KAZAKH STEEL PLC Competent Person's Report on the

KAZAKH STEEL PLC

Competent Person’s Report on the Kokbulak Iron Ore Project

Republic of Kazakhstan

[April] 2022

APPENDIX III COMPETENT PERSON’S REPORT

– III-1 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT

THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED

‘‘WARNING’’ ON THE COVER OF THIS DOCUMENT

DATE ISSUED: [11th April] 2022

JOB NUMBER: ZT61–2028

VERSION: V20.0

REPORT NUMBER: MM1539

STATUS: Draft

KAZAKH STEEL PLC

Competent Person’s Report on the Kokbulak Iron Ore Project, Republic of Kazakhstan

[April] 2022

Prepared by: Dr Phil Newall BSC, PhD, CEng, FIMMM

This report has been prepared by Wardell Armstrong International with all reasonable skill,

care and diligence, within the terms of the Contract with the Client. The report is

confidential to the Client and Wardell Armstrong International accepts no responsibility of

whatever nature to third parties to whom this report may be made known.

No part of this document may be reproduced without the prior written approval of Wardell

Armstrong International.


– III-2 –




CONTENTS

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Location and Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Licencing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Geology & Mineralisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Mineral Resource . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Ore Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Environmental & Social . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

1.1 Purpose of the Report and Terms of Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

1.2 Reporting Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

1.3 Consultants and Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

1.4 Sources of Information and Reliance on other Experts . . . . . . . . . . . . . . . . . . . [‧]

1.5 Personal Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

1.6 Units and Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

1.7 WAI Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]


– III-3 –




2 PROPERTY DESCRIPTION AND LOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

2.1 Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

2.2 Licences and Tenure or Title, Encumbrances and Obligations . . . . . . . . . . . . . [‧]

3 ACCESSIBILITY, CLIMATE, PHYSIOGRAPHY, FLORA/FAUNA AND

LOCAL INFRASTRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

3.1 Accessibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

3.2 Climate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

3.3 Physiography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

3.4 Fauna and Flora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

3.5 Local Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

4 EXPLORATION HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

4.2 Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

4.3 Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

4.4 Confirmatory Sampling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

4.5 Recent Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

5 GEOLOGICAL SETTING AND MINERALISATION . . . . . . . . . . . . . . . . . . . . . . . . [‧]

5.1 Structure & Lithology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

5.2 Deposit Geology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

5.3 Mineralisation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

6 MINERAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

6.2 Central Area of the Kokbulak Iron Ore Project . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

6.3 Mineral Resource Estimation for the Southern Area & Northern Area . . . . [‧]


– III-4 –




7 MINING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

7.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

7.2 Open Pit Optimisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

7.3 Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

7.4 Optimisation Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

7.5 Optimised Pit Shell Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

7.6 Cut-Off Grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

7.7 Mine Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

7.8 Mine Operating Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

8 MINERAL PROCESSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

8.2 Soviet Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

8.3 JSC ‘‘Centre of Geosciences, Metallurgy and Processing’’ Testwork . . . . . . . [‧]

8.4 Processing section of Project XXI 2013 Feasibility Study . . . . . . . . . . . . . . . . . [‧]

8.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

9 ENVIRONMENT, SOCIAL, HEALTH & SAFETY . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

9.2 Environmental and Social Setting and Context . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

9.3 Project Status, Activities, Effects, Releases and Controls . . . . . . . . . . . . . . . . . [‧]

9.4 Permitting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

9.5 Environmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

9.6 Social and Community Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

9.7 Mine Closure and Rehabilitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

9.8 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]


– III-5 –




10 FINANCIAL ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

10.2 DCF Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

10.3 Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

10.4 Conclusions & Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

11 RISKS ASSOCIATED WITH THE KAZAKH STEEL PLC KOKBULAK

IRON ORE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

12 CONCLUSIONS & RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

13 JORC TABLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]


– III-6 –




TABLES

Table 2.1 : Production Licence Area Coordinates — Northern & Central

Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 2.2 : Production Licence Area Coordinates — Southern Area . . . . . . . . . [‧]

Table 4.1 : Kokbulak Deposit Sampling Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 4.2 : Core Recovery for Kokbulak Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 5.1 : Dimensions of Lens 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 6.1 : Composition of Exploration Database — Entirety . . . . . . . . . . . . . . . [‧]

Table 6.2 : Composition of Exploration Database — Central Area . . . . . . . . . . [‧]

Table 6.3 : Statistics for Fe of Selected Samples by Domain (Central Area) . [‧]

Table 6.4 : Statistics for Other Components (Central Area) . . . . . . . . . . . . . . . . . . [‧]

Table 6.5 : Statistics for Fe of Composited Samples by Domain

(Central Area) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 6.6 : Composited Sample Statistics for Other Components

(Central Area) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 6.7 : Summary of Variogram Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 6.8 : Summary of Block Model Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 6.9 : Mineral Resource Estimate, Central Area of the Kokbulak

Iron Ore Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 6.10 : Composition of Exploration Database . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 6.11 : Pit Optimisation Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 6.12 : Mineral Resource Estimate, Northern Area & Southern Area . . . . [‧]

Table 7.1 : Pit Optimisation Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 7.2 : Mine Schedule for the Kokbulak Iron Ore Project

(Central Area) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 7.3 : Project Mining Equipment Requirements and Costs . . . . . . . . . . . . . [‧]

Table 8.1 : Metallurgical Samples Composition — Soviet Reports

1954/1955 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]


– III-7 –




Table 8.2 : Mineral Processing Tests Results — Soviet Reports 1954/1955 . . . [‧]

Table 8.3 : Kokbulak JSC CGMP Samples Chemical Analysis . . . . . . . . . . . . . . . [‧]

Table 8.4 : Kokbulak and Lisakovskoye Mineralisations Chemical

Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 8.5 : Kokbulak Iron Ore Project XXI 2013 Feasibility Study Basic

Metallurgical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 8.6 : Kokbulak Iron Ore Project Basic Process Plant Consumables . . . . [‧]

Table 8.7 : Processing Capital Costs Summary (US$’000) . . . . . . . . . . . . . . . . . . . . [‧]

Table 8.8 : Project Processing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 9.1 : Ground Water Resources Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 9.2 : Waste Management Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 9.3 : Recommendations for Environmental & Social Action Plan . . . . . . [‧]

Table 10.1 : Project Production Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 10.2 : Project Capital Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 10.3 : Infrastructure Capex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 10.4 : Sustaining Capital Costs for 2030 to 2040 . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 10.5 : Production & Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Table 11.1 : Kokbulak Risk Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]


– III-8 –




FIGURES

Figure 2.1 : Location of the Kokbulak Iron Ore Project,

Western Kazakhstan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 2.2 : Detailed Location of Kokbulak Iron Ore Project . . . . . . . . . . . . . . . . [‧]

Figure 2.3 : Combined Central Area and Northern Area (Red), . . . . . . . . . . . . . . [‧]

Figure 2.4 : Location of Optimised Open Pits (White),

within Exploration Licence (Green) . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 2.5 : Location of Northern Optimised Open Pits (4) within . . . . . . . . . . . [‧]

Figure 2.6 : Location of Southern Optimised Open Pits (1) within . . . . . . . . . . . . [‧]

Figure 6.1 : Location of all Drillhole and Shaft Collars in Exploration

Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.2 : Location of Exploration Drillhole and Shaft Collars

in Central Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.3 : 5m Contours of Area Covered by Mineral Resource Estimate . . . . [‧]

Figure 6.4 : Plan View of Mineralised Envelopes. Drillhole Collars

in Red (Central Area) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.5 : Histogram of Fe For All Domains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.6 : Variogram Models for Fe — Mineralised Domain 1 . . . . . . . . . . . . . [‧]

Figure 6.7 : Isometric View Looking North of Estimated Fe Grades

(Central Area) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.8 : Classification Following the Guidelines of the JORC Code

(2012) at the Central Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.9 : Kokbulak Grade Tonnage Curve — All Classifications . . . . . . . . . . [‧]

Figure 6.10 : Location of all Drillhole and Shaft Collars

in Exploration Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.11 : Location of Exploration Drillholes for Northern Area and

Southern Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.12 : The Resultant Block Model for Southern Area and

Northern Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.13 : Isometric View Looking North of Optimised Pit Shell . . . . . . . . . . . [‧]


– III-9 –




Figure 6.14 : Isometric View Looking North of Optimised Pit Shell . . . . . . . . . . . [‧]

Figure 6.15 : NPV Sensitivity Analysis, Southern Area . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 6.16 : NPV Sensitivity Analysis, Northern Area . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 7.1 : LG Phase Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 8.1 : Grade Recovery Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 8.2 : Concentration Ratio vs Mass Yield — HIMS . . . . . . . . . . . . . . . . . . . . [‧]

Figure 8.3 : JSC CGMP Recommended Flowsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 8.4 : Project XXI 2013 Feasibility Study Conceptual Flowsheet

— Gravity/Magnetic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 8.5 : Project XXI 2013 Feasibility Study Conceptual Flowsheet

— Dephosphorisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 8.6 : Gravity-Magnetic Metallurgical Design Criteria . . . . . . . . . . . . . . . . . [‧]

Figure 10.1 : Production Costs by Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Figure 10.2 : Kokbulak (Central Area) Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . [‧]

Figure 10.3 : NPV at Various Discount Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]


– III-10 –




PHOTOGRAPHS

Photo 3.1 : Typical Scenery in the Central Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Photo 3.2 : Outcropping Mineralisation in Tassay Drainage . . . . . . . . . . . . . . . . . [‧]

Photo 3.3 : Beyneu-Shalkar Line, Near Begimbet . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Photo 5.1 : Brown Cemented Ores Above Black Unconsolidated Ores

on Profile 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [‧]

Photo 5.2 : Outcropping Soft Black Ores in Stream Bed . . . . . . . . . . . . . . . . . . . . . [‧]


– III-11 –




EXECUTIVE SUMMARY

Wardell Armstrong International Limited (‘‘WAI’’) was commissioned by KAZAKH

STEEL PLC (the ‘‘Client’’ or the ‘‘Company’’), to prepare a Competent Person’s Report

(‘‘CPR’’ or the ‘‘Report’’), for the Kokbulak iron ore project in the Republic of Kazakhstan

(the ‘‘Kokbulak Iron Ore Project’’) for the purpose of the [REDACTED] of the Company on

the Main Board of The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) in

accordance with Chapter 18 of the Rules Governing the Listing of Securities (the ‘‘Listing

Rules’’) on the Stock Exchange.

In this report, WAI has considered all aspects of the Kokbulak Iron Ore Project

including but not limited to geology, mineral resources, mining, processing, geotechnical,

infrastructure, economics, and environmental and social issues.

Location and Access

The majority of the Kokbulak Iron Ore Project is located in the Shalkar District of

Aktobe Region, whilst a small part of the southeast corner of the Kokbulak Iron Ore

Project lies within the territory of the Aral District of Kyzyl-Orda Region, Republic of

Kazakhstan.

The Kokbulak Iron Ore Project lies approximately 250km southeast of Aktobe, the

regional capital of Aktobe Region, and some 100km southeast of Shalkar, a town within the

Shalkar District, Aktobe Region and close to the main road and rail corridor. The nearest

rail station, situated on the West-Kazakhstan railway, is at Togus, located 85km directly to

the northeast of the Kokbulak Iron Ore Project.

The village of Begimbet (a town in Aktobe Region) is located 60km to the west of the

Kokbulak Iron Ore Project and is located close to the Beyneu-Shalkar Line (a railway and

power line) connecting Beyneu (a village of Beyneu District, Mangystau Region and is

located to the southwest of the Kokbulak Iron Ore Project) with Shalkar. The

Beyneu-Shalkar Line lies approximately 40km to the west of the Kokbulak Iron Ore

Project.

A number of small villages are located on the Aral Sea, which is some 60–120km

southeast to the Kokbulak Iron Ore Project.

Licencing

Aktobe Steel Production LLP (‘‘ASP’’), a wholly owned subsidiary of Kazakh Steel

Plc, holds the subsoil use contract for the Kokbulak Iron Ore Project under contract

number 3734-TPI dated October 4, 2010. Six addenda pertaining to the main contract were

subsequently entered into. The expiry date of the subsoil use contract is 23 September 2021.

Nevertheless, according to the Client, the subsoil use contract is still legally valid, given the

Client had submitted an application for a production license (‘‘Production Licence’’) on 21

September 2021, which is prior to the expiration date of the exploration subsoil use

contract. The area of the subsoil use contract for exploration is currently stated at

307.2km2.


– III-12 –




WAI has been informed that the area applied by the Client for production (the

‘‘Production Licence Area’’) is 127.51km2 (which falls within the contract area of the subsoil

use contract for exploration of 307.2km2). The Production Licence Area comprises 2 major

areas for development, namely a ‘‘Combined Area and Northern Area’’ (which consist of

Central Area and Northern Area when separately referred to in this Report) and a

‘‘Southern Area’’.

The Client will return the remaining contract territory of 179.69km2 to the relevant

competent authority. ASP is awaiting the approval from relevant competent authority for

the Production Licence as at the date of this CPR.

History

The huge sedimentary-hosted iron deposits of the Kokbulak Iron Ore Project were

originally discovered and explored by the Soviets in the 1950s. Processing studies on the

iron mineralisation of the Kokbulak deposits were also carried out in the first half of the

1950s and samples were sent to the Moscow Institute of Steels and Alloys and the Thematic

Technological Party Central Laboratory of the Ural Geological Office. Testwork on

dephosphorisation was conducted by the Centre of Geosciences, Metallurgy and Processing

in 2011, followed by mineralogical and mineral processing studies performed at

VNIItsvetmet in 2013.

60 confirmatory drill holes were undertaken by ASP in 2013 to verify the exploration

works conducted in the 1950s which then led to the completion of a feasibility study by

Project XXI, a local Aktobe consultancy, dated 10th October 2013 (the ‘‘Project XXI 2013

Feasibility Study’’). This study which pulled the historical data and testwork together, set

out a mine plan to develop the Central Area of the Kokbulak Iron Ore Project. However,

WAI believes that much of the Project XXI 2013 Feasibility Study is only at pre-feasibility

level and parts only at Scoping Study Level, hence no Ore Reserves can be declared in

accordance with the guidelines of the JORC Code (2012) as to do so, requires all areas of

the report to be at Pre-Feasibility Study Level (PFS) level or greater. Furthermore, the

‘‘Project XXI 2013 Feasibility Study’’ has been completed in accordance with GKZ

requirements and not in accordance with the guidelines of the JORC Code (2012), hence

again Ore Reserves cannot currently be declared.

In 2020, further drilling works were conducted by ASP in the Southern Area.

Infrastructure

Apart from the Beyneu-Shalkar Line which provides the source of power and

transportation, a new gas pipeline extending across the country was completed in 2020,

passing at one point within 10km of the Kokbulak Iron Ore Project.

A possible water supply for the Kokbulak Iron Ore Project has been located near the

village of Begimbet (a town in Aktobe Region), which lies close to the path of the

Beyneu-Shalkar Line. A study in 1976 defined a water resource in the Aishuaksky sand

aquifer (near Begimbet) of some 62,000 m3/day was available for a minimum of 25 years

since 1976.


– III-13 –




In 2016–2017, confirmatory drilling in the area of wells numbered 1793 and 1723 was

conducted which reportedly yielded some 1.5–2dm3/sec.

Therefore, although the site is relatively remote, the generally benign environmental

situation coupled with flat terrain should overcome some major impediments to the

development of the Kokbulak Iron Ore Project. However, the importance of water to the

operation cannot be over emphasised and therefore a hydrological investigation will be

required to ensure sufficient water supplies are available and at minimal impact to the

environment and surrounding communities

Geology & Mineralisation

The sediment hosted Fe mineralisation identified at Kokbulak, which lies within both

sands and clays, has a strike extent of over 30km in a northwesterly direction, and a width

varying from 1.5 to 2.5km.

Mineralisation has been divided up into three areas, with the Central having had the

majority of exploration efforts, whilst the Northern and Southern less so.

The most widespread ore types identified are:

. Oolitic oxidised brown ores — Type 1, generally found above the water table;

. Loose black ores without cement — Type 2, found above and below the water

table, and

. Green or dark-grey ores of siderite-chlorite cement — Type 3, found below the

water table.

The percentage average iron content for the separate ore types was determined as:

Ore Types

Central

Area

Northern

Area

Brown Compact ores 39.23 36.75

Black Incoherent ores 40.87 38.29

Greenish-black Compact ores 36.31 35.80

For the majority of the deposit, these three types represent the main ore facies.

Hydrogoethite is the principal Fe mineral phase in Types 1 & 2, whilst siderite is dominant

in Type 3.

The maximum thickness of ore lenses is in the central part of the Central Area, in the

southwestern part of the Northern Area and in the area of #3 and #4 prospecting and

exploration lines at the Southern Area. Ores are deposited as individual lenses that overlap

each other on a scale-like basis.


– III-14 –




In broad terms, ore bodies of the Central Area and Northern Area are similar in that

they are characterised by a north-south strike and are flatly inclined to the west-southwest,

in many cases overlapping each other. Ore bodies in the Southern Area have a different

structure. All mineralisation can be identified visually.

These are three main lenses at the Central Area of the deposit, with the 1st and 2nd

lenses being the largest. All three lenses are also traced to the Northern Area. Moreover,

two more lenses (4th and 5th) are observed the western part of this site. As with all the

lenses seen at Kokbulak, thickness variations and bifurcations are common, particularly

near the edges, although in the main parts, the lens does show a high degree of

homogeneity. Thicknesses can exceed 50m.

Mineral Resource

Central Area

WAI has prepared a Mineral Resource Estimate (‘‘MRE’’), in accordance with the

guidelines of the JORC Code (2012), initially for the Central Area of the Kokbulak Iron

Ore Project using a 30% Fe cut-off grade, details of which are given in the Table below.

Mineral Resource Estimate, Central Area of the Kokbulak Iron Ore Project, Kazakhstan,

as of 7 March 2022, Cut Off Grade 30% In accordance

with the Guidelines of the JORC Code (2012)

Density Tonnage Total Fe

Metal

(Fe) P2O5 S CaO MgO CO2

t/m3 Million t % Million t % % % % %

Measured 2.36 126.4 40.5 51 1.6 0.07 0.8 0.3 0.7

Indicated 2.36 219.5 38.0 83 1.3 0.08 0.8 0.4 1.1

Inferred 2.36 6.8 36.9 2.5 1.31 0.07 1.21 0.50 1.32

Notes:

1. Mineral Resources are not reserves until they have demonstrated economic viability based on a

Feasibility study or pre-feasibility study.

2. Mineral Resources are reported inclusive of any reserves.

3. The contained Fe represents estimated contained metal in the ground and has not been adjusted for

metallurgical recovery.

4. The effective date of the Mineral Resource is 7 March 2022.

5. All figures are rounded to reflect the relative accuracy of the estimate

Although the resource estimate is based primarily on historic Soviet data,

confirmatory work has validated these data. The ensuing model described above is robust

and accurately reflects the magnitude and tenor of the resources found in the Central Area

of the Kokbulak Iron Ore Project.


– III-15 –




It is the resources of the Central Area only which have been used to define the mine

schedule.

Northern Area & Southern Area

WAI has also completed an MRE for the Northern Area and Southern Area of the

Kokbulak Iron Ore Project, in accordance with the guidelines of the JORC Code (2012),

using a 30% Fe cut-off grade, details of which are given in the table below.

The Fe grades in the final resource model were derived using the IDWᶟ estimation

method. Mineral Resources have an effective date of 7 March 2022. The Mineral Resources

are limited to those areas defined as having eventual expectations of economic extraction.

Based on the optimisation parameters provided, the Mineral Resources are reported to a

breakeven cut-off grade of 17.48% Fe.

Mineral Resource Estimate, Northern Area & Southern Area

of the Kokbulak Iron Ore Project, Kazakhstan,

as of 7 March 2022, Cut Off Grade 30% In accordance with the Guidelines

of the JORC Code (2012)

Area Density Tonnage Total Fe

Metal

(Fe) CaO CO2 MgO P2O5 S

t/m3 Mt % Mt % % % % %

Inferred

(Southern Area) 2.36 182 34.04 61.98 0.57 0.11 0.34 1.35 0.10

Inferred

(Northern Area) 2.36 397 36.98 147.00 0.84 1.06 0.38 1.29 0.07

Inferred Total 580 36.06 208.98

Notes:

1. Mineral Resources are not reserves until they have demonstrated economic viability based on a

Feasibility study or pre-feasibility study.


3. The contained Fe represents estimated contained metal in the ground and has not been adjusted for

metallurgical recovery.




– III-16 –




Mining

Development of the Kokbulak Iron Ore Project will begin with the commercial

production in the Central Area which contains Measured and Indicated mineral resources.

Traditional open-pit mining will be adopted. In order to estimate the ‘‘minable’’ resources

of the Central Area, WAI has carried out an open-pit optimisation for the Central Area

based upon the technical and financial parameters presented in the Project XXI 2013

Feasibility Study with necessary updates.

The optimisation comprises a series of pit shells which were generated at varying metal

revenue factors ranging from 30% to 120%. A nominal Net Present Value (‘‘NPV’’) was

reported for each pit shell, enabling comparison of the economic value of the pit shell and

determination of the optimum economic return mining scenario.

The analysis demonstrates that the theoretical discounted NPV of the project increases

rapidly up to the 52% revenue factor, but thereafter increases slowly with only a marginal

increase in NPV for a significant increase in ore/waste tonnage.

Selection of the optimised pit shell to be utilised for the financial analysis has been

made to optimise the nominal NPV whilst minimising the quantity of material extracted and

thus minimise the stripping ratio due to the sensitivity of NPV to early waste extraction.

At revenue factor 65%, a nominal NPV of US$3,353M is generated with 337Mt of ore

and 400Mt of waste. These values provide an NPV value of 99% of the maximum value,

extracting 95% of the available mineralised tonnage and moving only 60% of the waste

tonnage.

From this optimisation work, WAI has derived a Mineable Resource on which to base

a mine schedule with a production rate of 24Mtpa of ore containing a total of

approximately 337Mt of ore and 400Mt of waste over a 15-year mine life.


– III-17 –




The outcome of this optimisation process is shown in the Kokbulak Mine Schedule

table below.

Kokbulak Mine Schedule

Year Rock Total Ore

Total

Waste

Strip

Ratio Grade

(Mt) (Mt) (Mt) (t/t) (%Fe)

1 48 12 36 3.04 39.7%

2 78 24 54 2.25 39.8%

3 84 24 60 2.48 39.9%

4 59 24 35 1.44 40.1%

5 57 24 33 1.38 38.1%

6 49 24 25 1.06 37.7%

7 50 24 26 1.10 37.8%

8 40 24 16 0.67 38.2%

9 47 24 23 0.94 37.5%

10 46 24 22 0.93 38.6%

11 35 24 11 0.45 38.1%

12 40 24 16 0.65 38.7%

13 41 24 17 0.70 39.2%

14 41 24 17 0.70 39.1%

15 23 13 10 0.74 39.4%

Total 737 337 400 1.19 38.74%

The mining and production schedule and relevant parameters might differ with the

parameters used in open-pit optimisation above of which WAI believes no material concern.

However, it should be remembered that this optimisation work is not definitive and

must be considered as preliminary in nature, although it clearly does indicate the

considerable potential of the operation in the Central Area.

Ore Reserves

It should be noted that in accordance with the guidelines of the JORC Code (2012) no

‘‘Ore Reserves’’ have been declared, as this is only possible once all areas of study, including

geology, mining, metallurgy, geotechnical hydrology, hydrogeological, environmental &

social are at PFS or greater.

Processing

Processing on the mineralisation of the Kokbulak deposits, upon which the Kokbulak

Iron Ore Project sits on, has been studied in great detail in the past.


– III-18 –




In 1950s, the Moscow Institute of Steels and Alloys, performed agglomeration and

sintering studies on the unprocessed iron ore samples from the Kokbulak deposit.

Furthermore, the Thematic Technological Party Central Laboratory of the Ural Geological

Office conducted mineral beneficiation tests involving heavy liquid, magnetic, gravity and

roasting-magnetic separation technologies.

Sintering tests by the Moscow Institute of Steels and Alloys showed that

hydrogoethite-rich Kokbulak iron ores have good reducibility, but high levels of

impurities. Therefore, Kokbulak ores and concentrates will require blending with ores

and concentrates from other projects in order to produce a suitable feed for sale.

Phosphorous, the major impurity, is present with values constantly above 1% and

roughly one order of magnitude higher than the desirable level, and at this level will drive

the requirement for treatment and blending of the concentrates. The Kokbulak ores are also

characterised by high silica and alumina contents, which will further drive the need for the

production of a heavily fluxed agglomerate.

Testwork by the Thematic Technological Party Central Laboratory of the Ural

Geological Office extensively investigated the possibility to upgrade Kokbulak iron ores by

means of gravity and magnetic separation and roasting plus magnetic separation. They

succeeded in demonstrating that concentrates grading in excess of 48% iron can be obtained

by Dry High Intensity Magnetic Separation (‘‘HIMS’’) from brown and black ores with

reasonable recoveries. However, the same results could not be obtained with the green ores.

The roasting plus magnetic separation route was not considered economically justified. In

summary all concentrates obtained showed a high phosphorus content, which ranges from

0.51 to 0.72%.

The testwork conducted by the Centre of Geosciences, Metallurgy and Processing in

2011 provides laboratory evidence that the thermo acid dephosphorisation of brown iron

samples from the Kokbulak deposit, in particular from the Central area, is technically

feasible and low-phosphorus and low-silica brown iron ore concentrates can be obtained. In

2013, a testwork programme was commissioned and was performed at VNIItsvetmet, a filial

agency of the National Center for Complex Processing of Mineral Raw Materials,

Industrial Development Committee of the Ministry of Industry and Infrastructural

Development of the Republic of Kazakhstan. The report of this testwork covering

mineralogical and mineral processing studies on two bulk samples from the Kokbulak Iron

Ore Project was issued in 2014. However, given the unrepresentative grades, sample

collection method and lower phosphate content, WAI has discounted the testwork results of

the Centre of Geosciences, Metallurgy and Processing and VNIItsvetmet.

In terms of the dephosphorisation technology, in both the processing section and

CAPEX and OPEX sections of the Project XXI 2013 Feasibility Study, this was estimated

‘‘by analogy’’ with the processing facilities of the Lisakovsk mine (in North Kazakhstan)

which had similar mineralogical and chemical composition to the Kokbulak Iron Ore

Project.


– III-19 –




However, the dephosphorisation technology applied at the processing facilities in

Lisakovsk, whose scientific background is well understood, has yet not seen widespread use.

WAI understands Lisakovsk chose not to pursue such dephosphorisation technology and

WAI is not aware of any commercial operations of this type as at the date of this CPR.

Nevertheless, WAI is of the view that the major assumptions used in the financial

model e.g. CAPEX and OPEX are considered reasonable and the Kokbulak Iron Ore

Project is undoubtedly attractive, and also appears robust to significant price falls.

Although the testworks performed to date confirm a good repeatability in terms of

gravity and magnetic separation results, giving confidence in the metallurgical

performances of the flowsheet, WAI is of the opinion that additional gravity-magnetic

testwork and dephosphorisation testwork on samples that are representative of the project

are required to better confirm the processing workflow of the Kokbulak Iron Ore Project.

Nevertheless, in WAI’s opinion, the processing plant of the Kokbulak Iron Ore Project

could be designed on combination of processes researched by the Client and described in

public domain technical literature.

In addition, WAI is of the view that an iron ore concentrate grading 58.4% Fe with a

low level of impurities (P50.30%) is potentially achievable and hence saleable and hence

saleable.

As stated in the Industry Report prepared by Ipsos Asia Limited for the purpose of the

[REDACTED] of the Company on the Main Board of the Stock Exchange, such an Iron ore

concentrate with a Phosphorus level<0.30%, is able to meet the technical requirement in

the Russian and PRC Markets to be potentially saleable.

Environmental & Social

Whilst the development of the Kokbulak Iron Ore Project will affect the environment,

due to the distance from the nearest settlement and any sensitive receptors, environmental

and social conditions are considered favourable for the Kokbulak Iron Ore Project.

Financial Analysis

For this CPR, WAI has reviewed the latest financial model for the operation of Central

Area of the Kokbulak Iron Ore Project developed by the Client which is based on the

Project XXI 2013 Feasibility Study with major updates including (i) updated mining

schedule prepared by WAI according to the latest open-pit optimization results and (ii)

updated economic parameters such as iron ore concentrate price, CAPEX and OPEX.

In general, the model assumes a mine schedule with a production rate of approximately

24Mtpa of ore at an average grade of around 39% Fe over a mine life of 15 years, to

produce concentrate grading 58.4% Fe using a long-term price of US$100/t for 62% Fe

concentrate.


– III-20 –




On the basis of the above and at a 10% discount rate, the Central Area of the

Kokbulak Iron Ore Project has an NPV of US$2.3 billion under Discounted Cash Flow

Model (DCF) model, with a payback of only 2 years. A sensitivity analysis shows that the

project economics are dominated by the iron ore concentrate price.

Further work is required to bring plant CAPEX and plant OPEX estimates to the level

of accuracy of a Feasibility Study (+/–15%). The project appears to be more sensitive to

plant OPEX rather than to plant CAPEX, and almost 85–90% of the plant OPEX is

composed of four items — namely power, natural gas, sulphuric acid and limestone, whose

consumption is principally derived by analogy from the Lisakovsk mine process plant and

from industry standards.

Risks

The Kokbulak Iron Ore Project benefits from many advantages such as large size,

relative uniformity, and proximity to major infrastructure, but the high level of impurities

in the ore, most notably phosphorous, does present a serious project risk in regards the

ability to produce a saleable concentrate within international specification. Although the

dephosphorisation technology was demonstrated at the Lisakovsk plant, this did not lead to

full commercial adoption.

A full list of the risks to the project, considered the most important by the Competent

Person, are provided in the table below:

Kokbulak Risk Matrix

Risk Description Likelihood Consequence Risk

Mitigation

Recommendation

Status of implementation of

mitigation recommendation

Mitigated

risk rating

Water Supply The importance of water to

the operation cannot be

over-emphasised both

in terms of technical

and potable supplies.

The area is essentially

dry

Likely Major High Complete an updated

hydrogeological

investigation covering

the groundwater

regime including

quantity and quality,

is undertaken in the

area of abstraction to

include an impact

study to determine

the potential impacts

of abstraction

volumes required for

the project

Previously, a list of nearby

(50–70 km) subsurface

water fields was

provided. The list was

provided by

West-Kazakhstan

Interregional

Department of Geology

Committee.

The water use issues will

be agreed considering

water consumption

during production,

beneficiation and

further conversions of

ores in an established

manner.

Medium


– III-21 –





Mitigation

Recommendation



Mitigated

risk rating

Social Even though the area is

sparsely populated, a

social licence to operate

is essential to ensure

successful project

execution

Likely Minor Medium Prepare a social impact

assessment in line

with IFC

Performance

requirements for

inclusion into the

BFS

As far as we know, there is

no notion of such

licence in Kazakhstan.

