Completion of SRK Report on Trojan Mine Restart

10 August 2010

Mwana Africa PLC

("Mwana" or the "Company") (AIM: MWA)

2.1. Completion of SRK Report on Trojan Mine Restart Plan

Mwana Africa PLC is pleased to announce the completion of a Competent Person's Report (the "Report") on Bindura Nickel Corporation ("BNC")'s plans for the restart of operations at the Trojan Mine, including an audited resource and reserve statement for the Trojan deposit, prepared by SRK Consulting (UK) Ltd ("SRK"). Mwana Africa has a controlling interest in BNC.

Highlights

Ø Key Operating Statistics (based on average steady state production)

§ Average Mining Rate 870,000 tpa

§ Contained Ni mined 7,800 tpa

§ Average Ni grade 0.90%

§ Ni recovered into concentrate 6,300 tpa

§ Average cash operating cost $6,000 per tonne Ni in concentrate

Ø Concentrate to be sold to third parties for further processing (negotiations in progress)

Ø Value of concentrate produced $64m pa (based on BNC's assumptions for commercial terms, and based on a Ni price of $16,500 /tonne)

Ø Funding requirement of $26.3 million to complete the Trojan project (based on maximum cumulative cash outflow )

Ø SRK considers the Business Plan for the restart of operations at Trojan to be both realistic and achievable

Ø SRK confirms that the power and water infrastructure is well established and that the road network provides good access

Ø Mineral Resource confirmed by SRK at 3.5million tonnes of ore with a mean grade of 1.29% Ni

Ø Potential to increase the resource at depth confirmed

The Report does not cover the Shangani mine or the restart of the Bindura smelter and refinery complex. Additional aspects of the Trojan restart programme, including reaching settlement with remaining creditors, and reassessment of staffing levels, for which additional investment will be required, have not been reviewed by SRK.

The full Executive Summary of the SRK Report is reproduced below.

Resource and Reserve statement

The table below is as previously announced and presents SRK's audited resource and reserve statement which is reported using the terms and definitions set out in the JORC Code.

Table 1 SRK Audited Mineral Resource and Ore Reserve Statement at 31 March 2010

(1) Ore Reserves are reported as delivered to the concentrator and exclude all metallurgical recoveries.

(2) Mineral Resources are stated inclusive of Ore Reserves.

(3) Ore Reserves are restricted to the material above the current lowest working level (35L).

Kalaa Mpinga, CEO of Mwana said:

"The SRK report endorses our reserves and resources estimates and confirms the economic viability of our plan to restart the Trojan mine. The current business plan is projected to generate significant cash flow and we are confident of the potential to expand the resource base below current mining levels through a planned drilling program for which costs have been included in the business plan. A significant amount of development work for the shaft deepening project required to exploit the anticipated deeper resources has already been completed.

"The completion of SRK's Report enables BNC to complete financing and offtake arrangements for the restart of production.

"We believe that the restart of mining at Trojan is but the first step in the rehabilitation and development of Bindura's other nickel assets."

For more information, please visit www.mwanaafrica.comor contact:

Enquiries:

Mwana Africa PLC Tel: +44 (0)20 7654 5580

Oliver Baring - Executive Chairman

Nominated Adviser and Broker

Ambrian Partners Limited Tel: +44 (0) 20 7634 4700

Richard Greenfield

Public Relations

Merlin Tel: +44 (0)20 7726 8400

or 01823 400221

David Simonson

Anca Spiridon

Notes to Editors

The Trojan Mine

The Trojan Nickel Mine is located at the BNC operations at Bindura in the Mashonaland Central Province of Zimbabwe, 100km northeast of Harare. The Bindura Smelter and Refinery Complex are at the same location. BNC also owns the Shangani Nickel Mine and the Hunters Road open pit deposit. BNC's operations were placed on care and maintenance in November 2008 as a result of the economic situation in Zimbabwe and a sharp decline in the price of nickel.

Mwana currently holds a 52.9% controlling interest in BNC which is listed on the Zimbabwean Stock Exchange.

