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Duyker Eiland Property Western Cape, South Africa
NI 43-101 Technical Report
Prepared by: Armando Simón, Ph.D., P.Geo. (APGO), R.P.Geo. (MAIG) María-Angélica González, R.M. (CMC)
Effective Date: 27 September 2011 Project No. M40075
Prepared For: Montero Mining and Exploration Limited
CERTIFICATE OF QUALIFIED PERSON
Armando Simón, Ph.D., P.Geo. (APGO), R.P.Geo. (MAIG)
AMEC International Ingeniería y Construcción Limitada
Avda. Apoquindo 3846, 8th Floor, Las Condes, Santiago, Chile.
Tel. +56-2-957-7734; Fax +56-2-957-7769
I, Armando Simón, Ph.D., am a Principal Geologist for AMEC International Ingeniería y Construcción
Limitada, a Division of AMEC Americas Limited (“AMEC”) located at Ave. Apoquindo 3846, 8th Floor,
Las Condes, Santiago, Chile, and have been so since January 2005.
This certificate applies to the technical report “Duyker Eiland Property, Western Cape, South Africa, NI
43-101 Technical Report”, dated 27 September, 2011 (the “Technical Report”).
I graduated from the University of Bucharest with a Bachelor of Engineering degree in Geology and
Geophysics in 1974, and a Doctorate of Engineering in 1985. I am a Professional Geoscientist of the
Association of Professional Geoscientists of Ontario (A.P.G.O. # 1633), and a Registered Professional
Geoscientist of the Australian Institute of Geoscientists (A.I.G. # 10053). Since 1974, I have continually
been involved in mineral exploration projects for precious and base metals and industrial minerals in
Argentina, Brazil, Canada, Colombia, D.R. Congo, Cuba, Chile, Eritrea, Ethiopia, Guyana, Jamaica,
Kazakhstan, Madagascar, Mexico, Nicaragua, Pakistan, Peru, Portugal, Romania, Russia, South Africa
and Vietnam.
I visited the Duyker Eiland Property between 20 and 23 January 2011, and between 28 and 31 March
2011.
I am familiar with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-
101”) and by reason of education, experience and professional registration I fulfill the requirements of a
“qualified person” as defined in NI 43-101.
I am fully responsible for the preparation of Sections 1.0 to 13.0, and 15.0 to 27.0 of the Technical
Report.
I am independent of Montero Mining and Exploration Limited (“Montero”), as independence is described
by Section 1.5 of NI 43–101. I have had no previous involvement with Montero or with the property
which is the subject of this Technical Report.
I have read NI 43-101 and the part of the Technical Report which I am responsible for has been prepared
in compliance with NI 43-101.
As of the date of this certificate, to the best of my knowledge, information and belief, the portions of the
technical report for which I am responsible contain all scientific and technical information that is required
to be disclosed to make those sections of the technical report not misleading.
Signed: Armando Simón
(signed and sealed) “Armando Simón
Armando Simón, Ph.D.
Principal Geologist, P.Geo. (APGO # 1633); R.P.Geo. (AIG # 10053)
AMEC International Ingeniería y Construcción Limitada
Dated at Santiago, Chile, this 5th
day of December 2011
CERTIFICATE OF QUALIFIED PERSON
María-Angélica González, R.M. (CMC)
AMEC International Ingeniería y Construcción Limitada
Avda. Apoquindo 3846, 8th Floor, Las Condes, Santiago, Chile.
Tel. +56-2-957-7700; Fax +56-2-957-7404
I, María-Angélica González, am a Senior Mining Engineer with AMEC International Ingeniería y
Construcción Limitada, a Division of AMEC Americas Limited (“AMEC”) located at Ave. Apoquindo
3846, 8th
Floor, Las Condes, Santiago, Chile, and have been so since September 2010.
This certificate applies to the technical report “Duyker Eiland Property, Western Cape, South Africa, NI
43-101 Technical Report”, dated 27 September, 2011 (the “Technical Report”).
I graduated from the University of Chile with a Bachelor of Engineering degree in Mining and Metallurgy
in 2000. I am a Registered Member of the Chilean Mining Commission (C.M.C. # 64). Since 2000, I have
been continually involved in resource estimation projects for precious and base metals and industrial
minerals in Brazil, Chile, Greece, Panama, Peru and South Africa.
I am familiar with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-
101”) and by reason of education, experience and professional registration I fulfill the requirements of a
“qualified person” as defined in NI 43-101.
I am fully responsible for the preparation of Section 14.0 of the Technical Report.
I am independent of Montero Mining and Exploration Limited (“Montero”), as independence is described
by Section 1.5 of NI 43–101. I have had no previous involvement with Montero or with the property
which is the subject of the Technical Report.
I have read NI 43-101 and the part of the Technical Report which I am responsible for has been prepared
in compliance with NI 43-101.
As of the date of this certificate, to the best of my knowledge, information and belief, the portions of the
Technical Report for which I am responsible contain all scientific and technical information that is
required to be disclosed to make those sections of the technical report not misleading.
Signed: María-Angélica González
(signed and sealed) “María-Angélica González”
María-Angélica González
Senior Mining Engineer, R.M. (CMC)
AMEC International Ingeniería y Construcción Limitada
Dated at Santiago, Chile, this 5th day of December 2011
IMPORTANT NOTICE
This report was prepared as a National Instrument 43-101 Technical Report
for Montero Mining and Exploration Limited (Montero) by AMEC Earth and
Environmental (UK) Limited (AMEC). The quality of information, conclusions,
and estimates contained herein is consistent with the level of effort involved
in AMEC‟s services, based on: i) information available at the time of
preparation, ii) data supplied by outside sources, and iii) the assumptions,
conditions, and qualifications set forth in this report. This report is intended
for use by Montero subject to the terms and conditions of its contract with
AMEC. Except for the purposes legislated under Canadian provincial
securities law, any other uses of this report by any third party is at that party‟s
sole risk.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 TOC i 5 December 2011
C O N T E N T S
1.0 SUMMARY ................................................................................................................................... 1-1 1.1 Background ..................................................................................................................... 1-1 1.2 Location and Ownership .................................................................................................. 1-1 1.3 History .............................................................................................................................. 1-1 1.4 Geology ........................................................................................................................... 1-2 1.5 2011 Exploration .............................................................................................................. 1-2 1.6 Mineral Resource Estimate ............................................................................................. 1-3 1.7 Metallurgical Testing ........................................................................................................ 1-4 1.8 Risks and Opportunities .................................................................................................. 1-6 1.9 Conclusions ..................................................................................................................... 1-6 1.10 Recommendations ........................................................................................................... 1-9
1.10.1 Specific Recommendations ................................................................................ 1-9 1.10.2 Follow-up Program ........................................................................................... 1-10
2.0 INTRODUCTION .......................................................................................................................... 2-1 2.1 Terms of Reference ......................................................................................................... 2-1 2.2 Qualified Persons ............................................................................................................ 2-1 2.3 Effective Date .................................................................................................................. 2-2 2.4 Previous Technical Reports............................................................................................. 2-2 2.5 References ...................................................................................................................... 2-2
3.0 RELIANCE ON OTHER EXPERTS .............................................................................................. 3-1 3.1 Company Ownership and Agreements ........................................................................... 3-1 3.2 Mineral Tenure ................................................................................................................ 3-1 3.3 Surface Rights ................................................................................................................. 3-1 3.4 Royalties .......................................................................................................................... 3-1 3.5 Environmental Issues ...................................................................................................... 3-2
4.0 PROPERTY DESCRIPTION AND LOCATION ............................................................................ 4-1 4.1 Location ........................................................................................................................... 4-1 4.2 Company Ownership and Agreements ........................................................................... 4-2 4.3 Mineral Tenure ................................................................................................................ 4-2 4.4 Surface Rights ................................................................................................................. 4-4 4.5 Royalties .......................................................................................................................... 4-4 4.6 Environmental and Socio-Economic Issues .................................................................... 4-4 4.7 Comment on Section 4.0 ................................................................................................. 4-5
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ......................................................................................................................... 5-1 5.1 Access ............................................................................................................................. 5-1 5.2 Physiography ................................................................................................................... 5-2 5.3 Climate ............................................................................................................................. 5-2 5.4 Vegetation and Fauna ..................................................................................................... 5-2 5.5 Local Resources and Infrastructure ................................................................................ 5-3 5.6 Comments on Section 5.0 ............................................................................................... 5-4
6.0 HISTORY ...................................................................................................................................... 6-1
7.0 GEOLOGICAL SETTING AND MINERALIZATION ..................................................................... 7-1
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 TOC ii 5 December 2011
7.1 Regional Setting .............................................................................................................. 7-1 7.2 Local Geology .................................................................................................................. 7-3
7.2.1 Lithostratigraphic Units ....................................................................................... 7-4 7.2.2 Description of the Mineralized Units ................................................................... 7-7 7.2.3 Mineralization ..................................................................................................... 7-9
7.3 Comments on Section 7.0 ............................................................................................. 7-10
8.0 DEPOSIT TYPES ......................................................................................................................... 8-1 8.1 Comments on Section 8.0 ............................................................................................... 8-2
9.0 EXPLORATION ............................................................................................................................ 9-1 9.1 Drilling, Sampling and Assaying ...................................................................................... 9-1 9.2 Bulk Density ..................................................................................................................... 9-1 9.3 Comments on Section 9.0 ............................................................................................... 9-1
10.0 DRILLING ................................................................................................................................... 10-1 10.1 Legacy AECI Drilling ...................................................................................................... 10-1 10.2 Montero Drilling ............................................................................................................. 10-1 10.3 Drill Program Results ..................................................................................................... 10-3 10.4 Recovery........................................................................................................................ 10-4 10.5 Comments on Section 10.0 ........................................................................................... 10-7
11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY ........................................................ 11-1 11.1 AECI Legacy Exploration............................................................................................... 11-1 11.2 Montero Exploration ...................................................................................................... 11-1 11.3 Quality Control Program ................................................................................................ 11-3 11.4 Sample Security ............................................................................................................ 11-3 11.5 Sample Storage ............................................................................................................. 11-3 11.6 Comment on Section 11.0 ............................................................................................. 11-3
12.0 DATA VERIFICATION ................................................................................................................ 12-1 12.1 Data Entry ...................................................................................................................... 12-1 12.2 Drill-Hole Collar Review ................................................................................................. 12-1 12.3 Database Checks .......................................................................................................... 12-2
12.3.1 Collar Coordinates ............................................................................................ 12-2 12.3.2 Geological Logs ................................................................................................ 12-2 12.3.3 Original Assay Data .......................................................................................... 12-2
12.4 Geological Interpretation ............................................................................................... 12-2 12.5 Quality Control ............................................................................................................... 12-3
12.5.1 Assessment of Precision .................................................................................. 12-3 12.5.2 Assessment of Accuracy .................................................................................. 12-3 12.5.3 Assessment of Contamination .......................................................................... 12-6
12.6 Comments on Section 12.0 ........................................................................................... 12-6
13.0 MINERAL PROCESSING AND METALLURGICAL TESTING .................................................. 13-1 13.1 Introduction .................................................................................................................... 13-1 13.2 Turgis (2009) Conceptual Study .................................................................................... 13-1 13.3 Turgis (2011) Flotation Tests......................................................................................... 13-1
13.3.1 Test Description ................................................................................................ 13-2 13.3.2 Test Results ...................................................................................................... 13-2
13.4 Comments on Section 13.0 ........................................................................................... 13-3
14.0 MINERAL RESOURCE ESTIMATE ........................................................................................... 14-1
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 TOC iii 5 December 2011
14.1 Database ....................................................................................................................... 14-1 14.2 Topography ................................................................................................................... 14-1 14.3 Geological Model ........................................................................................................... 14-2 14.4 Estimation Domains ....................................................................................................... 14-2 14.5 Composites .................................................................................................................... 14-4 14.6 Exploratory Data Analysis ............................................................................................. 14-4 14.7 Block Model Definition ................................................................................................... 14-8 14.8 Grade and Thickness Interpolation ............................................................................... 14-9 14.9 Density ......................................................................................................................... 14-12 14.10 Model Validation .......................................................................................................... 14-12 14.11 Mineral Resource Classification .................................................................................. 14-16 14.12 Comment on Section 14 .............................................................................................. 14-19
15.0 MINERAL RESERVE ESTIMATE .............................................................................................. 15-1
16.0 MINING METHODS .................................................................................................................... 16-1
17.0 RECOVERY METHODS ............................................................................................................ 17-1
18.0 PROJECT INFRASTRUCTURE ................................................................................................. 18-1
19.0 MARKET STUDIES AND CONTRACTS .................................................................................... 19-1
20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ........ 20-1
21.0 CAPITAL AND OPERATING COSTS ........................................................................................ 21-1
22.0 ECONOMIC ANALYSIS ............................................................................................................. 22-1
23.0 ADJACENT PROPERTIES ........................................................................................................ 23-1
24.0 OTHER RELEVANT DATA AND INFORMATION ..................................................................... 24-1
25.0 INTERPRETATION AND CONCLUSIONS ................................................................................ 25-1
26.0 RECOMMENDATIONS .............................................................................................................. 26-1 26.1 Specific Recommendations ........................................................................................... 26-1 26.2 Follow-up Program ........................................................................................................ 26-1
26.2.1 Phase 1 ............................................................................................................ 26-1 26.2.2 Phase 2 ............................................................................................................ 26-2
27.0 REFERENCES ........................................................................................................................... 27-1
T A B L E S
Table 1-1: Inferred Phosphate Mineral Resources, Effective Date 27 September 2011, María-
Angélica González, Senior Mining Engineer, R.M. (C.M.C.) ................................................. 1-5 Table 7-1: Thickness and Average P2O5 Grades by Drill Hole and Mineral Zone .................................. 7-9 Table 10-1: Drilling Summary .................................................................................................................. 10-1 Table 10-2: Drill-Hole Intercepts by Mineral Zone (Upper and Lower Zones) ........................................ 10-4 Table 10-3: Recovery by Drill Hole and Mineral Zone ............................................................................ 10-6 Table 11-1: Detection Limits for Assayed Elements at Scientific Services ............................................. 11-1 Table 12-1: Summary of Data-Entry Procedures .................................................................................... 12-1 Table 12-2: Collar Coordinate Check ...................................................................................................... 12-2 Table 12-3: Duplicate Summary .............................................................................................................. 12-4
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 TOC iv 5 December 2011
Table 14-1: P2O5, CaO and MgO Basic Statistics – Original Samples ................................................... 14-8 Table 14-2: Extension of Estimated Zones ............................................................................................. 14-9 Table 14-3: Estimation Plan .................................................................................................................... 14-9 Table 14-4: Statistical Validation and Bias Evaluation .......................................................................... 14-13 Table 14-5: Inferred Phosphate Mineral Resources, Effective Date 27 September 2011, María-
Angélica González, Senior Mining Engineer, R.M. (C.M.C.) ............................................. 14-17
I L L U S T R A T I O N S
Figure 4-1: The Duyker Eiland Property Location Map ............................................................................ 4-1 Figure 4-2: Boundaries of the Duyker Eiland Prospecting Rights ............................................................ 4-3 Figure 5-1: Access Map ............................................................................................................................ 5-1 Figure 5-2: Satellite View of the Duyker Eiland Property ......................................................................... 5-2 Figure 6-1: AECI Historical Drill Holes and Prospecting Pits at Duyker Eiland ........................................ 6-2 Figure 6-2: Location of the Old Langebaan Phosphate Mine ................................................................... 6-3 Figure 7-1: Geologic Map of the Duyker Eiland Region ........................................................................... 7-1 Figure 7-2: Cross-Section Showing the Stratigraphic Position of the Varswater Formation .................... 7-2 Figure 7-3: Typical Stratigraphic Column of the Varswater Formation .................................................... 7-3 Figure 7-4: Preliminary Geological Map of the Duyker Eiland Property ................................................... 7-5 Figure 7-5: Typical Cross-Sections of the Duyker Eiland Property .......................................................... 7-6 Figure 7-6: Distribution of Mineralized Horizons at the Duyker Eiland Property ..................................... 7-8 Figure 8-1: Descriptive Model of the Upwelling Phosphate Deposit Type ............................................... 8-1 Figure 10-1: Splitting the Recovered Sample at the Drill Site .................................................................. 10-2 Figure 10-2: Material Retained for Logging .............................................................................................. 10-3 Figure 10-3: Drilling Recovery Histogram for Samples from Mineralized Horizons ................................ 10-5 Figure 10-4: Recovery versus P2O5 (Samples with >5% P2O5) ............................................................... 10-6 Figure 11-1: Stoichiometric Closure versus P2O5 Plot ............................................................................ 11-2 Figure 12-1: P2O5 Control Chart for the AMIS0055 CRM ........................................................................ 12-4 Figure 12-2: CaO Control Chart for the AMIS0055 CRM ........................................................................ 12-5 Figure 12-3: MgO Control Chart for the AMIS0055 CRM........................................................................ 12-5 Figure 14-1: Sections 6,371,450N and 6,371,850N – Drill-hole Grades of P2O5 ..................................... 14-3 Figure 14-2: P2O5 Histograms of the Lower and Middle Zones – Original Samples ................................ 14-5 Figure 14-3: P2O5 Boxplots by Zone – Original Samples ......................................................................... 14-6 Figure 14-4: Block Model Plan View - Upper Zone ................................................................................ 14-10 Figure 14-5: Block Model Plan View - Lower Zone ................................................................................ 14-11 Figure 14-6: P2O5, CaO and MgO Swath Plots – Upper Zone ............................................................... 14-14 Figure 14-7: P2O5, CaO and MgO Swath Plots – Lower Zone ............................................................... 14-15 Figure 14-8: P2O5, CaO and MgO Swath Plots – Middle Zone .............................................................. 14-16 Figure 14-9: Mineral Resource Areas .................................................................................................... 14-18
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 TOC v 5 December 2011
G L O S S A R Y
BPL .............................................................................. Bone phosphate of lime CIM .............................................................................. Canadian Institute of Mining, Metallurgy and Petroleum CMC…………… ........................................................... Comisión Calificadora de Competencias en Recursos y A
....................................................................... Reservas Mineras de Chile CRM ............................................................................. Certified Reference Material EDA ............................................................................. Exploratory Data Analysis LOM ............................................................................. Life-of-Mine QA ................................................................................ Quality Assurance QC ............................................................................... Quality Control QP ................................................................................ Qualified Person RC ................................................................................ Reverse Circulation SS....................................................................................Scientific Services C.C. 2D ................................................................................ Two-dimensional 3D ................................................................................ Three –dimensional
U N I T S O F M E A S U R E
a ................................................................................... Annum (year) amsl ............................................................................. Above mean sea level cm ................................................................................ Centimetres g ................................................................................... Grams h ................................................................................... Hour(s) ha ................................................................................. Hectares (10,000 square metres) kg ................................................................................. Kilograms km ................................................................................ Kilometres km
2 ............................................................................... Square kilometres
L ................................................................................... Litre M .................................................................................. Millions m .................................................................................. Metres m
3................................................................................. Cubic metres
mm ............................................................................... Millimetres t .................................................................................... Tonnes (metric) US$ M .......................................................................... Million US dollars US$/t ............................................................................ US dollars per tonne % .................................................................................. Percent ° ................................................................................... Degrees °C ................................................................................. Degrees Celsius
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 1-1 5 December 2011
1.0 SUMMARY
1.1 Background
Montero Mining and Exploration Limited (Montero) retained AMEC Earth and
Environmental (UK) Limited (AMEC) to present the results of the 2011 drilling
campaign for its Duyker Eiland property (the Property), in Western Cape, South Africa,
and prepare a first-time mineral resource estimate for the project. Montero will use this
Report in support of a press release dated 16 November 2011, titled “Montero
Identifies an Inferred Mineral Resource of 32.8 M Tonnes Grading 7.15% P2O5,
Capable of Producing an Acid-Grade Phosphate Concentrate, At the Duyker Eiland
Project, South Africa”.
