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Aripuanã Property NI 43–101 Technical ReportMato Grosso State - Brazil

Prepared for:Karmin Exploration Inc.

Effective Date31 September 2007 Prepared by:

Armando Simon, R.P.Geo.Rodrigo Marinho, P. Geo.Pierre Lacombe, P. Eng.

IMPORTANT NOTICE

This report was prepared as a National Instrument 43-101 Technical Report for Karmin Exploration Incorporated (Karmin) by AMEC International (Chile) S.A. (AMEC), a division of AMEC Americas Limited. The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in AMEC’s services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended to be used by Karmin, subject to the terms and conditions of its contract with AMEC. That contract permits Karmin to file this report as a Technical Report with Canadian Securities Administrators pursuant to provincial securities legislation. Except for the purposes legislated under provincial securities laws, any other use of this report by any third party is at that party’s sole risk.

Aripuanã Property NI 43–101 Technical Report Project No. SA3053 Page 23-2 September 2007

CERTIFICATE OF QUALIFIED PERSON

Rodrigo Alves Marinho, Senor Geologist, CPG, (AIPG) Américo Vespucio Sur 100, Oficina 203

Las Condes, Santiago, Chile. Tel. 56-2-210-9500; Fax 56-2-210-9510

[email protected]

I, Rodrigo Alves Marinho, CPG (AIPG) am employed as a Senior Geologist with AMEC International (Chile) S.A, a division of AMEC Americas Limited.

This certificate applies to the technical report entitled “Aripuanã Property NI 43–101 Technical Report” with an effective date of 31 September, 2007.

I am a member of the American Institute of Professional Geologists (CPG-10971). I graduated from University of Sao Paulo State with a Bachelor of Engineering degree in Geology in 1993.

I have practiced my profession for 14 years. I have been directly involved in mineral exploration and mining projects for precious and base metals and industrial minerals in Argentina, Australia, Brazil, Burkina Faso, Colombia, Chile, Peru, Portugal, South Africa, United States and Venezuela.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).

I visited the Aripuanã Property during December 4 to December 10 of 2006.

I am responsible for the preparation of Sections 1 to 6, 8 to 10, 14, 15 and 17 to 23 of the technical report entitled “Aripuanã Property NI 43–101 Technical Report” dated 31 September, 2007.

I am independent of Karmin Exploration Inc as independence is described by Section 1.4 of NI 43–101.

I have not previously prepared a technical report on the Aripuanã Property.

I have read NI 43–101 and this report has been prepared in compliance with that Instrument.


As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.

“Signed and sealed”

Rodrigo Alves Marinho. Senior Geologist CPG-AIPG (CPG-10971) Dated: October 16, 2007



Pierre Lacombe, ing. AMEC Americas Ltd

2500 Lapiniere Blvd., Montreal, QC, Canada Tel: 450-656-5210 Fax: 450-656-1201

[email protected]

I, Pierre Lacombe, ing., am employed as a Principal Process Engineer with AMEC Americas Limited.


I am a registered member of the Ordre des Ingénieurs du Québec (Registration #74096) and a member of the institutes of Mining and Metallurgy in Canada (CIMM) and United States (AIME). I graduated from École Polytechnique of Montreal with a Bachelor of Engineering in Mining Engineering in 1984.

I have practiced my profession continuously for the previous 23 years, during which period I have continually been involved in mineral processing projects for base and precious metals as well as industrial minerals in Canada, Chile, Peru, Costa Rica, Greece, the United States and Brazil. I have been directly involved in the preparation of feasibility studies relating to gold and silver projects and metallurgical investigations supporting these.


I did not visit the Aripuanã Property.

I am responsible for the preparation of Section 16 of the technical report entitled “Aripuanã Property NI 43–101 Technical Report” dated 31 September, 2007.

I am independent of Karmin Exploration Inc., as defined by Section 1.4 of NI 43–101 and have not previously prepared another technical report on the Aripuana Property.

I have read the National Instrument 43–101 requirements and Section 16 of this report, redacted under my responsibility, considered these for its preparation.




Pierre Lacombe, ing.

Principal Process Engineer

Dated 16 October 2007



Armando Simón, Ph.D., R.P.Geo, (AIG)

AMEC International Chile S.A.

Américo Vespucio Sur 100, Oficina 203 Las Condes, Santiago, Chile.

Tel. 56-2-210-9500; Fax 56-2-210-9510 [email protected]

I, Armando Simon, R.P. Geo. (AIG), am employed as a Principal Geologist with AMEC International Chile S.A.


I am a member of the Australian Institution of Geoscientists (MAIG # 3003). I graduated from the University of Bucharest with a Bachelor of Engineering degree in Geology and Geophysics in 1974, and a Doctorate of Engineering, with mention in Geology, in 1985.

Since 1974, I have been involved in mineral exploration projects for precious and base metals and industrial minerals in Argentina, Brazil, Colombia, Cuba, Chile, Eritrea, Ethiopia, Guyana, Jamaica, Madagascar, Mexico, Nicaragua, Peru, Portugal, Romania and Vietnam.


I visited the Aripuanã Property between 14 and 16 October 2006, and between 4 and 10 December 2006.

I am responsible for the preparation of Sections 1, 7, 11 to 14, 19, 20 and 22 of the Technical Report entitled “Aripuanã Property NI 43–101 Technical Report” dated 31 September, 2007.

I am independent of Karmin Exploration Inc as independence is described by Section 1.4 of NI 43–101.

I have not previously prepared a technical report on the Aripuana Property.


I have read NI 43–101 and this report has been prepared in compliance with that Instrument.



Armando Simon, R.P.Geo

Principal Geologist

Dated 16 October 2007

Aripuanã Property NI 43–101 Technical Report Project No. SA3053 TOC i September 2007

CONTENTS

1.0 SUMMARY.................................................................................................................................... 1-1

1.1 Introduction ...................................................................................................................... 1-11.2 Ownership ........................................................................................................................ 1-11.3 History .............................................................................................................................. 1-21.4 Geology and Mineralization ............................................................................................. 1-21.5 Resource Estimate........................................................................................................... 1-31.6 Conclusions ..................................................................................................................... 1-41.7 Recommendations ........................................................................................................... 1-5

2.0 INTRODUCTION .......................................................................................................................... 2-12.1 Introduction ...................................................................................................................... 2-12.2 Terms of Reference ......................................................................................................... 2-1

3.0 RELIANCE ON OTHER EXPERTS.............................................................................................. 3-13.1 Mineral Tenure................................................................................................................. 3-13.2 Surface Rights, Access and Permitting ........................................................................... 3-13.3 Environmental .................................................................................................................. 3-1

4.0 PROPERTY DESCRIPTION AND LOCATION ............................................................................ 4-14.1 Location............................................................................................................................ 4-14.2 Company Ownership and Agreements............................................................................ 4-14.3 Mineral Claims ................................................................................................................. 4-34.4 Surface Rights ................................................................................................................. 4-6

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY...................................................................................................................................................... 5-15.1 Accessibility ..................................................................................................................... 5-15.2 Physiography ................................................................................................................... 5-15.3 Climate, Vegetation and Fauna ....................................................................................... 5-15.4 Local Resources and Infrastructure................................................................................. 5-2

6.0 HISTORY...................................................................................................................................... 6-17.0 GEOLOGICAL SETTING.............................................................................................................. 7-1

7.1 Introduction ...................................................................................................................... 7-17.2 Regional Geology ............................................................................................................ 7-17.3 Local Geology .................................................................................................................. 7-4

8.0 DEPOSIT TYPE............................................................................................................................ 8-19.0 MINERALIZATION........................................................................................................................ 9-110.0 EXPLORATION .......................................................................................................................... 10-1

10.1 Anglo American-Anglo American/Karmin ...................................................................... 10-110.2 Votorantim...................................................................................................................... 10-110.3 Exploration Potential ...................................................................................................... 10-2

11.0 DRILLING ................................................................................................................................... 11-111.1 Anglo American-Anglo American/Karmin ...................................................................... 11-111.2 Votorantim...................................................................................................................... 11-211.3 Significant Mineral Intersections .................................................................................... 11-3

12.0 SAMPLING METHOD AND APPROACH................................................................................... 12-112.1 Anglo American-Anglo American/Karmin ...................................................................... 12-112.2 Votorantim...................................................................................................................... 12-1

13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ......................................................... 13-113.1 Sample Preparation and Assaying: Anglo American/Karmin ........................................ 13-113.2 Sample Preparation and Assaying: Anglo American/Karmin: Votorantim..................... 13-1

Aripuanã Property NI 43–101 Technical Report Project No. SA3053 TOC ii September 2007

13.3 Quality Assurance/Quality Control (QA/QC).................................................................. 13-213.3.1 Anglo American-Anglo American/Karmin QA/QC ........................................... 13-313.3.2 Votorantim QA/QC........................................................................................... 13-313.3.3 AMEC’s Evaluation Procedure ........................................................................ 13-413.3.4 AMEC Evaluation of Votorantim QA/QC Data................................................. 13-513.3.5 AMEC Independent Resampling ..................................................................... 13-8

14.0 DATA VERIFICATION ................................................................................................................ 14-114.1.1 Drill Hole Collars.............................................................................................. 14-114.1.2 Hardcopy Support for Database...................................................................... 14-214.1.3 Sampling Consistency..................................................................................... 14-314.1.4 Database Checks ............................................................................................ 14-314.1.5 Collar and Survey Data ................................................................................... 14-414.1.6 Assay Data ...................................................................................................... 14-414.1.7 Lithology Data.................................................................................................. 14-4

14.2 Geological Interpretation................................................................................................ 14-414.3 Bulk Density Review ...................................................................................................... 14-5

15.0 ADJACENT PROPERTIES......................................................................................................... 15-116.0 METALLURGICAL TESTING AND MINERAL PROCESSING .................................................. 16-1

16.1 METALLURGICAL TESTWORK ................................................................................... 16-116.1.1 Sample Selection............................................................................................. 16-116.1.2 Metallurgical Testwork..................................................................................... 16-216.1.3 Conclusions ..................................................................................................... 16-5

16.2 PROCESSING PLANT DESIGN ................................................................................... 16-716.2.1 Process Selection and Basis........................................................................... 16-716.2.2 Plant Design Criteria........................................................................................ 16-8

16.3 Operating Cost Estimate.............................................................................................. 16-1716.4 Conclusions ................................................................................................................. 16-1816.5 Recommendations ....................................................................................................... 16-18

17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES............................................. 17-117.1 Geological Interpretation and Modeling ......................................................................... 17-1

17.1.1 Exploratory Data Analysis (EDA) .................................................................... 17-117.1.2 Variography ..................................................................................................... 17-217.1.3 Grade Estimation............................................................................................. 17-217.1.4 Block Model Validation .................................................................................... 17-417.1.5 Resources Classification and Parametrization................................................ 17-5

17.2 Conclusions and Recommendations ........................................................................... 17-1017.2.1 Conclusions ................................................................................................... 17-1017.2.2 Recommendations......................................................................................... 17-12

18.0 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES .................................................................. 18-1

19.0 OTHER RELEVANT DATA AND INFORMATION...................................................................... 19-120.0 INTERPRETATION AND CONCLUSIONS ................................................................................ 20-121.0 RECOMMENDATIONS .............................................................................................................. 21-122.0 REFERENCES ........................................................................................................................... 22-123.0 DATE AND SIGNATURE PAGE................................................................................................. 23-1

Aripuanã Property NI 43–101 Technical Report Project No. SA3053 TOC iii September 2007

TABLES

Table 1-1: Ambrex Mineral Resources*......................................................................................1-3Table 1-2: Arex Mineral Resources – Cut-off 1.8% ZnEq ..........................................................1-4Table 2-1: Site Visits and Areas of Responsibility for Technical Report ....................................2-2Table 4-1: Registered Exploration Permits .................................................................................4-4Table 11-1: Drill Program Summary ...........................................................................................11-1Table 11-2: Ambrex/Arex Significant Mineral Intersections in Drill Holes ..................................11-3Table 11-3: Babacu Significant Mineral Intersections in Drill Holes...........................................11-5Table 13-1: Practical Detection Limits ........................................................................................13-5Table 13-2: Summary Table for Twin and Duplicate Samples (Votorantim) ..............................13-7Table 13-3: Documented Values and Statistics of Votorantim CRMs........................................13-8Table 13-4: Summary of AMEC’s Re-sampling Program...........................................................13-9Table 13-5: AMEC´s Re-sampling – Anglo Twin Check Samples............................................13-10Table 13-6: AMEC´s Re-sampling – Votorantim Twin Check Samples ...................................13-11Table 13-7: AMEC´s Re-sampling – Votorantim Coarse Reject Check Samples....................13-12Table 13-8: AMEC´s Re-sampling – Votorantim Pulp Check Samples....................................13-13Table 14-1: List of Reviewed Drill Hole Collars (with GPS)........................................................14-1Table 14-2: List of Reviewed Drill Hole Collar Elevations ..........................................................14-2Table 14-3: List of Reviewed Drill Hole Files ..............................................................................14-3Table 14-4: Average Bulk Density of the Arex and Ambrex Mineral bodies ..............................14-5Table 16-1: Main Parameters and Grades for the Processing Plant..........................................16-8Table 16-2: Design Parameters for the Crushing Section..........................................................16-9Table 16-3: Design Parameters for the Grinding Section.........................................................16-10Table 16-4: Design Parameters for the Bulk Cu-Pb Flotation Section .....................................16-11Table 16-5: Design Parameters for Cu-Pb Separation Section................................................16-13Table 16-6: Design Parameters for Zn Flotation Section .........................................................16-14Table 16-7: Design Parameters for Thickening and Filtering Section......................................16-16Table 17-1: Estimation Search Radii-Ambrex.............................................................................17-3Table 17-2: Estimation Search Radii-Arex..................................................................................17-3Table 17-3: Minimum and Maximum Number of Samples .........................................................17-3Table 17-4: Resource Classification Parameters .......................................................................17-5Table 17-5: NSR Calculation for Copper Concentrate ...............................................................17-6Table 17-6: NSR Calculation for Lead Concentrate ...................................................................17-7Table 17-7: NSR Calculation for Zinc Concentrate ....................................................................17-8Table 17-8: Pit Optimization Parameters....................................................................................17-9Table 17-9: Ambrex Mineral Resources* (Rodrigo Marinho, 17 December 2006) ..................17-10Table 17-10: Arex Mineral Resources – Cut-off 1.8% ZnEq (Rodrigo Marinho, 17 December 2006)

17-10

Aripuanã Property NI 43–101 Technical Report Project No. SA3053 TOC iv September 2007

FIGURES

Figure 4-1: Aripuanã Project – Location Map ..............................................................................4-1Figure 4-2: Summary Land Tenure Map (provided by Votorantim on September, 19th 2007)....4-5Figure 4-3: Surface Rights Map (provided by Votorantim) ..........................................................4-6Figure 7-1: Geological Map of the Amazonian Shield (Source: Petrus, 2006)...........................7-2Figure 7-2: Aripuanã Project: Regional Geological Map (Source: Votorantim Metais) ...............7-3Figure 7-3: Regional Stratigraphic Relationships (Source: Votorantim Metais) ..........................7-4Figure 7-4: Geologic Map of the Aripuanã Property (Edited from Petrus, 2006) ........................7-5Figure 7-5: Schematic Longitudinal Cross Section (Source: Votorantim Metais) ......................7-7Figure 8-1: Schematic Representation of a Typical VMS Model (Source: Votorantim) ..............8-2Figure 9-1: Isometric View of Arex Deposit (Looking NE) ...........................................................9-3Figure 9-2: Isometric View of Ambrex Deposit (Looking SW) .....................................................9-3Figure 9-3: Drilling Grid and Geological Map of Babaçu Area (Source: Votorantim, 2006b)......9-4Figure 9-4: Vertical Section 7A through Babaçu Area (Source: Votorantim, 2006b) ..................9-5Figure 10-1: Exploration Targets with Soil Geochemistry grid (Source: Votorantim)..................10-3Figure 17-1: Vertical Section with Estimated Block Grades and Composites .............................17-4 APPENDICES

A – Legal Support Information


1.0 SUMMARY

1.1 Introduction

Karmin Exploration Inc. (“Karmin”) retained the services of AMEC International (Chile) S.A. (“AMEC”) to prepare a Technical Report (“the Report”) covering the Aripuanã polymetallic deposit (the Property) located in Mato Grosso, Western Brazil. Dr. Armando Simón, R.P.Geo (AIG), Principal Geologist, Rodrigo Marinho, P.Geo. (CPG-AIPG), Senior Geologist, from AMEC’s Santiago Office and Pierre Lacombe, P.Eng., Principal Process Engineer from AMEC’s Oakville office, served as the Qualified Persons responsible for the preparation of the Technical Report as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects (NI 43-101).

The scope of work entailed the review of pertinent geological, geophysical, and other data in sufficient detail to prepare a mineral resource estimate and the Technical Report. Only limited metallurgical testwork was available, and as such AMEC has provided a brief review of metallurgy. AMEC understands that the Technical Report will be be used by Karmin in support of filings with the TSX Venture Exchange.

Early in 2007, AMEC prepared a Scoping Study at the Aripuanã project for Votorantim, Karmin´s partner for the Aripuanã Joint Venture. This report is not public disclosure since it uses assumptions appropriate for Votorantim's internal planning and not for Karmin and is not 43-101 compliant. Some information and parameters used at this Technical Report were extracted from the Scoping Study and are supported by it.

1.2 Ownership

Karmin Exploration Inc. (“Karmin”) is an Alberta-incorporated company with a registered address at 133 Kendall St., Point Edward, Ontario – Canada and is publicly traded on the TSX-Venture Exchange under the symbol KAR.

On 3 February 2000, a joint venture (JV) between Mineração Rio Aripuanã Ltda. (“MRA”) and Anglo American Brasil Ltda (“Anglo American”) was established to explore for base and precious metals over an area adjacent to the town of Aripuanã in the state of Mato Grosso, Brazil. Anglo American and MRA hold 70% and 30% interests in the joint venture, respectively. Anglo American had to expend US$3.25 million in geological exploration on the property.

Karmin is the controlling shareholder of MRA in Brazil and through it owned 28.5% of the Project, SGV Merchant Bank owned 1.5% and the remaining 70% interest in the project is owned by Anglo American. Votorantim Metais (Votorantim, a division of the privately-held Votorantim Group) entered into the project in May 2004 and is currently


earning part of Anglo American’s interest. In 2007, Karmin bought out SGV Merchant Bank’s interests, raising its participation to 30%.

1.3 History

Recent history of the deposit began with Garimpeiros (artisanal miners) discovering gold mineralization in streams draining the area in the 1980s with a major gold rush between 1988 and 1992. Western Mining Corporation optioned the centrally located Expedito licences between 1992 and 1994, dropping them when they left Brazil. Anglo American Brasil Ltda acquired the surrounding properties in 1993 and carried out systematic exploration culminating in the discovery of the Arex deposit in 1995. Madison do Brasil optioned Expedito's claims and in turn optioned the property to Karmin. In 1996 Karmin (then called Ambrex) discovered the Ambrex deposit and surrounding mineralization at Upper & Lower Toddy, Massaranduba and Babaçu. In 1997, Noranda optioned the Karmin property, but dropped it in 1998. In 1999, Anglo American and Karmin formed a joint venture to explore the district jointly. Exploration by the Anglo American and Karmin JV included airborne geophysics and core drilling, and focused on the Arex, Ambrex and Mocotó areas.

Since 2004, Petrus Consultoria Geológica (Petrus), contracted by Votorantim that joined the JV in this year, has undertaken geological mapping, geochemical and geophysical surveys as well as re-logging of old core and additional core drilling.

Votorantim is currently conducting a drilling campaign on various exploration targets in the area including the newly discovered Babaçu mineralization.

1.4 Geology and Mineralization

The Aripuanã polymetallic deposits are considered to be typical of mineralization developed in volcanogenic massive sulphide, Noranda-type settings. The deposits are located on the central-southern portion of the Amazonic Shield. Paleoproterozioc and Mesoproterozoic lithostratigraphic units predominate in the region, and are assigned to the 1.85-1.55 Ga Rio Negro-Juruena geochronological province.

The lithological assemblage generally strikes NW-SE, and at surface generally dips between 35° and 70° NE. Felsic volcanic rocks predominate in the deposit area. Stratigraphic features have been offset by sinistral, east-west wrench faults.

Massive, stratabound sulphide mineralization, as well as vein and stockwork-type discordant mineralization, have been described on the Property and form two main elongate, basin-shaped mineralized zones, Arex and Ambrex. Up to five other,


continuous mineralized horizons occur to the east, and three additional zones occur to the west of Arex-Ambrex. The mineralized horizons extend for over 9 km total length and over 1 km average width.

The individual mineralized bodies have complex shapes due to intense tectonism. The Arex mineralized zone has dimensions of 1,400 m in length, 200 m down dip and 60 m of maximum thickness. The Ambrex mineralized zone extends for 1,050 m in length, 400 m down dip and has a 150 m maximum thickness.

Mineralization, in order of economic abundance, comprises zinc, lead, copper and accessory gold and silver.

1.5 Resource Estimate

AMEC reviewed the available drill holes database and Quality Assurance/Quality Control (QA/QC) data, as well as mineralization controls and geological interpretations for Arex and Ambrex deposits. New resource models, based on information available as at 17 December 2006, were created for those two zones.

For modeling purposes AMEC built lithological solids to represent the stratabound and stringer units and to control grade extrapolation. These interpretations were defined by Votorantim staff and reviewed by AMEC. AMEC used Ordinary Kriging (OK) as the grade interpolation methodology. Visual checks, swath plots and statistics were used to validate the grade interpolations. Mineral resources estimated by AMEC were classified based on the grade continuity observed in vertical section and horizontal plans, in addition to other estimation parameters that ensure a good grade estimation quality.

Mineral Resources have been estimated assuming underground mining methods for the Ambrex deposit and an open pit mining method for the Arex deposit. NSR (Net Smelter Return) was calculated to value the blocks and therefore allow a cut-off definition. Tables 1-1 and 1-2 show the Resource tabulation for Ambrex and Arex, respectively.

Table 1-1: Ambrex Mineral Resources* Tonnage Zn Pb Cu Au Ag (kt) (%) (%) (%) (g/t) (g/t)

Indicated 18,322 4.03 1.52 0.09 0.18 35.55 Inferred 3,528 4.29 1.51 0.07 0.25 41.89 *Resources reported for Ambrex are contained in the stope shapes defined using a NSR cut-off of US$ 20/t


Table 1-2: Arex Mineral Resources – Cut-off 1.8% ZnEq Tonnage Zn Pb Cu Au Ag (kt) (%) (%) (%) (g/t) (g/t)

Indicated 9,380 2.54 1.00 0.58 0.45 34.65 Inferred 2,245 2.54 1.02 0.51 0.60 20.37

1.6 Conclusions

AMEC reviewed the available geological, metallurgical and resource estimation information for the Aripuanã project. The following is a list of general conclusions reached by AMEC as a result of its review:

• AMEC recognizes that the interpretation respects the data recorded in the logs and the sections, as well as the interpretation from adjoining sections, and is consistent with the known characteristics of this deposit type. The lithologic model has been diligently constructed in conformance to industry standard practices.

