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The Directors

Sylvania Resources Limited Constantia View Office Park Block 3, 2 Hogsback Road Quellerina Extn 4 Johannesburg South Africa The Directors Ambrian Partners Limited Old Change House 128 Queen Victoria Street London EC4V4BJ SYNOPSIS Sylvania has established a chrome recovery and platinum group elements (PGEs) processing and extraction business in South Africa predicated on its ability to build and operate metallurgical concentrators designed and engineered to treat tailings produced by both historical and current mining operations.

Sylvania Metals (Pty) Limited (Sylvania Metals), the entity that operates the processing and extraction business in South Africa, is now 100% owned by Sylvania following the recent acquisition by Sylvania of a 26% shareholding in Sylvania Metals that was previously held by its BEE partner, Ehlobo. This 26% shareholding in Sylvania Metals was exchanged for an approximate 19.5% share in Sylvania through the issue of 58,882,551 new Sylvania ordinary shares to a nominee of Africa Asia Capital Limited which is a subsidiary of International Mineral Resources (IMR).

IMR owns a controlling interest in Samancor Chrome which owns and operates a number of chrome mines, ferrochrome smelters and tailing dams in South Africa. Sylvania has entered into an agreement with Samancor Chrome to treat its current tailings risings and its existing tailings dams using the Sylvania Chromite Washing Plant (CWP) and PGE Recovery Plant (PRP) technology.

The primary purpose of the Sylvania relationship with Samancor Chrome is to enable new technologies to be applied to the chromite miners of the Bushveld Igneous Complex (BIC) so that Samancor Chrome can benefit from increased chromite recovery efficiencies whilst Sylvania can generate revenues from PGE recoveries. The recovery of PGEs from chromite has only been of commercial interest over the past 7 years as previously the PGE grades were considered uneconomic by the chrome miners.

In addition, Sylvania has acquired mineral resources in the Northern Limb of the BIC which will be required to realise its smelting and refining initiative. Sylvania has commenced with exploration work to further develop these projects. There are plans to develop the Volspruit Project to a Bankable Feasibility Study by 2011, while carrying out exploration on the farms Harriet’s Wish, Aurora and Cracouw with the aim of defining a mineral resource for the prospect. The AIM Note for mining and oil and gas companies Appendix 3 summary of reserves and resources is presented below:

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Sylvania produces PGEs and chromite concentrates using standard gravity and hydrometallurgical technology in South Africa. The company is evaluating alternatives to develop its business through a strategic rationale which includes: expanding existing production of chromite and PGEs by accessing conventional, in the ground mineral resources as well as previously uneconomic chromite and PGE deposits which contain low grade PGE grades in existing tailings dumps and current risings;

consolidating Sylvania’s CWP/PRP technology within the Samancor Service and Supply Agreement (Samancor Chrome Agreement) and expanding the technology throughout the South African chrome and PGE mining industry in South Africa. The application of the CWP/PRP technology will be evaluated for global opportunities;

further developing a joint venture relationship with Jubilee/Braemore, the owners of a direct current (DC) furnace technology to treat high chrome low grade PGE concentrates that existing PGE refiners prefer not to treat; and the original relationship between Samancor Chrome and Sylvania was generated as a result of an open market-related tender for the dumps which was awarded on a competitive basis to Sylvania. As a result, Sylvania and Samancor Chrome have developed a mutually advantageous commercial partnership.

In Venmyn’s opinion, Sylvania has founded its business on relatively simple and standard physical and hydrometallurgical technology for which the capital costs are relatively low and the pay backs short.

Sylvania is well positioned in South Africa in the heart of the PGE and chromite orebody mineral resources to take full advantage of its existing technology. It can also grow that niche position based upon a proven track record at a time when the major industry players are seeking ways to minimise cost and improve efficiencies.

Prior to the introduction of Africa Asia Capital Limited, the most critical potential threat to Sylvania was the integrity of the Samancor Chrome Agreement, which provides for the on-going feed material to all of Sylvania’s plants. The Samancor Chrome Agreement was renegotiated to clarify some operational clauses and improve the current working relationship. The corporate structure within which the mineral assets described in this report have been set is shown for Sylvania (Figure 1).

At the outset, it should be noted that because of the range of mineral assets to be reviewed and evaluated, this document has been structured to provide “Short and concise” information for each material asset.

Therefore, this document provides the framework within which to describe the different mineral assets.

However, each asset, once prepared into a Short Form Technical Statement, has been included as a specifically numbered Appendix.

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The report process took into account the principles incorporated in the requirements of the Regulatory Guides Numbers 111 and 112 of the Australian Securities and Investments Commission (ASIC), ASIC consultation Paper 143 (which relates to Regulatory Guides 111 and 112), and the Note for Mining and Oil and Gas Companies – June 2009 of the Alternative Investment Market (AIM).

The Technical Statements are intended to incorporate all material issues required by the expert reporting codes and, in particular, JORC and VALMIN, of Australasia, and SAMCODE, of South Africa.

The Tweefontein Complex is under review and negotiations are taking place for Sylvania to take over the existing “Green” CWP at the Tweefontein site. A scoping level study will be designed to replicate processes at Mooinooi. Whilst this is conceptual, the experience at Mooinooi should lead to successful implementation.

The cost and timing will be defined shortly.

In respect of the Volspruit Project, the initial Sylvania feasibility work demonstrates a positive NPV valuation but this will be prepared into a Definitive Feasibility Study over the next year and may demonstrate additional upside potential.

The mass balances contained within the Metallurgical Statements were accurate at the time of the release of the document, but are subject to change with future developments.

