43 101bedfordburgessfinal report

TECHNICAL REPORT

NI 43-101 ON THE

BEDFORD – BURGESS GRAPHITE PROJECT

BEDFORD DISTRICT AND BURGESS WARD

LANARK COUNTY SOUTHEASTERN ONTARIO

FOR

MEGA GRAPHITE INC.

L.D.S. Winter, P.Geo.

29 August 2011

2

TABLE OF CONTENTS

PAGE

1. Summary 4 2. Introduction 9 3. Reliance on Other Experts 10 4. Property Description and Location 11 4.1 Bedford Property 11 4.2 Burgess Property 14 5. Accessibility, Climate, Local Resources, Infrastructure

and Physiography 15 5.1 Bedford Property 16 5.2 Burgess Property 17

6. History 17 6.1 Bedford Property 17 6.2 Burgess Property 25 7. Geological Setting and Mineralization 27 7.1 Regional Geology 27 7.2 Mineralization 27

7.3 Bedford Property Geology and Mineralization 28 7.4 Burgess Property Geology and Mineralization 30 8. Deposit Types 32 9. Exploration 32 9.1 Bedford Property 32 9.2 Burgess Property 33 10. Drilling 33 10.1 Bedford Property 33

10.1.1 Diamond Drilling Program – Bedford Property 35 10.2 Burgess Property 39 11. Sample Preparation, Analyses and Security 39 11.1 Bedford Property 39 11.2 Burgess Property 40 12. Data Verification 41 13. Mineral Processing and Metallurgical Testing 42 14. Mineral Resource Estimates 46 15. Adjacent Properties (Item 23) 48 16. Other Relevant Data and Information (Item 24) 48 17. Interpretation and Conclusions (Item 25) 48 18. Recommendations (Item 26) 51 19. References 54 Signature Page 57

Certificate of Qualification 58

3

LIST OF TABLES

PAGE

Table 1: Bedford District Claims 13

Table 2: Burgess Ward, Tay Valley Claims 15

Table 3: Drilling Summary – Bedford Property 35

Table 4: Percussion and Diamond Drill Hole Summary 1999 38

Table 5: Sampling January 2010 – Bedford Property 41

Table 6: Historical Mineral Resource Estimate – Bedford Property 47

Table 7: Recommended Exploration Program and Budget – Bedford Property 52

Table 8: Recommended Exploration Program and Budget – Burgess Property 53

LIST OF FIGURES

Figure 1: Location Map

Figure 2: Property Map - Mining Claims - Bedford Property

Figure 3: Property Map – Mining Claims - Burgess Property

Figure 4: Meadow Zone Trenches – Bedford Property

Figure 5: Regional Geology

Figure 6: Property Area Geology – Bedford Property

Figure 7: 1999 Diamond Drill Hole Locations – Bedford Property

Figure 8: Test Work Process Flow Diagram

APPENDICES

Appendix 1: Visual Drill Logs/Columns – Bedford 1999 Diamond Drill Program

4

1. SUMMARY

Mega Graphite Inc. (MGI or “the Company”) holds two mineral exploration

properties in Southeastern Ontario centred at the village of Westport, approximately 50

km north of Kingston, Ontario that were acquired for their potential to host graphite

mineralization of economic significance. The two properties are within 25 km of one

another, have very similar geology and if at some future time a treatment facility was

constructed it could be utilized to treat material from both properties. On this basis the

following report is presented as the “Bedford-Burgess Project” that consists of the two

properties, the Bedford District, South Frontenac Township Property (the Bedford

Property) and the Burgess Ward, Tay Valley Township Property (the Burgess Property).

BEDFORD PROPERTY

The Bedford Property of Mega Graphite Inc. is located in Bedford District,

Southeastern Ontario approximately 45 km north of Kingston, Ontario at 44o-36’N

latitude, 76o-44’W longitude (Figure 1). The Property is centred at Concession 17, Lot 6,

Bedford District, Lanark County.

The Bedford Property consists of 36 contiguous, staked mining claims containing

a total of 36 units and covering approximately 852 ha and held in the name of Mega

Graphite Inc. MGI holds a 100% interest in the mining rights for all claims. The surface rights for 14 claims are held by third parties. All claims are currently in good

standing.

The Bedford Property was originally acquired by Mr. A.D. Houston, prospector

and developer, in 1988 by staking. Subsequently, between 1994 and 2002 a number of

exploration programs were carried out on the Property by Graphite Mountain Inc., a

private company controlled by Mr. Houston. The work consisted primarily of surface

trenching and stripping followed by geological mapping and sampling. The majority of

this work was carried out in the Meadow Zone area in the southwestern part of the

Property (claims 1037714, 1037718, 1037727 and 1037728).

5

In 1997 a preliminary percussion drilling program was carried out in the Meadow

Zone area with a total of 358.12 metres in 16 holes being completed. The second

percussion drilling program in September and October of 1999 completed 21 holes for a

total of 758.1 metres. In November and early December 1999 a diamond drilling

program was completed with 916.2 metres drilled in 19 holes.

King (2000) using the results of the two percussion drilling and the one diamond

drilling program as well as the information from the surface mapping completed a

mineral resource estimate. This estimate was carried out prior to the implementation of

the NI 43-101 regulatory requirements and as a result is considered as non-compliant

with the current requirements.

BEDFORD GRAPHITE PROPERTY

HISTORIC MINERAL RESOURCE ESTIMATE (KING 2000)

Category Tonnage (tonnes) Grade C% (g)

Measured Resource 933,800 3.52

Indicated Resource 1,669,000 3.44

Inferred Resource 1,268,000 3.44 (1) (1) assumed to be same grade as indicated resource.

Note: This resource estimate is historical and was prepared before the introduction of National Instrument

43-101 – Standards of Disclosure for Mineral Projects (NI 43-101”). It may not be relied upon until it is confirmed using methods and standards that comply with those required by NI 43-101. The potential for the exploration target to replicate the historical resource, or to reach the indicated range of tonnages, is conceptual and is based on historical reports, which cite approximate length, widths, depths, grades and projections of the historical resource. Readers are cautioned that a qualified person has not yet completed sufficient exploration, test work or examination of past work to define a resource that is currently compliant with NI 43-101. The Company further cautions that there is a risk that exploration and test work will not result in the delineation of such a currently compliant resource. Neither the Company nor its personnel treat the historical resource estimate or the historical data as defining a current mineral resource, as defined under NI 43-101, nor do they rely upon the estimate or the data for evaluation purposes; however, these data are considered relevant and will be used to guide exploration as the Company develops new data to support a current mineral resource estimate in accordance with the requirements of NI 43-101.

The Bedford Property is large, covering approximately 874 ha and much of the

Property is underlain by lithologic units that have the potential to host graphite

mineralization of economic interest. Most of the work has been in the Meadow Zone in

an area measuring about 500 metres x 500 metres in the southwestern part of the

Property. Graphite mineralization is recognized in other parts of the Property, however,

little work has been done outside the Meadow Zone to evaluate these additional areas.

To further evaluate the Bedford Property and its potential, a program of

geological mapping, stripping and trenching of high priority areas is recommended. To

complete the current evaluation program resource confirmation, diamond drilling

followed by the preparation of a resource estimate is recommended. A one phase

program of exploration is recommended with expenditures in Phase 1 being $800,000.

The implementation of a second phase would be contingent on the results of the Phase

1 program.

BURGESS PROPERTY The Burgess Property is located in Burgess Ward, Tay Valley Township, Lanark

County, Southeastern Ontario approximately 55 km north of Kingston, Ontario at 44o-

21.4’N latitude, 76o-20’W longitude (UTM NAD83, co-ordinates 396000mE, 4954500mN)

(Figure 1). The Property is centred at Concession 5, Lots 23-26, Burgess Ward, Tay

Valley Township.

The Property consists of 14 contiguous, staked mining claims containing a total

of 14 units and covering approximately 336 ha. All claims are currently in good standing.

MGI holds a 100% interest in the mining rights only for each of the 14 claims while the surface rights are held by third parties.

The Burgess graphite deposit was discovered in 1917 with exploration, generally

consisting of drilling, trenching and pitting, taking place from 1918 to 1923, in 1951, 1981

and 1989. At the present time there is no current 43-101 compliant resource estimate

for the Property.

6

7

To further evaluate the Burgess Property and its potential, a program of

geological mapping, stripping and trenching of high priority areas is recommended. To

complete the current evaluation program, diamond drilling followed by the preparation of

a resource estimate is recommended. A one phase program of exploration is

recommended with expenditures in Phase 1 being $800,000. The implementation of a

second phase would be contingent on the results of the Phase 1 program.

There is currently no 43-101 compliant resource estimate for the Burgess

Property. The most recent tonnage estimate for graphite mineralization was reported by

Hawley (1988) as stated in the following sentences. In 1989, Lodi Metals – Black Hawk

Mining Inc. completed an exploration program centred on the same general area as

previous work although the area explored was substantially larger and consisted of 39

claim units. Their work included 13,336.5 ft of diamond drilling, excavation of 69

trenches, geophysical surveys and geological mapping. This work outlined 100,000 tons

of material averaging 10% C (g) to a depth of 30 m in one of several zones tested. It is

not clear from the available information whether this tonnage represents a confirmation

of a previously known deposit or whether this tonnage represented a new discovery that

should be added to the already outlined resource. Hawley (1988) in “Summary Report

on the Timmins Graphite Project of Lodi Metals Inc., Conc. V, North Burgess Township,

Lanark County, SE Ontario” and dated 21 July, 1988 makes the following statement. “It

would appear that at least 10 million tons could be expected and considering the

numerous other conductors and geologically mapped graphite rich zones, a conservative

figure of 15 to 20 million tons of 8% C (graphite) may be increased with further

development work.”

GENERAL Both properties are geologically located within the Frontenac Terrain of the

Central Metasedimentary Belt (CMB) of the Grenville Province of Proterozoic age. The

Central Metasedimentary Belt is a major Mesoproterozoic accumulation of marble,

metavolcanic rocks and clastic metasedimentary rocks. The general structural trends in

the Frontenac Terrain are northeasterly and all units have been deeply buried and have

been metamorphosed to amphibolite to granulite grade.

8

Within the Properties, the main lithologic units are marbles (metamorphosed

carbonate units), intercalated, rusty meta-arenites, graphitic schists and various felsic to

mafic intrusive units. The lithologic units with the most economic interest are the

coarsely crystalline graphite-bearing Grenville marbles which were at one time

carbonate shelf sediments. The rusty meta-arenites occur in relatively narrow horizons

within the larger marble-rich units. The rusty meta-arenites also contain significant

graphite content, sometimes exceeding 5% by weight graphitic carbon. The contacts

between marbles and meta-arenites with graphitic schists, in general, appear to carry

significant graphite. The graphite mineralization for the most part occurs in flakes of

graphite ranging from 0.25 mm to 5 mm in size.

MGI has carried out preliminary mineral processing and testing studies to

determine if the graphite from the Bedford and Burgess Properties can meet the

specifications required for a high quality graphite product that could be used in the

construction of lithium-graphite batteries for example, where high purity graphite in the

10-20 micron range is required for the anodes of the battery. These studies have

consisted of;

Crushing and flotation studies on 1500 lb of graphite-bearing material

collected from surface from the two properties (750 lb from each

property). A concentrate of 130.5 lb of raw flake graphite was produced.

Material identification, size and weight tests on the 130.5 lb of

concentrate.

Milling tests to determine how effectively the particle size of the flake

graphite could be reduced.

Chemical analyses of all products and scanning electron microscope

(SEM) studies.

Subsequently 12.8 kg of graphite-bearing trench samples from the Bedford

Property was tested. A flake graphite concentrate was produced and then dry milled in

an attempt to produce spherically shaped particles in the 10 to 20 micron range. This

preliminary work produced material in the required size range and with an acceptable

circularity.

9

In summary, it is considered that the preliminary mineral processing and test

work has provided positive results and has indicated that acceptable products can be

produced from the graphite-bearing rocks of the Bedford and Burgess Properties.

For both the Bedford and Burgess Properties, Phase 1 programs of geological

mapping, trenching, sampling and diamond drilling are recommended with the objective

being to prepare NI 43-101 compliant Mineral Resource Estimate for both Properties.

The total estimated expenditure to carry out these two work programs is $1,600,000.

