RNS Number:4691U
Moydow Mines International Inc
04 April 2007
Part 2
Kanyankaw Property
1. Project Description and Location
Project area
The Kanyankaw East Property is located in south-central Ghana approximately 50
kilometres north of the important seaport of Takoradi. Initially, the property
consisted of one prospecting licence of 47.6 square kilometres in the Western
Region. After relinquishing the northern 50% of the license on the 3rd of
October 2005, the remainder of the license is 23.5 square kilometres, (the
License).
Title and Obligations
The Kanyankaw prospecting licence was obtained by Moydow Limited ("Moydow
(Ghana)"), a company incorporated under the laws of Ghana, and a 100% owned
indirect subsidiary of the Company, and by Antubia Resources Ltd. ("Antubia") on
January 16, 1996. The licence was held in a joint venture between Antubia, a
subsidiary of Glencar Mining plc ("Glencar"), and Moydow (Ghana), pursuant to
the terms of an agreement dated November 6, 1992, (the "Kanyankaw 1992 Agreement
"), amended on March 17, 1994 and June 20, 1995. The agreement granted Glencar
(or its nominee) an option to earn a 50% interest in the Kanyankaw prospecting
licence in return for funding U.S.$150,000 of reverse circulation drilling and
then contributing a further U.S. $330,000 in exploration expenditures before
December 31, 1993.
The option was exercised in 1995 after two time extensions were granted to
Glencar in March 1994 and June 1995. The agreement provided for the funding of
work subsequent to the exercising of the option through pro rata contributions
to work plans in accordance with each party's respective interests in the joint
venture. Should either party fail to participate in such work plans it would
suffer a dilution of its interest based on the total expenditures and deemed
expenditures of each of them. As of the formation of the joint venture, Moydow
(Ghana) and Antubia were both deemed to have advanced U.S.$480,000 to the joint
venture. Each party was entitled to a carried interest through to the
completion of a feasibility study in the event that their interest should be
diluted to a 10% interest. The carried interest, in such circumstances, was
explicitly not assignable.
Glencar, Antubia, Moydow (Ghana) and the Company entered into an additional
agreement in January, 2000, which required the parties to make an application to
the Ghanaian government for a split of the property into two licences along
longitude 2degrees03'43" west (the "Kanyankaw 2000 Agreement"). Pursuant to the
Kanyankaw 2000 Agreement, Moydow (Ghana) would hold the licence for the eastern
half which contains the old gold workings at Kanyankaw (the "Kanyankaw East
Property") and Antubia would hold the licence to the western half which contains
the old workings at Asheba (the "Kanyankaw West Property"). Application was
made to the Minerals Commission in August 1999 to ratify this proposal and it
became effective in early 2001.
Pursuant to the Kanyankaw 2000 Agreement, each party has the right to back-in
and acquire an interest in the other party's property (40% in the case of the
Kanyankaw East Property and 44% in the case of the Kanyankaw West Property). In
order to exercise a back-in right, a party (A) must have performed a minimum of
5,000 metres of drilling on its own property and must make a payment to the
other party (B) based on the drilling completed by B. The payment is calculated
by multiplying the number of metres of drilling completed by B by a figure
ranging between US$50 and US$100 (depending on the overall number of drill holes
completed by B). The splitting of the licence was designed to facilitate
aggressive exploration of the entire property in 2000.
The License was transferred to Shankill Resources Limited (Shankill) on 8
September 2003. Shankill is a 100% owned subsidiary of Moydow Mines
International Inc. The License was renewed for a period of twelve months to
expire on 16 September 2004.
At the end of that period, the Company was required to submit a report and
financial statements, an Environmental Permit from the Environmental Protection
Agency ("EPA") and a site plan indicating areas to be relinquished. The Company
submitted the required documents and applied for an Environmental Permit. It
submitted a plan with areas to be relinquished later, as the Company at that
time had not made a decision on this issue yet.
After Moydow relinquished 50% of the property as requested by the Minerals
Commission, the new corner coordinates of the PL.2/31 prospecting license, which
came into effect on the 3rd of October 2005, for the Kanyankaw East Property
are:
Pillar No. Lat North Long West Pillar No. Old No. Lat North Long West
P1 5degrees 03'46'' 2degrees 03'43'' P11 3 5degrees 03'58'' 2degrees 00'55''
P2 5degrees 03'46'' 2degrees 03'19'' P12 4 5degrees 03'22'' 2degrees 01'43''
P3 5degrees 04'51'' 2degrees 03'19'' P13 5 5degrees 02'33'' 2degrees 01'43''
P4 5degrees 04'51'' 2degrees 02'22'' P14 6 5degrees 02'33'' 2degrees 00'58''
P5 5degrees 04'19'' 2degrees 02'22'' P15 7 5degrees 01'46'' 2degrees 00'58''
P6 5degrees 04'19'' 2degrees 01'50'' P16 8 5degrees 01'46'' 2degrees 01'43''
P7 5degrees 04'51'' 2degrees 01'50'' P17 9 5degrees 01'22'' 2degrees 01'43''
P8 5degrees 04'51'' 2degrees 01'17'' P18 10 5degrees 01'11'' 2degrees 02'03''
P9 5degrees 04'17'' 2degrees 01'17'' P19 11 5degrees 01'11'' 2degrees 03'01''
P10 5degrees 04'37'' 2degrees 00'55'' P20 12 5degrees 02'10'' 2degrees 03'01''
P21 - 5degrees 02'49'' 2degrees 03'43''
The northern 40% of the License falls within the Neung Forest Reserve ("Reserve").
On October 3, 2005, the Company was granted a two-year extension to its
prospecting licence with respect to the Kanyankaw property, by the Minister for
Lands, Forestry and Mines in Ghana.
The carrying value of the Kanyankaw property was written off in 2005 in the
amount of $329,235, as exploration results at that time were not deemed
promising, (see Item 12).
Environmental liabilities and Permits
The Company is not aware of any environmental issues, which - without proper
care - could create a liability for the Company. The Company has no reason to
believe that necessary permits, once applied for, will not be granted.
The "Environmental Permit for Mineral Exploration EPA/PR/PN/296" was granted on
the 18th July of 2005 for a period of two years.
No other permits are required.
Mineralization and Mining
Artisan mining of alluvial gold has been done and is still done in some valleys.
Artisan miners are mining bedrock for gold in various places. No industrial
mining has been done on the property
For a detailed description, see Items 3 and 6 below.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiography
Accessibility and Infrastructure
Kotoka Airport at Accra has scheduled international flights. The Company has
guesthouse and office facilities in Accra.
The Licence area can be reached by vehicle from Accra in approximately 6 hours
along hard surface roads to within 3km, and thereafter along a good quality
gravel road to a Post and Telecommunications (P&T) tower located approximately
in the centre of the 'workable' licence area. Access away from this central
track is limited to a few 4WD vehicle tracks pushed through the forest for drill
rig access or timber haulage. There are several small-scale farms, and
footpaths link these. In forest areas, the vegetation is dense to extremely
dense, and access is difficult and slow going on foot.
Climate
The Licence falls within the wet equatorial zone of Ghana. Rainfall and
temperature records are not available for Kanyankaw or adjacent villages,
however the author understands the rainfall to exceed 2000mm per annum, and the
climate can be classified as seasonally wet humid and tropical. It is
characterized by an annual double maximum rainfall pattern occurring in the
months of May to July and from September to October.
Work can be done year-round, although certain activities have to be curtailed
during heavy rains.
Local Resources
Villages are common along the Takoradi-Teberebie road. Major towns are Tarkwa
about 30km to the North and Takoradi about 50km to the south.
Competent and experienced personnel and contractors for exploration and drilling
can be found in Ghana. Skilled and unskilled labourers are readily available
from towns or from nearby villages.
Physiography
The Permit area is characterized by steep hilly terrain, dendritic drainage and
several broad high level plateaus, which represent an ancient land surface,
rising above a low undulating terrain in the south of the licence (over the
granitoids). Elevations range from approximately 75 to 125m in the southern 30%
of the License and to 222m in the Reserve. Drainage channels have incised into
the soft weathering profile, developed beneath the ancient land surface, to
produce both dendritic and radial drainage patterns.
