Report to: KWG Resources Ltd Canada Chrome Corporation 141 Adelaide Street West Suite 420 Toronto, Ontario

, M5H 3L5

Document No. 1298820100-REP-C0000-00

Third Party Disclaimer
The content of this document is not intended for the use of, nor is it intended to be relied upon by any person, firm or corporation, other than the client and Tetra Tech WEI Inc. Tetra Tech WEI Inc. denies any liability whatsoever to other parties for damages or injury suffered by such third party arising from use of this document by them, without the express prior written authority of Tetra Tech WEI Inc. and our client. This document is subject to further restrictions imposed by the contract between the client and Tetra Tech WEI Inc. and these parties' permission must be sought regarding this document in all other circumstances.

Confidential
This document is for the confidential use of the addressee only. Any retention, reproduction, distribution or disclosure to parties other than the addressee is prohibited without the express written authorization of Tetra Tech WEI Inc.

Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Report to:
KWG Resources Ltd Canada Chrome Corporation 141 Adelaide Street West Suite 420 Toronto, Ontario, M5H 3L5

Prepared by

Sarath Vala, P.Eng., P.E.

Date

9 th February 2013

Reviewed by

Deepak Manglorkar, P.Eng, P.E

Date

9 th February 2013

Authorized by

Date

400-161 Portage Ave East, Winnipeg, Manitoba R3B 0Y4, Canada Phone: 204.954.6800 Fax: 204.988.0546

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

REVISION HISTORY

REV. NO

ISSUE DATE

PREPARED BY AND DATE

REVIEWED BY AND DATE

APPROVED BY AND DATE

DESCRIPTION OF REVISION

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

ACKNOWLEDGMENT
The Tetra Tech project team working on this project would like to acknowledge the guidance, insight and support provided by Krech Ojard & Associates during the development, execution and completion of this report. The project team would like to extend their sincerest thanks to Krech Ojard & Associates for their time and availability.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

TABLE OF CONTENTS
1. 2. EXECUTIVE SUMMARY ......................................................................................................................................6 INTRODUCTION...................................................................................................................................................8 2.1. 2.2. 2.3. 3. PROJECT BACKGROUND ..........................................................................................................................8 PREVIOUS STUDIES AND REPORTS ........................................................................................................8 MODES OF TRANSPORTATION.................................................................................................................8

PROJECT CORRIDOR.........................................................................................................................................9 3.1. 3.2. 3.3. CORRIDOR FEATURES ............................................................................................................................11 CORRIDOR CONSTRAINTS......................................................................................................................12 PROJECT LOGISTICS...............................................................................................................................13

4.

ROADWAY OPTION...........................................................................................................................................16 4.1. 4.2. 4.3. 4.4. 4.5. 4.6. 4.7. ALIGNMENT...............................................................................................................................................16 ASSUMPTIONS .........................................................................................................................................17 BASIS OF DESIGN.....................................................................................................................................18 EARTHWORK QUANTITIES......................................................................................................................20 STRUCTURES ...........................................................................................................................................21 CAPITAL COST..........................................................................................................................................23 OPERATIONAL COST ...............................................................................................................................26

5.

RAILROAD OPTION...........................................................................................................................................28 5.1. 5.2. 5.3. 5.4. 5.5. 5.6. 5.7. ALIGNMENT...............................................................................................................................................28 ASSUMPTIONS .........................................................................................................................................28 BASIS OF DESIGN.....................................................................................................................................28 EARTHWORK QUANTITES.......................................................................................................................30 STRUCTURES ...........................................................................................................................................31 CAPITAL COST..........................................................................................................................................34 OPERATING COST....................................................................................................................................37

6.

ROAD – RAIL COST COMPARISON AND ECONOMIC ANALYSIS ...............................................................38 6.1. 6.2. 6.3. TRANSPORT CAPACITY (LOAD) SENSITIVITY FOR ROAD OPERATIONS ...........................................39 TRANSPORT CAPACITY (LOAD) SENSITIVITY FOR RAIL OPERATIONS..............................................40 SENSITIVITY ANALYSIS FOR TERMS OF FINANCE FOR TRANSPORT CAPACITY (LOAD) VARIATION 41

7. 8.

OBSERVATIONS AND ANALYSIS....................................................................................................................50 FINAL CONCLUSIONS ......................................................................................................................................52
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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

LIST OF FIGURES Figure 3.1: Project Corridor..........................................................................................................................................10 Figure 3.2: Ontario Provincial Map...............................................................................................................................11 Figure 4.1: Typical Roadway Cross Section ...............................................................................................................19 Figure 5.1: Typical Rail Section ...................................................................................................................................30 Figure 6.1: Sensitivity Analysis – Road Opex and Cost per Tonne..............................................................................40 Figure 6.2: Sensitivity Analysis – Rail Opex and Cost per Tonne ................................................................................41 Figure 6.3: Cost for 30 Year Term (4% Rate) ..............................................................................................................42 Figure 6.4: Cost for 50 Year Term (5% Rate) ..............................................................................................................43 Figure 6.5: Cost for 10 Year Term (2.5% Rate) ...........................................................................................................44 Figure 6.6: Transportation Cost per Tonne ..................................................................................................................47 Figure 6.7: Capex Cost Difference v/s Breakeven Difference for 3 MTPA...................................................................48 Figure 6.8: Capex Cost Difference v/s Breakeven Difference for 5 MTPA...................................................................49 LIST OF TABLES Table 3.3-1: Summary of Production Rates .................................................................................................................14 Table 3.3-2: Days to Complete Construction Elements ...............................................................................................14 Table 3.3-3: Personnel Required to Complete Project in Three Years ........................................................................15 Table 3.3-4: Personnel Required in a Single Crew ......................................................................................................16 Table 4.3-1: Roadway Design Criteria .........................................................................................................................18 Table 4.4-1: Roadway Embankment Quantities...........................................................................................................20 Table 4.5-1: Bridge Locations & Spans........................................................................................................................22 Table 4.6-1: Material Hauling Cost Estimate................................................................................................................24 Table 4.6-2: Capital Cost Summary .............................................................................................................................25 Table 4.7-1: Operating Cost for Road Corridor (3 MTPA)............................................................................................27 Table 5.4-1: Rail Embankment Quantities ...................................................................................................................30 Table 5.5-1: Railway Bridge Characteristics ................................................................................................................33 Table 5.6-1: Estimated Railway Capital Costs ............................................................................................................36 Table 5.7-1: Operating Cost for Rail Corridor (3 MTPA) ..............................................................................................38 Table 6.3-1: Annualized Cost for Various Terms of Finance........................................................................................45 Table 6.3-2: Difference in Cost for Varying Loads and Terms of Finance....................................................................46

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

1. EXECUTIVE SUMMARY
This document summarizes the economic tradeoff study for a rail and road option along the 330 km alignment from Nakina to the mining region in the McFaulds Lake area of Ontario. This document presents the project background, geological features, corridor constraints, transportation options of rail and road, basis of design for the transportation modes, project logistics, construction elements, summary of capital cost, important elements of operational cost and sensitivity analysis for load and terms of finance variation. This report has not fully considered the environmental and socio-economic impact of the corridor on the region. Any comments made in this report are based on first principle judgment. These impacts and factors should be studied in greater details in future efforts and studies. This study highlights the challenging geological features, acute material shortages which impact the decision of choosing either mode of transportation, and the challenges associated with implementing those modes. The shortage of critical aggregate material quantified in a separate task (Final Material Availability Assessment Report, December 14th, 2012) is discussed with its impact on the overall transportation mode development. The effect of implementation of road corridor and its adverse impact on the rail corridor have been highlighted. The study has identified the major construction elements, the project logistics and constraints associated with the project logistics and the cost implications. The operating cost for both the modes of transportations was tabulated and the effects of transport capacity variations in finance terms analyzed. A load of 3.0 million tonne per annum (MTPA) was set as the baseline transportation capacity of the corridor. A 30 year term with 4.0% interest rate was considered as the baseline reference term of finance for the project. Based on the available ore estimates and projected demand, the region has the potential to grow and expand beyond the baseline scenario of 3.0 MTPA and attract longer terms of financing from the markets. Publicly available estimates indicate that the region has the potential to produce approximately 220 MTPA ore. For production rates ranging from of 1.5 MTPA to 5.0 MTPA, the mine life in the region could range from 146 to 44 years. For the base case of 3.0 MTPA, the mine life is estimated to be around 73 years. Based on the range of operational life, types of material explored in the region, investment scale and potential for the region, a longer period of development and investment can be expected. A shorter period of operational life and development may not be appropriate. A scoping level capital cost (Capex) and operating cost (Opex) were developed. The Capex was based on geotechnical report, preliminary roadway and rail profile and cross section analysis for quantities. Major construction elements were identified during the exercise. The Opex was based on resources and equipment required to transport the baseline load of 3.0 MTPA. The Capex comparison of the modes of transportation clearly demonstrated that the initial construction cost of rail are greater than the road, but the Opex for road were higher than that of the rail. The Opex for road are dominated by equipment, fuel and labor. These factors are more sensitive to market fluctuations and increase significantly with expanding operations.
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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

