technical report ni 43-101 on the preliminary economic

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Equapolar Consultants Limited

Submitted to Nemaska Exploration Inc.

March 5th, 2011

Technical Report NI 43-101 on the Preliminary Economic Assessment of the Whabouchi Spodumene Deposit of Nemaska Exploration Inc.

Equapolar Consultants Limited NI 43-101 PEA of the Whabouchi Deposit - Nemaska Exploration Inc

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Table of Contents

1- SUMMARY 7

2- INTRODUCTION 10 2.1 General 10 2.2 Terms of Reference 10

2.3 Units and Currency 11

2.4 Disclaimer 11

3- RELIANCE ON OTHER EXPERTS 12

4- PROPERTY DESCRIPTION AND LOCATION 13 4.1 Location 13 4.2 Property Ownership and Agreements 14 4.3 Royalties Obligations 15 4.4 Permits and Environmental Liabilities 16

5- ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND 17

PHYSIOGRAPHY 17 5.1 Accessibility 17 5.2 Physiography 17 5.3 Climate 17 5.4 Local Resources and Infrastructure 17

6- HISTORY 18 6.1 Regional Government Surveys 18 6.2 Mineral Exploration Work 18

7- GEOLOGICAL SETTING 20 7.1 Regional Geology 20 7.2 Property Geology 20

8- DEPOSIT MODEL 23 8.1 Origin and Features of Rare Metal Pegmatites 23 8.2 Stacked Sill Structure 24 8.3 Syntectonic Mobile Zone Feeder Dykes 25 8.4 Mafic Host Rocks 25 8.5 The Whabouchi Pegmatite 25

9- MINERALIZATION 27

10 & 11- EXPLORATION AND DRILLING 28

12- SAMPLING METHOD AND APPROACH 29

13- SAMPLE PREPARATION, ANALYSIS AND SECURITY 31 13.1 Sample Preparation and Analyses 31 13.2 Quality Assurance and Quality Control Procedure 31 13.3 Specific Gravity 33

14- DATA VERIFICATION 34

15- ADJACENT PROPERTIES 35


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16. MINERAL PROCESSING AND METALLURGICAL TESTING 36 16.1 Introduction 36 16.2 Testwork Samples 36 16.3 2010-2011 Testwork Results 37

17- MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES 39 17.1 Introduction 39 17.2 The Data 39 17.3 Composite Data 39 17.4 Interpretation 41 17.5 44 17.6 Mineral Resource Classification and Estimates 44

18 - ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES 46

18.1 Mine Design 46 18.2 Process Conceptual Plant Design 62 18.3 Site Infrastructure and Support Systems 65 18.4 Tailings Disposal 68 18.5 Environment 69 18.6 Capital Cost Estimate 70 18.7 Operating Costs 71 18.8 Financial Analysis 73

19- INTERPRETATION AND CONCLUSIONS 79

20- RECOMMENDATIONS 80

21- REFERENCES 81

22- DATE AND SIGNATURE PAGES 82

DATES 84


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List of Tables

Table 1 List of Abbreviations ..................................................................................... 11

Table 4.1 Cantore Purchase Agreement Conditions ..................................................... 15 Table 7.1 Summary of the Different Lithologies Occurring in the Area ....................... 22 Table 15.1 Nisk Assays of Sulphide Mineralization ........................................................ 35 Table 16.1 Head Grade of 2010 Metallurgical Sample (Assays Reported In Percent) .... 36 Table 16.2 Head Grade Semi-Quantitative X-ray Diffraction Results ............................. 37 Table 17.1 Statistics for the 1.5m Composites for Li2O and BeO ................................... 40 Table 17.2 Resource Block Model Parameters ............................................................... 42 Table 17.3 Mineral Resource Estimates for Whabouchi ................................................ 45 Table 18.1 Block Model Characteristics ......................................................................... 46 Table 18.2 Pit Optimization Results ............................................................................... 48 Table 18.3 Pit Design Parameters .................................................................................. 49 Table 18.4 In-Pit Resources (before dilution and mining loss) ....................................... 53 Table 18.5 In-Pit Resources (after dilution and mining loss) .......................................... 53 Table 18.6 Drilling Parameters ....................................................................................... 56 Table 18.7 Drill Operating Hours .................................................................................... 56 Table 18.8 Blasting Parameters ................................................................................ 57 Table 18.9 Summary of Mining Operating Costs ............................................................ 59 Table 18.10 Equipment Purchasing Costs ........................................................................ 61 Table 18.11 Annual Process Plant Production Parameters .............................................. 62 Table 18.12 Conversion Factors ....................................................................................... 63 Table 18.13 A Summary of the Investment Costs ............................................................ 70 Table 18.14 Operating Cost Summary ............................................................................. 71 Table 18.15 Manpower Requirements ............................................................................ 72 Table 18.16 Cash Flow Analysis ....................................................................................... 76

List of Figures

Figure 4.1 General Location Map ................................................................................. 13 Figure 4.2 Map of the Property Mineral Titles ............................................................. 14 Figure 7.1 Regional Geology Map ................................................................................ 20 Figure 7.2 Local Geological Map .................................................................................. 21 Figure 7.3 Map of the Property Geology ..................................................................... 23 Figure 8.1 Section at 700E Indicating Sill Structural Control ....................................... 26 Figure 17.1 Histogram of Li2O 1.5m Composites ............................................................ 40 Figure 17.2 Longitudinal View Showing the Spatial Distribution of the Composites ...... 41 Figure 17.3 Secton 525E - Modelled Envelope with Mineralized Intervals .................... 42 Figure 17.4 Secton 700E - Modelled Envelope Showing Block Model Structure ............ 43 Figure 17.5 Modelled Envelope Showing Block Model Structure in Plan View ............. 43 Figure 17.6 Resource Classifications in Cross-Section and Plan Views ........................... 44 Figure 17.7 Resource Classifications in Plan View .......................................................... 45 Figure 18.1 3D Representation of the LG Optimized Pit ................................................. 47


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Figure 18.2 LG Optimized Pit Plan View ......................................................................... 48 Figure 18.3 Plan View of Engineered Pit Design ............................................................. 50 Figure 18.4 3D View of Engineered Pit Design ............................................................... 50 Figure 18.5 Section View of Open Pit and Pit Optimization (Section E 605 ) ................. 51 Figure 18.6 Section View of Open Pit and Pit Optimization (section E 905) .................. 51 Figure 18.7 Section View of Open Pit and Pit Optimization (Section E 1205) ................ 52 Figure 18.8 Section View (longitudinal) of Pit and Pit Optimization (Section N -105) ... 52 Figure 18.9 Pit Design with Waste Rock Pile Plan View ................................................. 54 Figure 18.10 Pit Design with Waste Rock Pile 3D View ................................................... 55 Figure 18.11 Schematic Flowsheet for Processing Nemaska Ore .................................... 64 Figure 18.12 Proposed Site Plan ...................................................................................... 66 Figure 18.13 Sensitivity of Revenue, Opex and Capex Fluctuations ................................ 77


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1- SUMMARY Equapolar Consultants Limited (Equapolar) was commissioned by Nemaska Exploration Inc. (“Nemaska” or “the Company”) to prepare an independent Preliminary Economic Assessment report in accordance with NI 43-101 Standards and Disclosure for Mineral Projects on the Whabouchi spodumene pegmatite deposit using NI 43-101 compliant resource estimates made by GeoStat of SGS Canada Inc (GeoStat) in the summer of 2010 and a program of bench scale metallurgical tests completed by SGS Lakefield in December, 2010 and managed by Equapolar. The Whabouchi property (“Property”) is located in the James Bay area of the Province of Quebec, approximately 40 km east of the community of Nemaska and 250 km north-northwest of the town of Chibougamau. The Property is accessible by the Route du Nord road, the main gravel road linking Chibougamau and Nemaska, and crossing the Property near its center. The Nemiscau airport is 18 km west of the Property. The Property comprises one block containing 33 map-designated claims covering a total of 1,716 ha. The claims are 100% owned by Nemaska and were acquired via a purchase agreement with Victor Cantore Group, an option agreement with Golden Goose Resources Inc., and directly by map designation. The property is subject to a 2% NSR royalty to Golden Goose Resources Inc and a 3% NSR royalty to Victor Cantore Group. The Project area has been subject to numerous surveys conducted by the Quebec Government in the area and by mineral exploration work completed by various mining companies since the 1960’s. The initial exploration work conducted on the Wahbouchi spodumene-bearing pegmatite was done in 1962 by Canico where 1.44% Li2O over 83.2 m was intersected by drilling. Prior to Nemaska’s exploration program begun in 2009, the pegmatite was explored in 2002 by Inco where grades of 0.3% to 3.72% Li2O were obtained from grab and channel samples. The Property is located in the northeast part of the Superior Province of the Canadian Shield craton, in the Lac des Montagnes volcano-sedimentary formation which is principally composed of metasediments and mafic-ultramafic amphibolites. A spodumene-bearing pegmatite swarm occurs in the center of the Property and is composed of a series of sub-parallel and generally sub-vertical pegmatites up to 130 m wide in total. The mineralized pegmatite swarm has a generally NE-SW orientation, extends 1.4 km along strike and reaches a depth of more than 300 m below surface. Lithium occurs mainly in the mineral spodumene with some found in minor petalite and lithium bearing muscovite accessory minerals. Subsidiary beryl and trace niobium and tantalum also occur. Nemaska completed two exploration programs in fall 2009 and spring 2010 on the Property and began a new program of infill drilling, channel sampling, detailed geological mapping and bulk sample accumulation starting in the fall of 2010 and continuing at the time of writing of this report. In the earlier programs, from which GeoStat prepared its resource estimates, a total of 37 surface channels and 67 drill holes for 12,755 m were completed and 5,161 samples were assayed. In addition to the channel sampling and drilling, 14 line-km of ground magnetic surveying covering the main mineralized pegmatite occurrences and 670 line-km of helicopter-borne magnetic surveying covering the Property were completed.


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GeoStat estimated mineral resources using a computerized resource block model. Three-dimensional wireframe solids of the Mineralization were defined using channel and drill hole Li2O analytical data generated during the fall 2009- spring 2010 drilling and channel sampling programs. Composite data of 1.5 m in length was use to interpolate, using an inverse distance to the power square methodology. The grade of 5 m by 2 m by 5 m blocks regularly spaced on a defined grid that fills the 3D wireframe solids were used. The blocks were classified based on confidence level using proximity to composites, composite grade variance and mineralized solids geometry. Mineral resource estimate was calculated based on the interpolated blocks and using a bulk density of 2.68 t/m3. The initial Ni 43-101 compliant mineral resources for the Whabouchi deposit are as follows:

Mineral Resource Estimate ‐ Whabouchi Project

Cut-off Grd Li2O%

Resource Categories

Tonnes* Li2O grade

% BeO grade

ppm Li metal**

(tonne) Be metal**

(tonne)

0.5%

Measured 1,885,000 1.60 458 14,000 300

Indicated 7,889,000 1.64 446 59,900 1,300

Measured + Indicated

9,774,000 1.63 449 74,000 1,600

Inferred 15,396,000 1.57 420 112,100 2,300 Inferred mineral resources are exclusive of the measured and indicated resources. Bulk density of 2.68t/m3 used. Effective date May 28, 2010. * Rounded to the nearest thousand. **Rounded to the nearest hundred. Approximately one tonne of representative Nemaska mineralized material was taken by drilling and the whole core sent to SGS Lakefield in late July 2010 as feed for bench scale development of a processing method to produce a spodumene concentrate with minimum grade of 6.0% Li2O. Nineteen flotation trials were conducted involving stage crushing and grinding, mica flotation to remove mica, followed by spodumene flotation and magnetic separation of iron-bearing minerals. As high as 85% of the spodumene in the spodumene flotation feed (after mica and slimes removal) was recovered in the best trials. Concentrate from early flotation trials was tested to determine if battery grade 99.5% Li2CO3 (lithium carbonate) could be produced. Although not optimized and evaluated as to costs, hydrometallurgical bench testing succeeded in producing a battery grade product grading 99.967% Li2CO3 using off-the-shelf techniques. For this report, this work was for confirmation purposes only, since the PEA’s objective was to assess production of a spodumene concentrate for direct sale to market. The metallurgical program was directed and managed by the author of this PEA. The present 48 drill hole, 10,000 m infill program plus 16 cross-strike trenches comprising 1,969 m with 670 channel samples taken will be completed in March 2011 and data from it is not part of this Preliminary Economic Assessment report. The author of this PEA visited the site August 10th and 11th, walked out the length of the deposit and several cross trenches to examine the geology and mineralogy. Maps and sections were studied and a selection of drill holes chosen and the core examined. The local topography, and infrastructure were viewed and in the office, technical reports, including GeoStat’s NI 43-101 report on estimation of Whabouchi resources and the data base were studied.


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BBA Inc. was engaged by the Company to design an open pit for a 1 million tpy, 15 year operation complete with mine capital and operating costs and a production schedule for the PEA study. Patrice Live, mining engineer, prepared a detailed pit design using an 0.8% Li2O cut off grade, and an overall 3:1 stripping ratio. The design allowed for 6% mining dilution at 20% of original grade, and a 4% ore loss. Because the deposit outcrops along a ridge 40m above the surrounding topography, a starter pit was also designed with the same cut off grade and a stripping ratio of 1.07 from which 5.288 million tonnes grading 1.607% Li2O could be produced, representing 5 years of low-cost mine production. General site layout, waste pile and tailings preliminary locations and design, reclamation and environmental considerations for the PEA were realized with the input, guidance and advice of Donald Blanchet, engineer, of Genivar Inc., Nemaska’s environmental consultants. The NI 43-101 Preliminary Economic Assessment, which is the subject of this report was positive and yielded the following highlights: -------------------------------------------------------------------------- Preliminary Economic Assessment Highlights (All calculations assume a price of $280/tonne (FOB Plant) of 6% Li2O spodumene concentrate) (All figures are quoted in CDN$)(i) -------------------------------------------------------------------------- Open Pit Mine Production 2,950 tonnes per day (1 MT/year) -------------------------------------------------------------------------- Average Annual Spodumene 202,000 tonnes of 6 % Li2O Concentrate production -------------------------------------------------------------------------- Average Annual Revenue (ii) $56.6 M -------------------------------------------------------------------------- Pre-tax NPV 5% Discount $184.0 M Pre-tax NPV 8% Discount $130.3 M -------------------------------------------------------------------------- Pre-tax Internal Rate of 26.6% Return (IRR) -------------------------------------------------------------------------- Average Operating costs $27.86 per tonne of ore -------------------------------------------------------------------------- Total Initial Capital Costs $86 M (including $13.4 M contingency and $5 M working capital) -------------------------------------------------------------------------- Expected Mine Life 15 years -------------------------------------------------------------------------- Pay Back of Capital Costs 3.3 years -------------------------------------------------------------------------- (i) Assuming CDN $ at par with US $. (ii) No credit has been included for a possible beryllium concentrate that can also be produced

since metallurgical tests on this specific mineral have yet to be completed.


