Document:

d1414654_ex4-5.htm

Exhibit 4.5

 

FIRST SUPPLEMENTAL INDENTURE

 

FIRST SUPPLEMENTAL INDENTURE (the "Supplemental Indenture") is made as of September 26, 2013, by and among Ultrapetrol (Bahamas) Limited, a company organized and existing under the laws of the Commonwealth of the Bahamas (the "Company"), the companies listed as Guarantors on the signature page hereof (collectively, the "Guarantors"), the companies listed as Pledgors on the signature page hereof (collectively, the "Pledgors") and Manufacturers and Traders Trust Company as trustee (the "Trustee") and amends that certain Indenture, dated as of June 10, 2013 (the "Indenture"), made by and among the Company, the Guarantors, the Pledgors and the Trustee.

W I T N E S S E T H   T H A T:

WHEREAS Section 9.01 of the Indenture sets forth certain circumstances under which the Company and the Trustee may amend the Indenture without the consent of the Securityholders; and

 

WHEREAS, the Company and the Trustee wish to hereby amend the Indenture pursuant to subsection (1) of said Section 9.01 to clarify that the definition of "Initial Securities" as used in the Indenture includes Additional Securities issued under the Indenture, if any, and that the definition of "Issue Date" as used in the Indenture be amended to clarify that it refers to the date on which Securities were first issued under the Indenture, which occurred on June 10, 2013.

NOW, THEREFORE, in consideration of the premises, the mutual covenants hereinafter set forth, and other good and valuable consideration, the parties hereto hereby agree as follows:

(1)           Definitions.  Unless otherwise defined herein, words and expressions defined in the Indenture shall bear the same meanings when used herein.

(2)           Amendment to Indenture.

(a)           The definition of the term "Initial Securities" in the Rule 144A/Regulation S/IAI Appendix of the Indenture is hereby amended to add the words "and Additional Securities, if any", so that the amended definition shall read as follows (added text shown below as underlined):

 

"Initial Securities" means $200,000,000 aggregate principal amount of 8.875% First Preferred Ship Mortgage Notes due 2021 issued on the Issue Date and Additional Securities, if any.

 

(b)           The definition of the term "Issue Date" in Section 1.01 of the Indenture is hereby amended by deleting the words "the date on which the Securities are originally issued" and replacing them with the words "the date on which Securities were first issued under the Indenture, which is June 10, 2013" so that the amended definition shall read as follows (new text shown below as underlined):

 

 

  

  

  

 

"Issue Date" means the date on which Securities were first issued under the Indenture, which is June 10, 2013.

(3)           No Other Amendment.  All other terms and conditions of the Indenture shall remain in full force and effect and the  Indenture shall be read and construed as if the terms of this Supplemental Indenture were included therein by way of addition or substitution, as the case may be.

 

(4)           Governing Law. This Supplemental Indenture shall be governed by the internal laws of the State of New York, but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.

 

 

[Remainder of page intentionally left blank]

 

 

 

 

 

 

 

 

 

 

  

2

  

 

IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be duly executed as of the date first written above.

 

 

	
 

	
Ultrapetrol (Bahamas) Limited

	  	  
	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

 

	
 

	
Ultrapetrol S.A.

UABL S.A.

each as Guarantor

	  	  
	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

 

 

  

3

  

 

 

	
1

	
Oceanpar S.A.

Parfina S.A.

Parabal SA

UABL Paraguay S.A.

each as Guarantor

	  	  
	  	  
	  	
By:

	  
	  	  	
Name: Jorge Jose Alvarez

	  	  	  
	  	
By:

	  
	  	  	
Name: Edmundo Roberto Quevedo Ibarra

 

 

	
1

	
Compania Paraguaya De Transporte Fluvial SA

Riverpar SA

each as Pledgor

	  	  
	  	  
	  	
By:

	  
	  	  	
Name: Jorge Jose Alvarez

	  	  	  
	  	
By:

	  
	  	  	
Name: Edmundo Roberto Quevedo Ibarra

  

4

  

	
1

	
Arlene Investments Inc.

Brinkley Shipping Inc.

Danube Maritime Inc.

Dingle Barges Inc

General Ventures Inc.

Hallandale Commercial Corp

Longmoor Holdings Inc.

Palmdeal Shipping Inc

Princely International Finance Corp.

Riverview Commercial Corp.

each as Guarantor

 

	  	  
	  	  
	  	
By:

	  
	  	  	
Name: Felipe Menendez Ross

	  	  	
Title:

  

5

  

	
1

	
Dampierre Holdings Spain, S.A.

as Guarantor

	  	  
	  	  
	  	
By:

	  
	  	  	
Name: Leonard Hoskinson

	  	  	
Title:  President

 

  

6

  

	
1

	
Manufacturers and Traders Trust Company

as Trustee

	  	  
	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

  

7Exhibit 10.3

 

 

 

 

Definitive
Feasibility Study

ARX
Gold Corporation

For
mining project located in

Wide
Bay Burnett Region,

Queensland,
Australia

 

March
2013

 

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To,

 

Attn Mr Brian Smith

ARX Resources Corp.

Level 13 - 40 Creek
St.                                                                                                                   130309-CH-ARXGC-2-L001

Brisbane,

Queensland,

4000

 

 

Report prepared by

COCCIARDI HOLDINGS PTY
LTD

Unit 4, 2 Fiveways Boulevard

Keysborough, Victoria 3173, Australia

Phone: +61 3 9798 2633

Fax: +61 3 9798 2422

 

Peter
Cocciardi,

Director.

Peterc@cocciardi.com.au

 

 

 

Effective
Dated: 9th March 2013

 

 

 

 

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	 	 	COCCIARDI HOLDINGS PTY LTD

    Unit 4, 2 Fiveways Boulevard

    Keysborough, Victoria 3173, Australia

    Phone: +61 3 9798 2633

    Fax: +61 3 9798 2422

    http://www.cocciardi.com.au/

 

 

 

 

 

 

To,

 

Attn Mr Biran Smith

ARX Gold Corporation                                                                                                               130309-CH-ARXGC-2-L001

Level 13 - 40 Creek St.

Brisbane,

Queensland,

4000

 

Dear Sir,

 

ARX GOLD CORPORATION

GOLD PROJECTS IN
THE  WIDE BAY BURNETT REGION,

QUEENSLAND, AUSTRALIA

 

		•	These statements are based on  ARX Gold
Corps’ current plans and expectations and involve risks, uncertainties and other factors that may cause actual results,
performance or achievements to be different from any further results, performance and achievements expressed or implied by these
statements.

 

		•	The information provided in this documents is available
for the assistance only of  ARX Gold Corp’ and is not intended to be and must not be taken alone as the basis
for an investment decision. Where required, any potential investor should make further investigations as it deems necessary to
arrive at an independent evaluation of the project. In regards to this overview summary, there has been no consultation of legal
counsel and financial, accounting, regulatory and tax advisors to determine the consequences of any proposal for the project.

 

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		•	The report is to be read
and its use must be in conjunction with the following disclaimer: CHPL do not accept any liability to any individual, organization
or company and takes no responsibility for any loss or damage arising from the use of this report information data or assumptions
contained. Achievability of life of mine plans, project
plans, budgets and forecasts are inherently uncertain.
Consequently actual results may be significantly more or less favorable. This report includes
technical information, which assumes historical accuracy of data, and
future prospective results, which may be subjective. We retain the right to change and or modify conclusions as further information
becomes available. CHPL assumes no liability for the accuracy of the information provided within this report.

 

		•	
The
report on the project, referred to, as the  ARX Gold Corporation Project does not address potential corporate structure,
individual interests or avenues for new participants in the project. I have been informed that  ARX Gold Corporation is the
intended holding company for Arx Springs Pte Ltd, Singapore which owns two subsidiary companies ARX Springs Pty Ltd, Australia
and ARX Pacific Resources Pty Ltd, Australia. It also includes financial evaluations and analyses as provided by external parties
with significant experience in these areas. References
to  ARX Gold Corporation Project are made to provide an overview and summary. Hereinafter,
the company shall also be referred to as "ARX Gold Corp".

