Enirgi Group Corporation ("Enirgi Group" or the "Company") is pleased to announce the positive results of its Definitive Feasibility Study (the "DFS") for its planned 50,000 tonne per annum lithium carbonate processing plant at its Salar del Rincón development project located in the province of Salta, Argentina (the "Rincón Project").
Enirgi Group owns 100% of the Rincón Project through its wholly owned subsidiary ADY Resources Limited ("ADY"). The Rincón Project's lithium carbonate processing plant is designed to produce battery grade lithium carbonate directly from raw, unconcentrated brine and will use Enirgi Group's proprietary lithium extraction technology, developed in-house by Enirgi Group's Innovation Division in cooperation with the Australian Nuclear Science and Technology Organisation ("ANSTO").
Enirgi Group retained SRK Consulting (U.S.), Inc. ("SRK") to summarize the DFS in the form of a technical report prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") of the Canadian Securities Administrators (the "2016 NI 43-101 Technical Report").
Key DFS Findings
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Mineral Reserve and Resource Estimates
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Probable Reserves 1.2 million tonnes Lithium Carbonate
Equivalent ("LCE")
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Measured and Indicated Resources 3.5 million tonnes LCE
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Inferred Resources 4.8 million tonnes LCE
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Capital Expenditure
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Initial net capital expenditure $720.1 million (including 8.62%
contingency)
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Project Economics
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Ungeared After-tax 9% NPV $1.36 billion
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Ungeared After-tax IRR 30.80%
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Payback period 4.13 years from start of commercial
production
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Mine Production
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Life of Mine 24.5 years
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Average annual production 50,000 tonnes LCE per annum
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Total cash operating cost $2,070 per tonne LCE for life of mine
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*All amounts are in United States dollars, unless otherwise indicated. Figures are rounded. A complete summary of the mineral resource estimate and probable reserve estimate can be found in Table 1 and Table 2, respectively, of this news release.
DFS Highlights
Very large brine resource capable of supporting long project life with superior mining extraction and process recoveries when compared to industry averages; Lowest quartile operating costs and potentially the lowest all-in production costs (excluding by-product credits); High confidence in extending project life and/or increasing production rate further from conversion of Black Sand resource to reserve status and addition of large resource identified outside the halitic core; Flexible product distribution/logistics strategy to export from Argentine and Chilean ports to meet future market demand; and All environmental and construction permit approval processes on track to meet expanded 50,000 tonne per annum production ramp up schedule with all impacts mitigated.The 2016 NI 43-101 Technical Report was authored by SRK, Schlumberger Water Services ("SWS"), ANSTO and Prudentia Process Consulting and is dated June 3, 2016 with an effective date of February 24, 2016. The technical information in this news release is summarized or extracted from the 2016 NI 43-101 Technical Report and is subject to the assumptions and qualifications contained in the 2016 NI 43-101 Technical Report.
Enirgi Group's Project Development/Investment Strategy
In conjunction with the DFS work, Enirgi Group's Innovation Division has focused on delivering its proprietary, game-changing lithium extraction technology, which is capable of producing battery grade lithium carbonate product by directly extracting lithium from raw, unconcentrated brine and processing it to the end product within 24 hours, at a low cost and with a lower environmental impact than standard processing technologies.
Mr. Wayne Richardson, President and CEO of Enirgi Group commented, "We were confident that we had a high quality intergenerational lithium resource and the positive outcomes from the DFS have confirmed our confidence and the value of our investment to date. Enirgi Group has invested the time, effort and money into identifying exactly what we have in terms of lithium atoms and has established the ability to actually extract brine to feed our planned 50,000 tonne per annum production plant. We have a significant, scalable resource and our proprietary processing technology has been validated by a leading independent international technology group (ANSTO). Enirgi Group has done the hard work and is well positioned to become one of the world's leading producers of high grade lithium."
Enirgi Group has completed comprehensive exploration and metallurgical work and extensive technical, design, and engineering studies and the positive results of the DFS support the Company's significant investment to date and advancement of the Rincón Project.
The next milestone is to commence production at a demonstration plant level of lithium carbonate in-situ on the Salar del Rincón in Q1 2017 to demonstrate the full lithium extraction process and technology. In parallel with the work to achieve this, Enirgi Group's Innovation Division will finalize the commercial plant design, commence detailed plant engineering, and complete engineering activities relating to gas supply and construction of a gas pipeline for the Rincón Project.
The current resource and reserve estimates underpin plans to maintain 50,000 tonnes LCE per annum for 24.5 years, however, Enirgi Group is confident in converting significant inferred resources that will provide the opportunity to expand production or extend the life of the operation.
