NI 43-101 Preliminary Economic Assessment - Verde Potash

NI 43-101 Preliminary Economic Assessment 

Cerrado Verde Project 

Minas Gerais, Brazil 

Prepared for: 

Verde Potash Plc 

47 Colborne Street, Suite 307 

Toronto, Ontario M5E 1P8 

Prepared by: 

7175 W. Jefferson Ave. 

Suite 3000 

Lakewood, Co 80235 

SRK Project Number: 343500.020 

Effective Date: August 3, 2011 

Report Date: September 16, 2011 

Endorsed by Qualified Persons: 

Neal Rigby, CEng, MIMMM, PhD 

Rob Bowell, PhD, C.Chem MRSC, C. Geol FGS 

Volodymyr Myadzel, MAIG, PhD



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Table of Contents 

1 INTRODUCTION (ITEM 2) ........................................................................................... 1-1 

1.1 Terms of Reference and Purpose of the Report ................................................... 1-1 

1.2 Reliance on Other Experts (Item 4) ..................................................................... 1-1 

1.2.1 Sources of Information ......................................................................... 1-2 

1.3 Qualifications of Consultants ............................................................................... 1-2 

1.3.1 SRK ....................................................................................................... 1-2 

1.3.2 BNA Consultoria e Sistemas ................................................................ 1-3 

1.3.3 ECM ...................................................................................................... 1-3 

1.3.4 AgroConsult Consultoria & Marketing ................................................ 1-3 

1.3.5 Site Visit................................................................................................ 1-3 

1.3.6 Effective Date ....................................................................................... 1-3 

2 PROPERTY DESCRIPTION AND LOCATION (ITEM 4) ........................................... 2-1 

2.1 Property Location................................................................................................. 2-1 

2.2 Mineral Titles ....................................................................................................... 2-1 

2.3 Location of Mineralization .................................................................................. 2-4 

2.4 Royalties, Agreements and Encumbrances .......................................................... 2-4 

2.5 Environmental Liabilities and Permitting ............................................................ 2-5 

3 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND 

PHYSIOGRAPHY (ITEM 5) ...................................................................................................... 3-1 

3.1 Topography, Elevation and Vegetation ............................................................... 3-1 

3.2 Climate and Length of Operating Season ............................................................ 3-1 

3.3 Physiography........................................................................................................ 3-1 

3.4 Access to Property ............................................................................................... 3-2 

3.5 Surface Rights ...................................................................................................... 3-2 

3.6 Local Resources and Infrastructure ..................................................................... 3-2 

4 HISTORY (ITEM 6) ........................................................................................................ 4-1 

5 GEOLOGICAL SETTING AND MINERALIZATION (ITEM 7) ................................. 5-1 

5.1 Regional Geology ................................................................................................ 5-1 

5.2 Local and Project Geology ................................................................................... 5-1 

5.2.1 The Verdete Unit................................................................................... 5-1 

5.2.2 Structure ................................................................................................ 5-1 

5.2.3 Elevation and Erosion Level ................................................................. 5-2 

5.3 Mineralization ...................................................................................................... 5-2 

5.3.1 Mineralized Zones ................................................................................ 5-2 

5.3.2 Surrounding Rock Types ...................................................................... 5-3 

6 DEPOSIT TYPE (ITEM 8) .............................................................................................. 6-1 

7 EXPLORATION (ITEM 9) ............................................................................................. 7-1 

8 DRILLING (ITEM 10) .................................................................................................... 8-1 

8.1 Type and Extent of Drilling for Funchal Norte Target ........................................ 8-1 

8.1.1 Reverse Circulation (RC) Sampling ..................................................... 8-1 

8.1.2 Logging ................................................................................................. 8-1 

8.1.3 Bulk Density ......................................................................................... 8-1 

8.2 Type and Extent of Drilling for Targets 4, 6, 7, 10 and 11 .................................. 8-2 

SRK Consulting (U.S.), Inc. September 16, 2011 

Cerrado Verde_NI 43-101 PEA_343500.020_007_KG



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8.2.1 Logging ................................................................................................. 8-3 

8.2.2 Recovery ............................................................................................... 8-3 

8.2.3 Reverse Circulation (RC) Sampling ..................................................... 8-4 

8.2.4 DDH Sampling...................................................................................... 8-4 

8.2.5 Bulk Density ......................................................................................... 8-4 

9 SAMPLE PREPARATION, ANALYSES AND SECURITY (ITEM 11) ...................... 9-1 

9.1 Sample Preparation and Assaying Methods for Funchal Norte Target ............... 9-1 

9.2 Sample Preparation and Assaying Methods for Targets 4, 6, 7, 10 and 11 ......... 9-1 

9.2.1 Quality Controls and Quality Assurance .............................................. 9-3 

9.2.2 Adequacy of Procedures for Targets 4, 6, 7 10 and 11 ......................... 9-3 

10 DATA VERIFICATION (ITEM 12) ............................................................................. 10-1 

10.1 Funchal Norte Target ......................................................................................... 10-1 

10.1.1 Bureau Veritas Pulp Duplicates .......................................................... 10-2 

10.1.2 Adequacy of Procedures ..................................................................... 10-2 

10.1.3 Limitations .......................................................................................... 10-2 

10.2 Targets 4, 6, 7, 10 and 11 ................................................................................... 10-2 

10.2.1 QA/QC Results ................................................................................... 10-2 

10.2.2 Data Import and Validation ................................................................ 10-4 

11 MINERAL PROCESSING, METALLURGICAL TESTING AND RECOVERY 

METHODS (ITEMS 13 AND 17) ............................................................................................. 11-1 

11.1 Summary of Proposed Process ........................................................................... 11-1 

11.1.1 Overview ............................................................................................. 11-1 

11.1.2 Project Scenarios and Capital Costs ................................................... 11-2 

11.1.3 Product Specification and Application ............................................... 11-3 

11.1.4 Results of Agronomic Testwork ......................................................... 11-4 

11.1.5 Summary, Residual Issues and Recommendations ............................. 11-6 

12 MINERAL RESOURCE ESTIMATE (ITEM 14) ........................................................ 12-1 

12.1 Funchal Norte Target ......................................................................................... 12-1 

12.1.1 Geological Modeling .......................................................................... 12-1 

12.1.2 Block Model Development ................................................................. 12-1 

12.1.3 Statistical Analysis .............................................................................. 12-2 

12.1.4 Variography ........................................................................................ 12-3 

12.1.5 Grade Estimation ................................................................................ 12-4 

12.1.6 Resource Reporting ............................................................................. 12-5 

12.2 Targets 4, 6, 7, 10 and 11 ................................................................................... 12-7 

12.2.1 Statistical Analyses of Geological Exploration .................................. 12-8 

12.2.2 Interpretation ..................................................................................... 12-10 

12.2.3 Triangulation ..................................................................................... 12-10 

12.2.4 Data Selection ................................................................................... 12-11 

12.2.5 Modeling ........................................................................................... 12-11 

12.2.6 Geostatistical Analysis ...................................................................... 12-12 

12.2.7 Grade Estimation and Resources Classification ............................... 12-12 

12.2.8 Assignment of Density Values to the Block Model .......................... 12-14 

12.2.9 Block Model Validation .................................................................... 12-14 

12.2.10 Resources Evaluation Results ........................................................... 12-15 

12.3 Mineral Resource Estimate .............................................................................. 12-16 





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13 MINING METHODS (ITEM 16) .................................................................................. 13-1 

13.1 Mining Operations ............................................................................................. 13-1 

13.1.1 Pit Optimization .................................................................................. 13-1 

13.1.2 Whittle Parameters .......................................................................... 13-1 

13.1.3 Pit Optimization Analysis ................................................................... 13-3 

13.1.4 Pit Design ............................................................................................ 13-4 

13.1.5 Production Schedule ........................................................................... 13-5 

13.1.6 Recovery ............................................................................................. 13-7 

14 PROJECT INFRASTRUCTURE (ITEM 18) ................................................................ 14-1 

14.1 Access Road and Transportation ....................................................................... 14-1 

14.2 Power Supply ..................................................................................................... 14-1 

14.3 Water Supply ..................................................................................................... 14-2 

14.3.1 Rainwater Drainage ............................................................................ 14-2 

14.3.2 Hydraulic Sizing ................................................................................. 14-2 

14.4 Buildings and Ancillary Facilities ..................................................................... 14-3 

14.5 Potential Processing Plant Sites ......................................................................... 14-3 

14.6 Potential Tailings Storage Area ......................................................................... 14-3 

14.7 Potential Waste Disposal Area ........................................................................... 14-3 

14.8 Manpower .......................................................................................................... 14-4 

14.9 Other Surface Rights .......................................................................................... 14-4 

15 MARKET STUDIES AND CONTRACTS (ITEM 19) ................................................ 15-1 

15.1 Market Studies ................................................................................................... 15-1 

15.1.1 Introduction ......................................................................................... 15-1 

15.1.2 Methodology ....................................................................................... 15-1 

15.1.3 Determining the Crop Portfolio and Formulas ................................... 15-2 

15.1.4 Formula Optimization Process ............................................................ 15-3 

15.1.5 ThermoPotash Pricing Process ........................................................... 15-4 

15.1.6 Process to Determine the Potential Market for ThermoPotash ........... 15-5 

15.2 Contracts ............................................................................................................ 15-5 

16 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY 

IMPACT (ITEM 20) .................................................................................................................. 16-1 

17 CAPITAL AND OPERATING COSTS (ITEM 21) ..................................................... 17-1 

17.1 Capital Costs ...................................................................................................... 17-1 

17.1.1 Payback ............................................................................................... 17-2 

17.2 Operating Costs .................................................................................................. 17-2 

18 ECONOMIC ANALYSIS (ITEM 22) ........................................................................... 18-1 

18.1 Taxes and Royalties ........................................................................................... 18-2 

18.2 Sensitivity .......................................................................................................... 18-3 

18.3 Mine Life ........................................................................................................... 18-3 

19 ADJACENT PROPERTIES (ITEM 23) ........................................................................ 19-1 

20 OTHER RELEVANT DATA AND INFORMATION (ITEM 24) ............................... 20-1 

21 INTERPRETATION AND CONCLUSIONS (ITEM 25) ............................................ 21-1 

22 RECOMMENDATIONS (ITEMS 26) .......................................................................... 22-1 

22.1 Recommended Work Programs ......................................................................... 22-1 

22.1.1 Resources ............................................................................................ 22-1 





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23 

24 

22.1.2 Metallurgical ....................................................................................... 22-1 

22.1.3 Mining ................................................................................................. 22-1 

22.1.4 Costs .................................................................................................... 22-2 

REFERENCES (ITEM 27) ............................................................................................ 23-1 

GLOSSARY .................................................................................................................. 24-1 

24.1 Mineral Resources ............................................................................................. 24-1 

24.2 Mineral Reserves ............................................................................................... 24-1 

24.3 Glossary ............................................................................................................. 24-2 

24.4 Abbreviations ..................................................................................................... 24-3 

List of Tables 

Table 1: Grade Tonnage Report Cerrado Verde Potash Project .................................................. IV 

Table 2: Indicative Economics ....................................................................................................... V 

Table 3: Recommended Prefeasibility Work Program Cost Estimate (US$000’s) ....................... V 

Table 2.2.1: Cerrado Verde Potash Project Tenement Schedule ................................................ 2-1 

Table 8.1.1: Cerrado Verde Potash Project Summary Drilling Statistics ................................... 8-1 

Table 8.2.1: Drilling Statistics .................................................................................................... 8-3 

Table 8.2.2.1: Summarizes the Recovery Statistics .................................................................... 8-4 

Table 9.2.1: Detection Limits of XRF Analysis ......................................................................... 9-2 

Table 10.1.1: Standards Utilized by Bureau Veritas ................................................................. 10-2 

Table 11.1.2.1: Results of Carbon Speciation Analysis on Two Samples from the Scoping Level 

Pilot Plant ....................................................................................................................... 11-3 

Table 11.1.4.1: K content in soil (Mehlich 1) After 60 Days of Incubation with Different 

Sources of Potassium in a Clay Soil. ............................................................................. 11-4 

Table 11.1.4.2: K Content in Soil (Mehlich 1) After 60 Days of Incubation with Different 

Sources of Potassium in a Sandy Soil. ........................................................................... 11-4 

Table 11.1.4.3: Exchangeable Ca in the Soil After 60 Days of Incubation with Different Sources 

of Potassium in A Clay Soil ........................................................................................... 11-5 

Table 11.1.4.4: Exchangeable Ca in the Soil After 60 Days of Incubation with Different Sources 

of Potassium in a Sandy Soil ......................................................................................... 11-5 

Table 11.1.4.5: Exchangeable Mg in the Soil After 60 Days of Incubation with Different 

Sources of Potassium in a Clay Soil .............................................................................. 11-5 


Sources of Potassium in a Sandy Soil ............................................................................ 11-6 

Table 12.1.2.1: Block Model Summary .................................................................................... 12-2 

Table 12.1.3.1: Summary Statistic – 2m Composites ............................................................... 12-2 





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Table 12.1.4.1: Cerrado Verde Deposit Unweathered and Weathered Mineralized Domain 

Variogram Models ......................................................................................................... 12-3 

Table 12.1.6.1: Cerrado Verde Project Confidence Levels of Key Categorization Criteria .... 12-6 

Table 12.1.6.2: Cerrado Verde Deposit –February 27, 2010 Inferred Resource Grade Tonnage 

Report Ordinary Kriging Estimate 100mE x 100mN x 5mRL Selective Mining Unit . 12-6 

Table 12.2.1: Data Presentation ................................................................................................ 12-8 

Table 12.2.1.1: Descriptive Statistics Data for K 2 O of Target 4 .............................................. 12-9 

Table 12.2.1.2: Descriptive Statistics Data for K 2 O of the Target ........................................... 12-9 

Table 12.2.1.3: Descriptive Statistics Data for K 2 O of the Target 7 ........................................ 12-9 

Table 12.2.1.4: Descriptive Statistics Data for K 2 O of the Target 10 ...................................... 12-9 

Table 12.2.1.5: Descriptive Statistics Data for K2O of the Target 11 .................................... 12-10 

Table 12.2.5.1: Block Models Parameters .............................................................................. 12-12 

Table 12.2.6.1: Cross Validation Verification Results ........................................................... 12-12 

Table 12.2.7.1: Search Ellipse Parameters to Interpolate the Grades by the IDW And Kriging 

Methods of Target 6 ..................................................................................................... 12-13 

Table 12.2.7.2: Ellipse Search Parameters Used to Interpolate the Grades by the IDW Method 

for Target 4, 7, 10 and 11 ............................................................................................. 12-13 

Table 12.2.9.1: Comparison of metal tones and average K2O grade of the model, obtained by 

kriging and IDW2 methods to Target 6 ....................................................................... 12-14 

Table 12.2.9.2: Comparison of metal tonnes and average K2O grades, obtained by the Kriging 

method, the target to target 6 and by IDW2 for other targets, and polygonal solids 

evaluate by the "weighting intervals" method ............................................................. 12-15 

Table 12.2.10.1: Grade Tonnage Report for Target 6. Inverse Distance Weighting with power 

two (IDW2) estimate (Block Model - 50mE X 50mN X 10mRL) 7.5% K 2 O cut off 

utilized.......................................................................................................................... 12-15 

Table 12.2.10.2: Grade Tonnage Report for Target 7. Inverse Distance Weighting with power 

two (IDW2) estimate (Block Model - 50mE X 50mN X 10mRL) 7.5% K2O cut off 

utilized.......................................................................................................................... 12-16 

Table 12.2.10.3: Grade Tonnage Report for Target 4, Target 10 and Target 11. Inverse Distance 

Weighting with power two (IDW2) estimate (Block Model - 50mE X 50mN X 10mRL) 

7.5% K2O cut off utilized ............................................................................................ 12-16 

Table 12.3.1: Grade Tonnage Report Cerrado Verde Potash Project ..................................... 12-16 

Table 13.1.2.1: Whittle Block Model Dimensions ............................................................... 13-2 

Table 13.1.2.2: Whittle Parameters ....................................................................................... 13-3 

Table 13.1.3.1: Whittle Results ............................................................................................. 13-4 

Table 13.1.4.1: Pit Design Parameters ...................................................................................... 13-4 





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Table 13.1.5.1: First 10 Years of 1.1Mtpa Production Schedule .............................................. 13-5 

Table 13.1.5.2: First 10 Years of 2.2Mtpa Production Schedule .............................................. 13-6 

Table 13.1.5.3: 1.1Mtpa Product Mine Fleet and Annual Estimated Cost ............................... 13-6 

Table 13.1.5.4: 2.2Mtpa Product Mine Fleet and Annual Estimated Cost ............................... 13-7 

Table 15.1.3.1: Example of Fertilizing System Adopted for Each Crop Analyzed .................. 15-3 

Table 15.1.4.1: Price Composition of Raw Materials at the Uberaba Center ........................... 15-4 

Table 15.1.4.2: Raw Material Nutrient Levels ......................................................................... 15-4 

Table 15.1.4.3: Content Used and Status of Products Evaluated.............................................. 15-4 

Table 17.1.1: Summary Capital Cost by Facility in Reals and United States Dollars in thousands, 

Including Applicable Taxes for a 1.1Mtpa Operation ................................................... 17-1 

Table 17.1.2 Summary Capital Cost by Facility in Reals and United States Dollars in thousands, 

Including Applicable Taxes for a 2.2Mtpa Operation ................................................... 17-2 

Table 17.2.1: Summary of Operational Costs, 1.1Mtpa Using Petroleum Coke ...................... 17-3 

Table 17.2.2: Summary of Operational Costs, 2.2Mtpa using Petroleum Coke ....................... 17-3 

Table 18.1: Indicative Economics ............................................................................................. 18-1 

Table 18.2.1: Sensitivity Analysis ............................................................................................ 18-3 

Table 22.1.4.1: Recommended Prefeasibility Work Program Cost Estimate (US$000’s) ....... 22-2 

Table 24.3.1: Glossary .............................................................................................................. 24-2 

Table 24.4.1: Abbreviations ...................................................................................................... 24-3 

List of Figures 

Figure 2-1: Location Map of Cerrado Verde Potash Project ...................................................... 2-6 

Figure 3-1: Cerrado Verde Project Site ...................................................................................... 3-4 

Figure 5-1: Cerrado Verde Regional Setting .............................................................................. 5-4 

Figure 5-2: Cerrado Verde Stratigraphic Chart According to LIMA, 2005 ............................... 5-5 

Figure 7-1: Reverse Circulation and Diamond Drilling Program for Targets 4 and 6 ............... 7-2 

Figure 7-2: Reverse Circulation and Diamond Drilling Program for Targets 7, 10 and 11 ....... 7-3 

Figure 8-1: Drillhole Location Plan ............................................................................................ 8-6 

Figure 8-2: RC Drilling Flowchart ............................................................................................. 8-7 

Figure 11-1: Conceptual Flowsheet for Cerrado Verde ThermoFertilizer Project ................... 11-7 

Figure 12-1: Vertical Sections Location ................................................................................. 12-17 

Figure 12-2: Cross Section (Section 4) ................................................................................... 12-18 

Figure 12-3: Cross Section (Section 5) ................................................................................... 12-19 





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Figure 12-4: Weathered (Transition Zone) Domain – 3 Dimensions ..................................... 12-20 

Figure 12-5: Unweathered Domain – 3 Dimensions .............................................................. 12-21 

Figure 12-6: Sample Length Distribution ............................................................................... 12-22 

Figure 12-7: Basic Statistics – 2m Composite Unweathered K 2 O ......................................... 12-23 

Figure 12-8: Basic Statistics – 2m Composite Weathered K 2 O ............................................. 12-24 

Figure 12-9: K 2 O % Estimation Steps – Plan View ............................................................... 12-25 

Figure 12-10: Block Model Domains High and Weathered ................................................... 12-26 

Figure 12-11: Grade Tonnage Curve – Domain Unweathered - Inferred Resource ............... 12-27 

Figure 12-12: Grade Tonnage Curve –Weathered- Inferred Resource ................................... 12-28 

Figure 12-13: Comparative Statistics Unweathered % K 2 O ................................................... 12-29 

Figure 12-14: Comparative Statistics % K 2 O Weathered ....................................................... 12-30 

Figure 12-15: Modeled Semi-variogram of the Top Grid ...................................................... 12-31 

Figure 12-16: Modeled Semi-variogram of the Base Grid ..................................................... 12-32 

Figure 12-17: Geologic Interpretation of Target 6 .................................................................. 12-33 

Figure 12-18: Geologic Interpretation of the Top and Base surfaces (Kriging method) ......... 12-34 

Figure 12-19: Geologic Interpretation of the Top and Base Surfaces of the Target 7 (IDW 

method with Power 2) .................................................................................................. 12-35 

Figure 12-20: Target 6 Mineralized Body Divided in Oxidized (Red) and Fresh (Green) Areas12-36 

Figure 12-21: Target 7 Mineralized Body Divided in Oxidized (Red) and Fresh (Green) areas12-37 

Figure 12-22: Search Ellipse (Radius 1) to Interpolate the Grades by the IDW and Kriging 

Methods to Target 6 ..................................................................................................... 12-38 

Figure 12-23: Search Ellipse (radius 2) to Interpolate the Grades by the IDW Method for Target 

4, 7, 10 and 11, and the Ore Body of the Target 7 ....................................................... 12-39 

Figure 12-24: Histogram and Probability Plot of the K 2 O Distribution of the Composite Samples 

(left) and the Block Model Interpolated by the IDW2 Method (right) of the Target 6 12-40 

Figure 12-25: Histogram and Probability Plot of the K 2 O Distribution of the Composite Samples 

(left) and the Block Model Interpolated by the IDW2 Method (right) of the Target 7 12-41 

Figure 12-26: Comparison of K 2 O Grades in the Samples and Blocks, Interpolated by the 

Kriging Method, of the Target 6 (central part .............................................................. 12-42 

Figure 12-27: Comparison of K 2 O Grades in the Samples and Blocks, Interpolated by the 

Kriging Method, of the Target 6 .................................................................................. 12-43 

Figure 13-1: Preliminary Pit Design ......................................................................................... 13-8 

Figure 18-1: Annual Production and Cashflow for the 1.1Mtpa Production Case ................... 18-4 

Figure 18-2: Annual Production and Cashflow for the 2.2Mtpa Production Case ................... 18-5 





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List of Appendices 

Appendix A: Certificate of Author Forms 





I 


Summary (Item 3) 

SRK Consulting (U.S.), Inc. (“SRK”) was mandated by Verde Potash Plc (“Verde”), formerly 

Amazon Mining Holding Plc, to prepare a National Instrument 43-101 (“NI 43-101”) 

Preliminary Economic Assessment (“PEA”) on the Cerrado Verde Project (the “Project”) located 

in Minas Gerais, Brazil. 

This document provides a report on the results of mining, processing and a preliminary economic 

assessment of the potential project development. An update was made to the overall project 

resources, which now include Targets 4, 6, 7, 10 and 11. Targets 4, 6, 7, 10 and 11 resources are 

reported in addition to the existing Funchal Norte Target resources. The preliminary economic 

assessment is based only on the mineral resource estimate for the Funchal Norte Target as of 

March 1, 2011. 

Property Description and Location 

The Project is located in the Alto Paranaiba region of Minas Gerais State, Brazil. The 

boundaries of the concessions have not been surveyed as this is not a requirement of Brazil's 

mining code. The tenement boundaries are defined by UTM coordinates with the datum of 

SAD69 (Centered around coordinates 394,525 East and 7,856,531 North). 

