Date: 8 th May 2012 Report No: R215.2012 Summary Report Mineral Resource and Ore Reserve Update NORDIC MINES AB Finland As at 8 th May 2012 By Maria O Connor BSc, MAusIMM, FGS Clayton Reeves BEng, MSAiMM For: Nordic Mines AB Tradgardsgatan 11SE 753 09 Uppsala Sweden Approved: Malcolm Titley Director
Contents Contents...I 1 Summary...1 Figures Figure 1: Plan of drill holes used in MRE update. Eight holes were deepened (blue) and 30 new holes (red) were drilled, in the south and south west of the deposit... 3 Figure 2: Plan showing quartz vein measurements used to define 8 orientation domains. Blue strings represent mapped quartz veins, strike/dip symbols represent quartz vein measurements from diamond core. Three central domains were split by a barren granitic body... 4 Figure 3: Cross section through 2,528,200m E which shows the model with probabilities estimated from 0 to 1 (above).... 6 Figure 4. Ore blocks coloured by orientation with granite and dolerite geology interpretation at the 10m Rl... 9 Figure 5. Ore blocks coloured by classification with granite and dolerite geology interpretation at the 10 m Rl... 10 Figure 6. 750 optimal Whittle pit shell screen captures looking from the SE (above) and from the NE (below)... 14 Tables Table 1. Laiva Gold Project - Mineral Resource Estimate... 1 Table 2: Laiva Gold Project Ore Reserve... 2 Table 3: Drilling and Channel Sample data used in the MRE... 2 Table 4: Ore zone search ellipse orientations for Search Pass 1... 7 Table 5: Ore zone sample search parameters... 7 Table 6: Variogram models... 7 Table 7: In-situ dry bulk density values... 8 Table 8. Comparison between the May 2012 and August 2011 MRE... 11 Table 9: Input Parameters for Whittle... 12 Table 10: Whittle Pit Optimisation Results... 13 Table 11: Comparisons of May 2012, August 2011 and March 2009 MREs for Whittle optimised pit shells produced in March 2009, August 2011 and May 2012 respectively... 15 Table 12: The Portion of the May 2012 MRE excluded from the selected Whittle optimised pit shell produced in May 2012... 16 Report No: R215.2012 I
1 Summary CSA Global (UK) Ltd (CSA) has updated the Laiva Gold Project Mineral Resource Estimate (MRE) previously reported as at 8th August 2011. The MRE has been updated with additional drilling, sampling and geological data gathered during the period May 2011 to 31 st December 2011. Table 1 presents the updated MRE for the Laiva Gold Project as at 8 th May 2012. Table 1. Laiva Gold Project - Mineral Resource Estimate Nordic Mines - Laiva Gold Project Mineral Resource Estimate as at 8 th May 2012 Primary Resource Au>=0.8 g/t Ktonnes Au g/t Koz SG Measured 5,850 2.06 390 2.83 Indicated 14,170 2.03 930 2.83 M+I 20,020 2.04 1,310 2.83 Inferred 2,140 2.07 140 2.83 Total M+I+I 22,160 2.04 1,460 2.83 Additional Resource Au>=0.5 & <0.8 g/t Ktonnes Au g/t Koz SG Measured 2,040 0.64 40 2.83 Indicated 5,350 0.64 110 2.83 M+I 7,400 0.64 150 2.83 Note: The resource is reported for blocks greater than or equal to 0.5 g/t Au grade. Differences may occur due to rounding errors. The Isatis model is lvore.c.dm. Using the updated MRE the Laiva Ore Reserve has been updated by completing a Whittle Pit Optimisation using the Laiva BFS gold price, costs and open pit parameters. The updated Ore Reserve is presented in Table 2. Report No: R215.2012 1
Table 2: Laiva Gold Project Ore Reserve Nordic Mines - Laiva Gold Project Ore Reserve as at 8 th May 2012 Classification Ktonnes Au g/t Koz SG Proved 7,298 1.56 367 2.83 Probable 9,579 1.63 502 2.83 Total Ore Reserve 16,877 1.60 869 2.83 Waste to Ore Strip Ratio 5.15 to 1 The CSA Mineral Resource and Ore Reserve estimate was completed based on the following: The Laiva gold project is located 15 kilometres south-southwest of Raahe, in the north-western part of the Raahe-Ladoga zone in Finland, and wholly owned by Nordic Mines. The mineralisation is hosted in a silicified quartz diorite