Competent Person

The information in this press release that relates to Mineral Resources and Ore Reserves is based on information compiled under the direction of Dr Mike Armitage, who is a Chartered Engineer and a Chartered Geologist and a Member of the Institute of Materials, Minerals and Mining. Dr Armitage is a full time employee of SRK Consulting (UK) Ltd and 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 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Dr Armitage has reviewed this press release and consents to the inclusion in the press release of the matters based on his information in the form and context in which this appears.

Introduction

This Competent Person's Report (CPR) has been commissioned by Mwana Africa plc (Mwana or the Company) and relates to the re-establishment of operations at the Trojan Nickel Mine (Trojan or the Asset) which is currently operated by Bindura Nickel Corporation (BNC) and which at the time of writing is on care and maintenance. Mwana currently holds a 52.9% interest in BNC, which also owns the Shangani Nickel Mine (Shangani) and the Bindura Smelter and Refinery complex (BSR), both of which are also located in Zimbabwe. Shangani and BSR are also currently on care and maintenance and are excluded from this review. Historically, the BSR processed ore from both the Trojan and Shangani operations (in addition to toll treating concentrates from third parties), however, this review considers only the re-start of Trojan and it is assumed that both the BSR and Shangani remain on care and maintenance and that the nickel concentrates to be produced from the re-start at Trojan will be sold to third parties for further processing.

Location

Trojan is located at Bindura in the Mashonaland Central Province of Zimbabwe, 100km northeast of the capital Harare. The site can be accessed by road and rail and is supplied from the national network in terms of power and communications. Water is obtained from the Mazowe River. Situated between the highveld and lowveld the temperatures are generally high and winters are warm with only occasional frost. Temperatures range between 25°C and 35°C, and seasonal mean rainfall is around 800mm although some seasons have recorded a figure as high as 1,600mm. The mine is at an altitude of 1,070m above sea level.

Geology, Mineral Resources and Ore Reserves

The deposits as a whole comprise a series of orebodies which strike east-west and dip steeply (75° to 85°) to the north in line with the regional foliation trend. The two major ore bodies are the Main Orebody (MOB) and the Hangingwall Orebody (HOB). The MOB is the largest orebody and is characterised by the presence of massive and near massive high grade ores which form a narrow and discontinuous zone along its footwall contact. The MOB extends along strike for some 250m, has an average width of 30m and has been intersected at a maximum depth of some 1,260m below the shaft collar.

The Trojan deposit has been subject to a number of resource estimate updates over the years of its operation. Most recently a resource estimate was prepared by Digital Mining Services (DMS), Harare and is valid at the time the mine was placed on care and maintenance in November 2008. This resource estimate includes material between Level 31 (31L) and Level 37 (37L), a vertical extent of some 180m. BNC's Business Plan is based on the exploitation of the Measured, Indicated and Inferred Resources on and above 37L (some 975m below the shaft collar) which are projected to support mining for up to five years. As commented above, the MOB is known to extend for at least a further 260m below this elevation but insufficient drilling has been undertaken to allow the definition of a JORC compliant resource for this material. Notwithstanding this, SRK considers there is good potential to extend the Mineral Resource below 37L following further drilling and that this has the potential to support several further years of operation. The construction of the infrastructure required to access deeper levels has already commenced.

The table below presents BNC's latest Mineral Resource and Ore Reserve Statements for Trojan as at 31 March 2010. Principally the Ore Reserve incorporates the Measured and Indicated Mineral Resources above the current shaft infrastructure to 35L that have been used to derive Proved and Probable Ore Reserves respectively.

SRK Audited Mineral Resource and Ore Reserve Statement at 31 March 2010

(1) Ore Reserves are reported as delivered to the concentrator and exclude all metallurgical recoveries.

(2) Mineral Resources are stated inclusive of Ore Reserves.

(3) Ore Reserves are restricted to the material above the current lowest working level (35L).

The Ore Reserve statement reflected above includes appropriate modifying factors in terms of ore losses, extraction ratios and dilution associated with the drawpoint management of the sub-level caving mining method. The modifying factors are based on experience from a long operating history and reconciliation with the process plant. There is potential to increase the quantum of the Ore Reserve through improved confidence in the Inferred Mineral Resource as well as through the delineation of additional Mineral Resources below 37L following further exploration.

