SRK Consulting Sukulu Phosphate Project Scoping Report. 6 Tailings Dams Introduction Tailings behaviour...

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1 Sukulu Phosphate Project Scoping Report Page i Table of Contents 6 Tailings Dams Introduction Tailings behaviour Magnetics tailings Flotation tailings Gypsum tailings Tailings storage requirements Magnetics tailings Flotation tailings Gypsum tailings TSF capital and operating cost estimates Capital Cost Estimates Operating Cost Estimates Recommendations for Phase 2 Feasibility Study

2 Sukulu Phosphate Project Scoping Report List of Tables Page ii Table 6.1: Phase 1: From Year 1 to end of mine life Table 6.2: Phase 2: Year 4 to end of mine life Table 6.3: Estimate of magnetic tailings slurry properties Table 6.4: Volume of magnetics tailings Table 6.5: Estimate of flotation tailings slurry properties Table 6.6: Volume of flotation tailings Table 6.7: Volume of gypsum tailings Table 6.8: Rate of rise curve: magnetic tailings Table 6.9: Rate of rise curve: flotation tailings Table 6.10: Impoundment wall construction requirements Table 6.11: Rate of rise curve: gypsum tailings Table 6.12: Capital cost estimate Table 6.13: Capital cost estimate for alternative design option Table 6.14: Possible capex cash flow for Phase 2 alternative design option (US$million) Table 6.15: Capital Phasing for TSF for Phase 1 only and Phase 1&2 scenarios (US$million) List of Figures Figure 6.1: Tailings gradings Figure 6.2: Conceptual tailings storage facility layout Figure 6.3: Cross-section through magnetics tailings dam Figure 6.4: Cross-section through flotation tailings dam Figure 6.5: Cross-section through gypsum tailings dam

3 Sukulu Phosphate Project Scoping Report Page Tailings Dams 6.1 Introduction This section sets out a brief description of the tailings dam requirements for the Sukulu Phosphate Project. This aspect has not been addressed in previous studies by Nilefos. As outlined in section 5, there are four tailings streams, as shown in Tables 6.1 and 6.2. Table 6.1: Phase 1: From Year 1 to end of mine life Item Tonnage 80% Passing 50% Passing 20% Passing Passing 16µm (tpa) (µm) (µm) (µm) (%) Coarse Magnetics Fine Magnetics Flotation Tails Gypsum Table 6.2: Phase 2: Year 4 to end of mine life Item Tonnage 80% Passing 50% Passing 20% Passing Passing 16µm (tpa) (µm) (µm) (µm) (%) Coarse Magnetics Fine Magnetics Flotation Tails Gypsum 0 The objective of this section is, at a conceptual level, to: Assess the likely tailings behaviour; Assess the tailings storage facility ( TSF ) requirements; Estimate the likely capital and operating costs; Detail the feasibility study requirements. 6.2 Tailings behaviour Magnetics tailings The magnetic coarse and fine tailings are quite different in grading as shown in Figure 6.1. The magnetic tailings grading curves can be compared with other projects and the preliminary conclusions are: The option of consolidating these tailings in a filter belt or press is unlikely to be viable, as the fineness of the material would clog the filter cloth The fine magnetics tailings on their own are likely to remain unconsolidated and to lack sufficient material strength to be used in a wall building capacity. These tailings would therefore have to be stored in an impoundment.

4 Sukulu Phosphate Project Scoping Report Page 6-2 Indications are, however, that a combined fine and coarse tailings stream could be stored in a conventional tailings dam where the tailings itself can be used for wall building. This implies that the two magnetic tailings streams should be combined in the plant and pumped to one magnetics TSF Per cent passing Particle size (mm) Coarse Magnetics Fine Magnetics Flotation tailings Magnetics combination Mag&flot combination Figure 6.1: Tailings gradings The estimate of the slurry properties of the combined magnetics tailings is shown in Table 6.3. These properties would have to be confirmed by testwork during Phase 2 of the feasibility study.

