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The road of various mineral raw materials from ”grey” rocks to consumption products is long and includes many steps. Below is a description of the process, from ore discovery to completed raw material for consumption products.

Exploration

The ore exploration process includes recognition, followed by exploration, project studies and profitability analysis. The aim of the exploration is to identify the potential ore-rich areas and define their resources.

Recognition and Selection of Study Areas

In the recognition phase the areas are selected with favourable geological conditions in which the possibilities of discovering ore deposits are estimated good. This is realised through collecting geological, geochemical and geophysical data from the selected area. The information is compiled and analysed and on the basis of the achieved results estimated if the area can be considered ore critical.

Following Exploration

If the recognition is successful, the exploration process continues to the next level. In the area estimated to be ore critical a geological mapping will be detailed including boulder hunting and geophysical land surveys with different methods. Till and other rock tests are taken to assay.

These study methods aim at giving the foundation for the first test drilling programme. If the results of this study are positive, it allows the most expensive phase of the exploration with detailed and systematic core drilling be carried out. This enables an estimation of the size and concentration of the mineralisation and to be able to classify the mineral resource either measured or indicated according to the recognised standard.

On the basis of this study, if estimated that the resource is economically extractable, the ore will be examined mineralogically, metallurgically, and considering the beneficiation processing techniques to decide if a complete economic feasibility study is needed.

Classification of Mineral Resources and Ore Reserves

SveMin, previously Svenska Gruvföreningen, introduced reporting rules for ore and exploration results in the year 2001. SveMin’s recommendations are based on the Canadian instruction National Instrument (NI) 43-101. The companies connected to SveMin undertake to use the passed report principles in the instruction for reporting of the mineral resources and ore reserves. In its own estimates Endomines has used the Australian JORC code (Joint Ore Reserve Committee) which is quite similar to the Canadian instruction with small differences.

The classification rules in question are based on that the sampling and assaying of the samples have been carried out in an entirely transparent way and can be repeated if necessary. The assays must also be carried out by an accredited, independent laboratory and the results controlled by another independent laboratory.

The drilling and sampling density must be proper to the ore type in question e.g. massive sulphide ore or ilmenite ore can be counted as ore reserves with 50 metres’ section spacing with the help of geophysical survey. In principle gold ore can never be counted as ore reserve if the drill hole or drill section spacing and sampling density exceed 20 m due to the fact that gold ore’s limits are often irregular and contents vary. Gold usually exists in irregular veins with continuity of contents that seldom follow geophysical surveys.

Project Study and Profitability Analysis

In the process phase in which the project study and the profitability analysis are being performed the technical and economical parametres are also being studied to decide if the resource is profitable to be extracted.

The process starts usually with the so called inhouse scoping study. If the result is positive, the next step is pre-feasibility study which can be performed either internally or externally. It is often necessary to make various studies to find an optimal solution for the exploitation of the resource.

The last step before the decision of the mining operation is the bankable feasibility study which is usually performed by an impartial expert organisation or consult firm. If the results of this study are still positive and if the financing is clear the decision to exploit the resource can be made.

Mining Activity – Production

Mines consist mainly of two units: the mine itself which can be an underground mine or open pit and the beneficiation plant in which the ore becomes a completed product to sell. To start the underground production there must be an inclined track (or a shaft) built which is then followed by driving the waste rock and ore out of the tunnel. Open pit mining is normally simpler and faster to begin as there is only the stripping to do to reach the ore body.

Studies

To begin the ore production the ore body has to be examined in detail so that the ore limits and contents are recognised to minimise the unnecessary extracting of the surrounding rocks. The study is made through geological mapping, diamond core drilling, and sludge drilling. The geologists interpret the information, and in cooperation with the mine planning experts perform production plans.

Ore Mining

The ore mining can occur either above the ground in an open pit or under it in a mine. The open pit mining is cheaper and more flexible method than underground mining but demands mining of the surrounding rocks to effectively come to the ore body and maximise the mining. The open pit mining is suitable for a big scale production of ore with relatively lower mineral concentration. The underground mining suits for richer ore existing in more compact dimensions.

In the ore mining a blast hole is drilled in the rock and filled with explosives. The ore explodes into smaller boulders which are loaded in a truck and transported to a crusher from where they go on to a beneficiation plant.

Beneficiation

The next step is to grind the ore to grain size corresponding to sand. Valuable minerals are being concentrated from the ground product with various technics that are based on magnetic, gravitational or surface chemical properties. The result of this process is called concentrate, and it contains the majority of the valuable minerals. That can be further refined in the Company or sold to other companies specialised in the further refining of metal raw materials. Worthless particles are being pumped to a tailings storage facility for disposal.

Leaching, Smelting and Refining

Gold and other metal products can be extracted from the concentrate by smelting or by leaching with sodium cyanide. During the process the gold concentrate is smelted in the smelter and gold will be separated later in the metallurgical process. In the leaching method the concentrate is mixed with sodium cyanide and air and locked in the active coal that is in the solution in the form of granules. By handling the gold-saturated coal in a high temperature, the gold returns to solution. The solution undergoes an electrolytic process in which gold is poured on steel wool that is rusted in the next stage.

Cyanide will not be used in ore or concentrate processing at Pampalo. Pampalo gold concentrates will be refined by smelting.

The extracted gold is then melted into gold bars or doré bars. Doré bars contain around 90 percent gold and are typical end products which can be sold with good financial exchange to various refiners. The final cleaning of gold occurs in external refineries where gold and silver and other components in the form of doré bars are cleaned to 99,99 per cent’s degree of purification. The pure metals, gold and silver, are normally being cast into bars to sell.

The types of ilmenite raw materials which the Company produces are intended to the production of titanium dioxide pigment. The manufacturing process through leaching and precipitation are complicated and will be as a whole achieved by the Company’s customers.

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