Ownership 

Cerrado Verde mineral rights were originally requested by Verde, by means of applications for 

exploration licenses filed with DNPM between 2008 and 2010. Several Cerrado Verde mineral 

rights have been granted exploration licenses as presented in this report. 

Verde applied for the mineral rights directly to the DNPM. There was no prior ownership of 

mineral rights. 

Geology and Mineralization 

The region is mainly underlain by Neoproterozoic and Cretaceous rock units, which are partly 

covered by Cenozoic sandstones, lateritic sediments and soils. The oldest rocks, occurring in the 

southwestern portion of the region, are represented by a nucleus of calcoschists and diamictites 

of the Ibiá Formation (Araxá Group) surrounded by an undivided domain of the Canastra Group 

(quartzites, phyllites and micaschists). A model age of 1,000m.y. ( 207 Pb/ 206 Pb) has been 

determined for the Canastra Group, which was metamorphosed together with the Araxá Group 

during the Brasiliano Orogeny (600m.y.). The sequence is followed by the Bambuí Group (600- 

550m.y.), which comprises the marine deposits of the Paraopeba Formation, the Serra de Santa 

Helena Formation and the Serra da Saudade Formation, including the Verdete unit, all these units 

being dominated by variegated metasiltstones, and the overlying arkoses of the Três Marias 

Formation. After deposition of the Bambuí Group, and the Brasiliano Orogeny, the region was 

exposed to erosion during the Paleozoic, Triassic and Jurassic periods, giving rise to the 

development of a remarkable peneplane. In addition, the flat lying surface, the terrigenous 

sediments of the Areado Group was deposited during the Lower Cretaceous. The next 

stratigraphic phase is recorded by the extensive and dominantly pyroclastic kamafugitic 

volcanism of the Mata da Corda Group of Upper Cretaceous age. 

With some exceptions the Verdete unit, a potash rich rock are dominantly lying on top of the 

Serra da Saudade Formation and underlying the Areado sandstone. Its apparent thickness varies 





II 


from approximately 20m in the southernmost domain to over 50m in the northern half of the 

Serra da Saudade and up to 80m on the northern end where it started to be covered by younger 

sediments. The lower contact with the slates and metapelites of the Serra de Santa Helena 

Formation is transitional. 

Exploration 

Verde has completed remote sensing targeting exercise followed by regional mapping and grab 

samples. In addition, Verde completed a preliminary survey using an Innov-X portable XRF 

unit. The portable XRF unit was then correlated to pulp standards and showed good precision 

although returned a positive bias in the order of



III 


Resource grades vary physically from an Unweathered zone on the western extent to a lower 

grade zone in the east. The grade distribution suggests two pits and multiple working faces can 

be open at all times for blending purposes feeding the process plant at a consistent 8.5% K 2 O. 

Two production scenarios were considered by SRK whereby 1.1Mtpa and alternately 2.2Mtpa of 

product would be produced annually. SRK conducted a pit optimization, pit design and 

production schedules to independently test the assumptions made in mine costing and reported in 

the economic model. 

Given the course nature of the resource model, the ability to sensitize or understand potential 

challenges to future mining operations is difficult to quantify. With a more refined and detailed 

block model containing lithology, grade and product distribution, the confirmation that the mine 

will produce the appropriate process plant feedstock can be verified and accurately estimated. 

This PEA is preliminary in nature. It includes inferred mineral resources that are considered too 

speculative geologically to have the economic considerations applied to them that would enable 

them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do 

not have demonstrated economic viability. There is no certainty that the preliminary assessment 

will be realized. 

To accurately predict grade and quality of plant feedstock provided by the mine, a more 

complete understanding of the resource is required. In particular, the effect of K 2 O grade and 

mass yield calculations will effect what part of the mine is mined when and in what quantities. 

With a detailed infill drill program, continuation of metallurgical testing and further engineering 

studies SRK recommends additional work be dedicated to effect of mine dilution, possible effect 

of deleterious elements, construction of mining costs from first principles, RoM production 

targets, waste dump design and haul profiles for contractor estimation. This can be included as 

part prefeasibility study and will be required for any reserve generation in the future. 

Mineral Resource Estimate 

Volodymyr Myadzel, of BNA Consultoria e Sistemas Ltda (“BNA”) verified the Funchal Norte 

resource estimate provided by Coffey Mining as described in Section 12.1. SRK also verified 

this resource estimate on March 1, 2010. 

In addition, Dr. Myadzel constructed the geologic and resource model for Targets 4, 6, 7, 10 and 

11 as discussed in Section 12.2. Dr. Myadzel is responsible for the resource estimation 

methodology and the resource statement. Dr. Myadzel is independent of the issuer applying all 

of the tests in Section 1.5 of the NI 43-101. 

The resource estimate has been undertaken in compliance with accepted Canadian Institute of 

Mining, Metallurgy and Petroleum (CIM) definitions for indicated and inferred resources in 

accordance with NI 43-101 Standards of Disclosure for Mineral Projects. 





IV 


Table 1: Grade Tonnage Report Cerrado Verde Potash Project 

Target Cutoff grade (%K 2 O) Tonnage (Mt) Average Grade (% K 2 O) 

Indicated 

Target 6 7.5 23.25 8.83 

Target 7 7.5 50.79 9.39 

Total Indicated 74.04 9.22 

Inferred 

Target 4 7.5 74.43 9.20 

Target 6 7.5 47.85 8.84 

Target 7 7.5 873.59 9.45 

Target 10 7.5 28.50 10.10 

Target 11 7.5 46.79 8.27 

Funchal Norte 10 64.39 11.17 

Total Inferred 1,135.55 9.47 

Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. 

Inverse Distance Weighting with power two (IDW2) estimate (Block Model - 50mE X 50mN X 10mRL). 

Effective date of Targets 4, 6, 7, 10 and 11 is August 3, 2011. 

Effective date of Funchal Norte is March 1, 2010. 

Indicative Economics 






March 1, 2011. 

The indicative economics for the 1.1Mtpa (Base Case) and 2.2Mtpa production rates are 

presented in Table 2. This clearly demonstrates the very encouraging economics for the Cerrado 

Verde Projects based on the cost projections and price assumptions as presented in this PEA. 

However, readers are cautioned that this analysis is only a PEA based on indicated and inferred 

mineral resources, which are considered to be highly speculative geologically. Since there is no 

estimate of proven or probable reserves for the Project, this assessment cannot include cash flow 

forecasts on an annual basis. 





V 


Table 2: Indicative Economics 

Production Rate 1.1Mtpy 2.2Mtpy 

Average Sales Price US$151.82/t US$133.23/t 

Total Production (40 year plan) 44,700kt 89,370kt 

Revenue US$6,786.6M US$11,906.8M 

Cashflow US$3,065.6M US$5,449.2M 

NPV (10%) US$445.5M US$844.1M 

NPV (12%) US$331.6M US$642.0M 

IRR 32.7% 40.0% 

Opex US$41.80/t US$36.36 

Initial Capex US$155.3M US$218.4M 

Contingency (15%) US$23.3M US$32.8M 

Pre-construction US$18.2M US$18.2M 

Total Capex US$196.8M US$269.4M 

Payback 2.38yrs 1.87yrs 

*Note: The above figures include a sustaining capital provision of 2% per annum of direct capital costs commencing in year 4. 

Conclusions and Recommendations 

Given the extensive resource base available; albeit all of which is in the indicated and inferred 

category, a mine life of 40 years has been assumed for both the 1.1Mtpa and 2.2Mtpa production 

rates. 

This clearly demonstrates the encouraging economics for the Cerrado Verde Projects based on 

the scoping study concepts, cost projections and price assumptions as presented in this PEA. 

SRK recommends that the Project be advanced in one phase of work to the prefeasibility level of 

evaluation and design. The cost estimate for the recommended work program is shown in Table 

3. 

Table 3: Recommended Prefeasibility Work Program Cost Estimate (US$000’s) 

Description 

Cost 

Infill Drilling 300 

Metallurgical Testwork 800 

Engineering Studies 500 

Environmental Baseline 150 

Other 250 

Total 2,000 



Verde Potash Plc 1-1 



1 

Introduction (Item 2) 

SRK Consulting (U.S.), Inc. (“SRK”) were mandated by Verde Potash Plc (“Verde”), formerly 

Amazon Mining Holding Plc, to prepare a National Instrument 43-101 (“NI 43-101”) 

Preliminary Economic Assessment (“PEA”) on the Cerrado Verde Project (the “Project”) located 

in Minas Gerais, Brazil. 

1.1 Terms of Reference and Purpose of the Report 

This PEA is intended for the use of Verde to fulfill applicable securities obligations. This 

document provides a PEA of the Project, prepared according to NI 43-101 guidelines. Form NI 

43-101F1 was used as the format for this report. 

This report is prepared using the industry accepted Canadian Institute of Mining, Metallurgy and 

Petroleum (CIM) “Best Practices and Reporting Guidelines” for disclosing mineral exploration 

information, the Canadian Securities Administrators revised regulations in NI 43-101 (Standards 

of Disclosure For Mineral Projects) and Companion Policy 43-101CP, and CIM Definition 

Standards for Mineral Resources and Mineral Reserves (November 27, 2010). 






March 1, 2011. 

The PEA is based on inferred and indicated mineral resources only that are considered too 


them to be categorized as mineral reserves, and there is no certainty that the preliminary 

assessment will be realized. Mineral resources that are not mineral reserves do not have 

demonstrated economic viability. 

1.2 Reliance on Other Experts (Item 4) 

Section 15 of this report relies on AgroConsult Consultoria & Marketing (AgroConsult) for price 

and market analysis. AgroConsult prepared in depth analyses on the various agribusiness 

segments with a view to formulating short, medium and long term market trend reports on the 

main agricultural commodities as well as to developing customized studies and projects. In 

order to reach an average price per mixing center, the ThermoPotash benchmark price for each of 

the crops was weighted in accordance with the relevant demand potential. However, the average 

weighted price obtained reflects individual prices per crop. Consequently, the price would 

exceed the maximum price for some crops and the product would be too expensive. Therefore, 

the price was realigned to cater to 95% of the potential market. In this case, the resulting price is 

the potential price for ThermoPotash at the mixing center. Its complete results could be verified 

in the report prepared for Verde “Price and competitiveness survey for introducing 

ThermoPotash on the Brazilian fertilizer market” published in November of 2010. 

Verde provided geological data and information to BNA for Sections 5 through 9. The 

information provided was verified by BNA and accepted for the use in this report. 






Verde Potash retained Mr. Beau Nicholls, geologist, Dr. Gaspar Korndorfer, agronomist, Mr. 

Lupercio Oliveira, chemical engineer, and Mr. Ricardo Bandeira, lawyer, to provide scientific 

consulting services with respect to the Cerrado Verde Project. 

Mr. Beau Nicholls, MAIG consulting geologist to VERDE is the Qualified Person with respect 

to NI 43-101 at the Project. 

Mr. Lupércio Oliveira, chemical engineer, is pioneer in the studies of thermofertilizers and has 

been senior researcher in CETEC and past professor in Universidade Federal de Minas Gerais, 

Brazil. Verde Potash relies on Lupércio Oliveira on the conduction of the pilot plant where 

thermopotash has been produced. 

Dr. Gaspar Korndörfer is currently a Professor of Agriculture at the Universidade Federal de 

Uberlandia. He has a Post-Doctorate from University of Florida, US, and has earned his 

Doctorate on Soils and Plant Nutrition from ESALQ of the Universidade de São Paulo, Brazil. 

The company relies on Gaspar Korndörfer as agronomy consultancy and conductor of some 

agronomic tests. 

Mr. Ricardo Bandeira has worked with Verde Potash since the company was founded. He holds 

a Master’s degree in Civil Law from Pontifícia Universidade Católica de Minas Gerais, Brazil a 

Specialization degree in Strategic Management and Bachelor degree in Law from Universidade 

Federal de Minas Gerais, Brazil. He is a member of Brazilian Bar Associations. The company 

relies on Ricardo Bandeira as supervisor of legal matters including mineral rights and 

environmental permits. 

1.2.1 Sources of Information 

Information presented in this report has been provided by Verde and its consultants. Particularly 

for Sections 5 to 9. BNA has provided comment and reviewed the data and information 

provided and after all clarifications were made, accepted it. SRK has accepted this information 

and has provided comment and review of the data and information provided. Sources of 

information are provided in References Section 23. 

1.3 Qualifications of Consultants 

Listed below are the contributors to the PEA. Qualified Persons (“QP”) for this report are Dr. 

Neal Rigby and Dr. Rob Bowell of SRK, and Dr. Volodymyr Myadzel of BNA Consultoria e 

Sistemas Ltda (“BNA”). Descriptions of qualifications and responsibilities are presented below. 

1.3.1 SRK 

SRK is an independent, international consulting practice that provides focused advice and 

solutions to clients, mainly from earth and water resource industries. For mining projects, SRK 

offers services from exploration through feasibility, mine planning, and production to mine 

closure. Formed in 1974, SRK now employs more than 1,000 professionals internationally in 38 

permanent staffed offices on six continents. 

Dr. Neal Rigby 

Dr. Rigby is responsible for Sections 1 through 4, 10, 13 through 24 of this PEA. 

Dr. Rob Bowell 

Dr. Bowell is responsible for Sections 11 of this PEA. 






1.3.2 BNA Consultoria e Sistemas 

BNA Consultoria e Sistemas is a company dedicated to applying high technology to the mineral 

sector transforming it into sounding solutions. BNA offer effective solutions that consist of 

software systems and consulting services. Comprised of an experienced team of professionals 

with outstanding performance in the Brazilian mineral sector, having actively participated in 

relevant and important mine projects in Brazil. 

Dr. Volodymyr Myadzel 

Volodymyr Myadzel is responsible for Sections 5 through 9 and 12 of this PEA. 

1.3.3 ECM 

ECM, founded in 1984, is a Brazilian engineering company with extensive experience in 

developing multidisciplinary industrial projects of all sizes, including project design for the 

minerals and mining industry, from feasibility studies to plant commissioning. ECM has about 

550 employees and has been involved in significant mining projects over the past decade in 

Brazil. 

1.3.4 AgroConsult Consultoria & Marketing 

AgroConsult Consultoria & Marketing is a leading consulting company focused on agribusiness 

founded in 2000. Clients include: BHP Billiton, Bunge, Fosfertil, Petrobras, Heringer, Bayer, 

Santander, Citibank, John Deere, Banco do Brasil and Syngenta. AgroConsult’s team is 

comprised of a multi-disciplinary group of professionals who follow the market closely, prepare 

in depth analyses on the various agribusiness segments with a view to formulating short, medium 

and long term market trend reports on the main agricultural commodities as well as to 

developing customized studies and projects. 

1.3.5 Site Visit 

Mr. Volodymyr Myadzel, BNA Consultant, visited the Project site on March 15, 2011 and July 

20-22, 2011. 

1.3.6 Effective Date 

The effective date of this report is August 3, 2011. 






2 

Property Description and Location (Item 4) 

2.1 Property Location 

The Cerrado Verde Potash Project is situated in the Alto Paranaiba region of the State of Minas 

Gerais, Brazil (Figure 2-1). The project can be accessed from Belo Horizonte, the State capital 

to the town of Matutina in a distance of 320km, via a good quality paved road (BR-262). From 

Matutina the project area is accessed by a number of secondary gravel roads that connect the 

farming region. 

The project consists of sixty-four exploration licenses. The UTM Geographic zone is 23K and 

the Datum used for the area is World Geographic System 1984. The center of the project is 

approximately at longitude 46°00’W and latitude 19°20’S. 

2.2 Mineral Titles 

The Project comprises sixty four tenements, covering an aggregate area of 106,762ha as shown 

in Table 2.2.1 and Figure 2-1. 

Once an exploration license is granted, Verde must make annual fee payments to maintain the 

license, as explained in Section 17.6 of this report. 

Table 2.2.1: Cerrado Verde Potash Project Tenement Schedule 

Process Number Holder Size (Ha) Status of Mining Right Comments Mineral 

833329/2009 FVS 41.07 Exploration License valid until FVS informed the existence of 

Diamond 

29/10/2012 

potassium rocks at the area on 

833284/2008 FVS 1468.97 Exploration License valid until 

3/12/2012 


18/11/2012 


10/11/2012 


18/11/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 

15/10/2010. 

FVS informed the existence of 


28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

833269/2008 FVS 1771.42 Exploration License valid until FVS informed the existence of Diamond 







3/12/2012 potassium rocks at the area on 

28/01/2010. 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


3/12/2012 


13/11/2012 


22/12/2012 


3/12/2012 


24/3/2013 


4/1/2013 


12/3/2013 


12/3/2013 


4/1/2013 


4/1/2013 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



15/10/2010. 



28/01/2010. 



15/10/2010. 



15/10/2010. 



28/01/2010. 



28/01/2010. 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 









15/10/2010. 


4/1/2013 


4/1/2013 

833286/2008 FVS 1943.82 Exploration License valid until 

4/1/2013 


4/1/2013 


4/1/2013 


4/1/2013 


4/1/2013 


4/1/2013 


4/1/2013 


4/1/2013 


12/3/2013 


4/1/2013 


4/1/2013 


4/1/2013 


1/6/2013 


4/1/2013 


4/1/2013 


26/8/2012 


29/10/2012 


29/10/2012 


29/10/2012 



15/10/2010. 



28/01/2010. 



28/01/2010 



28/01/2010. 



28/01/2010. 



15/10/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



15/10/2010. 



28/01/2010. 



28/01/2010. 



28/01/2010. 



15/10/2010. 



28/01/2010. 



28/01/2010. 



25/11/2009. 



25/11/2009. 



25/11/2009. 



25/11/2009. 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Phosphate 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 









25/11/2009. 


29/10/2012 


29/10/2012 


29/10/2012 


29/10/2012 

833317/2008 FVS 1551,02 Exploration License valid until 

29/10/2012 


29/10/2012 

834389/2010 Verde 980.19 Exploration License valid until 

15/12/2013 



25/11/2009. 



25/11/2009. 

FVS filed the “Positive Final Research 

Report” on 04/08/2011, which is the 

first document that backed the company 

to make an application for exploitation. 

On 08/08/2011 Verde also filed a 

request for a 

“Trial Mining” (in literal translation, 

the document that allows this trial 

exploitation is called by the Brazilian 

legislation as “Guide for utilization”). 



25/11/2009. 



25/11/2009. 



25/11/2009. 

Normal procedural progress – no 

comment 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Diamond 

Phosphate 

2.3 Location of Mineralization 

The potash mineralized zones of the Cerrado Verde Project are located within Verdete green 

metasiltstone of the Serra da Saudade Formation. The known mineralization is located in the 

concessions owned by Verde. 

2.4 Royalties, Agreements and Encumbrances 

The tenements are owned 100% by FVS Mineração Ltda. that is a subsidiary of Verde. The 

Cerrado Verde Project was staked in the third quarter of 2008. Verde’s subsidiary Amazon 

Pesquisa Mineral e Mineração Ltda (“APMM” – as of December 30, 2010, the name of this 

subsidiary has changed to Verde Fertilizantes Ltda) entered into a discovery contract (the 

“Cerrado Verde Project Discovery Contract”) dated September 29, 2008 (with retroactive term 

for July 26, 2008) with Ysao Munemassa (“Ysao”) pursuant to which Ysao performed, at 

Verde’s expense, preliminary geological surveys and research studies on the Cerrado Verde 

Project area and the Cerrado Verde Project. The Cerrado Verde Project Discovery Contract was 

subsequently amended on July 27, 2010 to provide that APMM shall pay to Ysao: (a) 100,000 

Stock Options one year after the application for exploration permits over the Cerrado Verde 

Project area to the National Department of Mineral Production (“DNPM”), (b) US$500,000 upon 

approval of a bankable feasibility study, and (c) a 3% royalty on the net result of production. 

APMM has the right to purchase the royalties due to Ysao at a cost of US$1,000,000 for each 1% 

of the protected right of royalty to Ysao. 






2.5 Environmental Liabilities and Permitting 

The Project has no environmental liabilities and has begun the preparation of the environmental 

reports required for the licensing of the Project, as it is stated in Section 16 of this technical 

report. 



SRK Project No.: 343500.020 

Cerrado Verde Potash Project 



Location Map 

File Name: Figure_2-1.docx Date: 09/15/2011 Approved: NR Figure: 2-1




3 

Accessibility, Climate, Local Resources, 

Infrastructure and Physiography (Item 5) 

3.1 Topography, Elevation and Vegetation 

The peneplane developed by the Verdete unit, i.e., the ground over which the Areado Group was 

deposited, undulates between the altitudes of 1,000m and 850m. Higher values are found in the 

southern part of the Serra da Saudade range. In the middle portion of the ridge, the peneplane is 

placed between 880m and 920m. Therefore, all the surface exposures of the Verdete unit were 

the result of the Tertiary erosion cycles that stripped off the Mesozoic rocks (Mata da Corda and 

Areado groups). 

The local vegetation consists of relicts of the primitive savanna ("cerrado") still preserved 

between soya and coffee plantations and industrially planted forests of eucalyptus and pine trees. 

The farms are mainly confined to the fertile soil of the Mata da Corda Group that forms plateaux 

around 1,000m. 

3.2 Climate and Length of Operating Season 

The climate of the region is classified, according to IBGE (2002) as half-humid warm tropical, 

with annual average temperatures of 22°C Annual rainfall in the area averages between 1,300mm 

and 1,800mm, 84% of which falls during the rainy season between October and March, with the 

highest rainfall between December and January. Operations can be year round. 

3.3 Physiography 

The region is inserted in the hydrographic basin of Indaiá River, a tributary river in the left 

margin of São Francisco River. According to SECTES – Secretaria do Estado de Ciência e 

Tecnologia de Minas Gerais – (1938), Indaiá River basin is part of the geomorphological unit 

São Francisco Plateau where the planning surfaces, the edges of the hills and the crests point dip 

to NE, with high structural control (COSTA-FILHO et al, 2007). 

The main drainages are the rivers Indaiá, Abaeté, Borrachudo and their tributary. The 

morphology of those rivers is the meandering channels and the drainage style is dendritic, mainly 

when installed over the pelites. In the north of the area is the Três Marias dam, main mouth of 

the region rivers. The water depth of the dam oscillates between the altitudes of 560 and 575m 

(LIMA, 2005). 

The main topographic feature is the Serra da Saudade ridge. The landscape can be separated into 

three domains that may be correlated to the South American Surfaces (King, 1956): 

 

 

Upper Surface: Older stage of the planning that expose the Areado Group Sandstones and 

Mata da Corda Group; 

Intermediate Surface: Refer to the second stage of the planning after de dissection of the 

Upper Surface, triggered by the resumption of the erosive process. The average altitude 

is of 750 to 850m. They are irregular surfaces stretched in N-S strike, developed over the 

Serra da Saudade Formation represented by psamitic lithotypes. Matches to the South 

American Surface I, mio-pliocene; and 






Basal Surface: the youngest, bordering the São Francisco River, with elevations from 570 

to 630m. Exposure occurs in pelites of the Serra de Santa Helena and Serra da Saudade 

formations. 

3.4 Access to Property 

The project can be accessed by air from Rio de Janeiro, São Paulo, Brasilia and other cities, to 

Belo Horizonte, and then overland from Belo Horizonte to Matutina (approximately 320km), via 

a good quality paved road (BR-262). From the town of Matutina the project area is accessed by 

a number of secondary gravel roads that connect the farming region. 

