kanga potash project - juniorindaba · solution mining and mine plan (30 years lom) • solution...

KANGA POTASH PROJECT

Market Disruptive Potash OpportunityRepublic of Congo

Junior Mining Indaba – 2021

2 June 2021Kanga Potash was rebranded in 2021and was formerly registered as Sarmin Minerals Exploration

CONTENTS1. Highlights

2. Corporate Structure

3. Project History

4. Resource

5. Location

6. Solution Mining

7. Definitive Feasibility Study

8. MOP Cost Curve

9. ESIA

10. Steps to Implementation

11. Key Message

STRICTLY PRIVATE AND CONFIDENTIAL

1. Highlights – Why is it Market Disruptive?

2

Key Attributes:ü Exceptional Geological Characteristics: ultra-thick carnallitic seams in excess of

210m of mineable thickness

ü Unique Logistical Advantages: Solution Mining Field and Processing Plant located on the coast

ü Proximity to Market: Short shipping distance to key Brazilian and developing African markets

ü Low Cost of Power: Long-term competitively priced natural gas is readily available

ü A Modular Approach: which allows low CAPEX intensity of $457m and low OPEX entry of $66 per ton FOB from 600ktpa capacity which is scalable to 2.4Mtpa and more

ü Highly Compelling economics: for all production scenarios considered, with the 600ktpa initial module showing a $604m NPV and average EBITDA of $125m/pa over the 30-year LOM

ü Market leading Sustaining CAPEX: Solution Mining Cavern life in excess of 23 years per well

With OPEX in the lowest part of the industry cost curve, the Kanga project is the lowest cost MOP development project globally

STRICTLY PRIVATE AND CONFIDENTIAL 3

2. Corporate Structure – African Experience

AMED Funds• A Luxembourg based Private Equity group focussed on

developing Tier 1 mining assets

• Geographical investment focus on Sub-Saharan Africa• The AMED Funds team has a proven track record for bringing

projects into construction

SARMIN Mining Inc.• Sarmin is a Barbados based private equity investment

company which focuses on the development of high value-added resources, infrastructure and energy projects in Africa

• A long history of project development in ROC

Baker Steel Resources Trust• LSE-listed investment company, investing predominantly in

unlisted companies and specialist listed opportunities in the natural resources sector

Shareholders have the key skills and experience for developing African Projects


KEY PROJECT MILESTONES AND ACHIEVEMENTS TO-DATEDec 2016: ü Kanga Exploration Permit secured

ü Initial field work completed, exploration programmes defined and initial exploration well locations sighted

Aug 2017:ü A 3-well exploration drilling programme was completed with solution mining parameters

being confirmed on core samples from all wells

ü Exploration programme highlighted excellent correlation between wells for all 11 mineable carnallite seams

Sep 2018ü A PFS was completed as a Class 4 (AAEC) estimate in accordance to NI 43-101 standardsü The PFS used a modular approach assessing the economic viability of 400ktpa, 800ktpa

and 2.4mtpa production scenarios

Aug 2020ü A DFS was completed as a class 3 (AAEC) estimate to NI 43-101 standards for an initial

600ktpa moduleü The DFS has produced compelling economics with a CAPEX of $457m, IRR of 23.1% and

NPV of $604m

ü OPEX is a world leading $66.50 per ton Freight on Board

3. Project History – Now Ready for Development


• To confirm solution mining parameters selected core samples from all three exploration wells were analysed in accordance to NI 43-101 requirements:

§ Geochemcial assays (K-UTEC)§ Dissolution test work (Novopro)§ Cavern Temperature modelling (Rembe Consulting)§ Rock Mechanics and associated modelling (IFG)§ Control analysis of check samples (SRC)

• Assays from all three exploration wells confirm:

§ Excellent correlation between all three exploration holes and historic reference wells showing flat lying, continuous potash seams

§ Overall mineable thickness in excess of 210 meters at 62% average carnallite grade (KCl 17.5 % eqv.)

§ 13 mining horizons identified between 300 and 1100 meters from surface

• Caverns with >20-year life substantially reduce sustaining capital costs

• The resource could easily allow expansion beyond 2.4M tpa to satisfy increasing market demand

Source: Ercosplan

4. Resource Statement – World’s thickest Seams

EXPLORATION RESULTS CONFIRM THE KANGA LICENSE HAS THE THICKEST POTASH SEAMS’ SEQUENCE EVER DRILLED


Kanga - Mineral Resource MOP (NI 43-101 compliant)

Carnallititetonnes

Av. Carnallite content (%)

Av. KCl content (%)

KCltonnes

Indicated 4,730 M 63.8 17.1 810 M

Inferred 7,160 M 61.4 16.7 1,197 M

Total (I&I) 11,890 M 2,006 M

Probable Reserve 376 M 62.3 17.5 59.4 M

Loango - Mineral Resource MOP (NI 43-101 compliant)

