Maiden Sylvinite MRE at Dougou Extension

Commentary

•       The Dougou Extension Deposit is entirely within the Dougou Mining Permit (issued on the 9^th May 2017 under decree No. 2017-139) which is held 100% by the local company Dougou Mining SARL which is in turn held 100% by Sintoukola Potash SA RoC, which Kore Potash holds a 97% share.

•       There are no impediments on the security of tenure.

•       Potash exploration was carried out in the area in the1960's by Mines de Potasse d' Alsace S.A.  Holes K52 and K62 are within the Deposit area (intersections summarised in Table 3 of the announcement). High quality geological logs are available for these holes. Hole K52 intersected Sylvinite HWS and was the initial reason for Kore's interest in the area, beginning with the twin-hole drilling of K52 in 2012 by ED_01.

•       Oil exploration well Yangala-1 (outside of the DX deposit) was drilled in 1961 by Societe des Petrole d'Afrique Equatoriale (SPAFE).

•       2D Seismic data was acquired by oil exploration companies British Petroleum Congo and Chevron during the 1980's and by Morel et Prom in 2006. The Company acquired SEG-Y files for these surveys and this data has guided the exploration and deposit modelling at Dougou Extension.

•       The potash seams are hosted by the 400-500 m thick Loeme Evaporite formation, comprised of sedimentary evaporite rocks with minor clastic layers. These rocks are within the Congo Basin which extends from the Cabinda enclave of Angola to southern Gabon, from approximately 50 km inland, extending some 200-300 km offshore. The evaporites were deposited during the Aptian epoch of the Lower Cretaceous, probably between 125 and 112 million years ago, within a sub-sea level basin following the break-up of Gondwana into the African and South American continents. Importantly, the sedimentation was in a post-rift setting leading to the development of evaporite layers with significant continuity.

•       In terms of classification nomenclature, the evaporite is of the basin-wide 'mega-halite' type, formed by the cyclic evaporation of sea-water sourced, seepage-fed brines in  an extensive subsiding basin, each cycle generally following the expected brine evolution and resultant mineral precipitation model: dolomite then gypsum then halite then the bitterns of Mg and K as chlorides (as opposed to sulphates). To precipitate the thick potash beds the system experienced prolonged periods within relatively narrow a range of high salinity.

•       Reflecting the chloride-Mg-K dominated brine composition, halite (NaCl), carnallite (KMgCl₃·6H₂O) and bischofite (MgCl₂·6H₂O) account for over 90% of the evaporite rocks. Sylvinite is only found close to the top of the Salt. Carnallitite is a rock comprised predominantly of carnallite and halite. Sylvinite is a rock comprised predominantly of sylvite (KCl) and halite.  The term 'rock-salt' is used to refer to a rock comprising of halite without appreciable other minerals/materials.

•       Importantly, bischofite does not occur in the floor or roof of the HWS and TS, in fact the nearest is over 130 m below these seams.

•       The Salt was deposited in a cyclic manner; 11 cycles have been recognised, of which most are preserved at Dougou Extension, the important 'Top Seam' (TS) and 'Hangingwall Seam' (HWS) potash seams are within the mid to upper part of cycle 9.

•       All layers in the Salt member have good continuity and the thickness of the interval between them is consistent. Even narrow mm-scale layers or sub-layers can be correlated many km. In most holes all potash layers are present and have a low angle of dip (<15 degrees).

•       Where sylvinite, the TS and HWS have an average thickness of 5.2 and 3.6 metres respectively. The HWS is relatively high grade being comprised of a single massive bed of approximately 60% sylvite. The TS is made up of a number of narrow high grade sylvinite layers interbedded with rock-salt and so has a lower overall grade than the HWS.

•       Similar to the Company's Kola Deposit, at Dougou Extension the evaporite stratigraphy is  slightly elevated and slightly thinned relating to the presence of a horst block forming a paleo-topographic high in the underlying pre and syn-rift rocks referred to as the 'Yangala High'.

•       Capping the salt dominated part (Salt Member or 'Salt') is low permeability layer of anhydrite, gypsum and clay (the Anhydrite Member) between 10 and 16 m thick over the deposit. It is at a depth of between 290 and approximately 520 m at DX. Importantly, the contact between the Anhydrite Member and the underlying salt is an unconformity. Reflecting this, and that the layers of the Salt are gently undulating, in some areas there is a greater thickness of Salt above the seams than in others, or the seams may be 'truncated' (illustrated in Fig. 2 and 3 of the announcement).

