PINX:ENZR Energizer Resources Inc Annual Report 10-K Filing - 6/30/2012

Effective Date 6/30/2012

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 2012

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number:  000-51151
 

 
ENERGIZER RESOURCES INC.
(Name of small business issuer as specified in its charter)
Minnesota
 
20-0803515
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

520 – 141 Adelaide Street West, Toronto, Ontario, Canada M5H 3L5
(Address of principal executive offices)

(416) 364-4911
(Issuer’s telephone number)
_______________________

(Former name or former address, if changed since last report)
 

 
Securities Registered under Section 12(b) of the Exchange Act:
None

Securities Registered Under Section 12(g) of the Exchange Act:
Common Stock, $0.001
 

 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  [  ]     No [ X ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.   Yes  [  ]     No [ X ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  [X]     No [  ]

 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  []     No [ X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10K or any amendment to this Form 10-K or any amendment to this Form 10-K. [ x ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o
Non-accelerated filer  o
 
 
Accelerated filer  o
Smaller reporting company  x
   

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
Yes  [  ]     No [ X ]

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter was $26,128,520.

The number of shares outstanding of the registrant’s Common Stock, par value $0.01 per share (the "Common Stock"), as of September 21, 2012, was 157,447,178.

Documents Incorporated By Reference:  None
 
1

 
 
 
Energizer Resources Inc.
 
PART I
     
ITEM 1
Description of Business
 
4
ITEM 1A.
Risk Factors
 
35
ITEM 1B
Unresolved Staff Comments
 
42
ITEM 2.
Description of Properties
 
42
ITEM 3.
Legal Proceedings
 
42
ITEM 4
Mine Safety Disclosures
 
42
       
PART II
     
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
43
ITEM 6.
Selected Financial Data
 
45
ITEM 7.
Management’s Discussion and Analysis of Plan of Operations
 
46
ITEM 7.A
Quantitative and Qualitative Disclosures About Market Risk
 
50
ITEM 8
Financial Statements
 
50
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
50
ITEM 9A.
Controls and Procedures
 
50
ITEM 9B.
Other Information
 
51
       
PART III
     
ITEM 10.
Directors, Executive Officers, Promoters, Control Persons and Corporate Governance
 
 
Compliance with Section 16(A) of the Exchange Act
 
52
ITEM 11.
Executive Compensation
 
56
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related
 
 
Stockholder Matters
 
60
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
62
ITEM 14.
Principal Accountant Fees and Services
 
63
       
PART IV
     
ITEM 15.
Exhibits, Financial Statement Schedules
 
64
       
 
Signatures
   
       
       
CERTIFICATIONS
   
Exhibit 31 – Management certification
88-89
 
       
Exhibit 32 – Sarbanes-Oxley Act
90-91
 
 
 
2

 

FORWARD-LOOKING STATEMENTS

This Annual Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") regarding management’s plans and objectives for future operations including plans and objectives relating to our planned marketing efforts and future economic performance. The forward-looking statements and associated risks set forth in this Annual Report include or relate to, among other things, (a) our growth strategies, (b) anticipated trends in the mining industry, (c) our ability to obtain and retain sufficient capital for future operations, and (d) our anticipated needs for working capital. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Business,”.  Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors”. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this report will in fact occur.

The forward-looking statements herein are based on current expectations that involve a number of risks and uncertainties. Such forward-looking statements are based on assumptions described herein. The assumptions are based on judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Accordingly, although we believe that the assumptions underlying the forward-looking statements are reasonable, any such assumption could prove to be inaccurate and therefore there can be no assurance that the results contemplated in forward-looking statements will be realized. In addition, as disclosed in “Risk Factors”, there are a number of other risks inherent in our business and operations, which could cause our operating results to vary markedly, and adversely from prior results or the results contemplated by the forward-looking statements. Management decisions, including budgeting, are subjective in many respects and periodic revisions must be made to reflect actual conditions and business developments, the impact of which may cause us to alter marketing, capital investment and other expenditures, which may also materially adversely affect our results of operations. In light of significant uncertainties inherent in the forward-looking information included in the report statement, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.

Any statement in this report that is not a statement of an historical fact constitutes a “forward-looking statement”. Further, when we use the words “may”, “expect”, “anticipate”, “plan”, “believe”, “seek”, “estimate”, “internal”, and similar words, we intend to identify statements and expressions that may be forward- looking statements. We believe it is important to communicate certain of our expectations to our investors. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that could cause our future results to differ materially from those expressed in any forward-looking statements. Many factors are beyond our ability to control or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements. Important factors that may cause our actual results to differ from such forward-looking statements include, but are not limited to, the risks outlined under “Risk Factors” herein. The reader is cautioned that our Company does not have a policy of updating or revising forward-looking statements and thus the reader should not assume that silence by management of our Company over time means that actual events are bearing out as estimated in such forward-looking statements.

All references to “dollars”, “$” or “US$” are to United States dollars and all references to “CAD$” are to Canadian dollars. United States dollar equivalents of Canadian dollar figures are based on the noon exchange rate as reported by the Bank of Canada on the applicable date.  All references to “common shares” refer to the common shares in our capital stock.


 
3

 

PART 1
FINANCIAL INFORMATION
As used in this annual report, “we”, “us”, “our”, “Energizer Resources”, “Energizer”, “Company” or “our Company” refers to Energizer Resources Inc. and all of its subsidiaries. The term NSR stands for Net Smelter Royalty.


ITEM 1.   DESCRIPTION OF BUSINESS

BACKGROUND
Company Overview
Energizer Resources Inc. was incorporated in the State of Nevada with the name Uranium Star Corp. on March 1, 2004 and reincorporated in the State of Minnesota on May 14, 2008. On December 16, 2009, we  changed our name from Uranium Star Corp. to Energizer Resources Inc.  Our fiscal year-end is June 30.

During fiscal 2008, we incorporated Energizer Resources (Mauritius) Ltd, a Mauritius subsidiary and Energizer Resources Madagascar Sarl, a Madagascar subsidiary.  During fiscal 2009, we incorporated THB Venture Ltd., a Mauritius subsidiary to hold the interest in Energizer Resources Minerals Sarl, a Madagascar subsidiary, which holds the Madagascar properties. During fiscal 2012, we incorporated Madagascar-ERG Joint Venture (Mauritius) Ltd, a Mauritius subsidiary and ERG Madagascar Sarl, a Madagascar subsidiary.  ERG (Madagascar) Sarl is 100% owned by Madagascar-ERG Joint Venture (Mauritius) Ltd.,  which is owned 75% by Energizer Resources (Mauritius) Ltd.

We have not had any bankruptcy, receivership or similar proceeding since incorporation. Except as described below, there have been no material reclassifications, mergers, consolidations or purchases or sales of any significant amount of assets not in the ordinary course of business since the date of incorporation.

Summary of Our Business
We are an exploration stage company engaged in the search for graphite, vanadium, gold, uranium and other minerals. We have an interest in properties located in the African country of Madagascar and Canada in the Province of Québec.  None of the properties in which we hold an interest have known mineral reserves of any kind at this time.  As such, the work programs planned by us are exploratory in nature.
 
Our executive offices are currently located at 520–141 Adelaide Street West, Toronto, Ontario, Canada M5H 3L5. Our telephone number is (416) 364-4911.  We maintain a website at www.energizerresources.com (which website is expressly not incorporated by reference into this filing).  These offices are leased on a month-to-month basis, and our monthly rental payments are approximately CAD$5,000.
 
 
UNTIL WE CAN VALIDATE OTHERWISE, THE PROPERTIES OUTLINED BELOW HAVE NO KNOWN MINERAL RESERVES OF ANY KIND AND WE ARE PLANNING PROGRAMS THAT ARE EXPLORATORY IN NATURE.  
 
