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KORE POTASH PLC - Kola Project Optimisation Study
2022/06/27 11:16:00Download PDF Stock report
Kola Project Optimisation Study
Kore Potash plc
(Incorporated in England and Wales)
Registration number 10933682
ASX share code: KP2
AIM share code: KP2
JSE share code: KP2
ISIN: GB00BYP2QJ94
(“Kore Potash” or the “Company”)
27 June2022
Kola Project optimisation study outcomes
Kore Potash, the potash development company with 97% ownership of the Kola and DX Potash Projects in the Sintoukola Basin,
located within the Republic of Congo (“RoC”), is pleased to provide additional information on the outcomes of the optimisation
study (“Study”) for the Kola Potash Project (“Kola” or the “Project”).
The Company has completed its review of the Study undertaken by the engineering partner of the Summit Consortium
(“Consortium”), SEPCO Electric Power Construction Corporation (“SEPCO”) as announced in “Kola optimisation study received”
on 1st April 2022.
The Kola production target and forecast financial information has now been updated to incorporate the results of the
optimisation study.
Highlights
• Capital cost is reduced by US$520 million to US$1.83 billion on an engineering, procurement and construction (“EPC”) basis
compared to the DFS capital cost of US$2.35 billion on an equivalent EPC basis.
• Construction period reduced to 40 months from the DFS construction period of 46 months.
• Key financial metrics improved on DFS outcomes (at potash pricing averaging US$360/ tonne unchanged from the DFS):
o Kola NPV10 post tax improved to US$1.623 billion
o IRR improved to 20% on ungeared post tax basis
• At a potash price of US$1000/t MoP CFR Brazil (less than current potash price of approximately US$1100/t MOP CFR Brazil)
the Kola financial metrics improve to:
o Kola net present value (“NPV”)10 post tax US$ 9.354 billion
o Internal rate of return (“IRR”) of 49% on ungeared post tax basis
• Kola designed with a nameplate capacity of 2.2 million tonnes per annum (“Mtpa”) of Muriate of Potash (“MoP”)
• MoP production from Kola scheduled over an initial 31 year project life.
• Kola is designed as a conventional mechanised underground potash mine with shallow shaft access. Ore from underground
is transported to the process plant via an overland conveyor approximately 25 km long. After processing, the MoP product
is conveyor transported 11 km to the marine export facility. MoP is conveyed from the storage area onto barges via the
dedicated barge loading jetty and then trans-shipped into ocean going vessels for export.
• These results support moving to the next phase of the Kola development.
• The Consortium has advised that the EPC contract proposal for the construction of Kola will now be submitted to the
Company during August 2022. The EPC proposal will be based on the capital cost and construction schedule from the
optimisation study.
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• The Consortium advises that it intends to provide the financing proposal for the construction cost of Kola after the
Company’s receipt of the EPC proposal and agreement on key EPC terms.
Brad Sampson, Chief Executive Officer of Kore Potash, commented:
“The development of Kola is of global importance. The security of the world’s food supply is at risk as a result of disruptions to
the supply of fertiliser globally. Recent geopolitical events highlight the risks inherent with potash production concentrated
within a small number of companies and locations with operations situated long distances inland far from ports and global
customers. New potash producers are required in locations closer to customers. With low capital intensity and low production
costs, Kola is ideally situated to supply high quality potash to meet growing global demand.
“The successful completion of the Kola optimisation study moves us closer to production and we eagerly await delivery of the
construction contract and financing proposals.'
Optimisation Study
On 6 April 2021, Kore Potash announced the signing of a Memorandum of Understanding (“MoU”) with the Consortium for the
optimisation, construction and financing of the Kola Project.
The Study, which represented the first part of the financing process, has been undertaken by SEPCO. The key goals of the Study
were to improve the value of Kola through reductions in the capital cost and by shortening the construction schedule.
During the Study, SEPCO employed two key sub-contractors, China ENFI Engineering Corporation to review the mining,
processing and infrastructure aspects of the Project and CCCC-FHDI Engineering Co Limited to consider the optimisation of the
marine facilities.
A summary of the key assumptions adopted in the Optimisation Study and the DFS that related to Mining, Processing,
Infrastructure, Capital Cost, Operating Cost and Schedule are detailed in this announcement.
The results of this analysis compared with those of the January 2019 DFS are summarised in Table 1 below.
Table 1: Key Project Parameters and Assumptions comparison between DFS and Optimisation Study
Result Unit DFS Production Target Optimisation Study
(January 2019) Production Target
Total MOP production Mt 71 66
Initial project life Years 33 31
Average scheduled mining rate Mtpa ore 7.12 6.8
KCl recovery in process plant % KCl 91.9% 90.4%
Average MOP production per year Mtpa 2.20 Mtpa 2.14 Mtpa
Capital cost EPCM basis+ US$ billion 2.1 -
Capital Cost EPC basis+ US$ billion 2.35 1.83
Deferred capital US$ million 76.4 62.4
Sustaining capital US$/t MOP 10.98 11.20
Construction schedule months 46 40
Steady state operating cost (Mine gate) US$/t MOP 61.70 63.60
Operating cost (CFR Brazil) US$/t MOP 102.50 105.90
Forecast average MoP granular price (CFR Brazil)* US$/t MOP 360 360
Post tax, real un-geared NPV (10% real) US$ million 1,452 1,623
Post tax, real un-geared IRR % 17.2% 20%
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Average EBITDA per annum real US$ million 583 545
Notes: + The capital cost published in conjunction with the DFS was on EPCM basis, the capital cost estimate from optimisation study is on an EPC basis.
* US$360/t is the average future potash price CFR Brazil forecast over the project life.
Table 2: Kola Project financial performance sensitivity to potash pricing
MOP Price NPV 10 IRR Average EBIDTA per annum
US$/t US$ million % US$ million
300 899 15.6 419
360 1,623 19.6 545
500 3,314 27.6 837
1,000 9,354 49.0 1,882
SEPCO’s recommended improvements to Kola potentially reduce the Kola capital cost to US$1.83 billion on an EPC basis. The
US$1.83 billion capital cost includes US$118 million for Kore’s owner’s costs during the EPC phase.
The capital cost for Kola published in conjunction with the DFS was US$2.1 billion on an Engineering, Procurement and
Construction Management (“EPCM”) basis. The DFS capital cost on an equivalent Engineering, Procurement and Construction
(“EPC”) basis to the SEPCO optimisation study capital cost was US$2.35billion.
The optimisation study has thus identified reductions in the capital cost of Kola of approximately US$520 million.
Prior to commencement of the Optimisation Study SEPCO set targets to reduce the capital cost to US$1.65 billion and to
shorten the construction schedule by 6 months. The Optimisation Study achieved the targeted reduction in the construction
schedule. Despite identifying significant cost savings of US$520 million, the targeted capital cost of US$1.65 billion was not
achieved mostly as a result of a higher than anticipated inflationary environment.
The Summit consortium has advised that the strongly positive outcomes of the Optimisation Study continue to support their
financing of the Kola Project.
The Consortium have further advised the Company that the EPC contract proposal will now be provided to the Company in
August 2022. It also advises that the financing proposal for Kola will be provided to the Company within 2 months of Kore’s
agreement on the terms of the EPC contract.
Key assumptions related to the ore reserves, production target and financial evaluation of the project have been updated in
Appendix B of this announcement.
Ore Reserves and Mineral Resources
The Kola Potash Ore Reserves (Table 3) are based on the Kola Sylvinite Mineral Resources (Table 4) as reported on 6 July 2017.
Further detail on the Ore Reserve Estimate is provided in Appendix B: (Summary of Information required according to ASX
listing Rule 5.9.1) and Appendix C: JORC 2012 – Table 1, Section 4 Ore Reserves .All of the Ore Reserves and Mineral Resources
reported here for Kola are Sylvinite.
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Table 3: Kola Sylvinite Ore Reserves
Classification Ore Reserves KCl grade Mg Insolubles
(Mt) (% KCl) (% Mg) (% Insol.)
Proved 61.8 32.1 0.11 0.15
Probable 90.6 32.8 0.10 0.15
Total Ore Reserves 152.4 32.5 0.10 0.15
Table 4: Kola Sylvinite Mineral Resources (inclusive of Ore Reserves)
Million Tonnes KCl Mg Insoluble
Classification
(Mt) (% KCl) (% Mg) (% Insol.)
Total Measured 215.7 35.0 0.08 0.13
Total Indicated 292.0 35.7 0.06 0.14
Total Inferred 340.0 34.0 0.08 0.25
Total Mineral Resources 847.7 34.9 0.08 0.18
Reasonable Basis for Forward-Looking Statements (including production target and forecast financial information) and Ore
Reserves
This release, inclusive of Appendix A: Summary of Kola Optimisation Study, 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 Kola Project when required.
The detailed reasons for these conclusions are outlined throughout this release. All material assumptions, including the JORC
modifying factors, upon which the Ore Reserves, 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 2012 and the ASX and LSE: AIM Listing Rules.
The Ore Reserves (Proved and Probable) and Inferred Mineral Resources underpinning the production target have been
prepared by a competent person in accordance with the requirements of JORC 2012 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 Appendix C).
The production target is based on average scheduled annual production of 2.1 Mtpa MoP over a 31 year life. Ore Reserves
form 72% of the processed material and Inferred Mineral Resources form 28% of the processed material underpinning the
Production Target. No exploration targets underpin the production target. In particular, following exhaustion of the Ore
Reserve during the first 25 years of the mine life, which includes the exploitation of 9.7 Mt of Inferred Mineral Resources (6%
of the total production during that period), the Production Target includes the mining of Inferred Mineral Resources for a
further 6 years. Each of the same modifying factors as used for Ore Reserve determination was considered and applied to this
material in preparing the production target.
There is a lower level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further
exploration will result in the determination of Indicated Mineral Resources or that the production target will be realised,
This announcement has been approved for release by the Board of Kore Potash
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Market Abuse Regulation
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as
it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ('MAR'), and is disclosed in accordance
with the Company's obligations under Article 17 of MAR.
END
For further information, please visit www.korepotash.com or contact:
Kore Potash Tel: +27 84 603 6238
Brad Sampson – CEO
Tavistock Communications Tel: +44 (0) 20 7920 3150
Jos Simson
Emily Moss
Adam Baynes
SP Angel Corporate Finance – Nomad and Joint Tel: +44 (0) 20 7470 0470
Broker
Ewan Leggat
Charlie Bouverat
Shore Capital – Joint Broker Tel: +44 (0) 20 7408 4050
Toby Gibbs
James Thomas
Questco Corporate Advisory - JSE Sponsor Tel: +27 (11) 011 9205
Doné Hattingh
Page 5 of 71
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.
The information relating to Exploration Results and Mineral Resources in this report is based on, or extracted from previous
reports referred to herein, and available to view on the Company’s website www.korepotash.com. The Kola Mineral Resource
Estimate was reported on 6 July 2017 in an announcement titled ‘Updated Mineral Resource for the High-Grade Kola Deposit’.
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 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.
The information in this report that relates to Ore Reserves is based on information compiled or reviewed by, Mo Molavi, P.
Eng., who has read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition). Mr. Molavi is a Competent Person as defined by the
JORC Code 2012 Edition, having a minimum of five years of experience that is relevant to the style of mineralization and type
of deposit described in this report, and to the activity for which he is accepting responsibility. Mr. Molavi is member good
standing of Engineers and Geoscientists of British Columbia (Registration Number 37594) which is an ASX-Recognized
Professional Organization (RPO). Mr. Molavi is a consultant engaged by Kore Potash Plc to review the documentation for Kola
Deposit, on which this report ls based, for the period ended 29 October 2018. Mr. Molavi 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 review of the Ore Reserves.
The information in this report that relates to Valuation of Mineral Assets reflects information compiled and conclusions derived
by Mr. Roodt, who is a qualified Charted Accounted and a member of the South African Institute of Charted Accountants
(SAICA) Mr. Roodt is a consultant of the company, working for Fraser McGill (Pty) Ltd (Fraser McGill). Fraser McGill is a mining
& minerals advisory firm that offer strategic decision-making tools and provide business case solutions that are technically and
financially sound. Fraser McGill do this by translating complex ore body geometries, mining and processing techniques, and
logistics and infrastructure considerations into ‘executive friendly’ decision models and dashboards. Mr. Roodt has sufficient
experience relevant to the Valuation of the Mineral Assets under consideration and to the activity which he is undertaking to
qualify as a Practitioner as defined in the 2015 edition of the ‘Australasian Code for the Public Reporting of Technical
Assessments and Valuations of Mineral Assets’. Mr. Roodt consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears. Mr. Roodt discloses that nor him or his firm takes any responsibility
for any input data in the valuation, as this was obtained directly from the company.
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,
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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
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Appendix A: Summary of Kola Optimisation Study –June 2022
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 (a sub-market of the London Stock
Exchange, 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 flagship Kola Sylvinite
deposit (the “Kola Project”) in the Republic of Congo (RoC), held by the 97%-owned Sintoukola Potash
SA (SPSA). SPSA has 100% ownership of the Kola Mining Lease, on which the Kola Project is located.
The Kola Project is situated in the Kouilou Province of the RoC, within 40 km of the Atlantic Coast and
approximately 70 km north of the port city of Pointe Noire.
The Kola Definitive Feasibility Study (“DFS”) announced on 29 January 2019 considers the mining of the
Kola Sylvinite, and the production of approximately 2.2 million tons per annum (Mtpa) of Muriate of
Potash (MOP) and its export to its target markets and considers all associated infrastructure. It delivers
an economic model based on life of project of 33 years that is based upon 23 production years exploiting
Ore Reserves of 152.4Mt and 9.7 Mt of Inferred Mineral Resource, and an additional 10 production
years exploiting 70 Mt of the remaining Inferred Mineral Resources
In 2019, Kore signed a Memorandum of Understanding (“MoU”) with the Summit Consortium
(“Consortium”) to complete an optimisation study, provide a construction contract proposal and to
present a debt and royalty financing proposal for the full construction cost of Kola. The optimisation
study undertaken by the engineering partner of the Summit Consortium (“Consortium”), SEPCO Electric
Power Construction Corporation (“SEPCO”) with a specific task of reducing the capital cost and
construction schedule has now been completed.
The Kola Optimisation Study considered the mining of the Kola Sylvinite and the production of up to
2.24 million tonnes per annum (Mtpa) of Muriate of Potash (MOP). It delivers an economic model based
on life of project of 31 years that includes 25 production years exploiting Ore Reserves of 152.4Mt and
9.7 Mt of Inferred Mineral Resource mined coincident with Ore Reserves, and an additional 6 production
years exploiting of 49Mt of the remaining Inferred Mineral Resources.
During the Study, SEPCO employed two key sub-contractors, China ENFI to review the mining,
processing and infrastructure aspects of the project and CCCC-FHDI to consider the optimisation of the
marine facilities.
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During the DFS, Kore directly contracted with Met-Chem DRA Global (“MTC”) for the Mineral Resource
Estimate (“MRE”), and SRK Consulting (UK) Limited (“SRK”) for undertaking the Environmental and
Social Impact Assessment (“ESIA”). These have remained unchanged and have been incorporated into
the Optimisation Study.
Figure 1: Location Map showing Optimised Kola Project
(available at www.korepotash.com)
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2. Mineral Resource
The Kola Mineral Resources are summarised in Table 1 below.
The total Measured and Indicated Mineral Resources are 508 Mt with an average grade of 35.4% KCl
and provides the basis for the Ore Reserve statement. Sections 1 to 3 of the JORC 2012 Table 1 Checklist
of Assessment and Reporting Criteria for that Mineral Resource estimate remain unchanged as reported
to shareholders on 6 July 2017, and can be found in Appendix D.
The Company confirms there has been no material change to those Mineral Resources. The Company
advises that the Mineral Resources are inclusive of Mineral Resources to which modifying factors have
been applied to be reported as Ore Reserves.
In accordance with JORC 2012, the Competent Persons (“CP”) for the Kola Mineral Resources Estimate (“MRE”)
is:
o Mr. Kirkham P. Geo of MTC. Mr Kirkham is a member of good standing of the Association of
Professional Engineers and Geoscientists of British Columbia.
Table 1 July 2017 Kola Mineral Resources for Sylvinite
July 2017 - Kola Deposit Potash Mineral Resources - SYLVINITE
Million
KCl Mg Insoluble
Tonnes
Mt % % %
Measured - - - -
Hanging wall Indicated 29.6 58.5 0.05 0.16
Seam Inferred 18.2 55.1 0.05 0.16
Total Mineral Resources 47.8 57.2 0.02 0.16
Measured 153.7 36.7 0.04 0.14
Indicated 169.9 34.6 0.04 0.14
Upper Seam
Inferred 220.7 34.3 0.04 0.15
Total Mineral Resources 544.3 35.1 0.04 0.14
Measured 62.0 30.7 0.19 0.12
Indicated 92.5 30.5 0.13 0.13
Lower Seam
Inferred 59.9 30.5 0.08 0.11
Total Mineral Resources 214.4 30.6 0.13 0.12
Measured - - - -
Indicated - - - -
Footwall Seam
Inferred 41.2 28.5 0.33 1.03
Total Mineral Resources 41.2 28.5 0.33 1.03
Total Mineral Resources 847.7 34.9 0.07 0.13
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3. Ore Reserves
The Kola Ore Reserves are summarised in Table 2 below.
The Kola Sylvinite Ore Reserves are 152.4 Mt with average grade of 32.5% KCl. Sections 4 of the JORC
2012 Table 1 as reported to shareholders on 19 January 2019 has been updated based on the
optimisation study and is included in this announcement in Attachment C.
The original statement of Ore Reserves was prepared by Met-Chem DRA Global and was reported in
accordance with JORC 2012.
In conjunction with the Optimisation Study the Ore Reserves have been reviewed and restated in
accordance with JORC 2012 by the Competent Person (CP) for the Kola Ore Reserves:
o Mr. Molavi P. Eng. of AMC, for the Reserve Review (RR). Mr Molavi is a member of good standing
of the Association of Professional Engineers and Geoscientists of British Columbia.
There is no change to the Kola Sylvinite Ore Reserves from those previously reported
Table 2: Kola Sylvinite Ore Reserves
Seam Classification Ore Reserves KCl Mg Insolubles
Tonnage (%KCl) (%Mg) (%Insol)
(Mt)
Proved 47.3 33.43 0.08 0.15
Upper Seam Probable 58.7 31.83 0.06 0.15
Sylvinite
Total 106.0 32.54 0.07 0.15
Proved 14.5 27.88 0.20 0.13
Lower Seam Probable 23.4 28.35 0.08 0.14
Sylvinite
Total 37.9 28.17 0.13 0.14
Proved
Hanging Wall Probable 8.4 52.09 0.47 0.19
Seam
Sylvinite Total 8.4 52.09 0.47 0.19
Proved 61.8 32.13 0.11 0.15
Probable 90.6 32.81 0.10 0.15
TOTAL
Total Ore 152.4 32.54 0.10 0.15
Reserves
All Sylvinite in the Measured and Indicated Resource category was considered for Ore Reserve conversion
because of the sharp grade boundaries of the Sylvinite seams and the fact that the economic Cut- off Grade
(“CoG”) is below the Mineral Resources CoG of 10% KCl.
