Appendix Iii Competent Person’S Report
Total Page:16
File Type:pdf, Size:1020Kb
THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT DRAFT KAZNICKEL LLP GORNOSTAY IN SITU RECOVERY NICKEL-COBALT PROJECT Competent Persons’ Report Report Nº R433.2019 [●] – III-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT Report Prepared For Client Name KazNickel LLP Project Name/Job Code KZNCPR01 Contact Name Margulan Abekov (cc Marat Taishibayev) Contact Title Director Office Address 99B Abaya Street, Semey, Kazakhstan Report issued by CSA Global Office CSA Global (UK) Ltd First Floor, Suite 2, Springfield House Springfield Road Horsham, West Sussex, RH12 2RG UNITED KINGDOM T +44 1403 255 969 F +44 1403 240 896 E [email protected] Division Corporate Author and Reviewer Signatures Principal Author Maxim Seredkin PhD (Geology), BSc (Hons) Geology, FAusIMM, MAIG, MPONEN Coordinating Graham Jeffress Author BSc(Hons), FAIG, RPGeo, FAusIMM, FSEG, MGSA Contributing Anthony Donaghy Author BSc (Hons), Associate Diploma of Civil Engineering, PGeo Peer Reviewers Brendan Clarke PhD, BSc (Hons), FSSA, Pr.Sci.Nat Karl van Olden BSc (Eng) (Mining) Grad Dip Eng (Mining Economics), MBA, FAusIMM Paul Heaney MSc Hydrogeology, BSc Natural Science CSA Global Galen White Authorisation BSc(Hons), MSc, FGS, FAusIMM © Copyright 2020 – III-2 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT EXECUTIVE SUMMARY CSA Global Pty Ltd (an ERM Group company) (“CSA Global”) was engaged by KazNickel LLP (“KazNickel”, “the Client” or “the Company”) to compile a Competent Persons Report (CPR or the “Report”) in accordance with Chapter 18 of the Listing Rules of the Stock Exchange of Hong Kong (HKEX) for the Gornostay Nickel-Cobalt Project (“the Project”). KazNickel is a wholly-owned subsidiary of Battery Metals Technologies Ltd. (BMT), which is a wholly-owned subsidiary of Ferronickel Plant Ertis Limited Liability Partnership (FP Ertis or FNK), which is in turn controlled by Fincraft Resources Joint Stock Company (93.44% interest). Following a proposed [REDACTED] of BMT on the Hong Kong Stock Exchange and the Astana International Exchange, FNK is expected to hold a 70% interest in BMT, with the balance to be held by public shareholders. Location and Access The Gornostay Project is located in the Beskaragay district in Vostochno-Kazakhstanskaya oblast (Eastern Kazakhstan) between the regional centres of Ust-Kamenogorsk (Oskemen) (320 km distance by road) and Pavlodar (250 km distance by road). The Project has excellent infrastructure being adjacent to a major highway, railroad, and is located between two nearby towns, Kurchatov and Semey, with populations of 12,000 and 360,000 respectively. The distance from the Project to Kurchatov is 25 km, and to Semey is 110 km. The Irtysh River flows between the two areas of the project. The Project comprises two separate areas: • A larger area south of the Irtysh River called the “Left River Side”; and, • A smaller area north of the Irtysh River called the “Right River Side”. These two project areas are planned to support two developments in the near-to-medium term. Tenure KazNickel holds the SSU Contract for the Gornostay nickel-cobalt deposits, which gives the Company rights to explore and produce cobalt and nickel. The Company has been actively undertaking exploration and evaluation activities since 2004 at Gornostay. The Company recognised the potential to exploit the Gornostay Project using in situ recovery techniques, which are widely deployed in Kazakhstan for the extraction of uranium, and has been actively assessing this approach since gaining control of the project. The Contract for Exploration and Production of Nickel and Cobalt Ore at Gornostay (the “Contract”) was executed between the Ministry of Energy and Mineral Resources (the “Competent Authority”) and the Company on the 26th of February 2004, and registered with the Ministry of Energy and Mineral Resources on the same day under Registration Number 1349. The Contract was awarded as a result of the tender that was held by the Competent Authority in 2001. In accordance with the Contract the Company has an exclusive right to explore and produce cobalt and nickel within the area. History The potential of the Gornostay area to host economic nickel-cobalt mineralisation was first recognised in 1959. Since then, substantial work has been undertaken at Gornostay by different parties – III-3 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT prior to KazNickel acquiring the project. In the 1960s prospecting and evaluation of the project led to metallurgical testwork. KazNickel undertook drilling, test pits and testwork in 2004–2007, leading to Mineral Resource estimates and mining studies focusing on conventional mining and processing