NMIC Werri Gold and Base Metals Exploration project

TABLE OF CONTENT
Page
1 Prospecting and Exploration History…………….………..………..…………………… 1

2 The Consultents……………………………………………………………………..............

2.1 Japanese Consultants…………………………………………………………………………… 4

Venmyn Independent Projects (VIP)…………………………………………………….. 4
2.2
2.3 Metallergical Test Work…...……………..……………………………………………………. 6

3 Prefeasibility Study …….................….……………………………………………….…… 6

4 Mineral Resource Estimation for PFS …………..…………………………………………. 6

5 The FS current status…..…………………………...…………………………………………… 7

List of Table
Table 1. Location ofWerri Gold and Base Metals Exploration Project……………………….. 2
Table 2. Mineral Resource Statement by Vennyn ……….…………...…………………………… 5

1
 WERRI GOLD AND BASE METALS PROSPECTING AND EXPLORATION
PROJECT

1. PROSPECTING AND EXPLORATION HISTORY

In March 1996 a one year period prospecting License agreement was signed between
the then Ministry of Mines and Energy and NMIC to prospect for gold and associated
Minerals over 1637 sq.kms ofWerri area of Tigrai Regional State. The large concession
area coverage, Werri, is located at 100kms North West of Mekelle, the Regional
Administrative Capital city.

The area falls within the northern section of the Arabian-Nubian Shield, comprised of
granite greenstone terrain expressed by low grade meta-volcano sedimentary rock
assemblages considered to be favorable for base metals and gold potentials. Very little
or scanty evidence were available on the mineralization potential of the concession area
in the region until the launching of the prospecting and exploration campaign by NMIC.

The state of the art equipment methodologies applied during the prospecting survey
was aimed at assessing the area at regional scale so as to define potential prospective
mineralization zones for follow up studies.

To this effect, Regional mapping prospecting survey at a scale of 1:250,000 over 1650
sq.kms meter area was prospected at a time when a large number of geochemical
samples were collected and analyzed for Gold, Copper, Lead, Zinc, Nickel, Cobalt,
Molybdenum and other metals.

The survey result defined three most prospective grounds namely, WorqAmba,
Worqtarbi and Chemit areas covering 382sq.kms totals.(see map below)

2
3
The three target areas defined were subjected to follow up detail exploration for gold
and base metals soon after three year’s exploration license permit was granted.

Systematic exploration work using modern integrated geological, geochemical and

geophysical methods approach were applied by NMIC geological team over the three
areas exploration endeavor. The detailed and closely spaced surface rock chip, soil and
loam geochemical sampling collected from alteration zones and quartz veins were
analyzed to help trace gold, Silver, Lead and Zinc surface anomalies. A few trenches
were opened up to collect channel samples in areas of positive gold and base metals
findings. The result obtained from WorqAmba area among other targets was positive
showing persistent surface mineralization continuity for a distant of one kilometers
strike length and average width of up to 15 meters. Based on the study an area
designated as WorqAmba I South, asked for more detail studies including exploratory
test drilling aimed at knowing in-depth extension mineralization.

34 bore holes with average depth of 120 meters each were drilled. The result confirmed
gold, and base metals depth extensions defining ore zones of persistent continuity. The
ore zones defined is restricted within alteration zones marked by sericitization,
silicification and chloritization. The sulfide minerals associated with the ores are mainly
Pyrite, Sphalerite and Galena. At the initial stage of the first end detail exploration years
the result obtained, the project considered the involvement of foreign consultants to
evaluate on the mineralization found and help define the mineralization type and the
general scoping study of the resources. To this effect the following consultants &
companies were deployed to the project to assess the data collected and the study
made to date. Taking into account their recommendations the project team undertook
continued detail exploration and leading to Feasibility studies

4
2. The Consultants

2. 1 Japanese Consultant,

An agreement was signed with Japanese Consultant Company initially. A Japanese

team comprising of 2 experts arrived in the country and were engaged in data review
and compilation behind desk study. A preliminary evaluation for gold, silver, Lead and
Zinc done by the Consultants at early stage of the exploration data results was positive
and as a result recommended detail follow up exploration studies to upgrade the
reserves of the resources already indicated.

From the available data assessed and field observation of the project site theywere able
to define resources amounting to;3.5 mill tonsof ore at 0.8 g/t Au, 10.41g/t Ag
0.13%Pb, 0.51%Zn

Based on their recommendation NMIC upgraded the resources to 7 million tons of ore
by undertaking additional exploratoryinfill and extension drilling.

2. 2 Venmyn Independantprojects (VIP) of SA

Detail exploration continued with encouraging result findings for gold and base metals
within Worq Amba I south sub area by the project exploration team asking for more
foreign consultant involvement for estimation of the resources.

An agreement was reached with Venmyn Independent Projects (VIP) of South Africa to
undertake scoping studies on the mineralization findings of the Worq Amba south in

5
order to determine whether the deposit in the area found are economically viable and
hence can be developed. Venmyn Independant Projects set out conducting the resource
evaluation in accordance with guidelines set out by Canadian Mineral Resources
Reporting Code (N143-101) (CIMVAL Code) of Canada, Thus the Worq Amba I South
Gold and Base-metals deposit asset in accordance with reporting and assessment
criteria stipulated for Mineral assets Valuation can be mined economically at current
gold world market price and the suggested a simple open pit mining method for the
extraction of the ores. The scoping study by Venmyn Independent Company estimated
the Mineral Resource of Worq amba I South deposit at different categoriesis shown in
the table below.