 
Further details regarding our properties, although not incorporated by reference, including the comprehensive geological report prepared in compliance with Canada’s National Instrument 43-101 on our Green Giant Property (formerly the Three Horses Property in Madagascar) and our Sagar property in Northern Quebec can be found on our Company’s website: www.energizerresources.com (which website is expressly not incorporated by reference into this filing) or in our  filings on www.sedar.com (which website is expressly not incorporated by reference into this filing).
 

Cautionary Note
Due to the nature of our business, we anticipate incurring operating losses for the foreseeable future.  We base this expectation, in part, on the fact that very few mineral properties in the exploration stage ultimately develop into producing profitable mines.  Our future financial results are also uncertain due to a number of factors, some of which are outside our control.  These factors include, but are not limited to:
·  
our ability to raise additional funding as required;
·  
the market price for graphite, vanadium, gold, uranium and for any other minerals which we may find;
·  
ongoing joint ventures;
·  
the results of our proposed exploration programs on our mineral properties;
·  
environmental regulations that may adversely impact cost and operations; and
·  
our ability to find joint venture partners, as needed, for the development of our property interests.

 
4

 
If we are successful in completing an equity financing, as necessary, existing shareholders will experience dilution of their interest in our Company.  In the event we are not successful in raising additional financing, we anticipate that we will not be able to proceed with our business plan.  In such a case, we may decide to discontinue our current business plan and seek other business opportunities in the resource sector.  During this period, we will need to maintain our periodic filings with the appropriate regulatory authorities and, as such, will incur legal and accounting costs.  In the event no other such opportunities are available and we cannot raise additional capital to sustain operations, we may be forced to discontinue our business altogether.  We do not have any specific alternative business opportunities in mind and have not planned for any such contingency.

Due to our lack of operating history and present inability to generate revenues, our auditors have stated their opinion that there currently exists doubt about our ability to continue as a going concern.

Properties
Madagascar Properties
Green Giant Property, Madagascar
On August 22, 2007, we acquired a 75% interest in approximately 225 sq. kilometres of mineral research permits in the District of Toliara, Madagascar. This interest is held by a limited liability company that was formed under the laws of Madagascar which held a 75% interest in the property.  The remaining 25% interest was held by Madagascar Minerals and Resources Sarl.  On July 9, 2009, we acquired the remaining 25% interest in the property and now hold a 100% interest in the property.

Joint Venture Ground, Madagascar
On December 14, 2011, as reported in our current report on Form 8-K, filed with the Securities and Exchange Commission on December 15, 2011, we entered into a Definitive Joint Venture Agreement (“JVA”) with Malagasy Minerals Limited (“Malagasy”) (Australian Stock Exchange: MGY (“MGY”)) to acquire a 75% interest to explore and develop a defined group of industrial minerals.  Our Company will manage the exploration operations for the industrial minerals on this ground.

Canadian Properties
Sagar Property – Romanet Horst, Labrador Trough, Québec, Canada
On May 2, 2006, we signed a letter of intent for an option to acquire a 75% interest in 219 claims located in northern Quebec, Canada.  The vendor had the right and option to sell the remaining 25% interest in the property and exercised that right on February 28, 2007.  Therefore we now one a 100% interest in this property.  This agreement was subject to a 2% NSR (“net smelter return”) with the vendor. As there has been a change in government in the province of Quebec, in particular a political party that advocates separation of Canada and Quebec, we are uncertain if any legislation will be introduced that will impact our business plan for this property.

Further details on exploration programs carried out on the properties can be found below.

Competitive Conditions in our Industry
The mineral exploration and mining industry is competitive in all phases of exploration, development and production. We compete with a number of other entities and individuals in the search for, and acquisition of, attractive mineral properties.  As a result of this competition, the majority of which is with companies with greater financial resources than us, we may not in the future be able to acquire attractive properties on terms our management  considers acceptable.  Furthermore, we  compete with other resource companies, many of whom have greater financial resources and/or more advanced properties that are better able to attract equity investments and other capital.  Factors beyond our control may affect the marketability of minerals mined or discovered by us.

Employees
As of June 30, 2012, we had 6 total employees and 6 full-time employees.  In addition to our full time employees, we engage consultants to serve several important managerial and non-managerial functions for us including serving as officers and to performing professional, geological and administrative functions.

 
5

 

MADAGASCAR PROPERTIES

Green Giant Property Description and Location
The Green Giant Property is comprised of 6 mineral permits. The properties are located in the District of Toliara and are referenced as TN 12,306,P(R); TN 12,814, P(R); TN 12,887 P(R); TN 12,888 P(R); TN 13,020 P(R); TN 13,021 P(R) as issued by the Bureau de Cadastre Minier de Madagascar (“BCMM”) pursuant to the Mining Code 1999 (as amended) and its implementing decrees. The total land position is 225 sq. kilometres.  This property can be accessed by both air and road.

Joint Venture Property Description and Location
The “Joint Venture Property” is comprised of a portion of or all of 39 mineral permits. The properties are located in the District of Toliara and are referenced as TN 3,432,P(R); TN 5,394, P(R); TN 13,064 P(R); TN 13,811 P(R); TN 14,619 P(R); TN 14,620 P(R); TN 14,622 P(R); TN 14,623 P(R); TN 16,747 P(R); TN 16,753 P(R); TN 19,003 P(R); TN 19,851 P(R); TN 19,932 P(R); TN 19,934 P(R); TN 19,935 P(R); TN 21,059 P(R); TN 21,060 P(R); TN 21,061 P(R); TN 21,062 P(R); TN 21,063 P(R); TN 21,064 P(R); TN 24,864 P(R); TN 25,605 P(R); TN 25,606 P(R); TN 28,340 P(R); TN 28,346 P(R); TN 28,347 P(R); TN 28,348 P(R); TN 28,349 P(R); TN 28,352 P(R); TN 28,353 P(R); TN 29,020 P(R); TN 31,734 P(R); TN 31,735 P(R); TN 38,323 P(R); TN 38,324 P(R); TN 38,325 P(R); TN 38,392 P(R); and TN 38,469 P(R) as issued by the Bureau de Cadastre Minier de Madagascar (“BCMM”) pursuant to the Mining Code 1999 (as amended) and its implementing decrees.  The total land position is 827.7 sq. kilometres.  This property can be accessed by both air and road.
 
6

 
 

Agreements
Green Giant Property
On August 22, 2007, we entered into a joint venture agreement with Madagascar Minerals and Resources Sarl (“MMR” or “Madagascar Minerals”), a company incorporated under the laws of Madagascar.  The joint venture was operated through a Madagascar limited liability company in which our Company held 75% undivided interest and MMR held the remaining 25% undivided interest.

The consideration paid to MMR to acquire the 75% stake in the joint venture consisted of:  (i) cash consideration totaling $765,000; and (ii) the issuance of 1,250,000 of our common shares and 500,000 now expired common share purchase warrants.

On July 9, 2009, we entered into an agreement to acquire the remaining 25% interest of the Green Giant Property for $100,000.  Upon our  acquisition of the remaining 25%, the joint venture was terminated.  MMR retains a 2% NSR.  We can acquire the NSR on this 25% interest portion at a price of $500,000 in cash or common shares for the first 1% and at a price of $1,000,000 in cash or common shares for the second 1% at our option.

Joint Venture Ground, Madagascar, Africa
On December 14, 2011, we  entered into a Definitive Joint Venture Agreement (“JVA”) with Malagasy to acquire a 75% interest to explore and develop a defined group of industrial minerals (as noted below).  Malagasy retains a 25% interest in the exploration and development of the define group of industrial minerals.  The new land position covers an area totalling 2,119 research permits and 827.7 square kilometres.  This land portfolio is mainly adjacent to the south and east of the Green Giant Property.  Under the terms of the JVA, we paid Malagasy $2,261,690 and issued 7,500,000 of our common  shares.  Malagasy has a free carried interest until we deliver a Bankable Feasibility Study (“BFS”). Upon the delivery of a BFS, Malagasy will be required to contribute its 25% interest in the development and mining operations.  Should either party’s interest subsequently fall below a 10% interest, their position will be diluted to a 2% NSR.