Mining Engineering

SRK considers that the sub-level caving method and mining techniques planned to be re-established by BNC at Trojan are appropriate to the orebody, and that the production rates envisaged in the current five year plan are consistent with the rates achieved historically. The methods of production and development have been established over many years and the mine design is substantively the same for each 60m vertical mining block which includes mechanised drilling and cleaning on each 15m sub-level and a conventional tracked haulage at the base of the mining block used to tram ore and waste to the shaft for hoisting to surface. The sequence of mining where the HOB has lagged the MOB and amount of development is understood to have been impacted by the difficult operating and economic conditions prior to the mine being placed on care and maintenance. BNC plans to correct the development back-log and accelerate the mining of the HOB during the first few years of operation following the re-start. 

The current shaft and access infrastructure enables mining to be conducted to 35L whilst a shaft deepening project that will eventually enable mining to be undertaken to 43L was previously commenced but stopped at the time the mine was placed on care and maintenance. A significant amount of development for the shaft deepening project has been completed and BNC plans to finish this project once operations have re-commenced. The project has been undertaken in part by contractors and in part by Trojan personnel and requires only limited new equipment and machinery. The existing hoists and winders are capable of supporting mining to 52L. The planned full production rate of 72,500tpm is within the hoisting capacity of the shaft and less than the 80,000tpm historically achieved. Mine scheduling has historically targeted a vertical drop down rate of some 35m per annum. Although it is understood that the footprint of the orebody is decreasing with depth which would lead to this rate having to be increased, the planned full production rate is lower than previously achieved. The current five year plan also only includes mining to the base of 37L which is not materially smaller in area than the current working levels. Therefore SRK considers the achievement of the planned full production rate of 72,500tpm reasonable. It is also understood that ground conditions, particularly for development, are more onerous at depth and BNC has increased the support standard and reduced the lag time between development and production to ameliorate this. SRK considers this to be reasonable and does not anticipate any material risks to production from geotechnical aspects or from ventilation for the period of the five year plan.

The modifying factors such as ore losses, extraction ratios and dilution factors used in the derivation of Ore Reserves have been developed over many years of mining, reflect the results of reconciliation analyses with the plant and are considered by SRK to be appropriate. The Ore Reserve tabulated above, some 2.4Mt at a grade of 1.07% Ni, allows for all modifying factors necessary to reflect the plant feed grade and is considered appropriate by SRK. The five year plan includes some 31% of material from the Inferred Mineral Resource to which similar modifying factors have been applied. The Ore Reserve plus this modified Inferred Mineral Resource support the projections of tonnage and grade reflected in the five year plan. The increasing grade over time reflected in the five year plan is due to the inclusion of massive ore, the contribution of which increases below 33L. Although this will be mined naturally as part of the MOB, SRK has reviewed the scheduling of this material separately and considers the projections reasonable.

The build-up to full production has been investigated in detail by BNC personnel at the mine and the profile reflected in the five year plan is considered reasonable by SRK. This build-up profile commences at some 10,000tpm after a three month preparatory phase is complete. The build-up profile in the development phase provides six months to achieve a production rate of 60,000tpm and a further six months to attain the full production rate of 72,500tpm. Although SRK consider this profile reasonable there are obviously risks to this profile associated with unforeseen problems and longer periods necessary to re-establish the workings and production faces which could delay the achievement of the full production rate. However, the mine still has a significant resource of qualified and experienced personnel including the executive management team and the operators and mining labour are to be sourced from the complement of original employees. This will assist in the build-up to full production and should help overcome problems that may be encountered during re-commissioning.

Mineral Processing

Historically, between 2002 and 2008, the Trojan Concentrator upgraded Run of Mine (RoM) sulphide (pentlandite) ore from an average feed grade of 0.67% Ni to a concentrate grade of 9.2% Ni at an average recovery of approximately 71%. The concentrates were then transferred to the adjacent BSR for further processing. The name plate capacity of the Trojan concentrator is rated at 90,000tpm and the current intention in the BNC Business Plan is to reach up to 72,500tpm on recommencement of operations. The Trojan Business Plan assumes that the concentrate will be sold to third parties for further processing. Notwithstanding this, BNC expects to also re-start the BSR in the future in order to produce LME grade nickel cathodes.