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2- INTRODUCTION

2.1 General This Preliminary Economic Assessment report was prepared by Equapolar Consultants Limited (“Equapolar”) for Nemaska Exploration Inc. (“Nemaska” or “Company”). The evaluation was made based on:

a) mineral resources estimated by GeoStat of SGS Canada Inc. and presented in their report submitted July 14th,2010 entitled “NI 43-101 Technical Report Mineral Resource Estimation Whabouchi Lithium Deposit Nemaska Exploration Inc.”;

b) bench scale metallurgical work done at SGS Lakefield, which was managed and directed by Equapolar, on a one tonne minibulk sample taken by drilling 4 holes across the main zone of the Whabouchi deposit;

c) an open pit design by BBA Inc. employing GeoStat’s block model, utilizing a 0.8% Li2O cut off grade and a 1Mty production rate over 15 years;

d) a preliminary site plan, waste rock pile and tailings storage area layout guided by Genivar Inc., Nemaska’s environmental consultants, and site reclamation estimates also by Genivar;

e) price fob Nemaska plant for a 6% Li2O spodumene concentrate ($280/t) provided by Nemaska;

f) a review by the author of the available power, all-weather roads, room and board facilities, airport, and other infrastructure and amenities.

Equapolar was commissioned by Nemaska on August 4th, 2010 to direct metallurgical studies on the Whabouchi deposit spodumene pegmatite material and to prepare an independent NI 43-101 Preliminary Economic Assessment report on the project.

2.2 Terms of Reference This Preliminary Economic Assessment report on the Whabouchi lithium deposit was prepared by Gary Pearse, M.Sc., P.Eng, using mine design, waste rock pile design and production scheduling by Patrice Live, Ing., mining engineer, of BBA Inc. and site plan, tailings area and reclamation cost estimates by Donald Blanchette, MBA, Ing. of Genivar. The author is responsible for all other sections of the report. The report was prepared in accordance with guidelines under Form 43-101F1 Technical Report of National Instrument 43-101 Standards and Disclosure for Mineral Projects. The certificate of qualification for the Qualified Persons responsible for this technical report can be found in section 22. The author visited the Property August 10th and 11th, 2010, walked out the length of the deposit and several cross trenches to examine the geology and mineralogy. Maps and sections were studied and a selection of drill holes chosen and the core examined. The local topography, and infrastructure were viewed and in the office, technical reports, including GeoStat’s NI 43-101 report on estimation of Whabouchi resources and the data base were studied. Reports available to the author and general references are listed under the References section of this report.


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2.3 Units and Currency All measurements in this report are presented in (SI) metric units, as listed in Table 2.1. Currency amounts are Canadian Dollars (C$) unless otherwise stated. Abbreviations used in this report are listed in Table 2.1. Table 1: List of Abbreviations

tonnes or t Metric tonnes

tpy or t/y Tonnes per year

kg Kilograms

g Grams

km Kilometres

m Metres

μm Micrometres or microns

ha Hectares

m3 Cubic metres

% Percent sign

$ Dollar sign

°C Degree Celcius

NSR Net smelter return

ppm Parts per million

NQ Drill core size (4.8 cm in diameter)

SG Specific Gravity

UTM Universal Transverse Mercator

2.4 Disclaimer It should be understood that mineral resource estimates upon which the open pit design and the preliminary economic assessment are based are not mineral reserves and, therefore do not have demonstrated economic viability. Successful further drilling and other sampling work is required to upgrade resources into reserves. Other information upon which this report is based was gleaned from discussions at meetings, emails and phone conversations with Nemaska’s personnel and consultants and the fob plant price for 6% Li2O spodumene concentrate of $280/tonne was supplied by Nemaska’s president. Pricing was based on discussions with a strategic partner in China that intends to purchase the output of spodumene concentrate from the Whabouchi project should the project go into production.


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3- RELIANCE ON OTHER EXPERTS The author, Gary Pearse, M.Sc. P.Eng, is not qualified to comment on issues related to legal agreements, royalties, permitting, and environmental matters. The author has relied upon the representations and documentation supplied by the Company management and discussions with the Company's environmental consultant, Donald Blanchet, ing., MBA of Genivar Inc. who has yet to complete the preliminary environmental baseline study. The Whabouchi deposit is generally similar to other lithium pegmatites in terms of mineralogy and trace elements with which the author is familiar and no untoward environmental risks that would impact on this preliminary economic assessment have been noted. The author relies on GeoStat's estimation of resources for the Whabouchi deposit as contained in its report entitled: “NI 43-101 Technical Report Mineral Resource Estimation Whabouchi Lithium Deposit Nemaska Exploration Inc.” The author did examine the deposit surface, selected drill core and assay record and was satisfied that the deposit is of exceptional dimensions and above average grade in comparison to other deposits with which he is familiar. The author relies on Dr. Massoud Aghamirian, metallurgist at the SGS Lakefield facility of SGS Canada Inc. in Lakefield, Ontario for the technical information contained in section 18.2 of this report. The author relies on the expertise of Dr. Tassos Grammatikopoulos, Ph.D. P.Geo, Senior Process Mineralogist at SGS Canada Inc. – Advanced Mineralogy Network, Lakefield Facilities for the technical information contains in section 16 of this Technical Report.


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4- PROPERTY DESCRIPTION AND LOCATION

4.1 Location The Whabouchi property is located in the James Bay area of the Province of Quebec, approximately 40 km east of the community of Nemaska and 250 km north-northwest of the town of Chibougamau. The center of the Property is situated at about UTM 5,725,750 mN, 441,000 mE, NAD83 Zone 18. The Property is accessible by the Route du Nord road, the main all-season gravel road linking Chibougamau and Nemaska, and crossing the Property near its center. The Nemiscau airport is 18 km west of the Property. Figure 4.1 shows the general location of the Property. Figure 4.1 – General Location Map


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4.2 Property Ownership and Agreements The Property is composed of one block containing 33 map-designated claims covering a total of 1,716 ha. Sixteen (16) claims were acquired via a purchase agreement for 100% ownership from Victor Cantore Group (“Cantore”); on September 17, 2009, 10 claims were acquired through an option agreement for 100% ownership from Golden Goose Resources Inc. (“Golden Goose”) on August 12, 2009, and 7 claims were acquired by map staking directly by the Nemaska. Titles from the Cantore and the Golden Goose claims have been transferred to the Company name and 5 claims originally from the Golden Goose claim group were abandoned. As of July 8, 2010, all 33 claims are in good standing. The expiry dates for the claims range from April 15, 2011 to January 24, 2012. The mining titles are shown in Figure 4.2. Figure 4.2 Map of the Property Mineral Titles

The Golden Goose claims were acquired as part of the Lac Levac Option Agreement signed on August 12, 2009 and amended on November 11, 2009. The purchase option agreement covers a total of 594 claims held by Golden Goose in the Nemiscau area as part of the Lac Levac and Lac


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des Montagnes properties which include the Nisk-1 Ni-Cu deposit. Nemaska has exercised its purchase option and completed the acquisition on January 15, 2010. The Company has paid a non-refundable initial amount of $150,000 to obtain the option and a non-refundable amount of $50,000 in consideration of the amendment of the agreement. Nemaska has acquired 100% ownership based on the following general terms: 1) pay an amount of $450,000; 2) complete an initial public offering of a minimum of $5 million; 3) issue $1.5 million in common shares of the Company accompanied by a warrant for each

common share, and 4) issue $1 million in the form of a convertible debenture at 8% interest with various conditions

attached. Pursuant to the Acquisition Agreement, Golden Goose retains a 2% NSR, of which 1% can be repurchased by Nemaska for an amount of $1 million within the first 3 years (Nemaska IPO, 2009). The Cantore claims were acquired through a purchase and sale agreement signed on September 17, 2009. The agreement covers 16 claims purchased for an amount of $10,000, 2.1 million common shares of the Company, and a commitment to pay the fees and fund the exploration work needed for renewal. Furthermore, a maximum of $1.4 million and 1.4 million common shares of the Company might have to be paid and issued to Cantore according to exploration investments and results attained on the claims, see Table 4.1 below. Cantore retains a 3% NSR, of which 1% can be repurchased by Nemaska for an amount of $1 million (Nemaska IPO, 2009). Company management reports all payments and obligations of Nemaska to Cantore and Golden Goose are in good standing. Table 4.1 – Cantore Purchase Agreement Conditions

Exploration Work and Results Cash Shares of the Company

$2.5 million $100,000 100,000

$5.0 million $100,000 100,000

$7.5 million $100,000 100,000

$10.0 million $100,000 100,000

$12.5 million $100,000 100,000

$15.0 million $100,000 100,000

Pre-feasibility $300,000 300,000

Feasibility study confirming production $500,000 500,000

Total $1.4 million 1.4 million shares

4.3 Royalties Obligations As described in Section 4.2, a 2% NSR is retained by Golden Goose, of which 1% can be purchased by Nemaska for $1 million within the first 3 years. Cantore retains a 3% NSR, of which 1% can be purchased by Nemaska for $1 million.


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4.4 Permits and Environmental Liabilities The main permit required for exploration work is the forest intervention permit issued by the Ministère des Ressources Naturelles et de la Faune (“MRNF”). A certificate of authorisation from the Ministère du Developpement Durable de l’Environnement et des Parcs (“MDDEP”) is also necessary to conduct mechanical stripping covering more than 1,000 m3 of overburden. The Company management confirmed having valid work permits and authorizations. To author's knowledge is there are no outstanding environmental orders or obligations relating to the Property.


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5- ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY

5.1 Accessibility The Property is easily accessible via the Route du Nord road that crosses the Property near its center. This road links the town of Chibougamau, located approximately 250 km to the SSE, and the community of Nemaska and joins the Route de la Baie-James road. The area is also served by regular scheduled flights and charters to the Nemiscau Airport.

5.2 Physiography The area on and around The Property has low relief ranging from 275 m to 325 m above sealevel. The pegmatite underlies a ridge, with an average elevation of 300 m. Lakes and rivers cover approximately 15% of the Property area. The flora in the area is typical of the taiga with a mix of black spruce forest and peat bogs. Forest fires several years ago burned a portion of the Property. There is no permafrost at this latitude and the overburden cover ranges in depth from 0 m near the ridge to 25 m in the south part of the Property.

5.3 Climate The climate of the area is sub-arctic characterized by long, cold winters and short, cool summers. Daily average temperature ranges from -20°C in January to +17°C in July. Break-up usually occurs early in June, and freeze-up in early November.

5.4 Local Resources and Infrastructure The nearest infrastructure with general services is the Relais Routier Nemiscau Camp, located 12 km west of the Property, where the Company has setup its field office and core logging facilities. According to Company management, the Cree Nation enterprise that runs this facility has agreed to add to the existing room and board capacity to accommodate mine and mill workers should the Property go into production. The community of Nemaska, located 30 km west also has accommodation and general services and the Nemiscau airport is service by regular Air Creebec flights and charters. A cellular network operated by principal Canadian services provider serves the area. There is no mining infrastructure on the Property. Hydro-Québec operated the Poste Albanel and Poste de la Nemiscau electrical stations located approximately 20 km east and 12 km west from the Property respectively. Electrical transmission lines that connect both stations run alongside the Route du Nord road and cross the Property near its center.


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6- HISTORY This section is modified from GeoStat's NI 43 100 Technical Report and includes property evaluation work conducted in 2010-2011.

6.1 Regional Government Surveys Numerous geological surveys and geoscientific studies have been conducted by the Quebec Government in the James Bay area. Geological surveys in the 1960s (Valiquette 1964, 1965 and 1975) cover the entire Property area. In 1998, the MRNF released the results of a regional bottom lake sediment survey completed in 1997.

6.2 Mineral Exploration Work The first exploration reported in the area dates back to 1962, with work by Canico over a lithium-bearing pegmatite found by geologists of the Quebec Bureau of Mines. Canico drilled 2 packsack drill holes on the pegmatite, followed in 1963 by 3 diamond drill holes. A total of 463.11 m were drilled. The best result obtained was 1.44% Li2O over 83.2 m (Elgring 1962). In 1973, James Bay Nickel Ventures (Canex Placer) did a large-scale geological reconnaissance that covered the property (Burns 1973). From 1974 to 1982, the only exploration done was by the Société de Développement de la Baie James (“SDBJ”). This involved large scale geochemical surveys, followed by geological reconnaissance of the anomalies (Pride 1974, Gleeson 1975 and 1976). Two exploration programs, one in 1978, the other in 1980, were conducted on the Whabouchi pegmatite (Goyer et al. 1978, Bertrand 1978, Otis 1980, Fortin 1981, and Charbonneau 1982). No channel sampling or drill holes are reported. In 1987, Westmin Resources completed an airborne Dighem III survey. A part of this survey was located immediately east of the Property (McConnell 1987). In 1987-1988, Muscocho Exploration did ground Mag and VLF surveys that covered a major part of the property. The pegmatite gave a weak Mag and VLF response. The Muscocho Exploration's target was actually massive sulphides and a program of 14 holes was completed, 11 of them on the southern part of the Whabouchi property. Several arsenic anomalies were located, with a maximum of 3,750 ppm (Hole ML-88-8, Brunelle 1987, Gilliatt 1987 and Zuiderveen 1988). In 2002, while exploring for tantalum, Inco re-sampled the spodumene-bearing pegmatite, taking 11 channel and 7 grab samples. Inco obtained a best value of 0.026% Ta, and Li2O values ranging from 0.3% to 3.72% (Babineau 2002). In 2008, Golden Goose Resources visited and sampled the Valiquette (Ni) and chromite showings south of the Whabouchi property (Beaupre 2008).