The high plateau ranges in width from 1.5 km down to a few tens of meters.
Close to the plateau edges, blocks of ferruginous duricrust are variably
exposed, as are pisolitic and nodular gravels. Away from the plateau edges
pisolitic gravels are less evident on the surface, but are ubiquitous within a
meter of the surface. Off the plateaus hill slopes are generally steep to very
steep and can exceed 60o. Not all hills have plateau tops. Some have narrow
(0.5ppm anomaly with maximum dimensions of 300m
north-south and 200m east west centred about 500m north of the P&T tower. K2 on
the low ground was barren and intersected chloritic schist to 132.5m and
chloritic basalt to the bottom at 165 metres. Pervasive quartz-carbonate-
chlorite alteration occurs from 70 - 165m. K1 was collared on the high ground
and intersected 2m at 11g/t from 32m associated with quartz-limonite-manganese
stockworks or stringer mineralization in saprolitic basalt and 6m at 4.96g/t
from 152m associated with two 0.5m quartz veins with quartz-pyrite flooding in a
structure. Curiously, the Glencar drilling is at the southern end of this blob
and predominantly to the south and west where there is no Cyprus/CME anomaly.
The more interesting area is west and south of the P&T tower where a strong
anomalous zone oriented north-north-east appears to be unaffected by topography,
specifically an east-west salient of the plateau which protrudes into the centre
of the zone. Only two holes were drilled in this area, K3 and K4, both on low
ground, and both intersected mineralization - the former six narrow zones
including 2m at 16.6g/t from 8m and the latter 2m at 4.44g/t from 18m and 2m at
37g/t from 60m. Drillhole K3 is characterized by chlorite-quartz-carbonate
basalt, quartz-carbonate stockworks and fine crackle breccias. Pyrite varies
from 0 to 50% with the latter amount being confined to quartz + pyrite veins of
no more than 8cm in width. Vein and veinlet angles to core axis indicate that
veins are striking N15 degrees - 20 degrees E and dipping 50 degrees to the
northwest. K4 mineralization is associated with "annealed" shear zones
characterized by quartz-carbonate-tourmaline alteration, post mineral movement
and late quartz-pyrite veining (6-8cm) which could be carrying the gold.
Galamsey Activity
Within the licence, there are some areas with very active galamsey mining. The
main area of activity is currently northwest of the P&T Tower off the high
plateau where the miners are concentrated along what appears to be two narrow (<
1m wide) quartz veins along a total strike of some 500 meters.
4. Geological Setting
Regional Geology
The license area is underlain chiefly by Lower Proterozoic Upper Birimian
metamorphosed mafic volcanic rocks (greenstones), which are intruded by small
stocks and dykes of hornblende granodiorite. Slicing through the rock pile is a
series of NNE-trending fractures with associated minor splays; interestingly,
all recorded past production has come from the minor splays and only minimal
exploration has been conducted over the major lineaments, which
characteristically occupy the low ground in fault-controlled valleys. Where
these major lineaments cross terrain that is slightly more elevated, their trace
is frequently coincident with a trail of sericitic altered granodiorite dykes,
which show patchy development of gold-bearing, quartz stockworks.
The Kanyankaw prospecting licence is located twenty kilometres south of Tarkwa.
The Tarkwa Goldfields have reportedly produced 10 million ounces of gold and
host reserves in excess of 25 million ounces predominantly from the two major
mines at Tarkwa and Teberebie.
Local Geology
The main gold mineralization within the studied part of the Kanyankaw License is
connected with gold-bearing quartz veins within metamorphosed mafic volcanic
rock of the Upper unit of the Early Proterozoic Birimian Series. The rocks
hosting gold-bearing veins contain very weak gold mineralization. Earlier data
about the old underground Axim Mine and recent galamsey workings indicate that
the gold-bearing quartz veins form a sub-parallel system striking towards NNE.
The thickness of these veins is still unknown but it is expected to be less than
1m. The size of fragments of gold-bearing quartz in galamsey pits seldom
reaches 15-20 cm. Gold-bearing veins consist of light-gray sugary-grained
quartz with numerous caverns filled with limonite and clay, goethite
pseudomorphs after pyrite, relics of pyrite and fine native gold. The mined
quartz contains gold up to 153g/t.
5. Exploration
Exploration work
(1) The major part of the licence area away from the colonial workings at
Kanyankaw had never been systematically explored. A limited exploration program
in 2000 focused on the prospective north-northeast trending NKFZ lineament/
structure and the potential for open- pittable resources. 1467 soil samples
were collected on a 400m x 50m grid within a 2km-wide corridor straddling the
NKFZ. Airborne magnetic data was reprocessed and interpreted by consultants and
cross-referenced with geology and soil-sampling results.
(2) Eight holes (KR1-8) totalling 717m RC and 43m DD were drilled
targeting soil anomalies southeast of the old Kanyankaw workings. Although gold
was recorded, it was not significant enough to warrant further drilling at the
time. The holes were drilled in two SW-NE fences, 200m apart, in each four
holes 50m apart.
(3) A landform and regolith study completed by S.J.S. Bolster of Regolex
on the property in 2001 generated nine new targets, which warranted testing.
During the year, there was a significant increase in the number of illegal
artisan, or galamsey miners. At one stage, over 6,000 miners were reported to
be working the high-grade quartz reefs on the property, which restricted access.
(4) Following a study of all available data by Moydow geologist Dr. Yuriy
Deriouguine, the Company executed two drilling programs. Phase I, from May to
July 2004, and Phase II, from September to October 2004. For both phases,
Pontil Minerex Ltd. did the drilling and Blue Cross Ltd. was engaged for
organising workers. Up to thirty workers from the nearest villages and
galamseys, worked as diggers, line-cutters, samplers, guides, and watchmen. All
the work was directed and supervised by Yuriy Deriouguine.
(5) In December 2007 a site visit was made by Moydow geologist Ebo Bakker
as part of a program to evaluate all data on the property.
Results
(1)-(3) See above "Exploration work".
(4) I Phase I drilling was aimed to cross the whole vein system together
with earlier drilled holes. Potential gold mineralization with this type of
veins is of interest for industrial mining only in case if the system forms a
stockwork. The vein was divided into two intervals: (1) northern part - target
#2 and (2) southern part - target #1. Additionally, target #3 at the galamsey
mined quartz vein near Kanyankaw village was also drilled.
The sub-parallel vein system at two intervals (target #1 and target #2) was
drilled by 24 45degrees-inclined RC holes total 1732m. The results confirmed a
proposed system of sub-parallel gold-bearing quartz veins, which in sampled
intervals have thickness not more than 4m. Gold values vary from 1.1g/t up to
18.25g/t with the highest gold grade in previous hole KAN 4, 2m at 37g/t.
Quartz veins are not accompanied by gold-bearing alteration, which could
increase mineralized intervals. Quartz veins are situated rather far from one
another and they don't form a stockwork.
Target #3 is situated close the galamseys mined quartz veins near Kanyankaw
village. There in hole KRC19 the gold-bearing interval extends up to 22m depth,
which has average gold grade 4.24g/t and hole KRC19 contains 1.56g/t at 64m.
Hole KRC35 targeted to cross the quartz vein mined now by galamseys
unfortunately at 66-67m and 82-83m cut pits or adits so the real gold grade in
the mined vein wasn't clear. Assay results are probably the best ones in all
holes on the License but the geological structure of gold-bearing body (or
bodies) is still unclear.
A target near the highest soil anomaly (gold up to 58.0g/t) was not drilled
because of the complicated landscape and dense. This anomaly is traced more
than 800 m from the known underground mine towards SWS through the intermediate
wide soil gold anomaly on the previous profile. At its western edge on the
slope and across the stream there are many old galamseys pits.
(4) II Phase II drilling aimed T (1) at Target #3 - to extend previous
drilling on the galamsey mined quartz veins near Kanyankaw village, and (2) at
Target #4 - to drill the highest soil anomaly on the License.
At Target #3 saprolite hosts quartz veinlets at intervals contain pseudomorphs
of goethite after pyrite and fragments of pyrolusite. In fresh rock two types
of quartz veins were distinguished: (1) vein hosting disseminated pyrite (up to
5-7%), malachite, limonite in hole KDD46 looks like strait veins limited at
their contact by cataclasite, (2) cataclastic folded veins associated with
listvenitized (silicification + chloritization + carbonatization + pyritization)
rocks. Both types of veins are gold-bearing.
