SUMMARY REPORT GOUDREAU PROPERTY Wawa, Ontario, Canda ESSAR STEEL ALGOMA INC. 105 West Street, Sault Ste. Marie, Ontario, Canada P6A 7B4 Date: February 14, 2013 Prepared By: CARACLE CREEK INTERNATIONAL CONSULTING INC. Julie Selway, Ph.D., P.Geo. Stephen Wetherup, B.Sc., P. Geo.
Goudreau Property, Wawa, Ontario 1.0 HIGHLIGHTS The Goudreau Property is comprised of 36 freehold patents totaling 588.55 ha. It is located 35 km northeast of Wawa, Ontario with road and rail access onto the Property. The Property covers approximately 10 km of iron formation horizon and has been mined historically for pyrite. The focus of historical exploration and mining activity on the Goudreau Property was only for iron and none of the historical drill core (pre-1962) has been assayed for gold. In 1988, four holes were drilled south and southeast of Spring Lake, Aguonie township on Goudreau Property and intersected sericitized felsic volcanic rocks, narrow quartz veins in mafic volcanic rocks and sulphide-carbonate iron formation, but the gold assays are not publicly available. This was the last exploration work on the Goudreau Property. The Property lies within the Southern Domain of the Goudreau Deformation Zone which is host to several gold deposits including the Magino (6,250,990 oz Au indicated and 355,190 oz Au inferred) (Huxtable, McCracken and Kanhai, 2012) and Island Gold Island Gold Mine (171,814 oz Au proven and probable reserves, 153,920 oz Au measured and indicated resources, and 67,238 oz Au inferred resources) (Richmont website: http://www.richmontmines.com/op_operations_islandgold) less than 3 km northeast of the Essar s Goudreau Property. 2.0 LOCATION AND TENURE The Goudreau Property is located next to the historic town of Goudreau, northeastern Ontario, approximately 35 km northeast of Wawa in Aguonie Township. The approximate center of the Property is in UTM coordinates is: 685471 E, 5348851 N, Zone 16, NAD 83 and in geographic coordinates: 84º30 2 W and 48º15 57 N. The Goudreau Property consists of 36 freehold patents which are merged into 7 Land Registry Property Identification Numbers ( PIN s ) with a total area of 588.55 ha (Table 10-1 in Appendix 1, Figure 2-1). Essar has both surface and mining rights on all of the patents, except for PIN31140-0036 which is surface rights only (0.44 ha). All of the PIN s are owned 100% by Essar except for PIN 31140-0056 which is owned 75% by Essar and 25% by Joseph Max Wright. The patents have no expiry date and the only obligation is to pay land tax on them. February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 1
Goudreau Property, Wawa, Ontario Figure 2-1 Tenure map for Goudreau Property 3.0 ACCESS AND INFRASTRUCTURE The Goudreau Property is located approximately 35 km northeast of Wawa and can be accessed by road. The Algoma Central Railway connects Sault Ste. Marie to Hawk Junction (about 21 km east of Wawa) to Goudreau to Hearst. The railway tracks pass by the western edge of the Goudreau Property. The nearest airport to the Property is at Wawa. There are no powerlines on the Property. The town of Wawa has restaurants, hotels, hospital, and Ontario Provincial Police Station. The town of Wawa could supply most of the needs of an exploration program at Goudreau. Wawa has an urban February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 2
Goudreau Property, Wawa, Ontario population of 2,634 people in 2011 (Statistics Canada: http://www.citypopulation.de/php/canada-uaontario.php?cityid=394). 4.0 EXPLORATION HISTORY Pyrite was first discovered on Goudreau Property in 1907, but no active work was carried out until the First World War when the international sources of iron were cut off (MNDMF assessment file: 42C08SW0283). Nichols Chemical Company, a large company at that time, decided to establish a pyrite mine at Goudreau due to the amount of pyrite available and the close proximity to the Great Lakes. They started operations in 1914 and suspended all operations in 1919 after there was a drop in demand for iron at the end of the war. Nichols Chemical Company mined and shipped 300,000 to 400,000 tons of pyrite ore grading 30% S (Hewitt, 1967). Almost all of their production came from an open pit on the Deposit C on Algoma Steel Company s Property. In the same period, Rand Consolidated Mines Limited mined a few thousand tons with an average grade of about 38% S from Morrison No. 4 deposit (close to Rand No. 1). From 1959 to 1962, Algoma Ore Properties Division of Algoma Steel Corp. Ltd. mined and shipped to Wawa about 850,000 tons of ore (Hewitt, 1967). This production was obtained by open pit operations at the Morrison No. 4, the Bear, the C and A deposits. The approximate average grade was 40% Fe and 25-30% S. In 1983, Canamax and Algoma formed a joint venture to evaluate the mineral potential of Algoma's 117 patented claims covering the Goudreau Iron Range (Genivar, 2007). Prior to the end of 1988, Canamax drilled four holes to the south and southeast of Spring Lake in Aguonie Township. Weak alteration zones were intersected along this section of the Goudreau Lake Deformation Zone ( GLDZ ). Gold was found in sericitized felsic volcanic rocks, in narrow quartz veins in mafic volcanic rocks, and in sulphidecarbonate iron formation. Gold assays for these drill holes are not publicly available. Drilling indicated that the GLDZ has a width of about 180 m in this area. The claims in this area were allowed to revert back to Algoma. After searching the assessment files, Caracle Creek did not find the drill core logs, assay certificates or any mention of these four holes. A summary of Algoma Steel s iron deposits in the Goudreau area as of 1968 is given in Table 4-1. The location of these deposits is given in Figure 5-1. This appears to be the most current information February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 3
Goudreau Property, Wawa, Ontario regarding size of the mineralization and production for the Goudreau Property. A review of the drill hole distribution in Ontario Geological Survey database shows that the drill holes targeted only the iron formation around these deposits. Table 4-1 Summary of Algoma Steel s iron deposits in the Goudreau area as of 1968. (Hewitt, 1967 and Shklanka, 1968). All of these iron deposits are on Essar s Goudreau Property except for Morrison No. 3. Deposit Name Historic Category Size of Mineralization Historic Production claim Morrison No. 4 AC 44, 45, 46, 50 past producer pyrite sheet 3000 ft long x 40 ft wide at 40.5%Fe, 7.41% SiO 2, 26.9 %S Goudreau "B" N/A occurrence pyrite zone 900 ft long none Goudreau "D" N/A prospect north limb contains 150,000 tons at 24.15%S, 36.38%Fe; south limb contains 150,000 tons at none 28.4%S, 41.3%Fe over an average width of 95 ft Goudreau "E" N/A prospect shallow deposit with interbedded none pyrite, greenschist, carbonate and silica over a width of 250 ft with minor tonnage Goudreau "F" N/A occurrence narrow pyritic lenses none Goudreau "C" JL 15 and 9 past producer pyrite lens 200 to 300 ft wide x 50 ft thick x over 600 ft long at average 28.33%S "C" extension N/A past producer about 200,000 tons of pyrite at 38.9%Fe, 23.6%S are blocked out Bear claim JL 28 past producer pyrite zone 1500 ft long x 100 ft wide at a depth of 120 ft McPhail Goudreau "A" West of A JL 16 and 21 prospect past producer contains a west section with pyrite zone 500 to 600 ft long x 40 ft wide at 40%Fe, 6%SiO 2, 38%S a main pyrite zone of 1800 ft long x 20-100 ft thick, dipping 30 to 45º N unknown tons mined 1918-1919 by open pit and 67,000 tons mined 1958-1959 1914-1918: open pit production of 250,000 tons by Nichols. Pit was 1100 ft x 700 ft x 60 ft deep at west end. 1961: 75,000 tons mined by Algoma Ore Properties Mined by Algoma Ore Properties in 1962-1963 approximately 350,000 tons of pyrite were mined 1959-1961by open pit by Algoma Ore Properties none 250,000 tons mined in 1960-1961 from an open pit by Algoma Ore Properties February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 4