and/or mafic volcanic host. The deposit is currently split into two zones separated by granitic intrusives. Fine grained gold occurs in quartz rich millimetres to centimetre thick veins which occur in swarms ranging from centimetres to metres in thickness. Orientation of the mineralised lenses generally strikes east-west steeply dipping to the south. The deposit has been divided into 8 domains defined by changes in ore lens orientation. The overall dimensions of the deposit are a strike of 1,300m east-west by 1,200m north-south to a maximum inferred depth of approximately 300m. Drilling data used for the MRE consisted of 487 holes for 76,243.75m of diamond core, reverse circulation drilling and surface diamond saw channel samples. The total number of holes includes 30 new and 8 deepened holes for a total of 10,017.1 additional metres, drilled during the period May to December 2011. Approximately 82% of the total drilling metres is diamond core. The nominal assay sample length is 1m. Table 3 presents the drilling data used in the MRE. Figure 1 shows a plan view of the drill holes used in the updated MRE. Table 3: Drilling and Channel Sample data used in the MRE Resource Period Hole Type Number of holes Metres Drilled CH 26 241.60 DD 332 52,984.90 August 2011 RC 93 13,469.70 Total 451 66,696.20 May 2012 New DD 30 8,801.75 May 2012 Extended DD 8 1,215.35 Grand Total 38 10,017.10 Report No: R215.2012 2
Figure 1: Plan of drill holes used in MRE update. Eight holes were deepened (blue) and 30 new holes (red) were drilled, in the south and south west of the deposit The QAQC analysis completed for the October, 2008 MRE remains valid. No significant issues were identified. Drill collars were surveyed by differential GPS, and down hole surveys were completed using a multi-shot camera, generally taking dip and azimuth recordings every ten metres down hole and at the end of hole. The average drill hole orientation is 45 degrees to the north. Nordic provided CSA with 3D wireframe envelopes representing the various lithologies defined namely granite, dolerites and till and a mineralisation envelope. In addition, an updated DTM was provided, representing the topography affected by material moved during the mine construction phase and initial mining. The granite interpretation was updated and improved during 2011, and is considered more robust than previous versions. The mineralisation envelope used to constrain the block model was also improved, and tightened up in areas of less dense drilling to avoid blow outs of high grade where there is little sample support. Updated measured vein orientations derived from oriented diamond core and quartz veins mapped from surface were reviewed in 3-D and statistically. This Report No: R215.2012 3
analysis identified 8 structural domains and these were used in the current MRE. This contrasts to 7 structural domains identified for previous MREs (Figure 2). Figure 2: Plan showing quartz vein measurements used to define 8 orientation domains. Blue strings represent mapped quartz veins, strike/dip symbols represent quartz vein measurements from diamond core. Three central domains were split by a barren granitic body CSA reviewed the wireframe defining the overall zone of potential mineralisation produced by Nordic and no changes were made. Significant effort was made by Nordic in improving the waste granite interpretation, based on the additional drilling which was focused in that area. CSA reviewed the new granite interpretation and support the changes made. A volume block model was constructed in Datamine, using the mineralised envelope, wireframes defining granites, dolerites, till and DTM surfaces representing the topography and the topography after mining / construction. The panel block model contained parent block sizes of 25m x 10m x 5m (X x Y x Z). No sub blocking was required. An SMU block model representing the selective mining unit of 5m x 2.5m x 2.5m was generated using the same wireframes and DTM surfaces. Report No: R215.2012 4