Proprietary Lithium Extraction Process Development and Demonstration Plant
Highlights
Produces lithium carbonate directly from unconcentrated raw brine; Radically reduces processing time; from brine to bag in less than 24 hours; Eliminates reliance on capital intensive mega-evaporation pond infrastructure; Reduces dependency on external reagents brought to site; Low-impact extraction process radically reduces environmental footprint; Reliably brings to the market significant volumes of low cost, predictable supply of high grade lithium; Sets new industry benchmarks through superior extraction efficiencies; Process is amenable to production of lithium hydroxide; and Option to apply technology to other lithium-bearing brine resources.Enirgi Group's Innovation Division, in cooperation with ANSTO, began working on its proprietary lithium extraction process in 2013 with the goal of producing high grade lithium carbonate directly from raw unconcentrated brine. On October 29, 2014, the Company announced it had developed and validated its proprietary lithium extraction technology. To demonstrate and validate the proprietary lithium extraction process, extensive metallurgical test work was carried out on brines sourced from the Salar del Rincón, which were tested on site in Argentina and at ANSTO Minerals in Australia.
In addition, a scalable demonstration plant was constructed in Sydney, Australia to confirm plant design and engineering. The demonstration plant was operated for 12 consecutive days with brine sourced directly from the Salar del Rincón. The plant successfully demonstrated continuous manufacturing of high-purity lithium compounds at a production rate of approximately 1 tonne per day LCE.
Mr. Cameron Stanton, Enirgi Group's Innovation Division's Divisional Director and VP, Technical, commented, "One of the characteristics of our processing technology is its lithium recovery performance. This means we capture more lithium atoms out of the lithium brine pumped from the well-field," said Mr. Stanton. "Current industry processing technologies usually range between 40 to 60%, with the average in the lower end of that range. Our approach has a proven recovery of up to 85% of the contained lithium. We have conservatively applied a recovery rate of 74% when defining the resource."
2016 NI 43-101 Technical Report Summary
Salar del Rincón Exploration
Enirgi Group has invested significant resources and time in defining the mineral resources and reserves at the Rincón Project. Prior to the completion of the DFS, SRK has prepared separate NI 43-101 mineral resource estimates with effective dates as of December 19, 2011 (the "2011 Report"), October 28, 2013 (the "2013 Report") and December 23, 2014 (the "2014 Report") as well as a NI 43-101 Pre-Feasibility Study with an effective date of October 27, 2015 (the "Pre-Feasibility Study").
As a result, Enirgi Group has progressively improved its understanding of the Rincón Salar geology and the confidence level in its resource definition work from the first drilling campaign in 2009.
During 2009, 2010, and 2011, ADY conducted multiple diamond drilling campaigns on the Salar del Rincón. In addition, the following exploration programs were conducted:
Surface brine program; Gravity survey; Geoelectrical surveys; Geophysical logging; and Brine aquifer testing.The exploration results from the above programs were used by SRK to prepare the 2011 Report.
In 2013, ADY conducted further diamond drilling and exploration campaigns in the central area of the Salar del Rincón which included further geophysical logging and brine aquifer testing. This resulted in the subsequent exploration results being used to prepare the 2013 Report.
Additionally, in 2014, ADY completed an exploration program consisting of a diamond drillhole program and 30-day pumping test trials. The drill program was completed to collect:
Continuous cores for mapping and characterization; Geologic samples for geotechnical testing, including relative brine release capacity, grain size and density; and Brine samples by airlift.The 30-day pumping test was designed to better understand the characterization of brine flow in the Upper Fractured Halite for the 50,000 tonne per annum LCE plant and simulate future production well extraction rates. In 2015, based on these exploration results, Enirgi Group completed the Pre-Feasibility Study.
Following the Pre-Feasibility Study, ADY and SRK conducted additional drilling and field investigations on the Salar del Rincón. The drilling programs increased the conceptual understanding and characterization of subsurface geology, with an emphasis on the detailed stratigraphy.
This has led to an improved delineation of the porosity and transmissivity factors in measured and indicated resource category brine capacity, as well as the extractable resource from the Salar, resulting in the current mineral resource and reserve estimates.
