A brief report on the first hand impression on the visit of Dr R Choudhuri to Sukulu Project site and on the outcome of the various subsequent meetings (11.05.2013-16.05.2013)

Came back to Udaipur on 17th May following the fruitful visit to the Sukulu project site and the important internal meetings held amongst NML, GSFC , IDC and ADB representatives. Beside had the opportunity of having a meeting with the Permanent Secretary Dept. of Energy and Minerals GOU followed by a subsequent meeting with the Prime Minister of Uganda.

The standing of NML and Mr Nitin J. Madhvani (NJM) personally in the Government was quiet apparent though there were some hardened posturing from the Government side, ostensibly to pressurize NML into quick action vis a vis the implementation of the Sukulu Apatite Project. NML has every reason to take Government’s hint very seriously as they may not be in a mood to appreciate the hard realities of the ground and accommodate request for extension of the validity of the retention license due to expire on 23.06.2013.

In between I had a very brief one to one meeting with Mr NJM also. He was very keen about my association with you in updating the BFS. In the back drop of his very sincere request, I have assured him to complement your effort to the extent I am capable of. I took a conscious view that whatever I may do will be complementary to the effort for the Sukulu Project Development and without compromising my relation with GSFC. Kept the issue of consideration on the side line

In the present report I have deliberately incorporated several photographs with the aim to provide you with a comprehensive physical feel of the Sukulu Project site

Settlement issue of the habitats

The immediate and the most burning issue as I could observe and which needs to be addressed with highest priority attached to it is the resettlement issue of the habitats residing within the present land retention permit area. Cordial relation notwithstanding, Government apparently has firmly linked the extension of validity of the retention license, due to expire on 23rd June 2017, to the re-settlement a priori which is presently under sub Judice

I have seen in the SRK scoping report (2010) recommendation for consideration of some additional land acquisition which will come handy for the second phase for disposal and management of solid and liquid effluents. However for the first phase it may be a necessity to maintain the present status quo.

Fig 1 Photograph showing Sukulu soil deposit (North Eastern Valley) represented by cultivable land- mass lying on the resistant hill slope and being grazed by cattle. The nature of vegetation on the very apatite soil deposit is conspicuous. it supports luxuriant vegetation

Fig 2 represents downloaded views from Google earth showing the nature of cultivable landmass in the three closed valleys peppered with hut- mates of permanent and semi-permanent nature. One of the most important and urgent project implementation milestones would be to address and effect resettlement of the 2000 families- A daunting task by all means

Fig3 Same as Fig 2, blown up view

Fig 4 Picture showing a close up view of a typical habitat in the Sukulu village. Their resettlement plan will involve prior settlement of their assets which would include their huts/ building, cultivable land, types and number of trees under possession etc. A comprehensive exercise in this regard has reportedly been executed and report available with NML

With the stated position of both GSFC and IDC to become willing partners in the project only on the basis of the successful outcome of the Bankable feasibility study, the immediate onus of settlement issue consequently would remain vested with NML/MISA. I only hope that with the kind of stature and reputation Mr. NJM has in Uganda at the relevant quarters, the issue gets settled without further complication

As per the indication given, the settlement issue may involve a capital outgo of about 25 million USD which is a sizable upfront expenditure when juxtaposed against the target production considered for of about 70000 tpa of SSP during the first phase of the project . Personally I tend to maintain the view that an upward capacity target fixation during Ist phase subject to local market permitting, would better justify the upfront expenditure

The compulsive need for implementation of the phase I of the project

The desire of implementation of the first phase of the project at a faster pace as is being visualised by Mr NJM is borne out of his circumstantial compulsion and also strategic need. NML has to be demonstrative before the Government about precipitative action for project implementation. At the same time MOU notwithstanding with GSFC/IDC, as on date NML/MESA are the lone entities and would consequently like to securitise their position vis a vis the first phase of the project.