The industrial minerals within the agreements are as follows:   Vanadium, Lithium, Aggregates, Alunite, Barite, Bentonite, Vermiculite, Carbonatites, Corundum, Dimensional stone (excluding labradorite), Feldspar (excluding labradorite), Fluorspar, Granite, Graphite, Gypsum, Kaolin, Kyanite, Limestone/Dolomite, Marble, Mica, Olivine, Perlite, Phosphate, Potash –Potassium minerals, Pumice Quartz, Staurolite, Zeolites.

During January 2012, we signed a formal agreement with South Africa's DRA Mineral Projects (“DRA”), a world-leading process engineering and mining project development management firm, for the development of our projects in Madagascar.  Specific focus will be on the development of vanadium and graphite minerals.  This partnership provides us with the ability to both build and manage a mining operation.   It also provides DRA the option to purchase up to 5% of our Company through private placement at current market conditions.

 
7

 
Madagascar Historical Exploration Programs
The Green Giant Property displays extensive gossans outcroppings at surface.  An examination of part of this property revealed several large areas covered with gossanous boulders, which are believed to overlie massive sulphide mineralization.  Phases of the exploration projects were managed by Craig Scherba, P. Geol. who at the time was one of our outside consultant geologists.

We conducted a first phase of exploration from September to November 2007 that included the following activities:
·
Stream Sediment sampling of all stream on the property area
·
Detailed Geological mapping over selected startigraphic horizons
·
Reconnaissance geological mapping over the entire property
·
Soil sampling over selected target areas
·
Prospecting over selected target areas.
·
Limited trenching over selected targets
·
Construction of a cinder block base camp
·
Construction of a one kilometre long surfaced airstrip
·
Repair and surfacing of the access road from base camp to the airstrip
·
Airborne geophysical surveying conducted by Fugro Airborne Surveys Ltd

During March 2008 to June 2008, a full field exploration program following up on the airborne geophysical survey and results of the 2007 exploration program was implemented.  This exploration consisted of the following:
·
Infill stream sediment sampling
·
Detailed Geological mapping over selected stratigraphic horizons
·
Prospecting over selected target areas
·
Grid emplacement over selected target areas
·
Ground-based magnetometer and frequency domain EM surveys
·
Soil sampling over selected target areas

After reviewing the analytical data from the March 2008 to June 2008 program, additional exploration was conducted from July 2008 to September 2008 in preparation for a drill program.  This exploration consisted of the following:
·
Infill stream sediment sampling
·
Detailed geological mapping over selected stratigraphic horizons
·
Prospecting over selected target areas with the aid of a mobile XRF analyzer

Based on compiled analytical results obtained from the various exploration programs, a drill program was initiated on the property from September 2008 to November 2008. This exploration program consisted of the following:
·
Prospecting over selected target areas with the aid of a mobile XRF analyzer
·
Ground-based scintillometer surveying over selected target areas
·
Diamond drilling of 31 holes over 4,073 metres

Based on positive early indications of the presence of potentially economic grades and volumes of vanadium on the property, another exploration program was initiated on the Green Giant Property during the spring of 2009.  The program (completed between April 2009 and July 2009) consisted of an extensive X-Ray Fluorescence analysis (XRF) soil sampling program coupled with mechanical trenching and scintillometer surveys over known areas of vanadium enrichment and new areas, defined by the soil XRF survey.

The discovery of potentially significant vanadium mineralization from prior programs resulted in the initiation of resource delineation drill program during September 2009 to December 2009. This program consisted of the following:
·
XRF soil sample analyses (8,490 samples) on lines 200 metres apart covering 18 kilometre strike length
·
Scintillometer surveying (112 line kilometres) on lines 200 metres apart over an 18 kilometre strike length
·
Trenching (140 trenches for 17,105 metres)
·
Diamond drilling of 54 diamond drill holes over 8,931 metres

The exploration programs to date resulted in the delineation of two vanadium pentoxide (V­2O5) deposits (named the Jaky and Manga), characterized by two separate categories:  oxide and primary. Within the oxide and primary zone of the Jaky and Manga deposits, the total indicated resources was calculated to be 21.74 Mt at 0.759% V­2O5 containing 363.8 Mlb of vanadium pentoxide.  The total inferred resources was calculated to be 4.15 Mt at a grade of 0.655% V­2O5 containing 59.8 Mlb of vanadium pentoxide.

 
8

 
Based on these results, we conducted an additional exploration program on the property from April 2010 to July 2010. This program consisted of the following activities:
·
Diamond drilling of 46 diamond drill holes over 8,952 metres
·
Prospecting over selected target areas with the aid of a mobile XRF analyzer (20 grab samples)
·
Geologic mapping over the Manga and Mainty deposits at 1:5000 scale
·
ERT ground geophysical survey (5.64 km)
·
MAG ground geophysical survey (169.53 km)
·
Gradient Array EM ground geophysical survey (128.82 km)

In 2011, the identification of graphite as a potential credit to our  NI 43-101 compliant vanadium resources in the Manga, Jaky and Mainty zones led our geologists to conduct a reconnaissance exploration program (Phase I program) on the properties in September, 2011.  The goal of this exploration program was to delineate new graphitic trends, and compare them to those associated with vanadium mineralization. This program consisted of the following activities:
·
Diamond drilling of 10 holes over 1,157.5 metres
·
Trenching (16 trenches for 1,912 metres)
·
Prospecting over selected target areas

An additional reconnaissance exploration program was conducted from November 2011 to December, 2011 (Phase II program). The purpose of this program was to ascertain the industrial mineral potential on the Joint Venture Property, in addition to further drill testing of graphitic trends on the Green Giant Property in advance of Madagascar’s rainy season. This program consisted of the following activities:
·
Diamond drilling of 20 holes over 2,842 metres
·
Prospecting over selected target areas
·
EM31 ground geophysical survey over selected target areas (160.5 km)

The discovery of potentially significant graphite mineralization from the 2011 exploration programs resulted in the initiation of a resource delineation drill program from May 2012 through August 2012. This program consisted of the following:
·
Trenching (18 trenches for 2,100 metres)
·
Diamond drilling of 41 diamond drill holes over 8,459 metres

 
9

 
2008 Diamond Drilling Program
Diamond drilling completed in 2008 on the Green Giant Property tested a series of gossans and EM conductors, however no Volcanic Massive Sulphide (VMS) mineralization of significance was encountered.  Drilling did confirm the presence of a series of mineral occurrences highly enriched in vanadium and a number of associated anomalous elements, which were first seen in stream sediment sampling programs.  Due to this unexpected result, the focus of exploration shifted to vanadium mineralization part way through the 2008 drill program.