Gold mineralized intervals within target #3 join into three zones: A, B, C. The
first two zones were drilled during the first phase of exploration with drilling
extended in the second phase. Zone C was found in the second phase.
Zone A was crossed by hole KRC35 where from 66m to 68m gold grade is 2.4g/t but
this interval is probably partly mined by galamseys. Zone A has the most
representative intersection in hole KDD49 with from 156.7 m to 158.1m a light
grey quartz vein, bordered at both contacts by 7-10mm-thick cataclasite. In
hole KDD49 the gold-mineralized interval from 156m to 159m contains 3.3g/t gold,
the maximum gold grade in sample 5087 is 5.27g/t over 1m. The quartz vein is
associated with weakly mineralized rocks on the both sides of the vein where
gold values vary from 0.1g/t to 0.7g/t.
Zone B was after the first phase of drilling the most interesting. In hole
KRC19 from the surface up to 22m depth the average gold grade is 4.26g/t with
maximum value 16.15g/t over 2m. There, an envelope of weakly mineralized rocks
surrounds strongly mineralized intervals. Gold mineralization in hole KRC19 is
located within weathered rock represented by saprolite, partly after pyritized
rock hosting quartz veins and veinlets.
More drilling was done in Zone B in the second phase of drilling. In hole KDD49
Zone B split into four mineralized intervals, which also generally are jointed
by a weakly gold mineralized envelope. From 77 to 83m the average gold grade is
8.02g/t with maximum value 17.5g/t over 2m. A similar gold grade from 101
metres to 105 metres at 8.21g/t. In hole KDD46 zone B was intersected only at
interval 254 metres - 256 metres with 11.8g/t gold. In hole KDD46 Zone B is
almost absent, but there is a possibility that it goes between two holes.
Zone C is a new gold mineralized interval. In hole KDD46 from 72m to 128m rocks
host gold mineralization which an average grade of 0.48g/t at 56m depth. It
includes the best intersection of 10m at 3.63g/t with maximum value 7.7g/t.
Gold-bearing rocks are represented by saprolite, weathered schist, and weathered
pyritized schist hosting quartz veins.
At the target #3 assay results show that the gold mineralization belongs to two
different types. The first type in Zone A is associated with pyrite-hosting
quartz veins limited by strait cataclastic contacts. The second type (Zone B,
C) is represented by quartz veinlets hosted by altered (listvenitized) rocks.
Mineralization of the second type forms sub-parallel lenses within wider
envelopes of weakly altered rocks. This type of gold mineralization looks more
prospective because it organizes wide (up to 40m) envelopes of gold-bearing
rocks with higher gold grade.
Gold mineralization at target #3 was explored only in one profile. The gold
grade and thickness of mineralized intervals are very changeable; numerous pits,
shaft and adits complicate this. The morphology of gold-bearing bodies is still
unknown.
At Target #4 the drilled ten holes were aimed to cross the soil gold anomaly
with 58.03g/t. Weak gold mineralization less than 1g/t was found in many holes
but only one intersection is over 1g/t. The intersection in hole KRC38 from 54m
to 64m has an average gold grade of 6.93g/t with maximum value of 31.9g/t. The
gold mineralized interval is associated with quartz veins and veinlets hosted by
saprolite where in panned samples numerous particles of dust-like native gold
were seen. A weakly gold-mineralized envelope accompanies rich quartz veins.
Most of weakly gold-bearing intervals at Target #4 are associated with rocks
hosting quartz veinlets or pyrite mineralization.
(5) The conclusion of the site visit was that it was worthwhile to
analyze available data with other geological models in mind. Another model
would have to be tested with a drilling program if such a model would indicate
the possibility of a resource to be present.
6. Mineralization
See Item 5.
7. Drilling
The 2004 Phase I and Phase II programs targeted four areas in a 1.35km by 1.6km
area. The target areas consisted of fences of approximately 150m to 800m in
length and trending WNW-ESE. Drill holes were spaced 50m. Phase I consisted of
the holes KRC09-36 and Phase II of KRC37-45 and KRC47-48, and KDD46 and KDD49.
The 41 holes totalled 250m DD and 2986m RC. A total of 1876 samples were
submitted for analysis.
Drill hole spotting, drilling, sampling, logging and sampling were done
following standard procedures. The coordinates of the drill holes were
established with GPS with the spacing verified by tape and compass.
See Item 5 for an interpretation of the results.
8. Sampling and Analysis
Sampling
RC and DD sampling intervals at the 2004 drilling programs were 1m. Split
samples were combined to represent 2m intervals unless the mineralogy warranted
1m interval samples. All samples were sent to the SGS laboratory in Tarkwa for
standard gold fire assay.
All sampling and sampling procedures were done following standard procedures and
the Company does not belief that there are factors that adversely impacted the
accuracy or reliability of the results.
Internal control
For internal control 4.4% of the pulp reject samples with gold values covering
the whole range were selected. These samples with changed numbers and sample
bags were sent to SGS, Tarkwa for gold fire assay. Discrepancies were followed
up.
Gold values correlated well (cc 0.96). However, in the control samples gold
values are average 24% higher than in the original samples. SGS explains this
disagreement by the presence of coarser gold in samples, which is then prevalent
near the bottom of the sample bag. The control samples were poured into new
bags where the coarser gold ended up on top. If this is the case, then the
problem exists at SGS where samples were not properly mixed. One sample that
differed more than nine times would be re-assayed.
External control
External control was done by Transworld Laboratories Ghana Ltd. in Tarkwa. 4.2%
of the samples that had been fire assayed for gold at SGS were selected with the
same methodology as for internal control. Pulp rejects of these samples were
recalled, their bags were changed, and they were sent to Transworld for fire
assay for gold.
Results correlated well (cc 0.97). The Transworld data average 17% lower than
the SGS values. All samples that had more than 1g Au/t correspond between the
laboratories.
9. Security of Samples
The Moydow geologists Dr. Yuriy Deriouguine and Victor Litvinov supervised the
handling of all samples. The RC samples and the DD core is presently stored in
a locked building in a village near the License.
10. Mineral Resource and Mineral Reserve Estimates
No resource estimates have been made yet.
11. Mining Operations
No hard rock mining operations have been done or are planned yet.
12. Explorations and Development
The Company intents to analyze all data with other geological models in order to
plan and execute an additional drilling program if warranted. The nature and
amount of further exploration is subject to the results of this analysis.
Port Loko Bauxite Concession
1. Project Description and Location
Project area
The Port Loko Property is located 65 km East of Freetown, the capital of Sierra
Leone, Western Africa. The 668km2 (230 square mile) property forms a strip
about 77km NNW-SSE by 12 km WSW-ENE in the Port Loko District of Sierra Leone's
Northern Province.
Title and Obligations
Ownership of mineral rights and the right to search for or exploit minerals in
Sierra Leone are vested in the Sierra Leone government. The government may
grant rights to explore for or exploit minerals under the provisions of the
Mines and Minerals Act of 1994. A mineral right is defined as any of the
following:
* a prospecting license (exclusive and non-exclusive);
* an exploration license;
* a mining lease;
* an artisan mining license.
The government does not participate in the acquisition of mineral rights, either
directly or indirectly. There is no history of government confiscation or
nationalization of mineral rights from a mineral rights holder. Surface rights
remain the property of the landholder.
Gondwana (Investments) S.A. (Gondwana, a private company incorporated in
Luxembourg) obtained on the 15th of November 2002 the Exploration License No.
Expl. 7/02 (the License) for a period of three years to explore for base metals,
rutile, zircon, ilmenite, and bauxite from the Government of Sierra Leone in
accordance with an approved program of exploration operations.
The coordinates of the Property that are specified in EXPL 7/02 are:
Beacon UTM West UTM North Zone
A 739,100 997,000 28P
B 751,600 972,700 28P
C 757,400 953,600 28P
D 773,800 931,500 28P
F 770,500 922,800 28P
G 751,200 950,800 28P
H 733,400 982,400 28P
I 738,000 985,450 28P
J 731,700 992,800 28P
Notes: E was not used. Coordinates in Sierra Leone 1960 datum.