Goudreau Property, Wawa, Ontario Morrison No. 3 AC 38, 39, 40 prospect lens of pyrite 1250 ft long x up to 115 ft wide with an open pit potential of 130,000 tons at 40% Fe, 6% SiO 2, 31.7%S none 5.0 GEOLOGY OF GOUDREAU IRON RANGE The Goudreau Property occurs within the Wawa Subprovince of the Superior Providence. The Wawa Subprovince is an aggregation of Archean greenstone belts and granitoid plutons (Williams et al., 1991). The greenstone belts are composed of metamorphosed komatiite, basalt, dacite and rhyolite and associated metasedimentary rocks dispersed in a sea of granitoid rocks. The Wawa Subprovince is composed of two linear greenstone belts: one along its northern border with the Quetico Subprovince and another in the Mishibishu-Michipicoten-Gamitagama area. The Goudreau Property is located within the Michipicoten greenstone belt. The Michipicoten greenstone belt is approximately 140 km long and reaches a maximum width of about 45 km (Williams et al., 1991). Regional mapping delineated three discreet episodes of volcanism: the Hawk assemblage (the oldest episode), the mafic to felsic volcanism (Wawa assemblage) and the mafic volcanism (Catfish assemblage). The iron formation on the Goudreau Property is located at the boundary between the intermediate to felsic volcanic rocks of the Wawa assemblage (2.75 Ga) to the south and the mafic metavolcanic rocks of the Catfish assemblage (2.70 Ga) to the north (Figure 5-1). The local geology of the Goudreau Property consists of quartz-pyrite-carbonate iron formation with some pyrrhotite which forms S-shaped open folds with a dominant easterly trend (Shklanka, 1968). The iron formation is up to 69 m thick and is composed of a lower carbonate member, a middle pyrite member, and an upper silica member. The iron formation is underlain by felsic metavolcanic rocks (Wawa assemblage) and overlain by mafic metavolcanic rocks (Catfish assemblage) both of Archean age. The iron formation lies in open folds and forms a series of S shaped traces at the surface (Hewitt, 1967). The length of the iron formation on Essar s Goudreau Property, if the S folds were stretched out form a straight line, is approximately 10 km. It is broken and offset by faults. February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 5
Goudreau Property, Wawa, Ontario The pyrite member averages approximately 15-18 m thick. It is thicker in secondary drag folds and at the noses of anticlines and synclines (Hewitt, 1967). The pyrite member has a well-developed granular texture, but locally is massive and fine-grained and is dominantly composed of pyrite with up to 10% pyrrhotite. Chert and siderite (Fe-carbonate) occur in disseminated form in the massive sulphide zones and as lenses and beds. Figure 5-1 Local geology map for Goudreau Iron Range (modified from OGS P0184, 1963). February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 6
Goudreau Property, Wawa, Ontario 6.0 GEOLOGY OF GOUDREAU LAKE DEFORMATION ZONE GOLD MINERALIZATION During the search for pyrite in the Goudreau area, gold-bearing veins were discovered in several places in the Finan township: veins 6.4 km west of Goudreau (Goudreau Gold Mines), at Webb Lake 6.4 km east of Goudreau (McCarthy Webb Mines), at Cline Lake 8 km west of Lochalsh (Cline Gold Mines) (Bruce, 1940). The majority of the known gold deposits and occurrences are located within the Goudreau Lake Deformation Zone ( GLDZ ) (Figure 6-1) (Heather and Arias, 1992). The GLDZ was defined using the deformation intensity (i.e., strain intensity) of the supracrustal rocks, deformation style and the distribution and density of discrete high-strain zones. The GLDZ is 4.5 km wide by over 30 km long eastnortheast- to east-striking arcuate zone which is subparallel to the major lithological and foliation trends. The GLDZ has been subdivided into four structural domains (i.e., western, southern, northern and eastern domains) based on differences in deformation style, lineation patterns and orientation of high-strain zones and fractures. The Southern Domain hosts Essar s Goudreau iron occurrences and the following gold occurrences: Magino Mine (Argonaut/Prodigy), Lochalsh Zone and Island Zone (Richmont). See below for description of the Magino and Island Gold Mines. The gold mineralization occurs in all rock types (excluding diabase dykes) in the area associated with high-strain zone hosted quartz-veins (Heather and Arias, 1992). There is a spatial association of gold mineralization with felsic porphyry dykes and stocks, the contacts of the dykes being particularly favourable sites for shearing and gold deposition. Within the GLDZ, the gold mineralization is hosted by a series of parallel shear zones, up to 25 m wide by several hundred metres long with dips ranging from - 70º to -90º (Genivar, 2007). Moderate to high strain intensity is observed within the shear zones containing pervasive alteration occurring in the form of iron carbonate, silica and calcite. Within areas of intense sercitization and silification with 2% to 5% pyrite are narrow, sub-parallel quartz veins carrying gold mineralization. Within the GLDZ, the mafic metavolcanic and meta-intrusive rocks are typically intensely altered to an assemblage of biotite, Fe-carbonate, pyrite, pyrrhotite, quartz and minor potassium feldspar (Heather and Arias, 1992). Felsic volcanic and metaintrusive rocks are typically intensely altered to an assemblage of quartz, sericite, pyrite, Fe-carbonate, albite, hematite, pyrite and/or pyrrhotite. February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 7
Goudreau Property, Wawa, Ontario Figure 6-1 Local geology map of the Au and Fe occurences within the Goudreau Lake Deformation Zone. Occurrences are from Ontario Geological Survey s Mineral Deposit Inventory database. Outline of GLDZ is from Heather and Arias, 1992. 7.0 REHABILITATION OF RAND NO. 1 PIT Rehabilitation measures on Rand no. 1 Pit were designed by Knight Piésold in consultation with Algoma Ore Division and Dofasco (Knight Piésold internal report) (Figure 5-1). Rehabilitation measures were carried out between August 1995 and October 1997 to mitigate the occurrence of acid mine drainage ( AMD ) from a small, side hill open pit, as associated waste rock dump and a small strippings pile collectively known as Rand No. 1 Pit. The Pit walls and associated waste rock piles contain zones of massive sulphides that have historically produced AMD. The rehabilitation measures involved backfilling the pit and capping the waste rock and pit strippings piles with a dense, saturated fill derived from two by- February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 8
