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Press release from CNW Group

Elemental Minerals Announces Significant Further Mineral Resource Upgrade for Kola

Monday, August 20, 2012

Elemental Minerals Announces Significant Further Mineral Resource Upgrade for Kola19:58 EDT Monday, August 20, 2012Measured and Indicated Sylvinite Resource increases 38% to 573Mt at 20.92% K2O (33.13% KCl)Excellent conversion to Measured and Indicated ResourcesKola deposit remains open in several directionsPERTH, AUSTRALIA, Aug. 21, 2012 /CNW/ - Elemental Minerals Ltd. (ASX, TSX: ELM) ("Elemental" or "the Company") is pleased to announce its updated Mineral Resource estimate for the Kola deposit on the Sintoukola property located in the Republic of Congo (Figure 1).HIGHLIGHTS:38% increase in tonnage since the Resource Estimate announced on the 8th May 2012, in the combined Measured and Indicated sylvinite Mineral Resources of the Upper and Lower Seams:Total M&I estimated now 573Mt at average grade of 20.92% K2O (33.13% KCl).Inferred sylvinite Mineral Resource increases by 82% from 261Mt to 475Mt at 20.39% K2O (32.27% KCl).To date, near 100% conversion rate from Inferred to Indicated Mineral Resource category.Maiden Inferred Mineral Resources announced for the exceptionally high-grade Hangingwall Seam:47Mt at 34.75% K2O (55.01% KCl).Hangingwall Seam represents high priority target.Aggressive expansion of the high-grade Hangingwall Seam is planned.The total potash Mineral Resource (sylvinite and carnallitite) for all seams now stands at 1.32 Billion Tonnes grading 15.65% K2O (24.78% KCl) in the Measured and Indicated Mineral Resource categories and 948 Mt grading 16.20% K2O (25.64% KCl) of Inferred Mineral Resources.This latest update of the Mineral Resource estimate reinforces the strategic significance of both the Sintoukola Project and the Congo Basin as a source of global potash supply.Elemental's CEO, Iain Macpherson stated: "Elemental Minerals now has well over half a billion tonnes of sylvinite in the Measured and Indicated Mineral Resource categories, contained within two shallow seams that can be mined by conventional, underground mining methods. This resource update is expected to support excellent economics in the upcoming PFS. Given the exceptional grade and potential for a very positive impact on already robust economics, Elemental is now planning further exploration of the Hangingwall seam, both at Kola and at the Dougou target. This revised Mineral Resource estimate underlines the strategic nature of Sintoukola and the potential for the Congo Basin to become a major potash producer."Every borehole of the Phase 2B programme (8 exploration boreholes for 2745 metres) intersected significant sylvinite mineralisation at various stratigraphic levels (Figure 2). Reflecting this success, the tonnage of the combined Measured and Indicated sylvinite Resource estimate of the Upper and Lower Seams has increased by 38% to 573Mt at a slightly increased average grade of 20.92% K2O (33.13% KCl). The Measured and Indicated Mineral Resources will be the basis for the PFS, which is on track for completion in September 2012. Plan view of the sylvinite resources per seam are shown in Figures 3 to 6.The maiden estimate of Inferred Mineral Resources for the Hangingwall Seam contributes 47Mt at an average grade of 34.75% K2O (55.01% KCl) to the total sylvinite Mineral Resources. The Hangingwall Seam has been modelled in the northwest portion of the deposit where several new adjacent drill holes have intersected this seam. There is good potential to increase the Mineral Resources in this seam as it is open to the southwest, west and northwest (Figure 2). An aggressive exploration campaign will focus on expanding the Hangingwall Seam Inferred Mineral Resource and converting it into the Indicated and Measured Mineral Resource categories.To date, the Company has achieved a near 100% conversion rate from Inferred to Indicated Mineral Resource category by drilling and modeling of 2D seismic data, a reflection of the geometry and continuity of the mineralisation.The total Inferred sylvinite Mineral Resource estimate is now 475Mt at 20.39% K2O (32.27% KCl) and includes the Upper, Lower, Footwall and Hangingwall Seams. The Footwall Seam tonnage increased by 82% from 123Mt to 225Mt grading 17.63% K2O (27.92% KCl). Figure 7 shows a typical section through the deposit showing the relative positions of the seams.The substantial increase in the sylvinite Mineral Resources from the May 2012 Mineral Resource estimate set out in the Company's technical report dated June 21, 2012 is illustrated in Figure 8. The sylvinite remains open laterally in most directions, highlighting the potential to expand the Mineral Resource well beyond its current estimation boundary.Measured