2. INTRODUCTION The writer was requested by Mega Graphite Inc. to prepare an independent

technical report on the Company’s Bedford and Burgess graphite properties. This report

is being prepared for Company corporate purposes and is consistent with, “Repeal and

Replacement of National Instrument 43-101 Standards of Disclosure for Mineral

Projects, Form 43-101 F1 Technical Report, and Companion Policy 43-101 CP,

Supplement to the OSC Bulletin, April 8, 2011, Volume 34, Issue 14 (Supp – 2).

MGI holds two mineral exploration properties in Southeastern Ontario centred at

the village of Westport, approximately 50 km north of Kingston, Ontario that were

acquired for their potential to host graphite mineralization of economic significance. The

two properties are within 25 km of one another, have very similar geology and if at some

future time a treatment facility was constructed it could be utilized to treat material from

both properties. On this basis the following report is presented as the “Bedford-Burgess

Project” that consists of the two properties, the Bedford Property and the Burgess

Property.

The writer is a principal of Winterbourne Explorations Ltd. (Winterbourne) and

has operated Winterbourne as an independent geological consulting business since

1981. Through Winterbourne, the writer has prepared a number of 43-101 compliant

technical reports on gold and/or base metal and industrial mineral properties located

within the provinces of Ontario and Quebec. This report is based on information

provided by the Company, publically available information as well as a visit to the

properties by the writer on 26 January 2010. At the time of the property visits there was

10

limited (patchy) snow cover. On the Burgess Property the geological units in the

northwestern part of the property were inspected and on the Bedford Property several

sites in the Meadow Zone area were looked at and 2 sites were sampled (5 samples

were taken). Since that time no exploration work has been carried out on either Property

as evaluation work has concentrated on the mineral dressing/metallurgical aspects of

the Project.

Metric units and Canadian dollars are used throughout this report unless

otherwise stipulated. The percentage of graphite/carbon is reported as % C (g)

throughout the report.

Neither the Bedford Graphite Property nor the Burgess Graphite Property are

advanced (development or production) properties at this time and as a result, this report

does not include information under Items 15 through 22 of National Instrument 43-101

Replacement.

The effective date of the report is 29 August 2011.

3. RELIANCE ON OTHER EXPERTS

This report is being prepared by the writer for MGI and the information,

conclusions, opinions and estimates contained herein are based on;

information available to the writer at the time of preparation of this report that is in

the public domain,

assumptions, conditions and qualifications as set forth in this report,

data and reports supplied by the client and available from the public domain and,

property information available from the public website of the Ontario Ministry of

Northern Development Mines and Forestry.

in section 13, the writer has used the following reports provided by the Company

and as listed in the References (Item 27); Harwood, W. 2010; Hosokawa, 2011;

Ortech 2011.

11

4. PROPERTY DESCRIPTION AND LOCATION

4.1 BEDFORD PROPERTY

The Property is located in Bedford District, South Frontenac Township, Lanark

County, Southeastern Ontario approximately 45 km north of Kingston, Ontario at 44o-

36’N latitude, 76o-44’W longitude (UTM co-ordinates 377000mE, 4943000mN) (Figure

1). The Property is centred at Concession 17, Lot 6, Bedford District with the Property

being in the Southern Ontario Mining Division.


of 36 units and covering approximately 852 ha shown in Figure 2 and as summarized in

Table 1.

MGI holds a 100% interest in the mining rights only for each of the claims listed

in Table 1. For 14 claims a third party holds the surface rights (Table 1 and Figure 2).

The expiry date of all the claims is provided in Table 1 and for each claim, an annual

expenditure of $400 is required to keep the claim in good standing. All of the claims are

in good standing until 26 April 2012.

All claim boundaries are determined by the lot and concession line fabric of the

township.

To date, most work on the Property has been concentrated in the Meadow Zone

and its location is shown in Figure 2. There are no mine workings, tailing ponds or

waste rock piles on the Property. There are no recognized important natural features or

improvements within the Property boundaries.

There are no known royalties, back-in rights, payments or other agreements to

which the Property is subject.

There are no recognized environmental liabilities to which the Property is subject.

In the Meadow Zone area (Figure 2), there is some disturbance to the land due to the

....'i FIGURE 1

MEGA GRAPHITE INC. BEDFORD· BURGESS PROJECT

LOCATION MAP Scale: 1:750 000 August 2011

After Mining Land Tenure Map M-0052

FIGURE 2 MEGA GRAPHITE INC.

BEDFORD-BURGESS PROJECT BEDFORD PROPERTY

CLAIM MAP Scale: 1:40 000 August 2011

12

stripping, trenching and drilling programs. If, for any reason, the Property were

abandoned, there would be a limited amount of rehabilitation required in this area.

None of the work carried out to date required permits, however, a new Ontario

Mining Act was passed in October 2009 and changes are being phased in. In 2012 a

“graduated regulatory scheme setting rules for early exploration activities, including

consultation with First Nations and Metis” and “measures protecting areas which meet

criteria as sites of Aboriginal cultural significance from the impacts of mineral

exploration” are being considered for future implementation.

13

1037688 SW/4, Lot 17, Conc. 6 1 24 2012-Apr-261037689 NE/4, Lot 20, Conc. 8 1 24 2012-Apr-261037690 SW/4, Lot 18, Conc. 6 1 24 2012-Apr-261037691 SE/4, Lot 18, Conc. 6 1 24 2012-Apr-26

1037692 (1) NE/4, Lot 17, Conc. 6 1 24 2012-Apr-261037693 (1) SE/4, Lot 17, Conc. 6 1 24 2012-Apr-261037696 SW/4, Lot 18, Conc. 7 1 24 2012-Apr-261037697 NW/4, Lot 18, Conc. 7 1 24 2012-Apr-261037699 SE/4, Lot 18, Conc. 7 1 24 2012-Apr-261037700 SW/4, Lot 18, Conc. 8 1 24 2012-Apr-261037701 NW/4 , Lot 18, Conc. 8 1 24 2012-Apr-26

1037704 (1) NW/4, Lot 19, Conc. 7 1 24 2012-Apr-261037705 (1) SW/4, Lot 19, Conc. 7 1 24 2012-Apr-261037706 SE/4, Lot 19, Conc. 7 1 24 2012-Apr-261037707 NE/4, Lot 19, Conc. 7 1 24 2012-Apr-26

1037708 (1) W/2 of East half Lot 20, Conc. 7 1 20 2012-Apr-261037709 (1) E/2 of West half Lot 20, Conc. 7 1 20 2012-Apr-261037710 W/2 of West half Lot 20, Conc. 7 1 20 2012-Apr-261037711 NW/4, Lot 20, Conc. 8 1 24 2012-Apr-261037712 SW/4, Lot 20, Conc. 8 1 24 2012-Apr-26

1037717 (1) NE/4, Lot 16, Conc. 5 1 24 2012-Apr-261037718 (1) SE/4, Lot 16, Conc. 5 1 24 2012-Apr-261037719 NE/4, Lot 15, Conc. 5 1 24 2012-Apr-261037720 SE/4, Lot 15, Conc. 5 1 24 2012-Apr-261037721 NE/4, Lot 14, Conc. 5 1 24 2012-Apr-261037722 SE/4, Lot 14, Conc. 5 1 24 2012-Apr-26

1037723 (1) SW/4, Lot 14, Conc. 5 1 24 2012-Apr-261037724 (1) NW/4, Lot 14, Conc. 5 1 24 2012-Apr-261037725 (1) SW/4, Lot 15, Conc. 5 1 24 2012-Apr-261037726 (1) NW/4, Lot 15, Conc. 5 1 24 2012-Apr-261037727 (1) SW/4, Lot 16, Conc. 5 1 24 2012-Apr-261037728 (1) NW/4, Lot 16, Conc. 5 1 24 2012-Apr-261037729 NW/4, Lot 15, Conc. 6 1 24 2012-Apr-261037730 SW/4, Lot 15, Conc. 6 1 24 2012-Apr-261037731 NW/4, Lot 14, conc. 6 1 24 2012-Apr-261037732 SW/4, Lot 14, Conc. 6 1 24 2012-Apr-26

NOTE: (1) Mining rights only held by MGI. Third party holds surface rights. For all other claims, MGI holds mining rights.

TABLE 1 MEGA GRAPHITE INC.

BEDFORD DISTRICT CLAIMS

CLAIM NO. UNITS AREA (ha)

CLAIM DUE DATELOT / CONCESSION

14

4.2 BURGESS PROPERTY

The Property is located in Burgess Ward, Tay Valley Township, Lanark County,

Southeastern Ontario approximately 55 km north of Kingston, Ontario at 44o-21.4’N

latitude, 76o-20’W longitude (UTM NAD83, co-ordinates 396000mE, 4954500mN)

(Figure 1). The Property is centred at Concession 5, Lots 23-26, in the Southern Ontario

Mining Division.


of 14 units and covering approximately 336 ha shown in Figure 2 and as summarized in

Table 2.

MGI holds a 100% interest in the mining rights only for each of the claims listed

in Table 2 (Table 2 and Figure 3). The expiry date of all the claims is provided in Table 1

and for each claim, an annual expenditure of $400 is required to keep the claim in good

standing. On 9 August 2011, $400 per claim was transferred from the reserve (bank) to

maintain the claims in good standing until September 2012, however, as of the 29

August 2011 this was not being reported on the government website.

All claim boundaries are determined by the lot and concession line fabric of the

township.

To date, most work on the Property has been concentrated in the western part of

the Property. There are no mine workings, tailing ponds or significant waste rock piles on

the Property. There are several surface stockpiles of graphite-rich material excavated

from surface trenches. It is estimated that in total there is 11,000 tons of material in the

stockpiles. There are no recognized important natural features or improvements within

the Property boundaries.

There are no known royalties, back-in rights, payments or other agreements to

which the Property is subject.

There are no recognized environmental liabilities to which the Property is subject.

There is some disturbance to the land due to the stripping, trenching and drilling

rn :i!: « ...J U

z o 0'

«; ,,--o o ::iE' Co C'O

" :iE f :s c

"'C C C'O

-oJ en; c.-c.-::iE

---\ \ ( -<,.. ...- " /

M W c::: :) C) u:::

l-G

E o\ o It) rn -:::J en

:::J «

15

programs and if, for any reason, the Property were abandoned, there would be a limited

amount of rehabilitation required in this area.

None of the work carried out to date has required permits. (See comments on

page 13 re the new Ontario Mining Act).

748510 SW/4, Lot 26, Conc. 5 1 24 2011-Sep-14748511 SE/4, Lot 26, Conc. 5 1 24 2011-Sep-14748512 SW/4, Lot 25, Conc. 5 1 24 2011-Sep-14748513 SW/4, Lot 23, Conc. 5 1 24 2011-Sep-14748514 SE/4, Lot 23, Conc. 5 1 24 2011-Sep-14840566 NE/4, Lot 24, Conc. 5 1 24 2011-Sep-16840567 NW/4, Lot 24, Conc. 5 1 24 2011-Sep-16840568 NE/4, Lot 25, Conc. 5 1 24 2011-Sep-16840569 NW/4, Lot 25, Conc. 5 1 24 2011-Sep-16840570 NE/4, Lot 26, Conc. 5 1 24 2011-Sep-16840571 NW/4 , Lot 26, Conc. 5 1 24 2011-Sep-16840572 SE/4, Lot 24, Conc. 5 1 24 2011-Sep-16840573 SW/4, Lot 24, Conc. 5 1 24 2011-Sep-16840574 SE/4, Lot 25, Conc. 5 1 24 2011-Sep-16

NOTE: (1) Mining rights only held by MGI. Third party holds surface rights. * Approximate area.


BURGESS WARD CLAIMS

CLAIM NO. UNITS AREA (ha) *

CLAIM DUE DATELOT / CONCESSION

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The local community of Westport approximately 14 km to the northeast of the

Bedford Property and 9 km to the southwest of the Burgess Property can provide meals,

accommodation and general services for any exploration work in the area.

The Project area has a cool continental climate with an average annual

precipitation in the order of 900 mm per year and with the annual temperatures being in

16

the range from -12oC to +25oC. Snow accumulations are generally present for a 4.5 to 5

month period between November and March. In general, the climatic conditions permit

exploration work to be carried out at all times of the year. In some cases, the winter

season is more preferable for carrying out geophysical and drilling work in that it

provides access to normally swampy areas.

