1. 2012
Prepared for
Great Quest Metals Ltd.
TILEMSI PHOSPHATE PROJECT
MALI
PRELIMINARY ECONOMIC ASSESSMENT
Effective Date: December 20, 2012
Qualified Person: Jed Diner M.Sc., P.Geol.
2. COMPILED BY:
Roy Movsowitz, Gaya Resources Development Ltd. – Project Manager
M.Sc., B.Sc. Chemical Engineering, B.Com. – Registered Professional Engineer, Israel (37938)
CONTRIBUTIONS BY:
GEOLOGY
Jed Diner, Principal Consultant – Resource Geology– Independent Qualified Person
M.Sc., P.Geol. – Registered Association of Professional Geoscientists of Ontario (registration. Nr.
1560)
MINING
Kathleen Body, Coffey Mining – Principal Consultant – Resource Geology
B.Sc. (Geology), GDE (Mining), Pr.Sci.Nat.
Steven Rupprecht, Coffey Mining – Principal Mining Engineer
B.Sc. (Mining Engineering), PhD (Mech. Engineering), Pr. Eng., FSAIMM
GRANULATION/NPK BLENDING
Julien Cryspen, CFIh – Chemical Engineer
Ecole Nationale Supérieure Des Industries Chimiques (Ensic), France Process and Chemical
Engineer, University Of Twente, Enschede, Netherlands
DEA in Chemical Engineering, Institut d’Administration des Entreprises (IAE), Paris 1, La Sorbonne,
France
MBA in Company Administration, IAE – Institut d’Administration des Entreprises (Paris X), France
(completed 2005)
BENEFICIATION
Christopher Stinton, GBM – Minerals Engineer
B.Sc. (Hons) Minerals Engineering Birmingham University
Chartered Engineer – Member of the Institution of Materials, Metals and Mining
Colin Powers, GBM – Mechanical Engineer
Bachelor of Mechanical Engineering (Hons)
MIEAust – Chartered Professional Engineer of Engineers Australia (2742841)
MARKETING
Balu Bumb, Policy and Trade Specialist, BLB Associates, Florence, Alabama, USA – Marketing
PhD Economics (University of Maryland, USA), MA Economics University of Udaipur (India), and
B.Com. University of Rajahsthan (India)
Uzo Mokwunye, Development Strategy Consultant – Marketing
B.Sc. Agronomy and M.Sc. in Soil Chemistry from Ohio State University (USA) and PhD in Soil
Chemistry from the University of Illinois (USA)
Member of the Soil Science Society of America and American Society of Agronomy
Tilemsi Phosphate Project – PEA Page | ii
4. TABLE OF CONTENTS
1 SUMMARY ........................................................................................................................................................... 1
1.1 PURPOSE .......................................................................................................................................... 1
1.2 THE TILEMSI PHOSPHATE PROJECT ......................................................................................................... 1
1.3 GEOLOGY AND MINERALIZATION ........................................................................................................... 2
1.4 MINING ............................................................................................................................................ 3
1.5 BENEFICIATION................................................................................................................................... 3
1.6 GRANULATION ................................................................................................................................... 4
1.7 NPK BLENDING .................................................................................................................................. 4
1.8 PROJECT INFRASTRUCTURE ................................................................................................................... 4
1.9 MARKETING ...................................................................................................................................... 5
1.10 LOGISTICS ......................................................................................................................................... 5
1.11 FERTILIZER PRICES............................................................................................................................... 6
1.12 ECONOMICS ...................................................................................................................................... 6
1.13 MAJOR CONCLUSIONS AND RECOMMENDATIONS ..................................................................................... 7
2 INTRODUCTION .................................................................................................................................................... 9
3 RELIANCE ON OTHER EXPERTS ........................................................................................................................... 14
4 PROPERTY DESCRIPTION AND LOCATION ........................................................................................................... 15
4.1 THE TILEMSI LICENSE ......................................................................................................................... 16
4.2 THE TARKINT EST LICENSE .................................................................................................................. 16
4.3 THE ADERFOUL LICENSE ..................................................................................................................... 16
5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ..................................... 17
6 HISTORY ............................................................................................................................................................. 18
7 GEOLOGICAL SETTING AND MINERALIZATION.................................................................................................... 19
8 DEPOSIT TYPE ..................................................................................................................................................... 20
9 EXPLORATION .................................................................................................................................................... 21
10 DRILLING ............................................................................................................................................................ 22
11 SAMPLE PREPARATION, ANALYSES, AND SECURITY ........................................................................................... 24
12 DATA VERIFICATION ........................................................................................................................................... 25
13 MINERAL PROCESSING AND METALLURGICAL TESTING...................................................................................... 27
13.1 INTRODUCTION ................................................................................................................................ 27
13.2 PROCESS SUMMARY .......................................................................................................................... 27
13.3 OVERALL EXPECTED RECOVERIES ......................................................................................................... 27
13.4 MINERALOGY................................................................................................................................... 29
13.5 ASSAY BY SIZE ANALYSIS .................................................................................................................... 31
13.6 FINES REMOVAL BY SCREENING ........................................................................................................... 34
13.7 DRY MAGNETIC SEPARATION OF BLENDED COMPOSITE SAMPLE ................................................................ 35
13.8 GRANULATION TEST WORK ................................................................................................................ 36
Granulation Test on Blended Composite Sample ................................................................................ 36
Solubility Test on -4 mm +1 mm and -1 mm Granules ....................................................................... 37
13.9 FUTURE TEST WORK ......................................................................................................................... 38
14 MINERAL RESOURCE ESTIMATE .......................................................................................................................... 39
Additional Potential ............................................................................................................................ 40
15 MINERAL RESERVE ESTIMATES ........................................................................................................................... 41
16 MINING METHODS ............................................................................................................................................. 42
16.1 INTRODUCTION ................................................................................................................................ 42
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5. 16.2 GEOHYDROLOGY AND DEWATERING ..................................................................................................... 42
16.3 GEOTECHNICAL ................................................................................................................................ 42
16.4 MINING METHOD AND EQUIPMENT SELECTION ...................................................................................... 42
16.5 DRILL AND BLAST .............................................................................................................................. 43
16.6 LOAD AND HAUL .............................................................................................................................. 43
16.7 MINING EQUIPMENT UTILIZATION AND PRODUCTIVITY ............................................................................ 43
16.8 PRODUCTION PROFILE ....................................................................................................................... 47
17 RECOVERY METHODS ......................................................................................................................................... 50
17.1 MINERAL PROCESSING (BENEFICIATION) ............................................................................................... 50
Process Overview ................................................................................................................................ 50
Material Handling ............................................................................................................................... 52
Coarse Classification ........................................................................................................................... 52
Hydraulic Classification ....................................................................................................................... 52
Attrition and Classification ................................................................................................................. 53
Milling and Classification .................................................................................................................... 53
Magnetic Separation .......................................................................................................................... 53
Concentrate Dewatering ..................................................................................................................... 53
Filtration and Drying ........................................................................................................................... 53
Tailings Management ......................................................................................................................... 54
Reagents ............................................................................................................................................. 54
Industrial Operations .......................................................................................................................... 54
17.2 GRANULATION PLANT........................................................................................................................ 56
Design Criteria .................................................................................................................................... 56
Process Description ............................................................................................................................. 57
Plant Performance ............................................................................................................................. 59
Product Quality ................................................................................................................................... 60
Raw material consumptions ............................................................................................................... 60
Utilities ................................................................................................................................................ 60
