Marrying
Resource and Processing
Asmara Mining Conference 2014
1 October 2014Mark Chesher

Marrying resource and process

www.amcconsultants.com

2

The professional circle
Geologygy

Metallurgygy

Miningg

Enviro /Socialwww.amcconsultants.com

Engineeringgg

Project
ProposalFinancial3Topics for today• Reporting Standards• The planning cycle• How geology data is used
• 3D modellingd lli• Some examples
www.amcconsultants.com

4Reporting Standards - Resources
A ‘Mineral Resource’ is a concentration or occurrence ofsolid material of economic interest in or on the Earth’s
Earth scrust in such form, grade (or quality), and quantity that
there are reasonable prospects for eventual economic
extraction.
t ti
TheTh location,ltiquantity,
tit graded (or( quality),
lit )continuity and other geological characteristics of a
Mineral Resource are known, estimated or interpretedpfrom specific geological evidence and knowledge,
including sampling.
JORC 2012www.amcconsultants.com

5Reporting Standards – Why have them?
1. There were notable frauds
2. Non performanceStandards now linked to the listing rules of several stock
markets around the world – so we have to take notice.

www.amcconsultants.com

6Topics for today• Reporting Standards• The planning cycle• How geology data is used
• 3D modellingd lli• Some examples
www.amcconsultants.com

7

The Planning Cycle
RELATIVE STUDY COSTX

5X - 10X

25X - 100X

Improving Confidence
www.amcconsultants.com

8

The Planning Cycle – Study Manager
1. Ensure material risks to the project are identified early
2 Project
2.
P j t scope andd schedule
h d l should
h ld bbe comprehensivehiand well managed
3 Avoid rework3.
4. Progressively improve the confidence in the outcomes
5. Ultimately

Minimize study cost for an optimal result
www.amcconsultants.com

9Why Do Feasibility Studies Fail?

Mill Throughput (% of Designn)

A study of the start-up performance of nine Australian
underground base metal mines found that only 50%
achie ed design throachievedthroughput
ghp t bby Year 3 and 25% nenevererachieved it at all.
120%
100%
80%
60%

Base Metal Mine Start-ups

40%
20%

McCarthy and Ward 1999

0%
1

2

3

4

5

6

7

8

9

Year Since Start Up

www.amcconsultants.com

10Why Do Feasibility Studies Fail?
SECOND STUDY WITH 56 MINES ANNOUNCED 1988/89
ONLY 20% EXCEED EXPECTATIONS; 25% FAILED

Area of Problem

Frequency

Geology, resource and reserve estimation
Geotechnical analysis
Mine design and scheduling
Mining equipment selection
Metallurgical test work, sampling and scale-up
Process plant equipment design and selection
Cost estimation
Hydrology

17%
9%
32%
4%
15%
12%
7%
4%

www.amcconsultants.com

11Why Do Feasibility Studies Fail?
Geology,gy resources & reserves estimation
 Inadequate attention to local variability
 Inadequate attention to dilution and ore loss
 Statistics & modelling override common sense.
Metallurgical test-work, sampling and scale up Metallurgical domains not understood.
 TestingT ti donedon unrepresentative
t ti compositesit Failure to identify process contaminants
 Inability to handle ore types as per mining schedule Process water chemistry differs with laboratory
www.amcconsultants.com

12Why Do Feasibility Studies Fail?

A review of nearly 50 North American projects showedthat only 10% achieved their commercial aims with 38%
failing within about one year
(Harquail, 1991).

www.amcconsultants.com

13

Why Do Feasibility Studies Fail?
In the 1980s, a study of 35 Australian gold mines foundthat 68% failed to deliver the planned head grade(Burmeister, 1988)

IIn theth 1970s,
1970 a studyt d forf theth World
W ld BankB k showedhd thatth t inithe first year of operation after commissioning, 60% of
the mines and 70% of the treatment p
plants surveyedyachieved a production rate of less than 70% of design
capacity.

www.amcconsultants.com

14

Topics for today• Reporting Standards• The planning cycle• How geology data is used
• 3D modellingd lli• Some examples
www.amcconsultants.com

15

What to collect and how is it used?
The Concept Study:a. Generally supports the request for additional fundingb. Prepares for PFS stage where leverage is greatest forprocess flowsheet and value optimisationc. Often involves non-development professionals (as thefunding
g is not yyet assured))d. Can be a lonely place for a geologist. But all you needto do is seek some help from those who have been
th
there
b
beforef
www.amcconsultants.com

16

What to collect and how is it used?
•
•
•
•
•
•
•
•
•

Economic element analysis (grade)
Deleterio s element anal
Deleterious
analysissis (S(S, F,F As,
As Hg
Hg, etc)
Lithology
Alteration
Weathering/Oxidation (Ox, Pox, Primary)
Mineralogy
gy including
gg
gangueg minerals
Grain size and texture
Rock strength, hardness and breakage
Water levels and quality

www.amcconsultants.com

17What to collect and how is it used?

www.amcconsultants.com

18

What to collect and how is it used?
Metallurgical Testing:• Comminution
behaviour• Metallurgicalresponses• Smeltercharacteristics• Throughput andrecoveryrelationships
www.amcconsultants.com

Metallurgical data needs:• Reagent consumption• Throughput rates by
Ore Type• Deleterious minerals by
Ore type• Product
P d t recovery byb
Ore Type

19

What to collect and how is it used?
Mining Interest:
•
•
•
•
•

Hardness
Fragmentation
Diesel / power
Sulphur - ARD
Water table

www.amcconsultants.com

Geotechnical Interest:
•
•
•
•
•

Rock
R
k strengthtthRock hardness
Rock breakage
Structure
Fracture count20

What to collect and how is it used?
P t ti l tto exclude
Potential
l d coarse fractionftiPotential to reduce fine fractionwww.amcconsultants.com

21

What to collect and how is it used?

www.amcconsultants.com

22

What to collect and how is it used?

www.amcconsultants.com

23

What to collect and how is it used?

www.amcconsultants.com

24What to collect and how is it used?

www.amcconsultants.com

25What to collect and how is it used?
1. Factors need to be assessed at some time
2. Initial transition between exploration and development
3. Get some data early and then rely on people who have
b
been
th
there bbefore.
f
4. Without some initial tests the process considerations will
go straight to the top of risk list

www.amcconsultants.com

26

Topics for today• Reporting Standards• The planning cycle• How geology data is used

• 3D modelling• Some examples
www.amcconsultants.com

27

Resource modelling - Considerations
1. Try to get into 3D as soon as possible.
2. Processing parameters also vary within a deposit.
3. Models for process considerations just as important as
resource models.
d l
4. Include assessment of all waste materials likely to fallwithin the pit

www.amcconsultants.com

28

Resource modelling – how much data?
1. Possible to create block models with limited data
2. Use sensitivity to provide limits on the outcomes
3. Use simulation methods to populate from limited data

www.amcconsultants.com

29

Resource modelling - Gradewww.amcconsultants.com

30

Resource modelling – Rock Typewww.amcconsultants.com

31

Resource modelling - Weatheringwww.amcconsultants.com

32

Resource modelling - Hardness

www.amcconsultants.com

33

Resource modelling - Value

www.amcconsultants.com

34

Resource modelling - Strategy
Hill of Value Concept:

www.amcconsultants.com•

Iterative process•

Assess multiple options•

Focus on costs•

Across all disciplines

35Resource modelling - PAF

www.amcconsultants.com

36

Topics for today• Reporting Standards• The planning cycle• How geology data is used
• 3D modellingd lli• Some examples
www.amcconsultants.com

37

Examples of what can go wrong?
Some notable disasters from Australia
a. Mt Todd Gold Mine (still closed)b. Beenup Mineral Sands Mine (still closed)c. Bulong Nickel Cobalt Mine (running with mods)d. Ravensthorpe Nickel Cobalt Mine (running with mods)e. Port Hedland hot briquetted iron plant (still closed)www.amcconsultants.com

38

Examples of successful marriages
Colluli Potash Project• Had a false start and returned to Scoping level• Involved mining and processing at scoping study• Mine and strategic planning done several times already• Direction for current drilling set by results• Aim to mitigate all material risks at PFS• Goal to report a resource and reservewww.amcconsultants.com

39Conclusions
1 Geologist
1.
G l i t / metallurgist
t ll i t relationshipl ti
hi iis one off many
2. Involve all professions early to find threats / opportunities
3. Gather a variety of early data wherever possible
4. Use Scoping Study to define data needed for PFS
5. PFS cost < FS cost – get the data to get PFS right
6. Study Manager needs to know studies not just management
7. We can model anything
8. Get into 3D as soon as possible
9. Think about waste as well as ore
www.amcconsultants.com

40

So why am I here??

www.amcconsultants.com

41

The State of the Mining Industry

Tim Williams
With apologies and thanks to SP Angel, Reuters, Bloomberg and many others

The Imageg of Miningg

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

1968

1966

1964

1962

1960

1958

1956

1954

World Population (millions)

8000

7000

6000

5000

4000

3000

2000

1000

0

World GDP (Gross Domestic Product)
A measure of global wealth

$bn
80000

70000

60000

50000

40000

30000

20000

10000

0

Source: World Bank

World GDP per person

GDP per capita (constant 2005 US$)
2003

World

2004

2005

2006

2007

2008

2009

2010

2011

2012

8,257 8,557 8,832 9,174 9,541 9,669 9,487 9,848 10,102 10,282

Source: Bloomberg

Standard & Poor S&P 500 Index

Source: Bloomberg

Mining Industry Characteristics: Structural• Hazardous ‐ safety• Primary industry• Energy intensive• Immobilebil• Wasting assets – ore depletion• Environmental impact• Remote locations• Infrastructure dependentp• Water
The goose that lays the golden eggs?
• Skilled labour

The State of the Mining Industry• Good!
– World population is steadily growing– China is industrialising– Global per capita GDP is increasing– The mining industry is generously providing for the needsof the world– Mining generates great benefits for the producing
countries and their people– Long term projections of most commodities predict better
prices– Producing mining companies are (mostly) doing well
– The current slight problems are only cyclical features

The State of the Mining Industry• Bad!
– Stock markets have lost confidence in the industryy– Investors are fed up with the inefficiencies of the “junior”
exploration companies:
high overheads with low quality projects– Investors are angry at the waste of money by the “major”
mining companies :terrible acquisitions,acquisitions and overproduction– Credit squeeze is hitting new mining very hard
– Exploration model has collapsed:“f d and“findd sell”
ll” – butb thereh
are no buyers!
b!
– The “gold mining premium” has disappeared– But cheer up
p it could be worse: “It’s lookingg better”

Mining bad, mineral exploration worse

Mineral projects are looking badMineral Explorationp
is very,y veryy depressedpMiningg Industryy Characteristics: Financial– Capital intensive: access to sufficient capital– Very long lead times• Discount rates don’t
d ’ seem to workk properlyl– Price‐takers not price‐makers (mostly): some can be hedged out– Highly cyclical supply/demand balances• Normal business cycle• Mining manias/despairs– Price risks from• substitution• recycling• thrifting– Cost risks from• Depletion• Input costs – labour, energy, steel, equipment– Price and market risks due to technological advances– ResourceRnationalismtiliStructure of the industryy• “Majors”– Big diversified mining companies– Commodity specific mining companies• Mid‐Tier producers• Developersp– Typically single project• Exploration– Listed “Juniors”
Juniors» TSX‐V Toronto Venture Exchange» ASX Australian Stock Exchange» AIM London Stock Exchangeg» JSE
Johannesburg Stock Exchange– Private companies – Private capitalCopperpp

World copper production since 1900

Copperpp pprice ‐ longg term.
700
600

USc/lb

500
400
300
200
100
0

NominalReal Price
18

GOLD

Gold Price 1920
1920‐20132013

Source: Bloomberg

Gold pprice up:p gold
g
grade
g
down

Not much new ggold beingg discovered

So what does it all mean…#1• Parkinson’s Law:
– Work expands to fill the time available.
available• Tim’s Law:
– Mining costs expand to fill the revenue available.

So what does it all mean…#2• Warren Buffet:– When the tide goes out we find out who has beenswimming naked.

• Tim:– Whenh the
h metall pricei ffalls
ll we fifind
d out whoh hhasbeen mining the market.

Free Advice: How to get zero mine tax
• 1.
1 Set
S mining
i i tax at 0%• 2. Set mining tax at 100%

B tt toBettert findfi d theth right
i ht level?
l l?

How to encourage a mining industry(full disclosure: by an interested party )• Have a clear and fair mining
code and obey it• Look after that goose• Don
Don’tt tax exploration!

Thank you

2014 BISHA MINING EXPLORATIONAn OVERVIEWO
Asmara Mining Conference
October 1st, 2014

Rob Foy
BMSC Exploration Manager“Everyone going home safe and healthy everyday”

FORWARD LOOKING STATEMENTS

This Presentation contains forward-looking
forward looking statements within the meaningof the United States Private Securities Litigation Reform Act of 1995 andapplicable Canadian securities legislation concerning anticipateddevelopments on t he Company' s continuing and future operations in
Eritrea, the adequacy of the Company’s financial resources and financial
projections. Forward-looking statements include, but are not limited to,statements concerning or the assumptions related to estimates of capitaland operating costs,
costs the timing,
timing nature and extent of future copper,
copper zincand gold production, expanding exploration licenses, the estimation ofmineral res erves and r esources, methodologie s and models used t oprepare resource and reserve estimates, the realization of mineral reserve
estimates, the conversion of mineral properties to reserves and resources,
the potential to expand resources, reserves and mine life,
future exploration budgets, plans, targets and work programs, capital
expenditures and objectives, anticipated timing of grant of permits, mining
and development plans and activities, construction and production targets
and timetables, grades, processing rates, life of mine, net cash flows, metal
prices, exchange rates, reclamation costs, r esults of drill programs,
dividend plans and policy, litigation matters, integration or expansion ofoperations, requirements for additional capital, government regulation ofmining operations, environmental risks, political risks and uncertainties,
unanticipatedpreclamation expenses,p, and other events or conditions that
may occur in the future. Forward-looking statements are frequently, but
not always, identified by words such as "expects," "anticipates," "believes,“"intends," "estimated," "potential," "possible", "budget" and similar
expressions, or statements that events, conditions or results "will," "may,“"could" or "should" occur or be achieved. Information concerning theiinterpretationtt ti
off drill
d ill results
lt andd mineralil resource andd mineralil reserve
estimates also may be deemed to be forward-looking statements, as suchinformation constitutes a prediction of what mineralization might be foundto be present if and when a project is actually developed, and in the caseof mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically
exploited.
Forward-looking statements are statements about the future and are
inherently uncertain, and actual achievements of the Company or otherfuture events or conditions may differ materially from those reflected in theforward-looking statements due to a variety of risks, uncertainties andother factors. Although the Company has attempted to identify importantfactors that could cause actual results to differ materially from thosecontained in forward-looking statements,
statements there may be other factors thatcause results not to be as anticipated, estimated or intended. The
Company’s
forward-looking
statements
are
based
on
the
beliefs, expectations and opinions of management on the date thestatements are made and the Company assumes no obligation to updatesuch forward-looking statements in the future, except as required by law.
There can be no assurance that such statements will prove to beaccurate, as actual results and future events could differ materially fromthose anticipated in such statements. For the reasons set forth
above, investors should not place undue reliance on forward-looking
statements.
Please see the Company’s Annual Information Form and Management
Discussion and Analysis of BMSC for a more complete discussion of therisk factors associated with our business which have been filed with
Canadian securities regulators and are available at www.sedar.com, whichhave also been filed or submitted to the U.S. Securities and Exchange
Commission on Form 40-F or Form 6-K and are available at www.sec.gov.

“Everyone going home safe and healthy everyday”

LOCATION MAP

150km W of Asmara - 232km by road

Gash – Barka District - Western Nakfa Terrain“Everyone going home safe and healthy everyday”

PROPERTY MAP“Everyone going home safe and healthy everyday”

EXPLORATION HISTORY

Geol.
Mapping

Streams
Soils

1999

X

X

2002

X

Bisha Main Recognized

2003

X

X

Mogoraib River Exploration License Granted (Sanu)

2004

X

X

Hambok

2005

X

2006

X

2007

X

Ophir Ventures ‐ Regional Grassroots Exploration

1996

Nevsun Granted Exploration License

1998

Bisha Main Feasibility Study Completed

AEM

HLEM

TEM

MAG

DDH
Exploration

DDH
Total

6

6

X

140

140

X

163

312

X

105

453

68

519

16

16

7

7

X

17

17

X

15

54

12

172

33

138

35

133

100
717

100
2067

Gravity

X

X

X

X

X

X
X

X

X

X

X
X

2008
2009
Harena2010

Harena2011

Bisha Main First Production

2012

Northwest

2013
2014

X

X

X

IP

X

X

“Everyone going home safe and healthy everyday”

2014 EXPLORATION – QUICK FACTS• 2014 Exploration now Stand-alone Department• Strong Support from BMSC Board• USD $
$9.0Mn Budgetg• Properties have “critical mass of data”• Drillingg - ~ 10000 diamondd a o d drill
d holeo• Geophysics – airborne, ground, borehole EM• Targets – greenfields, brownfields, near Mine, Deposit extension• 2014 – successes at Aderat and Harena“Everyone going home safe and healthy everyday”

2014 EXPLORATION – AIRBORNE GEOPHYSICS

Bisha Property
NW Deposit

2014 AEM VTEM Survey
EM Ch 36 coloured
Showing previous drilling

Bisha
Pit

6.5km

“Everyone going home safe and healthy everyday”

2014 EXPLORATION –GROUND and BOREHOLE GEOPHYSICS
Setting up Transmitter

In-Hole Responses

Taking Readings

Off-Hole

Crone Geophysics
P l EM (S
Pulse(Sept 2014)

Response“Everyone going home safe and healthy everyday”

2014 EXPLORATION – LITHOGEOCHEMISTRY

maficsdykes
felsicsFW
Na-depletion“Everyone going home safe and healthy everyday”

2014 EXPLORATION – LITHOGEOCHEMISTRY

Alteration Box Plot ‐ all Harena Felsics
100

Chlorite‐Carbbonate‐Pyrite Index (CCPI)

90
80
70
60
50
40
30
20
10
0
0

20

40

60

Isikawa Alteration Index (AI)

80

100

Harena Felsics exhibit strong Chlorite-pyrite-(sericite) alteration“Everyone going home safe and healthy everyday”

2014 EXPLORATION – DIAMOND DRILLING
2014 Drilling• 25,000m, > 100 holes• Variety of targets at Bisha, Harena, Mogoraib River EL• Variety of target types• Work will continue into 2015

Drilling massive sulphides at Harena (July 2014)

Drilling at Aderat (June 2014)“Everyone going home safe and healthy everyday”

ADERAT – MOGORAIB RIVER EL

Aderat – Sanu Resources• Located 4km N of the Hambok Deposit• 2008-09 Discovered and Drilled by Sanu Resources• DDH ANK-006 ((Sanu,, 2009)) hit 27m intersection• Grades up to 12.8% Zn, 2.6% Cu, 2.4% Au• ~15% sulphide – High Metal Tenor system

Aderat – BMSC 2014
• Follow-up drilling to ANK-006• Extended Zone up-dip, down-dip, along strike• With similar results• Will continue drilling after surface Geophysics

IP Metal Factor“Everyone going home safe and healthy everyday”

ADERAT SECTION L5000mN“Everyone going home safe and healthy everyday”

ADERAT– DDH MX‐012“Everyone going home safe and healthy everyday”

HARENA – 2014 DRILLING

Harena – Previous Work• located 10km from processing plant• Previous drilling focused on defining the
Oxide Gold Reserve• 2011-12 – Mining Oxide Gold
• No Footwall drilling• No Step-out drilling• little Exploration drilling

DDH Drilling at Harena (June 2014)“Everyone going home safe and healthy everyday”

HARENA ‐ DRILL PLAN
Previous drilling focused on defining Oxide Au Reserve -- little Exploration drilling
Harena 2014 – Initial Targets: drilled under the Pit“Everyone going home safe and healthy everyday”

HARENA DRILLING – starts Monday April 28th

P‐160
‐65

FOLLOW_UP DRILLING
Harena 2014 program is 2300m
Initial 4‐5 holes are designed to extend thedeposit down‐dip.

250m“Everyone going home safe and healthy everyday”

HARENA SECTION L5950mN – May 2014
W

HX-005E
HARENA PITHARENADEPOSIT(wireframe)

H-041
MS / 0.75m
Highly altered FW

HX-005
MS sph-cpy / 14m
Includes 3.7m of stringer sulphides

1.77% Cu – 3.99% Zn
1.22g/t Au – 78g/t Ag / 18.5m

HX-011 (P-175)
0.75% Cu – 5.18% Zn
0.4 g/t Au – 43g/t Ag / 21.5m“Everyone going home safe and healthy everyday”

HARENA SECTION L5950 – September 2014

“Everyone going home safe and healthy everyday”

HARENA SECTION L6000 – Footwall Au Zone

7.64g/t Au / 8m

6.22g/t
622g/t AAu / 10m
8.78g/t Au / 4m

“Everyone going home safe and healthy everyday”

HAREAN 2014 – SELECTED RESULTS TO DATE
HOLE
ID

From (m)To (m)

Length(m)Cu (%)

Zn (%)Au (g/t)

Ag (g/t)

HX‐004170.00180.45

10.45

2.30

0.91

1.30

42.9

HX‐005

171.50190.00

18.50

1.77

3.99

1.22

77.9

HX‐006189.10206.80

17.70

1.28

3.71

0.56

41.7

HX‐011207 80207.80229 30229.30

21 50
21.50

0 75
0.75

5 18
5.18

0 40
0.40

43 4
43.4

HX‐012275.50289.00

13.50

0.96

6.57

0.30

30.1

HX‐01390.90

103.80

12.90

0.09

2.23

0.13

6.9

HX‐017235.40277.00

41.60

0.85

3.96

0.40

43.6

HOLE
ID

From (m)To (m)

Length(m)Cu (%)

Zn (%)Au (g/t)

Ag (g/t)

HX‐006239.00247.00

8.00

0.38

0.21

7.64

140.0

HX‐008187.00204.15

17.15

0.71

0.22

6.15

241.6

HX‐012291.00301.00

10.00

0.15

0.25

6.22

83.1

HX‐012316.00320.00

4.00

0.01

0.01

8.78

93.8

HX‐019264.50270.00

5.50

0.56

0.23

8.04

119.7

HX 020
HX‐020258.00272.00

14.00

0.25

0.11

8.50

146.2

Massive Sulphide

Footwall Gold

“Everyone going home safe and healthy everyday”

2014 EXPLORATION – MODEL

1.7km

Harena Model – View from Footwall“Everyone going home safe and healthy everyday”

2014 EXPLORATION – AIRBORNE GEOPHYSICSHarena Property
2014 AEM VTEM Survey
EM Ch 36 coloured
Showing previous drilling

Harena Pit(not active)“Everyone going home safe and healthy everyday”

T h a n k Y o u!!

“Everyone going home safe and healthy everyday”

Mining
State & Investor
Striking a Balance
an idea to…

Advance investment in African Mining
Asmara Mining Conference 2014
1 – 5 October, 2014

Bruce Shapiro
President
MineAfrica Inc.
Canada‐Southern Africa Chamber of BusinessAbout MineAfrica
MineAfrica is a business development and marketing company providing the premier platform, since 2002, formining companies, advisors to the mining industry, service providers and governments to promote themselves toa senior level, Africa focussed audience of financial institutions, investors, analysts, mining executives and media,
all interested in Investing in African Mining via the following programs:
4th Focus on West Africa ‐ London, UK ‐ October 28, 2014

The Risk Mitigation & CSR Seminar Series ‐ London, UK (October 31, 2014)
MineAfrica partners with the Canada‐Southern Africa Chamber of Business and Founding Sponsor Hatch indelivering the leading CSR seminar series in Toronto, Vancouver and London, UK.
8th Annual Investing in African Mining ‐ London, UK ‐ December 1, 2014
5th Managing Your Risks in Investing in African Mining ‐ Toronto, Canada ‐ March 1, 2015
MineAfrica at PDAC ‐ Toronto, Canada ‐ March 1‐4, 2015
Our 13thO
13 h AnnualA
l InvestingI
i in
i African
Af i
Mi i Seminar
MiningS i
i TorontoinT
seminaritakes
k placelwithi h theh Canada‐Southern
C d S hAf i Chamber
AfricaCh b off
Business 16th Annual African Mining Breakfast and is the biggest African mining event in North America.

