2% NSR Bambari Permit (Passendro Project), CAR
Effective January 25, 1996 United Reef transferred the Bambari Permit to Asquith Resources Inc.
(now AXMIN Inc.) in consideration for a 3% Net Smelter Return royalty. The terms of the royalty
were amended by several agreements entered into during 1999 with Asquith which had the following
effects: the royalty was reduced to a 2% NSR and includes the following provisions; a deferral
for payment of the royalties generated from production until all capital costs, including interest,
incurred to place the property into production are recovered; provision for an annual advance royalty
payment of $100,000 commencing one year after official production starts (which are deductible from
future royalty payments); and the right to purchase part or all of the 2% NSR at a rate of $500,000,
payable in cash or shares, for each 0.5% royalty interest during the initial five years of production
from the Bambari property. The royalty is not commodity or mineral specific.
In April 2008, AXMIN reported the results of a Bankable Feasibility Study for its Passendro Project.
Based on a total proven and probable mining reserve of 16.8 million tonnes of ore at an average grade
of 2.4 g/t Au containing 1.3 million ounces of gold, the study envisages a 6 year mine life with
average annual production of 203,000 ounces of gold. Using a gold price of US$750 per ounce,
the mine gives an internal rate of return ("IRR") of 29.4% and a net present value ("NPV") at a 5%
discount of US$164 million.
Based on drilling to June 2007, the overall in-situ Mineral Resource estimate for the Passendro
Project in the measured and indicated resource is 23.2 Mt grading 2.4 g/t Au (1.8 million ounces of
contained gold) and inferred resources are 16.7 Mt grading 1.9 g/t Au (1.0 million ounces of contained
gold).