To evaluate the response of the transportation corridor to fluctuations in load and financing, sensitivity analysis for variation in load and terms of finance was conducted. The transportation capacity was varied by 66% increase to 5.0 MTPA, and 50% decrease to 1.5 MTPA. The terms of finance were varied by a longer term-rate of 50 years at 4.0%, and to a shorter term-rate of 10 years at 2.5%. No potential public capital support or cost sharing by other entities was considered which could influence the terms of finance. Public financial support for the project could further reduce the cost with attractive terms of finance and offsetting some of the predevelopment cost. The benefits for the regional communities and promotion of large scale economic development were also not considered. The sensitivity analysis clearly shows that the rail option responds more favorably to increasing loads. Increasing loads resulted in significant increase in Opex for the road but had minimal impact on rail Opex resulting in significant lower cost per tonne for the rail. This clearly indicates that the rail option responds more favorably to increased load, and terms of finance. Longer terms of finance had similar effect on both modes of transportation, with rail reacting more favorably than road. Both modes of transportation react unfavorably to shorter terms. Further analysis into the differential savings in Opex reveal that the savings break even with the initial Capex difference in a much more reasonable time frame of 6 years for the Base Case terms. If the load increases this breakeven year is achieved much earlier between 3 to 4 years. This indicates that the potential reduction in longterm annual cost for the base case result in the potential for major savings in the total cost of mine to market economics. This provides an opportunity to improve the project economics during fluctuations in commodity prices over the life of the resource, operations and allow more stable, consistent returns on the private and possible public investment provided the infrastructure financing can be amortized beyond 10 years, which is common for infrastructure of this type and scale. Public financial support for the project could further reduce annual costs and would further increase the economic value of the rail infrastructure relative to a road system, since road cost are dominated by operating factors. An investment in rail capital has a larger impact on a per dollar basis on improved total per tonne annual cost. This analysis brings out the features that the rail option is more robust, low maintenance, cost-reflective and demand-responsive to operational and market conditions than the road option. The lower medium and long term cost for rail provides an opportunity to develop a more stable and consistent transportation corridor in the region, which can respond well to development and operations. The road options can significantly impact the economic and physical development of a rail line in the future due to depletion of economically available rock and NFS material along the corridor. Further investment in developing the concept, design elements, project logistics, and financial arrangements is highly recommended.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

2. INTRODUCTION
2.1. PROJECT BACKGROUND Canada Chrome Corporation (CCC) has a series of nearly contiguous claims for an infrastructure corridor between Nakina and McFaulds Lake in northern Ontario, Canada. CCC is exploring the options of either constructing a railroad over these claims and has requested an economic trade-off assessment to review the validity of these plans relative to an option of developing a roadway. The infrastructure would be used to provide access from the Ring of Fire prospect to an existing railroad near Nakina, Ontario for assisting with the hauling and transportation aspects of the Mining operations, as well as the supply of materials to the operations and potential freight and passenger to assist local First Nations communities. CCC requested Tt to perform a Tradeoff Study at a scoping level for the capital expenditure (Capex) – operational expenditure (Opex) along the corridor for both transportation modes (Railroad & Roadway), and compare the results. 2.2. PREVIOUS STUDIES AND REPORTS This evaluation is built and advanced further predominantly based on the information received from the following three studies, completed prior to the initiation of this evaluation. Krech Ojard & Associates, Consulting Engineers and Architects (KOA) completed a feasibility study for the proposed infrastructure corridor. This study included a preliminary design the railroad horizontal alignment & profile for the top of rail, which was provided in a 99 sheet plan set to CCC. Golder Associates, Inc. (Golder) was hired by CCC, under the direction of KOA to complete a preliminary geotechnical exploration program within the infrastructure corridor. Golder conducted geologic and geotechnical investigations to explore subsurface conditions within the proposed corridor and compiled the findings into a geotechnical report. More than 850 soil borings were completed within the proposed infrastructure corridor. Logs were prepared documenting information gathered from boreholes which include test results of in situ testing of soils encountered and lab testing of collected soil samples. Tetra Tech completed a Material Availability Assessemnt report for KWG Resources, on December, 14th, 2013. This was an analysis of material impact along the corridor based on the above Golder Geotechnical Report and cross sectional analysis of the preliminary corridor design. 2.3. MODES OF TRANSPORTATION This tradeoff study attempts to compare two modes of transportation roadway, and railroad. The design for roadway option for this evaluation was completed by Tt, and the design for railroad option was completed by EBA Engineering Consultants Ltd. operating as EBA, A Tetra Tech Company (EBA) with support from Albert Azoulay with BPR division of Tt.
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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

The roadway was designed to meet Transportation Association of Canada (TAC), and Ontario provincial standards. The railroad was designed to meet American Railway Engineering and Maintenance-of-way Association (AREMA) standards. The same horizontal alignment was used for both roadway, and railroad options to keep things consistent during the comparison. While other horizontal alignments are possible within the corridor, it is unlikely that such variations will have any substantial impact on the conclusions of this analysis considering the regional surficial geology and the limited land availability found in the Northern 2/3rds of the area.

3. PROJECT CORRIDOR
The proposed infrastructure corridor is located between Nakina and McFaulds Lake in the northwestern region of the province of Ontario, in Canada. The southern end of the corridor, near Nakina, ON, is located about 300 kilometers northeast of Thunder Bay, ON. The northern end terminates at a point 330 kilometers due north of Nakina, near McFaulds Lake, ON. The project corridor is shown in the following Figures 3.1& Figure 3.2.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 3.1: Project Corridor

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 3.2: Ontario Provincial Map

3.1. CORRIDOR FEATURES The topography of the 330 km Corridor is best described by extensive flat lowlands. Topographic features are low, linear, rounded hills aligned north and south with maximum elevation of 15 m above the surrounding

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

swamps and bogs. The infrastructure corridor generally traverses north across the Canadian Shield towards the Coastal Plain/Hudson Bay Lowlands. The terrain drains to the northeast in a series of low gradient rivers that cross the corridor. There is a total elevation drop of 145 m from Exton (southern end) to the proposed mine site where the final elevation is 165 m. Most of the terrain in the corridor is characterized by low topographic relief and 1 to 3 meters of surficial peat overlying clayey/silty lake sediments. Low linear ridges, consisting chiefly of fine sand, provide most of the topographic relief and the only granular resources available for building the proposed roadbed embankment. Materials suitable for use as embankment fill have been investigated by Golder and have been summarized in a report titled, “Preliminary Material Site Geotechnical Report”, dated December 17, 2010. The report identifies a total of 22 good material sources with 12 being potential rock quarries and 10 sources of sand and gravel, although the volume of gravel is quite limited. Bedrock of suitable quality for production of ballast and subballast material exists along the first 90 km of the route, but only near km 279 in the north portion of the route. In total, the materials source evaluations have identified in excess of 22,700,000 m3 of material in these deposits; 6,350,000 m3 are quarry rock and 16,350,000 m3 are sand and gravel. Review of the geotechnical information along the route identifies that some of the cut material will be suitable for use as general fill below the non-frost susceptible backfill that will be placed below the sub-ballast. In particular, cuts in bedrock will produce high quality general fill materials As noted, there are considerable deposits of peat along the proposed alignment. In addition, there are deposits of soft lacustrine silts and clays that do not provide good foundation conditions for the railway embankment. A cursory evaluation of the thicknesses of peat materials has identified that nearly 27 km of the route is located in areas where the peat is in excess of 2 m thick. On the other hand it has been determined that nearly 5 km of the route is located where cuts will be made entirely in bedrock. In locations where the embankment will be founded on either thick peat or soft silts and clays, provision is made to improve embankment support through the use of geotextile materials below the embankment fill. Examination of the available geotechnical information has indicated that geotextile will be required along roughly 15% of the route for the rail, and 40% for the roadway. 3.2. CORRIDOR CONSTRAINTS The geotechnical evaluation performed in this infrastructure corridor has determined that the existing ground is comprised of five soil and rock groups, rock (solid rock that will have to be excavated by blasting), glacial till (heterogeneous mix of clay, silt sand and gravel with occasional cobbles and boulders), granular soils (generally fine sand with very small amount of gravel in some areas), fine grained soils (silt and clay), and peat (highly compressible organic material).

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

The existing ground along the majority of the infrastructure corridor is covered with highly compressible peat with varying thickness, up to 5 m (and possibly more). This type of soil is not suitable for the construction of either the roadway, or railroad options and has to be disposed offsite. The geographic location of the corridor and local weather conditions, warrant the use of non-frost susceptible material as foundation for the railroad option, and the base for both options. All encountered soils, fine grained and granular (silty sand, sandy silt, silt and silty clay) have high to very high degree of frost susceptibility. Hence the non-frost susceptible material would most likely have to be produced from crushed rock, which is sparingly available in the corridor and mostly have to be hauled in form other sources. The remote location of the corridor would also have considerable impact on the construction, operation, and maintenance of either transportation modes. 3.3. PROJECT LOGISTICS The project logistics and strategy was based on the major construction elements of the corridor. They were identified as follows: 1. 2. 3. 4. 5. Mobilization Service road Main rail or road corridor Major bridges Minor bridges.