Composited Vanadium Mineralization in 2008 Drill Holes
Hole
Depth in Metres
V2O5
 
From
To
Interval
%
TH-08-01
103.6
115.8
12.2
0.39
TH-08-02
42.7
109.7
36.6
0.27
incl.
100.6
109.7
9.1
0.36
TH-08-07
27.4
54.9
27.4
0.23
TH-08-11
33.5
39.6
6.1
0.41
TH-08-11
57.9
76.2
18.3
0.37
TH-08-12
30.6
114.3
83.7
0.37
incl.
45.7
61.0
15.2
0.40
incl.
86.9
109.7
22.9
0.47
TH-08-13
38.5
141.7
103.2
0.32
incl.
76.2
141.7
65.5
0.36
incl.
112.8
141.7
27.4
0.45
TH-08-14
12.2
109.7
97.5
0.35
incl.
76.2
91.4
15.2
0.66
TH-08-24
4.6
82.3
77.7
0.67
incl.
12.2
61.0
45.7
0.91
TH-08-25
18.3
48.8
30.5
0.32
TH-08-25
100.6
103.6
3.0
0.47
TH-08-26
9.1
36.6
27.4
0.41
incl.
18.3
27.4
9.0
0.76
TH-08-26
67.1
73.2
6.1
0.53
TH-08-27
9.1
97.5
88.4
0.30
incl.
18.3
29.0
10.7
0.88
TH-08-27
146.3
153.9
6.0
0.50
 
 
10

 
 
Hole
Depth in Metres
V2O5
 
From
To
Interval
%
TH-08-31
15.2
51.8
36.6
0.38
incl.
36.6
48.8
12.2
0.56
 
**Average of Drill Intercepts - 43.9m @ 0.36% V2O5

The serendipitous discovery of potentially economic vanadium mineralization on the property changed the course of the 2008 diamond-drilling program.  Through a combination of prospecting, ground based scintillometer surveying, and analysis of airborne radiometrics, five vanadium-bearing trends were identified over the course of the 2008 exploration program.
 
 

Vanadium-Bearing Trends
After reviewing the analytical results from the spring 2009 exploration program, an additional exploration program was carried out between September and December 2009.  This exploration program involved mechanical trenching, diamond drilling with accompanying lithological, structural and geotechnical logging, specific gravity determination, point load tests and metallurgical sampling.

The primary aim of the September to December 2009 drill program was to delineate reserves at the Jaky and Manga targets.  A total of 8,931 metres (4,509 metres in 30 drill holes at the Jaky target and 4,422 metres in 24 drill holes at the Manga target) of diamond drilling was completed.  Selected drill holes were oriented with point load test and orientation measurements recorded.

Composited Vanadium Mineralization in 2009 Drill Holes

DDH ID
 
From (m)
To (m)
V2O5 (%)
Interval (m)
J-01
 
1.50
25.50
0.65
24.00
J-01
 
25.5
28.10
0.45
2.60
J-01
 
28.10
37.50
0.17
9.40
J-01
 
37.50
42.00
0.40
4.50
J-01
 
42.00
60.00
0.20
18.00
J-01
 
60.00
90.00
0.75
30.00
 
 
11

 
DDH ID
 
From (m)
To (m)
V2O5 (%)
Interval (m)
J-01
 
90.00
97.50
0.36
7.50
J-01
 
97.50
103.50
0.16
6.00
J-01
 
111.00
126.00
0.17
15.00
J-01
 
132.00
136.50
0.32
4.50
J-02
 
1.80
17.00
0.46
15.20
J-02
 
17.00
24.50
1.06
7.50
J-02
 
24.50
38.00
0.37
13.50
J-02
 
38.00
51.50
0.96
13.50
J-02
 
51.50
68.00
0.20
16.50
J-02
 
68.00
69.50
0.64
1.50
J-02
 
69.50
77.00
0.28
7.50
J-02
 
86.00
89.00
0.36
3.00
J-03
 
1.50
22.50
0.57
21.00
J-03
incl.
1.50
9.00
0.65
7.50
J-03
incl.
9.00
16.50
0.44
7.50
J-03
incl.
16.50
22.50
0.65
6.00
J-03
 
22.50
42.00
0.27
19.50
J-03
 
42.00
78.00
1.00
36.00
J-03
 
78.00
93.00
0.15
15.00
J-03
 
93.00
99.00
0.53
6.00
J-03
 
99.00
102.00
0.20
3.00
J-04
 
9.00
23.90
0.22
14.90
J-04
 
23.90
39.10
0.59
15.20
J-04
incl.
27.00
30.50
0.80
3.50
J-04
 
39.10
76.50
0.24
37.40
J-04
 
76.50
85.50
0.57
9.00
J-04
 
85.50
94.50
0.14
9.00
J-04
 
94.50
103.50
0.41
9.00
J-04
 
103.50
109.50
0.19
6.00
J-04
 
119.50
150.00
0.15
30.50
J-04
 
150.00
153.00
0.82
3.00
J-04
 
153.00
168.00
0.19
15.00
J-04
 
196.50
204.00
0.29
7.50
J-04
 
214.50
219.00
0.40
4.50
J-05
 
1.50
9.00
0.83
7.50
J-05
 
9.00
39.00
0.30
30.00
J-05
 
39.00
75.00
0.79
36.00
J-05
incl.
39.00
45.00
0.91
6.00
J-05
incl.
45.00
55.50
0.70
10.50
J-05
incl.
55.50
73.50
0.89
18.00
J-05
incl.
73.50
75.00
0.50
1.50
J-05
 
75.00
91.50
0.14
16.50
J-05
 
91.50
97.50
0.52
6.00
J-05
 
97.50
115.00
0.17
17.50
J-06
 
0.00
7.50
0.44
7.50
J-06
 
7.50
19.50
1.36
12.00
J-06
 
19.50
33.70
0.45
14.20
J-06
 
33.70
46.70
0.94
13.00
 
 
12

 
 
DDH ID
 
From (m)
To (m)
V2O5 (%)
Interval (m)
J-06
 
46.70
84.00
0.23
37.30
J-07
 
14.00
170.00
0.18
156.00
J-07
 
212.00
218.00
0.31
6.00
J-07
 
231.50
237.50
0.30
6.00
J-08
 
2.00
8.00
0.41
6.00
J-08
 
8.00
45.00
0.25
37.00
J-08
 
45.00
56.00
0.49
11.00
J-08
 
56.00
68.00
0.82
12.00
J-08
 
68.00
77.00
0.52
9.00
J-08
 
77.00
86.50
0.17
9.50
J-09
 
1.50
6.00
0.27
4.50
J-09
 
6.00
49.50
1.00
43.50
J-09
 
49.50
52.50
0.55
3.00
J-09
 
52.50
66.00
0.14
13.50
J-09
 
66.00
72.00
0.48
6.00
J-09
 
72.00
93.00
0.17
21.00
J-10
 
2.00
5.00
0.36
3.00
J-10
 
5.00
18.50
0.81
13.50
J-10
 
18.50
26.00
0.44
7.50
J-10
 
26.00
47.00
0.26
21.00
J-10
 
47.00
77.00
0.79
30.00
J-10
 
77.00
81.50
0.36
4.50
J-10
 
81.50
89.00
0.17
7.50
J-10
 
101.00
105.50
0.16
4.50
J-10
 
105.50
108.50
0.53
3.00
J-10
 
108.50
120.50
0.15
12.00
J-10
 
120.50
126.50
0.41
6.00
J-11
 
126.50
138.50
0.16
12.00
J-11
 
138.50
141.50
0.57
3.00
J-11
 
141.50
153.50
0.17
12.00
J-12
 
0.50
31.50
0.22
31.00
J-12
 
31.50
45.00
0.41
13.50
J-12
 
45.00
54.00
0.73
9.00
J-12
 
54.00
66.00
0.30
12.00
J-12
 
66.00
94.50
0.14
28.50
J-12
 
106.50
109.50
0.51
3.00
J-13
 
1.60
16.50
0.71
14.90
J-13
 
16.50
37.50
0.97
21.00
J-13
 
37.50
57.00
0.20
19.50
J-13
 
57.00
63.00
0.45
6.00
J-13
 
63.00
85.50
0.16
22.50
J-14
 
40.50
70.70
0.17
30.20
J-14
 
79.50
97.50
0.10
18.00
J-14
 
120.00
153.00
0.22
33.00
J-14
 
153.00
156.00
0.62
3.00
J-14
 
156.00
159.00
0.29
3.00
J-14
 
159.00
169.50
0.15
10.50
J-15
 
0.20
3.00
0.35
2.80
 
 
13

 
 