The plant is assumed to ramp up to a mill feed of 72,500tpm over a period of one year. Based on the past metallurgical performance of the concentrator the plant this is expected to perform as follows over the period of the Trojan Business Plan:

·; Average feed grade 0.97%

·; Mass pull 8.5%

·; Recovery 80.8%

·; Concentrate Ni grade 9.2%

The average feed grade of 0.97% over the Business Plan period is higher than that processed historically, which is a result of an increase in grade with depth and an increase in the portion of ore from the high grade Massive Orebody. The average recovery of 80.8% is higher than that seen historically. This is due not only to the higher grade of the feed (which typically results in increased recovery) but also reflects the improvement in recovery expected from the installation of new equipment in the concentrator plant and resulting improved performance in the processing of ore.

The plant condition in general reflects the fact that it has been on care and maintenance since November 2008 and that very little maintenance work was done towards the end of 2008. The skeleton staff have endeavoured to maintain the integrity of the plant and in general have succeeded very well. BNC has undertaken much of the refurbishment work using its own personnel and materials available from other operations within the group. SRK considers this to have been done to a satisfactory level and at the same time to have enabled the work to be done for a reasonably low capital cost. The waste conveyors and spreader have been refurbished and initial commissioning is in progress and this aspect of the plant was considered by SRK to be satisfactory. Once the refurbishment is complete the plant should only need normal ongoing maintenance and corrosion protection.

The mills and crushers are reported to be in reasonable condition and are undergoing general maintenance prior to restarting the plant. The concentrator plant is new and in good condition and is being kept energised and individual components can be run at will. There is some concern regarding the condition of the belt filter, however provision has been made to refurbish this equipment. The dust extraction plant is also in need of refurbishment and provision has been made for this work.

The plant is scheduled to re-start in month 7 and to reach steady state of 72,500tpm by month 19 in the current Business Plan. This schedule is dependent on achieving the necessary funding to develop the mine and complete the re-start activities.

A concentrate sales agreement remains to be negotiated with an operating smelter and refining facility. For the purposes of the Business Plan, BNC has assumed that 60% of the metal is payable at the mine gate and this is expected to cover all transport, marketing, treatment and refining costs of the buyer. In addition to revenue generated from nickel within the concentrate, an assumption of USD50/t of concentrate is also assumed for by-product credits. This is based on historical analysis of the concentrate produced at BNC and assumes by-product credits from the copper, cobalt and PGM content in the concentrate.

Infrastructure

Power

The power infrastructure is well established and problems encountered have generally been resolved over the previous years of operation. The electrical infrastructure in Zimbabwe is well developed and plans to increase the supply to the national grid are in progress. Power is supplied to the site by the Zimbabwe Electricity Supply Authority (ZESA). Although ZESA itself derives power from a variety of sources, BNC is located near to the high voltage line from the Cahora Bassa hydro-electric power plant in Mozambique. Although BNC has not yet formally requested power for the re-start of operations from ZESA, BNC has been advised that power will be made available for the operation as it is ramped up on giving notice to ZESA of the power demand required. Planned future plant upgrades are not expected to add materially to the power requirements and the power installation appears in relatively good condition and is adequate for the period covered by the Trojan Business Plan.

Water

The plant requires 260,000m3 water per month under normal operation conditions. No water is supplied from mine dewatering and all the water requirements for Trojan are supplied from the pump station on the Mazowe River, which has a pump capacity of 397,000m3 per month. The pipeline has been in operation for some time resulting in the requirement to replace some sections of the pipeline. It is reported that plans are in place to replace more sections of the pipeline as the need arises until the pipeline is restored to a satisfactory condition. The pump station and controls will also be upgraded as the plant is brought back on stream. Generally the installation, although old, is operating reasonably satisfactorily, but the upgrade and replacement of piping is necessary to ensure a more reliable supply once production has recommenced and reached steady state. The availability of water from the Mazowe River has been reported to be uninterrupted in the past even during dry spells. SRK considers that the water supply infrastructure is adequate for the period of the Trojan Business Plan.

