Brodie Consulting Ltd. 1 RECLAMATION SECURITY ESTIMATES MANDATE: MANDATE: Estimate the cost of reclamation assuming that it becomes necessary for the government to carry out the work

Brodie Consulting Ltd. 2 Philosophy Consistent methodology & approach for all mines Consistent methodology & approach for all mines Estimate only as per the mandate: Estimate only as per the mandate: More is not better (this is contrary to common industry approach)More is not better (this is contrary to common industry approach) Do not aim high with expectation of being negotiated/arbitrated downDo not aim high with expectation of being negotiated/arbitrated down There is no benefit to a security requirement which is greater than might actually be required.There is no benefit to a security requirement which is greater than might actually be required.

Brodie Consulting Ltd. 3 Approach Evaluation of site condition – review of available information, including site inspection Evaluation of site condition – review of available information, including site inspection Evaluate closure plan Evaluate closure plan  These steps do not constitute an audit.  There is limited verification  Need to rely upon information presented in the closure plan  INAC & BCL do not do reclamation engineering for any deficiencies

Brodie Consulting Ltd. 4 Approach Identify a scope of work (tasks & quantities) which are likely to meet reclamation objectives, considering the site condition Identify a scope of work (tasks & quantities) which are likely to meet reclamation objectives, considering the site condition Identify appropriate unit costs for each task Identify appropriate unit costs for each task

Brodie Consulting Ltd. 5 COSTING ISSUES 1. Tasks not included in cost estimate 2. Optimistic performance expectations 3. Optimistic unit costs 4. Inadequate consideration of uncertainty

Brodie Consulting Ltd. 6 Uncertainty What is the likelihood that the actual cost will vary from the estimated cost ? What is the likelihood that the actual cost will vary from the estimated cost ? Uncertainty concerns fit into 3 broad groups: Uncertainty concerns fit into 3 broad groups: 1.Mine plan – shape, quantity, geochem., hydrogeology 2.Reclamation plan – how well will the reclamation measures work 3.Cost of reclamation work

Brodie Consulting Ltd. 7 Pine Point Pilot Project Many technical details are lacking: Many technical details are lacking: The few engineering drawings are basicThe few engineering drawings are basic Geochemistry of the expected rock typesGeochemistry of the expected rock types Volume and chemistry of water to be drained from within the freeze fence.Volume and chemistry of water to be drained from within the freeze fence. Process plant mass balanceProcess plant mass balance Mining sequence and schedule of backfillingMining sequence and schedule of backfilling Ore handling, tailings &DMS reject stockpiling on surfaceOre handling, tailings &DMS reject stockpiling on surface

Brodie Consulting Ltd. 8 Pine Point Pilot Project Tailings Management Tailings Management 42% of ore is to be returned U/G as paste backfill 42% of ore is to be returned U/G as paste backfill No information is presented as to where the other 58% will go No information is presented as to where the other 58% will go Let’s look at this from 3 viewpoints Let’s look at this from 3 viewpoints

Brodie Consulting Ltd. 9 Quantities of Ore/Concentrate/Tailings Ore is 5.49% Pb and 11.16% Zn Ore is 5.49% Pb and 11.16% Zn Allowing for conversion of galena & sphalerite and assuming 95% recovery and 90% purity of concentrate  31% of ore is removed as concentrate Allowing for conversion of galena & sphalerite and assuming 95% recovery and 90% purity of concentrate  31% of ore is removed as concentrate Therefore 69% of ore becomes tailings Therefore 69% of ore becomes tailings Due to volume expansion from crushing, this % of tailings cannot be returned into the mine Due to volume expansion from crushing, this % of tailings cannot be returned into the mine

Brodie Consulting Ltd. 10 Delay Until First Backfilling Stopes must be mined out before backfilling commences Stopes must be mined out before backfilling commences Mines develop multiple stopes and produce continuously from each one to provide a steady feed to the mill and smooth the cycles of mining (drill/blast/mucking) Mines develop multiple stopes and produce continuously from each one to provide a steady feed to the mill and smooth the cycles of mining (drill/blast/mucking) It could easily be 3 months of production until first stope is backfilled It could easily be 3 months of production until first stope is backfilled This represents ¼ of mine production which will be stockpiled on surface This represents ¼ of mine production which will be stockpiled on surface