Carnallititetonnes

Av. Carnallite content (%)

Av. KCl content (%)

KCltonnes

Indicated (KEW3) 217 M 61.0 16.4 36 M

Inferred (KEW2, KEW3) 2,218 M 62.7 16.8 373 M

Inferred (K59B) 10 968 M 59.9 16.1 1,764 M

Total (Inferred) (*) 13,186 M 2,136 M

Probable Reserve 16.1 M 16.6 2.4 M

SARMIN

O:\@@@GIS\@@@GIS Projekte\CONGO BASIN...\Karten\16-082_Sarmin_Kanga\Congo_Basin_UTM_PN_32S_exploration_areas.mxdDate: 14 August 2018

Figure

Map of the Kanga andLoango Licence Areaswith Indicated andInferred Resource Areas

ERCOSPLAN IngenieurgesellschaftGeotechnik und Bergbau mbH

Arnstaedter Strasse 2899096 Erfurt/Germany

phone: +49 361 3810 500fax: +49 361 3810 505

e-mail: [email protected]: http://www.ercosplan.com

!(

!(

!(

!(

KEW 3

KEW 2

KEW 1

K-59B

Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS,AeroGRID, IGN, and the GIS User Community

808000

808000

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Coordinate system: WGS 1984 UTM Zone 32S

±

1:45.0000 1 20,5

Kilometers

Scale:

Legend

!( Historical drill holes

!( Sarmin Exploration well location

Kanga Licence

Loango Licence

Tchimpounga Natural Reserve Area

Indicated Resources 1500m

Inferred Resources 3000m

A total of 12Bt of resources at Kanga is complimented by further 13Bt at Loango, which makes it one of the largest potash projects ever discovered

4. Resource Statement– World’s Largest Resource

Source: Ercosplan


5. Unique Location – Market Leading Logistics

7

• The Project is located c. 32km north of the main economic hub of Pointe Noire in the Republic of Congo

• The project site can be reached within an hour drive from Pointe Noire

• A minimal environmental footprint is expected due to the small area required for process plant and solution mining (ca. 2km2 for 400Ktpa and 7km2 for the 2.4Mtpa throughput)

• Sea water will be used as the prime source of process water, thus fresh water sources will not be required. The entire water balance will be recovered from the evaporator condensate

• Scarce flora and fauna in the region• No population within the selected areas for solution mining

and process plant

• Process plant and solution mining field will be in immediate proximity to the Atlantic ocean and the owner’s operated transhipment jetty

810 541E,9 498 850S

811 630E,9 498 590S

812 173E,9 498 094S 812 549E,

9 498 213S

813 107E,9 496 651S

812 465E,9 496 381S

812 280E,9 496 358S

812 133E,9 496 306S

811 957E,9 496 056S

810 949E,9 495 846S

810 861E,9 496 160S

810 152E,9 495 480S

809 352E,9 496 368S

809 094E,9 496 700S

809 279E,9 496 971S

808 910E,9 497 359S

809 121E,9 497 509S

809 397E,9 497 772S

809 325E,9 497 895S

808 868E,9 498 292S

808 692E,9 498 352S

808 672E,9 498 479S

808 800E,9 498 538S

809 128E,9 498 566S

809 520E,9 498 491S

809 820E,9 498 644S

Potash Treatment Plant Site

Potash Salt Extraction Site

TchimpoungaNatural Reserve

Kanga Licence

Loango Licence

SeawaterIntake

Effluent

TilapiaSite

¥5

¥5

¥5

KP 6

KP 7.3 to KP 33.3Natural Gas Pipeline(20m wide Corridor)

KP 0 to KP 7.3Natural Gas Pipeline

and Mining Pipe(50m wide Corridor)

KP 7.3

Loango Environnement Group

Jetty

Holl-Moni

N'toupou

Km 21

KP 9

KP 8

KP 7

KP 5

KP 4KP 3

KP 2

KP 1

KP 0

810000

810000

9500

000

9500

000

Atlantic Ocean

N

Initial Wells (41)

Project Component

Limit

Jetty, Intake and Effluent

Natural Gas Pipeline (Kilometric Point)

Primary Roads

Secondary Roads

Trails

Roads

Permanent Watercourse

Intermittent Watercourse

Hydrography

KP 1

Natural Reserve

Kanga Licence

Loango LicenceMap 5-3

July 2020

161_18089_FS_m5-3_Wells_200709.mxd

Kanga Potash ProjectEnvironmental and Social Impact Assessment

Sources :Infrastructure Data : Novopro 2020Imagery : Esri, World Imagery ; Google Earth

