HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"

NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)

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Domestic Price Of Ferro-Chrome In China Is Weakening For Decreasing Production Of Stainless Steel
= Price Of Charge Chrome At End June Has Fallen To US$1.87 Per Lb. Of Cr
Reflecting the fact that major stainless steel mills of China have been continuing to decrease their production of stainless steel, the market price of high carbon ferro-chrome (charge chrome with Cr 50%) in China is falling. The domestic price of this high carbon ferro-chrome in April to May had risen to CNY16,600 per metric ton but turned to fall to CNY13,700 at the end of June.

This domestic price of CNY13,700 per metric ton at the end of June corresponded to US$1.38 per lb. of Cr, having fallen sharply from that (US$2.21) in May. Stainless steel companies in Japan, South Korea and Taiwan have regarded stainless steel mills in China as an enemy for them and, therefore, are interested in knowing how extent is the domestic price of ferro-chrome in China falling.

In order to adjust excessive stocks of stainless steel products, major stainless steel mills of China have entered from May into the structure to decrease their production of stainless steel and a signal to recover the production from July is not seen yet. Owing to this reduction on production of stainless steel in China, the market price of high carbon ferro-chrome in China had once maintained a firm tone but is now in the direction to weaken. The background is due to the matter that Chinese producers of ferro-chrome were eager to purchase chrome ore as raw material for production of ferro-chrome and have now held fairly stocks of chrome ore. Under this situation, it is possible for Chinese mills to purchase necessary lots of ferro-chrome produced in Chins without problems.

According to the customs-statistics released in China, this country imported 2,940,000 tons of chrome ore in January - May of 2008, having increased by 22.5% compared with that (2,400,000 tons) in the same period of 2007. As a matter of fact, China imported 6,090,000 tons of chrome ore in the calendar year (January - December) of 2007, having had a substantial increase of 40% compared to that in the preceding year of 2006, and secured necessary quantity of chrome ore. China has been importing chrome ore in 2008 on a higher pace than that in 2007.

As regards sources to import chrome ore into China, this country has been increasing the imports from South Africa. A crisis of electric power has emerged in South Africa from the end January of 2008 and it is unable to expect an increase of electricity supply for the next 5 years. Accordingly, new tendency to export a surplus of chrome ore from South Africa is coming up. Under the present situation which China is only the country to purchase chrome ore on spot base, there is no other way but to increase exports of chrome ore for China.

The quantities of chrome ore imported from main sources into China in January - May of 2008 were <> from South Africa : 1,048,000 tons (compared with 654,000 tons in the same period of 2007), <> from Turkey : 442,000 tons (507,000 tons in 2007), <> from India : 300,000 tons (457,000 tons in 2007), <> from Philippines : 168,000 tons (63,000 tons in 2007) and <> from Oman : 315,000 tons (103,000 tons in 2007).

In consequence of that China increased their imports of chrome ore in January - May of 2008, at the beginning of 2008, China was expected to increase their imports of high carbon ferro-chrome but actually imported 563,000 tons of high carbon ferro-chrome in January - May of 2008, which increased by only 11% compared to that (504,000 tons) in the same period of 2007. China imported 1,348,000 tons of high carbon ferro-chrome in the calendar year of 2007 and is anticipated to import high carbon ferro-chrome on a scale 2,000,000 tons per annum in 2008 but this high pace to import high carbon ferro-chrome into China is supposed to be necessary to revise.

The domestic price of high carbon ferro-chrome in China has turned to weaken as mentioned above and this aspect of price for high carbon ferro-chrome (charge chrome) in China is a contradictory phenomenon to a rise of 13 US-Cents per lb. of Cr (new benchmark price has come to 205 US-Cents per lb. of Cr on the basis of delivered to mills and duty paid) settled with stainless steel mills in Europe for shipments in July - September quarter of 2008. Since the market of high carbon ferro-chrome in China has shrunk, Indian suppliers are now offering high carbon ferro-chrome for Japan at discounted prices. As far as Asian market is concerned, it is hard to say that the market price of high carbon ferro-chrome in Asia will be kept on a firm tone. The negotiations with stainless steel companies of Far Eastern Asia on price of South African charge chrome for shipments in July - September quarter are not settled yet and, under the circumstances which domestic price of high carbon ferro-chrome in China has weakened, a possibility to create a stir in the above negotiations is coming up
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