mejillones phosphate project – geological …...figure 10 - phosphatic lithofacies. a. textural...

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MEJILLONES PHOSPHATE PROJECT –

GEOLOGICAL INTERPRETATION AND

EXPLORATION PROPOSAL REPORT - CHILE

I

DATE AND SIGNATURE PAGE

Project Name: Mejillones Phosphate Project

Title of Report: Mejillones Phosphate Project – Geological

Interpretation and Exploration Proposal Report

Location: Antofagasta Province, Chile

Client: Handa Copper Corporation

Effective Date of Report: 12 June 2018

Compiled by:

_____________________________________________

JP van den Berg

MSc (Exploration Geology)

Senior Exploration Geologist – Minrom Consulting ([email protected])

Reviewed by:

_____________________________________________

Oscar van Antwerpen

MSc (Geology), GDE (Mining), MPhil (Environ, Management) Pri.Sci.Nat

Director – Minrom Consulting ([email protected])

II

Contents

1 SUMMARY........................................................................................................................................................... IX

2 INTRODUCTION .....................................................................................................................................................1

2.1 TERMS OF REFERENCE - SCOPE OF WORK ...................................................................................................................... 1

2.2 SOURCE OF INFORMATION .......................................................................................................................................... 2

2.3 SITE VISIT ................................................................................................................................................................ 2

2.4 ABBREVIATIONS ....................................................................................................................................................... 2

3 DISCLAIMER - RELIANCE ON OTHER EXPERTS ........................................................................................................3

4 PROPERTY DESCRIPTION AND LOCATION ..............................................................................................................3

4.1 PROPERTY DESCRIPTION ............................................................................................................................................. 3

4.2 PROPERTY LOCATION ................................................................................................................................................. 5

4.3 MINING AND EXPLORATION LICENCE ............................................................................................................................. 5

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY .......................................7

5.1 ACCESSIBILITY .......................................................................................................................................................... 7

5.2 CLIMATE ................................................................................................................................................................. 7

5.3 LOCAL RESOURCES AND INFRASTRUCTURE ...................................................................................................................... 8

5.4 PHYSIOGRAPHY ........................................................................................................................................................ 9

6 HISTORY OF THE MEJILLONES PHOSPHATE DEPOSIT .............................................................................................9

6.1 GENERAL OVERVIEW ................................................................................................................................................. 9

6.1.1 Prior ownership ............................................................................................................................................... 9

6.1.2 Historical exploration work ............................................................................................................................. 9

7 GEOLOGICAL SETTING ......................................................................................................................................... 10

7.1 REGIONAL GEOLOGY ............................................................................................................................................... 10

7.2 LOCAL GEOLOGY ..................................................................................................................................................... 10

7.2.1 Stratigraphy .................................................................................................................................................. 10

7.2.2 Structure........................................................................................................................................................ 11

8 DEPOSIT TYPE AND MINERALISATION GENESIS ................................................................................................... 15

8.1 GLOBAL PHOSPHATE DEPOSITS AND MINERALISATION ENVIRONMENT .............................................................................. 15

8.1.1 Sedimentary Phosphate Minerals ................................................................................................................. 16

8.1.2 Phosphate Deposition and Depositional Systems ......................................................................................... 16

III

8.1.3 Phosphate Lithofacies ................................................................................................................................... 18

8.2 MEJILLONES PHOSPHATE DEPOSIT AND MINERALISATION MODEL ................................................................................... 22

9 EXPLORATION ..................................................................................................................................................... 24

9.1 HISTORICAL EXPLORATION WORK ............................................................................................................................... 24

9.2 RECENT EXPLORATION WORK .................................................................................................................................... 24

9.3 PROPOSED FUTURE EXPLORATION ............................................................................................................................. 26

9.3.1 Geophysics .................................................................................................................................................... 27

9.3.2 Drilling ........................................................................................................................................................... 27

10 DRILLING ............................................................................................................................................................. 30

10.1 PREVIOUS DRILLING ................................................................................................................................................ 30

10.2 RECENT DRILLING ................................................................................................................................................... 30

10.2.1 RC drilling recovery ................................................................................................................................... 41

10.2.2 Reliability of work ..................................................................................................................................... 43

11 SAMPLE PREPARATION, ANALYSIS, AND SECURITY ............................................................................................. 43

11.1 SAMPLE COLLECTION ............................................................................................................................................... 43

11.1.1 Sampling approach and methodology ...................................................................................................... 43

11.2 SAMPLE PREPARATION ............................................................................................................................................. 44

11.2.1 Relation of issuer to sample analysis ........................................................................................................ 44

11.2.2 Sample preparation, assaying, and analytical procedures ....................................................................... 44

11.3 SAMPLE ANALYSES RESULTS ..................................................................................................................................... 45

11.4 FIELD QUALITY ASSURANCE AND QUALITY CONTROL ..................................................................................................... 48

11.5 LABORATORY QUALITY ASSURANCE AND QUALITY CONTROL ........................................................................................... 51

11.6 SECURITY .............................................................................................................................................................. 51

12 DATA VERIFICATION ............................................................................................................................................ 52

12.1 FIELD VERIFICATION ................................................................................................................................................ 52

12.2 DATABASE VERIFICATION .......................................................................................................................................... 53

12.3 ANALYSIS VERIFICATION ........................................................................................................................................... 57

13 MINERAL PROCESSING AND METALLURGICAL TESTING ....................................................................................... 62

13.1 INTRODUCTION ...................................................................................................................................................... 62

13.2 PREVIOUS TEST WORK RESULTS ................................................................................................................................. 62

13.3 RECENT TEST WORK RESULTS .................................................................................................................................... 63

14 MINERALISATION EXPLORATION POTENTIAL RANGE ANALYSIS .......................................................................... 63

15 RECOVERY METHODS .......................................................................................................................................... 65

IV

16 INTERPRETATIONS AND CONCLUSION ................................................................................................................. 66

17 RECOMMENDATIONS .......................................................................................................................................... 67

18 REFERENCES ........................................................................................................................................................ 68

List of Figures

Figure 1 – Mejillones Phosphate Project Licence area and location. Corner numbers refers to the coordinates

listed in Table 2. ..............................................................................................................................................5

Figure 2 – Mejillones average yearly temperature and precipitation. .................................................................8

Figure 3 – Local infrastructure associated with the project area. Left: Train transporting copper plates from

Antofagasta to Mejillones although the project area. Right: High voltage power lines traversing the project

area from Antofagasta to Mejillones. .............................................................................................................9

Figure 4 – Simplified geological map illustrating the structurally controlled basins, fault systems and Pliocene

to Pleistocene Stratigraphy. Based on Di Calma, Pierantoni and Cantalamessa (2014) .............................. 12

Figure 5 – Schematic chart summarising the main Miocene and Pleistocene stratigraphic units of the three (3)

half graben basins developed on the Mejillones Peninsula. ........................................................................ 13

Figure 6 – Schematic presentation of the basin formation and sedimentation form the Miocene to present day.

MM, Morro Mejillones Block; MF, Mejillones Fault; PM, Pampa Mejillones basin; MJ, Morro Jorgino Block;

JF, Jorgino Fault; CH, Caleta Herradura Basin; CM, Cerro Moreno Block; RF, La Rinconada Fault; PA, Pampa

del Aeropuerto basin. Image obtained from Di Calma, Pierantoni and Cantalamessa (2014). ................... 13

Figure 7 – Geological cross sections of the Mejillones Peninsula. See Figure 4 for cross section reference lines.

...................................................................................................................................................................... 14

Figure 8 – Igneous and sedimentary phosphorite deposits with respective age. Image acquired from Pufahl

and Groat (2016) .......................................................................................................................................... 15

Figure 9 – Upwelling-related sedimentary phosphorite. (A) Continental margin phosphorite with upwelling

occurring on the margin of the distal shelf. The microbial degradation of accumulating sedimentary

organic matter produces an oxygen minimum zone (OMZ) and stimulates phosphogenesis in fine-grained

sediment at or near storm wave base. Shelf depth varies but is generally limited to depths <150 m. (B).

Phosphorite also forms as the result of upwelling adjacent to epeiric (shallow inland) seas, producing giant

phosphorite deposits. Unlike continental margin phosphorite, high surface-ocean productivity and thus,

phosphogenesis can be maintained across the platform by evaporation-driven lagoonal circulation, which

V

draws phosphate away from the upwelling front to shallow-water environments. Lithofacies are grainy

because they accumulate above the storm wave base. Epeiric seas are shallower than shelves and have

bottoms within the storm wave base, which is typically <50-m deep. (Pufahl and Groat, 2016) ............... 17

Figure 10 - Phosphatic lithofacies. A. Textural classification scheme for granular and microbial phosphatic

sediments (after Trappe, 2001). Ratio of mud to grains as well as the presence of microbial textures are

used to classify phosphate rocks. B. Time and energy relationships between the different phosphatic grains

in Pliocene and Quaternary sediments that are associated with upwelling on the Peru margin. After

Garrison and Kastner (1990). CFA = carbonate-fluorapatite. ...................................................................... 18

Figure 11 – Graph illustrating both pristine and reworked phosphate genesis and associated characteristics

(Pufahl and Groat, 2016) .............................................................................................................................. 19

Figure 12 - Sea level change, phosphogenesis, and production of economic phosphorite. (A). Single systems

tract model for forming phosphorite with economic P2O5 concentrations. Syn-depositional phosphogenesis,

reworking of pristine phosphorite, and amalgamation of granular beds occurs during transgression and

occurs along the maximum flooding surface. Continued sea level rise causes landward migration of

phosphatic and associated facies belts to create thick stratiform orebodies (Pufahl, James and Dalrymple,

2010). (B). Idealized stratigraphic column showing stacking of lithofacies and position of economic

phosphorite in sequence stratigraphic context. (C). Multiple systems tract model for developing granular

sedimentary ore deposits. Phosphogenesis occurs during transgression and wave reworking of pristine

phosphorite as sea level falls during regression (Baturin, 1971). This mechanism produces a single bed of

granular phosphorite along the basal surface of forced regression that is separated from similarly formed

grainstones by falling stage, lowstand, and transgressive deposits, which generates stratigraphically

separated ore zones. (D). Idealized stratigraphic column showing stacking of lithofacies and position of

economic phosphorite in sequence stratigraphic context. BSFR = basal surface of forced regression, FSST =

falling stage systems tract, HST = highstand systems tract, LST = lowstand systems tract, MFS = maximum

flooding surface, OMZ = oxygen minimum zone, TS = transgressive surface, TST = transgressive systems

tract. The thickness of stratigraphic columns in B and D vary from a few 10s to 100 m or more depending

on the amplitude of the sea level cycle. Obtained from (Pufahl and Groat, 2016) ..................................... 21

Figure 13 – Block Diagram and cross-section (at 23°S latitude) looking south of the structures in the Mejillones

segment. Diagram indicates upper plate extensional tectonics formed as a result of the subducting Nazca

Plate. Half graben structures formed from the extensional tectonics providing the depositional basins for

the Caleta Herradura Alloformation, The La Portada Alloformation, and the Mejillones Alloformation. Image

modified from Allmendinger and González (2010) ...................................................................................... 23

VI

Figure 14 – Interpreted simplified stratigraphic succession of the Mejillones Pininsula Basins. Note the CH AFM

formation was not observed in the Pampa Mejillones Basin but is observed in the Caleta Herradura basin.