5 Sukulu Phosphate Project Scoping Report Page 6-3 Table 6.3: Estimate of magnetic tailings slurry properties SG of water Slurry density SG of solids %Solids Volumetric water content Vw/Vt Unit volume of solids Unit volume of water Unit total volume Mass of solids for unit volume of solids Mass of water Total mass of slurry Mass of solids/ton of solids Total mass of slurry /ton of solids mass of water /ton of solids Mass of dry tailings pumped into tailings dam (tons) per annum Mass of water pumped (tons) per annum Total mass of slurry (tons/a) Volume of solids Volume of water Volume of slurry dry density void ratio Slurry water content It is therefore conceptually planned to pump the combined magnetic tailings to the tailings dams at a solids concentration of 60%. The estimated dry density in the tailings dam is 2.77t/m 3, which is based on a likely void ratio of

6 Sukulu Phosphate Project Scoping Report Page 6-4 The volume of combined magnetic tailings to be stored, is estimated as follows (Table 6.4). Table 6.4: Volume of magnetics tailings Phase 1 Tonnage (tpa) Phase 2 Tonnage (tpa) Total Tonnage (tpa) Cum. Tonnage (t) Dry density Volume Year (t/m 3 ) Totals Chemically, indications are that the magnetics tailings can be expected to be relatively inert and will not require a lined tailings disposal facility. This will need to be confirmed by future testwork however Flotation tailings The grading of the flotation tailings is shown in Figure 6.1. This grading shows that the tailings are expected to be exceptionally fine with about 48% passing 2 microns particle sieve size. The flotation tailings is so fine that it will also require to be impounded. The volume of the flotation tailings is such that it cannot be successfully combined with another tailings stream to then be used to construct a tailings dam that will not require impoundment walls. Also, consolidation of these tailings by means of filters will again be unsuccessful. The estimate of the slurry properties of the flotation tailings is shown in Table 6.5. These properties would have to be confirmed by testwork during Phase 2 of the feasibility study.

7 Sukulu Phosphate Project Scoping Report Page 6-5 Table 6.5: Estimate of flotation tailings slurry properties SG of water Slurry density SG of solids %Solids Volumetric water content Vw/Vt Unit volume of solids Unit volume of water Unit total volume Mass of solids for unit volume of solids Mass of water Total mass of slurry Mass of solids/ton of solids Total mass of slurry /ton of solids mass of water /ton of solids Mass of dry tailings pumped into tailings dam (tons) per annum Mass of water pumped (tons) per annum Total mass of slurry (tons/a) Volume of solids Volume of water Volume of slurry dry density void ratio Slurry water content High rate thickeners will most likely be required to prepare the flotation tailings to a percent solids of 30% to 35% to be pumped to the tailings dam site using positive displacement pumps. It is also likely that the final target dry density will be about 0.75t/m 3 to 0.9t/m 3 depending on the actual consolidation behaviour and the evaporative drying that can be considered. The volume of flotation tailings to be stored, is estimated as follows (Table 6.6).

8 Sukulu Phosphate Project Scoping Report Page 6-6 Table 6.6: Volume of flotation tailings Phase 1 Tonnage (tpa) Phase 2 Tonnage (tpa) Total Tonnage (tpa) Cum Tonnage (t) Dry density Volume Year (t/m 3 ) Totals Chemically, indications are that the flotation tailings is expected to be relatively inert and will not require a lined tailings disposal facility. This will need to be confirmed by future testwork however. The flotation tailings will however remain in a relatively unconsolidated state and will require fencing or other security of access into the future Gypsum tailings The gypsum tailings are generally of very poor quality and very acidic. They will have to be stored in a lined facility. The target dry density is estimated as 0.8t/m 3. The volume to be stored can be assessed as shown below (Table 6.7).

