Ethiopian Potash Project, Ethiopia

The Danakil potash project is located in Ethiopia's north-eastern Danakil depression, a desert area in the State of Afar. The project includes three potash concessions covering an area of approximately 150km2. It includes two deposits: the Mushley deposit and the smaller Crescent deposit.

The project is owned by Allana Potash, which began Phase I drilling on 5 April 2010. The drilling programme is scheduled for completion by July 2010. China Investment Corporation is considering investing in the project.

Reserves

The deposit contains an estimated 105.2 million tons of inferred potash mineral resources. The composite grade of the resources has been estimated at 20.8% KCl.

Geology

The mine lies within the Danakil depression, a northern extension of the Afar depression.

The north-west/south-east striking depression extends over 200km from Lake Badda in the north-west to Lake Acori in the south-east. The geological structure of the depression is 10km wide in the north and broadens up to 70km in the south. It is characterised by elevations as low as 50m to 128m below sea level.

Towards the north-west, the Danakil depression is surrounded by the Danakil Alps. The Alps, with 1,000m elevations, contain a 40-70km-wide horst structure that divides the depression from the Red Sea. The south-western border of the depression has elevations of 2,100m.

A 1,000m series of evaporite is formed close to Red Sea due to the high rates of subsidence. The shoulders of the Danakil Alps and Ethiopian highlands include gneisses and phyllites belonging to the precambrain age. It also comprises Jurassic-age sediments and granites, and intruded basalts belonging to the Palaeozic and Neogene age.

The border zone between the highland and depression consists of tertiary to quaternary alluvial fan sediments. Largely unconsolidated, the sediments interfinger and lie above the Pleistocene and Holocene sediments of the depression.

The basement rocks of the deposit consist of gneisses, phyllitic schists, limestones, sandstones and conglomerates of the palaeozoic and the pre-cambrian age. Found mostly in the eastern, western and border areas of the zone, the basement rocks do not outcrop. They are overlain by a series of mesozoic rocks including adigrat sandstones, antalo limestones, marls and upper sandstones. It is overlain by a series of tertiary and quaternary rocks.

The structure of the potash members found within the deposit dip gently by less than 50 in the north-east direction. The deposit is segmented into blocks depending on the thickness, grade and depth of the surface of the horizons.

Mineralisation

The deposit hosts four main potash bearing minerals including sylvite, carnallite, polyhalite and kainite. Three layers that comprise different constitution of potash minerals dominate the deposit. The sylvinite layer ranges up to 11m in thickness and comprises large amounts of sylvite along with decent amounts of Hallte and trace amounts of carnallite, anhydrite, clay and dolomite.

The kalnitite member that averages 9m in thickness is dominated by kainite with lesser amounts of kieserite, carnallite and insoluble material. The intermediate member that lies between the sylvinite and the Kainitite members is dominated by carnallite and polyhalite. It also includes significant amounts of halite and insoluble materials and traces of anhydrite, sylvite, kainite and kieserite.

Mining and processing

The deposit will be mined using either solution or open pit mining methods. The feasibility of these options is being investigated. Hydrogeological investigations will reveal the potential of open pit mining for the deposit. For sylvinite and kainitite members, mining will be carried out either through solution mining or conventional mining, if the deposit's depth is increased further. A combination of solution and conventional mining techniques can also be adopted.

The alternatives currently under consideration for processing the minerals include MOP production from solution and conventional mining of the sylvinite member and production of SOP and K-Mg sulphate from conventional and solution mining of the kainitite member.

Under the solution mining method of the sylvinite member, MOP is produced from the brine received by solution mining of a sylvinite deposit. MOP production from conventional mining of a sylvinite deposit includes mechanical separation and hot leaching of the ore to form a KCl liquor that is further crystallised.

Under conventional mining of the Kainitite member, SOP and K-Mg sulphite are produced by separating kainite and kieserite from halite. K-Mg sulphates are converted into K sulphates through reaction with additional KCl. SOP and K-Mg sulphite production through solution mining of the Kainitite member is not a proven process. A pilot operation is conducted before the composition of the final brine/slurry is determined.

Drilling

The Phase I drilling programme of the deposit will include seven holes extending between 2,500m and 3,000m. Designed to confirm the accuracy of the historical drilling results besides increasing the resource limit, the drilling programme will be conducted at the potash horizons closer to the current resources. It will also test the potash horizons hosted in the centre of the evaporite basin.