The issues of

social-economic

development of the

region are considered

and agreed by subsoil

asset development plans

(projects)

Medium

Licencing Production Licence

application

Likely Major High Production Licence

applied for awaiting

decision

ASP Received a notice

from RoK MIID stating

that according to

Contract, ASP has an

exclusive right for

obtaining a Production

Licence. Deadlines were

determined for

development and

approval of

design-and-cost

estimate documentation

for field development,

necessary for obtaining

a licence as a result of

commercial discovery.

Low

Metallurgy Define and optimise

process flowsheet

Likely Major High Additional

gravity-magnetic

testwork on

representative

samples will be

required. Further

testwork required to

ascertain optimum

process route for

dephosphorisation of

concentrate. All

studies to be at

Feasibility Study level

The completed testwork

showed that the most

rational method of

beneficiation is a

roasting-magnetic

process.

Additionally considering

a ‘‘dry’’ beneficiation,

which substantially

reduces the water use.

The

laboratory-technological

tests of

dephosphorization were

conducted successfully,

industrial tests were

conducted on similar

ores of Lisakovsk field.

High

Opex Power, natural gas,

sulphuric acid and

limestone make up 89%

of the total cost.

Most of the costs are based

on industry standard

assumptions or on

analogy with Lisakovsk

mine.

Likely Major High Define costs from first

principles at

Feasibility Study level

All these issues will be

resolved during

development and

approval of the

design-and-cost


for field development


a licence.

Low


– III-22 –





Mitigation

Recommendation



Mitigated

risk rating

Capex Much of the Capex

estimates are based on

a simple multiplication

of the Lisakovskoye

process plant to match

the target plant

throughput. Mining

equipment based on

general principles

Likely Major High Feasibility level Capex

analysis required for

plant and equipment.

Vendor quotes

required


resolved during

development and

approval of the

design-and-cost


for field development


a licence.

Medium

Technical

areas

Technical areas such as

geotechnical (pit slope

angles),

hydrogeological (source

of potable and

industrial water), and

mining (optimized)

production rates with

mine designs to suit)

should be developed

further with a view to

optimizing these

parameters.

Possible Moderate Medium Feasibility Study

required to properly

define these technical

areas to +/- 15%

accuracy

The mining-technical

conditions of

development activities

were studied fully and

are considered as

simple. The

hydrogeological

conditions during

production are simple,

and the expected water

inflows are

insignificant.

Medium

Economics Currency devaluation and

highly volatile Fe

pricing

Likely Moderate Medium Devalue tenge has

significant impact on

project economics

On-going Medium

1 INTRODUCTION

1.1 Purpose of the Report and Terms of Reference

Wardell Armstrong International Limited (‘‘WAI’’) was commissioned by

KAZAKH STEEL PLC (the ‘‘Client’’ or the ‘‘Company’’), to prepare a Competent

Person’s Report (‘‘CPR’’ or the ‘‘Report’’) for the Kokbulak iron ore project in the

Republic of Kazakhstan (the ‘‘Kokbulak Iron Ore Project’’).

This CPR has been prepared for the purpose of the main board [REDACTED] of

the Company on the Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’)

under Chapter 18 of the Rules Governing the Listing of Securities (the ‘‘Listing Rules’’)

on the Stock Exchange and for inclusion in the document of the Company.

In this report WAI has considered all aspects of the Kokbulak Iron Ore Project,

including but not limited to geology, mineral resources, mining, processing,

geotechnical, hydrogeological, infrastructure, economics, and environmental and

social issues.


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1.2 Reporting Standard

The CPR has been prepared in accordance with the guidelines of the JORC Code

(2012) and the rules and guidelines issued by such bodies as the Stock Exchange,

including Listing Rules (with specific emphasis on Chapter 18 which sets out

additional listing conditions, disclosure requirements and continuing obligations for

Mineral Companies) and Guidance Note 7 (Suggested Risk Assessment for Mineral

Companies).

1.3 Consultants and Interests

WAI has provided the mineral industry with specialised geological, mining, and

processing expertise since 1987, initially as an independent company, but from 1999 as

part of the Wardell Armstrong Group. WAI’s experience is worldwide and has been

developed in the metalliferous and coal mining sector.

The parent company of WAI is a mining engineering/environmental consultancy

that services the industrial minerals sector from twelve regional offices in the UK and

international offices in Almaty, Kazakhstan, and Moscow, Russia. Total worldwide

staff complement is now over 500.

Details of the principal consultants involved in the preparation of this CPR are as

follows:

Phil Newall, BSc (ARSM), PhD (ACSM), CEng, FIMMM, Managing Director of WAI

Phil is a mining geologist with nearly 30 years’ experience of providing

consultancy services to minerals companies throughout the world, with particular

specialisation in CIS, Europe, and Africa. He has a Mining Geology degree from Royal

School of Mines in London, and a PhD in Exploration Geochemistry from Camborne

School of Mines in Cornwall, UK. During his long career as a consulting geologist,

Phil has undertaken a large variety of exploration and mining-related contracts, from

project management through to technical audits of both metalliferous (specifically gold

and base metals) and industrial mineral deposits. In addition, Phil is responsible for

Wardell Armstrong’s Mining Division as well as managing the company’s Moscow and

Almaty offices. From a technical standpoint, most recently, Phil has been responsible

for Project Managing the Mineral Expert Report for the successful Glencore Initial

Public Offering.

Dr Phil Newall is the Competent Person defined in Chapter 18 of the Listing

Rules and fulfilled Rules 18.21 and 18.22 and in that capacity takes overall

responsibility for this CPR for the purpose of Listing Rule 18.21(3).


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Ualikhan Aknazarov, MSc, MIMMM, Mining Engineer

Ualikhan is an experienced mining industry professional specializing in mine

design and mine planning, through reserves optimization, project development, and

business and mine operation improvements. Ualikhan started his career in 2007 with

Kazakhmys as a Drilling operator assistant at Belousovskii & Irtishskii mines (East

Kazakhstan), Shift Foreman at USR and Belousovskii mines, before becoming a

Mining Engineer (2010) in Karaganda (Kazakhstan) responsible for mine planning and

implementation of mine planning software (Datamine, Surpac, GEMS (PCSLC)). In

2012, Ualikhan took a position with Polymetal, initially as Lead Mine Planning

Engineer (Lunnoe/Arylakh mine, Magadan, Russia) and then shortly afterwards as a

Senior Mine Planning Engineer (Mayskoe mine, Chukotka, Russia) responsible for

mine planning and scheduling (short-, mid- and long-term planning), production

efficiency analysis, ore reserve estimation, and optimisation and mine design. In 2016,

Ualikhan was promoted to Lead Mining Engineer. This role was more diverse taking in

risk assessment, safety audits, budgeting, routine production and mine schedule

analysis, reconciliation, plus other tasks. In 2019 Ualikhan took a position with

Datamine as a Senior Consultant (Mining Engineer) to support the Central Asia and

Russian Client base. In this role he assisted the development team to improve Open Pit

software and provided tutorials and training for several key mining companies

(including Altynalmas, Kores, Koza Gold, Kazakhmys, Polymetal, Kumtor, and

KazZink). Ualikhan is very experienced in the use of Datamine Studio NPV Scheduler,

Studio OP, Studio UG, Mineable Shape Optimizer for Open Pit and Underground

mining, and EPS (Enhanced Production Scheduler), and is multilingual (Native

Kazakh, fluent Russian, advance English).

Alan Clarke, CGeol, BSc, MSc, MCSM, FGS,> Principal Resource Geologist

Alan is a mining geologist with 10 years’ experience within the minerals sector. He

has previously worked in underground and open pit operations within the industrial

minerals sector in the UK and as a geological consultant with Datamine International.

He has conducted resource reports for annual corporate financial reporting and has

been responsible for pit optimisation, production scheduling, grade control and

reconciliation. As a resource modelling geologist with WAI, Alan has worked on

numerous resource modelling projects including the Kuranakh, Kimkan and Sutara

and Garinskoe iron ore projects for IRC in FE Russia, the Bissa gold deposit, Burkina

Faso and the Vasgold gold deposits, Kazakhstan.

Ruslan Erzhanov, MSc, FGS, CGeol, PONEN RoK, General Director — WAI

Kazakhstan

Ruslan is a General Director and Principal Resource Geologist for the

Kazakhstan office. He has more than 15 years’ experience as a mining and

exploration geologist. He has worked on numerous metalliferous projects in CIS.

Responsibilities included managing the implementation of drill programmes; grade

control; development and maintenance of QA/QC systems in assaying; he was involved

in resource and reserve estimates according to GKZ standard for a number of mineral


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projects. Working with WAI he involved with undertaking mineral resource

estimations and other technical studies including technical due diligence,

pre-feasibility/feasibility studies, NI43–101s and Competent Person’s Reports mainly

for metalliferous projects across Central Asia, Russia and Europe. As a resource

modelling geologist with WAI since 2013, he has modelled several polymetallic

deposits in CIS for such companies as Kazakhmys, Kazzinc, Polymetal, Polyus,

Nornickel as well as gold and iron ore deposits throughout Asia. He possesses a high

level of computer proficiency in Mining and geological software packages such as

Micromine, Supervisor and Leapfrog, Open Pit Optimisation Packages, database

administration. Ruslan has multilingual communication skills, proficient in both

Russian and English.

Stuart Richardson, ACSM, BEng, ProfGradIMMM; Senior Mining Engineer

Stuart is a mining engineer, graduating from Camborne School of Mines in 2006.

He was employed as a student mining engineer by Deno Gold, Republic of Armenia, in

2005 gaining experience in metalliferous mining methodologies. He joined Wardell

Armstrong in early 2007 as a Graduate Mining Engineer and has been involved in

several projects, including the analysis of coal resources in Kentucky, USA. He has

also gained experience in managing site works, acting as the Resident Engineer for a

project at the Great Laxey Mine on the Isle of Man and as Quality Control Engineer

for drilling works at Sutton Courtenay Landfill Site, Oxfordshire. In 2008, Stuart

transferred to Wardell Armstrong International, working as a mining engineer and

assisting in the production of a number of pre- feasibility and feasibility studies and

has considerable experience is the field of mine design, scheduling and optimisation

with the CAE Mining software suite.

Ruslan Sevostianov, Regional Director, WAI Russia

Ruslan is a Chartered Mining Engineer and Surveyor and has an Honours Master

of Science in Mine Engineering and Surveying from the Kyrgyz State Mining

Metallurgical University, Bishkek, Kyrgyzstan. Ruslan has over nine years of diverse

experience in the mining industry including mining operations, implementation of

innovative technologies in mining production, business improvement, mine

development, implementation of automation systems of mining, design, drilling and

blasting, geotechnical and dewatering experience with major gold mining companies in

the CIS.

Philip King, BSc (Eng) Mineral Technology (Hons), Technical Director (Mineral

Processing)

Philip has over 35 years minerals processing experience ranging from laboratory

test work and pilot plant operations through to plant commissioning, operations and

trouble-shooting. He has considerable experience in the technical and financial

evaluation of many mining projects through the completion of both pre-feasibility and

feasibility studies, and has been involved in process design and engineering studies,

equipment selection, and capital and operating cost estimates. He has also participated

in a number of multi-disciplinary projects throughout Africa, Europe and Central Asia


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involving base and precious metals and industrial minerals. In particular, Philip has

considerable experience of the metallurgy and extraction from gold and base metal

ores. Philip is a Fellow of the IMMM and is joint author of the SME Handbook ‘‘Ore

Body Sampling and Metallurgical Testing’’.

Alison Allen MSc, BSc, CEnv, MIEMA, MIEEM, Technical Director

Alison is Associate Director for the Environmental, social and sustainability

management team at WAI and a Chartered Environmental Specialist. Alison has

extensive experience of managing technical commissions involving environmental

impact assessment, Environmental Risk Management and Assessment, Environmental

Due Diligence and brownfield redevelopment. Alison has provided environmental

impact assessments, sustainability assessments, strategic environmental assessments,

environmental audits and human health risk assessments for various drivers including

DMRB, IFC Performance Standards, Equator Principles and International Financial

institution requirements. She is fully conversant with national and international

guidelines, procedures, regulations and standards for mining and ESIAs.

WAI is independent of the Client, its directors/senior management and advisors

pursuant to LR18.22.

WAI, its directors, employees and associates neither has nor holds:

. Any rights to subscribe for shares in KAZAKH STEEL PLC either now or in

the future;

. Any vested interests in any concessions held by KAZAKH STEEL PLC;

. Any rights to subscribe to any interests in any of the concessions held by

KAZAKH STEEL PLC, either now or in the future;

. Any vested interests in either any concessions held by KAZAKH STEEL

PLC or any adjacent concessions; or

. Any right to subscribe to any interests or concessions adjacent to those held

by KAZAKH STEEL PLC, either now or in the future.

WAI’s only financial interest is the right to charge professional fees at normal

commercial rates, plus normal overhead costs, for work carried out in connection with

this Report. Payment of professional fees by the Client is not contingent on the results

of this Report.

1.4 Sources of Information and Reliance on other Experts

All information WAI relied on in compiling this Report was supplied by

KAZAKH STEEL PLC, including but not limited to previous exploration data, in

particular the large volume of Soviet data prepared during the main exploration phase

for the project in the 1950s.


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Previous metallurgical testwork and other relevant published and unpublished

data were made available to WAI at the time of preparing this report. WAI has not

carried out any independent exploration work, drilled any holes or carried out any

sampling and assaying for the Kokbulak Iron Ore Project.

The metallurgical, geological, mineralisation, exploration techniques and certain

procedural descriptions, figures and tables used in this report are taken from reports

prepared by other parties and provided to WAI by KAZAKH STEEL PLC.

As mentioned above, in preparing this report, WAI has extensively relied on

information derived and collated by the Client and other parties. Nevertheless, the

authors have critically examined this information, made our own determinations, and

applied our general geological competence to conclude that the information presented

in this CPR complies with the definitions and guidelines of the JORC Codes, in

particular, WAI has:

. Reviewed all historical documentation pertaining to the Kokbulak Iron Ore

Project;

. Reviewed the Project XXI 2013 Feasibility Study;

. Undertaken a site visit to the Kokbulak Iron Ore Project and to meet and

discuss with the geologists and engineers of the Company;

. Identified drill and sample sites of Soviet’s work in 1950s as well as of the

Company’s confirmatory drill programme in 2013 and 2020;

. Reviewed the geology and exploration database of the Kokbulak Iron Ore

Project;

. Audited the sampling methodology including quality assurance, quality

control and assay procedures;

. Examined the geological model for the Kokbulak Iron Ore Project;

. Evaluated historical and recent metallurgical testwork data;

. Reviewed the transportation requirements of the Kokbulak Iron Ore Project;

. Reviewed the water supply and management issues;

. Highlighted any technical issues/challenges/fatal flaws;

. Considered environmental and social issues;

. Scrutinised the latest financial model for the operation in the Central Area;

and

. Provided recommendations going forward.


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Though WAI is confident that our opinions presented in this CPR are reasonable,

a substantial amount of data has been accepted in good faith. Whilst WAI has

endeavored to validate as much of the information as possible, WAI cannot be held

responsible nor liable for any omissions, errors or inadequacies of the data received.

With regards to the current legal status of the subsoil use rights, WAI has relied

on information provided by the Company and its legal advisers. WAI makes no other

assessment or assertion as to the legal title of subsoil use rights and is not qualified to

do so.

WAI has not undertaken any accounting, financial or legal due diligence of the

asset or the associated company structures of the Kokbulak Iron Ore Project, and the

comments and opinions contained in this report are restricted to technical and

economic aspects associated with the Kokbulak Iron Ore Project.

1.5 Personal Inspections

A team from WAI including Dr Phil Newall initially visited the Central Area of

the Kokbulak Iron Ore Project from 23–25 April 2014 inclusive, followed by a return

visit on 7th September 2021 by Ualikhan Aknazarov, Senior Mining Engineer with

WAI.

WAI considered that no visit was required for the Northern Area and Southern

Area given the early stage of development in both areas. During the site visit, the

following items were completed:

. Held discussions with company senior personnel;

. Viewed the Kokbulak deposits;

. Viewed the railway;

. Viewed the gas pipeline; and

. Viewed the power line.

WAI is of the opinion that all information inspected during the site visits

corresponds to the information provided by the Client.

1.6 Units and Currency

All units of measurement used in this report are metric unless otherwise stated.

Tonnages are reported as metric tonnes (‘‘t’’) and, base metal values are reported in

weight percentage (‘‘%’’).

Unless otherwise stated, all references to currency or ‘‘$’’ are to United States

Dollars (‘‘US$’’).


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1.7 WAI Warranty

The Consultant provides the services using the reasonable skill, care and diligence

expected of competent and properly qualified persons of the relevant disciplines who

are experienced in carrying out such services in relation to works of a similar size,

scope and nature to the Works.

2 PROPERTY DESCRIPTION AND LOCATION

2.1 Location

The majority of the Kokbulak Iron Ore Project is located in the Shalkar District

of Aktobe Region, whilst a small part of the southeast corner of the deposit of the

Kokbulak Iron Ore Project lies within the territory of the Aral District of Kyzyl-Orda

Region, Republic of Kazakhstan.

The Kokbulak Iron Ore Project lies approximately 250km southeast of Aktobe,

the regional capital of Aktobe Region, and some 100km southeast of Shalkar, a town

within the Shalkar District, Aktobe Region and close to the main road and rail

corridor (Figure 2.1).

Figure 2.1 : Location of the Kokbulak Iron Ore Project, Western Kazakhstan


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The village of Begimbet (a town in Aktobe Region) is located 60km to the west of

the Kokbulak Iron Ore Project, and is located close to the Beyneu-Shalkar Line (a

railway and power line) connecting Beyneu (a village of Beyneu District, Mangystau

Region and is located to the southwest of the Kokbulak Iron Ore Project) with

Shalkar. The Beyneu-Shalkar Line lies approximately 40km to the west of the

Kokbulak Iron Ore Project (red line on (Figure 2.2) A number of small villages are

located on the Aral Sea, some 60–120km southeast to the Kokbulak Iron Ore Project.

Figure 2.2 : Detailed Location of Kokbulak Iron Ore Project

2.2 Licences and Tenure or Title, Encumbrances and Obligations

2.2.1Subsoil Use Contract for Exploration

Aktobe Steel Production LLP (‘‘ASP’’) holds the subsoil use contract for the

Kokbulak Iron Ore Project under contract number 3734-TPI dated October 4,

2010. Six addenda pertaining to the main contract were subsequently entered into.

The expiry date of the subsoil use contract is 23 September 2021.

Nevertheless, according to the Client, the subsoil use contract is still legally

valid, given that the Client had successfully submitted an application for

Production Licences on 21 September 2021, which is prior to the expiration

date of the subsoil use contract.

The contract area of the subsoil use contract for exploration is currently

stated at 307.2km2 and is bounded by coordinates 59°36’45‘‘E, 46°45‘‘N and 60°12’10‘‘E, 47°26’25‘‘N, see black polygon in Figure 2.3 below.


– III-31 –




2.2.2Production Licence Areas

Kazakh Steel Plc has identified two areas for future mining, namely a

‘‘Combined Central Area and Northern Area’’, and a ‘‘Southern Area’’, which

together cover an area of 127.51km2, see Figure 2.3 below, which are within the

307.2km2 exploration licence area.

Details of these Production Licence Areas are as follows.

. A Combined Central Area and Northern Area (Red Polygon on Figure

2.3) comprising an area of 77.83km2;

. A Southern Area (Blue on Figure 2.3) comprising an area of 49.68km2;

and

. Totalling 127.51km2.

The Combined Central Area and Northern Area Coordinates are shown in

Table 2.1 below, and those for the Southern Area are shown in Table 2.2 below.

The Client will return the remaining area of 179.69km2 (307.2km2

–127.51km2 = 179.69km2) to the relevant competent authority.

ASP is awaiting the approval from the relevant competent authority for the

Production Licence as at the date of this CPR.

WAI Comment: Although not a legal due diligence, WAI has inspected the

licence documentation and is satisfied that this is a true reflection of ownership

with the licence currently held by Aktobe Steel Production.

Figure 2.3 : Combined Central Area and Northern Area (Red), and Southern Area (Blue),

Original Exploration Licence in Green


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As part of the MRE, WAI has created Optimised Pits (‘‘OP’’) using high iron

prices and other optimistic parameters to demonstrate the potential economic

viability of the projects, which is a requirement of the JORC Code (2012).

These optimised pits are not the final design, but simply an indication that

the open pits could potentially be this large.

Final pits using up to date iron prices, geotechnical, metallurgical and

hydrogeological parameters should lead to similar but slightly smaller pits,

though this is largely dependent upon iron prices and other parameters at the

stage of final pit designs.

As is shown in Figure 2.4 below, the optimised open pits are shown in

relation to the two Production Licence Areas.

Figure 2.4 : Location of Optimised Open Pits (White), within Exploration Licence (Green)

Combined Central Area and Northern Area (Red), and Southern Area (Blue)

1. The Central pit is wholly within the Combined Central Area and

Northern Area, as is seen in Figure 2.4 above, it should be noted that the

Central Area forms the basis of the Financial Analysis in Section 10 of

this report;

2. The Northern pits are also within the Combined Central Area and

Northern Area, with very minor portions slightly outside the Combined

Central Area and Northern Area, as seen in Figure 2.5 below.

3. The Southern pits are within the Southern Area, with very minor

portions slightly outside the Southern Area, as seen in Figure 2.6 below.


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In WAI’s professional opinion, the fact that very minor portions of the OP’s

are slightly outside the Production Licences Area (as seen in Figure 2.5 and Figure

2.6 below) is immaterial.

Figure 2.5 : Location of Northern Optimised Open Pits (4) within

Combined Central Area and Northern Area (Red), and Exploration Licence (Green)

Figure 2.6 : Location of Southern Optimised Open Pits (1) within

Southern Area (Blue), and Exploration Licence (Green)


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It should be noted that the Northern and Southern Pits do not contribute to

the Financial Analysis (Section 10 below), and therefore represent upside

potential to the project.

Table 2.1 : Production Licence Area Coordinates — Northern & Central Area

Kokbulak Iron Ore Project

Corner

points

Coordinates

Northing Easting

1 46˚55’51,23’’ 59˚56’38,28’’

2 46˚57’38,84’’ 59˚54’26,74’’

3 47˚00’27,26’’ 59˚52’21,57’’

4 47˚01’48,05’’ 59˚49’14,09’’

5 47˚02’48,19’’ 59˚48’24,69’’

6 47˚04’32,89’’ 59˚49’38,99’’

7 47˚02’46,81’’ 59˚51’52,32’’

8 47˚05’44,56’’ 59˚52’9,27’’

9 47˚05’51,77’’ 59˚54’4,56’’

10 47˚01’56,09’’ 59˚53’57,61’’

11 47˚00’37,34’’ 59˚55’38,50’’

12 46˚56’40,63’’ 59˚58’22,70’’

Table 2.2 : Production Licence Area Coordinates — Southern Area

Kokbulak Iron Ore Project

Corner

points

Coordinates

Northing Easting

1 46˚55’51,23’’ 59˚56’38,28’’

2 46˚56’40,63’’ 59˚58’22,70’’

3 46˚55’44,37’’ 59˚59’0,15’’

4 46˚53’54,07’’ 59˚59’10,37’’

5 46˚52’28,40’’ 60˚01’16,16’’

6 46˚48’57,31’’ 60˚03’1,76’’

7 46˚48’28,50’’ 60˚00’00’’

8 46˚49’34,04’’ 59˚59’7,47’’

9 46˚51’44,74’’ 59˚58’37,54’’

10 46˚53’31,54’’ 59˚57’23,98’’


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3 ACCESSIBILITY, CLIMATE, PHYSIOGRAPHY, FLORA/FAUNA AND LOCAL

INFRASTRUCTURE

3.1 Accessibility

The nearest rail station of the Kokbulak Iron Ore Project is situated on the

West-Kazakhstan railway at Togus which is located 85km directly to the northeast of

the Kokbulak Iron Ore Project (see black line on Figure 2.2).

During the site visit, a helicopter was used for travel, taking approximately 2¼

hours flying time from Aktobe to the Central Area of the Kokbulak Iron Ore Project.

From discussions with the local technical team, driving time to site from Aktobe is

of the order of 10 hours, but is highly dependent on the season and road conditions.

From Aktobe to Shalkar, the road is bitumen, but from Shalkar to the site of the

Kokbulak Iron Ore Project, roads are either dirt or non-existent. As such, road travel

is only really practical from mid-April through to November.

However, as with many other operations in Central Asia and Russia, extreme

weather does not affect any mining operations nor production through proper

logistical planning and experience, and particularly at the site of the Kokbulak Iron

Ore Project, where the proximity of the railway should future-proof the operation.

3.2 Climate

The site of the Kokbulak Iron Ore Project is heavily influenced by the climate of

the North Aral area which is characterised by a desert and semi-desert environment.

The climate of this area is strongly continental with minimal precipitation, high levels

of evaporation, and huge fluctuations of season and daytime temperatures.

Data collected from Saksaulskiy in the Kyzylorda Province which is at the same

latitude as the site of the Kokbulak Iron Ore Project shows an annual average

precipitation of some 91mm, with the majority falling in the spring and autumn.

Maximum precipitation per year is around 211mm.

Of more impact are the temperature readings which show an annual average of 7.2˚

C, but with a minimum of –36˚C and maximum of +42˚C.

As is typical of much of the steppe, winds blow almost constantly in different

directions; in summer, southern and southwesterly winds prevail, whilst in winter, the

prevailing wind directions are north and northeast.

Winds of a northeasterly direction have the highest velocity during the winter,

with an average velocity of 3.8m/sec.

The maximum thickness of snow cover does not exceed 20–30cm, more usually

15–20cm is common.


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As discussed above, as with many other operations in Central Asia and Russia,

extreme weather does not affect mining operations nor production with proper

logistical planning

3.3 Physiography

The site of the Kokbulak Iron Ore Project is represented by a wide plateau

bounded by steep slopes to the east, west and south, often descending to saline

depressions. The relative difference in height between the plateau and the low areas is

between 40–100m (Photo 3.1). The area generally shows a lowering of absolute

elevations from North to South, although in the far south, elevations increase again.

Photo 3.1 : Typical Scenery in the Central Area

The plateau is cut by dry valleys with attributed small ravines. The main ones are

Sabyrzhilga, Tassay (the largest one within the Central Area), Kokbulak and

Altynkazansay (the latter two are within the Southern Area).

In the Northern Area of the deposit, terrain is generally flat, but with some

depressions that act to catch water in spring with some also retaining a groundwater

source year-round. Good exposures are absent, although bedrock is exposed only in

the upper part of tabular remnants slopes and partially on the lower slopes in deep

washouts.

The Central Area of the deposit is crossed by the Sabyrzhilga north-south

drainage where elevations dip to 145–155m. In addition, the Tassay drainage with a

length of about 5km is interesting in that continuous iron ore (Photo 3.2) and host rock

exposures can be observed along its course and tributaries.


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Photo 3.2 : Outcropping Mineralisation in Tassay Drainage

Much of the Southern Area of the deposit is characterised by a high plateau, with

the high point of the area at 321.5m located here. The plateau is again dissected by

steep ravines, often showing good exposures of mineralisation.

Groundwater has been intersected by shafts and drill holes at variable depths

from surface down to 11–12m, although there do not appear to be significant aquifers

in the area. Insufficient water is present at site to support a major mining operation,

nevertheless a possible water supply for the Kokbulak Iron Ore Project has been

located near the village of Begimbet (a town in Aktobe Region), which lies close to the

Beyneu-Shalkar Line.

3.4 Fauna and Flora

The vegetation of the site of the Kokbulak Iron Ore Project is relatively sparse,

comprising predominantly grasses on the plateau areas with occasional wormwood and

dwarf peashrub, with reeds present along some of the water courses with hardy shrubs

such as saxaul and tamarisk.

Bird life seen during the visit included Steppe Eagle and Eagle Owl, along with

other smaller birds. Small mammals are also prevalent in the area.

3.5 Local Infrastructure

The site of the Kokbulak Iron Ore Project benefits from the fact that there are no

permanent dwellings within the deposit area. The nearest settlements are located along

the northern shore of the Aral Sea and are situated some 60–120km from the Kokbulak

Iron Ore Project (i.e. villages Sarbesat, Chumyshkul, Avan etc.).


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Of more importance is the village of Begimbet (population around 2,000) which

lies close to the path of the Beyneu-Shalkar Line (see below) and which is located

approximately 60km to the west of the Kokbulak Iron Ore Project (Photo 3.3), as it is

around here that a possible water supply for the Kokbulak Iron Ore Project has been

located.

A study in 1976 (1/7/76) defined GKZ approved (‘‘A’’ category) water resources in

the Aishuaksky sand aquifer (somewhere near Begimbet) of some 62,000m3/day from

the Yuzhny site, available for a minimum of 25 years from 1976. In 2016–2017,

confirmatory drilling in the area of holes numbered 1793 and 1723 were conducted and

yields of 1.5–2dm3/sec were confirmed. Clearly, these water resources would have to be

further verified by a new hydrological investigation, as water will be a critical part of

the development of the Kokbulak Iron Ore Project.

In terms of power and transportation, as mentioned, the railway and power line

construction project (the ‘‘Beyneu-Shalkar Line’’) with a total of 471km connecting

Beyneu (a village of Beyneu District, Mangystau Region which is located to the

southwest of the Kokbulak Iron Ore Project) with Shalkar (a town of Shalkar District,

Aktobe Region located to the northwest of the Kokbulak Iron Ore Project), which was

completed in 2016, is vitally important to the project.

The railway lies some 82Km from the Central Area of the Kokbulak Iron Ore

Project (Photo 3.3), crossing generally flat steppe.

No infrastructure currently exists at the site of the Kokbulak Iron Ore Project.

Clearly, to develop a large open pit mining operation with related processing plant

and other facilities will require significant infrastructure development at the site of the

Kokbulak Iron Ore Project to connect with the public infrastructure, not least of which

will revolve around the transportation of men, equipment, fuel and finished products.

In terms of workforce, Kazakhstan has a strong mining industry with a wealth of

expertise. Although local villages tend to have low populations, Shalkar at around

30,000 people and Aktobe at more than ½ million are important centres which are

relatively close to the site of the Kokbulak Iron Ore Project. The project has allowed

an amount of US$3.22M for camp construction. Moreover, the mine will likely adopt a

fly-in, fly-out policy for senior staff.


– III-39 –




Photo 3.3 : Beyneu-Shalkar Line, Near Begimbet

In addition, the relatively flat and arid nature of the terrain will allow relatively

easy and rapid construction of surface roads

WAI Comment: Although the site is relatively remote, the generally benign

environmental situation coupled with flat terrain should overcome some major

impediments to project development. However, a suitable water source will remain a

major requirement for successful project development


– III-40 –




4 EXPLORATION HISTORY

4.1 Introduction

The Kokbulak deposit, upon which the Kokbulak Iron Ore Project sits on, has

been known about for over 70 years with preliminary geological survey work in 1949,

then more detailed investigations over the deposit area (covering some 500km2) in

1950.