The areas of both the Bedford and Burgess Properties are typical of Southern

Ontario’s Precambrian Shield terrain with the general topography being controlled by

underlying bedrock ridges which in part are soil covered. Smaller areas primarily on

carbonate-rich bedrock are being cultivated while the remaining area is generally forest

covered. Throughout the area of the claim groups, the soil is of a poor quality and only

supports minor agriculture which is largely devoted to grazing of livestock.

For the most part, the Properties are covered with second growth hard wood with

some open pasture land areas.

In general, the average relief in the area is in the order of 5 metres or less,

however, locally it may reach up to 15 metres. The overburden which is largely glacial

till and glacial outwashed deposits is relatively thin and would appear to average in the

order of 1 metre to 5 metres deep. Swampy areas generally occupy the low-lying areas

between the forested rocky ridges.


Access to the Property from the north is from Arnprior on Provincial Hwy. 17 west

of Ottawa and then south on Provincial Hwy. 15 to the hamlet of Crosby. At Crosby

County Road 42 leads west though Newport to Westport, a distance of 14 km. From

Westport, County Roads 12 and 8 lead southwest a distance of approximately 14 km to

the area of the Property (Figure 1).

The Property can also be reached from Kingston to the south by way of

Provincial Hwy. 38 to Godfrey then northeast on County Road 8 about 12 km to the

Property.

17


Access to the Property from the north is from Arnprior on Provincial Hwy. 17 west

of Ottawa and then south on Provincial Hwy. 15 to the hamlet of Crosby. At Crosby

County Road 42 leads west though Newport to Westport, a distance of 14 km. From

Westport, County Roads lead northeasterly 9 km to the property area.

The Property can also be reached from Kingston to the south by way of

Provincial Hwy. 15 to Crosby then west to Westport and then 9 km northeasterly to the

property area.

6. HISTORY

6.1 BEDFORD PROPERTY The earliest reported exploration work from the general area of the subject

property was for galena (lead). Prior to 1915 numerous small pits, trenches and shafts

were put down on late-stage, fault-related calcite-galena veins. In the early part of the

20th century, production in the general area reached several million pounds lead.

Hewitt (1965) reports that Frobisher Ltd. outlined a substantial graphite body on

the Kirkham Graphite property approximately 8 km east of Godfrey and south of the

Bedford Property which is the subject of this report. In 1952, a diamond drilling program

by Frobisher outlined two parallel lenses of graphite-rich mineralization.

Harding (1951, p. 62) reported that a pit approximately 15 ft deep had been sunk

on a graphite showing on the side of the hill facing Birch Lake on Lot 1, Concession 5,

Bedford township. The graphite is present as disseminations in a crystalline limestone in

bands between 2 cm and 20 cm wide. No substantial body of graphite- bearing material

was exposed in the pit.

Harding (1951) also reports the presence of graphite mineralization at the

“Bawden Mine” in Lot 2, Concession 6 of Bedford township. Here the graphite occurs in

flakes, disseminated in crystalline limestones which are steeply folded and trend in a

18

northeasterly direction. Harding (1951) also reports the presence of disseminated

graphite in white Grenville marble on Lot 18, Concession 8 of Bedford township.

1970: Megaton Mines Ltd. From late November to mid-December 1970 Megaton Mines Ltd., Kingston,

Ontario drilled one diamond drill hole bearing approximately north at an angle of 45o and

to a depth of 891 feet (271.6 metres) on the site of current claim S01037697. No

information is available in the assessment report as to the purpose of this hole or the

commodity sought, however, both graphite-bearing “quartzites” and crystalline

limestones are reported in the drill log. (Megaton, 1970).

1988: A.D. Houston

The original Bedford Property claims were acquired in 1988 by Mr. A.D. Houston,

a prospector and developer. Prospecting at that time indicated that the graphite

mineralization was more widespread than previously thought and additional claims were

added to the group.

Subsequent work consisted of general prospecting and stripping and sampling as

required to meet assessment work requirements. This early work indicated the

presence of old pits and trenches, however, they appeared to be related to the search

for mica deposits. During this early work many graphite-rich zones were identified on

the Property, however, the Meadow Zone Area (claims 1037717, 1037718, 1037727 and

1037728) was the site of most work and was considered to be the most prospective area

(Figure 2). A Self Potential electrical geophysical survey completed at this time also

suggested the Meadow Zone Area as an area of interest. (King, 2000).

1994: Graphite Mountain Inc.

A reconnaissance inspection of the planned work area was carried out on 15

March 1994 following which approximately 40 test pits were excavated during the period

15 March to 19 March utilizing a Case 580-Super E backhoe. Subsequently, between

21 March to 15 April 1994 most of the test pits were connected to form trenches which

19

crosscut the apparent trend of the main graphite-bearing units. As a result, most of the

trenches were oriented approximately east-west.

The trenches revealed a zone of paragneiss, marble and granitic gneisses or

possibly a granitic intrusive extending throughout the area. Graphitic zones were found

in all trenches where bedrock was encountered, however, several trenches did not

encounter bedrock. Work was carried out on claims 1037704 and 1037705. (King,

1994).


MDX GeoServices, Bridgenorth, Ontario carried out a program of stripping and

trenching between 3 April 1995 and 21 April 1995. At this time, 4 major trenches were

drilled and blasted and/or excavated. The 4 trenches were subsequently mapped and

then the trenches were backfilled due to their being on agricultural land.

The trenches exposed a zone of marble and rusty graphitic gneisses extending

throughout the work area. It was observed that the graphite was primarily restricted to

the marble units and the contact zones between the marble units and the granitic gneiss.

Visually, the graphite contact was estimated to be between 1% C (g) and 4% C (g).

(King, 1995, 1995 (a).

1995-1996: Graphite Mountain Inc.

A program of drilling, blasting and backhoe excavating was undertaken at the site

of the previously identified self-potential geophysical anomaly within claim 1037717.

Subsequently, a 2 tonne bulk sample of the mineralized material was collected from the

excavation and shipped to a test facility in Sudbury, Ontario.

In a second area to the north, a program of drilling, blasting and backhoe

excavating was carried out where several excavations were made during 1995.

Previous work identified several bands of graphitic marble and granitic gneiss with

narrow zones of graphite enrichment along the contacts and good quality disseminated

20

flake graphite in the crystalline marbles. This area lies within claims 1037690 and

1037691.

Subsequent to the above work, the trenches were surveyed and mapped in with

base maps being prepared in a digital format.

The testing program at the Sudbury facility involved a series of test runs utilizing

a new patented dry processing method for separating and classifying flake graphite from

the host rock. Samples for assay were collected from the bulk sample pit and submitted

to Lakefield Research and were considered to represent the head grade for the tested

material. The report in the Assessment Files on this work indicates there were problems

associated with the sampling and/or processing.

At the second site, graphite appeared to be essentially restricted to the marble

units and localized at zones along the contacts with the granitic gneisses. It was

considered that the overall observed graphite content varied from about 1% C (g) to 4%

C (g) based on visual estimates and compared to assay results from elsewhere on the

property. (King, 1996).


During the period 20 May 1996 to 27 May 1996 an on-going program of drilling,

blasting and backhoe excavating was undertaken within claims 1037690 and 1037691.

Previous excavations had encountered significant zones of graphite mineralization in

1995 and early 1996. In total, 8 total areas were stripped, trenched or excavated during

the period following which they were mapped and then maps prepared in a digital

format.

The combination of the previous and the more recent trenching exposed the

principal rock units and their contacts in the area. Two major graphitic marble zones

were exposed by most of the trenches. One of the graphitic marble units is reported to

host a highly mineralized zone in the order of 2 metres thick where the graphite content

is estimated to be greater than 15% C (g).

21

Graphite is essentially restricted to the marble units and the contacts between

the marble and the granite gneiss. Overall the observed graphite content varies from

about 1% C (g) to over 15% C (g) based on visual estimates.

A zone of silicified marble occurs between the more graphitic marble and the

underlying granitic gneiss units. (King, 1996 (a).


Through 1997, a two-phase exploration program consisting of surface stripping,

trenching and sampling followed by a limited drilling program was completed at the

Meadow Zone (claims 1037717 and 1037718).

A program of stripping and trenching by excavator was conducted over an area

of approximately 100 metres by 350 metres in the vicinity of highly graphitic rocks that

occur along a small scarp within the indicated claims. A total of 11 major trenches were

excavated (Figure 4).

The trenching exposed a graphite schist at numerous locations along the 350

metre strike length. Common exposures of the graphitic schist exceed 10 metres of

continuous mineralization. Bands of marble generally containing disseminated flake

graphite occur above and below the graphitic schist.

During the trenching program, selected mineralized zones were sampled. In total

16 samples were submitted to Lakefield Research for graphitic carbon – percent C (g) –

assay. These sample results range from 1.01% C (g) representing a lens of marble with

only disseminated graphite to a high of 17.0% C (g) representing a grab sample of highly

mineralized graphitic schist at the extreme northern end of the explored area. Generally

the returned assay values were in the range of 6% to 10% C (g). The trench results

were considered to demonstrate the apparent continuity of the mineralized zones and

also suggested that the grade of mineralization is relatively consistent.

Based on the trenching and mapping, it was considered that the graphitic zone

was folded, appearing as an antiform-like structure whose axis trends roughly north-

Legend

---r-t Trench Outline

X 1.5W X 1.20 Dimensions (m)

Scale I o 1:1600 100m

MaX co.osllVlooo •AilglIIl , ll87. RoY./Wtg' 88

o Bedford Graphite Property Lot 16 Concession 5, Bedford Township

Claim. SO 103n17 &1037718

w c N (ast)

Gl .S /

24L X 3:ZW X 1.70 lJ1 ..i/''''' --v

, .lr ;Jf '1

......... _-

,.'

/I W

i ..

\ (

! wi

!

LS3+OON

--\ L51+00N /' II \ 18.9LX2.6WX2.9D

I d \\ ,I. .,. "'I \i . . 'if" "II" I I

\ \\ ""'...)J 'I \ ';', X 1.20 'Ilfr 0 '\ 7.. OJ.B \ ", II I

-J . -J 6'l.:J\- .mt" 8'CX1.4'''!X1.00-J \ ...." ..'. I '\CQ .... " !

I W /, ¥. 1.1

i12 4L X tow X 1.30

\ T-8'i, J / \ \' / /

,:. , IClaim Une , • \ \: ) \t

71.3L X X0.80

\1 \ Gater I

\ \Post 3 ......................._ __ __ _ _ _ _ -._- __ _--

/I i i

nIll.....

103n26 \ \ 1037719 \ FIGURE 4

After MDX Geoservices 1997, 1998

MEGA GRAPHITE INC. BEDFORD-BURGESS PROJECT

BEDFORD PROPERTY

MEADOW ZONE TRENCHES August 2011

22

south, however, as in most of the Grenville the deformation patterns are very complex

and probably represent several phases of folding. (King, 1997).

Following the stripping and trenching program, a limited percussion drilling

program was undertaken to establish the overall continuity of the mineralized zone. The

program was undertaken utilizing a track-mounted Atlas Copco percussion drill which

could drill to a maximum depth of 30 metres with a 2½” diameter hole. The drilling

equipment was not able to install casings with the result that all set-ups were cleared to

bedrock (Figure 6).

A total of 16 holes for a total of 358.1 metres were completed with all holes being

vertical. The sample return was accomplished by the return air circulation above the

water table and by air plus water below the water table. An abundance of fine graphite

was observed, however, it appears that much of the fine graphite was floated off and

was not captured in the sample. The sampling protocol for the drilling was to advance

each hole 1.5 metres following which the hole was cleaned to remove the cuttings for the

appropriate sample.

Most of the holes intersected the near surface part of the main graphitic zone,

however, several boreholes ended in significant mineralization at the limit of the drilling

equipment’s capacity. It was considered that the boring program was very successful

and provided significant information as to the sub-surface distribution of the graphite-

bearing units. (King, 1997 (a), 1997 (b).


In the fourth quarter of 1999 a second program of percussion drilling was

completed on the Bedford Property. In addition, some surface trenching and stripping

was also conducted. This work was carried out within the Meadow Zone area.

The 1999 percussion drilling program was carried out with similar equipment and

in a similar fashion to the earlier 1997 program. The 1999 program was intended to

supplement the results from the 1997 percussion drilling program and thereby to extend

the areas of known mineralization.

23

In general, the drilling revealed the presence of significant thicknesses of

graphitic schist, layered graphitic schist and marble with disseminated graphite, coarsely

crystalline marble with disseminated graphite, rusty paragneiss and meta-arenite. In

some rare cases pegmatite and granitic sills were intersected.

