Property Description and Access:

The project is located within EL 1165, approximately 200 kilometres east of Port Moresby and 35 kilometres from the village of Wanigela, situated on Collingwood Bay.

The small village of Embessa is located approximately 10 kilometres northwest from site on the Musa River and serviced by an airstrip suitable for light aircraft. Fuel, supplies and equipment can be ferried direct to the site or from Embessa by helicopter transport with up to 5,000 kg payload capacity. If development proceeds, it is contemplated to construct an ore haul road directly to Collingwood Bay, some 40 km to the east.

Prospect Geology:

The Wowo Gap nickel laterite is a result of deep weathering of ultramafic rocks of the Papuan Ultramafic Belt (PUB). In the Didana Range (Low and High) the ultramafic rocks consist of tectonite ultramafics, cumulate ultramafics and gabbro and granular gabbro. The tectonite ultramafics crop out at the eastern end of the Didana Range adjacent to and within the western section of the Wowo Gap Project. The Sivai Breccia, co-host of the Wowo Gap mineralisation, flanks the tectonite ultramafic at the eastern end of the Didana Range adjacent to the Bereruma Fault. The ultramafic breccia also occurs along the south side of the Didana Range on the Ansuna and Boge Plateau.

The nickel laterites are derived from the leaching of ultramafic bedrock. In the project area the complete lateritic profile is preserved, with partial truncation associated with recent drainage systems. The depth of weathering varies according to rock type and the degree of brecciation. The lateritic profile is typically 10 to 15 metres thick, increasing locally to more than 30 metres above the Sivai Breccia.

The laterite profile is typically 10m to 18m thick and composed of an upper iron-rich saprolite horizon (referred to as limonite) with high (>40%) to very high (>60%) Fe2O3 content but relatively low (<6%) MgO. It is the limonite horizon that contains enriched levels of cobalt, chromium and manganese values. Beneath the limonite is MgO-rich (>6 - 40%) earthy saprolite (referred to as saprolite) horizon with relatively low (<40%) Fe2O3 content. Below this in the regolith profile is the rocky saprolite (saprock), clearly identifiable because of corestones of partially weathered ultramafic bedrock.

Project History:

Nickel laterite mineralisation in the Didana Range was first noted in a 1958 Australian Bureau of Mineral Resources (BMR) reconnaissance survey of the area including Wowo Gap. Nickel mineralisation was reported in auger samples of breccia which returned values of up to 1.3% Ni, derived from a peridotite ultramafic having up to 0.18% Ni background values. This initial discovery was followed by several companies including United States Metals Refining Company (1967-1968), Papua Nickel Exploration (1970) and BRGM (1971-1972). The current period of exploration started when Niugini Nickel acquired the project in 1996. Since acquiring the project Niugini Nickel has carried out considerable work including geological mapping, resampling of pits, rock chip sampling, drainage sampling, several drilling programmes, a LiDAR survey over the whole of the mineralized area, two Ground Penetrating Radar (GPR) surveys (2007 and 2014), metallurgical test work and several Resource estimates.

This Mineral Resource estimate is based on the results of three drilling campaigns:

o  diamond core drilling [2003-2008]

o  tungsten carbide-tipped core drilling [2010-2011], and

o  diamond core and custom auger core drilling [2014-2015].

These drilling campaigns totalled 3,174 meters of diamond core, 2,901 meters of auger/carbide core, and 731 meters of wacker drilling (Figures 4, 5, and 6). Sample lengths were generally 1m with the shortest sample being 0.3m and the longest 2m; sampling was done on half core. All drill core samples were sent to Intertek in Lae for sample preparation, with the pulps being sent to Intertek Jakarta for fusion XRF analysis for Ni, Co, Al2O3, CaO, Cr2O3, Fe2O3, K2O, LOI, MgO, MnO, Na2O, P2O5, SiO2 and LOI. Total number of samples assayed was 7874.

This Mineral Resource estimate is also based on two GPR surveys (2007 and 2014). In addition to the drilling data, GPR was used to define two of the geological boundaries, the boundary between limonite/saprolite and the rocky saprolite and the boundary between rocky saprolite and bedrock.  The GPR lines in 2007 were between 200 and 300 metres apart while the 2014 survey reduced the spacing to 100 metres over a portion of the area. 

For grade estimation the laterite layers were simplified into overburden (Qva), limonite/non rocky saprolite and rocky saprolite which in turn were used to guide and control the mineral resource estimate. Samples from each hole were used and were composited to the full width of the layer, making one composite per layer for each of the three layer; the mineralised domains were limited to the three interpreted geological layers as noted above. Nickel and cobalt grades from the composites where estimated using the ordinary kriging (OK) estimation technique in Micromine software. The mineralised domains were limited to the three interpreted geological layers as noted above. The grade distributions for nickel and cobalt are not strongly skewed so OK was an appropriate estimation method; there are no extreme values requiring grade cutting.

Resource classification is based on both the overall footprint of the GPR coverage and drilling. A polygon covering the area with nominal 300 m x 200 m drill spacing along with the GPR coverage was used to flag the block model as follows:

o  any Qva or limonite-saprolite blocks within it are classified as Indicated,

o  rocky saprolite blocks are classified as Inferred regardless of the polygon, and

o  any blocks outside of classification polygon are classified as Inferred.

Density is based on the results of a limited number of samples collected during the 2010-2011 and 2014-2015 drilling campaigns. Based on this data a dry bulk density of 1.0 t/m3 has been used for the "clay profile" (limonite-saprolite layer), and 2.0 t/m3 for the rocky saprolite profile.

A nominal cut-off grade of 0.70% Ni was applied to define the Mineral Resources, which is based on a review of comparable nickel laterite deposits elsewhere.

The current mining plan proposal is to produce a bulk product suitable for smelting that will be transported offsite for processing. It has been assumed that mine waste will be relatively low in total volume and comprise the 0.5 m to 10 m soil and volcanic ash overburden layer. This material is likely to be used for rehabilitation purposes after mining is complete. Low-grade material, mostly limonitic in composition, may be stockpiled in mined-out areas.