank into another.
The slurry of the sixth or last CIL tank will discharge by gravity onto a carbon safety screen. The
screen oversize material containing any transient carbon will be washed with water and discharge by
gravity into a portable holding bin. The screen underflow will discharge directly into a CIL tailing
pumpbox from where it will be pumped with 10 by 8 pump fitted with a 60 kW variable speed drive to
the first mechanically agitated tank of the cyanide destruction system.
165
Low pressure air at a total flow rate of about 9,500 cfm and a pressure of 35 psi will be added to the
CIL tanks via spargers located near the bottom of the tank to provide oxygen to the process that is
required for the leaching the gold. The sparges will be designed to enable each of the sparges to be
removed without stopping the air flow to the tanks or the agitation of the slurry in the tanks.
Atomated reagent addition systems will be installed to ensure that the correct concentration of
reagents in the tanks is maintained to achieve maximum extraction of the gold.
16.4.4 Cyanide Destruction

The cyanide destruction system will comprise two mechanically agitated 10.9 m dia by 12.6 m tall
tanks that will provide about a total of 2 hours of retention time. The slurry containing about 200 ppm
WAD cyanide will be pumped from the CIL tailing pumpbox into the primary reactor where air, copper
sulphate, lime, and metabisulphite will be added to oxidise the cyanide. Copper sulphate solution will
be added to achieve a concentration of about 20 ppm or as required to accelerate the reaction rate for
the cyanide destruction. The discharge from the first tank will flow directly into the second tank where
the same chemicals at a lower dosage rate will be added to complete the reaction. The discharge
from the second reactor will flow directly into the final tailing pump box from where the treated slurry
will be transported to the tailing impoundment area. The final slurry will contain less than 1.0 ppm of
total cyanide as indicated by the test work.
16.4.5 Adsorption, Desorption and Recovery Plant (ADR)

Three tonnes of loaded carbon will be transferred with a 50 mm by 50 mm recessed impellor pump
fitted with a 5 kW drive from the loaded carbon bin to the acid wash vessel where carbonates and
other acid soluble compounds will be removed prior to processing the loaded carbon in the stripping
vessel.
A weak solution of hydrochloric acid (HCl will be pumped from the holding tank to the top of the
carbon acid wash vessel with a 50mm by 50mm horizontal pump fitted with 5 kW drive. The underflow
stream at the bottom of the acid wash vessel will be transported back to the holding tank from where
the solution will be recycled in a closed loop to the acid wash vessel. Fresh acid and water will be
added to the holding tank to maintain the correct concentration of free acid that is required for the
process. When the acid wash is complete and the acid solution neutralized with caustic soda to a pH
of 8.0, the neutralized solution will be pumped with a 50mm by 50mm horizontal pump fitted with a 5
kW drive to the final tailing pump box where it will be mixed with the final tailings and transported to
the impoundment area. A weak solution of caustic soda will be pumped to the acid washed carbon to
neutralize the remaining acid contained in the carbon.
166
The acid washed loaded carbon will be transferred from the acid wash vessel into the vertical
pressure strip vessel with a 50 mm by 50 mm horizontal recessed impellor pump fitted with 5 kW
drive. The water utilized to transport the carbon will drain from the pressure vessel into the floor sump
via Johnson screens fitted at the bottom of the strip vessel. After the water has drained from the strip
vessel, the vessel will be closed and hot strong cyanide solution will be pumped into the strip vessel to
remove the gold from the loaded carbon. The hot cyanide solution will discharge from the strip vessel
into a pregnant solution holding tank from where it willbe pumped to the electrowinning (EW) cells
where the gold contained in the solution will be plated onto the cathode blanks. The hot solution will
discharge from the EW cells and be recirculated through the direct fired electric heater to maintain the
proper temperature for the stripping fluid. The stripping process will continue until the gold content of
the strip solution discharging from the vessel achieves a tenor of less than one ppm. Normally, 5 bed
volumes (BV) are required to complete the stripping cycle. When the stripping cycle has been
completed, a hot water wash will be pumped into the strip vessel to remove the remaining cyanide
solution. The wash cycle will be complete when the cyanide (WAD) content of the solution discharging
from the strip vessel achieves a concentration of less than 5 ppm. The hot water wash will be stored in
a holding vessel and will be re-used in the ADR process or pumped to the CIL circuit.
The gold plated onto the cathodes will be removed utilizing a high pressure wash contained within a
locked sealed tank. The water containing the gold will be pumped from the cathode wash tank with a
50 by 50 pump driven with a 7.5 kW motor to a filter press to recover the gold. The water discharging
from the filter press will be returned to the cathode wash tank to ensure that no gold is lost. The EW
and gold filtration system will be contained within a secured system and area to prevent gold losses.
16.4.6 Process Plant Operating Cost

The following criteria were applied for the processing operating cost estimate (details of these costs
are in Appendix 24.5):
The manpower estimate was according to the personnel requirements shown in Section
18.19. The applied salaries were according to information supplied by MRDM.
Power consumption was calculated in kWh per year, using the estimated motor power
efficiency factors for each drive, the estimated operating hours per year and the power
costs as provided by the state power company CEMIG (without taking into consideration
any discounted or future negotiated long term rates). The average power costs amount to
R$155 per MW-h or US$0.065 per kW-h. The demand cost amounts to US$24.025 per
kW for the peak hours and US$6.025 per kW for the peak hours.
167
The quantities of consumables and reagents were based on test work results and other
similar operations. Annual consumption rates were calculated by multiplying the
consumption rates by the total annual tonnage processed as per the mass balance. The
reagent and energy costs are based on price and delivery quotations obtained from the
suppliers.
Maintenance costs include: mechanical, electrical, instrumentation parts and wear

materials.
The reagent and energy costs are based on price and delivery quotations obtained from
the suppliers.
The estimated processing cost amounts to US$7.76 per ore tonne feed to the plant, as
summarized below in Table 16-14.
2,555,000
Tonnage/Year (US$/t) (%)
(US$)
Manpower 1,750,064 0.68 8.8 %
Reagents 6,638,098 2.60 33.5 %
Electrical & Mechanical
1,839,600 0.72 9.3 %
Maintenance
Energy 9,176,754 3.59 46.3 %
Laboratory 424,238 0.17 2.1 %

Total 19,828,754 7.76 100%
Table 16-14 Summary Plant Operating Cost Estimate
16.4.7 Tailing Disposal and Impoundment

The complete report of the tailing dam that was developed by Golder is contained in the Appendix
24.2.
The treated tailing will discharge from the cyanide destruction circuit into a pump box fitted with 10 by
8 pumps driven by 30kW motors from where the tailing will be pumped to the tailing dam. During
periods of dam construction to increase its height, the tailing will be processed with hydrocyclones to
remove the fines that will discharge from the cyclone overflow onto the upstream slope of the tailing
dam and drain into the impoundment area.
The coarse sands will discharge from the cyclone underflow onto the top of the dam and will be
spread utilizing mobile carriages with the cyclones mounted on the carriages or with a dozer.
168
When no dam construction is being performed, the tailing will discharge directly onto the beach via
spigots placed in strategic locations to provide an even distribution of the tailing into the tailing
impoundment area. The reclaim water system that will include a barge complete with pumps will be
located at a point farthest from the tailing discharge points (nearest to the process plant) to provide
sufficient residence time in the impoundment area to allow the solids to settle so that a clear
supernatant in the impoundment area that can be reclaimed with water pumps for re-use in the plant.
The reclaim water will be transported from the tailing impoundment with 10 by 8 pumps fitted with
50kW motors and the reclaimed water will be pumped to the process water tank located in the
process plant area.
The seepage pond will be capture the seepage water from the impoundment area and returned to the
impoundment area via pumps.
The design of the tailing dam, see Figure 16-31 below, will meet the production needs of the first two
operating years. The starter dam, as shown in orange in Figure 16-32 below, will be constructed of
compacted soil from the borrow pit located in the area of the tailings reservoir. Its crest will be raised
in the future with the underflow product of cycloned tailing.
The height of the dam will be raised each year with the cycloned tailing product that will be deposited
on the centreline of the dam via mobile carriages. A portion of the water draining off the dam during
the cycloning process will be collected with drainage ditches located at the toe of the downstream side
of dam and this water will drain to the seepage sump so that the water can be returned to the
impindment area. Some of the underflow material will be spread with bulldozers to ensure that the
correct height of the dam is maintained. The overflow of the cyclones will be deposited onto the
beach formed on the upstream side of the dam.
Figure 16-31 Section of Tailing Dam
169
Figure 16-32 Plan View of Tailing Dam
170
17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATION

NCL has estimated the mineral resources at the RDM Gold deposit following the guidelines set out in
NI-43-101, companion policy NI43-101CP and Form 43-101F1. The effective date for this estimate is
November 16th, 2010, when NCL received the updated drill database and solids from Carpathian. The
estimate presented here is based upon the results of 56,984 metres of diamond drilling (DD) and
9,643 metres of Reverse Circulation drilling (RC). The DD includes the re-assaying of part of 156 old
CVRD drillholes, which totals 24,659 m of drilling. The RC includes pre-collar activities adopted by
Carpathian, totalling 4,996 metres.
NCL has previously prepared two resource estimates for Carpathian. One was published in May, 2009
and the other in July, 2010.
17.1 Software Used

The modelling and geostatistics analysis of the deposit was carried out using two different software
packages: Gemcom 6.2.4 (kriging and block model construction, modelling and exploratory data
analysis, model validation) and GSLIB (variography and exploratory data analysis).
17.2 Data Base

Data was supplied by Carpathian in Excel format, consisted of drilling information with assays, survey,
collar and lithology, and in DXF format, for the solids representing the mineralization and the surfaces
representing topography and weathering limits. As discussed in Section 11, results from drilling
executed by Carpathian and re-sampling of old CVRD holes were used, besides auger and channel
samples. The drillholes database was validated using the standard tools from GEMCOM and Excel.
All the problems detected were reported to Carpathian and were corrected. The methodology used by
Carpathian for data entry and validation was checked and found to be robust.
The general statistics of assay data used in the present estimation is given in Table 17-1 and
Table 17-2. Channels are considered as drillholes, for estimation purposes.
TYPE OF DRILLING
TYPE N of holes N Meters drilled N of samples
DD 385 56,984 22,572
RC 124 9,643 3,984
Trenches 40 1,133 1,107
Auger 35 275.15 279
Table 17-1 General stats of drilling used in this evaluation, separated by type
171
CPN
TYPE N of holes N Meters drilled N of samples
Trenches 40 1133.1 1107
DD 164 25034.0 15027
RC 59 4646.0 3984
RC+DD 65 12296.1 N/A
Auger 35 275.2 279
Total CPN 363 43384.4 20397
CVRD
DD 134 23486 6548
DD_Sub 22 1174 997
Total CVRD 156 24659 7545
Grand Total 519 68044 27942
Table 17-2 General stats of drilling used in this evaluation, separated by company
The data from CVRD are related to the results of re-assaying of the remains of old drill cores,
executed by Carpathian, on selected intervals.
17.3 3D Modelling
Two groups of wireframes representing the mineralized zone were interpreted and prepared by
Carpathian and revised by NCL.
One of them is intended to represent the mineralization amenable for open pit mining, with a cut-off of
0.3 g/t Au. The reason for choosing this value is that the deposit has a relatively good continuity using
this threshold, in addition, the low costs of open pit mine production which possibly should allow the
mining of low grades. Six lenses were modelled. They were grouped into two veins: the main vein,
which includes the footwall zone, and a hanging wall vein. They were considered as separate entities
for evaluation purposes. For example, the main vein was estimated using only samples considered as
contained within the solid of the main vein. Hereinafter this group is called the OP model.
The other group was built to support the estimation of mineral resources amenable by underground
mining, using a 1 g/t Au grade shell. A single mineralized zone was considered for the different
lenses, meaning that the grade of a sample from one lens may influence the grade on a different lens.
This model is called the UG model.
Four surfaces were also provided by Carpathian:
172
Topographic surface
Surface representing the top of the in-situ rock (beneath the fillings left by Vale)
Surface separating the oxide (weathered) from the mixed material
Surface separating mixed from fresh material
17.4 Selection of Representative Samples

To represent the mineralization, the samples contained within the solids were selected and marked
according to the vein, and according to the weathering state: oxide, if above the oxidation surface;
mixed, if below the oxidation surface and above the fresh rock surface; and fresh, if below the fresh
rock surface. As the interpretation lines were constructed using the resource called snapping (i.e.
the lines are tied to the sample position in 3D, and not on its projection to a section plane), the
selection using the solids marked the samples considered as internal to the mineralization zones.
17.5 Population Analysis

Differently than the previous estimates, at this study the deposit was divided in four groups: the main
vein and the hanging wall vein, divided in two blocks: South and North. The limit between south and
north blocks is given by a fault. The gold grade statistics for these veins has some significant
differences in order to support the decision of treating each one as a separate entity.
A single population, with all samples contained within the UG solids, was used for the underground
model, considering that the information about the zones covered by this model is sparse.
17.6 Outlier Analysis

Figure 17-1 below represents the probability graphs that were used to define the threshold to cap the
outliers of the studied population. The objective is to limit the influence of very high values on the
interpolation of grades. If the high values stay in the expected position (a straight line in the high end
of the probability graph) they may be considered part of the population and used in the estimative.
Otherwise, they may be capped, to have their value reduced to a selected threshold. A common
threshold is the one where 99% of the samples have grade less than that, but it depends on many
other factors, like the adherence of the kriging values to the moving average, the geology, etc. A value
of 30 g/t was chosen for the Main vein and 20 g/t was used for the HW vein, based on the inflection of
the curve at this grade.
173
Figure 17-1 Probability plot, for identification of outliers, for the four different domains
CAPPING
VALUE RAW MEAN CAPPED % NR SAMPLES
Zone Au g/t Au g/t MEAN Au g/t DECREASE CAPPED PERCENTILE Raw CV Capped CV
Main South 30 1.55 1.53 1% 5 99.87 1.66 1.58
HW South 20 1.22 1.18 3% 7 99.60 2.15 1.81
Main North 30 1.69 1.68 1% 2 99.82 1.69 1.63
HW North 20 1.98 1.96 1% 1 99.60 1.37 1.32
Table 17-2 Statistics of samples inside the OP model, before and after capping
For the UG model, 30 g/t was also adopted to cap outliers. Table 17-3 depict the effect of this
procedure. It is important to note that capping was applied on raw samples, before compositing.
174
CAPPING RAW CAPPED

VALUE MEAN MEAN % NR SAMPLES
Zone Au g/t Au g/t Au g/t DECREASE CAPPED PERCENTILE Raw CV Capped CV
RDM UG 30 2.77 2.75 1% 3 99.78 1.32 1.25
Table 17-3 Statistics of samples inside the UG model, before and after capping
17.7 Compositing
Compositing, i.e. transforming the samples to a fixed length in order to have all values at a similar
support, is a necessary step before interpolation of results. After a statistical analysis of the length of
the original samples, 1.0 m was chosen for compositing. The 1.0 m compositing was selected
because this value best represent the mode of the samples and its variograms. Almost 99% of the
distributions of lengths have 1m length, therefore choosing this length for composition would preserve
the detail obtained in the sampling, while still having a good statistical agreement between samples.
Table 17-4 through Table 17-6 present the statistics of samples and composites, in order to
appreciate the effects of this procedure.
17.8 Exploratory data analysis

The tables below depict the basic statistics of the composites divided by veins and for the samples
and composites, contained within the geologic solids. Figure 17-2 below represent the gold
histograms for both models.
Samples Inside solid Au g/t

Zone Number Mean g/t Std Dev Var CV Min Max
Main South 3,912 1.55 2.57 2.39 1.66 0.003 47.100
HW South 1,740 1.22 2.62 1.48 2.15 0.005 56.900
Main North 1,123 1.69 2.86 2.87 1.69 0.005 35.700
HW North 253 1.98 2.71 3.91 1.37 0.006 23.700
Total 7,028 1.50 2.64 2.26 1.76 0.003 56.900
Table 17-4 Basic statistics for raw samples inside the OP model separated by vein
175
Composites Inside Solid - Au g/t

Main South 3983 1.52 2.43 5.89 1.60 0.001 30
HW South 1769 1.16 2.08 4.32 1.80 0.001 20
Main North 1149 1.65 2.73 7.45 1.65 0.001 30
HW North 280 1.83 2.59 6.69 1.41 0.001 20
Total 7181 1.47 2.41 5.82 1.65 0.001 30
Table 17-5 Basic statistics for composites inside the OP model separated by vein, after capping
Samples Inside solid Au g/t after capping

Au 1,383 2.75 3.44 11.80 1.25 0.008 30
Intersects
Au 376 2.58 3.44 11.80 1.33 0.008 30
Composites Inside Solid - Au

All 1,383 2.742 3.43 11.79 1.25 0.008 30
Table 17-6 Comparison between samples and composites for UG model
Accumulated histogram - Au g/t composite

120%
100%
Accumulated frequency
80% Main South

HW South
60% Main North
HW North
40%
20%
0%
0 1 2 3 4 5 6
Au g/t
Figure 17-2 Histogram Au Composites OP model All veins
176
17.9 Specific Gravity Measurements

Specific Gravity measurements were made using two methods:
On core from holes executed by CPN on representative intervals. The samples were submitted to test
work of specific gravity were collected from drill cores measuring between 12 and 15 centimetres long,
at least a half core was used, with a diameter of 50.8 mm (NQ2). 101 samples were collected, being
46 representing the ore and 55 the waste rock, both related to lithologies, grades, and intensity of
weathering in order to be representative of the deposit. The test work was done for ALS Chemex
laboratory and the following procedures were adopted: The core sample was weighted and then
slowly placed into a bulk density apparatus which is filled with water. The overflow is collected into a
graduated cylinder and measured. From the data, the bulk density is calculated:
Density= weight of sample (g)/ volume of water displaced (cm)
In some cases the core were coated with paraffin before analysis. The paraffin wax density was
compensated for when determining the final density value.
On trenches, where bulk sampling of ore and waste material was carried out. Seven measurements
were taken, three for oxide ore, three for oxide waste and one for dumped waste (fillings). For each
site, a hole was dug, representing a cube with 0.50 cm of edge. The material extracted was weighted.
The hole was covered with canvas and the volume of the material extracted was measured, filling the
hole with water. A sub-sample was weighted, dried for 1:30 h at 70 and subsequently weighted
again, what gives the average humidity. The density is obtained by the formula:
Density= (weight of sample (g)-humidity factor)/ volume of water used to fill (cm)
The results were investigated for possible outliers, using the definition of outlier as results beyond the
limit of mean +/- 2 standard deviations. Only one outlier was found. It was discarded and a simple
average of the results according to the zone where the samples were collected was used to estimate
SG, considering core samples and trench samples.
Table 17-7 depicts the density values adopted for each zone, as well as the codes used for the block
model.
177
Zone Type Weathering Domain Vein Density

111 ore oxide South Main 2.12
112 ore oxide South Hang 2.12
wall
113 ore oxide North Main 2.12
114 ore oxide North Hang 2.12
wall
121 ore mixed South Main 2.46
122 ore mixed South Hang 2.46
wall
123 ore mixed North Main 2.46
124 ore mixed North Hang 2.46
wall
131 ore fresh rock South Main 2.77
132 ore fresh rock South Hang 2.77
wall
133 ore fresh rock North Main 2.77
134 ore fresh rock North Hang 2.77
wall
100 Waste oxide 2.24
200 Waste mixed 2.41
300 Waste fresh rock 2.75
400 Waste Landfill 1.76
Table 17-7 Density values adopted for the different rock types Block Model Parameters
17.10 Block Model Parameters

The block size used was 3 x 5 x 3 m, based on discussions with Carpathian. A block of this size would
be adequate for mine planning. The block model is rotated for better adjustment with the
mineralization.
The parameters are as follows Table 17-8:
178
Open Pit and UG Model

X Y Z
Minimum Coordinates 698235.758 8222231.93 153
Maximum Coordinates 699648.758 8224851.93 933
No. blocks 471 524 260
User Block Size 3 5 3
Rotation - 19.06542 - -
Extension 1413 2620 780
Table 17-8 Block model parameters Variography
17.11 Variography
Two different types of software were used to carry out the anisotropy analysis, GSLIB and GEMCOM.
A fan of variograms was studied, analyzing the anisotropy in intervals of 15, along the plane of the
mineralization. The best continuity was found along the azimuth 146, dip -33.8. Variography is very
poor at Riacho dos Machados. To obtain a better variogram, only core samples from Carpathian
drillholes were selected.
Semi-variograms were used for variogram modeling. Other types, like correlogram and relative
variogram, were also tested. The population of the main vein south was used to establish the
variographic model, since the populations obtained from the UG model or the HW vein produced
erratic variograms, which were difficult to model.
The variography parameters used in the kriging are listed on Table 17-9.
179
All zones
1st Azimuth 146.07
1st dip -33.83
2nd Az 42.92
2nd dip -18.75
3rd Azimuth 289.07
3rd dip -50
Nugget 0.55
Sill 0.1
Structure1 Range X 10
Range Y 10
Range Z 10
Sill 0.15
Structure2
Range X 60
Range Y 40
Range Z 18
Sill 0.2
Structure3
Range X 75
Range Y 50
Range Z 20
Search 1 40
Search 2 36
Search 3 20
Table 17-9 Variogram parameters
Figure 17-3 presents the down the hole variogram (used to identify the nugget effect) and three other
variograms, the first in the direction with best continuity, and the third to the poorest. All of the
variograms were calculated with a lag separation of 10 m, and using a tolerance on azimuth and dip of
15. All models are spherical. Search ratios normally are equivalent to 90% of the range of the
variogram.
180
3,846
Variogram - 01
1.40
1.20
1.00
5,579
3,228
Gamma(h)
0.80
0.60
0.40 Model
103
Variance
0.20
Data
0
0.00
0 20 40 60 80 100
Distance (m)
Figure 17-3 Variogram, calculated for 1 m composites
17.12 Kriging Strategy

Ordinary kriging was used for grade interpolation. The same strategy was used for both models.
Three passes were used, (Table 17-10) to successively interpolate grades with parameters of
decreasing requirements. Along with other considerations (discussed in the Section 17.14), these
passes were used to categorize the resources.
181
MRM - Kriging Parameters

Krig. 1 Krig. 2 Krig. 3
X 20 40 100
Y 18 36 75
Z 10 20 50
Min Nr octants 2 2 1
Max per octant 4 4 -
Min N Comp. 3 3 3
Max N Comp 12 12 12
Nr of discretizations 2x3x2 2x3x2 2x3x2
Classification Measured Indicated Inferred
Axis Direction
Azimuth Dip
146.07 -33.83
42.92 -18.75
289.07 -50
Table 17-10 Kriging strategy for RDM project
17.13 Block Model Construction

The sequence of block model construction in the GEMCOM software is the following:
Print the ore zone code from modeled solids and surfaces into blocks.
Print the densities into blocks according to the lithology.
Kriging of the Au grades.
Extract the blocks above surface.
Classify the resources into measured, indicated, and inferred.
17.14 Mineral Resource Classification

The classification methodology adopted by NCL follows:
Measured resources: blocks which have at least two different drillholes in the neighbourhood,
considering a distance corresponding to 50% of the range, which is defined as the distance where the
variogram reaches 90% of the variance (D90). An ellipsoid of 20x18x10 metres was used for this
purpose. The rock code of these intercepts must be same as the block being classified. Measured
blocks were defined only for the OP model.
Indicated resources: blocks which have at least two different drillholes in the neighbourhood,
considering a distance corresponding to 100% of the range (D90 distance). This represents an
182
ellipsoid of 40x36x20 metres. The rock code of these intercepts must be same as the block being
classified. The indicated blocks were classified using the second kriging pass. For the UG model, the
first pass also defined indicated resources. An additional criterion was used in order to take into
account the fact that the old pits are indicative of economic mineralization. For the area more intensely
mined, the outline of the pit bottom was projected by 20m along the plunge of 146, creating a solid.
Inferred blocks contained within this solid were upgraded to indicated resources.
Inferred resource: blocks estimated using a neighbourhood up to two and a half times the D90
distance (100 x 75 x 50 metres). A single drillhole is enough to estimate inferred resources.
17.15 Model Validation

To verify the results of the estimation, a set of checks were performed on the model for each area:
Visual validation of grades and the classification, comparing with the drilling.
Comparison with the previous sections and tabulations
Comparison using the drift analysis: compare the average grade of composites and kriged
values along the major axis of the deposit.
Drift analysis - Comparison across W-E - Gold
2
1.8
1.6
1.4
1.2
Au g/t
1 COMPOSITE
0.8 BLOCK MODEL

0.6
0.4
0.2
0
698800 698900 699000 699100 699200 699300 699400 699500 699600 699700
X coordinate
Figure 17-4 Floating window along West-East
183
Drift analysis - Comparison across S-N - Gold
2.5
1.5
Au g/t
COMPOSITE
1 BLOCK MODEL
0.5
0
8222000 8222200 8222400 8222600 8222800 8223000 8223200 8223400 8223600
Y coordinate
Figure 17-5 Floating window along South-North
Drift analysis - Comparison across height - Gold
2.5
2
Au g/t
1.5 COMPOSITE
BLOCK MODEL
1
0.5
0
550 600 650 700 750 800 850 900 950
Y coordinate
Figure 17-6 Floating window along levels (height)
17.16 Resource Reporting Criteria

The basic criteria followed in this estimation are as follows:
Cut-off based on costs and recovery taken from the studies perfomed for the Feasibility study
The open pit optimizer software Whittle was utilized to define the portions of the OP block model with
reasonable prospects of being economical by open pit methods.
184
All blocks of the OP model above 0.32 g/t Au cut-off and above the Whittle envelope were considered
resources.
The blocks of the UG model below Whittle envelope were investigated to define the portions with
reasonable prospects of being economical. The relationship between expected resources and
distance to infrastructure was used to define which zones could support the capital necessary to
develop the accesses. Inside these zones, blocks above 1 g/t Au cut-off were considered resources.
Parameters selected by NCL and used for Whittle optimization and cut-off definition are as
Figure 17-11 below:
Gold Price US$/oz 1100

Process and G&A (CIL) US$/ton 9.75
Mining Cost- Open Pit US$/ton 1.56
Mining Cost-Underground US$/ton 25
slope angle: as recommend by Golder
Metallurgical recovery-CIL % 90
Table 17-11 Parameters used for Whittle
The following cut-off grade values were chosen: 0.32 g/t for Open Pit resources, and 1.00 g/t for
Underground resources.
17.17 Results
Table 17-12 summarizes the mineral resources above 0.32 g/t Au for the OP model and 1.0g/t Au for
the UG model. Table 17-13 gives the grade/tonnage figures per cut-off for the OP model and
Table 17-14 that for the UG model.
Open Pit Cut off 0.32 g/t

Domain Measured Indicated Measured+Indicated Inferred
Ktons Au (g/t) Au (koz) kton Au (g/t) Au (koz) kton Au (g/t) Au (koz)
OXIDE 274 1.13 10.0 1.965 1.08 68.1 2.239 1.08 78.1 175 1.31 7.4
MIXED 219 1.29 9.0 1.515 1.35 65.8 1.734 1.34 74.8 64 1.32 2.7
FRESH ROCK 1.573 1.64 82.7 13.762 1.57 695.6 15.335 1.58 778.4 4.378 1.64 230.6
TOTAL 2.065 1.53 101.7 17.242 1.50 829.6 19.308 1.50 931.3 4.617 1.62 240.7
Underground Cut off 1 g/t

Total - - - 52 3.18 5.3 52 3.18 5.3 4.830 2.23 346.6
Total
Total 2.065 1.53 101.7 17.294 1.50 834.8 19.359 1.50 936.6 9.447 1.93 587.3
Table 17-12 Riacho dos Machados Mineral Resources Table
185
Cut-Off Measured + Inferred

Grade Indicated
Au (g/t) Ktonnes Au Au Ktonnes Au Au
(g/t) (Koz) (g/t) (Koz)
1.10 10,885 2.08 727.4 2,824 2.16 196.4
0.95 12,679 1.93 786.5 3,256 2.01 210.6
0.80 14,574 1.79 839.8 3,678 1.88 222.4
0.65 16,482 1.67 884.3 4,060 1.77 231.4
0.50 18,168 1.57 915.6 4,405 1.68 237.8
0.35 19,218 1.51 930.3 4,608 1.62 240.6
0.32 19,308 1.50 931.3 4,617 1.62 240.7
Table 17-13 Grade-Tonnage tables for OP mineral resources
Cut-Off Indicated Inferred

Grade
Au (g/t) Ktonnes Au Au Ktonnes Au Au
(g/t) (Koz) (g/t) (Koz)
2.00 47 3.32 5.0 2,721 2.82 246.7
1.75 51 3.21 5.2 3,267 2.65 278.3
1.50 51 3.20 5.2 3,782 2.51 305.2
1.25 51 3.19 5.2 4,252 2.39 326.7
1.00 52 3.15 5.3 4,830 2.23 346.3
0.79 52 3.15 5.3 4,941 2.20 349.5
Table 17-14 Grade-Tonnage tables for UG mineral resources
17.18 Dilution and Ore Losses

A diluted resource block model was used for pit optimization and reserves estimate. The resource
block model was originally built using the percentage technique, where the ore percent is stored for
every block and then used for reporting.
Within the ore zone occurs some internal waste, but because of Selective Mining Units (SMU) size,
some waste will be mined together with the ore. A statistical analysis was carried out to determine the
distribution of the width of these internal waste zones, concluding that two zones, one of about 350m
in extent and the other, about 90 m in extent, show excessive presence of internal waste zones
thinner than three meters.
For these zones a fully diluted block approach was applied, which means that the portion of the blocks
within the ore zone, at a certain estimated grade, is diluted with the rest of the block flagged as waste,
giving a final diluted grade for the block.
186
For the rest of the zones, waste corresponding to a maximum of 15% of the block was considered
possible to be mined selectively. Only blocks with ore percent lower than 85% were diluted.
Grade of the diluting material was estimated by inverse of squared distance technique. Composites up
to 3 m distance to the contact with mineralized zone were selected for this purpose. A capping value
of 0.3 g/t was used. Average grade of diluting material is estimated as 0.11 g/t.
With this approach a 22% dilution was obtained, but only a minor ore loss, lower than 1%, on the
contained gold.
Mining recovery, based on the applied SMU, has been set to 100%.
Figure 17-7 shows the two different areas that were used to limit those zones where was applied a
fully diluted criteria.
Figure 17-7 Areas for Dilution Criteria
187
17.19 Mineral Reserve Estimate

The mineral reserve estimate was completed under the supervision of Carlos Guzman of NCL Brasil
Ltda (NCL) an Independent Qualified Person for the purposes of NI 43-101. Additional information on
the mineral reserve and mining can be found in Section 17.19.5 and Section18.
17.19.1 Operating Parameters and Criteria

A mine plan was developed for the Riacho dos Machados project to process 2,555 million tonnes of
ore per year with a peak total material movement rate of 30.0 million tonnes per year. The mine is
scheduled to work seven days per week or 365 days per year. Each day will consist of three 8-hour
shifts. Four mining crews will cover the operation. Included in these operations will be normal drilling,
blasting, loading, hauling activities, as well as the supporting functions of dewatering, grade control
and equipment maintenance.
The current mining plan is based on exploiting the Riacho dos Machados sulphide gold deposit by
conventional open pit mining techniques using excavators of 5.0 cubic metre capacity and trucks with
a capacity of 40 tonnes for the ore in 6 metre passes, and 6.7 cubic metre capacity excavators with 40
tonnes trucks capacity for the waste in 12 m benches. This type of equipment is able to develop the
require productivity to achieve an annual total material movement of 30M tonnes and also to have
good mining selectivity with the minor excavators as defined by the grade control activities.
17.19.2 Pit Optimization

Whittle Four-X pit optimization software was applied in conjunction with Gemcom for the mining model
preparation and actual optimization runs.
The economic parameters assume a nominal 2.55Mtonnes per year treatment plant throughput rate.
This rate has been determined as optimal, based on the projects potential mineral inventory, its
capital requirements and operating cost profile.
17.19.2.1 Whittle Pit Optimization Model Construction

The Whittle Four-X model development was carried out using Gemcom software. Whittle Four-X uses
the amount of metal in a block for assessment, rather than the blocks grade value. The process
calculates the grade from the supplied tonnage and metal content, which are provided for each model
block. The metal content for each block is calculated using the grade estimate derived from the
uniform conditioning resource estimate.
188
17.19.2.2 Base Parameters

Table 17-15 summarizes the base case economic parameters used for Whittle Four-X economic
shells analysis and mine design.
The mining cost estimate for the pit optimization process is based on NCL estimate developed for
similar projects in Brazil and the results obtained from the PEA Technical Report (September 2009).
The estimated average life of project mining cost was separated into various components such as
fuel, explosives, tyres, parts, salaries etc. according to similar current operations in Brazil. This
resulted in the mining cost estimate of approximately US$1.40 per tonne shown in Table 17-15.
Additionally to the estimated average mining cost, a variable cost with depth was modelled and used
with the pit optimization process, according on what is shown in Table 17-15. The metal prices,
processing costs, refining costs, and processing recoveries were provided to NCL by Riacho dos
Machados personnel.
ECONOMICAL PARAMETERS
Item Unit
Average Mining Cost (for optimizing) US$/tonne mined 1.40
Processing Per Ore Tonne US$/t 8.50
Processing Per Ore Tonne (heap leached ore) US$/t 8.15
G&A US$/t 1.25
Base Case Gold Price US$/oz 950.00
Transport, Freight, Insurance, Refining US$/oz 15.00
Metallurgical Recovery % 90.00
Breakeven Cut-off Grade g/t 0.42
Internal Cut-off Grade g/t 0.37
Discount Rate % 5.00
Table 17-15 Lerch-Grossman Optimization Parameters
17.19.2.3 Slope Angles

Slope angles, varying from 29 to 52, were used for the optimization process. One ramp pass was
considered to calculate overall angle to east side of the pit. This information was provided by Golder
and summarize the values used.
189
SLOPES ANGLES FOR PIT OPTIMISATION
Zone Geomechanical Angle

Zone

Oxides FW_ZN01 29.4
Transition FW_ZN01 30.0
Fresh Rock FW_ZN01 33.7
Oxides HW_ZN02 (2) 34.1

Transition HW_ZN02 (2) 39.7
Fresh Rock HW_ZN02 (2) 50.0
Oxides HW_ZN03 (2) 34.1

Transition HW_ZN03 (2) 50.0
Fresh Rock HW_ZN03 (2) 50.0
Fresh Rock (1) HW_ZN03 (2) 52.0
(1) 100m under 620 level
(2) Overall angle with one ramp pass criteria
Table 17-16 Slopes Angles for Pit Optimization
190
Zn02
Hanginwall
Zn01
Footwall
Zn03
Hanginwall
Figure 17-8 Slopes Angles for Pit Optimization
17.19.2.4 Whittle Four-X Economic Shells Results

Table 17-17 and Table 17-18 show the results of the final optimization run. Pit shells were generated
for several gold prices, from US$190/oz to US$1,140/oz. Measured and indicated resources were
used as only these can be converted into reserves. Inferred mineral resources are not converted to
reserves and are instead treated as waste for mine planning purposes.
The optimization was generated considering only gold adding value to the resource model blocks.
Physically analysing the obtained shells, three sectors can be identified, named as north pit, central pit
and south pit. The three of them join together in the final geometry.
The NPV columns of Table 17-17 and Table 17-18 represent the best and worst operational net
present value reported by the optimization system, for an ore rate of 2,550 ktonnes per year and 8%
discount rate. The best corresponds to the maximum value that could be obtained if one economic
pit is mined after the other. The worst is the case if each single pit is mined bench by bench in
descending order, without considering previous shells.
191
From the table it can be seen that up to shell number 11, generated at a gold price of US$380 per
ounce and contained resources of 963 K tonnes at 1.69 g/t gold, the NPV curves increase moderately
and together for the first 43 Koz of recovered gold and at a strip ratio of 3.25 to 1.
From shell number 12 up to shell number 14, generated at a gold price of US$437 per ounce, a big
increase on the ore tonnes to 4,490 K tonnes, with a increase of the strip ratio to 4.12 to 1, decrease
of the mean grade to 1.46 g/t gold and a minimum difference between the NPV curves of US$1.5 M.
From shell number 15 up to shell number 23, generated at a gold price of US$608 per ounce, a
constant and moderate increase on the ore tonnes to 11,211 K tonnes, with a increase of the strip
ratio to 4.88 to 1, decrease of the mean grade to 1.30 g/t gold and a minimum difference between the
NPV curves of US$13.1 M.
From shell number 24 up to shell number 41, this last one generated at the evaluating gold price of
US$950 per ounce, there is a small increase in the average NPV for a total contained resource of
21,274 M tonnes of ore and recovered gold of 757 K ounces.
Pit 41, obtained for a gold price of US$950 per ounce, was then the selected shell used for final pit
design. Pit 41 defines a more comfortable scenario of recovered gold, with a strip ratio lower than 6.9
to 1 and incremental costs at about US$942.5 per ounce.
It is important to note that the parameters shown Table 17-18 are initial estimates, done at the
beginning of the project, for the purpose of starting the design process. They are not the final
economic parameters developed for this study, which are discussed in Section 18.1.8.
192
Table 17-17 Lerch-Grossman Economic Shells Results (1/2)
PIT DESIGN PARAMETERS FOR RDM PROJECT
Haul Road Width 20m

Haul Road Grade 10%
Bench Height 6m
Stacked Bench Height with 2 Benches Stacked 12m (waste areas)
Nominal Minimum Mining Phase Width 70m
Batter Angle as per geotechnical domains
Berm Width as per geotechnical domains
Rock Geomechanical Single Bench Double Bench Batter Angle Double Berm Interramp Angle Overall
Zone Heigth Heigth
One ramp pass Two ramp passes
criteria criteria
m m m
Oxides FW_ZN01 6 12 40.0 7.0 29.4 28.5 27.6
Transition FW_ZN01 6 12 40.0 6.5 30.0 29.0 28.1
Fresh Rock FW_ZN01 6 12 45.0 6.0 33.7 32.5 31.4
Oxides HW_ZN02 6 12 55.0 8.5 35.4 34.1 32.9

Transition HW_ZN02 6 12 65.0 8.0 41.4 39.7 38.2
Fresh Rock HW_ZN02 6 12 75.0 6.0 52.5 50.0 47.8
Oxides HW_ZN03 6 12 55.0 8.5 35.4 34.1 32.9

Transition HW_ZN03 6 12 75.0 6.0 52.5 50.0 47.8
Fresh Rock HW_ZN03 6 12 75.0 6.0 52.5 50.0 47.8
Fresh Rock (1) HW_ZN03 6 18 75.0 8.0 54.5 52.0 49.6
(1) 100m under 620 level
Table 17-18 Lerch-Grossman Economic Shells Results (2/2)
193
17.19.3 Open Pit Design

