KANGA POTASH PROJECT - JuniorIndaba · SOLUTION MINING AND MINE PLAN (30 years LOM) • Solution...
Transcript of KANGA POTASH PROJECT - JuniorIndaba · SOLUTION MINING AND MINE PLAN (30 years LOM) • Solution...
KANGA POTASH PROJECT
Market Disruptive Potash OpportunityRepublic of Congo
Junior Mining Indaba – 2021
2 June 2021Kanga Potash was rebranded in 2021and was formerly registered as Sarmin Minerals Exploration
CONTENTS1. Highlights
2. Corporate Structure
3. Project History
4. Resource
5. Location
6. Solution Mining
7. Definitive Feasibility Study
8. MOP Cost Curve
9. ESIA
10. Steps to Implementation
11. Key Message
STRICTLY PRIVATE AND CONFIDENTIAL
1. Highlights – Why is it Market Disruptive?
2
Key Attributes:ü Exceptional Geological Characteristics: ultra-thick carnallitic seams in excess of
210m of mineable thickness
ü Unique Logistical Advantages: Solution Mining Field and Processing Plant located on the coast
ü Proximity to Market: Short shipping distance to key Brazilian and developing African markets
ü Low Cost of Power: Long-term competitively priced natural gas is readily available
ü A Modular Approach: which allows low CAPEX intensity of $457m and low OPEX entry of $66 per ton FOB from 600ktpa capacity which is scalable to 2.4Mtpa and more
ü Highly Compelling economics: for all production scenarios considered, with the 600ktpa initial module showing a $604m NPV and average EBITDA of $125m/pa over the 30-year LOM
ü Market leading Sustaining CAPEX: Solution Mining Cavern life in excess of 23 years per well
With OPEX in the lowest part of the industry cost curve, the Kanga project is the lowest cost MOP development project globally
STRICTLY PRIVATE AND CONFIDENTIAL 3
2. Corporate Structure – African Experience
AMED Funds• A Luxembourg based Private Equity group focussed on
developing Tier 1 mining assets
• Geographical investment focus on Sub-Saharan Africa• The AMED Funds team has a proven track record for bringing
projects into construction
SARMIN Mining Inc.• Sarmin is a Barbados based private equity investment
company which focuses on the development of high value-added resources, infrastructure and energy projects in Africa
• A long history of project development in ROC
Baker Steel Resources Trust• LSE-listed investment company, investing predominantly in
unlisted companies and specialist listed opportunities in the natural resources sector
Shareholders have the key skills and experience for developing African Projects
STRICTLY PRIVATE AND CONFIDENTIAL 4
KEY PROJECT MILESTONES AND ACHIEVEMENTS TO-DATEDec 2016: ü Kanga Exploration Permit secured
ü Initial field work completed, exploration programmes defined and initial exploration well locations sighted
Aug 2017:ü A 3-well exploration drilling programme was completed with solution mining parameters
being confirmed on core samples from all wells
ü Exploration programme highlighted excellent correlation between wells for all 11 mineable carnallite seams
Sep 2018ü A PFS was completed as a Class 4 (AAEC) estimate in accordance to NI 43-101 standardsü The PFS used a modular approach assessing the economic viability of 400ktpa, 800ktpa
and 2.4mtpa production scenarios
Aug 2020ü A DFS was completed as a class 3 (AAEC) estimate to NI 43-101 standards for an initial
600ktpa moduleü The DFS has produced compelling economics with a CAPEX of $457m, IRR of 23.1% and
NPV of $604m
ü OPEX is a world leading $66.50 per ton Freight on Board
3. Project History – Now Ready for Development
STRICTLY PRIVATE AND CONFIDENTIAL 5
• To confirm solution mining parameters selected core samples from all three exploration wells were analysed in accordance to NI 43-101 requirements:
§ Geochemcial assays (K-UTEC)§ Dissolution test work (Novopro)§ Cavern Temperature modelling (Rembe Consulting)§ Rock Mechanics and associated modelling (IFG)§ Control analysis of check samples (SRC)
• Assays from all three exploration wells confirm:
§ Excellent correlation between all three exploration holes and historic reference wells showing flat lying, continuous potash seams
§ Overall mineable thickness in excess of 210 meters at 62% average carnallite grade (KCl 17.5 % eqv.)