The unpaved roads are in reasonable condition although some sections require improvement. 

3.5 Surface Rights 

According to Brazilian law, surface rights are separate from mining rights. Therefore, land 

owner has no title to the minerals contained in the soil or in the sub-soil, which are deemed a 

property of the Federal Government, which grant to private companies or individuals rights to 

exploration or exploitation. 

Private companies or individuals holding an Exploration Permit are supposed to enter into an 

agreement with the land owner allowing its access to the area in order to conduct exploration 

activities. In case an agreement is not reached, Brazilian Mining Code establishes a judicial 

procedure by means of which the mining company or individual secures access to the area by 

paying to the land owner compensation for damages in her/his property and loss of income due 

to exploration. 

Verde has agreements with the land owners to allow it to perform exploration in the targets 

selected by the company to research in the area located in the following DNPM Processes: 

833.263/2008, 833.270/2008, 833.274/2008, 833.280/2008, 833.287/2008, 833.289/2008, 

833.295/2008, 833.306/2008, 830.383/2008 and 833.323/2008. Private companies or individuals 

holding a Mining Concession are entitled to surface rights on the area necessary for the mine and 

ancillary structures. Such surface rights are obtained by agreement with the land owner, 

providing for compensation for the price of the land and additional losses caused by the 

occupation. In case such agreement is not reached, surface rights are granted by the local Court 

upon previous deposit by the mining company or individual of the amount judicially determined 

for such compensation. 

In addition to compensation for damages, the land owner is entitled to a royalty equal to 50% of 

CFEM. CFEM is federal royalty, which is established at 3.0% of the net sales of potash. 

However, it is common practice to negotiate a separate compensation agreement that is 

satisfactory to both parties. 

VERDE has not yet started to negotiate agreements with land owners for establishing 

exploitation and production activities. 

3.6 Local Resources and Infrastructure 

São Gotardo and Matutina are the closest towns with a significant population to provide 

manpower for a mining operation, having population around 40,000 combined. São Gotardo 

also has good infrastructure, with domestic power and telephone service available. Also, the 






project is very close to Patos de Minas (129km away), the main city in the Alto Paranaiba area, 

which has a strong economic, cultural, educational and social environment. 

Belo Horizonte, located about 320km from the project site, is the capital and also the largest city 

in the state, with a population above 4 million. It is the major center for the Brazilian mining 

industry, with infrastructure for mining equipment and services available. There is a large 

commercial airport with domestic and international flights services. Several state and federal 

government agencies are based here, in addition to private businesses that provide services to the 

mining industry. Skilled labor is readily available in Belo Horizonte as well as at the towns of 

São Gotardo and Matutina near the site of the Project. 

Further discussion on project infrastructure is contained in Section 14. 





Cerrado Verde Project Site 


File Name: Figure_3-1 Date: 09/15/2011 Approved: NR Figure: 3-1




4 

History (Item 6) 

Cerrado Verde Mineral Rights were originally requested by Verde, by means of applications for 

exploration licenses filed with DNPM between 2008 and 2010. Several Cerrado Verde Mineral 

Rights have already been granted exploration licenses. 

Verde applied for the mineral rights directly to the DNPM. There was no prior ownership of 

mineral rights. The areas were available and Verde just had to make the necessary applications. 

Verde does not have data with respect to past owners or any prior exploration work. Verde is not 

aware of any historical resource estimation work on the property. There has been no historical 

mining on the property. 

There has been no prior exploration or development previous to the current owner. No historical 

resource estimates have been released. No historical mining of the Verdete has been undertaken. 






5 

Geological Setting and Mineralization (Item 7) 

5.1 Regional Geology 

The region is mainly underlain by Neoproterozoic and Cretaceous rock units, which are partly 

covered by Cenozoic sandstones, lateritic sediments and soils. The oldest rocks, occurring in the 

southwestern portion of the region, are represented by a nucleus of calcoschists and diamictites 

of the Ibiá Formation (Araxá Group) surrounded by an undivided domain of the Canastra Group 

(quartzites, phyllites and micaschists). A model age of 1,000m.y. ( 207 Pb/ 206 Pb) has been 

determined for the Canastra Group, which was metamorphosed together with the Araxá Group 

during the Brasiliano Orogeny (600m.y.). The sequence is followed by the Bambuí Group (600- 

550m.y.), which comprises the marine deposits of the Paraopeba Formation, the Serra de Santa 

Helena Formation and the Serra da Saudade Formation, including the Verdete unit, all these units 

being dominated by variegated slates, and the overlying arkoses of the Três Marias Formation. 

Following the deposition of the Bambuí Group, and the Brasiliano Orogeny, the region was 

exposed to erosion during the Paleozoic, Triassic and Jurassic periods, giving rise to the 

development of a remarkable peneplane. In addition, the flat lying surface, the terrigenous 

sediments of the Areado Group was deposited during the Lower Cretaceous. The next 

stratigraphic phase is recorded by the extensive and dominantly piroclastic kamafugitic 

volcanism of the Mata da Corda Group of Upper Cretaceous age. 

5.2 Local and Project Geology 

5.2.1 The Verdete Unit 

The Verdete unit occurs mainly at the top of the Serra da Saudade Formation and underlies the 

Areado Group sandstone. The Serra da Saudade Formation consists of carbonate and siliciclastic 

sediments that were deposited in an epicontinental platform in the late Neoproterozoic (700 – 

600Ma). The Verdete occurs in extensive outcrops, along both banks of Indaiá River, in a trend 

approximately 120km x 20km. It covers the regions of municipalities of Santa Rosa da Serra, 

São Gotardo and Guarda dos Ferreiros (SW), Matutina, Quartel São João and Cedro do Abaeté 

(centre), Paineiras and Biquinhas (NE), in the State of Minas Gerais. 

The thickness of the Verdete unit varies from 15 to 80m in the southernmost domain to over 50m 

in the northern half of the Serra da Saudade range. The lower contact with the metasiltstone of 

the Serra da Saudade Formation is transitional within 2-3m. 

The Serra da Saudade Formation was eroded during the Gondwana Cycle (King, 1956) of 

probably Jurassic age, and it was over this extensive peneplain that the cretaceous sandstone 

beds of the Areado Group were deposited. 

The upper contact is transitional with rhythmic intercalations of Verdete and metasiltstone with 

various colors (predominantly pink when weathered), defined informally as the Transition Zone. 

These intercalations vary from millimeters to meters in thickness. 

The lower contact with the metasiltstone of the Serra da Saudade Formation is transitional within 

2 to 3m, and contains intercalations of limestone lenses and calciferous metasiltstone. 

5.2.2 Structure 

The Verdete unit and the Transition Zone underwent two main phases of folding. The first 

resulted in the development of pervasive concentric and chevron folds, in which the axial planes 






dip NNW. The strike of the foliation is NNE. The second phase formed folds with nearly 

vertical axial planes and sub-horizontal folding axis. In a regional scale, the folded Verdete and 

the transition zone display a sub-horizontal behavior. 

The largest extension of the Verdete unit occurs where the erosion has been less intense, and is 

marked by the presence of remnants of the Areado Group sandstones. This occurs mainly in the 

central part of the unit. 

5.2.3 Elevation and Erosion Level 

The peneplane developed by the Verdete unit, i.e., the ground over which the Areado Group was 

deposited, undulates between the elevation of 1,000m and 850m. Higher elevations are found in 

the southern part of the Serra da Saudade. In the middle portion of the ridge, the peneplane is 

placed between 880m and 920m. Therefore, all the surface exposures of the Verdete unit were 

the result of the Tertiary erosion cycles that stripped off the Mesozoic rocks (Mata da Corda and 

Areado groups). 

5.3 Mineralization 

Verdete is the rock-type with high content of K 2 O. It is pelitic sediment, metamorphosed in the 

greenschist facies. It displays a lepidoblastic texture and preserves relicts of the original fabric. 

Petrographically, it is classified as a metasiltstone, and has a green color due to chlorite. The 

chlorite was formed by the intense alteration of biotite. Biotite can still be observed locally in 

small plates forming massive aggregates. It also occurs in the cores of muscovite. 

The Verdete shows millimetric to centimetric bands rich in chlorite, interbedded with quartz-rich 

layers. 

A sample of Verdete containing 10.7% K 2 O showed the following modal composition: quartz 

(10%), microcline (20%), biotite-chlorite (60%) and muscovite (10%). Samples submitted for 

X-ray diffraction showed the following minerals: quartz, muscovite-fengite, microclineorthoclase 

and clinochlore (magnesium chlorite). 

The K 2 O content ranging from 5-6% to 13% is due to the presence of microcline-orthoclase and 

muscovite-fengite. 

This PEA is preliminary in nature. It includes inferred mineral resources that are considered too 




will be realized. 

5.3.1 Mineralized Zones 

As stated previously, potash mineralization occurs associated with the microcline-orthoclase and 

muscovite-fengite minerals that are constituents of the Verdete. 

The Verdete held within the Verde tenements can be traced for the entire 120km strike length 

with a potential width up to 500m wide. Grab samples along the entire strike length range from 

5% to 12% K 2 O. 






5.3.2 Surrounding Rock Types 

The Verdete unit is partially covered by a thin layer of sandstone of Cretaceous age in its central 

part. To the east it is intercalated with red to yellow metapelites (argillites, rhythmites and 

siltstones), which forms the transition zone. The transition zone is the basal part of the Verdete 

unit and crops out by a combination of folding and erosion. To the west the Verdete is eroded by 

a N-S running creek which exposes the underlying carbonatic slate. To the north the Verdete 

unit is again intercalated with metapelites. To the south the Verdete is abruptly eroded, 

occurring only as the metapelites and slates. 





Cerrado Verde Regional Setting 






Cerrado Verde stratigraphic 

chart according LIMA, 2005 





6 

Deposit Type (Item 8) 

No geological model has yet been proposed for the potash-rich Verdete metasiltstone. It is a 

unique type of mineralization that is known only in the Serra da Saudade Formation in the 

western part of the State of Minas Gerais. Presently, the Verdete is not a commercial source of 

potash. 






7 

Exploration (Item 9) 

The present exploration work applies to the Verdete units known as Target-4, Target-6, Target-7, 

Target-10 and Target-11 (Figures 7-1 and 7-2). 

The exploration included field and laboratory studies; geological mapping in scales 1:25,000 and 

1:10,000; outcrop studies and their correlation; drilling on the Verdete body; systematic 

sampling; chemical and physical analysis of the rock samples and drill core samples; processing 

and characterization testing. 

Initially, it was performed a bibliographic compilation of all the material about the project and 

surrounding areas, along with studies of economic exploitation of the potash present in silicatic 

rocks such as the Verdete, including technological and market aspects. The maps used as a 

cartographic base were the topographic map SE-23-Y-D-II 1:100.000 (Dores do Indaiá Sheet) 

from IBGE (government institute), the geological maps SE-23-Y-D 1:250.000 (Bom Despacho 

Sheet) and SE-23-YD-II 1:100.000 (Dores do Indaiá Sheet) from the Projeto São Francisco, as 

well as maps from theses and dissertations. 

Afterwards, it was performed the integration of the geological, geophysical, and geochemical 

information in regional scale, developing analysis and interpretation of digital satellite images 

for the visualization of the regional structures and occurrences of Verdete. 

The outcrops of the Verdete unit can be distinguished on satellite images by their characteristic 

green color. 

In the preliminary survey, the targets were defined using Google Earth images and data from 

SRTM (Shuttle Radar Topography Mission). These data can be found freely available on the 

website of EMBRAPA (government company), in form of a land numerical model grid, with 

90m resolution. 

In the first field research, held in 2008, a mapping of the main rock types present in the region 

was performed, on a 1:25,000 scale, as well as a survey of the access, drainage and farms of the 

area. For this survey were used GPS devices from Garmin ® , model GPSMAP 76 CSX. 

A preliminary evaluation of the potash levels on outcrop samples was made through a portable 

X-ray fluorescence device, followed by chemical analysis at laboratory. 

Later stages of field work consisted of the performance of regional geological cross sections, 

especially in the areas of Verdete exposure, and semi-detail mapping campaigns for recognition 

of the main lithofacies, stratigraphic relations and structural aspects. During the mapping, the 

samples collected were used to make thin sections and lithochemical and mineralogical analysis. 

It was collected structural data and some stratigraphic sections surveys were made. 

Besides surface mapping, a drilling program was made, performing 142 drill holes by a 

rotopercussive reverse circulation drill and 5 twin drill holes by a diamond drill. 

The main chemical analyses were made at ALS Minerals, Bureau Veritas, FRX Service, SGS 

Geosol laboratories in Vespasiano and Belo Horizonte cities, Minas Gerais State, and at the 

Laboratório de Caracterização Tecnológica da Escola Politécnica da USP in São Paulo State. 

The office works consist of the data compilation and integration, followed by the resource 

calculation using ARCGIS ® and MICROMINE ® software. 






Reverse circulation and diamond 

drilling program for targets 4 and 

6 





Reverse circulation and diamond 

drilling program for targets 7, 10 and 

11 





8 

Drilling (Item 10) 

8.1 Type and Extent of Drilling for Funchal Norte Target 

A drilling program was undertaken in early 2010 and has targeted only a select portion of the 

regional Verdete within the Verde tenements as shown in Figure 2-1. Figure 8-1 shows the 

location of the 15 drillholes completed by Verde. All holes were successful in intersecting the 

Verdete. 

The principal methods used for exploration drilling at Cerrado Verde have been reverse 

circulation drilling (RC). Table 8.1.1 summarizes pertinent drilling statistics. The main zone has 

been drilled at a nominal spacing of 100m to 400m. 

Table 8.1.1: Cerrado Verde Potash Project Summary Drilling Statistics 

Company/Year Drillholes Meters Contractor Drill Rig Diameter 

Verde / 2010 19 997 Fuad Rassi Engenharia Indústria Prominas R1-H 4.5” 

e Comerécio Ltda 

All drillholes have been drilled vertical to an average of 52m deep. No downhole surveys have 

been completed due to the short vertical holes and scale of mineralization. The drilling has been 

completed perpendicular to mineralization and as such all intercepts reflect the true thickness. 

Drillhole collars were surveyed by Verde surveyors using a portable GPS with accuracy of +/- 

5m. 

Accuracy of the survey measurements (downhole and surface) meets acceptable industry 

standards for the style of mineralization. 

The drilling completed has been compiled into a 3D geological model as defined in section 15, 

Mineral Resources, interpretation of drilling is also covered in this section. 

8.1.1 Reverse Circulation (RC) Sampling 

The samples were taken on 2m intervals and riffle split down to 3kg samples. Sample weights 

were not recorded but recoveries were reported as good. The RC method of sampling is not 

optimal and SRK would recommend that a Jones Riffle Splitter be utilized in future RC sampling 

programs. Although the quartering technique used by Verde is not optimal the homogenous 

nature of the Verdete will remove any sampling bias created. 

8.1.2 Logging 

Drill samples were sieved during drilling and a small sample of the chips was stored in chip trays 

for future reference. 

Basic weathering and lithologies were recorded by the geologists and entered into a digital 

database. 

Detailed geologic logging of the chips should be done to determine subtle changes within the 

formation that could be correlated with changes in grade of K 2 O 

8.1.3 Bulk Density 

Verde utilized a consulting group, ConcreSolo, to undertake Bulk Density measurements. 






Coffey Mining has reviewed the methodology used by ConcreSolo, and noted that the 22 

samples measured the saturated Bulk Density of grab samples collected from surface. 

Coffey Mining considers that given the apparent leached zone in the first 10m of drilling that 

down hole samples should be undertaken, to determine if there is any change in density with 

depth. 

Coffey Mining also considers that saturated bulk density measurements are not appropriate for 

resource estimation. Dry bulk density should be determined. Saturated bulk density 

measurements will result in a positive bias, as it is the weight of the rock plus the water that is 

absorbed into the rock. The result is an over estimation of the tonnage by the moisture content. 

Additional dry bulk density measurements are required. 

The dry bulk densities should be determined at several intervals down hole (across the thickness 

of the section) and specifically in reference to the weathered vs. the Unweathered portions of the 

deposit. A number of dry bulk densities should also be taken along strike and averaged to come 

up with a valid density to calculate tonnage. 

8.2 Type and Extent of Drilling for Targets 4, 6, 7, 10 and 11 

Two drilling campaigns were performed. Three reverse circulation drill rigs (RC), belonging to 

Geosedna Perfurações Especiais S/A were used in the first campaign, which started in January 

2011 and finished in June 2011. These three drills (Foremost, Prominas and Explorac), drilled a 

total of 9,059m in 142 holes. The second campaign, which started in February 2011 and April 

2011 drilling amounted to 412m in five twinned RC/diamond drill holes (DDH). 

The 142 RC boreholes were drilled using 4¾" and 5" hammers to an average depth of 58m in a 

400m x 400m grid (approximately). 

The purpose of the twinned holes was to confirm the geology and describe, in detail, the 

lithological and mineralogical variations of the intercepted units, besides providing material for 

density measurements. All holes were vertical, and drilled to an average depth of 82m. 

Drillhole diameter was HQ and NQ. The drill used was a Diakor II, belonging to ISOÁgua Ltda. 

Downhole deviation surveys are not required in view of the shallow depth to which the holes 

were drilled. 

The drilling was carried out perpendicular to the mineralization and reflects its true thickness. 

Table 8.2.1 represents the number of holes for each target, and the average depth reached. 

The coordinates of the holes were surveyed using a Trimble ® Pathfinder Pro XR differential 

GPS. The data had post-correction validated by the IBGE with reference to the Santiago & 

Cintra station in Belo Horizonte (vertex 93,621; East 608,308.23m, North 7,799,827.00m, 

879.06m altitude (HAE) – recording rate: 0.5s, C/ A code + L1). All azimuth, distances, areas 

and perimeters were calculated following the UTM planar projection system, SAD69 datum, MC 

–45W and 23K zone. The accuracy of the measurements (borehole and surface) is within 

acceptable standards, considering the type of mineralization. The accuracy is approximately 1 

cm after 45 minutes of satellites tracking. 

The drilling data are compiled into a 3D geological model, as described later in the chapter 

"Mineral Resource and Mineral Reserve Estimates", detailed in the Section 15 of this Technical 

Report. The interpretation of the drilling results will also be made in this section. 






Table 8.2.1: Drilling Statistics 

RC Drilling 

DC Drilling 

Prospect 

Quantity 

of holes 

Average 

depth (m) 

Meters 

drilled 

Results Received 

(# holes) 

Results 

Received (m) 

Quantity 

of holes 

Average 

depth (m) 

Target-11 9 49 542.00 9 432.00 0 - 

Target-10 5 50 250.00 5 250.00 0 - 

Target-7 77 65 6,345.00 77 5,147.00 3 87.00 

Target-4 7 72 509.00 7 509.00 0 - 

Target-6 22 57 1,255.00 22 1,255.00 2 76.00 

Total 120 58 8,901.00 120 7,593.00 5 82.00 

8.2.1 Logging 

The RC chip samples are sieved at the field and small amounts are stored in chip trays. Each 

tray has chips from 30m drilled. The chips are described by the lithology, and also by the color 

and degree of weathering. The DDH core is placed in core boxes. 

The weathering, regolith and lithology, including the petrographic features are recorded by the 

geologists, as well as the recording of basic geotechnical observations (RQD – rock quality 

designation, weathering degree and IRS – impact resistance degree) are entered into a digital 

database and the information stored on a log sheet. Logging is performed in the core shed where 

the cores are stored. 

After the core is logged the boxes are photographed as a precaution against accident as well as 

the deterioration of the core box. The core boxes are photographed in pairs. The photographs 

are taken over a fixed assembly holding a camera for consistency of lighting. The photographs 

are edited on the computer. The borehole identification, number of the core box and the interval 

contained are all recorded, the database has a file with all the photographs of every core boxes. 

8.2.2 Recovery 

In the reverse circulation drilling, the recovering determinations were made considering that the 

bag containing that interval is weighed and the weight is compared with the reference value, 

using the formula below: 

% Rec= 

∗ 

 

Where, the cylinder volume (Cv) is calculated by the formula: 

Cv = π* R 2 *h = 3.14* 6.35 2 *100 = 3.1415 * 40.32 * 100 = 12,666.5 cm 3 * 2.3 = 29.132 kg 

For DDH, the recovery determinations were made by a measuring tape. The value for the core 

measured is compared to the value noted on the wooden information tag. Each rush has an 

average of 1.5m. Using the formula: recovered core x 100 / run= recovered percentage. The 

maximum percentage was 100%. Table 8.2.2.1 summarizes the recovery statistics. 






Table 8.2.2.1: Summarizes the Recovery Statistics 

Prospect Average Recovery (%) 

Target-4 88.0 

Target-6 89.8 

Target-7 88.9 

Target-10 96.9 

Target-11 94.1 

8.2.3 Reverse Circulation (RC) Sampling 

RC samples are collected every 1 to 3m rush, and placed in a large plastic bag, weighed on a 

balance, and the weight noted by the supervisor. A small sample is also taken from the bag and 

placed into a chip tray for visual inspection and future logging by the geologist. The main water 

intersections encountered by drilling are also captured by the supervisor on site. The cyclone is 

cleansed by compressed air after every rod drilled. 

The sampling intervals were selected after a preliminary analysis by the portable XRF 

spectrometer. The cover rocks are not sampling. Verdete intervals containing above 6% of K 2 O 

were selected. A safety margin was given in these intervals. This margin ranging from 1 to 5m, 

taking as reference the content of 6% of K 2 O and variations up to 2% below this level. The 

results obtained were integrated in a spreadsheet and passed via a personal digital assistant 

(PDA) to the sampling responsible at the shed. 

At the shed, the sample is split repeatedly in a riffle splitter until a representative sample of 

approximately 1.3kg is obtained. This sample is destined for preparation and laboratory 

analyses. The riffle splitter is beaten with a rubber mallet and cleaned with compressed air after 

every sample, to avoid sample contamination. The wet and moist samples are split using a 

hollow plastic cylinder with a sharpened tip. This cylinder is projected into the sample bag, in 

order to perforate it in several different places. The material from the bag that is returned within 

the cylinder is then sampled. Approximately six punches are sufficient to obtain a representative 

sample of the meter interval drilled (Figure 8-2). These samples are transported to the SGS 

Geosol laboratories for further processing. 

8.2.4 DDH Sampling 

After logging testing the drill core selected is cut. The core is cut lengthwise by a diamond saw. 

One half of the core is sent for analysis and the other is retained in the core box. 

The samples, with a length of 2m, are packed in a plastic bag, with the identification number 

written with a marker on the sample together with an identification tag. The bag is placed inside 

another, sealed with clamps and likewise identified. All data related to sampling are recorded in 

a log table for subsequent correlation with the analytical results. 

8.2.5 Bulk Density 

Density measurements are made on DDH core samples. After the geological description the drill 

core is sawn in half. The weathered and fresh lithological units are then chosen for dry density 

measurements. Intervals of 10cm to 15cm are selected from the half of the drill cores. 

The top and the base from each section of drill core are marked and the depth recorded on the 

density spreadsheets for each hole. The samples are placed in labeled aluminum trays and dried 






in electric oven with temperature of approximately 90°C for 24 hours. Using half of the drill 

cores assures that all internal humidity is removed from the drill core. 

After cooling, each sample is wrapped in Boreda ® tinfoil transparent PVC film (vinyl 

polychloride resin) and weighed in air by a OHAUS Adventurer ® digital balance, approved by 

Inmetro (the National Institute of Metrology, Normalization and Industrial Quality), with a 

precision of at least 2 hundredths of a gram. 