1.2 Location and Ownership
The Property is located in the Western Cape Province, South Africa, approximately 18
km north of Vredenburg and 140 km north-northeast of Cape Town, the provincial
capital.
Montero Projects Limited (MPL), a wholly-owned subsidiary of Montero, owns a 74%
interest in the Property. Ventonet (Proprietary) Limited (Ventonet) owns the remaining
26%. Ventonet is subject to a five-year lock-in period, during which it may not dispose
of its shares on the Property.
The Property includes prospecting rights for phosphate mineralization on Portion 1 of
the Farm Skuitjesklip 22, and Portions 4, 5 and 7 of the Farm Duyker Eiland 6, located
in the Western Cape Province, Magisterial District of Malmesbury. The prospecting
rights extend over 1,921.2 ha. No surface rights have been obtained. Exploration
activities have been undertaken through agreements with local property owners.
1.3 History
In the 1940s and 1950s, AMCOR conducted mineral exploration on various phosphate
prospects in South Africa, and identified the presence of citric-soluble phosphates in
the Property.
During the 1960s, African Explosives and Chemical Industries Limited (AECI)
conducted drilling and pitting on the Property. Historical records of the exploration
drilling program have been lost.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 1-2 5 December 2011
No other exploration activities were carried out on the Property until February 2011,
when Montero conducted the drilling campaign which is the subject of this Report. No
mineral production has ever been reported for the property.
1.4 Geology
The regional geology is marked by the presence of numerous outcrops of
Cambrian/Neoproterozoic granites of the Cape Suite, and Tertiary/Quaternary
sediments consisting of calcareous and aeolian sands, calcretes and phoscretes.
In the Property, a portion of the Vredenburg granitic pluton is overlain by sediments of
the Varswater Formation, which is part of the Miocene-Pliocene Sandveld group, and
limestones and calcarenites of the Pleistocene Langebaan Formation.
At the Property, sands, clayey sands and gravels from the Varswater Formation overlie
the Vredenburg granite, which crop out at prominent, weather-resistant small hills at
the east and south east of the Property. The phosphate-rich, Varswater Formation
sediments are partially overlain by limestones of the Langebaan Formation, which is
exposed on top and along the shoulders of the small hill that dominates the
topography of the area.
The phosphate deposit predominantly consists of unconsolidated phosphatic sand with
sporadic intercalations of hard, well-cemented layers. Three phosphatic horizons have
been identified: lower and upper, relatively phosphate-rich zones, and a low-grade,
middle zone, all lying on a largely barren footwall. The phosphatic sediments have
either subhorizontal or shallow westerly/easterly dips. The phosphate mineralization
occurs as rounded and sub-rounded, polished collophane grains.
1.5 2011 Exploration
During the 2011 exploration campaign, Montero drilled 32 holes. Of these, six holes
were abandoned due to equipment failure and low recovery issues, and 26 holes,
totalling 613 m (23.6 m average length), were drilled on a 400 m x 200 m approximate
grid. Drilling was vertical. Due to difficulties in recovering the loose-sand material,
drilling used the dry, reverse circulation (RC) method. The sampling interval was 1 m.
In general, the phosphate-rich horizons (Lower, Middle and Upper Zones) present
good continuity within a 2.0 km (north-south) by 1.5 km (east-west) area, although the
horizons are not equally represented: whereas the Middle Zone is present in most of
the area, the Upper Zone was identified in the eastern half and in one drilling line in the
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 1-3 5 December 2011
western half, and the Lower Zone is constrained to a 200 m to 500 m wide, N-S-
oriented band on the eastern half of the Property.
Considering all mineralized intersections, the phosphate-rich horizons have the
following average grades: Lower Zone, 7.93% P2O5; Middle Zone: 2.45% P2O5; and
Upper Zone: 7.16% P2O5. The MgO grades in the phosphate-rich horizons range from
0.04% to 1.07%, averaging, 0.24%. The U3O8 content does not exceed 22 ppm.
No density determinations were conducted, mainly due to the disintegrated nature of
the recovered material. For the purposes of resource estimation, a bulk density value
of 1.82 g/cm3 was assumed by analogy with a similar deposit in the Western Cape
area.
Recovery of representative samples was difficult due to the nature of the material
intersected in the drill holes, namely loose mineralised phosphatic sands alternating
with hard limestone horizons containing dissolution cavities and minor consolidated
sandstone levels. As a result, sample recovery was poor, and it is difficult to confirm
whether the samples are representative of the in-situ material.
In spite of efforts to obtain acceptable recoveries, nearly 50% of the samples from
mineralized horizons had recoveries lower than 60%. Recoveries were also poor in
samples with P2O5 exceeding 5%. Low recovery affected the sample representativity,
resulting in potential sampling bias.
Due to the lack of density determinations and the poor recovery, the information from
the 2011 campaign can be used to estimate Inferred Mineral Resources only.
1.6 Mineral Resource Estimate
AMEC estimated phosphoric anhydride (P2O5), calcium oxide (CaO) and magnesium
oxide (MgO) grades, and also the thickness of the mineralized strata using the inverse
distance weighting (ID) estimation method.
Differences between -2.5 m and 8.0 m, with an average of 2.3 m, were identified in the
3-D topography compared with collar elevations. Collar coordinates were recently
surveyed and are considered more accurate than the elevations that were digitized
from a small-scale map; hence, the new ones were used as the basis for performing
the mineral resource estimate.
Five zones were modeled. The Upper and Lower zones are the richest strata; the
Middle zone is a lower-grade stratum. The Overburden and Footwall are considered
waste. Geological composites were generated with one single composite per
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 1-4 5 December 2011
stratigraphic zone and drill hole; a total of 87 composites were obtained for use in
resource estimation.
AMEC built a 2-D block model for each geological zone with regular dimensions of 5 m
x 5 m in the eastern and northern directions. The block model extends on an area of
approximately 1.4 km x 2.2 km (3 km2).
The thickness was interpolated for the five strata while the grade interpolation was only
carried out in the three mineralized strata: Upper, Lower and Middle.
The inverse distance squared method (ID2) was applied to estimate the grades and
inverse distance to the fourth power method (ID4) was used to estimate thickness.
The accumulation of P2O5, CaO and MgO in mineralized zones was calculated, and
consisted of multiplying the grades by the thicknesses.
Reasonable prospect of economic extraction was determined by applying an economic
filter. The deposit is shallow and AMEC looked at what cells have enough phosphate
to pay for the removal of the Overburden and Middle zone waste.
AMEC assumed a phosphate price of US$140/t of phosphate concentrate1, a mining
recovery of 90 %, a concentrate grade of 30% P2O5 (65.6% PBL2) a metallurgical
recovery of 85 %, a mining cost of US$5/t and a processing cost of US$10/t. The
US$140/t price is considered conservative, taking into consideration that the average
price during the last five years for 70% BPL phosphate rock has been US%152/t3. The
phosphate cut-off grade calculated from these parameters was 3.00% P2O5.
The Qualified Person for the phosphate resource estimate is María-Angélica
González. The effective date for the estimate is 27 September 2011, corresponding to
the completion date. The mineral resources tabulated in Table 1-1 are based on
recoverable phosphate resources. This exploitation requires the extraction of 5.0 Mt of
overburden.
1.7 Metallurgical Testing
Preliminary flotation tests were conducted at the Centre for Mineral Research
(Chemical Engineering Department, University of Cape Town), under the supervision
of Turgis Consulting. The tests used a composite of material from the three
1 The phosphate price was estimated considering information provided by Turgis (2009) and an average price in a two-year period from www.infomine.com. 2 In the North American phosphate industry, the phosphate content of the rock is usually expressed as
tricalcium phosphate, and traditionally referred to as bone phosphate of lime (BPL=P2O5 × 2.1853). 3 www.indexmundi.com/commodities
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 1-5 5 December 2011
mineralized zones, prepared from RC material from four drill holes along the eastern
margin of the deposit.
Table 1-1: Inferred Phosphate Mineral Resources, Effective Date 27 September 2011,
María-Angélica González, Senior Mining Engineer, R.M. (C.M.C.)
Mineralized Zone
Tonnage Mean
Thickness P2O5 MgO CaO
Accumulation
P2O5 MgO CaO
(Mt) (m) (%) (%) (%) (m•%) (m•%) (m•%)
Upper Zone 16.1 7.1 7.73 0.21 13.59 54.3 1.5 96.8
Middle Zone 7.5 6.4 3.66 0.08 6.51 23.3 0.6 42.6
Lower Zone 9.2 4.9 9.02 0.:21 15.84 44.8 1.0 80.2
Total/Weighted Mean
32.8 18.4 7.15 0.18 12.59 44.5 1.2 79.7
Notes to Accompany Inferred Phosphate Mineral Resource Table 14-5: 1. Blocks of the Middle zone are classified as Mineral Resources if the blocks of the Lower zone,
located below in the column, qualify as mineral resources 2. Mineral resources are defined as blocks for which there is sufficient phosphate to pay for the
stripping of the material column over them and reported at a 3.00% P2O5 cut-off grade 3. Mineral resources are reported using concentrate prices of US$140/t of phosphate concentrate; a
mining recovery of 90%; a metallurgical recovery of 85%; a mining cost of US$5/t and a processing cost of US$10/t
4. Tonnages are rounded to the nearest 100,000 t; grades are rounded to two decimal places and accumulations are rounded to one decimal place
5. Rounding as required by reporting guidelines may result in apparent summation differences between tonnages, grades and accumulations
6. Tonnage, grade and accumulation measurements are in metric units.
Samples were milled using a rod mill. Sodium carbonate was added to increase the pH
and act as a regulator in the flotation. The milled samples were washed and then
decanted on a 25 μm screen to remove excess slime. The decanted material was
washed into a flotation cell. Flotation reagents were added after the pH adjustment,
and the slurry was further conditioned. The float cell was a modified Leeds cell, with
3 L capacity. Both the speed and the airflow were adjusted to visual optimum.
As a result of the flotation tests, it was determined that two possible reagent suites can
produce a phosphate concentrate in excess of 30% P2O5: one based on a hydroxamic
acid reagent coded A2 AM2, gave the best results; a reagent coded SR6-6 also
showed ability to produce required grade. In all tests, diesel oil was required as a
promoter assisting agent.
The U3O8 content in flotation products ranged between 20 ppm and 48 ppm.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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In conclusion, an acid-grade phosphate concentrate of 33% P2O5 to 35% P2O5 (72.1%
BPL to 76.5% BPL) can be produced by flotation. By optimizing the flotation
conditions, fair recoveries reaching up to 80% could be achieved.
1.8 Risks and Opportunities
The Property is at an early exploration stage. Key risks identified were as follows:
The loose nature of the phosphate-rich material makes it difficult to obtain good
recoveries with conventional drilling methods. Future drilling should consider a
drilling solution able to overcome this, such as sonic drilling.
This exploitation requires the extraction of 5.0 Mt of overburden.
There is an upside potential of increasing the resource base by expanding the
drilling program mainly to the north and west, the deposit being still open in those
directions. In particular, historical information suggests the presence of additional
mineralization at shallow depths to the north.
1.9 Conclusions
The QPs, as authors of this Report, have reviewed the data for the Property and are of
the opinion that:
Information from legal experts supports the validity of the mining tenure.
Montero does not hold surface land rights, but an agreement for the use of the
Property area during the exploration has been signed. No royalties will be paid on
production.
At the effective date of this report, no significant environmental liabilities have been
originated by Montero.
Exploration to date has been conducted in accordance with the appropriate
regulatory requirements
Permitting, environmental and social and community impact studies have yet to be
performed.
There are reasonable expectations that sufficient labour and infrastructure is
available to support declaration of Mineral Resources.
There is sufficient area within the Project to host an open pit mining operation,
including the proposed open pits, mine and plant infrastructure, waste rock and
tailings storage facilities.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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The regional setting and the local geology of the Property are adequately
understood and can support the declaration of Mineral Resources.
The deposit type has been correctly understood, and its main features have been
used to guide the exploration campaign.
The exploration conducted by Montero in the Property was in accordance to the
known deposit type. The drilling campaign focused on the southern portion of the
area covered by AECI‟s earlier program.
Collar surveys were conducted using high-quality, differential GPS equipment. Due
to the shallow depth of the drill holes, no down-hole surveys were conducted. In
AMEC´s opinion, the survey data collected during the 2011 exploration program
are sufficiently accurate to support Mineral Resource estimation.
No density determinations were conducted during the 2011 exploration campaign.
A density value was assigned by analogy to a similar deposit in the region that had
been the subject of historic mining. Due to the lack of density determinations, the
Mineral Resources can be classified only as Inferred.
The drill-hole orientation was appropriate for the mineralization style.
The sampling interval was representative of the P2O5 grade distribution, and allows
the identification of areas of higher and lower grades.
Sample collection and handling of RC cuttings was undertaken in accordance with
industry-standard practices.
Drill logging met industry standards.
Drill intercept widths approximately represent true widths.
Drill-hole intercepts, as summarized in Table 10-2, appropriately reflect the nature
of the phosphate mineralization.
In spite of the widely-spaced drilling grid, the mineralized horizons exhibit
reasonable continuity along the drilled areas.
Nevertheless, low recovery in many intervals affected the sample representativity,
resulting in potential sampling bias. In this situation, the sampling data does not
support the estimation of Indicated or Measured Mineral Resources.
The sample preparation and analytical methods and procedures were adequate for
this type of deposit and material. SS has implemented a careful QP protocol in
order to monitor precision, accuracy and contamination.