Industrial Operation .......................................................................................................................... 60
17.3 NPK PLANTS ................................................................................................................................... 60
Design Criteria .................................................................................................................................... 60
Process Description ............................................................................................................................. 61
Description (see flowsheet in Appendix D) .......................................................................................... 61
17.4 NPK PLANT PERFORMANCE................................................................................................................ 62
Process ................................................................................................................................................ 62
18 PROJECT INFRASTRUCTURE ................................................................................................................................ 64
18.1 MINE ............................................................................................................................................. 64
Coffey Mining reviewed the infrastructure required at the Tilemsi mine site and the beneficiation plant in
Bourem. .............................................................................................................................................. 64
Mine Workshop................................................................................................................................... 64
Haul Road Construction ...................................................................................................................... 64
Explosive Storage ................................................................................................................................ 64
Off-Mine Transportation ..................................................................................................................... 64
Light Vehicles ...................................................................................................................................... 64
Software and Hardware ...................................................................................................................... 64
Consumables First Fill ......................................................................................................................... 65
Diesel Generator and Diesel Storage .................................................................................................. 65
Mining Village ..................................................................................................................................... 65
18.2 BENEFICIATION AND GRANULATION PLANTS – BOUREM ........................................................................... 66
Site Access ........................................................................................................................................... 66
Power .................................................................................................................................................. 66
Water .................................................................................................................................................. 67
Sewage Treatment .............................................................................................................................. 67
Reverse Osmosis Plant ........................................................................................................................ 67
Plant and Instrument Air ..................................................................................................................... 68
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6. Fuel ..................................................................................................................................................... 68
Communication ................................................................................................................................... 68
Warehouse and Workshop ................................................................................................................. 68
Laboratory .......................................................................................................................................... 69
Administration Office .......................................................................................................................... 69
Security Building ................................................................................................................................. 69
Emergency Services Building ............................................................................................................... 69
Accommodation Village ...................................................................................................................... 69
Community Development ................................................................................................................... 70
Tailings Storage Facility ...................................................................................................................... 70
TSF Configuration ................................................................................................................................ 71
18.3 LOGISTICS .................................................................................................................................... 73
Technical Issues................................................................................................................................... 74
Selected Equipment ............................................................................................................................ 74
Mining Haulage Manning ................................................................................................................... 75
19 MARKET STUDIES AND CONTRACTS ................................................................................................................... 76
19.1 BACKGROUND .................................................................................................................................. 76
19.2 OBJECTIVES OF THE MARKET STUDY ..................................................................................................... 78
19.3 AGRICULTURAL BACKGROUND............................................................................................................. 78
Area, Production, and Yield................................................................................................................. 78
Main Crops Grown in West Africa ....................................................................................................... 81
Main Fertilizer Products Used on Crops .............................................................................................. 82
19.4 FERTILIZER MARKETS: STRUCTURE, PERFORMANCE, AND PLAYERS ............................................................. 83
Trends in fertilizer Use ........................................................................................................................ 83
Structure and Players .......................................................................................................................... 85
Fertilizer Product Use by Country ........................................................................................................ 89
Fertilizer Pricing .................................................................................................................................. 90
Phosphate Rock Price .......................................................................................................................... 93
19.5 AGRONOMIC ISSUES .......................................................................................................................... 96
Agronomic Potential of Tilemsi Phosphate Rock (TPR) ....................................................................... 96
Internal factors: .................................................................................................................................. 97
Soil Properties: .................................................................................................................................... 98
Climate Factors: .................................................................................................................................. 99
Effects of Plant: ................................................................................................................................... 99
Management Practices: ...................................................................................................................... 99
What happens to the P from PR after it has been released to the soil? ........................................... 100
19.6 DEMAND PROJECTIONS.................................................................................................................... 105
Effective Demand .............................................................................................................................. 106
Potential Demand under Abuja Declaration ..................................................................................... 107
Nutrient Replenishment Requirements ............................................................................................. 107
Agronomic Requirements ................................................................................................................. 108
19.7 PRODUCT DEMAND......................................................................................................................... 108
19.8 INTERNATIONAL EXPERIENCES ........................................................................................................... 108
19.9 OPPORTUNITIES AND CHALLENGES ..................................................................................................... 109
Opportunities .................................................................................................................................... 109
Challenges: ........................................................................................................................................ 111
19.10 THE WAY FORWARD ....................................................................................................................... 112
GQ Market Share in P2O5 Demand .................................................................................................... 112
Marketing Domains .......................................................................................................................... 112
Marketing Strategy ........................................................................................................................... 113
Phasing of Marketing and Production Plans ..................................................................................... 113
20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ........................................... 115
21 CAPITAL AND OPERATING COSTS ..................................................................................................................... 116
21.1 MINE ........................................................................................................................................... 116
Operating Costs ................................................................................................................................ 116
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7. Capital Expenditure ........................................................................................................................... 120
21.2 BENEFICIATION PLANT ..................................................................................................................... 122
Basis of Cost Estimate ....................................................................................................................... 122
Design Basis ...................................................................................................................................... 122
Project Basis ...................................................................................................................................... 122
Methodology..................................................................................................................................... 124
Estimate Classification ...................................................................................................................... 124