Licence obligations include:
* Pay a yearly rent of US$200 for each square mile.
* Demarcate the licence boundary. Employ at least one qualified geologist
or mining engineer for the exploration.
* Carry out bona fide exploration during the continuance of the License.
* Undertake base line studies on the environment in order to provide details
of any significant adverse effect, which the carrying out of exploration
program would have on the environment, the proposals to combat any such
effect and the estimated cost thereof.
* Employ and train citizens of Sierra Leone.
* Backfill or make safe bore holes or excavations made during the course of
the exploration operations.
The Company and Shankill Resources Limited (Shankill) signed an Option Agreement
with Gondwana on 8 September 2004, for Shankill to explore the bauxite deposits
in the Exploration License EXPL 7/02. Shankill is a 100% owned subsidiary of
Moydow Mines International Inc. The Agreement allowed Moydow to acquire up to a
60% interest in the Port Loko bauxite deposit by incurring exploration
expenditure of $1 million and produce and deliver a feasibility study on or
before August 1, 2005. On the 28th of February 2006, an amending agreement was
signed which stated that "the phrase 'August1, 2005'in the 8 September 2004
Agreement, shall be read as 'June 30, 2006'. The Agreement only covers bauxite
and no other minerals on the property. Under the terms of the Agreement, Moydow
also issued 150,000 common shares and 200,000 warrants. The warrants, which
expired in 2006, had a strike price of CA$0.38.
Shankill Resources (SL) Ltd. (Shankill) was incorporated in Sierra Leone on 29
September 2005. Shankill is fully owned by the Company.
On October 24, 2005, the Company appointed Chlumsky Armbrust & Meyer, LLC of
Lakewood, Colorado (CA") to prepare a Bankable Feasibility Study on the Port
Loko bauxite deposit. By the 30th of June 2006, CAM had submitted the reports
"Feasibility Study Geological Resource Port Loko Project" and "Feasibility Study
Technical and Cost Evaluation Port Loko Project". The quality of CAM's reports
was such that the Company and Gondwana agreed on Moydow having acquired 50%
Interest in the Project (i.e., to develop the Port Loko Property) and to
continue exploration to get to a bankable feasibility study.
The 2004-2005 Exploration Report for renewal of the licence was prepared by
Moydow and was filed by Gondwana (the License holder) on the 15th of November
2005. The renewal was granted by the Mines Division of the Ministry of Mineral
Resources for one year (from the 15th of November 2005) on the 4th of January
2006. The area of the license, which had been stated as 230 square miles, was
amended to 258 square miles.
The Company has applied to the Sierra Leone government for a renewal of its
licence in respect of its activity at Port Loko and expects to receive the
licence in mid 2007. In the event that the licence is not renewed, the Company
will be required to write-off its investment in this project.
Cumulative expenditures by the Company to December 31, 2006 amounted to
US$2,586,405 of which US$945,367 was incurred during 2006.
Environmental liabilities and Permits
The Company is not aware of any environmental issues, which - without proper
care - could create a liability for the Company. The company has no reason to
believe that necessary permits, once applied for, will not been granted.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiography
Accessibility and Infrastructure
Freetown is reached from Lungi Airport by helicopter or ferry by crossing the
Sierra Leone River estuary. Lungi Airport has scheduled flights to and from
Europe and other Western African countries. The Company has a guesthouse in
Freetown and rents office facilities there.
The Company has established an exploration camp just outside the License area at
the village of Rogbere. The camp is an abandoned Unamsil camp that has been
renovated. The camp is capable of housing approximately 30 people. Water for
the exploration camp is provided by wells and drinking water is obtained from
Freetown. Power is generated on site with a 27 KVA diesel generator.
Access to the exploration camp from Freetown is by 75 km paved highway to
Masiaka and from there by another 30 km paved road. The latter road crosses the
central portion of the License from the Rokel River to Rogbere village. Rogbere
Junction can also be reached from Lungi Airport via Lungi Lol and Port Loko by
70 km dirt roads.
The License area straddles dirt and paved roads that head west and north from
Rogbere to Port Loko and beyond, and south and east to Masiaka and beyond.
Gravel and all-season dirt roads to villages scattered in the area provide good
access to most parts of the License. An extensive network of cut lines provides
detailed access in certain areas.
Villages of the Temne are common scattered in and around the License area.
Towns nearby are Port Loko and Lunsar, 14km west and 16km east from Rogbere.
There is no electrical grid in the region. All projects and settlements have to
rely on diesel-generated power.
Areas around Rogbere and Port Loko are covered by mobile phone networks.
Tropical diseases such as malaria and typhoid are endemic in the region. While
basic medical services are available at Rogbere, Port Loko and Lunsar any
serious health problem would require transport to Freetown.
Climate
Sierra Leone lies within the West African rain forest belt. The alternation of
monsoon rains and northeast dry winds divides the year into distinct wet and dry
seasons. Most of the rain falls from May to October (200-250 cm) and much less
from November to April (12-25 cm). Average temperatures range from 25 to 28
degreesC with the highest temperatures in March and November.
Work can be done year-round, although certain activities have to be curtailed in
the afternoons during the rainy season. Surface water is abundant in rivers and
creeks in the rainy season. Smaller streams gradually dry up in the dry season.
Local Resources
Most supplies have to be brought in from Freetown. Specialized equipment has to
be imported.
The License area has abundant sites that can be used for mining facilities.
Three main rivers, the Rokel, the Bankasoka, and the Little Scarcies, all of
which have bridges crossing them, intersect the concession. Any of these rivers
would provide ample sources of water for the bauxite washing plant and other
mining related requirements.
At Lungi Lol (33 km west of Port Loko), a road branches to Pepel Port on the
Sierra Leone River estuary (13 km from Lungi Lol). The road from Rogbere
Junction via Lungi Lol to Pepel Port largely parallels the mineral railway from
the Marampa iron mine (east of Rogbere) that operated from the early 1930s to
1985. A rail yard, rolling stock, housing, storage, and ship loading facilities
exist at Pepel Port. The railway, which crosses the bauxite deposits, and the
harbour facilities (65km by rail from Rogbere) can - after rehabilitation - be
used for transport and shipping of bauxite ore.
Certain competent and experienced contractors for exploration, drilling and
mining have to come from abroad. However, there is a pool of local people that
has experience with bauxite exploration and mining. Skilled and unskilled
labourers are readily available from Freetown and from local villages.
Physiography
The License area topography is characterized by flat to gently rolling savannah.
Mabing Hill with 156 m is the highest point north of the Rokel River. Most
hills, however, are between 30 and 60 m high; they are considered remnants of an
erosion surface.
Primary forest has been cleared from the area. Most of the area is now covered
with tall cane grass. These areas merge in open secondary forests, which occupy
small portions of the low hills and valleys.
Village agriculture is focused on growing cassava using traditional
slash-and-burn clearing methods. Large areas - especially those underlain by
bauxite - are not used for agriculture although they are seasonally burned.
3. History
The occurrence of low-grade bauxite in Sierra Leone was first recorded in
1920-1921 in the northeastern corner of the Northern Province. Other bauxite
occurrences were found in the Southern Province (Mokanji bauxite deposits) and
in the wide valleys of the Freetown Peninsular in the Western Area.
The Port Loko bauxite deposits were discovered in the early 1950s by road
construction workers. During reconnaissance exploration work in 1959 by
government geologists along the motor roads from the Rokel River Bridge to Port
Loko and Marampa, interesting bauxite zones developed on feldspathic gneisses of
the Kasila Group. This tended to constitute the extension of the Mokanji
deposits.