and Indicated carnallitite-only Mineral Resources have increased by 36% to 744Mt with an average grade of 11.59% K2O (18.35% KCl). Due to the more complex metallurgical requirements of treating carnallite mineralisation, carnallite is not given consideration in the PFS however the carnallitite Mineral Resources remain a future opportunity for the extraction of additional potash.The updated Mineral Resource estimates for sylvinite only and global potash mineralisation are presented in Tables 1 and 2. Figures 3 to 6 show the distribution of boreholes and the sylvinite mineralisation. Table 1: Mineral Resource estimate for sylvinite mineralisation only at a 10% K2O cut-off grade. MeasuredIndicatedInferred Tonnes (Mt)% K2O% KClTonnes (Mt)% K2O% KClTonnes (Mt)% K2O% KClHangingwall Seam      4734.7555.01Upper Seam (Syl)17122.4535.5415922.0434.899621.7834.48Lower Seam (Syl)9319.2230.4215019.0630.1710719.1430.30Footwall Seam      22517.6327.92TOTAL26421.3233.7430920.5932.5947520.3932.27Table 2: Mineral Resource estimate for all potash mineralisation (sylvinite and carnallitite) at a 10% K2O cut-off grade. MeasuredIndicatedInferred Tonnes (Mt)% K2O% KClTonnes (Mt)% K2O% KClTonnes (Mt)% K2O% KClHangingwall Seam      4734.7555.01Upper Seam (Syl+Car)24519.5330.9231017.7628.1127816.3325.84Lower Seam (Syl+Car)31313.2620.9944813.7421.7539813.1220.77Footwall Seam      22517.6327.92TOTAL55916.0125.3575815.3824.3594816.2025.64Notes:This Mineral Resource Estimate is effective as of 20th August 2012.Zones of geological uncertainty have been excluded (see Figure 2). Table entries are rounded to the second significant figure.Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, marketing, or other relevant issues. A bulk density of 2.07g/cm3 was applied for all sylvinite mineralisation and 1.70g/cm3 for carnallitite mineralisation.The Mineral Resource estimates have been reported based on a "four seam" model (see below) to a cut-off grade of 10% K2O for sylvinite and carnallite mineralisation.  Mineral Resources have been prepared by independent resource industry consultants CSA Global Pty Ltd ("CSA") and are reported in accordance with The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code", 2004 edition) which is consistent with Canadian Institute of Mining, Metallurgy and Petroleum (CIM) definition standards and hence complies with NI 43-101.The Mineral Resource estimate for the modelled mineralised zones at Kola is classified as Measured, Indicated and Inferred (Figure 2). This is based primarily on confidence in, and continuity of, the results from the drilling campaigns, and subsurface mapping of high density (150m spaced) and regional (3km spaced) 2D seismic data. The results of the Mineral Resource estimate are provided in Tables 1 and 2.Four main potash mineralised seams are present within the Kola deposit and are identified in stratigraphic and chronological order as: Hangingwall Seam (HWS), Upper Seam (US), Lower Seam (LS), and the Footwall Seam (FWS). The Upper Seam and Lower Seam can further be divided based on mineralogy, into sylvinite (USS / LSS) and carnallitite domains (USC / LSC) as illustrated in Figures 3 to 6. The HWS and FWS are sylvinite-dominant in the area that has been modelled for this Mineral Resource estimate.The extent of potash mineralisation in these seams is shown in Figures 3 to 6. Based on the 29 boreholes that intersected significant potash mineralisation at Kola the Upper Seam varies in thickness from 1.1 to 8.1m in the main sylvinite-dominant area and from 0 to 9.6m within areas of carnallitite-dominant mineralisation.  The Lower Seam varies in thickness from 0 to 7.8m in the sylvinite-dominant mineralisation and 0 to 18.9m within the main carnallitite-dominant part of the seam. The Hangingwall Seam sylvinite mineralisation varies from 2.46 to 3.77m in thickness and the Footwall Seam sylvinite mineralisation varies from 0 to 13.7m in thickness.The sylvinite mineralisation within the Upper and Lower seams remains open laterally in some directions as illustrated by Figures 3 and 4. The Hangingwall Seam is open to the west, and the Footwall Seam to the northwest, east and southeast.The formation of sylvinite mineralisation is considered to be the result of the downward and lateral movement of a salt (NaCl) saturated hydrous fluid (brines) which converted carnallitite to sylvinite by removing its Mg (magnesium) content causing volume reduction of the seams and K (potassium) grade enrichment.Project EconomicsThis significantly increased Mineral Resource estimate will form the basis for an updated set of economics over those issued as part of the Company's Preliminary Economic Assessment ("PEA") contained within the NI 43-101 Technical Report, dated 1 August 2011, which was based on the maiden Mineral Resource