• The geology of Ambrex and Arex deposits is reasonably well understood. Main mineralization controls (lithological and structural controls) have been identified, and have been used in domaining for grade estimation.

• Drilling and sampling procedures, sample preparation and assay protocols for the different drilling campaigns meet acceptable practices for core drilling in the exploration and mining industry.

• The Au, Ag, Cu, Pb and Zn assay data from the Votorantim exploration campaigns are sufficiently precise and accurate to be used for resource estimation purposes.

• AMEC does not consider the procedures used for determination of bulk density as best practice to be used for resource estimation purposes. However, considering the large amount of determinations, the low porosity of most local lithologies, and the large sample size used in the bulk density determinations, AMEC has used this information to estimate the average density of the main mineral types in the Arex and Ambrex deposits.

• It is possible to achieve a zinc recovery of 80% with a concentrate grade of 50% Zn, while processing ore at a feed grade of 4.32% Zn. The Ambrex testwork managed at best 70% recovery (78% within the zinc circuit), to a 47% Zn concentrate.

• A copper recovery of 75% is considered with a concentrate grading 25% Cu, for feed material grading 0.58% Cu – projections above the typical 74% recovery at 22% Cu achieved with Arex material (with 1.65-2.66% Cu heads), while Ambrex


ore may not contain sufficient copper to warrant its recovery when processed on its own most of the time.

• Lead recovery of 80% can yield a concentrate grade of 48% Pb, at average head grade of 2.04% Pb.

• Contact plots show hard contacts for zinc and lead between the waste, the stratabound and the stringer. AMEC has modeled hard contacts, except at Arex, where composites within the geological boundaries were used to estimate waste. There is a high risk of overestimation of the waste grade. AMEC expects that this overestimation will be compensated by the gain of mineralized material that was left outside the interpretations; however, for the sake of rigor, a hard contact should be modeled in future modeling efforts.

• Drilling density is sufficient to generate a reliable resource estimate at a global scale, but is insufficient to capture local features.

• In terms of grade estimation, the resource model is globally reasonable, and the stratabound and stringer estimates are globally unbiased.

• AMEC considered NSR (Net Smelter Return) calculations to value the blocks and run pit optimizations and define underground stopes.

• Votorantim is continuously assessing and acquiring surface rights on the Property, but to date no water rights have been acquired.

• Mineralization remains open in the areas in between Arex and Ambrex and at the bottom of both bodies. Other exploration targets like Massaranduba and Boroca present potential to add mineral resources to the property.

1.7 Recommendations

On the basis of the review and verifications conducted during the preparation of the Technical Report, AMEC has the following recommendations:

• AMEC recommends that RQD determination be conducted in the future.

• In order to adequately characterize the two deposits metallurgical performance, it is highly recommended to obtain fresh and representative samples of end members and testing representative composite samples formed with individual intercepts taken from a variety of drill holes within the Ambrex and Arex deposits.

• It is recommended to carry additional metallurgical test programs, especially in order to improve on the lead recovery outcome and selectivity against pyrite/pyrrhotite. Liberation analysis of the concentrate and reject streams should be completed via reflective microscopy to ascertain what are the mode of


occurrences of the concentrate contaminants and the type of losses in the tailings. Acid-base accounting (ABA) calculations and, if required, leaching tests on the tailings stream should also be completed to establish the acid-generating potential of the rejects.

• Due to the significant fluorite contents Arex 4 and Arex 5 metallurgical samples, AMEC recommends a more specific study of this mineral occurrence to avoid problems for the metallurgical process.

• Other metallurgical parameters, including material abrasivity and grindability, must also be obtained to adequately characterize the crushing and grinding properties of the deposit and further enhance the assessment of the expected power draws, and liner and grinding media wear rates.

• Some isolated drill hole intersections with grades were not considered in the interpretation and AMEC recommends revising the interpretations to incorporate this material into the stratabound and stringer bodies.

Regarding the continuation of the studies on the Property, AMEC recommends performing the following studies at a pre-feasibility level that will allow convertion of mineral resources into mineral reserves:

• Infill geological drilling • Geological model and resource estimate update • Geotechnical modeling • Hydrogeological investigations and drilling • Metallurgical testwork: follow up from previous testing by Lakefield Research and

CIMM (mineralisation type variability studies, bench scale testing, additional grindability testwork, thickening and filtration testwork, mass balances)

• Process and plant capacity definition • Mining studies including production plans. Consider open pit versus underground

trade-off studies • Facilities layout • Determination of capital and operating costs • Infrastructure studies: access roads, power, water requirements • Environmental assessment • Archaeological assessment • Tailings containment system design • Waste and tailings acid generation assessment. • Socio-economic assessment


2.0 INTRODUCTION

2.1 Introduction

Karmin Exploration Inc. (“Karmin”) retained the services of AMEC International (Chile) S.A. (“AMEC”) to prepare a Technical Report (“the Report”) on the Aripuanã polymetallic project (“the Property”), located in Mato Grosso, Western Brazil. This Report discloses updated mineral resources for the Property.

AMEC had previously conducted a mineral resource audit (AMEC, 2007a) of the Aripuanã project at the request of Votorantim Metais, the major partner at the Aripuanã joint venture. This audit comprised geological modeling and resource estimation.

The following persons served as Qualified Persons responsible for the preparation of the Report, as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects (CSA, 2005a, 2005b), and in compliance with Form 43-101F1 (CSA, 2005c).

• Rodrigo Marinho, P.Geo., Senior Geologist, AMEC Santiago office • Dr. Armando Simón, R.P.Geo., Principal Geologist, AMEC Santiago office • Pierre Lacombe, P.Eng., Principal Process Engineer, AMEC Oakville office

Sergio Muñoz, a mining engineer also from AMEC Santiago office, supported all taks run in Whittle® software.

In preparing this report, AMEC obtained background information on the Property from the reports, studies, maps, databases and miscellaneous technical papers listed in the References section at the conclusion of this report. Additional information and data for AMEC’s review and studies were obtained from Votorantim on site. AMEC understands that this report will be used by Karmin in support of filings with the TSX Venture Exchange.

2.2 Terms of Reference

The scope of work included an initial review of the available information, sampling, Quality Assurance-Quality Control (QA/QC), and geological interpretation, and conducted the resource modeling, estimation and classification according to generally accepted industry practices.

Site visits and areas of responsibility for this Technical Report are detailed in Table 2-1.


Table 2-1: Site Visits and Areas of Responsibility for Technical Report Site Visit Specialist

From To Activities Sections of Responsibility

(or Shared Responsibility)

Rodrigo Marinho P.Geo., QP

December 4, 2006

December 10, 2006

Review of drill core and re-intrepreted geological sections; geological modelling and resource estimation; preparation of the report

1 to 6, 8 to 10, 14, 15 and 17 to 23

October 14, 2006

October 16, 2006

Armando Simón R.P.Geo., QP

December 4, 2006

December 10, 2006

Data review, implementation of QA/QC program; geological re-interpretation; preparation of the report

1, 7, 11 to 14, 19, 20 and 22

Pierre Lacombe Pr.Eng., QP No site visit Metallurgical review;

preparation of the report 16, 19, 20 and 22

During the site visits, additional information was reviewed, including:

Data

• Topographic base • Hole locations • Drilling and sampling methods • Geological and geotechnical logging procedures • Sample preparation protocols • Assaying protocols for major elements • QA-QC programs • Density determination procedures and sufficiency of data by material type • Data entry, verification and archiving procedures.

Geological Interpretation

• Interpretation procedures • Interpretations in plan and two orthogonal sets of vertical sections.

Data Analysis

• Core recovery versus grade, need for adjustments or exclusion of data • Geological interpretations • Compositing procedures • Assessment of spatial variability, variography and analysis of continuity.


Database validation, verification of vertical and horizontal geological interpretation consistency, solids modeling and geostatistical analysis of the drill hole data were conducted. Rodrigo Marinho supervised the preparation of the geological models and mineral resource estimates. An assessment was also made of the quality of these data relative to industry standard practices. In addition, Pierre Lacombe summarized the metallurgical studies conducted to date.

AMEC is not an associate or affiliate neither of Karmin, nor of any associated company, or any joint-venture company. AMEC’s fees for this Technical Report are not dependent in whole or in part on any prior or future engagement or understanding resulting from the conclusions of this report. These fees are in accordance with standard industry fees for work of this nature, and AMEC’s previously provided estimates are based solely on the approximate time needed to assess the various data and reach appropriate conclusions.

This report is based on data provided and information known to AMEC as 31 September 2007. Although the last site visits were done prior to the 2007 drilling campaign, AMEC examined photos of the core drilled during this campaign and reviewed the respective drilling, sampling and QA/QC procedures and protocols.

All measurement units used in this report are metric, and currency is expressed in US dollars unless stated otherwise.


3.0 RELIANCE ON OTHER EXPERTS

The AMEC QPs, authors of this Technical Report, state that they are qualified persons for those areas as identified in the “Certificate of Qualified Person” attached to this report. The authors have relied, and believe there is a reasonable basis for this reliance, upon the following reports, which provided information regarding mineral rights, surface rights, permitting, and environmental issues in sections of this Technical Report as noted below.

3.1 Mineral Tenure

AMEC QPs have not reviewed the mineral tenure, nor independently verified the legal status or ownership of the Project area or underlying property agreements. AMEC has relied upon Votoranim experts for this information through the following documents:

• Email: “Aripuanã – Alvarás de Pesquisa”, from Cassia Yoko Gomi, dated 16 September 2007

• Email: “Processos DNPM Aripuanã”, from Cassia Yoko Gomi, dated 19 September 2007

3.2 Surface Rights, Access and Permitting

AMEC QPs have relied on information regarding Surface Rights, Road Access and Permits, as provided by Karmin/Votorantim experts through the following documents:

• Email: “Superficiarios”, from Gilmara Patricia Barros Carneiro, dated 30 August 2007

3.3 Environmental

According to the Brazilian law, all exploration permits contain an environmental section and Votorantim´s expert, Cassia Yoko Gomi, confirmed that permits were granted at this first level. Additional and more robust environmental permits will be necessary for further studies and Votorantim is working on preparing the required documentation.

At this exploration level, water required for drilling is provided by water trucks and therefore no water concessions were claimed so far. A hydrological study will be prepared for the next phases of the project.


AMEC has not reviewed the land tenure, nor independently verified the legal status or ownership of the properties or any underlying option agreements. The results and opinions expressed in this report are based on AMEC’s field observations and the geological, legal and technical data listed in the References and Appendices. While AMEC has carefully reviewed all of the information provided by Karmin and its partners, and believes the information to be reliable, AMEC has not conducted an in-depth independent investigation to verify its accuracy and completeness.

A copy of the declaration about the joint venture agreement, dated of 6 September 2007, in between Votorantim and MRA, provided by Karmin´s lawyers in Brazil (Fraga, Bekierman and Pacheco Neto Advogados) is attached in Appendix A.

AMEC has relied on the documentation supplied by Karmin’s lawyer (Fraga, Bekierman and Pacheco Neto Advogados) and Votorantim (Karmin´s partner) for a summary of the mineral titles and agreements on ownerships of the mining, exploration, water and land concessions.


4.0 PROPERTY DESCRIPTION AND LOCATION

4.1 Location

The Aripuanã Pb-Zn-Cu-Au deposit is located in the Mato Grosso state, Western Brazil, 700 km NNW of Cuiabá and 1,400 km NNW of Brasilia (Figure 4-1). The Property is located at approximately 10°2'54''S and 59°29'44''W, UTM 21L zone (South American 1969 datum), in the Aripuanã 1:250,000 topographic sheet (SC.21-Y-A).

Figure 4-1: Aripuanã Project – Location Map

4.2 Company Ownership and Agreements

Karmin Exploration Inc. (“Karmin”) is an Alberta-incorporated company with a registered address at 133 Kendall St., Point Edward, Ontario – Canada and is publicly traded on the TSX-Venture Exchange under the symbol KAR. The company has 38,453,591 shares outstanding and 41,453,591 shares fully diluted.

ARIPUANÃ

N


On 3 February 2000, a “contract of association” was signed between Mineração Rio Aripuanã Ltda. (“MRA”) and Anglo American Brasil Ltda (“Anglo American”) to explore for base and precious metals in areas adjacent to the town of Aripuanã in the state of Mato Grosso, Brazil. Anglo American and MRA held 70% and 30%, respectively. Anglo American had to expend US$3.25 million, by 30 June 2003, in geological exploration on the property. Mineração Dardanelos Ltda (Dardanelos) was set for the purpose of representing this JV.

Karmin is the controlling shareholder of MRA in Brazil. At the time of database close-off, MRA owned 28.5% of the Project, and SGV Merchant Bank owned 1.5%, with the remaining 70% interest held by Anglo American.

The contract of association was amended in May 2004 to allow Votorantim’s participation. By the agreement Votorantim commited to spend US$1.6 million from May 2004 to December, 31 2005 in the exploration targets and once this amount is invested, 70% of Anglo American´s participation in Dardanelos will be transferred to Votorantim. The Anglo American interest is currently being earned by Votorantim Metais (Votorantim, a division of the privately-held Votorantim Group).

According to Karmin´s attourney company (see document in Appendix A), Votorantim has already negotiated the 30% participation remaining of Anglo in Dardanelos.

In 2007, Karmin bought out SGV Merchant Bank’s interests, raising its participation to 30%.

According to the JV document signed in between MRA and Anglo American, 100% of the gold mineralization in the oxide material and 30% of the gold in sulphide material belong to MRA. AMEC verified this information with Karmin´s attourney company.

Votorantim is fully funding the project to bankable feasibility phase. Karmin is not required to contribute until a bankable feasibility study is completed, at which time Karmin contribute, on a pro-rata basis, towards bringing Aripuanã into production.

AMEC has not reviewed the legal status of the agreements between Karmin and the above mentioned Companies and Owners. AMEC has relied on the Brazilian attorneys Fraga, Bekierman and Pacheco Neto Advogados according to their letter dated of 6 September 2007 for a summary of the legal status of the agreements between Karmin and the above mentioned Companies and Owners (See Section 3.0).


4.3 Mineral Claims

AMEC has relied on the documentation supplied by Karmin’s lawyer (Fraga, Bekierman and Pacheco Neto Advogados) and Votorantim (Karmin´s partner).for a summary of the mineral titles and agreements on ownerships of the mining, exploration, water and land concessions. A complete list of exploration concessions and detailed land tenure maps are presented in Table 4-1 and Figure 4-2.


Table 4-1: Registered Exploration Permits Process Year Type Status Owner Area (ha) Original Date

of License Updated on Valid

for Issue Date of Final

Exploration Report

867381 1991 Exploration Permit Report Issued MINERAÇÃO DARDANELOS LTDA. 1,000.00 15-Mar-95 1-Feb-00 3 years 3-Feb-03 866173 1992 Exploration Permit Report Issued MINERAÇÃO DARDANELOS LTDA. 1,000.00 9-Aug-96 not requested 3 years 6-Aug-99 866174 1992 Exploration Permit Report Issued MINERAÇÃO DARDANELOS LTDA. 1,000.00 9-Aug-96 not requested 3 years 6-Aug-99 866565 1992 Exploration Permit Report Issued MINERAÇÃO DARDANELOS LTDA. 974.99 15-Mar-95 22-Mar-00 3 years 3-Feb-03 866569 1992 Exploration Permit Report Issued MINERAÇÃO DARDANELOS LTDA. 639.91 8-Jun-95 8-Feb-00 3 years 10-Feb-03 866570 1992 Exploration Permit Report Issued MINERAÇÃO DARDANELOS LTDA. 1,000.00 15-Mar-95 8-Feb-00 3 years 10-Feb-03 866057 2003 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 842.79 10-Jun-03 11-Apr-06 3 years not issued 866058 2003 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 417.42 23-Nov-06 not requested 3 years not issued 866069 2003 Exploration Permit In process MINERAÇÃO DARDANELOS LTDA. 1,000.00 not published not requested N/A not issued 866070 2003 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 930.46 25-Nov-03 25-Sep-06 3 years not issued 866071 2003 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 341.12 7-Mar-05 not requested 3 years not issued 866386 2003 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 412.20 18-Dec-03 19-Oct-06 3 years not issued 866530 2003 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 979.47 21-Mar-05 not requested 3 years not issued 866631 2004 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 821.69 21-Mar-05 not requested 3 years not issued 866721 2004 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 482.06 8-Sep-05 not requested 3 years not issued 866978 2005 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 295.23 15-Sep-06 not requested 3 years not issued 866342 2006 Exploration Permit Active MINERAÇÃO DARDANELOS LTDA. 465.63 9-May-07 not requested 3 years not issued 866235 2007 Exploration Permit In process MINERAÇÃO DARDANELOS LTDA. 9,829.78 not published not requested N/A not issued 866236 2007 Exploration Permit In process MINERAÇÃO DARDANELOS LTDA. 7,663.49 not published not requested N/A not issued 866588 2005 Exploration Permit Active ANGLO AMERICAN BRASIL LTDA. 1,000.00 23-Jun-05 not requested 3 years not issued 866589 2005 Exploration Permit Active ANGLO AMERICAN BRASIL LTDA. 4,679.32 4-Aug-05 not requested 3 years not issued 866590 2005 Exploration Permit Active ANGLO AMERICAN BRASIL LTDA. 9,369.90 5-Aug-05 not requested 3 years not issued 866603 1993 Exploration Permit Active ANGLO AMERICAN BRASIL LTDA. 10,000.00 21-Feb-00 23-Dec-05 3 years not issued 866604 1993 Exploration Permit Active ANGLO AMERICAN BRASIL LTDA. 10,000.00 21-Feb-00 23-Dec-05 3 years not issued 866744 1993 Exploration Permit In process ANGLOGOLD ASHANTI BRASIL LTDA 10,000.00 not published not requested N/A not issued

866742 1993 Exploration Permit In process ANGLOGOLD ASHANTI BRASIL LTDA 3,997.32 not published not requested N/A not issued


Figure 4-2: Summary Land Tenure Map (provided by Votorantim on September, 19th 2007)

866744/1993

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992

867381/1991

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30/2

003

866057/2003

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210000 .000000

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866742/1993

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4.4 Surface Rights

The surface rights are currently being negotiated by Votorantim. Figure 4-3 shows the surface rights updated to September 2007 with the areas already purchased by Anglo American and Votorantim. The areas belonging to Anglo are not a problem since rights will be transferred to Votorantim according to the JV contract.

In accordance with the Brazilian Mining Code, “any titleholder of a mining concession, whether for exploration or exploitation, shall have the right to establish an occupation easement over the surface land, as required for the comfortable exploration or exploitation of its concession. In the event that the surface property owner is not agreeable to grant the easement voluntarily, the titleholder of the mining concession may request said easement before the Courts of Justice, who shall grant it upon determination of the compensation for losses as deemed fit".

Figure 4-3: Surface Rights Map (provided by Votorantim)

Votorantim

Anglo N

Acess Road

Aripuanã River


5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility

The project is linked to the closest town, Aripuanã, by a 25 km unpaved road that is well-maintained during the dry season. Aripuanã can be accessed from the Mato Grosso state capital of Cuiabá by road through the townships of Engenho (67 km, BR-163 highway), Campos Novos dos Parecis (283 km, MT-364 highway), Juína (326 km, non-paved road), and Aripuanã (259 km, MT-174, non-paved road), totalling 935 km or 16 hours drive. The town is also serviced from Cuiabá by few weekly regular air connections (approximately 3 hours flight), as well as by charter flights when required.

5.2 Physiography

The Property is located in the Amazonas basin. The area is characterized by a well-developed drainage system, with water courses flowing into the Aripuanã and Branco rivers.

The natural surface is formed by at least four distinct geomorphologic units. The lower one corresponds to the flooding plain of the Vermelho, Tucunã, Amarelo and Furquim rivers; the second surface corresponds to large eroded areas, with homogeneous textures, the third surface is related to small hills mainly associated with granitic intrusions, and the fourth surface corresponds to the Serra Morena and Chapada Dardanelos plateaus. However, the local altitude at the Aripuanã deposit does not exceed 350 m.

5.3 Climate, Vegetation and Fauna

The climate is hot and humid, with well marked dry (April to September) and wet (October to March) seasons. It is classified as an Aw type-climate, using the Köppen classification1,. The monthly average temperatures range from 20°C to 30°C, with 24°C as yearly average. The natural humidity averages 80%. Annual precipitation reaches 2,970 mm2.


The original vegetation forms two layers: an upper, with over 20 m high trees, and a lower one, with low-to medium-size plants not exceeding 10 m in height. However, much of the area in the region has been deforested, and is currently used for agricultural purposes.

The fauna at the project area comprises several species of birds, reptiles (snakes and lizards) and small to medium-size mammals such as deer and wild boar.

5.4 Local Resources and Infrastructure

The closest population centre to the Aripuanã project is the town of Aripuanã, with a population of approximately 17,000 inhabitants3. This town is able to support basic needs (food, accommodations, communications, fuel, hardware, labour) for all stages of exploration, and most of the needs for starting up a mining operation.

Aripuanã has a small airport, with an unpaved runway, that may be used only by small airplanes. Currently there are few scheduled services to this small airport, the other way to access the city by air is by charter flight. The flight from Aripuanã to Cuiabá, a distance of about 700 km, takes about two and a half hours.

The existing road that connects Aripuanã town to the Property internal access road is wide enough to allow large trucks that would be necessary for transporting equipment and materials to the project area if the project is developed. Although unpaved, the road was in reasonable condition at the time AMEC visited the area, despite the rainy season. At this preliminary evaluation stage, the existing bridges do not appear to require any reinforcements or expansions; however, AMEC recommends a detailed profile study be undertaken along the complete 20 km extension of the road. The internal access road requires considerable expansion and enhancements and AMEC (2007b) considers that some 5 km would need to be rebuilt prior to any planned project implementation.

The Dardanelos power plant, located on the Dardanelos waterfall just besides Aripuanã township, is to be constructed by the end of 2009, with power generation beginning in 2010. This plant will have an installed capacity of 260 mW and may be a power source for the project. The plant belongs to the Brazilian National and Mato Grosso State water departments, and will be handled by a consortium of companies. AMEC could not obtain detailed and precise information about the power availability to the market, since the contracts are still to be negotiated. A power line from the power


plant to the project site will be needed, if the project is to be advanced to implementation stage. According to Karmin´s website this power line would be 12 km long; however, a more detailed study should define this properly.

AMEC did not review water availability for the Property; however, from the observation and measurements from drill holes, there is a reasonable expectation of finding underground water sources. This water could be used as process water, assuming it meets appropriate process water requirements. AMEC recommends a hydrological study to be completed in order to identify the water table, levels of recharge and availability. The specific and necessary permits will have to be requested, and a hydrological study is a common requirement for having the licenses granted.