CH Afm = Caleta Herradura Alloformation; LP Afm = La Portada Alloformation; MJ Afm = Mejillones

Alloformation; BSFR = basal surface of forced regression; FSST = falling stage systems tract; HST = highstand

systems tract; LST = lowstand systems tract; MFS = maximum flooding surface; OMZ = oxygen minimum

zone; TS = transgressive surface; TST = transgressive systems tract. The thickness of stratigraphic columns

will vary within the basin depending on the amplitude of the sea level cycle. Modified from Pufahl and

Groat (2016) ................................................................................................................................................. 24

Figure 15 – Plan view map of the Mejillones Phosphate Project area indicating the relevant geological,

infrastructure, and exploration scouting drillhole positions. ....................................................................... 25

Figure 16 - Pampa Mejillones basin, sedimentary and phosphate deposition characteristics. ........................ 26

Figure 17 – Proposed geophysical exploration program designed as N-S trending lines intersecting stratigraphy

perpendicularly. Line spacing at 200 m intervals. ........................................................................................ 28

Figure 18 – Proposed phase 1 and 2 drilling campaign. .................................................................................... 29

Figure 19 – Sectional view of drillhole RC MEJ-01 indicating the P2O5, SO3, loss on ignition (LOI), CaO, and Fe2O3

down hole grades and logged lithology. ...................................................................................................... 31

Figure 20 - Sectional view of drillhole RC MEJ-01 indicating the K2O, MgO, Na2O and SiO down hole grades and

logged lithology. ........................................................................................................................................... 32









Figure 25 - Sectional view of drillhole RC MEJ-04 indicating the P2O5, SO3, loss on ignition (LOI), CaO, and Fe2O3




Figure 27 - Sectional view of drillhole RC MEJ-04 indicating the P2O5, SO3, loss on ignition (LOI), CaO, and Fe2O3


VII



Figure 29 – RC drilling recovered mass (kg) recorded per meter intersection. ................................................ 42

Figure 30 - RC drilling recovered percentage based on a theoretical SG of each lithology .............................. 42

Figure 31 – Mejillones P2O5 grade distribution of the entire sample population (191 samples). ..................... 46

Figure 32 - Mejillones P2O5 grade distribution filtered to >1.0 % P2O5 <8.0 % P2O5. Data population = 126

samples ......................................................................................................................................................... 46

Figure 33 - Mejillones P2O5 grade distribution filtered to >1.5 % P2O5 <8.0 % P2O5. Data population = 99 samples

...................................................................................................................................................................... 47


...................................................................................................................................................................... 47

Figure 35 – QAQC CRM results .......................................................................................................................... 48

Figure 36 – QAQC blank results ......................................................................................................................... 50

Figure 37 – QAQC Duplicate Results .................................................................................................................. 51

Figure 38 – Drillhole collar markers clearly indicating the BH ID. ..................................................................... 53

Figure 39 – RC MEJ-01 Chip Trays. .................................................................................................................... 54

Figure 40 - RC MEJ-02 chip trays. ...................................................................................................................... 54

Figure 41 – RC MEJ-03 Chip Trays ..................................................................................................................... 55

Figure 42 – RC MEJ-04 chip trays....................................................................................................................... 55

Figure 43 – RC MEJ-05 Chip Trays ..................................................................................................................... 56

Figure 44 – Well-preserved sample logging material representing each metre of drilled material. ................ 58

Figure 45 - Sample check sampling method. ..................................................................................................... 59

Figure 46 – Sample check results vs the original sample P2O5 results. ............................................................. 60

Figure 47 – Mejillones Phosphate Project Mineralisation Potential are ........................................................... 64

Figure 48 – Process flow-sheet as extracted from the JPMC report. ................................................................ 65

List of Tables

Table 1 - Persons and their respective sections of responsibility ........................................................................1

Table 2 – Mejillones Phosphate Licence corner coordinates reported as UTM and Geographical projection

system .............................................................................................................................................................4

VIII

Table 3 – Mejillones License Documents received. ..............................................................................................6

Table 4 – Scouting RC drilling Summary ............................................................................................................ 30

Table 5 – Theoretical recovery mass parameters and calculations .................................................................. 41

Table 6 – RC mass recovery vs sampled mass ................................................................................................... 43

Table 7 – Summarised sample whole rock analysis statistics. .......................................................................... 45

Table 8 – List of CRM standard sample results along with Laboratory analysis of results ................................ 49

Table 9 – QAQA blank analysis results .............................................................................................................. 50

Table 10 – Complete database summarised statistics of the analysis received from the RC drilling programme.

...................................................................................................................................................................... 56

Table 11 – Mejillones Sample Check Results. Sample check material collected from the well-preserved metre

interval logging material............................................................................................................................... 61

Table 12 – Mejillones sample size distribution results. Table obtained from the JPMC report. Sample head

grade of 5.22% P2O5 ..................................................................................................................................... 62

Table 13 – Mejillones Phosphate Project RC Drillhole Mineralisation Intersections. ....................................... 63

Table 14 – Mejillones Phosphate Mineralisation Range Analysis based on the scout RC drilling results. ........ 64

IX

1 SUMMARY

This Technical Report (hereafter referred to as the “report”) on the Mejillones phosphate deposit has been

prepared at the request of Handa Copper Corporation, a Canadian based company, to present the technical

exploration data gathered, as well as the interpretations and conclusions made. All the observations and

conclusions are based on the technical data gathered by JPMC International (2016). The project data was

verified by Minrom during the Technical Due Diligence performed during the first quarter of 2018 (See

previous report completed by Minrom titled: “Mejillones Phosphate Project - Technical Field Verification

Report”). The effective date of this technical report is 12 June 2018.

The data presented in this report was provided by Mejillones SpA whom is a subsidiary of Mines Global Limited

and the current owners of the exploration and mining concessions covering the Mejillones Phosphate

Mineralisation. The database consists of a report containing the geological logs, analytical data and preliminary

metallurgical studies performed during a pre-economic assessment in 2016 by Jim Porter and Associates

International Limited (JPMC). This report validates the database and provided the reader with the geological

and exploration interpretation and possible potential.

The Mejillones Phosphate Project is located on the Mejillones Peninsula some 50 km north of Antofagasta.

The project area is located within the Atacama Desert and has an arid climate and flat topography. The project

is currently within the development phase and does not contain infrastructure. The regional infrastructure is

well-developed with two (2) well-maintained tarred roads providing access to the project site. A railroad also

crosses the project site along with a high voltage power line. The town of Antofagasta provides all the required

equipment and already services several mining projects within northern Chile.

The phosphorite mineralisation occurs as strata-bound deposits within the La Portada Alloformation. This

formation was deposited within an infra-littoral maritime environment formed because of basinal subsidence

related to local extensional tectonics forming the half graben intra-littoral marine environment during the

Pliocene Epoch. Subsequent tectonic uplift along with ocean level fluctuations deposited the coarse-grained,

richly fossiliferous, poorly consolidated sediments of the Mejillones Alloformation unconformably over the La

Portada Alloformation.

The exploration of the Mejillones Phosphate Project consisted of a Reverse Circulation (RC) drilling programme

of five (5) drillholes totalling 376 m, and 191 samples analysed for whole-rock chemistry by ALS Minerals in

Antofagasta. An additional size versus phosphate grade distribution study was performed on the RC recovered

X

material by AJS Global in Santiago. The validation process included a field visit in March 2018 to validate the

physical data such as the drillhole collar positions and to assess the project’s environment. Additional

validation was conducted on the laboratory responsible for the sample preparation during the 2016 drilling

campaign. Communication between the Minrom geologist and the senior geologist responsible for the drilling

campaign, namely Mr Enrique Grez, indicated that all sample reject (coarse and pulp) was discarded and not

available for sample tech material. Mr Enrique Grez did assist in acquiring the original analyses certificates

from ALS (Antofagasta). The metre chip material stored in chip trays were safe in storage in Antofagasta. Due

to the lack of sample reject material, Minrom elected to sample the well-maintained sample reject martial

located next to the collar position. Additional verification was performed on the database provided. The

Quality Assurance and Quality Control (QAQC) methods and samples were validated along with the

laboratory’s internal QAQC samples.

The conclusions of the technical data validation and due diligence performed by Minrom on behalf of Handa

Copper Corporation are summarised below:

• No discrepancies identified within the analytical database;

• Drillhole positions as reported;

• Analytical database complete;

• Proper QAQC samples inserted in the sample stream;

• Proper internal laboratory QAQC protocols followed.

This Technical Report compile and interpret the database in an attempt or understand the mineralisation and

economic potential of the Mejillones Phosphate Project and endeavours to outline an exploration program

that would increase the project development to a Bankable Feasibility Level.

1

2 INTRODUCTION

The Handa Copper Corporation (BC 0865902) (hereafter referred to as “the Client”) is a Vancouver based

company currently evaluating the mineralisation potential of the Mejillones Phosphate Project. The project is

situated approximately 50km north of Antofagasta, Chile. Minrom Consulting was commissioned by the Client

in March 2018 to perform a NI 43-101 Field Vetting and Technical Due Diligence on the work performed on

the phosphate deposit. The findings are based on a report provided by the Client titled “Mejillones Phosphate

Project – Preliminary Exploration and Process Report” (JPMC International Limited), database obtained from

Mejillones SpA, as well as observations made during a 4-day field excursion compiled by a Minrom Consulting

geologist. The Client further requested that Minrom compile a detailed Technical Report discussing the

Mejillones Phosphate Project’s geology and designing an exploration program which can develop the project

to a Bankable Feasibility Level.

2.1 Terms of Reference - Scope of Work

Handa Copper Corporation appointed Minrom Consulting to provide a Field Vetting and Due Diligence on the

technical data gathered by JPMC International Ltd (JPMC) during a preliminary scouting RC drilling campaign

(May 2016) designed to establish the preliminary economic potential of the Mejillones phosphate deposit. The

data obtained during this Technical Due Diligence was used to evaluate the mineralisation and economic

potential and develop an exploration program designed to further delineate the Mejillones Phosphate Project.

Table 1 provides a list of the responsible persons and their respective sections.

Table 1 - Persons and their respective sections of responsibility

Section Title of section Responsible person

1.0 SUMMARY JP van den Berg - MINROM CONSULTING

2.0 INTRODUCTION JP van den Berg, Oscar van Antwerpen -

MINROM CONSULTING

3.0 DISCLAIMER JP van den Berg - MINROM CONSULTING

4.0 PROPERTY DESCRIPTION AND LOCATION JP van den Berg - MINROM CONSULTING

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,

INFRASTRUCTURE, AND PHYSIOGRAPHY

JP van den Berg - MINROM CONSULTING

6.0 HISTORY JP van den Berg - MINROM CONSULTING

7.0 GEOLOGICAL SETTING AND MINERALISATION JP van den Berg - MINROM CONSULTING

8.0 DEPOSIT TYPE AND MINERALISATION GENESIS JP van den Berg - MINROM CONSULTING

2

9.0 EXPLORATION JP van den Berg - MINROM CONSULTING

10.0 DRILLING JP van den Berg - MINROM CONSULTING

11.0 SAMPLE PREPARATION, ANALYSIS, AND SECURITY JP van den Berg, Oscar van Antwerpen -

MINROM CONSULTING

12.0 DATA VERIFICATION JP van den Berg - MINROM CONSULTING

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING JP van den Berg - MINROM CONSULTING

14.0 MINERALISATION POTENTIAL JP van den Berg - MINROM CONSULTING

15.0 RECOVERY METHOD JP van den Berg - MINROM CONSULTING

16.0 INTERPRETATIONS AND CONCLUSION JP van den Berg, Oscar van Antwerpen -

MINROM CONSULTING

17.0 RECOMMENDATIONS JP van den Berg, Oscar van Antwerpen -

MINROM CONSULTING

2.2 Source of information

The information presented in this Technical Due Diligence Report is derived from JPMC report titled

“Mejillones Phosphate Project – Preliminary Exploration and Process Report”, dated May 2016. The database

along with the original analysis certificates was provided by Mejillones SpA, the current owner of the

exploration and mining concessions. The exploration program designed by Minrom is based on numerous

literature sources used to develop and understand the mineralisation and basin morphology of the Mejillones

Phosphate Project.

