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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Kore Potash Plc | LSE:KP2 | London | Ordinary Share | GB00BYP2QJ94 | ORD USD0.001 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.005 | 0.97% | 0.52 | 0.50 | 0.54 | 0.525 | 0.515 | 0.515 | 7,175,744 | 08:20:50 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMKP2
RNS Number : 7830M
Kore Potash PLC
13 May 2020
13 May 2020
Kore Potash Plc
("Kore Potash" or the "Company")
Dougou Extension (DX) Project Pre-Feasibility Study
Kore Potash, the potash exploration and development company whose flagship asset is the 97%-owned Sintoukola Potash Project ("Sintoukola" or the "Project"), located within the Republic of Congo ("RoC"), is pleased to announce outcomes of the Dougou Extension ("DX") Potash Solution Mining Project Pre-Feasibility Study ("PFS"). A summary of the results is presented herein.
Highlights:
Strong Financial Outcomes
-- Nameplate production target of 400,000 tpa MoP over an initial 18-year life based on Probable Ore Reserves.
Hot Features
Premium
-- Free on Board ("FOB") Pointe Noire costs of US$86.61/t MoP.
-- Average annual EBITDA of US$118 million.
-- Average annual post construction, post-tax, free cash flow of approximately US$95 million .
-- Approximately 4.3 years post-tax payback period from first production.
-- Real ungeared post tax IRR of approximately 22.9% and NPV10 (real) of approximately US$319 million on an attributable basis at life-of-mine average MoP price for granular product of US$422/t MoP (Argus Media's price forecast for DX Project's target markets).
-- PFS confirms low technical risk utilising selective solution mining, an efficient potash extraction method in use at multiple potash operations globally.
-- PFS outcomes reinforce Kore's broader development strategy for its deposits in the Sintoukola Potash Basin containing 6.1 Bt of potash Mineral Resources.
Low capital cost and short construction period improve financing options
-- Initial pre-production capital cost of approximately US$286 million (real 2019), including contingency.
-- Low pre-production capital intensity of US$715/t MoP produced. -- Short construction period of 21 months.
-- Combination of modest initial capital cost and short construction period improve attractiveness of DX Project to potential financiers.
Competitive costs to supply MoP to target markets
-- Low average mine gate operating costs of US$65.26/t MoP. -- Free on board (FOB Pointe Noire) costs of US$86.61/t MoP. -- Average cost of MoP delivered to target markets of approximately US$114.61/t MoP.
-- Close proximity to deep water port at Pointe Noire creates competitive advantage of reduced shipping distance compared to northern hemisphere producers, which tend to be well inland.
-- Higher grade and shallower deposits than majority of existing potash producers contributes to competitive cost structure.
-- Significant competitive advantage via low FOB costs and short shipping distance to target markets in Africa and South America.
High quality Ore Reserves and Mineral Resources
-- Sylvinite Ore Reserves of 17.7 Mt at a grade of 41.7% KCl.
-- Grade of the Ore Reserves is in the top quartile of all operating potash mines and potash development projects globally.
-- Total sylvinite Mineral Resources of 145 Mt at a grade of 39.7% KCl.
Further upside potential
-- Ore Reserves tonnage represent 22% of the Indicated Mineral Resources tonnage. -- Inferred Mineral Resources of 66 Mt at a grade of 40.4% KCl not included in the study.
-- Additional exploration drilling and/ or seismic surveys in the future may support classification of portions of the additional Mineral Resources of 127.3 tonnes at 39.4% KCl as Ore Reserves.
Next steps and Definitive Feasibility Study
-- Planning for the Definitive Feasibility Study (DFS) is progressing well and will be communicated to shareholders once the detailed scope and costing is completed.
-- The DFS planning stage includes consultation with potential debt financiers for the construction of the DX Project.
Cautionary Statement
-- The PFS referred to in this announcement has been undertaken to investigate the potential for a new potash development in the Republic of Congo.
-- The PFS is a preliminary technical and economic study of the potential viability of the DX project and is based on low level technical and economic assessments (AACE Class IV estimate).
-- The PFS Production plan is based on Probable Ore Reserves 17.7 Mt of sylvinite at an average grade of 41.7% KCl.
-- The PFS is based on the material assumptions outlined in this announcement and Appendix B. These include assumptions on availability of funding. While the Company considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the PFS will be achieved.
-- To achieve the range of outcomes indicated in the PFS, base case funding in the order of US$286 million will likely be required. Investors should note that there is no certainty that the Company will be able to raise that amount of funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of the Company's existing shares.
-- It is also possible that the Company could pursue other 'value realisation' strategies such as a sale, partial sale or joint venture of the project. If it does, this could materially reduce the Company's proportionate ownership of the project.
-- Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the PFS.
-- The Mineral Resources and Ore Reserves underpinning the production targets and forecast financial information in this combined AIM/JSE/ASX Release were prepared by Competent Persons in accordance with the requirements of the JORC Code 2012 edition (JORC).
Brad Sampson, CEO of Kore, commented: "The completion of the DX PFS confirms the district scale development potential of this world-class potash basin and the standalone commercial viability of the DX Project.
"The estimated US$286 million capital cost to construct the DX Project in just 21 months makes it attractive from a capital and near-term cashflow perspective, and low operating costs will allow Kore to profitably deliver MoP to our target markets.
"Building on the PFS and previously published positive Scoping Study for the DX Project, we can rapidly progress to conducting a definitive feasibility study, which will continue to improve Kore's understanding of the asset and de-risk the DX Project even further.
"Accelerating the Company into production and early cashflow generation via the DX Project will provide a strong platform to continue to optimise the Tier-1 Kola project and the wider potash basin, and a significantly improved commercial position to undertake its development. In addition, construction of the DX Project will give advantages in terms of overlapping infrastructure, thereby reducing the future capital cost at Kola.
"Developing the DX Project first is the best way forward for all of the Company's stakeholders: our local communities; the Government of the Republic of Congo; and our shareholders. We look forward to working with all these parties as we progress the DX Project into production and look to unlock the significant value within Kore's portfolio."
SGRF commented: " We are pleased with the completion of the DX PFS on time and underbudget and with the quality of the PFS outcomes. The results of the DX PFS indicate attractive economics and simplicity in project design which lends itself to comparatively lower risk in the subsequent construction and operating phases. We are supportive of Kore progressing to a Definitive Feasibility Study on DX."
Table 1: Key Project Metrics (100% basis unless otherwise stated)
Project physicals Units Project financials Units
--------- --------------------------- ------
Total MoP production kt 7 372 Total revenue US$M 3,113
MoP granular product
grade %KCl 98.5% Average annual revenue US$M 169
Average MoP production ktpa 393 Average annual EBITDA US$M 118
------------------------ --------- -------
Capital cost EBITDA margin % 69.8%
----------------------------------- -------
Average post-construction,
Pre-production post tax annual free
capital cost $M 285.9 cash flow US$M 95
Capital intensity
(at nameplate
400,000 tpa MoP) US$/tpa 715 Free cashflow margin % 56.4%
------------------------ --------- -------
Total post tax free
Operating costs cash flow(2) US$M 1,469
----------------------------------- -------
Attributable(3) post
tax, un-geared NPV (10%
Mine Gate Cost $/t 65.26 real) US$M 319
FOB (Pointe Noire) Attributable(3) post
Cost(1) $/t 86.61 tax, un-geared IRR % 22.9%
Payback period from
CFR (Africa) Cost(1) $/t 114.61 date of first production years 4.3
------------------------ --------- -------
Scheduled LOM years 18.4
Average forecast MoP US$/t
granular price MoP 422
--------------------------- ------ ------
Notes to Table 1:
1: Excludes Royalty and Sustaining Capex
2: Free cash flow defined as EBITDA minus tax, minus capex
3: Attributable to Kore's interest (i.e. 90% basis)
Table 2: Summary of changes between Scoping and PFS Studies
Financial Drivers Scoping PFS
Capital Cost Estimate US$327 million US$285.9 million
============================== ==================== ============================
Operating Cost: Mine
Gate US$78.85/t MoP US$65.26/t MoP
============================== ==================== ============================
Operating Cost: FOB (Pointe
Noire) US$82.74/t MoP US$86.61/t MoP
============================== ==================== ============================
Operating Cost: CFR (Africa) US$107.74/t MoP US$114.61/t MoP
============================== ==================== ============================
Life of Project 17 years 18.4 years
============================== ==================== ============================
US$344 /t Ave for first
Potash Price US$360/t flat 6 years
============================== ==================== ============================
US$456 /t Ave for remaining
years
============================== ==================== ============================
US$422/t LOM average
============================== ==================== ============================
MoP Produced over life 7,074 Mt 7,372 Mt
============================== ==================== ============================
Mineral Resource 232Mt @ 38.1% KCl 145 Mt @ 39.7% KCl
============================== ==================== ============================
17.7 Mt sylvinite @
Ore Reserve Nil 41.7% KCl
============================== ==================== ============================
NPV(10) US$221 million US$319 million
============================== ==================== ============================
IRR 19.3% 22.9%
============================== ==================== ============================
Average annual free cash
flow US$74 million US$95 million
============================== ==================== ============================
Dual well selective Single well selective
Mining Method dissolution dissolution
============================== ==================== ============================
Purpose built Kore BOO at existing Pointe
Ship loading facility Noire Port
-------------------- ----------------------------
Notes to Table 2: A key point to note with regards to pricing is the forecast potash price remains beneath the scoping study assumption of US$360/t MoP for the first 6 years of production, at an average price of $US 344/t MoP, until 2029. The average potash price for the remaining life of mine is US$ 456/t MoP. The overall impact of this pricing assumption adds 1% to the IRR of the DX Project when compared to the scoping study pricing assumption
Figure 1: Contributions to Change in IRR from Scoping Study to PFS - IRR Waterfall
(available at www.korepotash.com )
Ore Reserves and Mineral Resources
Ore Reserves (Table 3) were determined from a portion of the Indicated Mineral Resource Estimate which was updated for the PFS. The Sylvinite is hosted by two layers ('seams') referred to as the HWSS and the TSS, separated by 8 to 15 m of rock-salt. Table 4 provides the Mineral Resource Estimate.
Further detail on the Ore Reserves Estimates and Mineral Resource Estimate is provided in Appendix B: (Summary of Information required according to ASX listing Rule 5.9.1) and Appendix C (JORC Code Table 1, Sections 1-4).
Table 3: DX Sylvinite Ore Reserves
Classification Ore Reserves KCl grade Mg Insolubles
(Mt) (% KCl) (% Mg) (% Insol.)
------------ --------- -------
Probable 17.7 41.7 0.06 0.19
------------ --------- ------- -----------
Total Ore Reserves 17.7 41.7 0.06 0.19
------------------- ------------ --------- ------- -----------
Notes to Table 3: The Ore Reserves in Table 3 are gross numbers and the attributable numbers are presented in Appendix D: Kore Potash Mineral Resources and Ore Reserves as of 13 May 2020.
Table 4: DX Sylvinite Mineral Resources (inclusive of Ore Reserves)
Classification Mineral Resources KCl Grade Mg Insolubles
(Mt) (% KCl) (% Mg) (% Insol.)
------------------ ---------- --------
Indicated 79 39.1 0.06 0.20
------------------ ---------- --------
Inferred 66 40.4 0.05 0.22
------------------ ---------- --------
Total Mineral Resources 145 39.7 0.05 0.21
------------------------- ------------------ ---------- -------- ------------
Notes to Table 4: The Sylvinite Mineral Resources in Table 4 are gross numbers and the attributable numbers are presented in Appendix D: Kore Potash Mineral Resources and Ore Reserves as of 13 May 2020.
Reasonable Basis for Forward-Looking Statements (including production target and forecast financial information) and Ore Reserves
This release, inclusive of Appendix A: Summary results of DX Project PFS, contains a series of forward-looking statements. The Company has concluded that it has a reasonable basis for providing these forward-looking statements and the forecast financial information included in this release. This includes a reasonable basis to expect that it will be able to fund the development of the DX Project when required.
The detailed reasons for these conclusions are outlined throughout this release, including in Section 19 of Appendix A. All material assumptions, including the modifying factors, upon which the production target and forecast financial information is based are disclosed in this release (including the summary information in Appendix B and Appendix C). This announcement has been prepared in accordance with the requirements of the JORC and the ASX and AIM Rules.
The estimated Ore Reserves and Indicated Mineral Resources underpinning the production target have been prepared by a Competent Person in accordance with the requirements of JORC. Details of those Ore Reserves and Mineral Resources are set out in this release (including, in relation to the Ore Reserves, the details in Appendix B and C).
The 400,000 tonnes per annum MoP production over an 18.4-year life is underpinned by scheduling of Probable Ore Reserves. No Inferred Mineral Resources, exploration targets or qualifying foreign estimates underpin the production target.
SFor further information, please visit www.korepotash.com or contact: Kore Potash Tel: +27 11 469 9140 Brad Sampson - CEO Tavistock Communications Tel: +44 (0) 20 7920 Jos Simson 3150 Edward Lee Canaccord Genuity - Nomad and Tel: +44 (0) 20 7523 Broker 4600 James Asensio Henry Fitzgerald-O'Connor Shore Capital - Joint Broker Tel: +44 (0) 20 7408 Jerry Keen 4050 Toby Gibbs James Thomas
Competent Persons Statement:
The estimated Ore Reserves and Mineral Resources underpinning the production target have been prepared by a Competent Person in accordance with the requirements of the JORC Code.
All information in this report that relates to Mineral Resources is based on information compiled by Ms. Vanessa Santos, P.Geo. of Agapito Associates Inc. Ms. Santos is a licensed professional geologist in South Carolina (Member 2403) and Georgia (Member 1664), USA, and is a registered member (RM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 04058318), a Recognized Professional Organization' (RPO) included in a list that is posted on the ASX website from time to time.
Ms. Santos has sufficient experience that is relevant to the style of mineralisation and type of Deposit under consideration and to the activity she is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code). Mrs. Santos consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.
All information in this report that relates to Ore Reserves is based on information compiled or reviewed by, Dr. Michael Hardy, a Competent Person who is a registered member in good standing (Member #01328850) of Society for Mining, Metallurgy and Exploration (SME) which is an RPO included in a list that is posted on the ASX website from time to time.
Dr. Michael Hardy has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code).. Michael Hardy has verified that this report is based on and fairly and accurately reflects in the form and context in which it appears, the information in the supporting documentation relating to preparation of the Ore Reserves.
Dr. Michael Hardy president of Agapito Associates Inc is not associated or affiliated with Kore Potash or any of its affiliates. Ms. Santos is full time employee of Agapito Associates Inc. and is not associated or affiliated with Kore Potash or any of its affiliates. Agapito Associates Inc will receive a fee for the preparation of the Report in accordance with normal professional consulting practices. This fee is not contingent on the conclusions of the Report and Agapito Associates Inc. Michael Hardy will receive no other benefit for the preparation of the Report. Michael Hardy does not have any pecuniary or other interests that could reasonably be regarded as capable of affecting their ability to provide an unbiased opinion in relation to the Dougou Extension Potash Project. Agapito Associates Inc does not have, at the date of the Report, and has not had within the previous years, any shareholding in or other relationship with Kore Potash or the Dougou Extension Potash Project and consequently considers itself to be independent of Kore Potash.
Forward-Looking Statements
This release contains certain statements that are "forward-looking" with respect to the financial condition, results of operations, projects and business of the Company and certain plans and objectives of the management of the Company. Forward-looking statements include those containing words such as: "anticipate", "believe", "expect," "forecast", "potential", "intends," "estimate," "will", "plan", "could", "may", "project", "target", "likely" and similar expressions identify forward-looking statements. By their very nature forward-looking statements are subject to known and unknown risks and uncertainties and other factors which are subject to change without notice and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct, which may cause the Company's actual results, performance or achievements, to differ materially from those expressed or implied in any of our forward-looking statements, which are not guarantees of future performance.
Neither the Company, nor any other person, gives any representation, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statement will occur. Except as required by law, and only to the extent so required, none of the Company, its subsidiaries or its or their directors, officers, employees, advisors or agents or any other person shall in any way be liable to any person or body for any loss, claim, demand, damages, costs or expenses of whatever nature arising in any way out of, or in connection with, the information contained in this document.
In particular, statements in this release regarding the Company's business or proposed business, which are not historical facts, are "forward-looking" statements that involve risks and uncertainties, such as Mineral Resource estimates market prices of potash, capital and operating costs, changes in project parameters as plans continue to be evaluated, continued availability of capital and financing and general economic, market or business conditions, and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. Shareholders are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. The forward-looking statements are based on information available to the Company as at the date of this release. Except as required by law or regulation (including the ASX Listing Rules), the Company is under no obligation to provide any additional or updated information whether as a result of new information, future events or results or otherwise.
Summary information
This announcement has been prepared by Kore Potash plc. This document contains general background information about Kore Potash plc current at the date of this announcement and does not constitute or form part of any offer or invitation to purchase, otherwise acquire, issue, subscribe for, sell or otherwise dispose of any securities, nor any solicitation of any offer to purchase, otherwise acquire, issue, subscribe for, sell, or otherwise dispose of any securities. The announcement is in summary form and does not purport to be all-inclusive or complete. It should be read in conjunction with the Company's other periodic and continuous disclosure announcements which are available to view on the Company's website www.korepotash.com .
The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.
Not financial advice
This document is for information purposes only and is not financial product or investment advice, nor a recommendation to acquire securities in Kore Potash plc. It has been prepared without considering the objectives, financial situation or needs of individuals. Before making any investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction.
Market Abuse Regulation
This announcement is released by the Company and contains inside information for the purposes of the Market Abuse Regulation (EU) 596/2014 ("MAR") and is disclosed in accordance with the Company's obligations under Article 17 of MAR. The person who arranged for the release of this announcement on behalf of the Company was Brad Sampson, CEO. This announcement has been authorised for release by the Board of Directors
APPIX A
Summary results of DX Project PFS
1. Project Introduction:
Kore Potash Plc ("Kore", the "Company" or "KP2") is a mineral exploration and development company that is incorporated in the United Kingdom and listed on the AIM (as KP2), the Australian Securities Exchange (ASX, as KP2) and the Johannesburg Stock Exchange (JSE, as KP2).
The primary asset of Kore is the Sintoukola Potash Project which includes the Dougou Extension Sylvinite Deposit ("DX") and the Kola Sylvinite deposit ("Kola") in the Republic of Congo (RoC), held by the 97%-owned Sintoukola Potash SA (SPSA). SPSA has 100% ownership of the Dougou Mining Lease, on which the DX Project is located. All outcomes detailed within this PFS are expressed on a 100% basis with exception of Project Net Cashflow, NPV and IRR, which are expressed on a 90% attributable basis.
Following a review of the strategic options within the Sintoukola District, the Company formed the view that a reduced-scale potash development at the DX Project has strong potential to expedite the Company's path to cash flow generation and consequently, accelerate the subsequent development of the Kola Project.
The DX Solution Mining Project (the "DX Project") provides a more rapid path to production with a significantly smaller capital cost than required for the Kola project. Development of this project will establish Kore Potash as the first potash producer in the Republic of Congo in over 40 years. The smaller scale of the Project comes with relatively low operational and financial risks.
Development of the DX Project is expected to create a low-cost potash operation producing approximately 400,000 tons per annum (tpa) of K60 Muriate of Potash (MoP) annually. The mining target is the DX Sylvinite Mineral Resource, a sylvinite deposit with exceptionally high KCl grade. Selective solution mining and processing technology will be employed, resulting in minimal waste brine which will be disposed of to the sea. Solution mining is the most effective means of exploiting an underground potash resource at a reduced scale, and the method is proven across other operations globally.
The DX Project is located approximately 65 km North of Pointe Noire and 13 km from the coast (Figure 1).
The DX PFS considers the mining of the DX Sylvinite, and the production of circa 400,000 tpa of K60 MoP and its export and considers all associated infrastructure. It delivers an economic model with a scheduled life of project of 18.4 years based on Ore Reserves of 17.7 Mt at 41.7% KCl.
Kore commissioned a range of subject matter expert consultants to conduct a PFS for the DX Project. The team of consultants comprises Innovare Technologies Ltd. as solution mining, process and drilling consultants, Agapito Associates Inc. as mine designers and Competent Persons for the Mineral Resource and Ore Reserve estimation, Engcomp Engineering and Computing Professionals as engineering services consultant, Change Energy Services as natural gas virtual pipeline consultant and PRDW, port and coastal consulting engineers.
In accordance with JORC, the Competent Persons (CP) for the DX Project are:
Ms. Vanessa Santos, P.Geo. of Agapito Associates Inc., for the Exploration Results and Mineral Resources. Ms. Santos is a licensed professional geologist in South Carolina (Member 2403) and Georgia (Member 1664), USA, and is a registered member (RM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 04058318), an RPO included in a list that is posted on the ASX website from time to time.
Dr. Michael Hardy of Agapito Associates Inc, for the Reserve Review (RR). Dr. Hardy is a registered member in good standing (Member #01328850) of Society for Mining, Metallurgy and Exploration (SME), an RPO included in a list that is posted on the ASX website from time to time.
Appendix A Figure 1 : Location Map showing DX Project
(available at www.korepotash.com )
2. Sylvinite Mineral Resource:
Appendix C provides the JORC Table 1 Sections 1 to 4.
At DX the potash is hosted by two flat-lying or gently dipping (mostly <10deg) layers (referred to as 'seams') at a depth of approximately 300-450 metres below surface. These seams are separated by 8 to 15 metres of rock-salt. The uppermost seam is the Top Seam (TS) and the lowermost is the Hanging Wall Seam (HWS). These seams may be composed of sylvinite or carnallite. Carnallite may occur immediately below the sylvinite but these rock types are never mixed. The Mineral Resources Estimate ("MRE") is for the sylvinite only and the sylvinite seams are referred to as the HWSS and the TSS and average 3.5 and 7.4 m thick respectively. The TSS is comprised of 3 sub-seams between which there are layers of rock-salt.
In September 2019 the Company commissioned DMT GmbH&Co KG of Germany (DMT) to carry out a 60-line km 2D seismic survey over an area coinciding with the Indicated Mineral Resource (Figure 2) to provide higher resolution data for important geological contacts and to guide the improved interpretation of the position and dip of the potash layers. Processing of this data was carried out by DMT Petrologic GmbH & Co. KG of Germany (Petrologic). Between November 2019 and January 2020 Kore completed 2 new drill-holes; DX_07 and DX_09B. A third drill-hole DX_08 was stopped above the evaporite due to drilling difficulties. The positions of all drill-holes within the DX MRE are provided in Table 1. The sylvinite intersections in these new holes are provided in Table 2 along with the intersections of all previous drill-holes. The MRE was completed by creating a 3D wireframe for the sylvinite seams using drilling and seismic data, then by creating a 50 x 50 m block model with variable thickness into which grade was estimated using Inverse Distance Squared (IDW(2) ). Only blocks with a thickness of 1 metre or more were considered for the MRE. Table 3 provides the MRE for the HWSS and TSS 6-8. Figures 3 and 4 are maps showing the distribution and thickness of the HWSS and the TSS. Figure 5 provides a typical cross-section through the deposit.
