A European Commission report has named fluorspar as one of its 14 'critical mineral raw materials' for which a predicted supply shortage would represent a substantial economic threat. The fluorspar market is going through a ‘paradigm shift’ – with China evolving from a large net exporter to a potential net importer. Tertiary Minerals plc is one of a limited number of listed companies offering exposure to looming fluorspar market shortage.

The Company has diversified its risk with projects in a variety of commodities in Finland and Saudi Arabia. 

Finland

Kaaresselkä 

The Company holds the Kaaresselkä gold prospect in the Lappland Greenstone Belt in Northern Finland.

This greenstone belt contains numerous gold deposits including the world-class 3 million+ ounce Suurikuusikko discovery now being developed by Agnico Eagle.

Gold was first discovered at Kaaresselkä by the Geological Survey of Finland ("GTK") which completed 10,000m of diamond core drilling in 185 shallow holes. The project area has well developed infrastructure and is accessed by a network of logging roads and is just 15km from the Pahtavaara gold mine owned by Lappland Goldminers AB of Sweden.

Drilling to date at Kaaresselkä is reported by GTK to have intersected gold mineralisation in three separate zones - Vanha, Tienvarsi and Lampi - within an area of 1.1km by 0.6km. Drilling of the Vanha zone indicates that it is at least 650m long and broken into a number of fault blocks so that it does not outcrop continuously. In the centre of the Vanha zone there is a continuous block of mineralisation 200m long and 9-16m wide continuing to the deepest drill-hole at a depth of 55m from surface.

The Tienvarsi zone, drill defined for 200m along strike to date, has a reported width of 4-13m and has been drilled to only 40m vertical depth.

At Lampi drilling has defined a 10m wide breccia zone with assays up to 5.87g/t gold. Several other targets are defined by geochemical and geophysical anomalies and limited drilling.

GTK reported a best drill intersection of 2m grading 45g/t gold and several drill intersections of 3m grading better than 10g/t gold. The gold occurs as free gold, sometimes visible in drill core. Previous drilling was reportedly hampered by weathering of the mineralised zones which made for poor core recovery and hindered a detailed resource estimate. However, from drilling of the Vanha and Tienvarsi open-ended 200m long zones, GTK estimated a volume of at least 160,000 cubic metres of mineralised material grading between 1 and 10g/t gold and between 0.2% and 2% copper to the maximum drilled depth of 55m from surface. Mineralisation remains open at depth and along strike within Tertiary's claims and claim applications.

Tertiary has completed two phases of drilling. The best results were obtained from the Vanha zone where a zone of gold mineralisation was defined that is open at depth and along strike. The explored area is just one part of the prospective Kaaresselkä Shear Zone in the 4km long project area now controlled by Tertiary Minerals. The Shear Zone itself is associated with the Sirkka Break, a major geological feature associated with gold mineralisation in Central Lappland.

Rosendal Tantalum Project

The Rosendal claim is located in south-west Finland, on Kemiö Island and was originally discovered by the Geological Survey of Finland (GTK).

Tertiary has carried out a number of drilling programmes at Rosendal. CSMA Consultants Ltd completed an initial financial evaluation in 2002 as a part of the preliminary feasibility study. This work evaluated capital and operating costs for a contract mining operation feeding a gravity concentration plant producing 60,000 pounds of Ta2O5 in high-grade tantalite concentrates and a saleable feldspar concentrate. The capital cost for a plant treating 125,000 tonnes per annum was estimated at US$5.5 million.

The basis for the CSMA study was an Inferred Mineral Resource block model compiled by SRK Consulting and estimated to contain 1.05 million tonnes at a mean grade of 255ppm Ta2O5.

The results of CSMA pit-optimisation studies suggest a limited mine life based on the current block model and the low 2002 tantalum prices. CSMA concluded that a resource of 1mt at an in situ grade of approximately 390 ppm Ta2O5 would be required in addition to higher tantalum prices to progress the project further and that additional drilling at depth may be justified to increase the available tonnage of higher-grade material.

The Rosendal pegmatite is currently open at depth and contains a number of higher grade zones with potential to meet the future requirements for a commercial operation.

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Kiekerömaa Gold Project

The Kiekerömaa project is part of the wider gold interests of the Company in Finland which include the Kaaresselkå gold project, 20km to the east. They are located within the Lappland Greenstone Belt which hosts a number of advanced gold projects and two operating gold mines including the multi-million ounce Kittila Gold mine operated by Canadian major, Agnico Eagle Mines.

The Kiekerömaa prospect was drilled in 1997 by Outokumpu when six shallow reverse circulation drill holes were completed to follow up an area of gold-anomalous soils found during regional soil sampling. Encouraging gold-bearing drill intersections were made by Outokumpu but were not followed up in that period of low and declining gold prices.

In April 2011 Tertiary Minerals completed an eight hole diamond drilling programme at Kiekerömaa. The drilling programme, whilst affected by low core recovery, has indicated the potential for a significant gold-bearing sulphide mineralised zone. Extensive core loss in shallow holes suggests deep weathering of hydrothermally altered rocks associated with extensive gold-mineralised zone. It also means that the mineralised zone was not meaningfully sampled in the majority of shallow holes.