At the same time Mr NJM as the prime mover of the project as on date, perhaps also appreciates the perils of pushing the Ist phase too far in isolation of the consideration of development of the2nd phase in an integrated way .Hence his understandable urgency to complete the BFS at a fast pace with his fast independent decision making capability. On the other hand, GSFC and to a great extent IDC as a system driven companies would like to follow some laid down protocol for project implementation. Consequently a very appreciative and reconciliatory approach is needed from all concerned. It is in this area we both may have to act as facilitators for the best project interest including implementation of the first phase of the project on a demonstrative campaign basis. However as of now, NML is up against (a) Resettlement issue and(b) setting up of a beneficiation testing facility in the site

GSFC/IDC participation to lend excellent Credibility to the Project

Both GSFC and IDC are willing to share the BFS report preparation cost along with NML. Further IDC has also shown interest to fund up to 8 million USD for BFS study with some attached conditionality. It is my firm understanding that the prospect of Involvement of GSFC and IDC would lend the project enormous element of strength. Further the fact that there could be an assured off take agreement of sizable quantity of end product with or without value added basis is certainly going to significantly brighten the prospect of the holistic development of this otherwise deeply land locked phosphate project.(the second phase)

IDC in the role model of CSR

One key component of the project is the Corporate Social responsibility - CSR and I was impressed with the assessment of the IDC representative, particularly of Mr Kevin Lodge. His elaboration of the approach for resettlement issue, which incidentally form part of the subject of CSR reflected the comprehensive understanding and mitigation measures of IDC in an African country specific situation. In my judgement IDC would do well with the subject of CSR

Resource wise

The way I see it that historically the deposit had been systematically explored on a grid base approach (about 180m x180 m during 1952-53 exercise), with stint of subsequent infilling drilling in phases with reasonably deep dug holes (under supervision of SRK/local contractors and NML). As such I do not foresee any likely hood of much global variation in the deposit characteristics, either in the mineralogy/chemical analyses and physical property wise in the shallower part of the three valleys then what has been predicted. However to render the deposit JORC/NI 41-100 compliant we may have to have some definite additional exploration drill core data to profile the deposit characteristics isotropically, particularly to define the subsurface deposit behaviour below an average depth of 18m.

The extent of additional drilling, their spacing’s, total meterages to be drilled, recovery coefficient of core and their appropriate interpretation are to be carried out as per the JORC protocol which however is not prescriptive in approach and some judgemental/assessment of the accredited geologist comes into play . Unlike sedimentary phosphate deposits which tend to show remarkable uniformity in terms of lateral continuity, thickness and grade behaviour, Sukulu deposit represents a weathered variant of a Carbonatite plug and which would consequently need a relatively higher number of infilling drilling to what are needed in sedimentary types

Fig 3 The Map above showing typical circular nature of the volcanic plug, Blue shaded portions represent the 3 valleys(the actual weathered soil apatite deposit ) fringed by contoured hill ranges representing weathering resistant residual volcanic component, Location of the bore hole could be seen Reproduced from SRK report 2007

Fig 4 Above – A service road aligned along a high tension line passing through the wet soil deposit

Fig 5 Below The soil deposit to be mined (Cultivable firm land) along the North Eastern flank of the valley bordered by resistant hill mass

Fig 6 Bench plan showing the P2O5 grade characteristics in the three valleys, Reproduced from SRK Report 2007-2008

Being soft and with soil type deposit characteristics of the ore body, it is felt eminently possible to profile the deposit in terms of mineralogy, particularly for apatite, Similarly the deposit needs to be chemically profiled in slices/benches for P2O5, SiO2 Fe2O3, Al2O3, REE and moisture etc. Further the deposit will also need to be scrutinised from metallurgical angle also

A competent exploration agency with the back up support of an well organised drilling agency (for some large dia drill hole with +95% core recovery guarantee should be in a position accomplice the task of resource assessment of the deposit in about 16 weeks’ time after site mobilisation and generate JORC compliant report.

Incidentally Mr NJM indicated that he has an offer from SRK which indicated that they can carry out the assignment with an additional 15 nos of drill holes. The indicated fees inclusive of drilling for SRK’s involvement were reportedly $ 250000. It may not be out of place to mention that SRK’s association with the project has been quiet old-since 2007 as would be seen from the following historical study list

Mackay and Schnellmann (1953), Report on the Sukulu Phosphate-Niobium Deposits,

Examination and Assessment 1952 – 1953, report for the Tororo Exploration Company Ltd,

December 1953;

Beardon and Potter (1982), Technical Report – Uganda Phosphate Engineering Project

Phase-1, report prepared on behalf of Tororo Industrial Chemicals and Fertilizers Ltd, December

1982;

SRK Consulting (USA) (2007), Preliminary Assessment Sukulu Hills Deposit, report prepared

for Nilefos Minerals Limited, August 2007;

SRK Consulting (USA) (2007), Sukulu Hills Project – collection of P2O5 bearing material for

Pilot Plant Test, Technical Memo to Nilefos Minerals Limited, November 2007;

SRK Consulting (USA) (2008), Preliminary Assessment and Exploration Report Sukulu Hills

Project, Sukulu, Uganda, report prepared for Nilefos Minerals Limited, January 2008.

