Cominco Resources Hinda Phosphate Project Update · Cominco Resources – Hinda Phosphate Project Update ... following the long-term success of the country’s oil and gas industry

H i n d a P h o s p h a t e P r o j e c t Def i n i t iv e Fe as ib i l i t y S t udy

Cominco Resources – Hinda Phosphate Project Update Definitive Feasibility Study (DFS)complete, NPV10 After Tax of US $1.87 billion, UngearedAfter Tax IRR of 38%, Capital cost of US$601M, Cash cost (average for first five years)of $36.6 t FOB and in lowest industry quartile, Payback period on development cost of 26 months, World Bank - IFC compliant ESIA targeted for completion in August 2015, Mining license approval is imminent

Cominco Resources Limited (Cominco)continues to develop its 100% owned Hinda Phosphate Project (Project) in the Republic of Congo (ROC) and has now completed the Definitive Feasibility Study (DFS). The main participants in the DFS were:

Cominco, who prepared sections ongeological definition and the Mineral Resource Estimate (by CSA Global)marketing studies and price forecasts (by CRU Consulting),legal framework, permitting status and community relations;

SRK Consulting (UK) (SRK)who provided the JORC compliant Ore Reserve Statement, mine design and schedules and the mine capital and operating cost estimates. SRK also completedreports on hydrology, hydrogeology and geotechnical investigations. These studies have facilitated the design and cost estimation of the water management systems and the tailings storage facility as well as the mine itself;

Ausenco Engineering (Ausenco), who were responsible for the overall management and coordination of the DFS, including the metallurgical test work program and the design and costing of the beneficiation plant at Hinda and Pointe Indienne. Ausenco carried out product slurry testwork, facilitating the design and costing of the concentrate pipeline and completed the design and cost estimation of the export jetty, based on their evaluation of available bathymetric and geophysical data;

Mintek, who conducted the metallurgical bench and piloting test work;

Prayon, in Belgium, who carried out acidulation test work on the concentrate generated in the pilot campaigns to evaluate its amenability to the production of phosphoric acid and DAP; and

WSP (Genivar), who managed the environmental baseline studies and the development of an independent ESIA for the exploitation phase of the Project.

The Project is located in the coastal province of Kouilou and is favorably situated 37km from the port city of Pointe-Noire, the economic capital of ROC. Pointe-Noire is a major deep-water container port on the Atlantic coast of central Africa.


The Project involves the development of an open cut mining operation including in-pit crushing of an average 20 Mt/y of ore. The ore will be delivered to a beneficiation plant that will upgrade the apatite to produce 4.1 Mt/y of saleable phosphate rock concentrate (Phosrock) grading 32% P2O5. A slurry pipeline will transport this product 42 km to the export facility at Pointe Indienne immediately north of Pointe-Noire. Product dewatering, drying, storage and ship loading facilities will be built at Pointe Indienne. The Project includes all of the infrastructure required to support the development including power and gas transmission, accommodation and other buildings, access roads and mobile equipment.

The DFS demonstrates that the Hinda Project is technically and commercially robust and has the capacity to repay its US$601M development cost within 26months of production generating an after-tax, ungeared 38% IRR and NPV10% of US$1.85 billion.

The Hinda deposit is one of the world’s largest and thickest undeveloped phosphate JORC Ore Reserves. It has a low overburden to ore ratio and can be open pit mined, by free-digging, with no requirement for ripping or blasting.

A total of 929 diamond and reverse circulation holes have been drilled in the Hinda deposit covering a linear distance of 66,231 m. Phosphate mineralisation is hosted by Upper Cretaceous to Quaternary sediments and is up to 65 m thick and from surface at the mine start location. The JORC Measured and Indicated Mineral Resources is in total 581.5 Mt @ 10.4 % P2O5 at a 5% cut off.

SRK has completed an Ore Reserve Statement, based on a 20km long section of the ore body, which provides the life of mine ore schedule for the economic analysis. The Proved and Probable Ore Reserve is 404.9 Mt @ 11.0% P2O5. The ore body remains open to both the north and south of the DFS study zone.