Tailings

Ten tailings disposal facilities are located in close proximity to the mine site. Of these, the Insingizi tailings dam (Dam 10) is to be utilised for tailings disposal, Dam 8 is an emergency dam utilised in the event of a problem at Dam 10 and Dam 9 was un-rehabilitated in 2005 but has subsequently been re-vegetated. The remaining seven have all been re-vegetated. Visually, Dam 10 is in good condition and the wall appears to be covered by vegetation for much of its height. No meaningful information could be obtained regarding the actual operational procedures in relation to the design specifications for the dam and it is therefore not possible to comment on the adequacy of the remaining storage capacity at this stage in terms of future dam stability. However, there is no reason to expect that the remaining capacity, as deduced from the design manual and reported deposition to 2005, or dam stability is inadequate. Access to the seepage control facility is currently very difficult, with the access road being overgrown. There was evidence of a wet area at this facility and it was reported that seepage is collected by means of a toe drain and a seepage control dam. The limited access prevented any assessment of this dam, other than the wetland vegetation observed. In addition, water monitoring results did not include any ground water analyses downslope of the dam. The indications are, however, that seepage control measures have been adequately addressed by BNC in the design and construction of the dam and there these measures should prevent liabilities associated with seepage.

SRK has no reason to doubt that the dam has adequate capacity for the envisaged production, however, this is subject to BNC implementing appropriate management, monitoring and operational controls going forward.

Occupational Health and Safety

SRK has not reviewed documentation relating to Health and Safety policies at the Trojan mine but understands policies exist and are operational. Prior to being placed on care and maintenance, BNC reports that all operations were certified to OHSAS 18001: 1999 for occupational health and safety. As the Trojan Mine has been on care and maintenance since November 2008, no recent Health and Safety statistics relevant to the resumptions of operations have been recorded. Health and Safety aspects are not seen as a material risk to the future operations at Trojan provided that BNC ensures that policies which existed during the previous period of operation are reinstated and retained. 

Environmental Management

BNC's Environmental Management System (EMS) achieved ISO14001 certification in 2005. However, as a result of being placed on care and maintenance, this certification has lapsed. It should be noted that accreditation refers to the implementation of a management system and does not reflect the situation regarding environmental liabilities. Prior to 2005, Trojan developed a series of Environmental Management Programs (EMP) to aid the mine in management of various environmental aspects. Although there are no legislative requirements to develop an EMP, EMP components are incorporated into the respective EMS. These EMS generally include measurable criteria against which the various mines are audited. The EMS/EMP systems have been prepared to comply with the requirements of the Draft Environmental Management Guidelines for Mining and Exploration in Zimbabwe as well as the Environmental Management Act 2003.

All activities on the mine and at BSR that may potentially impact on the environment are required by Zimbabwean law to be permitted. Examples of these include permits to abstract water from the Mazowe river, operate oil traps, operate various mine residue deposits (tailings dams and rock dump), release effluents, handle hazardous waste and operate sewage treatment facilities. The permits specify what monitoring and reporting must take place and make reference to the bands with respect to water quality. These bands are referred to as blue, green, yellow and red bands and charges are levied in terms of the degree of contamination of the water, with permits in the red band being the most expensive. A single water quality parameter in the red band will result in the permit being issued in the red band. Permits made available at Trojan are out of date and not relevant to the re-commissioned mine. While it is not expected that compliance with legislation will pose a problem, re-commissioning will require new permit applications

Environmental issues identified in an independent review conducted by SRK South Africa in 2005 and again in 2007, shortly before operations at the mine were suspended, are largely still relevant and relate to hazardous material handling, land degradation (tailings areas and caved area), surface and ground water quality, dust control, weed control, pollution potential of mine residues and complaints.