Brodie Consulting Ltd. 11 Backfilling Secondary Stopes Once primary stopes are backfilled, secondary stopes can be mined Once primary stopes are backfilled, secondary stopes can be mined After ore is removed there is no incentive to backfill secondary stopes (cost of thickening, pumping, bulkheads, labor) After ore is removed there is no incentive to backfill secondary stopes (cost of thickening, pumping, bulkheads, labor)

Brodie Consulting Ltd. 12 Tailings Management Summary Tailings management is not addressed in the PPPP Project Description, other than to suggest U/G disposal Tailings management is not addressed in the PPPP Project Description, other than to suggest U/G disposal There is no supporting evaluation to indicate that all tailings can be placed U/G There is no supporting evaluation to indicate that all tailings can be placed U/G When considered from 3 different viewpoints, significant on-land tailings seems certain, potentially in the range of 115,000 m3 to 255,000 m3 When considered from 3 different viewpoints, significant on-land tailings seems certain, potentially in the range of 115,000 m3 to 255,000 m3

Brodie Consulting Ltd. 13 PPPP – Key Assumptions In Reclamation Security The company abandons the mine. The company abandons the mine. Tailings & waste rock have ARD/ML issues Tailings & waste rock have ARD/ML issues All ARD/ML material is to be placed U/G All ARD/ML material is to be placed U/G The settling pond is not a permanent tailings facility The settling pond is not a permanent tailings facility The mine workings flood and the perimeter freeze fence thaws. The mine workings flood and the perimeter freeze fence thaws. The freeze contractor has left the site and removed the refrigeration plant The freeze contractor has left the site and removed the refrigeration plant Reclamation activities include: Reclamation activities include: Remobilization and operation of the refrigeration plantRemobilization and operation of the refrigeration plant Dewatering of the mineDewatering of the mine

Brodie Consulting Ltd. 14 PPPP – Key Assumptions In Reclamation Security Slurry and pumping of the tailings into the mine Slurry and pumping of the tailings into the mine Excavate and dispose surplus tailings in historic open pit Excavate and dispose surplus tailings in historic open pit Excavation and disposal of waste rock in the shaft and raise-bore with surplus to open pits Excavation and disposal of waste rock in the shaft and raise-bore with surplus to open pits Construction of concrete cap for the shaft and raise bore Construction of concrete cap for the shaft and raise bore Flushing of the freeze fence piping system and off-site disposal of the brine Flushing of the freeze fence piping system and off-site disposal of the brine

Brodie Consulting Ltd. 15 PPPP – Key Assumptions In Reclamation Security Cut-off top of 600 pipes and remove brine circulation pipes Cut-off top of 600 pipes and remove brine circulation pipes Removal of hazardous materials from buildings and disposal off-site Removal of hazardous materials from buildings and disposal off-site Demolish buildings and dispose in Hay River landfill, tipping fee required Demolish buildings and dispose in Hay River landfill, tipping fee required Remove contaminated soil from ROM stockpile area, concentrate load-out area and railhead stockpile area Remove contaminated soil from ROM stockpile area, concentrate load-out area and railhead stockpile area Fold in settling pond liner and doze settling pond dike to bury liner and restore drainage. Fold in settling pond liner and doze settling pond dike to bury liner and restore drainage. Remove railhead buildings to Hay River landfill Remove railhead buildings to Hay River landfill

Brodie Consulting Ltd. 16 SUMMARY The Tamerlane PPPP Project Description is lacking many technical details and is inadequate with respect to tailings management The Tamerlane PPPP Project Description is lacking many technical details and is inadequate with respect to tailings management On land tailings disposal is certain to occur On land tailings disposal is certain to occur Closure planning and security is required to mitigate potential environmental effects Closure planning and security is required to mitigate potential environmental effects Reclamation security is preliminarily estimated to be in the order of $5 million, of which about 30% is water-related Reclamation security is preliminarily estimated to be in the order of $5 million, of which about 30% is water-related