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Nkout, Cameroon

Djoum Exploration Permit

Overview

  • Ownership: 100% subject to the Government of Cameroon having a right to receive a 10% free carried interest in the share capital of the project operating company
  • Licence size: 241 km2
  • Large total resource now compiled
    • 1.6Bt at 33.3% Fe Indicated, 0.9Bt at 30.8% Fe Inferred
    • Includes high grade cap (45% Fe cut off) totalling 64.3mt at 54.5% Fe Indicated and 8.2mt at 50.1% Fe Inferred
    • Resource from 12km of 20km total strike of major magnetic geophysical anomaly
    • 54,500m drilling to date
  • Metallurgical work indicates high-grade magnetite concentrate achievable at coarse grind sizes, with high recoveries and low deleterious materials, with sinter fines potential
  • Potential for combined, low-cost processing of DSO and saprolite being investigated
  • Located in the south of Cameroon at the heart of a rapidly emerging iron ore district, with economic benefits possible from cooperation on the infrastructure solution for the area
    • 330km from proposed deep water port, currently under construction near Kribi, and 30km from proposed rail corridor to the port

12km strike drill tested to date at Nkout

Infrastructure

  • Nkout is 330km from the deep-water port (Capesize or Chinamax for iron ore terminal) near Kribi, currently under construction by the Cameroon Government
  • Strategically well-situated in an emerging iron ore district, including: Mbalam (Sundance), Belinga, Avima (Core)
  • Government of Cameroon focused on opportunity to ensure infrastructure is scaled up front for likely projects
  • Nkout with the advantage of being closest to port of all advance projects and 100% within Cameroon. Situated only 30km from the proposed rail corridor
  • Grid power likely to be available for the project, as stated by the Government. Huge hydroelectric potential, with the Government aiming to triple grid capacity to 3,000MW by 2020

Nkout at the heart of rapidly emerging iron ore district

Metallurgy

  • Opportunity to significantly lower capex and opex with the combination of DSO and saprolite processing, simplifying saprolite circuit by removing milling
  • Further testing underway to evaluate combined processing circuit.
  • 59% iron DSO material beneficiated to 63.4% iron through simple attrition scrubbing
  • Processing of magnetite appears simple and low-cost, with liberation at a relatively coarse grind size
    • Sinter feed potential. Product of 59-67% iron grade at coarse 150µm grind size
    • Pelletiser feed potential. Very high grade of 70-71% iron, at 75µm grind size
  • Combination of moderate work index (~15 kWhr/t) with coarse grind is expected to result in low comminution energy requirement
  • High iron and mass recovery rates with up to 89% iron recovery and 46% mass recovery achieved for +70% iron product
  • Magnetite concentrate contains low levels of deleterious elements, particularly phosphorous and alumina

Metallurgical Work Completed on Samples of Nkout BIF

Phosphorous and sulphur levels are very low. P205 approx. 0.01% for all grind sizes and sulphur content is negligible

Simple plant proposed for magnetite processing

Geology

  • Nkout deposit located in the northern limits of the Congo Craton, on Archaean rocks, within the Ntem complex
  • Ntem complex rock types comprise schist, amphibolite, quartzite, granites, gneiss, greenstone and itabirite-like rocks
  • Nkout is a magnetite banded iron formation (BIF), with a high-grade oxidised cap. This is underlain by biotite gneiss
  • The BIF is made up of distinguishable layers of granular quartz alternating with magnetite, haematite and limonite

Magnetic intensity map of the Djoum exploration permit

Background

  • The Nkout Iron prospect is located in the Company’s Djoum licence in southern Cameroon
  • The project was identified from interpretation of airborne magnetic and remote sensing data in 2006, whilst investigating gold occurrences in the 150km long, Sangemalina-Djoum Archaean greenstone belt
  • Djoum, the closest town to the Nkout prospect, is located 280 km southeast of the Nsimalen International Airport in Yaoundé. The route from Yaoundé incorporates 170 km of macadam road and 110 km of laterite road
  • The Nkout project area is located approximately 7.5 km due south of the Djoum to Mbalam road

Resource Estimate

Table 1: Nkout Centre, Mineral Resource Estimate

Zone Resource Category Tonnes (Mt) Fe % SiO2 % Al2O3 % P % Contained iron (Mt)
Zone 110Oxidised, >55% Fe Measured
Indicated 19.9 60.6 5.9 3.0 0.12 12
Meas. + Ind. 19.9 60.6 5.9 3.0 0.12 12
Inferred 0.1 57.8 5.7 5.8 0.07 0.1
Zone 120Oxidised, 45 to 55% Fe Measured
Indicated 44.5 51.8 14.0 5.7 0.14 23
Meas. + Ind. 44.5 51.8 14.0 5.7 0.14 23
Inferred 8.0 50.0 15.6 6.5 0.09 4
Zone 130Oxidised, <45% Fe Measured
Indicated 85.7 39.1 36.0 3.6 0.06 33
Meas. + Ind. 85.7 39.1 36.0 3.6 0.06 33
Inferred 123.8 36.6 39.4 3.8 0.06 45
Zone 210Magnetite BIF Measured
Indicated 1,435.0 32.0 46.6 2.4 0.05 459
Meas. + Ind. 1,435.0 32.0 46.6 2.4 0.05 459
Inferred 786.8 29.7 48.6 3.3 0.05 234
TOTAL Measured
Indicated 1,585.0 33.3 44.6 2.6 0.05 528
Meas. + Ind. 1,585.0 33.3 44.6 2.6 0.05 528
Inferred 918.8 30.8 47.0 3.4 0.05 283

Notes:

(1) Mineral Resources which are not Mineral Reserves have no demonstrated economic viability

(2) The effective date of the Mineral Resource Estimate is 28 May 2013

(3) The Mineral Resource Estimate for the Nkout deposit was constrained within lithological and grade based solids and within a Lerchs-Grossman optimised pit shell defined by the following assumptions; metal price of USD1.4/dmtu; slope angles of 16º and 41º in the oxide and fresh material; a mining recovery of 95.0%; a mining dilution of 5.0%; a base case mining cost of USD1.60/t and an incremental mine operating costs of USD0.05/t/10 m below the 80 m reference RL and USD0.05/t/10 m above the 80 m reference RL; process operating costs of USD3.00/t crushed DSO, USD4.20/t crushed oxide and USD5.50/t crushed BIF ore; DSO processing recovery of 75%; Oxide processing recovery of 60%; BIF processing recovery of 88% and G&A costs of USD 1.68/t, USD0.78/t and USD0.96/t crushed DSO, oxide and BIF ore.

(4) Mineral Resources for the Nkout deposit have been classified according to the “CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines (December 2005)” by Howard Baker (MAusIMM(CP)), an independent Qualified Person as defined in NI 43-101.

Database Validation

The QA/QC program for Company’s Nkout project consists of alternating the insertion of a blank, standard and duplicate sample on a regular basis within the sample train. The Company uses standards with varying grades which are also alternated. All samples have been assayed at the accredited OMAC laboratory in Ireland. SRK found that the results of the above described QA/QC program indicate that the Company’s Nkout assay databases were appropriate for Mineral Resource Estimation.

Data Verification

Howard Baker as qualified person completed the verification of data on which the Nkout Resource Estimate was based. This verification included an assessment of QA/QC data, sample preparation and assay methodologies, density data, data inputs and survey data used in the estimate. Data was validated by using field checks, statistical methods and evaluating the Company’s protocols.