•SRK Consulting South Africa ( Oct 2010) Johannesburg ,Sukulu Phosphate Project: Scoping Study Report (Feasibility Study Phase 1)


It will be desirable to ascertain from SRK once for all about the number of additional bore holes and other related data that needs to be generated that would entail them to come out with a study report that would be JORC compliant and bring the report to international reporting standard. In their 2008 report SRK suggested in all 27 no of drill holes in the three valleys

The latest proposal of SRK as indicated to my mind would effectively be geared to produce a confirmatory drilling study report by an Independent geologist indicating his qualified resource assessment statement. The proposed study however its genuine merit has and could be considered for sponsoring since it represents a progressive project consolidation effort along geological axis. However it should not be reckoned as a substitute for comprehensive and detailed Resource/Reserve report required for preparation of BFS

Incidentally SRK has been very careful and guarded to emphasise that their results do not comply with generally accepted international reporting standards. Nevertheless, SRK is confident that a material phosphate resource can be reasonably delineated through a proper resource estimate. In any future dialogue with SRK This issue needs to be very explicitly defined- what additional exploration measures according to SRK would render the resource/grade estimate proper and would comply with internationally acceptable slandered. This aspect is most important for the project formulation and all decision making process will cascade from them.


SRK undoubtedly has a global reputation as a capable mining project consultant and in the present case should have an edge over other consultants because of their previous assignments and association with Sukulu Project. They have developed a reasonable understanding, insight on the resource/deposit related issues of the project. As such depending on the comprehensive nature of the scope and a reasonable fees, we should keep our option open with SRK. At the same time it will desirable to have one or two good offers in hand for comparative resource assessment. While I am trying to obtain an offer from an Australian Group , it will be good if you could sound BRGM also for the purpose.

If needed an attempt can be made to evolve a detailed scope of work and send the same to you and others for consideration and follow up decision. Incidentally it has been generally agreed during the last meeting that a final decision of engagement of resource assessment consultant will be taken in accordance with the recommendation of Owners Engineers.

The potentiality of the deposit is sufficiently defined and permits consideration for its large scale exploitation feasibility so much so that the implementation of Ist phase can be premised on the resources locked only in the South Valley- an approach which may significantly reduce the upfront capital outlay for the first phase significantly

In between I have made a hurried peer study of the Sukulu Carbonatite with some of the currently exploited Carbonatites and also project under implementation in Africa , South America and Asia. I find Sukulu deposit has several plus points and I feel encouraged on the exploitation feasibility of Sukulu

Mining wise

The deposit has yet to be scanned effectively from Geotechnical and also from Geohydrological angles. . Beside these, the tasks of ascertaining hydrogeological regime of the deposit area needs to be examined concurrent to the exploration work. Some draw down, piezomeric tests would be an unavoidable need, we will also have reason to ensure that the three valleys, if acting as perched/local aquifer for local inhabitants, in that case we may have to keep provision for creation of alternate source for water for them

Though the pit floor may not extend beyond a maximum depth of 60-70m, but due to soil characteristics with unconsolidated to semi consolidated nature and low cohesibility and with high level of precipitation , we have reason to be mindful about overall pit slope, pit stability, stability of the individual benches and fortification of the haul roads beside creation of water draw down sumps

A foretaste of things to come was experienced even during the brief site visit. We tried to negotiate the soil portion of the deposit on the North eastern valley along a high tension line maintenance road. The area experienced a shower apparently prior to our site visit. The service road became un negotiable as could be seen from the picture below. It was in a way good experience to have. The van carrying us got stuck up in the slash and had to be salvaged with villagers

Fig 7 a sharp shower rendered the service road unserviceable. A good experience to have for practical geotechnical consideration in future

Fig 8 Picture below- Slushy character of the wet cultivable field Northern Valley

However mining scenario on the whole does not outwardly provide any in surmountable challenges

Once the resource model is evolved along with a superimposed economic model leading to the development of the most optimum mining solution, and the feed requirement in the beneficiation plant is defined(metallurgical), the same should enable you consider mine fleet selection, their sizing and productivity etc. Incidentally I am not aware if you have any software like Whittle or any other mine software available with you. As you have been associated in the project since for quite some time you might have already covered a lot of ground

I won’t be knowing about the current details of your endeavour in BFS. Could you consider the location of the initial box cut to start with for the Ist phase of the project beside the dump location

On the subject of beneficiation

Apparently NJM appreciated the necessity of undertaking a pilot plant scale level investigation as complimentary approach to freezing up of the IIMT process flowsheet of the laboratory.