MASTERMINING Educational Courses
MineAfrica organizes educational courses in various cities around the world under its MASTERMINING brand. We also design
specialized courses in various areas depending on our client’s requirements and our two ongoing offerings are:••3‐day MASTERMINING course "Understanding the Mining Industry: From A to Z"
A to Z of Mining Supply Chain Optimisation ‐ Interactive one‐day Workshop

Business Development, Marketing and Consulting Services
We provide effective advice based on our many years of experience in dealing with African mining opportunities

For full details of MineAfrica events and other services see http://www.mineafrica.com/
Asmara Mining Conference 2014
1 ‐5 October, 2014

About the Canada-Southern
Africa Chamber of Business
The Canada
Canada‐Southern
Southern Africa Chamber of Business is the premier business association promoting trade andinvestment between Canada and Southern Africa (and beyond) primarily through organizing businessnetworking events with speakers of interest to its members and guests.
Founded in 1994 after South Africa's democratic election, the Chamber originally focussed on South Africa.
Given the broader ggeographicg p interests of its members across the African continent, the Chamber
expanded its geographic focus in 2008. It is not‐for‐profit, apolitical and funded entirely by its membershipand activities.
Chamber members and guest speakers represent the who’s who of Canadian companies invested in or
doing business with Africa.

For full details of the Canada‐Southern Africa Chamber of Business, see www.canadasachamber.com

Asmara Mining Conference 2014
1 ‐5 October, 2014

About this presentation
This presentation is based on my Opening Intervention on December 18,
18 2013 in Paris,
Paris France at the:OECD Multi‐Stakeholder Consultation
First Policy Dialogue on Natural Resource‐Based
Resource Based Development

The original
g
p
paper
p can be found at
http://www.oecd.org/dev/2.%20Kick%20off_taxation_Bruce%20Shapiro.pdf
Asmara Mining Conference 2014
1 ‐5 October, 2014

Trends – Global level

Asmara Mining Conference 2014
1 ‐5 October, 2014

Trends – country & local levels

Asmara Mining Conference 2014
1 ‐5 October, 2014

The time horizon disconnect

Asmara Mining Conference 2014
1 ‐5 October, 2014

The main players

State hasResources

Asmara Mining Conference 2014
1 ‐5 October, 2014

Investors
haveexpertise &ability tobring project
to production

Broad range of stakeholders





State
Citizens
Host jurisdiction
Local Communities
Investors – Attractionof Foreign Direct
Investment (FDI)

Asmara Mining Conference 2014
1 ‐5 October, 2014











Investor
Shareholders
Banks
Project Financiers
Loan providers
Host state
Host jurisdiction
Local communities
Customers
Any jurisdiction with“control”

The ppreferred result

State

Investors

Balance
A ttrue partnershipthi
Asmara Mining Conference 2014
1 ‐5 October, 2014

The unfortunate truths in theinvestment decision process
 Moneyy has no conscience Uncertainty is the enemy of investment

Asmara Mining Conference 2014
1 ‐5 October, 2014

What is relevant?
 To
T the
th iinvestor:t
9 Return on Investment (ROI) To the host jurisdiction:
9 The total “Resource
Resource Rent”
Rent , which includes
all of the benefits of mining

Asmara Mining Conference 2014
1 ‐5 October, 2014

What to do?
Full State ownership?

C
Creepingi R
Resource N
Nationalization?
ti
li ti ?



Change the Rules?

NO!

Asmara Mining Conference 2014
1 ‐5 October, 2014

The answer
Host nations should allow investors an ROI which isadequate for them to be able to fund and operate
the project.
This agreed ROI should be a minimum over the life of
the investment.
The guarantee will likely result in an investor taking alower ROI than in other circumstances.
…
Asmara Mining Conference 2014
1 ‐5 October, 2014

HoweverBoth the State and investors must benefit from any upside
upside.
Given a guaranteedGi
t d ROI
ROI, th
the iinvestor
t would
ld b
be satisfied
ti fi dwith a smaller share of this upside, thus allowing the hostjjurisdiction a highergshare of the upside.
p

Asmara Mining Conference 2014
1 ‐5 October, 2014

How can this be done?
 Initial ROI to the investor is agreed and guaranteed.
 Split above agreed ROI between state and investor tobe negotiated.
 Split below agreed ROI between state and investor tobe negotiated. The state must still receive a minimum
revenue stream.
 All calculations must be done at arms length byappropriate professionals, based on input costs
including depreciation of assets and all output
revenues.
Asmara Mining Conference 2014
1 ‐5 October, 2014

When times are bad The State needs ongoing revenue and this can beprovided on an agreed but realistic basis.
 The investor would not receive the agreed ROI, so
when returns are again above the agreed
th h ld th
threshold,the investorit would
ld receivei a greatertproportion of the upside than originally agreed
until the gguaranteed ROI has been achieved.

Asmara Mining Conference 2014
1 ‐5 October, 2014

Main stakeholders in revenue& expenditure
The State, the investor and their respective stakeholders have an interest in, but
not limited to, the following:









Profit taxes (including profit, income and production taxes);
Royalty payments (including royalty payments made in‐kind);
Fees (including license fees, rental fees and concession fees);
P d i entitlements
Production
il
(by
(b b
both
h valuel andd volume);l)Bonuses (including signature, discovery and production bonuses);Dividends (e.g. withholding tax);
Payments made for infrastructure improvements including; andTransportation and terminal operations fees.

Many of these complex negotiations would be eliminated by agreeing a ROI andsubsequent split of upside and downside. However, all of the above should betransparent as suggested by various bodies interested in transparency.
See: <hold for link to BennettJones transparency thinyg>
Asmara Mining Conference 2014
1 ‐5 October, 2014

Conclusion
Theh ROI Approach:h Reduces complexity of negotiations
 Removes uncertainty
 Creates flexibility
 IS A TRUE PARTNERSHIP

Asmara Mining Conference 2014
1 ‐5 October, 2014

A
AppendixdiReferences This presentation: Mining ‐ State & Investor, Striking a
Balance Mining's
Mi i ' Contribution
Cib i to SustainableSi bl Development
D l
Ben Peachey, Director, Communications ‐ International
Council on Mining and Metals
 Opening Intervention – Bruce Shapiro
OECD Development Centre Multi‐stakeholder Consultation
Policy Dialogue on Natural Resource‐based Development
 Is Africa’s “great boom” sustainable? Growth, prices andthe resources rent between 1970 and 2010
Eunomix
 An overview of various proposed and existing transparency
initiatives in the extractive industries
Eden M. Oliver, partner, Bennett Jones LLP, Toronto, Canada
Asmara Mining Conference 2014
1 ‐5 October, 2014

Resources MineAfrica
 Canada
Canada‐Southern
Southern Africa Chamber of Business Prospectors and Developers Association of
Canada International Council on Mining & Metals (ICMM)
 Eunomix
 OECD ‐ Policy Dialogue on Natural Resource‐
based Development

Asmara Mining Conference 2014
1 ‐5 October, 2014

Th k you
Thank

Bruce Shapiro
President
MineAfrica Inc.
Canada‐Southern Africa Chamber of BusinessNovember 2010

October 2014

CopperZinc
Gold

Underground workings at Debarwa copper-gold deposit

EXPLORATION, DEVELOPMENT AND
BEYOND

Eritrea and the Asmara Project

Sudan

Zara

Bisha Mine
HambokMassawa
AsmaraEthiopia
Sunridge Gold VMS/Gold Target Area
Sunridge Gold VMS/Gold Deposits
Nevsun’s Bisha VMS Gold-Copper-Zinc Mine
Other VMS/Gold Projects

2

AsmaraEritreaAsmara Licenses in 2003 (1100 Km2)
(SGC came in to Eritrea)x

Adi Nefas
Medrizien

Adi Nefas VMS
Emba Derho VMS

xx

Gupo Goldx

Debarwaeba ax
AsmaraAdvanced Projects

x

Priority Targets
GraniteKodadu VMSxx

Quartz Porphyry
Tertiary Basalt
Laterite / Saprolite
Undifferentiated Proterozoic Rocks
VMS Structures

Debarwa VMS

x

Adi Rassi
10 kmxDebarwa EL - Exploration
History Prior to 2003
DEBARWA EXPL. LICENSE•Western Mining Corp. (WMC) – April 1996
to July 1997 (Debarwa & surroundings)• Mapping, geochem & geophy. surveys•Too small; Transferred to Phelps Dodge•Golden Star : 1996 – 1998 (Adi Rassi &surroundings)

470000475000

SBS - Nov 2001 to Aug 2003 - Regional
mapping, drilled 9 holes at Debarwa

4950005000005050001720000

1715000

1715000

ADI NEFAS LICENSE

1710000

1710000

Adi Nefas

MEDRIZIEN LICENSE

1705000

1705000

Emba Derho
Gupo Gold

1700000

1700000

1695000

1695000

AsmaraShooting Star
Adi Musa

1690000

1690000

Dairo Paulus
1685000

1685000

Adi Lamza
Kodadu1680000

1680000

DEBARWA LICENSE

1675000

Shiketi

1670000

1670000

Debarwa
Adi Rassi

1665000

1665000

1660000

1660000

1660000
4700004

4900001720000

1675000•Aug 2003 - Sunridge and SBS signed JVAgreement•SGC drilled >46,000m & concluded/provedthat Debarwa can be a stand along mine

4850001725000•Mapping, Geochem, trenching, drilling•Phelps Dodge– July 1997 to Nov. 2001.
•Re-mapped & drilled 12 holes PD concluded that Debarwa deposit is too small
as a stand-alone mine & transferred Debarwa
lilicensesto Sub-Sahara
S bS hResourcesR
iin Nov.
N 20014800001725000

4750004800004850004900004950005000001660000
505000Medrizien license – Expl.
History prior to 2003
MEDRIZEN EXPL. LICENSE(includes the large Emba Derho deposit)• Ashanti Gold Fields: March 1996 –March 1998
• Mapping, geochem, geophysics,
trenching & drilling (3 drill holes at ED)

4700004750004800004850004900001720000

1715000

1715000

ADI NEFAS LICENSE

1710000

1710000

Adi Nefas

MEDRIZIEN LICENSE

1705000

1705000

Emba Derho
Gupo Gold

1700000

1695000

1695000

AsmaraShooting Star
Adi Musa

1690000

1690000

Dairo Paulus
1685000

1685000

Adi Lamza
Kodadu

DEBARWA LICENSE

1675000

1680000

1675000

Shiketi

1670000

1670000

Debarwa
Adi Rassi

1665000

1665000

1660000

1660000

1660000
47000055050001720000

1680000

SBS (Nov 2001 – Aug 2003) – Regional
mapping, geochem, limited drilling•Sunridge
S
id andd SBS signed
id JV
Agreement – Aug 2003
•SGC drill tested a gravity anomaly &discovered the large ED VMS deposit .

5000001725000

1700000•Phelps Dodge: May 1998 to Nov. 2001
• Remapped ED, trenching, geophysics,•drilled a single hole at ED to test TEM
anomaly , intersected massive sulphide•Nov. 2001 - PD pulled out & transferred
Medrizien EL to SBS.

4950001725000

4750004800004850004900004950005000001660000
505000

Emba Derho VMS Deposit
Sunridge/Sub‐Sahara JV : Aug 2003 to
Jan 2006g/survey,y,
Airborne Mag/EM
Surface geochem sampling,
Gravity survey
Drilling of 11 diamond holes

Sunridge Gold : Jan 2006 to present
Regional Gravity Survey (300x300m)
Detailed geological mapping
Ground geophysics (gravity(gravity, mag,
mag pulse
EM, down‐hole EM, and AMT)
Feb 2006 - Discovery of the large ED blinddepositDrilled 322 holes, totaling over 80,000m
Resource estimation – 70 million tones; hugeworld class deposit
Completed FS in May 2013

6

Gravity high anomaly

Adi Nefas EL – Expl. History
Prior to 2003

ADI NEFAS EXPL. LICENSE(Includes Adi Nefas VMS & Gupo Gold)

4700004750004800004850004900005000005050001725000

1720000

1720000

1715000

1715000

ADI NEFAS LICENSE

1710000

1710000

Adi Nefas

MEDRIZIEN LICENSE•La Source April 1996 – Mar. 1999
•Mapping, geochem, geophy., trenching,drilling at Gupo Gold
•Focus on gold, concluded too small
deposits and relinquished the license

4950001725000

1705000

1705000

Emba Derho
Gupo Gold

1700000

1700000

1695000

1695000

AsmaraShooting Star
Adi Musa

1690000

1690000

Dairo Paulus•Sub-Sahara acquired the Adi Nefaslilicenseiin N
Nov. 2001
2001.

1685000

1685000

Adi Lamza
Kodadu1680000

1680000

DEBARWA LICENSE•Sunridge and SBS signed a JV
Agreement in Aug 2003

1675000

1670000•Sunridge drilled > 22,000m at Adi Nefas
VMS and over 17,000m at Gupo
•SGC tested that the Adi Nefas VMS
deposit is a high grade zinc deposit

1670000

Debarwa
Adi Rassi

1665000

1665000

1660000

1660000

1660000
47000071675000

Shiketi

4750004800004850004900004950005000001660000
505000Asmara Project Agreement Terms• Nov. 2001 – Aug. 2003 - Sub-Sahara Resources NL owns 100%of the 3 Asmara Exploration licenses;• August 2003 Sunridge & Sub-Sahara signed an agreement;• Jan. 2004 - Sunridge earned 20% interest by funding $350,000• Feb. 2005 - Sunridge earned 40% interest by funding $2.4
million & became operator
SBS s 60%
• Jan. 2006 - Sunridge exercised option to purchase SBS’s• April 2007 - Sunridge owns 100% of Asmara Project by paying
US$15.6 million in shares to Sub-Sahara

8Summary of SGC Work on Asmara Project 2003 - 2014
• Airborne Fugro survey over whole property 5,441 line kms (bySBS & SGC JV)• Regional & local gravity survey > 60,000 stations• Ground magnetic survey: over 1,000 line kms• Ground EM surveys – over 170 line kms• IP/Resistivity surveys: > 42 line kms• AMT surveys: > 100 line kms• Detailed geological mapping: >70 km• Soil
S il andd rockk geochemical
h i l surveys: +10,000
10 000 samplesl• Trenching and channel sampling - +3800m• Over 1200 drill holes, +210,000 m on 4 deposits & 12 prospects• Metallurgical test-work on 6 deposits – total of +4000Kg• Social & Envir baseline data collection on 5 deposits for SEIA
• Total explorationp
costs + US$88 million
9Asmara Project – Historical Highlights
•
•
•
•
•
•
•
•
•
•
•
•
•
•

10

February 2006 – Emba Derho discovered
Januaryy 2008 – New resources for Debarwa & Adi Nefas byy MSA
September 2008 – indicated resource for ED by Wardrop – 59M ton
October 2010 – SENET chosen to complete Debarwa feasibility study
February 2011– Snowden chosen to complete PFS for Asmara North
February 2012 – New Snowden resource for ED – 70M tonnes
April 2012 – New resources for all 4 deposits for FS by Snowden
May 2012 – Asmara North PFS & Debarwa FS completed
June 2012 – SENET chosen to complete Asmara Project FS
July 2012 – ENAMCO exercises option to acquire 30% interest
May 2013 - Asmara Project FS completed
2013/2014 – SEIA & SEMP submitted to the DoM
June 2014 - Sunridge & ENAMCO signed shareholders’ Agreement
September 2014 – AMSC officially formed

Asmara Project – Current Land Position (102km2) & Resources
Completed May 2013! BFS - Central processing
facility at Emba Derho with 3 satellite deposits:• Emba Derho - 70.0 million tonnes (Measured andIndicated) resource containing 1.0 Blbs Cu, 2.07
Blbs Zn, 506,000 oz Au, 19 M oz Ag• Adi Nefas - 1.8 Mt (Indicated) resource at, 10.1%
Zn, 3.3 g/t Au, 1.8%Cu & 115 g/t Ag• Gupo Gold - 0.95 Mt (Indicated) resource at 1.52
g/t Au, same format• Debarwa -3.3 Mt (Measured and Indicated)resource containing 200 Mlbs Cu,
Cu 74 Mlbs Zn,
Zn
180,000 oz Au, 2.94 M oz Ag

Development and Exploration:• Adi Rassi –15.77 Mt (Inferred) resource at 0.54%
copper and 0.33 g/t gold

• Kodadu Gold Target – (Inferred) resource of
990,000 tonnes with an average grade of 1.24 g/tgold & 1.6 g/t silver

11

Asmara Project – Contained Metals
Exploration Success on the Asmara Project – Contained Metal in Measured
and Indicated Resources

DepositCopper millions of lbs

Zinc millions of lbs

Gold thousands oz

Silver million oz

E b Derho
Emba
D h993 70993.702 071 00
2,071.00

506 00506.00

18 60
18.60

Debarwa

199.8574.05

181.002.93

Adi Nefas

72.30

408.00

196.00

6.83

Gupo Gold

0

0

47.00

0

1,265.85

2,553.05
930.0028.36(574 000 tonnes)(574,000(1 158 000 tonnes)(1,158,000

Totals12

: Resources - Emba Derho Copper-Zinc-Gold Deposit

Emba Derho -Summary of Measured and Indicated Mineral Resource

Cut-off grade

tonnes(million)

Copper
%

Zinc
%

Gold
g/t

Silverg/t

Gold Oxide

0.5 g/t Au

1.74

0.07

0.04

1.06

4.30

Cu Supergene

0.5% Cu

1.64

0.94

0.38

0.17

12.20

Copper-rich Primary

0.3% Cu

49.80

0.83

0.93

0.17

7.70

<0.3% Cu, >1.0% Zn

16.80

0.14

2.80

0.31

9.90

Zone

Zinc-rich Primary
TOTAL

70.0

Sunridge Gold Corp: Mineral Resource Estimate Update, Emba Derho Deposit, Eritrea. NI 43-101 Technical Report prepared by Snowden Mining Industry
Consultants Inc. for Sunridge Gold Inc. with contributions by Blue Coast Metallurgy Ltd. 110 pages. Effective date 6 February 2012.

13

Resources – Debarwa Copper-Zinc-Gold Deposit

Location of Direct
Shipping Option (DSO)
tonnage

Debarwa Measured and Indicated Resources*
MaterialType

Cut-off

Tonnes(million)

Copper
(%)

Zinc
(%)

Gold
(g/t)

Silver
(g/t)

Oxide

Au 0.5g/t

1.091

0.08

0.05

2.38

20

SupergeneCu 0.5%
0 5%

1 389
1.389

5 15
5.15

0 07
0.07

1 40
1.40

33

Primary

Cu 0.5%

0.832

2.20

3.86

1.50

29

16.00

0.05

3.00

77

3.312

TotalsDSO zone14

Cu 12.0%

0.116* resource estimate completed by AMC Consultants (UK) Ltd, August 11, 2011

Resources – Adi Nefas Copper-Zinc-Gold Deposit

Adi Nefas:• High grade zinc-copper-gold VMS deposit• 6 kmk ffrom Emba
E b Derho
D h• High grade material to be blended with
Emba Derho• Underground mine plan

Measured and Indicated Resources*
Zone

Cut-off

tonnes(million)

Primary

Zn 2 %

1.84

Gold
(g/t)

Silver(g/t)

Copper
(%)

Zinc
(%)

3.31

115

1.78

10.05

* Sunridge Gold Corp: Mineral Resource Estimate Update, Adi Nefas Property, Eritrea. NI 43-101 Technical Report prepared by Snowden Mining
Industry Consultants Inc. for Sunridge Gold Inc. with contributions by Blue Coast Metallurgy Ltd. 82 pages. Effective date 20 February 2012.

15

Resources – Gupo Gold Deposit

Indicated resource*:
Cut ofGrade g/t
Au

Tonnes0.5

951,800

Average Grade
Ounces of Goldg/t Au1.53

46,780Inferred resource*:
Cut ofGrade g/t
Au

TonnesAverage
Grade g/t Au

Ounces of Gold

0.5

1,808,550
,
,

1.83

106,340,* Sunridge Gold Corp: Gupo Gold Mineral Resource Estimate Update, Adi Nefas
Property, Eritrea. NI 43-101 Technical Report prepared by Snowden Mining Industry
Consultants Inc. for Sunridge Gold Corp. with contributions by Blue Coast Metallurgy
Ltd 97 pages.
Ltd.
pages Effective date 3 April 201216

Pipeline Deposits and current land position (102km2)
Kodadu Gold Target:• Inferred Mineral Resource of 990,000 tonnes with anaverageg ggrade of 1.24 gg/t ggold & 1.6 gg/t silver• Contained metal = 39,000 ounces of gold & 51,000
ounces of silver in the near surface oxide• Initial metallurgical results show gold can berecovered by heap-leaching• The resource area is open for expansion
Adi Rassi:• Inferred resource of 15.8 million tonnes with anaverage grade of 0.54%
0 54% copper and 00.33
33 g/t gold
gold.

• The resource area is open for expansion in mostdirections

17

Sunridge Successes

Sunridge has been successful in its exploration
programs in Eritrea in the past 10 years:
The mysteries for the successes are:
•
•
•
•
•

18

Followed the right Exploration Approaches
Experienced and devoted staff
Well organized and strong Management
Team work
Government support

ENAMCO
Sunridge and the Eritrean National Mining Corporation (“ENAMCO”) have now executeda shareholders’ agreement to organize and operate the Asmara Mining Share Company(“AMSC”) - June 27, 2014
Agreement Highlights:• AMSC will be owned 60% by Sunridge and 40% by ENAMCO (30% purchased andparticipating and 10% free carried interest) and will have a board of directors offive comprising three from Sunridge and two from ENAMCO.
five,
ENAMCO• ENAMCO is paying Sunridge $18.33 million for their purchase of 30% of the project(US$2 million received by Sunridge immediately on signing the Shareholders’ Agreement, US$3 million to be
ppaid byy November 2014,, US$6 million to be ppaid upon
p on signingg g pprojectj Financingg Agreement,g, US$4 million
6 months after signing the Financing Agreement, US$3.3 million 12 months after signing the Financing
Agreement)• In addition, ENAMCO to fund the next ~US$6 million to AMSC for their portion ofp j
retroactive contributions to the project.

• All future project development or exploration costs will be shared two-thirds Sunridge
and one-third ENAMCO.

19

Sunridge Gold Highlights• Track record of success - explored and defined 6 deposits on the Asmara Project inEritrea• Feasibility Study completed on the 4 advanced projects demonstrate very strong
economics;
i NPV (10%) = $428 million,illi
IRR = 27%

• Mining License expected Q1 2015
• Near term production - minimizing dilution: Robust mining plan with a 3 phasestaged start-up with Phase 1A DSO production beginning in 2015 providing
injection of cash into the project• Full pproduction to averageg 65 million lbs. ((29,000,t)) copperpp
and 184 million lbs.
(83,000 t) zinc, with 42,000 oz gold and 1 million oz silver per year

• Strong Management Team with extensive experience in Eritrea• Project
P j t hash governmentt participation
ti i ti (ENAMCO)

20

Asmara Project Feasibility Study – Mining Phases
IInitial
iti l C
Capitalit lRequiredPhase I - DSO and Gold Production (Year 1 – Year 5)±$$30m

Phase IA – DSO (Year 1 – Year 2)• Mining of 116,000 tonnes of high-grade DSO with an average
grade of 15.6% copper, 2.96 g/t gold, and 76.8 g/t silver from
Debarwa± $50mPh
Phase
IB – GoldG ld production
d ti – (Year(Y
1 – YearY
5)• Mining and heap-leaching of the 3.0 million tonnes near-surface
gold “caps” at Debarwa and Emba Derho followed by Gupo GoldPhPhase
II Supergene
II–
SC
Copper Production
P d i (Y(Year 2 – Year
Y
3
3.25)
25)

• Mine and process by flotation 2.4 million tonnes of high-grade copper supergeneore from Debarwa and Emba Derho at rate of 2 million tonnes per year for 1.25
years
± $357m• Phaseh
II average gradesd 2.25%% copper, 0.76
6 g/t gold,
ld 21.6
6 g/t silver
ilPhase III Full Production (Year 3.25 – Year 16.3)• Mine and process by flotation 51.0 million tonnes of primary copper and zinc ore
from Emba Derho, Debarwa, and Adi Nefas at a rate of 4 million tonnes per year
for 13years

Phase 1A- DSO at Debarwa
Location of Direct
Shipping Option (DSO)
tonnagePhase IA – DSO (Year 1 – Year 2)• Mining of 116,000 tonnes of highOxide Gold Cap

grade DSO with an average grade of
15.6% copper, 2.96 g/t gold, and 76.8
g/t silver from Debarwa• Crush and direct ship to smelter• Mine and ship in 6 months• Sandfire’s Dagrussa Coper-Gold Mine
had similar DSO start up

22* resource estimate completed by AMC Consultants (UK) Ltd, August 11, 2011

Phase 1B- Heap Leach Gold Production
Phase IB – Gold production – (Year 1 –Year 5)• Mining of the 3.0 million tonnes near
nearEmba Deho Oxide

surface gold “caps” at Debarwa and
Emba Derho followed by Gupo Gold

• Process at gold heap
heap-leachingleaching operationnear the Emba Derho deposit at a rate of
1.4 million tonnes per year

• Phase IB average grades 1.48 g/t gold andDebarwa Oxide

8.2 g/t silver• Phase IB average recoveries 66.7% gold,
37.7% silver• Final Waste/Ore ratios at Gupo -1.7:1
Gupo Gold23

Phase 2- Supergene Copper Production
Phase II– Supergene Copper Production(Year 2 – Year 3.25)• MineMi andd process b
by flflotationi 2
2.4
4 million
illi

Emba Deho Supergene Copper

tonnes of high-grade copper supergeneore from Debarwa and Emba Derho at
rate of 2 million tonnes p
per yearyfor 1.25
years• Phase II average grades 2.25%
copper, 0.76 g/t gold, 21.6 g/t silver• Phase II average recoveries 79%
Debarwa Supergene Copper

copper, 51% gold, 58% silver• Copper concentrate – 25% copper, 4.2 g/t
gold, 109 g/t silver
24

Phase 3- Full Production
Phase III Full Production (Year 3.25 – Year 16.3)• Mine and process by flotation 51.0 million tonnes ofprimary copper and zinc ore from Emba Derho,
Debarwa and Adi Nefas at a rate of 4 million tonnes
Debarwa,
per year for 13years• Phase III averageg ggrades 0.73% copper,
pp , 1.91% zinc,,0.36 g/t gold, 12.6 g/t silver• Phase III recoveries average 86% copper, 86% zinc,
48% gold,
gold 44% silver

Emba Derho Primary• Copper concentrate – 25% copper, 7.9 g/t gold, 255
gg/t silver• Zinc concentrate – 57% zinc
Debarwa Primary Adi Nefas Primary25

Asmara Project – Potential Funding Sources
Export Credit Agencies

Offt kOfftakers

AMSC will carefully consider its procurement strategy andseek to maximise the use of funds and political risk covers
available from this sector including approaching
instit tions suchinstitutionss ch as EKN,EKN other European
E ropean ECAs,
ECAs ECIC,
ECIC EDC
and KEXIM.
Equipment Financiers, Leasing Providers

Offtake finance could come directly from smelting
companies or traders.