Appendix A Figure 2 : Map showing the Exploration data supporting the DX MRE
(available at www.korepotash.com )
Appendix A Table 1: Collar positions of all holes within the DX deposit. All holes were drilled vertically
BHID X Y Z Depth Collar Survey Notes
(m) type
Kore
DX_01 787201.22 9529045.8 54.64 551.7 DGPS hole
---------- ---------- ------ ------- -------------- ---------
Kore
DX_02 782845.02 9529278.3 34.73 484.4 DGPS hole
---------- ---------- ------ ------- -------------- ---------
Kore
DX_03 790475.49 9533343.7 39.54 421.9 DGPS hole
---------- ---------- ------ ------- -------------- ---------
failed
DX_06 788565 9531306 51.90 343.0 GPS/DTM hole
---------- ---------- ------ ------- -------------- ---------
Kore
DX_07 790559.2 9529112.8 61.40 486.0 DGPS hole
---------- ---------- ------ ------- -------------- ---------
failed
DX_08 790550.6 9529982.8 52.40 323.0 DGPS hole
---------- ---------- ------ ------- -------------- ---------
Kore
DX_09B 791082.6 9530224 50.50 480.0 DGPS hole
---------- ---------- ------ ------- -------------- ---------
Kore
ED_01 791144.84 9529490.7 55.29 525.2 DGPS hole
---------- ---------- ------ ------- -------------- ---------
Kore
ED_03 789848.75 9528941.2 62.9 492.2 DGPS hole
---------- ---------- ------ ------- -------------- ---------
Historic
K52 791162.76 9529488.7 56.57 1050.0 survey Historic
---------- ---------- ------ ------- -------------- ---------
K62 789179.19 9530654.4 59.79 531.0 DGPS Historic
---------- ---------- ------ ------- -------------- ---------
Appendix A Table 2: All drill hole intersections within the DX deposit including those of carnallite and halite
Drill-hole Seam Mineralogy Depth From Depth True Thickness KCl %
(m) To (m) (m)
ED_01 TSS sylvinite 403.98 409.14 5.16 31.8
------ ------------ ----------- -------- --------------- --------
HWSS sylvinite 421.93 426.4 4.47 57.7
------ --------------------------- ----------- -------- --------------- --------
ED_03 TS halite - - - -
------ ------------ ----------- -------- --------------- --------
HWSS sylvinite 398.95 403.16 4.21 59.5
------ --------------------------- ----------- -------- --------------- --------
DX_01 TSS sylvinite 430.76 437.59 6.83 27.8
------ ------------ ----------- -------- --------------- --------
HWS carnallite 449.4 462.35 12.95 24.6
------ --------------------------- ----------- -------- --------------- --------
DX_02 TS truncated - - - -
------ ------------ ----------- -------- --------------- --------
HWSS sylvinite 429.4 430.43 1.03 61.6
------ --------------------------- ----------- -------- --------------- --------
DX_03 TSS sylvinite 309.43 310.58 1.15 59.1
------ ------------ ----------- -------- --------------- --------
HWSS sylvinite 323.9 324.51 0.61 62.9
------ --------------------------- ----------- -------- --------------- --------
HWS carnallite 324.51 336.9 12.39 25.1
------ --------------------------- ----------- -------- --------------- --------
DX_07 TSS sylvinite 388.48 391.2 2.72 25.6
------ ------------ ----------- -------- --------------- --------
HWSS sylvinite 401.1 405.32 4.22 56.4
------ --------------------------- ----------- -------- --------------- --------
DX_09B TSS sylvinite 361.9 366.75 4.85 32
------ ------------ ----------- -------- --------------- --------
HWSS sylvinite 379.3 381.01 1.71 53.8
------ --------------------------- ----------- -------- --------------- --------
HWS carnallite 381.01 386.25 5.24 No data
------ --------------------------- ----------- -------- --------------- --------
K52 TSS sylvinite 406.15 411.02 4.87 31.9
------ ------------ ----------- -------- --------------- --------
HWSS sylvinite 423.55 427.16 3.61 57.5
------ --------------------------- ----------- -------- --------------- --------
K62 Historic
potash
hole TS carnallite 440.41 445.73 5.32 19.1
------ ------------ ----------- -------- --------------- --------
HWS carnallite 455.42 461.98 6.56 24.3
------ --------------------------- ----------- -------- --------------- --------
Note to Table 2: TS or HWS refers to intersections where the seam is not sylvinite
Appendix A Table 3: Dougou Extension for the HWSS and the TSS (Mineral Resources are reported inclusive of Ore Reserves)
Mineral Seam Sylvinite Average Contained Average Insol content Mg (%)
Resource (Mt) grade (% KCl (Mt) thickness (%)
Category KCl) (m)
------------ ---------- ---------- ---------- ----------- --------------
Measured - - - - - - -
Indicated HWSS 28 57.1 15.9 3.8 0.12 0.02
Inferred HWSS 17 60.4 10.2 3.0 0.17 0.02
----------
Total HWSS 45 58.3 26.1 3.5 0.14 0.02
=========== ============ ========== ========== ========== =========== ============== =======
Measured - - - -
Indicated TSS 6-8 51 29.3 14.9 4.6 0.25 0.08
Inferred TSS 6-8 49 33.5 16.5 4.2 0.24 0.07
----------
Total TSS 6-8 100 31.4 31.4 4.4 0.24 0.07
=========== ============ ========== ========== ========== =========== ============== =======
Measured - - - -
Indicated both seams 79 39.1 30.8 4.3 0.20 0.06
Inferred both seams 66 40.4 26.7 3.8 0.22 0.05
---------- ----------
Total both seams 145 39.7 57.5 4.1 0.21 0.05
=========== ============ ========== ========== ========== =========== ============== =======
Notes to Table 3:
The effective date of this MRE is 13 May 2020.
Mineral Resources are reported using a 15% KCl cut-off grade
The MRE is for sylvinite only and includes areas that are modelled as being underlain by carnallitite.
The density was calculated for each model block based on the KCl content using the formula DENSITY= (KCl-742.53)/ (-337.53), based on a regression line of density data (by pycnometer) versus KCl %.
Appendix A Figure 3 : HWSS thickness map
(available at www.korepotash.com )
Appendix A Figure 4 : TSS thickness map
(available at www.korepotash.com )
Appendix A Figure 5 : Typical cross-section through the DX deposit. Annotations referred to in the JORC Table in Appendix C
(available at www.korepotash.com )
3. Ore Reserves:
The DX Sylvinite Ore Reserves are 17.7 Mt at 41.7% KCl, with an equivalent contained MoP of 7.37 Mt with a KCl grade of 98.5%. The estimate of Ore Reserves was completed by Agapito Associates Inc and was prepared in accordance with the JORC Code.
Appendix B contains a summary of information required according to ASX Listing Rule 5.9.1 and Appendix C contains section 4 of the JORC Code Table 1 Checklist of Assessment and Reporting Criteria.
Details of the Ore Reserve Estimate are shown in Table 4 below.
Appendix A Table 4: DX Sylvinite Ore Reserves
Seam Classification Ore Reserves KCl Mg Insolubles
Tonnage (%KCl) (%Mg) (%Insol.)
(Mt)
--------------- ------------ ------- ------
Proved 0 0 0 0
--------------------------------- ------------ ------- ------ ----------
Probable 9.9 29.8 0.08 0.23
--------------------------------- ------------ ------- ------ ----------
TSS Total 9.9 29.8 0.08 0.23
--------------- ------------ ------- ------ ----------
Proved
--------------- ------------ ------- ------ ----------
Probable 7.7 57.1 0.02 0.12
--------------------------------- ------------ ------- ------ ----------
HWSS Total 7.7 57.1 0.02 0.12
--------------- ------------ ------- ------ ----------
Proved 0 0 0 0
--------------------------------- ------------ ------- ------ ----------
Probable 17.7 41.7 0.06 0.19
--------------------------------- ------------ ------- ------ ----------
Total Ore
Total both seams Reserves 17.7 41.7 0.06 0.19
--------------- ------------ ------- ------ ----------
4. Geotechnical and Hydrogeology:
The design for the single-well solution mining caverns is based on a radius of 60 m, with cavern centers spaced 144 m apart. This layout results in an aerial extraction ratio of 62.9% with a volumetric extraction of 46.2%.
During the PFS, no specific hydrogeological investigations were carried out. For the small quantity of well water required for the process plant utilities and camps, the hydrogeological test work for the nearby Kola Definitive Feasibility Study was referenced. The DX area was covered in the general Kola hydrogeologic model, and the conditions at DX were assumed to be similar to Kola, where 15 m3/h was easily sustainable from a single well. Specific Hydrogeological investigations in the DX area are planned to be conducted during a Definitive Feasibility Study ("DFS") phase for DX, including a test well to verify availability and quality of well water.
For some mining methods, disturbance to aquifers overlying the deposit may present risk. In the case of solution mining of potash, disturbance of overlying water bearing strata does not present a material risk to the operation. Production caverns and closed caverns contain brine of higher density and pressure than that of the overlying groundwater. There may be a possibility of brine leaking into overlying ground water. Local communities draw water from upper aquifers which are not expected to be impacted by operations at DX.
Zones of subsidence and structures have been avoided in the mine planning to further mitigate risk. If connection is made to the overlying aquifer(s) during operations, leakage can be detected. If the leakage is significant, a submersible pump can be used to lower the pressure in the cavern to control the leakage.
5. Mining:
The Dougou Extension solution mining method utilises one well per cavern, drilled to a vertical depth of approximately 460 m for areas where HWSS will be mined and approximately 440 m in areas where only mining of TSS is planned. Surface casing will be installed to the top of the salt at about 400 m, then an intermediate casing will be installed to the base of the HWSS and an open hole extended to the total depth of 460 m or 440 m for TSS only caverns.
In the scoping study, dual-well caverns were planned. Single well caverns have been selected for the PFS as this presents a lower initial capital cost approach and the smaller circular caverns are better suited to the varying dip of the DX deposit.
This change also resulted in the following advantages
-- well completion and equipping are easier due to fewer valves and in-connection pipes not being required
-- reduced Mineral Resource loss due to the dip of the potash beds
-- improved extraction ratio, as more circular caverns can be placed tightly along the irregular Mineral Resource boundary
-- improved extraction ratio because of the higher density of caverns (packing factor)
-- operational advantage because the single-well cavern development is 3 months less than for the dual-well caverns
For the single-well caverns, a radius of 60 m was selected. Additional numerical modelling of single-well cavern deformations is planned to be undertaken as part of the Definitive Feasibility Study ("DFS"). Geotechnical studies competed to date indicate that the caverns are expected to be stable, and some yielding of pillars may occur, with no adverse consequences expected as a result.
The solution mining method is divided into four phases: (1) sump development, (2) roof development, (3) continuous mining and (4) cavern closure. Figures 6 and 7 show schematically the HWSS and the TSS in solution mining mode respectively.
Appendix A Figure 6 : HWSS solution mining
(available at www.korepotash.com )
Appendix A Figure 7 : TSS solution mining
(available at www.korepotash.com )
Successful application of the selective dissolution method requires maintenance of adequate permeability through the potash zone during operation. Our experts have advised that a rule of thumb is that a minimum grade of 30% KCl is sufficient to create adequate permeability for the economic selective solution mining process to be sustained. The percentage of KCl in the HWSS is 57.1% which should facilitate selective mining. However, mining of the TSS which also has very high grade KCl, may be more challenging because the halite interbeds will not be dissolved by the NaCl-rich solvent, requiring other techniques to access the overlying high-grade potash beds. The mining method proposed for the TSS is to selectively mine the high-grade beds and induce the low-grade beds to fall to the bottom of the cavern. This technique has been used successfully in similar application in other potash solution mines.
In the determination of Ore Reserves, the TSS tonnage was modified downwards by 15% to provide for potential risk associated with the extraction of the TSS. Production scheduling prioritises HWSS extraction first to further mitigate potential risks associated with TSS extraction. In the first 7 years of operation, 78.1% of KCl production will be from the HWSS and 21.9% will come from the TSS. Prior to mining the TSS, pilot testing and evaluation of alternate ways to maximise recovery in the TSS are planned to be undertaken.
The estimated MoP production from each seam is shown in Table 5 Some production boreholes are planned to intersect both the HWSS and TSS where caverns are planned in both seams and other production boreholes are planned to only intersect one of the sylvinite seams and in those holes, caverns are only planned in the relevant seam.
Appendix Table 5: Breakdown of MoP produced from each source
Source Number of Caverns Average MoP MoP produced
produced per (tonnes)
Cavern
(tonnes)
HWSS + TSS 97 45,197 4,384,151
------------------ -------------- -------------
HWSS (only) 51 27,702 1,412,821
------------------ -------------- -------------
TSS (only) 90 17,505 1,575,491
------------------ -------------- -------------
All Caverns 238 30,977 7,372,463
------------------ -------------- -------------
The mine scheduling and processing of the Probable Ore Reserves for the Dougou Extension results in an equivalent contained MoP of 7.37 Mt with a KCl grade of 98.5%.
The cavern production estimate includes the following steps:
-- gridding potash grade, bed thickness and bed elevation over the Indicated Mineral Resource areas based on known drill hole data and
-- estimating recoverable KCl tonnages for each planned cavern.
Drill hole data was used to calculate recoverable tonnes for each planned cavern.
KCl tonnage within the cavern boundary depends on the cavern dimension, potash bed thickness and grade distribution within the cavern footprint. Potash beds within the Indicated Mineral Resource areas are generally flat lying, but local dips exist which can result in either dilution or loss of resource as the solution mining method leaches and recovers soluble material in horizontal slices.
A model has been developed by AAI and employed to calculate the production and brine history for each cavern. The program is based on the mass balance and simulates the entire cavern life from sump development to the end of selective mining using a time-differential method. The program output includes KCl, NaCl and magnesium chloride (MgCl(2) ) production rates and concentrations. KCl production is the total dissolved KCl minus the KCl left in the cavern.
The cavern layout within the mine plan boundary is shown in Figure 8.
The mine layout shown in Fig 9 below is the basis for the DX production plan given in Table 5
Appendix A Figure 8 : Cavern layout for the DX Life of Mine
(available at www.korepotash.com )
6. Life of Mine Production Schedule:
The life of mine based on the Ore Reserves for the DX Project is 18 years, and full-scale production of 400,000 tpa of MoP occurs approximately 2 years post commissioning. The life of mine production schedule is shown in Figure 9. No Inferred Mineral Resources are scheduled .
Appendix A Figure 9 : Life-of-Mine Production Summary of the DX Mine
(available at www.korepotash.com )
7. Metallurgy and Process
Plant and Flowsheet: The process plant will be located east of the Dougou Extension mine plan area, (Figure 10) with a buffer distance of 500m away from the Mineral Resources boundary. The process plant building is 30m wide x 145m long, and 32m high and can be seen in Figure 11. The process plant building will house all processing equipment, along with associated electrical and instrumentation. The building will have no exterior walls, and a simple roof will be installed to keep rain off the personnel and equipment.
Appendix A Figure 10 : Process Plant Location
(available at www.korepotash.com )
Appendix A Figure 11 : Process plant 3D schematic
(available at www.korepotash.com )
Other site buildings include:
-- 52m x 45m Utilities Building -- 18m x 10m Operation Center -- 44m x 40m Warehouse (fabric building) -- 44m x 40m covered Maintenance area -- 30m x 20m Administration Building
The long, narrow plant design makes it possible to position the mechanical equipment more densely than usual plant designs. Maintenance access is convenient from both sides of the building, so no service aisles will be included in the building interior. All removal of equipment will be through the open walls of the building. Elevated grated floors will be constructed for personnel access to all equipment, and several maintenance access lanes will be created for removal of some large components.
The potash production process shown in Figure 12 below consists of the following industry standard process steps and the expected plant recovery is 98.5% for this process:
o Injection and solution recovery: Return brine from processing will be heated to 100degC and pumped to the wellfield for re-injection into the mine caverns for dissolution and recovery of potassium chloride (KCl) from the underground Sylvinite deposit containing both potassium chloride (KCl) and sodium chloride (NaCl) minerals. The KCl mineral will be selectively dissolved from the ore due to the almost saturated NaCl and under saturated KCl in the return brine.
o Cooling and crystallisation: From the crystalliser feed tank, the brine will be pumped to the vacuum crystalliser for pre-cooling to approximately 28degC and then pumped to the surface crystallisers. In the four-stage surface cooled crystallisers, the mother liquor will be cooled to an end point of 2degC resulting in KCl solids precipitation. Spent brine from the 4th stage crystalliser will be pumped to the concentrate tank for return to the wellfield.
o KCl de-brining: Slurry containing KCl solids from the surface crystallisers will be pumped to the centrifuge, where brine will be removed. KCl product exiting the centrifuges will contain less than 5% moisture (by weight).
o KCl drying: A rotary drum dryer will be used to further reduce the residual moisture in the potash product to 0.2% (by weight) or less. Combustion air will be heated to 800degC and mixed with incoming feed material. Heat will be provided by burning natural gas. The exit temperature for dried solids is expected to be 146degC.
o Compaction: Two compaction circuits will operate in parallel to properly size the product. Each circuit will be comprised of a compactor, flake breaker, hammer mill, sizing screen and associated conveyance system. The sizing screen oversize streams will jointly feed another hammer mill and the crushed product will be returned to the main elevator feeding the compactors. The sizing screens fine fraction will be re-introduced back to the compactor. The screen middling fraction will constitute the final product, which will have a PSD typical for granular potash product.
o Product Glazing: The glazing process will harden the particle surfaces and smoothen sharp particle edges to avoid product degradation during transportation. The glazing process will consist of spraying a small volume of water over the compaction circuit hot product allowing the KCl crystal surface to slightly dissolve in a conditioning drum. The moist material will enter a fluidized bed dryer/cooler where hot air will be used to evaporate excess water in the first section of the unit. In the second section, ambient air will be blown to cool the product prior to shipping .
o Product Load Out: Granular MoP product from the Glazing circuit will be treated with anti-caking and de-dusting reagents and discharged into a 150t storage bin. 40 tonne multi-axle trailers will continuously transport finished MoP product from the Processing Plant to the Marine Facility located at Pointe Noire. One trailer will be loaded approximately every 45 minutes.
Appendix A Figure 12 : Potash production schematic
(available at www.korepotash.com )
Although no specific crystallisation testing has been carried out to verify the expected process plant production capacity for the Dougou Extension resource, Kore believes it has a reasonable basis for a production target of 400,000 tpa to be achieved with this method for the following reasons:
o During the PFS, a potash process technology specialist, Whiting Equipment Canada, provided the Swenson process design, equipment list and estimated equipment costs relating to the crystallisation process. T he same Swenson process technology is successfully used at other global potash operations over a large range of plant capacities.
o The proposed methods are commonly used in potash solution mining operations, including large scale production facilities. Although these methods can be more energy-intensive than the conventional flotation methods commonly used in conjunction with conventional underground mining, they are known to typically yield higher KCl process recovery and higher product KCl grade.
o Kore conducted dissolution tests on samples of the DX core and the resulting data was used to inform the estimation of brine grades and chemistry feeding into the processing plant
It is possible that pockets of carnallite may be encountered during mining that could introduce magnesium chloride (MgCl2) into the brine. The risk of this occurring, including its effect on KCl recovery, has been considered in the PFS. Magnesium (Mg) content in brine can be controlled operationally by bleeding out brine from the process stream without material impact on plant performance.
8. Marine Facilities
Trade-off studies into the marine loading options were undertaken during the PFS considering initial capital cost, operating cost, road hauling costs and risk.
The PFS design is for export of MoP from an existing marine berth within the Pointe Noire port, already accessible by ship, where only the construction of a storage building and movable conveyor/ship loading equipment would be required. The MoP produced at DX will be trucked to the planned storage facility at the Pointe Noire port.
Preliminary negotiations around this option have resulted in a proposal from the owner of the site, an established logistical company based in Pointe Noire. Under the potential agreement, they will construct a suitably designed and sized product storage building for the MoP and will provide all ship loading activities. In this arrangement, Kore will not be required to contribute capital and will pay fees for use of the space, the use of facilities, and activities required for ship loading.
9. Land based transport
Trade-off studies into road haulage of DX MoP to port were undertaken during the PFS considering initial capital cost, operating cost and risk.
The PFS assumed contracting land transport of MoP to a local transport provider. Quotations from various third-party sources were obtained to transport the MoP from the process plant site to the planned marine facility at the Pointe Noire port. The PFS assumes the use of trucks with 40 tonne trailers.
The DX Project will require the regular use of existing highway RN5 for transport during construction and operations. RN5 includes 25 km of unpaved sand road between Madingo-Kayes and the process plant. Although the sand portion of the road is currently used for logging transport, some upgrades are expected to be required to support the construction and operating traffic for DX.
The PFS capital cost includes an allowance for road upgrades on the unpaved portion of highway RN5, shown in Figure 13. Recent quotations for similar road upgrades in Congo were used to support the cost allowance for this work.
The current load limit for RN5 is 30 tonnes per load, and Kore Potash and the Minister of Mines are in discussions toward a concession to allow 40 tonne loads (or higher if required) for both construction and operations.
Appendix A Figure 13 : Proposed RN5 Upgrades
(available at www.korepotash.com )
10. Water Supply and Brine Disposal
The DX scoping study assumed multiple water bores into local aquifers would supply water for the process operation and mine development. The scoping study also assumed that disposal of waste brine would be by deep well disposal into a deep-seated aquifer.
Further evaluation of peak water requirement during sump and cavern development during the PFS determined that water bores would be suitable only for supplying the utility water requirements in the process plant, and that a source of sea water would be required to meet the peak water demand during cavern development.
The PFS includes provision for a permanent sea water intake, pumping station, and water supply pipeline to the production wellfield. Waste brine is planned to be placed in the sea via a pipeline.
Dedicated pipelines will be used to transport raw water to the process plant area and return waste brine to the sea. The proposed route of the pipelines is shown below. Potential impacts of brine discharge to the ocean was assessed and approved in the Kola Project ESIA. This assessment demonstrated that the impact of the planned discharge will meet or exceed internationally accepted standards for brine disposal at sea.
The proposed location of the ocean water pumping station location is approximately 13.8 km from the DX processing plant, and approximately 500 m from the coastline. The pipeline is designed to be buried below surface however trestles may be required to support the pipe in areas of rough terrain. Figure 14 shows the selected pipeline route.
Appendix A Figure 14 : Proposed route for brine discharge and sea water supply pipelines
(available at www.korepotash.com )
11. Bulk Infrastructure
a. Natural Gas Supply
The overall natural gas requirement for the PFS dropped to 1.30M GJ/year from the scoping study requirement of 1.95M GJ/year. This reduction was due to an increase in the expected brine KCl concentration from the mine, resulting in a significant reduction in required brine flow through the process plant. The PFS is based on the supply of compressed natural gas via transport trucks, requiring a compression station near the supply point, and a decompression station at the process plant. This method is known as a Natural Gas Virtual Pipeline (NGVP), and there are numerous examples of this system in operation in areas without natural gas pipeline infrastructure.
This solution was investigated in detail by Change Energy Services, a specialist consultant with design and operation experience with NGVP facilities. The report from Change Energy Services made a recommendation on design, as well as an estimate of capital and operational costs for the compressor station, the decompression station, the purchase of the compressed gas transport trailers and the operations and maintenance. The PFS assumes that Kore Potash will contract out the NGVP trucking operations. Figure 15 below shows the proposed route for natural gas transport, a distance of 115 km.
The RoC has not developed regulations covering the transport of compressed natural gas yet. Kore plans to work proactively with the Regulator to develop a set of regulations, in line with international best practices, to facilitate Kore's planned use of compressed natural gas.
Appendix A Figure 15 : Proposed Natural Gas Transport Route
(available at www.korepotash.com )
b. Power Supply
The PFS assumes construction of power lines and purchase of electrical power from local generators and distributor of electrical energy. Sufficient surplus gas turbine generated electrical energy is already available close to Pointe Noire, and the power station operator, CEC, is in the process of installing additional generating capacity.
The overall power requirement for the DX Project has reduced to 12.7 MW from the scoping study assumption of 13.5 MW. This reduction was due to an increase in the expected brine KCl concentration from the mine, resulting in a significant reduction in required brine flow through the mine and process plant.
The scoping study assumed a similar route to that used for the Kola DFS where power was supplied from the MKII sub-station. During the PFS, Kore Potash was advised by CEC that a better location to tie in power would be at the electrical sub-station at M'Boundi.
The PFS includes construction of an overhead high-voltage power transmission line from M'Boundi to the DX process plant site, a distance of 85 km. The capital cost for the overhead power line was estimated for the proposed route as shown below in Figure 16. The cost structure for electricity was obtained from CEC, the local operator of the gas turbine power station and additional operating costs for transmission of electrical power were obtained from E(2) C the local electrical transmission company.