The Sierra Leone Ore & Metal Co. (Sieromco), then a subsidiary of Swiss
Aluminium Ltd. (Alusuisse) obtained a prospecting license (No. SEPL 2087) and
carried out an exploration campaign north and south of the Rokel River from 1963
to 1965. Sieromco stopped work because the company's emphasis at that time was
on bauxite deposits with alumina content greater than fifty percent. In July
1972, Sieromco obtained a Special Exclusive Prospecting License (SEPL 2182)
covering an area of about 620 km2 between the Rokel River and the Little
Scarcies for a period of four years. Sieromco developed and executed a
comprehensive exploration programme that assessed and evaluated the license
area. Extensive and detailed exploration was carried out by drilling (3,500
hand and 11,000 mechanical drilled holes, total 126,000 m) and pitting (425
pits). Sieromco defined 28 mining blocks in four areas which largely parallel
the geological trend: Yenkisa (1-13), Lungi (1-6), Tekeya (1-12) and Kambia
(Mange-Gbonkomakent and Mamaliki). Results were presented in numerous reports,
inter alia in a Pre-feasibility study (November 1980). Following a corporate
management policy change not to expand its raw materials supply base, Alusuisse
surrendered its mineral holding of its property to the Government of Sierra
Leone.
In 1987, Austromineral, an Austrian owned company (then in the process of
rehabilitating the Marampa iron ore mine which was 23 km east of Rogbere
Junction), conducted a pre-feasibility study on the Port Loko bauxite deposit on
the basis of the results of the Sieromco exploration work. Austromineral
confirmed that it could be a viable venture of low-grade bauxite that should be
investigated for commercial exploration.
In 1992, Jupiter Export and Import (Jupiter) acquired the property (No. EXPL 4/
92) but its work was limited in scope during the escalation of the rebel war.
In 1996, Jupiter renewed its exploration license (No. EXPL 4/96) and proceeded
to undertake additional prospecting/exploration and due diligence on the
Sieromco work that led to an internal feasibility report (May 1997) and to a
review report by Watts, Griffis and McOuat (WGM) of Toronto, Canada (October 31,
1997). Jupiter filed an "Application for the Leasing of the Pepel Port and
Railway Installations and the Rail Tract" on 11 March 1996 with the Government
of Sierra Leone. The application contained a summary of work to be done and a
cost estimate for the rehabilitation of port and rail facilities. Renewed rebel
activity forced a suspension of operations in 1998 under conditions of force
majeure, and subsequent cancellation of the license in 1999 by the Government
when Jupiter failed to demonstrate its ability to continue.
Following the cessation of the rebel activities, the Government of Sierra Leone
granted exploration rights to Gondwana for the Port Loko bauxite concession
under Exploration Licence No. EXPL 7/02 in November 2002, (see Item 1).
Railway, Harbour and Iron Ore Mine
During 1930, construction commenced on a 52 miles 3ft6in gauge line from Pepel
to the Marampa haematite iron ore mine, 23 km east of Rogbere. The line was
constructed by the Sierra Leone Development Company (Delco). Trains were
organised to haul thirty bogie wagons with each wagon capable of carrying thirty
tons of ore. When the line opened in 1933 two 151 Beyer-Garratt steam
locomotives handled the ore trains, two more were received, one in 1935, the
other in 1936.
These locomotives were in 1955 replaced by five diesel locomotives from the
Birmingham Railway Carriage & Wagon Co Ltd. (BRCW). Two diesels were operated
back to back in multiple trains of forty double bogie ore wagons of thirty tons
carrying capacity. With the line limited to a top speed of 28mph, a round trip
would take about five hours to complete, not including any time taken at the
termini. During the mid 1960s, improvements to the track allowed the axle
loading to increase and the maximum speed to increase to 35mph. New roller
bearing equipped wagons had an increased capacity of fifty tons.
The BRCW locomotives were replaced by American Locomotive Company (Alco) diesel
locomotives. The first one to arrive in 1964 was numbered 201. Three more
arrived during 1970 numbered 202 - 204, now built by the Montreal Locomotive
Works. Presently, the condition of the 202-204 locomotives is reportedly such
that they can be made serviceable.
At Pepel Port, ore dumping, storage and three generations of ship loading
installations exist. The last one ("C plant") is reportedly capable of loading
4000 ton/hour. One of the two loading facilities of the C-plant has reportedly
been operated recently.
Delco exploited the Marampa iron ores from 1930 until 1976. The mine was
reopened by Austromineral in 1981 but closed again in 1985. All mining
installations at Marampa have been destroyed and the present assessment is that
the Marampa ore reserves do not warrant the construction of new mining
installations.
4. Geological Setting
Regional Geology
Most of the Sierra Leone is underlain by rocks of Precambrian age (Achaean and
Proterozoic) with a coastal strip about 50 km in width comprising marine and
estuarine sediments of Tertiary and Quaternary to Recent age. The Precambrian
outcrops cover 75% of the country and typically comprises granite-greenstone
terrain. It represents parts of an ancient continental nucleus located on the
edge of the West African Craton. The Achaean basement can be subdivided into
infracrustal rocks (gneisses and granitoids), supracrustal rocks (containing
greenstone belts) and basic and ultra-basic igneous intrusions.
The infracrustal gneisses and granitoids were formed and reworked during two
major orogenic cycles, an older Leonean episode (-2,950-3,200 Ma) and a younger
Liberian episode (-2700 Ma).
Greenstone belts of the Kambui Supergroup have been deposited upon a
post-Leonean basement and are accompanied by basic to ultrabasic intrusives.
The Marampa Group, bounded on its eastern margin by a tectonic contact, is
important for its iron-ore deposits and forms the upper part of the Kambui
Supergroup.
The Rokel-Kasila Zone bounds the main part of the West African Craton on its
west and southwestern margin in Sierra Leone, and appears to form part of a
north-south orogenic belt. Within this belt, the Marampa Group appears to
represent some of the oldest rocks. The Kasila Group, also considered part of
the Kambui Supergroup, comprises a high-grade series of granulites, consisting
of garnet, hypersthene and hornblende gneisses, quartzites and associated
migmatites. Where eroded, significant secondary deposition of titanium minerals
has formed from this unit.
A late Precambrian to Cambrian sedimentary and volcanic assemblage, the Rokel
River Group, was deposited unconformably on a basement complex. The Rokel River
Group and the Kasila Group to the west were deformed during the Rokelide
orogenic episode (550 Ma).
Tertiary and more recent weathering has led to laterization across a large part
of Sierra Leone, affecting mainly the greenstone belts and the extensive
dolerite intrusions. Weathering of the aluminous members of the Kasila Group
has given rise to the Port Loko bauxites, as well as those further south near
Mokanji, Gondama and Gbonge. The latter were mined by Sieromco (Sierra Leone Ore
and Metal Company Limited, a wholly-owned subsidiary of Alusuisse) from 1963
until 1995 when the civil war forced abandonment of the operation. Sierra
Mineral Holdings, Ltd. (SML) a subsidiary of Titanium Resources Group (TRG)
initiated renewed mining of bauxite in the Mokanji area early in 2006.
Local Geology
The weathering crust at Port Loko is composed mainly of hydrous aluminium oxide
minerals, clays, and iron oxide minerals, known as bauxite. These minerals were
formed at the expense of feldspars and other minerals in the Kasila metamorphic
rocks. At the same time, the low topographic relief has resulted in only slight
physical erosion. Bauxite in the Port Loko area occurs as a series of elongate
lenses, reflecting their preferred formation above the most highly aluminous,
northerly-trending bands of aluminous crystalline rocks. The Kasila Group rocks
in the Port Loko area consist of a more mafic (amphibolite-rich) band on the
east, and a more felsic (feldspar-rich) band on the west. However, the
difference in rock types does not appear to have strongly influenced the iron
content of the higher-grade (+40 percent Al2O3) bauxite, comparing Yenkisa and
Tekeya on the east, with Lungi on the west. The bauxite crust tends to have a
consistent vertical sequence of layers, reflecting the chemical changes which
gradually transform the crystalline bedrock to bauxite. The typical bauxite
stratigraphy in the Port Loko area is:
Unit Thickness range (m) Average (m) Comments
Topsoil 0 to 1 0.3 mainly organic
Lateritic gravel & bauxite pebbles/ pisolites 0.3 to 5 0.8 mainly sub-economic
Massive bauxite, blocks to 10 cm 2.0 to 12.0 6.8 potentially economic
Bedrock, partly weathered -- -- parent rock (substrate)
The bauxite proper is an intimate mixture of minerals, dominated by secondary
aluminium hydroxides (gibbsite, with less than 3 percent boehmite), kaolinite,
and hydrous iron oxides. This mixture is typical of metallurgical bauxites
worldwide. Lesser amounts of residual minerals, inherited from the weathered
crystalline rocks, are quartz (about 1 percent), rutile (1 to 2 percent), and
sparse amounts of other minerals. The weathered bedrock contains varying
amounts of rock-forming silicates as well as clays and lesser aluminous oxides.