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Nemaska began exploration in 2009 on the Property and results from their 2009 and 2010 geological mapping, drilling, trenching, channel sampling and ground and airborne magnetic surveys were used as data for GeoStat's NI43-101 Technical Report submitted July 2010, in which they estimated the mineral resources of lithium and beryllium (see section 17). Finally, Nemaska is conducting a 2010-2011 fall-winter exploration program, still ongoing at the time of this writing. Trenching and infill channel sampling (45 channel samples, totaling 556 m) and drilling (48 hole, 10,000 m campaign) to upgrade mineral resources to mineral reserves and higher level resources categories is being done to support a feasibility study (see section 10). This work will be completed in March, 2011. This work is not being considered in present PEA study.


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7- GEOLOGICAL SETTING

7.1 Regional Geology The Whabouchi property is located in the northeast part of the Superior Province of the Canadian Shield craton. The Superior Province extends from Manitoba to Quebec, and is mainly made up of Archean-age rocks. The general metamorphism is at the greenschist facies, except in the vicinity of intrusive bodies, where it reaches the amphibolite-to-granulite facies. In Quebec, the eastern extremity of the Superior Province has been classified into the following sub-provinces, from south to north: Pontiac, Abitibi, Opatica, Nemiscau, Opinaca, La Grande, Ashuanipi, Bienville and Minto (Hocq 1994). According to Card and Ciesielski (1986), the area covered by the Property is located in the Opinaca or Nemiscau subprovince. Figure 7.1 shows the position of the Property in the Superior Province. Figure 7.1 Regional Geology Map

7.2 Property Geology The Whabouchi property is located in the Lac des Montagnes volcano-sedimentary formation and sits between the Champion Lake granotoïds and orthogneiss and the Opatica NE, which is made of orthogneiss and undifferentiated granitoïds. From the northwest to the southeast, the


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property is underlain by the Champion Lake granitoïds, a grey oligoclase gneiss and then by the Lac des Montagnes formation. The Lac des Montagnes belt is approximately 7 km wide in the area, oriented northeast, and is principally composed of metasediments (quartz-rich paragneiss, biotite-sillimanite-staurolite schist and garnet-bearing schist) and amphibolites (mafic and ultramafic metavolcanics). These rocks are strongly deformed and cut by late granitoïds (leucogranites and biotite-bearing white pegmatites) (Valiquette 1975). Figure 7.2 shows the location of the property relative to the Lac des Montagnes, the Champion Lake and Opatica NE formations. Table 7.1 summarises the different lithologies occurring in the area. Figure 7.2 Local Geological Map


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Table 7.1 Summary of the Different Lithologies Occurring in the Area

Pleistocene and Holocene

Moraines, eskers, alluvial deposits, reticulated peat bogs, morainic belts

PRECAMBRIAN

11: Diabase

10: Pegmatites

a) White with muscovite, tourmaline, garnet and magnetite

b) Pink, with microcline

9: White and pink granite

8: Grey hornblende oligoclase granite with phenocrist of pink microcline

7: Ultramafic rocks: Serpentinites, tremolite rocks

6: Hornblende plagioclase gneiss

5: Metasomatic anthophyllite cordierite rocks (mineralization susceptible)

4: Paragneiss or biotite schists, garnet biotite schists; porphyroblastic schist:

Garnet, sillimanite, biotite

Garnet, cordierite, biotite

Garnet, andalusite, biotite

Staurotide, sillimanite, andalusite, biotite

Sillimanite, cordierite, andalusite, biotite

Amphibole paragneiss

3: Quartz rich paragneiss, sillimanite, sericite and quartz schist, impure quartzite

2: Pillowed metavolcanic amphibolites

1: Oligoclase gneiss

The Whabouchi spodumene pegmatite swarm occurs in the center of the Property and forms the core of a ridge approximately 40m above the surrounding flats, between Lac du Spodumene and Lac des Montagnes. The mineralized bodies are a series of sub-parallel, sub-vertical pegmatites having a general NE-SW orientation. They occur in a band of metasedimentary and amphibolitic rocks of volcanic and gabbroic origin and have been localized in the layered amphibolites. The known extend of the Whabouchi pegmatites is approximately 1.4 km long, up to 130 m wide, and reaches a depth of more than 300 m below surface. The spodumene is generally light green and occurs from medium grained to coarse, the largest up to 30 cm in length. Figure 7.3 shows the Property geology.


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Figure 7.3 Map of the Property Geology

8- DEPOSIT MODEL

8.1 Origin and Features of Rare Metal Pegmatites Interpretation of the pegmatite model is, in a major way, that of the author based on geological mapping, evalutation work and developement work on a number of major pegmatite deposits over many years. The Whabouchi deposit is a lithium-beryllium-bearing rare metal pegmatite. Emplacement of rare metals pegmatites is the last phase of the crystallization of a parent granite pluton. High-pressure residual fluids with abundant water, silica, alumina, alkalis and rich in rare elements and other volatiles from the crystallization of a pluton at modest depth, concentrate in the cupola or upper domed contact of the granite as it crystallizes. Under increasing pressure, this fluid dilates fractures in overlying rocks in a manner analogous to that of hyraulics in mechanical equipmen, thereby providing feeder channels for emplacement of pegmatites. Progressive crystallization of the main rock-forming minerals out of the fluid enriches the final fluids in rare metals and the process culminates in the formation of rare metal pegmatites still under fluid pressure. A variety of types occur depending on the abundance and type of rare metals associated with the pluton and the physico-chemical conditions affecting the sequence of emplacement events. Pegmatite petrologists classify the variety of types and subtypes by combinations of the following criteria: a) mineralogical-geochemical signatures; b) internal structure/zonation; c) pressure-temperature conditions of crystallization. The criteria are related through degrees of fractionation, which arise from the chemical, temperature and pressure evolution of the pegmatite fluids over time and distance from the


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parent granite. The complex rare element pegmatites generally evolve as follows: at depth under high pressure and temperature conditions, simple granite pegmatites of quartz, feldspar and mica crystallize in fractures above and within the solidified granite pluton. The residual fluids move higher along fractures to a lower pressure-temperature zone where beryl appears in the simple pegmatite assemblage. Above this level, columbo-tantalite minerals appear starting with high niobium compositions and progressing to higher tantalum/niobium ratios where the complex pegmatites appear with lithium, cesium, and rubidium bearing minerals. Variations may appear in which petalite is the dominant lithium mineral often along with pollucite, lepidolite, etc. Alternatively, spodumene dominates in a classification known as Albite-Spodumene pegmatite. Tantalum may occur in a variety of minerals and cassiterite may be present. A final, mariolitic or greisen phase at low pressure-temperature, may be present with lepidolite, quartz, tantalum-rich minerals, tin, beryl, topaz, etc. Three characteristics of the geological setting for rare metal pegmatites are common:

emplacement in concordant stacked sills;

presence of a compressed, near-vertical, syntectonic mobile zone that is the locus of pegmatite intrusion;

host rocks most commonly are dominantly mafic volcanics often with intercalated metasediments and gabbroic rocks.

8.2 Stacked Sill Structure Although a field of rare metal pegmatites is commonly termed a dyke swarm, the major economic ones most commonly are emplaced in concordant, shallow to medium dipping sills with one or more steeply dipping feeder dykes. The mechanism for emplacement of the rare metal pegmatite sills is as follows: stratification in volcanic-metasedimentary-gabbroic piles provides planes of weakness along contacts that facilitate entry of, and hydraulic dilation by late-stage pressurized rare metal bearing fluid. The layering also provides a barrier or cap to the escape of the volatile fluids from which the final rare metal pegmatites crystallize. Zoning in the pegmatite results from a continuation of crystallization of the rock forming minerals from the cooler contacts inward in the dilated space- albite at the contact, dominantly K-feldspar with quartz-mica next, spodumene quartz with some feldpars and mica, and finally, a core of quartz (in the albite-spodumene type). This simple zoning is often made more complex by two or more pulses of intrusion, albitization and other replacement reactions. It is worth noting that, in the case that the fluids are not confined and have rapid access to the surface through fractures in brittle rocks, rhyolites are formed. Rhyolites are known that have abundant lithium, tin, tantalum and other elements that are found in pegmatites. Indeed, economic lithium brines in Nevada, Chile and other localities are associated with acid volcanic flows, tuffs and hot springs that represent the same fluids from which rare metal pegmatites are formed.


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8.3 Syntectonic Mobile Zone Feeder Dykes The feeder dykes are near vertical and represent the conduit from depth connecting the pluton to the final rare metal pegmatite bodies. In most cases, shearing at the contacts of the dyke and mylonitization and/or plastic deformation of the feeder pegmatite identifies this as a deeper, syntectonic mobile zone. In extreme cases, the feeder pegmatite may be stretched and result in the formation of boudinage structure (as occurs at the Moblan Lake "Southwest Dyke" in northern Quebec. The feeder dykes tend to be intermediate in composition in the fractionation chain.

8.4 Mafic Host Rocks Virtually all pegmatite researchers make only passing reference or none at all to the host rocks of rare metal pegmatites. Their interest has been limited to contact geochemistry and mineralogy and to some extent the structural setting. The fact that most often the host rocks are volcanic-metasedimentary-gabbroic piles, indicates that these rocks are an important part of the genesis of rare metal pegmatite fields. This author indeed submits that the presence of these host rocks may be the most important factor after parent granite composition in the genesis of rare metal pegmatites. The layering and ductility, particularly of mafic volcanics and gabbros, causes the pile to flex and stretch without fracturing thereby confining the high pressure volatiles to permit final crystallization of the rare metal pegmatite. This mechanical behaviour is also conducive to selective emplacement along contact zones between units of the host rock, which accounts for the preponderance of sill-controlled pegmatite deposits. Were the host to be brittle and isotropic, the rocks would tend to fracture, the confinement required to permit coarse crystallization would be absent or greatly reduced, the volatiles would be essentially lost and the final product may be a more uniform feldspar-mica-spodumene rock with more subtle zoning or little zonation at all (examples are:Thompson Brothers deposit at Wekusko Lake, Manitoba and the Quebec Lithium deposit near Amos, Quebec). In cases where the active feeder dyke propogates through brittle fractures quickly to the surface, the final phase would be an extrusive rhyolite.

8.5 The Whabouchi Pegmatite The Whabouchi pegmatite is a highly fractionated, spodumene-rich pegmatite swarm, individual bodies of which display to varying degrees typical zoning - a comparatively thin albite wall zone at the contacts followed by a K-feldspar rich zone with lesser albite, quartz, mica and little or no spodumene, followed by a spodumene-quartz-rich core zone (with variable feldspars and mica) making up more than 90% of the cross-section. The Whabouchi deposit lacks a quartz core which is one of the classic zoned pegmatite features. Insufficient stratigraphic work has been done on the host rocks to establish that the bodies are dominantly sills as in the classic case. The concordance of the bodies with the greenstone belt and the persistence of even thin pegmatite bodies over a 100m ore more on strike and at depth supports this structural control. The drilled


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sections at 700E and 800E on the grid do appear to show this in that the hanging wall of the main pegmatite zone is basalt and the footwall gabbro (see Figure 8.1 below). The south contact observed at several locations by the author in the field showed strong shearing and stretched basalt pillows indicating that the main pegmatite was emplaced in the mobile feeder zone, rather than in offshoot sills from the feeder. This suggests that the feeder dyke was controlled by the steeply dipping volcano-sedimentary-gabbro pile and that above the present level an unknown layer or structure (faulting?) sealed the system and allowed containment of the volatile pegmatite fluids for crystallization in the steeply dipping dilation. Figure 8.1 Section at 700E Indicating Sill Structural Control

Basalt Hanging- wall Gabbro

Footwall


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9- MINERALIZATION The mineralization of economic interest observed in the Whabouchi pegmatites is principally lithium in spodumene, which when pure contains 8% Li2O, and possibly beryllium in beryl with minor nobium and tantalum. Spodumene generally assays 7.6%-8.0% Li2O depending on the degree of replacement largely by Na2O. Albite and microcline feldspars and high purity quartz generally occurring in pegmatites are of interest for glass, ceramics and other uses when sufficiently close to markets. Rubidium is also present in microcline (feldspar) and muscovite (mica) but this element is normally extracted from lepidolite, a lithium-rubidium mica. In the present study, only spodumene is being considered since metallurgical testing has been conducted only on this element. Two distinct phases are observed in the Whabouchi pegmatites: a spodumene-bearing phase comprising most of the pegmatite material and a lesser, white to pink barren quartz-feldspar pegmatite. The lithium mineralization occurs mainly in medium to large spodumene crystals (up to 30 cm in size) but petalite also occurs, averaging less than 2% in the deposit. Muscovite also contains minor lithium. Beryllium occurs in the mineral beryl and at Whabouchi is white with transparent greenish to bluish centres in the larger crystals, which may possibly be of gem quality. In the GeoStat study (see section 17), measured plus indicated resources (9,774,000t) averaged 1.63% Li2O and inferred resources (15,396,000t) average 1.57% Li2O. Selected core samples ranged as high as 4.24% Li2O, over half spodumene. The average grade material is approximately equivalent to a spodumene content of 20%. Beryllium assays average 158 ppm BeO but range up to 6383 ppm BeO where coarse beryl occurs.


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10 & 11- EXPLORATION AND DRILLING The Company is currenly carrying out an infill diamond drilling and channel sampling program during 2010-2011 that will be finished in March to upgrade resource estimates done by GeoStat in 2010 to reserves and resources. This program is a 48 hole, 10,000 m campaign of predominantly HQ size with NQ for several deep holes and some subsidiary holes. Eighteen trenches spaced at 50 to 100 meters apart, covered 1,050 meters laterally of the spodumene bearing pegmatite dykes. In the trenches, 45 channel samples, totalling 556 m were taken. Results to date indicate continuing high grade spodumene mineralization. The results of this work are not included in this PEA report. The following describes the earlier 2009-2010 work done by the Company that was reported on by GeoStat. This is the basis for GeoStat's resources estmation and the basis for the the present PEA report. During the fall 2009 exploration program, mechanical stripping exposed the spodumene-bearing pegmatite in 16 trenches spaced between 50 and 100 m apart and covering 1,000 m strike length. From these trenches, 37 channels were cut and a total of 281 samples were collected for analysis. In addition to the trenching work, 7 diamond drill holes were completed including one hole abandoned for technical reasons. All completed drill holes have intersected pegmatite zones. A second program of 59 holes totalling 11,630 m was done between January 15 and April 30, 2010. In addition, 14 line-km of ground magnetic survey covering the main mineralized occurrence and 670 line-km of helicopter-borne magnetics covering the Property were completed. In May 2010, the Company completed mechanical stripping of the south contact of the main mineralized zone over more than 750 m, plus bulldozed a 1.2 km access road from the Route du Nord main road. The drilling conducted at Whabouchi during the 2009 and 2010 exploration programs totals 67 NQ size holes for 12,755 m including one hole abandoned for technical reasons. From these drill holes, 4,980 samples for analysis were collected representing approximately 40% of the drill core material.