2.3 Site visit

JP van den Berg, Senior Exploration Geologist with Minrom Consulting, visited the site for 4 days from the 1st

to the 4th March 2018.

2.4 Abbreviations

Description Abbreviation

Diamond Drilling DD

Reverse Circulation RC

Degrees Celsius °C

Borehole BH

Certified Reference Material CRM

Discounted Cash Flow DCF

3

Drillhole DH

Dense Media Separation DMS

Environmental Audit EA

Environmental and Social Impact Assessment ESIA

Feasibility Study FS

Global Positioning System GPS

Kilometre km

Million Years Ma

Million Tonnes Mt

Metre m

National Instrument NI 43-101

Nearest Neighbour NN

Net Present Value NPV

Ordinary Kriging OK

Quality Assurance and Quality Control QA/QC

3 DISCLAIMER - RELIANCE ON OTHER EXPERTS

Minrom Consulting, on behalf of Handa Copper Corporation prepared the Field Vetting Report. The

information, conclusions, opinion, and estimations contained herein are based on:

• Information made available to Minrom Consulting at the time of the preparation of this report

with an effective date of 12 June 2018; and

• Field verification performed from 1st to the 4th March 2018.

Minrom Consulting believes the information supplied by the Client to be reliable but does not guarantee the

accuracy of the conclusion, opinions, or estimates that rely on third party sources of information outside the

area of technical expertise of Minrom Consulting.

This report is intended to be used by Hansa Copper Corporation as a technical report with Canadian Securities

Regulatory Authorities pursuant with provincial securities legislation. Use of this report by any third party is at

the party’s own risk, except for purposes intended under provincial securities law.

4 PROPERTY DESCRIPTION AND LOCATION

4.1 Property description

The original Mejillones Phosphate Project’s licence covers an area of approximately 13,000 hectares. The

license area consists of a conglomerate of smaller rectangular licenses which combined, produce the license

4

area illustrated in Figure 1. Following the results of the scoping drilling campaign, Mejillones SpA elected to

forfeit a number of these smaller exploration concessions. The conglomerate of these smaller licenses

produced the current license area (Figure 1) covering 6,300 hectares. The corner coordinates of both the

original and current license as supplied by the client are listed in Error! Not a valid bookmark self-reference.

below. Copies of the new license acquisition documents was supplied to Minrom and accompanies this

document as an attachment file.

Table 2 – Mejillones Phosphate Licence corner coordinates reported as UTM and Geographical projection system

UTM Zone - 19W Geographical

Original License Boundary

CORNER EAST NORTH EAST NORTH

1 348793.13 7444617.19 70° 28' 35.1614" W 23° 06' 00.9279" S

2 350783.90 7444633.78 70° 27' 25.1945" W 23° 06' 01.0387" S

3 350771.28 7440625.46 70° 27' 27.0453" W 23° 08' 11.3425" S

4 352782.40 7440623.55 70° 26' 16.3502" W 23° 08' 12.0538" S

5 352798.99 7439628.16 70° 26' 16.1122" W 23° 08' 44.4188" S

6 361792.71 7439621.94 70° 20' 59.9329" W 23° 08' 47.4177" S

7 361818.29 7432586.90 70° 21' 01.3285" W 23° 12' 36.1387" S

8 349806.79 7432633.70 70° 28' 03.7817" W 23° 12' 30.8320" S

9 349829.09 7430651.25 70° 28' 03.7017" W 23° 13' 35.2864" S

10 348785.77 7430673.37 70° 28' 40.3929" W 23° 13' 34.2234" S

11 348798.47 7429662.51 70° 28' 40.3081" W 23° 14' 07.0892" S

12 347837.50 7429652.68 70° 29' 14.1166" W 23° 14' 07.0898" S

13 347824.59 7432660.96 70° 29' 13.4873" W 23° 12' 29.2910" S

14 345815.98 7432671.04 70° 30' 24.1271" W 23° 12' 28.2908" S

15 345803.38 7439653.48 70° 30' 22.0294" W 23° 08' 41.2985" S

16 347801.52 7439635.05 70° 29' 11.7935" W 23° 08' 42.5647" S

17 347806.59 7441633.35 70° 29' 10.8991" W 23° 07' 37.6040" S

18 348804.43 7441640.72 70° 28' 35.8228" W 23° 07' 37.6939" S

19 348800.82 7441670.68 70° 28' 35.9390" W 23° 07' 36.7189" S

20 348793.13 7444617.19 70° 28' 35.1614" W 23° 06' 00.9279" S

Current License Boundary

CORNER EAST NORTH EAST NORTH

1 347797.24 7441648.92 70° 29' 11.2219" W 23° 07' 37.0946" S

2 349797.20 7441648.93 70° 28' 00.9244" W 23° 07' 37.7528" S

3 349797.21 7438648.99 70° 28' 01.9856" W 23° 09' 15.2780" S

4 352797.14 7438649.00 70° 26' 16.5168" W 23° 09' 16.2503" S

5 352797.14 7435649.06 70° 26' 17.5585" W 23° 10' 53.7764" S

6 353797.12 7435649.06 70° 25' 42.3948" W 23° 10' 54.0966" S

7 353797.12 7438649.00 70° 25' 41.3602" W 23° 09' 16.5700" S

8 355797.07 7438649.00 70° 24' 31.0464" W 23° 09' 17.2030" S

9 355797.08 7435649.07 70° 24' 32.0669" W 23° 10' 54.7304" S

5

10 359796.99 7435649.07 70° 22' 11.4090" W 23° 10' 55.9717" S

11 359796.99 7432649.14 70° 22' 12.4027" W 23° 12' 33.5004" S

12 347797.26 7432649.12 70° 29' 14.4529" W 23° 12' 29.6666" S

4.2 Property location

The Mejillones Phosphate Licence is located approximately 50 km north of Antofagasta, bordering the harbour

town of Mejillones (Figure 1). The local topography within the licence area is generally flat desert terrain

making it easily accessible from either the well-maintained B-272 tarred road or the national (N-1) tarred road.

Figure 1 – Mejillones Phosphate Project Licence area and location. Corner numbers refers to the coordinates listed in Table 2.

4.3 Mining and exploration licence

The updated licence documents related to the Mejillones Phosphate Project were presented to Minrom

Consulting in batches on the 27th of April, the 4th of March and the 11th of March 2018. A total of 21 individual

6

licenses currently make out the license area presented in Figure 1. The coordinates presented in The original

Mejillones Phosphate Project’s licence covers an area of approximately 13,000 hectares. The license area

consists of a conglomerate of smaller rectangular licenses which combined, produce the license area

illustrated in Figure 1. Following the results of the scoping drilling campaign, Mejillones SpA elected to forfeit

a number of these smaller exploration concessions. The conglomerate of these smaller licenses produced the

current license area (Figure 1) covering 6,300 hectares. The corner coordinates of both the original and current

license as supplied by the client are listed in Error! Not a valid bookmark self-reference. below. Copies of the

new license acquisition documents was supplied to Minrom and accompanies this document as an attachment

file.

Table 2 (Current license coordinates) represent the border outline of the 21 conglomerated exploration

licenses. Table 3 below provided a summary of the license documents received. Minrom recommend that a

detailed legal due diligence be conducted on the license status, applicable commodities, and duration of

license.

Table 3 – Mejillones License Documents received.

License Number Documents Heading Company Registered Date Received

Mejillones III 4" Exploration Concession Mejillones SpA 27/04/2018

Mejillones III 4" Re-registration of mining Mejillones SpA 27/04/2018























7



Mejillones 20, 1 AL 30" Constitutive Judgment and Memorandum

Minera Polar Mining Chile LTDA

04/05/2018



04/05/2018



04/05/2018



04/05/2018



04/05/2018

MEJILLONES II 38 1/60 Manifestation Minera Polar Mining Chile LTDA

11/05/2018


11/05/2018


11/05/2018

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,

INFRASTRUCTURE, AND PHYSIOGRAPHY

5.1 Accessibility

The project site can be accessed from the main national N1 tarred road leading to Antofagasta (50 km south).

The well-maintained B-272 tarred road connects the N1 road with the town of Mejillones and intersects the

project area (Figure 1). The entire project area can be accessed from these two main roads.

5.2 Climate

The climate at the Mejillones Project site is dominated by virtually no precipitation and average temperatures

range between 25°C to 13°C. The climate if controlled by the cold Humboldt Current to the east and the Andes

mountain range to the west which prevents humid air reaching the Mejillones project.

8

Figure 2 – Mejillones average yearly temperature and precipitation.

5.3 Local resources and infrastructure

The local infrastructure is well-developed with a deep-sea port located within the town of Mejillones, some 5

km from the project site. A well-maintained railroad stretches from Antofagasta to the port in Mejillones,

through the project area. High voltage power lines also cross the project area (Figure 3).

The town of Antofagasta is the primary location for companies owning and servicing major copper producing

mines located in the north of Chile. This environment provides and stimulates a range of resources relating to

professional skill and mining equipment.

9

Figure 3 – Local infrastructure associated with the project area. Left: Train transporting copper plates from Antofagasta to Mejillones although the project area. Right: High voltage power lines traversing the project area from Antofagasta to Mejillones.

5.4 Physiography

The Mejillones Phosphate Project area’s topography is generally flat with intermittent angulating hills. The

western extent of the project area is dominated by weathered resistant bedrock formations rising

approximately 150 m above the surroundings. The eastern extent of the project area is dominated by a steep

mountainous region indicating the start of the Andes mountain range. The project area lacks any vegetation

and is located within the Atacama Desert.

6 HISTORY OF THE MEJILLONES PHOSPHATE DEPOSIT

6.1 General overview

6.1.1 Prior ownership

The Mejillones Phosphate Project was previously owned by Mines Global who also owned an additional

phosphate licence located close by.

6.1.2 Historical exploration work

No historical exploration work has been conducted on the project area.

10

7 GEOLOGICAL SETTING

7.1 Regional geology

The Mejillones Phosphate Project is situated approximately 60 km east of the Peru-Chile subduction zone. This

marks the boundary between the subducting Nazca Plate and the South American Craton. The sub-crustal

accretion continuously removes lithospheric material from the South American Craton by means of subducting

erosion. This results in local the east-west extension experienced within the project areas during the Miocene

followed by both extension and uplift during the Pliocene Epoch (von Huene and Ranero, 2003; Victor et al.,

2011; Di Calma, Pierantoni and Cantalamessa, 2014).

The extension tectonics during the Miocene Epoch resulted in the development of three (3) half graben

structures, bound by north- to north-northwest-striking, east-dipping, listric normal faults. These half grabens

provided the ideal marine sedimentary deposition environment. Uplift during the Pleistocene Epoch formed

marine terraces resulting in inland exposures of the Miocene and Pleistocene shallow-marine sediments

(Armijo and Thiele, 1990). Figure 4 illustrates the structural and sedimentary features associated with the

Mejillones Peninsula.

7.2 Local geology

7.2.1 Stratigraphy

The stratigraphy of the three half graben basins is illustrated in Figure 5. The primary stratigraphic units

associated with the phosphate mineralisation consist of the La Portada Alloformation (LP Afm) unconformably

overlain by the Mejillones Alloformation (MJ Afm).

The La Portada Alloformation is associated with the Pliocene sedimentation and is rich in diatomaceous mud

and diatomite. Some observations also noted sedimentary strata of shallow-marine sandstone interbedded

with Balanus-bearing coquina limestone. Mapping results from Di Calma, Pierantoni and Cantalamessa (2014)

indicate that the northern extent of the Pampa Mejillones basin contains primarily weakly stratified silty clay,

massive diatomite and diatomaceous siltstone with occasional intercalations of well-sorted fine sand. The

southern extent of the Pampa Mejillones basin is, however, dominated by a mosaic of coarse bioclastic

sandstone, whitish diatomite siltstone with frequent intercalations of silty layers of a buff colour and, to a

significant lesser extent, conglomerates and lenses of gypsum.