Bauxite specimens may show relict gneissic banding, inherited from the parent
gneisses. The bauxite is various shades of red-brown. Its texture ranges from
gravelly pisolites (sub-spherical concretions) to hard blocks several decimetres
on a side in a clayey or pisolitic matrix. Higher-grade bauxite pods tend to be
elongated north-south, following the trend of the favourable bands in the
underlying Kasila Group rocks. Individual pods are 50 to 500 meters wide and
400 to 2000 meters long. The pods are noticeably concentrated on hill slopes,
rather than on the summits of hills or on flatter valley floors. This is
presumably due to the greater degree of meteoric (rainfall) leaching on steeper
slopes.
The three main bauxite areas, from north to south, are Mange-Gbonkomakent,
Yenkisa-Tekeya-Lungi, and Mamaliki. The subject of most exploration, and of
this report, is the Yenkisa-Tekeya-Lungi area, which has the most favourable
infrastructure at present. In many databases and reports, the Yenkisa, Tekeya,
and Lungi areas are subdivided into numbered zones, such as Y-3, T-4, L-4, etc.
Sieromco used these numbered zones to denote individual mining blocks or a group
of such blocks in close proximity. The combination of lithologic (bedrock)
control and topographic control on formation and erosion of the bauxite crust
have led to a high degree of lateral and vertical variability within a pod and
between pods. This large- and small-scale heterogeneity necessitates a
relatively dense sampling pattern, compared to many other large bauxite deposits
(especially those formed on flat-lying sedimentary rocks) having greater lateral
continuity.
5. Exploration
Moydow started an exploration project at the Port Loko bauxite deposit at the
end of November 2004. The extensive work to date on the project is covered in
the Report on Exploration October 2004 to November 2005 and the Exploration
Report November 2005 to June 2006, prepared as separate documents. Shankill
Resources (SL) Ltd. (Shankill) incorporated in Sierra Leone on 29 September 2005
execute the exploration programs. Shankill is fully owned by the Company.
Shankill 2004-2005
The December 2004 to November 2005 exploration program for a selected sixty
square kilometre area from Mabing Hill in the south to approximately the Rogbere
-Port Loko road in the north and straddling the Masiaka-Rogbere road, included
the following:
* Located and cleared 165 km of Sieromco and Jupiter grid lines:
Mining Block Cleared Base and Tie Lines Cleared Cross Lines Total length (m)
Number of lines Combined length Number of lines Combined length
(m) (m)
L3 1 2,150 36 15,100 17,250
L4 1 1,000 3 2,400 3,400
L5 1 2,600 9 2,400 5,000
L6 1 1,200 7 1,400 2,600
T4 2 2,165 36 23,770 25,935
Y3 6 7,750 28 34,850 42,000
Y4 5 7,650 27 36,050 43,700
Y5 2 4,500 22 20,610 25,110
TOTAL 19 29,015 168 136,580 164,995
* Located Sieromco drill holes, beacons, and Sieromco and
Jupiter pits and measured locations with differential GPS.
* Cleaned, deepened and logged 122 pits, and sampled 76
Sieromco and Jupiter pits:
Mining Block Number Number cleaned Only logged Logged and Number of pit Number of pits
located sampled samples fenced
L3 7 7 - 7 41 7
L4 6 2 1 1 6
L5 1 1 1 5
L6 2 2 2 10
T4 20 10 10 65 12
Y3 13 13 - 13 92 13
Y4 95 50 25 25 151 54
Y5 51 37 20 17 93 39
TOTAL 195 122 46 76 463 125
* Analysed Sieromco and Jupiter data and subsequently planned
locations for new drill hole locations and pits to explore.
* Drilled with a 4" hollow-stem-auger (HSA) 423 holes and
logged and sampled the retrieved chips and core.
Mining Block Number of holes Total drilled (m) Chip re-covery Core re-covery Total re-covery (%)
drilled (%) (%)
L3 57 365.2 99 0 99
L4 8 54.0 71 25 96
L5 23 126.1 86 14 100
L6 8 57.0 87 11 98
T4 71 644.0 93 7 100
Y3 60 581.1 67 32 99
Y4 99 816.5 2 96 97
Y5 97 853.5 8 90 99
TOTAL 423 3497.4 51 48 99
* Processed 3450 drill hole samples (washing, drying, crushing,
pulverizing and splitting) and shipped these and 172 unwashed split
samples to Australia and Canada for analysis.
Mining Block Regular Samples Check Samples
Washed Un- washed Total Washed Un- washed Total
L3 364 18 382 60 1 61
L4 52 3 55 8 1 9
L5 127 6 133 24 1 25
L6 56 3 59 6 2 8
T4 648 33 681 75 8 83
Y3 554 27 581 73 8 81
Y4 805 40 845 106 8 114
Y5 844 42 886 114 6 120
TOTAL 3450 172 3622 466 35 501
To support the exploration program the following was done:
* Acquired sample processing equipment specific for bauxite samples.
* Acquired four vehicles and a hollow-stem-auger drilling machine.
* Established an exploration camp at Rogbere Junction, which includes
among others: office facilities, sample storage buildings, and a
sample-processing laboratory.
* Established an office and guesthouse in Freetown.
* Trained Sierra Leoneans for general and bauxite-specific geological
work, operation of the HSA, bauxite sample processing, GPS theory and
survey, computer data input and data processing, and issues with respect
health and safety, and to quality control and quality assurance.
* Installed a GPS base station for differential GPS, and executed GPS
surveys of pits, HSA drill holes, Sieromco drill holes and beacons, and
various grid line elements and topographical features.
Other work included:
* Had a feasibility study of the Rogbere - Pepel section of the Marampa -
Pepel mineral railway executed by John Rapple of CIE Consult, Ireland.
For that purpose the Company employed up to 234 men from villages along the
railway for a period of two to four weeks to clear the track of vegetation
between Rogbere and Pepel..
* Executed a five-hole drilling program at the ballast quarry near
Rogbere.
* Installed a weather station and a WiFi system at the Rogbere
exploration camp.
* Covered drill hole collars, plugged large drill hole collars, and
fenced pits for safety concerns
* Mapped the damage to and destruction of the mineral railway, safe
guarded what is left with regular patrolling by company-hired personnel,
rendered support to the local police, and retrieved looted materials for
safekeeping - with the approval of the District Police Commissioner - at
the Rogbere camp on behalf of the Government.
* Built and furnished a Secondary School at Rogbere village, dug a water
well and developed the school grounds for soccer and various other sporting
activities.
* Assisted with transportation for medical and community activities, such
as funeral and traditional ceremonies. Promoted activities in surrounding
communities, including organizing soccer matches, parties for special
occasions, etc.
Shankill 2006
On the 24th of October 2005, the Company had appointed Chlumsky Armbrust &
Meyer, LLC of Lakewood, Colorado (CAM) to prepare a Bankable Feasibility Study
on the Port Loko Bauxite Deposit. CAM personnel visited the Port Loko
concession from the 9th to the 15th of January 2006. During this visit CAM
selected fifteen drillholes from two mining blocks. From these holes, all
duplicate samples were to be processed to obtain eight size fractions of each
one-meter drillhole sample. A total of 1176 samples were sent to SGS, Perth,
for analysis as the previous samples, (see Item 8).
Mining DH # Total Amount Mining DH # Total depth Amount
block depth (m) samples block (m) samples
T4 2162 9 9 Y5 2213 11.5 12
T4 2178 10 10 Y5 2311 9.5 10
T4 2192 11 11 Y5 2314 11 11
T4 2196 11 11 Y5 2324 8 8
T4 2204 13 13 Y5 2404 8 8
T4 2208 14 14 Y5 2409 7 7
T4 2211 8 8 Y5 2414 8 8
T4 2233 6.3 7 Total 15 holes and 147 samples
The sample processing was done from January to the end of February at Shankill's
bauxite sample processing laboratory at the Rogbere exploration camp by
personnel from the Rogbere area that had been trained by Shankill and that had
previously worked on drill hole sample processing. The work was supervised by
Moydow scientists Moses Bangura and Abdul Koroma.