•       The Anhydrite Member is covered by a thick 'cover sequence' of carbonate rocks and clastic sediments (Fig. 2 of the announcement) of Cretaceous age (Albian) to recent.

•       The potash seams were originally deposited as carnallitite but have been replaced in some areas by sylvinite, by a process of non-destructive leaching of Mg, OH and some NaCl from carnallite, converting it to sylvite. This process has taken place preferentially over the Yangala High, initiating at the top of the Salt Member and typically not advancing further than 40 m below this contact, but rarely as much as 80 m (as in drill-hole ED_01).  The thickness of the Salt above the seams is the principal control on the whether the seam is sylvinite or carnallitite, and thus the extent of the sylvinite Mineral Resources. The process advanced on a downward moving 'front' and was very efficient; when converted no residual carnallite remains within the sylvinite.  Un-replaced carnallitite may occur below the sylvinite (never above it) but the contact is always abrupt and easily identified in core. As a general rule, the conversion leads to a halving of thickness and a doubling of grade.

•       Very close to the roof of the Salt the sylvinite may be further 'leached', leaving reddish coloured halite with no or residual KCl, referred to as 'ghost seams' but still identifiable, as is the case for the TS in ED_03..

•       The borehole collar positions of the holes are provided in Table 2 of the announcement, along with the final depth. Holes were drilled vertically and no significant deviation was reported in drill-hole downhole surveys.

•       Positions of the holes in relation to other holes are shown in Figure 4 of the announcement. All drill-holes are shown on the map and the potash intersections (or absence of) for all holes within the deposit area, including historic holes, are listed in Table 3 of the announcement. No information is excluded.

•       For the calculation of the grade over the full thickness of the seams, the standard 'length-weighted' compositing method was used to combine individual results within each seam intersection.

•       No selective cutting of high or low grade material was carried out as is not justified given massive nature of the potash mineralization and absence of localised high/low grade areas.

•       For the TS some of the sub-seams making up the seam are relatively narrow but the composite intervals selected do not include unjustifiably thick intervals of low grade material.

•       No metal equivalents were calculated.

•       Core and acoustic televiewer images provide a reliable measurement of dip (and the latter provides azimuth). Seams have sufficiently low degree of dip, and drill-holes are vertical so correction of thickness for apparent thickness is not warranted.

•       Relevant diagrams are provided in the announcement including a map showing the extent of sylvinite of the TS and HWS, and a representative cross-section.

•       All relevant exploration data is reported. All intersections including carnallitite and leached seams within the deposit area are provided in Table 3 of the announcement.

•       Though process or geotechnical test-work has not been carried out on the DX sylvinite, based on observations of the core, it is similar in mineral composition,  texture and grain size as the sylvinite at Kola for which testing has been completed, for the Kola Pre-Feasibility and Definitive Feasibility Studies. The HWS hosts part if the Indicated MRE at Kola.

•       The Anhydrite Member at DX appears to be of relatively uniform thickness which would be positive in terms of hydrogeology, as this unit is a very effective aquitard, separating the Salt from potential aquifers in the 'Cover Rocks'.

•       Holes DX_05B and DX_06 were stopped above the Salt due to drilling difficulties relating to loss of drilling fluid.

•       No further exploration work is planned at present.

•       If further work is carried out, this may be aimed at expanding the deposit, by carrying out additional drilling, initially in the  vicinity of  'failed holes' DX_05B and DX_06 (Figure 4 of the announcement)

•       Additional holes between DX_01 and DX_02 may support conversion of Inferred Mineral Resources in that area to Indicated.

•       It may be helpful to carry out some new seismic surveying ahead of drilling, to better guide the latter.

•       DGPS surveys for the collars for DX_02, DX_03 and other holes not yet surveyed is important for holes  that may support  possible future expansions of the  Indicated MRE area.

•       Mineralogical work is recommended, to further support the similarity of the DX sylvinite with that of the Kola deposit. If studies are carried out, the work programme should include geotechnical, hydrogeological and process characterisation and test work.

Commentary

•       Geological data is recorded in hardcopy then captured digitally. During import into Micromine© software, an error file is generated identifying any overlapping intervals, gaps and other forms of error. The data is then compared visually in the form of strip logs against geophysical data.