Down hole ore zone intercepts were created using the CompSE algorithm in Datamine to ensure intercepts met or exceeded the specified gold grade cut-off for a minimum down-hole length of three metres, allowing internal waste of 2m. Intercepts were created for the cut-off of 0.8 Au g/t. The ore was coded 1 and waste (below cut-off material) was coded 0. The 1m composites, panel and SMU blank block models were imported into Isatis software. The ore and waste intercepts were used to estimate the probability of a block being part of an ore lens. This was achieved through modelling the variograms using the ore parameter, and Kriging values between 0 and 1 into resultant blocks. A threshold was chosen based on what best represented the mineralised zone and analysis of appropriate thresholds was conducted on a domain by domain basis, with a threshold of 0.1 chosen for all domains except domain 1, where 0.2 was chosen. Chosen thresholds were validated on-screen by comparing the blocks with the ore and waste intercepts. Sample search parameters were based on the dominant mineralisation orientation for each structural domain. Table 4 and Table 5 present the search parameters used. Report No: R215.2012 5
Figure 3: Cross section through 2,528,200m E which shows the model with probabilities estimated from 0 to 1 (above). Drill holes show ore intercepts in red, and waste in grey. The bottom image shows the block model filtered on the probability threshold which delineates the mineralised zone. It is this block selection that grade is then estimated into, using the data that is intersected by these blocks. Data used in grade estimation was selected using a process within Isatis that is designed to copy the contents of variables from a block model to a points file. For each sample in the composites file, the program searches for the nearest block centroid in the input block model and copies the contents of the probability estimate variable if the distance is less than a given value (in this case 3m). This data selection method allows for intercepts defined as both ore and waste to be used in the grade estimation. Search passes 2 and 3 were 2 x radius and 10 x radius Report No: R215.2012 6
Table 4: Ore zone search ellipse orientations for Search Pass 1 Domain X-Radius Y-Radius Z-Radius Rotation angle around Z Rotation angle around Y Rotation angle around X 1 100 50 20 20 0 70 2,6 100 50 20 25 0 75 3,7 100 50 20-10 0 80 4,8 100 50 20-15 0 75 5 100 50 20-10 0 85 Table 5: Ore zone sample search parameters Domain Minimum Samples Maximum Samples per sector Number of angular sectors Search Factors Maximum Samples per Drillhole All 9 15 1 1 3 Statistical analysis was completed for the selected intercept population. The gold population can be described as a log normal distribution, with very few grade outliers. A top cut of 30 g/t was chosen. If a sample was >30g/t and lay within the block being estimated, the actual value was used in the estimation of that block. However, if the sample lay outside the block being estimated, the cut value was used. This allows for the local estimation bias of outliers to be limited to the blocks in which they lie. Normal-score variograms were produced and modelled for gold. The nugget used was obtained from the down-hole variograms. The modelled variogram parameters applied to each domain for gold are presented in Table 6. Table 6: Variogram models Domain Nugget Model Structure Sill Range 1 Range 2 Range 3 1 0.34 Exponential 1 0.66 75 50 7 2 0.46 Exponential 1 0.54 41 47 4 3 0.06 Spherical 1 0.87 40 16 3 2 0.07 313 702 140 4 0.09 Exponential 1 0.91 57 57 6 5 0.32 Spherical 1 0.68 68 60 9 6 0.18 Spherical 1 0.82 47 47 10 7 0.15 Spherical 1 0.85 71 71 42 8 0.19 Spherical 1 0.29 57 38 1.75 2 0.52 105 70 14 Report No: R215.2012 7