9 Sukulu Phosphate Project Scoping Report Page 6-7 Table 6.7: Volume of gypsum tailings Phase 1 Tonnage (tpa) Phase 2 Tonnage (tpa) Cum tonnage Dry density Volume Year (t) (t/m 3 ) Totals Tailings storage requirements The most obvious place to store the bulk of the tailings material would be back into the mined-out areas in the carbonatite pipe. However this option cannot be seriously considered until it is established by deeper drilling within the orebody, that no further minerals of economic interest occur beneath the known phosphate deposits. This drilling is planned for phase 2 of this feasibility study. For this phase of the study, it is necessary to assume that all tailings material will be stored in facilities that are outside of the orebody area, as is further described below. The tailings storage requirements can therefore be summarized as follows: The gypsum tailings will be stored in a specific lined tailings dam and the gypsum return water facility will also have to be lined. The flotation tailings has to be stored in a impoundment. The magnetics tailings can be stored in a conventional tailings dam. It may later be decided to provide an outer laterite or earth wall layer to assist in the ongoing rehabilitation of the facility. A return water dam ( RWD ) facility will be required for both the magnetic tailings and for the flotation tailings. This could either be separate RWD facilities or combined facilities. These principles for the conceptual TSF layout are shown in Figure 6.2. For the calculations in the following sections it is assumed that the slope of the various tailings dams sites will be about 1(v) in 33 (h). The 100 foot contours were used in this assessment.

10 Sukulu Phosphate Project Scoping Report Page 6-8 Figure 6.2: Conceptual tailings storage facility layout

11 Sukulu Phosphate Project Scoping Report Page Magnetics tailings A preliminary rate of rise curve was developed for the magnetics tailings as shown below in Table 6.8. Table 6.8: Rate of rise curve: magnetic tailings Elevation L (m) B (m) Area (m 2 ) Volume Cum Volume Rate of rise (m/yr) Time (yrs) A schematic cross-section through the proposed tailings dam is shown in Figure 6.3. The main assumption is that the outer wall of the magnetic tailings dam will be constructed at a slope of 1(v) in 4 (h).

12 Sukulu Phosphate Project Scoping Report Page 6-10 Figure 6.3: Cross-section through magnetics tailings dam

13 Sukulu Phosphate Project Scoping Report Page Flotation tailings A preliminary rate of rise curve was developed for the flotation tailings as shown below in Table 6.9. Table 6.9: Rate of rise curve: flotation tailings Elevation L (m) B (m) Area (m 2 ) Volume Cum Volume Rate of rise (m/yr) Time (years) A schematic cross-section through the proposed tailings dam is shown in Figure 6.4.

14 Sukulu Phosphate Project Scoping Report Page 6-12 Figure 6.4: Cross-section through flotation tailings dam

15 Sukulu Phosphate Project Scoping Report Page 6-13 The assumption is made that the outer containment wall will be constructed at an outside slope of 1(v) in 4 (h), and that the interface between the containment or impoundment wall and the flotation tailings will be near vertical. This means that the costs of the containment wall will be expended to keep to the rate of rise of the tailings material deposition and consolidation. A significant source of earthfill material will be required to construct the impoundment wall of between 10 million and 13 million m 3 as shown in Table Table 6.10: Impoundment wall construction requirements Lift Percentage of impoundment wall required It must be appreciated that the capital costs involved in constructing an earthfill impoundment of this size are enormous and are unlikely to be able to be carried by the project. For this reason, an alternative scheme has been proposed, where it may be possible to use the magnetics tailings as the construction material for the flotation tailings impoundment wall. This implies that the magnetics tailings could then not be remined in the future; unless the outer slopes of the magnetic tailings and the flotation tailings are kept the same, i.e. the width of the magnetics tailings containment wall be kept constant, at about 80m to 100m. This trade-off study needs to be addressed in detail during the second phase of the feasibility study.