•       Laboratory data was imported from csv files into an Access database, where sorting of 'original' and QA-QC samples was carried out, and for checking for errors as part of the import process. Original laboratory result certificates are kept in pdf format.

•       For the MRE a 'stratigraphic file' was generated, as synthesis of key geological units including the seam contacts and the roof of the Salt, based on geological, geophysical and assay data.

•       The grade, depth and thickness data for all mineralised intervals and other important surfaces used in the MRE were repeatedly checked to ensure no errors were present.

•       The CP, has visited the site on numerous occasions between 2012 and present, to set-up and monitor exploration procedures, and to develop a geological understanding of the deposit and the controls on sylvinite mineralisation.  

•       Recognition and correlation of potash and other important layers or contacts in and between drill-holes is straightforward and did not require assumptions to be made; each being distinct when thickness, grade distribution, and stratigraphic position relative to other layers is considered. Correlation is further aided by the use of downhole geophysical data. The abrupt nature of the contacts between rock-salt, carnallitite and sylvinite aids the confident 'picking' of seams.

•       Between drill-holes there is reliance on seismic data to guide the geometry of the seams, which in turn influences the extent of sylvinite. Some uncertainty is inherent in seismic interpretation, especially further away from control points (drill-holes); this is reflected in the allocation of the Indicated or Inferred categories.

•       The addition of more seismic and drill-hole data may result in a change to the model and estimate in the Inferred area, but it is unlikely that change would be severe, with a similar chance of an updated model resulting in a larger or smaller tonnage.

•       The geological model for the formation of sylvinite at DX is summarised in section 2.3. It is well understood. This geological model was applied in the creation of the model for the MRE, as described in 3.5.

•       Where sylvinite, the grade and other attributes of each seam is relatively consistent. The factors affecting continuity are as follows:

o  Where the seams are truncated at the unconformity at the top of the Salt Member the seams are absent (as illustrated in Fig. 2 of the announcement)

o  Beyond the replacement 'front' the sylvinite stops and carnallitite is  found. This is an abrupt change affecting the continuity. (as illustrated in Fig. 2 of the announcement)

o  Close to the roof of the Salt, the sylvinite may be 'leached' and is barren. This was excluded from the model.

•       No faults have been interpreted within the Salt, within the deposit area.

•       The DX deposit extent covers an area of approximately 4 by 10 km (Fig. 4 of the announcement). The TS and HWS are found at a depth of approximately 310 to 490 m below surface. Dip of the seams is low, rarely greater than 5 degrees.

•       Within this area the sylvinite is not continuous; there are large internal areas where the seams are carnallitite, generally in areas where, due to gentle undulation, the seams are a greater distance from the top of the Salt Member.

•       The thickness of the sylvinite is relatively consistent, averaging 5.2 m for the TS and 3.6 m for the HWS.

•       All drill-holes within and surrounding the deposit were used for the construction of the model (Figure 4 of the announcement). Even if not sylvinite, the holes around the deposit contain the same seams (TS and HWS) and the 'roof of Salt' and are therefore useful in guiding the contacts and surfaces at the margins and beyond the deposit extent.

•       The seismic data was imported in SEG-Y format into Micromine™ 2013 software and viewed in section and in 3D. A velocity of between 3900 and 4200 m/s was used to depth adjust the seismic data, 'hanging' it from the top of the Salt Member, an obvious reflector that can be 'tied' to the same contact in drill-hole data.

•       The 'roof of Salt' and the 'roof of HWS' surfaces were modelled as 'strings' by Kore (in Micromine 2013). Between holes the seismic data was used to model the 'roof of the HWS' and the' roof of Salt'. MSA imported these into Leapfrog Geo to create surfaces. Then (in Datamine Studio 3) using the surface for the 'roof of HWS' as a reference horizon, the floor of the HWS then the floor and roof of the TS were created, by 'gridding' using Inverse Distance Weighting cubed (IDW³) of the thickness (as intersected in the drill-holes) of the interval between these surfaces from the 'roof of HWS' reference horizon. By this method 'seam models' for the HWS and TS (irrespective of whether they are carnallitite or sylvinite) were created.

