Prepared by:

October 2007

Ref: WAI/61-0465

Wardell Armstrong International Limited
Wheal Jane, Baldhu, Truro, Cornwall, TR3 6EH
Tel: +44 1872 560738 Fax: +44 1872 561079
Email: enquiries@wardell-armstrong.com
Web site: http://www.wardell-armstrong.com

The Neves Corvo Mine is located some 220km southeast of Lisbon in the Alentejo district of southern Portugal. In June 2004 the Portuguese company, Sociedade Mineira de Neves Corvo SA (SOMINCOR), which owns and operates the mine was acquired by EuroZinc Mining Corporation (EuroZinc).

Following the acquisition by EuroZinc of Neves Corvo in June 2004, management has focused on improving the mine’s operating performance and exploring for new resources and reserves in the immediate vicinity. Since November 2006, SOMINCOR has been fully consolidated into Lundin Mining (Lundin).

In June 2007 Silverstone Resources Corporation (Silverstone) agreed to acquire 100% of the life of mine payable silver production from Lundin. The mill at Neves Corvo produces approximately 0.5Moz of payable silver annually in the copper concentrate.

The Neves Corvo orebodies were discovered in 1977 after a period of exploration drilling which was planned to test a number of favourable gravity anomalies. Following discovery, SOMINCOR was formed to exploit the deposits, and by 1983, the Corvo, Graça, Neves and Zambujal sulphide deposits had been partially outlined covering an area of some 1.5km x 2km.

Rio Tinto became involved in the project in 1985 effectively forming a 49:51% joint venture with the Portuguese government (EDM). This change in shareholding led to a reappraisal of the project with eventual first production commencing from the Upper Corvo and Graça orebodies on 1 January 1989, achieving 1Mt in that year. Total capital cost for the mine was approximately $350M.

During the development of the mine, significant tonnages of high grade tin ores were discovered, associated with the copper mineralisation, which led to the rapid construction of a tin plant at a cost of some $70M. The plant was commissioned in 1990 and in that year some 270,000t of tin-bearing ore was treated. This was followed between 1992-1994 by a major mine deepening exercise, at a cost of $33M, to access the Lower Corvo orebody through the installation of an inclined conveyor ramp linking the 700 and 550 levels.

The mine has operated continuously since 1989 and annual production of copper metal in concentrate since 1997 has ranged between 76.3-114kt with an additional 0.35-3.5kt of tin metal in concentrate.

Maximum production was achieved in 2005 (2.040Mtpa). The copper head grade fell below 5% Cu in the years 1998 to 2001, but this figure was exceeded from 2002 to 2004 whence it has declined to below 5%. However, Cu recovery has steadily improved over the last 3 years (2004 – 2006 inclusive) to over 88%. Since 1997, copper recovery has ranged from 85.3% to 88.4%.

Historical operating and capital costs are shown in the Table below.

(1) Note: Year 2000 costs affected by industrial action

Production of copper metal in concentrate over more than 16 years of operation has been within 0.6% of the annual plan with an average annual variance against plan of less than 460 tonnes of copper metal.

Neves Corvo is located in the western part of the Iberian Pyrite Belt (IPB) which stretches through southern Spain into Portugal and which has historically hosted numerous major stratiform volcano-sedimentary massive sulphide (VMS) deposits. Five massive sulphide lenses have been defined at Neves Corvo comprising Neves (divided into North and South), Corvo, Graça, Zambujal and Lombador. The base metal grades are segregated by the strong metal zoning into copper, tin and zinc zones, as well as barren massive pyrite.

The mine access is provided by one vertical 5m diameter shaft, hoisting ore from the 700m level, and a ramp from surface at a gradient of 17%. A number of shaft ‘incidents’ from July through to October 2003 adversely affected mine production, however, the cause has been identified and remedial measures are now in place to prevent any reoccurrence.

A number of different stoping methods are employed on the mine but the most prominent being Bench and Fill and Drift and Fill which account for 41.5% and 38% of production tonnages respectively. Dilution has been highlighted as being a major concern in the Drift and Fill Stopes (19%) and the mine is progressively moving towards increasing production from the Bench and Fill (5-7.5%) method. The mine works a 3 shift per day pattern 6 days per week, but effective time at the work face can be considered low by normal mining standards.

The processing operations at Neves Corvo are divided between the Copper Plant, which treats copper ores, and the Zinc Plant which treats a polymetallic ore.

The processing of copper ores at Neves Corvo is well established, with over 18 years of production. By world standards, the copper ores are exceptionally high-grade although processing is made more difficult by the fine grained nature of the mineralisation and high levels of pyrite present. The plant has treated a maximum of 2.04Mtpa of ore and the plant is being modified to treat up to 2.2Mtpa.

In 2006 the Company commenced treating zinc ores. These massive pyrite ores are essentially polymetallic, containing minor levels of copper, lead, and silver although these minerals are not recovered. The ores are treated at a rate of 400,000tpa in the former Tin Plant which has been converted for this purpose.

The mine and mill are well served by a functional Maintenance Department with surface and underground workshops. All mobile and fixed plant is maintained on site although engine rebuilds are contracted out. Generally mobile plant availability is reasonable although the utilization of the equipment can be considered lower than would be expected on a mine of this size and nature. Power is supplied from the National Grid at 150kV, 50MVA rated, through a 22.5km line; sufficient for the mines present and future needs. Potable water is supplied from the Santa Clara reservoir some 40km from the mine site; however, there has been recent investment to install a supernatant water treatment plant close to the tailings facility to reduce the dependence on Santa Clara.

Tailings Management

The Cerro do Lobo tailings dam is a water retaining embankment dam; tailings are deposited into the impoundment by sub-aqueous means to prevent oxidation of the mainly sulphide (pyrite) waste. Since 1998, the mine has commissioned independent feasibility studies and has carried out trials so that deposition at the dam site can be changed from sub-aqueous deposition to using paste tailings.

In 1999, a paste plant commenced operation to provide paste backfill for stopes and since that time, tailings from the mill have either been used to produce paste backfill or have been sent to the tailings dam. Tailings from both the copper and zinc plants are cycloned; the coarser fraction being used for paste fill underground. The finer fraction is disposed of in the TMF. To date, tailings are delivered to the facility via pipeline as a suspension, with a pulp density of approximately 35%.

The Neves Corvo mine inherently has a number of significant potential environmental impacts, due to its size and scale, location (close to the Oeiras River) and the nature of the mineral deposit (pyritic, with heavy metals). Environmentally, it is a challenging operation. Notwithstanding the occasional environmental problems and incidents, the mine is operated and managed to a very high standard, largely in accordance with best international practice, and the potential impacts are well understood and mitigated.

The mine has a good environmental record and has a good relationship with the environmental regulatory authorities.

The only significant area of concern that is not, in WAI’s opinion, being dealt with adequately by SOMINCOR, is the provision for mine closure and the closure funding arrangements (currently at 18M€).