The sample is then completely immersed in water through a suspended steel hook attached to the 

central beam of the balance. The immersed weight is then recorded. Thereafter, the sample is 

returned to its respective place in the drill core box. The dry density calculation is made using 

the Archimedes Principle. 

Density determinations were made at the sample preparation section at VERDE in 7 samples of 

weathered Verdete, obtaining an average density of 1.49g/cm 3 ; and in 65 samples of fresh 

Verdete, with an average density of 2.11g/cm 3 . 

Density determinations were also made at SGS Geosol Laboratories Ltda, located at km 24.5 of 

Highway MG 10, Vespasiano, Minas Gerais. Measurements were made in 2 samples of 

weathered Verdete, obtaining an average density of 1.85g/cm 3 ; and 22 samples of fresh Verdete, 

with an average density of 2.09g/cm 3 . The measurements are made using the same methodology 

than VERDE, spending the Archimedes Principle. The weigh is determinate by a SARTORIUS 

TE2145 ® digital balance, with includes calibration with NIST traceable certification and a 

precision of at least 4 hundredths of a gram. 





Drillhole Location Plan 





RC Drilling Flowchart 






9 

Sample Preparation, Analyses and Security 

(Item 11) 

9.1 Sample Preparation and Assaying Methods for Funchal Norte 

Target 

All samples following drilling were sent via a Verde vehicle to the Bureau Veritas laboratory in 

Belo Horizonte for analysis. All sample reject, pulps and chip trays are stored at the Verde base 

in Belo Horizonte. 

All samples have been prepared and analyzed by Bureau Veritas in Belo Horizonte. 

The samples were received then dried, crushed to 2mm and riffle split; and 

Samples were analyzed by XRF for Fe 2 O 3 , SiO 2 , Al 2 O 3 , CaO, MgO, MnO, TiO 2 , Na 2 O, 

K 2 O, BaO, P 2 O 5 , Cr 2 O 3 , SrO and LOI. 

Bureau Veritas insert duplicates, blanks and certified standards at a rate of 5% to maintain their 

quality control. 

9.2 Sample Preparation and Assaying Methods for Targets 4, 6, 7, 10 

and 11 

The aliquots for the laboratory were prepared in the office. Initially, the six firsts holes drilled 

were sampled meter by meter and the others were made samples every 2m. The homogenization 

was the first stage of the preparation. In one corner of a tarpaulin of 2 x 2m were disposed 

samples of 1m (from the six first holes) or of 2m (for the other holes drilled). Next, the bulk was 

rolled in a unique way (clockwise or counter-clockwise) raising the edges of the tarpaulin until 

the sample became homogeneous in terms of distribution of color and granulometry. After 

mixing, the sample was divided into four equal parts (splitting). In this fourth part of the sample 

aliquots were separated for the lab, for archive (chips). To collect the first two aliquots, a quarter 

of the material was distributed on the tarpaulin in a linear shape, and then small portions were 

collected randomly with a shovel. These aliquots were properly packaged, labeled and weighed 

between 2kg and 2.5kg. Something around 1kg to 2kg was separated to 5mm, and the fraction 

upper than 5mm was filed in core boxes, identified with name of the hole, size and number of 

laboratory sample. The fraction under 5mm was discarded. The other three quarters of the 

sample were archived. 

The aliquots for the laboratory were prepared in the shed at the project site, by the VERDE 

technicians and sent in a Verde vehicle to the SGS Geosol Laboratórios Ltda (“SGS”), laboratory 

with ISO 9001:2008 and ISO 14001:2004 certifications, located at km 24.5 of Highway MG 10, 

Vespasiano, Minas Gerais State, for analysis. All sample reject, pulps and chip trays are stored 

at the Verde base in Matutina. 

After receiving the samples at the SGS, the request for analysis and the inclusion in the CCLAS 

system, the samples are checked. Physical preparation quality controls are introduced by the 

laboratory, which include a preparation blank (quartz) and duplicate at every 20 samples. The 

samples are dried at 105±5°C and passed through the crusher with 95% of the sample passing at 

2mm. Afterwards the fractionation of the sample is made to approximately 600g (RSD or Riffles 

depending on the mass to fractionate). The powdering is made with 95% passing at 150#, 

forming the laboratory aliquot and the reserved pulp. At this stage, the laboratory quality control 






is obtained by the inclusion of a reagent blank, certified reference materials and a laboratory 

duplicate within each analytical run. The blank is inserted at the beginning, standards at every 

20 samples and duplicate are inserted at random intervals. If necessary, additional quality 

control samples can be added. All data gathered for quality control samples is automatically 

captured by the CCLAS software, sorted and retained in the QA/QC database. The SGS quality 

management system complies with the requirements of International Standards ISO 9001:2008. 

After the loss on ignition (LOI) analysis, the analytical aliquot preparation is made by fusion 

with lithium tetraborate in the fusion machine with oxygen enriched flame – Phoenix ® (XRF 

Scientific). In this method, a calcined sample (0.5g) is added to the lithium borate fusion (50% 

Li 2 B 4 O 7 – 50% LiBO 2 ), mixed and fused between 1,050° and 1,100° C. The machine uses a 

mold which incorporates a crucible shape in which both mixing and mixing and molding is 

performed. When mixing is complete the molten material is cooled in the moldable and the bead 

is then removed using a suction cup. The analysis of the fused tablet is made by X-Ray 

Fluorescence Spectrometer – Axios mAX -Minerals ® (PANalytical). The samples were analyzed 

for Fe 2 O 3 , SiO 2 , Al 2 O 3 , CaO, MgO, MnO, TiO 2 , Na 2 O, K 2 O, P 2 O 5 , and LOI. The detection 

limits are described in Table 9.2.1. 

Sample 

Dry (105°C) 

Crush (95% @ 2mm) 

Fractionate 

Powder (95% @ 150#) 

LOI analysis 

Fusion with lithium tetraborate 

X‐ray flourescence analysis 

Quality control 

Table 9.2.1: Detection Limits of XRF Analysis 

Item Al 2 O 3 CaO Fe 2 O 3 K 2 O MgO MnO Na 2 O P 2 O 5 SiO 2 TiO 2 

Limit of Detection (%)




9.2.1 Quality Controls and Quality Assurance 

At the time of the drilling for Funchal Norte Target, Verde did not have appropriate internal 

QA/QC systems. Future drilling should include at least one twinned hole from the existing set 

that has good QA/QC in place that could be used to verify the values from the present reverse 

circulation drilling program. 

In May 2010, Verde introduced a QA/QC program. For the internal control reference, at every 

20 routine samples, a certified standard, a powder blank and a duplicate was inserted and sent to 

laboratory. 

Initially, duplicates were prepared from the splitting of previous sample pulp. After analysis at 

SGS laboratory, the pulp were returned and forwarded to analysis at the ALS Brasil Ltda 

laboratory, located at Vespasiano, Minas Gerais State. From there, the pulps were sent to ALS 

laboratory located in Lima, Peru for analysis. The pulps are analyzed by XRF and LOI. The 

ALS quality management system complies with the requirements of the International Standards 

ISO 9001:2008 and ISO/IEC 17025:2005. Quality control samples are inserted within each 

analytical run. Form XRF methods, the minimum number of QA/QC samples are 2 standards, 1 

duplicate and 1 blank, introduced every 39 samples. The blank is inserted at the beginning, 

standards are inserted at random intervals, and duplicates are analyzed at end of the batch. Every 

batch of samples are analyzed has a dual approval and review process. The individual analytical 

runs are monitored and approved by the analyst. The results are compared with the initial values 

of SGS in graphics for duplicate controls like Thompson and Howarth, QQ and Correlation plots. 

This procedure was adopted until sample CV-RCS-2151. 

From March 2011 on, starting at the sample CV-RCS-2171, the duplicate was obtained by 

quartering the routine sample, verifying, in that way, the whole laboratory sample preparation 

process. 

For the accuracy control, the Australian GeoStats Phosphate certified reference material and 

Brazilian Instituto de Pesquisas Tecnológicas reference material were used. There were 

submitted to SGS for conventional XRF analysis. The standards certificates are attached at the 

end of this report. 

The blank material was prepared from pulverized quartz obtained from a Brazilian laboratory 

Sulfal Química Ltda. At the time, the company did not have appropriate internal contamination 

control. Gravel blank composed by quartz will be provided to verify the contamination of the 

sample preparation. 

For the external control reference, after analysis at the SGS laboratory, pulps were selected from 

routine samples, spaced 20 by 20 and sent to analysis at ALS. 

9.2.2 Adequacy of Procedures for Targets 4, 6, 7 10 and 11 

The Geosol SGS laboratory, which were performed the preparation and the chemical analysis of 

the bulk samples, was inspected in July 12. The inspection of the sample preparation room 

confirmed that the procedure described above is satisfactory. The preparation rooms and 

equipment are kept clean, and upon the completion of each shift, these rooms are cleaned up. All 

laboratories and each equipment is provided with ventilation system and exhaust fans. All 

instruments are in serviceable condition. The laboratory operates according to international 

standards and the risk of error in chemical analysis can be assessed as low. 






10 

Data Verification (Item 12) 

10.1 Funchal Norte Target 

Verde did not carry out a proper QA/QC program. The current QA/QC analysis is the internal 

Bureau Veritas program. 

5% of samples sent to the Bureau Veritas were then sent to SGS in Belo Horizonte to undertake 

an umpire sample. 

In the QA/QC program implemented by Verde in May 2010, as the analytical results are 

received, they are immediately imported into the respective sampling spreadsheets, where any 

undesirable analytical deviations of standards, blanks, duplicates, or inconsistency between the 

sample result and its respective lithology can be easily compared. Simple inversions of sample 

results and typing errors of the spreadsheets after receiving the certificates, are also common and, 

therefore, all the results of all samples must be checked one by one and not only the control 

samples introduced. 

The accuracy, precision and contamination of the analysis should be evaluated. 

All reference materials require validation, to check the level of accuracy and reliability of the 

laboratories. The mistakes detected in the analytical procedures are identified and evaluated 

having as reference the precision of the method. 

The results for the certified reference materials (standard samples) must be between the limits of 

2.SD (twice the standard deviation). 

The validation method of the blank samples consists in verifying the presence of the analyte. 

Therefore it is necessary to observe the detection limit of the method. 

If there is any analysis deviation of the control samples or inconsistencies with the respective 

lithologies, the batches should be re-examined and eventually re-sampled. Depending on the 

situation, and certifying that there could not have been any mistake on sampling (which is 

common), the costs of re-examination will be on the laboratory. If the blank values are very 

high, the method of sample preparation should be checked. If all values for the standards are off 

the defined limits, the digestion method of the samples should be checked. When the results of 

standards and blanks are following a same trend, higher or lower than expected, the analysis for 

all the batch of samples sent should be repeated, including the reference ones. 

Besides the analysis of the results obtained, an unannounced visit to the laboratory is 

programmed to check the conditions of the analysis. 

Only after all results from each batch of samples are checked and validated, can information be 

fed into the database. 

The final validation of the results obtained is performed by an independent consultant (Qualified 

Person). 

Coffey Mining has reviewed the QA/QC results returned by Bureau Veritas as presented in Table 

10.1.1. 






Table 10.1.1: Standards Utilized by Bureau Veritas 

Standard 

Expected 

ValueK 2 0% +/-10% (EV) Failed 

IPT 146 0.04 0.034 and 

0.042 

No of 

Analyses Minimum (%) Maximum(%) Mean (%) 

5 6 0 .07 0.05 

IPT 53 12.1 10.89 and 0 6 11.95 12.61 12.18 

13.31 

IPT53+IPT146 6.07 5.46 and 6.67 0 6 5.84 6.36 6.07 

Pulp Blank 0




Information about internal quality control was presented as a single data batch, without 

separation of the samples by grade ranges. Two evaluation methods were used, simple linear 

regression and QQ (Quantile Quantile) plot. 

One of the parameter used in the results analyzes was the precision. Precision is a measure of 

how well the Y value represents the X value. It is most commonly used in assay quality control, 

where X is the first assay value and Y is the matching repeat assay. A perfect result has a 

precision of zero. Values of greater than zero represent an increasing amount of deviation; for 

example a precision of 10% indicates that the difference between X and Y varies by around 10% 

of X. The tests for K 2 O, P 2 O 5 , Al 2 O 3 , Fe 2 O 3 , SiO 2 , MgO and TiO 2 , had a high quality and 

accuracy in the statistical analysis, with precision accuracy lower than 5%. For MnO and Na 2 O, 

the tests showed a precision accuracy lower than 15%, and for CaO, the tests showed a precision 

accuracy higher than 15%. The numbers of tests provided are statistically representative. 

Precision of the Chemical Analysis 

The sampling precision was evaluated using the method of repeated analysis for K 2 O, P 2 O 5 , 

CaO, Al 2 O 3 , Fe 2 O 3 , SiO 2 , MgO, TiO 2 , MnO, Na 2 O and LOI. In a total of 3244 samples, 108 

were re-examined, representing 3.3% of the total number of tests. 

Information on internal quality control was presented as a single data batch, without separation 

of the samples by grade ranges. Was used two evaluation methods, simple linear regression and 

QQ (Quantile Quantile) plot. 

In general, the tests for K 2 O, Al 2 O 3 , Fe 2 O 3 , MgO, TiO 2 and SiO 2 , had a high quality and 

accuracy in the statistical analysis, with accuracy higher than 5%. To P 2 O 5 , CaO, MnO and 

Na 2 O, tests showed a precision up to 12%. 

The correlation coefficient of the samples values of regular control is above 0.9, allowing it to 

conclude that tests for the most important elements for the mineralization in study were 

conducted with a satisfactory and acceptable accuracy. 

Inaccuracy 

The inaccuracy was determined as a difference in Fe 2 O 3 , SiO 2 , Al 2 O 3 , P 2 O 5 , Mn, TiO 2 , CaO, 

MgO, K2O, Na2O e LOI in samples, between the values determined by SGS and those 

determined by an independent laboratory ALS. 

The external control was conducted for the purpose of determination of systematic inaccuracy in 

the results of principal analytical laboratory. The value of the systematic inaccuracy was 

estimated by the same formula as used for the internal control. 

The number of repeated tests is 119, which is 3.6% from the total number of tests 3244. 

In whole, the analysis of data for each laboratory demonstrates good precision of data with high 

coefficient of correlation R > 0.98. 

The total number of control external tests is sufficient. According to the analysis of external 

control data, the accuracy of principal laboratories can be rated as satisfactory. 

Standards 

For quality control were used 174 standard samples, which represent 5.3% of the total number of 

analyzed samples. 






Standard GPO-11 (43 analysis results); 

Standard GPO-12 (43 analysis results); 

Standard GPO-13 (54 analysis results); 

Standard GIOP-27 (8 analysis results); 

Standard IPT-53 (21 analysis results); and 

Standard IPT-72 (5 analysis results). 

Four types of standard GPO-11, GPO-12, GPO-13 and IPT-53 were analyzed, and the results 

were analyzed using the Shewhart Control Chart. Statistical analysis was performed for the 

following elements Fe 2 O 3 , SiO 2 , Al 2 O 3 , P 2 O 5 , MnO, TiO 2 , CaO, MgO, K 2 O and Na 2 O. 

The analyzed results, provided by SGS, present problems when compared with known results. 

Blank Samples 

For quality control were used 174 blank samples, representing 5.3% of the total number of 

samples analyzed. 

When discussing the use methodologies of the blank samples with Verde Fertilizantes Ltda. 

team, it was certified that powder material was sent to the laboratory. 

The purpose of using blank samples is attempting to quantify the contamination of samples 

during the preparation process. This objective was not achieved whereas the blank samples were 

sent to a laboratory as powder, not subject to potential contamination involved in the preparation 

process and reduction of other samples. This makes it unnecessary to analyze the results 

obtained for the blank samples to quantify the possible errors in the preparation of other samples. 

Conclusions 

It was certified that the tests relating to duplicate samples were conducted with an acceptable and 

satisfactory accuracy to the most important elements of the mineralization under study. 

There are possibilities of error in the methodology of sample analysis. Therefore, the results of 

sample analysis with known grades were not within the expected mean range. 

The methodology for the use of blank samples, as has been said, is not correct. 

Despite the unsatisfying results for the standards samples and the incorrect methodology used for 

the blank samples, the risk of errors in chemical analysis can be assessed as low. 

10.2.2 Data Import and Validation 

Data Local Validation 

The client did not provide information about the data local validation, so this procedure was not 

performed by BNA Consultoria e Sistemas. 

Data Validation Performed in MICROMINE Software 

The analytical database was exported to the format *.xls, and then imported into MICROMINE ® 

software. After this process, the imported database was validated using specific processes to find 

the following possible errors: 






 

 

 

 

 

 

 

 

 

 

 

 

 

 

The drillhole name is present in the collar coordinate file, but is missing in the analytical 

database; 

The drillhole name is present in the analytical database, but is missing in the collar 

coordinate file; 

The drillhole name appears repeated in the analytical database and in the collar 

coordinate file; 

The drillhole name is not present in the collar coordinate file and in the analytical 

database; 

One or more coordinates notes are missing from the collar coordinate file; 

From or to are not present in database analysis; 

From > to in analytical database; 

Sampling intervals are not continuous in analytical database (there are breaks between the 

records); 

Sampling intervals are overlapping in the analytical database; 

The first sample does not correspond to 0 m in the database analysis; 

The azimuth is not in the range from 0 to 360 degrees; 

The dip angle is not in the range from 0 to 90 degrees; 

Azimuth or dip angle of the drillhole is missing; and 

The drillhole total depth is less than the depth of the last sample. 

The topography and cartography geological files in *.shp format were converted to the 

MICROMINE ® formats. 

Although the data do not provide a suitable structure, the validation results were satisfactory, 

being found only one error in the entire database. 






11 

Mineral Processing, Metallurgical Testing 

and Recovery Methods (Items 13 and 17) 

The Project's objective is to produce a thermo-fertilizer in the form of calcined potassium pellets, 

with diameters between 2 and 4mm, to be produced at Verde facilities, located at São Gotardo – 

MG. The primary feed material is a metasiltstone (Verdete) that typically contains 8 to 10% 

K 2 O The project base case is the production of 1.1Mt of thermo-fertilizer per year 8.34% K 2 O 

with an expected life of around 100 years at this level of production. 

The process approach is summarized in the conceptual flowsheet in Figure 11-1. Recovery is 

discussed in Section 13.1.6. 

11.1 Summary of Proposed Process 

11.1.1 Overview 

Verdete is mechanically extracted from the quarry is reclaimed by front loaders which load a 25- 

50t truck fleet. Prior blasting is regarded to be unnecessary for the majority of the quarry 

extension, due to the friability of the ore. 

Fragments up to 500mm will be discharged into a 60m 3 capacity bin, and will be screened in a 

75mm fixed grizzly. Oversized ore will be retained at this grizzly and then will be disaggregated 

through a jaw crusher. Material passing from the grizzly, finer than 75mm, along with the 

primary crusher product feed will be conveyed into the secondary crushing circuit. 

Material is fed to a 40m 3 bin which feeds a vibrating screen from which ore in the -75 to +16mm 

fraction will feed a secondary cone type crusher. The product from the crusher, with p 80 less 

than 20mm, is conveyed to a storage hall to be chevron stacked, in order to improve stockpile 

homogeneity. 

Finely crushed Verdete from the storage hall is reclaimed and fed to a dosing bin in the raw meal 

grinding department. 

Limestone, max 5% passing 1 inch, is received from an external quarry, and stacked in a conical 

pile with a volume of 1300m 2 . The material is transferred via truck loader to a hopper to a 

dosing bin in the raw meal grinding department. 

Both crushed Verdete and limestone are proportioned and fed to a vertical roller mill grinding 

circuit, nominal rate of 169t/h dry basis, comprising of a belt feeder, integrated dynamic 

separator, bag filter, bucket elevators for both internal circulation and final product transport. 

The installed power will be 1360kW.The raw meal produced in the grinding circuit is stocked in 

a storage silo, where the material will be homogenized pneumatically. 

Raw meal finely ground at 10%+170 mesh, along with recirculating off-spec fines generated in 

different steps of the process and agglomerator (necessary for the pelletizing step) will be fed to 

an 215 t/h continuous intensive vertical mixer (commercial reference adopted is RV24K Eirich). 

The blend will be fed via belt conveyors to pelletizing gate feeders to the pelletizing area, 

comprising of three 5.5m diameter disk pelletizer lines at a nominal dry basis rate of 72t/h each, 

where water is continuously injected (up to 18% humidity). After pelletizing, the green pellets 

are classified and off-spec pellets will be returned to the mixer. 






Green pellets will feed a grizzly car at a rate of 210t/h wet basis. There will be approximately 7 

min residence time and at this time the pellets are dried in ascending and descending areas with 

hot air from the preheating zone. The total effective length of the grizzly car will be 

approximately 40m with a width of 3m. 

The dust generated at the grizzly car will be collected by a dust collector and will return the 

heated and clean air to the pellets drying areas. Fines collected return through pneumatic 

conveying to the fines dosing system, making part of the load that feeds the mixer. The fines 

generated along the bed of the grizzly car will be transported back to the bins in the mixing area. 

After drying the pellets feed the rotary kiln at a rate of 172t/h dry basis, 12% filling degree, 60 

minutes residence time, max temperature 1300C. Power supply demand for the kiln and all its 

auxiliary equipment will be about 3700KW. Reaction temperature will be approximately 

1300ºC. 

After roasting, thermopotash is formed and must be quickly quenched. Quenching is performed 

in a water reservoir. After this treatment the pellets will be extracted from the bottom of the 

reservoir and dried in a rotary dryer. Evaporated steam will be collected and condensed and 

returned to the quench circuit. Evaporation losses in the pellets drying condenser and cooling 

tower will be compensated with makeup water added at the cooling tower basin. 

From the rotary dryer thermopotash is sent to a final grinding area, where its size is reduced to 

100% passing 100 mesh. After classification, the product is repelletized and conveyed to a final 

classification step using a vibrating screen. The pellets within the specification range, -4 + 2mm, 

will be dried and conveyed by belt to the storage warehouse where the final product will be 

stored and further dispatched by trucks. 

The product is a potassium source only sparingly water soluble, and recovery is anticipated to be 

better than 90% of the 8% potassium as K 2 O. 

In the proposed process the purpose of calcining is to thermally release potassium from Verdete, 

so that potassium becomes readily exchangeable for agriculture. 

11.1.2 Project Scenarios and Capital Costs 

For this project, three potential scenarios for heating the kiln have been identified: 

1. Petroleum Coke heating directly in the kiln with the Verdete; 

2. A dead roaster for utilizing any fuel with heat exchange to the kiln (i.e., no transfer of 

residue); and 

3. Natural Gas heating. 

The scenarios are summarized in Table 11.1.2.1. As can be observed although capital cost is 

lowest for option 3 the operating cost is double options 1 and 2. 

Option 1 presents the middle capital cost and lowest operating cost but Verde cannot yet confirm 

that petroleum products do not contaminate the product during the kiln roasting and as such 

cautious has to be applied in advocating this process option. However, it has been stated by Dr. 

Gaspar Korndorfer, University of Uberlandia that even if residual organics from combustion 

were absorbed by the pellets, there will be a positive effect regarding agronomic efficiency. 