§ 13 mining horizons identified between 300 and 1100 meters from surface
• Caverns with >20-year life substantially reduce sustaining capital costs
• The resource could easily allow expansion beyond 2.4M tpa to satisfy increasing market demand
Source: Ercosplan
4. Resource Statement – World’s thickest Seams
EXPLORATION RESULTS CONFIRM THE KANGA LICENSE HAS THE THICKEST POTASH SEAMS’ SEQUENCE EVER DRILLED
STRICTLY PRIVATE AND CONFIDENTIAL 6
Kanga - Mineral Resource MOP (NI 43-101 compliant)
Carnallititetonnes
Av. Carnallite content (%)
Av. KCl content (%)
KCltonnes
Indicated 4,730 M 63.8 17.1 810 M
Inferred 7,160 M 61.4 16.7 1,197 M
Total (I&I) 11,890 M 2,006 M
Probable Reserve 376 M 62.3 17.5 59.4 M
Loango - Mineral Resource MOP (NI 43-101 compliant)
Carnallititetonnes
Av. Carnallite content (%)
Av. KCl content (%)
KCltonnes
Indicated (KEW3) 217 M 61.0 16.4 36 M
Inferred (KEW2, KEW3) 2,218 M 62.7 16.8 373 M
Inferred (K59B) 10 968 M 59.9 16.1 1,764 M
Total (Inferred) (*) 13,186 M 2,136 M
Probable Reserve 16.1 M 16.6 2.4 M
SARMIN
O:\@@@GIS\@@@GIS Projekte\CONGO BASIN...\Karten\16-082_Sarmin_Kanga\Congo_Basin_UTM_PN_32S_exploration_areas.mxdDate: 14 August 2018
Figure
Map of the Kanga andLoango Licence Areaswith Indicated andInferred Resource Areas
ERCOSPLAN IngenieurgesellschaftGeotechnik und Bergbau mbH
Arnstaedter Strasse 2899096 Erfurt/Germany
phone: +49 361 3810 500fax: +49 361 3810 505
e-mail: [email protected]: http://www.ercosplan.com
!(
!(
!(
!(
KEW 3
KEW 2
KEW 1
K-59B
Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS,AeroGRID, IGN, and the GIS User Community
808000
808000
809000
809000
810000
810000
811000
811000
812000
812000
813000
813000
814000
814000
815000
815000
816000
816000
817000
817000
818000
818000
819000
8190009489
000
9489
000
9490
000
9490
000
9491
000
9491
000
9492
000
9492
000
9493
000
9493
000
9494
000
9494
000
9495
000
9495
000
9496
000
9496
000
9497
000
9497
000
9498
000
9498
000
9499
000
9499
000
9500
000
9500
000
9501
000
9501
000
9502
000
9502
000
Coordinate system: WGS 1984 UTM Zone 32S
±
1:45.0000 1 20,5
Kilometers
Scale:
Legend
!( Historical drill holes
!( Sarmin Exploration well location
Kanga Licence
Loango Licence
Tchimpounga Natural Reserve Area
Indicated Resources 1500m
Inferred Resources 3000m
A total of 12Bt of resources at Kanga is complimented by further 13Bt at Loango, which makes it one of the largest potash projects ever discovered
4. Resource Statement– World’s Largest Resource
Source: Ercosplan
STRICTLY PRIVATE AND CONFIDENTIAL
5. Unique Location – Market Leading Logistics
7
• The Project is located c. 32km north of the main economic hub of Pointe Noire in the Republic of Congo
• The project site can be reached within an hour drive from Pointe Noire
• A minimal environmental footprint is expected due to the small area required for process plant and solution mining (ca. 2km2 for 400Ktpa and 7km2 for the 2.4Mtpa throughput)
• Sea water will be used as the prime source of process water, thus fresh water sources will not be required. The entire water balance will be recovered from the evaporator condensate
• Scarce flora and fauna in the region• No population within the selected areas for solution mining
and process plant
• Process plant and solution mining field will be in immediate proximity to the Atlantic ocean and the owner’s operated transhipment jetty
810 541E,9 498 850S
811 630E,9 498 590S
812 173E,9 498 094S 812 549E,
9 498 213S
813 107E,9 496 651S
812 465E,9 496 381S
812 280E,9 496 358S
812 133E,9 496 306S
811 957E,9 496 056S
810 949E,9 495 846S
810 861E,9 496 160S
810 152E,9 495 480S
809 352E,9 496 368S
809 094E,9 496 700S
809 279E,9 496 971S
808 910E,9 497 359S