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12- SAMPLING METHOD AND APPROACH This section is based on information supplied by Nemaska to GeoStat and GeoStats observations made during their independent verification program conducted at the project site. Accordingly, this material is summarized from GeoStat's report. 1) The evaluation of the geological setting and Spodumene mineralization on the Property is based on observations, mapping, grab and channel sampling and diamond drilling. 2) The channel and drill core logging and sampling was conducted at the Property or at the nearby project facilities. 3) All samples collected by Nemaska from the 2009 and 2010 exploration programs were prepared by Table Jamesienne de Concertation Minière (“TJCM”) preparation laboratory located in Chibougamau, Québec and then shipped to SGS Canada Inc. - Mineral Services (“SGS Minerals”) laboratory in Don Mills, Ontario for analysis. 4) The retained half of the split drill core is stored in core racks on site near the Nemiscau camp. All channel samples and drill core handling was done on site with logging and sampling processes conducted by employees and contractors of Nemaska. The observations of lithology, structure, mineralization, sample number and location were noted by the geologists and geotechnicians on hardcopy and then recorded in a Microsoft Access digital database. Copies of the database are stored on CD optical supports. 5) Channel samples were broken out from between two diamond saw cuts spaced typically 4 cm and to 4 cm depth. Each sample is generally 1 m long, broken directly from the outcrop, identified and numbered then placed in a new plastic bag. 6) Drill core of NQ size was placed in wooden core boxes and delivered twice a day by the drill contractor to the project core logging facilities at Nemiscau camp. The drill core was first aligned and measured by a technician for core recovery. The core recovery measurements were followed by the RQD measurements. After a summary review of the core, it was logged. Before sampling, the core was photographed using a digital camera and the core boxes identified with Box Number, Hole ID, From-and-To using aluminum tags. Due to the hardness of the pegmatite units, the recovery of the channel material and the drill core is generally very good. 7) Sampling intervals were determined by the geologist, marked and tagged based on observations of the lithology and mineralization. The typical sampling length is 1 m but can vary because the extent of the mineralization departs from full metre increments. In general, one host rock sample was collected at each contact. 8) The drill core samples were split into halves, with one half placed in a new plastic bag along with the sample tag and the other replaced in the core box with a second sample tag for reference. A third sample tag is archived on site. The samples were then catalogued and placed in rice bags for shipping. Sample shipment forms were prepared on site with one copy inserted


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in one of the shipment bags, one copy sent by email to TJCM, and one copy kept for reference. The samples were transported on a regular basis by Nemaska’s employees or contractors by pick-up truck directly to the TJCM facilities in Chibougamau. 9) At the TJCM laboratory, the samples shipment is verified and a confirmation of shipment receipt and content is emailed to Nemaska’s project manager. The remaining core samples kept for reference are stored in covered metal racks in a controlled storage facility located less than 3 km from the Nemiscau camp. 10) SGS Geostat validated the exploration processes and core sampling procedures used by Nemaska as part of its independent verification program. SGS Geostat concluded that the drill core handling, logging and sampling protocols are at conventional industry standard and conform to generally accepted best practices. Accordingly, SGS Geostat considers that sample quality is good and the samples generally representative. 11) Finally, SGS Geostat is confident that the system is appropriate for the collection of data suitable for the estimation of a NI 43-101 compliant mineral resource.


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13- SAMPLE PREPARATION, ANALYSIS AND SECURITY

13.1 Sample Preparation and Analyses This section is based on information supplied by Nemaska to GeoStat and GeoStats observations made during their independent verification program. Accordingly, this material is summarized from GeoStat's report. GeoStat visited and verified the following procedures: 1) All samples received at TJCM are inventoried and weighed prior to processing. Drying is done to samples having excess moisture. They are crushed to 80-85% passing 2 mm using jaw crushers and split split using a riffle to obtain a 275-300 g sub-sample. Sub-samples are pulverized using a ring and puck mill or a single component flying disk mill to 85-90% passing 200 mesh (75 μm). Crushed rejects were returned to the original plastic bag. 2) The pulverized portions are sent by Canada Post secured delivery service to SGS Minerals laboratory in Don Mills, Ontario which is an ISO/IEC 17025 laboratory accredited by the Standards Council of Canada. Two analytical methods were used: the 55 elements analysis package using sodium peroxide fusion followed by both Inductively Coupled Plasma Optical Emission Spectrometry (“ICP-OES”) and Inductively Coupled Plasma Mass Spectrometry (“ICP-MS”) finish (SGS code ICM90A). This method uses 10 g of the pulp material and returns different detection limits for each element and includes a 10 ppm lower detection limit for Li. The ICM90A analytical method was conducted at the beginning of exploration program to verify the content of other element. The second method processes 20 g of pulp material and used the ICP-OES finish methodology with a lower detection limit of 0.01% Li (SGS code ICP90Q). The ICP90Q analytical method was used at the beginning of the exploration program on samples analyzed by ICM90A returning values greater than 0.3% Li and 500 ppm Be. The ICP90Q method for Li and Be was later used on a more systematic basis. 3) Analytical results are sent electronically to Nemaska and results are compiled in a MS Excel spreadsheet by the project manager. 4) The analytical protocol used at ALS Canada Inc. – Chemex laboratory (“ALS Chemex”) is the ore grade lithium four-acid digestion with Inductively Coupled Plasma – Atomic Emission Spectrometry (“ICPAES”) (ALS code Li-OG63). The Li-OG63 analytical method uses 4 g of pulp material and returns a lower detection limit of 0.01% Li.

13.2 Quality Assurance and Quality Control Procedure In addition to the quality assurance quality control (“QA/QC”) employed by SGS Minerals and ALS Chemex using pulp duplicate analysis, Nemaska developed an internal QA/QC protocol involving insertion of analytical standards, blanks and core duplicates on a systematic basis with the samples shipped to SGS Minerals. The company also sent pulps from selected samples to ALS Chemex for re-analysis. SGS Geostat did not visit the SGS Minerals or ALS Chemex facilities or conduct an audit of the laboratories.


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13.2.1 Analytical Standards

Two different standards were used by Nemaska for the internal QA/QC program: one low grade lithium (“Li-LG”) and one high grade lithium (“Li-HG”) standard. Both standards are custom made reference materials coming from historical drill core from the Whabouchi deposit itself. Sample preparation was done by TJCM using the same protocol as that for the exploration samples. Each standard inserted in the sample series weighed between 90 and 120g. To evaluate their expected values, Li-HG and Li-LG standards have been analyzed 6 times each at the SGS Mineral Services laboratory in Don Mills, Ontario and 5 times each at the ALS Chemex laboratory in North Vancouver, British-Colombia. Both facilities are accredited ISO 17025. SGS Mineral Services used ICPOES finish described in section 12.1. ALS Chemex used ICPAES finish also described in section 13.1. For the Li-LG standard, SGS Minerals analyses averaged 0.46% Li versus an average of 0.45% Li for ALS Chemex. For the Li-HG the averages were 0.72 and 0.71 respectively. Both laboratories show relatively consistent analytical results from one sample to another and there was good correlation between the two labs. A total of 98 Li-LG and 99 Li-HG standards were inserted at intervals as samples among the drill core samples representing 3.8% of the total samples analyzed. To determine the QC warning ±2x Std.Dev., and QC failure (±3x Std.Dev.) were used. From the 98 Li-LG standard samples analyzed, 21 fall outside the QC Warning interval and 1 is considered a failure. The only failure was within 13% of the expected value for Li-LG and was considered acceptable. From the 99 Li-HG standards analyzed, 13 fall outside the QC Warning interval and 6 outside the QC Failure interval. Since the 6 failures are within 10-13% of the expected value, they were deemed acceptable.

13.2.2 Analytical Blanks

Nemaska inserted one pure silica blank for every 20 core samples submitted. From the 58 blanks analyzed by the ICM90A method, 100% of them returned less than 50 ppm, which is five times the method detection limit. From the 197 blanks analyzed by the ICP90Q method, 100% of them returned less than 500 ppm, which is the five times the method detection limit.

13.2.3 Core Duplicates

Sample duplicates were inserted every 20 samples in the series as part of Nemaska internal QA/QC protocol. The sample duplicates are made from a quarter NQ core from the sample left behind for reference, or a representative channel sample cut parallel to the main channel. For the 216 core duplicates analyzed with ICP90Q, 91% of assay pairs with grade higher than 0.05% Li (5 times the method detection limit) reproduced within ±10% and 94% of assay pairs with grade higher than 0.1% Li reproduced within ±10%. For the 38 core duplicates analyzed with ICM90A, 97% of assay pairs with grade higher than 50 ppm Li (5 times the method detection limit) reproduced within ±10% and 88% of assay pairs with grade higher than 1000 ppm Li


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reproduced within ±10%. The sign test for the duplicates for both methods showed no analytical bias.

13.2.5 Nemaska Pulp Re-analysis

A detailed description of this procedure and results is given in GeoStat's NI 43-101 Technical Report. As part of Nemaska’s QA/QC protocol, pulps from 192 core samples originally analysed by SGS Minerals were sent for re-analysis to ALS Chemex. Re-analysis returned higher Li values for SGS Minerals for 145 samples (or 76% of the samples re-analysed), lower Li values for SGS Minerals for 23 samples (12%) and identical values for both labs for 24 samples (13%). SGS analyses averaged 5.3% higher than those of ALS. The results of the pulps re-analysis program shows a positive small analytical bias toward SGS Minerals analytical data, which could be explained in part by the differences in analytical methodologies of the two laboratories.

13.2.6 QA/QC Conclusions

Results for the standards, blanks and core duplicates did not highlight any analytical issues, although SGS Geostat recommended modification the Company's QA/QC protocol to include coarse silica as an analytical blank upstream from sample preparation (instead of after the preparation process) in order to validate sample preparation quality. The re-analysis of the pulps outlined a potential small analytical bias between the two assay companies that SGS Geostat considered significant enough to be investigated. However, the grade differences observed between the two laboratories were considered to be acceptable for a mineral resource estimation. For the future, SGS Geostat recommends an in depth comparison of the different analytical methods used and additional pulp re-analyses to verify the grade differences found. It was concluded overall by GeoStat that Nemaska is operating according to an industry standard QA/QC program for the insertion of control samples into the stream of samples for the Project and that the data are of sufficient quality to be used for mineral resource estimation.

13.3 Specific Gravity As part of the independent data verification program, SGS Geostat measured specific gravity (“SG”) of 34 mineralized core samples collected from drill holes WHA-09-07 and WHA-10-25. The measurements were performed using the water displacement method on representative half core pieces weighting between 0.42 kg and 0.74 kg with an average of 0.53 kg. The resulting measurements reported an average SG value of 2.68 t/m3.


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14- DATA VERIFICATION GeoStat for its NI 43-101 Technical Report, a) selected samples from the core for re-analysis to compare these with the original results and did not detect any analytical bias; b) determined only minor discrepancies in the drill hole survey data and these were corrected by Nemaska; c) found that assay certificate data matched those of the data base; d) determined that the final drill hole database is adequate to support a mineral resource estimate. The author of the present PEA relies on GeoStat's verification. However, in a visit to the Project during August 10th and 11th, 2010, the author walked out the 1.4 km length of the Whabouchi main pegmatite, examined several trenches across the deposit observing the widely occurring high grade spodumene mineralization and examined core of several drill holes across the widest part of the pegmatite mineralization. The author also thoroughly reviewed company literature and technical reports including the NI 43-101 reports of GeoStat and Solumine, examined Whabouchi plans, cross-sections, assays and geological and geophysical maps.


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15- ADJACENT PROPERTIES The main properties surrounding the Whabouchi property are owned by Nemaska and occur in the same east-north-easterly trending Lac des Montagnes volcano-sedimentary formation and include: the Lac Levac property which hosts the Nisk-1 Ni-Cu-Co-PGE deposit, and the Lac Arques and Lac des Montagnes properties which show potential for magmatic and volcanogenic sulfides as well as additional spodumene-bearing pegmatites. Other adjacent claims are mainly owned by individuals. A map showing these properties is to be found in the Solumines and GeoStat NI 43-101 Technical Reports. The Lac Levac property consists of 177 claims covering approximately 8,653 ha and is located east of the Whabouchi property about 6 km north of the Albanel transmission station. The Nemiscau airport lies about 55 km by road to the west of the Lac Levac Property. The property contains the Nisk-1 deposit hosted in an elongated body of serpentinized ultramafic rocks that intrude paragneiss and amphibolite sequences. The ultramafic rock intrusion is interpreted as a sill composed of a grey serpentinized peridotite with magnetite veinlets, and a black serpentinized peridotite with chrysotile veinlets hosting Ni-Cu-Co-PGE sulphide mineralization. Nisk-1 deposit hosts NI 43-101 compliant mineral resources as shown in Table 15.1. Table 15.1 Nisk Assays of Sulphide Mineralization Resource Category

Tonnage Ni (%)

Cu (%)

Co (%)

Pd (g/t)

Pt (g/t)

Measured 1,255,000 1.09 0.56 0.07 1.11 0.20

Indicated 783,000 1.00 0.53 0.06 0.91 0.29

Total M+I 2,038,000 1.06 0.55 0.07 1.03 0.23

Inferred 1,053,000 0.81 0.32 0.06 1.06 0.50 The Lac Arques property comprises 763 map-designated claims covering an area of 38,546 ha. It lies east of the Whabouchi property on portions of NTS sheets 32O11, 32O12, 32O13 and 32O14 and hosts similar geological units to Whabouchi which are part of the Lac des Montagnes Formation and the adjacent Champion Lake granitoïds and include paragneiss, amphibolites and granitic intrusives. Recent geophysical surveys reflect the signatures of ultramafic intrusions, some confirmed by drilling. As yet, no significant Mineralization has been outlined on the property. The Lac des Montagnes property is located west of Whabouchi and covers approx. 15,000 ha in several claim blocks. It hosts similar geological units to Whabouchi, but no significant Mineralization has been found.