Dead burnt carbon has beneficial properties, increasing water retention in the soil, ensuring 

better fertilizer retention (negative surface charge), therefore reducing deleterious elements 

leaching. In the case of residual hydrocarbons adsorbed by the pellets, in minor quantities, it will 

be hard to determine any negative effect. Indeed, in some applications of the fertilizer industries 

waste oil was applied to fertilizer to provide mechanical particle stability. This supports the 

application of option 1 or 2 for heating but requires confirmation. 

Option 2 would have the benefit that any fuel source could be utilized in a dead roaster up front 

of the kiln and transfer heat to the kiln ensuring there would be no mix of fuel and product in the 

kiln keeping the product pure. Although this option has the highest capital cost, the operational 

cost is similar to the direct petroleum coke application in the calcine and a small incremental 

increase in operating costs (




11.1.4 Results of Agronomic Testwork 

The available K in the soil shown in Table 11.1.4.1 and 11.1.4.2 indicated that there is no 

difference between the water soluble K source (KCl) and Thermo-K, 60 days after application in 

sandy and clay soil, using dosage applications of 200 and 400kg/ha K 2 O. 

This result shows that the thermal treatment applied to the Verdete (raw material used in the 

manufacture of Thermo-K) was very efficient from an agronomic point of view. This can be 

seen when comparing the results against those of the pure Verdete, without heat treatment. In 

this case, the K in the soil did not differ from the control standard which means that virtually no 

potassium from the Verdete was released to the soil, indicating a low efficiency of this material 

as a source of potassium for plants. 

Table 11.1.4.1: K content in soil (Mehlich 1) After 60 Days of Incubation with Different 

Sources of Potassium in a Clay Soil. 

Dose K 2 O 

K – Source 

kg ha -1 KCl Thermo-K Verdete 

Average 

0 -- -- -- 0,07 

200 0,24 * a B 0,23 * a B 0,07 ns b A 0,18 

400 0,36 * a A 0,32 * b A 0,07 ns c A 0,25 

Average 0,30 0,27 0,07 

CV% = 9,40 

DMS dose = 0,03; DMS source = 0,03; DMS Dunnet = 0,04 

Averages followed by distinct letters, lowercase on the line and uppercase in the column, differ by Tukey test at 0.05 significance; ns not 

significant by the Dunnett test at 0.05 significance, * significant by the Dunnett test at 0 05 significance; 

Table 11.1.4.2: K Content in Soil (Mehlich 1) After 60 Days of Incubation with Different 

Sources of Potassium in a Sandy Soil. 

Dose K 2 O 

Source 


Average 

0 0,04 

200 0,25 * a B 0,24 * a B 0,04 ns b A 0,18 

400 0,41 * a A 0,38 * a A 0,04 ns b A 0,28 

Average 0,33 0,31 0,43 

CV% = 12,89 

DMS dose = 0,04; DMS source = 0,05; DMS Dunnet = 0,05 



In addition to potassium addition the application of Thermo-K also appears to increase available 

Ca and Mg in the soil after 60 days of incubation. Presumably, magnesium is also released from 

clays in the Verdete and Ca is present as lime from calcining of limestone in the kiln (Tables 

11.1.4.3 through 11.1.4.6). Further with a higher application mass of Thermo-K (400kg/ha) 

greater availability of Ca and Mg was also observed. Potassium chloride did not affect the Ca 

and Mg in the soil because it simply does not have these elements in their composition. 

The Verdete, however, despite containing Ca and Mg in its composition, did not increase the 

levels of these elements in the soil, strengthening the conclusion that the Verdete has low 

reactivity and is not able to release nutrients to the soil in the short term. 






When comparing the doses of 200 and 400kg/ha K 2 O, only Thermo-K showed an increase in the 

nutrient content in the soil, which further demonstrates the high reactivity of the product even 

when analyzed in the short term. 

Table 11.1.4.3: Exchangeable Ca in the Soil After 60 Days of Incubation with Different 

Sources of Potassium in A Clay Soil 

Dose K 2 O 

K-Source 


Average 

0 --- --- --- 0,09 

200 0,08 ns b A 1,40 * a B 0,10 ns b A 0,52 

400 0,09 ns b A 2,20 * a A 0,10 ns b A 0,80 

Average 0,08 1,79 0,10 

CV% = 6,70 

DMS dose = 0,07 ; DMS source = 0,06 ; DMS Dunnet = 0,08 


significant by the Dunnett test at 0.05 significance, * significant by the Dunnett test at 0 05 significance 

Table 11.1.4.4: Exchangeable Ca in the Soil After 60 Days of Incubation with Different 

Sources of Potassium in a Sandy Soil 

Dose K 2 O 

K-Source 


Average 

0 --- --- --- 0,09 

200 0,08 ns b A 1,54 * a B 0,14 ns b A 0,58 

400 0,12 ns b A 2,26 * a A 0,11 ns b A 0,83 

Average 0,10 1,90 0,12 

CV% = 8,84 

DMS dose = 0,08 ; DMS source = 0,1 ; DMS Dunnet =0,11 




Sources of Potassium in a Clay Soil 

Dose K 2 O 

K-Source 


Average 

0 --- --- --- 0,04 

200 0,04 ns b A 0,43 * a B 0,05 ns b A 0,17 

400 0,05 ns b A 0,69 * a A 0,04 ns b A 0,26 

Average 0,04 0,56 0,04 

CV% = 5,54 










Sources of Potassium in a Sandy Soil 

Dose K 2 O 

K-Source 


Average 

0 --- --- --- 0,05 

200 0,05 ns b A 0,48 * a B 0,05 ns b A 0,19 

400 0,05 ns b A 0,64 * a A 0,04 ns b A 0,24 

Average 0,04 0,60 0,05 

CV% = 12,75 




This initial testwork indicates that Thermo-K provides a potentially superior source of nutrient 

enrichment in soils not only for potassium but also for calcium and magnesium. In addition, 

the source of potash is a non-chloride, non-sulfate source of potash and thus will not adversely 

impact soil pH or salinity. In addition, Verde conducted mass balance testwork, which 

demonstrated that Thermo-K is practically insoluble in water. Ergo, Thermo-K also provides a 

superior source of fertilizer as it would be a slow release source of nutrients which is important 

in climates with notably wet and dry seasons where traditional fertilizers have been weathered 

from soils during seasonally heavy meteoric events and unavailable during the dry season 

reducing the quality of agricultural soils. 

11.1.5 Summary, Residual Issues and Recommendations 

The testwork undertaken to date demonstrates that this unique process and product are 

potentially a valuable contribution to agriculture, particularly in regions where soils have a low 

natural exchangeable nutrient component. In addition although Thermo-K is relatively 

expensive when compared to similar potassium concentrations from salar salts it has the distinct 

advantages that: 

 

 

 

The source of salts is a non-chloride, non-sulfate source of salt and thus will not 

adversely impact soil pH or salinity components; 

Additional nutrients such as calcium, magnesium and silicon are present; and 

The nutrient source is slow release and as such more sustainable than traditional sources 

of fertilizer and thus will have lower usage costs for farmers as less frequent applications 

will be required. 

However residual issues remain with the product that need to be addressed in further studies. 

The rate of water solubilization of nutrients from the calcined product needs to be established 

through rinse tests simulating the quench step post calcining and long term exposure to meteoric 

rinsing. In addition, this testwork needs to also address potential mobilization of aluminum, 

manganese and iron as well as trace metals from the Thermo-K product that would adversely 

impact crop quality or yield. From preliminary studies Verde does not consider this to be a 

problem but more testwork needs to be undertaken before definitive conclusions can be made. 

In addition during prefeasibility assessment frequent samples to demonstrate consistency in 

product production and to demonstrate lack of impurities need to be undertaken. 






Conceptual Flowsheet for 

Cerrado Verde ThermoFertlizer 

Project 

File Name: Figure_11-1 Date: 09/15/2011 Approved: RB Figure: 11-1




12 

Mineral Resource Estimate (Item 14) 

Volodymyr Myadzel, of BNA verified the Funchal Norte resource estimate provided by Coffey 

Mining as described in Section 12.1. SRK also verified this resource estimate on March 1, 2010. 

In addition, Dr. Myadzel constructed the geologic and resource model for Targets 4, 6, 7, 10 and 

11 as discussed in Section 12.2. Dr. Myadzel is responsible for the resource estimation 

methodology and the resource statement. Dr. Myadzel is independent of the issuer applying all 

of the tests in Section 1.5 of the NI 43-101. 

The resource estimate has been undertaken in compliance with accepted Canadian Institute of 

Mining, Metallurgy and Petroleum (CIM) definitions for indicated and inferred resources in 


12.1 Funchal Norte Target 

Coffey Mining was commissioned by Verde Potash plc to complete a resource estimate for the 

Project. Coffey Mining has estimated the Mineral Resource for the Project as at February 27, 

2010. All grade estimation was completed using Ordinary Kriging (“OK”) for Potash. 

This estimation approach was considered appropriate based on review of a number of factors, 

including the quantity and spacing of available data, the interpreted controls on mineralization, 

and the style of mineralization. The estimation was constrained with mineralization 

interpretations. 

12.1.1 Geological Modeling 

Based on grade information and geological observations from Coffey Mining and site based 

Verde geologists, one Unweathered domain and one Weathered domain (transition zone) have 

been interpreted using E-W oriented vertical sections. 

Interpretation and digitizing of all constraining boundaries has been undertaken on cross sections 

orientated at 90° (drill line orientation). The interpretation was completed using 8 vertical 

sections. Figure 12-1 shows the vertical sections location. The resultant digitized boundaries 

have been used to construct wireframe defining the three-dimensional geometry of each 

interpreted feature. The interpretation and wireframe models have been developed using the 

Gemcom Surpac mine planning software package. 

As the drill holes collars were surveyed using a portable GPS the RL values of each one were 

defined by Coffey draping those collars to the 3D topography surface. 

For the purpose of the resource estimation, 2 mineralized domains were interpreted and modeled 

to the Verdete which is characterized by the green glauconitic mineralization. Cross section 

examples are shown in Figures 12-2 through 12-3. 

Figures 12-4 and 12-5 show the two domain wireframes interpreted in 3 dimensions. 

12.1.2 Block Model Development 

A three-dimensional block model was constructed for the Cerrado Verde deposit, covering all the 

interpreted mineralization zones and including suitable additional waste material to allow later 

pit optimization studies. The block model has been developed using Gemcom Surpac Mine 

planning software. 






A parent block size of 100mE x 100mN x 10mRL has been used for all materials with subblocking 

to 50mE x 50mN x 5mRL to allow adequate volume resolution. To obtain a robust 

flagging of the wireframe in the block model, a percent model technique was used which 

calculates the percentage of the block inside the Unweathered wireframe. This provides a more 

accurate volume estimate. Bulk density has been coded to the block model based on the defined 

density values provided by Verde. 

The Table 12.1.2.1 shows the summary of the block model created. 

Table 12.1.2.1: Block Model Summary 

Item Y X Z 

Minimum Coordinates 7,868,000 407,500 600 

Maximum Coordinates 7,871,500 409,500 1,050 

User Block Size 100 100 10 

Min Block Size 50 50 5 

Rotation 0 0 0 

12.1.3 Statistical Analysis 

The drillhole database was composited to a 2m downhole composite interval, recording. The 2m 

composites were used for all statistical, geostatistical and grade estimation studies. The decision 

to use 2m composites was based the raw sample lengths of sampled intervals (Figure 12-6). 

Statistical analysis of the composite datasets was completed within the Weathered and 

Unweathered domains. Descriptive statistics are presented in Table 12.1.3.1. 

Table 12.1.3.1: Summary Statistic – 2m Composites 

Domain Item K 2 0(%) 

Count 244 

Minimum 7.09 

High Grade Domain Maximum Mean 13.02 

Std. Dev. 10.95 

CV 1.09 

Count 174 

Minimum 3.31 

Low Grade Domain Maximum 10.74 

Mean 6.62 

Std. Dev. 1.69 

CV 0.26 

"Box and whisker" plots for the mineralized intervals were compiled for Unweathered and 

Weathered K 2 O in Figures 12-7 and 12-8, respectively. 

Based on the statistical review a top cut was applied to Weathered mineralization based on the 

97.5 percentile which included only one Unweathered assay being reduced to 10.73% K 2 O. 






12.1.4 Variography 

Introduction 

Variography is used to describe the spatial variability or correlation of an attribute. The spatial 

variability is traditionally measured by means of a variogram, which is generated by determining 

the averaged squared difference of data points at a nominated distance (h), or lag (Srivastava and 

Isaacs, 1989). The averaged squared difference (variogram or v(h)) for each lag distance is 

plotted on a bivariate plot, where the X-axis is the lag distance and the Y-axis represents the 

average squared differences (v(h)) for the nominated lag distance. 

Several types of variogram calculations are employed to determine the directions of the 

continuity of the mineralization: 

Traditional variograms are calculated from the raw assay values; 

Log-transformed variography involves a logarithmic transformation of the assay data; 

Gausssian variograms are based on the results after declustering and a transformation to a 

Normal distribution; 

Pairwise-relative variograms attempt to 'normalize' the variogram by dividing the 

analyses; and 

Correlograms are 'standardized' by the variance calculated from the sample values that 

contribute to each lag. 

Fan variography involves the graphical representation of spatial trends by calculating a range of 

variograms in a selected plane and contouring the variogram values. The result is a contour map 

of the grade continuity within the domain. 

The variography was calculated and modeled in the mining planning software, Gemcom Surpac 

Software. The rotations are tabulated as input into Gemcom Surpac Software (geological 

convention), with X representing the bearing, Y representing dip and Z representing plunge. Dip 

and dip direction of major, semi-major and minor axes of continuity are also referred to in the 

text. 

Grade variography was generated to enable grade estimation via OK. Interpreted anisotropy 

directions correspond well with the modeled geology and overall geometry of the interpreted 

domain. The results are show in Table 12.1.4.1. 

Table 12.1.4.1: Cerrado Verde Deposit Unweathered and Weathered Mineralized Domain 

Variogram Models 

K2O 

Nugget 

(CO) 

Bearing 

Rotation Structure 1 Structure 2 

Dip Plunge 

Sill 1 

(C1) 

Major 

Range (m) 

Semi- 

Major Minor 

Sill 2 

(C2) 

Major 

Range (m) 

Semi 

Major Minor 

Low Grade 0.21 180 -10 0 0.34 200 100 16.53 1.20 400 200 33.06 

High Grade 0 21 180 -10 0 0.34 200 100 16.53 1.20 400 200 33.06 






12.1.5 Grade Estimation 

Resource estimation for the Cerrado Verde mineralization was completed using Ordinary 

Kriging (OK) within the Weathered and Unweathered mineralized domain. 

OK is the most commonly used type of kriging. It assumes a constant but unknown mean. 

Typical ordinary kriging assumptions. 

The typical assumptions for the practical application of ordinary kriging are: 

Intrinsic stationarity or wide sense stationarity of the field; and 

Enough observations to estimate the variogram. 

The mathematical condition for applicability of ordinary kriging is: 

The mean E[Z(x)] = u is unknown but constant 

The variogram v(x,y) = E[(Z(x) - Z(y))2] of Z(x) is known. Ordinary Kriging equation 

Ordinary Kriging equation 

The kriging weights of ordinary kriging fulfill the unbiasedness condition 

and are given by the ordinary kriging equation system: 

the additional parameter µ is a Lagrange multiplier used in the minimization of the kriging error 

to honor the unbiasedness condition. 

Ordinary kriging interpolation 

The interpolation by ordinary kriging is given by: 

Ordinary kriging error 

The kriging error is given by: 






Properties of kriging (Cressie 1993, Chiles & Delfiner 1999, Wackernagel 1995) 

 

 

The kriging estimation is unbiased: 

The kriging estimation honors the actually observed value: 

The kriging estimation assumptions hold. However (e.g. Cressie 1993): 

As with any method: If the assumptions do not hold, kriging might be bad. 

There might be better nonlinear and/or biased methods. 

No properties are guaranteed, when the wrong variogram is used. However typically still 

a 'good' interpolation is achieved. 

Best is not necessarily good: e.g. In case of no spatial dependence the kriging 

interpolation is only as good as the arithmetic mean. 

Kriging provides correctness of the variogram. 

Additional to the drilling samples, channel composites samples, from complementary sampling 

campaign were used, after a test of adequacy of support. Figure 12-9 shows the estimation steps 

undertaken in the Cerrado Verde estimation. 

12.1.6 Resource Reporting 

The grade estimates for all domains have been classified as Inferred based on the confidence 

levels of the key criteria that were considered during the resource estimation. Key criteria are 

tabulated below. A summary of confidence levels of the several items involved for the resources 

estimation for the Cerrado Verde deposit is provided in Table 12.1.6.1 below, reflecting the 

updated resources for Targets 4, 6, 7, 10 and 11. 






Table 12.1.6.1: Cerrado Verde Project Confidence Levels of Key Categorization Criteria 

Items Discussion Confidence 

Drilling Techniques Reverse Circulation drilling is Industry standard approach. High 

Logging Standard nomenclature and apparent good quality. High 

Drill Sample Recovery Good recovery recorded. High 

Sub-sampling Techniques 

Industry standards of sampling technique and preparation Moderate 

and Sample Preparation 

Quality of Assay Data 

have been used for the new targets. 

Has filed duplicates for pulp, adequate number of samples 

and good results, however, methodology for the use of 

blank and standard samples was not satisfactory. 

Moderate 

Verification of Sampling and Assaying 119 samples were analyzed at the ALS lab and the High 

comparative results were very good. 

Location of Sampling Points Differential GPS was used for the new sample locations. High 

Data Density and Distribution Approximately 200m x 400m spaced drilling Moderate 

Audits or Reviews None N/A 

Database Integrity 

Assay hard copy sheets were randomly checked against High 

the digital database with no errors identified 

Geological Interpretation Simple geology, two domains defined. High 

Estimation and Modeling Techniques Ordinary Kriging has been used to obtain estimates of 

K2O % grade. 

High 

The Inferred resource has been classified based on blocks estimated until step 5 with a maximum 

range of 1,000m. 

The total Inferred resource estimate is shown in Table 12.1.6.2 utilizing different cut off grades. 

The additional figures are different views of the model as used in the validation process. Mineral 

resources that are not mineral reserves do not have demonstrated economic viability. Quantity 

and grade or quality is an estimate and should be rounded to reflect approximation. 

Table 12.1.6.2: Cerrado Verde Deposit –February 27, 2010 Inferred Resource Grade 

Tonnage Report Ordinary Kriging Estimate 100mE x 100mN x 5mRL Selective Mining 

Unit 

Domain Cutoff Grade (% K 2 0) Million Tonnes Average Grade (% K 2 0) 

0 67.82 6.22 

3 G7.82 6.22 

4 67.45 6.23 

Low Grade 5 55.85 6.41 

6 33.19 7 T 

7 14 7.78 

8 6.49 8.52 

9 1.01 9.43 

0 92.74 10.61 

7 92.74 10.61 

8 92.20 10.63 

High Grade 9 86.55 10.76 

10 64.39 11.17 

11 35.71 11.61 

12 8.24 12.33 

Total Low Grade + High Grade 0 160.56 0.75 






There are no mineral reserves at the Cerrado Verde property at this time. All mineral resources 

are classified as inferred. The mineral resource estimates may be influenced by a range of 

factors including environmental, permitting, legal, title, taxation, socio-economic, marketing, 

political and other issues. However, such influences cannot be determined at this time. 

The resource estimate has been classified as inferred mainly due to the low confidence in the 

Bulk Density determinations, data density of distribution and the limited QA/QC program 

provided by Verde. The actual model shows relative homogeneity and is a simple geological 

model. 

Figures 12-11 and 12-12 show the grade and tonnage curve for the high and low domains. 

Validation 

Validation of the grade estimate was completed with a comparative Nearest Neighbor estimation. 

Validation consists of a comparative statistical analysis over inferred results for Weathered and 

Unweathered mineralized intervals. In addition, an interactive visual validation utilizing the drill 

holes and the block model was completed in plan and cross section (Figures 12-13 and 12-14). 

The visual validation of the OK model shows a good correlation, considering the inferred level 

of resource classification, between the blocks estimated and the original samples. 

The use of OK and the simple block model method for determining resource is the accepted 

practice and appears to have been applied correctly in the Coffey resource estimation. The 

caveat is that the underlying database is weak in that the influence of the individual drill holes 

varies across the deposit and in the northern section do not have any east-west component to use 

in the model. This has the result that there is insufficient data, other than geologic inference, to 

construct the blocks in those areas. Given that the deposit appears to be geologically highly 

predictable gives the results some credence, but more drilling should be done and the assay 

values should be inserted into the model before assigning more than low credibility to the 

tonnage and grade inferred by this exercise. 

12.2 Targets 4, 6, 7, 10 and 11 

The resource estimation of the Verdete mineralization from the areas Target-4, Target-6, Target- 

7, Target-10 and Target-11 were performed using the K 2 O values obtained from samples 

collected in drill holes. Information about the initial data is presented in the Table 12.2.1. 






Table 12.2.1: Data Presentation 

Description 

Areas 

Target 4 Target 6 Target 7 Target 10 Target 11 

Diamond drill holes 0 2 3 0 0 

Reverse circulation drillholes 7 22 77 5 9 

Notes of drillholes sampling 197 1043 1894 98 185 

Notes on the drillhole geological database 509 1274 5177 250 447 

K 2 O chemical analyses 187 1023 1765 95 174 

P 2 O 5 chemical analyses 187 1023 1764 95 174 

CaO chemical analyses 185 1016 1737 95 163 

Al 2 O 3 chemical analyses 187 1023 1765 95 174 

Fe 2 O 3 chemical analyses 187 1023 1765 95 174 

SiO 2 chemical analyses 187 1023 1765 95 174 

MgO chemical analyses 186 1023 1765 95 174 

TiO 2 chemical analyses 187 1023 1765 95 174 

MnO chemical analyses 187 1023 1765 95 174 

Na 2 O chemical analyses 143 767 1765 88 129 

LOI chemical analyses 187 1023 1765 95 174 

Density analyses SGS GEOSOL 0 10 15 0 0 

Density analyses VERDE 0 14 56 0 0 

The methodology used to evaluate the resources included several routine phases of computer 

manuals works. It was necessary to refine the geological interpretation of the mineralized bodies 

and create three-dimensional wireframe models. Then the topographic digital terrain model 

(DTM) was imported. After this stage, was built a block model for the interpreted mineralized 

body, creating blocks with size of 50 m (X) by 50 m (Y) by 10 m (Z), and refines them into subblocks 

with smaller size, 5 m (X) by 5 m (Y) by 1 m (Z). 

As the main interpolation method for the mineralized body block model of the area Target 6, was 

adopted the Kriging method. For the other targets was used the method Inverse Distance 

Weighting (IDW) with power 2. The block model with the interpolated grades was used to 

evaluate the resources of the Verdete deposit. 

Software used: MICROMINE (12.0.4). 

Using this software was performed the formatting and verification of all data, the construction of 

wireframe and block models, and the data preparation for the final report. 

12.2.1 Statistical Analyses of Geological Exploration 

This report used a classical statistical analysis to perform the following tasks: 

 

 

 

Evaluate the need of separate populations to K 2 O grades, if exist more than one 

population; 

Evaluate the effect of populations mixing; 

Determine the grade distribution. 