Mobilization will be the first step of the construction process and will include setting up of the project office, construction of camps, manpower mobilization and infrastructure to receive material for management and construction. The major construction elements have to begin as soon as practical. Mobilization can vary from 16 months to 24 month period. The production days or time to complete units of these major construction elements were reviewed, researched and evaluated based on past projects, previous studies, input from contractors, engineers and suppliers. They are summarized as below:

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Table 3.3-1: Summary of Production Rates

Based on the above production rates of the construction elements, following days of production would be required to complete the project‘s construction elements. Table 3.3-2: Days to Complete Construction Elements

The construction sequence for the proposed corridor is expected to be as follows,      Mobilize & transport material needed to construct bridges by airlifting, and by winter roads Build construction access roads or temporary access roads where needed to deliver bridge material and main corridor construction materials. Begin construction of major and minor bridges simultaneously Mobilize material for the construction of main road/rail corridor Progress the construction of the road/rail in segments and advance it steadily

It is assumed that about 200 km of temporary access roads would have to be constructed aside from the existing winter roads to mobilize the material for the development of the corridor. Two options were considered for completion of the project: 1. Completion in least amount of time (3 years). 2. Balancing development schedule with least amount of cost and personnel.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

To evaluate the above options, crew sizes for the above construction elements were evaluated. A crew size could vary from 10 people for service road to 30 people for long span major bridges. Based on past experience and input from contractors the following crew sizes were formed, To achieve the above production days required in three years, following crew size would be required: Table 3.3-3: Personnel Required to Complete Project in Three Years

Given the required time of three years to complete major construction elements, it is evident that one or more crews have to be deployed for each of the elements. The above table illustrates that, the main corridor would require 2 crews for road and rail. The major bridge spans would require 2 crews for road and 3 crews for rail. The minor bridge spans would require 2 crews for road and rail. Rail crews will always be larger than the road crew to make up for the slower production and slightly involved construction operations and elements. If the construction were to proceed with cost as the primary governing factor, the key focus would be to keep the crews as small as possible. The following crew size would be required to keep the personnel cost to a minimum and yet achieve a reasonable rate of production:

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Table 3.3-4: Personnel Required in a Single Crew

The above tables reflect the fact that in order to maintain a reasonable schedule and cost, multiple crews will be required to start concurrently on each of the major construction elements. The long spans are critical and will govern the timeline for the project completion. The construction period would be longer by approximately 1363 days (4.5 years) for the road option, and 2328 days (7.8 years) for the rail option. It is also cautioned that there are several major spans along major stream crossings. Substantial design and cost will have to be allocated to substructure development to protect from ice and scour. Further evaluation and study is recommended to understand the cost and schedule implications to the project.

4. ROADWAY OPTION
4.1. ALIGNMENT The horizontal alignment for the roadway utilized by Tt in this tradeoff study is based on an alignment shown in plans provided by KOA. For the purposes of this evaluation, the drawings provided by KOA showing the rail alignment and an initially proposed top of rail profile were used as a baseline for the road alignment. The alignment begins at the existing Canadian National railway just to the west of Nakina, ON near Exton and extends north towards the McFaulds Lake, ON. The length of the alignment from the junction with the CN railway to the mine site is 330.2 km long. The horizontal alignment from the preliminary design was maintained for the roadway design to be consistent with the railroad design. The alignment was divided into six sections titled Alignment A to Alignment F. Tt simplified the horizontal alignment by combining the six alignments sections, and removing the spirals attached to the horizontal curves.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Tt developed the profile for the proposed roadway to meet the TAC & Ontario Provincial standards. The profile was further optimized to minimize the cut & fill along the alignment. The geotechnical information utilized for this design was provided by Golder summarized in a 99 drawing set titled “Preliminary Geologic Plan and Profile” (drawings I-01 to I-98), dated December 12, 2010. 4.2. ASSUMPTIONS The overall drainage concept for this evaluation is limited by the hydrology components like groundwater effects, freeze/thaw effects, soil properties, etc., which affect the catchment response characteristics. Size and number of watercourse culverts were assumed, since detailed hydrological, catchment area, and hydraulic analyses were not available. It is assumed that an 18 m long, 1200mm culvert will be needed every 5 km with appropriate safety end treatments. Detailed hydrological and hydraulic analyses shall be performed during the detailed design stage. Ditches are included in the design for the purpose of collecting seepage from high moisture low density bog material caused from the overburden pressure of the higher density roadbed over time, and to intercept ground seepage from beyond the ditch banks. They also promote a drying and stabilizing effect on the roadbed. The existing ground information and topography for this design was obtained using LiDAR (Light Detection and Ranging) image data. Although sufficient for a preliminary design level evaluation, the accuracy of LiDAR data is restricted due to aircraft positioning, and spatial resolutions limitations. Survey quality contours are more reliable and known to give better estimates and should be utilized during the detail design stage. The bridge locations and lengths used in this evaluation were provided in KOA plans (including the 100 year flood elevations). A roadway section with 600 mm Granular B-Type 1 base course, and 300 mm Granular M crushed rock wearing course was used for this analysis, based on the available geotechnical information and engineering judgment. A specific pavement design analysis was not performed as part of this evaluation due to time constraints, and lack of all the detailed information. The assumed road and pavement cross-sections were based on TAC standards. It should be noted that the use of heavy-haul trucks operating persistently would likely result in increases to these standards (i.e. TAC standards would be inadequate) and the associated cost of capital to construct and operate the road. Such factors are not considered in this analysis, but should a road option be favored for development, further analysis of the cross-section, required high-quality aggregate material requirements, and associated impacts on both capital and operations maintenance must be considered. Although this preliminary level evaluation couldn’t make provisions for the clear zone concept, safety berms, and the determination of the length of need for roadside barriers due to budget and time constraints, these concepts shall be taken into account at the detailed design stage. Such factors may add up to 6% to of the initial capital cost and have not been considered as such in the estimate.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Due to the preliminary information on the strength of the in-situ soil, for the purpose of this study it is assumed that there is no additional cut or fill needed than what is determined by the road design software (Autodesk Civil 3D). Although in reality this may vary and substantially impact (increase) the embankment cut, and fill quantities. 4.3. BASIS OF DESIGN The preliminary design completed by KOA for railroad was utilized as a starting point in this evaluation. The horizontal alignment for the roadway option was simplified by eliminating the inbound and outbound spirals attached to the horizontal curves, which increased the length of the roadway alignment by 300 m. The vertical alignment (roadway profile) was completely redesigned and optimized to reflect the differing geometric constraints of a road relative to rail standards in an attempt to minimize the embankment cut & fill areas. The road centerline was generally held to the original rail centerline. This decision was made based on limitations on readily interpretable data within the corridor, consideration of the narrow band of viable ground within the corridor, and the relatively flat topography. The resulting effort and overall conclusions are unlikely to be significantly impacted should the horizontal road alignment shift within the area. The geometric design for the proposed roadway (including horizontal and vertical alignments) was completed to meet TAC standards for a design speed of 90 km/h, with 80 km/h operating speed even though the trucks loaded at full capacity may travel at lower speeds on average. The following Table 4.3-1 summarizes the design criteria used for this analysis, Table 4.3-1: Roadway Design Criteria
Width (travel) Design Speed (Desirable) Operating Speed (Desirable) Cross Slope Maximum Grade Maximum Superelevation Radius (Desirable) Desirable K value for Crest vertical curve Desirable K value for Sag vertical curve Minimum Stopping Sight Distance Surface Course Thickness Base Course Thickness Ditch Fore Slopes 12.0 m 90 km/h 80 km/h 2% 6% 6% 340 m 53 40 350 m 300 mm 600 mm 2H:1V *

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Ditch Back Slopes Berm Height Design Load

3H:1V * None B Train 8 axles (62500kg gross)

*= For preliminary purposes only Superelevation is incorporated into the design of horizontal curves to negate the effect of a diminished friction factor from the use of granular aggregate as surface course instead of a hard (asphalt or concrete) surface. This will reduce the possibility of vehicles sliding off the road at curves. The length of the bridges was shortened from preliminary design bridge lengths provided by KOA to reduce costs, after examining them on a case-by-case basis. A total of approximately 1670 m of bridge structure was eliminated by removing spans and extending the bridge approach embankments. Further investigations, later in the development process, should be planned to determine more accurate additions or decreases. Figure 4.1: Typical Roadway Cross Section

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

4.4. EARTHWORK QUANTITIES A cross-sectional analysis was performed using average end-area method, discounting bridge locations, to estimate the preliminary embankment cut and fill, and material quantities needed to construct the roadway. The corridor was divided into 10 km segments to determine the localized impacts. The following Error! Reference source not found. summarizes the embankment earth work quantities on a segment by segment basis for the proposed roadway, Table 4.4-1: Roadway Embankment Quantities Segment Begin Sta. End Sta.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 0+000 10+000 20+000 30+000 40+000 50+000 60+000 70+000 80+000 90+000 100+000 110+000 120+173 130+000 140+114 150+000 160+000 170+000 180+000 190+000 200+000 210+000 220+000 230+000 240+000 250+000 260+000 270+000 280+130 290+000 300+000 310+000 320+000 10+000 20+000 30+000 40+000 50+000 60+000 70+000 80+000 90+000 100+000 110+000 120+173 130+000 140+114 150+000 160+000 170+000 180+000 190+000 200+000 210+000 220+000 230+000 240+000 250+000 260+000 270+000 280+130 290+000 300+000 310+000 320+000 330+000