From 1950–54, detailed topographic surveys were undertaken which tied in all the

exploration works being executed at the time, including drilling and limited

underground exploration.

This allowed the completion of the first geological map of the area in 1954 along

with a report on the exploration activities and an initial ‘‘reserve’’ estimation (in

accordance with local GKZ standards).

It was not until 2013 that further exploratory works were undertaken by ASP at

the site of the Kokbulak Iron Ore Project leading to the completion of Project XXI

2013 Feasibility Study.

In 2020, further drilling works were conducted by ASP in the Southern Area of the

Kokbulak Iron Ore Project.

4.2 Exploration

The ore lenses at Kokbulak have a general elongated north-northwestern strike

and a flat southwestern dip. They are longer along strike than width. This led to a

relatively straightforward rectangular exploration network over the area, but with

some minor variations.

From the recognised strike direction of the orebodies, a grid orientated 026o was

established across the Central Area, whilst in the Northern Area, this was set to 000o

and in the Southern Area to 75o.

Drillhole spacing was initially 200m in the Central Area, with lines 400m apart,

decreased to 200m apart in later drilling.

Due to the general shallowness of the ore zones (<50m), drilling results could be

controlled with test pits (1.25m2 in section) and shafts which also provided bulk

density values.


– III-41 –




4.3 Drilling

4.3.1Exploration Patterns

During the 1950s, some 1,109 drill holes and 182 deep test pits were

undertaken at the Kokbulak deposit (Table 4.1) and surrounding areas.

In addition to the deeper test pits, in the Central Area where mineralisation is

exposed at surface, shallower test pits were also utilised with an average depth of

1.95m.

Table 4.1 : Kokbulak Deposit Sampling Inventory

Area Mechanical Drill Holes Deep Test Pits Barren

Holes1

Number

Total

Metres

No. of

Holes

Average

Depth

Total

Metres

No. of

Holes

Average

Depth

Central 23,158.20 455 50.90 1544.01 104 14.85 114

North 29,035.33 487 59.62 755.33 66 11.44 175

South 3,532.64 70 50.49 203.28 12 16.94 20

1 Many barren holes contained low grade mineralisation (<20% Fe),

actual % of barren holes was 16%.

The holes were drilled with ZIF-75 drill rigs and partially with ZIF-150 drill

rigs at four diameters. 130mm drill bits were used down to 4m depth, after which

the collar of the holes was fixed with casing. Below this to a depth of 27–35m, the

drilling was performed with 101mm drill bits, and to 50–35m with 89 or 84mm

drill bits. Below this depth, 74mm drill bits were used.

As indicated above, the main focus of exploration was the Central Area

which was drilled mostly on a 200 x 200m grid, apart from the southeastern part

which was at 200 x 400m. Most holes cut the mineralised sequence through to

bedrock. In addition, a 0.5km2 area was drilled on a 100 x 140m spacing (30 holes)

to comply with GKZ B category allocation.

The Northern Area is the second most explored part of the deposit. This site

was examined by north-south profiles mainly on a 400 x 800m grid, partially by

400 x 400m, 200 x 400m and 200 x 200m grids, and by a 200 x 100m grid over a

0.5km2 area.

In contrast, the Southern Area represents the least explored part of the ore

deposit and is also the lower grade part of the whole deposit. It was drilled on

2,000 x 400m grid with perimeter holes on an 800m spacing. Drilling was made

more difficult in this area due to the greater depth of the mineralised horizons as

well as a thick bed of incoherent sands that lies just beneath the ore — this

resulted in many holes collapsing on intersection with this zone.


– III-42 –




4.3.2 Core Recovery

Both the host rocks and mineralised zones have different hardness and,

consequently, drillability. Highest core recovery was found in the clays and

cemented ores, whilst core recoveries for the uncemented ores (oolitic incoherent

ore) required careful management and in the incoherent ores, occasionally sludge

samples were required for confirmatory analysis. Table 4.2 below shows the core

recoveries across the site.

Table 4.2 : Core Recovery for Kokbulak Deposit

Site Core Recovery, %

Ore Host rocks

Central Area 93.3 64

North Area 95.21 70.57

South Area 96.9 64

Exploration Holes in the Area of the Deposit 62.3

4.3.3 Sampling Method & Approach

In total some 7,331 standard samples were taken at Kokbulak deposit, made

up of 6,467 from drill holes and 864 from test pits.

Samples from drillholes were taken by splitting core in halves along the

longer axis. One half of the core was placed in a box as a duplicate, whilst the

other half was prepared for chemical analysis. Sample length varied depending on

the homogeneity of the mineralised material but could be from 1 to 5m. Similarly,

dependent on core size, samples were often around 7kg in weight.

Test pits were sampled by channel method, with samples typically 8cm x 3cm

x 100cm which provided 5–6kg of sample.

Metallurgical samples were selected from each of the three main ore types

ensuring average values for both iron content, deleterious elements and physical

composition. This was done by blending material from a number of test pits to

produce approximately 600kg samples for each ore type.

These were sent to the Thematic Party of Central Chemical Laboratory of

Uralsk geological survey. However, from their chemical composition, the black

incoherent and greenish-black cemented ores with chlorite-siderite cement were

not representative enough and therefore required the selection of four further

samples of 100kg each, selected from drill core that allowed testing on both the

average ore types as well as potential for low-grade ores.


– III-43 –




From this work, the percentage average iron content for the separate ore

types was determined for the North and Central Areas only:

Ore

Central

Area North Area

Brown Compact ores 39.23 36.75

Black Incoherent ores 40.87 38.29

Greenish-black Compact ores 36.31 35.80

For sample preparation, samples of the various ore types were treated

differently, although in essence they were reduced in size fraction from

approximately 3mm down to 0.5mm, at all times ensuring the cone and

quartering produced representative splits. Sample reduction continued until

there was approximately 150–200g of sample remaining, which was then divided

into two, one half to the laboratory, one half saved as a duplicate.

The majority of samples were analysed in Aktyubinsk laboratory of

West-Kazakhstan geological expedition and in the Central laboratory of

South-Uralsk geological survey in Ufa city.

The analysis of internal control samples was undertaken in the laboratories

of South-Ural survey of West-Kazakhstan geological expedition. External control

of the samples was performed by Central chemical laboratories of Uralsk and

West-Siberian geological surveys.

726 samples were used for internal control, 46 samples comprised external

control which corresponds to 9.9% and 3.4% from the total number of samples.

A comparison of the results for Quality Control showed good agreement with

the database being deemed fit for resource/reserve estimation.

4.3.4 Bulk Density

The bulk density of brown and black (incoherent) ores was determined by

direct excavation of the ore mass from test pits of known dimensions. Ore was

excavated, weighed, left to dry for 20 or more days and then re-weighed. From

these data, wet and dry bulk densities could be estimated.

For the bulk density of the green ores, this was established in the laboratory

as these ores could not be intersected near surface. Thus, the bulk density was

determined from 15–20cm core samples or samples from test pit walls (15x15cm),

wrapped in gauze fabric, waxed and immediately sent to a chemical laboratory,

which name is not known to WAI.


– III-44 –




4.4 Confirmatory Sampling

In an effort to verify the previous exploration works, 60 confirmatory drill holes

were completed by ASP in 2013. These holes were spread across the Kokbulak Iron Ore

Project with 34 being completed in the Central Area (CV1–34), 21 in the Northern

Area (CV35–55) and 5 in the Southern Area (CV56–60).

The verification holes were located by GPS in relation to the existing drill

network. The holes were drilled to depths ranging from 2 to 54m with a total length of

1659m. In total 551 core samples were taken. Ore intersections thickness and iron

content of the historical drilling were validated.

Drill holes were made with an AVB-1 vibratory-percussion rig producing 108mm

core. The technique avoided core washing and produced 100% core recovery.

These works were undertaken by "Project XXI’’, whilst analyses were completed

in the certified laboratory ‘‘Akrobe-Temir’’ LLP. ‘‘Project XXI’’ also checked the

laboratory data for errors and deviations

The results of this small drill programme showed that thickness variation did not

exceed 1m and any deviation could be accounted for by possible inaccuracy of drillhole

locations. Similarly, the average difference of Fe content values did not exceed 2%

which is broadly acceptable.

An exception was noted of 4.24% Fe content between ordinary (hole# 280) and

control values (hole#6) can be explained by the complexity of the interval structure

that is presented by interbedding of different-type ores.

However, notwithstanding the above, ‘‘Project XXI’’ considered the results of

data validation for the Kokbulak deposit as relevant and reliable for reserve

estimation. WAI agrees with this assessment.

4.5 Recent Work

4.5.1 Southern Area

Information provided by the Client has indicated that in accordance with the

recommendations from the Republic of Kazakhstan State Revenue Committee for

the purposes of follow-up study of the hydrogeology and the Southern Area of the

Kokbulak Iron Ore Project, a project titled ‘‘Project of Geological Exploration

Work at the Southern Area of Kokbulak Iron Ore Deposit’’ was developed. This

work was completed in autumn 2020.


– III-45 –




The main types of work were as follows:

. Topographic work (positioning and staking out drill holes);

. Core drilling;

. Core sampling; and

. Analytical work.

Since then, WAI has completed an MRE on both the Northern Area and

Southern Area, see Section 6.3 below.

5 GEOLOGICAL SETTING AND MINERALISATION

5.1 Structure & Lithology

The sediments associated with the Kokbulak deposit, which are hosted by the

Kutanbulak suite, are related to the axial part of the Dzhylan synclinal structure which

extends in a south-southeast to north- northwest direction for 33.9km with a width of

1.5–2.5km. From a mineralisation standpoint, the deposit has been divided into North,

Central and South areas.

The oldest rocks seen at the site are those of the Chegan suite which are composed

of grey and dark- grey clays (montmorillonite) with siltstone as well as two thin beds of

marly sandstone (thickness of 0.2–0.3m). Erosion at the end of Eocene has resulted in

the formation of an uneven, corrugated surface to these Chegan clays. Drilling

intersected only the upper parts of this unit.

Tectonic uplift in the area has elevated the Chegan suite rocks in both the North

Area as well as the South with respect to the Central Area.

Above the Chegan suite, fresh and saltwater sediments of Upper Oligocene age

were deposited (the Tugan series) which are divided into four suites; the most

important for the deposit is the Kutanbulak suite which is represented by sands, clays,

various sandstones, and three types of iron ores, and in its lower part by clays,

containing ore and siderite layers of variable thickness.

The sands, which are mostly observed in upper parts of section, are grey,

yellowish-grey and brownish- yellow, and are often ferruginous, containing 10–15% of

iron. These were sampled if they contained more concentrated Fe-rich zones.

The clay within the upper levels of the Kutanbulak suite is grey, dark-grey with

thin silty-sands parallel to bedding, whilst at the lower levels, clays tend to be

dark-grey with occasional greenish-grey silty clays observed.


– III-46 –




In the upper parts of the suite, there is some interbedding of greenish-grey clays

and greenish-black well-cemented and black unconsolidated ores with brown gypsum

and siderite sublayers. However, there is variability across the site, although

differences are clearly observed.

These sands in the southeast part of the Central Area have thickness from

13–20m, up to 30m, whilst the same ones are observed in southern and northern parts

of the Southern Area. They are also widespread in the southwest part of the Northern

Area. Clays of this suite, in many cases interbedded with sands, are also widespread

within all sites of the deposit. The ores lie within both sands and clays.

The maximum thickness of ore lenses is in the central part of the Central Area, in

the southwestern part of the North Area and in the area of #3 and #4 prospecting and

exploration lines at the South Area. Ores are deposited as individual lenses that

overlap each other on a scale-like basis. Forms and dimensions of the lenses are

highlighted below, although large thicknesses of this suite appear to be related to

depressions in the roof of the Chegan clays.

Sediments of the Chiliktinsky suite, which are predominantly brown-grey

gypsum-bearing clays, lie on the uneven surface of the Kutanbulak suite and are

found in isolated parts of the South and North Areas and in the northeast part of the

Central Area.

Thus, in general, ore bodies are related to the lowest part of Turgay series —

Kutanbulak suite, deposited on the variable surface of pelagic Palaeogene clays.

5.2 Deposit Geology

5.2.1 Introduction

In broad terms, ore bodies of the Central and Northern Areas are similar in

that they are characterised by a north-south strike and are flatly inclined to the

west-southwest, in many cases overlapping each other in the manner of scales. Ore

bodies in the Southern Area have a different structure. All mineralisation can be

identified visually.

These are three main lenses at the Central Area of the deposit, with the 1st

and 2nd lenses being the largest. All three lenses are also traced to the Northern

Area. Moreover, two more lenses (4th and 5th) are observed in the western part of

the Northern Area.

At the Southern Area, there is quite a large, embedded lens observed between

exploration lines #1 and #6, in some places this lens is split into eastern and

western parts.


– III-47 –




5.2.2 First Lens

This major mineralised unit has been traced along the eastern part of the

deposit from exploration line #13 in southern part of the Central Area to

exploration line #62 on the Northern Area. Its total length is 17.7km with a width

1.6km and occupying an area of about 25km2. It appears to be localised in a

north-south depression in the roof of the underlying rocks of the Chegan suite.

As with all the lenses seen at the Kokbulak Iron Ore Project, thickness

variations and bifurcations are common, particularly near the edges, although in

the main parts, the lens does show a high degree of homogeneity. Thicknesses can

exceed 40m, and reaches 51.7m at hole #655, although equally wedges from the

main lens can tail off to around 1m in thickness.

5.2.3 Second Lens

The second lens starts from exploration line #7 at the Southern Area and it is

clearly wedged in the northern part of the Northern Area near exploration line

#62. Its total length by strike is 23.9km, width is 1.26km.

The dimensions of the lens by site is shown in Table 5.1 below:

Table 5.1 : Dimensions of Lens 2

Site Length Width Area

(m) (m) (km2)

Southern Area 4,000 1,450 5.8

Central Area 5,900 1,100 6.49

Northern Area 14,000 1,240 17.36

Total 23,900 29.63

As with Lens 1, the lens shows good continuity along strike, but wedging,

thickness variations and lithology change are common on the peripheries of the

main body. Thickness again varies considerably from a few metres to >40m.

5.2.4 Third Lens

The 3rd lens is located to the west of the 2nd lens in the northern part of the

Central Area and in the southern part of the Northern Area. The lens is not large

with strike length not exceeding 2.8km, width 0.46km with an area of 1.26km2.

The lens is traced from the exploration line #35 to line #38.

The structure is quite simple and does not change either down dip or along

strike. Thickness varies from 2.7 to 7.9m in its axial part from where it is

symmetrically wedged to the periphery.


– III-48 –




5.2.5 Fourth & Fifth Lenses

The Fourth lens is found at the Northern Area from exploration line #39 to

line #56. The lens is extended in a north-south direction for 6.1km and it has a

significant width (average 2.5km) and achieves a maximum thickness of 36.7m.

Area is 19.25km2, therefore making it the third largest behind the first and second

lenses.

To the west of 4th lens, the small 5th lens is observed in between exploration

lines #41–#48. The fifth lens is deposited over the fourth lens.

5.3 Mineralisation Types

5.3.1 Introduction

The most widespread ores identified at the Kokbulak Iron Ore Project are:

. Oolitic oxidised brown ores — Type 1;

. Loose black ores without cement — Type 2, and

. Green or dark-grey ores of siderite-chlorite cement — Type 3.

For the majority of the deposit, these three types represent the main ore

facies.

5.3.2 Type 1

Oolitic oxidised brown ores with rusty-yellow or dark-brown hydrogoethite

cement are represented by both hard and solid ore and rather incoherent ore

which breaks up due to weathering. Oolite size varies from 0.1 to 1.5mm.

At Kokbulak deposit brown oxidised hydrogoethite ore forms only the upper

parts of ore bodies (Photo 5.1).


– III-49 –




Photo 5.1 : Brown Cemented Ores Above Black Unconsolidated Ores on Profile 21

Oolitic ores with hydrogoethite cement universally form the upper parts of

the ore bodies located above ground water level. In this zone, they are the

prevailing type of ores, but in some parts, they are replaced with incoherent ores

without cement, and sometimes with calcite cemented ores.

The boundary of brown ores with hydrogoethite cement and greenish-grey

ores with siderite-chlorite cement in most of the drill holes and excavations is very

distinct and coincides with the current level of ground water, although

occasionally lenses of partially oxidised mineralisation are found below the

water table.

As expected, an examination of drill hole cross-sections along the dip of the

ore lenses shows this boundary to be almost horizontal and cuts the stratification.

From analysis, Type 1 ores contain up to 76% hydrogoethite along with

semi-oxidised chlorite and quartz grains partially replaced with hydrogoethite are

found in oolites. In addition, a small amount of calcite, loamy material and free

fragmental quartz are found in cement.

5.3.3 Type 2

Type 2 is represented by black oolitic hydrogoethite incoherent ores without

cement. They are widely spread at Kokbulak deposit (Photo 5.2).


– III-50 –




Photo 5.2 : Outcropping Soft Black Ores in Stream Bed

Incoherent ores are found everywhere at Kokbulak deposit, both above and

below ground water level. There are represented by oolitic material primarily

deprived of cement. The thickness of incoherent ores in some drill holes from the

Central Area can be 30m or more.

Incoherent ores consist of oolites 0.1–1mm in diameter (in rare cases they are

a little bigger). These are black, sometimes dark-grey and dark brown oolites with

small additions of thin quartzitic siltstones, sometimes with subrounded

incrustations of black ferrous nodules.

Under the microscope it can be seen that oolites of incoherent ores have no

obvious concentric structure and are fissured. This is connected with oxidation of

their chlorite and compaction, re- crystallisation and conversion of hydrogoethite

into less hydrous forms of ferrous oxides. Such oolites are either uniform by their

composition or include quartz grains.

Type 2 ores have a higher content of iron, which is 70–80% of hydrogoethite,

with iron concentrated in oolites rather than in cement. They contain significant

Al2O3 (7–8%) and variable P2O5 (up to 2%).

5.3.4 Type 3

Type 3 ores are represented by oolitic compact green, greyish-green or

blackish-green ores with a chlorite-siderite cement (siderite usually dominant over

chlorite). These ores are widespread at the deposit and make up the majority of

ore below the water table.


– III-51 –




Ores of this type, where siderite is the major element, are characterised by

cohesiveness and hardness. The amount of siderite is significant and reaches up to

one third of the rock weight. The siderite content does have an impact on the

beneficiation process.

Oolites of these ores are formed with either just hydrogoethite or with

hydrogoethite and chlorite.

There are almost no chlorite-siderite cemented ores in the Southern Area due

to the higher, well drained and highly oxidised nature of the rocks there.

6 MINERAL RESOURCES

6.1 Introduction

A Mineral Resource Estimate (‘‘MRE’’) was undertaken by WAI following the

guidelines of the JORC Code (2012) initially only for the better explored Central Area

of the Kokbulak Iron Ore Project, see Section 8.2 below.

An additional MRE was also completed for the Northern Area and Southern

Area, see Section 8.3 below.

The MRE is effective as at 7 March 2022. There has been no material change to

the MRE, conclusions and opinions in this report since 7 March 2022.

6.2 Central Area of the Kokbulak Iron Ore Project

The work was completed using a 3d block modelling approach utilising CAE

Mining Studio 3 software. Sample data were imported and verified before mineralised

envelopes were defined by creating 3d wireframes based on a cut-off grade of 30% Fe.

Sample data were selected and allocated using these mineralised zone wireframes and

selected samples were composited and used as the basis of a geostatistical study. The

mineralised zone envelopes were used as a basis for the creation of a volumetric block

model based on a parent block size of 25m x 25m x 5m.

Variogram models were constructed using composited data and estimation was

carried out using ordinary kriging as the principle method, but with estimation also

using inverse-distance weighting and nearest neighbour estimation which were used for

validation purposes. The resultant block model was verified against the input

composite grades and classification was carried out based on an assessment of

geological and grade continuity.

6.2.1 Data Source

The exploration database comprises diamond drillholes from the original

exploration campaigns carried out between 1950–1954, shallow exploration shafts

excavated during the same period and verification diamond drillholes (twinned

holes) completed during 2013 that are contained within the database (these


– III-52 –




numbers differ from those in Table 6 : 1 which include all data, i.e. some of the

holes were outside of the Licensed Area and therefore not included in the final

resource database).

The composition of the exploration database in its entirety is shown in Table

6 : 1.

Table 6 : 1 : Composition of Exploration Database — Entirety

Type Year Number

Total

Length

Mean

Length

Number of

Samples

Exploration Holes 1950–1954 1,051 55,059 52.4 6,333

Exploration Shafts 1950–1954 270 2,635 9.8 941

Confirmation Holes 2013 60 2,732 45.5 551

The locations of all drillhole and shaft collars in the database are shown in

Figure 6.1 below. The mineral resource assessment as described below focusses on

the Central Area of the Kokbulak Iron Ore Project as shown by the boundary in

Figure 6.2 The composition of the exploration database, when limited to the

boundary shown in Figure 6.2, is shown below in Table 6 : 2.

Figure 6.1 : Location of all Drillhole and Shaft Collars in Exploration Database


– III-53 –




The individual sample database files were imported to CAE Mining Studio 3.

Separate drillhole files were created for each of the three sets of data using the

desurveying process, Holes3d. The individual databases were then combined to

form a single complete database containing all available data for the deposit.

Verification was carried out both during data import and during the

desurveying process to ensure that no duplicate or overlapping samples were

included in the final database. Collar locations were checked against the

topographic survey and found to be consistent with that surface. Absent data

values of Fe were adjusted to a zero grade

Figure 6.2 : Location of Exploration Drillhole and Shaft Collars in Central Area

Table 6 : 2 : Composition of Exploration Database — Central Area

Type Year Number

Total

Length

Mean

Length

Number of

Samples

Exploration Holes 1950–1954 399 20,067 50.3 3,437

Exploration Shafts 1950–1954 197 1,685 8.6 636

Confirmation Holes 2013 34 1,346 39.6 331

Based on an assessment of the data, WAI considered the entire dataset to be

acceptable for Mineral Resource estimation.


– III-54 –




6.2.2 Topographic Data

A topographic Digital Terrain Model (DTM) for use in the mineral resource

estimation covering the extent of the deposit area was generated from a variety of

data sources. This DTM is mainly based on a wireframe, supplied by the Client,

created by digitising contours from a hard copy of the topographic survey carried

out between 1951 and 1954 at the time of the original exploration of the area. As

this wireframe did not quite cover the area required for the model and open pit

optimisation, WAI extended this wireframe using drillhole collar elevations as

reference points.

The Central Area of the Kokbulak Iron Ore Project is generally gently

undulating steppe and this approach to extending the surface is not expected to

result in gross errors. The area has relatively high area to the north and south with

the major topographic feature being a shallow, relatively narrow valley, running

roughly north to south from the northern high into a broad shallow east west

orientated valley. These major topographic features of the area are covered by the

detailed survey. Figure 6.3 shows a plan view of the area of the mineral resource

estimate showing the main topographic features.

Figure 6.3 : 5m Contours of Area Covered by Mineral Resource Estimate

with Drill Collars in Red (Central Area)


– III-55 –




6.2.3 Domaining for the Central Area

6.2.3.1 Mineralised Envelopes

Delineation of the mineralised domains by the creation of wireframe

envelopes was first carried out by the Client with subsequent verification by

WAI.

The following parameters were used to determine zones of

mineralisation:

. Cut-off grade of 30% Fe;

. Minimum thickness above cut-off grade of 1m; and

. Maximum thickness of internal waste of 1m.

The mineralised domains were defined using string outlines digitised on

vertical sections along the exploration profiles that are spaced 100m to 400m

apart. Strings were snapped to the beginning or end of sample locations. In

some areas discrepancies were found between close spaced drilling. In these

situations priority was given to the drilling carried out in 2013 as these were

deemed more reliable. A total of 5 separate mineralised envelopes were

defined for the Central Area of the Kokbulak Iron Ore Project. Figure 6.4 is

a plan view of the mineralised envelopes. Zones 1 and 2 are the largest of the

interpreted mineralised zones.

Extrapolation along strike was up to half the distance between adjacent

exploration profiles where mineralisation was not deemed continuous

between them with the thickness of mineralised zones being reduced over

this distance. Extrapolation along strike was up to 1/3 of drillhole spacing at

the limits of the mineralised envelopes. In some cases, to achieve continuity,

the wireframes were allowed to pass through intersections below the cut-off

grade if mineralisation above cut-off grade were found on either side.

The Central Area of the Kokbulak Iron Ore Project covered by this

Mineral Resource estimate is split in to five mineralised envelopes. These

strike roughly NW to SE and are shallowly dipping (1–3°) towards the SW.

At the longest point, the mineralised zones are 5.8km long along strike and

4.1km across strike. The largest of the mineralised zones are 1 (4km x 2.5km

maximum dimensions) and 2 (4.4km x 1.6km maximum dimensions). The

mineralised zones can be up to 30m thick vertically which due to the very

shallow dip of the deposit is close to true thickness.


– III-56 –




Figure 6.4 : Plan View of Mineralised Envelopes. Drillhole Collars in Red (Central Area)

6.2.3.2 Sample Selection & Statistics

Drillhole samples within the wireframes, constructed as described

above, were selected for further processing. Samples from the exploration

shafts were rejected from further processing due to difficulties in reconciling

sample sizes for support during estimation. Samples were coded based on

their location with regards to the major mineralised envelopes.

Summary statistics by domain for Fe in the selected samples are shown

in Table 6.3 Overall statistics for each of the other assayed components are

shown in Table 6.4.


– III-57 –




Table 6.3 : Statistics for Fe of Selected Samples by Domain (Central Area)

Minzone No. Min Max Mean Variance

Standard

Deviation Skewness CV

1 1817 0 56.76 38.44 111.51 10.56 –2.51 0.27

1A 24 31.04 40.53 35.04 5.79 2.41 0.57 0.07

2 662 0 49.8 36.7 106.56 10.32 –2.43 0.28

2A 9 30.84 43.93 38.38 17.44 4.18 –0.32 0.11

3 16 30.11 43.17 37.24 17.8 4.22 –0.16 0.11

Total 2528 0 56.76 38.02 109.11 10.45 –2.48 0.27

Table 6.4 : Statistics for Other Components (Central Area)

Component No. Minimum Maximum Mean Variance

Standard


P2O5 2495 0 20.8 1.46 0.68 0.83 11.64 0.57

S 2274 0 1.99 0.08 0.02 0.12 6.15 1.5

CaO 2274 0 12.38 0.81 1.16 1.08 2.5 1.33

MgO 2274 0 4.83 0.36 0.15 0.38 1.98 1.06

CO2 2273 0 25.52 0.92 5.2 2.28 3.16 2.48

Statistical analysis shows that the spread of Fe is similar for all domains

and mean Fe ranges generally from approximately 35% to around 38%.

Zones 1 and 2 are the largest of the mineralised envelopes containing the

greatest number of samples. Furthermore, there is no risk from the data

distributions, as the ordinary kriging estimation method takes this into

account.

Figure 6.5 is a histogram of Fe grades for samples across all domains.

An analysis of the domains shows that Fe has a negative skew and a single

population.


– III-58 –




Figure 6.5 : Histogram of Fe For All Domains

An examination of the correlation between all assayed components from

the Central Area of the Kokbulak Iron Ore Project in the samples selected

within the mineralised envelopes shows little correlation (positive or

negative), with only a slight positive correlation between Fe and P2O5 and

MgO and CaO is seen.

As a final note, after analysis of the different components of interest by

domain and in the deposit as a whole, no significant outlier samples were

identified in the selected samples and no top-cutting was undertaken for any

of the domains at the Central Area of Kokbulak Iron Ore Project.

6.2.4 Compositing & Statistics for the Central Area

Compositing of drillhole samples is carried out in order to ensure that for

estimation a consistent level of support is achieved and any bias effect due to

varying sample length is removed. The Central Area of the Kokbulak Iron Ore

Project is sampled at varying sample intervals reflecting the length of intersected

geological features. Lengths of selected samples were examined for the deposit as

a whole. The two largest groups of sample lengths are at 1m and 2m

although>23% of samples are greater than 2m in length

When selecting the composite length, a balance was needed to ensure that

both the underlying characteristics of the data are retained and also that not too

many samples were ‘decomposited’ which would result in a misrepresentation of

variability during variographic analysis. A 5.0m composite length was chosen for

further processing. Drillhole composites were generated in 1.0m lengths from the

top of the hole downwards limited by the boundaries of the mineralised zone


– III-59 –




wireframes. Small adjustments in composite lengths were allowed whilst keeping

as close as possible to the composite interval so as to minimise sample loss during

the compositing process. A minimum composite length of 0.5m was allowed

against wireframe boundaries and at the end of holes. After processing the

average composite length was 4.8m.

The summary statistics for Fe by domain are shown in Table 6.5 and for

other components across the Central Area of the Kokbulak Iron Ore Project as a

whole in Table 6.6.

Table 6.5 : Statistics for Fe of Composited Samples by Domain (Central Area)

Minzone No. Minimum Maximum Mean Variance

Standard


1 695 0.00 49.83 38.44 95.66 9.78 –2.69 0.25

1A 7 34.05 37.37 35.04 1.45 1.20 1.25 0.03

2 229 0.00 49.31 36.70 91.13 9.55 –2.79 0.26

2A 5 34.41 40.48 38.38 4.57 2.14 –0.74 0.06

3 6 34.29 41.72 37.24 4.35 2.09 0.81 0.06

Total 942 0.00 49.83 38.02 93.47 9.67 –2.69 0.25

Table 6.6 : Composited Sample Statistics for Other Components (Central Area)

Component No. Minimum Maximum Mean Variance

Standard


P2O5 914 0.00 7.87 1.46 0.34 0.59 3.25 0.40

S 791 0.00 0.98 0.08 0.01 0.10 4.05 1.25

CaO 791 0.00 5.83 0.82 0.76 0.87 1.79 1.06

MgO 791 0.00 2.02 0.36 0.10 0.31 1.11 0.86

CO2 791 0.00 12.71 0.92 3.56 1.89 2.66 2.05

6.2.5 Variography for the Central Area

6.2.5.1 Analysis

Variographic analysis was performed using Supervisor 8.2 and was

attempted for each variable in each of the 5 mineralised domains as well as

for the deposit as a whole using the 5m composited samples contained within

the mineralised domain wireframes

The methodology for producing experimental variograms and

variogram models was as follows

. Experimental variograms with small lag distances were generated

downhole to aid in estimation of nugget effect. Nugget effect is the

variance between sample pairs at the same direction containing

components of inherent variability, sampling error and analytical

error;


– III-60 –




. Omni-directional variograms were generated to assist with

determining optimal lag distances;

. Variogram maps were generated in 18 directions in the horizontal

plane, across strike and in the dip plane at each stage selecting the

direction of greatest continuity; and

. Variogram models were generated using the spherical scheme for

three orthogonal directions defining the principal directions of

anisotropy; the major, semi-major and minor axis.