Sample security was ensured in accordance with exploration best practices and
industry standards.
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Western Cape, South Africa
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No significant differences between the collar coordinates measured with a hand-
held GPS and the coordinates recorded in the project database were observed.
Survey, logging, sampling and assay data were properly transferred into the
project database. AMEC did not identify any transcription errors during database
checks consisting in comparing the original survey, logging and assay data with
the data recorded in the project database.
The geological interpretation generally respects the observed RC cutting and data
recorded in the logs and the sections, as well as the interpretation from adjoining
sections, and is consistent with the known characteristics of this deposit type.
The lithologic model has been diligently constructed in conformance to industry-
standards practices.
The QC program implemented by Montero complied with the most stringent
international standards. This program considered every aspect of the exploration
process, and ensured the timely assessment of precision, accuracy and possible
contamination.
The sampling, sub-sampling and analytical precisions and accuracies for P2O5, CaO and MgO were within acceptable limits.
No significant P2O5 cross-contamination during sample preparation and assaying
was identified.
Preliminary flotation tests have indicated that an acid-grade phosphate concentrate
of 33% P2O5 to 35% P2O5 (72.1% BPL to 76.5% BPL) can be produced by flotation.
By optimizing the flotation conditions, improved recoveries that may be as high as
80% could be achieved.
The differences up to 8 m found between the topography contour lines and the
drill-hole collars could impact over the 3-D interpretation of the mineralized
surfaces.
Multiple grade populations were grouped in the same estimation domains. The
data available were insufficient to perform the variography and study the spatial
continuity and arbitrary geological criteria were taken.
Validation of the block model indicated that the differences between the two
alternative P2O5 and thickness estimates showed acceptable bias for all the
mineralized strata (less than 5%). Higher global biases were found in the
estimation of CaO and MgO within the Middle zone. Results obtained from swath
plots showed a closer match between the different types of estimate in the north-
south direction compared with the east-west, reflecting better grade continuity in
the north-south direction.
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Western Cape, South Africa
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Current drill hole spacing is sufficient only to support Inferred Mineral Resources.
Another area of uncertainty which may materially impact the mineral resource
estimate is changes to the economic and recovery parameters used to define a
reasonable prospect of economic extraction.
The presence of phosphate-rich deposits, as previously indicated by historic drilling
and pitting data, has been confirmed by the 2011 drilling program.
The phosphate-rich horizons the phosphate-rich horizons remain open-ended in
most directions but southwest. However, potential in the eastern and southern
directions is limited by the close outcrop of the Vrendenburg granite. Therefore,
there is potential to expand the area of known phosphate mineralization mainly to
the west and north. In fact, historical information suggests the presence of
significant mineralization at shallow depths to the north.
In the opinion of the QPs, the information included in this Report is sufficient to
support the estimation of Inferred Mineral Resources. The proposed program for
further exploration on the Property is justified.
1.10 Recommendations
1.10.1 Specific Recommendations
Additional surface rights should be obtained to ensure suitable land for future
mining activities, tailing and waste disposal, process facilities and related mine
infrastructure.
Future work should include hydrogeological studies to locate a reasonable water
supply source.
No density determinations were conducted during the 2011 exploration campaign.
A density value was assigned by analogy to a similar deposit in the region that had
been the subject of historic mining. Due to the lack of density determinations, the
Mineral Resources can be classified only as Inferred.
AMEC recommends resurveying the topography.
In future, when more drill data are available, grade populations should be reviewed
to improve the estimation domain definition.
Variographic analyses are recommended when there are sufficient drill data
available.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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1.10.2 Follow-up Program
AMEC has prepared a two-phase recommended work program. The first phase, which
is estimated to cost approximately US$100,000, is to complete a Preliminary Economic
Assessment (PEA).
The second phase, which is contingent on positive results from the PEA, is to conduct
a step-out and infill drill program. Future exploration at the Property should ensure
drilling recoveries over 80%. Given the difficult drilling conditions in the Property,
AMEC recommends that an alternative drilling method, such as sonic drilling, be used
in future exploration campaigns order to provide sufficient robust information for more
detailed mining studies, and support potential upgrades in Mineral Resource
confidence categories. The budget for this phase should be established after the
completion of Phase 1.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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2.0 INTRODUCTION
At the request of Mr. Antony Harwood, President and Chief Executive Officer (CEO) of
Montero Mining and Exploration Limited (Montero), AMEC Earth and Environmental
(UK) Limited (AMEC) was retained to compile an updated Canadian National
Instrument (NI) 43-101-compliant Technical Report (the Report), on the Duyker Eiland
Property, Western Cape Province, South Africa.
Montero will use this Report in support of a press release dated 16 November 2011,
titled “Montero Identifies an Inferred Mineral Resource of 32.8 M Tonnes Grading
7.15% P2O5, Capable of Producing an Acid-Grade Phosphate Concentrate, At the
Duyker Eiland Project, South Africa”.
2.1 Terms of Reference
This Report was prepared to support first-time disclosure of Mineral Resources on the
Project.
The work reported on here was managed by AMEC Earth and Environmental (UK)
Limited, from its office in Ashford, Kent, UK. The Qualified Persons, as identified
below, are both employees of AMEC International Ingeniería y Construcción Limitada
and are based in Santiago de Chile, Chile. Both of these companies are subsidiaries
of the UK-registered company AMEC plc. Employees from other subsidiaries of
AMEC plc have also contributed to the preparation of this Report. For the purposes of
this Report, the parent and subsidiary companies are referred to interchangeably as
“AMEC”; the full company names are specified where required for legal purposes.
All measurement units used in this Report are metric, and currency is expressed in US
Dollars unless stated otherwise. The Report uses Canadian English spelling.
2.2 Qualified Persons
The Qualified Persons (QPs) for this Technical Report are as follows:
Dr. Armando Simón, P.Geo. (AIG, APGO), responsible for Sections 1.0 to 13.0,
and 15.0 to 27.0.
María-Angélica González, R.M. (CMC), responsible for Section 14.0.
Dr. Armando Simon completed two site visits on 20 to 23 January 2011 and 28 to 31
March 2011 on behalf of AMEC in order to collect necessary field data. During the site
visits, he reviewed drilling, logging, sampling, and QA/QC practices. No other QP has
Montero Mining and Exploration Ltd.
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Western Cape, South Africa
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visited site. The QPs are not aware of any material scientific and technical changes to
the information on the Property between the dates of the site visit and Report signature
date.
2.3 Effective Date
The Report effective date is 27 September 2011, corresponding to the completion
date.
2.4 Previous Technical Reports
No previous technical reports have been prepared on the Property.
2.5 References
Information that supports the Report has been obtained from Montero, or external
consultants as per Section 3.0, or has been prepared by, or under the supervision of
the QPs. Reference documents are cited in the text as appropriate and summarized in
Section 27.0 of this Report.
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Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 3-1 5 December 2011
3.0 RELIANCE ON OTHER EXPERTS
The QPs state that they are qualified persons for those areas as identified in the
relevant “Certificates of Qualified Person” attached to this Report. The QPs have
relied on, and believe there is a reasonable basis for this reliance, upon the following
reports of other experts, which provided information in sections of this Report as noted
below.
3.1 Company Ownership and Agreements
For information relating to the status of ownership and agreements, AMEC has fully
relied upon, and disclaims responsibility for information derived from legal experts,
prepared by Werksmans Incorporated Jan S. De Villiers (Werksmans), located at 155
5th Street, Sandton 2196, South Africa, telephone 27-11-535 8000, dated 9 April 2010
(Werksmans, 2010b), 1 September 2011 (Werksmans, 2011a) and 2 December 2011
(Werksmans, 2011b). This information is used in Section 4.2 of the Report.
3.2 Mineral Tenure
AMEC has not reviewed the mineral tenure, nor independently verified the legal status,
ownership of the Property area, underlying property agreements or permits. AMEC
has fully relied upon, and disclaims responsibility for information derived from legal
experts, through documents prepared for Turgis Consulting (Proprietary) Limited
(Turgis) by Werksmans, dated 23 March 2010 (Werksmans, 2010a), and for MPL by
Werksmans, dated 1 September 2011 (Werksmans, 2011a) and 2 December 2011
(Werksmans, 2011b). This information is used in Section 4.3 of the Report.
3.3 Surface Rights
The QPs have not reviewed the current status of the surface rights. The QPs have fully
relied upon, and disclaims responsibility for information derived from legal experts,
through a document prepared for MPL by Werksmans, dated 1 September 2011
(Werksmans, 2011a). This information is used in Section 4.4 of the Report.
3.4 Royalties
The QPs have not reviewed the royalty policy. The QPs have fully relied upon, and
disclaims responsibility for information derived from legal experts, through a document
prepared for MPL by Werksmans, dated 2 December 2011 (Werksmans, 2011b). This
information is used in Section 4.5 of the Report.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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3.5 Environmental Issues
For information relating to the status of environmental permits, AMEC has fully relied
upon, and disclaims responsibility for information derived from legal experts, prepared
by Werksmans, dated 9 April 2010 (Werksmans, 2010a). This information is used in
Section 4.6 of the Report.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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4.0 PROPERTY DESCRIPTION AND LOCATION
4.1 Location
The Property is located in the Western Cape Province, in the Republic of South Africa
(RSA), approximately 18 km north of Vredenburg and 140 km north-northeast of Cape
Town, the provincial capital (Figure 4-1). The geographical coordinates of the center of
the Property are 32°45' S and 17°57' E (UTM coordinates: 6,372,500 m S and 776,300
E, zone 33H, datum WGS84). The Property covers approximately 1,921 ha.
Figure 4-1: The Duyker Eiland Property Location Map
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 4-2 5 December 2011
4.2 Company Ownership and Agreements
Various companies are involved in the Property ownership. Inter-relations between
these companies are explained below (Werksmans, 2010b; Werksmans, 2011a;
Werksmans, 2011b):
Montero was incorporated on 2007 in Canada with registration number
BC0771057 (contact address: Suite 400 – 20 Adelaide Street East, Toronto, ON,
M5C 2T6, Canada; registered address: 1900 - 1040 West Georgia St.
Vancouver, BC V6E 4H3, Canada). Montero is listed in the Toronto Venture
Exchange (TSX-V: MON), and its shares are traded since 15 February 2011.
Montero Projects Limited BVI (MPL) is a wholly-owned subsidiary of Montero.
MPL acquired the entire issued share capital of Eurozone Investments Limited
(Eurozone) as a result of the agreement signed between MPL and Celtic Trust
Company Limited (Celtic) on 18 October 2010, amended on 18 July 2011.
Mellosat (Proprietary) Limited (Mellosat) is a fully owned subsidiary of Eurozone.
Midnight Moon Trading 231 (Proprietary) Limited (MMT) is a fully-owned
subsidiary of Mellosat, incorporated on 2 October 2008 in the RSA with registration
number 2008/023102/07. Mellosat's former name was Phosco SA (Proprietary)
Limited, and such name change was effected on 7 December 2009.
Phosco Duyker Eiland (Proprietary) Limited (Phosco), previously known as
Burgundy Rose Trading 5 (Proprietary) Limited (Burgundy), was incorporated on
20 May 2008 in the RSA with registration number 2008/012553/07. Phosco´s
shareholders are MMT (seventy four ordinary shares) and Ventonet (Proprietary)
Limited (Ventonet; twenty six ordinary shares).
For the purposes of compliance with the black empowerment imperatives of the
Republic of South Africa, Ventonet is subject to a five-year lock-in period, during
which it may not dispose of its shares on Phosco (previously Burgundy).
4.3 Mineral Tenure
According to Werksmans (2010a), the Property includes prospecting rights for
phosphate mineralization granted to Phosco, on the terms of section 17(1) of the
Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA), on
Portion 1 of the Farm Skuitjesklip 22, and Portions 4, 5 and 7 of the Farm Duyker
Eiland 6, located in the Western Cape Province, Magisterial District of Malmesbury.
The prospecting rights extend over 1,921.2132 ha. Details of the granted prospecting
Montero Mining and Exploration Ltd.
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Western Cape, South Africa
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rights, including the geographic coordinates of the property corners, are included in
Figure 4-2.
Figure 4-2: Boundaries of the Duyker Eiland Prospecting Rights
Source: Montero
The prospecting rights were registered on 27 July 2009 with Nr.
WC30/1/1/5/2/3430PR. Unless cancelled or suspended in terms of section 47 of the
MPRDA, the validity of the prospecting rights extends until 26 July 2012.
A provision in clause 3.2 of the Duyker Eiland prospecting right stated that
“prospecting operations must commence within one hundred and twenty days from the
date on which the prospecting right becomes effective, being 27 July 2009, or any later
date as may, upon written requires to the Minister, be authorised”. According to
Werksmans (2011a), “prospecting operations” are defined in the MPRDA as “any
activity carried on in connection with prospecting”, and concluded that the Preliminary
Evaluation conducted by Turgis (2009) was undertaken within the one hundred and
twenty day period (Werksmans, 2011a).
Werksmans (2011a) reviewed the shareholders agreement between MMT and
Ventonet, as amended, in respect of Phosco, and confirmed that such agreement is a
Montero Mining and Exploration Ltd.
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Western Cape, South Africa
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fairly standard agreement and no material issues of concern arise there from.
Werksmans (2011a, 2011b) pointed out that appropriate lock-ins (for a period of five
years) for the purposes of the protection of the Broad-Based Black Economic
Empowerment imperatives of the Mining Charter and the MPRDA have been
adequately addressed.
4.4 Surface Rights
Montero does not hold surface rights on the Property. However, on 24 January 2011
Phosco entered into a land use agreement with Bester Eiendomme Trust (Trust) for
the duration of the Duyker Eiland prospecting right for purposes of drilling thirty two
bore holes at a rate of R1,000.00 (excluding VAT) per borehole so drilled to be paid to
the Trust. The total amount of R36,480 was paid to the Trust on 4 March 2011
(Werksmans, 2011a).
4.5 Royalties
According to Werksmanns (2011b), in terms of the Mineral and Petroleum Resource
Development Royalty Act 28 of 2008 (Royalty Act; RSA, 2008), the only royalty
payable in respect of minerals won in terms of the relevant mining rights, is payable to
the State. All other royalties that may have been payable have been abolished since
the entry into force of the Royalty Act.
The Royalty Act (RSA, 2008) indicates that phosphate rock and concentrates are
classed as unrefined mineral products. In this case the royalty is calculated using the
following formula:
where EBIT represents earnings before interest and taxes, and GS represents gross
sales in respect of unrefined mineral resources. The Royalty Act states that royalties
for unrefined mineral products must not exceed 7%.
4.6 Environmental and Socio-Economic Issues
According to Werksmans (2010a), an Environmental Management Program (EMP)
was duly approved on 27 July 2009 by the Regional Manager of the South African
Department of Mineral Resources (DMR) in terms of section 39(4) of the MPRDA.
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Western Cape, South Africa
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Phosco provided the DMR a financial guarantee of ZAR465,000 to make financial
provision for the rehabilitation or management of negative impacts to the environment,
as required by section 41 of the MPRDA. To AMEC‟s best knowledge, the Property is
not currently affected by any significant environmental liabilities.
4.7 Comment on Section 4.0
In the opinion of the QP, the information discussed in this section supports the
declaration of Mineral Resources, based on the following:
Information from legal experts supports the validity of the mining tenure.
Montero does not hold surface land rights, but an agreement for the use of the
Property area during the exploration has been signed. Additional surface rights
should be obtained to ensure suitable land for future mining activities, tailing and
waste disposal, process facilities and related mine infrastructure.
No royalties will be paid on production.
At the effective date of this report, no significant environmental liabilities have been
originated by Montero.
Exploration to date has been conducted in accordance with the appropriate
regulatory requirements
Additional permits will be required for Project development.
4 ZAR: South African rands.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,
INFRASTRUCTURE AND PHYSIOGRAPHY
5.1 Access
The Property is located at the Saldanha Bay municipality (population 81,000), Western
Cape province, approximately 18 km north of Vredenburg and 140 km north-northeast
of Cape Town.
Access to the Property from Cape Town is via paved roads (R27-R45 to Vredenburg,
approximately 130 km), and then by the Vredenburg-St. Helena Bay dirt road, which
crosses through the eastern part of the area (approximately 15 km; Figure 5-1).
Alternatively, the property can be accessed from Vredenburg via Paternoster through
the R399 road, and then by a local dirt road (approximately 17 km).
Figure 5-1: Access Map
Source: www.google.com Map north is to top of plan. Area covered by the image is approximately 25 km from top to base, and 36 km across the plan.
Driving outside the established roads is possible through most of the Property.
However, due to the loose and finely sandy soil, four-wheel drive vehicles should be
used, even in nearly flat-lying locations.
