Patience Lake Member Saskatchewan - Operating (KL) Abstract S.M.R.I. Fall 2010 2a Prince Albert 3a Exploration-Stage Mineral Resource Estimation North Battleford Melfort Solution Mining Research Institute Fall 2010 Technical Conference Wainwright North Battleford Melfort Leipzig Germany 6-8 October 2010 Tisdale Battleford 30 a16 EXPLORATION STAGE MINERAL RESOURCE ESTIMATION OF a16 10 Of Potash Deposits: A Status Report ± POTASH DEPOSITS: A STATUS REPORT 1 50 1 2 0 a 0 6 Saskatoon Warman Saskatoon Stephen P. Halabura P.Geo. F.E.C. (Hon.) - Speaker 0 0 8 Saskatchewan 3 Swan River 30 PCS Cory www.northrim.sk.ca PCS Patience Lake Solution Mining Research Institute Fall 2010 Technical Conference PCS Patience Lake Lola M. Piche P.Geo., Earl Gebhardt P.Eng.,Tanner Soroka G.I.T. 70 50 [email protected] 6 60 Agrium Potash Mosaic Colonsay 0 PCS Cory PCS Allan North Rim Exploration Ltd., Saskatoon, Saskatchewan, Canada 0 7 Agrium Potash Mosaic Colonsay 5 0 PCS Lanigan 4 a 0 1 0 PCS Allan 3 16 1 0 6 0 a0 20 6 6 30 Abstract 6 0 6 0 40 4 0 0 Member Thickness 0 a 1 0 7 3 0 PCS Lanigan 2 Kindersley 3 4 6 1 16 0 0 (in metres) a 0 This paper presents a broad overview of the development of methods for 4 Potash Members in Saskatchewan Yorkton determining and reporting mineral resources and reserves for greenfield 3 1 0 Nipawin conventional and solution mining potash projects arising in Saskatchewan during 50 0 Lloydminster a5 Carrot River 2 a2 5 the recent global potash boom. In Saskatchewan, the renewed potash activity Melville 6 Lashburn Shellbrook Yorkton began in 2005 after a hiatus of almost 35 years. This “lost generation” required 0 6 5 0 25 50 75 km 2 4 0 0 0 Maidstone exploration specialists to return to first principles in their task of assessing new Mosaic Potash K1 1 2 Prince Albert 5 a Arborfield conventional and solution mining potash prospects. 0 Mosaic Potash K2 Regina 4 5 0 Projection: UTM Zone 13N, WGS84 Melville 0 PCS Rocanville Saskatchewan Canadian technology, mining practices, and financial reporting standards 1 30 2 Swift Current a 10 0 Wainwright Birch Hills changed dramatically from those in effect during the previous exploration and a14 Moose Jaw Mosaic Belle Plaine 6 development period of 1960 to 1971. All of Saskatchewan’s present advanced a NU Mosaic Potash K1 Star City YT Hudson Bay CR 837 Outline greenfields potash development projects, for instance, BHP Billiton’s Conventional Mining Blaine Lake S a s k a t c h e w a n Tisdale NT Mosaic Potash K2 Virden (Conceptual) Battleford Duck Lake a41 Melfort C A N A D A conventional mining Jansen Project and Potash One’s solution mining Legacy Hafford 0 Regina Project, originated from pre-existing 1960’s advanced exploration projects. For 9 40 2 2 a a PCS Rocanville Weyburn a NL the Jansen Project, this involved the exploration work of Kerr McGee Industries a16 Rosthern Swift Current 1 Assiniboia Waldheim Wakaw a Ltd. and for the Legacy Project, the work of Imperial Oil Ltd. These exploration Porcupine Plain Moose Jaw Mosaic Belle Plaine 23BC AB SK QC a1 a MB programs have historical exploration data as their foundation. In such cases, the 0 50 100 150 kms 3 Map Area 1 Hague PE challenge is to evaluate the vintage dataset with all its limitations and restrictions 0 Unity Calgary NB Radisson Cudworth Vancouver Saskatoon Winnipeg NS Estevan Provost 14 0 50 100 kms from the viewpoint of current technical, design, and financial requirements. a 2 ON Ottawa Macklin 1 Scott a Vonda Naicam Langham Osler Toronto One of the critical challenges faced by Saskatchewan potash exploration and Dalmeny Warman Aberdeen development firms was the requirement to undertake exploration activities that Martensville Rose Valley U S A the National Instrument 43-101 Resources and Reserves Reporting Standards. Bruno a 1 0 Humboldt The NI43-101 Standard defines “Resources” in terms of three categories – Saskatoon Kelvington Luseland Asquith Swan River Inferred, Indicated and Measured. The Inferred Mineral Resource can be 5 Watson 49 9 3 PCS Patience Lake a a A l b e r t a Biggar PCS Cory a estimated and reasonably assumed but not verified in terms of geology, grade Conventional Mining continuity, and assay verification, and the Indicated Mineral Resource can be Kerrobert No Current a Leroy 5 estimated with a level of confidence sufficient to allow the appropriate application Belle Plaine Member Agrium Potash 1 Colonsay a M a n i t o b a Saskatchewan - Advanced (KP) 1 (Development) Delisle Wadena of technical and economic parameters, so as to support mine planning and 2b Prince Albert Mining Method PCS Allan Allan Mosaic Colonsay Outline of Potash Dispositions 3b evaluation of the economic viability of the deposit. In many cases, vintage drill a31 Dundurn PCS Lanigan (CR 837) North Battleford Melfort hole and seismic data was insufficient to support a resource estimate with a confidence level greater than the “Indicated” category; therefore the question Wainwright North Battleford Melfort Wynyard Tisdale a16 facing exploration geologists and engineers was “what then IS the proper Battleford Watrous Canora exploration dataset so as to obtain proper confidenc e in the deposit’s viability so Zealandia Hanley Foam Lake a16 1 Kamsack as to proceed with advanced mine planning?” 