Introduction

The Sandpiper Marine Phosphate Project (“Sandpiper” or “the Project”) is owned by the Namibian registered joint venture company Namibian Marine Phosphate (Pty) Ltd (“NMP") comprised of the Namibian subsidiaries of UCL Resources Limited (42.5%), Mawarid Mining LLC (42.5%), and Namibian women’s empowerment group Tungeni Investments cc (15%).

Phosphates in the marine environment were first discovered and regionally mapped on the Namibian shelf in the late 1960s and 1970s,  with subsequent exploratory work undertaken by  South African mining company Gencor and others in the 1990s and 2000s. The phosphate deposit off Walvis Bay was termed “Sandpiper Deposit ” by Gencor, and that name has been retained. Phosphate deposits (of various type and grade) are known to be widely distributed on the Namibian continental shelf. In the 1990s the Sandpiper deposit was considered as sub economic based on then current prices for rock phosphate concentrate (1991: US$42.50 tonne).  From 2007 the value of phosphate rock concentrate (32% P₂O₅) increased rapidly from US$80.00 per tonne, peaking at US$430.00 per tonne in August – September 2008 resulting in a re-rating of the economic viability of phosphate projects worldwide.  As anticipated, the market eased from these levels and the current market price is around US$200. 

Phosphorus (P) is an essential nutrient of all plants and animals. There is an ever-increasing demand for phosphate of good quality, which the Sandpiper deposit provides, as a component of fertilizer in the agricultural industry (for farming and as an ingredient of animal feeds) as well as in the food industry as a food additive. As the traditional world phosphate reserves decline, the impacts to society are potentially immense. This directly relates to declining farm output (produce decline). This in turn has generated higher food prices and contributes significantly to food insecurity and associated escalating socio-economic challenges. Some countries (particularly China and Saudi Arabia) are currently ensuring their own food resources by securing large tracts of arable land in foreign countries, notably Africa (Zambia, Angola, Mozambique, and Tanzania).

It is expected that global phosphate resources will be subjected to upward price pressure as world demand for food rises, population increases (est. 9 billion in 2050), increased living standards,  available arable land decreases and the quality of the mineable reserves declines.

Project Objectives

The primary objective is to develop a world class phosphate project  in Namibia and to initially supply phosphate (‘rock phosphate’) regionally in Africa and also to the international phosphate markets at competitive prices, to undertake this development in a responsible manner, with due and proper consideration to corporate, social, economic, and environmental matters.

The medium to long-term objectives of the project are to progress to advanced beneficiation and chemical processing of the recovered rock phosphate to produce a range of fertiliser products.

Location of the Project

The project is located on the Namibian continental shelf approximately 120 km south southwest (SSW) of Walvis Bay. The eastern boundary of the Mining Licence Area is approximately 40-60 km off the coast (directly west of Conception Bay). The water depths in the licence area range from 180 to 300 m.  Following successful exploration, NMP applied for, and was granted, a mining licence over a defined mineral resource area (see below).  The Mining Licence Area is 25.2km wide (maximunm width) and 115 km long (maximun length) and covers an area of 2 233 km².

 
Location of the project (Mining Licence 170)

Geology and ResouRce

The phosphatic material within the sediment predominantly comprises unconsolidated fine sand sized phosphorite ooliths and pellets, falling in the 100 to 500 micron grain size range (mostly 150 to 250 microns). These pellets are formed of concentric phosphate layers and predominantly comprise calcium carbonate and phosphate (P₂O₅). They can also contain quartz grains, ilmenite and sulphides.

They are  characterized by their spatial continuity (especially in a SSW - NNE direction) and general uniformity in grade. The variations in thickness are generally the product of thicker accumulation of sediment in very shallow palaeo-topographic depressions in the underlying clay surface, which is locally burrowed, with these burrows being filled with phosphate rich sediment. The phosphate is considered to be the product of synsedimentary chemical precipitation and early digenetic concretionary growth within the unconsolidated sediment. With the various changes in sea level since the Miocene the original deposits have been winnowed (removal of fines) and redistributed.