A total of 21 vertical percussion holes were completed for a total of 758.1 metres.

With the sampling approach and protocols being the same as those used in the 1997

program.

The 1999 percussion drilling program confirmed the tightly folded nature of the

graphite-bearing horizons as indicated by the earlier surface mapping and the 1997

program. The deformation patterns are very complex and polyphase and the graphite

zones appear to have been subjected to at least 2 periods of folding. (King, 2000, 2000

(a).

A diamond drilling program carried out between late November and early

December 1999 was a follow-up to the percussion drilling program completed earlier in

the year. The purpose of the diamond drilling program was to explore the folded

graphitic schist zones previously tested by surface stripping, trenching and the shallow

percussion drilling earlier in the year and in 1997. A total of 19 drill holes were

completed between 23 November 1999 and 6 December 1999 for a total of 916.2

metres. Initially the drill core was transported to the Graphite Mountain Inc. core shack

facility at Warkworth, Ontario and the drill cores were subsequently logged and split and

sawn during 2000. The drilling was conducted within claims 1037717, 1037718 and

1037727. All holes were drilled vertically with the exception of 3 holes which were drilled

at -70o on an azimuth of 315o. Since this is the most recent drilling program, it is

discussed in more detail in Section 13.1 Diamond Drilling. (King, 2000 (a), 2001).


Between 27 August and 30 August 2002, Graphite Mountain Inc. carried out a

surface stripping and trenching program along a transect of approximately 320 metres

southeast of the Meadow Zone and in claim 1037719. The work included excavation of

a linear trench trending northeasterly plus several cross trenches to expand the

24

exposure. Trenching was conducted to provide new stratigraphic information to assist in

correlating the known graphite deposit with a single outlying percussion drill hole

advanced several years earlier.

A total of 4 individual trenches were excavated which exposed a sequence of

coarse crystalline calcitic marble which continues for the entire length of the explored

area. The marble units were layered and intensely folded and locally silicified and

intruded by small zones of granitic material. The marbles vary from essentially 100%

white calcite to a mixture of calcite plus disseminated phylogopite mica plus

disseminated graphite plus minor actinolite/tremolite. Within the middle of the transect

the marble is intercalated with the sequence of rusty meta-arenite and as this zone is

approached, the graphite and mica content increase significantly. The graphite schist

zone has an apparent dip ranging from about 20o to 45o to the southeast. This

mineralization appears indistinguishable from that observed at the main Meadow Zone

deposit. (King, 2002).

2009: Cardinal Explorations Inc.

In late April 2009 a fixed-wing magnetic gradiometer and VLF surveys were flown

over the Bedford township claim area, Ontario by Terraquest Limited. The total

coverage was 319 line-km at 100 metre spacing with the results being presented at

scales of 1:25000. Base maps were prepared from local topographic maps and the

following map types were prepared, flight path, total magnetic intensity, calculated

vertical magnetic gradient, cross track magnetic gradient, a long track magnetic gradient,

reconstructed total magnetic field and VLF long track horizontal component, VLF cross-

track horizontal component, VLF vertical component, low frequency EM and digital

terrain model.

The Meadow Zone appears to be parallel to and on the flank of a magnetic high

to the northwest. It is in the area of a measured longitudinal magnetic gradient high of

similar strike and strike length. There is no clear suggestion in the magnetics of a fold at

the northeast end of the Meadow Zone. A crosscutting magnetic break near the

northeast of the Meadow Zone is also a possibility.

25

The Meadow Zone has no clear VLF expression which may be due to a limited

strike length (?). (Webster, 2009).


The graphite mineralization on the Property was first identified in 1917 and from

time to time over the last 90 years additional work has been carried out as summarized

below.

1917 – 1918: Hines and Timmins

A graphite deposit was discovered in 1917 by Mr. Frank Hines in lots 24 and 25,

Concession V, North Burgess Township, Lanark County. The Property was initially

explored from 1918 to about March 1923 by Mr. Noah A. Timmins of Montreal who

completed 6 shallow diamond drill holes and numerous shall exploratory pits. During this

period, a small office, a bunkhouse and a mill were constructed.

1951: Frobisher Ltd.

In 1951, the Property was explored by Frobisher Ltd. through drilling an

additional 5 diamond drill holes which outlined a resource reportedly containing

approximately 55,000 tons (none of the tonnages mentioned in this section are NI 43-

101 compliant – they are historical estimates) with an average grade of 7.6% C (g) over

a strike length of about 100 m. In a second zone, 15 additional diamond drill holes were

completed, indicating the presence of a 140 m long deposit with an average grade of

approximately 8.4% C (g). Test milling of material obtained from surface pits was also

conducted at the Black Donald Mine, a graphite mine which was operating in the region

at that time.

1981: Orrwell Energy Corporation Ltd.

Orrwell Energy Corporation Ltd., in 1981, completed a comprehensive

compilation of the known drilling and trenching results on lots 23 to 26, Concession V

(16 contiguous mining claims). Orrwell’s consulting Engineer located many of the

26

recorded trenches and combined that data with the drill plans from previous work. This

work indicated a resource inventory of approximately 967,000 tons at a grade in the

order of 8% C (g). In addition, the Property contained broken material in several surface

stockpiles amounting to approximately 11,000 tons with an average grade of 7.72% C

(g). Samples from the on-site stock piles were collected and submitted to F. Baril &

Associates Inc. (Quebec) for test purposes to determine whether economic graphite

concentrates could be produced.

1989: Lodi Metals – Black Hawk Mining Inc.

In 1989, Lodi Metals – Black Hawk Mining Inc. completed an exploration program

centred on the same general area as previous work although the area explored was

substantially larger and consisted of 39 claim units. Their work included 13,336.5 ft of

diamond drilling, excavation of 69 trenches, geophysical surveys and geological

mapping. This work outlined 100,000 tons of material averaging 10% C (g) to a depth of

30 m in one of several zones tested. It is not clear from the available information

whether this tonnage represents a confirmation of a previously known deposit or whether

this tonnage represented a new discovery that should be added to the already outlined

resource (Hawley, 1988).

Black and MacKinnon (1990) report a personal communication from R.G.

Hawley, Field Manager, Lodi Metals Inc. in 1988 that “The Timmins Mine (had)

proven reserves estimated at 227,000 tonnes of 8% graphite with an additional 681,000

tonnes of probable reserves”. Hawley (1988) in “Summary Report on the Timmins

Graphite Project of Lodi Metals Inc., Conc. V, North Burgess Township, Lanark County,

SE Ontario” and dated 21 July, 1988 makes the following statement. “It would appear

that at least 10 million tons could be expected and considering the numerous other

conductors and geologically mapped graphite rich zones, a conservative figure of 15 to

20 million tons of 8% C (graphite) may be increased with further development work.”

Note: This reserve estimate is historical and was prepared before the introduction of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101”). It may not be relied upon until it is confirmed using methods and standards that comply with those required by NI 43-101. The potential for the exploration target to replicate the historical reserve, or to reach the indicated range of tonnages, is conceptual and is based on historical reports, which cite approximate length, widths, depths, grades and projections of the historical reserve. Readers are cautioned that a qualified person has not yet completed sufficient exploration, test work or examination of past work to define

27

a reserve that is currently compliant with NI 43-101. The Company further cautions that there is a risk that exploration and test work will not result in the delineation of such a currently compliant reserve. Neither the Company nor its personnel treat the historical reserve estimate or the historical data as defining a current mineral reserve, as defined under NI 43-101, nor do they rely upon the estimate or the data for evaluation purposes; however, these data are considered relevant and will be used to guide exploration as the Company develops new data to support a current mineral reserve estimate in accordance with the requirements of NI 43-101.

2000 – 2009: Graphite Mountain Inc. – Cardinal Explorations Inc.

More recent work by previous claim holders (Graphite Mountain Inc. and Cardinal

Explorations Inc.) have included trenching and airborne geophysical surveys (magnetics

and VLF) completed at the same time as the work on the Bedford Property.

7. GEOLOGICAL SETTING AND MINERALIZATION

7.1 REGIONAL GEOLOGY

The Project is geologically located within the Frontenac Terrain of the Central

Metasedimentary Belt (CMB) of the Grenville Province of Proterozoic age (Figure 5).

The Central Metasedimentary Belt is a major Mesoproterozoic accumulation of marble,

metavolcanic rocks and clastic metasedimentary rocks. The Frontenac Terrain, the

most easterly within the CMB, lacks volcanic rocks and contains a sequence of marbles,

quartzites and quartzo-feldspathic gneisses that are considered to originally have been

continental platform type sediments that were intruded by plutonic rocks and deformed

and metamorphosed at approximately 1170 to 1160 Ma. The metamorphic grade in the

Frontenac Terrain is generally at or close to granulite facies in contrast to those to the

northwest and southeast which are at a somewhat lower grade. The general structural

trends in the Frontenac Terrain are northeasterly.

7.2 MINERALIZATION

On the Bedford and Burgess Properties, as well as in other graphite properties in

the general area, the better grade graphite mineralization, occurring as massive to

layered graphitic schists, is usually associated with the contact zone between marble

and meta-arenite units. In these contact zones, the arenites are usually sulphide-

bearing with some sections being semi-massive. In outcrop, this weathered contact

76°

Note: No Legend, see report for description FIGURE 5 of the Frontenac Terrain MEGA GRAPHITE INC.

BEDFORD-BURGESS PROJECT After OGS Map 2578

REGIONAL GEOLOGY August 2011Scale: 1: 1 000 000

28

zone produces a noticeable gossan. Beyond the contact zones, the marbles typically

contain disseminated flake graphite with the occasional graphite schist horizon.

Typically the graphite content decreases gradually away from the contact. Within the

contact zone, the graphite content appears to be concentrated into thicker and thicker

layers as the contact is approached.

Mapping by King (2000) on the Bedford Property has indicated that the graphite

mineralization for the most part occurs in flakes of graphite ranging from 0.25 mm to 5

mm in size. The arenitic units may host significant amounts of disseminated graphite,

some of which at least appears to occur in fine fractures.

Because of the flowage-type folding exhibited by the marble/meta-arenite units,

the thicknesses of the various graphite-rich horizons show extreme variation. On fold

limbs the thickness of graphite-rich horizons may be only a few centimetres whereas in

hinge or fold closure zones, the graphite-rich units may increase to several tens of

metres.

7.3 BEDFORD PROPERTY GEOLOGY AND MINERALIZATION

The Bedford Property is underlain by three main lithologic units; marbles

(metamorphosed carbonate units), intercalated, rusty and siliceous paragneisses (meta-

aranites) and various felsic to mafic intrusive units (Figure 6).

Within the claim group, one of the dominant rock types and the one with the most

economic interest is the coarsely crystalline Grenville marbles which were at one time

carbonate shell sediments. Due to the presence of graphite within these units, it is

considered that originally they were organic-rich and this organic material is now the

graphite. Approximately 50% or greater of the area is underlain by granitic gneisses

which appear to occur as areas of upwelling. The Grenville marbles overlie these areas

of gneissic upwelling and represent the lower portions of the stratigraphic column in the

area. All units appear to have been subjected to very deep burial which has produced

the current metamorphic grade at the amphibolite to granulite facies.

(

'1

LEGEND

CENOZOIC

Stippled grey

PRECAMBRIAN

Metasediments

FIGURE 6

MEGA GRAPHITE INC. BEDFORD· BURGESS PROJECT BEDFORD PROPERTY GEOLOGY

August 2011 800 m

29

The rusty paragneisses occur in relatively narrow horizons within the larger

marble-rich units. The paragneisses currently have a carbonate component which

suggests that the original sediments were an organic-rich arenite. The rusty

paragneisses also contain significant graphite content, sometimes exceeding 5% by

weight graphitic carbon.

No metavolcanic rocks have been recognized in the immediate area of the

Property, however, a major volcanic eruptive centre was probably located in the Madoc

area to the west which suggests that the area of the Property represented a more stable

carbonate shelf environment which permitted the accumulation of elevated levels of

organic matter within the carbonate and associated units.

King (2000a) reports that the graphite mineralization occurs as a sequence of

several parallel zones, all folded around a major structural feature (Figure 4). It is

important to note that the zones illustrated by Figure 4 are not the only graphite-bearing

horizon in the Meadow Zone, the Meadow Zone contains many zones, most of which

have not been characterized to date.