Cut (m3)
90,382 184,751 228,870 202,466 223,629 114,834 258,104 199,177 194,956 112,006 93,478 136,041 79,329 73,294 145,218 120,109 82,501 66,041 75,540 72,937 93,280 65,732 69,254 84,656 76,664 81,243 68,582 80,902 87,646 117,574 104,998 63,347 71,966

Fill (m3)
56,773 87,844 148,390 95,285 143,406 38,277 135,050 67,298 253,509 51,653 183,332 69,943 82,028 31,229 69,362 38,457 42,304 23,851 41,119 21,059 22,238 49,550 26,591 34,614 43,556 20,214 36,459 10,501 93,423 64,892 54,425 29,538 146,852

Surface Course (m3) Base Course (m3)
37,182 37,488 36,785 36,152 37,624 37,875 37,253 37,307 33,568 36,551 35,205 34,423 36,854 36,849 37,443 36,405 37,263 36,195 37,117 36,564 37,875 36,618 37,875 37,875 36,669 37,364 36,796 36,786 37,301 37,076 37,875 37,331 37,043 85,409 86,112 84,496 83,042 86,422 87,000 85,571 85,695 77,106 83,959 80,867 79,070 84,655 84,643 86,008 83,623 85,595 83,141 85,258 83,988 87,000 84,112 87,000 87,000 84,231 85,826 84,522 84,498 85,682 85,164 87,000 85,750 85,088 Page 20 of 53

Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

The quantities shown in the table above are derived from the optimization of the roadway profile by Tt and are assumed to only slightly vary during the detailed design by further optimizing the vertical alignment of the roadway. It can be observed that while the cut and fill quantities vary largely between segments, the surface and base course quantities are relatively similar because of the constant geometry of the cross sections, and even the minor differences can be attributed to the bridge locations present in the respective segments and superelevation effects. The geotechnical analysis performed for the study suggests that none of the segments have sufficient in-situ rock material available for the construction of surface and base courses from the excavated cut material. Only segments 1 thru 5, and 9 have some in-situ rock. The cut material comprises only of Peat, Fine Grains, Granular soil, or Till in the remaining segments. So rock needs to be hauled from other sources to complete the construction of a road (in all the segments). 4.5. STRUCTURES The locations of bridges along the alignment were determined from the drawings provided by KOA. The bridge lengths provided appear to have been chosen by beginning and ending the structure beyond the 100-yr flood plain. Hence the bridge spans were quite long and usually comprised of more than one span. No further hydrology, environmental, or geotechnical evaluations were made in this effort and any assumptions made are based on engineering judgement and the available data. These changes and further modifications should be confirmed at later stages of the work. As stated earlier the lengths of the bridges were shortened wherever possible by eliminating spans and extending the bridge approach embankments, as part of this evaluation in order to reduce costs. Where there were multiple options available for the same bridge, the option with the minimum length was chosen. A total of 65 culverts, 18 m long & 1.2 m wide will be needed to accommodate for the drainage requirements for the construction of the roadway based on the assumptions made.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

The following Table 4.5-1 provides a summary of bridge location and length adjustments Table 4.5-1: Bridge Locations & Spans KOA Begin Sta.
1+213.960 15+100.000 23+132.250 23+850.000 31+710.000 38+100.000 46+151.950 64+661.550 73+360.000 79+858.150 83+314.950 88+916.850 92+680.000 98+714.250 101+400.000 105+330.000 106+310.000 108+530.000 109+940.000 112+155.000 114+135.000 119+765.000 123+880.000 134+425.498 139+860.000 150+590.437 162+539.698 170+311.000 173+082.000 178+488.448 179+212.000 182+180.000 197+568.609 199+032.000 213+875.000 247+300.292 257+920.000 258+499.000 260+686.300 263+467.000 269+334.250 273+636.000 278+867.840 279+833.806 280+732.031 285+308.717 288+698.825 297+868.000 311+190.346 325+813.294

Tt Begin Sta.
1+213.305 15+101.260 23+132.100 23+848.000 31+652.000 38+100.500 46+151.800 64+701.900 73+406.000 80+321.150 83+393.975 88+971.250 92+725.000 98+726.725 101+400.500 105+264.000 106+232.000 108+462.000 109+862.500 112+002.500 113+971.000 119+598.500 123+901.500 134+425.498 139+890.000 150+615.400 162+173.750 169+864.000 172+784.850 178+058.550 178+769.840 181+743.400 197+321.900 198+793.000 213+775.000 246+984.851 257+732.000 258+270.000 260+441.650 263+251.000 269+072.950 273+394.000 278+245.100 279+833.806 279+997.802 285+308.717 288+698.825 298+512.100 312+034.150 326+383.100

KOA End Sta.
1+396.890 15+202.100 23+250.050 24+020.000 32+085.000 38+180.000 46+218.350 64+825.750 73+510.000 80+821.200 83+412.050 89+065.350 92+850.000 98+919.150 101+530.000 105+500.000 106+615.000 108+630.000 110+005.000 112+470.000 114+330.000 120+340.000 124+020.000 134+553.298 140+135.000 151+029.337 162+770.298 170+344.000 173+402.000 178+649.048 179+278.000 182+516.000 197+780.609 199+436.000 214+347.800 247+772.090 258+044.000 258+576.000 260+826.000 263+544.000 269+510.250 273+713.000 279+189.740 279+844.447 280+864.427 285+319.357 288+709.465 298+112.250 311+409.446 326+083.794

Tt End Sta.
1+396.235 15+203.360 23+249.900 24+018.000 32+027.000 38+180.500 46+218.200 64+866.100 73+556.000 81+258.850 83+445.025 89+119.750 92+895.000 98+906.275 101+530.500 105+434.000 106+472.000 108+562.000 109+927.500 112+317.500 114+166.000 120+173.500 123+997.500 134+553.298 140+114.000 151+003.600 162+302.250 169+897.000 173+074.150 178+168.450 178+814.160 181+943.600 197+406.100 199+055.000 214+107.000 247+303.149 257+812.000 258+325.000 260+537.350 263+306.000 269+207.050 273+449.000 278+464.900 279+844.447 280+130.198 285+319.357 288+709.465 298+723.100 312+177.850 326+602.900

KOA Length (m)
182.93 102.10 117.80 170.00 375.00 80.00 66.40 164.20 150.00 963.05 97.10 148.50 170.00 204.90 130.00 170.00 305.00 100.00 65.00 315.00 195.00 575.00 140.00 127.80 275.00 438.90 230.60 33.00 320.00 160.60 66.00 336.00 212.00 404.00 472.80 471.80 124.00 77.00 139.70 77.00 176.00 77.00 321.90 10.64 132.40 10.64 10.64 244.25 219.10 270.50

Tt Length (m)
182.93 102.10 117.80 170.00 375.00 80.00 66.40 164.20 150.00 **937.70 51.05 148.50 170.00 **179.55 130.00 170.00 **240.00 100.00 65.00 315.00 195.00 575.00 **96.00 127.80 **224.00 **388.20 **128.50 33.00 **289.30 **109.90 **44.32 **200.20 **84.20 **262.00 **332.00 **318.30 **80.00 **55.00 **95.70 **55.00 **134.10 **55.00 **219.80 10.64 132.40 10.64 10.64 **211.00 **143.70 **219.80

*Note: The station ranges for bridges have also been affected by the removal of spirals from horizontal curves
** Bridge length shortened

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

4.6. CAPITAL COST The capital cost for this option includes all the costs incurred during the construction of the roadway. The capital cost has further been divided into two segments direct costs, and indirect costs. Direct costs are the costs that are incurred for the construction of the roadway only, like construction material costs, equipment cost, cost of labor, the cost involved in site preparation for construction, actual construction etc. Indirect costs are also the costs that are incurred during the construction of the roadway, but they are for all the other necessary tasks which shall be done for the successful completion of the project. Indirect costs include items like, costs associated with camping & dining for construction labor, health & safety, site security, material storage, quality control, engineering procurement & construction management (EPCM), environmental and other administrative permits, etc. Cost of a service road and the expense of bringing the construction material to the construction site were identified as an indirect cost to highlight the expense of working in this remote region and reflect the acute shortage of good material along the corridor. This cost is also subject to large variations depending on the sources of the material and procurement strategy applied to deliver the material to the construction site. It is possible that the construction contract may be independent of the material provision contract. Similar philosophy may apply to the service road construction. The following costs are excluded from this capital cost estimate,        Right-of-way, easement, and other land acquisition costs Property taxes and/or other legal costs Insurance Cost incurred to complete preliminary design & other feasibility studies Cost for environmental impact studies, truck/traffic Impact studies, mitigation measures, etc. Cost involved in coordinating and liaising with public & regulatory agencies Force majeure

To identify approximate and reasonable cost, the material hauling for the construction of roadway is assumed to be handled by an independent contractor during the course of the work. The haul distance from the material source to the construction site would have a substantial impact on the capital cost for the project. Considering the local geology and interpretations of the available geotechnical data, it appears that much of the embankment and surface materials will require transport from sites with suitable material properties over distances that are beyond the range of typical linear corridor development. A rationalization of these distances was considered in the analysis of the embankment construction. As part of a separate task for evaluating material availability assessment along the corridor, Tt performed an extensive preliminary quantity analysis of the road and rail corridors. Golder Study results and corresponding

