Advancing the World Class, Low Cost, Scalable Danakil Potash Project Dr Chris Gilchrist Addis Ababa May 2016
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 2050. 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
Potash Overview Muriate of Potash (MOP), KCl “ Potash" refers to a group of potassium (K) bearing minerals ● Most common form of potassium fertilizer and chemicals. ● Global market of 55-60 Mt per year Its primary use is as a soil ● Contains chloride, which can be harmful to sensitive plants fertilizer (90% of current use). ● Primarily for carbohydrates crops Sulphate of Potash (SOP), K 2 SO 4 ● Global market of 5.5 Mt per year ● No chloride Circum is in the ● Ideal for fruits, vegetables, unique position to be coffee, nuts, potatoes a producer of both ● Priced 30-60%+ over MOP MOP and SOP. ● Ideal for use in arid regions 2 2
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
Low Cost, High Margin, Capital Efficient Project 2014 MOP Cash Cost Curve (US$/t EXW) 2014 SOP Cash Cost Curve (US$/t EXW) 250 600 At $112/t, Circum 500 200 would be lowest cost At $38/t, Circum would be SOP producer 400 lowest cost MOP producer 150 300 100 200 50 100 - - 5 10 15 20 25 30 35 40 45 50 55 60 - 1.0 2.0 3.0 4.0 5.0 6.0 MOP Sales volume (Mtpa) SOP Sales volume (Mtpa) Capital Intensity per Tonne (US$/t) 3,000 2,500 Circum at $838/t 2,000 1,500 1,000 500 0 0 5 10 15 20 25 Target Production (Mtpa) 4 4
Danakil Project Overview Project Location 5 5
Danakil Depression 6 6
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
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
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
Circum Minerals – Proud to be Ethiopian Circum team at site are all highly-trained Ethiopian nationals 10 10
Circum Minerals – Proud to be Ethiopian …..millions of years ago….. 11 11
Site Photos Solution Mining Well Head Solar Evaporation Pools Main Camp Harvesting Kainite Crystal Crop 12 12
Circum’s Development Progress May January August February / March March Updated Mineral 70% interest ESIA completed NI 43-101 Preliminary Economic Solution mining Resource in Danakil Assessment and Resource test program Mining license Project Trial evaporation Estimate commences application filed acquired ponds built 2013 2014 2015 2016 July May May March April Definitive Feasibility April Remaining 30% Advanced negotiation Plinian Drilling of Study completed AMED interest in with government of appointed two water Subscription Danakil Project Ethiopia on Mining Updated NI 43-101 Operator test wells acquired License Resource 13 13
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 2016. ● 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. ● 14 14
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 2021. ● 15 15
Long term vision Apart from Potash, the Danakil Depression contains many other minerals which ● could be exploited economically in future. ￚ Halite (Sodium Chloride or common salt) ￚ Bischoffite (Magnesium Chloride) ￚ Kieserite (Magnesium Sulphate) ￚ Polyhalite (Potassium, Magnesium, Calcium Sulphate) 16 16
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. 17 17
Potential Processed Outputs Potential Product Flowsheet Salts (DSO) Other Intermediate Rocksalt Magnesium Hydroxide MgCl 2 Refined Salts + Ca(OH) 2 Mg(OH) 2 + CaCl 2 Halite Magnesium Oxide Kieserite 2Mg(OH) 2 + Heat 2MgO + 2H 2 O Processed Sylvinite Magnesium Metal Outputs Schoenite Other magnesium products (bath salts, Carnallite cosmetics, pharmaceuticals) Processed Kainite MOP Bischofite SOP Other MgCl 2 Bromine HCl 18 18
Potential Processed Outputs with Gas supply Salts (DSO) Other Intermediate Rocksalt Magnesium Hydroxide MgCl 2 Refined Salts + Ca(OH) 2 Mg(OH) 2 + CaCl 2 Halite Magnesium Oxide Kieserite 2Mg(OH) 2 + Heat 2MgO + 2H 2 O Processed Sylvinite Magnesium Metal Outputs Schoenite Carnallite Other magnesium products (bath salts, cosmetics, pharmaceuticals) Processed Kainite DSO – Bagged Product MOP Bischofite Chlor-Alkali processes yielding K, Na hydroxides and chlorine gas SOP Other Production of Nitrogen, Phosphoric Acid, MAP, DAP, compound fertilizers MgCl 2 Bromine HCl Plastics – PE, PVC Conversion to electrical Power and steam Speciality Bromine compounds Natural gas fire retardants, pesticides 19 19
አ መ ሰ ግ ና ለ ሁ 20 www.circumminerals.com 20
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