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Molybdenum (Mo) and Tungsten (W) Mineralisation Styles The bulk of the world's Mo is produced from porphyry deposits where grades vary widely but rarely exceed 0.25%. Mo is predominately mined as molybdenum sulphide (MoS 2 ). Grades can be as low as 0.05% Mo for bulk tonnage systems where Mo is mined as the primary economic commodity or as low as 0.01% Mo where Mo is mined as a co-product or by-product. Typically, the lower grade deposits enjoy co-product credits such as copper (Cu) or W. Mo also occurs in greisen, skarn or vein style deposits often in association with W and occasionally bismuth (Bi). Mo is sometimes mined underground from narrow vein deposits predominately from mines in China, CIS and South Korea. Grades of Mo from economically recoverable vein deposits are more varied but generally tend to be higher. Grades in excess of 0.15% Mo have historically been considered economic. W is typically mined from skarn, vein, greisen and less commonly porphyry deposits. W is mined both as wolframite ((Fe, Mn)WO 4 ) and scheelite (CaWO 4 ). W is commonly mined in association with Mo and tin (Sn) in various styles of deposits. Economic grades mined rarely exceed 1% W in ore and are typically much lower with cut-off grades as low as 0.01% W reported from mines where W is mined as a co-product or by-product of Sn or Mo mining. Sources: International Molybdenum Association, USGS, Geoscience Australia Daehwa Project Background Exploration in South Korea is being conducted through wholly owned Korean Resources Limited (“ KRL ”) and in turn, its wholly owned subsidiary Suyeon Mining Company Limited (“ SMCL ”) SMCL has contractual rights to acquire the Daehwa Molybdenum/Tungsten Project. The Daehwa Project is located some 100km southeast of Seoul in Chungcheong-buk Province in central South Korea. The Daehwa Project contains two former molybdenum / tungsten mines, Daehwa and Donsan. It is believed that the mines closed during a period of low commodity prices and recent drilling confirms that the mineralisation extends well below and into the hangingwall of the historic workings. The Daehwa Project is comprised of three Mining Rights with granted tenure, subject to performance conditions, until 2027-2028. 9
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Background on Molybdenum and Tungsten Molybdenum and Tungsten are both metals whose principal use is as alloying agents in the manufacture of specialty steels. Molybdenum (Mo) metal is used mostly in steels and superalloys to enhance strength, toughness, thermal and corrosion resistance, and to reduce brittleness. Applications include high speed steels, stainless steels, high temperature steels and in cast iron. The US Geologic Survey (USGS) estimates that world molybdenum production in 2011 amounted to 250kt. China, the USA, Chile and Peru accounted for about 86% of global outputs in 2011 with China producing 94kt, followed by the USA with 64kt, Chile with 38kt and Peru with 18kt. The most common economic mineral from which Mo is extracted is molybdenite (MoS 2 ). Tungsten (W) metal and its alloys are amongst the hardest of all metals and has the highest melting point of all pure metals. Tungsten is noted for its hardness and high temperature capabilities which makes it desirable for many industrial applications. Tungsten’s range of properties also makes it difficult to substitute it with other metals. The major use for tungsten is within cemented carbides, which are also called hard metals. Tungsten carbide is used for cutting and in wear-resistant materials, primarily in the metalworking, mining, oil drilling and construction industries. Tungsten alloys are used also in electrodes, filaments (light bulbs), wires and components for electrical, heating, lighting and welding applications. The USGS estimated that world production of tungsten in 2011 amounted to 72kt. China was the major producer with approximately 83%, followed by Russia with 4.3%. USA production was not recorded for confidential reasons. Over the past few years, the Chinese Government has restricted the amount of its tungsten ores which can be offered on the world market by applying export quotas and taxes. Sources: International Molybdenum Association, USGS, Geoscience Australia 37
Drilling, Transport and Laboratory Procedures The drilling completed to date at Daehwa is shown in plan view earlier in this presentation and the specific details of each hole where known are summarised in the table below. Minimal information is available regarding the drilling completed at Daehwa and Donsan prior to 2010. The assaying of the 2010 drill core was undertaken by the previous Australian project operators. The assay data available from the two holes is presented in Appendix 1. The assaying was undertaken at ALS Brisbane and SGS Perth following sample preparation at the internationally accredited laboratory facilities of ALS, Guangzhou and SGS Tianjin, China. The half and quarter core samples were cut using a diamond bladed brick saw. The 2010 assays have been generated from a mixture of half core samples and a selection of check repeat quarter core samples. The quarter core check samples were assayed at both SGS and ALS laboratories as part of an overall QA/QC programme. The remaining half core sample has been retained for future reference. All core logging and sampling was undertaken by SMCL geological team. The samples were packed in lots of 6 to 10 samples depending on sample weight by a SMCL geologist and then dispatched to JMK Express freight forwarders Seochu-gu, Seoul. JMK Express then arranged for the samples to be air freighted to Tianjin or Guangzhou, China using TNT International. The samples cleared customs in China and were then transported by laboratory personnel to the laboratory in Tianjin or Guangzhou. The samples upon receipt were sorted to ensure that all the samples in the assay job had been received and matched the sample request consignment details supplied by email to the respective ALS or SGS laboratory. After sorting, the samples were stacked on trolleys and dried at 105 o C. The sample preparation varied marginally between the two labs in China. ALS Guangzhou followed ALS sample prep procedure Prep-32. This involved jaw crushing the dried core sample until >70% sample passing 2mm and then riffle splitting the crushed sample to produce a 1500gm sub sample for pulverisation in a LM5 pulveriser using a Ferro-chrome mill and puck. The samples were pulverised until a nominally >85% of the sample was passing 75 microns. At SGS Tianjin, the dried samples were jaw crushed until >90% of the sample passing 3mm was achieved. The sample was then homogenised and split (splitting method is unknown) and a 1 kg sub sample was then pulverised until >85% of the sample passing 75 microns was achieved. The excess sample has been retained and stored by the laboratories for any future metallurgical testing by the company. The prepared sample pulps were then air freighted by the Chinese laboratories to partner laboratory facilities in Brisbane (ALS) and Perth (SGS). ALS completed both an ICP analysis of a range of elements using method ME-MS61 (this method uses a four acid digest) along with a separate Mo and W analysis using XRF pressed pellet method lab code XRF-05. The results of the XRF Mo and W analyses and the ICP Cu analysis are reported in Appendix 1. The results of other elements analysed for as part of the overall ICP analysis suite that are not considered material have been omitted from the attached appendix. These analyses only provide geochemical information on the deposit that is of academic interest. Similarly, SGS Perth on receipt of sample pulps from SGS Tianjin completed a range of analyses. The results of the analyses are summarised in Appendix 1. The core samples were analysed for Mo and W by SGS Perth using XRF Fusion (method XRF780), XRF pressed pellet (method XRF75V) and ICP using a four acid digest (method ICP40Q). In the appendix below, the XRF fusion number has been reported where available and when an XRF fusion analysis was not undertaken, the XRF pressed pellet number has been reported. The detection limit for Mo by XRF fusion is 100ppm compared with 4ppm by XRF pressed pellet. Where the XRF fusion number was below the detection limit for Mo, the result of XRF pressed pellet number has been reported. All Cu assays reported were determined using an acid digest preparation and an ICP analysis method. 38
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