A deeper holes with good core recovery gave the best result: 4.55m grading 3.62g/t gold from 89.90m within thick sulphide-mineralised zone - 50.55m grading 0.49g/t gold from 74.25m to the base of the hole in 11KAD-006 at the western edge of the area tested.

Geophysics planned to outline the extent of the gold-bearing sulphide zone and to locate further drill targets.

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Sweden

Storuman 

Tertiary Minerals holds an exploration licence covering a major deposit of fluorspar near Storuman in the Västerbottens district of Northern Sweden. Fluorspar is the commercial name for the industrial mineral fluorite (calcium fluoride - chemical formula CaF2) which is an essential raw material in the chemical, steel and aluminium industries. Tertiary controls an estimated four million tonnes of fluorspar across its two Scandinavian projects (Storuman in Sweden and Lassedalen in Norway).

MINERAL RESOURCE ESTIMATE

In March 2011 the maiden JORC compliant Mineral Resource was estimated for the Storuman Fluorspar Project. Further details may be found in the RNS dated 31st March 2011

Table 1 - JORC Mineral Resource Estimate effective 25th March 2011

The Mineral Resource Estimate is based on the results from 56 diamond drill holes completed by the Company in 2008 and 2010. All tonnage in the estimate falls within a Whittle optimised open-pit with low waste overburden strip ratio (0.8 tonnes of overburden per tonne of mineralisation). 

By definition, a JORC compliant Mineral Resource must have reasonable prospects for eventual economic extraction and portions of a mineral deposit that do not have such prospects must be excluded from the estimate. 

To determine the Mineral Resource Statement, a Whittle pit optimisation exercise is used to determine the proportion of the material that has a reasonable prospect of economic extraction. The ore tonnage and grade generated by the pit optimisation process is the Mineral Resource Estimate. It is classified as either “Inferred” or “Indicated”. The Minerals Resource at Storuman is 90% in the higher “Indicated Mineral Resource” category which means that confidence in the estimate is sufficient to allow the application of technical and economic parameters, and to enable an evaluation of economic viability.

Fluorspar mineralisation in close up

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Norway

Lassedalen Fluorspar project

The Lassedalen fluorspar deposit was mined on a small scale during World War II when it was developed to a depth of 40m below surface and fluorspar was mined from a 560m long drift for use in aluminium smelting.

The mine was dewatered in the 1970s by Norsk Hydro A/S when drilling was carried out from both surface and underground. Norsk Hydro estimated that the most intensively explored section of the steeply dipping Lassedalen vein contained 4 million tonnes of mineralisation, containing 1.2 million tonnes of fluorspar mineral at an average grade of 29% fluorspar (at a cut off of 20% fluorspar over minimum width of 2m). In March 2011 the fluorspar concentrate price for Chinese acid-spar (CIF Rotterdam) is US$460/tonne. Fluorspar mineral concentrate is currently priced at US$350-365 per tonne CIF Rotterdam. The tonnage was estimated from 25m below surface, allowing for a crown pillar, to an average vertical depth of just 200m below surface. Mineralisation is open at depth.

This tonnage-grade estimate was produced before the introduction of the Joint Ore Reserves Committee (JORC) standard classifications and was based on results from 28 diamond drill holes, which proved the vein over at least 2.7km strike length, as well as drill cuttings taken from holes drilled into the side walls of an underground mine level cut during World War II. This mine level, developed at an average depth of 40m below surface, was driven over a strike length of 560m almost entirely within the fluorspar vein. Assay plans are available for the drill cuttings and indicate, at the same 20% fluorspar cut-off, a 7m average width of fluorspar mineralisation along the full length of the underground drive. Significantly higher grade sections have been demonstrated - up to 6m grading 68% fluorspar- indicating the potential to define higher grade zones if required.

The Company holds exploration permits at Lassedalen that grant exploration rights to claimable minerals (those with a specific gravity of 5g/cm3 or greater) and the Company has secured exploration rights for non-claimable minerals (which includes fluorspar, specific gravity 3.2) from private land and mineral owners under new mining legislation introduced earlier this year.

The fluorspar exploration rights have been granted by the Norwegian Directorate of Mining and will expire at the end of 2016. There are no other ongoing costs to maintain the rights and no specific expenditure obligations.

This project has complementary characteristics to the Company's Storuman Fluorspar Project where a positive scoping study has been completed.

Where Storuman is a large low-grade deposit mineable by open-pit; Lassedalen is potentially much higher grade and would need to be mined by underground methods due to the surrounding steep topography. Subject to mineral processing testwork results, the Company believes the Lassedalen project may have potential to supply metallurgical-grade fluorspar for the European steel industry, a grade of fluorspar not targeted by the Storuman project, as well as acid-grade fluorspar.