DDH ID
 
From (m)
To (m)
V2O5 (%)
Interval (m)
J-15
 
3.00
69.00
0.17
66.00
J-15
 
87.00
115.50
0.16
28.50
J-15
 
115.50
118.50
0.60
3.00
J-16
 
0.00
14.00
0.45
14.00
J-16
 
14.00
30.50
0.83
16.50
J-16
 
30.50
38.00
0.48
7.50
J-16
 
38.00
45.50
0.20
7.50
J-16
 
51.50
56.00
0.12
4.50
J-16
 
56.00
60.50
0.49
4.50
J-16
 
60.50
63.50
0.18
3.00
J-17
 
2.00
6.50
0.19
4.50
J-17
 
6.50
11.00
0.42
4.50
J-17
 
11.00
23.00
0.93
12.00
J-17
 
23.00
39.50
0.19
16.50
J-17
 
39.50
45.50
0.48
6.00
J-17
 
45.50
62.00
0.16
16.50
J-18
 
1.50
6.50
0.37
5.00
J-18
 
6.50
20.00
0.21
13.50
J-18
 
20.00
24.50
0.54
4.50
J-19
 
36.50
62.00
0.19
25.50
J-19
 
81.90
86.00
0.34
4.10
J-19
 
86.00
113.00
0.13
27.00
J-19
 
113.00
117.50
0.62
4.50
J-20
 
0.50
8.00
0.30
7.50
J-20
 
8.00
27.50
0.50
19.50
J-20
 
27.50
42.50
0.23
15.00
J-20
 
50.00
53.00
0.13
3.00
J-20
 
53.00
57.50
0.48
4.50
J-20
 
57.50
78.50
0.16
21.00
J-21
 
6.5
11.00
0.32
4.50
J-21
 
11.00
26.00
0.73
15.00
J-21
 
26.00
39.50
0.18
13.50
J-21
 
39.50
44.00
0.5
4.50
J-21
 
44.00
59.00
0.16
15.00
J-22
 
117.50
153.50
0.31
36.00
J-22
incl.
141.50
146.00
0.54
4.50
J-22
 
153.50
164.00
0.66
10.50
J-22
 
164.00
170.00
0.12
6.00
J-22
 
170.00
174.50
0.42
4.50
J-23
 
2
42.50
0.15
40.50
J-23
 
93.5
113.00
0.16
19.50
J-23
 
113.00
117.50
0.54
4.50
J-23
 
117.50
121.80
0.21
4.30
J-24
 
0.7
3.5
0.22
2.80
J-24
 
3.5
14
0.34
10.50
J-24
 
14
27.5
0.21
13.50
J-24
 
38
41
0.17
3.00
J-24
 
41
47
0.54
6.00
 
 
14

 
 
DDH ID
 
From (m)
To (m)
V2O5 (%)
Interval (m)
J-24
 
47
69.5
0.16
22.50
J-25
 
2
12.5
0.33
10.50
J-25
 
23
33.5
0.23
10.50
J-26
 
27.50
41.00
0.35
13.50
J-26
 
41.00
53.00
0.74
12.00
J-26
 
53.00
59.00
0.41
6.00
J-26
 
59.00
90.50
0.18
31.50
J-26
 
90.50
117.50
0.40
27.00
J-26
 
117.50
122.00
0.16
4.50
J-26
 
134.00
162.50
0.15
28.50
J-26
 
162.50
168.50
0.51
6.00
J-27
 
125.00
138.50
0.24
13.50
J-27
 
138.50
162.50
0.53
24.00
J-27
incl.
138.50
144.50
0.63
6.00
J-27
incl.
144.50
150.50
0.32
6.00
J-27
incl.
150.50
159.50
0.65
9.00
J-27
incl.
159.50
162.50
0.42
3.00
J-27
 
162.50
170.00
0.17
7.50
J-27
 
170.00
176.25
0.32
6.25
J-27
 
176.25
186.50
0.19
10.25
J-27
incl.
183.50
186.50
0.42
3.00
J-MET-01
 
2.50
5.50
0.43
3.00
J-MET-01
 
5.50
59.50
1.12
54.00
J-MET-01
 
59.50
64.00
0.51
4.50
J-MET-01
 
64.00
74.50
0.18
10.50
J-MET-02
 
2.50
10.00
1.11
7.50
J-MET-02
 
10.00
16.00
0.51
6.00
J-MET-02
 
16.00
23.50
0.18
7.50
J-MET-02
 
23.50
41.50
0.70
18.00
J-MET-02
 
41.50
64.00
0.22
22.50
J-MET-02
 
76.00
83.50
0.36
7.50
J-MET-02
 
83.50
121.00
0.17
37.50
J-MET-02
 
121.00
124.00
0.93
3.00
J-MET-02
 
124.00
133.00
0.26
9.00
J-MET-03
 
1.50
27.00
0.45
25.50
J-MET-03
 
27.00
78.00
0.80
51.00
J-MET-03
 
78.00
88.50
0.46
10.50
J-MET-03
 
88.50
96.00
0.17
7.50
M-11
 
7.00
38.00
0.22
31.00
M-11
 
38.00
57.50
0.58
19.50
M-12
 
3.50
20.00
0.47
16.50
M-12
incl.
3.50
9.50
0.64
6.00
M-12
incl.
9.50
20.00
0.37
10.50
M-13
 
123.00
132.50
0.18
9.50
M-13
 
132.50
144.00
0.40
11.50
M-13
 
144.00
153.00
0.17
9.00
M-13
 
153.00
156.00
0.57
3.00
M-13
 
156.00
166.50
0.81
10.50
 
 
15

 
 
DDH ID
 
From (m)
To (m)
V2O5 (%)
Interval (m)
M-13
 
166.50
175.50
0.36
9.00
M-14
 
1.50
4.50
0.27
3.00
M-14
 
4.50
21.00
0.70
16.50
M-14
 
21.00
30.00
0.33
9.00
M-14
 
30.00
100.50
0.74
70.50
M-14
incl.
30.00
39.00
0.54
9.00
M-14
incl.
39.00
49.50
0.82
10.50
M-14
incl.
49.50
55.50
0.59
6.00
M-14
incl.
55.50
66.00
0.71
10.50
M-14
incl.
66.00
100.50
0.79
34.50
M-14
 
100.50
112.50
0.30
12.00
M-15
 
3.50
26.00
0.72
22.50
M-15
incl.
3.50
12.00
0.60
8.50
M-15
incl.
12.00
26.00
0.81
14.00
M-15
 
26.00
47.00
0.38
21.00
M-16
 
66.5
74.7
0.18
8.20
M-16
 
74.7
81.5
0.64
6.80
M-16
 
81.5
89
0.33
7.50
M-16
 
89.00
180.50
0.80
91.50
M-16
 
180.50
191.00
0.29
10.50
M-17
 
3.40
12.50
0.20
9.10
M-17
 
12.50
29.00
0.45
16.50
M-17
 
29.00
113.00
0.97
84.00
M-17
incl.
29.00
44.00
0.77
15.00
M-17
incl.
44.00
113.00
1.01
69.00
M-17
incl.
102.50
111.50
1.45
9.00
M-17
 
113.00
121.10
0.18
8.10
M-17
 
121.10
126.50
0.36
5.40
M-18
 
4.10
41.00
0.71
36.90
M-18
incl.
4.10
15.50
0.67
11.40
M-18
incl.
15.50
32.00
0.81
16.50
M-18
incl.
32.00
41.00
0.59
9.00
M-18
 
41.00
57.50
0.41
16.50
M-18
incl.
44.00
57.50
0.45
13.50
M-18
 
57.00
77.00
0.13
20.00
M-19
 
60.50
69.50
0.36
9.00
M-19
 
69.50
156.50
0.94
87.00
M-19
incl.
134.00
156.50
1.23
22.50
M-19
 
156.50
174.50
0.33
18.00
M-19
 
156.50
174.50
0.33
18.00
M-20
 
5.00
90.50
0.98
85.50
M-20
incl.
5.00
30.50
0.65
25.50
M-20
incl.
30.50
42.50
0.42
12.00
M-20
incl.
42.50
75.50
1.55
33.00
M-20
incl.
75.50
83.00
0.33
7.50
M-20
incl.
83.00
90.50
0.97
7.50
M-20
 