UTM, Zone 32S, WGS84

Limits of the Potash Salt Extraction Siteand Location of the Wells

0 250 500 m

Kouilou DepartmentLoango District

Potash Plant Site

Potash Mining Site

Subsequent Wells (29)

Republicof Congo

Angola

DemocraticRepublic of Congo

Gabon

!!StudyArea

N

0 200 km

THE PROJECT HAS AN UNIQUE LOCATION IN IMMEDIATE PROXIMITY TO THE SHORE


6. Solution Mining – Proven Mining Method

Source: Novopro, Ercosplan

SOLUTION MINING AND MINE PLAN (30 years LOM)

• Solution Mining is used for the production of potash by pumping water into subterranean salt deposits, dissolving the salts and pumping the brine to the surface for further processing

• Solution Mining is a proven mining method used around the world for the production of potash, uranium, lithium and other water soluble salts

• The production of 600Ktpa requires an initial 43 single well caverns, which then ramps up to0 70 in year 10

• Due to carnallite seam thickness, no new wells need to be drilled for the rest of the LOM

KEW 3

KEW 2

KEW 1

Source: Esri, Maxar, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AeroGRID, IGN,and the GIS User Community

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813000812000811000810000809000

813000812000811000810000809000

Kanga Potash ProjectSarmin Minerals Exploration

O:\@@@GIS\@@@GIS_Projekte\CONGO BASIN\Karten\19-016_Sarmin-Kanga\19-016_Sarmin-Kanga\19-016_Sarmin-Kanga.aprxDate: 2020-06-22

Figure 10Map of the investigated Partof the Kanga License Areawith Proposed CavernPositions and Cavernsrequired for the Mineplan

ERCOSPLAN IngenieurgesellschaftGeotechnik und Bergbau mbH

Arnstaedter Strasse 2899096 Erfurt/Germany

phone: +49 361 3810 500fax: +49 361 3810 505

e-mail: [email protected]: http://www.ercosplan.com

0 500 1.000 m

Coordinate System: WGS 1984 UTM Zone 32S

Legend:

Kanga Exploration Wells

Kanga License

Tchimpounga Natural Reserve Area

Areas not suitable for Well Drilling

Indicated Mineral Resources

Revised Cavern LayoutYear 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11


COMPELLING PROJECT ECONOMICS BASED ON AN INITIAL MOP CAPACITY of 600Ktpa

7. DFS – Compelling Financial Outputs

The Kanga potash project OPEX is on the lowest part of the industry cost curve:

• Market competitive, low cost and long-term natural gas supply from a reputable O&G major

• Process plant, solution mining and linear infrastructure next to the coastline

• Strategic location with short sailing distance to Brazil, the 2nd largest importer of potash

• Huge resource with ultra thick seams reducing the initial number of caverns required and significantly reducing sustaining capital

Total Capacity, K tpa 600Start of construction 2022

OPEX , $ per ton KCl, FOB 66.5

Peak CAPEX, $M 457

Pre-tax Project NPV(10), $M 604After-tax Project NPV(10), $M 511Pre-tax Project IRR, % 23.3After-tax Project IRR, % 22.3

• The initial 600Ktpa module demonstrates a scalable modular approach to project development allowing growth to 2.4Mtpa and more

• A unique deposit that supports the development of an industry disruptive, tier one potash project

• The financial model applied an average blended sales price of 288/t for granular and standard MOP (2020 real)

• Natural gas price: $50/1000Nm3 (= $1.23/MMBTU)

Source: brokers, Company data


KP(2.4M tpa)

KP(600K tpa)

KP(400K tpa) Uralkali Belaruskali Potash

Corp Agrium QinghaiSal t Lake Mosaic ICL Arab

Potash Intrepid SQM K+S

Transport Costs to Brazil $25 $25 $25 $26 $26 $27 $27 $50 $27 $26 $26 $26 $21 $28Transport to Vessel at Port $- $- $- $42 $32 $36 $36 $51 $36 $17 $11 $49 $15 $11Cash Cost $53 $60 $73 $43 $61 $66 $73 $48 $86 $116 $130 $106 $162 $177FOB Vessel Cash Cost $53 $60 $73 $85 $93 $102 $109 $99 $122 $133 $141 $155 $177 $188Total Delivered Cost $78 $85 $98 $111 $119 $129 $136 $149 $149 $159 $167 $181 $198 $216

$53 $60 $73

$85 $93 $102 $109 $99 $122 $133 $141

$155 $177 $188

$78 $85 $98

$111 $119 $129 $136 $149 $149 $159 $167

$181 $198

$216

$-

$50

$100

$150

$200

$250

$/to

nne

Producer Cost Structure

10

CASH COSTS AS PROVIDED AND DEFINED BY ARGUS Media group

Source: except for KP data, Argus media group, Potash Market Service, Quarterly Industry Analysis, June 2020