Initially, the statistical analysis was performed for all drilling samples, not grouped, for the K 2 O 

element for the entire data. Then, was performed a statistical analysis for the samples that are 

part of the selected mineralization area. A statistical analysis of the samples length determined 






that the optimal composed sample size was 1m. After that a statistical analysis was performed 

again for the samples grouped into 1m (composite). The results of the statistical analysis are 

shown in Table 12.2.1.1 to 12.2.1.5. 

Determine a cutoff grade for interpretation was not the purpose of this statistical analysis. 

Table 12.2.1.1: Descriptive Statistics Data for K 2 O of Target 4 

Samples 

Quantity Minimum Maximum Mean Median Variance 

Standard 

Deviation 

Element 

All samples 

K 2 O 187 0.94 11.2 8.44 9.10 3.82 1.95 

Samples inside the mineralized bodies 

K 2 O 153 5.27 11.20 9.13 9.47 1.33 1.15 

Samples composited inside the mineralized bodies 

K 2 O 153 5.27 11.20 9.13 9.47 1.33 1.15 

Table 12.2.1.2: Descriptive Statistics Data for K 2 O of the Target 

Samples 


Standard 

Deviation 

Element 

All samples 

K 2 O 1023 2.67 11.40 7.12 7.18 4.46 2.11 


K 2 O 720 4.11 11.40 8.14 8.12 2.54 1.59 


K 2 O 808 4.11 11.40 8.22 8.15 2.53 1.59 

Table 12.2.1.3: Descriptive Statistics Data for K 2 O of the Target 7 

Samples 


Standard 

Deviation 

Element 

All samples 

K 2 O 1765 1.03 11.80 8.72 9.05 4.35 2.08 


K 2 O 1501 1.03 11.80 9.30 9.53 2.57 1.60 


K 2 O 1547 1.03 11.80 9.29 9.52 2.56 1.60 

Table 12.2.1.4: Descriptive Statistics Data for K 2 O of the Target 10 

Samples 


Standard 

Deviation 

Element 

All samples 

K 2 O 95 4.30 11.60 9.58 10.60 3.99 2.00 


K 2 O 93 4.30 11.60 9.65 10.60 3.86 1.97 


K 2 O 107 4.30 11.60 9.76 10.76 3.57 1.89 






Table 12.2.1.5: Descriptive Statistics Data for K2O of the Target 11 

Samples 


Standard 

Deviation 

Element 

All samples 

K 2 O 174 3.77 11.40 7.68 7.59 3.27 1.81 


K 2 O 124 5.35 11.40 8.46 8.21 1.96 1.40 


K 2 O 124 5.35 11.40 8.46 8.21 1.96 1.40 

12.2.2 Interpretation 

In the mineralized domains interpretation were used the drillhole data and the geologic mapping 

data. The drillhole grid in the area is characterized by irregularities. In the deposit interpretation 

was used the Top and Base Grid method. The Kriging method was chosen for the Grid 

interpolation for the Target 6; and IDW with power 2 was chosen for the others areas. The 

modeled semi-variograms for the body top and base are represented in the Figures 12-15 and 12- 

16. 

Then the Grids were transformed in Digital Terrain Model (DTM). This method was chosen 

because the body is sub-horizontal, Figure 12-19. 

Interpreting the geologic limits of the mineralized bodies the interpretation was performed on the 

half of the distance of the exploration grid of each area keeping the mineralized body thickness. 

In the mineralized bodies interpretation the following conditions were used: 

The interpretation was performed to the K 2 O; 

Some low grades were selectively included in the mineralization, when the grade data 

logically were part of the mineralization body; 

The interpretation was performed up to the half of the distance of the exploration grid. 

For the Target 6 and Target 7 the mineralized body was divided in two areas: oxidized and fresh. 

In the data interpreting the geological description of the holes were used for the construction of 

the grid. Similar interpolation parameters to those used in the construction of top and bottom of 

the mineralization areas were used. 

12.2.3 Triangulation 

The *.shp data files (that represent the topographic surface SRTM of the deposit area with 5m 

contours) were used in the construction of the topographic digital terrain model (DTM). The file 

was imported to the Micromine system, interconnected and then, using the obtained contours, the 

topographic surface was constructed. 

To build the mineralization body solid were used Boolean operations. At the beginning was built 

a solid (“box”) inside the mapped geologic limits of the mineralization zone. Then, this box was 

cut by base and top surfaces and by the topographic surface. As result, we get the exact solid of 

the mineralization body. 






12.2.4 Data Selection 

The drillhole data selection is a standard procedure of certification. It is essential that, in the 

classic statistical analysis, geostatistics and in the grades interpolation process, are used the 

correct samples. To the selection of the drillhole samples were used solids of the element to be 

analyzed. 

Analyzing the collected samples to each target is noted that for the Target 6 the majority samples 

have a length of 1 m, and to the other targets the majority has 2 m length. To use the same 

methodology to all the targets was assumed a 1 m length samples for the composites. The 

creation process of the composed intervals began on the drillhole collar continuing on the 

perforation way (down). 

The samples with high and low K 2 O grades were divided into composed samples of 1 m. Then, 

files of the composed samples were encoded by the mineralization body solid. To each 

composed interval was assigned a value in the field ORE, being ORE=1 if the composed interval 

is inside the mineralized body solid, and ORE=0 if not. 

12.2.5 Modeling 

The blocks models were created in order to intersect the tridimensional solids and represent then, 

in defined dimensioned blocks. The blocks parameters are listed below, Table 12.2.5.1. 

The block model process of the solid includes the sub-blocks process. Initially, the model was 

filled with blocks of 50(X), 50(Y) and 10(Z) meters, that were divided into smaller subunits, 

with a factor for the subdivision of 10, at the contact with the three-dimension solid that limit 

them. 

As result, at the limit with the solid, the size of the blocks became 5(X), 5(Y) and 1(Z) meters. 

The initial size of the blocks was chosen based on the morphology of the mineralized bodies and 

the dimension of the exploration grid (1/4 of the grid). The Model of the Target 4 has 16.786 

blocks, Target 6 has 28.037 blocks, Target 7 has 193.382 blocks, Target 10 has 10.114 blocks 

and Target 11 has 23.889 blocks. 

The solid was used to create a block model inside the geologic mineralized body. This solid was 

used to encode this blocks. The digital model of the topographic surface was used to limit the 

block models by the vertical axis. 






Table 12.2.5.1: Block Models Parameters 

Target 

Target 4 

Target 6 

Target 7 

Target 10 

Target 11 

Extension (m) 

Block Models 

Block size Sub-block minimum Number of 

Minimum Maximum 

Directions 

(m) 

size (m) primaries blocks 

East 387000 390000 50 5 61 

North 7855000 7859000 50 5 81 

RL 750 1100 10 1 36 

East 390000 392000 50 5 41 

North 7856000 7859000 50 5 61 

RL 800 1100 10 1 31 

East 403000 409000 50 5 121 

North 7865000 7874000 50 5 181 

RL 750 1000 10 1 25 

East 408500 410500 50 5 41 

North 7873500 7876500 50 5 61 

RL 800 1000 10 1 21 

East 409000 415000 50 5 121 

North 7874000 7879000 50 5 101 

RL 750 1100 10 1 36 

12.2.6 Geostatistical Analysis 

The target chosen to geostatistic study is target 6, because it is relative regularity of the grid 

exploration, amount of data (802 samples), and isometric body shape. Semi Variograms were 

built for this target. For the construction of semi variogram were used the composite samples 

file. 

Cross-validation process was used to check the variogram, showing a low statistical error in data 

interpolation. The results of verification by Cross Validation are presented in Table 12.2.6.1. A 

diagram of linear dependency was also built between the samples file data and the interpolated 

K 2 O obtained by the cross-validation process. Results were satisfactory, presenting a correlation 

coefficient of 0.73 and accuracy of 13.5%. 

Table 12.2.6.1: Cross Validation Verification Results 

Analysis var K 2 0 

Transformation 

None 

Number of points 802 

Mean 

Std Dev 

Raw Data 8.1965 1.5967 

Estimate 8.2081 1.4248 

Standard error 0.82398 0.24225 

Error statistic -0.007620 1.2884 

12.2.7 Grade Estimation and Resources Classification 

To target 6 the element K 2 O was interpolated to the empty block model by the methods Kriging 

and IDW (Inverse Distance Weighted). 






For the mineralization in question the IDW method was used with the search ellipse defined by 

the axis of the geostatistical analysis. Was used the ellipse divided into four sectors. The search 

radius were determined by semi variogram models. The parameters of the search ellipse radius 

are presented in Table 12.2.7.1. 

Table 12.2.7.1: Search Ellipse Parameters to Interpolate the Grades by the IDW And 

Kriging Methods of Target 6 

Radius Azimuth Factor Dip Factor Thickness Factor Min. Points by Sector Min. Count Fields 

0.6667 324 222 30 3 2 

1 324 222 30 2 2 

2 324 222 30 2 1 

3 324 222 30 1 1 

4 324 222 30 1 1 

100 324 222 30 1 1 

After comparing the results of Kriging interpolation and IDW2 methods for target Target 6 

(Table 12.2.9.1), it was decided to use IDW2 as the main interpolation method for the other 

bodies. Search ellipse parameters used to interpolate the grades for the other targets are shown 

in Table 12.2.7.2. 

Table 12.2.7.2: Ellipse Search Parameters Used to Interpolate the Grades by the IDW 

Method for Target 4, 7, 10 and 11 

Radius Azimuth Factor Dip Factor Thickness Factor Min. Points by Sector Min. Count Fields 

0.6667 150 100 15 3 2 

1 150 100 15 2 2 

2 150 100 15 2 2 

3 150 100 15 1 1 

4 150 100 15 1 1 

100 150 100 15 1 1 

The blocks for each zone of the mineralization were interpolated using only composite samples 

belonging to the corresponding part of the body. During the interpolation process was used the 

discretization process for each block, using a factor 4 for the X and Y axis, and a factor 2 for Z 

axis. This makes it possible to evaluate each block in four positions and assign to the center of 

the block the average of these values. This increases the accuracy of estimating the grade of 

each block. 

The constraints presented by each ellipse search sector were: the maximum number of points in 

the sector - 5 and the minimum point total for the interpolation, which varied depending on the 

size of the ellipse (from 3 to 1). Thus, the maximum total number of samples involved in the 

interpolation was 20. 

In the resources classification was used some parameters, as: the ellipse search radius (based on 

geostatistical studies), the kriging variance and the minimum drillhole number used in the block 

interpolation. In the resources classification of Target 6, inferred and indicated resources have 

been allocated. For the indicated resource was allocated blocks interpolated by the first and 

second search ellipses, with kriging variance less than 2, drillhole grid in the area about 200 by 

200 m, and used in the samples interpolation at least two different drillholes. 






For indicated resource in Target 7 was allocated blocks interpolated by the first three search 

ellipses, with a drillhole grid about 300 by 300 m and with outcrops sampling approximately 100 

by 100 m. 

12.2.8 Assignment of Density Values to the Block Model 

The density value was allocated directly for each block of the block model. The value of 

1.49t/m 3 was allocated to the oxidized Verdete blocks, and the value of 2.11t/m 3 was allocated to 

the fresh Verdete blocks. 

12.2.9 Block Model Validation 

The block model with grades interpolated was submitted to a visual and statistics check. 

Histograms and probability plots were constructed to the interpolated grades. Then, the 

interpolated grades were compared with the same histograms and probability plots of the 

composite samples. Histograms and graphics of the interpolated grades and composite samples 

were similar, which confirmed the validity and consistency of the block model built. 

In addition, the grades interpolated were displayed and compared with the grades of the drillhole 

samples. This comparison show an approximate relation, indicating the accuracy of the block 

model built. Thus, several sections were built showing the grades of the block model and 

drillholes of Target 6. 

The average grade of the model was compared with the average grade of the drillhole samples. 

Comparing the IDW with power 2 and the kriging methods to the Target 6, was verified a 

relative difference of 1.09% between them, as shown in Table 12.2.9.1. 

A data comparison was made between a polygonal provisional estimate by the weighting 

"intervals" method and the data obtained by the Kriging and IPD2 interpolation method. These 

comparisons are presented in Table 12.2.9.2. The difference between the average K 2 O grades 

and of metal tones in relative percentage is approximately 1.26%, which also confirms the good 

convergence and high reliability of the block model data. The 0.03% difference between the 

volumes of solids and the block model are due to the use of different methods of limitations, 

since the block model was constrained by the method of contour. 

Table 12.2.9.1: Comparison of metal tones and average K2O grade of the model, obtained 

by kriging and IDW2 methods to Target 6 

Relative difference Relative difference 

Tonnes KRIG Tonnes IDW2 KRIG IDW2 

KRIG – IDW2 KRIG – IDW2 

Cut Off 

Mt 

Mt K 2 O K 2 O 

K 

% % 

2 O 

Tonnes 

Relative % Relative % 

6 95.9 94.87 8.2796 8.3695 1.09 1.07 






Table 12.2.9.2: Comparison of metal tonnes and average K2O grades, obtained by the 

Kriging method, the target to target 6 and by IDW2 for other targets, and polygonal solids 

evaluate by the "weighting intervals" method 

Targets Type Volume Mm 3 K 2 O % 

Solid 36.16 9.14 

Target 4 

Block Model (IDW2) 36.17 9.15 

Relative difference in % 0.03769 0.13 

Solid 47.27 8.22 

Target 6 

Block Model (KRIG) 47.26 8.26 


Solid 484.83 9.30 

Target 7 



Solid 14.62 9.76 

Target 10 



Solid 27.56 8.44 

Target 11 



12.2.10 Resources Evaluation Results 

The resources evaluation results based on the Verdete block model, with Cut Off 7.5% of K 2 O, 

are presented in Table 12.2.10.1 through 12.2.10.3. 

Table 12.2.10.1: Grade Tonnage Report for Target 6. Inverse Distance Weighting with 

power two (IDW2) estimate (Block Model - 50mE X 50mN X 10mRL) 7.5% K 2 O cut off 

utilized 

Cut Off K 2 O% Class Type Density (t/m3) Tonnes (Mt) K 2 O (%) 

Fresh 2.11 20.37 8.83 

Indicated Weathered 1.49 2.88 8.85 

Total 2.01 23.25 8.83 

7.5 

Fresh 2.11 43.98 8.84 

Inferred 

Weathered 1.49 3.87 8.89 

Total 2.04 47.85 8.84 

Total 2.03 71.10 8.84 






Table 12.2.10.2: Grade Tonnage Report for Target 7. Inverse Distance Weighting with 

power two (IDW2) estimate (Block Model - 50mE X 50mN X 10mRL) 7.5% K2O cut off 

utilized 

Cut Off K2O% Class Type Density (t/m3) Tonnes (Mt) K 2 O (%) 

Fresh 2.11 50.64 9.39 

Indicated Weathered 1.40 0.14 8.80 

Total 2.11 50.79 9.39 

7.5 

Fresh 2.11 857.42 9.45 

Inferred Weathered 1.49 16.16 9.29 

Total 2.09 873.59 9.45 

Total 2.09 924.37 9.44 

Table 12.2.10.3: Grade Tonnage Report for Target 4, Target 10 and Target 11. Inverse 

Distance Weighting with power two (IDW2) estimate (Block Model - 50mE X 50mN X 

10mRL) 7.5% K2O cut off utilized 

Target Cut Off K 2 O% Class Density (t/m 3) Tonnes (Mt) K 2 O (%) 

Target 4 7.5 

Inferred 2.11 74.43 9.20 

Total 2.11 74.43 9.20 

Target 10 7.5 

Inferred 2.11 28.50 10.10 

Total 2.11 28.50 10.10 

Target 11 7.5 

Inferred 2.11 46.79 8.27 

Total 2.11 46.79 8.27 

12.3 Mineral Resource Estimate 

The Mineral Resource statement is presented in Table 12.3.1. The resource estimate has been 

undertaken in compliance with accepted CIM definitions for indicated and inferred resources in 


Table 12.3.1: Grade Tonnage Report Cerrado Verde Potash Project 

Target Cutoff grade (%K 2 O) Tonnage (Mt) Average Grade (% K 2 O) 

Indicated 

Target 6 7.5 23.25 8.83 

Target 7 7.5 50.79 9.39 

Total Indicated 7.5 74.04 9.22 

Inferred 

Target 4 7.5 74.43 9.20 

Target 6 7.5 47.85 8.84 

Target 7 7.5 873.59 9.45 

Target 10 7.5 28.50 10.10 

Target 11 7.5 46.79 8.27 

Funchal Norte 10 64.39 11.17 

Total Inferred 7.64 1,135.55 9.47 

Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. 

Inverse Distance Weighting with power two (IDW2) estimate (Block Model - 50mE X 50mN X 10mRL) 7.5% K2O cut off utilized. 

Effective date of Targets 4, 6, 7, 10 and 11 is August 3, 2011. 

Effective date of Funchal Norte is March 3, 2011. 





Vertical Sections Location 


File Name: Figure_12-1 Date: 09/15/2011 Approved: BS Figure: 12-1



Cross Section (Section 4) 





Cross Section (Section 5) 


File Name: Figure 12-3 Date: 09/15/2011 Approved: BS Figure: 12-3



Weathered (Transition Zone) 

Domain – 3 Dimensions 





Unweathered Domain – 3 

Dimensions 





Sample Length Distribution 






Basic Statistics – 2m Composite 

Unweathered K 2 O 





Basic Statistics – 2m Composite 

Weathered K 2 O 





K 2 O% Estimation Steps – Plan 

View 





Block Model Domains High and 

Weathered 





Grade Tonnage Curve – Domain 

Unweathered – Inferred Resource 





Grade Tonnage Curve - 

Weathered – Inferred Resource 





Comparative Statistics 

Unweathered % K 2 O 





Comparative Statistics % K 2 O 

Weathered 





Modeled semi-variogram of the 

top grid 





Modeled Semi-variogram 

of the Base Grid 





Geologic interpretation of the 

Top and Base surfaces (Kriging 

method) 





Geologic interpretation of the Top 

and Base surfaces of the Target 7 

(IDW method with Power 2) 





Target 6: Mineralized body 

divided in oxidized (red) and 

fresh (green) areas 












Search Ellipse (radius 1) to 

Interpolate the Grades by the IDW 

and Kriging Methods to Target 6 





Search Ellipse (radius 2) to 

Interpolate the Grades by the IDW 

Method for Target 4, 7, 10 and 11, 

and the Ore Body of the Target 7 





Histogram and Probability Plot of the K 2 O 

Distribution of the Composite Samples 

(left) and the Block Model Interpolated by 

the IDW2 Method (right) of the Target 6. 





Histogram and Probability Plot of the K 2 O 

Distribution of the Composite Samples 

(left) and the Block Model Interpolated by 

the IDW2 Method (right) of the Target 7 












Comparison of K2O Grades in the 

Samples and Blocks, Interpolated by 

the Kriging Method, of the Target 6 





13 

Mining Methods (Item 16) 

This report is preliminary in nature, it includes inferred mineral resources that are considered too 




will be realized. Additional core drilling and assaying, with adequate QA/QC, is needed to bring 

this property to a level where a reliable resource can be used to do the next stage of Economic 

Assessment. 

13.1 Mining Operations 

Mining operations at Cerrado Verde will consist of small mining equipment liberating potentially 

minable resources hosted in gently undulating topography over a wide surface extent. 

It is expected that mining will be conducted by a local 3rd party mining contractors with Verde 

staff acting as mine owners. Initial static costing for mining operations is based on a 

combination of excavator’s, support equipment and 20t haul trucks. 

Resource grades vary physically from an Unweathered zone on the western extent to a lower 

grade zone in the east. The grade distribution suggests two pits and multiple working faces can 

be open at all times for blending purposes feeding the process plant at a consistent 8.5% K 2 O. 

Two production scenarios were considered by SRK whereby 1.1Mtpa and alternately 2.2Mtpa of 

product would be produced annually. SRK conducted a pit optimization, pit design and 

production schedules to independently test the assumptions made in mine costing and reported in 

the economic model. 

13.1.1 Pit Optimization 

Pit optimization was carried out on the Cerrado Verde deposit using Whittle v4.3 pit 

optimization software in conjunction with Maptek’s Vulcan (v8) general-purpose mine 

planning package. 

This PEA includes the inferred mineral resources that are considered too speculative geologically 

to have the economic considerations applied to them that would enable them to be categorized as 

mineral reserves. There is no certainty that the preliminary assessment will ever be realized. 

Mineral resources that are not mineral reserves do not have demonstrated economic viability. 

13.1.2 Whittle Parameters 

Table13.1.2.1 illustrates the parameters and dimensions of the Vulcan block model exported to 

Whittle for pit optimization. 






Table 13.1.2.1: Whittle Block Model Dimensions 

Whittle Parameter Type Value 

Base Units 

Inferred Unit Product Tonnes 

Block Model Dimensions 

Geological 

X 100 

Y 100 

Z 10 

No. X 20 

No. Y 35 

No. Z 45 

Slope 

Bearing 

Slope Angle 

All Walls 0 45 

As part of the preliminary analysis of the Cerro Verde deposit, Verde will evaluate the cost 

benefit analysis of building a 1.1Mpta versus 2.2mpta process plant. Due to changes in market 

conditions, economies of scale and operating costs based on production, SRK performed a 

Whittle analysis of both operating conditions. These parameters are detailed in Table 13.1.2.2. 

Recoveries used in the pit optimization represent the mass yield of plant feed to product 

produced. 

The Whittle parameters are estimated before the final economic model is constructed and may 

require further iterations in the future. 






Table 13.1.2.2: Whittle Parameters 

Whittle Parameter Type Value 

Mining Cost 

Price Reference Mining Cost 2 

Mining Recovery Fraction 1 

Mining Dilution Factor 1 

Processing Cost 1.1 Mt 

Rock Type Process Name PRCS 

Rocktype 1 

HG 

Rocktype 2 

LG 

Process Cost ($/ore.t) Ore Selection Method Cash Flow 

Process Cost (1.1 Mtpa) 41.8 

Process Cost (2.2 Mtpa) 36.4 

Recoveries Mass Product Recovery (HG) 0.83 

Mass Product Recovery (LG) 0.83 

Revenue and Selling Cost 

Product 

unit 

Product Price (1.1 Mtpa) 

$151.82/prod.t 

Product Price (2.2 Mtpa) 

$133.23/prod.t 

Optimization 

Revenue factor range 

0.01-.99 50 factors 

Operational Scenario - Time Costs 

(Really sustaining) Initial Capital Cost (1.1 Mtpa) $ 197,000,000 

Initial Capital Cost (2.2 Mtpa) $ 269,000,000 

Discount Rate Per period 10 

Operational Scenario – Limits 

Mining Limit 

na 

Processing Method Limit (1.1 Mtpa) 

1,111,968 prod.t 

Processing Method Limit (2.2 Mtpa) 

2,223,158 prod.t 

13.1.3 Pit Optimization Analysis 

The results achieved through the process of pit optimization, indicated that there is minimal 

variability or selectivity for mining related decisions within the orebody block model at this time 

(2010). Given the size of block (100mx100mx10m), consistent strip ratio and profitability each 

block model block contains (using input parameters), the Whittle analysis is better suited as an 

independent check on production rate, mine life and NPV (Table 13.1.3.1). 






Table 13.1.3.1: Whittle Results 

Production Rate Units 1.1 Mtpa 2.2 Mtpa 

Potentially Mineable Resources t 152,411,794 152,411,794 

Waste t 46,206,355 46,206,355 

SR w:o 0.30 0.30 

Product Tonnes t 126,501,784 126,501,784 

Initial Capital US$ 197,000,000 269,000,000 

Sales Price US$ 152 133 

NPV US$ 881,992,227 1,647,723,559 

Life yr 137 57 

Payback yr 1.82 1.41 

IRR % 54 71 

*This PEA includes the inferred mineral resources that are considered too speculative geologically to have the economic considerations applied 

to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary assessment will ever be realized. 