11

The Pleistocene Mejillones Alloformation unconformably overlay the La Portada Alloformation. This formation

primarily consists of coarse-grained, richly fossiliferous, poorly consolidated sediments. These sedimentary

deposits were deposited within numerous sequences of shingled, west-east trending, arcuate beach ridges

and can be easily distinguished with both satellite images and ground mapping. These ridge lines represent

the paleo shorelines, formed during the relative sea-level fluctuation during this period. The concave-to-the-

sea shape of the paleo shorelines suggest that the shore line progressed away from the central part of the

peninsula towards the north of the Pampa Mejillones basin and Caleta Herradura basins, and towards the

south of the Pampa del Aeropuerto basin. Figure 6 schematically illustrates the formation of the three (3)

basins, followed by the deposition of the Pliocene La Portada Alloformation, and subsequently by the

Pleistocene Mejillones Alloformation.

7.2.2 Structure

The major structural features of the Mejillones Peninsula is described by Armijo and Thiele (1990) and

Allmendinger and Gonzalez (2010). The structural features observed at the project area were formed from

extensional tectonism resulting in the formation three (3) primary N-S and NNW-SSE striking, eastwards

dipping, large displacement faults (Figure 4). The Mejillones Fault displays a cumulative displacement of more

than 400 m in the north, which gradually decreases towards the southern point, whereas the La Rinconada

Fault’s displacement increases from the north towards the south. The displacement associated with these

faults resulted in the basin formation (Di Calma, Pierantoni and Cantalamessa, 2014). Figure 7 schematically

illustrates these major fault systems by means of geological cross sections as indicated in Figure 4.

12

Figure 4 – Simplified geological map illustrating the structurally controlled basins, fault systems and Pliocene to Pleistocene Stratigraphy. Based on Di Calma, Pierantoni and Cantalamessa (2014)

13

Figure 5 – Schematic chart summarising the main Miocene and Pleistocene stratigraphic units of the three (3) half graben basins developed on the Mejillones Peninsula.

Figure 6 – Schematic presentation of the basin formation and sedimentation form the Miocene to present day. MM, Morro Mejillones Block; MF, Mejillones Fault; PM, Pampa Mejillones basin; MJ, Morro Jorgino Block; JF, Jorgino Fault; CH, Caleta

Herradura Basin; CM, Cerro Moreno Block; RF, La Rinconada Fault; PA, Pampa del Aeropuerto basin. Image obtained from Di Calma, Pierantoni and Cantalamessa (2014).

14

Figure 7 – Geological cross sections of the Mejillones Peninsula. See Figure 4 for cross section reference lines.

15

8 DEPOSIT TYPE AND MINERALISATION GENESIS

8.1 Global Phosphate Deposits and Mineralisation Environment

Globally, economic concentrations of phosphor occur in either igneous intrusions or as boielemental

sediments formed from precipitates of phosphor. Igneous phosphor deposits are typically associated with

carbonate minerals whereas sedimentary phosphor deposits are associated with sedimentary accumulation

or precipitation. The largest resource of phosphor occurs in these sedimentary deposits with the largest known

deposits occurring in North Africa, the Middle East, and North America (Figure 8) and contains grades ranging

between 18 wt% to 35 wt% P2O5.

Figure 8 – Igneous and sedimentary phosphorite deposits with respective age. Image acquired from Pufahl and Groat (2016)

The deposition and concentration of phosphate in sedimentary deposits is closely associated with the earths

biological cycles. The Neoproterozoic Oxygenation Event (Pufahl and Groat, 2016) is linked to the first major

evolution of multicellular animals and the largest known phosphate sedimentary deposits. Thus, sedimentary

16

phosphates are generally a Phanerozoic phenomenon that reflects the influence of an environment and

expanding biosphere and phosphor fixation.

8.1.1 Sedimentary Phosphate Minerals

The primary phosphate mineral occurring in these sediment deposits is francolite (Ca10-a-bNaaMgb (PO4)6-x(CO3)x-

y-z(CO3⋅F)x-y-z(SO4)zF2), an authigenic carbonate-rich fluorapatite (Jarvis et al., 1994). Sedimentary environments

associated with vertebrate fossils also contained varying proportions of dahllite [Ca5(PO4, CO3)3(OH)], a

carbonate-rich hydroxylapatite that forms from bone, dental enamel, and dentine. Unaltered francolite

typically contains 32% P2O5, 52% CaO, and 4% F, and includes 1.2 ± 0.2% Na, 0.25 ± 0.02 Sr %, 0.36 ± 0.03 %

Mg, 6.3 ± 0.3% CO2, and 2.7 ± 0.3% SiO2 (Jarvis et al., 1994). Weathering and diagenesis promote a transition

to fluorapatite, whereas supergene enrichment creates secondary Fe- and Al-rich phosphate minerals such as

crandallite [CaAl3(PO4)2(OH)5⋅(H2O)], millisite [(Na,K)CaAl6(PO4)4(OH)9⋅3(H2O)], wavellite [(Al3

(PO4)2(OH,F)3⋅5(H2O)], and strengite [Fe3+PO4⋅2(H2O)].

8.1.2 Phosphate Deposition and Depositional Systems

Phosphorus is delivered via weathering of the continental rocks to the ocean in two forms: namely dissolved

and particulate. The first mentioned is relevant for marine phosphate deposit and occurs in oceanic waters as

dissolved phosphate. The general concentration of P in oceanic water increase with depth. This is due to the

relative fixation of phosphate by phytoplankton during photosynthesis which reduce the P concentrations to

near zero. The increase in P concentration with depth occurs due to the recycling of organic matter as is sinks

to the sea floor. The large accumulation of phosphate within sediments on continental margins and epeiric

seas occurs as a result of P-rich deep water being returned to the surface via coastal upwelling.

Peritidal phosphate deposits formed only in the Precambrian coastal environment form sedimentary facies

which created thin stratiform orebodies parallel to the paleoshoreline. These deposits are generally low grade,

produced from microbial and abiotic phosphogenic processes and tidal flats.

Higher grade P deposits started to accumulate during the Neoproterozoic and continued to the Phanerozoic

Era. The primary cause of the higher-grade deposits is due to the oceanic upwelling mechanism. When coastal

upwelling was focused on the distal shelf, continental margin phosphate formed (Figure 9A). Bacterial

processes that both released and incorporated phosphate from pore water drove the phosphate accumulation

within organic-rich sediments beneath the upwelling front. Epeiric sea phosphate deposits formed in ancient,

shallow inland seas with current systems that transported dissolved phosphate away from the area of active

upwelling to precipitate francolite across the entire platform (Figure 9B) (Pufahl, James and Dalrymple, 2010).

17

Continental margin phosphatic sediments accumulate today where favourable trade winds induce upwelling

along western North America, South America, and southern Africa; economically significant Pleistocene and

Miocene deposits that formed under these conditions are exposed along these coasts.

Figure 9 – Upwelling-related sedimentary phosphorite. (A) Continental margin phosphorite with upwelling occurring on the margin of the distal shelf. The microbial degradation of accumulating sedimentary organic matter produces an oxygen minimum zone

(OMZ) and stimulates phosphogenesis in fine-grained sediment at or near storm wave base. Shelf depth varies but is generally limited to depths <150 m. (B). Phosphorite also forms as the result of upwelling adjacent to epeiric (shallow inland) seas, producing giant phosphorite deposits. Unlike continental margin phosphorite, high surface-ocean productivity and thus,

phosphogenesis can be maintained across the platform by evaporation-driven lagoonal circulation, which draws phosphate away from the upwelling front to shallow-water environments. Lithofacies are grainy because they accumulate above the storm wave

base. Epeiric seas are shallower than shelves and have bottoms within the storm wave base, which is typically <50-m deep. (Pufahl and Groat, 2016)

18

8.1.3 Phosphate Lithofacies

Identifying and classifying phosphate Lithofacies proved difficult as a number of deposition environments

exists. Slansky (1986) consequently developed several classifications based on the outcrop description,

petrography, chemical composition, or a combination thereof. Due to the textural similarities with limestone

sedimentary deposits, these phosphate facies evolved to a nomenclature based on the modified Dunham

classification for carbonate rocks (Garrison and Kastner, 1990; Trappe, 2001). This classification scheme names

phosphate rocks based on the ratio of mud vs grains as well as the presence of microbial textures (Figure 10).

Figure 10 - Phosphatic lithofacies. A. Textural classification scheme for granular and microbial phosphatic sediments (after Trappe, 2001). Ratio of mud to grains as well as the presence of microbial textures are used to classify phosphate rocks. B. Time and energy relationships between the different phosphatic grains in Pliocene and Quaternary sediments that are associated with

upwelling on the Peru margin. After Garrison and Kastner (1990). CFA = carbonate-fluorapatite.

19

Another practical classification scheme recognizes two broad categories which are applicable to both

phosphate-rich carbonate and siliciclastic sediments. This classification is termed pristine and reworked

phosphate lithofacies. The pristine phosphate lithofacies are autochthonous and reflect the locus of

phosphogenesis in sediments. Reworked phosphate lithofacies are allochthonous high-energy deposits

composed of phosphatic grains (Figure 11).

Figure 11 – Graph illustrating both pristine and reworked phosphate genesis and associated characteristics (Pufahl and Groat, 2016)

The deposition environment along with the associated sediment can help to generate a simplified stratigraphic

succession that can help in identifying possible phosphate deposits. Sequence stratigraphy emphasizes facies

associations in relation to time and illustrates the interplay between accommodation and sedimentation on

strata architecture (Eriksson et al., 2013). Accommodation refers to the space available for deposition to occur

as a result of local tectonics and/or global eustatic changes in the sea level. Because a sedimentary sequence

records sea level cyclicity, it has a predictable internal structure of contemporaneous depositonal systems

20

called systems tracts, each representing a different phase of sea level change. This predictability provides a

framework to target and extrapolate the potential occurrence of phosphatic beds, which mark surfaces of

stratigraphic condensation between systems tracts.

The most important of these is the maximum flooding surface because in Phanerozoic upwelling

environments, the potential for very low rates of sedimentation commonly produces high-grade,

amalgamated phosphorite beds. This condensed surface marks the transition from the transgressive to

highstand systems tract and is characterized by firm grounds, hardgrounds, and concretionary layers (Figure

12 A). Although syn-depositional phosphogenesis, reworking, and amalgamation during transgression are the

most common way of forming large, high-grade sedimentary phosphorites (Figure 12 A & B), small lower grade

deposits (5–15 wt % P2O5) may develop in all systems tracts associated with sea level rise and fall, thus

complete sea level cycle, known as Baturin Cycling (Figure 12 C; Baturin (1971)). On some continental shelves

with coastal upwelling, pristine phosphorite produced during transgression is reworked into a high-grade

regressive lag (25–35 wt % P2O5) along the basal surface of forced regression. The basal surface of forced

regression is a condensed surface marking the contact between the transgressive and falling stage system

tracts (Figure 12 C). Although potentially economic, this single bed of granular phosphorite will be separated

from similarly formed grainstones by a thick succession of sediments deposited during regression and

subsequent transgression to produce stratigraphically separated ore zones.

These sedimentary layers are easily visible on seismic profiles due to each lithological strata’s high acoustical

impedance. The condensed surface of the pristine phosphorite beds are also visible on gamma-ray logs as it

produces a pronounced positive anomaly resulting from U scavenged by upwelling related organic matter and

francolite (Jones, 1989; Pufahl and Groat, 2016).

