Frequently Asked Questions

Rakita is a Serbian company, currently carrying out exploration activities in the Timok district of Eastern Serbia, near the town of Bor, and holds the exploration license for the Timok Project (The Project). Rakita is owned and operated through a joint venture between Nevsun Resources Ltd. and Freeport-McMoran Exploration Corporation. Nevsun is a mid-tier Canadian mining company.

The main focus of activity for Rakita is the Timok Project, situated within the Brestovac-Metovnica Exploration license. The Cukaru Peki mineral deposit has been subdivided into two zones, the ‘Upper Zone’ and ‘Lower Zone’. Nevsun Resources holds a 100% interest in the Upper Zone, and is the operator. Following completion of a feasibility study on the Upper Zone, Nevsun will hold a 46% interest in the Lower Zone and Freeport will hold a 54% interest in the Lower Zone. Rakita is currently undertaking a pre-feasibility study on the Upper Zone, with the objective of evaluating this high-grade deposit for mining and processing of copper and gold ore. In parallel, exploration of the lower grade, but higher tonnage, Lower Zone mineralized zone is continuing. The Project is located approximately 6 km south of the town of Bor, which is a regional administrative and mining centre approximately 245 km southeast of Belgrade, Serbia. The Project site is favourably located for mining infrastructure (road, rail, power, water) and close to the recently upgraded copper smelter complex in Bor.

The current studies are indicating the potential for an underground mine on the Upper Zone to a depth of 450 m to 850 m below ground surface. Access to the Upper Zone will be through an inclined tunnel or ‘decline’, which will initially serve as an exploration decline for the purpose of confirming the viability of the Upper Zone. The decline would most likely be comprised of two parallel tunnels. The first tunnel would ultimately be used for access, and the second one for ventilation. Each tunnel is currently designed to be approximately 5 m wide and 5 m high, but this remains a work in progress. Operational support facilities would be located adjacent to the portals of the decline tunnels at the surface. These facilities are expected to include typical mine site infrastructure and offices, including a mobile equipment workshop, fuel storage, temporary power generation, shotcrete batch plant, mine dry, administrative offices, temporary waste rock storage, and water management infrastructure. A processing plant would be developed to convert the mined ore into a copper concentrate with gold credits, which would be available for sale at international rates. A tailings storage facility would be located in the vicinity of the processing plant, designed and built to comply with Serbian law and international best practice. At the end of the operating phase of the Upper Zone Mine, the Project site will be reclaimed. A depression will remain in the ground surface above the mine, and some ground subsidence is expected within a circular zone around this depression.

Rakita is conducting exploration activities under the Decision of the Sector for Geology and Mining of the Ministry of Mining and Energy No. 310-02-0221/2012-14. Although some limited exploration work had been carried out in the area in the past, no mineralised deposit had been identified until the Rakita team made the discovery of the Cukaru Peki deposit in July 2012. The team’s success in discovering the deposit was recognised internationally by the award of the Thayer Lyndsey Exploration Success Award at the 2016 Prospectors & Developers Conference in Toronto, Canada. More information on this award presented to Rakita in relation the discovery of the deposit can be found at http://www.pdac.ca/multimedia/press-releases/publications---press-releases/2015/12/08/december-8-2015. Following the intended development of an Exploration decline for the Upper Zone deposit, planned for late 2017, construction of the proposed mining and mineral processing facilities for the Upper Zone is scheduled to commence in year 2019, subject to a positive Feasibility Study, permitting and approvals from applicable authorities. This anticipated construction of processing facilities for the Upper Zone deposit is expected to be complete no later than 2021, with underground mining operations starting in later that year. The mining and mineral processing operations are expected to run approximately 12 to 15 years, but the exact timeframe for these activities will be further clarified in the pre-Feasibility and Feasibility studies for the Upper Zone. Construction and operations are expected to take place on a 24-hour/day, seven-day/week, and 365-day/year work schedule. The Lower Zone mineralised zone will continue to be evaluated, however Lower Zone mine development has yet to be confirmed with considerable drilling and technical/economic studies still required, and if feasible, initial development is not likely for at least 15-20 years, subject to the continued success of the Lower Zone exploration program.