•       To determine the extent and thickness of the sylvinite, the 'downward' limit of the process leading to sylvinite formation was recorded in drill-holes, for example at the contact of sylvinite over carnallitite. The thickness of this interval was gridded using IDW³ to create a sub-horizontal surface 'suspended' from the 'roof of Salt' surface, then used to cut the earlier seam models, resulting in surfaces for the top and base of the sylvinite portion of the HWS and the TS. In an identical method, the thin zone of leaching of the potassium from the sylvinite at the very top of the Salt Member was also cut from the model. The products of these steps were 'sylvinite-only' wireframes for the HWS and the TS. Within the wireframe adjustments were made to remove the influence of thickness derived from carnallitite intersections of TS and HWS outside of the sylvinite wireframes. These wireframes were checked against all borehole intersections on screen in Micromine. Figures 2 and 3 of the announcement illustrate the final wireframes used for the estimation, along with other key geological surfaces. 

•       Blocks of 50 by 50 metres, with variable height were created within the HWS and TS sylvinite wireframes. Grade (KCl%) was then estimated into these blocks by IDW², using the composited drill-hole assay data. Typical spacing between holes is between 1 .4 and 4.0 km apart. Density was calculated for each block, based on the grade, as discussed in section 3.11.

•       In the CPs view, the model reflects the geological controls well, and is more appropriate to the deposit type than the potash industry standard method of using circles around holes for 2D polygonal estimation. Given the well understood controls, it provides an estimation of tonnes and grade appropriate to the respective classification.

•       The overall vertical grade variation within both the HWS and the TS is minimal and so the grade model did not require adjusting for the proportion/part of the seam present, if not complete for a given composite.

•       There are no 'outlier' in terms of grade, relating to the massive layered nature of the sylvinite and its high grade and lateral continuity within the sylvinite.  No top or bottom cutting was carried out. The CP is confident in the grade estimation method used, aided by the fact that the grade variation between holes is not significant. More complex methods such as kriging were not deemed necessary or appropriate given the relatively small data-set and relatively uniform grade.

•       The block model estimated grades were checked in cross-section in Micromine, comparing against the supporting assay data, for all drill-holes.

•       Both Mg and insoluble material are considered deleterious elements but are only present in very  small quantities in all intersections; less than in most deposits globally.  They were not estimated into the block model. In all intersections they are <0.1 and <0.3% respectively.

•       The eastern and southern limits of the deposit were cut by a 'sylvinite extent' (Fig. 4 of the announcement) interpreted from seismic data but also strongly supported by the resource model itself. Beyond this extent, the seams are considered to be carnallitite-only, to th eest of DX within the adjacent Dougou carnallite Deposit. The 'sylvinite extent' reflects the limit of the influence of the Yangala High, as described in section 2.3.

•       Extrapolation beyond data points is limited to a distance deemed appropriate in terms of the confidence of the classification into Inferred and Indicated, as described in section 3.13

•       A check estimate was made, using a volume created by multiplying the average thickness of the sylvinite with the extent of the sylvinite (as determined by a proportional representation of sylvinite to carnallitite within the deposit area). The check supports the reported MRE.

•       The sylvinite seams are dry and the estimate is on a dry basis. Moisture content was checked by weighing before and after 'drying'.

•       In all cases, the transition from high grade sylvinite to barren rock-salt or carnallitite is abrupt, typically over a 10 mm interval. Due to this 'binary' nature of the material, a standard cut-off grade approach is not really applicable. However, for reporting, a 15% KCl cut-off was used though no blocks in the model fall below this. The cut-off for the nearby Kola deposit is 10% KCl as determined from an application of modifying factors from feasibility work; therefore for DX, 15% KCl is considered conservative. The Mg and insoluble content is so low and consistent at DX that it is not a consideration in cut-off.

•       The feasibility work for the nearby Kola deposit provides guidance due to the apparent similarities of the deposits.

•       DX would likely be suited to conventional underground mining using a room and pillar layout. This is the planned method for the nearby Kola deposit which is similar in terms of seam thickness and geometry, and is also sylvinite. Pillars are left in place for long term stability of the mine openings.

•       The absence of 'difficult' lithologies such as bischofite or clay/shale rich layers is advantageous in terms of geotechnical stability of the roof and floor of the mine.

•       At Kola, drum-cutting continuous mining machines (CMs) are planned; these would likely be the preferred choice of machine for DX. Minimum mining height for these machines is typically between 1.5 and 2.5 m depending on the size of CM used.

•       At DX, the average height of the HWS and TS is 4.7 metres. For the DX MRE, all blocks with a height of less than 1.0 m were excluded from the estimate. Given the high grade of the deposit, an additional 0.5 m or more could be accepted as planned dilution in these areas.

