TNMM Iron Ore Joint Venture | NAMIBIA

Historical Estimate

A Historical Estimate of mineral resources at Naruchas, dated October 2013, was completed by Sheron Kaviua, an independent consultant to TNMM, in compliance with the SAMREC Code and is summarised in Table 1 below. The estimate is defined as a Historical Estimate by virtue of being prepared before Katoro entering into the agreement to acquire an effective interest in the property containing the Naruchas deposit.

Table 1: Mineral Resource statement as of October 2013 for the iron ore project on the Naruchas farm (Kaviuola, S. 2013.).

The source and date for the Historical Estimate is a report titled: ‘Mineral Resource and Ore Reserve Statement’ compiled by S. Kaviua for Trans-Namibian Mining and Minerals (Pty) Ltd and dated 31 October 2013.

Katoro has not independently verified the Historical Estimate and no Competent Person (as defined in the SAMREC Code, 2016 Edition) has done sufficient work to classify this as a ‘current Mineral Resource’ and therefore Katoro is not treating the Historical Estimate as a current Mineral Resource Estimate.

Further, the Historical Estimate was classified according to the SAMREC Code in place at the time it was produced, being the 2007 Edition as amended in 2009. This code has been superseded by the SAMREC Code, 2016 Edition, and the reader should note that the most recently published SAMREC Code is more rigorous in its estimation and classification protocols than the previous codes, and the Historical Estimate should be re-evaluated in terms of these later codes.

Consequently, no reliance can be placed on the Historical Estimate as no assurance can be given that any particular grade, stripping ratio or grade of minerals will in fact be realised or that any current Mineral Resource Estimate or Ore Reserve will ever be delineated or that planned future exploration and study programs will result in profitable commercial mining operations.

The Historical Estimate was calculated based on the technical programme and analysis summarised below.

High resolution airborne magnetic data was purchased from the Ministry of Mine and Energy to identify magnetic iron formations and were utilised to identify target areas, especially where mapping has confirmed outcropping iron formations. Additionally, ground magnetic surveys were carried out and all survey lines together with anomalous readings, were plotted on topographical maps and used for selecting sites for Reverse Circulation (‘RC’) drilling.

A total of 25 RC boreholes were drilled on two separate drilling campaigns in 2013 by hard rock drilling on farm Naruchas. The boreholes were drilled on an irregular grid, with the drills pacing ranging from 20m in the north-east to 500m in the southeastern part of Naruchas. A total of 1,307m was drilled at an average depth of 52.2m. The aim of the drilling was to test the continuity of the iron ore formations down depth for estimation purposes and to understand their occurrence. At the drill site, 1m sample intervals were collected from the cyclone and then riffle split to obtain two samples A and B, each weighing 250g. Drill chips were also collected and placed into chip trays for geological logging.

All samples taken during RC drilling campaigns were assayed using NITON handheld XRF spectrometer for screening only. Samples exceeding 25% Fe (32% Fe₂O₃ equivalent) were selected and sent for analysis at Acts laboratories. A total of 50 drill chip samples were selected and submitted as well. The samples were checked, verified, then crushed using a jaw crusher before splitting to obtain representative samples. The representative samples were then mill pulverised prior to analysis via wavelength dispersive X-Ray Fluorescence Spectroscopy. Certified reference materials, duplicates and blanks were incorporated in the testing procedure to ensure the integrity of results.

No samples were analysed for specific gravity (‘sg;) from farm Naruchas, with an assumed sg of 4.5t/m³ used for the mineralised iron formation and 3.0t/m³ for unmineralised lithologies.

Resource estimation was completed using MineSight software and followed a relatively typical process.  Lithological models were developed for carbonates, quartzites, diamictites, alluvial sands and the mineralised iron formation. These were based on surface mapping, grab sampling and drilling data, with structural planes also modelled. Iron grades were observed to drop sharply at lithological boundaries, and the cut-off could be described as geological; in practice, a 15% Fe cut-off was applied in combination with minimum widths for the iron formation of 2m. Any iron formation not meeting these criteria was reclassified as diamictite. 

The block models were built using a 100m x 100m x 25m blocks (L x W x H), a tighter spacing in general than the drilling, which was on average at 250m spacings. The block model was subsequently coded using the iron formation lithological model and IDW2 interpolation, with a primary search ellipse of 2,000 x 2,000 x 100m for the x, y and z search directions respectively. 

The classifications of the Historical Estimate were done on the following basis:

• • Inferred: mapped, sampled and drilled on a drill spacing of 500m – 1,000m and a depth of -75 to -100 levels
• • Indicated: mapped, sampled and drilled on a drill spacing of 250m – 500m and a depth of -50 to -75 levels
• • Measured: mapped, sampled and drilled on a drill spacing of 50m – 250m and a depth of 0 to -50 levels

There are no more recent estimates or data available to the Company’s knowledge.

In addition to the Naruchas iron ore, the Kanubeb Wes, Kanubeb Oos and Kanubeb farms are in early phases of exploration for copper deposits.

Work Programme and Budget

The JV Partners will, in accordance with the provisions of the JV agreement, assess all work done to date and agree on an appropriate development budget and work programme to:

• • advance the Project to a level where it will qualify as a bankable project, and
• • procure appropriate debt, project and equity funding from prospective investors for the purposes of developing, constructing and commissioning a producing mine capable of producing a targeted c. 3 million tonnes of ore per annum, should further development and exploration work return positive results.

Katoro does not have any funding obligation to the JV other than it shall be obliged to procure the funding required in respect of all expenditure of the JV. For the avoidance of doubt, this does not commit Katoro to directly provide the funding; the obligation is limited to procurement only. In the event that Katoro does not or cannot procure such funding, the JV will unwind and Katoro will have no further interest in the Project.