The highest grade graphite mineralization (massive and/or layered graphite

schists) is associated with a major contact zone separating marble and meta-arenite.

This style of mineralization is similar to other graphite deposits in the area. Typically, the

contact zone arenites are iron sulphide rich. Outside of the actual contact zone, the

marble units typically contain abundant disseminated graphite with occasional thin bands

of graphite schist. Graphite content appears to gradually decrease with increasing

distance from the contact zone (or its stratigraphic equivalent). The presence of strong

disseminated graphite is therefore a good indicator of the contact zone. Approaching

the contact zone, the graphite mineralization tends to become concentrated into

progressively thicker layers.

Locally, the arenites will also host significant disseminated graphite, although the

graphite often appears to have been mobilized into fine fractures as opposed to

widespread disseminations. The marble units vary for medium crystalline to very coarse

(recrystallized) and many marble exposures show silicification.

30

On fold limbs, individual graphite schist bands may be only a few centimetres in

thickness, however, approaching the fold closure zones, the graphite mineralization

thickens dramatically to several tens of metres. Since most of the graphite schists are

found within the marble units, the marble’s highly ductile nature is very important with

respect to developing “structural taps” where mineralization is concentrated. Overall, the

outcrop mapping indicates that the entire sequence has endured multiple phases of

deformation. This has resulted in the formation of unusual and complex interference

patterns caused by re-folding of earlier folds.

The observed folding appears to be more or less isoclinal and recumbent, with

fold limbs dipping on average, about 30o to the east. Numerous fold closures are

present. The dominant plunge of parasitic folds appears to be about 35o to 40o to the

southwest, although other plunges are present, attesting to the poly-phase deformational

history of the region.

The ductility contrast between arenite and marble has resulted in significant

boudinage. In those zones dominated by marble, intercalated layers of arenite are

typically broken into short, blocky segments. In many cases, these arenite blocks have

been highly rotated and altered resulting in the development of coarse, rusty quartz

pods. The marble (and graphite) on the other hand, have deformed without significant

boudinage as a result of their high ductility.

7.4 BURGESS PROPERTY GEOLOGY AND MINERALIZATION

The claims in general are underlain by folded, northeasterly-trending

metasedimentary marbles with intercalated siliceous paragneisses which have been

intruded by small granitic to mafic dykes and sills.

The Burgess claim group units are very similar to those in the Bedford property

and, in general, contains very coarsely crystalline Grenville marbles which have been

intruded by gneissic granitic rocks and affected by remobilized granitic basement units.

The marble units are considered to be thin sequences (in comparison to marbles

exposed to the west) which were at one time carbonate shelf sediments. These are

likely to have been rich in organics and are now very graphitic. More than 50% of the

31

North Burgess region is underlain by granitic gneisses which have undergone

considerable upwelling. These rocks (and the overlying marbles) represent the lower

portions of the stratigraphic column in this area and are in the upper amphibolite to

granulite grade metamorphic facies.

The rusty (i.e., sulphide rich) paragneisses appear to occur in variable width

zones within the marbles and are thought to represent more siliceous sediments albeit

with a carbonate content. Often, the rusty paragneisses contain a significant graphite

content, commonly exceeding 5% (by weight) graphitic carbon.

Previous diamond drilling on the claims revealed the following rock types:

- Epidotized Biotite Gneiss (metasediments) – fine to medium crystalline gneiss;

- Marble – coarse, crystalline marble with trace disseminated flake graphite;

- Graphite Schist – coarse flake graphite schist, 5 – 15% est C (g) content;

- Biotite Gneiss (metasediments) – possible arkose type sediment with potassic

feldspar alteration;

- Amphibolite – coarse crystalline, annealed, mafic rock possible mafic intrusive

or possible skarn (evidence of marble intercalations and/or replacement texture).

Note: C (g) carbon as graphite.

The graphite-rich zones consist predominantly of flake graphite hosted in

crystalline marbles, although finer graphite in lenses in the marble locally grade up to

15%.

Mapping by Lodi Metals Inc. identified several parallel zones of graphitic marble

both south and north of the previously known mineralization, and extended the length a

considerable distance to the east. The strike length of the overall graphite-rich zone

totals at least 3000 metres from east to west, with individual zones totalling 610 metres.

The true width of the overall zone including country rock is at least 1200 metres. The

zones of graphite-enriched marble are commonly 7 to 15 metres wide, and usually have

a vertical or near vertical dip.

32

8. DEPOSIT TYPES

The Bedford District and Burgess Ward Graphite Properties are considered to

host deep metamorphic type graphite deposits formed as the result of the

metamorphism of organic rich carbonate units at high temperatures and pressures

typical of those in the upper amphibolite to granulite grades of metamorphism. As a

result of the high temperatures and pressures during metamorphism the marble was

recrystallized and the contained organic matter was converted to crystalline flake

graphite.

The current zones of graphite rich sediments, whether they be marbles or

paragneisses, are recrystallized and deformed metasedimentary units. Due to the high

temperatures and pressures during metamorphism, “flowage-type” folding has resulted

which has caused thickening and thinning of the sedimentary horizons in fold hinge

zones and fold limbs respective. As a result, fold hinge zones may contain larger

tonnage of graphite-rich material and therefore represent high priority target areas.

9. EXPLORATION


Previous exploration work on the subject Property is summarized in Section 6,

History. The most recent work on the Property prior to the airborne survey in 2009 was

carried out during the fourth quarter of 1999 and the summer of 2000 by Graphite

Mountain Inc. with reporting in 2000 and 2001 by King (2000, 2001). The details of this

work are summarized in this and the following section, Drilling.

During October 1999 and the following summer of 2000, detailed geological

mapping of the Meadow Zone in the southwestern part of the subject Property was

conducted. Geological work to this time had shown the structural complexity of the area

and also indicated the stratigraphic setting of the graphite mineralization with the result

that it was considered that geological mapping was a critical aspect of the exploration

program. Mapping in the Meadow Zone was carried out using a 12 channel differential

GPS receiver as a means of determining location of observations. It was considered

33

that locations would be within less than 2 metres of their actual location. As a result, no

grid was cut on the Property.

Traverses were carried out across the Property to observe and record the

lithologic contacts, structure, folding patterns and rock fabric. The data points were

referenced to the UTM co-ordinate grid system based on a NAD 83 datum. The

geological data was compiled and a 1:1000 geological map of the meadow area was

prepared.

Apart from the geophysical survey by Cardinal Explorations Inc. in 2009, no

recent exploration work has been carried out on the Property. Mega Graphite Inc. has

not done any exploration work on the Property.


Previous exploration work on the subject Property is summarized in Section 6,

History. The most recent work on the Property was carried out in 2009 and consisted of

a fixed wing magnetic gradient and VLF airborne survey which detailed the location and

extent of the graphite-rich horizons. Apart from the geophysical survey by Cardinal

Explorations Inc. in 2009, no recent exploration work has been carried out on the

Property. Mega Graphite Inc. has not done any exploration work on the Property.

10. DRILLING


Drilling has been carried out 4 times on the Bedford Property between 1970 and

1999. The holes drilled are summarized in Table 3 and the results obtained in the 1999

programs are summarized below (King, 2000, 2000a).

A percussion drilling program was conducted in two segments by Graphite

Mountain Inc. (GMI) with the first being from 28 September 1999 to 2 October 1999.

The second program was from 12 October 1999 to 17 October 1999. The work was

carried out utilizing a track mounted Furukawa HCR9-ES with an Atlas Copco

34

compressor that would advance the drill stem to a maximum depth of approximately 47

metres (155 feet).

The 1999 percussion drilling program was designed to serve as a preliminary

program in anticipation of a diamond drilling program planned for later in the year. The

geological mapping had indicated that the mineralized zones occurred in a very complex

configuration and therefore additional data was needed to better understand the various

zones. In 1997 a percussion drilling program had been very helpful, however, it was

decided that a second set of percussions holes was needed to better define areas where

geological data was missing. In addition, some of the 1999 holes were planned to check

the continuity of graphite bearing horizons between outcrops and holes drilled in 1997.

During 1999 a total of 21 percussions holes for a total of 758.1 metres were

drilled (Table 4). A continuous log of the rock types encountered was maintained during

the drilling and sampling was conducted on 1.5 metre (5 feet) intervals as the drilling

progressed. Chip cuttings and dust samples were collected for later identification, assay

and archival purposes.

The majority of the 1999 holes were concentrated in the main Meadow Zone

area, however, some holes were drilled further to the west and south with the result that

these more distal holes revealed the presence of graphitic schist indicating additional

potential outside of the currently identified zone.

The drilling equipment used in 1999 was not capable of installing casings with

the result that all holes were collared in bedrock. To do this required excavating

trenches to expose the bedrock and to provide drill site drainage. As a result, the

location of drill holes was dependant on being able to locate suitable starting points.

All of the percussion holes drilled in 1999 intersected graphite bearing

mineralization ranging from disseminated coarse flake graphite to rich graphite schist.

35

Year Claim(s)

Graphite Mountain Inc. 21

MetresComments

Megaton Mines Ltd.

Driling

19701037697 (current number)

Number Holes

271.6 (891 ft)

758.1

16 358.12

Diamond Drilling

1997 (July 17-22)

1037717 1037718

Graphite Mountain Inc.

1

Percussion Drilling 4.0 inch diam. hole

1999 (Sept. 28 - Oct. 14)


BEDFORD DISTRICT PROPERTY DRILLING SUMMARY

1037717 1037718 1037727

1999 (Nov. 23 -

Dec. 6)

Graphite Mountain Inc. 19 916.2Diamond Drilling

1037717 1037718 1037727 1037728

Company

Percussion Drilling 2.5 inch diam. hole

No drilling has been carried out by Cardinal Explorations Inc., the previous claim

holders, or Mega Graphite Inc.

10.1.1 DIAMOND DRILLING PROGRAM

In mid-November 1999 a diamond drilling program was carried out by GMI on the

Meadow Zone between 23 November 1999 and 4 December 1999. A total of 19

diamond drill holes for a total of 916.2 metres (Table 4) were completed consisting of

both vertical (16) and inclined holes (3) with the deepest hole being to a depth of 74.7

metres (245 feet). The inclined holes were drilled at -70o (Figure 7) (King 200a, 2001).

There were two main goals to the diamond drilling program. The first objective

was to confirm and demonstrate the efficacy of the percussion drilling methods and

results from the 1997 and 1999 programs. The second objective was to assist in

-----.99-14

175 n.(5 .4m) -90" 0:41111-

.99-17 • 99-16 180 ft.(55m) 245 Ft.(74.7m) -90"

-70'

• 99-18 240 Ft.(73.2m)

99-11 GRAPHITE • 105 Ft.(32m)

-90'

W o o

4942 700N

-4942 600N

4942 500N

4942 400N

4942 300N

WESTPORT FIGURE 7

4942 200N MEGA GRAPHITE INC. DIAMOND DRlU- HOLE BEDFO BURGESS PROJECT

.99-15 Number 1999 DIAMOND DRILL PROGRAM w

240 FI.(73.2m) Depth 315' Azimuth W

HOLE LOCATONS 8 m -70' Inclination8

0 50

IB...-••••• o 100m

i

,..... If),..... SCALE

MEGAGR.DWG AUG./l1 n n

36

outlining the geological structure at depth and to provide the basis for a geological

resource of the graphite bearing horizons in the Meadow Zone.

The diamond drill hole locations were selected to be immediately adjacent to an

existing vertical percussion drill hole or were placed on or near section lines established

during the geological mapping. The section lines were oriented northwest-southeast and

were laid out to be more or less at 90o to dominant foliation and elongation direction.

All of the diamond drill holes were logged on a preliminary basis in the field. The

drill core was subsequently shipped to the GMI office for detailed logging and sampling.

The diamond drilling program revealed a series of silicified marbles, sulphide-

bearing meta-arenites and graphitic schist in an intensely folded sequence consistent

with the geology as exposed at surface. In some cases, the drill appears to have

penetrated both limbs of a major fold. In others, multiple zones were intersected. The

drilling appeared to confirm the observation from the geological mapping that the highest

grade of graphite mineralization was related to the contact between the marble and the

meta-arenite. Few well developed fault zones were observed within the core.

The drill holes were plotted in a series of sections along with the percussion bore

hole data from the earlier programs.