•       As at Kola, a vertical shaft would likely be the most suitable means of accessing the DX deposit, being the lowest risk option for passing the poorly consolidated weathered sediments of the 'cover rocks'.

•       Of importance is that the DX deposit appears to be overlain by a thick 10 to 16 m thick layer of anhydrite and clay, providing a low permeability hydrogeological barrier (an aquitard) separating possible aquifers in the Cover Rocks from the Salt Member. This would need to be further tested and modelled.

•       The thickness of rock-salt between the TS and the HWS is always in excess of 8 metres thus providing a thick 'sill pillar' between the seams. Based on test work and 2D and 3D geotechnical modelling at Kola, a 'sill pillar' of this thickness is likely to be more than sufficient to allow mining of both seams even where 'superimposed'.

•       Sylvinite is the most commonly mined and processed ore of potash globally.

•       A large amount of process test work carried out for the nearby Kola deposit for feasibility studies. The sylvinite at DX appears to be similar, being comprised of medium to coarse-grained sylvite and halite, with consistently low quantities of insoluble material and magnesium.

•       Given the similarity (as observed in core) of the DX sylvinite with that at the Kola Deposit, it is likely that the DX ore is similarly amenable to conventional flotation and this should be confirmed by test-work if the project is advanced further.

•       The deposit area is outside of the 'Integral' zone Conkuati Douali National Park. It is within the 'buffer' and 'economic development' zones of the park. A comprehensive Environmental Social Impact Assessment (ESIA) was prepared and approved, for the Dougou Mining Permit.

•       At the mine site, infrastructure would be limited to the shaft related infrastructure, and conveyance of the ore. Processing of sylvinite would be at the planned plant for Kola, located at the coast, 15 km south of DX (figure 1 of the announcement) which is permitted for the production of Mt Muriate of Potash (MoP).

•       Waste from possible mining and processing is dissolved halite (salt-water), which is then diluted and discharged into the ocean.

•       Any future scoping or feasibility work for DX would benefit significantly from the large amount of social and environmental assessment and planning work carried out for the Kola feasibility study.

•       Conventional 'Archimedes Principle' density measurements are problematic due to the soluble nature of the core. At nearby Kola, it has been shown that density of sylvinite is directly correlated to the relative proportion of sylvite and halite (which have known densities of 1.99 and 2.16 g/cm³ respectively), which can be determined from the KCl content. This density is referred to as the 'mineralogically determined density' and is a method is used routinely in some operating potash mines. At DX the method is made simpler due to the extremely small amounts (<2.5%)  of other minerals.  An equation and 'curve' for the conversion of KCl to density was developed, based on pycnometer density and the 'mineralogically determined density' data. Based on this curve, a density was assigned to each block for the HWS and TS using the formula DENSITY= (KCL-742.53)/(-337.53). The average for the seams is 2.02 and 2.11 g/cm3 for the HWS and TS respectively. This is similar to sylvinite density of deposits elsewhere, typically between 2.00 and 2.15 g/cm3.

•       The bulk of the DX deposit is classified as Inferred, being supported by relatively widely-spaced drill-hole and seismic data. Within this area grade and geological continuity is implied but will require additional data-points to verify.

•       A relatively small area of the deposit has sufficient drill-hole control and seismic data to be able to assume continuity of grade and geology sufficient for it to be classified as Indicated Mineral Resources.

•       For the extent of the Mineral Resources within the Inferred and Indicated categories, the following was deemed appropriate by the CP, based on an understanding of the controls on the sylvinite, and confidence in the model in relation to data points:

•       Indicated Mineral Resource: sylvinite within a polygon guided by a 1 km radius of the drill-holes DX_01, K62, ED_03, ED_01

•       Inferred Mineral Resource: sylvinite within a polygon guided by a 2.5 km radius of inner holes and a 1.5 km radius beyond 'outer' holes, and with the removal of the area of the Indicated MRE.

•       Both the Indicated and Inferred extents were 'cut' by the limit of 'maximum extent of sylvinite' (described in section 3.5 and shown in Figure 4 of the announcement).

•       Indicated Mineral Resources are supported by drill-holes with collar positions surveyed by a DGPS.

•       Mineral Resources for the different categories for each seam within the DX Deposit are shown in Table 1 of the announcement.

•       In using MSA to assist with the resource model, there has been 3^rd party review of the drill-hole data, the resource model, and estimation procedure.

•       An external audit has not been carried out.