6.2.5.2 Variogram Interpretation

During this process it was found that for Fe and other variables, most of

the 5 mineralised domains do not contain enough sample pairs on their own

to calculate robust semi-variograms and even for the largest domains (1 and

2) the experimental variograms were not deemed to have robust structures.

Experimental variograms for the deposit as whole were therefore generated

and it was these variogram models that were used during grade estimation.

As an example, Figure 6.6 shows the variogram models for Fe. When

calculating the experimental variograms variable lag distances were used to

reflect the varying drillhole spacing used at the Kokbulak Central Area. For

directional variograms a lag distance of 50m was used for data at a spacing of

4100m, a lag distance of 200m was used for data at a spacing of 4400m and

a lag of 400m was used for data at a spacing of>400m. For downhole

variograms a lag distance of 5m was used, equal to composite length.

The experimental variograms are, in general, reasonably well structured

with large ranges horizontally reflecting the large drill spacing. The nugget

value for Fe is seen to be low reflecting that, at short ranges, little variation is

seen.

The spherical model scheme was used for all variables. Variogram

models were created for Fe for the entire deposit and in addition variogram

models were generated for P2O5, S, CaO, MgO and CO2 for the deposit as a

whole. A summary of the variogram models is given in Table 6.7.


– III-61 –




Figure 6.6 : Variogram Models for Fe — Mineralised Domain 1

Table 6.7 : Summary of Variogram Models

Variable Domain

Major Axis

Orientation Nugget C1§ Ranges C1§ Ranges

Fe All 030 0.04 0.57 404,333,24 0.39 655,655,34

P2O5 All 300 0.04 0.51 215,370,12 0.45 650,400,13

S All 085 0.29 0.20 564,483,17 0.51 600,614,20

CaO All 060 0.11 0.89 900,1289,33 — —

MgO All 350 0.21 0.24 377,321,34 0.55 625,688,37

CO2 All 070 0.08 0.46 129,480,44 0.46 1100,1764,45

Note: Variances have been normalised to one; Structures modelled with spherical

model.

6.2.6 Volumetric Modelling for the Central Area

An initial empty block model was created inside the mineralised zone

wireframes. A summary of the block model parameters is listed in Table 6.8

below. A parent cell size of 25m x 25m x 5m (northing x easting x vertical) was

selected. Keyfields were established within the block model to identify and

separate the individual mineralised zones for control on grade estimation as

described below. The model was not rotated, the mineralised zones are extensive

and the dip of the mineralised zones is very gradual and rotation of cells is of no

benefit in fitting to the wireframes. A minimum subcell size of 5m x 5m x 1m was

allowed to get a close fit to the wireframe surfaces.


– III-62 –




Table 6.8 : Summary of Block Model Parameters

Property Direction Metres

(m)

Model Origin

X –7600

Y 5199700

Z 90

Parent Cell Size

X 25

Y 25

Z 5

No. of Cells

X 224

Y 320

Z 25

6.2.7 Densities for the Central Area

The average bulk density is recorded as 2.36t/m3 from extensive historical

testing, although the position of samples used for density measurement is not

recorded. Thus, this value was therefore assigned to the whole of the mineralised

zones at the Central Area of the Kokbulak Iron Ore Project.

6.2.8 Grade Estimation for the Central Area

6.2.8.1 KNA

Kriging Neighbourhood Analysis (KNA) is a method used for

optimising block sizes and search parameters used during grade estimation.

The process was carried out using Supervisor v8.2 software which enables a

series of tasks to be carried out in turn to determine:

. The optimum block sizes;

. The minimum and maximum samples to be used during estimation;

. The optimum search ellipse size; and

. The optimum block discretisation.

For each of these tasks a series of estimation runs are carried out using

the variogram parameters calculated as shown above on a block centre

location selected for its representivity of the deposit. The variable used to run

the KNA tests was Fe.

In terms of block size, the analysis showed that 25m x 25m x 5m was the

optimum size for modelling. This block size was a compromise between

gaining acceptable statistical results in this test and the block being small

enough for pit optimisation to be carried out at an adequate resolution.


– III-63 –




A series of tests were carried out at the selected block size of 25m x 25m

x 5m to determine the optimum minimum and maximum samples to be used

during the estimation process. This showed that a minimum of 6 and a

maximum of 16 samples were optimum and duly selected for the estimate.

Next, further tests were carried out to determine the optimum search

ellipse size using the selected block size of 25m x 25m x 5m and using a

minimum of 6 samples and a maximum of 16 samples. This showed that a

search ellipse with dimensions of 650m x 650m x 35m was appropriate.

Finally, using a block size of 25m x 25m x 5m, a minimum number of 6

samples and a maximum number of 16 samples with a search ellipse of 650m

x 650m x 35m, a series of estimation runs was carried out to determine the

optimum block discretisation parameters which proved to be 5 x 5 x 2.

6.2.8.2 Estimation Plan

Grade estimation was carried out using Ordinary Kriging (OK) as the

principal interpolation method. (IDW2) and Nearest Neighbour (NN) were

also used for comparative purposes for each element. The OK method used

estimation parameters defined by the variography and KNA as described

above. The estimation was performed on mineralised material domains

defined during the domaining process described above and only drillhole

composites contained within a domain were used in the grade estimation of

that domain.

For the mineralised zones, the OK estimation was run in a three pass

estimation plan, the second and third passes using progressively larger search

radii to enable the estimation of blocks not estimated on the previous pass.

The search ellipses were derived from the variographic analysis, with the first

search distances corresponding to the distance at roughly half of the

variogram sill value and the second search distance approximating the

variogram range and the third search ellipse approximating twice the

variogram range.

An isometric view of the resultant block model after estimation of Fe

grades is shown in Figure 6.7.

6.2.9 Model Validation for the Central Area

Following grade estimation a statistical and visual assessment of the block

model was undertaken to ensure the model was valid. This included a visual

assessment of grade, global statistical grade validation and Swath plot (model

grade profile) analysis.

The results of this work showed that globally no indications of significant

over or under estimation are apparent in the model nor were any obvious

interpolation issues identified. From the perspective of conformance of the


– III-64 –




average model grade to the input data, WAI considers the model to be a

satisfactory representation of the sample data used and an indication that the

grade interpolation has performed as expected.

In terms of conformance to the drillhole composite data, WAI considers the

OK interpolation method to most closely represent the drillhole data. The

resource estimate is therefore based upon the OK grade estimation.

Figure 6.7 : Isometric View Looking North of Estimated Fe Grades (Central Area)

6.2.10Conditional Simulation Study for the Central Area

A conditional simulation study, using Sequential Gaussian Simulation

(SGS), was carried out on Fe to assess the confidence and risk associated with

the Mineral Resource estimation of the Central Area of the Kokbulak Iron Ore

Project.

For example, for Domain 1, based on expected annual production rates, the

vast majority of the domain can be considered to be within ±15% relative

accuracy of the 90% confidence limits (5th and 95th percentiles).


– III-65 –




6.2.11Mineral Resource Classification for the Central Area

6.2.11.1 Classification Indicators

The mineral resource of the Central Area of the Kokbulak Iron Ore

Project is classified following the guidelines of the Australian Code for

Reporting of Exploration Results, Mineral Resources and Ore Reserves

[JORC Code (2012)].

To classify the mineral resource of the Central Area of the Kokbulak

Iron Ore Project, WAI has taken into account the following indicators:

. Geological Continuity and Complexity;

. QAQC Results — Quality of Data;

. Spatial Grade Continuity — Results of Geostatistical Analysis;

. Quality of Block Model;

. Simulated Grade Variability; and

. Expectations of Economic Extraction.

Addressing these in turn, with the current drillhole spacing, clear

geological continuity both between exploration profiles along strike and

down dip is seen and this continuity of mineralisation is seen in field

outcrops. The current drillhole spacing allows for interpretation of

continuous zones of mineralisation based on the cut-off grade of 30% Fe.

The Mineral Resource estimate relies to a significant extent on historical

drilling data from the early 1950s. Core from historical drilling is not

available for study or re-assay, but verification drilling (twinned holes) has

been completed which confirms grade, mineralisation intersection points and

mineralised zone thicknesses of the historical drilling.

An assessment of spatial grade continuity is important when assigning

resource classification. The confidence that can be placed in the variogram

parameters is a major consideration when assessing classification. The data

used in geostatistical analysis resulted in reasonably robust along strike and

down dip variogram structures for Fe allowing the determination of

appropriate search parameters through the KNA process.

Validation of the block model has shown the estimated grades to be a

good reflection of the input composite grades. Visual and statistical checks

reveal no evidence of major under or over estimation.

Furthermore, conditional simulation demonstrated that the grade of the

majority of blocks could be estimated at ±15% at 90% confidence intervals.


– III-66 –




Finally, given the shallow and relatively continuous nature of the

mineralisation and thin overburden, WAI considers that the Central Area of

the Kokbulak Iron Ore Project can be considered to have reasonable

prospects for economic extraction for the purposes of mineral resource

reporting in accordance with the guidelines of the JORC Code (2012).

6.2.11.2 Final Classification

WAI considers that the Central Area of the Kokbulak Iron Ore Project

has been sufficiently explored to estimate Measured, Indicated and Inferred

Mineral Resources as defined by JORC Code (2012).

Criteria for defining resource categories were also derived from the

geostatistical studies. The key criteria for the allocation of resources by area

can be summarised as follows:

. Measured resources — Measured resources were outlined where

drillhole spacing was up to 150m x 250m in areas where 2013

drilling has been carried out;

. Indicated resources — Indicated resources were outlined where

drillhole spacing was up to 400m x 200m and where the conditional

simulation study indicated that recoverable metal in blocks of

annual production increments were known with a relative accuracy

of ±15% at 90% confidence; and

. Inferred resources — within defined mineralised zones outside of

the Indicated Resource criteria.

Classification was assigned to the block model by assessing the model on

the criteria above. Strings were digitised around those portions deemed to be

indicated on a zone by zone basis and wireframes created to delineate the

indicated zones. Blocks were selected inside or outside these wireframes,

again on a zone by zone basis, and the correct classification code assigned to

the final block model.

A plan view of classification following the guidelines of the JORC Code

(2012) at the Central Area of the Kokbulak Iron Ore Project is shown in

Figure 6.8 which also shows the 2013 drilling in purple and 1950s in Orange.


– III-67 –




Figure 6.8 : Classification Following the Guidelines

of the JORC Code (2012) at the Central Area of the Kokbulak Iron Ore Project

(Blocks: Measured — Blue, Indicated — Green, Inferred — Red)

6.2.12Mineral Resource Reporting for the Central Area

The resource classification for the Central Area of the Kokbulak Iron Ore

Project is classified following the guidelines of the Australian Code for Reporting

of Exploration Results, Mineral Resources and Ore Reserves [JORC Code (2012)].

WAI is not aware, at the time of preparing this report, of any modifying

factors such as environmental, permitting, legal, title, taxation, socioeconomic,

marketing, and political or other relevant issues that may materially affect the

Mineral Resource estimate herein; nor that the Mineral Resource estimate may be

affected by mining, metallurgical, infrastructure or other relevant factors.

The grades in the final resource model were derived using the Ordinary

Kriging estimation method for Fe and all other variables. An evaluation of the

in-situ material is shown below in Table 6.9. The Kokbulak Iron Ore Project is a

greenfield site at the time of this report being written and the effective date of the

Mineral Resource Estimate is 7th March 2022. The date of the WAI site visit was

7th September 2021. The Mineral Resource is reported at a cut-off grade of 30%

Fe.


– III-68 –




Table 6.9 : Mineral Resource Estimate,

Central Area of the Kokbulak Iron Ore Project

Kazakhstan, as of 7 March 2022, Cut Off Grade 30%

In accordance with the Guidelines of the JORC Code (2012)

Density Tonnage Total Fe

Metal

(Fe) P2O5 S CaO MgO CO2

t/m3 Million t % Million t % % % % %

Measured 2.36 126.4 40.5 51 1.6 0.07 0.8 0.3 0.7

Indicated 2.36 219.5 38.0 83 1.3 0.08 0.8 0.4 1.1

Inferred 2.36 6.8 36.9 2.5 1.31 0.07 1.21 0.50 1.32

Notes:

1. Mineral Resources are not reserves until they have demonstrated economic viability

based on a Feasibility study or pre-feasibility study.


3. The contained Fe represents estimated contained metal in the ground and has not been

adjusted for metallurgical recovery.



WAI has also prepared grade-tonnage curves for all resources (Figure 6.9)

which demonstrate the relative values of the model and resource estimate. The

grade-tonnage curve is generated by averaging nodes into block grades and

accumulating the respective tonnages above a series of cut-off grades. The average

grades are then plotted against the tonnages at each cut-off.

Figure 6.9 : Kokbulak Grade Tonnage Curve — All Classifications


– III-69 –




WAI Comment: Although the resource estimate is based primarily on historical

Soviet data, the confirmatory work has validated these data. The ensuing model

described above is robust and accurately reflects the magnitude and tenor of the

resources found in the Central Area of the Kokbulak Iron Ore Project.

6.3 Mineral Resource Estimation for the Southern Area & Northern Area

6.3.1 Data Source for the Southern Area & Northern Area

The exploration database that covers the Northern Area and Southern Area

comprises diamond drillholes from the original exploration campaigns carried out

between 1950–1954.

The locations of all drillhole collars are shown in Figure 6.10 below. The

mineral resource estimate as described below focusses on the Northern Area and

Southern Area of the Kokbulak Iron Ore Project. The composition of the

exploration database, when limited to the boundary shown in Figure 6.11, is

provided in Table 6.10 below.

Table 6.10 : Composition of Exploration Database

Area Number

Total

Length

Mean

Length

Number of

Samples

Drillholes for Southern Area 50 2462,95 49,25 239

Drillholes for

Northern Area 405 21413,89 52,87 2029


– III-70 –




Figure 6.10 : Location of all Drillhole and Shaft Collars in Exploration Database

The Excel database file was imported to CAE Mining Studio 3. The database

was validated visually and automatically. No duplicate or overlapping samples

were identified in the database. Collar locations were consistent with the topo

surface. Absent data values of Fe were adjusted to a zero grade


– III-71 –




Figure 6.11 : Location of Exploration Drillholes for Northern Area and Southern Area

(historic drillholes — green, verification drillholes — red)

6.3.2 Topographic Data for the Southern & Northern Areas

The topographic surface was based on the drillhole collars and was created in

Leapfrog software.

6.3.3 Mineralised Zones for the Southern Area & Northern Area

Mineralised wireframes were created in Leapfrog software. All mineralised

wireframes were checked against errors.

The following parameters were used to determine zones of mineralisation:

. Cut-off grade of 30% Fe for delineation;

. Minimum thickness of mineralised material of 1m; and

. Maximum thickness of internal waste of 1m.


– III-72 –




The approach used for the wireframing was based on half distance between

profiles.

The following parameters were used for the Southern Area:

. Mean distance between profiles of about 2,000m; and

. Mean distance between drillholes of about 400m.

The following parameters were used for the Northern Area:

. Distance between profiles of 200, 400 and sometimes 800m; and

. Distance between drillholes of 100, 200 and sometimes 400m.

6.3.4 Grade Estimation for the Southern Area & Northern Area

Grade estimation for Fe was carried out using Inverse Distance Squared

(IDW2) as the principle interpolation method. Ordinary Kriging (OK) and

Nearest Neighbour (NN) were also used for comparative purposes. The IDW2

method used estimation parameters defined by the variography and Quantitative

Kriging Neighbourhood Analysis (‘‘QKNA’’). The estimation was performed both

on the mineralised domains and keyfields within the solid wireframe domains.

Domains (defined by the BODY code) were treated as hard boundaries with only

drillhole composite samples contained within a domain used in the grade

estimation of that domain.

Estimation using Inverse Distance Squared method was run in a three-pass

plan; the second and third passes using progressively larger search radii to enable

the estimation of blocks not estimated on the previous pass. The search

parameters were derived from the variographic analysis, with the first search

distances corresponding to the distance at roughly half of the variogram sill value

and the second search distance approximating the variogram range and the third

search ellipse approximating twice the variogram range.


– III-73 –




The resultant model is shown in Figure 6.12 :

Southern Area Northern Area

Figure 6.12 : The Resultant Block Model for Southern Area and Northern Area

6.3.5 Mineral Resource Classification for the Southern Area & Northern Area

The mineral resource of Southern Area & Northern Area of the Kokbulak

Iron Ore Project is classified following the guidelines of the Australian Code for

Reporting of Exploration Results, Mineral Resources and Ore Reserves [JORC

Code (2012)].

To classify the mineral resource of Southern Area & Northern Area of the

Kokbulak Iron Ore Project, WAI has taken into account the following indicators:

. Geological Continuity and Complexity;

. QAQC Results — Quality of Data;

. Spatial Grade Continuity — Results of Geostatistical Analysis;

. Quality of Block Model;

. Simulated Grade Variability; and

. Expectations of Economic Extraction.

Addressing these in turn, with the current drillhole spacing clear geological

continuity both between exploration profiles along strike and down dip is seen

and this continuity of mineralisation is seen in field outcrops. The current

drillhole spacing allows for interpretation of continuous zones of mineralisation

based on the cut-off grade of 30% Fe.

The Mineral Resource estimate relies heavily on historic drilling data from

the early 1950s. Core from historic drilling is not available for study or re-assay,

but verification drilling (twinned holes) has been completed which confirms grade,

mineralisation intersection points and mineralised zone thicknesses of the historic

drilling.


– III-74 –




An assessment of spatial grade continuity is important when assigning

resource classification. The confidence that can be placed in the variogram

parameters is a major consideration when assessing classification. The data used

in geostatistical analysis resulted in reasonably robust along strike and down dip

variogram structures for Fe allowing the determination of appropriate search

parameters through the KNA process.

Validation of the block model has shown the estimated grades to be a good

reflection of the input composite grades. Visual and statistical checks reveal no

evidence of major under or over estimation.

Furthermore, conditional simulation demonstrated that the grade of the

majority of blocks could be estimated at ±15% at 90% confidence intervals.

Finally, given the shallow and relatively continuous nature of the

mineralisation and thin overburden, WAI considers that the mineral resource of

Southern Area & Northern Area of the Kokbulak Iron Ore Project can be

considered to have reasonable prospects for economic extraction for the purposes

of mineral resource reporting in accordance with the guidelines of the JORC Code

(2012).

6.3.6 Optimisation and Cut-Off Grade Analysis for the Southern Area & Northern

Area

6.3.6.1 Economic and Technical Input Parameters for Open Pit Optimisation

For a deposit, or portion of a deposit, to be classified as a Mineral

Resource there must be reasonable prospects for eventual economic

extraction (the JORC Code [2012]). The model classified as described

above was therefore further limited by suitable economic and technical

parameters.

The prospects for eventual economic extraction were tested in the first

instance by running an open pit optimisation using Studio NPVS based on

the technical, financial and economic parameters listed in Table 6.11, which

WAI believes they are reasonable and is the same used for Central Area. The

resultant optimised pit shell is shown in Table 6.11 and Figure 6.13 and

Figure 6.14 below.


– III-75 –




Table 6.11 : Pit Optimisation Parameters

Parameter Unit

Target Production Rate Mtpa ore 24

Mining Cost (Ore & Waste) US$/t rock 0.71

Processing Cost US$/t ore 15.6

Royalty Cost US$/t ore 2.12

Shipping Cost US$/t ore 16.00

G & A US$/t ore 0.61

Process Recovery % 96.6

Concentrate Grade %Fe 58.4

Discount Rate % 10

Overall Pit Slope Angle ° 35

Losses % 5

Dilution % 1.12

Bench Height m 10

Berm Width m 5

Fe Price US$/t Ore 100.00

Fe Price (58.4% Fe) US$/t conc 94.00

Breakeven cut-off grade % 17.48

Figure 6.13 : Isometric View Looking North of Optimised Pit Shell

and Mineralisation Wireframes Northern Area


– III-76 –




Figure 6.14 : Isometric View Looking North of Optimised Pit Shell

and Mineralisation Wireframes Southern Area

Based on the optimisation results, an NPV sensitivity analysis was

carried out (see Figure 6.15 and Figure 6.16 below), and the following

Lerchs-Grossmann (LG) shells were selected:

Southern Area — Shell 13 at LG revenue factor 60%.

Northern Area — Shell 16 at revenue factor LG 57%.

0

0.5

1

1.5

2

2.5

3

3.5

4

0

500

1,000

1,500

2,000

2,500

1 12 23 34 45 56 67 78 89

Strip

,t/t

NPV

,mln

Pit Shells

South Kokbulak

NPV $ Rock tonnes ORE tonnes Strip

Figure 6.15 : NPV Sensitivity Analysis, Southern Area


– III-77 –




0

0.5

1

1.5

2

2.5

3

3.5

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1 12 23 34 45 56 67 78 89

Strip

, t/t

NPV

, mln

Pit Shells

North Kokbulak

NPV $ Total Waste ORE tonnes Strip

Figure 6.16 : NPV Sensitivity Analysis, Northern Area

6.3.7 WAI Mineral Resource Statement for the Southern Area & Northern Area

The Mineral Resource estimate as carried out by WAI for the Kokbulak

Northern Area and Southern Area open pit projects are classified in accordance

with the Australasian Code for Reporting of Exploration Results, Mineral

Resources and Ore Reserves (the JORC Code (2012)).

WAI is not aware, at the time of preparing this report, of any modifying

factors such as environmental, permitting, legal, title, taxation, socioeconomic,

marketing, and political or other relevant issues that may materially affect the

Mineral Resource estimate herein; nor that the Mineral Resource estimate may be

affected by mining, metallurgical, infrastructure or other relevant factors.

The Fe grades in the final resource model were derived using the IDW3

estimation method. Mineral Resources have an effective date of 7 March 2022.

WAI assigned a density value of 2.36 t/m3.

The Mineral Resources are limited to those areas defined as having eventual

expectations of economic extraction as explained above. Based on the

optimisation parameters provided, the Mineral Resources are reported to a

breakeven cut-off grade of 17.48% Fe.

The Mineral Resource Estimate for potential open pit operations is reported

in Table 6.12 below.


– III-78 –




Table 6.12 : Mineral Resource Estimate, Northern Area & Southern Area

of the Kokbulak Iron Ore Project, Kazakhstan,

as of 7 March 2022, Cut Off Grade 30% In accordance

with the Guidelines of the JORC Code (2012)

Area Density Tonnage Total Fe

Metal

(Fe) CaO CO2 MgO P2O5 S

t/m3 Mt % Mt % % % % %

Inferred (South) 2.36 182 34.04 61.98 0.57 0.11 0.34 1.35 0.10

Inferred (North) 2.36 397 36.98 147.00 0.84 1.06 0.38 1.29 0.07

Inferred Total 580 36.06 208.98

Notes:

1. Mineral Resources are not reserves until they have demonstrated economic viability

based on a Feasibility study or pre-feasibility study.


3. The contained Fe represents estimated contained metal in the ground and has not been

adjusted for metallurgical recovery.



7 MINING

7.1 Overview

Development of the Kokbulak Iron Ore Project will begin with mining in the

Central Area which contains Measured and Indicated mineral resources. Mining in the

Central Area is to take place via a conventional open pit operation using conventional

hydraulic shovels and trucks for movement of ore and waste. Mineralisation comprises

near horizontal (1–2°) bedding located near-surface, with up to 14m of overburden.

Although a feasibility study was completed by Project XXI (a local Aktobe

consultancy) in 2013 which set out a mine plan to develop the Central Area of the

Kokbulak Iron Ore Project (based on resources estimation under GKZ standard), WAI

believes that much of the Project XXI 2013 Feasibility Study is indeed at

Pre-Feasibility Study Level and parts only at Scoping Study Level, hence no Ore

Reserves can be declared in accordance with the guidelines of the JORC Code (2012) as

to do so, requires all areas of the report to be at PFS level or greater. Furthermore, the

‘‘Project XXI 2013 Feasibility Study’’ has been completed in accordance with GKZ

requirements and not in accordance with the guidelines of the JORC Code (2012),

hence again Ore Reserves cannot currently be declared.


– III-79 –




As such, for this CPR, WAI has undertaken an independent review of the Project

XXI 2013 Feasibility Study and updated the relevant technical and financial

parameters such as ‘‘mineable’’ resources, mine plan and schedule based upon a

re-calculated ‘‘mineable’’ resources and grade derived from the Mineral Resources

Estimate for the Central Area.

7.2 Open Pit Optimisation

WAI undertook open pit optimisation work to delineate the ‘‘mineable’’ resource

for the Central Area.

To complete the works, WAI has followed the standard recommended workflow.

NPV Scheduler software is used for strategic long-term planning, including pit

optimisation and the generation of different strategic production scenarios. NPV

Scheduler has also been used to determine the optimum pushback shells for different

conditions.

Pit optimisation is a recognised technique by which different open pit shells may

be generated based on a supplied geological resource block model and a number of

user-defined economic and operating parameters. NPV Scheduler compares the

estimated value of the individual mining blocks at the pit boundary versus the cost

for waste stripping.

The main input data and parameters for pit optimisation include:

. Resource block model;

. Economic parameters;

. Processing parameters;

. Slope parameters; and

. Any existing pit limits.

The principal output data from pit optimisation includes:

. Block models and surface wireframes of optimal pit shells;

. Evaluation and economic data for optimal pits;

. Wireframes of suggested pushbacks; and

. Evaluation and economic data for long term mining schedules.

The optimisation was run to target a 24Mtpa of ore production rate with a 50%

reduction factor in the first year of production. The optimisation have been based on

the Mineral Resource block model ‘‘k_pmod.dm’’ generated by WAI, as presented in

this report.


– III-80 –




As this study targets the delineation of a mineable inventory, only the Measured

and Indicated Mineral Resources have been considered during the optimisation. These

two rock types make up 98% of the mineral resource. WAI notes that only Measured

and Indicated Mineral Resources may be considered for conversion to Ore Reserves

under the guidelines of the JORC Code (2012).

7.3 Parameters

The target of the optimisation study was to identify a suitably economic pit shell

upon which a detailed pit design could be based and to analyse the financial outputs. A

summary of the updated pit optimisation parameters for the scenarios is given in Table

7.1 below.

Table 7.1 : Pit Optimisation Parameters

Parameter Unit

Target Production Rate Mtpa ore 24

Mining Cost (Ore & Waste) US$/t rock 0.71

Processing Cost US$/t ore 15.6

Royalty Cost US$/t ore 2.12

Shipping Cost US$/t ore 16.00

G & A US$/t ore 0.61

Process Recovery % 96.6

Concentrate Grade %Fe 58.4

Discount Rate % 10

Overall Pit Slope Angle ° 35

Losses % 5

Dilution % 1.12

Bench Height m 10

Berm Width m 5

Fe Price US$/t Ore 100

Fe Price (58.4% Fe) US$/t conc 94

Breakeven Cut-Off Grade % 17.5

Since the Project XXI 2013 Feasibility Study to the date of preparation of this

CPR, the KZT/US$ exchange rate has changed to approximately 425KZT/US$ from

approximately 185KZT/US$ in this period which has had the effect of lowering or

reducing the effect of inflation on the mining and processing costs.

The latest World Bank long term price forecast for 62% Fe iron ore is US$90/t,

however due to the uncertainty in the current iron ore price forecasting, this study has

taken a long-term view of US$100/t, which WAI believes it is reasonable. The

concentrate price is quoted for a 62% Fe product, therefore the parameters have been

adjusted to account for the expected 58.4% Fe concentrate being produced.


– III-81 –




7.4 Optimisation Results

WAI has used NPVS to produce the open pit optimisation for the Central Area of

the Kokbulak Iron Ore Project. NPVS utilises the Lerchs-Grossmann (LG) algorithm

belonging to the family of Network Flows methods that finds the open pit shell

yielding maximum profit. The software considers successive application of the LG

method to a block model with varying block values (net profits from blocks). The

block values can be modified directly through product prices or through mining costs

with small positive fractional factors yielding small pits with high grade ore. Gradually

increasing the price/revenue factors produces a sequence of ever bigger pit shells.

A series of pit shells were generated at varying metal revenue factors ranging from

30% to 120%. A nominal Net Present Value (NPV) was reported for each pit shell,

enabling comparison of the economic value of the pit shell and determination of the

optimum economic return mining scenario.

The LG Phase analysis is shown in Figure 7.1 below. The analysis demonstrates

that the theoretical discounted NPV of the project increases rapidly up to the 52%

revenue factor, but thereafter increases slowly with only a marginal increase in NPV

for a significant increase in ore/waste tonnage.

Figure 7.1 : LG Phase Analysis


– III-82 –




7.5 Optimised Pit Shell Selection

The pit optimisation process in NPV Scheduler generates nested pit shells using

incremental revenue factors ranging from 30% — 120%, with a 1% step size to

generate 81 pit shells. A pseudoflow optimisation algorithm has been used, targeting a

maximum cash flow ore selection method. A revenue factor of 100% corresponds to

the price of US$94/t concentrate used in the optimisation.

Typically, the pit with a revenue factor equal to 100% is referred to as the

economic optimal pit, however this is not always the pit which generates the maximum

cash flow based on the specific inputs. Final selection of the optimum pit will also

depend on consideration of net cashflow, average mining cost, strip ratio, total ore,

and corporate life of mine scheduling requirements.

Selection of the optimised pit shell to be utilised for the financial analysis has been

made to optimise the nominal NPV whilst minimising the quantity of material

extracted and thus minimise the stripping ratio due to the sensitivity of NPV to early

waste extraction.

At revenue factor 65% (i.e. a smaller pit shell), a nominal NPV of US$3,353M is

generated with 337Mt of ore and 400Mt of waste. These values provide an NPV value

of 99% of the maximum value, extracting 95% of the available mineralised tonnage

and moving only 60% of the waste tonnage. The blue line on Figure 7.1 highlights the

position on the curve on which the 65% revenue factor shell sits.

7.6 Cut-Off Grade

The cut-off grade for the operations has been calculated based upon the

operational and cost parameters input into NPVS. As the iron ore concentrate price

is quoted for a 62% Fe product, the parameters were adapted to account for the

concentrate grade of 58.4% Fe expected from the processing operation.

The breakeven cut-off grade output by NPV’S for the Central Area of the

Kokbulak Iron Ore Project at the given parameters is 17.8% Fe, however it must be

reiterated that this value has not been utilised as an input, but rather is calculated

because of the optimisation parameters.


– III-83 –




7.7 Mine Scheduling

The optimisation process has derived a ‘‘mineable’’ resource on which to base a

schedule accounting for the 24Mtpa of ore production rate with a short ramp-up

period. The outcome of this exercise is shown in Table 7.2 below.