The project capital costs are inclusive of all necessary equipment, infrastructure and services required to extract the ore from the mine and to deliver product into a vessel at the port. The costs for mechanical equipment and bulk materials, such as concrete, structural steel and earthworks, have been obtained from quotations. Capital costs include allowances for contingency and Owners costs. The economic analysis includes sustaining capital largely associated with the ongoing expansion of the mine, the associated pit dewatering and the replacement of mining equipment. The operating costs are inclusive of labour, electrical power, natural gas, maintenance spares, reagents, consumables and administrative costs. Unit operating costs have been built up on the basis of firm quotations and in the case of labour, have been based on an evaluation of the rates and regulations prevailing in ROC. The Phosrock pricing assumptions in the financial model are derived from CRU’s estimated long run marginal cost of production.


The primary outcomes of the DFS are summarised below;

Table 1.0 Project Fundamentals

Item Value

Measured and Indicated Mineral Resource 581.5 Mt

Mineral Resource average grade 10.4% P2O5

Proved and Probable Ore Reserve 404.9mt

Mine life based on Ore Reserves 24years

Ore Reserve average phosphate grade 11.00%

Mined Ore – years 1 to 5 76 dMt

Run of mine head feed grade– years 1 to 5 13.1 % P205

Mined Ore – Years 1 to 20 351 dMt

Run of mine head feed grade – 20 year average 11.03 % P205

Average ROM throughput -20 year average (kdt Pa) 17,526

Waste:Ore ratio – years 1 to 5 (m3:t) 0.747

Waste:Ore – years 1 to 20 (m3:t) 1.387

Mill Power (installed) 7.5MW

Peak Mill feed (after screening) – 20 year 8.56dMt Pa

Mill feed grade (after screening) – years 1 – 5 21.9 % P205

Mill feed grade (after screening) – 20 year average 20.46 % P205

Time weighted product price 148.8 $/t

Overall product mass recovery average (1-20) 21.1%

Annual production of Phosrock concentrate (av.) 4.1 Mt

Phosrock product grade 32% P2O5

Phosrock product minor element ratio 0.06

Phosrock product CaO / P2O5 ratio 1.52

Pre-production capital expenditure $601.3m

Lead time to first production 2 years

Average cash operating cost FOB – first 5 years $36.57/t Phosrock

Average cash operating cost FOB – years 6-10 $41.52 /t Phosrock

Base case Phosrock price – average 148.8 $/t

Internal Rate of Return (100% equity, post tax) 38%

Payback after production commences 26 Months

Capital intensity 150$/t

Project Location Advantages: ROC is a stable and safe place to work and invest, with a developed commercial sector, following the long-term success of the country’s oil and gas industry. Pointe-Noire city, with a population of over 1M, is the economic capital of the country, and an attractive coastal city, home to a substantial, residential-based expatriate community.

Figure 1 identifies the location of the Hinda mine and beneficiation plant together with the product pipeline easement and the concentrate dewatering and export facilities at Pointe Indienne


Figure 1: Cominco Hinda Project Location Map.

The close proximity of the Project to local infrastructure minimises the Project’s capital and operating costs, and the key advantages can be summarised as follows:

Ease of access to Pointe-Noire with its international airport and deep water port, which will be utilised for import of construction equipment, reagents and spares.


The dual carriageway, paved highway N1 passes through Hinda village from where

an upgraded 12 km access road will link with the Hinda mine and beneficiation plant;

The Pointe-Noire facilities are close to the sealed N5 highway that links with Pointe-Noire;

Therecently constructed 300 MW gas-fired power station to the south of Pointe-Noiretransmits electrical power via the national grid. A substation 17 km from the beneficiation plant will be upgraded to provide electricity to the Hinda site. Another substationissituated 15km from the Pointe Indienne de watering facilities and the export jetty. The total connected electrical load is 45.1 MW

A buried slurry pipeline will deliver Phosrock product from the Hinda beneficiation plant to the dewatering facilities at Pointe Indienne. The line will travel a relatively short distance of 42km and the easement is flat and passes through existing state owned land.

Natural gas will be employed for drying of the product Phosrock and this is available in the immediate project location. The gas requirement is 3,661 GJ/day.

The diesel requirement for the project (49.2 kL/day) is largely dictated by the mining operation. A refinery, that produces a variety of products including diesel, is located just north of Pointe-Noire.

Neither the Project area nor the routes required for Project infrastructure fall within any protected area, nature reserve or sanctuary or area of known environmental or cultural sensitivity.