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Table 3. Kore’s Sylvinite Mineral Resources and Ore Reserves
KOLA SYLVINITE DEPOSIT
Gross Net Attributable (90%)
Contained
Contained
Mineral Resource Million Grade KCl Million Grade KCl KCl
KCl million
Category Tonnes % Tonnes % million
tonnes
tonnes
Measured 216 34.9 75 194 34.9 68
Indicated 292 35.7 104 263 35.7 94
Sub-Total Measured +
508 35.4 180 457 35.4 162
Indicated
Inferred 340 34.0 116 306 34.0 104
TOTAL 848 34.8 295 763 34.8 266
Gross Net Attributable (90%)
Contained
Contained
Million Grade KCl Million Grade KCl KCl
Ore Reserve Category KCl million
Tonnes % Tonnes % million
tonnes
tonnes
Proven 62 32.1 20 56 34.9 19
Probable 91 32.8 30 82 35.7 29
TOTAL 152 32.5 50 137 35.4 49
Table provided as Gross and Net Attributable (reflecting Kore’s future holding of 90% and the RoC
government 10%), prepared and reported according to the JORC Code, 2012 edition. Table entries are
rounded to the appropriate significant figure.
Ore Reserves are not in addition to Mineral Resources but are derived from them by the application
of modifying factors
4. Mining
The Kola mine design utilised in the optimisation study remains materially unchanged from the design
used in the DFS and is described below:
The Kola orebody is planned to be mined using conventional underground mechanised methods,
extracting the ore within ‘panels’, using Continuous Miner (“CM”) machines of the drum-cutting type.
This is the most widely used method of potash mining world-wide and is considered a low-risk method.
The mine design adopts a relatively typical layout including panels, comprised of rooms and pillars.
Pillars are the support rock left in place to provide stable ground support during the operation of the
mine.
The mine design is based on a minimum mining height of 2.5 m with mining being undertaken by a CM
which is capable of mining seam heights of between 2.5m and 6m. Each panel is accessed by 4 entries.
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Each entry is 8m wide and 3m to 6m high depending on the seam height. The rooms are mined in a
chevron pattern at an angle of 65 degrees from the middle entry, each with a length of approximately
150 m.
Key geotechnical parameters evaluated in the mine design were:
o support interval between potash seams to be minimum of 3 m thick,
o 8 m wide pillar between consecutive production rooms (of 8 m each)
o 50 m wide pillar between Production Panels and between the side of the Production Panel and the
Main Haulage
o minimum thickness of 10 m to 15 m of the Salt Member between the mine openings and the floor
of the overlying Anhydrite Member (referred to as the ‘salt back’)
o stand-off distance of 20 m from any exploration holes
o stand-off distance of between 30 m – 60m from significant geological anomalies
o pillar of 300 m in radius around Shafts
Mine access is provided by two vertical Shafts, each 8 m in diameter. The shafts will be sunk near the
center of the orebody. To provide access to the underground, the Intake Shaft will be equipped with a
hoist and cage system for transportation of persons and material. The Exhaust Shaft will be equipped
with a Pocket Lift conveyor system to continuously convey the mined-out ore to the surface. Both shafts
are approximately 270m deep.
Mining equipment selected for the Kola Project Mine includes a fleet of 7 electrically powered
continuous miners. Ore haulage from the CMs to the feeder breaker apron feeder will be done using
electrically- powered Shuttle Cars, with a rated payload of 30 t and a 250 m power supply cable.
Underground conveyor belts will be used for ore transportation to the shaft. The belt conveyors are
distributed in the haulages and into the working panels near the CM working face. The ore will be placed
on the belts from feeder breakers that are fed by the Shuttle Cars. Belt conveyors will carry the ore
loaded by the feeder breakers to the ore bins. The ore is then conveyed from the ore bins to the vertical
conveyor (Pocket Lift) system located in the Exhaust Shaft.
5. Life of Project schedule
The Life of Mine (LoM) production schedule reported in the optimisation study is as summarized below.
The project Life-of-Mine (LoM) production schedule, including tonnes of Sylvinite, tonnes of waste,
tonnes of the Muriate of Potash (MOP) product, and the average KCl grade of the Run-Of–Mine (ROM)
material, is summarized in Figure 3.
The Life of Ore Reserves for the Kola Project is estimated at 25 years, and full-scale production averaging
approximately 2.14 million tonnes per annum of MOP from Ore Reserves occurs for approximately 21 years
post commissioning and ramp up. During the exploitation of Ore Reserves, 9.7 Mt of Inferred Mineral
Resources are scheduled to be mined and processed. This represents approximately 6.0% of the total
amount of ROM material processed in the first 25 years. This portion of the Inferred Mineral Resources is
at the periphery of the Mineral Resources envelope and immediately adjacent to the Ore Reserves and
logically would be extracted in conjunction with the adjacent Ore Reserves. Figure 4 below shows panel
sequencing for extraction of Ore Reserves.
Page 13 of 71
Figure 3 - Life-of-Mine Production Summary of the Kola Mine
(available at www.korepotash.com)
In addition, scheduling a further portion of Inferred Mineral Resources after the full depletion of Ore
Reserves adds an additional 6 years to the project life. The extraction and processing of these Inferred
Mineral Resources has been included in the Life of Project economic evaluation and extends the
evaluated project life to 31 years.
Approximately 17% (58.5 Mt) of the total Inferred Mineral Resources (340Mt) have been included in
the economic evaluation. There is a low level of geological confidence associated with inferred
mineral resources and there is no certainty that further exploration work will result in the
determination of indicated mineral resources or that the production target itself will be realized. In
preparing the production target and economic evaluation, each of the modifying factors was
considered and applied and the Company consider there are reasonable grounds for the inclusion of
Inferred Mineral Resources in the production target for the Kola Project.
Due to the lower level of confidence associated with Inferred Mineral Resources, a detailed mine
design and extraction plan was not prepared for the Inferred Mineral Resources considered in the
final 6 years of the economic evaluation. The same underlying operating cost and sustaining capital
assumptions for the first 25 years were applied to the final 6 years of the economic evaluation.
Page 14 of 71
No Exploration Target material has been included in the economic evaluation or production target
for the Kola Project.
Page 15 of 71
Figure 4: Life of Ore Reserves Panel Sequencing
(available at www.korepotash.com)
Page 16 of 71
6. Hydrogeology
The DFS hydrogeological investigations have been used in the optimisation
study and there are no changes to the information or assumptions related to
hydrogeology. The hydrogeology test work that was carried out, is summarised
below:
1. Identify sources of fresh water supply for construction and operations.
These tests concluded that process plant area water supply is available at
required rate of 150 m3/hr utilising 5 wells at a depth of 120 m. Similarly,
the required water supply at the mine site of 30 m3/hr can be supplied via
2 wells sunk to 120 m depth. Hydrogeological modelling indicates that
extraction of these quantities of water over the project life will not adversely
impact the aquifers and minor drawdown in the aquifers is expected over
the life of the project.
2. Understand the risk that aquifer system poses to mining operations and how
to mitigate this risk.
The risk of water ingress to the mining areas is a common risk in almost all salt
and potash mines. These mines are typically overlain by water-bearing
sediments. At operating potash mines in Canada and Europe, the
hydrogeological risk is considered higher in areas of disturbance of the
stratigraphy, referred to as geological or subsidence anomalies. At Kola, a
detailed understanding of the aquifers overlying the evaporite rocks, as well
as of the aquitards (or barriers to water flow), has been developed over a
number of years. The conclusions drawn following hydrogeological testing
were:
o A problematic water ingress is considered a low probability as no linear
faults have been identified and all potential subsidence features can be
accurately delineated using (proposed 50 m spaced line) 3D seismic
surveying, to add to the existing 186 km of seismic survey data over the
Deposit.
o No mining or shaft sinking is planned within areas of subsidence. In
addition, horizontal ‘cover drilling’ and ground penetrating radar (“GPR”)
will be employed as forward-looking actions to improve understanding
of ground conditions in advance of mining and further mitigate the risk
of intersecting a structure or area of disturbance.
o The mine design incorporates a 10-15 m minimum 'salt-back' barrier
between the mining area and the anhydrite aquitard, effectively
reinforcing the anhydrite member aquitard layer.
3. Understand the impacts of groundwater composition and the aquifers on the shaft
sinking operation.
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The results of this testing confirmed:
o That ground freezing during shaft sinking will not be impacted by
hydraulic flow or high salinity in the deep aquifer. In fact, low
permeability, and low total dissolve solids (“TDS”) and salinity in both
aquifers is to be expected, supporting the planned freeze-hole spacing
and comparatively low energy consumption for the ground freezing
operation.
o The presence of a thick Anhydrite Member (12 m) overlying the salt
member which acts as an aquitard and reduces risk of water inflow into
the salt member.
7. Metallurgy and Process
Ore from underground is transported to the process plant via an overland
conveyor approximately 24 kilometers long.
A conventional potash flotation plant with a maximum designed production of
2.24 million tonnes per annum of MoP has been designed for the Kola Project.
As a result of the low Insolubles content, no separate process circuit is required
to remove Insoluble material.
The final MOP product is then transported 11 km by conveyor belt from
process plant to the marine export facility at the coast.
A schematic of the full process to extract ore and produce MOP product is
shown in Figure 5.
Figure 5: Process flow from mine to ship
(available at www.korepotash.com)
The design strategy adopted delivers a Process Plant designed to produce 2.2
Mtpa of MOP at a KCl grade of 95.5 %w and that will accommodate the variety
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of ROM feedstock characteristics expected to be encountered during the Life
of the project.
The optimised process design references the DFS metallurgical test work in
2017 and 2018. The description of the test work used in the optimisation study
is summarised below.
Characterisation tests were performed on pure seam samples (USS, LSS and
HWS) expected to be mined as part of the mine schedule. Composite samples
of multiple seams, prepared to be as representative as possible of the expected
range of Run of Mine Ore characteristics foreseen in the mine schedule, were
prepared from the seam samples.
The insoluble content of the samples was less than 0.5%w and close to 0.1%w
in the composite from the USS and LSS. The characterisation of both the
composite samples and the pure seam samples established that the KCl
content in the composite was 32.2%w.
The optimisation study determined the minimum process plant KCl recovery
will be 90.4% and this recovery has been used in the economic evaluation.
8. Marine Facilities
The marine facility used in the optimisation study was based on the DFS design.
A summary of the design is given below:
A trans-shipment arrangement has been designed whereby MOP for export is
loaded from a dedicated Jetty into self-propelled shuttle Barges (two units),
which then travel to the Ocean-Going Vessels (OGVs) anchored 11 nautical
miles (20 km) offshore at a dedicated transshipment zone. The MOP is
transferred from the Barges to the OGVs using a Floating Crane Transhipper
Unit (FCTU).
Transshipping was selected over direct ship loading from the export jetty. The
ocean depth along the coastline is shallow and it was not considered feasible
to construct the length of jetty required to facilitate direct ship loading.
To ensure sufficient year-round operational availability of the Jetty, a
breakwater structure has been designed to shelter the berthing area for Barge
loading operations.
The Jetty has been widened to accommodate both a Seawater Intake (“SWI”)
and a Seawater Outfall (“SWO”) system.
9. Residue and Brine Disposal
The Kola Project’s process residue is combined into a single waste stream
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composed of the NaCl (the brine from product and salt de-brining – bulk of the
effluent) and the residue stream which originates from the insoluble de-brining
circuit within the Process Plant. The residue is collected in onshore
dissolution/dilution tanks and then discharged at sea via the SWO pipe and
diffuser. The discharge stream’s dispersion characteristics comply with the
applicable environmental criteria.
Ecotoxicological test work of the expected discharge confirms that the
discharge at sea of the combined salt and insoluble tails stream does not place
undue stress on the marine environment.
No onshore tails storage facility is therefore required for the Kola Project.
10. General Infrastructure
a. Mine Site – Infrastructure
The Mine Site is located 24 km north and inland of the Project Process Plant
Site which is near the village of Koutou and the current KP2 Exploration
Camp.
The site can be accessed from Pointe Noire on the existing National Highway
“Routes Nationales” RN5 and RN6, via Madingo Kayes.
The Mine Site surface facilities and infrastructure provides access and
support facilities for the Underground Mining operations.
No permanent living accommodation is planned at the Mine Site for the
Operational phase of the Project.
b. Process Plant Site - Infrastructure
The Process Plant Site is located 11 km inland from the marine facilities,
approximately 60 km northwest of Pointe Noire. Run of Mine (ROM) ore is
transferred from the Mine Site via the Overland Long Conveyor (OLC).
The Process Plant Site facilities and infrastructure produces granular
Muriate of Potash (MOP), which is transferred to the Marine Facilities for
export. The main administration, control and support functions
(Maintenance, Storage, Logistics, Training, etc.) are also located within the
Process Plant Site.
c. Mining Complex & Off-Site - Infrastructure
The operation of the Kola Project’s Mine and Process Plant sites are
supported by ancillary sites (Accommodation Camp and Solid Waste
Management Centre) and interconnecting infrastructures (Roads, Power,
Water and Gas supply, and Communications).
The permanent accommodation camp will be located approximately 3 km
from the Process Plant and will accommodate up to 850 people.
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Operational electrical power will be sourced from the RoC national grid. A 57
km long 220 kV transmission line will be built from the Mongo Kamba II
substation north of Pointe Noire to the Process Plant. The power demand is
estimated to be 25 MVA at the Mine Site and 50 MVA at the Process Plant.
The natural gas needed for product drying will be supplied by a 73 km long
pipeline from the M’Boundi gas treatment plant.
Memoranda of Understanding for the supply of electrical power and gas are
in place with the intended suppliers. Supply contracts are planned to be
formalised post the final investment decision for the project.
Raw water will be supplied from wells located at the Mine Site (2 wells), the
process plant site (5 wells) and at the Accommodation Camp (4 wells).
11. Environmental and Social Impact Assessment (ESIA)
The ESIA was prepared managed by SRK Consulting (UK) Limited’s
environmental and social (E&S) team. SRK partnered with “Cabinet
Management & Etudes Environnementales S.A.R.L.” (CM2E), which acted as
the Congolese-registered consultancy.
The Kola ESIA, initially approved on 10 October 2013, was amended to reflect
the design changes made to the Kola Project as part of the Definitive Feasibility
Study (“DFS”) and has been amended to include the service corridors for a gas
pipeline and overhead power line. The application and terms of reference for
amending the ESIA were approved on 12 April 2018 by the Minister of Tourism
and Environment.
The ESIA for the Kola Mining License was approved on 31 March 2020 granting
a 25-year approval.
The change in position of the process plant will now require an amendment to
this ESIA and this will be actioned in the 2nd half of 2022.
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.
12. Potash Marketing
Kore’s potash marketing strategy recognises the supply opportunities arising
from MOP market growth in Brazil, the project’s proximity to Brazil and African
markets and the cost competitiveness of the Kola Project. The DFS and
optimisation study demonstrate that the Kola project can deliver MOP into
Brazilian and ports on the west coast of Africa at lower cost than all other
international suppliers.
The same selling price that was used in the DFS economic evaluation has been
used in the optimisation study.
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The design of the processing plant allows Kore to produce red MOPG (Muriate
of Potash - Granular) for the Brazil market.
13. Capital and Operating Costs
a. Capital Cost
The pre-production Capital Cost for the Kola Project is estimated at US$1.83
billion which includes US$80 million of Contingency, US$55million of
Escalation and US$118 million owners’ costs.
The Capital Cost Estimates, expressed in US dollars, have been developed
for each work breakdown area, and are based on December 2021 prices.
The Capital Cost Estimates are based on Erected Quantities determined by
ENFI’s engineers involved in the optimisation study.
Rates for construction and installation are based on those of similar projects
executed in recent years in the local area.
The rates of mine works are in reference to the Chinese Budget Quotes of
Non-ferrous Metal Construction Projects (2019 Edition).
The rates for indirect costs are based on Chinese Government-Stipulated
Social Average Prices for the Calculation of Indirect Costs in the Non-Ferrous
Metals Industry (2019 Edition).
The prices of large special equipment have been sourced mainly from tender
prices. The prices of a portion of the large equipment comes from Chinese
suppliers, and those of other equipment such as the regrind mill are from
corresponding non-Chinese suppliers. The prices of medium and small-sized
mechanical and electrical equipment are adjusted according to the 2021
Chinese Price Inquiry System of Mechanical and Electrical Products.
The prices of non-standard equipment are adjusted in reference to the
Chinese Method for Determining Non-Standard Equipment Prices issued in
2019, as well as recent order prices and delivery prices of the same kind of
equipment.
For the DFS and optimisation study, Capital Costs have been grouped into
Initial, Deferred and Sustaining Capital Costs.
o Initial Capital Costs: all costs incurred up to the completion of First Barge
Load milestone.
o Deferred Capital Costs: all capital costs incurred from First Barge Load
completion up to the Nominal production rate (Mine Steady State + 3
months of stabilized full production) achievement milestone.
o Sustaining Capital Costs: all capital costs incurred after this last
milestone. They represent the costs of investments to be carried out to
maintain nominal production capacity over the years.
o Capital Costs (Initial and Deferred) are summarized in Table 4.
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Table 4 - Summary of Optimisation Study Capital Costs
Deferred Capex Initial plus Deferred Capex
Description Initial Capex (kUSD)
(kUSD) (kUSD)
Mine Area 361,671 62,409 424,080
Process Area 453,386 497,667
Tailings Disposal - - -
Roads 51,550 - 62,877
Marine Facilities 166,946 - 179,176
General Infrastructures 236,722 - 309,484
Sub-Total Direct Costs 1,270,277 62,409 1,332,686
Construction Supervision 74,946 0 79,369
Pre-Comm. / Comm- /Start-
28,454 0 33,443
up Supervision
Home Office Services 154,338 0- 164,397
Miscellaneous 8,000 0- 10,388
Sub-Total Services & Misc. 265,739 0 287,597
Sub-Total Technical Cost 1,536,016 62,409 1,598,425
Owner's Costs 118,844 - 118,844
Escalation 55,437 0 55,437
Contingency 81,915 0 81,915
EPC margin 35,236 - 35,236
Total Capital Costs 1,827,450 62,409 1,889,859
Sustaining capital costs cover expenditures required to ensure the operation
can sustain the production at nameplate capacity. These costs include overhaul
parts and labour, replacement of equipment, maintenance of infrastructures
(road, jetty etc.), shut down costs, additional continuous miner and additional
underground conveyor costs, and the inspection and maintenance of the trans-
shipment vessels.
Sustaining Capital Costs of US$732 million have been included in the financial
analysis, which is equivalent to US$11.20/t MOP.
b. Operating Cost
The Operating Costs are expressed in US dollars on a real 2022 basis and are
based on average annual production of 2.1 Mtpa of MOP over the life of
mine. All costs have been prepared on an owner operated basis and are
shown in Table 5.