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16. MINERAL PROCESSING AND METALLURGICAL TESTING

16.1 Introduction This subdivision gives an overview of the initial bench scale metallurgical testwork done at SGS Lakefield laboratories to evaluate the amenability of Nemaska spodumene-bearing pegmatite to production of a spodumene concentrate of minimum 6.0% Li2O. Flotation concentrates were made, then roasted, acid-baked and used in a hydrometallurgical process to make a high quality battery-grade lithium carbonate sample. Heavy liquid separation (HLS) trials were also done to investigate the potential for effecting a pre-concentration of the feed employing dense media separation technology (DMS) with the objective of rejecting 30%+ of the feed with a maximum 5% loss of Li2O. Good results were obtained for each type of test using off-the-shelf processes and work is continuing at the time of writing. For the present PEA study, however, the analysis is restricted to the case of production of a spodumene flotation concentrate for sale. The hydrometallurgical bench work serves to verify the suitability of Nemaska spodumene concentrate for making high quality battery grade lithium carbonate and also provides data for consideration of all options for the Company. The following sections present a summary of the metallurgical testwork undertaken by SGS and the results.

16.2 Testwork Samples Four NQ holes were drilled by Nemaska through the central portion of the main pegmatite to obtain approximately one tonne of mineralized core exclusively for metallurgical testwork. The core was sent by truck in a single palletized crate to the SGS Lakefield laboratories in July 2010. The entire sample was stage crushed to 6mm (1/4"). The head grade of the sample is reported as 1.72 % Li2O (Table 16.1, Aghamirian 2010). Table 16.1 Head Grade of 2010 Metallurgical Sample (Assays Reported In Percent) Sample Li2O SiO2 Al2O3 Fe2O3 MgO CaO Na2O K2O TiO2 P2O5 MnO Cr2O3 V2O5 LOI Sum

Cut A 1.70 74.5 16.0 0.99 0.11 0.49 3.31 2.67 0.01 0.15 0.09 0.02 0˂.01 0.06 98.4

Cut B 1.74 76.0 16.4 0.99 0.14 0.50 3.39 2.71 0.02 0.15 0.09 0.02 0˂.01 -0.08 100

Average 1.72 75.3 16.2 0.99 0.13 0.50 3.35 2.69 0.02 0.15 0.09 0.02 -- -0.01 99.2

Note: Li2O is determined by ICP-OES and the other oxides by WRA The material collected from the pegmatite is 5.5% higher in Li2O than the average grade determined by GeoStat and used in their resource estimation. This is considered within acceptable limits and is therefore appropriate for the metallurgical work for the PEA study. Table 16.2 below gives the mineralogical assay and indicates that spodumene makes up 21.1% of the sample.


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Table 16.2 Head Grade Semi-Quantitative X-ray Diffraction Results

Mineral Head Sample Cut A

(wt %)

Quartz 32.4

Albite 26.5

Microcline 9.4

Muscovite 8.5

Fluorapatite 0.8

Spodumene 21.1

Siderite 1.3

TOTAL 100.0

16.3 2010-2011 Testwork Results

16.3.1 Crushing and Grinding Testwork

A BWI of 14.2 kWh/t was measured on a sample of the crushed composite feed material ground to -106 microns (-150 mesh). No other grindability tests were carried out.

16.3.2 Dense Media Testwork

Preliminary heavy liquid separation tests were done to see if a pre-concentration step might be feasible. Results were encouraging and more work is being done but this process is not considered in this study.

16.3.3 Flotation Testwork

The main variables studied in the test program to produce a high-grade spodumene concentrate were the flowsheet, the grind (grain size) and the types of flotation reagents required with their corresponding dosages. Samples for testwork were ground in a laboratory sized mill using either stainless steel rods or steel balls and de-slimed in two stages using a Mozley cyclone. After the first stage of desliming the sample was scrubbed to free slimes attached to the mineral surface and lignin sulphonate added to prevent their reattachment. All flotation tests were conducted in batches in a Denver flotation cell with no recirculation of streams. A number of collectors were tested but LR19, a mixture of FA-2 fatty acid and other chemicals, was found to give the best results and it was used in all the later tests. A mica flotation step at a pH of 1 preceded the spodumene rougher flotation stage at pH 10. Armac T was found to be effective as a mica collector. Fine spodumene was found to have been


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entrained in the mica concentrate and a mica scavenger stage was added to recover some of this spodumene and return it to the spodumene flotation feed. Four cleaner stages were used to upgrade the concentrate but it was found that 2 cleaner stages would be adequate and gave a higher recovery at an acceptable grade.


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17- MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

17.1 Introduction Resource estimates are derived from resource block models constructed using 3D wireframe solids of the mineralization centred on the channels and drill holes and their Li2O analytical data (BeO was estimated in parallel but is not considered in the present PEA Technical report). Then, the analytical data within the wireframe solids is normalized to generate fixed length composites. The composite data is used to interpolate the grade of blocks regularly spaced on a defined grid that fills the 3D wireframe solids. The interpolated blocks comprise the mineral resources. The blocks are then classified based on confidence level using proximity to composites, composite grade variance and mineralized solids geometry.

17.2 The Data SGS Geostat (see References) conducted mineral resource estimates using channel sampling and diamond drilling data compiled from the 2009 and 2010 exploration programs conducted by Nemaska. No historical estimates of resources had been done previously. The database used by GeoStat was compiled by the company from information derived from a total of 37 channels and 66 diamond drill holes. The Exel format record contains the collar survey coordinates, drill hole depths and orientations, lithology and analytical results of the 2009-2010 program (the last hole, WHA-10-66 was not included because analytical results were not available for the mineral resource estimate). The channel samples were mainly collected across the crest area of the outcrop ridge. Orientations ranged from N105° to N178° with an average of N145° and are generally perpendicular to the strike of the pegmatite intrusions. The average length was 7.6 m and the sampling interval is typically one metre. The core holes drilled on the project are generally oriented N330°, perpendicular to the general orientation of the pegmatite intrusions, and have a weak to moderate deviation toward the east. Their spacing was typically 100 m with tighter 25 to 50 m spacing between sections 150E and 725E. Drill hole dips range from 45° to 58° with an average of 50° and the drill hole intercepts range from approximately 70% of true width to near true width of the Mineralization. There are a total of 5,161 assay intervals in the database used for the current mineral resource estimate.

17.3 Composite Data A 5 m by 2 m by 5 m block size was defined for the resource. A composite length of 1.5 m was selected based on the N-S thickness (across the strike) of the block model. Block model grade interpolation is conducted on composited analytical data. The minimum length of composite kept for the interpolation process is 0.75 m. Compositing is conducted at the start of the


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bedrock-overburden contact in the case of drill holes. Table 16.1 shows the statistics of the composites used for the interpolation of the resource block model and Figure 16.1 shows the related histogram for Li2O. Figure 16.2 displays the spatial distribution of the composites in the longitudinal view.

Table 17.1 Statistics for the 1.5m Composites for Li2O and BeO (GeoStat's Table 16.2)

Figure 17.1 Histogram of Li2O 1.5m Composites


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17.4 Interpretation Modeling was first completed on sections to define mineralised prisms using lithologies and analytical data using a cut off grade of 0.5% Li2O over a minimum drill hole interval length of 2 m, the width defining the N-S thickness of the mineralized blocks. The final 3D wireframe model was constructed on a bench by bench basis assuming a bench height of 5 m, which is the vertical dimension of the mineralized blocks. To convert volumes to tonnage, the specific gravity of 2.68t/m3 determined by GeoStat and reported on in this report in section 12.3 was used. Mineralized envelopes of the drill sections and also their interpretation in plan at various levels were constructed based on the geological interpretation of the deposit. An example for vertical section 525E is given in Figure 17.3. A plan example is not shown but can be viewed in GeoStat's report on page 43.

Figure 17.2 Longitudinal View Showing the Spatial Distribution of the Composites (GeoStat’s Fig. 16.4)


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Figure 17.3 Section 525E Modelled Envelope with Mineralized Intervals (GeoStat's Fig. 16.5)

Spatial continuity of the Li2O grade of composites was assessed using correlograms, which are the calculated correlation coefficient of grade from composite pairs separated by a given distance in a given direction, has been generated for 3 m composites . For this, composites of 3 m length were used to lower the data variability in order to better analyse spatial continuity. The spatial continuity of the Li2O grade was characterized as more or less isotropic with a relatively poor continuity in all directions. As mentioned, a block size of 5m (E-W) by 2m (N-S) by 5 m (vertical) was selected for the resource block model based on drill hole spacing, width and general geometry of Mineralization. Hole spacing averaged 25 m in the shallow depth of the western half of the deposit, increased to 50 m at mid-depth of the same western half then averages 100 m for the eastern half and at depth. The minimum thickness of Mineralization averages 2 to 3 m and the general orientation of the deposit averages N75° azimuth for the western half of the deposit and N90° for the eastern half. The resource block model contains 95,287 blocks for a total of 9,398,659 m3. Table 16.2 summarizes the parameters for the block model and Figures 16.4 and 16.5 illustrate the block model structure within mineralized envelopes for section and level plan views respectively. Table 17.2 Resource Block Model Parameters


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Figure 17.4 Section 700E Modelled Envelope Showing Block Model Structure (GeoStat's Fig. 16.8)

Figure 17.5 Modelled Envelope Showing Block Model Structure in Plan View (GeoStat's Fig. 16.9)


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17.5 Grade Interpolation Methodology The inverse distance to the power square (“ID2”) methodology was used to interpolate grade for the model blocks of the deposit. Isotropic search ellipsoids were selected for the process based on correlogram analysis. Limits are set for the minimum and maximum number of composites used per interpolation step and the maximum number of composites used from each hole. Three successive passes with relaxed search conditions from one pass to the next were done until all blocks were interpolated. In the first pass, the search ellipsoid distance was 75m x 75m x 25m aligned with the general orientation of the pegmatite bodies in the deposit. Search conditions were defined with a minimum of 7 composites and a maximum of 30 composites and with a minimum of 3 holes required to estimate the block. Using the same composite selection criteria, a second pass with the ellipsoid dimensions double those of the first pass and a third pas using 500m x 500m x 100m were done.

17.6 Mineral Resource Classification and Estimates Mineral resources at Whabouchi are classified as Measured, Indicated and Inferred following CIM guidelines, grade variability and spatial continuity of mineralization. An automated classification is followed by manual editing of the results. The automated determination is arrived at with the use of the search ellipsoids constrained by criteria on number of composites and number of drill holes within a given search ellipsoid. For the Measured resource category, the search ellipsoid is 35 m (strike) by 35 m (dip) by 5 m with a minimum of 7 composites in at least 4 different drill holes. For the Indicated category, the search ellipsoid is twice the size of the Measured category ellipsoid using the same composites selection criteria. The second classification stage involves the delineation of coherent zones for the Measured and Indicated categories based on the results of the automated classification. The objective is to homogenise or “smooth” the results of the automated process by removing the “Swiss cheese” or “spotted dog” patterns typical of the automated process results. The second stage is conducted by defining 3D solids on a bench by bench basis for the Measured and Indicated categories. Figure 16.6 illustrates block model resource classifications for section and level plan views respectively (Measured – Red, Indicated – Blue, and Inferred – Grey). Figure 17.6 Resource Classifications in Cross-Section (GeoStat's Fig. 16.11)


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Figure 17.7 Resource Classifications in Plan View (GeoStat's Fig. 16.12)

The mineral resource estimation for Whabouchi deposit is tabulated in Table 16.3 for the Measured, Indicated and Inferred resources using 0%, 0.5% and 1.0% cut-off grade for Li2O. The fact that the maximum difference in resource estimate tonnages between cut off grades 0% and 1.0% was only 3.35% for the inferred category and less than 1% for the other categories shows that the deposit is, for all intents and purposes, all high grade with only very narrow low grade zones (PEA author's comment). Table 17.3 Mineral Resource Estimates for Whabouchi


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18 - ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES A preliminary site plan has been selected for the Whabouchi Project showing the location of the proposed open pit, the process plant, administration buildings, general infrastructure, the mine waste dump and the tailings management facility. This is in the Appendix. Part of the plan is shown also in sections 18.1.7 and 18.3 below. The following section on mine design has been done by Patrice Live, head of mining engineering department, BBA Inc., Montreal. His certificate page is included.

18.1 Mine Design The Preliminary Economic Assessment (PEA) of the Whabouchi Lithium Project is based on an open pit operation, which, after mining dilution and ore loss, contains about 15.04 million tonnes of ore and 42.99 million tonnes of waste. Based on a mill throughput of 1mtpy, the mine life is estimated at 15 years. Using a 3D block model provided by SGS-Geostat, the development of in-pit resources was carried out using computer-assisted 3D algorithm in the mining software MineSight. The mine study process from the transfer of the block model to the preparation of the pit optimization and operating cost estimate is presented in the following sections.

18.1.1 Resource Block Model

The block model was supplied in Comma Separated Value text format (CSV) to BBA by SGS-Geostat in September, 2010. The block size used in the model is 10m x 2m x 5m. Table 18.1 gives a list of the main variables provided in the block model. Table 18.1 Block Model Characteristics

Model Item Description

Ix Row Number (Easting) in model

Iy Column Number (Northing) in model

Iz Bench Number (Elevation) in model

X Easting coordinate

Y Northing coordinate

Z Elevation coordinate

FixedDensity Density assigned to ore and waste material in model

Classification 3=Measured, 2=Indicated, 1=Inferred

Li2O_ICP90Q Li2O % Grade (Grades vary between 0.17%-3.49%)

BeO BeO ppm grade

Percent_Env Fraction of block that is considered ore material


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Once the model was transferred into MineSight and ready for analysis, it was checked numerous times through a complete verification process. The model was deemed to have the required integrity and consistency for the following steps of the assessment.

18.1.2 Pit Optimization

The objective of the pit optimization is to develop an optimal pit shell, using all economic parameters, which are determined using data from similar projects, historical trends of costs and forecasting of selling prices for the coming years. In the latter case, a selling price was supplied by Nemaska representing their discussions with a customer/strategic partner. The pit shell for Whabouchi was obtained using the Lerchs-Grossman 3D algorithm pit optimizer in MineSight (“LG 3D”) and an overall stripping ratio not exceeding 3.0 tonnes of waste per tonne of ore and a mine life of 15 years. The optimized pit shell is shown in 3D view in Figure 18. and plan view in Figure 18.2. As can be seen in these figures, the optimized pit does not include operational features required in an open pit mining operation. These characteristics, which include proper slopes, haulage ramps, pit exit, smooth pit walls, benching arrangement are all demonstrated in the engineered pit design in Section 18.1.4.