Table 7.2 : Mine Schedule for the Kokbulak Iron Ore Project (Central Area)

Year Rock Total Ore Total Waste Strip Ratio Grade

(Mt) (Mt) (Mt) (t/t) (%Fe)

1 48 12 36 3.04 39.7%

2 78 24 54 2.25 39.8%

3 84 24 60 2.48 39.9%

4 59 24 35 1.44 40.1%

5 57 24 33 1.38 38.1%

6 49 24 25 1.06 37.7%

7 50 24 26 1.10 37.8%

8 40 24 16 0.67 38.2%

9 47 24 23 0.94 37.5%

10 46 24 22 0.93 38.6%

11 35 24 11 0.45 38.1%

12 40 24 16 0.65 38.7%

13 41 24 17 0.70 39.2%

14 41 24 17 0.70 39.1%

15 23 13 10 0.74 39.4%

Total 737 337 400 1.19 38.74%

The mining and production schedule and relevant parameters might differ with

the parameters used in open-pit optimisation above of which WAI believes no material

concern.

However, it should be remembered that this optimisation work is not definitive

and must be considered as preliminary in nature, although it clearly does indicate the

considerable potential of the operation in Central Area.

7.8 Mine Operating Procedures

7.8.1 Mine Equipment Fleet

Within this CPR, an exact equipment requirement is not needed other than to

say that Caterpillar trucks and shovels have been factored into the calculations to

provide an efficient excavation and haulage cycle with ore production capacity of

24Mtpa of ore.


– III-84 –




Based on the Project XXI 2013 Feasibility Study, it is assumed that the

haulage distance from the open pit to the processing plant will not exceed 4.8km.

At the early stage of the pit life the waste dump will be located beyond the pit, but

later in life of mine the waste will be backfilled within the pit. Hence, the

assumption is that the waste haulage distance will not exceed 2km.

Since the mining method includes no drilling and blasting, it is recommended

that heavy track- mounted ripper bulldozers such as Caterpillar D9T or

Caterpillar D10T be added into the mining fleet to deal with difficult areas and

trim bench floors and for waste dump maintenance.

To reduce the movement of the main excavators, it is recommended to add to

the loading fleet heavy wheel-mounted loaders, whose main purpose will be to

remove the material ripped by bulldozers from the bench floor to support ore

stockpiles and backup the main excavators on production faces.

WAI considers the equipment selected for purchase is well suited to the

intended purpose.

7.8.2 Mine Workforce

According to the mine design, the mine will be operating 354 days in a year

on shift rotation basis. The daily shift pattern will be 2 shifts a day 11 hours each.

Based on the Project XXI 2013 Feasibility Study, the mining department will

consist of 299 personnel in total, including mining supervisors, drillers, samplers,

shotfiring crew, magazine supervisors and all the mobile machinery operators.

Should alterations to the mining fleet be made, the personal requirements will also

require revision. The plant manpower is 492, with mining and technical

comprising 299 staff, with additional head office manpower at 36, therefore the

total work force is 827. WAI believes the number of personnel required to perform

all the necessary tasks during the life of the mine to be accurate and suitable given

the operating conditions and the region.

7.8.3 Topsoil Harvesting

The topsoil at the project area is considered to have little value due to high

salt content and the absence of a homogenous layer as a result of natural

environment and climatic factors. As such, during the open pit mine construction

the topsoil shall be removed as waste rock.

7.8.4 Grade Control

To ensure efficient grade control and consistent feed to the processing plant,

grade control drilling will be used. Drill grid density of 100x100m was selected

based on experience of similar mines.


– III-85 –




7.8.5 Drill and Blast

Since the ore and waste consists of friable and loose cemented material, the

mining method will not include drilling and blasting. Where direct excavation will

be difficult, the material will be ripped with a bulldozer and removed with a

front-end loader.

7.8.6 Water Management

A dam will be constructed in Sabyrzhylga valley as a water catchment

reservoir to retain the ground water pumped from the open pit and surface runoff

water. This reservoir may have a positive impact on creation of a good

microclimate in the camp, which will be located nearby. As this water will not

be sufficient to cover the water requirement for ore processing, the mine design

allows for construction of a water pipeline from the Aishuaksky fresh-water

aquifer located 65km from the site, near Begimbet village.

7.8.7 Drainage and Pumping

Given the arid nature of the site area, at the early stage of the project life the

drainage system will only include culverts to divert seasonal rainfall and melt

water.

Within the mine life, the open pit is expected to hit a non-confined

underground aquifer below 170mASL. To deal with this water inflow, it is

proposed to construct a sump and remove the water with a 30m3/h mobile

overhung centrifugal pump through a pipeline into the water catchment reservoirs

outside of the open pit.

7.8.8 Equipment Costs

WAI considers that the production capacity of 24Mtpa of ore will require

higher capital costs to purchase equipment with appropriate capacity. The cost

estimate for the mining equipment proposed has been estimated at US$100.3M

(excluding contingency of US$10M and sustaining capital cost of US$31.2M). The

estimation was done based on the average market prices and WAI considers it is

reasonable.


– III-86 –




Project Mining equipment requirements have been summarised in the Table

7.3 below.

Table 7.3 : Project Mining Equipment Requirements and Costs

Equipment requirements

Unit

Cost Total Total

US$’000 Units US$’000

Shovels Cat 6030 FS/HITACHI EX2600–6 4,776 9 42,986

Dump Trucks Cat 777 1,304 36 46,953

Loader Cat-992K 2,414 2 4,829

Bulldozer Cat–8R 635 2 1,270

Land Leveller 14H,16Н/DZ-98 1,055 1 1,055

Sprinkling Truck KAMA3–65115 107 2 214

Tank-Car ACPT 56–274 Kamaz 91 1 91

Fuel Tanker ATZ 4,9 66 2 132

Long-haul truck 65116–6010–48, NEFAZ 9334 77 2 153

Truck Kamaz 65115 60 4 242

KRAZ — Trailer KTAZ — 6743 86 2 172

Vibratory Combined Rollar RV–9,0DS 59 1 59

Truck Crane Kamaz KS 65711 207 1 207

Kamaz 65117–6010–50 Drop-Side Truck 62 2 123

UAZ Passenger Car 17 2 35

Car ‘‘Niva’’ VAZ–21213 19 3 57

Crew Change Vehicle KAMA3 43118–3098–50 93 2 186

Bus ЛA3 5207 (84 seats) 300 2 600

UAZ Vehicle ‘‘Emergency Ambulance’’ 396260 17 1 17

Fire Truck Kamaz–AC 8.0–40 on the Chassis

KAMAZ 65115 187 1 187

Mobile Auto Repair Shop KAMAZ

43118–3027–50 107 1 107

Tyre Handler 240 1 240

Mobile Light Plant 42 9 378

Portal Bridge Crane 33 1 33

Total Capex (Initial) 100,325

Contingency (one off payment) 10% 10,032

Maintenance Capital (7% of annual mining

opex) 31,172

Additionally, contingency at 10%, and maintenance capital cost at 7% of

annual mining operating cost have been applied for the mining equipment.


– III-87 –




7.8.9 Mine Operating Costs

WAI has used a mining operating cost of US$0.71/t rock as we believe that

this is a reasonable assumption for the given production rate and equipment fleet.

However, the updated fleet will allow the achievement of economies of scale and

therefore the mining operating cost has the potential to be lower upon detailed

re-modelling.

7.8.10 Mining Workforce Costs

The average annual payroll for mining workforce is estimated to vary

between US$2 million/annum to US$4.5 million/annum depending on the stage of

the mine life. The average cost of workforce is estimated in the Project XXI 2013

Feasibility Study to be US$3.5 million/annum. WAI believes that these costs are

reasonable as at the date of this CPR.

8 MINERAL PROCESSING

8.1 Introduction

Processing on the mineralisation of the Kokbulak deposits, upon which the

Kokbulak Iron Ore Project sits on, has been studied in great detail in the past.

In 1950s, the Moscow Institute of Steels and Alloys, performed agglomeration

and sintering studies on the unprocessed iron ore samples from the Kokbulak deposit

and the Thematic Technological Party Central Laboratory of the Ural Geological

Office conducted mineral beneficiation tests involving heavy liquid, magnetic, gravity

and roasting-magnetic separation technologies.

The testwork conducted by the Centre of Geosciences, Metallurgy and Processing

in 2011 provides laboratory evidence that the thermo acid dephosphorisation of brown

iron samples from the Kokbulak Iron Ore Project, in particular from the Central Area,

is technically feasible and low-phosphorus and low-silica brown iron ore concentrates

can be obtained for the further cast iron melting.

In 2013 a testwork programme was commissioned and was performed at

VNIItsvetmet. A report of this testwork covering mineralogical and mineral

processing studies on two bulk samples from the Kokbulak Iron Ore Project was

issued in 2014.


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8.2 Soviet Data

8.2.1 Data Sources

The following reports were submitted for review:

a) Study of the material composition and concentration of the iron ore

from the Kokbulak deposit — Volume 1; Moscow Institute of Steels and

Alloys (‘‘MISA’’) — Moscow; 1954;

b) Study of the material composition and concentration of the iron ore

from the Kokbulak deposit — Volume 2; (MISA 1954); and

c) The study of the composition and concentration of four samples of iron

ore from the Kokbulak deposit; Thematic Technological Party Central

Laboratory — Ural Geological Office — Sverdlovsk; 1955.

8.2.2 Provenance and Nature of Samples

Both the metallurgical and mineral processing studies carried out in 1952–53

under the co-ordination of MISA (1954 Report Volumes 1 and 2) were performed

on three bulk samples which represented the three main ore types at Kokbulak.

The weight of each sample was approximately 600kg.

The three bulk samples were described (Volume 2) as:

. Sample 1 : brown and yellowish brown oolitic and weekly cemented

oolitic mineralisation:

. Provenance: Pit 77 Central Area, depth of 2.80 –5.00m;

. Mineralogical classification: hydrogoethite type;

. Components of the sample:

. Oolite brown and yellow-brown — 60%;

. Cement brown and yellow-brown — 9%;

. Crusts ferruginous sandstones and clay — 10%; and

. Quartz grains — 21%.


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. Sample 2 : dense, green, grey-green or black-green ore with

chlorite-siderite cement:

. Provenance: Pit 61 Central Area, depth of 25.00 –26.75m;

. Mineralogical classification: hydrogoethite-chamosite-siderite type

with chlorite- siderite cement; and

. Sample 3 : black loose — granular oolitic:

. Provenance: Pit 207 Northern Area, depth of 11.0–13.0m.

. Mineralogical classification: mainly hydrogoethite type with thin

layers (crusts) of yellow and brown clay and brownstones.

In 1954 four additional composite samples, weighing approximately 100kg

each, were prepared from drill cores and underwent a variability testwork

programme under the Thematic Technological Party Central Laboratory — Ural

Geological Office (1955 Report). The new samples were described as follow:

. Sample 4 : brown oolitic, weakly cemented, interbedded with clay and

ferruginous sandstones:

. Provenance: Unknown, but selected from six drill holes;

. Mineralogical classification: Hydrogoethite and

Hydrogoethite-siderite- chamosite;

. Components of the sample:

. Oolites black and brown — 54%;

. Cement brown and yellow-brown — 8%;

. Brown clay and ferruginous sandstones — 15%; and

. Quartz grains — 23%.


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. Sample 5 : greyish-brown unconsolidated ore interbedded with thick

crusts and grey and brownish — grey sideritic sandstones:

. Provenance: Unknown, but selected from four drill holes;

. Mineralogical classification: hydrogoethite,

hydrogoethite-siderite-chamosite and Siderite;

. Sample 6 : black, loose, granular oolitic ore and dense grey and brown

siderite and ferruginous sandstones:

. Provenance: Unknown, but selected from four drill holes;

. Mineralogical classification: hydrogoethite and

hydrogoethite-siderite- chamosite;

. Sample 7 : friable greenish-grey with numerous bands of grey

argillaceous sideritic sandstones:

. Provenance: Unknown, but selected from nine drill holes; and

. Mineralogical classification: hydrogoethite-siderite-chamosite and

siderite.

In the first type, the main Fe mineral is hydrogoethite, in the second type

hydrogoethite remains the most abundant mineral together with siderite and

chamosite. In the third type the main Fe mineral is siderite.

Structurally the mineralisation has been divided in three main styles:

. Brown ore (weekly cemented);

. Black loose ore; and

. Green Ore.

In Table 8.1 the chemical composition of the metallurgical samples (before

processing) is compared to the average composition of brown, black and green

types of commercial ores (before processing) estimated by statistical method

according to the Project XXI 2013 Feasibility Study.


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Table 8.1 : Metallurgical Samples Composition — Soviet Reports 1954/1955

Sample Number 1 4 3 5 6 2 7

AVG Commercial Ores

Reserves according to

Project XXI 2013

Feasibility Study

Type Brown Black Green Brown Black Green

Mineralogy H

H

HSC H

H

HSC

S

H

HSC HSC

HSC

S — — —

Elements Content,% Content,%

Fe 44.65 37.85 42.72 37.00 41.78 28.05 31.75 36.64 39.83 35.83

Fe2O3 63.76 54.04 60.71 48.41 58.80 25.89 34.33

FeO 0.07 0.07 0.36 4.05 0.85 12.78 9.96

P 0.76 0.45 0.65 0.52 0.55 0.43 0.42

P2O5 1.74 1.05 1.49 1.21 1.26 0.98 1.05 1.42 1.46 1.30

SiO2 13.44 23.35 17.50 23.61 17.71 32.30 26.32

Al2O3 6.37 6.66 7.45 6.17 6.33 7.37 7.45

TiO2 0.33 0.35 0.41 0.36 0.35 0.48 0.44

CaO 1.28 1.73 0.86 1.15 0.98 3.34 1.88

MgO 0.59 0.9 0.57 1 0.73 1.44 1.24

S 0.06 0.07 0.04 0.05 0.08 0.05 0.06 0.14 0.05 0.09

Cr2O3 0.040 0.027 0.020 0.034 0.042 0.020 0.027

V2O5 0.08 0.04 0.06 0.05 0.06 0.05 0.04

MnO 0.36 0.37 0.43 0.38 0.37 0.39 0.38

Ni 0.02 0.02 0.02 0.02 0.02 0.01 0.02

Pb 0.01 0.04 0.1 0.02 0.02 seq. 0.07

Zn 0.07 0.06 0.07 0.06 0.06 0.07 0.05

Cu 0.02 0.01 0.01 0.02 0.01 0.01 0.01

Co 0.015 0.01 0.02 0.008 0.01 0.02 0.008

As 0.007 0.008 0.011 0.006 0.018 0.005 0.009

CO2 0.16 1.28 0.36 3.6 1.12 8.33 6.68 2.73 4.12 6.66

LOI 11.44 10.04 11.4 9.42 11.02 6.87 9.2 10.79 11.53 13.05

WAI Comment: Although the details of the sample composition and

preparation were not available for review, it appears that the samples used in

the historical Soviet metallurgical reports cover the entire spectrum of

mineralisation types and paragenesis present in the Kokbulak deposit. The

classification was substantiated by macroscopical and optical microscopy

mineralogical analysis. The analysis correctly identifies that the phosphorus

content is bound to the main part of the ore mass, in which it is present as an

isomorphous impurity. The chemical analysis of some of the samples (before

processing) are close to the average estimated composition of commercial ores

(before processing) according to the Project XXI 2013 Feasibility Study with the

remaining samples covering a variability range per each ore type. Both low grade

(Fe 34–40%) and high grade (Fe>=40%) ores are represented within the tested

samples.


– III-92 –




8.2.3Testwork Review

8.2.3.1 Moscow Institute of Steels and Alloys

The first documented processing studies on the Kokbulak iron ore

deposit were performed in 1952–1953 by MISA on samples of the three main

types mineralisation, subsequently identified as Samples 1, 2 and 3. These

testwork investigated the recoverability, porosity, sintering conditions,

agglomerate quality and other parameters to assess the performance of the

ores, prior to any enrichment by mineral processing, in blast furnace

smelting.

While detailed results from MISA works are not available to WAI but

only a summary of general findings, sintering tests showed that brown and, in

particular, black ore types can produce agglomerates with low content of

FeO (less than 15%), high porosity, good recoverability and high mechanical

properties.

These ore types were considered suitable for blast furnace smelting

without processing. The good reducibility of these ores was explained by the

low content of limonite and siderite and the high in- situ porosity.

For green ore, the lower grade sample No. 2, processing by roasting and

magnetic separation was initially suggested to reduce the chlorite content

prior to sintering. Subsequent studies indicated that there is no practical

benefit from processing Kokbulak iron ores using the roast-magnetic

separation routes as opposed to direct high intensity magnetic separation.

Sintering tests performed on 0–2mm dry magnetic concentrates did not

reveal any technical issues.

WAI Comment: Sintering tests showed that hydrogoethite-rich

Kokbulak iron ores have good reducibility, but high levels of impurities.

Therefore, Kokbulak ores and concentrates will require blending with ores

and concentrates of different origin and nature in order to produce a suitable

feed for blast furnaces. Phosphorous, the major impurity, is present with

values constantly above 1% and roughly one order of magnitude higher than

the desirable level. It will drive the requirement for any treatment and

blending of the concentrates. Kokbulak ores are also characterised by high

silica and alumina contents. The resulting very low Basicity index (B=(CaO

+MgO)/(SiO2+Al2O3)), constantly below 0.12 in all samples, will

determine the need for the production of a heavily fluxed agglomerate.

8.2.3.2 Sverdlovsk

All samples underwent a programme of testwork including:

. Dry High Intensity Magnetic Separation (HIMS);


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. Roasting followed by dry Low Intensity Magnetic Separation

(Roasting-LIMS);

. Heavy Liquids Testing (HL); and

. Preliminary Gravity Separation by Jigging.

The main findings of the testwork programme are summarised in Table

8.2.

Table 8.2 : Mineral Processing Tests Results — Soviet Reports 1954/1955

Sample

No. Test Method

Size

Fraction

mm

Mass

Yield %

Concentrate Fe

Recovery

%

% Fe % P

1 HIMS 0–2mm 2–0 90.4 47.51 0.80 97.2

HIMS 2–0.22/0.22–0.074 mm 2–0.74 90.9 47.39 — 96.9

HIMS 0.22mm with desliming 0.22–0.04 83.0 48.72 — 88.9

HL +74m 2–0.74 82.2 49.2 — 91.8

4 HIMS 0–2mm 2–0 70.1 50.78 0.62 90.2

HIMS 2–0.22/0.22–0.074 mm 2–0.74 72.6 50.64 — 98.0


Roasting-LIMS 2–0mm 2–0 72.6 50.64 0.68 98.0

Roasting-LIMS 0.22–0mm 0.22–0 66.2 53.27 0.58 95.1

HL +74m 0.74–2 47.2 64.71 0.78 81.3

3 HIMS 0–2mm 2–0 85.0 48.75 0.75 96.0

HIMS 2–0.22/0.22–0.074 mm 2–0.74 86.5 48.01 — 96.7

HIMS 2–0.22/0.22–0.074 mm 0.22–0.04 80.8 47.79 — 85.7

HL +74m 2–0.74 81.3 48.72 — 92.7

5 HIMS 0–2mm 2–0 70.4 50.20 0.78 93.2

Roasting-LIMS 2–0mm 2–0 68.6 49.44 0.81 97.4

Roasting-LIMS 0.22–0mm 0.22–0 70.8 51.26 0.84 97.7

HL +74m 2–0.74 67.6 47.44 0.72 86.5

6 HIMS 0–2mm 2–0 74.0 52.06 0.72 94.1

Roasting-LIMS 2–0mm 2–0 77.6 52.49 0.84 97.5

Roasting-LIMS 0.22–0mm 0.22–0 73.4 55.68 0.86 96.5

HL +74m 0.74–2 77.8 49.06 0.72 91.4

2 HIMS 0–2mm 2–0 82.2 33.00 0.49 95.0

HIMS 2–0.22/0.22–0.074 mm 2–0.74 68.2 34.30 — 82.2


HL +74m 2–0.74 43.0 43.46 — 51.4

7 HIMS 0–2mm 2–0 65.6 42.07 0.51 95.5

Roasting-LIMS 2–0mm 2–0 64.2 48.87 0.78 94.3

Roasting-LIMS 0.22–0mm 0.22–0 57.6 51.11 0.82 91.5

HL +74m 2–0.74 53.5 45.08 0.70 76.0


– III-94 –




HIMS was performed on various size classes in four successive passes

with increasing field intensities of 5400, 7200, 9600 and 10000 gauss. An

induced roll dry separator was used for all tests. Results indicate that a high

field strength (10000 gauss) is required to obtain good Fe recoveries and that

dry HIMS can be satisfactorily performed on the unclassified 0–2mm size

fraction. Concentrate grades obtained ranged from 47.5% to 52.1% with Fe

recoveries from 90.2% to 97.2% for brown and black ore. Green ores

produces 34–42% Fe grades with Fe recoveries in the order of 95%.

Calcination was performed in a laboratory rotating tube furnace. Firing

was carried out in a reducing atmosphere at a temperature of 550oC for 30

minutes. All samples magnetised satisfactorily, and LIMS was tested with

both dry drum electromagnetic separator and wet tubular electromagnetic

separator with comparable results.

Compared to direct HIMS, roasting followed by LIMS produced

comparable grades at higher recoveries (approximately 5% higher) for

brown and black ores. As expected, green ores performed better with roasting

followed by LIMS with final concentrates grade close to 50% Fe and

recoveries comparable to those obtained with direct HIMS

Heavy Liquids testing showed that gravity methods may be used to

upgrade Kokbulak iron ores at grain sizes below 2mm with results just

slightly lower that direct HIMS. Jigging tests were not conclusive and hence

not included in Table 8.2 above.

WAI Comment: Soviet Testwork extensively investigated the possibility

to upgrade Kokbulak iron ores by means of gravity, magnetic and roasting

plus magnetic separation. They succeeded in demonstrating that concentrates

grading in excess of 48% iron can be obtained by HIMS from brown and

black ores with reasonable recoveries. The same results could not be obtained

with the green ores. The roasting plus magnetic separation route was not

considered economically justified. All concentrates obtained showed a high

phosphorus content, which ranges from 0.51 to 0.72%. No attempt was made

to reduce the phosphorus content of the concentrates. Figure 8.1 graphically

illustrates the grade — recovery relationship obtained for the direct dry

HIMS and roasting plus magnetic separation processes (Marker’s colours

identify the mineralisation types: brown, black, and green). Figure 8.2 shows

the linear relationship obtained between the upgrade ratio (%Fe

concentrate/%Fe Feed) and the mass yield of concentrate (except for

roasting and magnetic separation of green ores). This type of graph which

eliminates the effect of varying head grade, is useful to compare the

metallurgical response of different samples. Notwithstanding a certain

variability in the head samples, the testwork results are predictable in

terms of grade/recovery on the basis of the head grade and the mineralization

type.


– III-95 –




Figure 8.1 : Grade Recovery Relationship

Figure 8.2 : Concentration Ratio vs Mass Yield — HIMS

Roasting-Magnetic Separation and HL Process


– III-96 –




8.3 JSC ‘‘Centre of Geosciences, Metallurgy and Processing’’ and VNIItsvetmet

Testwork

WAI has reviewed a report prepared by the Joint Stock Company (‘‘JSC’’) ‘‘Centre

of Geosciences, Metallurgy and Processing’’ testwork report (Levintov B.L. and

Others). The report dated 2011 relates to dephosphorisation and smelting tests

performed on a sample of the Kokbulak mineralisation.

The samples used for testwork are described as shallow samples collected from the

Southern and Central Areas of the deposit. The sample average composition is shown

in Table 8.3. The number of samples is not known to WAI.

Table 8.3 : Kokbulak JSC CGMP Samples Chemical Analysis

Sample Fe SiO2 Al2O3 P%

South Sample 22.0 48.9

Central Sample 47.6 10.1 5.26 0.70

Mineral processing of the samples by means of gravity and magnetic technologies

confirmed the unsuitability of the gravity method and obtained magnetic concentrates

with results and process performances in line with both the Soviet data and the

VNIItsvetmet testwork.

Samples of the magnetic concentrates obtained were then used for a

comprehensive series of dephosphorisation and smelting testwork. Alkaline and acid

leaching dephosphorisation together with ‘‘two-slag’’ blast furnace, Romelt and the

Kobe’s ITmk-3 smelting processes were tested.

The most relevant tests were performed on the high-grade (46.58% Fe) ores from

Central Area and their magnetic concentrates.

Received concentrates after thermo activating processing at 950°С were subjected

to acid or alkaline dephosphorisation. Using acid dephosphorisation with 5–7%

sulphuric acid at 50°С, cakes were obtained, containing 0.21% P; during alkaline

non-autoclave dephosphorisation with 10% NaOH at 80°С cakes containing 0.15% P

were obtained.

The studies showed that phosphorus in the magnetic concentrates (MC) is in two

forms: approximately 80% is contained in soluble components whilst the remaining

20% is in insolubles. Autoclave alkaline processing of MC was conducted in two

variations producing cakes with P content as low as 0.10–0.13%.

The study provides some evidence that the insoluble phosphorous is contained in

corundum-like AlPO4 compounds and therefore further deep thermo chemical

dephosphorisation of oolitic concentrates is likely unfeasible.


– III-97 –




Studies of thermo acid dephosphorisation were in particular performed on

samples of Kokbulak MC containing 49.0% Fe, 0.7% Р, 4.74% SiO2, 5.25% Аl2O3,

0.55% CaO and 1.1% MgO.

Roasting was carried out in a muffle furnace with carborundum heaters in

oxidising atmosphere at 800, 900, 950 and 1000°С.

The process yielded 85.5–85.7% of scoria by weight containing 57.3% Fe, 0.82%

Р, 5.6% SiO2, 6.1% Аl2O3, 0.65% CaO, 1.2% MgO.

Acid leaching of the scoria was performed with sulphuric acid at 50°С with a

solid to liquid ratio of 1 : 3, acid concentrations of 50 and 75g/dm3. The best results

were obtained at 900–950°С with 50g/dm3 H2SO4 : phosphorus grade in cakes was

reduced to 0.19–0.21%, silica and alumina to 4–6% and the iron losses did not exceed

1–2%. The phosphorus extraction was 75–77%.

The most advanced ironmaking method is two-slag melting, which allows

adjustment of temperature, alkalinity ratio and oxidation of the metal bath. Romelt

and ITmk-3 are less flexible, but less expensive. The testwork shows that with all the

above technologies the production of cast iron with less than 0.3%P is feasible.

Tests on liquid-phase reduction of cakes from thermo acid dephosphorisation

were carried out at 1300–1500°С and holding time 20–60min. Cast iron production

yielded 60.5–61.7% by weight with phosphorus content of 0.13–0.19%.

Tests with the Romelt process showed that the iron recovery into cast iron

averages 95–98.5% and the phosphorus content fluctuates between 0.13% and 0.25%

depending on the amount of lime in the slag.

Dephosphorisation of alkaline cakes and roasted at 1000°С RMC

(Roast-Magnetic Concentrates) was tested using ITmk-3 method. Results were not

satisfactory and further studies were recommended on slag composition and process

temperatures.

The flowsheet in Figure 8.3 was recommended for treatment of Kokbulak ores.


– III-98 –




Figure 8.3 : JSC CGMP Recommended Flowsheet

WAI Comment: The JSC study has provided laboratory evidence that the thermo

acid dephosphorisation of brown iron samples from the Kokbulak deposit, in

particular from the Central area, is technically feasible and low-phosphorus and

low-silica brown iron ore concentrates can be obtained for the further cast iron melting

Post Feasibility Mineral Processing Studies — VNIItsvetmet 2014 Report

In the second half of 2013 a programme of mineral processing testwork was

commissioned to the National Centre of Complex Mineral Processing of the

Republic of Kazakhstan’’ ‘‘VNIItsvetmet’’.


– III-99 –




The two samples submitted are described as:

. Sample 1 : friable ore without cementing (coded KBS, also called ‘‘black

crumble’’); and

. Sample 2 : oolitic brown and oxidised ore (coded KBZ, also called

‘‘lumpy ore’’).

Total iron content in the sample of black crumble KBS is 52.64%, and in

lumpy sample KBZ is 44.77%, significantly higher than the average in the

commercial reserves of the Kokbulak deposit (39.38%). According to the report

the two bulk samples were apparently taken from the middle layers of

mineralisation without any dilution host rocks and internal layered waste.

Content of phosphorus pentoxide in ore samples is 0.74–0.97%, which is less than

the average for the Central Area of the deposit, but close enough to ores of

Northern Area and Southern Area (1.39–1.38% P2O5).

The Kokbulak Iron Ore Metallurgical Sampling Passport further explained

that, due to shortage of time, the metallurgical sample had to be collected quickly

in June 2013 from bedrock outcrops in the left flank of Tassay Gullet, part of the

Central area. No data for drill holes was prepared. The samples have been

composited from individual 15.0–35.0kg increment samples collected in 23 points

located in Tassay Gullet. Only friable and cemented mineralisation were sampled

and the third ore type (green) was excluded.

Given the unrepresentative grades, sample collection method and lower

phosphate content, WAI has discounted the testwork results of the Centre of

Geosciences, Metallurgy and Processing and VNIItsvetmet and no further details

are provided here.


– III-100 –




8.4 Processing section of Project XXI 2013 Feasibility Study

8.4.1 Background

In the Project XXI 2013 Feasibility Study, the processing section is developed

by analogy with the processing facilities at the Lisakovsk mine in North

Kazakhstan. Project XXI justified this decision on the basis of the genetic and

mineralogical similarities between the Kokbulak and Lisakovskoye mineral

deposits and WAI agrees. Table 8.4 shows a comparison between the average

compositions of the two deposits.

Table 8.4 : Kokbulak and Lisakovskoye Mineralisations Chemical Analysis

Deposit Fe FeO Fe2O3 SiO2 CaO MgO Al2O3 MnO P S

Kokbulak 39.4 3.70 58.8 20.6 0.98 1.07 6.81 0.30 0.69 0.07

Lisakovskoye 41.3 0.30 58.7 24.3 0.28 0.36 4.32 0.22 0.57 0.01

The Process Design Criteria for the whole flowsheet are contained in the

Project XXI 2013 Feasibility Study and have been further clarified in a document

recently provided to WAI by the Client titled ‘‘Kok-Bulak Ore Process Design

Basis’’.

The Kokbulak flowsheet comprises two main sections:

1) Gravity Magnetic Circuit (GMC); and

2) Dephosphorisation Circuit (DC).

The gravity magnetic circuit includes

. Crushing with hammer crusher to –30mm;

. Wet screening of the –2mm size fraction;

. Grinding of +2mm oversize in rod mills to –2mm;

. Desliming in screw-type classifier at 0.1mm;

. Gravity processing: two stages jigging to produce final concentrate and

middling;

. Magnetic separation: three stages of dewatering and magnetic

separation of jigging middling to produce concentrate and tailings; and

. Dewatering and filtration of concentrate.


– III-101 –




The dephosphorisation circuit includes:

. Roasting of gravity magnetic concentrate in cylindrical rotating kiln at

900–920°С;

. Magnetic separation of roasted concentrate;

. Sulphuric acid leaching of the magnetic fraction followed by washing

and neutralization of the concentrate;

. Filtration of cleared concentrate.