Cellular communication is available.

Accommodation is available in the local hotels; however, the availability of rooms may not be enough for the demand during any potential project construction and implementation phases.


6.0 HISTORY

The discovery of gold mineralization in the 1700s by prospectors lead to the construction of a small fort to protect the portage at Aripuanã´s Cachoeira de Andorinhas (Swallow Falls). No more details of this period of extraction are available.

During 1980s small scale gold extraction by “garimpeiros”, mainly panning streams in the district. From 1988 to 1992 a major gold rush by “garimpeiros”, with up to 2000 workers at any one time. Expedito's Pit, where gold-rich gossans and quartz lenses cropped out, discovered and hard rock mining by Expedito and partners continues until pit collapses originated intense “garimpo” activity in the area, mainly around the Cava do Expedito.

Western Mining Corporation (WMC) options property in 1992 and then drops it when WMC withdraws from Brazil in 1994.

In 1995, Anglo American (Anglo) claim areas surrounding Expedito's Pit. Anglo discovers Arex Deposit. Madison do Brasil (now Thistle Mining) options Expedito's claims and in turn optioned the property to Karmin.

Karmin (Ambrex), in 1996, discovers Valley Deposit (Ambrex) along with the Upper & Lower Toddy, Massaranduba and Babaçu. During this and the following year, Karmin drills 19 holes and continue with ground geophysics. Anglo continues to define Arex target. During 1997 and 1998 period, Karmin options property to Noranda who drills 24 holes and extends Ambrex to the southeast: Drills Babaçu and Massaranduba showings without success. A further 8 holes are drilled seeking near surface gold mineralization.

After signing the Anglo-Karmin joint venture contract in 2000, Anglo carries out in the following four years an extensive exploration program, including a SPECTRUM airborne geophysical survey, and several thousand metres of drilling.

In 2004, Votorantim Metais, the fifth largest zinc producer in the world, replaces Anglo-American as lead JV partner and project operator. Completes 22 drill holes as a Phase I diamond drill program totaling 8,682 m.

Vorantim Metais commences 15,000 m Phase II drilling program, with 28 holes totaling 7,147 m completed by the end of year 2005 and continues this program during 2006.

In early 2006, Petrus prepared a mineral resource estimate which has been superceded by the estimate presented in Section 17 of this report, so it is not included here.


During 2007, Votorantim focussed efforts on extending the mineralization to the south east of the Ambrex deposit culminating with the discovery of the Babaçu massive sulphide announced in July 2007. This target is still being drilled and no resource has yet been estimated. Votorantim also drilled 7 infill holes in the Ambrex area.


7.0 GEOLOGICAL SETTING

7.1 Introduction

The following discussion on the regional and local geology has been summarized from Leite et al. (2005), Petrus (2006) and Karmin (2006).

7.2 Regional Geology

The Aripuanã deposits are located on the central-southern portion of the Amazonic Shield. Paleoproterozoic and Mesoproterozoic lithostratigraphic units predominate in the region, and belong to the 1.80-1.55 Ga Rio Negro-Juruena geochronological province (Leite et al., 2005; Figure 7-1).

The Property is underlain by a meta-volcano-sedimentary sequence, known as Aripuanã Meta-Volcano-Sedimentary Sequence, (Aripuanã Sequence) that is interpreted as a greenstone belt. The sequence is associated with a major intra-continental suture defining the margin of the Caiabís graben in the south. This lineament was disrupted by the emplacement of the Rio Branco granite. The Aripuanã sequence is bounded by granites and gnaisses of the Xingu Complex in the north through interrupted tectonic contacts (Figure 7-2). The relationships between the Aripuanã sequence, the Xingu Complex and the Caiabís Group are presented in Figure 7-3.

The Aripuanã Sequence comprises three major meta-volcano-sedimentary units:

• a basal unit, represented by felsic and intermediate flows with tuffaceous layers • an intermediate, transitional felsic volcanic unit • an upper sequence, represented by inter-layered meta-argillites, meta-tuffs and

meta-cherts.

These units form a broad semicircular shape surrounding the Rio Branco granite. The mineralized zones are located in the north-eastern portion of the arc (Figure 7-2). Post-mineral overthrust faults, dipping north and northeast, originated complex imbricated sheets, which represent the most characteristic structural feature of the area. Typically, the imbricated sheets include portions of the lower and middle volcanic units, and the upper meta-sedimentary unit, but often the contact relationships are hidden by extreme deformation.


Figure 7-1: Geological Map of the Amazonian Shield (Source: Petrus, 2006)

Aripuanã


Figure 7-2: Aripuanã Project: Regional Geological Map (Source: Votorantim Metais)


Figure 7-3: Regional Stratigraphic Relationships (Source: Votorantim Metais)

Caiabís Group

Basalts and diabases

Sandstones and conglomerates

Late to Post-tectonic granites

Syeno to monzo-granites

Syn-tectonic granites

Deformed syeno to monzo-granites

Aripuanã Volcano-Sedimentary Sequence

Chlorite schist Felsic sub-volcanic rocks

Carbonatic pelitic rocks Felsic meta-volcanic rocksFelsic pyroclastic rocks

Xingu Complex

Granite-gneiss terrain

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ICCaiabís Group

Basalts and diabases

Sandstones and conglomerates

Late to Post-tectonic granites

Syeno to monzo-granites

Syn-tectonic granites

Deformed syeno to monzo-granites

Aripuanã Volcano-Sedimentary Sequence

Chlorite schist Felsic sub-volcanic rocks

Carbonatic pelitic rocks Felsic meta-volcanic rocksFelsic pyroclastic rocks

Xingu Complex

Granite-gneiss terrain

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7.3 Local Geology

Felsic volcanic rocks predominate in the deposit area, and comprise porphyritic lavas, dacitics to rhyolitics, with quartz phenocrysts and feldspar laths set in a fine-grained sericitic matrix. Interbedded felsic lapilli and crystal tuffs and finely-foliated ash tuffs grade into the overlying sediments (Leite et. al., 2005).

The sedimentary sequence, about 500 m thick, consists of fine- to medium-grained argillites, siltstones, arkoses and greywackes, with interbedded crypto-crystalline exhalites. The exhalites are finely laminated, and usually occur within discontinuous lenses.

The lithological assemblage generally strikes NW-SE at Arex and Ambrex zones (Figure 7-4), and at surface generally dips between 35° and 70° NE. Stratigraphic features have been offset by sinistral, east-west wrench faults, traced by mapping and from geophysical interpretations.


Figure 7-4: Geologic Map of the Aripuanã Property (Edited from Petrus, 2006)

BASE LINE

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FPAR055

FPAR056

FPAR058

FPAR059

FPAR060

FPAR061

FPAR062

FPAR063

FPAR065

FPAR066

FPAR068

FPAR069

FPAR070

FPAR071

FPAR072

FPAR073

F PAR074

FPAR076

BASE LINE

8884000

8886000

8885000

SA Aluvial

GS Gossan

AS Siltites, Argilites, Carbonatic Philytes

QV Quartz veins

Code Colour Lithology

ZH Hydrothermal Zone

FV Volcanics

Falha Transcorrente Dextral

Falha Transcorrente Sinistral

Thrust Fault

Banding S1/S0 with dip

Foliation S2 with dip

BASE LINE

MASSARANDUBA

Legend

Fault

3300SSE

2.90

0NW

500NNW

1000

SE

3.900

NW

00

8884000

8887000

8890000 8890000

8889000

8888000

8887000

8886000

8885000

229000

230000230000

229000

228000

227000

226000

225000

228000

227000

226000

225000

224000

8888000

8889000

224000

BABACU


Massive, stratabound sulphide mineralization, as well as vein and stockwork-type discordant mineralization, have been described from the Property. The stratabound bodies, consisting of disseminated to massive pyrite and pyrrhotite, with well-developed sphalerite and galena mineralization, is commonly associated with the contact between the middle volcanic and the upper sedimentary units. Discordant, stringer pyrrhotite-pyrite-chalcopyrite mineralization is usually located in the underlying volcanic units, or intersecting the massive sulphide lenses, and has been interpreted as representing feeder zones. Where outcropping, the sulphide mineralization has been completely oxidized, forming gossan bodies. These gossans commonly mark the position of overthrust faults. The gossans are weathered sulphide-bearing units suggesting underlying sulphide bearing rocks in the vicinity; in the property they are up to 350 metres long, and were identified during the initial exploration campaigns. All five of the identified mineralized zones have surface gossans associated with them.

Two main elongate, basin-shaped mineralized zones, Arex and Ambrex, have been outlined in the central part of the area (Figure 7-4). Up to five continuous mineralized horizons occur to the east of Arex-Ambrex, and at least three zones occur to the west. The dimensions of the known mineralization are least 9 km total length and about 1 km in width.

The individual mineralized bodies have complex shapes due to intense tectonism. Stratabound mineralized bodies tend to follow the local folds, but local-scale, tight isoclinal folds are frequently observed, usually orienting their axes parallel to major inverse faults and causing rapid variations in the dips. The Arex mineralized zone extends for 1,400 m length, 200 m down dip and has a 60 m maximum thickness. The Ambrex mineralized zone extends for 1,050 m in length, 400 m down dip and has a 150 maximum thickness (Figure 7-5).

The most recent discovery, Babaçu body, seems to be an extension southwards of Ambrex. The 16 drill holes drilled in this area are still not enough to define an adequate shape of the mineralized zone neither estimate mineral resources; however, some intervals (see Section 11.3) hit significant mineralization intersections.


Figure 7-5: Schematic Longitudinal Cross Section (Source: Votorantim Metais)

Zinc is the most important economic element, averaging, from drill holes, 3.1% in Arex and 2.9% in Ambrex, and locally reaching up to 16.0%. Lead grades average 1.2% Pb, with up to 10.0% in certain intersections. Copper grades average 0.6% Cu, although individual samples reach 16.0%. Other important constituents are Ag (average 25 g/t), usually linked to high Pb values, and Au (average 0.2 g/t), predominantly asssociated with the stringer mineralization.

1,700m of prospective horizon with drilling indications of VHMS

mineralisation


8.0 DEPOSIT TYPE

The Aripuanã deposits are considered to be examples of Volcanogenic Massive Sulphide (VMS) style mineralization.

The most common feature among all types of VMS deposits is that they are formed in extensional tectonic settings, including both oceanic seafloor spreading and arc environments, from discharge of hot, metal-rich hydrothermal fluids on to the sea floor. More rarely, the mineralization can form a result of shallow sub-seafloor replacement (Wilton, 1998a).

Immediate host rocks are typically felsic or basic volcanics or fine-grained, clay-rich sediments. VMS deposits are typically classified on either base metal content, gold content or host-rock lithology (Galley et al., 2007).

Most VMS deposits have two components, a stratabound body, and a stringer system. The mound-shaped to tabular, stratabound body is composed principally of massive (>40%) sulphide, quartz and subordinate phyllosilicates and iron oxide minerals and altered silicate wallrock. Discordant to semi-concordant stockwork veins, or stringers, and disseminated sulphides typically underlie the stratabound mineralization, but can also be present in the immediate hangingwall. The stockwork vein systems are typically surrounded by distinctive alteration halos, which may extend into the hanging-wall strata above the VMS deposit (Galley et al., 2007).

The deposits typically consist of iron sulphides (pyrite, pyrrhotite) with chalcopyrite, sphalerite, and galena as the principal economic minerals. Barite and cherty silica are common gangue accessory minerals. The distribution of metals and sulphide types is commonly zoned on the scale of an individual lens and in clusters of lenses. Individual deposits also cluster on a district scale.

Figure 8-1 displays a typical section through an idealized VMS deposit.


Figure 8-1: Schematic Representation of a Typical VMS Model (Source: Votorantim)

Key: py = pyrite, sp = sphalerite, po = pirrhotyte, cp = chalcopyrite, mag = magnetite, zn = zinc, pb = lead.


Votorantim geologists have interpreted a portion of the Aripuanã Property as prospective for, and hosting, Sedex-style mineralization, but additional work is required to confirm the interpretation.

A summarized description of a Sedex deposit, derived from Wilton (1998b), is included below. .

“Sedimentary exhalative deposits grade between 4% and 30% combined lead and zinc, with tonnages of up to 200 million tonnes. Examples are the giant deposits at Sullivan, in British Columbia, contained 170 million tonnes of ore with 5.5% zinc and 5.8% lead; Mt. Isa in Australia, contains 125 million tonnes grading 6% zinc and 7% lead; Broken Hill in Australia contained 300 million tonnes grading 12% zinc and 13% lead; and Red Dog in Alaska has 77 million tonnes with 17.1% zinc and 5% lead.

Unlike volcanic-related massive sulphide deposits, Sedex deposits contain no copper, though they do have significant amounts of lead, compared with most (but not all) Mississippi Valley-type deposits. Besides lead and zinc, Sedex deposits also produce silver.

The targets of first-phase exploration are usually the large sedimentary basins in which these deposits tend to appear. The basins range in age from 300 million to 1.8 billion years. Sedex deposits generally occur in smaller, fault-bounded sub-basins within a larger basin. Follow-up targets include horizons that are the stratigraphic equivalents of known deposits, and mineralized veins and stockworks that may have acted as feeder zones. Sedimentary fill within prospective basins would include sulphur-rich shale-argillite clastic sedimentary rocks, which are interlayered with chemical sedimentary rocks, including chert, carbonate (calcite, siderite and ankerite) and barite.

Other prospective exploration targets in the search for Sedex deposits are fault-bounded sub-basins, since hydrothermal exhalations were controlled by fluid movement along these faults. Synsedimentary faults can be identified by the presence of synsedimentary fault breccias, which are composed of sedimentary fragments cemented by more sedimentary material. Because the sulphide horizons are large and considerably more conductive and denser than the host sedimentary rocks, geophysics can often locate a deposit. Such geophysical exploration often includes airborne and ground surveys for magnetic, gravity and electromagnetic properties, as well as ground-based induced-polarization surveys.

Another initial exploration technique could be regional geochemical surveys for enhanced lead, zinc and barium in regions underlain by suitable sedimentary rocks.


Vent regions have geochemical halos in lead, zinc and silver, the values of which increase toward the vent. Therefore, if a regional geochemical survey detects enhanced concentrations of lead, zinc and silver, follow-up surveys for these metals could be used to track down a vent and, hence, possible massive sulphides.”


9.0 MINERALIZATION

The Aripuanã property was initially drilled and interpreted by Anglo America Brasil and Karmin and the interpretations further refined during the Votorantim 2006 exploration program. AMEC geologists contributed to the interpretations used in the most recent geological models of Ambrex and Arex zones.

The polymetallic mineralization at Aripuanã Property is characterized by massive and stratabound sulphide bodies with significant amount of sphalerite and galena, occurrences of pyrite, chalcopyrite, pirrhotyte and lesser amounts of magnetite and arsenopyrite, depending on the location in the mineralization system.

The sphalerite, that hosts most of the Zinc mineralization, occurs in milimetric-centimetric bands. Where the suit Py+Po+Cpy occurs, massive and disseminated sulphide bodies present subordinated amounts of sphalerite.

Significant thick quartz veins with pyrite, sometimes of metric dimensions, cut the different lithotypes and, in general, show sericite.

Hydrothermal alteration is common in Arex, Ambrex and Babaçu zones and according to Leite et al. (2005) present a zonal and symetrical standard:

• External zone: biotite porphyroblast ic in a fine matrix with chlorite and biotite:

• Intermediate zone: tremolite-chlorite calcio-silicated association showing intense carbonatation and silification; the zone is characterized by mosked textures and, sometimes, brecciated with amphibol porphyroblast;

• Internal zone: association of chlorite and porphyroblastic magnetite substituting the sulphide matrix.

Practically, the totality of zinc is found in the form of sphalerite, the lead as galena and the copper as chalcopyrite. The pyrrhotite occurs free already in fraction +0.074mm. The sphalerite, in some cases, is seen as grains mixed with galena and chalcopyrite. Galena crystals above 0.074mm are mostly free (85-90%) but can be observed within the ganga and sphalerite.

Poli (2006) describe fluorite in metallurgical samples from Arex deposit. Due to the significant mass proportion of 11% and 16% in Arex 4 and Arex 5 samples, respectively, AMEC recommends a more specific study of this mineral occurrence because of metallurgical process.


Within the limits of the current drilling grid, two deposits are interpreted in the area, Arex and Ambrex. The Babaçu, Massaranduba and Arpa bodies are still under geological investigation.

Mineralization at Arex strikes at about 110 degrees azimuth, extending over a 1,400 m strike. Upper portions of the deposit tend to be near-vertical, but lower portions dip at -55 degrees to the northeast. Mineralization thicknesses average 30 m, reaching a maximum of 60 m. The main mineralized zone lies between 263 m and -23 m elevations, coming close to cropping out in the upper reaches.

The Ambrex deposit is located about 1,300 m southeast of Arex. Mineralization strikes at about 120 degrees azimuth on the UTM grid, and has a strike extent of about 1,050 m on current drilling. Dip varies between -70 and -90 degrees to the northeast. Mineralization thicknesses typically range between 10 m and 50 m, with a maximum of 150 m. Nominal surface elevation is approximately 195 m at Ambrex, and mineralization extends between 135 m and -213 m elevations. This equates to an upper depth of about 60 m to a lower depth of about 350 m, below the ground surface. The deposit contains a non-mineralized zone that separates two massive/stringer zones.

For both deposits, massive and stockwork (or stringer) styles of mineralization were interpreted and modeled. Ambrex contains a better-developed stringer zone than Arex; however stringer-style mineralization is less continuous than the massive sulphide mineralization in both deposits. Figures 9-1 and 9-2 show isometric three-dimensional views of the interpreted models for Arex and Ambrex deposits respectively.

Figure 9-3 shows a plan view of the Babaçu drilling grid and geological map. In this plan view a vertical section is indicated and the geological interpretation of this section is seen in Figure 9-4. The geological interpretation was prepared by Votorantim geologists.


Figure 9-1: Isometric View of Arex Deposit (Looking NE)

Figure 9-2: Isometric View of Ambrex Deposit (Looking SW)


Figure 9-3: Drilling Grid and Geological Map of Babaçu Area (Source: Votorantim, 2006b)

Section 7A

Aripuanã Property NI 43–101 Technical Report Project No. SA3053 Page 9-5 Septembre 2007

Figure 9-4: Vertical Section 7A through Babaçu Area (Source: Votorantim, 2006b)

Potential Potential blind blind targettarget

Potential Potential blind blind targettarget


10.0 EXPLORATION

The following description of the exploration methodology is mainly based on discussions with Votorantim and Petrus geologists during AMEC’s site visits.

10.1 Anglo American-Anglo American/Karmin

Between 1993 and 1999, Anglo American explored the Arex area to the west of Karmin’s ground and the Mocoto area to the south east. Karmin and Noranda (in 1997-1998) covered the Ambrex, Babaçu and Massaranduba areas. After 1999, when Anglo American and Karmin formed a joint venture they conducted geological mapping, geochemical and geophysical surveys, including a Spectrum airborne geophysical survey. The companies drilled 45,347 m in 146 diamond drill holes mainly at the Arex and Ambrex deposits and 4,665 m in 59 RC holeswere drilled by Anglo American mainly in the Cabeça Branca area south east of the main mineralization, where a gold bearing oxide resource was identified. The oxide rights at Aripuanã are owned by Karmin, and are not considered in this report.

No details were supplied to AMEC for the Anglo American and Anglo American/Karmin survey programs and methods. Details of the drilling, sampling and assaying methods are described in Sections 11 to 13.

10.2 Votorantim

In 2004, Votorantim took over from Anglo American as project operator, and commenced a detailed geological, geochemical and geophysical exploration program, which included additional drilling.

Geoambiente Sensoriamento Remoto (Geoambiente) prepared a topographic map in 2005, based on photogrametric restitution of two pairs of Ikonos panchromatic images with 1 m spatial resolution (173214-0/173214-3, and 173214-1/173214-2), and with ground control on geodesic IBGE stations. Internal control points were surveyed through differential GPS stations. The 195 km2 topographic map has 1:10,000 altimetric and 1:5,000 planimetric scales, and 5 m contour lines (plus additional 1 m interpolations). A detailed report was prepared by Geoambiente (Geoambiente, 2005).

Integração Geofísica (Intergeo) compiled and integrated in 2004 all previous geological, geophysical and geochemical data to allow a more complete interpretation of the regional and local geology, and the identification of local exploration targets (Intergeo, 2004). A digital terrain model was prepared, and was integrated with


airborne gamma-spectrometric (K-Th-U channels), magnetometric and electro-magnetic (time domain EM) survey data, soil geochemical surveys, regional and local geological information, including most of the data previously obtained by Anglo American-Karmin. As a result of this study, five groups of targets were identified in addition to Arex, Ambrex and Vale dos Sonhos, and additional exploration was recommended.

In 2004, Votorantim contracted Petrus Consultoria Geológica Limitada (Petrus) to conduct and/or supervise geological, geochemical and geophysical exploration in the Property. Between 2004 and 2007, additional exploration in the Property included relogging of old Anglo American/Karmin core, geological mapping, and geochemical surveys.

A time domain, airborne electromagnetic survey was conducted by Fugro Airborne Surveys. The survey covered approximately 1.8 km2, divided in four loops of 700 m x 500 m each, with readings on a 100 m by 20 m grid. The survey included 14,290 m with 30 Hz. In addition, 3,860 m were surveyed with 3 Hz in order to detail the anomalies identified with the 30 Hz survey.

Borehole surveys of most drill holes were conducted by BGEO Tecnologia en Geociências (BGEO) and Anglo American.

Between 2004 and 2005, Votorantim also drilled 18,746.45 m in 56 diamond holes. At the time when AMEC visited the site in 2006, a new campaign was under way. Details of the drilling, sampling and assaying methods are described in Sections 11 to 13.

10.3 Exploration Potential

Mineralization remains open in the areas in between Arex and Ambrex and at the depth below both deposits. Other exploration targets, within the Property are being investigated now and belong to the same mineralization belt. Figure 10-01 illustrates all exploration targets at Aripuanã property. The Cabeça Branca oxide gold target is located in the immediate vicinity of Mocotó.


Figure 10-1: Exploration Targets with Soil Geochemistry grid (Source: Votorantim)

Votorantim has been conducting drilling on those exploration targets in order to confirm structure and mineralization at depth.

AREX

AMBREX

ARPA

MASSARANDUBA

BOROCA

MOCOTÓ

BABAÇU


11.0 DRILLING

Drilling for the project is summarized in Table 11-1.

Table 11-1: Drill Program Summary Diamond Drilling RC Drilling

Company Target Year Holes Meterage (m) Holes Meterage (m)

Arex 57 16,845 19 1,329

Ambrex 12 5,433

Mocotó 18 4,473 30 2,395

Others 8 2,285 10 941

Anglo American

Subtotal

1993-1999

95 29,036 59 4,665

Ambrex, Babaçu

Massaranduba 51 16,311

Karmin/

Noranda Subtotal

1996-1999

51 16,311

Arex 27 5,710

Ambrex 46 19,789

Babaçu 26 13,918

Massaranduba 5 2,057

Arpa 3 1,797

Votorantim

Subtotal

2004-2007

107 43,271

Total 1993-2007 253 88,618 59 4,655

Drillholes from Vale dos Sonhos target were not considered for not being in the JV area.