The Saldanha Bay port (30 km south of the Property), the deepest and largest natural
port in South Africa, could be used to ship any mineral product from the Project.
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Western Cape, South Africa
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5.2 Physiography
A prominent north-south trending limestone ridge (Soetlandskop), with elevations up to
150 m amsl, forms the core of the Property. This elevation, with low-dipping slopes, is
surrounded by flat-lying areas and, with elevations ranging from 5 m to 80 m amsl.
Figure 5-2: Satellite View of the Duyker Eiland Property
Source: www.google.com
5.3 Climate
The Property area has a Mediterranean-type climate. Average mid-day temperature
ranges between 16.6°C in July and 25.3°C in February. In July, the temperature drops
to 8°C on average during the night. The average annual precipitation at Paternoster is
203 mm. Average monthly rainfalls range between 1 mm in February and 39 mm in
June.
The climate does not affect mineral exploration and other ground-based operations.
For the time being, mineral exploration can only be conducted in periods between
plantations, but once the proper permits have been obtained from the land owner,
exploration and mining operations could take place year-round.
5.4 Vegetation and Fauna
The Property area is relatively dry and windswept. Vegetation is of semi-arid type with
scarce bushes and trees in the lower elevations of the valleys. According to Turgis
(2009), the following vegetation types occur in the area:
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Western Cape, South Africa
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Saldanha Limestone Strandveld;
Saldanha Flats Strandveld
Saldahna Granite Fynbos
Azonal Cape Wetlands and Vernal Pools.
The first three types are listed as endangered, with the Azonal Cape Wetlands and
Vernal Pools being critically endangered. Current agricultural activities in the Property
have destroyed the Dune Strandveld Scrub and the Saldanha Flats Strandveld
vegetation.
The Property is located at the southern point of the bird migratory route from Europe,
which has resulted in more than 250 bird species being recorded in the neighbouring
areas. The nature and presence of other animals which could potentially be impacted
upon by the proposed development is unknown.
5.5 Local Resources and Infrastructure
The Saldanha Bay port is mainly used for iron-ore exports, but steel processing plants
and related down-stream activities are diversifying its activity. Major economic sectors
of the municipality include manufacturing, transport and communications, wholesale,
retail and tourism, agriculture, forestry and fishing, finance and business services5.
The population of St. Helena Bay and neighbouring areas used to be dedicated to
fishing, but a number of fisheries have been closed in recent years. Tourism is
increasingly taking its place as a major economic endeavour in the area, with
numerous motels and houses for rental at Paternoster and other coastal settlements.
The prominence of tourism in current local life may produce a negative impact in the
local population support for future mining activities, which has to be carefully assessed
by environmental and social-impact studies.
Local infrastructure is excellent. Good cell phone coverage is available throughout the
area. Access to the national power grid is possible, as various power lines pass
through the Property. Personnel with mining experience are available within the
Western Cape Province.
The Property land is currently used for agricultural purposes (mainly wheat and
pasture). Farming operations (dairy farming) and worker residences are found in the
vicinity of the Property.
5: http://www.westerncapebusiness.co.za/pls/cms/ti_regout.munic?p_site_id=127&p_rid=6
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Western Cape, South Africa
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According to Turgis (2009), a baseline groundwater assessment conducted at the
Property in August of 2008 identified groundwater level at 10 m to 20 m depth, the
aquifer yielding between 0.0 L/s and 0.1 L/s, and with average recharge ranging
between 10 mm and 15 mm per annum. The groundwater potential at the Property
was assessed as low, as well as the potential for the proposed mining activities to
impact on groundwater resources. No permanent water streams are found at or near
the Property. A single, non-perennial stream draining westward transects the project
area at its southeast corner. Future work should include hydrogeological studies to
locate a reasonable water supply source.
5.6 Comments on Section 5.0
In the opinion of the QP:
The possible impact of future mining activities should be assessed by
environmental and social-impact studies.
There are reasonable expectations that sufficient labour and infrastructure is
available to support declaration of Mineral Resources.
There is sufficient area within the Project to host an open pit mining operation,
including the proposed open pits, mine and plant infrastructure, waste rock and
tailings storage facilities.
Future work should include hydrogeological studies to locate a reasonable water
supply source.
It is a reasonable expectation that any surface rights to support Project
development and operations can be obtained through negotiation and agreement.
It is expected that any future mining operations will be able to be conducted year-
round.
Montero Mining and Exploration Ltd.
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6.0 HISTORY
The phosphate deposits located around Saldanha Bay were known for many years by
the local population, but more detailed studies were first conducted starting from the
early 1900s (Visser and Schoch, 1973).
In the 1940s and 1950s, AMCOR conducted mineral exploration on various phosphate
prospects in South Africa (Boardman, 1961; Visser and Schoch, 1973). Through
shallow pitting and sampling in the Skuitjiekslip farm, AMCOR identified the presence
of citric-soluble phosphates in calcareous sands in the area, and performed a
conceptual tonnage and grade estimate.
During the 1960s, African Explosives and Chemical Industries Limited (AECI)
conducted drilling and pitting on a 3.0 km by 0.5 km area extending over the
Skuitjiesklip, Skoongesig and Stompneusbaai farms (Figure 6-1). Although AECI‟s
primary purpose was to provide blasting explosives and detonators to South African
gold and diamond mines, the company was also the only South African producer of
phosphatic fertilizer. AECI completed a mineral resource estimate, and conducted
flotation tests, obtaining a concentrate with 33.0 % P2O5 (87 % collophane). Historical
records of the exploration drilling program are not available (Turgis, 2010).
A similar phosphate deposit was mined until recent years by Samancor at
Langebaanweg, about 25 km southeast of the Property (Figure 6-2). This phosphate
was sold for direct use as fertiliser, although some upgrading was done by mixing with
other components, such as ammonium sulphate (Turgis, 2009, 2010).
In 2009, Turgis prepared a preliminary evaluation of the Property for Phosco (Turgis,
2009) on the basis of AECI‟s historical estimate. Turgis (2009) assessed three
possible open-pit production scenarios:
1.5 Mt/a of run of mine (RoM) phosphate mineralized material
2.0 Mt/a of RoM phosphate mineralized material
3.0 Mt/a of RoM phosphate mineralized material.
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Figure 6-1: AECI Historical Drill Holes and Prospecting Pits at Duyker Eiland
Source: Turgis (2010)
The evaluated process, based on analogy with existing Florida operations, considered
obtaining a 30% P2O5 concentrate with 85% recovery through limited grinding, de-
sliming and flotation.
Turgis (2009) concluded that the project deserved further investment and investigation,
and that there were no apparent environmental fatal flaws, although he recommended
exhaustive an investigation of potential risks and environmental and social aspects
should the project advance to feasibility study stage.
No other exploration activities were carried out on the Property until February 2011,
when Montero conducted the drilling campaign which is the subject of this Report. No
Montero Mining and Exploration Ltd.
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mineral production has ever been reported in the property. The prospecting rights at
the Property are currently held by Phosco (Section 4.3).
Figure 6-2: Location of the Old Langebaan Phosphate Mine
Source: Turgis (2009). Map north is to top of plan.
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7.0 GEOLOGICAL SETTING AND MINERALIZATION
7.1 Regional Setting
The regional geology is marked by the presence of numerous outcrops of
Cambrian/Neoproterozoic granites of the Cape Suite, and Tertiary/Quaternary
sediments consisting of calcareous aeolian sands, calcretes and phoscretes.
In the Property, a portion of the Vredenburg granitic pluton is overlain by sediments of
the Varswater Formation, which is part of the Miocene-Pliocene Sandveld Group, and
limestones and calcarenites of the Pleistocene Langebaan Formation (Roberts, 2006;
Turgis, 2010; Figure 7-1). In some areas, though, the Sandveld Group is underlain by
carbonaceous fluvial sediments of the Neogene Elandsfontyn Formation, or by meta-
sediments of the Malmesbury Group (Roberts, 2006; Figure 7-2).
Figure 7-1: Geologic Map of the Duyker Eiland Region
Source: Turgis (2010). Map north is to top of plan.
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Figure 7-2: Cross-Section Showing the Stratigraphic Position of the Varswater
Formation
Source: Roberts (2006)
According to Roberts (2006), the Varswater Formation is formed of sand, clayey sand
and gravel relating to a series of sea level fluctuations. This formation is characterized
by the presence of phosphatic material. The Varswater Formation was separated in
four members (Figure 7-3):
Langeenhaid Clayey Sand Member, mainly consisting of sporadically phosphatic
clayey sand (structureless, rounded, pale greenish-yellow, fine to very fine quartz
grains), with intercalations of dark to grey-black carbonaceous clays (average
thickness: 10.0 m; maximum thickness: 11.5 m).
Konings Vlei Gravel Member, formed of brownish, spherical to discoidal, mainly
well-rounded and polished phosphorlte clasts, up to 0.6 m in diameter; partly
ferruginised, grading to coarse sandy gravel in places. The matrix comprises
slightly silty sand with pelletal phosphorite and yellowish phosphatized shell
fragments (average thickness: 1.5 m; maximum thickness: 3 m).
Langeberg Quartz Sand Member, composed of light-gray, fine- to medium-grained,
moderately sorted, quartz sands, usually lacking phosphates, with minor
intercalations of clays and lignitic clays (average thickness: 1.5 m; maximum
thickness: 2.5 m).
Muishond Fontein Phosphatic Sand Member, formed of light-brownish gray, fine-
to coarse-grained, moderately sorted, phosphatic quartzose sand. Two kinds of
phosphatic material have been described: coarse-grained, amber-coloured shell
fragments comprising authigenic carbonate apatite, and peIIetaI phosphorite. This
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sand is generally soft and weakly cemented by calcareous material, but
occasionally hard and well cemented by phosphorite. At least three such horizons
were identified at the Varswater Quarry (average thickness: 15 m; maximum
thickness: 20 m).
Figure 7-3: Typical Stratigraphic Column of the Varswater Formation
Source: Roberts (2006)
The boundaries between the four members are sharp. The boundary between the
Konings Vlei Gravel and the underlying Langeenheid Clayey Sand members is marked
by the presence of a clay-pebble conglomerate.
The sediments of the Varswater and the Langebaan Formations at the Duyker Eiland
region are usually sub-horizontal or very shallow-dipping (less than 5°) with N-S strike.
7.2 Local Geology
The local geology was studied during the 2011 exploration campaign conducted by
Montero. The following description is summarized from Cullen (2011).
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At the Property, sands, clayey sands and gravels from the Varswater Formation overlie
the Vredenburg Granite, which crops out in prominent, weather-resistant small hills at
the east and south east of the Property. The phosphate-rich, Varswater Formation
sediments are overlain by limestones of the Langebaan Formation, which is exposed
on top and along the shoulders of the small hill that dominates the topography of the
area (Figure 7-4).
The phosphate deposit predominantly consists of unconsolidated phosphatic sand with
thin, sporadic intercalations of hard, well-cemented layers. Three phosphatic horizons
have been identified: lower and upper zones, both relatively phosphate rich, and a low-
grade, middle zone, all lying on a largely barren footwall. The phosphatic sediments
have a subhorizontal or shallow westerly/easterly dip (Figure 7-5).
7.2.1 Lithostratigraphic Units
A direct correlation has not been established between local lithostratigraphic units and
the stratotype of the Vaarswater Formation, defined by Roberts (2006) on a location 30
km to the south of the Property. However, on the basis of geological mapping, and RC
drilling, Cullen (2011) recognized a broad correlation, as described below:
Basement granite (Vredenburg Pluton): Locally observed on the hills east and south of
the deposit. It was intersected occasionally in the drill holes, which were halted once
granitic chips were observed. In some instances, weathered „saprolitic‟ grey clay is
observed. Fresh granite chips are grey-coloured, coarse-grained (>0.5 cm), with
approximately 25% plagioclase, K-feldspar and quartz, as well as prominent biotite. No
significant thickness was drilled.
Contact Grit: Occasionally observed towards the lower contact of the phosphatic
horizons; it generally contains coarse fragments of granitic material, as well as coarse
sand and sandstone fragments. It was also observed in the field and may reach a few
meters thickness (less than 2 m thickness in boreholes).
Footwall Clayey Sand and Clays (Vaarswater Formation, Langeenheid Clayey Sand
Member equivalent): These clayey sands and clays occur at the footwall. Their
thickness ranges from 1 m in the eastern part of the Property to 12 m in the western
part.
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Figure 7-4: Preliminary Geological Map of the Duyker Eiland Property
Source: Patrick Cullen
Montero Mining and Exploration Ltd.
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Figure 7-5: Typical Cross-Sections of the Duyker Eiland Property
Source: Patrick Cullen; Note: Vertical exaggeration of approximately 1.5 times
Footwall Sand (Vaarswater Formation, Langeberg Quartz Sand Member/lower
Muishond Fontein Member equivalent): Poorly phosphatic, generally pale-coloured,
fine- to medium-grained, rounded to sub-rounded, moderately sorted sands. Fossils
are common, especially broken fragments of echinoderm spines and rare oyster
shells. Elsewhere, land snail shells fragments are observed, which demonstrates that
the environment fluctuated between shallow marine, beach and aeolian sands at
various periods. Thickness varies from 2 m to 19 m.
Lower Zone (Vaarswater Formation, Muishond Fontein Member equivalent):
Phosphatic sands ranging in thickness from 1 m on the eastern margin to a maximum
of 9 m, including with weekly cemented, thin intercalations of sandstones. Collophane
grains are often abundant and visible under hand lens or microscope, generally brown
to yellow-brown, sub-rounded, flattened or poorly spherical grains. A 1 m to 3 m thick
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marker band is commonly observed within the unit, which is characterized by the
presence of Fe-oxide staining resulting in red-brown or pale-brown color.
Middle Zone (Vaarswater Formation, Muishond Fontein Member equivalent): Poorly
phosphatic, grey-orange to yellow-orange, generally moderately sorted, fine-grained
sands, and occasional weekly cemented sandstones, ranging in thickness from 3 m to
16 m. Only scattered or occasional collophane grains are observed.
Upper Zone (Vaarswater Formation, Muishond Fontein Member equivalent):
Phosphatic sands and cemented sandstones ranging in thickness from 1 m on the
eastern margin, where they are exposed at surface or lie directly below thin soil cover,
to 13 m along the north-south-trending central area of the deposit. The phosphatic
material is composed of collophane, which is often observed as yellow-brownish to
brownish, medium-grained, sub-rounded grains, often flattened or elongate and
distinguishable from Fe-stained, generally yellow-brownish to grey-orange, fine-
grained, moderately sorted quartz grains.
Limestone (Langebaan Formation): A light-grey calcrete unit, up to 9 m thick in drill
holes, and perhaps up to 12 m thick on the western part of the Property. Rounded
cobbles and large pebbles of igneous origin are observed at certain levels within the
calcrete. This unit is interpreted as a raise-beach deposit that was later formed within
calcified bioclastic to silliclastic arenites of aeolian origin. Rudaceous snail fossils are
also observed.
7.2.2 Description of the Mineralized Units
In general, the phosphate-rich horizons (Lower, Middle and Upper Zones) present
good continuity within a 2.0 km (north-south) by 1.5 km (east-west) area, although the
horizons are not equally represented. Whereas the Middle Zone is present in most of
the area, the Upper Zone was identified in the eastern half and in one drilling line in the
western half, and the Lower Zone is constrained to a 200 m to 500 m wide, N-S-
oriented band on the eastern half of the Property (Figure 7-6).
Considering all mineralized intersections, the phosphate-rich horizons have the
following average grades: Lower Zone, 8.92% P2O5; Middle Zone: 2.31% P2O5; and
Upper Zone: 7.53 % P2O5. Thicknesses and average P2O5 grades by zone and drill
hole are presented in Table 7-1. The MgO grades in the phosphate-rich horizons
range from 0.04% to 1.07%, averaging, 0.24%. The U3O8 content, determined in
selected samples from mineralized horizons used for flotation tests, does not exceed
22 ppm.
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Figure 7-6: Distribution of Mineralized Horizons at the Duyker Eiland Property
Map north is to top of plan.