In the opinion of WAI, SOMINCOR has prepared an achievable 10 year plan to mine a portion of the remaining known copper and zinc ores at Neves Corvo. It should be noted that this 10 year schedule exploits only a portion of the current Indicated resource. There remain substantial additional zinc reserves and also a significant Inferred resource which has not been considered here. SOMINCOR is currently reviewing options to improve the utilization of this resource base.

The mine has the capability in terms of hoisting capacity and mobile equipment to produce 2.4Mtpa. The plants have sufficient capacity to process this tonnage and to achieve copper recoveries of between 86% and 88%.

The SOMINCOR model provides an indication of the likely pre-tax operating returns, however, there can be no assurances that the assumptions made in preparing these cashflow projections will prove accurate, and actual results may be materially greater or less than those contained in such projections.

The SOMINCOR financial model indicates the Net Present Value of the Neves Corvo Mine at a discount rate of 10% as $US 755M. This is based on an average copper price $US 1.78/lb and a zinc price of $US 0.895/lb. WAI considers that the project is robust.

Wardell Armstrong International Ltd (WAI) was commissioned by Lundin Mining (Lundin) in July 2007, to prepare a Technical Report on the Neves Corvo Copper Mine, Portugal, using December 31^st 2006 reserves and resources.

The Neves Corvo Mine is located some 220km southeast of Lisbon in the Alentejo district of southern Portugal. In June 2004 the Portuguese company, Sociedade Mineira de Neves Corvo SA (SOMINCOR), which owns and operates the mine was acquired by EuroZinc Mining Corporation (EuroZinc).

Since November 2006, SOMINCOR has been fully consolidated into Lundin Mining (Lundin). Following the acquisition by EuroZinc of Neves Corvo in June 2004, management has focused on improving the mines operating performance and exploring for new resources and reserves in the immediate vicinity.

In June 2007 Silverstone Resources Corporation (Silverstone) agreed to acquire 100% of the life of mine payable silver production from Lundin. The mill at Neves Corvo produces approximately 0.5Moz of payable silver annually in the copper concentrate.

This Technical Report has been prepared for Lundin for use in connection with the proposed financing by Lundin and its subsidiaries of the purchase price for SOMINCOR and related regulatory filings and approvals.

Wardell Armstrong International Limited ("WAI") is an internationally recognised, independent minerals industry consultancy. Most consultants used in the preparation of this report have over 20 years of relevant professional experience. WAI staff, that are authors to this report have visited the Neves Corvo Mine site over the last 6 months.

Details of the principal consultants involved in the preparation of this document are as follows:

P Newall, BSc PhD FIMMM CEng, is Senior Consulting Geologist with WAI and has practised his profession as a mine and exploration geologist for over twenty years for both base and precious metals.

M Owen, BSc MSc (MCSM) FGS CGeol EurGeol, is an Associate Director with WAI and has over 25 years experience as a Mining Geologist in areas of gold and base metals evaluation in a number of deposits and countries around the world.

N Coppin, BSc MSc CBiol MIEnvSci MIEEM MLI, Partner with Wardell Armstrong is an Environmental Scientist and Managing Director of WAI and has over twenty five years experience of environmental assessment and management in the mining industry.

A Kornitskiy, MSc PhD, is a Senior Resource Geologist with WAI and has almost 10 years experience in the evaluation of a wide range of minerals, specialising in the assessment of gold deposits and in the use of Datamine® geological modelling software.

O Mihalop, BSc MSc (MCSM) is a Senior Mining Engineer with WAI and has over 11 years experience from project geologist through to mine and quarry management including the design and implementation of mine backfill systems and development of paste technology.

M Hooper, BSc MSc FIMMM CEng, is an Associate Consultant with WAI specialising in Financial Analysis and has over 40 years mining experience including production mining and more recently specialising in the financial analysis of mineral projects with emphasis on Monte Carlo simulation techniques associated with financial risk assessment.

D Chillcott, (ACSM) FIMMM CEng, is an Associate Consultant Mining Engineer with WAI and has some 47 years experience predominantly in the underground operation of Zambia Consolidated Copper Mines (ZCCM) becoming General Manager of the Mufulira Division and eventually becoming Consulting Mining Engineer for the whole of ZCCM.

T Richards, BEng (Hons) is an Associate Consultant Mining Engineer with WAI and has gained operational experience in several mines and now specialises in the application of Mine2-4D computer mine modelling as well as in enhanced production schedules.

Four of the consultants, Messrs Newall, Owen, Hooper and Chillcott, are considered as Qualified Persons under NI 43-101, being Members or Fellows of the Institute of Materials, Minerals and Mining, UK and/or Fellows of the Geological Society and Chartered Geologists (see Certificate of Author).

Neither WAI, its directors, employees or company associates hold any securities in Lundin, its subsidiaries or affiliates, nor have:

The basic strategy for this Technical Study has been to examine and report on the existing mine resources/reserves, infrastructure, equipment, costs, mining methods, mill, tailings facility and environmental issues of the Neves Corvo Mine. In addition WAI has provided comment on SOMINCOR’s ability to achieve their Life of Mine Plan for the next 10 years.

Wardell Armstrong International (WAI) has reviewed and evaluated data provided by SOMINCOR and their consultants (see Section 23 References) of the Neves Corvo mine property, and has drawn its own conclusions therefrom, augmented by its direct field examination. WAI has not carried out any independent exploration work, drilled any holes nor carried out any sampling and assaying.

WAI has audited the estimation of resources and reserves at Neves Corvo, and has reviewed the estimates performed by mine personnel, examined the procedures used and reviewed in-house procedures in arriving at statements. While exercising all reasonable diligence in checking and confirming it, WAI has relied upon the data presented by SOMINCOR in formulating its opinion.

The metallurgical, geological, mineralisation, exploration technique and certain procedural descriptions, figures and tables used in this report are taken from reports prepared for and provided by SOMINCOR.

SOMINCOR report their mineral resources and mineral reserves using the 2004 version of the Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code). For this reason, and because of the use of extracts from SOMINCOR reports, WAI will generally use JORC terminology throughout the report.

The Neves Corvo polymetallic base metal deposit is located within the western part of the world-class Iberian Pyrite Belt of southern Spain and Portugal. The mine is situated in the Alentejo province of southern Portugal, some 15km to the southeast of the town of Castro Verde. The area has an excellent transport network with international airports at Faro some 80km to the south and Lisbon 150km to the northwest (Figure 6.1).

(Base Map from www.lib.utexas.edu)

The mining operations at Neves Corvo are contained within a Mining Concession Contract between the State and SOMINCOR covering 13.5km², located in the parishes of Santa Bárbara de Padrões and Senhora da Graça de Padrões, counties of Castro Verde and Almodôvar, district of Beja. The concession provides the rights to exploit the Neves Corvo deposits for copper, zinc, lead, silver, gold, tin and cobalt for an initial period of fifty years (from 24 November 1994) with two further extensions of twenty years each.