Appendix A Figure 16 : Overhead power line route
(available at www.korepotash.com )
12. Environmental and Social Impact Assessment (ESIA)
The existing ESIA for Dougou Licence area was approved in 2017 and a Certificate of environmental compliance was granted in July 2018 by the Ministry of Tourism and Environment for a 1 year period, which was recently extended to 25 year validity. The Company believes that a revised ESIA incorporating the DX Project requirements for the sylvinite process plant and solution mine wellfield will be required. The ESIA revision is planned to be undertaken concurrently with a DFS for DX.
The revised ESIA will utilise existing baseline information from both the Dougou ESIA and the Kola ESIA completed in 2018. The existing baseline information on the DX area is believed to be adequate for the revised ESIA to be prepared and submitted for approval within 12 months.
A Decree D'Utilité Publique (DUP) and a Resettlement Action Plan (RAP) will be required to be developed for Longo-Bondi and possibly Youngou villages and surrounding land affected by project land-take. The DUP is the Government-mandated and led process that identifies affected parties, establishes their access and ownership rights and values their properties. The DUP then establishes the quantum to be paid in compensation for loss of access to the affected land parcels. On completion of the DUP process, the government issues a decree transferring the affected land to the company. The RAP is a re-settlement plan based on the International Finance Corporation Performance Standards that ensures that disruption to the livelihoods of affected communities is minimised and that affected parties are assisted to be in an equivalent state of productivity to what they were prior to the land acquisition. While the DUP compensates for loss of crops and structures, the RAP provides additional support as required by good international industry practice (such as transport, access to markets, agricultural extension services). Both procedures were followed on the Kola Project and are well known to the Kore team. It is unlikely that physical resettlement of any people from these villages will be required.
The Dougou mining exploitation Licence for potash on a surface area of 451 km2 in the Kouilou district was approved on 9th May 2017 and is valid for 25 years, with an option to extend it by 15 years at that point. The DX Project lies within the Dougou mining exploitation license.
13. Potash Marketing
MoP produced from the DX Project is planned to be marketed predominantly into select African markets. Any excess product will be sold into the large Brazilian market or other South American markets. The key targeted destination countries and their current demand for MoP are set out below. Based on discussions with Argus Media and WABCO, the granular MoP demand in each of these markets is approximately 60% of total MoP demand. Table 6 shows the current consumption for Africa.
Appendix A Table 6: African MoP Consumption
Region Total 2019 Consumption Estimated Granular(1)
(tMoP) (tMoP)
Morocco 347,000 242,900
---------------------- ---------------------
South Africa 350,000 245,000
---------------------- ---------------------
Nigeria(2) 116,000 81,200
---------------------- ---------------------
Other West Africa(3) 171,000 119,700
---------------------- ---------------------
Other North Africa 201,000 140,700
---------------------- ---------------------
East Africa 116,000 81,200
---------------------- ---------------------
Other Africa 8,000 5,600
---------------------- ---------------------
Total Africa 1,309,000 916,300
---------------------- ---------------------
Source: Argus Media (Jan 2020)
Notes to Table 6:
1. Based on an assumed 70% (granular) / 30% (standard) split per discussions with Argus Media
2. Following Nigeria's regulation banning import of blended product, WABCO estimates that the granular consumption is expected to be approximately 400,000 tpa
3. Additional market information obtained from WABCO indicates that Other West African markets could be as high as 310,000 tpa based on Ghana, Burkina Faso, Mali and Ivory Coast
The PFS price forecast is based on the weighted average of leading potash market consultant Argus Media's granular MoP CFR price forecast (in real 2019 terms) for South Africa, Nigeria and Morocco from 2020 to 2033 The weightings applied are based on total imported MoP volumes for each of these markets. The price assumption is based on a real price profile which steadily declines from 2022 to a low in 2027 and then steadily rises to a maximum of $474/t MoP in 2033 with a flat real profile from 2033 until the end of mine life. The price forecast graph used is shown in Figure 17 below.
Appendix A Figure 17 : African Price forecast
(available at www.korepotash.com )
Notes to Figure 17: Argus Media Ltd is the source of the confidential proprietary data which Kore Potash has aggregated and republished above. Kore Potash obtains data from Argus under licence. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of its data or Kore Potash's presentation of that data, or its fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party's reliance on Argus' data, and disclaims any and all liability related to or arising out of use of the data to the full extent permissible by law.
A key point to note with regards to pricing is the forecast potash price remains beneath the scoping study assumption of US$360/t MoP for the first 6 years of production, at an average price of $US 344/t MoP, until 2029. With the remaining life of mine for the project price, at average of US$ 456/t MoP, only rising above the scoping study assumption of a flat US$ 360/t MoP. The overall impact of this pricing assumption adds 1% to the IRR of the DX Project when compared to the scoping study pricing assumption.
14. Capital and Operating Costs
The PFS Capital Cost estimate qualifies as an AACE Class IV capital cost estimate, having an approximate accuracy of +/- 25%. The estimate captures all project costs from various contributors as follows:
Design and estimation of direct costs for Solution Mining & Drilling was performed by Innovare Technologies (Innovare), based on Turnkey quotations from drilling suppliers. Engcomp provided the design and Estimate for the electrical infrastructure in the wellfield.
Design and estimation of direct costs for the Process Plant was completed by Engcomp with support from Innovare. Equipment vendors were issued procurement packages and budgetary quotations were obtained.
Design and estimation of direct costs for off-site infrastructure was performed by Kore and its third-party service providers.
Indirect and contingency costs were estimated by Engcomp, with Kore providing inputs related to construction execution strategies. Engcomp consolidated the overall estimate, and the summary of the capital cost estimate (CAPEX) is shown in Table 7.
Appendix A Table 7: Capital Cost estimate (real Q4 2019)
Description Initial Capex
-------------------------------
(kUSD)
------------------------------- --------------
Solution mining and wellfield 33,645
Process Plant 93,657
Offsite infrastructure 12,719
------------------------------- --------------
Sub-total Direct Costs 140,021
Field Construction Indirect 24,987
Other Indirect Costs 28,141
Owner's Costs 15,827
Engineering and project
management 22,656
------------------------------- --------------
Sub-total Direct + Indirect
Costs 231,632
Contingency 50,060
Escalation 4,210
------------------------------- --------------
Total Capital Costs 285,902
------------------------------- --------------
The pre-production capital cost of US$286 million equates to a pre-production capital intensity of US$715/t MoP annual capacity. This is very competitive in relation to MoP industry peers.
Sustaining capital costs total US$247 million over the 18 years life of mine and mostly relate to ongoing drilling, piping relocation and cavern development. Deferred capital costs total US$0.3 million in the first year of operation. Reclamation costs total US$21 million after operations are complete.
The sustaining capital, deferred capital and reclamation costs are summarized in Table 8.
Appendix A Table 8: Summary of Sustaining, Deferred and Reclamation costs
Description Category kUSD LOM US$/t MoP
---------
Sustaining Capital Debottlenecking 2.0 0.27
----------------- --------- ----------
Sustaining Capital Mining 212.8 28.86
----------------- --------- ----------
Sustaining Capital Buildings 4.1 0.56
----------------- --------- ----------
Sustaining Capital Electrical 28.4 3.85
----------------- --------- ----------
Deferred Capital Process Plant 0.3 0.04
----------------- --------- ----------
Reclamation Costs All 21.1 2.87
----------------- --------- ----------
Total Costs 268.7 36.44
--------------------------------------- --------- ----------
Operating Cost
The PFS confirms that the Operating Cost of the DX Project is highly competitive for supply into the African and South American markets. The mine gate operating cost is estimated at US$65.26/t MoP and the export (FOB) cost is estimated at US$86.61/t MoP, excluding royalty and sustaining capital.
The Operating Costs are expressed in US dollars on a real Q4 2019 basis and are based on average annual production of 400,000 tpa of MoP over the life of mine. All costs have been prepared on an owner operated basis and are shown in Table 9.
Electricity represents 64% of annual utility costs, while natural gas represents 36%.
Appendix A Table 9: Summary of Operating Costs
Cost Category (real Total unit
Q4 2019) Cost
--------------------------
(US$/t)
-------------------------- -----------
Labour 9.02
Utilities 27.74
Operations & Consumables 5.59
Maintenance 6.10
General and Admin 2.87
Offsite 13.94
Mine Gate Cost 65.26
Ground MoP Transport 13.57
Export Facility 7.78
FOB 86.61
Marine Transport 28.00
Total Operating
cost (CFR Africa)
(1) 114.61
--------------------------- -----------
Note to Table 9: Excludes Royalty and Sustaining Capex
15. Economic Evaluation
a. Summary Economics
All financials are presented on a 100% consolidated basis; the 10% government free carried equity interest is deducted from Post Tax Free Cash Flow to derive the Net Project Cash Flow (on a 90% attributable basis), which is used to calculate the attributable NPV and IRR of the DX Project. The PFS economic evaluation delivers a real post-tax, ungeared IRR of 22.9% and NPV10(real) of US$319M on attributable basis. The evaluation is based on Argus International's forecast granular MoP price for DX's target markets which results in an average life-of-mine granular MoP price of US$422/t MoP CFR Africa (real 2019).
Table 10 summarises the financial outcomes.
Appendix A Table 10: Summary of Financials
Financials Units Total revenue US$M 3,113 Average annual revenue US$M 169 Average annual EBITDA US$M 118 EBITDA margin % 69.8% Average post-construction, post tax annual free cash flow US$M 95 Free cashflow margin % 56.4% Total post tax free cash flow(1) US$M 1,469 Attributable(2) post tax, un-geared NPV (10% real) US$M 319 Attributable(2) post tax, un-geared IRR % 22.9% Payback period from date of first production years 4.3 Scheduled LOM years 18.4 Average forecast MOP granular price US$/t MoP 422 ------------------------------------- ----------- ------
Notes to Table 10
1. Free cash flow defined as EBITDA minus tax, minus capex 2. Attributable to Kore's interest (i.e. 90% basis)
The key assumptions underpinning the base case economic evaluation are as follows:
-- 18-year initial project life from first production; -- Approximately 400,000 tpa average production of MoP; -- Granular MoP represents 100% of total MoP production and sales; -- All cashflows are on a real Q4 2019 basis;
-- NPVs are ungeared and calculated after-tax applying a real discount rate of 10% (based on a review of 7 recent potash projects, 4 of which were in Africa).
Fiscal regime assumptions aligned with the recently finalised Mining Convention:
-- Corporate tax of 15% of taxable profit with concessions for the first 10 years of production (0% for the first 5 years and 7.5% for years 6 - 10);
-- Mining royalty of 3% of the Ex-Mine Market Value (defined as the value of the Product (determined by the export market price obtained for the Product when sold) less the cost of all Mining and Processing Operations including depreciation, all costs of Transport (including any demurrage), and all insurance costs);
-- Exemption from withholding taxes during the term of the Mining Convention; -- Exemption from VAT and import duty during construction; and
-- Government receives a 10% free carried equity interest in the DX Project company until the initial construction phase is completed.
The forecast net attributable project cash flow for 18.4 years of production is illustrated in Figure 18.
Appendix A Figure 18 : DX Project Cash Flow Forecast (real Q4 2019)
(available at www.korepotash.com )
b. Sensitivity Analysis
The PFS economic evaluation demonstrates that the DX Project economics are most sensitive to potash price and to project capital costs.
Sensitivity of the NPV to key input assumptions, on a -20%/+20% range is illustrated in Figure 19.
Appendix A Figure 19 : NPV10 Sensitivity to key inputs
(available at www.korepotash.com )
c. Price Sensitivity
Table 11 below shows the sensitivity of the Dx Project NPV to Potash Price.
Appendix A Table 11: Sensitivity to potash price
Granular MoP NPV
(US$/t CFR Brazil) (US$ million)
260 (flat real)(2) 1
---------------
310 (flat real) 122
---------------
360 (flat real) 243
---------------
Argus Media Price
Forecast(1) 319
---------------
400 (flat real) 339
---------------
450 (flat real) 459
---------------
Notes to Table 11:
1. The Argus Media price assumption is based on a real price profile which steadily declines from 2022 to a low in 2027 and then steadily rises to a maximum of $474/t MoP in 2033 with a flat real profile from 2033 until the end of mine life.
2. Flat real pricing assuming a fixed price from start to end of production has been applied in other sensitivity calculations.
16. Differences between Scoping study and Pre-Feasibility study
The key differences between the DX scoping study published 29 April 2019 and the PFS details included in this announcement are highlighted in Table 12.
Appendix Table 12: Summary of changes between Scoping and PFS Studies
Financial Drivers Scoping PFS
--------------------
Capital Cost Estimate US$327 million US$285.9 million
============================== ==================== =======================
Operating Cost: Mine
Gate US$ 78.85/t MoP US$ 65.26/t MoP
============================== ==================== =======================
Operating Cost: FOB (Pointe
Noire) US$ 82.74/t MoP US$ 86.61/t MoP
============================== ==================== =======================
Operating Cost: CFR (Africa) US$107.74/t MoP US$114.61/t MoP
============================== ==================== =======================
Life of Project 17 years 18.4 years
============================== ==================== =======================
Potash Price US$360/t flat US$422/t average
============================== ==================== =======================
MoP Produced over life 7,074 Mt 7,372 Mt
============================== ==================== =======================
Mineral Resource 232Mt @ 38.1% KCl 145 Mt @ 39.7% KCl
============================== ==================== =======================
17.7 Mt sylvinite @
Ore Reserve nil 41.7% KCl
============================== ==================== =======================
NPV(10) US$221 million US$319 million
============================== ==================== =======================
IRR 19.3% 22.9%
============================== ==================== =======================
Average annual free cash
flow US$ 74 million US$95 million
============================== ==================== =======================
Dual well selective Single cell selective
Mining Method dissolution dissolution
============================== ==================== =======================
Purpose built Kore BOO at existing Pointe
Ship loading facility Noire Port
------------------------------ -------------------- -----------------------
17. Project Ownership and transfer of 10% to the RoC Government
The DX Project lies within the Dougou mining licence area. The Dougou Mining Licence will be held by Dougou Potash Mining SA, a 100% owned subsidiary of SPSA. In turn, SPSA is owned by the Kore Group (97%) and a RoC entity (Les Etablissements Congolais MGM) (3%). An existing Share Purchase Agreement enables Kore to purchase the remaining 3% of the shares in SPSA, with Kore shares to form the consideration.
In accordance with the Mining Convention, the RoC Government will be transferred 10% of the shares in Dougou Potash Mining SA.
An existing contract with the current 3% shareholder of SPSA, provides for Kore to become the 100% owner of SPSA in advance of transferring the 10% interest in DX Potash Mining S.A. to the RoC Government.
18. Risks and Opportunities
Key risks identified for the DX Project are:
-- TSS brine grade variability: If lower brine grade concentrations are achieved than determined in the PFS, higher flow rates may be required to achieve production targets, or there may be reduced MoP production. This risk has been mitigated in the PFS via commencement of mining in the TSS being delayed until Year 4. Moreover, only 21% of the initial 7 years of scheduled MoP production is drawn from the TSS.
-- Unplanned carnallite intersections: Unplanned carnallite intersection, by either a drill hole or a cavern, could result in an operational need to abandon the drill hole or cavern. Should this happen this could increase drill hole costs and potentially reduce Ore Reserves in that cavern area. Cost risk (for initial caverns) is addressed through an allowance for 3 additional caverns, and through project contingency.
-- Operating cost variability: The PFS has been based on the use of 3rd party in-country supplies for off-site infrastructure such as gas, power, transport and marine services. All of these activities have been costed on the basis of proposals received from in-country service providers. However, there is a risk that these prices are not achieved in final contract negotiations. These risks are mitigated in the PFS through receipt of proposals from multiple service providers in each area possible.
-- Potash market and price variability: Kore is in advanced discussions with potential offtake partners for the planned DX Project production. The Company has not yet formed sales contracts for the planned production and anticipates forming offtake agreement/s prior to completion of a DFS. There is currently no forward selling of potash or market to hedge potash prices. The DX Project will be exposed to potash price variability. The DX Project's low operating cost allows it to competitively deliver high quality MoP to its target markets cheaper than other suppliers and the net cash back to Kore is expected to be larger than for other suppliers to the target markets. The PFS assumption is that the inherent value in the higher grade of MoP that DX will produce will offset potash marketing costs (DX is designed to produce K62 MoP v industry standard K60).
Key opportunities identified for the DX Project are:
-- Product Quality: The PFS indicates that the DX product (MoP) will contain 98.5% KCl (meeting the requirements for K62 fertilizer product) which is significantly higher than the common industry specification of 95% KCl (corresponding to K60 product). This could present the opportunity to either market the DX product as K62, or to correct the product to a purity consistent with K60. At a production rate of 400,000 tpa, the 3.7% excess KCl in the DX product represents the equivalent of 14,800 additional tonnes of K60 MoP per annum.
-- Project Life: Multiple potential opportunities exist to extend the DX Project life:
o The PFS only schedules 22% of Indicated Mineral Resources for extraction in the scheduled life of 18 years.
o The Inferred Mineral Resources at DX are 66 Mt at 40.4% KCl. No Inferred Mineral Resources are scheduled within the PFS.
o No secondary potash recovery modes have been scheduled following initial cavern operation and prior to ultimate cavern closure. These secondary recovery modes are a normal approach within the potash solution mining industry.
19. Permit progress
The majority of permits and agreements required to facilitate commencement of construction and operations of the DX Project are in place. An amendment to the ESIA for the Dougou mining exploitation licence is required and will be applied for during the execution of the DFS.
-- The Dougou Mining Licence was granted on 9(th) May 2017 for a period of 25 years. -- The ESIA for the Dougou Mining Licence was approved for 25 years on 31 March 2020
-- The Mining Convention was gazetted into law on 7 December 2018 and is renewable after for 25 years
20. Project Funding
Reasonable Basis for Funding Assumption
The Directors of Kore have formed the view that there is a reasonable basis to believe that requisite financing for development of the DX Project will be available when required. Kore shareholders should be aware of the risk that future financing for development of the DX Project may dilute their ownership of the Company or Kore's economic interest in DX (or the DX Project).
There are several grounds on which this reasonable basis is held:
-- Kore Potash has two large strategic shareholders:
o SQM (c.19%): a large Chilean public company listed on NYSE (USA) that is an integrated producer and distributor of specialty plant nutrients, including having an established business in the global potash market; and
o SGRF (c.19%): the sovereign wealth fund of Oman, which holds a range of natural resource investments, including on the African continent.
These two groups initially invested a total of c.US$40 million into Kore Potash in late 2016. They have subsequently invested further in the Company to continue developing its pipeline of projects, including the DX. They collectively bring a considerable and highly relevant combination of substantial financial capacity, specific potash experience, Latin American, Middle Eastern and African operating experience, and financing expertise.
-- Kore has ongoing dialogue with a number of interested financial institutions including commercial banks, Development Finance Institutions (DFI) and private equity funds:
-- The Company's modelling indicates the DX Project has a debt carrying capacity in excess of 50% of the capital cost. Kore's management team have identified a pool of interested commercial banks with capability and indicated interest to provide debt financing for the DX Project.
-- Kore's structure facilitates financing options for DX via the parent Company Kore plc, or through joint venture at the DX Project level.
-- Kore's management continue advanced discussions with multiple international trading groups with expressed interest in procuring the DX MoP production.
-- DX PFS has been completed by a team of world-class solution mining experts in Innovare Technologies and Agapito. The study meets the expected level of detail required for a PFS.
-- The technical and financial parameters detailed in the DX Project PFS are robust and economically attractive. Further opportunities to de-risk and improve the investment case are planned in the DFS phase of the DX Project.
-- Financing for the construction of the DX Project would be required in the future after completion of the DFS.
-- The Kore Board and management team is highly experienced in the broader resources industry. They have played leading roles previously in the exploration and development of several large and diverse mining projects in Africa and around the world. In this regard, key Kore personnel have a demonstrated track record of success in identifying, acquiring, defining, funding, developing and operating quality mineral assets of significant scale.
21. Execution Strategy
Kore Potash currently foresees debt forming part of the financing mix. It expects lenders will require execution of the DX Project via EPC contracts and is planning on this basis.
Preliminary discussions with potential EPC partners indicate significant interest for construction of all project components. Drilling of production holes forms material part of the initial capital spend on the DX Project. Opportunity may exist to complete drilling of these holes via non-EPC models and Kore will investigate these options further in consultation with potential lenders during the DFS phase.
The storage facilities and the ship loading conveyor facilities are planned to be constructed as part of a Build-Own-Operate (BOO) contract financed by the BOO service provider.
Kore will have control over BOO infrastructure designs to ensure they will meet operational requirements.
Table 13 shows a list of the anticipated major construction contracts.
Appendix A Table 13: Major Construction Contracts
# Contract Title Type
C1 Drilling EPC/Target
Price
----------------------------- ------------------
C2 Pipelines (Wellfield, Water, EPC
Disposal)
----------------------------- ------------------
C3 Process Plant EPC
----------------------------- ------------------
C4 Power Supply EPC
----------------------------- ------------------
C5 Product Transport & Storage Build-Own-Operate
----------------------------- ------------------
During construction, Kore will have a Project Management team operating from the DX Project construction site, with support from the Kore office in Pointe Noire.
Camp accommodation will be provided for up to 250 people during construction, with any excess temporary requirements handled in the surrounding communities. Camp capacity will be reduced to approximately 100 during operations.
The DX Project construction effort is expected to create significant employment opportunities for people in the surrounding communities, including Pointe Noire. EPC contractors will draw from the local labour force where available and will also subcontract to local contractors. Kore expects most construction skills to be available in-country.
Project Execution Schedule
The DX Project execution schedule is summarised in Figure 20.
After a final investment decision is made, year 1 of construction will be focused on drilling and construction of the wellheads, wellfield piping, instrumentation and controls and wellfield pump station. In tandem, water supply and disposal pipelines will be constructed to the coastal pump station. Brine outfall and water intake structures will be installed in the ocean. Permanent power will be established with an overhead power line from a connection point near M'Boundi. Temporary electrical power generators will be installed for construction activities and replaced with permanent power as early as possible in the construction schedule.
During year 2 of construction, the process plant construction, natural gas infrastructure, site buildings and all other aspects of construction will be completed. Development of caverns will be performed during year 2 of construction and caverns are scheduled to be ready for mining at the end of construction.
The process plant is expected to start up after a 21-month construction period. Figure 20 shows an indicative schedule.
Appendix A Figure 20 : Indicative Execution Schedule
(available at www.korepotash.com )
Commissioning and Handover
As the final phase of construction, project commissioning will be executed over a three-month period before startup. A standard five-phase project commissioning process will be followed, including:
-- Phase 1 - Construction and mechanical completion; -- Phase 2 - Cold commissioning or pre-operational testing; -- Phase 3 - Wet commissioning or operational testing; -- Phase 4 - Product commissioning and -- Phase 5 - Completion certificate (Handover from project to operations).
Operations
During commissioning and first potash production the operational workforce will be onsite working in parallel with the commissioning team. The project capital cost includes provision for commissioning through to process plant handover.
The operational headcount totals 85. A summary of headcount by organisational area is shown in Table 14.
Appendix A Table 14: Summary of Operational Headcount
Function Headcount
Operations 34
---------
Maintenance 17
---------
Health, Safety and
Environment 10
---------
General & Administration 24
---------
Total 85
---------
Employees will be located in both Pointe Noire and at the DX Project site. Some site employees will be on continuous shift work and will work an average of 56 hours/week. All other employees will be on dayshift at 40 hours/week.
APPIX B
Summary of Information required for ASX
Appendix B: Summary of Information required under ASX Listing Rule 5.9.1(in relation to Ore Reserves), Listing Rule 5.16.1 (production target) and Listing Rule 15.7.1 (forecast financial information).
DX Project Ore Reserves and related production target and forecast financial information
Pursuant to Listing Rules 5.9.1, 5.16.1 and 15.7.1, and in addition to the information contained in the body of this release and in Appendix C below, the Company provides the following summary information. T he assessment of the modifying factors to prepare the Ore Reserves Statement occurred as the PFS was being finalised, with the production target and forecast financial information based on the information contained in the finalised PFS described in this report. Differences between the material assumptions for the Ore Reserve Statement and the production target and financial forecast (referred to below) are attributable to improvements in the material assumptions while finalising the PFS.