90.50
105.50
0.36
15.00
M-21
 
3.50
18.50
0.42
15.00
 
 
16

 
 
DDH ID
 
From (m)
To (m)
V2O5 (%)
Interval (m)
M-21
 
18.50
36.50
0.26
18.00
M-22
 
68.00
69.50
0.17
1.50
M-22
 
69.50
153.50
0.84
84.00
M-22
incl.
69.50
95.00
0.85
25.50
M-22
incl.
83.00
92.00
1.10
9.00
M-22
incl.
95.00
108.50
0.34
13.50
M-22
incl.
108.50
126.50
1.41
18.00
M-22
incl.
126.50
134.00
0.46
7.50
M-22
incl.
134.00
143.00
1.17
9.00
M-22
incl.
143.00
153.50
0.52
10.50
M-22
 
153.50
164.00
0.34
10.50
M-22
 
164.00
168.50
0.14
4.50
M-23
 
1.70
8.00
0.34
6.30
M-23
 
8.00
30.50
0.73
22.50
M-23
 
30.50
38.00
0.30
7.50
M-23
 
38.00
68.70
0.45
30.70
M-23
 
68.70
77.00
0.95
8.30
M-23
 
77.00
95.00
0.40
18.00
M-24
 
12.50
35.00
0.31
22.50
M-25
 
108.50
111.50
0.33
3.00
M-25
 
111.50
123.50
0.80
12.00
M-25
 
123.50
137.00
0.61
13.50
M-26
 
48.50
77.00
0.82
28.50
M-26
incl.
48.50
54.30
0.54
5.80
M-26
incl.
54.30
74.00
0.94
19.70
M-26
incl.
74.00
77.00
0.55
3.00
M-26
 
77.00
110.00
0.33
33.00
M-26
 
110.00
114.50
0.68
4.50
M-26
 
114.50
132.50
0.30
18.00
M-27
 
2.00
14.00
0.70
12.00
M-27
 
14.00
35.00
0.35
21.00
M-37
 
132.50
233.00
0.86
100.50
M-37
incl.
132.50
141.50
0.60
9.00
M-37
incl.
141.50
159.50
0.90
18.00
M-37
incl.
159.50
164.00
0.58
4.50
M-37
incl.
164.00
219.50
0.98
55.50
M-37
incl.
192.50
215.00
1.11
22.50
M-37
incl.
219.50
224.00
0.46
4.50
M-37
incl.
224.00
227.00
1.04
3.00
M-37
incl.
227.00
233.00
0.46
6.00
M-38
 
198.50
215.00
0.19
16.50
M-38
 
215.00
237.50
0.85
22.50
M-38
 
237.50
245.00
0.26
7.50
M-39
 
132.50
135.50
0.15
3.00
M-39
 
135.50
141.50
0.56
6.00
M-39
 
141.50
147.50
0.29
6.00
M-39
 
200.00
208.80
0.17
8.80
M-39
 
208.50
212.00
0.37
3.50
 
 
17

 
 
DDH ID
 
From (m)
To (m)
V2O5 (%)
Interval (m)
M-39
 
212.00
215.00
0.68
3.00
M-39
 
215.00
224.00
0.40
9.00
M-39
 
224.00
229.50
0.09
5.50
M-39
 
229.50
249.50
0.79
20.00
M-39
incl.
229.50
233.00
0.62
3.50
M-39
incl.
233.00
249.50
0.84
16.50
M-39
incl.
233.00
237.50
0.99
4.50
M-39
incl.
237.50
240.50
0.42
3.00
M-39
incl.
240.50
249.50
0.90
9.00
M-39
 
249.50
258.50
0.28
9.00
M-40
 
215.00
218.00
0.83
3.00
M-40
 
218.00
224.00
0.35
6.00
M-41
 
104.00
117.50
0.27
13.50
M-41
 
117.50
212.00
0.87
94.50
M-41
incl.
153.50
161.00
1.06
7.50
M-41
incl.
188.00
210.00
1.05
22.00
M-41
 
212.00
216.50
0.41
4.50
M-41
 
216.50
219.50
0.98
3.00
M-41
 
219.50
224.00
0.41
4.50
M-42
 
182.00
190.00
0.38
8.00
M-42
 
195.50
206.00
0.23
10.50
M-42
 
206.00
291.50
0.71
85.50
M-42
 
291.50
294.50
0.30
3.00

Analytical results from the 2009 exploration program were provided to AGP Mining Consultants (“AGP”), a consulting engineering firm, in order to calculate a vanadium pentoxide resource.  Based on the favourable resource calculation results, we  conducted additional drilling between April 2010 and July, 2010. This program involved diamond drilling with accompanying lithological, structural and geotechnical logging, specific gravity determination, point load tests and metallurgical sampling.  The primary aim of this drilling was to delineate additional reserves at the Jaky and Manga targets, as well as targeting an additional target, the Mainty. A total of 8,952 metres of diamond drilling was completed in 46 holes.  Selected drill holes were oriented with point load test and orientation measurements recorded.  Drill hole results from the exploration program completed through April 2010 to July 2010 are as follows:

INTERVAL
INCLUDING
Hole ID
V205 Grade
From (m)
To (m)
Interval (m)
V205
From (m)
To (m)
Interval (m)
K-01
0.559
92
95
3
-
-
-
-
K-01
0.523
99.5
113
13.5
-
-
-
-
K-01
0.59
140
155
15
0.647
143
152
9
K-02
0.522
180.5
204.5
24
0.645
185
192.5
7.5
K-03
0.616
93.5
135.56
42.06
-
-
-
-
K-03
0.628
138.5
150.5
12
0.74
140
144.5
4.5
K-04
0.514
141.5
189.5
48
0.612
149
159.77
10.77
K-04
-
-
-
-
0.683
164.18
167
2.82
K-05
0.588
45.5
104
58.5
0.61
48.5
89
40.5
K-06
0.577
108.5
139.75
31.25
0.611
113
134
21
K-06
0.519
189.52
194
4.48
-
-
-
-
K-07
0.58
161
258.5
97.5
0.714
174.5
213.5
39
K-08
0.527
92.26
100.5
8.24
-
-
-
-
 
 
18

 
 