THE LOWEST COST FROM ex MINE to MARKET

Note: Included - fuel and energy, raw materials, maintenance, labour, and G&A (including sales), KP “transport to port” cost included in cash cost due to owned and operated jetty and barge designExcluded - sustaining capital, royalties, plant closure costs

8. OPEX – At the lowest end of the Cost Curve


9. ESIA – Approved

11

WSP (Canada), an independent and internationally recognised environmental consultancy undertook the ESIA work program

2019 to 2020: ESIA Base Line Studies

• Site confirmation• Public consultations and stakeholder engagement • Base line Data Collection• Impact Assessment, Mitigation and Offset Measures• Project cumulative effects• Environmental & Social Management Plan• The ESIA Letter of Conformity was issued in Q1 2021

NO ISSUES OF CONCERN HAVE BEEN IDENTIFIED

ü The Project will mainly use sea water for all key processes, thus avoiding use of fresh water sources. The process water is generated entirely from the evaporation condensate

ü Carnallite seams can be solution mined within an uninhibited areaü No issues of concern that relate to the physical, biological or socio-

economical environments have been identified to date


10. IMPLEMENTATION – advancing to production

Oct 2019 –Sep 2020 2021 Jan 2022 –

June 2024July 2024 –Dec 2024

Jan 2025 –Onwards

FEED• EPC-f bid phase

and selection process -commenced

• Owners team in place and strategic Investors on board

• Detailed engineering for early works

• Key offtake/marketing contracts finalized

• Secure Project finance

DFS• Basic Engineering• ESIA • Permitting• Key agreements

completed

CONSTRUCTION•Overall EPCm •Designated EPC

packages• Production well drilling

programme for initial cavern development

COMMISSIONING & RAMP UP• Commissioning• Gradual production

increase to full name plate capacity

PRODUCTION AND EXPANSION

• MOP production at name plate capacity

• Phased expansions as and when market conditions allow

• Underpinned by a huge resource allowing exponential expansion of production

12 months 12 months 30 months 6 - 9 months

MAIN PROJECT DEVELOPMENT STEPS AND ANTICIPATED TIMELINES FROM DFS TO COMMERCIAL PRODUCTION


210m thickThickest known carnallite horizons at av. KCl 17.5 % grade equivalent

$66.3/t OPEX1)

Lowest known OPEX FOB Pointe Noire

810mtM&I KCl resources

>13BtIndicated & Inferred Resources

760 km2

Kanga license including the adjacent Loango license

$457M1) CAPEXLow capital intensity project

>20-year cavern life30 years Life of MineReduced ongoing drilling requirements

$125M EBITDA1)

av. EBITDA p.a.

THE DFS WORK PROGRAM HAS FURTHER DE-RISKED AND ADVANCED THE KANGA PROJECT

DFS completedin September 2020

11. SUMMARY – A Market Disruptive Opportunity

1) 600K tpa, 2020 real

EPC-F and Pre-Investment StructuringJanuary 2021 onwards


Important notice:

This document has been compiled by the professional team of Kanga Potash “KP“.

The Document contains forward-looking statements which reflect the team’s current views based on the information provided to it and the assumptions made by it. These forward looking statements by their nature address matters that are uncertain and involve elements of subjective judgment and analysis which may or may not be accurate, and are therefore subject to significant risks and changes which may cause the valuations and projections to change materially from the views expressed in the Document. These forward looking statements are subject to review, verification and amendment without prior notice and without liability to compensate or reimburse any party and no guarantee is given that the projected valuations will be achieved. These forward looking statements may or may not prove to be correct and there can be no assurance that any such statements, estimates, targets, forecasts or projections are attainable or will be realised.

Nothing contained in this Document is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Accordingly, neither SME nor its directors, partners, employees or advisors nor any other person, shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of such person’s reliance on any statement in or omission from this Document and any such liability is expressly disclaimed. In particular, but without limitation, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any statements, estimates, targets, information, forecasts, projections, opinions or conclusions contained in this Document (or otherwise provided by or on behalf of SME with respect to the subject matter of this document).

No representation or warranty, express or implied, is furthermore made as to the fairness, accuracy, completeness or correctness of any statements, estimates, targets, information, forecasts, projections, opinions or conclusions contained in this Document. To the maximum extent permitted by law, neither SME, its directors, employees or agents, nor any other person, accepts any liability for any loss arising from the use of this document or its contents or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on the part of the Fund or their directors, employees or agents.

SME shall only be bound by those particular representations and warranties set forth in definitive written transaction documents, when and if such transaction documents are executed and subject to such restrictions and limitations as may be contained therein. This Document and its contents are confidential and may not be disclosed to any third party without the prior written consent of KP.

Disclaimer

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kanga potash project - juniorindaba · solution mining and mine plan (30 years lom) • solution...

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