Assumptions ...................................................................................................................................... 124
Currency and Exchange Rates ........................................................................................................... 124
Base Date and Reporting Currency ................................................................................................... 124
Exceptions ......................................................................................................................................... 125
Inclusions .......................................................................................................................................... 125
Exclusions .......................................................................................................................................... 125
Risks and Opportunities .................................................................................................................... 126
Management Reserve ....................................................................................................................... 126
Estimate Quality Assurance .............................................................................................................. 126
Contingency ...................................................................................................................................... 126
21.2.1 CAPITAL COST DEVELOPMENT ........................................................................................................... 126
Direct Cost Development .................................................................................................................. 127
Sustaining Capital ............................................................................................................................. 128
Indirect Cost Development ................................................................................................................ 129
21.2.2 OPERATING COST DEVELOPMENT ...................................................................................................... 129
Reagent Consumption....................................................................................................................... 129
Operating Personnel ......................................................................................................................... 130
General Administration ..................................................................................................................... 130
Site Road Maintenance ..................................................................................................................... 131
Electricity .......................................................................................................................................... 131
Utilities .............................................................................................................................................. 132
Operating Spares, Lubricants, and Wear Items ................................................................................ 132
21.2.3 COSTING REPORT ........................................................................................................................... 132
Capital Cost Estimate ........................................................................................................................ 132
Operating Cost Estimate ................................................................................................................... 139
21.3 GRANULATION PLANT...................................................................................................................... 142
OPEX ................................................................................................................................................. 142
21.4 CAPEX ........................................................................................................................................ 143
21.5 NPK PLANTS ................................................................................................................................. 146
OPEX ................................................................................................................................................. 146
CAPEX ................................................................................................................................................ 147
21.6 LOGISTICS OPEX ............................................................................................................................ 150
22 ECONOMIC ANALYSIS ....................................................................................................................................... 151
22.1 GENERAL ...................................................................................................................................... 151
22.2 USE OF FUNDS ............................................................................................................................... 152
Capital Costs ..................................................................................................................................... 153
Financing Terms, Conditions, & Costs ............................................................................................... 153
22.3 SOURCE OF FUNDS .......................................................................................................................... 154
Equity ................................................................................................................................................ 154
Debt During Construction Phase ....................................................................................................... 154
22.4 ECONOMIC MODEL ASSUMPTIONS..................................................................................................... 155
Key Dates .......................................................................................................................................... 155
Production......................................................................................................................................... 155
Revenues ........................................................................................................................................... 156
Operating Costs ................................................................................................................................ 157
General and Administration .............................................................................................................. 157
Income Tax, Royalties, and other Taxes ............................................................................................ 158
Other Assumptions............................................................................................................................ 158
22.5 PROJECT PRO-FORMA PROFIT & LOSS ................................................................................................ 158
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8. 22.6 CASH FLOW ................................................................................................................................... 161
22.7 ECONOMIC RESULTS........................................................................................................................ 163
22.8 SENSITIVITY ................................................................................................................................... 163
Equity Sensitivity Analysis ................................................................................................................. 164
Project Sensitivity Analysis ................................................................................................................ 167
22.9 ECONOMIC CONCLUSIONS ................................................................................................................ 170
23 ADJACENT PROPERTIES .................................................................................................................................... 171
24 OTHER RELEVANT DATA AND INFORMATION ................................................................................................... 172
25 INTERPRETATION AND CONCLUSIONS.............................................................................................................. 173
25.1 RESOURCE ESTIMATE....................................................................................................................... 173
25.2 MARKET ....................................................................................................................................... 173
Socio-economic Context and Resource Endowment ......................................................................... 173
West Africa Phosphate Fertilizer Market: Structure and Potential ................................................... 174
25.3 PROCESS PLANTS ............................................................................................................................ 175
26 RECOMMENDATIONS ....................................................................................................................................... 176
26.1 RESOURCE ESTIMATE....................................................................................................................... 176
26.2 MARKET ....................................................................................................................................... 176
Strategy for Market Penetration and Development ......................................................................... 176
Phasing of Investment and Marketing Plans .................................................................................... 177
26.3 PROCESS PLANTS ............................................................................................................................ 177
26.4 ENVIRONMENTAL ........................................................................................................................... 177
27 REFERENCES ..................................................................................................................................................... 178
27.1 GEOLOGY ...................................................................................................................................... 178
27.2 MARKET ....................................................................................................................................... 178
27.3 MINERAL PROCESSING AND METALLURGICAL TESTING ........................................................................... 180
APPENDIX A - DATE AND SIGNATURES ...................................................................................................................... 183
APPENDIX B - BENEFICIATION FLOWSHEET ............................................................................................................... 190
APPENDIX C - GRANULATION FLOWSHEET ................................................................................................................ 191
APPENDIX D - NPK FLOWSHEET ................................................................................................................................ 192
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9. LIST OF ABBREVIATIONS
Abbreviation Description
AAS atomic absorption spectroscopy
ADT articulated dump truck
Al2O3 aluminium (iii) oxide
AN ammonium nitrate
AS ammonium sulphate
bcm billion cubic metres
cc cotton complex
Cd cadmium
CaO calcium oxide
CAPEX capital cost estimate
CFIh CFI holding (France)
CIF Cost Insurance and Freight
CIM Canadian Institute of Mining, Metallurgy, and Petroleum
DAP di-ammonium phosphate
Engineering, Procurement, and Construction
EPCM
Management
ERT emergency response team
FAO Food and Agriculture Organization of the United Nations
Fe2O3 iron (iii) oxide
FOB Free on Board
g gramme
GBM GBM Mineral Engineering Consultancy Ltd.
GQ Great Quest
GQM Great Quest Metals Ltd.
GTPR granulated Tilemsi phosphate rock
HDPE high-density polyethylene
HGP high-grade phosphate (P2O5 > 35%)
HV high voltage
ICP inductively coupled plasma
IFDC International Fertilizer Development Center
IRR internal rate of return
ISE ion selective electrode
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10. Abbreviation Description
KCl potassium chloride (sylvite)
km2 square kilometres
kPa kilo Pascal
kt/a kilo tonnes per annum
kV kilovolts
kW kilowatt
kWh/t kilowatt hour per tonne
LDV light duty vehicle
LOI loss on ignition
LOM life of mine
LV low voltage
m metre
MAP mono-ammonium phosphate
MgO magnesium oxide
MGP medium-grade phosphate (P2O5 > 27%)
mm millimetre
MM Minjingu Mazao
MMFL Minjingu Mines and Fertilizer Ltd.
