A NICHE PRODUCER OF THE PUREST MAGNETITE AND
HEMATITE FOR INDUSTRIAL CONSUMERS

Lodestone Projects

The Dordabis Mine

Lodestone's Dordabis mine is located 20km north of the town of Dordabis and 75km south of the Hosea Kutako International Airport in Namibia. Lodestone began production of magnetite and hematite products for niche producers in mid-2015. In addition to Mining License #182, Lodestone holds the following Exclusive Prospecting Licences (EPLs); EPL 3112 (5,913 ha), EPL 3938 (7,274 ha), and EPL 4265 (25,287 ha). Lodestone continues to investigate its EPLs for additional resources. Exploratory drilling to date concentrated primarily on the Tsatsachas and Elizenhöhe farms which contain the majority of Lodestone's Mining License Area. Minrom Namibia conducted four phases of drilling on the contiguous ore bodies and oversaw cataloging and analysis of core and bulk samples. Drilling to date has proven adequate resources for at least the first 20 years of Lodestone's scheduled production and on-going exploration is expected to expand Lodestone's proven reserves.

EXPLORATION PHASE 1

Phase 1 of exploration was conducted from August to September 2010. This initial phase of subsurface exploration included diamond drilling of nine boreholes totaling 1,324 metres. 454 metres were drilled on the north body (4 boreholes) and 870 metres were drilled on the south body (5 boreholes).

The aim of the first exploration phase was to:

  • Determine the lateral extent of the deposit;
  • Determine the depth extent of the deposit;
  • Determine the thickness of the ore body from the borehole intersections;
    and ultimately to
  • Determine the ore quality and extractability of material from the host rock.

EXPLORATION PHASE 2

Based on the encouraging exploration results from phase 1, Lodestone commissioned a second phase of drilling from June to November 2011. This consisted of 34 diamond drilled boreholes and a total of 4064 metres of sampling. 12 boreholes totaling 1394 metres were drilled on the northern body and 22 holes, totaling 2670 metres were drilled on the southern body.

The aim of the second exploration phase was to:

  • Aid in the understanding of the ore body's characteristics by means of infill drilling on a grid plan and at the same time compute a detailed block model with the data generated; and to
  • Prepare a resource estimation

EXPLORATION PHASES 3 and 4

Phase 3 and 4 drilling commenced in March 2013 and produced 6,500 metres of core samples. Of this, 1,800 metres was HQ drilling core designed for a representative metallurgical bulk sample analysis (to be conducted by SGA, Germany). The remaining drilling will prove the initial 13 years (minimum expected) of pit production profiles into a measured category. In addition, some 1,600 metres were drilled to increase the contiguous resource size and to explore and investigate the strongly indicated surrounding geophysical targets. The latest phases of drilling were completed in September 2013. All cataloging, recording, and storage of samples was completed in December 2013.

DRILLING RESULTS

Phase 2 culminated in the development of a geological block model describing the quality and quantity of primary ore of the Dordabis Iron ore Project. Structural field mapping, high intensity gravity and magnetic surveys in addition to the drilling program assisted greatly in the unraveling of a complex structurally deformed ore resource. A CPR was compiled from data obtained from phase 1 and phase 2. The CPR and resource statement were subsequently updated in December 2013 to incorporate the exploration work conducted in phases 3 and 4.

Various drill samples were provided to SGA in Germany who conducted the primary flow sheet design and specification register. Lodestone commissioned further bulk test work for the final specification for plant design on a Bankable Feasibility Level.

Metallurgical test work results indicated that the ore is feasible for the extraction of a high grade (67% Fe) hematite/magnetite (minor) blend as well as higher grade hematite and magnetite concentrates.

The Phase 1 and 2 drilling was focused on the thick, well-presented and visible ore packages situated in the south of EPL 3112. Phase 3 focused on the large subsurface geophysical targets in the south west corner of EPL 3112, the northern extension on EPL 4265 (the interlinked targets) and the targets on Otjimukona (EPL 3938). During the drilling of geohydrological boreholes in the area, thick and well-represented iron ore horizons associated with the well-developed geophysical anomalies were intersected. The large extension of ore added a significant amount of contiguous resource to the mining plan.

