Davenport Resources Limited Technical Report on The

DAVENPORT RESOURCES LIMITED

TECHNICAL REPORT

ON THE

MINERAL RESOURCES

OF THE

KÜLLSTEDT EXPLORATION LICENCE

SOUTH HARZ POTASH PROJECT

THURINGIA, GERMANY

Report Date: 15th March 2019 Effective Date: 13th February 2019

Prepared By

Micon International Co Limited Suite 10 Keswick Hall, Norwich, NR4 6TJ, United Kingdom

Davenport Resources Ltd

Table of Contents

1.0 EXECUTIVE SUMMARY ...... 1 1.1 INTRODUCTION ...... 1 1.2 PROPERTY DESCRIPTION AND LOCATION ...... 2 1.3 LICENCES AND PERMITS ...... 3 1.4 INFRASTRUCTURE ...... 3 1.5 GEOLOGY AND MINERALISATION ...... 4 1.6 EXPLORATION ...... 4 1.7 MINERAL RESOURCE ESTIMATION ...... 6

2.0 INTRODUCTION...... 2 2.1 PURPOSE AND SCOPE OF REPORT ...... 2 2.2 CAPABILITY AND INDEPENDENCE...... 2 2.3 DISCLAIMER ...... 3

3.0 GENERAL INFORMATION ...... 5 3.1 KALI-INSTRUKTION AND THE GKZ SYSTEM ...... 5 3.2 MICON APPROACH TO RESOURCE/RESERVE CLASSIFICATION ...... 7 3.2.1 Mineral Resources ...... 7

4.0 PROPERTY DESCRIPTION AND LOCATION ...... 9 4.1 PROPERTY DESCRIPTION ...... 9 4.2 PROPERTY LOCATION ...... 9 4.3 LICENCES ...... 9 4.3.1 Exploration Licences ...... 12 4.3.2 Surface Rights ...... 12 4.4 ROYALTIES ...... 12 4.5 ENVIRONMENTAL LIABILITIES, LEGISLATIVE AND PERMITTING REQUIREMENTS ...... 12 4.6 MATERIAL AGREEMENTS ...... 13 4.7 OTHER SIGNIFICANT FACTORS AND RISKS ...... 13

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 14 5.1 PROPERTY ACCESS ...... 14 5.2 CLIMATE ...... 14 5.3 LOCAL RESOURCES AND INFRASTRUCTURE ...... 14 5.4 PHYSIOGRAPHY ...... 15 5.5 FLORA AND FAUNA ...... 15

6.0 REGIONAL GEOLOGY ...... 16 6.1 DEPOSIT TYPES ...... 16 6.2 REGIONAL GEOLOGY AND STRUCTURAL SETTING ...... 16 6.3 LOCAL GEOLOGY ...... 17 6.4 MINERALISATION ...... 22 6.5 ECONOMIC MINERALS ...... 23 6.5.1 Sylvinite – ‘Hartsalz’ ...... 23

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6.5.2 Carnallitite...... 24 6.5.3 Rock-Salt...... 25

7.0 HISTORICAL EXPLORATION ...... 26 7.1 HISTORY OF THE SOUTH HARZ POTASH DISTRICT ...... 26 7.2 HISTORIC OWNERSHIP ...... 27 7.3 SOURCE DATA ...... 28 7.4 EXPLORATION ...... 29 7.5 DRILLING ...... 39 7.6 LOGGING ...... 39 7.7 SAMPLE PREPARATION AND ANALYSIS ...... 40 7.7.1 Sampling ...... 40 7.7.2 Analysis Procedures ...... 40 7.8 HISTORICAL MINERAL RESOURCE ESTIMATES...... 4142

8.0 DATA VERIFICATION ...... 4344

9.0 MINERAL PROCESSING METALLURGY AND TESTING ..... 4445

10.0 MINERAL RESOURCE ESTIMATE ...... 4546 10.1 INTRODUCTION ...... 4546 10.2 GEOLOGICAL MODELLING AND INTERPRETATION ...... 4546 10.3 MINERAL RESOURCES ...... 5152

11.0 MINING METHODS ...... 5759

12.0 CONCLUSIONS AND RECOMMENDATIONS ...... 5860

13.0 DATE AND SIGNATURE PAGE ...... 6062

14.0 REFERENCES ...... 6163

15.0 CERTIFICATE ...... 6264

16.0 GLOSSARY AND ABBREVIATIONS ...... 6365 16.1 GLOSSARY ...... 6365 16.2 ABBREVIATIONS ...... 6668

17.0 APPENDIX 1 ...... 6870

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List of Tables

Table 1.1: Historical Resources for the Küllstedt Project (Kästner et al., 1980) ...... 6 Table 1.2: Exploration Target Mineral Resource Estimate for the Küllstedt Project (Ercosplan, 2015) ...... 7 Table 1.3: Inferred Mineral Resource Estimate for the Küllstedt Project (Micon, 13th February 2019) ...... 1 Table 4.1: Küllstedt Exploration Licence ...... 1211 Table 6.1: Zechstein Series Geology (after Ercosplan, Jan 2018) ...... 19 Table 6.2: Evaporite Rock Types within the Küllstedt Project ...... 22 Table 7.1 Historically Significant South Harz Potash District Mines ...... 26 Table 7.2: Küllstedt Drill hole Database Summary ...... 30 Table 7.3: Exploration Drill Holes Data within the Küllstedt ...... 30 Table 7.4: Historical Resources for Küllstedt ...... 42 Table 7.5: Exploration Target Mineral Resource Estimate for the Küllstedt Exploration Licence (Ercosplan, 2015) ...... 4243 Table 10.1: Average Seam Thickness Per Fault Block...... 5152 Table 10.2: Küllstedt Mineral Resources as at 13th February 2019 ...... 5658

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List of Figures

Figure 1.1: Location Map of the Küllstedt Exploration Licence ...... 2 Figure 3.1: Comparison of GKZ and JORC Code Resource/Reserve Classification ... 6 Figure 3.2: Exploration Results, Mineral Resources and Ore Reserves as Defined by the JORC Code ...... 7 Figure 4.1: Regional Location Map of the South Harz Potash Project ...... 10 Figure 4.2: Location Map of the Davenport Mining and Exploration Licence Areas 10 Figure 6.1: Thuringian Basin Geology (Frank, 2011) ...... 17 Figure 6.2: Geological Map of the Küllstedt Project ...... 20 Figure 6.3: Interpreted fault blocks of the Küllstedt Project ...... 21 Figure 6.4: 3D View of Fault Blocks on the Küllstedt Project ...... 21 Figure 6.5: Kieserite content within the Hartsalz layer of the Küllstedt Project ...... 24 Figure 7.1: Location of historical shafts on Küllstedt...... 27 Figure 7.2: Drill Hole Kal Eigenrode 3/1977 Graphical Log ...... 36 Figure 7.3: Drill Hole Positions and Main Mineral Distribution within Küllstedt ..... 38 Figure 8.1: Historical drill hole E Küllstedt 1/1966 collar ...... 4344 Figure 10.1: N-S Cross-Section across Fault Block 1 and Fault Block 2 on Küllstedt ...... 4647 Figure 10.2: Upper Carnallitite Seam Thickness ...... 4748 Figure 10.3: Upper Hartsalz Seam Thickness ...... 4849 Figure 10.4: West-East Cross-Section through Fault Block 1 ...... 4950 Figure 10.5: Drill Hole Plan and Inferred Resource Extent of the Küllstedt Project ...... 5051

Figure 10.6: K2O Grade Distribution in the Upper Hartsalz Seam ...... 5254 Figure 10.7: Thickness Distribution in the Upper Hartsalz Seam ...... 5355

Figure 10.8: K2O Grade Distribution in the Upper Carnallitite Seam ...... 5456 Figure 10.9: Thickness Distribution in the Upper Carnallitite Seam...... 5557

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1.0 EXECUTIVE SUMMARY

1.1 INTRODUCTION

Micon International Co Limited (Micon) was contracted by Davenport Resources Ltd (Davenport) to undertake an estimate of the mineral resources of the Küllstedt exploration licence (the Küllstedt Project or the Project) located within the South Harz Potash District of the Thuringian Basin, Germany. Davenport is a publicly listed company on the Australian Securities Exchange (ASX) and holds the Küllstedt exploration licence through its wholly owned subsidiary East Exploration GmbH. In addition to the Küllstedt Project, Davenport has also been awarded the Ebeleben, Mühlhausen-Nohra and Ohmgebirge mining licenses, together with the Gräfentonna exploration license, all of which form the greater South Harz Potash Project.

This technical report presents the results of the mineral resource estimate for the Küllstedt Project and has been prepared in accordance with the guidelines of the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserve Committee (JORC) of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia (the JORC Code).

The evaluation of the Project has been based on historical exploration records supplied to Micon, which Micon used to create a three-dimensional (3D) geological model using Micromine® modelling software. The historical data was supplied to Micon either as scans of the original drilling information or as pre-captured data ordered in an Excel database by Ercosplan Geotechnik und Bergbau (Ercosplan) that Micon cross-checked against original records.

The principal consultants responsible for the review of the Project and the preparation of this Report are listed in Section 2.2.

Elizabeth de Klerk M.Sc., Pr.Sci.Nat., SAIMM., Micon’s Senior Geologist and Competent Person visited the South Harz Potash project from 12th to 16th February and 6th to 8th March 2018. During the initial site visit the South Harz Potash Project and laboratory facilities at K-UTEC AG Salt Technologies (K-UTEC) in Sondershausen were visited. The original hard copy drill hole logs, reports, maps and cross-sections held in the Bodenverwertungs und verwaltungs GmbH (BVVG) archives in Berlin were inspected. In addition, Mrs. de Klerk had discussions with the Ercosplan team at the offices in Erfurt to understand how the data was captured and structured in an Excel database in order to estimate Exploration Targets for the various licenses of the South Harz Potash Project. The second site visit involved additional time being spent at K-UTEC inspecting additional historical records for the South Harz Potash Project held in the K-UTEC archives at its head office in Sondershausen.

The results of this study are principally derived from the examination and interpretation of historical exploration and sampling data. No independent confirmatory sampling has been performed by Micon as a part of the current study to confirm or otherwise quantify the conclusions presented in this report due to no historical drill core being available for check logging or sampling.

Micon has provided a completed Table 1 of the JORC Code in Appendix 1 for the Küllstedt Project.

Küllstedt Project, March 2019 1 Davenport Resources Ltd

1.2 PROPERTY DESCRIPTION AND LOCATION

The Küllstedt Project is located in the north-western part of the Federal State of Thuringia, approximately 30 km northwest of the state’s capital city of Erfurt, and at the western boundary of the South Harz Potash District (Figure 1.1).

Figure 1.1: Location Map of the Küllstedt Exploration Licence

Source: Davenport

The Küllstedt Project is situated within the Central Uplands of Germany, which has a transitional climate that fluctuates between moderately oceanic and humid continental. Winters are relatively cold with average highs of 2ºC and lows of -3ºC, whilst summers tend to be warm, and at times humid, with average highs of 23ºC, although maximums can exceed 30ºC. Precipitation averages 502 mm per annum, which falls throughout the year.

Küllstedt Project, March 2019 2 Davenport Resources Ltd

The topography in the area is characterised by gently undulating hills, which are often forested and interspersed by narrow slow-flowing rivers and streams.

1.3 LICENCES AND PERMITS

East Exploration GmbH is 100% owned by Davenport and is the owner of each of the Ebeleben, Mühlhausen-Nohra and Ohmgebirge mining licences, in addition to the neighbouring Gräfentonna and Küllstedt exploration licences. This report does not contain a legal review of the Ebeleben, Mühlhausen-Nohra and Ohmgebirge mining licences or the Gräfentonna and Küllstedt exploration licences.

The exploration licence for Küllstedt was granted to East Exploration GmbH in compliance with Sections 6 and 7 of the Bundesberggesetz (BBergG) by the Thüringer Landesbergamt on 14th January 2015 and is valid until 12th January 2020. The Küllstedt exploration licence is registered in the commercial register at AG Munich under Notice Number 19/2015 and has an area of 241.50 km2. During the tenure of the exploration licence, East Exploration GmbH are permitted to explore for rock salt, potash salts, magnesia and boron salts with accompanying salts, and the results of all exploration activities must be reported annually to the Thüringer Landesbergamt authority.

Environmental and water permits may also be required as well as other permits, such as deep drilling operations which require approval from the Federal Office for the Safety of Nuclear Waste Management (BfE) that is responsible for preserving geological formations that are potentially suitable for the storage of nuclear waste.

Davenport Resources Ltd do not own any of the surface rights across the Küllstedt Project.

1.4 INFRASTRUCTURE

In general, the infrastructure of the region is modern and well-developed with several federal and state roads connecting to federal motor-ways, and a regional railway network connecting to the trans-regional railway network in the vicinity of the mining licence. Power supplies are available for households, established commerce and industry via a well-developed grid network. All of the state towns, especially the district capitals, are considered to be advanced modern towns with a developed infrastructure that includes shopping centres, hospitals and clinics, schools and banking.

Thuringia State has an average population density of 130 people per km2 with numerous towns and villages located both within or adjacent to the Project. Each of the district capital towns of Heilbad Heiligenstadt, Nordhausen, Mühlhausen and Sondershausen are approximately 20 km from the Project area. Erfurt the largest city and state capital of Thuringia has a population of approximately 206,000 and is 50 km southeast of Küllstedt exploration licence. All basic services can be sourced from these towns.

Potash mining is an established industry in the region which has resulted in the ongoing development of a skilled workforce in this regard. Supplies and personnel to conduct exploration and mining activities can be sourced locally and whatever cannot be sourced from Erfurt or elsewhere in Thuringia can be easily sourced from cities such as Berlin and Frankfurt.

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1.5 GEOLOGY AND MINERALISATION

The Küllstedt Project is located in the north of Thuringia in the western section of the Thuringian Basin and has an area of 241.501 km². A portion of the northern Küllstedt Project boundary was mined by conventional underground methods via two vertical shafts between 1920 and 1924 with the primary target being the Staßfurt potash seam of the potash-bearing Zechstein Group (Upper Permian – Zechstein). The adjacent Volkenroda, Sollstedt, Bleicherode and Kemstedt mining fields have been historically mined since 1896 for the production of potash fertilisers and are currently being used as underground waste storage facilities. The adjacent Volkenroda underground potash mine originally held the mining licences for both Mühlhausen-Nohra and Ebeleben and had planned on extending the mine southeast onto the Ebeleben mining license. A new ventilation shaft was started on Ebeleben, which was sunk to a depth of 100 m, before Germany was reconciled in 1990 and Volkenroda lost the licences. Whilst on site, Mrs. de Klerk visited the area where the ventilation shaft was sunk.

The regional stratigraphy of the South Permian Basin is fairly well understood with a pre-Variscan basement (Upper Carboniferous and older rocks) and a transition horizon of Upper Carboniferous to Lower Permian lying beneath an expansive sequence of evaporite rocks of the Upper Permian succession. These evaporite deposits are assigned to the Zechstein Group, and host the target potash mineralisation of the South Harz Potash District which occurs on Küllstedt. The potash-bearing target Zechstein Group consists of seven depositional cycles with the potash mineralisation of the South Harz Potash District hosted within the second cycle, the Staßfurt Formation (Z2).

The majority of the potash deposits have been altered by intruding water or basalt causing plastic deformation resulting in the potash horizons being forced upwards into the overlying strata. Faulting and water intrusion have caused alteration or dissolving of the deposited potash, and as such strata within the Zechstein Group can be regionally highly variable.

The Z2 is further sub-divided into horizons, of which the Kaliflöz Staßfurt (z2KSt) hosts the potentially economic potash seam. The z2KSt is split into a hanging wall group that has 11 to 19 horizons of finely layered potassium salts and a footwall group that has 1 to 10 coarsely layered potassium salts and thick halite layers. The z2KSt is present across the most of the Küllstedt exploration license, with a fringe of no intersections along the western edge of the property as this represents the edge of the potash basin. The average thickness of the z2KSt on Küllstedt is 12.94 m. The main minerals present are carnallite and Hartsalz, a local mining term for hard salt rocks commonly composed of 65% halite and 15% sylvite, plus sulphates. There is often elevated kieserite associated with both the carnallite and Hartsalz in the south of the Project area, which drops off in content towards the base of the carnallitite layer. Lesser amounts of halite, polyhalite, anhydrite, langbeinite, glaserite, kainite, aphthitalite and syngenite also occur.

1.6 EXPLORATION

All of the exploration conducted on Küllstedt is historical. According to historical reports, exploration commenced within the Küllstedt exploration licence in 1890 for potash and natural gas, however, no data is currently available for this. The first drill hole information is from the Felsenfest series of drill holes that were drilled from 1906 to 1910 for the now closed Hüpstedt- Berestedt Mines. Exploration recommenced in the 1960's with all exploration drilling

Küllstedt Project, March 2019 4 Davenport Resources Ltd conducted by the former German Democratic Republic (GDR). Various state parties were involved, most of which combined to form VEB Kombinant after reunification. A total of 34 historical exploration drill holes have been drilled within the Küllstedt Project.

The drill hole database for the Küllstedt Project consists of 73 drill holes – 34 within the Project boundary, 38 on the adjoining Mühlhausen-Nohra mining license and one outside of the Davenport licence areas. Of these 73 drill holes, 14 were hydrocarbon exploration drill holes and 59 potash exploration drill holes. The database is incomplete with various drill holes missing corresponding downhole data sets. This is due to the historical data having been partially sourced with the unsourced data considered as being either stored at an as yet undetermined location, or having been lost/destroyed.

Various state institutions were involved in the historical exploration, where during and post- unification, the responsibility of the ownership and curatorship of the historical geological exploration archives became unassigned. This effectively resulted in the archives being neglected over this period of instability, thereby instigating a process of the exploration archives being seized/copied and privately stored by various private firms and newly formed technical institutions of the time.

This has today resulted in the historical data either being stored in duplicate at various localities, being stored in a single known locality, being stored at an as yet to be determined locality or being assumed as being lost/destroyed. The BVVG is considered to have the most complete national archive, with various other depositories hosting duplicates thereof, as well as various additional datasets that the BVVG does not yet have copies of. This has resulted in the current archives stored by BVVG as being partial in extent.

Compounding this scenario is that various, often undated, iterations of the historical exploration data, pertaining to a single drill hole exists – i.e. during the drilling and analysis of a drill hole various updated versions of the drill hole were issued, each differing to the previous as additional data became available, geological logging was refined (based on any downhole geophysics) or the chemistry and mineralogy results were corrected before sign off and final approval by the analytical institution. As such it is a common occurrence that two separate data depositories may contain exploration data for the same drill hole, but which differ when compared against each other. These differences are virtually always <5%, and rarely between 5% to 10%. It is often impossible to determine which is the more recent and which should be relied upon as the date is more often than not recorded only as the year, e.g. 1978.

In compiling the Küllstedt Project database, Micon relied on drill hole data that had been stored and previously captured by Ercosplan. The historical data for Davenport's surrounding licence areas, that were drilled at the same time and by the same companies as Küllstedt, were cross- checked against the original drill hole logs in the BVVG and K-Utec archives in Berlin and Sondershausen respectively. This process will be completed for Küllstedt when the Micon Competent Person next visits the Project during 2019. For the majority of the drill holes on Küllstedt, Micon was able to update the data received from Ercosplan with the more accurate version of historical depth intersections that had been interpreted off the downhole geophysical logs.

All drill holes with supporting downhole chemistry data were relied upon for geological modelling and estimation purposes, whilst drill holes with only downhole geological data were

Küllstedt Project, March 2019 5 Davenport Resources Ltd relied upon in order to complete wireframing interpretations, especially in localities where there was a paucity of drill holes with supporting chemistry data.

In instances where full drill hole logs were available, these typically included a detailed lithological description of the entire drill hole, a summarised stratigraphic log, graphically displayed downhole geophysical logging and the chemistry and mineralogy results.

All drill hole sampling was conducted according to the Kali-Instruktion (1956 and 1960). Core sampling was available from two of the hydrocarbon drill holes (E Kud 1/1966 and E Mh 25/1960) and all 34 of the potash drill holes on Küllstedt. Where possible, the K2O grade of the potash-bearing horizons was determined on an empirical base using the correlation with the downhole natural gamma log. Samples were collected across all potash-bearing horizons and the total sampled length represents the total thickness of the potash-bearing horizon of the z2KSt. Specific details regarding sample length have not yet been translated from the historical German exploration reports, however since drilling on Küllstedt was simultaneous to that on Müllhausen and conducted by the same company and geologists, Micon has assumed sampling methods to be similar, if not the same, as at Müllhausen. For the potash drill holes at Müllhausen, core sample thickness ranged from 0.18 m to 4.00 m. Over inhomogeneous potash horizons where interlayers of potential waste were included, the minimum sample thickness was 0.5 m and the maximum was 5 m. Samples were crushed to 2 mm in a jaw crusher and a representative sample was milled and crushed further to 50 μm which was assayed by Induced Coupled Plasma Optical Omission Spectrometry (ICP-OES) for all elements, except NaCl which was tested using potentiometric titration. X-Ray Diffraction (XRD) was used for mineralogy and thin sections were carried out at a local university.