809 121E,9 497 509S
809 397E,9 497 772S
809 325E,9 497 895S
808 868E,9 498 292S
808 692E,9 498 352S
808 672E,9 498 479S
808 800E,9 498 538S
809 128E,9 498 566S
809 520E,9 498 491S
809 820E,9 498 644S
Potash Treatment Plant Site
Potash Salt Extraction Site
TchimpoungaNatural Reserve
Kanga Licence
Loango Licence
SeawaterIntake
Effluent
TilapiaSite
¥5
¥5
¥5
KP 6
KP 7.3 to KP 33.3Natural Gas Pipeline(20m wide Corridor)
KP 0 to KP 7.3Natural Gas Pipeline
and Mining Pipe(50m wide Corridor)
KP 7.3
Loango Environnement Group
Jetty
Holl-Moni
N'toupou
Km 21
KP 9
KP 8
KP 7
KP 5
KP 4KP 3
KP 2
KP 1
KP 0
810000
810000
9500
000
9500
000
Atlantic Ocean
N
Initial Wells (41)
Project Component
Limit
Jetty, Intake and Effluent
Natural Gas Pipeline (Kilometric Point)
Primary Roads
Secondary Roads
Trails
Roads
Permanent Watercourse
Intermittent Watercourse
Hydrography
KP 1
Natural Reserve
Kanga Licence
Loango LicenceMap 5-3
July 2020
161_18089_FS_m5-3_Wells_200709.mxd
Kanga Potash ProjectEnvironmental and Social Impact Assessment
Sources :Infrastructure Data : Novopro 2020Imagery : Esri, World Imagery ; Google Earth
UTM, Zone 32S, WGS84
Limits of the Potash Salt Extraction Siteand Location of the Wells
0 250 500 m
Kouilou DepartmentLoango District
Potash Plant Site
Potash Mining Site
Subsequent Wells (29)
Republicof Congo
Angola
DemocraticRepublic of Congo
Gabon
!!StudyArea
N
0 200 km
THE PROJECT HAS AN UNIQUE LOCATION IN IMMEDIATE PROXIMITY TO THE SHORE
STRICTLY PRIVATE AND CONFIDENTIAL 8
6. Solution Mining – Proven Mining Method
Source: Novopro, Ercosplan
SOLUTION MINING AND MINE PLAN (30 years LOM)
• Solution Mining is used for the production of potash by pumping water into subterranean salt deposits, dissolving the salts and pumping the brine to the surface for further processing
• Solution Mining is a proven mining method used around the world for the production of potash, uranium, lithium and other water soluble salts
• The production of 600Ktpa requires an initial 43 single well caverns, which then ramps up to0 70 in year 10
• Due to carnallite seam thickness, no new wells need to be drilled for the rest of the LOM
KEW 3
KEW 2
KEW 1
Source: Esri, Maxar, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AeroGRID, IGN,and the GIS User Community
9500
000
9499
000
9498
000
9497
000
9496
000
9495
000
9500
000
9499
000
9498
000
9497
000
9496
000
9495
000
813000812000811000810000809000
813000812000811000810000809000
Kanga Potash ProjectSarmin Minerals Exploration
O:\@@@GIS\@@@GIS_Projekte\CONGO BASIN\Karten\19-016_Sarmin-Kanga\19-016_Sarmin-Kanga\19-016_Sarmin-Kanga.aprxDate: 2020-06-22
Figure 10Map of the investigated Partof the Kanga License Areawith Proposed CavernPositions and Cavernsrequired for the Mineplan
ERCOSPLAN IngenieurgesellschaftGeotechnik und Bergbau mbH
Arnstaedter Strasse 2899096 Erfurt/Germany
phone: +49 361 3810 500fax: +49 361 3810 505
e-mail: [email protected]: http://www.ercosplan.com
0 500 1.000 m
Coordinate System: WGS 1984 UTM Zone 32S
Legend:
Kanga Exploration Wells
Kanga License
Tchimpounga Natural Reserve Area
Areas not suitable for Well Drilling
Indicated Mineral Resources
Revised Cavern LayoutYear 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Year 11
STRICTLY PRIVATE AND CONFIDENTIAL 9
COMPELLING PROJECT ECONOMICS BASED ON AN INITIAL MOP CAPACITY of 600Ktpa
7. DFS – Compelling Financial Outputs
The Kanga potash project OPEX is on the lowest part of the industry cost curve:
• Market competitive, low cost and long-term natural gas supply from a reputable O&G major
• Process plant, solution mining and linear infrastructure next to the coastline
• Strategic location with short sailing distance to Brazil, the 2nd largest importer of potash
