MAKWA PROJECT  ( formerly Maskwa Project )

Mustang Minerals published an NI-43-101 compliant report in May 2008 to announce the results of the pre-feasibility study of the Makwa deposit. The study was based on the estimated mineral reserve of 7.11 million tonnes containing 0.64% nickel, 0.13% copper, 0.01% cobalt, 0.10 g/t platinum and 0.37% g/t palladium. The open pit mine production plan in the study was based on an ore mining rate of 2750 tonnes per day and a milling operation producing an average of 9.2 million pounds of nickel per year in concentrate. By product credits include revenues for platinum group metals, copper and cobalt. The study concluded that “the Makwa Project contains an economic mineral reserve and warrants continued development to the full feasibility stage.”  

Mustang announced an updated resource estimate as of October 14, 2009 prepared by Micon International Limited (Micon) which presented the mineral resources contained within an optimized open pit generated using the Whittle software package.  The previously reported Open Pit portion of the Maskwa resource, estimated as part of the May 2008 Prefeasibility Study, is shown in Table 2 for comparison:

Table 1

Mineral Resource Estimate as at October 2009
Prepared by Micon International Limited 

Resource Category	Tonnes	Ni (%)	Cu (%)	Co (%)	Pt (g/t)	Pd (g/t)	Contained Ni Tonnes
Indicated	10,275,000	0.55	0.11	0.01	0.10	0.35	56,510
Inferred	1,669,000	0.25	0.07	0.01	0.05	0.15	4,170

Table 2

Open Pit portion of Mineral Resource as at May 2008

Resource Category	Tonnes	Ni (%)	Cu (%)	Co (%)	Pt (g/t)	Pd (g/t)	Contained Ni Tonnes
Measured/Indicated	8,232,000	0.64	0.13	0.02	0.11	0.38	52,680
Inferred	107,000	0.42	0.14	0.02	0.04	0.12	450

The Indicated mineralization comprises a higher grade core grading over 1% nickel and an adjacent flanking zone of disseminated, lower grade mineralization, both of which have excellent continuity and together average 0.55% nickel within the open pit shell. The resource is estimated using a cut-off net smelter return value of CDN$ 16.34 per tonne. A total of 150,000 ounces of platinum group metals are also contained in the indicated resource, plus payable copper and cobalt credits. Metal payability has been based on indicative terms received from a smelter as part of the prefeasibility study.

Core sampling and assaying during 2009 focussed on the recently discovered hanging wall zone which occurs to the south of, and parallel to, the main mineralized zone. Metallurgical testing with representative samples of this mineralization has shown that metal recovery to a concentrate is excellent, thereby allowing the use of the stated cut-off value to this lower grade material. Micon applied the category of inferred to this mineralization, a total of 1.67Mt containing 0.25% Ni.

Metal prices used to calculate the resource were the same as for the May 2008 prefeasibility study and included nickel at $US 8 per pound and copper at US$ 2.20 per pound. Updated parameters incorporated into the new resource model included additional drill hole and sampling assay results compiled over the last two years, standardization of assay procedures, and application of a metal grade recovery curve ( based on completed metallurgical test work ) to more accurately estimate the recovery of metal by grade range in the deposit.

In 2013 the Company is evaluating the potential to co-develop the Makwa and Mayville deposits using a central concentrator and shared infrastructure.