1.7 MINERAL RESOURCE ESTIMATION

In 1980 an historical mineral resource estimate was reported for an area that overlapped part of the current Küllstedt Project area. The historical resource estimation was conducted by VEB Geological Research and Exploration, a state-owned enterprise, according to the Kali- Instruktion of the former GDR (Gotte, 1982, /12/) (Table 1.1).

Table 1.1: Historical Resources for the Küllstedt Project (Kästner et al., 1980)

2 Volume Tonnage Grade Tonnage Mineral Area (km ) 3 Category (Mm ) (Mt) K2O (%) K2O (Mt) Hartsalz 12.8 42.5 Carnallite 70.9 302 331 6.8 22.6 Balance - C2 Glaserite 7.3 24.2 Total 14.2 47.1

A separate Exploration Target mineral resource estimate for Küllstedt was estimated by Ercosplan in January 2015 in accordance with the guidelines of the 2012 edition of the JORC Code (Table 1.2).

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Table 1.2: Exploration Target Mineral Resource Estimate for the Küllstedt Project (Ercosplan, 2015)

3 Volume Density (t/m ) Tonnage (Mt) Grade K2O (%) Tonnage K2O (%) Seam (Mm3) Min. Max Min. Max Min. Max Min. Max Potash Seam (carnallite 2,216 1.83 2.32 4,055 5,141 7.2 25 292 1,285 and sylvite) Total 2,216 1.83 2.32 4,055 5,141 7.2 25 292 1,285

The Ercosplan Exploration Target grade estimate is comparable to the Micon Inferred Mineral Resource estimate. The Micon Inferred Mineral Resource tonnage is significantly less than the Exploration Target tonnes due to a more restricted resource area being used by Micon, based on additional historical information becoming available that was not available to Ercosplan in 2015.

The geological model and mineral resource estimation undertaken by Micon for the Project was carried out in Micromine®, a software package used for modelling stratiform deposits. The database used to create the geological model and mineral resource estimation was created from the manual data entry of hard-copy historical drill hole logs and exploration records. The drill hole database was imported into Micromine® and validated. Validation checks undertaken included checking for missing samples, mismatching sample and stratigraphy intersections, duplicate records and overlapping from-to depths. In addition, and where possible, the sum of the chemical compounds was checked to ensure a total of 100%.

Once validated, the chemical database was composited according to stratigraphy, which allowed the merging of the mineralogical and chemical data tables. Based on the abundance of sulphate minerals in the drill hole database, Micon elected to term the higher-grade seam as Hartsalz. Each drill hole was individually examined where based on the stratigraphy, sequence of mineralised seams and the K2O composite grades, the Hartsalz or carnallitite seams were further subdivided into the Upper Hartsalz seam, the Upper Carnallitite seam, the Lower Carnallite seam and the Lower Hartsalz seam. Based on the elevation of the z2KSt, four main fault blocks were defined. The Lower seams only occur in Fault Block 1.

Roof and floor grids were made for each of the four identified seams for each of the four fault blocks. The minimum and maximum X and Y origins used for gridding were 581,494 (min X), 5,668,287 (min Y), 607,408 (max X) and 5,694,912 (max Y). A grid cell size of 200 was used as this best fitted the data when correlated in cross-section. An inverse distance squared gridding algorithm was used, with a circular search area and a 5,000 m search radius to cover the distance between data points, one sector and maximum 1 point per sector. The roof and floor grids were converted to wireframes surfaces and then to digital terrain model (DTM) surfaces for analysis.

A grade-tonnage report was generated for the four seams using average densities obtained from historical records, specifically: 2.26 t/m³ for Upper Hartsalz seam, 2.21 t/m³ for the Lower Hartsalz seam and1.88 t/m³ for both the Upper and Lower Carnallitite seams. The grades for each wireframe have been reported based on the modelled composited assay database, which were modelled using the same algorithm and parameters as the seam roof and floor surfaces.

Based on the quality and quantity of the historical data used to create the geological model, Micon has classified Küllstedt as an Inferred Mineral Resource with a 20% geological loss applied to factor into consideration the confidence levels and potential for seam loss due to localised faulting (Table 1.3).

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Table 1.3: Inferred Mineral Resource Estimate for the Küllstedt Project (Micon, 13th February 2019)

Bulk Geol K2O Seam Density Loss Tonnage (Mt) K2O (Mt) Insolubles (%) KCl (%) Mg (%) Na (%) SO4 (%) Category (%) (t/m3) (%)

Upper Hartsalz 2.26 20 275 13.57 37 0.76 16.69 1.93 19.90 17.67 Inferred Lower Hartsalz 2.21 20 59 10.23 6 0.11 16.20 2.85 24.30 18.02 Inferred Sub-Total Hartsalz 333 12.98 43 0.65 16.60 2.09 20.67 17.73 Inferred Upper Carnallitite 1.88 20 1,175 10.20 120 0.49 14.48 5.00 17.36 6.87 Inferred Lower Carnallitite 1.88 20 30 5.89 2 0.50 9.43 3.90 24.27 7.59 Inferred Sub-Total Carnallite 1,205 10.10 122 0.49 14.35 4.97 17.53 6.89 Inferred Total Küllstedt 1,538 10.72 165 0.52 14.84 4.35 18.21 9.24 Inferred

Notes: Minimum seam thickness considered for resources is 1m. Minimum cut‐off grade ≥5% K2O. 20% geological loss applied to account for potential unknown geological losses for Inferred Mineral Resources. Data source: historical state records (BVVG) checked and verified. Inferred Resources rounded down to nearest 100,000 t. Errors may exist due to rounding.

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2.0 INTRODUCTION

2.1 PURPOSE AND SCOPE OF REPORT

Micon International Co Limited (Micon) was contracted by Davenport Resources Ltd (Davenport) to undertake an estimate of the mineral resources of the Küllstedt exploration licence (the Küllstedt Project or the Project) located within the South Harz Potash District of the Thuringian Basin, Germany. Davenport is a publicly listed company on the Australian Securities Exchange (ASX) and holds the Küllstedt Project through its wholly owned subsidiary East Exploration GmbH. In addition to the Küllstedt Project, Davenport has also been awarded the Ebeleben, Mühlhausen-Nohra and Ohmgebirge mining licenses, together with the Gräfentonna exploration license, all of which form the greater South Harz Potash Project.

This technical report presents the results of the mineral resource estimate for the whole of the Küllstedt Project and has been prepared in accordance with the guidelines of the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserve Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia (the JORC Code).

The evaluation of the Project has been based on historical exploration records supplied to Micon, which Micon used to create a three-dimensional (3D) geological model using Micromine® modelling software. The historical data was supplied to Micon either as scans of the original drilling information, as well as some pre-captured data ordered in an Excel database by Ercosplan Geotechnik und Bergbau (Ercosplan) that Micon cross-checked against original records.

2.2 CAPABILITY AND INDEPENDENCE

Micon is an independent consulting firm of geologists, mining engineers, metallurgists and environmental consultants, all of whom have extensive experience in the mining industry. The firm has offices in Norwich and Cornwall (United Kingdom), Toronto and Vancouver (Canada).

Micon offers a broad range of consulting services to clients involved in the mining industry. The firm maintains a substantial practice in the geological assessment of prospective properties, the independent estimation of resources and reserves, the compilation and review of feasibility studies, the economic evaluation of mineral properties, due diligence reviews and the monitoring of mineral projects on behalf of financing agencies.

Micon’s practice is worldwide and covers all of the precious and base metals, the energy minerals (coal and uranium) and a wide variety of industrial minerals. The firm’s clients include major mining companies, most of the major United Kingdom and Canadian banks and investment houses, and a large number of financial institutions in other parts of the world. Micon’s technical, due diligence and valuation reports are typically accepted by regulatory agencies such as the London Stock Exchange, the US Securities and Exchange Commission, the Ontario Securities Commission, the Toronto Stock Exchange, and the Australian Stock Exchange.

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Micon is internally owned and is entirely independent of Davenport Resources Ltd, East Exploration GmbH and their affiliated companies. The personnel responsible for this review and the opinions expressed in this Report are Micon’s full-time employees or Micon associates. For its services in preparing this Report, Micon is receiving payment based upon time and expenses and will not receive any capital stock from Davenport Resources Ltd, East Exploration GmbH or any of their affiliated companies. Micon is reimbursing its associates based upon time and expenses.

The principal consultants responsible for the review of the Küllstedt exploration licence, and the preparation of this report have extensive experience in the mining industry, have appropriate professional qualifications and are listed below:

• Stanley Bartlett, M.Sc., P.Geo., Micon Managing Director and Vice President, Senior Geologist and Managing Director of Micon’s UK office, who reviewed the mineral resource estimate; • Elizabeth de Klerk, M.Sc., Pr.Sci.Nat., GSSA, SAIMM, Micon Director and Senior Geologist, Project Manager and Competent Person, who visited the site and reviewed the geological model and mineral resource estimate, as well as the exploration history, geology and mineralisation and compiled the report; • Andrew de Klerk, B.Sc.(Hons.), Pr.Sci.Nat., GSSA, SAIMM, Micon Senior Geologist, who managed the exploration data, reviewed the mineral resource estimate and compiled the report; • James Turner, B.Sc., M.Sc., CEng., MIMMM, Micon Senior Processing Engineer who commented on the processing options; and, • Sandra Stark, B.Sc., FGS, Micon Geologist, who reviewed the report.

2.3 DISCLAIMER

Whilst Micon has reviewed the exploration and mining licences, permits and entitlements of the Project in so far as these may influence the investigation and development of the mining assets, Micon has not undertaken legal due diligence of the asset portfolio described in this report. The reader is therefore cautioned that the inclusion of exploration and mining properties within this report does not in any form imply legal ownership.

2.4 SOURCES OF INFORMATION

Various sources of information were accessed to prepare this report including:

• Structured and informal interviews conducted during the site visit with the management and senior staff of Davenport, BVVG, Ercosplan and K-Utec; • Reports submitted to Davenport by Ercosplan on the historical data collation and Exploration Target estimation for Küllstedt; • The Ercosplan electronic drill hole database captured in Excel including information on drill hole collar, lithology, stratigraphy, chemical assay results for K2O and high- level mineralogy; and • Scans of the original historical drill hole information, where available, including drill hole logs, stratigraphic interpretation, chemical assay results, mineralogy, reserve estimations according to Kali-Instruktion, plan maps, cross-sections and downhole

Küllstedt Project, March 2019 3 Davenport Resources Ltd

geophysical logging results including calliper, natural gamma, gamma-gamma, resistivity and temperature.

2.5 UNITS OF MEASUREMENT

Quantities are generally stated in SI units, as utilised by international mining companies. These include metric tonnes (t), million metric tonnes (Mt), kilograms (kg) and grammes (g) for weight; kilometres (km), metres (m), centimetres (cm) and millimetres (mm) for distance; cubic metres (m3), litres (l), millilitres (ml) and cubic centimetres (cm3) for volume, square kilometres (km2) and hectares (ha) for area, weight percent (%) for base metal grades, grammes per metric tonne (g/t) for gold and silver grades and tonnes per cubic metres (t/m3) for density. All currency amounts are stated either in US dollars (US$) or Euros (EUR).

A glossary of terms and abbreviations are provided in Section 16.0.

Küllstedt Project, March 2019 4 Davenport Resources Ltd

3.0 GENERAL INFORMATION

3.1 KALI-INSTRUKTION AND THE GKZ SYSTEM

All historical exploration of the Küllstedt Project was conducted adhering strictly to the German state procedures manual specific to potash exploration entitled ‘Instruktion zur Anwendung der Klassifikation der Lagerstätten-vorräte fester mineralischer Rohstoffe vom 28. August 1979 auf Kalisalz- und Steinsalzlagerstätten’, commonly referred to as the Kali- Instruktion (directly translated as ‘Potash Instruction’). The Kali-Instruktion was issued in German in the former GDR and is based on the established system developed and administered by the Russian State Commission for Mineral Reserves (Gosudarstvennaya Komissia po Zapasam - GKZ). The first Kali-Instruktion issued on the classification of reserves regarding potash and rock-salt deposits (Stammberger 1956) was released in 1957 with revision in 1960 by Ulbrich containing detailed information about the sampling and analytical procedures used as guidance by the former GDR State Geological Survey for potash-bearing salt rocks. The latest revision was issued on 17th November 1981.

The Kali-Instruktion applied strict control over the estimation and reporting of mineral reserves and utilised a prescribed protocol for their calculation that was usually based upon standard sectional methods. Preliminary mineral reserve estimates, as completed by the licence holder, were submitted to the GDR State Geological Survey for approval. These included the justification of the cut-off grade criteria which were used to generate the mineral reserves.

In many respects the system is similar to western classification systems, essentially measuring the level of confidence in quantity and quality information that is used to define the mineral resources or reserves. One of the systems commonly adhered to in Western countries is the JORC Code (the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserve Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia), which was released in 1989 and last updated in 2012.

In Micon’s experience, the level of detail required to support a submission of mineral reserves to the GKZ or the State Geological Survey is more systematic and comprehensive than is required under the JORC Code in almost all respects. The data submitted for approval are subject to rigorous review, including consideration of the geological complexity of the deposit, the distribution and complexity of the ore mineralogy, the degree of knowledge obtained from exploration activities such as the density of drilling, the extent of any underground development, the computation of resource estimates, cut-off grades, as well as numerous other economic, technological, mining and metallurgical characteristics. The State Geological Survey or the GKZ analyses the approach undertaken for calculations as well as mineral resources and cut-off grade estimates.

The JORC Code and the Kali-Instruktion/GKZ reserve reporting systems share a very important fundamental principle, which is that the economic viability of a reserve base must be demonstrated. For this reason, both systems utilise a similar set of geological, economic and technical factors within a sequential classification scheme which reflects the increasing degree of knowledge and confidence in the integrity of the reserves. Figure 3.1 illustrates Micon’s understanding of the correlation between the JORC Code and the GKZ systems.

Küllstedt Project, March 2019 5 Davenport Resources Ltd

Figure 3.1: Comparison of GKZ and JORC Code Resource/Reserve Classification

Using the Kali-Instruktion/GKZ system, mineral resources and reserves are recognised as either prognosticated resources, which include those resources that are of an inferred, potential or speculative nature, or mineral reserves, which can be effectively subdivided into those that demonstrate economic significance (balance mineral reserves) and those with only potential economic significance (off-balance mineral reserves).

Balance mineral reserves comprise that part of the mineralisation that has been demonstrated to a sufficient level of confidence to contain a metal or commodity whose economic viability has been approved by the Kali-Instruktion/GKZ. They may not however, include adjustment for technical and economic matters such as mining dilution and losses.

The JORC Code classification term "mineral resources" approximately corresponds to the term "geological reserves" from the German Kali-Instruktion and Russian GKZ systems. The JORC Code term "ore reserves" approximately corresponds to the term "exploitation reserves" from the German Kali-Instruktion and Russian GKZ systems.

The Kali-Instruktion/GKZ categories for balance mineral reserves (A, B, C1 and C2) can be correlated by definition with mineral resources as defined under the JORC Code. Categories A and B are generally reported as Measured Resources, whilst category C1 generally constitutes Indicated Mineral Resources, with C2 category as Inferred Mineral Resources. Under the Kali- Instruktion/GKZ systems, C2 category mineral reserves can be included in mine-planning

Küllstedt Project, March 2019 6 Davenport Resources Ltd studies, but it should be noted that under the terms and conditions of reporting public documents to Western standards, Inferred Mineral Resources cannot be included as ‘ore reserves’ or used for formal valuation purposes.

By contrast, the classification of prognosticated resources (P1, P2, and P3) refers to mineral resources that range from Inferred Mineral Resources, to potential and speculative resources. These are not generally recognised as quantifiable in Western terms and can only be regarded as indicators of the mineral potential of an area or region. Such resources may be subsequently upgraded to recognised categories of reserves and resources by successful exploration work, or excluded if the work is unsuccessful.

3.2 MICON APPROACH TO RESOURCE/RESERVE CLASSIFICATION

The classification of the mineral resources contained within this Report has been completed in accordance with the guidelines of the 2012 edition of the JORC Code. Similar to the system followed by the Kali-Instruktion/GKZ, the JORC Code relies upon an increased level of geological knowledge and the application of mining and other modifying factors to elevate those categories of resources to reserves as summarised in Figure 3.2.

Figure 3.2: Exploration Results, Mineral Resources and Ore Reserves as Defined by the JORC Code

The JORC Code is similar in most respects to those systems adopted in North America and in Europe, in particular the system of resource definition established by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) and recognised under the guidelines of Canadian National Instrument (NI) 43-101.

3.2.1 Mineral Resources

The relevant sections of the JORC Code are provided for reference as follows:

• A ‘Mineral Resource’ is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity,

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grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge including sampling. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. • An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify, geological and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to Ore Reserves. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration. • An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to assume geological and grade (or quality) continuity between points of observation where data and samples are gathered. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Ore Reserve. • A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics, are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to confirm geological and grade (or quality) continuity between points of observation where data and samples are gathered. A Measured Mineral Resource has a higher level of confidence than that applying to an Indicated or an Inferred Mineral Resource. It may be converted to a Proved Ore Reserve or under certain circumstances to a Probable Ore Reserve.

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4.0 PROPERTY DESCRIPTION AND LOCATION

4.1 PROPERTY DESCRIPTION

The Küllstedt Project is located in the German Federal State of Thuringia located within the large-scale potash field known as Südharz. The Südharz potash field has been subjected to multiple legal divisions, each of which is informally described as its own mining ‘field’. The Project shares a common boundary with the Mühlhausen-Nohra mining licence, also owned by Davenport. In addition, whilst not adjoining, the Ohmgebirge and Ebeleben (also owned by Davenport) mining fields are considered as neighbouring as they are separated by an approximate 10 km gap in an area where the now defunct Volkenroda potash mine operated.

In addition to the Küllstedt exploration licence, Davenport has also been awarded the Mühlhausen-Nohra, Ebeleben and Ohmgebirge mining licences, together with the adjoining Gräfentonna exploration licence, all of which form the greater South Harz Potash Project located in the north of Thuringia (Figure 4.1) in the central/north-western section of the Thuringian Basin. The Küllstedt Project covers an area of 241.501 km2. A portion of the northern boundary of the Küllstedt Project was mined by conventional underground methods via two vertical shafts between 1920 and 1924. The primary target was the Staßfurt potash seam of the potash-bearing Zechstein Group (Upper Permian – Zechstein). The adjacent Volkenroda, Sollstedt, Bleicherode and Kemstedt mining fields (Figure 4.2) have been historically mined since 1896 for the production of potash fertilisers and are currently being used as underground waste storage facilities.

4.2 PROPERTY LOCATION

Küllstedt is located in the northwest of the Federal State of Thuringia in central Germany, approximately 50 km northwest of Erfurt, the largest city and state capital of Thuringia (Figure 4.1). The exploration licence is centred approximately on 51°11’14” N and 10°32’30” E. More specifically the Project straddles each of the Eichsfeld and Unstrut-Hainich Districts of Thuringia. The capital towns of these two districts flank the Project area and are located approximately 20 km from the licence centre point.

4.3 LICENCES

Davenport is the current owner of the Ebeleben, Mühlhausen-Nohra and Ohmgebirge mining licences in addition to the neighbouring Gräfentonna and Küllstedt exploration licences (Figure 4.2). This technical report presents the results of the mineral resource estimate for the Küllstedt exploration licence area only, excluding the Mühlhausen-Nohra, Ebeleben and Ohmgebirge mining licences as well as the Gräfentonna exploration licence.

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Figure 4.1: Regional Location Map of the South Harz Potash Project

South Harz Potash Project

(Source: Nations Online)

Figure 4.2: Location Map of the Davenport Mining and Exploration Licence Areas

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Source: Davenport

The exploration licence for Küllstedt was granted to East Exploration GmbH in compliance with Sections 6 and 7 of the Bundesberggesetz (BBergG) by the Thüringer Landesbergamt on 12th January 2015 and is valid until 12th January 2020 (Table 4.1Table 4.1). During the tenure of the exploration licence, East Exploration GmbH are permitted to explore for rock salt, potash salts, magnesia and boron salts with accompanying salts that occur in the same reservoir, and the results of all exploration activities must be reported annually to the Thüringer Landesbergamt authority.

Davenport appointed CMS Hasche Sigle Partnerschaft von Rechtsanwälten und Steuerberatern mbB (CMS) to conduct a legal due diligence on the validity of Davenport’s exploration licences, the findings of which are summarised in Section 4.3.1.

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Table 4.1: Küllstedt Exploration Licence

Licence Area Type Deed No.* Commodity Validity Current Owner Name (km²) Rock salt, potash 12th salts, magnesia and January East Exploration Küllstedt Exploration 19/2015 boron salts with 2015 – 12th 241.5 GmBH * accompanying January salts 2020 Notes: * East Exploration GmBH is 100% owned by Davenport Resources Ltd.