 

Sincerely,

COCCIARDI
HOLDINGS PTY LTD

Peter
Cocciardi

MANAGING DIRECTOR

 

 

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TABLE
OF CONTENTS

 

	Executive Summary	7
	Introduction	7
	About the Project	7
	Current Status of the Project	7
	Satellite images of ARX Gold Corporation Project
    Sites	8
	Financial Analysis Summary	9
	Important Risks and Opportunities	10
	Conclusions and Recommendations	11
	Main Report	12
	Introduction	12
	History of the Area	13
	Tenure	19
	Permits/ Bonds	19
	Ownership and Permits 	20
	About Riverstone Resources	21
	Terms of the Agreement with Riverstone 	23
	Application of BRI Microfine Technology 	23
	Terms of the Sub-License between BRI and the Project	25
	Local Characteristics	26
	Geology & Resource	26
	Preliminary Operations 	29
	Plant & Treatment of Stockpile	30
	Access	31
	Accommodation	32
	Plant Site	32
	Tailings 	32

 

 

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	Water 	32
	Power 	33
	Site Buildings 	33
	Mobile Equipment 	33
	Communications 	33
	Rehabilitation 	34
	Infrastructure Summary	34
	Financial 	35
	Capital Cost Summary 	35
	Production Data 	37
	Economic Evaluation 	38
	Valuation Methodology 	38
	Royalties	38
	Taxation 	38
	Cash Flows 	39
	Net Present Values and Sensitivities 	40
	NPV Sensitivity – Single Parameter Analysis 	40
	NPV Sensitivity – Twin Parameter Analysis	41
	Payback 	42
	Important Risks and Opportunities	42
	Interpretation and Conclusions 	42
	Recommendations 	42
	Appendix 1: Assay Reports	43
	References 	77
	Date and Signature 	77
	Report Distribution Record 	77

 

 

 

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Executive
Summary

 

Introduction

 

ARX
Gold Corporation wishes to evaluate a proposed mining project with Australian interests in a mining property in the Wide Bay
Burnett Region in central Queensland. We have been engaged by ARX Gold Corp to update information for this project. The
project can be operated in stages however for the purpose of this report there is not a significant difference in referring
to the project as a whole.

 

About
the Project

 

The ARX Gold
Corp Gold Project (gold project) is located about 25 km East of Eidsvold in the Wide Bay Burnett Region
of Queensland. The project site is situated at Coonambula on Cheltenham Road, (nearest town is Eidsvold) within a quarry
and extractive industries operation. The project site is referred to as the ARX Springs Site.

 

The ARX
Springs site is located on the first stage of this extraction site. The ARX Pacific Resources site is located in the second
stage. The staging of the extractive operations does not impose onerous conditions on proposed mining and processing
production by ARX Gold Corp.

 

The deposit is described
as alluvial grade sand and gravel resource with a varying depth of resource and for Phase 1 (ARX Springs) the project is contained
within a continuous surface area of 600 ha and for phase 2 (ARX Pacific Resources) the project is contained within a continuous
surface area 1000 ha. Average depth of resources estimated from extensive drilling is at between 15 m to 20 m. For the sake of
this report we have assumed a conservative 12.5m average depth over the project site resulting in an estimated 200,000,000 cu
metres of treatable material.

 

The total resource
is estimated to be between 300,000,000 tonnes and 320,000,000 tonnes of treatable material. The estimated recovery is based on
assumptions of average low-grade recovery using BRI Microfine process at an average of only 1.8 gpt giving a targeted recovery
of between 16,000,000 ounces and 18,000,000 ounces of gold from the current resource area. This targeted recovery is dependent
upon operational factors once the project is in production and the consistent average recovery of the targeted yield.

 

Current
Status of the Project

 

		•	The ARX Springs project is ready to start the construction
phase and quickly move into production. We have verified with relevant agencies on the required permits and licenses and the required
permits are in place for production to commence subject to specific building permits in relation to the construction of the processing
plant.

		•	Ownership: Riverstone Resources Pty Ltd is the extractive
Industries license holder and has provided exclusive treatment farm-in agreements for mining to ARX Springs Pty Ltd and ARX Pacific
Resources Pty Ltd.

		•	Environmental, planning and local permits are issued and
current.

		•	Treatment rights have been granted specifically utilising
existing mining license.

		•	Technology sub license for BRI Microfine process has been
signed.

		•	Permits are in place with further requirement of mining
plan and mining license application.

		•	Additional survey of the specific surface area of the project
is to be initiated.

		•	A Joint application toward securing additional mining licence
as expansion of existing permits.

 

 

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Satellite images
of ARX  Corp Gold Project Sites

 

 

 

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Financial
Analysis Summary

 

The 
ARX Gold Corp Gold Project feasibility study uses discounted cash flow
techniques to determine a Net Present Value (‘NPV’) for the Project in real terms. The NPV is derived after
royalties and tax, is ungeared and based on real cash flows. The effective date of the financial evaluation is March 1,
2012.

 

The
Life of Mine (LOM) is 20 years, which includes an initial two- yea r design and construction phase and subsequent capacity expansion
over the next 8 years. The Gold prices used to develop the base case in the financial model are based on the current market price
of gold and reasonable estimates of market prices in the future. Included is a detailed sensitivity analysis to test the various
parameters for both revenue and costs.

 

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The NPV (14%) in
real terms amounts to US$ 4.29 billion. Payback on capital is 3.5 years (2.5 years following commissioning). Total capital expenditure
over the construction period is US$ 400 million with a peak funding requirement of US$ 60 million each in years 9 and 10.

 

Project
sensitivities to revenue, capital and operating costs are shown in the following tables in the report. The base case sensitivity
analysis of the variation in NPV at various discounting rates is shown below

 

Base Case Sensitivity Analysis (variation in
NPV at various discount rates)

 

Important
Risks and Opportunities

 

The project
assessment indicated certain risks and opportunities, which should be evaluated in further detail by  ARX Gold Corp in order
to assess the complete returns on the project. The key risks and opportunities are:

 

Risks

		•	Delay in establishing the initial production plant and
consequently the financial impact on the project;

		•	Decline in global demand of gold and consequent decrease
in prices;

		•	Increase in the costs of operations of the project by 10%
or more on annual basis thereby affecting the margins;

		•	The BRI Microfine process has not yet been commercially
deployed on any project and during the process of developing the initial production plant and deploying the process, there could
be unexpected issues and concerns arising out of the deployment of the process. This could delay the project commencement unless
alternative processing methods are planned as contingencies;

 

Opportunities

		•	The BRI Microfine process has the potential to derive significant
improvements in yield from the tailings at the project site. The upside from any potential increase in yield will have significant
positive impact on the project returns;

		•	The Master Agreement in place with Riverstone Resources
provides for a total treatment area of 2500 hectares. The phase 1 and 2 as part of this report is for a total area of 1600 hectares
and hence there is scope to include a significant additional area as part of the project in future (57.50% of the total area under
phase 1 and 2 is the possible additional area for treatment)

 

 

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Conclusions
and Recommendations

 

CHPL
concludes that  ARX  Gold Corp Gold Project fulfils financing requirements in terms of payback period (less than 5
years), required returns (>15% real) and that the risk of returning a negative NPV is considered low especially because
the yield assumed at 1.8gpt is a conservative assumption. Any possible increases in costs or capital required or drop in
commodity prices can be managed with this yield. The possibility of getting better yields is a potential but ARX Gold Corporation
should retain conservative assumptions of yield in assessment of the financial viability of the project.

 

Further, the microfine
process adopted for this project is not capital intensive by its very nature and the production plant to be constructed is a modular
design. This allows for a higher degree of flexibility to control the capital expansion in accordance with the change in market
dynamics such as gold prices and increased costs. Hence, the likelihood of a negative NPV on the project is very low.

 

CHPL
recommends that ARX Gold Corporation progress the project to the detailed design and implementation phase. The various risks and
opportunities identified should be closely monitored during the detail design and implementation phase, to take advantage of
any further possible optimization.

 

 

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Main
Report

 

Introduction

 

The
 ARX  Gold Corp Gold Project is located about 25 km east of Eidsvold in the Wide
Bay Burnett Region of Queensland. The project site is situated at Coonambula on Cheltenham Road, (nearest town is Eidsvold) within
a quarry and extractive industries operation.

 

 

 

The extractive industries
operation has commenced. The project sites are located on the first and second stages of this extraction site, which is located
in proximity to an additional extended mining lease area. The staging of the extractive operations does not impose onerous conditions
on proposed mining and processing production by ARX Gold Corporation.