Geology and Resources: The phosphatedeposit is located within a graben structure between 300 m and 800 m wide and extending for more than 20 km in a north to south direction. The depth to mineralisation is very shallow, less than 10 m in the south and slowly deepens northwards where overburden is between 40 m to 65 m thick.

The deposit is a large, structurally controlled and confined sedimentary accumulation of primary biogenic and secondary phosphate mineralisation. There are two main phosphate-bearing sedimentary layers. The Grey Maastrichtian (Gm) upper cretaceous layer represents the primary phosphate rock, providing 90% of the ore. Upper layers of the Gm unit have been subjected to tropical weathering and decarbonatation and the resulting weathered layer is designated Beige Maastrichtian (Bm).

Mineralisation is homogenous along and across strike. The orientation is well suited to a strip-mining type sequence that commences in the south and moves northwards. Figure 2 shows a cross section through the deposit. The graben host structures can be seen on the West (left) and East (right) side of the Ore body.


Figure 2: Cross section through the Hinda deposit.

Phosphate in the Ore lithologyGm and Bm is carried by only two minerals, the carbonate-fluorapatite (francolite) in Gm Ore and the fluorapatite in Bm Ore. Phosphate grades are directly related to the abundance of these minerals, allowing a good understanding of the distribution of minerals to be developed from drilling samples. The nature of the long uniform and consistent depositional environment is such that the sedimentary layers are relatively uniform and mineralogy is consistent for long distances along strike.

Ore Reserves: The Hinda Life of Mine plan developed by SRK schedules mining of a total of 1,489.7 Mt of material, comprising 1,084.7 Mt of overburden and 405.0 Mt of Ore. The Ore Reserve reported in Table 2 below is 404.9 Mt dry, grading 11.0% P2O5 with the 0.1 Mt of additional material scheduled derived from Inferred Mineral Resources. Mining operations will commence in the southern portion of the Orebody, progressing northwards at an average rate of approximately 500 m per annum. Total tonnage mined increases from 24.4 Mt in Year 1 to a maximum of 88 Mt in Year 21.

The reporting standard adopted for the reporting of the Ore Reserve statement for the Hinda Project is that defined by the terms and definitions given in The 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC 2012).

Table 2: Ore Reserve Statement (SRK: 1 April 2015).

Ore Reserves Tonnage Grade (dry Mt) (%P2O5) (%MgO) (%SiO2) (%CaO)

Proved 158.7 12.1 4.2 39.8 23.8 Probable 246.3 10.4 4.2 43.9 21.4

Total Ore Reserves 404.9 11.0 4.2 42.3 22.3

(1)

Ore Reserves are reported within an engineered design pit which is based on an optimised shell corresponding to a product (32.0% P2O5) price of $101/t reported on a dry basis ($3.15/dmtu P2O5). The associated overburden mined


totals 1,084.7Mt which reflects a stripping ratio 2.68twaste per tonne of Ore.

(2) Ore Reserves are derived from all scheduled mining blocks contained within the geological wireframes for each seam, which are defined assuming a geological 5%P2O5cut off.

(3) Assuming a long term price of $155t ($4.84/dmtu P2O5) of phosphate concentrate, the operating cut-off grade ranges from 1.7%P2O5 to 2.4%P2O5, and the marginal processing cut-off grade ranges from 1.4%P2O5 to 1.9%P2O5. Assumed operating expenditures are $1.24/tmined, $4.91/tprocessed; selling cost of $3.17/tconcentrate; and royalty of 3.00% of gross sales revenue.

(4) The contribution of each Ore type to the total Ore Reserves by tonnage comprises: Bm (5.3%); Gm (90.4%); Cb (3.2%) and Cg (1.0%).

(5) The mining loss factor varies by Ore type and seam geometry resulting in the following weighted averages: Bm (18.0%; Gm (3.10%); Cb (14.7%); and Cg (18.0%). Dilution is assumed at 0.0% with zero dilutant grade.

(6) The assume yields and metallurgical recoveries are determined assuming the formulae as developed by the Company. These have resulted in the following weighted LOMp averages: Bm (36.5% mass yield, 77.4% P2O5 recovery); Gm (19.7% mass yield, 59.1% P2O5 recovery); Cb (39.1% mass yield, 77.4% P2O5 recovery); Cg (12.3% mass yield, 56.1% P2O5 recovery).

(7) The Ore reserves are reported on a dry basis and the assumed moisture content for the various lithology’s are: Bm (13.6%); Gm (11.2%); Cb (20.0%); Cg (17.1%); and waste ranging from 15.0% to 16.3%.