Gravity-magnetic concentrate with 10% moisture is sent to the rotating kiln

feed hoppers. The concentrate is roasted in counter-flow, natural gas fuelled,

rotating cylindrical kiln.

After roasting, the concentrate is sent for temperature reduction from 900°Cto 80°C and conveyed into a storage bin. The roasted concentrate is screened to

remove coarse (+2mm) sinters and the undersize product is sent to the dry

magnetic separation. Non-magnetic and magnetic fractions are re-pulped and

respectively pumped to the leaching circuit and the mine waste facility.

Leaching is performed with sulphuric acid in Pachuca tanks and the reacted

slurry is pumped to the thickener. Sand from thickener (concentrate) is washed in

two stages in spiral classifiers. Lime milk is added for neutralization before the

pulp is pumped to filtration on vacuum belt filters. Filtrated concentrate is

conveyed for storage and then is dried (in wintertime).

Spent solutions are neutralised in agitators by limestone pulp and lime milk.

Neutral pulp is combined with tailings of the processing plant and pumped to the

tailings dam.

The gravity magnetic flowsheet is illustrated in Figure 8.4.


– III-102 –




Figure 8.4 : Project XXI 2013 Feasibility Study Conceptual Flowsheet — Gravity/Magnetic

The dephosphorisation flowsheet is illustrated in Figure 8.5.


– III-103 –




Figure 8.5 : Project XXI 2013 Feasibility Study Conceptual Flowsheet — Dephosphorisation


– III-104 –




8.4.2 Metallurgical Design Criteria

Concentrate grades, recoveries and mass balances are derived from the 1950s

Soviet Studies for gravity magnetic circuit and by analogy to the Lisakovsk plant

for the dephosphorisation circuit

Table 8.5 summarises the basic metallurgical design criteria (metallurgical

balance) utilised in the Project XXI 2013 Feasibility Study.

Table 8.5 : Kokbulak Iron Ore Project XXI 2013 Feasibility Study Basic Metallurgical

Design Criteria

Products

Quantity Analysis, % Recovery, % Content, kt

kt % Fe P Fe P Fe P

Original Ore (dry) 13,000 100.0 40.20 0.69 100.0 100.0 5226 89.7

Concentrate (Gravity-

Magnetic) 10,462 80.48 48.25 0.61 96.6 71.0 5048 63.7

Tailings 2,538 19.52 7.02 1.02 3.4 29.0 178 26.0

Dephosphorised

Concentrate 8,290 63.77 59.37 0.28 94.2 26.0 4922 23.2

Dephosphorisation

Losses 739 5.7 17.0 5.5 2.4 44.9 126 40.3

Losses at Roast 1,433 11.0

WAI Comment: Figure 8.6 graphically shows the position of

gravity-magnetic circuit metallurgical performance assumed in the Project XXI

2013 Feasibility Study in comparison to the most relevant Soviet and

VNIItsvetmet Testwork results.


– III-105 –




Figure 8.6 : Gravity-Magnetic Metallurgical Design Criteria

WAI Comment: Although the design criteria appear to be reasonably placed

in consideration of the test performed and the flowsheet proposed, the following

considerations can be made:

. The combination of the gravity and magnetic processes has never been

tested on Kokbulak samples. The requirement and the effectiveness of a

flowsheet combining gravity and magnetic technologies in not supported

by testwork evidence; and

. Most of the magnetic separation testwork were performed with dry

induced roll separators. Results must be confirmed on wet HIMS as per

flowsheet.

WAI is of the opinion that further testwork, on representative samples, is

required to confirm the flowsheet definition and provide further confidence in the

process design.

In terms of dephosphorisation process, the design criteria and flowsheet have

been developed by simple analogy with the processing facilities at the Lisakovsk

mine. As already commented in this CPR, there is a substantial similarity between

the two mineralisation types and it is possible that the process utilised at

Lisakovsk can be applied at Kokbulak.


– III-106 –




However, successful dephosphorisation testwork of Kokbulak concentrates

using the Lisavosrsk flowsheet has yet to be performed.

According to published information1 at Lisakovsk GOK, following several

trials and technology adjustments, an experimental hydrometallurgical plant for

dephosphorisation of the iron gravity-magnetic concentrate was placed in

operation during late 2011. The implemented technology included roasting at

900°C in neutral media to hematite followed by dry high intensity magnetic

separation and leaching in pachucas with sulphuric acid. Laboratory tests showed

that the level of phosphorus can be decreased down to 0.15 — 0.20%, although,

the paper also states that ‘‘unfortunately, up to now, such level of P removal is

still not attained at plant scale.’’

WAI believes that this technology was not pursued further and that there are

no commercial plants of this type around the world.

8.4.3 Plant Design Criteria

Consequently, even though the Project XXI 2013 Feasibility Study uses a

process flowsheet which is commercially unproven, WAI has utilised the flowsheet

as no other option is available as at the date of this CPR and clearly additional

testwork is required to both optimise the flowsheet and solve the

dephosphorisation issue.

From the Project XXI 2013 Feasibility Study, the process plant is devised as

being made of a large number of parallel identical lines. The plant comprises up to

four crushing circuits followed by 10/11 gravity-magnetic and dephosphorisation

lines.

Plant operation is planned over 330d/year and 7,920h/year giving an overall

plant utilisation of 90%. The processing plant is proposed to be continuously

operated with three 8 hours, shifts per day.

The number of employees based in the plant is 492 people.

1 Removal of phosphorus through roasting of oolitic iron ore with alkaline earth additives — K. Ionkov

and others — XXVI International Mineral Processing Congress (IMPC) 2012 — September 2012


– III-107 –




Basic consumptions per tonne are estimated as shown in Table 8.6

Table 8.6 : Kokbulak Iron Ore Project Basic Process Plant Consumables

Materials

Consumption per

1 ton of plant feed

Consumption per

1 ton of concentrate

(GM)

Electricity, kwh 23.5 38.6

Water Including Return, m3 15.9 26.1

Lining Steel, kg 0.011 0.018

Hummer Liners, kg 0.0019 0.0031

Rod, kg 0.019 0.032

Mill Lining, kg 0.029 0.048

Natural Gas, m3 44.5 73.0

Sulphuric Acid, kg 29.4 36.5

Limestone, kg 39.8 49.4

Lime, kg 4.02 5.00

WAI considers that the assumptions are reasonable and adequate for a

preliminary evaluation of project economics.

WAI Comment: Most of the costs are based on industry standard

assumptions or on analogy with the Lisakovsk mine according to the Project

XXI 2013 Feasibility Study. With the exception of the natural gas, the unit

consumptions in Table 8.6 are deemed to be reasonable and in line with industry

standards.

Project XXI 2013 Feasibility Study assumed a natural gas consumption of

45m3/t and 20m3/t respectively for the concentrate roasting and lime production.

WAI would recommend using higher energy requirements of 2.5GJ/tconc and

1GJ/tCaO for concentrate roasting at 900oC and lime production respectively as

per average published data on concentrates roasting and lime plants. By following

these higher energy requirements, WAI opines that this would equate to a

requirement of 73m3 of natural gas per tonne of concentrate and 30m3 of natural

gas per tonne of CaO.


– III-108 –




8.4.4 Plant CAPEX

The total CAPEX for the processing plant, excluding site infrastructures and

mine waste facility, is calculated at US$313 million based on the data of the

Project XXI 2013 Feasibility Study and the revised Financial Model.

A CAPEX breakdown for the processing plant based on the Project XXI

2013 Feasibility Study which is further updated by WAI is given in Table 8.7

below.

Table 8.7 : Processing Capital Costs Summary (US$’000)

Plant Building Construction 60,000

Ore Beneficiation Lane 81,376

Concentrate Roasting 168,675

Lime Hydration 505

Sulphuric Acid Storage Facility 2,641

Total Initial Processing Plant Capex 313,197

Contingency (10%) 31,320

Sustaining (5% of annual processing operating costs) 203,578

WAI believes the processing plant capital costs estimation is reasonable.

8.4.5 Plant Operating Costs

Plant operating costs estimated based on the data of the Project XXI 2013

Feasibility Study and have been updated by WAI for the purpose of this study.

Thus, for 2021, the overall processing cost resulted in US$15.62 per t of ore

treated. More details on processing cost assumptions are shown in Table 8.8

below.

Table 8.8 : Project Processing Costs

Area

Magnetic separation

Cost $ per

tonne milled

Power 0.87

Lining Steel 0.04

Steel for Crusher 0.01

Picks 0.02

Mill Balls 0.03

Conveyor Belt 0.07

Total for Magnetic Separation 1.03


– III-109 –




Dephosphorization

Cost $ per

tonne

concentrate

Natural Gas (Dephosphorization) 5.27

Sulfuric Acid 3.47

Limestone 8.25

Lime 0.84

Filter Fabric 0.02

Total Reagents* 17.85

Area

Cost $ per

Tonne ore

processed

Plant Salary & Oncost 0.04

Magnetic Separation 1.03

Dephosphorization* 14.36

Other Fixed Costs 0.19

Processing Unit Cost 15.62

* This calculation is US$17.85/80.48% (taken from Table 8.5) = US$14.36

8.5 Conclusions

The Kokbulak mineralisation has been studied in great detail and the testwork

performed to date confirm a good repeatability in terms of gravity and magnetic

separation results giving sufficient confidence in the metallurgical performances of this

section of the flowsheet.

Nevertheless, WAI is of the opinion that some additional gravity-magnetic

testwork utilising representative samples would further improve processing confidence

levels

The testwork conducted by the Centre of Geosciences, Metallurgy and Processing

in 2011 provides sufficient laboratory evidence that the thermo acid dephosphorisation

of brown iron samples from the Kokbulak deposit, in particular from the Central

Area, is technically feasible and low-phosphorus and low-silica brown iron ore

concentrates can be obtained for the further cast iron melting.

The dephosphorisation technology was only applied at the plant in Lisakovsk.

However, WAI understands that Lisakovsk chose not to pursue the dephosphorisation

technology with the result that WAI is not aware of any commercial operations of this

type.

WAI is of the opinion that further pilot testwork on representative samples from

Kokbulak regarding the use of the dephosphorisation process would also further

improve processing confidence levels.


– III-110 –




In addition, WAI is of the view that an iron ore concentrate grading 58.4% Fe

with a low level of impurities (P50.30%) is potentially achievable and hence saleable.

As stated in the Industry Report prepared by Ipsos Asia Limited for the purpose

of the listing of the Company on the Main Board of the Stock Exchange, such an Iron

ore concentrate with a phosphorous level<0.30%, is able to meet the technical

requirement in the Russian and PRC Markets to be potentially saleable.

The project appears to be more sensitive to plant OPEX rather than to plant

CAPEX and almost 85–90% of the plant OPEX is determined by four items — namely

power, natural gas, sulphuric acid and limestone — whose consumption is derived by

analogy from the Lisakovsk mine process plant and from industry standards.

9 ENVIRONMENT, SOCIAL, HEALTH & SAFETY

9.1 Introduction

This review of the environmental and social performance of the Kokbulak Iron

Ore Project is based on a brief site visit and reconnaissance, together with discussions

with staff of the Client. The following sections provide an overview of the Project and

the way that the company manages its health, safety, environmental and social

obligations.

Whilst WAI believes it has gained sufficient insight into the key issues and

performance, there may be additional information that was not seen, or variations in

interpretation of the available data that could not be explored further.

A site visit was undertaken on the 7th of September 2021. Documents and plans

provided by the company staff included:

. Environmental Impact Assessment (‘‘OVOS’’) section from Kokbulak

Mining Plan, Turebekova IE, 2021;

. Draft Mine Closure and Rehabilitation Plan, QAZTAUKEN Scientific

Design Institute LLP, 2021;

. Minutes of Public Consultation Meeting, 2021;

. State Approvals of Kobulak Mine Plan and a Draft Closure and

Rehabilitation Plan; and

. Exploration and Mining Contract for Subsoil, 2010

9.2 Environmental and Social Setting and Context

The environmental setting for the site has been previously described in Section 5

of this report, although it is worth elaborating on the water issue pertaining to the site

in a little more detail.


– III-111 –




The OVOS states there are no surface water courses in the deposit area as in

general, there is very limited water within the North Aral region. Ground water in the

area of the deposit is between 7–11m below surface, whilst within the proposed central

pit area, ground waters were observed between 0- 35m, and on the northern area site it

has depths of about 8–27.8m. There are gully pools near the Kokbulak spring and a

group of wells in Altynkazak gully which are preserved all year round.

Whilst there is a seasonal farm building near the property which uses borehole

water for cattle and drinking water, the low levels of water in the area of the deposit

means there is a potential issue with regards water supply. It is understood the current

plan considers three options for the mine potable water supply including abstracting

water from Oligocene sediments, from a confined aquifer of Saksaul and Tasaran

formations, and from Small Barsuki Sand Massif located 50km to the east of deposit.

Use of melt water and drainage wells water is suggested for technical waters supply.

For this purpose, construction of water collection dam is recommended in the

Sabyrzhilga valley.

Hydrogeological surveys and drilling are recommended to further assess the

quality and quantity of groundwater resources.

Studies on the aquifers were undertaken in the 1970–1980s by the local geological

committee, and it is thought this shows sufficient water for the projects’ needs. The

information provided by the Client with regards to groundwater resources availability

is presented in Table 9.1 below. More detailed information about water resources will

be available at the water use licence obtaining stage.


– III-112 –




Table 9.1 : Ground Water Resources Availability

Deposit Age

Ground Water Reserves, ’000m3/day by categories

ReportА В С1 С2 Total

Aishuak Sand Massif BigBarsuki:

}AGKZ 30.06.1976

№7748a) Southern Area 62.2 — — — 62.2b) Sheterli Site — — — 22.5 22.5

North-Aishuak Sand

Massif Big Barsuki:

}ATKZ 30.05.1980№8526

a) Northern Area(Begimbet

village)

75 69.6 — — 144.6

b) Sarbulak Site(Sarbulakvillage)

58.9 60.7 — — 119.6

c) Alaguz Site 18.8 8.0 — — 26.8d) Southern Area 37.5 37.5 — — 75e) oasis irrigation

in Aishuak svh

4.7 1.0 — — 5.7

f) for h/p GKS-11 6.5 — — — 6.5Tolagai Sand Massif

Small Barsuki(Murunkum village)

}A 5.2 16.8 — — 22.0 GKZ 1984

№9477

Total: 268.8 193.6 22.5 484.9

9.3 Project Status, Activities, Effects, Releases and Controls

9.3.1 Emissions to Air

The Project is located within the zone with a moderate atmospheric pollution

potential, meaning quite favorable climatic conditions for the pollutant dispersion

in the atmosphere. There are neither other big industrial pollution sources nor

residential places within the area of the Project location.

Kokbulak Mine Plan envisages open pit mining of the deposit with ore

transportation to stockpile/processing plant and external/in-pit waste dumping.

During the operations inorganic dust containing 20–70% SiO2 will be released.

There will be 17 sources of atmospheric pollution that are expected to include

operations of ore handling and stockpiling, waste dump formation, rockmass

transportation, and dust from roads. Mitigation measures will include sprinkling

of the surfaces with water for dust suppression.

The OVOS report contains calculations of inorganic dust emissions for

2022–2031. Baseline data were not accounted in the calculation as the air is not

monitored within the area of study. It is recommended to undertake baseline

studies of the ambient air before the production commencement.


– III-113 –




9.3.2 Water Management

Potential sources of water impact will include abstraction of fresh water for

drinking, technical, and fire-fighting needs and discharge of domestic wastewater,

rainwater, technical and pit waters generated during the operation of the mine

facilities. Planned measures to control and mitigate the impact include drilling of

five monitoring wells and interception of surface run-off to prevent inflow into the

open pit.

The importance of water to the operation cannot be overemphasised and it is

therefore recommended that an updated hydrogeological investigation covering

the groundwater regime including quantity and quality, is undertaken in the area

of abstraction to include an impact study to determine the potential impacts of

abstraction volumes required for the project.

9.3.3 Mine Waste

Mine waste will include host and overburden rock. At the first stage of the

deposit development, overburden material will be used for filling the grounds for

the construction of the processing plant, field camp, and roads. Some overburden

will be used to construct a barrier along the eastern pit wall to prevent the surface

runoff inflow into the open pit. At the initial stage, this barrier will be used as an

external waste dump. At the later stages, waste will be dumped into the mined-out

areas.

9.3.4 Waste Management

According to the Environmental Code and other environmental regulations

of the Republic of Kazakhstan, all production and domestic wastes must be

collected, stored, treated, transported, and disposed of with due cognisance of

their potential environmental impact. According to p. 3–1 of Art. 288 of the

Environmental Code, waste can be temporarily kept in special containers

(bunkers, containers, pads, spaces for collection and accumulation) for 6

months maximum and then removed from the site under agreements with

specialised services.


– III-114 –




Table 9.2 below lists wastes that will be generated as the result of the mine

operation and summarises planned management measures.

Table 9.2 : Waste Management Provisions

№ Type of Waste Measure Period Expectation

1 Waste tyres Forwarding to a

dedicated facility for

treatment

As they build

up

Waste recycling.

Prevents

environmental

pollution.

2 Oiled rag Forwarding to a

dedicated facility

As they build

up

Prevents environmental

pollution.

3 Metal scrape Forwarding to a


treatment

As they build

up

Waste recycling.

Prevents

environmental

pollution.

4 Waste

batteries

Forwarding to a


treatment

As they build

up

Waste treatment.

Prevents

environmental

pollution.

5 Waste oil Forwarding to a


treatment

As they build

up

Waste recycling.

Prevents

environmental

pollution.

6 Waste filters Forwarding to a

dedicated facility

As they build

up

Prevents environmental

pollution.

7 Solid

domestic

waste

Forwarding to a

specialised landfill

As they build

up

Reduces environmental

pollution.

9.3.5 Hazardous Materials Storage and Handling

Simple mining conditions of the deposit preclude the use of explosives for

blasting. The only hazardous materials at the later stage of the Project

development might include, among other things, reagents for the future

processing plant. Information of the hazardous materials storage and handling

arrangement is not available due to the early stage of the Project.

9.4 Permitting

A number of pre-OVOS reports have been completed for the project, two covering

the exploration works dated 2013 with an update completed in March 2014. The

update was required due to changes to the exploration drill programme and

prospecting works design.

In 2021, an OVOS report was prepared by QAZTAUKEN Scientific Design

Institute LLP as part of the Mine Plan development for the Kokbulak deposit. The

report contains more explicit description of the environmental and social setting of the


– III-115 –




deposit area compared to the pre-OVOS. However, it seems that no baseline studies of

air, water and soils have been conducted for the Project so far. Appropriate

recommendations are made in the OVOS report with regards to the baseline studies

to be completed before commencement of the production. According to the

conclusions made in the report, in general the Project will have an insignificant

environmental impact and a quite positive social and economic effect.

WAI is of the opinion based on the information provided that the Project is in

compliance with its environmental obligations to date. No incidence of

non-compliance was reported for the property. The Client has shown a commitment

to satisfying Kazakh requirements and laws at this stage.

In addition to the Kazakh OVOS requirements, should the company require

international funding, it is recommended that an internationally compliant ESIA

document is completed for IFC and Equator Principle compliance.

Data that are usually contained in an OVOS report are largely sufficient to

provide a preliminary evaluation of the project’s impact on the environment and

evaluate the project setting for potentially significant environmental constraints. Some

gaps to international standards exist, and some additional studies will be needed

namely:

. Geochemistry;

. Soils;

. Hydrology and hydrogeology;

. Cultural heritage and archaeology;

. Socioeconomic baseline — stakeholder mapping;

. Biodiversity and ecosystem services;

. Climate and Energy Use;

. Air Quality; and

. Noise and vibrations.

9.5 Environmental Management

The OVOS report discusses the requirements to the programme of an industrial

environmental control that must be conducted at the operational stage of the Project.

It includes monitoring of surface and groundwater quality, emissions, and air quality

monitoring, soil quality monitoring, and monitoring of radiation and physical impact

factors. Environmental samples shall be analysed by an accredited laboratory. Apart


– III-116 –




from industrial control of an environmental media, the Project shall also control and

report volumes of emissions, water consumption and waste generation and disposal

rates. This will be a responsibility of an environmental manager.

WAI recommends that the Client employs a dedicated environmental manager

engaged at the Kokbulak Iron Ore Project to provide for ongoing day to day

management, control and reporting of environmental issues at the sites.

At present the Project does not hold any formalised environmental, social and

health and safety management systems or policies. The Project is in a development

stage and as such these will be formulated as the Project progresses.

9.6 Social and Community Management

The number of employees expected at the site is unknown at this time, although it

is likely to be >>100 persons. It is expected that a large number of these will be from

the local area.

The remoteness of the project some 100km from the nearest settlement would

indicate the project is a low risk with regards social impacts. However, a social impact

assessment is essential to assess the project.

It is recommended that the social baseline collection and subsequent impact

assessment should be run in conjunction with the environmental baseline.

9.7 Mine Closure and Rehabilitation

In June 2018, a new Subsoil Use Code of the Republic of Kazakhstan took force

stipulating new requirements to mine closure and rehabilitation and bringing them

closer in line with the international standards. Under these new requirements, a

formalised Mine Closure Plan is required to obtain a Production Licence i.e. at the

very beginning of the project implementation. A Mine Closure Plan will be a basis for a

Mine Closure Design that should be developed not later than two years before the

licence expiry date. Mine closure and rehabilitation are supposed to be implemented in

accordance with this Design.

As per the new requirements a Draft Mine Closure Plan for Kokbulak was

prepared in 2021 by QAZTAUKEN Scientific Design Institute LLC. The Draft Plan

was prepared as an Appendix to the Production Licence application and approved by

the Ministry of Industry and Infrastructure Development in March 2021 as evidenced

by the provided Expertise Conclusion. Later, it will be developed into a full plan in line

with the provisions of the mine closure planning guidance approved by the order 386 of

the Minister for Investments and Development of the Republic of Kazakhstan. The

guidance covers such important components of the closure process as the reclamation

of disturbed soil from Project activities with a due cognisance paid to acid rock

drainage and metal leaching aspects, financial provisions, and post-closure period

monitoring.


– III-117 –




The current Draft Plan covers preliminary closure and reclamation concept of the

designed open pit and waste dump with estimation of required expenditures. It was

discussed in the course of public consultations that took place in Begimbet village on

10.02.2021 according to the provided minutes of meeting. The minutes include a

description of the case at hand as well as a report from the question- and-answer

session. The public consultation attendees included local Akim, few community

leaders, and workers from other job sectors. The reviewed document suggests that the

community has no concerns with regard to the proposed closure and reclamation

activities.

As for the financial provision of the closure and rehabilitation, according to

paragraph 20.5 of Addendum No. 3 to the Contract, deductions to the abandonment

fund amount to 1% of the cost of geological exploration work and are to be transferred

by the Subsoil User to a special account. Deductions to the abandonment fund during

the production period will be approved by the Competent Body when signing an

Addendum for transition to production.

9.8 Conclusions

To date, the Kokbulak Project is compliant with the terms of subsoil use rights

(SSU Contract/Exploration Licence). Whilst the Project will affect the environment,

due to the distance from the nearest settlement and any sensitive receptors,

environmental and social conditions are considered favourable for the Project.

As the project develops, the Company must undertake an Environmental and

Social scoping study and subsequent impact assessment to highlight any sensitive

receptors and to determine any impacts requiring mitigation.

The importance of water to the operation cannot be over-emphasised and it is

therefore recommended that an updated hydrogeological investigation covering the

groundwater regime including quantity and quality, is undertaken in the area of

abstraction to include an impact study to determine the potential impacts of

abstraction volumes required for the project.

WAI recommends that the Company adopt, and make public, procedures and

instruments for the management of environmental, social and health and safety issues

and apply relevant national laws and regulations as well as international best practice

guidelines for the necessary management, control and reporting.

Furthermore, WAI recommends instigating an Environmental & Social Action

Plan the details of which are provided in Table 9.3 below.


– III-118 –




Table 9.3 : Recommendations for Environmental & Social Action Plan

ActionPriority &

timescale

1. Information Medium/

Immediate

A study in 1976 defined a water resource in the Aishuaksky sand

aquifer (near Begimbet) of some 62,000m3/day was available for a

minimum of 25 years since 1976.

Assessment

Water aspect is quite critical for this Project. Project

documentation mentions scarce water resources in the region, and

potential issues with water supply might be envisaged. Information

about Soviet hydro studies is included in this version of CPR. The

Client has also advised that more detailed information will be

available at water use licence obtaining stage. WAI opinion is that

a new hydro programme is still a priority to confirm the quantity of

water resources and assess potential impacts of water abstraction.

Recommendation

Undertake a hydrogeological investigation covering water quality

and quantity to ensure the feasibility and potential impacts of

extracting project water from the Begimbet Aquifer.

2. Information

The environmental impact assessment report, prepared by a

specialized third-party in Kazakhstan, is currently under review

by the Department of Ecology of the Ministry of Ecology in

Aktobe. This is also a requirement for the company in line with our

obtaining the Production Licence. Once approved by the state, it

will be included in BFS.

Assessment

This is acceptable

Recommendation

Prepare an Environmental impact assessment in line with IFC

Performance Standards for inclusion into BFS

Low/

Immediate


– III-119 –




ActionPriority &

timescale

3. Information

The social impact assessment report is currently being prepared and

shall then go through the local authority’s approval; subject to the

social development and impact committee in Aktobe.

Once approved by the committee, will be included in BFS.

Assessment

Undertaking an internationally compliant ESIA is recommended if

the Client decides to attract investment from financial institutions

adhering to Equator Principles. It is understood EPFI finance is

not currently sought with the present aim being to attract

investments from China. If so, the priority can be stated as low.

Recommendation

Prepare a social impact assessment in line with IFC Performance

requirements for inclusion into the BFS.

Low/

Immediate


– III-120 –




ActionPriority &

timescale

4. Information

In line with the HKSE listing requirements, Kazakh Steel PLC has

engaged a professional party to prepare an internal control report.

The report will consist of the assessment of current company

policies and systems on environmental and social management, as

well as recommendations going forward. The report will be part of

the document. As the company develops and moves into the mining

stage, the Environmental and Social Management Systems will get

more detailed and get broader implementation within the company.

Assessment

This is considered acceptable

Recommendation

Prepare an overarching, company-wide Environmental and Social

Management System to incorporate the following elements:

Low/

Immediate

. Policy;

. Identification of risks and impacts;

. Management programmes;

. Organizational capacity and competency;

. Emergency preparedness and response;

. Stakeholder Engagement; and Monitoring and Review.

10 FINANCIAL ANALYSIS

10.1 Introduction

WAI has reviewed the financial model developed by KAZAKH STEEL PLC for

the operation of Central Area of the Kokbulak Iron Ore Project which is based on the

Project XXI 2013 Feasibility Study with major updates including (i) updated mining

schedule prepared by WAI according to the latest open-pit optimisation results and (ii)

updated economic parameters such as iron ore concentrate price, CAPEX and OPEX.

From this, a financial analysis for the operation of Central Area of the Kokbulak

Iron Ore Project was performed using a Discounted Cash Flow (‘‘DCF’’) analysis, from

which the post-tax Net Present Value (‘‘NPV’’), Internal Rate of Return (‘‘IRR’’),

payback period and other measures of project viability were determined.


– III-121 –




In general, the model assumes a mine schedule with a production rate of

approximately 24Mtpa of ore at an average grade of around 39% Fe over a mine life of

15 years, or 14.8Mtpa of concentrate grading 58.4% Fe using a long-term price of

US$100/t for 62% Fe concentrate (or US$94/t for 58.4% Fe concentrate).

Assessments of NPV are generally accepted within the mining industry as

representing the economic value of a project after allowing for the cost of capital

invested. WAI has not completed any financial analysis using the Northern Area and

Southern Area as the MRE is only at the Inferred level, and as such more works are

required before such a study could be completed.

10.2 DCF Model

Given the level of study, WAI believes this to be a reasonable reflection on the

likely CAPEX that might be involved in the operation of Central Area of the Kokbulak

Iron Ore Project, particularly given the new infrastructure already constructed in the

area.

Life of Mine capital investments are shown in Table 10.2 below.

On the basis of the mine schedule developed by WAI, the CAPEX and OPEX,

revenue and taxes, the Client has undertaken a DCF Analysis that shows that at a 10%

Discount rate, the Project has an NPV of US$2.3 billion, with a payback of only 2

years, following first year of the concentrate production.

It is important to note that the purpose of the analysis is only to demonstrate the

economic viability of the Central Area of the Kokbulak Iron Ore Project. The derived

NPV do not indicate the fair market values of the Central Area of the Kokbulak Iron

Ore Project.

The majority of operating costs are informed by the production costs shown in

Table 10.1 below and shown graphically as percentages in Figure 10.1.

Table 10.1 : Project Production Costs

US$/t

conc. sold US$ M

Mineral Extraction Tax (‘‘MET’’) 2.6 550

Shipping 15.0 3,130

Mining 2.1 445

Processing 29.1 6,074

Cash Cost 48.8 10,199

G&A 1.0 217

Total Cash Cost 49.8 10,416

Capital Expenditure (sustaining) 1.32 275

All-in Sustaining Cost (AISC) 51.1 10,691


– III-122 –




The above production costs breakdown might differ with the parameters used in open-

pit optimisation above of which WAI believes no material concern.

WAI is of the view that the estimated production cost for the operation of Central

Area of the Kokbulak Iron Ore Project presented above is reasonable and economically

sound.

Mineral ExtractionTax (“MET”)

Shipping

Mining

Processing

G&A

Capital expenditure(sustaining)

Figure 10.1 : Production Costs by Percentage

Project capital investments are shown in Table 10.2 with a further yearly

breakdown of stripping work and sustaining capex after 2030 in Table 10.4.

Table 10.2 : Project Capital Investments

Total

Cost

US$’000 2023 2024 2025 2026 2027 2028 2029

2030 to

2040

Project Design andExploration Works 3,000 3,000 0 0 0 0 0 0 0

Stripping Works*** 67,837 0 0 5,581 18,336 21,950 11,589 10,381Infrastructure Capex** 106,530 36,972 58,286 11,271 0 0 0 0 0The Main Ore-Handling &

Ancillary Equipment 100,325 0 0 42,974 48,662 7,385 1,304 0 0Process Plant 313,197 0 78,299 78,299 78,299 78,299 0 0 0Adm. Office Investments 305 293 13 0 0 0 0 0 0Contingency Reserve 52,305 3,997 13,658 13,254 12,696 8,568 130 0 0

Sustaining Capex*** 274,698 0 0 0 3,615 4,408 19,942 20,827 225,906TOTAL INVESTMENTS 918,196 44,262 150,256 145,799 148,853 116,996 43,327 32,416 236,287

Note:

** Capex of US$70M has been included for railway spur;

** Capex of US$3.4M has been included for the gas pipeline; and

*** Payments beyond 2030 are shown in Table 10.4 below.


– III-123 –




Apparent errors may occur due to rounding

See detail below regarding the Infrastructure Capex in Table 10.3.