16 Sukulu Phosphate Project Scoping Report Page Gypsum tailings A preliminary rate of rise curve was developed for the gypsum tailings as shown below in Table Table 6.11: Base Elevation Rate of rise curve: gypsum tailings L (m) B (m) Area (m 2 ) Volume Cum Volume Rate of rise (m/yr) Time (years) A schematic cross-section through the proposed gypsum tailings dam is shown in Figure 6.5. The gypsum tailings dam, solution trenches and its return water dam have to be lined (most likely liner material will have to be HDPE liners) to cater for the low ph water that will develop, which could seep through the tailings dam. For this conceptual design, the outer slopes have been flattened rather than to provide for impoundment walls. This trade-off study will also have to be addressed as part of the phase 2 feasibility study.

17 Sukulu Phosphate Project Scoping Report Page 6-15 Figure 6.5: Cross-section through gypsum tailings dam

18 Sukulu Phosphate Project Scoping Report Page TSF Capital and Operating Cost Estimates Capital Cost Estimates The tailings dam and return water dam capital costs were estimated comparing the size of the required facilities with a tailings dam and return water dam which were costed by three contractors in Ghana in September It may be that better prices for the construction of these major earthworks structures will be forthcoming from local Ugandan contractors. This possibility will be tested during the detailed feasibility study (phase 2). A lower-bound estimate has been given for these capital costs, for the purposes of economic sensitivity assessment only. The capital cost estimates are summarised in Table Table 6.12: Capital cost estimate Item Base Estimate Lower-bound Estimate Total cost (US$million) Total cost (US$million) Magnetics TSF Flotation TSF Flotation impoundment wall Gypsum TSF including liner Magnetics and Flotation RWD Gypsum RWD including liner Totals If the trade-off study indicates that it will be possible to use the magnetics tailings material as an equivalent impoundment wall for the flotation tailings, then the following alternative cost estimate would be relevant (Table 6.13). The study evaluation has been based on the assumption that this design option and hence capital cost will be possible. Table 6.13: Capital cost estimate for alternative design option Item Base Estimate Lower-bound Estimate Total cost (US$million) Total cost (US$million) Flotation and Magnetics TSF Flotation impoundment wall - - Gypsum TSF including liner Magnetics and Flotation RWD Gypsum RWD including liner Totals The cost estimates include allowances for: Liners where required; Starter walls; Drains; Penstocks; Access roads; Upstream stormwater cut-off trenches and berms; Solution trenches where required;

19 Sukulu Phosphate Project Scoping Report Page 6-17 Catchment paddocks where required; Tailings delivery and distribution piping. Closure and rehabilitation costs are excluded from the costs shown in Tables 6.12 and 6.13 above. The phased capex cash flow for the alternative tailings design option could be as shown in Table Table 6.14: Possible capex cash flow for Phase 2 alternative design option (US$million) Gypsum TSF including Magnetics and Flotation Gypsum RWD including Phase Years Magnetics TSF Flotation TSF Flotation impoundment wall liner RWD liner Total Cost 1&2 Total It should be noted that the capital estimates in Tables 6.12 to 6.14 are based on the Phase 2 annual production rate. If the Sukulu Project was restricted to the Phase 1 tonnages only, i.e. 320ktpa RoM, the tonnage of about 250ktpa to be disposed each year is about 7.5% of the total annual Phase 2 arisings designed for. In this situation, the initial size of the facilities can be reduced, and then expanded progressively through the life of the project. The final size of the facilities at the end of the LoM will still be the same as shown. While the total construction cost for the facilities using a phased approach will be higher, this would be offset by the time-value of money benefits to be derived from delaying this expenditure over time. Given this possibility, which was not part of the original scope, SRK did not redo the capital estimates but rather factorised the capital costs based on experience with other projects. Based on the Phase 1 tonnages to be disposed being about 7.5% of the total (i.e. Phase 2 tonnages), the Phase 1 capital cost should then most likely lie within the range of 7.5% to 15% of the total of US$62.8million, i.e. between US$4.7million and US$9.4million. It is important to note that this is a ratio calculation and is not based on a re-assessment of the likely site conditions. The FM considers project cash flows for Phase 1 which are based on a 50-year period processing some 16Mt of RoM material. This represents approximately 18% of the total Phase 2 production schedule, for which the initial Phase 1 TSF above would not have sufficient space. Based on the above factorisation, the cost for a TSF for this larger tonnage should lie within the range of 18% to 25% of the total cost, i.e. from US$11.3million to US$15.7million. For evaluation purposes, SRK has set the initial capital cost for the Phase 1 tailings facilities at US$7.1million (the average of US$4.7million and US$9.4million) and then added US$6.4million in year 14 to get to US$13.5million (the average of US$11.3million to US$15.7million) (see Table 6.14).