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Saudi Arabia

Ghurayyah Tantalum-Niobium-Rare-Earth Project

Ghurayyah is a world-class deposit containing valuable tantalum, niobium, rare-earths, zirconium and yttrium with a last estimated Inferred Mineral Resource of nearly 400 million tonnes grading 245 grammes/tonne (0.024%) tantalum pentoxide (Ta2O5), 2,840 grammes/tonne (0.28%) niobium pentoxide (Nb2O5), 8,915 grammes/tonne (0.89%) zirconium oxide (ZrO2), and 1,270 grammes/tonne (0.13%) yttrium oxide (Y2O3).

Following on from favourable metallurgical testwork a Scoping Study for development of the Ghurayyah tantalum-niobium deposit in Saudi Arabia was completed in 2003 with positive results. The Study included financial modelling of a number of alternative processing flow sheets over an initial 20-year mine life with costs estimated to an accuracy of +/- 30%. On a 100% equity funded, un-escalated basis the four main flow sheets were all economically attractive. Each produced pre-tax Internal Rates of Return (IRR) in excess of 25% and Net Present Values (NPV) in the range $55-285 million using discount rates between 10 and 20%.

Following the successful Scoping Study further activities have been carried out as part of a Pre-feasibility study including further metallurgical testwork, an environmental scoping study, a location trade-off study and additional resource investigation work.

The process flowsheet being evaluated will consider the hydrometallurgical separation of the metals following flotation and magnetic separation of ore after crushing/grinding. Further processing of Niobium into Ferro-niobium remains the preferred route for this metal.

The conceptual mining rate is 1.52 million tonnes ore per annum over an initial 20 year period although at this rate the known resources should be sufficient for over 200 years of operations.

The project is being funded jointly by Tertiary (Middle East) Ltd together with the consortium of Saudi investors (AH Algosaibi Bros Co and Al Nahla Trading & Contracting Co)

At present work on the project is currently suspended pending the re-issue of an exploration license over the deposit in the names of Tertiary (Middle East) Ltd - a wholly-owned subsidiary of the Company (50%); AH Algosaibi Bros Co (25%); Al Nahla Trading & Contracting Co (25%).

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Patrick Cheetham - Executive Chairman 

Patrick Cheetham has a first class honours degree in Mining Geology from the Royal School of Mines, Imperial College, University of London. He is also a former winner of the Cominco (Europe) prize for mining geology. Patrick co-founded Archaean Gold N.L. in 1993 with his wife, Karen. At the 1995 "Diggers and Dealers" mining forum in Western Australia, Archaean Gold N.L. was awarded "Best Junior Explorer of the Year", and in July 1996 it was the subject of a successful $50 million takeover bid by Lachlan Resources NL. Prior to founding Archaean Gold, Patrick was, from 1986 to 1993 joint managing director of Dragon Mining NL, during which time he was responsible for the formation of that company, the identification of and acquisition of its exploration projects, its listing on the Australian Stock Exchange and the subsequent development of its exploration projects. Patrick operated a private mineral exploration company, Sovereign Mining Limited, in the UK from 1983 to 1985 and prior to that worked for Western Mining Corporation in Western Australia, and for Imperial Metals Corporation in British Columbia, Canada.

David Whitehead - Non-Executive Director

David Whitehead joined Tertiary in April 2002 on retiring as Vice President Integration, Exploration and Innovation at BHP Billiton Group Plc, having been with the Billiton Group since 1976. As Chief Executive, Exploration and Development of Billiton Plc from 1997 David created and introduced a market oriented and commercial approach to minerals exploration, involving the formation of strategic alliances with junior exploration companies and the leveraging of group capabilities with funding obtained in venture capital markets. Following the merger of Billiton with BHP David, among other things, lead the team responsible for the integration of the two companies' exploration and development groups. He has a broad range of exploration and general mining and management skills, including experience of project development and operating mine management, having held the position of chief geologist at both the Tynagh and Tara base metal mines earlier in his career. He is currently Chairman of European Nickel plc.

Donald McAlister - Non-Executive Director 

Mr McAlister is a founding director of the Company and has 19 years experience in all financial aspects of the resource industry. He was until recently finance director of Ridge Mining plc. Prior to that he was finance director of Reunion Mining in 1994 having worked previously at Enterprise Oil plc, Texas Eastern N Sea Inc and Cluff Oil Holdings plc. Donald's experience includes the economic evaluation of gold and base metal mines and the arranging of project finance for feasibility studies and mine developments. He has also been involved in the listing of Reunion Mining plc on the Luxembourg and London Stock Exchanges. He is familiar with all financial aspects of resource companies including metal hedging, tax planning and economic modelling, Reunion Mining. In October 2009 he was appointed to the board of Mwana Africa, as finance director.

Colin Fitch MA, LLM, FCIS, Barrister-at- Law - Company Secretary

Colin Fitch is a Barrister-at-Law, and was previously Corporate Finance Director of Kleinwort Benson, Partner and Head of Corporate Finance at Rowe & Pitman (SG Warburg Securities) and Assistant Secretary at the London Stock Exchange. He has also held a number of non-executive directorships of public and private companies, including Merrydown Plc. Since retiring from full time work he is currently non-executive director of African Lakes and was until recently Company Secretary of both Ridge Mining plc and Cluff Gold.

Judith Hayes-Manager Administration

Gwynn Lewis-Management Accountant