MOP muriate of potash
MPR Minjingu phosphate rock
Mt/a million tonnes per annum
MVA mega-Volt ampere
µm micron
NAC neutral ammonium acetate
NFPA National Fire Protection Authority
NPV net present value
OEM original equipment manufacturer
OPEX operating cost estimate
P phosphorus
pa per annum
PEA preliminary economic assessment
P2O5 phosphorus oxide
ppm parts per million
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11. Abbreviation Description
PR phosphate rock
PSD particle size distribution
QA/QC Quality Assurance / Quality Control
QP qualified person
RAB rotary air blast
RM raw material
RO reverse osmosis
ROI return on investment
ROM run-of-mine
SEM scanning electron microscope
SiO2 silicon dioxide
SSP single superphosphate
TCOE total cost of employment
t/h tonnes per hour
TPP Tilemsi Phosphate Project
TPR Tilemsi phosphate rock
TSF tailings storage facility
TSP triple superphosphate
UEMOA Union économique et monétaire ouest-africaine
USD United States dollar
USD/t United States dollars per tonne
VAC volts alternating current
WHIMS wet high-intensity magnetic separator
wt weight
w/w weight by weight
XRD X-ray diffraction
XRF X-ray fluorescence
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12. LIST OF FIGURES
Figure 4-1: Map Showing Different Permits of the Tilemsi Phosphate Project on Topographic Map................................. 16
Figure 6-1: Geological map of the TPP area (from Van Kauwenbergh et.al 1991) ............................................................. 18
Figure 6-2: Geological cross section in the TPP area (from Van Kauwenbergh et.al 1991) ................................................ 18
Figure 10-1: Overview of the TPP area, with drillholes as dots, resource polygons in magenta and blue, and the outline
of license areas for Tilemsi, Aderfoul and Tarkint Est. ........................................................................................................ 23
Figure 16-1: Annual ROM Tonnage .................................................................................................................................... 48
Figure 16-2: Annual Phosphate Grade ................................................................................................................................ 48
Figure 16-3: Annual Strip Ratio ........................................................................................................................................... 49
Figure 16-4: Annual Waste Tonnage .................................................................................................................................. 49
Figure 17-1: Block Flow Diagram ........................................................................................................................................ 51
Figure 17-2: Site Plan .......................................................................................................................................................... 52
Figure 17-3: Personnel Schedule Beneficiation and Granulation ........................................................................................ 55
Figure 18-1: TPP Logistics ................................................................................................................................................... 73
Figure 18-2: Proposed Haulage Routes............................................................................................................................... 74
Figure 19-1: Contribution of area and yield growth to cereal production in West Africa, 1980–2009............................... 80
Figure 19-2: Contribution of area and yield growth to cassava production in West Africa, 1980–2009 ............................ 80
Figure 19-3: Crop yields by major region (maize, rice, and cassava) .................................................................................. 81
Figure 19-4: Total fertilizer (NPK) consumption trends in Sub-Saharan Africa, 1990-2008 ................................................ 83
Figure 19-5: Performance of supply chain in Ghana ........................................................................................................... 85
Figure 19-6: Performance of supply chain in Mali .............................................................................................................. 86
Figure 19-7: Supply chain cost components by fertilizer products in select countries in 2009 (USD/metric tonne) .......... 91
Figure 19-8: Supply chain cost components—domestic marketing costs (averaged across all four countries in the
sample), (USD/metric tonne) in 2009 ................................................................................................................................. 91
Figure 19-9: Fertilizer Prices (FOB, bulk) Monthly averages January 2000 – May 2012 ..................................................... 93
Figure 19-10: PR prices, 1990-2011 .................................................................................................................................... 94
Figure 19-11: UREA Prices and Price Projections (1960 – 2020) ......................................................................................... 95
Figure 19-12: Schematic diagram of the behavior of PR in the soil .................................................................................... 97
Figure 19-13: Effect of granulation on solubility of PR ..................................................................................................... 102
Figure 21-1: Annual Mining Operating Cost ..................................................................................................................... 118
Figure 21-2: Capital Expenditure ...................................................................................................................................... 120
Figure 22-1: Factors with Greatest Influence on IRR ........................................................................................................ 163
Figure 22-2: Effect of Oil Price on IRR ............................................................................................................................... 164
Figure 22-3: Equity Cash Flow ........................................................................................................................................... 169
LIST OF MAPS
Map 2-1: Map showing the Tilemsi mine site, the Bourem beneficiation site, and four propsed NPK Blending Facilities . 10
Map 4-1: Location of Tilemsi Phosphate Project, West Afica ............................................................................................. 15
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13. LIST OF TABLES
Table 10-1: Number of drillholes and metres drilled .......................................................................................................... 22
Table 12-1:Major oxides in drillholes/pit phosphates samples (% per wt) ......................................................................... 25
Table 12-2: Trace elements in Tin Hina phosphates (ppm) ................................................................................................. 25
Table 12-3: Comparison of Geochemistry of phosphate seams in Alfatchafa, Tin Hina and Tarkint Est (% per wt)........... 25
Table 13-1: Summary of Wet and Dry Screening on Blended Composite ........................................................................... 28
Table 13-2: Summary of Magnetic Separation Results ....................................................................................................... 29
Table 13-3: Quantitative Mineralogical Analysis of Composite Sample ............................................................................. 30
Table 13-4: Quantitative Mineralogical Analysis of Composite Sample ............................................................................. 31
Table 13-5: Summary of Assay by Size of Low Grade Feed Head Samples ......................................................................... 32
Table 13-6: Summary of Assay by Size of High Grade Feed Head Samples ........................................................................ 33
Table 13-7: Results of Fines Removal by Screening ............................................................................................................ 35
Table 13-8: Masses of Granules Produced after Curing ...................................................................................................... 36
Table 13-9: Summary of Abrasion Strength on -4mm+1mm Granules Test Results ........................................................... 37
Table 13-10: Summary of Solubility Results on Granules and Un-granulated Samples ...................................................... 38
Table 14-1: Inferred Resources in Tarkint Est ..................................................................................................................... 39
Table 14-2: Inferred Resources in Tin Hina ......................................................................................................................... 39
Table 14-3: Inferred Resources, Alfatchafa ......................................................................................................................... 39
Table 16-1: Tilemsi Phosphate Project Tilemsi “Pitable Tonnage” Based on Selected Mining Areas ................................. 42
Table 16-2: Tilemsi Phosphate Project Mining Shifts and Annual Production Hours .......................................................... 44
Table 16-3: Tilemsi Phosphate Project Excavator Productivity ........................................................................................... 45
Table 16-4: Tilemsi Phosphate Project Excavator Productivity ........................................................................................... 46
Table 16-5: Tilemsi Phosphate Project Equipment Replacement Schedule ........................................................................ 47