Equipment providers such as Atlas Copco, Caterpillar may
contribute to project finance funding particular if ECA
cover is available
Development Banks and Multi‐lateral Agencies
pbanks can pprovide potentiallypy largeg amounts
Developmentof financing and longer tenors and could also be
considered for the Asmara Project. DEG and KfW wereinvolved in the Bisha transaction and could again beapproached.
Alternative Sources
Several funds and companies are now active in the mining
sector who are looking to enter intoroyalty,y y streaming,
g offtake linked transactions andconvertible notes

26

Commercial Banks
Current market is characterised by no (or very weak)underwritings and certain banks withdrawing from thegwhich has reduced the overallminingg sector altogether
lending capacity of the commercial bank sector.
Equity/Convertible Debt
IIn common withith standard
t d d projectj t financefi
practiceti a
proportion of the funding requirement will come from theSponsor’s equity contribution which could be raised at thecorporate level in the form of equity or quasi‐equity such as
convertible debt

Challenges to Financing the Current Plan•

Quantum of Senior Debt
Requirement for US$300-350m of Senior Debt, US$50-80m of Cost Overrun Facility
is a significant amount of debt to be raised in the current market irrespective ofjurisdiction of the Project
Project. Location of project reduces the number of financing
sources currently available which provides a challenge to financing the current
plan

Tenor of Senior Debt
Current modelling envisages a 3.5 year grace period for principal repayments
followed by a 7 year repayment period so an overall tenor of 10.5 years. This will
be challenging for commercial banks but may be possible for Development
Financial Institutions and commercial banks under ECA cover
A cash sweep of 50% is assumed which reduces the tenor from 10.5 years to 6.75
years which will provide some comfort to lenders
Irrespective of ECA cover and the cashsweep the 3.5 year grace period required will
be a concern to lenders

27

Alternative “phased” approach
Given the challenges highlighted it maybe prudent to consider a more stagger phased
approach to development.
This will be worked on in parallel to the current financing plan and the current permitting
process
This plan envisages a phased approach as set out below:• Phase IA – DSO only from Debarwa
Finance DSO only and use any excess cashflow after completion of DSO phase toprovide funding to Phase IB• Phase IB – Gold Oxide HL
Finance gold HL and process oxide caps at Emba Derho, Debarwa and Gupo using
excess cashflow from completion of Phase IA plus additional funding
Use any excess cashflow after completion of oxide phase to provide funding toPhase II and Phase III• Phase II and III – Copper and Zinc (supergene and primary)
Excess cashflow from Phase IA and IB provides equity portion of Phase II andPhase III project costs
Remainder of project costs easier to fund from conventional debt markets now as
grace period for repayments and overall tenor likely to be reduced. Plus company
has demonstrated ability to build and operate to potential lenders

28

Alternative “phased” approach• Financing for Phase IA and Phase IB unlikely to be financed from conventional
lending sources but could potentially be financed from offtakers, equipment
finance, streaming companies or alternative funds capable of providing
mezzanine/bridge finance.
• Key to this approach is understanding capex, operating costs and cashflows
from each phase on a stand-alone basis and to understand whether sufficient
cash is generated by each stage to provide a meaningful contribution to theproject costs for the next phase• Additionally, the cashflows from Phase IA and Phase IB ideally need to also
provide both payback and a return to any provider of funding for Phase IA andPhase IB• If the cashflows generated in each phase are insufficient to payback the funding
provider then will likely need an alternative structure that provides a return overa longer timeframe (i.e. over Life of Mine and including Phase II and III) such asa 3rd party royalty or streaming transaction• Some initial optimization work to understand better the capex, operating costs
and cashflows of this staged approach will be required29

Asmara Project Timeline30

Asmara Project

Thank You!

31

Gold in So
outh Sudan
Asmara Mininng Conference
O t ber 2015
Octobe1

South Sudanz

Independent since July 20
011

z

Favourable new mining laawz

Minimal exploration for 60
0 yrs

z

Ony two explorers with lic
cences:Luri licence– Equator Gold (Luri)– New Kush Explorattion and Mining (Kapoeta)
z Gold areas largely unaffe
ected by recent conflict2

Frontier exploration...inin elephant countryz

Two major unexplored frrontier gold provincesz

300,000km2 Congo Craton rocks – bigger than Ghanaz

Significant
gareas of Neo-Proteroz
zoic Arabian-Nubian Shieldz

Greenstone belts and crustal-scalle shear zoneszClose to recently-developed world
d-class gold deposits in Congoz

Many areas of artisanal operationnszLarge licences available (up to 25
500km2)z

No exploration for ~60 yearszGood potential for high grade mullti-million ounce deposits“South Sudan is frontier ofo choice for Randgold”(Mark Bristow, Randg
gold CEO, February 2014)3

South Sudan

Gold deposits of Africa(Source: Randgold)

4

South Sudan
Basement rocksof theCongo Craton~300,000 km2
Neo-Proterozoic(Arabian-Nubian)rocks
Crrustal-scale shear zones
and Greenstone Belts

Kibali Mine, DRC
26M ounces
Reserves and Resources5South Sudan

New Kush ProjectEquaq tor's Projects
j

6

N
New
Kush - KapoetazGold scarn depositzzProlific gold panningzz

Coarse gold in carbonates

Famous for large nuggets

Work completed:zSatellite image interpretationz

Airborne geophysical surveyzSoil geochemistryz

Geological mapping

Drills now on site
7

N
New
Kush - Kapoeta
z

F
Four
“greenstone”
“
t
”b
belts
lt
z

carbonates, quartz gneisszamphibolites, ultramafics

zchlorite schistz

Shear zoneszArtisanal operationszz(Red circles on map)

Alteration anomaliesz

Landsat and Aster images

8

N
New
Kush - Kapoeta
Bulls eye target
Bulls-eye
Soil anomalies up to 15g/t
Shear zones and alteration
Extensive artisanal operations

Drill targets selected
Drills now on site

9

Luri Gold Projectjz

Three priority gold targets found to datezGold zone extends over 33km strikeszMetavolcanic (greenstone) rockkszPrevious work by Kivu Gold (20008), Hunting (1980), Belgian Aidz

Also indications of base metal aand intrusion
intrusion-related
related mineralsz

JV with local partner (CMERIC))z

Equator can earn 65% by $1M exploration
and up to 85% by further $10M
M exploration

10

Luri Gold Projectj
33+km gold trend

Togolo Target
Rich artisan panning

GT Target
18g/t over 15m
i l di 85g/t
including
85 /t over 3m3(trench result)

Confluence Target
6km soil anomaly up to 4.3g/t

Crustal-scale shear zone
Metavolcanic Greenstones

Farm-inF
i withith llocall partnert
Equator holds 65% interest
and can earn 85%
p
g $10Mbyy spending11

Confluence Target

12Localities

Clockkwise from top right:
Gold--bearing quartz vein fromGT ta
arget;
Artisaan diggings
gg g at GT target;g ;Artisaan workings of terrace deposits,
R. Togolo;Director Bob Foster and geologists
inspe
ecting pits at the
Confluence Target

13Equator – Wudabi
New Project
Farm-in with S Sudan company
Metavolcanic greenstones(light blue)
Extensive artisanal panning(yellow triangles)
Licence applied for

14

Goals and plans
GOAL 1
1: E
Evaluatel t fifirstt didisscoveriesi
GOAL 2: Extend coveragege within and beyondyLuri
GOAL 3: Monetise discov
veries15

Directors andManagement
Directors of Equator Gold Holdings Ltd

Technical Advisory Groupand Directors of Equator Gold Ltd

Mark Parker, BA, MIMMM (Managing Director)
An explorationpggeophysicist
p y
and mineral explorationpentrepreneurpwith 38 yyearssexperience in exploration and corporate management in Africa, Europe,
Southeast Asia, Latin America and the Middle East. Also Chairman of AndiamooExploration and former MD of African Eagle

Emma Parker, BSc, MSc, TEFL; COO
Environmental scientist with experiencepon explorationpand mining
gp
projects,jwith 10 years in eastern and central Africa and Korea. USA fund-raiser andformer Administrative Manager of NGO running an orphanage in Tanzania.

John Carlile, BSc, MSc, DIC, FAusIMM, FGS (Non-executive Director)
A Jersey-based geologist with more than 35 years in mineral exploration,
mostly gold and base metals in the East Asian region,
region especially Indonesia
Indonesia.
With multi-national companies (BHP, Utah, MEM and Newcrest) from 1979 to
1996, then joined Indonesian company PT Austindo Nusantara Jaya, serving
on boards of group companies including Pearl Energy (Chairman, 2003 to2006) and ARC Exploration (MD/CEO 2008 to 2013).

Jeff Malaihollo, BA, PhD, FGS, MAusIMM
Founder of GGG plc and Managing Director until its merger in 2012 with
Bullabulling Gold Limited. Former Executive Director at London corporate
financiers specialising in natural resources
resources. Previously geologist working on
generative programmes with Newcrest, Rio Tinto and Billiton.
Bob Foster, BSc, PhD, FIMMM, CEng, FGS,CGeol
Professional economic geologist, CEO of Stratex International plc. 37 years
global experience in exploration, mining, and academic posts incl.
Southampton University. Expertise in gold genesis and exploration.

William J G Bennett (Independent Non-Executive Director)
An English solicitor based in Jersey, William set up Garfield-Bennett Trust
Company Limited, undertaking trust and company work and services business. Geert Trappeniers MSc, (Exploration Manager)
Sits on the boards of a number of companies including property and investmentt Geert has 16 years exploration experience as an exploration geologist andholding and is a trustee on a number of private client trusts. William is also a
project manager in Africa, Europe and the Middle East, including gold,
director of a property fund and a distressed asset fund that invests in European diamonds, base metals and industrial minerals.
and Asian businessMichael Paul Egerton-Vernon (Independent Non-Executive Director)
A Solicitor, he spent five years in the City and become legal director forInternational Process Industries. He established his own practice in 1978 and
was a partner in Nigel Harris & Partners in Jersey, becoming head ofRathbones worldwide trust division. He is a director of Channel Islands
subsidiaries of several FTSE 100 and other companies and funds.

16Companyp y Profilez

Equator Gold Holdings Lttd–

Jersey public compan
ny (unlisted)–

Project-specific subsid
diaries–

UK service subsidiaryy–

Branch office registerred in S Sudanz

200,001 shares in issuez£1 7M invested to date
£1.7M
17

Equator Golld SummaryyS th SSouth
Sudand iis ththe world's
w ld' mostt promising
i ifrontier explora
ation destination
We believe that Luri is a world-classw
project with ahighg probability
y of coontainingg several multimillion ouncee gold deposits.
Equator s top priority is tto advance the project toEquator's
resource evaluation asa quickly as possible.

18

Disclaimers
Document
This draft Presentation is preliminary in nature and is not a formal information memorandum,, prospectus or placement memorandum. It does not constitute or form part of any offer or
invitation to subscribe for, underwrite or purchase shares in the Company and should not be tre
eated as constituting an inducement or representation in connection with any offer or invitation,
nor shall it or any part of it form the basis of or be relied upon in any way in connection with any
a contract relating to any shares in the Company. ● The information contained in this draft
Presentation is selective and is for illustrative purposes only and is subject to material updatinng, completion, revision, verification or other amendment. ● This draft Presentation does notcomprise advice on the suitability of an investment in shares in the Company for any particularr investor or prospective investor and is given for information purposes only. If you are in any
doubt about the contents of this draft Presentation you should consult your stockbroker, bank manager,m
solicitor, accountant or other financial adviser. ● In particular, this draft Presentation
may refer to certain events as having occurred which may not have occurred but which are expe
ected to occur prior to publication of the final information memorandum relating to the proposed
offering of shares in the Company. It being noted that the Jersey Financial Services Commisssion is yet to give its consent to the issue of any offering document and the issue of shares;
however the applications are in the process of being made. ● Any application for shares in the Company shall be made solely on the basis of the final information memorandum relating to theCompany which it is expected will be published in due course.
course ● This draft Presentation and itss contents are confidential and should not be distributed published or reproduced (in whole or inpart) or disclosed by recipients to any other person.
This document does not comprise a prospectus pursuant to the Companies (General Provisions) Order (Jersey) 2002 and has not been drawn up in accordance with Companies (General
Provisions) Order (Jersey) 2002. ● A copy of this document has not been delivered to the regisstrar of companies in accordance with Article 5 of the Companies (General Provisions) (Jersey)
Order 2002, and the registrar has not given consent to its circulation. ● Neither the registrarr of companies nor the Jersey Financial Services Commission takes any responsibility for thefinancial soundness of the Company or for the correctness of any statements made, or opinions expressed, with regard to it. ● If you are in any doubt about the contents of this document you
should consult your stockbroker,
stockbroker bank manager,
manager solicitor,
solicitor accountant or other financial adviser ● The Directors have taken all reasonable care to ensure that the facts stated in this document
are true and accurate in all material respects, and that there are no other facts the omission of whichw
would make misleading any statement in the document, whether of facts or of opinion. ●It should be remembered that the price of securities and the income from them can go down as well
w as up.

Forward-looking statements
This document includes forward looking statements. All statements other than statements of historicalhfact included in this document regarding the business, financial condition, results ofoperations of the Company,
Company or any Group Company and certain plans,
plans objectives,
objectives assumptions,ns expectations or beliefs with respect to these items and statements regarding other future
events or prospects, are forward looking statements. Should one or more of the risks or unce
ertainties associated with such forward looking statements materialise, or should assumptions
underlying such forward looking statements prove incorrect, actual results may vary materially from those described herein. Neither the Company nor any Group Company assume any
obligation to update or correct the information contained in this document, whether as a result ofo new information, future events or otherwise. ● These statements include, without limitation,
those concerning: strategy and the ability to achieve it; expectations regarding sales, expensess, profitability and growth; possible or assumed future results of operations; capital expenditureand investment plans; adequacy of capital; and financing plans. The words “aim”, “may”, “expectt”, “anticipate”, “believe”, “future”, “continue”, “help”, “estimate”, “plan”, “intend”, “should”, “could”,“would”, “shall” and similar terms or the negative or other variations thereof, as well as other stattements regarding matters that are not historical fact, are or may also constitute forward looking
statements.
t t
t In
I addition,
dditi
thi document
thisdt includes
i l d forwardfd lookingl ki statementst t
t relating
l ti tot potential
t ti l exposureet various
to
i
t
types
off market
k t risks,
i k suchh as foreignf i exchangehrate
t risks,i k interesti t
t ratet risksi kand other risks related to financial assets and liabilities. ● These forward looking statements havehbeen based on the current view of the Directors with respect to future events and financial
performance. These views reflect the best judgement of the Directors but involve a number of rissks and uncertainties which could cause actual results to differ materially from those predicted inforward-looking statements and from past results, performance or achievements. Although it iss the belief of such persons, that the estimates reflected in the forward looking statements arereasonable, such estimates may prove to be incorrect. By their nature, forward looking statemen
nts involve risk and uncertainty because they relate to events and depend on circumstances that
may occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward looking
statements, including the following: economic downturn, recession, acts or threats of terrorism, acts or the threat of war or other adverse political developments in key markets, legislative andregulatory changes, failure to protect intellectual property rights or any infringement claims, terrmination of arrangements with third parties for any reason, litigation and future exchange andinterest rates.

19

Equator Gold Holdings Limited

Equator Gold Limited

CTV House, La Pouquelaye
St HelierHelier, Jersey,
Jersey JE2 3TP
T +44 1534 857 773
F +44 1534 500 901

Carbery House, Adlams Lane
Sway, Hampshire
Sway
Hampshire, SO41 6EG
6EG, UK
T +44 15 90 68 11 25
F +44 20 33 00 58 21
M +44 77 56 40 68 99

info@equato
orgold.co.uk
www.equato
orgold.co.uk

20

1

SUPPLY CHAIN
LINKAGESIN HOST COUNTRIES

Nahom Tesfay

2

Why Linkage with local Suppliers?
L
Lean
Production
P d ti Capability
C
bilit
Q-C-D. Supply Chain: Low inventories; Rapid response

Long-Run• Closer to suppliers• Reduce risk

Reputation building
Social concession”This adds resilience to the supply chain ...
You have a source that you know and thatis local. You also have a choice, which
reduces the risk for your operations.”(Spano, Christian; Anglo American)

Future concessions
Also in other countries

3“Window
Window dressing
dressing” local supply
Not p
pleading
g for local content regulationg((ownership)p)
Substitution

Higher cost

mining company importby local firm import

No value added

Locall manufacturing
L
f t i
and
d
service delivery• Local Firm
• Foreign supplier SubsidiaryCl
Closertot supplylLocal value added

Lose-loseLose
losesituation

Win-winsituation

4

LOCAL PROCUREMENT
IN GHANA

5

Initiative Mining Industry Ghana
Increase annual local supply Spending$120 million Æ $200 million

Examine capacity of
local enterprises
Identified 27 product categories thatcan be made locally6

local procurement Ghana• Broadeningg access to local supplierspp
FormalAdvertising
Supplier
registration available
open daysby suppliers contracts

Publish local
open
spendingpg datatenderingon quarterly basis• Preference
P f
i assessingini tenderst dLocal-Local

Ghanaianowned

Ahafo mine 2007-2010

Ghanaian
participation•

Ghanaregistered

International

Trained 53 local suppliers$14 million in local procurement

7

INVESTMENTANGLO ZIMELESouth Africa

Anglo Zimele Investment• Equityq y stake (20( ppercent))• Finance up to $470.000• Capital dependence
reduced over time

Partner-shareholder• Board member• CorporateCt governance• Protect investment• (2004-2007) net profit
2.5 million• 72% off SME
SMEs survived
i d
8 years or longer

9

Anglo Zimele

Bite size tenders“Incubator”
Incubator approach

Easier accessfor local SMEs

Business development officers
Small Business Hubs
• Transferring business skills; Provide
technical training; Enhance financing
skills; Secretarial, accounting,gand tax help

10

RESEARCH &DEVELOPMENT (R&D)
Chile

11

CSIRO Chile
Research for mining
g equipment,
q p, technology
gy and service sector
Mining companies• Anglo American, Antofagasta Minerals, BHP
Billiton and Xstrata Copper
Billiton,• Codelco

R
Researchh Centres
C t• CSIRO (Australia)• CICITEM (Chile)

Universities• University of Antofagasta• University of Chile

12

BHP Billiton Supplier Program Chile

Solutions in mining desired
by BHP Billiton

Collaborate with local
suppliers to find solutions
Provide consultancy support
to suppliers
Management; Corporate Governance;
Strategic Planning; Marketing

Invested> $50 million

Savings (est.)(est )$121 million

13

BHP Billiton and Prodinsa
Snapping ofshovel cables

40 percent increase
shelf life cables

Export•••Peru
Venezuela
Brazil14

Lessons
1) Local sourcing
Identify product categories
Identify local SMEs
Bite size tenders3)) Training
g of supplierspp
Business skills
Financing skills
Technical skills

2) Equity and loans
Different SMEs to spread risk
Provide a board member
Have a clear exit strategy

4)) R&D collaboration
Mining companies
Suppliers
Knowledge institutes

15

A cord of three strands is not quickly brokenብሰለስተ ዝኸረረ ገመድ ቀልጢፉ ኣይብተኽን።
Ecclesiastes - መጽሓፍ መክብብ 4:12

16

AppendixExamples• Uniform,, Clothing,g, shoes• Catering, Food
• Safety equipment• Equipment maintenance• Engineering services

18

Lessons Procurement
Identify goods andservicesith t can bethatbproduced locallyEnterprise map
TTogetherth withith Mi
Ministryi tTrade & Industry

Tenders• OpenO
access• Bite size tenders

Preference for local
value added(no “window dressing”)

19

Tesra and Sixth Sense Processware• Local firm Tesra and Canadian technology
gy p
partner Sixth

Sense Processware• Reduced electricity consumption per tonne of copper by

two percent• Automatic scanning system• Detecting short circuit• Helps operators to fix them in the electro-winning plant

20

Biohydro cl
Biohydro.cl• BHP Billiton commissioned Biohydro.clywith• Automating the wetting phase in copper leaching process• Minimize exposure operators to acid mist
• Reduce variability of the wetting phase process• Solution by Biohydro.cl• Reduced
R dd variability
i bilit off theth wetting
tti phasehffrom seven percentt tto lless
than one percent• Reduced water consumption• Increased mineral recovery

21

MicomoDeveloper
p of communication and information solutions• A previously unavailable forecast system assessing a

combination of elements (weather Geography Operational
activities)• Predicts with 75 p
percent accuracy
y the likely
y level of dust output
p up
pto 48 hours in advance op planned activities• Enables to schedule activities with greater certainty• Minimize dust experiences• Reduce costly last-minute changes in work schedules

22

R&D Collaboration
Rio Tinto Mine of the Future
IGATE Patni, India
Supplier•

Industry

Collaboration with Chinalco, China•

Modify and adapt innovations at othercenters, for broader application

To develop new mining technology

CSIRO Chile
Knowledge Institutions

Anglo
g American,, AntofagastagMinerals,, BHP
Billiton, and Xstrata Copper, and Codelco••

CSIRO (Australia), and CICITEM (Chile)
University of Antofagasta
Antofagasta, and Universityof Chile

23

A cord of three strands is not quickly brokenብሰለስተ ዝኸረረ ገመድ ቀልጢፉ ኣይብተኽን።
Ecclesiastes - መጽሓፍ መክብብ 4:12

24

R&D for Mining
Collaboration• Enhance productivity• Mining Suppliers• Increase recovery• Local Universities and• Reduce cost

Research Centers• Product innovations• Industry• AMIRA,AMIRA Australia
A t li• Better business• CAMIRO, Canada

performance

25

Innovations Mine of the Future
Gravity
gradiometers

Autonomous
TrucksRemoteoperations
p

Robotic tire
machines

26

ENHANCE QUALITY OF
SUPPLY
Knowledge transfer

Reduce input cost

Improvecompetitive
Position

27

Why Linkage with local Suppliers?