17.19.3.1 Final Pit Designs
The final pit design was based on the economic shell generated at US$950 per ounce of gold with
variable slopes angle according to geotechnical domains recommended by Golder, ranging from 39
to 56. Table 17-18 shows the key open pit design parameters.
The road width of 20 metres is to accommodate the selected 40 tonne trucks. NCL used the 10% road
gradient, which is common in the industry for these types of trucks. The last three benches were
designed with a ramp of 15 m wide.
The current mine plan is designed with 6m benches stacked to 12 metres (i.e. double benching) for
the fresh rock material. Mining costs for this report are based on blasting 12 m benches for the waste
zones and 6m for the ore, to assure a good selectivity. To improve selectivity at the edges of the ore
zone, the 6m slice can be mined in two 3m passes. A grade control procedure that utilizes RC drilling
will be used to define the internal waste zones and the contacts between the ore and the host rock.
The pit design considers a single exit on the east side of the pit which provides access to the ROM
pad area, primary crusher, and the waste storage area. The final pit is 1.8 km long in the north-south
direction and 0.6 km wide in the east-west direction. The highest wall is about 270 metres on the
south-east side. The total area impacted by the pit is about 92 hectares. Figure 17-9 shows the final
pit design.
194
Plant
Main
facilities
Bottom Pit
645 Level Pit Exit 877 Level
Waste Dump
Area
Figure 17-9 Final Pit Design
17.19.3.2 Mining Phases Designs

NCL designed a set of six mining phases for the Riacho dos Machados Project. Figure 17-10 shows
the phase outlines on the 801 mining bench and Figure 17-11 to Figure 17-13 show sections on
different orientations. Figures 17-14 to 17-16 show the different mining phases.
195
Mining Phases
Plant view 801 bench
Ph01
Ph03
Ph05
Ph06
Ph04
Ph02
Figure 17-10 Phases Design on 801 Bench
196
Mining Phases
Central Section 10600
Ph05
Ph01
Ph03
Ph06
Figure 17-11 Phases Design on North Section
197
Mining Phases
Central Section 10375
Ph01
Ph03
Ph05
Ph06
Figure 17-12 Phases Design on Central Section
198
Mining Phases
South Section 9825
Ph02
Ph04
Ph05
Ph06
Figure 17-13 Phases Design on South Section
199
Phase 01 Phase 02
Figure 17-14 Mining Phases 01 & 02
200
Phase 03 Phase 04
201
Phase 05 Phase 06
Phase 1 targets the ore in the highest grade and lowest strip ratio in the northern area of the mine,
down to 800 m elevation.
Phase 2 corresponds to an initial pit at the central-south area, down to 750 m elevation.
Phase 3 corresponds to a expansion from Phase 1 down to 750 m elevation.
Phase 4 corresponds to a expansion from Phase 2 down to 700 m elevation.
Phase 5 joins together the north pit with the south pit and deeps down to 700 m elevation at the
centre.
Phase 6 corresponds to the final expansion at the east and deeps down to the final configuration at
645 m elevation.
17.19.3.3 Tabulation of Pit Contained Resources

Table 17-19 summarizes the pit contained resources for the final design pit at several different gold
cut-off grades, and is for the individual mining phases. The tables include only measured and
202
indicated resources using the updated January 2011 block model, inferred is considered as waste
material.
At a 0.37% cut-off grade, the final pit contains 20.9M tonnes at a gold grade of 1.24 g/t and 830,000
oz of gold.
RESOURCES CONTAINED IN FINAL PIT AT VARIOUS CUTOFF GRADES
Ore Marginal Ore Waste

Total ktonnes Strip Ratio
Mining Phases ktonnes Au (g/t) Sum of Oz ktonnes Au (g/t) Sum of Oz ktonnes
Final Pit
COG 1.20 13,575.17 1.59 692.81 - - - 494.00 14,069.17
COG 0.80 739.19 1.08 25.59 - - - 118.98 858.18
COG 0.50 3,102.41 0.61 61.03 720.47 0.53 12.38 172.75 3,995.63
COG 0.37 1,290.83 0.44 18.09 1,438.07 0.43 20.07 123.01 2,851.91
Wa s te 163,386.45 163,386.45
SubTotal 18,707.60 1.33 797.51 2,158.55 0.47 32.46 164,295.19 185,161.34
Total Ore+Marginal Ore 20,866.15 1.24 829.97 7.87
Table 17-19 Resources in Final Pit at Various Cut-off Grades
NCL does not consider Table 17-19 and Table 17-20 a statement of potential mineable reserves.
They are included to provide a distribution of ore grades in the pit and various phases. The
mineral reserve is based on the mine production schedule and is shown in Table 17-21.
203
RESOURCES CONTAINED IN MINING PHASES AT VARIOUS CUTOFF GRADES
Ore Marginal Ore Waste

Total ktonnes Strip Ratio
Mining Phases ktonnes Au (g/t) Sum of Oz ktonnes Au (g/t) Sum of Oz ktonnes
Ph01
COG 1.20 927.04 1.62 48.17 - - - 92.06 1,019.10
COG 0.80 2.87 0.90 0.08 - - - 19.62 22.49
COG 0.50 153.78 0.63 3.10 72.55 0.53 1.24 33.49 259.81
COG 0.37 - - - 166.78 0.43 2.33 16.65 183.43
Wa s te - - - - - - 9,597.31 9,597.31
Subtotal Ph01 1,083.68 1.47 51.36 239.33 0.46 3.57 9,759.14 11,082.14
Ph02
COG 1.2 2,972.91 1.50 143.52 - - - 20.83 2,993.74
COG 0.8 90.74 1.13 3.30 - - - 17.63 108.37
COG 0.5 461.74 0.63 9.41 248.54 0.53 4.27 13.72 724.00
COG 0.37 - - - 541.57 0.43 7.55 14.55 556.12
Wa s te - - - - - - 30,256.08 30,256.08
Subtotal Ph02 3,525.39 1.38 156.24 790.10 0.47 11.82 30,322.82 34,638.32
Ph03
COG 1.2 1,532.13 1.69 83.23 - - - 20.69 1,552.82
COG 0.8 142.64 1.07 4.91 - - - 42.12 184.76
COG 0.5 361.35 0.63 7.37 213.77 0.53 3.67 26.05 601.17
COG 0.37 - - - 457.97 0.43 6.39 16.71 474.69
Wa s te - - - - - - 17,797.79 17,797.79
Subtotal Ph03 2,036.12 1.46 95.51 671.74 0.47 10.06 17,903.36 20,611.22
Ph04
COG 1.2 1,381.79 1.38 61.53 - - - 23.70 1,405.49
COG 0.8 314.42 1.10 11.07 - - - 12.10 326.52
COG 0.5 468.18 0.60 9.11 70.42 0.54 1.21 15.11 553.70
COG 0.37 260.54 0.43 3.63 126.56 0.43 1.77 9.83 396.93
Wa s te - - - - - - 33,099.93 33,099.93
Subtotal Ph04 2,424.92 1.09 85.34 196.97 0.47 2.98 33,160.69 35,782.58
Ph05
COG 1.2 3,919.86 1.55 194.75 - - - 69.41 3,989.27
COG 0.8 179.20 1.02 5.88 - - - 18.63 197.82
COG 0.5 1,127.85 0.60 21.87 115.21 0.54 2.00 26.40 1,269.46
COG 0.37 667.16 0.44 9.35 145.20 0.43 2.03 17.85 830.20
Wa s te - - - - - - 37,816.73 37,816.73
Subtotal Ph05 5,894.06 1.22 231.84 260.40 0.48 4.03 37,949.02 44,103.49
Ph06
COG 1.2 2,841.45 1.77 161.61 - - - 267.30 3,108.76
COG 0.8 9.34 1.13 0.34 - - - 8.88 18.22
COG 0.5 529.51 0.60 10.18 - - - 57.98 587.49
COG 0.37 363.13 0.44 5.11 - - - 47.41 410.54
Wa s te - - - - - - 34,818.59 34,818.59
Subtotal Ph06 3,743.43 1.47 177.23 - - - 35,200.16 38,943.59
Total
Subtotal 18,707.60 1.33 797.51 2,158.55 0.47 32.46 164,295.19 185,161.34
Table 17-20: Resources Contained in Mining Phases at Various Cut-off Grades
204
17.19.4 Mine Production Schedule

A mine production schedule was developed to show the ore tonnes, metal grades, total material and
waste material by year throughout of the life of the mine. The distribution of ore and waste contained
in each of the mining phases was used to develop the schedule, assuring that criteria such as
continuous ore exposure, mining accessibility, and consistent material movements were met.
NCL used an in-house developed system to evaluate several potential production mine schedules.
Required annual ore tonnes and user specified annual total material movements are provided to the
algorithm, which then calculates the mine schedule. Several runs at various proposed total material
movement schedules were done to determine a good production schedule strategy. It is important to
note that this program is not a simulation package, but a tool for calculation of the mine schedule and
haulage profiles for a given set of phases and constraints that must be set by the user.
The mine plan developed by NCL does not include any special provisions for dilution because the
resource block model is considered as already diluted. NCL considered a 100% ore mining recovery
due to the continuity characteristics of the ore. Nevertheless, careful grade control must be carried out
during mining to minimise misplaced ore due to the important effect of head grade on gold recovery.
These efforts should include the following standard procedures:
Implement an intense and systematic program of sampling, mapping, laboratory analyses,

and reporting.
Utilize specialized in-pit, bench sampling drills for sampling well ahead of production
drilling and blasting.
Use of excavators and benches no higher than 5m (as presently planned) to selectively
mine ore zones.
Maintain top laboratory staff, equipment, and procedures to provide accurate and timely
assay reporting.
Utilize trained geologists and technicians to work with excavator operators in identifying,
marking, and selectively mining and dispatching ore and waste.
The mine plan developed by NCL considered the diluted model specified above, which considers an
average of 22% dilution.
205
NCL considered a 100% ore mining recovery because of the identified sharp contacts between ore
and waste and because the main ore zone has been well delineate, and the grade control program
that will be implemented.
A grade of 0.37 g/t Au corresponds to the marginal cut-off that defines the separation between ore
and waste. NCL used an operational cut-off, higher than the marginal cut-off, as a strategy to improve
the grade of the plant feed during the first two years of production. This strategy could not be
extended for a longer period of time because of the increase of the total material mined. The material
with grades between the marginal cut-off and the operational cut-off was considered to be stockpiled
for later re-handling.
Table 17-21 shows the mine production of ore for each mining year. The schedule is based on 2,555
ktonnes of ore per year for plant feed. Year 3 considers a plant feed of 3,025 ktonnes to maintain the
annual gold production above 90,000 per year. The table also shows the total material movement
from the mine by year, which peaks at 30.0M tonnes per year during commercial production. The limit
on the ore production is the number of benches that is possible to mine in a year in any single phase.
MINE PRODUCTION SCHEDULE
Ore Low Grade Ore

Waste Total
Mining Year Cut-Off In Situ Au Cut-Off Strip Ratio
Ktonnes Au (g/t) Ktonnes Au (g/t) Au (koz) Ktonnes Ktonnes
Au (g/t) (koz) Au (g/t)
PP 0.56 704 1.195 27.0 0.37-0.56 354 0.462 5.3 17,942 19,000 16.96
Y01 0.56 1,836 1.356 80.1 0.37-0.56 425 0.463 6.3 27,739 30,000 12.27
Y02 0.58 2,742 1.401 123.5 0.37-0.58 864 0.475 13.2 26,394 30,000 7.32
Y03 0.56 2,420 1.388 108.0 0.37-0.56 516 0.463 7.7 27,065 30,000 9.22
Y04 0.37 2,494 1.163 93.3 0.37-0.37 - - - 27,506 30,000 11.03
Y05 0.37 2,555 1.224 100.5 0.37-0.37 - - - 17,269 19,824 6.76
Y06 0.37 2,555 1.403 115.3 0.37-0.37 - - - 14,051 16,606 5.50
Y07 0.37 2,555 1.285 105.6 0.37-0.37 - - - 5,815 8,370 2.28
Y08 0.37 846 1.632 44.4 0.37-0.37 - - - 515 1,361 0.61
Y09 0.37 - - - 0.37-0.37 - - - - - -
Y10 0.37 - - - 0.37-0.37 - - - - - -
Total 18,707 1.326 797.6 2,159 0.468 32.5 164,295 185,161 7.87
Table 17-21 Mine Production Schedule
One waste rock storage area at the south east of the pit was designed for the Riacho dos Machados
Project. Details on the location construction sequence can be found on Section 18.1.3.
The total of the mined ore will be hauled to a stockpile area close by the primary crusher for later
rehandle and blending to feed the processing plant. It is been considered that 15% of the total plant
feed will be rehandled and 85% for direct tipping.
206
The preproduction period requires the mining of 19.0 M tonnes of total material to expose sufficient
ore to make it a reliable ore source for the start of commercial production in Year 1. The preproduction
period will require approximately 15 months. The ore mined during preproduction will be stockpiled in
the ROM-pad area located on the waste storage area and near to the primary crusher to make up part
of Year 1 ore production. Contractors were considered to handle 40% of the waste material during the
pre-production period.
The plant feed is shown in Table 17-22. It shows that Year 1 ore to the plant is made up of material
mined during preproduction and Year 1.
PLANT FEED SCHEDULE
Plant Feed
Mined Ore (direct to
Stockpile Rehandle Total Plant Feed
plant)
Mining Year
In situ Au Gold Recovered
Ktonnes Au (g/t) Ktonnes Au (g/t) Ktonnes Au (g/t)
(Koz) Recovery (%) Gold (koz)
Y01 (*) 1,836 1.25 676 1.20 2,512 1.31 106 90 95

Y02 2,555 1.34 - - 2,555 1.40 115 90 104
Y03 2,369 1.32 186 1.37 2,555 1.39 114 90 103
Y04 2,494 1.16 531 0.61 3,025 1.07 104 90 93
Y05 2,555 1.22 - - 2,555 1.22 101 90 90
Y06 2,555 1.40 - - 2,555 1.40 115 90 104
Y07 2,555 1.29 - - 2,555 1.29 106 90 95
Y08 846 1.63 1,708 0.47 2,554 0.85 70 90 63
Y09 - - - - - - - - -
Y10 - - - -
Total 17,766 1.30 3,100 0.70 20,866 1.24 830 90 747
(*) Year 1 considers one month at 80% throughput and 11 months at 100% throughput (7,000 tonnes per day)
The plant feed rates for Year 1 corresponds to the estimated ramp-up of the processing plant,
provided to NCL by Carpathian personnel.
17.19.5 Mineral Reserve

The mineral resource calculated in January 2011 was used for the conversion to mineral reserve
described below.
Optimized shells obtained only with measured and indicated resources were selected as guides for
mine designs. The mineral reserves are defined as diluted mineral resources contained by the pit,
above the internal cut-off grade of 0.37 g/t gold. Contained measured resources are transformed to
proven reserves and contained indicated resources are transformed into probable reserves. Inferred
207
mineral resources are not converted to mineral reserves and are instead treated as waste for mine
planning purposes.
It is the opinion of the Qualified Person of NCL that the mine production schedule defines the mineral
reserve for a mining project. The total mineral reserve for the Riacho dos Machados project amounts
to 20.9M tonnes at a gold grade of 1.24 g/t and 830,00 oz contained. The following Table 17-23
summarizes the mineral reserve estimate.
RIACHO DOS MACHADOS MINERAL RESERVES REPORT
Category M tonnes Gol d (g/t) Gol d Conta i ned

(Koz)
Proven 2.30 1.30 97.50
Probable 18.50 1.23 732.70
Total 20.90 1.24 830.20
(1) Based on a price for Gold of US$950.00 per ounce
(2) The Mineral Reserves as set out in the table above have been estimated by Carlos
Guzmn of NCL Brasil Ltda, who is a Qualified Person under NI 43-101 and Member of
the AusIMM.
(3) Numbers may not add up due to rounding.
Table 17-23 Proven & Probable Mineral Reserves current as at March 2011
All mining modifiers, including aspects relating to metallurgy, processing, infrastructure and/or mining
have been included in the Mineral Reserve determination. Environmental, permitting, legal, title,
taxation, socio-economic, marketing, and or political factors have also been considered, where
relevant, and are discussed in various sections of this report (refer to Sections 4, 16 and 18).
208
18. OTHER RELEVANT DATA AND INFORMATION

18.1 Mining Study
18.1.1 Mine Design
A mine plan was developed for the Riacho dos Machados project to process 2,555 million tonnes of
ore per year with a peak total material movement rate of 30.0 million tonnes per year. The mine is
scheduled to work seven days per week or 365 days per year. Each day will consist of three 8-hour
shifts. Four mining crews will cover the operation. Included in these operations will be normal drilling,
blasting, loading, hauling activities, as well as the supporting functions of dewatering, grade control
and equipment maintenance.
The current mining plan is based on exploiting the Riacho dos Machados sulphide gold deposit by
conventional open pit mining techniques using excavators of 5.0 cubic metre capacity and trucks with
a capacity of 40 tonnes for the ore in 6 metre passes, and 6.7 cubic metre capacity excavators with 40
tonnes trucks capacity for the waste in 12 m benches. This type of equipment is able to develop the
require productivity to achieve an annual total material movement of 30M tonnes and also to have
good mining selectivity with the minor excavators as defined by the grade control activities. This size
is consider small for a project of this size, i.e. peak monthly material movements of 2.5 million tonnes
(30 million tonnes per year); however, the current situation at mines in Brazil is that contractors are
using this type of equipment at lower costs for material movement up to about the same mining rate.
The advantage of the smaller equipment is that it provides flexibility for mining, most of them are
fabricated in Brazil, and does not have the large transportation costs and import duties associated
with large offshore equipment and spare parts. This aspect, combined with availability of spare parts,
low local labour rates and same type of fleets currently operating in other projects, make the use of
this equipment an attractive alternative to traditional larger capacity open pit mining equipment.
The fleet is complemented with drilling rigs for ore and waste, as 64% of material is defined as hard
rock.
Auxiliary equipment includes track dozers, wheel dozers, motor graders and water truck. Additionally
a reverse circulation drill rig is included for grade control purposes.
18.1.2 Open Pit Design

Using the resource block model, the pit slope recommendations, and the expected operating costs
based on the mining and milling methods selected and the results of the Updated Bankable Feasibility
209
Study, an open pit was designed, a mine production schedule was developed and the mineral reserve
was estimated, as previously detailed in Section 17 of this report.
18.1.3 Mine Production Schedule

A mine production schedule was developed to show the ore tonnes, metal grades, total material and
waste material by year throughout of the life of the mine. The distribution of ore and waste contained
in each of the mining phases was used to develop the schedule, assuring that criteria such as
continuous ore exposure, mining accessibility, and consistent material movements were met.
Table 18-1 shows the mine production of ore for each mining year. The schedule is based on 2.555
million tonnes per year to the processing plant. The table also shows the total material movement
from the mine by year, which peaks at 30.0 million tonnes per year during commercial production. The
limit on the ore production is the number of benches that it is possible to mine in a year in a single
phase, or vertical development per phase. Figure 18-1, Figure 18-2 and Figure 18-3 show the mine
schedules.
Ore Low Grade Ore

Waste Total
Mining Year Cut-Off In Situ Au Cut-Off Strip Ratio
Ktonnes Au (g/t) Ktonnes Au (g/t) Au (koz) Ktonnes Ktonnes
Au (g/t) (koz) Au (g/t)
PP 0.56 704 1.195 27.0 0.37-0.56 354 0.462 5.3 17,942 19,000 16.96
Y01 0.56 1,836 1.356 80.1 0.37-0.56 425 0.463 6.3 27,739 30,000 12.27
Y02 0.58 2,742 1.401 123.5 0.37-0.58 864 0.475 13.2 26,394 30,000 7.32
Y03 0.56 2,420 1.388 108.0 0.37-0.56 516 0.463 7.7 27,065 30,000 9.22
Y04 0.37 2,494 1.163 93.3 0.37-0.37 - - - 27,506 30,000 11.03
Y05 0.37 2,555 1.224 100.5 0.37-0.37 - - - 17,269 19,824 6.76
Y06 0.37 2,555 1.403 115.3 0.37-0.37 - - - 14,051 16,606 5.50
Y07 0.37 2,555 1.285 105.6 0.37-0.37 - - - 5,815 8,370 2.28
Y08 0.37 846 1.632 44.4 0.37-0.37 - - - 515 1,361 0.61
Y09 0.37 - - - 0.37-0.37 - - - - - -
Y10 0.37 - - - 0.37-0.37 - - - - - -
Total 18,707 1.326 797.6 2,159 0.468 32.5 164,295 185,161 7.87
Table 18-1 Mine Production Schedule
The total of the mined ore will be hauled to a stockpile area close by the primary crusher for later
rehandle and blending to feed the processing plant. It is been considered that 15% of the total plant
feed will be re-handled and 85% for direct tipping.
210
MRDM Mine Schedule

35,000
30,000
25,000
20,000
Ktonnes
15,000
10,000
5,000
-
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Waste 17,942 27,739 26,394 27,065 27,506 17,269 14,051 5,815 515 - -
Marginal Ore 354 425 864 516 - - - - - - -
Ore (> cof) 704 1,836 2,742 2,420 2,494 2,555 2,555 2,555 846 - -
Figure 18-1 MRDM Mine Schedule
Total Material Handling

by mining phases
35,000
30,000
25,000
Ktonnes
20,000
15,000
10,000
5,000
-
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Phase 01 8,000 3,082
Phase 02 8,000 13,200 9,500 3,938
Phase 03 3,000 8,200 8,100 1,311
Phase 04 5,000 10,900 9,600 8,050 2,233
Phase 05 518 1,500 11,000 14,200 10,192 5,800 894
Phase 06 4,151 7,750 7,400 10,806 7,476 1,361
Figure 18-2 MRDM Mine Schedule Total Material Handling by Mining Phases
211
Total Mined Benches

by mining phases
18.00
16.00
14.00
benches by period
12.00
10.00
8.00
6.00
4.00
2.00
-
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Phase 01 16.50 5.50
Phase 02 8.80 6.00 6.00 6.30
Phase 03 7.00 8.00 8.00 3.90
Phase 04 8.30 8.00 8.00 8.00 5.60
Phase 05 5.90 3.00 8.00 8.00 6.80 7.60 2.70
Phase 06 10.50 8.20 5.40 7.90 7.20 4.80
Figure 18-3 MRDM Mine Schedule Total Mined Benches by Mining Phases
The preproduction period requires the mining of 19.0 M tonnes of total material to expose sufficient
ore to make it a reliable ore source for the start of commercial production in Year 1. The preproduction
period will require approximately 15 months.
The ore mined during preproduction will be stockpiled in the ROM-pad area located on waste storage
area and near to the primary crusher to make up part of Year 1 ore production.
Figures 18-4, 18-5 and 18-6 show snap shots per year from the mine schedule.
PP Y01 Y02
Figure 18-4 MRDM Mine Schedule Mining Photos PP to Y02
212
Y03 Y04 Y05
Figure 18-5 MRDM Mine Schedule Mining Photos Y03 to Y05
Y06 Y07 Y08
Figure 18-6 MRDM Mine Schedule Mining Photo Y06 to Y08
The plant feed is shown on Table 18-2. It shows that Year 1 ore to the plant is made up of material
mined during preproduction and Year 1. The plant feed rate for Year 1 considers a ramp-up period,
provided by Riacho dos Machados personnel.
213
PLANT FEED SCHEDULE
Plant Feed
Mined Ore (direct to
Stockpile Rehandle Total Plant Feed
plant)
Mining Year
In situ Au Gold Recovered
Ktonnes Au (g/t) Ktonnes Au (g/t) Ktonnes Au (g/t)
(Koz) Recovery (%) Gold (koz)
Y01 (*) 1,836 1.25 676 1.20 2,512 1.31 106 90 95

Y02 2,555 1.34 - - 2,555 1.40 115 90 104
Y03 2,369 1.32 186 1.37 2,555 1.39 114 90 103
Y04 2,494 1.16 531 0.61 3,025 1.07 104 90 93
Y05 2,555 1.22 - - 2,555 1.22 101 90 90
Y06 2,555 1.40 - - 2,555 1.40 115 90 104
Y07 2,555 1.29 - - 2,555 1.29 106 90 95
Y08 846 1.63 1,708 0.47 2,554 0.85 70 90 63
Y09 - - - - - - - - -
Y10 - - - -
Total 17,766 1.30 3,100 0.70 20,866 1.24 830 90 747
(*) Year 1 considers one month at 80% throughput and 11 months at 100% throughput (7,000 tonnes per day)
18.1.4 Waste Rock Stockpile

One waste rock storage area at the east of the pit was designed for the RDM by Golder. The final
configuration is shown in Figure 18-7.
The total extent of the pile is 2.0 Km in the east-west direction by 1.2 Km in the north-south direction,
covering a total area of approximate 152 hectares. The total height is 130 m, from 900 m RL to 1030
m RL.
The piles were designed in 10m lifts. Each lift is constructed at the approximate angle of repose of
36. A 10 m set-back between two 10 m lifts maintains the overall angle at 28 to facilitate
reclamation and long term stability. A constant 2.2 tonnes/m3 loose density was used, based on a
30% swell factor for the compacted material in the pile.
214
Pit Exit 877 Level
Top Waste Dump

1030 Level
Figure 18-7 Waste Dump Configuration
The construction sequence of the waste storage areas was always considered from bottom to top.
The pile was divided into sections, because of the big horizontal extension of the full area; and then
the capacity of each section was calculated every 10 m lift. Using NCLs in-house developed system,
a construction schedule was performed for these sections to smooth the truck fleet. The general
applied strategy was to reduce long horizontal and uphill hauling distances within the waste storage
area when mining occurs at high depths in the pit.
The designed piles cover the total storage requirement of 164 million tonnes of waste material
scheduled in the mine production plan.
18.1.5 Mine Equipment

Mine equipment requirements were calculated based on the annual mine production schedule, the
mine work schedule, and equipment annual production capacity estimates.
215
Table 18-3 provides a summary of the peak number of units required for commercial production.
Table 18-4 provides the fleet requirements by year during the mine life. This represents the equipment
necessary to perform the following duties:
Mine and transport ore to the ROM-pad area. Mine and transport waste material from the
pit to the appropriate storage areas.
Maintain all the mine work areas, in-pit haul roads, and external haul roads. Also maintain
the waste storage areas.
Rehandle the ore (load, transport and auxiliary equipment) from the ROM-pad to feed the
primary crusher.
A strategy adopted, together with Riacho dos Machados personnel, was to mine a portion of PP waste
material with contractors mainly during owner equipments delivery time. To add, this strategy will
permit to control the mine ramp up operations with an adequate training system. Considering this, it
was estimated the equipment requirement to a maximum of 12 M tonnes for preproduction period of
total mined material and absorb the difference with a mining contractor.
Topsoil striping and disposal is considered to be developed by a contractor, with minor equipment,
according to the mine necessities.
PEAK FLEET REQUIREMENTS FOR FIRST YEAR AND COMMERCIAL PRODUCTION
Commercial
Equipment Type: Preproduction
Production
Atlascopco Explorac R50 1.0 2.0
Atlascopco ROC L8-30 1.0 3.0
Liebherr 984C (5.0 cu. m) ore 1.0 2.0
Liebherr L580 (4.0 cu. m) 1.0 1.0
Liebherr 984C (6.7 cu. m) waste 1.0 4.0
Scania Truck (40ton) 11.0 42.0
CATD9T Track Dozer 1.0 3.0
CAT160M Grader 1.0 2.0
Scania Water Truck (20000 liter) 1.0 3.0
Table 18-3 Peak Fleet Requirements for First Year and Commercial Production
216
MINE MAJOR EQUIPMENT FLEET REQUIREMENT
Time Period
Equipment Type:
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Atlascopco Explorac R50 1.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.0 - -
Atlascopco ROC L8-30 1.0 1.0 3.0 3.0 3.0 3.0 3.0 2.0 2.0 - -
Liebherr 984C (5.0 cu. m) ore 1.0 2.0 2.0 2.0 2.0 2.0 2.0 1.0 1.0 - -
Liebherr L580 (4.0 cu. m) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 - -
Liebherr 984C (6.7 cu. m) waste 1.0 4.0 4.0 4.0 4.0 3.0 2.0 1.0 - - -
Scania Truck (40ton) 11.0 40.0 39.0 41.0 42.0 34.0 32.0 17.0 12.0 - -
CATD9T Track Dozer 1.0 3.0 3.0 3.0 3.0 3.0 2.0 2.0 1.0 - -
CAT160M Grader 1.0 2.0 2.0 2.0 2.0 2.0 1.0 1.0 1.0 - -
Scania Water Truck (20000 liter) 1.0 3.0 3.0 3.0 3.0 3.0 2.0 2.0 1.0 - -
Table 18-4 Mine Major Equipment Fleet Requirement
18.1.5.1 Equipment Selection Criteria

The study is based on operating the Riacho dos Machados mine with excavators of 5.0 m3 capacity
and trucks with a capacity of 40 tonnes for the ore in 6 metre passes, and 6.7 m3 capacity excavators
with 40 tonnes trucks capacity for the waste in 12 m benches. This type of equipment is able to
develop the require productivity to achieve an annual total material movement of 30 M tonnes and
also to have good mining selectivity with the minor excavators as defined by the grade control
activities. Excavators for ore and waste are the same model and but with different bucket capacity to
give to loading operation an adequate flexibility during operation.
This fleet will be complemented with drilling rigs capable to drill 4 and 6 diameter blast holes for
ore and waste respectively, as 100% of material is defined as hard rock.
As per the known dip and variability of the ore, the bench height for drilling and blasting was
considered as 6m, and an additional 50% of the material scheduled as ore was considered to be
drilled and blasted with ore parameters. Alternatively for waste, as per the high strip ratio of the pit,
there will be large areas of known waste material, so 12 m benches is the selected height for waste
drilling and blasting. The loading activities was also considered to be in this differential bench heights
for ore and waste, for obtaining the require selectivity and high productivity.
Auxiliary equipment includes track dozers, wheel dozers, motor graders and water truck. Additionally
a reverse circulation drill rig is included for grade control purposes.
The mine fleet also includes the necessary equipment to do the rehandle of the ore in the ROM-pad
area and feed the primary crusher. This operation will be carried out with a 4.4 m3 front-end-loader
and the same 40 tonne trucks operating at the mine. This type of front-end-loader is oversized for the
217
rehandle activity, but it was considered to be used as a support loading unit at the mine, capable to
load the same type trucks than the main excavator units.
18.1.5.2 Production Fleet Requirement

The mine major equipment was selected based on the mine production requirements shown above on
Table 18-4. Based on the schedule, 15 months of preproduction activity and 8 years of commercial
mining activity will be necessary to mine to total reserves of the project.
Work during the preproduction period will include preparing roads, preparing bench openings and
preproduction stripping, all currently being developed by a mining contractor. Total material mined
during preproduction is 19 million tonnes.
Topsoil stripping and disposal is considered to be developed by a contractor, with minor equipment,
according to the mine necessities.
Table 18-4 also shows an amount of the ore that will be handled twice by the mining equipment.
Rehandle ore tonnes in Year 1 correspond to those mined during preproduction and Year 1 to
complete the plant feed requirement.
A strategy adopted, together with Riacho dos Machados personnel, was to mine a portion of PP waste
material with contractors mainly during owner equipments delivery time. To add, this strategy will
permit to control the mine ramp up operations with an adequate training system. Considering this, it
was estimated the equipment requirement to a maximum of 12 million tonnes for preproduction period
of total mined material and absorb the difference with a mining contractor.
The maximum amount of material to be mined with own fleet was also adjusted to smooth the number
of required trucks, as shown in Table 18-5.
218
Owner Contractor Total

Total Ore Rehandling Total Total Ore Mined Rehandling Total Total Ore Mined Rehandling Total
mined Mined Ktonnes material mined material Mined (total) material
Ktonnes Ktonnes movement movement movement
Y00 11,823 1,058 0 11,823 7,177 0 0 7,177 19,000 1,058 0 19,000
Y01 30,000 2,261 676 30,676 0 0 0 0 30,000 2,261 676 30,676
Y02 30,000 3,606 0 30,000 0 0 0 0 30,000 3,606 0 30,000
Y03 30,000 2,936 186 30,186 0 0 0 0 30,000 2,936 186 30,186
Y04 30,000 2,494 531 30,531 0 0 0 0 30,000 2,494 531 30,531
Y05 19,824 2,555 0 19,824 0 0 0 0 19,824 2,555 0 19,824
Y06 16,606 2,555 0 16,606 0 0 0 0 16,606 2,555 0 16,606
Y07 8,370 2,555 0 8,370 0 0 0 0 8,370 2,555 0 8,370
Y08 1,361 846 1,708 3,069 0 0 0 0 1,361 846 1,708 3,069
Y09 0 0 0 0 0 0 0 0 0 0 0 0
Y10 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 177,985 20,866 3,100 181,085 7,177 0 0 7,177 185,161 20,866 3,100 188,262
Table 18-5 Mine Production Schedule Owner and Contract Mining
18.1.5.3 Main Characteristics of the Rock

Table 18-6 shows the material characteristics used for the equipment productivity calculations. An
average dry bank density of 2.66 tonnes per cubic metre was used for ore and 2.51 tonnes per cubic
metre for waste. The density values are based on the resource block model values for the various
materials as tabulated from the mine production schedule.
MATERIAL CHARACTERISTICS
Material Ore Marginal (Ore+ (Ore+ (Ore+ Waste Waste Waste Waste
Ore Marginal) Marginal) Marginal) Oxides Transition Fresh Rock
Oxides Transition Fresh rock
Dry Bank Density 2.66 2.36 2.04 2.45 2.77 2.51 2.22 2.41 2.75
Material Handling Swell 30% 30% 30% 30% 30% 30% 30% 30% 30%
Moisture Content 4% 4% 4% 4% 4% 4% 4% 4% 4%
Dry Loose Density 2.04 1.81 1.57 1.88 2.13 1.93 1.71 1.85 2.12
Wet Loose Density 2.12 1.89 1.63 1.96 2.21 2.01 1.78 1.93 2.20
Table 18-6 Material Characteristics
The material handling swell (in situ to loose tonnage) was estimated at 30%.
NCL assumed moisture content of 4%, which represents weight percent of the dry weight of the
material. The density of wet loose material was used to calculate truck allowable payload limits.
All equipment production is reported in dry metric tons. This corresponds with the units of dry
measurement contained in the computer model, the stated mineable resource and the mine material
movements summarized in Table 18-6.
219
18.1.5.4 Operating Time Definition

The mine is scheduled to work seven days per week or 365 days per year. Each day will consist of
three 8 hour shifts. It is estimated that about nine days per year will be lost due to holidays and
weather delays for a net of 356 days per year.
Four mining crews will cover the operation. Each person will be scheduled to work 42 hours per week.
This is two hours less than the normal 44 hour work week, so any overtime pay will be included.
Table 18-7 summarizes the mine work schedule shows the definitions used for equipment time
allocation and calculation of the main operational indices.
ANNUAL SCHEDULED MINE DAYS & SHIFTS
Scheduled Days and shifts

Partial Year
Mining Period Scheduled Available No. of Crews
Lost Days (1) Shifts/ Day Available Shifts Factor
Days Days
PP 450 12 438 3 1314 4 1.20
P01 365 9 356 3 1068 4 1.00
P02 365 9 356 3 1068 4 1.00
P03 365 9 356 3 1068 4 1.00
P04 365 9 356 3 1068 4 1.00
P05 365 9 356 3 1068 4 1.00
P06 365 9 356 3 1068 4 1.00
P07 365 9 356 3 1068 4 1.00
P08 121 9 112 3 336 4 0.30
(1) Lost days include holidays and weather delays
Table 18-7 Annual Scheduled Mine Days and Shifts
The following definitions apply:
Maintenance time. Applies when the equipment is:
In maintenance.
Waiting for maintenance personnel.
220
Waiting for maintenance equipment or spare parts.
Travel time to workshops.
Waiting time within the workshops.
Scheduled losses: Time allocated for:
Meal breaks.
Shift change.
Blasting.
Re-fuelling.
Meetings.
Weather conditions
Reserve : The equipment is available but has not been allocated to a face.
Operational losses: Time allocated for:
Working face preparation
Training
Accidents/incidents
Equipment movement
Equipment inspection, etc.
The general concept is that operational hours correspond to all the time when the odometer is
working. It is a management issue to avoid any scheduled loss or reserve going to operational
losses.Table 18-8 summarizes the use of time according to the adopted criteria.
The table below mentions operational indices that have been estimated for all major units of
equipment according to the experience of NCL and other similar operations.
A job efficiency factor of 83.3%, to allow for operational losses, was used to estimate all major units of
equipment and productivities, which corresponds to 50 minutes per operating hour.
221
SUMMARY OF OPERATING TIME PER DAY
Summary of Operating Time per Shift hrs min

Scheduled time per shift 8.00 480
Less Scheduled nonproductive times 1.25 75
Travel time/Shift change/Blasting 0.17 10.00
Equipment inspection 0.17 10
Fueling, lube & service 0.17 10
Lunch/Breaks 0.75 45
Net scheduled productive time (metered operating time) 6.75 405
Job efficiency (preproduction) 75.0%
Job efficiency (commercial production) 83.3%
Net productive operating time per shift (preproduction) 5.06 303.8
Net productive operating time per shift (commercial production) 5.63 337.5
Table 18-8 Summary of Operating Time per Day
Table 18-9 shows the maximum utilization (MAxUA), mechanical availability (MA), and utilization of
availability (UA) used for the various equipment types for this study. The relatively high values of
mechanical availability and utilization are based on maintenance between shifts and during lunch
breaks. Total fleet numbers are rounded up to whole units so that in general the actual fleet utilization
is not greater than the maximum allowable fleet utilization.
UTILISATION AND AVAILABILITY OF MINING EQUIPMENT
Equipment MA UA MAxUA
Atlascopco Explorac R50 88% 45% 40%
Atlascopco ROC L8-30 88% 75% 66%
Liebherr 984C (5.0 cu. m) ore 85% 93% 79%
Liebherr L580 (4.0 cu. m) 90% 95% 86%
Liebherr 984C (6.7 cu. m) waste 85% 95% 81%
Scania Truck (40ton) 90% 93% 83%
CATD9T Track Dozer 85% 80% 68%
CAT160M Grader 85% 80% 68%
Scania Water Truck (20000 liter) 85% 80% 68%
Table 18-9 Utilization and Availability of Mining Equipment
18.1.5.5 Drilling
The drilling equipment will consist of diesel units capable to drill in 6 diameter for ore and waste.
A general design of the drilling and blasting patterns has been carried out (Table 18-10). As per the
known dip and variability of the ore, the bench height for drilling and blasting was considered as 6m
with two three metres slices, and an additional 50% of the material scheduled as ore was considered
to be drilled and blasted with ore parameters. Alternatively for waste, as per the high strip ratio of the
222
pit, there will be large areas of known waste material, so 12m benches is the selected height for waste
drilling and blasting Table 18-10 shows the drilling parameters.
To add, oxides material was considered as totally minable by excavators as well as 50% of
transitional material. This criteria was adopted with Carpathian personnel in function of project history
and material characteristics observed on site.
DRILLING DESIGN PARAMETERS
(ORE+LG) (ORE+LG) (ORE+LG) Waste oxides Waste Waste

oxides (1) transitional fresh rock (1) transitional fresh rock
ITEM un (2) (2)
Hole diameter in 4 1/2 4 1/2 4 1/2 6 6 6
Hole diameter mm 114.3 114.3 114.3 152.4 152.4 152.4
Bank density t / m3 2.0 2.4 2.8 2.2 2.4 2.8
Bench height m 6.0 6.0 6.0 12.0 12.0 12.0
Burden m 4.0 4.0 3.0 6.0 6.0 5.0
Spacing m 5.0 5.0 4.0 6.0 6.0 6.0
Subgrade m 1.0 1.0 1.0 1.0 1.0 1.0
Hole length m 7.0 7.0 7.0 13.0 13.0 13.0
Hole volume m3 120.0 120.0 72.0 432.0 432.0 360.0
Specific drilling m3 / m 17.1 17.1 10.3 33.2 33.2 27.7
Rock mass per hole tonnes 244.6 293.9 199.1 960.7 1,041.3 990.1
Powder Spg. Loaded t / m3 0.8 0.9 0.9 0.8 0.9 0.9
Powder Height m 4.2 4.2 4.9 8.8 8.8 9.5
Stemming Height m 2.8 2.8 2.1 4.2 4.2 3.5
Powder per Hole kg 34.5 38.8 45.3 128.4 144.5 156.0
Powder Factor kg / m3 0.287 0.323 0.628 0.297 0.334 0.433
Powder Factor kg/tonne 0.141 0.132 0.227 0.134 0.139 0.158
Powder Load kg/m 8.2 9.2 9.2 14.6 16.4 16.4
Specific drilling t/m 34.9 42.0 28.4 73.9 80.1 76.2
Average effective drill rate m/h 28.0 28.0 28.0 33.1 33.1 33.1
Effective productivity t/h 978.2 1,175.4 796.5 2,445.4 2,650.5 2,520.3
Scheduled time per shift hr 8.0 8.0 8.0 8.0 8.0 8.0
Net scheduled productive time hr/shift 6.8 6.8 6.8 6.8 6.8 6.8
Job efficiency (preproduction) % 75% 75% 75% 75% 75% 75%
Job efficiency (commercial production) % 83% 83% 83% 83% 83% 83%
Operating productivity t/shift 5,502.5 6,611.8 4,480.1 13,755.4 14,909.2 14,176.8
Operating productivity t/hr 815.2 979.5 663.7 2,037.8 2,208.8 2,100.3
MAxUA (%) % 66% 66% 66% 66% 66% 66%
Production capacity t/shift 3,631.6 4,363.8 2,956.9 9,078.6 9,840.1 9,356.7
Production capacity t/day 10,894.9 13,091.3 8,870.6 27,235.7 29,520.2 28,070.1
Drill rate m/y 111,018.6 111,018.6 111,018.6 131,203.8 131,203.8 131,203.8
Hole depth m 7.0 7.0 7.0 13.0 13.0 13.0