Under the concession agreement, SOMINCOR is obliged to:

This Mining Concession is in turn surrounded by Exploration Concession, signed in 2006, covering an area of 549km². The Exploration Concession has an initial period of 5 years, with a provision for 3 one year extensions subject to a 50% reduction in area each time. SOMINCOR also holds several other concessions in the area, totalling 2,700km².

Figure 6.2 shows the present coordinate boundaries for the Mining Concession as well as the plan position of the main orebodies defined by a 10m isopach.

The mine produces a variety of copper-rich ores (chalcopyrite is the only commercially significant copper mineral) as well as a limited amount of tin-rich ores which have been historically treated by a separate tin plant (currently inactive). The copper ores are treated in a conventional crushing, grinding and flotation circuit with the tailings pumped to the Cerro do Lobo tailings facility some 3km from the plant. The Zinc Plant has only been in operation since June 2006 and treats some 0.4Mtpa of zinc ore, predominantly from the Corvo South deposit. The plant achieves a zinc concentrate grade of 49% Zn at a recovery of approximately 80%.

(from SOMINCOR and adapted by WAI)

The general mine site buildings and infrastructure layout is shown in Figure 6.3.

(from SOMINCOR)

Neves Corvo is connected by a good road into the national road network and is approximately a one-and-a-half hour drive from either Faro to the south or Lisbon to the north. In addition, the mine has a dedicated rail link into the Portuguese rail network and on to the port of Setúbal where the mine has a private harbour facility for concentrate shipments.

There are no major centres of population close to the mine, although a number of small villages with populations numbered in the hundreds do lie within the Mining Concession. WAI does not believe that mining activities have a direct impact on any of these small settlements.

The topography around the mine is relatively subdued, comprising low hills with minimal rock outcrop. The mine collar is 210m above sea level. The area supports low intensity agriculture confined to stock rearing and the production of cork and olives.

The climate of the region is semi-arid with an average July temperature of 23°C (maximum 40°C) and an average minimum temperature in winter of 3.8°C. Rainfall averages 426mm, falling mainly in the winter months.

Mine site infrastructure includes a main headframe, two process plants, paste plant, rail facility, offices, surface workshops, mine store, laboratory, change house, medical building, restaurant, weighbridge and gatehouse.

Fresh water is supplied to the mine via a 400mm diameter pipeline from the Santa Clara reservoir, approximately 40km west of the mine. Supply capacity is 600m³/hr whilst storage facilities close to the mine hold thirty days’ requirements. The total water requirement for the mine and plant is estimated at over 350m³/hr with as much as 75% of the volume being reused.

The mine is connected to the national grid by a single 150kV, 50MVA rated, overhead power line 22.5km long.

The Mining Concession (see Figure 6.2) provides sufficient surface rights to accommodate the existing mine infrastructure and allow expansion if required.

Rio Tinto became involved in the project in 1985 effectively forming a 49:51% joint venture with the Portuguese government (EDM). This change in shareholding led to a reappraisal of the project with eventual first production commencing from the Upper Corvo and Graça orebodies on 1 January 1989, achieving 1Mt in that year. Total capital cost for the mine was approximately $350M.

During the development of the mine, significant tonnages of high grade tin ores were discovered, associated with the copper mineralisation, which led to the rapid construction of a tin plant at a cost of some $70M. The plant was commissioned in 1990 and in that year some 270,000t of tin-bearing ore was treated.

The railway link through to Setúbal was constructed between 1990-1992 to allow shipment of concentrates and the back-haul of sand for fill. This was followed between 1992-1994 by a major mine deepening exercise, at a cost of $33M, to access the Lower Corvo orebody through the installation of an inclined conveyor ramp linking the 700 and 550 levels. Access to the orebody of North Neves was also completed in 1994 and significant production tonnage has since come from this area.

Throughout the history of the mine, it is significant that the total copper resources held in inventory have remained relatively static indicating that exploration discovery has kept up with annual production on a year by year basis.

However, as with many mature mines, head grade over the same period has declined from between 7-9% Cu to its present level of around 5% Cu.

Neves Corvo is located in the western part of the Iberian Pyrite Belt (IPB) that stretches through southern Spain into Portugal and which has historically hosted numerous major stratiform volcano-sedimentary massive sulphide (VMS) deposits including the famous Rio Tinto mine, worked for gold and copper since Roman times (Figure 9.1).

Deposits within the IPB vary in size from a few hundred thousand tonnes to >200Mt, and also vary mineralogically from massive pyrite, through complex sulphides to gold-rich ores. They occur at different levels and different settings within the Volcanic Siliceous Complex (VSC) which has been dated at Upper Devonian to Lower Carboniferous in age. The VSC comprises fine grained clastic sediments and felsic to mafic volcanics, underlain by the Phyllite-Quartzite Group of Lower Devonian age and overlain conformably by Upper Visean Flysch Group rocks characterised by a thick clastic succession of greywackes and shales.

The massive sulphide deposits are generally interpreted as syngenetic in origin, ranging from sulphide precipitates to re-worked sulphide/silicate sediments, lying close to acid submarine volcanic centres.

The Neves Corvo deposits are located at the top of a dominantly volcanic sequence of the VSC which consists of three piles of acid volcanics separated by shale units, with a discontinuous black shale horizon immediately below the lenses. Above the mineralisation, there is a repetition of volcano-sedimentary and flysch units. The whole assemblage has been folded into a gentle anticline orientated NW-SE which plunges to the southeast, resulting in orebodies distributed on both limbs of the fold. All the deposits have been affected by both sub-vertical and low angle thrust faults, causing repetition in some areas.

Mineralisation is also concentrated within the footwall and hangingwall rocks, and although the deposits are similar to others found in the IPB, the high copper, tin and zinc grades are unique and the strong metal zonation patterns are well developed.

Figure 9.2 below shows a schematic section through the stratigraphy.

Five massive sulphide lenses have been defined at Neves Corvo comprising Neves (divided into North and South), Corvo, Graça, Zambujal and Lombador (Figure 10.1).

The base metal grades are segregated by the strong metal zoning into copper, tin and zinc zones, as well as barren massive pyrite. From this, the different ore types have been classified into the following:

In addition to the ore types, barren and low grade sulphide mineralisation is classified as follows:

Due to the structural complexity of the orebodies, different ore types are often juxtaposed, even over short distances both vertically and laterally. However, much of the high grade tin ore is now depleted, as is a large proportion of the very high grade copper ores. A typical cross section through the Graça-Corvo orebodies is shown in Figure 10.2.

WAI has inspected the different styles of mineralisation underground and considers the divisions of the various ore types as defined above to be a fair reflection of the distribution and style of mineralisation seen at Neves Corvo.