21

Figure 12 - Sea level change, phosphogenesis, and production of economic phosphorite. (A). Single systems tract model for forming phosphorite with economic P2O5 concentrations. Syn-depositional phosphogenesis, reworking of pristine phosphorite, and amalgamation of granular beds occurs during transgression and occurs along the maximum flooding surface. Continued sea

level rise causes landward migration of phosphatic and associated facies belts to create thick stratiform orebodies (Pufahl, James and Dalrymple, 2010). (B). Idealized stratigraphic column showing stacking of lithofacies and position of economic phosphorite in

sequence stratigraphic context. (C). Multiple systems tract model for developing granular sedimentary ore deposits. Phosphogenesis occurs during transgression and wave reworking of pristine phosphorite as sea level falls during regression

(Baturin, 1971). This mechanism produces a single bed of granular phosphorite along the basal surface of forced regression that is separated from similarly formed grainstones by falling stage, lowstand, and transgressive deposits, which generates

stratigraphically separated ore zones. (D). Idealized stratigraphic column showing stacking of lithofacies and position of economic phosphorite in sequence stratigraphic context. BSFR = basal surface of forced regression, FSST = falling stage systems tract, HST =

highstand systems tract, LST = lowstand systems tract, MFS = maximum flooding surface, OMZ = oxygen minimum zone, TS = transgressive surface, TST = transgressive systems tract. The thickness of stratigraphic columns in B and D vary from a few 10s to

100 m or more depending on the amplitude of the sea level cycle. Obtained from (Pufahl and Groat, 2016)

22

8.2 Mejillones Phosphate Deposit and Mineralisation Model

The sedimentary secession and phosphate observed at the Mejillones Project was produced in an infralittoral

maritime zone of a small epeiric ocean. The formation of the small epeiric ocean developed due to tectonic

subsidence during the Moicene to Pliocene Epoch. The tectonic subsidence is primarily related to the

subducting Nazca Plate resulting in upper plate extension of the Coastal Cordillera forming graben and half

graben structures (Figure 13). The deposition of the Caleta Herradura, La Portada, and the Mejillones

Alloformations occurred during these subsiding tectonics. The architecture of the deposition environment

contains a vertical and lateral distribution factor.

The vertical sedimentary distribution is related to the cyclical deposition system tract, imposed form either

tectonic subsidence or sea level changes. The sedimentary secessions and basal location of the Caleta

Herradura and La Portada Alloformations suggest that these sediments were primarily deposited within the

infralittoral zone of the epeiric ocean. Each of these formations were deposited under transgressing and

regressing sea level changes with the unconformity representing a drastic and sudden change in the deposition

environment, presumably as a result of tectonic processes. The deposition of the Mejillones Alloformation is

associated with an intertidal zone deposition environment with regressing sea level deposition system tract.

Figure 14 illustrates a simplified and idealised stratigraphically column of the sedimentary succession observed

in the Mejillones Peninsula.

The lateral sedimentary characteristics will determine the P grade distribution. The geometry of the Pampa

Mejillones basin consists of deeper epeiric seas at the north-western section which shallows towards the

south-east. This suggests that lower grade laminated pristine phosphorite lithologies is expected towards the

northwest of the basin whereas higher grade reworked granular phosphorite lithologies is expected towards

more shallow, tidal dominated sedimentary environment. The primary sedimentary environment will also be

a faction of the lateral distribution of sedimentation and phosphate production within the epeiric ocean shelf.

Figure 9-B illustrates the lateral sedimentary distribution and phosphate sediments association. This indicates

that the inner platform (south to southeast of the Pampa Mejillones basin) will be dominated by coarse-

grained cross-stratified and stratified sediments with phosphorite associated with clastic sediments. The mid

to outer platform of the basin (north to northwest of the Pampa Mejillones basin) will theoretically, be

dominate by finer grained, laminated sediments with phosphorite associated with carbonate minerals.

23

Figure 13 – Block Diagram and cross-section (at 23°S latitude) looking south of the structures in the Mejillones segment. Diagram indicates upper plate extensional tectonics formed as a result of the subducting Nazca Plate. Half graben structures formed from

the extensional tectonics providing the depositional basins for the Caleta Herradura Alloformation, The La Portada Alloformation, and the Mejillones Alloformation. Image modified from Allmendinger and González (2010)

24

Figure 14 – Interpreted simplified stratigraphic succession of the Mejillones Pininsula Basins. Note the CH AFM formation was not observed in the Pampa Mejillones Basin but is observed in the Caleta Herradura basin. CH Afm = Caleta Herradura Alloformation; LP Afm = La Portada Alloformation; MJ Afm = Mejillones Alloformation; BSFR = basal surface of forced regression; FSST = falling

stage systems tract; HST = highstand systems tract; LST = lowstand systems tract; MFS = maximum flooding surface; OMZ = oxygen minimum zone; TS = transgressive surface; TST = transgressive systems tract. The thickness of stratigraphic columns will vary

within the basin depending on the amplitude of the sea level cycle. Modified from Pufahl and Groat (2016)

9 EXPLORATION

9.1 Historical exploration work

No historical exploration work has, to Minrom Consulting’s knowledge, been performed on the phosphate

deposit within the study area.

9.2 Recent exploration work

The exploration work performed on the Mejillones Phosphate deposit consists of five (5) scout RC drillholes

for a total of 376 m. The primary objective of this drilling campaign was to identify the phosphate-bearing

25

lithology, establish the lateral continuity of the mineralised strata, and determine whether the P2O5 grades are

able to support economic conditions. The drillhole positions were spread out within the licenced area to obtain

a good geographical spread (Figure 15). According to the JPMC report, conventional RC drilling equipment was

used with a 5½” bit dimension. Standard RC drilling practice was also implemented, which included the

sampling of every metre. The report compiled by JPMC indicates that the drilling campaign was managed by

Mr Enrique Grez (South American Manager, 2015), who compiled a detailed report as to the Standard

Operating Procedures (SOP) implemented during the RC drilling programme.

Figure 15 – Plan view map of the Mejillones Phosphate Project area indicating the relevant geological, infrastructure, and exploration scouting drillhole positions.

26

9.3 Proposed Future Exploration

The formation of the Pampa Mejillones basin along with the vertical sedimentary cycles and lateral

phosphorite distribution will form the base of the proposed exploration technique. Figure 16 below illustrates

the basin characteristics based in the tectonic setting and the theoretical sedimentary and phosphate

deposition environment. This indicates that the phosphate mineralisation will be irrepressibly of the lower

weight percentage grade towards the northwest but will contain thicker successions of mineralised

phosphorite associated with finer grained carbonaceous stratigraphy. The shallow sedimentary environment

towards the southeast suggests that the phosphate mineralisation beds would likely be reworked due to wave

action resulting in thinner, higher weight percentage P2O5, clastic-phosphorite beds.

Figure 16 - Pampa Mejillones basin, sedimentary and phosphate deposition characteristics.

Minrom therefor propose that the following exploration program be initiated in order to delineate the basin

sedimentary environment and to characterise the phosphate ore characteristic.

Basin, Sedimentation and

Phosphate Analysis

• Basin Depth: Increasing

• Sedimentary Phosphate Facies Type: Pristine

Phosphate Deposit

• Thickness of Phosphate beds: Increasing

thickness

• Theoretical phosphate conc.: 2 – 10 wt% P2O5

• Sedimentary Grain Size: Increasing Fine

Grained

• Phosphate association: Phosphorite-Carbonate

Incr

easi

ng

No

rth

Increasing West

• Basin Depth: Decreasing

• Sedimentary Phosphate Facies Type: Reworked

Phosphate Deposit

• Theoretical phosphate concentration: 10 – 35 wt%

P2O5

• Thickness of Phosphate beds: Decreasing thickness

• Sedimentary Grain Size: Increasing Coarse Grained

• Phosphate association: Clastic-phosphorite

Increasing East

Incr

easi

ng

Sou

th

A

B C

A

A

B

B C

C

27

9.3.1 Geophysics

Three sedimentary formations are observed within the Pampa Mejillones basin. The older Caleta Herradura

Alloformation was deposited during the basinal subsidence sequence. A drastic change in the paleo-

sedimentary environment resulted in the reworking of the Caleta Herradura Alloformation and the formation

of the unconformity followed by the deposition of the La Portada Alloformation. The unconformity separating

the La Portada Alloformation with the Mejillones Alloformation marks the paleo-sedimentary change from a

middle platform environment to the inner platform sedimentary environment. The change in sedimentary

environment occurs as a result of either the sea level subsiding or the crustal lithology rising, forming the

numerous concave to the sea, paleo-shorelines observed within the study area.

These unique sedimentary successions along with the unconformities and phosphorite associated with the La

Portada, and possibly the Caleta Herradura Alloformations are perfect seismic reflectors due to the relative

differences in acoustical impedance between indurated beds and less cemented layers. Performing 3D or 2D

seismic will greatly enhance the special understanding of the sedimentary environment of the basin as well as

delineating the depth of mineralisation and bedrock.

Alternatively, the resistivity contrast between the mudstone and sandstone layers can be used to map the

basin sedimentary morphology using Electro Magnetic (EM) ground techniques. This method is easier to

implement and cheaper than the seismic method. Figure 17 below illustrates the proposed geophysical

program designed at line spaced 200 metre apart trending north-south. The survey consists of 26 lines with a

total length approximately 186 km.

9.3.2 Drilling

The proposed drilling of the Mejillones Phosphate Project is proposed to be performed within two campaigns

following the results of the geophysical survey. Conventional drilling methods such as Reverse Circulation (RC)

and Diamond Core Drilling (DD) will not produce a representative sample due to the physical characteristics

of the sedimentary units as well as the phosphorite minerals. Furthermore, any abrasive or percussive drilling

techniques will inevitably reduce the phosphor concentrations due to volume loss (core recovery) and will

change the phosphor mineral’s physical characteristics. This will have a major impact on the metallurgy and

project design. Due to this, Minrom suggest that vibrating drilling techniques be implemented on the

Mejillones Phosphate Project. This drilling technique is proved to produce drill sample with 97 – 100% recovery

and will furthermore maintain the integrity of the phosphor mineralisation.

28

Figure 17 – Proposed geophysical exploration program designed as N-S trending lines intersecting stratigraphy perpendicularly. Line spacing at 200 m intervals.

Minrom therefor propose the following drilling campaigns, planned based on the seismic results:

• Drilling Phase 1 (Pre-Feasibility Level Project Development)

o 6 drill holes totalling 600 metres

o Planned according to geophysical survey results and aimed to delineate regional phosphate

concentrations and basin morphology

29

o Pre-Feasibility level metallurgical analysis. Delineate metallurgical characteristics, size

distribution analysis, and liberalisation study

o Develop an Indicated Mineral Resource based on the NI 43-101 international standard

• Drilling Phase 2 ( Pre-Feasibility/Feasibility Level Project Level)

o Target Area base on the geophysics and Phase 1 drilling results

o Produce a bulk sample from the drilling material which will be used for detailed processing

studies

o Delineate an Ore Reserve based on the client’s yearly production and Life of Mine Plan.

Figure 18 below illustrates the exploration and resource definition drilling for the phase 1 and phase 2 drilling

campaigns. The phase 1 exploration and resource delineation drilling are proposed to consist of 6 vibro-core

drillholes placed based to the interpreted geophysical results. The phase 2 reserve definition drilling (Figure

18 – Frame B) will focus on the area containing the best result from both the geophysics and phase 1 drilling

campaigns. The proposed phase 2 drilling is designed within a 100 by 100 metre grid which will allow a total

area of 750,000 m2 to be evaluated. This area, based on the scout drilling results, has the potential to produce

an estimated 2.9 Mt P2O5 at a stratigraphically thickness of 37 m and an average grade of 4.5% P2O5.

Figure 18 – Proposed phase 1 and 2 drilling campaign.

30

10 DRILLING

10.1 Previous drilling

No historical drilling programmes have been performed on the phosphate deposit currently under evaluation.