Metallurgical test work from phases 3 and 4 was completed in 2014, supplying Lodestone's process engineering consultants the required data to complete the final design of the plan on a bankable feasibility level. The geological block model at the end of phase 4 indicates that the total resource tonnage for the north and the south ore bodies total more than 87.6 million tons of JORC resources at an average Fe of 36.35% at a 20% cut-off grade. The resources were classified as follows: 31.3 million tons are classified as Measured, 48.1 million tons are classified as Indicated, and 8.2 million tons are classified as Inferred. A range analysis at the conclusion of phase 4 estimates the existence of up to 759 million tons of iron ore in situ.

Phases 3 and 4 of drilling ran from March to September 2013 and focused on:

  1. Drilling of the southern ore deposit to upgrade the status to a measured resource level (JORC Standard)
  2. Drilling of the northern ore deposit to upgrade the status to an indicated resource level (JORC Standard)
  3. Investigating the ore resource in EPL3938 by field mapping and subsequent drilling of boreholes on the well-represented geophysical targets
  4. Investigating the large geophysical anomalies as per Figure 5
  5. In addition, a detailed ground survey was conducted.

During phases 3 and 4, additional composite sampling was performed on the lower grade lithologies to estimate more accurately the entire resource and subsequently the cut-off grades of the entire deposit. This sampling process will aid in the refinement of the current pit design and mining techniques.

CURRENT STATUS

Lodestone received Mining License #182 from the Namibian Ministry of Mines and Energy in November 2014. All environmental clearances were granted to Lodestone in July 2014 and production at Dordabis commenced in Q2 2015, shortly after Lodestone closed the first of its off-take agreements. The management team completed a pre-feasibility study of the Dordabis project in July 2014. A bankable feasibility study was completed by VBKom Namibia in November 2015. In addition to operating the Dordabis mine, the project team is currently negotiating off-take agreements and working on securing additional financing. Several additional high value drill targets have been identified at Dordabis. To date, drilling and geophysical analysis has been conducted on a small portion of Lodestone's EPLs. It is suggested that Lodestone's resource base can be expanded significantly with additional exploratory drilling.

MINROM NAMIBIA

Mineral Resource Management

Minrom Namibia is Lodestone's key advisor in its ongoing geological exploration and mineral resource management. Minrom is managed by Oscar van Antwerpen who has 25 years of experience in geological resource management. The Dordabis mine was developed in a stepwise process. Minrom Namibia aims to address investment risks in Africa for prospective investors by the deployment of well-planned exploration programs and sound mineral resource management protocols.

KEY SUPPLIERS, CONTRACTORS, & PARTNERS

COMPANYSCOPE
Actlabs Namibia Quality Control and Mineral Assaying
AKW Verfahren GmbH Germany Process Design and Plant Engineering
Atlantic Aggregates Switzerland Marketing
Colin Christian & Associates CC Namibia Environmental Impact Assessment
Dempsey Multi Konsult Logistic Feasibility Report
Ferro Drill Namibia Exploration Drilling Contractor
First Berlin Research and Valuation
Genalysis Laboratory Services Australia X-ray Fluoresence Testing
GERCHI Germany Conceptual Plant Design
Grant Thornton Neuhaus Audit
Gunzel Drilling Namibia Exploration Drilling Contractor
Hannam and Partners LLP Coporate Advisory
HireMAN Windhoek (Pty) Ltd Equipment Rental
Human Drilling Contractors Okahandja Hydrology Drilling Contractor
International SOS Mining Security
Kupfermelt Metal Processing Metallurgy
Minrom Namibia Geological Consultants Drilling Program & Data evaluation
Rex Quip (Pty) Ltd Namibia Mining Equipment Service & Supplies
SGA Liebenburg Deutschland Metallurgical Test Work and Plant Design
SLR Namibia Environmental Consulting Hydrological Studies
SST Ingenieur mbH Germany Conceptual Mining Study
Synergistix Namibia Consulting cc Logistics and Process Engineering
Terratec Geophysical Services Namibia Geophysics
VBKom Namibia Mining Engineering Consultancy
Venmyn Deloitte SA Research and Valuation