4.3.1 Exploration Licences

CMS provided Davenport with an ‘Expert Mining Licence Report on 20th July 2016. The scope of the report was to comment on the compliance of the exploration licences held by Davenport in accordance with: -

• The German Federal Mining Act (Bundesberggesetz); and • The Thüringina Ordinance on Exploration and Production Royalties (Thüringer Verordnung über die Feldes- und Förderabgabe).

According to German law, there is no certain way of knowing if an exploration licence has been validly issued and the possibility of duplicate issuing of exploration licences cannot be completely disregarded. However, CMSs assessment of Davenports exploration licences confirms the licence confirmation issued by the Thüringian State Mining Authority on 7th July 2016 via email.

4.3.2 Surface Rights

Davenport do not own any of the surface rights across the Küllstedt Project.

4.4 ROYALTIES

All exploration and mining properties issued in accordance with the current German Federal Mining Act (Bundesberggesetz – BbergG) are subject to royalty payments. No exploration royalties apply in Thüringia until 31st December 2020. Royalty rates shall be negotiated with the authority on commencement of payment.

4.5 ENVIRONMENTAL LIABILITIES, LEGISLATIVE AND PERMITTING REQUIREMENTS

The holder of a mining right has the exclusive right to explore and/or produce and to appropriate the respective mineral resources in a certain field. However, all exploration and production activities require a mining permit (Betriebsplanzulassung) to be applied for with the mining authority.

In addition, environmental and water permits may also be required as well other permits, such as deep drilling operations which require approval of the Federal Office for the Safety of Nuclear Waste Management (BfE) that is responsible for preserving geological formations that are potentially suitable for the storage of nuclear waste. All permits can only be granted if the

Küllstedt Project, March 2019 12 Davenport Resources Ltd relevant statutory prerequisites have been met. To date Ercosplan have been advising Davenport on the environmental sensitivity of the Küllstedt Project.

4.6 MATERIAL AGREEMENTS

Micon is unaware of any other material agreements pertaining to the Küllstedt Project.

4.7 OTHER SIGNIFICANT FACTORS AND RISKS

Micon is unaware of any other significant factors or risks associated with the Küllstedt Project.

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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 PROPERTY ACCESS

Access to the Küllstedt Project is primarily via road. The Federal Autobahn (A) A38 acts as the main access highway from both Berlin and Frankfurt and passes approximately 4 km north of the Project area. Several nationally maintained Bundesstraße (B) roads leading off the A38 traverse the area (B247), including numerous State maintained Landesstraße (L) roads and country roads branching therefrom. Beyond these roads, four-wheel drive vehicles can be used to access farm or country tracks.

The nearest tarred airport to the Project, which can accommodate charter planes is the Obermehler-Schlotheim Airfield located adjacent to the town of the Schlotheim directly between the Mühlhausen-Nohra and Ebeleben mining licences. The capital city of Germany, Berlin, is located to the northeast (approximately 285 km) and the city of Frankfurt to the southwest (approximately 245 km). Both the Berlin Tegel Airport (IATA: TXL) and the Frankfurt Airport (IATA: FRA) are well serviced by frequent daily domestic and multiple direct international flights across Europe and worldwide.

5.2 CLIMATE

The climate of Germany as a whole is classified as largely temperate to oceanic with generally cold, cloudy and wet winters and warm wet summers with no consistent dry season. This is due to Germany being situated between the oceanic climate of Western Europe and the continental climate of Eastern Europe with the climate largely moderated by the North Atlantic Drift, the northern extension of the Gulf Stream.

The Küllstedt Project is located within the Central Uplands, which has a transitional climate that fluctuates between moderately oceanic and humid continental. Winters are relatively cold with average highs of 2ºC and lows of -3ºC. Summers tend to be warm, and at times humid, with average highs of 23ºC, although maximums can exceed 30ºC. Precipitation averages 502 mm per annum, which falls throughout the year.

The climatic conditions are such that no specific operating season would be applicable and any exploration or mining activities could be undertaken throughout the year. Micon does not consider the climatic conditions to be a risk to the Project.

5.3 LOCAL RESOURCES AND INFRASTRUCTURE

Thuringia is the sixth smallest state in Germany and the fifth smallest by population which is supported by a modern and well-maintained infrastructure. As the most central state in Germany, Thuringia is an important hub for road, rail and communication traffic with extensive investment and upgrades in this infrastructure ensuring that it is modern and well maintained.

Küllstedt Project, March 2019 14 Davenport Resources Ltd modern towns with a developed infrastructure that includes shopping centres, hospitals and clinics, schools and banking.

Thuringia State has a population density of 130 people per km2 with numerous towns and villages located both within or adjacent to the mining field. Each of the district capital towns of Heilbad Heiligenstadt (Eichsfeld district), Nordhausen (Nordhausen district) Mühlhausen (Unstrut-Hainich district) and Sondershausen (Kyffhäuserkreis district) are less than 20 km from the Küllstedt Project. The populations of these district capitals are: Heilbad Heiligenstadt 17,000; Nordhausen 42,000; Mühlhausen 33,000 and Sondershausen 22,000. Erfurt the largest city and state capital of Thuringia has a population of 206,000 and is ±55 km southeast of the Project. All basic services can be sourced from these towns.

5.4 PHYSIOGRAPHY

Generally, the physiography of Germany can be sub-divided into three distinct topographical regions:

• Low-lying featureless and flat northern region, which forms a part of the North European Plain; • Central elevated hilly region which is at times rugged that is informally referred to as the Central Uplands; and, • High mountainous southern region which is characterised by mountain ranges such as the Swabian Jura, Franconian Jura, Alps and the Black Forest.

The Küllstedt Project is located within the Central Uplands between the North European Plain and the mountainous southern region. The topography in the area is characterised by gently undulating hills, which are often forested and interspersed by narrow slow-flowing rivers and streams.

5.5 FLORA AND FAUNA

The original natural vegetation of the Küllstedt Project, and the Thuringia state as a whole, was beech and spruce forests. However due to centuries of intensive settlement most of the area has been shaped by human influence. Protected natural tracts of these forests do still exist, as can be found across the Hainich forested hill chain and the Dün Ridge across the Project area and these form part of the greater Eichsfeld-Hainich-Werratal Nature Park. Some of these protected areas have been granted national park status to ensure the protection of the unique beech forest fauna and flora communities synonymous with the area. This includes populations of ash trees, hornbeams, maples, lindens, and occasional checker trees which, amongst other species, support populations of wild cats, 15 species of bats and seven species of woodpecker.

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6.0 REGIONAL GEOLOGY

6.1 DEPOSIT TYPES

The deposits within the Küllstedt Project are formally classified as evaporites within the South Harz Potash District which is part of the Upper Permian Zechstein Group.

The deposits of the Zechstein Group were formed within the Zechstein Sea, a partly barred large basin with relict sea characteristics. The barriers were totally breached on at least four occasions allowing mass influxes of oceanic water followed by regression and prolonged sequential desiccation. Initially the deposits at the base of each sequence were limestones, now dolomitised, marls and shales all of supratidal to relatively deep-water origins. These grade vertically and laterally into sulphate and chloride beds. Evaporite sub-cycles show a gradual vertical change from the least soluble calcium salts at the base (calcite, gypsum and anhydrite) followed by halite and polyhalite and lastly potassium and magnesium salts at the top (sylvite, carnallite, kainite and kieserite).

The Zechstein Group consists of seven depositional cycles with the potash mineralisation of the South Harz Potash District hosted within the second cycle termed the Staßfurt Formation and more specifically the Kaliflöz Staßfurt lithostratigraphic horizon (z2KSt) of the Staßfurt Formation. Locally, potash mineralisation also occurs within the salt rocks of the Staßfurt- Steinsalz horizon (z2NA). Remnants of potassium salts are also present in the salt rocks of the lithostratigraphic Decksteinsalz (z2NAr) horizon. No commercially mineable concentrations within the salt rocks of the Staßfurt-Steinsalz unit (z2NA) have yet been identified.

The main potash minerals present in the deposits are carnallite and sylvite; chemical analyses performed on samples confirm the occurrence of polyhalite and subordinate kieserite, langbeinite, glaserite and anhydrite. The sylvite is of secondary origin, which leads to the assumption that the primary carnallite was influenced by brines. A primary origin is assumed for carnallite and polyhalite.

The majority of the potash deposits have been altered by intruding water or basalt causing plastic deformation resulting in the potash horizons being forced upwards into the overlying strata. Extensive faulting and water intrusion have caused alteration or dissolving of the deposited potash, therefore strata within the Zechstein Group are highly variable.

6.2 REGIONAL GEOLOGY AND STRUCTURAL SETTING

The Südharz (South Harz) Potash District is located in the north-western extent of the Thuringian sedimentary basin, which has been separated by the uplift of the northerly Harz Mountains from the South Permian Basin (SPB) (Figure 6.1Figure 6.1). The South Permian Basin comprises an area from England to Eastern Poland with flanking areas within Denmark and the South Baltic Sea in the north and the upland regions of Belgium and Germany to the south.

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Figure 6.1: Thuringian Basin Geology (Frank, 2011)

The regional stratigraphy of the South Permian Basin is well understood with a pre-Variscan basement (Upper Carboniferous and older rocks) and a transition horizon of Upper Carboniferous to Lower Permian lying beneath an expansive sequence of evaporite rocks of the Upper Permian succession. These evaporite deposits are assigned to the Zechstein Group, and host the target potash mineralisation of the South Harz Potash District, which is confirmed to occur on the Mühlhausen-Nohra and Ebeleben mining licences as well as the Küllstedt exploration licence. In the hanging wall of the evaporite rocks of Upper Permian age, the rocks of the German Triassic Supergroup follow, consisting of sandstones, siltstones, clays and carbonate rocks and along with subordinate amounts of evaporite rocks. The potash- bearing target Zechstein Group consists of seven depositional cycles with the potash mineralisation of the South Harz Potash District hosted within the second cycle, the Staßfurt Formation.

Generally, the deposit bedding is assumed to be undulating with an even dip over large distances. Local differences may occur in areas influenced by tectonic structures.

6.3 LOCAL GEOLOGY

Potash mineralisation is present within the Staßfurt-Steinsalz and Kaliflöz Staßfurt evaporite horizons within the Staßfurt Formation. In the South Harz Potash District commercially mineable concentrations of potassium salts occur normally within the Kaliflöz Staßfurt

Küllstedt Project, March 2019 17 Davenport Resources Ltd lithostratigraphic horizon. Rock-salt “barren” zones above the sylvinite are a common feature of the Kaliflöz Staßfurt potash-bearing horizon (Table 6.1Table 6.1).

In the South Harz Potash District polysulphatic sylvinite was encountered in the western and southern boundary areas of the deposit, e.g. in the Volkenroda and Bischofferode mines and this has been confirmed within the Küllstedt Project area as well as the Mühlhausen-Keula sub- area. Otherwise, almost only mono-sulphatic ‘anhydritic sylvinite’ occurs, which surrounds the large barren zones of the Potash District.

The Zechstein Group has been split into four main economic series that occur within the Küllstedt Project, in stratigraphic order they are as follows:

• Z4 Aller Formation; • Z3 Leine Formation; • Z2 Staßfurt Formation; and, • Z1 Werra Formation.

Pure sylvinite with some carnallitite is only found in the upper Z3 and Z4 potash beds across parts of England (e.g. Boulby Mine), northern Germany and the Netherlands. Some localised pure sylvinite, but mostly mixed sulphate and potash salts, also known as Hartsalz are found in the Z1 and Z2 potash beds of central Germany, parts of northern Germany and Poland. The Küllstedt exploration licence is located in an area where the Z2 potash beds have been historically economically mined. The target potash bed is locally referred to as the Kaliflöz Staßfurt horizon (z2KSt), where Kali is the local German term for Potash.

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Table 6.1: Zechstein Series Geology (after Ercosplan, Jan 2018)

Thickness Formation Horizon Rock Types (m) Ohre-bis Fulda- 0.0 to 13.0 "Obere Zechsteinletten" (z4Tb-z7) Siltstones and claystones with minor anhydrite and carbonates. Formation 0.3 to 14.0 Oberer Aller-Anhydrit (z4ANb) White to flesh red anhydrite partly converted to gypsum.

9.0 to 21.4 Aller-Steinsalz unit (z4NA) Colourless to milky halite with subordinately occurring anhydrite. Aller Formation (Z4) Light grey anhydrite with halite intergrowth in the subrosion-free areas, and 0.0 to 2.4 Unterer Aller-Anhydrit (z4ANa) light grey to white anhydrite in areas influenced by subrosion.

Unterer Aller-Ton (z4Ta) red coloured salt clays. 0.0 to 9.5 “Roter Salzton” Oberer Leine-Ton (z3Tb) red coloured salt clays. 34.2 to 71.0 Leine-Steinsalz (z3NA) Halite, anhydrite and subordinate clay.

Leine 23.0 to 51.0 Leine-Anhydrit (z3AN) Blue-grey anhydrite rocks with subordinate limestone and clay inclusions. Formation (Z3) 0.0 to 6.0 Leine-Karbonat (z3CA) Dolomite. Unterer Leine-Ton unit (z3Ta) - Grey sediments with clay content increasing up the unit and evaporite content decreasing. 5.5 to 20.5 “Grauer Salzton” (z2Tb-z3Ta) Oberer Staßfurt-Ton unit (z2Tb) - Grey sediments with clay content increasing up the unit and evaporite content decreasing. Anhydrite rocks extensively altered by leaching processes, containing relict 0.0 to 4.5 Deckanhydrit (z2ANb) potash minerals and structures. Halite and anhydrite rocks altered by leaching processes, containing relict 0.0 to 4.1 Decksteinsalz (z2NAr) potash minerals and structures.

Hanging Wall Group - Horizons 11 to 19 finely layered potassium salts. 1.4 to 39.5 Kaliflöz Staßfurt (z2KSt) Footwall Group - Horizons 1 to 10 coarsely layered potassium salts and thick halite layers.

Staßfurt Oberes Südharzsteinsalz - Grey or yellow-red halite and anhydrite, locally Formation (Z2) contains polyhalite, kieserite, sylvite and carnallite in the form of nests or as fissure fillings.

6.0 to 111.3 Staßfurt-Steinsalz (z2NA) Unteres Südharzsteinsalz - Grey or yellow-red halite and anhydrite, locally contains polyhalite, kieserite, sylvite and carnallite in the form of nests or as fissure fillings. Anhydritisches Steinsalz - Rock-salt. Kieseritic horizon in the Sondershausen and Bleicherode areas. Blue-grey to dark grey anhydrite rocks with a low percentage of carbonate Unterer Staßfurt-Anhydrit 0.7 to 28.5 and inclusions of halite in its upper portions. Also known as Staßfurt- (z2ANa) Basananhydrit. Light grey-brown dolomite with subordinate layers of anhydrite, also 24.5 to 52.5 Staßfurt-Karbonat (z2CA) hydrocarbon bearing. 2.1 to 172.5 Oberer Werra-Anhydrit (z1ANc) Anhydrite rocks. 0.0 to 0.0 Werra-Steinsalz (z1NA) Salt rocks. 0.0 to 0.0 Unterer Werra-Anhydrit (z1ANa) Anhydrite rocks. Werra- 2.0 to 2.0 Werra-Karbonat (z1CA) Limestones. Formation (Z1) Unterer Werra-Ton 0.0 to 0.0 Dark grey heavy metal-bearing clays. (Kupferschiefer) (z1T)

0.0 to 0.0 Zechsteinkonglomerate (z1C) Grey carbonate cemented conglomeratic sandstones.

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Within the potash-bearing Staßfurt-Steinsalz and Kaliflöz Staßfurt evaporite horizons of the Küllstedt Project, different evaporite minerals occur, changing in their abundance both horizontally as well as vertically. The fine rock-salt and clay layers usually remain constant. The potash-bearing layer is developed over the eastern side of the exploration licence area (Figure 6.2Figure 6.2).

The economic potash deposit covers the eastern side of the Küllstedt exploration licence. Based on interpretation of drill hole data and historical plan maps, it appears that the z2KSt does not occur to the north, south or west of Küllstedt and the licence represents the western limit of the potash-bearing basin (Figure 6.1Figure 6.1). Regional folding is known, whilst locally it displays varying thicknesses and K2O grades. The bedding shows in general wide alternating syn- and anticlines with, especially within the saliferous horizons.

Faults and folds as well as local thinning and thickening of the potash bearing horizon are observed. Interpreted faulting on the Küllstedt Project is shown on Figure 6.3Figure 6.3. Four major fault blocks have been distinguished that upthrow the evaporate sequence towards the north with average displacements of ±120 m (Figure 6.4Figure 6.4). These major faults follow the regional trend with a west north west orientation. In addition, two faults striking north east have also been identified with displacements of ±90 m.

Figure 6.2: Geological Map of the Küllstedt Project

Source: Davenport

Küllstedt Project, March 2019 20 Davenport Resources Ltd

Figure 6.3: Interpreted fault blocks of the Küllstedt Project

Figure 6.4: 3D View of Fault Blocks on the Küllstedt Project

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6.4 MINERALISATION

Within the Kaliflöz Staßfurt horizon (z2KSt) the original potash-bearing salt rocks were relatively evenly deposited as kieseritic carnallitite with the original mineralisation consisting of carnallite (55% to 60%), halite (25% to 30%) and kieserite (10% to 14%). Soon after the deposition of the carnallite, mineral conversion processes started taking place due to the high solubility and reactivity of the salt minerals as the units underwent diagenesis in different chemical environments. Ascending brines were able to flow through the still relatively porous and uncompacted evaporites and as these brines were usually undersaturated in potassium salts, they removed their components in the order of decreasing solubility, accompanied by the generation of new minerals in the affected areas. Carnallite was converted to sylvite via the removal of magnesium chloride (MgCl2). Dissolution of sylvite, the main potassium salt in sylvinite, produced barren rocks. Kieserite has a relatively low solubility and was converted to alkaline-bearing sulphates (Mg, Ca, K and Na).

The movement of these brines therefore has led to significant restructuring of the original evaporite rocks via dissolution and recrystallisation resulting in different thicknesses of potash minerals spatially with depth and laterally. The process of dissolving soluble rocks underground via undersaturated solutions with the removal of the dissolved material and the insoluble parts of these rocks being left behind is called subrosion.

The evaporite rock types occurring within the Staßfurt-Steinsalz and Kaliflöz Staßfurt evaporite horizons of Küllstedt are detailed in Table 6.2Table 6.2 along with the associated mineral components.

Table 6.2: Evaporite Rock Types within the Küllstedt Project

Ore Type Description Minerals Formula Comments Primary potassium- Carnallite KMgCl ∙6(H O) 3 2 bearing mineral Halite NaCl - Most abundant ore Occurs in an area of FB1, type within the potash Kieserite MgSO ·H O 4 2 average 13.62% content target horizon. Carnallitite Contains the lowest Anhydrite CaSO4 Subordinate mineralogical Clays Various Rarely occurring

variability. Boracite Mg3B7O13Cl Rarely occurring

Goethite Fe3+O(OH) Finely dispersed as red

Haematite Fe2O3 colour pigments Halite NaCl Primary mineral Primary potassium- Sylvite KCl Hartsalz deposits are bearing mineral usually spatially Polyhalite K Ca Mg(SO ) ·2H O Subordinate linked to barren zones 2 2 4 4 2 where it is arranged Langbeinite K2Mg2(SO4)3 Subordinate between these zones Kainite KMg(SO4)Cl·3H2O - Hartsalz and the carnallitite Secondary potassium- (Sylvinite) zones. Generally, → In order increasingof occurrence → Kieserite MgSO4·H20 bearing mineral, average there is a high to very 12.1% content

high variability in the Anhydrite CaSO4 - mineralogy with Clays Various Rarely occurring abundant sulphates. Glaserite K3Na(SO4)2 Subordinate

Boracite Mg3B7O13Cl

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Ore Type Description Minerals Formula Comments Occur together as Pyrite FeS2 irregular admixtures in small concentrations Barren Zones Halite NaCl Primary mineral occurring within, Often the only Rock-Salt Anhydrite CaSO above or below the 4 accompanying mineral

sylvinite Polyhalite K2Ca2Mg(SO4)4·2H2O Local occurrences only

The mineralised horizon of the Küllstedt Project hosts four distinct seams which, from a modelling perspective, have been named according to their stratigraphic position: Upper Hartsalz, Upper Carnallitite, Lower Carnallitite and Lower Hartsalz.

6.5 ECONOMIC MINERALS

The cut-off grade for potash deposits is variable depending on the mineralisation and the MgCl2 content contained within the carnallitite. High-grade potash minerals include sylvite and carnallite. These deposits produce a concentrate referred to as Muriate of Potash (MOP) and often generate halite as a by-product. The halite can be sold for salting roads or made into a paste and used as backfill. A typical potash project will, at best, breakeven on selling the halite as a by-product.