The extensive drilling, coring and brine sampling programs completed between 2009 and 2015 can be summarized below:
The 2010 and 2011 drilling programs, where one hundred and eleven (111) holes were completed, for a total drilling of 7,862 meters (4,143.75 meters in 2010 and 3,718.25 meters in 2011). Borehole depths range from 18 to 311.35 meters. The 2013 exploration campaign, which focused on the Central Salar region with the purpose of expanding the resource area. The total drillhole length for this campaign was 1,265.5 meters, with hole depths varying from 30 meters for pumping wells to 125 meters for exploration holes. The 2014 drilling campaign, which focused on the drilling of a pilot pumping well, a nearby exploration hole and several monitoring wells to be used during a 30-day pump test. The total drillhole length for this campaign was 208 meters, with drillhole depths varying from 28 meters for monitoring wells to 48.5 meters for exploration holes. The 2015 drilling campaign, which focused on the deep (i.e., greater than 65 meters in depth) Black Sands within the halitic core. Enirgi conducted detailed logging, core sampling and 7-day brine aquifer tests at three different locations. The total drill hole length for this campaign was 744 meters, with hole depths ranging from 120 to 128 meters.Characteristics of the Salar del Rincón, Location and Infrastructure
The Salar del Rincón covers an area roughly 435 km2 with inner Salar area, termed the Halitic Zone, of approximately 232 km2. The halite crust area is essentially completely covered by ADY concessions and is the area used for the static resource estimation and remains the primary focus of brine evaluation on the Salar.
The Salar core consists predominantly of a thick body of halite (NaCl), well developed and forming a hard cracked and upheaved salt crust (30 to 40 centimeters high), typical of a dry lake (Salar). The phreatic brine level currently lies some 40 to 50 centimeters below the salt crust.
The Salar del Rincón is a very large, mature salar and displays substantial effective porosity and hydraulic continuity within the Upper Fractured Halite resource unit. The Black Sands resource unit also displays significant effective porosity with a lesser degree of verified hydraulic continuity. This Upper Fractured Halite resource unit accommodates relatively high brine extraction rates.
The Salar is situated in close proximity to key infrastructure, including existing natural gas pipeline, electricity, rail and road transport that is required to build and support a large, scalable lithium processing facility. Water can be sourced from tenements owned by Enirgi Group, which is sufficient to sustain long term processing rates.
Enirgi Group will construct a tie-in to the existing Gas Atacama pipeline connecting Chile and Argentina to supply power to support the Rincón Project (construction of the pipeline is included in the capital expenditure estimate).
The location of Salar del Rincón, and in relation to other Salars in the region, is shown below:
http://www.marketwire.com/library/MwGo/2016/7/6/11G105574/Images/Salar_del_Rincon_Location-1e813e36892fae3280f614475fbd1a7e.jpg
Dynamic Groundwater Model and Mining Plan
SWS developed a numerical groundwater model to mathematically incorporate the conceptual hydrogeology of the Salar del Rincón and evaluate the potential to extract lithium-rich brine from the Salar subsurface.
The dynamic numerical groundwater model (the "Dynamic Model") was then used to develop a mine plan from simulation of the number of wells identified by the analytical well field design.
Output from the Dynamic Model was used to develop the life of mine production schedule and corresponding capital expenditure and operating costs for the economic model. Results which were used for the economic analysis include:
Number of production wells and replacement schedule; Total wellfield discharge rate; Well field chemistry profile; Re-infiltration rate; and Lithium production schedule.Economic Analysis, Market Analysis and Indicative Economic Results
The financial results are derived from annual inputs based on an annual mining schedule included in the DFS. The mining schedule of the reserves declared in the DFS are planned to be exploited between the latter half of 2018 and the end of 2042, granting the Rincón Project an expected life span of approximately 24.5 years. Cash flows are reported on a yearly basis and all financial data is expressed in United States dollars as at first quarter 2016.
Roskill Consulting Group Ltd. ("Roskill") and Mr. Joe Lowry of Global Lithium LLC ("Global Lithium") contributed to the lithium market information and price forecasts relied upon in the DFS. Both Roskill and Global Lithium are independent of Enirgi Group. Roskill is a UK-based research consultancy with substantial expertise in international metals and minerals. Enirgi Group retained Roskill to provide updated minerals research and market information for lithium (as of January 2016).
