Phosphate Projects, South Africa

Location

The Phosco project covers four phosphate exploration projects in South Africa, namely Duyker Eiland, Phillips Kraal, and Lamberts Bay in the Western Cape; and Bierkraal in the Northwest Province (see maps on left sidebar). Exploration drilling has been completed on Duyker Eiland and Phillips Kraal. Resource definition on Duyker Eiland has been completed and an NI43-101 compliant resource report has been compiled by an independent consultant, AMEC.
The most advanced project, Duyker Eiland, is located 30 kilometers north of the Port of Saldanha, in the Western Cape Province of South Africa.

History

In the Western Cape, phosphate deposits located around Saldanha Bay were known for many years by the local population, but more detailed studies were conducted starting from the early 1900's. A phosphate deposit was mined until recent years by Samancor at Langebaanweg, about 25 km southeast of the Duyker Eiland property, 12 km east of Phillips Kraal. This phosphate was sold for direct use as fertiliser, although some upgrading was done by mixing with other components, such as ammonium sulphate.

The Duyker Eiland project area has historical prospecting results of approximately 30Mt of phosphatic sands. In the 1940's and 1950's, AMCOR conducted mineral exploration on the property. During the 1960's, African Explosives and Chemical Industries Limited (AECI) conducted drilling and pitting on a 3.0 km by 0.5 km area extending over the property. Historical records of the exploration drilling program have been lost. AECI conducted flotation tests, and obtained a concentrate with 33.0 % P2O5 (87 % collophane). These estimation and flotation results are historical in nature, and do not comply with NI 43-101 definitions. Historical prospecting results are also published for the area of the Phillips Kraal project though the records have also been lost. On October 18, 2010 a subsidiary of the Corporation entered into an amended binding term sheet agreement providing for the right to acquire Eurozone Investments Limited (“Eurozone”). Celtic Trust Company Limited and its subsidiaries hold interests in four phosphate exploration projects in South Africa (the “Phosco assets”). The Corporation paid $100,000 to the vendor in consideration for receiving an exclusivity period to conduct due diligence.

The acquisition was announced in November 2011 (see news release 10/11/2011). The purchase price for the Phosco assets is the issuance of 2,500,000 shares of Montero. In addition, Montero is required to complete an initial exploration program on one (the Bierkraal Project) of the four projects within 18 months of closing, which includes drilling. A further 1,000,000 shares of Montero shall be issued to the vendor within 18 months of the closing date if Montero delivers a NI 43-101 Report identifying a phosphate resource on all or part of the Bierkraal Project, or if Montero otherwise elects to maintain the Bierkraal Project. If the Bierkraal Project is not maintained by Montero it is to be returned to the vendor. Upon closing, Montero will have 100% ownership of the other three projects and there is no further obligation to the vendor with respect to those projects after closing.

Geology

At the Western Cape projects, the regional geology is marked by the presence of Tertiary/Quaternary sediments consisting of calcareous and aeolian sands, calcretes and phoscretes.

At Duyker Eiland, a portion of the Vredenburg granitic pluton is overlain by sediments of the Varswater formation, which is part of the Miocene-Pliocene Sandveld group, and limestones and calcarenites of the Pleistocene Langebaan formation.

At the Property, sands, clayey sands and gravels of the phosphate-bearing Varswater formation sediments are partially overlain by limestones of the Langebaan Formation, which is exposed on top and along the shoulders of the small hill that dominates the topography of the area. The phosphate mineralization occurs as rounded and sub-rounded,polished collophane grains. A similar geologic setting is observed at the Phillips Kraal project. Desktop studies indicate that historic targets at Lamberts Bay also occur in the Varswater Formation. The Bierkraal project area is located in an apatite rich layer of the Bushveld Igneous Complex.

Exploration Programs

During the exclusivity period, the compilation of the historic data, desktop studies, field visits and mapping continues. RC/Aircore drilling commenced at Duyker Eiland and at Phillips Kraal during the 2011 exploration campaign.

In November 2011, an Initial Inferred Mineral Resource of 32.8 M tonnes grading 7.15% P2O5, capable of producing an acid-grade phosphate concentrate of 33% to 35% P2O5at the Duyker Eiland Project in South Africa, one of the phosphate assets Montero acquired was announced. (see news release 16/11/2011) Click the title to download and view the N1 43-101 Resource Estimate

Preliminary Economic Assessment

An independent NI43-101 compliant PEA has been completed by Turgis Consulting on the Duyker Eiland Phosphate Project in South Africa. Positive results and highlights  are as follows:

  • A NPV of CAD$ 126.1 million (at a discount rate of 10%) and an IRR of 38.14%
  • Average 4.5 million tonnes per annum rock mined at low stripping ratios of 0.57:1
  • Average production of 490,000 tonnes per annum of 33% P2O5 concentrate
  • 11 year Life of Mine (based on initial resource estimate) 
  • Operating cash costs CAD$ 109 per tonne concentrate Free alongside Ship ("FAS") Port of Saldanha, South Africa
  • Capital costs of CAD$ 132 million

Click the title to download and view the N1 43-101 Compliant PEA