High-grade sulphate minerals include kieserite, kainite and polyhalite. Sulphate-rich deposits produce a concentrate referred to as Sulphate of Potash (SOP). The Küllstedt Project has an elevated amount of sulphate minerals, dominated by kieserite, with subordinate langbeinite, polyhalite and glaserite that spreads across into the Mühlhausen-Keula sub-area. SOP and MOP are typically reported separately due to the different processing and marketing implications. However, detailed analysis of the SOP potential for Küllstedt Project has not yet been undertaken so the current mineral resources stated in this report have been combined.

Insoluble material (‘insols’) is also associated with potash deposits, which include anhydrite, clay and dolomite. This material downgrades potash deposits and can render processing to be complicated. As such, it is important to understand the amount and composition of the insoluble material. A typical potash resource statement will report percentages of the following, where K2O represents the deposit grade:

• K2O; • K; • Mg; • Na;

• SO4; and, • Insols.

The mineral resource statement will show grade, tonnage and tonnage of potash.

6.5.1 Sylvinite – ‘Hartsalz’

On the Küllstedt Project the potash-bearing evaporite target horizon has been termed “Hartsalz”, a common miner’s term for the locally occurring potash-bearing evaporite rocks.

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This is due to the primary ore horizon containing sylvite along with other potash sulphate minerals such as langbeinite, kainite, arcantite, and non-potash minerals such as kieserite and anhydrite. These minerals render the ore to be much “harder” than ‘conventional’ sylvinite. The Hartsalz also demonstrates a highly variable mineralogy.

Generally, the mineralogy of sylvinite is highly variable and as such the ‘Hartsalz’ is not truly “sylvinite” rock as per its definition of being composed of the minerals sylvite and halite. The main mineral of the ‘Hartsalz’ is halite (NaCl) with sylvite (KCl), the main potassium bearing mineral. In addition, anhydrite (CaSO4), kieserite (MgSO4·H2O), glaserite (K3Na(SO4)2), polyhalite (K2SO4·MgSO4·2CaSO4·H2O) and clays mineral along with minor boracite (Mg3B7O13Cl) and pyrite (FeS2) may be present. In the South Harz Potash District, the sylvinite mainly occurs as monosulphatic “anhydritic sylvinite” and these deposits surround large barren zones of the Potash District. On the Küllstedt Project, the kieserite content of the modelled Upper Hartsalz is relatively prolific, as illustrated in Figure 6.5Figure 6.5.

Figure 6.5: Kieserite content within the Hartsalz layer of the Küllstedt Project

Where both potash-bearing rock types are present at the Project, the ‘Hartsalz’ sylvinite typically occurs at the top and or/base of the carnallitite. The ‘Hartsalz’ above the carnallitite is distributed over almost the entire Küllstedt Project with the exception of Fault Block 2. The ‘Hartsalz’ below the carnallitite occurs only in four drill holes in the Fault Block 1 and Fault Block 4, although the Lower Hartsalz seam does extend into the neighbouring Mühlhausen- Keula sub-area.

6.5.2 Carnallitite

This is the most abundant economic rock type in the South Harz Potash District consisting mainly of carnallite, the main potassium mineral, accompanied by halite and kieserite with subordinate anhydrite and rarely clay and boracite. Iron-bearing minerals (haematite) and

Küllstedt Project, March 2019 24 Davenport Resources Ltd occasionally goethite appear finely dispersed as red colour pigments. Carnallitite occurs most often in terms of area, compared to other evaporite rocks in the potash-bearing horizons, with the comparably lowest mineralogical variability of all the evaporite rocks. Carnallitite has a lower percentage of K2O compared to sylvinite. Carnallitite is very brittle and weak and as a result, all underground shafts into carnallite areas are required to be backfilled, as subsidence is an important issue.

At the Küllstedt Project carnallite is the dominant mineral and occurs across all of the Project within the defined basin extents. There is occasionally elevated kieserite associated with carnallite in Fault Block 1, which reduces in content toward the base of the carnallite layer.

6.5.3 Rock-Salt

Rock salt is composed mainly of halite, often accompanied by anhydrite as well as with polyhalite and kieserite which occurs locally, as at the Bischofferode mine. Zones of rock-salt are also referred to as barren zones. These zones comprise partly the complete profile of the potash-bearing horizon, but can also only affect parts of it, either below, within or above the potash-bearing horizon in varying combinations. Barren zones above the potash-bearing horizon are a common feature of the Kaliflöz Staßfurt horizon.

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7.0 HISTORICAL EXPLORATION

7.1 HISTORY OF THE SOUTH HARZ POTASH DISTRICT

Potash mining and exploration in the South Harz Potash District commenced with the sinking of the first exploration drill hole in 1888 near the town of Kehmstedt in the north of Thuringia. Results from this drill hole proved the presence of potash-bearing salt rocks in the south of the Harz Mountains, resulting in extensive exploration for potash commencing across the region. This exploration was initiated by the Prussian State and private investors. The early exploration campaign culminated in the development of multiple small and medium-sized potash mines (Table 7.1).

Table 7.1 Historically Significant South Harz Potash District Mines

Total Operating Date of KCL Current Mine Name Production Comment Date Decommissioning (%) Owner (Mt) Since 2004 production of Sondershausen 1896 to 1991 31st December 1991 110 20.1 GSES rock salt for de-icing salt (~200kt) Bischofferode 1911 to 1993 31st December 1993 114 19.2 LMBV - Sollstedt 1905 to 1991 31st December 1991 85 20.6 NDH-E - Bleicherode 1902 to 1990 31st December 1991 86 21.5 NDH-E - Since 2007 utilisation of Volkenroda 1909 to 1991 31st December 1991 55 19.7 LMBV mine gas for generation of electricity 2011 K+S considering Roßleben 1903 to 1991 31st December 1993 270* 18 GVV re-opening the mine *Plant capacity

In addition to the mines detailed in Table 7.1Table 7.1, two mines were also operational on the Küllstedt Project between 1912 and 1924, namely the Hüpstedt-Beberstedt Mine and the Felsenfest Mine (Figure 7.1Figure 7.1). The Hüpstedt-Beberstedt mine shaft was sunk by the previous owners of Winterhall AG in 1909. The combined total area of the mines was 1,440,000 m2, which extracted the potash ore by longwall room and pillar methods (Ercosplan, 2015).

Between 1920 and 1950 several of the existing potash operations had started to flood, which under state resolution were put under the ownership of the remaining operating potash operators in the South Harz Potash District. Furth consolidation of potash producing sites in the South Harz Potash District resulted in the remaining potash operations being combined into the VEB Kaliwerke Südharz which controlled the remaining six separate producing units, as detailed in Table 7.1 above, along with Roßleben, located in the Unstrut Potash District.

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Figure 7.1: Location of historical shafts on Küllstedt

During this time the mining law was re-written and the resulting sub-fields (i.e. a defined area with a reasonable prospect for mining) were summarised as BWE Thüringen Nord. Today’s classification of the mine property fields (or BWE) in the South Harz Potash District is based upon this earlier re-organisation, where the mine property fields were created by sub-dividing the former sub-fields.

During operation of the South Harz Potash District mines (Table 7.1), the GDR was one of the top three producing countries in the world, with a steady increase of produced K2O tonnage from 1,336 kt K2O in 1950 to 3,510 kt K2O in 1988. The potash mines in the South Harz Potash District contributed approximately 43% of the GDR production (in 1985) with the extraction of the potash ore mainly carried out by conventional underground mining techniques.

By resolution of the board of directors of the Mitteldeutsche Kali AG, the last active mines and potash processing plants (Table 7.1) were decommissioned in 1991 and 1993. Most of the geological documentation was in-complete at the time of decommissioning, and what was available was handed to the trust company Gesell-schaft zur Verwahrung und Verwertung von Bergwerksbetrieben (GmbH).

Today potash is produced in the South Harz Potash District only from the BWE Kehmstedt and Kehmstedt-NW owned Kehmstedt operation via solution mining techniques.

7.2 HISTORIC OWNERSHIP

Early exploration was initiated by the Prussian State and private investors with the VEB Kaliwerke Südharz assuming ownership of the five key producing units of the South Harz Potash District, excluding Roßleben (Table 7.1).

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In September 1990 the competent authority of the German Democratic Republic (East Germany) granted the Südharz mining property to the state-owned agency of Treuhandanstalt (later renamed Bundesanstalt für vereinigungsbedingte Sonderaufgaben (BvS)) that was responsible for the privatisation of state-owned industry and commercial assets.

Following the reunion of the Federal Republic of Germany (West Germany) and East Germany on 3rd October 1990, doubt was cast over the validity of the Treuhandanstalt owned Südharz mining property. Validity of the mining property was confirmed by the newly appointed Federal Republic of Germany competent mining authority in February 1991, with the Südharz mining property being classified as an ‘old mining property’ pursuant to Sec. 151 BBergG, which remains continuously valid to its original extent.

The original larger all-encompassing Südharz mining property has since been sub-divided into several smaller legal mining licences, mainly between February 1993 and December 1995, resulting in the formation of several smaller ‘mining fields’, amongst which were the Küllstedt, Ebeleben and Mühlhausen-Nohra mining licences.

In 2002 BvS transferred all of the newly-formed Südharz mining licences to its subsidiary BVVG whose mandate it was to privatise state-owned agricultural and forestry land as well as mining rights in the territory of the former East Germany.

7.3 SOURCE DATA

During the 1950s and 1960s an internal company standard for processing historical and recent exploration data was established in the mines of the South Harz Potash District. The purpose of the standard was to evaluate several parameters of the deposit, such as its thickness, distribution and structure, which were missing from previous records. Until then the geological documentation was prepared according to different degrees of detail depending on which group of companies the individual mine was affiliated with. By 1964 this framework had been set, and geological documentation was collected and processed according to this newly-established framework during the following years.

After German reunification, the Kali-Umwelttechnik GmbH was established in 1992 as a successor of the Kaliforschungsanstalt that had successfully developed the patents pertaining to potash processing from the end of the Second World War. Its role was to continue the research in the field of potash mining and processing. Since 2008, the Kali-Umwelttechnik GmbH has been known as K-UTEC AG Salt Technologies.

All geological data pertaining to the Küllstedt Project is historical. The historical data was supplied to Micon as scans of the original drilling information sourced from BVVG, Ercosplan and K-UTEC, as well an existing Excel database previously compiled by Ercosplan from its archived data sources. The scanned data was verified by Mrs. de Klerk at both the BVVG and Ercosplan during the site visit.

In addition to the above, various other sources of information has been used by Micon to evaluate the Küllstedt Project, including:

• Structured and informal interviews conducted during the site visit with the management and senior staff of Davenport, BVVG, Ercosplan and K-Utec;

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• Reports submitted to Davenport by Ercosplan on the historical data collation and Exploration Target estimation; • The Ercosplan electronic drill hole database held in Excel including information on drill hole collar, lithology, stratigraphy, chemical assay results for K2O and high-level mineralogy; and • Scans of the original historical drill hole information, where available, including drill hole logs, stratigraphic interpretation, chemical assay results, mineralogy, reserve estimations according to Kali-Instruktion, plan maps, cross-sections and downhole geophysical logging results including calliper, natural gamma, gamma-gamma, resistivity and temperature.

7.4 EXPLORATION

The first reported exploration activity on the Küllstedt Project is dated 1890, although this data is no longer available other than the targeted commodities were potash and natural gas (Ercosplan, 2015). The first recorded drill hole on neighbouring Mühlhausen-Nohra is Kal Möhrbach 1/1890, drilling of which commenced in 1889. The first drill hole information available from the Küllstedt Project is from the Felsenfest series of drill holes, that were drilled between 1906 and 1910 for the now closed Hüpstedt-Berestedt and Felsenfest Mines. Exploration was focused around the location of the historical Hüpstedt-Beberstedt and Felsenfest Mines, and the mine shafts are dated 1909 and 1910.

Following this initial phase of exploration and after the closure of the Hüpstedt-Beberstedt and Felsenfest Mines, drilling activities resumed in 1930 along the southern border of the Leinefeld anticline (Figure 6.2Figure 6.2). Exploration activities were intermittent up until 1977 with the majority of the drill holes being drilled in the 1960s, targeting two primary commodities:

• Potash, hosted by the potash-bearing salt rocks of the lithostratigraphic unit Kaliflöz Staßfurt (z2KSt); and, • Natural gas and crude oil, hosted by the carbonate rocks of the lithostratigraphic unit Staßfurt-Karbonat (z2CA).

The location and proximity of the Küllstedt Project to historical and current potash mining operations rendered it to be considered a prospective extension. As such the majority of the historical exploration drilling was conducted by the GDR. Various state institutions were involved during these campaigns; institutions which were merged after reunification to form the VEB Kombinant.

All historical exploration was conducted adhering strictly to the German state procedures manual specific to potash exploration entitled ‘Instruktion zur Anwendung der Klassifikation der Lagerstätten-vorräte fester mineralischer Rohstoffe vom 28. August 1979 auf Kalisalz- und Steinsalzlagerstätten’, commonly referred to as Kali-Instruktion (directly translated as ‘Potash Instruction’).

The drill hole database considered for Küllstedt consists of 73 drill holes made up of 14 hydrocarbon exploration drill holes and 59 diamond core potash exploration drill holes (Table 7.2). Not all the drill holes considered for modelling are located exclusively within the licence area. A total of 38 of the 73 Project drill holes are located on the neighbouring Mühlhausen-

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Nohra mining license and one drill hole is located outside of the Davenport licence areas approximately 680 m to the south of the Küllstedt Project.

Table 7.2: Küllstedt Project Drill Hole Database Summary

Downhole Geophysics Hole Location No. Collar Geology Min Chem Gamma- Neutron- Category Calliper Gamma Gamma Gamma Hydrocarbon 3 3 2 1 1 1 1 0 0 Küllstedt Potash 31 31 30 19 23 12 12 0 0 Project Sub-Total 34 34 32 20 24 13 13 0 0 Mühlhausen- Hydrocarbon 8 8 2 2 2 8 8 8 8 Nohra Potash 30 30 25 29 30 23 23 23 23 License Sub-Total 38 38 27 31 32 31 31 31 31 Hydrocarbon 1 1 1 0 0 0 0 0 0 Adjacent to Potash 0 0 0 0 0 0 0 0 0 Licence Sub-Total 1 1 1 0 0 0 0 0 0 Hydrocarbon 12 12 5 3 3 9 9 8 8 Total Potash 61 61 55 48 53 35 35 23 23 TOTAL 73 73 60 51 56 44 44 31 31

The Project database is considered to be incomplete with various drill holes missing various corresponding downhole data sets, as summarised in Table 7.2. This is due to the historical data having been partially sourced with the unsourced data, either considered as being stored at an as yet undetermined location, or having been lost/destroyed. All drill holes were drilled vertically on the Project. Table 7.3 provides an overview of the drill holes drilled on the Küllstedt Project and their mineralised intersections. Acquisition and capture of this missing data remain an ongoing priority task by Davenport.

Table 7.3: Exploration Drill Holes Data within the Küllstedt Project

Average Easting z2KSt Intersection Northing EOH Width K2O Hole ID Location (UTM RL (m) (UTM 32N) (m) (m) Grade 32N) From To (%) E Haen 2/1961 Off Licence 590321.47 5675716.16 471.00 882.00 Not intersected Küllstedt E Kued 1/1966 593367.62 5681713.04 410.90 985.30 881.37 882.15 0.78 9.87 Licence Küllstedt E Kued 1/1966 593367.62 5681713.04 410.90 985.30 882.15 886.60 4.45 11.43 Licence Küllstedt E Kued 1/1966 593367.62 5681713.04 410.90 985.30 886.60 888.55 1.95 9.19 Licence Mühlhausen E KuSo 2/1961 605397.56 5685453.73 436.39 1037.20 899.50 907.57 8.07 9.97 Licence Mühlhausen E KuSo 3/1962 607020.67 5685356.68 434.60 1546.60 865.70 877.40 11.70 12.18 Licence Mühlhausen E KuSo 4/1961 605419.27 5686262.59 429.79 1056.40 900.20 904.80 4.60 12.18 Licence Mühlhausen E Mh 28/1960 602289.19 5680779.61 317.20 1274.15 960.06 963.81 3.75 12.18 Licence Mühlhausen E Mh 28/1960 602289.19 5680779.61 317.20 1274.15 966.36 973.79 7.43 8.72 Licence Mühlhausen E Mh 30/1961 602571.87 5680133.97 297.70 1078.50 967.20 970.00 2.80 14.50 Licence Mühlhausen E Mh 31/1962 602200.51 5679278.51 273.50 1320.90 960.60 967.76 7.16 12.18 Licence Mühlhausen E Mh 31/1962 602200.51 5679278.51 273.50 1320.90 967.76 977.76 10.00 8.72 Licence

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Average Easting z2KSt Intersection Northing EOH Width K2O Hole ID Location (UTM RL (m) (UTM 32N) (m) (m) Grade 32N) From To (%) Küllstedt E SosMh 1/1962 603251.62 5685286.02 468.50 1011.00 874.00 876.00 2.00 9.00 Licence Küllstedt E SosMh 2/1962 601002.46 5686930.78 450.30 968.20 857.00 879.00 22.00 13.02 Licence Mühlhausen E Wttl 1/1962 607307.79 5688545.26 413.40 963.50 859.40 865.00 5.60 11.80 Licence Mühlhausen Kal Amr 1/1976 601755.88 5677432.67 224.00 1061.47 1020.45 1023.93 3.48 13.86 Licence Mühlhausen Kal Amr 1/1976 601755.88 5677432.67 224.00 1061.47 1023.93 1028.84 4.91 5.43 Licence Mühlhausen Kal Amr 1/1976 601755.88 5677432.67 224.00 1061.47 1034.14 1036.60 2.46 8.07 Licence Mühlhausen Kal Amr 1/1976 601755.88 5677432.67 224.00 1061.47 1038.00 1038.66 0.66 7.00 Licence Küllstedt Kal Beb 001/1961 597381.83 5683313.35 341.30 965.50 916.00 916.76 0.76 6.00 Licence Küllstedt Kal Beb 001/1961 597381.83 5683313.35 341.30 965.50 916.76 931.66 14.90 9.92 Licence Küllstedt Kal Bic 1/1975 593249.47 5680101.31 360.80 951.04 900.12 902.84 2.72 14.04 Licence Küllstedt Kal Bic 1/1975 593249.47 5680101.31 360.80 951.04 910.72 915.67 4.95 6.20 Licence Küllstedt Kal Bic 1/1975 593249.47 5680101.31 360.80 951.04 927.57 932.34 4.77 5.62 Licence Küllstedt Kal Bic 2/1975 595168.09 5679834.57 304.50 1036.75 907.23 908.40 1.17 12.09 Licence Küllstedt Kal Bic 2/1975 595168.09 5679834.57 304.50 1036.75 908.40 909.10 0.70 8.50 Licence Mühlhausen Kal Bic 3/1976 595198.73 5677847.47 289.20 982.56 917.00 917.98 0.98 12.43 Licence Mühlhausen Kal Bic 3/1976 595198.73 5677847.47 289.20 982.56 918.85 923.06 4.21 13.98 Licence Küllstedt Kal Bic 4/1976 593269.35 5677827.28 328.60 933.71 904.06 904.75 0.69 9.30 Licence Mühlhausen Kal Dad 1/1975 600926.25 5680874.29 294.20 1004.30 958.84 960.70 1.86 19.24 Licence Mühlhausen Kal Dad 1/1975 600926.25 5680874.29 294.20 1004.30 960.70 976.10 15.40 7.72 Licence Mühlhausen Kal Dad 1/1975 600926.25 5680874.29 294.20 1004.30 982.30 985.25 2.95 5.90 Licence Mühlhausen Kal Dad 1/1975 600926.25 5680874.29 294.20 1004.30 985.25 985.75 0.50 6.50 Licence Mühlhausen Kal Dad 2/1975 600578.38 5679496.85 278.40 1020.45 976.58 983.04 6.46 11.80 Licence Mühlhausen Kal Dad 2/1975 600578.38 5679496.85 278.40 1020.45 983.52 986.47 2.95 6.65 Licence Mühlhausen Kal Dad 2/1975 600578.38 5679496.85 278.40 1020.45 995.00 998.89 3.89 6.50 Licence Mühlhausen Kal Dad 2/1975 600578.38 5679496.85 278.40 1020.45 999.20 999.99 0.79 7.20 Licence Mühlhausen Kal Ero 1/1965 600997.04 5682706.83 369.20 1003.50 947.00 950.30 3.30 15.52 Licence Mühlhausen Kal Ero 1/1965 600997.04 5682706.83 369.20 1003.50 950.30 955.85 5.55 6.35 Licence Mühlhausen Kal Ero 1/1965 600997.04 5682706.83 369.20 1003.50 957.10 960.10 3.00 6.58 Licence Mühlhausen Kal Ero 1/1965 600997.04 5682706.83 369.20 1003.50 960.1 962.65 2.55 1.53 Licence Küllstedt Kal Ero 2/1976 601704.80 5684091.31 427.40 994.50 958.62 959.22 0.60 18.70 Licence