Anglo American used Boart Longyear as a drilling contractor. Between 1993 and 2002 Anglo American (and Anglo American/Karmin) drilled 45,347 m in 146 diamond drill holes, and 4,665 m in 59 RC holes. Most holes were drilled in the Arex and Ambrex deposits (Table 11-1). Core diameter was HQ (6.35 mm). The DDI Reflex Fotobor method was used for downhole survey measurements. Most holes were drilled with 180° to 220° azimuth, and with 50° to 70° dip. Occasionally, some holes were drilled with 0° to 40° azimuth. Drill core boxes are stored on site, and are adequately labelled


and ordered for efficiently locating and extracting the boxes and samples. Original drill reports are not available on site.

11.2 Votorantim

During the 2004-2005 drilling campaign, Votorantim drilled 18,746 m in 56 holes, with Boart Longyear GeoServ (BLG) as a drilling contractor, using Longyear 44 drill rigs. Core diameters were HW (7.62 mm) and NQ (4.76 mm). The DDI Reflex Fotobor method was used for downhole survey measurements. Drill core boxes are stored on site and are adequately labelled and ordered for efficiently locating and extracting the boxes and samples.

During 2006-2007 drilling campaign Votorantim used Geosol, from Belo Horizonte, as a drilling contractor. At the time of the 2006 site visit, drilling was being conducted using three rigs (one MacSonda Mach 1200 and two MacSonda Mach 320), working on two 12-hour shifts. AMEC visited one, the MacSonda Mach 350 nr.155) and observed that it was clean and in good working condition. AMEC observed the drilling and core handling procedures, and inspected the measurements of recovery, which was in general very good (practically 100%). Length recovery was measured by drill run, immediately after core was removed from the core tube.

A Votorantim technician visited the rigs at various times during the day to observe core handling practices and supervise the drill helpers during measurement of recovery. The Maxibor method was used for down-hole survey measurements. Most holes were drilled with azimuths generally ranging from 180° to 220° azimuths, and dips from 40° to 80°. Occasionally, some holes were drilled with 0° to 60° azimuth. RQD for the core was not measured at the time of AMEC´s the site visit and the implementation of this practice was recommended.

Core boxes were well identified with aluminium tags recording the contractor name, target name, hole identification box number, and from and to distances. Core runs were marked with wooden pieces, nailed to the box, with aluminium tags recording the depth, run length and recovered length. Core boxes did remain on the drill site after shift changes, or after demobilization from the drill platform, being transported each day by truck to the camp at Aripuanã. Boxes were closed during transportation. Original drill reports, including recovery information, are available on individual folders on site for most holes.

AMEC is of the opinion that observed procedures meet acceptable practices for core drilling in the exploration and mining industry.


11.3 Significant Mineral Intersections

A list of significant intersections of Ambrex and Arex is presented in Table 11-2. Intervals were composited with a 5 m minimum length (apparent thickness) and a grade cut-off of 5% ZnEq allowing insertion of intervals below cut-off no longer than 1 m (see Section 17 for ZnEq calculation formula).

Table 11-2: Ambrex/Arex Significant Mineral Intersections in Drill Holes HOLE-ID FROM TO Length Zn (%) Pb (%) Cu (%) Au (ppm) Ag (ppm) Zn_Eq

EXRP01 23.00 43.00 20.00 3.26 0.67 3.75 0.95 54.89 17.01 EXRP04 58.00 67.00 9.00 0.00 0.00 0.00 11.05 4.22 25.38 EXRP11 62.00 68.00 6.00 1.05 2.88 0.44 1.93 3.23 7.23 EXRP14 30.00 36.00 6.00 0.83 3.75 0.77 1.23 86.90 9.49 EXRP17 0.00 20.00 20.00 1.92 3.21 1.93 0.26 7.57 8.25 EXRP18 0.00 5.00 5.00 5.39 2.26 5.21 0.13 7.16 19.47 EXRP18 8.00 15.00 7.00 6.59 3.00 4.10 0.03 13.10 18.00 F008 131.60 140.30 8.70 12.66 2.15 0.14 0.31 51.54 16.05 F009 4.45 20.30 15.85 0.22 0.95 0.17 26.03 5.00 60.39 F014 143.20 149.75 6.55 4.59 1.42 0.08 0.15 74.44 8.17 F015 181.20 188.90 7.70 10.67 1.65 0.05 0.17 65.83 13.95 F016 186.83 194.32 7.49 13.97 1.72 0.03 0.36 109.64 19.28 F016 227.15 235.30 8.15 4.88 1.57 0.03 0.05 25.76 6.32 F017 155.90 161.45 5.55 11.51 2.27 0.02 0.24 220.16 20.72 F019 230.37 236.87 6.50 6.47 2.12 0.02 0.21 30.27 8.50 F020 26.70 35.50 8.80 14.61 3.72 0.03 0.30 191.61 23.16 F024 393.30 398.70 5.40 6.03 2.53 0.03 0.11 109.89 10.90 F024 430.00 455.70 25.70 7.63 2.71 0.08 0.41 40.10 10.74 F025 146.35 153.35 7.00 5.54 2.37 0.03 0.08 83.62 9.33 F025 179.80 188.40 8.60 5.51 1.50 0.02 0.05 34.41 7.22 F025 199.50 211.90 12.40 8.08 8.69 0.03 0.36 340.60 23.22 F040 327.70 333.40 5.70 5.77 1.81 0.06 0.64 127.96 12.47 F047 153.83 161.38 7.55 9.93 9.61 0.01 0.51 255.96 22.41 F048 440.65 447.55 6.90 3.50 0.96 0.01 0.24 19.54 4.97 F048 462.70 468.25 5.55 4.93 6.45 0.05 0.19 199.42 14.08 F048 506.00 515.70 9.70 9.95 5.12 0.06 0.28 105.31 15.60 F048 522.65 531.65 9.00 7.52 2.77 0.01 0.12 57.78 10.50 F049 395.30 405.30 10.00 10.72 3.71 0.11 0.49 87.18 16.03 F049 422.70 432.40 9.70 7.21 2.00 0.53 0.34 51.66 11.59 F049 536.90 545.05 8.15 5.29 1.72 0.01 0.24 94.34 9.67 F054 427.05 434.05 7.00 20.83 6.67 0.04 0.30 192.99 30.00 FD057 489.65 495.30 5.65 5.25 1.91 0.09 0.09 56.19 8.12 FD057A 72.80 78.65 5.85 8.52 2.98 0.07 0.24 92.03 13.21 FEX12 38.35 50.62 12.27 15.56 9.72 0.39 1.22 427.69 37.01 FEX12 72.97 80.43 7.46 6.42 3.63 0.47 0.07 66.07 10.89 FEX19 63.16 74.53 11.37 12.25 4.61 0.26 0.69 98.94 19.00 FEX25 142.82 169.43 26.61 4.81 1.58 1.59 1.26 84.71 15.12 FEX35 173.15 182.65 9.50 9.81 4.32 0.04 0.11 58.33 13.12 FEX41 32.77 39.78 7.01 0.40 0.16 5.60 1.96 38.73 20.42


HOLE-ID FROM TO Length Zn (%) Pb (%) Cu (%) Au (ppm) Ag (ppm) Zn_Eq

FEX41 41.18 46.51 5.33 0.36 0.06 3.06 1.93 28.61 13.52 FEX41 61.28 70.09 8.81 0.30 0.01 2.51 1.29 31.22 10.71 FEX47 133.31 141.66 8.35 30.91 8.98 0.84 1.45 64.36 40.36 FEX54 469.11 476.85 7.74 0.02 0.00 0.90 2.68 5.69 8.60 FPAR001 197.30 206.60 9.30 8.14 2.66 2.05 0.88 95.39 19.32 FPAR002 140.20 145.20 5.00 4.54 0.43 3.20 2.31 51.20 19.83 FPAR003 167.10 176.80 9.70 7.45 1.40 2.41 0.84 73.35 18.40 FPAR003A 167.00 178.00 11.00 5.43 0.97 1.95 0.81 55.36 14.41 FPAR004 82.90 94.70 11.80 8.16 3.75 2.62 0.52 144.00 21.97 FPAR004A 82.20 92.20 10.00 8.78 4.35 1.70 0.58 144.35 20.53 FPAR005 160.72 176.60 15.88 9.55 4.55 0.06 0.34 108.90 15.36 FPAR005 182.60 194.60 12.00 5.62 3.18 0.03 0.23 68.90 9.36 FPAR005 303.60 309.60 6.00 4.41 1.56 0.03 0.05 33.17 6.11 FPAR005 387.60 395.60 8.00 11.34 2.06 0.09 0.23 48.13 14.26 FPAR005A 158.50 176.50 18.00 10.15 5.28 0.08 0.42 119.11 16.71 FPAR005A 182.50 197.50 15.00 4.88 2.78 0.03 0.22 65.73 8.42 FPAR005A 240.50 245.50 5.00 10.65 5.75 0.06 0.09 170.80 18.42 FPAR005A 288.50 297.50 9.00 10.81 1.21 0.10 0.13 20.56 12.34 FPAR005A 367.50 372.50 5.00 0.20 0.09 1.55 1.91 36.44 9.81 FPAR006 267.50 274.70 7.20 11.66 3.67 0.07 0.21 36.00 14.33 FPAR006 311.10 317.70 6.60 13.09 4.85 0.15 0.19 109.73 18.87 FPAR006A 264.30 269.30 5.00 6.32 0.94 0.08 0.07 10.40 7.23 FPAR006A 297.30 302.30 5.00 6.32 1.08 0.02 0.05 38.80 8.12 FPAR006A 312.30 323.30 11.00 6.28 2.13 0.11 0.09 57.91 9.31 FPAR009 251.00 263.00 12.00 12.74 5.85 0.04 0.48 106.60 18.98 FPAR009 286.20 293.20 7.00 5.54 2.64 0.02 0.06 61.29 8.51 FPAR009 317.50 330.30 12.80 10.09 2.02 0.07 0.14 34.16 12.25 FPAR009 338.30 343.70 5.40 8.44 3.26 0.02 0.12 33.80 10.62 FPAR009 367.50 376.50 9.00 13.65 3.94 0.09 0.12 67.42 17.37 FPAR009 391.50 413.50 22.00 14.52 7.93 0.03 0.28 124.77 21.32 FPAR009 422.10 442.90 20.80 12.27 3.51 0.09 0.14 77.14 16.33 FPAR010 172.55 178.80 6.25 6.93 2.57 0.04 0.10 21.48 8.52 FPAR010 190.80 207.60 16.80 11.18 4.39 0.07 0.19 69.70 15.21 FPAR011 248.90 268.10 19.20 6.88 2.71 0.03 0.25 58.66 10.21 FPAR011 273.80 289.60 15.80 15.58 8.91 0.06 0.82 147.41 24.73 FPAR011 331.40 339.50 8.10 5.37 1.82 0.01 0.09 23.46 6.83 FPAR011 364.00 370.10 6.10 0.76 0.33 0.71 0.50 25.46 4.68 FPAR012 192.00 201.40 9.40 7.77 2.97 0.02 0.13 44.72 10.32 FPAR012 203.40 210.60 7.20 27.75 7.35 1.36 1.84 156.44 42.52 FPAR015 304.40 313.70 9.30 17.42 4.38 0.06 0.36 66.11 21.66 FPAR017 265.80 270.80 5.00 6.92 0.66 0.17 0.08 5.60 7.87 FPAR019 228.80 234.10 5.30 4.90 1.87 0.02 0.35 24.89 7.02 FPAR021 194.80 201.10 6.30 0.25 0.03 6.04 4.52 33.27 26.97 FPAR025 75.00 84.10 9.10 4.31 1.39 0.77 0.19 39.10 8.40 FPAR026 77.60 87.50 9.90 9.93 5.38 0.02 0.13 213.88 19.21 FPAR036 277.10 282.50 5.40 4.21 1.75 0.01 0.09 72.35 7.47 FPAR036 285.40 299.55 14.15 9.91 5.00 0.04 0.32 102.94 15.50 FPAR050 119.65 125.65 6.00 12.38 5.67 0.04 0.18 61.62 16.22 FPAR068 408.00 421.00 13.00 13.05 5.42 0.05 0.27 111.22 18.92


Table 11-3 below shows a few drillhole intersections from Babacu area. From the 16 holes, there are only 11 with assays results back from the laboratory.

Table 11-3: Babacu Significant Mineral Intersections in Drill Holes

HOLE-ID FROM TO Length Zn (%) Pb (%) Cu (%) Au (ppm) Ag (ppm)

FPAR075 416.40 417.30 0.90 3.24 2.89 0.07 N/D 33.30 FPAR087 421.75 422.50 0.75 9.83 3.15 0.12 0.11 31.00 FPAR088 485.10 486.00 0.90 0.43 0.00 11.70 4.53 172.00 FPAR094 582.00 583.05 1.05 15.95 5.93 0.12 N/D 226.00 FPAR095 397.85 398.85 1.00 0.17 0.03 2.53 1.31 59.30 FPAR100 447.95 449.05 1.10 9.10 0.26 0.01 N/D 5.90


12.0 SAMPLING METHOD AND APPROACH


Drill log header sheets included general data (project name, hole identification, target, collar coordinates, final depth, start and completion dates, collar azimuth, dip and elevation). Logging was descriptive, and included the identification of lithology, alteration, main and accessory minerals, degree of oxidation, main structures, sample and assay details (from, to, sample number and Au, Ag, Cu, Pb and Zn grades, where available). Core samples were cut with a core saw at 1 m lengths on average, but major lithological contacts were usually respected.

No other details were supplied to AMEC for the Anglo American or Anglo American/Karmin logging and sampling. AMEC could not confirm if rejects or pulps are stored elsewhere to the drill core.

12.2 Votorantim

At arrival to the camp, core was photographed before geotechnical and geological were completed. RQD for the core was not determined. Logging used codes for main lithology, volcanogenic massive sulphide (VMS) and skarn-type alteration (assessed according to the presence of some particular alteration minerals), the degree of weathering, the presence of certain sulphide minerals, and includes brief additional descriptive observations. However; log sheets did not include a header section, only recording the hole id and the start and completion dates.

The core shack and logging facility have excellent conditions, with good lighting and protection for the logging area, and sufficient space for long-term storage of samples. The core shack is adequately ordered for efficiently locating and extracting the boxes and samples. Original drill reports, including recovery information, are available on individual drill hole folders for most holes. AMEC recommends that RQD determination be conducted in the future.

Core samples were cut at 1 m lengths in average, using an industry standard core saw. Major lithological contacts were respected. AMEC was not present for any core cutting, but observed the core that has been cut, and confirmed that the operation was properly conducted.


13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY

13.1 Sample Preparation and Assaying: Anglo American/Karmin

Samples were initially assayed by Nomos, and later at Mineração Morro Velho Laboratory (MMV), both in Minas Gerais.

Nomos assayed the samples for Ag, Au, Cu, Pb, Zn, Mo and Fe, as follows:

• Au: fire assay with AAS finish • Ag, Cu, Pb, Zn, Mo, Fe: aqua regia digestion (sometimes multi-acid digestion,

which included As), AAS reading.

MMV assayed the samples for Ag, Au, Cu, Pb, Zn, Mo and Fe as follows:

• Au: fire assay with AAS finish (lower detection limit: 0.05 ppm Au) • Ag, Cu, Pb, Zn, Mo, Fe: aqua regia digestion, AAS reading (lower detection limits:

5 ppm Ag, 2 ppm Cu, 5 ppm Pb, 1 ppm Zn, 8 ppm Mo, 2 ppm Fe).

No other details were supplied to AMEC regarding the Anglo American or Anglo American/Karmin preparation and assaying procedures. AMEC could not confirm if rejects or pulps are stored elsewhere. Original or copied assay certificates were available for review on site.

13.2 Sample Preparation and Assaying: Anglo American/Karmin: Votorantim

During the 2004-2007 drilling campaigns, 6,921 samples were prepared and assayed at ACME Laboratórios S.A. in Goiânia, Goiás, including 5,921 core samples and 1,000 control samples. The sample preparation protocol consisted of drying at 60°C, crushing to 70% passing 2 mm, quartering to obtain a 250 g sample and pulverization to 95% passing 150 mesh (0.105 mm). Samples were analyzed for Pb, Zn, Cu, Au, Ag and Fe as follows:

• Au: fire assay with AAS finish (lower detection limit: 0.01 g/t Au) • Ag, Cu, Pb, Zn, Mo, Fe: aqua regia digestion, AAS reading (lower detection limits:

1 ppm Ag, 0.001% Cu, 0.001% Zn, 0.001% Pb, 0.01% Fe).

During the 2006 campaign, samples were shipped to ALS Chemex in Luziânia, Goiás, in secured bags and prepared and assayed as follows:


Preparation:

• CRU-31, SPL-21 and PUL-31 methods: drying to maximum 120°C, crushing to 70% passing 2 mm, splitting to obtain a 250 g subsample, pulverizing to 85% passing 0.075 mm.

Assaying:

• Au (method AuAA24): 50 g aliquot, fire assay with AAS finish (detection limits: 0.005 ppm – 10 ppm)

• ME-ICP61 method: Ag, Cu, Pb, Zn, Cd: 0.25 g aliquot, perchloric-nitric-hydrofluoric acid digestion, dilute hydrochloric acid dilution, ICP-AES reading (detection limits: Ag: 0.5 ppm – 100.0 ppm; Cu: 1 ppm – 10,000 ppm; Pb, Zn: 2 ppm – 10,000 ppm; Cd: 0.5 ppm – 1,000 ppm). This method includes 17 additional elements.

• ME-AA62 method for Ag, Cu, Pb, Zn and Cd overlimits: perchloric-nitric-hydrofluoric acid digestion, hydrochloric acid dilution, AAS reading.

Original or copied assay certificates were available for review on site. AMEC is of the opinion that logging, core sampling, sample preparation and assaying were conducted, in general, according to acceptable standards. However, in the future RQD measurement should be included in the logging procedure.

13.3 Quality Assurance/Quality Control (QA/QC)

Companion Policy 43-101CP (CSA, 2005b) recommends Companies and qualified persons to follow CIM Exploration Best Practices Guidelines (CIM, 2003a, 2003b, 2005) which require that a program of data verification accompany an exploration program to confirm validity of exploration data. Furthermore, the guidelines require that a QA/QC program be utilized to ensure that analytical accuracy and precision are adequate to support resource estimation.

The terms used in this report for the control sample types are defined as follows:

• Twin samples are samples obtained by repeating the sampling in the proximity of the original location. These samples are mainly used to assess the sampling variance.

• Coarse duplicates (also referred to as coarse rejects or preparation duplicates) are splits of sample rejects taken immediately after the first crushing and splitting step. These samples provide information about the sub-sampling variance introduced during the preparation process.

• Coarse blanks are coarse samples of barren material, which provide information about the possible contamination during preparation.


• Pulp duplicates are second splits, or resubmission of the prepared samples that are routinely analyzed by the primary laboratory. These samples are indicators of the assay reproducibility or precision.

• Pulp blanks are pulverized samples of barren material, which provide information about the possible contamination during assaying.

• Certified reference materials (CRMs) are samples with well established grades, prepared under special conditions, usually by certified commercial laboratories, and used to estimate the assay accuracy, together with the check samples.

• Check samples are re-submitted to an external certified laboratory (secondary laboratory), and are used to estimate the accuracy, together with the standards.

13.3.1 Anglo American-Anglo American/Karmin QA/QC

QA/QC data from the Anglo American and Anglo American/Karmin exploration campaigns were not available for review.

13.3.2 Votorantim QA/QC

Until 2006, the QA/QC program in place included the insertion of pulp duplicates, coarse blanks and standards. In 2007, twin samples and coarse duplicates were added to the QA/QC protocol. The insertion frecuencies stated by Votorantim are presented below. However, the actual insertion frecuencies for some control samples were different (Section 13.3.4).

• Twin samples (1 in 20 samples). These duplicates consist of one quarter core, taken from the remaining half-core backup.

• Coarse duplicates (1 in 20 samples). These duplicates are not actually true duplicates from the samples found in the same batch, but instead are coarse samples prepared and assayed in previous batches, which are resubmitted to the same laboratory.

• Pulp duplicates (1 in 20 samples). These duplicates are not actually true duplicates from the samples found in the same batch, but instead are pulp samples prepared and assayed in previous batches, which are resubmitted to the same laboratory. Votorantim assessed failures on Max-Min plots, after the linear equation y=mx+b, where m roughly corresponds to 10% relative error (RE), and b was calculated as 30 times the detection limit.

• Coarse blanks (1 in 20 samples). Initially, Votorantim used supposedly barren core as blank material, but assays yielded some Zn, Cu and Pb values, after which river sand was used as blank material. AMEC did not have access to and did not process the blank data, but reviewed the control charts presented by Votorantim,


and considers that significant contamination during preparation does not appear to have taken place. However, river sand is never recommended to be used as a blank material. Such material should be discarded in future campaigns, and a more appropriate source of blank material identified and used.

• CRMs (1 in 20 samples). Votorantim used three CRMs for low, medium and high Zn and Pb grades. The CRMs were documented on a round robin completed in five different laboratories from Chile, Canada and Brazil. Copper CRMs were not used.

The QA/QC program implemented by Votorantim did not include the insertion of pulp blanks (used to assess contamination during assaying). To AMEC’s best knowledge, check samples (used to complement the assessment of analytical accuracy) were not submitted to a secondary laboratory.

13.3.3 AMEC’s Evaluation Procedure

The standard procedure followed by AMEC for evaluation of the QA/QC results is discussed below (Long, 2000; Simón, 2006).

Duplicate Samples AMEC evaluates the duplicate samples according to the Hyperbolic Method. The failure rate for each duplicate type is calculated, by evaluating each sample pair against the hyperbolic equation y2=m2x2+b2. An acceptable level of precision is achieved if the failure rate does not exceed 10% of all pairs.

CRMS For evaluating the CRMs, control charts are constructed for each of them and for each documented element. The analytical bias is calculated as:

Bias (%) = (AVeo / BV) – 1

where AVeo represents the average recalculated after the exclusion of the outliers. The bias values are assessed according to the following ranges: good: between -5% and +5%; acceptable, with care: from -5% to -10% or from +5 to +10%; unacceptable: below -10% or above 10%.

Blank Samples

Contamination is suspected if the blank value exceeds five times the detection limit for the studied element.


Check Samples For evaluating the check samples, Reduction-to-Major-Axis (RMA) plots are constructed for the studied elements, and the bias of the primary laboratory as compared to the secondary laboratory was calculated.