Summary of Material Assumptions - Ore Reserves
The material assumptions relating to the Ore Reserve Statement, for the DX Project are summarised below:
-- Production life (Appendix A p12-13 Appendix C, p22)- LoM of the Ore Reserves 18.4 years at nominal 400,000 tpa MoP production, this was determined during the execution of the PFS and from an aligned production schedule for both mining and processing.
-- Product Type (Appendix A, p15, Appendix C p2) - process design was based on one MoP product type- white granular. The marketed MoP will comprise at least 95% KCl, with a maximum of 0.2% Mg and 0.3% Insolubles.
-- Product pricing (Appendix A p22, Appendix C, p22) - MoP prices were based on forecasts from Argus Media specifically for select African markets. The Base Case sales price is forecast to decrease to a low in 2027 and then increase to a maximum of $474/t MoP in 2033. Post 2033 the price has been assumed to remain flat at $474/t MoP. The average CFR sales price over the LoM is forecast at US$422/t MoP.
-- Operating cost (Appendix A, p24 and Appendix C, p22) - ex-mine LoM average operating cost of US$65.26/t MoP, real and FOB LoM average operating cost of US$86.61/t MoP was calculated from first principles in the PFS
-- Shipping costs (Appendix C, p22) - LoM Shipping costs of US$28/t MoP were based on information and estimates from 3(rd) party expert and reflects ocean going vessels with capacity in the range of the 10000-15000t DWT.
-- Project durations - A project capital period 21 months was estimated in the PFS and the deferred capital period defined 6 months, with sustaining capital estimated in the PFS as 216 months
-- Project Capital (Appendix A p22, Appendix C, p21) - A total nominal Project Capital of US$ 286 million was estimated in the PFS
-- Fiscal parameters (Appendix a, p25, Appendix C, p23) - The signed mining convention determined the relevant fiscal parameters as summarised below:
-- Company tax rate (15%), -- Tax holidays (5 years at 0% + 5 years at 7.5%) -- Royalties (3%) (Mining Convention) -- Government free carry (10%) (Mining Convention) -- Other minor duties and taxes (Mining Convention)
Summary of Material Assumptions - production target and forecast financial information
The material assumptions relating to the production target and forecast financial information for the DX Project which vary from the assumptions relating to the Ore Reserve Statement described above are summarised below:
-- Production life (Appendix A p12-13 Appendix C, p22) - LoM of 18 years at nominal 400,000 tpa MoP production, this was determined following the receipt of the PFS.
-- Product pricing (Appendix A p22, Appendix C, p22) - Average MoP price of US$422/t MoP CFR Africa (real 2019) for granular product (based on recent potash price movements, current market prices, a review of recent releases by Potash producers and potash development companies and potash market research from Argus Media).
-- Operating cost (Appendix A, p24 and Appendix C, p22) - mine gate operating cost is estimated at US$65.27/t and the export (FOB) cost is estimated at US$86.61/t, excluding royalty and sustaining capital.
The Mineral Resource Estimation
The Mineral Resource Estimate was reported in accordance with the JORC Code, pursuant to Listing Rules 5.6, 5.22 and 5.24. A full description of the methodology is provided in Appendix C.
The Mineral Resource Estimate used an interpretation based on drill-hole data and 2D seismic data to create 3D 'wireframes' for the sylvinite seams. The wireframes were then 'filled' with a block model, with individual block dimensions of 50 by 50 metres and variable height. The drill-hole intersection data for KCl (%), magnesium (%) and insoluble content (%) was estimated into the block model using Inverse Distance Weighting squared. The d density of each block was calculated using a formula for the correlation between KCl content and density (by pycnometer) and has an average of 2.03 t/m(3) and 2.11 t/m(3) for the HWSS and TSS.
T he block-model and thus the estimate was then reduced by the removal of two 'structural exclusion zones' and by cutting it on the east and southeast by a boundary reflecting the 'maximum extent of sylvinite' interpreted from seismic and drill-hole data.in the tabulation (not in the block model). All blocks with a thickness of less than 1-metre were excluded from the estimate and a 15% KCl cut-off-grade was applied. A final step was the reduction of the resultant tonnages by 15% to account for unmodelled geological losses, to obtain the final estimated sylvinite tonnages. Two estimates were made; one for the HWSS and the full TSS and one for the HWSS and TSS-6-8, the latter being a higher-grade lower tonnage option and the base case for the Ore Reserve Estimate.
The classification of the Mineral Resource Estimate by the Competent Person was based on Area of Influence (AOI) around the drill-holes. No Measured Mineral Resources were estimated. Indicated Mineral Resources are limited to (sylvinite) blocks within an area guided by an AOI with a radius of 1.0 km around the drill-holes DX_01, K62, ED_03, ED_01. Inferred Mineral Resource are limited to sylvinite (blocks) within an area guided by an AOI with a radius of 2.5 km around inner holes, and a 1.5 km radius beyond 'outer' holes (DX_03 and DX_02) and exclude the Indicated Mineral Resource area.
The Ore Reserve Estimation
The Ore Reserve estimate was carried out by Agapito and reported in accordance with the JORC Code, pursuant to Listing Rules 5.9.1, 5.16.1 and 15.7.1.
Classification of Ore Reserve
The Ore Reserve is that portion of the Indicated Mineral Resource within the Preliminary Feasibility Study mine plan boundary. The mine plan boundary includes the Indicated Mineral Resource area within 1 kilometre from the four exploration cored boreholes ED-01, ED-03, DX-07 and DX-09. These 4 cored holes are within 2,000 meters of each other so that their Area of Influence (AOI) are interconnected. Mineral Resources were assigned to DX-01 which is not contiguous to the four interconnected core holes so was not considered to be included in the Ore Reserves.
Mining Method and assumptions
For the PFS solution mining plan, single-well caverns were adopted. The decision to use single-well caverns was based on the need to locate caverns as close to each other as possible to maximize resource recovery and the Reserves for the Dougou Extension (DX). The 2D seismic and new drill holes completed as part of the PFS resulted in better definition of the extent, thickness and dip of the floor of the resource. Solution mining of large dual-well caverns, as proposed in the Scoping Study, resulted in reduced resource recovery in comparison to the single, smaller caverns.
This configuration resulted in additional wells, but higher resource recovery and mine life. The plant is designed to produce 400,000 tonnes per year of Muriate of Potash (MOP) with a purity of 98.5% KCl. Recovery of resource is planned in the HWSS and TSS where they exist. To meet this production goal, 25 caverns will need to be developed and put into operation at start-up and replaced over the 18-year mine life. The adopted method of solution mining will inject a hot brine with near saturation of NaCl and KCl content of approximately 90 to 100 g/l. The brine will selectively dissolve the KCl to produce a brine feed to the plant of up to 165 g/l KCl with the NaCl remaining in the cavern. Laboratory-scale dissolution rate testing has verified selective dissolution of KCl at a KCl concentration of 165 g/l.
The steps in solution mining is to first develop a sump in the salt below the lowest potash bed available, then to expand the top of the sump with both steps utilizing an oil or nitrogen cap to inhibit vertical cavern growth. When the roof is developed, the oil/gas cap will be removed and solution mining of the lowest beds (HWSS or the TSS) can be achieved. If the HWSS and TSS are present, sump development in the TSS will follow completion of mining in the HWSS.
Other mining techniques were evaluated during the Scoping Study and these included dual-well caverns as practiced in Saskatchewan and horizontal wells as practiced by Intrepid, Natural Soda, and in Turkey (Eti Soda and Kazan). The dip of the beds and the variability of the dip favoured the single-well plan.
Cavern stability and size of the caverns was based on modelling of the larger dual-well caverns and geomechanical parameters from the Definitive Feasibility Study (DFS) of the nearby Kola Project that is owned by KORE Potash.
The selected areal extraction ratio is 63%, with the caverns approximately circular with a radius of 60 meters and pillars between caverns of 24 meters. The volumetric extraction ratio is 46.2%. This configuration is likely to be stable during operations when the pressure in the caverns will support the roof. Pillar degradation is possible, and subsidence or interconnection of caverns is not of concern.
The mining recovery factors used include losses due to geologic anomalies and the brine remaining in the cavern after completion of active mining. The geologic loss factor for the HWSS and TSS is 15%. There is greater uncertainty for resource recovery because of the banded nature of the TSS therefore a 15% factor related to TSS mining has been allowed. The HWSS is of uniform high-grade KCl, whereas the TSS has high-grade KCl seams interspersed with low-grade seams. The overall grade of the TSS seam is 29.3% KCl, whereas the grade of the HWSS is 57%. Hence, selective mining of the TSS is expected to be less reliable than for the HWS. The loss of resource to the remaining brine in the cavern is estimated to be 16-18%. Some of this can be recovered with the use of submersible pumps. No credit has been taken for the recovery of the residual brine in the cavern because for some caverns, deformation above the cavern may restrict the placement of the submersible pump and the suction pipe to the bottom of the cavern.
Mining dilution factors are not applicable to solution mining. Modelling completed for the PFS incorporates the transition from sump development with the production of brine of high NaCl content and no KCl to a high KCl concentration brine once solution mining is advanced to mine the HWSS or the TSS. During this transition from sump mining to potash mining, brine grades less than 90 g/l will be discarded or recirculated. Dilution factors generally associated with conventional mining involve reduction (dilution) of the ore grade delivered to the plant because of mining low-grade material, either above or below the economically viable ore zone.
The mining recovery factors include the areal extraction ratio of 63% (volumetric extraction of 46%) and the losses due to the geologic anomalies and the loss of brine remaining in the cavern. Plant losses are estimated to be 1.5%. The final product will be 98.5% pure KCl with 1.5% NaCl.
Inferred resources have not been quantified into the mining plan.
The infrastructure requirements for solution mining include piping for delivery of the solute and recovery of the pregnant brine, wellfield pumps, electrical, instrumentation and roads. Instrumentation at the well head includes flow, temperature and brine density. Sampling of brine at the well head will be done manually. Production piping will be insulated to minimize temperature losses in the solvent and product brine. Cavern development pipelines will not be insulated.
Processing Method and Assumptions
The selective solution mining process for DX is expected to deliver brine to the process plant containing (by weight) 66.8% water, 18.6% NaCl, 13.4% KCl, 1.1% MgCl(2) , and 0.1% CaSO(4) at a temperature of 60degC. All the above elements will be fully dissolved within the brine. Brine of this nature is well understood globally and can be readily processed.
Crystallisation is the processing method selected for the DX Project and is well established in the potash industry. KCl crystallisation involves the gradual cooling of KCl-rich brine and relies on a strong relationship
between KCl solubility and brine temperature. As the brine is cooled, the amount of KCl that can remain in solution decreases. Therefore, KCl crystallises as brine is cooled, while most NaCl remains in solution. KCl crystallisation is known to yield higher KCl recovery than conventional recovery methods used for separation of KCl solids from NaCl solids, such as flotation.
The estimated KCl losses are due to:
-- Purge stream (0.50%): A purge stream is required to control the level of MgCl(2) in the process brine. MgCl(2) is preferentially soluble to KCl and will gradually displace KCl if it is not controlled. A small portion of brine is bled off and disposed to manage the level of MgCl2 in the brine, and this also results in a loss of KCl. The DX design includes a purge stream.
-- Boilout (0.15%): Crystallisation vessels are descaled with water using a process called 'boilout', which results in some loss of KCl from the walls of the vessels, directed to brine discharge.
-- Dust (0.29%): Dust losses to the atmosphere occur in the process of drying, and also after KCl is dried.
-- Spills and washdowns (0.20%): The plant will occasionally have process upsets and cleaning procedures which may result in a loss of KCl to brine discharge.
-- Offsite transportation losses (0.35%): Some allowance is made for transportation losses during transport of MoP and during ship loading at the marine location.
The total losses are expected to be 1.49%, and therefore, the total process KCl recovery is expected to be 98.5%.
Some impurities are expected to accompany the final MoP product. The minimum KCl content for K60 MoP is 95% KCl, however the DX process is expected to yield a product grade of 98.5% KCl.
The primary basis for the above assumptions was a detailed mass balance, produced by subject matter experts in the field of potash crystallisation and potash dry processing, with supplementary input from a world-renowned supplier of potash crystallisation equipment.
Furthermore, dissolution test work was performed on DX core samples from both the HWSS and TSS at Agapito Associates Inc. laboratory in Grand Junction, Colorado, USA. The testing provided a basis for the predicted dissolution characteristics within the caverns, and the resulting brine KCl concentration and flow to the process plant. These parameters were used in the design of the process plant and became the basis for the prediction of LOM production for the DX project.
Cut-off Grades
For the MRE a 15% KCl cut-off-grade was applied though no blocks have a grade less than this. The deleterious components Mg and insolubles are so low and consistent at DX that these were not considered in the selection/exclusion of blocks from the model.
The cut-off grades and quality parameters applied in selecting the mine plan include presence of carnallite, thickness and in-situ KCl content. The high KCl grade for the HWSS is exceptional compared to other mined potash beds. The TSS is comprised of several narrow high-grade sylvinite layers separated by narrow layers of 'barren' rock-salt. TSS lower most layer 5 and the uppermost layer 9 were excluded from the Ore Reserve estimate and from the mine plan because they are separated from the 'inner' layers 6-8 by thick layers of rock-salt. The Reserve considers the TSS 6-8 only. A potash grade of 30% KCl is considered necessary for successful selective solution mining of potash. The mine plan involves selective dissolution of the KCl by injecting near-saturated NaCl brine and selectively dissolving the KCl.
Estimation Methodology
-- Capital Cost :
Capital Cost Estimate has been developed for each scope area, expressed in United States dollars (USD) and based on 4th Quarter 2019 prices.
Capital Cost Estimate is a full AACEI Class IV Estimate (-15 to 30%, +20 to 50%)), based on an equipment factored methodology where budget prices were obtained for all equipment with an expected value higher than $50,000 all other equipment was factored as a percentage of the total of the budget quotes received.
Indirect costs were estimated by Kore Potash and included owner's costs and offsite infrastructure costs based on quotes received.
Escalation of 1.5% per annum has been considered, and a total Contingency of approximately 22.0% (of total direct and indirect costs) has been added.
Three capital periods have been defined: Initial (Construction and up to first barge loading, Month +21); Deferred (up to ramp-up completion, Month +27); Sustaining (after Month +27).
-- Operating Cost:
Operating costs were estimated from first principles using quoted rates, estimated consumption, forecast labour complements and remuneration estimates.
Operating Cost covering the Life of Mine (18 years) has been estimated in Q4 2019 US$ terms. They include costs for Electric power, Fuel, Gas, Labour, Maintenance parts, Operating Consumables, General and Administration costs and Contract for Employee Facilities.
Ocean freight transportation estimate was based on shipping costs for 10-12 kt ships specifically for the African market.
Mine Closure cost estimated in accordance with a Conceptual Rehabilitation and Closure Plan developed during the PFS
State mineral royalties of 3% of Gross Revenue applies.
Indicated Mineral Resources were used for the estimation of Probable Ore Reserves.
The conversion of Indicated Mineral Resource to Probable Ore Reserve reflects the Competent Person's view of the deposit.
Material Modifying Factors
-- Status of Environmental Approvals
The Dougou Extension project area falls within the Dougou mining licence which has a 25-year ESIA approval in place. The DX scope will require an amendment to the Dougou ESIA and this application would be prepared simultaneously with the execution of the DFS phase of the project. The base line studies for the Dougou ESIA and the Kola infrastructure corridors (power, gas and overland access) will provide required information for the amendment application.
Additional baseline studies required to complete the application will be centred around new areas that would be affected by the DX project.
There are no waste rock dumps or process residue storage facilities required for the scope of the DX project. Waste salt brine is planned to be disposed of back into the ocean. The disposal of waste brine into the ocean was investigated and included in the Kola ESIA which was approved by the regulator when the Kola ESIA was granted a 25-year approval in March 2020.
The Company shall carry out their construction operations in compliance with the environmental and social management plan as part of the approved ESIA and will be subject to Regulator's environmental management compliance audits.
-- Status of Mining Tenements and Approvals
Kore Potash Limited (which is 100% owned by Kore Potash Plc.) and formerly known as Elemental Minerals Limited (ELM), has a 97%-holding in Sintoukola Potash SA (SPSA), a company registered in the ROC. The remaining 3% in SPSA is held by "Les Establissements Congolais MGM" (Republic of Congo). SPSA in turn has a 100% interest in its two ROC subsidiaries, Sintoukola Potash Mining SA and Dougou Potash Mining SA. The DX Deposit is within the Dougou Mining Licence which is 100% held by Dougou Potash Mining SA and was issued on the 9 May 2017 for a period of 25 years, under decree No. 2017-139.
Other Governmental Factors
A mining convention entered into between the RoC government and the Companies on 8 June 2017 and gazetted into law on 7 December 2018 concludes the framework envisaged in the 25-year renewable Dougou Mining Licence granted in August 2013. The Mining Convention provides certainty and enforceability of the key fiscal arrangements for the development and operation of Dougou Mining Licences, which amongst other items include import duty and VAT exemptions and agreed tax rates during mine operations. The Mining Convention provides strengthened legal protection of the Company's investments in the Republic of Congo through the settlement of disputes by international arbitration. The Mining Convention also provides for 10% of the shares in the subsidiary companies holding the Dougou and Kola Mining licences to be transferred to the Government of the Congo. This transfer of 10% to the Government has not yet occurred.
Infrastructure Requirements for Selected Mining, Processing and Product Transportation to Market
The project infrastructure is comprised of a mine site (well field), a processing plant, a 13.8 km buried water line to the coast, an accommodation camp, an overhead powerline from Mboundi and overland truck transport on the national road system of both product and gas.
Land acquisition rights for the DX project area will have to be applied for during the DFS phase and a project specific area will need to be through a ministerial order. To achieve this a governmental process is followed that culminates in a "Declaration d'Utilite Publique" (DUP) being granted. This process was followed successfully on the Kola project and will only be required for new areas that are impacted by the DX project area.
The Process Plant Site is located approximately 65 km north west of Pointe Noire and 18 km inland from the coast. The Mine Site is located next to the Project Process Plant.
The DX Project will require the regular use of existing highway RN5 for transport during construction and operations. RN5 includes 25 km of unpaved sand road between Madingo-Kayes and the process plant. Although the sand portion of the road is currently used for logging transport, some upgrades may be required to support the construction and operating traffic for DX.
A High Voltage (HV) Overhead Transmission Line (OHL) will be run from a CEC tie-in point at M'Boundi. The OHL will supply electrical power to the DX mine and process plant
Water supply will be seawater and brine will be disposed to the ocean via two 14 km long pipes between the process plant and the coast. A water pumping station will be required near the coastline.
A Natural Gas Virtual Pipeline (NGVP) will be used for the DX Project, involving the delivery of compressed natural gas on trucks. A compression (mother) station is installed adjacent to the existing natural gas pipeline. Natural gas is compressed at high pressure onto tube trailers. Tube trailers are transported to a decanting (daughter) station at the DX process plant. The tube trailer is connected to apparatus at the decanting station where the pressure is reduced to the correct pressure for use by the end use customer.
APPIX C
JORC CODE Table 1 Checklist of Assessment and Reporting Criteria - sections 1-4
Section 1 Sampling Techniques and Data
(Criteria in this section apply to all succeeding sections.)
Section 1 - Sampling Techniques and Data
JORC JORC Explanation Commentary
Criteria
------------------------------------------------------------ ------------------------------------------------------------
1.1 SAMPLING
TECHNIQUES * Nature and quality of sampling (e.g. cut channels, * Sampling of Kore's holes was carried out according to
random chips, or specific specialised industry an industry standard operating procedure (SOP)
standard measurement tools appropriate to the beginning at the drill rig.
minerals under investigation, such as down hole gamma
sondes, or handheld XRF instruments, etc.). These
examples should not be taken as limiting the broad * Core drilling was used to provide core samples.
meaning of sampling. Sample intervals were between 0.1 and 2.0 metres and
sampled to lithological boundaries where present.
Minor lithological intervals (20cm or less) were
* Include reference to measures taken to ensure sample generally included within a larger sample.
representivity and the appropriate calibration of any
measurement tools or systems used.
* In all cases, core was cut along a 'center-line'
marked such that both halves are as close to
* Aspects of the determination of mineralisation that identical as possible.
are Material to the Public Report. In cases where
'industry standard' work has been done this would be
relatively simple (e.g. 'reverse circulation drilling * All were sampled as half-core and cut using an
was used to obtain 1 m samples from which 3 kg was Almonte(c) core cutter without water, and blade and
pulverised to produce a 30 g charge for fire assay'). core holder cleaned between samples. Samples were
In other cases, more explanation may be required, individually bagged and sealed in boxes.
such as where there is coarse gold that has inherent
sampling problems. Unusual commodities or
mineralisation types (e.g. submarine nodules) may * At the laboratory, samples were crushed to nominal 2
warrant disclosure of detailed information. mm then riffle split to derive a 100 g sample for
analysis.
* Historical holes (starting with 'K') were drilled by
Mines de Potasse d' Alsace S.A (MDPA) during the late
1960's and early 1970's. There is no description of
the sampling methodology for these holes. Only K52
was used in the estimate of grade for the Dougou
Extension (DX) MRE and was twinned by Kore's hole
ED_01 (20 m away) to validate the historic grade and
geology data.
* Further discussion on sampling representivity is
provided in section 1.5.
* Downhole geophysical data including gamma-ray data
were collected for all holes. Gamma-ray data provides
a useful check on the depth and thickness of the
potash intervals.
------------------------------------------------------------ ------------------------------------------------------------
1.2.
DRILLING * Drill type (e.g. core, reverse circulation, open-hole * Holes were drilled in two phases by rotary percussion
TECHNIQUES hammer, rotary air blast, auger, Bangka, sonic, etc.) through the 'cover sequence' (Phase 1 between 9- and
and details (e.g. core diameter, triple or standard 12-inch diameter, Phase 2 between 5- and 8-inch
tube, depth of diamond tails, face-sampling bit or diameter) stopping 3-5 m into in the Anhydrite Member
other type, whether core is oriented and if so, by and cased and grouted to this depth. Holes were then
what method, etc.). advanced using diamond coring with the use of
tri-salt (K, Na, Mg) mud to avoid dissolution and
ensure acceptable recovery. ED_01 and ED_03 core was
drilled PQ (85 mm diameter) then subsequent holes HQ
(64.5 mm core diameter) as standard. All holes were
drilled as close to vertically as possible.
------------------------------------------------------------ ------------------------------------------------------------
1.3. DRILL
SAMPLE * Method of recording and assessing core and chip * Core recovery was recorded for all cored sections of
RECOVERY sample recoveries and results assessed. Kore's holes by recording the drilling advance
against the length of core recovered. Recovery is
between 95 and 100% for the evaporite and all potash
* Measures taken to maximise sample recovery and ensure intervals. A full-time mud engineer was recruited to
representative nature of the samples. maintain drilling mud chemistry and physical
properties.
* Whether a relationship exists between sample recovery
and grade and whether sample bias may have occurred * Core is wrapped in cellophane sheet soon after it is
due to preferential loss/gain of fine/coarse removed from the core barrel, to avoid dissolution in
material. the atmosphere, and is then transported at the end of
each shift to a de-humidified core storage room where
it is stored permanently.
* Recovery data is not available for all historic
boreholes. Only K52 was used in the grade estimate.
* There are no concerns relating to bias due to
recovery or due to preferential loss of certain size
fractions; the sylvinite and halite are of similar
grainsize and hardness.
------------------------------------------------------------ ------------------------------------------------------------
1.4. LOGGING
* Whether core and chip samples have been geologically * The entire length of Kore's holes was logged
and geotechnically logged to a level of detail to geologically, from rotary chips in the 'cover
support appropriate Mineral Resource estimation, sequence' and core in the evaporite. Logging is
mining studies and metallurgical studies. qualitative and supported by quantitative downhole
geophysical data including gamma and acoustic
televiewer images, which provide a useful check on
* Whether logging is qualitative or quantitative in the conventional core logging.
nature. Core (or costean, channel, etc.) photography.
