Spider Resources Inc. (SPQ:TSX-V) (“Spider”), KWG Resources Inc. (KWG:TSX-V) (“KWG”) and Freewest Resources Canada Inc. a wholly owned subsidiary of Cliffs Natural Resources (CLF:NYSE) (Paris: CLF) (“Cliffs”) provide results from an initial resource estimate as prepared by Micon International Limited.
The report meets the guidelines for reporting mineral exploration programs as set out in National Instrument 43-101, including a policy compliant resource estimate. This report was prepared at the request of the management of the Spider/KWG - Freewest Option Project, the cost of which was shared by Spider and KWG, as an independent estimate of the indicated and inferred resources encountered in drilling the Big Daddy Chromite Deposit, located in the McFaulds Lake area of Northern Ontario.
As explained in the report, the Big Daddy Chromite Deposit has been tested by 48 drill holes of NQ size core, on a ground grid with 100 metres spacing between sectional lines, with two to four holes per line testing the deposit with 50 metre to 100 metre pierce points on the vertical longitudinal section. The drill holes cover a strike length of one kilometre down to a maximum vertical depth of 365 metres (lowest drill hole intercept). The bulk of the chromite mineralization was found to be confined to the massive chromite domain but also occasionally occurs in the host peridotite, as disseminated, semi-massive or intermittent beds of chromite. The sectional interpretation of the continuity of various chromite domains shows that the Big Daddy Deposit comprises two main segments aligned in a northeast trending mineralized envelope that Micon in discussion with Spider and KWG have designated BD1 and BD2.
The international demand for chromite is mainly for a metallurgical grade product which is around 40% Cr2O3 with a Cr:Fe ratio of generally around or greater than 2:1. Metallurgical grades of this nature command much higher prices than lower grade material. Worldwide, lower grade deposits are being exploited and profitably mined by reduction to metallurgical grade products. Thus, Micon presented Spider and KWG with two scenarios in their review of the Big Daddy deposit:
Scenario 1 focused on high grade massive (lumpy) material with little or no beneficiation required, this being a much more sought after type of deposit. Micon refers to this in the report as the Massive Chromite Domain.
Scenario 2 defined a broader zone of chromite mineralization that may be exploitable by open pit mining, but requiring beneficiation to upgrade to meet certain market demands.
The chromite resources at Big Daddy have been estimated for the Massive Domain, as well as for the broader zone that Micon constrained to 15% Cr2O3 cut-off but including internal waste. The mineral resources were estimated by Micon in accordance with the definitions contained in the CIM Standards on Mineral Resources and Reserves Definitions and Guidelines that were prepared by the CIM Standing Committee on Reserves Definitions and adopted by the CIM Council on December 11, 2005.
The mineralized material was classified into either the Indicated or Inferred mineral resource category on the basis of a combination of the following factors: (a) confidence in the geological and mineralization continuity, (b) position of blocks in relation to the range of influence as defined by the variographic analysis and (c) and the search ellipse ranges. For data information refer to our press release site.
Micon further reports that the geological observations and interpretation, statistical analysis and spatial analysis of the data demonstrate a high level of continuity in the mineralization both in the lateral and vertical sense. The broad zone of continuity is clearly defined to justify the bulk of the deposit being categorized as Indicated.
The portion of the deposit below the -220 m and -160 m elevation (for BD1 and BD2 respectively), as well as all of the satellite bodies whose geological continuity is somewhat questionable, have been categorized as Inferred. The bulk of the Inferred category of the major components of the deposit remains to be drill tested. The lower limit of the inferred resource (being 600 m below surface) is considered very prudent. The interpretation is based on the large thicknesses of the massive chromite encountered in the line of the deepest holes suggesting that at between 350 m and 400 m depth, the deposit is not narrowing at depth, and is also consistent with a Magnetic 3D inversion which suggests that the ultramafic rocks hosting the chromite mineralization extend to a depth of +/- 1,700 metres.
Micon further reports that in order to upgrade the resource from indicated and inferred to the “measured category”, a few strategically positioned drill holes will be required.
Whilst additional resources may be discovered by deeper drilling, Micon believes that the optimal economic depth for mining should be determined before such drilling is undertaken. Thus in the short to medium term, additional drill programs are not necessarily a priority.
The report entitled “Spider Resources Inc. and KWG Resources Inc. Technical Report on the Mineral Resource Estimate for the Big Daddy Chromite Deposit” has an effective date of March 30, 2010. The report has a signing date of April 30, 2010. The full report will be filed within 45 days on SEDAR along with the requisite material change report.
The Micon staff with responsibility for this resource estimate are Messrs Richard Gowans, P.Eng., Alan J. San Martin, MAusIMM and Charley Murahwi, MSc., P.Geo., MAusIMM. All are Qualified Persons as defined in NI 43-101, and are independent of the Spider Resources Inc. Micon acknowledges that it has read this press release and there are no errors contained herein. Micon International Limited has provided consulting services to the international mining industry since 1988, with particular focus upon mineral resource estimations, metallurgical services, mine design and production scheduling, preparation of pre-feasibility and feasibility studies, independent reviews of mining and mineral properties, project monitoring, independent engineer roles, financial analysis and litigation support. Additional information about Micon can be found at www.micon-international.com
2010 Program
In a KWG Resources Inc. (“KWG”) press release dated April 8, 2010, KWG announced that under the terms of the Option Agreement with Spider and Freewest Resources Canada Inc. respecting the Freewest Option Project, KWG became Operator on April 1st, 2010. KWG and Spider each currently hold a 26.5% interest in the Freewest Option Project which contains the Big Daddy chromite deposit and have the right to earn an additional aggregate 7% interest by spending $10 million by March 31, 2012 or by delivering a positive feasibility study on or before March 31, 2012 and related resource definition study on the Big Daddy chromite deposit as part of their earn-in. As Operator, KWG has proposed to Spider that KWG and Spider undertake a scoping and related resource definition study on the Big Daddy chromite deposit as part of their earn-in. The details of this proposal have yet to be finalized.