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

stratigraphy was used to quantify the types and quality of material available for construction. A geotechnical engineer examined the stratigraphy along the corridor and determined the percentage of rock and other suitable materials that will be available from the cut sections along the corridor. The material quantity and type of material required for road and rail corridor were compared against the material quantity and types available from the cut sections. The tabulated results conclusively illustrated that rock sources may be sufficient at the south end and the north end of the project but there is a significant stretch of the corridor in the middle which has a shortage of suitable material, especially critical rock aggregate. This significant conclusion and findings led Tt to account for cost of hauling material from distant places to the construction site, and hence make the transportation corridor achievable. It is evident from the requirements of the cross sections for both the modes of transportation that critical rock aggregate is an absolute requirement. Absence of good quality rock aggregate may pose a challenge to the transportation corridor for either rail or road. It became necessary in the analysis to account for material to be imported from distant sources for the corridor other than those identified in Golder Report. Since this information is currently not available, an assumption was made to account for various costs of hauling or importing the material from a range of distances. The following Table 4.6-1 shows the material haul cost for a range of haul distances, Table 4.6-1: Material Hauling Cost Estimate

The haul distance range of 50 to 75 km is considered for estimating the capital costs for the project based on the known local conditions. This needs to be evaluated in more detail before the detail design stage to update the project capital cost. The following Table 4.6-2 summarizes the capital costs incurred for the roadway option,

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Table 4.6-2: Capital Cost Summary

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

4.7. OPERATIONAL COST The major elements of the operational costs for this study were determined as follows:        Labor cost for trucks Truck cost Fuel cost Transloading cost at Nakina Road Maintenance Indirect and Overhead Profit

The number of trucks calculation is primarily based on the baseline load of 3MTPA. Truck capacities of 40T and 70T were considered for this effort. The 70T model was used in this analysis as it appeared to provide better economics relative to fleet size and maintenance; however this model is non-standard in the area so limited comparable costs were available. Even so, the rationalized costs described are based on industry data and likely operational factors that should be valid for this level of analysis. Detail logistical exercise of travel time, driver behaviour, varying truck capacity, truck types, truck performance, impact of road maintenance on truck performance, and other truck fleet optimization parameters were considered out of scope at this level. Based on a high level effort, the operational costs are summarized as follows:

Sunday, February 10, 2013

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Table 4.7-1: Operating Cost for Road Corridor (3 MTPA)

These costs vary with the operating tonnage. Operation levels of 1.5 MTPA and 5.0 MTPA were also considered to evaluate the sensitivity of the annual road costs. This information is presented in Section 5. The major components for the road Opex are truck cost at 31%, crew cost at 26%, and fuel cost at 19%. Maintenance cost was at 5% and subject to increase with volume of trucks and level of due diligence on maintenance program. This particular corridor will experience exclusively heavy truck traffic which will be beyond the level of traffic volumes meant for implementation of TAC and provincial standards. The maintenance cost reflected in this report may be conservative and may become a significant component of the operating cost for the road. Due to the higher cost allocation to items like fuel and labor, the road operation is subject to more variability in the total cost. These costs tend to trend upward over time and will have a higher impact on road operational cost. No effort to account for these inflationary differences have been included in the analysis, but the results should be considered in that light.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

5. RAILROAD OPTION
5.1. ALIGNMENT The horizontal alignment for the railway utilized by this tradeoff study was provided in a series of drawings developed by KOA. These drawings show the plan and an initially proposed top of rail profile for the proposed railway. Geotechnical information used to evaluate foundation conditions along the railway alignment are summarized in a 99 drawing set prepared by Golder titled, “Preliminary Geologic Plan and Profile” (drawings I-01 to I-98), dated December 12, 2010. The railway starts at the existing Canadian National railway just to the west of Nakina, ON near Exton. The railway alignment from the junction with the CN railway to the mine site is 330.2 km long. The railway alignment was previously divided into six sections denoted as Alignments A through F. The six sections were ultimately combined into a one all-encompassing alignment which was used to determine material quantities. The alignment, as developed by KOA, includes a total of 20 sidings. Three of the sidings are roughly 2 km in length and are for the passing of trains. There are eight sidings for maintenance purposes and nine for equipment storage, with each of these being between 400 and 500 m long. 5.2. ASSUMPTIONS The horizontal alignment previously chosen by KOA has been utilized in the evaluation carried out by Tt/EBA. The initial profile originally developed by KOA was evaluated but it was determined that cut and fill material quantities could be further optimized with adjustments to the vertical profile correlated with the available Golder information, as the original plan and profile was developed prior to the completion of the preliminary geotechnical studies. The terrain crossed by the railway, is quite varied, being either surficial soils or rock. The terrain is well documented in a report prepared by Golder titled, “2010 Geology and Terrain Unit Geotechnical Data Report”, dated December 27, 2010. The level of information provided is extensive considering the preliminary scope of this effort and provides a basis for building the analysis. 5.3. BASIS OF DESIGN The railway is expected to carry an estimated 3 to 5 Mtpa. It will comprise a single track with sidings for equipment, maintenance, and passing. The American Railway Engineering and Maintenance-of-Way Association (AREMA) provides guidelines for design of railway structures (AREMA, 2010) and these were apparently considered in the selection of the alignment by KOA and have been utilized in the tradeoff study design. A Golder report titled, “Preliminary Infrastructure Corridor Roadbed Embankment, Preliminary Geotechnical Report”, dated January 2011 was reviewed to determine the proposed embankment design cross sections that were previously suggested for the project. Several different cross
Sunday, February 10, 2013

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

sections were suggested in this report and have formed the basis of the simplified cross sections utilized in the EBA tradeoff study carried out here. The two suggested cross sections utilized by EBA are shown in Figure 1. Optimization of the rail profile along the given alignment was based on AREMA standards for vertical curves, with additional expert input/review from Mr. Albert Azoulay, Eng, P.Eng., Dir. Railway Eng., Tt. Mr. Azoulay provided review and input with regard to design criteria and geometry, as well as recommendations regarding further modifications to typical cross sections used. The geometric design used for the rail has the following design parameters: Maximum Rail Grade: 1.0% Speed of train: 55 mph Minimum Curve length based on: L = (D x V2 x K)/A Where: V = Speed of train in mph L = Length of Vertical Curve D = Absolute value of the difference in rates of grades expressed as a decimal A = 0.1 feet/sec/sec K = 2.15 (conversion factor to give L in feet) EBA has assumed that the track and embankment will have the following characteristics: Rail: Ties: Ballast: Sub-ballast: NSF Fill: 136 lb. Continuous Welded Rail (CWR). Wood or concrete with elastic fasteners at 60 ties per 100’ of track. Ballast to be crushed rock sourced from rock quarries along the line and will have the hardness and fracture characteristics that conform to railway standards. Clean pit run gravel or crushed rock sourced from pits/quarries along the route. Non frost susceptible fill consisting of sand or sand and gravel with less than 20% fines (clay and silt).

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 5.1: Typical Rail Section

5.4. EARTHWORK QUANTITES The design cut and fill cross sections and revised profile have been utilized in AutoCAD Civil3D to determine the earthwork quantities for embankment construction. The earthwork quantities for the rail embankment and sidings determined in this evaluation are summarized in Table 5.4-1. Table 5.4-1: Rail Embankment Quantities
Start Station 0+000 End Station 330+200 Cut (m3) Required Fill Required (m3) 3,099,648 NFS Fill Required (m3) 4,071,783 Sub-Ballast (m3) 667,564 Ballast (m3) 498,646

5,472,998

Sunday, February 10, 2013

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

It is assumed that the majority railway embankment will be constructed during the non-freezing months when fill materials can be placed and compacted. Winter months, depending on annual variations, may provide the best opportunity to advance access and temporary works, including roads, bridges, camps, and heavy equipment. Additional embankment may be constructed throughout the year, but special attention would be required to prevent longer-term maintenance performance. It may be prudent to install bridges and bridge foundations during the winter when access can be gained to the bridge sites on temporary winter roads. Quarrying operations may be carried out year round, but a summer operation may be more economical. Ballast placement and track laying are expected to occur during non-freezing months. The construction process will require the use of various pieces of large construction equipment that can build the embankment and track structure in a timely manner. It has been assumed that a specialized railway construction contractor will be contracted to provide the specialty railway construction equipment such as track layers, ballast tampers, and regulators. Sub-Grade fill (NSF or general fill) and sub-ballast will be placed using earth moving equipment or dump trucks that will dump the material near the end of the constructed embankment where a dozer will push the fill off the end of the constructed embankment. Culverts will be installed at designated locations as work progresses with embankment construction. All fill materials will be placed in suitable lift thicknesses and compacted. Track construction will commence at the Exton junction working progressively towards the mine site. It is assumed that track construction will be done using mechanized track laying machinery. 5.5. STRUCTURES Numerous structures are required to cross water courses along the proposed alignment. A series of bridge drawings were developed by KOA and others and have been utilized in EBA’s evaluation of the railway. In addition to the required 47 bridges, EBA has also estimated required culvert locations based on topography along the alignment. The proposed bridges are typically of the following design: Bridge type: single track multi span pre-cast bridges with ballast deck structure, typically on steel girders or a through-truss design for longer crossings. Bridge foundations: driven steel piles, large diameter pipe piles or piers on bedrock with options for larger drilled shaft foundations at some locations. Bridge width: 3.87 m ballast tub, 5.07 m incl. walkway