The ungeared indicative economic results for the 50,000 tonne LCE per annum production plan, 24.5 year operating period, follow below (stated in thousands of United States dollars):
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Description Value Units
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Market Prices
Lithium Carbonate 8,487 US$/t-LCE
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Estimate of Cash Flow (all values in $000s)
Concentrate Net Return $/t-LCE
Gross Revenue $9,958,419 $8,501.52
Export Rebates $497,921 $425.08
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Total Revenue $10,456,340 $8,926.60
Freight & Duty ($258,873) ($221.00)
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Gross Revenue $10,197,467
Royalties ($241,540) ($206.20)
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Net Revenue $9,955,927
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Total Operating Costs ($1,923,804) ($1,642.34)
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Operating Margin (EBITDA) $8,032,124
Initial Capital ($720,064)
LoM Sustaining Capital ($328,501)
Income Tax ($2,339,716)
Working Capital ($8,126)
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After Tax Free Cash Flow $4,635,716
NPV @: 9% $1,359,689
IRR 30.8%
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NPV Sensitivity Analysis (stated in millions of United States dollars):
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NPV @ 9% -25% -20% -15% -10% -5% Base 5% 10% 15% 20% 25%
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Lithium
Price 760 881 1,001 1,121 1,241 1,360 1,478 1,597 1,716 1,834 1,952
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Capital
Costs 1,500 1,472 1,444 1,416 1,388 1,360 1,332 1,303 1,274 1,245 1,217
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Operating
Costs 1,467 1,445 1,424 1,402 1,381 1,360 1,338 1,317 1,296 1,274 1,253
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Natural
Gas Price 1,429 1,415 1,401 1,387 1,374 1,360 1,346 1,332 1,318 1,304 1,290
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Mining Method and Process Recovery
The Rincón Project will utilize Enirgi Group's proprietary lithium extraction technology. Raw brine will be extracted from the Salar through pumping from recovery wells strategically placed to maximize recovery of the resource within the Salar. Pumping rates, locations and area of influence for extraction wells were estimated based on hydrogeological parameters calculated for each geological formation based on field testing results and supported by simulation utilizing the Dynamic Model. Production well discharge varied from year to year, with an average rate of 1,450 litres per second and an average annual variation of +/- 98 litres per second.
The proposed plant will have the capacity to produce 50,000 tonnes LCE per annum. To achieve this, a brine containing approximately 350 to 500 milligrams per litre ("mg/L") lithium will be pumped from a series of wells in the Salar to the process plant, where impurities are removed and the lithium is refined and converted to a lithium carbonate.
The technology enables lithium extraction from raw unconcentrated brine and returns the spent brine with a very similar elemental composition with the exception of lithium. This removes the need for brine concentration which is usually made via a large area pond system reducing the mining area footprint and environmental impact relative to conventional technologies.
The chemical processes main reagent inputs are cost-effective natural gas and limestone with the carbonate requirement needed for the end product being manufactured from carbon dioxide flue gases from the power station reducing carbon emissions to the environment. There are no large amounts of solid waste generated from the plant as all impurities remain in the spent brine, this attribute solves many scalability and environmental problems usually encountered with material handling and storage of these wastes at the mine site.
Recent Project Development and Current Focus
In the second half of 2015, the demonstration plant was disassembled and its modular parts were shipped from Sydney, Australia to the Salar del Rincón in Salta Province, Argentina. The Company is currently focused on continued work to support its goal of recommissioning and expanding the plant to test and demonstrate the full lithium extraction process and technology on site including finalizing the commercial plant design, commencement of detailed plant engineering, and engineering activities relating to gas supply and construction of a gas pipeline for the 50,000 tonne per annum Rincón Project.
In summary, Enirgi Group has completed various projects, assessments, detailed engineering studies, and process and technology testing to de-risk the Rincón Project in the areas of:
Technology:
Proven technology - validated by leading independent international technology organization. Demonstrated process. Exhaustive studies and technical peer reviews completed. Proprietary technology dramatically decreases production time from 365+ days to 24 hours.Brine Resource Definition:
Resource definition work was completed to NI 43-101 standards and reflects technical parameters relevant to brine-hosted deposits such as:
Porosity and permeability. Brine chemistry. Brine hydrology and water balance. Host aquifer and brine body definition.Mineral Control:
Enirgi Group holds exclusive mineral claims over nearly 100% of the economic halitic zone. Enirgi Group maintains a large block of mineral claims related to an adjacent limestone resource. There are no material risks or uncertainties associated with Enirgi Group's ownership of the brine.Execution:
Federal and Provincial permits associated with the operation of the on-site pilot plant for lithium carbonate production obtained. Clear strategy and plan in place to carry out execution of the 50,000 tonne per annum Rincón Project. Experienced team in place. Strong global track record of successful project execution across Enirgi Group's assets and operations. Project support from shareholders. Strong local presence and positive relationships with Federal and National Government entities.Information relevant to Mineral Resource and Reserve Estimation
Data Verification
SRK reviewed the historical and contemporary data sets relevant to the resource model. Drillhole data was audited by SRK before use in development of the geological model representing the drillhole and assay database for the Rincón Project. The data audit included review of: assay certificates, hard copy records of the downhole survey results, logging codes for consistency, logging codes for lithology and checks for data logged, sampled or otherwise measured past the end of the drillhole. SRK corrected verified errors in the database. The resulting 2015 drillhole and assay database is considered of high quality and acceptable for use in resource estimation.