Goudreau Property, Wawa, Ontario products of Dofasco s steel manufacturing process in Hamilton, Ontario. The backfill and waste rock caps were then covered with a protective layer of sand and gravel and vegetated. 8.0 ADJACENT PROPERTIES 8.1 Magino mine The Magino mine is currently 100% owned by Argonaut Gold (Argonaut Gold website: http://argonautgold.com/gold-operations/magino/). The Magino mine Property is a past producing underground gold mine located 40 km northeast of Wawa, Ontario (Figure 5-1). The Magino mine is less than 1 km northeast of the corner of Essar s Goudreau Property and totals 2,204.495 hectares. Magino is being evaluated by Prodigy Gold Incorporated as an open-pit mining opportunity with the potential for deeper, higher grade gold production. The Magino mine gold mineralization is hosted by the felsic intrusion Webb Lake Stock which intrudes mafic volcanic rocks (Huxtable, McCracken and Kanhai, 2012). The trondhjemite contains 5-10 % veins of carbonate, quartz, tourmaline and pyrite in various orientations. Prodigy is focusing on its evaluation of zones of low-grade, gold-bearing quartz-sericite-pyrite mineralization that includes narrow higher-grade gold-bearing veins. In September 2012, Prodigy released a 43-101 compliant mineral resource estimate for Magino of 223,479,790 tonnes at 0.87 g/t Au and 6,250,990 oz Au indicated and 13,809,410 tons at 0.80 g/t Au and 355,190 oz Au inferred (Huxtable, McCracken and Kanhai, 2012). 8.2 Island Gold Mine The Island Gold Mine is owned 100% by Richmont Mines and is located 50 km northeast of Wawa (Richmont website: http://www.richmont-mines.com/op_operations_islandgold). The Property is 2.6 km northeast of the corner of Essar s Goudreau Property and totals 8,444 hectares (Figure 5-1). In 1989 and 1990, underground infrastructures were built into the Island deposit beneath Goudreau Lake from an adit on the north shore. The project began commercial production on October 1, 2007 and is still operating. As of Dec. 31, 2011, the Island Gold Mine has 959,523 tonnes at 5.57 g/t Au and 171,814 oz Au proven and probable reserves, 679,359 tonnes at 7.05 g/t Au and 153,920 oz Au measured and indicated resources, and 344,382 tonnes at 6.07 g/t Au and 67,238 oz Au inferred resources (Richmont website: http://www.richmont-mines.com/op_operations_islandgold). At the Island Gold Zone, five Au zones February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 9
Goudreau Property, Wawa, Ontario referred to as E1, E, D1, D, and C, are defined and characterized by the presence of alteration halos ranging from 0.5 to over 8 m in thickness, comprising intense silica alteration, albite alteration and quartz-carbonate veins (Genivar, 2007). 9.0 CONCLUSIONS Essar s Goudreau Property has been mined from four open pits for pyrite within an iron formation from 1914 to 1919 and 1959 to 1962. During these active mining periods, numerous drill holes were drilled only on the iron formation on the Property. The focus of this exploration and mining activity was only for iron. To the best of Caracle Creek s knowledge, none of the historical drill core (pre-1962) has been assayed for gold. To the best of Caracle Creek s knowledge, the Goudreau Property has not been historically explored or assayed for gold even though historic gold mines occur in Finan Township to the northeast of the Goudreau Property. Prior to the end of 1988, Canamax drilled four holes to the south and southeast of Spring Lake in Aguonie Township on Goudreau Property. Weak alteration zones were intersected along this section of the Goudreau Lake Deformation Zone ( GLDZ ). These holes intersected sericitized felsic volcanic rocks, narrow quartz veins in mafic volcanic rocks, and sulphide-carbonate iron formation. Gold assays from these drill holes are not publicly available. The claims in this area were allowed to revert back to Algoma and no follow-up exploration was completed on the occurrence. In 1992, Heather and Arias identified that the gold mineralization in the Goudreau area lies within the Goudreau Lake Deformation Zone. The Southern Domain of the GLDZ hosts Essar s iron occurrences and the following gold occurrences: Magino Mine (Argonaut/Prodigy), Lochalsh Zone and Island Zone (Richmont). Given that the Magino and Island Gold mines are less than 3 km northeast of the Essar s Goudreau Property and the lack of gold exploration on the Goudreau Property in the past, suggests that the Goudreau Property has good exploration potential for gold. February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 10
Goudreau Property, Wawa, Ontario 10.0 REFERENCES GENIVAR, Limited Partnership (2007): Island Gold Project Technical Report, prepared for Richmont Mines Inc., dated May 15, 2007. Heather, K.B. and Arias, Z. (1992): Geological and structural setting of gold mineralization in the Goudreau-Lochalsh area, Wawa gold camp; Ontario Geological Survey, Open File Report 5832, 159. Hewitt, D.F. (1967): Pyrite Deposits of Ontario, Ontario Department of Mines, Mineral Resources Circular No. 5, 64pp. Huxtable, P., McCracken, T. and Kanhai, T. (2012): Technical Report on the Magino Property, Wawa, Ontario, prepared for Prodigy Gold Incorporated, dated Oct. 4, 2012. Knight Piésold: Algoma Steel Inc., Algoma Ore Division, Rand No. 1 Pit, Final report on Construction of Rehabilitation Measures (Ref. No. D2171D/1), internal report. Shklanka, R. (1968): Iron Deposits of Ontario, Ontario Department of Mines, Mineral Resources Circular No. 11, 489pp. Williams, H.R., Stott, G.M., Heather, T.L., Muir, T.L. and Sage, R.P. (1991): Wawa Subprovince, Chapter 12, in Geology of Ontario, Ontario Geological Survey, Special Volume 4, Part 1, p. 485-542. February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 11
Goudreau Property, Wawa, Ontario Appendix 1 Tenure Table 10-1 Essar s Tenure for Goudreau Property MNDMF patent Land Registry MPAC Roll Area number Pin No. Number Township (ha) Name formerly AC86 31140-0056 LT 579913800003601 Aguonie 16.83 Goudreau Pyrite formerly AC87-88 31140-0056 LT 579913800003600 Aguonie 21.00 Goudreau Pyrite formerly AC91-94, 31140-0057 LT 579913800003500 Aguonie 78.99 Goudreau Pyrite 102, 150 AC113 31140-0036 LT 579913800000100 Aguonie 0.44 Wedge JL1 31140-0009 LT 579913800003700 Aguonie 17.07 Goudreau Lake JL10 31140-0009 LT 579913800003700 Aguonie 12.48 Goudreau Lake JL11 31140-0009 LT 579913800003700 Aguonie 11.39 Goudreau Lake JL12 31140-0009 LT 579913800003700 Aguonie 15.03 Goudreau Lake JL13 31140-0009 LT 579913800003700 Aguonie 14.05 Goudreau Lake JL14 31140-0009 LT 579913800003700 Aguonie 18.44 Goudreau Lake JL15 31140-0009 LT 579913800003700 Aguonie 13.59 Goudreau Lake JL16 31140-0012 LT 579913800000200 Aguonie 15.96 Goudreau Lake JL17 31140-0009 LT 579913800003700 Aguonie 13.65 Goudreau Lake JL18 31140-0009 LT 579913800003700 Aguonie 15.43 Goudreau Lake JL19 31140-0009 LT 579913800003700 Aguonie 15.75 Goudreau Lake JL2 31140-0009 LT 579913800003700 Aguonie 16.94 Goudreau Lake JL20 31140-0009 LT 579913800003700 Aguonie 14.69 Goudreau Lake JL21 31140-0009 LT 579913800003700 Aguonie 17.12 Goudreau Lake JL22 31140-0009 LT 579913800003700 Aguonie 15.37 Goudreau Lake JL23 31140-0009 LT 579913800003700 Aguonie 13.25 Goudreau Lake JL24 31140-0009 LT 579913800003700 Aguonie 14.86 Goudreau Lake JL25 31140-0009 LT 579913800003700 Aguonie 15.69 Goudreau Lake JL26 31140-0009 LT 579913800003700 Aguonie 14.94 Goudreau Lake JL27 31140-0009 LT 579913800003700 Aguonie 17.16 Goudreau Lake JL28 31140-0009 LT 579913800003700 Aguonie 13.81 Goudreau Lake JL3 31140-0011 LT 579913800000200 Aguonie 16.19 Goudreau Lake JL4 31140-0009 LT 579913800003700 Aguonie 14.39 Goudreau Lake JL5 31140-0009 LT 579913800003700 Aguonie 16.80 Goudreau Lake JL6 31140-0009 LT 579913800003700 Aguonie 16.59 Goudreau Lake JL7 31140-0009 LT 579913800003700 Aguonie 12.34 Goudreau Lake JL8 31140-0009 LT 579913800003700 Aguonie 12.43 Goudreau Lake JL9 31140-0009 LT 579913800003700 Aguonie 12.29 Goudreau Lake AC44 31140-0013 LT 579913800004000 Aguonie 18.40 Goudreau Lake AC46 31140-0013 LT 579913800004000 Aguonie 13.72 Goudreau Lake AC50 31140-0013 LT 579913800004000 Aguonie 8.64 Goudreau Lake AC45 31140-0013 LT 579913800004000 Aguonie 12.80 Goudreau Lake total area 588.55 February 14, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 12
SUMMARY REPORT GRACE MINE PROPERTY McMurray Township, Ontario, Canada ESSAR STEEL ALGOMA INC. 105 West Street, Sault Ste. Marie, Ontario, Canada P6A 7B4 Date: February 15, 2013 Prepared By: CARACLE CREEK INTERNATIONAL CONSULTING INC. Zsuzsanna Magyarosi, Ph.D., P.Geo.