Table 17-1: Phosphate rock specification ........................................................................................................................... 56
Table 17-2: NPK Grades ...................................................................................................................................................... 62
Table 17-3: NPK 15-15-15 ................................................................................................................................................... 63
Table 18-1: Tilemsi Phosphate Project Software and Hardware Costs ............................................................................... 64
Table 18-2: Plant Load Requirements Summary ................................................................................................................. 67
Table 18-3: Haulage Manning (Road Train Type A) ............................................................................................................ 75
Table 19-1: Population Projections (all variants) for West African Countries (2010-2050) ................................................ 77
Table 19-2: West Africa _Total agricultural area; area harvested; and area under permanent crops ............................... 79
Table 19-3: Average annual growth in cereal production in West Africa, 1980–2009 (%) ................................................. 79
Table 19-4: Main Crops Grown in West Africa, 2010 .......................................................................................................... 82
Table 19-5: West Africa Fertilizer Products Used on Various Crops .................................................................................... 82
Table 19-6: West Africa: Fertilizer Consumption, 2010 (nutrient tonnes) .......................................................................... 83
Table 19-7: West Africa: Main Fertilizer Products .............................................................................................................. 84
Table 19-8: Cotton Complex Formula in West Africa .......................................................................................................... 84
Table 19-9: Key actors and constraints in the fertilizer markets in West Africa ................................................................. 87
Table 19-10: Installed Fertilizer Production Units in Nigeria .............................................................................................. 88
Table 19-11: Major suppliers of fertilizer during 2008 and their market in Nigeria ........................................................... 89
Table 19-12: Phosphate Fertilizer Imports in West Africa, 2010 ........................................................................................ 90
Table 19-13: Monthly National Fertilizer Prices by Western African Countries (USD/tonne) ............................................. 92
Table 19-14: Fertilizer Prices (Retail) in Mali, JUNE 2012 (FCFA per 50-kg bag)................................................................. 93
Table 19-15: The Molar Ratio of Some West African PRs ................................................................................................... 98
Table 19-16: NAC Solubility................................................................................................................................................. 98
Table 19-17: Chemical Properties of Soils in Food Producing zones of Mali ..................................................................... 100
Table 19-18: Response of TPR in Different Locations and on Different Crops (yield kg/ha) ............................................. 103
Table 19-19: Compacted fertilizers made from TPR, KCl and Urea (1988) ....................................................................... 104
Table 19-20: Evaluation of annual effects of compacted fertilizers made from phosphate rock (1988) .......................... 104
Table 19-21: Effects of compaction .................................................................................................................................. 104
Table 19-22: Evaluation of annual effects compacted fertilizer (1989) ............................................................................ 105
Table 19-23: Agronomic effects of compacted materials ................................................................................................. 105
Table 19-24: West Africa P2O5 Demand Projections to 2020 and 2030 ............................................................................ 106
Table 19-25: Project Demand Projections to 2020 and 2030 ........................................................................................... 107
Table 19-26: Tanzania: Performance of Minjingu Mazao (MM) and DAP on Maize Grain Yield ...................................... 109
Table 19-27: GQ Market ................................................................................................................................................... 112
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15. 1 SUMMARY
1.1 Purpose
The purpose of this Preliminary Economic Assessment (“PEA”) report dated December 20, 2012, is to
validate the Tilemsi Phosphate Project (“Project” or “TPP”), Mali, and to demonstrate its potential economic
viability. The PEA is being filed by Great Quest Metals Ltd (“GQ”), a TSX Venture–listed company, in
compliance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“N.I. 43-101”).
The PEA has been completed in support of a Press Release dated December 18, 2012.
The PEA study considers the phosphate mine drilling program (2011), as well as the construction of
phosphate beneficiation and granulation plants and their associated infrastructure and utilities. Test work
was completed to prove two saleable medium- and high-grade phosphate products. In addition, the study
looked at the construction of four NPK blending plants in West Africa. As part of the study on mining,
beneficiation, granulation, and NPK blending, the investment costs (CAPEX) and operating costs (OPEX) were
prepared. This Technical Report incorporates all applicable data, interpretations, and conclusions that were
in hand at the time of preparing this report.
1.2 The Tilemsi Phosphate Project
The proposed TPP is a vertically integrated phosphate mining, beneficiation, granulation, and NPK fertilizer
blending project.
Tilemsi Phosphate Project
Mine Location in Northeastern Mali
The mine is located some 120 km north of Gao in northeastern Mali. It is planned to mine 200 kt/a
phosphates Run-of-Mine (ROM) from Year 1, increasing to 500 kt/a in Year 4 (Phase 1) and finally to 1 Mt/a
from Year 8 onwards (Phase 2). Based on the Inferred Resources, a life-of-mine (LOM) of at least 20 years is
assumed and projected in the proposed mining program prepared for this study. The deposit covers three
concessions, namely Tilemsi, Tarkint Est, and Aderfoul over a total area of 1,206 km2. GQ, through its
Tilemsi Phosphate Project – PEA Page | 1
16. subsidiaries, has an option to earn a 94% interest in the Tilemsi license (417 km2), an option to earn 97% of
the Tarkint Est license (589 km2), and wholly owns the Aderfoul license (200 km2).
As part of the TPP, GQ plans to construct phosphate beneficiation and granulation plants, along with their
associated infrastructure and utilities, near the city of Bourem on the Niger River in Mali, 95 km northwest
of Gao. Two saleable products—Hyperphosphate High Grade and Hyperphosphate Medium Grade—are
considered.
Further processing will be achieved at four planned bulk blending plants for manufacturing NPK fertilizers of
various grades. The proposed locations of these plants are Sikasso city, Mali; Cotonou Port, Benin; Dosso
city, Niger; and Tamale city, Ghana.
GQ’s head office is located in Vancouver, BC. The operations in Mali are coordinated from GQ’s wholly
owned subsidiary, Great Quest (Barbados) Ltd. The latter owns 100% of Great Quest Mali SA, which carries
out the exploration work in Mali. Great Quest Mali SA, owns 94% of Engrais Phosphates du Mali (“EPM”) SA.
The concessions Tarkint Est and Aderfoul are held in Great Quest Mali SA, whilst the Tilemsi concession is
held in EPM.
1.3 Geology and Mineralization
The geology, exploration, and mineral resource on which this PEA has been based is a 50 Mt Inferred
Resource at an average P2O5 grade of 24.3% and cutoff grade of 10%, which have been reported in full in the
NI 43-101 Technical Reports on the Tilemsi Phosphate Project authored by Jed Diner on behalf of GQ. These
reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August
23, 2012, and October 23, 2012, respectively. The resources are currently defined as Inferred due mainly to
the large spacing of drillholes (about 500 m separation).
The PEA is preliminary in nature as it includes Inferred Mineral Resources, which are considered too
speculative geologically to have the economic considerations applied to them that would enable them to be
categorized as Mineral Reserves. There is no certainty that the PEA will be realized, as Mineral Resources
Tilemsi Phosphate Project – PEA Page | 2
17. that are not Mineral Reserves do not demonstrate economic viability. As such, the information on which the
PEA work is based, and the accuracy of the PEA work itself, does not support the declaration of Mineral
Reserves. Therefore, no Mineral Reserves have been declared.
1.4 Mining
The mining study investigated extracting high-grade material, greater than 27% P205, for feed to a
beneficiation plant to upgrade the ROM phosphate material. An open pit resource of 15.8 Mt is conceptually
planned for the TPP based on mining the Tilemsi and Tarkint Est mining areas only. Waste stripping will
coincide with phosphate production with a strip ratio of 6.8:1. The open-pit design will be mined through
conventional truck and shovel mining methods applying a rollover technique, with phosphate removal being
followed by backfilling of overburden material and topsoil. No drilling or blasting activities are envisaged.