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Average Easting z2KSt Intersection Northing EOH Width K2O Hole ID Location (UTM RL (m) (UTM 32N) (m) (m) Grade 32N) From To (%) Küllstedt Kal Ero 2/1976 601704.80 5684091.31 427.40 994.50 959.22 962.15 2.93 9.49 Licence Küllstedt Kal Ero 3/1977 599441.29 5684129.83 370.00 1008.00 944.62 946.13 1.51 17.13 Licence Küllstedt Kal Ero 3/1977 599441.29 5684129.83 370.00 1008.00 982.45 984.10 1.65 5.86 Licence Küllstedt Kal Fef /001 598647.17 5690631.99 294.00 532.02 Not intersected Licence Küllstedt Kal Fef /005 597547.91 5687643.85 460.00 853.50 821.65 832.53 10.88 9.70 Licence Küllstedt data not Kal Fef /006 599521.82 5689304.22 366.00 625.00 576.20 584.30 8.10 Licence available Küllstedt data not Kal Fef /007 601811.57 5689577.96 354.00 561.60 557.30 561.60 4.30 Licence available Küllstedt Kal Fef /008 596448.53 5689452.61 360.00 639.00 600.00 600.50 0.50 17.20 Licence Küllstedt Kal Fef /008 596448.53 5689452.61 360.00 639.00 600.50 606.00 5.50 10.40 Licence Küllstedt data not Kal Fef /009 599616.93 5690158.45 314.00 522.10 511.13 519.60 8.47 Licence available Küllstedt Kal Fef /010 599570.53 5689336.22 366.00 584.86 574.10 583.35 9.25 14.00 Licence Küllstedt Kal Fef /011 601833.59 5689528.84 356.00 633.00 570.28 572.28 2.00 10.20 Licence Küllstedt Kal Fef /011 601833.59 5689528.84 356.00 633.00 572.28 628.28 56.00 10.56 Licence Küllstedt Kal Fef /013 598366.99 5689533.09 356.00 645.00 548.91 570.41 21.50 11.30 Licence Küllstedt data not Kal Fef /017 601329.53 5691579.08 335.00 553.20 529.80 543.70 13.90 Licence available Küllstedt Kal Fef 003/1906 598847.56 5687983.11 477.00 883.50 827.65 832.85 5.20 22.29 Licence Küllstedt Kal Fef 003/1906 598847.56 5687983.11 477.00 883.50 832.85 835.85 3.00 10.79 Licence Küllstedt Kal Fef 18 600742.08 5687353.31 461.00 882.00 841.9 842.4 0.5 10.24 Licence Küllstedt Kal Fef/012 598277.41 5689532.80 352.00 551.00 Stopped short Licence Küllstedt Kal Gte 001/1961 603672.79 5692037.11 307.40 560.10 No information Licence Kal Holla Mühlhausen 597797.47 5676907.93 280.00 995.55 961.86 967.45 5.59 12.03 001/1975 Licence Kal Holla Mühlhausen 597797.47 5676907.93 280.00 995.55 967.91 975.37 7.46 7.31 001/1975 Licence Kal Holla Mühlhausen 599864.34 5677365.82 257.10 1060.57 1023.96 1031.41 7.45 10.89 002/1976 Licence Kal Holla Mühlhausen 599864.34 5677365.82 257.10 1060.57 1032.83 1034.19 1.36 6.79 002/1976 Licence Kal Holla Mühlhausen 597870.22 5675213.11 292.40 959.82 927.62 941.55 13.93 10.07 003/1977 Licence Kal Holla Mühlhausen 597870.22 5675213.11 292.40 959.82 943.27 946.67 3.40 7.60 003/1977 Licence Kal Holla Mühlhausen 599451.19 5675900.71 248.70 980.42 945.45 953.62 8.17 9.99 004/1978 Licence Kal Hsm Mühlhausen 597150.89 5680861.96 318.90 1001.40 963.67 969.19 5.52 14.44 001/1961 Licence Kal Hsm Mühlhausen 597150.89 5680861.96 318.90 1001.40 969.19 972.28 3.09 5.00 001/1961 Licence Kal Hsm Küllstedt 599039.98 5680829.11 301.40 988.71 950.77 952.04 1.27 16.04 002/1975 Licence

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Average Easting z2KSt Intersection Northing EOH Width K2O Hole ID Location (UTM RL (m) (UTM 32N) (m) (m) Grade 32N) From To (%) Kal Hsm Küllstedt 599039.98 5680829.11 301.40 988.71 952.04 958.71 6.67 8.46 002/1975 Licence Mühlhausen Kal Hzl 1/1961 610548.39 5688465.68 412.30 1033.80 963.27 963.80 0.53 19.30 Licence Mühlhausen Kal Hzl 1/1961 610548.39 5688465.68 412.30 1033.80 963.80 977.80 14.00 11.77 Licence Mühlhausen Kal Hzl 1/1961 610548.39 5688465.68 412.30 1033.80 980.15 983.15 3.00 10.60 Licence Mühlhausen Kal Hzl 1/1961 610548.39 5688465.68 412.30 1033.80 983.15 983.78 0.63 15.20 Licence Küllstedt Kal Kai 2/1975 603000.99 5683169.88 404.90 1210.47 984.86 987.24 2.38 7.76 Licence Mühlhausen Kal Kai 3/1976 603066.08 5681563.68 362.20 1014.80 982.52 983.05 0.53 17.80 Licence Mühlhausen Kal Kai 3/1976 603066.08 5681563.68 362.20 1014.80 983.05 983.46 0.41 8.90 Licence Mühlhausen Kal Kai 3/1976 603066.08 5681563.68 362.20 1014.80 984.63 984.86 0.23 6.40 Licence Küllstedt Kal Kai 4/1977 604371.03 5683648.06 413.70 995.88 949.64 949.85 0.21 21.80 Licence Küllstedt Kal Kai 4/1977 604371.03 5683648.06 413.70 995.88 949.85 961.11 11.26 7.32 Licence Küllstedt Kal Kai 4/1977 604371.03 5683648.06 413.70 995.88 964.23 974.71 10.48 5.46 Licence Kal Kued Küllstedt 590880.48 5681303.98 398.90 923.60 894.89 896.50 1.61 18.37 001/1962 Licence Kal Kued Küllstedt 588967.12 5682422.21 466.30 953.90 924.50 925.70 1.20 8.03 002/1964 Licence Kal KuSo Mühlhausen 603747.67 5687517.86 435.70 916.00 864.33 867.09 2.76 17.43 006a/1978 Licence Kal KuSo Mühlhausen 603747.67 5687517.86 435.70 916.00 867.09 871.41 4.32 11.63 006a/1978 Licence Kal KuSo Mühlhausen 603747.67 5687517.86 435.70 916.00 871.41 873.02 1.61 17.36 006a/1978 Licence Mühlhausen Kal KuSo 1/1957 606430.13 5687144.63 405.10 1006.48 892.30 895.55 3.25 14.36 Licence Mühlhausen Kal KuSo 5/1977 605515.74 5688413.91 436.90 855.70 803.90 805.02 1.12 9.40 Licence Mühlhausen Kal KuSo 7/1982 604381.15 5685138.11 469.10 948.30 923.60 926.66 3.06 14.21 Licence Kal LfdMh Mühlhausen 597002.01 5678534.78 285.00 997.38 965.56 974.18 8.62 13.44 001/1975 Licence Kal LfdMh Mühlhausen 597002.01 5678534.78 285.00 997.38 977.27 980.90 3.63 8.40 001/1975 Licence Kal LfdMh Mühlhausen 598639.75 5679042.75 252.40 976.00 937.14 950.90 13.76 14.54 002/1976 Licence Mühlhausen Kal Mda 609408.23 5685826.86 400.00 1070.00 977.78 983.81 6.03 18.70 Licence Mühlhausen Kal Mda 3/1983 607513.26 5686575.95 406.30 954.24 919.71 920.57 0.86 20.59 Licence Mühlhausen Kal Mda 4/1984 608233.11 5688437.01 388.60 933.86 870.04 876.71 6.67 18.72 Licence Mühlhausen Kal Mda 6/1984 607619.96 5689426.89 418.70 924.70 880.07 889.07 9.00 7.91 Licence Mühlhausen Kal NSo 1 605661.11 5693296.99 328.40 686.70 643.10 645.10 2.00 16.73 Licence Mühlhausen Kal NSo 1 605661.11 5693296.99 328.40 686.70 645.10 664.60 19.50 10.33 Licence Mühlhausen Kal NSo 2 608744.93 5694088.10 428.00 850.00 819.00 820.00 1.00 14.90 Licence

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Average Easting z2KSt Intersection Northing EOH Width K2O Hole ID Location (UTM RL (m) (UTM 32N) (m) (m) Grade 32N) From To (%) Mühlhausen Kal NSo 2 608744.93 5694088.10 428.00 850.00 820.00 830.00 10.00 10.70 Licence Mühlhausen Kal NSo 3 606231.69 5692800.11 366.80 742.82 660.33 664.24 3.91 13.25 Licence Mühlhausen Kal NSo 3 606231.69 5692800.11 366.80 742.82 664.24 701.73 37.49 10.28 Licence Mühlhausen Kal NSo 8/1907 611691.82 5692613.37 350.00 856.60 814.98 824.10 9.12 12.26 Licence Mühlhausen Kal NSo 8/1907 611691.82 5692613.37 350.00 856.60 824.10 850.70 26.60 9.52 Licence Küllstedt data not Kal Scf/01909 598177.44 5687913.46 477.12 869.50 835.00 848.00 13.00 Licence available Küllstedt Kal Sch 599224.01 5687781.51 473.93 880.00 811.80 813.40 1.60 10.00 Licence Küllstedt Kal SchBeb 1910 599298.58 5687742.46 474.15 880.00 813.40 814.40 1.00 6.00 Licence Küllstedt Kal Vll 1/1960 604760.60 5691417.34 361.01 672.10 609.93 635.38 25.45 9.87 Licence Küllstedt Kal Wch 1/1963 586672.20 5683379.77 479.40 901.40 863.95 866.60 2.65 16.00 Licence Küllstedt Kal Wch 1/1963 586672.20 5683379.77 479.40 901.40 866.60 869.05 2.45 11.30 Licence Küllstedt Kal Wch 1/1963 586672.20 5683379.77 479.40 901.40 869.05 869.60 0.55 20.40 Licence Mühlhausen Kal Wndg 1/1975 605796.25 5683633.29 402.80 967.06 930.45 937.72 7.27 8.97 Licence Mühlhausen Kal Wndg 2/1975 604938.12 5681865.16 362.20 1044.39 993.93 995.24 1.31 15.48 Licence Mühlhausen Kal Wndg 2/1975 604938.12 5681865.16 362.20 1044.39 995.24 1010.58 15.34 8.85 Licence Mühlhausen Kal Wndg 2/1975 604938.12 5681865.16 362.20 1044.39 1017.15 1020.99 3.84 6.68 Licence Mühlhausen Kal Wndg 2/1975 604938.12 5681865.16 362.20 1044.39 1021.82 1022.21 0.39 8.40 Licence Mühlhausen Kal Wndg 3/1983 605563.11 5682515.77 363.20 1006.72 975.47 976.63 1.16 13.69 Licence Mühlhausen Kal Wndg 3/1983 605563.11 5682515.77 363.20 1006.72 977.09 978.95 1.86 9.08 Licence Mühlhausen Kal ZlMh 1/1965 595053.18 5681985.70 370.00 973.20 889.50 891.85 2.35 25.65 Licence Mühlhausen Kal ZlMh 1/1965 595053.18 5681985.70 370.00 973.20 891.85 896.30 4.45 11.43 Licence Mühlhausen Kal ZlMh 1/1965 595053.18 5681985.70 370.00 973.20 896.30 898.25 1.95 9.19 Licence Küllstedt Kal ZlMh 3/1977 596266.50 5682258.37 285.70 949.53 906.60 907.08 0.48 10.20 Licence Küllstedt Kal ZlMh 3/1977 596266.50 5682258.37 285.70 949.53 907.08 915.65 8.57 11.66 Licence Küllstedt Kal ZlMh 3/1977 596266.50 5682258.37 285.70 949.53 915.65 915.88 0.23 19.00 Licence Mühlhausen Kal ZlMh 4/1978 595394.08 5680767.16 337.40 955.30 920.64 924.21 3.57 15.70 Licence Mühlhausen Kal ZlMh 4/1978 595394.08 5680767.16 337.40 955.30 924.21 924.66 0.45 6.3 Licence

As discussed, various state institutions were involved in the historical exploration, where during and post-unification, the responsibility of the ownership and curatorship of the historical geological exploration archives became unassigned. This effectively resulted in the archives being neglected over this period of instability, thereby instigating a process of the exploration

Küllstedt Project, March 2019 34 Davenport Resources Ltd archives being seized/copied and privately stored by various individuals and newly formed technical institutions of the time.

This has today resulted in the historical data either being stored in duplicate at various localities, being stored in a single known locality, being stored at an unknown locality, or being assumed to be lost/destroyed. The BVVG is considered to have the most complete national archive, with various other depositories hosting duplicates thereof, as well as various additional datasets of which the BVVG does not yet have copies. This has resulted in the current archives stored by BVVG as being partial in extent.

Compounding this scenario is that various, often undated, iterations of the historical exploration data pertaining to a single drill hole exist: during the drilling and analysis of a drill hole various updated versions of the drill hole were issued, each differing to the previous as additional data became available, geological logging was refined (based on any downhole geophysics) or the chemistry and mineralogy results were corrected before sign off and final approval by the analytical institution. As such, it is a common occurrence that two separate data depositories may contain exploration data for the same drill hole, but which differ when compared to one another. These differences are virtually always <5%, and rarely between 5% to 10%. It is often impossible to determine which is the more recent and which should be relied upon, as the date is more often than not recorded only as the year, e.g. 1978. For the majority of the Küllstedt Project drill holes, Micon is in possession of the final graphical drill holes logs that reflect the adjusted depth intersections based on the geophysical interpretation, an example of which is shown in Figure 7.2Figure 7.2.

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Figure 7.2: Drill Hole Kal Eigenrode 3/1977 Graphical Log

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All drill holes with supporting downhole chemistry data were relied upon for geological modelling and estimation purposes, whilst drill holes with only downhole geological data were relied upon in order to complete wireframing interpretations, especially in localities where there was a paucity of drill holes with supporting chemistry data.

All drill hole sampling was conducted according to the procedures and protocols as specified in Kali-Instruktion (1956 and 1960). Drill core samples were collected from all of the potash drill holes. Where possible, the K2O grade of the potash-bearing horizons was historically determined on an empirical base using the correlation with the downhole natural gamma log. Samples were collected across all potash-bearing horizons and the total sampled length represents the total thickness of the potash-bearing horizon of the z2KSt. Specific details regarding sampling methods have not yet been translated from the historical German exploration reports, however since drilling on the Küllstedt Project was simultaneous to that on Mühlhausen-Nohra and conducted by the same company and geologists, Micon has assumed sampling methods to be if not the same, then very similar to Mühlhausen-Nohra.

The position of the drill holes and the distribution of the main mineral types is shown in Figure 7.1.

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Figure 7.3: Drill Hole Positions and Main Mineral Distribution of the Küllstedt Project

Source: Micon

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7.5 DRILLING

Information relating to the drilling techniques used in the historical exploration is based upon the English translation in the Ercosplan report dated 31st January 2015, ‘Küllstedt Exploration Licence Area, Thuringia, Germany’ and the Ercosplan 12th January 2017 report dated ‘JORC compliant Report for the Mühlhausen-Nohra Mining Licence Area, Federal State of Thuringia, Federal Republic of Germany’. The reason for using the Mühlhausen-Nohra report as well as the Küllstedt report is that much of the detailed information regarding exploration techniques used at Küllstedt have not been documented but are considered to be similar to that adopted at Mühlhausen-Nohra since the drilling programmes were conducted at the same time, by the same companies and involving the same technical personnel.

The following commentary is therefore largely based on the techniques adopted at the neighbouring Mühlhausen-Nohra mining license.

Limited detail of the drilling techniques used for the hydrocarbon drill holes is known. However, Ercosplan state that state-of the-art techniques were used and assume the methods and technology to be similar to those applied on licences in the surrounding South Harz area.

Three types of drill rigs (T-50, BU-40 or BU-75) were used for the hydrocarbon drilling. According to historical technical reports rotary tricone bits were used to penetrate the overburden and upper stratigraphy into the top of the salt rocks of the Staßfurt-Steinsalz (z2NA). The drilling method was then switched to diamond drill bits, resulting in drill core through the salt intersections. In addition, the sandstone of the Chirotheriensandstein (smSTC) was cored to gain detailed structural understanding for possible extraction of hydrocarbons. Once the drill bit was removed, geophysical logging was conducted downhole.

For the core drilling, a clay mud was used as the drilling fluid through the overburden sections and a NaCl-saturated drilling fluid was used through the salt horizons. Additional measures were taken to reduce core loss and caving, including addition of CMC (carboxymethyl cellulose) to build filter cake and reduce fluid losses and mud pressure and reduced drilling speed.

Diamond core drilling was conducted with drill hole diameters of 114 mm, 118 mm, 143 mm or 193 mm. The last cemented casing (size: 6⅝” or 5¾”) was mainly installed in the salt rocks of the Staßfurt-Steinsalz (z2NA), in the anhydrite rocks of the Unterer Staßfurt-Anhydrit (‘Basalanhydrit’, z2ANa), or in the upper part of the dolomite of the Staßfurt-Karbonat (z2CA).

7.6 LOGGING

All drill hole logging was conducted according to the Kali-Instruktion. Drill core was geologically logged in detail and full and summary drill-core logs were produced in both written and graphical format. The complete core intersection was logged on a millimetre scale and information recorded on the drill-core logs included lithological depths, stratigraphic interpretation, and sampling information.

Chip logging was conducted on the upper sections of the drill holes that had been drilled using tricone drilling methods, to give an indication of rock type. In the hydrocarbon drill holes the K2O grade of the potash-bearing horizons was determined on an empirical basis, using the correlation with the downhole natural gamma log. This was also used to correlate recovery and interpreted stratigraphy based on the drill-core logs.

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Full drill hole logs include a detailed lithological description of the entire drill hole, which was also summarised and graphically portrayed alongside the downhole geophysical logging and assay results. A total of 10 Küllstedt Project drill holes have detailed graphical logs showing lithology, chemistry, mineralogy, calliper and gamma results. Geophysical logging speed is recorded as 2.5 m/min and 7 m/min and the majority of the 1980 drill holes had the temperature also recorded.

7.7 SAMPLE PREPARATION AND ANALYSIS

The sampling and assay procedures completed on the potash-bearing salt rock samples from the potash deposits within the Küllstedt Project followed the latest technology and state of scientific knowledge at the time the potash exploration holes were drilled.

7.7.1 Sampling

The sampling procedures consisted of the following:

• Samples were collected across all potash-bearing horizons; • The total sampled length represented the total thickness of the potash-bearing horizon of the z2KSt; • In the hydrocarbon drill holes, core sample thickness ranged from 0.07 m to 1.58 m. In the potash drill holes, core sample thickness ranged from 0.18 m to 4.00 m; • Over inhomogeneous potash horizons where interlayers of potential waste were included, the minimum sample thickness was 0.5 m and the maximum was 5 m; • Samples were crushed to 2 mm in a jaw crusher and a representative sample was milled and crushed further to 50 μm; • In situations where interlayers of clay, anhydrite, carbonates or other undesirable substances are contained in the potash-bearing salt rocks within the potash deposit, interlayers with thicknesses of up to 50 mm were incorporated into the sample for analysis. Interlayers > 50 mm were analysed separately to ascertain if separation of the raw ore material was appropriate; and, • The crushed sample was assayed by ICP-OES for all elements except NaCl which was tested using potentiometric titration. XRD was used for mineralogy and thin sections were carried out at a local university.

7.7.2 Analytical Procedures

Micon has no specific details about the procedures used prior to 1919; however, it is known that since the foundation of the Kaliforschungsanstalt GmbH in 1919, it was responsible for representative sampling and analytical work of potash-bearing salt rock samples following the corresponding procedures.

The first documentation (Kali-Instruktion) issued on the classification of reserves regarding potash and rock-salt deposits (Stammberger 1956) was released in 1957. The instruction was revised in 1960 by Ulbrich to include detailed information about the sampling and analytical procedures used by the former GDR for potash-bearing salt rocks.

Samples were homogenised to ensure a representative sample was assayed.

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Samples were sent to the VEB Kombinat Foundation of Potash Research Institute, now known as K-Utec AG Salt Technologies. Samples were assayed by ICP-OES for all elements except NaCl which was tested using potentiometric titration.

The sample analysis procedures consisted of the following:

• Samples consisting mainly of carnallite and/or other hygroscopic evaporite minerals were sealed in airtight containers after sample retrieval. If the analysis of the sample was not conducted immediately under appropriate conditions storage and transport for analyses were conducted without destroying the seal; • Complete and partial sample analyses were distinguished. Partial analysis was mainly restricted to determining the K2O content of samples; • Potassium, magnesium, calcium, sulphate, chloride, water and insoluble material contents were analytically determined. The sodium content was determined by calculation; • If required, the bromine, boron, iodine and other valuable components of the samples were determined; • Partial analyses were only permitted for already investigated potash deposits and cannot generally be used as the basis for reserve estimation in newly explored potash deposits; and, • Analytical results were cross-checked by analysing duplicate samples. Duplicate samples had to be chosen with respect to a homogenous distribution within the deposit. For surface drill holes, 10% of the total sample amounts had to be duplicated with internal and external cross-check samples.