Reputationbuilding
Socialconcession

Future concessions
Also in other countries

Lithogeochemistry of Host Rocks
t the
to
th Bi
Bisha
h C
Cu-Zn-Au
Z A
Volcanic Hosted Massive SulphideCamp, Eritrea
Cliff Stanley, Ronald Massawe
Dept. of Earth & Environmental Science,
A di U
AcadiaUniversity,i
it W
Wolfville,
lf ill N
Nova S
Scotia,ti C
Canadad
cliff.stanley@acadiau.ca

Asmara Geo-Congress - Sept./Oct. 2014

Background
Bisha
Bi
h Mi
Miningi C
Camp hhas 4 VHMS ddepositsi (Bisha(Bi h & H
Harena))It is located in a granite-greenstone belt, the Nakfa Terrane in
the Arabian-Nubian
Arabian Nubian Shield in Western Eritrea
Hydrothermal alteration & metamorphism overprint the hostrocks, modifying compositions, textures & mineralogy
Only chlorite alteration wasrecognized in the campD
Deposits
it were ththought
ht tto b
be attthe same stratigraphic
horizon (~ 9 km apart)
Detailed stratigraphic columns& hydrothermal zoning
models needed to be
developed for the camp

Background
LoggedL
d7d
drill
ill cores through
h
h the
h Bi
Bisha
h and
dH
Harena ddepositsiCollected 282 samples for petrography & lithogeochemistry
Pulverized samples were analyzed by fusion
fusion-ICP
ICP methods for
10 major oxides, 47 trace elements, plus total C & S
Data qqualityy assessment using
g 100 QAQC samples
p
indicatesthat results are ‘fit for purpose’

Bisha VHMS

Harena VHMS

Conserved Element Analysis
800
FEL 1

Felsic # 1

700

Felsic # 2

FEL 2
INT
MAF 1

600

MAF 2

500

Intermediate

400

300

200

Mafic # 1 & # 2
100

0
0.0

0.5

1.0

TiO2 (wt.

1.5

2.0

2.5

Lithogeochemical Classification
Mafic :

Zr/TiO2 < 200

Mafic 1:
Mafic 2:Comparison

Zr/P2O5 < 110
110 < Zr/P2O5

Intermediate : 200 < Zr/TiO2 < 380
Felsic :Zr/TiO2 > 380

Felsic 1:
Felsic 2:

Zr/TiO2 > 570
380 < Zr/TiO2 < 570

DDH Log
g
LGC

MAF#
INTM
FEL#

MAF#
6
2
1

INTM
35
3
53

FEL#
44
17
86

38 % Correct(w/Hallberg, 1984)
BasaltZr/TiO2 = 100
Andesite
Zr/TiO2 = 500
DaciteZr/TiO2 = 1500
Rhyolite

Sampling
p g
MAF#
4
1
3

INTM
3
0
2

FEL#
81
20
166

61 % Correct

Stratigraphy
ChemostratigraphicChihi analysis
l i ididentified
ifi d 5 diffdifferent volcanicli units:i
2 felsic (rhyolite & rhyodacite), 1 intermediate (dacite), &2 mafic ((basalt)) volcanic compositionspBoth Bisha and Harena deposits have felsic volcanic rockfootwalls
Bisha VHMS
Harena VHMS

Stratigraphy

Petrography

Petrography
IIgneous Minerals:Mil FELD,FELD QTZ
Hydrothermal Minerals: CHL, MUS, QTZ, SX, CAL, AP, TIT
Metamorphic Minerals: HB, BT, EP, CTD, AND, VES

Mafic rocks contain CHL, some QTZ, and minor MUS
All felsic rocks contain MUS & CHL, contain significant QTZ

Aluminous Alteration
100

60

ALUM

90

QZMS

QZCH

50

80
70

QuartzQt
CalciteMuscovite
Chlorite
Andalusite

60
50
40
30

40

FEL1 QZMSFEL1 QZCHFEL1 ALUM
FEL2 QZMSFEL2 QZCHFEL2 ALUM

30

20

20
10

10
0
H004819

H004117

B336832

H002032

H002109

H002528

H004189

H004798

H011483

H011496

H011871

0
20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

SiO2 (wt. %)Sample Number
60

60

QZMS & QZCH
50

50

40

40

FEL1 QZMSFEL1 QZCHFEL1 ALUM
FEL2 QZMSFEL2 QZCHFEL2 ALUM

30

20

QZCH

QZMS

ALUM

ALUM

FEL1 QZMSFEL1 QZCHFEL1 ALUM
FEL2 QZMSFEL2 QZCHFEL2 ALUM

30

20

10

10

0

0
5

7

9

11

13

15

17

19

21

23

25

Al2O3 (wt. %)

27

29

31

33

35

37

39

0.0

0.4

0.8

1.2

1.6

2.0

2.4

2.8

3.2

Mg/(Fe-S/2) (molar)

3.6

4.0

4.4

4.8

Molar Element Ratio Analysis
180
FEL 1

160

Alkali Feldspar
Control Line(m = 1)

FEL 2

140
120
100

feldspar->muscovite

siliceous
exhalite

80
60

Muscovite
Control Line(m = 1/3)

40

muscovite->
chlorite

20
0
0

20

40

60

80

100

Al/Ti (molar)

120

ChloriteControl Line(m = 0)
140

160

180

Molar Element Ratio Analysis
540

Qtz & Ch
Control Line(m = infinity)

450

FEL 1

Qtz-Mus

FEL 2

Muscovite &Alkali Feldspar
pControl Line(m = 3)

360

270

180

Qtz-Chl90

Aluminous
0
0

20

40

60

80

100

120

(Na+K)/Ti (molar)

140

160

180

200

220

Molar Element Ratio Analysis
1.0

K-spar
Node [0,1]

0.9

FEL 1
FEL 2

0.8
0.7
0.6
0.5

Muscovite
Node [0,1/3]

0.4

AlbiteNode [1,0]

0.3
0.2
0.1

Chlorite
Node [0,0]

00
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

Na/Al (molar)

0.7

0.8

0.9

1.0

Molar Element Ratio Analysis
3.0

2.5

Clinochlore
Node[0,5/2]

2.0

FEL 1

BiotiteNode [1,3]Projected from Pyrite

FEL 2

Daphnite
Node[0,3/2]

Alkali Feldspar
Node [1,0]Muscovite
Node[1/3,0]

1.5

1.0

0.5

0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

(Na+K)/Al (molar)

0.7

0.8

0.9

1.0

Hydrothermal Alteration
QTZ-MUSC:
QTZ
MUSC weakk muscovite
i alterationli off feldspar
f ld(h(hangingwall)ill)
QTZ-CHL: intense chlorite alteration of muscovite (footwall)
ALUMINOUS: chlorite or chlorite
chlorite-andalusite-muscovite-calcite
andalusite muscovite calcite
assemblage (immediate footwall/gangue)
Bisha VHMS

Harena VHMS

K vs. Na Mineral Stability Diagram
high
Na/K fluid(tonalite)

DNa
l
log
DH

albitemediumNa/K fluid(monzogranite)K-sparchlorite

muscovite
low
Na/K fluid(alkali feldspar
granite)hydrothermal
y
fluid

DK
l
log
DH




Water-Rock Reactions
K-spar & Albite => Muscovite
3 K-SparSpa + 2 H+ => Muscovite
usco te + 6 Qua
Quartzt + 2 K+
3 Albite + 2 H+ + K+ => Muscovite + 6 Quartz + 3 Na+
Muscovite => Chlorite
2 Muscovite + 14 H2O + 3 Fe+2 + 6 Mg+2=>>
Daphnite/Sheridanite + Quartz + 2 K+ + 16 H+
Albite => Chlorite
6 Albite + 14 H2O + 3 Fe+2 + 6 Mg+2=>
Daphnite/Sheridanite + 13 Quartz + 6 Na+ + 12 H+

K vs. Na Mineral Stability Diagram
high
Na/K fluid(tonalite)

DNa
l
log
DH

albitemediumNa/K fluid(monzogranite)K-sparchlorite

muscovite
low
Na/K fluid(alkali feldspar
granite)hydrothermal
y
fluid

DK
l
log
DH




Hydrothermal Alteration Path
Introduction of hydrothermal
fluid moves the mixed fluid
composition into the muscovite
stability field, causing the K-spar=> muscovite reaction to
occur:
3 KAlSi3O8 + 2 H+=>
KAl3Si3O10((OH))2 + 6 SiO2 + 2 K+

muscovite

K-spar

0 % MS

low
Na/K fluid(alkali feldspar
granite)20 % MS
40 % MS
60 % MS

This moves the mixed fluid
composition back onto the K-sparmuscovite stability field boundary
Repetition of this process moves themixed fluid composition down thestability boundary until K-spar isconsumed

80 % MS
100 % MS

Hydrothermal Alteration Path
3 KAlSi3O8 + 2 H+=>
KAl3Si3O10(OH)2 + 6 SiO2 + 2 K+

muscovite

K-spar

0 % MS,
100 % KS

low
Na/K fluid(alkali feldspar
granite)Buffered Hydrothermal
Alteration PathIn equilibrium withmuscovite(100 % muscovite)

IIn equilibrium
ilib iwith K-spar(100 % K-spar)

100 % MS,
0 % KS

Reaction between k-spar& muscovite buffers themixed fluid

Mineral Stability Diagram
high
Na/K fluid(tonalite)

DNa
l
log
DH

albitemediumNa/K fluid((monzogranite)
g
)





K-sparchlorite

muscovite
low
Na/K fluid(alkali feldspar
granite)hydrothermal
fluid

DK
l
log
DH




MER Analysis and HA Models
1.0

K-spar
Node [0,1]

0.9

FEL 1
FEL 2

08
0.8
0.7
06
0.6
0.5

Muscovite
Node [0,1/3]

04
0.4

AlbiteNode [1,0]

0.3
02
0.2
0.1

Chlorite
Node [0,0]

0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

Na/Al (molar)

0.7

0.8

0.9

1.0

MER Analysis and HA Models
30
3.0

2.5

Clinochlore
Node[0,5/2]

2.0

FEL 1

BiotiteNode [1,3]Projected from Pyrite

FEL 2

Daphnite
Node[0,3/2]

Alkali Feldspar
Node [1,0]Muscovite
Node[1/3,0]

1.5

1.0

0.5

0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

(Na+K)/Al (molar)

0.7

0.8

0.9

1.0

Mineral Stability Diagram
albite

DNa
l
log
DH



mediumNa/K fluid(monzogranite)
(
g
)

No
Alteration

Aluminous
Alt
Alterationti

K-sparchlorite

QTZ-MUSC
QTZAltAlterationti

QTZ-CHL
QTZAlteration

muscovitehydrothermal
fluid

DK
l
log
DH




Mineral Stability Diagram
chloritelog

Chloritite
Alteration

D ((Fe,Mg)
g)2
2
D 
H

K-sparandalusite(pyrophyllite)

AND-CHL-MUS-CAL
Alteration

muscovite

DK
l
log
DH




Conclusions
T felsic,Twof l i one iintermediate,t
di t & ttwo mafic
fi volcanicli rockkcompositions host the Bisha & Harena VHMS deposits
Bisha & Harena depositsp
do not occur at the same stratigraphic
g p
level
Three hydrothermal alteration styles exist:• QTZ-MUS - hangingwall felsic & mafic rocks• QTZ-CHL - footwall felsic, mafic, & intermediate rocks• ALUMINOUS - immediatei
di t ffootwallt ll (H(Harena ffelsicl i rocks)k )Aluminous alteration is previously un-recognized
These alteration styles exhibit similar (mmc) mineral
assemblages with different proportions in different hosts
A simplep thermodynamicymodel describes all 3 alteration stylesyFirst illustration of invariant point control in VHMS alteration

Thanka You
ou
Questions ?

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are needed to see this picture.

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are needed to see this ppicture.

Colluli: The Gateway to the Danakil
Asmara Mining
i i Conferencef
2014Paul Donaldson – CEO and Managing Director

Forward Looking Statements and Disclaimer
The information
Th
i f
i in
i thishi presentationi isi published
bli h d to informi f
you aboutb
S h BoulderSouth
B ld MinesMi( h “Company”
(the
“C
” or
“STB”) and its activities. STB has endeavoured to ensure that the information in this presentation is accurate at
the time of release, and that it accurately reflects the Company’s intentions. All statements in thispresentation, other than statements of historical facts, that address future production, project
development,p, reserve or resource p
potential,, explorationpdrilling,g, exploitationp
activities,, corporateptransactions
and events or developments that the ‘Company expects to occur, are forward-looking statements. Although theCompany believes the expectations expressed in such statements are based on reasonable assumptions, suchstatements are not guarantees of future performance and actual results or developments may differ materiallyfrom those in forward-looking statements.
Factors that could cause actual results to differ materially from those in forward-looking statements include
market prices of potash and, exploitation and exploration successes, capital and operating costs, changes inproject parameters as plans continue to be evaluated, continued availability of capital and financing and general
economic, market or business conditions, as well as those factors disclosed in the Company's filed documents.
There can be no assurance that the development of the Colluli Project will proceed as planned.
Accordingly, readers should not place undue reliance on forward looking information. Mineral Resources havebeen estimated using the Australian JORC (2004) Code (‘JORC 2004’), which is a permitted code underCanadian National Instrument 43-101 (‘NI 43-101’). In addition to the CIM Definition Standards on Mineral
Resources and Mineral Reserves.
Reserves Mineral Resource classifications under the two reporting codes arerecognised as equivalent in categories with no material differences. To the extent permitted by law, theCompany accepts no responsibility or liability for any losses or damages of any kind arising out of the use of any
information contained in this presentation. Recipients should make their own enquiries in relation to any
investment decisions.

2Colluli highlights

3

1.

Large, high grade potassium bearing resource close to surface in an
emerging potash province.

2.

Close proximity to coast and geographically favourable relative to keymarkets.

3.

Unique combination of salts suitable for low cost production ofpotassium sulphate (SOP or sulphate of potash).

4.

Strong and effective relationship with joint venture partners –ENAMCO

5.

Project development based on modular concepts to build a platform
for growth while focussing on risk mitigation and resource utilisation

Potash and demand drivers
Potash is a generic term used todescribe a variety of potassium
bearing minerals and manufactured
chemicals used primarily as fertiliser.
fertiliser
Keyy drivers of ggrowth
1. Increasing global population: +80 million people annually
2 Decreasing
2.
D
i arable
bl landl d
3. Changing dietary preferences

4

Potash comes in a variety of forms

Potashh TypeTotal
MarketPotashType

Nutrients

Uses

NOP

Potassium
NitratePotassiumand nitrogen

Chloride sensitive crops that require
additional nitrogen

SOP M
SOP‐M

Sulphateof Potash
Magnesia

Potassium,
sulphur andmagnesium

Specialty fertiliser, high value crops,
limited production centres

SOP

Sulphateof Potash

Potassiumand sulphur

Chloride intolerant and specialty crops
such as fruits, vegetables, nuts, beans andcoffee

MOP

PotassiumP
t i
Chloride

P t i
Potassium

St l – wheat,
Staplesh t corn, chloride
hl id tolerantt lt

Total global potash market approx. 64 million tonnes

0

10

20

30

40

Million tonnes per annum
Source: UN FAO, BMO Capital Markets

5

50

60

SOP – Price premium and limited advanced projects
Significant price premium overpotassium chloride (MOP)••••

Historical price premium has beenin the order of 35%
C
Currentt premiumiover 80%
Suitable for high value crops
Advantageous in saline and arid
soils*Compass Minerals North American
average selling price for sulphate ofpotash, compared to North American
average selling price of Potash reported by
Potash Corporation of Saskatchewan
Source: Compass Minerals Limited
Presentation, Nov’13

Limited advanced new projects•••

Significant price premium over potassium chloride

4% CAGR projected
Approximately 2 million tonnes ofgrowth over the next 10 years
Limited new projects• Greenfield SOP Projects at DFS = 1• Greenfield SOP Projects at PFS = 2

4% CAGR projected
Source: Parthenon Analysis, EPM Mining

6

The Danakil Depression ‐ an emerging potash province
The Danakil Potash belt comparespfavourablyy in terms of size, resource depth
p and environmental
issues against other potash belts globally.
> 4.2 billion tonnes of measured and indicated potassium salts across the Danakil to date1
Key Global Potash Belts2
Danakil,
East Africa – Eritrea, Ethiopia

A ib
Attributes

Saskatchewan,
CanadaManaus – Santarem Basin, Amazonas,
BrazilUrals,
RussiaSize

Operator(s)Profile

350km across

600km across

400km across

150km acrossEmerging junior mining companies
South Boulder,
Boulder Allana,
Allana Circum
Mineralised zones occur much closer
to the surfaceEstablished, large cap companies
i e Canpotex
i.e.




Emerging mining companies
i e Brazil Potashi.e.
Potash,Established, large cap companies
K&S Group,Group Uralkali (Bela‐Russian)Typically only 20‐100m in Eritrea
150 – 950m in Ethiopia3

Canadian deposits typically range from1,500–2,000m



Similar depth as Saskatchewan
Typically ~500‐2,000m1

Russian depths are typically 1,800 to
2,000m

Conducive to the use of Evaporationand geothermal power

Cold climate
Evaporative solar ponds less effective

Wet climate, heavy rainfall
Evaporative solar ponds less effectiveCold climate
Evaporative solar ponds less effectiveFlat, arid desert with sparse
population
Minimal community/social concerns

Heavily populated area
Significant community/social concerns

Tropical climate, dense vegetation
Considerable environmental issues

Mountainous terrain
Low environmental concerns
Resource Depth

ClimateEnvironment /SocialNotes:
1.

2.
3.

7



Measured and Indicated tonnages for Danakil based on combined tonnages from South Boulder Mines, Allana Potash and Ethiopian Potash (Agriminco)
South Boulder Mines tonnages from stated N43‐101/JORC resource, Allana tonnages from Allana Feasibility N43‐101 compliant
project summary, Ethiopian Potash (subsequently Agriminco) tonnages obtained from SEDAC, N43‐101 resource report
Based on Brazil Potash presentation (February 2013).
Ethiopia drill depths obtained from Allana reports

Large, high grade potassium bearing resource
Over 1 billion tonnes of potassium
bearing salts – all potassium salts in
the Colluli resource are suitable for the
production of potash fertilisers.

Colluli at a Glance

Shallow mineralisation supports
Colluli as open pit – a proven, safer
mining method, easier to expand
and better overall resource
recovery than underground.
One of only three major resources
containingt i i kainite
k i it saltlt (key(k salt
lt forf SOP
production) in solid form globally.

Location

South Eritrea

Size

Approximatelypp
y 400km2

Product

Sulphate of Potash

Resource1

Measured:
Indicated:
Inferred:
Total:

262Mt
581Mt
173Mt
1016MtPotassium
Bearing Salts

Sylvinite:
Carnallitite:
Kainitite:

110Mt
309Mt
597Mt

Process

Flotation/Solar
EvaporationStage

PFS level testwork
program underway

1 Refer to Resource Statement on Page 30

8Close and unmatched proximity to the coast
ColluliCll li isi theth closestlt potassium
t isulphatel h t resource tot theth coastt globallyl b ll andd hashthe most favourable coastal access from the Danakil depression.

Anfile Bay Port
Other Ethiopian
Projects

Tadjourah Port
Dijbouti Port

• 75km75k tot designatedd i t d loading
l di pointi t att Anfile
A fil BayB
• 180km from the Port of Massawa (4 berth bulk and container terminal)

9

Well located to key growth markets

10Colluli’s switch from MOP to SOP ‐ strong economic uplift
Switching from MOP to SOP better matches resource, process and product
Lower strip ratio
Lower mine cost
Potentially longer mine life
Substantial price premium

•
•
•
•

Reduction in strip ratio andminingi i costs
t

12

190

10

$

170

8

150
130

6

110

4

90
2

70
50

0
ESS1

SDM

Mine Cost Est.

11

SOP

ye
ears (@ 1Mtpa rate)

210

Waste:OreMin
ning Cost $/tonne prod
duct

14

200

700

180

650

160
140

Life

120
100
80
60
40

9
9
9
9

Substantial Premium based on
current and historical p
product
pricesSubstantial potential increase inmine
i life
lif

250
230

14:1 to 2.3:1$224 to $75/tonne of productp17yrs to 200yrs+$US300 price premium over MOP

FOB
B sale price $/tonnee

•

600
550

$

500
450
400
350
300

20
0

250
ESS1

SDM

SOP

Waste:Ore

Source: 6th February 2014, South Boulder Mines ASX release, ‘Positive Results from Colluli Processing Review’21st March 2013, Colluli Potash Project, Updated Economics
ESS1 = Engineering Scoping Study, 1 million tpa potassium chloride
SDM = Staged Development Model

ESS1

SDM

SOP

Production process is simple and proven

12

1
1.

Colluli’sC
ll li’ key
k salts
lt can beb purified
ifi d using
i simplei l libliberation
ti anddconventional flotation processes.

2.

The combination of the purified salts results in an ambientttemperature,
t
hi
high
h yield
i ld conversion
i didirectlytl tto potassium
t isulphate.
l h t

3.

This simple, proven process is currently used by low cost brine
producers.

4.

The key difference is that Colluli starts with salts rather than brine.
This is a major advantage of the Colluli resource. It reduces footprintsize, improves reliability of productivity, and reduces complexities ofbbrinechemistryhmanagement.

5.

The presence of kainite and sylvite (from sylvinite and carnallite) give
the Colluli a major advantage for SOP production. It is the
combination of these salts that minimise energy inputs and result in
maximum potassium yield.

Preliminary process concept
Potassium chloride produced is combined with kainite to produce SOPThis is the lowest energy input, highest potassium yield route to potassium
sulphate

13

Other key factors for Colluli

14

1
1.

No communities
N
iti within
ithi theth
exploration tenements.

2.

Process can accommodate
seawatert – consistenti t t anddunlimited water supply to be
piped from the Red Sea coast to
the Colluli site.
site No major
abstraction from local aquifer.

3.

Unsealed coastal road runs within
60km of the Colluli site.
site

4.

No clearing required.

5.

Ease of access for construction
equipment and mining fleet.

Colluli Mining Share Company (CMSC) incorporated

Colluli Mining Share Company wasincorporated in March 2014.

1
1.

3 board meetings held to date2.

Financials approval process for
CMSC established3.

Board overseeing andgoverning the Colluli
development

15

Adopting the principles of modularity
Colluli has changed the development philosophy from large
scale development to one where modularity andexpandability are key themes.

Why Modularity?

16

1.

Risk Mitigation: Safety, Capital/Commercial

2.

Process Optimisation

3.

Capital Management

4.

Ease of Expandability

Risk mitigation•••

Managing workforce size, skills andtraining
Avoiding competition for limited skills
within developing mining industry
Developing capability at ag
rate
manageable

Employyees

Safety:
f

1000
900
800
700
600
500
400
300
200
100
0

Source: STB Colluli PFS, SOP Production

350

700

1050

1400

Production
Rate tonne/yr
National
Expat

Capital/Commercial:
•

•

17

Analysis of Australianmining projects shows
larger % cost increases withiincreasingi project
j t sizeiHighest level of confidence
in the bracket with theg number of projects
p jlargest($100m ‐ $500m)

Value of Mining
Projects Completed($m)

20 – 100

101 ‐ 500

501 ‐ 1000

+1000

Number completed

43

54

17

27

Average cost change

2.4%

‐3.8%

4.0%

14.6%

Source: Deloitte Access Economics, March 2014

Process and resource optimisation
Process Optimisation
Ambient data
Metallurgical
Piloting

18

Engineering
designIncreasing resource andprocess knowledge

GreenfielddevelopmentdltOperational data
Engineering improvements

Optimised
moduleOperational optimisation•

Greenfield developments rely on data acquisition and metallurgical test
programs forfprocess design.
d iWhil thisWhile
thi proves andd derisksd i k thethprocess, operational data and process understanding are core elements ofprocess optimisation.

•

Module designs can be optimised with the combination of data, plant
performance, improved understanding of raw material and processing
behaviour.

The advantages of modularity
1.
1
2.
3.
4.

