Scalable Danakil Potash Project Dr Chris Gilchrist Addis Ababa May - - PowerPoint PPT Presentation

Advancing the World Class, Low Cost, Scalable Danakil Potash Project Dr Chris Gilchrist

Addis Ababa May 2016

1 1

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.

2 2

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). Sulphate of Potash (SOP), K2SO4

• 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 Muriate of Potash (MOP), KCl

• Most common form of potassium fertilizer
• Global market of 55-60 Mt per year
• Contains chloride, which can be harmful to sensitive plants
• Primarily for carbohydrates crops

Circum is in the unique position to be a producer of both MOP and SOP.

3 3

• 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

Introduction

Advancing the World Class, Low Cost, Scalable Danakil Potash Project

4 4

Low Cost, High Margin, Capital Efficient Project

2014 MOP Cash Cost Curve (US$/t EXW) 2014 SOP Cash Cost Curve (US$/t EXW) Capital Intensity per Tonne (US$/t)

500 1,000 1,500 2,000 2,500 3,000 5 10 15 20 25 Target Production (Mtpa)

Circum at $838/t

• 50

100 150 200 250 5 10 15 20 25 30 35 40 45 50 55 60 MOP Sales volume (Mtpa)

At $38/t, Circum would be lowest cost MOP producer

• 100

200 300 400 500 600

• 1.0

2.0 3.0 4.0 5.0 6.0 SOP Sales volume (Mtpa)

At $112/t, Circum would be lowest cost SOP producer

5 5

Danakil Project Overview

Project Location

6 6

Danakil Depression

7 7

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

Solution Mining – Simple and Inexpensive

* Figure for illustrative purposes only. Source: Sennen Potash Corp Presentation.

8 8

• 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.

Product Transport

Transport initially by truck with rail the preferred long term option

• Circum is completing a feasibility study
• n 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).

9 9

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

10 10

Circum Minerals – Proud to be Ethiopian

Circum team at site are all highly-trained Ethiopian nationals

11 11

Circum Minerals – Proud to be Ethiopian

…..millions of years ago…..

12 12

Site Photos

Harvesting Kainite Crystal Crop Solar Evaporation Pools Main Camp Solution Mining Well Head

13 13

2013 2014 2015 2016

Circum’s Development Progress

January 70% interest in Danakil Project acquired March Plinian appointed Operator April AMED Subscription May Remaining 30% interest in Danakil Project acquired April Drilling of two water test wells February / March NI 43-101 Preliminary Economic Assessment and Resource Estimate July Definitive Feasibility Study completed Updated NI 43-101 Resource March Solution mining test program commences May Updated Mineral Resource Trial evaporation ponds built August ESIA completed Mining license application filed May Advanced negotiation with government of Ethiopia on Mining License

14 14

• 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.

Post – DFS Work Program

15 15

• 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.

Next Steps for the Danakil Project

16 16

• 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)

Long term vision

17 17

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.

18 18

Potential Processed Outputs

Potential Product Flowsheet

Intermediate Refined Salts Kieserite Processed MOP SOP Schoenite MgCl2 Processed Outputs Salts (DSO) Rocksalt Halite Sylvinite Carnallite Kainite Bischofite Other Magnesium Hydroxide MgCl2 + Ca(OH)2  Mg(OH)2 + CaCl2 Magnesium Oxide 2Mg(OH)2 + Heat  2MgO + 2H2O Magnesium Metal Other magnesium products (bath salts, cosmetics, pharmaceuticals) Other Bromine HCl

19 19

Potential Processed Outputs with Gas supply

Intermediate Refined Salts Kieserite Processed MOP SOP Schoenite MgCl2 Processed Outputs Salts (DSO) Rocksalt Halite Sylvinite Carnallite Kainite Bischofite Other Magnesium Hydroxide MgCl2 + Ca(OH)2  Mg(OH)2 + CaCl2 Magnesium Oxide 2Mg(OH)2 + Heat  2MgO + 2H2O Magnesium Metal Other magnesium products (bath salts, cosmetics, pharmaceuticals) DSO – Bagged Product Other Bromine HCl Chlor-Alkali processes yielding K, Na hydroxides and chlorine gas Production of Nitrogen, Phosphoric Acid, MAP, DAP, compound fertilizers Plastics – PE, PVC Speciality Bromine compounds fire retardants, pesticides

Natural gas

Conversion to electrical Power and steam

20 20

www.circumminerals.com

አ መ ሰ ግ ና ለ ሁ