(8) The Ore reserve statement must be read in conjunction with the following additional technical disclosure commentary: Table 1 disclosures as mandated by JORC Code 2012; the risks and opportunities as included in Chapter 25 of the Definitive Feasibility Study for the HPP; and the additional qualifications as stated in Chapter 7- Mine Design.

Mining Operations: Mining will be a conventional open-pit, truck and shovel operation employing in-pit crushing and conveying (IPCC) for both free dig ore and overburden. The pit will be mined to the full depth of economic mineralisation and then advanced north-west along strike, allowing for continual backfill.

The trucking operation will commence with two backhoes operating in ore and overburden. The haul trucks will be equipped with lightweight trays and will have a capacity of 193 tonnes. Latter in the mine schedule face shovel excavators will be utilised to supplement the operation.

A development fleet (of up to ten, 40t articulated trucks) will be used for construction works required to support the mining operations. This will includeconstruction activities associated with the tailings dam, surface water diversion channels,access roads site works and topsoil stripping.

The ore IPCC system will consist of a single crushing station and conveyors that, for the first three years of operation will be located on surface at the western boundary of the open pit.After Year 3, the ore crusher will be relocated in the pit and thereafter will be progressively moved northwards.

The overburden disposal strategy will be to truck haul the waste for the first five years of operation. Following this, an additional IPCC system will be installed and a combination of truck and IPCC backfill will be utilised. The overburden crushing station is planned to periodically move along the length of the pit to support the advancing mine face. The spreader and dump conveyor will be relocated as required.

The average mining operating cost for the first five years is estimated at $1.59 /dry tonne. Following the introduction of the waste IPCC this will decrease to $1.18 per year. Figure 4 defines the mine operating cost over the first 10 years. The capital costs for the LOM mining operation are $639.8 M.


Figure 4: Mine Operating Cost – first ten years

Beneficiation: A detailed bench and pilot scale test work programme has been undertaken on both Gm and Bm ore types. Over 70 tones of large diameter (200mm) drill core supplemented by samples of PQ core have been employed in the programme. The metallurgical test work programme has been extensive and has included bench testing of all unit operations by ore type, full scale testing of the crushing operation and pilot testing the attritioning, screening, milling and flotation operations. Vendors have also undertaken test work on specific unit operations. Acidulation testing of Phosrock has been undertaken by Prayon.

The key outcomes of the metallurgical development programme are summarised as follows:

Production of a high-grade phosphate rock concentrate analysing 32% P2O5 (and as high as 34.5% P2O5) from type Gm Ore and 36% P2O5 from type Bm Ore and deleterious elements within industry specifications;

Suitability of the Phosrock for the production of phosphoric acid (54% P2O5) at a recovery of 97.1%. Whilst the MgO content of the sample was slightly higher than that generated in bench and pilot tests the filtration rate of the gypsum cake was acceptable;

An overall and relatively conservative P2O5 recovery from ore through to Phosrock product of 61.4% from Gm Ore averaging 12.4% P2O5 and 4.2% MgO;

The development of a robust crushing and screening process based on pilot test work including the use of commercial size equipment to reduce technical risk. The work has verified the outcomes of the PFS with respect to upgrading P2O5 to an average 20.2% P2O5 whilst rejecting 70% of MgO;

Establishment of an attritioning step on the coarse screened fraction that provides an increased recovery of phosphate mineral;

0.00.20.40.60.81.01.21.41.61.82.0

1 2 3 4 5 6 7 8 9 10

$ /

dt

Year


Grinding at P80 < 190 μm and desliming at 10 μm based on pilot scale ball

milling, with low specific energy requirement. A single stage ball mill has been selected on the basis of testwork and cost comparisons with other comminution methods; and

The identification of a flotation process utilising two stage reverse - reverse flotation. This configuration evidences major improvements over the direct flotation process specified in the PFS, including significant reductions in the consumption of reagents (operating cost) and circuit complexity.

This process flow sheet is summarised in Figure 3.

Figure 3: Summary Flowsheet.

The beneficiation plant design has adopted a single train philosophy in order to minimise capital investment and spares holdings and simplify the operation. A high level of redundancy and back up of higher maintenance plant such as pumps is provided, as is surge capacity and stockpiles, in order to maintain availability. All of the selected equipment is commonly employed in the phosphate industry today at sizes equivalent to what is proposed for the Hinda project.