Mineral resources that are not mineral reserves do not have demonstrated economic viability 

It must be stressed that the results reported in Table 13.1.3.1 are for comparative purposes to 

check effect of production rate. If compared to the economic model, the NPV number will vary 

considerably given lack of taxes, duties, depreciation and other miscellaneous expenses. The 

mine life achieved for both cases re-enforce that resource inventory for feed stock is not a 

limiting factor for the potential operation. 

13.1.4 Pit Design 

Pit designs for the Cerrado Verde deposit were constructed using Vulcan 8 general-purpose 

mine planning package. The final pit design used was based on pit optimization results as a 

guide for toe and crest location. No Ramps were added given the preliminary nature of the block 

model and because the majority of the resource daylights within current valley systems on site. 

Pit Dimensions 

SRK used default pit parameters illustrated in Table 13.1.4.1. 

Table 13.1.4.1: Pit Design Parameters 

Dump Parameter 

Value 

Batter/Bench Face Angle 64º 

Berm Width 2.5m 

Bench Height 

5m 

Overall Slope 45º 

SRK constructed three pit designs representing three phases used in construction of a preliminary 

production schedule. Figure 13-1 illustrates the final pit design layout and tonnage basis for the 

production schedule. 

SRK did not construct any form of dump design. Given the low stripping ratio and abundance of 

land that waste can be placed, SRK does not consider creating a waste dump design material for 

the project at this stage. 






13.1.5 Production Schedule 

SRK produced a mine production schedule based on the resource block model and phased pit 

design. Using a target rate of either 1.1 or 2.2Mt of produced product, the RoM tonnage and 

variable stripping ratio of the deposit was calculated for each case. A simple pancake extraction 

method of benches within each phase made up the mining sequence. 

As the mine life was so extensive, the first 10 years of the production schedule for the 1.1 and 

2.2Mpta cases have been illustrated in Tables 13.1.5.1 and 13.1.5.2 respectively. 

Table 13.1.5.1: First 10 Years of 1.1Mtpa Production Schedule 

Period 1 2 3 4 5 6 7 8 9 10 

Target Tpd 3,940 3,940 3,940 3,940 3,940 3,940 3,940 3,940 3,940 3,940 

Target 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 

Accumulation 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 

Accumulated Grade 8.66 9.00 8.74 8.62 8.65 8.86 8.86 9.38 8.61 8.80 

TargetGradeK 2 0 8.50 8.50 8.50 8.50 8.50 8.50 8.50 8.50 8.50 8.50 

Stripping Ratio 2.43 1.20 0.63 0.66 0.75 0.65 0.65 0.46 0.32 0.35 

Total Tpd 13,530 8,674 6,415 6,524 6,911 6,489 6,489 5,759 5,217 5,327 

BK 2 O 8.66 9.00 8.74 8.62 8.65 8.86 8.86 9.38 8.61 8.80 

BK 2 O_MASS 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 1,339,720 

TOTAL_MASS 4,600,230 2,949,073 2,181,106 2,218,264 2,349,726 2,206,411 2,206,411 1,957,952 1,773,900 1,811,074 

HGBK 2 O 10.32 10.76 10.69 10.61 10.61 10.89 10.89 10.89 10.89 10.85 

HGBK 2 O_MASS 895,600 847,423 718,432 695,448 695,448 709,445 709,445 851,334 558,060 629,961 

HGTOTAL_MASS 895,600 847,423 718,432 695,448 695,448 709,445 709,445 851,334 558,060 629,961 

WASTETOTAL_VOLUME 1,212,085 598,272 312,783 326,596 375,467 322,190 322,190 229,826 161,405 175,224 

WASTETOTAL_MASS 3,260,510 1,609,353 841,385 878,543 1,010,005 866,690 866,690 618,231 434,180 471,353 

LGBK 2 O 5.33 5.97 6.48 6.48 6.53 6.57 6.57 6.75 6.98 6.98 

LGBK 2 O_MASS 444,121 492,298 621,289 644,273 644,273 630,276 630,276 488,387 781,660 709,760 

LGTOTAL_MASS 444,121 492,298 621,289 644,273 644,273 630,276 630,276 488,387 781,660 709,760 









Table 13.1.5.2: First 10 Years of 2.2Mtpa Production Schedule 

Period 1 2 3 4 5 6 7 8 9 10 

Target Tpd 7,878 7,878 7,878 7,878 7,878 7,878 7,878 7,878 7,878 7,878 

Target 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 

Accumulation 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 

Accumulated Grade 9.47 9.12 8.83 8.86 9.17 9.08 9.92 9.78 9.32 9.24 

TargetGradeK 2 0 8.50 8.50 8.50 8.50 8.50 8.50 8.50 8.50 8.50 8.50 

Stripping Ratio 1.67 0.79 0.51 0.65 0.45 0.36 0.28 0.28 0.36 0.40 

Total Tpd 21,042 14,133 11,900 12,973 11,414 10,683 10,106 10,091 10,716 11,044 

BK 2 O 9.47 9.12 8.83 8.86 9.17 9.08 9.92 9.78 9.32 9.24 

BK 2 O_MASS 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 2,678,504 

TOTAL_MASS 7,154,331 4,805,259 4,045,860 4,410,934 3,880,893 3,632,330 3,436,012 3,430,840 3,643,504 3,755,079 

HGBK 2 O 10.57 10.61 10.89 10.89 10.85 10.85 10.91 10.91 10.92 10.92 

HGBK 2 O_MASS 2,113,730 1,738,619 1,418,890 1,418,890 1,551,163 1,453,635 2,003,330 1,905,802 1,587,025 1,521,407 

HGTOTAL_MASS 2,113,730 1,738,619 1,418,890 1,418,890 1,551,163 1,453,635 2,003,330 1,905,802 1,587,025 1,521,407 

WASTETOTAL_VOLUME 1,663,876 790,615 508,311 644,026 446,985 354,582 281,601 279,679 358,736 400,214 

WASTETOTAL_MASS 4,475,827 2,126,755 1,367,356 1,732,430 1,202,389 953,826 757,508 752,336 964,999 1,076,575 

LGBK 2 O 5.33 6.36 6.50 6.57 6.85 6.98 6.98 6.98 7.00 7.02 

LGBK 2 O_MASS 564,774 939,885 1,259,614 1,259,614 1,127,341 1,224,869 675,174 772,702 1,091,479 1,157,097 

LGTOTAL_MASS 564,774 939,885 1,259,614 1,259,614 1,127,341 1,224,869 675,174 772,702 1,091,479 1,157,097 




Given the limited amount of drill hole information for such a large resource, the development of 

a specific mine fleet is somewhat premature. For the purposes of this report, standard operating 

procedures, costing and equipment sizing for a deposit of this nature has been considered. 

Mining will consist of clear and grubbing, waste stripping and extraction of potential resource; 

using front-end-loaders suitable for 20t highway trucks. The need for drill and blast operations 

has not been considered at this stage. 

Verde has indicated that a mine contractor will be employed to haul mineralized material from 

the mine face to the process plant facility. ECM has suggested a static mining cost per year. 

This static cost has been estimated over the SRK production schedule to determine a reference 

mining cost for comparison purposes. 

Along with a suggested mining fleet the total annual cost is detailed in Tables 13.1.5.3 and 

13.1.5.4. 

Table 13.1.5.3: 1.1Mtpa Product Mine Fleet and Annual Estimated Cost 

Equipment Model Amount Operating Costs (US$/year 000’s) 

Truck Scania 420 4 1,340 

Track Excavators R964 2 1,390 

Tractor D9-T 2 1,005 

Motor Grader 16G 1 251 

Truck Scania 40t 2 558 

Wheel Loaders 980G 2 894 

Mitsubishi L200 2 107 

Truck M.Benz 1315C/48 1 102 

Truck M.Benz/Lubrication 1315C/48 1 102 

Water Truck Scania 40t 2 371 

Total $6,120 

Source: ECM S/A Projectos Industrias, 623-01-0000-N-H25-0102, 2010 






SRK is of the opinion that this cost is conservative when applied over 1.3Mtpa of RoM 

production at a strip ratio of 0.4 (for the 1.1Mtpa base case). Over the life of the mine this would 

equate to a mining cost of approximately $3.3/t moved. 

Table 13.1.5.4: 2.2Mtpa Product Mine Fleet and Annual Estimated Cost 

Equipment Model Amount Operating Costs (US$/year 000’s) 

Truck Scania 420 6 2,010 

Track Excavators R964 3 2,085 

Tractor D9-T 3 1,508 

Motor Grader 16G 1 251 

Truck Escânia 40t 2 558 

Wheel Loaders 980G 2 894 

Mitsubishi L200 2 107 

Truck M.Benz 1315C/48 1 102 

Truck M.Benz/Lubrication 1315C/48 1 102 

Water Truck Escânia 40t 2 371 

Total $7,988 

Source: ECM S/A Projectos Industrias, 623-01-0000-N-H25-0104, 2010 

SRK is of the opinion that this cost is conservative when applied over 2.6Mtpa of RoM 

production at a strip ratio of 0.4 (for the 2.2Mtpa base case). Over the life of the mine this would 

equate to a mining cost of approximately $2.5/t moved. While closer to expected contract rates 

in Brazil, but this is still quite expensive. 

13.1.6 Recovery 

Verdete deposits owned by Verde are essential outcropping, leading to a very low stripping ratio. 

In the scoping study, a stripping ratio of 0.1:1 was assumed, and open pit operation is being 

foreseen. 

Researches were carried out to determine an Unweathered Verdete area close to which plant site 

will be erected. 

During ThermoPotash processing, all the run-of-mine is supposed to be used for grinding the raw 

meal to heat treatment. Intensive quality control during processing ensures. Therefore, losses of 

RoM Verdete are not expected. 

In all pellet handling steps, dust is expected to be generated due to superficial friction. The dust 

is to be collected and sent to raw preparation area for recycling. 

As a result of this, recoverability is assumed to be in the range of 90 to 100%. 



*Map image not to scale. For illustrative purposes only. 



Preliminary Pit Design 






14 

Project Infrastructure (Item 18) 

14.1 Access Road and Transportation 

The principal access to the property are; the BR-262 and BR-354, MG-235. Primary access is by 

gravel roads that connect the farming region. The road upgrade costs are imbedded within the 

mine capital and operating costs. 

14.2 Power Supply 

Sections 14.2, 14.3, 14.3.1, and 14.7 have been extracted from the ECM, 2010 report. 

Cerrado Verde Project at São Gotardo is scheduled to be powered by CEMIG 138kV system, 

connected through an exclusive transmission line 23km long, from a substation close to the town 

of São Gotardo. 

In electrical terms the development of the beneficiation shall be considered middle size, with an 

estimated demand of around 25MW similar to a small town such as the São Gotardo and the 

surrounding places. 

The configuration set for the factory system, has the main 138kV receiving substation, lowers to 

13.8kV and distributes to the substations that will serve each of the main project areas. 

It is observed that over 70% of the demand will be concentrated in three areas, grinding, 

calcination kiln, and pellets quenching systems and as a result, the location of the main 

substation shall be as close to the grinding and regrinding substations. 

For the main substation two 138-13.8kV transformers are provided with 25/40MVA estimated 

power, with the load distributed between both, and if one of them fails to work, the other 

remaining transformer shall still supply the total demand at the forced ventilation stage. 

According to CEMIG (governmental electrical energy agency) regulations harmonic 

compensation and power factor systems shall be forecasted so that the operational performance 

of large equipment/heavy loads do not affect the basic system network and other consumers. 

From the main substation power will be distributed to area substations through 13.8kV feeders, 

by means of radial-type simple system, and according to the need cable racks may be used for 

beneficiation, aerial lines for distant facilities and piping network at the operational and 

administrative support areas or where for safety reasons the use of aerial systems is not possible. 

The area substation will be constructed in its majority at masonry buildings, and there will be a 

few armored substations, housing all the electrical equipment to receive power at 13.8kV, lowers 

it and feed all the electrical charges of the area (s) and / or buildings served by it. 

To meet the equipment electrical supply that cannot stop operating in case of electrical failure, 

emergency power supply system is provided with diesel generator and an automatic generator 

group, mainly targeting the auxiliary grinding systems, some pumps, a compressor for pneumatic 

conveying, for emergency lighting and the noble parts of the supervision, control and 

communication systems. 






14.3 Water Supply 

Essentially, the water system that serves the beneficiation shall be divided into the following 

parts: 

Process Water - is part of raw water intended for industrial use, which will be stocked at 

the reservoir located on the site highest plateau, next to the raw water reservoir and then 

distributed as make up water for burnt pellets quenching system at the cooling tower 

tank, to process route consumption, for services and general cleaning, including the 

central maintenance workshop; and 

Raw Water - is the new water which intake will be performed from Indaiá River and 

stored at a tank; the intake from the river will be at dry well, with horizontal pumps, sand 

filter box and is located approximately 9km from the raw water reservoir. The raw water 

will be used for the following purposes: 

For pumps sealing; 

For pellets quenching system make up; 

For circulating at the heat exchangers of equipment refrigeration systems; 

For dust removing systems; 

For pelletizing; 

For fresh water generation by the Water Treatment Station; and 

For firefighting system. 

14.3.1 Rainwater Drainage 

The drainage system shall be designed to comprise all devices designed to intercept, intake and 

dispose of run-offs that flow to the plateaus, terraces, accesses and buildings, leading them to the 

point of final release. 

The plateaus, berms and access designed in different elevations, will be drained and its 

contribution will be sent to a sedimentation basin and damping. 

The embankment stools slopes (cut / landfill) will be cross slope to collect contributions from 

longitudinal discharge and sections with concrete gutters, unloading at water flowing downhill 

sent for intake boxes and sequentially to the drainage system. 

14.3.2 Hydraulic Sizing 

The following criteria and methods shall be considered in establishing the methodology of the 

hydraulic design of the devices: 

Physical characterization of the Area - Location, type of relief, occupation and land 

cover; 

Climate Characterization - climate is classified according to the International System of 

Köppen; 

Studies of heavy rainfall - shall be used Gumbel statistical methods and CETESB rain 

disaggregation; 






 

 

 

 

 

 

 

 

 

Surface runoff studies - comprising the analysis of the physiographic features of the basin 

and its coverage; 

Determination of the Project Flow - shall be developed according to the Rational Method; 

Surface Runoff Coefficient - shall be considered depending on the type of area to be 

drained and surface coverage; 

Concentration Time - shall be calculated using the Kirpich formula; 

Rainfall intensity - shall be calculated for the rainfall post of the region; 

Rainfall Calculation - rain duration (tc) = 2.0 hours shall be adopted; 

Precipitation per square meter - the duration of rain (tc) = 2.0 hours shall be adopted; 

Precipitation per square meter that drains - the runoff coefficient = 0.90 shall be adopted; 

and 

Time Period of Return and Recurrence - (TR) = 10 years. 

14.4 Buildings and Ancillary Facilities 

There are no buildings or other facilities on the property, besides a rented small shelter for field 

activities support in the city of Matutina, and the main office in Brazil in Belo Horizonte. Plant, 

Mill, office, and mine building will be constructed as part of the mine development in the area. 

14.5 Potential Processing Plant Sites 

Among the several possibilities for site location, Verde is considering to install the plant close to 

Matutina, a small town close to the City of Sao Gotardo, which is a local pole. Two sites are 

being considered, Target 7 and Funchal Norte Target. 

14.6 Potential Tailings Storage Area 

Tailings from process are generated due to: 

Inadequate particle size, as the product has to be produced in a 2-4mm diameter range. 

Tailings are those materials which do not comply with such specification, mainly dust 

from pellet handling; and 

Unburned or not sufficiently burned material, produced mainly from flushes during kiln 

operation. 

Both are to be stored in Storage & Reclaiming stockpile, to be reprocessed. Therefore, no tailing 

accumulation or landfilling is foreseen for tailings. The Storage & Reclaiming stockpile area has 

not yet been defined. 

14.7 Potential Waste Disposal Area 

The design criteria adopted for the landfill areas (location not yet defined), shall include the 

implementation of the materials deposit, whether from cuts, or loan, within the limits of design 

sections ("offset") at the project influence areas facilities. 






Confirmation of geotechnical condition will provide evaluation of classification, distribution and 

quantification of material to be selected from the 1st and 2nd categories, with the quality and the 

allocation provided, during elaboration of detailed earthworks design. 

Preliminarily, the following criteria were adopted for the classification, distribution and 

geometry of the landfill slopes, until geotechnical surveys geotechnical surveys campaigns to be 

programmed are carried out: 

Compacted landfills at a minimum 95%: 70%; 

Compacted landfills at a minimum 100%: 30%; 

degree of blistering: 30%; 

Landfill slopes: V=1 / H=1,5; 

Berms balance width: 4.0m, with cross slope of 5% and 0.5% longitudinal; and 

Maximum height between stools: 5.0m. 

The basic design shall present forms for plant restoration, as well as methods of restoration and / 

or protection of exposed areas (slopes, areas of loans, stools, water cuts, gutters, ditches, etc.) as 

per erosion resistance conditions. 

14.8 Manpower 

São Gotardo and Matutina are the closest towns with a significant population to provide 

manpower for a mining operation, having population around 40,000 combined. 

Also, the project is very close to Patos de Minas, main city in Alto Paranaiba area which has 

strong economic, cultural, educational and social environment. 

14.9 Other Surface Rights 

The project is at the exploration phase and surface rights for processing plant site, tailing storage 

and waste disposal areas have yet to be acquired. 






15 

Market Studies and Contracts (Item 19) 

15.1 Market Studies 

15.1.1 Introduction 

The goal of AgroConsult study is to analyze the economic feasibility of using ThermoPotash 

(8% K2O) as a source of potassium for fertilizing activities in the states of Minas Gerais, Mato 

Grosso, Mato Grosso do Sul, São Paulo, Paraná, Goiás and Bahia. 

In order to determine a market potential of ThermoPotash, was conducted a comparative analysis 

of its pricing competitiveness in relation to traditional raw materials. The project looked at 

possible uses for ThermoPotash as a source of potassium in the main NPK formulas most 

commonly used on each crop (soybeans, cotton, sugarcane, summer corn, second crop corn, dry 

rice, irrigated rice, beans, potatoes, coffee, pasture, reforestation, wheat, sorghum and fruit and 

vegetables) in each state. 

Today, Brazil is the world's fourth-largest consumer of fertilizers. In 2009, 22.5Mt of fertilizer 

were used in Brazil and this figure is expected to rise to 23.58 million in 2010. (Source: 2009 

Statistical Yearbook of the Fertilizer Industry from ANDA – Associação Nacional para Difusão 

de Adubos – Nacional Association for Promotion of Fertilizer) Fertilizer application is vital for 

the performance of the farming industry and is likely to remain important for the foreseeable 

future. However, more than half of the fertilizer consumed in Brazil is imported, which 

represents a fundamental weakness for local agribusiness. There is an even greater dependence 

on potash, which is supplied as potassium chloride, more than 90% of which has to be imported. 

Since 2008, the government, the private sector and Brazilian agribusiness leaders have been 

playing closer attention to this issue. There is clear agreement that Brazil needs to reduce its 

dependence on imported fertilizers. To do so, Brazil needs to take two steps: expand raw 

material production and develop new sources of nutrients. 

In this case, introducing ThermoPotash as a new source of potassium on the Brazilian fertilizer 

market is a timely move, in line with government, private sector and producer concerns. 

Was used the forecast data for 2010 fertilizer deliveries estimated at 23.58Mt of product and 3.97 

million K 2 O, 82% of which is consumed as NPK formulas and 18% on its own. Using the same 

information, the states included in this survey represent 76% of the fertilizer market and 76.1% 

of Brazilian K 2 O consumption. 

The following sections will provide information on the Brazilian agribusiness and fertilizer 

markets, the methodology adopted these results by the survey as well as the price and market 

potential for ThermoPotash in each state. 

15.1.2 Methodology 

The goal of this study is to analyze the economic feasibility of using ThermoPotash (8% K 2 O) in 

the main fertilizer formulas marketed in Minas Gerais, Mato Grosso, Mato Grosso do Sul, São 

Paulo, Paraná, Goiás and Bahia. 

To do so, we evaluated the fertilizer markets in the selected regions during 2010 and estimated 

fertilizer delivery volumes by crop and nutrient (N, P e K 2 O). The data was taken from the 

AgroConsult database, which is frequently updated with market information. 






These results from the database were validated by comparing fertilizer volumes, nutrient 

volumes and the average formula with information from the National Association for Fertilizer 

Diffusion – ANDA. Furthermore, we verified that nutrient consumption by crop was compatible 

with estimated or actual productivity. The final results are converted into raw material 

consumption and consolidated figures for Brazil are compared with the supply and demand 

figures. 

Based on this data, after building an optimization model based on linear programming, we 

initially calculated the costs of traditional formulas (not including ThermoPotash) based on the 

best combination (lowest cost) of raw material mixtures best suited to expected productivity 

levels in each region. 

Subsequently, was used the same procedure including ThermoPotash with 8% K 2 O at a price of 

zero to determine the maximum product volume in NPK formulas. Based on the formula 

compositions obtained by the model, we estimated a price for ThermoPotash so that the cost of 

the differentiated formula was identical to the traditional formula. This allows us to calculate the 

average quantity of ThermoPotash per ton of fertilizer and by applying this to the planted area 

for each crop; we were able to estimate potential demand for ThermoPotash in the main fertilizer 

formulas used in each state. 

The raw materials were priced at market value for September/2010, based on an AgroConsult 

survey. In this case, the product cost at each mixing center also took into account domestic 

shipping as well as breakage and inventory costs. The exchange rate used was 1.8 BRL/US 

dollars. 

15.1.3 Determining the Crop Portfolio and Formulas 

The project took into account the fertilizer technology for the following groups of crops: 

 

Major Crops: These crops are present around 97% of the market and include pasture, 

soybeans, summer corn and second crop corn, rice (dry and irrigated), beans (3 types), 

wheat, reforestation, sugarcane, cotton, coffee and potatoes (three crops); and 

Other crops: These crops represent 3% of the market and include bananas, cocoa, grapes, 

avocados, pineapples, ramie, sisal, figs, pears, apples, melons, watermelons, strawberries, 

guava, guaraná, mango, passion fruit, cashew, coconuts, peanuts, other fruits, vegetables 

and fibers, sunflowers, sorghum and tobacco. 

The survey looked at the fertilizer technology adopted in each state based on the fertilizer system 

used. We analyzed the main formulas and dosages used to adequately fertilize in line with 

productivity expectations, for each crop (Table 15.1.3.1). 

In each region, we looked at the six main formulas used for each crop, the proportional 

relationship between the formulas and optimization of each formula in relation to its raw material 

composition. 






