This was in Jan-Feb 2011 Resource Stocks, enjoy it!Republic of...

This was in Jan-Feb 2011 Resource Stocks, enjoy it!


Republic of the Congo
Elemental Minerals

?Technically, our project is relatively straightforward
and when you are dealing with an irreplaceable
product and a supply-demand imbalance, it can be a
good space to be in the market.?
IaIn Macpherson
elemental minerals push to get potash
mine off the ground

A supply-demand imbalance and a window of opportunity have become the drivers for junior explorer
Elemental Minerals to fast-track its flagship Sintoukola potash project.
A
series of historic
exploration results over
elemental?s sintoukola
exploration lease in the
republic of the congo have given
the company a serious opportunity to
become a substantial potash supplier
by 2015.
inadvertently discovered by oil
explorers and studied in more detail
by subsequent parties during the
1960s and 1970s, the leases in the
congolese Basin have been shown
to contain several sylvinite and
caranallite deposits which could
indicate a potash resource large
enough to fill a hole in the market
when current supplies run out.
?the congolese Basin has been
shown to have substantial potash
mineralisation in the form of both
sylvinite and carnallite, which has the
potential to see the congo develop
as a major potash producer in the
medium term,? elemental managing
director iain Macpherson said.
?it is this potential, and the bonus
of a strengthening commodity price,
which compelled us to formally fast-
track the sintoukola project shortly
after we were awarded the exploration
licence for it in 2009.?
the company?s work has since
become a race against time to develop
a project by 2015 which is capable
of meeting the needs of nations
like Brazil, china and india whose
agricultural sectors demand a secure
and stable supply of good quality
potash.
?Potash is irreplaceable as a
mineral fertiliser,? Macpherson said.
?farmers can avoid not dosing
their soil every year but ultimately
there will be significant yield impacts
as crops need potassium to grow.
?Analysts are predicting a 3.5 to
4 per cent compound annual growth
rate in demand for potash over the
foreseeable future and this will create
a supply-demand imbalance window.
?our strategy is to ensure that
sintoukola is in production for that
window.?
elemental?s race is undoubtedly
also against the world?s potash
juniors, all of whom will be vying for
a valuable spot in a vacant market.
But with a substantially de-risked
project under its belt due to earlier
exploration activity, Macpherson
believes his company has the upper
hand.
?the groundwork has already
been done and we will deliver a Jorc
code-compliant maiden resource
estimate in early 2011, which should
give us a head start over other
players,? he said.
the sintoukola project covers an
area of 1400 square kilometres over
the congolese coastal basin in the
republic of the congo.
it is 55km from the port of
Pointe-Noire and about 50km north
of the holle Mine, a historic potash
producer which yielded 7.4 million
tonnes of sylvinite grading 27.7%
potassium oxide (K2o).
Based on historical drilling,
Elemental has identified an initial
exploration target at the Kola site on
the sintoukola licence of 170-300Mt
at grades of 23.1-23.5% K2o.
An $8 million exploration program
kicked off earlier this year over the
high-priority, 25 square kilometre
Kola target to confirm the historical
mineralisation, with the next phase
due to test the potential for much
larger scale sylvinite and carnallite
mineralisation across the remainder
of the sintoukola licence.
Results to date have confirmed
historical results at Kola, with
shallow sylvinite zone intersections of
4.17m at 24.37% K2o from 273m and
3.83m at 20.91% K2o from 281m.
With a targeted start-up production
rate of 600,000t per annum of potash
ramping up to 1.2Mt in the first few
years over an initial 25-year mine
life, elemental?s priority now is to
prove confidence in the historic work
with a view to creating a new world
production base for potash in the
congo.
?We have been able to target what
we believe is the most attractive portion
of our acreage, which has allowed us to
adopt an intensive program of activity
with very little early exploration risk,?
Macpherson said.
With its location close to west-
central Africa?s largest port and
cost-effective sources of labour and
utilities at hand, sintoukola has the
makings of a cheaper production hub.
?Based on our location alone,
Sintoukola is on
track to become a
significant source
of potash in 2015
we estimate a shipping cost saving of
around $US25 a tonne for potash
sales into the Brazilian market
compared to what Canada can offer,?
Macpherson said.
?Our project is relatively shallow
at 270 metres underground, we
have good grades compared to our
competitors, and we have the distinct
advantage of logistics and transport to
the markets ? those are factors [that]
will help us secure a position as a
lower quartile-cost producer.?
Sintoukola will require a hefty
capital injection to bring it into
production and Macpherson and his
team are targeting larger institutional
investors for the two capital raisings
required to move the project into
the feasibility stage next year and
construction in 2013.
?This is an expensive venture
and we have made quite deliberate
and early moves into the London,
Canadian and South African markets
with a view to attracting the levels
of investment we will need to
successfully fast-track,? he said.
?Potash production typically
involves big volumes and high capital
costs.
?Technically, our project is
relatively straightforward and when
you are dealing with an irreplaceable
product and a supply-demand
imbalance, it can be a good space to
be in the market.?
Timing is of the essence and it is
for this reason that the company has
opted to chase the sylvinite resource
first.
?Sylvinite is the potash
mineralisation of choice for the BHPs
of the world, so we are very fortunate
to have the historical borehole logs
and assays for it which will allow us
to get into our feasibility study fast,?
he said.
?There will be a definite upside
from the carnallite because it is
massive, although deeper, but the
sylvinite is priority one because we
have the information at hand
which makes it a less risky option to
kick off with.
?We have already commenced
some of the long-lead work on the
feasibility study as if we are going
forward with it.?
Fast-tracking is an inherently risky
business in any commodity, according
to Macpherson.
?A successful fast-tracking is not
as clear-cut as your standard project
timeline,? he said.
?It can be challenging because you
are taking risks pretty much all the
way and you need to know how to
manage those appropriately.
?We are currently in the
confirmatory exploration phase,
which involves verifying the
historical data and saves us two to
three years on a typical greenfield
exploration program.
?We will commence feasibility
in January and move to a seamless
bankable feasibility study which
means no formal and lengthy decision
breaks between the typical pre-
feasibility and bankable stages.
?Because we have a very good
understanding of the mineralisation,
we will also be able to start our
metallurgical testwork earlier than
normal, which is an advantage as it is
one of the longer-lead items.
?It is a different approach to
project development, which will yield
dramatic results if we get it right.?
The biggest risk to Elemental?s
fortunes will be the prospect of
missing that window of opportunity.
?We have spent a lot of time and
effort in the last 12 months sensitising
the market to our project so we
would be very discouraged if another
company assumed our spot in the
market,? he said.
?The experts believe the
window will open up in the next six
or seven years and we are hoping
to get into production within four
which should put us well ahead of the
competition.? ? Imelda Cotton