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The Colluli Resource and Reserve

The Colluli Resource

The Colluli resource contains approximately 1.289 billion tonnes of potassium bearing salts including sylvinite (sylvite plus halite), carnallitite (carnallite plus halite) and kainitite (kainite plus halite). 97% of the salts sit within Measured and Indicated categories. The Mineral Resource estimate prepared and reported under the guidelines of the 2012 JORC Code is represented below:

colluli measured indicated

The resource contains a K2SO4 equivalent of 260Mt (100% recovery basis), making it one of the largest potassium sulphate deposits in the world.

The Colluli JORC 2012 compliant resource is shown in the table below.

table 3 resource

Resource Statement

The 2015 Colluli Potash Mineral Resource is reported according to the JORC Code and estimated at 1,289Mt @11% K2O Equiv. The Mineral Resource is classed as 303Mt @ 11% K2O Equiv Measured, 951Mt @ 11% K2O Equiv Indicated and 35Mt @ 10% K2O Equiv Inferred. The Competent Person for this estimate is Mr. Stephen Halabura, M. Sc., P. Geo., Fellow of Engineers Canada (Hon), Fellow of Geoscientists Canada, and a geologist with over 25 years’ experience in the potash mining industry. Mr. Halabura is a member of the Association of Professional Engineers and Geoscientists of Saskatchewan, a Recognised Professional Organisation (RPO) under the JORC Code and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code.

 

The Colluli Reserve

More than 85% of the resource is held within the Colluli Reserve (1.113 billion tonnes of potassium bearing salts). The Ore Reserve estimate prepared and reported under the guidelines of the 2012 JORC Code is represented below:

 table 001

Reserve Statement

The November 2015 Colluli Ore Reserve is reported according to the JORC Code and estimated at 1,113Mt @10% K2O Equiv. The Ore Reserve is classed as 286Mt @ 11% K2O Equiv Proved and 827Mt @ 10% K2O Equiv Probable. The Competent Person for the estimate is Mr Mark Chesher, a mining engineer with more than 30 years’ experience in the mining industry. Mr. Chesher is a Fellow of the AusIMM, a Chartered Professional, a full-time employee of AMC Consultants Pty Ltd, and has sufficient open pit mining activity experience relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the JORC Code. Mr Chesher consents to the inclusion of information relating to the Ore Reserve in the form and context in which it appears.

In reporting the Mineral Resources and Ore Reserves referred to in this public release, AMC Consultants Pty Ltd acted as an independent party, has no interest in the outcome of the Colluli Project and has no business relationship with Danakali Ltd other than undertaking those individual technical consulting assignments as engaged, and being paid according to standard per diem rates with reimbursement for out-of-pocket expenses. Therefore, AMC Consultants Pty Ltd and the Competent Persons believe that there is no conflict of interest in undertaking the assignments which are the subject of the statements.

Potassium Bearing Salts 

Sylvinite

Sylvinite is the most commonly used mineral for the production of potassium chloride. Potassium chloride, also known as Muriate of potash or MOP, is primarily produced from evaporite deposits in Canada, Russia and Belarus. These deposits are quite deep, with depths of over 1000m in Canada and to 300 to 500m in Eastern Europe. These deposits are typically mined using conventional underground mining methods, however, conventional mining is not suitable at depths deeper than 1,200m. Solution mining involves injecting heated solution into the resource, dissolving the valuable salts and pumping them to surface for subsequent processing. Sylvinite is a combination of two salts; sylvite (KCl) and halite (NaCl). Processing sylvinite is relatively simple. The mined material is crushed to a size where sufficient liberation of potassium chloride and halite particles occur. The liberated materials are then selectively separated in flotation units. Halite is typically transported to a tailings storage facility and sylvite is dried and sold as potassium chloride (Muriate of Potash) fertiliser.

Carnallitite

Carnallitite is the combination of carnallite and halite. Carnallite rich brines are currently recovered from the Dead Sea to produce potassium chloride (MOP). Carnallite is a hydrated potassium magnesium chloride with formula KMg.Cl3.6(H2O). Carnallite occurs within a sequence of potassium and magnesium evaporite minerals; sylvite, kainite, polyhalite and kieserite. Carnallite is an uncommon double chloride mineral that only forms under specific environmental conditions in an evaporating sea or sedimentary basin. It is mined for both potassium and magnesium and occurs in the evaporite deposits of Carlsbad, New Mexico, Utah, United States, and the Williston Basin in Saskatchewan, Canada. Israel and Jordon produce potash from the Dead Sea by using evaporation ponds to concentrate the brine until carnallite precipitates. The carnallite is dredged from the ponds and processed to remove the magnesium chloride from the potassium chloride.

Kainitite

Kainitite is the combination of kainite and halite. Kainite consists of potassium chloride and magnesium sulphate. Kainite exists in salt form in appreciable amounts in only three regions of the world; the Danakil Basin, Ukraine and Italy. Kainite was essentially depleted from the German Strassfurt mines with the salt being primarily used as a direct application fertiliser. With cessation of kainite mining in both the Ukraine and Italy, the Danakil Basin remains the last unexploited major deposit with kainite in solid form. Kainite is the key salt used for low temperature, high potassium yield production of potassium sulphate. It decomposes to an intermediate salt known as loenite, and then reacts with potassium chloride under ambient conditions to produce potassium sulphate. In key potassium sulphate producing operations, kainite is formed by evaporation of kainite rich brines. This increases footprint size and renders production rates subject to ambient conditions. Kainite can produce potassium sulphate or potassium chloride depending on the production process chosen. Kainite makes up over 60% of the Colluli resource and is seen as the key differentiating mineral species. The shallow mineralisation makes it easily extractable. Kainite is difficult to solution mine due to its solubility.

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