After consultation with CAM, Moydow accepted the following proposals submitted
by Cemmats Group Ltd. on the 19th of January 2006:
1. Carrying out an Environmental baseline study for the Port Loko
bauxite deposit in northern Sierra Leone.
2. Carrying out a Study to determine the environmental requirements for
dredging the Pepel Port for the shipping of product from the mining of Port Loko
bauxite deposit in northern Sierra Leone.
3. Carrying out a Review of regulatory and permitting requirements
leading up to the start of operations of mining companies in the Republic of
Sierra Leone.
The results of Cemmats' studies were received as draft reports on 20 and 23
April and as final reports on 20 May 2006. They were forwarded to CAM.
Cemmats Group Ltd. is an Engineering and Project Management consultancy based in
Freetown, Sierra Leone. It concentrates especially on mechanical, electrical,
mining engineering and management services. Cemmats has been involved in
consultancy work for companies in Sierra Leone, other parts of Africa, Ukraine,
and USA. The Company was established by a group of Sierra Leoneans with
experience in the mining industry.
Moydow geologist Ebo Bakker spent from 18 to 28 April at CAM to assist in the
completion of the Feasibility study. By the 30th of June 2006, CAM had
submitted the reports "Feasibility Study Geological Resource Port Loko Project"
and "Feasibility Study Technical and Cost Evaluation Port Loko Project."
No other exploration work was done at the Port Loko Property in 2006. However,
maintaining the exploration camp and patrolling the Marampa-Pepel railway and
Pepel harbour facilities continued throughout the year.
Results
(i) Regarding Cemmats' work, CAM in its "Feasibility Study Technical and
Cost Evaluation Port Loko Project" comments that it constitutes the
environmental and the socio-economic baseline studies for the mining of the Port
Loko Project bauxite deposits in the Maforki and Marampa Masemera Chiefdoms in
the Port Loko District, Northern Sierra Leone.
The objective of the study was to assemble, evaluate, and present baseline data
on the environmental and socioeconomic features and the infrastructural status
of the study area. The Cemmats report reflects this objective and constitutes a
full environmental baseline study for the area prior to start of operations.
The central government of Sierra Leone has outlined a Core Minerals Policy for
the Minerals sector. There are also various governmental Acts that are
applicable to the study. They are the following:
* The Environmental Protection Act, 2000;
* The Mines and Minerals Act, 1996;
* The Forestry Act, 1988;
* Forestry Regulations, 1989; and
* The Factories Act, 1974.
The Environmental Protection Act, which requires all mining companies to prepare
Environmental Impact Assessments (EIAs) before the start of mining, and the
Mines and Minerals Act are particularly relevant to the mining sector, dealing
with many issues pertinent to mining and the environment. In addition to these,
Sierra Leone is signatory to several international conventions.
CAM has reviewed the Cemmats work and the resulting report entitled,
Environmental Baseline Study for Port Loko Bauxite Deposit in Northern Sierra
Leone.
The baseline study highlighted the status of the environment and the socio-
economic aspect of the eight settlements identified for the study, which are
located within the concession. Mining activities in Sierra Leone are
customarily associated with social, developmental, and environmental problems.
This is expected to also apply to the Port Loko bauxite project. Mining is
always a lure for unemployed people and generally results in over-population of
such areas, with the attendant environmental effects.
The physical and biological aspects of the environment are well captured in the
Cemmats report. These aspects are to a large extent typical of most areas in
Northern Sierra Leone.
The socio-economic conditions in the area are also typical of this part of
Sierra Leone. Poverty is pervasive and amenities few. The expectation of the
people in the surrounding communities for significant benefits from mining
activities will be high.
The baseline survey, to a large extent, provides an indication of the
environmental and social impacts of the project when it enters the development
and mining stages. Although further detailed evaluation will be required, it is
not anticipated that these impacts will threaten the economic or political
viability of the project. Appropriate mitigation measures are available for any
such impacts.
(ii) Summarizing, CAM in its "Feasibility Study Geological Resource Port
Loko Project" concluded that - based on all available data - CAM would not
recommend proceeding with Project development until such time as additional
sampling and testing has been performed that validates the Sieromco data in
terms of recoveries and grades for Al2O3 and content of reactive silica.
CAM stated - inter alia - that if Moydow believes that their testing to date has
not shown the true economically recoverable resource of the Project, and desires
to perform additional tests, CAM would recommend that in-depth pilot plant
testing be performed on pit-sourced bauxite ore from the various Port Loko
deposits.
Although a substantial amount of data was available from the work performed by
Sieromco, two of the primary factors affecting the potential economic viability
of the project have been insufficiently documented (according to CAM). First,
the procedural method used to arrive at the Al2O3 grade determination was not
clearly detailed and documented, and second, there is no specific data relating
to the determination of reactive alumina and reactive silica versus total
alumina and total silica, respectively, in the Sieromco data. The procedural
method used to arrive at the Al2O3 grade determination will be directly related
to product recovery, and thus cost per tonne of product. Excess reactive silica
will reduce the value of the product, ultimately to the point where the product
is no longer marketable. In order to perform the first step in converting the
present inferred resource to measured and/or indicated, the above mentioned
variables must be accurately determined and documented throughout the deposit.
To accomplish this, CAM recommends the following program:
1. Obtain bulk samples from each area that will eventually be mined.
a. Samples to be obtained from machine-excavated pits with dimensions of 10
meters wide by 50 meters long by 11 meters deep. The physical characteristics of
the samples should appear to be the same as those expected from an eventual full
scale mine operation.
b. Bulk samples should be handled and stockpiled (if applicable) in a
manner similar to the anticipated in a full-scale operation.
c. Perform ore density evaluations on new trench samples.
2. Construct a pilot plant on the project site to crush, screen,
wash and classify (as necessary) the bauxite ore to produce a final product.
a. Pilot plant must be designed to replicate the conditions that would be
found in a full-scale facility.
b. Process a minimum of three bulk samples from each two-meters of depth in
the sample pit.
c. Analyze and document incoming and exiting material weights, taking into
account moisture content to establish weight recovery values.
d. Analyze product material for percent Al2O3 and silica, such that
reactive and non-reactive components can be accurately determined for each level
in a sample pit.
e. Ship product to buyers for evaluation.
3. Review plan and vertical location data for the Sieromco
exploration program and compare directly with the new trench data on a
statistical basis.
Such a program should not only provide an entirely new, clean set of resource
data, but should also serve to either validate or invalidate the data collected
and assumptions made regarding the existing Sieromco data.
(iii) Summarizing, CAM in its "Feasibility Study Technical and Cost
Evaluation Port Loko Project" stated that: the Port Loko process plant at Pepel
Port has been designed at an average capacity of 350 tonnes per hour of raw ore.
This production rate, which should yield 1.6 million tonnes of washed bauxite
per year, is based on operating 24 hours per day and 365 days per year. However,
the nature of the bauxite deposits appears to be the potential limiting factor
to production, rather than mining, washing or shipping. Careful blending may be
difficult to achieve at high production rates, and reduced attention to blending
could well result in excessive grade fluctuations and ore losses. Also, the
sizes of the ore bearing structures are not suited for massive production. In
reality, the maximum production rate depends on the efficiency of the mining
methods and grade controls, since grades and ore recovery are the principal
issues in achieving a marketable product.
Capital costs for the Port Loko Project have been estimated in 2006 United
States dollars. These costs include all equipment, materials, labour and
support functions required to mine, process and export the bauxite contained in
the Port Loko mineral deposit. The size and extent of the facilities is based
on the mining and processing rates specified as above and on the infrastructure
necessary to support these rates as described CAM's report.