Knowing fully well the short comings inherent in the functioning of a Government controlled laboratory like IBM in Nagpur, yet GSFC team along with me and one of my phosphate beneficiation specialist colleague (Mr LP Khamesra)have gone there on two consecutive occasions because of their strong proven and historical background on the development of phosphate mineral beneficiation flow sheet. Further being government supported, they have not inherited the hard commercially driven culture either. At the same time close monitoring of IBM work progress (if it is entrusted with the Job) will be necessary

However GSFC to my understanding would also be open to pilot plant beneficiation studies being carried out in any reputable laboratories like SGS, BRGM.

I strongly and genuinely feel that since the subject of beneficiation represents the most technical domain specific areas of challenges, the criticality of issues at the current stages of project formulation needs to be addressed with all comprehensiveness and objectively. Thus we need to have a operationally favourable and practical flowsheet which not only would yields highest P2O5 or wt. recovery but also optimal concentrate quality.

As per the details available the, above test campaign was carried with equipments as were available in IIMT with mismatched capacities,. These might have acted as limiting factors in obtaining results in continuous manner

The effect of recycling of water/circulating load etc. has not been addressed (as they are not found in the report of IIMT)

Many key process control parameters such as flotation time, conditioning, time pulp density, ph, strength of magnetic separator has not been provided

The entire water balance, mass balance and chemical balance picture is not available

On the advisability of erecting a large pilot plant based on the flow sheet developed by IIMT vis a vis getting the result validated in an existing continuous pilot plant facility (test campaign of say 0.5 TPH/1TPH) , it is maintained that both time line and cost wise the second option will be much more favourable option to adopt. Both GSFC and IDC also are appreciative of taking recourse to second option.

On the other hand It appears that erection of a pilot plant at the site seems to be a committed understanding entered into between Government and NML. It was also indicated by NML that based on IMMT result, NML with IIMT and Delkor (known for equipment manufacturing) has firmed up a pilot plant design basis. It is not known how far the results of IIMT with its certain gap areas have been negotiated in the above design basis. Given the compulsive situation in which NML is placed, my hunch that they may not mine going ahead with the implementation of IIMT process based pilot plant irrespective of the eventual outcome of the operation

The disposal aspect of the very large volume of tailing that would be generated has not been addressed comprehensively .This subject is as critical as the very subject of beneficiation and may need much large chunk of land (during 2nd phase) than what has been indicated in the present retention area

On the subject of feasibility of recovery of magnetite as a possible by product or co product, it was indicated by Mr NJM that necessary study has already been made and the end product can be used as feed for a palletisation plant. What is not clear to me is the way they get integrated technically, operationally and financially into the project. Incidentally while in IBM we suggested the inclusion on the subject of beneficiability of Magnetite in the scope of work concurrent to apatite though from economic angle currently I would like to reckon magnetite as bonus. I am also keen that I BM also carries out a comprehensive Ore characterisation studies including REE minerals

Converting the small beneficiation plant for R&D

While in Tororo, I could visit the small beneficiation plant supplied by SRK housed in a generously spaced shade. I foresee that the above small pilot plant can be suitably reconfigured into a permanent R&D facility at Tororo once we have frozen the flowsheet through pilot plant campaign. Since the IIMT flowsheet is significantly different to SRK’s flowsheet, a lot of retrofitting would be necessary. I have a very capable team located in Calcutta who can possibly accomplish the above task in Tororo. While in Kolkata (the erstwhile Calcutta) about Six month back I did made a visit there and touched upon the subject and I was assured of total support by the MD of the Group.

What I would like to make abundantly clear that this small plant however should not be considered as a substitute to the immediate requirement of comprehensive large scale, continuous pilot plant scale investigation envisaged in a say 0.5-1tph hour plant, preceded by an optimally configured flow sheet (with IIMT as the base case) in a bench scale study

Fig 9 Picture showing the 103 kg pilot plant beneficiation plant components supplied by SRK lying in a spacious shed in CKD condition. At a suitable time this plant upon appropriately re configured basis can be effectively used as a permanent, R&D facility

Fig 10 Picture showing the small spiral classifier and flotation cells lying in unpacked condition

Infrastructure/Utilities

For the first phase of the project and to a considerable extent for the second phase of the project also the project seemed to have several plus points even after reckoning deep landlocked geographic location of the Sukulu project site with respect to the marine loading facility at Mombasa involving cross country movement of railway traffic covering a distance of over 1200km

The very existence of the railway line/yard at Tororo at the door step of Sukulu project is a boon for the project. There are case histories of Madden constructing a dedicated long railway line over 1400 km in Saudi Arabia to connect its mining/beneficiation facility at Al Jalamid to Ras AZ Zwar facility lying to the North of Jubail Industrial City and covering distance 1392 Km with a heavy traffic carrying capacity in 1.57 m BG line erected at a cost of over 600 m $ .

