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Estimated sustaining capital during operations is estimated at US$ 24.3 million (2013$) per year once operations reach steady state full production at 1 MTPY.
The economic analysis performed in the FS was based on the following assumptions:
Production: One million tonnes MOP per year from Sylvinite, with first product in 2015, and bulk shipments ramping up from 2016 to full 1 MTPY production rate by the end of 2017Mine life: 25 years, based on currently defined reserves of Sylvinite onlyMining method: Solution miningProcessing: Solar evaporation and flotationTransport: Trucking to DjiboutiPower: Power generation with fuel oil shipped to sitePotash Price: US$430 per tonne (2013$)Underlying NSR: 1.5% (after partial buyout of royalty)
The economic analysis also included government tax and levies based on current Ethiopian published legislation and regulation, assuming:
Government Royalties: 4% on revenueGovernment free carried interest: 5%Corporate taxes: 35%
The FS estimates include all infrastructure required to operate a potash solution mine and to bring the product to market including cavern and wellfield installation, three stage processing plant, product storage facilities, load out, trucking fleet and port storage facilities with all necessary infrastructure.
Summary of Mineral Reserve and Resource Estimates Update
The Company also announces that as a result of the proposed mine plan and favourable economic results developed in the FS, portions of the previously reported measured and indicated sylvinite mineral resource estimates have been upgraded to proven and probable sylvinite mineral reserves. Estimates of the updated mineral reserves and mineral resources were completed by ERCOSPLAN based on a Radius of Influence (ROI) as per industry standards. The following Tables outline the current estimated sylvinite mineral resources and proven and probable sylvinite mineral reserves. All Measured and Indicated Sylvinite Resources were converted to Reserves.
Summary of Mineral Resource Estimates effective as of February 2, 2013
-----------------------------------------------RESOURCES TONNES (MT) KCL (%) KCL (MT) (in-situ)-----------------------------------------------Measured 115.31 27.8 32.0-----------------------------------------------Indicated 212.11 28.6 60.7-----------------------------------------------Inferred 90.76 27.8 25.2-----------------------------------------------
(i)ROI for measured, indicated and inferred Sylvinite mineral resource estimates are 350 metres, 750 metres and 1500 metres respectively. Cut-off grade is 15% KCl, minimum width is 1.5 metres, density average 2.15
Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimates of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category