 

The deposit at the sites can be described as alluvial grade sand and
gravel resource with a varying depth of resource and for Phase 1 (Arx Springs) the project is contained within a continuous surface
area of 600 ha and for phase 2 (Arx Pacific Resources) the project is contained within a continuous surface area 1000 ha. Average
depth of resources estimated from extensive drilling is at between 15 m to 20 m.

 

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Overlay Image of Project
site.

 

 

The project site
is a tertiary glacial till deposit and the recoverable grade is contained within paleo channels of alluvial sand, gravel and conglomerate
associated with gravel beds of old alluvium and minor alluvial deposits. The tertiary glacial till deposit is composed of white
to buff, poorly sorted, clayey sandstone, local unsorted granule to boulder gravel beds and the sands associated with the gravel
beds.

 

History
of the Area

 

Gold has historically
been found, worked and extracted from the material in vicinity of the project. The mineral interest in this area dates back to
the 1880s. The early geological reports identified a tertiary glacial till that extends extensively in the area of the project
site. It is within this glacial till that the majority of the alluvial deposits occur and the surveys have indicated the presence
of gold.

 

Gold was
discovered in the area in 1888. Production from the nearby St John's Creek field between 1888 and 1937 yielded 313 kg from
15,669 t of ore (19.976gpt). Peak production was achieved in 1890 when 98.35 kg of gold was obtained from 7574 t of ore
(12.985gpt). There has been no activity since 1937 reported. The first gold production recorded from the Hungry Hill Creek
McKonkeys Creek area was in 1889. The field was worked intermittently until 1901, the total recorded production of 23.32 kg
of gold from 938 t of ore (24.861gpt). No records of production from alluvial workings have been found.

 

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A number of shafts
were dug which yielded widely varying results. The water accumulating at the bottom of shafts generally defeated the mining.

 

The shafts are identified
by various names, MacPherson's shaft, PC shaft, Harvey's shaft, Capers claim and Gully shaft. Subsequent reports indicated that
these older workings were not at the deepest part of the lead. Reports indicated in most places there are two channels at the
bottom of the lead both containing gold. Gold was detected at most points close to the bottom of the lead and stream and surface
examination confirmed the presence of gold.

 

The water table exists between 20 feet and 40 feet from the surface. Old sampling of
dumps around old shafts show gold that was at least 10 divt per tonne. Sampling of undisturbed shallow ground also showed similar
grades. Early miners would not have worked the large numbers of shafts at the depth they did unless they were getting something
like 1 ounce to the tonne. Admittedly, this could have been in small pockets.

 

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Overlay Image of Shape
of Paleo Channel

You can clearly
see the Paleochannel extending through all stages of the project.

 

Antimony has also
been produced from the project site surrounds. Since 1876 the deposits have been worked intermittently. In the period 1953 to
1954, 23.6 t of antimony concentrate was produced from 111.8 t of ore. This area has been known previously under many identities:
Spring Gully, McKonkeys Creek, Macpherson’s diggings, PC claim and so forth. Historically the Queensland government geologist
William H Rand undertook a geological survey in 1901 over the Eidsvold goldfield and mapped locations, which indicated mineral
deposits where the project site today exists. Geological survey was conducted in 1969, which indicated the existence of alluvial
gold deposits in and around the vicinity of the project site. Further surveys have been undertaking more recently, Batstone and
Cardno in 1984 and Morris and Savory in 1990. Kelly in 1979 conducted a review report of the 1969 survey.

 

Early prospecting established
the presence of an auriferous alluvial lead. Gold was extracted from the old workings by former mining operations in limited amounts
but in variable grades up to 5 ounces per tonne. Preliminary surface examination has historically confirmed the presence of gold
in the lead. Extensive drilling operations confirmed the presence of two deep channels within the area. Owing to an abundance
of clay, which caused severe analytical difficulties the early drilling, was completed without obtaining critical assays. The
early analytical techniques at that stage (1969) closely matched systems that were then available for production and it was assumed
that production difficulties might be expected.

 

 

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The
 ARX Gold Corp Gold Project site and area has a history of intermittent working
by small-scale mining and various private operators. The area has been subject to a number of previous investigations and has
included reports by Rands (1897, 1901), Saint Smith (1926), Ball (1931) and Denmead (1943). Much of the previous investigations
referred to the mining conducted in the area. Previous literature reported that some 51t of ore averaging 27 g per tonne from
shafts up to 25 m deep in this area were worked. The best grades were apparently in coarse wash near the base of alluvial sands.
Water from the water table discouraged much mining.

 

 

 

William Rands
report of 1901 showing results from 1887 through to 1900.

Total recovery
of 102,323 ounces from 98,205 tonnes of ore.

 

 

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Extracts from
the Mining Maps of the Site

 

 

 

 

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There
is a long history of small-scale working and exploration on the property and surrounding areas and although reports are available
on previous work those reports have not allowed the full potential of the property to be understood. Gold has been detected and
recovered since the 1880s however in small disconnected independent operations. Attempts to evaluate the area by larger prospective
operations/ companies found gold in low levels and based on the lower gold price before the last decade usually concluded the
area and the project site was sub economic.

 

However
three factors now appear to work to ARX Gold Corporations advantage and allow the project to be operated as a low-level
long-term project. Firstly the site has been amalgamated into a large continuous area available for treatment so offering
volume of the resource and the ability to target low average per tonne grade. Secondly the use of the microfine process
increases the viability, as it is one treatment that can target the low micron sized sandy alluvial material where 92% of the
potential gold is likely to be found. Thirdly the sustained increase in the price of gold over recent years has made the
operation viable.

 

Tenure

 

The
current project area is approximately 1600 ha. The tenure of the  ARX Gold  Corp Gold Project is
based on a mining lease; extractive industries permit, farm-in style treatment agreements with exclusive licences for the
expected life of mine term to treat the anticipated resource.

 

The
mining lease is current until 2014 and it allows immediate production processing work subject to notification to the Queensland
Department of Environment and Resource Management. The anticipation is that it will be renewed for a further five years in the
ordinary course of business. The extractive industries permit covers all areas of the project. Exclusive treatment agreements
have now been signed for the use of the mining licence to treat the project area. Licences have been granted to operating companies
on an exclusive basis to mine process and treat for minerals.

 

The extractive industry
licence holder has contracted with ARX Springs Pty Ltd to expand the area of the mining lease in a joint application for additional
mining lease grants as an overlay of the existing extractive industries permit. The joint applications will be in the names of
Riverstone Resources Pty Ltd, ARX Springs Pty Ltd and ARX Pacific Resources Pty Ltd and will follow standard industry practices
and procedures.

 

Permits/
Bonds

 

On application for
extended mining leases the Queensland Mines Department will assess an increase in the current bond for rehabilitation purposes.
There is no reason known to Riverstone Resources or ARX Springs why the bond will not be assessed according to current guidelines
and the actual amount of the bond while not yet known is covered by reasonable forward provisions.

 

The mineral extraction
and mining rights will be an overlay of the permits owned by Riverstone Resources. Those permits are in place and allow the extraction
of sand, gravel and minerals to an area known as Coonambula Sand Operation.

 

The sand and gravel
operation is forecast to have a production life of 80 years. From the underlying extraction rights Riverstone Resources has granted
mining rights for the anticipated life mine terms for all minerals to ARX Springs Pty Ltd and ARX Pacific Resources Pty Ltd. Riverstone
Resources will indefinitely operate a sand and gravel operation and in so doing deliver to ARX Springs Pty Ltd screened crushed
material for treatment.

 

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As the operation
increases in size it is anticipated that primary earthmoving operations will be undertaken by ARX Springs as an expansion of the
Riverstone Resources operation. There is no hard rock mining or underground mining involved. There is no need for blasting. There
is no requirement for hard rock drilling, sampling or test work.

 

The relationship between Riverstone Resources and ARX Springs
Pty Ltd/ARX Pacific Resources Pty Ltd is one of a Farm-in exclusive treatment rights and licensed mine and with Riverstone Resources
operating its own sand and gravel business, there are cost savings to ARX in the supply to it of raw material for processing as
part of the relationship. Riverstone Resources is compensated by the payment of royalty on gold extracted.