13.3.4 AMEC Evaluation of Votorantim QA/QC Data

Practical Detection Limits Practical detection limits for Au, Ag, Cu, Pb and Zn were graphically calculated using the pulp duplicate RE versus Grade plots, for the points where the pair relative errors suddenly increased, exceeding or tending towards 100%, and therefore reflecting a drastic reduction in assay precision (Table 13-1). These values were used for establishing the intervals where reduced precision levels could be expected when processing the duplicate sample data.

Table 13-1: Practical Detection Limits Element Units Laboratory Detection Practical Detection Limit

Au g/t 0.01 0.06 Ag ppm 1 3 Cu % 0.001 0.020 Pb % 0.001 0.010 Zn % 0.001 0.010

Twin samples (TS) The evaluation of the sample pairs according to the hyperbolic method used a failure boundary that asymptotically approaches the line with slope m corresponding to a 30% RE. In total, 115 twin sampless were assayed (8.8% of the total number samples included in the regular submission batches during 2007), but most samples were not assayed for Au. As a result, the failure rates were not calculated against the same total number of assays. AMEC identified one failure for Au (2.2%), four failures for Ag (3.5%), two failures for Cu (1.7%), 17 failures for Pb (14.8%) and 20 failures for Zn (17.4%; Table 13-2). In addition, some samples appear to represent evident sample mixups.

An acceptable level of precision is achieved if the failure rate does not exceed 10%. On the basis of these results, AMEC concludes that the samplingl variance for Au, Ag and Cu during the Votorantim drilling exploration campaign was satisfactory. The Pb and Zn sampling variances were high, although most failures occur in the low-grade range (below 1% Pb and Zn). AMEC recommends that Votorantim investigates this issue, so that sampling precision is improved.


Coarse Duplicates (CD) The evaluation of the sample pairs according to the hyperbolic method used a failure boundary that asymptotically approaches the line with slope m corresponding to a 20% RE. In total, 149 pulp duplicates were assayed (11.4% of the total number samples included in the regular submission batches during 2007), but not all the samples were assayed for all the elements (and the original samples did not have Ag assays). As a result, the failure rates were not calculated against the same total number of assays. AMEC identified one failures for Au (2.2%), no failures for Cu (0.0%), three failures for Pb (2.6%) and five failures for Zn (3.4%; Table 13-2). In addition, some samples appear to represent evident sample mixups.

An acceptable level of precision is achieved if the failure rate does not exceed 10%. On the basis of these results, AMEC concludes that the sub-sampling variance for Au, Cu, Pb and Zn at ACME during the Votorantim drilling exploration campaign was satisfactory.

Pulp Duplicates (PD) The evaluation of the sample pairs according to the hyperbolic method used a failure boundary that asymptotically approaches the line with slope m corresponding to a 10% RE. In total, 267 pulp duplicates were assayed (3.9% of the total number samples included in the regular submission batches), but not all the samples were assayed for all the elements. As a result, the failure rates were not calculated against the same total number of assays. AMEC identified 17 failures for Au (10.4%), 11 failures for Ag (7.2%), 14 failures for Cu (5.3%), 18 failures for Pb (6.7%) and 5 failures for Zn (3.4%; Table 13-2). In addition, some samples appear to represent evident sample mixups.

An acceptable level of precision is achieved if the failure rate does not exceed 10%. On the basis of these results, AMEC concludes that the analytical variance for Au, Ag, Cu, Pb and Zn at ACME during the Votorantim drilling exploration campaign was satisfactory.


Table 13-2: Summary Table for Twin and Duplicate Samples (Votorantim) Element Number of Samples Failures Number %

Au 45 1 2.2% Ag 115 4 3.5% Cu 115 2 1.7% Pb 115 17 14.8%

Twin Samples

Zn 115 20 17.4% Au 46 1 2.2% Ag - - - Cu 116 0 0.0% Pb 116 3 2.6%

Coarse Duplicates

Zn 149 5 3.4% Au 164 17 10.4% Ag 153 11 7.2% Cu 265 14 5.3% Pb 267 18 6.7%

Pulp Duplicates

Zn 149 5 3.4%

CRMs

Votorantim prepared three CRMs from local material: L1, M1 and H1, corresponding to low, medium and high Pb-Zn grades, respectively. The CRMs were documented for Pb and Zn through a round robin test at five laboratories (ACME Chile, ACME Canada, Lakefield Canada, Lakefield Brazil, and ALS Chemex Canada). AMEC reprocessed the round robin data and established the best values (BV) and confidence intervals (CI). The documented values are presented in Table 13-3.

During the analysis of 130 samples of L1, 122 samples of M1, and 100 samples of H1, representing in total 5.1% of the samples included in the regular submission batches, few outliers were identified; most assays were within the AV±2*SD range or very close to those limits, and the overall and individual bias values were acceptable (Table 13-3). AMEC also estimated the overall accuracy for the studied elements. Both Pb and Zn yielded acceptable overall accuracies, corresponding to -1.7% and 0.5% bias, respectively (Table 13-3).

On the basis of these results, AMEC concludes that the Pb and Zn accuracies at ACME during the 2004-2007 exploration campaigns were acceptable.


Table 13-3: Documented Values and Statistics of Votorantim CRMs Standard Pb (%) Zn (%)

L1 BV 0.465 0.780 CI 0.020 0.010 Nr. of Results (outliers) 130 (2) 130 (1) Mean 0.481 0.785 Bias (%) 3.5 3.3

M1 BV 1.004 2.830 CI 0.040 0.066 Nr. of Results (outliers) 122 (1) 122 (1) Mean 0.986 2.906 Bias (%) -1.8 2.7

H1 BV 4.905 7.700 CI 0.134 0.166 Nr. of Results (outliers) 100 (0) 100 (1) Mean 4.837 7.776 Bias (%) -1.4 3.0

Overall Bias (%) -1.7 0.5

Coarse Blanks

AMEC only received the blank results for 2007. In total, 117 coarse blanks were inserted in the submission batches (8.7% of the total number samples included in the regular submission batches during 2007), but not all the samples were assayed for all the elements). AMEC only identified minor contamination events for Pb and Zn. AMEC concludes that sample preparation at ACME did not produce significant contamination.

13.3.5 AMEC Independent Resampling

During the second site visit to the Aripuanã Project, AMEC organized an independent re-sampling program, consisting of the preparation of a random selection of twin samples (core), coarse rejects and pulp duplicate samples from the Anglo and Votorantim drilling programs, which were submitted to an external check at ALS Chemex (Luziânia), the secondary laboratory, in order to complete an independent assessment of the accuracy.


For the sample selection AMEC did not apply an individual selection cut-off, thus avoiding the introduction of a selection bias. The samples were randomly selected from a 2% Equivalent Zn (EqZn) broad envelope, in a proportion of one twin sample per diamond drill hole (Anglo and Votorantim), and of one in 40 samples (2.5%) for the reject and pulp duplicates (Votorantim), depending on the available material.

The check sample batches also included coarse and pulp duplicates of some of the samples included in the batches, as well as standard samples, coarse and pulp blanks, in reasonable proportions, in order to assess the precision, accuracy and possible contamination, respectively, at the secondary laboratory. A summary of AMEC’s re-sampling program is presented in Table 13-4.

Table 13-4: Summary of AMEC’s Re-sampling Program Type of Sample Number of Samples

Number of Samples in Envelope

- Anglo

- Votorantim

Number of Check Samples

- Anglo (Core)

- Votorantim (Core)

- Votorantim (Rejects + Pulps)

Control Samples

- Coarse Duplicates

- Pulp Duplicates

- Standards

- Coarse Blanks

- Pulp Blanks

1,081 (100%)

1,121 (100%)

53 (4.9%)

26 (2.4%)

17 + 47 (4.8%)

5

11

18

5

11

Anglo Twin Check Samples AMEC prepared Reduction-to-Major-Axis (RMA) plots for Au, Ag, Cu, Pb and Zn for Anglo twin check samples. The RMA statistics are presented in Table 13-5.

After excluding 12 outliers for Ag, three outliers for Cu, nine outliers for Pb and nine outliers for Zn, from 53 valid pairs, the Ag, Cu, Pb and Zn plots reflect reasonable fits between the check assays and the original assays (R2 of 0.977, 0.989, 0.981 and 0.947, respectively). This fit is poorer for Au (R2 of 0.735), even after excluding five


outliers. Nevertheless, AMEC considers that the accuracy of ALS Chemex as compared to MMV, calculated for composite twin samples, is acceptable for Cu, Pb and Zn (biases of -3.7%, -4.2% and -3.5%, respectively, after excluding the outliers). The Au and Ag accuracies are poor (biases of -10.5% and 7.0%, respectively, after excluding the outliers).

Table 13-5: AMEC´s Re-sampling – Anglo Twin Check Samples RMA Parameters - AMEC Resampling-Anglo Twin Check Samples-All Samples

Element R2 N (total) Pairs m Error (m) b Error (b) Bias

Au (g/t) 0.419 53 53 1.201 0.126 0.081 1.287 -20.1%

Ag (ppm) 0.848 53 53 0.916 0.049 9.888 15.731 8.4%

Cu (%) 0.939 53 53 1.283 0.044 -0.002 0.263 -28.3%

Pb (%) 0.345 53 53 0.701 0.078 0.534 1.297 29.9%

Zn (%) 0.376 53 53 0.743 0.081 0.376 1.832 25.7%

RMA Parameters - AMEC Resampling-Anglo Twin Check Samples-No Outliers

Element R2 Accepted Outliers m Error (m) b Error (b) Bias

Au (g/t) 0.735 48 5 1.105 0.078 -0.020 0.059 -10.5%

Ag (ppm) 0.977 41 12 0.930 0.019 4.514 6.801 7.0%

Cu (%) 0.989 50 3 1.037 0.015 0.016 0.067 -3.7%

Pb (%) 0.981 44 9 1.042 0.020 -0.095 0.206 -4.2%

Zn (%) 0.947 44 9 1.035 0.033 -0.238 0.448 -3.5%

Votorantim Twin Check Samples

AMEC prepared Reduction-to-Major-Axis (RMA) plots for Au, Ag, Cu, Pb and Zn for Votorantim twin check samples. The RMA statistics are presented in Table 13-6.

After excluding five outliers for Ag, one outlier for Cu, seven outliers for Pb and five outliers for Zn, from 26 valid pairs, the Ag, Cu, Pb and Zn plots reflect reasonable fits between the check assays and the original assays (R2 of 0.988, 0.997, 0.978 and 0.992, respectively). This fit is poorer for Au (R2 of 0.935), even after excluding six outliers. Nevertheless, AMEC considers that the accuracy of ALS Chemex as compared to ACME, calculated for composite twin samples, is acceptable for Cu, Pb and Zn (biases of -7.1%, -2.3% and 3.1%, respectively, after excluding the outliers). The Au and Ag accuracies are poor (biases of 9.0% and 7.7%, respectively, after excluding the outliers).


Table 13-6: AMEC´s Re-sampling – Votorantim Twin Check Samples RMA Parameters - AMEC Resampling-Votorantim Twin Check Samples-All Samples


Au (g/t) 0.902 26 26 0.642 0.039 0.136 0.114 35.8%

Ag (ppm) 0.890 26 26 0.965 0.063 8.360 10.910 3.5%

Cu (%) 0.996 26 26 1.107 0.013 -0.029 0.097 -10.7%

Pb (%) 0.908 26 26 0.920 0.055 0.361 0.477 8.0%

Zn (%) 0.939 26 26 0.999 0.048 -0.392 0.797 0.1%

RMA Parameters - AMEC Resampling-Votorantim Twin Check Samples-No Outliers


Au (g/t) 0.935 20 6 0.910 0.046 0.018 0.029 9.0%

Ag (ppm) 0.988 21 5 0.923 0.020 4.000 3.990 7.7%

Cu (%) 0.997 25 1 1.071 0.011 -0.026 0.076 -7.1%

Pb (%) 0.978 19 7 1.023 0.029 -0.133 0.212 -2.3%

Zn (%) 0.992 21 5 0.969 0.016 -0.170 0.278 3.1%

Votorantim Coarse Reject Check Samples AMEC prepared Reduction-to-Major-Axis (RMA) plots for Au, Ag, Cu, Pb and Zn for Votorantim coarse reject check samples. The RMA statistics are presented in Table 13-7.

After excluding two outliers for Au, two outliers for Ag, one outlier for Cu, one outlier for Pb and one outlier for Zn, from 17 valid pairs, the Au, Ag, Cu, Pb and Zn plots reflect reasonable fits between the check assays and the original assays (R2 of 0.992, 0.994, 1.000, 0.997 and 0.998, respectively). AMEC considers that the accuracy of ALS Chemex as compared to ACME, calculated for composite twin samples, is acceptable for Au, Ag, Cu, Pb and Zn (biases of -5.1%, -2.2%, -1.2%, -2.3% and 4.5%, respectively, after excluding the outliers).


Table 13-7: AMEC´s Re-sampling – Votorantim Coarse Reject Check Samples RMA Parameters - AMEC Resampling-Votorantim Coarse Reject Check Samples-All Samples


Au (g/t) 0.988 17 17 1.453 0.038 -0.089 0.082 -45.3%

Ag (ppm) 0.982 17 17 1.152 0.037 -5.041 7.477 -15.2%

Cu (%) 0.995 17 17 0.999 0.018 -0.026 0.137 0.1%

Pb (%) 0.994 17 17 1.014 0.018 -0.166 0.176 -1.4%

Zn (%) 0.996 17 17 0.956 0.014 -0.027 0.253 4.4%

RMA Parameters - AMEC Resampling- Votorantim Coarse Reject Check Samples-No Outliers


Au (g/t) 0.992 15 2 1.051 0.023 -0.010 0.013 -5.1%

Ag (ppm) 0.994 15 2 1.022 0.019 0.017 2.570 -2.2%

Cu (%) 1.000 16 1 1.012 0.002 -0.002 0.019 -1.2%

Pb (%) 0.997 16 1 1.023 0.014 -0.154 0.143 -2.3%

Zn (%) 0.998 16 1 0.955 0.011 0.049 0.207 4.5%

Votorantim Pulp Check Samples AMEC prepared Reduction-to-Major-Axis (RMA) plots for Au, Ag, Cu, Pb and Zn for Votorantim pulp check samples. The RMA statistics are presented in Table 13-8. AMEC considers that the accuracy of ALS Chemex as compared to ACME, calculated for composite twin samples, is acceptable for Au, Ag, Cu, Pb and Zn (biases of -4.8%, 1.3%, 6.5%, 6.0% and 2.2%, respectively, after excluding the outliers).

AMEC inserted 18 standard samples (six from each of the standards L1, M1 and H1), five coarse duplicates, 11 pulp duplicates, five coarse blanks and 11 fine blanks as internal control samples in the check sample batch, in order to obtain an independent assessment of the accuracy, precision and possible contamination at ALS Chemex.

As a result of this test, AMEC confirmed that ALS Chemex assays had an acceptable accuracy for Pb (bias of 6.1% for standard L1, -2.5% for standard M1, and -4.5% for standard H1). The overall Pb bias was 5.4%. The Zn accuracy was also acceptable, although at the low range it was poorer; individual biases were of 8.2% for standard L1, -2.6% for standard M1 and -4.3% for standard H1. For that reason, the overall Zn bias was 5.6%, slightly above the recommended limit. The Au, Ag and Cu accuracies were not assessed since the standards had not been documented for those elements.


Table 13-8: AMEC´s Re-sampling – Votorantim Pulp Check Samples RMA Parameters - AMEC Resampling-Votorantim Pulp Check Samples-All Samples


Au (g/t) 0.847 47 47 0.948 0.054 0.034 0.103 5.2%

Ag (ppm) 0.993 47 47 1.007 0.013 0.482 3.048 -0.7%

Cu (%) 0.998 47 47 0.883 0.006 0.010 0.036 11.7%

Pb (%) 0.991 47 47 0.897 0.012 0.058 0.139 10.3%

Zn (%) 0.993 47 47 0.907 0.011 -0.005 0.235 9.3%

RMA Parameters - AMEC Resampling- Votorantim Pulp Check Samples-No Outliers


Au (g/t) 0.975 42 5 1.048 0.024 -0.007 0.014 -4.8%

Ag (ppm) 0.996 45 2 0.987 0.009 0.810 2.076 1.3%

Cu (%) 0.998 45 2 0.935 0.006 0.005 0.007 6.5%

Pb (%) 0.998 44 3 0.940 0.007 -0.029 0.067 6.0%

Zn (%) 0.997 44 3 0.978 0.007 -0.193 0.138 2.2%

The coarse and pulp duplicates were evaluated according to the hyperbolic method. Only one failure was identified for Ag and Pb in coarse duplicates, and no failures were identified for pulp duplicates. AMEC is of the opinion that the Au, Ag, Cu, Pb and Zn assays at ALS Chemex had acceptable subsampling and analytical precisions. None of the inserted blanks showed any significant contamination.

The evaluation of the analytical precision requires that the samples be assayed in similar conditions. However, AMEC is of the opinion that the original Au, Ag, Cu, Pb and Zn analytical precision at ACME was probably close to or within the acceptable ranges, considering the following two facts: the very good fit between the ACME and ALS Chemex pulp check assay results, and the acceptable level of precision obtained by ALS Chemex during the pulp check assay test.


Conclusions On the basis of the Votorantim data processing and the independent sampling, AMEC concludes that:

• The Cu, Pb and Zn analytical accuracies at MMV during the Anglo exploration campaigns appear to have been within acceptable limits. The Au and Ag accuracies could not be assessed due to the large dispersion of the pair values.

• The Au, Ag, Cu, Pb and Zn sampling precision at Votorantim, and the subsampling and analytical precision at ACME during the Votorantim exploration campaigns were within acceptable limits.

• The Pb and Zn analytical accuracies at ACME during the Votorantim exploration campaigns were within acceptable limits.

• The Au, Ag and Cu analytical accuracies at ACME as compared to ALS Chemex during the Votorantim exploration campaigns were within acceptable limits.

• The subsampling and analytical precisions for Au, Ag, Cu, Pb and Zn at ALS Chemex during the check assay test were within acceptable limits.

• The analytical accuracies for Pb and Zn at ALS Chemex during the check assay test were acceptable, with overall biases of 5.4% and 5.7%, respectively. These values exceeded slightly the recommended 5% maximum bias due to poorer accuracy at the low range (below 1% Pb and 1% Zn), reflected in larger bias values (6.1% for Pb and 8.2% for Zn).

• No significant cross-contamination was identified during preparation at ACME, or during preparation and assaying at ALS Chemex for Au, Ag, Cu, Pb and Zn.

• The Cu, Pb and Zn assay data from the Anglo exploration campaign are sufficiently accurate to be used for resource estimation purposes. The Au and Ag assay data from the Anglo exploration campaign should not be used exclusively to estimate Measured or Indicated resources.



14.0 DATA VERIFICATION

14.1.1 Drill Hole Collars

AMEC reviewed the collars of 10 drill holes from Arex and Ambrex (4.0% of the drill holes included in the database) and two topographic reference points (M1 and R1), and measured the coordinates with a Garmin V GPS. The collars were usually well conserved and marked, with identified wooden pickets or plastic/cement monuments. The measured coordinates were compared with the database coordinates, and the maximum planar difference found was 15.5 m Easting and 17.4 m Northing, within the GPS precision, although most holes showed differences lower than 6 m in Easting and 5 m in Northing (Table 14-1).

Table 14-1: List of Reviewed Drill Hole Collars (with GPS) Database Coordinates AMEC Coordinates Absolute Differences

Hole-ID Easting (m) Northing (m) Easting (m) Northing (m) Easting (m) Northing (m)

FEX19 225500.74 8888306.84 225492.00 8888309.00 8.74 2.16 FEX34 225688.04 8888351.09 225686.00 8888348.00 2.04 3.09

FPAR005 226796.69 8887329.56 226790.00 8887329.00 6.69 0.56

FPAR010 226949.37 8887269.82 226932.00 8887279.00 17.37 9.18

FPAR021 225507.42 8888381.00 225504.00 8888386.00 3.42 5.00

FPAR027 225595.05 8888325.81 225578.00 8888341.00 17.05 15.19

FPAR047 225503.31 8888260.52 225491.00 8888259.00 12.31 1.52

FPAR055 224935.92 8888551.93 224934.00 8888561.00 1.92 9.07

FPAR066 226643.85 8887358.49 226639.00 8887343.00 4.85 15.49

FPAR076 226431.94 8887514.19 226434.00 8887508.00 2.06 6.19

M1 226225.39 8888142.82 226217.00 8888144.00 8.39 1.18

RN 226235.24 8888130.94 226226.00 8888132.00 9.24 1.06

As part of the collar review, AMEC also plotted the drill hole collars on the topographic map, and compared the collar altitude with the location altitude for 12 holes (4.8% of the drill holes included in the database), according to the contour lines represented in the topographic map. The topographic map had contour lines every 5 m. The maximum difference in elevation was 14 m, but most holes (8) had differences below 10 m, which is considered reasonable for a map at this scale.


Table 14-2: List of Reviewed Drill Hole Collar Elevations From Database From Surface Map Absolute Differences

Hole-ID Elevation (m) Elevation (m) Easting (m)

FEX54 331 337 6 FEX28 273 285 12

FPAR022 218 227 9 FEX10 199 211 12 FEX08 259 268 9 F040 311 309 2 F002 329 329 0

FPAR063 308 317 9 FPAR037 198 212 14

F004 304 308 4 F016 203 205 2

FPAR038 260 273 13

14.1.2 Hardcopy Support for Database

AMEC randomly selected 24 drill holes (9.7% of the drill holes included in the database) for checking the hardcopy documentation (Table 14-3). Although much important documentation is present, the hardcopy files are commonly incomplete. The Anglo American/Karmin files did not include drilling reports, and some of them lacked general drill hole information (collar coordinates, deviation measurements). All Votorantim files lacked sampling data, and two lacked assays. It is important that the drill hole files include all relevant primary documents, as the drill report with recovery data, detailed geological and geotechnical logs, downhole surveys, sampling data, sample submittals, a copy of the assay certificate, QA/QC and other important information, as well as a summary sheet.

AMEC selected five original certificates from Nomos (corresponding to drill holes FEX-3, FEX-14, FEX-26, FEX-38 and FEX-49) and six original ACME certificates (corresponding to drill holes FPAR-010, FPAR-020, FPAR-032, FPAR-050, FPAR-062 and FPAR-073), and tried to compare the original assay data with the data included in the database. This was not possible, since the database did not include the sample numbers.


Table 14-3: List of Reviewed Drill Hole Files

Hole ID Hole ID Hole ID Hole ID

FEX 03 FEX 24 FEX 39 FPAR 002 FEX 05 FEX 27 FEX 42 FPAR 004

FEX 10 FEX 32 FEX 43 FPAR 051



FEX 23 FEX 38 FPAR 001

14.1.3 Sampling Consistency

AMEC reviewed the sample intervals and the lithology type stored in the database, compared them with the corresponding information recorded in the original documentation from 23 drill holes (Table 14-3), corresponding to 9.3% of the drill holes included in the database and found them adequately recorded. Sample intervals (From-To) were usually in agreement with major lithologic changes on drill logs and respected the main lithologic boundaries.