20 Sukulu Phosphate Project Scoping Report Page 6-18 Using the same philosophy, the construction of the Phase 2 tailings facilities has been phased for evaluation purposes as shown in Table 6.14, bearing in mind the construction costs assumed for Phase 1 above and the shorter mine life when operating at the Phase 2 production rate. To allow for the higher construction cost for the facilities using a phased approach, the US$36.6million for years 4-20 shown in Table 6.14 was increased by 10% and then expended in three tranches in years 7, 10 and 14 (see Table 6.15). Table 6.15: Capital Phasing for TSF for Phase 1 only and Phase 1&2 scenarios (US$million) Year Phase 1 TSF Phase 1 & 2 TSF (50-year LoM only) (21-year LoM) Total (for modelled LoM) Operating Cost Estimates It is difficult to estimate the likely tailings dam operating costs with any accuracy until the phase 2 study testwork has been done. The following costs are proposed, based on previous experience: Operating costs per ton of magnetics tailings: US$0.25/t. Operating costs per ton of flotation tailings: US$0.50/t. Operating costs per ton of gypsum tailings: US$0.40/t. 6.5 Recommendations for Phase 2 Feasibility Study The conceptual design proposal needs to be developed into a feasibility study design. The following main activities are proposed: An overall block plan will have to be developed considering the preliminary sizes of the various facilities. This will define an area to be surveyed in detail for feasibility study levels: this will also include additional areas for alternative layouts etc. such as different plant locations, TSF and RWD locations and routes of infrastructure such as roads and other utilities. A site selection study then has to be undertaken for the tailings dams and return water dams. The site selection study will identify the options and sites to be taken into account and will select the most suitable options for the feasibility design. This study will include the options of in-pit disposal of tailings as well as utilisation of the magnetics tailings material for impoundment walls. Geotechnical investigation of the magnetics, flotation and gypsum TSFs and the two return water dams.

21 Sukulu Phosphate Project Scoping Report Page 6-19 Geotechnical investigation to source the volume of earthfill required to impound the flotation tailings. Geotechnical investigation of construction materials including sources for aggregates, drain and filter materials. Geotechnical testing of representative samples of tailings of the fine and coarse magnetics, combined coarse and fine magnetics, flotation tailings and gypsum tailings. The required testing will include: specific gravity, gradings down to 2 microns, Atterberg limits, tropical soil testing, beaching trials, settling trials, evapo-transpiration tests, consolidation testing, compaction testing, tri-axial strength testing. On the metallurgical testing related to tailings management the testing will include rheology testing, thickening testing, and transportation testing by pumping. Furthermore the long term behaviour of the tailings materials have to be determined also in terms of potential acid mine drainage behaviour. The salt content of the tailings has to be determined and other possible environmental impacts. The impacts of ph variations on the behaviour of the tailings also has to be determined. Feasibility tailings dam and return water dam designs have to be undertaken. There will be a requirement for various trade-off studies to assess how the costs can be reduced from a capital and operating cost. The impact on the capital costs if construction is phased will need to be carefully assessed. All designs will have to be done taking into account that the project falls within an area that is classified as a Seismic Zone 1, with an expected maximum event of magnitude 4.6.