Table 5 – Summary of Operating Costs
Cost Category Real 2022 costs
Page 23 of 71
(US$/t MOP)
Opex
Mining Cost 21.20
Process Cost 28.90
G&A costs 13.50
Mine Gate Operating Costs 63.60
Sustaining Capex 11.20
Product Realisation Charges and Allowances 3.30
Royalties 8.30
Ex Works Cost 86.40
Logistics to FOB point 4.40
Ocean Shipping 15.10
CFR Cost (Landed in Brazil) 105.90
14. Economic Evaluation
a. Summary Economics
The economic evaluation delivers a post-tax NPV10 (real) of US$1.623
billion and a real ungeared IRR of 20% on an 90% attributable basis, The
evaluation is based on a granular MOP price of US$360/t MOP CFR Brazil
(real 2022) which represents the same pricing scenario used in the DFS.
The Quarter 1 average for 2022 CFR Brazil price was US$876 /t MOP.
The key assumptions underpinning the economic evaluation are as
follows:
• Construction start date: 1 January 2023.
• 25-year initial project life from first production based on depletion of
Ore Reserves.
• Subsequently an additional 6 year project life based on exploitation
of a portion of the Inferred Mineral Resources
• 2.1 Mtpa average production of MOP.
• Granulated MOP represents 100 % of total MOP production and
sales.
• All cashflows are on a real 2022 basis
• NPVs are ungeared and calculated after-tax applying a real discount
rate of 10%.
• NPVs are calculated at a base date of 1 January 2023 prior to the
potential dates for commencement of project construction
• Fiscal regime assumptions are aligned with the recently finalised
Mining Convention:
o 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).
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o 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).
o Exemption from withholding taxes during the term of the Mining
Convention.
o Exemption from VAT and import duty during construction; and
o Congo Government receives 10% of the shares in KPM which
owns the Kola Project.
The forecast project cash flow on a 90% attributable basis for 31
years of production is illustrated in Figure 6.
Figure 6– Project Cash Flow Forecast (real 2022) on a 90% Attributable Basis
(available at www.korepotash.com)
b. Price Sensitivity Analysis
The price sensitivity of the project financial performance to potash pricing is
shown in Table 6 below.
Table 6: Sensitivity to potash price based on a 90% attributable basis
Page 25 of 71
Average Annual
Potash Price NPV10% real
IRR % EBITDA
US$/tonne (US$ million)
(US$ million)
300 899 15.6% 419
360 1 623 19.6% 545
400 2 106 22.0% 628
500 3 314 27.6% 837
600 4 522 32.7% 1 046
700 5 730 37.2% 1 255
800 6 938 41.4% 1 464
900 8 146 45.3% 1 673
1000 9 354 49.0% 1 882
15. Project Funding
The Directors of Kore have formed the view that there is a reasonable basis to believe that
requisite future funding for development of the Kola Project will be available when required.
Kore shareholders should be aware of the risk that future funding for development of the Kola
Project may dilute their ownership of the Company or Kore’s economic interest in the Kola
Project.
There are a number of grounds on which this reasonable basis is held:
• On the 6th April 2021, in the release “Non-binding Memorandum of Understanding
to arrange the full financing required for the construction of the Kola Project”,
Kore advised details of the Consortium that has undertaken to provide a debt and
royalty financing proposal for the full construction cost of Kola. The Summit
Consortium consists of Summit (an African strategic advisory and corporate
finance investment group) and SEPCO (an international engineering and
construction group) as its technical partner. Together they committed to a
process to fully fund the construction of Kola. The first key milestone in this
process, the optimisation study, has now been completed and is reported in this
announcement. The next key milestone is the receipt of an EPC contract
proposal from SEPCO and then is to be followed by the financing proposal from
the Summit Consortium.
• Kore has two large strategic shareholders on its register: (i) SQM (15.74%): a
Chilean company with a market capitalisation in excess of US$26 B that is an
integrated producer and distributor of specialty plant nutrients, including having
an established business in the global potash market; and (ii) OIA (19.35%): the
sovereign wealth fund of Oman (formerly SGRF), which holds a range of natural
resource investments, including on the African continent. These two groups
invested a total of US$40 million into Kore in late 2016 and have continued to
invest in the company through additional fundraises and the issue of shares in
lieu of cash for technical services totalling US$19.5 million. They collectively
bring a considerable and highly relevant combination of substantial financial
Page 26 of 71
capacity, specific potash experience, Latin American, Middle Eastern and African
influence, and financing expertise.
• The Kola Project optimisation study was completed by SEPCO with their
technical consultants China ENFI Engineering corporation (for mining and
process) and CCC-FHDI Engineering Co Ltd (Marine facilities). This team has
the technical and commercial experience in potash and African projects that
supports the successful execution of the Kola project.
• The technical and financial parameters detailed in the Kola Project Optimisation
study are robust and economically attractive.
• SQM and OIA hold a right of first refusal to product offtake from Kola
proportionate to their shareholding interest (with each having a floor of 20% of
production). The residual 60% remains uncontracted and therefore a
considerable attraction to other potential strategic financiers of the Kola Project.
In this respect, Kore has held, and continues to hold, discussions with respect to
possible offtake and project funding/ownership via additional strategic partners.
• Kore as 90% owner of Kola retains options for raising the required equity funding
including selling down part of its interest in the Kola Potash Project to a third party
to form a joint venture. Introduction of a joint venture partner may also provide
further comfort for potential debt project financiers and could reduce Kore’s share
of the equity funding requirements for the project. Kore shareholders should be
aware that any sale of a joint venture interest in the project to a third party would
most likely dilute Kore’s economic ownership of the project.
• 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. 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.
• Funding for Kola Project pre-production and initial working capital is not expected
to be required until post conclusion of an EPC agreement and receipt of financing
proposal. Kore has reasonable grounds to believe that obtaining requisite
funding within this timeline is achievable.
Page 27 of 71
Appendix B: Summary of Information required under ASX Listing Rule 5.9.1 (Ore Reserves), Listing
Rule 5.16.1 (production target) and Listing Rule 15.7.1 (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, the Company provides the following summary information
Kola Project Ore Reserves and related production target and forecast financial information
Summary of Material Assumptions – Ore Reserves
Material assumptions relating to the statement of Ore Reserves for the Kola Project are summarised
below:
• Production life – Life of Mine (“LoM”) based on Ore Reserves of 25 years at nominal 2.2 Mtpa MoP
production, average 2.1 Mtpa MoP production, this was determined during the execution of the
optimisation study and from an aligned production schedule for both mining and processing.
• Product pricing - Average MoP price of US$360/t MoP CFR Brazil (real 2022) for granular product
has been assumed which is considered to be highly conservative compared to prevailing prices of
$1100/ t MoP CFR Brazil for 2021
• Operating cost – average LoM mine gate operating cost US$63.6/MoP t real as detailed in the
optimisation study
• Shipping costs - LoM Shipping costs (trans-shipment and sea freight) of US$19.5 /MoP t were
based on information and estimates from the DFS and review during the optimisation study.
• Project duration – A project capital expenditure period of 40 months was assumed in the
optimisation study and a deferred capital expenditure period from month 49 to month 72.
Sustaining capital was assumed in the optimisation study to be spent over a period from month
44 to month 408.
• Project Capital – A total nominal Project Capital of US$1.83 billion (including EPC costs and mark-
up) was estimated in the optimisation study
• Fiscal parameters – The mining convention between the Company and the Republic of Congo
specifies the fiscal parameters summarised below:
o Company tax rate (15%),
o Initial tax rates (5 years at 0% + 5 years at 7.5%)
o Royalties (3% of revenue) (Mining Convention)
o Government free carry (10%) (Mining Convention)
o Other minor duties and taxes (Mining Convention)
• Working capital assumptions – Working capital based on 30 days Debtors and Creditors, 60 days
Stores.
Page 28 of 71
Summary of Material Assumptions – production target and forecast financial information based on
the optimisation study
Material assumptions relating to the production target and forecast financial information for the Kola
Project which incorporate results from the optimisation study are summarised below:
• Production life - LoM of 31 years at an average annual production of 2.1 Mtpa MoP production.
The production life fully depletes Ore Reserves and incorporates a portion of Inferred Mineral
Resource into the production target.
• Product pricing - Average MoP price of US$360/t MoP CFR Brazil (real 2018) for granular product.
• MoP Product – The process design is based on a single product type, Red Granular MOP. (The MoP
produced will comprise at least 95.3% KCl, with a maximum of 0.2% Mg and 0.3% Insolubles).
• Operating cost - mine gate operating cost of US$63.60/t and export (FOB) cost of US$90.80/t were
reported in the Optimisation Study.
• Project duration – A project capital period 40 months was reported in the Optimisation Study.
• Project Capital – A Project Capital of US$1.83 billion (including EPC costs and profit margin) was
reported in the optimisation study
Criteria for Mineral Resource and Ore Reserve Classification
The criteria for Mineral Resource and Ore Reserve Classification remain unchanged from the “Definite
Feasibility Study” released on 29th January 2019.
The Ore Reserve estimate is based on the Kola Sylvinite Indicated and Measured Mineral Resources
reported by Met-Chem DRA in accordance with the JORC Code (2012 edition) and announced by the
Company on 6 July 2017.
Drill-hole and seismic data were relied upon in the geological modelling and grade estimation. Across
the deposit the reliability of the geological and grade data is high. Grade variation is small within each
domain reflecting the continuity of the depositional environment and ‘all or nothing’ style of Sylvinite
formation.
Drill hole data spacing determines confidence in the interpretation of the seam continuity and
therefore confidence and classification; the further away from seismic and drill-hole data the lower
the confidence in the Mineral Resource classification. In the assigning confidence category, all relevant
factors were considered, and the final assignment reflects the Competent Persons view of the deposit.
Table 1: Summary of Criteria used for the Classification of the Kola Mineral Resource
Drill-hole required Seismic data required Classification extent
Measured Average of 1 km Within area of close spaced Not beyond the seismic
spacing 2010/2011 seismic data (100 – requirement
200 m spacing)
Indicated 1-1.5 km spacing 1 to 2.5 km spaced 2010/2011 Maximum of 1.5 km
seismic data and 1 to 2 km spaced beyond the seismic data
oil industry seismic data requirement if sufficient
drill-hole support
Inferred Few holes, none 1-3 km spaced oil industry seismic Seismic data required
more than 2 km data and maximum of 3.5 km
from another from drill-holes
Page 29 of 71
The Measured and Indicated Mineral Resources for sylvinite are hosted by 3 layers (or ‘seams’) which
are from uppermost; the Hanging Wall Seam (HWS), the Upper Seam (US) and the Lower Seam (LS),
each separated by rock-salt (a rock-type typically comprised of >95% halite).
Magnesium and insoluble content are considered deleterious but are present in only very small
amounts in the ore (average of 0.07% and 0.14%respectively).
The Mineral Resource Estimate was delivered to the Ore Reserve consultants in the form of a standard
block model, blocks having dimensions 250 x 250 x 1 m, each block having a KCl grade, a density, and
magnesium and insoluble content.
The Mineral Resources are inclusive of the Ore Reserves i.e. the Ore Reserves are the mineable part
of the Mineral Resources after the application of technical, economic and other modifying factors.
Areas of potential structural disturbance, referred to as geological anomalies were excluded from the
Measured and Indicated Mineral Resource. They were identified from seismic data as is standard in
potash mining districts elsewhere.
A 10% cut-off grade (CoG) was used in the Mineral Resource Estimate.
Mining Method and assumptions
The mining method and assumptions remain unchanged from the “Kola Definite Feasibility Study”
(“DFS”) released on 29 January 2019.
Mining factors and assumptions have been derived from the historical information available for
mature potash mines, and the current best mining practices. The Kola orebody will be mined using
conventional underground (UG) mining method consisting of room and pillar in a ‘chevron’ (or
herringbone) pattern, with Continuous Miners (CM’s) mining machines of the drum-cutting type.
Most of the mining will be on one level only where only the US will be extracted. In some areas, both
the US and the LS will be mined, in which case the LS will only be mined after the US. In other areas
only the HWS will be mined.
In determining the Ore Reserves, a minimum mining height of 2.5 m was selected based on capability
of the selected CM which is also capable of mining up to 6 m. Areas of the Mineral Resource with a
seam height of less than 2.5 m were excluded from the Ore Reserves.
The mine design is typical of potash mines, having 4 entries for accessing panels. Each drive will
typically be 8 m wide and 3 m to 6 m high depending on the seam height. The typical configuration for
the chevron pattern is an angle of 65 degrees from the middle entry, and length of 150 m
approximately.
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The Mine design relies on geotechnical modelling, carried out in FLAC 3D software. The modelling was
based on geotechnical test-work carried out on representative core samples from the sylvinite seams
and host rocks (rock-salt and lesser carnallitite). The geotechnical modelling established that the mine
design is stable over the LoM and includes the following geotechnical parameters:
• Where both the US and LS seams are to be mined, the support interval between the US and LS
must be at least 3 m thick,
• An 8 m wide pillar between two consecutive production rooms (of 8 m each).
• A 50 m wide pillar between two production panels. Similarly, a 50 m wide pillar will be left in place
between the side of the production panel and the main haulage access drift.
• The interval of rock-salt between the mine openings and the floor of the overlying anhydrite
member is referred to as the ‘salt back’. This is typically over 30 m but is less in some areas. The
DFS design allows that it may be a minimum of 15 m unless the Anhydrite Member is well
developed where it may be 10 m. This is based on the results of the geotechnical model.
• A stand-off distance of 20 m radius from the exploration holes.
• A stand-off distance of 30 m radius from class 2 geological anomalies and 60 m radius from class
3 geological anomalies.
• A pillar of 300 m in radius around the exhaust and intake shafts.
Based on the selected mining equipment (CMs), it is anticipated that a good cutting selectivity would
be achieved, and that a maximum of 0.2 m of dilution material above and/or below the potash seam
is likely. Carnallitite is present in the floor of the seam in some areas. The roof is always of rock-salt.
On average, the dilution material is equivalent to approximately 10% of the tonnage of the Ore
Reserves. Dilution material was assigned a grade of 3% KCl if rock-salt and 0% KCl if Carnallitite.
Based on the configuration of the proposed mining layout, and the anticipated fleet of mining
equipment, it is assumed that the mining recovery in the different extraction chambers will be 90%
on average (i.e. mining losses will be 10%). This considers the mining action which will lead to some
losses such as material being excavated and left in the production chamber, or mineralized material
left in the floor or roof, etc.
The Global extraction ratio is 30% (25% in the LS, 33% in the US and 28% in the HWS). This is after the
removal from Ore Reserves of all pillars (pillars around the geological anomalies, the barrier pillars,
the shaft pillar, the pillars between chevrons and main access drifts), the stand-off distance around
boreholes, mining losses and the exclusion of sylvinite <2.5 m thick.
Two vertical shafts, each of 7 m internal diameter, will be sunk at a central location in the Ore
Reserves, to provide access to the underground. The intake shaft will be equipped with a hoist and
cage system for transportation of persons and material, while the exhaust shaft will be equipped with
a vertical conveyor system to convey the mined-out ore to the surface. Both shafts are approximately
270 m deep.
Ore haulage from the CMs to the feeder breaker apron feeder will be done using electrically- powered
Shuttle Cars.
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Underground conveyor belts will be used for ore transportation in all the areas of the mine. The belts
are distributed in the mains and submains and ultimately in the working panels near the CM working
face. The ore will be placed on the belts from the feeder breakers that were fed by the shuttle cars.
The belt conveyors will carry the ore loaded by the feeder breakers to the ore bins. Then the ore is
conveyed from the ore bins to the Pocket Lift system located in the exhaust shaft.
Processing Method and Assumptions
The changes to the processing method and assumptions arising from the optimisation study are as
follows.
• The product will be granular MoP K60, comprising at least 95.3% KCl. The optimisation study
design allows for the production of a single product, red granular MOP.
• The process flow sheets were optimised to produce a maximum of 2.2 Mtpa of Muriate of Potash
(MOP), at 95.3% KCl purity, with a minimum KCl recovery of 90.4% of the KCl content in the ROM
fed to the Process Plant.
• Eight key areas of process design were changed in the optimisation study
o The crushing circuit was changed from 3 stage crushing to 2 stage crushing
o The mixing tanks post crushing were replaced with a combination of screens and tanks
o The scrubbing capacity has been reduced
o The thickening capacity has been increased
o Column cells have been replaced with floatation cells
o Re-grind flows have been re-routed
o Tailings centrifuges has been replaced with a belt filters
o Compaction circuit has been simplified
A conventional flotation process will be utilised for potash concentration. This method is well
established and is the most widely used method in the potash industry.
No new metallurgical test work was carried out in the optimisation study, the test work completed
remains as per the DFS released on 29 January 2019, and is summarised below:
The metallurgical test work campaigns were based on representative core samples of the three seams,
collected from the exploration drill hole cores. They comprised US (114.5 kg), LS (102.0 kg) and HWS
(10.3 kg). All test work was carried out at the Saskatchewan Research Council (“SRC”) laboratory in
Saskatoon, Canada
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Two metallurgical test work campaigns were conducted during the DFS in 2017 and 2018. The main
philosophy of the first DFS test work campaign was to prepare representative test feedstocks for each
seam, confirm KCl liberation, characterize the feedstock, perform flotation tests, optimize the
operating conditions, optimize reagent consumption for optimum KCl recovery and grade
performance, perform a sensitivity test on flotation.
The objective of the second test work campaign was to optimize the flotation process and improve
the plant recovery from the initial flow sheet. The results of this second test work campaign
demonstrated that the new flotation process performed above the project performance minimum
target.
Magnesium and insoluble material are considered deleterious. The extremely low content of these
materials in the ore mean that their removal is relatively straightforward. Insoluble material is
removed by attrition scrubbing and magnesium removed by brine purge.
Cut-off Grades
The cut off grades remain the same as the DFS published on 29th January 2019.
A Cut-off grade (“CoG”) of 10% KCl has been calculated within the process to state Ore Reserves. The
cut-off grade calculation included all operating costs associated with the extraction, processing and
marketing of ore material. The cut-offs are based on a Muriate of Potash (MoP) price of US$250 per
tonne of MoP. Inputs to the calculation of CoG included:
o Mining costs
o Metallurgical recoveries
o Processing costs
o Shipping costs
o General and administrative costs
All sylvinite of the Measured and Indicated Resource is above 9.9% KCl (the Ore Reserve calculated
CoG), therefore all the Measured and Indicated Sylvinite Resources have been considered for the Ore
Reserve Estimate by application of the other modifying factors.
The uniformly very low content of deleterious elements (magnesium and insoluble material) meant
that these did not require consideration in the CoG determination.
Cost Estimation Methodology
Capital Cost:
• Capital costs have been estimated for each scope area, expressed in United States dollars (US$)
and based on December 2021 prices.
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• Escalation of 3.3% of direct costs (up to project completion) has been modelled, and a Contingency
of 5% of direct costs has been added.