Gold grades were estimated using Ordinary Kriging (OK) in Isatis into blocks with ore estimates above the chosen probability thresholds identified by IK. Orientations for the search ellipse and sample search parameters were identical to those used for the IK model construction and are presented in Table 4 and Table 5. After grade estimation using OK, a recoverable resource was estimated using Uniform Conditioning (UC). This is based on a global change of support (Gaussian) which is used to model the histogram (distribution) of SMU blocks from the modelled histogram of the 1m composites using the variogram which computes the correct variances for SMUs. This is called the block anomorphosis and is used alongside the estimated grade and the variance of the estimated grade for each block generated by OK to produce the proportion and grade of a panel that is above a specified list of cut-offs. A local uniform conditioning (LUC) technique was used to convert the panel blocks to SMU size blocks for use in subsequent mine planning. This is achieved by using OK to estimate grades into SMU sized blocks and ranking the estimated grades of the SMUs to guide the distribution for each block. The local grade metal tonnage calculated by UC is preserved. Comparison of the block grades and 1m composite samples both showed similar mean grades for gold. Bulk density data provided by Nordic Mines was analysed for the March 2009 update and results were used for the May 2012 MRE. 755 one metre samples were available for analysis. The dry in-situ bulk density was determined using the weight in water method, which is suitable for competent non-porous rocks such as these. Density values showed no correlation with depth and little correlation with grade. The strongest influence on density was rock type. The density values used in the resource model are presented in Table 7. No additional bulk density data was analysed for the updated MRE. Table 7: In-situ dry bulk density values Rock type Category Density Surface Soil and Till Waste 2.00 Mafic Volcanics and Quartz Diorite Mineralisation 2.83 Granite Waste 2.70 Dolerite Waste 2.60 The Mineral Resource has been classified as Measured, Indicated and Inferred based on guidelines specified in the JORC code. The Kriging confidence, measured by the slope of regression, combined with geological confidence and sample spacing was used as a guide to determining classification boundaries. Wireframes were constructed and used to code the appropriate model blocks. Report No: R215.2012 8
Measured and Indicated material increased due to further drilling in the south and south west of the deposit. The improved granite interpretation has increased the reliability of the geological model which has also improved grade confidence in some areas. Figure 4 presents the ore blocks at Au >=0.8 g/t coloured by orientation, showing the strike directions. The pink and green outlines present the granite and dolerite interpretation at the 10m elevation. Figure 5presents the same blocks coloured by classification, showing the area to the south west now classified as measured. Figure 4. Ore blocks coloured by orientation with granite and dolerite geology interpretation at the 10m Rl Report No: R215.2012 9
Figure 5. Ore blocks coloured by classification with granite and dolerite geology interpretation at the 10 m Rl A comparison between the May 2012 and August 2011 MRE is presented in Table 7. The increase in overall tonnes is a direct result of the additional drilling. The increase in M&I is due to improved confidence resulting from the improved granite waste interpretation and infill drilling. The reduction in grade in the MRE at the 0.8 g/t gold cut-off is primarily due to updated parameters used in the grade estimation. The updated parameters include: 1) the use of variograms derived from the past 10 months of mine production grade control drilling; 2) additional surface mapping data resulting in adjustments to the orientation domains used to control the mineralisation directions; and 3) improvements to the geostatistical modelling technique to take into account minimum mining widths and in-situ dilution. This has resulted in some increases in the mixing of high and lower grades, which has resulted in an overall grade decrease at the 0.8 g/t gold cut-off. Report No: R215.2012 10