INTERVAL
INCLUDING
Hole ID
V205 Grade
From (m)
To (m)
Interval (m)
V205
From (m)
To (m)
Interval (m)
K-09
0.555
132.5
230
97.5
0.606
144.5
195.5
51
K-09
-
-
-
-
0.643
203
230
27
K-13
0.562
125
181.47
56.47
0.606
135.5
181.47
45.97
M-05
0.572
50
90.5
40.5
0.705
51.5
62
10.5
M-05
-
-
-
-
0.661
78.5
90.5
12
M-44
0.686
75.5
87.5
12
0.974
80
83
3
M-48
0.692
50
62
12
0.864
51.5
59
7.5
M-49
0.734
192.5
200
7.5
1.036
194
197
3
M-53
0.711
71
86
15
0.946
72.5
80
7.5
M-53
0.616
99.5
102.5
3
-
-
-
-
M-54
0.528
134
147.5
13.5
0.749
134
137
3
M-55
0.602
102.5
108.5
6
0.88
104
107
3
M-55
0.548
116
137
21
-
-
-
-
M-55
0.521
147.5
155
7.5
-
-
-
-
M-56
0.726
163.5
178.5
15
0.801
168
177
9
M-56
0.711
180
244.5
64.5
0.983
223.5
234
10.5
M-57
0.621
24.5
63.5
39
0.948
44
48.5
4.5
M-58
0.783
161
185
24
0.945
171.5
180.5
9
M-59
0.844
81.5
102.5
21
0.981
90.5
101
10.5
M-60
0.751
210.5
219.5
9
-
-
-
-
M-60
0.773
231.5
236
4.5
-
-
-
-
M-62
0.706
51.5
84.5
33
0.991
65
69.5
4.5
M-62
-
-
-
-
1.057
80
83
3
M-65
0.736
50
60.5
10.5
-
-
-
-
M-65
0.531
101
108.5
7.5
-
-
-
-
M-71
0.725
188
273.5
85.5
0.923
192.5
198.5
6
M-71
-
-
-
-
1.2
221
234.5
13.5
M-71
-
-
-
-
0.922
245.64
260
14.36
M-72
0.594
53
66.5
13.5
0.838
54.5
59
4.5
M-73
0.611
51.5
63.5
12
0.714
53
60.5
7.5
M-74
0.667
51.5
66.5
15
0.874
53
60.5
7.5
M-74
0.505
95
101
6
-
-
-
-
M-75
0.516
30.17
33.5
3.33
-
-
-
-
M-75
0.618
45.5
77
31.5
0.922
54.5
66.5
12
M-76
0.53
54.5
69.5
15
-
-
-
-
M-82
0.533
119
126.5
7.5
-
-
-
-
M-83
0.66
45.5
71
25.5
1.073
56
63.5
7.5
M-84
0.564
149.75
162.5
12.75
-
-
-
-
M-85
0.609
96.5
108.5
12
-
-
-
-
M-85
0.657
113
131
18
0.859
122
126.5
4.5
M-86
0.65
155
191
36
-
-
-
-
M-87
0.749
185
283.5
98.5
0.801
195.5
270.5
75
M-88
0.64
206
249.5
43.5
0.731
221
245
24
 
 
19

 
 
INTERVAL
INCLUDING
Hole ID
V205 Grade
From (m)
To (m)
Interval (m)
V205
From (m)
To (m)
Interval (m)
M-88
0.608
266
276.5
10.5
-
-
-
-
M-88
0.688
284
306.5
22.5
0.823
297.5
305
7.5
M-89
0.846
240.4
312.5
72.1
0.912
252.5
294.5
42
M-89
-
-
-
-
1.043
306.5
311
4.5
M-91a
0.875
243.5
303.5
60
0.939
282.5
303.5
21
MM-01
0.911
2.5
156.5
154
1.166
71
155
84
MM-01
-
-
-
-
1.343
74
86
12
MM-01
-
-
-
-
1.327
102.5
126.5
24

All drill core assays have been received and AGP was retained to undertake a resource calculation update for the Manga and Jaky Zones, as well as a new resource estimate for the Mainty Zone.
Metallurgy
Various metallurgical scoping test programs have been completed since 2009, covering physical and chemical pre-concentration processes, acid and alkaline leaching (atmospheric and pressure), alkaline salt roasting and high definition mineralogical characterisation.  Mineralogical characterisation of several silicate samples has revealed a unique deportment of vanadium on the Green Giant Property.  Vanadium bearing minerals include clays, micas, oxides, and sulphides.  The vanadium deportment for three recent silicate composites is summarized below.

Vanadium Deportment, Mass % - Summary
Mineral
HMC  (%)
MPC (%)
Silicate (%)
Other
0.0
0.1
0.1
Rutile
1.7
1.3
2.0
Pyrrhotite
0.4
2.0
0.5
Other Micas/Clays
0.7
4.0
3.0
Sillimanite
1.3
0.2
0.0
Cordierite
3.0
5.1
4.2
Phlogophite (low-V)
53.5
5.0
5.8
Phlogophite (high-V)
26.1
19.5
26.1
Roscoelite
14.5
11.1
15.0
V-Phosphate
0.7
0.0
0
V-Oxides
28.6
22.6
18.6
V-Fe Sulphide
17.4
29.2
24.6

Vanadium is spread across a range of mineral types, but is primarily found in Phlogophite (of various V tenors) Oxides and sulphides.  Gangue minerals of note include quartz (generally 30-40% of sample mass) K-feldspar (10% of sample mass) and graphite (<10% of sample mass).  Similar work completed in 2009 suggests that the oxide zone differs mineralogically in that a greater percentage of vanadium occurs in oxide minerals, with less in clays/micas and none in sulphides.

Leaching with sulphuric acid can achieve high vanadium extractions (up to 77%), but always at the expense of acid consumption and leach liquor quality.  Acid consumptions have varied, but have generally been in the 3 to 500 kg/t range.  The vigorous co-extraction of elements such as aluminum, magnesium, and iron is considered detrimental to downstream processes, and is also believed to be responsible for the high acid consumption.

Leaching with alkaline lixiviants such as soda ash (Na2CO3) and caustic soda (NaOH) has historically not resulted in high vanadium extractions.  Pressure leaching with soda ash (Phase 2) resulted in 30% to 40% vanadium extraction which, although lower than the acid-based leach results, was significantly higher than atmospheric alkaline leach extractions.  The more selective alkaline lixiviants provide much cleaner leach liquors, with minimal co-extraction of problematic elements.

Early Phase 3 alkaline pressure leach tests observed an excess of micaceous material in leach residues, and it was postulated that the vanadium-bearing micas (phlogophite) might be more resistant to alkaline leaching.  An oxidative pre-roast was introduced to the treatment process, with a resultant 25% increase in vanadium extraction rate.  Comparing leach residues, the micaceous material was no longer present after pre-roasting.  Further work is recommended to optimize conditions, but the most encouraging extraction results to date have been achieved on pre-roasted samples, using concentrated soda ash as a lixiviant at high temperature.
 
 
20

 
 
Phase 3 Alkaline Leach Results – Summary
PL
V205 Extraction
Roasting
Grind  K80
Feed % Solids
Na2CO3 Kg/t
Na2CO3 g/L
0C
Hours
10
80.6
Pre-roast – 1,000 0C / 3 h
105
10
n/r
100
240
4
11
82.0
Pre-roast – 1,100 0C / 3 h
105
10
n/r
100
240
4
18
75.3
Pre-roast – 1,000 0C / 3 h
105
10
147
50
220
4
20
64.0
Pre-roast – 1,100 0C / 3 h
105
30
71
50
220
4

As the project continues to develop, further scoping work is essential to allow optimization of the roast and leach conditions for both silicate and oxide samples from all zones.  The metallurgical processes tested would undoubtedly benefit from higher head grades.  Therefore, it is important that future metallurgical programs assess the influence of higher feed vanadium concentrations.

Resource Calculations
During November 2010, AGP estimated the mineral resources for the Green Giant Property.  The mineral deposits on the property have been divided into three separate zones, which are referred to as the Jaky, Manga, and Mainty deposits.  This mineral resource estimate utilized approximately 18,832 metres of diamond drill hole data from the 2008, 2009, and 2010 drill program and was supplemented by approximately 5,928 metres of trench data from the 2008 and 2009 exploration programs.  No additional work was carried out on the Jaky deposit;  therefore, the resources are merely restated from the NI43-101 report dated June 18, 2010.
 
The Jaky, Manga, and Mainty resource estimate is comprised of indicated and inferred resources reported as vanadium pentoxide mineralization at a base case cut-off grade of 0.5% V2O5.  The method employed to select the base case cut-off grade was to consider the mineralogical characteristic, envisioned mining methods and comparable vanadium projects worldwide.  Further work is required to more accurately determine the optimum economic cut-off grade, and this is recommended as part of the Preliminary Economic Assessment.
 
