Mr. Bruce Cumming reports
AGRIMINCO CORP.: DANAKIL POTASH JOINT VENTURE EXPANDS MAIDEN NI 43-101 MINERAL
RESOURCE ESTIMATE TECHNICAL REPORT TO INCLUDE PRELIMINARY INVESTIGATION INTO
ECONOMIC MINING AND PROCESSING OPTIONS
AgriMinco Corp. has provided an update. Following the completion of the maiden National Instrument 43-101-compliant mineral resource estimate, the operator of Danakil Holdings Ltd., Plinian Capital LLP, requested a preliminary investigation into the economic viable mining and processing options for the Danakil potash resources. The preliminary investigation was prepared by independent consultants K-UTEC Salt Technologies, a German consulting firm with expertise in potash mining, and the results are published in Section 16 of the technical and MRE report, to be filed on SEDAR on or before March 27, 2014. The key findings of Section 16 of the report include:
The study selected solution mining as the method of choice, as the
Danakil resources are too deep for an open-pit mining method (200 to 400
metres) and mining by conventional underground method was discounted due
to the weak Bischofitite member located between the upper and lower
mineralized zones and the perceived risk of flooding.
- The Bischofitite member which separates the upper and lower mineralized
units is shown to develop midway across the deposit in a north-south direction. In the west the Bischofitite is either non-existent to 10
metres thick and steadily increases in thickness to a maximum of 80
metres as the deposit deepens to the east.
- Although the magnesium chloride from the Bischofitite can be included in the
processing concept, its exploitation is considered uneconomic due to
high energy and water consumption and as such a 10-metre cut-off
thickness for the Bischofitite unit has been defined. As such two mining
methods were defined, SolMin1 and SolMin2, at an annual rate of two million tonnes of
sulphate of potash. The transition from SolMin 1 to SolMin 2 mining method will be in
approximately year 14:
- SolMin 1 -- solution mining of the southwest portion of the deposit
where the Bischofitite unit is less than 10 metres, where solution
mining will generate high caverns up to 30 metres, as the sylvinite,
carnallitite and kainitite units will be mined at the same time;
- SolMin 2 -- selective mining of the upper and lower mineralized units
where the Bischofitite exceeds 10 metres in thickness. This method
will simultaneously mine both the lower and upper mineralized units
through a triangular pillar cavern mining method. The next phase of
study is expected to generate the geotechnical data required to
maximize cavern design with the aim of producing robust productive
caverns by maximizing SOP production.
Design of the solar evaporation ponds and the mining method, or combination thereof will allow flexibility in the final product mix. The tables set out some of these options that include 100 per cent SOP to a combination of SOP and MOP and the projected NPV and IRR associated with the options.
KEY ASSUMPTIONS OF THE PRELIMINARY STUDY
Discount rate 10%, 12% scenarios
Accuracy +/- 40%
Price of SOP $600 (U.S.)
Price of MOP $350 (U.S.)
Key resource highlights
Indicated mineral resource 708.8 Mt
KCl grade 19.4%
Inferred mineral resource 1,116.5 Mt
KCl grade 19.1%
INVESTIGATED SCENARIOS FOR THE SOLUTION MINING CONFIGURATION
Code Mining option Process option Product
A1 SolMin 1 initially Solar 500 SOP
A2 SolMin 1 initially Solar 1000 SOP
A3 Solmin 1 initially Solar 2000 SOP
B1 SolMin 1 initially Solar 417 SOP
B2 SolMin 1 initially Solar 835 SOP
B3 SolMin 1 initially Solar 1,670 SOP
C1-1 SolMin 2 Solar 313 SOP
C1-2 SolMin 2 Solar 626 SOP
C1-3 SolMin 2 Solar 1,252 SOP
RESULTS OF THE CASH FLOW CALCULATION MODEL FOR THE VARIANTS A-1 TO C1-3
capex NPV10 NPV12
U.S.$ U.S.$ U.S.$
M M M IRR%
A1 459 664.45 506.51 32%
A2 804 1439.40 1,113.86 36%
A3 1,407 3,273.28 2,569.22 43%
B1 470 521.53 388.25 28%
B2 827 1,160.91 885.18 32%
B3 1,589 2,572.48 1,978.56 35%
C1-1 439 502.59 376.74 29%
C1-2 852 1,035.40 779.98 30%
C1-3 1,461 2,257.88 1,732.62 34%
AgriMinco's chief executive officer, Bruce Cumming, comments: "Whilst the results are encouraging, they must be seen against the backdrop of uncertainty that the company continues to face due to the difficulties experienced in attempting to raise additional finance and the existing debt burden the company carries. We continue to focus our efforts on completion either of a capital raise or a corporate transaction. Under the terms of the JV agreement and the amendment thereto, AgriMinco was required to contribute 30 per cent of expenditure in excess of the agreed free carry by April 7, 2014. In addition, the company must also contribute 30 per cent of the next fiscal year exploration budget. A failure to contribute will result in a dilution of the company's interest. The operator has submitted budgets and costs for the historic overspend and a board meeting of the JV company will be held on May 6, 2014, at which time cash call notices will be issued. The combined cash call for the first fiscal quarter and the historic excess is expected to be of the order of $2-million (U.S.) and the budget for the next 12 months, of which the company must meet 30 per cent, is expected to be $20-million (U.S.)."
The mineral resource estimate was completed by independent K-UTEC consultant Thomas Schicht, EurGeol, assistant head of geophysics, K-UTEC Independent Salts Technologies, a qualified person under the National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators.
The operator of the joint venture, Plinian Capital, and Circum Minerals Ltd., the 70-per-cent joint venture partner, have consented to the release of the information contained herein.
A copy of the National Instrument 43-101 technical report will be available on SEDAR under AgriMinco's profile on or before March 27, 2014.
We seek Safe Harbor.
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