Table 8. Comparison between the May 2012 and August 2011 MRE Nordic Mines - Laiva Gold Project - Tonnage and Grade Difference May 2012 cf. August 2011 Primary Resource Au>=0.8 g/t Ktonnes Au g/t Koz SG Measured 19.8% -11.4% 6.1% -0.05% Indicated 49.2% -5.4% 41.1% -0.05% M+I 39.2% -7.6% 28.6% -0.05% Inferred -48.8% 3.6% -47.0% -0.04% Total M+I+I 19.4% -5.5% 12.9% -0.05% Additional Resource Au>=0.5 & <0.8 g/t Ktonnes Au g/t Koz Measured 73.5% 2.9% 78.5% Indicated 34.0% 2.7% 37.6% M+I 43.0% 2.7% 46.9% Whittle analysis was run to produce optimal pits and an updated Ore Reserve using updated parameters to those used in the 2009/2010 BFS. The gold price used in the BFS was 535 per ounce. This gold price is conservative compared to current market conditions. A gold price of 750 per ounce was thus used in the pit optimisation to update the Ore Reserve. Two additional Whittle scenarios were completed for 535 and 1,000 gold price as a comparison with the BFS results and current market conditions. Table 9 summarises the Whittle parameters used. Report No: R215.2012 11
Table 9: Input Parameters for Whittle Nordic Mines - Laiva Gold Project Whitttle Pit Optimisation Input Parameters as at 8 th May, 2012 Parameter Mining Cost ( /t mined) Mining Cost Adjustment Factor (MCAF) Processing Cost ( /t processed) Input 1.94/t 0.03/20m depth 9.06/t Overall Open Pit Slope 55 o Gold Price ( ) 535/oz; 750/oz; 1,000/oz; Sell Cost ( /oz) 4.04/oz Plant Capacity (ktpa) 2,000ktpa Mining Limit 12,500ktpa Mining Recovery (%) 90% Mining Dilution (%) 10% Process Recovery (%) [IF(AU.G>19PPM,100%,0.187*POWER(AU.G,3)- 1.1405*POWER(AU.G,2)+3.1808*WO3.G+82.485)] Discount Rate (%) 10% An optimal pit shell was chosen for each gold price. Pits were chosen on a combination of ore tonnes (mine life) and NPV. The results of the optimisations shown for the three gold price scenarios are presented in Table 10. Report No: R215.2012 12
Table 10: Whittle Pit Optimisation Results Nordic Mines - Laiva Gold Project Whitttle Pit Optimisation Results as at 8 th May, 2012 Gold Price /troy oz 535 750 1,000 Ore in the ground Ore processed (Inl. Dilution and ore loss) t t 8,280,553 8,197,747 17,047,773 16,877,295 23,115,968 22,884,808 Au g/t Au g/t 2.09 1.90 1.76 1.60 1.58 1.44 Waste tonnes t 37,104,895 87,082,765 120,139,651 Strip ratio t/t 4.53 5.16 5.25 Gold to plant Au kg 15,552 26,961 32,897 Gold recovered Au kg 15,021 25,043 30,242 Gold recovered Au koz 482,936 805,160 972,300 Cost of mining 89,778,441 208,662,969 289,877,817 Cost of processing 74,230,603 152,823,908 207,221,938 Cost of selling 1,952,695 3,255,625 3,931,450 Revenue from gold sales 258,366,323 603,869,841 972,300,314 Cashflow undiscounted 92,404,584 239,127,339 471,269,109 Best 77,957,749 176,122,088 316,880,563 Discounted cashflow Specified 72,026,738 160,491,183 285,281,226 Worst 68,312,310 136,902,700 241,390,657 Table 11 presents a comparison of the in-situ MRE at a 0.8 g/t Au lower cut-off grade within the various optimised Whittle pit shells for the March 2009 and August 2011 models compared with the BFS Whittle pit shell generated in March 2009 ( 535 per oz) and the current Whittle pit shells generated using updated parameters for the May, 2012 model for gold prices of 535, 750 and 1000 per oz. The Whittle optimised pit results produced for the May, 2012 resource model are significantly different to that produced in March 2009, with a similar ore tonnes but reduced Au grades due to modified MRE techniques employed for the MRE update. Perspective 3-D views of the Laiva mineralisation within the 750 optimised pit shell are presented in Figure 6. Report No: R215.2012 13