14.1.4 Database Checks

Votorantim uses a proprietary SQL database management package for handling the data. The package was developed for Votorantim by Geoexplore Consultoria e Serviços (Geoexplore), a Brazilian company. Votorantim supplied AMEC the drilling database as a MS Access file, AP_091007.mdb with various tables. The data structure is as follows:

• Collar data (collar): hole id, coordinate X, coordinate Y and coordinate Z

• Survey data (survey): hole id, depth, bearing and dip

• Assay data (assay): hole id, from, to, lithology (empty field), contact (coded), sample number (only for Votorantim samples), Cu, Pb, Zn, Fe, Au, Ag, As and equivalent Zn (EqZn), density and laboratory (other fields are empty)

• Lithology data (lito): hole id, from, to, lithology (coded), VMS alteration minerals (coded), skarn alteration minerals (coded), shears, weathering, presence of pyrite, pyrrhotite, chalcopyrite, sphalerite and galena, and additional remarks

• Structural data (estrutura): hole id, depth, azimuth, dip, type of structure (coded) and additional remarks.


14.1.5 Collar and Survey Data

There are 44 drill holes without downhole surveys in the “survey” table. A large number of drill holes had considerable changes in azimuth and dip from the collar to end of hole (EOH). There were 62 holes, or 30% of the surveyed holes, with changes greater than 10% in azimuth, and 78 holes, or 38% of the surveyed holes with changes greater than 10% in dip from collar to EOH. In total, 150 measurements (0.9%) had variations between consecutive azimuth readings greater than 2%, and 360 measurements (2.3%) had variations between consecutive dip readings greater than 2%.

14.1.6 Assay Data

The table “assay” was evaluated for data quality. The file contains 24,535 drill hole assay values. In addition, AMEC’s preliminary review indicates that some errors like zero and negative values are present; AMEC later corrected these values. The database does not include samples with below-detection-limit values, as defined by the laboratory and AMEC recommends this to be implemented.

14.1.7 Lithology Data

Although the Anglo American and Karmin original logs included descriptive lithology, alteration and mineralogy, all holes were re-logged by Votorantim, and assigned codes for lithology, alteration minerals and sulphides.

AMEC checked three fields (From, To and Lithology) as stored in the Aripuanã database and compared the code for the sampled material with the original logs from 23 original (or re-described) logs (Table 14-3), corresponding to 11.3% of the drill holes included in the database, to determine the entry error rates. No errors were detected.

14.2 Geological Interpretation

AMEC reviewed the original logs from 23 drill holes from Arex and Ambrex (9.3% of the holes included in the database), visually cross-checked them against the information displayed in the corresponding geological sections, and reviewed the geometry of the interpreted geological shapes in the sections.

AMEC recognizes that the interpretation respects the data recorded in the logs and the sections, as well as the interpretation from adjoining sections, and is consistent with


the known characteristics of this deposit type. The lithologic model has been diligently constructed in conformance to industry-standard practices.

14.3 Bulk Density Review

Anglo American-Anglo American/Karmin Scattered bulk density data from the Anglo American and Anglo American/Karmin exploration campaigns are found in the database; however, details on the bulk density determination procedure were not available for review.

Votorantim During the 2004-2005 exploration campaign, all samples were measured for bulk density. The procedure was conducted using the whole sample, and consisted of measuring the weight and determining the sample volume by measuring with a graduated vessel the volume of water displaced through immersion on a plastic pipe. The samples are not dried prior to weighing, and are not covered with paraffin prior to immersion on water. In addition, the graduated vessel has 10 ml divisions. In the example sheet presented to AMEC, the volume has been determined with a 5 ml precision, probably by interpolation between lines in the graduated vessel. AMEC does not consider this procedure as best practice for determination of bulk density to be used for resource estimation purposes.

However, considering the large amount of determinations, the low porosity of most local lithologies, and the large sample size used in the bulk density determinations, AMEC has used this information to estimate the average density of the main mineralization types in the Arex and Ambrex deposits (Table 14-4).

Table 14-4: Average Bulk Density of the Arex and Ambrex Mineral bodies Body Mineral Type Average Bulk Density (t/m3)

Stratabound 3.15 Ambrex

Stringer 3.07

Stratabound 3.07 Arex

Stringer 2.95


15.0 ADJACENT PROPERTIES

No adjacent properties of significance are known as all mineralization found to date lies within the joint venture area. Vale de Sonhos may lie outside the JV area, but drilling at that location was unsuccessful.


16.0 METALLURGICAL TESTING AND MINERAL PROCESSING

16.1 METALLURGICAL TESTWORK

The conceptual engineering study (AMEC, 2007b) for the Aripuanã Project indicates that mill feed is to be sourced from two deposits: the Ambrex and the Arex deposits.

The highlights and conclusions from the relevant mineralogical and metallurgical evaluations made of samples taken from either of these deposits are presented in the following sections.

16.1.1 Sample Selection

The logs and mineralogical analysis of some drill intercepts, retrieved from three holes (F-54, F-55 and FPAR-15 (4 intercepts)), was provided.

A second mineralogical report (Poli, 2006) relating the study of two samples obtained from the Arex deposit (Arex 4, Arex 5), was also reviewed. The document did not detail the sample sources.

These reports provided information regarding the occurrence mode of the zinc, lead, copper, gold and silver in the ore deposits, and assisted the development of preliminary process recovery options.

Mineralogical Analysis of Selected Samples

They also indicated that different lithologies contain the potentially economic minerals, and correspond either to a massive sulphide, or a carbonate or sericite/chlorite matrix in the Ambrex deposit and a more silica-rich material (17-24%) in the Arex deposit, yet with up to 25% of the material as sulphides. The Arex 4 and 5 samples analyzed in the second report were found contain 11% and 16% of its weight, respectively, as fluorite. The fluorine content in the concentrates produced has to be tracked for this potentially penalty-bearing element at the smelters.

Zinc is occurring as sphalerite, which is present in all the samples studied. Sphalerite is principally present as free and disseminated grains but, sometimes, as occlusions within pyrite and pyrrhotite, or associated with chalcopyrite, pyrite or pyrrhotite. Sphalerite was assessed to be occurring in grains expected to yield 85% liberation at a grind size of 75 microns (µm), or 200 mesh. Some values will remain locked within the pyrite/pyrrhotite matrix down to a grind size of 25 µm. Others will exhibit the


“chalcopyrite disease”, with residual micro-grains of chalcopyrite and pyrrhotite/pyrite within larger sphalerite grains, even at a fine grind size.

Copper occurs only within chalcopyrite and is found in almost all the inspected samples. Sometimes chalcopyrite is observed in association with sphalerite and, in minor cases, with pyrite. The chalcopyrite was assessed to be mostly liberated at 74 µm.

Galena is the sole lead carrier. It is observed as free grains, but sometimes occluded or associated with sphalerite and pyrite, and sometimes as fracture filling within grains of pyrite. It is also found as a thin layer over pyrrhotite grains. It was estimated that the lead values would be 85% liberated at a grind size of 74 µm.

Gold and silver are not observed in the samples. For this reason, it is presumed that they are present as solid inclusion or within the mineral matrix of the main sulphide species, with galena likely the predominant carrier.

Gangue principally corresponds to quartz/feldspar and sericite/chlorite. In a couple of samples a large amount of carbonates is observed. Iron is found predominantly as free pyrrhotite and pyrite, and sometimes as binaries of these minerals and sphalerite or galena. Pyrrhotite is almost completely liberated at 74 µm.

Considering these petrographic and mineralogical analysis of the limited samples from the Ambrex and Arex deposits, it is possible to establish that Aripuanã corresponds to a classical zinc-lead-copper ore deposit, containing sphalerite, galena and chalcopyrite, with non-minor amounts of gold and silver, as the recoverable species with economic value.

16.1.2 Metallurgical Testwork

The program involved the selective flotation of zinc, lead and copper to obtain separate concentrates as final products. Lead and copper are first recovered in a bulk flotation while depressing zinc. The bulk concentrate is then separated into a copper concentrate and a lead concentrate, where feed grades warranted it. Rejects of the bulk flotation circuit are then floated to recover zinc. This is a standard sequential flotation approach for polymetallic sulphide mineralization.

A requirement stated by Votorantim was to exclude cyanide in the reagent schemes tested. Cyanide is sometimes introduced, along with zinc sulphate, to enhance the depression of zinc and pyrite in the bulk Cu-Pb flotation stage. As such, multiple alternatives are also available. Where it is mostly used as the reagent of choice is in the separation stage of the bulk concentrate, for depressing copper and selectively


floating lead. The alternate route involving the depression of lead instead had therefore to be followed. The report does not indicate if the most common reagent scheme, involving the addition of sulphur dioxide (SO2) was retained.

Arex Testwork

The two samples from the Arex deposit used for the mineralogical study referenced above (Poli, 2006) were also involved in a flotation testwork program (Gorceix, 2005).

About 27 flotation tests were performed with these two samples, either individually or as a 50:50 blend of the two. Highlights of the test series can be summarized as follow.

• The financial analysis used diluted grades of 4.32% Zn, 0.58% Cu and 2.04% Pb, with the low copper content of the Ambrex lowering the average. With respective head grades for the samples tested of 6.35-6.89% Zn, 2.66-1.65% Cu and 1.8-2.6% Pb, test results for zinc and copper, as well as for lead with the Arex 5 sample, are expected to be superior to what might be achievable for material bearing only the average grades considered.

• The flotation feed size distribution resulting from 30 minutes of grinding is reported as sufficient to achieve results similar to those obtained with 45 minutes. Regrinding of the bulk concentrate allows enhancement of the cleaned concentrate grade but is not deemed a necessity. No indication of the P80 achieved under these circumstances was provided. No further optimization of the primary grinding or regrinding stages was performed.

• The cleaned bulk concentrate with the Arex 4 sample is capable of recovering over 90% of the copper and lead, but along with about 20% of the zinc. With Arex 5, the equivalent recoveries are decreased towards 80%.

• Separation of the bulk rougher proved difficult, with the better tests on Arex 4 producing no more than a 45-60% lead recovery to the lead concentrate, along with about half of the zinc units floated to the bulk concentrate reporting to this product. Arex 5 proved much more challenging, with a concentrate grade of at best 29.5% Pb being obtained at very low recovery, or with lower concentrate grades typically in the 18% Pb range yet not allowing much more than a 50% recovery. Both samples achieved good rejection of copper though, with mostly less than 2% Cu reporting to the lead product (for about 5% recovery), indicating grade dilution from poor liberation of the galena and/or poor rejection of iron-bearing minerals.

• The cleaned copper concentrate indicated at best a grade of 22% Cu against a recovery of about 74% (Test 13), or up to 34.4% Cu but against a lowered recovery


of about 63% (Test 19). Zinc content in the concentrate is mostly below 3% while lead content, increasing with the higher concentrate copper grade (thus probably reflecting better iron-bearing minerals), is found between about 3-5%.

• A cleaned zinc concentrate grade of up to 53 %Zn yields a recovery of approximately 70% for Arex 4, increasing to about 80% with Arex 5. The copper contents were below the 1% level for the better tests with both samples, so was the lead content for Arex 4. Lead levels with Arex 5 increased though to the 1-2.5% range, typically, reflecting the poorer performance of the prior bulk flotation.

Considering the indications obtained from the mineralogical analysis of the two samples used in the testwork, the more negative response encountered with the Arex 5 sample is not fully explained. Sample oxidation, prior to the testwork, may have hampered the outcome.

Ambrex Testwork

The same testwork program referenced above (Gorceix, 2005) involved three tests with a sample of the Ambrex orebody, of unknown origin. The sample feed grades are not provided in the report but it may well have been bearing only lead and zinc in sufficient quantity to warrant production of the relevant concentrates, as typically found within the Ambrex deposit.

Highlights of the test series can be summarized as follow.

• The financial analysis used diluted grades of 4.32% Zn, 0.58% Cu and 2.04% Pb, with the low copper content expected from the Ambrex zone lowering the average. With head grades for the sample tested of 6.4% Zn, 0.19% Cu and 2.08% Pb, the actual test results for zinc are expected to be superior to what might be achievable for material of the average grades considered. As for lead, they may approach the eventual outcome, albeit with more pressure from potential copper contamination than the sample tested provided with its much lower copper content.

• The same grinding time of 30 minutes retained for the testwork with the Arex samples was adopted for Ambrex zone ore sample. The report does not state if any check relative to the actual P80 achieved with this material was made.

• Lead recovery to the bulk rougher concentrate reached just over 80% in the best test.

• Copper recovery is just below this level, partly reflecting the expected low feed grade for this metal. Its marginal content do not likely warrant production of a


separate concentrate, unless its separation from the lead concentrate is dictated by quality concern of this product.

• Lead cleaner concentrate quality is poor, with a grade of not much more than 10% Pb being obtained against recovery of 30-35% (or 7.4% Pb with 56.3% recovery), while copper recovery stayed mostly in the 55-65% range. Attempts at depressing the copper and zinc may have caused the drop in lead recovery as well.

• Zinc recovery reached a range of 70% (or nearly 78% of the zinc not retained in the bulk Cu-Pb circuit), along with concentrate grades of about 47% Zn.

16.1.3 Conclusions

There is no strong correlation between the results exposed in the metallurgical testwork report and the projections used for the financial evaluation of the Project at this stage, especially when one is accounting for the differential between tested and average ore grades. The projections retained are assuming the following:

• It is possible to achieve a zinc recovery of 80% with a concentrate grade of 50% Zn, while processing ore at a feed grade of 4.32% Zn - even though the best results showed a recovery of 75% against a grade of 48 % Zn for Arex 4 (with heads of 6.35% Zn), while Arex 5 (6.89% Zn heads) did approach these projections. The Ambrex testwork managed at best 70% recovery (78% within the zinc circuit), to a 47% Zn concentrate.

• A copper recovery of 75% is considered with a concentrate grading 25% Cu, for feed material grading 0.58% Cu – projections above the typical 74% recovery at 22% Cu achieved with Arex material (with 1.65-2.66% Cu heads), while Ambrex material may not contain sufficient copper to warrant its recovery when processed on its own most of the time.

• Lead recovery of 80% can yield a concentrate grade of 48% Pb, at average head grade of 2.04% Pb – despite lead recovery of about only 30% having been achieved with Arex 4 (feed grade of 1.8% Pb), for concentrates hardly reaching the minimum grade requirement for marketing, of 45 to 50% Pb. The outcome with Arex 5 (with 2.6% Pb heads) was worst, and much worst still for the Ambrex testwork.

The metallurgical projections used for the determination of the model block value are optimistic relative to the actual tests outcome. Though these were realized in an open circuit, therefore not involving recovery improvements that the eventual recycling of the intermediate tailings within the industrial-scale process could yield, and were likely yet not optimized, the extrapolations made to derive the projections may yet not be


sustainable. As well, the testwork involved samples of higher grades than the anticipated averages from the deposit, especially for zinc and copper (for the Arex samples), which invalidate any direct projection of the metallurgical response achieved to the lower average metal contents expected.

Nevertheless, at a preliminary evaluation stage, such an optimistic approach may yet be justifiable, although requiring qualification accordingly.

The flotation testwork report failed to provide critical details, some of which should have been readily made available, all with relevance to the plant design and plant operating costs estimate, such as:

• Actual primary grind fineness achieved after the 30 minute grind time selected. • Regrinding intensity implemented, when attempted. • Indication of the flotation time employed, per stage, for scaling-up the industrial

flotation cells. • Confirmation of all the reagent types employed, along with addition points and

quantities. • Precious metals deportment amongst the concentrates produced. • Minor element loads in the concentrates, if obtained.

This testwork program is obviously very preliminary, both relative to the sample variability and limited depth of the process optimization sequences involved.

It is recommended to carry additional test programs, while ensuring the supply of fresh mineralization samples, especially in order to improve on the lead recovery outcome and selectivity against pyrite/pyrrhotite. Liberation analysis of the concentrate and reject streams should be completed via reflective microscopy to ascertain what are the mode of occurrences of the concentrate contaminants and the type of losses in the tailings. Acid-base accounting (ABA) calculations and, if required, leaching tests on the tailings stream should also be completed to establish the acid-generating potential of the rejects.

The eventual marketability of the concentrates should also be ascertained through the analysis of a suite of minor elements deemed deleterious by the smelters.


16.2 PROCESSING PLANT DESIGN

16.2.1 Process Selection and Basis

Using the information available from the metallurgical testwork on Aripuanã, and in consideration with the standard flotation circuit configurations encountered in other plants dealing with such polymetallic mineralization, the following general processing route is established:

• Crushing and grinding of the mineralization to produce a flotation feed pulp. • Bulk flotation of copper and lead, while depressing zinc and iron minerals (pyrite,

pyrrhotite) • Regrinding of the bulk concentrate prior to cleaning of the product to reject further

zinc values and iron minerals. • Separation of copper and lead from the cleaned bulk concentrate via selective

flotation of copper, yielding a copper and a lead concentrate. • Flotation of zinc from the bulk flotation circuit tails, producing as final product a zinc

concentrate. • Dewatering of the concentrates in circuits involving thickening and filtration of the

products. • Tailings disposal in a proper wet tailings dam.

The process selected is consequent with the presence of three economic base metals and corresponds to a standard configuration for such polymetallic mineralization.

The projected recoveries and concentrate grades used for the financial analysis of the Aripuanã Project, as presented in the previous sections, were retained for completing preliminary sizing of the processing equipment. Despite a total lack of precious metal balances from the flotation testwork completed, projections regarding the eventual deportment of gold and silver to each of the three products were made as follows:

• Global gold and silver recovery of 70%. The recovered gold and silver units are distributed between the three products, with 25%, 50% and 25% said to report respectively to the zinc, lead and copper concentrates.

Again, the preliminary development stage of the project has to be stressed for allowing the use of optimistic metallurgical assumptions and incomplete design parameters to dictate the expected product value and equipment sizing.


16.2.2 Plant Design Criteria

The annual tonnage considered as the design plant feed is 1.2 Mt, and the average grades and metallurgical parameters related to the economic values are summarized in the next Table 16-1.

Table 16-1: Main Parameters and Grades for the Processing Plant PARAMETER Zinc Lead Copper Gold Silver

Average Feed Grade (% or g/t) 4.32 2.04 0.58 0.50 63

Plant Recovery (%) 85 80 80 70 70

Concentrate Grade (%)

Gold Grade (g/t)

Silver Grade (g/t)

50

1.2

150

60

6.4

812

25

4.7

590

Average Tail Grade (% or g/t) 0.74 0.46 0.13 0.17 21

Due to the lack of additional test data, the major equipment in the processing plant is dimensioned using the assumptions listed above in Table 16-1 and indexed design parameters.

The following sections describe the corresponding design criteria retained.

Crushing Section

Design Criteria

General design parameters for the crushing section are presented in Table 16-2.


Table 16-2: Design Parameters for the Crushing Section Design Parameter Unit Value

Operating weeks per year

Operating days per week

Operating hours per day

Nominal feed to the plant

Design Capacity of the crushing plant

ROM bin capacity

ROM size (80% passing)

ROM jaw crusher undersize (-2”)

Intermediate stock pile

Final product sizing (100% passing)

w/y

d/w

h/d

t/y

t/y

trucks

inches

% wt

days of operation

inches

52

6

20

1,200,000

1,380,000

3

20

25

1

!

Design Parameters

The mineralization is brought from the mine with a typical size of 80% -20”, and is discharged from mine trucks in a ROM ore bin, where the mineralization is continuously fed through a scalping feeder to a 34” x 44” primary jaw crusher. A conveyor transports the nominal -6” crushed mineralization stream and the scalped ROM fines to an intermediate stockpilet.

Under the intermediate stockpile, four vibrating feeders feed a conveyor belt that transports the mineralization to the secondary standard-head cone crusher, nominally a HP300. The cone crusher product, typically at minus 1.5”, is then transported by other conveyor belt to a 10’ x 27’ double-deck screen, with a lower deck opening of !”. The undersize of the screen is the final crushing circuit product, which is received by another conveyor belt and transported to the fine ore bin.

The oversize of the screen, at +!”, is transported by belt conveyor to a tertiary short-head cone crusher, nominally a HP700, operating in closed circuit with the same double-deck screen.

The circuit configuration and equipment sizing was found consequent with the design criteria indicated in Table 16-2.


Grinding Section

Design Parameters

General design parameters for the grinding section are presented in Table 16-3.

Table 16-3: Design Parameters for the Grinding Section Design Parameter Unit Value

Operating days per year

Plant availability

Nominal ore feed to the grinding section

Design capacity of the grinding section

Specific gravity of the ore

Top size of the feed

Product sizing (80% passing)

Work index

Rotational speed of the mills

Circulating load

d/y

%

t/y

t/y

t/m3

inches

microns

kWh/t

%Cs

%

365

98

1,200,000

1,320,000

3.1

!

75

13

72

200

The indicated work index (Wi) used for sizing the ball mills is an inferred value from similar massive sulphide mineralization. No actual measurement was performed on any sample from the Project. Neither were measurements of the actual flotation feed size distribution for the selected 30 min primary grind adopted, with the indicated P80 of 75 µm apparently selected solely based on the mineralogical analysis.

Detailed Description

From the fine mineralization bin, two conveyors feed mineralization to the grinding circuit comprising two parallel lines, each with one ø12’ x 18’ ball mill and an hydrocyclone battery fitted with four ø10” cyclones. The ground slurry reports to the flotation conditioner at the nominal flotation feed size of 80% -75 µm.

The preliminary equipment sizing, in particular the requirement for two 1,500 hp mills, is consequent with the design criteria presented above in Table 16-3.


Bulk Cu-Pb Flotation Section

Design Parameters

General design parameters for the bulk Cu-Pb flotation section are presented in Table 16-4:

Table 16-4: Design Parameters for the Bulk Cu-Pb Flotation Section Design Parameter Unit Value


Plant availability

Nominal mineralization feed to the section

Design capacity of the Flotation section

Specific gravity of the mineralization

Size distribution of flotation feed (80% passing)

Regrind circuit product

Retention time in conditioner

Slurry density in conditioner

Retention time in rougher flotation

Retention time in 1st cleaner flotation

Retention time in 2nd cleaner flotation

d/y

%

t/y

t/y

t/m3

µm

µm

min

% solids

min

min

min

365

98

1,200,000

1,320,000

3.1

75

44

5

30

15

15

15

As for the primary grind determination, the criteria calling for a P80 of 44 µm for the regrinding circuit product is not supported by actual test data from the testwork report.

There is no indication either in the flotation testwork report as to the actual flotation periods used for the individual stages. To these, a normal scale-up factor in the order of 2-2.5 for roughing and scavenging stages and 3-3.5 for cleaning stages is normally added to account for the eventual effect of intermediate circulating loads.