10.2 Recent drilling

The RC drilling campaign consisted of 5 RC scouting drillholes delivering a total of 376 m (Figure 15). Drilling

commenced on the 5th of December 2015 for a total of 5 days. Figure 19 to Figure 28 illustrate the geological

and down hole whole rock grades of each RC drillhole.

Table 4 – Scouting RC drilling Summary

BH ID EAST NORTH AZIMUTH BEARING RL EOH DATE

COMPLETED TIME

START TIME

FINISHED

RC MEJ-1

356983 7432765 0 -90 134 80 05/12/2015 08:16 12:30:00

RC MEJ-2

361390 7434999 0 -90 147 56 06/12/2015 08:05 12:30:00

RC MEJ-3

355962 7439513 0 -90 72 75 07/12/2015 08:30 16:00:00

RC MEJ-4

353517 7437051 0 -90 78 85 08/12/2015 10:00 12:30:00

RC MEJ-5

355711 7433732 0 -90 130 80 09/12/2015 08:15 12:15:00

31

Figure 19 – Sectional view of drillhole RC MEJ-01 indicating the P2O5, SO3, loss on ignition (LOI), CaO, and Fe2O3 down hole grades and logged lithology.

32

Figure 20 - Sectional view of drillhole RC MEJ-01 indicating the K2O, MgO, Na2O and SiO down hole grades and logged lithology.

33


34


35


36


37

Figure 25 - Sectional view of drillhole RC MEJ-04 indicating the P2O5, SO3, loss on ignition (LOI), CaO, and Fe2O3 down hole grades and logged lithology.

38


39

Figure 27 - Sectional view of drillhole RC MEJ-04 indicating the P2O5, SO3, loss on ignition (LOI), CaO, and Fe2O3 down hole grades and logged lithology.

40


41

10.2.1 RC drilling recovery

The data supplied to Minrom Consulting included the weight of each 1 m material recovered from the scout

RC drilling campaign. The boxplot diagram of the recovered mass per identified lithology is illustrated in Figure

29. The results indicate that the coarser grained lithologies (conglomerate and sandstone) produced a higher

recovered mass overall than the finer grained lithologies (coquina, limestone, and mudstone). Using these

recovered weights, along with the mentioned drillhole diameter of 5½” (140mm), a theoretical recovery mass

can be calculated using the SG parameters as indicated in Table 5. Using this theoretical mass, a percentage

recovery can be estimated per lithology (Figure 30). The results indicate that the RC drilling recovered an

average of 65% of the conglomerate material, 87% of the coquina material, 58% of the limestone material,

47% of the mudstone material, and 69% of the sandstone material.

Table 5 – Theoretical recovery mass parameters and calculations

Cong Coq Lime Mud Sand

Theoretical SG 2.8 1.8 2.43 2.5 2.5

Hole Diameter (mm) 140 140 140 140 140

Hole Volume (l/m) 15.4 15.4 15.4 15.4 15.4

Theoretical Mass

(kg/m)

43.11 27.71 37.41 38.49 38.49

Average Recovery (%) 65% 87% 58% 47% 69%

42

Figure 29 – RC drilling recovered mass (kg) recorded per meter intersection.

Figure 30 - RC drilling recovered percentage based on a theoretical SG of each lithology

43

10.2.2 Reliability of work

The drilling RC drilling campaign was performed based on international drilling standards with every metre

sampled in bulk bags. An average recovery of 63.4% was estimated using the method stated in Section 10.2.1.

This low recovery does cause some concern.

Two individual samples were split from the recovered material using a riffle. These represent the lithological

logs collected in chip trays, along with a sample split for chemical analysis. The remaining samples were

discarded. The collar positions were clearly marked for future reference.

11 SAMPLE PREPARATION, ANALYSIS, AND SECURITY

11.1 Sample collection

11.1.1 Sampling approach and methodology

A total of 191 samples were collected from drilled holes at metre intervals. Sample collection methodology

consisted of riffle splitting the recovered RC material. The data provided includes the weight of each sample

as reported by ALS Minerals. Table 6 below summarises the recovered mass, sample weight, and statistics.

This suggests that an average of 47% of the recovered RC drilled material were sampled for analysis at ALS

Minerals. No Standard Operation Procedure could be obtained relating to the sampling method.

Table 6 – RC mass recovery vs sampled mass

RECOVERED

DRILLING MATERIAL WEIGHT (kg)

SAMPLE WEIGHT RECEIVED (kg)

SAMPLE MASS PERCENTAGE OF REC MAT

Number of samples 191 191 191

Min 6.00 0.24 0.75

Max 41.00 17.57 97.67

Mean 18.63 8.55 47.24

Range 35.00 17.33 -

Variance 36.87 9.79 -

Standard Deviation 6.07 3.13 -

CoV 0.33 0.37 -

Mode 15.00 6.64 48.08

Median 18.00 8.34 48.20

44

11.2 Sample preparation

11.2.1 Relation of issuer to sample analysis

ALS Minerals, located in Antofagasta was used for the analysis of the RC samples. No relationship between the

issuer and the sample analysis laboratory exists.

11.2.2 Sample preparation, assaying, and analytical procedures

Sample preparation procedures at ALS Minerals consisted of the following procedures:

• WEI 21: Received Sample Weight;

• CRU-QC: Crushing QC Test;

• PUL-QC: Pulverising QC Test;

• LOG-24: Pulp Login – Red w/o Barcode;

• LOG-22: Sample Login – Red w/o Barcode;

• CRU-31: Fine Crushing – 70% <2mm;

• SPL-21: Split sample (riffle splitter);

• Pul-31: Pulverise split to 85% <75 µm.

Upon receiving the sample material, ALS weighed the samples and assigned a unique tracking number to each

sample. The samples were dried and crushed to 70% passing 2 mm size fraction. Each sample was slit using a

riffle split with one portion kept as a coarse reject. The second portion (250g) was pulverised to 85% passing

75 µm (microns). 50 g of the pulverised sample was analysed with the remaining 200 g kept for future

reference.

Two separate analyses were performed on the pulverised material. These include a loss on ignition test, as

well as a whole-rock analysis. The loss on ignition test measures the content of a sample lost as gases when

subjected to high temperatures, often including water and CO2. In this case the sample material was subjected

to a temperature of 1000°C. The whole-rock analysis performed on the sample material included both x-ray

fluorescence (XRF) and ICP-AES instruments finishes which effectively analyse major rock-forming elements.

The results report the percentage of the following elements as oxides: aluminium (Al), barium (Ba), calcium

(Ca), chromium (Cr), iron (Fe), potassium (K), magnesium (Mg), manganese (Mn), sodium (Na), phosphorus

(P), sulphur (S), silica (Si), strontium (Sr), and titanium (Ti).

45

11.3 Sample Analyses Results

The analysis performed on the 1 metre sample intervals included whole rock and Loss on Ignition analysis. A

total of 191 sample were analysed and is summarised in Table 7 below. The sample distribution is illustrated

in Figure 31 to Figure 34. The total population sample P2O5 grades range between 0.01% to 9.52%. The

weighted mean of this entire population is estimated at 3.95% P2O5. In order to better understand the sample

distribution, a range of minimum and maximum grade trimming were applied to the sample population (Figure

32 to Figure 34).

Table 7 – Summarised sample whole rock analysis statistics.

SAMPLE WEIGHT

(kg)

WEIGHT RECEIVED

(kg)

LOI (%) Al2O3 (%)

BaO (%)

CaO (%)

Cr2O3 (%)

Fe2O3 (%)

K2O (%)

MgO (%)

MnO (%)

Na2O (%)

P2O5 (%)

SO3 (%)

SiO2 (%)

SrO (%)

TiO2 (%)

Total (%)

Number of samples

191 191 191 191 191 191 191 191 191 191 191 191 191 191 191 191 191 191

Min 4.00 0.24 4.15 0.23 0.01 2.86 0.01 0.42 0.19 1.06 0.01 1.01 0.01 0.03 11.64 0.01 0.06 11.55

Max 41.00 975.00 35.28 17.00 0.23 45.40 0.04 7.39 2.70 8.10 0.12 5.17 9.52 20.20 61.34 4.00 0.84 105.45

Mean 4.00 0.24 4.15 0.23 0.01 2.86 0.01 0.42 0.19 1.06 0.01 1.01 0.01 0.03 11.64 0.01 0.06 11.55

Range 37.00 974.76 31.13 16.77 0.22 42.54 0.03 6.97 2.51 7.04 0.11 4.16 9.51 20.17 49.70 3.99 0.78 93.90

Var 36.87 4,875.21 45.02 8.87 0.00 56.04 0.00 1.93 0.15 1.84 0.00 0.62 3.81 6.79 92.97 0.08 0.03 43.30

StDev 6.07 69.82 6.71 2.98 0.02 7.49 0.00 1.39 0.39 1.36 0.02 0.78 1.95 2.61 9.64 0.28 0.16 6.58

CoV 1.52 290.93 1.62 12.95 2.06 2.62 0.44 3.30 2.05 1.28 1.83 0.78 195.22 86.88 0.83 28.49 2.69 0.57

Mode 15.00 6.64 10.01 10.01 0.03 12.65 0.01 3.16 1.10 2.14 0.06 4.25 2.74 0.25 52.17 0.07 0.61 100.50

Median 18.00 8.28 12.46 9.50 0.03 16.40 0.01 3.16 1.19 2.63 0.06 3.58 1.70 2.74 44.73 0.07 0.48 100.90

46

Figure 31 – Mejillones P2O5 grade distribution of the entire sample population (191 samples).


47



48

11.4 Field Quality Assurance and Quality Control

The exploration team implemented sample QAQC whilst internal QAQC samples were analysed by ALS

Minerals during the analysis procedure. Minrom Consulting collected sample duplicate check material that will

be discussed in Section 12.3.

QAQC samples submitted with the RC sample batches verify that the analytical results obtained are accurate

and precise, and therefore should contain a value that can be replicated if necessary. The QAQC protocols and

methods implemented during the RC scout drilling campaign included blanks, duplicates, and standards (CRM)

which contained a known grade/concentration. Each of these QAQC samples inserted into the sample stream

valuates the laboratory analyses.

The CRM samples used are certified by African Mineral Standards (AMIS) and referenced AMIS0185. The

standard material was obtained from the Wigu Carbonatite Complex, located in Tanzania. See attached

AMIS0185 certificate in Appendix Error! Reference source not found.. Figure 35 below illustrates the P2O5

analysis results compared to the AMIS0185 standard. Based on these results all the analyses were reported

within the 2-standard deviation error margin. The overall trend indicates that the analyses under-reported the

phosphorus grades by 0.11%.