estimate issued in Q2-2011. The PEA economic model is in the process of being revised on the basis of the enlarged Mineral Resource and updated engineering as the Company works towards completing the PFS, which is expected to be released in September 2012.Given the ongoing work to update the PEA model, the existing scoping study economic analysis that was based on the Phase 1 Mineral Resource in the 1 August 2011 Technical Report should therefore no longer be relied upon.Supporting Information to the updated Mineral Resource EstimatesCSA Global of Perth, Australia completed all aspects geological and resource modelling for this update to the Kola deposit Mineral Resource estimates. CSA Global has been involved with the Sintoukola project as the Company's geological consultants since Elemental acquired the project.  They have provided technical advice and input during exploration planning, targeting studies and have been responsible for review and interpretation of exploration data, database management, and verification of QAQC results and estimation of Mineral Resources.Exploration, Sampling and Analytical MethodsAll exploration was managed by Elemental's staff following processes recommended by CSA Global and with periodic review and site visits by CSA Global Principal Geologist Dr Simon Dorling.  The procedures followed and the data produced is of general industry standard and practice and the procedures were appropriate for the deposit and style of mineralisation.A total of 203 line kilometres of 2D seismic data were collected over two survey periods. High-resolution 2D seismic data was available over the central zone of the deposit, with lower density seismic data available along traverses peripheral to the deposit (Figure 2). Topographic control was provided by a digital elevation model based on data from a Lidar survey. Additional recent (2006) regional 2D seismic data was acquired from petroleum exploration companies in the region (Figure 2). The data was integrated into the local Elemental survey and geologically interpreted.Elemental completed 45 vertical diamond drill holes during the Phase 1 and 2 exploration programmes for a total of 15,949.43 metres. Of these, three stopped short of the target horizon due to in-hole technical problems (Figure 2). A fourth EK-series drill hole was drilled for hydro-geological purposes and was stopped short of the evaporate sequence. Only two of the 41 successful exploration boreholes (EK_03 and EK_25) did not intersect significant potash. Drill hole collars were surveyed by DGPS by an independent surveying company. All holes were directionally surveyed and geophysically loggedPQ sized cores were obtained through the evaporite sequence hosting the potash seams wherever possible. All sylvinite- and carnallitite-bearing intervals of each drill hole were sampled with one additional sample collected in the hanging wall and footwall of the mineralisation. A sample interval between 0.3m to 0.6m was chosen within the mineralisation. Drill core samples (PQ core diameter sizes) were split in half by a diamond saw cutting machine at the project site.All sample preparation and analysis were carried out at laboratories that have been certified in accordance with ISO/IEC 17025. No aspect of laboratory sample preparation or analysis was conducted by an employee, officer, director or associate of Elemental Minerals. The majority of samples were processed and analysed by Genalysis, Perth, Australia for potassium, sodium, calcium, magnesium, chlorine, and sulphur using ICP-ES methods. The majority of potash samples were also assessed to determine water insoluble content.Elemental has used a combination of duplicates, checks, blanks and standards to ensure suitable quality control of all assay testing. Results of recent sampling have not identified any issues which materially affect the accuracy, reliability or representativeness of the results. The procedures and QA/QC management are consistent with industry good practices and the data produced is suitable for resource estimation.In Situ Bulk DensityThe insitu bulk density determinations for each potash mineral type (sylvinite and carnallitite mineralisation) across the deposit are based on a total of 192 physical density measurements by the pycnometer method and qualitative assessment of mineralogy, mineralogical composition and wire-line density recordings. The application of the pycnometer method was supported by petrographic studies, stoichiometric estimates and via comparison with physical bulk density measurements on core samples.A total of 101 pycnometer measurements were undertaken across sylvinite mineralisation and 43 across samples of carnallitite mineralisation.Based on the review of the data above and comparison with other deposits with similar mineralogy average in-situ bulk densities of 2.07 t/m3 was assigned for the sylvinite mineralisation in the HWS, USS, LSS and FWS, and 1.70 t/m3 for the Upper and Lower Seam (USC, LSC) carnallitite mineralisation.Database and Data VerificationCSA Global were responsible for data management and database validation and have verified the data disclosed here. The cut-off date for receiving drilling data for the update of the Mineral Resource estimate was 29 July 2012.  