 

Overlay Image of Extractive
Operation & Mineral Area

Ownership
and Permits

 

The 
ARX Gold  Corp Gold Project site is within a large area in total and the resource of
this mine site is part of a larger deposit with similar geology. The land upon which the mine site is located comprises a
total area in Lot 7, Crown Plan WK96, County of Wicklow, Parish of Boolgal, Title reference 487184; lot 5, Crown Plan WK96,
County of Wicklow, Parish of Cheltenham, Title reference 50205095, Lot 6, Crown Plan WK96, County of Wicklow, Parish
of Cheltenham, Title reference 50221359, Lot 8, Crown Plan WK149, County of Wicklow, Parish of Boolgal, Title reference
17487185. There is a long history of historical mining rights and licenses granted by the Queensland mines Department in
respect of previous workings. The owner is confident that there will be no problems in securing additional mining rights.
There is no vegetation, environmental, heritage, and historical, aboriginal or cultural impediments to treatment operations
at the mine site.

 

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About Riverstone Resources

 

Riverstone Resources
Pty Ltd is a privately limited liability company, which was primarily established to generate a new supply of river-gravel and
decorative stone to the building, and landscape industries in and around Queensland with some export potential also investigated.

 

Riverstone Resources
Pty Ltd and its consultant Mr Bob Lewers worked closely together since early 2008 in establishing extraction rights for sand and
river-gravel from some 2500Ha surrounding a Mining lease owned by Riverstone Resources Pty Ltd. His experience in sand & gravel
extraction as well as mineral exploration is immense as Bob Lewers is a protégé of the Farley & Lewers company,
a well- known Australian quarrying, concrete manufacturing and mining company that were market leaders in the 50's, 60's and 70's
throughout NSW and southern Queensland. Bob Lewers has been interested in the subject site and surrounding areas as a source of
both precious metals and gravel for over 30 years. The current Managing Director and founder of Riverstone Resources Pty Ltd was
previously Managing Director of Coloundra Sand & Gravel a medium sized (30 employees) private company operating in the sand
and gravel supply business in South East Queensland for many years.

 

Riverstone Resources
Pty Ltd has obtained all the required permits to operate both for its business and to provide treatment agreements for the mineral
extraction. Riverstone Resources Pty Ltd has obtained government planning and development authority and conditions granted with
reasons in case No 1789 0f 2011, extraction and environment permits Environmental Authority IPCE01538909 dated 30 June 2009 issued
by the State of Queensland Department Environment Resource Management for the extractive industries business and mineral extraction
business, a Mining Lease ML 80077, the Environmental Authorities for Mining Lease ML 80077 dated 28 August 2009 and Extractive
Industries permit No 175-09 dated 21 September 2011. A copy of the plan approved in DERM permit IPCE01538909 is included.

 

Riverstone
Resources Pty Ltd has consolidated the area, which contains the Arx Springs project so combined extractive operations, and mining
operations can be conducted side by side. The management of Arx Springs Pty Ltd, Arx Pacific Resources Pty Ltd and Riverstone
Resources Pty Ltd enjoy a good working relationship.

 

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Terms of the Agreement with Riverstone

 

Riverstone Resources
Pty Ltd and Arx Springs Pty Ltd have signed tribute Treatment agreements. The treatment agreements provide exclusive rights to
the project for extracting minerals from the mining operations. It contains a license and is subject to royalty payments payable
to Riverstone Resources Pty Ltd. The grant of license of mineral extraction rights is for a term until the resource of the project
is fully treated or the 25th annual anniversary (March 2037) from the date of agreement to treat.

 

The company also
has the right to occupy and utilise the land until the resource of the project is fully treated or the 25th annual anniversary
from the date of its agreement, whichever is the earlier. There is provision in the agreement to extend the term of occupation
of the land upon notice, if the resource is not fully treated within 25 years.

 

The
approvals and permits attached to the ARX Springs project are to be utilised freely and in accordance with the tribute treatment
agreement. The approvals and permits are available to Celframe ARX Resources Corp Gold Project for
use in its business on the project site area. The tribute treatment agreement provides for use of current permits and future and
additional permits and approvals to be obtained within the ordinary scope of the development of the treatment operation. Those
approvals and permits cover planning, environmental, landowner, local government, business operations, extraction rights, exploration
and mining permits, mineral treatment extraction rights, work plans, rehabilitation plans and bonds, roads, power and water.

 

The company has
the right to transport material extracted from the resource of the project to an adjacent property for treatment using a proposed
production, processing plant. The land the company is to occupy and the adjacent property share a common boundary and share free
access between and over the areas. Vehicle access to the nearest public road is provided for and will be constructed within the
scope of the mining work plan. The adjacent property is subject to a treatment agreement between Riverstone Resources Pty Ltd
and Arx Pacific Resources Pty Ltd. The treatment agreement has similar terms to the Arx Springs Treatment agreement. The Arx Pacific
Resources agreement covers the use of the current permits and mining license, is an exclusive right and license and allows immediate
start of mining and processing operations.

 

Application of
BRI Microfine Technology

 

A report in 1984
on behalf CSR Ltd provided summary information about the area in which the project site is situated. The report refers to the
known placer gold deposits occur at the base of a sedimentary sequence of probable Jurassic age. The gold occurs in a mature pebble
conglomerate. There is indication that the material ore deposits from which the project has been drawn occurs in a paleo channel
where working from the West to East there is a greater volume of coarse gravels overlain by finer sentiments in the West while
to the east, there is a significantly less coarse material and a far greater volume of fine sediments in place. There are suggestions
of a significant difference in the environment of the deposits of the material probably affected by a tertiary drainage.

 

In recent times
with development work and the establishment of the extractive industries operation various samples have been taken from in and
around the project site area mainly for petrological analysis. Whilst the stone testing was being conducted, samples were also
taken and submitted for testing (gold) to three separate labs.

 

    	23

    	 

    

 

 

The conventional
assays, which resulted from the submission to the labs, show mineral concentration that match with historical archive results
relating to this area. The BRI Microfine process has consistently produced superior results than the conventional assays.

 

Testing of the sand
and gravel of samples taken from the ARX Springs Project and the surrounding geological material has shown the BRI Microfine process
can recover gold from the project resource. The basis of a potential productive mine operation is twofold, firstly the BRI Microfine
process can obtain moderately better results than historical mining on the site notwithstanding it is a low grade alluvial sand
deposit and secondly the recent sustained increase in the price of gold. A large-scale mining operation, albeit at low recovery
grades, in current times is potentially feasible as the BRI Microfine process may lift recovery from sub economic levels when
compared to previous assessments and the price of gold may sustain profitable operations.

 

The definition of
the BRI Microfine process and technology is broadly as an enhanced chemical leaching process which has been shown to concentrate
gold, particularly in a Microfine state, from concentrates, ores, tailings, solutions and other friable or pulverized materials
even when conventional methods of assay do not disclose the presence of gold and metals or do not disclose the extent of the presence
of gold and metals.

 

Microfine technology
is still a relatively new technology process to recover gold and other precious metals that exist in a Microfine form. The BRI
Microfine technology aims to recover gold, silver and platinum by processing material at the Microfine level in many cases from
existing tailings dumps. Treatment processing is a leaching style mining operation using the BRI Microfine Technology for the
treatment of tailings ore. The ore body can be an alluvial source and need not have prior processing. While tailings denote an
ore body having appearance of pulverized low micron material whether it be alluvial source, reprocessed or crushed ore it can
include alluvial sands.

 

Independent assessments
have been conducted by numerous parties over decades are recited below, Extensive sampling and drilling has been undertaken on
the material on the project site and its surrounds. Although there is some disagreement the number of the geological reports referring
to this area and sites recommended (when the reports were done) that it was not economically viable to mine the area commercially
as the mineral concentration although definitely existing was not noted as overly outstanding. However, in one of the reports
of investigation in the area on alluvial material it was noted that the 92.6% of the gold occurred in the -5 mm size material.

 

Sample testing produced
an observation that gold particles appear to be highly uniform in size and screening indicated that some 92% of the gold was contained
in the -30-mesh fraction. It is this size material (as a by-product of the extractive industry operation) which is targeted by
the Microfine process. The highest gold values recorded in the previous investigations seem to be recorded in a coarse clayey
basal wash material and it is intended that the Microfine process by its ability to obtain the gold in coarse clayey material
will obtain economic grade.