Table 10.3 : Infrastructure Capex

Item

Total per

unit, VAT

free, $’000

Power Supply 13,300

Water Supply 7,900

Gas Supply 3,400

Construction of Rail Road (70 km) 70,000

Communications, Video Surveillance System and Computerization 270

Construction of Roads 980

Tailings 7,000

Ancillary Facilities 520

Field Camp 3,160

Total 106,530

Table 10.4 : Sustaining Capital Costs for 2030 to 2040

Item

Total

Cost

US$’000 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Stripping Works 10,380 0 0 0 5,224 5,156 0 0 0 0 0 0

Sustaining Capex 225,906 21,553 21,042 20,773 20,498 20,430 20,473 20,269 20,386 20,384 20,420 19,678

Total Investments 236,286 21,553 21,042 20,773 25,722 25,587 20,473 20,269 20,386 20,384 20,420 19,678

WAI is of the view that the estimated CAPEX for the operation of Central Area of

the Kokbulak Iron Ore Project presented above is believed to be economically sound.


– III-124 –




The production and financial highlights are presented in Table 10.5 below.

Table 10.5 : Production & Financial Highlights

Unit Total

PROFIT AND LOSS STATEMENT ($ ’000)

Amount of Fe Concentrate Sold thou.t 208,650

Fe Grade in Concentrate % 58.4%

Fe Concentrate Price, 62% US$/t 100

Fe Concentrate Price, 58.4% US$/t 94.12

Gross Revenue US$M 19,637

Less: Shipping US$M (3,130)

Less: MET, Fe US$M (550)

Net Revenue US$M 15,958

Total Operating costs US$M (6,736)

EBITDA US$M 9,221

Profit tax US$M (1,688)

Capex US$M (918)

Free Cash Flow to Firm US$M 6,615

NPV at flat discount rate 8% US$M 2,757

NPV at flat discount rate 10% (Base Case) US$M 2,259



NPV at flat discount rate 20% US$M 891

NPV at flat discount rate 30% US$M 383

IRR % 63.5%

Max Cash Exposure US$M 350.1

Payback Period years 4

Payback Period (from the start of production) years 2


– III-125 –




10.3 Sensitivity Analysis

A sensitivity analysis was performed on several key parameters within the

financial model to assess the impact of changes upon the Net Present Value of the

project (at a 10% discount rate). These parameters are as follows:

. Concentrate Price;

. Mining OPEX;

. Processing OPEX; and

. Capital Cost.

Each factor was increased and lowered between –30% and +30% to examine the

sensitivity of the model to changing economic and operational conditions. The base

case results are those of the 10% discount factor and the results of the sensitivity

analysis are shown in Figure 10.2.

Sensitivity Analysis (NPV @ 10%)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

-30% -25% -20% -15% -10% -5% BaseCase

5% 10% 15% 20% 25% 30%

Fe Conc. Price Opex Mining Opex Processing Capex


– III-126 –




The changes to NPV at various discount rates is also shown in Figure 10.3 below.

Figure 10.2 : Kokbulak (Central Area) Sensitivity Analysis

NPV ($ m.) at Various Discount Rates

-

500

1,000

1,500

2,000

2,500

3,000

8% 10% 12% 15% 20% 30%

Figure 10.3 : NPV at Various Discount Rates

As expected, based on these results, the operation of the Central Area of the

Kokbulak Iron Ore Project is most sensitive to changes in iron ore concentrate price

with other factors having minimal impact at 30% variation.

10.4 Conclusions & Recommendations

Based on the WAI production schedule which considers the Central Area only,

revised costs against the Project XXI 2013 Feasibility Study due to exchange rate

differences as well as other changes to OPEX, CAPEX and tax, but most notably with

a significant increase in the Fe Concentrate price, the operation of the Central Area of

the Kokbulak Iron Ore Project presents a highly robust NPV which at a 10% Discount

Rate achieves around US$2.3 billion, and project IRR of 63.5%.

A sensitivity analysis of this shows that the project economics, as expected, are

dominated by the Fe concentrate price which for the purposes of this CPR has been set

on a long term forecasted price of US$100/t of 62% Fe concentrate.

In conclusion, given the project parameters, costs and revenues described here, the

operation of the Central Area of the Kokbulak Iron Ore Project is undoubtedly

attractive, and also appears robust to significant price falls.

Furthermore, the Northern Area and Southern Area present upside to the project,

once more works are completed to increase the confidence levels of these resources.


– III-127 –




11 RISKS ASSOCIATED WITH THE KAZAKH STEEL PLC KOKBULAK IRON ORE

PROJECT

The specific risk of the Project has been classified as follow:

Major The factor poses an immediate danger of a failure, which if uncorrected,

will have a material effect (>15% to 20%) on the project cash flow and

performance and could potentially lead to project failure.

Moderate The factor, if uncorrected, could have a significant effect (10% to 15%)

on the project cash flow and performance unless mitigated by some

corrective action.

Minor The factor, if uncorrected, will have little or no effect (<10%) on project

cash flow and performance.

The Likelihood of a risk is considered within 7-year time frame as:

Likely: Will probably occur

Possible: May occur

Unlikely: Unlikely to occur

WAI completed a risk assessment of the specific risks identified for the project in

relation to their likelihood of occurrence within a seven-year period and consequence in

accordance with Guidance Note 7 of the Listing Rules.

Table 11.1 below sets forth a risk assessment undertaken by the Competent Person

which considers the key project risks and recommended mitigation strategy where

appropriate.

WAI believes the mitigation recommendation is appropriate and the identified risks

can be generally managed if the mitigation recommendation as stated in Table 11.1 above

are implemented.


– III-128 –




Table 11.1 : Kokbulak Risk Matrix


Mitigation

Recommendation



Mitigated risk

rating

Water Supply The importance of water to the

operation cannot be

over-emphasised both in

terms of technical and

potable supplies. The area

is essentially dry

Likely Major High Complete an updated

hydrogeological

investigation covering

the groundwater

regime including

quantity and quality,

is undertaken in the

area of abstraction

to include an impact

study to determine

the potential impacts

of abstraction

volumes required for

the project

Previously, a list of nearby

(50–70 km) subsurface

water fields was provided.

The list was provided by

West-Kazakhstan

Interregional Department

of Geology Committee. The

water use issues will be

agreed considering water

consumption during

production, beneficiation

and further conversions of

ores in an established

manner.

Medium

Social Even though the area is

sparsely populated, a social

licence to operate is

essential to ensure

successful project execution

Likely Minor Medium Prepare a social impact

assessment in line

with International

Finance Corporation

(‘‘IFC’’) Performance

requirements for

inclusion into the

Bankable Feasibility

Study (‘‘BFS’’)

As far as we know, there is no

notion of such licence in

Kazakhstan. The issues of

social-economic

development of the region

are considered and agreed

by subsoil asset

development plans

(projects)

Medium

Licencing Production licence application Likely Major High Production Licence

applied for awaiting

decision

Received a notice from RoK

MIID stating that

according to Contract, ASP

has an exclusive right for

obtaining a Production

Licence. Deadlines were

determined for development

and approval of

design-and-cost estimate

documentation for field

development, necessary for

obtaining a licence as a

result of commercial

discovery.

Low


– III-129 –





Mitigation

Recommendation



Mitigated risk

rating

Metallurgy Define and optimise process

flowsheet

Likely Major High Additional

gravity-magnetic

testwork on

representative

samples will be

required. Further

testwork required to

ascertain optimum

process route for

dephosphorisation of

concentrate. All

studies to be at

Feasibility Study

level

The completed testwork

showed that the most

rational method of

beneficiation is a

roasting-magnetic process.

Additionally considering a

‘‘dry’’ beneficiation, which

substantially reduces the

water use. The

laboratory-technological

tests of dephosphorization

were conducted

successfully, industrial tests

were conducted on similar

ores of Lisakovsk field.

High

Opex Power, natural gas, sulphuric

acid and limestone make

up 89% of the total cost.

Most of the costs are

based on industry standard

assumptions or on analogy

with Lisakovsk mine.

Likely Major High Define costs from first

principles at

Feasibility Study

level


resolved during

development and approval

of the design-and-cost

estimate documentation for

field development necessary

for obtaining a licence.

Low

Capex Much of the Capex estimates

are based on a simple

multiplication of the

Lisakovskoye process plant

to match the target plant

throughput. Mining

equipment based on general

principles

Likely Major High Feasibility level Capex

analysis required for

plant and equipment.

Vendor quotes

required


resolved during

development and approval

of the design-and-cost

estimate documentation for

field development necessary

for obtaining a licence.

Medium

Technical areas Technical areas such as

geotechnical (pit slope

angles), hydrogeological

(source of potable and

industrial water), and

mining (optimized)

production rates with mine

designs to suit) should be

developed further with a

view to optimizing these

parameters.

Possible Moderate Medium Feasibility Study

required to properly

define these technical

areas to +/- 15%

accuracy

The technical conditions of

development activities were

studied fully and are

considered as simple. The

hydrogeological conditions

during production are

simple, and the expected

water inflows are

insignificant.

Medium

Economics Currency devaluation and

highly volatile Fe pricing

Likely Moderate Medium Devalue tenge has

significant impact on

project economics

On-going Medium


– III-130 –




12 CONCLUSIONS & RECOMMENDATIONS

The operation in the Central Area of the Kokbulak Iron Ore Project represents a

significant potential iron ore mining project which at the current iron ore prices appears

highly robust. At a 10% discount rate, the project commands an NPV of some US$2.3

billion.

Further weight is given to the importance of the project by the fact that the current

study is only based on the better-known Central Area, although WAI is in no doubt that the

580Mt of iron-rich mineralisation are also available in the Northern Area and Southern

Area, which, should a mine be developed in the Central Area, will greatly extend the life of

mine.

The overall economic viability of the operation in the Central Area of the Kokbulak

Iron Ore Project is enhanced by a number of factors such as the free-digging nature of the

ore, very low strip ratio, proposed metallurgical concentration route, and generally modest

capital cost outlay. The current new infrastructure already constructed in the area (the

Beyneu-Shalkar Line) have significantly improved the chances of developing a project in

what was previously a relatively remote area.

For this study, WAI has reviewed the main technical and economic parameters

provided in the Project XXI 2013 Feasibility Study and adjusted these where appropriate.

In addition, WAI has estimated a Mineral Resource for the Central Area, as well as a

‘‘mineable’’ resource.

WAI has also completed an MRE on the Northern Area and Southern Area.

In WAI’s opinion, it should be noted that as the project progresses, technical areas

such as geotechnical (pit slope angles), hydrogeological (source of potable and industrial

water), mining (optimised production rates with mine designs to suit) and metallurgical

(dephosphorisation process) should be developed further with a view to optimising these

parameters.

Notwithstanding the above, the Kokbulak Iron Ore Project represents a strategic asset

to both the Client and the Kazakh State and certainly warrants further progress.


– III-131 –




13 JORC TABLE 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections)

Criteria JORC Code explanation Commentary

Sampling

techniques

‧ Nature and quality ofsampling (eg cut channels,random chips, or specific

specialised industry standardmeasurement toolsappropriate to the mineralsunder investigation, such as

down hole gamma sondes, orhandheld XRF instruments,etc). These examples should

not be taken as limiting thebroad meaning of sampling.

. Include reference to measurestaken to ensure samplerepresentivity and theappropriate calibration of any

measurement tools or systemsused.

. Aspects of the determinationof mineralisation that areMaterial to the Public Report.

. In cases where ‘industrystandard’ work has been done

this would be relatively simple(eg ‘reverse circulationdrilling was used to obtain 1 msamples from which 3 kg was

pulverised to produce a 30 gcharge for fire assay’). Inother cases more explanation

may be required, such aswhere there is coarse gold thathas inherent sampling

problems. Unusualcommodities or mineralisationtypes (eg submarine nodules)may warrant disclosure of

detailed information.

‧ The deposit is sampled using diamond andvibratory percussion drill holes on asemi-regular pattern generally on 100m or

greater spacing.

. Diamond drilling was used to retrieve core thatwas cut for half core samples sent for sample

preparation using industry standardmethodology and fire assay analysis for gold.

. Diamond core was sampled at 1–2m intervalsexcept where geological intervals dictatedotherwise. Core has been cut using a diamond

core saw for half core samples.

. For the drilling programme completed between1950 and 1954, the majority of samples were

analysed at the Aktyubinsk laboratory ofWest-Kazakhstan geological expedition andthe Central laboratory of South-Uralsk

geological survey in Ufa. A minority of thesamples were analysed at the Central chemicallaboratory of Middle-Asian Geological survey

in Tashkent and in the chemical laboratory ofNovosibirsk geological expedition ofWest-Siberian geological expedition.

. In 2013 Samples were analysed at theAktobe-Temir-Sun laboratory.

. For mineralised domain samples, samples weredried, crushed and pulverised to produce0.15–0.2kg sub sample from which a charge

was taken for analysis by atomic absorption.


– III-132 –





Drilling

techniques

‧ Drill type (eg core, reverse

circulation, open-holehammer, rotary air blast,auger, Bangka, sonic, etc)

and details (eg core diameter,triple or standard tube, depthof diamond tails,

face-sampling bit or othertype, whether core is orientedand if so, by what method,

etc).

‧ Drilling at Kokbulak has been diamond core

drilling.

. The 1950s holes were drilled with ZIF-75 drill

rigs and partially with ZIF-150 drill rigs at fourdiameters. 130mm drill bits were used down to4m depth, after which the collar of the holes

was fixed with casing. Below this to a depth of27–35m, the drilling was performed with101mm drill bits, and to 50–35m with 89 or

84mm drill bits. Below this depth, 74 mm drillbits were used.

. 2013 drill holes were drilled with an AVB-1

vibratory-percussion rig producing 108mmcore. The technique avoided core washing andproduced high core recovery.

. Further details of tube and bit type are notknown

. The drill core was not orientated duringlogging.


– III-133 –





Drill sample

recovery

‧ Method of recording and

assessing core and chip samplerecoveries and resultsassessed.

. Measures taken to maximisesample recovery and ensure

representative nature of thesamples.

. Whether a relationship existsbetween sample recovery andgrade and whether sample biasmay have occurred due to

preferential loss/gain of fine/coarse material.

‧ Core recovery recording was based on

measurement of core length recoveredcompared against the total metres drilled. Anydifference between the metres recorded as

drilled and core recovered is recorded as coreloss.

. Each drill run length was recorded and theamount of recovered and fitted core wasmeasured. Broken core and loose fragments are

consolidated to try and equate the solid corelength prior to measurement taking place. Corerecovery percentage is then calculated bydividing recovered length by drilled length.

. Drilling recovery was recorded as >90% formineralised intervals during the 1950s

exploration programme. Average core recoveryfor the 2013 drilling is recorded as 82.5%.

. Both the host rocks and mineralised zones havedifferent hardness and, consequently,drillability. Highest core recovery was found in

the clays and cemented ores, whilst corerecoveries for the uncemented ores (ooliticincoherent ore) required careful managementand in the incoherent ores, occasionally sludge

samples were required for confirmatoryanalysis. Table 4.2 below shows the corerecoveries across the site.

. Recovery in the fresh BIF is better than in theoxide zone but relative difference is not

defined. There is no bias related to potentialloss/gain of fines

Table 4.2 : Core Recovery for Kokbulak Deposit

Site Core Recovery, %

Ore Host rocks

Central Area 93.3 64North Area 95.21 70.57South Area 96.9 64

Exploration holes in thearea of the deposit 62.3


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Logging ‧ Whether core and chip

samples have beengeologically andgeotechnically logged to a

level of detail to supportappropriate Mineral Resourceestimation, mining studies and

metallurgical studies.

. Whether logging is qualitative

or quantitative in nature. Core(or costean, channel, etc)photography.

. The total length andpercentage of the relevantintersections logged.

‧ It is not clear what geological or geotechnical

logging has been completed.

. Mineralised domains are however distinct from

overburden and host rock based on assay data.

Sub-sampling

techniques and

sample

preparation

‧ If core, whether cut or sawnand whether quarter, half orall core taken.

. If non-core, whether riffled,tube sampled, rotary split, etcand whether sampled wet or

dry.

. For all sample types, the

nature, quality andappropriateness of the samplepreparation technique.

. Quality control proceduresadopted for all sub-samplingstages to maximise

representivity of samples.

. Measures taken to ensure that

the sampling is representativeof the in situ materialcollected, including for

instance results for fieldduplicate/second-halfsampling.

. Whether sample sizes areappropriate to the grain sizeof the material being sampled.

‧ Sample intervals were identified duringgeological logging which was carried out at theproject site. Sample intervals were typically1.0m — 2.0m but with samples limited to

changes in lithology, alteration or identifiedmineralised domain boundaries as appropriate.Final sample intervals ranged from 0.15m to

5m.

. Core was cut in half along its long axis

honouring the marked sample intervals using adiamond core saw with one half of corebecoming the sample for analysis and the

second sample retained for storage.

. No field duplicate samples were taken to assesssample representivity.


– III-135 –





Quality of assay

data and

laboratory

tests

‧ The nature, quality and

appropriateness of theassaying and laboratoryprocedures used and whether

the technique is consideredpartial or total.

. For geophysical tools,spectrometers, handheldXRF instruments, etc, the

parameters used indetermining the analysisincluding instrument makeand model, reading times,

calibrations factors appliedand their derivation, etc.

. Nature of quality controlprocedures adopted (egstandards, blanks,

duplicates, externallaboratory checks) andwhether acceptable levels of

accuracy (ie lack of bias) andprecision have beenestablished.

‧ The sample preparation process for analysis of

channel samples has followed similarprocedures throughout the various explorationprogrammes. Sample preparation procedures

have broadly followed international bestpractise with initial two stage crushing to aparticle size of 0.5mm. Final sample size for

chemical analysis was 0.15–0.2kg Duplicatesamples of reject material were retained at eachstage including a final pulp duplicate.

. During the drilling programme completedbetween 1950 and 1954, a total of 722 internal(pulp) duplicate samples and 240 external

(pulp) duplicate samples were analysed. Thisdata is not held in an electronic database butWAI has reviewed the raw sample data as

recorded in the 1955 GKZ report and overall,the duplicate samples had similar mean gradesto the primary samples. No blank samples or

reference material samples are recorded ashaving been submitted for analysis during thisexploration programme.

. During the drilling programme completedduring 2013, a total of 95 internal (pulp)duplicate samples and 95 external (pulp)

duplicate samples were analysed for Fe. Thisequates to 17.4% of the total number of coresamples analysed during this programme (545).

Internal duplicates were analysed at theprimary laboratory, Aktobe-Temir-Sun, andthe external duplicates were analysed at

Centregeoanalit. External duplicates wereanalysed alongside nine blank samples toassess potential cross contamination or sampleswitching and eight standard reference samples

with a total Fe content of 38.2% to assessanalytical accuracy. No blank or referencematerial samples are recorded as having been

submitted to the primary laboratory. Duplicatesamples that were taken show a reasonablelevel of precision and the data was deemed

acceptable for use in a Mineral resourceestimate.


– III-136 –





Verification of

sampling and

assaying

‧ The verification of

significant intersections byeither independent oralternative company

personnel.

. The use of twinned holes.

. Documentation of primarydata, data entry procedures,

data verification, datastorage (physical andelectronic) protocols.

. Discuss any adjustment toassay data.

No independent verification of intersections of the

exploration drill holes exist.

In an effort to verify the previous exploration works,

60 confirmatory drill holes were completed by ASPin 2013. These holes were spread across theKokbulak Project with 34 being completed in the

Central Area (CV1–34), 21 in the Northern Area(CV35–55) and 5 in the Southern Area (CV56–60).

The verification holes were located by GPS inrelation to the existing drill network. The holes weredrilled to depths ranging from 2 to 54m with a totallength of 1659m. In total 551 core samples were

taken. Ore intersections thickness and iron contentof the historical drilling were validated.

Drill holes were made with an AVB-1vibratory-percussion rig producing 108mm core. Thetechnique avoided core washing and produced 100%

core recovery.

Data entry procedures were partly based on manual

entry techniques

No adjustments have been made to the original rawassay data by WAI during the Mineral Resource

estimate.


– III-137 –





Location of data

points

Accuracy and quality of surveys

used to locate drill holes (collarand down-hole surveys),trenches, mine workings and

other locations used in MineralResource estimation.Specification of the grid system

used. Quality and adequacy oftopographic control.

‧ The coordinates of all data supplied have been

recorded with reference to UTM coordinates.All data supplied are stored using the samelocal co-ordinate system and the same unit

convention and the Mineral Resource estimatewas carried out using this system. Therefore,transformations of drillhole or other data were

not required.

. All drill hole collars were surveyed UTM

coordinates. Collar surveys were completedusing handheld GPS in 2013 but surveyingtechniques for historical drilling are notrecorded.

. Topographic survey is adequate for use inreporting Mineral Resources and developing a

block model.

. No downhole surveys are recorded for either

drill programme. Holes are vertical andgenerally less than 50m in length. Littledeviation is expected to have taken place

during drilling.

. A topographic Digital Terrain Model (DTM)for use in the mineral resource estimation

covering the extent of the deposit area wasgenerated from a variety of data sources. ThisDTM is mainly based on a wireframe, supplied

by the client, created by digitising contoursfrom a hard copy of the topographic surveycarried out between 1951 and 1954 at the time

of the original exploration of the area. As thiswireframe did not quite cover the area requiredfor the model and open pit optimisation, WAIextended this wireframe using drillhole collar

elevations as reference points. The CentralArea of the Kokbulak Project is generallygently undulating steppe and this approach to

extending the surface is not expected to resultin gross errors. The area has relatively higharea to the north and south with the major

topographic feature being a shallow, relativelynarrow valley, running roughly north to southfrom the northern high into a broad shallow

east west orientated valley. These majortopographic features of the area are covered bythe detailed survey. Figure 6.3 shows a planview of the area of the mineral resource

estimate showing the main topographicfeatures.


– III-138 –





Data spacing and

distribution

Data spacing for reporting of

Exploration Results.

Whether the data spacing and

distribution is sufficient toestablish the degree of geologicaland grade continuity appropriate

for the Mineral Resource and OreReserve estimation procedure(s)and classifications applied.

Whether sample compositing hasbeen applied.

‧ Exploration results are not being reported.

Data spacing is sufficient for the reporting ofMineral Resources.

. In the Central Area, mineralisation is sampledusing diamond drillholes drilled on spacing asclose as 100m grid but more generally 150m —

250m grids.

. The Northern Area is the second most explored

part of the deposit. This site was examined bynorth-south profiles mainly on a 400 x 800mgrid, partially by 400 x 400m, 200 x 400m and200 x 200m grids, and by a 200 x 100m grid

over a 0.5km2 area.

. In contrast, the Southern Area represents the

least explored part of the ore deposit and isalso the lower grade part of the whole deposit.It was drilled on 2,000 x 400m grid with

perimeter holes on an 800m spacing. Drillingwas made more difficult in this area due to thegreater depth of the mineralised horizons as

well as a thick bed of incoherent sands that liesjust beneath the ore — this resulted in manyholes collapsing on intersection with this zone.

. Spacing is deemed sufficient to establish gradeand geological continuity to support thedefinition of Mineral Resource to a Measured,

Indicated and Inferred classification as definedby the 2012 JORC Code.

. Compositing to 5m lengths was applied duringMineral Resource estimation and adjustedwhere necessary to ensure that no residualsample lengths have been excluded (best fit).

Orientation of

data in relation

to geological

structure

Whether the orientation ofsampling achieves unbiasedsampling of possible structures and

the extent to which this is known,considering the deposit type.

If the relationship between the

drilling orientation and theorientation of key mineralisedstructures is considered to have

introduced a sampling bias, thisshould be assessed and reported ifmaterial.

‧ Drilling is vertical holes drilled from surface.The bulk of the drill holes are thereforeroughly perpendicular to the tabular

mineralisation.

. Holes are aligned on exploration profile linesof two main orientations to reflect the

understanding of the orientation of themineralised domains

. No major orientation based sampling bias hasbeen identified in the sample data.

. Given the shallow, flat lying nature of theorebodies, the samples are considered correctlyorientated.

Sample security The measures taken to ensure

sample security.

‧ Measures taken to ensure sample security are

not recorded.


– III-139 –





Audits or reviews The results of any audits or reviews

of sampling techniques and data.

‧ A verification drill programme in 2013

consisted of 60 holes that twinned historicaldrilling. The verification drilling showedsimilar results in terms of mineralised domain

thickness and Fe grade to the historicaldrilling.

. As part of this Mineral Resource estimation,WAI carried out verification of the explorationdatabase with subsequent edits made to fix

some errors and inconsistencies. The reviewincluded, but was not limited to, the followingsteps:

. Verification that collar coordinatescoincide with underground workings ortopographical surfaces.

. Ensuring each drillhole collar recordedhas valid XYZ coordinates.

. Ensuring collar coordinates are insideexpected limits.

. Ensuring collar coordinates are reportedto an expected accuracy.

. Checking for the presence of anyduplicate drillhole collar IDs or collarswith duplicate collar coordinates.

. Check for overlapping sample intervals.

. Check for duplicate sample intervals.

. Assessing for inconsistencies in spellingor coding (typographic and case sensitive

errors) of BHID, hole type, lithology etc.to ensure consistency in data review.


– III-140 –





‧ No other audits of sampling techniques or data

are known other than reviews of QA/QC dataduring this Mineral Resource estimate.

An analysis of internal control samples wasundertaken in the laboratories of South-Ural surveyof West-Kazakhstan geological expedition. External

control of the samples was performed by Centralchemical laboratories of Uralsk and West-Siberiangeological surveys.

726 samples were used for internal control, 46samples comprised external control whichcorresponds to 9.9% and 3.4% from the total

number of samples.

A comparison of the results for Quality Control

showed good agreement with the database beingdeemed fit for resource/reserve estimation.


– III-141 –




Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section)


Mineral tenement

and land tenure

status

. Type, reference name/number,location and ownership includingagreements or material issues with

third parties such as joint ventures,partnerships, overriding royalties,native title interests, historical sites,

wilderness or national park andenvironmental settings.

. The security of the tenure held at

the time of reporting along with anyknown impediments to obtaining alicence to operate in the area.

. Aktobe Steel Production LLP (‘‘ASP’’) holds the subsoiluse contract for the Kokbulak Project under contractnumber 3734-TPI dated October 4, 2010. Six addenda

pertaining to the main contract were subsequentlyentered into. The expiry date of the subsoil use contractis 23 September 2021. Nevertheless, according to the

Client, the subsoil use contract is still legally valid, giventhe Client had successfully submitted an application forProduction Licences on 21 September 2021, which isprior to the expiration date of the subsoil use contract.

The contract area of the subsoil use contract forexploration is currently stated at 307.2km2.

. WAI has been informed that the Licenced Area appliedby the Client for the Production licence is 127.51km2

(which falls within the contract area of the subsoil use

contract for exploration of 307.2km2). The Client willreturn the remaining contract territory of 179.69km2 tothe relevant competent authority. ASP is awaiting theapproval from relevant competent authority for the

Production Licence as at the date of this CPR. For theavoidance of doubt, the Mineral Resource Estimate forthe Kokbulak Project in this CPR covers the contract

area of the subsoil use contract for exploration of307.2km2.

. The mineral licence information was reviewed by WAIbut not to a legal standard

. The licence is considered in good standing

Exploration done by

other parties

. Acknowledgment and appraisal ofexploration by other parties.

. The Kokbulak deposit, upon which the KokbulakProject sits on, has been known about for over 70 yearswith preliminary geological survey work in 1949, then

more detailed investigations over the deposit area(covering some 500km2) in 1950.

. From 1950–54, detailed topographic surveys wereundertaken which tied in all the exploration works beingexecuted at the time, including drilling and limitedunderground exploration.

. This allowed the completion of the first geological mapof the area in 1954 along with a report on the

exploration activities and an initial ‘‘reserve’’ estimation(in accordance with local GKZ standards).

. It was not until 2013 that further exploratory workswere undertaken by ASP at the site of the KokbulakProject leading to the completion of Project XXI 2013

Feasibility Study.

. In 2020, further drilling works were conducted by ASPin the Southern Area of the Kokbulak Project


– III-142 –





Geology . Deposit type, geological setting and

style of mineralisation.

. The Kokbulak deposit consists of sediment hosted Fe

mineralisation within sands and clays.

. The most widespread ore types identified are:

. Oolitic oxidised brown ores — Type 1, generallyfound above the water table;

. Loose black ores without cement — Type 2,found above and below the water table, and

. Green or dark-grey ores of siderite-chloritecement — Type 3, found below the water table.

In broad terms, ore bodies of the Central and NorthernAreas are similar in that they are characterised by anorth-south strike and are flatly inclined to the

west-southwest, in many cases overlapping each other inthe manner of scales. Ore bodies in the Southern Areahave a different structure. All mineralisation can be

identified visually.

These are three main lenses at the Central Area of the

deposit, with the 1st and 2nd lenses being the largest. Allthree lenses are also traced to the Northern Area.Moreover, two more lenses (4th and 5th) are observed inthe western part of the Northern Area.

At the Southern Area, there is quite a large, embeddedlens observed between exploration lines #1 and #6, in

some places this lens is split into eastern and westernparts.

5.2.2 First Lens

This major mineralised unit has been traced along theeastern part of the deposit from exploration line #13 insouthern part of the Central Area to exploration line

#62 on the Northern Area. Its total length is 17.7kmwith a width 1.6km and occupying an area of about25km2. It appears to be localised in a north-south

depression in the roof of the underlying rocks of theChegan suite.

As with all the lenses seen at the Kokbulak Project,

thickness variations and bifurcations are common,particularly near the edges, although in the main parts,the lens does show a high degree of homogeneity.

Thicknesses can exceed 40m, and reaches 51.7m at hole#655, although equally wedges from the main lens cantail off to around 1m in thickness.


– III-143 –





5.2.3 Second Lens

The second lens starts from exploration line #7 at theSouthern Area and it is clearly wedged in the northern

part of the Northern Area near exploration line #62. Itstotal length by strike is 23.9km, width is 1.26km

The dimensions of the lens by site is shown in Table 5.1below:

Table 5.1 : Dimensions of Len 2

Site

Length

(m) Width (m)

Area

(km2)

Central Area 4,000 1,450 5.8North Area 5,900 1,100 6.249South Area 14,000 1,240 17.36

Total 23,900 29.63

As with Lens 1, the lens shows good continuity along

strike, but wedging, thickness variations and lithologychange are common on the peripheries of the main body.Thickness again varies considerably from a few metres

to>40m.

5.2.4 Third Lens

The 3rd lens is located to the west of the 2nd lens in the

northern part of the Central Area and in the southernpart of the Northern Area. The lens is not large withstrike length not exceeding 2.8km, width 0.46km with an

area of 1.26km2. The lens is traced from the explorationline #35 to line #38.

The structure is quite simple and does not change either

down dip or along strike. Thickness varies from 2.7 to7.9m in its axial part from where it is symmetricallywedged to the periphery.