The percussion drilling and the diamond drilling program explored only a small

portion of the known graphite mineralization within the Meadow Zone. There are many

additional areas of graphite mineralization as indicated by the mapping and the

percussion drilling during 1999 and 2000 that have not been tested by diamond drilling.

The drilling results were also used to prepare a resource estimate (See Section 14).

The typical sections revealed by the diamond drilling consisted of the following

lithologic units. Appendix 1 contains visual drill logs/columns for the drill holes.

1. a rusty paragneiss, a wacke-type metasediments with abundant sulphide

content,

2. a coarse crystalline marble with coarse disseminated flake graphite,

37

3. a layered marble with disseminated flake graphite alternating with bands

of graphite schist,

4. a graphite schist consisting of coarse flake graphite estimated to contain

5% to 15% C (g),

5. rusty paragneiss, similar to the upper unit but with a lower sulphide

content and,

6. granitoid intrusive which is uniform to weakly to moderately foliated and in

places porphyritic and with a minor sulphide content.

38

EASTING NORTHING

99-1 374987 4942488 1037718 135 --- 90o

99-2 374924 4942415 1037718 155 --- 90o

99-3 374957 4942440 1037718 105 --- 90o

99-4 375020 4942418 1037718 135 --- 90o

99-5 375000 4942352 1037718 125 --- 90o

99-6 375002 4942295 1037718 150 --- 90o

99-7 374945 4942305 1037718 165 --- 90o

99-8 374919 4942340 1037718 155 --- 90o

99-9 374957 4942358 1037718 125 --- 90o

99-10 374966 4942394 1037718 145 --- 90o

99-11 374928 4942508 1037718 105 --- 90o

99-12 375015 4942547 1037718 105 --- 90o

99-13 375058 4942609 1037717 185 90o

99-14 375065 4942645 1037717 175 90o

99-15 375103 4942609 1037717 240 315 70o

99-16 375093 4942576 1037717 245 315 70o

99-17 375054 4942576 1037717 180 --- 90o

99-18 375090 4942540 1037718 240 315 70o

99-19 1037718 135 --- 90oNo co-ordinates


BEDFORD DISTRICT PROPERTY PERCUSSION AND DIAMOND DRILL HOLE SUMMARY

1999

HOLELOCATION (NAD 83)

CLAIM LENGTH (FT) AZIMUTH INCLIINATION

39


Drilling has been carried out 4 times on the Burgess Property between 1917 and

1989. The work done and the results obtained are summarized in Section 6, History,

Section 6.2 Burgess Property.

No drilling has been completed on the Property by MGI.

11. SAMPLING PREPARATION, ANALYSES AND SECURITY


All of the percussion borings were advanced as vertical holes. The sample

return was accomplished by the return air circulation above the water table and by

air+water below. Above the water table, a “cyclone” separator collected the dry cuttings

and the driller was instructed to release the cuttings every 1.5 metres (5 ft) so that a

sample could be collected. When the cyclone separator was in operation, the vacuum

suction captured virtually all of the returning cuttings, thus maintaining a continuous log

of the materials when drilling above the water table (King 2000).

Below the water table, if a sufficient water-bearing zone was encountered, the

drill cuttings were returned to surface as a slurry from the borehole. A stainless steel

ladle was used to collect representative samples of the cuttings at the hole. In general

this method was quite effective in capturing the coarse fragments. Unfortunately, much

of the finer particulates could not be trapped for sampling. This was especially

problematic when drilling through graphitic zones. An abundance of fine graphite was

observed many times to be draining away from the boring without being retained by the

ladle. In fact, the graphite appeared to behave as a hydrophilic material, essentially

impossible to trap. It is possible that a considerable loss of graphite occurred, therefore,

the subsequent assay results may under-estimate the actual graphite content (King,

2000).

As the drilling progressed, the sampling protocol consisted of advancing the hole

in 1.5 metres (5 ft) increments followed by a cleaning of the hole to remove any

40

remaining cuttings so that subsequent samples would not be “contaminated”. In most

cases, this was observed to be an effective protocol (King, 2000).

The percussion borehole samples were bagged and tagged at the site by the

supervising geologist. The samples were split into 3 sub-samples comprising: a) the

laboratory sample (for assay), b) a geological sample for archive and c) the remaining

sample for Graphite Mountain Inc. archive. In total, 195 samples were submitted to

Lakefield Research for graphitic carbon assay.

During the diamond drilling program carried out in 1999 by Graphite Mountain

Inc. on the subject Property the sampling, as described by King (2000a) consisted of

quickly logging all holes in the field after which, the drill core was shipped to the Graphite

Mountain Inc. office/core shack for detailed logging and sampling. The sample intervals

were selected during logging. Twenty-seven duplicate samples were also taken and

sent for analysis.

For the drill core, sample intervals were selected during the core logging. A

diamond blade (circular) cut-off saw was then utilized to “split” the core – half for assay

and half for archive. Three hundred and forty samples plus 27 duplicates were delivered

to XRAL Laboratories for %C (g) analyses (King, 2000, 2000a).

MGI has not conducted any sampling on the Property except for metallurgical

test work purposes (Section 13).


MGI has not carried out any drilling to date on the Property. As a result there are

no aspects of a sampling program related to drilling to report. The only sampling carried

out by MGI has been for mineral processing studies which are reported in Section 13.

41

12. DATA VERIFICATION

The writer has reviewed the results of the various work programs on both the

Bedford and Burgess Properties as per the assessment files of the Ontario Ministry of

Northern Development, Mines and Forestry and in particular the reports by King as per

the References. It is the writer’s opinion that the data is complete and the work was

done in a professional manner.

Since MGI has not carried out any recent exploration work or exploration

sampling, no discussions of quality control procedures by the Company are presented.

The writer took five samples from the Meadow Zone during the visit on 26

January 2010. The results for these 5 samples are summarized in Table 5.

37141

10 metres south of sample 37141. Coarse crystalline marble similar to 37141. Estimated at 10% graphite.

12.904942420mN 374940mE37142

Western side of graphite-rich horizon in southern part of Meadow Zone. Medium to coarse grained, friable, grey to brown, mica-bearing. Massive to slightly foliated: estimated at 15% graphite.

16.404942430mN 374940mE

15 metres south of sample 37139. Similar to sample 37139. Estimated 15% disseminated, flake graphite 1 mm in size.

16.404942610mN 375025mE37140

TABLE 5 BEDFORD GRAPHITE PROPERTY

SAMPLING, JANUARY 2010

North end of tight isoclinal fold in Meadow Zone. Medium grained grey to white marble with 10%-15% disseminated flake graphite approx. 1 mm in size.

13.804942645mN 375035mE37138

SAMPLE NUMBER % C (g) COMMENTSLOCATION

20 metres south of sample 37138 medium grained friable, grey-green to brown, iron-oxide, mica bearing, calcite foliated marble. 15% disseminated, flake graphite 1 mm in size.

17.704942625mN 375030mE37139

42

The analyses on the samples collected by the writer were carried out by AGAT

Laboratories using their Lithogeochemical Analysis ICP/ICP-MS for carbon and sulphur

(LECO). AGAT Laboratories provides Quality Assurance through their ISO 9001:2000

accredited facilities.

13. MINERAL PROCESSING AND METALLURGICAL TESTING

During the period June through September 2010, Mega Graphite Inc. carried out

a series of beneficiation tests on behalf of Cardinal on approximately 750 lb of graphite-

bearing rock collected from the Meadow Zone (Figure 4) and UTM co-ordinates

374940mE, 4942430mN (NAD83, claim 1037718 (Figure 2) and 750 lb of graphite-

bearing rock from the Burgess Property (Figure 3) and UTM co-ordinates 396000mE,

4954500mN (NAD83, claim 840570) for the purpose of determining whether an

acceptable flake graphite product could be produced from the Bedford Property and the

Burgess Property. The Company’s objective is to determine if the graphite from the two

properties can meet the specifications required to produce a high quality graphite

product for use in the construction of lithium-graphite batteries. Very high purity graphite

in the 10-20 micron range is required to make the anode of the battery. The work done

on the combined sample is as follows.

1. Crushing and flotation of bulk sample which produced 130.5 lb of flake

graphite. The test procedure was as follows and the process flow

diagram is shown in Figure 8.

Full sample crushed and ground to –20 mesh and one (1) sample of

this material was sent to Activation Laboratories for analysis.

Ground sample screened to remove -20 mesh material, only +20

mesh material was used in flotation tests.

Sample was split into 3 representative samples using a Jones splitter.

The 3 ground samples were floated using a Wemco Laboratory batch

flotation cell.

Three stages of flotation were performed on the sample .1 rougher

and 2 cleaners

Flotation concentrate was filtered in a Denver pressure filter and dried

in a drying over.

Feed (l kg)

Mineral spirits ------+I MIBC Rougher Tail

Rougher Concentrate ___k _ Regrinding

___k:....--__ Cleaner Flotation Cleaner Tail

+ 48 mesh Concentrate

'.,

Cleaner Concentrate

Screening 48 Mesh

-48 mesh

Cleaner Tail

Cleaner Concentrate

- 48 + 100 mesh _ Concentrate

·100 mesh

Regrinding

-100 mesh Concentrate Cleaner Tail

FIGURE 8 MEGA GRAPHITE INC. - BEDFORD· BURGESS PROJECT

MINERAL PROCESSING FLOW SHEET August 2011

43

2. Material identification, size and weight test on 130.5 lb of raw flake

graphite-bearing rock by Power Technology Inc. (PTI), (Friederichs,

2010).

3. Milling test to reduce the particle size by Quadro Engineering Corp.

(Quadro), (Hardwood, 2010).

4. Activation Laboratories (Actlabs); 62 element analyses and,

5. Actlabs Geometallurgy – MLA Dept. SEM photomicrographs of graphite

products.

During the flotation test work the coarse flake graphite floated relatively quickly.

A flotation retention time of 20 minutes was used in all three tests. Approximately 94%

of graphite was recovered in the rougher stage increasing to approximately 96% in the

second cleaning stage. In all three stages the reagent used was EKOF. Reagent

consumption was relatively low at 4 c.c.’s in the rougher test and 2 c.c.’s in each of the

first and second stage cleaning.

The original rock sample showed a carbon (graphite) content of 14.8% as per the

Activation Laboratories Analysis.

The work by Power Technology Inc. (Friederichs, 2010) yielded two products,

Product #1 (10640T) and Product #2 (10640F). Product #1 was a graphite flake product

with a mean size of 18.93 microns (um) in a range between 3.27 um and 74 um.

Product #2 was a graphite flake with a mean size of 26.77 (um) in a range between 4.62

um and 88.0 um. The infeed material was a flake graphite mixed at 40% by weight with

water. The particle size distribution of the infeed was >80% less than 150 micron (100

mesh). The material was to be milled to reach an average particle size in the 5 micron

range.

The Quadro test milling results were summarized as follows (Quadro report,

Harwood, 2010);

44

The HV1 milling made a noticeable difference in the particle size of the flake

graphite sample. There appeared to be significant level of milling reducing a

considerable degree of the material into the target particle size range of 5

microns but some larger flakes or agglomerates remained.

The carrier liquid used in this trial was water. Alternative carrier fluids can be

utilized to optimize the temperature at which the material is milled.

The long term effect on the tooling from milling graphite is unknown at this point.

A variety of options are available for tooling materials should problems arise with

wear or corrosion.

A high degree of mill was evident in the trial, and should the results not meet the

expectation, increased recirculation or a change in the concentration could be

examined to improve the milling performance.

The Actlabs chemical analyses of the pre-milled and post-milled materials

indicated a high degree of purity of the graphite. The SEM photomicrographs provided

images of the graphite products and any mineral impurities present.

The tests as carried out on the graphite produced from the samples from the

Bedford and Burgess properties indicated that an acceptable flake graphite product

could be produced from the two properties. On this basis additional work was carried

out to further evaluate the quality of the graphite.

To continue the mineral processing work, Mr. Paul Ogilvie, CEO of Mega

Graphite Inc. and on behalf of the Company collected samples from the Meadow Zone

area of the Bedford Property. The material tested was fresh blasted rock from trenches

chosen to determine if “fresh” graphite (from depth) behaved differently than material

collected from surface outcrops that had been subjected to weathering. The total

sample weight was 12,843.3 g (12.843 kg) and the work was carried out to specifically

evaluate flake graphite recovery using different flotation regents. This material was

submitted to ORTECH (Process Research ORTECH Inc.), Sheridan Park, Mississauga,

Ontario in March 2011. (Ortech, 2011). The flotation products were analyzed by

Actlabs, Ancaster, Ontario.