 

The extractive industries
operation means that the project is not a stand-alone mine and will be able to treat the low micron size material produced from
the extractive industries operation and from its own screening and movement of material. The increase in the gold price since
all of the previous investigations were undertaken indicates that an economic recovery can be made from what is a low- grade alluvial
deposit.

 

    	24

    	 

    

 

 

In many cases the
estimates of grade were low to uneconomic based on the then prevailing technology for recovering of fine gold from alluvial sands.
Microfine technology has tested samples from the total deposit from which the area of this resource is derived and the grade that
has been assessed by the Microfine test work is 1 .80 gpt to 2.10 gpt. There are no records of recent gold sales from this property.
The historical information contained in reports from the government geologist and seven other independent geologists confirms
recovery of gold and antimony.

 

Samples were taken
and submitted to a USA based laboratory with instructions to ascertain assay of gold without allowing for the gold assays to be
affected by the abundance of clay component in the sand and gravel samples. The assay results were good, all above the target
grade for the project and twice the assay result exceeded 15 g per tonne.

 

There has been a
recent assessment of the project by its owner in his project development and all legal and business matters were successfully
completed for the start-up of the sand and gravel component of the extractive industries project. The geology observed on the
property during site visits is similar to the geology observed in areas in close proximity to the project. The surface and wildcat
drilling gravels are similar in nature to ones observed nearby. The sand and gravel component extends extensively in the north
and south direction kilometres either side of the property there is no observable reason why successful alluvial goldmining cannot
take place.

 

Recent inspections
vindicated that the historical more recent mining activities have been based on the principle where the mining was blind and it
was not based on a mining plan where definable grade block models existed. Many of the previous workings potholes and the gold
bearing trenches were not identified in indicated on plans. However, based on test work current observations in available data
the area is prospective.

 

The Assay reports
are included in Appendix 1 at the end of this report.

 

Terms of the
SubLicense between BRI and the Project

 

A technology Sub
License has been signed between BRI Microfine Pty Ltd and Arx Springs Pty Ltd. In summary the sub license agreement is a contractual
right permitting Arx Springs Pty Ltd and Arx Pacific Resources Pty Ltd exclusive rights to operate a Licensed Business with the
utilisation of the Technology for the purpose of recovering gold from friable, or pulverised earth and operate microfine production
plants at the site at Arx Springs Wide Bay Queensland.

 

It is a grant of
the use of the technology for the Arx Springs Project. It is exclusive sub license and is limited to the project only. The technology
sub license covers the project and is not limited by any term, as it is available at the project site for as long as the resource
exists and can be treated. BRI provides the technology, operating management of the plant, operation security and the design build
delivery and commissioning of plant and equipment.

 

For these operations
BRI will provide the operating systems, facility management systems and software. During operations BRI will provide technical
and operational support and personnel for LOM. At the end of the treatment of the project resource BRI will oversee the dismantling
of the plant and equipment.

 

    	25

    	 

    

 

 

Local Characteristics

 

Climate: the area
lies within a temperate region with the average rainfall is around 700 mm. approximately 67% falls in the summer months. Normal
mean temperature is approximately 25°C. Vegetation; a major portion of the area has been at least partially cleared the more
densely vegetated areas being confined to a few hills. Most of the areas covered by low grasses and eucalyptus.

 

Topography: the
topography is generally a low medium relief, which consists of gently undulating hills and plains.

 

Land use: for beef
cattle grazing horse racing and grain growing are the main industries within the area.

 

Geology &
Resource

 

The project site is a tertiary glacial till deposit and the recoverable grade is contained within paleo channels of
alluvial sand, gravel and conglomerate associated with gravel beds of old alluvium and minor alluvial deposits. The tertiary glacial
till deposit is composed of white to buff, poorly sorted, clayey sandstone, local unsorted granule to boulder gravel beds and
the sands associated with the gravel beds.

 

 

    	26

    	 

    

 

The general characteristics
of the area are shown in the table marked Lithology Code in the map.

 

 

 

 

    	27

    	 

    

 

 

Numerous geological
reports exist which identify that the area has been of interest as a potential source of alluvial mineralisation since the turn
of the century. A literature review on the area indicates existence of precious metals and heavy minerals (predominantly gold/antimony,
ilmenite, rutile, and zircon) in this area. Minor resources have been historically exploited (indicated by the appearance of many
mining leases) in and around this area. A significant degree of interest exists in the exploration potential of the area.

 

The project site
and the mining lease covers a section of Carboniferous Permian Granitoids (Coonambulla Granodiorite and Cheltenham Adamelite )
in the north of the lease area whilst in the south, a series of tertiary glacial till paleo channels host the majority of recorded
mineralisation on site. The granitoids are basement to the tertiary alluvium in the area. The maximum-recorded thickness of the
alluvial channel is 28 m however it varies significantly in both thickness and lateral extent (800 m to 1500 m). Mineralisation
within the placer leads is in the form of ultrafine -5 um-alluvial gold slightly coarser heavy mineral also occurring generally
between the -50 um and -150 um fraction. The map illustrates the regional geology of the area and also displays known occurrences
of mineralisation. It should be noted that if blind or deep leads within the placer can be identified and delineated then this
enrichment could quickly and significant upgrade the quantum of a resource on the mining lease area and the project site.

 

 

 

    	28

    	 

    

 

Preliminary Operations

 

Riverstone
Resources has commenced operations on the site and has begun stockpiling materials for treatment by the  ARX Gold
Corp Gold Project. Sufficient stockpile has been produced and exists for three
months operation of the pilot production plant to be installed. Stockpiling will continue during the construction period of
pilot production plant, the initial 10 t per hour processing plant and construction of the first 100 t per hour commercial
plant. It is anticipated that by the time of the commissioning of the 10 t per hour initial production plant the stockpile
of treated material available to ARX Gold Corp will provide 4 to 6 months of resource available for treatment processing.
The topography of the project area is relatively benign and is flat with slightly undulating hills. Riverstone
Resources operations confirm the area is conducive to the use of earthmoving equipment. The project sites topography does not
represent any major infrastructure or construction obstacles.

  

 

The actual mining
will consist of earthmoving activities within the paleo channel of Coonambula sand operation. Most of the mining in the sense
of obtaining the material for treatment and processing will consist of operations with moderate sized, low risk earthmoving equipment.
Some of the equipment is already on site and commissioned and assessments have been made performance of the resource material
to loading screening and crushing. No difficulties in loading, screening and crushing the material is anticipated based on the
work carried out to date.

 

First mining of
the target resource will occur at local creek level with loaders operating to create working face and long narrow strikes into
resource sands away from the creek toward Cheltenham Road.

 

    	29

    	 

    

 

 

Open pit extraction
of resource is not required for the first 2 to 3 years of production. It may not be required at any time during the life of the
mine. However, it is an unknown. Should open pit mining be most efficient method a pit design will be modelled by engineers and
plans lodged with the Queensland Mines Department. The design and work plan utilising open pit will conform to the mining and
environmental regulations of the Queensland Mines Department. Open pit mining may require reassessment of the bond however it
is considered low risk and will not occur in the first three years of operations. Any open pit work will not be extensive as the
resource targeted is found in a long paleo channel, which varies in widths with an average depth of 20 m, and an adopted average
by ARX is 12.5 m. Sample drilling has logged maximum depth at 35 m in some spots.

 

The first useful
production resource will be obtained by working long strikes in a narrow band and keeping a consistent depth along the strike.
Once the first earthmoving strikes have been established the loaders will widen the working face. Loaders will transfer to dump
trucks for delivery to the extractive sand, gravel plant for crushing screening and processing.

 

Plant & Treatment
of Stockpile

 

Stockpile material
for treatment by the ARX Springs project will be accumulated next to the extractive industries sand & gravel plant. Stock
stockpile material will be handled by the ARX Springs project using a lift loader and conveyor and will follow the design, build,
supply, install and commissioning of a series of conveyors and associated feed hoppers for an alluvial sand wash plant.