• Three capital periods have been defined: Initial (Construction and up to first barge loading, Month
+40); Deferred (up to ramp-up completion, Month +65); Sustaining (after Month +65)
Operating Cost:
• Operating Cost covering the Life of Mine (31 years) has been estimated in US dollars and reported
in the SEPCO Optimisation Study report 2022. They include costs for Electric power, Fuel, Gas,
Labour, Maintenance parts, Operating Consumables, General and Administration costs and
Contract for Employee Facilities.
• Transshipment costs were supplied by SEPCO in the optimisation study report based on work done
by their marine consultant.
• Ocean Freight Transportation estimate produced were supplied by SEPCO in the optimisation
study report based on work done by their marine consultant.
• Mine Closure cost estimated in accordance with the Conceptual Rehabilitation and Closure Plan
developed by SRK Consulting.
• Mine Closure duration of 24 months (2 years)
• Quantities of equipment, materials and works directly assessed from the Material Take-off
prepared within the framework of the DFS for the Kola Potash Project.
• Unit rates for dismantling, demolition and rehabilitation works directly based on the Construction
Unit rates applied for the CAPEX estimate of the Kola Potash Project and adjusted by using ratios
to assess the lower consuming time and means for dismantling, removing and demolition works.
• State mineral royalties of 3% of Gross Revenue were applied
• Measured Mineral Resources were used for the estimation of the Proved Ore Reserves. Indicated
Mineral Resources were used for the estimation of Probable Ore Reserves.
• The conversion of Measured and Indicated Mineral Resource to Proved and Probable Ore Reserve
reflects the Competent Person’s view of the deposit.
• 40.6% of the Ore Reserves are classified in the Proved category and 59.4% of the Ore Reserves are
classified in the Probable category
Material Modifying Factors
• Status of Environmental Approvals
The Kola Environmental and Social Impact Assessment (“ESIA”), initially approved on 10 October
2013, was amended to reflect the design changes made to the Kola Project as part of the Definitive
Feasibility Study (“DFS”) and has been amended to include the service corridors for a gas pipeline
and overhead power line. The application and terms of reference for amending the ESIA were
approved on 12 April 2018 by the Minister of Tourism and Environment.
The ESIA for the Kola Mining License was approved on 31 March 2020 for 25 years.
The proposed new position of the process plant resulting from the optimisation study creates a
requirement to further amend the ESIA. It is intended that work on this amendment will
commence in the second half of 2022.
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• Status of Mining Tenements and Approvals
Kore 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, Kola Potash Mining SA (“KPM”) and Dougou
Potash Mining SA (“DPM”). The Mining Convention includes a requirement for 10% of the shares
in KPM and DPM to be assigned to the Government of the Congo. The Company is currently
awaiting instructions on how to affect this transfer.
The Kola Deposit is within the Kola Mining Lease which is 100% owned by KPM
o In May 2008, a non-exclusive Prospecting Authorisation was granted to Sintoukola Potash
covering an area of 1,436.5 km2. On 13 August 2009, this was changed to a “Permis de
Recherches” (Exploration Permit) named ‘Permis Sintoukola’ under decree No. 2009-237
giving the Company exclusive rights to explore.
o On 27 November 2012, the first renewal of the permit was made, by decree No. 2012-1193
and reduced in size to 1,408 km2.
o On the 9 August 2013, a Mining Lease for Kola issued under decree No. 2013-312, totaling
204.52 km2 falling entirely within the Exploration Permit.
• Déclaration d’Utilité Publique” or “DUP
Exclusive land acquisition rights have been granted to the Project company for plant
development through ministerial order gazetted on 30 August 2018 (the “Déclaration d’Utilité
Publique” or “DUP”) valid for three years and renewable once for a two-year period.
As a result of the proposed optimised processing plant location, a new application, to cover the
optimised processing plant location is planned to be submitted to the Government after receipt
and acceptance of the financing proposal from Summit
• Other Governmental Factors
The Company entered into a mining convention with RoC government on 8 June 2017 and it was
gazetted into law on 7 December 2018. The Mining Convention provides certainty and
enforceability of the key fiscal arrangements for the development and operation of the Kola
Project. This includes clarifying 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 any disputes by international
arbitration.
Infrastructure Requirements for Selected Mining, Processing and Product Transportation to
Market
The project infrastructure is comprised of the mine-site (shaft and offices), the process plant 24 km
from the mine and a product and marine export facility at the coast (at Tchiboula), the 34 km
infrastructure corridor between these (including the overland conveyor, service road and power line),
the gas line from M’boundi gas field, overhead line from the MKII substation, the accommodation and
administrative camp and the transshipment facilities.
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Changes to the infrastructure requirements that arise from the optimisation study and are thus
different from the DFS are summarised below.
• The process plant position has been moved 11 km inland which has allowed optimisation of the
foundation design, the resultant infrastructure at the coast consists of the product storage
building and marine export facilities. The design of the barge loading jetty has also been optimised.
• Road access to the Kola Potash Project sites will be via the existing Route Nationale 5 (RN5). Two
external access roads will be built, which are respectively connected from RN5 to the mining site
and from RN5 to the mineral processing site and living quarter, with a length of 2.0 km and 4.3 km
respectively. Two maintenance roads for long-distance belt conveyors will be built. One of the
roads for RoM belt conveyor maintenance is about 24.0 km, connecting Koutou camp and the
mineral processing site. The other road is for MOP belt conveyor maintenance,
• Raw Water will be supplied from wells located at the Mine Site and at the Accommodation Camp
close to the Process Plant Site.
• The Accommodation Camp has been sized for a capacity of 850 beds and will be located 3 km
southwest of the Process Plant
• Electrical Power will be sourced from the ROC national grid. A 57 km long 220 kV transmission line
will be built from the Mongo Kamba II substation north of Pointe Noire to the Process Plant Site.
A second 34 km long 220 kV transmission line will be built from the Process Plant Site to the Mine
Site and the marine facility at the coast.
• The Natural Gas needed for product drying will be supplied by a 73 km long pipeline from the
M’Boundi gas treatment plant.
The infrastructure requirements that have not been modified in the optimisation study and thus
remain the same as the DFS are summarised below.
• Ongoing operational labour will be a combination of permanent employees, permanent contract
services, and part-time contract services for intermittent needs. The total requirement for
permanent employees is expected to be 731. Local labour resources will be used for the majority
of labour requirements, while some selected positions are planned as expat roles.
• The Kola Potash Project intends to export up to 2.2 Mt MoP to world markets each year. A
transshipment solution has been developed, whereby MoP for export is loaded at a dedicated
jetty onto self-propelled shuttle barges (two units), which will then travel to Ocean Going Vessels
(OGVs) anchored 11 nautical miles (20 km) offshore in a dedicated transshipment area. The cargo
will be transferred from the Barges to the OGVs using a Floating Crane Transhipper Unit (FCTU).
Page 36 of 71
Appendix C: JORC 2012 – Table 1, Section 4 Ore Reserves
The Company has relied upon its previously reported information, in particular the announcement of 6 July 2017, in respect of the matters related to sections 1, 2 and 3.
The Company confirms that the information in sections 1, 2 and 3 has not changed since it was last reported and has been included in Appendix D of this report for compliance
with ASX requirements and ease of reference.
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
Description of the Mineral Resource The Ore Reserves are based on the Indicated and Measured Mineral Resource estimate for sylvinite carried out by Met-Chem DRA
estimate used as a basis for the and reported in accordance with the JORC Code (2012 edition), announced by the Company on 6 July 2017.
conversion to an Ore Reserve. The Measured Mineral Resource is 216 Mt with an average grade of 35.0% KCl. The Indicated Mineral Resource is 292 Mt with an
Clear statement as to whether the average grade of 35.7% KCl.
Mineral Resources are reported The total combined Measured and Indicated Mineral Resources are 508 Mt with an average grade of 35.4% KCl.
additional to, or inclusive of, the
The Measured and Indicated Mineral Resources for sylvinite are hosted by 3 layers (or ‘seams’) which are as follows from uppermost;
Ore Reserves.
the Hanging Wall Seam (HWS), the Upper Seam (US) and the Lower Seam (LS), each separated by rock-salt (a rock-type
Mineral Resource typically comprised of >95% halite).
estimate for Magnesium and insoluble content are considered deleterious but are present in only very small amounts in the ore (average of 0.07%
conversion to Ore
and 0.14%respectively).
Reserves
The Mineral Resource Estimate was delivered to the Ore Reserve consultants in the form of a standard block model, blocks having
dimensions 250 x 250 x 1 m, each block having a KCl grade, a density, and magnesium and insoluble content.
The Mineral Resources are inclusive of the Ore Reserves (i.e. the Ore Reserves are the mineable part of the Mineral Resources
after the application of technical, economic and other modifying factors.)
Areas of potential structural disturbance, referred to as geological anomalies were excluded from the Measured and Indicated Mineral
Resource. They were identified from seismic data as is standard in potash mining districts elsewhere.)
A 10% cut-off grade (CoG) was used in the Mineral Resource Estimate.
Comment on any site visits A site visit was conducted by the Competent Person for the Ore Reserve Estimate between June 26 to June 28, 2017. The visit
undertaken by the Competent included exploration camp inspection, core viewing, site of shafts and process plant, access route from Pointe Noire. The site
Site visits Person and the outcome of visit supported the findings of the Competent Person.
those visits. No additional site visits were undertaken for optimisation study.
Page 37 of 71
Criteria JORC Code explanation Commentary
If no site visits have been undertaken
indicate why this is the case.
The type and level of study A comprehensive Definitive Feasibility Study (DFS) was completed in 2019 including a Life of Mine (LoM) plan. The DFS considered
undertaken to enable Mineral all relevant modifying factors, to permit the conversion of the Mineral Resources to Ore Reserves.
Resources to be converted to An Optimisation Study that is intended to lead to an EPC contract proposal has been completed in 2022 which included review of
Ore Reserves. material aspects of the project design and costs.
The Code requires that a study to at
least Pre-Feasibility Study level
has been undertaken to convert
Study status 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.
The basis of the cut-off grade(s) or A cut-off grade (CoG) of 9.9% KCl has been calculated for the Ore Reserve Estimation based on forecast revenue and estimated
quality parameters applied. operating costs. The cut-off calculation included all operating costs associated with the extraction, processing and marketing of
ore material. The cut-offs are based on a conservative Muriate of Potash (MoP) price of US$250 per tonne of MoP. Inputs to
the calculation of cut-off grades included:
o Mining costs
o Metallurgical recoveries
o Processing costs
Cut-off parameters o Shipping costs
o General and administrative costs
All sylvinite of the Measured and Indicated Resource is present at a grade significantly above 9.9% KCl (the Ore Reserve calculated
CoG), therefore all the Measured and Indicated Sylvinite Resources have been considered for the Ore Reserve Estimate by
application of the other modifying factors.
The uniformly very low content of deleterious elements (magnesium and insoluble material) meant that these did not require
consideration in the CoG determination.
Mining factors or The method and assumptions used Mining factors and assumptions have been derived from the historical information available for mature potash mines, the current
assumptions as reported in the Pre-Feasibility best mining practices and the outcomes of the various technical studies completed in the DFS and Optimisation Study
Page 38 of 71
Criteria JORC Code explanation Commentary
or Feasibility Study to convert The Kola orebody will be mined using conventional underground (UG) mining method consisting of room and pillar in a ‘chevron’ (or
the Mineral Resource to an Ore herringbone) pattern, with Continuous Miners (CM’s) mining machines of the drum-cutting type.
Reserve (i.e. either by The mining equipment selected for the Kola Potash Project Mine are CM’s.
application of appropriate
Most of the mining will be one level only where only the US will be extracted. In some areas, both the US and the LS will be mined,
factors by optimisation or by
in which case the LS will only be mined after the US. In other areas only the HWS will be mined.
preliminary or detailed design).
In determining the Ore Reserves, a minimum mining height of 2.5 m was selected based on capability of the selected CM which is
The choice, nature and
also capable of mining up to 6 m. Areas of the Mineral Resource with a seam height of less than 2.5 m were excluded from the
appropriateness of the selected
Ore Reserves.
mining method(s) and other
mining parameters including The mine design is typical of potash mines, having 4 entries for access drives. Each drive will typically be 8 m wide and 3 m to
associated design issues such 6 m high depending on the seam height. The typical configuration for the chevron pattern is an angle of 65 degrees from the
as pre-strip, access, etc. middle entry, and length of 150 m approximately.
The assumptions made regarding
geotechnical parameters (e.g. The Mine design relies on geotechnical modelling, carried out in FLAC 3D software. The modelling was based on geotechnical test-
pit slopes, stope sizes, etc.), work carried out on representative core samples from the sylvinite seams and host rocks (rock-salt and lesser carnallitite). The
grade control and pre- geotechnical modelling established that the mine is stable over the LoM for the DFS mine design which includes the following
production drilling. geotechnical parameters:
The major assumptions made and o Where both the US and LS seams are to be mined, the support interval between the US and LS must be at least 3 m thick.
Mineral Resource model used o An 8 m wide pillar between two consecutive production rooms (of 8 m each).
for pit and stope optimisation (if o A 50 m wide pillar between two production panels. Similarly, a 50 m wide pillar will be left in place between the side of the
appropriate). production panel and the main haulage access drift.
The mining dilution factors used. o The interval of rock-salt between the mine openings and the floor of the overlying anhydrite member is referred to as the ‘salt
The mining recovery factors used. back’. This is typically over 30 m but is less in some areas. The DFS design allows that it may be a minimum of 15 m unless
Any minimum mining widths used. the Anhydrite Member is well developed where it may be 10 m. This is based on the results of the geotechnical model.
The manner in which Inferred Mineral o A stand-off distance of 20 m radius from the exploration holes.
Resources are utilised in mining o A stand-off distance of 30 m radius from class 2 geological anomalies and 60 m radius from class 3 geological anomalies.
studies and the sensitivity of the o A pillar of 300 m in radius around the exhaust and intake shafts.
outcome to their inclusion.
The infrastructure requirements of
Based on the selected mining equipment (CMs), it is anticipated that a good cutting selectivity would be achieved, and that a
the selected mining methods.
maximum of 0.2 m of dilution material above and/or below the potash seam is likely. Carnallitite is present in the floor of the
seam in some areas. The roof is always of rock-salt. On average, the dilution material is equivalent to approximately 10% of
the tonnage of the Ore Reserves. Dilution material was assigned a grade of 3% KCl if rock-salt and 0% KCl if Carnallitite.
Based on the configuration of the proposed mining layout, and based on the anticipated fleet of mining equipment, it is assumed
Page 39 of 71
Criteria JORC Code explanation Commentary
that the mining recovery in the different extraction chambers will be 90% on average (i.e. mining losses will be 10%). This
considers the mining action which will lead to some losses such as material being excavated and left in the production chamber,
or mineralized material left in the floor or roof, etc.
The Global extraction ratio is 30% (25% in the LS, 33% in the US and 28% in the HWS). This is after excluding the tonnage associated
with removal of all pillars (pillars around the geological anomalies, the barrier pillars, the shaft pillar, the pillars between chevrons
and main access drifts), the stand-off distance around boreholes, mining losses and the exclusion of sylvinite <2.5 m thick.
Two vertical shafts, each with 8 m internal diameter, will be sunk at a central location in the Ore Reserves, to provide access to the
underground. The intake shaft will be equipped with a hoist and cage system for transportation of persons and material, while
the exhaust shaft will be equipped with a vertical conveyor system (pocket lift configuration) to convey the mined-out ore to the
surface. Both shafts are approximately 270 m deep.
One haulage from the CMs to the feeder breaker apron feeder will be done using electrically- powered Shuttle Cars.
Underground conveyor belts will be used for materials handling (ore haulage) ore transportation in all the areas of the mine. Conveyor
belts are distributed in the mains and submains and ultimately in the working panels near the CM working face. The ore will be
placed on the belts from the feeder breakers that were fed by the shuttle cars. The conveyor belts will carry the ore loaded by
the feeder breakers to the ore bins. Then the ore is conveyed from the ore bins to the Pocket Lift system located in the exhaust
shaft.
The life-of mine schedule for the Kola Potash Project based on Ore Reserves is 25 years, at an average annual production of 2.1
Mt of MoP production. This Ore Reserves LoM production schedule Mineral Resource contributes 6.0% of the total amount of
ROM material and is planned to be materially extracted from year 11 onwards. Without the inclusion of this material the LoM is
23 years, with a reduction of NPV10 of approximately USD 34 million and reduction in IRR of 1%
The Production Target includes the Ore Reserves plus 58.5 Mt of Inferred Mineral Resource. The life-of-mine schedule for the Kola
Potash Project based on the Production Target is 31 years, at an average annual production of 2.2 Mt of MoP. The Production
Target LoM production schedule and economic analysis includes 9.7 Mt of Inferred Mineral Resources that need to be extracted
in conjunction with the Ore Reserves, plus an additional 48.8 Mt of Inferred Mineral Resource scheduled at the end of the mine
plan. The total Inferred Mineral Resource contributes 27.7% of the total amount of ROM material and is planned to be materially
extracted from year 11 onwards.
The metallurgical process proposed The final product will be MoP K60, comprising at least 95% KCl. The DFS design allows for the production of this MoP in two forms,
and the appropriateness of that standard and granular. The optimised design simplified production to a single product – red granular K60 MOP.
process to the style of A conventional flotation process will be utilized for potash concentration. This method is well established, and the most widely used
Metallurgical
factors or mineralization. method in the potash industry.
assumptions Whether the metallurgical process is The DFS Metallurgical Test work Campaigns were based on representative core samples of the three seams, collected from the
well-tested technology or novel exploration drill hole cores. They comprised US (114.5 kg), LS (102.0 kg) and HWS (10.3 kg). All test work was carried out at
in nature. the Saskatchewan Research Council (SRC) laboratory in Saskatoon, Canada. No further testing was completed during
Page 40 of 71
Criteria JORC Code explanation Commentary
The nature, amount and optimisation.
representativeness of The process flow sheets were optimised to meet the Kola Potash Project targets of producing 2.2 Mtpa of Muriate of Potash (MoP),
metallurgical test work at 95.5% KCl purity, with a minimum KCl recovery of 90.4 %
undertaken, the nature of the
Two metallurgical test work campaigns were conducted during the DFS in 2017 and 2018. The main philosophy of the first DFS test
metallurgical domaining applied
work campaign was to prepare representative test feedstocks for each seam, confirm KCl liberation, characterize the feedstock,
and the corresponding
perform flotation tests, optimize the operating conditions, optimize reagent consumption for optimum KCl recovery and grade
metallurgical recovery factors
performance, perform a sensitivity test on flotation.
applied.
The objective of the second test work campaign was to optimize the flotation process and improve the plant recovery from the initial
Any assumptions or allowances
flow sheet. The results of this second test works processed in SYSCAD model demonstrated that the new flotation process
made for deleterious elements.
performed above the project performance minimum target.