Penetration rate m/min 0.7 0.7 0.7 0.7 0.7 0.7
Penetration time per hole min 10.0 10.0 10.0 18.6 18.6 18.6
Move time min 3.0 3.0 3.0 3.0 3.0 3.0
Steel changes - 2.0 2.0 2.0 2.0 2.0 2.0
Time per steel change min 1.0 1.0 1.0 1.0 1.0 1.0
Total time per hole min 15.0 15.0 15.0 23.6 23.6 23.6
Holes per hour holes 4.00 4.00 4.00 2.55 2.55 2.55
Average effective drill rate m/hr 28.0 28.0 28.0 33.1 33.1 33.1
(1) Oxides material will be not drilled.
(1) Only 50% transitional material will be drilled.
Table 18-10 Drilling Design Parameters
223
As a result of these calculations, daily production capacity has been estimated for each period of the
mine plan and according to the required tonnages, the number of units were estimated for every time
period, as detailed in Table 18-11. One unit will be required for PP and Y01, and three units for Year 2
to Year 6.
Initial FACTOR 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
50% extra material drilled as ore
Mine Plan PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
0% (ORE+LG) OX ktonnes 1,498 1,124 796 311 0 0 0 0 0 0 0
50% (ORE+LG) MX ktonnes 87 1,325 672 465 431 0 0 0 0 0 0
100% (ORE+LG) FR ktonnes 1 942 3,941 3,627 3,310 3,833 3,833 3,833 1,270 0 0
0% WasteOX ktonnes 16,476 16,485 7,154 8,192 367 0 0 0 0 0 0
50% WasteTR ktonnes 1,259 8,599 7,603 6,976 5,651 11 0 0 0 0 0
100% WasteFR ktonnes 33 2,543 11,611 11,874 21,489 17,259 14,051 5,815 515 0 0
WASTE ktonnes 17,942 27,739 26,394 27,065 27,506 17,269 14,051 5,815 515 0 0
Total Drilling Requirement ktonnes 708 8,447 19,690 19,221 27,840 21,097 17,883 9,648 1,784 0 0
DAYS/PERIOD 438 356 356 356 356 356 356 356 112 0 0
SHIFTS/DAY 3 3 3 3 3 3 3 3 3 0 0
SHIFTS/PERIOD 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Operating productivity PP P01-08

(ORE+LG) OX tonne/hr 734 815
(ORE+LG) MX tonne/hr 882 980
(ORE+LG) FR tonne/hr 597 664
WASTE tonne/hr 1,724 1,915
Waste oxides tonne/hr 1,834 2,038
Waste transitional tonne/hr 1,988 2,209
Waste fresh tonne/hr 1,890 2,100
(ORE+LG) OX tonne/day 9,805 10,895
(ORE+LG) MX tonne/day 9,805 13,091
(ORE+LG) FR tonne/day 7,984 8,871
WASTE tonne/day 23,040 25,600
Waste oxides tonne/day 24,512 27,236
Waste transitional tonne/day 26,568 29,520
Waste fresh tonne/day 25,263 28,070
Requirement
Op.Hrs 386 5,837 15,034 14,372 18,575 15,549 13,849 9,492 2,398 0 0
Days 30 389 884 852 1,186 923 796 470 161 0 0
N Equipment
TOTAL (fraction) 0.07 1.09 2.48 2.39 3.33 2.59 2.24 1.32 1.44 0.00 0.00
TOTAL UNITS 1 1 3 3 3 3 3 2 2 0 0
Fleet utilization 4.5% 72.1% 54.6% 52.7% 73.3% 57.1% 49.2% 43.6% 47.6% 0.0% 0.0%
Operators 3 3 8 7 10 8 7 4 4 0 0
N of Crews 4 4 4 4 4 4 4 4 4 0 0
Table 18-11 Drilling Requirement Estimate
18.1.5.6 Blasting Design Parameters

According to the drill pattern specified on Table 18-12, a blasting powder factor of 0.132 to 0.227
grams per tonne was estimated for ore and 0.139 to 0.158 grams per tonne for waste. Both estimated
values correspond to common practice for each type of rock material.
224
BLASTING DESIGN PARAMETERS
(ORE+LG) (ORE+LG) (ORE+LG) Waste oxides Waste Waste

oxides (1) transitional fresh rock (1) transitional fresh rock
ITEM un (2) (2)
Hole diameter in 4 1/2 4 1/2 4 1/2 6 6 6
Hole diameter mm 114.3 114.3 114.3 152.4 152.4 152.4
Bank density t / m3 2.0 2.4 2.8 2.2 2.4 2.8
Bench height m 6.0 6.0 6.0 12.0 12.0 12.0
Burden m 4.0 4.0 3.0 6.0 6.0 5.0
Spacing m 5.0 5.0 4.0 6.0 6.0 6.0
Subgrade m 1.0 1.0 1.0 1.0 1.0 1.0
Hole length m 7.0 7.0 7.0 13.0 13.0 13.0
Hole volume m3 120.0 120.0 72.0 432.0 432.0 360.0
Specific drilling m3 / m 17.1 17.1 10.3 33.2 33.2 27.7
Rock mass per hole tonnes 244.6 293.9 199.1 960.7 1,041.3 990.1
Powder Spg. Loaded t / m3 0.8 0.9 0.9 0.8 0.9 0.9
Powder Height m 4.2 4.2 4.9 8.8 8.8 9.5
Stemming Height m 2.8 2.8 2.1 4.2 4.2 3.5
Powder per Hole kg 34.5 38.8 45.3 128.4 144.5 156.0
Powder Factor kg / m3 0.287 0.323 0.628 0.297 0.334 0.433
Powder Factor kg/tonne 0.141 0.132 0.227 0.134 0.139 0.158
(1) Oxides material will be not blasted.
(1) Only 50% transitional material will be blasted.
Table 18-12 Blasting Design Parameters
18.1.5.7 Loading
The performance of the loading units has been calculated upon the basis of the operational indices
and a detailed estimate of the times involved in the loading activity. Table 18-13 shows the
performance calculation for each unit.
Using the above productivities, the following loading equipment requirements have been estimated
(Table 18-14 and Table 18-15), considering the general criteria that the ore will be loaded with the 5.0
m3 excavator, the waste material with the 6.7 m3 excavators and the front end loader will be used for
rehandling the ore to the primary crusher.
One 5.0 m3 excavator will be required in PP and two during commercial production to mine mainly ore
material. One 6.7 m3 excavator on PP and four from Year 2 through Year 6 will be required to mine
waste material. One 4.4 m3 front end load will be required during the life time of mine, mainly for
rehandling operation.
225
LOADING DESIGN PARAMETERS
Liebherr 984C L Ore Liebherr 984C L Waste L580 2+2 FEL

Ore Low Grade Waste Ore Low Grade Waste Ore Low Grade Waste
Bucket capacity (m3) 5.00 5.00 5.00 6.70 6.70 6.70 4.40 4.40 4.40
Dry bank density (t/m3) 2.66 2.36 2.51 2.66 2.36 2.51 2.66 2.36 2.51
Swell 30% 30% 30% 30% 30% 30% 30% 30% 30%
Moisture Content 4% 4% 4% 4% 4% 4% 4% 4% 4%
Bucket Fill factor 90% 90% 90% 90% 90% 90% 90% 90% 90%
Vol/ Pass (m3) 4.50 4.50 4.50 6.03 6.03 6.03 3.96 3.96 3.96
Tonnes/ Pass (dry) 9.19 8.16 8.68 12.32 10.93 11.64 8.09 7.18 7.64
Tonnes/ Pass (wet) 9.56 8.49 9.03 12.81 11.37 12.10 8.41 7.47 7.95
Truck max capacity (m3) 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00
Truck max capacity (ton) 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00
Passes/ Truck 4 5 5 3 4 4 5 5 5
Tonnes per Truck (wet) 38.2 40.0 40.0 38.4 40.0 40.0 40.0 37.3 39.7
Tonnes per Truck (dry) 36.78 38.46 38.46 36.96 38.46 38.46 38.46 35.90 38.20
Cycle Time / Pass (min) 0.50 0.50 0.50 0.50 0.50 0.50 0.33 0.33 0.33
Truck Spot Time (min) 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
Total Time / Truck (min) 2.25 2.50 2.50 1.75 2.00 2.00 1.75 1.92 1.92
Effective productivity (t/hr) 981 923 923 1,267 1,154 1,154 1,319 1,124 1,196
Time/ Shift (hrs) 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00
Net scheduled productive time/ Shift (hrs) 6.75 6.75 6.75 6.75 6.75 6.75 6.75 6.75 6.75
Job efficiency (preproduction) 75.0% 75.0% 75.0% 75.0% 75.0% 75.0% 75.0% 75.0% 75.0%
Job efficiency (commercial production) 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Operational productivity (t/shift) 5,516 5,192 5,192 7,128 6,490 6,490 7,418 6,322 6,727
Operational productivity (t/hr) 817 769 769 1,056 962 962 1,099 937 997
Avail. x Utiliz (%) 78.6% 78.6% 78.6% 80.8% 80.8% 80.8% 85.5% 85.5% 85.5%
Shift production capacity (t/shift) 4,337 4,082 4,082 5,756 5,241 5,241 6,342 5,406 5,752
Shift production capacity (t/day) 13,012 12,247 12,247 17,268 15,723 15,723 19,026 16,217 17,256
Table 18-13 Loading Productivity Estimate
18.1.5.8 Hauling
Haulage Distance Calculation
The haulage distances were measured in the yearly plans of the pits and waste dumps, for every
mining phase and for ore and waste. The distances were divided between ramp (normally at 10%
gradient) and horizontal transport. Table 18-16 shows a summary of the distances.
Figure 18-8 shows graphically the weighted average total hauling distance per mining period,
indicating also the percentage of the uphill distance. The total average distance varies from a
minimum of 2.2 kilometres to a maximum of 3.9 kilometres. The crests and valleys observed in the
uphill percentage curve are generated with the opening of new phases, where the stripping of the
waste at the upper mining benches reduces the uphill haulage.
226
PP P01-P08
Liebherr 984C L Liebherr 984C L L580 2+2 FEL Liebherr 984C L Liebherr 984C L L580 2+2 FEL
Operating productivity Ore Waste Ore Waste
Ore tonne/hr 736 950 989 817 1,056 1,099
Low grade tonne/hr 692 865 843 769 962 937
Waste tonne/hr 692 865 897 769 962 997
Ore tonne/day 11,711 15,541 17,123 13,012 17,268 19,026
Low grade tonne/day 11,023 14,151 14,595 12,247 15,723 16,217
Waste tonne/day 11,023 14,151 15,530 12,247 15,723 17,256
LOADING DISTRIBUTION PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
Liebherr 984C L Ore
Ore ktonnes 563 1,836 2,742 2,420 2,494 2,555 2,555 2,555 846 - -
Low grade ktonnes 354 297 605 361 - - - - - - -
Waste ktonnes 3,230 5,548 5,279 5,413 5,501 3,454 2,810 1,163 257 - -
Rehandling ktonnes - - - - - - - - - - -
TOTAL Liebherr 984C L Ore ktonnes 4,147 7,681 8,626 8,194 7,995 6,009 5,365 3,718 1,104 - -
L580 2+2 FEL
Ore ktonnes 141 - - - - - - - - - -
Low grade ktonnes - 127 259 155 - - - - - - -
Waste ktonnes 2,153 2,774 2,639 2,706 2,751 1,727 1,405 582 257 - -
Rehandling ktonnes - 676 - 186 531 - - - 1,708 - -
TOTAL L580 2+2 FEL ktonnes 2,294 3,577 2,899 3,047 3,281 1,727 1,405 582 1,965 - -
Liebherr 984C L Waste
Ore ktonnes - - - - - - - - - - -
Low grade ktonnes - - - - - - - - - - -
Waste ktonnes 5,383 19,417 18,476 18,945 19,254 12,089 9,835 4,071 - - -
Rehandling ktonnes - - - - - - - - - - -
TOTAL Liebherr 984C L Waste ktonnes 5,383 19,417 18,476 18,945 19,254 12,089 9,835 4,071 - - -
Table 18-14 Loading Requirement Estimation (1/2)
PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
Requeriment
Liebherr 984C L Ore Op.Hrs 5,942 9,845 11,004 10,467 10,204 7,616 6,780 4,638 1,370 - -
Days 373 618 691 657 641 478 426 291 86 - -
L580 2+2 FEL Op.Hrs 2,543 3,641 2,925 3,079 3,326 1,733 1,410 583 2,081 - -
Days 147 210 169 178 192 100 81 34 120 - -
Liebherr 984C L Waste Op.Hrs 6,220 22,438 21,350 21,892 22,249 13,969 11,365 4,704 - - -
Days 380 1,372 1,306 1,339 1,361 854 695 288 - - -
Liebherr 984C L Ore 5.0m3 N Equipment

TOTAL (fraction) 0.85 1.74 1.94 1.85 1.80 1.34 1.20 0.82 0.77 0.00 0.00
TOTAL UNITS 1 2 2 2 2 2 2 1 1 0 0
Fleet Utilization 0.67 0.68 0.76 0.73 0.71 0.53 0.47 0.64 0.60 - -
Operators 3 6 7 7 7 5 4 3 3 0 0
L580 2+2 FEL N Equipment

TOTAL (fraction) 0.34 0.59 0.47 0.50 0.54 0.28 0.23 0.09 1.07 0.00 0.00
TOTAL UNITS 1 1 1 1 1 1 1 1 1 0 0
Fleet Utilization 0.29 0.51 0.41 0.43 0.46 0.24 0.20 0.08 0.92 - -
Operators 1 2 2 2 2 1 1 1 4 0 0
Liebherr 984C L Waste 6.7m3 N Equipment

TOTAL (fraction) 0.87 3.85 3.67 3.76 3.82 2.40 1.95 0.81 0.00 0.00 0.00
TOTAL UNITS 1 4 4 4 4 3 2 1 0 0 0
Fleet Utilization 0.68 0.76 0.72 0.74 0.75 0.63 0.77 0.64 - - -
Operators 3 14 13 14 14 9 7 3 0 0 0
N of Crews 4 4 4 4 4 4 4 4 4 0 0
Table 18-15 Loading Requirement Estimation (2/2)
227
HAULING DISTANCES
Period PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10 TOTAl
Ore Ktonnes 703,700 1,836,200 2,742,000 2,419,800 2,494,300 2,555,000 2,555,000 2,555,000 846,400 - - 18,707,400
Horizontal 892 772 1,344 1,221 961 1,050 998 581 531 - - 975
Uphill 713 613 817 1,064 1,174 1,502 1,691 2,003 2,283 - - 1,314
Downhill 126 245 218 259 349 349 349 349 349 - - 299
Low Grade Ktonnes 354,400 424,600 863,900 515,700 - - - - - - - 2,158,600
Horizontal 928 880 1,230 1,184 - - - - - - - 1,101
Uphill 522 1,000 1,075 1,404 - - - - - - - 1,048
Downhill 110 137 82 46 - - - - - - - 89
Waste Ktonnes 10,765,140 27,739,200 26,394,100 27,064,500 27,505,700 17,269,400 14,050,700 5,815,100 514,700 - - 157,118,540
Horizontal 1,550 2,388 1,555 1,532 1,309 1,467 1,449 939 465 - - 1,609
Uphill 481 762 1,156 1,263 1,431 2,135 2,623 3,032 2,557 - - 1,419
Downhill 233 115 28 95 68 - - - - - - 69
REHANDLING Ktonnes - 675,800 - 186,100 530,600 - - - 1,707,700 - - 3,100,200
Horizontal - 995 - 824 744 - - - 668 - - 761
Uphill - 117 - 190 211 - - - 211 - - 189
Downhill - 489 - 562 583 - - - 583 - - 561
TOTAL Ktonnes 11,823,240 30,675,800 30,000,000 30,186,100 30,530,600 19,824,400 16,605,700 8,370,100 3,068,800 - - 181,084,740
Horizontal 1,492 2,240 1,526 1,497 1,270 1,413 1,379 830 596 - - 1,523
Uphill 496 742 1,122 1,243 1,389 2,053 2,479 2,718 1,176 - - 1,383
Downhill 223 131 47 110 100 45 54 107 421 - - 102
TOTAL 2,211 3,113 2,695 2,850 2,759 3,512 3,912 3,654 2,193 - - 3,008
% Uphill 22% 24% 42% 44% 50% 58% 63% 74% 54% 0% 0% 46%
Table 18-16 Haulage Distances Summary
Total Hauling Distances for RDM project

4,500 80%
4,000 70%
Annual average distance (m)
3,500 60%
3,000
50%
2,500
%Uphill
40%
2,000
30%
1,500
1,000 20%
500 10%
- 0%
PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
TOTAL % Uphill
Figure 18-8 Total Hauling Distance
18.1.5.9 Truck Speeds

Truck speeds were determined upon the basis of typical values obtained from supplier information
and similar operations. The values used are shown in Table 18-17.
228
AVERAGE TRUCK SPEEDS (Km/hr)
Truck Scnia 40ton Velocity Diesel

km/hr lt/hr lt/km
Empty Horizontal 50.0 16.5 0.3
Uphill 25.0 19.5 0.8
Downhill 45.0 13.5 0.3
Loaded Horizontal 45.0 19.5 0.4
Uphill 15.0 24.0 1.6
Downhill 25.0 16.5 0.7
Table 18-17 Average Speeds (km/hr)
18.1.5.10 Fixed Times in Truck Cycle

The truck cycles include other fixed times for loading, tipping, queuing, etc. The values for loading are
shown in the tables for loader performance shown in Table 18-13.
One and a half minute has been added to every cycle for dumping and queuing.
18.1.5.11 Trucks Requirement

The number of units required was obtained dividing the annual capacity of transport of a truck for each
combination and period, by the corresponding tonnage according to the defined assignment per
loading unit. 40 tonnes trucks will be loaded by 5.0 m3 excavators and front end loaders and 40
tonnes trucks will be loaded by 6.7 m3 excavators.
Truck operating hours were calculated per period, type of material and loading unit dividing the
tonnage that has to be transported by the hourly productivity of each combination.
Productivity estimates and number of required units for every type of material are presented in
Table 18-18 to Table 18-20. A summary of units required is presented in Figure 18-9.
229
Summary of Required Trucks

45 180
40 160
35 140
Productivity (t/hr)
30 120
25 100
Trucks
20 80
15 60
10 40
5 20
0 -
PP P01 P02 P03 P04 P05 P06 P07 P08 P09
N 40t Trucks 11 40 39 41 42 34 32 17 12 0 0
Average productivity 157 129 129 122 120 96 85 84 131
Figure 18-9 Summary of Required Trucks
An average performance in tonnes/hour of operation is also included. % uphill and total hauling
distances explain the decreasing truck productivity behaviour. An increase on average productivity on
Y8 is observed due low grade rehandling operation.
Operational indices considered for the trucks were:
Availability (MA): 90.0%
Use of availability (UA): 92.5%
Operational losses: 83.3% during commercial production (50/60 min, accounting for operator factor,
inspection, training, etc.).
230
P420 8X4 w/ Liebherr 984C L Ore PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
Ore tonnes 562,960 1,836,200 2,742,000 2,419,800 2,494,300 2,555,000 2,555,000 2,555,000 846,400 - -
Payload tonnes 36.78 36.78 36.78 36.78 36.78 36.78 36.78 36.78 36.78 - -
Trip time min 6.66 6.40 8.80 10.01 10.37 12.34 13.22 13.83 15.20 - -
Spot, Load, Turn & Dump min 3.65 3.65 3.65 3.65 3.65 3.65 3.65 3.65 3.65 - -
Cicle time min 10.31 10.05 12.45 13.66 14.02 15.99 16.87 17.48 18.85 - -
Effective productivity t/hr 213.96 219.52 177.16 161.58 157.35 137.96 130.79 126.22 117.08 - -
Operating productivity tonne/shift 1,083.16 1,234.77 996.55 908.88 885.12 776.01 735.70 709.99 658.56 - -
Operating productivity tonne/hr 160.47 182.93 132.87 121.18 118.02 103.47 98.09 94.67 87.81 - -
Operating hours hr 3,508 10,038 20,636 19,968 21,135 24,694 26,046 26,990 9,639 - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period 1,184,870 1,097,848 886,044 808,098 786,970 689,957 654,122 631,261 184,214 - -
N Trucks un 0.5 1.7 3.1 3.0 3.2 3.7 3.9 4.0 4.6 0.0 0.0
Low Grade tonnes 354,400 297,220 604,730 360,990 - - - - - - -
Payload tonnes 38.46 38.46 38.46 38.46 - - - - - - -
Trip time min 5.66 8.22 9.24 10.71 - - - - - - -
Spot, Load, Turn & Dump min 3.90 3.90 3.90 3.90 - - - - - - -
Cicle time min 9.56 12.12 13.14 14.61 - - - - - - -
Effective productivity t/hr 241.30 190.43 175.61 157.97 - - - - - - -
Operating productivity tonne/shift 1,221.57 1,071.14 987.82 888.60 - - - - - - -
Operating productivity tonne/hr 180.97 158.69 146.34 131.64 - - - - - - -
Operating hours hr 1,958 1,873 4,132 2,742 - - - - - - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period 1,336,286 952,362 878,282 790,063 - - - - - - -
N Trucks un 0.3 0.3 0.7 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Waste tonnes 3,229,542 5,547,840 5,278,820 5,412,900 5,501,140 3,453,880 2,810,140 1,163,020 257,350 - -
Payload tonnes 38.46 38.46 38.46 38.46 38.46 38.46 38.46 38.46 38.46 - -
Trip time min 7.61 10.66 10.23 11.08 11.27 15.10 17.66 18.55 14.82 - -
Cicle time min 11.51 14.56 14.13 14.98 15.17 19.00 21.56 22.45 18.72 - -
Operating productivity tonne/shift 1,015.16 891.26 918.36 866.76 855.45 683.06 602.15 578.24 693.55 - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period 1,110,487 792,432 816,523 770,644 760,593 607,316 535,381 514,121 194,001 - -
N Trucks un 2.9 7.0 6.5 7.0 7.2 5.7 5.2 2.3 1.3 0.0 0.0
Table 18-18 Trucks Productivity and Units Required (Loading with Liebherr 984C L Ore)
231
P420 8X4 w/ L580 2+2 FEL PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
Rehandling tonnes - 675,800 - 186,100 530,600 - - - 1,707,700 - -
Payload tonnes - 38.46 - 38.46 38.46 - - - 38.46 - -
Trip time min - 5.49 - 5.80 5.81 - - - 5.62 - -
Spot, Load, Turn & Dump min - 3.15 - 3.15 3.15 - - - 3.15 - -
Cicle time min - 8.64 - 8.95 8.96 - - - 8.77 - -
Effective productivity t/hr - 267.03 - 257.82 257.63 - - - 263.28 - -
Operating productivity tonne/shift - 1,351.83 - 1,305.22 1,304.23 - - - 1,332.84 - -
Operating productivity tonne/hr - 200.27 - 193.37 193.22 - - - 197.46 - -
Operating hours hr - 3,374 - 962 2,746 - - - 8,648 - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period - 1,201,923 - 1,160,486 1,159,603 - - - 372,822 - -
N Trucks un 0.0 0.6 0.0 0.2 0.5 0.0 0.0 0.0 4.6 0.0 0.0
Ore tonnes 140,740 - - - - - - - - - -
Payload tonnes 38.46 - - - - - - - - - -
Trip time min 6.66 - - - - - - - - - -
Spot, Load, Turn & Dump min 2.75 - - - - - - - - - -
Cicle time min 9.41 - - - - - - - - - -
Effective productivity t/hr 245.16 - - - - - - - - - -
Operating productivity tonne/shift 1,241.11 - - - - - - - - - -
Operating productivity tonne/hr 183.87 - - - - - - - - - -
Operating hours hr 765 - - - - - - - - - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period 1,357,654 - - - - - - - - - -
N Trucks un 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Low Grade tonnes - 127,380 259,170 154,710 - - - - - - -
Payload tonnes - 38.46 38.46 38.46 - - - - - - -
Trip time min - 8.22 9.24 10.71 - - - - - - -
Spot, Load, Turn & Dump min - 3.32 3.32 3.32 - - - - - - -
Cicle time min - 11.54 12.56 14.02 - - - - - - -
Effective productivity t/hr - 200.05 183.77 164.54 - - - - - - -
Operating productivity tonne/shift - 1,012.78 930.34 833.00 - - - - - - -
Operating productivity tonne/hr - 150.04 137.83 123.41 - - - - - - -
Operating hours hr - 849 1,880 1,254 - - - - - - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period - 900,470 827,173 740,631 - - - - - - -
N Trucks un 0.0 0.1 0.3 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Waste tonnes 2,153,028 2,773,920 2,639,410 2,706,450 2,750,570 1,726,940 1,405,070 581,510 257,350 - -
Payload tonnes 38.46 38.46 38.46 38.46 38.46 38.46 38.46 38.46 38.46 - -
Trip time min 7.61 10.66 10.23 11.08 11.27 15.10 17.66 18.55 14.82 - -
Cicle time min 10.92 13.98 13.55 14.39 14.59 18.42 20.97 21.87 18.13 - -
Operating productivity tonne/shift 1,069.36 835.60 862.10 811.70 800.69 634.22 557.01 534.30 644.28 - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period 1,169,782 742,945 766,504 721,690 711,901 563,894 495,244 475,054 180,217 - -
N Trucks un 1.8 3.7 3.4 3.8 3.9 3.1 2.8 1.2 1.4 0.0 0.0
Table 18-19 Trucks Productivity and Units Required (Loading with L580 2+2 FEL)
232
P420 8X4 w/ Liebherr 984C L Waste PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
Ore tonnes - - - - - - - - - - -
Payload tonnes - - - - - - - - - - -
Trip time min - - - - - - - - - - -
Spot, Load, Turn & Dump min - - - - - - - - - - -
Cicle time min - - - - - - - - - - -
Effective productivity t/hr - - - - - - - - - - -
Operating productivity tonne/shift - - - - - - - - - - -
Operating productivity tonne/hr - - - - - - - - - - -
Operating hours hr - - - - - - - - - - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period - - - - - - - - - - -
N Trucks un 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Low Grade tonnes - - - - - - - - - - -
Payload tonnes - - - - - - - - - - -
Trip time min - - - - - - - - - - -
Spot, Load, Turn & Dump min - - - - - - - - - - -
Cicle time min - - - - - - - - - - -
Effective productivity t/hr - - - - - - - - - - -
Operating productivity tonne/shift - - - - - - - - - - -
Operating productivity tonne/hr - - - - - - - - - - -
Operating hours hr - - - - - - - - - - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period - - - - - - - - - - -
N Trucks un 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Waste tonnes 5,382,570 19,417,440 18,475,870 18,945,150 19,253,990 12,088,580 9,835,490 4,070,570 - - -
Payload tonnes 38.46 38.46 38.46 38.46 38.46 38.46 38.46 38.46 - - -
Trip time min 7.61 10.66 10.23 11.08 11.27 15.10 17.66 18.55 - - -
Spot, Load, Turn & Dump min 3.40 3.40 3.40 3.40 3.40 3.40 3.40 3.40 - - -
Cicle time min 11.01 14.06 13.63 14.48 14.67 18.50 21.06 21.95 - - -
Effective productivity t/hr 209.63 164.08 169.25 159.41 157.26 124.71 109.59 105.14 - - -
Operating productivity tonne/shift 1,061.27 830.65 856.83 807.03 796.14 631.37 554.81 532.27 - - -
Operating productivity tonne/hr 157.22 123.06 126.94 119.56 117.95 93.54 82.19 78.86 - - -
Operating hours hr 34,235 157,789 145,550 158,458 163,243 129,240 119,663 51,621 - - -
Avail. x Utiliz (%) % 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3% 83.3%
Shifts un 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
Production capacity tonne/period 1,160,926 738,543 761,819 717,536 707,858 561,354 493,284 473,250 - - -
N Trucks un 4.6 26.3 24.3 26.4 27.2 21.5 19.9 8.6 0.0 0.0 0.0
Table 18-20 Trucks Productivity and Units Required (Loading with Liebherr 984C L Waste)
Period PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
P420 8X4
Total to haul Ktonnes 11,823 30,676 30,000 30,186 30,531 19,824 16,606 8,370 3,069 - -
Ore 0.6 1.7 3.1 3.0 3.2 3.7 3.9 4.0 4.6 0.0 0.0
Low Grade 0.3 0.5 1.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Rehandling 0.0 0.6 0.0 0.2 0.5 0.0 0.0 0.0 4.6 0.0 0.0
Waste 9.4 37.0 34.2 37.2 38.3 30.3 28.0 12.1 2.8 0.0 0.0
Total 10.2 39.7 38.3 41.0 41.9 34.0 31.9 16.1 11.93 0.0 0.0
N 40t Trucks 11 40 39 41 42 34 32 17 12 0 0
Fleet Utilization 77% 83% 82% 83% 83% 83% 83% 79% 83% 0% 0%
Operators 40 155 149 160 163 132 124 63 46 0 0
N of Crews 4 4 4 4 4 4 4 4 4 0 0
Table 18-21 Summary of Required (Units) Trucks
The number of required units during first year is eleven 40 tonne trucks. This type equipment
increases up to a maximum of 42 units during the four first years. The requirement then lowers down
due to less mined material. The major requirement is for hauling the waste because of high strip ratio
and the long distances down the pit and to the storage areas.
233
18.1.5.12 Auxiliary Equipment Requirement

Major auxiliary equipment refers to the major mine equipment that is not directly responsible for
production, but which is scheduled on a regular basis. Equipment operating requirements, operating
hours and personnel requirements were estimated for this equipment.
The primary function of the auxiliary equipment is to support the major production units, and provide
safe and clean working areas. Equipment types included in the auxiliary mine fleet are:
CAT D9T Track Dozer (410HP)
CAT 160M Grader (285HP)
Scania Water Truck (20000 litre)
Atlas Copco Explorac 50 (RC Drill Rig)
The primary duties assigned to the auxiliary equipment are as follows:
Mine development including access roads, drop cuts, temporary service ramps, safety
berms, etc.
Waste rock storage area control. This includes maintaining access to the dumping and
stockpile areas and maintaining the travel surfaces.
Ore stockpile storage area control. This includes maintaining access to the dumping and
stockpile areas and maintaining the travel surfaces.
Maintenance and cleanup in the mine and waste storage areas.
Drilling for grade control purposes, developed in advance in relation with production
drilling.
Table 18-22 and Table 18-23 were used to estimate the number of required operating hours for the
mine auxiliary equipment. Table 18-22 is a tabulation of the number of active work areas during each
year. The tabulation includes active mining phases, excavator loading areas, waste storage areas,
and road construction and maintenance activities. Table 18-23 shows the fraction of a unit assigned to
each work area for the various equipment types. This table is used to assign the number of operating
hours for each class of equipment for each task.
234
MINE ACTIVE AREAS
PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
Mining Phases 3 5 4 5 4 4 3 3 1 0 0
Loading Areas 2 6 6 6 6 5 4 2 1 0 0
Waste Storage Areas 1 1 1 1 1 1 1 1 1 0 0
Stockpiles 1 1 1 1 1 1 1 1 1 0 0
Road Maint & Const 1 3 3 3 3 2 1 1 1 0 0
Table 18-22 Major Auxiliary Equipment - Active Work Areas
NUMBER OF UNITS PER WORKING AREA
Equipment Mining Phases Loading areas Waste Storage Stockpiles Road Maint &
Areas Const
Track Dozer 0.20 0.25 0.00 0.10 0.10
Grader 0.00 0.25 0.00 0.00 0.10
Water Truck 0.20 0.25 0.00 0.10 0.10
Table 18-23 Assigned Auxiliary Equipment Units Per Work Area
Table 18-24 shows the estimation details for the major auxiliary equipment. In general, three track
dozers, two motor-graders and three water trucks are required during the peak material movement
period.
235
MAJOR AUXILIARY EQUIPMENT REQUIREMENT
PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
Track Dozer
N Fractional 0.78 2.90 2.70 2.90 2.70 2.35 1.80 1.30 0.65 0.00 0.00
Fleet 1 3 3 3 3 3 2 2 1 0 0
Operating Hours 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002 0 0
N operators 4 12 11 12 11 9 7 5 3 0 0
Grader
N Fractional 0.36 1.80 1.80 1.80 1.80 1.45 1.10 0.60 0.35 0.00 0.00
Fleet 1 2 2 2 2 2 1 1 1 0 0
Operating Hours 2,171 8,824 8,824 8,824 8,824 7,108 5,392 2,941 540 0 0
N operators 2 7 7 7 7 6 5 3 2 0 0
Water Truck
N Fractional 0.78 2.90 2.70 2.90 2.70 2.35 1.80 1.30 0.65 0.00 0.00
Fleet 1 3 3 3 3 3 2 2 1 0 0
Operating Hours 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002 0 0
N operators 4 12 11 12 11 9 7 5 3 0 0
SHIFTS 1314 1068 1068 1068 1068 1068 1068 1068 336 0 0
N of Crews 4 4 4 4 4 4 4 4 4 0 0
Table 18-24 Major Auxiliary Equipment Requirement
The air reverse drill rig requirement was estimated separately from the rest of the auxiliary equipment,
by considering a drill pattern of 3.0 m x 5.0 m for 16 m holes length for grade control activities
purposes (Table 18-25). Additionally it was considered that 100% extra material than the scheduled
ore is going to be drilled for grade control. Table 18-26 shows the estimation details for the air reverse
drill rig requirement and two piece of equipment is sufficient during all mine life.
236
GRADE CONTROL DESIGN PARAMETERS
(ORE+LG) (ORE+LG) (ORE+LG)

ITEM un OX MX FR
Hole diameter in 4 1/2 4 1/2 4 1/2
Hole diameter mm 114.3 114.3 114.3
Bank density t / m3 2.0 2.4 2.8
Bench height m 15.0 15.0 15.0
Burden m 3.0 3.0 3.0
Spacing m 5.0 5.0 5.0
Subgrade m 1.0 1.0 1.0
Hole length m 16.0 16.0 16.0
Hole volume m3 225.0 225.0 225.0
Specific drilling m3 / m 14.1 14.1 14.1
Rock mass per hole tonnes 458.5 551.0 622.2
Specific drilling t/m 28.7 34.4 38.9
Average drill rate m/h 63.8 63.8 63.8
Effective productivity t/h 1,829.8 2,198.7 2,483.1
Scheduled time per shift hr 8.0 8.0 8.0
Net scheduled productive time hr 6.750 6.750 6.750
Job efficiency (preproduction) % 0.750 0.750 0.750
Job efficiency (commercial production) % 0.8 0.8 0.8
Operating productivity tonne/shift 10,292.8 12,367.7 13,967.2
Operating productivity tonne/hr 1,524.9 1,832.3 2,069.2
MAxUA (%) % 40% 40% 40%
Production capacity tonne/shift 4,075.9 4,897.6 5,531.0
Production capacity tonne/day 8,151.9 9,795.2 11,062.0
Table 18-25 Grade Control Design Parameters
237
Initial FACTOR 1.20 1.00 1.00 1.00 1.00 1.00 1.00 1.00 0.30 0.00 0.00
100% extra material drilled as ore
Mine Plan PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10
(ORE+LG) OX ktonnes 1,998 1,498 1,061 415 0 0 0 0 0 0 0
(ORE+LG) MX ktonnes 117 1,767 896 620 575 0 0 0 0 0 0
(ORE+LG) FR ktonnes 2 1,257 5,255 4,836 4,414 5,110 5,110 5,110 1,361 0 0
Total Drilling Requirement ktonnes 2,116 4,522 7,212 5,871 4,989 5,110 5,110 5,110 1,361 0 0
DAYS/PERIOD 438 356 356 356 356 356 356 356 112 0 0
SHIFTS/DAY 1 2 2 2 2 2 2 2 2 0 0
SHIFTS/PERIOD 438 712 712 712 712 712 712 712 224 0 0
Operating productivity Y00 Y 01-20

(ORE+LG) OX tonne/hr 1,144 1,525
(ORE+LG) MX tonne/hr 1,374 1,832
(ORE+LG) FR tonne/hr 1,552 2,069
(ORE+LG) OX tonne/day 7,337 8,152
(ORE+LG) MX tonne/day 7,337 9,795
(ORE+LG) FR tonne/day 9,956 11,062
Requirement
Op.Hrs 2,199 2,554 3,724 2,948 2,447 2,470 2,470 2,470 197 0 0
Days 346 478 697 551 458 462 462 462 37 0 0
N Equipment
TOTAL (fraction) 0.79 1.34 1.96 1.55 1.29 1.30 1.30 1.30 0.33 0.00 0.00
TOTAL UNITS 1 2 2 2 2 2 2 2 1 0 0
Fleet utilization 31.3% 26.6% 38.7% 30.7% 25.5% 25.7% 25.7% 25.7% 13.1% 0.0% 0.0%
Operators 1 1 2 1 1 1 1 1 1 0 0
N of Crews 2 2 2 2 2 2 2 2 2 0 0
Table 18-26 Grade Control Drilling Requirement - Explorac R50
18.1.5.13 Auxiliary Support Equipment

Additional equipment to support mining activities was estimated. The estimation is detailed in
Table 18-27.
SUPPORT EQUIPMENT REQUIREMENT
Equipment Type: Time Period

PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Flatbed Truck (7.3 mt) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 - -
Mechanics Truck (4x4) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 - -
Scania Fuel Truck (12000 liter) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 - -
Backhoe Loader (1 cu m) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 - -
Pickup Truck (4x4) 7.0 7.0 7.0 7.0 7.0 7.0 7.0 5.0 4.0 - -
Light Plants 3.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 2.0 - -
Mine Radios 40.0 40.0 40.0 40.0 40.0 40.0 40.0 30.0 10.0 - -
Water Pipe - (per 1000m) 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.0 - -
Mine Pumps 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 - - -
Table 18-27 Support Equipment Requirement
An estimate for the operating hours requirement for the support equipment was developed, based on
the following criteria:
238
Flatbed Truck (7.3 mt): 1 full shift per day, 1 equipment
Mechanics Truck (4x4): 1 full shift per day, 1 equipment
Scania Fuel Truck (12000 litre): 0.5 shift per day, 1 equipment
Backhoe Loader (1 cu m): 1 full shift per day, 1 equipment
Pickup Truck (4x4): 3 full shifts per day, 7 equipment
Light Plants: 1 full shift per day, 4 equipment
18.1.5.14 Total Mine Fleet Requirement

The total main equipment requirements of the project are summarized in Table 18-28 for every period
of the plan. Additionally, Table 18-29 shows the operating hours requirement for every piece of
equipment, which is the base for the later operating cost estimate in Section 18.1.8.
MINE MAJOR EQUIPMENT FLEET REQUIREMENT
Time Period
Equipment Type:
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Atlascopco Explorac R50 1.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.0 - -
Atlascopco ROC L8-30 1.0 1.0 3.0 3.0 3.0 3.0 3.0 2.0 2.0 - -
Liebherr 984C (5.0 cu. m) ore 1.0 2.0 2.0 2.0 2.0 2.0 2.0 1.0 1.0 - -
Liebherr L580 (4.0 cu. m) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 - -
Liebherr 984C (6.7 cu. m) waste 1.0 4.0 4.0 4.0 4.0 3.0 2.0 1.0 - - -
Scania Truck (40ton) 11.0 40.0 39.0 41.0 42.0 34.0 32.0 17.0 12.0 - -
CATD9T Track Dozer 1.0 3.0 3.0 3.0 3.0 3.0 2.0 2.0 1.0 - -
CAT160M Grader 1.0 2.0 2.0 2.0 2.0 2.0 1.0 1.0 1.0 - -
Scania Water Truck (20000 liter) 1.0 3.0 3.0 3.0 3.0 3.0 2.0 2.0 1.0 - -
Table 18-28 Mine Equipment Fleet Requirement Summary
MINE EQUIPMENT OPERATING HOURS REQUIREMENT SUMMARY
Time Period
Equipment Type:
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Atlascopco Explorac R50 2,199 2,554 3,724 2,948 2,447 2,470 2,470 2,470 197 - -
Atlascopco ROC L8-30 386 5,837 15,034 14,372 18,575 15,549 13,849 9,492 2,398 - -
Liebherr 984C (5.0 cu. m) ore 12,162 32,283 32,354 32,359 32,453 21,585 18,145 9,342 1,370 - -
Liebherr L580 (4.0 cu. m) 2,543 3,641 2,925 3,079 3,326 1,733 1,410 583 2,081 - -
Scania Truck (40ton) 75,531 238,347 231,664 248,044 253,719 206,445 194,237 99,533 23,488 - -
CATD9T Track Dozer 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002 - -
CAT160M Grader 2,171 8,824 8,824 8,824 8,824 7,108 5,392 2,941 540 - -
Scania Water Truck (20000 liter) 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002 - -
Flatbed Truck (7.3 mt) 2,957 2,403 2,403 2,403 2,403 2,403 2,403 2,403 756 - -
Mechanics Truck (4x4) 2,957 2,403 2,403 2,403 2,403 2,403 2,403 2,403 756 - -
Scania Fuel Truck (12000 liter) 1,478 1,202 1,202 1,202 1,202 1,202 1,202 1,202 378 - -
Backhoe Loader (1 cu m) 2,957 2,403 2,403 2,403 2,403 2,403 2,403 2,403 756 - -
Pickup Truck (4x4) 41,391 33,642 33,642 33,642 33,642 33,642 33,642 24,030 6,048 - -
Light Plants 8,870 14,418 14,418 14,418 14,418 14,418 14,418 14,418 1,512 - -
Table 18-29 Mine Equipment Operating Hours Requirement Summary
239
18.1.6 Mine Personnel

Mine personnel includes all the salaried supervisory and staff people (Table 18-30) working in mine
operations, maintenance, and engineering/geology departments, and the hourly people required to
operate and maintain the drilling, blasting, loading, hauling, and mine support activities.
18.1.6.1 Salaried Staff

Mine salaried staff requirements consist of 22 persons for preproduction, 41 persons for Year 1, and
45 from Year 2 through Year 4.
Of the 45 persons assigned for Years 2 through 4, 13 are in mine operations, 11 in mine maintenance,
13 in mine engineering, and 8 in mine geology.
Annual costs for the personnel, including fringe benefits, are also shown on Table 18-31. The
personnel costs used for this study were updated according to current situation in Brazil given by
Carpathian and an exchange rate of 2.0 Brazilian Real per US dollar.
18.1.6.2 Hourly Labour

Mine total hourly personnel requirements is 109 during preproduction. The maximum number of
persons during commercial production is 397 in Year 4. From Year 5 through the end of mine life
personnel requirements reduce significantly due to reduction of pit operations.Table 18-31 also shows
the annual cost for hourly personnel, including fringe benefits. The hourly personnel costs used for
this study were updated according to current situation in Brazil given by MRDM and an exchange rate
of 2.0 Brazilian Reais per US dollar.
18.1.6.3 Mine Operations

As shown on Table 18-31, the majority of persons in mine operations are equipment operators. The
number of operators for major equipment was calculated as part of the Equipment Operating
Requirements information provided in Section 18.1.5 of this report. The fleet size, the number of
crews, and the fleet utilization are used to calculate the number of operators as follows:
Operators = (Total Fleet) x (Crews) x (Utilization) x (Cross Training Factor)
The operator cross-training factor (CTF) was assumed at 1.17 for this study. This factor adds
operators to account for shifts when more than the average number of units are available and need to
be scheduled and also for inefficiencies in cross training of operators. The limits on this factor are 1.0
(100% cross-training of operators) and 1/utilization (0% cross-training).
240
The factor of 1.17 is based on the limiting case of no cross-training. This is based on an operator
being assigned to a unit for an entire shift. If the equipment requires maintenance during the shift, the
operator will assist maintenance personnel with the required work.
NCL rounds up if the fractional number of operators indicated by the above.
Additional mine persons are assigned to perform the following tasks:
Pumpman: Set pumps and pipe as required and use small excavators for building sumps.
General labourer: The general labourer is an unskilled worker who assists with many of the mine
support activities such as moving and setting pumps, road maintenance, general mine cleanup, etc.
There is not an allowance for blasting personnel in the estimate. Blasting will be performed by a
contractor and the personnel costs are included in the price of the service.
18.1.6.4 Mine Maintenance

Table 18-31 also shows the number of maintenance personnel required for each time period. It can be
seen that the ratio of maintenance personnel to operations personnel is about 58% during the mine
life. As discussed above, the number of operators is quite high and they will assist with maintenance
on the equipment they are assigned to. Operators will be trained to change lubricants, filters, and
tyres and assist the mechanics with repairs.
18.1.6.5 Vacation Sickness & Absenteeism Allowance (VS&A)

An additional allowance in the manpower is required to cover vacations, sick leave, and absenteeism
(VS&A). The 10% VS&A allowance is based on 30 vacation days plus 6 sick days out of 365
scheduled days per person per year, i.e.
10% = 100% x (30 + 6)/365.
241
Table 18-30 Salaried Staff Labour Requirements
242
MINE HOURLY LABOUR REQUIREMENTS
Annual Cost ($US) PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
MINE OPERATIONS:
Drilling 25,883 25,883 1.0 4.0 10.0 8.0 11.0 9.0 8.0 5.0 5.0 - -
Loading 25,883 25,883 6.0 20.0 20.0 21.0 21.0 14.0 11.0 6.0 3.0 - -
Hauling 25,883 25,883 40.0 155.0 149.0 160.0 163.0 132.0 124.0 63.0 46.0 - -
Stockpile loading 25,883 25,883 1.0 2.0 2.0 2.0 2.0 1.0 1.0 1.0 4.0 - -
Main Equipment 48.0 181.0 181.0 191.0 197.0 156.0 144.0 75.0 58.0 - -
Dozer 25,883 25,883 4.0 12.0 11.0 12.0 11.0 9.0 7.0 2.0 3.0 - -
Grader 19,304 19,304 2.0 7.0 7.0 7.0 7.0 6.0 5.0 2.0 2.0 - -
Grade Control 25,883 25,883 1.0 1.0 2.0 1.0 1.0 1.0 1.0 1.0 1.0 - -
Water truck 19,304 19,304 4.0 12.0 11.0 12.0 11.0 9.0 7.0 2.0 3.0 - -
Auxiliary Equipment 11.0 32.0 31.0 32.0 30.0 25.0 20.0 7.0 9.0 - -
Laborer 14,042 14,042 2.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 2.0 - -
Pumpman 14,042 14,042 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 - -
General Mining 3.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 3.0 - -
Total Operators 62.0 217.0 216.0 227.0 231.0 185.0 168.0 86.0 70.0 - -
MINE MAINTENANCE:
Mechanic 25,883 25,883 10.0 33.0 33.0 35.0 35.0 28.0 26.0 13.0 11.0 - -
Mechanic's helper 14,042 14,042 8.0 27.0 27.0 28.0 28.0 23.0 21.0 11.0 9.0 - -
Welder 25,883 25,883 4.0 14.0 14.0 14.0 14.0 12.0 11.0 6.0 5.0 - -
Welder 22.0 74.0 74.0 77.0 77.0 63.0 58.0 30.0 25.0 - -
Electrician 25,883 25,883 6.0 20.0 20.0 21.0 21.0 17.0 16.0 8.0 7.0 - -
Fuel Man 14,042 14,042 6.0 20.0 20.0 21.0 21.0 17.0 16.0 8.0 7.0 - -
Laborer 14,042 14,042 3.0 10.0 10.0 11.0 11.0 9.0 8.0 4.0 4.0 - -
General Maintenance 15.0 50.0 50.0 53.0 53.0 43.0 40.0 20.0 18.0 - -
Maintenance Total 37.0 124.0 124.0 130.0 130.0 106.0 98.0 50.0 43.0 - -
HOURLY LABOUR COST US$x1000 2,619.1 7,668.2 7,674.8 8,046.8 8,182.8 6,572.8 6,044.6 3,122.3 762.6 - -
VS&A Allowance 10% 10.0 34.0 34.0 36.0 36.0 29.0 27.0 14.0 11.0 - -
VS&A COST US$x1000 277.1 795.5 796.0 842.8 844.4 678.2 631.9 326.7 76.5 - -
TOTAL LABOUR REQUIREMENT 109.0 375.0 374.0 393.0 397.0 320.0 293.0 150.0 124.0 - -
TOTAL HOURLY LABOUR COST US$x1000 2,896.2 8,463.8 8,470.8 8,889.6 9,027.2 7,251.0 6,676.5 3,449.0 839.1 - -
Maint/Operations Ratio 60% 57% 57% 57% 56% 57% 58% 58% 61% 0% 0%
Vacations, Sick leave and Absenteeism (VS&A) is based on 30 vacation days and 6 sick days/person out of 365 scheduled days/person per year.
Annual Cost includes Fringes Benefits
Table 18-31 Mine Hourly Labour Requirements
18.1.7 Mine Capital Cost

The estimated mine capital cost includes the following items:
Mine major equipment.
Mine support equipment.
Shop tools.
Initial spare parts.
Engineering and geology equipment.
Mine preproduction development expense.
Explosive storage facilities.
This estimate does not include the following mine physical structures:
243
Fuel and lubricant storage facilities.
The mine shop, offices, and warehouse.
It is anticipated that the vendors will provide storage for fuel, lubricants, and explosives as part of their
contract of work and that the prices for these items are included in the delivered price. Concerning the
mine shop and warehouse, it is reported to NCL that this is included in the facilities/infrastructure
capital cost prepared for this study.
Table 18-32 summarizes the mine capital costs by category for initial capital period. The initial capital
period is the 27 month period from Preproduction (15 months) through the end of Year 1. Mine
preproduction development amounts US$17.6 million during Year 0
The total estimated initial capital cost of the mining project is US$57.6 million which comprises US$
25.8 million for development and infrastructure and US$31.7 million for equipments. The capital
allowance for the pre-strip is US$12.6 million and US$ 13.0 million for contractors. Contractor
expenses during preproduction is based on the 7.2m tonnes scheduled total material during the
preproduction period at a constant unit cost of US$1.663 per tonne, informed by MRDM personnel as
negotiated with the mining contractor.
Mine equipment includes all the items on Table 18-32 except mine development by contractors. Initial
mine equipment capital is US$31.7m during PP and Year 1.
Sustaining capital corresponds to the increase of the equipment fleet to achieve the required material
movement and for the replacement of some pieces of equipment because the end of their useful life
was reached. Sustaining capital amounts to US$13.8m from Year 2 through Year 8, as detailed in
Table 18-33.
Adding sustaining capital and salvage credit, the total mining capital cost for the life of the project
amounts to US$ 67.7 million.
244
SUMMARY OF MINE CAPITAL COSTS ($US X 1000) COMBINED OPTION (40% CONTRACTOR PP)
Initial Capital Sustaining

Category Total Capital
Preproduction Year 1 Total Capital
EARTHWORKS 1,081.6 1,081.6 1,081.6
MINE DEVELOPMENT (contractor) 11,938.4 11,938.4 11,938.4
MINE DEVELOPMENT (owner) 12,627.2 12,627.2 12,627.2
MINE EQUIPMENT:
Major Equipment 9,617.6 18,425.3 28,042.9 12,008.7 40,051.6
Support Equipment 978.2 - 978.2 945.5 1,923.7
Engineering/Safety Equipment 1,364.6 - 1,364.6 100.2 1,464.8
Shop Tools 96.2 184.3 280.4 54.8 335.2
Spare Parts 329.6 736.4 1,066.0 680.2 1,746.2
Subtotal Equipment 12,386.1 19,346.0 31,732.1 13,789.4 45,521.4
Salvage Credit - - - (3,717.4) (3,717.4)
INFRASTRUCTURE 200.0 - 200.0 200.0
TOTAL 38,233.3 19,346.0 57,579.3 10,072.0 67,651.2
Table 18-32 Summary of Mine Capital Costs ($US x 1000)
An equipment salvage credit is also shown in Table 18-33. This amounts to US$3.7 million over the
project life. The salvage value was estimated as a percentage of the purchase value for all equipment
considering:
Salvage value was calculated using estimated available hours per each piece of equipment.
A minimum of 5% of price equipment was considered for all main and auxiliary equipments.
A maximum of 50% of price equipment was considered for those equipments that had more than 50%
of available hours.
Trucks were considered only with 5% of price as salvage criteria.
Equipments with less than 20% of lifetime (in hours) were considered only with 5% of price salvage
criteria. Units between 20% and 50% of lifetime available were considered with a price equivalent with
their proportion of lifetime hours. Equipments with more than 50% of available lifetime were
considered with 50% of price as salvage criteria.Table 18-33 shows the detailed salvage schedule.
This credit occurs at the end of mine life.
Table 18-35 shows the details of the equipment unit prices used for this study. The following is noted:
Base equipment prices are shown in constant 2nd quarter 2010 US dollars in the year in which the
equipment is required. It is assumed that payment for the equipment is made at the time of delivery.
The costs for major equipment are based on negotiated values directly with the vendors (Caterpillar,
Liebherr, Scania, Atlas Copco and Randon).
The capital costs shown include delivery to the site and assembly estimation.
245
Any taxes were included in the unit prices, because they are included on the economical analysis,
developed directly by Riacho dos Machados personnel.
Exchange rate for CAPEX of 2.00 Brazilian Reais per US dollar was considered for preproduction and
commercial production periods respectively, when applicable.
A contingency is not included in the mine capital cost, but NCL understands a contingnecy for the
mining capital has been included as part of the overall contingnecy for the project.
MINE CAPITAL COST
Price
Major Equipment Life (hours) PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 TOTAL
(US$'000)
Atlascopco Explorac R50 495 30,000 494.9 494.9 - - - - - - - - - 989.8
Atlascopco ROC L8-30 644 35,000 643.7 - 1,287.5 - - - - - - - - 1,931.2
Liebherr 984C (5.0 cu. m) ore 1,464 36,000 1,463.7 1,463.7 - - - - - - - - - 2,927.4
Liebherr L580 (4.0 cu. m) 401 25,000 401.3 - - - - - - - - - - 401.3
Liebherr 984C (6.7 cu. m) waste 1,464 35,000 1,463.7 4,391.1 - - - - - - - - - 5,854.8
Scania Truck (40ton) 322 35,000 3,545.8 9,348.1 - 322.3 3,868.2 5,157.6 967.0 - - - - 23,209.1
CATD9T Track Dozer 920 35,000 920.1 1,840.2 - - - - - - - - - 2,760.3
CAT160M Grader 481 24,000 481.2 481.2 - - - - - - - - - 962.5
Scania Water Truck (20000 liter) 203 25,000 203.0 406.1 - - - 203.0 203.0 - - - - 1,015.2
Subtotal Major Equipment US$'000 9,617.6 18,425.3 1,287.5 322.3 3,868.2 5,360.6 1,170.1 - - - - 40,051.6
Price
Mine Support Equipment Life (years) PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 TOTAL
(US$'000)
Flatbed Truck (7.3 mt) 82 5 81.7 - - - - 81.7 - - - - - 163.5
Mechanics Truck (4x4) 92 5 91.5 - - - - 91.5 - - - - - 183.1
Scania Fuel Truck (12000 liter) 72 5 72.0 - - - - 72.0 - - - - - 144.0
Backhoe Loader (1 cu m) 101 5 100.6 - - - - 100.6 - - - - - 201.2
Pickup Truck (4x4) 25 5 176.2 - - 100.7 - - 75.5 - - - - 352.4
Light Plants 22 5 130.8 - - - - 109.0 - - - - - 239.8
Mine Radios 1 5 43.6 - - - - 32.7 - - - - - 76.3
Water Pipe - (per 1000m) 103 5 205.5 - - - - 205.5 - - - - - 411.0
Mine Pumps 38 5 76.3 - - - - 76.3 - - - - - 152.6
Subtotal Mine Support Equipment US$'000 978.2 - - 100.7 - 769.3 75.5 - - - - 1,923.7
TOTAL MINE EQUIPMENT US$'000 10,595.8 18,425.3 1,287.5 423.0 3,868.2 6,129.9 1,245.6 - - - - 41,975.3
Mine Facilities -
Engineering and Geology Equipment US$'000 1,364.6 - - - 100.2 - - - - - - 1,464.8
Shop Tools (1% of major equip.) US$'000 96.2 184.3 12.9 3.2 38.7 - - - - - - 335.2
Initial Spare Parts US$'000 329.6 736.4 22.9 20.3 243.4 328.6 64.9 - - - - 1,746.2
Subtotal Mine Support Equipment US$'000 1,790.3 920.7 35.8 23.5 382.3 328.6 64.9 - - - - 3,546.2
Total Equipment/Facilities Capital US$'000 12,386.1 19,346.0 1,323.2 446.5 4,250.5 6,458.6 1,310.5 - - - - 45,521.4
Major Equipment Salvage Value US$'000 - - - - - - - - (3,717.4) - - (3,717.4)
Infrastructure US$'000 200.0 200.0
TOTAL MINE CAPITAL US$'000 12,586.1 19,346.0 1,323.2 446.5 4,250.5 6,458.6 1,310.5 - (3,717.4) - - 42,004.0
Table 18-33 Mine Equipment Capital Cost
246
MINE MAJOR EQUIPMENT SALVAGE
MINE MAJOR EQUIPMENT: Sal Value x equip

PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
US$'000 Salvage %
Atlascopco Explorac R50 247.4 50% - - - - - - - - 494.9 - -
Atlascopco ROC L8-30 59.7 9% - - - - - - - - 179.2 - -
Liebherr 984C (5.0 cu. m) ore 148.5 10% - - - - - - - - 297.0 - -
Liebherr L580 (4.0 cu. m) 59.1 15% - - - - - - - - 59.1 - -
Liebherr 984C (6.7 cu. m) waste 219.7 15% - - - - - - - - 878.7 - -
Scania Truck (40ton) 15.7 5% - - - - - - - - 1,128.2 - -
CATD9T Track Dozer 147.5 16% - - - - - - - - 442.6 - -
CAT160M Grader 113.8 24% - - - - - - - - 227.6 - -
Scania Water Truck (20000 liter) 10.2 5% - - - - - - - - 10.2 - -
TOTAL SALVAGE VALUE (US$x1000) - - - - - - - - 3,717.4 - -
Table 18-34 Mine Major Equipment Salvage Values
BASIS FOR MINE EQUIPMENT CAPITAL COSTS
Price
Comments
Major Equipment Life (hours) Original
(US$'000) Condition Origin
Currency
Atlascopco Explorac R50 495 30,000 EXW Marsta, Sweden US$ Feb 2011 budget quotation
Atlascopco ROC L8-30 644 35,000 FAS Gotemburg, Sweden US$ Feb 2011 budget quotation
Liebherr 984C (5.0 cu. m) ore 1,464 36,000 FAS USA US$ Feb 2011 budget quotation
Liebherr L580 (4.0 cu. m) 401 25,000 FAS USA US$ Sept 2010 budget quotation
Liebherr 984C (6.7 cu. m) waste 1,464 36,000 FOB Antuerpia, Belgium US$ Feb 2011 budget quotation
Scania Truck (40ton) 322 25,000 EXW Contagem, Brazil $R July 2010 budget quotation
CATD9T Track Dozer 920 35,000 FAS USA US$ Sept 2010 budget quotation
CAT160M Grader 481 35,000 EXW Contagem, Brazil $R Sept 2010 budget quotation
Scania Water Truck (20000 liter) 203 24,000 EXW Contagem, Brazil $R July 2010 budget quotation
Price
Mine Support Equipment Life (years)
(US$'000)
Flatbed Truck (7.3 mt) 82 5.0 Estimation
Mechanics Truck (4x4) 92 5.0 Estimation
Scania Fuel Truck (12000 liter) 72 5.0 EXW Contagem, Brazil $R July 2010 budget quotation
Backhoe Loader (1 cu m) 101 5.0 DDP Riacho dos Machados, Brazil $R June 2010 budget quotation
Pickup Truck (4x4) 25 5.0 Estimation
Light Plants 22 5.0 Estimation
Mine Radios 1 5.0 Estimation
Water Pipe - (per 1000m) 103 5.0 Estimation
Mine Pumps 38 5.0 Estimation
Table 18-35 Basis for Mine Equipment Capital Costs
18.1.7.1 Mine Major Equipment

Total capital for mine major equipment is US$40.1 million over the mine life.
Table 18-35 shows the details of the unit costs. The costs for major equipment are based on
negotiated values directly with the suppliers (Caterpillar, Liebherr, Scania, Atlas Copco and Randon).
Prices basis are specified for each supplier. Where no local freight is stated, the price includes
delivery to the mine site.
247
An exchange rate of 2.00 Brazilian Reais per US dollar was used, when applicable.
The number of units required during each year is based on the calculations presented in Section
18.1.5 (Mine Equipment Requirements) and an appropriate equipment replacement schedule for each
piece of equipment. The replacement schedule for the equipment is based on the estimated life of the
equipment in operating hours as shown on Table 18-33 and the number of operating hours that the
equipment is scheduled for each production year during the mine life (Table 18-29). NCL has shown
the major mining equipment being purchased in the first year that it is needed to maintain production.
18.1.7.2 Mine Support Equipment

The initial capital cost for mine support equipment is estimated at US$0.9 million during PP and a full
replacement was considered in Year 4. The middle section of Table 18-33 lists the equipment by item.
The equipment costs are based on vendor quotations collected by NCL and estimations done
considering NCL database. It is assumed that this equipment, other than the pumps, can be sourced
in Brazil. An exchange rate of 2.00 Brazilian Real per US dollar was considered used, when
applicable.
It is noted that there are not any cranes included in the list. These will be borrowed from the plant as
needed.
The pumps and pipe for pumping requirement estimate is in Section 18.8. The specified pump is
capable of pumping about 100 litres per second (1600 gallons per minute) at heads of 90m (300 ft).
10% for installation is included. The pipe is 25.4cm (10 in) plastic at about USU$77 per metre with a
25% (US$20 per m) allowance for installation.
18.1.7.3 Initial Spare Parts and Shop Tools

Supplier quotations include spare parts estimation for major equipments. Where no data was available
it was assumed 2% of the cost of equipment for initial spare parts.
NCL assumed 1% of the cost of major equipment during mine life for shop tools capital expenses.
This item amounts to US$1.1m as initial capital and US$0.68m as sustaining capital (Year 2 to Year
8)
18.1.7.4 Mine Engineering and Geology Equipment

NCL has included a budget amount for mine engineering and geology equipment based on vendor
quotations collected by NCL. This has been estimated as US$1.4m during Preproduction period and
248
includes a dispatch system, mining software licences, surveying equipment, printing devices and
computers (Table 18-36).
ENGINEERIG AND GEOLOGY EQUIPMENT
Item Value
(USDx1000)
CONTROL SYSTEM & COMUNICATIONS Smartmine 974.8
Mining Software 3 Gemcom software + 1 Gemcom Schedule 289.6
Robotic Total Station Autolock Trimble S6 2 56.9
Plotter 36" 20.0
Desktop PCs 15.3
Color Printers 5.0
B&W Printers 3.0
TOTAL 1,364.6
Table 18-36 Engineering & Geology Equipment
18.1.7.5 Mine Development

Mine preproduction development of US$17.6 million during Year 0 is based on owner operation of
US$12.6 million and US$ 13.0 million for contractors.
Contractor expenses during preproduction is based on the 7.2 m tonnes scheduled total material
during the preproduction period at a constant unit cost of US$1.663 per tonne, informed by Riacho
dos Machados personnel as negotiated with the mining contractor. Detailed contractor operation cost
is presented on Table 18-37.
249
CONTRACTOR PROPOSSAL WITH NCL DATA
Prestripping Waste DMT 2,264 m

Item Description Unit Quant. R$ per unit R$ Total
1 1st category material
1.1 Loading and Dump m3 2,994,707.23 1.50 4,492,060.85
1.2 Material handling DMT 0 to 500 m m3 3.49 -

1.4 Material handling DMT 1501 to 2500 m m3 2,994,707.23 4.29 12,847,294.02
-
1.7 Waste disposal m3 2,994,707.23 0.20 598,941.45
Subtotal 17,938,296.31
2 2nd category material

2.1 Loading and Dump m3 208,981.15 1.90 397,064.19

2.4 Material handling DMT 1501 to 2500 m m3 208,981.15 4.94 1,032,366.88
-
2.7 Waste disposal m3 208,981.15 0.30 62,694.35
Subtotal 1,492,125.42
3 3rd category material

3.1 Loading and Dump m3 4,843.02 2.42 11,720.11

3.4 Material handling DMT 1501 to 2500 m m3 4,843.02 7.50 36,322.67
-
3.7 Waste disposal m3 4,843.02 0.52 2,518.37
Subtotal 50,561.15
Total Geral m3 3,208,531.40 $R 19,480,982.88

tonne 7,176,760.00 9,740,491.44
Subtotal Contractor tonne/m3 2.24 US$/ton 1.36
Subtotal Diesel Ltr/tonne 0.35 US$ 2,197,882.75
Total Expenses US$ 11,938,374.19
Total Contractor Cost US$/ton 1.663
Table 18-37: Contractor Mine Development
18.1.8 Mine Operating Cost

Mine operating costs were developed from the recommended equipment requirements presented in
Section 18.1.6 and the personnel requirements presented in Section 18.1.7. The mine operating costs
include all the parts, supplies, and labour costs associated with mine supervision, operation, and
maintenance. Table 18-38 summarizes the total mine operating costs. Total cost, unit cost per total
250
tonne of material, and unit cost per ore tonne are shown for the commercial production years. The
total mine operating cost includes the rehandle of the ore from the ROM pad area to the primary
crusher.
SUMMARY OF TOTAL AND UNIT MINING COSTS
Category Total Cost Cost Per Cost Per

(US$'000) Total Tonne Ore Tonne
Preproduction 25,647.2 1.35 24.24

Commercial production 234,149.3 1.41 11.22
TOTAL OWNER OPERATING COST 259,796.5 1.40 12.45
Table 18-38: Summary of Total and Unit Mining Costs
Total mine operating cost during commercial production is US$259.8m. This amounts to US$1.40 per
total tonne of mined material and US$12.45 per mined ore tonne during this period.
Table 18-39 presents the mining costs in total dollars by the various cost centres (drilling blasting,
loading, etc.) for each year. Table 18-40 presents a similar summary in dollars per total tonne.
The following factors are considered for the operating cost calculations:
Local unit costs for consumable items such as diesel fuel and blasting agents, based on BFS unit
costs.
Local hourly labour rates and fringe benefits were used, based on BFS unit costs.
Local costs for tires and spare parts were used, based on BFS unit costs.
Exchange rate of 2.00 Brazilian Real per US dollar was considered.
The general activities that are included in the operating cost estimate are as follows:
Mine and transport ore to the ROM-pad area and primary crusher. Mine and transport waste
material from the pit to the waste storage areas.
Rehandle the ore from the stockpile to the primary crusher.
Maintain all the mine work areas, in-pit haul roads, and external haul roads. Also maintain the
waste storage areas.
251
Table 18-41, Table 18-42 and Table 18-43 show the details of the various cost centres by year. The
contents of the various cost centres are summarized as follows:
18.1.8.1 Grade Control Drilling

The parts and consumables cost associated with operating and maintaining the Atlas Copco Explorac
R50, including bits and other down the hole accessories.
18.1.8.2 Drilling
The parts and consumables cost associated with operating and maintaining the Atlas Copco ROC L8-
30, including bits and other down the hole accessories.
18.1.8.3 Blasting
The parts and consumables cost for blasting supplies. Blasting services are provided by a contractor
and the labour cost for the blasting personnel is included in the delivered price of the explosives.
Riacho dos Machados is going to buy the explosives and accessories; and delivered to the contractor.
18.1.8.4 Loading
The parts and consumables cost associated with operating and maintaining the fleet of Liebherr
R984C excavators and Liebherr L580 Wheel Loader.
18.1.8.5 Hauling
The parts and consumables cost associated with operating and maintaining the fleet of Scania P420
8x4 40mt haul trucks.
18.1.8.6 Auxiliary
The parts and consumables cost associated with operating and maintaining the fleet of auxiliary mine
equipment. This includes the track dozers, wheel dozers, motor graders and the water trucks.

All the labour costs for operating all major and auxiliary equipments, all of the maintenance labour,
general labourers and pumpmen, as previously detailed in Table 18-31.
The allowance in the manpower that is required to cover vacations, sick leave, and absenteeism
(VS&A) and initial training costs are considered as part of Mine G&A.
18.1.8.8 General Mine

The parts and consumables cost associated with maintaining the small mine operations support
equipment such as the flat bed trucks, pickups, light plants, etc.
252
Office supplies and utilities for the mine operations office, mine engineering and geology.
Pit dewatering operating cost (parts and consumables and power).
Road treatments including chemicals and aggregate.
18.1.8.8.1 General Maintenance

The parts and consumables cost associated with maintaining the mine maintenance support
equipment (such as the fuel and lube truck, mechanics trucks, etc.).
Office supplies and utilities for the mine maintenance office, shop and warehouse.
An allowance of $US 0.010 per tonne of total material is included for all the above items.
18.1.8.8.2 Mine General and Administrative (G&A)

The labour cost of salaried personnel including fringe benefits. This includes mine operations, mine
maintenance, engineering, and geology.
The labour cost for the personnel required to cover vacations, sick leave, and absenteeism (VS&A)
and initial training costs.
SUMMARY OF MINE OPERATING COSTS - TOTAL DOLLARS ($US X 1000)
Total
Grade Hourly General General Cost/ Tonne of Cost/ Ore
Mining Year Material Contractor Earthworks Drilling Blasting Loading Hauling Auxiliary G&A TOTAL
Control Labour Mine Maint. Total Mat'l Tonne
(ktonnes)
PP 19,000 11,938 1,082 452 37 299 2,547 2,568 829 2,743 681 190 2,281 25,647 1.350 24.239
Y01 30,000 - 506 525 562 2,873 6,536 8,083 2,651 7,979 665 300 4,251 34,930 1.164 15.450
Y02 30,000 - 112 766 1,447 6,285 6,497 7,953 2,507 7,960 673 300 2,999 37,498 1.250 10.399
Y03 30,000 - 117 606 1,383 6,112 6,510 8,502 2,651 8,357 678 300 3,046 38,261 1.275 13.034
Y04 30,000 - - 503 1,788 8,308 6,546 8,688 2,507 8,468 682 300 3,048 40,837 1.361 16.372
Y05 19,824 - - 508 1,497 6,769 4,319 7,166 2,145 6,806 638 198 2,390 32,436 1.636 12.695
Y06 16,606 - - 508 1,333 5,854 3,627 6,764 1,640 6,226 623 166 2,295 29,036 1.749 11.365
Y07 8,370 - - 508 914 3,739 1,857 3,490 1,123 3,174 539 84 1,990 17,418 2.081 6.817
Y08 1,361 - - 41 231 812 417 819 182 786 139 14 293 3,732 2.742 4.410
Y09 - - - - - - - - - - - - - - - -
Y10 - - - - - - - - - - - - - - - -
Total 185,161 11,938 1,816 4,416 9,192 41,051 38,857 54,033 16,234 52,498 5,317 1,852 22,594 259,797 1.403 12.451
Cost/ Tonne of Total Mat'l 0.064 0.010 0.024 0.050 0.222 0.210 0.292 0.088 0.284 0.029 0.010 0.122 1.403
Percent 4.6% 0.7% 1.7% 3.5% 15.8% 15.0% 20.8% 6.2% 20.2% 2.0% 0.7% 8.7%
Preproduction - Total Cost, Unit Cost Per Total Tonne, and Unit Cost Per Mined Ore Tonne 25,647 1.350 24.239
Commercial Production - Total Cost, Unit Cost Per Total Tonne, and Unit Cost Per Ore Tonne 234,149 1.409 11.222
Table 18-39 Summary of Mine Operating Costs - Total Dollars ($US x 1000)
SUMMARY OF MINE OPERATING COSTS - PER TOTAL TONNE (US$/TONNE)
Total
Grade Hourly General General Total Cost ($US
Control Labour Mine Maint. 1000)
(ktonnes)
PP 19,000 0.63 0.06 0.02 0.00 0.02 0.13 0.14 0.04 0.14 0.04 0.01 0.12 1.35 25,647
Y01 30,000 - 0.02 0.02 0.02 0.10 0.22 0.27 0.09 0.27 0.02 0.01 0.14 1.16 34,930
Y02 30,000 - 0.00 0.03 0.05 0.21 0.22 0.27 0.08 0.27 0.02 0.01 0.10 1.25 37,498
Y03 30,000 - 0.00 0.02 0.05 0.20 0.22 0.28 0.09 0.28 0.02 0.01 0.10 1.28 38,261
Y04 30,000 - - 0.02 0.06 0.28 0.22 0.29 0.08 0.28 0.02 0.01 0.10 1.36 40,837
Y05 19,824 - - 0.03 0.08 0.34 0.22 0.36 0.11 0.34 0.03 0.01 0.12 1.64 32,436
Y06 16,606 - - 0.03 0.08 0.35 0.22 0.41 0.10 0.37 0.04 0.01 0.14 1.75 29,036
Y07 8,370 - - 0.06 0.11 0.45 0.22 0.42 0.13 0.38 0.06 0.01 0.24 2.08 17,418
Y08 1,361 - - 0.03 0.17 0.60 0.31 0.60 0.13 0.58 0.10 0.01 0.22 2.74 3,732
Y09 - - - - - - - - - - - - - - -
Y10 - - - - - - - - - - - - - - -
Total 185,161 0.06 0.01 0.02 0.05 0.22 0.21 0.29 0.09 0.28 0.03 0.01 0.12 1.40 259,797
Percent 4.6% 0.7% 1.7% 3.5% 15.8% 15.0% 20.8% 6.2% 20.2% 2.0% 0.7% 8.7% 100.0%
Table 18-40 Summary of Mine Operating Costs - Per Total Tonne ($US/tonne)
253
MINE OPERATING COST BY COSTS CENTRES (US$x1000 & US$/tonne)
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Contractor operation US$/tonne
Material handling 1.663 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Kton 7,177 - - - - - - - -
Mobilization/Desmobilization US$x1000
Contractor mine operation US$x1000 11,938 - - - - - - - -
Clear and grub, trees and shrubs US$/m2 1.2

m2 491,909 268,343 61,099 57,092 - - - - -
US$x1000 566 309 70 66 - - - - -
Topsoil stripping and disposal US$/m3 2.7
m3 124,421 67,133 15,275 14,475 - - - - -
US$x1000 336 181 41 39 - - - - -
Cut US$/m3 3.0
m3 7,222 236 - 1,008 - - - - -
US$x1000 22 1 - 3 - - - - -
Fill US$/m3 1.6
m3 102,139 9,923 - 5,686 - - - - -
US$x1000 158 15 - 9 - - - - -
Mobilization/Desmobilization US$x1000
TOTAL Earth works operation US$x1000 1,082 506 112 117 - - - - -
US$/tonne 0.057 0.017 0.004 0.004 - - - - -
Grade Control Drilling oper cost 205.59 205.59 US$/hr

oper hours 2,199 2,554 3,724 2,948 2,447 2,470 2,470 2,470 197
TOTAL Grade Control Drilling US$x1000 452 525 766 606 503 508 508 508 41
US$/tonne 0.024 0.018 0.026 0.020 0.017 0.026 0.031 0.061 0.030
Drilling oper cost 96.26 96.26 US$/hr

oper hours 386 5,837 15,034 14,372 18,575 15,549 13,849 9,492 2,398
TOTAL Drilling US$x1000 37 562 1,447 1,383 1,788 1,497 1,333 914 231
US$/tonne 0.002 0.019 0.048 0.046 0.060 0.075 0.080 0.109 0.170
Blasting
Explosives US$x1000 144 2,005 5,061 4,918 7,020 5,560 4,777 2,768 572
Accessories US$x1000 13 208 474 444 537 459 418 312 85
Services US$x1000 142 660 750 750 750 750 660 660 155
TOTAL Blasting US$x1000 299 2,873 6,285 6,112 8,308 6,769 5,854 3,739 812
US$/tonne 0.016 0.096 0.209 0.204 0.277 0.341 0.353 0.447 0.597
Table 18-41 Mine Operating Cost by Costs Centres (US$x1000 & US$/tonne) (1/3)
254
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Loading
Liebherr 984C (5.0 cu. m) ore oper cost 111.13 111.13 US$/hr wo/diesel
oper hours 5,942 9,845 11,004 10,467 10,204 7,616 6,780 4,638 1,370
Diesel consumption Lt/hr 95 95 95 95 95 95 95 95 95
Liebherr L580 (4.0 cu. m) oper cost 55.15 55.15 US$/hr
oper hours 2,543 3,641 2,925 3,079 3,326 1,733 1,410 583 2,081
Liebherr 984C (6.7 cu. m) waste oper cost 111.13 111.13 US$/hr
oper hours 6,220 22,438 21,350 21,892 22,249 13,969 11,365 4,704 -
Diesel consumption Lt/hr 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00 95.00
Liebherr 984C (5.0 cu. m) ore US$x1000 660 1,094 1,223 1,163 1,134 846 753 515 152
Liebherr L580 (4.0 cu. m) US$x1000 140 201 161 170 183 96 78 32 115
Liebherr 984C (6.7 cu. m) waste US$x1000 691 2,494 2,373 2,433 2,473 1,552 1,263 523 -
Diesel consumption Lt 1,206,248 3,139,732 3,132,100 3,135,708 3,149,526 2,085,271 1,751,971 899,164 171,801
Diesel cost US$/ltr 0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88
Diesel US$x1000 1,055 2,747 2,741 2,744 2,756 1,825 1,533 787 150
TOTAL Loading US$x1000 2,547 6,536 6,497 6,510 6,546 4,319 3,627 1,857 417
US$/tonne 0.134 0.218 0.217 0.217 0.218 0.218 0.218 0.222 0.307
Hauling
40t Truck oper cost 16.86 16.86 US$/hr wo/diesel
oper hours 75,531 238,347 231,664 248,044 253,719 206,445 194,237 99,533 23,488
Operation US$x1000 1,273 4,018 3,906 4,182 4,277 3,480 3,275 1,678 396
Diesel cost US$/ltr 0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88
Diesel US$x1000 1,294 4,065 4,048 4,320 4,411 3,686 3,489 1,812 423
TOTAL Hauling US$x1000 2,568 8,083 7,953 8,502 8,688 7,166 6,764 3,490 819
US$/tonne 0.135 0.269 0.265 0.283 0.290 0.361 0.407 0.417 0.601
Auxiliary Equipment
Track Dozer oper cost 124.28 124.28 US$/hr
Grader oper cost 64.35 64.35 US$/hr
Water Truck oper cost 22.23 22.23 US$/hr
Track Dozer oper hours 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002
Grader oper hours 2,171 8,824 8,824 8,824 8,824 7,108 5,392 2,941 540
Water Truck oper hours 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002
Track Dozer US$x1000 585 1,767 1,645 1,767 1,645 1,432 1,097 792 125
Grader US$x1000 140 568 568 568 568 457 347 189 35
Water Truck US$x1000 105 316 294 316 294 256 196 142 22
TOTAL Auxiliary Equipment US$x1000 829 2,651 2,507 2,651 2,507 2,145 1,640 1,123 182
US$/tonne 0.044 0.088 0.084 0.088 0.084 0.108 0.099 0.134 0.133
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Hourly Labour
TOTAL Hourly Labour US$x1000 2,743 7,979 7,960 8,357 8,468 6,806 6,226 3,174 786
US$/tonne 0.144 0.266 0.265 0.279 0.282 0.343 0.375 0.379 0.577
Mine General
Office Supplies 0.0020 0.0020 US$/tonne
Road Treatment 0.0030 0.0030 US$/tonne
US$x1000 95 150 150 150 150 99 83 42 7
Support Equipment US$x1000 583 510 510 510 510 510 510 456 120
Pumping US$x1000 3 5 13 18 22 29 31 42 12
Topsoil stripping and disposal US$x1000
TOTAL Mine General US$x1000 681 665 673 678 682 638 623 539 139
US$/tonne 0.036 0.022 0.022 0.023 0.023 0.032 0.038 0.064 0.102
Maintenance General
Parts/Consumables 0.010 0.010 US$/tonne
TOTAL Maintenance General US$x1000 190 300 300 300 300 198 166 84 14
US$/tonne 0.010 0.010 0.010 0.010 0.010 0.010 0.010 0.010 0.010
G&A
Salaried Staff US$x1000 1,551 2,139 2,203 2,203 2,203 1,712 1,663 1,663 217
VS&A US$x1000 277 796 796 843 844 678 632 327 77
Training US$x1000 453 1,316 - - - - - - -
TOTAL G&A US$x1000 2,281 4,251 2,999 3,046 3,048 2,390 2,295 1,990 293
US$/tonne 0.120 0.142 0.100 0.102 0.102 0.121 0.138 0.238 0.215
TOTAL
US$x1000 25,647 34,930 37,498 38,261 40,837 32,436 29,036 17,418 3,732
US$/tonne 1.350 1.164 1.250 1.275 1.361 1.636 1.749 2.081 2.742
18.1.8.8.3 Parts and Consumables
255
Table 18-44 summarizes the total mine parts and consumables operating costs. Total cost, unit cost
per total tonne of material, and unit cost per ore tonne are shown for the preproduction development
period and for commercial production years.
SUMMARY OF MINE PARTS AND CONSUMABLES OF TOTAL AND UNIT MINING COSTS