The stratigraphy throughout the project area has been ascertained from gravity cores (with a restricted maximum penetration potential of up to ~ 3 m) and older (Gencor) vibrocores (with a penetration of up to 6 m). The phosphatic horizon, which overlies a grey-green footwall clay of Miocene age, is subdivided into two distinct layers; an upper (layer 1) 0.1 to 1.0 m thick Miocene shelly phosphorite demonstrating a downward fining sequence and a lower (layer 2) 0.05 to > 2.0 m Miocene thick clayey phosphorite.  Alternating phosphate and clay layers below layer 2 are known from the Gencor cores. The extent and significance of these deeper deposits is the intended subject of further exploration.

 
Sandpiper Core sample and log 

NMP has confirmed the existence of a world-class phosphate deposit and Mineral Resource to internationally approved standards (JORC compliant) in the Mining Licence Area. The estimate of the phosphate mineral resource by independent geostatistical consultant Dr Alwyn E Annels, FIMMM, C.Eng. currently stands at: 

Note:  The Sandpiper deposit comprises two main layers with phosphate mineralisation.  The upper layer (Layer 1) tends to be relative shelly, grading downwards into a second generally higher grade sandy layer (Layer 2) which overlies a poorly mineralised footwall clay.

Indicated and Measured Mineral Resources have been calculated for the initial target recovery area in ML170 using combined assay and thickness data for Layers 1 and 2.

2D Inverse Distance Weighting (IDW) methods (to the power 3) were used to interpolate thicknesses, grade, specific gravities and moisture content for 200 m N-S  x 200 m E-W blocks. Extrapolation has been constrained by the search parameters used. The dimensions of the search areas were controlled by examination of the distribution and trends of data, the numbers of samples captured and by the results of current geostatistical studies.

SCOPING STUDY AND DEFINITIVE FEASIBILITY STUDY

NMP is finalising a Definitive Feasibility Study (“DFS”) on the Sandpiper Project. The parameters for the DFS were determined from a Scoping Study concluded in November 2010.

Scoping Study Outcome:

The DFS is nearing completion and the lead DFS consultants, Bateman Advanced Technologies Limited, is now completing compilation of the DFS report. The sub-consultants that are working with Bateman to complete the DFS include:

• Jan de Nul – Dredging
• Paterson and Cooke – Pipeline and slurry material
• Lithon Project Consultants (Pty) Ltd – Infrastructure, civils and ponds
• Enviro Dynamics – Environment

OPERATIONS   

The key operational aspects for the project comprise:

• Recovery of Phosphate sediment by dredging initially from water depths of up to 225 m;
• Planned annual recovery volume of circa. 5.0 million tonnes of phosphate rich sea bed material to an initial thickness of 3m (potentially up to 6m), extracted from an area of up to 3km²;
• Transporting the recovered sediments by the dedger and transferring (by pumping) the material to shore;
• Transfer of the slurry from the vessel to the shore by means of a  sinker line pipeline to a buffer pond;
• Oversize screening of the slurry at the buffer pond site;
• Pumping the resultant slurry via a pipeline to the processing plant;
• Beneficiating (de sliming, gravity separation of fine shells, attrition, washing and drying) the incoming material at a processing plant near Walvis Bay; and
• Transfer of saleable product (rock phosphate concentrate) circa.3.0 million tonnes to the nearby port of Walvis Bay for loading onto suitable bulk carrying vessels for export or to other point of sale.

Dredging

Trailing Suction Hopper Dredging (“TSHD”) technology is currently determined as the optimal method by which the deposit can be developed.

A TSHD is a large self-propelled vessel with:

• Retractable dredge arm, which ‘trails’ on the sea floor behind the vessel;
• Large pumps which generate a suction force, via which the dredge head entrains the sediments with seawater;
• A suction ‘dredge’ head, designed to extract the target sediments;
• An integrated large cargo hold, (“hopper)” into which the dredged sediments are discharged and transported; and
• Secondary pumps are used to transfer (pump) the sediment from the vessel to the shore.

The Belgian company, Jan De Nul, has been identified as the “Preferred Supplier” of services being a major international dredging company with the optimal experience, capacity and resources to recover the marine phosphate-rich sediments.  Dredging of these marine sediments will initially be conducted from a large TSHD dredge vessel, the MV Cristobal Colon.

TSHD Cristobal Colon

 The dredge arm will be extended to enable initial dredging to 225 m water depth and a design to enable dredging in 275 m water depth is being developed.