The Project is already providing economic benefits to the local economy. Currently, the Project employs approximately 410 people (employees and contractors) to support ongoing pre-feasibility studies and related exploration activities. As a result of Rakita’s directive to employ locally wherever the appropriate skills are available, 85 percent of the Project workforce are citizens of Serbia. During the expected two-year construction phase of the Project, a peak workforce of 1,200 people is anticipated. This number is expected to stabilise to approximately 600 people during the operating phase of the anticipated Upper Zone Mine but considerably more work during the Feasibility study will be done before more accurate numbers can be released. The Bor area has a history of mining, and Serbia has a skilled workforce. It is expected that the majority of the workforce will be Serbian citizens. Rakita aims to maximise the use of local and Serbian supply and service companies, where such capacity exists to provide the services at the level required. In the absence of this technical and operating capacity with relevant experience, international companies may be engaged. As is the case already, international companies must register a local Serbian subsidiary, and operate through these entities to comply with applicable Serbian labour and business laws. During 2016 Rakita utilised the services of 246 sub-contractors & suppliers, of which 83% (204) were Serbian. Of these, 37% were companies registered locally to Bor. Rakita Management is committed to providing local opportunities wherever possible. The income, taxes and employment opportunities currently being generated are the first indications of the positive impact of the Project on Bor and Serbia.

Rakita’s environmental policy is based on the objective to be compliant with laws and regulations and to avoid or minimize environmental impacts using proven risk management strategies. In order to meet Serbian and international standards, Rakita hired a number of local and international consulting companies. Environmental Resources Management (ERM), a global provider of environmental, health, safety, risk, and social consulting services, is leading the Project’s environmental and social impact assessment activities with the support of Serbian specialty consultants and institutes. Since 2015, ERM has been collecting social and environmental baseline data on the Project in order to conduct a comprehensive impact assessment in accordance with Serbian laws and international standards. These impact assessment studies will incorporate the analysis of Project alternatives to reach an optimal design, taking into account social and environmental factors. Rakita is committed to environmental sustainability and protection, and the Project design objective is to avoid, minimize and mitigate potential impacts. Rakita will engage with affected communities on these issues throughout the development process, and during Project permitting, will also be engaging with Serbian institutions that focus on protection and improvement of the natural and cultural heritage of Serbia.

The Project is currently undertaking extensive hydrology and technical evaluations by independent experts, supported by the University of Belgrade, in order to ensure that mine operation impacts are minimized. Flow rates in some small, localized tributary streams may be affected, but the Project will implement design measures to protect water quality during and after the life of the mine. In addition to the adherence of European standards and international best practices, Rakita is engaging with Serbian regulatory authorities and institutions to meet or exceed applicable standards for the design of their water reticulation systems.

Rakita is acquiring land from private landowners on a willing buyer/willing seller basis, offering and entering into sale purchase agreements. Rakita has established and implemented land acquisition practices in accordance with applicable Serbian legislation and based on international best practices. Compensation for private land and crops is calculated at full replacement cost, which includes the independently assessed market value of the asset and transaction costs, plus a transaction premium. Rakita manages and supports the land acquisition process, including identification of affected plots and owners/users, valuation of properties, sale-purchase agreements, registration of transfer of ownership, and payment of compensation. Additionally, Rakita is continuing to monitor affected households to help mitigate potential impacts of land acquisition activities. Further information on these topics can be found in the Project Stakeholder Engagement Plan http://rakita.net/SEP-ENG-FINAL.pdf or by visiting the Rakita Community Information Center at Mose Pijade Street 46/6, Bor, Serbia.

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