Preproduction 20,622.5 1.09 19.49

Table 18-44 Summary of Total and Unit Mining Parts and Consumables Costs
Total mine parts and consumables operating cost during commercial production is US$164.1m. This
amounts to US$0.99 per total tonne of material and US$7.86 per mined ore tonne during this period.
Table 18-45 presents the parts and consumables mining costs in total dollars by the various cost
centres (drilling blasting, loading, etc.) for each year. Table 18-46 presents a similar summary in
dollars per total tonne.
During commercial production, the parts and consumables cost amounts to 70% of the total mine
operating costs of US$234.1m.
The parts and consumables cost includes diesel fuel, spare parts, lubricants, blasting agents, etc.
Parts and consumables are further divided into the following four cost sections:
Mine Major Equipment.
Blasting Supplies.
General Mine.
General Maintenance.
256
SUMMARY OF MINE PARTS AND CONSUMABLES - TOTAL DOLLARS ($US X 1000)
Total
(ktonnes)
PP 19,000 11,938 1,082 452 37 299 2,547 2,568 829 681 190 20,622 1.085 19.490
Y01 30,000 - 506 525 562 2,873 6,536 8,083 2,651 665 300 22,700 0.757 10.041
Y02 30,000 - 112 766 1,447 6,285 6,497 7,953 2,507 673 300 26,539 0.885 7.360
Y03 30,000 - 117 606 1,383 6,112 6,510 8,502 2,651 678 300 26,857 0.895 9.149
Y04 30,000 - - 503 1,788 8,308 6,546 8,688 2,507 682 300 29,322 0.977 11.755
Y05 19,824 - - 508 1,497 6,769 4,319 7,166 2,145 638 198 23,240 1.172 9.096
Y06 16,606 - - 508 1,333 5,854 3,627 6,764 1,640 623 166 20,515 1.235 8.030
Y07 8,370 - - 508 914 3,739 1,857 3,490 1,123 539 84 12,254 1.464 4.796
Y08 1,361 - - 41 231 812 417 819 182 139 14 2,654 1.950 3.135
Y09 - - - - - - - - - - - - - -
Y10 - - - - - - - - - - - - - -
Total 185,161 11,938 1,816 4,416 9,192 41,051 38,857 54,033 16,234 - 5,317 1,852 - 184,705 0.998 8.852
Cost/ Tonne of Total Mat'l 0.064 0.010 0.024 0.050 0.222 0.210 0.292 0.088 - 0.029 0.010 - 0.998
Percent 6.5% 1.0% 2.4% 5.0% 22.2% 21.0% 29.3% 8.8% 0.0% 2.9% 1.0% 0.0%
Table 18-45 Summary of Mine Parts and Consumables Total Dollars ($US x 1000)
SUMMARY OF MINE PARTS AND CONSUMABLES - PER TOTAL TONNE (US$/TONNE)
Total
Grade Hourly General General Total Cost ($US
Control Labour Mine Maint. 1000)
(ktonnes)
PP 19,000 0.63 0.06 0.02 0.00 0.02 0.13 0.14 0.04 - 0.04 0.01 - 1.09 25,647
Y01 30,000 - 0.02 0.02 0.02 0.10 0.22 0.27 0.09 - 0.02 0.01 - 0.76 34,930
Y02 30,000 - 0.00 0.03 0.05 0.21 0.22 0.27 0.08 - 0.02 0.01 - 0.88 37,498
Y03 30,000 - 0.00 0.02 0.05 0.20 0.22 0.28 0.09 - 0.02 0.01 - 0.90 38,261
Y04 30,000 - - 0.02 0.06 0.28 0.22 0.29 0.08 - 0.02 0.01 - 0.98 40,837
Y05 19,824 - - 0.03 0.08 0.34 0.22 0.36 0.11 - 0.03 0.01 - 1.17 32,436
Y06 16,606 - - 0.03 0.08 0.35 0.22 0.41 0.10 - 0.04 0.01 - 1.24 29,036
Y07 8,370 - - 0.06 0.11 0.45 0.22 0.42 0.13 - 0.06 0.01 - 1.46 17,418
Y08 1,361 - - 0.03 0.17 0.60 0.31 0.60 0.13 - 0.10 0.01 - 1.95 3,732
Y09 - - - - - - - - - - - - - - -
Y10 - - - - - - - - - - - - - - -
Total 185,161 0.06 0.01 0.02 0.05 0.22 0.21 0.29 0.09 - 0.03 0.01 - 1.00 259,797
Percent 6.5% 1.0% 2.4% 5.0% 22.2% 21.0% 29.3% 8.8% 0.0% 2.9% 1.0% 0.0% 100.0%
Table 18-46 Summary of Mine Parts and Consumables - Per Total Tonne ($US/tonne)
18.1.9 Major Mine Equipment

The supplies required to operate, maintain, and repair the major mine equipment contribute a
significant part of the total mine parts and consumables costs. The parts and consumables costs for
the drilling, loading, hauling, and the auxiliary equipment cost centres comprise the operating costs for
the major equipment. The bases used in developing these costs were the required equipment
operating hours, as previously detailed in Section 18.1.5, and the unit rates applied to the different
types of equipment. Table 18-47 summarizes the estimated operating hours for the mine major
equipment.
Table 18-48 summarizes the estimated costs per operating hour for the major mine equipment. These
costs represent the average direct operating cost per operating hour over the equipment life.
The parts and consumables cost includes fuel, tires, lubricants, filters, major and minor repair parts
and undercarriage costs. The cost of the operator and the maintenance labour is not included in
Table 18-48.
257
Table 18-49 to Table 18-56 show the details of the operating cost estimate for each piece of
equipment for the commercial production period. A summary of the parameters and assumptions used
to establish the major equipment parts and consumables costs is as follows:
Diesel fuel delivered to the site at R$1.75 per litre. This is based on a quote obtained by Riacho dos
Machados personnel. Fuel consumption for each piece of equipment was based on data provided by
Caterpillar and other providers on hourly fuel consumption.
The diesel fuel consumption for the trucks was estimated according to variable consumptions and
hauling profiles.
Parts for all equipment are based on cost data provided by the vendors.
Drill bits and downhole accessories are based on an average drill productivity of 32.12 metres per
operating hour for a 6 inch holes and 15m length. Unit costs for bits, drill pipe, sub adapters and
stabilizers are shown on Table 18-49.
The major repair costs for the Caterpillar, Liebherr, Atlas Copco and Scania equipment are based on
cost data provided by the vendors. An exchange rate of 2.00 Brazilian Real per US dollar was
considered for costs received in local currency.
MINE EQUIPMENT OPERATING HOURS REQUIREMENT SUMMARY
Time Period
Equipment Type:
PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
Atlascopco Explorac R50 2,199 2,554 3,724 2,948 2,447 2,470 2,470 2,470 197 - -
Atlascopco ROC L8-30 386 5,837 15,034 14,372 18,575 15,549 13,849 9,492 2,398 - -
Liebherr 984C (5.0 cu. m) ore 12,162 32,283 32,354 32,359 32,453 21,585 18,145 9,342 1,370 - -
Liebherr L580 (4.4 cu. m) 2,543 3,641 2,925 3,079 3,326 1,733 1,410 583 2,081 - -
Scania Truck (40ton) 75,531 238,347 231,664 248,044 253,719 206,445 194,237 99,533 23,488 - -
CATD9T Track Dozer 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002 - -
CAT160M Grader 2,171 8,824 8,824 8,824 8,824 7,108 5,392 2,941 540 - -
Scania Water Truck (20000 liter) 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002 - -
Flatbed Truck (7.3 mt) 2,957 2,403 2,403 2,403 2,403 2,403 2,403 2,403 756 - -
Mechanics Truck (4x4) 2,957 2,403 2,403 2,403 2,403 2,403 2,403 2,403 756 - -
Scania Fuel Truck (12000 liter) 1,478 1,202 1,202 1,202 1,202 1,202 1,202 1,202 378 - -
Backhoe Loader (1 cu m) 2,957 2,403 2,403 2,403 2,403 2,403 2,403 2,403 756 - -
Pickup Truck (4x4) 41,391 33,642 33,642 33,642 33,642 33,642 33,642 24,030 6,048 - -
Light Plants 8,870 14,418 14,418 14,418 14,418 14,418 14,418 14,418 1,512 - -
Table 18-47 Mine Equipment Operating Hours Requirement Summary
258
MAJOR EQUIPMENT HOURLY COST (US$/hr)
Equipment Type: Total Diesel Lube-Oil-Filters- Tyres Wear Items Others Reparis
US$/hr lt/hr US$/hr lt/hr US$/hr hrs/set US$/h US$/h US$/h US$/h
Atlascopco Explorac R50 205.59 55.00 48.13 8.79 106.96 1.73 39.98
Atlascopco ROC L8-30 96.26 70.00 61.25 0.23 0.32 30.49 4.20
Liebherr 984C (5.0 cu. m) ore 194.26 95.00 83.13 8.89 12.44 9.17 89.52
Liebherr L580 (4.4 cu. m) 72.65 20.00 17.50 1.75 2.45 78,000 17.33 1.22 34.16
Scania Truck (40ton) 39.76 20.04 22.90 0.11 0.15 17,496 3.50 13.21
CATD9T Track Dozer 124.28 50.00 43.75 1.73 2.42 15.65 21.34 41.12
CAT160M Grader 64.35 25.70 22.49 0.74 1.04 30,000 6.00 3.32 31.51
Scania Water Truck (20000 liter) 22.23 12.00 10.50 2.00 2.80 6,020 4.01 4.92
Table 18-48 Major Equipment Cost Per Operating Hour (US$/h)
Operating Cost Per Hour - Atlascopco ROC L8-30
US Dollars
Category Parts
Machine Life (Metered Hours) 35,000.00
COST PER METERED HOUR:
Surface Operation:
Fuel Cost ($/Ltr) 0.88
Fuel Consumption (Ltr/Hr) 70.00
Fuel 61.25
Lube-Oil-Filters-Grease 0.32
Repairs 4.20
Undercarriage -
Surface Operation Cost Per Hour 65.77
Downhole Operation:
Bit Rate (m/min) 23.33
Bit Unit Cost 980.00
Bit Life (m) 1,200.00
Bit Cost 19.06
Pipe Unit Cost 1,800.00
Pipe Life (m) 18,000.00
Pipe Number Required 2.00
Pipe Cost 4.67
Drilling tools unit Cost 5,800.00
Drilling tools Life (m) 20,000.00
Drilling tools Cost 6.77
Downhole Operation Cost Per Hour 30.49

Total Cost Per Hour 96.26
Note: Equipment cost per hour includes parts and consumables required to
perform all minor service, repairs, and major rebuilds.
Table 18-49 Hourly Cost for Atlas Copco ROC L8-30 Drill
259
Operating Cost Per Hour - Liebherr 984C (5.0 cu. m) ore & waste
US Dollars
Category Parts
Fuel Unit Cost ($/Ltr) 0.88
Fuel Consumption (ltr/hr) 95.00
Fuel 83.13
Number of Tires
Tire Cost
Tire Life (hours)
Tires
Lube Unit Cost ($/Ltr) 1.40
Lube Consumption (ltr/hr) 8.89
Repairs 89.52
Undercarriage (included in repairs)
Wear Items 9.17
Total Cost Per Hour $US/hr 194.26
Table 18-50 Hourly Cost for Liebherr R984C Excavator
Operating Cost Per Hour - Liebherr L580 (4.4 cu. m)
US Dollars
Category Parts
Fuel 17.50
Number of Tires 4.00
Tire Cost 19,500.00
Tire Life (hours) 4,500.00
Tires 17.33
Repairs 34.16
Undercarriage
Wear Items 1.22
Total Cost Per Hour $US/hr 72.65
Table 18-51 Hourly Cost for Liebherr L580 2+2 Wheel Loader
260
DIESEL CONSUMPTION FOR HAUL TRUCKS
SCANIA 40ton PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 TOTAL
Cycle Time (min)
Ore 6.66 6.40 8.80 10.01 10.37 12.34 13.22 13.83 15.20 - -
Low grade 5.66 8.22 9.24 10.71 - - - - - - -
Waste 7.61 10.66 10.23 11.08 11.27 15.10 17.66 18.55 14.82 - -
Waste to TSF - - - - - - - - - - -
Rehandling - 5.49 - 5.80 5.81 - - - 5.62 - -
Diesel (lt/hr)
Ore 19.95 19.75 19.70 19.94 20.06 20.21 20.32 20.62 20.71 - -
Low grade 19.69 20.21 20.12 20.38 - - - - - - -
Waste 19.18 19.33 20.06 20.08 20.31 20.56 20.69 20.95 21.11 - -
Waste to TSF - - - - - - - - - - -
Rehandling - 18.42 - 18.62 18.68 - - - 18.70 - -
Average Consumption Lt/hr 19.58 19.49 19.97 19.90 19.87 20.40 20.53 20.81 20.56 - - 20.04
Consumption Lt/periodx1000 1,479.07 4,645.39 4,626.03 4,936.84 5,040.92 4,212.16 3,987.74 2,071.11 482.95 - - 31,482.23
Table 18-52 Diesel Consumption for Haul Trucks
Operating Cost Per Hour - CATD9T Track Dozer
US Dollars
Category Parts
Fuel 43.75
Number of Tires -
Tire Cost -
Tire Life (hours) -
Tires -
Repairs 41.12
Undercarriage 21.34
Wear Items 15.65
Table 18-53 Hourly Cost for CAT D9T Track Dozer
261
Operating Cost Per Hour - CAT160M Grader
US Dollars
Category Parts
Fuel 22.49
Tire Cost 5,000.00
Tires 6.00
Repairs 31.51
Undercarriage -
Wear Items 3.32
Table 18-54 Hourly Cost for CAT 16M Grader
Operating Cost Per Hour - Scania Water Truck (20000 liter)
US Dollars
Category Parts
Fuel 10.50
Tire Cost 602.00
Tires 4.01
Repairs 4.92
Undercarriage -
Wear Items -
Table 18-55 Hourly Cost for Scania Water Truck (20000 litre)
262
Operating Cost Per Hour - Atlascopco Explorac R50
US Dollars
Category Parts
Surface Operation:
Fuel Cost ($/Ltr) 0.88
Fuel Consumption (Ltr/Hr) 55.00
Fuel 48.13
Repairs 39.98
Undercarriage 1.73
Surface Operation Cost Per Hour 98.63
Downhole Operation:
Bit Rate (m/min) 0.89
Bit Unit Cost 830.00
Bit Life (m) 2,500.00
Bit Cost 17.66
Pipe Unit Cost 5,300.00
Pipe Life (m) 60,000.00
Pipe Number Required 10.00
Pipe Cost 47.00
Drilling tools unit Cost 47,700.00
Drilling tools Life (m) 60,000.00
Drilling tools Cost 42.30
Downhole Operation Cost Per Hour 106.96

Table 18-56 Hourly Cost for Atlas Copco Explorac R50 Grade Control
18.1.9.1 Blasting Supplies

The drilling pattern, explosive charge per hole, and other blasting information is summarized in
Section 18.1.8. The drill spacing is 5.0 m and burden 5.0 m for ore with 6 blast hole diameter;
and spacing of 6.5 m by burden of 5.0 m for waste also with 6 blast hole diameters.
The explosives cost is based on a mixture between ANFO and an emulsion delivered down the
hole at US$$1.63 per kilogram by a contractor. The cost is based on contractor quotation. The
project buys the consumables for the emulsion fabrication by the contractor, who then deliver
them down the hole.
An exchange rate of 2.0 Brazilian Real per US dollar was considered for explosives, blasting
accessories and contractor costs.
263
Table 18-57 shows the details of unit cost estimation.

BLASTING COST - EXPLOSIVES & ACCESSORIES
Blasting Parameters (ORE+LG) (ORE+LG) (ORE+LG) fresh Waste oxides Waste Waste fresh
oxides (1) transitional (2) rock (1) transitional (2) rock
Rock mass per hole tonnes 293.86 199.12 1,041.28 990.13
Holes per blast hol es 50.00 50.00 100.00 100.00
Tonnes per blast tonnes 14,692.79 9,955.75 104,127.59 99,012.55
Hole length m 7.00 7.00 13.00 13.00
Burden m 4.00 3.00 6.00 5.00
Spacing m 5.00 4.00 6.00 6.00
Powder Factor kg/tonne 0.13 0.23 0.14 0.16
ANFO proportion % 30% 30% 30% 30%
Emulsion proportion % 70% 70% 70% 70%
ANFO (Granulated ANFOMAX) US$/kg 1.37 1.37 1.37 1.37
Emulsion (IBENITE 70/30) US$/kg 1.63 1.63 1.63 1.63
Detonator US$/uni t 6.46 5.41 6.46 5.41
Non electric cord (BRINEL) US$/uni t 3.90 3.90 4.32 4.32
Non electric cord II (BRINEL) US$/uni t 5.28 5.28 5.28 5.28
Primer US$/uni t 1.65 1.65 1.65 1.65
Accessories / Initiation (ORE+LG) (ORE+LG) (ORE+LG) fresh Waste oxides Waste Waste fresh
oxides (1) transitional (2) rock (1) transitional (2) rock
Detonator uni t/bl a s t 50.0 50.0 100.0 100.0
Non electric cord (BRINEL) uni t/bl a s t 50.0 50.0 100.0 100.0
Non electric cord II (BRINEL) uni t/bl a s t 13.0 13.0 25.0 25.0
Primer uni t/bl a s t 50.0 50.0 100.0 100.0
Detonator US$/bl a s ted tonne 322.88 270.38 645.75 540.75
Non electric cord (BRINEL) US$/bl a s ted tonne 195.00 195.00 432.00 432.00
Non electric cord II (BRINEL) US$/bl a s ted tonne 68.64 68.64 132.00 132.00
Primer US$/bl a s ted tonne 82.50 82.50 165.00 165.00
Subtotal US$/blasted tonne 669.02 616.52 1,374.75 1,269.75
Subtotal US$/hol e bl a s ted 0.05 0.06 0.01 0.01
(1) Oxides material will not be blasted.
(1) Only 50% transitional material will be blasted.
Table 18-57: Blasting Cost Explosives and Accessories
18.1.9.2 General Mine

This includes the parts and consumables cost associated with maintaining the mine
operations, the support equipment and supplying the mine engineering and operations
departments. This includes the following:
Fuel, tyres, repair parts, etc. for all the mine operations small support equipment.
Office supplies for the mine engineering and mine operations departments. US$0.002 per
tonne has been allocated for these costs.
Pit dewatering operating costs.
Topsoil striping and disposal.
Road treatments including chemicals for dust suppression and aggregate, estimated as
US$0.03 per tonne.
Support equipment costs were developed separately for the General Mine Cost Centre. Table 18-58
shows an estimate for the hourly operating cost for every type of equipment and applying the
264
calculated operating hours previously shown in Table 18-47 was estimated the total cost, which
average to US$0.029 per tonne for all mine life.
SUPPORT EQUIPMENT HOURLY COST (US$/hr)
Equipment Type: Total Diesel Lube-Oil-Filters- Tyres Wear Items Others Reparis
US$/hr lt/hr US$/hr lt/hr US$/hr hrs/set US$/h US$/h US$/h US$/h
Flatbed Truck (7.3 mt) 60.26 50.00 43.75 0.79 1.11 - 3.00 2.40 - 10.00
Mechanics Truck (4x4) 15.11 15.00 13.13 0.37 0.52 - 0.47 - 0.50 0.50
Scania Fuel Truck (12000 liter) 15.11 15.00 13.13 0.37 0.52 - 0.47 - 0.50 0.50
Backhoe Loader (1 cu m) 20.00 8.00 7.00 1.00 1.40 - 2.00 - - 9.60
Pickup Truck (4x4) 5.66 5.00 4.38 0.20 0.28 - 0.40 - - 0.60
Light Plants 5.02 5.00 4.38 0.10 0.14 - - - - 0.50
Table 18-58 Support Equipment Hourly Cost (US$/hr)
Pumping costs were developed separately for the General Mine Cost Centre. Table 18-59 shows the
details of the estimate. The table shows pit surface area by year. The estimate is based on 1090 mm
of rainfall per year with 90% as runoff, groundwater inflow the same as the rainfall. The amount of
static head by year is also shown. This corresponds to pit depth each year, considering the pit exit at
150 mRL.
The topsoil stripping and disposal cost has been estimated by calculating the area perturbed by
mining activities, in accordance with the mine production schedule. The sectors involved are the pit,
the ROM-pad and the waste storage areas. Table 18-60 shows those areas in a yearly basis. For cost
estimate it was assumed that this job will be carried out by contractors and unit rates for clear and
grub of US$1716 per hectare and US$2.51 per cubic metre for strip and stockpile the topsoil were
assumed. The cost required for Preproduction period and Year 1 is already included in the contractor
that is currently operating during the construction period.
265
PUMPING COST PER YEAR
Annual Estimated Annual Total Pumping Other Total Power Tot Cost
Pit Area Rainfall Seepage Seepage Total US Gal Time Static Head Heads (ft) Head Water Motor Cost (+5%)
Year Hectares Meter^2 cum (lps) cum cum x 1000 Hours m ft @30% m ft HP HP KWH $ $ x 1000
PP 51.6 516,490 700,373 44 700,373 1,400,746 370,078 3,855 18 59 18 23 77 9 14 39,175 2,742 2.88
P01 80.5 805,198 909,891 29 909,891 1,819,782 480,788 5,008 24 79 24 31 102 13 18 67,859 4,750 4.99
P02 86.1 860,734 972,647 31 972,647 1,945,295 513,948 5,354 57 187 56 74 243 30 43 172,280 12,060 12.66
P03 91.7 916,907 1,036,124 33 1,036,124 2,072,248 547,490 5,703 75 246 74 98 320 39 57 241,478 16,903 17.75
P04 91.7 916,907 1,036,124 103 1,036,124 2,072,248 547,490 5,703 93 305 92 121 397 49 70 299,433 20,960 22.01
P05 91.7 916,907 1,036,124 103 1,036,124 2,072,248 547,490 5,703 123 404 121 160 525 65 93 396,024 27,722 29.11
P06 91.7 916,907 1,036,124 103 1,036,124 2,072,248 547,490 5,703 129 423 127 168 550 68 98 415,342 29,074 30.53
P07 91.7 916,907 1,036,124 103 1,036,124 2,072,248 547,490 5,703 177 581 174 230 755 93 134 569,889 39,892 41.89
P08 91.7 916,907 310,837 31 310,837 621,674 164,247 1,711 171 561 168 222 729 90 129 165,171 11,562 12.14
P09
P10
P11
P12
P13
P14
P15
P16
P17
P18
P19
P20
P21
TOTAL 8,074,368 8,074,368 16,148,736 4,266,509 44,443 2,366,651 165,666 173.9
Annual Average Rainfall (P66% criteria) 1256 mm 1.256 m Rainfall mm/ano

Runoff Portion - Average Rainfall 0.9 Min 668
Groundwater Inflow = Rainfall Mean 1,023
Pumping Rate 1600 gpm Max 1,646
Pump Efficiency 0.73 Stdev 233
Motor Efficiency 0.95 P66% 1,256
Electric Power Cost PP 0.070 per kwh
Electric Power Cost Y1-Y8 0.070 per kwh
MWH R$ 140.00 USD 70.00 USD 0.07
1. Water HP = Q (gpm) x Head (ft) x 8.33 (lbs/gal H2O) / 33,000 ft-lb/min-HP
2. Motor HP = Water HP / (Pump Efficiency x Motor Efficiency)
3. KWH = Pumping Time (hrs) x Motor HP x 0.7457
4. Pumping Will Be Staged to Keep Heads Down for Plastic Pipe. Overall Cost Should be About the Same.
Table 18-59 Pumping Cost per Year
266
TOPSOIL STRIPING AND DISPOSAL
Accesses+Pit Magazine
Pit Area Exit storage Total Total Total (1) Total Total Total TOTAL COST (US$ x 1000)
Clear & Grub Strip &

Year m2 m2 m2 m2 Hectares m3 m3 Dump m3 Cut m3 Fill (2) Stockpile (3) Fill (6) Cut (7) Total Type
PP 407,176 28,886 55,847 491,909 49.2 122,977 124,421 7,222 102,139 566 336 158 22 1,082 contractor
P01 264,628 3,715 268,343 26.8 67,086 67,133 236 9,923 309 181 15 1 506 contractor
P02 61,099 - 61,099 6.1 15,275 15,275 - - 70 41 - - 112 contractor
P03 53,060 4,032 57,092 5.7 14,273 14,475 1,008 5,686 66 39 9 3 117 contractor
P04 - - - - - - - - - - - - - contractor
P05 - - - - - - - - - - - - - contractor
P06 - - - - - - - - - - - - - contractor
P07 - - - - - - - - - - - - - contractor
P08 - - - - - - - - - - - - - contractor
P09 - - - - - - - - - - - -
P10 - - - - - - - - - - - -
TOTAL 785,962 36,633 55,847 878,442 88 219,610 1,010 598 183 25 1,816
1
Topsoil depth 0.25 m
4
Topsoil density 1.70 tonne/m3
2
Clear and grub, trees and shrubs
3
Strip topsoil and stockpile
5
Witdh acesses include an additional buffer of 2m per side to cut/fill and construction issues
1
Topsoil depth 0.3 m
4
Topsoil density 1.70 tonne/m3
Y0 Y1-Y14
2
Clear and grub, trees and shrubs $ 1.15 $ 1.15 per m2
3
Strip topsoil and stockpile $ 2.70 $ 2.70 per Bm3
6
Cut $ 3.00 $ 3.00 per Bm3
7
Fill $ 1.55 $ 1.55 per Bm3
Mine accesses detail

Total cut Total Fill
Distance Width Area Topsoil requirement requirement
Item m m m2 m3 m3 m3
Waste dump road 1 201 24 4,824 1,206 1,486 32,907

Waste dump road 2 168 24 4,032 1,008 5,686 1,031
Mine-Plant road 484 24 11,616 2,904 36,474 49,584
Magazine road 889 14 12,446 3,112 64,179 970
Total Acceses 1,742 32,918 9,875 107,825 84,492
m2 m3 m3
Pit exit area 3,715 929 236 9,923
Magazine area 55,847 13,962 24,601 11,193
Total 1,742 92,480 24,766 132,662 105,608
Table 18-60 Topsoil Stripping Cost per Year
18.1.9.3 General Maintenance

This includes the parts and consumables cost associated with maintaining the mine maintenance
support equipment such as the fuel and lube trucks, mechanics trucks, etc. It includes the following
items:
Fuel, tires, repair parts, etc. for all mine maintenance support equipment.
Office supplies for the mine maintenance department, shop, and warehouse.
Other monthly billings for the mine maintenance department, shop, and warehouse, including
lighting, power, heating, etc.
Service contracts.
The above costs were estimated at US$0.010 per tonne of total.
267
18.1.9.4 Operating Labour

Labour operating costs were derived from the recommended number of mine personnel given in
Section 18.1.6 and estimates of labour rates and fringe benefits. Table 18-61 summarizes the mine
labour costs. Total cost, unit cost per total tonne of material, and unit cost per ore tonne are shown for
commercial production years.
SUMMARY OF LABOUR (HOURLY & STAFF) OF TOTAL AND UNIT MINING COSTS

Preproduction 5,024.7 0.26 4.75

Table 18-61 Summary of Total and Unit Mine Labour Costs
Total mine labour operating cost during commercial production is US$72.3m. This amounts to
US$0.44 per total tonne of material and US$3.65 per mined ore tonne during this period.
During commercial production the mine labour cost amounts to 30% of the total mine operating cost of
US$259.8m.
18.1.9.5 Salaried Staff

Personnel requirements for the mine salaried staff are discussed in Section 18.1.6 and summarized in
Table 18-30. Annual salaries are also shown in Table 18-30. They are based on labour rates
developed by Riacho dos Machados personnel.
Salaried staff costs are assigned to the Mine G&A cost centre.

The number of required hourly workers is discussed in Section 18.1.6 and summarized in
Table 18-31.
Again, the rates are based on data provided by Riacho dos Machados personnel.
A personnel allowance of 10.0% is added to account for vacation, sickness, and absenteeism. This is
included in the G&A cost centre. The 10.0% VS&A allowance is based on 30 vacation days plus 6 sick
days out of 365 scheduled shifts per person per year, i.e: 10.0% = 100% x (30 + 6)/365.
268
18.1.9.7 Mine Operating Costs by Commodity

Table 18-64 summarizes the mine operating cost by commodity. The following information is included
in the table:
Scheduled operating hours for each category of major equipment.
Diesel fuel consumption for each category of equipment.
Total diesel fuel cost.
Tire costs for each category of equipment and total cost.
Lubricants, filters, repair parts, and wear items cost for each category of major equipment.
Drill bits and downhole accessories costs.
Explosives costs.
General mine and general maintenance costs.
Mine labour costs.
Table 18-64 is a concise summary of mine operating costs. Table 18-62 and Table 18-63, show total
dollar amounts for each commodity. This table is included to facilitate sensitivity analysis to various
cost items that might be required for the cash flow analysis.
269
MINE OPERATING COSTS BY COMMODITY
Units PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 Total
OPERATING HOURS FOR MAJOR EQUIPMENT:
Atlascopco Explorac R50 Op. Hours 2,199 2,554 3,724 2,948 2,447 2,470 2,470 2,470 197 21,478
Atlascopco ROC L8-30 Op. Hours 386 5,837 15,034 14,372 18,575 15,549 13,849 9,492 2,398 95,493
Liebherr 984C (5.0 cu. m) ore Op. Hours 5,942 9,845 11,004 10,467 10,204 7,616 6,780 4,638 1,370 67,866
Liebherr L580 (4.0 cu. m) Op. Hours 2,543 3,641 2,925 3,079 3,326 1,733 1,410 583 2,081 21,322
Liebherr 984C (6.7 cu. m) waste Op. Hours 6,220 22,438 21,350 21,892 22,249 13,969 11,365 4,704 0 124,187
Scania Truck (40ton) Op. Hours 75,531 238,347 231,664 248,044 253,719 206,445 194,237 99,533 23,488 1,571,009
CATD9T Track Dozer Op. Hours 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002 87,327
CAT160M Grader Op. Hours 2,171 8,824 8,824 8,824 8,824 7,108 5,392 2,941 540 53,448
Scania Water Truck (20000 liter) Op. Hours 4,704 14,216 13,236 14,216 13,236 11,520 8,824 6,373 1,002 87,327
Support Equipment Total Op. Hours 60,608 56,471 56,471 56,471 56,471 56,471 56,471 46,859 10,206 456,496
Total Equipment Operating Hours Op. Hours 165,009 376,389 377,467 394,529 402,286 334,400 309,621 183,966 42,286 2,585,953
FUEL CONSUMPTION: Ltr/Hr
Contractor Ltrx1000 2512 0 0 0 0 0 0 0 0 2,512
Atlascopco Explorac R50 55.00 Ltrx1000 121 140 205 162 135 136 136 136 11 1,181
Atlascopco ROC L8-30 70.00 Ltrx1000 27 409 1,052 1,006 1,300 1,088 969 664 168 6,684
Liebherr 984C (5.0 cu. m) ore 95.00 Ltrx1000 565 935 1,045 994 969 724 644 441 130 6,447
Liebherr L580 (4.0 cu. m) 20.00 Ltrx1000 51 73 59 62 67 35 28 12 42 426
Liebherr 984C (6.7 cu. m) waste 95.00 Ltrx1000 591 2,132 2,028 2,080 2,114 1,327 1,080 447 0 11,798
Scania Truck (40ton) variable Ltrx1000 1,479 4,645 4,626 4,937 5,041 4,212 3,988 2,071 483 31,482
CATD9T Track Dozer 50.00 Ltrx1000 235 711 662 711 662 576 441 319 50 4,366
CAT160M Grader 25.70 Ltrx1000 56 227 227 227 227 183 139 76 14 1,374
Scania Water Truck (20000 liter) 12.00 Ltrx1000 56 171 159 171 159 138 106 76 12 1,048
Support Equipment Total variable Ltrx1000 489 434 434 434 434 434 434 386 99 3,576
Total Fuel Consumption Ltrx1000 6,182 9,876 10,496 10,783 11,106 8,852 7,964 4,627 1,008 70,895
0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88
Fuel Cost at PP Y1-Y8
per liter USD 0.875 USD 0.875 $x1000 5,409 8,642 9,184 9,435 9,718 7,746 6,969 4,049 882 62,033
Lt/ton 0.28 0.28 0.31 0.31 0.32 0.39 0.42 0.48 0.29
TIRE COSTS: Cost/hr
Y0 Y1-Y15
Atlascopco Explorac R50 0.00 0.00 $x1000 0 0 0 0 0 0 0 0 0 0
Atlascopco ROC L8-30 0.00 0.00 $x1000 0 0 0 0 0 0 0 0 0 0
Liebherr 984C (5.0 cu. m) ore 0.00 0.00 $x1000 0 0 0 0 0 0 0 0 0 0
Liebherr L580 (4.0 cu. m) 17.33 17.33 $x1000 44 63 51 53 58 30 24 10 36 370
Liebherr 984C (6.7 cu. m) waste 0.00 0.00 $x1000 0 0 0 0 0 0 0 0 0 0
Scania Truck (40ton) 3.50 3.50 $x1000 264 834 811 868 888 722 680 348 82 5,497
CATD9T Track Dozer 0.00 0.00 $x1000 0 0 0 0 0 0 0 0 0 0
CAT160M Grader 6.00 6.00 $x1000 13 53 53 53 53 43 32 18 3 321
Scania Water Truck (20000 liter) 4.01 4.01 $x1000 19 57 53 57 53 46 35 26 4 350
Support Equipment Total variable $x1000 33 27 27 27 27 27 27 23 7 226
Total Tire Cost ($US x 1000) $x1000 374 1,034 995 1,058 1,079 868 799 425 132 6,764
Table 18-62 Mine Operating Costs by Commodity (1/2)
270
MINE OPERATING COSTS BY COMMODITY
Units PP Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 Total
LUBRICANTS, REPAIRS, WEAR ITEMS: Cost/hr
Y0 Y1-Y15
Atlascopco Explorac R50 50.50 50.50 $x1000 111 129 188 149 124 125 125 125 10 1,085
Atlascopco ROC L8-30 4.52 4.52 $x1000 2 26 68 65 84 70 63 43 11 432
Liebherr 984C (5.0 cu. m) ore 111.13 111.13 $x1000 660 1,094 1,223 1,163 1,134 846 753 515 152 7,542
Liebherr L580 (4.0 cu. m) 37.82 37.82 $x1000 96 138 111 116 126 66 53 22 79 806
Liebherr 984C (6.7 cu. m) waste 111.13 111.13 $x1000 691 2,494 2,373 2,433 2,473 1,552 1,263 523 0 13,801
Scania Truck (40ton) 13.36 13.36 $x1000 1,009 3,184 3,095 3,314 3,390 2,758 2,595 1,330 314 20,989
CATD9T Track Dozer 80.53 80.53 $x1000 379 1,145 1,066 1,145 1,066 928 711 513 81 7,032
CAT160M Grader 35.87 35.87 $x1000 78 316 316 316 316 255 193 105 19 1,917
Scania Water Truck (20000 liter) 7.72 7.72 $x1000 36 110 102 110 102 89 68 49 8 674
Support Equipment Total variable $x1000 119 101 101 101 101 101 101 93 26 846
Total Lube, Repair Parts, Wear Items $x1000 3,182 8,737 8,643 8,913 8,915 6,790 5,926 3,318 699 55,124
DRILL DOWNHOLE ITEMS: Cost/hr
Y0 Y1-Y15
Atlascopco Explorac R50 106.96 106.96 $x1000 235 273 398 315 262 264 264 264 21 2,297
Atlascopco ROC L8-30 30.49 30.49 $x1000 12 178 458 438 566 474 422 289 73 2,911
Total Drill Downhole Items ($US x 1000) $x1000 247 451 857 753 828 738 686 554 94 5,209
EXPLOSIVES:
Explosive Cost $x1000 144 2,005 5,061 4,918 7,020 5,560 4,777 2,768 572 32,824
Accessories Cost $x1000 13 208 474 444 537 459 418 312 85 2,950
Services Cost $x1000 142 660 750 750 750 750 660 660 155 5,277
Total Cost $x1000 299 2,873 6,285 6,112 8,308 6,769 5,854 3,739 812 41,051
OTHER CONSUMABLES:
Contractor operation $x1000 10,822 506 112 117 - - - - - 11,556
General Mine $x1000 97 152 152 152 152 101 85 44 7 941
General Maint. $x1000 190 300 300 300 300 198 166 84 14 1,852
Pumping $x1000 3 5 13 18 22 29 31 42 12 174
Topsoil stripping and disposal $x1000 0 0 0 0 0 0 0 0 0 0
Total Other Consumables $x1000 11,112 963 576 586 474 328 281 169 33 14,523
TOTAL CONSUMABLES $x1000 20,622 22,700 26,539 26,857 29,322 23,240 20,515 12,254 2,654 184,705
LABOUR COSTS:
Partial Year Factor none 1.20 1.00 1.00 1.00 1.00 1.00 1.00 1.00 0.30
Salaried Staff $x1000 1,551 2,139 2,203 2,203 2,203 1,712 1,663 1,663 217 15,555
Hourly Labour $x1000 2,743 7,979 7,960 8,357 8,468 6,806 6,226 3,174 786 52,498
VS&A and Training $x1000 730 2,112 796 843 844 678 632 327 77 7,038
TOTAL LABOUR $x1000 5,025 12,229 10,959 11,404 11,515 9,196 8,521 5,164 1,079 75,092
TOTAL COSTS $x1000 25,647 34,930 37,498 38,261 40,837 32,436 29,036 17,418 3,732 259,797
Table 18-63 Mine Operating Costs by Commodity (2/2)