De‐riskingDerisking the project
Resource utilisation – introducing other value accretive products
Market penetration
Expandability

Growth with market

SOP Module 3+

volumeKainiteSOP Module 2•••

Rocksalt•
SOP Module 1

time
19

•

ExampleModule 1 = 350,000 tonnes productMarket development for mined rocksalt
Module 2 = replicate 350,000 tonne module•
Reduced engineering costs•
Economy of scale benefits•
Reduced time to deploy
Test and deploy direct application kainite as
MOP‐M type fertiliser
Develop SOP‐M products

Colluli’s infrastructure solution based on modularity

ModularInfrastructure
growthModule 2
Ponds

Modular Servicing Bays (example)
Module 1
Ponds

Modular Fuel Pods (example)

Modular Offices and Camp (example)

20•

Simpler logistics•

Reducedd d Earthworkshk•Ease of expandability•

Improved capital management•

Improved process ramp up

Case study: Modular expansion at the Dead Sea
A modular expansion path was used at Arab Potash Company’s (APC) Dead Sea
operations. This laid the foundation for ongoing growth.
Modular Expansion Case Study: APC

Modular Production Profile
Production kt• Produce in the Dead Sea
2,500

2.25Mt of Potash by 2011

• Modular expansion a success• Began in 1983 with 280kt potash production• Introduced downstream industries such as salt,
NPK, Magnesia, Bromine & Potassium Nitrate

2,000
1,500

Introduced other downstream products

1,000• By 2011 producing 2.25Mt of potash
500

Initial 280kt production• This supports STB’s planned ‘first generation’,21

Page 21 – Strictly Private and Confidential

2011

2009

2007

2005

2003

2001

1999

1995

1991

1987

stages0
1983

second generation
generation’ and ‘long
long term
term’ expansion‘second2014 Accomplishments

22

Options review to process all salts completed

Feb

CMSC incorporated

Mar

Initiated transfer of resource model to AMC consultants

Mar

Commencement of metallurgical testwork for SOP production

Apr

Appointed study manager

May

Established all project workstreams for feasibility studies

May

Anfile Bay allocated to the project as export location

Jun

Oceanography studies initiatedJul

Preliminary process design flowsheets developed

Aug

First tranche of environmental baselines submitted

Aug

Resource hole ‘twinning’ and geotech drilling initiatedSep

PFS well progressed
Mil t
Milestones

2014E
Q2

Metallurgical Testwork
Preliminary Feasibility Study
Finalise the resource
Feasibilityy Studyy
Social Environmental Impact
Assessment
Mining License Application
Funding
Detailed Engineering
Phase 1 Construction

23

Q3

Q4

2015E
Q1

Q2

Q3

2016E
Q4

Q1

Q2

Q3

Q4

Colluli summary24

1.

Large, high grade potassium bearing resource close to surface in an
emerging potash province.

2.

Close proximity to coast and geographically favourable relative to keymarkets.

3.

Unique combination of salts suitable for low cost production ofpotassium sulphate (SOP or sulphate of potash).

4.

Strong and effective relationship with joint venture partners –ENAMCO

5.

Project development based on modular concepts to build a platform
for growth while focussing on risk mitigation and resource utilisation

Th k you
Thank
25

A
Appendixdi26

Highly capable team working through SOP PFS
Colluli Study Manager : James Durrant
Commencement Date : May 2014

Resource
Mine planning
Mine geotech

Infrastructure and p
process designg(with Global Potash Solutions)Hydrogeology, ponds
and infrastructure
geotechMetallurgical Testing

Export logistics

Social and Environmental Impact
Assessment

27

Potential market opportunities
Markets for these products are well established.
Potential Markets for Various Resource Mineralisation
Colluli Resource1

Global Market Context+ 650Mt

300Mt global
300Mtpal b l salt
lt market
k tbischofite (MgCl2)+200Mt

6 – 7Mtpa global market

anhydrite

Avg 4% ( ~40Mt)

187Mtpa Gypsum market

kieserite (MgSO4)

40Mt

Established fertiliser segment

Mineral Present at Colluli
rock salt (NaCl)
halite (NaCl)

1 Refer to Resource Statement on Page 30

28

Resource statement
The Current Colluli JORC-Compliantp
Mineral Resource Estimate byyp
potash mineral is as follows:

Occurrence

Tonnes (Mt)

Equivalent
KCl

Contained KCl(Mt)% of Total
Resource

Sylvinite (KCl.NaCl)

110

28.4%

31

16%

Polysulphate (K2SO4.NaCl.MgSO4.H2O)

65

10.8%

7

4%

Carnallite (KCl.MgCl2.H2O)

309

12.3%

38

19%

Kainite (KCl.MgSO4.3H2O)

596

19.8%

118

61%

Totall

1,080

18.0%

194

100%

The Colluli Potash Project has a current JORC/NI43-101 Compliant Measured, Indicated and Inferred Mineral Resource Estimate of 1,079.00Mt @17.97% KCl or 11.35% K2O (total contained potash of 194.09Mt KCl or 122.61Mt K2O). The resource contains 261.81Mt @ 17.94% KCl or 11.33% K2O
of Measured Resources, 674.48Mt @ 17.98% KCl or 11.36% K2O of Indicated Resources and 143.50Mt @ 18.00% KCl or 11.37% K2O of Inferred
Resources.
This information was prepared and first disclosed under the JORC Code 2004.
2004 It has not been updated since to comply with the JORC Code 2012 on thebasis that the information has not materially changed since it was last reported by independent consultants ERCOSPLAN and announced by South
Boulder on 16 April 2012.

Competent Persons and Responsibility Statement
The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Greg Knox using estimates
supplied by South Boulder Mines Ltd under supervision by Ercosplan. Dr Henry Rauche and Dr Sebastiaan Van Der Klauw are co-authors of the JORC
and NI43-101 compliant resource report. Greg
G
Knox is a member in good standing off the Australian Institute off Mining and Metallurgy and Dr.s’ Rauche
and Van Der Klauw are members in good standing of the European Federation of Geologists (EurGeol) which is a “Recognised Overseas Professional
Organisation” (ROPO). A ROPO is an accredited organisation to which Competent Persons must belong for the purpose of preparing reports on
Exploration Results, Mineral Resources and Ore Reserves for submission to the ASX.
Mr Knox, Dr Rauche and Dr Van Der Klauw are geologists and they have sufficient experience which is relevant to the style of mineralisation and type ofdeposit under consideration and to the activity which they have undertaken to qualify as a Competent Person as defined in the 2004 Edition of the“Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Knox, Dr Rauche and Dr Van Der Klauw consent to thei l i ininclusioni theth reportt off theth matters
tt
b
based
d on information
i f
ti in
i the
th formfandd context
t t ini whichhi h it appears.

29

Experienced board and management
Paul Donaldson,
Donaldson CEO and Managing Director
Mr Donaldson was appointed to the role of Chief
Executive Officer in February 2013. He joins South
Boulder Mines from a series of senior management
roles with BHP Billiton. Mr Donaldson has experience ing scale open
p cut mine management,g, supply
pp y chain
large
logistics, mineral processing, business improvement andmarketing.

30

Liam Cornelius, Non Executive Director
Mr Cornelius graduated from Curtin University ofTechnology with a BAppSc in Geology. He has been
involved in the exploration industry within Australia
and Africa for 18 years. As a founding member ofS th BoulderSouth
B ld Mines,Mi
M CorneliusMrCli hash playedl d a keykrole in outlining areas of interest for the company.

Seamus Cornelius, Non Executive Chairman

James Durrant, Project Coordinator

Mr CorneliusMCli hash 21 years off corporate experienceiiinboth legal and commercial negotiations. He has been
based in Shanghai and Beijing since 1993, where hehas been living and working as a corporate lawyer.
From 2000 to 2011 Mr Cornelius was an international
partner with one of Australia’s leading law
firms, specialising in cross border investments in theenergy and resource sectors.

Mr. Durrant joined South Boulder Mines after a seriesMrof operational roles within BHP Billiton. With tertiary
qualifications in both mechanical and mining
engineering, Mr. Durrant brings project management,
organisational design and operational managementof large scale open cut mines skills to theorganisation
organisation.

Tony, Kiernan, Non Executive Director

Zeray Leake, Country Manager

Mr Kiernan was previously a commercial lawyer andis currently Chairman of the Australian iron ore
producer BC Iron Ltd (ASX:BCI) and a non‐executive
director of several listed mining companies including
Chalice Gold Mines Ltd (ASX: CHN), which has been
operating in Eritrea since 2009.

Mr Leake is a Geologist with over 12 years experience
i theinth development
d l
t and
d explorationl ti off
potash, gold, base metals and industrial minerals.
Mr Leake previously worked for the Geological
Survey of Eritrea.

Weathering of Mine Wastes and Tailingsin Water-limited (Arid) Settings:
Implications for Geochemical andEnvironmental Control
Protection of groundwater and surface-water,and other environmental values
Dr GD Campbell
Graeme Campbell & Associates Pty Ltd
Bridgetown, Western Australia
Asmara Mining Conference 2014
1-5 October 2014, Palace Hotel, Asmara, Eritrea

Generics
A. Terminology•

Acid-Rock Drainage (ARD) or Acid Mine Drainage (AMD)•Neutral Mine Drainage (NMD) or Metalliferous Drainage

B Commodity Context
B.
•hard-rock mines, coal mines, minerals sands mines, etc.

C. Rock-water-air (geochemical) interactions- control local pH regime and solute chemistry- pH is Master-Variable = f (acid-base balance)

ARD Formation: Thermodynamics / Reaction Mechanism
A Thermodynamics
A.
Thdi att earth-surface-P/T
th
f
P/T
-

B.

stable versus unstable minerals

Gibbs free-energy change (∆G) as governed by enthalpic (∆H) andentropic (∆S) terms, e.g.
FeS2 (pyrite) + O2 + H2O = H2SO4 + Fe(OH)3(unbalanced equation)

C. Mechanistically, fundamental to understand that:•pyrite oxidation is an electrochemical reaction•'freely-available' H2O is required for oxidation of reduced-S forms(Rimstidt and Vaughan 2003)

Control oxidation at arid sites by preserving residual moisturesof ex-pit reactive rock – the latter invariably 'dry-n-dusty'!

ARD Formation: Kinetics
A Rates of surface-chemical reactions:
A.

B
B.

-

specific-surface area-

unsaturated, moist conditions for peak oxidation rates

Relative saturations less than 80-85
80 85 % for O2 supply to be nonnon-limiting
limiting

C. Water content above residual,, so H2O is 'freely-available'yfor reaction-

porefluid flow also needed for removal of solutes for peak oxidation rates

Oxidation at arid sites is restricted by infrequent and limited
wetting-front
wetting
front penetration

Laboratory Testwork Approaches (1)•Presciptive (?) Compendia for Geochemical Testing•

MEND (2009)•

GARD Guide, AMIRA (2002), and others•

originators may not intend these to be prescriptive, but can easily
be perceived as prescriptive by regulators, consultants, etc.

But, in undertaking a characterisation programme:•'horses for courses'•

personal preferences of individual practitioners•

professional judgement as governed by 'drivers' from experience•

R&D / creativity
ti it lleads
d tto advancementdt ((cf.
f 'd'dumbingbi ddown')')

Laboratory Testwork Approaches (2)A Static Testing (('wholeA.
whole-rockrock' analyses and tests)•

S Forms (Sulphide-S, Cr(II)-Reducible-S, SO4-S)•

Acid-Neutralisation Capacity (chiefly carbonates)•

Net-Acid Generation•

mineralogy

B. Kinetic Testingg ((real-time behaviour with varyingy g moisture /aeration regimes)•

humidity cells and weathering columns•

oxygen-consumption cells

Static and kinetic testing approaches equally applicable for bothwater-limited and well-watered sites.

Kinetic-testing (1): Humidity Cells [e.g. ASTM 2013]

Kinetic-testing (2): Weathering Columns (e.g. AMIRA 2002)

Kinetic-testing (3): Oxygen-consumption Cells
use weathering
weathering-columns
columns to measure
Oxygen-Consumption Rate (OCR) directlyKinetic-testing (4): Hybrid Approachuse flood-lamps to dewater 'sludge'
sludge immediately after flushing toa 'middling-moisture', then keep in an incubatorSulphide Oxidation and Moisture Status:
Least-Limiting-Water Range (LLWR)•

Long-held concept in soil science and agronomy•

Moisture limits on plant growth:
•
•
•

•

'wet-end':'middling':'dry-end':

Tv > 80-90 % of I
<t > c. 10-20 bars

impeded, O2-limited
optimalimpeded, H2O-limited

impeded, O2-limited
optimalimpeded, H2O-limited

Moisture limits on sulphide oxidation:•••'wet-end':'middling':
middling :'dry-end':

Tv > 80-90 % of I
<t > c. 10-20+ bars

Value of looking beyond geology and engineeringengineering, and cross-correlating
cross correlatingwith concepts from other earth-science disciplines.

Pulsed & Zonal Weathering in Arid Lands
A
A.

Pulsed Dynamics in Arid Lands shared by:•biotic responses – from microbial soil surface crusts to growth stimuli
and fruitingg byy under and upper
pp storeyypplant species;p; commencement ofnext predator-prey cycle, etc.
•

B.

rock-water-air interactions'Weathering-windows' for oxidation are:•restricted to sizeable wet
wet-spells
spells (e(e.g.
g 10+ mm)•transient / short-lived as rapid drying immediately kicks-in

C. Locus of weathering confined to reach of irregular, 'fingered' wetting-front
Seasonality
y of oxidation 'spikes'p
at arid sites allows p
preparationpahead of major storm arrivals (e.g. rate-of-rise of reactive profile during
waste-dump construction linked to timing of episodic wet-spells).

Sulphide Oxidation and Moisture Status: Demo 1

Grey-Tails 
Rapid Drying(hours-to-days)

Brown Tails 
Brown-Tails
Delayed Drying(weeks+)Slurry of near-monomineralic pyrite left to free-drain withEp (at tailings-bed surface) approx. 10 mm/day; pH = 2-4

Sulphide Oxidation and Moisture Status: Demo 2
Localised moisture gradients
gradients, due to segregation of fines

Reactive tailings
wetted from below
via wicking; reaction
over weeks•

Dark Grey saturation-zones
 unoxidised•Light-brown and “just damp”
distal from saturation-zones
 leasteast ooxidisedd sed•Orange and moist proximal tosaturation-zones
 most oxidised
After rapid drying(days)

Wetting/Weathering-Front Coincidence
After 1st Wetting‐Cycle
g y

Wetting-Fringe just below
cover/tailings interface•

lag-phaselagphase (i.e.
(i e circum
circum-neutral)neutral) weatheringof PAF-tailings with/without 'store-releasecover'•Fe-pigmentationFe
pigmentation = locus of sulphidesulphideoxidation•

23 mm pulse of water+1d
day off redistribution
di t ib ti+ 6 days of Ep of c. 10-15 mm/day via
heating-lamps with side-wall insulation 
strong diurnal-T gradientsAfter
f 1st Drying‐Cyclel'Grey‐Tailings' ( largely unoxidised) in top cm, due toinstant evaporative‐drying, and thus stifled sulphide‐oxidation

Weathering-Fringe just below
cover/tailings interface

Field Example: Hardpan Formation in an 'Old' (30-40 yrs)
Massive-Sulphide-TSF in NSW Arid-Zone
Alternative Interpretation: Wetting‐front versus O2‐diffusion‐front control

Agnew and Taylor (2000), 5th ICARD (Denver)

Key Management Outcome: Climate Dependence of Oxidation
A.

Pyrite Oxidation in Well-Watered Settings
FeS2 + 15/4 O2 + 7/2 H2O = H2SO4 + Fe(OH)
(
)3


B.

Control of O2-supply is 1st-order control strategy

Pyrite Oxidation in Water-Limited Settings
FeS2 + 15/4 O2 + 7/2 H2O = H2SO4 + Fe(OH)3

Control of H2O-supply is 1st-order control strategy

Locate pyrite beneath reach of shallow seasonal wetting-front

optimise 'unsaturated freeboard' in terms of Water HoldinggCapacity (WHC)

Engineering & Cost Implications
A
A.

Basal-blanket of benign soil / regolith materials (cf(cf. HDPE liners
liners, etc.)
etc )• not compacted, but paddock dumped and dozed• WHC likely 300+ mm (site-specific specification)

B.

End-tipping versus bottom-up construction during waste-dump operation• WHC of reactive profile being built; rate-of-rise of reactive profile• role of traffic layer at top of lifts: enhanced WHC

C.

Free-draining cover profile for infiltration control at closure (cf. multi-layered,heavily engineered covers at well-watered sites)••••

not purpose compacted
WHC likely 300+ mm (site-specific specification)
erosion stabilityy'patched' distribution of vegetation – natural analogue in arid lands

Arid sites generally offer more 'degrees
degrees of freedom'
freedom for geochemical control

Quantifying Water-Holding Capacity (1)•Suction-plates and pressure-chambers•

Only suited to small moulds, due to equilibration-time constraints

Quantifying Water-Holding Capacity (2)•Column-Infiltration Technique• can be applied to estimate WHC of reactive lithotypes being isolated
e.g. pyritic carbonaceous shales with WHC c. 100 mm/m

Cover Ripline Infiltration Capacity (1)Cover Ripline Infiltration Capacity (2)•60 mm Total Storm-Depth

CONCLUSIONSA GA.
Geochemical
h i l Instability
I t bilit (e.g.
(pyritic
iti units)it ) ddoes NOT dependdd on siteitclimate – it is, what it is, where ever it is!
However, expression of this instability in terms of Reactivity DOES
Howeverdepend on climate – reactivity suppressed in strongly arid settings.
B Testing approaches relevant to both arid and wellB.
well-wateredwatered sites
sites.
C. Pulsed oxidation dynamics at arid sites from episodic rainfall
Locate pyritic units beneath reach of shallow seasonal wetting-front
D Arid sites generally offer more 'degrees
D.
degrees of freedom'
freedom , and longer'response times', for geochemical control•'unsaturated
unsaturated freeboard
freeboard' and water holding capacity

Acknowledgements•

Eamonn Dare, Bisha Mining Share Company•

Asmara Mining Conference Committee (Seife Berhe)•

Serge Smolonogov (formerly at Bisha)•

Lots of clients since the late-1980s•

Ann Evers / John Flynn, Genalysis Laboratory Services•

Roger and Daniel Townend, Townend Mineralogical Laboratory

Prospects of Haykota with Special
p ,Reference to Yacob Dewar VMS Deposit,
Western Eritrea

By
Seife M. Berhe and Tim Williams

Presented at Asmara Mining Conference
Asmara Eritrea
Asmara,2 October 2014

The Company¾ A private company, based in London, UK, exploring in Eritrea, East
Af i
Africa¾ Andiamo is focused on: Volcanic Massive Sulphides (Copper /Zinc) and gold deposits¾ Has a 235 km Haykota Exploration Licence,
Licence which contains theYacob Dewar and Ber Gebey mineral deposits, which Andiamo iscurrently exploring.
¾ Track record of discoveries include:
9 Yacob Dewar VMS system – Advanced project
9 Ber Gebey VMS system
9 Adi Merirey VMS system
9 Frataka VMS system
9 Hoba VMS system.
system
9 Shambotai, Jawkeray and Gurgur gold fields

Haykotaklilicensearea locatedalong the Bisha
VMS BeltGeology and Mineralization¾Geologically the Haykota project area forms
partt off th
the A
Arabian-Nubianbi N bi Shi
Shield,ld whichhi h isiformed by Upper Proterozoic folded rocksequence andd shearedhd zones;¾Very prospective for VMS deposits:
presence off gossans andd silica
ili bbarite;it¾Presence of artisanal mining and anomalous
soil
il geochem
h results
lt on theth southernthpartt offthe license area: Shambotai and Gurgur.

Outline of Regional andD il d SSoilil SSampling
Detailedli
Cu Results (ppm)(pp )A total of 7223 soil samples
collected
Sampling Space
400 400m
400*400m
200*200
200*100
100*100
200*50100 25100*25400*50

Soil sampling of
the Yacob Dewar
and Ber Gebey
corridorshowedanomalous Au
and Curesults.
Follow up
drilling was
conducted.

Regional Airborne Survey

Integrated Gravity & EM Geophysical Survey Data

IP Geophysical Survey

Regional gravity
covered an areaof 360 km2 whichis 46% of the
exploration
license area.
Magnetic Survey

Regional gravity survey

Case Study of Prospect Areas
Detailed follow up of prospective mineralised areas was
conducted using various exploration techniques.
techniques The projects
are divided into advanced and less advanced projects and only
five case studies are presented :¾ Yacob Dewar - Ber Gebey VMS system: Advanced
project¾ Hoba VMS prospect¾ Adi Merirey VMS prospect¾ Frataka VMS prospect¾ Shambotai, Jawkeray and Gurgur shear hosted gold fields

Hoba VMS Prospect Geological Map

Standing on Hoba Copper
trenchAdi Merirey VMS system¾ NE of Yakob Dewar about 5 km
¾ Strong geophysical anomaly¾ Extensive disseminated sulphides¾ Gold and copper values in gossan
9 2011: Geology mapping discovered gossan
9 2012: 8 diamond drill holes completed¾ Incl. 15 metres grading approx 0.5% copper

Massive sulphide cores at Adi MerireyFrataka Gold and Copper VMS Prospect

Based
ased on anomalous EM
M and gravity data, geological and soil sampling and IP surveys wereconducted. Followed by exploratory drilling.

Anomalous Cu in soils at Frataka.
Malachite in rock outcrops

Frataka
Cu resultsin drill holes
FRAD 02 & 05

Shambotai –Gurgur
Gurgur Gold Prospect Area
¾ The
Th Shambotai-Jawkerai
Sh b t i J k i andd GurgurGgold
ld occurrences havehbeen known for over 20 years because of artisanal workings.
¾ Systematic exploration by Andiamo Exploration, which
included rock chip, stream sediment, magnetic andgeostructural studies has shown that this area contains major
shear hosted gold deposits that are controlled by major shear
zones,, which forms a flower structure.
¾ There is also extensive development of several quartz veins in
the area.
area Very encouraging results have been discovered.
discovered

Shambotai
Artisanal pits
pobserved from ahelicopterShambotai Area
Initial drilling
results showed
disseminatedgold of36m@0.52g/t

Gurgur Shear Hosted Gold ProspectYacob Dewar – Ber Gebey VMS
Corridord
The Yacob Dewar Project is a VMS gold-copper
exploration project, located in central Haykotaarea.

Induced Polarization (IP) GeophysicalSurvey at Yacobb DewarThe IP anomalous values correspondto the oxide Cu and Au zone

Diamond & RC Drilling at Yacob Dewar• 2 Air core Drills (36m)• 58 RC Drills (4475m)• 62 diamond Drills (4782m)

Trench In Yacob Dewar Gossan
2388 m trenches excavated at
Yacob Dewar at a maximum
depth of 6.3 meters

Yacob Dewar – Au and Cu Drill ResultsRepresentative Geologic Section Across the Yacob
Dewar Au & Cu Deposit

Yacob Dewar & Ber Gebey Drill Collars

Resource Modelling of Yacob Dewar Au DepositResource Modelling of Yacob Dewar Oxide Copper
DepositTrenching at Ber Gebey

Ber Gebey – Gold Bearing Silica Barite
Rock (SBR)

Baseline Social & Environmental Studies
The following baseline survey have so far being collected:
1. Land Use and Land Cover
2. Socio economic studies
3 Land ownership3.
o nership study
st d of the Yacob Dewar
De ar area
4. Baseline data of artisanal miners in Haykota area
5. Vegetation baseline study
6. Wildlife baseline study
7. Water demand in the Haykota area
8. Hydrological study of the Haykota area
9. Soil survey of Yacob Dewar area
10. Livestock and11. Baseline Health Survey

Corporate Strategy
1. Development
pof Yacob Dewar¾Surface gold deposit; open pit; high grade;
simple processing¾Intention: to generate cash for copper/gold
exploration¾Low capital costs; near term production;
55kms from Bisha¾Resource estimate¾A Technical and Economic Study (“TES”) will becompleted by 30 June 2015;

Corporate Strategy
2. Explorationpfor VMS in the HaykotayLicence¾Target is multi million tonne massive
sulphide Cu/Zn surface deposits¾Strong geophysics and geochemical
evidence¾Drilling has already demonstrated
mineralisation

Corporate Strategy
3. Exploration for shear hosted gold in

Haykota Licence Area

¾Target is multi million ounce gold
deposits at surface¾Extensive artisan mining activity inShambotai‐Gurgur: both valleys andveins¾Drilling has already demonstrated
mineralisation

Teamwork

MANAGEM
Exploration activities in Sudan

Over 80 years of successin mining development

Over 80 years of success in mining development

Company profile→ MANAGEM is an international diversified

BASE METALS

mining company.

Cu→ A major player in the Moroccan mining
sector since 1928
1928.

MANAGEM
Metals Portfolio

Gold

CaF2

SilverCOBALT & SPECIALTIES→ More than 10 years operations in Africa.
Co

20 Industrial sites

Zn

PRECIOUS METALS→ Listed on the Casablanca stock exchange.