The vanadium deposits on the Green Giant Property are split into two separate categories: oxide and primary.  The following resource values were determined at a 0.5% V2O5 cut-off.  Within the oxide and primary zones of the Jaky, Manga, and Mainty deposits, the total Indicated resource is 49.5 Mt at 0.693% V2O5, containing 756.3 Mlb of vanadium pentoxide.  The total Inferred resource is 9.7 Mt at a grade of 0.632% V2O5, containing 134.5 Mlb of vanadium pentoxide.  Since no additional work was conducted, mineral resources at the property were classified using logic consistent with the CIM definitions referred to in NI 43-101 guidelines.  This independent mineral resource estimate and review conducted by AGP supports the disclosure by our Company of the mineral resource statement for the Jaky, Manga, and Mainty deposit dated November 30, 2010.
 
2011 Phase I Exploration
The mineralization delineated in our NI43-101 compliant vanadium resource was found in two types of rocks, silicates and oxides. Petrographic descriptions undertaken on thin sections of selected rocks submitted for metallurgical analysis to Mintek labs of South Africa, identified 17.17% modal graphite from the silicate composite and 15.87% modal graphite from the oxide composite samples.
____________________________ 
1 For the QEMSCAN analysis, graphite impregnated polished epoxy grain mounts were prepared and analyzed using Particle Map Analysis (PMA) which provides a statistically robust population of mineral identification based on X-ray chemistry of minerals and modal abundance. Chemical assay values were determined by Mintek using LECO CS200 and Eltra CS2000 analyzers.
 
21

 
Three additional composite samples were submitted to Mintek at the conclusion of the 2010 exploration program. The QEMSCAN1 analysis of these head samples quantified a graphite composition of 4.09%, while the head chemical analysis quantified a graphitic carbon content of 3.87%.

The identification of graphite as a potential credit to our NI 43-101 compliant vanadium resources led our  geologists to conduct a reconnaissance exploration program (Phase I program) on the Green Giant Property in September, 2011, with the goal of delineating new graphitic trends and comparing them to those associated with vanadium mineralization.

During the course of the Phase I program, surficial graphitic trends were identified on the Green Giant Property.  These graphite trends were visually determined to be of both higher carbon content, and larger flake size than those associated with the NI 43-101 compliant vanadium resource mineralization.  Based on these field observations, we  initiated an exploration program which included 10 diamond drill holes (totaling 1,157.5 metres), 16 trenches (totaling 2,842 metres), and 132 grab samples collected over two newly identified prospective graphitic units, named the Fondrana and Fotsy zones, bringing the total number of Graphite Zones on the Property to 5.


2011 Phase II Exploration
Based on the promising results of the Phase I program, we commenced the Phase II exploration program in November, 2011.  The objective of the program was to enhance exploration efforts on the Green Giant Property through further drill testing of graphitic trends on this property and to apply geophysical techniques to delineate graphite mineralization. The signing of the Joint Venture agreement with Malagasy Minerals for the exploration and development of industrial minerals prompted additional reconnaissance exploration to ascertain the industrial mineral potential of the joint venture property.

Potential Flake Graphite Camp
During the course of the Phase I and II exploration programs, multiple graphitic or graphitic-vanadium trends were identified with the aid of airborne geophysics, and subsequently verified with ground prospecting, and delineated with the use of an EM31-MK2 (EM31) instrument.  In total, 12 new graphite trends have been identified over the Joint Venture Property. This brings the total number of graphite trends identified to date over the Green Giant Property and the Joint Venture Property to 17, with a cumulative strike length in excess of 320 kilometres.  These observations have validated our Company’s belief that southern Madagascar has the potential to host a potential flake graphite camp.

The graphite trends identified to date by our Company have been named the following:  Berenty, Bemelo, Mahasoa, Bepeha, Besavoa, Fondrana, Mainty, Manga, Molo, Bevaro, Jaky, Fotsy, Rano, Seta, Tanantsoa, Vavy and Ampanihy.
 
22

 
 

Multiple Graphitic Horizons Identified Within Each Zone With EM31
Field observations indicated that each graphitic zone identified was comprised of multiple ‘stacked’ graphitic horizons. This observation was validated by surveying a number of the zones in detail with an EM31 ground conductivity instrumentation.  In total, 160.5 line kilometres of EM31 surveying was completed over 5 target areas, the Fondrana, Fotsy, Molo, Seta, and Besavoa targets.

The EM31 geophysical tool was invaluable in delineating the extents of the graphitic zones, as well as their continuity. The EM31 has the capability to also identify multiple graphitic horizons within each zone. As an example, the Fotsy zone has a delineated strike length of 6 kilometres, but the EM31 identified at least 4 separate graphite horizons within the zone, for an aggregate strike length of 24 kilometres. The table below summarizes the graphite strike length analysis as determined by EM31 testing over 5 zones:

Zone
Zone Length (km)
Number of  Graphite Horizons
Aggregate EM31 Measured Strike Length (km)
Besavoa
3
4
12
Fondrana
1
3
3
Fotsy
6
4
24
Molo
2
5
10
Seta
1.6
2
3.2
Totals
13.6
18
52.2

Structurally ‘Thickened’ Graphite Zone Identified
Our outside geoscientists have identified a graphitic zone consisting of multi-folded graphitic strata with a surficially exposed strike length of over 2 kilometres. This zone, called Molo, is characterized by resistant ridges of graphitic schist, and abundant graphitic schist float, with fracture-lined vanadium mineralization yielding field XRF values as high as 0.7% V2O5.  Geologic mapping has revealed the individual graphitic ridges to be between 20 and 150 metres in width within this zone. EM31 surveys indicate the graphite mineralization is pervasive in the area, and that the mineralization is not always exposed.  Wide-spaced drilling of 6 diamond drill holes conducted over a strike length of 1.2 kilometres, intersected graphitic mineralization to a vertical depth of 75 metres with down-hole thicknesses between 60 and 150 metres in width. Graphite mineralization intersected in drill core was open along strike, and at depth.

 
23

 
 

Vanadium Trend Extended On To Joint Venture Property by 30 kilometres
The vanadium trend found on the Green Giant Property has now been increased by an additional 30 kilometres  on the Joint Venture Property.  This trend was delineated through the analysis of soil samples with a hand-held XRF analyzer at 25 metre station intervals, and 200 metre line spacing. XRF analysis was an invaluable tool in delineating the original Green Giant Property vanadium trend, and enables our Company to make ‘real-time’ exploration decisions based on field results.

In the course of XRF soil analysis on the Joint Venture property, a 1.6 kilometre outcrop of graphitic schist, named the Seta zone, was identified adjacent to the vanadium trend. Geologic mapping in the area indicates that this zone is sub-horizontal, and roughly 20 metres in thickness.  Geologic mapping in the area indicates that this zone is sub-horizontal, and roughly 20 metres in thickness.
 
 

2011 Diamond Drilling
 
 
24

 
Petrographic work completed on the 2010 drilling samples resulted in the realization that a significant graphitic resource may exist on the Green Giant Property. Therefore, a 2-phase reconnaissance drilling program was implemented to test the viability and potential of graphitic resources defined during prospecting and mapping activities. Phase I of this program then resulted in the completion of 10 holes, for a combined aggregate of 1,157 metres. Of these 10 holes, 2 were cut and quartered, and sent to Mintek, South Africa for metallurgical samples.  No assurances can be provided as to the results of the analysis.   Phase II of the program targeted significant graphitic occurrences on both the Green Giant and Joint Venture properties, with the aim of better defining known deposits and better understanding the new locations. This resulted in 19 holes for a combined aggregate of 1701m of drilling. Of these 19 holes, one larger diameter PQ hole was completed and sent to Activation Labs in Ancaster, Ontario, Canada for metallurgical analysis. No assurances can be provided as to the results of the analysis.

 
Target
Area
HoleID
UTMX
UTMY
Az
Dip
Depth
Elev
 
Graphite
FONDRANA
FOND-01
502132
7355354
110
-45