SUMMARY OF MINE OPERATING COSTS BY COMMODITY
Units PP P01 P02 P03 P04 P05 P06 P07 P08 P09 P10 Total % of Total
PARTS AND CONSUMABLES:
Electrical Power $x1000 0 0 0 0 0 0 0 0 0 0 0.0%
Diesel Fuel $x1000 5,409 8,642 9,184 9,435 9,718 7,746 6,969 4,049 882 62,033 23.9%
Tires $x1000 374 1,034 995 1,058 1,079 868 799 425 132 6,764 2.6%
Lubricants, Repairs, Wear Items $x1000 3,182 8,737 8,643 8,913 8,915 6,790 5,926 3,318 699 55,124 21.2%
Drill Down Hole Items $x1000 247 451 857 753 828 738 686 554 94 5,209 2.0%
Explosives $x1000 299 2,873 6,285 6,112 8,308 6,769 5,854 3,739 812 41,051 15.8%
Gen.Mine/Gen. Maint/Pumping/Topsoil $x1000 11,112 963 576 586 474 328 281 169 33 14,523 5.6%
TOTAL PARTS AND CONSUMABLES $x1000 20,622 22,700 26,539 26,857 29,322 23,240 20,515 12,254 2,654 184,705 71.1%
LABOUR:
Salaried Staff $x1000 1,551 2,139 2,203 2,203 2,203 1,712 1,663 1,663 217 15,555 6.0%
Hourly Labour $x1000 2,743 7,979 7,960 8,357 8,468 6,806 6,226 3,174 786 52,498 20.2%
VS&A and Training $x1000 730 2,112 796 843 844 678 632 327 77 7,038 2.7%
TOTAL LABOUR $x1000 5,025 12,229 10,959 11,404 11,515 9,196 8,521 5,164 1,079 75,092 28.9%
TOTAL MINING COST $x1000 25,647 34,930 37,498 38,261 40,837 32,436 29,036 17,418 3,732 259,797 100.0%
Total Tonnes Mined tonx1000 19,000 30,000 30,000 30,000 30,000 19,824 16,606 8,370 1,361 185,161
Per Total Tonne $/tonne 1.350 1.164 1.250 1.275 1.361 1.636 1.749 2.081 2.742 1.403
Total Ore tonx1000 1,058 2,261 3,606 2,936 2,494 2,555 2,555 2,555 846 20,866
Per total tonne of ore $/tonne of ore 24.24 15.45 10.40 13.03 16.37 12.70 11.36 6.82 4.41 12.45
Table 18-64 Summary Mine Operating Costs by Commodity
18.2 Geotechnical/Structural Studies

The prevailing structural geological pattern in the mine area is defined by a ductile shear zone
characterized by an outstanding mylonitic foliation with associated Sc features. The mylonitic
foliation has N20E/40SE orientation on average, and contains mineral lineation of average attitude
271
of S38E/38. Faults F1, subparallel to schistosity are also usual. Foliation will be the primary
structure to influence slope stability.
Some drill cores show slight flattening of dip angles in depth. Fault systems occur in more ruptile
zones, striking normally and parallel to the mylonitic foliation.
Table 18-65 shows a compilation of structural data reported on internal Vale memos and on the 2003
SBC report.
Discontinuity Type Clar Measurement Brunton Measurement

Dip direction Dip Strike Dip
1 Sn + Fault 117 43 N27E 43SE
2 Sn + Fault 088 43 N02W 43NE
3 Fault 294 88 N24E 88NW
4 Fault 204 78 N66W 78SW
5 Fault 255 38 N15W 38SW
Table 18-65 Key Structural Data from Previous Reports
The faults, identified in previous investigations, were the principal source of failures that took place on
the west slope by the time the mine was operated by Vale. These failures occurred in a class V rock
mass, whose dimensions reached two to three benches.
18.3 Geomechanical Characterization

Generally, the geomechanical characterization of rock masses contained in the final pit design of
Minerao Riacho dos Machados enabled identifying four distinct geomechanical domains, on the
west slope and north and central portions of the east slope, primarily composed of biotite schists:
25 m to 30 m thick Class V schist;
Class III schist with interspersions of class V or IV rock mass, thickness varying between
20 m and 25 m;
20 m thick Class III schist and;
Class II/I schist, from a depth of 70 m.
On the south portion of the east slope, schist is overlain by granitic rock, to a depth of about 60 m. At
the contact of granite with schist there is a band of more altered schist (class IV), 5 m in thickness,
such that the typical profile of that slope portion would be:
Class V, 20 m thick granite;
272
Class III, 5 m thick granite;
Class II/I, 40 m thick granite;
Class IV, 5 m thick schist;
Class III, 2m thick schist;
Class II/I schist, from a depth of 70m.
As the Class III rock masses are not thick, in terms of geomechanical domains they could be grouped
together with Class II/I rock masses, such that this sector would comprise four domains:
Class V, 20m thick granite;
Class III granite + class II/I granite, 45m thick;
Class IV, 5m thick schist;
Class III schist + class II/I schist from a depth of 68m.
18.4 Geomechanical Drill Core Characterization

To identify the types, magnitude and frequency of sub-surface geological discontinuities, five slant
holes were drilled in the final pit design area (Figure 18-10).
273
Figure 18-10 Final Pit Design Showing Geotechnical Drill Hole Locations
Figure 18-11 below shows, in a schematic manner, the spatial distribution of geotechnical holes that
were logged.
274
Figure 18-11 Spatial Distribution of Slant Holes
Note: light green: class II/I rock mass, dark green: class III rock mass, blue: class IV rock mass and
brown: class V rock mass.
In short, the logs containing the description of the 5 geotechnical drill cores allowed to characterize in
the north region a class V rock mass to a depth of 40 m, following both the east and west directions,
whereas at the south portion this depth decreases, reaching 20 m on both sides of the pit.
From this point, it is possible to notice some differences between the west and east portions of the pit.
While on the west slope, underneath the class V rock mass, there is a direct contact with the class III
rock mass, on the east slope, to the north and at the central portion, there is a 5 m thick transition
from the class IV rock mass to the class III material. The class IV rock mass keeps the same
thickness while heading south and dips following the contact between schist and the overlying granitic
rock, which was ranked as class II. The class III rock mass, except for the south portion of the east
slope, is about 25 m thick before reaching the class II/I rock mass.
18.5 Strength Parameters

The parameters adopted for the interest lithotypes of the mine followed the Hoek-Brown classification
entitled GSI (Geological Strength Index) and also when updating failure criteria in year 2000.
275
The analysis of drill cores with rock classes established as per the RMR system supported the
calculation of the corresponding GSI; GSI tables and the lab test results were also used to define the
geomechanical parameters of the existing rock masses. RMR-based GSI was obtained through the
following formulation: GSI= RMR1989 5.
Table 18-66 shows estimated GSI and constant mi values, as well as uniaxial compressive strength
values for intact rock and Youngs modulus values for intact rock (laboratory). From these values, it
was possible to calculate the Hoek parameters for the rock mass. For joints, a friction angle of 30 in
the rocky material was considered.
Sample Estimated Values Test values Values obtained through calculations performed by the RocLab software
GSI mi Ei MPa ci MPa c MPa cm MPa t MPa mb s a c MPa
G-01* 60 10 55,982 75 2.625 7.705 -0.166 0.574 0.0013 0.503 1 34
G-02* 55 10 51,288 104 2.373 8.769 -0.143 0.402 0.0006 0.504 0.9 36
G-03* 65 10 65,827 111 5.938 13.95 -0.396 0.821 0.0029 0.502 1.7 39
G-04* 65 10 49,094 94 5.028 11.814 -0.335 0.821 0.0029 0.502 1.4 39
G-05* 43 10 55,417 95 0.753 4.968 -0.042 0.171 0.0001 0.509 0.5 29
G-06* 65 10 68,650 118 6.312 14.83 -0.421 0.821 0.0029 0.502 1.7 40
G-07* 43 10 31,194 101 0.8 5.282 -0.044 0.171 0.0001 0.509 0.5 30
G-08* 65 10 70,847 112 5.991 14.076 -0.4 0.821 0.0029 0.502 1.6 39
G-09** 65 10 47,500 45 2.407 5.656 -0.161 0.821 0.0029 0.502 0.8 36
G-10** 65 10 82,937 70 3.745 8.797 -0.25 0.821 0.0029 0.502 1.1 39
G-11** 65 10 83,600 81 4.333 10.18 -0.289 0.821 0.0029 0.502 1.5 36
G-12** 65 10 80,385 27 1.444 3.393 -0.096 0.821 0.0029 0.502 0.7 30
Table 18-66 Geomechanical Parameters Obtained
*normal to foliation
** oblique to foliation
Legend:
GSI Geological Strength Index;
mi Hoek constant;
ci intact rock strength;
c rock mass strength;
cm overall rock mass strength;
t rock mass tensile strength;
276
mb Hoek constant for rock mass (similar to Mohr-Coulomb friction angle);
s Hoek cohesion criteria;
a Hoek parameter that defines the envelope curve under low confinement conditions;
c rock mass cohesion (Mohr-Coulomb);
rock mass friction angle (Mohr-Coulomb;
Erm rock mass deformation modulus.
18.6 Failure Mechanism

Based on the geostructural and geotechnical characteristics of the rock mass and on the geometric
configuration of the slopes, we considered that the following types of failure are likely to occur:
18.6.1 Circular failure

Circular failure occurs along the rock mass, usually strongly altered, where geological structures play
a less important role in the type of failure mechanism. The strength parameters adopted are those of
the altered rock mass.
18.6.2 Plane failure

This type of failure is kinematically possible when the discontinuity plane dips to the inside of the pit at
an angle flatter than the slope angle. In addition, this plane must be parallel or subparallel to the slope
face. The strength parameters adopted are those of the discontinuity planes.
18.6.3 Wedge failure

Wedge failure cases are somehow similar to plane failure. However, in this case, the line generated
by the intersection of two planes forming a wedge must dip at an angle flatter than the slope angle in
order to satisfy the geometric/kinematic slide condition.
18.6.4 Plane-circular failure

Plane-circular failures generated by combined sliding through the foliation and the rock mass may
eventually occur. In this case the foliation strikes parallel and subparallel to the slope face, dipping to
the inside of the pit.
Failure can be through foliation (upper portion) combined with circular failure at the toe, along the rock
mass. The strength parameters adopted are those of the foliation (upper portion) and of the rock mass
(lower portion).
277
18.7 Groundwater Conditions

The stability studies were carried out considering slopes under a drained condition.
18.8 Stability Analysis

The stability analyses were carried out considering the following failure surfaces: plane, wedge,
circular and plane-circular.
The kinematic analyses were carried out considering the structural data obtained from core samples
of slant holes. The results showed that, for the west slope, plane failures play a significant role and will
limit the slope geometry to a face angle of 40. For the east slope, both at the north and central
portions, and on dip directions of 270 and 290 at the south portion, face angles of 75 could be
used. The south portion requires additional care due to the existence of a larger number of sets of
discontinuities close to the granite/schist contact that could trigger bench failure events.
The limit-equilibrium analyses seek to simulate the medium anisotropy, with lower strength
parameters along the foliation orientation.
The factors of safety (FS) produced by the analyses are summarized in Table 18-67. The Simplified
Bishop Method was used for circular failures and the Spencer Method for non-circular failures.
Factor of Safety
non-
Slope Geotechnical circular circular
Borehole failure failure
FGT-01 1.5 -
FGT-02 1.4 -
FGT-03 1.9 -
FGT-04 1.4 1.3
FGT-05 1.4 1.3
Table 18-67 Factors of Safety Obtained through Stability Analyses
In terms of limit-equilibrium analysis, the upper slopes, in class V rock mass, are considered the most
sensitive ones, and the west slopes the most critical ones due to the foliation-induced anisotropy.
18.9 Waste Rock Stockpile

The Minerao Riacho dos Machados waste dump, designed to maximum net volume of 80 Mm3, is
inserted into the municipalities of Riacho dos Machados and Porteirinha.
278
The local geology of the planned waste dump area comprehends residual soils of granitic-gneissic
rocks that prevail in the area, and residual schist soils restricted to the extreme west edge of the area,
detritic-lateritic cover located at the mid-west portion and colluvial soils overlain by the other units. In
the area of the foundation of the sediment containment dike we identified the presence of colluvial soil
on the hillsides, alluvial soil within the swail and residual sapprolitic soil from granitic-gneissic rocks.
The design criteria were defined in conformance with the internal guidelines relative to the
development of waste pile and dam designs and with the requirements of technical standards NBR
13028 and 13029, dated October 2006.
The stability analyses were carried out using effective geomechanical parameters estimated from the
experience acquired by the Golder specialists while developing similar works involving this type of soil
and rock. Since the waste is composed primarily of rocky material (80% inert rock), we analyzed the
conditions of the phreatic surface at the contact between the waste dump embankment and the
foundation soil, where the internal drainage system operates steadily. The stability analyses indicated
the necessity to treat the foundation, i.e., excavation and removal of a 2 m thick layer of low-strength
colluvial soil at the south portion of the waste dump.
With regard to the geometric arrangement, the waste dump will be laid out at an average angle of
repose for rock materials of 1V:1.3H, to be formed in 2.5 m thick ascending layers. Each 10 m (4
layers, approximately) a platform shall be created to allow implementing 6 m wide berms. Aiming at
the decommissioning phase of such structure, slopes will be covered with soil to enable the
application o vegetal cover; the final slope geometry will comprehend 1V:2H angles and benches
each 10 m.
Figure 18-12 shows the waste dump construction method and its final configuration.
279
Vegetation
Lateritic
Soil Layer
Figure 18-12 Construction Method and Final Geometric Arrangement
The internal drainage system, considering the waste size distribution, will comprise the placement of
selected blocks on thalweg surfaces and valley bottoms to serve as internal drainage devices.
The surface drainage system was designed such to use waste materials as lining material for gravity
ditches and channels. The proposed construction method allows the construction of stepped gravity
ditches at adequate sections of the rockfill material. The peripheral channels, excavated in soil and
lined with selected rockfill, will be responsible for collecting runoff from the gravity ditches and
conveying it to the tailings dam reservoir and to the sediment-containment dike reservoir.
As previously mentioned, sediments generated during the operation will be conveyed through the
surface drainage devices to the tailings dam located at the east portion of the waste dump and to the
sediment containment dike to be implemented at the southwest portion of the waste dump. This dike
was designed to store the volume of sediments generated over 1-year waste dump operation and
must be dredged during the dry season by means of light equipment (backhoe, front-end loader and
light trucks). As rocky material will be promptly available, the dike embankment and spillway were
designed in rockfill. It is worth emphasizing that this structure was designed taking the
decommissioning phase into consideration.
Aiming at the monitoring of the physical conditions of the waste dump during the operation phase and
after the decommissioning phase, an instrumentation and visual monitoring plan was developed. The
280
instrumentation plan is composed of topographic landmarks to be installed next to the drainage

system, to allow checking eventual structural deformations. The visual monitoring plan consists of
local inspection of the waste dump, accesses and other structures for any evidence of erosive
processes, silt-up spots, poor lining conditions, alteration of the geometry of the hydraulic devices and
any process indicating unstable conditions of the waste dump.
18.10 Tailing Dam

The tailing system consists of a dam and an impoundment that is designed to contain an annual
production of a nominal 2.555 million tonnes of solid tailing product and a total of 20.9 million tonnes
over an 8 year mine-life. The impoundment facility is located east of the process plant and is
approximately 2.2 km from the plant to dam location and will be a zero discharge facility
The local geology of the area where the tailing dam will be constructed consists mainly of granitic-
gneissic rocks with occurrences of amphibolitic rocks. The local topsoil profile comprises residual soil,
saprolitic horizon, colluvial and alluvial soils. Outcrops also occur within the area of the dam.
The geometric arrangement of the tailings dam was developed to maximise the disposal volume of the
impoundment area and includes a starter dam constructed with compacted soil. Subsequent
increases in dam heights would by performed with a cyclone underflow product utilizing a centre line
construction technique. The cyclone overflow slurry containing the fine tailing particles will be
deposited on the beach on the upstream face of the dam over a minimum of a 400 metre wide area.
The crest elevation of the starter dam is at the 826.00 metre elevation and is designed with
downstream slope angles of 1V:2H, an average bench height of 10 m, 4 m wide berms, a 6 m wide
crest, upstream slope angles of 1V:2.5H. The final embankment geometry will have a slope angle of
1V:3H, bench height of 10 m, 3 m wide berms, 6 m wide crest, and upstream slope angle of 1V:3H.
The construction of the foundation of the tailing dam comprises teh excavation and removal of soil of
SPT < 7 and compaction of the entire surface upstream the embankments vertical filter zone. In
addition, the designed cut-off dimensions are: height: 4 m; base: 4 m; slope angle: 1V:1H. Based on
the assumption that tailings are inert and are not a source of acid drainage, as the current test work is
showing, the reservoir will not be watertight and there will be no treatment system for percolated
effluents.
The stability and percolation studies developed for the starter and final dam, including the closure dike
required for the future embankment crest-raising stages, were carried out using the appropriate
geomechanical parameters estimated from the experience acquired by the Golder specialists while
281
developing similar projects involving this type of soil and rock. The results showed that the designed
geometry meets the safety requirements over the life cycle of the dam, assuming a steady production
and construction regime.
The reservoir formed by the starter dam was designed to store tailings for a period of 2 years,
considering a tailings production rate of 7,000 t/day of ore. Even though the crest will be raised with
cycloned tailings after the first two years of mine operation, the cycloning process shall start earlier to
enable filling the downstream zone between the rockfill embankment and the downstream slope of the
starter dam with cyclone underflow material.
The installation of several cyclones on mobile carriages on the dam crest will enable the formation of
beds of underflow material on the dam crest so that the cycloned material can be placed on a bed to
form the next layer on the dam crest. A concrete sump will be installed to collect the seepage from
the dam that percolates through the embankment during the crest raising phase to enable the
seepage to be returned to the impoundment area.
The crest is planned to be raised from EL826 (initial dam) to EL840during the years 2012 to 2015 with
the use of cycloned tailings. A free board of 4 metres will be maintained to avoid any effluent
discharging from the impoundment area.
A small dyke with the dimensions: 6 m wide crest on El. 840.0 metres, downstream slope angle of
1V:2H, bench height of 10m, 4m wide berms, upstream slope angle of 1V:2.5H will need to be
constructed in about the third year of operation . A broad crested spillway located at the left abutment
of the dyke is included in the design of the dyke and will be constructed at the end of mine life to allow
excess water to drain from the tailing facility to the environment.
The internal drainage system is designed to convey flows that percolate through the foundation and
compacted embankment. For the starter dam, the internal drainage system configuration consists of a
vertical sand filter zone, horizontal sand blanket placed next to the abutments and a horizontal
sandwich type drainage blanket placed at the base of the dam. The vertical filter zone and the sand
drainage blanket are designed to be 1 metre thick. The horizontal sandwich-type drainage blanket will
consist of 2.3 m of crushed rock and 0.3 m of sand placed at the foundation and fill material contact
zone. The internal drainage system of the final embankment will consist of underdrain of rectangular
section (1.0 m x3.0 m) at each abutment will consist of 0.3 metres thick of sand, 0.3 metres thick of
crushed rock, 0.4 metres thick of rockfill and covered with geotextile. The area contact between the
282
dam and the fill material of the final embankment will contain a horizontal drainage blanket as per the
starter dam design.
The surface drainage system of the tailing starter and final dams will include berm ditches and
stepped peripheral channel in concrete. The closure dike will be provided with berm ditch leading to
the decommissioning spillway. Flows that percolate through the embankment during the crest raising
phase will be collected in a concrete lined sump so that the water can be pumped back to the tailing
impoundment. After passing through the monitoring weir, the water will flow to the concrete seepage
sump where a set of submersible pumps will be installed.
The monitoring system of the hydraulic gradient within the dam and the water quality of the seepage
during the operational, the decommissioning, post deommissining phases includes instrumentation,
visual techniques and procedures. The instrumentation plan is composed of topographic landmarks
for displacement measurements, piezometers, water level indicators, limnimetric rules and flow metre.
Water contained in the boreholes of the piezomenters will be sampled to measure the quality. The
dyke will contain piezometers only to measure hydraulic gradients and water quality.
Type Tailing slurry valley fill with starter-dam and future dyke
Starter Dam Compacted earth from borrow pit to engineer specifications
2 yr operating capacity
790 825 RL (35 m height)

Final Dam Utilize cylcone overflow beginning in year 2 to raise the crest with a
minimum 400 m beach and 4 m freeboard
825 840 RL (15 m height cyclone dam + 35 m starter dam)
15 Mm3 capacity tailing
118 ha area coverage

Table 18-68 Summary Aspects of the Tailing Impoundment.
18.11 Water Dam and Reservoir

The basic engineering for a water dam has been completed in the event that additional fresh water
usage that is greater than what is available with the current fresh water supply system which may then
require in the future the dam construction. The future water dam, if required, will be located in the
PIranga River some 5 km from the project site.
283
18.12 Hydrology And Hydrogeology

The mine site is located in the watershed of the Gorutuba River, which is a tributary of the Verde
Grande River, which in turn is a tributary of the So Francisco River located in the State of Minas
Gerais. The Verde Grande River watershed, located between latitudes 1420' and 1714' south and
longitudes 4230' and 4415' west, encompasses an approximate area of 30,420 km of which 87% of
this area is part of the State of Minas Gerais and the remaining area is contained within the State of
Bahia. Thirty five municipalities are locaed into this region, twenty seven of them in the State of Minas
Gerais and eight cities in the State of Bahia. The major neighboring water courses of the project are
the Olaria and Mumbuca creeks, tributaries of the Curral Novo (or Ribeiro) stream, and Piranga
stream (Figure 18-13).
Figure 18-13 Hydrological Patterns near the RDM Site
The water flows of the Olaria (water flows only during wet season), Mumbuca, Piranga, and Curral
Novo creeks are intermittent so that the creeks are flowing full during the wet season and have
minimal water flows during the dry season.
284
According to Kppens classification, the mine site is located at an interface zone between the CWA
and AW climates:
i. CWA is a subtropical climate of dry winters and hot summers with moderate average temperatures
of 18C in the winter and 22C in the summer.
ii. AW is a tropical climate with a dry winter period from about May to October with an average
temperature of 18C, and rainy summer from about November to April. The total annual rainfall
ranges between 750 mm and 1800 mm.
Monitoring data from a pluviometer installed at the mine site show a mean annual precipitation of
1,066 mm (1989 - 2008), which is consistent with other local stations. Data from the Montes
Claros weather monitoring station shows mean annual evaporation of 1398 mm (Class A pan),
mean annual temperature of 22.4 C, mean annual relative air humidity of 66.6% and mean
annual hours of sunshine of 2673 h from 1960 -1990.
Rainfall distribution over the year shows clearly the existence of dry and wet seasons. Historical
records show that about 20% of those years considered extremely dry had a total annual rainfall
of about 70% of the total mean annual rainfall, whereas about 20% of wet years showed total
annual rainfall about 130% of total mean annual rainfall, evidencing the variability pattern
expected for the rainfall behavior that can reflect in the mine site water balance.
Even though pluviosity at the mine site shows a rainfall of 1066 mm per year), 85% of annual
rainfall is concentrated in the months of November to March. Availability of surface water in this
area is very low even for locations with huge drainage areas (about 0.1 m/h.km of drainage
area) resulting in a water deficit verified in this region.
18.13 Infrastructure
18.13.1 Gold Transport
The access road to the site is a 15 kilometre municipal all weather gravel road that connects the
interstate asphalt paved highway to the site. All construction and project equipment will be
delivered to site via the federal and interstate highways plus the all weather gravel road.
The gold produced at the mine will be bars bullion with each bar weighing 15 to 20 kilograms. It is
expected that each two weeks, the gold will be shipped from the mine site to Belo Horizonte by
helicopter or airplane. A security company will take possession of the gold bars at the refinery and
transport them by armoured car to the aircraft for shipping to Belo Horizonte.
285
The production rate of gold is estimated to average about 7,780 ounces per month for the life of
mine.
18.13.2 Power Supply

The electrical power will be supplied from the CEMIG grid to the project via a 34.5kV line
beginning at the Janauba substation, some 35 km of right of way and terminating at the substation
of the mine site. The upgraded power line will follow the same route as the existing 13.8kV power
line that currently supplies electrical power to the project site. Since the CEMIG power distribution
grid in the area is weak and the grid can furnish a maximum of about 6.0 MW without a
substantial upgrade of the system, two diesel fired 2.25 MW generators will be installed at site to
supplement the power supply to the project. Both the 13.8kV and 34.5kV power transmission
lines belong to CEMIG. To increase the capacity of the grid in the region, CEMIG intends to
construct by 2015 an interconnecting 138kV power transmission line from Arauai to Salinas,
some 88 km that will an additional connection between the local grid and state grid.
The 13.8kV power transmission line has sufficient capacity to be able to complete the
construction, commissioning, and start-up phases of the project.
The power distribution throughout the project will be provided in four voltages: 34.5 kV, 13.8 kV,
6.6kV, and 460 volt for equipment with motors less than 225 kW.
The peak electrical demand for the operations is estimated at 8.3 MW with an average at 7.7 MW.
Substations will be installed at Janauba and the project site. The power consumption will be
measured at the Janauba substation.
The cost of the energy and transmission during the peak hours of 17h:00 to 20h:00 is very
expensive so that, to minimize the power consumption during the peak hours, all non-essential
operating equipment will be shutdown during this period of time.
18.13.3 Water Supply and Management

All values shown below refer to mean values over 8 years of mine operation at a process plant
production rate of 2.555 million tonnes per year of ore.
The majority of the water for the operations will be obtained from the recycle of the tailing
supernatant to the process waster tank from where the water will be distributed to the project.
The fresh water will be obtained from water wells, rainfall, and the drainage of the open pit for use
as make-up water for the process, preparing reagents, dust control at the crushing plant and
286
mine, and potable water. Water for dust control of the roads will be obtained from the fresh water
supply system.
The total demand of water for the process plant including the ADR plant is 1,452.2 m/h. Of this
total demand, 977.7 m/h is provided by the recycle of the thickener overflow, 341.8 m/h is
provided by the recycle of the supernatant water from the tailing impoundment, and 132.7 m/h of
fresh water. The fresh sources of fresh water include: area drainage of rainwater, drainage into
the open pits from fracture zones, and wells. The potable water will be obtained from the fresh
water holding tank and will be treated prior to usage.
The fresh water amounting to about 0.5Mm that is contained stored in the existing open pits will
be pumped to the tailing pond prior to the start of the mine development phase and will be utilized
during the construction phase mainly for the site earth works, civil works, and dust control.
The water distribution diagram is shown in Figure 18-14.
287
TECHNICAL REPORT ON THE RESOURCE ESTIMATE UPDATE AND THE FEASIBILITY STUDY FOR RIACHO DOS MACHADOS
GOLD DEPOSIT,
Figure 18-14 Water Balance and Distribution Diagram
288
18.13.4 Communications
The operations will have full internet and intranet services to be able to communicate between the
different areas of operations plus the corporate offices.
A direct dialing PABX telephone system will be installed so that the receptionist at the site
administration office can handle and re-direct the incoming calls. An internal phone system will be
installed to provide communications from remote areas of the operations as well as the ore
reclaim tunnel.
Remote cameras will be located in strategic locations to monitor the process plant and refinery
areas. Flat screen monitors to observe the operations will be located in the control room as well
as in the offices of the key managers.
Hand held radios and radios mounted in the operational vehicles will be utilized for
communications between the operational people of the project.
An emergency automated call system will be installed to be able to call directly to the hospital,
clinic, or police.
A Wi-Fi system that will be utilized with the mine mobile dispatch system will be installed at the
mine to provide a messaging service between the dispatch centre and the fleet of mobile
equipment.
18.13.5 Buildings and Facilities

The drawings of the facility layout and buildings are contained in the Appendix 24.8. The general
layout of the plant facility and office buildings etc. is shown in Figure 18-15.
A five bay truck 1130 m2 maintenance work shop and lubrication bay complete with overhead
cranes will be provided to service and maintain the mobile mine equipment One of the bays will
be fitted with a hardened concrete floor that will contain steel filings to enable the track dozers to
enter the bay without damaging the concrete. An equipment wash bay will be installed adjacent
to the maintenance bays to clean the equipment before servicing. In addition to the workshop, a
fully equipped mechanics truck will be utilized to provide minor servicing and urgent repairs to the
mine equipment within the open pit area.
Mine offices to house the Mine Manager, Mine Supervisors, technical services, exploration team,
the mine dispatch system, and a meeting area will be included in the building.
289
A fuel truck will provide fuel to the large mobile equipment in the field to improve the efficiency of
the mine operations.
A workshop and offices at the process plant that will contain offices for the Manager of the plant,
plant supervisors, processing engineers, will be installed adjacent to the plant.
290
LEGEND:
1) Main Gate
2) Administrative Area
3) Fuel Station
4) Crushing Plant
5) Buffer Silo
6) Grinding &
Classification
7) ADR Plant
8) Helipoint
9)Cyanide Destruction
10)Reagent Storage
11) Thickener
12) Leaching Circuit
Figure 18-15 Facility layout plan
291
18.13.5.1 Explosive Storage

The explosive storage will comprise three separate areas to contain nitrate, emulsions, and the
detonators. A contractor will fabricate and furnish the explosives to the mine operations. It is
estimated that about 400 tonnes of explosive will be consumed monthly.
18.13.5.2 Site Building

The 1,100 m2 building will house: a cafeteria of about 100 m2 to service up to 126 people per
sitting, offices for the people of administration, accounting, human resources, safety and health
care, a medical and first aid clinic, environmental, training, and the manager of site security.
18.13.5.3 Laboratory
The 250 m2 building will installed near the process plant and will contain a sample preparation
area that includes a dust collection system, laboratory sized crushers, sample pulverizers, sample
splitters, an area to perform fire assays, an area to conduct wet chemical analyses for metals of
solutions and solids from the mine and plant, and an area to perform water analysis of the
monitoring wells, tailing supernant, and streams for environmental work. An area to conduct
mineral processing test work will be provided within the laboratory facility.
18.13.5.4 Gatehouse
The gatehouse will be occupied 24 hours per day during the construction and operating phases of
the project and will be located at the entry to the project on the single access road to the project.
It will be equipped a magnetic card swipe system to record people entering and leaving the mine
site including the employees, contractors, and visitors. As part of the overall security system,
emergency communications will be installed at the gate house so that the police, hospitals, and
clinics can be contacted immediately in the event of an accident, a breach of security, or an
environmental incident.
18.13.5.5 Fuel Station

A diesel fuel station with a capacity of 90 to 120 cubic metres of fuel will be furnished with a
supply contract and will be installed at the entrance to the access of the mine. The station will
provide diesel fuel to the mobile mine equipment and the electrical generators. The estimated
consumption of fuel is about 15 cubic metres per day during the construction and pre-production
phases of the project and 30 cubic metres per day during full scale operation.
For operations, all vehicles, including light vehicles, on the site will utilize diesel fuel.
292
18.13.5.6 Warehouse
A covered warehouse comprising 240 square metres and an enclosed open area of about 1,120
m2 will be provided to store goods and materials such as reagents, electrical, instruments, etc for
the operations.
An fenced area of about 2,000 m2 will be provided as outdoor storage will be installed for storage
of the materials such as barrels of lubricants, piping, sheet metal, etc.
18.13.5.7 Drill Core Storage Building

To house some 70,000 metres of core obtained from the various drilling campaigns that began
with CVRD plus future core, the existing core storage building will be relocated to near the mine
maintenance and office building to provide ready access to the geologists.
18.13.6 Infrastructure and Process Plant Capital Cost Estimate

Detailed mechanical and electrical equipment lists, plant layouts, flow sheets, estimates of
quantities, and the estimated cost for the upgrade of the electrical power transmission line for the
project was utilized to develop the capital cost of the infrastructure, process plant. Prices were
solicited with delivery quotations from equipment suppliers that included the primary crusher,
feeders, vibrating screens, carbon retention screens, agitators for the process and reagent tanks,
slurry and water pumps, air compressor, tanks, and the thickener. Prices for building material,
steel, concrete, sand and gravel, etc., were also obtained. MRDM has already purchased a 9,000
tonne per day comminution plant and ancillary equipment that include two cone crusher,
conveyor, cyclone and spare parts and these have been included in the plant capital cost
estimate.
For the ADR plant, a combined proposal by FL Smidth of Brazil and Summit Valley of Utah, USA
to provide the complete ADR package for the project was obtained. The price of this package
forms part of the capital cost.
Golder provided the cost estimates for the tailing impoundment and dam plus the waste rock
stockpile based on contractor quotations and quantities developed from engineering specifications
and drawings. Price and delivery quotations were received for the sand and crushed rock that is
required for the construction of the dam.
A firm unit price quotation was received from a contractor for the site clearing, grubbing, and
levelling. This price was utilized in the cost estimate.
293
Table 18-69 below shows the estimated cost for the process plant and infrastructure. For the
tailing and waste pile estimate see further details in Table 18-70.
Pre-Production Capital Sustaining

PP Cost Capital
Total Capital $US
Description $US (000s) $US (000s) (000s)
Civil Works 6,494.7 6,494.7
Equipment and Bulk Materials 35,324.5 35,324.5
Tailing Dam 6,087.1 3,363.1 9,450.2
Construction, Commissioning
and Vendor Support 13,017.6 13,017.6
Engineering and Project
Management 13,240.0 13,240.0
Taxes (equipment and
services) 6,382.1 6,382.1
34.5 kV Power Transmission
Line 3,200.0 3,200.0
Sub Total 90,090.6 96,410.1
Total 90,090.6 6,339.5 84,365.1
Table 18-69 Process Plant and Infrastructure Summary Capital Cost Estimate
The total mechanical equipment, infrastructure and site works capital cost amounts to US$96.4
million, exclusive of any salvage credit. The total capital cost of the plant will be distributed as
100% of the total during the pre-production or construction period. Details of the capital cost
breakdown are shown in Appendix 24.4.
A salvage credit of approximately 30% was estimated for the major plant related items only. This
credit is considered to be at the end of the life of the project.
The quantities and cost for the tailing dam and waste dump as shown below in Table 18-70 were
determined from the basic engineering and design of the structures. And quotes for materials,
sand and gravel. Further details can be found in the Golder report in Appendix 24.2.
294
Structure (Basic design) Total (US$)

Tailing Dam
Initial dam 6.087.064,47
Dyke 956.357,54
Decomissioning spillway (closure cost) 858.912,60
Final dam 2.406.788,03
Total (US$) 10.309.122,63
Waste Dump
pre-stripping 1.711.563,15
post-stripping 2.976.430,95
Revegetation (closure cost) 6.457.662,00
Total (US$) 11.145.656,10
Table 18-70 Tail Dam & Waste Pile Capital Costs Summary
18.14 Personnel
A total of 544 will be employed for the project, distributed as follows:
General Management and Administration 25
Process Plant 78 (excluding Process Plant Manager)
Mining Department 441 (peak excluding Mine Manager)
Total 544
The General Manager will be responsible for the entire operation. The area managers, site
Environmental Coordinator and safety engineer will report directly to him. His support staff is shown
as per the organization chart in Figure 18-16. The mining department will be led by the Mine Manager
who needs to be a fully qualified graduate engineer with 20 years of experience for open pit
operations including mine planning and maintenance. The organization chart is shown in
Figure 18-17.
The Mine Manager needs to be hired 3 6 months before the start of the mining operations so that he
can be involved with the hiring process for the operators and maintenance people plus be involved
with the preparation of the training program.
In addition to the Mine Manager, there are four other key people for the other areas of the mining
operation for maintenance, mine engineering and planning, geology. The
295
senior people for these positions will require 15 20 years of experience and need to be hired two
months before the start of the mine operations.
The process group will be led by the Process Manager who will report to the General Manager. The
Process Manager will require being an engineer with 10 15 years of process experience including a
minimum of five years of experience senior supervisory with gold processing plants. This person will
need to be hired about six months before the start-up of the process plant and be involved with the
hiring of his team plus the development of the training program. The organization chart is shown in
Figure 18-18.
The Administration Manger will be responsible for accounting and cost control, human resources, site
security, and procurement. This person will need to have 5 10 years of experience with mining
operations. He will need to be hired about six months before start-up.
The site Environmental Coordinator will report to the General Manager. This person will need to be a
university graduate and have five years of experience with environmental control, and legal and
governmental procedures. This person needs to be hired one month before the start of the mining
operations.
The Safety Coordinator will report to the General Manager. This person will be a safety engineer with
5 10 years of experience with construction and mining operations and will be repsonsible for
implementing the zero accident safety policies plus training.
Contractors will provide services for cleaning the offices and dry, security, waste removal (organic,
hazardous and non hazardous), exploration drilling, and transportation of people and gold.
296
GOLD DEPOSIT,
Administration Organization Chart
General Manager Total