Figure 35 – QAQC CRM results

49

Table 8 – List of CRM standard sample results along with Laboratory analysis of results

SAMPLE ID

Sample Type

WEIGHT RECEIVED (kg)

LOI (%)

Al2O3 (%)

BaO (%)

CaO (%)

Cr2O3 (%)

Fe2O3 (%)

K2O (%)

MgO (%)

MnO (%)

Na2O (%)

P2O5 (%)

SO3 (%)

SiO2 (%)

SrO (%)

TiO2 (%)

Total (%)

AMIS0185 0.06 20.69 2.22

11.48 0.026 5.29 0.1 4.65 1.09 0.17 1.74

21.53

0.081

3416 Standard 0.06 20.78 2.09 7.48 10.75 0.02 4.31 0.1 4.67 0.97 0.14 1.66 4.27 20.81 1.5 0.06 83.45

3435 Standard 0.06 20.8 2.08 7.42 10.7 0.02 4.3 0.1 4.66 0.96 0.14 1.65 4.28 20.81 1.5 0.05 83.25

3454 Standard 0.06 20.46 2.09 7.48 10.8 0.02 4.32 0.1 4.68 0.97 0.15 1.66 4.28 20.82 1.5 0.06 83.23

3469 Standard 0.06 20.57 2.08 7.43 10.65 0.02 4.26 0.1 4.62 0.97 0.18 1.64 4.33 20.75 1.5 0.06 83.01

3528 Standard 0.06 20.75 7.08 7.41 10.25 0.01 4.28 0.1 4.65 0.07 0.15 1.66 4.29 20.84 1.5 0.06 83.36

3613 Standard 0.06 20.54 2.08 7.47 10.75 0.01 4.35 0.1 4.64 0.08 2.11 1.66 4.9 20.77 1.5 0.06 83.18

3714 Standard 0.06 20.92 2.09 7.49 10.75 0.02 4.29 0.1 4.56 0.98 0.18 1.7 4.3 20.84 1.5 0.07 99.75

3729 Standard 0.06 20.08 2.1 7.45 10.75 0.02 4.28 0.1 4.55 0.96 0.19 1.7 4.33 20.9 1.5 0.07 83.53

3802 Standard 0.03 20.68 2.09 7.51 10.7 0.02 4.32 0.1 4.72 0.08 0.02 1.71 4.35 20.89 1.5 0.7 83.9

3824 Standard 0.06 20.77 2.06 7.4 10.65 0.01 4.27 0.1 4.69 0.07 0.19 1.69 4.31 20.78 1.5 0.08 83.26

The blank QAQC results are illustrated in Figure 36 below. The blank material inserted into the sample stream

consisted of pure quartz. Four (4) sample analyses indicated P2O5 levels above the laboratory detection limit

of 0.01%. The contamination is below ore grade percentages (<0.1%). The results of the blanks and

performance of the laboratory is acceptable. Table 9 illustrates the blank sample analysis results.

50

Figure 36 – QAQC blank results

Table 9 – QAQA blank analysis results

SAMPLE ID

Sample type

WEIGHT RECEIVED (kg)

LOI (%)

Al2O3 (%)

BaO (%)

CaO (%)

Cr2O3 (%)

Fe2O3 (%)

K2O (%)

MgO (%)

MnO (%)

Na2O (%)

P2O5 (%)

SO3 (%)

SiO2 (%)

SrO (%)

TiO2 (%)

Total (%)

3430 Blank 10.11 0.02 0.18 0.01 0.22 0.01 1.33 0.05 0.01 0.01 0.03 0.02 0.02 98.3 0.01 0.01 100.2

3457 Blank 10.11 0.06 0.48 0.01 0.06 0.01 0.53 0.19 0.01 0.01 0.09 0.01 0.02 98.83 0.01 0.05 100.35

3475 Blank 10.17 -0.16 0.18 0.01 0.11 0.01 1.58 0.06 0.01 0.02 0.06 0.01 0.05 97.78 0.01 0.02 99.73

3531 Blank 12.08 0.01 0.28 0.01 0.34 0.01 1.6 0.09 0.05 0.01 0.09 0.05 0.01 97.29 0.01 0.01 99.75

3616 Blank 10.29 -0.17 0.21 0.01 0.02 0.01 1.31 0.06 0.01 0.01 0.07 0.01 0.01 98.08 0.01 0.01 99.62

3716 Blank 10.23 0.02 0.33 0.01 0.27 0.01 1.36 0.11 0.06 0.01 0.09 0.08 0.08 96.93 0.01 0.03 99.35

3732 Blank 10.23 -0.23 0.14 0.01 0.07 0.01 1.59 0.06 0.03 0.02 0.03 0.01 0.01 97.99 0.01 0.02 99.61

3789 Blank 10.21 0 0.24 0.01 0.02 0.01 1.13 0.1 0.02 0.01 0.1 0.01 0.01 97.65 0.01 0.01 99.43

3806 Blank 10.22 -0.24 0.26 0.01 0.03 0.01 1.61 0.11 0.01 0.02 0.11 0.01 0.01 98.36 0.01 0.02 100.35

3826 Blank 10.23 -0.07 0.36 0.01 0.34 0.01 1.85 0.1 0.07 0.02 0.12 0.1 0.12 96.79 0.01 0.02 99.78

Field duplicate samples were inserted within the sample stream to evaluate the precision of the analysis and

whether the grades obtained from one sample could be re-produced. Figure 37 below illustrates the duplicate

analysis grades plotted against each other. Only one sample indicates P2O5 grades outside the 5% error margin.

51

Figure 37 – QAQC Duplicate Results

11.5 Laboratory Quality Assurance and Quality Control

Internal QAQC samples were analysed by the laboratory. The laboratory uses these results to audit its

analytical techniques and ensure that the analysis equipment is correctly calibrated. The results of these

analyses are appended in this document (Section Error! Reference source not found.). The results indicate a

dequate performance by the laboratory.

11.6 Security

No documentation nor reference could be found as to the Chain of Custody implemented to assure that

sample integrity was maintained and that the samples represent the material sampled. Personal discussions

with the exploration manager, however, confirmed that due care was taken in the storing and handling of the

samples to prevent contamination and tampering.

52

12 DATA VERIFICATION

12.1 Field verification

Field verification of the collar positions were established by recording the observed collar coordinates and any

information relevant to the position. The Mejillones collar positions were clearly marked by cemented PVC

pipe with marked drillhole ID as indicated in Figure 38 below. Coordinates varied within a 5-metre radius which

is acceptable for a handheld GPS.

53

Figure 38 – Drillhole collar markers clearly indicating the BH ID.

12.2 Database verification

The database provided by the Client contained the collar coordinates, down hole geological and sample logs.

54

The geological logging database was validated by correlating the geological logs with the chip material

collected in chip trays. No anomalous or erroneous logging interpretations were observed by Minrom

Consulting. Figure 39 to Figure 43 represent the chips collected per metre for each RC drillhole.

Figure 39 – RC MEJ-01 Chip Trays.

Figure 40 - RC MEJ-02 chip trays.

55

Figure 41 – RC MEJ-03 Chip Trays

Figure 42 – RC MEJ-04 chip trays

56

Figure 43 – RC MEJ-05 Chip Trays

The analysis database was validated by performing a series of basic statistical tests as listed in Table 10. The

statistics indicate that a total of 191 samples were analysed for whole-rock chemistry, which included Al, Ba,

Ca, Cr, Fe, K, Mg, Mn, Na, P, S, Si, Sr, and Ti grades. Due to the nature of the drilling programme, all samples

were obtained from 1 m length intervals. No abnormal results were observed.

Table 10 – Complete database summarised statistics of the analysis received from the RC drilling programme.

LOI (%)

Al2O3 (%)

BaO (%)

CaO (%)

Cr2O3 (%)

Fe2O3 (%)

K2O (%)

MgO (%)

MnO (%)

Na2O (%)

P2O5 (%)

SO3 (%)

SiO2 (%)

SrO (%)

TiO2 (%)

Number of

samples 191 191 191 191 191 191 191 191 191 191 191 191 191 191 191

Min 4.15 0.23 0.01 2.86 0.01 0.42 0.19 1.06 0.01 1.01 0.01 0.12 11.64 0.01 0.06

Max 35.28 17.00 0.23 45.40 0.04 7.39 2.70 8.10 0.12 5.17 9.52 20.20 61.34 4.00 0.84

Mean 13.87 9.34 0.03 17.63 0.01 3.38 1.18 2.96 0.06 3.47 2.29 2.97 43.27 0.09 0.48

Range 31.13 16.77 0.22 42.54 0.03 6.97 2.51 7.04 0.11 4.16 9.51 20.08 49.70 3.99 0.78

Var 44.95 8.79 0.00 56.52 0.00 1.92 0.15 1.84 0.00 0.62 3.80 6.83 93.90 0.08 0.03

StDev 6.70 2.96 0.02 7.52 0.00 1.39 0.39 1.36 0.02 0.79 1.95 2.61 9.69 0.28 0.16

CoV 0.48 0.32 0.72 0.43 0.38 0.41 0.33 0.46 0.31 0.23 0.85 0.88 0.22 3.16 0.34

Mode 14.93 10.01 0.03 12.65 0.01 3.16 1.10 2.14 0.06 4.29 0.44 0.25 52.17 0.07 0.61

Median 12.48 9.50 0.03 16.40 0.01 3.16 1.19 2.60 0.06 3.58 1.68 2.74 44.82 0.07 0.49

57

12.3 Analysis verification

Part of the field verification consisted of resampling the analysed sample material from the RC drilling

campaign. The coarse reject and sample pulp material used during the analysis procedure was, however,

discarded.

Therefore, Minrom Consulting elected to sample the reject material still preserved next to the drillholes. The

primary purpose of these sample reject material is for geological logging and represent a small fraction of the

total drilled meter interval. The method used to sample the logging sample material consist of randomly

sampling a small fraction of the rock chips ejected during each meter of RC drilling. These small samples are

then placed in rows representing 20 metre depths from left to right. The result is that the top-of-hole is

collected at the top-left with samples representing increasing depth towards the right. Each consecutive row

represents increase in depth resulting the bottom-of-hole samples being placed at the bottom-right. Figure 44

illustrates these well-preserved sample materials representing each metre drilled.

This basic RC drilling principle whereby the meter samples are collected and placed next to the drillhole was

used to collect the sample check material during the filed visit by the Minrom Geologist. Using the sample logs

provided along with the analyses results, the depth of each sample could be estimated within the metre

sample material preserved next to the drillhole collar. The sampling method implemented on the identified

sample heaps included removing the top 3 cm exposed to the climate. Approximately 500 grams of material

was then collected from each sample pile. A total of ten (10) samples were collected to represent the sample

check material. Figure 45 illustrates the sampling procedure implemented by the Minrom geologist.

This sample check verification method does not serve as a precise method to verify the database samples. The

primary factor that will affect the results of the sample check material is the imposed bias sampling method,

whereby the original sample material represents the entire metre drilled, whereas the sample material still

preserved usually represents a portion of the metre drilled. Weathering of the material will also affect the

chemical composition. Despite these bias sampling, a high phosphorus concentration within the original

sample will be reflected in the sample check material and the sample analysis. The compared P2O5 results are

illustrated in Figure 46. The sample check results generally report lower P2O5 results, but the overall trend

reflects that of the original analysis. Table 11 reports the full results of the original samples along with the

sample check results.

58

Figure 44 – Well-preserved sample logging material representing each metre of drilled material.

59

Figure 45 - Sample check sampling method.

60

Figure 46 – Sample check results vs the original sample P2O5 results.

61

Table 11 – Mejillones Sample Check Results. Sample check material collected from the well-preserved metre interval logging material.

