Figure 2:  Victory Bore RTP Magnetics   An image of the reduced-to-pole (RTP) magnetics over the Victory Bore magnetite deposit created from high resolution magnetic data, collected along NW-SE flight lines (50 m horizontal-separation/20m flying-height). The image shows the high magnetic amplitudes ( snow-capped peaks ™) associated with the deposit are continuous along >9 km of strike, as is the indicated thickness and the shallow depth to the top of the deposit.

Figure 3: Cross Section of mineralisation on section 6872750N

Figure 1: Victory Bore Prospect Location map   Historical drilling in 1981 at the project identified elevated Fe and vanadium results grading from 0.35% to 0.45% V2O5 over true widths of 24-35m, associated with sub-vertical bands of massive magnetite within a layered gabbroic intrusion.
Southern Geoscience Corporation (SGS) were engaged in June 2007 to interpret magnetic profiles derived from a low-level, aeromagnetic survey flown in 1998. This survey delineated several strong, sub-parallel magnetic trends, which are indicative of magnetite rich layers within the interpreted layered intrusion. These magnetite bands extend for in excess of 22.5km, of which 11km exist within E57-550.

Three Dimensional model of Victory Bore magnetics  On 25 June 2009 Quest Minerals entered into an exclusive dealing and non-circumvention agreement with Chinese coal producer Donghui Group in relation to the tenement. Under the agreement Donghui Group has the exclusive right for a period of 120 days to conduct further inquiries and to determine whether to participate in the exploration and development of the tenement under a joint venture or similar arrangement.
In cooperation with Quest Minerals, Black Ridge Mining Limited (ASX: BRD) has entered into the same arrangement with Donghui Group in relation to its Unaly Hill tenement (E57/420) located immediately south of Victory Bore. Donghui Group is one of the largest producers of coal and related products in the mining and industrial Shanxi Province of China. It also produces 2.7 million tonnes of metallurgical coke per year.

Figure 4: Massive high grade magnetite in diamond drill core  VC0902

Diamond Core Drilling November 2009

Diamond Core Drilling November 2009

Project site

Project site

Outcropping gabbro (unmineralised) at Victory Bore

Location and Tenure

Quest Minerals holds a 100% interest in E57/550, known as Victory Bore, in the Mid West region of Western Australia (Figure 1). The tenement covers the northern 11 km segment of a 25 km long magnetic anomaly overlying multiple magnetite-rich horizons within a large layered intrusive gabbro complex. This style of layered intrusive is an important host for vanadium and titanium bearing magnetite iron deposits, including the Windimurra Vanadium Project (Atlantic Limited) which is now back in production, and several other occurrences in the Mid West.

Figure 1: Victory Bore Prospect Location map

Geology

A characteristic feature of the upperparts of the layered gabbro body is the presence of multiple magnetite-rich lenses 10-50m thick of great lateral continuity. These magnetite lenses grade from densely packed coarse magnetite crystals at their bases (95% magnetite) up to gabbro (plagioclase-pyroxene rock) with disseminated magnetite (25%) at the top of each lens.

The magnetite crystals contain high levels of included elemental vanadium, together with abundant small exsolved grains of the titanium mineral ilmenite. Drill-hole data indicates that vanadium content within the magnetite crystals is higher in the lower part of the magnetite layers, whereas titanium content increases up the magmatic stratigraphy.

In places fresh Ti-V magnetite outcrops at the surface, but the average depth to fresh rock is 32m. The upper part of the regolith is soft saprolitic material studded with magnetite.

Exploration History

Quest acquired the property in early 2009 after the drilling of 4 RC holes in 2007 demonstrated the presence of thick titanium-vanadium magnetite lenses. Quest then acquired high-resolution aeromagnetics over the layered gabbro that showed two prominent magnetic units and several thinner units, all with remarkable consistency along strike.

Figure 2: Victory Bore RTP Aeromagnetics

In Nov 2009 Quest drilled two DD holes to confirm the presence of high-grade vanadium-titanium massive magnetite lenses of considerable thickness. Significant intersections from this drilling include 66m at 29.33% Fe, 0.57% V₂O₅ and 8.36% TiO₂.These cores provided material for initial metallurgical test work.