Grace Mine Property, McMurray Township, Ontario, Canada 1.0 HIGHLIGHTS The Grace Mine Property is a 1.234 ha claim located within the Michipicoten Greenstone Belt, which hosts several operating and historical gold mines. There are six gold occurrences within 1.5 km of the property boundaries, one of which, the Grace Mine, operated intermittently between 1901 and 1944. Surluga Gold Mine is 4.5 km from the Grace Property and contains an inferred resource of 32.2 M tonnes @ 1.14 g/t Au (0.2 g/t Au cut-off; Duke, 2012) 2.0 LOCATION AND TENURE The Grace Mine Property is located approximately 3 km south-southeast of Wawa, northeastern Ontario, in McMurray Twp. The approximate center of the Property in UTM coordinates is: 668141 E, 5312445 N, Zone 16, NAD 83 and in geographic coordinates: 84º44 54.12 W and 47º56 35.68 N. The Grace Mine Property consists of one freehold patent with area of 1.234 ha (Table 2-1, Figure 2-1). The Property Identification Number ( PIN ) of the patent is 31169-0261. Essar has both surface and mining rights on the patent. The PIN is owned 100% by Essar. The patent has no expiry date and the only obligation is to pay land tax on it. The patent is subject to reservations in Crown Grant. Table 2-1 Essar s tenure for the Grace Mine Property MNDMF patent number Land Registry Pin No. MPAC Roll Number Township Area (ha) Name DJ97 31169-0261 LT 577600001644401 McMurray 1.234 Grace Mine February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 1
Grace Mine Property, McMurray Township, Ontario, Canada Figure 2-1 Tenure map for the Grace Mine Property 3.0 ACCESS AND INFRASTRUCTURE The Grace Mine Property is located approximately 3 km south-southeast of Wawa and is approximately 250 m from a gravel road (Surluga Road) that runs south from Hwy 101 approximately 1 km east of Wawa. The nearest airport and the nearest railway tracks to the Property are in Wawa. There are no powerlines on the Property. The town of Wawa has restaurants, hotels, hospital, and Ontario Provincial Police Station. The town of Wawa could supply most of the needs of an exploration program at Grace Mine. Wawa has an urban February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 2
Grace Mine Property, McMurray Township, Ontario, Canada population of 2,634 people in 2011 (Statistics Canada: http://www.citypopulation.de/php/canada-uaontario.php?cityid=394). 4.0 EXPLORATION HISTORY There is no information on exploration history on Essar s Grace Mine Property. 5.0 GEOLOGY The Grace Mine Property occurs within the Wawa Subprovince of the Superior Providence. The Wawa Subprovince is an aggregation of Archean greenstone belts and granitoid plutons (Williams et al., 1991). The greenstone belts are composed of metamorphosed komatiite, basalt, dacite and rhyolite and associated metasedimentary rocks dispersed in a sea of granitoid rocks. The Wawa Subprovince is composed of two linear greenstone belts: one along its northern border with the Quetico Subprovince and another in the Mishibishu-Michipicoten-Gamitagama area. The Grace Mine Property is located within the Michipicoten greenstone belt. The Michipicoten greenstone belt is approximately 140 km long and reaches a maximum width of about 45 km (Williams et al., 1991). Regional mapping delineated three discreet episodes of volcanism: the Hawk assemblage, the Wawa assemblage and the Catfish assemblage, from oldest to youngest. The Grace Mine Property is located in the Wawa assemblage (2.75 Ga), which consists of felsic, intermediate and minor mafic volcanic rocks and synvolcanic granitoid plutons (Figure 5-1). The Grace Mine Property is underlain by intermediate volcanic rocks composed of massive dacite, andesite and diorite, and pyroclastic breccia and conglomerate, which were intruded by intermediate and felsic rocks of the Jubilee stock (Williams et al., 1991, Rupert, 1975, Sage, 1982). Foliation strikes east to northeast and dips steeply to moderately to the south (45 to 70 ). The presence of quartz veins has been recorded on the property. No iron formation has been reported on the Grace Mine Property. Augustine Ventures Inc., the owner of the adjacent property exploring for gold in the area, completed an airborne magnetic and electromagnetic survey at 100 m line interval, that covered Essar s Grace Mine Property, but no significant anomalies were located on the Grace Mine Property (Duke, 2012). However, February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 3
Grace Mine Property, McMurray Township, Ontario, Canada the anomalies identified by the survey do not seem to coincide with known gold mineralization on Augustine s property. Figure 5-1 Local geology map for the Grace Mine Property (modified from OGS map MRD126, 2011) 6.0 MINERALIZATION There is no publicly known mineral occurrence within the Grace Mine Property, but it is surrounded by numerous occurrences in the area, described in the adjacent properties section. February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 4
Grace Mine Property, McMurray Township, Ontario, Canada 7.0 ADJACENT PROPERTIES The closest iron formation is the Barton occurrence and abandoned mine located approximately 0.7 km southwest of the Grace Mine Property (MNDMF Mineral Deposit Inventory, Shklanka, 1968). Gold is a secondary commodity. The occurrence consists of two parallel bands of iron formation, 4 and 6 feet wide and at least 100 feet long, in green schists. The iron formation consists of granular silica, minor iron oxides and pyrite. No assay results are available for the occurrence. There are several gold occurrences near the Grace Mine Property. Gold mineralization in the Michipicoten greenstone belt occurs in shear zones or quartz or quartz-carbonate veins cutting rocks within or felsic to intermediate tuffs surrounding the Jubilee stock (Sage, 1993). The quartz veins strike either northwest and dip northeast or east to northeast and dip south. Gold occurs as native metal. Other minerals in the veins include tourmaline, pyrrhotite, pyrite, chalcopyrite, arsenopyrite, and small amounts of galena, sphalerite, marcasite and cubanite. The alteration minerals in the wall rocks include biotite, chlorite and sericite. The occurrences near the Grace Mine Property include the War Eagle occurrence located 0.5 km eastnortheast, the abandoned Grace Mine (Darwin Gold Mine) located 0.75 km north, Nyman Vein occurrence located 1 km north-northeast, the Moody Vein occurrence located 1.3 km north-northeast, and the Skunky Dog occurrence located 1.3 km north of the property (MNDMF Mineral Deposit Inventory). The Grace Mine operated intermittently between 1901 and 1944 by several companies, including Algoma. In 1901 a mill run of 52 tons of ore contained a total gold value of $ 34.5 oz/t gold. From the War Eagle occurrence the best assay returned 0.45 oz/t of gold from vein. Most of the surrounding patents and claims are held by Augustine Ventures Inc., who is actively exploring for gold in the area. A mineral resource estimate on the old Surluga gold mine, located approximately 4.5 km north of Essar s Grace Mine Property, was completed by Augustine in 2012 and estimated an inferred resource of 32.2 million tonnes grading 1.14 g/t gold, above a 0.2 g/t cut-off grade (Duke, 2012). New Oroperu Resources Inc. owns the patents 0.35 km south of Essar s Property, but no public information is available on exploration activities. February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 5
Grace Mine Property, McMurray Township, Ontario, Canada 8.0 REFERENCES Duke, C.J. (2012): Amended technical review and mineral resource estimate for the Jubilee-Surluga Property, near Wawa, Ontario, Canada, for Augustine Ventures Inc., 74p. Ontario Geological Survey (2011): 1:250 000 scale bedrock geology of Ontario, Ontario Geological Survey, Miscellaneous Release-Data 126-Revision 1. Rupert, R.J. (1975): McMurray Township and parts of surrounding townships, District of Algoma, Ontario Div. Mines, Prelim. Map P.828, Geol. Ser., scale l inch to 1/2 mile. Compilation 1970 to 1972. Sage, R.P., Sawitsky, E., Turner, J., Leeselleur, P., and Sagle E. (1982): Precambrian Geology of McMurray Township, Wawa Area, Algoma District, Ontario Geological Survey Preliminary Map P. 2441,Geological Series, Scale 1:15 840 or 1 inch to 1/4 mile. Geology1979. Sage, R.P. (1993): Geology of Chabanel, Esquega, Lastheels and McMurray Townships, District of Algoma, Ontario Geological Survey, Open File Report 5586, 462p. Shklanka, R. (1968): Iron Deposits of Ontario, Ontario Department of Mines, Mineral Resources Circular No. 11, 489p. Williams, H.R., Stott, G.M., Heather, T.L., Muir, T.L. and Sage, R.P. (1991): Wawa Subprovince, Chapter 12, in Geology of Ontario, Ontario Geological Survey, Special Volume 4, Part 1, p. 485-542. February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 6
SUMMARY REPORT FIRESAND PROPERTY McMurray and Lastheels Townships, Ontario, Canada ESSAR STEEL ALGOMA INC. 105 West Street, Sault Ste. Marie, Ontario, Canada P6A 7B4 Date: February 15, 2013 Prepared By: CARACLE CREEK INTERNATIONAL CONSULTING INC. Zsuzsanna Magyarosi, Ph.D., P.Geo.