Figure 6. 750 optimal Whittle pit shell screen captures looking from the SE (above) and from the NE (below) Report No: R215.2012 14
Table 11: Comparisons of May 2012, August 2011 and March 2009 MREs for Whittle optimised pit shells produced in March 2009, August 2011 and May 2012 respectively Grade and Tonnage Comparison within Whittle Optimised Pit Shells @ 0.8g/t Au Lower Cut-off as at 8 th May, 2012 Resource Classification Resource Model Whittle Optimised Pit Shell Tonnage (ktonnes) Gold Grade (g/t) Gold Metal (koz) Insitu Dry Density March 2009 535 March 2009 4,653 2.37 355 2.83 535 March 2009 4,647 2.36 353 2.83 535 August 2011 4,706 2.35 356 2.83 August 2011 750 August 2011 4,815 2.33 361 2.83 Measured 1,000 August 2011 4,861 2.32 363 2.83 535 May 2012 4,235 2.12 288 2.83 May 2012 750 May 2012 5,522 2.08 369 2.83 1,000 May 2012 5,786 2.07 384 2.83 March 2009 535 March 2009 4,694 2.48 374 2.83 535 March 2009 4,574 2.45 360 2.83 535 August 2011 5,682 2.44 445 2.83 August 2011 750 August 2011 6,866 2.34 518 2.83 Indicated 1,000 August 2011 8,106 2.25 586 2.83 535 May 2012 3,388 2.33 254 2.83 May 2012 750 May 2012 7,314 2.16 509 2.83 1,000 May 2012 9,556 2.11 648 2.83 March 2009 535 March 2009 9,347 2.42 728 2.83 535 March 2009 9,220 2.4 712 2.83 Measured + Indicated Inferred Within Pit August 2011 535 August 2011 10,388 2.4 801 2.83 750 August 2011 11,681 2.34 879 2.83 1,000 August 2011 12,967 2.28 949 2.83 535 May 2012 7,622 2.21 542 2.83 May 2012 750 May 2012 12,836 2.13 878 2.83 1,000 May 2012 15,341 2.09 1032 2.83 March 2009 535 March 2009 26 3.59 3 2.83 535 March 2009 22 3.91 3 2.83 August 2011 535 August 2011 21 3.99 3 2.83 750 August 2011 25 3.74 3 2.83 1,000 August 2011 29 3.51 3 2.83 535 May 2012 12 2.54 1 2.83 May 2012 750 May 2012 25 2.73 2 2.83 1,000 May 2012 29 2.61 2 2.83 Note: The MRE tonnes and grade are in-situ and do not include dilution and ore loss. All results are reported at a lower cut-off grade of 0.8 g/t Au, to allow direct comparison between the Whittle pit shells. The total tonnages will differ to the Whittle results and Ore Reserve as the Whittle results are based on a different lower cut-off grade commensurate with the change in gold price. Nordic Mines - Laiva Gold Project Table 12 presents a breakdown of the in-situ MRE at 0.5g/t 0.8g/t Au and > 0.8g/t grade excluded from the 750 optimised Whittle pit shell. Report No: R215.2012 15
Table 12: The Portion of the May 2012 MRE excluded from the selected Whittle optimised pit shell produced in May 2012 Nordic Mines - Laiva Gold Project Grade and Tonnage of MRE as at 8 th May excluded from the Euro 750 Whittle Optimised Pit Shell Resource Cut-off Grades Insitu Ore Tonnes Insitu Au Grade Insitu Au Metal Insitu Au Metal Classification (g/t) (t) (g/t) (g) (oz) Measured Indicated Inferred Total 0,5 g/t>0.8g/t 0,5 g/t>0.8g/t 0,5 g/t>0.8g/t 0,5 g/t>0.8g/t 152,317 2,944,904 893,967 3,991,188 0.64 0.64 0.64 0.64 97,799 1,887,632 573,203 2,558,634 3,144 60,689 18,429 82,262 > 0,8 g/t > 0,8 g/t > 0,8 g/t > 0,8 g/t 329,583 6,857,123 2,111,304 9,298,010 1.80 1.89 2.06 1.93 593,439 12,968,741 4,351,511 17,913,690 19,079 416,955 139,904 575,939 The information in this Report that relates to in-situ Mineral Resources and Ore Reserves is based on information compiled by Malcolm Titley of CSA Global UK Ltd. Malcolm Titley takes overall responsibility for the Report. He is a Member of the Australasian Institute of Geoscientists ( AIG ) and the Australasian Institute of Mining and Metallurgy ( AusIMM ) and has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person in terms of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2004 Edition). Malcolm Titley consents to the inclusion of such information in this Report in the form and context in which it appears. Report No: R215.2012 16