The derivation of the required total volume for the individual flotation stages has included a factor in the order of 85%, which is properly accounting for the lost nominal cell volume occupied by the agitation mechanism, entrained air and froth layer.


No design feed grades were elected for deriving optimum volume requirements. These design grades are usually a multiple of the average feed grades and their application ensures that there is sufficient retention time remaining in the cleaning stages to maintain metallurgical performance when the plant is processing feed at grades higher than the average values. Design grades are usually derived from a yearly mine plan, to which the peak grades encountered are grossed-up by a factor, or from an analysis of the block model grade distributions, to ensure coverage of 80-85% of the individual block grades included within the mine design limits. These design grades would influence the sizing of the cleaning stages and dewatering circuits or, conversely, the intensity of blending efforts that would have to be deployed ahead of the plant to comply with its design capacity restrictions. The same comments are applicable to all the flotation circuit design.

Lacking design grades, the actual retention times used for design are reflecting industrial practice at other plants processing polymetallic Cu-Pb-Zn mineralization but to which incremental retention and pulp dilution have been assigned to cover peak grades above the averages. The resulting operational margins, in terms of equivalent feed grades that could thus be accommodated in the flotation circuit, are not detailed.


The slurry from the grinding section is first fed to a conditioner where the reagents to depress zinc, float copper and lead are added.

From the slurry conditioner, slurry is fed to Cu-Pb rougher flotation bank composed of six 700-ft3 WEMCO cells.

Concentrate from the rougher cells is pumped to a regrinding circuit comprising a cyclone battery of three ø5” cyclones and a ø 5‘x 7‘ regrind mill. The reground slurry goes to the first cleaners, comprising six 100-ft3 WEMCO cells.

The first cleaner concentrate is fed to a second cleaning stage, with five WEMCO cells of 100 ft3. First cleaner tails are pumped to the zinc flotation section together with the tails from the rougher flotation.

The second cleaner concentrate is fed to the Cu-Pb separation section and the tails of this flotation stage are pumped back to the regrinding circuit.



Copper-Lead Separation Section

Design Parameters

General design parameters for the copper-lead separation section are presented in Table 16-5.

Table 16-5: Design Parameters for Cu-Pb Separation Section Design Parameter Unit Value


Plant availability

Nominal feed to the section


Specific gravity of the feed




Retention time in scavenger flotation


Retention in cleaner-scavenger flotation


d/y

%

t/y

t/y

t/m3

min

%

min

min

min

min

min

365

98

46,000

55,000

4.7

5

20

20

10

20

10

20

The same comments regarding derivation of the required retention times as indicated under “Bulk Cu-Pb Flotation Section” is applicable to the data shown in the above table.


The Cu-Pb bulk concentrate flows to a conditioner where the reagents are required to depress lead and enhance the differential flotation of copper are added.

From this conditioner, the flotation slurry is fed to four 150-ft3 copper rougher WEMCO cells. The tails are fed to a copper scavenger flotation stage provided with three 150 ft3 cells. The concentrate from scavenger flotation is pumped back to the rougher


flotation cells while the tails, forming the final lead concentrate, are pumped to the lead concentrate thickener.

The rougher concentrate is fed to the copper cleaning circuit, made of banks of WEMCO 100-ft3 cells. The first cleaners, with four cells, produce a concentrate feeding the second cleaners, comprising three cells. Tails of the first cleaner flotation circuit are fed to a single cell acting as the cleaner-scavenger. This step is producing an intermediate concentrate that is fed back to the first cleaner flotation circuit while its tails are pumped back to the scavenger flotation cells.

The second cleaners concentrate is pumped to the copper concentrate thickener. Tails from this flotation stage are pumped to the first cleaner flotation feed.


Zn Flotation Section

Design Parameters

General design parameters for the Zn flotation section are presented in Table 16-6. The same comments regarding derivation of the required retention times as indicated is applicable to the data shown in the above table.

Table 16-6: Design Parameters for Zn Flotation Section Design Parameter Unit Value


Plant availability

Nominal feed to the section


Specific gravity of the ore

Top size of the feed

Regrind circuit product



d/y

%

t/y

t/y

t/m3

mm

mm

min

%

365

98

1,150,000

1,250,000

3.0

80% -0.075

80% -0.044

5

30


Design Parameter Unit Value




min

min

min

15

15

15


Tails from the copper-lead bulk flotation section are fed to a slurry conditioner where the reagents required to activate and float zinc, while enhancing iron rejection, are added.

From this conditioner, the slurry is fed to zinc rougher flotation cells, where ten 700-ft3 WEMCO cells are yielding a rougher concentrate. The tails are pumped to the tailings pond.

Concentrate from the roughers is pumped to a regrinding circuit comprising a battery of seven ø8” cyclones and a regrind mill of ø5’ x 7’. The cyclone overflow gravitates to the first cleaner zinc flotation cells.

The first cleaner has six WEMCO cells of 150 ft3. Its concentrate is pumped to the second cleaning stage, with four WEMCO cells of 150 ft3. The first cleaner tails are pumped to the tailings pond, along with the rougher tails.

The concentrate from the second cleaner is pumped to the zinc concentrate thickener and its tailings are pumped back to the regrinding circuit.


Thickening and Filtration

Design Parameters

General design parameters for thickening and filtering section are presented in Table 16-7.


Table 16-7: Design Parameters for Thickening and Filtering Section Design Parameter Unit Value


Plant availability

Operating hours per day

Nominal Cu concentrate to thickener

Design Cu concentrate to thickener

Specific area for Cu thickening

Retention time in Cu thickener

Nominal Pb concentrate to thickener

Design Pb concentrate to thickener

Specific area for Pb thickening

Retention time in Pb thickener

Nominal Zn concentrate to thickener

Design Zn concentrate to thickener

Specific area for Zn thickening

d/y

%

h/d

t/h

t/h

m2/t/d

d

t/h

t/h

m2/t/d

d

t/h

t/h

m2/t/d

365

98

18

2.4

2.7

0.56

1

2.8

3.4

0.56

1

9.0

10.8

0.65

The unitary area requirements indicated in Table 16-7, as used for sizing the required thickeners, are based on benchmarked operations. The values are sufficiently conservative, considering the lack of actual testwork data and values from other existing operations dealing with finer concentrate of heavy sulphides.

No such data is presented to justify the sizing of the pressure filters. Typically, values in the order of 350 kg/h/m2 of net filter chamber area are expected for a concentrate with solids SG in the order of 4.25. This is based on providing filters featuring vertical plates. This filtration rate is underlying a chamber depth of 50 mm, a nominal cycle time of 15 minutes and an equipment utilization rate of 85%.


The concentrates are pumped to their corresponding thickener from their respective flotation circuit sections. The unit area requirements used are dictating the selection of a ø7 m unit for copper, ø8 m for lead and ø15 m for the zinc concentrate. The actual thickener diameters retained for lead and copper concentrates are amply covering the unit area requirements indicated, with units of ø10 m provided for both concentrates,


vs. an expressed need for ø7 and 8 m units. The zinc product obtains an ø15 m thickener, matching the design criteria.

The thickeners are operated at a target underflow density of 60% solids. The thickened slurry is pumped batch-wise to the respective concentrate pressure filter, yielding a nominal final moisture content of no more than 10%.

Table 16-7 does not present any unitary filtration rates for the concentrates. The capital cost estimate is based on the provision of one filter with 30 plates each for the copper and lead concentrates, while two filters, each fitted with 60 plates, cover the zinc duty. Even based on the smallest plate size available, such filter packs are very conservative for the design concentrate production.

16.3 Operating Cost Estimate

Based on the limited testwork data provided, especially lack of mineralization hardness and abrasivity measurements and lack of addition rates of reagents used in the flotation testwork program, most of the consumable consumptions were assessed from other operations. The resulting accuracy of such estimates is therefore very limited.

Some reagents expected to be part of the scheme implemented were found missing from the list considered, such as: zinc sulphate as a zinc depressant in the bulk copper-lead circuit, as well as the lead depressant (SO2) and a more selective copper collector in the copper-lead separation circuit.

Power consumption estimates were derived from a comprehensive equipment list, with installed power base and load factors having been assigned to the individual motor. The resulting power consumption estimate is therefore considered to be as good as the basic equipment sizing exercise could be, in light of the limited testwork data provided. No power consumption is attributed against the provision of services to the plant, such as compressed and instrumentation air, and water supplies. A comment found in the conceptual study (AMEC, 2007b) indicates that fresh water would likely be supplied from wells drilled near the mine site. There are no apparent requirements for pumping reclaimed water from the tailings pond to the plant, or to treat water discharged to the environment, which may be accurate for the water balance requirements and in compliance with local environmental management practices and norms.

Labor costs were derived from a detailed roster of plant personnel and burdened wage estimates prepared from AMEC’s database. Absent though is an estimate for contractual services to be provided, mostly stemming from maintenance requirements during scheduled plant shutdowns.


16.4 Conclusions

Only limited metallurgical information is available from the testwork completed on Aripuanã mineralized samples. The basic flowsheet normally implemented at other mining operations treating such polymetallic mineralization containing zinc, lead and copper as main products, has been adopted, with the corresponding design metallurgical parameters estimated for equipment sizing and costing.

The economic parameters assigned to the mineralization behavior, such as recovery and concentrate grade, do not consider particular processing issues, despite mineralogical evidence indicating that complex intergrowth of iron-bearing minerals are expected to dilute maximum concentrate grades. The gangue carries fluorite, which may report in sufficient quantity in a given concentrate to attract smelting penalties, or rejection.

Considering the conceptual nature of the engineering study (AMEC, 2007b) and metallurgical testwork results provided as a basis for the current evaluation, missing metallurgical design parameters have been assessed based on valid indexing approaches, from established industry standards.

16.5 Recommendations

In order to adequately characterize the two deposits metallurgical performance, it is highly recommended to obtain fresh and representative samples of end members and testing representative composite samples formed with individual intercepts taken from a variety of drill holes within the Ambrex and Arex deposits. At the onset, such a program must consider a proper lithological characterization of the deposits and identification of the mineralogical species involved in the end members of the geo-metallurgical units thus defined. Once mineralized domains are identified, representative samples can be prepared to develop the geo-metallurgical response of the deposits.

The principal objective of the testwork program is the economic optimization of the metallurgical results, in terms of the metal recoveries and concentrate grades.

Other metallurgical parameters, including abrasivity and grindability of the mineralization, must also be obtained to adequately characterize the crushing and grinding properties of the deposit and further enhance the assessment of the expected power draws, and liner and grinding media wear rates.


Finally, under the optimum conditions retained, the required volumes of flotation cells per stage are to be set while additional dewatering testwork is to be completed for firming up the proposed sizing of the thickeners and pressure filters.


17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

As part of AMEC´s scope of work, a mineral resource estimate was prepared, using existing drill hole data and a new geological model. Using Votorantim´s geological interpretation in vertical sections, AMEC constructed a geological model used as the basis for resource estimation. The resource model was developed in close collaboration with Votorantim, and concepts, issues and solutions were discussed with Votorantim staff on an on-going basis.

17.1 Geological Interpretation and Modeling

Votorantim geologists interpreted geology on non-parallel sections at an irregular spacing to accommodate for the irregular distribution of the drill holes. Arex and Ambrex were interpreted as Volcanogenic Massive Sulphide (VMS) or Kuroko deposit-types, with separation of a stratabound and a stringer zones.

Fifteen sections were interpreted at Ambrex, with the sections mostly oriented at N22ºE. Twenty sections were interpreted at Arex, with sections mostly oriented at N10ºE.

AMEC built the three dimensional stratabound and stringer solids from the sectional interpretations using GoCAD®, an advanced modeling software.

International standards such as the CIM’s Estimation of Mineral Resources and Mineral Reserve Best Practice Guidelines recommend interpreting two orthogonal sets of sections and reconciling them on plan. This was not done at this time, but AMEC recommends that this work be done in the next modelling effort.

AMEC also observed that the interpretations leave significant amounts of mineralized material outside the interpreted deposit boundaries. This material may add value to the property, but it was not considered in the current mineral resource estimate for the Aripuanã project; therefore, AMEC recommends revising the interpretations to incorporate this material into the stratabound and stringer bodies.

17.1.1 Exploratory Data Analysis (EDA)

AMEC performed statistics on the raw assay zinc, lead, copper, silver and gold grades. The database contains a significant amount of samples coded as missing. AMEC suspects that low-grade intervals were systematically disregarded for assaying by the field geologists, and has therefore re-coded these missing values intervals as zero-grade assays. This conservative correction is required to avoid overestimation of grades during the interpolation.


Reviewing the assay histograms and log probability plots AMEC found that there is mixture of grade populations within the interpreted solids.

The assays were composited at 5 m, which corresponds to the selected block height. The composites were created down-the-hole, and broken at geological contacts.

AMEC generated contact plots in order to define the grade behaviour at contacts. The contact plots show hard contacts between waste, stratabound and the stringer mineralization types.

17.1.2 Variography

AMEC modeled composite variograms for zinc, lead, copper, silver and gold separately at Ambrex and Arex. The number of composites did not allow for separate modeling of the stringer and of the stratabound mineralization; therefore, AMEC generated combined stratabound and stringer variogram models.

AMEC first generated down-hole variograms to define the nugget effect. The nugget effect was then used to model the 3D experimental variograms, which were generated at lags of 10 m to 25 m. Two spherical structures were used to fit the variograms.

17.1.3 Grade Estimation

AMEC generated a subcell block model in Datamine to represent the different domains of the stringer and stratabound zones. Blocks that are not inside those solids were considered as “host” unit. The cells immediately outside the solids were consider as a dilution zone and were also estimated with grades.

The grade interpolation was done independently in the stratabound and in the stringer solids, using ordinary kriging.

Kriging was done in three passes with increasing search radii. The search radii were defined based on the variogram ranges and represent approximately 75%, 150% and 300% of the ranges in the X, Y and Z direction, respectively, (Tables 17-1 and 17-2). The same passes were used for the waste rock outside the stratabound and stringer solids.

AMEC modeled hard contacts between the waste, the stringer and the stratabound solids, except at Arex, where, despite the fact the contact plots indicated hard contact between the stratabound and the stringer solids with the waste, AMEC modeled a firm contact where composites from the stratabound and the stringer zones that were


directly in contact with the solid were used to estimate the waste. However, waste composites could not be used to estimate blocks within the solids. AMEC acknowledges there is a significant risk of overestimation of the waste, and this should be corrected during the next modeling effort.

Table 17-1: Estimation Search Radii-Ambrex Search Radii (m) Variable

X Y Z

Second Search Third Search

Zinc 30 60 20

Lead 20 60 20

Copper 30 60 20

Gold 30 60 20

Silver 10 60 20

x 2 x 3

Table 17-2: Estimation Search Radii-Arex Search Radii (m) Variable

X Y Z

Second Search Third Search

Zinc 60 30 20

Lead 60 30 20

Copper 60 30 20

Gold 80 30 30

Silver 60 30 20

x 2 x 3

AMEC did not use an octant search strategy due to the spatial distribution of the samples. The octant search restricted the estimation so much, that it left significant parts of the model uninterpolated.

Table 17-3 shows the minimum and maximum number of the samples used for each search. A maximum of three samples was allowed per drill hole.

Table 17-3: Minimum and Maximum Number of Samples

Search Minimum Nr. of Samples Maximum Nr. of Samples

First 3 15

Second 3 15

Third 1 15


Blocks were discretized with 3 x 6 x 3 points in Ambrex and 6 x 3 x 3 points in Arex. This discretization is for full cells, and in the case of the subcells the number of discretization points was proportional to the size of the subcells.

The model was regularized after completion of the kriging, i.e. the subcells were re-blocked into standard full-size cells. This process generates a regular cell-size model which is fully diluted at contacts.

The number of composites used, search-radius distance and kriging variance were stored for each block in the model to facilitate block model validation.

17.1.4 Block Model Validation

AMEC used several validation methods to evaluate the quality of the grade estimation.

AMEC visually inspected the block model in section and plan views. Figure 17-1 shows an example of a section with blocks and composites coloured by zinc grade ranges. Higher grades are plotted in magenta and lower grades in blue. The block grade estimates honour the composites and the anisotropy observed in the deposit. AMEC did not observe high-grade over-projections, except in the third kriging pass; however, this pass qualifies for the Inferred category at best.

AMEC used a conservative approach to the handling of the non-sampled intervals by assuming they are zero-grade. Consequently, some of the low grade zones may be underestimated, and AMEC recommends strongly that all intervals be sampled and assayed in the future drilling campaigns.

Figure 17-1: Vertical Section with Estimated Block Grades and Composites


AMEC generated a nearest-neighbour (NN) model based on the same search ellipsoids as for kriging. Comparing the kriged, NN and composite statistics AMEC is of the opinion that there is reasonable agreement between the kriged and the NN estimates, although zinc is overestimated in the lower-grade stringer at Ambrex.

As other validation tool, AMEC generated swath plots to compare the NN estimates with the ordinary kriging estimates averaged in vertical and horizontal slices. The swath plot analysis shows reasonable agreement between the kriged and the NN estimates. Only the blocks within the stratabound and stringer zones were validated. No validation was done for the blocks where grades were not estimated.

17.1.5 Resources Classification and Parametrization

AMEC defined a set of resource classification parameters based on geological and grade continuity. These parameters are shown in Table 17-4.

Table 17-4: Resource Classification Parameters Resource Category Search Pass Number of Samples

Indicated 1 >=3 Indicated 2 >=9 Inferred 2 <9 Inferred 3 >=1

To be fully compliant with NI 43-101, additional criteria was added for data quality and reasonable prospect of economic extraction.

A pit optimization was prepared using Whittle® software. AMEC considered NSR4 calculations to value the blocks that were further imported into Whittle® software. Geotechnical parameters and mining and processing costs were added to allow pit optimization.

Each block in the resource model is assigned a net smelter return (NSR) value, which is a function of the block grade and the NSR calculation parameters. The NSR calculation parameters incorporate long-term metal prices, recoveries, distribution of precious metals (in concentrate), and concentrate transportation, smelting, and refining costs. The NSR calculations for the three concentrates are presented in Tables 17-5 through 17-7.


Table 17-5: NSR Calculation for Copper Concentrate Area/Item Value Units Block Data Volume 500 m3 Density 3.07 t/m3 Tonnes 1,535 t feed Average Feed Grade Copper 0.58 % Cu Gold 0.50 g/t Au Silver 63.0 g/t Ag Plant Recovery Copper 75 % Cu Gold 70 % Au Silver 70 % Ag Au/Ag Proportion in Concentrate 25 % Concentrate Details Concentrate Produced 26.9 t conc dry Copper Grade 25 % Cu Gold Grade 5.0 g/t Au Silver Grade 629 g/t Ag Concentrate moisture 8.5 % Concentrate Shipped 29.4 t conc we Shipping Loss 0.5 % Copper concentrate (as received) 29.3 t conc dry Copper concentrate (as received) 26.8 t conc wet Copper metallurgical deduction 2.5 % Concentrate treatment charge 120 $/t Copper refining charge 0.12 $/lb Gold metallurgical deduction 1 g/t Gold payment after deduction 100 % Gold refining charge 4 $/oz Silver metallurgical deduction 30 g/t Silver refining charge 0.3 $/oz Silver payment after deduction 100 % Copper price 1.5 $/lb Gold price 600 $/oz Silver price 10 $/oz Payable metals (as received) Copper 806.06 $/t conc dry Gold 76.76 $/t conc dry Silver 192.59 $/t conc dry Total 1075.41 $/t conc dry Charges Shipping 186.73 $/t conc dry Treatment charge 120.00 $/t conc dry Copper refining charge 64.48 $/t conc dry Gold refining charge 0.51 $/t conc dry Silver refining charge 5.78 $/t conc dry Total 377.50 $/t conc dry Net Smelter Return 697.91 $/t conc dry Average NSR 12.17 $/t feed


Table 17-6: NSR Calculation for Lead Concentrate Area/Item Value Units Block Data Volume 500 m3 Density 3.07 t/m3 Tonnes 1,535 t feed Average Feed Grade Lead 2.04 % Pb Gold 0.50 g/t Au Silver 63.0 g/t Ag Plant Recovery Lead 80 % Pb Gold 70 % Au Silver 70 % Ag Au/Ag Proportion in Concentrate 50 % Concentrate Details Concentrate Produced 52.1 t conc dry Lead Grade 48 % Pb Gold Grade 5.1 g/t Au Silver Grade 650 g/t Ag Concentrate moisture 8.5 % Concentrate Shipped 56.9 t conc wet Shipping Loss 0.5 % Lead concentrate (as received) 56.6 t conc wet Lead concentrate (dry basis) 51.8 t conc dry Lead metallurgical deduction 3 % Concentrate treatment charge (base) 190 $/t Gold payment after deduction 80 % Gold refining charge 4 $/oz Silver metallurgical deduction 50 g/t Silver refining charge 0.3 $/oz Silver payment after deduction 80 % Lead price 0.5 $/lb Gold price 600 $/oz Silver price 10 $/oz Payable metals Lead 496.04 $/t conc dry Gold 56.26 $/t conc dry Silver 154.33 $/t conc dry Total 706.63 $/t conc dry Charges Shipping 186.73 $/t conc dry Treatment charge 220.00 $/t conc dry Gold refining charge 0.38 $/t conc dry Silver refining charge 4.63 $/t conc dry Total 411.73 $/t conc dry Net Smelter Return 294.90 $/t conc dry Average NSR 9.96 $/t feed


Table 17-7: NSR Calculation for Zinc Concentrate Area/Item Value Units Block Data Volume 500 m3 Density 3.07 t/m3 Tonnes 1,535 t feed Average Feed Grade Zinc 4.32 % Zn Gold 0.50 g/t Au Silver 63.0 g/t Ag Plant Recovery Zinc 80 % Zn Gold 70 % Au Silver 70 % Ag Au/Ag Proportion in Concentrate 25 % Concentrate Details Concentrate Produced 106 t conc dry Zinc Grade 50 % Zn Gold Grade 1.3 g/t Au Silver Grade 160 g/t Ag Concentrate moisture 8.5 % Concentrate Shipped 115.9 t conc wet Shipping Loss 0.5 % Zinc concentrate (as received) 115.4 t conc wet Zinc concentrate (dry basis) 105.6 t Zinc metallurgical deduction 8 % Concentrate treatment charge (base) 194 $/t Gold payment after deduction 70 % Gold refining charge 4 $/oz Silver metallurgical deduction 90 g/t Silver refining charge 0.3 $/oz Silver payment after deduction 70 % Zinc price 0.8 $/lb Gold price 600 $/oz Silver price 10 $/oz Payable metals Zinc 740.75 $/t conc dry Gold 3.55 $/t conc dry Silver 15.65 $/t conc dry Total 759.95 $/t conc dry Charges Shipping 186.73 $/t conc dry Treatment charge 217.81 $/t conc dry Gold refining charge 0.02 $/t conc dry Silver refining charge 0.47 $/t conc dry Total 405.03 $/t conc dry Net Smelter Return 354.92 $/t conc dry Average NSR 24.41 $/t feed


For NSR calculations, AMEC considered market long-term metal prices with an allowance of approximately 10% for estimating resources. Plant recovery and gold and silver distribution at the concentrates were estimated according to AMEC´s experience in similar projects. AMEC also considered market values for metal deductions and treatment charges. Shipping costs were extracted from AMEC (2007b).

