Mineral Resource and Ore Reserve Statement on the Talitsky Potash Project, Berezniki,Russia

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Mineral Resource and Ore Reserve Statement on the Talitsky Potash Project, Berezniki,Russia MINERAL RESOURCE AND ORE RESERVE STATEMENT ON THE TALITSKY POTASH PROJECT, BEREZNIKI, RUSSIA Prepared For Verkhnekamsk Potash Company Report Prepared by SRK Consulting (UK) Limited UK6597 changed the report name to work with the local application script 03.06.13 SRK Consulting Mineral Resource and Ore Reserve Statement COPYRIGHT AND DISCLAIMER Copyright (and any other applicable intellectual property rights) in this document and any accompanying data or models which are created by SRK Consulting (UK) Limited ("SRK") is reserved by SRK and is protected by international copyright and other laws. Copyright in any component parts of this document such as images is owned and reserved by the copyright owner so noted within this document. The use of this document is strictly subject to terms licensed by SRK to the named recipient or recipients of this document or persons to whom SRK has agreed that it may be transferred to (the “Recipient”). Unless otherwise agreed by SRK, this does not grant rights to any third party. This document may not be utilised or relied upon for any purpose other than that for which it is stated within and SRK shall not be liable for any loss or damage caused by such use or reliance. In the event that the Recipient of this document wishes to use the content in support of any purpose beyond or outside that which it is expressly stated or for the raising of any finance from a third party where the document is not being utilised in its full form for this purpose, the Recipient shall, prior to such use, present a draft of any report or document produced by it that may incorporate any of the content of this document to SRK for review so that SRK may ensure that this is presented in a manner which accurately and reasonably reflects any results or conclusions produced by SRK. This document shall only be distributed to any third party in full as provided by SRK and may not be reproduced or circulated in the public domain (in whole or in part) or in any edited, abridged or otherwise amended form unless expressly agreed in writing by SRK. Any other copyright owner’s work may not be separated from this document, used or reproduced for any other purpose other than with the document in full as licensed by SRK. In the event that this document is disclosed or distributed to any third party, no such third party shall be entitled to place reliance upon any information, warranties or representations which may be contained within the document and the Recipient of this document shall indemnify SRK against all and any claims, losses and costs which may be incurred by SRK relating to such third parties. © SRK Consulting (UK) Limited 2016 version: Jan2016 SRK Consulting (UK) Limited SRK Legal Entity: 5th Floor Churchill House SRK Address: 17 Churchill Way Cardiff, CF10 2HH Wales, United Kingdom. Date: July 2016 Project Number: UK6597 SRK Project Director: Mike Armitage Corporate Consultant (Geology) SRK Project Manager: Tim McGurk Corporate Consultant (Mining Engineering) Client Legal Entity: CJSC Verkhnekamsk Potash Company Client Address: St. Gagarina, d. 10, Berezniki, Perm Region, Russia, 618419 UK6597 Mineral Resource and Ore Reserve Statement_v4.docx July 2016 SRK Consulting Mineral Resource and Ore Reserve Statement– Table of Contents Table of Contents 1 INTRODUCTION ................................................................................................. 1 2 MINERAL RESOURCE ....................................................................................... 1 2.1 Introduction .............................................................................................................................. 1 2.2 Legal Aspects .......................................................................................................................... 1 2.2.1 Available Permits and Licences .................................................................................... 1 2.2.2 Required Permits, Stages and Terms of Obtaining Permits ......................................... 4 2.2.3 Licence Conditions ........................................................................................................ 4 2.2.4 Terms for Development ................................................................................................. 5 2.2.5 Licence Status ............................................................................................................... 5 2.2.6 Responsibility for Violation of the Licence Conditions................................................... 5 2.3 Geology .................................................................................................................................... 6 2.3.1 Regional Geology .......................................................................................................... 6 2.3.2 Stratigraphy ................................................................................................................... 8 2.3.3 Mineralisation .............................................................................................................. 10 2.3.4 Summary Comments ................................................................................................... 11 2.4 History .................................................................................................................................... 11 2.4.1 Regional Exploration ................................................................................................... 11 2.4.2 Exploration of Talitsky ................................................................................................. 12 2.4.3 Input Data Analysis...................................................................................................... 24 2.5 Resource Estimation .............................................................................................................. 27 2.5.1 Introduction .................................................................................................................. 27 2.5.2 Geological Modelling ................................................................................................... 27 2.5.3 Classification ............................................................................................................... 30 2.5.4 SRK Audited Mineral Resource Statement ................................................................. 32 2.5.5 Comparison with Previously Reported Resource Estimates ....................................... 37 3 ORE RESERVES ............................................................................................... 40 3.1 Mining Plan ............................................................................................................................ 40 3.2 Ore Processing ...................................................................................................................... 42 3.3 Infrastructure .......................................................................................................................... 43 3.4 Environment and Social ......................................................................................................... 44 3.5 Economic Analysis ................................................................................................................. 45 3.6 Statement of Ore Reserves ................................................................................................... 45 UK6597 Mineral Resource and Ore Reserve Statement_v4.docx July 2016 Page i of ii SRK Consulting Mineral Resource and Ore Reserve Statement– Table of Contents List of Tables Table 2-1: Licence Coordinates for the Talitsky Project ................................................................. 2 Table 2-2: Topographic Survey of Talitsky Area. ......................................................................... 12 Table 2-3: Holes by Exploration Campaigns ................................................................................ 13 Table 2-4: Final Database for Resource Estimation ..................................................................... 14 Table 2-5: Methods of Downhole Survey for Holes Drilled in 1980-1990s ................................... 17 Table 2-6: Methods of Downhole Survey for Holes Drilled in 2009-2011 .................................... 18 Table 2-7: Core Recovery within the GKZ Ore Intervals .............................................................. 18 Table 2-8: SRK Check of Grade Calculation within GKZ Ore Intervals, Holes 1967-69 .............. 25 Table 2-9: SRK check of grade calculation within GKZ ore intervals, holes 1988-94 .................. 25 Table 2-10: SRK check of grade calculation within selected ore intervals, holes 2009-11 ............ 26 Table 2-11: Structural Grid and Block Model Extents and Size ..................................................... 27 Table 2-12: GKZ Potassium Resource Categorisation for the Talitsky deposit, effective date 1 January 2016 (Protokol #2809) ................................................................................ 31 Table 2-13: Comparison of SRK’s block model with the GKZ Reserves for the AB horizon.......... 31 Table 2-14: Comparison of SRK’s block model and GKZ Reserves on block basis of Red 2 horizon ......................................................................................................................... 32 Table 2-15: Comparison of SRK’s block model and GKZ Reserves on a block basis for Red 3 horizon ........................................................................................................................
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