Based on the results found and evaluation made by Venmyn VIP projects Company a
total of: 590 kilo. Ounces of gold, 3,371 million ounces of Silver, 110 million pounds of
Lead and 93 million pounds of Zinc resources were estimated to be present. The
company concluded that the study showed a net present value of 62.4 million dollar at
20% discount rate with an internal rate of return of 44.12%, and payback period in 2
years from start of production.

2.3 Metallurgical Test work

6
During the same period of scoping study, the project deployed foreign based
Independent Consultant Company, Wardell Armstrong International of UK to undertake
the WorqAmba I South metallurgical test work on ore samples collected. The samples
proved recoveries of up to 95% gold by direct leaching and salable base Metals,
Zinc,Lead concentration recoveries by floatation methods.

The mineralizations defined at Worq Amba I south were open to the north east and
south west. An area of about 80 Sq.Kms lying to the south west, outside NMIC
property, Chini, was later incorporated. Both extension areas to the north east and
south west have been explored in detail and are ready for immediate test drilling
program implementation.

3. Prefeasibility (PFS): Werri Gold and base metals project

In May of 2013, NMIC entrusted China National Geological & Mining Corporation (CGM)
and Beijing General Research Institute of Mining & Metallurgy （BGRIMM） to conduct
Prefeasibility Study and Definitive Feasibility Study on Werri Gold and Base Metal
Project.

In September of 2014, Commissioned by National Mining Corporation (NMIC) in

Ethiopia, China National Geological & Mining Corporation (CGM) conducted process test
work and provided a report of test work on Werri Au, Ag and Base metal ores. BGRIMM
revised the pre-feasibility report on Werri project based on the metallurgical test work
report provided by CGM and to conduct Prefeasibility Study and Definitive feasibility
Study.

4) MINERAL RESOURCE ESTIMATION FOR PFS

The resource estimation of the feasibility study is based on the resources estimation
provided by Venmyn. From the scoping study conducted by Venmyn, the grand total of
resources was estimated to be 15.26Mt, while the indicated resources is only 1.67Mt,
which means that 89% of the total resources is the inferred resources.Thus the
resources is estimated with a low level of confidence. As aresult it was suggested that
more boreholes should be added to increase the level of confidence particularly in
7
geology as the design needs more indicated resources. After these infill drilling, 80% of
the inferred resources will be upgraded to the indicated category, thus the indicated
resources will reach up to 12.53Mt, which will be considered for mining of the deposit.
Taking into account the suggested upgrading of the resources, Feasibility study is
designed for mining of the ore with throughput capacity of 1,000,000tons/ annually (i.e.
3030.3t/d). Opencast mining method is considered for the mine design. A total of
10.153 million tons of ores will be exploited with gold grade of 1.20g/t, silver grade of
10.27g/t and average stripping ratio of 8.5 t/t the lifetime of the mine is ten years,
which consists of nine years at full production, one year tail off. The construction period
of the mine infrastructure is expected to be approximately one year. The working
system of three consecutive shifts in a day and eight hours in a shift is adopted for the
mine operation; the annual working days are total 330 days. The open pit limit is
designed with about 1150m long and 410m wide, the maximum height of the overall pit
slope is up to 190m high. The highest and lowest bench designed with 1840 m and
1630 m, and the level of closed circle is 1760 m.

5. The FS Current Status

The PFS study report prepared by the consultants (CGM) were presented to NMIC in 5
volumes. The report was forwarded also to the Ministry of Mines (MOM) for its
completeness for grant of mining license. In addition as part of the PFS study
components , Environmental and Social Impact Assessment (ESIA) studies of the
project area was conducted by SRK consultants and reports were also submitted to the
Licensing Authority, the MOM.

After submission of the reports, the project placed request for grant of the mining
license. The authority after reviewing the work done and presentation by experts was
on the verge of giving the mining license but failed to do so due to problems it found
that a small portion of the PFS studied area,( the project license property) was given to
another investor through Regional Mines Bureau. Despite the area being small the
location according to the project study is comparatively rich in its resource content and

8
will also affect the overall mining application endovour. To resolve the problem the
MOM instead asked the project to contact the Regional Mines Bureau in Mekele for
solution to the problem which it did by writing a letter to the regional mines bureau.
While awaiting for an answer to our request, the prevailing regional unrest problem
considered as force major occurred. Consequently the project could not continue its
follow up for solution through Mekele Mines Bureau until condition in the area pacifies.

NOTE: This report is a narrative summary of the work done on the werri gold and base
metals license past studies. There are large volumes of performance result and
feasibility reports in the archives of the National Mining Corporation (NMIC) both in
electronic and hard copies. Two NMIC experts geologists responsible for the projects
but now left the company both can trace the details of the projects status. These
experts had the opportunity to accompany the consultant’s CGM to study the feasibility
study and to be trained in the evaluation of the deposit using data mine software.
Contact with these experts for any details is strongly recommended.