* Due to the conformable nature of the evaporite
* The total length and percentage of the relevant stratigraphy and the observed continuity and abrupt
intersections logged. nature of contacts, recognition of the potash seams
is straightforward and made with confidence.
* Core was photographed to provide an additional
reference and record.
* High quality geological logs were available for
historic holes used in the model, based on cored
holes. For oil well Yangala-1, the logging was based
on rotary cuttings and is therefore less detailed.
The position of the seams in these holes was
interpreted by Kore. Only K52 and K62 are within the
area of MRE.
------------------------------------------------------------ ------------------------------------------------------------
1.5
SUB-SAMPLING * If core, whether cut or sawn and whether quarter, * Kore's samples were sawn as described above, into two
TECHNIQUES half or all core taken. halves. One half was retained at site as a record,
AND and one half sent in a batch of samples to the
SAMPLE laboratory, Intertek of Perth.
PREPARATION * If non-core, whether riffled, tube sampled, rotary
split, etc. and whether sampled wet or dry.
* Care was taken to orient the core before cutting so
that the retained and submitted halves were as
* For all sample types, the nature, quality and similar as possible.
appropriateness of the sample preparation technique.
* For at least 1 in 20 samples both halves were
* Quality control procedures adopted for all submitted, as two separate samples - an original and
sub-sampling stages to maximise representivity of (field) duplicate sample. The results of the
samples. duplicate analyses indicate no problematic bias,
supporting the adequacy of the sample size and the
sub-sampling procedures. This partially a reflection
* Measures taken to ensure that the sampling is of the massive layered nature of the mineralisation,
representative of the in situ material collected, with layering that is generally close to
including for instance results for field perpendicular to the core axis.
duplicate/second-half sampling.
* Whether sample sizes are appropriate to the grain
size of the material being sampled.
------------------------------------------------------------ ------------------------------------------------------------
1.6 QUALITY
OF * The nature, quality and appropriateness of the * Analyses for holes ED_01, ED_03 and DX_01 to DX_04
ASSAY DATA assaying and laboratory procedures used and whether were carried out at Intertek in Perth. Analyses for
AND the technique is considered partial or total. holes DX_07 and DX_09B were carried out at SGS
LABORATORY Lakefield in Canada. At the laboratory, samples were
TESTS crushed to >75% passing 2 mm then split to derive a
* For geophysical tools, spectrometers, handheld XRF subsample (100 g for Intertek and 250 g for SGS) for
instruments, etc., the parameters used in determining analysis. Total K, Na, Ca, Mg and S were determined
the analysis including instrument make and model, by ICP-OES. Cl was determined volumetrically.
reading times, calibrations factors applied and their Insolubles were determined by filtration of the
derivation, etc. residual solution and slurry on a 0.45 micron
membrane filter, washing to remove residual salts,
drying and weighing. Loss on drying by Gravimetric
* Nature of quality control procedures adopted (e.g. Determination was also completed as a check on the
standards, blanks, duplicates, external laboratory mass balance.
checks) and whether acceptable levels of accuracy
(i.e. lack of bias) and precision have been
established. * A full quality control and assurance (QAQC) programme
was implemented, to assess repeatability of the
sampling procedure and the precision of the
laboratory sample preparation and the accuracy of
analyses.
* This comprised the insertion of blanks, duplicates,
certified reference materials and internal
(non-certified) reference material. QAQC samples make
up 17% of the total number of samples submitted,
which is in line with industry best-practices.
* The results of the QAQC data were assessed
graphically and is acceptable supporting the use of
the laboratory analyses for sylvinite for the MRE. A
QAQC report was produced.
------------------------------------------------------------ ------------------------------------------------------------
1.7.
VERIFICATION * The verification of significant intersections by * Sampling and other drilling data was captured into MS
OF SAMPLING either independent or alternative company personnel. Excel, then imported along with assay data into an MS
AND Access database. On import, checks on data are made
ASSAYING for errors.
* The use of twinned holes.
* All mineralised intervals used for the MRE were
* Documentation of primary data, data entry procedures, checked and re-checked an compared against lithology
data verification, data storage (physical and and gamma data, which provide a further check of
electronic) protocols. grade and thickness.
* Discuss any adjustment to assay data. * As stated, K52 was the only historic hole for which
assay data was used in the MRE. To validate the
historic hole, it was twinned by ED_01, which
supported the accuracy of the K52 data.
------------------------------------------------------------ ------------------------------------------------------------
1.8.
LOCATION OF * Accuracy and quality of surveys used to locate drill * Drill-hole collars were surveyed by a professional
DATA POINTS holes (collar and down-hole surveys), trenches, mine surveyor using a DGPS, expected to be accurate to
workings and other locations used in Mineral Resource within 200 mm. DX_07 and DX_09B were drilled at
estimation. seismic survey stations which had been surveyed prior
to drilling by a professional surveyor using a DGPS.
* Specification of the grid system used.
* The drill-hole positions are given in UTM zone 32 S
using WGS 84 datum (Table in the announcement).
* Quality and adequacy of topographic control.
* Topographic elevation is from SRTM 90 satellite data,
though of relatively low resolution, it is sufficient
for the MRE.
------------------------------------------------------------ ------------------------------------------------------------
1.9. DATA
SPACING * Data spacing for reporting of Exploration Results. * The figure in the announcement shows the location of
AND the drill-holes. Those within the deposit extent are
DISTRIBUTION spaced between 0.7 and 4 km apart.
* Whether the data spacing and distribution is
sufficient to establish the degree of geological and
grade continuity appropriate for the Mineral Resource * Between drill-holes, 2D seismic data was important in
and Ore Reserve estimation procedure(s) and modelling the geometry (elevation and dip) of key
classifications applied. surfaces between holes. Kore Potash collected 60 km
of high frequency 2D data in 2019 using DMT GmbH&Co
KG of Essen, Germany (DMT). Lines were on an
* Whether sample compositing has been applied. approximate grid (figure in the announcement) and
spaced between 240 and 800 m. The receiver interval
and the source interval were 10m.
* Beyond the area of the 2019 survey, historic oil
industry seismic data was used. These lines are
between1.5 and 2.4 km apart and extend across all
parts of the deposit in various orientations, as
shown on the figure in the announcement.
* Owing to the continuity of the depositional setting
of the seams, their contacts and other surfaces and
'markers' can be easily identified and correlated
between drill-holes. The change from sylvinite to
carnallitite is obvious in drill-holes based on
visual observation, gamma-ray data and laboratory
analyses. Between drill-holes, on the seismic data,
the contacts/changes between sylvinite and
carnallitite are not visible. As described in Section
3.5, a method of modelling these contacts/changes
based was developed to interpret the distribution of
sylvinite between drill-holes.
* The Competent Person (CP) has sufficient confidence
that the data spacing and the methods used for
modelling are sufficient to support grade and
geological continuity relative to the applied
classification categories described in section 3.12.
* For the reporting of sylvinite intersections (as used
in the MRE), samples within the sylvinite interval
were composited to a single grade and thickness,
using the standard length-weighted average method.
------------------------------------------------------------ ------------------------------------------------------------
1.10.
ORIENTATION * Whether the orientation of sampling achieves unbiased * The sylvinite grade is controlled by the original
OF DATA IN sampling of possible structures and the extent to horizontally layered sedimentary deposition.
RELATION which this is known, considering the deposit type. Intersections have a sufficiently low angle of dip
TO and drill-holes were drilled vertically; a correction
GEOLOGICAL of thickness for apparent thickness was not deemed
STRUCTURE * If the relationship between the drilling orientation necessary. Drill-hole inclination was surveyed to
and the orientation of key mineralised structures is check verticality, it ranged - 85deg to -90deg, the
considered to have introduced a sampling bias, this hole dip through most intersections being between
should be assessed and reported if material. 88deg and 90 deg.
------------------------------------------------------------ ------------------------------------------------------------
1.11. SAMPLE
SECURITY * The measures taken to ensure sample security. * The chain of custody of samples was secure. At the
rig, the core was under full supervision of a Company
geologist. At the end of each drilling shift, the
core was transported by Kore Potash staff to a secure
site where it is stored within a locked room.
* Sampling was carried out under the observation of
Company staff; packed samples were transported
directly from the site by Company staff to DHL
couriers in Pointe Noire 3 hours away. From there DHL
airfreighted all samples to the laboratory, either in
Australia or Canada. Samples were weighed before
sending and on receipt of the results weights were
compared with those reported by the lab.
------------------------------------------------------------ ------------------------------------------------------------
1.12. AUDITS
OR * The results of any audits or reviews of sampling * Kore's sampling procedure has been reviewed on
REVIEWS techniques and data. several occasions by external parties, for the MRE
for the Kola, Dougou and DX Deposits.
* The supporting data has been checked by the external
CP, with inspection of logging sheets and laboratory
analysis certificates.
------------------------------------------------------------ ------------------------------------------------------------
Section 2 Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section.)
Section 2 - Reporting of Exploration Results
JORC Criteria JORC Explanation Commentary
---------------------------------------------------------------------- ------------------------------------------------------------
2.1 MINERAL
TENEMENT * Type, reference name/number, location and ownership * The DX Deposit is entirely within the Dougou Mining
AND LAND including agreements or material issues with third Licence which is held 100% under the local company
TENURE parties such as joint ventures, partnerships, Dougou Mining SARL which is in turn held 100% by
STATUS overriding royalties, native title interests, Sintoukola Potash SA RoC, of which Kore Potash holds
historical sites, wilderness or national park and a 97% share. The Permit is valid for 25 years from
environmental settings. 9(th) May 2017.
* The security of the tenure held at the time of * There are no impediments on the security of tenure.
reporting along with any known impediments to
obtaining a license to operate in the area.
---------------------------------------------------------------------- ------------------------------------------------------------
2.2
EXPLORATION * Acknowledgment and appraisal of exploration by other * Potash exploration was carried out in the area in the
DONE BY OTHER parties. 1960's by Mines domaniales de Potasse d' Alsace S.A.
PARTIES Holes K52 and K62 are within the Deposit area. High
quality geological logs are available for these
holes. Hole K52 intersected HWSS and was the initial
reason for Kore's interest in the area, beginning
with the twin-hole drilling of K52 in 2012 by ED_01.
* Seismic data was acquired by oil exploration
companies British Petroleum Congo and Chevron during
the 1980's and by Morel et Prom in 2006. The Company
acquired SEG-Y files for these surveys and this data
has guided the exploration and deposit modelling at
DX.
---------------------------------------------------------------------- ------------------------------------------------------------
2.3. GEOLOGY Deposit type, geological setting and style
of mineralisation. * The potash seams are hosted by the 400-500 m thick
Loeme Evaporite formation of sedimentary evaporite
rocks. These are within the Congo Basin which extends
from the Cabinda enclave of Angola to southern Gabon
from approximately 50 km inland, extending some
200-300 km offshore. The evaporites were deposited
during the Aptian epoch of the Lower Cretaceous,
between 125 and 112 million years ago. Importantly,
the sedimentation was in a post-rift setting leading
to the development of evaporite layers with
significant continuity.
* The evaporites formed by cyclic evaporation of
marine-sourced brines which were fed by seepage into
an extensive subsiding basin, each cycle generally
following the expected brine evolution and resultant
mineral precipitation model: dolomite then gypsum
then halite then the bitterns of Mg and K as
chlorides. To precipitate the thick potash beds the
system experienced prolonged periods within a range
of high salinity of brine concentration.
* Reflecting the Cl-Mg-K dominated brine composition,
halite (NaCl), carnallite (KMgCl(3) --6H(2) O) and
bischofite (MgCl(2) --6H(2) O) account for over 90%
of the evaporite rocks.
* Carnallite is a rock comprised predominantly of
carnallite and halite. Sylvinite is a rock comprised
predominantly of sylvite and halite. The term
'rock-salt' is used to refer to a rock comprising of
halite without appreciable potash. Both potash types
are easily identified. Sylvinite is typically reddish
or pinkish in colour. Carnallite is coarser grained,
greasy and orange in colour.
* Importantly, bischofite does not occur in the floor
or roof of the HWS and TS; the nearest bischofite is
over 130 m vertically below these seams.
* At DX the evaporite stratigraphy is slightly elevated
and thinned relating to the presence of an underlying
horst block forming a paleo-topographic high in the
pre- and syn-rift rocks below the evaporite. This
feature is referred to as the 'Yangala High' and was
an important 'large-scale' control on the development
of sylvinite in the DX area.
* 11 evaporite cycles have been recognised, of which
most are preserved at DX, the important 'Top Seam'
(TS) and 'Hangingwall Seam' (HWS) potash seams are
within the mid to upper part of cycle 9. Where
sylvinite these are referred to as the TSS and HWSS,
where referred as TS and HWS they could be sylvinite
or carnallite
* The TSS is made up of several narrow high grade
sylvinite layers with barren rock-salt layers between
them. The individual layers within the TSS are
numbered 5 to 9 from lowest to uppermost. A model and
MRE was completed for 6-8 only (i.e. excluding seams
5 and 9). simply referred to as the TSS hereon.
* The TSS and HWSS seams have an average thickness of
4.4 and 3.5 metres respectively within the MRE. The
HWSS is very high grade, being comprised of a single
massive bed comprising 53 to 63% sylvite.
* Capping the salt dominated part of the evaporite
(Salt Member or 'Salt') is a low permeability layer
of anhydrite, gypsum and clay (referred to as the
'Anhydrite Member') between 10 and 16 m thick in
drill-holes to date. It is at a depth of between 290
and approximately 520 m at DX. The contact between
the SALT and the base of the Anhydrite Member is
referred to as the salt roof or 'SALT_R'.
* The Anhydrite Member is covered by a thick sequence
of dolomitic rocks and clastic sediments of
Cretaceous age (Albian) to recent.
* Importantly, the SALT_R contact is an unconformity.
Reflecting this and that the layers within the Salt
are gently undulating, in some areas there is a
greater thickness of Salt above the seams (i.e.
between the seams and the Anhydrite Member) than in
others, or the seams may be 'truncated', as shown in
the cross-section in the announcement.
* Except where truncated by the unconformity at the
SALT_R, all layers in the Salt Member have good
continuity and the thickness of the interval between
them is relatively consistent. Even narrow mm-scale
layers or sub-layers can be correlated many km. In
most holes, all potash layers are present and have a
low angle of dip (mostly
* The potash seams were originally deposited as
carnallite but at DX have been replaced in some areas
by sylvinite, by a process of non-destructive
leaching of Mg, OH and some NaCl from carnallite,
converting it to sylvite. The conversion from
carnallite to sylvinite leads to a significant
reduction of the seam thickness and a concomitant
increase of grade. This process has taken place
preferentially over the Yangala High, initiating from
the top of the Salt Member. The process advanced on a
laterally extensive 'front' and was efficient; when
converted to sylvinite, almost no residual carnallite
remains within the sylvinite.
* The zone within which carnallite seams have been
converted to sylvinite is termed the SYLVINITE zone.
This laterally extensive zone starts a short distance
below the SALT_R and extends down to typically 40- 50
m below this contact, but rarely as much as 80 m (as
in drill-hole ED_01). If the base of the SYLVINITE
zone is part-way through the potash seam, u
n-replaced carnallite occurs immediately below the
sylvinite part. In these situations, the contact
between the sylvinite and carnallite is abrupt and
easily identified in core.
* In the upper 5-30 m of the Salt Member, the sylvinite
may be further 'leached', leaving pale reddish
coloured halite with little to no KCl, referred to as
'ghost' seam and generally still identifiable for
lateral correlation purposes. The zone within which
the sylvinite is leached is termed the LEACH zone.
* With reference to the above features, the main
control on the distribution of sylvinite is the
position of the seams (in vertical sense) relative to
the SYLVINITE zone; if the seam is above or below
this zone they are 'ghost' (halite) or carnallite
respectively. This is shown in the cross-section in
the announcement.
---------------------------------------------------------------------- ------------------------------------------------------------
2.4. DRILL
HOLE * A summary of all information material to the * The borehole collar positions of the holes are
INFORMATION understanding of the exploration results including a provided in the announcement, along with the final
tabulation of the following information for all depth.
Material drill holes:
* Holes were drilled vertically, the hole dip ranged
* easting and northing of the drill hole collar from - 85deg to -90deg, the hole dip through most
intersections being between 88deg and 90 deg. For the
MRE, a dip of -90deg was assigned to all drill-holes.
* elevation or RL (Reduced Level - elevation above sea
level in metres) of the drill hole collar
* Positions of the holes in relation to other holes are
shown in the map in the announcement. All potash
* dip and azimuth of the hole intersections (or absence of) for all holes within
the deposit area, including historic and 'failed'
holes, are provided in the announcement. No
* down hole length and interception depth information is excluded.
* hole length.
* If the exclusion of this information is justified on
the basis that the information is not Material and
this exclusion does not detract from the
understanding of the report, the Competent Person
should clearly explain why this is the case.
---------------------------------------------------------------------- ------------------------------------------------------------
2.5 DATA
AGGREGATION * In reporting Exploration Results, weighting averaging * For the calculation of the grade over the full
METHODS techniques, maximum and/or minimum grade truncations thickness of the seams, the standard length-weighted
(e.g. cutting of high grades) and cut-off grades are average method of compositing was used to combine
usually Material and should be stated. results of each sample.
* Where aggregate intercepts incorporate short lengths * No selective cutting of high or low-grade material
of high-grade results and longer lengths of low-grade was carried out.
results, the procedure used for such aggregation
should be stated and some typical examples of such
aggregations should be shown in detail. * No metal equivalents were calculated.
* The assumptions used for any reporting of metal
equivalent values should be clearly stated.
---------------------------------------------------------------------- ------------------------------------------------------------
2.6
RELATIONSHIP * These relationships are particularly important in the * Core and acoustic televiewer (ATV) images provide a
BETWEEN reporting of Exploration Results. reliable measurement of hole dip. The ATV images
MINERALISATION provide azimuth. ATV data was not collected for DX_07
WIDTHS AND and DX_09B.
INTERCEPT * If the geometry of the mineralisation with respect to
LENGTHS the drill hole angle is known, its nature should be
reported. * Seams have sufficiently low degree of dip, and
drill-holes are close enough to vertical that a
correction of intersected thickness was not deemed
* If it is not known and only the down hole lengths are necessary.
reported, there should be a clear statement to this
effect (e.g. 'down hole length, true width not
known').
---------------------------------------------------------------------- ------------------------------------------------------------
2.7 DIAGRAMS
* Appropriate maps and sections (with scales) and * A relevant map, tables and a cross-section are
tabulations of intercepts should be included for any provided in the announcement.
significant discovery being reported These should
include, but not be limited to a plan view of drill
hole collar locations and appropriate sectional
views.
---------------------------------------------------------------------- ------------------------------------------------------------
2.8 BALANCED
REPORTING * Where comprehensive reporting of all Exploration * All relevant exploration data is reported. All
Results is not practicable, representative reporting intersections including carnallitite and 'ghost'
of both low and high grades and/or widths should be seams within the deposit area are provided in the
practiced avoiding misleading reporting of table in the announcement. The reporting is balanced
Exploration Results. and not misleading.
---------------------------------------------------------------------- ------------------------------------------------------------
2.9 OTHER
SUBSTANTIVE * Other exploration data, if meaningful and material, * Holes DX_05B, DX_06, DX_08 were stopped above the
EXPLORATION should be reported including (but not limited to): evaporite due to drilling difficulties. DX_09B is
DATA geological observations; geophysical survey results; named such as the first attempt to drill this hole
geochemical survey results; bulk samples - size and failed. DX_09B was drilled successfully at the same
method of treatment; metallurgical test results; bulk location.
density, groundwater, geotechnical and rock
characteristics; potential deleterious or
contaminating substances. * As stated in section 1.9, 60 km of high frequency 2D
seismic data was acquired in 2019. This data was used
for the MRE, for the modelling of the seams between
drill-holes and for the identification of structures.
---------------------------------------------------------------------- ------------------------------------------------------------
2.10 FURTHER
WORK * The nature and scale of planned further work (e.g. * Infill drilling is recommended initially for the area
tests for lateral extensions or depth extensions or planned for early years of mining. Additional holes
large-scale step-out drilling). would provide new data points for the model, for the
depths of the seams and importantly for the depth of
the base of the SYLVINITE and LEACH zones.
* Diagrams clearly highlighting the areas of possible
extensions, including the main geological
interpretations and future drilling areas, provided * In support of the depth conversion of seismic data,
this information is not commercially sensitive. additional downhole density and full waveform sonic
(FWS) data and possibly vertical seismic profiling
(VSP) or check-shot data would be helpful.
* It would be beneficial to carry out infill 2D seismic
surveying along lines between the existing lines to
achieve a 100-200 m line spacing over the Indicated
MRE or a portion of it. This should allow more
confident correlation of structural features between
seismic lines.
* In advance of mining, 3D seismic surveying should be
carried out to provide a detailed 'image' of the Salt
Member and overlying rocks, to guide mine planning.
---------------------------------------------------------------------- ------------------------------------------------------------
Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)
Section 3 - Estimation and Reporting of Mineral Resources
JORC Criteria JORC Explanation Commentary
----------------------------------------------------------------- -----------------------------------------------------------------
3.1. DATABASE
INTEGRITY * Measures taken to ensure that data has not been * Geological data is recorded in hardcopy then captured
corrupted by, for example, transcription or keying digitally. During import into Micromine(c) software,
errors, between its initial collection and its use an error file is generated identifying any
for Mineral Resource estimation purposes. overlapping intervals, gaps and other forms of error.
The data is then compared visually in the form of
strip logs against geophysical data.
* Data validation procedures used.
* Assay data was imported from laboratory certificates
into an Access database. The importing process checks
for errors. Original laboratory certificates (pdf
files) are kept as a secure record.
* The grade and depth data for all mineralised
intervals used in the MRE were thoroughly checked to
ensure no errors were present.
----------------------------------------------------------------- -----------------------------------------------------------------
3.2. SITE
VISITS * Comment on any site visits undertaken by the * The CP visited the site from 9(th) to 12(th) January
Competent Person and the outcome of those visits. 2020 to observe the drill-core, drilling of the
evaporite and review sampling and logging procedures.
The CP found all to be of acceptable standard.
* If no site visits have been undertaken indicate why
this is the case.
----------------------------------------------------------------- -----------------------------------------------------------------
3.3.
GEOLOGICAL * Confidence in (or conversely, the uncertainty of) the * Recognition and correlation of potash and other
INTERPRETATION geological interpretation of the mineral deposit. important layers or contacts between drill-holes is
straightforward and did not require assumptions to be
made; each being distinct when thickness, grade
* Nature of the data used and of any assumptions made. distribution, and stratigraphic position relative to
other layers is considered. Correlation is further
aided using downhole geophysical data.
* The effect, if any, of alternative interpretations on
Mineral Resource estimation.
* Between drill-holes there is reliance on seismic data
to guide the geometry (elevation and dip) of the
* The use of geology in guiding and controlling Mineral seams, which in turn influences the extent of
Resource estimation. sylvinite.
* The factors affecting continuity both of grade and * Sylvinite cannot be 'seen' directly in the seismic
geology. data. As described above, the extent of sylvinite is
controlled largely by the thickness of the SYLVINITE
and to a lesser extent the LEACH zones. These are
determined from the drill logs. If future drilling
leads to changes of the thickness of these zones
between the drill-holes, then the MRE would change
accordingly.
* Some uncertainty is inherent in seismic
interpretation, especially further away from control
points (drill-holes); this is reflected in the
classification of the Indicated or Inferred
categories.
* The geological model for the formation of sylvinite
at DX is summarised in section 2.3. It is well
understood. This model was used in the construction
of the model for the MRE, as described in 3.5.