At this cut-off date complete assay results have been received for all boreholes that contain significant potash mineralisation. Selected, narrow-interval core samples from EK_17, 24, 28 and 29 are undergoing geotechnical test-work before being forwarded for assaying; and Lower Seam results for EK_45 are expected shortly.  The quality control protocols implemented at the project are considered to represent good industry practices and the data is therefore considered reliable.Geological and Resource ModellingFollowing compilation, review and interpretation of the latest geological, geophysical and analytical data an updated Mineral Resource was estimated for main potash-bearing (sylvinite and carnallite) horizons within the Kola deposit.  The geological model at Kola now comprises six mineralisation domains within four distinct seams.  The four mineralised seams are referred to as the Hangingwall Seam (HWS), the Upper Seam (US), the Lower Seam (LS) and the Footwall Seam (FWS).  The Upper and Lower Seams are further subdivided into sylvinite (USS, LSS) and carnallite (USC, LSC) mineralogy.  The HWS and FWS were identified during the Phase 2 programme and are interpreted to be composed entirely of sylvinite within the area modelled.Based on the higher density of seismic data the "fault model" of 2011 was revised to a "disturbances area model" in which the disturbance is likely to be caused by removal of salt in the evaporite sequence which has led to sagging of the overlying strata and consequently to loss of seismic reflector continuity. The potash mineralisation within the footprint of these areas of geological uncertainty was not included in this Mineral Resource estimate. The area defined as uncertainties and excluded from the estimate equates to approximately 7% of the total volume.Micromine 12.5 software was used for interpretation of geological, seismic and drill hole data which then formed the basis of the revised geological model.  GEMCOM Minex 6.1 software was used for geostatistical analysis of seam intersections and to create seam and assay grids for estimation of Mineral Resources. The gridding method used was Minex's general (or growth) method to generate geological surfaces such as Seam Floor (SF), Seam Roof (SR) and Seam Thickness (ST).  Seam thickness is the underlying control for Minex gridded seam modelling, for which an east-west grid mesh dimension of 25 x 25m was chosen to honour both the closely spaced seismic points and borehole intersections.Grade estimation relied on Inverse Distance Weighting to the power of 2 along a major axis 328° and with an anisotropic ratio of 1 (major axis): 0.8 (minor axis).  Model validation was carried out visually, graphically and statistically to ensure that the seam model geology and grades accurately represented the drill hole data.Mineral Resource Reporting and ClassificationThe Mineral Resource estimates have been reported based on a "four seam" model and a lower cut-off grade of 10% K2O for combined sylvinite and carnallite mineralisation and sylvinite only mineralisation.  Mineral Resource estimates are presented in terms of tonnes of potash mineralisation and the K2O and KCl content by percent. Sylvite is potassium chloride (KCl), and pure KCl represents 63.18% K2O by weight. K2O grade is converted to KCl grade (the basis used in potash sales) by multiplying by a factor of 1.583.The result of this work is a substantial increase in the Mineral Resource estimates and classification of the Mineral Resource estimates to Measured, Indicated and Inferred as listed in Tables 1 and 2 above.The classification of Mineral Resources at the Kola potash deposit is based on the following criteria:For the Upper Seam and Lower Seam mineralisation the Mineral Resources were classified as:Measured if within a polygon that is based on the end-points of the Phase 2 seismic grid (pseudo 3D) and the drill holes included within it;Indicated if within an area that was immediately outside the area classified as Measured, which includes 1 km and 3km spaced seismic, drill holes and is delineated by the combined intersecting perimeters of a 1km radius around those drill hole collars. (Where no additional drilling was conducted since the previous estimate the May 2012 classification boundary was maintained.)Inferred if within an area within a 1km buffer around the Indicated Mineral Resources.  