• Huge resource with ultra thick seams reducing the initial number of caverns required and significantly reducing sustaining capital
Total Capacity, K tpa 600Start of construction 2022
OPEX , $ per ton KCl, FOB 66.5
Peak CAPEX, $M 457
Pre-tax Project NPV(10), $M 604After-tax Project NPV(10), $M 511Pre-tax Project IRR, % 23.3After-tax Project IRR, % 22.3
• The initial 600Ktpa module demonstrates a scalable modular approach to project development allowing growth to 2.4Mtpa and more
• A unique deposit that supports the development of an industry disruptive, tier one potash project
• The financial model applied an average blended sales price of 288/t for granular and standard MOP (2020 real)
• Natural gas price: $50/1000Nm3 (= $1.23/MMBTU)
Source: brokers, Company data
STRICTLY PRIVATE AND CONFIDENTIAL
KP(2.4M tpa)
KP(600K tpa)
KP(400K tpa) Uralkali Belaruskali Potash
Corp Agrium QinghaiSal t Lake Mosaic ICL Arab
Potash Intrepid SQM K+S
Transport Costs to Brazil $25 $25 $25 $26 $26 $27 $27 $50 $27 $26 $26 $26 $21 $28Transport to Vessel at Port $- $- $- $42 $32 $36 $36 $51 $36 $17 $11 $49 $15 $11Cash Cost $53 $60 $73 $43 $61 $66 $73 $48 $86 $116 $130 $106 $162 $177FOB Vessel Cash Cost $53 $60 $73 $85 $93 $102 $109 $99 $122 $133 $141 $155 $177 $188Total Delivered Cost $78 $85 $98 $111 $119 $129 $136 $149 $149 $159 $167 $181 $198 $216
$53 $60 $73
$85 $93 $102 $109 $99 $122 $133 $141
$155 $177 $188
$78 $85 $98
$111 $119 $129 $136 $149 $149 $159 $167
$181 $198
$216
$-
$50
$100
$150
$200
$250
$/to
nne
Producer Cost Structure
10
CASH COSTS AS PROVIDED AND DEFINED BY ARGUS Media group
Source: except for KP data, Argus media group, Potash Market Service, Quarterly Industry Analysis, June 2020
THE LOWEST COST FROM ex MINE to MARKET
Note: Included - fuel and energy, raw materials, maintenance, labour, and G&A (including sales), KP “transport to port” cost included in cash cost due to owned and operated jetty and barge designExcluded - sustaining capital, royalties, plant closure costs
8. OPEX – At the lowest end of the Cost Curve
STRICTLY PRIVATE AND CONFIDENTIAL
9. ESIA – Approved
11
WSP (Canada), an independent and internationally recognised environmental consultancy undertook the ESIA work program
2019 to 2020: ESIA Base Line Studies
• Site confirmation• Public consultations and stakeholder engagement • Base line Data Collection• Impact Assessment, Mitigation and Offset Measures• Project cumulative effects• Environmental & Social Management Plan• The ESIA Letter of Conformity was issued in Q1 2021
NO ISSUES OF CONCERN HAVE BEEN IDENTIFIED
ü The Project will mainly use sea water for all key processes, thus avoiding use of fresh water sources. The process water is generated entirely from the evaporation condensate
ü Carnallite seams can be solution mined within an uninhibited areaü No issues of concern that relate to the physical, biological or socio-
economical environments have been identified to date
STRICTLY PRIVATE AND CONFIDENTIAL 12
10. IMPLEMENTATION – advancing to production
Oct 2019 –Sep 2020 2021 Jan 2022 –
June 2024July 2024 –Dec 2024
Jan 2025 –Onwards
FEED• EPC-f bid phase
and selection process -commenced
• Owners team in place and strategic Investors on board
• Detailed engineering for early works
• Key offtake/marketing contracts finalized
• Secure Project finance
DFS• Basic Engineering• ESIA • Permitting• Key agreements
completed
CONSTRUCTION•Overall EPCm •Designated EPC
packages• Production well drilling
programme for initial cavern development
COMMISSIONING & RAMP UP• Commissioning• Gradual production
increase to full name plate capacity
PRODUCTION AND EXPANSION
• MOP production at name plate capacity