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Table 7-1: Thickness and Average P2O5 Grades by Drill Hole and Mineral Zone
Lower Zone Middle Zone Upper Zone
HoleID Drilled
Thickness (m)
P2O5 (%)
Drilled Thickness
(m)
P2O5 (%)
Drilled Thickness
(m)
P2O5 (%)
DYE006 9 8.23 11 3.81 7 7.01
DYE007 NP NP 5 3.68 4 6.47
DYE008 4 13.22 6 3.17 6 6.82
DYE009 6 4.34 NP NP NP NP
DYE010 6 6.25 8 3.77 7 7.45
DYE011 6 7.05 NP NP NP NP
DYE012 4 7.96 4 3.82 1 10.19
DYE013 4 6.67 6 2.30 5 4.14
DYE014 1 5.85 6 2.55 4 13.64
DYE021 NP NP 10 0.90 NP NP
DYE022 NP NP 8 2.52 NP NP
DYE023 NP NP 11 1.30 NP NP
DYE024 NP NP 3 0.24 8 1.90
DYE025 NP NP 13 1.00 7 6.56
DYE026 NP NP 16 0.35 2 1.17
DYE028 NP NP 8 3.17 2 8.53
DYE029 NP NP 10 1.20 13 8.80
DYE030 7 15.43 6 4.87 11 9.70
DYE031 5 10.34 6 3.88 12 9.00
DYE032 2 12.39 5 4.37 6 8.65
Average 8.92 2.31 7.53
Note: Drill intercept widths are approximately similar to true widths.
7.2.3 Mineralization
The phosphate mineralization occurs as rounded and often polished collophane grains
(although often discoidal and occasionally irregular in shape), which are identified in a
field microscope or hand lens. Pelletal phosphate and nodules previously described in
the consulted literature (Birch, 1961; Turgis, 2010) were not preserved by the RC
drilling technique and could not be observed.
According to Cullen (2011), the concentration of these collophane grains with rounded
to sub-rounded quartz grains results from preferential sorting of beach sands along a
marine transgressional zone and to near-shore, in-land aeolian processes. Evidence
relating to a series of sea-level fluctuations is recorded in the Vaarswater Formation
(Rogers, 1980).
Additional details of the phosphate mineralization at the Property are presented in
Section 10.0.
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7.3 Comments on Section 7.0
AMEC is of the opinion that the regional setting and the local geology of the Property
are adequately understood and can support the declaration of Mineral Resources.
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8.0 DEPOSIT TYPES
The phosphate deposits of the South African continental margin and coastal terrace
were described in detail by Birch (1961), who indicated that diagenetic phosphorites
are ubiquitous in the western and southern margins of South Africa.
According to Birch (1961), authigenic phosphorites form in shallow estuaries or
embayments, in environments of intense, wind-generated upwelling and high biological
productivity. In such conditions, phosphate-rich sediments deposit into the sea floor by
decay of siliceous phytoplankton, which facilitates the interstitial precipitation of apatite
to form phosphatic packstones and oolitic pellets at the water-sediment inter-phase.
Lime mud resulting from the disaggregation of calcareous exoskeletons is replaced by
calcium phosphate. Finally, all sea-bottom components are subsequently lithified into a
thin, near-continuous capping of phosphate rock.
The descriptive model of the upwelling phosphate deposits was developed by Mosier
(1986), and its main features are presented in Figure 8-1.
Figure 8-1: Descriptive Model of the Upwelling Phosphate Deposit Type
Source: Mosier (1986)
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8.1 Comments on Section 8.0
In AMEC‟s opinion, the deposit type has been correctly understood, and its main
features have been used to guide the exploration campaign.
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9.0 EXPLORATION
9.1 Drilling, Sampling and Assaying
Drilling completed on the Property, as well as the sampling/sample preparation/
assaying procedures, are discussed in Sections 10 and 11 of the Report, respectively.
9.2 Bulk Density
No density determinations were conducted at the Property during the 2011 exploration
campaign, mainly due to the disaggregated nature of the recovered material. AMEC
recommended that backhoe-assisted, in-situ bulk density determinations be
conducted, but it was not possible, because as soon as drilling concluded the
landowner planted the land. For the purposes of resource estimation, a bulk density
value of 1.82 g/cm3 was assumed (Turgis, 2009). AMEC recommends that
representative, in-situ bulk density determinations be obtained in future campaigns.
9.3 Comments on Section 9.0
The QP is of the opinion that:
The exploration conducted by Montero in the Property was in accordance to the
known deposit type. The drilling campaign focused on the southern portion of the
area covered by AECI‟s earlier program.
No density determinations were conducted during the 2011 exploration campaign.
A density value was assigned by analogy. Due to the lack of density
determinations, the Mineral Resources can be classified only as Inferred.
AMEC recommends that a representative number of in-situ density determinations
be conducted in the next exploration campaign. The density database should be
representative of all major lithologies and phosphate-rich zones.
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10.0 DRILLING
Drilling prior to the acquisition of the Property (legacy drilling), as well as drilling
completed by Montero, are summarized in Table 10-1.
Table 10-1: Drilling Summary
Company Date Type Holes Meterage (m) Numbers
AECI 1960s Unknown 32? Unknown x, S-x Montero 2011 RC 26 613 DYE-x
10.1 Legacy AECI Drilling
In the 1960s, AECI conducted a drilling and pitting campaign at the property. A map
showing the approximate drill-hole collar and pit locations, the mineralization
thicknesses and average grades per hole was presented earlier in Figure 6-1.
However, historical records of the AECI‟s exploration cannot be found (Turgis, 2010).
Montero did not use this information for resource estimation.
10.2 Montero Drilling
During the 2011 exploration campaign, Montero drilled 32 holes. Of these, six holes
were abandoned due to low recovery issues, and 26 holes, totalling 613 m (23.6 m
average length), were drilled on a 400 m x 200 m approximate grid (Figure 7-2). Collar
surveys were conducted using high-quality, differential GPS equipment. Due to the
shallow depth of the drill holes, no down-hole surveys were conducted. In AMEC´s
opinion, the survey data collected during the 2011 exploration program are sufficiently
accurate to support Mineral Resource estimation.
The drilling campaign focused on the southern portion of the area covered by AECI‟s
earlier program. Torque Drilling (Torque), the drill contractor, used a Thor rig with a 26
bar Ingersoll Rand compressor. Drilling used the dry RC method, with a 5½" (139.7
mm) bit. Drill-hole lengths ranged from 8 m to 49 m, averaging 23.6 m. The collar
elevations ranged from 26.8 m to 113.8 m. Drill runs were consistently 5 m long.
RC samples consisted of small cuttings (less than 10 mm diameter), similar to material
obtained during reverse-circulation drilling. After drilling, the recovered material was
run through a cyclone and collected by Torque employees in polyethylene bags fixed
to the base of the cyclone in systematic, 1 m long intervals.
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At the end of each 1 m sample run, drilling was halted until all material for that interval
was collected at the bag. The cyclone was then hit with a rubber hammer to remove
any material left behind.
Bags containing 1 m long samples were weighed and riffle-split using a three-deck
Jones splitter (Figure 10-1) into two collector trays. One tray, containing 87.5% split,
was initially discarded, until midway through the drill program, when this material was
then stored at a secure site and later transported to commercial secure storage for
future metallurgical studies. The content of the other tray (12.5% split) was collected
into a separate plastic bag marked with sample number and from-to depths, and
placed in the proper sequence. A small portion of each sample was sieved and
retained for logging (Figure 10-2). A Montero geologist was permanently on the drill
site supervising the drilling and sampling operation. Recovery is discussed in Section
10.4.
Figure 10-1: Splitting the Recovered Sample at the Drill Site
Sample bags were trucked every day by Montero to a secured warehouse at
Paternoster for temporary storage. At the warehouse, the sample bags were sorted
and placed on larger bags for transportation to the laboratory.
All holes were vertical. As the mineralized horizons were nearly horizontal or very
shallow-dipping, the vertical thickness indicated by sample length approximately
corresponds to true thickness.
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Figure 10-2: Material Retained for Logging
Logging was conducted at the Paternoster office using a stereoscopic microscope. In
addition to local stratigraphy and lithology, the following qualitative parameters were
logged: induration (aggregation state), color, grain size, sorting, presence of fossil
remains, intensity of reaction to HCl, moisture content, presence of Fe oxides, grain
rounding, sorting, presence of certain marker horizons, and intensity of reaction to
long-wave and short-wave ultraviolet light. Logging was recorded in Excel sheets,
using standard alphanumeric codes.
10.3 Drill Program Results
As a result of the 2011 drilling campaign, three phosphate-rich horizons were
identified. In general, the phosphate-rich horizons present relatively good continuity
within a 2.0 km (north-south) by 1.5 km (east-west) area, although the horizons are not
equally represented (Figure 7-6). Selected drill-hole intercepts are listed in Table 10-2.
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Table 10-2: Drill-Hole Intercepts by Mineral Zone (Upper and Lower Zones)
HoleID From (m)
To (m)
Drilled Thickness
(m)
P2O5
(%) Mineral
Zone
DYE006 0.0 7.0 7.0 7.01 UPPER
DYE006 18.0 27.0 9.0 8.23 LOWER
DYE007 0.0 4.0 4.0 6.47 UPPER
DYE008 0.0 6.0 6.0 6.82 UPPER
DYE008 12.0 16.0 4.0 13.22 LOWER
DYE009 2.0 8.0 6.0 4.34 LOWER
DYE010 1.0 8.0 7.0 7.45 UPPER
DYE010 16.0 22.0 6.0 6.25 LOWER
DYE011 1.0 7.0 6.0 7.05 LOWER
DYE012 0.0 1.0 1.0 10.19 UPPER
DYE012 5.0 9.0 4.0 7.95 LOWER
DYE013 1.0 6.0 5.0 4.14 UPPER
DYE013 12.0 16.0 4.0 6.67 LOWER
DYE014 1.0 5.0 4.0 13.64 UPPER
DYE014 11.0 12.0 1.0 5.85 LOWER
DYE024 3.0 11.0 8.0 1.90 UPPER
DYE025 5.0 12.0 7.0 6.56 UPPER
DYE026 8.0 10.0 2.0 1.17 UPPER
DYE028 9.0 11.0 2.0 8.52 UPPER
DYE029 1.0 14.0 13.0 8.80 UPPER
DYE030 3.0 14.0 11.0 9.70 UPPER
DYE030 20.0 27.0 7.0 15.43 LOWER
DYE031 1.0 13.0 12.0 9.00 UPPER
DYE031 19.0 24.0 5.0 10.34 LOWER
DYE032 3.0 9.0 6.0 8.65 UPPER
DYE032 14.0 16.0 2.0 12.39 LOWER
As observed in Figure 7-6, the phosphate-rich horizons remain open-ended in most
directions but southwest. However, potential in the eastern and southern directions is
limited by the close outcrop of the Vrendenburg granite. Therefore, there is potential to
expand the area of known phosphate mineralization mainly to the west and north. In
fact, historical information suggests the presence of significant mineralization at
shallow depths to the north. Details of the exploration results are discussed in Section
7.0, which includes a local geological map and representative cross-sections.
10.4 Recovery
As a result of very unfavourable geological conditions (the loose nature of the
mineralized sands alternating with hard limestone horizons with dissolution cavities
and minor compact sandstone levels), sample recovery required permanent attention
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from day one of the drill program. Various test holes were drilled at the beginning of
the program until recovery could be improved.
RC recovery was estimated by dividing the theoretical weight of the sample to the
actual recovered weight. A 1.82 g/t bulk density was applied. Overall RC recovery
averaged 60% during the 2011 program, and 58% in the mineralized horizons, but in
addition, recovery was not regular.
In spite of Montero‟s efforts to obtain acceptable recoveries, nearly 50% of the
samples from mineralized horizons had recoveries lower than 60% (Figure 10-3).
Some coarser material probably tended to fill-up cavities and pores within the
surrounding rocks. Recoveries were also poor in samples with P2O5 exceeding 5%
(Figure 10-4). Low recovery possibly affected the sample representativity, which may
have resulted in potential sampling bias.
Figure 10-3: Drilling Recovery Histogram for Samples from Mineralized Horizons
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
15%-40% 40%-60% 60%-90% 90%-110% >110%
Feq
ue
ncy
(%
)
Recovery Ranges (%)
Recovery Histogram (%)Samples in Mineralized Horizons
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 10-6 5 December 2011
Figure 10-4: Recovery versus P2O5 (Samples with >5% P2O5)
0%
20%
40%
60%
80%
100%
120%
0 5 10 15 20 25
Re
cove
ry (
%)
P2O5 (%)
Recovery versus P2O5 (%)
A detailed analysis of recovery by drill hole and mineralized horizon is presented in
Table 10-3. The average recovery in all of the mineralized zones present exceeded
60% in only four drill holes (DYE006, DYE022, DYE025 and DYE03).
Table 10-3: Recovery by Drill Hole and Mineral Zone
Recovery (%)
HoleID Lower Zone Middle Zone Upper Zone
DYE006 71.6% 65.3% 64.3% DYE007 NP 69.6% 44.0%
DYE008 67.0% 60.7% 36.3%
DYE009 51.3% NP NP
DYE010 64.7% 56.0% 43.4%
DYE011 54.0% NP NP
DYE012 50.0% 53.0% 40.0%
DYE013 70.0% 63.3% 34.8%
DYE014 44.0% 66.7% 78.0%
DYE021 NP 44.8% NP
DYE022 NP 68.0% NP
DYE023 NP 55.3% NP
DYE024 NP 84.0% 58.5%
DYE025 NP 66.2% 66.3%
DYE026 NP 60.8% 58.0%
DYE028 NP 72.5% 54.0%
DYE029 NP 55.2% 28.3%
DYE030 58.9% 50.7% 50.9%
DYE031 59.2% 57.3% 62.7%
DYE032 72.0% 63.2% 62.7%
NP: Not present; yellow highlight: P2O5 50%-60%; orange highlight: P2O5 < 50%
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 10-7 5 December 2011
Future exploration at the Property should ensure drilling recoveries over 80%. Given
the difficult drilling conditions in the Property, AMEC recommends that an alternative
drilling method, such as sonic drilling, be used in future exploration campaigns order to
improve recovery.
10.5 Comments on Section 10.0
In AMEC´s opinion, the quantity and quality of the logging and sampling data collected
during the 2011 exploration program are sufficient to support the estimation of Inferred
Mineral Resource estimation, as follows:
Drill orientation was appropriate for the mineralization style.
The sampling interval was representative of the P2O5 grade distribution, and allows
the identification of areas of higher and lower grades.
Sample collection and handling of RC cuttings was undertaken in accordance with
industry-standard practices.
Logging met industry standards.
Collar surveys were conducted using high-quality, differential GPS equipment. Due
to the shallow depth of the drill holes, no down-hole surveys were conducted. In
AMEC´s opinion, the survey data collected during the 2011 exploration program
are sufficiently accurate to support Mineral Resource estimation.
Drill intercept widths approximately represent true widths.
Drill-hole intercepts, as summarized in Table 10-2, appropriately reflect the nature
of the phosphate mineralization.
In spite of the widely-spaced drilling grid, the mineralized horizons exhibit
reasonable continuity across the drilled areas.
Nevertheless, low recovery in many intervals affected the sample representativity,
resulting in potential sampling bias. In this situation, the sampling data does not
support the estimation of Indicated or Measured Mineral Resources.
Future exploration at the Property should ensure drilling recoveries over 80%.
Given the difficult drilling conditions in the Property, AMEC recommends that an
alternative drilling method, such as sonic drilling, be used in future exploration
campaigns order to improve recovery.
The phosphate-rich horizons the phosphate-rich horizons remain open-ended in
most directions but southwest. However, potential in the eastern and southern
directions is limited by the close outcrop of the Vrendenburg granite. Therefore,
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 10-8 5 December 2011
there is potential to expand the area of known phosphate mineralization mainly to
the west and north. In fact, historical information suggests the presence of
significant mineralization at shallow depths to the north.
.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 11-1 5 December 2011
11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY
11.1 AECI Legacy Exploration
Historical records of the AECI drilling programs have been lost (Turgis, 2010). Montero
did not use this information for resource estimation.
11.2 Montero Exploration
Samples from the 2011 drilling program were prepared and analyzed at Scientific
Services C.C. (SS) in Cape Town, South Africa. SS has ISO 9001:2008 certification.
Sample preparation was as follows:
Drying to 85°C using an electric oven with forced air circulation
Crushing to finer than 70% -2 mm using a Boyd Rocklabs jaw crusher
Splitting using a rotary splitter to obtain a 100 g fraction
Pulverizing the split fraction to finer than 95% < 0.105 mm using a TS-250 Dickie &
Stockler ring mill
Sieve tests on crushed and pulverized material were conducted on 4% of the
samples (one in 25).
Pulverized samples were assayed for 11 elements in oxide form (Table 11-1) using a
Phillips X‟Unique II X-Ray Fluorescence (XRF) analyzer with the fusion method. Fused
disks were prepared with 0.65 g aliquots and 5.6 g lithium tetra-borate flux, which were
fused in platinum crucibles to 1,200°C. Loss-on-ignition (LOI) was also determined by
drying the samples at 105°C to eliminate moisture, and subsequent roasting to 900°C.
Assay results were digitally reported to Montero in Excel files submitted by e-mail.
Some samples were also assayed for U3O8.
