Advancing the World Class, Low Cost, Scalable Danakil Potash Project Dr Chris Gilchrist. Addis Ababa May 2016

Transcription

1 Advancing the World Class, Low Cost, Scalable Danakil Potash Project Dr Chris Gilchrist Addis Ababa May 2016

2 More People... More Food... More Potash The United Nations has estimated that the world s population will reach 8.5 billion by 2030 and over 9 billion by In response to this population growth, the Stanford School of Earth, Energy and Environmental Sciences has estimated that the planet will need to produce 35% more food, 40% more energy and consume 50% more water. Security of food supply is seen as a critical geopolitical driver over the next 15 years. 1 1

3 Potash Overview Potash" refers to a group of potassium (K) bearing minerals and chemicals. Its primary use is as a soil fertilizer (90% of current use). Muriate of Potash (MOP), KCl Most common form of potassium fertilizer Global market of Mt per year Contains chloride, which can be harmful to sensitive plants Primarily for carbohydrates crops Sulphate of Potash (SOP), K 2 SO 4 Global market of 5.5 Mt per year No chloride Ideal for fruits, vegetables, coffee, nuts, potatoes Priced 30-60%+ over MOP Ideal for use in arid regions Circum is in the unique position to be a producer of both MOP and SOP. 2 2

4 Introduction Advancing the World Class, Low Cost, Scalable Danakil Potash Project Circum is developing its 100% owned Danakil Potash Project in Northern Ethiopia Mineral resources of 4.9 billion tonnes at 18.1% KCl, however Seismic data suggests potential total resource of 11 to 13+ billion tonnes ore Targeting annual production of 2 Mt of MOP and 0.75 Mt of SOP Amenable to low cost solution mining and solar evaporation - both low risk, proven technologies Scalable production - resources sufficient to support at least two, possibly three expansions Mine gate cash costs projected to be the lowest in the world Management team has experience building mines and a track record of creating value 3 3

5 Low Cost, High Margin, Capital Efficient Project 2014 MOP Cash Cost Curve (US$/t EXW) 2014 SOP Cash Cost Curve (US$/t EXW) At $38/t, Circum would be lowest cost MOP producer At $112/t, Circum would be lowest cost SOP producer MOP Sales volume (Mtpa) SOP Sales volume (Mtpa) Capital Intensity per Tonne (US$/t) 3,000 2,500 Circum at $838/t 2,000 1,500 1, Target Production (Mtpa) 4 4

6 Danakil Project Overview Project Location 5 5

7 Danakil Depression 6 6

8 Solution Mining Simple and Inexpensive FAVORABLE ECONOMICS Capex and opex lower than conventional mining Solar evaporation ideal for regional climate Faster time to production LESS COMPLEX Ability to selectively mine potash layers No underground access is required No development shafts are needed Production volume is easily scalable LOW RISK Proven technology (used in Canada & USA) Minimal impact on the environment Low personnel risks during operation * Figure for illustrative purposes only. Source: Sennen Potash Corp Presentation. 7 7

9 Product Transport Transport initially by truck with rail the preferred long term option Paved roads built and available for most of export route. Distance from Project to port is approximately 600km. The Government has agreed to build a concrete haul road for potash transport out of the Danakil Basin to main rail line (~400km). New bulk terminal at Tadjoura to be completed in 2016; discussions underway with Djibouti Port Authority. EEPC intends to expand the national power grid from Mekele to the Danakil region. Circum is completing a feasibility study on potential routing and costs of a rail link from Danakil Basin to Tadjoura Port (a scoping study was already completed and presented to the Government). 8 8

10 Community Relations Excellent relations with local communities Improved local water supply; electrified medical facilities Ethiopian nationals hired over expatriates In country work force of 55 people, 54 Ethiopian nationals, 1 expatriate Circum field camps operated with Ethiopian-trained managers, electricians, mechanics and admin staff Community retrieving water from local tanks 9 9

11 Circum Minerals Proud to be Ethiopian Circum team at site are all highly-trained Ethiopian nationals 10 10

12 Circum Minerals Proud to be Ethiopian..millions of years ago

13 Site Photos Solution Mining Well Head Solar Evaporation Pools Main Camp Harvesting Kainite Crystal Crop 12 12

14 Circum s Development Progress January 70% interest in Danakil Project acquired February / March NI Preliminary Economic Assessment and Resource Estimate March Solution mining test program commences May Updated Mineral Resource Trial evaporation ponds built August ESIA completed Mining license application filed March Plinian appointed Operator April AMED Subscription May Remaining 30% interest in Danakil Project acquired April Drilling of two water test wells July Definitive Feasibility Study completed Updated NI Resource May Advanced negotiation with government of Ethiopia on Mining License 13 13

15 Post DFS Work Program Value engineering process completed February 2016, Capital estimate reduced by $245 m. Pre-feasibility study for rail link design 95% complete. Additional electromagnetic water survey completed February Eleven water wells to be drilled over next three months, drilling to commence this week. Re-assay of 600 cores for Bromine completed Successful Ministerial visit to site in March

16 Next Steps for the Danakil Project Continue solution test mining to deliver proof of concept Obtain mining license in 2016 which will open the door to investment Complete financing by 2017, first production

17 Long term vision Apart from Potash, the Danakil Depression contains many other minerals which could be exploited economically in future. ᅳᅳᅳᅳ Halite (Sodium Chloride or common salt) Bischoffite (Magnesium Chloride) Kieserite (Magnesium Sulphate) Polyhalite (Potassium, Magnesium, Calcium Sulphate) 16 16

18 Parallels to UK Chemical Industry Britain s chemical industry, later consolidated as ICI Limited, was built in the 1920 s using Anhydrite (calcium sulphate) and Halite (sodium chloride) as starting materials. It was originally built to manufacture synthetic ammonia for the explosives industry, but the discovery of potash nearby (together with imported phosphates) led to the development of a significant fertilizer business. With the introduction of natural gas in the 1960 s, these naturally-occurring minerals enabled the chemical industry to grow, producing a wide range of inorganic products, plastics and organic chemicals

19 Potential Processed Outputs Potential Product Flowsheet Salts (DSO) Intermediate Other Rocksalt Refined Salts Magnesium Hydroxide MgCl 2 + Ca(OH) 2 Mg(OH) 2 + CaCl 2 Halite Sylvinite Kieserite Schoenite Processed Outputs Magnesium Oxide 2Mg(OH) 2 + Heat 2MgO + 2H 2 O Magnesium Metal Carnallite Kainite Processed Other magnesium products (bath salts, cosmetics, pharmaceuticals) Bischofite MOP SOP Other Bromine MgCl 2 HCl 18 18

20 Potential Processed Outputs with Gas supply Salts (DSO) Intermediate Other Rocksalt Refined Salts Magnesium Hydroxide MgCl 2 + Ca(OH) 2 Mg(OH) 2 + CaCl 2 Halite Sylvinite Kieserite Schoenite Processed Outputs Magnesium Oxide 2Mg(OH) 2 + Heat 2MgO + 2H 2 O Magnesium Metal Carnallite Kainite Processed Other magnesium products (bath salts, cosmetics, pharmaceuticals) DSO Bagged Product Bischofite MOP SOP Chlor-Alkali processes yielding K, Na hydroxides and chlorine gas Other Bromine MgCl 2 Production of Nitrogen, Phosphoric Acid, MAP, DAP, compound fertilizers HCl Conversion to electrical Power and steam Plastics PE, PVC Natural gas Speciality Bromine compounds fire retardants, pesticides 19 19

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