Firesand Property, McMurray and Lastheels Townships, Ontario, Canada 1.0 HIGHLIGHTS Essar s Firesand Property is a ~504 ha property covering almost all of the Firesand River Carbonatite Complex. Located within 11 km of Wawa, Ontario and 3 km south of Highway 101. Explored for iron until 1952 and for niobium, phosphorus (apatite), calcite and uranium between 1953 and 1976. 1117 m of drilling focused toward Nb, P and U with up to 0.3% Nb 2 O 5 over 11 m. Grab samples up to 1.32% Nb 2 O 5. No modern exploration. Has not been explored for tantalum, zirconium and rare earth element mineralization, which are typically associated with carbonatite intrusions. 2.0 LOCATION AND TENURE The Firesand Property is located approximately 5.5 km east of Wawa, northeastern Ontario, in McMurray and Lastheels Twps. The approximate center of the Property in UTM coordinates is: 673628 E, 5318087 N, Zone 16, NAD 83 and in geographic coordinates: 84º41 24.27 W and 47º58 26.50 N. The Firesand Property consists of thirty-three (33) freehold patents totaling 504.069 ha (Table 2-1, Figure 2-1). Essar holds 100% of both surface and mining rights on twenty-five (25) patents and mining rights only on the other eight (8) patents. The patents have no expiry date and the only obligation is to pay land tax on them. All patents are subject to reservations in Crown Grant. Table 2-1 Essar s tenure for the Firesand Property MNDMF patent Land Registry number Pin No. MPAC Roll Number Township Area (ha) Name Rights SSM21690 31168-0004 LT 577600001617800 Lastheels 16.398 Firesand both* SSM21691 31168-0005 LT 579916200000800 Lastheels 26.734 Firesand both SSM21694 31168-0006 LT 579916200001000 Lastheels 7.891 Firesand both SSM21695 PT 31168-0007 LT NA Lastheels 4.087 Firesand both SSM31209 31168-0008 LT 579916200000900 Lastheels 21.428 Firesand MRO** SSM31204 31168-0009 LT NA Lastheels 18.239 Firesand MRO SSM21659 31169-1260 LT 577600001619500 McMurray 9.603 Firesand both SSM21660 31169-1261 LT 577600001620400 McMurray 13.569 Firesand both SSM21664 31169-1262 LT 577600001617400 McMurray 15.342 Firesand both SSM21668 31169-1263 LT 577600001616100 McMurray 22.699 Firesand both SSM21667 31169-1264 LT 577600001616200 McMurray 11.315 Firesand both February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 1
Firesand Property, McMurray and Lastheels Townships, Ontario, Canada MNDMF patent Land Registry number Pin No. MPAC Roll Number Township Area (ha) Name Rights SSM21670 31169-1265 LT 577600001617700 McMurray 11.388 Firesand both SSM21671 31169-1266 LT 577600001617000 McMurray 11.914 Firesand both SSM21672 31169-1267 LT 577600001616900 McMurray 16.276 Firesand both SSM21673 31169-1268 LT 577600001619400 McMurray 11.546 Firesand both SSM21685 31169-1269 LT 577600001617300 McMurray 17.013 Firesand both SSM21675 31169-1303 LT NA McMurray 14.172 Firesand MRO SSM21674 31169-1304 LT NA McMurray 10.461 Firesand MRO SSM21662 31169-1305 LT 577600001617100 McMurray 13.711 Firesand both SSM21661 31169-1306 LT NA McMurray 15.406 Firesand MRO SSM21676 31169-1307 LT NA McMurray 14.043 Firesand MRO SSM21677 31169-1308 LT NA McMurray 13.395 Firesand MRO SSM21652 31169-1309 LT 577600001618700 McMurray 18.158 Firesand both SSM21654 31169-1310 LT 577600001619300 McMurray 14.682 Firesand both SSM21678 31169-1311 LT 577600001618600 McMurray 19.502 Firesand both SSM21655 31169-1312 LT 577600001619600 McMurray 14.067 Firesand both SSM21656 31169-1313 LT 577600001619700 McMurray 19.49 Firesand both SSM21665 31169-1314 LT 577600001616800 McMurray 19.469 Firesand both SSM31208 31169-1315 LT 577600001616700 McMurray 14.52 Firesand both SSM31205 31169-1316 LT 577600001616600 McMurray 20.275 Firesand both SSM31203 31169-1317 LT NA McMurray 15.512 Firesand MRO SSM31206 31169-1318 LT 577600001617200 McMurray 16.41 Firesand both SSM21653 31169-1320 LT 577600001619200 McMurray 15.354 Firesand both Total area 504.069 *both=surface and mining rights **MRO=mining rights only February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 2
Firesand Property, McMurray and Lastheels Townships, Ontario, Canada Figure 2-1 Tenure map for Firesand Property 3.0 ACCESS AND INFRASTRUCTURE The Firesand Property can be easily accessed following Hwy 101 east from Wawa for approximately 11 km to the start of a road that crosses the Firesand Property, which is located approximately 3 km south of Hwy 101. The nearest airport and the nearest railway tracks to the Property are in Wawa. The closest powerline is located approximately 3 km southeast of the Property. The town of Wawa has restaurants, hotels, hospital, and Ontario Provincial Police Station. The town of Wawa could supply most of the needs of an exploration program at Firesand. Wawa has an urban February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 3
Firesand Property, McMurray and Lastheels Townships, Ontario, Canada 4.0 EXPLORATION HISTORY The focus of exploration on the Firesand Property was iron in the 1920 s and early 1950 s, but it changed to Nb, carbonate, and then P (apatite) as Algoma realized the potential of the Property. Table 4-1 summarizes the exploration history on the Firesand Property. Table 4-1 Summary of exploration on the Firesand Property Year Company Type of exploration Results population of 2,634 people in 2011 (Statistics Canada: http://www.citypopulation.de/php/canada-uaontario.php?cityid=394). 1922-1925 Algoma 1950 Algoma 1951 Algoma 1952 Algoma 1953 Algoma 1970 Algoma hematite showing, 300 m trenching, drilling 3 holes totaling at least 55 m staking to check iron potential, geological and dip needle survey drilling 16 drill holes totaling 2531 m and trenching pack sack drilling, 6 holes totaling 67.5 m checking Nb potential, drilling 6 holes totaling 1117.5 m, assaying previous and current drill core for Nb checking carbonate potential in calcitebearing rim of complex, surface sampling, magnetometer survey 1972 Algoma drilling 8 holes totaling 717 m 1976 International Mineral and Chemical Corp. 114 m reverse circulation (RC) holes and surface sampling testing for apatite Fe up to 55.5 %, but work unsuccessful delineating economic Fe presence of erratic Nb mineralization, best assay 0.3% Nb 2 O 5 over 15 m in hole 11 carbonate too high in P, Si and Mg P content in surface samples ranged between 0.23 and 4.95% Reference/Assessment file number Sage (1988), 42C02SE0205 42C02SE1039, 42E01SE0005 42C02SE0605, 42C02SE1039 Sage (1988) Sage (1988) Sage (1988) 42C02SE0205 42C02SE0202 5.0 GEOLOGY The Firesand Property is underlain by the Firesand River Carbonatite Complex (1008 to 1087 Ma), which intrudes rocks of the Wawa assemblage (2.75 Ga) and the Hawk assemblage (2.89 Ga), of the Michipicoten greenstone belt, along faults associated with the Kapuskasing Structural Zone (Gittins et al., 1967, Sage, 1988, Sage, 1991, Williams et al., 1991). February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 4