Drillhole ID Description Sample ID Al2O3

(%) BaO (%)

CaO (%)

Cr2O3 (%)

Fe2O3 (%)

K2O (%)

MgO (%)

MnO (%)

Na2O (%)

P2O5 (%)

SO3 (%)

SiO2 (%)

SrO (%)

TiO2 (%)

Total LOI (%)

RC MEJ-02 Sample check MEJ02/01 5.10 0.03 40.0 -0.01 1.38 0.51 1.22 0.04 1.45 0.26 0.52 17.93 0.07 0.23 100.55 31.63

RC MEJ-02 Original 3540 10.88 0.02 25.20 0.01 2.20 0.80 1.52 0.06 3.08 0.58 0.88 37.04 0.09 0.44 100.10 17.25


RC MEJ-02 Original 3541 11.82 0.02 22.90 0.03 2.62 0.89 1.08 0.07 3.30 0.75 1.07 39.77 0.07 0.51 100.50 14.94

RC MEJ-03 Sample check MEJ03/01 9.33 0.07 16.05 0.02 2.12 1.80 3.37 0.05 3.45 2.60 2.54 45.41 0.07 0.33 101.90 13.58

RC MEJ-03 Original 3622 9.07 0.05 15.60 0.01 1.60 1.88 3.52 0.04 3.12 2.28 2.27 46.86 0.06 0.33 100.20 13.21


RC MEJ-03 Original 3625 13.66 0.04 10.60 0.01 3.23 1.45 2.08 0.08 4.31 1.92 3.90 54.23 0.06 0.66 100.90 4.60


RC MEJ-03 Original 3631 10.15 0.05 14.50 0.01 4.31 1.28 3.76 0.08 3.83 3.13 4.52 44.87 0.06 0.60 101.95 10.70


RC MEJ-04 Original 3693 6.61 0.06 27.30 0.01 1.69 0.76 3.14 0.05 2.79 4.11 1.68 31.07 0.15 0.32 100.00 20.22


RC MEJ-04 Original 3703 9.08 0.02 14.35 0.02 4.63 1.25 2.34 0.06 4.13 3.84 7.70 45.21 0.07 0.58 103.65 10.27


RC MEJ-06 Original 3793 10.37 0.03 14.25 0.02 3.67 1.29 3.98 0.06 3.80 3.20 4.78 44.95 0.05 0.63 102.25 10.01


RC MEJ-08 Original 3814 9.90 0.05 15.30 0.02 2.91 1.51 1.47 0.07 3.71 5.54 3.86 46.75 0.08 0.47 102.60 8.83


RC MEJ-10 Original 3818 9.88 0.04 12.65 0.01 4.96 1.26 2.32 0.07 3.90 3.63 6.33 47.98 0.06 0.65 103.95 10.00

62

13 MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 Introduction

The technical report prepared by JPMC discusses the results of a size vs phosphorus grade distribution study

performed by AJS Global in Santiago. No additional metallurgical tests have been requested or performed

since then on the Mejillones Phosphate deposit.

13.2 Previous test work results

The size versus P2O5 grade distribution performed by AJS Global in Santiago, was implemented with the aim

to identify the P2O5 concentration related to processing techniques.

The results indicate that the phosphate migrates to the -1 000 + 106 µm size fraction when approximately 60%

of the phosphate is concentrated into 20% of the mass (Table 12). Further results indicate that additional

phosphate is locked in the coarse-grained size fraction (1 mm) and needs to be investigated to potentially

increase the overall phosphate recovery by implementing additional crushing processes.

Table 12 – Mejillones sample size distribution results. Table obtained from the JPMC report. Sample head grade of 5.22% P2O5

Screen (µm) Sub-

sample sizing (g)

Adjusted (g)

wt % P2O5 Cumulative distribution %

Retained Passing Assay (%) Dist'n (%) wt P2O5

4,750.00 - 4.30 0.04 100.00 3.05 0.02 0.04 0.02

3,360.00 - 45.80 0.50 99.50 3.62 0.30 0.50 0.30

2,360.00 - 81.40 0.80 98.70 4.48 0.70 1.30 1.00

2,000.00 - 35.40 0.40 98.30 4.75 0.30 1.70 1.30

1,700.00 4.60 45.20 0.50 97.90 4.33 0.40 2.10 1.70

1,180.00 6.30 61.90 0.60 97.30 5.39 0.60 2.70 2.30

850.00 5.70 56.00 0.60 96.70 5.93 0.60 3.30 2.90

600.00 7.10 69.80 0.70 96.00 7.01 0.90 4.00 3.80

425.00 9.70 95.40 1.00 95.00 8.01 1.40 5.00 5.20

300.00 11.50 113.10 1.10 93.90 9.20 1.90 6.10 7.20

212.00 24.60 241.90 2.40 91.50 15.50 7.00 8.50 14.10

150.00 59.40 584.10 5.80 85.70 20.70 22.50 14.30 36.60

106.00 84.10 827.00 8.30 77.40 15.50 23.70 22.60 60.30

75.00 96.70 950.90 9.50 67.90 6.92 12.20 32.10 72.50

53.00 117.90 1,159.30 11.60 56.30 2.87 6.20 43.70 78.70

38.00 61.20 601.80 6.00 50.30 2.09 2.30 49.70 81.10

-38.00 511.20 5,026.70 50.30 2.03 18.90 100.00 100.00

Total 1,000.00 10,000.00 100.00 5.39 100.00

63

13.3 Recent test work results

No additional metallurgical analysis or studies have been performed or requested on the Mejillones deposit.

14 MINERALISATION EXPLORATION POTENTIAL RANGE ANALYSIS

The mineralisation potential estimation serves as an indication as to the possible volume and size of the

deposits which can be used as input parameters within a scoping economic evaluation. The mineralisation

potential is estimated by calculating the area within the new license area (Figure 47) and is estimated from

the Mejillones scoping phase RC drillholes data. The volume was obtained by using the estimated area along

with the average phosphorus intersecting thickness of each drillhole (Table 13). The Specific Gravity (SG) used

to calculate the tonnage is based on the theoretical SG of each lithology. By assigning this SG to each lithology

within the mineralisation zone, a weighted average SG could be estimated of 2.4. The estimation included

trimming of the phosphate grades based on the grade distribution histograms illustrated in Figure 32 to Figure

34. The grade trimming was imposed as to resemble cut-off grades, as well as to obtain a broad grade dilution

factor. For example, by imposing a grade cut-off of 1.0% P2O5 and trimming the higher-grade samples at 8.0

P2O5 a total of 126 samples (126 metres out of a total of 191 metres) contains values within this range. Thus

34.1% of the samples does not contain grades within this trimmed bin. The same method was applied to a

1.5% P2O5 and 2.0% P2O5 cut-off delivering grade dilution factors of 48.2% and 58.6% respectively. The

Mineralisation Range Analysis is summarised in Table 14. The above modifying factors is based on the scout

RC drilling results which produced an average core recovery of 63%. Minrom suggest that the percussive

drilling technique utilised affect the phosphate metallurgical characteristics negatively. A greater recovery

and lower dilution factor is anticipated in an increased core recovery method.

Table 13 – Mejillones Phosphate Project RC Drillhole Mineralisation Intersections.

DRILLHOLE DEPTH OF MIN END OF MIN THICKNESS OF MIN AVERAGE GRADE INTERSECTED (%P2O5)

RCMEJ 01 16 80 64 2.57

RCMEJ 02 20 56 36 0.80

RCMEJ 03 55 75 20 1.13

RCMEJ 04 48 84 36 2.93

RCMEJ 05 48 80 32 3.44

AVERAGE 37.4 37.6 2.29

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Table 14 – Mejillones Phosphate Mineralisation Range Analysis based on the scout RC drilling results.

Total Area (Mil

m2)

Volume (Mil m3)

SG Billion

Tonnes P2O5

Trimming Grade

Dilution Million Tonnes

Mean P2O5 Contained

Mineralisation P2O5 (Mt)

31.77 1.19 2.40 2.87

None 0.00% 2,867.52 2.29% 66

1.0>8.0 34.20% 1,886.83 3.05% 58

1.5>8.0 48.20% 1,485.38 3.56% 53

2.0>8.0 58.60% 1,187.15 4.01% 48

Figure 47 – Mejillones Phosphate Project Mineralisation Potential are

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15 RECOVERY METHODS

A preliminary recovery method was evaluated by JPMC as a basic development flow-sheet based on the size

distribution characteristics of the Mejillones Phosphate deposit. The following is extracted from the JPMC

report and has not been verified by Minrom Consulting.

The flow-sheet produced by JPMC was based on a simple process which minimises the capital and operational

costs. The flow-sheet was based on previous studies on iron beach sands, where the iron was found to be in

the minus 200 µm size fraction. This study concluded that the use of a ‘trommel’ screen for agglomerate

breakages and a Derrick screen for the fine portions provided the optimum results. The suggested process is

described as follow:

The mined ore would be loaded by means of a loader into the scrubber feed hopper where it would be

monitored, using water. Due to the location of the project site, the use of sea water as process water was

considered.

Liberation of the phosphate material will be achieved by means of a scrubbing and milling process. The slurry

exiting the scrubber will subsequently be screened at 1 mm on a conventional vibrating screen with the

oversize fraction being stockpiled for later disposal. The screen undersize fraction will be pumped to the

distributor ahead of the Derrick Stack Sizer® which will be used to recover the +106 µm material. The -106 µm

slurry will then be pumped to a settlement pond. The recovered water will then be redistributed to the process

stream.

Figure 48 – Process flow-sheet as extracted from the JPMC report.

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16 INTERPRETATIONS AND CONCLUSION

The Mejillones phosphate deposit is situated within the Pampa Mejillones basin, formed as a result of

extensional tectonics, resulting in the formation of half graben basinal environments. Infra-littoral marine

sedimentation within these half graben basins resulted in the deposition of the La Portada Formation and the

associated phosphorite. The La Portada Formation was subsequently eroded and overlain by coarse-grained,

richly fossiliferous, poorly consolidated sediments of the Mejillones Formation.

The phosphate mineralisation associated with the La Portada Formation will vary laterally and vertically as a

function of basinal deposition mechanics and changes in the deposition environment. Identifying these

sedimentary facies changes is key to understanding the mineralisation distribution and will aid in future

exploration endeavours.

The exploration activity conducted on the Mejillones Phosphate Project consisted of 5 RC scout drillholes

totalling 376 m. A total of 191 samples were submitted for whole-rock chemical analysis to ALS Minerals in

Antofagasta. Additional samples were sent to AJS Global, located in Santiago for size and phosphate

distribution analysis.

The database received, was validated by visually inspecting the down hole data, cross-referencing the

geological data and assay data, and re-evaluating the QAQC results. Minrom Consulting also collected

additional field sample checks from the well-preserved RC reject sample material located next to the drillhole

collars. No sample reject, nor pulp reject material stored during the RC drilling campaign could be obtained.

Minrom Consulting also validated the geological data by visually inspecting the RC chip trays which represent

the material of each metre drilled. The validation process performed by Minrom Consulting did not produce

any discrepancies within the database nor misleading conclusions.

The phosphor mineralisation potential of the Mejillones Project is estimated based on the scout RC drilling

spatial distribution, average thickness of phosphorus strata, and surface area covered by the new license areas

(Figure 47). The total sample population (191 samples) were used to estimate the mean P2O5 grades based on

four (4) scenarios of grade trimming (cut-off) applied. These scenarios were estimated by applying a cut-off

grade of 0.0%, 1.0%, 1.5%, and 2.0% P2O5 along with an 8.0% P2O5 high grade trimming. The results produced

an increase in the mean grade from 2.29% to 4.01% P2O5 with a volume decrease of 0% to 41.4% delivering

approximately 48Mt to 66Mt P2O5 covered by an overburden of approximately 37 metres in thickness.

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17 RECOMMENDATIONS

Based on the geological information, basin formation and deposition environment, and RC drilling data,

Minrom Consulting recommends that the following be performed on the Mejillones Project:

Delineate the basin deposition environment:

o Initiate Seismic or Electro Magnetic geophysics to detailed basin spatial morphology and

characteristics;

o Identify unconformity between the Mejillones Formation and phosphorite La Portada

Formations;

o Identify contact between base metamorphosed lithology and deposited La Portada

Formation and possible pot-hole deposition structures.

Regional Delineation Drilling (Pre-Feasibility Level Indicated Resource)

o Perform vibro-core drilling on a large grid pattern covering the license property on order to

delineate the lateral and vertical spatial P2O5 grade distribution;

o Provide representative samples material bench scale P2O5 size distribution analysis and

liberalisation metallurgical studies;

o Perform inter-hole and down-hole variography to determine lateral and vertical P2O5 grade

distribution which will assist in determining grid density needed to upgrade the Mineralised

Resource to an Ore Reserve (Next Phase).

Focussed Drilling (Feasibility Level – Probable to Prove Reserve)

o Identify possible area to upgrade Mineralisation Resource to Ore Reserve;

o Perform vibro-core drilling based on the predetermined grid density;

o Collect a bulk sample for detailed metallurgical study to determine the dilution and grade

distribution.

68

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