5.2.5 Fourth & Fifth Lenses

The Fourth lens is found at the Northern Area fromexploration line #39 to line #56. The lens is extended ina north-south direction for 6.1km and it has asignificant width (average 2.5km) and achieves a

maximum thickness of 36.7m. Area is 19.25km2,therefore making it the third largest behind the first andsecond lenses.

To the west of 4th lens, the small 5th lens is observed inbetween exploration lines #41-#48. The fifth lens is

deposited over the fourth lens.


– III-144 –





Drill hole

Information

. A summary of all information

material to the understanding of theexploration results including atabulation of the following

information for all Material drillholes:

. Easting and northing of thedrill hole collar;

. Elevation or RL (ReducedLevel — elevation above sealevel in metres) of the drillhole collar;

. Dip and azimuth of the hole;

. Down hole length andinterception depth; and

. Hole length.

. If the exclusion of this information

is justified on the basis that theinformation is not Material and thisexclusion does not detract from theunderstanding of the report, the

Competent Person should clearlyexplain why this is the case.

During the 1950s, some 1,109 drill holes and 182 deep test pits

were undertaken at the Kokbulak deposit (Table 4.1) andsurrounding areas.

In addition to the deeper test pits, in the Central Area wheremineralisation is exposed at surface, shallower test pits werealso utilised with an average depth of 1.95m


Area

Mechanical Drill Holes Deep Test Pits Barren

Holes1

Number

Total

Metres

No. of

Holes

Average

Depth

Total

Metres

No. of

Holes

Average

Depth

Central 23,158.20 455 50.90 1544.01 104 14.85 114North 29,035.33 487 59.62 755.33 66 11.44 175

South 3,532.64 70 50.49 203.28 12 16.94 20

1 Many barren holes contained low grade mineralisation

(<20% Fe), actual % of barren holes was 16%


– III-145 –






Area

Mechanical Drill Holes Deep Test Pits Barren

Holes1

Number

Total

Metres

No. of

Holes

Average

Depth

Total

Metres

No. of

Holes

Average

Depth

Central 23,158.20 455 50.90 1,544.01 104 14.85 114

North 29,035.33 487 59.62 755.33 66 11.44 175South 3,532.64 70 50.49 203.28 12 16.94 20

1 Many barren contained low grade mineralisation (<20%Fe), actual % of barren holes 16%

60 confirmatory drill holes were undertaken by ASP in 2013 toverify the exploration works conducted in the 1950s which thenled to the completion of a feasibility study by Project XXI, alocal Aktobe consultancy, in the same year (the ‘‘Project XXI

2013 Feasibility Study’’).

This study which pulled the historical data and testwork

together, set out a mine plan to develop the Central Area of theKokbulak Project. However, WAI believes that much of theProject XXI 2013 Feasibility Study is only at Pre-Feasibility

Study Level and parts only at Scoping Study Level, hence noOre Reserves can be declared in accordance with the guidelinesof the JORC Code (2012) as to do so, requires all areas of thereport to be at PFS level or greater. Furthermore, the ‘‘Project

XXI 2013 Feasibility Study’’ has been completed in accordancewith GKZ requirements and not in accordance with theguidelines of the JORC Code (2012), hence again, Ore Reserves

cannot currently be declared.

In 2020, further drilling works were conducted by ASP in the

Southern Area.

. Exploration results are not being reported.

. Mineralisation is encountered in holes from surface andthroughout their entire length with mineralisationoccurring as tabular zones at variable depths.

. Given the number of drill holes at Kokbulak it is notpracticable to report all drill hole collar co-ordinates in

this section.


– III-146 –





Data aggregation

methods

. In reporting Exploration Results,

weighting averaging techniques,maximum and/or minimum gradetruncations (eg cutting of high

grades) and cut-off grades areusually Material and should bestated.

. Where aggregate interceptsincorporate short lengths of high

grade results and longer lengths oflow grade results, the procedureused for such aggregation should bestated and some typical examples of

such aggregations should be shownin detail.

. The assumptions used for anyreporting of metal equivalent valuesshould be clearly stated.


. No metal equivalents have been used in this MineralResource estimate.

. The raw sample database has not been top-cut. Sampledata has not been top-cut as part of the Mineral

Resource estimation process.

Relationship between

mineralisation

widths and

intercept lengths

. These relationships are particularly

important in the reporting ofExploration Results.

. If the geometry of themineralisation with respect to thedrill hole angle is known, its nature

should be reported.

. If it is not known and only the down

hole lengths are reported, thereshould be a clear statement to thiseffect (eg ‘down hole length, truewidth not known’).

. The data is drilled on profiles perpendicular to the strike

of the two main orientations of mineralised domains.

. Drilling is vertical holes to intersect the tabular zones of

mineralisation.

. No orientation based sampling bias has been identified

in the sample data.

Diagrams . Appropriate maps and sections(with scales) and tabulations ofintercepts should be included for any

significant discovery being reportedThese should include, but not belimited to a plan view of drill holecollar locations and appropriate

sectional views.

. Appropriate data tabulations, plans and sectionsshowing the nature of the mineralisation, explorationand final Mineral Resources are included in the main

body of the report.

Balanced reporting . Where comprehensive reporting ofall Exploration Results is not

practicable, representative reportingof both low and high grades and/orwidths should be practiced to avoidmisleading reporting of Exploration

Results.



– III-147 –





Other substantive

exploration data

. Other exploration data, if

meaningful and material, should bereported including (but not limitedto): geological observations;

geophysical survey results;geochemical survey results; bulksamples — size and method of

treatment; metallurgical test results;bulk density, groundwater,geotechnical and rock

characteristics; potential deleteriousor contaminating substances.

. No other information available.

Further work . The nature and scale of plannedfurther work (eg tests for lateral

extensions or depth extensions orlarge-scale step-out drilling).

. Diagrams clearly highlighting theareas of possible extensions,including the main geologicalinterpretations and future drilling

areas, provided this information isnot commercially sensitive.

. WAI know of no further drilling planned at Kokbulak

. WAI recommend infill and definition drilling is plannedto better understand and potentially upgrade areas ofinferred and indicated mineral resources.


– III-148 –




Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in Section 1, and where relevant in Section 2, also apply to this section)


Database integrity . Measures taken to ensure that data hasnot been corrupted by, for example,transcription or keying errors, between

its initial collection and its use forMineral Resource estimation purposes.

. Data validation procedures used.

. Geological and field data was collected on to hard copylogging sheets. Historical data was transferred to electronicformat. The data is validated by company geologist before

acceptance into the exploration database.

. The sample database was supplied to WAI as CSV format

Microsoft Excel spreadsheets.

. The main files were:

. Collar co-ordinates and information;

. Assay data;

. The supplied files were used to generate separate collar andassay files in Datamine Studio RM software. These in turn

were used to create de-surveyed drill hole files.

. As part of this Mineral Resource estimation, WAI carried outverification of the exploration database with subsequent edits

made to fix some errors and inconsistencies. The reviewincluded, but was not limited to, the following steps:

. Verification that collar coordinates coincide withunderground workings or topographical surfaces.

. Ensuring each drillhole collar recorded has valid XYZcoordinates.

. Ensuring collar coordinates are inside expected limits.

. Ensuring collar coordinates are reported to an expectedaccuracy.

. Checking for the presence of any duplicate drillholecollar IDs or collars with duplicate collar coordinates.

. Check for overlapping sample intervals.

. Check for duplicate sample intervals.

. Identify sample intervals for which grade has been

recorded that have excessive length which may indicatecomposite samples or typographic errors.

. Assessing for inconsistencies in spelling or coding

(typographic and case sensitive errors) of BHID, holetype, lithology etc. to ensure consistency in datareview.

. Verification was carried out by WAI during the desurveyingprocess to ensure there were no missing, duplicate or

overlapping data.


– III-149 –





Site visits . Comment on any site visits undertaken

by the Competent Person and theoutcome of those visits.

. If no site visits have been undertakenindicate why this is the case.

. In relation to the Mineral Resource estimation work, WAI has

undertaken a site visit on the 7h September 2021 as well as anearlier site visit in April 2014. The 2014 site visit includedAlan Clarke BSc, MSc, MCSM, CGeol, EurGeol, FGS, a full

time employee of WAI.

. During the course of the WAI site visits information on the

following was obtained or reviewed:

. Geology;

. Licensing and permits;

. Location, access and infrastructure;

. Exploration works to date;

. Sample preparation;

. Laboratories and assay methods;

. QA/QC procedures and results;

. Density measurements;

. Exploration database; and

. Geological interpretation.

Documents and plans provided by the company staff included:

. Environmental Impact Assessment (‘‘OVOS’’) section fromKokbulak Mining Plan, Turebekova IE, 2021;

. Draft Mine Closure and Rehabilitation Plan, QAZTAUKENScientific Design Institute LLP, 2021;

. Minutes of Public Consultation Meeting, 2021;

. State Approvals of Kobulak Mine Plan and a Draft Closureand Rehabilitation Plan; and

. Exploration and Mining Contract for Subsoil, 2010


– III-150 –





Geological

interpretation

. Confidence in (or conversely, the

uncertainty of) the geologicalinterpretation of the mineral deposit.

. Nature of the data used and of anyassumptions made.

. The effect, if any, of alternativeinterpretations on Mineral Resourceestimation.

. The use of geology in guiding andcontrolling Mineral Resource estimation.

. The factors affecting continuity both ofgrade and geology.

. The sediment hosted Fe mineralisation identified at Kokbulak,

which lies within both sands and clays, has a strike extent ofover 30km in a northwesterly direction, and a width varyingfrom 1.5 to 2.5km. Mineralisation has been divided up into

three areas, with the Central having had the majority ofexploration efforts, whilst the Northern and Southern less so.The most widespread ore types identified are:

. Oolitic oxidised brown ores — Type 1, generally foundabove the water table;

. Loose black ores without cement — Type 2, foundabove and below the water table, and

. Green or dark-grey ores of siderite-chlorite cement —Type 3, found below the water table.

. The Kokbulak deposit is reasonably well studied fromrelatively close spaced drilling and surface mapping, as suchthe geological model of the respective host rocks is robust.

. No alternative interpretation is considered due to the relativelyclose spaced drilling and exposure of mineralisation at surface.

. Continuity of mineralisation vertically is geologicallycontrolled by changes in lithology. Mineralization is openlaterally in places but is generally controlled on the periphery

of the deposit by lithology changes.


– III-151 –





Dimensions . The extent and variability of the

Mineral Resource expressed as length(along strike or otherwise), plan width,and depth below surface to the upper

and lower limits of the MineralResource.

. Lens 1 : This major mineralised unit has been traced along the

eastern part of the deposit from exploration line #13 insouthern part of the Central Area to exploration line #62 onthe Northern Area. Its total length is 17.7km with a width

1.6km and occupying an area of about 25km2. It appears to belocalised in a north-south depression in the roof of theunderlying rocks of the Chegan suite. As with all the lenses

seen at the Kokbulak Project, thickness variations andbifurcations are common, particularly near the edges, althoughin the main parts, the lens does show a high degree of

homogeneity. Thicknesses can exceed 40m, and reaches 51.7mat hole #655, although equally wedges from the main lens cantail off to around 1m in thickness.

. Lens 2 : The second lens starts from exploration line #7 at theSouthern Area and it is clearly wedged in the northern part ofthe Northern Area near exploration line #62. Its total length

by strike is 23.9km, width is 1.26km. As with Lens 1, the lensshows good continuity along strike, but wedging, thicknessvariations and lithology change are common on the peripheries

of the main body. Thickness again varies considerably from afew metres to>40m.

. Lens 3 : The 3rd lens is located to the west of the 2nd lens inthe northern part of the Central Area and in the southern partof the Northern Area. The lens is not large with strike lengthnot exceeding 2.8km, width 0.46km with an area of 1.26km2.

The lens is traced from the exploration line #35 to line #38.The structure is quite simple and does not change either downdip or along strike. Thickness varies from 2.7 to 7.9m in its

axial part from where it is symmetrically wedged to theperiphery.

. Lens 4 : The Fourth lens is found at the Northern Area fromexploration line #39 to line #56. The lens is extended in anorth-south direction for 6.1km and it has a significant width(average 2.5km) and achieves a maximum thickness of 36.7m.

Area is 19.25km2, therefore making it the third largest behindthe first and second lenses.


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Estimation and

modelling techniques

. The nature and appropriateness of the

estimation technique(s) applied and keyassumptions, including treatment ofextreme grade values, domaining,

interpolation parameters and maximumdistance of extrapolation from datapoints. If a computer assisted estimation

method was chosen include a descriptionof computer software and parametersused.

. The availability of check estimates,previous estimates and/or mineproduction records and whether the

Mineral Resource estimate takesappropriate account of such data.

. The assumptions made regardingrecovery of by-products.

. Estimation of deleterious elements orother non-grade variables of economicsignificance (eg sulphur for acid mine

drainage characterisation).

. In the case of block model interpolation,the block size in relation to the average

sample spacing and the search employed.

. Any assumptions behind modelling of

selective mining units.

. Any assumptions about correlation

between variables.

. Description of how the geologicalinterpretation was used to control the

resource estimates.

. Discussion of basis for using or not

using grade cutting or capping.

. The process of validation, the checking

process used, the comparison of modeldata to drill hole data, and use ofreconciliation data if available.

. The Mineral Resource estimation has been carried out using

Datamine Studio RM, Leapfrog and Snowden Supervisorsoftware.

. Domains: The following parameters were used to determinezones of mineralisation:

. Cut-off grade of 30% Fe derived as outlined above;

. Minimum thickness above cut-off grade of 1m; and

. Maximum thickness of internal waste of 1m

The mineralised domains were defined using string outlines

digitised on vertical sections along the exploration profiles thatare spaced 100m to 400m apart. Strings were snapped to thebeginning or end of sample locations. In some areas

discrepancies were found between close spaced drilling. Inthese situations priority was given to the drilling carried out in2013 as these were deemed more reliable. A total of 10

separate mineralised envelopes were defined for Kokbulak.Figure 1.4 is a plan view of the mineralised envelopes andFigure 1.5 is an isometric view of the mineralised envelopes.

Zones 1 and 2 are the largest of the interpreted mineralisedzones. Extrapolation along strike was up to half the distancebetween adjacent exploration profiles where mineralisation wasnot deemed continuous between them with the thickness of

mineralised zones being reduced over this distance.Extrapolation along strike was up to 1/3 of drillhole spacing atthe limits of the mineralised envelopes. In some cases, to

achieve continuity, the wireframes were allowed to passthrough intersections below the cut-off grade if mineralisationabove cut-off grade were found on either side.

. A block model was created using the geological andmineralised zone wireframes as boundaries. A block size of25m (X) x 25m (Y) x 5m (Z) was used in the block model with

key fields established for mineralised domains.

. Grade capping: Assessment was made for anomalous grades

but no grade capping was carried out.

. Composites: A 5m composite length was chosen to ensure

consistent sample support during estimation. Composites werelimited to the boundaries of mineralised domains.


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. Variography: A variographic study was carried out for Fe,

P2O5, S, CaO, MgO and CO2.

. Estimation: Estimation was carried out using Ordinary kriging

as the primary method. Inverse distance (squared) and NearestNeighbour estimates were carried out for validation purposes.Only composite samples within a domain were used for

estimation of that domain. Estimation parameters were basedon models of grade continuity produced during geostatisticalanalysis. Minimum and maximum sample criteria, restrictions

of number of composite samples from a single drill hole wereemployed during grade estimation to assist with declusteringand to reduce local grade bias. A multiple pass estimation ascarried out with expanding search ellipses and less restrictive

estimation parameters for estimating blocks in more poorlysampled areas.

. Estimation was carried out into parent cells only to reduce riskof conditional bias. Estimation was carried out using adiscretisation of five points in the X and Y dimensions and

two points in the Z dimension.

. The block model was verified first by comparing drill hole

composite sample values with estimated block values on asectional and plan basis. Grade comparison was also carriedout statistically by zone to ensure the global grade estimatewas unbiased. Grade profile (swath) plots were also

constructed to compare modelled grades and input compositegrades in slices or varying width. During this process acomparison was made between declustered and clustered data

to identify any possible local bias introduced by irregulargrade spacing.

. Estimation was carried out for P2O5, S, CaO, MgO and CO2as well as Fe.

Moisture . Whether the tonnages are estimated ona dry basis or with natural moisture,

and the method of determination of themoisture content.

. Mineral Resource tonnages have been reported on a dry basis.

Cut-off parameters . The basis of the adopted cut-offgrade(s) or quality parameters applied.

. WAI has prepared a Mineral Resource Estimate (MRE), inaccordance with the guidelines of the JORC Code (2012),

initially for the Kokbulak Project using a 30% Fe cut-offgrade. The cut-off grade used was the economic cut-off gradeat the time of completion of the MRE for this area.


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Mining factors or

assumptions

. Assumptions made regarding possible

mining methods, minimum miningdimensions and internal (or, ifapplicable, external) mining dilution. It

is always necessary as part of theprocess of determining reasonableprospects for eventual economic

extraction to consider potential miningmethods, but the assumptions maderegarding mining methods and

parameters when estimating MineralResources may not always be rigorous.Where this is the case, this should bereported with an explanation of the

basis of the mining assumptions made.

. In order to adhere to the guidelines of the JORC Code (2012)

WAI has assumed that all material in the Central Area abovethe reporting cut-off grade has reasonable prospects foreventual economic extraction by open pit mining methods.

. In order to adhere to the guidelines of the JORC Code (2012)that a Mineral Resource should display reasonable prospects

for eventual economic assessment in the Southern andNorthern Areas, WAI has constrained the Mineral Resource tothat portion of the deposit which falls within a conceptual

open pit which is based on reasonably assumed economic andmining parameters. The pit optimisation has been carried outusing NPV Scheduler software with the following parameters:

Pit Optimisation Parameters

Parameter Unit

Target Production Rate Mtpa ore 24Mining cost (Ore & Waste) US$/t rock 0.71Processing cost US$/t ore 15.6

Royalty Cost US$/t ore 2.12Shipping Cost US$/t ore 16.00G & A US$/t ore 0.61

Process Recovery % 96.6Concentrate Grade %Fe 58.4Discount Rate % 10Overall Pit Slope Angle ° 35

Losses % 5Dilution % 1.12Bench Height m 10

Berm Width m 5Fe Price US$/t Metal 161.07Fe Price (58.4% Fe) US$/t conc 94.00

COG % 17.48


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Mining in the Central Area is to take place via a conventional open pit

operation using conventional hydraulic shovels and trucks formovement of ore and waste. Mineralisation comprises near horizontal(1–2°) bedding located near-surface, with up to 14m of overburden.

An exact equipment requirement is not needed other than to say thatCaterpillar trucks and shovels have been factored into the calculations

to provide an efficient excavation and haulage cycle with oreproduction capacity of 24Mtpa of ore.

Based on the Project XXI 2013 Feasibility Study, it is assumed thatthe haulage distance from the open pit to the processing plant will notexceed 4.8km. At the early stage of the pit life the waste dump will belocated beyond the pit, but later in life of mine the waste will be

backfilled within the pit. Hence, the assumption is that the wastehaulage distance will not exceed 2km.

Since the mining method includes no drilling and blasting, it isrecommended that heavy track- mounted ripper bulldozers such asCaterpillar D9T or Caterpillar D10T be added into the mining fleet to

deal with difficult areas and trim bench floors and for waste dumpmaintenance.

To reduce the movement of the main excavators, it is recommended toadd to the loading fleet heavy wheel-mounted loaders, whose mainpurpose will be to remove the material ripped by bulldozers from thebench floor to support ore stockpiles and backup the main excavators

on production faces.

WAI considers the equipment selected for purchase is well suited to

the intended purpose.


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Metallurgical factors or

assumptions

. The basis for assumptions or predictions

regarding metallurgical amenability. Itis always necessary as part of theprocess of determining reasonable

prospects for eventual economicextraction to consider potentialmetallurgical methods, but the

assumptions regarding metallurgicaltreatment processes and parametersmade when reporting Mineral Resources

may not always be rigorous. Where thisis the case, this should be reported withan explanation of the basis of themetallurgical assumptions made.

. Processing on the mineralisation of the Kokbulak deposits,

upon which the Kokbulak Project sits on, has been studied ingreat detail in the past. In 1950s, the Moscow Institute ofSteels and Alloys, performed agglomeration and sintering

studies on the unprocessed iron ore samples from theKokbulak deposit and the Thematic Technological PartyCentral Laboratory of the Ural Geological Office conducted

mineral beneficiation tests involving heavy liquid, magnetic,gravity and roasting-magnetic separation technologies. Thetestwork conducted by the Centre of Geosciences, Metallurgy

and Processing in 2011 provides laboratory evidence that thethermo acid dephosphorisation of brown iron samples from theKokbulak Project, in particular from the Central Area, istechnically feasible and low-phosphorus and low-silica brown

iron ore concentrates can be obtained for the further cast ironmelting.

. The first documented processing studies on the Kokbulak ironore deposit were performed in 1952–1953 by the MoscowInstitute of Steel and Alloys (MISA) on samples of the three

main types mineralisation, subsequently identified as Samples1, 2 and 3. These testwork investigated the recoverability,porosity, sintering conditions, agglomerate quality and other

parameters to assess the performance of the ores, prior to anyenrichment by mineral processing, in blast furnace smelting.

. While detailed results from MISA works are not available to

WAI but only a summary of general findings, sintering testsshowed that brown and, in particular, black ore types canproduce agglomerates with low content of FeO (less than

15%), high porosity, good recoverability and high mechanicalproperties.

. These ore types were considered suitable for blast furnacesmelting without processing. The good reducibility of theseores was explained by the low content of limonite and sideriteand the high in- situ porosity.

. For green ore, the lower grade sample No.2, processing byroasting and magnetic separation was initially suggested to

reduce the chlorite content prior to sintering. Subsequentstudies indicated that there is no practical benefit fromprocessing Kokbulak iron ores using the roast-magnetic

separation routes as opposed to direct high intensity magneticseparation.


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. Sintering tests performed on 0–2mm dry magnetic concentrates

did not reveal any technical issues.

. WAI Comment: Sintering tests showed that hydrogoethite-rich

Kokbulak iron ores have good reducibility, but high levels ofimpurities. Therefore, Kokbulak ores and concentrates willrequire blending with ores and concentrates of different origin

and nature in order to produce a suitable feed for blastfurnaces. Phosphorous, the major impurity, is present withvalues constantly above 1% and roughly one order of

magnitude higher than the desirable level. It will drive therequirement for any treatment and blending of theconcentrates. Kokbulak ores are also characterised by highsilica and alumina contents. The resulting very low Basicity

index (B=(CaO+MgO)/(SiO2+Al2O3)), constantly below 0.12in all samples, will determine the need for the production of aheavily fluxed agglomerate.

Environmental factors

or assumptions

. Assumptions made regarding possiblewaste and process residue disposaloptions. It is always necessary as partof the process of determining reasonable

prospects for eventual economicextraction to consider the potentialenvironmental impacts of the mining and

processing operation. While at this stagethe determination of potentialenvironmental impacts, particularly for a

greenfields project, may not always bewell advanced, the status of earlyconsideration of these potential

environmental impacts should bereported. Where these aspects have notbeen considered this should be reportedwith an explanation of the environmental

assumptions made.

. No environmental factors or assumptions have been appliedduring this Mineral Resource estimate other than theassumption that appropriate permits to operate an open pitmine and associated facilities would be granted.

. No potential environmental impacts have been considered aspart of this Mineral Resource estimate.

To date, the Kokbulak Project is compliant with the terms oftheir exploration licence and are in compliance with Kazakh

legislation. Whilst the Project will affect the environment, dueto the distance from the nearest settlement and any sensitivereceptors, environmental and social conditions are considered

favourable for the Project.

As the project develops, the Company must undertake anEnvironmental and Social scoping study and subsequent impact

assessment to highlight any sensitive receptors and todetermine any impacts requiring mitigation.

The importance of water to the operation cannot beoveremphasised and it is therefore recommended that anupdated hydrogeological investigation covering the

groundwater regime including quantity and quality, isundertaken in the area of abstraction to include an impactstudy to determine the potential impacts of abstractionvolumes required for the project.


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WAI recommends that the Company adopt, and make public,

procedures and instruments for the management ofenvironmental, social and health and safety issues and applyrelevant national laws and regulations as well as international

best practice guidelines for the necessary management, controland reporting.

Furthermore, WAI recommends instigating an Environmental& Social Action Plan the details of which are provided inTable 9.3 below.

Table 9.3 : Recommendations for Environmental &

Social Action Plan

ActionPriority &

timescale

1. Undertake a hydrogeological investigation coveringwater quality and quantity to ensure the feasibility

and potential impacts of extracting project waterfrom the Begimbet Aquifer

High/ Immediate

2. Prepare an Environmental impact assessment in linewith IFC Performance Standards for inclusion into

BFS

High

3. Prepare a social impact assessment in line with IFCPerformance requirements for inclusion into the

BFS

High

4. Prepare an overarching, company-wideEnvironmental and Soda Management System to

incorporate the following elements:

Medium

‧ policy‧ Identification of risks and impacts;

‧ Management programmes‧ Organizational capacity and competency;‧ Emergency preparedness and response;‧ Stakeholder Engagement; and Monitoring

and Review.


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Bulk density . Whether assumed or determined. If

assumed, the basis for the assumptions.If determined, the method used, whetherwet or dry, the frequency of the

measurements, the nature, size andrepresentativeness of the samples.

. The bulk density for bulk material musthave been measured by methods thatadequately account for void spaces

(vugs, porosity, etc), moisture anddifferences between rock and alterationzones within the deposit.

. Discuss assumptions for bulk densityestimates used in the evaluation processof the different materials.

. A combination of data is available for density determination.

Values used in the Mineral Resource estimate are determinedfrom various methods and periods of testing.

. Tests of bulk samples in 1950s and of core samples in 2013were carried out. The two eras of testing gave similar meanvalues for bulk density.

. The bulk density of brown and black (incoherent) oreswas determined by direct excavation of the ore mass

from test pits of known dimensions. Ore wasexcavated, weighed, left to dry for 20 or more daysand then re-weighed. From these data, wet and drybulk densities could be estimated.

. For the bulk density of the green ores, this wasestablished in the laboratory as these ores could not be

intersected near surface. Thus, the bulk density wasdetermined from 15–20cm core samples or samplesfrom test pit walls (15x15cm), wrapped in gauze fabric,

waxed and immediately sent to a chemical laboratory,which name is not known to WAI.

. The average bulk density is recorded as 2.36t/m3 fromextensive historical testing, although the position ofsamples used for density measurement is not recorded.Thus, this value was therefore assigned to the whole of

the mineralised zones at the Central Area of theKokbulak Project.


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Classification . The basis for the classification of the

Mineral Resources into varyingconfidence categories.

. Whether appropriate account has beentaken of all relevant factors (ie relativeconfidence in tonnage/grade estimations,

reliability of input data, confidence incontinuity of geology and metal values,quality, quantity and distribution of the

data).

. Whether the result appropriately reflectsthe Competent Person’s view of the

deposit.

. Classification of Mineral Resources is based upon a review of

geological continuity and complexity, quality of supportingdata, spatial grade continuity and quality of block mode.

. With the current drill hole spacing, geological continuitybetween exploration profiles is seen. The extents of thedomains that act as host for the vast majority of

mineralisation are generally well constrained by the currentdrilling. The current drill hole spacing of areas of 150m x250m (or less) drilling allows for interpretation of continuous

zones of mineralisation for the larger mineralised domains.Little variation is seen in grade or mineralised domainthickness at this grid spacing.

. The data held in the exploration database is deemed acceptablefor use in a Mineral Resource estimate with limitations. QA/QC has generally been of a basic nature throughout the

majority of the exploration used in the estimate with the focusmainly upon analytical precision by reviewing internal andexternal laboratory duplicate assay results. These results show

a reasonable match but a lack of duplicates, other than pulpduplicates, CRM samples and blank data means not all areasof sampling and assay quality have been reviewed. Whilst the

Mineral Resource estimate relies upon a large amount ofhistorical data, a programme of verification drilling has showna good match with the grades and mineralisation domainthickness recorded in these historical holes.

. The data used in geostatistical analysis resulted in robust alongstrike and down dip variogram structures for Fe across main

domains.

. Validation of the block model has shown the estimated grades

to be a good reflection of the input composite grades. Visualand statistical checks reveal no evidence of major under orover estimation.

. Key drill hole spacing for the allocation of resources can besummarised as follows:

Measured resources — Measured resources were outlined wheredrillhole spacing was up to 150m x 250m in areas where 2013drilling has been carried out.

Indicated resources — Indicated resources were outlined wheredrillhole spacing was up to 400m x 200m; and.

Inferred resources — Within defined mineralised zones outsideof the Indicated Resource criteria.


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. Classification was applied on a zone by zone basis with string

outlines generated around blocks deemed to be Measured orIndicated which were then used to select and code these blocksin a ‘‘cookie cutter’’ approach. The drillhole spacing for

resource classification is seen as a guide rather thanprescriptive. Certain zones where close spaced drilling indicateshighly variable grade or thickness of mineralisation were

sometimes downgraded to a lower classification than theguidelines above.

. It is the opinion of WAI that the Mineral Resourceclassifications assigned to the Kokbulak deposit areappropriate and are in accordance with the guidelines of theJORC Code (2012).

Audits or reviews . The results of any audits or reviews ofMineral Resource estimates.

. To the knowledge of WAI. no audits or reviews have beencarried out of this or previous Mineral resource estimates otherthan an internal peer review procedure.

Discussion of relative

accuracy/confidence

. Where appropriate a statement of the

relative accuracy and confidence levelin the Mineral Resource estimate usingan approach or procedure deemed

appropriate by the Competent Person.For example, the application ofstatistical or geostatistical procedures

to quantify the relative accuracy of theresource within stated confidencelimits, or, if such an approach is notdeemed appropriate, a qualitative

discussion of the factors that couldaffect the relative accuracy andconfidence of the estimate.

. The statement should specify whether itrelates to global or local estimates,

and, if local, state the relevanttonnages, which should be relevant totechnical and economic evaluation.

Documentation should includeassumptions made and the proceduresused.

. These statements of relative accuracyand confidence of the estimate shouldbe compared with production data,

where available.

. WAI considers that the current drill hole spacing is sufficient

to demonstrate geological continuity of the main geologicalstructures hosting the mineralization.

. The application of top-cuts and compositing in the MineralResource estimation are appropriate. Any additional samplingworks, however, may necessitate a revision of the top-cuts

used.

. The Mineral Resource estimation methodology used is deemedappropriate based upon validation of the model using visual,

statistical and graphical checks and a comparison againstmining production. The use of alternative methods is likely toyield only minor changes to the global Mineral Resource

estimate.

. The geological domains have been adhered to through the

geostatistical and grade estimation works, and the spatialdistribution of grade in the final Mineral Resource model isrepresentative of the sample data.

. No production data is available to validate the MineralResource estimate.


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