 Buffer Pond

 The dredged material is pumped to shore as a slurry into a reclamation or buffer pond:

 
Buffer pond examples

 Material Processing and beneficiation

Laboratory scale testing followed by pilot plant processing of a 265 tonnes bulk sample has established that a simple mechanical process of screening, desliming, gravity separation, attrition, washing and drying can be done at a commercial scale to upgrade run of mine feed material of 18-20% P2O5 to a saleable concentrate of 26-28% P2O5.     

 The pilot plant process work was carried  out in 2 phases at Mintek in Johannesburg in late 2011 and early 2012 and is illustrated in the pictorial summary below:  

 
Mintek Pilot Plant work

Environmental Considerations

In January 2012 NMP announced the lodgement, with the relevant Namibian Government Ministries, of the Draft Environmental Impact Assessment (“EIA”) and the Draft Environmental Management Plan (“EMP”) report for the marine component of the Sandpiper Phosphate Project.

In accordance with the terms of the granted Mining Licence (“ML 170”) and in compliance with the Namibian Environmental Management Act (No. 7 of 2007) (“the Act”), NMP lodged the EIA and EMP on 12 January 2012 at the Namibian Ministries of Mines and Energy and Environment and Tourism. The EIA and EMP has been prepared by J Midgley and Associates in association with Namibian environmental consultants Enviro Dynamics and externally reviewed by CSIR Consulting and Analytical Services: Environmental Management Services (“CSIR”).

The key issues addressed in the EIA were determined through a scoping process as prescribed by the Act that included the participation of government authorities, the public, business, NGO’s and the EIA team. The following aspects were covered in the EIA:

• Governance;
• The EIA process;
• Biogeochemical impacts;
• Benthic impacts;
• Marine fauna – flora impacts;
• Cumulative impacts;
• Socio-economic impacts; and
• Project impacts.

 The EIA also includes the full reports, and findings therefrom, of four independent specialist studies that were undertaken to address the specific potential impacts on:

• Fish and fisheries and seabirds and marine mammals;
• Water column dynamics;
• Macrobenthos; and
• Jellyfish.

The draft report concluded “The significance of the potential impacts associated with the proposed Sandpiper project for dredging of marine phosphate-enriched sediment has been investigated and assessed in the Environmental Impact Assessment. There are presently no identified issues of environmental significance to preclude the dredging of phosphate-enriched sediments from the Mining Licence Area No. 170. There are however, management and mitigation measures that are to be implemented by NMP and their sub contractors”  (as evaluated and detailed in the report).

Following CSIR’s comprehensive external review, Mr Patrick Morant M.Sc., Pr. Sci.Nat. of CSIR commented that “Having been involved throughout the process, my overall impression is that the Draft Environmental Impact Assessment Report is of high quality and is a good reflection of the professional competence and abilities of the EIA process manager, the public consultation team and the specialist scientists.  The level of detail in all aspects of the study provides confidence in the assessment of the potential impacts and the conclusions drawn. The draft EIA report provides the necessary information to permit the authorities and the I&APs to verify that matters of concern have been addressed comprehensively. I, therefore, recommend that the Draft Environmental Impact Assessment Report be accepted as fulfilling the requirements for an Environmental Impact Assessment Report”.

An additional related EIA for the land based activities of the project is also in progress.   

Marketing

NMP has identified the following potential uses for the Sandpiper concentrate product:

• Direct Application Phosphate Rock (“DAPR”);
• Single Super Phosphate (“SSP”);
• Phosphoric Acid (“PA”);
• Fertilizer Products:
  • Di-Ammonium Phosphate (“DAP”);
  • Mono-Ammonium Phosphate (“MAP”);
  • NPK.

The following map shows the regions identified as potential markets for Sandpiper concentrate: 

The designations employed and the presentation of material in the map(s) do not imply the expression of any opinion whatsoever on the part of FAO concerning the legal or constitutional status of any country, territory or sea area, or concerning the delimitation of frontiers

The information in this report that relates to Mineral Resources for the Sandpiper Marine Phosphate Project is based on information compiled by Roger Daniel who is a member of the Australasian Institute of Mining and Metallurgy. Mr Daniel is a full-time employee of the Company. Mr Daniel has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Daniel consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.