An open pit mining cost of 1.20 $/t was suggested by Votorantim and checked by AMEC using benchmarking from similar operations in Brazil. A 2% royalty was added to this value.

For pit optimization, AMEC used a processing cost of 6.44 $/t. This value includes general and administrative (G&A) allocations for the plant, global overhead and a royalty of 2%.

Table 17-8 summarizes the pit optimization parameters used by AMEC.

Table 17-8: Pit Optimization Parameters Parameter Units Value

Mine Cost (includes G&A) $/t 1.224

Process Cost (includes G&A) $/t 6.44

Global Slope Angle degrees 42

A global slope angle of 42º was defined by AMEC for this study (AMEC, 2007b), but no slope angle analysis was prepared since there is limited or almost inexistent geotechnical information available. AMEC recommends that geotechnical and rock mechanics studies are prepared for next phases of the project.

The pits optimized for Ambrex could not mine all potential resource blocks due to the high strip ratio obtained. Because of the significant amount of blocks with positive values that were not considered for extraction using open pit methods, AMEC performed an underground evaluation for the Ambrex resource model. According to AMEC (2007b), an underground mine cost of US$ 10.71/t could be achieved and adding process costs and G&A to this value, a NSR cut-off of US$ 20/t is considered adequate to mine the blocks using a combination of the following underground mining methods:

• Mineralized zone width > 15 m – Transverse Longhole Stoping (Paste Fill) • Mineralized zone width 5 to 15 m – Longitudinal Longhole Stoping (Paste Fill)


• Mineralized zone width < 5 m – Cut and Fill Stoping (Paste Fill)

Considering the Ambrex blocks coloured by NSR values, AMEC designed stope contours in horizontal plans every 20 m. A minimum width of one block and continuity (to allow block access) were considered when designing the stopes, but they are suitable for resources definition only.

AMEC calculated Zinc Equivalent using the parameters listed in tables 17-5 to 17-7 (NSR calculation) and related to metal proportions, therefore the ZnEq formula can be expressed as:

ZnEq= Zn + 0.184992*Pb + 2.513182*Cu + 2.281742*Au + 0.037136*Ag

Where Zn, Pb, Cu, Au and Ag are the respective grade values for these metals.

Tables 17-9 and 17-10 tabulate the mineral resources for Ambrex and Arex, respectively. Diluted (at contact) resources are reported.

Table 17-9: Ambrex Mineral Resources* (Rodrigo Marinho, 17 December 2006) Tonnage Zn Pb Cu Au Ag (kt) (%) (%) (%) (g/t) (g/t)

Indicated 18,322 4.03 1.52 0.09 0.18 35.55 Inferred 3,528 4.29 1.51 0.07 0.25 41.89 *Resources reported for Ambrex are contained in the underground stope shapes defined using a NSR cut-off of US$ 20/t

Table 17-10: Arex Mineral Resources – Cut-off 1.8% ZnEq (Rodrigo Marinho, 17 December 2006)

Tonnage Zn Pb Cu Au Ag (kt) (%) (%) (%) (g/t) (g/t)

Indicated 9,380 2.54 1.00 0.58 0.45 34.65 Inferred 2,245 2.54 1.02 0.51 0.60 20.37

17.2 Conclusions and Recommendations

17.2.1 Conclusions

• The geological interpretation respects the data recorded in the logs and the sections, as well as the interpretation from adjoining sections, and is consistent


with the known characteristics of this deposit type. The lithologic model has been diligently constructed in conformance to industry standard practices.

• The Cu, Pb and Zn analytical accuracies at MMV during the Anglo exploration campaigns appear to have been within acceptable limits. The Au and Ag accuracies could not be assessed due to the large dispersion of the pair values.

• The Au, Ag, Cu, Pb and Zn sampling precision at Votorantim, and the subsampling and analytical precision at ACME during the Votorantim exploration campaigns were within acceptable limits.

• The Pb and Zn analytical accuracies at ACME during the Votorantim exploration campaigns were within acceptable limits.

• The Au, Ag and Cu analytical accuracies at ACME as compared to ALS Chemex during the Votorantim exploration campaigns were within acceptable limits.

• The subsampling and analytical precisions for Au, Ag, Cu, Pb and Zn at ALS Chemex during the check assay test were within acceptable limits.

• The analytical accuracies for Pb and Zn at ALS Chemex during the check assay test were acceptable, with overall biases of 5.4% and 5.7%, respectively. These values exceeded slightly the recommended 5% maximum bias due to poorer accuracy at the low range (below 1% Pb and 1% Zn), reflected in larger bias values (6.1% for Pb and 8.2% for Zn).

• No significant cross-contamination was identified during preparation at ACME, or during preparation and assaying at ALS Chemex for Au, Ag, Cu, Pb and Zn.

• The Cu, Pb and Zn assay data from the Anglo exploration campaign are sufficiently accurate to be used for resource estimation purposes. The Au and Ag assay data from the Anglo exploration campaign should not be used, exclusively, to estimate Measured or Indicated resources.


• AMEC does not consider the bulk density determination procedure used by Votorantim as best practice for resource estimation purposes. However; considering the large amount of determinations, the low porosity of most local lithologies, and the large sample size used in the bulk density determinations, AMEC has used this information to estimate the average density of the main mineral types in the Arex and Ambrex deposits.

• The geological interpretations are globally reasonable, but will have to be improved locally when additional drilling data will be available. The interpretations need to


be done on two orthogonal sets of sections and reconciled in plan in order to be compliant with the CIM guidelines.

• The interpreted volume is conservative, since a significant amount of mineralized material was left outside the interpreted stratabound and stringer solids.

• The resource model is globally reasonable, and the stratabound and stringer estimates are globally unbiased.

• Contact plots show hard contacts for zinc and lead between the waste, the stratabound and the stringer solids. AMEC has modeled hard contacts, except at Arex, where composites within the geological boundaries were used to estimate waste. There is a high risk of overestimation of the waste grade. AMEC expects that this overestimation will be compensated by the gain of mineralized material that was left outside the interpretations; however, for the sake of rigor, a hard contact should be modeled in future modeling efforts.


• The use of GoCAD® to generate solids proved to be very efficient in terms of speed and quality of the result.

17.2.2 Recommendations

As recommendations, Karmin and its partners in the joint venture should be:

• Complementing, in the future, the bulk density database using appropriate determination methods.

• Adding a new field to the drill hole database that indicates the mineralization type (waste, stratabound or stringer).

• Reviewing the block size to better accommodate for the anticipated mining method. Smaller blocks should be used for underground mining. Composite size and resolution (i.e. minimum thickness to be interpreted) of the interpretation should be adjusted accordingly.

• Using a hard contact between the waste, the stratabound and the stringer at Arex.


18.0 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES

As the project is not yet at a development level, and no production is occurring, there is no information to be presented for this section of the report.


19.0 OTHER RELEVANT DATA AND INFORMATION

No other relevant data or information has been provided to AMEC that should be included in this report.


20.0 INTERPRETATION AND CONCLUSIONS

AMEC reviewed the available geological, metallurgical and resource estimation information for the Aripuanã project. The following is a list of general conclusions reached by AMEC as a result of its review:

• AMEC recognizes that the interpretation respects the data recorded in the logs and the sections, as well as the interpretation from adjoining sections, and is consistent with the known characteristics of this deposit type. The lithologic model has been diligently constructed in conformance to industry standard practices.

• The geology of Ambrex and Arex deposits is reasonably well understood. Main mineralization controls (lithological and structural controls) have been identified, and have been used in domaining for grade estimation.

• Drilling and sampling procedures, sample preparation and assay protocols for the different drilling campaigns meet acceptable practices for core drilling in the exploration and mining industry.


• AMEC does not consider the procedures used for determination of bulk density as best practice to be used for resource estimation purposes. However, considering the large amount of determinations, the low porosity of most local lithologies, and the large sample size used in the bulk density determinations, AMEC has used this information to estimate the average density of the main mineral types in the Arex and Ambrex deposits.

• It is possible to achieve a zinc recovery of 80% with a concentrate grade of 50% Zn, while processing ore at a feed grade of 4.32% Zn. The Ambrex testwork managed at best 70% recovery (78% within the zinc circuit), to a 47% Zn concentrate.

• A copper recovery of 75% is considered with a concentrate grading 25% Cu, for feed material grading 0.58% Cu – projections above the typical 74% recovery at 22% Cu achieved with Arex material (with 1.65-2.66% Cu heads), while Ambrex ore may not contain sufficient copper to warrant its recovery when processed on its own most of the time.

• Lead recovery of 80% can yield a concentrate grade of 48% Pb, at average head grade of 2.04% Pb.

• Contact plots show hard contacts for zinc and lead between the waste, the stratabound and the stringer. AMEC has modeled hard contacts, except at Arex,


where composites within the geological boundaries were used to estimate waste. There is a high risk of overestimation of the waste grade. AMEC expects that this overestimation will be compensated by the gain of mineralized material that was left outside the interpretations; however, for the sake of rigor, a hard contact should be modeled in future modeling efforts.


• In terms of grade estimation, the resource model is globally reasonable, and the stratabound and stringer estimates are globally unbiased.

• AMEC considered NSR (Net Smelter Return) calculations to value the blocks and run pit optimizations and define underground stopes.

• Votorantim is continuously assessing and acquiring surface rights on the Property, but to date no water rights have been acquired.

• Mineralization remains open in the areas in between Arex and Ambrex and at the bottom of both bodies. Other exploration targets like Massaranduba and Boroca present potential to add mineral resources to the property.


21.0 RECOMMENDATIONS

On the basis of the review and verifications conducted during the preparation of the Technical Report, AMEC has the following recommendations:

• AMEC recommends that RQD determination be conducted in the future.

• In order to adequately characterize the two deposits metallurgical performance, it is highly recommended to obtain fresh and representative samples of end members and testing representative composite samples formed with individual intercepts taken from a variety of drill holes within the Ambrex and Arex deposits.

• It is recommended to carry additional metallurgical test programs, especially in order to improve on the lead recovery outcome and selectivity against pyrite/pyrrhotite. Liberation analysis of the concentrate and reject streams should be completed via reflective microscopy to ascertain what are the mode of occurrences of the concentrate contaminants and the type of losses in the tailings. Acid-base accounting (ABA) calculations and, if required, leaching tests on the tailings stream should also be completed to establish the acid-generating potential of the rejects.

• Due to the significant fluorite contents Arex 4 and Arex 5 metallurgical samples, AMEC recommends a more specific study of this mineral occurrence to avoid problems for the metallurgical process.

• Other metallurgical parameters, including material abrasivity and grindability, must also be obtained to adequately characterize the crushing and grinding properties of the deposit and further enhance the assessment of the expected power draws, and liner and grinding media wear rates.

• Some isolated drill hole intersections with grades were not considered in the interpretation and AMEC recommends revising the interpretations to incorporate this material into the stratabound and stringer bodies.

Regarding the continuation of the studies on the Property, AMEC recommends performing the following studies at a pre-feasibility level that will allow convertion of mineral resources into mineral reserves:

• Infill geological drilling • Geological model and resource estimate update • Geotechnical modeling • Hydrogeological investigations and drilling


• Metallurgical testwork: follow up from previous testing by Lakefield Research and CIMM (mineralisation type variability studies, bench scale testing, additional grindability testwork, thickening and filtration testwork, mass balances)

• Process and plant capacity definition • Mining studies including production plans. Consider open pit versus underground

trade-off studies • Facilities layout • Determination of capital and operating costs • Infrastructure studies: access roads, power, water requirements • Environmental assessment • Archaeological assessment • Tailings containment system design • Waste and tailings acid generation assessment. • Socio-economic assessment


22.0 REFERENCES

AMEC, 2006. Memorandum SA3032-Aripuanã Project - Initial Review. Internal memorandum prepared by AMEC International (Chile) S.A. for Votorantim Metais, October 2006

AMEC (2007a) – Aripuanã Project – Mineral Resources Audit, June 2007.

AMEC (2007b) – Aripuanã Project – Conceptual Engineering Study, July 2007.

Agterberg, F.P., 1974, Geomathematics; Developments in Geomathematics 1, Elsevier Scientific Publ. Co., Amsterdam, 596p.

CIA (2005): The World Fact Book: Chile.

www.odci.gov/cia/publications/factbook/ geos/ci.html.

CIM, 2003a. Exploration Best Practices Guidelines. Adopted by CIM Council, August 20, 2000. Canadian Institute of Mining, Metallurgy and Petroleum.

CIM, 2003b. Estimation of Mineral Resources and Mineral Reserves. Best Practices Guidelines. Adopted by CIM Council, November 23, 2003. Canadian Institute of Mining, Metallurgy and Petroleum.

CIM, 2005. CIM Definition Standards for Mineral Resources and Mineral Reserves. Prepared by the CIM Standing Committee on Reserve Definitions. Adopted by CIM Council, December 11, 2005. The Canadian Institute of Mining, Metallurgy and Petroleum; 10 p.

CSA, 2005a. National Instrument 43-101, Standards of Disclosure for Mineral Projects. Canadian Securities Administrators (CSA); October 7, 2005, 13 p.

CSA, 2005b. Companion Policy 43-101CP to National Instrument 43-101, Standards of Disclosure for Mineral Projects. Canadian Securities Administrators, 15 p.

CSA, 2005c. National Instrument 43-101, Standards of Disclosure for Mineral Projects. Canadian Securities Administrators, 14 p.

Davis, J.C., 1986, Statistics and data analysis in geology (2nd ed.); John Wiley and Sons Inc., New York, 646 p.

Geoambiente, 2005. Relatório da metodologia empregada para a geração do modelo digital de elevação a partir de imagens estereoscópicas do satélite Ikonos – Aripuanã (MT). Internal report prepared for Votorantim Metais.

Gorceix (2005) - Estudos Preliminares de Flotaçao em Bancado de Minério de Aripuanã; Fundação Gorceix; December 2005.


Intergeo, 2004. Projeto Aripuanã (MT) –Integracao de Dados Geocientíficos. Internal report prepared by Integração Geofizica (Intergeo) for Compania Minera de Metais.

Karmin, 2006. Aripuanã Property, Geological Description. http://www.karmin.com/html/properties-gd.html.

Karmin, 2007 – Management´s Discussion and Analysis, May 2007

Leite, Jaime Alfredo et al., 2005. Caracterização do depósito polimetálico (Zn, Pb, Ag, Cu-Au) de Aripuanã, Mato Grosso. In: Caracterização de Depósitos Minerais em Distritos Mineiros da Amazônia.

Petrus, 2006. Relatório de Progresso –Trabalhos de Pesquisa 2004/2006. Internal report prepared by Petrus Consultoria Geológica, Ltda. For Votorantim Metais.

Poli, 2006. - Caracterizaçao em Amostras de Sulfeto Polimetálico de Aripuanã – Amostras Arex; Laboratório de Caracterizaçao Tecnológica, Escola Politécnica da Uiversidade de Sao Paulo, Departamento de Engenharia de Minas e de Petróleo; January 2006.

Sinclair, A.J., 1999, Evaluation of errors in paired analytical data by a linear model, Explor. Mining Geol. V 7, Nos . 1,2, pp 167-173.

Votorantim, 2006a – Aripuanã Project, Distrito Vulcanogenico, VHMS-SEDEX e Metassomático, PowerPoint Presentation from April 2006

Votorantim, 2006b – Aripuanã Project, PowerPoint Presentation from December 2006

Votorantim, 2007 – Projeto Aripuanã, IV Workshop da Exploração Mineral, Sao Roque, Setembro 2007.

Wilton (1998a), Wilton, Derek – VMS Deposits - October 5, 1998

http://www.northernminer.com/Tools/Geology101/geo101pg4.asp

Wilton (1998b) - Wilton, Derek – VMS Deposits - December 14, 1998 http://www.northernminer.com/Tools/Geology101/geo101pg4.asp

Appendix A - Legal Support Information

Gilberto Fraga

José Vicente Cêra Junior

Marcelo Leonardo Cristiano

Renato Pacheco Neto

Roberto Bekierman

Arlindo Daibert Neto *

Dircêo Torrecillas Ramos *

João Luiz Faria Netto*

Maria Minomo de Azevedo *

Ana Cândida Carneiro Muniz

Anne-Sophie Van Keer**

Augusto César Guerra Vieira

Bruno Gaya da Costa Martins

Cristiane Delfini Cêra

Daniel Miotto

Ernani Teixeira Ribeiro Junior

Fernando Hirata Muramatsu

Ilan Machtyngier

Julia Krautter Romeiro***

Leonardo Costa Coscarelli

Luiz Carlos Fraga

Márcia Elisabete Martins

Marcos Olinto

Marie-Lorraine Metz

Milena Midori

Reynaldo Delfini Cêra

Rodrigo Pires Carvalho

Rogério Tucherman

Sofia Granstrom Zdolsek****

Taís Helena Bacellar

Tatiana S. Ribeiro

Valdirene Laginski

Ana Paula Gonçalves da Silva

Antônio Carlos da Cunha Gonçalves

Débora Maria Nunes Huamani

Gabriela Conte Viotto

Hugo Mendes Martins

Marina Pombo de Oliveira

Pedro Caldas Bottino

Rodrigo S. Santos

Vanessa Alves da Cunha

Vinícius Haesbaert Feitosa

* Consultor| ** Admitida apenas na França

***Admitida apenas na Alemanha |

****Admitida somente na Suécia

Rio de Janeiro, September 6, 2007 RT- 545/07 - File: 2682- RJ AMEC INTERNATIONAL (CHILE) Av. América Vespucio Sur, 100, Oficina 203 Las Condes, Santiago de Chile

At.: Rodrigo Marinho Re: Aripuanã Project – JV between Votorantim and Mineração Rio Aripuanã – Corporate Structure, Status of DNPM Tenements, and Comments about the Association Agreement Dear Sirs, For the purposes set out in the National Instrument 43-101 issued by the Ontario Securities Commission, and in the capacity of legal counsel for Mineração Rio Aripuanã Ltda. (“MRA”) in Brazil, and as duly authorized by Mr. William Fisher, representing its controlling shareholder Karmin Exploration Inc. (“Karmin”), please find below our simplified report on its association with Votorantim Metais Zinco S/A (“Votorantim”) as it stands as of this date. 02. The Association Agreement (“Association Agreement”) was first executed on February 3, 2000, by and between Anglo American Brasil Ltda. (“Anglo”) and MRA, to which Karmin was a consenting-intervening party, set forth that a special purpose company (eventually, Mineração Dardanelos Ltda. (“Dardanelos”)), an LL.C., was to be incorporated to jointly explore the property titles whereby Anglo would hold 70% and MRA the remaining 30% of equity interest. 03. Pursuant to the Association Agreement, Dardanelos would promote the exploration and exploitation of the mining tenements listed in Annex A and filed at DNPM under the following registration numbers: 866.173/92, 866.174/92, 867.381/91, 866.565/92, 866.566/92, 866.567/92, 866.569/92 866.570/92, 866.571/92, 866.572/92, 866.574/92, 866.577/92, and 866.573/92. 04. On May 17, 2004, the Parties executed an Amendment to the Association Agreement to reflect developments in the survey of the areas, pursuant to which the interests listed in Annex A of the Association Agreement, and filed at DNPM were: 866.070/03, 866.057/03,

FBP 2.

866.071/03, 866.058/03, 866.530/03;866.404/03, 866.386/03; 867.381/91; 866.565/92, 866.569/92; 866.570/92, 866.173/92, 866.174/92, 866.742/93, 866.744/93; 866.603/93; 866.604/93, 866.606/93, 866.747/93, 866.748/93, and 866.442/03. 05. Simultaneously, by virtue of a Private Deed of Promise to Assign Certain Rights, Anglo assigned its rights and obligations under the Association Agreement to “Companhia Mineira de Metais”. 06. Finally, on November 4, 2005, a new amendment was executed to reflect the amalgamation of CMM into Votorantim, by which Votorantim succeeded CMM in all of its rights and obligations under the Association Agreement. 07. We can confirm that, as of today, Votorantim remains with a 70% equity interest in Dardanelos while Karmin holds the additional 30%. 08. In respect to your request for current information on current status of DNPM’s tenements that are still part of the Association Agreement, it is likely that the most recent set of case files listed above, from May 2004, is superseded due to progresses in the survey made since that day. Since we do not have this information, we must defer judgment on any developments thereafter. 09. As for the JV Structure defined in the Association Agreement and superseding amendments, the basic commitment that Votorantim undertook when entering the project in May 2004 was to spend US$ 1.6 million from May 2004 to Dec. 31, 2005 in the Survey Areas (“Áreas de Pesquisa”). 10. Once Votorantim reaches the US$ 1.6 million investment, 70% of Anglo’s participation in Dardanelos will be transferred to Votorantim, that is, 49%. After the conclusion of the surveys and of the Bankable Feasibility Study, Anglo should transfer to Votorantim the rights to the remaining 21%. Even though a Bankable Feasibility Study has not been prepared, it is our understanding that Anglo has negotiated with a Votorantim the assignment of its remaining 21% interest in Dardanelos. 11. Votorantim investment over the past few years is treated according to items 9 and 10 of the Association Agreement, and does revert into additional participation in the case Votorantim wish to implement the Aripuanã Project (the “Project”) after the end of the Bankable Feasibility Study, irrespective of whether MRA will be able to secure financing to contribute to the JV in proportion to its 30% interest. It must be noted that the Bankable Feasibility Study to be delivered by Votorantim must take into account financing that is “bankable” to both Parties, and not only to Votorantim. – .e, the project shall be bankable by tself. 12. All Survey Expenses, defined in Clause 6 of the Agreement, will be considered as new capital contribution by Votorantim at the beginning of the implementation of the project, but can be equalized by Karmn to avoid dlution. 13. If MRA cannot secure financing to contribute to the JV in the proportion of its 30% participation, its participation will be bought out (or diluted and bought out) by Votorantim, as follows:

(i) if MRA fails to secure, within 12 months counted from the receipt of notice that Votorantim wants to implement the Aripuanã Project, the guarantees necessary to

FBP 3.

financing its portion of the required investment, Votorantim will have the right to acquire from MRA and MRA the obligation to sell to Votorantim the full 30% interest for US$ 5 million; (ii) on the other hand, if Votorantim contributes to the JV capital on behalf of MRA, MRA’s participation will be diluted according to such Votorantim’s contributions: if MRA ends up holding 10%-29% of Dardanelos, MRA will have the right to sell and Votorantim the obligation to buy the remaining participation for US$ 3 million; if the participation decreases to 0%-10%, Votorantim must pay US$ 2 million to buy MRA out of the Project.

14. We remain at your entire disposal for any additional information you may deem necessary.

Best Regards,

ROGÉRIO TUCHERMAN

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