* The factors affecting continuity are as follows.
o Where the seams are truncated at the unconformity
at the top of the Salt Member, the seams are
absent.
o Below the SYLVINITE zone, there is no sylvinite
and only carnallite is present. This is an
abrupt change affecting the continuity.
o Close to the SALT_R, within the LEACH zone
the sylvinite may be 'leached' and is barren.
o Structures were observed within the MRE area
in the 2D seismic data. Two structural 'exclusion
areas' were delineated and excluded from the
MRE (see map in the announcement). Other structures
were identified but were not correlated between
seismic lines.
* The above factors were a consideration in the
application of the 15% geological loss applied to the
MRE.
----------------------------------------------------------------- -----------------------------------------------------------------
3.4 DIMENSIONS
* The extent and variability of the Mineral Resource * The DX deposit extent covers an area of approximately
expressed as length (along strike or otherwise), plan 4 by 10 km. The sylvinite is found at a depth of
width, and depth below surface to the upper and lower approximately 310 to 490 m below surface. Dip of the
limits of the Mineral Resource. seams is low, up to 20deg but mostly less than
5-10deg.
* Within this area, the sylvinite is not continuous;
there are internal areas where the seams are
carnallite, generally in areas where, due to gentle
undulation, the seams are a greater distance from the
SALT_R surface and therefore below the SYLVINITE
zone.
* The TSS and HWSS seams have an average thickness of
4.4 and 3.5 metres respectively within the MRE.
----------------------------------------------------------------- -----------------------------------------------------------------
3.5 ESTIMATION
AND MODELLING * The nature and appropriateness of the estimation * Drill-holes within and surrounding the deposit were
TECHNIQUES technique(s) applied and key assumptions, including used to construct the model (map in the
treatment of extreme grade values, domaining, announcement). Even if not sylvinite, the holes
interpolation parameters and maximum distance of around the deposit contain the same seams and other
extrapolation from data points. If a computer key contacts such as the SALT_R and are therefore
assisted estimation method was chosen include a helpful in guiding the model close to and beyond the
description of computer software and parameters used. deposit extents.
* The availability of check estimates, previous * The seismic data was imported in SEG-Y format into
estimates and/or mine production records and whether Micromine(TM) 2013 software and viewed in section and
the Mineral Resource estimate takes appropriate in 3D. The data has been converted to depth by DMT
account of such data. Petrologic (Petrologic) application of a velocity
model and then 'tied' to the drill-hole data using
the main reflectors. Drill-holes DX_07 and DX_09B
* The assumptions made regarding recovery of postdated well-tying of the seismic data. Predicted
by-products. DX_09B intersections were several metres 'out' in
terms of the depth of the surfaces based on the
seismic data and so the HWS_R and SALT_R surfaces had
* Estimation of deleterious elements or other non-grade to be adjusted accordingly to fit the new drill-hole
variables of economic significance (e.g. Sulphur for data.
acid mine drainage characterisation).
* For the historic seismic data, a uniform velocity of
* In the case of block model interpolation, the block between 3900 and 4200 m/s was used for a simple depth
size in relation to the average sample spacing and conversion of the seismic data, 'hanging' it from the
the search employed. top of the Salt Member (an obvious reflector that can
be 'tied' to the same contact in drill-hole data).
* Any assumptions behind modelling of selective mining
units. * For the 2019 seismic data, Petrologic provided an
interpretation of key surfaces; notably the SALT_R
and the 'base of cycle 8' (BoC8), a reflector within
* Any assumptions about correlation between variables. the upper part of the Salt Member. The SALT_R and the
'roof of HWS' (HWS_R) surfaces were modelled as
'strings' (in Micromine 2013) by Mr. A Pedley, a
* Description of how the geological interpretation was Consultant to Kore Potash. Between drill-holes the
used to control the resource estimates. seismic data was used to model the elevation of these
surfaces.
* Discussion of basis for using or not using grade
cutting or capping. * CSA Global (South Africa) then imported these strings
into Leapfrog Geo to create 'meshes' for the SALT_R
and the HWS_R, using Leapfrog's 'radial basis'
* The process of validation, the checking process used, function. These surfaces were then imported into
the comparison of model data to drill hole data, and Datamine Studio 3 and 'resampled' on a 50x50 m grid.
use of reconciliation data if available.
* The HWS_R was then used as a 'reference horizon' to
guide the models for the other key potash seam
surfaces; the floor of the HWS, and the floor and
roof of the TS. This was achieved by 'gridding'
(using Inverse Distance Cubed - IDW3) the thickness
(as intersected in the drill-holes) of the interval
between these surfaces from the HWS_R, across the
deposit. By this method, 'seam models' for the HWSS
and TSS (irrespective of whether they are carnallite
or sylvinite) were created.
* To determine the extent and thickness of the
sylvinite areas, the base of the SYLVINITE zone was
determined from the drill-hole data. This is visible
if this contact is within a potash layer. If
occurring between the potash layers, the mid-point
them was used. The thickness of this interval was
'gridded' in Datamine using IDW3 into the 50x50 m
grid, then subtracted from the elevation of the
SALT_R to create the SYLVINITE zone floor surface.
Similarly, the floor of the LEACH zone was created.
* The seam models were then cut by these surfaces, to
give surfaces for the top and base of the sylvinite
portion of the seams.
* Minor manual edits were made to the SYLVINITE surface
to remove pockets/slivers of carnallite in the models
that were considered unlikely.
* The maximum thickness of the seam models was 'capped'
by the maximum thickness observed in the drill-hole
data i.e. so that there are no parts of the model
where the seams are thicker than the maximum
intersected thickness.
* The products of the above steps were final
'sylvinite-only' wireframes (closed solids) for HWSS
and TSS5-9. The cross-section in the announcement
illustrates these.
* The wireframes were checked against all borehole
intersections on screen in Micromine.
* A surface was also created for the extent of
carnallite Hangingwall Seam (HWSC) to help the
understanding of the distribution of this material in
the floor of the seam, being an important
consideration for solution mining.
* Block models of 50 by 50 metres with variable height
were created for the HWSS. TSS 5-9 and TSS
wireframes. KCl, Mg and insoluble content were
estimated into the block model using Inverse Distance
Weighting Squared (IDW2), using the composited
drill-hole assay data.
* Both Mg and insoluble material are considered
deleterious elements but are only present in
extremely small quantities, less than in most potash
deposits globally. They were estimated for
completeness.
* Density was calculated for each block, based on the
grade, as discussed in section 3.11. All blocks with
a height of less than 1.0 m were excluded from the
MRE.
* In the CPs view, the resulting model reflects the
geological controls well, more so than would have
been achieved using the potash industry standard
polygonal method extrapolating the grade and
thickness of intersections to areas around
drill-holes. The CP is satisfied that the grade
modelling and estimation method used is appropriate
to the assigned classification.
* No top or bottom cutting based on grade was carried
out. The TSS intersection in drill-hole DX_03 is a
partial (thin) intersection and as a result is higher
grade than intersections in other drill-holes but was
not excluded from the MRE. Elsewhere the lateral
grade variation is relatively low.
* The estimated grade values in the block model were
checked in section in Micromine, comparing against
the supporting assay data, for all drill-holes.
* The eastern and southern limits of the block-models
were cut by the 'maximum extent of sylvinite' a
boundary interpreted from seismic data. Beyond this
the seams are considered unlikely to be sylvinite,
reflecting the limit of influence of the Yangala High,
as described in section 2.3.
* The block model was also cut to exclude all material
within the two structural exclusion zones (refer to
map in the announcement).
* Extrapolation beyond data points is limited a
distance deemed appropriate in terms of the
confidence of the classification into Inferred and
Indicated, as described in section 3.13.
* A further 15 % of the tonnage for both seams was
deducted from the totals as a provision for
unmodelled geological losses due to faults, internal
carnallitite zones or leaching of the sylvinite. This
was not applied to the block model itself but to the
tabulation of the MRE only.
* The CP is confident in the grade estimation method
used, aided by the fact that the grade variation
between holes is relatively low and that there
appears to be no discernible directional control on
sylvinite or grade. More complex methods such as
kriging were not deemed appropriate.
* A check estimate of the Indicated MRE was conducted
using a simple 2D method using polygons around the
sylvinite intersections based on an Area of Influence
(AOI) of 800 m radius around the drill-holes. If the
check estimate AOIs are also cut by the structural
exclusions and the ' maximum extent of sylvinite'
(described in section 3.5) as per the MRE. The check
estimate tonnages are slightly lower than those of
the MRE (25.6 Mt vs 27.9 Mt for the HWSS, 45.9 Mt vs
50.9 Mt for the TSS). The check estimate KCl grades
are within 3% of those of the MRE.
----------------------------------------------------------------- -----------------------------------------------------------------
3.6 MOISTURE
* The sylvinite seams are dry and the estimate is on a
dry basis. Moisture content was checked by weighing
before and after drying.
----------------------------------------------------------------- -----------------------------------------------------------------
3.7 CUT-OFF
PARAMETERS * The basis of the adopted cut-off grade(s) or quality * For the MRE a 15% KCl cut-off-grade was applied
parameters applied. though no blocks have a grade less than this.
* The deleterious components Mg and insolubles are so
low and consistent at DX that these were not
considered in the selection/exclusion of blocks from
the model.
----------------------------------------------------------------- -----------------------------------------------------------------
3.8 MINING
FACTORS * Assumptions made regarding possible mining methods, * The DX PFS and Ore Reserve estimation is based on
OR ASSUMPTIONS minimum mining dimensions and internal (or, if selective solution mining of KCl using NaCl-saturated
applicable, external) mining dilution. It is always brine injected into the sylvinite layers to develop
necessary as part of the process of determining caverns. The solution mining method utilises one well
reasonable prospects for eventual economic extraction per cavern, drilled to a vertical depth of
to consider potential mining methods, but the approximately 460 m.
assumptions made regarding mining methods and
parameters when estimating Mineral Resources may not
always be rigorous. Where this is the case, this * The solution mining method is divided into four
should be reported with an explanation of the basis phases: (1) sump development, (2) roof development,
of the mining assumptions made. (3) continuous mining and (4) cavern closure.
* The design for the single-well caverns is based on a
radius of 60 m, with cavern centers spaced 144 m
apart. This layout results in an aerial extraction
ratio of 62.9% with a volumetric extraction of 46.2%.
* In the early stages of the PFS, dual-well caverns
were numerically modelled for stability. This
modelling was done with 70 m cavern radius and
spacing between wells of 80 m. The results of the
numerical modelling for cavern stability indicated
that in all cases, the roof and pillars were stable
and no leakage between caverns was indicated.
* For the single-well caverns, the radius was reduced
from 70 m, for the dual-well configuration, to 60 m
so cavern roof stability is improved. On this basis,
the high-extraction single-well caverns were adopted
for the PFS. Additional numerical modelling of
single-well cavern deformations will be undertaken as
part of the Definitive Feasibility Study (DFS). The
caverns are expected to be stable, but some yielding
of pillars may occur, however no adverse consequences
are expected as a result.
----------------------------------------------------------------- -----------------------------------------------------------------
3.9
METALLURGICAL * The basis for assumptions or predictions regarding * The Dougou Extension Sylvinite ore represents a
FACTORS OR metallurgical amenability. It is always necessary as simple mineralogy, containing only sylvite, halite
ASSUMPTIONS part of the process of determining reasonable and traces of other soluble elements. Solution mining
prospects for eventual economic extraction to brine is expected to contain negligible amounts of
consider potential metallurgical methods, but the insoluble materials. Brine of this nature is well
assumptions regarding metallurgical treatment understood globally and can be readily processed.
processes and parameters made when reporting Mineral
Resources may not always be rigorous. Where this is
the case, this should be reported with an explanation * Dissolution test work was performed on DX core
of the basis of the metallurgical assumptions made. samples from both the HWSS and TSS at Agapito
Associates Inc. laboratory in Grand Junction,
Colorado, USA. The testing provided a basis for the
predicted dissolution characteristics within the
caverns, and the resulting brine KCl concentration
and flow to the process plant. These parameters were
used in the design of the process plant.
----------------------------------------------------------------- -----------------------------------------------------------------
3.10
ENVIRONMENTAL * Assumptions made regarding possible waste and process * The deposit area is outside of the 'Integral' zone
FACTORS OR residue disposal options. It is always necessary as Conkuati Douali National Park. It is within the
ASSUMPTIONS part of the process of determining reasonable 'buffer' and 'economic development' zones of the
prospects for eventual economic extraction to park.
consider the potential environmental impacts of the
mining and processing operation. While at this stage
the determination of potential environmental impacts, * A comprehensive Environmental Social Impact
particularly for a Greenfields project, may not Assessment (ESIA) was prepared and approved for the
always be well advanced, the status of early Dougou Mining Permit and will be amended for DX.
consideration of these potential environmental
impacts should be reported. Where these aspects have
not been considered this should be reported with an * Discharge brine from the process plant will be
explanation of the environmental assumptions made. disposed to the ocean via a buried pipe from the
process plant to the coast. A brine disposal diffuser
will be located about 250 m from the shoreline. The
diffuser will be designed to ensure proper disposal
flow characteristics.
* Based on preliminary reviews, subsidence is not
expected to result in significant surface impacts.
Subsidence will be examined more closely in the DFS.
* A Reclamation (Closure) cost allowance is included to
rehabilitate areas used for the process plant,
wellfield and other offsite infrastructure.
----------------------------------------------------------------- -----------------------------------------------------------------
3.11 BULK
DENSITY * Whether assumed or determined. If assumed, the basis * At DX (and at Kola), it has been shown that density
for the assumptions. If determined, the method used, of sylvinite is directly correlated to the relative
whether wet or dry, the frequency of the measurements proportion of sylvite and halite (which have known
, densities of 1.99 and 2.16 t/m(3) respectively).
the nature, size and representativeness of the These can be determined from the laboratory
samples. analytical data. This method of density determination
is used in some operating potash mines. At DX the
method is made simpler due to the small amounts (
* The bulk density for bulk material must have been
measured by methods that adequately account for void
spaces (vugs, porosity, etc.), moisture and * A regression line of KCl against density (measured by
differences between rock and alteration zones within gas pycnometry) for samples was plotted. The formula
the deposit. for the regression line is DENSITY =
(KCl-742.53)/(-337.53) where KCl is % and density is
tonnes per cubic metre. Using is formula and the KCl
* Discuss assumptions for bulk density estimates used % for each block the density was assigned to each
in the evaluation process of the different materials. block for the HWSS, and TSS models. The average
density for the seams is 2.03 and 2.11 t/m(3)
respectively. These densities are similar to the
sylvinite density determined for deposits elsewhere,
typically between 2.00 and 2.15 t/m(3) .
----------------------------------------------------------------- -----------------------------------------------------------------
3.12
CLASSIFICATION * The basis for the classification of the Mineral * A portion of the deposit has sufficient drill-hole
Resources into varying confidence categories. control seismic data to assume continuity of grade
and geology sufficient for it to be classified as
Indicated Mineral Resources.
* Whether appropriate account has been taken of all
relevant factors (i.e. relative confidence in
tonnage/grade estimations, reliability of input data, * A portion of the DX deposit is classified as Inferred,
confidence in continuity of geology and metal values, being supported by relatively widely spaced
quality, quantity and distribution of the data). drill-hole and seismic data. Within this area grade
and geological continuity is implied but will require
additional data-points to verify.
* Whether the result appropriately reflects the
Competent Person's view of the deposit.
* For the extent of the Mineral Resources within the
Inferred and Indicated categories, and Area of
Influence (AOI) around drill-holes was determined,
based on an understanding of the controls on the
sylvinite, and confidence in the model in relation to
data points, and with comparison of AOI's used for
potash deposits elsewhere. It is important to note
that within the AOI only a portion is sylvinite
unlike at other sylvinite deposits where the AOI is
the extent of the sylvinite.
* Indicated Mineral Resources are limited to sylvinite
within an area guided by an AOI with a radius of 1.0
km around the drill-holes DX_01, K62, ED_03, ED_01.
* Inferred Mineral Resource are limited to sylvinite
within an area guided by an AOI with a radius of 2.5
km around inner holes, and a 1.5 km radius beyond
'outer' holes (DX_03 and DX_02) and exclude the
Indicated Mineral Resource area.
* As explained in section 3.5, the block-model and thus
the MREs were 'cut' on the east and southeast side of
the deposit by the interpreted 'maximum extent of
sylvinite' and the structural exclusion zones.
* The Mineral Resource Estimate for the different
categories for each seam within the DX Deposit are
shown in table form in the announcement, after the
application of the 15% geological loss.
* The CP considers the classification of the Mineral
Resources to be appropriate.
----------------------------------------------------------------- -----------------------------------------------------------------
3.13 AUDITS OR
REVIEWS * The results of any audits or reviews of Mineral * The CP has reviewed all exploration data that have
Resource estimates. been used in the MRE reviewed the model and
estimation methodology and checked assay data and
composites used for the MRE.
* In using CSA Global to assist with the work, there
has been additional review of the drill-hole data,
the resource model, and estimation procedure.
----------------------------------------------------------------- -----------------------------------------------------------------
3.14
DISCUSSION * Where appropriate a statement of the relative * The accuracy of the estimate reflects the confidence
OF RELATIVE accuracy and confidence level in the Mineral Resource assigned as per the resource classification.
ACCURACY/ estimate using an approach or procedure deemed
CONFIDENCE appropriate by the Competent Person. For example, the
application of statistical or geostatistical * It is likely that additional data points in the form
procedures to quantify the relative accuracy of the of drill-hole and seismic data would lead to an
resource within stated confidence limits, or, if such adjustment of the seam model for the Inferred MRE,
an approach is not deemed appropriate, a qualitative with a similar chance of a global increase or
discussion of the factors that could affect the decrease in tonnage.
relative accuracy and confidence of the estimate.
* Additional data is less likely to lead to a global
* The statement should specify whether it relates to change to the Indicated MRE. Local changes to the
global or local estimates, and, if local, state the Indicated MRE are possible.
relevant tonnages, which should be relevant to
technical and economic evaluation. Documentation
should include assumptions made and the procedures * The main impact would be changes to the modelled
used. position of the seams relative to the LEACH and
SYLVINITE zones, as described in section 3.3.
* These statements of relative accuracy and confidence
of the estimate should be compared with production * As stated in section 3.3 it is also possible that
data, where available. structures impact on the continuity of the sylvinite.
* The above factors were a consideration in the
classification and in the allocation of the 15%
geological loss factor.
* The check-estimate described in section 3.5 provides
support for the MRE.
* It is unlikely that further data will impact
significantly on the grade of the seams as the grade
variation is relatively low. If the proportion of TSS
to HWSS changed significantly (within the Inferred
MRE), the average 'total' grade of the deposit would
change accordingly, the HWSS being significantly
higher grade than the TSS.
----------------------------------------------------------------- -----------------------------------------------------------------
Section 4 Estimation and Reporting of Ore Reserves
(Criteria listed in section 1, and where relevant in sections 2 and 3, also apply to this section)
Criteria JORC Code explanation Commentary
Mineral Resource Description of the The Mineral Resource described
estimate for Mineral Resource in Section 2 of the PFS identifies
conversion to estimate 79 million tonnes of Indicated
Ore Reserves used as a basis for the Resource, including the HWSS and
conversion to an Ore TSS for beds 6 through 8. The
Reserve. Resource is identified in an area
Clear statement as to defined by interpretation of the
whether the Mineral 2D seismic data and supported
Resources by eight cored and assayed drill
are reported additional holes with three core holes within
to, or inclusive of, the mine plan area. There is no
the Ore Reserves. Measured Mineral Resource. The
mine plan is exclusively within
the identified Indicated Resource
for the Hanging Wall Seam (HWS)
and Top Seam (TS) for beds 6 through
8. The large difference in the
Indicated Resource and the Probable
Reserves is because the mine plan
did not include all the Indicated
Resource areas. The reported Mineral
Resource is inclusive of the Ore
Reserves and this is specified
in each tabulation of Mineral
Resources.
------------------------- -----------------------------------------------------------------
Site visits Comment on any site The CP for the Ore Reserves, Dr
visits undertaken by the Michael Hardy of Agapito Associates
Competent Person and the Inc. (AAI), has not visited the
outcome of those visits. site. A site visit was not considered
If no site visits have necessary as other geotechnical
been undertaken indicate representatives of AAI have been
why this is the case. to the site and AAI's role was
limited to developing the mine
plan based on the resource definition
provided by other Kore Potash
personnel and respected professionals.
------------------------- -----------------------------------------------------------------
Study status The type and level of The Ore Reserve estimate is based
study undertaken to on a Pre-Feasibility Study (PFS)
enable that includes a mine plan which
Mineral Resources to be is technically achievable and
converted to Ore economically viable. Modifying
Reserves. factors include loss of resource
The Code requires that a because of dip of the beds, pregnant
study to at least brine remaining in the caverns,
Pre-Feasibility Study unforeseen geologic factors and
level has been plant losses.
undertaken
to convert Mineral
Resources to Ore
Reserves.
Such studies will have
been carried out and
will have determined a
mine plan that is
technically
achievable and
economically viable, and
that
material modifying
factors have been
considered.
------------------------- -----------------------------------------------------------------
Cut-off parameters The basis of the cut-off The Ore Reserve includes mining
grade(s) or quality of both HWSS and TSS beds 6 to
parameters applied. 8. The KCl grade for the HWSS
is exceptional compared to other
mined potash beds. The TSS has
high-grade sylvinite seams which
are separated by halite interbeds.
A potash grade of 30% KCl is considered
necessary for selective solution
mining of potash. Within the Reserve,
all KCL grades in blocks to be
selectively solution mined are
higher than 30%
------------------------- -----------------------------------------------------------------
Mining factors The method and For the PFS solution mining plan,
or assumptions assumptions used as single-well caverns were adopted.
reported The decision to use single-well
in the Pre-Feasibility caverns was based on the need
or Feasibility Study to locate caverns as close to
to convert the Mineral each other as possible to maximize
Resource to an Ore resource recovery and the Reserves
Reserve for the Dougou Extension (DX).
(i.e. either by The 2D seismic and new drill holes
application of completed as part of the PFS resulted
appropriate in better definition of the extent,
factors by optimization thickness and dip of the floor
or by preliminary or of the resource. Solution mining
detailed design). of large dual-well caverns, as
The choice, nature and proposed in the Scoping Study,
appropriateness of the resulted in reduced resource recovery
selected mining in comparison to the smaller single
method(s) and other well caverns. This configuration
mining resulted in additional wells,
parameters including but higher resource recovery and
associated design issues mine life.
such as pre-strip,
access, etc. The plant is designed to produce
The assumptions made 400,000 tpa of Muriate of Potash
regarding geotechnical (MoP) with a purity of 98.5% KCl.
parameters (e.g. pit Recovery of resource is planned
slopes, stope sizes, in the HWSS and TSS where they
etc.), exist. To meet this production
grade control and goal, 25 caverns at a minimum
pre-production drilling. and 3 additional to allow flexibility
The major assumptions in operations will be developed.
made, and Mineral and put into operation at start-up
Resource and replaced over the 19-year
model used for pit and mine life.
stope optimisation (if
appropriate). The adopted method of solution
The mining dilution mining will inject a hot brine
factors used. with near saturation of NaCl and
The mining recovery KCl content of approximately 90
factors used. to 100 g/l. The brine will selectively
Any minimum mining dissolve the KCl to produce a
widths used. brine feed to the plant of up
The manner in which to 165 g/l KCl. Laboratory-scale
Inferred Mineral dissolution testing was conducted
Resources to predict dissolution characteristics,
are utilised in mining and modelling of brine concentrations
studies and the has verified the expected KCl
sensitivity concentration of 165 g/l in the
of the outcome to their HWSS. Brine concentration is expected
inclusion. to be lower in the TSS.
The infrastructure
requirements of the The steps in solution mining is
selected to first develop a sump in the
mining methods. salt below the lowest potash bed
available, then to expand the
top of the sump with both steps
utilizing an oil or nitrogen cap
to inhibit vertical cavern growth.
When the roof is developed, the
oil/gas cap will be removed and
solution mining of the lowest
beds (HWSS or the TSS) can be
achieved. If the HWSS and TSS
are present, sump development
in the TSS will follow completion
of mining in the HWSS.