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Bridge spans: 7 or 11m concrete box girder, 15, 20 or 25m steel girder supported ballast deck or 92.3 m throughtruss In general, bridge lengths were chosen by KOA to place the abutments outside of the 1:100 year high water mark. These lengths were reduced in several case in a similar conditions noted in the road option. No further hydrology, environmental, or geotechnical evaluations were made in this effort and any assumptions made are based on engineering judgment and the available data. These changes and further modifications should be confirmed at later stages of the work. It can be noted that some of the crossings have two or more options shown. In all cases, EBA has considered the shortest bridge concept in the current evaluation. Golder has carried out relatively detailed geotechnical and geophysical site investigations as well as determinations of bathymetry at most of the major crossing locations. Golder has also prepared separate geotechnical reports with foundation recommendations for 15 bridges. Table 5.5-1 summarizes the bridge structures identified along the alignment and includes a summary of the number and length of spans as well the suggested foundation types determined by Golder. The bridges, which have specific foundation recommendations, are identified in the table.

Sunday, February 10, 2013

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Table 5.5-1: Railway Bridge Characteristics
No. 1000 1700 1800 1850 1900 2000 2100 2400 2650 2700 2750 2850 2950 3050 3100 3200 3250 3300 3350 3400 3450 3550 3600 3700 3850 3950 4050 4150 4200 4250 4300 4350 4450 4500 4700 4800 4900 4950 5000 5050 5100 5200 5250 5350 5500 5650 5800 Totals Muketei Tributary * Fish Trap Lake Inlet * Attawapiskat * Wabassi * Gourlie Creek * Albany Tributary * Albany * Dusey * North Ogoki * Colpitts Creek * Little Colpitts Creek * Ogoki * Esnagimi * Little Current * Stinger Lake Inlet * River Start 1+213 15+100 23+132 23+850 31+710 38+102 46+152 64+662 73+360 80+706 83+315 88+917 92+678 98+714 101+401 105+263 106+310 108+462 109+875 112+156 114+136 119+763 123+880 134+425 139+867 150+590 162+540 170+311 173+309 178+484 179+212 182+180 197+568 199+037 214+180 247+300 257+920 258+499 260+687 263+467 269+334 273+636 278+868 280+732 297+867 311+190 325+812 End 1+397 15+202 23+250 24+016 32+082 38+179 46+218 64+826 73+512 80+778 83+412 89+065 92+890 98+919 101+530 105+435 106+614 108+562 109+941 112+468 114+329 120+339 124+019 134+553 140+137 151+029 162+776 170+344 173+402 178+649 179+278 182+451 197+780 199+431 214+322 247+628 258+048 258+576 260+826 263+544 269+510 273+713 279+190 280+886 298+113 311+410 326+080 Length (m) 184 102 118 166 372 77 66 164 151 72 97 148 212 205 129 172 303 100 66 312 193 576 139 128 279 439 235 33 93 181 66 271 212 394 132 328 128 77 139 77 176 77 322 154 246 220 271 8803 5 12 7 13 7 25 7 14 14 22 10 12 569 2 1 2 2 2 70 331 12 63 13 19 8 10 100 5 1 25 7 12 1 1 11 7 12 7 Spans 17 4 5 9 35 7 3 7 8 4 4 6 20 8 12 16 16 9 6 29 10 54 13 5 26 20 4 3 6 7 6 12 9 21 2 1 3 12 1 1 3 18 1 6 10 8 3 6 6 2 4 24 16 2 2 2 1 5 1 49 12 5 1 1 2 9 6 27 9 11 15 14 2 18 8 1 3 1 1 1 1 3 32 7 2 1 7 1 3 5 1 5 2 8 7 m Frames 1 11 m Spans 16 4 3 15 m Spans 20 m Spans 25 m Spans 92.3 m Truss Foundation Type piles piles footings on rock piles piles piles footings on rock pipe piles piles rock socket pipe piles rock socket pipe piles rock socket pipe piles piles footings on rock & piles piles piles piles piles piles piles piles Piles piles rock socket pipe piles piles rock socket pipe piles footings on rock piles piles rock socket pipe piles piles piles rock socket pipe piles piles piles large dia. pipe piles piles piles piles piles piles piles rock socket pipe piles piles piles footings on rock piles

*

Bridge with geotechnical report

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

The cursory evaluation of the topography along the railway has identified a requirement for an estimated 85 culverts. For costing purposes, it was assumed that the culverts would be corrugated steel pipe (CSP) of 2.0 m or 1.5 m dia. 5.6. CAPITAL COST The estimated costs include the direct cost of materials, construction materials, and construction labour. Indirect cost includes site indirects and costs of engineering, procurement, and construction management. A contingency allowance is included. Costs are in 2013 Canadian dollars. The estimated unit costs have been based on estimates previously prepared for other resource railways located in remote northern locations. Freight costs have been included in the individual items of work. Engineering, procurement, and construction management (EPCM) services were estimated at 15% of total direct costs. Indirects include things such as temporary construction facilities, warehouses, lay down areas and owner’s team office, costs of vehicles for construction management staff and site security, surveying, quality assurance services, and various other miscellaneous costs. Owners costs as noted below are not included in the capital cost estimate:             Owner’s project team Permit costs Royalties Land and/or water acquisition Quarry restoration costs Legal costs Public relations Force Majeure Insurance Taxes Cost of consultants Environmental studies, mitigation, and habitat compensations

A contingency for undefined items is intended to cover any change of scope items that could not be reasonably foreseen at this point in time due to a lack of complete, accurate, and detailed information. The estimated capital costs include the costs of the 330.2 km long railway embankment, track, 20 sidings and embankment, and 6 km track complete with switches etc. for train turn-around and loading at the mine site. Capital costs do not include materials handling/loading equipment at the mine site or railway equipment such as locomotives, hopper
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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

cars, or other rail cars, as these costs have been included in the annualized operating expense. It is understood that the owner anticipates contracting the haul to either the mainline operator or to a smaller short line operator. CCC could also operate the system with its own forces, which has the potential to further reduce operations costs. During the review of these costs, no effort was made to estimate total transportation costs from mine to market, as market locations vary significantly depending on product. These market locations also impact the size and type of the rail car fleet due to the need to continue to transfer material from the mine while loaded cars are in transit to/from the final destination. As such, no cost allocation for car sets was made in the rail operations cost. This is a valid assumption for this effort, as the purpose is to derive a comparison between the two operating modes and the road operation would rely on nearly identical car fleet to move materials from Exton to market after transloading. As a result, the incremental haul equipment required for rail is limited to locomotives needed to cycle unit trains from the mine site to the CN interchange. The estimated capital costs based on the above noted assumptions and material quantities determined in the evaluation are presented in .

Sunday, February 10, 2013

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Project Number: 705 1298820100 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Table 5.6 1: Estimated Railway Capital Costs 5.6-1

Sunday, February 10, 2013

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

5.7. OPERATING COST The operating cost for rail will follow the same philosophy and guideline as the road operating cost by focusing on major cost components. The major elements of the operational costs for this study were determined as follows:       Cost of locomotives Fuel cost Maintenance cost Crew cost Indirect and Overhead Profit

The number of cars per train was primarily based on the baseline load of 3MTPA. Each car/wagon was assumed to carry 100 tonnes, and a 100 car/wagon train was considered as baseline for this effort. Detail logistical exercise of travel time, driver behaviour, wagon/car capacity, car/wagon and other signal/track optimization parameters are considered out of scope at this level, and further operating cost reductions may be achieved in these efforts. Changes in annual capacity requirements can be readily adjusted with planned equipment by increasing or decreasing the train length, or modifying the cycle spacing of the equipment on the line. Based on a high level effort, the operational costs are summarized as follows:

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Table 5.7-1: Operating Cost for Rail Corridor (3 MTPA)

The rail Opex cost was at $31.6M with maintenance at 30%, crew at 28%, and fuel at 18% of the overall annual Opex cost. The above analysis and results are subject to short and long term market conditions for labour and spot fuel prices including negotiated contracts.