The following descriptions relate to the deposits in their original state, prior to mining.

The Corvo orebody lies between 280-800m below surface, dips to the northeast at 10-40° and has dimensions in plan of approximately 1,100m down dip and 600m along strike. The orebody attains a maximum thickness of 95m and consists of a basal layer of copper ore up to 30m thick, overlain by barren pyrite containing intermittent lenses of copper mineralisation.

The main massive sulphide orebody is predominantly overlain by a complex mineralised sequence known as "Rubané" which comprises an assemblage of chloritic shales, siltstones and chert-carbonate breccias that are all mineralised with cross-cutting and bedding-parallel sulphide veinlets and occasional thin lenses of massive sulphides. The sulphides are predominantly copper-rich and Rubané ore constitutes over 15% of the total copper content of Corvo. Rubané mineralisation is interpreted as a stockwork emplaced in the hanging wall of the massive sulphide by low angle reverse faults (thrust faults).

Cupriferous sulphide stockwork zones (fissural mineralisation), consisting of veinlet sulphides cutting footwall shales and acid volcanics, underlie the massive sulphide lens over part of its area. Tin-rich ores occur closely associated with the copper ores, principally in the massive sulphide material and Rubané. Massive sulphide tin ore, also containing high copper values, is distributed throughout the copper mineralisation at Corvo defining a north-south trend. At the north end, near the edge of the massive sulphides, the Rubané has high grades of tin and the underlying stockwork also contains tin ores.

Zinc mineralisation develops laterally to the southeast of the copper and tin ores within the massive sulphide.

The Graça orebody, which is now mostly worked out with the exception of a small extension to the southeast, lies on the southern flank of the anticline and dips to the south at 10-70°. The lens is up to 80m thick extends for 700m along strike, 500m down dip and ranges in depth below surface from 230-450m. The orebody is linked to Corvo by a bridge of thin continuous sulphide mineralisation. As with Corvo, much of the copper ore occurs as a basal layer overlain by barren pyrite in which there are also intercalations of copper ore.

Massive sulphide tin ores occur as a trend through the copper ores from northeast to southwest, similar to that seen at Corvo. However, there is no significant development of Rubané, although stockwork copper ore is being exploited in the southeast section of the orebody and extensions to this mineralisation are being investigated. In the massive sulphide there is again strong lateral metal zoning and zinc occurs preferentially in the southwest limit of Graça.

The Neves deposit consists of two lenses of mineralisation, joined by a thin bridge, which dip to north at 5-25°. The maximum true thickness is 55m with a strike length of 1,200m and 700m down dip. The southern lens, Neves South, contains mostly zinc ore with significant lead, silver and copper grades and minor barren pyrite, underlain by copper ore which is locally tin-bearing. Zinc mineralisation tends to be very fine grained (<25µm) and does contain deleterious elements such as As, Sb, Hg and Sn. In addition, silver is present within tennantite-tetrahedrite, typically freibergite ((CuAgFe)12Sb4S13).

In contrast, Neves North is copper-rich and occurs mainly as a basal massive sulphide and as stockwork in the underlying shale and volcanic rocks. The stockwork is well developed and extends well beyond the limits of the massive sulphide lens.

This area comprises a series of zinc-rich lenses (with similar mineralogy to the zinc mineralisation at Neves South) with copper mineralisation. SOMINCOR is now undertaking an underground exploration drilling programme in order to upgrade the majority of the Zambujal resources to Measured and Indicated categories. Recent exploration has identified additional MC and MCZ mineralisation.

Furthermore, on-going exploration has discovered bridge mineralisation linking it to Lower Corvo which is likely to increase the resource base.

This deposit comprises continuous lenses of sphalerite mineralisation with lead and copper which has been defined at an Inferred category from surface drilling. The mineralisation dips to the north at 20-40°, has a thickness up to 100m and extends for 1,350m down dip and 600m along strike.

Earlier exploration intersected a second lens north of Lombador that has the potential to extend the zinc resource. Copper mineralisation is also present at Lombador, but in minor quantities, although some Indicated and Inferred MC resources have been identified recently in the bridges with Corvo and Neves.

Throughout the life of mine, the main focus of exploration has been the continued search for mineralisation within the mining licence area. To-date, this process has been undoubtedly successful in that the mine commenced production with a resource of approximately 30Mt, and although approximately 22Mt have been mined since then, there is still a copper resource base of around 19.4Mt in the Measured and Indicated categories and 3Mt in the Inferred category, with a significant zinc resource in addition.

In addition, exploration drilling by SOMINCOR has also been conducted in the surrounding exploration licence through the follow-up of numerous gravity anomalies. It is understood that the 2007 drilling programme has been very successful and is likely to improve the resource position at the end of the year.

WAI has reviewed the exploration data and is satisfied that it has been undertaken in a systematic and proficient manner both within the mine area and surrounding exploration concession.

Exploration work within the Mining Licence has concentrated primarily on the extension of known orebodies by both underground and surface drilling, and in particular, areas that are relatively close to surface. Some of the Neves Corvo orebodies remain open and the potential to increase the current mineral resource is possible.

Moreover, recent underground drilling has identified some very important bridge Fissural Copper mineralisation, originally identified from surface drilling, between the Lower Corvo and Lombador orebodies. This area provided an addition to the resource base during 2006.

Surface drilling since 2005 has defined the western edge of the Neves deposit, and tested the internal continuity and lateral extent of the Lombador South zonc zone. This zone appears to be much larger that initially considered and has the potential to provide significant addition to the mine’s zinc resource.

As a general rule, the most prospective areas now appear to be to the north, east and northeast, lateral to currently defined mineralisation, although this mineralisation is commonly deeper. However, WAI is of the opinion that considerable potential exists to define additional copper and zinc mineralisation that can be brought into the Neves Corvo resource base.

Neves Corvo is a mature mining operation having been in production for nearly 18 years. Commensurate with this is the vast database of sample data that has been accumulated, and through time, reconciled against actual production data. To this end, only brief mention will be made here of some of the points of interest, as sampling reconciliation will be dealt with further under Resources.

As mentioned in the previous section, surface and underground exploration drilling is an ongoing operation at the mine.

The mine has consistently undertaken approximately 11-19,000m of underground exploration drilling per year, by contractors and in-house drill rigs. Typically, underground fan drilling would produce intersections on approximately 35m spacing.

In addition, surface drilling, often on a spacing of 75-100m, has successfully outlined a number of new exploration targets such as Zambujal and Lombador, the latter by surface holes only.

As standard procedure, drillholes are surveyed with an Eastman Single Shot or Reflex EZ-Shot tool at 30m intervals, which provides an accurate location of the drill intersections.

The mine utilises two main forms of stope development, notably drift and fill where the orebodies are thin and high grade and dip at between 15-45°, and bench and fill where the ore must be >16m thick, be of a single ore type, and dip at >45° or <15° (mini bench and fill is used where the ore is <10m thick).