The sample preparation and analysis of samples obtained from the potash-bearing salt rocks of the Küllstedt Project were carried out in the VEB Kombinat Kali’s research department laboratory according to standard procedures by the state authority. In 1992 the VEB Kombinat Kali laboratory was renamed K-Utec. These standard procedures were developed during the 1950’s and have been mandatory since 1975.

All the Küllstedt Project samples were collected during the historical drilling campaigns predominantly carried out during the 1960's and 1970's, with earlier drillholes focusing around the now closed Hüpstedt-Beberstedt and Felsenfest Mines dating back to 1909 and 1910.

Sample data exists from three hydrocarbon drill holes that were geophysically logged, and 56 diamond core drill holes ('potash drill holes'). Core samples were collected from two of the hydrocarbon drill holes, namely E Kud 1/1966 and E Mh 25/1960 and all of the potash drill holes.

7.8 HISTORICAL MINERAL RESOURCE ESTIMATES

The first mineral resource estimate that covered historically defined sub-fields, part of which overlap the current Küllstedt Project extent, was carried out in 1964 (Ercosplan, 2015). The area covered by the mineral resource estimation totalled 369.50 Mm³ with a projected 312.32 Mt of K2O at an average grade of 11.7% K2O.

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In 1980 an historical mineral resource estimate for an area that overlapped part of the current Küllstedt Project was estimated by VEB Geological Research and Exploration, a nationally owned enterprise. The estimate was undertaken according to the Kali-Instruktion of the former GDR (Gotte, 1982, /12/) (Table 7.4Table 7.4). Details regarding the estimation methodology have not yet been translated from the historical reports, but are considered accurate based on the department and technical personal that conducted the estimation.

Table 7.4: Historical Resources for the Küllstedt Project (Kästner et al., 1980)

Tonnage Grade Tonnage 2 Volume Mineral Area (km ) 3 Category (Mm ) (Mt) K2O (%) K2O (Mt) Hartsalz 12.8 42.5 Carnallite 70.9 302 331 6.8 22.6 Balance - C2 Glaserite 7.3 24.2 Total 14.2 47.1

Davenport commissioned Ercosplan in January 2015 to review the available historical exploration data pertinent to the Küllstedt Project with the intention of ascertaining the mineral resource potential.

Ercosplan conducted the geological modelling in Paradigm SKUA-GOCAD (version 17) software using a Discrete Smooth Interpolation (DSI) algorithm and a cell size of 50 m x 50 m. A minimum K2O cut-off grade of 5% was used for the estimation and no thickness cut-offs were used. For more details regarding the modelling methodology applied by Ercosplan the reader is referred to the JORC compliant report that accompanied the resource statement (see references).

Ercosplan classified the Küllstedt Project mineral resources as Exploration Targets in accordance with the guidelines of the JORC Code (2012) (Table 7.5Table 7.5).

Table 7.5: Exploration Target Mineral Resource Estimate for the Küllstedt Exploration Licence (Ercosplan, 2015)

The Ercosplan Exploration Target grade estimate is comparable to the Micon Inferred Mineral Resource estimate. However, the Micon Inferred Mineral Resource tonnage is significantly less than the Exploration Target tonnes due to a more restricted resource area used by Micon based on additional historical information that was not available to Ercosplan in 2015.

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8.0 DATA VERIFICATION

For all exploration work conducted post-1950, quality assurance and quality control (QAQC) procedures performed across the South Harz Potash Project were conducted by independent state institutions and quality checked by VEB Kombinat Kali company professionals. Detailed information regarding the cross-check analyses, that is reported to have occurred on the Küllstedt Project drill hole data, is not yet currently available and requires sourcing from an as yet determined data depository.

During a site visit in 2018, the Davenport Technical Director and members of the Ercosplan geological team visited the location of historical hydrocarbon drill hole E Küllstedt 1/1966 and were able to confirm the collar position (Figure 8.1Figure 8.1).

Figure 8.1: Historical Drill Hole E Küllstedt 1/1966 collar

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9.0 MINERAL PROCESSING METALLURGY AND TESTING

Currently no mineral processing or metallurgical test work programmes are planned, as no mining or processing plans have been conceptualised.

Processing of sylvinite is well understood and focuses on the correct size at which the potash is liberated and desliming to remove insoluble and fines. The most common method used in potash processing, which has been adopted in the South Harz region, is conventional flotation including drying, compaction and glazing. In addition, solution mining is currently taking place at the Kehmstedt DEUSA mine approximately 25 km north of the Küllstedt Project and this might be an amenable mining and processing method for the carnallitite resources at the Küllstedt Project. Ultimately this will depend on the product, or anticipated range of products, that will be produced from the Küllstedt Project.

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10.0 MINERAL RESOURCE ESTIMATE

10.1 INTRODUCTION

The historical drill hole database was used by Micon to create a 3-D geological model and mineral resource estimate. The following sections describe the adopted estimation process.

10.2 GEOLOGICAL MODELLING AND INTERPRETATION

The geological model and mineral resource estimation for the Küllstedt Project was conducted in Micromine®, a software package used for geologically modelling stratiform deposits. The database used to create the geological model and mineral resource estimate was created from the manual data entry of hard copy historical drill hole logs and exploration records.

The drill hole database was imported into Micromine® and validated. Validation checks undertaken included checking for missing samples, mismatching sample and stratigraphy intersections, duplicate records and overlapping from-to depths. Three small errors in the database were identified that were easily remedied. Once imported into Micromine®, geological interpretation was carried out in 2-D cross-sections and 3-D downhole plots of lithology and grade (Figure 10.1Figure 10.1). This process confirmed the correlating relationship between the drill hole logs and the geophysical logging as well as the stratigraphic- hosted nature of the potash mineralisation.

The chemical database was first composited according to stratigraphy, which allowed the merging of the mineralogical and chemical data tables. The mineralogy of the Küllstedt Project includes various sulphate minerals, including kieserite (MgSO.H2O), langbenite (K2Mg2(SO4)3) and glaserite (K,Na)3Na(SO4)2) (Figure 6.5Figure 6.5). These, together with sylvinite, were flagged in the database as Hartsalz. The composited database was assigned a tag column to indicate if a sample was Hartsalz or carnallitite based on the mineralogical drill hole logging data and the chemical assay data. Micon noted in particular that there is often a thin (±0.5 m) higher grade horizon of sylvinite at the top of the Upper Hartsalz seam. This is an important observation as grade control during underground extraction will need to consider this, and future geological models should attempt to model this horizon separately. Likewise, Micon also noted that a layer of elevated langbenite frequently marks the top of the Lower Hartsalz seam, for example in drill holes Kal Bic 3/76 and Kal ZlMh 4/78.

The graphical logs provided details of sample depths and thicknesses as well as historically interpreted mineral content. For all of the drill holes on the Project there is only chemical data available for K2O with other elements missing. Davenport should attempt to source this information for the next phase of work. In order to create a complete data set for modelling, Micon used the chemical results from the Mühlhausen-Nohra drill holes that were included in the Küllstedt Project modelling database and created seam specific dummy values. No K2O values had to be inferred in this way.

The Project database contains some drill holes with duplicated stratigraphy indicating faulting or folding, such as Kal Keula 6a/1978 and Kal Eigenrode 3/1977. The duplication was noted in Micromine and is also supported with historical cross sections. These were numbered according to elevation, cross-sections drawn and the historical cross sections were used to determine which portion of the z2KSt would be used for modelling.

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Figure 10.1: North-South Cross-Section across Fault Block 1 and Fault Block 2 on the Küllstedt Project

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Four separate fault blocks were distinguished based on the depth of the z2KSt, namely Fault Block 1, Fault Block 2, Fault Block 3 and Fault Block 4 (Figure 6.3Figure 6.3). The Lower seams only occur in Fault Block 1. The west north west orientation of the major faults follows the regional trend and have upthrown the evaporite sequence towards the north with average displacements of ±120 m (Figure 6.4). In addition, two faults striking north east have also been identified with displacements of ±90 m. Fault Block 1 hosts the largest modelled resource and the deepest intersection of potash at approximately 950 m below surface, whilst the depth to potash in Fault Block 3 is approximately 550 m.

Each drill hole was individually examined and based on stratigraphy, the sequence of mineralised seams and the K2O composite grades the Hartsalz or carnallitite seams were further subdivided into the Upper Hartsalz seam, Upper Carnallitite seam, Lower Carnallitite and Lower Hartsalz seam.

Micon created histograms of the K2O grade and thicknesses for each seam. The Upper Carnallitite seam displays continuous grade, however the thickness is more variable ranging from 0.41 m to 56 m (Figure 10.2Figure 10.2). The Upper Hartsalz seam has relatively consistent grades and thicknesses (Figure 10.3Figure 10.3). No top cut was applied to any of the seam grades.

Figure 10.2: Upper Carnallitite Seam Thickness

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Figure 10.3: Upper Hartsalz Seam Thickness

The database was composited again, this time by grade, using a minimum trigger of 5% K2O, a maximum total length of waste of 2 m and a 1 m maximum consecutive length of waste.

The minimum and maximum X and Y origins used for gridding were 581,494 (min X), 5,668,287 (min Y), 607,408 (max X) and 5,694,912 (max Y). A grid cell size of 200 was used as this best fitted the data when correlated in cross-section. An inverse distance squared gridding algorithm was used, with a circular search area and a 5,000 m search radius to cover the distance between data points, one sector and maximum 1 point per sector. The roof and floor grids were converted to wireframes surfaces and then DTM surfaces for analysis.

Finally two sets of solid wireframes were created for each of the Upper Hartsalz seam, the Upper Carnallitite seam, the Lower Carnallite seam and the Lower Hartsalz seam using the roof and floor surfaces from each fault block. The first set of wireframes represents the total extent of potash mineralisation based on complete set of data provided and the second set of wireframes represents the potash seam mineralisation cropped by the Project licence boundary. A cross section of the resultant solid wireframes is shown in Figure 10.4Figure 10.4.

The final extents of the modelled Inferred Mineral Resources for the Küllstedt Project, which extends southwards into the neighbouring Mühlhausen-Nohra mining license is shown in Figure 10.5Figure 10.5.

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Figure 10.4: West-East Cross-Section through Fault Block 1

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Figure 10.5: Drill Hole Plan and Inferred Resource Extent of the Küllstedt Project

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10.3 MINERAL RESOURCES

With the exception of the barren western side of the Küllstedt Project, which represents the western edge of the potash basin, the economic potash deposit extends across the whole of the Project area and extends beyond the Küllstedt Project into Davenport’s neighbouring Mühlhausen-Nohra mining licence, as confirmed from previous modelling (Figure 10.5Figure 10.5). The average thicknesses of the wireframes of the Küllstedt Project are shown in Table 10.1Table 10.1. Table 10.1: Average Seam Thickness Per Fault Block

Seam Fault Block Avg. thickness (m) 1 1.64 Upper 2 not present Hartsalz 3 3.35 4 2.65 1 8.71 Upper 2 5.89 Carnallitite 3 25.62 4 2.45 1 4.49 Lower 2 not present Carnallite 3 not present 4 not present 1 1.72 Lower 2 not present Hartsalz 3 not present 4 not present

Fault Block 1 hosts the largest modelled resource and the deepest intersection of potash at approximately 950 m below surface, whilst the depth from surface to potash in Fault Block 3 is approximately 550 m. The modelled seam package is sub-horizontal with localised gentle undulations.

A grade-tonnage report was generated for the three seams using average densities obtained from historical records, specifically: 2.26 t/m3 for the Upper Hartsalz, 2.21 t/m3 for the Lower Hartsalz and 1.88 t/m3 for both Upper and Lower Carnallitite seams. The grades for each wireframe have been reported based on the modelled composited assay database, which were modelled using the same algorithm and parameters as the seam roof and floor surfaces. The modelled K2O grade and width of the composited potash seams are indicated in Figure 10.6Figures 10.6 to Figure 10.910.9.

The entire extent of the mineral resources of the Küllstedt Project have been classified as an Inferred Mineral Resource, based on the quality and extents of the drilling database that are sufficient to imply geological grade and continuity for eventual economic extraction. In the south of the Küllstedt Project the average drill hole spacing is approximately ±1,500 m. In the north of the Project the drill hole spacing is closer with an average of ±800 m, and several drill holes were drilled <100 m apart. A 20% geological loss has been applied to the modelled tonnage to take into consideration the Inferred category nature of the mineral resources and potential for discovery of localised structure and grade variation. Figure 10.5Figure 10.5 highlights the extents of the Inferred Mineral Resources.

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The 13th February 2019 Inferred Mineral Resources for the Küllstedt exploration licence are presented in Table 10.2Table 10.2.

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Figure 10.6: K2O Grade Distribution in the Upper Hartsalz Seam

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Figure 10.7: Thickness Distribution in the Upper Hartsalz Seam

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Figure 10.8: K2O Grade Distribution in the Upper Carnallitite Seam

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Figure 10.9: Thickness Distribution in the Upper Carnallitite Seam

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Table 10.2: Küllstedt Project Mineral Resources as at 13th February 2019 (in accordance with the guidelines of the 2012 edition of the JORC Code)

Bulk Geol Loss Tonnage Seam Density K2O (%) K2O (Mt) Insolubles (%) KCl (%) Mg (%) Na (%) SO4 (%) Category (%) (Mt) (t/m3) Upper Hartsalz 2.26 20 275 13.57 37 0.76 16.69 1.93 19.90 17.67 Inferred Lower Hartsalz 2.21 20 59 10.23 6 0.11 16.20 2.85 24.30 18.02 Inferred Sub-Total Hartsalz 333 12.98 43 0.65 16.60 2.09 20.67 17.73 Inferred Upper Carnallitite 1.88 20 1,175 10.20 120 0.49 14.48 5.00 17.36 6.87 Inferred Lower Carnallitite 1.88 20 30 5.89 2 0.50 9.43 3.90 24.27 7.59 Inferred Sub-Total Carnallite 1,205 10.10 122 0.49 14.35 4.97 17.53 6.89 Inferred Total Küllstedt Project 1,538 10.72 165 0.52 14.84 4.35 18.21 9.24 Inferred

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11.0 MINING METHODS

The South Harz region is a renowned producer of potash, which has been economically mined from various depths and at different thicknesses for decades. A number of mines in the surrounding area have been mining potash from similar depths to the deposits on the Project using both conventional underground methods and solution mining. Most notable is the adjacent conventional underground Volkenroda mine (closed in 1990), and the Kehmstedt DEUSA operations to the north of the Küllstedt Project, which is currently producing potash through solution mining. At this stage it can be speculated that conventional room and pillar mining may be suitable.

No mining method has been planned for the Project at this stage, but a minimum seam thickness of 1 m was applied to the resources to exclude areas where there is no prospect for eventual economic extraction.

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12.0 CONCLUSIONS AND RECOMMENDATIONS

The Küllstedt Project held by Davenport is located in a well-known potash producing area in the South Harz Potash District in the Thüringen Basin of Central Germany. A total of 73 historical drill holes were used to create a geological model and mineral resource estimate using Micromine®. Downhole sampling data was available from three hydrocarbon drill holes that were geophysically logged, whilst downhole sampling data was available from 56 of the 73 diamond core drill holes ('potash drill holes').

The target economic potash deposit is hosted in the z2KSt stratigraphic horizon, which occurs across the whole of the Project except for the western edge, an area that represents the western edge of the potash basin. Mineral resources have been defined from four distinct seams, including the Upper and Lower Hartsalz seams and the Upper and Lower Carnallitite seams. Each of these have been restricted by a seam thickness (>1 m) and grade (>5% K2O).

The seams are predominately horizontal with gentle undulations. Four fault blocks have been defined, two of which upthrow the potash horizon by ±120 m to the north of the Project. The minimum depth to the roof of the Upper Hartsalz seam is ±550 m decreasing in depth to ±950 m in the south of the Project area due to the faulting.

The drill hole spacing on the Project ranges from ±100 m to ±1,500 m. This is considered sufficient to imply geological and grade continuity to produce an Inferred Mineral Resource following the guidelines defined in the 2012 edition of the JORC Code.

The total mineral resource area for the Küllstedt Project is approximately 106.7 km² and the total Inferred Mineral Resources tonnage is 1.54 Mt. The average grades and thicknesses of each seam are:

• Upper Hartsalz = 2.20 m @ 13.57 % K2O;

• Upper Carnallitite = 17.56 m @ 10.20 % K2O;

• Lower Carnallitite = 4.50 m @ 5.89 % K2O; and

• Lower Hartsalz = 1.72 m @ 10.23 % K2O.

The Micon Inferred Mineral Resource grade estimate compares with both the VEB Geological Research und Exploration historical resource estimate as well as the Ercosplan Exploration Target. There is a difference in tonnage between the historical estimates and the Micon estimate due to slightly different resource areas being used for the estimations. In order to increase confidence in the resources of the Küllstedt Project, Micon recommends a twin-drilling programme to confirm the grade reported in the historical drill hole database. This recommendation is based on the quality and volume of the available historical data, which throughout this modelling process has been queried and the validity checked at source. Micon has been working with Davenport and Ercosplan to create a suitable twin drilling programme that will increase confidence in a portion of both the Küllstedt Project and the adjoining southerly Mühlhausen-Nohra mining licence. Two historical drill holes on the Küllstedt Project have been suggested for twinning, namely Kal Bickenriede 1/1975 and Kal Lengefeld 2/1976 on Mühlhausen-Nohra (Figure 10.5Figure 10.5).

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Due to the complexities encountered whilst interpreting the historical drill hole logging and sampling records, Davenport is committed to continuing to update and verify the historical drill hole database. This process would allow for a better understanding of the historical seismic survey data, which would be used in any subsequent update of the geological interpretation on the Küllstedt Project. Should the historical seismic data be deemed unreliable for use, Davenport can consider conducting a new seismic survey to reinforce the geological interpretation.

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13.0 DATE AND SIGNATURE PAGE

The effective date of the mineral resource estimates presented in this report is 13th February 2019.

Signed on behalf of Micon International Co Limited

Liz de Klerk, M.Sc., Pr.Sci.Nat., SAIMM Senior Geologist Micon International Co Limited

Date: 15th March 2019

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14.0 REFERENCES

JORC compliant Report for the Ebeleben Mining Licence Area, Federal State of Thuringia, Federal Republic of Germany, Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau mbH, 2nd February 2018.

Review of Historical Exploration Data and Estimation of Exploration Targets for the Ebeleben Mining License Area, Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau mbH, 2nd November 2017.

JORC Code (2012) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserve Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia, 20th December 2012.

Potash - Deposits, Processing, Properties and Uses, Donald E. Garrett, PhD., 1996.

Kali-Instruktion - Instruktion zur Anwendung der Klassifikation der Lagerstättenvorräte fester mineralischer Rohstoffe vom. 28 August 1979 auf Kalisalz- und Steinsalzlagerstätten, Prof. Dr W Gotte, Akademie-Verlag Berlin, Zeitschrift für angewandte Geologie, Bd. 28 (1982), Heft 6, p287 - 293.

Ulbrich, Instruktion zur Anwendung der Klassifikation der Lagerstättenvorräte fester mineralischer Rohstoffe auf Kali- und Steinsalzlagerstätten der DDR (2. Kali-Instruktion vom 9 Januar 1960). In: Zeitschrift für angewandte Geologie, Bd. 6 Heft 7, Zentrales Geologisches Institut, Akademie-Verlag Berlin, , Berlin, Juli 1960, p330 - 336.

Stammberger, F., Instruktion zur Anwendung der Klassifikation der Lagerstättenvorräte fester mineralischer Rohstoffe auf Kali- und Steinsalzlagerstätten. Akademie-Verlag Berlin: Zeitschrift für angewandte Geologie. Berlin, Heft 2/3, December 1956, p134 - 139.