Firesand Property, McMurray and Lastheels Townships, Ontario, Canada The Firesand River Carbonatite Complex covers a surface area of approximately 4.5 km 2 and consists of a dolomite-rich core and a calcite-rich rim (Sage, 1988). Rocks in the calcite rim include sovite, silicocarbonatite and ijolite enclosing fragments of older rocks (Figure 2). The dolomite core consists of ferruginous rauhaugite (fine-grained carbonatite) with a thick hematite and/or goethite coating. The rocks around the complex are brecciated and fenitized, indicated by the presence of blue-green amphibole replacing quartz (Sage, 1991). Minerals in the calcite-rim include carbonate, biotite, clinopyroxene, magnetite, apatite, amphibole, olivine, garnet, perovskite, plagioclase and nepheline (Sage, 1988). Minerals in the dolomite core include mostly carbonate, lesser magnetite, apatite, and traces of biotite and barite. Figure 5-1 Local geology map for the Firesand Property (modified from Sage, 1988) February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 5
Firesand Property, McMurray and Lastheels Townships, Ontario, Canada 6.0 MINERALIZATION The Firesand River Carbonatite Complex contains widespread low-grade niobium and uranium mineralization (Sage, 1988). It has been explored for phosphorus (hosted in apatite) potential by International Minerals and Chemical Corp., but no significant accumulation of apatite was found. Algoma also explored the Property for iron and calcite, but was unsuccessful delineating economic amounts of either. Parsons (1961) described two locations containing niobium mineralization on the Property. At Zone C occurrence pyrochlore (Nb-bearing mineral) occurs in calcite carbonatite with magnetite, apatite and biotite. Surface sampling returned values up to 0.52% Nb 2 O 5. Surface sampling by Algoma at Zone D occurrence returned values up to 1.32% Nb 2 O 5. According to Sage (1993), the Firesand River Carbonatite Complex is favorable for rare earth element (REE) mineralization and should be tested for REE concentrations. 7.0 ADJACENT PROPERTIES The rest of the Firesand River Carbonatite Complex is staked by individuals and there is no public exploration data available on them. Augustine Ventures Inc. holds the claims to the west of Essar s Firesand Property, but the focus of their exploration is gold that occurs in Archean age rocks (see report on Grace Mine Property). 8.0 REFERENCES Parsons, G.E. (1961): Niobium-bearing complexes east of Lake Superior, Ontario Department Mines, Geological Report 3, 73p. Sage, R.P. (1988): Geology of Carbonatite - Alkalic Rock Complexes in Ontario: Firesand River Carbonatite Complex, District of Algoma; Ontario Geological Survey, Study 47, 82p. Sage, R.P. (1991): Alkalic rock, carbonatite and kimberlite complexes of Ontario, Superior Province, Chapter 18, in Geology of Ontario, Ontario Geological Survey, Special Volume 4, Part 1, p. 683-709. Sage, R.P. (1993): Geology of Chabanel, Esquega, Lastheels and McMurray Townships, District of Algoma, Ontario Geological Survey, Open File Report 5586, 462p. February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 6
Firesand Property, McMurray and Lastheels Townships, Ontario, Canada Williams, H.R., Stott, G.M., Heather, T.L., Muir, T.L. and Sage, R.P. (1991): Wawa Subprovince, Chapter 12, in Geology of Ontario, Ontario Geological Survey, Special Volume 4, Part 1, p. 485-542. February 15, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 7
SUMMARY REPORT COWIE-MORRISON PROPERTY NahwegezhicTownship, Ontario, Canada ESSAR STEEL ALGOMA INC. 105 West Street, Sault Ste. Marie, Ontario, Canada P6A 7B4 Date: February 21, 2013 Prepared By: CARACLE CREEK INTERNATIONAL CONSULTING INC. Zsuzsanna Magyarosi, Ph.D., P.Geo.
Cowie-Morrison Property, Nahwegezhic Township, Ontario, Canada 1.0 HIGHLIGHTS Essar s Cowie-Morrison Property covers a ~963 ha area underlain by most of the Goulais River Iron Range. Located ~90 km north-northeast of Sault Ste. Marie by road, following the Trans Canada Hwy. and a network of secondary roads. Contains four iron orebodies (Gut Lake North, Gut Lake, Ella Lake, and Morrison Lake) that have not been mined and have the potential to host economic amounts of iron. The open pit tonnage at Morrison Lake is 9,573,000 tons at a grade of 20.4 % magnetic iron (Canadian Bechtel Ltd., 1966). In 1968, reserves from the entire Goulais River Iron Range (including Essar s present Property) were sufficient to produce 1 million tons of pellets per year for about 30 years (Shklanka, 1968). The Property has not been explored for any other commodity such as gold that is known to be associated with iron formations. 2.0 LOCATION AND TENURE The Cowie-Morrison Property is located approximately 65 km north-northeast of Sault Ste. Marie, northeastern Ontario, in Nahwegezhic Twp. The approximate center of the Property in UTM coordinates is: 285525 E, 5212739 N, Zone 17, NAD 83 and in geographic coordinates: 83 49 22.50 W and 47 2 0.11 N. The Cowie-Morrison Property consists of one freehold patent totaling 963.09 ha (Table 2-1, Figure 2-1). Essar holds 100% of both surface and mining rights on the patent. The patent has no expiry date and the only obligation is to pay land tax on it. Table 2-1 Essar s tenure for the Cowie-Morrison Property MNDMF patent number Land Registry Pin No. MPAC Roll Number Township Area (ha) Name PARCEL A 31273-0005 LT 579925900000800 McMurray 963.087 Cowie-Morrison February 21, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 1
Cowie-Morrison Property, Nahwegezhic Township, Ontario, Canada Figure 2-1 Tenure map for the Cowie-Morrison Property 3.0 ACCESS AND INFRASTRUCTURE The Cowie-Morrison Property can be accessed by road following the Trans Canada Hwy. north from Sault Ste. Marie for 18 km, then turning northeast onto Road 556 until Glendale (~27 km), turning north to Searchmont (~5 km), turning northeast from Searchmont onto Whitman Dam Road. The Cowie Lake is located approximately 46 km north-northeast of Searchmont by road and the western boundary of the Property is approximately 1 km east of the road. The Property can also be accessed through Mekatina, following the Trans Canada Hwy. from Sault Ste. Marie for ~53 km then turning right and following a network of smaller roads for ~80 km to the east. The closest railway track is approximately 10 km west of the Property. The nearest airport to the Property is in Sault Ste. Marie. February 21, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 2
Cowie-Morrison Property, Nahwegezhic Township, Ontario, Canada The town of Sault Ste. Marie has restaurants, hotels, hospital, and Ontario Provincial Police Station. The town of Sault Ste. Marie could supply most of the needs of an exploration program at Cowie-Morrison. Sault Ste. Marie has an urban population of 67,646 people in 2011 (Statistics Canada: http://www.citypopulation.de/php/canada-ua-ontario.php?cityid=739). 4.0 EXPLORATION HISTORY Most of the exploration on the Cowie-Morrison Property was completed by Algoma and it is not public information. In the past the Cowie-Morrison Property included McPhail, Cowie Lake, Gut Lake (Gut Lake North, Gut Lake and Ella Lake) and Morrison Lake orebodies, but the patent held by Essar at the present time includes only the Gut Lake and Morrison Lake orebodies. Table 4-1 summarizes the exploration history on the Cowie-Morrison Property. Table 4-1 Summary of exploration on the Cowie-Morrison Property Year Company Source of data Type of work Results 1920 Algoma? Assessment files: 41O04SW0021, 41O04SW0023 1941 Algoma internal report 1941 Algoma internal report 1963 Algoma internal report 1966 Algoma internal report 1966 Algoma internal report 1975 HBOG Mining Ltd. Assessment file: 20006965 survey and sampling 13 drill holes totaling 7,398 ft on Gut Lake section 50 drill holes totaling 22,466 ft on Morrison lake section, drill holes 145 to 157 Preliminary engineering study and cost estimates (Arthur G. McKee & Comp. Canada Ltd.) 8 drill holes on Gut Lake section and resource estimate Engineering studies and cost estimate (Canadian Bechtel Ltd.) Airborne EM survey large lense: 5 million tons of ore/100 ft of depth, width varies from 20 to 230 ft, ~30% iron, low grade magnetite 2,232,000 g/t Fe in Area A and 2,946,000 g/t Fe in Area B Morrison Lake open pit ore reserves estimated at 9,573,000 long tons at 20.4% magnetic Fe looking for bedrock conductors, identified IF February 21, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 3