Table 11-1: Detection Limits for Assayed Elements at Scientific Services
Element (oxide)
Detection Limit
Element (oxide)
Detection Limit
Element (oxide)
Detection Limit
Fe2O3 0.02% K2O 0.02% Na2O 0.05%
MnO2 0.02% P2O5 0.02% LOI 0.01%
Cr2O3 0.02% SiO2 0.05% U3O8 20 ppm
TiO2 0.02% Al2O3 0.02%
CaO 0.02% MgO 0.04%
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In the XRF measurements, SS used nine individual calibration standards, sourced
from Mintek (South African Council for Mineral Technology), the National Institute of
Standards & Technology (USA) and the China National Analysis Centre. These
standards were diluted by SS using silica.
Precision scales are calibrated once a week using certified weights, and are certified
once a year by CMLAB (last certification on 13 January 2011).
Assay quality was monitored by inserting certified reference materials (CRM, 4%
frequency), pulp duplicates (6% frequency) and fine blanks (4% frequency) in the
assay batches. SS monitored accuracy with the NIST 694 CRM (32.35% P2O5 certified
value), produced by the National Institute of Standards and Technology (NIST). This
CRM was previously diluted to 50% with SiO2 to adjust it to the lower P2O5 values of
most of the samples. The average stoichiometric closure was 97.9%, with most
deviations occurring in samples not exceeding 2.0% P2O5 (Figure 11-1).
In February 2011, AMEC visited SS‟s facilities in Cape Town, and reviewed the
preparation and assaying procedures that would be used for the Duyker Eiland
samples, including the internal quality control protocol, which can be qualified as best
practices.
Figure 11-1: Stoichiometric Closure versus P2O5 Plot
0
20
40
60
80
100
120
0 5 10 15 20 25
Sto
ich
iom
etr
ic C
losu
re (
%)
P2O5 (%)
Stoichimetric Closure versus P2O5 (%)
SC vs P2O5
Regression Line
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 11-3 5 December 2011
11.3 Quality Control Program
The quality control (QC) program is discussed in Section 12.0.
11.4 Sample Security
During the Montero drilling program, samples were collected by Torque personnel
under the supervision of a Montero geologist. Samples were always transported by
Montero personnel using company vehicles, and were securely locked at the
Paternoster storage facility or at the laboratory.
Chain-of-custody procedures consisted of filling out sample submittal forms that
accompanied the sample shipments to confirm that all samples were received by the
laboratory.
11.5 Sample Storage
Samples were bagged in plastic bags properly identified with sequential sample
numbers and from-to intervals. The warehouse where samples, rejects and pulps were
stored was located in Paternoster, in the vicinity of the project office, in a secure
environment.
11.6 Comment on Section 11.0
SS is independent from Montero, and holds ISO 9001-2008 accreditation. The sample
preparation and analytical methods and procedures were adequate for this type of
deposit and material. SS has implemented a careful QC protocol in order to monitor
precision, accuracy and contamination.
Sample security was ensured in accordance with exploration best practices and
industry standards.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 12-1 5 December 2011
12.0 DATA VERIFICATION
During the first site visit to the Property, AMEC reviewed the drilling, sampling and
logging procedures, and suggested the implementation of a QC program during the
exploration program at the property.
During the second site visit, after completion of the exploration campaign, AMEC
conducted various verification routines on the data collected by Montero. AMEC
checked the location of various drill holes in the field, audited the mineral resource
database, and compared the logging data with cuttings from selected drill holes.
AMEC also reviewed the interpretation of the geological sections and verified in the
field the geological map.
12.1 Data Entry
The project database was assembled using Excel files. Data-entry procedures for the
database are summarized in Table 13-4.
Table 12-1: Summary of Data-Entry Procedures
Source Data-Entry Method Procedure
Collar survey data Digital Excel files were produced by the surveyor
and e-mailed to Montero
Logging, recovery, and sampling data
Manual The paper logs and records were digitized
by a geologist into Excel files
Assay data Digital SS submitted digital files by e-mail, and the project manager inserted the data into an
Excel file
12.2 Drill-Hole Collar Review
AMEC took readings of the easting and northing collar coordinates for five drill-holes
(20% of the drill holes) with a hand-held Garmin GPS device, and compared them with
the corresponding coordinates determined by ACS. In spite of the fact that
conventional hand-held GPS measurements are less precise than measurements
conducted with more sophisticated equipment, this procedure allows the identification
of gross surveying errors.
The absolute differences between AMEC‟s measurements of the collar coordinates
and the corresponding ACS‟s determinations recorded in Montero‟s database range
between 0.16 m and 4.46 m for the eastern coordinates (averaging 1.84 m), and
between 0.51 m and 3.95 m for the northern coordinates (averaging 1.97 m). These
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Project No.: M40075 Page 12-2 5 December 2011
absolute differences are within the acceptable error of a conventional hand held GPS
(Table 12-1).
Table 12-2: Collar Coordinate Check
Hole ID AMEC Montero Absolute Difference
Easting (m)
Northing (m)
Easting (m)
Northing (m)
Easting (m)
Northing (m)
DYE-006 777,649.00 6,371,456.00 777651.12 6371453.89 2.12 2.11
DYE-016 776,950.00 6,370,451.00 776954.46 6370447.05 4.46 3.95
DYE-017 776,948.00 6,370,748.00 776950.21 6370747.49 2.21 0.51
DYE-020 776,950.00 6,371,052.00 776949.84 6371050.21 0.16 1.79
DYE-023 777,122.00 6,371,458.00 777121.78 6371456.50 0.22 1.50
Averages 1.84 1.95
12.3 Database Checks
12.3.1 Collar Coordinates
AMEC compared the collar coordinates (easting, northing and elevation) of all 26 drill
holes included in the mineral resource database with the original measurements
reported by the surveyor in an Excel file, and did not find any differences.
12.3.2 Geological Logs
AMEC reviewed the original logs of six drill holes (DYE-006, DYE-007, DYE-029, DYE-
030, DYE-031 and DYE-032), corresponding to 23% of the drill holes included in the
project database, and confirmed that the recorded data matched the original logs.
12.3.3 Original Assay Data
AMEC requested the primary laboratory (SS) to provide directly, via e-mail, the original
Excel assay data. AMEC then compared the original assay values with the assay data
recorded in the project database. In total, the assay data corresponding to 712
samples and the 12 assayed elements (including the LOI) were reviewed, and no
errors were identified.
12.4 Geological Interpretation
During the site visit, AMEC compared the cuttings and the logs from six drill-holes
(DYE-006, DYE-007, DYE-029, DYE-030, DYE-031 and DYE-032), corresponding to
Montero Mining and Exploration Ltd.
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23% of the drill holes included in the project database, and confirmed that the recorded
data matched the material collected.
AMEC also reviewed the geometry of the interpreted geological shapes in six 400 m-
spaced, E-W-oriented geological cross-sections. Drill holes were represented with the
projected trace and the main lithology. AMEC also conducted direct field verifications
of the geological interpretation on most sections.
AMEC recognizes that the interpretation generally respects the data recorded in the
logs and the sections, as well as the interpretation from adjoining sections, and is
consistent with the known characteristics of this deposit type. The lithologic model has
been diligently constructed in conformance to industry standards practices.
12.5 Quality Control
During the 2011 drilling program, Montero implemented a QC protocol consisting of
the insertion of the following control sample types (and approximate proportions): field
duplicates (2.7%), coarse duplicates (2.3%), pulp duplicates (2.1%), coarse blanks
(1.4%), fine blanks (1.4%), and CRMs (4.5%).
Montero personnel inserted the field duplicates and the coarse blanks in the
submission batches on site, prior to the submission of the sample batches to SS. A
Montero geologist inserted the other control samples into the sample batches directly
at the laboratory premises, during and/or after sample preparation. The results of the
QC data processing are summarized below.
12.5.1 Assessment of Precision
AMEC evaluated the duplicate data after the hyperbolic method (Simon, 2005). Field,
coarse and pulp duplicates exhibited no failures for MgO, and only one failure for P2O5
and two failures for CaO in pulp duplicates (Table 12-3). The failure rate for CaO
(13.3%) in pulp duplicates is above the commonly-accepted threshold (10%).
However, the two failed pairs plot virtually on the failure line. For that reason, in
AMEC‟s opinion the sampling, sub-sampling and analytical precision for P2O5, CaO
and MgO can be deemed as adequate.
12.5.2 Assessment of Accuracy
Montero used the AMIS0055 CRM (21.22% P2O5 certified value), produced by African
Mineral Standards (AMIS), to monitor accuracy. In total, 32 CRM samples were
inserted in the submission batches. No outliers were identified, and the P2O5, CaO and
Montero Mining and Exploration Ltd.
Duyker Eiland Property
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Project No.: M40075 Page 12-4 5 December 2011
MgO biases were -2.3%, -1.9% and -4.6%, respectively (Figures 12-1 to 12-3). AMEC
concluded that the P2O5, CaO and MgO analytical accuracies at SS were adequate.
Table 12-3: Duplicate Summary
Duplicate Type Element Pairs Failures Failure Rate (%)
Field Duplicates
P2O5
16
0 0.0
CaO 0 0.0
MgO 0 0.0
Coarse Duplicates
P2O5
15
0 0.0
CaO 0 0.0
MgO 0 0.0
Pulp Duplicates
P2O5
15
1 6.7
CaO 2 13.3
MgO 0 0.0
Figure 12-1: P2O5 Control Chart for the AMIS0055 CRM
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 12-5 5 December 2011
Figure 12-2: CaO Control Chart for the AMIS0055 CRM
Figure 12-3: MgO Control Chart for the AMIS0055 CRM
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Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 12-6 5 December 2011
12.5.3 Assessment of Contamination
In total, 10 coarse blanks and 10 fine blanks were inserted in the submission batches.
All P2O5 values were below the detection limit. AMEC concluded that no significant
P2O5 contamination occurred during sample preparation or assaying.
12.6 Comments on Section 12.0
AMEC verified the easting and northing collar coordinates of six drill holes with a hand-
held GPS and did not observe significant differences with the corresponding
coordinates recorded in the project database.
AMEC conducted a series of database checks, consisting in comparing the original
survey, logging and assay data with the data recorded in the project database. During
these checks, AMEC did not identify any transcription errors.
The geological interpretation generally respects the observed recovered material and
data recorded in the logs and the sections, as well as the interpretation from adjoining
sections, and is consistent with the known characteristics of this deposit type. The
lithologic model has been diligently constructed in conformance to industry-standard
practices.
The QC program implemented by Montero complied with the most stringent international standards. This program considered every aspect of the exploration process, and allowed a detailed quality monitoring:
The sampling, sub-sampling and analytical precisions for P2O5, CaO and MgO
were within acceptable limits.
The analytical accuracies for P2O5, CaO and MgO can be deemed as adequate.
No significant P2O5 cross-contamination during sample preparation and assaying
was identified.
In AMEC‟s opinion, survey, logging, sampling and assay data were properly
transferred into the project database. The QC program implemented by Montero
ensured the timely assessment of precision, accuracy and possible contamination,
which were within acceptable limits.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 13-1 5 December 2011
13.0 MINERAL PROCESSING AND METALLURGICAL TESTING
13.1 Introduction
In the late 1960s, AECI drilled approximately 33 holes and dug nine test pits in the
area of the Property. Turgis (2010) noted that “detailed drilling, pitting and flotation
results are not available”. AECI described the phosphatic sand as consisting of brown
to yellow collophane and colorless rounded quartz grains; the mineralized material was
subjected to flotation tests and the concentrate averaged 33% P2O5 (Turgis, 2010).
It is unknown, but assumed that the AECI flotation tests were based on bulk samples
taken from the test pits. Figure 6-1 (Section 6.0) shows the location of AECI‟s drill
holes and test pits. This map shows that all test pits are located in the Western,
Central, and Eastern areas of the Property, with none located in the Skoongesig or
Stompneusbaai areas. Therefore, it is unknown if these samples are representative of
the mineralization intercepted in the Montero drilling.
13.2 Turgis (2009) Conceptual Study
The following process concept is summarized from Turgis (2009). The Duyker Eiland
deposit is similar to the Florida phosphate deposits, and because of the lack of specific
data, the main source of information was from the Florida Institute of Phosphate
Research.
Turgis (2009) assumed a phosphate concentrate, averaging 30 % P2O5, could be
produced by limited grinding of the mineralized material (average feed grade of 7.6 %
P2O5 with a recovery of 85%) followed by de-sliming and flotation. The tailings were
estimated to comprise 70% to 80% of the mineralized material. From the scavenger
bank, the tailings would be pumped to a tailings thickener together with the slimes from
the de-sliming process. Following partial dewatering, the thickened tailings could be
pumped to a tailings impoundment and later recycled to the mine pit as space
becomes available. The percentage of slimes was unknown, but was considered
minor. It was assumed that the amount of middlings would also be minor and
uneconomic to recover. The concentrate would be filtered and stockpiled for later
transport.
13.3 Turgis (2011) Flotation Tests
After concluding the 2011 drilling campaign, Montero prepared a composite sample
from RC-drilled samples in order to conduct preliminary tests aimed at assessing if
concentrate exceeding 30% P2O5 could be obtained by flotation. These tests were
Montero Mining and Exploration Ltd.
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Project No.: M40075 Page 13-2 5 December 2011
conducted at the Centre for Mineral Research (Chemical Engineering Department,
University of Cape Town), under the supervision of Turgis Consulting. The flotation
tests and their main conclusions are summarized below (based on Turgis, 2011).
13.3.1 Test Description
A composite of material from the three mineralized zones was prepared using RC
material from four drill holes along the eastern margin of the deposit. Good
homogenization was achieved by repeated riffle-splitting and re-mixing. Three large
sample bags weighing approximately 16 kg each were obtained as a result of this
process.
Then, a 1 kg sample was riffle-split from each of the large bags, and the remaining
material in the large bags was retained for metallurgy test work. Of the three 1 kg
splits, one was retained as a reference, one was used raw for fraction/grade analysis
and the other was de-slimed first and used for fraction/grade analysis.
The composite samples were split into two bags of approximately 20 kg each, and
delivered to the Chemical Engineering laboratory for flotation tests. One of the
samples was split in 1 kg lots using a rotary splitter.
Flotation samples were milled using a rod mill for two minutes to break up consolidated
lumps and to produce fresh surfaces for flotation. Sodium carbonate was added to the
mill to increase the pH and act as a regulator in the flotation. The 1 kg samples were
milled at 66% solids. The milled samples were washed and then decanted on a 25 μm
screen to remove excess slime.
The decanted material was washed into a flotation cell. Conditioning was done at 65%
to 70% solids with an adjusted pH. Flotation reagents were added after the pH
adjustment, and the slurry was conditioned nominally for 2 minutes. Tap water was
added to maintain the level in the flotation cell. The float cell was a modified Leeds
cell, with 3 L capacity. Both the speed and the airflow were adjusted to visual optimum.
With the slimes removed, the solids content was approximately 30%.
13.3.2 Test Results
Two possible reagent suites can produce a phosphate concentrate in excess of 30%
P2O5: one based on a hydroxamic acid reagent coded A2 AM2, supplied by Axis
House, gave the best results; a reagent coded SR6-6 also showed the ability to
produce required grade. In all tests, diesel oil was required as a promoter assisting
agent.
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Project No.: M40075 Page 13-3 5 December 2011
De-sliming on 25 μm lost in excess of 20% of the phosphates in the slime fraction.
This is excessive, and a finer, 5 μm to 10 μm cut, is likely to recover a large portion of
this loss material without much effect on the flotation. It is noted that, by excluding the
slimes, the flotation recovery in the rougher concentrate may exceed 90%.
The U3O8 content in flotation products ranged between 20 ppm and 48 ppm (Moir,
2011).
In conclusion, an acid-grade phosphate concentrate of 33% P2O5 to 35% P2O5 (72.1%
BPL to 76.5% BPL) could be produced by flotation. According to Turgis (2011), by
optimizing the flotation conditions, improved recoveries that may be as high as 80%
could be achieved.
13.4 Comments on Section 13.0
In the QP‟s opinion, the results of the preliminary metallurgical test work reported
above support the prospects for economic extraction of the material and the reporting
of a Mineral Resource.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
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Project No.: M40075 Page 14-1 5 December 2011
14.0 MINERAL RESOURCE ESTIMATE
AMEC estimated phosphoric anhydride (P2O5), calcium oxide (CaO) and magnesium
oxide (MgO) grades, and also the thickness of the mineralized strata using the inverse
distance (ID) estimation method. Only those blocks which have sufficient grade to pay
for the removal of the overburden waste under reasonable technical-economical
assumptions were classified as Mineral Resources.