Estimated Capital Cost Summary (US$)
Description Labour Material Equip-ment Sub-Contr. Other Total
PORT FACILITIES 349,694 8,492,189 5,892,138 1,274,000 16,008,021
RAIL TRANSPORT 103,749 6,957,800 516,394 7,577,943
MINING SUPPORT 35,272 595,100 1,095,402 1,725,774
PROCESS FACILITIES 270,612 525,000 2,775,993 13,027,601 16,599,206
INFRASTRUCTURE 192,234 4,568,566 1,145,403 7,679,000 13,585,203
Feasibility study; bankable 1,000,000 1,000,000
Engineering; detail 2,000,000 2,000,000
Vendor Reps 950,000 950,000
Capital Spares 96,315 96,315
OTHER COSTS
Freight, taxes & duties; direct equip & materials 2,113,865 2,113,865
Contractor mark-up on materials & related costs 2,325,252 2,325,252
Contractor direct OH, plus general OH & profit 391,938 391,938
Contingency (on overall project cost) 6,437,352 6,437,352
EPCM Contract (10% of contractor cost) 6,437,352 6,437,352
TOTAL CAPITAL COST 77,248,221
The November 1980 Alumining Pre-Feasibility Study for the Exploration of the
Port Loko Bauxite Deposits contains a capital cost estimate of US$ 59,864,000
(excluding mining equipment and working capital) in 1980 dollars. This number
contains significantly more detail and appears much more comprehensive than any
other capital cost estimates contained in the other available documents. For
purposes of comparison, this estimate converted to 2006 dollars at an annual
rate of 2 percent, which is a very conservative estimate of the annual inflation
rate over the past 25 years, would be approximately US$ 98.2 million. CAM
considers its capital cost estimate of US$ 77.2 million to be conservative by
comparison.
CAM's estimate of operating costs is based on:
* Local labour rates, obtained from the Moydow representatives located in
Sierra Leone were used to estimate construction costs. These rates included
applicable benefits and salary burdens.
* Local labour productivity factor of 3.0 when compared to the Texas gulf
coast area.
* Electrical power generation costs of US$ 0.06 per kWh.
* Contract mining cost of US$ 1.25 per tonne of material moved.
* Bauxite ore haul cost of US$ 0.15 per tonne kilometre.
* Railcar loading and transport cost at US$ 0.25 and US$ 0.04 per tonne
kilometre, respectively.
* Material handling and ship loading cost at US$ 6.00 per tonne of bauxite
product.
* Product drying costs at US$ 2.50 per tonne
* General and administrative costs at US$ 0.75 per tonne With the exception
of local labour the rates and costs used to estimate the Port Loko operating
costs are based on CAM's current experience and data collected for similar
activities on mining projects in various parts of the world.
US$/m3 or tonne for 6.725 year, in US$
Grub/m3 0.10 Labour 39,466,657
Overburden 0.75 Power 14,243,083
Waste/tonne 1.25 Reagents 238,174
Ore mining 1.25 G&A supplies, 250/month 20,175
Hauling 0.75 Maintenance, 4% of capital plant 2,689,965
Washing 4.34 cost
Loading for rail 0.25 Insurance, 250,000/year 1,681,228
Rail transport 2.64 Total 58,339,282
Ship loading 6.00
Drying, bunker fuel 2.50
G&A 0.75 for 6.725 year and 1.6 million ton/year
Total US$/tonne 20.58 Total US$/tonne 5.42
CAM developed a cash flow that projects operations for a period of 12 years.
The bauxite resources indicated by the Sieromco data would extend the mine life
far beyond a 12-year period; however, after a given length of time wear on
equipment will reach a point where normal maintenance will no longer produce the
desired operating availability and new equipment will be required. CAM's model
has not been developed to consider replacement capital expenditures that would
normally start to occur sometime after year 12.
A value of US$ 32 per tonne was assumed for the bauxite product. This value was
selected to produce a positive cash flow and a positive net present value (NPV)
at a discount rate of 7.5 percent. The internal rate of return (IRR) is 9.0
percent at US$ 32 per tonne. At a value of US$ 30 per tonne, both the NPV at
7.5 and 5.0 percent become negative and the internal rate of return (IRR) is 3.0
percent.
Assuming the grades, recoveries and costs (both capital and operating) used in
the model are correct, the project would have a negative NPV at a zero percent
discount rate and a negative IRR at today's metal prices.
Summarizing, CAM does not see much potential for reducing labour rates and
mining contract costs with oil prices continuing to rise and environmental
priorities requiring greater attention throughout the world.
CAM states that based on all available data, it would not recommend proceeding
with Project development until such time as additional sampling and testing has
been performed that validates the Sieromco data or otherwise proves the resource
in terms of recoveries and grades for Al2O3 and content of reactive silica.
If Moydow believes that their testing to date has not shown the true
economically recoverable resource of the Project, and desires to perform
additional tests, CAM would recommend that in-depth pilot plant testing be
performed on pit-sourced bauxite ore from the various Port Loko deposits.
Assuming the Sieromco stated resources, recoveries, and grades can be validated,
the Project still faces the major problem of economic viability. CAM considers
it unlikely that any significant reductions can be achieved in the estimated
capital or operating cost. Combining this with the present market price for the
bauxite product, CAM does not consider the project to be feasible at this time.
(iv) The Company and Gondwana had severe critics on CAM's studies. The
critics boiled down to three types (1) factual errors and misstatements, (2)
CAM's conclusions, which being professional opinions, have to be accepted, were
it not for the fact that the Company feels that CAM has not used legacy data to
the extent that the data warranted. This for instance showed by comments which
appeared to downplay the importance of Sieromco's data or which emphasized the
loss of Sieromco data during the war and elsewhere by not using available
significant Sieromco data in its study, and (3) the fact that for the "
Feasibility Study Technical and Cost Evaluation Port Loko Project" report the
section with "Observations, Conclusions and Recommendations" for the Resource
report was verbatim copied.
6. Mineralization
See Item 4, "Local Geology".
7. Drilling
A total of 426 holes were drilled from April to September 2005 with a 4"
diameter hollow-stem auger in eight of Sieromco's mining blocks. Drilling was
conducted under supervision of an expatriate foreman driller from Pontil
Minerex, Ghana, who trained a local crew of five Sierra Leoneans, four as drill
assistants and one as drilling foreman. A Sierra Leonean geologist that had
been trained by a Moydow expatriate geologist conducted the logging of the
samples. The sampling was done under his supervision by a team of four
samplers.
Based on the hardness and wetness of the material drilled, material was either
recovered from the outside of the auger (so-called "chips") or from the inside
of the hollow stem sampling tube ("core") as the system was meant to be used.
The chip sampling technique, although defeating the purpose of the HSA system to
prevent production of contaminated samples, duplicated Sieromco's drilling and
sampling technique exactly. Later in the program, when improvements to the
drilling system had been made, the core recovery increased dramatically.
Chips or core of each hole was placed in sequential order in one-meter depth
increments in a core box. After logging of the material (i.e. detailed
geological description), the material was sampled. In case of core, all the
material in each meter interval constituted the sample. In case of chips,
sometimes all, but generally a part of the material in each meter interval was
sampled after homogenizing the material. The sampled material had about the
same weight as a one-meter core sample. Each sample was placed in a bag (rice
sack) labelled with the mining block identifier, the drill hole number, and a
sample number according to depth in sequential order, starting with 1 for the
interval 0 to 1 meter. A tag with the same number was placed in each bag.
Sample bags were weighed with a handheld scale; weights were typically between 8
and 12kg. Sample bags were transported to the Rogbere Exploration Camp for
subsequent sample processing.
Upon completion of the drilling, each drill site was cleaned of debris. Drill
holes were covered and holes widened in the rainy season were plugged with
cement.
The drilling was supervised either by Don Hains, P. Geo., by Dr. Yuriy
Deriouguine (geologist), or by Ebo Bakker, P.Geol. (Alberta).
8. Sampling and Analysis
Sampling and sample processing started in early April 2005 and ended in
September 2005. The program was set-up and supervised by Don Hains, P.Geo. of
Hains Technology Associates, Toronto, Ontario.
Drill samples, 2005 program
See item 7 for sample processing at the drill site. Subsequently, most of the
samples were further processed at Moydow's laboratory at the Rogbere exploration
camp; the remainder were processed at the laboratory of the Geological Survey in
Freetown. Processing consisted of weighing, splitting (Jones splitter),
weighing, hand washing on 18" diameter 1mm sieve for 2 minutes, drying of the
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