The existence of any bulk sample or
With a raw ore feed grade of 31.3% KCl, the material balance confirmed that the project objectives can be met with a production of
pilot scale test work and the
2.2 Mtpa with an expected product recovery of 90.4%, and a final product grade of 95.5% KCl.
degree to which such samples
are considered representative of Magnesium and insoluble material are considered deleterious. The extremely low content of these materials in the ore mean that
the orebody as a whole. their removal is relatively straightforward. Insoluble material is removed by attrition scrubbing and magnesium removed by brine
purge.
For minerals that are defined by a
specification, has the Ore The metallurgical test work campaigns provided a sound foundation for the development of the process design engineering and
Reserve estimation been based subsequent project performance, overall engineering studies and the cost estimate.
on the appropriate mineralogy to
meet the specifications?
The status of studies of potential Exploration and data acquisition and activities were undertaken under the auspices of an approved Environmental Impact
environmental impacts of the Assessment (EIA) and Environmental Management Plan (EMP) set out to international best practice and approved by the RoC
mining and processing regulator.
operation. Details of waste rock The Environmental and Social Impact Assessment (ESIA) for the operation of the mining project was initially prepared by the
characterisation and the consulting company SRK in Cardiff and approved by the RoC regulator in 2013.
consideration of potential sites,
An amendment was prepared by SRK in parallel with the DFS to capture changes to the project description and was submitted to
status of design options
Environmental considered and, where
the ROC regulator in Q4 2018 and approved on 31 March 2020 for 25 years.
applicable, the status of The proposed new position of the process plant resulting from the optimisation study creates a requirement to further amend the
approvals for process residue ESIA. It is planned to commence this amendment once financing for the development of Kola is secured.
storage and waste dumps An Environmental and Social Action Plan (ESAP) captured the differences between the national process required by the Congolese
should be reported. authorities and International Best Practice to Equator Principles and IFC Performance Standards.
The ESIA addresses all impacts of the operation, from mine-site to exportation, as listed in the infrastructure section below.
The mine-site and a portion of the infrastructure corridor are located within the economic development and buffer zones of the
Page 41 of 71
Criteria JORC Code explanation Commentary
Conkouati-Douli National Park (CDNP). Project activity in this area was minimized and influx is led away from the park through
the siting of employee facilities outside the CDNP.
Waste rock is very minimal, being only the <0.2% of insoluble material or just under 1Mt over the LoM. The bulk of the waste is
dissolved halite in the form on an NaCl brine. All waste streams will be diluted with seawater to a concentration of 200mg/l and
discharged via a diffuser into the ocean. This material has been characterised and ecotoxicological testing has been undertaken
to confirm that no adverse impacts are caused at the edge of the mixing zone.
The overall conclusion of the ESIA is that negative environmental impacts identified can be reduced to acceptable levels.
A rehabilitation and closure plan has been prepared and included in owner's costs of the project.
Biodiversity, air quality, social, archeological, water and noise baseline studies have been prepared and incorporated into the ESIA
process.
The existence of appropriate The project infrastructure is comprised of the mine-site (shaft and offices), the process plant is 24km from the mine site and the
infrastructure: availability of land marine and product storage facility a further 11km from the plant site, on the coast (at Tchiboula), the 34 km infrastructure
for plant development, power, corridor between these (including the overland conveyor, service road and power line), the gas line from M’boundi gas field,
water, transportation overhead line from the MKII substation, the accommodation and administrative camp and the transshipment facilities.
(particularly for bulk Exclusive land acquisition rights through the Déclaration d’Utilité Publique (“DUP”) process will be applied for based on the new plant
commodities), labour, position.
accommodation; or the ease
Road access to the Kola Potash Project sites will be via the existing Route Nationale 5 (RN5). Two external access roads will be
with which the infrastructure can
built, which are connected from RN5 to the mining site and from RN5 to the mineral processing site and living quarter, with a
be provided or accessed.
length of 2.0km and 4.3km respectively. Two maintenance roads for long-distance belt conveyors will be built. One of the roads
for RoM belt conveyor maintenance is about 25 km, connecting Koutou camp and the mineral processing site. The other 9 km
road is for MOP belt conveyor maintenance,
Infrastructure Electrical Power will be sourced from the ROC national grid. A 57 km long 220 kV transmission line will be built from the Mango
Kamba II substation north of Pointe Noire to the Process Plant Site. A second 34 km long 220 kV transmission line will be built
from the Process Plant Site to the Mine Site from process plant to marine facility.
The Natural Gas needed for product drying will be supplied by a 73 km long pipeline from the M’Boundi gas treatment plant.
Raw Water for process plant will be supplied from 5 wells and at the mine site via 2 wells.
Ongoing operational labour will be a combination of permanent employees, permanent contract services, and part-time contract
services for intermittent needs. The total requirement for permanent employees is expected to be 731. Local labour resources
will be used for most labour requirements, while some selected positions are planned as expat roles.
The Accommodation Camp has been sized for a capacity of 850 beds and will be located 4km Southwest of the process plant.
The Kola Potash Project intends to export up to 2.2 Mt MoP to world markets each year. A transshipment solution has therefore
been developed, whereby the material for export is loaded at a dedicated Jetty onto self-propelled shuttle Barges (two units),
Page 42 of 71
Criteria JORC Code explanation Commentary
which will then travel to Ocean Going Vessels (OGVs) anchored 11 nautical miles (20 km) offshore in a dedicated transshipment
area. The cargo will be transferred from the Barges to the OGVs using a Floating Crane Transhipper Unit (FCTU).
The derivation of, or assumptions Capital Cost:
made, regarding projected Capital Cost Estimate has been developed by SEPCO for each scope area, expressed in United States dollars (USD) and based on
capital costs in the study. December 2021 prices.
The methodology used to estimate Rates for construction and installation are based on those of similar projects executed in recent years in the local area.
operating costs.
The rates of mine works are in reference to the Chinese Budget Quota of Non-ferrous Metal Construction Projects (2019 Edition).
Allowances made for the content of
The rates for indirect costs are based on Chinese Government-Stipulated Social Average Prices for the Calculation of Indirect Costs
deleterious elements.
in the Non-Ferrous Metals Industry (2019 Edition).
The derivation of assumptions made
The prices of large special equipment have been sourced mainly from tender prices. The prices of a portion of the large equipment
of metal or commodity price(s),
comes from Chinese suppliers, and those of other equipment such as the regrind mill are from corresponding non-Chinese
for the principal minerals and co-
suppliers. The prices of medium and small-sized mechanical and electrical equipment are adjusted according to the 2021
products.
Chinese Price Inquiry System of Mechanical and Electrical Products.
The source of exchange rates used in
The prices of non-standard equipment are adjusted in reference to the Chinese Method for Determining Non-Standard Equipment
the study.
Prices issued in 2019, as well as recent order prices and delivery prices of the same kind of equipment.
Derivation of transportation charges.
Escalation of 3.3% (up to project completion) has been considered, and a total Contingency of 5.0% has been added.
The basis for forecasting or source of
Three capital periods have been defined: Initial (Construction and up to first barge loading, Month +40); Deferred (up to ramp-up
Costs treatment and refining charges,
completion, Month +65); Sustaining (after Month +65)
penalties for failure to meet
specification, etc.
The allowances made for royalties Operating Cost:
payable, both Government and Operating costs were estimated by SEPCO after their review of the DFS estimate which was based on first principles using quoted
private. rates, estimated consumption, forecast labour complements and remuneration estimates.
Operating Cost covering the Life of Mine (31 years) has been estimated in Q12022 USD. They include costs for Electric power, Fuel,
Gas, Labour, Maintenance parts, Operating Consumables, General and Administration costs and Contract for Employee
Facilities.
Mine Closure cost estimated in accordance with the Conceptual Rehabilitation and Closure Plan developed by SRK Consulting.
Mine Closure duration of 24 months (2 years), for the effective dismantling, demolition and rehabilitation works..
Quantities of equipment, materials and works directly assessed from the Material Take-off prepared within the framework of the DFS
for the Kola Potash Project.
Unit rates for dismantling, demolition and rehabilitation works directly based on the Construction Unit rates applied for the CAPEX
estimate of the Kola Potash Project and adjusted by using ratios to assess the lower consuming time and means for dismantling,
removing and demolition works.
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Criteria JORC Code explanation Commentary
State mineral royalties of 3% of Gross Revenue applies
Other criteria
The marketed MoP will comprise at least 95% KCl, with a maximum of 0.2% Mg and 0.3% Insolubles.
The derivation of, or assumptions Head grade, recovery and product grade forecasts were based on the DFS results.
made regarding revenue factors Product pricing - Average MoP price of US$360/t MoP CFR Brazil (real 2022) for granular product has been assumed which is
including head grade, metal or considered to be highly conservative compared to prevailing prices of $1100/ t MoP CFR Brazil for 2021
commodity price(s) exchange
rates, transportation and
Revenue factors 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.
The demand, supply and stock Based on CRU estimates, global potash demand is forecast to grow from 74.9Mt in 2022 to exceed 100Mt by 2040 and global
situation for the particular nameplate potash capacity to increase from 107.5Mt by the end of 2022, reaching 120Mt by 2040.
commodity, consumption trends The Company’s current market strategy considers selling to South America and Africa.
and factors likely to affect supply
MoP price of US$360/t is the average future potash price CFR Brazil forecast over the project life.
and demand into the future.
The Quarter 1 average for 2022 CFR Brazil price was US$876 /t MOP
A customer and competitor analysis
along with the identification of Customer specifications are based on K60 product, which means the MoP product has a minimum K2O content of 60%,
Market likely market windows for the corresponding to a KCl content of 95.0 %. Product will be sampled regularly on site and tested in a site-based laboratory to
assessment product. ensure product grade is consistently met. Product that does not satisfy grade will be removed from the product stream and
reprocessed.
Price and volume forecasts and the
basis for these forecasts.
For industrial minerals the customer
specification, testing and
acceptance requirements prior
to a supply contract.
The inputs to the economic analysis
to produce the net present value Key valuation assumptions and (sources)
Economic
(NPV) in the study, the source
Production - LoM of 31 years at nominal 2.2 Mtpa MoP production.
and confidence of these
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Criteria JORC Code explanation Commentary
economic inputs including Single MoP product type – red MOPG (Muriate of Potash - Granular)
estimated inflation, discount Average LoM CFR price of US$ 360/MoP t
rate, etc.
On-mine LoM average operating cost US$ 63.6/MoP t, Real
NPV ranges and sensitivity to
LoM Shipping (transshipment and sea freight) of US$ 19.5/MoP t
variations in the significant
assumptions and inputs. Project capital period 40 months, deferred capital period 24 months
Total Nominal: Project Capital US$ 1.83 Bn (including Owners Capital)
Owners Capital US$ 118 million
Deferred Capital US$ 62 million
Sustaining Capital US$ 11.20/MoP t, Real
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)
Working capital: 30 days Debtors and Creditors, 60 days Stores (Kore)
Payback period: 7.7 years from start of construction
Highest sensitivities to Price and Capital. A 1% movement in Price has an approximate US$ 44 M movement in NPV10, and a 1%
movement in Project Capital has an approximate US$ 15 M impact on NPV10.
The status of agreements with key Approval of an ESIA is a prerequisite for beginning construction of a mining project in the Republic of Congo. The Kola ESIA, initially
stakeholders and matters approved on 10 October 2013, was amended to reflect the design changes made to the Kola Project as part of the Definitive
leading to social license to Feasibility Study (“DFS”) and has been amended to include the service corridors for a gas pipeline and overhead power line.
operate. The amended ESIA for the Kola Mining License was approved on 31 March 2020 for 25 years.
The proposed new position of the process plant resulting from the optimisation study creates a requirement to further amend the
ESIA. It is intended that work on this amendment will commence following receipt and acceptance of the EPC and Financing
proposals.
Social
The Compliance Certificate is renewed annually until construction of a mine on the license is completed. 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 Kola
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 2Mtpa from the Kola Mining license.
The Kola Mining License is held within subsidiary which will be owned 10% by the ROC government.
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Criteria JORC Code explanation Commentary
Socio-economic, cultural heritage, archeological and livelihood baseline reports have been prepared and approved as part of the
ESIA baseline process.
Sintoukola 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, includes Mine Site, Conveyor Belt and Process Plant,
the HV line and the Gas Pipeline:
A new application for each corridor for a declaration d'utilite publique (DUP) will be required from the Ministry of Land Affairs
Consulting Company RSK undertook a Resettlement Action Plan (RAP) for the Service Corridor
A Resettlement Policy Framework (RPF) was undertaken for the HV and Gas Corridors by RSK
Physical displacement is minimal with most actions requiring livelihood restoration
Resettlement Costs have been included in owner's costs and time in the implementation schedule
There are believed to be no social related issues that do not have a reasonable likelihood of being resolved.
To the extent relevant, the impact of Kola is currently compliant with all legal and regulatory requirements subject to final approval of the Kola Environmental and Social
the following on the project Impact Assessment Amendments (which was required following the project design changes implemented during the
and / or on the estimation and optimisation study).
classification of the Ore A mining convention entered into between the RoC government and the Companies on 8 June 2017 and gazetted into law on 29
Reserves: November 2018 concludes the framework envisaged in the 25-year renewable Kola Mining License granted in August 2013.
Any identified material naturally The Mining Convention provides certainty and enforceability of the key fiscal arrangements for the development and operation
occurring risks. of Kola Mining Licenses, which amongst other items include import duty and VAT exemptions and agreed tax rates during mine
The status of material legal operations. The Mining Convention provides strengthened legal protection of the Company’s investments in the Republic of
agreements and marketing Congo through the settlement of disputes by international arbitration.
arrangements. To the best of the Competent Person’s knowledge, there is no reason to assume any government permits and licenses or statutory
Other
The status of governmental approvals will not be granted. There are no unresolved matters upon which extraction is contingent.
agreements and approvals
critical to the viability of the
project, such as mineral
tenement status, and
government and statutory
approvals. There must be
reasonable grounds to expect
that all necessary Government
approvals will be received within
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Criteria JORC Code explanation Commentary
the timeframes anticipated in the
Pre-Feasibility or Feasibility
study. Highlight and discuss the
materiality of any unresolved
matter that is dependent on a
third party on which extraction of
the reserve is contingent.
The basis for the classification of the Measured Mineral Resources were used for the estimation of the Proved Ore Reserves. Indicated Mineral Resources were used for
Ore Reserves into varying the estimation of Probable Ore Reserves.
confidence categories. The conversion of Measured and Indicated Mineral Resource to Proved and Probable Ore Reserve reflects the Competent Person’s
Whether the result appropriately view of the deposit.
reflects the Competent Person’s 40.6% of the Ore Reserves are classified in the Proved category and 59.4% of the Ore Reserves are classified in the Probable
Classification view of the deposit. category
The proportion of Probable Ore
Reserves that have been
derived from Measured Mineral
Resources (if any).
The results of any audits or reviews of DFS deliverables were continually reviewed by an Owner's Team consisting of an inter-discipline engineering team, specialists in
Audits or reviews Ore Reserve estimates. ESIA and economic modelling and construction experts.
Where appropriate a statement of the In the Competent Person's view, the Kola DFS achieves the required level of confidence in the modifying factors to justify the
relative accuracy and estimation of an Ore Reserve. All relevant modifying factors were considered in the Ore Reserve Estimation and deemed to be
confidence level in the Ore modelled at a level of accuracy appropriate to the classification, that a global change of greater than 10% considered unlikely
Reserve estimate using an The DFS determined a mine plan and production schedule that is technically achievable and economically viable.
approach or procedure deemed
The capital and operating costs are based on the outcome of the optimisation study. An EPC proposal is due in August 2022 from
appropriate by the Competent
Discussion of SEPCO and the Summit Consortium.
Person. For example, the
relative accuracy/ application of statistical or Factors that could affect the Ore Reserves locally include; localised changes in salt-back thickness, greater dip of the seam in some
confidence areas, local changes in the thickness of the rock-salt support layer between the seams, areas of unexpected carnallite in floor.
geostatistical procedures to
quantify the relative accuracy of The Mineral Resource model attempted to model these features to a high level of detail and are ‘passed-on’ into the Ore
the reserve within stated Reserve and mine plan. The Ore Reserve is also partially reliant on the model for the thickness of the overlying Anhydrite
confidence limits, or, if such an Member which was not part of the Mineral Resource.
approach is not deemed While local variation from the mine plan in the above are expected, is considered unlikely that these would lead to significant negative
appropriate, a qualitative change in the Ore Reserves, and that positive changes are equally likely.
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Criteria JORC Code explanation Commentary
discussion of the factors which For the optimisation study, data from a potash mining operation was used to guide and check the design, productivity assumptions,
could affect the relative cost estimates and budgets. The input data and design are likely to be realistic and achievable in the Competent Persons view.
accuracy and confidence of the
estimate.
The statement should specify
whether it relates to global or
local estimates, and, if local,
state the relevant tonnages,
which should be relevant to
technical and economic
evaluation. Documentation
should include assumptions
made and the procedures used.
Accuracy and confidence discussions
should 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.
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APPENDIX D
Appendix D: JORC 2012 – Table 1, Sections 1 to 3[1]
[1]
Refer to ASX announcement dated 6 July 2017
Page 49 of 71
Section 1 Sampling Techniques and Data
(Criteria in this section apply to all succeeding sections.)
Criteria JORC Code explanation Commentary
1.1 Sampling techniques • Nature and quality of sampling (e.g. cut channels, random chips, Sampling was carried out according to a strict quality control protocol beginning at the drill rig.
or specific specialised industry standard measurement tools Holes were drilled to PQ size (85 mm core diameter) core, with a small number of holes drilled
appropriate to the minerals under investigation, such as down HQ size (63.5 mm core diameter). Sample intervals were between 0.1 and 2.0 metres and
hole gamma sondes, or handheld XRF instruments, etc). These sampled to lithological boundaries. All were sampled as half-core except very recent holes
examples should not be taken as limiting the broad meaning of (EK_49 to EK_51) which were sampled as quarter core. Core was cut using an Almonte© core
sampling. cutter without water and blade and core holder cleaned down between samples. Sampling and
• Include reference to measures taken to ensure sample preparation were carried out by trained geological and technical employees. Samples were
representivity and the appropriate calibration of any individually bagged and sealed.
measurement tools or systems used.
• Aspects of the determination of mineralisation that are Material A small number of historic holes were used in the Mineral Resource model; K6, K18, K19, K20,
to the Public Report. K21. K6 and K18 were the original holes twinned by the Company in 2010. The grade data for
• In cases where ‘industry standard’ work has been done this these holes was not used for the Mineral Resource estimate but they were used to guide the
would be relatively simple (eg ‘reverse circulation drilling was seam model. The 2010 twin hole drilling exercise validated the reliability of the geological data
used to obtain 1 m samples from which 3 kg was pulverised to for these holes (section 1.7).
produce a 30 g charge for fire assay’). In other cases more
explanation may be required, such as where there is coarse KCl data for EK_49 to EK_51 was based on the conversion on calibrated API data from downhole
gold that has inherent sampling problems. Unusual commodities geophysical logging, as is discussed in Section 6. Subsequent laboratory assay results for EK_49
or mineralisation types (eg submarine nodules) may warrant and EK_51 support the API derived grades.
disclosure of detailed information.