Tilemsi Phosphate Project
Open Pit Mineral Inventory”
Mining
Area Resource Grade Losses Dilution “Pitable Grade SR
Tonnage % P2O5 % % Tonnage” % P2O5
Tilemsi 8,367,000 27.3 2.5 2.5 8,362,000 26.6 6.4:1
Tarkint Est 7,444,000 29.1 2.5 2.5 7,440,000 28.4 7.24:1
Total 15,811,000 28.1 2.5 2.5 15,803,000 27.5 6.8:1
Initial mining capital expenditure for the TPP is estimated at USD23.4 million, which includes mine
equipment, fuel storage, generators, and a small village for mine workers. A further USD14.4 million is
required between Year 2 and Year 8 for further capital purchase to bring mining at Tilemsi to a steady state
rate of 1 Mt/a. In Year 13, USD15.9 million is required for the replacement of mining equipment and will be
used to mine the Tarkint Est area from Year 13 to Year 20.
The operating cost for TPP is between USD4.22 and USD12.72 per tonne phosphate material mined for
mining operations producing between 0.2 Mt/a and 1 Mt/a. Coffey Mining associates a low to moderate risk
to the mining activities pertaining to TPP. Many of the risks associated with the TPP should be mitigated as
the TPP advances to the next stage of advancement, i.e. Prefeasibility or Feasibility Study.
1.5 Beneficiation
A beneficiation study was prepared, based on laboratory mineral processing and metallurgy on the Tilemsi
rock, for the construction of a phosphate beneficiation plant and its associated infrastructure and utilities
along the Niger River, near Bourem in northeastern Mali. The plant will initially process 200 kt/a in the first
year and ramp up to 500 kt/a ROM from Years 4–7 and then increase to 1 Mt/a for the remainder of the
LOM. Two grades of phosphate rock (PR) concentrate will be produced—Medium Grade (MG) with
>27% P2O5 and High Grade (HG) with >35% P2O5.
The beneficiation capital expenditure, including contingency, has been estimated at USD72.2 million to an
accuracy of ±50% (Class 4 estimate). Sustaining capital is required over the 20-year project life and has been
estimated at USD37.4 million, of which USD12.2 million is required in Year 7 for the expansion to increase
throughput to 1 Mt/a.
Beneficiation operating costs have been estimated to level at USD44.15/t in Phase 1 (Years 1–7) and
USD31.27/t in Phase 2 (Year 8 onwards). The operating costs are largely influenced by the price at which
diesel can be sourced and a value of USD1.10 per litre has been used in this PEA.
Tilemsi Phosphate Project – PEA Page | 3
18. 1.6 Granulation
A study was done on the granulation of the Hyperphosphate Medium Grade (>27% P2O5) and
Hyperphosphate High Grade (>35% P2O5) products. The granulation project at Bourem consists of 300 kt/a
of phosphate granulation as a first stage, with an additional two lines of 300 kt/a each to be installed in Year
3 and Year 7, respectively, to meet the increased production requirements.
The operating cost for granulating one tonne of phosphate rock is estimated at approximately USD37.70/t
and the investment for the first granulation plant and related storage facilities is approximately
USD37.8 million. The power and drying costs required for granulating the phosphate rock contribute
approximately 70% of the total operating costs.
Each additional 300 kt/a capacity plant will cost approximately USD19.9 million.
1.7 NPK Blending
A study was done on constructing bulk blending plants to manufacture NPK fertilizers of various grades,
using raw materials like granulated phosphate rock, urea, potassium chloride (KCl), and micronutrients.
Four plants are foreseen, with 125 kt/a of blended NPK nominal capacity (design capacity of up to 300 kt/a)
for each. In Year 3, two plants will be constructed in Sikasso (south Mali) and in Cotonou Port on the sea
coast of Benin. In Year 7, two additional NPK plants will be constructed—one in Tamale in the north of
Ghana and the other in Dosso City, south of Niamey in Niger.
The operating cost for bulk blending one tonne of NPK (excluding raw materials) is estimated at
approximately USD1.92/t and the investment for the each NPK bulk blending plant and related storage
facilities is approximately USD5.3 million.
1.8 Project Infrastructure
A mining camp near the mine has been included for mine operations personnel. In addition, all utilities for
the camp and mine (power, water, and associated infrastructure) have been included.
The infrastructure required to support the beneficiation and granulation plants has been specified to suit
the 20-year project life. Infrastructure includes the required offices such as the mill office and administration
building, warehouse, workshops, laboratory, emergency services, and security. Access roads and perimeter
fencing have also been included. Due to the remote nature of TPP, an accommodation village has been
allowed for on the outskirts of Bourem. The village includes a kitchen, dining hall, and sporting and
recreational facilities.
Utilities including power, water, compressed air, and fuel will be provided to service the beneficiation and
granulation plants and their associated infrastructure. Diesel generating units will be installed to provide
power, and diesel storage tanks will supply diesel to the generators, rotary driers, and heavy vehicles. Light
vehicles will be refueled from a petrol storage tank. All water for the beneficiation and granulation plants
will be supplied from the Niger River, with a reverse osmosis (RO) plant installed to treat the raw water from
the river for use as potable water. A compressed air station will provide plant air and instrument air as
required.
As part of community development, the construction of a school and clinic in Bourem has been provided for,
along with supply of the necessary power and potable water for these buildings with an allowance for public
services within the village.
A tailings storage facility (TSF) will be constructed in a phased approach to minimize the upfront capital
investment. It has been proposed that six cells are constructed over the 20-year life of the plant to
accommodate the 1.5 million cubic meters of tailings from the beneficiation plant.
Tilemsi Phosphate Project – PEA Page | 4
19. 1.9 Marketing
United Nations population medium variant projection indicates that West Africa’s population will increase at
an annual rate of 2.5% from 304 million in 2010 to 442 million in 2025 and at 2% per annum thereafter to
744 million in 2050. This growth requires that food and fibre production be increased at an annual rate of
4-6%.
Such population growth, along with increased per capita income and global and local commitments to
reduce poverty and hunger, is driving governments and other stakeholders to seek key strategies that will
ensure food security while supporting sustainable agriculture. Members of the Economic Community of
West African States (ECOWAS) have committed under the Abuja Declaration to increase fertilizer use to
50 kg/ha from current levels of less than 2 kg/ha.
P205 demand is projected to increase from 184,000 t in 2010 to 287,000 t in 2020 and 430,000 t in 2030.
However, based on Abuja Declaration targets, potential but realizable requirements of phosphate fertilizers
will be approximately 537,000 t of P2O5 in 2020 and over one million tonnes of P2O5 in 2030. Recognizing
that increased fertilizer use is essential for preventing nutrient depletion and soil degradation, many West
African governments already promote fertilizer use, including through the use of subsidies.