The information in this report (and the appendices) relating to exploration results, mineral resources and ore reserves is based on information compiled by Andrew Neil Clay, who is a Fellow of the Australasian Institute of Mining and Metallurgy, as set out in Appendix 3 (Qualifications, Declarations and Consents), has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person, as defined in the 2004 Edition of the JORC Code. Mr Clay is employed by Venmyn.

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This Competent Person’s Report has been prepared by Venmyn. In the preparation of the report, Venmyn has utilised information relating to operational methods and expectations provided to it by Sylvania. Where possible, Venmyn has verified this information from independent sources after making due enquiry on all material issues that are required in order to comply with the Code for Technical Assessment of Mineral and Petroleum Assets and Securities for Competent Person’s Reports (Valmin Code). Venmyn and its directors accept no liability for any losses arising from reliance upon the information presented in this report.

–  –  –

The businesses of mining and mineral exploration, development and production by their nature contain significant operational risks. The businesses depend upon, amongst other things, successful prospecting programmes and competent management.

–  –  –

Factors such as political and industrial disruption, currency fluctuation and interest rates could have an impact on Sylvania’s future operations. The majority of these factors are, and will be, beyond the control of Sylvania or any other operating entity.

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1.1. Nature and Purpose of the Report

1.2. Basis of the Assessment

1.3. Sources of Information

1.4. Limitations and Reliance on Information


2.1. Chrome and Ferrochrome Sector

2.1.1. Geology and Mineralogy

2.1.2. Geology of the Bushveld

2.1.3. Occurrence and Mining

2.1.4. World Production and Global Development

2.1.5. Ore Processing

2.1.6. Uses and Applications

2.1.7. Ferroalloys

2.1.8. Future Trends

2.1.9. The Asian Influence

2.1.10. Supply/Demand Dynamics for Chromite

2.2. PGE Sector

2.2.1. Introduction

2.2.2. Geology and Mineralogy

2.2.3. Occurrence and Mining

2.2.4. World Production and Global Development

2.2.5. Ore Processing

2.2.6. Concentration

2.2.7. Smelting

2.2.8. Base Metal Refining (BMR)

2.2.9. Precious Metal Refining (PMR)

2.2.10. Low Grade Concentrate Processing

3. South Africa’s Political and Economic Status

3.1. Political Climate

3.2. Economic Climate and Fiscal Regime

3.3. Industrial Relations

3.4. South African Infrastructure Capacity

3.5. Minerals Industry

3.6. South African Mining Law

3.6.1. Mineral and Petroleum Resources Development Act (MPRDA)

3.6.2. Broad-Based Socio-Economic Charter for the South African Mining Industry.............28 3.6.3. Amendment of the Broad Based Socio-Economic Empowerment Charter..................29 3.6.4. Mineral and Petroleum Reserves Royalty Act (MPRRA)

3.6.5. Chromium Mineral Rights from UG2 Mined for PGEs


4.1. Overview

Independent Competent Person’s Report Without Valuations December 2010 vi 4.2. Location

4.3. Corporate Structure and Management

4.4. Samancor Chrome Mining and Tailings Operations


5.1. Introduction to the Plant Complex

5.2. Summary


6.1. Introduction


7.1. Introduction


8.1. Introduction


9.1. Material Agreements

9.1.1. Samancor Services Supply Agreement

9.1.2. Offtake Agreements

9.2. Environmental Considerations


Appendix 1: Glossary of Terms

Appendix 2: Abbreviations

Appendix 3: Qualifications, Declarations and Consents

Appendix 4: Metallurgical Statement for Millsell Complex

Appendix 7: Metallurgical Statement for Mooinooi Complex

Appendix 9: Metallurgical Statement for CTRP Complex

Appendix 5: Metallurgical Statement for Lannex Complex

Appendix 6: Metallurgical Statement for Steelpoort Complex

Appendix 8: Metallurgical Statement for Doornbosch Complex

Appendix 10: Technical Statement for Everest North Project

Appendix 11: Technical Statement for Cracouw 391 LR (HACRA Project)

Appendix 12: Technical Statement for Aurora 397 LR (HACRA Project)

Appendix 13: Technical Statement for Harriet’s Wish 393 LR (HACRA Project)

Appendix 14: Technical Statement for Volspruit Project

Appendix 15: Technical Statement for Aurora Project


Figure 1: Corporate Structure of Sylvania

Figure 2: Regional Location of the Western BIC and Related Mineral Assets to this Transaction

Figure 3: Regional Location of the Eastern Bushveld and Mineral Assets Related to this Transaction........... 6 Figure 4: Regional Location of the Northern Bushveld and Mineral Assets Related to this Transaction.......... 7 Figure 5: Schematic Geology of the BIC


Table 1: Global Chromite Mineral Resources and Mineral Reserves

Table 2: Global Chromite Production 2007

Table 3: Global Chromite Production 2008

Table 4 : Global Chromite Production 2009

Table 5: High Carbon Ferrochrome Production in 2007

Table 6 : High Carbon Ferrochrome Production in 2009

Independent Competent Person’s Report Without Valuations December 2010 vii Table 7: Low and Medium Carbon Ferrochrome Production 2007

Table 8 : Low and Medium Carbon Ferrochrome Production 2009

Table 9: Typical Compositions of Various Grades of Chromite

Table 10: Global Platinum and Palladium Mineral Resources as at 2009

Table 11: Platinum and Palladium Production in 2008

Table 12: Key Features of the PGE Extraction Business

Table 13: Characteristics of BIC PGE Ore Types

Table 14: Types of Rights Applicable to Mining in South Africa

Table 15: Attributable Equity of Sylvania South Africa

Table 16: Attributable Equity of GAU

Table 17: Attributable Equity of SA Metals

Table 18: Summary of the Legal Tenement for Sylvania’s Mineral Properties

Independent Competent Person’s Report Without Valuations December 2010


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