Ore Samples

-12.5 mm

Primary

Crushing

Secondary

Crushing

CRUSHING MILLING AND SCREENING

-2.8 mm

106 Micron (P80) to Waste

Coarse Screen

106 Micron

Cyclone

Hydrosizer

10 Micron (P80) to Waste

Flotation

Reagents

Milled and

Deslimed Product

Flotation

Reagents

FLOTATION

Reverse Float of Silica and

Carbonate

SOLID-LIQUID SEPARATION

Gangue to Thickener

Gangue to

Thickener

Rougher

Product

Ball Mill

Flotation Cells

Roughers

Flotation Cells

Coarse CleanersConditioning

Tanks

Conditioning Tanks

DryerFilter

Final Product

Phosrock to

Export

Product

Thickener

FloatTailings

Thickener

Gangue to Tailings

Impoundment

Gangue to Tailings

Impoundment

10 Micron

Cyclone

Cleaner

Product

Pipeline

Transfer

Slimes Thickener

+2.8mm to

Waste

Attritioners

190 Micron (P80)

+12.5 mm

+5.6 mm

-5.6 mm


Supporting Project Infrastructure: The project costs are inclusive of all equipment and plant required to support the mining and processing activities. The following has been incorporated to provide the necessary infrastructure and services and to facilitate the logistical requirements associated with export of the Phosrock:

Electrical Power Supply – A 16km long 220 kVA transmission line from the existing substation at Mboundi to the beneficiation plant and full reticulation around the Hinda mine site. Emergency diesel power generation is included at the beneficiation plant;

Tailings Storage Facility – The tailings management study has evaluated the

requirements for containing 312Mt of material over the project economic life. A series of upstream raised storage facilities will be constructed in naturally occurring valleys in proximity to the beneficiation plant. Beyond Year 12 some of the tailings will be stored within the pit void. The Poundji valley will be the first of these impoundment facilities to be constructed;

Product Slurry Pipeline – The slurry pipeline design is little changed from the design

adopted in the PFS. However the design has progressed to a more detailed level of cost accuracy through the identification of a definite easement path and the execution of further physical testing with respect to concentrate viscosity, porosity and settlement characteristics; and

Export Jetty and Concentrate Storage – The design of the jetty has been based on

wave modeling and a simulation model to examine the appropriate volume of storage required and the loading rate . The recommended Phosrockstorage stockpile capacity is 194,000 tonnes. An enclosed product conveyor will run to the vessel loading platform via a causeway. A 1,300m long access trestle will run between the shore and the loading platform. The platform will support the shiploader.

Mining Licence Application: On 6 October 2014 Cominco applied to the Ministry of Mines and Geology for grant of an Exploitation (Mining) Licence for phosphate covering an area of 263 km2 of which 216.22 km2 is within Hinda Phosphate Exploration Licence and 47.46 km2 is within the Kola- tchikanou Phosphate Exploration Licence, as shown in Figure 5. Upon grant of the Exploitation Licence, these areas will be excised from the Exploration Licences. It is expected that the licence will be issued imminently.


Figure 5: Mining licence application boundary

Ongoing Project Development: A project development plan has been formulated to define the execution strategy, schedule and actions proposed to develop the Project from the completion of the DFS through detailed engineering and early works, construction, commissioning and ramp-up. An overview of the proposed schedule is indicated in Figure 6.

12°04' 12°08'

-4°3

8'

-4°3

4'

-4°3

0'

-4°2

6'

Projection: Latitude/Longitude (WGS 84)

Sources: LiDAR, UAV

Hinda Phoshpate

Project

Author: H.Vilchez

Office: London

Exploitation Licence Map

Scale 1: 55,000(A3)


Figure 6: Summary Level - Project Master Schedule


The Early Engineering phase targets some additional work aimed at cost improvement and activities associated with placing orders for critical path equipment. Sufficient planning and detailed design will be undertaken to ensure that, upon financial approval, the project can move rapidly to final design and procurement. The Project Execution phase will follow the normal course of activities for a fast track project and a duration of 92 weeks is planned.

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Cominco Resources Hinda Phosphate Project Update · Cominco Resources – Hinda Phosphate Project Update ... following the long-term success of the country’s oil and gas industry