For drift and fill, current grade control involves face sampling to a particular pattern dependent on the ore type being sampled. For massive ores, 6 panel samples are collected from a 5x5m face (originally, 9 samples were collected, but budget cut-backs and a general overall agreement of sampling results led to the reduction). For fissural ores, 6 chip samples are collected across each face.

As a general conclusion, WAI believes that much of this grade control effort may be unnecessary (particularly the bench and fill drilling) as a considerable volume of historical data points to a consistent trend that the grade control samples give grades approximately 10% higher than the defined reserve grade for that particular block. Thus, it may be more beneficial and cost effective to undertake additional fan drilling at the resource definition stage, rather than considerable volume of grade control drilling now undertaken.

In terms of resource modelling and reporting, SOMINCOR consider Neves Corvo Mine as 11 deposits, comprising:

Three resource modelling methods are used by SOMINCOR. Resources for Neves, Corvo, Graca and Zambujal are evaluated using Vulcan Software. Resources for Lombador and Lombador/ Corvo Bridge have been prepared in Gemcom. Zinc resources for North Neves, South Neves, South-East Graça and South-East Corvo and also copper resources for South East Corvo were estimated in SUMP system (in-house Rio-Tinto software, developed in the mid 1980’s). Sump system estimates were last updated in 1997.

WAI has audited the resource evaluation methodologies and has inspected Zambujal, Lower Corvo and Lombador resource models. WAI also reviewed AMEC’s report entitled ‘Neves Corvo Project: Data and Resource Reviews Report’ prepared for EuroZinc Mining Corporation (EuroZinc) in January 2005 along with WAI’s report entitled ‘Technical Report on the Neves Corvo Mine’ prepared for EuroZinc in 2004.

SOMINCOR classifies resources according to the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves (2006), generally known as the JORC Code. WAI is of the opinion that the JORC Code resource and reserve categories are in all material respects equivalent to the resource and reserve categories as defined by CIM (2005) in Canada and, therefore, the mineral resources identified by SOMINCOR are directly equivalent to the Measured, Indicated and Inferred mineral resource as specified in National Instrument (NI) 43-101, and the authors hereby do so certify.

For the Vulcan models block sizes are 2m cubes for production areas and 4m cubes for exploration areas with minimum sub-blocks of 0.5m. The Gemcom resource model utilizes a 10×10×5m cell size with percent models to preserve wireframe volumes.

The resources are defined according to the dominant value metal present. The grade boundaries used are as follows:

In the case of ambiguity, tin takes priority over copper content, which in turn overrides zinc.

Surface and underground exploration drilling are ongoing operations at the mine. Drilling is performed using both in-house drill rigs and contractors. Underground fan drilling produces 17-35m spaced intersections whereas intersections from surface are spaced 70–100m apart. Surface drill holes can deviate significantly, especially at the Lombador deposit were some holes are more than 1,000m.

NQ drilling equipment is used for both underground and surface exploration drilling. Occasionally holes are reduced to BQ when difficult drilling conditions require. Underground drill holes are surveyed with an Eastman Single Shot tool every 15-40m as were the historic surface holes. Surface holes since 2005 are surveyed with Reflex EZ-Shot instruments on 30m intervals.

Grade control drilling is done vertically from the top access of ‘Bench and Fill’ stopes on a 10m spacing using 10-30m long NQ and BQ holes.

Specific gravity measurements are done on exploration drill hole intervals with visible massive sulphide or stockwork mineralisation using the traditional water displacement method prior to sampling.

The core is halved by diamond saw with one half sent for assay and the other half archived. Prior to 1999, ¼ core was used for sampling with ¾ archived, but it was considered that ¼ core was not representative, especially for FC type mineralisation. As most of the copper resources originally evaluated on ¼ samples have already been mined or re-evaluated using ½ core, any bias resulting from differences in sample volumes is considered minimal and unlikely to have any impact to the current resource estimates. Grade control drill core is whole core sampled.

Sample length is normally controlled by lithology with 1m lengths for most of the massive sulphide samples and 2m for stockwork.

Underground development faces in ore are normally sampled by chip sampling. The 5x5m faces are divided equally into six 1.5x1.5m areas, with each area constituting one sample. Each face is sampled every second or third advance, which equals a sampling interval of 6- 9m. In the past, 9 to 12 chip samples were taken from the face and side walls were also sampled every 3–4m.

SOMINCOR Lab is accredited by the Instituto Portugues Qualidade (IPQ), certificate 93/L.106, renewed each 3 years and submitted annually to quality audits by the same Institute, and also to internal audits.

The laboratory has been accredited for ISO NP EN 450001, changed in 2002 to the new ISO/IEC 17025, for 47 analytical methods and around 100 determinations. Of these methods, 17 are for operational and commercial purposes and 30 are needed for environmental controls. The laboratory is also responsible for sampling the concentrate leaving the mine by train and at Setúbal.

Lab activity is ruled by written contracts signed by the client, stating for example:

The laboratories regularly deal with three types of sample: underground production samples, production drill core and exploration drill core. Initial preparation of these samples is common with drying at 105°C, crushing to 6.3mm, riffle splitting, then milling to 1mm.

From here, the underground production samples are bagged and a sample taken for XRF analysis. Similarly, the production and exploration drill core samples are also analysed by XRF, but are also subject to further analysis after pulverisation to 150µm which includes Cu by Electrogravimetric methods, Ag by Flame Atomic Absorption and Hg by Hydride Atomic Absorption.

WAI has inspected these facilities and protocols and is satisfied with the current set up.

QA/QC systems are in place and appear to work satisfactorily. In detail, these include:

With regard to security of samples and data, SOMINCOR state that:

In summary, Neves Corvo operates stringent sample preparation and analytical procedures in full accordance with international standards.

WAI has not undertaken a data verification exercise at Neves Corvo as the original brief for the Due Diligence study did not require such an investigation. Moreover, in a mature mine such as Neves Corvo, there has been a constant data verification process from sample data through to resource model and as such, WAI is satisfied that any significant problems have been dealt with as part of the on-going process.

However, as part of this current study, WAI has inspected a selection of drillhole sections, plans and assay data, and can conclude that no problems have been identified.

In addition, WAI has examined the orebody models with respect to the data input, statistical analysis and variography, and again can conclude that no errors were identified.

No information on adjacent properties is relevant to this report.

The processing operations at Neves Corvo are divided between the Copper Plant, which treats copper ores, and the Zinc Plant which treats a polymetallic ore.

The processing of copper ores at Neves Corvo is well established, with over 18 years of production. By world standards, the copper ores are exceptionally high-grade although processing is made more difficult by the fine grained nature of the mineralisation and high levels of pyrite present. The plant has treated a maximum of 2.04Mtpa of ore and the plant is being modified to treat up to 2.2Mtpa.