 

The purpose of these
conveyors is to deliver the Alluvial sand to the process plant and take the wash sand and deposit this into (waste) stockpiles.
This will be in preparation for backfill loading to extraction areas. The proposed conveyor systems will feed 10 separate process
production lines with an average of 10 tons per hour per production line, with each production line 15 meters apart. Therefore
the conveyor feed system will need to accommodate this. Initially the plant will process a total of 100 tons per hour via ten
process production lines. These 10 production lines will ultimately increase to 30 production lines, and then the process plant
will produce a total output of 300 tons per hour.

 

The 10tph production
lines are a constant process line and are simply replicated to increase overall production. The system being delivered must be
capable of dealing with this expansion in production without the need for significant upgrade. The proposed sand conveying system
is required to be a covered type conveyor with associated access and maintenance walkways. The site is reasonably flat with only
slight undulations.

 

Location of the
proposed process production plant will be nearby to existing sand stockpile but may ultimately be up to 100 metres away from a
stockpile location. Various Alluvial sand stockpiles will be situated within a 1 square kilometre project site. The proposed process
production plant will treat this alluvial sand taken from the stockpiles. The new stockpile of processed sand will be within 100m
of the process plant.

 

Plant construction
will follow the path of off-site assembly; build and test of each plant section in a progressive step up in production capacity.
Planned modules will be constructed in discrete operating units; however the overall design allows each unit to work independently
as modules. Processing plant will start with a pilot production and 10 t per hour capacity operation. Once commissioned the 10
t per two further modules will expand hour plant module each time until 100 t per hour capacity is achieved. The overall design
allows modules to be built from then on at 20 t per hour capacity.

 

    	30

    	 

    

 

 

The process plant
itself is being designed as an isolated, largely self-contained element that can be replicated as required. The entire process
plant will be enclosed within large portal steel shed. This structure will be fully reusable and can be replicated at various
locations throughout the site. These sheds will be approx 180m long with a span of approx 60metres.

 

Its main purpose
is to provide protection from the elements for the operators and a heighted level of security over the process. The process will
be fully enclosed and therefore unable to be viewed without security clearance. They will contain some laboratory facilities and
secure gold room.

 

The material required
to feed the processing plant will be delivered from the stock pile via conveyors, the material will then be processed, then delivered
onto another set of conveys and stockpiled ready for drying and delivery back into the site from where it was initially extracted.

 

As the current process
allows for retreatment of the material, a conveyor system allowing for this will be incorporated into the stockpiling conveyor
systems. This will allow material requiring processing to be delivered directly from the initial stockpile or from the treated
stockpile as required.

 

The conveyor systems
will be let on a design and construct basis. The supplier will be required to provide the design, fabrication, installation, and
commissioning and possibly ongoing maintenance of the conveyor systems as part of their contract. This system will incorporate
a recovery pit and reclaim conveyor (or similar). The contract will incorporate both incentives and penalties for the handling
of the sand thereby, as much as is practical, ensuring the processing capacities and associated timelines. The material will be
fed onto the main conveyor system for distribution to the various process lines. The material will ultimately be fed onto each
of the process feed lines. These process lines will be nominally 15 meters apart and approx 50 metres long.

 

The process plant
is being designed to allow expansion of capacity of each process line from the initial 10 tph up to 30tph. This will allow the
initial plant to commence processing 100tph but quickly move up to 300 tph as design refinements within the process are developed.
Modular expansion of the process lines is aimed at lifting the total plant production to approx 450-500tph. It is simply a matter
of replicating the entire plant to achieve a plant with 900tph – 1000tph capacity each at multiple locations within the
project site.

 

Access

 

Access to the site
is easy and does not present difficulties for delivery of equipment during construction phase or operation phase. Main roads in
Queensland have provided permits for the use of roadways by heavy vehicles. Access within the site is easily constructed on the
surface of the project area using loaders and earthmoving equipment utilised in mining.

 

An upgrade of roads
is not acquired for construction and operations traffic. If it is required (and the probability is very low) a gravel airstrip
can be constructed on the project site as well as a helipad for personnel transfers and secure air transport. However the townships
of Eidsvold and Mundubbera are close by and there are mostly all-weather roads in the area. It is considered more likely that
the personnel will transfer to and from the project site on a daily basis.

 

    	31

    	 

    

 

 

Accommodation

 

There is no need
to build an accommodation village or overnight accommodation other than for security staff.

 

Plant Site

 

The plant site will
be located on the site of the existing extractive industries operation. An initial area of 20000 m2 has been set-aside in
the mining lease for the construction of the initial processing plant. The plant site will not be constrained by mine waste, as
tailings will not be a significant cost or operational issue. The site will be moderately levelled and presents very little difficulty
with the advantage of the flat topography. Drains will isolate the plant site from run-off for diversion around the plant. Within
the plant area, drainage will be collected and recovered to the process.

 

Tailings

 

A tailings facility
is not required. Microfine processing allows the waste to be stockpiled on site and after a short time to allow for monitoring
and drying, the waste will be returned to the extraction areas as backfill. The stockpiling can occur in bunded (with soil) secure
low-level indents in the surface area of the project site. The stockpile areas will have diversion drains constructed to minimise
capture of rainfall in the stockpile areas. There is sufficient area on the project site to allow process material to be dried
by natural weather.

 

Prior to return
to the extraction areas quality tests will be conducted to ensure the mineral content of the material complies with Mines Department
regulations. It is a feature of the microfine process that's the resource material may be treated more than once, and as such
the handling of the material both during the process and at completion of the process will be conducted in similar methods to
the stockpiling of sand and gravel with the use of movable conveyors and lifters.

 

Water

 

Perennial streams
and local groundwater can supply the project’s water needs. There is ample evidence numerous small underground streams existing
between the surface area and the actual water table. Groundwater use will not involve the local water table.

 

The Coonambula area
overall is a significant catchment area with well-developed streams creeks and rivers and groundwater can therefore be developed
from surface water leakage, groundwater storage and groundwater through flow and the local streams.

 

In years one to
three of plant operation the average water demand for the project is estimated to be easily accommodated by the local streams
and will be augmented by an initial water feed dam to be constructed in the initial construction phase. Once full-scale commercial
operations are established, it is not anticipated there will be any significant risk to operations from the supply of water from
the local area around the project site.

 

Stormwater runoff
from undisturbed areas of the plant site will be allowed to run into local creeks, through diversion channels and sediment control
structures if necessary. Rainfall onto bunded areas will be recovered by the sump pumps and used in the process. Rainfall onto
other plant areas will flow into a secure event pond and returned to the process, as it may be contaminated with chemicals or
ore spillage.

 

    	32

    	 

    

 

 

Power

 

Power will be generated
for the operations by diesel generator sets at 11 kV to meet the expected maximum demands. Power can be supplied by transportable
equipment and it will 4 years into the operations before a permanent power installation may be required. Any boreholes will have
a separate generator and a stand-by generator will be located at the plant area.

 

Site Buildings

 

Wherever practical,
flat-pack type buildings will be used, imported in containers and assembled on site. This construction method will be used for
the laboratory, administration and training facility. Larger facilities such as the workshop and warehouse will be made up of
stacked shipping containers, with roofing over the enclosed spaces and concrete floors as required. The containers will be used
as stores and offices. Specialised buildings such as the plant control rooms and laboratory will be prefabricated in shipping
containers and brought to site fully assembled.

 

Staff and office
rooms will likewise be prefabricated and pre-wired inside shipping containers, with the wiring tested in the factory before despatch,
to minimise site work. The main processing plant will be fully enclosed inside a large weather resistant building providing security
and protection for operating systems and to allow operations to be conducted 24/ 6 with 20 hours per day and 4 hours per day allocated
for maintenance. Lighting and safety procedures will also be more easily installed within a large building envelope.

 

Mobile Equipment

 

In addition to the
mining fleet, four 4WD vehicles will be provided for use by the treatment plant and administration department to transfer staff
around the site. An ambulance will be provided. A 5 t truck with hoists will be provided to carry light freight to and from site.

 

Other equipment
to be provided to the operations include a mobile crane, portable stand-by generators and lighting towers, diesel welders and
HDPE pipe fusion welder, an Integrated tool carrier / forklift for reagent bag handling and a small FEL / Bobcat for plant clean-up.