GG should be able to capture 30% (in 2020) and 40% (in 2030) of the market share. Assuming that 20% of
the market will be targeted with granulated Tilemsi Hyperphosphate product and 80% with NPKs (15-15-15
is taken as a base) based on this granulated product and imported urea and potash, then the size of the
market for GQ will be as follows:
Projected GQ Market Size for Mali PEA
Realizable Market GQ Total share GTPR - avg. 30% NPKs 15% P2O5
(tonne P2O5) P2O5
(tonne P2O5) (80% share)
(20% share)
2020 537,000 161,100 107,400 859,200
2030 1,040,000 416,000 277,300 2,218,700
GQ’s marketing strategy will be based on the production of a local phosphate product that is suitable as a
direct application fertilizer or as a component of blended NPK fertilizers at a price that can displace more
costly imported fertilizers. Additionally, a local source of phosphate reduces foreign exchange and offers
timely delivery to farmers.
An appropriate strategy will be based on agro-dealer-based extension and promotional efforts and will
include agronomic trials, seeding programs, partnerships with stakeholders (i.e regulation), and investments
in downstream distribution opportunities.
1.10 Logistics
Logistics is one of the most critical issues for TPP, due to the large distances from the mine and
beneficiation/granulation plants to the various West African markets and sea ports.
Haulage costs vary between approximately USD70/t for distances of 800 km to approximately USD180/t for
distances up to 2,000 km. These costs include added costs of approximately 40% for customs, taxes,
insurance etc. The average haulage costs calculated for granulated product to market are approximately
USD82/t and for delivery to NPK blending plants approximately USD92/t. Taking into account the tonnage
and distances to the market and to the NPK blending plants, the calculated haulage cost corresponds to an
average price per tonne per kilometre of USD0.083. The Malian Ministry of Equipment and Transport
reported in its 2010 Transport Statistical Yearbook that the average price per ton per kilometre is between
32 and 36F CFA/t/km, which corresponds to 0.064 and 0.072 USD/t/km.
Tilemsi Phosphate Project – PEA Page | 5
20. 1.11 Fertilizer Prices
As most countries depend on imported fertilizers, fluctuations in global fertilizer prices are reflected in
domestic prices, which are also impacted by fluctuations in exchange rates. In addition, transportation costs,
port handling charges, and domestic marketing costs contribute significantly to retail prices.
The prices (KCl & Urea) shown in the table below are the current world prices adjusted for West Africa and
current sales prices in West Africa. The model uses current prices, while the sensitivity to potential lower
world prices is reflected in the economic sensitivity analysis. The price for granulated rock is adjusted for the
grade of P2O5.
Fertilizer Prices for Mali PEA
DESCRIPTION PRICE ADD-ON COSTS ESTIMATED TOTAL
(USD FOB) (USD) (USD)
KCl 465 210 675
Urea 367 147 514
MG Granulated Hyperphosphate (27% P2O5) 262
HG Granulated Hyperphosphate (35% P2O5) 350
NPK Bulk Blend 661
1.12 Economics
An economic analysis on the conceptual engineering design and costing was performed by generating a
basic discounted cash flow. This cash flow used costs in current terms (fourth quarter 2012); no escalations
to costs over time, taxes, or royalties were applied. This approach was considered appropriate for the
conceptual levels of work undertaken. The purpose of undertaking this evaluation was to determine the
economic potential of the TPP and to motivate further work if appropriate.
The total Capital Expenditure (CAPEX) required for the first two years of Project construction is
approximately USD155.7 million (USD143 million in construction costs and USD13 million for feasibility
studies and initial project development). It is assumed that a mix of debt and equity on a 60/40 debt/equity
ratio shall be used to fund the total financing requirement for the construction phase and that project
operating cash will fund the additional investments.
CAPEX during construction (initial CAPEX) and operation (development and maintenance CAPEX) are shown
in the table below.
CAPEX for TPP
NPK
(IN $000) MINING BENEFICIATION GRANULATION FACILITIES OTHER TOTAL
Initial CAPEX 23,455 72,731 37,832 - 21,683 155,701
Development CAPEX 5,648 16,344 39,869 21,090 - 82,951
Maintenance CAPEX 27,902 21,038 - - 2,900 51,840
The results of the basic economic analysis undertaken are shown below:
TPP
PROJECT IRR: 33.1%
NPV @10%: USD635 M
PAYBACK @10%: 4.23 years
Tilemsi Phosphate Project – PEA Page | 6
21. Debt and equity financing costs including political risk insurance premium are estimated at USD28.3 M.
EQUITY
40 % Equity Financing - Total required equity of USD71.3 M (See Table
22-3 below)
EQUITY IRR: 42.9%
NPV @10%: USD635 M
PAYBACK @10%: 3.93 years
The cash flow pro-forma statement starts with two years of construction followed by 20 years of operation.
During the first year of construction (2014), 40% of the equity and debt is spent and the balance of 60% is
spent during the second construction year. The TPP is cash positive from the first year of operation and
accumulates over the project life more than USD2.8 billion.
In the case of using a 60% financing package, the TPP is consecutively cash positive from the fourth year of
operation and accumulates over the project life more than USD2.6 billion.
Additionally, the statement clearly shows that the TPP is profitable from the third operating year, with the
gross margin after the first three years being more than 29% and remaining at approximately 35% gross
margin for the following years.
1.13 Major Conclusions and Recommendations
Based on the work undertaken, the following strongly support the potential viability for the TPP:
(i) The economic results for TPP are excellent, especially for a large mining infrastructure project,
indicating an economically significant resource.
(ii) The sensitivity analysis also shows good results, even when making extreme assumptions.
(iii) The results of the PEA strongly support the potential of a viable mine at Tilemsi, commencing
production of 200 kt/a phosphates building to 500 kt/a by Year 4 and to 1 Mt/a by Year 8 with a
20-year LOM.
(iv) Landlocked countries like Mali and other West African countries pay large sums for supply chain
components, such as in-transit transportation from port to national markets, port handling
charges, production, and financing. Facilities like those proposed for TPP, near these markets,
offer added advantages in reducing prices and promoting timely delivery of quality fertilizers to
farmers.
(v) The current level of fertilizer use in West Africa is very low. With the population set to double
over the next four decades, a several-fold increase in fertilizer use will be needed to secure
future food requirements. Under the Abuja Declaration target, phosphate fertilizer use will have
to be increased from 184,000 t of P2O5 in 2010 to 1,792,000 t in 2020 and 2,079,000 t in 2030
according to demand projections. The realizable potential will still be 537,000 t in 2020 and over
one million tonnes in 2030.
(vi) An appropriate strategy for marketing the TPP future production will be required. An
appropriate strategy will be based on agro-dealer-based extension and promotional efforts and
will include agronomic trials, seeding programs, partnerships with stakeholders (i.e. regulation),
and investments in downstream distribution opportunities.
(vii) Further exploration drilling to both indicated and measured levels should be done with aircore
drills.