approaches; this work concluded in 2012. The Project was dormant from 2012 to 2018 due to low prices for nickel, and due to the sub-economic results of the proposed pyrometallurgical processing and ferronickel production options reviewed to that point. In 2018, a new team a KazNickel (with experience of ISR from their time in Kazakhstan’s substantial uranium ISR sector) recognised the potential of applying ISR at Gornostay. The new team commenced construction of a pilot ISR test block and laboratory leaching investigations. In situ Recovery The in situ recovery (ISR) method of mining, also known as in situ leaching (ISL), is potentially one of the most effective methods of addressing the operating costs of conventional mining. A unique feature of ISR is the ability to transfer a sizeable proportion of the processing of mineralised bodies to the subsurface, and thereby directly obtain solutions of the metals of interest. Importantly, this approach also has the potential to minimise effects on the natural environment when well managed. The ISR method uses solutions which are pumped through a mineralised body in situ (underground) to recover metals by leaching them directly from the host rocks. Typical ISR mines comprise a well field/s and an extraction process plant. Leaching solutions are pumped into the mineralised zone/s through a network of injection bores and extracted by production wells. In the process, the leaching solution dissolves the metals of interest, which are brought to the surface in a ‘pregnant solution’. The pregnant solutions are treated at an extraction plant to produce a chemical concentrate of the target metal/s. As a result, there is little surface disturbance, and minimal tailings or waste rock is generated. However, for ISR to be effective, the mineralised body needs to be permeable (either naturally or artificially) and located such that the leaching solutions cannot contaminate surrounding groundwater. Target minerals need to be readily soluble by the leaching solutions in a reasonable period, and there should be a reasonable consumption of leaching reagents. As a result, there is little surface disturbance and no tailings or waste rock are generated at ISR mines. In comparison to other types of mining operations, ISR offers a number of distinct advantages: • Lower development costs for the mine, processing plant and infrastructure; • The ability to start production at low capital cost with a following increase in production; this allows profits from cash flow to fund development of the mine instead using debt financing; and, • Greater flexibility in production capacity (easier reduction of capacity during lower price periods and increased capacity during higher price times). This can be achieved by decreasing pumping evenly at each wellfield block and/or stopping pumping at certain mining sites. – III-4 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III COMPETENT PERSON’S REPORT The economics of ISR mines primarily depend on following the parameters: • Flow rate capacity of the wellfields (input capacity of injection wells and extraction capacity of production wells); • Concentration of extracted component(s) in pregnant solutions; • Overall level of extraction of mined component(s); and, • Ratio of Liquid to Solid (L:S) required to achieve the desired extraction of the mined component(s). This ratio is calculated based on volume of solutions passed through the operational block over the whole period of operation and on the tonnage of the operational block. The technological schemes for leaching and processing of solutions are approximately same for different commodities. This feature of ISR operations can be used to provide an estimation of the potential financial performance of new ISR projects based on the well-known economics of established uranium ISR mines. ISR can allow profitable exploitation of deposits with low grades of metals, and/or small resources, unsuitable for conventional mining operations. There are three critical parameters that must be met for a deposit amenable to ISR: • mineralisation must be located in permeable environment; • possible management of leaching solutions; and, • the lixiviant should be suitable for selective leaching of a specific component from the deposit. Evaluation of the suitability of deposits for application of ISR requires different and modified approaches compared to traditional mining/extraction techniques. Furthermore, some deposits that are currently uneconomic to exploit using traditional mining methods have the potential to be profitable as ISR operations. Nickel and cobalt in laterite deposits are considered highly amenable to ISR and ISR may become a significant method of extraction, as in the uranium industry.