The drilling showed a bundle of six magnetite layers with average grades between 22% – 30% Fe, 0.4% – 0.7% V₂O₅, 6% -8% TiO₂. The layers dip steeply west, and range from 4m to 30m true thickness, with a combined thickness of 75m.

Figure 3: Cross Section of mineralisation on section 6872750N

Figure 4: Massive high grade magnetite in diamond drill core – VC0902

Based on the available drilling and 3D modeling of the aeromagnetic data by Southern Geoscience Consultants, independent consultancy CSA Global Pty Ltd estimated an Exploration Target of 200-250Mt of magnetite iron ore at grades ranging from 22% – 30% Fe , 0.4% – 0.7% V₂O₅ and 6% - 8% TiO₂. That estimate covered only 4km of the 10km of strike length of the magnetite bundle.

Resource

In Nov 2010 Quest completed a 17-hole RC resource-drilling program on 400m-spaced lines, extending over only 30% of the total strike length of the bundle of magnetite lenses. Based on block modeling by CSA Global, Quest announced in March 2011 a maiden Inferred Resource of:

Mineralised zones were identified by wireframes between sectional interpretations, using a nominal cutoff of 20% Fe and a maximum internal waste of 3m. Variograms were generated and grades interpolated using ordinary kriging from the 1m RC drill assays. Each lens was interpolated using samples from that lens only. Search radii were 400m along strike, 170m vertically and 70m across strike with a maximum of 24 samples and a minimum of 8 samples used in interpolation. Grades for Fe, P, SiO₂, Al₂O₃, LOI, V₂O₅ and TiO₂ were interpolated and validated by comparing mean grades and visually comparing model grades and sample grades on sections for each assay.

Initial Davis tube Tests

Davis Tube Recovery (DTR) testwork on material from the two early diamond holes confirmed that the mineralisation had excellent beneficiation characteristics, amenable to producing a high grade iron-vanadium concentrate.

Separation tests were taken on eight different p80 grind sizes varying from 500? to 25?. Those for 150? and 45? are reproduced below. The 150? fraction shows that a reasonable quality concentrate can be produced even from a very coarse grind size. The 45? fraction illustrates the likely optimum specification of a high-quality magnetite concentrate. The combined value for SiO₂ and Al₂O₃ is within the generally regarded upper limit of 5% for salt roasting of magnetic concentrate.

Scoping Studies

In October 2011, the company commissioned a study by Mineral Engineering Technical Services (METS) into the processing aspects of a ferro-vanadium operation. The study used the previously reported Inferred Mineral resource, and focused on a process involving:

• crushing, grinding to 45?m
• magnetic extraction of magnetite
• salt (Na₂CO₃) roasting of magnetite concentrate
• vat leach of calcines to produce sodium meta-vanadate
• exchange with ammonium sulphate to produce ammonium meta-vanadate (AMV)
• removal of ammonia in kiln with acid to produce V₂O₅ powder
• electric-arc smelt with scrap iron to produce Fe20%-V80% alloy product.

The main process parameters are:

The OPEX production cost of $8.69/lb is well below the current price of vanadium (as ferro-vanadium) of around US$15/lb. This operating margin assumes that the plant is fueled by natural gas, rather than diesel. Several of the processes are yet to be optimized in terms of reagent and power consumption.

The metallurgical study confirms that Victory Bore ore is amenable to standard processing with a high recovery of vanadium. Leach recoveries can be achieved at very low salt (sodium carbonate) dosages of around 60kg/t of concentrate. Sodium carbonate is by far the most costly reagent consumed in the process.

Cube Consultants were commissioned to undertake the mining component of the scoping study. It shows that a number of positive pit shell are generated using the processing parameters from the METS study. Taking into account appropriate pit angles, mining dilution, mining recovery, waste removal, and mine-site administration, the overall cost of ROM ore feed was $2.50/tone, or equivalent to $0.46/lb FeV. Mining cost is a relatively minor component that does not significantly affect project economics.

Although the overall project economics remain positive, it falls short of the investment criteria set by the company. The capital cost for the full ferro-vanadium concept is the major factor in determining project economics.

Future Program

Quest will examine a number of options regarding size of plant, optimization of reagent consumptions, and delivery of products other than FeV which will involve less capital.