An EMP compiled by Trojan in 2009 identified additional environmental aspects, namely water usage/effluent discharges, electricity usage, land degradation, dust emissions, noise emissions, Lantana Camara propagation and sewage handling and treatment. SRK concurs with this list and is of the view that these aspects can be managed by generally accepted practices and sound engineering design. SRK considers that additional issues not identified in the EMP, which will need to be addressed in the re-opening of the mine, include the acquisition of required permits, residual impacts (notably groundwater contamination) and rehabilitation.

Community expectations regarding the socio-economic benefits of the mine re-opening should be seen against the stated intention of mine management to reduce staff numbers from around 960 to 610. Since staff were retained while operations were suspended, socio-economics related to the re-opening of the mine will relate more to social responsibility initiatives than to job creation. Expectations regarding social responsibility will be high. The mine consults the local community as and when required. Historically, the mine operated a number of projects in which members of the community acted as contractors and these can be revived. These include eradication of exotic vegetation and germinating indigenous tree seeds for later planting on the tailings dam. These projects are, however, not considered sustainable as they are only a requirement during the operational phase. Currently the mine does not have any long term projects that would provide income to the community once the mine has closed.

Operations at Trojan will be re-commencing with existing environmental liabilities. It will be necessary to take these liabilities into account in future planning. Investigative work may be required to distinguish between liabilities associated with the mine and the BSR, particularly with respect to ground water. SRK recommends that the envisaged implementation of an ISO 14001 compliant Environmental Management System proceeds as planned. In parallel with this, monitoring and where necessary specialist investigations, should be implemented to obtain a more accurate quantification of environmental liabilities, including a substantiated closure cost estimate which should address issues such as possible residual contamination as well as the more readily understood demolition and rehabilitation costs.

BNC has included a sum of USD 9.5 million to cover close and rehabilitation costs. Provisioning for closure liabilities is required but can be delayed in the interests of cash flow in the early stages of the project, and as is currently assumed in the Trojan Business Plan. This has been included in the Business Plan spread equally over 42 months from month 17, the point at which under the assumptions made, the project is adequately cash generative. This should not detract from the fact that the closure liability already exists and full costs will have to be met in the event of early closure.

Trojan re-start Business Plan

BNC expects that during the period of the Business Plan, a comprehensive restructuring of its business will take place. This will include the retrenchment of a number of staff and the settlement of existing trade creditors. During the period covered by the current Business Plan, BNC expects to continue the care and maintenance programme at Shangani, Hunters Road and BSR. The costs of restructuring and the ongoing care and maintenance programmes at these assets have been considered separately by BNC, do not form part of SRK's review and are not considered in this report.

Production of ore from the mine is forecast to begin in month 4 of the Business Plan at an initial rate of 10,000 tonnes per month (tpm) and to ramp up over a period of 12 months to 70,000tpm. The long term full production rate is 72,500tpm. Development will initially exceed replacement development, with a target of 620m of development per month, in order to facilitate the forecast ramp up in production rate. The production schedule is based on a combination of Ore Reserves and modified Inferred Mineral Resources. Analysis shows that up to month 25 the Inferred material contributes a minor amount of the total material mined, however, beyond this the proportion increases steadily until the majority of ore mined in the latter months of the Business Plan is from Inferred classified material. While this does represent a risk in the assumptions to the production schedule, this can be mitigated by BNC undertaking infill drilling ahead of mining in order to increase the confidence in the Inferred material to Indicated or Measured as appropriate ahead of mining. SRK understands that BNC has a plan in place to do this and the costs are included in the Business Plan. In summary, the fully modified Measured, Indicated and Inferred material in the Trojan 65 month Business Plan totals some 3,500kt of ore at an average grade of 0.97% Ni and containing some 34,107t of nickel. This compares to a total Mineral Resource (including Inferred) of some 3,530kt ore at an average grade of 1.29% Ni and containing 45,600t of nickel and to an Ore Reserve of some 2,410kt of ore at an average grade of 1.07% Ni and containing some 25,810t of nickel. Therefore, the Ore Reserve represents some 69% of the total ore material in the mining production schedule.