Assumptions, Parameters and Methods
The Salar del Rincón covers an area roughly 435 km2 with inner Salar area of approximately 232 km2. The halite crust area is essentially completely covered by ADY concessions and is the area used for the static resource estimation and remains the primary focus of brine evaluation on the Salar.
The resource estimate for the Salar is based on drilling, brine assays, porosity determinations from core and specific yield as estimated by pump tests conducted by ADY and monitored by SRK and/or SWS, and dynamic modeling completed by SWS. Physical properties of the brine such as density, total dissolved solids, and pH were measured by both the ADY laboratory and external independent laboratories (e.g., ALS Laboratory Group and Alex Stewart International).
Brine aquifer tests conducted to date show that, within a relatively short duration of start-up, the brine from the pumping well homogenizes the assay differentials that are present downhole. Statistical testing on the assays from the upper portions of the drillholes show that downhole averaging is valid for lithium and potassium. Brine aquifer tests indicate that the near surface (i.e., less than 65 meters in depth) "communication" between holes within the Upper Fractured Halite unit is unrestricted and that widespread, impervious clay layers are not present.
Resource recovery factors utilized to calculate reserves include the following: wellfield performance (i.e., in situ recovery of resource from brine); recovery of rejected stream from the brine beneficiation stage; lithium extraction plant process recovery; and environmental permitting.
Relevant Factors
The resource estimate is not anticipated to be materially affected by known environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors.
Qualified Persons
The 2016 NI 43-101 Technical Report was authored by Qualified Persons Mr. Jerry Aiken, Registered SME, Senior Associate Geologist, SRK; Mr. Terry Braun, P.E., Principal Consultant, SRK; Mr. Tyler Cluff, P.G., Senior Hydrogeologist, SWS; Mr. Douglas Collier, Fellow AusIMM, Principal Engineer, ANSTO, Hugh D Thompson, B. Eng. (Mining), FAusIMM, Prudentia Process Consulting and Mr. Jeff Osborn, BEng Mining, MMSAQP, SRK. All persons are Qualified Persons, independent of Enirgi Group within the meaning of NI 43-101.
The scientific and technical information contained in this news release has been reviewed and approved by Mr. Terry Braun, P.E., Principal Consultant, SRK.
The 2016 NI 43-101 Technical Report was prepared in accordance with NI 43-101 and Staff Notice 43-704 of the Ontario Securities Commission.
About Enirgi Group
Enirgi Group is a global, diversified industrial and specialty chemicals company that owns and operates a portfolio of world-class assets and operations located around the world. Part of Enirgi Group's Chemicals Division, ADY operates at the Salar del Rincón in the province of Salta, Argentina.
Table 1 - Mineral Resource Estimate, Recoverable Lithium as Metal, effective
January 13, 2016
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Total
Average Brine
Lithium Average Average Volume(3, Lithium
Stratigraphic Grade Specific Thickness 4)(000's as Metal LCE(5)(to
Unit (mg/L) Yield(1) (2)(m) m3) (tonnes) nnes)
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Upper Fractured Halite
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Measured 395 0.119 16.4 521,489 205,988 1,099,977
Indicated - - - - - -
Inferred - - - - - -
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Clastics
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Measured - - - - - -
Indicated 343 0.041 21.0 149,071 51,131 273,041
Inferred 235 0.023 21.0 22 5 28
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Mixed Halite and Clastics
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Measured - - - - - -
Indicated 384 0.021 10.4 88,531 33,996 181,538
Inferred 381 0.091 10.4 261 99 531
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Black Sands
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Measured - - - - - -
Indicated 400 0.101 72.5 933,133 373,253 1,993,171
Inferred 393 0.086 72.5 947,295 372,287 1,988,011
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Massive Halite
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Inferred 415 0.018 273.5 1,275,223 529,218 2,826,022
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Totals
Measured 395 0.12 521,489 205,988 1,099,977
Indicated 392 0.09 1,170,734 458,380 2,447,750
Inferred 406 0.05 2,222,801 901,609 4,814,592
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Measured +
Indicated 393 0.10 1,692,223 664,368 3,547,728
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