1.2 Drilling techniques • Drill type (eg core, reverse circulation, open-hole hammer, rotary Holes were drilled by 12 and 8 inch diameter rotary Percussion through the 'cover sequence',
air blast, auger, Bangka, sonic, etc) and details (eg core stopping in the Anhydrite Member and cased and grouted to this depth. Holes were then
diameter, triple or standard tube, depth of diamond tails, face- advanced using diamond coring with the use of tri-salt (K, Na, Mg) mud to ensure excellent
sampling bit or other type, whether core is oriented and if so, by recovery. Coring was PQ (85 mm core diameter) as standard and HQ (64.5 mm core diameter)
what method, etc). in a small number of the holes.
1.3 Drill sample recovery • Method of recording and assessing core and chip sample Core recovery was recorded for all cored sections of the holes by recording the drilling advance
recoveries and results assessed. against the length of core recovered. Recovery is between 95 and 100% for the evaporite and
• Measures taken to maximise sample recovery and ensure all potash intervals, except in EK_50 for the Carnallitite interval in that hole (as grade was
representative nature of the samples. determined using API data for that hole this is of no consequence). The use of tri-salt (Mg, Na,
Page 50 of 71
Criteria JORC Code explanation Commentary
• Whether a relationship exists between sample recovery and and K) chloride brine to maximize recovery was standard. A fulltime mud engineer was recruited
grade and whether sample bias may have occurred due to to maintain drilling mud chemistry and physical properties. Core is wrapped in cellophane sheet
preferential loss/gain of fine/coarse material. soon after it is removed from the core barrel, to avoid dissolution in the atmosphere, and is then
transported at the end of each shift to a de-humidified core storage room where it is stored
permanently.
1.4 Logging • Whether core and chip samples have been geologically and The entire length of each hole was logged from rotary chips in the ‘cover sequence’ and core in
geotechnically logged to a level of detail to support appropriate the evaporite. Logging is qualitative and supported by quantitative downhole geophysical data
Mineral Resource estimation, mining studies and metallurgical including gamma, acoustic televiewer images, density and calliper data which correlates well
studies. with the geological logging. Due to the conformable nature of the evaporite stratigraphy and the
• Whether logging is qualitative or quantitative in nature. Core (or observed good continuity and abrupt contacts, recognition of the potash seams is straightforward
costean, channel, etc) photography. and made with a high degree of confidence. Core was photographed to provide an additional
• The total length and percentage of the relevant intersections reference for checking contacts at a later date.
logged.
1.5 Sub-sampling • If core, whether cut or sawn and whether quarter, half or all core Excluding QA-QC samples 2368 samples were analysed at two labs in 44 batches, each batch
techniques and sample taken. comprising between 20 and 250 samples. Samples were submitted in 46 batches and are from
preparation • If non-core, whether riffled, tube sampled, rotary split, etc and 41 of the 47 holes drilled at Kola. The other 6 drill-holes (EK03, EK_21, EK_25, EK_30, EK_34,
whether sampled wet or dry. EK_37) were either stopped short of the evaporite rocks or did not intersect potash layers.
• For all sample types, the nature, quality and appropriateness of Sample numbers were in sequence, starting with KO-DH-0001 to KO-DH-2650 (EK_01 to
the sample preparation technique. EK_44) then KO-DH-2741 to KO-DH-2845 (EK_46 and EK_47).
• Quality control procedures adopted for all sub-sampling stages
to maximise representivity of samples. The initial 298 samples (EK_01 to EK_05) were analysed at K-UTEC in Sondershausen,
• Measures taken to ensure that the sampling is representative of Germany and thereon samples were sent to Intertek-Genalysis in Perth. Samples were crushed
the in-situ material collected, including for instance results for to nominal 2 mm then riffle split to derive a 100 g sample for analysis. K, Na, Ca, Mg, Li and S
field duplicate/second-half sampling. were determined by ICP-OES. Cl is determined volumetrically. Insolubles (INSOL) were
• Whether sample sizes are appropriate to the grain size of the determined by filtration of the residual solution and slurry on 0.45 micron membrane filter,
material being sampled. washing to remove residual salts, drying and weighing. Loss on drying by Gravimetric
Determination (LOD/GR) was also competed as a check on the mass balance. Density was
measured (along with other methods described in section 3.11) using a gas displacement
Pycnometer.
1.6 Quality of assay data • The nature, quality and appropriateness of the assaying and For drill-holes EK_01 to EK_47, a total of 412 QAQC samples were inserted into the batches
and laboratory tests laboratory procedures used and whether the technique is comprising 115 field duplicate samples, 84 blank samples and 213 certified reference material
considered partial or total. (CRM) samples. Duplicate samples are the other half of the core for the exact same interval as
• For geophysical tools, spectrometers, handheld XRF the original sample, after it is cut into two. CRMs were obtained from the Bureau of Reference
instruments, etc, the parameters used in determining the (BCR), the reference material programme of the European Commission. Either river sand or later
analysis including instrument make and model, reading times, barren Rock-salt was used for blank samples. These QA-QC samples make up 17% of the total
calibrations factors applied and their derivation, etc.
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Criteria JORC Code explanation Commentary
• Nature of quality control procedures adopted (eg standards, number of samples submitted which is in line with industry norms. Sample chain of custody was
blanks, duplicates, external laboratory checks) and whether secure from point of sampling to point of reporting.
acceptable levels of accuracy (i.e. lack of bias) and precision
have been established. In addition two batches of ‘umpire’ analyses were submitted to a second lab. The first batch
comprised 17 samples initially analysed at K-UTEC sent to Intertek-Genalysis for umpire. The
second umpire batch comprised 23 samples from Intertek-Genalysis sent to SRC laboratory in
Saskatoon for umpire. They demonstrate excellent validation of the primary laboratory analyses.
Potash intersections for EK_49 to EK_51 were partially sampled for geotechnical test work and
so were not available in full for chemical analysis. Gamma ray CPS data was converted to API
units which were then converted to KCl % by the application of a conversion factor known, or K-
factor. The geophysical logging was carried out by independent downhole geophysical logging
company Wireline Workshop (WW) of South Africa, and data was processed by WW. Data
collection, data processing and quality control and assurance followed a stringent operating
procedure. API calibration of the tool was carried out at a test-well at WW’s base in South Africa
to convert raw gamma ray CPS to API using a coefficient for sonde NGRS6569 of 2.799 given a
standard condition of a diameter 150mm bore in fresh water (1.00gm/cc mud weight).
To provide a Kola-specific field based K-factor, log data were converted via a K-factor derived
from a comparison with laboratory data for drill-holes EK_13, EK_14 and EK_24. In converting
from API to KCl (%), a linear relationship is assumed (no dead time effects are present at the
count rates being considered). To remove all depth and log resolution variables, an ‘area-under-
the-curve’ method was used to derive the K factor. This overcomes the effect of narrow beds not
being fully resolved as well as the shoulder effect at bed boundaries. For this, laboratory data
was converted to a wireline log and all values between ore zones were assigned zero. A block
was created that covered all data and both wireline gamma ray log (GAMC) and laboratory data
log were summed in terms of area under the curves. From this like-for –like comparison a K
factor of 0.074 was calculated. In support if this factor, it compares well with the theoretical K-
factor derived using Schlumberger API to KCl conversion charts which would be 0.0767 for this
tool in hole of PQ diameter (125 mm from calliper data. As a check on instrument stability over
time, EK_24 is logged frequently. No drift in the gamma-ray data is observed.
As confirmation of the accuracy of the API-derived KCl grades for EK_49 to EK_51, samples for
the intervals that were not taken for geotechnical sampling, were sent to Intertek-Genalysis for
analysis. The results are within 5% of the API-derived KCl and thickness, and so the latter was
used unreservedly for the Mineral Resource estimation.
1.7 Verification of • The verification of significant intersections by either independent 40 samples of a variety of grades and drill-holes were sent for umpire analysis and as described
sampling and assaying or alternative company personnel. these support the validity of the original analysis. Other validation comes from the routine
• The use of twinned holes. geophysical logging of the holes. Gamma data provides a very useful check on the geology and
Page 52 of 71
Criteria JORC Code explanation Commentary
• Documentation of primary data, data entry procedures, data grade of the potash and for all holes a visual comparison is made in log form. API data for a
verification, data storage (physical and electronic) protocols. selection of holes (EK_05, EK_13, EK_14, EK_24) were formally converted to KCl grades. In all
• Discuss any adjustment to assay data. cases the API derived KCl supports the reported intersections.
As mentioned above; K6, K18, K19, K20, K21 were used in the geological modelling but not for
the grade estimate. K6 and K18 were twinned in 2010 and the comparison of the geological data
is excellent, providing validation that the geological information for the aforementioned holes
could be used with a high degree of confidence.
1.8 Location of data • Accuracy and quality of surveys used to locate drill holes (collar A total of 50 Resource related drill-holes have been drilled by the Company: EK_01 to EK_52.
points and down-hole surveys), trenches, mine workings and other EK_37 and EK_48 were geotechnical holes. Of the 50 Resource holes, 4 stopped short above
locations used in Mineral Resource estimation. the Salt Member due to drilling difficulties. Of the 46 Resource holes drilled into the Salt Member,
• Specification of the grid system used. all except 4 contained a significant Sylvinite intersection.
• Quality and adequacy of topographic control.
The collars of all drill-holes up to EK_47 including historic holes were surveyed by a professional
land surveyor using a DGPS. EK_48 to EK_52 were positioned with a handheld GPS initially
(with elevation from the LIDAR data) and later with a DGPS. All data is in UTM zone 32 S using
WGS 84 datum.
Topography for the bulk of the Mineral Resource area is provided by high resolution airborne
LIDAR (Light Detection and Ranging) data collected in 2010, giving accuracy of the topography
to <200 mm. Beyond this SRTM 90 satellite topographic data was used. Though of relatively low
resolution, it is sufficient as the deposit is an underground mining project.
1.9 Data spacing and • Data spacing for reporting of Exploration Results. In most cases drill-holes are 1-2 km apart. A small number of holes are much closer such as
distribution • Whether the data spacing and distribution is sufficient to EK_01 and K18, EK_04 and K6, EK_14 and EK_24 which are between 50 and 200 m apart.
establish the degree of geological and grade continuity
appropriate for the Mineral Resource and Ore Reserve
The drill-hole data is well supported by 186 km of high frequency closely spaced seismic data
estimation procedure(s) and classifications applied.
acquired by the Company in 2010 and 2011 that was processed to a higher standard in 2016.
• Whether sample compositing has been applied.
This data provides much guidance of the geometry and indirectly the mineralogy of the potash
seams between and away from the holes, as well as allowing the delineation of discontinuities
affecting the potash seams. The combination of drill-hole data and the seismic data supports
geological modelling with a level of confidence appropriate for the classification assigned to the
Measured, Indicated and Inferred sections of the deposit. The seismic data is described in
greater detail below.
Two sources of seismic data were used to support the Mineral Resource model:
1) Historical oil industry seismic data of various vintage and acquired by several
companies, between 1989 and 2006. The data is of low frequency and as final SEG-Y
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Criteria JORC Code explanation Commentary
files as PreStack Time Migrated (PreSTM) form. Data was converted to depth by
applying a velocity to best tie the top-of-salt reflector with drill-hole data. The data
allows the modelling of the top of the Salt Member (base of the Anhydrite Member) and
some guidance of the geometry of the layers within the Salt Member.
2) The Company acquired 55 lines totalling 185.5 km of data (excluding gaps on two lines)
in 2010 and 2011. These surveys provide high frequency data specifically to provide
quality images for the relatively shallow depths required (surface to approximately 800
m). Data was acquired on strike (tie lines) and dip lines. Within the Measured Mineral
Resource area lines are between 100 and 200 m apart. Data was re-processed in
2016, for the 2017 Mineral Resource update, by DMT Petrologic GmbH (DMT) of
Germany. DMT worked up the raw field data to post stack migration (PoSTM) and
PreSTM format. By an iterative process of time interpretation of known reflectors (with
reference to synthetic seismograms) the data was converted to PreStack depth
migrated (PSDM) form. Finally, minor adjustments were made to tie the data exactly
with the drill-hole data.
The Competent Person reviewed the seismic data and processing and visited DMT in Germany
for meetings around the final delivery of the data to the Company.
1.10 Orientation of data in • Whether the orientation of sampling achieves unbiased All exploration drill-holes were drilled vertically and holes were surveyed to check for deviation.
relation to geological sampling of possible structures and the extent to which this is In almost all cases tilt was less than 1 degree (from vertical). Dip of the potash seam intersections
structure known, considering the deposit type. ranges from 0 to 45 degrees with most dipping 20 degrees or less. All intersections with a dip of
• If the relationship between the drilling orientation and the greater than 15 degrees were corrected to obtain the true thickness, which was used for the
orientation of key mineralised structures is considered to have creation of the Mineral Resource model.
introduced a sampling bias, this should be assessed and
reported if material.
1.11 Sample security • The measures taken to ensure sample security. At the rig, the core is under full time care of a Company geologist and end of each drilling shift,
the core is transported by Kore Potash staff to a secure site where it is stored within a locked
room. Sampling is carried out under the fulltime watch of Company staff; packed samples are
transported directly from the site by Company staff to DHL couriers in Pointe Noire 3 hours away.
From here DHL airfreight all samples to the laboratory. All core remaining at site is stored is
wrapped in plastic film and sealed tube bags, and within an air-conditioned room (17-18 degrees
C) to minimize deterioration.
1.12 Audits or reviews • The results of any audits or reviews of sampling techniques and The Competent Person has visited site to review core and to observe sampling procedures. As
data. part of the Mineral Resource estimation, the drill-hole data was thoroughly checked for errors
including comparison of data with the original laboratory certificates; no errors were found.
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Section 2 Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section.)
Criteria JORC Code explanation Commentary
2.1 Mineral tenement and • Type, reference name/number, location and ownership including The Kola deposit is within the Kola Mining Lease which is held 100% under the local company
land tenure status agreements or material issues with third parties such as joint Kola Mining SARL which is in turn held 100% by Sintoukola Potash SA RoC, of which Kore
ventures, partnerships, overriding royalties, native title interests, Potash holds a 97% share. The lease was issued August 2013 and is valid for 25 years. There
historical sites, wilderness or national park and environmental are no impediments on the security of tenure.
settings.
• The security of the tenure held at the time of reporting along with
any known impediments to obtaining a licence to operate in the
area.
2.2 Exploration done by • Acknowledgment and appraisal of exploration by other parties. Potash exploration was carried out in the area in the1960's by Mines de Potasse d’ Alsace S.A
other parties in the 1960’s. Holes K6, K18, K19, K20, K21 are in the general area. K6 and K18 are within the
deposit itself and both intersected Sylvinite of the Upper and Lower Seam; it was the following
up of these two holes by Kore Potash (then named Elemental Minerals) that led to the discovery
of the deposit in 2012.
Oil exploration in the area has taken place intermittently from the 1950’s onwards by different
workers including British Petroleum, Chevron, Morel et Prom and others. Seismic data collected
by some of these companies was used to guide the evaporite depth and geometry within the
Inferred Mineral Resource area. Some oil wells have been drilled in the wider area such as Kola-
1 and Nkoko-1.
2.3 Geology • Deposit type, geological setting and style of mineralisation. The potash seams are hosted by the 300-900 m thick Lower Cretaceous-aged (Aptian age)
Loeme Evaporite formation These sedimentary evaporite rocks belong to the Congo (Coastal)
Basin which extends from the Cabinda enclave of Angola to the south well into Gabon to the
north, and from approximately 50 km inland to some 200-300 km offshore. The evaporites were
deposited between 125 and 112 million years ago, within a post-rift ‘proto Atlantic’ sub-sea level
basin following the break-up of Gondwana forming the Africa and South America continents.
The evaporite is covered by a thick sequence of carbonate rocks and clastic sediments of
Cretaceous age to recent (Albian to Miocene), referred to as the ‘Cover Sequence’, which is
between 170 and 270 m thick over the Kola deposit. The lower portion of this Cover Sequence
is comprised of dolomitic rocks of the Sendji Formation. At the top of the Loeme Formation,
separating the Cover Sequence and the underlying Salt Member is a layer of anhydrite and clay
typically between 5 and 15 m thick and referred to as the Anhydrite Member. At Kola, this layer
rests un-conformably over the Salt-Member, as described in more detail below.
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Within the Salt Member, ten sedimentary-evaporative cycles (I to X) are recognized with a vertical
arrangement of mineralogy consistent with classical brine-evolution models; potash being close
to the top of cycles. The Salt Member and potash layers formed by the seepage of brines into
an extensive sub sea-level basin. Evaporation resulted in precipitation of evaporite minerals over
a long period of time, principally halite (NaCl), carnallite (KMgCl3·6H2O) and bischofite
(MgCl2·6H2O), which account for over 90% of the evaporite rocks. Sylvinite formed by the
replacement of Carnallitite within certain areas. Small amounts of gypsum, anhydrite, dolomite
and insoluble material (such as clay, quartz, organic material) is present, typically concentrated
in relatively narrow layers at the base of the cycles (interlayered with Rock-salt), providing useful
‘marker’ layers. The layers making up the Salt Member are conformable and parallel or sub-
parallel and of relatively uniform thickness across the basin, unless affected by some form of
discontinuity.
There are upwards of 100 potash layers within the Salt Member ranging from 0.1 m to over 10
m in thickness. The Kola deposit is hosted by 4 seams within cycles 7, 8 and 9, from uppermost
these are; Hangingwall Seam (HWS), Upper Seam (US), Lower Seam (LS), Footwall Seam
(FWS). Seams are separated by Rock-salt.
Individual potash seams are stratiform layers that can be followed across the basin are of
Carnallitite except where replaced by Sylvinite, as is described below. The potash mineralogy is
simple; no other potash rock types have been recognized and Carnallitite and Sylvinite are not
inter-mixed. The seams are consistent in their purity; all intersections of Sylvinite are comprised
of over 97.5% euhedral or subhedral halite and sylvite of medium to very coarse grainsize (0.5
mm to >-5 mm). Between 1.0 and 2.5% is comprised of anhydrite (CaSO4) and a lesser amount
of insoluble material. At Kola the potash layers are flat or gently dipping and at depths of between
190 and 340 m below surface.
The contact between the Anhydrite Member and the underlying salt is an unconformity and due
to the undulation of the layers within the Salt Member at Kola, the thickness of the salt member
beneath this contact varies. This is the principal control on the extent and distribution of the
seams at Kola and the reason why the uppermost seams such as the Hangingwall Seam are
sometimes absent, and the lower seams such as the Upper and Lower Seam are preserved over
most of the deposit.