In 2006 the Company commenced treating zinc ores. These massive pyrite ores are essentially polymetallic, containing minor levels of copper, lead, and silver although these minerals are not recovered. The ores are treated at a rate of 400,000tpa in the former Tin Plant which has been converted for this purpose.

For the purposes of processing, the ores are categorised into several different Ore Types:

These ores are blended to give a consistent feed to the plant. No attempt is made to produce a zinc concentrate from the MCZ ore. A preliminary treatment campaign was initiated in August 2006 and metallurgical investigations are ongoing.

The performance of the Copper Plant since 1997 is given in Table 18.1, Figure 18.1 and Figure 18.2 below.

The plant throughput has increased since 2003, reaching a maximum of 2.04Mtpa in 2005. Copper recovery has also increased and stabilised over the last three years and is now in excess of 88%. The plant head grade has fallen over the same period from 5.74% Cu (2004) to 4.56% Cu (2006). The daily silver grade in the copper plant feed and concentrate from December, 2000 is shown in Figure 18.3. The actual silver recovered to copper concentrate from the daily production data is given in Figure 18.4 showing consistent performance.

A flowsheet for the Copper Plant is presented as below.

After the primary underground crushing stage, where ore is crushed to approximately 0.25m, the ore is delivered to the surface and discharges via a stacker conveyor to a coarse ore stockpile of 50,000t capacity. The ore stockpiles are blended to ensure a constant copper head grade and that the levels of penalty elements are kept within certain limits. The MH ores contain higher levels of arsenic (>5,000ppm) and are blended, typically at a ratio of three MC to one MH in order to reduce the overall grade of the plant feed to less than 5,000ppm As. Mercury levels do not require blending.

Ore is fed to the secondary crushing plant via a front end loader. The Copper Plant has experienced difficulty in crushing wet ore and a triple deck screen (35, 25 and 19mm) was installed to remove fine material ahead of the crushing plant. This has significantly improved crushing rates and now the crushing plant typically operates for 10 hours per day at a rate of 600t/h.

The crushed ore passes to a fine ore bin of approximately 10 hours capacity and then via a feed conveyor fitted with a belt weightometer to the grinding section.

The grinding section uses three stages of conventional grinding, namely rod milling, primary ball milling and secondary ball milling where the ore is ground to 80% passing 40-45µm.

The grinding capacity of the Copper Plant is summarised in Table 18.2:

The rod mill discharge joins the primary ball mill discharge and is cycloned in a bank of 500mm cyclones. The secondary mill discharge is cycloned in a bank of 250mm cyclones with the cyclone overflow passing to the flotation section.

The regrind mill circuit utilises only one of the two installed mills. Classification is achieved with 150mm cyclones reducing the material from a d80 of 35µm to a d80 of 25µm.

The flotation circuit uses conventional cells of 38m³ and 17m³ capacities. The flowsheet is summarised as follows:

The reagent system in the copper plant is very straightforward and consists essentially of lime to increase the pH, the collectors D-527 (a blend of dithiophosphates and thionocarbamates) and xanthate, the latter being used in scavenger flotation to increase recovery. Frother is not used and it was noticed that the froth appeared very heavy on many of the cells during the site visit.

Lime is added within the grinding circuit to increase the pH of the pulp in the rougher cells to between 10.8 and 11.0 and between 10.6 and 11.4 in the scavengers. Flotation cell capacity is given in Table 18.3.

The final copper concentrate is pumped to a 40m diameter thickener. The thickener underflow is pumped via a 270m³ holding tank to one of five Sala VPA Pressure filters. Due to the lower head grades now being treated, compared with earlier years, the filtration capacity significantly exceeds the current requirement.

The empty containers are used to transport the quarried sand back to the mine for use as backfill.

The loss of concentrate during shipping is reported to be 0.35%

Automatic samplers are used to produce daily composites of the mill feed (copper rougher conditioner feed), plant tailings (lamella feed) and final copper concentrate. The sample collection and preparation is undertaken by the laboratory staff, are under control of the Commercial Department.

The plant is equipped with three Amdel OSA probes which are located on the plant feed, concentrate and tailings streams. These multi-element probes can determine Cu, As, Zn, Sb, Sn and Pb. Five intermediate process streams are analysed using an Outukumpu Courier 30 OSA. These are the first rougher tailings, second rougher tailings, scavenger tailings, first cleaner tailings and regrind rougher cleaner 2 tailings streams. The analysis systems communicate with a Bailey Network 90 DCS that is used for stabilising control in the crushing, grinding, flotation and filtration sections.

The Copper Plant consumable are summarised in Table 18.4.

The Zinc Plant has only been in operation since June 2006 and treats some 0.40Mtpa of zinc ore, predominantly from the Corvo South deposit. The plant achieves a zinc concentrate grade of 49% Zn at a recovery of approximately 80%.

The Zinc Plant uses the conventional processes of crushing, grinding and flotation to produce a moderately low grade zinc concentrate. The zinc minerals are fine grained and the concentrates require grinding to pass 20µm in order to achieve satisfactory liberation between sphalerite and pyrite.

The flowsheet consists of sequential flotation of copper and lead minerals followed by zinc flotation.

A flowsheet for the Zinc Plant is given in Figure 18.6.

The crushing section of the Zinc Plant is capable of crushing up to 80tph of zinc ore to -11mm. The plant consists of a 750 x 500mm jaw crusher which is in open circuit followed by two stages of cone crushing. Secondary crushing takes place in a Standard H400 cone crusher, which is in open circuit, followed by a Tertiary crushing stage using a H400 Shorthead cone crusher, which in closed circuit with a screen.

The current grinding circuit consists of two stage ball milling, each mill with 450kW motors, with regrinding of both copper-lead and zinc rougher concentrates.

The final product size is approximately 80% passing 45µm.

The current (August 2007) Zinc Plant circuit involves the bulk flotation of a copper-lead concentrate which is reground and then cleaned in four stages followed by a fifth column cleaning stage. Zinc is then floated from the copper-lead tailings and cleaned four times after regrinding. A summary of the Zinc Concentrate performance for the first 6 months of 2007 is given in Table 18.5.

Separate copper and lead flotation circuits are still to be installed and commissioned in order to remove a copper rich concentrate and produce saleable lead concentrate as demonstrated in previous laboratory and pilot plant studies. Results from typical locked cycle laboratory tests from G&T Metallurgical Services are given in Table 18.7 showing 23 % silver recovery to a lead concentrate of around 45% lead grade.

The final zinc concentrate is pumped to a 12m conventional thickener and the thickener underflow is pumped to a Sala VPA pressure filter.

The Zinc Plant consumable are summarised in Table 18.9.

The consumption figures are typical for the treatment of a massive pyrite, polymetallic ore.