 

Four-diesel storage
tanks will provide approximately two weeks supplies for the mine and power station. The facility will be bunded with unloading
pumps, light vehicle and heavy vehicle rapid fill bowsers. Mining trucks will refuel at the plant site, but a service truck will
refuel other mining equipment and remote generators. Transfer pumps will be used to supply the plant diesel generator set day
tanks. During construction, two additional 2 kL storage bladders will supplement the existing 2 kL tank, until such time as the
permanent fuel storage tanks can be constructed.

 

Communications

 

The existing satellite
service for voice and data will be used until a new expanded system can be installed for use during construction and later for
operations. A two-way radio system will be installed at the site, covering the mine operations and extending to a solar powered
transmitter tower will be installed on a convenient hill and the system will provide additional security for the area. Vehicles
travelling between off site and the site will be equipped with mobile telephones for safety reasons. Within the plant, additional
security will be provided around the gold room.

 

    	33

    	 

    

 

 

Rehabilitation

 

At the end of the
mine life, major items of process equipment and mining plant will be sold. Structures will be dismantled and the construction
materials sold for use in other projects. Waste dumps will be battered during operation to conform to typical slopes in the land
and all extraction areas then vacant will be backfilled. Seepage bores will be monitored for several years after closure to ensure
that no drainage problems from returned material arise.

 

The mine operation
will work with its waste material to back fill extraction areas as part of the ongoing operations. It is intended that constantly
returning material to extraction areas will aim for efficient handling and transport and at end of LOM the task of rehabilitation
will be simplified. The work plans to be lodged and approved by Queensland Government Mines Department will contain all rehabilitation
requirements and it is expected the requirements can be managed.

 

Infrastructure
Summary

 

The infrastructure
in the district is good and the area is readily accessible by well-maintained tarmac then sand and gravel roads. Telecommunications
equipment has been installed. Access within the site will be over widened and packed farm tracks. Electricity will need to be
supplied by on site local transportable power generation. There is adequate water for domestic and agricultural purposes and sufficient
water to commence mining operations. Large-scale mining operations may require pumping from local water table, utilising boreholes
that would require government approval. The planning and environmental permits allow borehole pumping to be part of a mining work
plans.

 

    	34

    	 

    

 

Financial

 

Capital Cost
Summary

 

The capital expenditure
summary over the first two years (initial design and construction phase) is shown in the table below, with sustaining capital
for capacity expansion shown in the subsequent table.

 

 

 

    	35

    	 

    

 

Table Capital
Cost After initial Design and Construction Phase (Refer to NPV Sheet)

 

 

 

Table Capacity
Build Up

 

 

 

    	36

    	 

    

 

Production Data

 

The
data of production planned during the design and construction phase (Y1 and 2), capacities build up phase (Y3-10) and operating
phase (Y11-20) is shown in the table below:

 

 

 

 

Direct Cost and
Plant Operating Costs

 

 

 

    	37

    	 

    

 

Economic
Evaluation

 

Valuation Methodology

 

Valuation of the project
is by using Discounted Cash Flow (“DCF”) techniques to determine a Net Present Value (“NPV”) for the Project
in real terms. The NPV is derived from post royalties and tax, pre-debt real cash flows. The cash flows extracted from the Financial
Model (“FM”) are presented in real terms using the Technical Parameters (“TP”), commodity price and macro-
economic projections. To accommodate taxation a nominal financial model has been populated and the final free cash flow has been
de-escalated to real terms prior to discounting.

 

To populate the nominal
financial model the commodity prices have been escalated over the LoM by US$ inflation which is estimated to be 3.5% per annum.
All capital and operating costs have been escalated from Month 1 to the end of the LoM by inflation, which is estimated to be
3% per annum.

 

The timing of the cash
flow has been adjusted to take into consideration the effects of revenue delay. The project valuation is based on a zero starting
balance with respect to unredeemed capital expenditure.

 

The FM is based on
calendar years running from June to May. The FM commences on 1 June 2012. The LoM is 20 years, consisting of 10 years of full
capacity production and 10 years of production during capacity build-up.

 

Royalties

 

Royalties have been
deducted from the operating margin as per the terms agreed to in the Royalty Agreement with Riverstone Resources:

 

		1.	On the first 100 ha of surface area of the project mined
– 19% of the gross revenue earned by the project

		2.	Subsequent to the first 100 ha of surface area of the project
mined – 15% of the gross revenue earned by the project

 

Taxation

 

Company
tax has been deducted from profits at a rate of 30% in line with the Australian corporate tax rate. Taxable income is determined
from operating profit less depreciation.

 

    	38

    	 

    

 

 

Cash Flows

 

Table below presents
the post-tax real cash flows for the Project. Each period reflects the calendar year from June to May. The valuations are derived
from the projected cash flows commencing in June 2012.

 

 

 

    	39

    	 

    

 

Net Present Values
and Sensitivities

 

Based on the real cash
flows calculated in the FM, CHPL has reported a DCF valuation, and performed single and double parameter sensitivity analyses
to ascertain the impact of discount factors, commodity prices and total costs;

 

Net Present Values (“NPV”)
for the project are presented. The NPV of the post-tax pre-finance nominal cash flows as derived from the FM compiled are presented
here, as follows:

 

The variations in NPV
with discount factors for the Project are presented in the following table. The discount factors are arranged from 10% to 25%.
A rate of 14% is used to represent the NPV for the project and as a base case to compare sensitivity. The NPV for the Project,
at a 14% discount rate, amounts to US$ 4.29 billion.

 

 

 

NPV Sensitivity –
Single Parameter Analysis

 

The variations in NPV
based on single parameter sensitivities for the Project are presented in the following table. For the single parameter sensitivity,
we have kept the revenues of the LoM at an average of US$2525 per Oz based on an escalation of 3.5% per annum from the current
base price of US$ 1600 per Oz. The single parameter is “Cost” and we have shown the impact of increase in costs on
the NPV at various discounting rates. Our base cost escalation is assumed at 3% pa over the LoM.

 

 

 

    	40

    	 

    

 

 

NPV Sensitivity –
Twin Parameter Analysis

 

The variations in NPV
based on twin parameter sensitivities for the Project are presented in the following table. The parameters tested for sensitivity
are “commodity price” and “cost” and we have presented the impact at various discounting rates.

 

 

 

From an analysis of
the twin parameter sensitivity table above, the project has a very high sensitivity to a combination of falling gold prices and
increase in costs of operations. If we were to factor drop in the commodity price combined with increase in costs, we will approach
negative NPV scenarios if the twin affect of a 5% drop in price is combined with an approximate 10% annual increase in costs.
While the risk of such a combined affect occurring is relatively medium-low, it could affect the viability of the project.

 

We have also evaluated
a possible scenario of an increase/decrease in yield affecting the NPV at 14% discounting rate. The emphasis is to test the negative
impact from a drop in actual yield from the recoveries from the estimated average of 1.8gpt. A scenario analysis in such a situation
is exhibited in the table below and even at an average yield of 0.9gpt (50% discount to the 1.8gpt adopted yield) the NPV is US$2.07
billion.

 

 

 

    	41

    	 

    

 

Payback

 

The payback period is
3.5 years (including 1 year of design and construction) for a LoM of 20 years.

 

Important Risks and
Opportunities

 

The
project assessment indicated certain risks and opportunities, which should be evaluated in further detail by ARX Gold
Corporation in order to assess the complete returns on the project. The key risks and opportunities are:

 

Risks

		•	Delay in establishing the initial production plant and
consequently the financial impact on the project;

		•	Decline in global demand of gold and consequent decrease
in prices;

		•	Increase in the costs of operations of the project by 10%
or more on annual basis thereby affecting the margins;

		•	The Microfine process has not yet been commercially deployed
on any project and during the process of developing the initial production plant and deploying the process, there could be unexpected
issues and concerns arising out of the deployment of the process. This could delay the project commencement unless alternative
processing methods are planned as contingencies;

 

Opportunities

		•	The Microfine process has the potential to derive significant
improvements in yield from the tailings at the project site. The upside from any potential increase in yield will have significant
positive impact on the project returns;

		•	The Master Agreement in place with Riverstone Resources
provides for a total treatment area of 2500 hectares. The phase 1 and 2 as part of this report is for a total area of 1600 hectares
and hence there is scope to include a significant additional area as part of the project in future (57.50% of the total area under
phase 1 and 2 is the possible additional area for treatment)

 

Interpretation
and Conclusions

 

The
ARX Gold Project fulfils financing requirements in terms of payback period (less than 5 years), required returns (>15% real)
and that the risk of returning a negative NPV is considered low especially because the yield assumed at 1.8gpt is an extremely
conservative assumption. Any possible increases in costs or capital required or drop in commodity prices can be managed if the
yield is even marginally higher. The possibility of getting better yields is good based on the test results from the site but
we have retained conservative assumptions of yield in our assessment of the financial viability of the project.