Figure 18.1 3D Representation of the LG Optimized Pit


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Figure 18.2 LG Optimized Pit Plan View

18.1.3 Pit Optimization Results

Table 18.2 Pit Optimization Results

Cut-Off Grade: 0.5%Li2O (No Dilution and no mining Loss)

Category Tonnage Li2O BeO

(Mt) (%) (ppm)

Measured 1.88 1.602 426.06

Indicated 7.79 1.636 446.32

Inferred 11.37 1.598 458.24

Total Ore 21.04 1.613 436.43

Overburden -- Strip

Rock 87.93 Ratio

Total Waste 87.93 4.18

The resources contained in the optimized pit are presented in Table 18.2 above.

18.1.4 Engineered Pit Design

The engineered mine design was carried out using the 3D pit shell that was optimized using the Lerchs-Grossman algorithm. The engineered pit design takes into account operational features as listed in Table 18.3.


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For instance, all in-pit haulage ramps are 21m wide to accommodate the 56-tonne haul trucks. This ramp will provide enough room for two-way traffic, in order to have the most efficient haulage profile and cycle time estimate possible. Based on recommendations, all in-pit ramps have been restricted to a 10% gradient. The rock and overburden have the same slopes and characteristics in the pit design. There are no additional recommendations for the overburden material.

Table 18.3 Pit Design Parameters

PARAMETERS ROCK

BENCH SLOPE

Bench Height 15m

Face Angle 75o

Berm Width 8m

Interamp Slope 52o

Benching Arrangement Triple

ROADS IN ROCK

2 LANES 21m

1 LANE 15m

Grade 10%

The engineered pit design is presented in plan view and isometric 3D in Figure 18.3 and Figure 18.4, respectively.


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Figure 18.3 Plan View of Engineered Pit Design

Figure 18.4 3D View of Engineered Pit Design The section views of both the engineered pit design and the pit optimization are shown in the au-dessous figures. The cut-off grades that are represented range from 0.5% Li2O to 1.5% Li2O.


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Figure 18.5 Section View of Open Pit and Pit Optimization (Section E 605)

Figure 18.6 Section View of Open Pit and Pit Optimization (section E 905)


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Figure 18.7 Section View of Open Pit and Pit Optimization (Section E 1205)

Figure 18.8 Section View (longitudinal) of Open Pit and Pit Optimization (Section N -105)

18.1.5 In-Pit Resources

The life-of-mine (LOM) in-pit resources in the ultimate pit design for the Whabouchi lithium project were calculated and classified in the Measured, Indicated, and Inferred categories. Since the study is limited to a Preliminary Economic Assessment, the Inferred material was included in the total in-pit resource estimates.


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The total in-pit resources in the engineered pit design, before mining dilution and mining loss, amount to 14.78 Mt of ore at an average grade of 1.618% Li2O and 434.78 ppm BeO are presented in Table 4. The total waste is estimated at 43.23 Mt, with a stripping ratio of 2.93.

Table 18.4 In-Pit Resources (before dilution and mining loss)

Cut-Off Grade: 0.5%Li2O

(No Dilution and no mining Loss)


(Mt) (%) (ppm)

Measured 1.88 1.602 417.49

Indicated 6.82 1.634 443.72

Inferred 6.08 1.606 458.24

Total Ore 14.78 1.618 434.78

Overburden -- Strip

Rock 43.25 Ratio


Based on a preliminary review of the block model by benches and grade distribution, the ore loss has been estimated at 4% and the mining dilution at 6% and 0.32% Li2O, resulting in a total of 15.04 Mt of in-pit resources at an average grade of 1.54% Li2O and 415.09 ppm BeO. The stripping amounts to 42.99 Mt and the stripping ratio is 2.86 tonnes of waste per tonne of in-pit resource. Table 18.5 In-Pit Resources (after dilution and mining loss)

Cut-Off Grade: 0.5%Li2O

Mining Loss: 4%

Mining Dilution: 6% at 0.32%Li2O


(Mt) (%Li2O) (ppm)

Proven 1.91 1.53 398.59

Probable 6.94 1.56 423.63

Inferred 6.19 1.53 437.49

Total Ore 15.04 1.54 415.09

Overburden -- Strip

Rock 42.99 Ratio



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18.1.6 Mine Production Schedule

The development of the mine plan is based upon the following criteria:

approximately 15 years mine life;

mining a yearly ROM of 1 Mt ore to obtain the final product of Spodumene concentrate at around 200,000 tpa;

mining high grade ore in the early years and postpone the stripping in order to maximize the return on investment.

18.1.7 Waste Pile Design In order to store the waste rock from the mine, a rock pile is designed and is located to the south-west of the pit from a minimum distance of 150m away from the pit edge and 100m from other installations. The waste rock pile was designed so as to store the 42.99M bank tonnes of waste material excavated over the mine life with no provision for material required during the construction period, e.g. tailings dam, roads, etc. The main parameters used to design the waste rock pile are as follows:

waste rock pile bench height: 10 m;

waste rock pile face angle: 35°;

waste rock pile inter-ramp angle: 30o;

material density: 2.68;

rock pile swell factor: 30%. The placement of the pile and the final pit design are shown in Figure 18.9 in plan view and Figure 18. in 3D view. The total height of the rock pile is 77m.

Figure 18.9 Pit Design with Waste Rock Pile Plan View


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Figure 18.10 Pit Design with Waste Rock Pile 3D View

18.1.8 Mining Fleet

Production drilling will use a fleet of 4 ½ inch diesel blast-hole drilling rigs. A re-drill factor of 5% has been included to account for productivity lost to collapsed holes or lost drill steels. The number of drills operating at any given time is dependent on the annual production rate and varies over the course of the mine life. The drill fleet reaches a maximum of 2 drills in Year 7. Holes will be drilled to a total depth of 5.6m including 0.6m of sub-drilling. A stemming height of approximately 1.75m will be used to maximize the explosive column’s effectiveness. An average drilling pattern of 3.2m by 4.2m will be used in ore and a 3.5m by 4.5m drilling pattern will be used in waste. Drill hole characteristics are detailed in Table 18.6.


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Table 18.6 Drilling Parameters

Category Ore Waste Units

Hole Diameter 4 1/2 4 1/2 inches

Hole Diameter 114.3 114.3 mm

Bench Height 5.0 5.0 m

Subdrill Length 0.6 0.6 m

In situ Bulk Density 2.73 2.73 t/m3

Hole Spacing 4.2 4.5 m

Burden 3.2 3.5 m

Rock Mass per Hole 183 215 tonnes/hole

Penetration Rate 28 28 m/hr

Shift Drill Time 8.2 8.2 hr

Meters/Shift 230.1 230.1 m

Re-drill 5% 5% %

Holes/Shift 39 39 holes

Tonnes/Shift 7,180 8,414 tonnes

Table 18.7 Drill Operating Hours

Category Time/Shift (min)

Scheduled Shift Parameters

Scheduled Time Per Shift (min) 720

Scheduled Delays

Startup 15

Shut Down 15

Coffee Break 15

Lunch 30

Net Scheduled Productive Time (min) 645

Job Efficiency Factor (Post Scheduled Breaks) 75%

Net Productive Operating Hours/shift 8.2


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The drilling net productive time per 12-hour shift was determined using a total of 75 minutes of scheduled delays. Due to the time required for drill setup and relocation, operator efficiency was established at 75%. Blasting will be executed under a contract with an explosive company that will supply blasting materials and technology, and ensure the storage and delivery of explosive products. Based on the drilling patterns listed above, the powder factor is estimated to be 0.27 kg/tonne in ore and 0.23 kg/tonne in waste. The parameters related to blasting can be found in Table 18.8.

Table 18.8 Blasting Parameters

Category Ore Waste Units

Hole Diameter 114.3 114.3 mm

Bench Height 5.0 5.0 m

Subdrill Length 0.6 0.6 m

Stemming Length 1.75 1.75 m

Loaded Length 3.85 3.85 m

Volume/m 0.0103 0.0103 m3/m

Rock Mass Per Hole 183 215 tonnes/hole

Bulk Emulsion

Density 1.25 1.25 g/cm3

Kg/Hole 49.38 49.38 kg

Powder Factor 0.27 0.23 kg/tonne

Fleets of 56 tonnes capacity haul trucks and hydraulic shovels with a bucket capacity of 5.4 m3

will be used for production. This fleet combination should allow for 4-5 pass loading of trucks. Loading operations will also be assisted by an 8.6 m3 bucket capacity wheel loader in order to maximizing the flexibility of the operation. The loader will be used as replacement for the shovel in down-time situations as well as for other tasks involving material displacement such as blending or re-handling.

Loading and hauling productivities were calculated using a net productive time of 9.5 hours (570 minutes) per 12-hour shift. Included in this time is a total scheduled delay (non-productive time) of 75 minutes per shift to account for shift change, routine inspection, coffee break and lunch break. Based on haul truck, loader and drill productivity data as well as equipment availability, haulage distances and production requirements, the annual fleet requirements for the major mine equipment types were determined.


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The major fleet will consist of a maximum of:

1 x 385D hydraulic shovel;

1 x 990H loader;

4 x CAT773F haul trucks;

2 x CUBEX QXR920 drill.

(Note: Or equivalent alternative equipment may be used.)

The auxiliary equipment will consist of the following equipment:

motor grader;

water truck;

fuel/Lube truck;

service truck;

tire changer;

etc.

18.1.9 Mine Operating Costs

Mine operating costs represent the total of the equipment maintenance and fuel costs, blasting costs, personnel costs, other costs (RC and Dewatering). The price of diesel fuel is $0.87/liter Average salaries are based on the 2010 Canadian Mine Salaries and Wages Survey results and/or similarly size mining operations. Blasting costs were estimated based on the patterns and tonnages required in both ore and waste. The basis for the unit costs related to blasting was derived from quotations received from suppliers from an internal database of similar projects. Equipment unit operating and maintenance costs were developed from quotations received from suppliers’ cost estimates and from experience and personal contacts within the mining industry. Energy consumption was calculated for each piece of equipment based on consumption estimates obtained from the various sources listed above. Fuel requirements were calculated according to the annual operating hours for each type of equipment. The summary of all operating costs can be seen in Table 18.9.


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Table 18.9 Summary of Mining Operating Costs

OPEX Summary

Open Pit Production Units

PP 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Totals

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12 Yr 13 Yr 14 Yr 15

Milled Ore Tonnes tonnes 0 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 15 000 000

GRADE (%) 0 1.450 1.553 1.554 1.560 1.558 1.547 1.492 1.522 1.529 1.528 1.527 1.528 1.545 1.580 1.614 1.620 1.550

Waste tonnes 577 038 1 789 486 2 287 890 2 724 982 3 115 562 3 398 809 3 617 080 3 830 660 3 942 059 3 839 208 3 319 684 2 935 953 2 719 693 2 504 020 1 314 667 546 972 42 463 763

Ore Tonnes Mined tonnes 0 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 15 000 000

Waste + OB Tonnes Mined tonnes 577 038 1 789 486 2 287 890 2 724 982 3 115 562 3 398 809 3 617 080 3 830 660 3 942 059 3 839 208 3 319 684 2 935 953 2 719 693 2 504 020 1 314 667 546 972 42 463 763

Stripping Ratio 1.79 2.29 2.72 3.12 3.40 3.62 3.83 3.94 3.84 3.32 2.94 2.72 2.50 1.31 0.55 2.83

Total Tonnes Mined tonnes 577 038 2 789 486 3 287 890 3 724 982 4 115 562 4 398 809 4 617 080 4 830 660 4 942 059 4 839 208 4 319 684 3 935 953 3 719 693 3 504 020 2 314 667 1 546 972 57 463 763

Spodumene Produced (t) 207 057 207 230 208 002 207 643 200 850 198 949 202 926 203 860 203 698 203 655 203 733 205 790 209 917 209 917 215 994 3 094 355

Equipment Operating (EXCL FUEL) $ 471 084 1 668 671 1 904 581 2 154 014 2 532 081 2 706 966 2 771 794 2 936 017 3 067 349 3 097 895 2 930 394 2 801 717 2 726 055 2 676 293 2 095 685 1 460 388 38 000 983

Equipment Fuel $ 530 829 1 488 140 1 625 055 1 750 177 1 905 463 2 020 038 2 118 033 2 557 545 2 642 263 2 655 630 2 201 441 2 106 158 2 043 234 2 003 059 1 619 799 1 123 975 30 390 840

Blasting $ 178 769 917 441 1 071 849 1 207 261 1 328 265 1 416 016 1 483 637 1 549 805 1 584 317 1 552 453 1 391 502 1 272 621 1 205 623 1 138 806 770 340 532 505 18 601 208

Personnel $ 1 219 511 4 270 404 4 764 479 4 831 949 4 966 889 5 177 732 5 314 780 5 456 747 5 524 217 5 524 217 5 380 141 5 099 017 5 031 547 4 958 455 4 403 938 1 793 235 73 717 258

Total OPEX $ 2 400 192 8 344 656 9 365 964 9 943 401 10 732 697 11 320 752 11 688 244 12 500 114 12 818 146 12 830 194 11 903 477 11 279 513 11 006 459 10 776 613 8 889 763 4 910 103 158 310 097

Cost Per Tonne Mined $/tonne 4.16 2.99 2.85 2.67 2.61 2.57 2.53 2.59 2.59 2.65 2.76 2.87 2.96 3.08 3.84 3.17 2.755

Cost Per Tonne Milled $/tonne -- 8.34 9.37 9.94 10.73 11.32 11.69 12.50 12.82 12.83 11.90 11.28 11.01 10.78 8.89 4.91 10.55


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18.1.10 Mining Capital Costs

The mining capital costs are divided among equipment purchasing, equipment replacement, and pre-stripping costs transferred from the operating in pre-production. The major capital costs are listed below:

initial Capital (Year PP): $5.70M (divided among two pre-production periods);

sustaining Capital: $5.86M;

equipment Replacement: $8.5M;

pre-Stripping: $2.40M (excluding G/A);

total Capital associated to mining: $22.46M.

The initial capital is made up of the purchasing of one loader, one haul truck and one drill. The details of the purchasing over the lifetime can be seen in Table 18.10. The other details of expenditure can be seen in the financial analysis section of the report.