The area classified as Inferred Mineral Resources includes some recent drill holes, regional seismic and regional (but adjacent) historic drill holes.For the Hangingwall Seam and Footwall Seam mineralisation the Mineral Resources were classified as:Inferred if within the area defined by the US or LS "Indicated" or "Measured" boundaries as described above.  This generally coincided with a 1km radius around those drill hole collars which intersected the mineralisation of the relevant seam and had supporting seismic data.ABOUT ELEMENTAL MINERALSElemental Minerals Limited is an advanced mining exploration and development company that aims to grow shareholder value through its 93%-owned Sintoukola Potash Project on the Republic of Congo coastline.  Elemental Minerals is dual listed on the Australian Stock Exchange and the Toronto Stock Exchange under the symbol ELM. For more information, visit www.elementalminerals.comCompetent Person / Qualified Person Statement:Information in this report that relates to Exploration Results or Mineral Resources is based on information compiled by Dr Simon Dorling, Mr Jeff Elliott and Dr Andrew Scogings of CSA Global Pty Ltd, the Company's geological consultants. Dr. Dorling, Mr. Elliott and Dr. Scogings are members of the Australian Institute of Geoscientists (MAIG) and have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code). Dr. Dorling, Mr. Elliott and Dr. Scogings are also Qualified Persons for the purposes of Canadian National Instrument 43-101 and they consent to the inclusion in this report of the Information, in the form and context in which it appears.Further information respecting Elemental's Sintoukola Project is contained in a technical report entitled ''NI 43-101 Technical Report, Sintoukola Potash Project, Republic of Congo'' prepared by Neal Rigby of SRK Consulting (U.S.), Inc. and Messrs. Simon Dorling, Jeff Elliott, and Andrew Scogings and Peter Davies of CSA Global Pty Ltd. for the Company dated June 21, 2012 with an effective date of June 21, 2012 (the "Technical Report").  The Technical Report can be accessed on the Company's profile on SEDAR. The Mineral Resource estimates in the Technical Report are superseded by the information contained in this press release.Forward-Looking StatementsThis news release contains statements that are "forward-looking". Generally, the words "expect," "potential", "intend," "estimate," "will" and similar expressions identify forward-looking statements. By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results, performance or achievements, to differ materially from those expressed or implied in any of our forward-looking statements, which are not guarantees of future performance. Statements in this news release regarding the Company's business or proposed business, which are not historical facts, are "forward looking" statements that involve risks and uncertainties, such as resource estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are Image with caption: "Figure 1: Location of Sintoukola Potash Permit and drill hole locations. (CNW Group/Elemental Minerals Limited)". Image available at: with caption: "Figure 2: Drill hole plan, with seismic lines, disturbance areas and Mineral Resource classification plan (for the Upper and Lower Seams only). (CNW Group/Elemental Minerals Limited)". Image available at: with caption: "Figure 3: Plan view showing isopach and grade distribution of the Upper Seam Sylvinite mineralisation.(CNW Group/Elemental Minerals Limited)". Image available at: with caption: "Figure 4: Plan view showing isopach and grade distribution of the Lower Seam Sylvinite mineralisation (CNW Group/Elemental Minerals Limited)". Image available at: with caption: "Figure 5: Plan view showing isopach and grade distribution of the Hangingwall Seam Sylvinite mineralisation. (CNW Group/Elemental Minerals Limited)". Image available at: with caption: "Figure 6: Plan view showing isopach and grade distribution of the Footwall Seam Sylvinite mineralisation (CNW Group/Elemental Minerals Limited)". Image available at: with caption: "Figure 7: Representative cross section through the Kola deposit showing the relative position of each of the seams. (CNW Group/Elemental Minerals Limited)". Image available at: with caption: "Figure 8: Bar graph illustrating the increase in the tonnage of sylvinite Mineral Resources between May 2012 and the current update. (CNW Group/Elemental Minerals Limited)". Image available at: Elemental Minerals LimitedFor further information: Iain Macpherson Chief Executive Officer Tel: +27 (0) 76 238 4461 John Sanders Executive Director Tel: +27 (0) 82 445 5291 Ilja Graulich Investor Relations Manager Tel: +27 (0) 83 604 0820 Johannesburg Office: +27 11 469 9140