Tertiary Minerals

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Tertiary Minerals holds an exploration licence covering a major deposit of fluorspar near Storuman in the Vasterbotten district of Northern Sweden. Fluorspar is the commercial name for the industrial mineral fluorite (calcium fluoride - chemical formula CaF2).

The Storuman deposit is a flat-lying sandstone-hosted replacement deposit. It has been defined by 39 historic and 10 recent diamond drill holes and extends over an area of at least 2 km by 1.2 km where the mineralised horizon is typically 3-10 m thick.

The Storuman fluorite deposit was first evaluated by the Swedish Gränges Group in the 1970's when drilling, resource evaluation and metallurgical testwork was carried out. Subsequently the Gränges Group was taken over and broken up and the Storuman discovery was largely neglected.

On 17th November 2009 Tertiary released a tonnage/grade estimate for mineralisation at Storuman based on a review by Tertiary's independent consultants, Scott Wilson Ltd, of drilling conducted by both Tertiary and Gränges. The estimate of tonnage and grade of mineralisation provided is in the range of 28 to 31 million tonnes grading 11.2 to 12.3% CaF2 using an 8% cut-off grade. This suggests the potential for at least 3 million tonnes of contained fluorspar and is nearly double that contained in the historical estimate of 15.6 million tonnes grading 12.2% CaF2 reported by Gränges in the 1970s using the same cut-off grade.s of contained fluorspar and is nearly double that contained in the historical estimate of 15.6 million tonnes grading 12.2% CaF2 reported by Gränges in the 1970s using the same cut-off grade.

Neither the drilling conducted by Gränges or Tertiary closed off the deposit and it is open to expansion on three sides along from, and away from, the trace of its outcrop along the side of a hill.

The Company has carried out a preliminary site evaluation, re-located the fluorspar mineralisation in outcrop and completed a 10-hole diamond drilling program. The Company's drilling programme will be used to confirm grades, to enable resource calculations and to provide samples for metallurgical testwork.

Tertiary drilled three speculative holes, each stepping-out 250-300m beyond the previously known perimeter of the deposit at its NW limits. The corresponding assay results confirm that all holes intersected fluorite mineralisation with hole 08TS011 returning 1.75m grading 12.8% fluorite. This hole, which stopped in mineralization due to drill rig problems, is of particular interest as it suggests potential large extensions to the mineralisation on the west side of the highway not previously explored by Gränges.

Metallurgical testwork carried out by Gränges was successful in producing acid grade (min. 97% CaF2) fluorspar concentrate with very good recoveries after fine grinding.

The deposit is located in an area with well established infrastructure. It is located adjacent to a sealed highway and only 25 km from the regional town of Storuman which is connected by rail to the city and port of Umeå on the Gulf of Bothnia. The sealed highway road continues in the opposite direction to the port town of Mo I Rana in Norway. There are also sealed highway routes to the major regional port of Skellefteå. Each of these three named ports are roughly 250km from the project site.

Storuman Scoping Study and Development Plan

A conceptual target for the Company is a mining operation producing at least 100,000 tonnes per annum of acid grade fluorspar.

As a result of the Company's successful drilling programme which both confirmed and extended the zone of mineralisation, in late 2008 the Company commissioned a scoping study to evaluate the technical and economic viability of the Storuman fluorspar deposit. The scoping study will incorporate the results of metallurgical testwork conducted at SGS Lakefield in Canada. Metallurgical testwork has now successfully produced a fluorspar concentrate to a specification that would be saleable to consumers of acid-grade fluorspar.

Fluorspar Market

Fluorspar is the main industrial source of fluorine for the manufacture of hydrofluoric acid and derivative fluorine chemicals including refrigerants, PTFE (TeflonTM) and aluminium hydrofluoride, a flux used in the reduction of alumina to aluminium. It is also used as a flux in steel making, in the ceramics industry and in the manufacture of nuclear fuel (uranium hexafluoride).

The world market for fluorspar is just over 5 million tonnes per annum of which 65% is for acid grade fluorspar which currently sells in Europe for over US $300 per tonne, more than double the price some few years ago.

Fluorspar consumers, several of which are based in Europe, are facing strategic supply decisions as traditional supplies from China are diverted to meet growing Chinese domestic demand. China has recently imposed export quotas and export taxes to discourage export and thus ensure domestic supplies.

At present, China accounts for half of world fluorspar production but exports only 25% of its output. Export tonnages have fallen by more than half since the year 2000 and this trend is predicted to continue. Furthermore, the quality and quantity of the exported material is both declining and becoming unpredictable.