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Table 18.10: Equipment Purchasing Costs

Equipment Type Unit Cost PP 2012 2013 2016 2018 2019 2021 Totals

Yr 1 Yr 4 Yr 6 Yr 7 Yr 9

385D 920 000 -- 920 000 -- -- -- -- 920 000

Loader 990H 1 660 000 1 660 000 -- -- -- -- -- 1 660 000

Haul Truck CAT 773F 885 000 885 000 885 000 885 000 885 000 -- -- 3 540 000

CUBEX QXR 920 1 100 000 1 100 000 -- -- -- 1 100 000 -- 2 200 000

Total Primary Equipment CAPEX $ 3 645 000 1 805 000 885 000 885 000 1 100 000 0 8 320 000

Track Dozer (CAT D7E) 619 163 619 163 -- -- -- -- 619 163 1 238 326

Motor Grader (CAT 14M) 564 531 564 531 -- -- -- -- 564 531 1 129 062

Water Truck (10,000L) 300 000 300 000 -- -- -- -- -- 300 000

Total Secondary Equipment CAPEX $ 1 483 694 -- -- -- -- 1 183 694 2 667 388

Fuel/ Lube Truck 250 000 250 000 -- -- -- -- -- 250 000

Service Truck ( 250 HP 22,000 GVW) 222 385 222 385 -- -- -- -- -- 222 385

Light Plant 14 000 56 000 -- -- -- -- --

Mobile Pump (125 HP diesel) 48 000 48 000 -- -- -- -- -- 48 000

Total Auxiliary Equipment CAPEX $ 576 385 -- -- -- -- -- 576 385

Total Mine Equipment CAPEX $ 5 705 079 1 805 000 885 000 885 000 1 100 000 1 183 694 11 563 773


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8.2 Process Conceptual Plant Design

18.2.1 Process Design Criteria

This a Preliminary Economic Assessment report and, as such, design for this level of evaluation is conceptual in nature, based on preliminary bench scale data, the author's familiarity with similar pegmatite projects he has worked on and data in Equapolar's files. Also, the end product for sale is a 6.0% Li2O spodumene concentrate. This is an intermediate product suitable for transformation into lithium chemicals, particularly battery grade lithium carbonate (Li2CO3) and lithium hydroxide monohydrate (LiOH•H2O). The process plant equipment selection is for a throughput of 3,800 tpd of feed, and projected throughput is 2,950 tpd. Criteria for the design are listed in Table 18.11. Table 18.11 Annual Process Plant Production Parameters

Item Average Value Design Value Unit

Scheduled operating days per year 365 d

Processing Plant Equipment Utilization 93 %

Processing Plant Annual Operating Time 8,145 h

Ore crushed (dry) 1,077,000 t/a

237.5 t/h

Mill feed tonnage (dry) 2,950 3,800 t/d

132.2 t/h

Ore specific gravity 2.68

Ore abrasion index Ai 0.5 (assumed) g

Moisture in ore 5.0 (assumed) %

Process Plant Feed Analysis:

Spodumene – LiAlSi2O6 20.1 %

Lithia - Li2O 1.61 %

Quartz – SiO2 32.4 %

Albite – NaAlSi3O8 26.9 %

Microcline - KAlSi3O8 9.4 %

Muscovite - KAl3Si3O10(OH)2 8.5 %

Fluorapatite 0.8 %

Total 99.71 %

Trace other (Ta,Nb,etc) ----

Fe203 (contained in above minerals) 0.99 %

Lithium recovery 80 %


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Table 18.12 Conversion Factors

To convert To Li To Li2O To Li2CO3

Lithium (100%Li) 1.000 2.153 5.324

Lithium oxide (Li2O) 0.465 1.000 2.473

Lithium carbonate (Li2CO3)

0.188 0.404 1.000

Spodumene (LiAlSi2O6) 0.037 0.080

18.2.2 Process Flowsheet Description

A generalized process scheme for producing a 6.0% Li2O spodumene concentrate is illustrated in Figure 18.11 and is based on testwork by SGS Lakefield and their recommendations. The flowsheet is a schematic of SGS's proposed flotation pilot plant for the Nemaska Project. Run-of-mine ore is stage crushed to a size suitable for feeding to a rod mill using a primary jaw crusher, a secondary cone crusher, both in open circuit, and a tertiary cone crusher operated in closed circuit. The crushed ore is ground wet in a primary rod mill, and a secondary ball mill (or possibly another rod mill), to reduce the feed to -42 mesh, thence to a primary desliming cyclone, the underflow feeding scrubbers that adjust pH to 3-4 and add a collector to float mica in two stages using a bank of rougher and a bank of cleaner cells, the latter for recovering fine spodumene from the mica concentrate. The mica tailing, which is the spodumene flotation feed, goes to a scrubber to adjust pH to alkaline and is deslimed in a second cyclone, the underflow going to a high-density conditioning scrubber where a spodumene collector reagent is added and the conditioned pulp then goes through banks of rougher, scavenger and cleaner flotation cells to produce a spodumene concentrate containing 6.0% Li2O. The final concentrate is thickened, filtered and dried ready for shippng. Rejects from the concentrator, composed of quartz, feldspars, microcline, muscovite, trace minerals and minor spodumene, are sent to the tailings thickener and then pumped to the tailings pond. The overflows from the concentrate and tailings thickeners are recycled to the process.


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Figure 18.11 Schematic Flowsheet for Processing Nemaska Ore (based on proposed pilot plant)


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18.2.3 Plant Services

8.2.3.1 Process Water

Process water is made up from water recycled from the concentrate and tailings thickeners and from the tailings polishing pond where used water and added natural precipitation water can be pumped to the process water tank, in which the water level is maintained. Shortfalls can be made up with fresh water from Lac Spodumene, or possibly from mine dewatering. Fresh water is also needed for domestic use, boiler water, etc.

18.2.3.2 Compressed Air

One air screw compressor supplies high pressure compressed air for snap blow air on drum filters, for instrumentation. An air blower supplies low pressure air to the flotation cells.

18.2.4.2 Steam

Bunker C-fired boilers provide steam for heating for heavy fuel oil in the storage tanks and distribution lines and miscellaneous heating requirements.

18.2.4.3 Heavy Fuel Oil

Bunker C fuel oil is used in the boiler house to produce steam for uses noted under the previous heading. The storage tanks are placed on an impermeable barrier and surrounded by a berm to capture fuel in case of leakage.

18.3 Site Infrastructure and Support Systems

18.3.1 Plant Buildings

The primary crusher and the secondary-tertiary pair of crushers are housed in a building outside the main processing building and connected by covered conveyors. Figure 18.12 shows the location of the plant and crusher building as well as the open pit, tailings pond and waste rock pile. A 2000m2 process plant that houses grinding flotation and ancillary equipment and has plant offices, laboratory, utility rooms, reagent storage, a spodumene concentrate storage and load-out area lies about 300m north-west of the western end of the open pit.


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Figure 18.12 Proposed Site Plan Showing Location of the Pit, Crushing and Processing Plant, Tailings and Waste Rock Pile.

The crushing building housing the primary, secondary and tertiary crushers is located also approximately 300m north-northwest of the open-pit and is connected to the processing plant by a 60m long covered conveyor. A ramp on the east side gives access to mine trucks to dump ore onto a grizzly over the primarly crusher feed hopper. The rock breaker and the operator’s cabin are installed on the ramp over the grizzly.


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18.3.2 Administration, Accommodation and Warehouse Buildings

Managerial, technical, personnel, accounting and clerical staff will operate from a prefabricated administration building provisionally to be located in the Relais Routier Nemiscau Camp, located 12 km west of the Property, where the Company already has its field office and core logging facilities. The building will have meeting rooms, washrooms, printing and utility rooms and is connected to telephone and internet. According to Company management, the Cree Nation enterprise that runs this facility has agreed to add to the existing room and board capacity to accommodate mine and mill workers should the Property go into production. The facility will also serve to house mine and plant construction crews. A warehouse will also be constructed at the Nemiscau Camp.

18.3.3 Security

A guard house will be located at the entrance to the site access road adjacent to the Route du Nord highway. A visitor's parking lot will be located by the guard house.

18.3.4 Access and Site Roads

The Route du Nord, a wide all-weather road, connects the Project to Chibougamau (250km to the south) and ultimately to southern Quebec. This highway continues to Nemaska, 40km west of the property where it joins the James Bay Highway that connects to Matagami and points south. Site service roads will connect to the access road and to the mine, crusher, process plant, garage/repair shop, tailings facility and waste rock storage.

18.3.5 Fuel Storage

Tank storage for diesel fuel is located near the garage/repair shop. Bunker C fuel oil for steam boilers is stored in tanks by the concentrator.

18.3.6 Fresh Water

Potable water, fresh process water, and water for fire is provisionally pumped from a no-name lake approximately 1 km north-west of the plant. For process water and fire, water will be pumped to tanks near the plant, the fire water tank serving a buried line to hydrants at the garage and the process plant (portable fire extinguishers in the buildings will augment fire protection). Potable water will be pumped to a water treatment facility with distribution lines to the plant and the garage.


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18.3.8 Sewage Treatment and Disposal

A treatment plant near the process plant handles sewage from the plant, and garage/repair shop. Clear water from the treatment plant is pumped to the tailings pump box in the processing plant and pumped to the tailings pond. Solid waste is collected by a contractor of off-site disposal.

18.3.9 Power Supply and Distribution

The total estimated electrical power demand for the Project is 5 MW and the projected annual energy consumption is 51.5 GWh, somewhat less than half of which is diesel fuel for mining. Hydro-Québec operates the Poste Albanel and Poste de la Nemiscau electrical stations located approximately 20 km east and 12 km west from the Property respectively. Electrical transmission lines that connect both stations run alongside the Route du Nord road and cross the Property near its center. Three 13.8 kV overhead lines from the distribution centre will supply the tailings pond and waste treatment plant, the fresh water pumping station and explosive plant, and the mine garage. Transformers then step down the power to 600 V to supply the various loads. The rod and ball mill which are rated at 1250hp each (932kw) are the largest power consumers in the plant. The three 13.8 kV substations, and their 600 V transformers are installed in the processing plant utility room to be near the main demand units. Backup power is supplied by a 600 V, 1 MW emergency generator.

18.4 Tailings Disposal For the Preliminary Economic Assessment, the tailings area selected is about 300m north of the plant at its closest point. For the 15 year production of this study, a total of 12Mt of tailings solids (19Mt of slurry) will be pumped. Alternative locations within a 10km2 area centred on the plant site appear to be available, although sites north of the plant may be restricted by the east-west 735kV powerline 1.5km north of the plant and the more immediate area north along the Route du Nord highway. Selection of such sites will require permission and likely a buried tailings line would have to be constructed. Tailings perimeter dams will be built in stages with waste rock obtained from the development of the open pit. Since the tailings are chemically benign, it is assumed that surface runoff water from the tailings area and any seepage water would not represent an environmental hazard but to reclaim water from the tailings for recycling to the processing plant would require that a low permeability liner (till and/or a geotextile) be used along the upstream slope of the dams to limit seepage.


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18.5 Environment Lithium pegmatites are essentially granitic rocks and are generally benign, environmentally, rarely possessing more than traces of sulphides or heavy metals. Nevertheless, complete environmental studies must be carried out to support development. A full study isn't necessary for a PEA, although the Company has commissioned a study be done that will support a bankable feasibility study and qualify for permits to begin construction. In Summer 2010, Nemaska engaged Genivar of Amos, Quebec, to undertake a full Environmental Study for the Project including a baseline study. This Study is an integral part of the permitting and approval process and takes a year to complete as it must evaluate parameters over each of the four seasons. The study involves the collection of fish, water, sediment and benthos samples at several sites around the Project area of influence, including a control site. Testing guidelines and regulations are prescribed by federal and provincial agencies. Also included in the scope of the work are public meetings with stakeholders in the region as well as with local municipal, provincial and federal governments to ensure that all are fully informed about the Project. All these activities are prerequisites for obtaining the necessary permits and authorizations to go forward with development. An ongoing program will be done to monitor the effects of the Project water quality, effluents, groundwater, fish populations, benthic invertebrate communities and sediment quality during both the construction and operational periods and to include mitigation or compensatory measures as applicable. A rehabilitation plan will be submitted to the Ministry of Natural Resources and Wildlife prior to the start of production. Monetary provisions for project closure and rehabilitation will commence at the beginning of operations and continue throughout the life of the mine. Under present regulations, 50% of the cost of restoration will be deposited upon commencement of the production phase and further installments of 25% each will be deposited in years 2 and 3 in equal the form of a bond or guarantee. These bonds will be drawn down as each year of rehabilitation work is undertaken. Although the study is yet to be completed, with the author's familiarity with this type of project, he knows of no obvious environmental risks that might impair economic underpinnings of the Project.

18.5.1 Native Land Status

The obligation to consult and accommodate First Nations communities is part of the environmental scope and Nemaska company management has already taken the lead in this exercise. On August 17, 2010, Nemaska announced the signing of a Memorandum of Understanding with the Cree Nation of Nemaska, a Cree local government, the Grand Council of the Crees and the Cree Regional Authority. The MOU provides the framework for further discussions between the signing parties on the development of the Whabouchi (Lithium/Beryllium) and the Nisk 1 (Nickel-Copper-PGE) deposits. The Cree Nation of Nemaska is a long term shareholder of Nemaska Exploration having participated in private and IPO financings and own approximately 7.4% of Nemaska Exploration. The MOU anticipates participation in


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economic benefits of continuing exploration and a potential mining operation through hiring Cree for the Project and contracting for their services where possible. The Project has the full support of the regional and local First Nations.

18.6 Capital Cost Estimate Mine capital costs were estimated by Patrice Live, a BBA Inc. mining engineer. Equipment purchasing costs are shown in Table 18.10 in Section 18.1.10 and the associated maintenance shop ($1.5 M) and preproduction costs ($4.4M) are found in the financial spread sheet (Table: 18.14 below ). Mining capital costs are derived from Patrice Live's in house information and recent experience with similar projects. The processing plant, ancillary equipment and infrastructure/utilities and their installation costs were estimated by the author, (+/- 35%) using the 2010 issue of "Mine and Mill Equipment Costs, An Estimator's Guide" published by InfoMine USA, Inc. This was augmented by the author's recent experience with similar projects and information in-house. All US dollar costing was converted to Canadian dollars at par. The initial capital investment for the Nemaska Project, including equipment and materials, during the construction period is estimated to be $86 million (US$86 M). The total capital investment over the life of the project (15-years) is $103 million (US$103 M). Table 18.13 A Summary of the Investment Costs

Cost Item Initial Capital Sustaining Total

Direct Costs

Mining (includes shop, pre-prod) 11,555,000 5,859,000 17,414,000

Process Plant and buildings 36,075,000 3,200,000 39,275,000

Tailings Facility, water system 3,000,000 2,500,000 5,500,000

Site Prep, roads 3,500,000 - 3,500,000

Subtotal Direct 54,130,000 11,559,000 65,689,000

Indirect Costs

Owner's Cost 3,500,000 3,500,000

Working Capital 5,000,000 5,000,000

First Fills 1,000,000 1,000,000

Reclamation 2,348,000 2,349,000 4,697,000

EPCM 6,700,000 350,000 7,050,000

Contingency 13,420,000 2,763,000 16,183,000

Subtotal Indirect 31,968,000 5,462,000 37,430,000

Grand Total 86,098,000 17,021,000 103,119,000


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The Owner’s costs consist of salaries and expenditures of Nemaska personnel working on the project during engineering, preparation, construction and start-up phases, costs for further drilling, metallurgy, environmental studies, geotechnical, etc. Reclamation costs are paid half at the initiation of production and 25% each in the following two years.