45

Not all graphite deposits can provide acceptable graphite. For use in lithium

graphite batteries, the graphite must be of a certain size and shape. Test work consists

of jet milling (dry) the flake graphite concentrate to produce spherically shaped particles

in the 10 to 20 micron range. To carry out this type of testing, the graphite concentrate

was sent to Hosokawa (Hosokawa) Micron Powder Systems, Summit, New Jersey, USA

(Hosokawa, 2011).

The samples of flake graphite-bearing marble with a total weight of 12.843 kg

were combined as one sample which was then crushed. At -8 mesh the total sample

was split into 1 kg flotation test samples. These samples were then ground to 80% at

300 micron and then various size concentrates were produced by flotation. The

following products were then analyzed by Actlabs with the indicated results.

Material % graphite

Head sample 1.27 +48 mesh concentrate (flake) 78.2 -48 +100 mesh concentrate (flake) 83.0 -100 mesh concentrate (flake) 86.9 Rougher tail 0.21 Cleaner tail 7.04

It is considered that the tests carried out on the graphite produced from the

samples from the Bedford Property indicate that an acceptable flake graphite product

can be produced.

Hosokawa carried out 6 test runs on 4 head samples of graphite concentrate, J-

1, J-2, J-3 and J-4 with one duplicate run of J-4 and one combined sample J-4 and J-5.

The degree of circularity varied from 0.895 (Test J-4) to a combination of 0.942/0.913

(Test F-5) for coarse/fines on Raw material J-2.

This preliminary work is considered to be very positive in that material in the

required size range has an acceptable shape and indicates that further test work is

warranted to confirm the preliminary results. The material taken for the test work was

taken from only 3 locations and may or may not be totally representative of all the

46

mineralization. Additional test work on representative samples from all styles of graphite

mineralization from both properties is considered to be warranted.

Based on the work to date there do not appear to be any processing factors or

deleterious elements present that could adversely affect the production of an acceptable

graphite concentrate.

14. MINERAL RESOURCE ESTIMATES

King (2000) prepared a resource estimate for the Bedford Property based on the

results from the two percussion drill programs and the diamond drilling program and

using the “CIM Standards on Mineral Resources and Reserves, Definitions and

Guidelines” released in August 2000.

The following is the outline as presented by King (2000) for the procedure used

in preparation of the resource estimate. For each section, the diamond drill holes and

percussion boreholes were projected onto the line of section and plotted accordingly and

in most cases, the projection distance was relatively short (generally less than 25

metres). Following this, the interpreted outline of the mineralized zone based on an

assumed cut-off value of 2% C (g) was manually added. The area contained in the

mineralized zone in square metres was measured in the plane of the section and

tabulated along with the average grade assigned to that segment.

King recognized that the separation distance between sections was too great to

allow all the resource to be placed in the measured category. Using this approach, he

used a projection distance of only 50% of the distance between sections for the

measured category with the balance being in the indicated category. As a result, the

“tonnage” zones have reasonably spaced drill holes. This approach was also used

within the plane of the sections where the distance between holes was excessive.

Extrapolation beyond this 50% yielded indicated resources and any additional

extrapolation over a maximum 30 metres was placed in the inferred resource category.

Each sectional area was multiplied by the strike length between sections divided

between the three resource categories as indicated above to yield the sectional volume.

47

Using a specific gravity factor of 2.75 the estimated tonnages were calculated. No

dilution factor was used in the calculations.

A second component of the inferred resources was also considered. To the

south and west of the area drilled, prospecting and geological mapping had identified

additional zones of graphitic mineralization. It was estimated that these areas contained

an inferred tonnage of 500,000 tonnes. The total mineral resource tonnage and grade

estimate based on the above assumptions is presented in Table 6.

TABLE 6 BEDFORD GRAPHITE PROPERTY

HISTORIC MINERAL RESOURCE ESTIMATE (KING 2000)

Category Tonnage (tonnes) Grade C% (g) Measured Resource 933,800 3.52

Indicated Resource 1,669,000 3.44

Inferred Resource 1,268,000 3.44 (1)

(1) assumed to be same grade as indicated resource.

Note: This resource estimate is historical and was prepared before the introduction of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101”). It may not be relied upon until it is confirmed using methods and standards that comply with those required by NI 43-101. The potential for the exploration target to replicate the historical resource, or to reach the indicated range of tonnages, is conceptual and is based on historical reports, which cite approximate length, widths, depths, grades and projections of the historical resource. Readers are cautioned that a qualified person has not yet completed sufficient exploration, test work or examination of past work to define a resource that is currently compliant with NI 43-101. The Company further cautions that there is a risk that exploration and test work will not result in the delineation of such a currently compliant resource. Neither the Company nor its personnel treat the historical resource estimate or the historical data as defining a current mineral resource, as defined under NI 43-101, nor do they rely upon the estimate or the data for evaluation purposes; however, these data are considered relevant and will be used to guide exploration as the Company develops new data to support a current mineral resource estimate in accordance with the requirements of NI 43-101.

The writer has reviewed the approach to the estimate, the assumptions and the

procedures used and considers that the estimates are reliable and reasonable.

48

King (2000) used the CIM Standard as released in August 2000 which are the

categories used to define the resource estimate as currently required under NI 43-101.

The NI 43-101 requirements came into effect on the 1st of February, 2001.

No additional or more recent resource estimate for the Bedford Property has

been prepared since King’s (2000) report.

There is currently no 43-101 compliant resource estimate for the Burgess

Property. The most recent tonnage estimate for graphite mineralization was in 1988

(Hawley, 1988, see Section History 6.2). Apart from the airborne geophysical survey

carried out in 2009 no exploration work has been done on the Burgess Property by

Mega Graphite Inc. or the predecessor property holder, Cardinal Explorations Inc. to

confirm this previously reported tonnage estimate.

15. ADJACENT PROPERTIES (ITEM 23)

There are no immediately adjacent or contiguous properties of relevance to the

Bedford or Burgess Graphite Properties, however, Hewitt (1965) reports on the Kirkham

graphite property located south of the Bedford property and about 8 km east of Godfrey

on highway 38. From the property description, it is considered that the Kirkham property

hosts graphite mineralization similar to that in the Bedford and Burgess Properties.

16. OTHER RELEVANT DATA AND INFORMATION (ITEM 24) To date, the majority of the work on the Bedford Property has been concentrated

in the “Meadow Zone” where some stripping, trenching and the drilling has taken place.

There are no known environmental concerns or liabilities associated with this work,

however, at some point some limited site reclamation work may be required on both the

Bedford and Burgess Properties depending on how the Project proceeds.

17. INTERPRETATION AND CONCLUSIONS (ITEM 25) The Bedford Graphite Property was initially acquired by staking in 1988 by A.D.

Houston. Subsequently, the Property was transferred to Graphite Mountain Inc., a

49

private company controlled by Mr. Houston. Between 1994 and 2002, Graphite

Mountain carried out programs of stripping, trenching, sampling and geological mapping.

This work, mainly concentrated in the Meadow Zone in the southwestern part of the

Property, indicated the potential of the Property to host a flake graphite deposit of

economic significance that could be exploited by open pit mining methods.

Exploration work on the Burgess Property has taken place periodically since the

discovery of graphite mineralization here in 1917. Subsequently, work took place in

1918, 1951, 1981 and most recently in 1989. Work has consisted of geological and

geophysical surveys, trenching and sampling and diamond drilling. Resource/reserve

estimates were prepared in 1951, 1981 and 1989, however, there is no current NI 43-

101 / CIM Standards compliant resource estimate.

In general, the work on both properties has outlined a complexly folded

stratigraphic sequence of organic-rich limestones and arenites that have been

metamorphosed at upper amphibolite to granulite facies temperatures and pressures.

These units generally trend northeasterly, the regional trend. Due to the metamorphism,

the organic carbon has been converted to flake graphite which is present in the marbles,

graphitic schists and meta-arenites that now underlie the properties. The contacts

between the marble and meta-arenite units are particularly well mineralized with

graphite.

Mega Graphite Inc. is attempting to determine if graphite from the Bedford and

Burgess Properties can provide graphite of the required flake size and chemical purity

that can be used as anode material in lithium graphite batteries. To this effect two

samples, one of surface rock material and one comprised of blasted trench material

have been subjected to a series of mineral dressing/metallurgical and analytical tests.

These have consisted of;

- crushing and flotation for the production of a flake graphite concentrate.

- milling tests to determine if flake graphite of an appropriate size and purity

can be produced.

- SEM studies and chemical analyses and,

50

- tests to determine the shape (circularity) of the flake graphite at various

sizes.

The preliminary work has been positive in that the initial tests show that

acceptable products can be produced.

In 1997, a preliminary percussion drilling program was completed on the Bedford

Property and in 1999 two percussion drill programs followed by a diamond drilling

program were completed. The purpose of this work was to confirm the results from the

surface stripping and trenching as to zone continuity, to provide information on the

behaviour of the graphite-rich zones at depth and to provide information for a resource

estimate. Subsequently, a preliminary resource estimate was prepared in 2000 (King,

2000 a). This resource estimate was prepared using CIM Standards, however, it was

prior to the implementation of NI 43-101 on the 1st of February 2001 and is not compliant

with NI 43-191 requirements. No current resource estimate has been prepared for the

Burgess Property.

In summary, it is considered that;

The two properties cover approximately 1210 ha and a considerable part of both

Properties is underlain by lithologic units that have the potential to host graphite

mineralization of economic interest.

To evaluate the full potential of the Properties and to establish a

Resource/Reserve base, a program comprised of additional geological mapping,

stripping, trenching and diamond drilling is recommended for both Properties.

At the present time, there are no compliant resource estimates for either property

which introduces an element of uncertainty or risk. Specifically, this is the

geological uncertainty as to the tonnages and grades of graphite-bearing material

within the two Properties.

Additional mineral processing/metallurgical testing studies are required to confirm

the favourable characteristics of the flake graphite from the two properties.

For the Bedford Property, a third party holds the surface rights to 14 mining

claims and for the Burgess Property, third parties hold the surface rights to all 14

mining claims. These situations create an uncertainty as to the Company’s

51

ability to gain access to their claims for exploration and potential development

work.

The Project is located in Southeastern Ontario in an area where there is well

established tourism. This situation should be taken into consideration.

18. RECOMMENDATIONS (ITEM 26)

To continue the evaluation of the Bedford-Burgess Project, the following program

is recommended.

Geological mapping of the properties with particular emphasis on lithologies,

structure and the flake graphite content of the units.

Stripping and trenching of high priority areas identified by the mapping as

required.

Additional mineral processing test work.

Diamond drilling to provide the basis for a resource estimate. The drilling

program for Bedford would consist of confirmation drilling to validate and to

expand the resource estimate by King (2000, 2000a). Drilling at Burgess would

be for the purpose of establishing a resource estimate.

Preparation of a resource estimate for the Project following which a Preliminary

Economic Assessments (PEA) can be carried out.

52


BEDFORD DISTRICT PROPERTY RECOMMENDED EXPLORATION PROGRAM AND BUDGET

Phase 1

1. Geological mapping of property $ 25,000

2. Stripping, trenching, sampling 30,000

3. Mineralogical and mineral processing studies 30,000

4. Analyses 22,000

5. Diamond drilling: 2000 m of NQ core @ $225/m 450,000

all inclusive (logging, sampling, analyses)

6. Supervision 50,000

7. Reports and maps 25,000

8. Preparation of Resource Estimate 30,000

7. Administration and overhead 65,000

Sub-Total $ 727,000

Contingency 10% 73,000

PHASE 1 TOTAL $ 800,000

The implementation of a second phase would be contingent on the results

obtained in the Phase 1 program.

53


BURGESS WARD PROPERTY RECOMMENDED EXPLORATION PROGRAM AND BUDGET

Phase 1

1. Geological mapping of property $ 25,000

2. Stripping, trenching, sampling 30,000

3. Mineralogical and mineral processing studies 30,000

4. Analyses 22,000

5. Diamond drilling: 2000 m of NQ core @ $225/m 450,000

all inclusive (logging, sampling, analyses)

6. Supervision 50,000

7. Reports and maps 25,000

8. Preparation of Resource Estimate 30,000

7. Administration and overhead 65,000

Sub-Total $ 727,000

Contingency 10% 73,000

PHASE 1 TOTAL $ 800,000

The implementation of a second phase would be contingent on the results

obtained in the Phase 1 program. The total expenditure for both programs is $1,600,000.