The Mineral Resource estimate was prepared by María-Angélica González, Resource
Modeller at AMEC, under the supervision of Edmund Sides, Principal Geologist at
AMEC. María-Angélica González, registered member at the Chilean Mining
Commission (CMC), is the Qualified Person (QP) for the resource estimation.
14.1 Database
Montero provided AMEC a Microsoft Excel® database consisting of 26 drill holes
which represent 615 drilled meters and 613 grade samples. AMEC imported the
collar, assay, strata definition and lithology data into GEMS (version 6.3), a
commercially-available software package. The drill-holes were not surveyed and
AMEC assumed they are all perfectly vertical, which is reasonable given their short
lengths. Database integrity was checked for inconsistencies and no errors were found.
14.2 Topography
Montero provided surveyed topographic contour lines at 20 m intervals from which a 3-
D surface was generated.
AMEC found that the elevations of the collars were mostly lower than the 3-D surface.
The average difference was 2.3 m, with a minimum of -2.5 m and a maximum of 8.0 m.
The original collar locations were considered for performing the resource estimates;
the 3-D topography was shifted 2.3 m downwards in order to obtain an average
elevation difference equal to zero. The collar coordinates were recently surveyed and
they are considered more accurate than the topographic contours which have been
digitized from a small-scale topographic map.
AMEC recommends that Montero should resurvey the topography.
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Project No.: M40075 Page 14-2 5 December 2011
14.3 Geological Model
The drilling grid is semi-regularly spaced at 200 m x 400 m to the east and north,
respectively. Strata and their thicknesses were logged in the drill-hole database. Five
zones were identified as follows, from top down:
Overburden
Upper
Middle
Lower
Footwall.
The Upper and Lower zones have the highest grades; the Middle zone is a lower-
grade stratum. The Overburden and Footwall are considered waste.
AMEC estimated the thickness of each stratum using an inverse distance to the fourth
power (ID4) estimation method to build a 3-D strata model.
AMEC defined vertical sections with the following characteristics:
Six E–W sections spaced at 400 m, from coordinate 6,370,250N to 6,372,250N
Seven N–S sections spaced at 200 m, from coordinate 776,750E to 777,950E.
14.4 Estimation Domains
The Upper, Middle and Lower zones constitute three distinct grade estimation
domains. The following image illustrates two typical sections of the deposit (Figure
14-1).
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Project No.: M40075 Page 14-3 5 December 2011
Figure 14-1: Sections 6,371,450N and 6,371,850N – Drill-hole Grades of P2O5
Drill hole Grades P2O5%
Section 6,371,450N
Section 6,371,850N
The Upper and Lower mineralized zones are illustrated in red and cyan lines, while the Middle zone is identified in blue.
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14.5 Composites
The original samples have equal lengths of 1 m. AMEC grouped the samples to build
a single composite per zone and drill hole. Not all strata are present in every drill hole,
and only 87 composites were generated.
14.6 Exploratory Data Analysis
The exploratory data analysis (EDA) consisted of samples and composite basic
statistics, histograms, frequency plots and box plots.
The grade distributions of P2O5, CaO and MgO vary significantly with the stratigraphic
horizon. The better phosphoric anhydride grades are located in the Upper and the
Lower zones, whereas grades are lower in the Middle zone. However, the highest
grades of calcium and magnesium oxides are found in the Overburden and the
Footwall.
Frequency plots suggest the presence of multiple grade populations in the same
estimation domain, especially in the Lower and Middle Zones; nevertheless, additional
analyses will be necessary to separate these populations in the future, when the size
of the database increases (Figure 14-2).
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Figure 14-2: P2O5 Histograms of the Lower and Middle Zones – Original Samples
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Boxplots (Figure 14-3) confirm the better phosphoric anhydride grades are in the
Upper and in particular the Lower zones. The Overburden and Footwall zones are
considered as waste.
Figure 14-3: P2O5 Boxplots by Zone – Original Samples
There is insufficient information to perform a reliable contact analysis and establish the
behaviour of grades at hard stratigraphic contacts.
A summary of the sample univariate statistics is presented below in (
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Table 14-1).
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Table 14-1: P2O5, CaO and MgO Basic Statistics – Original Samples
Total Sample P2O5 CaO MgO
Statistics (%) (%) (%)
Number of Samples 613 613 613
Minimum 0.02 0.08 0.04
Maximum 22.66 52.23 2.75
Mean 3.16 17.78 0.27
Standard Deviation 3.86 14.40 0.26
Variance 14.73 210.04 0.07
Coefficient of Variation 1.22 0.81 0.96
Sample Statistics
P2O5 (%)
613 57 95 142 54 265
100% 9% 15% 23% 9% 43%
Minimum 0.02 0.09 0.68 0.02 0.69 0.02
Maximum 22.66 6.93 19.06 6.68 22.66 9.55
Mean 3.16 1.60 7.53 2.31 8.92 1.20
Standard Deviation 3.86 1.74 4.07 1.62 5.53 1.19
Variance 14.73 3.02 16.80 2.63 30.66 1.40
Coefficient of Variation 1.22 1.09 0.54 0.70 0.62 0.99
Sample Statistics
CaO (%)
613 57 95 142 54 265
100% 9% 15% 23% 9% 43%
Minimum 0.08 0.32 1.96 0.09 1.80 0.08
Maximum 52.23 46.70 38.54 47.58 35.23 52.23
Mean 17.78 23.06 13.65 12.67 16.03 21.23
Standard Deviation 14.40 12.91 7.64 12.80 9.14 16.98
Variance 210.04 165.22 57.73 163.32 84.14 286.36
Coefficient of Variation 0.81 0.56 0.56 1.01 0.57 0.80
Sample Statistics
MgO (%)
613 57 95 142 54 265
100% 9% 15% 23% 9% 43%
Minimum 0.04 0.04 0.04 0.04 0.04 0.04
Maximum 2.75 2.75 1.07 0.92 0.62 1.63
Mean 0.27 0.51 0.22 0.18 0.20 0.29
Standard Deviation 0.26 0.47 0.17 0.19 0.12 0.23
Variance 0.07 0.22 0.03 0.04 0.01 0.05
Coefficient of Variation 0.96 0.92 0.75 1.04 0.62 0.80
Overburden Upper Zone Middle Zone Lower Zone Footwall
Overburden Upper Zone Middle Zone Lower Zone Footwall
Overburden Upper Zone Middle Zone Lower Zone Footwall
Number of Samples
Total
Total
Total
Number of Samples
Number of Samples
14.7 Block Model Definition
AMEC built a 2-D block model with regular dimensions of 5 m x 5 m in the eastern and
northern directions. The block model extends on an area of 1.4 km x 2.2 km (3 km2)
approximately. The extension of each zone varies, as shown in Table 14-2.
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Table 14-2: Extension of Estimated Zones
Zone Extension for Estimating
(km2)
Overburden 2.0
Upper Zone 1.5
Middle Zone 0.8
Lower Zone 1.0
14.8 Grade and Thickness Interpolation
The thickness was interpolated for the five strata while the grade interpolation was only
carried out in the three mineralized strata: Upper, Lower and Middle. Subsequently,
accumulation was calculated for the stratigraphic horizons which had interpolated
grades.
The inverse distance squared interpolation method (ID2) was applied to estimate P2O5,
CaO and MgO, and inverse distance to the fourth power method (ID4) was used to
estimate thickness. The accumulation of P2O5, CaO and MgO in mineralized zones
was calculated by multiplying the grades by the thicknesses.
There are insufficient data to perform a variographic analysis. Anisotropic search radii
were considered based on arbitrary geological criteria which indicated greater
continuity of grades and thicknesses in the north-south direction. No restrictions were
applied to outliers at this stage of deposit knowledge. The estimation plan is shown in
Table 14-3. Figure 14-4 and Figure 14-5 show typical plans of the upper and lower
block model.
Table 14-3: Estimation Plan
Parameters Value
Minimum Number of Drill Holes 3
Minimum Number of Composites 3
Maximum Number of Composites 8
Search Type Ellipsoidal
Search Ranges (m) (EW / NS) 400 / 600
Number of Passes 1
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Figure 14-4: Block Model Plan View - Upper Zone
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Figure 14-5: Block Model Plan View - Lower Zone
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14.9 Density
At this stage there are no density measurements available. The density was set to a
fixed value of 1.82 t/m3 based on the data from a neighbouring deposit which was
mined in the past. AMEC recommends Montero develop a density determination
program.
14.10 Model Validation
AMEC performed the following validations to verify that the block model honours the
drill-hole data:
Statistical validations
Visual inspections
Swath plots.
AMEC declustered the drill-hole data by means of a nearest neighbour (NN) estimate.
The validation showed that bias of the ID2 estimate as compared to the NN estimate is
within 5% for the Upper and Lower strata, which is considered acceptable. It is also
acceptable for thickness and P2O5, but high for CaO and MgO, in Middle Zone. A
summary of this validation is included in Table 14-4.
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Table 14-4: Statistical Validation and Bias Evaluation
Statistical Validation
UPPER ZONE ID4 NN ID2 NN ID2 NN ID2 NN
Number of Blocks
Minimum 1.0 1.0 1.20 1.17 5.55 5.55 0.04 0.04
Maximum 13.0 13.0 13.41 13.64 19.52 19.78 0.59 0.60
Mean 6.7 6.8 7.15 7.21 13.17 13.24 0.21 0.22
Standard Deviation 2.7 3.4 2.22 3.03 2.11 3.57 0.07 0.11
Variance 6.8 11.6 5.00 9.28 4.61 13.20 0.00 0.01
Coefficient of Variation 0.4 0.5 0.31 0.42 0.16 0.27 0.31 0.52
Bias
Statistical Validation
LOWER ZONE ID4 NN ID2 NN ID2 NN ID2 NN
Number of Blocks
Minimum 1.0 1.0 4.96 4.34 8.63 8.27 0.09 0.09
Maximum 9.0 9.0 15.17 15.43 23.80 24.05 0.31 0.32
Mean 4.9 4.9 9.02 9.02 15.84 15.77 0.21 0.21
Standard Deviation 2.0 2.0 2.16 3.52 3.33 4.73 0.05 0.07
Variance 3.3 4.2 4.52 12.19 10.76 22.89 0.00 0.00
Coefficient of Variation 0.4 0.4 0.24 0.39 0.21 0.3 0.22 0.33
Bias
Statistical Validation
MIDDLE ZONE ID4 NN ID2 NN ID2 NN ID2 NN
Number of Blocks
Minimum 4.0 4.0 2.31 1.20 3.40 3.36 0.04 0.04
Maximum 11.0 11.0 4.82 4.86 13.82 8.65 0.20 0.14
Mean 6.4 6.3 3.50 3.70 6.34 5.75 0.08 0.07
Standard Deviation 1.3 1.9 0.49 0.78 1.78 1.44 0.02 0.03
Variance 2.1 3.0 0.25 0.61 3.12 2.01 0.00 0.00
Coefficient of Variation 0.2 0.3 0.14 0.21 0.28 0.25 0.31 0.42
Bias
Thickness (m) P2O5 (%) CaO (%) MgO (%)
31,641 31,641 31,641 31,641
MgO (%)
P2O5 (%)
58,350
CaO (%) MgO (%)
58,350 58,350
Thickness (m)
58,350
Thickness (m) P2O5 (%) CaO (%)
1.6% -5.4% 10.3% 14.3%
-1.5% -0.8% -0.5% -4.5%
0.0% 0.0% 0.4% 0.0%
40,994 40,994 40,994 40,994
Visual validations indicated good agreement between the composites and estimated
grades. The grade extrapolation appeared well controlled by the application of
influence areas from drill holes.
Swath plots (Figure 14-6 to Figure 14-8) confirm the observations made from Table
14-4, in which the Middle zone presents higher global biases for CaO and MgO. The
swath plot validation shows better results for all domains in the north-south direction
compared with the east-west.
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Figure 14-6: P2O5, CaO and MgO Swath Plots – Upper Zone
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
6370000 6370500 6371000 6371500 6372000 6372500 6373000
Mg
O (%
)
P2O
5 &
CaO
(%
)
North Coordinate
Swath Plots P2O5, MgO and CaO EstimatesUpper Zone - North Direction
P2O5%_ID P2O5%_NN CaO%_ID CaO%_NN MgO%_ID MgO%_NN
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
776400 776600 776800 777000 777200 777400 777600 777800 778000
Mg
O (%
)
P2O
5 &
CaO
(%
)
East Coordinate
Swath Plots P2O5, MgO and CaO EstimatesUpper Zone - East Direction
P2O5%_ID P2O5%_NN CaO%_ID CaO%_NN MgO%_ID MgO%_NN
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Figure 14-7: P2O5, CaO and MgO Swath Plots – Lower Zone
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
6370000 6370500 6371000 6371500 6372000 6372500 6373000
Mg
O (%
)
P2O
5 &
CaO
(%
)
North Coordinate
Swath Plots P2O5, MgO and CaO EstimatesLower Zone - North Direction
P2O5%_ID P2O5%_NN CaO%_ID CaO%_NN MgO%_ID MgO%_NN
0
0.1
0.2
0.3
0.4
0.5
0.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
22.0
777200 777300 777400 777500 777600 777700 777800 777900
Mg
O (%
)
P2O
5 &
CaO
(%
)
East Coordinate
Swath Plots P2O5, MgO and CaO EstimatesLower Zone - East Direction
P2O5%_ID P2O5%_NN CaO%_ID CaO%_NN MgO%_ID MgO%_NN
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Figure 14-8: P2O5, CaO and MgO Swath Plots – Middle Zone
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
6370000 6370500 6371000 6371500 6372000 6372500 6373000
Mg
O (%
)
P2O
5 &
CaO
(%
)
North Coordinate
Swath Plots P2O5, MgO and CaO EstimatesMiddle Zone - North Direction
P2O5%_ID P2O5%_NN CaO%_ID CaO%_NN MgO%_ID MgO%_NN
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
777200 777300 777400 777500 777600 777700 777800 777900
Mg
O (%
)
P2O
5 &
CaO
(%
)
East Coordinate
Swath Plots P2O5, MgO and CaO EstimatesMiddle Zone - East Direction
P2O5%_ID P2O5%_NN CaO%_ID CaO%_NN MgO%_ID MgO%_NN
14.11 Mineral Resource Classification
Mineral Resources take into account geologic, mining, processing and economic
constraints, and have been confined within appropriate LG pit shells, and therefore are
classified in accordance with the 2010 CIM Definition Standards for Mineral Resources
and Mineral Reserves.
The resource classification took into consideration the following criteria:
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Geological continuity of the mineralization
Grade continuity and support
Data quality
Reasonable prospects for economic extraction.
At the current stage of deposit testing, the drill hole spacing is sufficient only to support
Inferred Mineral Resources.
Reasonable prospects of economic extraction were determined by applying an
economic filter. The deposit is shallow and AMEC reviewed which blocks had
sufficient phosphate grades to conceptually pay for the removal of the Overburden and
Middle zone waste.
AMEC assumed a phosphate price of US$140/t of phosphate concentrate6, a mining
recovery of 90%, a concentrate grade of 30% P2O5 (65.6% PBL7) a metallurgical
recovery of 85%, a mining cost of US$5/t and a processing cost of US$10/t. No
restriction was applied over the thickness of the strata. The US$140/t price is
considered conservative, taking into consideration that the average price during the
last five years for 70% BPL phosphate rock has been US$152/t8. The phosphate cut-
off grade calculated from these parameters was 3.00% P2O5.
Table 14-5: Inferred Phosphate Mineral Resources, Effective Date 27 September 2011,
María-Angélica González, Senior Mining Engineer, R.M. (C.M.C.)
Mineralized Zone
Tonnage Mean
Thickness P2O5 MgO CaO
Accumulation
P2O5 MgO CaO
(Mt) (m) (%) (%) (%) (m*%) (m*%) (m*%)
Upper Zone 16.1 7.1 7.73 0.21 13.59 54.3 1.5 96.8
Middle Zone 7.5 6.4 3.66 0.08 6.51 23.3 0.6 42.6
Lower Zone 9.2 4.9 9.02 0.21 15.84 44.8 1.0 80.2
Total/Weighted Mean
32.8 18.4 7.15 0.18 12.59 44.5 1.2 79.7
Notes to Accompany Inferred Phosphate Mineral Resource Table 14-5: 1. Blocks of the Middle zone are classified as Mineral Resources if the blocks of the Lower ne,
located below in the column, qualify as mineral resources; 2. Mineral resources are defined as blocks for which there is sufficient phosphate to pay for the
stripping of the material column over them and reported at a 3.00% P2O5 cut-off grade;
6 The phosphate price was estimated considering information provided by Turgis (2009) and an average price in a three-year period (2009-2011) from www.indexmundi.com. 7 In the North American phosphate industry, the phosphate content of the rock is usually expressed as
tricalcium phosphate, and traditionally referred to as bone phosphate of lime (BPL=P2O5 × 2.1853). 8 www.indexmundi.com/commodities
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3. Mineral resources are reported using concentrate prices of US$140/t of phosphate concentrate; a mining recovery of 90%; a metallurgical recovery of 85%; a mining cost of US$5/t and a processing cost of US$10/t;
4. Tonnages are rounded to the nearest 100,000 tonnes; grades are rounded to two decimal places and accumulations are rounded to one decimal place;
5. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grades and accumulations;
6. Tonnage, grade and accumulation measurements are in metric units.
The Qualified Person for the phosphate resource estimate is María-Angélica
González. The effective date for the estimate is 27 September 2011, corresponding to
the completion date.