Cowie-Morrison Property, Nahwegezhic Township, Ontario, Canada 5.0 GEOLOGY The Cowie-Morrison Property is located in the Batchawana Greenstone Belt of the Abitibi Subprovince (Jackson and Fyon, 1991). The Batchawana Greenstone Belt is subdivided into the Griffin, Dismal and Wart assemblages. The Cowie-Morrison Property is underlain by rocks of the Dismal assemblage (2711 to 2698 Ma), which consist of mafic volcanic rocks with dominantly tholeiitic affinity in the northwestern, northern and eastern part of the assemblage, felsic and intermediate volcanic rocks with calc-alkalic affinity in the southeastern part, minor sediments, and oxide and minor sulphide facies iron formation that is interlayered with both mafic and felsic volcanic rocks (Figure 5-1). The iron formation marks the change from tholeiitic mafic volcanic to calc-alkalic intermediate and felsic volcanic environment (Grunsky, 1980). Regional foliation has a northwest strike and the grade of metamorphism ranges from greenschist to amphibolite facies. February 21, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 4
Cowie-Morrison Property, Nahwegezhic Township, Ontario, Canada Figure 5-1 Local geology map for the Cowie-Morrison Property (modified from Moore and Armstrong, 1946 and Algoma Ore Properties internal files from 1956) February 21, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 5
Cowie-Morrison Property, Nahwegezhic Township, Ontario, Canada 6.0 MINERALIZATION Essar s Cowie-Morrison Property covers the southern half of the Goulais River Iron Range, which is nearly 6 km long, varies in thickness from 10 cm to 200 m, extends to more than 300 m in depth and has a north-northwesterly trend (Grunsky, 1980). The major iron orebodies in the Goulais River Iron Range are McPhail, Cowie Lake, Gut Lake and Morrison Lake sections, from north to south (Figure 5-1). According to an engineering study completed by Canadian Bechtel Ltd., on behalf of Algoma, in 1966, the open pit tonnage at Morrison Lake is 9,573,000 tons at a grade of 20.4 % magnetic iron. The majority of the Goulais River Iron Range consists of Algoma-type oxide facies iron formation composed of magnetite-chert beds varying from 2 mm to 1 cm in thickness (Grunsky, 1980, Moore and Armstrong, 1946). Minor jasper, amphibole, hematite and pyrite are also present. The total iron content of the minable material ranges between 25 and 40%, with an average from 30 to 32%. 7.0 ADJACENT PROPERTIES Adjacent claims and dispositions are held by individuals and there is no public information on exploration activities, but the dispositions east of Cowie Lake host the Cowie Lake section and the claims north of the Essar s Property host the McPhail section of the Goulais River Iron Range. According to Shklanka (1968), reserves from the whole Goulais River prospect were sufficient to produce 1 million tons of pellets per year for about 30 years. The three additional iron occurrences in the area include the McClintock occurrence located ~6 km northnortheast of the Property, the Butter Tin occurrence located ~9.5 km north-northwest of the Property, and the Central Goulais occurrence located ~13 km northwest of the Property (MNDMF Mineral Deposit Inventory). The Butter Tin occurrence consists of banded iron formation of narrow stringers to width up to 30 m (MNDMF Mineral Deposit Inventory). The iron content is up to 64.65%, contained in magnetite and jasper. The total length of the iron formation is not available. February 21, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 6
Cowie-Morrison Property, Nahwegezhic Township, Ontario, Canada The Central Goulais occurrence consists of numerous narrow, discontinuous northwest trending bands of iron formation in a 7.2 km long and 5.6 km wide area. Two main bands can be traced to ~1829 m. Channel samples returned around 33% Fe and 60% SiO 2. The McClintock occurrence consists of small masses of hematite in pegmatitic granites in felsic tuffs (MNDMF Mineral Deposit Inventory). Occurrences of other commodities in the area include Private Lake-Northwest occurrence (2.5 km to west; Cu), Teepee Lake occurrence (3 km to north; Cu, Au, Pb, Ag), Brennan occurrence (4 km to north; Cu, Pb, Zn, Ag), Hanes Lake West occurrence (7.5 km to northwest; Cu, Zn, Pb, Ag), Hanes Lake North occurrence (8 km to northwest; Au), and Loggers Lake-Northwest occurrence (9 km to west; Cu). These occurrences exist in the form of banded sulphide iron formation and volcanic exhalative lenses interbedded with metavolcanic rocks. 8.0 REFERENCES Arthur G. McKee & Company of Canada Ltd. (1963): Preliminary engineering study and cost estimates covering crushing, concentrating, pelletizing and handling of Goulais Iron Property ores for Alogma Ore Properties Division of the Algoma Steel Corporation Ltd., 4p. Canadian Bechtel Ltd. (1966): Engineering studies and cost estimate, Goulais River Project, Cowie Lake, Ontario; prepared for the Algoma Ore Properties, Division of Algoma Steel Corporation, 14p. Grunsky, E.C. (1980): Geology of the Cowie Lake Area, District of Algoma; Ontario Geological Survey Report 192, 67p. Accompanied by Map 2426, scale 1:31 680 (l inch to 1/2 mile). Jackson and Fyon (1980): The Western Abitibi Subprovince, Chapter 11, in Geology of Ontario, Ontario Geological Survey, Special Volume 4, Part 1, p. 405-482. Moore, E.S. and Armstrong, H.S. (1946): Iron Deposits in the District of Algoma; Ontario Department of Mines, Volume 55, Part 4, p. 7-36. Moore, E.S. and Armstrong, H.S. (1946): Goulais River iron range (Cowie Lake section), Township 22, Range 12 [Nahwegezhic Township], District of Algoma, Ontario, Ontario Ministry of Northern Development and Mines, Ontario Geological Survey, Map, 1900 Series. Moore, E.S. and Armstrong, H.S. (1946): Goulais River iron range (Dude-Gut lakes section), Township 22, Range 12 [Nahwegezhic Township], District of Algoma, Ontario, Ontario Ministry of Northern Development and Mines, Ontario Geological Survey, Map, 1900 Series. Moore, E.S. and Armstrong, H.S. (1946): Goulais River iron range (Morrison Lake section), Township 22, Range 12 [Nahwegezhic Township], District of Algoma, Ontario, Ontario Ministry of Northern Development and Mines, Ontario Geological Survey, Map, 1900 Series. February 21, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 7
Cowie-Morrison Property, Nahwegezhic Township, Ontario, Canada Shklanka, R. (1968): Iron Deposits of Ontario; Ontario Department of Mines, Mineral Resoruces Circular No. 11, 489p. February 21, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 8
SUMMARY REPORT IRON LAKE PROPERTY Keating and Keating Additional Townships, Ontario, Canada ESSAR STEEL ALGOMA INC. 105 West Street, Sault Ste. Marie, Ontario, Canada P6A 7B4 Date: March 18, 2013 Prepared By: CARACLE CREEK INTERNATIONAL CONSULTING INC. Zsuzsanna Magyarosi, Ph.D., P.Geo.