Franke, D. (2011) Regionale Geologie von Ostdeutschland – Ein Worterbuch. www.regionalgeologie-ost.de

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15.0 CERTIFICATE

CERTIFICATE OF AUTHOR ELIZABETH DE KLERK

As author of this report entitled “Technical Report on the Mineral Resources of the Küllstedt Exploration Licence, South Harz Potash Project, Thuringia, Germany”, effective date 13th February 2019, I, Elizabeth de Klerk do hereby certify that:

1. I am employed as a Director and Senior Geologist by, and carried out this assignment for, Micon International Co Limited, Suite 10, Keswick Hall, Norwich, United Kingdom. tel. 0044(1603) 501 501, e-mail [email protected] ; 2. I hold the following academic qualifications:

B.Sc. Geology University of Leicester, United Kingdom, 2000; M.Sc. Exploration Geology University of Rhodes, Grahamstown, South Africa, 2002; 3. I am a member of the South African Institute of Mining and Metallurgy (SAIMM) and a Fellow of the Geological Society of Africa and a registered Professional Natural Scientist (Pr.Sci.Nat. 400090/08) 4. I have worked as a geologist in the minerals industry for over 15 years in the mining industry in Africa, Europe and United Kingdom; 5. I do, by reason of education, experience and professional registration, fulfil the requirements of a Competent Person as defined by the JORC Code (2012); 6. I visited the property that is the subject of this Technical Report from 12th to 16th February and 6th to 8th March 2018; 7. I am responsible for the preparation or supervision of preparation of all sections of this Technical Report; 8. I am independent of Davenport Resources Ltd and East Exploration GmbH, their directors, senior management, and other advisers, I have had no previous involvement with the property; 9. I have read the JORC Code (2012) and this report for which I am responsible and it has been prepared in compliance with the instrument; 10. As of the date of this certificate to the best of my knowledge, information and belief, this Technical Report for which I am responsible contains all scientific and technical information that is required to be disclosed to make this report not misleading.

Liz de Klerk {signed and sealed}

Elizabeth de Klerk, M.Sc., Pr.Sci.Nat., SAIMM (707850) Senior Geologist, Micon International Co Limited Signed Date: 15th March 2019

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16.0 GLOSSARY AND ABBREVIATIONS

16.1 GLOSSARY

Anhydrite (CaSO4): Anhydrous calcium sulphate, common evaporite deposit mineral.

Aphthitalite also known as Glaserite (K3Na(SO4)2): Potassium sodium sulphate uncommon evaporite mineral, however it is an important potash source.

Argillaceous rocks: Group of detrital sedimentary rocks, commonly clays, shales, mudstones, siltstones and marls.

Basalt: A finely crystalline igneous rock with a basic composition.

Boracite (Mg3B7O13Cl): Magnesium chloroborate, rare evaporite marine deposit mineral.

Brecciated (breccia): Fragmented rock consisting of angular particles that have not been worn by water (unlike conglomerates).

Calcite (CaCO3): Calcium carbonate.

Carbonate rock: Rock primarily composed of carbonate minerals: calcite, aragonite, dolomite, magnesite, siderite etc. The majority of carbonate rock is formed by sedimentation in sea and lake basins.

Carnallite (KMgCl3∙6(H2O): Hydrated potassium magnesium chloride, common marine evaporite deposit mineral and an economically important potash source.

Carnallitite: Potassium rich evaporite rock consisting mainly of carnallite, halite, kieserite and anhydrite.

Clay: Finely grained sedimentary rock composed of clay minerals.

Cut-Off: An assay cut-off is the break-even economic value of the ore; the block cut-off is the economic value that optimises the net present value of the operating assets.

Dolomite: (CaMg(CO3)2): Calcium magnesium carbonate rock.

Evaporite Deposit: A sedimentary rock deposited from aqueous solution (e.g. seawater) as a result of evaporation.

Footwall: The rock on the underside of a vein or ore structure.

Glaserite also known as Aphthitalite (K3Na(SO4)2): Potassium sodium sulphate uncommon evaporite mineral, however it is an important potash source.

Gosudarstvennaya Komissia po Zapasam (GKZ): the State Commission for Mineral Reserves. Founded in 1927, GKZ manages mineral reserves on behalf of the Ministry for Environmental Protection and Natural Resources of the Russian Federation.

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Goethite (αFeO.OH): Hydrated iron oxide, rust like in appearance.

Gypsum (CaSO4∙2H2O): Calcium sulphate, common mineral in sedimentary rocks. This mineral is especially important in evaporite deposits.

Haematite (Fe2O3): Iron oxide common in igneous, metamorphic and sedimentary rocks.

Halite (NaCl): Sodium chloride, very common evaporite deposit mineral.

Hartsalz: Rock comprising sylvite, halite, anhydrite and/or kieserite. Common miner’s term for potash-bearing evaporite rocks, which exhibit a high hardness while drilling due to the admixtures of sulphate minerals.

Igneous rock: A rock formed by the solidification of magma.

Intrusion: A body of igneous rock that invades older rock. The invading rock may be a plastic solid or magma that pushes its way into the older rock.

Isopach: A line, on a map, drawn through points of equal thickness of a designated unit.

JORC Code: The Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserve Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia. The current edition is dated 2012.

Kainite (KMg(SO4)Cl∙3H2O): Hydrated potassium magnesium sulphate. A secondary mineral in marine potash deposits formed due to metamorphism or resolution by ground waters.

Kainitite: Potassium rich evaporite rock consisting mainly of kainite and halite.

Kali-Instruktion: Guideline document for the classification of solid mineral resources of rock- salt and potash deposits in the former German Democratic Republic. It defines the requirements for the exploration of rock-salt and potash. Originally published 5th December 1956, three revisions, dated 9th January 1960 (2nd revision), 20th June 1963 (3rd revision) and 17th November 1981 (4th and last revision).

Kieserite (MgSO4∙H2O): Hydrated magnesium sulphate monohydrate, commonly occurring mineral in marine evaporites.

Langbeinite (K2Mg2(SO4)3): Potassium magnesium sulphate uncommon marine evaporite mineral, however it is an important potash source.

Limestone: A common sedimentary rock composed mainly of calcium carbonate.

Magmatic: Consisting of, relating to or of magma origin.

Metamorphic rock: A rock that has, in a solid state, undergone changes in mineralogy, texture, or chemical composition as a result of heat or pressure.

Mine: An excavation from which valuable materials are recovered.

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Mineral deposit: A body of mineralisation that represents a concentration of valuable metals. The limits can be defined by geological contacts or assay cut-off grade criteria.

Mineral Reserve: The Russian equivalent of the Western mineral resource and ore reserve. Mineral reserves are subdivided into A, B, C1 and C2 categories depending on the level of definition and technological study.

Mineral Resource: The JORC Code defines a mineral resource as “a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form and quantity that there are reasonable prospects for eventual economic extraction”. Subdivided into Measured, Indicated and Inferred categories depending on how well they are defined.

Off-Balance Mineral Reserve: A volume of material which has demonstrated the presence of a metal to a sufficient level of confidence, but whose economic viability has not been demonstrated.

Open pit: A mine that is entirely on surface; also referred to as open-cut or open-cast mine.

Operational reserves: Balance mineral reserves that have been adjusted for dilution and losses, and have been incorporated into a mine production schedule.

Ore Reserve: The JORC Code defines an ore reserve as “the economically mineable part of a Measured or Indicated mineral resource”. Ore reserves have been the subject of appropriate assessments, such as feasibility studies that apply realistic mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified.

Polyhalite (K2Ca2Mg(SO4)42∙H2O): Hydrated potassium calcium magnesium sulphate. Common marine evaporite deposit mineral and an economically important potash source.

Pyrite (FeS2): Iron sulphide.

Run of mine (ROM): A term used loosely to describe ore of average grade as produced from the mine.

Sedimentary rock: Rock formed by sedimentation of substances in water, less often from air and due to glacial actions on the land surface and within sea and ocean basins. Sedimentation can be mechanical (under the influence of gravity or environment dynamics changes), chemical (from water solutions upon their reaching saturation concentrations and as a result of exchange reactions), or biogenic (under the influence of biological activity).

Sylvinite: Evaporite rock comprising sylvite and halite.

Sylvite (KCl): Potassium chloride, common evaporite deposit mineral and an economically important potash source.

Suite: An aggregate of conformable rock beds with similar general properties that differentiate them from overlying or underlying rocks.

Techniko-Ekonomicheskie Obosnovie (TEO): Standard Russian format for characterising a mineral deposit.

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16.2 ABBREVIATIONS

% Percent ° degree (angle) °C degree Centigrade Ca Calcium CaSO4 Calcium sulphate ASX Australian Stock Exchange CIM Canadian Institute of Mining, Metallurgy and Petroleum CoV coefficient of variation CP Competent Person CRM certified reference material Cu copper € Euro EHS environment, health and safety ESIA Environment and Social Impact Assessment G&A general and administration GDR German Democratic Republic GKZ The State Commission for Mineral Reserves GMT Greenwich Mean Time g Gram(s) g/t gramme/tonne h Hour(s) ha Hectare ICP-OES inductively coupled plasma-optical emission spectrometry ID2 inverse distance weighting to the power of two ID3 inverse distance weighting to the power of three Insols Acid insoluble material K Potassium K2O Potassium oxide KCl Potassium chloride kg kilogramme km kilometre km2 square kilometre k m3 thousand cubic metres kt thousand tonnes kV kilovolt kW Kilowatt(s) kWh Kilowatt hour(s) kWh/t Kilowatt hours per tonne L Litre(s) LOM life-of-mine µm micron mm millimetre m metre m2 square metre m3 cubic metre Ma Millions of years ago Mg Magnesium MgCl2 Magnesium chloride

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MgSO4 Magnesium sulphate Micon Micon International Co Limited Mt million tonnes Mt/a million tonnes per year MW megawatt Na Sodium NaCl Sodium chloride N/A Not applicable NN nearest neighbour oz ounce QA/QC Quality assurance/quality control QP Qualified Person Report technical report ROM Run of Mine s Second t tonne t/a tonnes/year t/d tonnes/day t/h tonnes/hour TEO Techniko-Ekonomicheskie Obosnovie US$ United States dollar V Volt(s) VAT Value Added Tax Wt% Weight percent XRF X-ray fluorescence XRD X-ray diffraction y Year(s)

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17.0 APPENDIX 1

JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data (Criteria in this section apply to all succeeding sections.)

Criteria JORC Code explanation Commentary The data base used to model Küllstedt included drillholes on Davenport's neighbouring Mühlhausen-Keula sub-area licence. All samples were taken during historical drilling campaigns predominantly Nature and quality of sampling (e.g. cut channels, carried out during the 1960's and 1970's with random chips, or specific specialised industry five holes drilled in the 1980’s and an standard measurement tools appropriate to the additional three drill holes drilled between minerals under investigation, such as down hole 1906-1910 some of which were stopped gamma sondes, or handheld XRF instruments, etc). before intersecting the z2KSt horizon. Sample These examples should not be taken as limiting the data exists from 10 hydrocarbon drill holes broad meaning of sampling. that were geophysically logged and 54 diamond core drill holes ('potash drill holes') that produced core samples. A total of 26 drill holes with sample data occur within the Küllstedt licence. Information about the calibration of the geophysical downhole tools is not available at present. Core recovery logs were kept for the Include reference to measures taken to ensure core drill holes, showing measurements taken sample retrospectivity and the appropriate by the drillers and geologists, which were calibration of any measurement tools or systems checked and corrected against the geophysical used. logs. Many of the historical drill hole logs include graphical logs that show the adjustment according to the geophysical Sampling logging depths. techniques All drill hole sampling was conducted according to the Kali-Instruktion (1956 and 1960). Core samples were taken from two of the hydrocarbon drill holes (E Kud 1/1966 and E Mh 25/1960). Core samples were taken from all 34 of the potash drill holes on Küllstedt. Where possible, the K O grade of Aspects of the determination of mineralisation that 2 the potash-bearing horizons was determined are Material to the Public Report. In cases where on an empirical base using the correlation with ‘industry standard’ work has been done this would the downhole natural gamma log. Samples be relatively simple (e.g. ‘reverse circulation were taken across all potash-bearing horizons drilling was used to obtain 1 m samples from which and the total sampled length represents the 3 kg was pulverised to produce a 30 g charge for total thickness of the potash-bearing horizon fire assay’). In other cases more explanation may of the z2KSt. Specific details regarding be required, such as where there is coarse gold that sample length have not yet been translated has inherent sampling problems. Unusual from the historical German exploration commodities or mineralisation types (e.g. reports, however since drilling on Küllstedt submarine nodules) may warrant disclosure of was simultaneous to that on Mühlhausen and detailed information. conducted by the same company and geologists, Micon has assumed sampling methods to be if not the same, then very similar to Mühlhausen. On Mühlhausen in the potash drill holes, core sample thickness ranges from 0.18 m to 4.00 m. Over inhomogeneous potash horizons where

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Criteria JORC Code explanation Commentary interlayers of potential waste were included, the minimum sample thickness was 0.5 m and the maximum was 5 m. Samples were crushed to 2 mm in a jaw crusher and a representative sample was milled and crushed further to 50 μm which was assayed by Induced Coupled Plasma Optical Omission Spectrometry (ICP- OES) for all elements except NaCl which was tested using potentiometric titration. X-Ray Diffraction (XRD) was used for mineralogy and thin sections were carried out at a local university. The type of drilling techniques used has not yet been translated from the historic German exploration reports, however since drilling on Küllstedt was simultaneous to that on Mühlhausen and conducted by the same company and geologists, Micon has assumed drilling methods to be if not the same, then very similar to Mühlhausen. On Mühlhausen cored potash drill holes were drilled using a Type C 1500 rig in the 1960s, and T50A and Drill type (e.g. core, reverse circulation, open-hole Sif 1200 rigs in the 1980s producing core with hammer, rotary air blast, auger, Bangka, sonic, diameters of 108 mm and 65 mm respectively. Drilling etc) and details (e.g. core diameter, triple or The hydrocarbon drill holes were drilled using techniques standard tube, depth of diamond tails, face- T-50, BU-40 and BU-75 rigs producing core sampling bit or other type, whether core is oriented with diameters of 114 mm, 118 mm, 143 mm and if so, by what method, etc). and 193 mm. All drill holes were drilled vertically with minor deviations in some drill holes at depth. Drilling from surface used tricone bits through the overburden and upper stratigraphy, switching to core through the potash-bearing horizons to the end of hole (EOH). Clay mud was used as the drilling fluid through the overburden sections in potash drill holes and a NaCl-saturated drilling fluid was used through the salt horizons. Casing was used through the overburden. It is apparent that the core recovery was monitored by the project geologist on site at the time of drilling and this recorded in the Method of recording and assessing core and chip historical logs. Lithological and stratigraphic sample recoveries and results assessed. intersections were subsequently corrected using the geophysical logging results, and the adjustments can be seen on the graphical historical logs. Drill sample Information about maximising sample Measures taken to maximise sample recovery and recovery recovery is not currently known, but may be ensure representative nature of the samples. available in historical German documents. Sampling was conducted according to the stratigraphic interpretation of the core using Whether a relationship exists between sample the downhole geophysical logging as a depth recovery and grade and whether sample bias may guide. Axial drilling into the drill core with a have occurred due to preferential loss/gain of spiral drill was conducted to contain fine/coarse material. pulverised material for chemical and mineralogical analysis.

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Criteria JORC Code explanation Commentary Core samples were geologically logged in Whether core and chip samples have been detail and both full and summary drill hole geologically and geotechnically logged to a level of logs were produced in both written and detail to support appropriate Mineral Resource graphical format. Information recorded on the estimation, mining studies and metallurgical drill hole logs included lithological depths, studies. stratigraphic interpretation, and sampling information. Full drill hole logs include a detailed lithological description of the entire drill hole, which was also summarised and graphically Logging portrayed alongside the downhole geophysical logging and assay results. Logs are available Whether logging is qualitative or quantitative in for 45 drill holes whilst information regarding nature. Core (or costean, channel, etc) mineralogy and stratigraphy were read of photography. historical maps for 27 drill holes and geophysical logs are available for 44 drill holes, mostly made up of calliper and natural gamma. Geophysical logging speed is recorded as 2.5 m/min and 7 m/min. The total length and percentage of the relevant The complete core intersection was logged on intersections logged. a millimetre scale. Exact details regarding the sample preparation are not known but as above assumed to be the If core, whether cut or sawn and whether quarter, same as those used on Mühlhausen. Axial half or all core taken. drilling into the drill core with a spiral drill was conducted to obtain pulverised material for chemical and mineralogical analysis.

If non-core, whether riffled, tube sampled, rotary Not applicable. split, etc and whether sampled wet or dry.

For all sample types, the nature, quality and All drill hole sampling was conducted appropriateness of the sample preparation according to the Kali-Instruktion (1956 and Sub-sampling technique. 1960). techniques and sample Exact details regarding the sample preparation are not known but as above assumed to be the preparation Quality control procedures adopted for all sub- same as those used on Mühlhausen. Samples sampling stages to maximise representivity of were homogenised to ensure a representative samples. sample was assayed (see section above on sampling). Measures taken to ensure that the sampling is No field duplicates were taken. Thicknesses representative of the in situ material collected, of the potash-bearing horizons were confirmed including for instance results for field by the geophysical logging and the full length duplicate/second-half sampling. of the potash was sampled. Sample sizes are considered appropriate to the Whether sample sizes are appropriate to the grain material being sampled, which is bulk size of the material being sampled. mineralisation. Samples were sent to the VEB Kombinat Foundation of Potash Research Institute, now Quality of known as K-Utec AG Salt Technologies. assay data The nature, quality and appropriateness of the Chemical analysis was carried out according and assaying and laboratory procedures used and to the Kali 97-003/01 standard using laboratory whether the technique is considered partial or total. potassium flame photometry. Transmitted tests light investigation in bright field for thin sections was conducted.

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Criteria JORC Code explanation Commentary

For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in This information is not currently known, but determining the analysis including instrument make may be available in untranslated historical and model, reading times, calibrations factors German documents. applied and their derivation, etc.

Nature of quality control procedures adopted (e.g. Quality control was insured by technical standards, blanks, duplicates, external laboratory representatives from several state institutions checks) and whether acceptable levels of accuracy at the time who checked the sampling (i.e. lack of bias) and precision have been procedures and laboratory results. established. For all exploration work conducted post-1950 in the Davenport licence areas, quality assurance and quality control (QAQC) procedures were conducted by independent The verification of significant intersections by state institutions and quality checked by VEB either independent or alternative company Kombinat Kali company professionals. personnel. Detailed information regarding the cross-check analysis that is reported to have occurred on the Küllstedt drill hole data is not currently available to Micon and may exist in the archives in Germany. The use of twinned holes. No twin drilling has taken place. Original drill hole logs were recorded on Verification of paper, using a combination of handwritten and sampling and typed records. Copies of the drill hole logs assaying (including the summary logs and geophysical logging etc) were distributed to several Documentation of primary data, data entry institutions around Germany, including procedures, data verification, data storage BVVG, Ercosplan and K-Utec, many of which (physical and electronic) protocols. are still stored in the archives and available for review. The header for each drill hole lists has not been located, but those that are have been were reviewed in person by Micon and Davenport. No original drill core or sample pulps are still available. Assay data was not adjusted in any way. K2O grades for the hydrocarbon drill holes without Discuss any adjustment to assay data. core samples were interpreted from the natural gamma logs. Records of collar positions were obtained from drill hole logs and state archives. Details regarding collars surveys are not available and may be recorded in the historical German exploration reports. However, considering the Accuracy and quality of surveys used to locate drill drilling took place at the same time and by the Location of holes (collar and down-hole surveys), trenches, same people as Davenport's adjacent data points mine workings and other locations used in Mineral Mühlhausen property, Micon assumes the Resource estimation. collar positions were surveyed using a similar technique. On Mühlhausen drill hole collars were surveyed by the state surveyor subsequent to drilling and given with centimetre to decimetre accuracy.

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Criteria JORC Code explanation Commentary Drill hole coordinates were recorded in local a German coordinate system, which is a 3- degree Gaus Kruger zone 4 projection with a DHDN datum and an East Germany local Specification of the grid system used. transformation to 2 m (EPSG-Code 31, 468). For the purposes of this resource estimation the coordinates have been converted to UTM Zone 32 North. No topographic survey exists for the project Quality and adequacy of topographic control. area, which is flat lying to gently undulating. In the south of the Küllstedt licence area the average drill hole spacing is approximately ±1,500 m. In the north of the licence area the drill hole spacing is closer with an average of ±800 m, and several drill holes were drilled Data spacing for reporting of Exploration Results. <100 m apart. Three shafts were also sunk on the north of Küllstedt for the Hüpstedt- Beberstedt Mine in 1909-1910. Two of these, Data spacing Kal Sch and Kal SchBeb 1910 are spaced 84 and m apart and have a comparable intersection of distribution Carnallite. Whether the data spacing and distribution is The spacing of drill holes and samples is sufficient to establish the degree of geological and considered sufficient to imply geological and grade continuity appropriate for the Mineral grade continuity based on information Resource and Ore Reserve estimation procedure(s) obtained from historical drill holes and and classifications applied. samples. Samples were not composited prior to Whether sample compositing has been applied. laboratory test work. All drill holes are vertical with only minor Whether the orientation of sampling achieves deviations at depth as discussed above. The unbiased sampling of possible structures and the potash-bearing horizons are horizontal with Orientation of extent to which this is known, considering the only minor gentle undulations and the sample data in deposit type. thicknesses are considered to represent true relation to thickness without requiring correction. geological If the relationship between the drilling orientation The potash seam at Küllstedt is horizontal to structure and the orientation of key mineralised structures is sub-horizontal and all thicknesses from the considered to have introduced a sampling bias, this vertical drill holes have been treated as true should be assessed and reported if material. thickness.