Other mining techniques were evaluated
during the Scoping Study and these
included dual-well caverns as
practiced in Saskatchewan and
horizontal wells as practiced
by Intrepid, Natural Soda, and
in Turkey (Eti Soda and Kazan).
The dip of the beds and the variability
of the dip favoured the single-well
plan.
Cavern stability and size of the
caverns was based on modelling
of the larger dual-well caverns
and geomechanical parameters from
the Definitive Feasibility Study
(DFS) of the nearby Kola Project
that is owned by KORE Potash.
The selected areal extraction
ratio is 63%, with the caverns
approximately circular with a
radius of 60 meters and pillars
between caverns of 24 meters.
The volumetric extraction ratio
is 46%. This configuration is
likely to be stable during operations
when the pressure in the caverns
will support the roof. Pillar
degradation is possible, and subsidence
or interconnection of caverns
is not expected to impede the
mine plan.
The modifying factors in converting
the Mineral Resource to Ore Reserves
are as follows;
* TSS Seams 5 and 9: The interlaying salt layer between
Seams 5 and 6 and Seams 8 and 9 were considered too
large to allow economical extraction and were
excluded from Ore Reserve classification.
* Mine Plan Boundary: The mine plan boundary is defined
in Figure 8, and all Mineral Resource outside this
boundary have been excluded from the mine plan.
* Pillars: The pillar losses between caverns were
calculated and used as a modifying factor.
* Dip: The layout of the caverns results in a loss of
tonnage due to the dip of the floors of the caverns.
The modifying factor was based on the calculated loss
per cavern.
* Brine Entrapment: Approximately 18% of KCl remains in
the cavern at the end of cavern life for an average
cavern recovery ratio of 82% (assuming the brine
concentration within a cavern was fully saturated).
* Geological anomalies: An allowance of 15% for the
HWSS and TSS for unknown geological anomalies was
applied.
* TSS Mining Loss: An allowance of 15% for mining
uncertainty in the TSS bed was applied.
Mining dilution factors are not
applicable to solution mining.
Modelling completed for the PFS
incorporates the transition from
sump development with the production
of brine of high NaCl content
and no KCl to a high KCl concentration
brine once solution mining is
advanced to mine the HWSS or the
TSS. During this transition from
sump mining to potash mining,
brine grades less than 90 g/l
will be discarded or recirculated.
Dilution factors generally associated
with conventional mining involve
reduction (dilution) of the ore
grade delivered to the plant because
of mining low-grade material,
either above or below the economically
viable ore zone.
The mining recovery factors include
the areal extraction ratio of
63% (volumetric extraction of
46%) and the losses due to the
geologic uncertainty and the loss
of brine remaining in the cavern.
Plant losses are estimated to
be 1.5%. The final product will
be 98.5% pure KCl with 1.5% NaCl.
Inferred Mineral Resources have
not been quantified into the mining
plan.
The infrastructure requirements
for solution mining include piping
for delivery of the solute and
recovery of the pregnant brine,
wellfield pumps, electrical, instrumentation
and roads. Instrumentation at
the well head includes flow, temperature
and brine density. Sampling of
brine at the well head will be
done manually. Production piping
will be insulated to minimize
temperature losses in the solvent
and product brine. Cavern development
pipelines will not be insulated.
------------------------- -----------------------------------------------------------------
Metallurgical The metallurgical The selective solution mining
factors or assumptions process proposed and the process for DX is expected to
appropriateness of that deliver brine to the process plant
process to the style containing (by weight) 66.8% water,
of mineralization. 18.6% NaCl, 13.4% KCl, 1.1% MgCl(2)
Whether the , and 0.1% CaSO(4) at a temperature
metallurgical process is of 60degC. All the above elements
well-tested will be fully dissolved within
technology or novel in the brine. Brine of this nature
nature. is well understood globally and
The nature, amount and can be readily processed.
representativeness of
metallurgical test work Crystallisation is the processing
undertaken, the nature method selected for the DX Project
of the metallurgical and is well established in the
domaining applied and potash industry. KCl crystallisation
the corresponding involves the gradual cooling of
metallurgical recovery KCl-rich brine and relies on a
factors strong relationship between KCl
applied. solubility and brine temperature.
Any assumptions or As the brine is cooled, the amount
allowances made for of KCl that can remain in solution
deleterious decreases. Therefore, KCl crystallises
elements. as brine is cooled, while most
The existence of any NaCl remains in solution. KCl
bulk sample or pilot crystallisation is known to yield
scale higher KCl recovery than conventional
test work and the degree recovery methods used for separation
to which such samples of KCl solids from NaCl solids,
are considered such as flotation.
representative of the
orebody The estimated KCl losses are due
as a whole. to:
For minerals that are * Purge stream (0.50%): A purge stream is required to
defined by a control the level of MgCl(2) in the process brine.
specification, MgCl(2) is preferentially soluble to KCl and will
has the Ore Reserve gradually displace KCl if it is not controlled. A
estimation been based on small portion of brine is bled off and disposed to
the appropriate manage the level of MgCl(2) in the brine, and this
mineralogy to meet the also results in a loss of KCl. The DX design includes
specifications? a purge stream.
* Boilout (0.15%): Crystallisation vessels are descaled
with water using a process called 'boilout', which
results in some loss of KCl from the walls of the
vessels, directed to brine discharge.
* Dust (0.29%): Dust losses to the atmosphere occur in
the process of drying, and also after KCl is dried.
* Spills and washdowns (0.20%): The plant will
occasionally have process upsets and cleaning
procedures which may result in a loss of KCl to brine
discharge.
* Offsite transportation losses (0.35%): Some allowance
is made for transportation losses during transport of
MoP and during ship loading at the marine location.
The total losses are expected
to be 1.49%, and therefore, the
total process KCl recovery is
expected to be 98.5%.
Some impurities are expected to
accompany the final MoP product.
The minimum KCl content for K60
MoP is 95% KCl, however the DX
process is expected to yield a
product grade of 98.5% KCl.
The primary basis for the above
assumptions was a detailed mass
balance, produced by subject matter
experts in the field of potash
crystallisation and potash dry
processing, with supplementary
input from a world-renowned supplier
of potash crystallisation equipment.
Furthermore, dissolution test
work was performed on DX core
samples from both the HWSS and
TSS at Agapito Associates Inc.
laboratory in Grand Junction,
Colorado, USA. The testing provided
a basis for the predicted dissolution
characteristics within the caverns,
and the resulting brine KCl concentration
and flow to the process plant.
These parameters were used in
the design of the process plant
and became the basis for the prediction
of LOM production for the DX project.
------------------------- -----------------------------------------------------------------
Environmental The status of studies of The Dougou Extension project area
potential environmental falls within the Dougou mining
impacts of the mining Licence which has a 25 year ESIA
and processing approval in place. The DX scope
operation. will require an amendment to the
Details of waste rock ESIA and this application would
characterisation and be prepared simultaneously with
the consideration of the execution of the DFS phase
potential sites, status of the project. The base line
of design options studies for the Dougou ESIA and
considered and, where the base line studies for the
applicable, Kola infrastructure corridors
the status of approvals (power, gas and overland access)
for process residue will provide required information
storage and waste dumps for the amendment application.
should be reported. Additional baseline studies required
to complete the application will
be centered around new areas that
would be affected by the DX project.
There are no waste rock dumps
or process residue storage facilities
required for the scope of the
DX project. Waste salt brine is
planned to be disposed of back
into the ocean. The disposal of
waste brine into the ocean was
investigated and included in the
Kola ESIA which was approved by
the regulator when the Kola ESIA
was granted a 25-year approval
in March 2020.
------------------------- -----------------------------------------------------------------
Infrastructure The existence of The project infrastructure is
appropriate comprised of a mine site (well
infrastructure: field), a processing plant, a
availability of land for 14 km buried water line to the
plant development, coast, an accommodation camp,
power, water, an overhead powerline from Mboundi
transportation and overland truck transport on
(particularly the national road system of both
for bulk commodities), product and gas.
labour, accommodation; Land acquisition rights for the
or the ease with which DX project area will have to be
the infrastructure can applied for during the DFS phase
be provided or accessed. and a project specific area will
need to be through a ministerial
order. To achieve this a governmental
process is followed that culminates
in a "Declaration d'Utilite Publique"
(DUP) being granted. This process
was followed successfully on the
Kola project and will only be
required for new areas that are
impacted by the DX project area.
The Process Plant Site is located
approximately 65 km north west
of Pointe Noire and 18km inland
from the coast. The Mine Site
is located next to the Project
Process Plant.
The DX Project will require the
regular use of existing highway
RN5 for transport during construction
and operations. RN5 includes 25
km of unpaved sand road between
Madingo-Kayes and the process
plant. Although the sand portion
of the road is currently used
for logging transport, some upgrades
may be required to support the
construction and operating traffic
for DX.
A High Voltage (HV) Overhead Transmission
Line (OHL) will be run from a
CEC tie-in point at M'Boundi.
The OHL will supply electrical
power to the DX mine and process
plant
Water supply will be seawater
and brine will be disposed to
the ocean via two 14 km long pipes
between the process plant and
the coast. A water pumping station
will be required near the coastline.
Natural Gas Virtual Pipeline (NGVP)
will be used for the DX Project,
involving the delivery of compressed
natural gas on trucks. A compression
(mother) station is installed
adjacent to the existing natural
gas pipeline. Natural gas is compressed
at high pressure onto tube trailers.
Tube trailers are transported
to a decanting (daughter) station
at the DX process plant. The tube
trailer is connected to apparatus
at the decanting station where
the pressure is reduced to the
correct pressure for use by the
end use customer.
------------------------- -----------------------------------------------------------------
Costs The derivation of, or Capital Cost :
assumptions made, The Capital Cost Estimate is a
regarding full AACEI Class IV Estimate (-15
projected capital costs to 30%, +20 to 50%)), based on
in the study. an equipment factored methodology
The methodology used to where budget prices were obtained
estimate operating for all equipment with an expected
costs. value higher than $50,000 all
Allowances made for the other equipment was factored as
content of deleterious a percentage of the total of the
elements. budget quotes received.
The derivation of The estimate includes the total
assumptions made of direct field costs, direct field
metal support costs, indirect costs
or commodity price(s), and contingency of approximately
for the principal 22% of the direct + indirect costs.
minerals All costs are reported in 4th
and co- products. quarter 2019 US dollars with an
The source of exchange allowance of one year's escalation
rates used in the study. at 1.5% per annum. No management
Derivation of reserve is included.
transportation charges. Design and estimating of direct
The basis for costs for solution mining and
forecasting or source of drilling area was performed by
treatment Innovare Technologies (Innovare).
and refining charges, Engcomp provided the design and
penalties for failure estimate for the electrical infrastructure
to meet specification, for these areas. Design and estimating
etc. of direct costs for the process
The allowances made for plant was completed by Engcomp
royalties payable, with support from Innovare. Equipment
both Government and vendors were issued procurement
private. packages and budgetary quote pricing
used for the project was obtained.
Design and estimating of direct
costs for off-site infrastructure
was performed by Kore Potash and
their third-party service providers.
Contingency was estimated by Engcomp.
Indirect costs were estimated
by Engcomp and Kore Potash.
Engcomp consolidated the overall
estimate.
Operating Cost :
Operating costs were estimated
from first principles using quoted
rates, estimated consumption,
forecast labour complements and
remuneration estimates.
Operating Cost covering the Life
of Mine (18 years) has been estimated
in US$. They include costs for
Electric power, Fuel, Gas, Labour,
Maintenance parts, Operating Consumables,
General and Administration costs
and Contract for Employee Facilities.
Ocean freight transportation estimate
was based on shipping costs for
10-12 kt ships specifically for
the African market
Mine Closure cost estimated in
accordance with a Conceptual Rehabilitation
and Closure Plan developed during
the PFS
State mineral royalties of 3%
of Gross Revenue applies
Other criteria
The marketed K60 MoP will comprise
at least 95% KCl, with a maximum
of 0.2% Mg and 0.3% Insolubles.
------------------------- -----------------------------------------------------------------
Revenue factors The derivation of, or Head grade, recovery and product
assumptions made grade forecasts were based on
regarding the PFS results.
revenue factors Commodity prices were informed
including head grade, by Argus Media who provided an
metal African specific forecast of selling
or commodity price(s) prices until 2033 in real 2019
exchange rates, terms.
transportation
and treatment charges,
penalties, net smelter
returns, etc.
The derivation of
assumptions made of
metal
or commodity price(s),
for the principal
metals,
minerals and
co-products.
------------------------- -----------------------------------------------------------------
Market assessment The demand, supply and Based on Argus Media estimates,
stock situation for global potash demand is forecast
the particular to grow from 71 Mt in 2022 to
commodity, consumption 87 Mt by 2033 and global nameplate
trends potash capacity to increase from
and factors likely to 107 Mt by the end of 2022, reaching
affect supply and demand 135 Mt by 2033.
into the future. The Argus Media forecast for African
A customer and consumption is an increase from
competitor analysis 1.4Mt in 2022 to 1.9Mt in 2033.
along with The Company's current market strategy
the identification of therefore is focused on servicing
likely market windows the African market with any excess
for the product. being sold into Brazil.
Price and volume MoP prices were based on forecasts
forecasts and the basis from Argus Media.
for For DX PFS, a price profile has
these forecasts. been developed using the information
For industrial minerals provided by Argus, specifically
the customer for the African potash market.
specification, The following assumptions were
testing and acceptance used to develop the pricing profile
requirements prior to for DX PFS:
a supply contract. 1. Weighted average Argus forecast
MoPG CFR price for South Africa,
Nigeria and Morocco from 2020
to 2033;
2. Weightings based on total imported
MoP volumes for each of these
markets;
3. After 2033, prices are assumed
to stay flat at 2033 levels until
the end of mine life;
Customer specifications are based
on K60 product, which means the
MoP product has a minimum K2O
content of 60%, corresponding
to a KCl content of 95%. Product
will be sampled regularly on site
and tested in a site-based laboratory
to ensure product grade is consistently
met. Product that does not satisfy
grade will be removed from the
product stream and reprocessed
------------------------- -----------------------------------------------------------------
Economic The inputs to the Key valuation assumptions and
economic analysis to (sources)
produce Production - LoM of 18 years at
the net present value nominal 400,000 tpa MoP production.
(NPV) in the study, the Single MoP product types - White
source and confidence of Granular MoP
these economic inputs Average LoM CFR price of US$422/t
including estimated MoP (Argus)
inflation, discount Ex-mine LoM average operating
rate, cost of US$65.26/t MoP, Real (PFS
etc. estimate)
NPV ranges and FOB LoM average operating cost
sensitivity to of US$86.61/t MoP, Real (PFS estimate)
variations in LoM Shipping of US$28/t MoP Real
the significant (PFS estimate)
assumptions and inputs. Project capital period 21 months,
deferred capital period 6 months,
sustaining capital 216 months
(PFS outcome)
Total Nominal: Project Capital
US$ 286 million (PFS estimate)
Deferred Capital US$270,000 (PFS
estimate)
Sustaining Capital US$33.54/MoP
t, Real (PFS estimate)
Fiscal parameters: Company tax
rate (15%), tax holidays (5 years
at 0% + 5 years at 7.5%) (Mining
Convention)
Royalties 3% (Mining Convention)
Government free carry (10%) (Mining
Convention)
Other minor duties and taxes (Mining
Convention)
The PFS Real NPV at real discount
rate of 10% is US$319 million
(as at the date just prior to
commencement of construction of
31 August 2021 in Q4 2019 money
terms), and Real IRR is 22.9%
Payback period: approximately
6.0 years from first capital and
4.3 years from first production
Pre-tax margin: 70%.
Highest sensitivities to Price
and Capital. Each percentage movement
in Price has an approximate US$9
M movement in NPV(10) , and each
percentage movement in Project
Capital has an approximate US$3
M impact on NPV(10) .
------------------------- -----------------------------------------------------------------
Social The status of agreements Approval of an ESIA is a prerequisite
with key stakeholders for beginning construction of
and matters leading to a mining project in the Republic
social license to of Congo. The Dougou ESIA, initially
operate. approved on 9 May 2017, will require
to be amended to reflect the design
changes made to the DX Project
as part of the Pre-Feasibility
Study ("PFS"). This process is
planned to take place concurrently
with the execution of the DFS.
The Company shall carry out their
construction operations in compliance
with the environmental and social
management plan as part of the
approved ESIA and will be subject
to Regulator's environmental management
compliance audits. Upon construction
completion, the DX project will
be subject to the Minister of
Tourism and Environment's final
approval of the construction activities
environmental and social management
compliance allowing the Company
to effectively commission and
start the mining and processing
operations for the export of 400,000
tpa from the DX Mining Licence.
The DX Mining Licence is held
within subsidiary which will be
owned 10% by the ROC government.
Socio-economic, cultural heritage,
archeological and livelihood baseline
reports have been prepared and
approved as part of the ESIA baseline
process.
Kore Potash has implemented a
Stakeholder Engagement Process
and is actively engaging with
a wide range of project stakeholders,
including conservation NGO's,
adjacent National Parks, the regulator
and communities.
Three separate land take corridors
have been identified, the Service
Corridor Process Plant and wellfield,
the HV line and the Gas Pipeline:
For each corridor a declaration
d'utilite publique (DUP) will
be required to be declared by
the Ministry of Land Affairs
Physical displacement is minimal
with most actions requiring livelihood
restoration
There are believed to be no social
related issues that do not have
a reasonable likelihood of being
resolved.
------------------------- -----------------------------------------------------------------
Other To the extent relevant, DX is currently compliant with
the impact of the all legal and regulatory requirements
following subject to final submission for
on the project and / or approval of the DX Environmental
on the estimation and and Social Impact Assessment Amendments
classification of the (which was required following
Ore Reserves: the project design changes implemented
Any identified material during the PFS) which will be
naturally occurring done concurrently with the envisaged
risks. DFS for DX project.
The status of material A mining convention entered into
legal agreements and between the RoC government and
marketing arrangements. the Companies on 8 June 2017 and
The status of gazetted into law on 29 November
governmental agreements 2018 concludes the framework envisaged
and approvals in the 25-year renewable Dougou
critical to the Mining Licence granted in 9 May
viability of the 2017 covers the DX Project which
project, such is part of the Dougou Mining Licence.
as mineral tenement The Mining Convention provides
status, and government certainty and enforceability of
and statutory approvals. the key fiscal arrangements for
There must be reasonable the development and operation
grounds to expect that of DX Mining Licences, which amongst
all necessary Government other items include import duty
approvals will be and VAT exemptions and agreed
received within the tax rates during mine operations.
timeframes The Mining Convention provides
anticipated in the strengthened legal protection
Pre-Feasibility or of the Company's investments in
Feasibility the Republic of Congo through
study. Highlight and the settlement of disputes by
discuss the materiality international arbitration.
of any unresolved matter To the best of the Competent Person's
that is dependent knowledge, there is no reason
on a third party on to assume any government permits
which extraction of the and licences or statutory approvals
reserve is contingent. will not be granted. There are
no unresolved matters upon which
extraction is contingent.
------------------------- -----------------------------------------------------------------
Classification The basis for the The Indicated Mineral Resources
classification of the were used for the estimation of
Ore Probable Ore Reserves.
Reserves into varying The conversion of Indicated Mineral
confidence categories. Resource to Probable Ore Reserve
Whether the result reflects the Competent Person's
appropriately reflects view of the deposit.
the
Competent Person's view
of the deposit.
The proportion of
Probable Ore Reserves
that
have been derived from
Measured Mineral
Resources
(if any).
------------------------- -----------------------------------------------------------------
Audits or reviews The results of any The Ore Reserve has been peer
audits or reviews of Ore reviewed and is in line with the
Reserve estimates. current industry standards.
------------------------- -----------------------------------------------------------------
Discussion of Where appropriate a In the Competent Person's view,
relative accuracy/ statement of the the DX PFS achieves the required
confidence relative level of confidence in the modifying
accuracy and confidence factors to justify the estimation
level in the Ore Reserve of an Ore Reserve. All relevant
estimate using an modifying factors were considered
approach or procedure in the Ore Reserve Estimation
deemed and deemed to be modelled at a
appropriate by the level of accuracy appropriate
Competent Person. For to the classification. A global
example, change of greater than 10% is
the application of considered unlikely.
statistical or The PFS determined a mine plan
geostatistical and production schedule that is
procedures to quantify technically achievable and economically
the relative accuracy viable.
of the reserve within The capital and operating costs
stated confidence are based on the outcome of a
limits, prefeasibility study.
or, if such an approach Factors that could affect the
is not deemed Ore Reserves locally include;
appropriate, greater dip of the seam in some
a qualitative discussion areas, unexpected geological anomalies,
of the factors which areas of unexpected carnallite,
could affect the unexpected challenges with mining
relative accuracy and the TSS. The geological model
confidence attempted to model these features
of the estimate. to a high level of detail and
The statement should are 'passed-on' into the Ore Reserve
specify whether it and mine plan.
relates While local variation from the
to global or local mine plan in the above are expected,
estimates, and, if is considered unlikely that these
local, would lead to significant negative
state the relevant change in the Ore Reserves, and
tonnages, which should that positive changes are equally
be likely.
relevant to technical For the PFS, data from existing
and economic evaluation. potash mining operations was used
Documentation should to guide and check the design
include assumptions made and cost estimates. The input
and the procedures used. data and design are likely to
Accuracy and confidence be realistic and achievable in
discussions should the Competent Persons view.
extend to specific
discussions of any
applied
modifying factors that
may have a material
impact on Ore Reserve
viability, or for which
there are remaining
areas of uncertainty at
the current study stage.
It is recognized that
this may not be possible
or appropriate in all
circumstances. These
statements of relative
accuracy and confidence
of the estimate should
be compared with
production
data, where available.