Iron Lake Property, Keating and Keating Additional Townships, Ontario, Canada 1.0 HIGHLIGHTS Essar s Iron Lake Property covers a ~252 ha area underlain by an approximately 3 km long and up to 350 m wide section of the Iron Lake Iron Range. Located ~78 km northwest of Wawa by road, following the Trans Canada Hwy. and a network of secondary roads. The iron formation is composed of ~90% oxide facies iron formation, which is generally more preferred due to the low content of minor elements (Gross, 1996) Two 7 m sections containing 39% and 46% iron were intersected by drill holes completed by Lake Superior Company (Algoma Commercial Company) between 1909 and 1911 The amount of iron in grab samples is up to ~62% (Reilly, 1991). The focus of exploration has been pockets of hematite; the magnetite content has not been investigated. Essar s Property is cut by the Iron Lake Deformation Zone that is associated with gold mineralization. There are thirteen (13) gold and/or copper occurrences within 5 km of the property boundaries. No modern exploration for iron or gold on the Property. 2.0 LOCATION AND TENURE The Iron Lake Property is located approximately 47 km northwest of Wawa, northeastern Ontario, in Keating and Keating Additional Townships. The approximate center of the Property in UTM coordinates is: 624980m E, 5341010m N, Zone 16, NAD 83 and in geographic coordinates: 85 19 3.70 W, 48 12 36.04 N. The Iron Lake Property consists of seventeen (17) freehold patents totaling 252.122 ha (Table 2-1, Figure 2-1). Essar holds 100% of the mining rights only on the patents. The patents have no expiry date and the only obligation is to pay land tax on it. All patents are subject to reservations in Crown Grant. March 18, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 1
Iron Lake Property, Keating and Keating Additional Townships, Ontario, Canada Table 2-1 Essar s tenure for the Iron Lake Property MNDMF Land Registry MPAC Roll patent Pin No. Number number Township Ownership Y310 31134-0003 LT 579900013201000 Keating MRO 16.592 Iron Lake Y311 31134-0003 LT 579900013201000 Keating MRO 17.402 Iron Lake Y312 31134-0003 LT 579900013201000 Keating MRO 18.211 Iron Lake Y313 31134-0003 LT 579900013201000 Keating MRO 15.378 Iron Lake Y314 31134-0003 LT 579900013201000 Keating MRO 16.188 Iron Lake Y315 31134-0003 LT 579900013201000 Keating MRO 16.997 Iron Lake Y316 31134-0003 LT NA Keating MRO 14.164 Iron Lake Y317 31134-0003 LT 579900013201000 Keating MRO 12.141 Iron Lake Y318 31134-0003 LT 579900013201000 Keating MRO 14.164 Iron Lake Y319 31134-0003 LT 579900013201000 Keating/Keating Additional MRO 13.355 Iron Lake Y320 31134-0003 LT 579900013201000 Keating MRO 14.569 Iron Lake Y321 31134-0003 LT 579900013201000 Keating/Keating Additional MRO 14.569 Iron Lake Y322 31134-0003 LT 579900013201000 Keating/Keating Additional MRO 14.569 Iron Lake Y323 PT 31134-0003 LT 579900013201000 Keating/Keating Additional MRO 12.545 Iron Lake Y324 31134-0003 LT 581122000300400 Keating/Keating Additional MRO 12.545 Iron Lake Y325 PT 31134-0003 LT 581122000300400 Keating/Keating Additional MRO 16.188 Iron Lake Y326 PT 31134-0003 LT 579900013201000 Keating/Keating Additional MRO 12.545 Iron Lake Total 252.122 Area (ha) Name March 18, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 2
Iron Lake Property, Keating and Keating Additional Townships, Ontario, Canada Figure 2-1 Tenure map for the Iron Lake Property 3.0 ACCESS AND INFRASTRUCTURE The Iron Lake Property can be accessed by road following the Trans Canada Hwy. north from Wawa for ~48 km, then following a network of smaller roads west-southwest for an additional ~30 km. The nearest airport and railway track to the Property are in Wawa. A utility line runs ~1 km southwest of the Property. The town of Wawa has restaurants, hotels, hospital, and Ontario Provincial Police Station. The town of Wawa could supply most of the needs of an exploration program at Iron Lake. Wawa has an urban population of 2,634 people in 2011 (Statistics Canada: http://www.citypopulation.de/php/canada-uaontario.php?cityid=394). March 18, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 3
Iron Lake Property, Keating and Keating Additional Townships, Ontario, Canada 4.0 EXPLORATION HISTORY Exploration on the property started in 1898 and included stripping trenching, shaft sinking, sampling, drilling and geophysical surveys. Most of the companies explored for iron, but Algoma analyzed some of the drill core for gold between 1943 and 1948. No records were found to document the gold grade in this drill program. Table 4-1 summarizes the exploration history on the Iron Lake Property. Table 4-1 Summary of exploration on the Iron Lake Property Year Company Source of data Type of work Results 1898-1902 1899 Pickands Mather Mining Company/Ontario Mining Company Minnesota Mining Company MNDM MDI stripping, trenching, test pitting, 30 foot shaft into the iron range (211 feet) 44.1 to 56.45% Fe Reilly, 1991 sampling 62.04% Fe and 4.71% Si 1902 Lake Superior Company MNDM MDI bought property 1904 Clergue Company MNDM MDI 1 drill hole 1909-1911 1943-1948 Algoma Lake Superior Company (Algoma Commercial Company) MNDM MDI Algoma internal reports and MNDM MDI and Ass. File: 42C03NW0050 5 drill holes (1904 m), trenching magnetometer survey, drilling, geological report 1957 Canadian Pacific Railway Ass. File: 42C03NW8811 mapping, prospecting 1990 Corona Corporation Ass. File: 42C06SE0002 report of activities two 7 m sections containing 39% and 46% Fe identified 4 magnetic anomalies, Fe content up to 51.37% over 1.8 m Fe content in grab samples ranges between 28 and 56.24% sampling, but mostly not within Essar's Property 5.0 GEOLOGY The Iron Lake Property occurs within the Wawa Subprovince of the Superior Providence. The Wawa Subprovince is an aggregation of Archean greenstone belts and granitoid plutons (Williams et al., 1991). The greenstone belts are composed of metamorphosed komatiite, basalt, dacite and rhyolite and associated metasedimentary rocks dispersed in a sea of granitoid rocks. The Wawa Subprovince is composed of two linear greenstone belts: one along its northern border with the Quetico Subprovince and another in the Mishibishu-Michipicoten-Gamitagama area. March 18, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 4
Iron Lake Property, Keating and Keating Additional Townships, Ontario, Canada The Iron Lake Property is located in the western part of the Michipicoten greenstone belt (Reilly, 1991). The metavolcanic rocks, the oldest rocks in the area, are divided into a south-younging northern terrane and a north-younging southern terrane (Figure 5-1). The Iron Lake Range is underlain by the metavolcanic rocks and is overlain by a clastic metasedimentary sequence, which separates the northern and southern terranes. All rocks are intruded by mafic and felsic intrusions and diabase dikes. Bedding and foliation strike approximately east-west and dip steeply (Reilly, 1991). Minor folding, several shear zones and a broad zone of strike-slip movement named the Iron Lake Deformation Zone (ILDZ) affected the area. The ILDZ crosses the Property, has a northeast-southwest trend and is associated with gold mineralization (Figure 5-1). The Iron Lake Range strikes east-west and measures up to 350 m in thickness (Reilly, 1991). It is composed of mainly oxide facies iron formation, 90% of the Iron Lake Range, with minor carbonate facies iron formation at the base and massive to brecciated chert on top. Sulphide facies iron formation is also locally present. The strike length of the iron formation on the Essar Property is approximately 3 km. The oxide facies iron formation is composed of magnetite and/or hematite layers thinly interbedded with chert. Bedding ranges between 1 and 10 cm with an average of 2 cm. March 18, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 5
Iron Lake Property, Keating and Keating Additional Townships, Ontario, Canada Figure 5-1 Local geology map for the Iron Lake Property (modified from ODM Map 2333) 6.0 MINERALIZATION The Iron Lake Property covers the thickest part of the Iron Lake Range extending west of Iron Lake (Reilly, 1991). The iron formation is composed of mostly oxide facies iron formation composed of layers of chert and hematite with minor magnetite. The focus of exploration by most of the companies was pockets of hematite (Assessment file: 42C03NW0050). According to Gross (1996) oxide facies iron formation is generally more preferred due to the low content of minor elements. Grab samples of weathered cap rock collected by the Minnesota Mining Company in 1899 yielded 62.04% iron and 4.71% silicon (MNDM Mineral Deposit Inventory). Samples collected by Pickland- March 18, 2013 CARACLE CREEK INTERNATIONAL CONSULTING INC. Page 6