The concentrates are transferred into 27t containers which are weighed and then transported by rail to Setúbal. On arrival the concentrates are off-loaded into a storage shed of 50,000t capacity. Reclaim for ship loading is by conveyor belt at maximum rate of 800tph.

Concentrates are predominantly sold to six smelters which are listed in Table 18.10.

The copper concentrates incur penalties, predominantly for mercury, and a credit for silver values. The average level of penalties currently incurred is between US$4-5/t.

A Production Manager is responsible for both the Copper and Zinc plants operations. The two concentrators are operated with five shift crews each with one supervisor and 14 operators. A day crew is used for routine tasks such as reagent mixing, ball loading, general clean-up etc. The plants are scheduled to operate 24 hours per day, seven days per week.

The total number of personnel employed on operations is 77.

A total of 61 personnel are employed in the plant maintenance department under the control of the mill manager. The department is split into Planning, Instrumentation and Electrics, Mechanical, General and Projects/Drafting. A total of 25 contractors are employed in the Maintenance department for such duties as sand blasting, painting, mechanicals and electrics.

A total of 8 are employed on Process and Systems and a further 8 on Tailings disposal.

The laboratory operates under the control of the Commercial Department and is responsible for operational, environmental and quality control aspects of the operation. The laboratory is accredited to ISO/IEC 17025 for 47 analytical methods and approximately 100 determinations. For production samples the laboratory uses X-Ray fluorescence (XRF), and atomic absorption spectrophotometry (AAS) for sample analysis as well as an electro-gravimetric method for analysis of the final copper concentrates and a LECO analyser for sulphur determinations.

The laboratory is equipped with two XRF machines with one being used for grade control and geological samples whilst the other is dedicated to plant production.

Approximately 64% of the XRF analyses are undertaken for the mine, 35% are for the plant and 1% is for the Commercial Department. The AAS analyses are split 35% for the mine, 53% for the plant and 12% for the Commercial Department.

The total number of staff employed in the laboratory is 22.

The operating costs* for processing 2.0Mtpa of copper ore are summarised in Table 18.1.

*Note: The costs for ore processing are obtained directly from the SOMINCOR Cost Statements.

The operating costs* for processing 0.40Mtpa of zinc ore are summarised in Table 18.12.

*Note: The costs for ore processing are obtained directly from the SOMINCOR Cost Statements.

All analytical, survey and geological data is kept in a fully functional and secure SQL database.

Geological logging of development faces and underground drill core is done digitally, using handheld computers with data imported directly into the SQL database. Laboratory assay results received are also transferred digitally, eliminating the chance of typographical errors.

Ore lens codes are assigned to each sample interval based on both the geological log and assay results. Ore lens codes are used to identify geological domains in the resource modelling.

The geology department at Neves Corvo historically used an in-house 2D block modelling system (SUMP) as their primary geological modelling software. This system was designed to create paper plots of ore boundaries from which the mine geologists implemented grade control procedures and updated ore boundaries as it was only possible to consider an individual 2m thick slice plotted onto a paper plan at any given moment.

As development of the orebody progressed, it became apparent a 3D system was required to understand the complex orebody geometry. In 2001, the mine introduced the Vulcan software system.

The Geology Department completed the transfer of SUMP format block models into Vulcan block models in 2004. Since 2004, the mine has been performing the variography and block model updates within Vulcan.

On-going exploration on the Lombador deposit is under the direction of Lundin’s Exploration Department who, in 2006, assisted the SOMINCOR geological department by updating the Lombador/Corvo Bridge and Lombador resource models. This update was done using Gemcom.

Population statistics are calculated by deposit and mineralogical type to determine estimation parameters.

As discussed in AMEC’s 2005 report, the population statistics suggest that natural thresholds between ME and MC mineralisation may lie at 3-4%Cu. In the case of stockwork mineralisation, the natural boundary most likely lies at 0.5-1.0%Cu.

Resource estimation is constrained by domains interpreted from geological and assay data. The location of lithological contacts is derived from drill core and underground mapping data (if available), to determine domain boundary location. There are 9 main domain types at the deposit as follows:

1.

Host volcanic rocks (Footwall) and greywacke (Hangingwall);

2.

Massive pyrite (ME);

3.

Massive chalcopyrite (MC);

4.

Massive chalcopyrite and sphalerite (MCZ);

5.

Massive sphalerite (MZ);

6.

Stockwork barren sulphide mineralisation (FE);

7.

Stockwork chalcopyrite mineralisation in footwall contact (FC);

8.

Stockwork chalcopyrite mineralisation in hanging wall contact (RC); and

9.

Rubane (tin & copper mineralisation).

Contacts between stockwork and massive sulphide bodies, stockwork and non-mineralised host rocks and between host rocks and massive sulphide are identified using lithology data from core log and underground mapping. Assay COGs are used to distinguish ore types inside the massive sulphide and stockwork structural types as follows:

Neves, Corvo, Graca and Lombador:

Mineral resources for Zambujal reported at following COGs:

Historically, the Neves Corvo resource model was created and evaluated using the SUMP system which was not capable of 3D wireframe modelling. Domains were outlined on 2m horizontal block model slices without linking the outlines together to create true 3D solids.

Since the SUMP block models were imported into Vulcan, domain models are based on sectional interpretation of the drill hole data plus any available face samples and underground mapping information.

Closed vertical perimeters, created in Vulcan, are linked together to produce 3D solids for each domain. Interpretation is performed on vertical cross sections orientated at 057-237°. Despite drill holes normally being spaced either 17.5m or 35m apart, intermediate perimeters are created manually every 2-4m between drill hole profiles in order to produce smoother solids. Solid construction is based upon a minimum mining width of 2m.

Domain solids are used as boundaries for block modelling and grade interpolation.

The resource model for the Lombador/Corvo Bridge and the Lombador deposit was created in Gemcom. The MC, MZ and ME domain wireframes were interpreted from available surface and underground drill holes. No assumptions with regards to minimum mining width was made for the Lombador resource model thus the wireframes represent in-situ geological and grade envelopes. Three distinctive massive sulphide lenses have been identified within which two MC and four MZ bodies were modelled.

Histograms of sample length for the massive sulphide (ME+MC+MZ+MCZ) and stockwork mineralisation (FE+FC), for drill hole samples, from all deposits are shown in Figure 19.1 and Figure 19.2.

SOMINCOR does not composite samples prior to grade interpolation since the majority of assaying has been done on the same length. In case of Lombador/Corvo Bridge and Lombador 1m composites were used.

SOMINCOR’s present Vulcan resource model comprises several individual block models sub-divided by deposit and further sub-divided by elevations within a deposit. The main reason for these subdivisions is Vulcan’s limitations on block model size and computing time during interpolation.

The block model was originally created in SUMP using 2x2x2m size cells, with no sub-cells. The SUMP model was imported into Vulcan between 2001 and 2004. The Vulcan system is currently used for maintaining and updating the resource model.