1 25
Assistant
1
Mine Manager Process Plant Manager Administrative Manager Environmental Coordinator Safety Coordinator
1 1 1 1 1
Human Resources Supt Environmental Technician Safety Technician

1 1 1
Human Resources Assistant

2
Training Coordinator
1
Senior Accountant
1
Accountants
3
Procurement Supt
1
Contracts and Purchasing Warehouseman

2 1
Security
4
Figure 18-16 General Management and Administration Organization Chart
297
GOLD DEPOSIT,
Mine Organization Chart
Mine Manager
1 442
Senior Mining Engineer 1
Secretary / Administ
4 4
Secretary 2
Mine Clerk 2
Mine Operations Mine Maintenance Mine Engineering Geology

239 239 141 141 13 13 8 8
Senior Mining Engineer 1 Maintenance Manager 1 Senior Mining Engineer 1 Senior Mine Geologist 1
Supervisors 7 Maint Eng 2 Mining Eng 2 Mine Geologist 1
Operators 1 209 Electr Eng 1 Chief Surveyor 2 Jr Geologist 2
Operators 2 18 Maint Supervisor 4 Seurveyor helper 4 Technician/sampler 4
Operators 3 4 Planner Supervisor 1 Dispatch operator 4
Maint Clerk 2
Mechanics 35
Mech helper 28
Welder 14
Salaried Staff Electrician 21 Vacation, Sick leave & Absenteeism (VS&A) 36
Hourly Staff Fuel Man 21
Laborer 11
Figure 18-17 Mine Area Organization Chart
298
GOLD DEPOSIT,
Process Plant Organization Chart
Plant Manager
1 79
Senior Eng. 1
Process/Plant Secretary
Metall. /Administ.
2 2 2 2
Proc. Eng 1 Secretary 1
Tech 1 Control Clerk 1
Room/Shift Sup.
8 74
Control Room 4
Shift Superv 4
Crushing Operat. Mill Operat.. Sup. Sup.Laboratory General Services Smelt house
4 4 4 4 4 4 1 16 1 16 16 20 2 2
Operator 4 Operator 4 Operator 4 Senior Tech 1 Senior Tech 1 Helpers 12 Operators 2
Reagents 2
Dayly Helpers 2
Mechanics/Electr Technician /shift
ical shift (B)
8 15 12 15
Mechan 4 Sample prep 4
Elect 4 Chem tech 8
Mechanics/Electr Dam operators/

Tecnician daily
ical / Instrum. Auxiliars
7 7 3 3 4 4
Mechan 5 Abs.Atm 1 Helpers 4
Elec/Inst 2 Enviromn 2
Figure 18-18 Process Plant Area Organization Chart
299
18.15 Proposed Project Implementation

The project schedule shows that the project implementation including detailed engineering,
construction commissioning and start up will require 18 months from the date of receival of the
permit to construct (LI). Planned hand over is in August 2012. It is intended that the mine
preproduction will commence on or about June 2011 and will require approximately 15 months.
The following key milestones have to be met to achieve this target:
Start detailed engineering in March 2011
Submit requests for quotation (RFQs) for major equipment and services packages in
April/May 2011
Obtain the construction license (LI) in June 2011
Complete access road upgrade in June 2011
Start pre-strip and mine pre-production in July 2011
Start site earthworks in July 2011
Start initial tailing dam in August 2011
Obtain the permit to construct 34.5 kV transmission line from Janauba to site in August
2011
Complete mechanical installation in February 2012
Start commissioning of plant (Dry) in May 2012
Start wet commissioning of plant in June or July 2012
Commence production in August 2012 (complete ramp up by October 2012)
Below is a schedule showing the key activities (Figure 18-19). As seen in the timeline activities,
basic and detail design and engineering work has commenced. Basic engineering for the process
plant is about 80% completed and detailed engineering has started in the areas earthworks and
tailing dam and waste rock pile.
300
GOLD DEPOSIT,
Figure 18-19 Master Schedule
301
18.16 Environmental Considerations

18.16.1 Environmental Impact Assessment (EIA), EIA Report, and Environmental Control
Program (PCA)
The environmental impact assessment (EIA) and the EIA report for the project were completed
and submitted to the state environmental agency SUPRAM in October 2009 for evaluation and to
obtain the preliminary license (Licena Previa) for the project. In April 2010, SUPRAM sent the
consolidated technical and legal report, Parecer Unico, to the regional unit of the state council of
environmental policy north of Minas Gerais URC NM that voted and granted the Preliminary
License, in June 2010.
In August 2010, the subsequent Environmental Control Program Report (Plano de Controle
Ambiental - PCA) was submitted to SUPRAM for evaluation to obtain the Construction License
(Licena de Instalao). The award of the LI is pending and subject to the receipt of the
supplementary information as solicited by SUPRAM.
18.16.2 Principal Environmental Baseline Findings

The original environmental impact assessment and report comprising four volumes were prepared
by CVRD and submitted to the environmental agency FEAM, the forerunner to SUPRAM, in July
1990. The document was very comprehensive and contained detail descriptions of the mineral
resource, the heap leach project, bio-diversity, water quality, etc. At that time, the water quality
study did not require the analyses of the metal content so that this background data is not
available in the CVRD EIA report.
Environmental and socio-economic studies were performed in 2009 to develop the Environmental
Impact Assessment Report for the RDM project. The studies included the preliminary assessment
of the water quality and availability, climate, geological, geomorphological and soil characteristics,
noise assessment, flora and fauna studies, and evaluation of the socio-economic aspects related
to the project.
Government statistics show that the region of Riacho dos Machados is an impoverished region
comprising mainly of subsistence farming and plantations of eucalyptus trees with few
opportunities in the region to obtain work.
The population of the town of Riacho dos Machados is about 9,700 inhabitants (2009). About
33% of the people of the region live in the town and remainder live on farms. The population
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density is only 7.12 habitants per km2 (2000). The population of Porteirinha is about 37,842
inhabitants (2009), 48% living in town. The population density is 20.9 inhabitants per km.
According to the employment records of the municipal Riacho dos Machados, 110 professionals
work for municipal services of education and 80 professionals work for the state schools. There is
no information about the other occupations.
Services in the town of Riacho dos Machados are very limited to schools and medical clinics but
no hospital. Two doctors come to the town twice a week to provide basic medical care. In
Porteirinha there are 83 hospitals beds available.
Water usage and availability were identified as a key environmental aspect of the project, since
the project is located in a semi-arid region. Fresh water supply for the project will be obtained from
wells located in on the project site, pluvial surface drainage, drainage into the open pit from the
rock fractures, and the initial mine de-watering. Most of the water that will be utilized for the
process will be acquired from the recycle of the water from the tailing pond supernatant.
The project is located in a transition zone between the typical Brazilian savannah called Cerrado
and the semi-arid brush type growth named Caatinga. The characteristics of the project area
are more similar to a Cerrado type environment that includes sparse areas of bedrock, known as
Campos Rupestres, and some areas of a deciduous forest (Mata Seca) that is protected by
law.
The flora study indentified a total of 107 tree species, of which two species are listed by IBAMA as
threatened, two are considered threatened by the Minas Gerais State, and four species are within
the Mata Seca and are considered very rare. The active project site does not include any of the
Mata Seca area; however, about 177 hectares of Mata Seca has been included in the forest legal
reserve.
The fauna studies registered 106 species of birds (28 endemic), 77 species (10 endemic) of
anurans and lizards (herpetofauna), 21 of mammals (8 threatened) and 185 species of fish (18
threatened). The locations of the project facilities and roads have been designed to avoid utilizing
the sensitive environmental areas for the project development. Monitoring and restoration
programs will focus on measures to enhance biodiversity for the preserved areas, including the
registered Legal Reserve.
The project area that was purchased by Carpathian from Santa Elina Minerao is a brown field
project and as such, there are facilities at the site including the land, engineering and operational
303
information, the original environmental impact assessment and its report, the open pit mines, the
13.8 kV power transmission line, office buildings, access road and gate house, and exploration
areas that were acquired with the project. As part of the baseline study, Carpathian Gold Inc
contracted Multigeo, of So Paulo, Brasil, in January 2008 to conduct a preliminary environmental
evaluation of the site and closure. This report entitled: Preliminary Environmental Appraisal,
RDM Gold Mine is contained in the appendix of thie 2009 PEA report.
According to the report, the rehabilitation programs performed by CVRD included the following:
re-shaping the stockpiles of waste and leached ore.
installation of concrete channels to capture and drain rain water from the mine, heap, and plant areas
to small dams built by CVRD.
revegetation of the open pits, the waste rock stockpile and the leached material.
implementation of a site maintenance program.
implementation of a monitoring program for water quality.
implementation and execution of the acid rock drainage (ARD) remediation program.
implementation of the arsenic treatment program for water contained within the exploration
underground workings.
The rehabilitation programs were completed by 2004; however, evidence of ARD was detected by
members of FEAM during site visits conducted post project rehabilitation. In 2000, CVRD
contracted Knight and Piesold to prepare an ARD remediation program to address the ARD
occurrences.
The ARD remediation program consisted of excavating about 154,000 cubic metres of leached
sulphide ore and sulphidic waste rock, depositing these materials in three waste rock stockpiles,
and encapsulating the materials with oxidized schist waste rock and 30 cm of topsoil. Twelve
months after completion of the remediation program, water samples were taken of the infiltrated
water and the water quality was within limits of the state and federal norms.
About nine months after completion of the ARD remediation program, additional ARD was
detected at the heap that remained on the pad after closure and this material was treated in place
by covering it with a layer of oxidized schist and soil.
304
Since the 2003 when the entire ARD remediation program was completed, there has been no
evidence of ARD at the site as shown by the results of the water analyses of the site monitoring
points.
Another issue that was raised by Multigeo in their report was the level of arsenic in the water,
especially in the exploration shaft and underground galleries. It is important to note that the
signature element of the soil samples for the presence of gold in the region is arsenic so that the
level of arsenic in the soils is higher than the average for Minas Gerais and can exceed the state
norms.
The water in the underground workings and exploration shaft contained levels of arsenic that was
an order of magnitude higher than the norm so that CVRD implemented a system to treat the
water as it was discharged from the workings. The system comprised a pump that extracted the
water from the shaft and discharged the water into concrete channel filled with iron filings to
precipitate the arsenic. This operation was conducted for 120 days and the iron filings were
replaced on three occasions. The product of the arsenic precipitation was stored in bags within a
concrete structure complete with a tight fitting lid located near the mine entrance.
Since the exploration workings were conducted in the ore zone of the mine, the high
concentration of arsenic in the water contained within the underground workings is not surprising
because the high grade gold zones are associated with aresenopyrite and pyrrhotite. As the open
pit mine operations progress, the ore at the underground workings will be excavated and fed to
the process plant. When the underground workings are de-watered to allow open pit mining to
proceed, a solution of ferrous sulphate will be mixed with the water to co-precipitate the arsenic
with iron and the water will be pumped to the tailing impoundment for storage. The quantity of
water in the shaft and underground galleries is less than 5.000 cubic metres.
The sulphate content and the pH water in the underground workings, as per the results of the
water samples taken since 2002, range from 30 to 73 ppm and 7.22 to 8.11 respectively. These
results show that ARD is not occurring in the underground workings.
In February 2011, Environmental Resources Management (ERM) conducted a soil, heap leach
material, and water (surface and in-ground) sampling campaign at the mine site, as per the
request of SUPRAM, to determine the quality of the soil, heap leach, and water as of that date.
The results of the soil sampling (14 samples) show that the concentrations of the metals in the
inorganic portion of the soil were within the CONAMA 420 limits. The results of one soil sample
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showed a chromium concentration and three soil samples showed nickel concentrations near the
CONAMA limit.
The results of sampling (24 samples) of the surface of the heap leach showed that the
concentrations of the metals, with the exception of arsenic, were within the CONAMA limits.
Arsenic concentrations were higher than the CONAMA limits; however, the heap leach material
has a gold grade that is about 0.6 g/t that is greater than the mineable cut-off grade of 0.32 g/t so
that this material is considered ore and will be treated in the process plant to recover the gold.
The surface water samples that were extracted at the mine site showed that the concentrations of the
metals, with the exception of arsenic for five samples, were within the CONAMA guidelines. The five
samples are shown in the following Table 18-71:
Sample Name Description Concentration As

ppm
PA - 5 North Mine Lake 0.279
PA - 6 South Mine Lake 0.0538
PA 7 Emergency Pond 0.0101
PA 12 Dam 2B (located below extinct heap 0.0241
material)
PA - 15 Dam 15 (located about 600m west of mine) 0.0148
CONAMA 357 Norm 0.010

Table 18-71 Arsenic Concentrations
The water from the north and south pits will be treated with ferrous sulphate to reduce the arsenic
concentrations to within the CONAMA limits when the pits are being de-watered. The water from the
pits will be stored behind the tailing dam and will be utilized during the construction and operation
phases.
The complete ERM report entitled: Caracterizao do Solo, guas Subterrneas e Superficiais na
Minerao Riacho dos Machados dated March 2011 is contained in Appendix 24.7. The report also
contains the results of water analyses for samples extracted from monitoring points for the surface
and in-ground water from November 1999 to Mar 2010.
18.16.3 Main Environmental and Social Issues for the Project

The main environmental issues for the project are concerned with the availability of water for the
project, because of its location in a semi-arid area, water and soil quality of the neighbouring
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farms that could be impacted by the activities of the project, noise and dust control during the
construction and operating phases, and acid rock drainage.
18.16.3.1.1 Water Availability for Project

The project is located within a semi-arid region of the state with distinct wet and dry seasons and
has a total rainfall of about 1,100 mm per year. The fresh water make-up for the project
amounting to about 50m3/h (refer to water balance in Section 18.13.3) will be obtained from water
wells that are remote from the towns of the region so that there will be no impact on the
availability of well water for the towns; from rain water drainage of the project area into the tailing
pond, and drainage of water into the pit, because of rain and water contained in the fractured rock
of the pit walls. The installation of a water dam and reservoir located in the Piranga River as a
source of fresh water for the project was included in the PEA; however, after a more thorough
investigation of the availability of water from the open pits that was performed during the
development of the Feasibility Study, it was determined that the water dam was not required. The
study estimated that the flow of water into the open pits would amount to about 30 -40m3/h and
this water will be utilized as a source of fresh water. The operating philosophy will be to minimize
the use of fresh water from the wells and maximize the use of the other sources of water, such as
the thickener overflow solution, reclaim water from the tailing pond, the water drainage into the
open pit, and rain water drainage of the project area.
18.16.3.1.2 Soil and In-Ground Water Contamination

The people of the area have voiced a concern regarding the contamination of the soil and in-
ground water with cyanide, arsenic, and acid rock drainage products during operations. These
concerns have been addressed by installing concrete containment fields for the CIL, the cyanide
detoxification, and reagent preparation tanks, installing a cyanide detoxification system, and
utilizing a zero discharge system for the tailing impoundment.
The detoxification process of the tailing slurry will include the addition of metabisulphite and air to
oxidize the cyanide. The additional natural degradation of the remaining species of cyanide will
take place in the pond and will be very rapid because of the intensity of the sunshine and high
average temperature. During the oxidation process, some of the pyrite and pyrrhotite will be
oxidized thereby solubilizing iron and large quantities of sulphate will be generated because of the
addition of metabisulphite. The solubilized iron and sulphate will cause co-precipitation of the
arsenic contained in the tailing solution and the precipitate will be combined with the tailing solids.
The co-precipitation will reduce the concentration of dissolved arsenic in the tailing supernatant.
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18.16.3.1.3 Noise and Dust

The nearest city to the project is Ricacho dos Machados that is located some 25 kilometres from
the project site so that the impact of the noise generated at the site will be very minimal. The city
of Porteirinha is some 55 kilometres from the site so that there will no impact at Porteirinha of the
noise generated at the site during construction and subsequent operation.
The dust generated at the site by the mobile equipment utilized during the construction, pre-
production and mine operation phases will be controlled by the frequent passes of water trucks to
place water on the roads and site work areas to reduce the quantity of air borne dust. The air
borne dust that will be generated when the rock is blasted will be in small amounts for a very short
period of time so that it is not expected to be an issue. As a contingency plan, the surface of the
area to be blasted can be wetted with the water truck prior to loading the holes with explosives.
18.16.3.1.4 Acid Rock Drainage (ARD)

The ARD issues began in 2000 with the observance by FEAM of an ARD occurrence at the site after
the closure of the operations in 1997. CVRD executed an ARD abatement program as described in
the previous Section 18.16.2 that eliminated the problem.
ARD was recognized by MRDM as a potential problem for the pre-production and operation phases
so that a program to identify the rock that had potential to generate ARD was developed and
implemented in August 2010. The program consisted of static acid base accounting tests (ABA)
whereby samples of drill core and final tailing product generated by the CIL test work were analyzed
by Maxxam Analytics located in Burnaby B.C., Canada to determine their potential to generate and
neutralize acid. Eleven humidity cell tests at Maxxam Analytics were initiated in August 2010 and are
on-going to determine thepotential of the rock at the mine and the final tailing product to generate
ARD. In addition, two samples of the final tailing product were provided to perform SAD (sub-aqueous
disposal) column tests and to perform leach solubility tests in accordance with the Brazilian norms
NBR10005 and 10006 to measure the re-solubilization and mobilization of the metals contained in the
tailing solids.
Lawrence Consulting Ltd of Vancouver, B.C., Canada, was contracted by MRDM in September 2010
to provide consulting services to review the history and the future potential for ARD at the site, review
the ARD test program in progress at Maxxam Analytics, and to assess the plans for mining, waste
rock disposal, and tailings disposal with respect to ARD.
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According to the reports of Lawrence Consulting Ltd (see Appendix 24.6), despite a theoretical
potential to produce ARD, there is a very low probability of the final tailing of the process plant to
generate ARD because of the following reasons:
The pH of the final tailing after cyanide destruction is basic at 8.0 to 8.5 and contains
excess lime, which will maintain ongoing protective alkalinty as tailings are deposited
during operations, minimizing metal solubility and neutralizing any acid generated.
The conditions of the cyanide leaching process can render acid producing minerals such
as pyrite and pyrrhotite unreactive and also can create conditions in the tailings that are
unfavourable to biochemical oxidation reactions that can contribute to ARD.
The maintenance of a water cover over the deposited tailings minimizes the diffusion of
oxygen, an essential ingredient for ARD, to the tailings solids and is an proven and
accepted method to prevent the generation of ARD.
The low concentration of sulphur, in the order of 1 3 percent, contained in the tailing
product.
The following is an excerpt taken from the interim report entitled Interim Report ARD Test work on
Leach Tailings, Riacho dos Machados Project, 21 February 2011 prepared by Lawrence Consulting
Ltd:
The majority of the residues will be stored sub-aqueously, although some will be used for dam
construction and will remain above water. Both scenarios are being evaluated in the laboratory, using
column and humidity cell test procedures. Both sets of tests have been in operation for a relatively
short time period and no conclusions can be stated with respect to the long tembehaviour of the
tailings in sub-aqueous or sub-aerial deposition conditions. In the short term, water chemistry in the
tests will be controlled by the presence of excess alkalinity and soluble salts provided to the solids by
the cyanidation and detoxification processes.
This will also be the case in the tailings impoundment during mine operations, where continual
deposition of fresh tailings, both above and below water, will provide an environment in which ARD
generation is unlikely, particularly for sub-aqueous disposal, which is a very effective method to
prevent ARD. The sulphides present in the residues will also likely have been passivated during
cyanidation due to the formation of ferricoxyhydroxides on mineral surfaces. With proper engineering
and management of the tailings facility during operations and after closure, the risks of ARD will be
very low.
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The waste rock that is adjacent to the ore body contains sulphide minerals and this waste rock has
shown a potential to generate ARD so that this rock will be placed and encapsulated within the waste
rock stockpile to prevent oxygen and water from contacting the sulphidic waste rock to produce ARD.
This method of prevention has been shown to be effective when CVRD performed this type of ARD
remediation work in 2002. Since the type of rock that has the potential to generate ARD can be
identified by the geologists and located on the geological model, the mine plan and geological
modelling will be utilized to mark the areas in the mine where this rock is present so that it can be
excavated and treated with the correct procedure to avoid an ARD occurrence.
Additionally, all drainage from the waste rock pile will be controlled and, if necessary, directed to the
tailings facility, thereby preventing it entering the environment.
The complete results of the ABA, humidity cell, and SAD column tests performed by SGS and
Maxxam Analytics are shown in the Appendix 24.6 of this report. The reports prepared by Rick
Lawrence Consulting Limited are contained in the Appendix 24.6 of this report.
18.16.4 Socio-economic Potential Impacts

The development and subsequent operation of the project will create about 1,000 direct jobs during
the construction and over 500 direct jobs for the operations so that the project will be the largest
employer of quality jobs in the region. These jobs and associated indirect jobs will bring a much
needed flow of money into the region and will improve the living standards of the people of the region.
The royalty and tax payments that Riacho dos Machados and Porteirinha will receive from the project,
will provide funding for the development of the social programs, such as improvements to the medical
facilities and schools, recreational facilities and water supply and treatment.
The influx of new people to the region will create some issues such as public safety and inflation
within the region and communities. MRDM is creating programs of public awareness to inform and
educate the people to mininize the negative impacts associated with the ingress of a large number of
transient workers. MRDM and the environmental committees of the regional towns will meet regularly
to assess the impacts and prepare plans of action to minimize the negative impacts. The
headquarters of the Military Police for the region is located in Janauba that is some 80 kilometres from
the project site and MRDM have met with the police to begin the development of a public safety
program. The local police of Riacho dos Machados and Porteirinha report to the Janauba
headquarters and will be integrated into the public safety plan.
310
The goal of MRDM is to maximize the utilization of the people of the area for the construction and
operation of the project. It is recognized that a great deal of training is required to upgrade the skill
sets of the local people to be able to provide the necessary services for the construction and
operations. The most applicable areas for people to upgrade their skills are: the laboratory,
mechanical, electrical, welding, pipe fitting, operator assistants, and administration. There are very
few experienced construction and operating type people in the region so that it is highly likely that the
managers, area chiefs, supervisors, and senior operators will be hired from other areas of Brasil.
MRDM has initiated discussions with the state secretaries of education and work to develop training
and educational programs for people of the area so that these people can be ready to work for MRDM
and the construction companies. MRDM will institute a recruitment, selection, and contracting
program to select the people for its operation.
MRDM has contracted Performance Associates, Arizona, U.S.A. to train qualified people to operate
the mobile equipment of the mine and the equipment of the process plant. The preparation of the
training manuals is in progress.
MRDM will develop a sustainability plan and community programs such as a centre of education for
the environment in conjunction with the city environmental councils of Riacho dos Machados and
Porteirinha. The plan will define the projects and level of participation of the MRDM and the
municipal, state and federal governments for each project to ensure that MRDM is not performing
programs that are the responsibility of the governments.
18.16.5 Licensing
In Minas Gerais State, the environmental polices including licensing are under the control of SEMAD
(Secretara Estadual de Meio Ambiente e Desenvolvimento Sustentvel), COPAM (Conselho
Estadual de Poltica Ambiental) and its regional councils, the URCs (Unidades Regionais Colegiadas),
SUPRAM (Superintendncias Regionais de Meio Ambiente e Desenvolvimento Sustentvel), FEAM
(Fundao Estadual do Meio Ambiente FEAM), IGAM (Instituto Mineiro de Gesto das guas), and
IEF (Instituto Estadual de Florestas).
The licensing process for a mining project in Brasil comprises three stages: Licena Previa (LP -
Preliminary Licence), Licensa de Instalao (LI - Construction Licence), Licena de Operacao (LO -
Operation Licence). For the RDM project, the licensing process is controlled by the SUPRAM office
located in Montes Claros, Minas Gerais, Brasil.
311
The obtain the LP, a public hearing, the Environmental Impact Assessment (EIA) and Environmental
Impact Assessment Report (RIMA Relatrio de Impacto Ambiental) were completed and submitted
to the SUPRAM for its review and analysis. After the review of the EIA and RIMA was completed, a
consolidated legal and technical report (the Parecer nico) was prepared by SUPRAM and submitted
to the COPAM / URC (COPAM) and MRDM for their review. At the voting stage of the LP approval
process, the COPAM, SUPRAM, and the project owner discussed the contents of the submitted
documents and the conditions that were attached to the approval of the LP by the COPAM to clarify
any ambiguous items contained in the documents. When the discussion period was completed, the
COPAM approved the LP and its conditions.
To obtain the LI, the Environmental Control Program (PCA-Programa de Controle Ambiental) was
prepared based on the EIA, RIMA, additional field studies plus the recommendations as presented by
the SUPRAM and COPAM in the Parecer nico of the LP and submitted to the SUPRAM for its
review and analysis. After the SUPRAM completed its review, the SUPRAM requested additional
information that MRDM is preparing for submittal to SUPRAM for its analysis. Once the analysis of the
PCA and the additional information is completed by SUPRAM, the Parecer Unico will be prepared and
provided to COPAM and MRDM. The subsequent process of discussion and voting for the LI is the
same as for the LP. Once the Parecer Unico has been prepared and submitted to the Secretary of
the environment by SUPRAM, MRDM will request the approval of an Ad Referendum (AR) for the LI
so that the construction of the project site can commence.
The acquisition of the LO follows the same steps as the acquisition of the LP and LI. The detail
project development plan that formed part of the PCA will be audited by SUPRAM to ensure that the
project is being completed in accordance with the documents submitted with the PCA and the
conditions of the licences. If during the detail design and construction periods of the project,
significant modifications to the project are required, the modifications need to be submitted to the
SUPRAM.
An AR for any of the licenses LP, LI or LO can be granted by the Secretary of the Environment prior to
the formal approval of the license by the URC. The AR is an official document that permits the
development of the project to advance while waiting for the vote of the COPAM to approve formally
the license. The award of the AR by the Secretary is based on the the Parecer nico, that is prepared
by SUPRAM and the recommendation of the area Superintendent of SUPRAM. To obtain an AR, the
owner needs to prepare a formal request to the Secretary for the award of the AR. The time period
from the date of the submittal of the request to the date of the award is normally 10 15 days.
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The following diagrams (Figure 18-20 to Figure 18-23) show the state environmental organization and
the procedures for the acquisitions of the licenses.
State Environmental Organization Government

Agencies
SISEMA State SEMAD - State Environmental

Environmental System Secretary
IGAM
FEAM
COPAM State Council of CERH Water Resources
Environmental Policy State Committee
IEF
CBH Verde Grande River

Regional Unit URC Watershed Committee
North of Minas Gerais
(water resources licenses)
SUPRAM NM
Councils Regional Agency
(representatives of governments, North of Minas
companies and society)
Figure 18-20 State Environmental Organization
313
EIA - Environmental
LP Preliminary
Impact Assessment (and
License
EIA Report)
SUPRAM analyzes EIA Conditions

Public Hearing
and EIA report
URC analyzes and

counselors vote
Previous License LP
SUPRAM requests / MRDM prepares and
analyzes Additional submits additional
Information information
Government may grant
Ad Referendum LP
When its ok: SUPRAM

prepares Consolidated
Technical and Legal Report
and send it to URC NM*
*Regional Unit of State Council of Environmental Policy URC North of Minas Gerais
Figure 18-21 LP Acquisition
Environmental Control Program

(PCA) and condicions compliance to LI Installation
obtain LI License
SUPRAM analyzes PCA

reort and conditions Conditions
compliance to obtain LI
URC analyzes and

SUPRAM requests / MRDM prepares and counselors vote
analyzes Additional submits additional Installation License LI
Information information
Government
When its ok: SUPRAM may grant
prepares Consolidated Ad Referendum
Technical and Legal Report LI
*Regional Unit of State Council of Environmental Policy URC North of Minas Gerais
Figure 18-22 LI Acquisition
314
PCAs programs preparation and

implementation report and LO LO Operation
conditions compliance License Renewal
SUPRAM analyzes PCAs programs

implementation and conditions Conditions
compliance to obtain LO Renewal
SUPRAM requests / URC analyzes and

MRDM prepares and
analyzes Additional counselors vote
submits additional
Information Operation License
information
RENEWAL*
When its ok: SUPRAM

prepares Consolidated
*Between 4 and 6 years
Technical and Legal Report
Figure 18-23 LO Acquisition
When MRDM was purchased by Carpathian Gold Inc in 2008, MRDM possessed an LO that was
transferred with the purchase of MRDM. However, the LO was applicable to a heap leach project
with a capacity of about 1,500 tpd so that the LO could not be renewed for the new project that
consisted of a completely different type of project at a larger production scale. For the purpose of
environmental licensing, the projects are classified according to the COPAM Norm n 74 of 09
September 2004, as follows:
Class 1 small size and small or medium potential for pollution.
Class 2 medium size and small pollution potential
Class 3 small size and great pollution potential or medium size and medium pollution potential
Class 4 great size and small pollution potential
Class 5 large size and medium potential for pollution or medium size and large potential for
pollution.
Class 6 large size and large potential for pollution.
The MRDM project is in Class 6 because the production rate exceeds 500,000 tonnes per year
and has a high potential for pollution. Consequently, the licensing process included all of the
315
steps beginning with the preparation and submittal of the EIA to the final stage of the acquisition
of the LO.
Below is a summary of the activities completed:
EIA and EIA Report submitted to SUPRAM on Oct 2009.
Public Hearing Dec 22, 2009; 1,400 attendees showed very strong support for project
Approval of LP on June 02, 2010
Approved LP contained 28 conditions mainly concerned with social improvements of the region
Conditions revised and revisions with URC NM agreed on Oct 19, 2010. The LP conditions were
moved to be attached to the LI to provide sufficient time to develop them.
Preparation of PCA document based on the EIA, EIA Report and LP conditions and submitted to
SUPRAM on Aug 24, 2010.
Key issues for the approval of the LI:
ARD (Lawrence Consulting Ltd, an expert in ARD, provided a short course to SUPRAM).
Tailing dam construction engineering and design.
Fresh water supply.
Location of the legal land reserve.
Site visit by SUPRAM Nov 16 to 19, 2010.
Report provided to MRDM on Dec 03, 2010.
Key conditions attached to LP that needs to be developed during the construction of the project:
Environmental training centre.
Assistance with the improvement of the medical care and school facilities.
Assistance with the improvement to the water supply and sewage treatment facilities.
Implementation of communication committees (company and communities).
Development of public safety programs (including implementation of systems to prevent sexual

abuse).
316
The following Table 18-72 shows the status of the licenses and permits required to develop the
project.
Licenses and Permits
Item Description Status

1 EIA and EIA Report (RIMA) Completed and submitted on
October 2009
2 Licenca Previa (LP) Awarded - June 2010

3 LP Conditions Revised to be conditions of LI on
October 2010
4 Environmental Control Program (PCA) for Submitted on August 2010

Award of LI
5 SUPRAM Request for Additional Received on 22 December 2010

Information for PCA
6 MRDM Submittal of Additional Complete by 23 May 2011

Information to SUPRAM
7 Licena de Instalao (LI) or LI Ad To be awarded - expected in July

Referendum 2011
8 Licena de Operao (LO) or LO Ad To be awarded - expected in August

Referendum 2012
9 Explosive License - to be obtained by Expected in October 2011

explosive supplier
10 Documents for Water Well and Mine De- Submitted on May 2011. Award
Watering Permits expected by end of June 2011
Table 18-72 Licenses and Permits
18.16.6 Closure and Abandonment Stage

At the end of the mine life, the facilities will require to be completely dismantled including the removal
of the concrete structures (except for the spill way at the tailing dam). All foundations will be buried in-
place and the building sites will be graded and re-vegetated with indigenous species. Topsoil will be
317
applied in areas where it is necessary to ensure successful re-vegetation. All salvageable equipment
and materials will be sold and removed from the site.
The majority tailing impoundment will be covered by water and excess water will drain via the spillway.
A water sampling to measure the quality of the water and a monitoring program for up to two years at
the spillway will be included in the closure plan. The tailing material not covered with water will be
seeded with nave species of vegetation to stabilize the material and prevent erosion by wind and rain.
The waste rock stockpile will be contoured, covered with soil, and planted with native species of
vegetation to prevent erosion. Drainage ditches will collect the water discharging waste rock pile and
direct the drainage to sediment ponds to allow the fine sediments to settle in the pond prior to the
water discharging to the environment. Native grasses will be planted in the sediment ponds to provide
natural filters to clean and aerate the water,
The pits of the mine will be flooded and surrounded by fencing to prevent animals and people from
entering the area. Signs will be posted on the fence to warn people that the site is off limits for entry,
fishing, and hunting. The drainage from the pits will be sampled on a regular basis to measure the
water quality and will be monitored for a period of up to two years. It is expected that the water will be
suitable for irrigation to improve the productivity of the local farms.
During the site preparation phase, the top soil will be stockpiled and will be used during closure to
provide soil cover for planting the vegetation. To control the erosion and maintain the nutrient levels
of the topsoil piles, the topsoil storage piles will be fertilized and vegetated using with native plant
species.
An annual amount of US$90,000 for reclamation, plus an amount of US$8.2 million for final closure
and abandonment are included in the cost estimates for the project. The following points summarize
the reclamation goals included in the EIA:
The waste rock that has potential for generating ARD will be sealed within the waste rock stockpile to
eliminate air and water from entering the sealed to avoid the generation of ARD.
MRDM has followed a precautionary approach to natural resource management to ensure

opportunities for environmentally sustainable development by maintaining protected areas as per the
Brazilian norms.
318
Educational activities for the initiative on environmental knowledge and natural habitat conservation
will be sponsored by MRDM for pre-school up to first grade children, in accordance with acquired
commitments to the community.
The project has already nominated 177 hectares of land that is sufficient in quantity and of suitable
quality to be able to re-locate the legal forest reserve at the open pit area to another area that will not
be impacted by the operation.
18.16.7 Risk analysis and Opportunities

18.16.7.1 Risk Analysis
The following projects risks have been identified together with a proposed preliminary mitigation
strategy.
319
Risk Area Description Proposed Mitigation Responsible

Licensing The current project Utilization of specialized MRDM, M2,
implementation schedule is local permitting and AVALICON
based on the receipt of the environmental consultants
license to construct in June (M2 and AVOLICON) to
2011. Any delay on this liaise closely with Brazilian
milestone will delay the authorities and to provide
project at least by the same assistance with the
period preparation of any
outstanding
documentation and the
resolution of outstanding
issues related to the
permitting process.
Power A new 34.5 kV transmission Engagement of dedicated HATCH
Supply to line has to be installed package engineer for this
Plant together with some sub-project to drive
equipment in the CEMIG schedule and liaise with
substation in Janauba. To involved parties, including
achieve timely supply of the early procurement of
power in April 2012, the long lead items
construction permit has to be
obtained no later than
September 2011 and the
construction work started in
October 2011
Tailing The change from the Golder considers that a MRDM
Dam and oxidized ore to sulphide ore management plan
Waste in the operations of the (prevention or control) of
Rock Pile Riacho dos Machados Mine ARD is needed, with
should elevate the possible effects on
importance of issues related engineering solutions
to the ARD. adopted in the detailed
design of the structures
like the waste dump and
the tailings dam.
In this regard, further

characterization
(increasing the number of
samples) of the materials
involved (waste, ore and
tailings) is essential to
reduce or eliminate these
uncertainties.
320
A concern exists that tailing Cycloning test work to be MRDM

cyclone U/F may not be conducted to verify
suitable to extend dam walls
because of the fine material
Escalation Based on the current trend in Re-negotiation and award HATCH/MRDM
of cost for Brazil, prices for equipment of major packages as
equipment and services may increase soon as license to
and during the course of 2011 construct (LI) has been
service mainly caused by the large obtained
contracts number of projects
scheduled by the industry
and government for the next
years.
Table 18-73 Project Risks
18.16.7.2 Opportunities
Several opportunities have been identified that should be followed up during the construction period
and afterwards.
Sampling of waste rock and additional heap leach material from previous mining activity
that could provide additional low-grade ore either for stock piling or early feed material for
the process plant.
The state power company CEMIG has indicated its willingness to continue negotiating a
reduced power rate on a long-term rate contract and a collaborative effort for upgrading
additional power to the project area on an expedited basis.
Resource growth potential is considered to be very good from both on-strike discoveries of
new deposits as well as underground resources.
With careful selective mining and the grade control program that will be implemented there
is an opportunity to feed higher-grade material during the operations to the process plant.
Mine optimization to have higher feed grade is underway.
Improving the grade of the plant feed material by diligently removing the internal waste
contained within the ore zone
Further optimization of gold recovery and reagent consumption is possible with some
additional test work.
Leasing of mining equipment to reduce initial upfront capital requirements.
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18.17 Economic Analysis

18.17.1 Capital Cost
The total estimated initial capital cost of the project is US$177.6 million, which includes the capital
equipment (from Table 18-32) as initial upfront capital). Table 18-74 summarizes the capital
requirements (taken from Tables 18-32, 18-69 and 18-70) for the project.
Pre-Production Capital Production Sustaining Total

Description PP Cost Y1 Capital Capital
$US (000s) $US $US
(000s) (000s)

Mine Development 25,650.0 25,650.0
(includes related
earthworks & contractor
costs)
Mine Equipment* 27,095.5 4,386.5 13,789.4 45,271.4
Civil Works 6,494.7 6,494.7
Equipment and Bulk 35,324.5 35,324.50
Materials
Tailing Dam 6,087.1 3,363.1 9,450.2
Construction, 13,017.6 13,017.6
Commissioning and
Vendor Support
Engineering and Project 13,240.0 13,240.0
Management
Owners Cost 6,800.0 6,800.0
Taxes (equipment and 6,382.1 6,382.1
services)
34.5 kV Power 3,200.0 3,200.0
Transmission Line
Contingency 10,700.0 10,700.0
Subtotal 160,336.1 4,386.5 20,128.9 184,851.5
Closure Cost 8,200.0
Total 160,336.1 4,386.5 20,128.9 177,559.10
Table 18-74 Total Capital Cost Summary
322
* For initial capital requirement, MRDM assumes that taking into account the order period and
payment schedule that 75% of Y1 mining capital (from Table 18-32) will be required as payment
upfront for early delivery of the majority of the mining equipment at the beginning of Y1 of operations,
with the balance to be paid in Y1.
18.17.2 Owners Capital Cost Estimate

The owners cost included in the capital cost estimate is to cover the following costs for the design,
engineering, and construction of the project:
Owners project management team.
Travel and lodging.
Office equipment.
Vehicle rentals for Owners team.
Service contracts (cleaning, waste removal, meals).
Office materials (Belo Horizonte and Riacho dos Machados).
Communications.
Licenses.
The value of the owners cost was estimated about US$6.8 million. Details can be found in Appendix
24.4.
18.17.3 Mine Closure Capital Costs

An annual reclamation fee of amount of US$90,000 was set aside, plus an amount of US$8.2 million
for final closure and abandonment (for tailing, waste rock pile and dismantling of infrastructure) are
included in the cost estimates for the project.
18.17.4 Contingency Provisions

Contingency provisions were estimated on a unit basis for each category of capital as to the degree of
certainty resulting in an overall average of approximately 9%.
18.18 Operating Cost Estimate