50 Scientists
14 Processing Methods
7 Patents

Pb

Ni

ZnO

4 500 employees inmore than 5 countries

www.managemgroup.com

othersFully integrated mining groupMarketingExploration

Environmental

Processing

Internationally

E
c
o
n
o
m
i
c

S
o
c
i
a
l

Locally

R&D

DEVELOPMENTEngineering
MiningServices

Precious Metals
Imiter silver mine
Imiter mine is located 150 km East of Ouarzazate. Operated
by SMI, Imiter mine is one of the leading silver mines
worldwide producing up to 7 million ounces per year of highpurity silver ingots. It started operations in 1969. The mineowns important reserves estimated at more than 100
million ounces of silver metal.
metal
10‐year investments: MAD940 million
Number of employees: 580

Bakoudou gold mine
The Bakoudou gold mine is located 90 km far from
Mouanda in Gabon.
Gabon Operated by REG,
REG the mine started
production early in 2012.
Production capacity : 45 000 oz of gold per annum
Investment : US$50 million
Number of employees : 150

Base Metals
CMG polymetallic mines
CMG currently owns and operates zinc‐lead‐copper
polymetallic ore bodies located in the region of Jbilet in
Marrakech, namely Hajjar, Draa Sfar and Tighardine.
Annual capacity :85 000 tons of zinc concentrates / 20 000 tons of leadconcentrates / 15 000 tons of copper concentrates.
Cumulated investments : MAD2,400 million
Number of employees: 1 140

Akka gold and copper mines
Located 280 km south‐east of Agadir, AGM mines the Iourirn
ggold‐bearingg depositpsince 2001. AGM operationp
producespalso copper concentrates since 2007.
Annual capacity : Gold 23,000 oz – Copper 25,000 tons ofconcentrates
Investments : MAD2,200
MAD2 200 million
Number of employees : 600

Cobalt & Specialties
Bou‐azzer cobalt mine
Located 120 km south of Ouarzazate, Bou‐Azzer is the Group’s
oldest property (1928). Operated by CTT, the Bou‐azzer mine
produces cobalt concentrates and hydroxides.
Annual capacity : 2 000 tons of cobalt

Guemassa hydrometallurgical operations
The Guemassa site is based 30 km far from Marrakech.
Since 1996, CTT runs hydrometallurgical operations, derived
from R&D efforts, to produce high added value products
such as : cobalt cathodes, cobalt hydroxide, nickel sulfate,arsenic trioxide, zinc oxide, copper sulfate, …
10‐year investments : MAD2 billion
Number of employees : 1 600

Fluorspar

El Hammam fluorspar
p mineLocated 63 km from Meknès, El Hammam mine is operated
by SAMINE since 1974 and produces high quality fluorspar.
A
Annuall capacity
it : 100 000 tonst
off fluorspar
flacid
id graded10‐year investments : MAD 400 million
Number of employees : 310

Mangem: Our operation in Africa: Example of Sudan

Bloc 15 : 8730 km2

Bloc 9 : 12000 km2

Bloc 24 : 5880 km2

Our presence in Sudan: Since 2008

15

9

Artisanal work
24

Block 15
covering an area totaling 8,730
Km² in Northern Soudan→ September 2008: Agreement between the Government of Sudan and Managem for
Blocks 15 & 24 exploration licenses→ Year 2009: Exploration activity startup in Block 15

Block 9covering an area of 12,000 Km²
in the South of Block 15

Block 24covering an area of 5,880 Km²
in the South of Block9→ Year 2010: Establishment of MCM company, Managem’s subsidiary in Sudan→ Year 2011: JV company with HCMC for Block 9 Exploration license→ Year 2012‐2013 : Resources certification and BFS of Block 15‐Gabgaba ProjectWhy to explore in the Nubian Shield?
400

0
km

The Arabian‐Nubian Shield (ANS):
A favorable geological context forgold exploration(13
13 MozMoz)→ Gold deposits dating back to ancient times→

Fundamentally fertile belt with variety ofdeposit styles (orogenic, VMS, epithermal
porphyry)→ Unexplored in modern time

(2 Moz
(2
Moz))
MANUB
(3 Moz)
(2
2 Moz
Moz)

(0,9
0,9 Moz
Moz)
(1
1 Moz
Moz)

Tertiary
Precambrian shield
Operating Mine

Base metal – Epithermal gold – Orogenic gold deposit

JhonsonFrom Peter Johonson 2013
Johnson, 2013

ANS – Fundamental favorable geologic features→ Juvenil crust – material newly extarcted from the
mantle→ Oceanic setting – tectonic evolution fromoceanic crust to continental crust→ Multiple active margins – subduction zones,
island arcs in a large ocean basin→ Enormous magmatic activity – emplacement ofvast amounts of mafic and felsic magma
elevated heat flow , driver of hydrothermal
activityy→ Transpressive deformation – compression,
extension, shearing, thrusting, creation of space
Johnson, 2013

Soudan : MANAGEM hold 26 610 km2 of gold exploration project

Bloc 15 : 8730 km2
15
9

24

Sud
Ethi an
opia

Ri
ve
rN
ile

Bloc 9 : 12000 km2

ile
eN
u
l
B

e
Nil
ite
h
W

Bloc 24 : 5880 km2

Artisanal workSudan : Geological features of the concession areas→ Rock units having Panafrican age: meta‐
volcanic sedimentary rocks of Green
schisthi facies
f i intrudedid d byb plutonicli rocksk→ All the rocks are affected by the NS shear
zone: Keraf shear zone
→ Tertiary intrusive and extrusive igneousrocks→ Mineralization restricted to NS tending
quartz veins and alteration zones hosted
by felsic dykes

15 km

www.managemgroup.com

Exploration works conducted in Sudan
Block 15
→ Remote sensing:g satelliteinterpretation and hyperspectral→ Stream Sediments (BRGM)→ Soil geochemistry (BRGM)→ Generation of numerous targets forfield checking→ GeologicalG l i l mappingi andd samplingli
in some focusing areas→ Trenching : 27 000 m→ Drilling program: 195 000m
→ Topographic survey of the target
Areas→ Best deposits to date:¾ UTM Zone
¾ Central Zone (C04 & C02)
¾ WG03

BRGM – Results of strategic works
Au

Cu

As

Remote sensing: Block 15

Iron oxide

Carbonate/Sericite/Biotite/Silce
Exploration target

Exploration works conducted in Sudan

Block 15

Exploration works performed by MCM – Geology→ Deformed network of quartz veins→

Shear corridor dipping gently to the east

→ Country rock (diorite and andesite)→ Strong hydrothermal alteration: ironcarbonates; disseminated pyrite; silicification

UTM ‐ Exploration works performed by MCM – Trenches/RC/DD

Zone

Trenches

Lenght (m)No of samples

Preparedsamples

Analysedsamples

UTM

27

4281

3106

3106

3106

Zone

UTM

RC

DD

%DD/RC

Lenght (m)No. drill

Lenght (m)No. drill

29512

539

892

12

2

UTM – Resources estimation & bloc model
Drill spacing 25mx25m
UTM – As of May 2013

UTM
UTM

Cut‐off grade
(g/t
/ Au)
0.35
0.35

UTM

0.35

UTM

0.35

Zone

Total

Classification
Measured
Indicated
Measured+In
dicatedInferred

Tonnage(t)
3 759 000
1 413 000

Grade
(g/t
/ Au)
1.95
1.59

Metal
(Oz)
236 000
72 0005 172 000

1.85

308 000

324 000
5 496 000

1.75
1.85

18 000326 000

Central Zone – C04 – Localization & Geology→ Deformed network of quartz veins→ Host rocks: microgranodiorite dyke
→ Country rock : black shales→ Hydrothermal alteration: carb.Hem.Ser.
Tourmaline, leucoxene, disseminatedpyrite
C04

Central Zone – Performed work – RC & DD –Felsic dyke with Tourmaline

Felsic dyke with iron carbonates

Zone

Trenches

Lenght (m)No of samples

Preparedsamples

Analysedsamples

Central

39

8296

5853

5853

5302

Zone

C04

RC

DD

%DD/RC

Lenght (m)No. drill

Lenght (m)No. drill

22970

250

703

9

4

Central Zone – C04 ‐ Mineral resources
CT 20

CT 25

C04 – As of January 2013

C04
C04
C04

Cut‐off grade(g/t Au)
0 33
0.33
0.33
0.33

MeasuredMeas
redIndicated
Measured+ Indicated

C04

0.33

Inferred

zone

Total

Classification

Tonnage(t)
3 978 000
432 000
4 410 000Grade(g/t Au)
1 98
1.98
2.43
2.03

Metal
(Oz)
254 000
34 000288 000

2 000
4 412 000

2.97
2.03

200
288 200

Central Zone – C02 – Geology and location→ Deformed network of quartz veins→ Host rocks: microgranodiorite dyke
→ Country rock : black shales→ Hydrothermal alteration: carb.Hem.Ser
Altered microdiorite

C04

Stockworks of quartz

C02
Visiblegold
Black shales

Central Zone – C04 ‐ Mineral resources
Zone

Trenches

Lenght (m)No of samples

Preparedsamples

Analysedsamples

Central

39

8296

5853

5853

5302

Zone

C02

RC

DD

%DD/RC

Lenght (m)No. drill

Lenght (m)No. drill

24 398

246

632

7

CT 15

CT 7

3

Central Zone – C02 ‐ Mineral resources

Drill spacing 25mx25m

C02 – As of January 2013

C02
C02

Cut‐off grade(g/t Au)
0.33
0.33

C02

0.33

C02

0.33

Zone

Classification
Measured
Indicated
Measured+In
dicatedInferred

Total

Tonnage(t)
2 481 000
319 000

Grade(g/t Au)
1.65
1.71

Metal
(Oz)
132 000
18 0002 800 000
16 0002 816 000

1.66
1.46
1.66

150 000
1 000
151 000

C02
North

Measured
Indicated
InferredCategorization

WG03 – Location & Geology→ Located in the western part of the KSZ→ The geology is dominated by the sheared coarse‐ grained toporphyric diorite with basic to acid meta‐volcanic rocks crosscut
by gold bearing quartz veins→ Metamorphism: amphibolite→ Two types of the mineralization:→ Biotite, horenblend, disseminated pyrrhotite→

Chlorite, albite with pyrite→ The structures present a geological dome and draw an anticlinalform with a sub‐vertical axial plane striking N30°.

WG03 – Orogenic mineralization Vs disseminated→ Biotite – hornblende ‐ pyrrhotite

Hem

Horn

Po
Bio

0.5 cm→ Chlorite ‐ albite ‐ pyrite

Py
Alb

Chl
1cm

WG03 – Exploration work (ongoing Rc drilling program; spacing 25x25m– Mineral resources
Zone

WG03

RC

DD

%DD/R
C

Lenght
(m)

No.
drill

Lenght
(m)

No.
drill

65 229

421

3261

20

WG03

Zone

Trenches

Lenght (m)

WG03

7

4252

5

Block NW

Block SE

WG03 – As of October 2013

WG03
WG03

Cut‐off grade(g/t Au)
0.43
0.43

WG03

0.43

WG03

0.43

Zone

Total

Classification
Measured
Indicated
Measured+In
dicatedInferred

Tonnage(t)
11 881 000
21 218 000

Grade(g/t Au)
1.61
1.53

Metal
(Oz)
614 000
1 045 000

33 099 000
426 000

1.56
1.09

1 659 000
15 00033 525 000

1.55

1 674 000

Exploration Activity in Potential Extension

www.managemgroup.com

Exploration Tools and Staff in Sudan→ Total Staff : 260 including exploration, labs and industrial pilot plant unit
→ Laboratory of sample preparation and Analysis (Fire assay)→ Capacity of : 700 samples per day→ Drilling machines with a capacity of 200 000 m drills per year→

5 RC (Reverse Circulation)→ 1 DD (Diamond Drill)→ 1 percution machine→ Complete staff‐house with fully equipped nursery→ Water treatment unitPhase 1 Pilot Plant Project – Block 15
Pilot processing plant overview:¾

Start‐up of the production: August 2012¾

Objective: Starting mining activity with existing fresh ore and tailings
along with the ongoing exploration¾

Confirming all technical parameters and processing performances of the
BFS, which are decisive in the full scale project profitability¾

Processing capacity : 750 tpd of Ore by adding a flotation circuit

Highlights & Main Achievements
Corporate Social Responsibility
Objective : Contribute to local development
Total en SDG

Education25%

1. Furnishing of the existing dormitories
2. Distribution of encouraging presents to deserving students
3. Study grant
4. School Transport expenses contributions
103 000

Health

1. Ophthalmologist caravan at Mahalyat Barbar From 7/03/2014 to 13/03/2014
N b off medical
Numberdi l examinations:
i ti
2481 citizen
iti
Number of chirurgical operations: 93 citizen
Number of delivered glasses : 1151
123 000

Access to water

Other Helps

1. Borehole drilling and pumping equipment (B9)80 0001. Contribution to help victims of July and August floods
2. Contribution to help necessitous families during Ramadan
3. Contribution for regional wedding ceremony organized by the Nile State government
320 000
626 000

Total

www.managemgroup.com

GEOLOGY and STRATIGRAPHY
HARENA MINE Area
Asmara Mining Conference
October 2nd, 2014

Presented by:

Tesfaldet Berhane and Mussie Alemseged
BMSC Exploration Geologists

Harena Pit - Looking North – September 2014

“Everyone going home safe and healthy everyday”

Forward Looking Statements
This Presentation contains forward-looking
forward looking statements within the meaningof the United States Private Securities Litigation Reform Act of 1995 andapplicable Canadian securities legislation concerning anticipateddevelopments on t he Company' s continuing and future operations in
Eritrea, the adequacy of the Company’s financial resources and financial
projections. Forward-looking statements include, but are not limited to,statements concerning or the assumptions related to estimates of capitaland operating costs,
costs the timing,
timing nature and extent of future copper,
copper zincand gold production, expanding exploration licenses, the estimation ofmineral res erves and r esources, methodologie s and models used t oprepare resource and reserve estimates, the realization of mineral reserve
estimates, the conversion of mineral properties to reserves and resources,
the potential to expand resources, reserves and mine life,
future exploration budgets, plans, targets and work programs, capital
expenditures and objectives, anticipated timing of grant of permits, mining
and development plans and activities, construction and production targets
and timetables, grades, processing rates, life of mine, net cash flows, metal
prices, exchange rates, reclamation costs, r esults of drill programs,
dividend plans and policy, litigation matters, integration or expansion ofoperations, requirements for additional capital, government regulation ofmining operations, environmental risks, political risks and uncertainties,
unanticipatedpreclamation expenses,p, and other events or conditions that
may occur in the future. Forward-looking statements are frequently, but
not always, identified by words such as "expects," "anticipates," "believes,“"intends," "estimated," "potential," "possible", "budget" and similar
expressions, or statements that events, conditions or results "will," "may,“"could" or "should" occur or be achieved. Information concerning theiinterpretationtt ti
off drill
d ill results
lt andd mineralil resource andd mineralil reserve
estimates also may be deemed to be forward-looking statements, as suchinformation constitutes a prediction of what mineralization might be foundto be present if and when a project is actually developed, and in the caseof mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically
exploited.
Forward-looking statements are statements about the future and are
inherently uncertain, and actual achievements of the Company or otherfuture events or conditions may differ materially from those reflected in theforward-looking statements due to a variety of risks, uncertainties andother factors. Although the Company has attempted to identify importantfactors that could cause actual results to differ materially from thosecontained in forward-looking statements,
statements there may be other factors thatcause results not to be as anticipated, estimated or intended. The
Company’s forward-looking statements are based on the beliefs,
expectations and opinions of management on the date the statements are
made and the Company assumes no obligation to update such forwardlooking statements in the future, except as required by law. There can be
no assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated insuch statements. For the reasons set forth above, investors should notplace undue reliance on forward-looking statements.
Please see the Company’s Annual Information Form and Management
Discussion and Analysis of BMSC for a more complete discussion of therisk factors associated with our business which have been filed with
Canadian securities regulatorsgand are available at www.sedar.com,, whichhave also been filed or submitted to the U.S. Securities and Exchange
Commission on Form 40-F or Form 6-K and are available at www.sec.gov.

“Everyone going home safe and healthy everyday”

Objectives

 Previous exploration – what were the objectives?
 2014 Explorationp– a new focus
 To outline the Geology and Stratigraphy of the immediate
Harena Mine area – using good observations andlithogeochemistry to identify rock type and important alteration
alteration.
 To generate targets – using the defined stratigraphy inassociation with geophysics“Everyone going home safe and healthy everyday”

Outline
1 Location
1.
Lti (relative( l ti tot theth Bisha
Bi h Mine)Mi )2. Previous Exploration
3. 2014 Exploration Activities
4. Geology and Stratigraphy
5. Hydrothermal Ateration
6. Mineralization
7. Conclusion“Everyone going home safe and healthy everyday”

Location Map

233km by road west of Asmara, in the Gash Barka Region“Everyone going home safe and healthy everyday”

Property Map

Bishag
Processing
Plant

HARENA

HarenaMiningLi
License:9km South of
Bisha Mine
VMS

“Everyone going home safe and healthy everyday”

Previous Exploration• Fi
Firstt identified
id tifi d as a smallll alteration
lt ti ffeatureton th
the llandd sattimagery by Nevsun Resources• Subsequent exploration in the area continued during 2004
and defined:• Coincident soil geochemistry and gravity anomalies• Favourable geology and alteration associated withmassive sulphide deposits.
deposits• Further exploration methods included EM, Mag, IP andResistivity surveys were conducted• Metallurgical test work
• Bulk density measurements and geotechnical works• Resource and Reserve estimation“Everyone going home safe and healthy everyday”

Previous DrillingYear

Diamond
Drill Holes

metres

2005

27

4,072

First Exploration Drilling

2009

17

2,164

In-fill drilling

2010

37

2,896

Resource & Reserve drilling

2011
0

5

852
85

Resource
esou ce & Reserve
ese e ddrilling
g

2012

6

1,123

Production

Total

92

11,106

2014

29

9 450
9,450

E l ti
Exploration

Most of previous drilling focused on defining the Oxide Gold for
Production in 2012 and 2013

“Everyone going home safe and healthy everyday”

Harena - Reserves & Resources
Harena Mineral Resource Estimate (December31 2013) –Nevsun 43-101 Bisha MineZone

NSR Cutoff($/t)

Tonnes('000s)

Cu
%

Zn
%

Au
g/t

Ag
g/t

Indicated
Oxide Phase

42.41

Primary Phase

41.41

70 1,800

Total

0.65

3.91

5.5

14

0.6

23

59
5.9

8

0.8

32

4.93

16

0.52

22

1,870

Inferred
Oxide Phase

40 55
40.55

20 -

Primary Phase

39.55

350

Total

0.75

4.1

370

Harena Probable Mneral Reserve Estimate
Oxide Phase80 -Primary Phase

1,160

Total

1,240

0.64

3.57

NSR Cut-Off for Resources: Cu ($3.35/lb), Zn ($1.05/lb), Au ($1,350/oz), and Ag ($23/oz).
NSR Cut-Off for Reserves: Cu ($2.90/lb), Zn ($0.92/lb), Au ($1,175/oz), and Ag ($20/oz).
See NI 43-101 Report dated December 31, 2013 for additional details.

“Everyone going home safe and healthy everyday”

2014 Exploration Activities
2014 Exploration Activities
Diamond Drilling

9,450 meters

29 holesDrilling Ongoing

Airborne Geophysics

VTEM EM-Mag Survey

180kmCompleted

Ground Geophysics

FLEM“Fixed-Loop EM” surveys

50km

Completed

Borehole Geophysics

3-component BHEM + Physical
Properties probe

12 holesOngoingGeochemistryy

Systematic Whole rock andtrace element sampling

29 holes> 300 samples

Ongoingg g

Re-Logging

re-logging & WRA sampling of
selected historic holes

12 holes,~80 samples

CompletedMain
i tools
l are diamonddid drillingd illi andd geophysics
h i ini associationi i withi h re-logging
li off
historic holes and geochemistry to identify rock types and alteration styles“Everyone going home safe and healthy everyday”

Geology and Stratigraphy
STRATIGRAPHY
Meta-Sediments:

Graphitic Mudstone & Greywacke

Gabbroic Complex:
Felsic Volcanics:

Occurs in both Hangingwall andFootwall

Mafic Volcanic:

variable, fine to medium grained,
plage-phyric

Mafic - Intermediate Dykes: three types are known
STRUCTURE
Faults are manifested by strongly brecciated zones observed on
drill cores
The rocks are weak to moderately schistose with slightvariations in orientation
Small scale folds are also commonly observed in the hanging
wall“Everyone going home safe and healthy everyday”

Stratigraphic Cross-Sections“Everyone going home safe and healthy everyday”

Stratigraphic Section A – A’Section L5650 section A-A’ – (viewing NE 035deg Az.)

“Everyone going home safe and healthy everyday”

Stratigraphic Section B – B’FW

Section L5950 section B-B’ – (viewing NE 035deg Az.))“Everyone going home safe and healthy everyday”

Stratigraphic Section C – C’Section L610 section C-C’ – (viewing NE 035deg Az.)

“Everyone going home safe and healthy everyday”

Hole HX-005 Stratigraphy
Meta-sediments with andalusite
porphyroblasts
Hangingwall felsics

Mafic units

Massive Sulphide
FW
Footwall felsics

Columnar stratigraphic section, DDH HX-005“Everyone going home safe and healthy everyday”

TiO2 vs Zr – Rock Types
HX-005Stratigraphic
SectionTiO2 vs Zr ‐ All samples Harena
3.50

3.00

2.50

TiO2 (%)

Geology and
2.00

1.50

1.00

FW

0.50

0.00
0

100

200

300

400

500

600

700

Zr (ppm)“Everyone going home safe and healthy everyday”

Hydrothermal Alteration
HANGINGWALL ALTERATIONSilica-Sericite +/- chlorite, biotite alteration is occurredin Felsic volcanic rocks

Silica-Chlorite +/- biotite alteration in Mafic rocks

FOOTWALL ALTERATION•

Proximal- Intense Aluminous (Chlorite-SericiteSillimanite) -- alteration exists within the immediate
footwall Has the most intense degree of hydrothermal
alteration
lt ti

•

Distal- Moderate to strong Silica-Sericite +/- Biotite
alteration exists beneath the immediate footwall“Everyone going home safe and healthy everyday”

Hydrothermal Alteration Indexes
Na2O vs. Depth ‐ HX‐005

AI vs. Depth ‐ HX‐005

Al2O3/(CaO+Na2O+K2O)

100(K2O+MgO)/(K2O+MgO+Na2O+CaO)
0

50.00

50

50

100.00

100

100

Depth
h (m)

0

Depth (m)

0 00
0.00

150.00FW

ANCK vs. Depth ‐ HX‐005

150

150

200.00200

200

250.00

250

250

0.00

2.00

4.00

6.00

8.00

0.00

HX-005 -- Geochemical profile plots

2.00

4.00

6.00

8.00

0

20

40

60

80

100

“Everyone going home safe and healthy everyday”

Mineralization
Supergene (Cu) :45m-55m
Cu rich massive sulphides
containing Au andd Ag

125 m +

Au enrichedoxide cup:
0m-45m

400 m +

Primary (Zn &Cu)

Massive Sulphide containing
significant Cu and high grade
Zn Zones with appreciable Au and Ag

3D Isometric view from April 2012 BMSC report“Everyone going home safe and healthy everyday”

Metal Zoning
10%

4%

6 ppm

Zn (%)

Cu (%)Au (ppm)

Zinc-rich((upper))Copper-rich(lower)
Gold-rich(footwall)“Everyone going home safe and healthy everyday”

Hole HX-005
Zn-rich upper zone

Cu-rich lower zone

Gold-rich footwall“Everyone going home safe and healthy everyday”

Conclusions• There are three main Lithological units showing relatively consistent
stratigraphy• Sequences dipping to the NW• Th
The rocks
k are clearlyl l affected
ff t d b
by ffaults
lt andd smallll scalel folds;
f ld theirth i sizeiand orientation is not yet clearly defined and will be studied under theongoing exploration activities.
• Hangingwall and footwall alterations are distinctively identified and arecharacteristically indicative for targeting the mineralized zones• The primary sulphide zone shows further Zn, Cu, And Au zoning•

Immediate footwall zone has significant gold results“Everyone going home safe and healthy everyday”

2014 BMSC Exploration Team
Thank You!!
Yo !!

Our People our asset!!
“Everyone going home safe and healthy everyday”

Mineralogy & Lithogeochemistryof the Weathering Zone and Gossan
over the Bisha Zn-Cu-Au
Volcanic-Hosted Massive Sulphide
Deposit, Eritrea
Cliff Stanley, Kacper Halama
Dept. of Earth & Environmental Science
Acadia University, Wolfville, Nova Scotia, B4P 2R6, Canada
cliff.stanley@acadiau.ca