Updating of the block models for massive sulphide and stockwork mineralisation is carried out using 2x2x2m parent cells in production areas and 4x4x4m parent cells in exploration areas. A minimum sub-cell size of 0.5m is used in both cases. Host rocks (volcanics and greywackes) are modelled with 50x50x20m parent cell dimensions. The whole block model structure is rotated 57° around the vertical axis to be parallel to the drill hole profiles. Blocks and sub-blocks are coded according to their mineralogical and structural type.

Standard Gemcom ‘percent’ block modelling technique was used with a cell size of 10×10×5m. Overall model structure is rotated 33° counter clockwise to align with drill hole profiles.

Somincor has traditionally modelled each orebody and ore type separately, employing nested two structure spherical semi-variograms. Directional semi-variograms are generated for Cu, Zn, Pb, S, Fe, Ag, Hg, Sn, As, Sb, Bi, Au and specific gravity. There are more than 70 variogram models that require fitting for each deposit. WAI has inspected a number of semi-variograms and found them to be appropriate. Examples of the semi-variograms used in Zambujal resource modelling are shown in the Figure 19.3 and Figure 19.4.

Grade interpolation for Cu, Zn, Pb, S, Fe, Ag, Hg, Sn, As, Sb, Bi and Au is performed using ordinary kriging with variogram model parameters derived from geostatistical analysis. A two iteration search method is employed, with the first search ellipsoid dimensions being determined by variogram range and the second search radius being twice the range. A unique search ellipsoid is used for each deposit, domain and metal. A minimum of 4 and a maximum of 32 samples are used to estimate the grade of each cell. Soft boundary conditions are used between lenses.

SOMINCOR collects specific gravity (SG) measurements for massive sulphide exploration samples using a water displacement method. SG determinations for each sample are subsequently used for SG interpolation in the block model, using an ordinary kriging and the search ellipsoid applied for the grade interpolation.

A summary of the various density values used for the different ore types can be seen in Table 19.1.

SOMINCOR reports its mineral resources under the JORC system of resource classification. During the grade estimation process, the current system classifies each cell into one of three resource categories on the basis of average distance to samples as follows:

The summary for the current Neves Corvo mineral resources as on 31 December 2006 is provided in Table 19.2 below.

The definition of reserve envelopes is an integral part of the mine planning activity at Neves Corvo. Stoping volumes are determined according to access, cut-off grade, planned and unplanned dilution and ore loss. An effective minimum mining width of 5m is applied. SOMINCOR prepare their reserve statement annually based on Measured and Indicated resources only, and the principal tool used is Vulcan® 3D software.

The mining cut-off grade (COG) applied at Neves Corvo is determined by the senior management and is based on a combination of economic, mining and geological factors. The calculation is made by dividing the sum of the variable operating costs, the development costs and the royalties, per tonne of ore treated, by the net sales revenue per % metal per tonne treated.

The economic boundaries of the copper ore bodies at Neves Corvo are largely controlled by structure and ore type. The influence of the COG, therefore, on the tonnage of mineable copper ore in the reserve is limited.

The zinc ore bodies are much more influenced by the COG, and their size and hence mining method is directly affected by the COG used to define the reserve.

Grade, however, is the principal element used to determine stope boundaries for both copper and zinc ore bodies.

The potential economic viability of an ore body or portion of the mining reserves is determined based on one metal, i.e. either copper content or zinc content.

At the present time, there are no treatment facilities to recover zinc from the copper ores, but this capability is planned for commissioning in 2010. Silver values are recovered from copper ores, and SOMINCOR expects to be able to recover lead and silver from zinc ores from 2009 onwards.

The first stage in the reserve estimation methodology is to produce wire frames of the orebody at the cut-off grade boundary. This is achieved by importing the geological resource block model, prepared by the geology department, into Vulcan and applying the current cutoff grade. All blocks in the model with an average grade below the current cut-off grade are deleted from the model. The resulting economic block model is then viewed in a series of plans at 5m vertical intervals. The mining engineer draws an outline around the economic ore blocks on each level to form a series of wire frames also at 5 m vertical intervals. Figure 19.5 and Figure 19.6 below illustrate wireframes at the 2% Cu COG level in the Zambujal orebody.

Not all the blocks within the economic block model will be included inside the wire frame envelope. A number of factors including stoping method, minimum mining width, amount of development required and grade determine whether or not the block will be included. Conversely, some blocks below the minimum mining width of 5m may be included, if the grade of the block is sufficiently high to justify the cost of extraction and processing.

A series of 5 m thick solids, representing the volume of mineable material on each level, are then created from the wire frame envelopes as seen in Figure 19.7. Wedges are manually inserted between the hangingwall and footwall intersections of solids on each level. These represent slashing of the stope sidewalls in order to fully extract the ore in each stope.

The solid model is re-evaluated against the original geological resource block model to determine the volume, tonnage and grade of the material inside the model along with ore type and any internal dilution.

The geological resource block model used to determine the mining reserves contains Measured, Indicated and Inferred resources. Historically at Neves Corvo, almost all resources in the Inferred category have subsequently transferred through to Indicated and Measured categories. For this reason the creation of the wire frames and solids is performed on the entire block model with Inferred resources being deleted from the reserve after evaluation against the original block model.

During the reserve estimation, due cognisance is taken of mined-out areas within the mine. Solids created from underground survey data are imported into Vulcan and used to overlay the block model. Figure 19.8 illustrates a large mined-out area (shown in light brown) imported in to Vulcan and used to assist in the drawing of wireframes.

The solid models produced in Vulcan along with associated tonnages, grades, ore-types, resource category and internal dilution are then incorporated into the mining plan. The planning department apply a detailed dilution factor to each stope using a dilution simulator. This dilution simulator takes into account mining losses and dilution introduced through mining next to backfill. The amount of dilution is dependant on stope size, mining method and backfill type.

For the purposes of reserve reporting a dilution factor is applied to each stoping block dependant on the mining methods employed. Typical dilution factors applied are:

An overall mining recovery factor of 95% is also applied to the reserve, to allow for losses particularly near contacts and in secondary stopes.

In order for reserves to be considered Proven or Probable, they must be derived from Measured or Indicated resources only, and also be supported by mine plans and schedules together with all associated costs, recoveries and dilutions, in order to demonstrate that extraction is economically viable.

In February 2007 WAI audited the reserve estimation methodology employed by SOMINCOR along with the Reserve Statement dated 31 December 2006, and as such believe the reserves to have been prepared in accordance with JORC Code (2004) and CIM Definition Standards on Mineral Resources and Mineral Reserves (CIM 2005) definitions that are referred to in National Instrument (NI) 43-101, Standards of Disclosure for Mineral Projects. Table 19.3 below is a summary of reserves contained within the mine as of 31 December 2006.