6. ROAD – RAIL COST COMPARISON AND ECONOMIC ANALYSIS
In the remaining portion of this document, the terms: transportation capacity, transport load, load, tonnage or ore generally refers to the material or cargo carried by the rail or road and is used interchangeably in the document. The term “cost” is generally referred to cost of doing business or expense that will be incurred by CCC. It is also the price to be charged to customers for transporting the load or cargo. It will also be referred as the breakeven cost for CCC to have a successful financial venture. The term, “Terms of Finance” will be the duration of the loan in years and the interest rate charged for the loan used in supporting capital and operating expenses. To analyze the cost benefits of either modes of transportation, the Capex and Opex costs were subjected to variables of transport capacity/load and varying terms of finance. The baseline load was set at 3.0 MTPA (Million Tonne Per Annum) and three terms of finance were considered with 30 year term at 4% as the baseline rate.
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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

The cost of doing business or break even cost for this study was calculated and defined as the difference in the capital cost of rail and road (fixed for all variables) plus the annual operating cost. A profit margin of 15% was applied to this sum to obtain the resulting cost of doing business or total cost incurred. No sharing of initial development costs with government was considered in the analysis, but would further improve the economics of the initial construction and long-term annual costs basis associated with repaying capital. Such a scenario is not unreasonable, or unlikely, considering the multiple benefits provided to the regional communities and broad-scale economic impact. For this study, the transportation costs were considered separate from the mine and processing operations, material market prices, and final destination shipping costs. This is appropriate for the comparison study given that if the transportation cost were part of the total operational cost, a profit would be applied to the total cost to determine the cost of doing business, there by having no impact on the resulting conclusions. The price to be charged per tonne to cover the cost of doing business was obtained by dividing the total annual cost or cost of doing business (Difference in capital cost + annual operating cost + profit) divided by the transport load or tonnage carried by the corridor. Variance in inflation and market condition factors were not applied to the analysis.

6.1. TRANSPORT CAPACITY (LOAD) SENSITIVITY FOR ROAD OPERATIONS The total operating costs for rail and road were stress tested for load variations of 5.0 MTPA (66% increase), and 1.5MTPA (50% decrease). The figures below illustrate the change in annual operating cost and price to be charged to customers to cover the cost of doing business. The results of these variations have been illustrated in the following:

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 6.1: Sensitivity Analysis – Road Opex and Cost per Tonne

SENSITIVITY ANALYSIS FOR ROAD OPERATIONS
$350 $300 $250 $200 $150 $100 $50 $0 3.0 5.0 1.5 TRANSPORTED LOAD (MILLION TONNES)
When the load or transportation capacity increased by 66%, the operating cost for road increased by 62% ($183M to $296M) and the price per tonne decreased by only 2.5% ($61 to $59) The figure above illustrates that as the load decreased by 50%, the operating cost for road decreased by 47% ($183M to $97M) while the price per tonne increased by 6% ($61 to $65) 6.2. TRANSPORT CAPACITY (LOAD) SENSITIVITY FOR RAIL OPERATIONS The load variations of 5.0 MTPA, an increase of 66% and 1.5MTPA, a 50% decrease were applied to the operating cost of rail. The figure below illustrates the change in annual operating cost and resulting price. $96.70 $60.78 $59.28 $64.61 $183.18 $296.40

ANNUAL OPERATING COST (Million $) COST PER TONNE ($)

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 6.2: Sensitivity Analysis – Rail Opex and Cost per Tonne

SENSITIIVITY ANALYSIS FOR RAIL OPERATIONS
$35 $30 $25 $20 $15 $10 $5 $0 3.0 5.0 1.5 TRANSPORTED LOAD (MILLION TONNES)
When the load or transportation capacity increased 66%, the operating cost increased by remained relatively unchanged at $32M but the cost per tonne decreased by 40% ($10 to $6) The figure above illustrates that as the load decreased by 50%, the operating cost for rail decreased by 21% ($32M to $25M) while the cost per tonne increased by 60% ($10 to $17) 6.3. SENSITIVITY ANALYSIS FOR TERMS OF FINANCE FOR TRANSPORT CAPACITY (LOAD) VARIATION Both the transportation modes and their costs were analyzed for the three terms of finance under different load conditions. The 30 year term at 4% was considered as the baseline term of finance for comparing the variations. The following figures show the results of effects of terms of finance and varying load on cost of doing business.
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$31.65

$31.65

$25.14

ANNUAL OPERATING COST (Million $) COST PER TONNE ($)
$16.80

$10.50 $6.33

Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 6.3: Cost for 30 Year Term (4% Rate)

COST FOR 30 YEAR TERM (4% RATE)
$120 $100 COST PER TONNE $80 $60 $40 $20 $3 5 1.5 TRANSPORTED LOAD (MILLION TONNE)
$44.62 $26.89 $83.77 $73.14 $110.91 $85.50

RAIL ROAD

For the baseline scenario of a 30 year at 4%of finance the following resulted: A 66% increase in load led to 13% decreases ($84 to $73) in cost per tonne for road and a 40% decrease ($45 to $27) in cost per tonne for rail. A 50 % decrease in load led to 32% increases ($84 to $111) in cost per tonne for road while the rail cost per tonne increased 92% ($45 to $86).

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 6.4: Cost for 50 Year Term (5% Rate)

COST FOR 50 YEAR TERM (5% RATE)
$120 $100 COST SPER TONNE
$82.65 $82.15 $72.46 $108.66

$80 $60
$42.96

RAIL ROAD

$40
$25.89

$20 $3 5 1.5 TRANSPORTED LOAD (MILLIONS TONNE)

For a 50year – 5% term of finance the following resulted: A 66% increase in load led to 13% decreases ($83 to $72) in cost per tonne for road and a 40% decrease ($43 to $26) in cost per tonne for rail. A 50 % decrease in load led to 32% increases ($83 to $109) in cost per tonne for road while the rail cost per tonne increased by 92% ($43 to $82).

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 6.5: Cost for 10 Year Term (2.5% Rate)

COST FOR 10 YEAR TERM (2.5% RATE)
$180 $160 $140 COST PER TONNE $120 $100 $80 $60 $40 $20 $3 5 TRANSPORTED LOAD (MILLION TONNE)
For a 10 year-2.5% term of finance the following resulted: A 66% increase in load led to 18% decreases ($106 to $87) in cost per tonne for road and a 40% decrease ($78 to $47) in cost per tonne for rail. A 50 % decrease in load led to 47% increases ($106 to $156) in cost per tonne for the road while the rail cost per tonne increased by 95% ($78 to $152). The above results are further summarized in the table below illustrating the net savings in dollars for the various loads under different terms of finance. $77.87 $46.94 $106.18 $86.64 $152.46 $156.04

RAIL ROAD

1.5

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Project Number: 705-1298820100 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Table 6.3 1: Annualized Cost for Various Terms of Finance 6.3-1 Annualized Various erms

The above table illustrates the following: For the baseline term of finance for 30 year note at 4.0% 4.0%: A load increase of 66% led to 97% increase in savings ($117M to $231M) while a load decrease of 50% led to oad 68% decrease in savings ($117M to $38M). decrease For a 50 year note at 5.0% 5.0%: A lload increase of 66% led to 95% increase in savings ($119 to $232M) while a load decrease of 50% led to oad % 67% 67% decrease in savings ($119M to $39M) $39M). For a 10 year note at 2.5% 2.5%: A load increase of 66% led to 133% increase in savings ($ 85 to $198) while a load decrease of 50% led to 95% ($85 decrease in savings ($85M to $5M) $5M).

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Project Number: 705-1298820100 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

The impact of changes in loads on the total cost for various terms of shown in Figures 5.3, 5.4 to 5.4 can be also 5.3, be tabulated to reflect the difference in cost per tonne .The results are tabulated as follows: Table 6.3 2: Difference in Cost for Varying Loads and Terms of Finance ble 6.3-2

The above table illustrates that: For the baseline load of 3.0 MTPA the differential in cost per tonne can vary from $40 to $28. It remains the 3.0 40 $28. same for a 50 year term at 5.0% but decreases to $28 (30% decrease) for a 10 year term at 2.5%. $28 (30% crease) For a 66% increase in load to 5.0 MTPA, the differential in cost per tonne can vary from $46 to $40. It increases to $47 (2% increase) for 50 year term at 5.0% but decreases to $40 (13% decrease) for a 10 year term at 2.5%. For a 50% decrease in load to 1.50 MTPA the differential in cost per tonne can vary from $25 to $4. It increases MTPA, $25 $4 to $27 (8% increase) for a 50 year term at 5.0% but decreases to $4 (84% decrease) for a 10 year term at 2.5%. % for $4 84% The effect of variables on the transportation cost can also be illustrated as shown in figure below: llustrate llustrated

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 6.6: Transportation Cost per Tonne

TRANSPORTATION COST PER TONNE
$0 $25 $50
$45 $84

$75

$100 $125 $150 $175

30 YEARS @ 4.0%

$27 $73 $86 $111 $43 $83

RAIL-3 MTPA ROAD-3 MTPA RAIL-5 MTPA ROAD- 5 MTPA RAIL-1.5 MTPA

50 YEARS @ 5.0%

$26 $72 $82 $109 $78 $106

ROAD-1.5 MTPA

10 YEARS @ 2.5%

$47 $87 $152 $156

The data on the differential in capital cost ($508,936,628) and differential in savings in operational cost of the two modes of transportation was plotted against time for the three terms of finance. The graphs were plotted for each load scenario (3.0, 1.5 and 5.0 MTPA)

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

This yielded the year in which the cost savings would recover the difference in the capital cost for each load case. The difference in the capital cost was assumed to increase at 4% to account for return on equivalent investment and adequately reflect the cost of capital or loss of opportunity. For the base case scenario of 3.0 MTPA load, the savings in cost for a 30 year term at 4.0% and 50 year term at 5.0% will break even with the excess capital cost around the 6th year of operations. For the10 year at 2.5%, the savings will catch up with the excess capital cost between the 9th and 10th year of operation. The results are shown graphically in the Figure below.