No information is available about sample security, although it is noted that the historical drilling programmes were conducted with a Sample very high level of technical capability with The measures taken to ensure sample security. security experienced geologists and drillers. The laboratory used (K-Utec) is regarded as one of the most experienced salt technological facilities in the world. Original analytical results retained in the K- Utec archives were reviewed where possible and compared with historical records stored at Audits or The results of any audits or reviews of sampling the BVVG archives. No original core or reviews techniques and data. sample material is available; however, the available data is of sufficient quality to support an Inferred Resource.

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Section 2 Reporting of Exploration Results Criteria listed in the preceding section also apply to this section.)

Criteria JORC Code explanation Commentary

Davenport Resources Limited is a publicly Type, reference name/number, location and listed company on the Australian Securities ownership including agreements or material issues Exchange and holds the Küllstedt exploration with third parties such as joint ventures, licence through its wholly owned subsidiary partnerships, overriding royalties, native title East Exploration GmbH. The Küllstedt interests, historical sites, wilderness or national exploration licence is located within the South park and environmental settings. Harz Potash District of the Thuringian Basin, Germany. Mineral tenement and There are no known impediments to the land tenure security of the tenure that Davenport have status over the Küllstedt exploration licence area. The Küllstedt exploration licence was granted to East Exploration GmbH by the Thüringer The security of the tenure held at the time of Landesbergamt in compliance with Sections 6 reporting along with any known impediments to & 7 BBergG on 12th January 2015 and is obtaining a licence to operate in the area. valid until 12th January 2020. The exploration licence is limited to the exploration of mineral resources of rock salt, potash salts, magnesia and boron salts with accompanying salts. The area of the Küllstedt exploration licence is 241,501,552.5 m2. All of the exploration conducted on Küllstedt is historical. According to historical reports, exploration commenced within the Küllstedt exploration licence in 1890 for potash and natural gas, however, no data is currently available for this. The first drill hole information is from the Felsenfest series of Exploration hole, that were drilled between 1906 - 1910 Acknowledgment and appraisal of exploration by done by other for the now closed Hüpstedt-Berestedt Mines. other parties. parties Exploration recommenced in earnest in the 1960's and all of the exploration drilling was conducted by the former GDR. Various parties were involved, most of which combined to form VEB Kombinant after reunification. A total of 34 historical exploration drill holes have been drilled within the Küllstedt exploration licence area.

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Criteria JORC Code explanation Commentary The Küllstedt exploration licence is located in the Südharz (South Harz) Potash District in the north-western extent of the Thuringian sedimentary basin, which has been separated by the uplift of the northerly Harz Mountains from the South Permian Basin (SPB). The regional stratigraphy of the South Permian Basin is fairly well understood with a pre- Variscan basement (Upper Carboniferous and older rocks) and a transition horizon of Upper Carboniferous to Lower Permian lying beneath an expansive sequence of evaporite rocks of the Upper Permian succession. These evaporite deposits are assigned to the Zechstein Group, and host the target potash mineralisation of the South Harz Potash District which occurs on the Küllstedt exploration licence. The potash-bearing target Zechstein Group consists of seven depositional cycles with the potash mineralisation of the South Harz Potash District hosted within the second cycle, the Staßfurt Formation (Z2). The Z2 is further sub-divided into horizons, of which the Kaliflöz Staßfurt (z2KSt) hosts potentially economic potash. The z2KSt is split into a Deposit type, geological setting and style of Hanging Wall Group that has 11 to 19 Geology mineralisation. horizons of finely layered potassium salts and a Footwall Group that has 1 to 10 coarsely layered potassium salts and thick halite layers. Drill holes to the north and south of the licence did not intersect the z2KSt and a devoid of drill holes to the west of the licence area along with historical hand drawn maps, imply that Küllstedt exploration licence appears to occur on the edge of the potash basin in this area. Figure XX indicates the interpreted extents of the potash basin on Küllstedt. The z2KSt is present in 30 drill holes on Küllstedt with an average thickness of 12.94 m. The mineralogy on Küllstedt is varied with development of carnallite, sylvite, kieserite and polyhalite. The sylvite/kieserite/polyhalite seam has been modelled as one horizon, called the Hartsalz and the carnallite seam has been modelled separately. The potash seams have been affected by faulting that has resulted in three major fault blocks upthrown towards the north with average displacements of ±120 m. These major faults follow the regional trend with a west north west orientation. In addition, two faults striking north east have also been identified with displacements of ±90 m.

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Criteria JORC Code explanation Commentary

A summary of all information material to the The drill hole database for Küllstedt is made Drill hole understanding of the exploration results including a up of 73 historical drill holes. A table showing Information tabulation of the following information for all the key drill hole information can be found in Material drill holes: Section 7.4 of this report.

The chemical analysis for Küllstedt was In reporting Exploration Results, weighting composited according to stratigraphy (z2KSt). averaging techniques, maximum and/or minimum A minimum cut-off grade of 5% K2O was grade truncations (e.g. cutting of high grades) and applied to delineate the limits of the potash- cut-off grades are usually Material and should be bearing horizon within the z2KSt. A weighted stated. average K2O grade for each drill hole was calculated against sample length.

Data aggregation Where aggregate intercepts incorporate short methods lengths of high grade results and longer lengths of Waste was included in the grade composite low grade results, the procedure used for such with a 2 m maximum total length of waste and aggregation should be stated and some typical a 1 m maximum consecutive length of waste examples of such aggregations should be shown in allowed. detail.

The assumptions used for any reporting of metal No metal equivalents were used or reported. equivalent values should be clearly stated.

These relationships are particularly important in the reporting of Exploration Results.

Relationships If the geometry of the mineralisation with respect to All drill holes are vertical with only minor between the drill hole angle is known, its nature should be deviations at depth as discussed above. The mineralisation reported. potash-bearing horizons are horizontal with widths and only minor gentle undulations and the sample intercept thicknesses are considered to represent true lengths thickness without requiring correction. If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. ‘down hole length, true width not known’).

Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported. These should Diagrams Diagrams included in the body of the report. include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

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Criteria JORC Code explanation Commentary

Where comprehensive reporting of all Exploration Results is not practicable, representative reporting All available drill hole information was used. Balanced of both low and high grades and/or widths should Küllstedt has been reported as a mineral reporting be practiced to avoid misleading reporting of resource, see Section 3 of Table 1. Exploration Results.

As well as the potash and hydrocarbon drill Other exploration data, if meaningful and material, hole information described above seismic should be reported including (but not limited to): studies were also been conducted by the VEB Other geological observations; geophysical survey Geophysik on Küllstedt between July 1975 substantive results; geochemical survey results; bulk samples – and March 1976. A report dated 28th October exploration size and method of treatment; metallurgical test 1976 contains the results of the survey that data results; bulk density, groundwater, geotechnical focused on the area tectonics and thickness and rock characteristics; potential deleterious or changes in the first two Zechstein cycles. The contaminating substances. report is not available to Micon at this time.

Future work should include twin drilling to confirm the historical grades, possibly accompanied by a seismic survey or a detailed The nature and scale of planned further work (e.g. review of the results of the historical seismic tests for lateral extensions or depth extensions or survey. Translation of all historical reports large-scale step-out drilling). would also be beneficial. Further analysis of the sulphate distribution could be conducted to understand potential ore types and processing Further work option. Although there is potential to increase the resource area by drilling in the gap to the west Diagrams clearly highlighting the areas of possible of the licence area, at this stage of the project extensions, including the main geological the focus is on increasing confidence and not interpretations and future drilling areas, provided area of the resource. Positions of suggested this information is not commercially sensitive. holes to be twinned are shown on Figure Formatted: Font: 10 pt 10.5Figure 10.5.

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Section 3 Estimation and Reporting of Mineral Resources (Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

Criteria JORC Code explanation Commentary The database used to create the geological model and mineral resource estimation was created from manual data entry of hard copy historical drill hole logs and exploration records. The Excel databases for Davenport's Measures taken to ensure that data has not been other licence areas, that were drilled at the corrupted by, for example, transcription or keying same time and by the same companies as errors, between its initial collection and its use for Küllstedt, were cross-checked against the Mineral Resource estimation purposes. original drill hole logs in the BVVG and K- Utec archives in Berlin and Sondershausen Database respectively. This process will be completed integrity for Küllstedt next time the CP visits the project later in the year. When the Excel database is imported into Micromine® modelling software, a data validation exercise is run that includes checking for missing samples, mis-matching Data validation procedures used. samples and stratigraphy intersections, duplicate records and overlapping from-to depths. In addition, and where possible the sum of chemical compounds was checked to ensure a total of 100%. The Competent Person visited Küllstedt on two occasions and incorporated visits to the archives of BVVG and K-Utec and the Comment on any site visits undertaken by the surrounding area where there are currently Competent Person and the outcome of those visits. operating and now dormant Potash mines. Site visits The dates for the two site visits are 12th -15th February 2018 and 6th - 8th March 2018.

If no site visits have been undertaken indicate why Not applicable. this is the case.

The confidence in the data used and geological interpretation of the potash deposit is high due to the strict guidelines followed during the historical exploration and adherence to the Kali-Instruktion. In addition, Confidence in (or conversely, the uncertainty of) the geological interpretation was checked by the geological interpretation of the mineral deposit. several geologists during both the 1960s and 1970s drilling campaigns. Lastly, the depths recorded in the lithological descriptions and Geological geophysical logs correspond, providing interpretation confidence in the continuity of the potash horizons and grade. Since there are no records yet in English about some of the sampling protocols and sample security, assumptions have been made that this Nature of the data used and of any assumptions was done to a high standard based on the made. historical records and information known about the other South Hartz licence areas that were explored during the same period by the same companies.

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Criteria JORC Code explanation Commentary In 1980, the VEB Geologie Forschung und Erkundung estimated a resource that covered a portion of the current Küllstedt exploration licence area, though the exact area is not The effect, if any, of alternative interpretations on known to Micon. The estimate reported a Mineral Resource estimation. carnallite resource and a glaserite resource. Although Micon has not reported a separate glaserite resource, the mineral is included the current Hartsalz seam. The mineralisation is predominately confined The use of geology in guiding and controlling to the z2KSt horizon and this was used as the Mineral Resource estimation. initial basis for geological modelling prior to applying cut-off grades. Variation in mineralogy across Küllstedt exist due to the secondary nature of the Upper The factors affecting continuity both of grade and Hartsalz seam and precipitation of various geology. sulphate salts. Four fault blocks have been defined based on depths of the z2KSt. The economic potash deposit covers the eastern side of the Küllstedt exploration licence. Based on interpretation of drill hole data and historical plan maps, it appears that the z2KSt does not occur to the north, south or west of Küllstedt and the licence represents the western limit of the potash-bearing basin. The extent and variability of the Mineral Resource The mineral resource has been restricted by expressed as length (along strike or otherwise), Dimensions total seam thickness (>1 m) and grade (>5% plan width, and depth below surface to the upper K O). The total mineral resource area for and lower limits of the Mineral Resource. 2 Küllstedt is approximately 106.7 km2 and the total Inferred Mineral Resources tonnage is 1,538 Mt. The minimum depth from surface to the roof of the economic potash is ±550 m in the north of the licence in fault block 3 and the maximum depth to the base of the potash seam is ±950 m in fault block 1. The geological model and resource estimation for Küllstedt was carried out in Micromine® modelling software, which is internationally recognised software used for modelling stratiform deposits. The chemical database was first composited according to stratigraphy. The composited database was assigned a tag column to indicate if a sample The nature and appropriateness of the estimation was Hartsalz or carnallite based on the technique(s) applied and key assumptions, mineralogical data. Where some chemical including treatment of extreme grade values, Estimation data was missing, a length weighted average domaining, interpolation parameters and maximum and modelling dummy value was assigned. No K O values distance of extrapolation from data points. If a 2 techniques had to be inferred in this way. This database computer assisted estimation method was chosen was composited using a minimum trigger of include a description of computer software and 5% K O, a maximum total length of waste of parameters used. 2 2 m and a 1 m maximum consecutive length of waste. Each drill hole was then examined and, based on stratigraphy, sequence of mineralised layers and K2O composite grades, the Hartsalz or carnallitite seams were further divided into the Upper Hartsalz seam, the Upper Carnallitite seam, the Lower Carnallite seam and the Lower Hartsalz seam. Based on

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Criteria JORC Code explanation Commentary elevation of the z2KSt, four main fault blocks were defined. The Lower seams only occur in fault block 1. Roof and floor grids were made for each of the four distinguished seams for each of the four fault blocks. The minimum and maximum X and Y origins used for gridding were 581494 (min X), 5668287 (min Y), 607408 (max X) and 5694912 (max Y). A grid cell size of 200 was used as this best fitted the data when correlated in cross- section. An inverse distance squared gridding algorithm was used, with a circular search area and a 5,000 m search radius to cover the distance between data points, one sector and maximum 1 point per sector. The roof and floor grids were converted to wireframes surfaces and then DTM surfaces for analysis. Lastly, two sets of solid wireframes were created for each of the Upper Hartsalz seam, the Upper Carnallitite seam, the Lower Carnallite seam and the Lower Hartsalz seam using the roof and floor surfaces from each fault block. The first set of wireframes represents the total extent of potash mineralisation based on complete set of data provided and the second set of wireframes represents the potash seam mineralisation cropped by the project licence boundary.

An historical Kali-Instruktion balanced C2 The availability of check estimates, previous reserve and a JORC Exploration Target exists estimates and/or mine production records and for Küllstedt. Both are comparable to the whether the Mineral Resource estimate takes current Inferred resource grade; however, the appropriate account of such data. resource tonnages differ due to different resource areas.

No assumptions have been made regarding by-products. There are a range of sulphate minerals in the Hartsalz seam but these have The assumptions made regarding recovery of by- not been individually estimated at this stage products. and should be done in conjunction with the neighbouring South Mühlhausen licence (Mühlhausen-Keula sub-area) to form one combined model.

Estimation of deleterious elements or other non- The insoluble content has been reported for grade variables of economic significance (e.g. purposes of metallurgical processing review sulphur for acid mine drainage characterisation). and is not considered to be significant.

In the case of block model interpolation, the block size in relation to the average sample spacing and A block model was not created. the search employed. No selective mining units were modelled. The Any assumptions behind modelling of selective resource was modelled according to Hartsalz mining units. and carnallite so the lower grade and higher- grade areas can be distinguished as well as

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Criteria JORC Code explanation Commentary variations in mineralogy, which will be important for processing.

Any assumptions about correlation between Not applicable. variables. The geological model was first constrained to the z2KSt horizon and then the mineralogical Description of how the geological interpretation data was used to split this into the upper/lower was used to control the resource estimates. Hartsalz and carnallitite seams. Four main fault blocks have been modelled individually. A minimum cut-off grade of 5% K2O was used as this is considered economic. No top Discussion of basis for using or not using grade cut was applied as the statistical analysis of cutting or capping. the data shows a normal distribution with no outlying populations. The composited assay data was compared The process of validation, the checking process against original assay data in cross section. used, the comparison of model data to drill hole Modelled wireframes were compared against data, and use of reconciliation data if available. original stratigraphic interpretations and geophysical logs. All correlated well.

Whether the tonnages are estimated on a dry basis Moisture or with natural moisture, and the method of Not applicable. determination of the moisture content.

A minimum cut-off grade of 5% K2O was Cut-off The basis of the adopted cut-off grade(s) or quality used as this is considered economic. In parameters parameters applied. addition, areas with a combined seam height of <1 m were excluded.

Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual Mining factors A minimum total seam height of 1 m was used economic extraction to consider potential mining or as a cut-off to take into account potential methods, but the assumptions made regarding assumptions mining height underground. mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

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Criteria JORC Code explanation Commentary

The basis for assumptions or predictions regarding Processing specifically for Küllstedt has not metallurgical amenability. It is always necessary as been considered at this stage. Insoluble part of the process of determining reasonable material has been modelled. The South Harz prospects for eventual economic extraction to area has historically been mined for decades Metallurgical consider potential metallurgical methods, but the and there is a lot of local knowledge about the factors or assumptions regarding metallurgical treatment metallurgical processes required. The next assumptions processes and parameters made when reporting phase of work for the project area will involve Mineral Resources may not always be rigorous. a more detailed understanding of the varied Where this is the case, this should be reported with mineralogy and possible processing an explanation of the basis of the metallurgical techniques. assumptions made.

Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining Mining will take place underground. reasonable prospects for eventual economic Assumptions regarding environmental factors extraction to consider the potential environmental have been based on the standards set by impacts of the mining and processing operation. surrounding potash mines in the area. Environmental While at this stage the determination of potential Davenport has the exclusive right to explore factors or environmental impacts, particularly for a and/or produce and to appropriate the assumptions Greenfields project, may not always be well respective mineral resources in a certain field. advanced, the status of early consideration of these However, all exploration and production potential environmental impacts should be activities require a mining permit reported. Where these aspects have not been (Betriebsplanzulassung) to be applied for with considered this should be reported with an the mining authority. explanation of the environmental assumptions made.

The bulk density for both the sylvinite and carnallitite seams was calculated by Ercosplan based on historical data. The bulk density for each sample was calculated based on the Whether assumed or determined. If assumed, the derived mineralogical composition. A basis for the assumptions. If determined, the weighted average was created for Hartsalz and method used, whether wet or dry, the frequency of carnallitite based on the samples. The average the measurements, the nature, size and density for Upper Hartsalz is 2.26 t/m3 and representativeness of the samples. 2.21 t/m3 for the Lower Hartsalz and 1.88 t/m3 for both Upper and Lower Carnallitite seams. Bulk density Densities reported by Ercosplan were used by Micon. The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and Not applicable. differences between rock and alteration zones within the deposit.

Discuss assumptions for bulk density estimates used Not applicable. in the evaluation process of the different materials.

The Küllstedt exploration licence area has been classified as an Inferred Resource based The basis for the classification of the Mineral on the quality and extents of the drilling Classification Resources into varying confidence categories. database that are sufficient to imply geological grade and continuity for eventual economic extraction.

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Criteria JORC Code explanation Commentary The location of Küllstedt is in an area that has been mining potash for decades. The newly Whether appropriate account has been taken of all created modelling database and the historical relevant factors (i.e. relative confidence in cross sections both show the seams to be tonnage/grade estimations, reliability of input data, consistent across the property. Whilst on site, confidence in continuity of geology and metal the Competent Person visited the area where values, quality, quantity and distribution of the the old Volkenroda ventilation shaft was sunk data). and other operating underground mines and solutions mines in the neighbouring area such as Bleicherode. The stated tonnage and grade are considered Whether the result appropriately reflects the an appropriate reflection of the Competent Competent Person’s view of the deposit. Persons view of the deposit. In 1980 an historical resource estimate was reported for an area that overlapped part of the current Küllstedt exploration licence held by East Exploration GmbH. The historical resource estimation was conducted by VEB Geological Research and Exploration. The Audits or The results of any audits or reviews of Mineral total C2 balanced resource was 331Mt with an reviews Resource estimates. average K2O grade of 14.2% that is made up of a Hartsalz K2O grade of 12.8% and a carnallite grade of 6.8% K2O. In 2015 Ercosplan estimated a JORC compliant Exploration Target with a total tonnage range of 4,055 – 5,141Mt at a K2O grade of 7.2 – 25%.

Where appropriate a statement of the relative accuracy and confidence level in the Mineral The stated resource tonnage and grades stated Resource estimate using an approach or procedure are considered based on the detailed drill hole deemed appropriate by the Competent Person. For database and 3D modelling. The use of the example, the application of statistical or inverse distance squared method is considered geostatistical procedures to quantify the relative appropriate for Küllstedt as the drill holes are accuracy of the resource within stated confidence relatively far apart, the mineralised zone is flat limits, or, if such an approach is not deemed lying, mineral zones are clearly defined and appropriate, a qualitative discussion of the factors grade is relatively consistent. Discussion of that could affect the relative accuracy and relative confidence of the estimate. accuracy/ confidence The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to This statement relates to the global Küllstedt technical and economic evaluation. Documentation resource. should include assumptions made and the procedures used.

These statements of relative accuracy and confidence of the estimate should be compared with Not applicable. production data, where available.

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Section 4 Estimation and Reporting of Ore Reserves (Criteria listed in section 1, and where relevant in sections 2 and 3, also apply to this section.)

Criteria JORC Code explanation Commentary Mineral Resource estimate for conversion to Ore Reserves Site visits Study status Cut-off parameters Mining factors or assumptions Metallurgical factors or assumptions Environmental Infrastructure Costs Not applicable for this report Revenue factors Market assessment Economic Social Other Classification Audits or reviews Discussion of relative accuracy/ confidence

Section 5 Estimation and Reporting of Diamonds and Other Gemstones (Criteria listed in other relevant sections also apply to this section. Additional guidelines are available in the ‘Guidelines for the Reporting of Diamond Exploration Results’ issued by the Diamond Exploration Best Practices Committee established by the Canadian Institute of Mining, Metallurgy and Petroleum.)

Criteria JORC Code explanation Commentary Indicator minerals Source of diamonds Sample collection Sample treatment Carat Sample grade Not applicable for this report Reporting of Exploration Results Grade estimation for reporting Mineral Resources and Ore Reserves Value estimation Security and integrity Classification

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