The most widely distributed Sylvinite seams at Kola are the US and LS, hosted within cycle 8 of
the Salt Member. These seams have an average grade of 35.5 and 30.5 % KCl respectively and
average 3.7 and 4.0 m thick. The Sylvinite is thinned in proximity to leached zones or where they
‘pinch out’ against Carnallitite. They are separated by 2.5-4.5 m thick Rock-salt layer referred to
as the interburden halite (IBH). Sylvinite Hangingwall Seam is extremely high grade (55-60%
KCl) but is not as widely preserved as the Upper and Lower Seam being truncated by the
Anhydrite Member over most of the deposit. Where it does occur, it is approximately 60 m above
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the Upper Seam and is typically 2.5 to 4.0 m thick. The Top Seams are a collection of narrow
high grade seams 10-15 m above the Hangingwall Seam but are not considered for extraction
at Kola as they are absent (truncated by the Anhydrite Member) over almost all the deposit.
The Footwall Seam occurs 45 to 50 m below the Lower Seam. The mode of occurrence is
different to the other seams in that it is not a laterally extensive seam, but rather elongate lenses
with a preferred orientation, formed not by the replacement of a seam, but by the ‘accumulation’
of potassium at a particular stratigraphic position. It forms as lenses of Sylvinite up to 15 m thick
and always beneath areas where the Upper and Lower seam have been leached. It is considered
a product of re-precipitation of the leached potassium, into pre-existing Carnallitite-Bischofitite
unit at the top of cycle 7.
The insoluble content of the seams and the Rock-salt immediately above and below them is
uniformly low (<0.2%) except for the FWS which has an average insoluble content of 1%. Minor
anhydrite is present throughout the Salt Member, as 0.5-3 mm thick laminations but comprise
less than 2.5% of the rock mass of the potash layers.
Reflecting the quiescence of the original depositional environment, the Sylvinite seams exhibit
low variation in terms of grade, insoluble content, magnesium content; individual sub-layers and
mm thick laminations within the seams can be followed across the deposit. The grade profile of
the seams is consistent across the deposit except for the FWS; the US is slightly higher grade
at its base, the LS slightly higher grade at its top. The HWS is 50 to 60% sylvite (KCl) throughout.
The FWS, forming by introduction of potassium and more variable mode of formation has a
higher degree of grade variation and thickness.
The original sedimentary layer and ‘precursor’ potash rock type is Carnallitite and is preserved
in an unaltered state in many holes drill-holes, especially of LS and in holes that are lateral to the
deposit. It is comprised of the minerals carnallite (KMgCl3·6H2O), halite (NaCl) (these two
minerals comprise 97.5% of the rock) and minor anhydrite and insolubles (<2.5%). The
Carnallitite is replaced by Sylvinite by a process of ‘outsalting’ whereby brine (rich in dissolved
NaCl) resulted in the dissolution of carnallite, and the formation of new halite (in addition to that
which may already be present) and leaving residual KCl precipitating as sylvite. This ‘outsalting’
process produced a chloride brine rich in Mg and Na, which presumably continued filtering down
and laterally through the Salt Member.
The grade of the Sylvinite is proportional to the grade of the precursor Carnallitite. For example,
in the case of the HWS when Carnallitite is 90 percent carnallite (and grades between 24 and 25
percent KCl), if all carnallite was replaced by sylvite the resulting Sylvinite would theoretically be
70.7 percent (by weight) sylvite. However, as described above the inflowing brine introduced new
halite into the potash layer, reducing the grade so that the final grade of the Sylvinite of layer 3/IX
is between 50 and 60 percent KCl (sylvite).
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Importantly, the replacement of Carnallitite by Sylvinite advanced laterally and always in a top-
down sense within the seam. This Sylvinite-Carnallitite transition (contact) is observed in core
and is very abrupt. Above the contact the rock is completely replaced (Sylvinite with no carnallite)
and below the contact the rock is un-replaced (Carnallitite with no sylvite). In many instances the
full thickness of the seam is replaced by Sylvinite, in others the Sylvinite replacement advanced
only part-way down through the seam. Carnallitite is reliably distinguished from Sylvinite based
on any one of the following:
• Visually: Carnallitite is orange, Sylvinite is orange-red or pinkish red in colour and less
vibrant.
• Gamma data: Carnallitite < 350 API, Sylvinite >350 API
• Magnesium data: Sylvinite at Kola does not contain more than 0.1% Mg. Instances of
up to 0.3% Mg within Sylvinite explained by 1-2 cm of Carnallitite included in the
lowermost sample where underlain by Carnallitite. Carnallitite contains upwards to 5%
Mg.
• Acoustic televeiwer and calliper data clearly identify Carnallitite from Sylvinite.
Based on the ‘stage’ of replacement, 5 seam types are recognized. The replacement process
was extremely effective, no mixture of Carnallitite and Sylvinite is observed, and within a seam,
Carnallitite is not found above Sylvinite.
It is thought that over geological time groundwater and/or water released by the dehydration of
gypsum (during conversion to anhydrite in the Anhydrite Member) infiltrated the Salt Member
under gravity, centred on areas of ‘relatively disturbed stratigraphy’ referred to as RDS zones
(not to be confused with subsidence anomalies, see section 3.5). In these areas the salt appears
to be gently undulating over broad zones, or forms more discrete strike extensive gentle
antiformal features. There appears to be a correlation of these areas with small amounts
undulation of the overlying strata and the Salt Member and thickening of the Bischofitite at the
top of Cycle 7 (some 45-50 m below the LS). The cause of the undulation appears to be related
to immature salt-pillowing.
The process of sylvinite formation appears to have been very gradual and non-destructive; where
leached, the salt remains in-tact and layering is preserved. Brine or voids are not observed.
Fractures within the Salt Member appear to be restricted to areas of localized subsidence, as
observed in potash deposits mined elsewhere, and described in more detail in section 3.5.
Within and lateral to the RDS zones, brine moved downward then laterally, preferentially along
the thicker higher porosity Carnallitite layers, replacing the carnallite with sylvite (as described in
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Criteria JORC Code explanation Commentary
preceding text) 10s to 100’s metres laterally and to a depth of 80-90 m below the Anhydrite
Member. Beyond the zone affected by sylvite replacement, the potash is of unaltered primary
Carnallitite. In the intermediate zone, the lower part of the layer may not be replaced supporting
a lateral then ‘top-down’ replacement of the seams. For the most part the US is ‘full’ (fully
replaced by Sylvinite), and the LS often is Carnallitite especially within synformal areas giving
rise to pockets or troughs of Carnallitite. The HWS, being close to the anhydrite is only preserved
in synformal areas where it is always Sylvinite (being close to the top of the Salt Member), or
lateral to the main deposit where it is likely to be Carnallitite, relating to the broader control on
the zone of Sylvinite formation discussed below.
Some of the longer seismic lines show that the relative disturbance of the salt over much of Kola
relates to the ‘elevation’ of the stratigraphy due to the formation of a northwest-southeast
orientated horst block, bound either side by half-graben. The horst block referred to as the ‘Kola
High’ and is approximately 8 km wide and at least 20 km in length. Lateral to this ‘high’ Sylvinite
is rarely found except immediately beneath (within 5-10 m of) the Anhydrite Member.
2.4 Drill hole Information • A summary of all information material to the understanding of All drill-hole collar information for holes relevant to the Mineral Resource estimate was provided
the exploration results including a tabulation of the following in Table 5 of the announcement (dated 6 July 2017), including historic holes. Hydrological drill-
information for all Material drill holes: holes are excluded as they were drilled to a shallow depth. All holes except one were drilled
o easting and northing of the drill hole collar vertically and deflection from this angle was less than 3 degrees for almost all holes. Holes were
o elevation or RL (Reduced Level – elevation above sea level surveyed with a gyroscope or magnetic deviation tool to obtain downhole survey data.
in metres) of the drill hole collar
o dip and azimuth of the hole
o down hole length and interception depth
o 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 thickness of the seams, the standard ‘length-
methods techniques, maximum and/or minimum grade truncations (eg weighted’ compositing method was used to combine individual results within each seam
cutting of high grades) and cut-off grades are usually Material intersection.
and should be stated.
• Where aggregate intercepts incorporate short lengths of high No selective cutting of high or low grade material was carried out as it is not justified given the
grade results and longer lengths of low grade results, the massive nature of the potash mineralization and absence of the localised high/low grade areas.
procedure used for such aggregation should be stated and some
typical examples of such aggregations should be shown in Results for short lengths of high grade material included in the Mineral Resource Estimate are
detail. justifiable based on their lateral continuity. They were included in the full seam grade by
• The assumptions used for any reporting of metal equivalent standard ‘length-weighted’ compositing.
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values should be clearly stated.
No metal equivalents were calculated.
2.6 Relationship between • These relationships are particularly important in the reporting of All mineralised intersections where the dip of the seam is 15 degrees or greater were corrected
mineralisation widths and Exploration Results. to obtain true thickness which was used in the Mineral Resource Estimate.
intercept lengths • If the geometry of the mineralisation with respect to the drill hole
angle is known, its nature should be reported.
• If it is not known and only the down hole lengths are reported,
there should be a clear statement to this effect (eg ‘down hole
length, true width not known’).
2.7 Diagrams • Appropriate maps and sections (with scales) and tabulations of The original announcement (dated 6 July 2017) included appropriate maps and sections.
intercepts should be included for any 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 Results is not Not relevant to the reporting of the Mineral Resource Estimate.
practicable, representative reporting of both low and high grades
and/or widths should be practiced to avoid misleading reporting
of Exploration Results.
2.9 Other substantive • Other exploration data, if meaningful and material, should be All substantive data has been reported herein.
exploration data reported including (but not limited to): geological observations;
geophysical survey results; geochemical survey results; bulk
samples – size and method of treatment; metallurgical test
results; bulk density, groundwater, geotechnical and rock
characteristics; potential deleterious or contaminating
substances.
2.10 Further work • The nature and scale of planned further work (eg tests for lateral The exploration database should be updated with the most recent drilling data. No other further
extensions or depth extensions or large-scale step-out drilling). work is necessary currently. If conversion of Indicated resources to Measured and Inferred to
• Diagrams clearly highlighting the areas of possible extensions, Indicated Mineral Resource is deemed important, additional seismic data would need to be
including the main geological interpretations and future drilling acquired. Furthermore, the deposit is open laterally, in places to the west and east (though in the
areas, provided this information is not commercially sensitive. case of the latter is limited by the Mining Lease boundary) and probably to the greatest extent to
the southeast, along the strike of the Kola High. Additional drilling and seismic data may allow
the delineation of additional resources in these areas if results of the work are positive.
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Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)
Criteria JORC Code explanation Commentary
3.1 Database integrity • Measures taken to ensure that data has not been corrupted by, Geological data is collected in hardcopy then captured digitally by data entry. All entries are
for example, transcription or keying errors, between its initial thoroughly checked. During import into Micromine© software, an error file is generated identifying
collection and its use for Mineral Resource estimation purposes. any overlapping intervals, gaps and other forms of error. The data is then compared visually in
• Data validation procedures used. the form of strip logs against geophysical data. Laboratory data was imported into an Access
database using an SQL driven software, to sort QA-QC samples and a check for errors is part of
the import. Original laboratory result files are kept as a secure record. For the Mineral Resource
model a ‘stratigraphic file’ was generated, as synthesis of key geological units, based on
geological, geophysical and assay data. The stratigraphic file was then used as a key input into
the Mineral Resource model; every intersection and important contact was checked and re-
checked, by visual comparison with the other data types in log format. Kore Potash is in the
process of creating an updated database, to include the most recent geology and assay data.
For the process of setting up a Mineral Resource database, Met-Chem division of DRA Americas
Inc., a subsidiary of the DRA Group underwent a rigorous exercise of checking the database,
including a comparison with the original laboratory certificates. Once an explanation of the files
had had been provided, no errors were found with the assay or stratigraphic data, or with the
other data types imported (collar, survey, geophysics). The database is considered as having a
high degree of integrity.
3.2 Site visits • Comment on any site visits undertaken by the Competent The Competent Person visited the project from the 5-7 November 2016 to view drill-hole sites,
Person and the outcome of those visits. the core shed and sample preparation area. Explanation of all procedures were provided by the
• If no site visits have been undertaken indicate why this is the Company, and a procedural document for core logging, marking and sampling reviewed. Time
case. was spent reviewing core and hard copy geological logs. All was found to meet or exceed the
industry standards.
3.3 Geological • Confidence in (or conversely, the uncertainty of) the geological Recognition and correlation of potash and other important layers or contacts between holes is
interpretation interpretation of the mineral deposit. straightforward and did not require assumptions to be made, due the continuity and unique
• Nature of the data used and of any assumptions made. characteristics of each of the evaporite layers; each being distinct when thickness, grade and
• The effect, if any, of alternative interpretations on Mineral grade distribution, and stratigraphic position relative to other layers is considered. Further
Resource estimation. support is provided by the reliable identification of ‘marker’ units within and at the base of the
• The use of geology in guiding and controlling Mineral Resource evaporite cycles. Correlation is further aided by the downhole geophysical data clearly shows
estimation. changes in mineralogy of the evaporite layers and is used to validate or adjust the core logged
• The factors affecting continuity both of grade and geology. depths of the important contacts. The abrupt nature of the contacts, particularly between the
Rock-salt, Sylvinite and Carnallitite contributes to above.
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Between holes the seismic interpretation is the key control in the form and extent of the Sylvinite,
in conjunction with the application of the geological model. The controls on the formation of the
Sylvinite is well understood and the ‘binary’ nature of the potash mineralization allows an
interpretation with a degree of confidence that relates to the support data spacing, which in turn
is reflected in the classification. In this regard geology was relied upon to guide and control the
model, as described in detail section 3.5. Alternative interpretations were tested as part of the
modelling process but generated results that do not honour the drill-hole data as well as the
adopted model.
The following features affect the continuity of the Sylvinite or Carnallitite seams, all of which are
described further in Section 3.5. By using the seismic data and the drill-hole data, the Mineral
Resource model captures the discontinuities with a level of confidence reflected in the
classification.
• where the seams are truncated by the anhydrite
• where the Sylvinite pinches out becoming Carnallitite or vice versa
• areas where the seams are leached within zones of subsidence
Outside of these features, grade continuity is high reflecting the small range in variation of
grade of each seam, within each domain. Further description of grade variation is provided in
later in text.
3.4 Dimensions • The extent and variability of the Mineral Resource expressed as In its entirety, the deposit is 14 km in length (deposit scale strike) and 9 km in width. The
length (along strike or otherwise), plan width, and depth below shallowest point of the upper most Sylvinite (of the HWS) is approximately 190 metres below
surface to the upper and lower limits of the Mineral Resource. surface. The depth to the deepest Sylvinite (of the FWS) is approximately 340 metres below
surface. The thickness of the seams was summarized in Table 3 of the original announcement
(dated 6 July 2017).
3.5 Estimation and • The nature and appropriateness of the estimation technique(s) Table 8 and Table 9 of the original announcement (dated 6 July 2017) provide the Mineral
modelling techniques applied and key assumptions, including treatment of extreme Resource for Sylvinite and Carnallitite at Kola. This Mineral Resource replaces that dated 21
grade values, domaining, interpolation parameters and August 2012, prepared by CSA Global Pty Ltd. This update incorporates reprocessed seismic
maximum distance of extrapolation from data points. If a data and additional drilling data. Table 10 and Table 11 of the original announcement (dated 6
computer assisted estimation method was chosen include a July 2017) provide the Sylvinite and Carnallitite Mineral Resource from 2012. The updated
description of computer software and parameters used. Measured and Indicated Mineral Resource categories are not materially different from the 2012
• The availability of check estimates, previous estimates and/or estimate and is of slightly higher grade. The Inferred category has reduced due to the reduction
mine production records and whether the Mineral Resource in the FWSS tonnage, following the updated interpretation of it being present within relatively
estimate takes appropriate account of such data. narrow lenses that are more constrained than in the previous interpretation. There is no current
• The assumptions made regarding recovery of by-products. plan to consider the FWSS as a mining target and so the reduction in FWSS tonnage is of no
• Estimation of deleterious elements or other non-grade variables consequence to the project’s viability.
of economic significance (eg sulphur for acid mine drainage
characterisation).
• In the case of block model interpolation, the block size in relation
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to the average sample spacing and the search employed. As described in section 3.3, the spatial application of the geological model was central to the
• Any assumptions behind modelling of selective mining units. creation of the Mineral Resource model. Geological controls were used in conjunction with the
• Any assumptions about correlation between variables. seismic data interpretation. The process commenced with the interpretation of the depth
• Description of how the geological interpretation was used to migrated drill-hole-tied seismic data in Micromine 2013 © involving the following. Table 7 of the
control the resource estimates. original announcement (dated 6 July 2017) provides an explanation of abbreviations used in text.
• Discussion of basis for using or not using grade cutting or
capping. 1. Interpretation of the base of anhydrite surface or salt roof (SALT_R) which is typically
• The process of validation, the checking process used, the a distinct seismic event.
comparison of model data to drill hole data, and use of 2. Interpretation of base of salt, the ‘intra-salt marker’ and ‘base cycle 8’ (BoC8) markers.
reconciliation data if available. Based on synthetic seismograms the latter is a negative event picking out the contrast
between the top of the Cy78 and overlying Rock-salt.
Using Leapfrog Geo 4.0 (Leapfrog) surfaces were created for the SALT_R and BoC8 . In doing
so, an assessment of directional control on the surfaces was made; following the observation
based on the sectional interpretation a WNW-ESE ‘strike’ is evident. Experimental semi-
variograms were calculated for the surface elevation values at 10° azimuth increments. All
experimental semi-variograms were plotted; 100° and 10° produce good semi-variograms for
the directions of most and least continuity respectively. This directional control was adopted for
the modelling of surfaces, created in Leapfrog on a 20 by 20 m ‘mesh’ using a 2:1 ellipsoid ratio
(as indicated by the semi-variogram ranges).
The following steps were then carried out:
1. The BoC8 surface was projected up to the position of the Upper Seam roof (US_R) by
‘gridding’ the interval between these units from drill-hole data. On seismic lines, The
US_R interpretation was then adjusted to fit reflectors at that position, considering
interference features common in the data in the Salt Member close to the SALT_R
2. In all cases drill-hole intersections were honoured. In addition to USS and USC
intersections, the small number of leached US intersections, all within subsidence
zones) were used to guide the seam model.
3. The new US_R interpretation along seismic lines, was then ‘gridded’ in Leapfrog, also
into a mesh of 20 m by 20 m resolution making use of the 100° directional control and
2:1 anisotropy, to create a new US_R surface.
The Mineral Resource model has two potash domains in order to represent the geology i.e.
Sylvinite or Carnallitite. A third non-potash domain areas of leaching and/or subsidence as
described in the following text. Using the reference horizons, the Sylvinite and Carnallitite seam
model was developed as follows:
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1. The US_R surface was fixed as the reference horizon for the modelling of the US, LS
and HWS. The US_R surface was imported into Datamine Studio 3 (Datamine), using
the same 20 by 20 m cells as described above.
2. The US Sylvinite (USS) model was developed by analysing the position of the cell in
relation to the SALT_R and to the RDS zones. The latter were interpreted from seismic
data. As described in section 2.3 these attributes are the main geological controls.