10 a6 Rosetown 1 Kindersley 1 a7 a ± Nokomis For Saskatchewan deposits, it is important to realize that the mineral estimation Saskatoon Warman40 Outlook 15 Oyen a9 a procedure is essentially subtractive –from the initial volume calculation, a set of PCS Cory 0 PCS Patience Lake Swan River 5 Humboldt Raymore Saskatoon Saskatchewan Agrium Potash deductions is tallied to arrive at the final resource tonnages. The process of 9 PCS Patience Lake 1 Springside 5 Mosaic Colonsay a PCS Cory 0 a570 Imperial KP 308 generating potash mineral resource estimates can be broadly summarized in the 10 Eatonia Govan KP 290 0 40 Roblin Agrium Potash Mosaic Colonsay following ten sequential steps used to construct a “Mineral Resource Estimation PCS Allan 4 PCS Lanigan 60 Davidson a PCS Allan 1 0 3 16 Elrose 44 Yorkton 5 Model”: 5 0 50 1 a a 0 Eston a 0 2 KP 286 5 Member Thickness Ituna a a PCS Lanigan KP 285 5 1 0 0 8 5 1 16 Kindersley 3 (in metres) KPa 360 a) Determination of total area of potential potash resource within 3 0 40 30 30 Yorkton Strasbourg Saltcoats KP 287 permit/tenement area; 2 Craik 0 0 2 0 4 b) Subtraction of land area not controlled by the permit / tenement 0 2 a 1 50 Leader No Current Mining Method Bredenbury holder(s); Southey Cupar Churchbridge 0 c) Emplacement within estimation model of drill holes that provide required Melville 3 Kyle Melville Langenburg Yorkton 30 a32 Conventional Mining a data, and selectio n of “radius of influence” (“ROI”) for required calculation Mosaic Potash K1 8 Russell Balcarres Central Butte Regina Beach (Development) levels (e.g. inferred versus indicated); 4 Mosaic Potash K2 Fort Qu'Appelle a 0 1 Fenwood 0 Burstall Lemberg 6 5 North Block d) Calculation of areas contained within drill hole ROIs, net of portions of Regina Mosaic Potash K1 30 PCS Rocanville Solution Mining Esterhazy 1 30 Cabri Mosaic Potash K2 South Block ROIs falling within lands not controlled by permit / tenement holder(s); Swift Current a Lumsden Melville Moose Jaw Mosaic Belle Plaine 20 (Conceptual) Example Township e) Determi nation of mineral estimation calculation interval, i.e. the base and CR 837 Outline Mosaic Potash K1 top of zone for which an estimate is to be generated , using selected drill 10 Shown in Procedure 4b a KP 289 Mosaic Potash K2 hole data (e.g. borehole geophysical logs, assay records, etc.); Balgonie Regina Pilot Butte Qu'Appelle Sintaluta PCS Rocanville Birtle KP 335 Virden Herbert f) Calculation of gross mineral volume, using spec ific gravities determined 1 Morse Mosaic Belle Plaine Wolseley Grenfell Rocanville 0 Broadview Mosaic Belle Plaine PCS Rocanville by mineral composition of potash bed(s); Weyburn 3 4 0 0 Solution Mining Whitewood Swift Current KP 336 KP 337 7 1 g) Subtraction of volume affected by solution collapse, unfavorable 2 3 Moose Jaw a Assiniboia 0 a (Development) Wapella Moose Jaw Regina mineralogy (i.e. carnallitite as opposed to sylvinite), and/or other mining 30 0 50 100 150 kms a1 Swift Current factors (e.g. depth of beds); Rouleau Moosomin h) Subtraction of volume left as pillar support material as determined by Estevan Gull Lake 0 50 100 kms 30 Kipling Fleming mining extraction ratio; 30 Francis a1 Irvine 4 i) Subtraction of any other required pillar material (e.g. property/boundary a a1 pillars, pillars surrounding individual drill holes, etc.). Maple Creek Milestone Mossbank Wawota j) Net remaining tonnage, expressed as “tonnes KCl” or “tonnes K2O” depending upon client requirements. Gravelbourg a33 Yellow Grass A review of public record reports of resource estimates show s that typical ROI for Ponteix Legend the Inferred category ranges from 1.5km up to 8.05km while the Indicated Lafleche Esterhazy Member ! Solution Mining Saskatchewan - Exploratory (KP) Shaunavon Drill Hole 7 Stoughton 4 category is more consistent at 1.6 km and the Measured at 0.8km (half the a 2c Prince Albert Assiniboia a13 (Conceptual) Potash Mine Redvers 3c Indicated resource) . The decrease in ROI reflects the requirement for higher Weyburn a2 Eastend Ogema levels of confidence in deposit continuity required for the Indicated and Measured Areal Extent of the Potash Members North Battleford Melfort categories.