The exploitation of Bofal and Loubboira deposits along the course of Senegal river in Mauritania could not be initiated for nonexistence of a railway track covering the Port of Nouakchott to the project site over a distance of about 400 km

On the other hand the existing operating railway skeletal service can be rendered significantly effective with modernisation and the turnaround period can be effectively reduced. This aspect has been touched upon in some details in the Scoping study of SRK

Fig 11 The downloaded Google Earth view of the Tororo railway yard with Toro Station at the centre of the picture

Fig 12 Picture showing the view of the Tororo Rly Station

Fig 13 Another view of the Rly yard and the Diesel Loco standing at the Tororo Station

Fig 14 View of the east west running National High way across Uganda extending up to Mombasa via Kenya. The circular hill ranges in the foreground are the part of Sukulu Massif by the edge of which the high way negotiates. No better accessibility to the project site can be expected

The Sukulu project site lying to the eastern fringe of Uganda and bordering Kenya is excellently linked nationally and with Kenya with an all-weather national highway

Utility wise it is possible to draw power from the existing power plant located in between Jinja and the Project site Fig 12 below which is hooked to the National grid and located right on the national high way. For the first phase of the project there may not be much of a problem to ensure power supply on an uninterrupted basis. In the scoping study the power has been considered for tapping from the National Grid at Tororo Substation Apparently Power and water situation around the project site is reasonably good and compare well with many of the on-going major phosphate operation in the world

Fig 15 Picture showing the view of the power plant on way to the Sukulu project site from Jinja . This adjacently located power plant could be considered as source of power supply to start with during the first phase of the project

The nearby perennial river Malaba considered as the source of water for the project could not be seen. However en-route to the project site had the opportunity see one of its overflowing tributaries Manafa river flooding extensive low lying fields.


These two river is capable of supplying the average and maximum demand at a very high assurance (this is based on the observed flow data for 17 years).


Infrastructure. The initial and subsequent project development activity including the project administrative office site can be eminently considered in the Tororo Township and at a suitable time some good chunk of land may be procured for the purpose. Already there are some good hotels have come up in Tororo and they can be used conveniently on a long term rental basis by the expatriates who would be working for the project implementation

Climatic Regime in Tororo is excellent. The region enjoys a salubrious climate throughout the year and should be reckoned as a boon for the project

Fig 16 View of one of the reasonably good hotel with all modern amenities in Toro Township

Fig 17 View of the Tororo Township from the Hotel complex mentioned above. In the fore ground the elevated hill ranges of the Sukulu complex could be seen

Certain points relating to trade of studies would include the advantages/disadvantages inherent in the deposit being deeply landlocked

The Sukulu as residual Carbonatite deposits have mining and beneficiation characteristics which should translate to economic advantage when compared to the massive rock-type deposits (as in case of Evate deposit in Mozambique, now under development by Vale). However the extreme fine nature of the Sukulu ore is not very advantageous from their beneficiation, material handling, and transport and disposal viewpoints. These would consequently point to a critical analyses about the nature of end product/products to be eventually considered for the project

Immediate action plan as felt desirable

1 Settlement of Retention Licence and converting them into Mining lease

2 Collection of 100 tonnes bulk sample for pilot plant scale investigation under professional supervision

3 Concurrent selection /finalisation of beneficiation test agencies

4 Scope of consideration of development of basic engineering package based on the outcome of pilot plant Test Campaign for a suitable sized plant at Tororo for first phase

5 Consideration of selection of location for initial box cut locale

4 Consideration of Early Engagement of Owners Engineers and BFS Study agency through Owners engineer

On the subject of Implementation Strategy and the project economics,I will shortly revert back to you and share my perception with you in another report

Dr R Choudhuri

28.05.2013

On the project economics a consensus view needs to be developed

Fig view of the arterial road traversing across Uganda in East west direction and extending eastwardly across Kenya Mombasa up to the port Mombasa. The residual hill ranges of the Sukulu massif could be seen to the right side of the road

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