------------------------- -----------------------------------------------------------------
APPIX D
Kore Potash Mineral Resources and Ore Reserves as of 13 May 2020
Kore's Potash Mineral Resource and Ore Reserves - Gross and according to future 90% interest (10% by the RoC government)
KOLA SYLVINITE DEPOSIT
Gross Net Attributable (90% interest)
----------------------------------- ------------------------------------
Mineral Resource Sylvinite Average Contained Sylvinite Average Contained
Category Million Grade KCl million Million Grade KCl million
Tonnes KCl % tonnes Tonnes KCl % tonnes
---------- -------- ------------- ----------- -------- -------------
Measured 216 34.9 75.4 194 34.9 67.8
---------- -------- ------------- ----------- -------- -------------
Indicated 292 35.7 104.3 263 35.7 93.9
---------- -------- ------------- ----------- -------- -------------
Sub-Total Measured
+ Indicated 508 35.4 179.7 457 35.4 161.7
---------- -------- ------------- ----------- -------- -------------
Inferred 340 34.0 115.7 306 34.0 104.1
---------- -------- ------------- ----------- -------- -------------
TOTAL 848 34.8 295.4 763 34.8 265.8
---------- -------- ------------- ----------- -------- -------------
Gross Net Attributable (90% interest)
Ore Reserve Category Sylvinite Average Contained Sylvinite Average Contained
Million Grade KCl million Million Grade KCl million
Tonnes KCl % tonnes Tonnes KCl % tonnes
---------- -------- ------------- ----------- -------- -------------
Proved 62 32.1 19.8 56 32.1 17.9
---------- -------- ------------- ----------- -------- -------------
Probable 91 32.8 29.7 82 32.8 26.7
---------- -------- ------------- ----------- -------- -------------
TOTAL 152 32.5 49.5 137 32.5 44.6
---------- -------- ------------- ----------- -------- -------------
Ore Reserves are not in addition to Mineral Resources but are derived
from them by the application of modifying factors
DOUGOU EXTENSION SYLVINITE DEPOSIT (HWSS and TSS)
Gross Net Attributable (90% interest)
----------------------------------- ------------------------------------
Mineral Resource Sylvinite Average Contained Sylvinite Average Contained
Category Million Grade KCl million Million Grade KCl million
Tonnes KCl % tonnes Tonnes KCl % tonnes
---------- -------- ------------- ----------- -------- -------------
Measured - - - - - -
---------- -------- ------------- ----------- -------- -------------
Indicated 79 39.1 30.8 71 39.1 27.7
---------- -------- ------------- ----------- -------- -------------
Sub-Total Measured
+ Indicated 79 39.1 30.8 71 39.1 27.7
---------- -------- ------------- ----------- -------- -------------
Inferred 66 40.4 26.7 59 40.4 24.0
---------- -------- ------------- ----------- -------- -------------
TOTAL 145 39.7 57.5 130 39.7 51.8
---------- -------- ------------- ----------- -------- -------------
Gross Net Attributable (90% interest)
Ore Reserve Category Sylvinite Average Contained Sylvinite Average Contained
Million Grade KCl million Million Grade KCl million
Tonnes KCl % tonnes Tonnes KCl % tonnes
---------- -------- ------------- ----------- -------- -------------
Proved - - - - - -
---------- -------- ------------- ----------- -------- -------------
Probable 17.7 41.7 7.4 16 41.7 6.6
---------- -------- ------------- ----------- -------- -------------
TOTAL 17.7 41.7 7.4 16 41.7 6.6
---------- -------- ------------- ----------- -------- -------------
Ore Reserves are not in addition to Mineral Resources but are derived
from them by the application of modifying factors
DOUGOU CARNALLITE DEPOSIT
Gross Net Attributable (90% interest)
------------------------------------- -------------------------------------
Mineral Resource Million Average Contained Million Average Contained
Category Tonnes Grade KCl million Tonnes Grade KCl million
carnallite KCl % tonnes carnallite KCl % tonnes
------------ -------- ------------- ------------ -------- -------------
Measured 148 20.1 29.7 133 20.1 26.8
------------ -------- ------------- ------------ -------- -------------
Indicated 920 20.7 190.4 828 20.7 171.4
------------ -------- ------------- ------------ -------- -------------
Sub-Total Measured
+ Indicated 1,068 20.6 220.2 961 20.6 198.2
------------ -------- ------------- ------------ -------- -------------
Inferred 1,988 20.8 413.5 1789 20.8 372.2
------------ -------- ------------- ------------ -------- -------------
TOTAL 3,056 20.7 633.7 2750 20.7 570.3
------------ -------- ------------- ------------ -------- -------------
KOLA CARNALLITE DEPOSIT
Gross Net Attributable (90% interest)
------------------------------------- -------------------------------------
Mineral Resource Million Average Contained Million Average Contained
Category Tonnes Grade KCl million Tonnes Grade KCl million
carnallite KCl % tonnes carnallite KCl % tonnes
------------ -------- ------------- ------------ -------- -------------
Measured 341 17.4 59.4 307 17.4 53.5
------------ -------- ------------- ------------ -------- -------------
Indicated 441 18.7 82.6 397 18.7 74.4
------------ -------- ------------- ------------ -------- -------------
Sub-Total Measured
+ Indicated 783 18.1 142.0 705 18.1 127.8
------------ -------- ------------- ------------ -------- -------------
Inferred 1,266 18.7 236.4 1140 18.7 212.8
------------ -------- ------------- ------------ -------- -------------
TOTAL 2,049 18.5 378.5 1844 18.5 340.6
------------ -------- ------------- ------------ -------- -------------
Notes: All Mineral Resource and Ore Reserves are reported in accordance with the JORC Code (2012 edition). Numbers are rounded to the appropriate decimal place. Rounding 'errors' may be reflected in the "totals". The Kola Mineral Resource Estimate was reported 6 July 2017 in an announcement titled 'Updated Mineral Resource for the High -Grade Kola Deposit'. It was prepared by Competent Person Mr. Garth Kirkham, P.Geo., of Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group, and a member of the Association of Professional Engineers and Geoscientists of British Columbia. The Dougou carnallite Mineral Resource estimate was reported on 9 February 2015 in an announcement titled 'Elemental Minerals Announces Large Mineral Resource Expansion and Upgrade for the Dougou Potash Deposit'. It was prepared by Competent Persons Dr. Sebastiaan van der Klauw and Ms. Jana Neubert, senior geologists and employees of ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH and members of good standing of the European Federation of Geologists. The Dougou Extension sylvinite Mineral Resource Estimate is reported herein. Ms. Vanessa Santos, P.Geo. of Agapito Associates Inc., for the Exploration Results and Mineral Resources. Ms. Santos is a licensed professional geologist in South Carolina (Member 2403) and Georgia (Member 1664), USA, and is a registered member (RM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 04058318). The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources or Ore Reserves that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.
APPIX E
Glossary of Terms & Abbreviations
Term Explanation
AACE American Association of Cost Engineers
---------------------------------------------------------------------------------------
a tool which is lowered down the drill-hole to provide a continuous high-resolution
acoustic televiewer oriented ultrasound image of the side-wall
---------------------------------------------------------------------------------------
Albian The uppermost subdivision of the Early/Lower Cretaceous epoch/series. Its
approximate time range is 113.0 +/- 1.0 Ma to 100.5 +/- 0.9 Ma (million years
ago)
---------------------------------------------------------------------------------------
analysis in this case the determination of the content (by weight%) of K, Mg and other
chemical elements
---------------------------------------------------------------------------------------
anhydrite Anhydrous calcium sulphate, CaSO(4) .
---------------------------------------------------------------------------------------
Anhydrite A hard-white mineral consisting of anhydrous calcium sulphate (CaSO(4) )
typical in evaporite deposits
---------------------------------------------------------------------------------------
Anhydrite member A unit comprised mostly of anhydrite and clay
---------------------------------------------------------------------------------------
Aptian a subdivision of the Early or Lower Cretaceous epoch or series and encompasses
the time from 125.0 +/- 1.0 Ma to 113.0 +/- 1.0 Ma
---------------------------------------------------------------------------------------
Aquifer An underground layer of water-bearing permeable rock, rock fractures or unconsolidated
materials
---------------------------------------------------------------------------------------
assay in this case refers to the analysis of the chemical composition of samples
in the laboratory
---------------------------------------------------------------------------------------
Basal Carnallitite Carnallitite that may be present in the immediate footwall of the base (bottom)
of any of the targeted sylvinite seams
---------------------------------------------------------------------------------------
bischofite Hydrous magnesium chloride minerals with formula, MgCl(2) --6H(2) O and CaMgCl(2)
--12H(2) O
---------------------------------------------------------------------------------------
block model a 3D model created in mining software to 'fill' a geological domain with
blocks of given dimensions, into which the attributes of the deposit are
estimated
---------------------------------------------------------------------------------------
brine Brine is a high-concentration solution of salt in water
---------------------------------------------------------------------------------------
carnallite an evaporite mineral, a hydrated potassium magnesium chloride with formula
KMgCl. (3) -- 6(H(2) O)
---------------------------------------------------------------------------------------
carnallitite a rock comprised predominantly of the minerals carnallite and halite
---------------------------------------------------------------------------------------
Cavern An underground void created by the dissolution and removal of water-soluble
underground salts
---------------------------------------------------------------------------------------
classification (of The determination of the level of confidence of the estimations, in this
Resources and Reserves) case using the categories of the JORC Code
---------------------------------------------------------------------------------------
clastic Clastic rocks are composed of fragments, or clasts, of pre-existing minerals
and rock.
---------------------------------------------------------------------------------------
clay A fine-grained sedimentary rock.
---------------------------------------------------------------------------------------
collars (drill-hole) the top of the drill-hole
---------------------------------------------------------------------------------------
Competent Person A 'Competent Person' is a minerals industry professional who is a Member
or Fellow of The Australasian Institute of Mining and Metallurgy, or of the
Australian Institute of Geoscientists, or of a 'Recognised Professional Organisation'
(RPO), as included in a list available on the JORC and ASX websites.
---------------------------------------------------------------------------------------
composited (sample) method by which drill-hole intersection attributes such as grade are combined
to a different length by averaging and/or cutting
---------------------------------------------------------------------------------------
conformable refers to layers of rock between which there is no loss of the geological
record
---------------------------------------------------------------------------------------
core (drill) the cylindrical length of rock extracted by the process of diamond drill
coring
---------------------------------------------------------------------------------------
Cost and Freight Cost and freight are a legal term in international trade. In a contract specifying
(CFR) that a sale is made CFR, the seller is required to arrange for the carriage
of goods by sea to a port of destination and provide the buyer with the documents
necessary to obtain the goods from the carrier
---------------------------------------------------------------------------------------
Cretaceous the last of the three periods of the Mesozoic Era. The Cretaceous began
145.0 million years ago and ended 66 million years ago
---------------------------------------------------------------------------------------
cross-section an image showing a slice (normally vertical) through the sub-surface
---------------------------------------------------------------------------------------
Cut-off-grade (CoG) The lowest grade, or quality, of mineralised material that qualifies as economically
mineable and available in a given deposit. May be defined on the basis of
economic evaluation, or on physical or chemical attributes that define an
acceptable product specification.
---------------------------------------------------------------------------------------
cutting (of grade) a method by which samples above or below a certain grade are assigned a lower
or higher grade to remove the influence of anomalous values
---------------------------------------------------------------------------------------
(Definitive) Feasibility A (Definitive) Feasibility Study is a comprehensive technical and economic
Study study of the selected development option for a mineral project that includes
appropriately detailed assessments of applicable Modifying Factors together
with any other relevant operational factors and detailed financial analysis
that are necessary to demonstrate at the time of reporting that extraction
is reasonably justified (economically mineable). The results of the study
may reasonably serve as the basis for a final decision by a proponent or
financial institution to proceed with, or finance, the development of the
project. The confidence level of the study will be higher than that of a
Pre-Feasibility Study.
---------------------------------------------------------------------------------------
diamond coring the method of extracting cores of rock by using a circular diamond-tipped
bit (though may be tungsten carbide)
---------------------------------------------------------------------------------------
dip in this case refers to the angle of inclination of a layer of rock, measured
in degrees or % from horizontal
---------------------------------------------------------------------------------------
dolomite anhydrous carbonate mineral composed of calcium magnesium carbonate, ideally
CaMg(CO(3) )(2) . The term is also used for a sedimentary carbonate rock
composed mostly of the mineral dolomite. Mineral form is indicated by italic
font
---------------------------------------------------------------------------------------
domaining (mineral) process by which a spatial zone is identified by within which material is
modelled/expected to be of a type or types that can be treated in the same
way, in this case in terms of resource estimation
---------------------------------------------------------------------------------------
drill-hole a hole drilled to obtain samples of the mineralization and host rocks, also
known as boreholes or just holes
---------------------------------------------------------------------------------------
Engineering, Procurement, Forms of engineering contract where EPC is generally in the form of a fixed
Construction (EPC) price with risk of delivery sitting with the contractor while EPCM the contractor
and Engineering, acts for and behalf of the owner on a re-imbursible basis and the risk of
Procurement, Construction project cost and time overruns sits more with the owner.
and Management (EPCM)
---------------------------------------------------------------------------------------
evaporite Sediments chemically precipitated due to the evaporation of an aqueous solution
or brine
---------------------------------------------------------------------------------------
extraction ratio refers to the amount if mineralized material mined as a ratio of the amount
that is left in place
---------------------------------------------------------------------------------------
fault A planar fracture or discontinuity in a volume of rock, across which there
has been significant displacement as a result of rock mass movement.
---------------------------------------------------------------------------------------
Footwall The floor of the seam or mine opening (room)
---------------------------------------------------------------------------------------
gamma-ray A gamma ray or gamma radiation is penetrating electromagnetic radiation arising
from the radioactive decay of atomic nuclei.
---------------------------------------------------------------------------------------
Geological Anomalies Features that affect the integrity of the evaporite and overlying rocks found
in many potash deposits and depending on the severity of the type and severity
of the anomaly, may represent a zone of hydrogeological risk due to connection
between the evaporite (hosting the potash) and water bearing cover rocks
above.
---------------------------------------------------------------------------------------
geotechnical Refers to the physical behaviour of rocks, particularly relevant for the
Mine design requiring geotechnical engineering
---------------------------------------------------------------------------------------
graben A graben is a basin bound by normal faults either side, formed by the subsidence
of the basin due to extension
---------------------------------------------------------------------------------------
grade in this case the amount of potassium, expressed as potassium chloride (KCl)
---------------------------------------------------------------------------------------
gridding a term used to refer to estimation of data into a grid of cells from data
values spaced more widely than the cells
---------------------------------------------------------------------------------------
gypsum soft sulfate mineral composed of calcium sulfate dehydrate, with the chemical
formula CaSO. (4) --2H(2) O.
---------------------------------------------------------------------------------------
halite The mineral form of sodium chloride (NaCl), salt.
---------------------------------------------------------------------------------------
horst a horst is a raised fault block bounded by normal faults. A horst is a raised
block of the Earth's crust that has lifted, or has remained stationary, while
the land on either side (grabens) have subsided
---------------------------------------------------------------------------------------
Hydrogeology The branch of geology concerned with the distribution and movement of groundwater
in the subsurface
---------------------------------------------------------------------------------------
Indicated Mineral An 'Indicated Mineral Resource' is that part of a Mineral Resource for which
Resource quantity, grade (or quality), densities, shape and physical characteristics
are estimated with sufficient confidence to allow the application of Modifying
Factors in sufficient detail to support mine planning and evaluation of the
economic viability of the deposit. Geological evidence is derived from adequately
detailed and reliable exploration, sampling and testing gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes, and is sufficient to assume geological and grade (or quality)
continuity between points of observation where data and samples are gathered.
An Indicated Mineral Resource has a lower level of confidence than that applying
to a Measured Mineral Resource and may only be converted to a Probable Ore
Reserve.
---------------------------------------------------------------------------------------
Inferred Mineral An 'Inferred Mineral Resource' is that part of a Mineral Resource for which
Resource quantity and grade (or quality) are estimated on the basis of limited geological
evidence and sampling. Geological evidence is sufficient to imply but not
verify geological and grade (or quality) continuity. It is based on exploration,
sampling and testing information gathered through appropriate techniques
from locations such as outcrops, trenches, pits, workings and drill holes.
An Inferred Mineral Resource has a lower level of confidence than that applying
to an Indicated Mineral Resource and must not be converted to an Ore Reserve.
It is reasonably expected that the majority of Inferred Mineral Resources
could be upgraded to Indicated Mineral Resources with continued exploration.
---------------------------------------------------------------------------------------
insoluble material in this report, refers to material that cannot be dissolved by water such
as organic material, clay, quartz, anhydrite
---------------------------------------------------------------------------------------
JORC Code (Australasian) Joint Ore Reserves Committee requirements for the reporting
of Exploration Results, Mineral Resources and Ore Reserves (2012 edition)
---------------------------------------------------------------------------------------
Life-of-Mine (LoM) The duration in years and months from commencement of mining to the end of
mining
---------------------------------------------------------------------------------------
lithological refers to the observed characteristics if a rock type (or lithology)
---------------------------------------------------------------------------------------
Measured Mineral A 'Measured Mineral Resource' is that part of a Mineral Resource for which
Resource quantity, grade (or quality), densities, shape, and physical characteristics
are estimated with confidence sufficient to allow the application of Modifying
Factors to support detailed mine planning and final evaluation of the economic
viability of the deposit. Geological evidence is derived from detailed and
reliable exploration, sampling and testing gathered through appropriate techniques
from locations such as outcrops, trenches, pits, workings and drill holes,
and is sufficient to confirm geological and grade (or quality) continuity
between points of observation where data and samples are gathered. A Measured
Mineral Resource has a higher level of confidence than that applying to either
an Indicated Mineral Resource or an Inferred Mineral Resource. It may be
converted to a Proved Ore Reserve or under certain circumstances to a Probable
Ore Reserve.
---------------------------------------------------------------------------------------
Metallurgical recoveries The % of the contained KCl that can be extracted from the ore by the processing
---------------------------------------------------------------------------------------
Mine Gate Cost Cost of getting product to mine gate, generally ex-works plus any additional
storage and transport costs to mine gate
---------------------------------------------------------------------------------------
Mineral Deposit A mineral deposit is a natural concentration of minerals in the earth's crust.
---------------------------------------------------------------------------------------
Mineral Reserve the economically mineable part of a Measured and/or Indicated Mineral Resource.
It includes diluting materials and allowances for losses, which may occur
when the material is mined or extracted and is defined by studies at Pre-Feasibility
or Feasibility level as appropriate that include application of Modifying
Factors. Such studies demonstrate that, at the time of reporting, extraction
could reasonably be justified
---------------------------------------------------------------------------------------
Mineral Resource A 'Mineral Resource' is a concentration or occurrence of solid material of
economic interest in or on the Earth's crust in such form, grade (or quality),
and quantity that there are reasonable prospects for eventual economic extraction.
The location, quantity, grade (or quality), continuity and other geological
characteristics of a Mineral Resource are known, estimated or interpreted
from specific geological evidence and knowledge, including sampling. Mineral
Resources are sub-divided, in order of increasing geological confidence,
into Inferred, Indicated and Measured categories.
---------------------------------------------------------------------------------------
mineralised/mineralisation a natural concentration of an economic commodity within the earth's crust,
in this case potassium
---------------------------------------------------------------------------------------
Mining royalty Cost payable to the government of RoC as documented din the mining convention
---------------------------------------------------------------------------------------
modelling (resource) modelling refers to the creation of outlines in 2D or 3D for geological domains
or structures
---------------------------------------------------------------------------------------
Muriate of Potash The saleable form of potassium chloride, comprising a minimum of 95% KCl
(MoP)
---------------------------------------------------------------------------------------
Ore and orebody Ore is the economically and technically mineable material. The orebody is
the mineable part of the deposit comprising the Ore Reserves
---------------------------------------------------------------------------------------
Ore Reserve The economically mineable part of a Measured and/or Indicated Mineral Resource.
It includes diluting materials and allowances for losses, which may occur
when the material is mined or extracted and is defined by studies at Pre-Feasibility
or Feasibility level as appropriate that include application of Modifying
Factors. Such studies demonstrate that, at the time of reporting, extraction
could reasonably be justified
---------------------------------------------------------------------------------------
paleo-topography topography of an ancient land surface
---------------------------------------------------------------------------------------
pillars (in mining) the columns of rock left in place in mining to support the mine opening,
either within the mined out areas (rooms) or adjacent to them
---------------------------------------------------------------------------------------
potash refers to any of various mined and manufactured salts that contain potassium
in water-soluble form. In this report generally refers to the potassium bearing
rock types
---------------------------------------------------------------------------------------
Pre-Feasibility Study A Preliminary Feasibility Study (Pre-Feasibility Study) is a comprehensive
study of a range of options for the technical and economic viability of a
mineral project that has advanced to a stage where a preferred mining method,
in the case of underground mining, or the pit configuration, in the case
of an open pit, is established and an effective method of mineral processing
is determined. It includes a financial analysis based on reasonable assumptions
on the Modifying Factors and the evaluation of any other relevant factors
which are sufficient for a Competent Person, acting reasonably, to determine
if all or part of the Mineral Resources may be converted to an Ore Reserve
at the time of reporting. A Pre-Feasibility Study is at a lower confidence
level than a Feasibility Study.
---------------------------------------------------------------------------------------
pycnometer A laboratory device used for measuring the density of solids.
---------------------------------------------------------------------------------------
recovery (of drill refers to the amount of core recovered as a % of the amount that should have
core) been recovered if no loss was incurred.
---------------------------------------------------------------------------------------
riffle (splitter) a device used for the separation of crushed or pulverised material into equal
portions
---------------------------------------------------------------------------------------
rift refers to the splitting apart of the earth's crust due to extension, typically
resulting in crustal thinning and normal faulting
---------------------------------------------------------------------------------------
Rock Salt A rock comprising predominantly of the mineral halite
---------------------------------------------------------------------------------------
rock-salt rock comprising predominantly of the mineral halite
---------------------------------------------------------------------------------------
rotary (drilling) a method of drilling using a rotating destructive bit to penetrate the rocks
and using water with various additives referred to as the drilling fluid
or 'mud'
---------------------------------------------------------------------------------------
Salt-back Rock salt between the cavern and the top of the salt member
---------------------------------------------------------------------------------------
sample (core) a length of drill-core that may be tested, for grade or other attributes
---------------------------------------------------------------------------------------
sediment A naturally occurring material that is broken down by processes of weathering
and erosion, and is subsequently transported by the action of wind, water,
or ice, and/or by the force of gravity acting on the particles.
---------------------------------------------------------------------------------------
seismic in this case seismic reflection, a method of exploration geophysics that
uses the principles of seismology to estimate the properties of the Earth's
subsurface from reflected seismic waves. The method requires a controlled
seismic source of energy, such as dynamite or Tovex blast, a specialized
air gun or a seismic vibrator
---------------------------------------------------------------------------------------
Stratigraphy Stratigraphy is a branch of geology concerned with the study of rock layers
and layering. It is primarily used in the study of sedimentary and layered
volcanic rocks
---------------------------------------------------------------------------------------
strike refers to the direction of preferred control of the mineralization be it
structural or depositional. In this direction it is expected that there be
greater correlation of attributes
---------------------------------------------------------------------------------------
strip logs also known as graphic logs, are the graphical display of drill-hole data
such a lithology, typically plotted against depth
---------------------------------------------------------------------------------------
structure here refers to faults, fractures of zones of subsidence that affect the stratigraphy
---------------------------------------------------------------------------------------
sylvinite a rock type comprised predominately of the mineral sylvite and halite
---------------------------------------------------------------------------------------
sylvite an evaporite mineral, potassium chloride (KCl)
---------------------------------------------------------------------------------------
unconformity An unconformity is a buried erosional or non-depositional surface separating
two rock masses or strata of different ages, indicating that sediment deposition
was not continuous
---------------------------------------------------------------------------------------
wireframe a 3D surface created in mining software to enclose a geological domain
---------------------------------------------------------------------------------------
Abbreviations
CFR Cost and Freight
-------------------------------------------------------------
CoG Cut-off Grade
-------------------------------------------------------------
CP Competent Person
-------------------------------------------------------------
DFS Definitive Feasibility Study
-------------------------------------------------------------
DUP Decree D'Utilite Publique
-------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and amortization
-------------------------------------------------------------
EPC Engineering, Procurement and Construction
-------------------------------------------------------------
EPCM Engineering, Procurement and Construction Management
-------------------------------------------------------------
ESIA Environmental and Social Impact Assessment
-------------------------------------------------------------
ESMP Environmental and Social Management Plan
-------------------------------------------------------------
FOB Free on board
-------------------------------------------------------------
HWS Hangingwall Seam
-------------------------------------------------------------
IRR Internal rate of Return
-------------------------------------------------------------
JORC (Australasian) Joint Ore Reserves Committee
-------------------------------------------------------------
K60 MoP product has a minimum K2O content of 60%, corresponding
to a KCl content of 95%.
-------------------------------------------------------------
KCl Potassium Chloride
-------------------------------------------------------------
LoM Life-of-Mine
-------------------------------------------------------------
MoP Muriate of Potash
-------------------------------------------------------------
MoPG Muriate of Potash - Granular
-------------------------------------------------------------
MoPS Muriate of Potash - Standard
-------------------------------------------------------------
MRE Mineral Resource Estimate
-------------------------------------------------------------
Mtpa Million tons per annum
-------------------------------------------------------------
NaCl Sodium Chloride
-------------------------------------------------------------
NPV10 (real) Net Present Value
-------------------------------------------------------------
PFS Pre-Feasibility Study
-------------------------------------------------------------
RAP Resettlement Action Plan
-------------------------------------------------------------
RoC Republic of Congo
-------------------------------------------------------------
ROM Run of Mine
-------------------------------------------------------------
RPO Recognized Professional Organization
-------------------------------------------------------------
SME Society for Mining, Metallurgy and Exploration
-------------------------------------------------------------
SPSA Sintoukola Potash SA
-------------------------------------------------------------
SWI Seawater Intake
-------------------------------------------------------------
SWO Seawater Outfall
-------------------------------------------------------------
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