Asmara Geo-Congress - Sept./Oct. 2014

Resources(Probable Reserves as of Oct. 4, 2011)
Oxide Gossan: 4.65 M tonnes; 7.06 g/t Au, 29.56 g/t Ag
Supergene:7.38 M tonnes; 0.77 g/t Au, 32.68 g/t Ag,
6.35% Cu
Hypogene:
16.28 M tonnes; 0.72 g/t Au, 44.39 g/t Ag,
0.97% Cu, 5.40% Zn
Overall:
Now (2014):

28.31 M tonnes (indicated)
41.22 M tonnes (indicated)
Asmara Geo-Congress - Sept./Oct. 2014

Resources(Probable Reserves as of Oct. 4, 2011)
Oxide Gossan: 4.65 M tonnes; 7.06 g/t Au, 29.56 g/t Ag
Supergene:7.38 M tonnes; 0.77 g/t Au, 32.68 g/t Ag,
6.35% Cu (plus Pb)
Hypogene:
16.28 M tonnes; 0.72 g/t Au, 44.39 g/t Ag,
0.97% Cu, 5.40% Zn
Overall:
Now (2014):

28.31 M tonnes (indicated)
41.22 M tonnes (indicated)
Asmara Geo-Congress - Sept./Oct. 2014

Resources(Probable Reserves as of Oct. 4, 2011)
Oxide Gossan: 4.65 M tonnes; 7.06 g/t Au, 29.56 g/t Ag
Supergene:7.38 M tonnes; 0.77 g/t Au, 32.68 g/t Ag,
6.35% Cu (plus Pb)
Hypogene:
16.28 M tonnes; 0.72 g/t Au, 44.39 g/t Ag,
0.97% Cu, 5.40% Zn
Overall:
Now (2014):

28.31 M tonnes (indicated)
41.22 M tonnes (indicated)
Asmara Geo-Congress - Sept./Oct. 2014

Problems
What is the mineralogy &geochemistry of this gossan,in profile ?
Why is gossan Au grade 10 times
higher than hypogene grade ?
Why is there anomalous Pb in the auriferous)gossan)ore)loaded)for)processing
supergene zone ?

gossanoblique)air)photo)of)recessively
weathering)gossan)before)mininggold)dore)from)ﬁrst)pour,)2011

Asmara Geo-Congress - Sept./Oct. 2014

Regional Geology

Eastern Nafka
TerraneAsmara Geo-Congress - Sept./Oct. 2014

Local Geology

HambokAsmara Geo-Congress - Sept./Oct. 2014

Data Collected• Open)Pit)Observa?ons)&)Limited)Mapping• Drill)Core)Logs• Proximal)weathering)proﬁle:)gossan,)siliceous)gossan,)acid)leach,)supergene)Cu,)supergene)Pb,)hypogene)Cu/Zn)zones• Distal)weathering)proﬁle:)saprolite,)unweathered)host)rocks• Lithogeochemistry• Fusion)ICP/AES)&)ICP/OES)analysis)for)major)&)trace)elements• Leco)analysis)for)total)C)and)S• XPRay)Diﬀrac?on• Smear)mount)of)pulverized)material)from)geochemical)analysis• Regression)of)essen?al)minerals)against)lithogeochemistry)todetermine)mineral)modes• Magne?c)Suscep?bility)&)pH)Measurements• on)pulverized)lithogeochemical)samples

Asmara Geo-Congress - Sept./Oct. 2014

Fe-oxy-hydroxide minerals
2 Fe(OH)3 => 2 FeO.OH + 2 H2O => Fe2O3 + 3 H2O
2 Ferrihydrite => 2 Goethite + 2 H2O => Hematite + 3 H2Odehydrationtime

Ferrihydrite - Fe(OH)3

Goethite - FeO.OH
Asmara Geo-Congress - Sept./Oct. 2014

Hematite - Fe2O3

25oxidizing

Jarosite

O2

20
15

rain water

Fe+3

Ferrihydrite - Fe(OH)3

10

Ferrihydrite /Goethite /Hematite / Specularite

Fe+2

pE 5

Siderite0

H2O

PyriteGoethite - FeO.OH

-5

H2

-10

reducing-1502acidic

4

6

8

pH

10

12

14

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

Hematite - Fe2O3

25oxidizing

Jarosite

O2

20
15

rain water

Fe+3

Specularite - Fe2O3

10

Ferrihydrite /Goethite /Hematite / Speculaite

Fe+2

pE 5

Siderite0

H2O

PyriteSiderite - FeCO3

-5

H2

-10

reducing-1502acidic

4

6

8

pH

10

12

14

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

Jarosite KFe3(SO4)2(OH)6

Mapping of Weathering Zones

acid+leach+zone+adjacent+to+hema99c+gossan

acid+leach+zone+adjacent+to+goethi9c+gossan

unconformity+between+gossan+&+alluvium

typical+Fe<oxy<hydroxide+gold+ore

Asmara Geo-Congress - Sept./Oct. 2014

Mapping of Weathering Zones

porous+goethite+&+ferrihydrite+gossan

siliceous+acid+leachkaolini9c+saprolite

supergene+CHAL+replacing+massive+PY
Asmara Geo-Congress - Sept./Oct. 2014

Mapping of Weathering Zones

jarosite<coated+gossanous+boulder

hard,+massive+(non<porous)+specularite

hard,+massive+specularite+gossan

goethite+&+ferrihydrite+boxwork+(aFer
PY)+with+hard,+massive+specularite

Asmara Geo-Congress - Sept./Oct. 2014

Geochemical Results
Ag

Au

Pb

Cu

Asmara Geo-Congress - Sept./Oct. 2014

Mineralogical AnalysisAn)essen?al)mineral)suite)(>)5)vol.
%))was)iden?ﬁed)using)XRD
spectra)from)several)samplesof)each)lithology
acid+leach+sample+#+1922+w/quartz+&+jarosite

gossan+sample+#+1601+w/quartz+&+hema9te

saprolite+sample+#+1590+w/quartz,+muscovite+&chlorite

Asmara Geo-Congress - Sept./Oct. 2014

Essential Minerals
GossanAcid)Leach
Saprolite
SupergeneP)QTZ,)GOE,)ANA,)BAR,)KAO,)HEM,)CHL
P)QTZ,)GOE,)JAR,)BAR,)HEMP)QTZ,)ANA,)BAR,)KAO,)HEM,)CHL,)MUSP)QTZ,)PYR,)BAR,)DIG,)COV,)GAL,)SID{MEL,)ROZ,)SZO}
Massive)Sulphide P)PYR,)SPH,)QTZ,)CPY,)GYP,)BAR,)
COV,)DIG,){CUP,(CHAL},{MEL,)ROZ,)SZO}
Unweathered
P)QTZ,)MUS,)CHL,)PY,)ALU,)GYP
Regressed)mineral)mode)es?mates)were)compared)withlithogeochemical)composi?ons)and)validate)thesequan?ta?ve)nature)of)these)data
Asmara Geo-Congress - Sept./Oct. 2014

Saprolite

Asmara Geo-Congress - Sept./Oct. 2014

Gossan & Siliceous Gossan

Siliceous(Gossan
Normal(Gossan

MAF

MAF

MAF

MAF

FEL

FEL

FEL

FEL

Asmara Geo-Congress - Sept./Oct. 2014

FEL

FEL

FEL

FEL

Acid Leach

Asmara Geo-Congress - Sept./Oct. 2014

Asmara Geo-Congress - Sept./Oct. 2014

Initial Pyrite Oxidation
pE
Pyrite:)Goethite:4(FeS2(+(15(O2(+(10(H2O=>
4(FeO.OH(+(8(SO4C2(+(16(H+4)*)119.98)g)4)*)88.85)g)

=)
=

pH

479.92)g355.40)g

Pyrite)oxida?on)results)in)a)net)material)loss)&)thus
produces)residual)enrichment,)but)by)how)much?
0.72)gpt)*)(479.92/355.40))=
0.97(gpt(AuResidual)Enrichment)Alone
Doesn’t)Explain)the)7)gpt)Oxide)Au)Grade)!
Requires)either/both:Au)mobility)/)Fe)or)Si)removal

Asmara Geo-Congress - Sept./Oct. 2014

25

oxidizing

Jarosite

O2

20
15

Initial Pyrite
Oxidationrain water

Fe+3

10

pE 5

Fe+2

Fe-oxy-hydroxide
Siderite0

H2O

Pyrite

-5

H2

-10

reducing-150acidic

2

4

6

8

pH

10

12

alkaline

Asmara Geo-Congress - Sept./Oct. 201414

Example Host Rock Buffering Reaction(Fe,Mg)10Al4Si6O20(OH)16(+(20(H+pH

2(Al2Si2O5(OH)4(+(2(SiO2(+(14(H2O(+(10((Fe,Mg)+2

Buffered Hematite PrecipitationpE

4(Fe+2(+(O2(+(4(H2O<=>
2(Fe2O3(+(4(H+Asmara Geo-Congress - Sept./Oct. 2014

pH

25

oxidizing

Jarosite

O2

20
15

Initial Pyrite
Oxidationrain water

Fe+3

Buffering by
Chlorite
Hydrolysis

10

pE 5

Fe+2

Fe-oxy-hydroxide
Siderite0

H2O

Pyrite

-5

H2

-10

reducing-150acidic

2

4

6

8

pH

10

12

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

14

25

oxidizing

Jarosite

O2

20
15

Initial Pyrite
Oxidationrain water

Fe+3

Buffering by
Chlorite
Hydrolysis

10

pE 5

Fe+2

Fe-oxy-hydroxide

Buffered
Hematite
Precipitation

Siderite0

H2O

Pyrite

-5

H2

-10

reducing-150acidic

2

4

6

8

pH

10

12

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

14

25

oxidizing

Jarosite

O2

20
15

Initial Pyrite
Oxidationrain water

Fe+3

Buffering by
Chlorite
Hydrolysis

10

pE 5

Fe+2

Fe-oxy-hydroxide

Buffered
Hematite
Precipitation

Siderite0

H2O

Pyrite

-5

H2

-10

reducing-150acidic

2

4

6

8

pH

10

12

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

14

25

oxidizing

Jarosite

O2

20
15

Initial Pyrite
Oxidationrain water

Fe+3

Combined
Buffering by
Chlorite
Hydrolysis &Specularite
Precipitation

10

pE 5

Fe+2

Fe-oxy-hydroxide
Siderite0

H2O

Pyrite

-5

H2

-10

reducing-150acidic

2

4

6

8

pH

10

12

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

14

25

oxidizing

Jarosite

O2

20
15

Initial Pyrite
Oxidationrain water

Fe+3

Combined
Buffering by
Chlorite
Hydrolysis &Specularite
Precipitation

10

pE 5

Fe+2

Fe-oxy-hydroxide
Siderite0

H2O

Pyrite

-5

H2

-10

reducing-150acidic

2

4

6

8

pH

10

12

alkaline

Asmara Geo-Congress - Sept./Oct. 201414
Siderite - FeCO3

25

oxidizing

Jarosite

O2

20
15

rain water

Fe+3

10

pE 5

Fe+2
SideriteFe-oxy-hydroxide

0
-5

H2O

PyriteH2-10

reducing-150acidic

2

4

6

8

pH

10

12

14

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

Siderite - FeCO3

Gossan)minerals:
goethite)&)siderite
Anomalous)Pb)enrichPment)(f.g.+galena)
above)the) superPgene)Cu)zone

25

oxidizing

Jarosite

O2

20
15

rain water

Fe+3

Siderite

0-5

Pb(OH)3-

Pb+2

Fe+2

Pb(OH)2opE 5

Pb(OH)+

10

H2O

GalenaPyriteGalena - PbS

H2

-10

reducing-150acidic

2

4

6

8

pH

10

12

14

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

Siderite - FeCO3

Gossan)minerals:
goethite)&)siderite
Anomalous)Pb)enrichPment)(f.g.+galena)
above)the) superPgene)Cu)zone

25

oxidizing

Jarosite

O2

20
15

rain water

Fe+3

Siderite

0-5

Pb(OH)3-

pE 5

Pb(OH)+

Pb+2

Pb(OH)2o10

H2O

GalenaPyriteGalena - PbS

H2

-10

reducing-150acidic

2

4

6

8

pH

10

12

14

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

Siderite - FeCO3

Supergene)chalcocite&)covelliteCu)enrichment)in)a)supergene)zone

25

oxidizing

Jarosite

O2

20
15

rain water

Fe+3

10

Cu+2

pE 5

Malachite

Galena+Siderite0
CupriteCovellite

Chalcocite - Cu2S

-5

PyriteNativeCopperH2-10

Chalcocite

reducing-150acidic

2

4

6

8

pH

10

12

14

alkaline

Asmara Geo-Congress - Sept./Oct. 2014

Covellite - CuSSingle Thermodynamic Model
VerRcal(ZonaRon:
Goethite((siliceous)boxworks,)above)
HemaRte((massive,)below)

Oxide
GossanGalena(+(Siderite((+(HemaRte)
Chalcocite(+(Covellite((+(HemaRte)

Supergene
Zone

Chalcopyrite(+(Sphalerite((+(Pyrite)

Massive
Sulphide

Asmara Geo-Congress - Sept./Oct. 2014

Schematic Section - Geology

Asmara Geo-Congress - Sept./Oct. 2014

Schematic Section - Alteration

Asmara Geo-Congress - Sept./Oct. 2014

Schematic Section - Weathering

Asmara Geo-Congress - Sept./Oct. 2014

Schematic Section - Mineralization

Asmara Geo-Congress - Sept./Oct. 2014

Schematic Section - Interpretation

Asmara Geo-Congress - Sept./Oct. 2014

Take Away PointsThe)presence)of)jarosite,)kaolinite,)and)acid)leached)host)rocks
suggests)that)during)weathering,)very)low)pH’s)(1)P)2))were
obtained
This)triggered:• concentra9on+of+Au+by+material+transport+down+to+the+water+table• residual+enrichment+of+Au+due+to+S+&+Fe+loss+during+oxida9on• transport+&+re<distribu9on+of+Fe+in+the+gossan+(leaching+at+surface,+
precipita9on+below+as+massive+specularite)• forma9on+of+residual+siliceous+gossan+at+the+top+of+proﬁle+and+Fe<oxy<hydroxide+gossan+below

Anomalous)Pb)enrichment)(f.g.+galena+++siderite))occurs)at)the)top)ofthe)supergene)Cu)zone)(predicted)thermodynamically)Such)Pb)enrichment)is)only)observed)in)one)other)VHMS)gossan
worldwide)(Las)Cruces,)Spain)
Jarosi?c)acid)leach)zone)is)down)‘hydraulic)head’)of)the)gossan)due)tolateral)groundwater)ﬂow;)restricted)to)muscovite)altered)felsic
volcanic)rocks)(due)to)the)presence)of)K)&)low)buﬀering)capacity)
Asmara Geo-Congress - Sept./Oct. 2014

Questions ?

Asmara Geo-Congress - Sept./Oct. 2014

Bisha Mining Share Company“Everyone going home safe and healthy everyday”

Asmara Mining Conference 2014
Geotechnical Hazard Management at Bisha

Alasdair Ross
Presentation Date: October 2014

Forward Looking Statements
This Presentation contains forward-looking
forward looking statements within the meaningof the United States Private Securities Litigation Reform Act of 1995 andapplicable Canadian securities legislation concerning anticipateddevelopments on t he Company' s continuing and future operations in
Eritrea, the adequacy of the Company’s financial resources and financial
projections. Forward-looking statements include, but are not limited to,statements concerning or the assumptions related to estimates of capitaland operating costs,
costs the timing,
timing nature and extent of future copper,
copper zincand gold production, expanding exploration licenses, the estimation ofmineral res erves and r esources, methodologie s and models used t oprepare resource and reserve estimates, the realization of mineral reserve
estimates, the conversion of mineral properties to reserves and resources,
the potential to expand resources, reserves and mine life,
future exploration budgets, plans, targets and work programs, capital
expenditures and objectives, anticipated timing of grant of permits, mining
and development plans and activities, construction and production targets
and timetables, grades, processing rates, life of mine, net cash flows, metal
prices, exchange rates, reclamation costs, r esults of drill programs,
dividend plans and policy, litigation matters, integration or expansion ofoperations, requirements for additional capital, government regulation ofmining operations, environmental risks, political risks and uncertainties,
unanticipatedpreclamation expenses,p, and other events or conditions that
may occur in the future. Forward-looking statements are frequently, but
not always, identified by words such as "expects," "anticipates," "believes,“"intends," "estimated," "potential," "possible", "budget" and similar
expressions, or statements that events, conditions or results "will," "may,“"could" or "should" occur or be achieved. Information concerning theiinterpretationtt ti
off drill
d ill results
lt andd mineralil resource andd mineralil reserve
estimates also may be deemed to be forward-looking statements, as suchinformation constitutes a prediction of what mineralization might be foundto be present if and when a project is actually developed, and in the caseof mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically
exploited.
Forward-looking statements are statements about the future and are
inherently uncertain, and actual achievements of the Company or otherfuture events or conditions may differ materially from those reflected in theforward-looking statements due to a variety of risks, uncertainties andother factors. Although the Company has attempted to identify importantfactors that could cause actual results to differ materially from thosecontained in forward-looking statements,
statements there may be other factors thatcause results not to be as anticipated, estimated or intended. The
Company’s
forward-looking
statements
are
based
on
the
beliefs, expectations and opinions of management on the date thestatements are made and the Company assumes no obligation to updatesuch forward-looking statements in the future, except as required by law.
There can be no assurance that such statements will prove to beaccurate, as actual results and future events could differ materially fromthose anticipated in such statements. For the reasons set forth
above, investors should not place undue reliance on forward-looking
statements.
Please see the Company’s Annual Information Form and Management
Discussion and Analysis of BMSC for a more complete discussion of therisk factors associated with our business which have been filed with
Canadian securities regulators and are available at www.sedar.com, whichhave also been filed or submitted to the U.S. Securities and Exchange
Commission on Form 40-F or Form 6-K and are available at www.sec.gov.

“Everyone going home safe and healthy everyday”

Geotechnical Hazard Management“Everyone going home safe and healthy everyday”

The Big Picture - GCMP
Minimising the effect that a geotechnicalhazard has on personnel safety, mine
production and equipment damage• Big picture:
Ground Control Management Plan

“Everyone going home safe and healthy everyday”

On the Ground• Remove the hazard• Re-design• Controlled failure• Remediation• Limit the effect of thehazard• Engineering controls• Physical barriers• Catch bench/bund• Wire meshmesh, catch fence• Limit the exposure of
personnel/equipment toth hazard
thehd• Exclusion zones/signage• Procedural controls• Education and awareness“Everyone going home safe and healthy everyday”

Redesign - Northeast Failure
Large toppling failure of the Northeast wall in January 2011

• Toppling risk
had been
identified• Release shear
h d notthad“Everyone going home safe and healthy everyday”

Redesign - Northeast Failure•Drilling programme
conducted•Failure mode identified•SlopeSlorientationiialtered to negate
similar failure occurringgin the future“Everyone going home safe and healthy everyday”

Remediate - North Wall Failure

Batter scale sliding failure
Triggeredgg
byy blast in immediate area
“Everyone going home safe and healthy everyday”

Remediate - North Wall Failure

S5
S3
S4
S4

Area observed and failure mass excavated• Full Team Based Risk Assessment completed• Excavated in a controlled manner

Area isolated for the wet season .
“Everyone going home safe and healthy everyday”

Remediate - North Wall Failure

S5
S3
S4

• S5 Joint had had been recorded during mapping• Low risk assumed“Everyone going home safe and healthy everyday”

Remediate - North Wall Failure• Controlled clean-up undertaken“Everyone going home safe and healthy everyday”

Remediate - North Wall Failure• Controlled clean-up undertaken• Area inspected and declared safe
• GeotechnicalGh i l restrictions
i ilif
liftedd andd mining
i i continuedid as
normal“Everyone going home safe and healthy everyday”

Remediate - North Wall Failure

U il
Until
“Everyone going home safe and healthy everyday”

North Wall Failure - Remediate

A i !
Again!
“Everyone going home safe and healthy everyday”

Remediate - North Wall Failure

Re-design!
• Laser scan• Interpret structure• Redesign next bench“Everyone going home safe and healthy everyday”

Engineering controls
A hazard exists, but it is not p
possible, feasible, or too costlyyto remove the hazard

Limit the effect of thehazard“Everyone going home safe and healthy everyday”

Engineering controls“Everyone going home safe and healthy everyday”

Engineering controls• Rockfall Catch fence• High risk of rockfall on
NELB cutback“Everyone going home safe and healthy everyday”

Procedural controls
Policies or p
procedures p
put in p
place to mitigategrisk

Remove or limit access tothe hazard area

“Everyone going home safe and healthy everyday”

Procedural controls
Policies or p
procedures p
put in p
place to mitigategrisk• Signage• Exclusion zones• Risk assessments• Ed
Educationti andd awareness• Geotechnical Hazard Maps

“Everyone going home safe and healthy everyday”

Geotechnical Exclusion zones

Put
ut in pplace
ace foro YOUROU S
SAFETYNO ENTRY
without:√ completed
p
TBRA
and

√ approvalppfrom theGeotechnical Department.
Work must be conductedfollowing the methods
outlined in the TBRA“Everyone going home safe and healthy everyday”

Geotechnical Hazard Map
Intended as a visual indication topit
it personnell id
identifying
tif i areas off
geotechnical hazard
Identifies:• The hazard area–

The shading of the hazard area indicates the levelof risk in relation to the risk matrix“Everyone going home safe and healthy everyday”

Geotechnical Hazard Map
Intended as a visual indication topit
it personnell id
identifying
tif i areas off
geotechnical hazard
Identifies:• The hazard area–•

The shading of the hazard area indicates the levelof risk in relation to the risk matrix

The failure mode of the hazard••

The outline color
Sliding, Wedge, Rockfall, Toppling, Planar“Everyone going home safe and healthy everyday”

Geotechnical Hazard Map
Intended as a visual indication topit
it personnell id
identifying
tif i areas off
geotechnical hazard
Identifies:• The hazard area–•

The failure mode of the hazard•••

The shading of the hazard area indicates the levelof risk in relation to the risk matrix

The outline color
Sliding, Wedge, Rockfall, Toppling, Planar

The location of Geotechnical Exclusion
Zones“Everyone going home safe and healthy everyday”

Education and Awareness“Everyone going home safe and healthy everyday”

Geotechnical Hazard Management

Any
Questions?

“Everyone going home safe and healthy everyday”

Bisha Mining Share Company“Everyone going home safe and healthy everyday”

Asmara Mining Conference 2014
Bisha Mine Geology Activities

Samson Ephrem
Mine Geologist

October 2014

Forward Looking Statements
This Presentation contains forward-looking
forward looking statements within the meaningof the United States Private Securities Litigation Reform Act of 1995 andapplicable Canadian securities legislation concerning anticipateddevelopments on t he Company' s continuing and future operations in
Eritrea, the adequacy of the Company’s financial resources and financial
projections. Forward-looking statements include, but are not limited to,statements concerning or the assumptions related to estimates of capitaland operating costs,
costs the timing,
timing nature and extent of future copper,
copper zincand gold production, expanding exploration licenses, the estimation ofmineral res erves and r esources, methodologie s and models used t oprepare resource and reserve estimates, the realization of mineral reserve
estimates, the conversion of mineral properties to reserves and resources,
the potential to expand resources, reserves and mine life,
future exploration budgets, plans, targets and work programs, capital
expenditures and objectives, anticipated timing of grant of permits, mining
and development plans and activities, construction and production targets
and timetables, grades, processing rates, life of mine, net cash flows, metal
prices, exchange rates, reclamation costs, r esults of drill programs,
dividend plans and policy, litigation matters, integration or expansion ofoperations, requirements for additional capital, government regulation ofmining operations, environmental risks, political risks and uncertainties,
unanticipatedpreclamation expenses,p, and other events or conditions that
may occur in the future. Forward-looking statements are frequently, but
not always, identified by words such as "expects," "anticipates," "believes,“"intends," "estimated," "potential," "possible", "budget" and similar
expressions, or statements that events, conditions or results "will," "may,“"could" or "should" occur or be achieved. Information concerning theiinterpretationtt ti
off drill
d ill results
lt andd mineralil resource andd mineralil reserve
estimates also may be deemed to be forward-looking statements, as suchinformation constitutes a prediction of what mineralization might be foundto be present if and when a project is actually developed, and in the caseof mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically
exploited.
Forward-looking statements are statements about the future and are
inherently uncertain, and actual achievements of the Company or otherfuture events or conditions may differ materially from those reflected in theforward-looking statements due to a variety of risks, uncertainties andother factors. Although the Company has attempted to identify importantfactors that could cause actual results to differ materially from thosecontained in forward-looking statements,
statements there may be other factors thatcause results not to be as anticipated, estimated or intended. The
Company’s forward-looking statements are based on the beliefs,
expectations and opinions of management on the date the statements are
made and the Company assumes no obligation to update such forwardlooking statements in the future, except as required by law. There can be
no assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated insuch statements. For the reasons set forth above, investors should notplace undue reliance on forward-looking statements.
Please see the Company’s Annual Information Form and Management
Discussion and Analysis of BMSC for a more complete discussion of therisk factors associated with our business which have been filed with
Canadian securities regulatorsgand are available at www.sedar.com,, whichhave also been filed or submitted to the U.S. Securities and Exchange
Commission on Form 40-F or Form 6-K and are available at www.sec.gov.