Mine operating costs were estimated as an average of US$ 1.40 per total material mined (see
Table 18-75). Processing operating cost was estimated as US$7.76 per ore tonne feed to the plant
323
(see Table 16-14 in Section 16.4.6). The rest of the parameters used for the economical model are
presented in Table 18-76.
SUMMARY OF MINE OPERATING COSTS - TOTAL DOLLARS ($US X 1000)
Total
(ktonnes)
PP 19,000 11,938 1,082 452 37 299 2,547 2,568 829 2,743 681 190 2,281 25,647 1.350 24.239
Y01 30,000 - 506 525 562 2,873 6,536 8,083 2,651 7,979 665 300 4,251 34,930 1.164 15.450
Y02 30,000 - 112 766 1,447 6,285 6,497 7,953 2,507 7,960 673 300 2,999 37,498 1.250 10.399
Y03 30,000 - 117 606 1,383 6,112 6,510 8,502 2,651 8,357 678 300 3,046 38,261 1.275 13.034
Y04 30,000 - - 503 1,788 8,308 6,546 8,688 2,507 8,468 682 300 3,048 40,837 1.361 16.372
Y05 19,824 - - 508 1,497 6,769 4,319 7,166 2,145 6,806 638 198 2,390 32,436 1.636 12.695
Y06 16,606 - - 508 1,333 5,854 3,627 6,764 1,640 6,226 623 166 2,295 29,036 1.749 11.365
Y07 8,370 - - 508 914 3,739 1,857 3,490 1,123 3,174 539 84 1,990 17,418 2.081 6.817
Y08 1,361 - - 41 231 812 417 819 182 786 139 14 293 3,732 2.742 4.410
Y09 - - - - - - - - - - - - - - - -
Y10 - - - - - - - - - - - - - - - -
Total 185,161 11,938 1,816 4,416 9,192 41,051 38,857 54,033 16,234 52,498 5,317 1,852 22,594 259,797 1.403 12.451
Cost/ Tonne of Total Mat'l 0.064 0.010 0.024 0.050 0.222 0.210 0.292 0.088 0.284 0.029 0.010 0.122 1.403
Percent 4.6% 0.7% 1.7% 3.5% 15.8% 15.0% 20.8% 6.2% 20.2% 2.0% 0.7% 8.7%
Table 18-75 Total Mine Operating Cost Summary (US$ per tonne)
18.18.1 General and Administrative Costs

General and administrative costs for the project for an 18 month period were provided by MRDM and
amounts to US$1.01 per tonne of ore mined. Details can found in Appendix 24.5.
18.18.2 Taxes and Royalties

In Brazil, the base corporate income tax rate is set at 25% of profits (the Base Rate). Additionally,
there is a tax known as the Contribuicao Social sobre Lucro Liquido (CSLL) that is calculated at the
rate of 9% of profits. Combined, these taxes amount to an effective tax rate of 36%. However, owing
to governmental economic development policies for northern Minas Gerais State, a project considered
to be of priority interest is entitled to a reduction of 75% in the effective income tax rate. The RDM
Gold Project qualifies for this reduction and therefore the income tax rate is reduced by 75% to 6.25%
for a period of 10 years. Therefore, the effective tax rate on project profits will, when combining the
reduced Base Rate with the CSLL, be 15.25% for the first ten years of operations.
For tax calculation purposes, the economic model uses a straight-line depreciation method based on
the mine life. Under Brazilian tax rules accelerated depreciation rates can be used. The use of these
accelerated rates together with certain fully expensed pre-production costs and loss carry forward
expenses will likely result in little if any income tax payable, thus maximizing free cash flow in the first
few years of mine life.
Under federal law, a royalty, the Compensacao Financiera pela Exploracao de Recursos Minerais
(CFEM) is levied on gold production. The current CFEM rate stands at 1% of the gold produced and
324
is calculated on the gross gold sale proceeds less refining charges and insurance as well as any
applicable sales taxes. The project also carries a 1% royalty on gold produced which is payable to
Minercao Brilhante Ltda., the previous owner of the project.
18.18.3 Federal Incentive on Reinvestment

The Re-Investment fund is a fund that can be utilized to purchase new equipment, increase capacity,
environmental reclamation, etc. The government contribution to the fund is the 30% of the federal
payable income tax. The Company will contribute to the fund so that when new equipment is
purchased, etc, money is withdrawn from the fund such that 50% of the value of the purchase or
contract is taken from the federal portion of the Re-Investment Fund and 50% of the value is taken
from MRDMs portion of the fund so that MRDM pays only 50% of the value of purchase or contract.
This Federal Incentive plan will not be applicable in situations where there is no tax payable.
18.18.4 Discounted Cash Flow Model

Base case gold price for the financial model was a constant US$1,150 per ounce for all the life of
mine, provided by MRDM. This gold price represents the approximately two-year trailing average for
gold and was established as the base case given the current gold trend and the near term production
profile of the project (see Section 18.23.1).
The exchange rate set for the project was established at the beginning of the study and reflects the
possible currency hedge that would be applicable to the project from a senior bank debt lender at that
time.
The cash flow financial model was created utilizing the mine production schedule, associated gold
grades, gold recoveries and capital and operating costs as set out above. The study entails a 7,000
tonnes per day to an industry standard carbon in leach and ADR, producing a total of 747,000 ounces
of recoverable gold over the mine life of 8 years. Table 18-76 summarizes the economic parameters
used in the discounted cash flow model.
325
Item Unit
Average Mining Cost US$/tonne mined 1.40
Processing Cost US$/ore tone 7.76
G&A US$//ore tone 1.01
Reclamation fee US$ per year 90,000
Closure Cost US$ 8,200,000
Transport, Freight,
Insurance, Refining US$/oz 13.00
Metallurgical
Recovery % 90.0
Discount Rate % 5.0
Taxes payable % 15.25
Royalty % 2.0
Table 18-76 Economic Parameters
The total cost (not including capital re-payment and royalty) is US$558 per ounce (US$593 per ounce
including royalty payment) and including capital re-payment is US$828 per ounce at the financial base
case gold price.
The cash flow is considered on a 100% equity basis, i.e. no account has been taken of financing
arrangements and associated costs.
A summary of the economic evaluation of the project is shown below (Table 18-77) at US$1,150 gold,
along with gold prices ranging from US$1,150 to US$1,350.
Financial Model US$1,150 US$1,200 US$1,250 US$1,300 US$1,350

Gold Gold Gold Gold Gold
NPV5 pre-tax (US$ MM) $150.8 $179.2 $207.6 $236.0 $264.4
NPV5 (after tax) (US$ $123.8 $147.8 $171.9 $196.0 $220.1
MM)
IRR pre-tax 24.9% 28.4% 31.8% 35.2% 38.5%
IRR (after tax) 21.9% 24.6% 27.6% 30.5% 33.4%
Payback (yr) 3.8 3.4 3.0 2.8 2.6
Table 18-77 Economical Evaluation Results Summary
Table 18-78 and Table 18-79 show the NPV at various discount rates and gold prices, pre-tax and
after tax, respectively.
326
NPV (US$ MM) pre-tax

Discount Rate 1,150 1,200 1,250 1,300 1,350
0.0% $237.6 $274.2 $310.8 $347.5 $384.0

Discount
2.5% $190.0 $222.1 $254.3 $286.4 $318.6

Rate
5.0% $150.8 $179.2 $207.6 $236.0 $264.4

7.5% $118.4 $143.7 $168.9 $192.2 $219.4
10.0% $91.5 $114.1 $136.6 $159.2 $181.7
IRR (%) 24.9% 28.4% 31.8% 35.2% 38.5%
Table 18-78 Sensitivity Gold Price and Discount Rate Pre-Tax
NPV (US$ MM) after tax

GOLD PRICE (US$/oz)
Gold Price &
Discount Rate 1,150 1,200 1,250 1,300 1,350
Discount Rate
0.0% $202.5 $233.5 $264.5 $295.6 $326.6

2.5% $159.2 $186.5 $213.7 $241.0 $268.2
5.0% $123.8 $147.8 $171.9 $196.0 $220.1
7.5% $94.5 $115.9 $137.3 $158.6 $180.0
10.0% 70.2 $89.3 $108.4 $127.5 $146.6
IRR (%) 21.6% 24.6% 27.6% 30.5% 33.4%

Table 18-79 Sensitivity Gold Price and Discount Rate After-Tax
Below is a sensitivity graph showing the operational variance (at US$1,150 gold price) of grade,
recovery, capital cost and operating cost. As shown in Table 18-80, the project is most sensitive to
grade and recovery.
327
Table 18-80 Economic Sensitivity Chart
Detailed cash flow models at gold prices of US$1,150 and US$1,250 are presented in Table 18-81
and Table 18-82.
328
TECHNICAL REPORT ON THE RESOURCE ESTIMATE UPDATE AND THE FEASIBILITY STUDY FOR RIACHO DOS MACHADOS GOLD
DEPOSIT,
329
DEPOSIT,
Table 18-81 Cash Flow Model for US$1,150 per ounce Gold
330
DEPOSIT,
331
DEPOSIT,
Table 18-82 Cash Flow Model for US$1,250 per ounce Gold
r
332
18.19 Gold Market

18.19.1 Industry Trends and Pricing
The gold price in 2009, achieved a record spot trading value of US1,227.50 per ounce for the gold
futures contract. In February 2011, the gold price achieved a record value of US$1,411 per ounce
and as of May 5, 2011 gold reached a high of US$1,596 per ounce. This increase in the price of gold
appears to have been brought about by the uncertainty of the strengths of the world currencies, the
lack of economic recovery in Europe and U.S.A. that was predicted to occur in 2010, the uncertainty in
the mid-East where the majority of the oil reserves lie, and the prediction of the rapid growth of
inflation of newly developing countries such as the BRIC countries. The expectation is that the price
of gold will remain strong for the near future because of the investment demand by ETFs, fabrication
demand, purchasers of gold coins, and banks.
The gold price that was utilized for the base case cash flow analysis is US$1,150 per ounce for the life
of the project, which represents less than the two year trailing average for gold ($US1,186), and just
over the three year trailing average (US$1,079).
18.19.2 Sale Strategy

RDM Gold Project will produce gold bars containing about 95% gold. These bars refined to produce
pure gold and the refined gold will be sold to banks or other financial institutions either in Brazil or off-
shore on spot price basis to capture the highest price.
333
19. REQUIREMENTS FOR TECHNICAL REPORTS ON PRODUCTION AND

DEVELOPMENT PROPERTIES
This section is not applicable to the RDM Gold Project as it is not at a development or production
stage.
334
20. INTERPRETATION AND CONCLUSIONS

20.1 Geology and Resources
The gold mineralization at the RDM Gold Project is shear-zone hosted in a metamorphic sequence of
Archean to early Proterozoic in age. At the RDM mine site, the shear-zone strikes 20 and dips 35 to
45 to the east. Geologic features at RDM have many similarities with Orogenic, or lode gold type
deposits associated with first or second order regional scale structures in collision orogens.
CVRD operated the RDM Mine as an open pit oxide gold operation with ore processed by cyanide
heap leaching from 1989 to 1997. It produced 155,000 ounces of gold from 3.2 million tones of oxide
ore (1.89 g/t Au) mined to an approximate depth of 30-60 metres. Since acquiring the RDM Gold
Project in 2008, Carpathians and MRDMs efforts have been successful in defining continuous gold
mineralization (principally sulphide) below and along strike of the existing shallow open pit.
Carpathian has completed three phases of drilling and completed two previous NI 43-101 compliant
resource estimate. This Technical Report contains the third NI 43-101 compliant resource estimate
which includes results from all three drill phases. The present total database includes 229 diamond
drill holes completed by Carpathian (37,622 m), 157 CVRD diamond drill holes re-sampled (24,727
m), and 58 Carpathian reverse circulation drill holes (4,566 m) totalling 444 drill holes (66,915 m).
The de-commissioned heap leach pile left by CVRD was sampled utilizing a pattern of auger drill
holes to define a low grade resource. These results were utilized to prepare the April 2011 Resource
Estimate Update for the RDM deposit. This resource estimate was completed in conformance with NI
43-101 reporting guidelines. This resource estimate incorporates all of Carpathians drilling results and
re-sampling of CVRD drill-core that were available as of March 31st, 2011.
As of April 5th 2011, the effective date of the resource estimate, resources amenable for open pit
mining are estimated as 19.308 million tonnes in the measured plus indicated categories grading at
1.50 g/t Au and 4.617 million tonnes grading 1.62 g/t Au in the inferred category. The underground
indicated resource amounts to 0.52 million tonnes at a grade of 3.18 g/t Au and 4.830 million tonnes
inferred resource at a grade of 2.23 g/t Au. The open pit resources include 931,300 ounces of gold in
the measured plus indicated categories and 240,700 ounces gold in the inferred category. Combined
open pit and underground resources include 936,600 ounces gold in the measured plus indicated
categories and 587,300 ounces in the inferred category.
335
Exploration potential to add further resources exists at depth for a possible underground operation,
and along strike targets for near-surface mineralization. The shear zone that hosts the RDM deposit,
is known to extend at least 12 km north of the deposit.
20.2 Mining and Reserves

Mining studies have concluded that the RDM orebody can be mined using conventional methods of
open pit mining. This Feasibility Study considers open pit mining only and is based on the Resource
Estimate update of April 5th 2011. The development of the mining studies included the following:
From consideration of mining methods and ore control systems, a diluted resource block
model was utilized for the mining studies. This diluted block model utilized the contact
block approach, whereby blocks with less than 85% ore, and in locally selected areas, all
contact the blocks were diluted with adjacent waste resulting in an overall 22% dilution and
a minor ore loss of less than 1%.
Pit optimization using Whittle 4X and Lerchs-Grossman algorithym to determine the

ultimate pit limits and identify a sequence of intermediate mining phases. Appropriate
mining and processing costs, metallurgical recovery, variable pit slope angles, and 950
USD/ounce gold are used.
Six mining phases, a pre-production waste removal plan, and a detailed final pit design
were developed to determine the locations of the access ramps and working areas
required for the mining equipment. Bench and overall pit slope design was based on
recommendations by the geotechnical consultants (Golder Associates, Brazil) with bench
height of 12 metres (two stacked 6 metre benches) in fresh rock and 6 metre benches in
ore (with possible 3 metre slices at contacts).
The final pit is 1.8 kilometres long in the north-south direction and 0.6 kilometres wide in
the east-west direction. The highest wall is about 270 metres on the southeast side.
Operational strip ratio over life-of-mine is 7.4 to 1 (waste to ore).
Development of the mine production schedule and plant feed schedule, based on the pit
phases and years and contained resources inventory, were performed for an ore
processing rate of 7,000 tonnes per day (2.55 million tonnes per year) and a life of mine of
8.0 years. The LOM average annual gold production rate was calculated to be 93,375
ounces with average annual production in the first three years of 100,670 ounces gold.
Total Life of mine gold production was estimated at 747,000 ounces gold.
336
The proven and probable ore reserves contained within the open pit limits total 20.90
million tonnes at a calculated grade of 1.24 g/t gold containing 830,200 ounces gold.
The mine operation is based on the use of 6.7 cubic metre backhoe excavators, matched
to 40 tonne conventional haul trucks, ROC-L8 blast hole drills, D9 bulldozer, and a 160H
grader plus auxiliary equipment. Total material movements, loading cycles and haul
profiles were taken into account to define the number of each component comprising the
mine fleet.
A single waste storage area was designed according to the geotechnical

recommendations.
The estimates of mine capital and operating costs were performed based on an owner
operator mining scenario with for 40% of the waste removal during the preproduction
period removed by a contractor. Replacement and additional equipment purchase costs
have been included as sustaining capital over the life of mine.
The operating cost estimate was based on the mine equipment operating costs that
included consumables, labour, and maintenance, blasting, and general and administration.
20.3 Metallurgical Information and Process Design

Carpathian envisions an industry standard, crushing, grinding (single-stage ball mill), CIL (carbon in
leach) circuit with an ADR (adsorption, desorption, and recovery) process plant to extract and recover
gold from the sulphide and oxide mineralization at the RDM Gold Project.
The 90% gold recovery that was utilized to develop the feasibility study was determined from
metallurgical test work performed by two independent laboratories. The samples that were utilized to
perform the test work were extracted from the drill core.
The largest single component of the plant operating costs is the electrical power. The cost per kW-h
for the power supplied from the grid was provided by CEMIG, the power company of Minas Gerais,
Brazil. The calculated cost of the energy provided by diesel fired generator was based on the fuel
consumption and maintenance costs provided by the suppliers of the generators.
The reagent costs were estimated utilizing price quotations obtained from the suppliers. The cyanide
consumption rate of 0.5 kg/t that was utilized to calculate the cost per tonne of ore will be confirmed
by performing additional testwork that will be completed by end of July 2011. Ore samples of oxide,
transition, and fresh rock will be extracted from the drill core of three ore bodies (Areas I to III) to
337
measure the gold extraction rates and cyanide addition rates that are required to maintain
concentrations of weak acid dissociable cyanide of 150, 250, 400 ppm. Separate tests will be
conducted to measure the cyanide consumption rate.
The cost of wear materials were estimated using in-house information of the consultants.
The average operating time of the crushing plant is 16 hours per day whereas 19.2 hours was utilized
for the rest of the plant.
The tailing starter dam and impoundment area were designed for two years of operation. The height
of the tailing dam will be increased with the use of the coarse fraction of the cycloned tailings.
20.4 Geotechnical Investigations

MRDM retained Golder to complete geotechnical studies pertaining to open pit slope stability, tailing
dam and impoundment, waste dump design, design of the foundations for the process plant and
infrastructure buildings. Golder has also completed the basic engineering design of the tailing dam
and waste rock stockpile. These tailing dam and impoundment, and waste rock stockpile are
designed for the storage of the CIL tailings following cyanide destruction and the waste rock plus the
low grade ore. Water balance calculations indicate sufficient water supply is available from the tailing
supernatant plus the rain water drainage of the tailing catchment area and the drainage of open pit
catchment area, plus the infiltration to supply the water requirements of the operations. However, if
MRDM determines that an additional source of water is required for the project Golder has completed
a geotechnical study and design of a water dam and reservoir proximal to the mine site.
Results of the geotechnical studies divide the open pit into three sectors: Sector 1 (foot wall) is the
west wall of the pit, which follows the dip-slope of the rock foliation. Sector 2 (hanging wall) is the
east wall of the pit and is a cut-slope the rock foliation. Sector 3 is the south part of the east pit wall
and includes granite. Rock strength analyses are used to classify stability of rock types and their
position relative to the foliation dip and weathering state. Class I is the strongest and Class V the
weakest with Inter-ramp Angles (IRA) ranging from 52.50 in the east-wall (Class II/I schist) to 29.50
in the west-wall (Class V weathered schist).
20.5 Hydrology
The RDM minesite is located n a semi-tropical climate zone with open grasslands and savannah
within the watershed of the Gorutuba River, which is a tributary of the Verde Grande River, which in
turn is a tributary of the So Francisco River, located in the State of Minas Gerais.
338
Two distinct seasons prevail with a long dry season and a wet season from November to March when
85% of the annual 1,066 mm rainfall occurs. The water flow in the streams of the region is unreliable
and intermittent with high water flows in the rain summer season and dry stream beds in the winter
season.
To augment the supply of the fresh water, wells will be installed for the project to provide a supply for
potable water and as the source of make-up water for the process plant. The study shows that the
predominant aquifer systems of the installed wells of the region are located in the Gneiss-Granitic and
the Schistous Systems (48 wells), representing 41.7% of the wells. The Pellitic System is represented
by 23 wells drilled in limestone, and when predominant the karstic-fractured aquifer type represents
around 20% of the occurrences. Detritic System represents 4.3% of the drilled wells (5 unities),
generally installed in the weathered layer, having small depths. The 34% remaining wells have no
information about the installed lithology.
The observed productivity for wells installed in fractured aquifers (gneiss rocks) shows a mean value
of 3.5 m3/h, varying between 0.14 m3/h and 24.0 m3/h, the same is observed when the wells are
installed in granite rock, and occasionally achieve a water pumping rate of 10.3 m3/h. In the schists,
the observed mean flow value is 6.8 m3/h, with a maximum of 23.8 m3/h.
20.6 Power Supply

The electrical power will be supplied from the CEMIG grid to the project via a 34.5kV line beginning at
the Janauba substation, some 35 km of right of way and terminating at the substation of the mine site.
The upgraded power line will follow the same route as the existing 13.8kV power line that currently
supplies electrical power to the project site. Since the CEMIG power distribution grid in the area is
weak and the grid can furnish a maximum of about 6.0 MW without a substantial upgrade of the
system, two diesel fired 2.25 MW generators will be installed at site to supplement the power supply to
the project. Both the 13.8kV and 34.5kV power transmission lines belong to CEMIG. To increase the
capacity of the grid in the region, CEMIG intends to construct by 2015 an interconnecting 138kV
power transmission line from Arauai to Salinas, some 88 km.
The 13.8kV power transmission line has sufficient capacity to be able to complete the construction
and commissioning phases of the project.
The power distribution throughout the project will be provided in four voltages: 34.5 kV, 13.8 kV,
6.6kV, and 460 volt for equipment with motors less than 225 kW.
The peak electrical demand for the operations is estimated at 8.3 MW with an average at 7.7 MW.
339
20.7 Water Supply

The total demand of water for the process plant including the ADR plant is 1,452.2 m/h. Of this total
demand, 977.7 m/h is provided by the recycle of the thickener overflow and 341.8 m/h is provided by
the recycle of the supernatant water from the tailing impoundment. The total fresh water requirement
for the process plant make-up water, utilities, reagent preparation, and potable water is calculated at
132.7 m/h. The fresh water sources include: area drainage of rain water, drainage into the open pits,
and bore-hole wells. The potable water will be obtained from the wells.
The fresh water amounting to about 0.5Mm that is contained stored in the existing open pits will be
pumped to the tailing pond prior to the start of the mine development phase and will be utilized during
the construction phase mainly for the site earth works, civil works, and dust control.
20.8 Environmental and Social Issues

As supported by the baseline studies, the main environmental and social issues are the following:
Water availability and usage: the region has low water availability, and its uptake and use
is a key matter of concern.
In terms of ecological impacts, the RDM Gold Project has typical mining impacts. Since the
area has a background of disturbance, impacts are acceptable and attention must be paid
for the remnant areas to be preserved, where important flora and fauna elements must be
monitored and conservation efforts must be carried out.
Social concerns include dust and noise disturbance and potential social conflicts because
of new people coming to the region. Common protection measures as noise abatement
systems and road watering to avoid dust suspension must be adopted to minimise these
impacts. The social programs to be carried out as part of the RDM Gold Project will enable
the mitigation of undesirable social conflicts.
Local economic growth will be very significant and the project will play a key role at local
economy, likely becoming the largest employer and user of local and regional services.
20.9 Economic Analysis

The total estimated capital cost of the project is US$177.6 million, which includes the capital
equipment as initial upfront capital).
340
Mine operating costs were estimated as an average of US$ 1.40 per total material mined. Processing
operating cost is estimated at US$ 7.76 per ore tonne feed to the plant with 90% gold recovery. A 2%
Royalty is included as well as appropriate costs for reclamation, closure, and gold transport and
refining.
The base case discounted cash flow model utilizes US$ 1,150 per ounce gold over the life of mine,
15.25% tax rate, a 5% discount rate, 100% Equity interest without financing arrangements, and an
exchange rate of R$/US$ of 2.0. The exchange rate set for the project was established at the
beginning of the study and reflects the possible currency hedge that would be applicable to the project
from a senior bank debt lender.
The total estimated cost (not including capital re-payment or royalty) is US$ 558 per ounce gold (US$
593 including royalty) and including capital re-payment is US$ 828 per ounce gold.
Base Case net present value (NPV) at a 5% discount rate, after-tax NPV is US$ 123.8 million,
generating an IRR of 21.9% after-tax and 3.8 year payback. At near spot gold price of US$ 1,350 per
ounce gold, the NPV at 5% discount rate after tax is US$ 220.1 million and IRR of 33.4% with 2.6 year
payback.
A sensitivity analysis of capital costs and operational variance indicates the project is most sensitive to
gold grade/recovery and operating costs.
The economic analysis for the project is positive at a financial base case of $1,150 gold price with a
good NPV (discounted 5%), IRR and payback period. This gold price for the financial model is
considered realistic given the current gold trend and the near term nature of the production profile of
the project. At higher gold prices the project becomes more robust. In order to protect any possible
unforeseen gold depreciation in price it may be prudent to consider a hedging program to protect the
downside.
20.10 Project Implementation Plan

The project schedule (Figure 18-19) shows that the project implementation including detailed
engineering, construction, commissioning, and start up will require 18 months to complete. The
construction period of the project, from the date of receipt of the license LI is estimated to be about 16
months.
The following key milestones (which also assume that project financing and LI are in place) have to be
met to achieve this target:
341
Start detailed engineering in March 2011
Submit requests for quotation (RFQs) for major equipment and services packages in
April/May 2011
Obtain the construction license (LI) in June 2011
Complete access road upgrade in June 2011
Start pre-strip and mine pre-production in July 2011
Start site earthworks in July 2011
Start initial tailing dam in August 2011
Obtain the permit to construct 34.5 kV transmission line from Janauba to site in August
2011
Complete mechanical installation in February 2012
Start commissioning of plant (Dry) in May 2012
Start wet commissioning of plant in June or July 2012
Commence production in August 2012 (complete ramp up by October 2012)
The project schedule shows that the feasibility study development, engineering and design,
construction, and start-up of the facilities will require about 22 months to complete, beginning with the
development of the feasibility study. It is intended that the mine pre-production will commence about
June/July 2011.
342
21. RECCOMENDATIONS
Based on the positive results of the Feasibility Study, Tecnomin recommends the following:
Advance this project to construction and production.
Obtain the LI License or its ad referendum so that site works can begin with a key item
being the starter dam for the tailing impoundment area and clearing and grubbing.
Further evaluate the possible use of leased mining equipment and/or a greater role of
contract mining.
Evaluate the use of a currency hedging facility to reduce risk exposure.
Obtain assurance from CEMIG that the construction of the 138 kV power line segment
Arauai to Salinas and any upgrades required to provide more grid capacity to the mine-
site will be completed by 2015 to phase-out the supplemental diesel generator power.
Any resource/reserve additions to the current project will be highly accretive in value and
thus exploration drill testing should be completed to test high priority targets near the mine.
Evaluate that portion of the underground resource that may be upgraded to an

underground reserve with drilling as well as optimization plans to incorporate the
mineralization into the overall project during the open pit operation.
Complete the negotiations with the governments to maximise the incentives for the project
development.
Complete additional metallurgical test work to optimize the reagent consumptions for
cyanide and metabisulfite for the process.
MRDM should continue with the EPCM programs that are presently in-place. MRDM is
adequately focused on the critical path items of the Project Implementation Plan and
should continuously review the execution progress of this plan and update if necessary.
Drill testing priority exploration targets along strike is considered an important goal to
accomplish in the next year. A total of 6,000 metres is recommended for the first-pass
drill test of these targets and an exploration budget of US$ 1.2 million recommended.
Depending on results a second phase of drilling is recommended to follow-up drill results
and test additional exploration targets. The underground mining potential should be
343
addressed by completing an engineering scoping study on the present inferred resource

followed by drill-hole spacing study to estimate drilling and cost requirements. If deemed
acceptable, this deep drilling should commence during mine development such that a
feasibility study could be completed and underground mine development could be initiated
at a predetermined time for integration into the open pit operation.
344
22. REFERENCES
Alkmim F.F., Marshak S. & Fonseca M.A., 2001. Assembing West Gondwana in the Neoproterozoic:
Clues from the So Francisco cratonregion, Brazil. Geology, 29:319-322.
Barbosa, J.S.F., 1996. O embasamento arqueano e proterozico inferior do estado da Bahia. In

J.S.F. Barbosa and J.M.L. Dominguez (Eds.), Mapa Geolgico do Estado da Bahia: Texto Explicativo
(pp.63-83). Salvador, Bahia, Brazil: Supeerintendncia de Geologia e Recursos
Minerais/Universidade Federal da Bahia/Fundao de Apoio Pesquisa e Extenso, 400p
Belo de Oliveira, O.A., 1993. Mapa Geolgico da Regio de Riacho dos Machados (1:100.000).
Unpublished geological map, Rio Doce Geologia e Minerao S.A., Belo Horizonte, MG, Brazil.
DOCEGEO, 1991. Mapeamento Tectnico-Estrutural da Regio de Ouro Fino-Jatob, Riacho dos

Machados, Minas Gerais. Unpublished final report, Rio Doce Geologia e Minerao S.A./Ecogeo
Projetos e Consultoria Ltda., Belo Horizonte, 37p.
DOCEGEO, 1992. Mapeamento Geolgico-Estrutural em Escala 1:50.000 da Regio de Riacho dos

Machados (MG). Unpublished final report, Rio Doce Geologia e Minerao S.A./Ecogeo Projetos e
Consultoria Ltda., Belo Horizonte, MG, Brazil, 88p.
Crocco-Rodrigues, F.A., Guimares, M.L.V., de Abreu, F.R., Belo de Oliveira, O.A. & Greco, F.M.,
1993. Evoluo tectnica do Bloco Itacambira-Monte Azul entre Barroco e Porteirinha (MG). Anais,
IV Simpsio Nacional de Estudos Tectnicos, Belo Horizonte, pp. 212-216.
Fonseca, E., 1993. Depsito Aurfero de Riacho dos Machados, Minas Gerais: Hidrotermalismo,
Deformao e Mineralizao Associados. Belo Horizonte, Unpublishes M.Sc. dissertation. UFMG,
Universidade Federal de Minas Gerais.
Fonseca, E., Lobato, L. M. & Baars F. J., 1997. The petrochemistry of the auriferous,
volcanosedimentary Riacho dos Machados Group, Central-Eastern Brazil: geotectonic implications
for shear-hosted gold mineralization, Journal of South American Earth Sciences, V. 10 No. 5-6, pp
423-443
G & T Metallurgical Services Ltd., July 27th, 2010, Cyanidation bottle roll testing eleven discrete
samples Mineracao Riachos dos Machados project, Carpathian Gold, KM2658, Salvatore, D., and
Folinsbee, J., British Columbia, Canada.
345
Goldfarb, R.J., Baker, T., Dube, B., Groves, D.I., Hart, C.J.R., and Gosselin, R., 2005, Distribution,
character, and genesis of gold deposits in metamorphic terranes, Economic Geology 100th
Anniversary Volume, Society of Economic Geologists, Inc., Littleton, Colorado, USA. p. 407-450.
Groves, D.I., Goldfarb, R.J., Knox-Robinson, C.M., Ojala, J., Gardoll, S., Yun, G., and Holyland, P.,
2000, Late-kinematic timing of orogenic gold deposits and its significance for computer-based
exploration techniques with emphasis on the Yilgarn block, Western Australia: Ore Geology Reviews,
v. 17, p. 1-38. in Distribution, character, and genesis of gold deposits in metamorphic terranes,
Economic Geology 100th Anniversary Volume, Society of Economic Geologists, Inc., Littleton,
Colorado, USA. p. 407-450.
Guzmn, C., Mello, R., Wells, J. 2009. Riacho dos Machados Gold Project, Preliminary Economic
Assessment. 224 pag.
Klohn, M. & Broili, C., 2008. (B&K Exploration Associates) Technical Report, Riacho dos Machados
Gold Project, Minas Gerais State, Brazil, 54p. NI43101
Marshak, S., Alkmim, F. F., Whittingtom, A. G. & Pedrosa-Soares, A. C., 2001. Extensional Collapse
of the Neoproterozoic Araua Orogen, Brazil: The Role of Regional Crenulation Cleavage, GSA
Annual Meeting, Session No. 63.
Monteiro, R.N., Fyfe, W.S. & Chemale Jr, F., 2004. The impact of the linkage between grade
distribution and petrofabric on the understanding of structurally controlled mineral deposits: Ouro Fino
Gold Mine, Brazil, Journal of Structural Geology V.26, pp. 1195-1214.
Multigeo Consulting Group, 2008, Preliminary Environmental Appraisal, RDM Gold Mine, DNPM
831.005/1982. Riacho dos Machados/MG; private report.
Mello, R.B. (NCL do Brasil Ltda), July 2009., NI 43-101 Technical Report, Mineral Resource Estimate
for Riacho dos Machados Gold Deposit, Minas Gerais State, Brazil. NI 43.101, 120 pg, 119 pgs.
Robert, F., 1989, Internal structure of the Cadillac tectonic zone southeast of Val dOr, Abitibi
greenstone belt, Quebec: Canadian Journal of Earth Sciences, v. 26, p. 2661-2675. in Distribution,
character, and genesis of gold deposits in metamorphic terranes, Economic Geology 100th
Anniversary Volume, Society of Economic Geologists, Inc., Littleton, Colorado, USA. p. 407-450.
Rodrigues, J.T.L. (CVRD), 1996, Several vertical and horizontal sections. Internal reports
Ruff, R., 2008: RDM Gold Project, Brasil: Site Visit Observations and Comments, January 2008:
unpublished internal report, Carpathian Gold Inc., 9 p.
346
Ruff, R, and Stefanini, B, February 22, 2008: Data verifiication Check Assay Results RDM Project;
private report.
SGS GEOSOL Laboratorio Metalurgico, January 15th, 2009: Leaching kinetics of three RDM samples,
15 pgs; Tartarotti, F., Savassi, O., Belo Horizonte, Brasil; private report to Carpathian Gold.
Sibson, R.H>, Robert, F., and Pousen, K.H., 1988, High-angle reverse faults, fluid-pressure cycling,
and mesothermal gold-quartz deposits: Geology, v. 16, p. 551-555. in Distribution, character, and
genesis of gold deposits in metamorphic terranes, Economic Geology 100th Anniversary Volume,
Society of Economic Geologists, Inc., Littleton, Colorado, USA. p. 407-450.
Stefanini, B., 2008: RDM Gold Project, Brasil: Geologic modelling progress and Exploratory Data
Analysis, January 2008: unpublished internal report, Carpathian Gold Inc., 3 p.
Vearncombe, J.R., Barley, M.E., Eisenlohr, B.N., Groves, D.I., Houstoun, S.M., Skwarnecki, M.S.,
Grigson, M.W., and Partington, G.A., 1989, Structural controls on mesothermal gold mineralization:
Examples from the Archean terranes of southern Africa and Western Australia: ECONOMIC
GEOLOGY MONOGRAPH 6, p. 124-134. in Distribution, character, and genesis of gold deposits in
metamorphic terranes, Economic Geology 100th Anniversary Volume, Society of Economic
Geologists, Inc., Littleton, Colorado, USA. p. 407-450.
Whittington, A. G., Pedrosa-Soares, A. C., Marshak, S. & Alkmim, F. F., 2001. The Metamorphic
Signature of Confined Orogeny and Collapse: an Example from the Neoproterozoic Araua Belt of
Eastern Brazil, GSA Annual Meeting, Session No. 63.
347
23. CERTIFICATE OF AUTHORS

23.1 Certificate of Pierre Desautels
348
23.2 Certificate of Carlos Guzmn
349
23.3 Certificate of Richard Lawrence
350
351
23.4 Certificate of Roy Lopes
352
23.5 Certificate of John Wells
353
354
24. APPENDICES
24.1 Sustainability Program
YKS Report
24.2 Golder Report

Projeto Bsico-Barragem de Rejeitos, Projeto Bsico-Pilha de Estril, Projeto Bsico-Barragem de
gua
24.3 Metallurgical Test Work

SGS Brasil, G&T Metallurgical Services Ltd, SGS Lakefield.
24.4 Capital Cost Estimate Details

24.5 Operating Cost Estimate Details
24.6 Acid Rock Drainage
24.7 EMR Report
ERM report entitled: Caracterizao do Solo, guas Subterrneas e Superficiais na Minerao
24.8 Drawings
355

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Technical Report on the

RESOURCE ESTIMATE UPDATE AND THE FEASIBILITY STUDY FOR

RIACHO DOS MACHADOS GOLD DEPOSIT,

MINAS GERAIS STATE, BRAZIL

Tecnomin Projetos e Consultoria Ltda.

NCL Brasil Ltda.

Golder Associates Brasil Consultoria e Projetos Ltda.

YKS Servicos Ltda

M2 Environmental and Consulting Services Ltd.

Lawrence Consulting Ltd.

John A Wells Metallurgical Consultant

Carpathian Gold Inc.

May 20, 2011 (Effective Date of April 6, 2011)

[Amended November 15, 2011 with updated QP certificates]

1.2 Property Description, Location, Access and Physiography ..................................................................... 2

1.3 History ........................................................................................................................................................... 3

1.4 Geology and Mineralization ......................................................................................................................... 6

1.5 Exploration .................................................................................................................................................... 7

1.6 Metallurgy Summary .................................................................................................................................... 8

1.7 Mineral Resources Estimation..................................................................................................................... 9

1.8 Mining & Mineral Reserves ........................................................................................................................ 11

1.9 Summary Cost Estimates and Economic Analysis ................................................................................. 14

1.10 Conclusions & Recommendations............................................................................................................ 18

2. INTRODUCTION AND TERMS OF REFERENCE ..............................................................20

2.2 Terms of Reference .................................................................................................................................... 21

3. RELIANCE ON OTHER EXPERTS ....................................................................................26

4. PROPERTY DESCRIPTION AND LOCATION ...................................................................27

4.2 Company Ownership and Agreements ..................................................................................................... 28

4.3 Title Agreements and Ownership .............................................................................................................. 29

4.4 Surface Rights ............................................................................................................................................ 30

4.6 Environmental and Socio-Economic Issues ............................................................................................ 32

5. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.2 Climate, Phisiograpyhy, Flora and Fauna ................................................................................................ 34

5.3 Local Resources and Infrastructure ......................................................................................................... 36

6.1 Project Exploration ..................................................................................................................................... 38

6.2 Open Pit Mining .......................................................................................................................................... 40

6.3 Underground Exploration .......................................................................................................................... 41

6.3.1 Deep Diamond Drilling Program ............................................................................................................... 41

6.3.2 Underground Exploration Development .................................................................................................... 42

6.4 Metallurgical Sampling............................................................................................................................... 42

6.5 Historical Underground Resource Estimation ......................................................................................... 42

7. GEOLOGICAL SETTING ...................................................................................................47

7.1 Regional Geology and Tectonic Evolution ............................................................................................... 47

7.2 Local Geology ............................................................................................................................................. 50

7.2.1 Biotite (quartz-oligoclase-sericite) schist with staurolite and garnet .......................................................... 51

7.2.2 Quartz-feldspar schist ............................................................................................................................... 52

7.2.3 Quartz-muscovite schist............................................................................................................................ 52

7.2.4 Quartz-sericite/muscovite-biotite/chlorite schist ........................................................................................ 52

7.3 Structural Geology ..................................................................................................................................... 52

8. DEPOSIT TYPES ...............................................................................................................57

9. DEPOSIT GEOLOGY AND MINERALIZATION .................................................................59

9.1 General Considerations ............................................................................................................................. 59

9.2 Alteration ..................................................................................................................................................... 59

9.3 Mineralization .............................................................................................................................................. 61

10. EXPLORATION ...............................................................................................................63

10.1 MRDM Exploration Program 2008 to Present ........................................................................................... 63

10.2 Coordinates and Datum ............................................................................................................................. 64

10.3 Magnetic Declination .................................................................................................................................. 65

10.4 Other Local Grids ....................................................................................................................................... 66

10.5 Historical Exploration................................................................................................................................. 66

10.6 Targets on the Riacho dos Machados Shear Zone .................................................................................. 66

10.6.1 RDM Mine South Extension .................................................................................................................. 66

10.6.2 RDM Mine ............................................................................................................................................. 67