• Phased expansions as and when market conditions allow
• Underpinned by a huge resource allowing exponential expansion of production
12 months 12 months 30 months 6 - 9 months
MAIN PROJECT DEVELOPMENT STEPS AND ANTICIPATED TIMELINES FROM DFS TO COMMERCIAL PRODUCTION
STRICTLY PRIVATE AND CONFIDENTIAL 13
210m thickThickest known carnallite horizons at av. KCl 17.5 % grade equivalent
$66.3/t OPEX1)
Lowest known OPEX FOB Pointe Noire
810mtM&I KCl resources
>13BtIndicated & Inferred Resources
760 km2
Kanga license including the adjacent Loango license
$457M1) CAPEXLow capital intensity project
>20-year cavern life30 years Life of MineReduced ongoing drilling requirements
$125M EBITDA1)
av. EBITDA p.a.
THE DFS WORK PROGRAM HAS FURTHER DE-RISKED AND ADVANCED THE KANGA PROJECT
DFS completedin September 2020
11. SUMMARY – A Market Disruptive Opportunity
1) 600K tpa, 2020 real
EPC-F and Pre-Investment StructuringJanuary 2021 onwards
STRICTLY PRIVATE AND CONFIDENTIAL
Important notice:
This document has been compiled by the professional team of Kanga Potash “KP“.
The Document contains forward-looking statements which reflect the team’s current views based on the information provided to it and the assumptions made by it. These forward looking statements by their nature address matters that are uncertain and involve elements of subjective judgment and analysis which may or may not be accurate, and are therefore subject to significant risks and changes which may cause the valuations and projections to change materially from the views expressed in the Document. These forward looking statements are subject to review, verification and amendment without prior notice and without liability to compensate or reimburse any party and no guarantee is given that the projected valuations will be achieved. These forward looking statements may or may not prove to be correct and there can be no assurance that any such statements, estimates, targets, forecasts or projections are attainable or will be realised.
Nothing contained in this Document is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Accordingly, neither SME nor its directors, partners, employees or advisors nor any other person, shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of such person’s reliance on any statement in or omission from this Document and any such liability is expressly disclaimed. In particular, but without limitation, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any statements, estimates, targets, information, forecasts, projections, opinions or conclusions contained in this Document (or otherwise provided by or on behalf of SME with respect to the subject matter of this document).
No representation or warranty, express or implied, is furthermore made as to the fairness, accuracy, completeness or correctness of any statements, estimates, targets, information, forecasts, projections, opinions or conclusions contained in this Document. To the maximum extent permitted by law, neither SME, its directors, employees or agents, nor any other person, accepts any liability for any loss arising from the use of this document or its contents or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on the part of the Fund or their directors, employees or agents.
SME shall only be bound by those particular representations and warranties set forth in definitive written transaction documents, when and if such transaction documents are executed and subject to such restrictions and limitations as may be contained therein. This Document and its contents are confidential and may not be disclosed to any third party without the prior written consent of KP.
Disclaimer
14