29 August 2011

54

19. REFERENCES

1. Black, S.J., and MacKinnon, A., 1990 Major Graphite Occurrences Within the Frontenac Axis, Southeastern Ontario in Min. North. Dev. Mines, Summary of Field Work and Other Activities, Ont. Geol. Sur. M.P. 156, p. 359-362.

2. Carter, A.J., Winter, L.D.S., 2010

Report on Preliminary Beneficiation Tests on Graphite-Rich Material for Cardinal Explorations Inc., North and South Burgess Township, Graphite Property, Lanark County, Southeastern Ontario, 13 p.

3. Friederichs, J., 2010 Flake Graphite Processing Report, 3 p. 4. Garland, M.I., 1987

Graphite in the Central Gneiss Belt of the Granville Province of Ontario; Ontario Geological Survey, Open File Report 5649.

5. Harding, W.D., 1951

Geology of the Olden-Bedford Area, Ontario Department of Mines, Annual Report, Vol. LVI, Part VI, 1947.

6. Harwood, W., 2010 Confidential Test Report, TFR YL-750, 5 p. 7. Hawley, R.G., 1988

Summary Report on the Timmins Graphite Project of Lodi Metals Inc., Con. V, North Burgess Township, Lanark County, SE Ontario.

8. Hewitt, D.F., 1965

Graphite in Ontario, Ontario Department of Mines, Industrial Mineral Report No. 20.

9. Hosokawa, 2011 Lab Test Report, Hosokawa Micron Power Systems, 6 p. 10. King, B.R., 1994

Report of Physical Work for Graphite Mountain Inc., Assessment File MNDM W9490-00036 by MDX GeoServices.

11. King, B.R., 1995


12. King, B.R., 1995 (a)


55

13. King, B.R., 1996. Report of Work Performed for Graphite Mountain Inc., Assessment File MNDM W9690-00034 by MDX GeoServices.

14. King, B.R., 1996 (a)

Report of Work Performed for Graphite Mountain Inc., Assessment File MNDM 2.16635 by MDX GeoServices.

15. King, B.R., 1997

Report of Physical Work Performed for Graphite Mountain Inc., Assessment File MNDM 2.17237 by MDX GeoServices.

16. King, B.R., 1997 (a)

Report of Assessment Work Performed for Graphite Mountain Inc., Assessment File MNDM 2.18479 by MDX GeoServices.

17. King, B.R., 1997 (b) Report on Current Exploration Activities and Geological Compilation: Houston Graphite Property, Bedford Township, Frontenac County, Southern Ontario Mining Division, MDX GeoServices.

18. King, B.R., 2000

Report of Assessment Work Performed for Graphite Mountain Inc., Assessment File MNDM 2.20251 by MDX GeoServices.

19. King, B.R., 2000 (a) Report on Exploration Activities: Drilling and Geological Mapping: Houston – Bedford Project, Bedford District, South Frontenac Township, Southern Ontario Mining District for Graphite Mountain Inc., by MDX GeoServices.

20. King, B.R., 2001

Report of Assessment Work Performed (Diamond Drilling) for Graphite Mountain Inc., Assessment File MNDM 2.21074 by MDX GeoServices.

21. King, B.R., 2002

Report of Physical Work Performed for Assessment for Graphite Mountain Inc., Assessment File MNDM 02-666 by MDX GeoServices.

22. Megaton Mines Ltd., 1970 Assessment report No. 12, Ont. Dept. Mines. 23. Ortech, 2011 Graphite Recovery Test, Process Research ORTECH Inc., 6 p. 24. Webster, B., 2009

Report on Fixed Wing Magnetic Gradiometer and VLF Surveys, Bedford and North Burgess Townships, Ontario for Cardinal Explorations Inc., 13 p.

56

25. Winter, L.D.S., 2011 Report on Sampling and Beneficiation Tests, Bedford Graphite Property, Bedford Township, Frontenac County, Southeastern Ontario for Cardinal Explorations Inc., 28 p., 4 Appendices, 2 Tables, 5 Figures. (Revised)

26. Winter, L.D.S., 2011a

Report on Mineral Processing Test Work, Bedford Graphite Property, Bedford Township, Frontenac County, Southeastern Ontario for Cardinal Explorations Inc., 25 p., 4 Appendices, 1 Table, 5 Figures.

SIGNATURE PAGE

This report titled: "Technical Report on the Bedford - Burgess Graphite Project, Bedford District and Burgess Ward, Lanark County, Southeastern Ontario" and dated 29 August 2011 was prepared by and signed by the following author:

Dated at Sudbury, Ontario 29 August 2011 Lionel Donald Stewart Winter, P.

Consulting Geologist

57

L.D.S. Winter

1849 Oriole Drive, Sudbury, ON P3E 2W5 (705) 560-6967

(705) 560-6997 (fax) email: [email protected]

CERTIFICATE OF AUTHOR

I, Lionel Donald Stewart Winter, P. Geo. do hereby certify that:

1. I am currently an independent consulting geologist.

2. I graduated with a degree in Mining Engineering (B.A.Sc.) from the University of Toronto in 1957. In addition, I have obtained a Master of Science (Applied) (M.Sc. App.) from McGill University, Montreal, ac.

3. I am a Member of the Geological Association of Canada, a Life Member of the Canadian Institute of Mining, a Life Member of the Prospectors and Developers Association of Canada and a Registered Geoscientist in Ontario and in British Columbia (P.Geo.).

4. I have worked as a geologist for over 50 years since my graduation from university.

5. I have read the definition of "qualified person" set out in National Instrument 43-101 ("NI43-101") and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI43-101.

6. I am the author responsible for the preparation of the Technical Report titled "Technical Report on the Bedford - Burgess Graphite Project, Bedford District and Burgess Ward, Lanark County, Southeastern Ontario" and dated 29 August 2011 (the "Technical Report"). I visited both properties on 26 January 2010.

Dated this 29th Day of August 2011


58

mailto:[email protected]

59

APPENDIX 1

MEGA GRAPHITE INC.

NI 43-101 TECHNICAL REPORT

BEDFORD-BURGESS PROJECT

VISUAL DRILL LOGS/COLUMNS

BEDFORD PROPERTY

1999 DIAMOND DRILLING PROGRAM

BH-99-1 BH-99-2 188

178

168

158

148

II

III

0.0

o 0

l:rr:tI:IiIi

Marble & Mica & Dissem Graph Marble & Layered Graphite Schist

Graphite Schist

Marble & Layered Graphite Schist

Arenite


Arenite

SilicifiedlGranitized Marble Marble &Dissem Graphite

Marble (trace graphite)

Marble &Mica &Dissem Graph

Graphite Schist

Marble &Layered Graphite Schist Marble & Dissem Graphite

Marble (trace graphite)

BH-99-3 Graphite Schist

Marble & Mica & Dissem Graph Marble (trace graphite)

BH-99-4 Marble & Dissem Graphite


Marble & Dissem Graphite


Marble & Dissem Graphite Marble & Layered Graphite Schist Marble & Dissem Graphite

BH-99-5 BH-99-6 ·1·· ·1Marble & Layered Graphite Schist .. '1"

.. '1 .. '1"

.. ·1

Marble & Dissem Graphite188

Marble & Dissem Graphite .. '1"

Graphite Schist .. ·1·· ....... Marble & Dissem Graphite

Arenite 178 .".Graphite Schist Marble (trace graphite) Marble & Dissem Graphite Graphite Schist Marble & Layered Graphite Schist Marble & Dissem Graphite Marble (trace graphite) Graphite Schist Graphite SChist 168

Marble & Dissem Graphite Marble & Layered Graphite Schist Graphite Schist

Graphite Schist Marble & Dissem Graphite

158 Arenite w Sulphide .. '1" '""'-r 1""- Graphite Schist .. '1"

''''Marble & Dissem Graphite Graphite Schist .. ·1· Marble & Dissem Graphite

148 ·1·· ·1 Graphite Schist .. ·1·· Marble & Dissem Graphite


Marble & Layered Graphite SchistBH-99-7 Marble & Dissem Graphite

Marble & Layered Graphite SChist


Graphite SChist Marble & Layered Graphite Schist Marble & Dissem Graphite

Marble & Dlssem Graphite

Biotite Schist Marble & Dls&em Graphite Marble & Layered Graphitlll Schist

...............,....""- Graphite Schist Marble & Dlssem Graphite Graphite Schist Merble & Layered Graphite Schist Marble & Dlssern Graphite

,.....--.-". Graphite Schist Marble & Dlssem Graphite

- - --- - --

- - --- --

BH-99-9 BH-99-10 ... Marble & Dissem Graphite9OT· ..T·


Marble & Dissem Graphite Marble & Layered Graphite Schist

... I ..

...IBO- Marble & Dissem Graphite• .. 1 .. "'\....". -,./ Graphite SchistT .. I ., ·1·· Marble & Dissem Graphite

" Graphite Schist Marble & Layered Graphite Schist .. .

17u- Marble & Dissem Graphite· .. 1.. .-. Arenite w Sulphide

1""- Marble & Layered Graphite Schist '-' Arenite w Sulphide1-.-

I- .160 Graphite Schist

Arenite

150

90- - - -- Marble & Mica & Dissem Graph

- - --- - --- - --

Graphite Schist 'Dn ., .

Marble & Dissem Graphite..·1" ·1· .. 1 .. ·1··

.. ·1 .. Marble & Mica & Dissem Graph

I\.Graphite Schist·T ... /

T ...'j .. Marble & Dissem Graphite


Arenite

"- Graphite Schist 160 e.::---=.--

Marble & Layered Graphite Schist Biotite Schist··T·

·1·;· .J Marble & Dissem Graphite

Marble & Layered Graphite Schist .. ·1 ..

150 .. ·1 .. '·j .. ·1 \ .. ·1 ..


BH-99-11 192

182

172

162

d·· ., ..., Marble & Dissem Graphite 1·1·· ·1·1 ...,...

Graphite Schist Marble & Layered Graphite Schist

·1 .. ·1· Marble & Dissem Graphite · .. 1· ..

Graphite Schist

Marble & Mica & Dissem Graph

Graphite Schist

.. ·1 .. · Marble & Dissem Graphite'-' . '-'-152 '-._. Arenite wSUlphide '-'-

'-'-

'-'-J..-. _.

- --- -

- -- --

- --

BH-99-12 196

186

176

166

156

Marble & Dissem Graphite·1·· ·1 · .. 1.. ·1 .. ·1 .. ·1 ..


Graphite Schist ... J ..

·1· .. 1 Marble & Dissem Graphite ···1 .. ·1· .. 1 "·1 .. ·1· .. 1 · .. 1.. ·1"·1 .. ·1 ..

Biotite Schist Marble & Mica & Dissem Graph

Arenite: - complex zone of banded mafic gneiss, mb, dissem graphite..

BH-99-14BH-99-13

-0 b b


Graphite Schist


-ti .. Marble & Dissem Graphite: - lost circulation

198 · .. 1.. ·1· .. 1


.. ·1 .. ·1 .. ·1 .. ·1 .. ·1 .. ·1 .. ·1 .. '1 .. ·1 · .. 1..

188 ·1 .. ·1 .. ·1 .. ·1· .. 1 .. ·1 ..

r"\..,.'"'-'...,/ Graphite Schist f".... Marble & layered Graphite Schist Graphite Schist

178 Marble & Layered Graphite Schist

Marble & Mica & Dissem Graph Graphite Schist

... .. " Marble & Dissem Graphite168

Graphite Schist Marble & Dissem Graphite Graphite Schist

· .. 1.. Marble & Dissem Graphite


Graphite Schist Arenite W Sulphide: - zones of graph schst

Marble &Mica &Dissem Graph Marble &Layered Graphite Schist Arenite W Sulphide: - zones of graph sehst



Marble &Layered Graphite Schist

Arenite W SUlphide

"

BH-99-19 Marble &Dissem Graphite Marble &Layered Graphite Schist Marble &Mica & Dissem Graph

Arenite


Sulphide Zone



Graphite Schist Marble & Dissem Graphite

Arenite W Sulphide: - graphitic zones


Marble & Dlssem Graphite Arenite W Sulphide: - dissem graphite

Investor Relations

43 101bedfordburgessfinal report