 

Further,
the microfine process adopted for this project is not capital intensive by its very nature and the production plant to be constructed
is a modular design. This allows for a higher degree of flexibility to control the capital expansion in accordance with the change
in market dynamics such as gold prices and increased costs. Hence, the likelihood of a negative NPV on the project is very low.

 

Recommendations

 

CHPL
recommends that ARX Gold Corporation progress the project to the detailed design and implementation phase. The various risks
and opportunities identified should be closely monitored during the detail design and implementation phase, to take advantage
of any further possible optimization

 

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Appendix
1: Assay

Reports

 

 

 

 

 

 

 

 

 

 

 

 

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Labmark
Internal Quality Control Review

 

General

 

	1.		Laboratory
                                                                                                                 QC results for
                                                                                                                 Method Blanks,
                                                                                                                 Duplicates, Matrix
                                                                                                                 Spikes, and Laboratory
                                                                                                                 Control Samples
                                                                                                                 are included
                                                                                                                 in this QC report
                                                                                                                 where applicable.
                                                                                                                 Additional QC
                                                                                                                 data may be available
                                                                                                                 on request.

	2.		Matrix
                                                                                                                 spike recoveries
                                                                                                                 are calculated
                                                                                                                 on an ‘As
                                                                                                                 Received’
                                                                                                                 basis; the parent
                                                                                                                 sample result
                                                                                                                 is moisture corrected
                                                                                                                 after the % recovery
                                                                                                                 is determined.

	3.		Proficiency
                                                                                                                 trial results
                                                                                                                 are available
                                                                                                                 upon request.

	4.		Actual
                                                                                                                 PQLs are matrix
                                                                                                                 dependant. Quotes
                                                                                                                 PQLs may be raised
                                                                                                                 where sample
                                                                                                                 extracts are
                                                                                                                 diluted due to
                                                                                                                 interferences.

	5.		Results
                                                                                                                 are uncorrected
                                                                                                                 for matrix spike
                                                                                                                 or surrogate
                                                                                                                 recoveries.

	6.		Test
                                                                                                                 samples are duplicated
                                                                                                                 or spiked, are
                                                                                                                 for this job
                                                                                                                 only and are
                                                                                                                 identified in
                                                                                                                 the following
                                                                                                                 QC report.

	7.		SVOC
                                                                                                                 analyses on waters
                                                                                                                 are performed
                                                                                                                 on homogenized,
                                                                                                                 unfiltered sample,
                                                                                                                 unless noted
                                                                                                                 otherwise.

	8.		When
                                                                                                                 individual results
                                                                                                                 are qualified
                                                                                                                 in the body of
                                                                                                                 a report, refer
                                                                                                                 to the qualifier
                                                                                                                 descriptions
                                                                                                                 that follow.

	9.		Samples
                                                                                                                 were analysed
                                                                                                                 on an as received
                                                                                                                 basis.

	10.		This
                                                                                                                  report replaces
                                                                                                                  any interim
                                                                                                                  results previously
                                                                                                                  issued.

 

Holding
Times

 

Please
refer to “Sampling and Preservation Chart for Soils & Waters” for holding times (LM-FOR-ADM-020)

 

For
samples received on the last day of holding time, notification of testing requirements should have been received at least 6 hours
prior to sample receipt deadlines as stated on the Sample Receipt Acknowledgement.

If
the Laboratory did not receive the information in the required timeframe, and regardless of any other integrity issues, suitability
qualified results may still be reported.

 

Holding
times apply from the date of sampling, therefore compliance to these may be outside the laboratory’s control.

 

**NOTE:
pH duplicates are reported as a rant NOT as an RPD

 

Qualtity
Control Results

 

 

 

 

 

    	54

    	 

    

 

 

 

 

	Sample Integrity	 
	Custody Seals Intact (if used)	N/A
	Attempt to Chill was evident	No
	Samples correctly preserved	Yes
	Organic samples had Teflon liners	N/A
	Samples received with Zero Headspace	N/A
	Samples received within Holding Time	Yes
	Some samples have been subcontracted	No

 

	Authorized By	 	 
	Carol Cawrse	Client Services Officer	 
	Mark Herbstreit	Senior Analyst - Metals	Accreditation Number: 1645
	 	 	 
	Laboratory Manager	 	 
	Anthony Crane	Operations Manager	/s/ Anthony Crane

 

	Final Report	 
	- Indicates Not Requested	* Indicates NATA accreditation
    does not cover the performance of this service

 

    	55

    	 

    

 

 

 

24
April 2009

 

EMA
Log #” 0904159

 

Project
Name: Gold

 

Enclosed
are the results of analyses for samples received by the laboratory on 04/07/09 09:48. Samples were analyzed pursuant
to client request utilizing EPA or other ELAP approved methodologies. I certify that this data is in compliance both
technically and for completeness.

 

/s/
Dan Verdon

 

Dan
Verdon

Laboratory
Director

 

CA
ELAP Certification #: 2564

 

4340
Viewridge Avenue, Suite A - San Diego, California 92123 - (858) 560-7717 - Fax (858) 560-7763

Analytical
Chemistry Laboratory

 

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Notes
and Definitions

 

 

	QR-02		The RPD result exceeded the QC limits due to
non-homogeneity of sample.

 

	QM-4X		The spike recovery was outside of the QC acceptance limits
for the MS and/or
MSD due to analyte concentration
at 4 times or greater
the spike concentration. The QC batch was accepted based on LCS and/or
LCSD recoveries within the
acceptance limits.

 

	QM-06		Due to noted non-homogeneity of the QC sample matrix,
the MS/MSD did not provide reliable
results for accuracy
and precision.
Sample results for the QC batch were accepted based on LCS/LCSD
percent recoveries and RPD values.

 

	QL-03		The LCS recovery for this analyte was outside
the QC criteria for this method.

 

	QB-05		This analyte was found in the method blank and is a suspected
laboratory contaminent.

	ND		Analyte
NOT DETECTED at or above
the reporting
limit

 

	NR		Not Reported

  

	dty		Sample results
reported on a dry weight
basis

 

	RPD		Relative
Percent Difference

 

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    	76

    	 

    

 

References

 

ARX Pacific Resources Pty Ltd, ASIC Database Extract, 11 April
2012

 

ARX Springs Pty Ltd, ASIC Database Extract, 11
April 2012

 

BRI Microfine Pty Ltd, ASIC Database Extract, 11 April 2012

 

ARX Springs Pty Ltd and Riverstone Resources Pty Ltd, Various Tribute
Agreements and Map

 

Areas, 6 March 2012/ 31st March 2012

 

BRI Microfine Pty Ltd and ARX Springs Pty Ltd, Technology Sub License
Agreement

 

Environment Approvals for Extractive Industries, Extractive industries
permit, EPA approvals for mining license and Mining License

 

ARX Springs NPV Certificate and NPV Valuation - ESA Pte Ltd, Singapore,
Ref: CD/11-2011/034, 28 November 2011

 

Certificate of Analysis- LabMark Environmental Laboratories, Australia,
31 July 2008

 

Certificate of Analysis- EnviroMatric Analytical, Inc., USA, 24
April 2009

 

Certificate of Analysis- LabMark Environmental Laboratories, Australia,
31 September 2008

 

Certificate of Analysis- ALS Chemex, Australia, 19 January 2009
/ 7 October 2011 /  17 February 2012 / 22 February 2012 / 23 February 2012

 

 

Date and Signature

 

Effective Date of Feasibility Study:
 9th March 2013

 

Date of Signature:
 9th March 2013

 

Signed by:

 

COCCIARDI HOLDINGS PTY LTD

 

    	77

    	 

    

 

Report Distribution
Record

 

Complete this form and include it as the final page for each copy
of the report produced.

 

 

 

 

This report is protected by copyright vested in ARX Springs Pty
Ltd. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission
of the copyright holder, ARX Springs Pty Ltd.

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