Tilemsi Phosphate Project – PEA Page | 7
22. (viii) Power costs (the PEA assumes the use of diesel generators) are a major factor in the operating
costs; alternative, cheaper sources should be investigated.
(ix) Logistics is one of the most critical issues for TPP due to the large distances from the mine and
beneficiation/granulation plants to the various West African markets and sea ports.
(x) A detailed feasibility study is required to bring TPP to bankable level.
(xi) A social and environmental impact study is required.
Tilemsi Phosphate Project – PEA Page | 8
23. 2 INTRODUCTION
Gaya Resources Development Ltd (“Gaya”), a team of experts specializing in the phosphate, mining, and
minerals industries, and Jed Diner M.Sc., P.Geol. were retained by Great Quest Metals Ltd. to prepare a PEA
and Resource Estimate, respectively, for the Tilemsi Phosphate Project (TPP) in Mali. Jed Diner is identified
as the Qualified Person for this PEA.
The PEA study considers mine development; the construction of phosphate beneficiation and granulation
plants and their associated infrastructure and utilities in the city of Bourem on the Niger River in Mali, 95 km
north of Gao; the production of two saleable products—Hyperphosphate High Grade and Hyperphosphate
Medium Grade; and the construction of four NPK blending plants in West Africa as illustrated in Map 2-1. As
part of the study on mining, beneficiation, granulation, and NPK blending, the investment costs (CAPEX) and
operating costs (OPEX) were prepared. No site visits took place during the PEA study and all the work was
done as a desktop study only, based on the various consultants’ experience in designing and building similar
plants. Similarly, the logistics and marketing of the various products in West Africa were investigated.
The purpose of the PEA is to demonstrate the economic potential of the TPP and to motivate, if appropriate,
further detailed work. The PEA has been completed in support of a Press Release dated December 18, 2012.
The report has been prepared in accordance with the guidelines of the NI 43-101 and complies with the NI
43-101.
The TPP covers three licenses—Tilemsi, Tarkint Est, and Aderfoul. GQ is a publicly traded company on the
TSX-Venture and, through its subsidiaries in Mali, has an option to earn a 94% interest in the Tilemsi license,
has an option to earn 97% of the Tarkint Est, and owns the Aderfoul license. All three licenses together make
up the TPP, which is situated around 120 km north of Gao, a city located on the Niger River in northeastern
Mali.
The proposed TPP is a vertically integrated phosphate mining, beneficiation, granulation, and NPK blending
project. The mine is located some 120 km north of Gao in northeastern Mali. It is planned to mine 200 kt/a
phosphates ROM from Year 1, increasing production annually by 100 kt to meet a goal of 500 kt/a by Year 4
(Phase 1) and finally to 1 Mt/a from Year 8 onwards (Phase 2). Currently a life-of-mine (LOM) of at least 20
years has been assumed based on this mining program.
The phosphate rock (PR) will be beneficiated in a new facility for the processing of sedimentary phosphate
ore for the production of:
Hyperphosphate Medium Grade >27% P2O5
Hyperphosphate High Grade >35% P2O5
The phosphate concentrate will then be granulated and sold either as a direct application fertilizer to existing
NPK blenders or for use in four new NPK blending plants to be constructed in West Africa by GQ.
The beneficiation and phosphate granulation plants will be situated near the Niger River at Bourem, which is
some 95 km from the mine. Bourem was chosen for three main reasons: it is the closest large town to the
mine; its proximity to the Niger River provides water access for the plants; and it offers infrastructure such
as paved roads and electricity supply from the national grid.
The granulated phosphate rock will be sold in West Africa, either for use as a direct application fertilizer or
as input to existing independent NPK bulk blenders. GQ plans to establish four new NPK bulk blending plants
at Sikasso in Mali, Cotonou Port on the coast of Benin, Tamale in northern Ghana, and Dosso City south of
Niamey in Niger.
Tilemsi Phosphate Project – PEA Page | 9
24. Map 2-1: Map showing the Tilemsi mine site, the Bourem beneficiation site, and four propsed NPK Blending Facilities
The proposed structure for the various phases of the TPP is shown in Figures 2-1, 2-2, and 2-3.
Tilemsi Phosphate Project – PEA Page | 10
25. Figure 2.1: TPP Production Plan—Initial Development Phase
Tilemsi Phosphate Project – PEA Page | 11
26. Figure 2.2: TPP Production Plan—Intermediate Development Phase
Tilemsi Phosphate Project – PEA Page | 12
27. Figure 2.3: TPP Production Plan—Final Development Phase
Tilemsi Phosphate Project – PEA Page | 13
28. 3 RELIANCE ON OTHER EXPERTS
The mining study was subcontracted to Coffey Mining, RSA, an international mining consultancy firm with
over 50 years’ experience in the business; the beneficiation to GBM Minerals Engineering Consultants, UK,
an independent engineering consultancy providing engineering services to the mining and minerals industry;
and the granulation and NPK blending to CFI holding (CFIh), France, an engineering company specializing in
the fields of fertilizers, explosives, chemicals, and crystallization/evaporation processes. The market report
was prepared by policy and trade specialist Dr. Balu Bumb of BLB Associates, Florence, Alabama, USA,
formerly Program Leader of the Policy, Trade and Markets Program at the International Fertilizer
Development Center (IFDC). A West African logistics study was also carried out by Bolloré Africa Logistics,
and Mintek of South Africa carried out the laboratory and metallurgy tests.
The Qualified Person (QP) has relied upon experts, as listed in section 2, and upon GQ for information
pertaining to ownership and status of the Property, the relevant permitting requirements, and the legal and
financial liabilities pertaining to the Property and potential sites for the various plants. The writer has not
independently verified the accuracy of this information.
Gaya and the PEA Consultants have followed standard professional procedures in preparing the contents of
this report. Data used in this report have been verified where possible and the writers have no reason to
believe that the data were not collected in a professional manner.
Technical data provided by GQ for use in this report are the result of work conducted by GQ professional
staff.
Other sources of information used in this report are listed in the References or elsewhere in the text of the
report.
Tilemsi Phosphate Project – PEA Page | 14
29. 4 PROPERTY DESCRIPTION AND LOCATION
The information in this section has been obtained from the NI 43-101 Technical Reports on the Tilemsi
Phosphate Project authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25,
2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012,
respectively. The information has not been reproduced in full and the reader is referred to the above
reports for full details.
The TPP comprises the contiguous Tilemsi , Tarkint Est, and Aderfoul licenses and covers a land package of
around 1,206 km2. The Tilemsi license hosts the two target areas of the 2011 drilling campaign namely Tin
Hina and Alfatchafa, while the Tarkint Est license hosts the three target areas of the late 2011 drilling
campaign.
Map 4-1: Location of Tilemsi Phosphate Project, West Afica
Source: Google Earth
Tilemsi Phosphate Project – PEA Page | 15