Figure 6.7: CAPEX Cost Difference v/s Breakeven Difference for 3 MTPA

For 5.0 MTPA (66% increase) load, the savings in cost for a 30 year term at 4.0% and 50 year term at 5.0% will breakeven with the excess capital cost between 3rd and 4th year of operations. For the 10 year term at 2.5%, the savings catch up with the excess capital cost around the 4th year of operations. The results are shown graphically in the Figure below.
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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

Figure 6.8: CAPEX Cost Difference v/s Breakeven Difference for 5 MTPA

The graph for 1.5 MTPA (-50% decrease) has not been plotted as the lower savings in operational cost difference never catch up to the difference in capital cost.

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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

7. OBSERVATIONS AND ANALYSIS
Based on the project background, corridor constraints, geotechnical review, basis of design, capital cost, operating cost, sensitivity analysis and stress testing to loads and terms of finance, the following observations and conclusions are presented: 1. Significant amount of rock and NFS material will be required for both modes of transportation. 2. Critical rock aggregate is a key and fundamental component of the road and rail cross section. 3. Aggregate sources are available at the very north and south end of the corridor. Significant stretch of the corridor in the middle has scarcity of critical rock (Sta 100 +00 to Sta 270+00) 4. Extensive preliminary quantity analysis has conclusively shown that there is an shortage of critical rock aggregate and the cut sections along both corridors do not suffice the needs of the corridor cross sections for either modes of transportation. 5. There is a consistent rock deficit along the upper stretch of the corridor (Sta 100+00 to Sta 330+00) in spite of few rock sources at the north end. 6. Rock is sparingly available along the corridor and will have to be hauled from other sources. 7. The Material Availability Assessment Report has also quantitatively illustrated that the initial development of a permanent road will significantly impact the viability of a rail corridor and vice versa due to the depletion of scarce rock aggregate thereby increasing the burden of importing of rock aggregate. 8. Hauling cost of material will be a significant component of the capital cost for both modes of transportation. 9. Rail infrastructure can be used to economically provide future road construction materials from outside sources. 10. Permanent road infrastructure would provide limited advantage to a future rail embankment due to the high costs of trucking suitable construction materials. 11. Long span bridges are on the critical path of the project and construction has to begin as early as possible. 12. Multiple crews may be required to complete the bridges in a reasonable amount of time and schedule. It is highly recommended that crews work separately and concurrently on major and minor span bridges. 13. A limited, temporary service/access road will be required to transport the construction material and especially material for bridges. This service road construction expense is a significant component of the capital cost. 14. The capital costs for rail are higher than capital cost for road by 50%. 15. The operating cost for road are higher than the rail cost by a factor of 5.79 or 479%. 16. Trucks and personnel form a significant factor of the operating cost for road. The road operating cost has fuel cost as its major component. This component is highly susceptible to inflationary and market conditions. 17. The road is designed to TAC and provincial standards which usually encounter less percentage of truck traffic than projected for this corridor.
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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

18. Maintenance component of the road could become significant factor with increasing truck and load traffic. 19. An acute shortage of aggregate required for the continual maintenance of the road under constant traffic will continue to persist along the corridor. In other words, asset depreciation for a road corridor will be dramatically faster than a rail corridor for increased traffic if not maintained adequately. 20. The road operating costs are more sensitive to variation in loads than rail and show dramatic increase in cost with increasing loads. 21. The total annual rail operating costs plateau with increase in load. 22. As the load increases there is substantial savings in cost per tonne for the rail operations. 23. The road operation does not show significant savings with increasing traffic volume. 24. The trend in savings is similar for road and rail for all terms of finances. 25. The savings are greatly reduced for all terms of finance for reduced load. 26. Both the modes of transportation become economically unattractive for loads under 1.5 MTPA unless materials of higher value are shipped. Market value of these high value material could be expected to cover the higher transportation cost related to low volumes. 27. The terms of finance have less impact on the cost per tonne as the load increases for both modes of transportation. 28. The total annual cost including finance costs on capital and operations/maintenance for rail quickly overcome the difference in initial capital costs. 29. The time frame to recover the differential in capital cost between rail and road decreases as the load increases for reasonable finance terms. 30. Rail offers higher reliability and more working days per year than a truck transportation system. 31. Rail transportation has a higher flexibility to adapt to increasing or decreasing transportation loads. It is much more expedient to double the size of wagon or cars than to increase the number of trucks at a short notice. 32. Rail transportation mode could be a primer for development of local truck routes to prospective mining sites, resources and communities. Truck corridor may not foster the development of a rail corridor. In other words, a rail corridor may be complementary to a road corridor but not vice versa. 33. The rail corridor remains a versatile and scalable mode of transportation for a wide range of material and goods ranging from ore to machinery parts and mining equipment. Similar heavy bulk commodities, large volumes and large haul cargoes would require special truck-axle configuration and the pavement may not be able to handle the stresses generated by heavy loads leading to deterioration and closure of the corridor outside of winter months. 34. Road transportation is more flexible than rail and is suitable to carry perishable, fragile, time sensitive cargo. It is more suitable for more frequent, smaller, non-linear, shorter haul deliveries. 35. Rail transportation offers a higher level of safety, lower accidents and higher hazard protection in this region compared to the truck traffic.
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Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

8. FINAL CONCLUSIONS
The project location and terrain remain the biggest and obvious challenge to the project development. Project logistics and production rates in this remote area add significant cost to the program budget relative to the total development expense. Geotechnical investigations conducted so far show that there are some sources of aggregate available to the far south, and far north of the project. There is a deficit of good material through the majority of the corridor. Material for any mode of transportation will have to be imported or hauled in from far distances at a cost. Building a road corridor will adversely impact the development of the rail corridor by depleting the available and critical rock aggregate. The key component for construction of both modes of transportation remains acceptable quality of aggregate and NFS material. Its needs get more acute if a road is built, since good quality of aggregate will be required to maintain the road and reduce the wear and tear on truck tires and improve efficiency of trucking operations. It is clear from this analysis that significantly more rock will be required to maintain the heavy truck traffic and meet the increase in road cross sectional rock requirements further impacting the prospects of a rail corridor. Completion of long span bridges is a critical component of the project schedule and will require airlifts and service roads to access construction sites and deliver material. Construction of service road to convey the materials for these bridge sites is very important and significant component of the Capex. Rail capital cost is higher than the road by approximately $500M, however this mode of transportation reacts favorably to higher loads, longer and reasonable terms of finance. The amount of time required to recover the additional capital cost of rail over road reduces dramatically if the load increases along the corridor, hence remaining a favorable option within term of the described resource extraction period and the life of the infrastructure beyond initial mine development. Both modes of transportation are not favorable initiatives if production or load remains low and terms of finance are for shorter periods as the associated annual costs to support the financing and operation would likely impact the ability to sell material into the market at reasonable prices. The road capital cost are lower than the rail at approximately $1,051M, however the annual operating cost increase significantly as the load increases, implying that this mode of transportation is not a suitable option if the Ring of Fire region is expected to produce higher loads or operate over a long period of time and support other growth in the area if mining activity expands. Under the same circumstances, rail economics improve through flexible use of train operations with decreases in per tonne costs. The described chromite and copper/nickel deposits, as well the extent of other exploration activities in the area, suggest that such grow is likely to occur over time if economically efficient surface access and support can be
Page 52 of 53

Project Number: 705-1298820100

CANADA CHROME CORPORATION RAIL v/s ROAD TRADEOFF STUDY

Project Name: Canada Chrome Corporation Rail vs Road Tradeoff Study for McFauld's Lake, ON Infrastructure Corridor

provided. Service support could provide supplies and transportation to regional communities over time, further utilizing planned access corridors. These factors indicate that both infrastructure options should consider the possibility of cost sharing mechanisms with public funding sources, as well as future resource development proponents. Simple calculations demonstrate that an initial public or third-party capital contribution of $500M towards both options significantly improves annual debt service payments, with a higher percentage reduction realized in the road. However, since the road unit costs per tonne are dominated by operating factors that do not appreciably change with volume, there is a lower return per dollar invested in capital compared with rail. For example, under the base scenario with $500M in funding, road unit costs per tonne decrease from approximately $84 to $73/tonne, a reduction of about 13%. The same contribution to rail infrastructure realizes a decrease from $45 to $27/tonne, a reduction of about 40% for the same conditions. Such savings are potentially very significant in the long-term stability of the operations of any associated with the infrastructure as their costs are directly added to mining, processing, and delivery to market. The observations of this analysis indicate that the lower medium and long-term costs associated with developing rail, favor the economically sustainable development of the overall resources in the Ring of Fire, as this option provides the opportunity to improve project economics during fluctuations in commodity prices over the life of the resource operations and allow more stable/consistent returns on the private and possible public investment, provided the infrastructure financing can be amortized beyond 10-yrs, which is common for infrastructure of this type and scale. To this end, we suggest a further advancement of the work to refine and further improve the definition and details of the project. Additional factors and design elements will be identified as the design and study process dwells into the intricacies and implementation of the corridor. The costs and estimates presented above will vary as further information is gathered, but the overall impact and final conclusions are not expected to change.

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