Initial feed from the mine is assumed to be stockpiled until the level of stocks and the production rate are sufficient to allow steady state production in excess of 40,000tpm. Milling is therefore expected to commence in month 7 at 40,000tpm and to gradually ramp up to steady state production of 72,500tpm by month 19. Ore will be processed through the existing concentrator plant, which incorporates a new flotation circuit, which was commissioned in 2008, shortly before the operations were placed on care and maintenance. Nickel recovery is expected to vary from 70.4% to 82.41% at steady state, averaging 80.8% over the period of the Business Plan. The nickel recovery has been adjusted upwards from that achieved historically to reflect the increase in head grade and the improved performance expected from the new flotation circuit. The nickel concentrate is assumed to have a Ni grade of 9.20% with between 160t and 900t of nickel being recovered per month with an average at steady state of some 540t of Ni recovered per month. The amount of concentrate produced per month varies between 1,855t and 10,395t, averaging some 6,355t per month at steady state. Concentrates are expected to be dried to below 8% moisture prior to bagging and shipment.

BNC expects to enter into an off-take agreement for the sale of nickel concentrates and has indicated to SRK that discussions have commenced with a number of potential off-takers. Pending conclusion of an agreement, BNC has assumed that 60% of the contained nickel is payable and has assumed that by product revenue of USD50 per dry tonne concentrate will be achieved from cobalt, copper and PGM content. While the Trojan Mineral Resource/Ore Reserve model only contains information for nickel, the assumed revenue for by-product credits is based on the indicative concentrate specification based on historical analysis of the concentrate produced from Trojan.

BNC has developed operating costs from first principles and using experience from the previous operating history at the mine and processing plant. All costs are presented in real terms with an effective date of 1 June 2010. The Business Plan also assumes that the staff numbers are reduced from the levels seen prior to the mine being place on care and maintenance. The reduction in labour is principally based on the belief that the mine was previously over staffed. SRK considers the revised mine and processing labour complements to be appropriate.

Closure costs are estimated to be some USD9.5million and this total has been spread over 42 equal instalments of some USD226,000 per month, commencing once the project cashflow is positive in month 17 and continuing to the end of the Business Plan in month 58 such that USD9.5M has accumulated by this time.

The bulk of the envisaged capital expenditure is for the completion of the re-deepening project, which will provide access for mining down to 43L. This project was commenced in 2006 but was stopped in 2008 following the decision to place the mine on care and maintenance. The mine intends to operate with 3 production rigs, 3 face rigs and 3 support rigs, of which all will be re-furbished existing equipment with the exception of 1 new support rig. Four existing LHD's are intended to be refurbished and 3 new LHD's will be purchased in order for the mine to have a total of 7 LHD's available for production. BNC has also developed a replacement capital schedule over the period of the Business Plan.

The table below shows the annual key production forecasts and cashflow estimates presented in the BNC business plan. A peak funding requirement of USD26.3M occurs in month 14 with consistent positive monthly project cashflows occurring after month 20 and a positive cumulative project cashflow occurring after month 36.

SRK has reviewed the production schedule on which the Trojan Business Plan is based and considers this to be appropriately derived from the Mineral Resource and Ore Reserve model. As noted above, the Trojan Business Plan currently includes Ore Reserves and modified Inferred Mineral Resources which it assumes will be upgrade to Measured and Indicated categories before being mined and following ongoing exploration. SRK has reviewed the operating and capital cost assumptions and considers these to have been developed in a thorough manner and to represent reasonable assumptions for the purposes of the Trojan Business Plan. While negotiations are at an early stage for an off-take agreement the assumptions currently used in the Trojan Business Plan appear reasonable given the information available.

Conclusion

SRK has reviewed the Business Plan for the re-start of operations at Trojan and considers the plan to be both realistic and achievable. While the inclusion of resources classified as inferred in the 5 year Business Plan does present a risk, this is not untypical for steep dipping orebodies such as this. Furthermore, given that this material does not become prominent in the production schedule until after two years from re-start there is sufficient time available for BNC to undertake a phase of drilling to increase the confidence in this material prior to its mining.

While the Business Plan runs for a 5 year period, SRK considers that the orebody is open with depth and that there is a good likelihood that with further exploration drilling and technical studies, further resources will be delineated below 37L which will in due course enable this to be extended beyond this period.