“Everyone going home safe and healthy everyday”

Contents¾

Introduction¾

Sampling¾

Quality Control¾

Logging¾

Mapping¾

Ore blocks¾

O Mining
Ore
Mi i

¾

Blending¾

Data Managementg¾

Other Activates¾

Challenges¾

Opportunities¾

Achievements“Everyone going home safe and healthy everyday”

Introduction¾ Located 150 km West of Asmara¾ Large,g , highg g
grade VolcanogenicgMassive Sulphidep((VMS))¾ Rock types hosting the ore deposit include:
Rhyolite, rhyolite breccia, mudstone and mafic volcanic rocks.
¾ The mineralized ore body extends to a depth of 475m and isopen at depth.

Bi h Ore
Bisha
O Reserves
R(Effective December 31, 2013)

Zone

Tonnage Copper Zinc

Gold Silver

Oxide
430 kt‐‐6.5 g/t 20 g/t
Supergene 7,400
7 400 kt 3.57
3 57 %‐
0 61 g/t 27 g/t
0.61
Primary 18,390 kt 1.02 % 5.66 % 0.68 g/t 46 g/t
Based on US$2.90/lb Copper, US$0.92/lb Zinc,
US$1175/oz Gold and US$20/oz Silver

http://nevsun.com/pdf/Nevsun TechReport-Bisha
http://nevsun.com/pdf/Nevsun_TechReport
Bisha_Mine_2014.pdf
Mine 2014.pdf“Everyone going home safe and healthy everyday”

Introduction
Mine Geology
The grade control geology section is a part of the Technical Services department. We
have a dedicated team of grade control personnel who are responsible for logging,sampling, mapping, creating dig-blocks and tracking ore to ensure that we understandthe grade distribution of Au, Ag, Cu, As & Zn in order to deliver a quality product to theprocess plant.

“Everyone going home safe and healthy everyday”

Samplingp g
1. Reverse Circulation (RC) Samples







Grade Control Rigs

Two RC rigsg ((Schramm))
Drilled over 2,600 holes and 40,000m to date
38,000 samples undertaken to date
Samples/rock chips are collected every meter
Analyzed on site lab (SGS)
Assayed for Cu, Au, Ag, Zn, As and S

2. Grab Samples
Sampling

I - Blending Grab Samples (GBR)

Active feeding faces at ROM Pad every 2 hours
Monitor the grades of the active stockpiles

II - Stockpile Samples (GBS) Sample taken from stockpiles
 Confirms the grade of the stockpile“Everyone going home safe and healthy everyday”

Logging
Purpose¾¾¾¾

To identify mineralized zones from waste
waste.
To determine the association between lithology, alteration and oxidation with mineralization.
To correlate variations of stratigraphy with assay results
To determine the thickness of each lithology.
gyTypes of Logging
Rock Chips
1. RC ChipspRock Chips ( lithology, alteration anddescription )2. Blast Hole Chips


Cutting material

RC Chips“Everyone going home safe and healthy everyday”

Mapping
Purpose¾¾¾¾

To determine lithology
To identify geological structures
To identify the ore-waste boundary
To increase the accuracy of GCX Blocks

GCX Blocks Vs.
Face mapping
SAPR

Types of Mapping

SUPG

MSUL

1. Face Mapping

Active digging face
Perpendicular to the Strike of the ore body
Using GPS and compass
SURPAC and Arc GIS

2. Blast Hole Mapping



SUPG

Blast Hole Mapping

SAPR

Every blast pattern that includes ore
Using Blast hole map“Everyone going home safe and healthy everyday”

Creating Ore Blocks
AcquireDatabase
Manage information“Everyone going home safe and healthy everyday”

Creating Ore Blocks
GCX





Integrated with SurpacTM mining software.
Designed by CUBE Consulting™
Grade estimation and reporting system.
Produces ore blocks for grade control

Bisha Material Types>15%
15% Cu8-15% Cu
4 - 8% Cu
0.6 - 4% Cu
0 3 - 0.6%
0.3
0 6% Cu
Cu:Zn ratio < 8:1

DSO (Direct Shipping Ore)
HG (High Grade Copper)
MG (Medium Grade Copper)
LG (Low Grade Copper)
SLG(Sub Low Grade Copper)
ZNO (Zinc Ore)“Everyone going home safe and healthy everyday”

Ore Mining and Tracking

Ore mining is selective.
Material from the pit is transported tovarious stockpile destinations:
ROM Pad and long term stockpiles

Ore mark up 517.5mRL

ZNO

MG

LG

Ore SpotterKey person to manage the ore and waste
Is responsible to minimize:- Waste to ROM
Dilution- Ore to Waste
Loss

HG

(e.g. one dump truck HG Copper is worth US$45,000)

Controls the ore block mining
Keeps count of ore loads and monitors
the mill feed blend ratio

O Spotter
Ore
S tt“Everyone going home safe and healthy everyday”

Blending
Maintaining a balanced mill feed blend ratio






In order to meet the grade requirements of the process plant
plant.
Requirements are: 4-6 % Cu, <0.15% As & <1:8 Zn/Cu
The blend depends on the mined ore block and stockpile grades.
The mill throughput averages 6,575 tonnes per day.
Ore is tipped at stockpiles (HG,MG,LG and SLG) from which it is reclaimed and blended.

ROM PadLTS“Everyone going home safe and healthy everyday”

Data ManagementAcquireMPX ((records all mine p
production for trucking
g and blending)g)
Database designed by Cube Consulting™
Importance:- for determining the grade and tonnes of ore material moved- Create daily, weekly and monthly reports.

“Everyone going home safe and healthy everyday”

Other Activities
Bucket Test

Density test

activeti ore blblockk
To get the density of different rock types- Bulk density (intact sample)- Loose density (swelled after the blast)
To calculate tonnage.

Reactiveeact e G
Groundou d test

To understand the reactivity of different
material types in order to avoid pre-detonation
Melted Bucket
Bucket test

“Everyone going home safe and healthy everyday”

Challenges
Pyrite Sand (FeS2)
Pyrite sand is a horizon of unconsolidated loose material that consists of fine, crystalline
sand sized particles of pyrite.

Supergeneg-

Supergene
PyriteSand
Pyrite Sand






Phase 5 south 520mRL

It creates a problem for the process plant.
Requires a lot of attention to mine it selectively.
Not consistent, making it difficult to estimate the tonnes.
However it contains Au and Ag“Everyone going home safe and healthy everyday”

Challenges
Arsenic (As)Oxidized Cu- Not wanted byy the customers

Enargite (Cu3AsS4)- couldn’t yet identified from mapping and/or
assaying- Is recovered with the copper in concentrate

Pit W
Water
t
- Very acidic (pH ~ 1)
- corrosive issues- Speed up oxidation

Pit Water

Reactive Ground- Digenite,
Digenite a catalyst for oxidation and the reaction is
exothermic and that generates heat.
- Potential for premature detonation of explosives.
“Everyone going home safe and healthy everyday”

Opportunities
Copper grade

Copperpp ggrade this yyear is highergthan the estimated reserve g
grade.

Zinc Ore

Zinc ore starting to be mined in the southern part of the pit ( Phase 5)
Long term stockpile of zinc ore is ready in preparation for the Zinc processing plant.

Petrographic LaboratoryCommission
Ci i a petrographicthi laboratoryl b t
on siteit
Helps to analyze minerals using microscope
Will play a vital role in identifying zones of enargite.

Bore Holes

Petrographic Microscope

The bore holes drilled recently will help to minimize the dewatering challenges

Skill


The department has gained good exposure to both gold and copper mining“Everyone going home safe and healthy everyday”

Achievements
Bisha Second Quarter Results


Produced 21,528t,
of copper
pp in thequarter including 8,065t in June 2014



Sold 23,350t of copper, a 51% increaseover Q1 2014

Achieved C1 cash costs of US$ 1.05 per poundwith strong earnings and cash flows“Everyone going home safe and healthy everyday”

Thank You“Everyone going home safe and healthy everyday”

Questions“Everyone going home safe and healthy everyday”

SUNRIDGE (AMSC)STAKEHOLDER ENGAGEMENT
PLAN (SEP)
Asmara Mining Conference 2014
Asmara Palace
October 01 – 05, 2014
Yemane Kifle

1. Introduction
Stakeholder Engagement!
g gy ‘’Who are stakeholders? Stakeholders are persons or groups
who are directly or indirectly affected by a project, as well as those
who may have interests in a project and/or the ability to influence
its outcome, either positively or negatively’’. IFC, Stakeholder Engagement: A
Good Practice Handbook for Companies Doing Business in Emerging Markets, 2007.

y Engagement:‐ is the formal & informal interaction/communications between the project/company and thestakeholders .

Introduction--y The SEP is prepared as acompanion Doc.
Doc to SEIA for:y Asmara Project, consisting of
4 deposits:
1. The Emba Derho
copper/zinc/gold deposit;
2 The Adi Nefas zinc/copper2.
/gold deposit;
3. The Gupo gold deposit; and4. The Debarwa
copper/zinc/gold deposit.

2. Policy, Legal & Administrative Frameworky Sunridge policies & standards
y Eritrean Government requirements¾ Proclamation to promote the development of Mineral

Resources No. 69/1995, Article
l 43 (f)
f and
d the
h
¾ Regulations on Mining Operations, 70/1995, Article 5 (j)¾ National
N ti
l Environmental
E it lA
Assessmentt P
Proceduresd&Guidelines (NEAPG), March 1999
y IFC Performance Standards and Guidelines
y Equator Principles.

3. Project Description
Project Locationy Northern properties
p p
Zoba Maekel, S/Zobas
Serejeka, Berik & Akria
y Debarwa property

Zoba Debub, S/Zobab
Debarwa
Project Components
y Project integrates themining, stockpiling &processing of 4 deposits

4. Project Area of Influence
Social & Economic
Context
y Populated area ~6,359
HH in Northern
properties & ~5,422
HH in Debarwa
P
Property.
ty Rural and peri-urban,
villages and towns.
y Majority involved inAgricultural activities.

Project Area of Influence ----Direct Area of Influencey Deposit,D
it processing
i & wastet ffacilities
iliti
y Communities affected by landacquisitiony Resettlement
R ttl
t siteity Local transport corridors

Indirect Area of Influencey 4 S/zobas, & 2 Zobas( Zoba Maekel & Debub)

5. Stakeholder Engagement Conducted to Datey Introduction & early

consultation to Asmara
Projecty Workshops
p & meetingsg
at different levely Mining Awareness andtheh SEIA ProcessPy Community Consultationy Formal & Informal
meetings with relevant
Gov. authorities,

6. Stakeholder Identification and Analysis
Stakeholder Categorization
1. Primary Stakeholder Description of Stakeholder Group
Groups
Project Affected Persons Residents affected by physical displacement(PAPs)
Land owners/users directly affected by land acquisition
Affected Communities

Any otherAh person/business/entity/b i/ i economicallyi ll displaced
di l dEMBA DERHO / ADI NEFASDEBARWA
Debarwa Town, Adi
Logo, Shiketi , Adi
Kubulo, Adi Watot,

Local Government
National & Regional
Government

Emba Derho , Adi Nefas,
Medrizien, Hazega, Adi
Habteslus, Shinjibluk, Adi Beney /Daero, Adi Asfeda, Beleza Ametsi
Local/Kebabi Administrators
MoEM, MoLWE, IRC, Other relevant ministries &departments, Administrations of Zobas Maekal & Debub,
Ad i i t ti
Administrations
off SubS b zobasb Debarwa,
D b
B ik Serejeka,
Berik,
S j k& Akria

Stakeholder Categorization----2. Secondary Stakeholder
GroupsGeneral Public
Businesses
Non-Government
Non
Government and Quasi
QuasiGovernment Organizations
Investors, Financial
InstitutionsMedia

Description of Stakeholder Group
Population of Eritrea
Businesses within the regional area and Eritrea
Community Based Organizations,
Organizations National Unions,
UnionsScientific Institutes, & International NGOs
Current and potential investors, financial institutions
Interested media organisations

3. Stakeholder
St k h ld T
Tackingki
andd Monitoring
M it i• Stakeholder data base

7. Approach to Stakeholder Engagementy Engagement Strategy & Objectives
Working closely with relevant Eritrean Authorities, to ensure
it iis carefully
f ll plannedld & undertaken
d t k iin a ti
timelyl ffashion.
hiy Managing Engagement during the

Early Stages of the Project

Need to be careful about engagement particularly withlocal communities & managing expectations.

y Engagement Tools and Techniques

Such as:¾Informal meetings;¾Public meetings;¾Mining
Mi i awareness materials;t i l¾Info. leaflets, posters & brochures;¾Small group meetings or FGDs
¾Project information centres (PICs);¾Suggestion/comment
S
ti /
tb
books;
k¾Website, correspondence & phone¾Mine site visits or tours;¾Open houses; and¾LocalL l media,
di radiodi spotst & newspaper
articles.

8. Stakeholder Engagement Program
The engagement process adoptedththreeconsecutive
ti phases:hPhase 1: Planning and Scopingth SEIA P
theProcess;
Phase 2: Project Assessment
S
Stage
(i
(including
l di theh SEIA
report preparation); andPhaseh3: ProjectjConstructioni
and into Operations (including
in preparation for Closure).

9. Resources and Responsibilities
Effective implementation of the SEP will require
cooperation within the Project, and between the Project andits partners. Expected key participants are:y AMSC & in particular their community & environment staff
y Environmental, social, engineering, and other consultantsy Local, regional and national government and theirrepresentatives
y Local organizations and community committees and theirrepresentatives;

Resources and Responsibilities----Proposed Community/External Relations Team10. Community Grievance Procedure
Complaint Received(verbally or writing)

Key Steps in CGP:y Receiving
i i andddocumenting grievancesy Preliminary assessmenty Responding to grievancesy Investigating andresolving grievancesy Closing out grievancesy Following up withcomplainants.

Record date on the
Complaints Log

Completed Complaint
Action Form submitted

Enter registration number
on Complaint Action Form

Complete Immediate Corrective Action
Section (if appropriate) and assign
responsibility

Yes

Corrective
actionti
considerediddadequate?

No

Initiate next level of resolution

Establish & agree next resolution steps

R
Recorddd
datet on ththeComplaints Log

Inform complainant (if appropriate) of
the proposed resolution process

Implement procedure and agreecorrective action outcome

Carry out follow up of the corrective
actionInform complainant ofcorrective action

Yes

Corrective action
satisfies the complaint

Close out the Complaint Action Form

Record date on the
Complaints Log

No

Record date on the
Complaints Log

11. Implementation Plan, Schedule and Budget
The key action commitments
to be accomplishedpasidentified in the SEP:y Agricultural, Water & Rangeland
Improvement program (AWRI)Northern properties:- lose of Arable land 336ha (14%)- lose of Rangeland 397ha (14%)
Debarwa Property:- lose of Arable land 26ha (3 %)- lose of Rangelandg148
4 ha (11%))y Community Assistance Plan(CAP)y Resettlement Action plan (RAP).
See next slide....

Potential Relocation/Resettlement/Replacement by Village
Items Requiring Relocation/Resettlement/Replacement
Northern
Properties

Households /Structures

Other Assets

Adi Nefas

6 Buildings (Hidmo/Merebae)
3 Eucalyptus Plantation sites
1 Tiesa Plot & 47 Crop Residue

Emba Derho

None

31 Temporary Shallow Dug Wells
2 Permanent Shallow Dug Wells & Irrigation Lines

Medrizien

14 Crop Residue Fences

1 Community Well, 4 Temporary Shallow Dug Wells
6 Eucalyptus Plantation sites

Sh jb lShnjbuluq

N
None

Abune Buruk Church & its Spring, 1 Water
R
Reservoir,1
i 1P
Pond,
d 1B
Borehole,h l 5 Temporary
T
Shallow
Sh ll
Dug Wells, Large Portion Eucalyptus Plantation site

Daero

None

School , and its Teacher’s Residence
2 Eucalyptus Plantation sites

Debarwa Property
Debarwa
Mereb

74 Tiesa Plots, 1 Hidmo & 52
Crop Residue Fences

Factory Groundwater Well and Lines
Livestock Watering Points

None

Livestock Watering Points & 15 Eucalyptus
Plantation sites

Adi Logo12. Monitoring, Evaluation and Reporting
The Projectjwill establish a stakeholder engagementg gmonitoring system as part of the final SEP, and it will
involve:y Stakeholders at the same level with the dev’t of SEP,y Most importantlypy local stakeholders will be Involved,,y Range of internal & external reporting system todescribe the progress of implementation,y Independent & external evaluation of the SE will beconsidered.

Conclusion
The Sunridge/AMSC;
g /; SEP document & its ongoingg g andanticipated activities are aiming:y To foster two way communications between thecompany and its stakeholders in order to have better
understanding on the social and environmental
situations around the project areas,
areas
y To help in the mitigation management planning & its
implementations i.e.,
implementations,i e as much as possible to avoid
or minimize the negative impacts on the one handand enhance the positive impacts on the other.

The End

Thank YouPRE-MINING SURFACE AND GROUND WATERQUALITY BASELINE STUDIESDEBARWA AND NORTH ASMARA MINING PROPERTIES

Prepared by: Sunridge Gold/AMSC
October 02, 2014

1. Background
Sunridge, as part of the Environmental Impact Assessment program, has
undertaken different baseline studies through national and international
consultancy-

Ground and surface water,
Hydrometeorology,
Air quality,
Noise,
Geochemistry,
Soil,
Vegetation,
Wildlife andA
Aquatics
ti

In accordance with the State of Eritrea National Environmental
Assessment Procedure Guidelines ((NEAPG)) and International FinanceCorporation (IFC) performance standards.

2. Ground and surface water quality assessment
The pre-mining water quality conditions and in-depth characterization
will enable to predict potential direct changes in the water quality
and/or indirect effects on receptors that may result from the mining
activities.
Knight Piésold (KP), an international consulting company, advised
Sunridge on procedures, sample locations and provided oversight onsample results and analysis,
In country, Global Resources Development and Management
Consultants (GREDMCO) was initially an advisor and later on groundmonitoring and sampling were undertaken through Sunridge.
Analysis to the accredited ALS laboratory located in the Czech
Republic.
The assessment has been undertaken from December 2006 throughJanuary 2013.

Baseline water quality analytical and in situ data were compared to relevant
guidelines with respect to the most sensitive receptors in the downstream
environment .
 World Health Organization: Guidelines for Drinking-water Quality, Third
Edition (WHO-DW) (WHO 2008) Food and Agriculture Organization of the United Nations (FAO):
 Republic of South Africa Water Quality Guidelines (DWAF 1996):
 Domestic Water Use, including drinking water, Volume 1 (SA(SA-DW)DW)
 Agricultural Use: Irrigation, Volume 4 (SA-Irrigation)
Long-term use (LTV1) (ANZECC-LTV Irrigation)
Short-term use (STV) (ANZECC-STV Irrigation)
 Agricultural Use: Livestock Watering, Volume 5 (SA(SA-Livestock)
Livestock) Australian Government National Health and Medical Research Council:
 Australian
ust a a Drinking
g Water
ate GuGuidelinesde es ((AUS-DW)
US) ((NHMRC
C 2011)0 )2.1 Study areas
I Debarwa
InD b
area within
ithi theth catchment
t h
t off
1) Mereb,
2) Gual Mereb
3) Mai Noh rivers
In the Northern Property within the catchments of
1) Mai Bela Rivers2)) Mai Kubo catchment ((a tributary
y of the Mai Bela River))3) Mesheala2.2 Surface water
In Debarwa area there weretotally 16 different surface
water quality assessment
sites.
sites
Water quality sampling was
made monthly during therainy season at the surface
stream sites.

In Northern property there
were totally 19 surface water
quality assessment sites.

Surface water sampling site Northern Property map

2.3 Ground water
wells
In Debarwa
barea, therehweretotally 27 ground water wells.
In thehNorthernhProperty,
there were totally 45 groundwater wells.
Water quality sampling wasundertaken quarterly.

3 Results
3.
Rl
3.1 Surface water quality
Debarwa area

The three rivers (Mereb, Gual Mereb and Mai Noh) have showed similar insitu
it characteristicsht i ti (Water(W t tempt
19 8 oC to
19.8
t 29 oC;
C pH
H fromf
7 93 to7.93
t 8.99;8 99 TDS
from 97 mg/L to 290 mg/L).

All alkalinity values within the Mereb, Gual Mereb and Mai Noh catchment
water quality samples exceeded 20 mg/L, which is considered to have goodbuffering capacity and less sensitive to acidic inputs.

Dissolved and total metal concentrations were generally low in all of thesurface water sites;However, with some samples aluminium, copper, iron, manganese and silver
showed elevated levels, exceeding drinking water quality and irrigation andlivestock water quality guidelines.

Northern PropertyThe physical characteristics of the water quality in each catchment are quite
different. Total hardness in the Mesheala catchment is characterized by soft to hardwater. In contrast, the Mai Bela catchment is characterized by moderately hard tovery hard water with high salinity range.

Both watersheds have very alkaline water (Mai Bela catchment: 272 mg/L
CaCO3, and Mesheala catchment: 127 mg/L CaCO3).

pH remains quite similar for Mai Bela and Mesheala catchment despite the physicalcharacteristics
hi i off theh water qualityli ini eachh catchmenthare quite
i different.
diffThe majority of measured metals were available at concentrations below relevantgguidelines.
¾

In Mesheala catchment, antimony and lead concentrations were slightly
elevated and¾

In Mai Bela catchment total aluminum, total iron, total lead and total
manganese concentrations are consistently elevated.

Example: In Situ Measurements and Physical Tests within the Mai Bela catchment

3.2 Ground water quality
Debarwa areaIn situ characteristics of ground water (Water temperature from 24 to 27.5
oC; pH values falls within 7.07 to 8.11; TDS concentrations ranges from 165.6
mg/L
g/ to 734 mg/L)g/ )Alkalinity concentrations ranges from 157 to 485 mg/L CaCO3 and hardness
concentrations range from 172 to 640 mg/L CaCO3



TDS values all fall below 1,000 mg/L and as such the groundwater in the
Debarwa area is classified as freshwaterGenerally, total and dissolved metal concentrations (lead, aluminum,
manganese, copper and iron) showed elevated value in most of the groundwater sites.

In Situ and General
Chemistry in Groundwaterin the Gual Mereb
Catchment

Northern property:

Groundwater quality in the project area can be generally
characterized slightly alkaline, with very good buffering capacity .

The concentrations of major anions in the groundwater samples did
not exceed guidelines.

TTotalt l dissolved
di l d solids
lid (TDS) concentrationst ti
are elevatedl t d althoughlthh allllsamples are less than 1,000 mg/L and as such are classified as
freshwater.

Generally, in the Northern property Iron, manganese, andmolybdenum were the only metals to exceed any guidelines in thisarea.

EExample:
ample General Chemistry
Chemistrlaboratory result for one
well in Adi Nefas area

5. Mitigation plans
Sunridge has prepared SEIA and SEMP to mitigate potential
impacts. The following are some management plans related towater quality preservation both for the ground and surface
water:
 Water Management Plan Waste Rock Management Plan Hazardous Substances Management Plan
 Conceptual Closure Plan

Strategically, the mine design and water management policy
plans and enforces all contact water to be preserved andcaptured for reused in the mine process.
process
In addition, the Tailings Storage Facility (TSF) and collection
ponds will have adequate liners and compacted earth works tominimizei i i groundd infiltration.
i filiNaturally, the ground water buffering capacity will neutralise thelow pH generation created by the Potentially Acid Generating(PAG) stockpiles.
SGC/AMSC have begun reclamation testing to understand how tobest reclaim on the existing Nippon waste dumps in Debarwa.
DebarwaAt closure the surface and ground water quality will be preserved toallow the people, vegetation, domestic and wildlife to maintain or
improve their existing conditions.

Thank you!