3. To a lesser extent the dip of the seam and the relative elevation of each cell, relative
to the cells within a 100 by 100 m area were also considered, to further identify Sylvinite
with the understanding that areas of very low dip are more likely to be of Carnallitite.
4. Beyond the 2010/2011 seismic data (within the Indicated Mineral Resource area) the
influence of the distance from RDS zones was reduced and the proximity to the
SALT_R and the dip and relative elevation were assigned greater consideration.
5. Seam thickness of the USS was determined by gridding the drill-hole data of the full
Sylvinite intersections (excluding those that have a Carnallitite basal layer or are
leached) using Inverse distance squared (IDW2) and adjusting it to account for the
influence of 2 and 3 above. The Sylvinite thickness was then subtracted from the
elevation of the US_R to create the USS floor (USS_F), on the 20m by 20m mesh.
6. Only the true thickness of drill-hole intersections were used (i.e. corrections for any dip
were made) for the above. As the seam model thickness developed in a vertical sense,
areas of the model with a dip were corrected so that the true thickness was always
honoured.
7. Even if the USS has zero thickness the surface for the USS_F was created, overlying
exactly that of the US_R to facilitate the creation of DTMs for each surface.
8. The same method (effectively the inverse) was applied to create the US Carnallitite
model (USC) below the USS. The roof of the USC (USC_R) is the same surface as
the USS_F.
9. A number of iterations of the model were produced and assessed. The selected model
was the one that produced a result that ties well with the drill-hole data and honours
the proportional abundance of Sylvinite as intersected in the drill-holes.
The Lower Seam model was created in a similar manner as follows:
1. The LS is separated by between 2 and 6 metres of barren Rock-salt, also referred to
as the Interburden-halite or IBH. This layer is an important geotechnical consideration
and so care was taken to model it. The IBH thickness from drill-hole data was ‘gridded’
in Datamine using IDW2 into the 20 by 20 cells. This thickness was then subtracted
from the elevation of the US_F to obtain the LS_R elevation from which a DTM was
made.
2. Unlike the USS the LSS is often underlain by a layer of Carnallitite. For the LSS model
the thickness of the LSS from drill-hole data was gridded using IDW2 into the 20 x 20
mesh without influence from distance to the SALT_R or RDS zones. However, based
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on the geological understanding that LSS rarely occurs beneath USC the LSS model
was cut accordingly, based on the USC model. Reflecting the model and based on
analysis the following rule was also applied; that if the US is ‘full’ then the LSS is also
full but only if the LS_R is within 30 m of the SALT_R. Finally, if the US_R is truncated
by the SALT_R, then the remaining LS is modelled as full LSS due to its proximity to
the SALT_R.
For the US and LS Inferred Resources, the distribution of Sylvinite and Carnallitite was by manual
interpretation based on available drill-hole data and plots of the distance between the seam and
the SALT_R. The thickness of the USS and LSS was determined by gridding all USS drill-hole
data. The Carnallitite was then modelled as the Inverse of the Sylvinite model, in adherence to
the geological model.
The Hangingwall seam model was created as follows
1. The distance between the US_R and HWS_R in drill-hole intersection was
gridded using IDW2 into the 20 by 20 m mesh. This data was then added to the
elevation of the US_R to create a HWS_R.
2. Being close to the SALT_R (within 30 m in all cases) there is less variation in
domain type; in all areas except for the zone labelled ‘A’ on Figure 24 of the
original announcement (dated 6 July 2017) the USS is full Sylvinite (not underlain
by USC). For all HWS outside of zone A the model was created by gridding the
thickness using IDW2 into the 20 x 20 mesh.
3. The HWS model was created without input from distance to the SALT_R or RDS
zones for the reasons stated above, by gridding of the drill-hole intersections.
4. Within the area labelled ‘A’ on Figure 24 of the original announcement (dated 6
July 2017), the HWSS is underlain by HWSC and so this was incorporated into
the model.
5. Finally, the HWS was ‘pinched’ upwards from 4 m below the SALT_R to reflect
the geological observation that close to this surface the seam is leached.
Modelling of the Footwall Seam (FWS)
1. A different approach was adopted for the modelling of the FWS as the mode of
occurrence is different to the other seams as described in section 2.3. Only
Sylvinite (FWSS) was modelled as Carnallitite FWS is poorly developed or
absent, and low grade.
2. Drill-hole and seismic data was used to identify areas of leaching of the Salt
Member based on subsidence of the overlying strata signs of marked disturbance
of the salt, within which FWSS is typically developed. These were delineated in
plan view.
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Where possible drill-hole data was used to guide thickness of the FWS, in other
areas the thickness was interpreted using the seismic data. The FWS was
‘constructed’ from the top of the Cy7B upwards.
As is standard practice in potash mining zones of subsidence which pose a potential risk to
mining were identified using seismic and drill-hole data and classified from 1 to 3 depending on
severity where 3 is highest. Several drill-holes within or adjacent to these features show that the
Salt Member is intact but has experienced some disturbance and leaching.
The HWS, US and LS Mineral Resource models were ‘cookie-cut’ by these anomalies before
calculation of the Mineral Resource estimate. The FWSS model was not cut as that Sylvinite is
considered the product of potassium precipitation below the influence of the subsidence
anomalies.
Finally, all the potash seams were truncated (cut) by the SALT_R surface (base of the Anhydrite
Member) as it is an unconformity.
Traditional block modelling was employed for estimating %KCl, %Na, %Cl, %Mg, %S, %Ca and
%Insols (insolubles). No assumptions were made regarding correlation between variables. The
block model is orthogonal and rotated by 20 degrees reflecting the orientation of the deposit. The
block size chosen was 250m x 250m x 1m to roughly reflect drill hole spacing, seam thickness
and to adequately descretize the deposit without injecting error.
Volumetric solids were created for the individual mineralized zones (i.e., Hangingwall Seam,
Upper Seam, Lower Seam, Footwall Seam) for both Sylvinite and Carnallitite using drill hole data
and re-processed depth migrated seismic data. The solids were adjusted by moving the nodes
of the triangulated domain surfaces to exactly honour the drill hole intercepts. Numeric codes
denoting the zones within the drill hole database were manually adjusted to ensure the accuracy
of zonal intercepts. No assay values were edited or altered.
Once the domain solids were created, they were used to code the drill hole assays and
composites for subsequent statistical analysis. These solids or domains were then used to
constrain the interpolation procedure for the mineral resource model, the solids zones were then
used to constrain the block model by matching composites to those within the zones in a process
called geologic matching. This ensures that only composites that lie within a particular zone are
used to interpolate the blocks within that zone.
Relative elevation interpolation methods were also employed which is helpful where the grade is
layered or banded and is stratigraphically controlled. In the case of Kola, layering manifests itself
as a relatively high-grade band at the footwall, which gradually decreases toward the hanging
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wall. Due to the undulations of the deposit, this estimation process accounts for changes in dip
that are common in layered and stratified deposits.
The estimation plan includes the following:
• Store the mineralized zone code and percentage of mineralization.
• Apply the density, based on calculated specific gravity.
• Estimate the grades for each of the metals using the relative elevation method and
an inverse distance using three passes. The three estimation passes were used to
estimate the Resource Model because a more realistic block-by-block estimation can
be achieved by using more restrictions on those blocks that are closer to drill holes,
and thus better informed.
• Include a minimum of one composite and a maximum of nine, with a maximum of
three from any one drill hole.
The nature and distribution of the Kola Deposit shows uniform distribution of KCl grades without
evidence of multiple populations which would require special treatment by either grade limiting
or cutting. Therefore, it was determined that no outlier or grade capping was necessary.
The grade models have been developed using inverse distance and anisotropic search ellipses
measure 250 x 150 x 50 m and have been oriented relative to the main direction of continuity
within each domain. Anisotropic distances have been included during interpolation; in other
words, weighting of a sample is relative to the range of the ellipse. A sample at a range of 250
m along the main axis is given the same weight as a sample at 50 m distance located across the
strike of the zone.
A full set of cross-sections, long sections, and plans were used to check the block model on the
computer screen, showing the block grades and the composite. There was no evidence that any
blocks were wrongly estimated. It appears that block grades can be explained as a function of:
the surrounding composites, the solids models used, and the estimation plan applied. In addition,
manual ballpark estimates for tonnage to determine reasonableness was confirmed along with
comparisons against the nearest neighbor estimate.
As a check on the global tonnage, an estimate was made in Microsoft Excel by using the average
seam thickness and determining a volume based on the proportion of holes containing Sylvinite
versus the total number of holes (excluding those that did not reach the target depth) then
applying the mean density of 2.1 (t/m3) to determine the total tonnes. This was carried out for the
USS and LSS within the Measured and Indicated categories. A deduction was made to account
for loss within subsidence anomalies. The tonnage of this estimate is within 10% of the tonnage
of the reported Mineral Resource.
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3.6 Moisture • Whether the tonnages are estimated on a dry basis or with Mineral Resource tonnages are reported on an insitu basis (with natural moisture content),
natural moisture, and the method of determination of the Sylvinite containing almost no moisture and Carnallitite containing significant moisture within its
moisture content. molecular structure. Moisture content of samples was measured using the ‘Loss on Drying’ (LOD)
method at Intertek Genalysis as part of the suite of analyses carried out. Data shows that for
Sylvinite the average moisture content is 0.076 % and the maximum value was 0.6%.
Representative moisture analyses of Carnallitite are difficult as it is so hygroscopic. 38% of the
mass of the mineral carnallite is due to water (6 H20 groups within its structure). Using the KCl
data to work out a mean carnallite content, the Carnallitite has an average moisture content
approximately 25% insitu. It can be reliably assumed that this amount of moisture would have
been held by the Carnallitite samples at the time of analysis of potassium, in a temperate
atmosphere for the duration that they were exposed.
3.7 Cut-off parameters • The basis of the adopted cut-off grade(s) or quality parameters For Sylvinite, a cut-off grade (COG) of 10% was determined by an analysis of the Pre-feasibility
applied. and ‘Phased Implementation study’ operating costs analysis and a review of current potash
pricing. The following operating costs were determined from previous studies per activity per
tonne of MoP (95% KCl) produced from a 33% KCl ore, with a recovery of 89.5%:
• Mining $30/t
• Process $20/t
• Infrastructure $20/t
• Sustaining Capex $15/t
• Royalties $10/t
• Shipping $15/t
For the purpose of the COG calculation, it was assumed that infrastructure, sustaining capex,
royalty and shipping do not change with grade (i.e. are fixed) and that mining and processing
costs vary linearly with grade. Using these assumptions of fixed costs ($60/t) and variable costs
at 33% ($50/t) and a potash price of $250/t, we can calculate a cut-off grade where the expected
cost of operations equals the revenue. This is at a grade of 8.6% KCl. To allow some margin of
safety, a COG of 10% is therefore proposed. For Carnallitite, reference was made to the Scoping
Study for Dougou which determined similar operating costs for solution mining of Carnallitite and
with the application of a $250/t potash price a COG of 10% KCl is determined.
3.8 Mining factors or • Assumptions made regarding possible mining methods, The Kola Sylvinite has been the subject of several scoping studies as well as a publicly available
assumptions minimum mining dimensions and internal (or, if applicable, NI43-101 compliant PFS completed in September 2012 by SRK Consulting of Denver. The study
external) mining dilution. It is always necessary as part of the found that economic extraction of 2 to 5m thick seams with conventional underground mining
process of determining reasonable prospects for eventual machines is viable and that mining thickness as low as 1.8m can be supported. Globally, potash
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Criteria JORC Code explanation Commentary
economic extraction to consider potential mining methods, but is mined in similar deposits with seams of similar geometry and form. The PFS determined an
the assumptions made regarding mining methods and overall conversion of resources to reserves of 26%. A Definitive Feasibility Study is underway.
parameters when estimating Mineral Resources may not always
be rigorous. Where this is the case, this should be reported with Mining of Carnallitite is not planned at this stage but in the form, grade and quantity of the
an explanation of the basis of the mining assumptions made. Carnallitite does support reasonable ground for eventual economic extraction. A Scoping Study
complete in 2015 for the nearby Dougou Carnallitite deposit further supports this.
3.9 Metallurgical factors • The basis for assumptions or predictions regarding metallurgical The Kola Sylvinite ore represents a simple mineralogy, containing only sylvite, halite and minor
or assumptions amenability. It is always necessary as part of the process of fragments of other insoluble materials. Sylvinite of this nature is well understood globally and can
determining reasonable prospects for eventual economic be readily processed. Separation of the halite from sylvite by means of flotation has been proven
extraction to consider potential metallurgical methods, but the in potash mining districts in Russia and Canadas. Furthermore, metallurgical test work was
assumptions regarding metallurgical treatment processes and performed on all Sylvinite seams (HWSS, USS, LSS and FWSS) at the Saskatchewan Research
parameters made when reporting Mineral Resources may not Council (SRC) which confirmed the viability of processing the Kola ore by conventional flotation.
always be rigorous. Where this is the case, this should be
reported with an explanation of the basis of the metallurgical
assumptions made.
3.10 Environmental • Assumptions made regarding possible waste and process The Kola deposit is located in a sensitive environmental setting in an area that abuts the
factors or assumptions residue disposal options. It is always necessary as part of the Conkouati-Douli National Park (CDNP. Approximately 60% of the deposit is located within the
process of determining reasonable prospects for eventual economic development zone of the CDNP, while the remainder is within the buffer zone around
economic extraction to consider the potential environmental the park. The economic development zone does permit mining activities if it is shown that impact
impacts of the mining and processing operation. While at this can be minimised. For these reasons, Sintoukola Potash has focussed its efforts on
stage the determination of potential environmental impacts, understanding the environmental baseline and the potential impacts that the project will have.
particularly for a greenfields project, may not always be well Social, water, hydrobiology, cultural, archaeological, biodiversity, noise, traffic and economic
advanced, the status of early consideration of these potential baseline studies were undertaken as part of the ESIA process between 2011 and 2013. This led
environmental impacts should be reported. Where these aspects to the preparation of an Equator Principles compliant ESIA in 2013 and approval of this study by
have not been considered this should be reported with an the government in the same year.
explanation of the environmental assumptions made.
Waste management for the project is simplified by the proximity to the ocean, which acts as a
viable receptor for NaCl from the process plant. Impacts on the forest and fauna are minimised
by locating the process plant and employee facilities at the coast, outside the CDNP.
Relationships with the national parks, other NGO’s and community and government stakeholders
have been maintained continuously since 2011 and engagement is continuing for the ongoing
DFS. All stakeholders remain supportive of the project.
3.11 Bulk density • Whether assumed or determined. If assumed, the basis for the The separation of Carnallitite and Sylvinite (no instances of a mixed ore-type have been
assumptions. If determined, the method used, whether wet or observed) and that these rock types each comprise over 97.5% of only two minerals (Carnallitite
dry, the frequency of the measurements, the nature, size and of carnallite and halite; Sylvinite of sylvite and halite) means that density is proportional to grade.
representativeness of the samples. The mineral sylvite has a specific gravity of 1.99 and halite of 2.17. Reflecting this, the density of
• The bulk density for bulk material must have been measured by
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methods that adequately account for void spaces (vugs, Sylvinite is less if it contains more sylvite. The same is true of Carnallitite, carnallite having a
porosity, etc), moisture and differences between rock and density of 1.60.
alteration zones within the deposit.
• Discuss assumptions for bulk density estimates used in the Conventional density measurements using the weight in air and weight in water method were
evaluation process of the different materials. problematic due to the soluble nature of the core and difficulty applying wax to salt. As an
alternative, gas pycnometer analyses were carried out (71 on Sylvinite and 37 on Carnallitite
samples). Density by pycnometer was plotted against grade for each and a regression line was
plotted, the formula of which was used in the Mineral Resource model to determine the bulk
density of each block. As a check on the pycnometer data, the theoretical bulk density (assumes
a porosity of nil) was plotted using the relationship between grade and density described above.
As a further check, a ‘field density’ was determined for Sylvinite and Carnallitite from EK_49 and
EK_51 on whole core, by weighing the core and measuring the volume using a calliper, before
sending samples for analysis. An average field density of 2.10 was derived from the Sylvinite
samples, with an average grade of 39% KCl, and 1.70 for Carnallitite with an average grade of
21% KCl, supporting the pycnometer data. The theoretical and field density data support the
approach of determining bulk-density.
3.12 Classification • The basis for the classification of the Mineral Resources into Drill-hole and seismic data are relied upon in the geological modelling and grade estimation.
varying confidence categories. Across the deposit the reliability of the geological and grade data is high. Grade continuity is less
• Whether appropriate account has been taken of all relevant reliant on data spacing as within each domain grade variation is small reflecting the continuity of
factors (i.e. relative confidence in tonnage/grade estimations, the depositional environment and ‘all or nothing’ style of Sylvinite formation.
reliability of input data, confidence in continuity of geology and
metal values, quality, quantity and distribution of the data). It is the data spacing that is the principal consideration as it determines the confidence in the
• Whether the result appropriately reflects the Competent interpretation of the seam continuity and therefore confidence and classification; the further away
Person’s view of the deposit. from seismic and drill-hole data the lower the confidence in the Mineral Resource classification,
as summarized in Table 13 of the original announcement (dated 6 July 2017). In the assigning
confidence category, all relevant factors were considered and the final assignment reflects the
Competent Persons view of the deposit.
3.13 Audits or reviews • The results of any audits or reviews of Mineral Resource No audits or reviews of the Mineral Resource have been carried out other than those of
estimates. professionals working with Met-Chem division of DRA Americas Inc., a subsidiary of the DRA
Group as part of the modelling and estimation work.
3.14 Discussion of • Where appropriate a statement of the relative accuracy and The Competent Person has a very high degree of confidence in the data and the results of the
relative accuracy/ confidence level in the Mineral Resource estimate using an Mineral Resource Estimate. The use of tightly spaced seismic that was reprocessed using
confidence approach or procedure deemed appropriate by the Competent state-of-the-art techniques combined with high quality drill data formed the solid basis from
Person. For example, the application of statistical or which to model the deposit. Industry standard best practices were followed throughout and
geostatistical procedures to quantify the relative accuracy of the rigorous quality assurance and quality control procedures were employed at all stages. The
resource within stated confidence limits, or, if such an approach Competent Person was provided all information and results without exception and was involved
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is not deemed appropriate, a qualitative discussion of the factors in all aspects of the program leading up to the estimation of resources. The estimation strategy
that could affect the relative accuracy and confidence of the and method accurately depict tonnages and grades with a high degree of accuracy both locally
estimate. and globally.
• The statement should specify whether it relates to global or local
estimates, and, if local, state the relevant tonnages, which There is no production data from which to base an opinion with respect to accuracy and
should be relevant to technical and economic evaluation. confidence.
Documentation should include assumptions made and the
procedures used.
• These statements of relative accuracy and confidence of the
estimate should be compared with production data, where
available.
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Date: 27-06-2022 11:16:00
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