18.7 Operating Costs

18.7.1 Summary

An operating cost estimate (+/-35% accuracy) has been prepared for the 1,000,000 tpy (2,950 tonnes/day) Nemaska Project in this study. Processing plant equipment operating costs including wear parts, fuel, power, lube, maintenance and overhaul are tabulated in the 2010 issue of "Mine and Mill Equipment Costs, An Estimator's Guide" published by InfoMine USA, Inc. The author’s expertise, work on recent similar projects and in-house information has also been used in estimation of plant manpower, and other operating costs for the Project. The finished product is a 6.0% Li2O spodumene concentrate. Mine operating costs have similarly been prepared by Patrice Live of BBA Inc. and are reported in the section on mining- 18.1.9 above. A summary of operating costs is given in Table 18.14 below. Table18.14 Operating Cost Summary

Item $/t Ore Mined $/t Spod Conc.

Mine (avg) 11.55 57.13

Process Plant 13.00 64.30

General/Administration 1.60 7.91

Total 26.05 129.34

18.7.2 Manpower

The approximate manpower requirements are shown in Table 18.15. In the initial years of operation, 47 staff and 99 hourly employees (totalling 146) will be required. Over time due to the depth of the mine and extra equipment requirements, could add more mine manpower. At the peak of mining operations (Year 15) an additional 8 hourly workers will be required, resulting in a total project manpower requirement of 154.


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Table 18.15 Manpower Requirements

Area Staff Hourly Total

Mine 23 59 82

Processing Plant 8 40 48

General and Administration 16 - 16

Total Project 47 99 146

Salaries and wages are typical of operations in northern Quebec and include employee benefit costs. No temporary or permanent housing will be built. Construction and project operating personnel will be accommodated at the Relais Routier Nemiscau Camp, located 12 km west of the Property, where the Company already has its field office and core logging facilities. The company has an agreement with the Cree owners that the camp will be expanded to provide room and board to workers and staff of the Project.

18.7.3 Mine

Operating cost estimates for the mine (see section 18.1.9) are based on Nemaska owned and operated mining equipment. Except for specialized repairs, maintenance and repairs will be performed at the shop on site and in the mine. Hourly equipment operating costs were obtained from suppliers. Fuel prices were estimated from in-house data and recent experience on other projects.

18.7.4 Process Plant

Consumption rates for reagents and chemicals are taken from the SGS laboratory testwork. Wear for crusher and ball mill liners and grinding media were estimated from an assumption of an 0.5 abrasion index (AI) and other operating costs – fuel, lube, power, other ware parts, and maintenance were estimated using the 2010 issue of "Mine and Mill Equipment Costs, An Estimator's Guide" published by InfoMine USA, Inc which gives average costs, adjusted by the author for estimates of hourly use factors. Unit costs for all these items are based on in-house data, experience with similar projects and known rates such as Quebec Hydro’s 0.05 $/kWh.

18.7.5 Administration

General and Administration costs cover:

administration building maintenance;

utilities;

office and IT supplies;

mining lease costs, municipal taxes;

consultants;

insurance and fire protection;

recruiting, training;

safety equipment and medical supplies;

environmental supplies;

miscellaneous (community involvement, etc.).


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18.8 Financial Analysis

18.8.1 Introduction

Financial analysis involves the synthesis of the information which has been detailed in the foregoing sections to assess the economic viability of the Project. This is done by constructing a discounted cash flow model using the mine production schedule, the output of the concentrator, the price of the product, and the capital and operating cost estimates. The IRR on total investment and the NPV resulting from the net cash flows generated by the project have been calculated. The payback period is also determined.

18.8.2 Assumptions

This section defines the fundamental assumptions that have been incorporated into the financial model.

18.8.2.1 Project Timing

The financial evaluation was carried out over a period of 16 years. The construction phase is assumed to take one year and the mine will be operated over 15 years between 2014 and 2028.

18.8.2.2 Canadian Dollar Exchange Rate

For the purposes of this study the exchange rate was assumed at par between $C and $US over the life of the project.

18.8.2.3 Chemical Grade Spodumene Concentrate Price

A price of $280/t fob plant, a figure supplied by Nemaska management after discussions with their strategic partner, the largest converter of spodumene concentrate to lithium chemicals for the battery industry in China. Considerable upside to future prices of lithium is thought to be likely by the industry after recovery from the present international recession.

18.8.2.4 Escalation and Inflation

This evaluation was based on a constant money value.


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18.8.2.5 Taxation, Duties and Royalties

Financial calculations are made on a before-tax basis and royalty payments were not considered.

18.8.2.6 Depreciation

No depreciation has been considered in the financial evolution as it is on a pre-tax basis.

18.8.2.7 Salvage Value

No salvage value for the Project was estimated.

18.8.2.8 Project Discount Rate

The financial plan assumes 100% owner equity supply Project capital requirements. For this project, a discount rate of 8% was used as the base case.

18.8.2.9 Working Capital

Working capital of $5.0 M (US$5.0 M) is required to meet expenses before revenue becomes available.

18.8.2.10 Other Assumptions

No provisions for tax losses carried forward;

no provision for dividend payments;

all pre-production capital expenditures are assumed to occur in Year (-1) and Year (0) (2012 and 2013) with mining and processing operations commencing in Year 1 (2014).

18.8.6 Production Revenues

At the given price of $280/t, total gross sales of 6.0% Li2O spodumene concentrate over the 15 year production period is $849,091,000. Other potential by products as beryl concentrate and feldspar product have not been considered in the study.


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18.8.7 Financial Results

18.8.8 Cash Flow Projection

Based on the above production, operating and capital expenditure plans, with the pre-tax cash flows discounted at 8% (base case) to derive the Project’s NPV, the cash flow components and results are shown in Table 18.16 below.


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Figure 18.13 Sensitivity of Revenue, Opex and Capex Fluctuations

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

As per PR

Sensitivity +10%

Sensitivity +20%

Sensitivity +30%

Sensitivity -10%

Sensitivity -20%

Sensitivity -30%

NPV@ 0% NPV@ 5% NPV@ 8% NPV@ 10%

Sensitivity analysis parameters for Revenue, Operating costs and Capital costs:

NP

V M

illio

n o

f ca

n$


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18.8.9 Financial Analysis Results

18.8.9.1 Internal Rate of Return and Net Present Value

The analysis resulted in an IRR of 26.6%. The base case discount rate yielded a NPV of $130.3 million. With discount rates of 0%, 5% and 10%, the NPV was $318.8 million,$184.0 million and $103.1 million respectively. The IRR is a performance indicator based on the flow of real resources as opposed to financial resources. Accordingly, flows from financial sources, debt service and dividends are not used in this calculation.

18.8.9.2 Payback Period

Using a discounted cash flow of 8%/yr (base case), the discounted payback period is 3.3 years.

18.8.10 Sensitivity Analysis

The sensitivity of the pre-tax NPV (discounted at 8%/yr) was evaluated for +/-10%, +/-20% and +/-30% for revenue, operating costs and capital costs and the effect is shown Table 18.16 above. In the worst case for a 8% rate, NPV remains a positive $72 million. The discounted payback period before taxes for the project is 3.6 years, competitive within the lithium industry and with the mining industry in general. These strong financial indicators and positive outlook for lithium indicate an excellent economic viability of the Nemaska Project and its resilience to fluctuations in revenue and capital and operating costs.


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19- INTERPRETATION AND CONCLUSIONS Based on resource estimates of 9.8 million tonnes measured and indicated and 15.4 million tonnes inferred by GeoStat in compliance with the National Instrument 43-101, the mineral resources usable for this PEA study are 25.2 million tonnes, the categories having average grades between 1.57% and 1.64% Li2O, one of the richest of its kind in the world. The optimized open-pit design contains resources before dilution of 14.78 tonnes grading 1.618% fully sufficient for 15 years of operation at a production rate of approximately 1.0 Mt/y of ore. The spodumene-bearing feed for bench scale processing, proved to be amenable to flotation to produce a concentrate of over 6.0% with the best recovery over 75% (locked cycle tests and optimization of the process are likely to improve on an already good process). Moreover, although not analyzed in this study, the feed responded well to heavy liquid separation (HLS) which indicates good pre-concentration, or possibly preparation of a concentrate using Dense Media Separation (DMS). The spodumene concentrate was also submitted for hydrometallurgical testing to evaluate the material for making lithium carbonate. The result was battery grade product exceeding 99.9% Li2CO3 that surpassed all specifications for this product. This was done to ensure that the Nemaska material could meet specifications with off-the-shelf technology. This product was not considered in the PEA study. At the confidence level of a Preliminary Economic Assessment, Nemaska Project is financially and technically feasible with initial capital costs estimated at $86 million (life of project $103 million), an IRR of 26.6% and a discounted payback of 3.6 years (before taxes); the base case pre-tax NPV of $130.3 at a current spodumene concentrate price of $280/t and cash operating costs $27.86/t milled. The level of accuracy of the capital and operating cost estimates is ± 35% and the capital cost estimate includes a 25% contingency.


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20- RECOMMENDATIONS It is known to the author that Nemaska wishes to proceed with a bankable feasibility study. To that end, infill drilling and trenching has been underway since the fall of 2010 and is expected to be completed in March 2011 at which time an upgrading of resources to include measured and indicated reserves will be done. The drilling program is using HQ core to provide, in addition to assays, a representative sample for pilot plant metallurgy of up to 8 tonnes. Also, surface blasted samples across the deposit at a few locations will provide 50 tonnes more material. The pilot plant work is scheduled to begin in early summer and the feasibility study is projected to be completed before year-end 2011. Engineering, ground preparation, ordering of large equipment units and construction activities will begin in 2012 with projected production in the following year. The environmental base line study which began in summer 2010, will have completed its four seasons investigations by summer 2011 and permitting can begin. This aggressive development is driven by several factors:

Nemaska's having a market already for their product through a strategic partner, the largest

lithium battery chemical producer in China;

by a spodumene lithium grade that is second only to Talison's Greenbushes deposit among

operating spodumene projects;

by unusual deposit size with the main spodumene pegmatite body up to 90m thick and

extending for 1.4km, making for a low stripping ratio open pit project;

by the excellent metallurgical response in heavy media separation and flotation concentrating.

This Preliminary Economic Assessment report supports going ahead with the bankable feasibility study.

The budget for the present drilling, trenching and channel sampling is already set and being spent.

The remaining metallurgical testing and pilot plant will cost approximately $1.0 million.

Consulting engineering, resource upgrading, geotech, tailings design, additional resource drilling, environmental study, hydrogeological drilling, and other costs to completion of feasibility will total about $3000,000.

Overall budget for remaining work to the end of feasibility is $4,000,000.


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21- REFERENCES 1 . Roskill Information Services Ltd., 2006. The Economics of Lithium, 10th Ed., 262pages (This report was edited for Roskill by the author of the present study). 2. Roskill Information Services Ltd., 2008. The Economics of Feldspar, 11th Ed. 354pages (This report was written for Roskill by the author of the present study). 3. Geostat- SGS Canada Inc., 2010. NI 43-101 Technical Report Mineral Resource Estimation Whabouchi Lithium Deposit Nemaska Exploration Inc. 4. BBA Inc., 2010. Technical Report 43-101 on the Pre-Feasibility Study for the Quebec Lithium Project. SGS metallurgical program managed by G.Pearse author of the present PEA. 5. SGS Lakefield Inc.; 2010. Proposal 100665-R1 for a Scoping Study and Generation of Lithium Carbonate from the Whabouchi Deposit. Project managed by G. Pearse, author of this PEA study. 6. Donald Théberge, Solumines; 2009. NI 43-101 QUALIFYING REPORT, PERTAINING TO: WHABOUCHI PROPERTY James Bay area NTS sheet 32O/12 7. Nemaska Exploration Inc.; 2010. Fact Sheet, and Corporate Presentation. 8. InfoMine USA, Inc.; 2010. Mine and Mill Equipment Costs, An Estimator's Guide


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22- DATE AND SIGNATURE PAGES CERTIFICATE OF QUALIFIED PERSON I, Patrice Live, Eng., do hereby certify that: 1. I am currently employed as Manager – Mining in the consulting firm: BBA Inc. 630 René-Lévesque Boulevard, West Suite 2500 Montréal, Québec Canada H3B1S6 2. I graduated from Université Laval of Québec, Canada with a B. Sc. in Mining in 1976. 3. I am in good standing as a member of the Order of Engineers of Québec (#38991). 4. I have practiced my profession continuously since my graduation. 5. I have read the definition of “qualified person” set out in the National Instrument 43-101 (“NI 43-101”) and certify that as a result of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 6. I am responsible for or was involved in the preparation of this Technical Report 43-101F1, entitled Technical Report NI 43-101 on the Preliminary Economic Assessment of the Whabouchi Spodumene Deposit of Nemaska Exploration Inc.. I have reviewed Section 18.1. I have not visited the project site. 7. As of the date of this certificate, I am not aware of any changes in fact or circumstances with respect to the subject matter of this report which materially affects the content of the report or the conclusion reached. 8. I am independent of the issuer applying all of the tests in Section 1.4 of the National Instrument 43- 101. 9. I have read national Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form. 10. I consent to the filing of the Technical Report with any stock exchange or any regulatory authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report. 11. A copy of the Preliminary Economic Assessment Study for the Nemaska Exploration Project is submitted as a computer readable file. The requirement of electronic filing necessitates submitting the report as an unlocked, editable file. I accept no responsibility for any changes made to the computer file after it leaves my control. Montreal, Quebec, March 1st, 2011 Signed Patrice Live, Eng.


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technical report ni 43-101 on the preliminary economic

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