The mineral resources tabulated in Table 14-5 are based on potentially recoverable
phosphate resources. This exploitation requires the extraction of 5.0 Mt of overburden.
Zones that classify as mineral resources, which constitute areas operationally and
potentially feasible to extract, are illustrated in Figure 14-9. Blocks coloured in grey
indicate grades below a cut-off of 3% P2O5.
Figure 14-9: Mineral Resource Areas
LEGEND
Mineral Resources
Upper Zone
Mineral Resources
Middle Zone
Mineral Resources
Lower Zone
Operative
Extraction Zones
1.2 km2
0.6 km2
1.0 km2
0 3
3 5
5 6
6 7
7 8
8 9
9 10
10 11
11 12
12 100
P 2 O 5 (%)
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14.12 Comment on Section 14
The differences up to 8 m in elevation found between the topography contour lines
and the drill-hole collars could impact on the 3-D interpretation of the mineralized
surfaces. AMEC recommends resurveying the topography.
Multiple grade populations were grouped in the same estimation domains. In
future, when the size of the database increases, additional analyses will be
required to improve the estimation domain definition.
Data were insufficient to perform the variography and study the spatial continuity
and arbitrary geological criteria were taken. Variographic analyses are
recommended once the database increases and improves.
The block model was validated and the P2O5 and thickness estimates showed
acceptable bias for all the mineralized strata (lower than 5%). Higher global biases
were found in the estimation of CaO and MgO within the Middle zone and better
results were obtained in the north-south direction compared with the east-west.
The conduction of a density determination program will permit to improve the
tabulation and classification of mineral resources. Current drill hole spacing is
sufficient only to support Inferred Mineral Resources.
Other areas of uncertainty which may materially impact the mineral resource
estimate are the variation in economic and recovery parameters used to define
reasonable prospects of economic extraction, including commodity price
assumptions, mining and metallurgical recovery assumptions, specific gravity
assignment, and open pit design parameters such as hydrological and
geotechnical considerations.
AMEC has made an assumption that Montero can acquire appropriate surface
rights. Permitting, environmental and social and community impact studies have
yet to be performed. These areas represent an unknown risk to the Mineral
Resource estimate. No marketing strategy has yet been planned. Marketing of any
future phosphate production represents an unknown risk to the Mineral Resource
estimate.
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15.0 MINERAL RESERVE ESTIMATE
As the Property is not an advanced property, this section is not applicable to this
Technical Report.
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16.0 MINING METHODS
As the Property is not an advanced property, this section is not applicable to this
Technical Report.
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17.0 RECOVERY METHODS
As the Property is not an advanced property, this section is not applicable to this
Technical Report.
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18.0 PROJECT INFRASTRUCTURE
As the Property is not an advanced property, this section is not applicable to this
Technical Report.
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19.0 MARKET STUDIES AND CONTRACTS
As the Property is not an advanced property, this section is not applicable to this
Technical Report.
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20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR
COMMUNITY IMPACT
As the Property is not an advanced property, this section is not applicable to this
Technical Report.
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21.0 CAPITAL AND OPERATING COSTS
As the Property is not an advanced property, this section is not applicable to this
Technical Report.
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22.0 ECONOMIC ANALYSIS
As the Property is not an advanced property, this section is not applicable to this
Report.
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23.0 ADJACENT PROPERTIES
To AMEC‟s best knowledge, there are no other exploration or mining properties
adjacent to the Property that are relevant to this Report.
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24.0 OTHER RELEVANT DATA AND INFORMATION
To AMEC‟s best knowledge, there are no other relevant data and information.
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25.0 INTERPRETATION AND CONCLUSIONS
The QPs, as authors of this Report, have reviewed the data for the Property and are of
the opinion that:
Information from legal experts supports the validity of the mining tenure.
Montero does not hold surface land rights, but an agreement for the use of the
Property area during the exploration has been signed. No royalties will be paid on
production.
At the effective date of this report, no significant environmental liabilities have been
originated by Montero.
Exploration to date has been conducted in accordance with the appropriate
regulatory requirements
Permitting, environmental and social and community impact studies have yet to be
performed.
There are reasonable expectations that sufficient labour and infrastructure is
available to support declaration of Mineral Resources.
There is sufficient area within the Project to host an open pit mining operation,
including the proposed open pits, mine and plant infrastructure, waste rock and
tailings storage facilities.
The regional setting and the local geology of the Property are adequately
understood and can support the declaration of Mineral Resources.
The deposit type has been correctly understood, and its main features have been
used to guide the exploration campaign.
The exploration conducted by Montero in the Property was in accordance to the
known deposit type. The drilling campaign focused on the southern portion of the
area covered by AECI‟s earlier program.
Collar surveys were conducted using high-quality, differential GPS equipment. Due
to the shallow depth of the drill holes, no down-hole surveys were conducted. In
AMEC´s opinion, the survey data collected during the 2011 exploration program
are sufficiently accurate to support Mineral Resource estimation.
No density determinations were conducted during the 2011 exploration campaign.
A density value was assigned by analogy to a similar deposit in the region that had
been the subject of historic mining. Due to the lack of density determinations, the
Mineral Resources can be classified only as Inferred.
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The drill-hole orientation was appropriate for the mineralization style.
The sampling interval was representative of the P2O5 grade distribution, and allows
the identification of areas of higher and lower grades.
Sample collection and handling of RC cuttings was undertaken in accordance with
industry-standard practices.
Drill logging met industry standards.
Drill intercept widths approximately represent true widths.
Drill-hole intercepts, as summarized in Table 10-2, appropriately reflect the nature
of the phosphate mineralization.
In spite of the widely-spaced drilling grid, the mineralized horizons exhibit
reasonable continuity along the drilled areas.
Nevertheless, low recovery in many intervals affected the sample representativity,
resulting in potential sampling bias. In this situation, the sampling data does not
support the estimation of Indicated or Measured Mineral Resources.
The sample preparation and analytical methods and procedures were adequate for
this type of deposit and material. SS has implemented a careful QP protocol in
order to monitor precision, accuracy and contamination.
Sample security was ensured in accordance with exploration best practices and
industry standards.
No significant differences between the collar coordinates measured with a hand-
held GPS and the coordinates recorded in the project database were observed.
Survey, logging, sampling and assay data were properly transferred into the
project database. AMEC did not identify any transcription errors during database
checks consisting in comparing the original survey, logging and assay data with
the data recorded in the project database.
The geological interpretation generally respects the observed RC cutting and data
recorded in the logs and the sections, as well as the interpretation from adjoining
sections, and is consistent with the known characteristics of this deposit type.
The lithologic model has been diligently constructed in conformance to industry-
standards practices.
The QC program implemented by Montero complied with the most stringent
international standards. This program considered every aspect of the exploration
process, and ensured the timely assessment of precision, accuracy and possible
contamination.
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The sampling, sub-sampling and analytical precisions and accuracies for P2O5, CaO and MgO were within acceptable limits.
No significant P2O5 cross-contamination during sample preparation and assaying
was identified.
Preliminary flotation tests have indicated that an acid-grade phosphate concentrate
of 33% P2O5 to 35% P2O5 (72.1% BPL to 76.5% BPL) can be produced by flotation.
By optimizing the flotation conditions, improved recoveries that may be as high as
80% could be achieved.
The differences up to 8 m found between the topography contour lines and the
drill-hole collars could impact over the 3-D interpretation of the mineralized
surfaces.
Multiple grade populations were grouped in the same estimation domains. The
data available were insufficient to perform the variography and study the spatial
continuity and arbitrary geological criteria were taken.
Validation of the block model indicated that the differences between the two
alternative P2O5 and thickness estimates showed acceptable bias for all the
mineralized strata (less than 5%). Higher global biases were found in the
estimation of CaO and MgO within the Middle zone. Results obtained from swath
plots showed a closer match between the different types of estimate in the north-
south direction compared with the east-west, reflecting better grade continuity in
the north-south direction.
Current drill hole spacing is sufficient only to support Inferred Mineral Resources.
Another area of uncertainty which may materially impact the mineral resource
estimate is changes to the economic and recovery parameters used to define a
reasonable prospect of economic extraction.
The presence of phosphate-rich deposits, as previously indicated by historic drilling
and pitting data, has been confirmed by the 2011 drilling program.
The phosphate-rich horizons the phosphate-rich horizons remain open-ended in
most directions but southwest. However, potential in the eastern and southern
directions is limited by the close outcrop of the Vrendenburg granite. Therefore,
there is potential to expand the area of known phosphate mineralization mainly to
the west and north. In fact, historical information suggests the presence of
significant mineralization at shallow depths to the north.
In the opinion of the QPs, the information included in this Report is sufficient to
support the estimation of Inferred Mineral Resources. The proposed program for
further exploration on the Property is justified.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 26-1 5 December 2011
26.0 RECOMMENDATIONS
26.1 Specific Recommendations
Additional surface rights should be obtained to ensure suitable land for future
mining activities, tailing and waste disposal, process facilities and related mine
infrastructure.
Future work should include hydrogeological studies to locate a reasonable water
supply source.
No density determinations were conducted during the 2011 exploration campaign.
A density value was assigned by analogy to a similar deposit in the region that had
been the subject of historic mining. Due to the lack of density determinations, the
Mineral Resources can be classified only as Inferred.
AMEC recommends resurveying the topography.
In future, when more drill data are available, grade populations should be reviewed
to improve the estimation domain definition.
Variographic analyses are recommended when there are sufficient drill data
available.
26.2 Follow-up Program
AMEC has proposed a two-phase program to follow-up the exploration in the Property.
The first phase will consist of completion of a Preliminary Economic Assessment
(PEA) to determine likely Project economics. Should the PEA return encouraging
results, then Montero should consider an infill and step-out drilling program in order to
provide sufficient robust information for more detailed mining studies, and support
potential upgrades in Mineral Resource confidence categories.
26.2.1 Phase 1
Montero should complete a Preliminary Economic Assessment (PEA) to include:
Definition of the Engineering Concept:
Evaluation of geological information.
Geotechnical analysis for mining.
Production rate estimation using Whittle pit optimisation software.
Surface mining concept, layout and scheduling of mine.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 26-2 5 December 2011
Mine engineering infrastructure.
Logistics design for any proposed mine.
Beneficiation concept work, including assimilation of test work completed.
Beneficiation plant concept.
Waste rock dump and tails dam site.
Support infrastructure engineering.
Manpower generation for all aspects of the project.
Bulk utilities supplies.
Product logistics.
Preliminary consideration of surface rights, access, and easement corridors
Preliminary consideration and collection of initial baseline information on
environmental, permitting and social and community issues
Water sources to meet potable and process requirements
Preliminary marketing study.
Costing and Evaluation of the Engineering Concepts
Risk Assessment
A basic risk assessment will be undertaken on the technical, environmental
and social aspects of the project.
Determine any fatal flaws.
Determine areas of sensitivity which will need particular focus as the project
moves forward.
The work in Phase 1 could be completed with a budget of approximately US$100,000.
26.2.2 Phase 2
Completion of Phase 2 is contingent on receipt of positive results from the PEA study.
The second phase of work should comprise collection of additional data to support
upgrades in mineral confidence categories. AMEC recommends the following actions:
Evaluate the most appropriate drill type to provide robust information for detailed
mining studies
Complete an infill and step-out drill program of an additional 40 drill holes
(approximately 1,000m)
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 26-3 5 December 2011
Collect at least 30 density determinations per lithological horizon
Acquire sufficiently detailed photogrammetry to provide accurate topographic
contours.
Future exploration at the Property should ensure drilling recoveries over 80%. Given
the difficult drilling conditions in the Property, AMEC recommends that an alternative
drilling method, such as sonic drilling, be used in future exploration campaigns in order
to improve the drilling recovery. The budget for this phase should be established after
the completion of Phase 1.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 27-1 5 December 2011
27.0 REFERENCES
Birch, G., 1961. Phosphorite Deposits on the South African Continental margin and
Coastal Terrace.
Boardman, L.G., 1961. Results of Phosphate Prospecting by AMCOR on Cape West
Coast. Report prepared by African Metals Corporation Limited for the
Department of Mines, Pretoria, 23 August 1961.
Cullen, Patrick, 2011. Duyker Geology. Internal report prepared for Montero Mining
and Exploration Ltd.
Maptek, 2010. Geological Model Report Phosphate Project, Western Cape South
Africa, Montero Project Ltd. Internal report prepared by Maptek Technical
Services Africa for Montero Mining and Exploration Ltd., July 2010.
Moir, 2011. U Results. E-mail from Kelly Moir dated 28 September 2011.
Mosier, D., 1986. Model 34c. Descriptive Model of Upwelling Type Phosphate
Deposits. In: Dennis P. Cox and Donald A. Singer (eds.), Mineral Deposit
Models, US Geological Survey Bulletin 1693, 1986.
Roberts, D.L., 2006. Varswater Formation (Including the Langeenheid Clayey Sand,
Konings Vlei Gravel, Langeberg Quartz Sand and Muishond Fontein
Phosphatic Sand Members). In: Johnson, M.R. (Ed.): Catalogue of South
African Lithostratigraphic Units. SA Commitee for Stratigraphy, 2006.
Rogers, J., 1980. First Report on the Cenozoic Sediments Between Cape Town and
Eland's Bay. Unpublished report, Geol. Surv. S. Afr., 136 pp.
RSA, 2008. No. 28 of 2008: Mineral and Petroleum Resources Royalty Act, 2008,
Enacted by the Parliament of the Republic of South Africa. Government
Gazette, Vol. 521, No. 31635, 24 November 2008, Cape Town.
Turgis, 2009. Preliminary Evaluation of the Duyker Eiland Prospect. Report 30551-01.
Internal report prepared by Turgis Consulting (Pty) Ltd. for Phosco, October
2009.
Turgis, 2010. Technical and Legal Assessment of Four Potential Phosphate
Resources. Report 30640-02. Internal report prepared by Turgis Consulting
(Pty) Ltd. for Montero Mining and Exploration Ltd., 6 April 2010.
Montero Mining and Exploration Ltd.
Duyker Eiland Property
Western Cape, South Africa
NI 43-101 Technical Report
Project No.: M40075 Page 27-2 5 December 2011
Turgis, 2011. Duyker Eiland Phosphate Sand, Exploratory Flotation Tests. Report
30887-00. Report prepared by Turgis Consulting (Pty) Ltd. for Montero Projects
Ltd., July 2011.
Visser, H.N and Schoch, A.E., 1973. The Geology and Mineral Resources of the
Saldanha Bay Area. Memoir 63, Department of Mines, Geological Survey of
the Republic of South Africa.
Werksmans, 2010a. Validity of Mining and Prospecting Rights Held by The Phosco
Group Of Companies. E-mail addressed to Jim Pooley, Turgis dated 23 March
2010.
Werksmans, 2010b. Limited Corporate Due Diligence Report-
SAL/GR01022010/TURG13277.1. Limited Corporate Legal Due Diligence
Report 09.04.10/#563943v1. Internal report prepared by Werksmans
Incorporating Jan S. De Villiers for and on behalf of Turgis Consulting
(Proprietary) Limited, in relation to Mellosat (Proprietary) Limited and its
subsidiaries, 9 April 2010.
Werksmans, 2011a. Updated due Diligence Investigation in Relation to Mellosat
(Proprietary) Limited (“MELLOSAT”) and Its subsidiaries (MELLOSAT
GROUP”). Internal report prepared by Werksmans Inc. for and on behalf of
Montero Projects Limited in relation to Mellosat (Proprietary) Limited and its
subsidiaries, 1 September 2011.
Werksmans, 2011b. Update on the Amendment of the Contract Between Montero
Projects Limited BVI and Celtic Trust Company Limited BVI, Signed on 18 July
2011, on the Purchase of the Entire Share Capital from Eurozone Investments
Limited, and on Royalties Payable according to the Royalty Act. Internal Memo
prepared by Werksmans Inc. for AMEC and on behalf of Montero Projects
Limited, 2 December 2011.