Table 15.1.3.1: Example of Fertilizing System Adopted for Each Crop Analyzed 

Cotton Soybean Sugar Cane Corn Corn (Winter) Rice (Dry) Rice (IRR) 

05.20.15 00.20.20 05.25.25 03.16.16 08.16.16 04.20.20 04.20.20 

08.25.15 02.20.18 20.05.20 08.20.20 08.25.15 04.20.15 04.20.15 

05.25.15 00.18.18 14.07.28 08.25.15 12.15.15 04.22.15 05.25.15 

08.28.16 00.20.10 15.05.15 06.30.15 08.20.20 04.25.15 04.25.15 

20.00.20 02.20.10 20.00.20 20.00.20 20.00.20 20.00.20 20.00.20 

36.00.12 00.20.18 36.00.12 36.00.12 36.00.12 36.00.12 36.00.12 

Source: AgroConsult 

15.1.4 Formula Optimization Process 

The optimization model, structured by linear programming, takes into account: 

List of the main raw materials available at mixing centers; 

Raw material nutrient levels; 

Chemical incompatibility between raw materials; 

Nutrient supplies (primary, secondary and micronutrients); 

Lowest cost; and 

Market price system. For nitrogenous fertilizer and potash prices, imported raw materials 

were taken into account. For phosphates, imported and domestic prices for used, given 

the level of supply in the Minas Gerais and Catalão, GO regions. 

The formulas were optimized using the following criteria: 

Conventional formula not including ThermoPotash; 

The same formula using ThermoPotash at zero price, in order to determine the maximum 

volume of the product in the composition; 

A likely end price for ThermoPotash was determined so that the formula including 

ThermoPotash cost the same as the formula without ThermoPotash; and 

We then determined the average dose of ThermoPotash per ton and per crop. 

For raw material prices; the price composition in each mixing center was calculated based on 

raw material cost, transport value and breakage and inventory expenses. As an example, the 

prices from the Uberaba center are shown in Table 15.1.4.1. The exchange rate used was 1.8 

BRL/US dollars. 






Table 15.1.4.1: Price Composition of Raw Materials at the Uberaba Center 

Raw Material Freight Cost at Break Storage 

Blender Raw Material Origin 

Cost (domestic) Factory (%) (%) Total Cost 

UREIA Importada 310.00 51.35 361.35 1.00 0.4 366.42 

SAMGR Importada 209.82 42.11 251.93 1.00 1.6 258.52 

Nitrato de Amonio Fosfertil 506.00 3.46 509.46 0.50 0.4 

Uberaba MAP GR Fosfertil 403.68 3.46 407.14 0.50 0.4 410.81 

TSP GR Fosfertil 247.35 3.46 250.81 0.50 0.4 253.07 

SSP GR BPI - 226.00 3.46 229.46 0.50 0.4 231.53 

Cubatao 

KCL GR Importada 462.80 42.11 504.91 0.50 1.6 515.55 

Source: Survey data 

The N, P and K levels in the raw materials used during optimization are listed in Table 15.1.4.2. 

Table 15.1.4.2: Raw Material Nutrient Levels 

Element SAM Urea NAM Term K SSP STP MAP DAP KCI 

N 20.0% 16.0% 34.5% 0.0% 10.5% 16.0% 

P 20.0% 46,0% 54.0% 45.0% 

K 8.0% 60.0% 


The levels of K 2 O, CaO, SiO 2 , MgO and S, as well as the status of each of the three products 

evaluated are listed in Table 15.1.4.3. 

Table 15.1.4.3: Content Used and Status of Products Evaluated 

Elements 

Content (%) 

Product 01 Product 02 Product 03 

K 2 O 8.00% 8.00% 8.00% 

CaO 30.00% 19.50% 30.00% 

SiO 2 40.00% 32.70% 40.00% 

MgO 2.30% 8.60% 2.30% 

S 10.00% 

Status Product used in the study Product with Ca and Mg 

included in balancing 

Product undergoing 

technological development 


15.1.5 ThermoPotash Pricing Process 

After conducting the optimization process, the model provides us with the demand for 

ThermoPotash and the product price, so that the differentiated formula costs the same as the 

traditional formula. 

Based on these prices, AgroConsult calculated a weighted ThermoPotash price for each of the 

crops based on proportion of each of the formulas in the fertilizing system. Then, in order to 

reach an average price per mixing center, the ThermoPotash benchmark price for each of the 

crops was weighted in accordance with the relevant demand potential. The assumption that 

formula costs would be the same was applied during this stage. 






However, the average weighted price obtained reflects individual prices per crop. Consequently, 

the price would exceed the maximum price for some crops and the product would be too 

expensive. Therefore, the price was realigned to cater to 95% of the potential market. In this 

case, the resulting price is the potential price for ThermoPotash at the mixing center. 

Then, discounting transport and ICMS costs, we obtained an adjusted ThermoPotash price at 

source (São Gotardo-Minas Gerais). 

15.1.6 Process to Determine the Potential Market for ThermoPotash 

Was calculated the potential market for ThermoPotash for each of the crops and the results were 

then added together to calculate the potential in each state. 

In this calculation, the data was based on 2010 fertilizer demand for each crop in each state. 

Then, based on frequent market surveys carried out by AgroConsult, we defined the market share 

of each of the six formulas selected during the fertilizer process, totaling 100%. This is how we 

obtained the fertilizer volume used in each of the formulas. 

Based on the proportion of ThermoPotash in each of these formulas (1,000kg), obtained using 

the optimization process, we calculated the ThermoPotash potential for each formula. In this 

case, we multiplied the proportion of ThermoPotash by the volume of fertilizer in each of the 

formulas. 

Total ThermoPotash potential for each of the six formulas provides us with the potential market 

for each crop. Market potential by state is obtained by adding together the results from each 

crop. 

15.2 Contracts 

Verde does not yet have any contracts in place at the time of this report. 

The QP has reviewed data and information provided by ArgoConsult and finds that the 

assumptions made are reasonable. 






16 

Environmental Studies, Permitting and 

Social or Community Impact (Item 20) 

Mining concessions can be applied for following a final exploration report to be submitted to, 

and approved by the Brazil’s Department of Mines and Energy (DNPM) by the final expiry date 

of the exploration license. The report must conclude and demonstrate that an economic mineral 

resource has been delineated and measured. Normally, a mining plan and feasibility study must 

be presented within a year. That is the moment for the environmental licenses. Those of 

installation and a license of operations are then issued by the applicable environmental agency as 

a prerequisite to the granting of the mining concession. A mining concession is granted for a 

period covering the mine life until the mineral reserves of the deposit are exhausted. A mining 

concession does not convey title to a mineral deposit but provides the holder with the right to 

extract, process, and sell minerals extracted from the deposit in accordance with a plan approved 

by the DNPM and environmental authorities. 

Environmental Regulation General environmental rules and obligations are relatively similar to 

those applicable in Canada. The Brazilian environmental policy is the responsibility of the 

Ministry of the Environment and is executed at three levels: federal, state, and municipal. 

SRK performed an independent review of the current regulatory context of exploration activities 

in Brazil. SRK also consulted with “Silva Martins, Vilas Boas, Lopes e Frattari Advogados” 

(SMVBLFA), a law firm with prior knowledge of the environmental permitting activities of 

Verde. 

Based on the SRK review and consultation with SMVBLFA, the requirements stipulated in the 

environmental legislation for the mining activities, when Verde is in this stage, is basically 

consolidated in the following: 

Study of Environmental Impacts ("EIA"); 

Previous License ("LP"); 

Installation License ("LI"); 

Operational License (“LO”); and 

Rehabilitation Plan for Degraded Areas ("PRAD"). 

An EIA is required as a condition for obtaining the LP for any activity which potentially causes 

substantial environmental impact. The LP, LI and LO are mandatory for installing, expanding, 

and operating any mining activity, except exploration, under the systems of mining concession or 

licensing. A PRAD requires suitable technical solutions to rehabilitate the soil and other aspects 

of the environment that might be degraded by mining operations. In recognition that the 

preparation of an EIA can represent a substantial financial burden for a smaller projects, a 

company can undertake a less detailed form of EIA called an "Environmental Diagnostic Report" 

in certain cases. 

Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováreis, the federal 

environmental agency, is in charge of the licensing of activities with environmental impacts in 

more than one state or in federal waters, while SUPRAM is in charge of the licensing of 

activities with environmental impacts within the State of Minas Gerais. The determination of 






competence between the two environmental bodies may cause overlap which may result in some 

cases in problems and delays for mining companies. 

The proposed project, while in this phase of exploration, at first, will not require an 

environmental license. Parallel, the environmental reports that will be necessary to the 

application of the exploitation are already been prepared (EIA). 

The EIA is ongoing during 2011. Verde has hired the specialized company SSMA Assesoria de 

Consultoria LTDA (SSMA) to do all the EIA, which should be finished by the end of 2011. 

SSMA is in the course of preparing the study of environmental impacts (in Brazilian legislations 

it is named: EIA – Estudo de Impactos Ambienta) and the plan for the restoration of degraded 

areas (in Brazilian legislations it is named: PRAD – Plano de Recuperação de Áreas 

Degradadas), which is a requirement for filing the application for the Provisional License. 

The company filed the Description of the Activity Form (in Brazilian legislations it is named: 

Formulário de Caracterização do Empreendimento – FCE) on May 25, 2011, which is the first 

step of the environmental licensing procedure. Based on such form, the Minas Gerais 

Environmental Agency (which is named: Secretaria de Estado de Meio Ambiente e 

Desenvolvimento Sustentável – SEMAD) issued the Basic Instructions Form (in Brazilian 

legislations it is named: Formulário de Orientações Básicas – FOB) on September 13, 2011, 

which contains instructions on the issues to be addressed by the study of environmental impacts 

and the manners it should be prepared. 

Based on records available for review, Verde operates in accordance with Brazil legislation. 

With the completion of this Scoping Study, Verde will formalize reliable information of the 

project and have elements to complete the preparation of the necessary reports for obtaining the 

environmental permits. 

The selection of SSMA, a company qualified and specialized in making those reports, with 

experience and commitment to the observance of legal standards and best practices for 

implementing this will mitigate the risk of future remediation costs. 

It is difficult to determine the exact amounts which will be required to complete all land 

reclamation activities in connection with Cerrado Verde Project. 

The project is in an exploration phase and the reclamation bonds and other forms of financial 

assurance represent only a portion of the total amount of money that will be spent on reclamation 

activities over the life of a potential mine. Accordingly, it may be necessary to make a complete 

planned expenditures and operating plans in order to fund reclamation activities. 

As the Project seems to have a good recoverability, it appear won`t going to have the usual 

potential future liability for cleanup of tailings deposited on the expected future mining license 

areas and reprocessing. It is not possible to quantify at this time what the potential liability may 

be and detailed assessments need to be made to determine future land reclamation costs. 

The Project does not have a final Mine Plan of Operations and the conceptual level closure plan 

for the property, and therefore no reclamation and closure cost estimate budget due to the 

project’s preliminary nature. 






17 

Capital and Operating Costs (Item 21) 

17.1 Capital Costs 

Total capital costs are estimated at US$155.3 million for the 1.1Mtpa production rate and 

US$218.4 million for the 2.2Mtpa production rate. A detailed breakdown of the capital cost 

estimates is given in Table 17.1.1 and 17.1.2 respectively. 

Table 17.1.1: Summary Capital Cost by Facility in Reals and United States Dollars in 

thousands, Including Applicable Taxes for a 1.1Mtpa Operation 

Sub-area 

Total Price r$(000) 

Total Price us$(000) 

With Taxes 

With Taxes 

Total R$ 279,544 $155,302 

General area R$ 57,448 $31,915 

Primary crushing R$ 3,173 $1,763 

Secondary crushing R$ 5,253 $2,918 

Stockpile R$ 737 $409 

Limestone storage and dosing R$ 7,691 $4,273 

Grinding R$ 11,621 $6,456 

Pelletizing R$ 28,490 $15,828 

Furnace R$ 69,782 $38,768 

Quenching R$ 6,276 $3,487 

Pellets classification R$ 5,561 $3,089 

Bulk product classification, 

Storage, loading and shipping 

R$ 4,295 $2,386 

Raw water intake R$ 9,936 $5,520 

Fire fighting R$ 3,990 $2,217 

Compressed air R$ 6,702 $3,724 

Electrical substations R$ 33,254 $18,475 

Main substation and transmission line R$ 25,335 $14,075 

*Exchange Rate is R$1.80=USD1 






Table 17.1.2 Summary Capital Cost by Facility in Reals and United States Dollars in 

thousands, Including Applicable Taxes for a 2.2Mtpa Operation 

Sub-area 

Total Price R$(000) 

Total Price US$(000) 

With Taxes 

With Taxes 

Total R$ 393,131 $218,406 

General area R$ 57,448 $31,915 

Primary crushing R$ 6,204 $3,447 

Secondary crushing R$ 8,910 $4,950 

Stockpile R$ 1,965 $1,092 

Limestone storage and dosing R$ 9,531 $5,295 

Grinding R$ 20,010 $11,117 

Pelletizing R$ 40,138 $22,299 

Furnace R$ 139,563 $77,535 

Quenching R$ 12,552 $6,973 

Pellets classification R$ 8,119 $4,511 

Bulk product classification, 

storage, loading and shipping 

R$ 4,295 $2,386 

Raw water intake R$ 9,936 $5,520 

Fire fighting R$ 3,990 $2,217 

Compressed air R$ 6,702 $3,724 

Electrical substations R$ 38,433 $21,352 

Main substation and transmission line R$ 25,335 $14,075 

*Exchange Rate is R$1.80=USD1 

17.1.1 Payback 

Based on the following economic evaluation for the two production rates, the 1.1Mtpa pellet 

production rate, project payback occurs in Year 3 of production. For the 2.2Mtpa production rate 

project payback occurs in Year 2 of production. 

17.2 Operating Costs 

For the production of fertilizer pellets with an estimated 8% to 10% K 2 O content, the 1.1Mtpa 

pellet production rate, operating costs are estimated at US$41.80/t of pellets, inclusive of General 

and Administrative costs. A summary breakdown of operating costs, excluding G&A, is 

presented in Table 17.2.1. For the 2.2Mtpa production rate operating costs are estimated at 

US$36.36/t of pellets produced, inclusive of G&A costs. A detailed breakdown of operating 

costs, excluding G&A, is presented in Table 17.2.2. Total operating costs are stated in both 

US$(000) and R$(000). 






Table 17.2.1: Summary of Operational Costs, 1.1Mtpa Using Petroleum Coke 

ITEM 

TOTAL/ YEAR 

US$(000) 

% US$/t pellets 

ELECTRIC POWER 8,317 20.3% $7.48 

PETCOKE 12,197 29.7% $10.97 

LIMESTONE 2,525 6.1% $2.27 

WEAR MATERIAL 88 0.2% $0.08 

PARTS / MAINTENANCE MATERIAL 1,996 4.9% $1.80 

TOTAL COSTS VARIABLES (USD) 25,123 61.2% $22.59 

OWN WORK FORCE (USD) 9,823 23.9% $8.83 

MINE (USD) 6,120 14.9% $5.50 

TOTAL OPERATIONAL COSTS (USD) 41,066 100% $36.93 

TOTAL OPERATIONAL COSTS (R$) R$ 73,919 100% R$ 66.48 

Table 17.2.2: Summary of Operational Costs, 2.2Mtpa using Petroleum Coke 

ITEM 

TOTAL/ YEAR 

US$(000) 

% US$/t pellets 

ELECTRIC POWER $16,094 22.6% $7.24 

PETCOKE $24,378 34.2% $10.97 

LIMESTONE $7,575 10.6% $3.41 

WEAR MATERIAL $166 0.2% $0.07 

PARTS / MAINTENANCE MATERIAL $3,365 4.7% $1.51 

TOTAL COSTS VARIABLES (USD) $51,577 72.3% $23.20 

OWN WORK FORCE (USD) $11,766 16.5% $5.29 

MINE (USD) $7,988 11.2% $3.59 

TOTAL OPERATIONAL COSTS (USD) $71,331 100% $32.09 

TOTAL OPERATIONAL COSTS (R$) R$ 128,396 100% R$ 57.75 






18 

Economic Analysis (Item 22) 

The following economic analysis shows the results of two production rates, 1.1Mtpa and 

2.2Mtpa rates for the production of fertilizer pellets and is based only on the mineral resource 

estimated as of March 1, 2010. The base case used in this economic analysis is the 1.1Mtpa 

scenario. The results do not include the project resources for Targets 4, 6,7,10 and 11 that were 

drill defined after completion of the PEA. 

Readers are cautioned that this analysis is only a preliminary assessment based on conceptual 

mine plans and process flowsheets and inferred mineral resources, which are considered to be 

highly speculative geologically. There is no certainty that this PEA will be realized. Since there 

is no estimate of proven or probable reserves for the Project, this assessment only include cash 

flow forecasts on an annual basis for the mineral resource estimated as of March 1, 2010. 

Figures 18-1 contains the estimated annual cashflow, in thousands of USD, and production rate, 

in ktonnes, for the 1.1Mtpa production rate over the projected 40 year plan. The plan includes a 

2 year pre-production period with product recovered starting in year 3 of the project. As stated 

earlier, payback is estimated to occur in the 3 rd year of production. 

Figures 18-2 contains the estimated annual cashflow, in thousands of USD, and production rate, 

in ktonnes, for the 2.2Mtpa production rate over the projected 40 year plan. The plan includes a 

2 year pre-production period with product recovered starting in year 3 of the project. As stated 

earlier, payback is estimated to occur in the 2 nd year of production. 

The indicative economics for the 1.1Mtpa and 2.2Mtpa production rates are presented in Table 

18.1. This clearly demonstrates the encouraging economics for the Cerrado Verde Projects 

based on the scoping study concepts, cost projections and price assumptions as presented in this 

PEA. 

Table 18.1: Indicative Economics 

Production Rate 1.1Mtpy 2.2Mtpy 

Average Sales Price US$151.82/t US$133.23/t 

Total Production (40 year plan) 44,700kt 89,370kt 

Revenue US$6,786.6M US$11,906.8M 

Cashflow US$3,065.6M US$5,449.2M 

NPV (10%) US$445.5M US$844.1M 

NPV (12%) US$331.6M US$642.0M 

IRR 32.7% 40.0% 

Opex US$41.80/t US$36.36 

Initial Capex US$155.3M US$218.4M 

Contingency (15%) US$23.3M US$32.8M 

Pre-construction US$18.2M US$18.2M 

Total Capex US$196.8M US$269.4M 

Payback 2.38yrs 1.87yrs 

*Note: The above figures include a sustaining capital provision of 2% per annum of direct capital costs commencing in year 4. 

Revenue for the 1.1Mtpa production rate is based on two product streams. 70% of the 

production will be sold to market area Mina Gerais at a unit price of US$160.04/t and 30% of the 






production will be sold to market area Mato Grosso at a unit price of US$130.13/t. The average 

sales unit price for 1.1Mtpa case is US$151.82/t. 

Revenue for the 2.2Mtpa production rate is based on multiple product streams. The average 

sales unit price for the 2.2Mtpa production rate is US$133.23/t. The breakdown of products to 

be sold for both production rates are contained in Table 18.2. 

Table 18.2: Sales Unit Price/t for 1.1Mtpa and 2.2Mtpa Production Cases 

1.1Mtpa 

2.2Mtpa 

Market Area 

% US$/t % US$/t 

Minas Gerais 70% 160.04 36% 160.04 

Mato Grosso 30% 130.13 28% 130.13 

Mato Grosso do Sul 8% 122.2 

Goias 16% 112.98 

Bahia 10% 93.98 

Sao Paulo 2% 90.92 

Average Sales Price 100% 151.82 100% 133.23 

18.1 Taxes and Royalties 

In Brazil, the DNPM, Brazil’s Department of Mines and Energy, monitors exploration, mining, 

and mineral processing. This body also administers mineral exploration licenses and mining 

concessions. Mineral exploration licenses are issued by DNPM and mining concessions by the 

Ministry of Mining and Energy. 

Exploration licenses are granted for a maximum period of three years. As prerequisite, the 

requestor should provide all requirements and the area of interest does not overlap with an 

existing license. There is an annual fee of R$2.02 per hectare during the initial period. It is 

possible to request for an extension, situation that increase this annual tax (TAH) to R$3.06 

during this extension period. Those values are in force since March 2010, before that it was 

respectively R$1.90 and R$2.87. That mineral rights tax should to be paid to the Brazilian 

government. Exploration licenses can be extended for a second period no longer than three 

years. DNPM has the discretion of the whether requested renewal. 

Until the final expiry date of the exploration license, concessions can be applied for following a 

final exploration report. This one should be submitted to, and approved by the DNPM. The 

report must conclude and demonstrate that an economic mineral resource has been delineated 

and measured. According to the protocol of the DNPM, a mining plan and feasibility study must 

be presented within a year. A license of installation and a license of operations are then issued 

by the applicable environmental agency as a prerequisite to the granting of the mining 

concession. A mining concession is granted for a period covering the mine life until the mineral 

reserves of the deposit are exhausted. A mining concession does not convey title to a mineral 

deposit but provides the holder with the right to extract, process, and sell minerals extracted from 

the deposit in accordance with a plan approved by the DNPM and environmental authorities. 

A mining concession leads a royalty payment to the federal government. It is the Financial 

Compensation for the Exploitation of Mineral Resources ("CFEM"), which is established at 2% 

of the net sales of fertilizers. There is also a royalty to the landowner, if the surface rights do not 

belong to the mining titleholder – that is the case of the Cerrado Verde Project. This royalty 

amounts to 50% of CFEM. However, it is common practice to negotiate a separate 






compensation agreement, if this amount may not be sufficient for the land owner. Surface rights 

in Brazil are distinct from mining rights and must be acquired separately. The land owner has no 

title to the subsoil or minerals contained therein. The Brazilian mining code provides for some 

form of expropriation of privately held surface rights subject to fair compensation. The holder of 

a mineral right is entitled to use the surface to conduct mining operations, including the 

construction of facilities required for such operations. The access to the land and reclamation of 

disturbed areas must be negotiated with each individual surface right holder. However, the 

landowners are obliged by law to provide access to the mineral license holder to conduct 

exploration. If an agreement cannot be reached by negotiation there are legal mechanisms in 

place to allow courts to lead an arrangement. 

18.2 Sensitivity 

The Cerrado Verde Project is most sensitive to the received ThermoPotash product price. 

Table 18.2.1: Sensitivity Analysis 

Simulation Rate Opex Capex Sales Price IRR range 

NPV range 

(US$M) 

Sim_1 12% -10% +10% -10% +30% -10% +10% 27.8% to 35.3% 281.2 to 380.4 

Sim_3 12% -10% +10% -10% +30% -30% +10% 23.1% to 34.5% 181.9 to 370.3 

Sim_4 12% -1% +50% -10% +30% -10% +10% 25.9% to 34.0% 239.9 to 359.5 

18.3 Mine Life 

Given the extensive resource base available; albeit all of which is in the inferred category, a mine 

life of 40 years has been assumed for both the 1.1Mtpa and 2.2Mtpa production rates. 






Annual Production and Cashflow 

for the 1.1Mtpa production case 





Annual Production and Cashflow 

for the 2.2Mtpa Production Case 

File Name: Figures 18-2 Date: 09/15/2011 Approved: NR Figure: 18-2




19 

Adjacent Properties (Item 23) 

There are no advanced potash properties in the immediate vicinity of the Cerrado Verde Project. 






20 

Other Relevant Data and Information (Item 24) 

There is no other relevant data and information that has not been presented within the 

appropriate sections of this report. 






21 

Interpretation and Conclusions (Item 25) 

The pertinent observations and interpretations which have been developed in producing this 

report are detailed in the sections above. 






22 

Recommendations (Items 26) 

22.1 Recommended Work Programs 

22.1.1 Resources 

The current resource estimate confidence can be improved by: 

Undertaking additional Bulk Density measurements on diamond core downhole and 

across the deposit focusing mainly on the weathered ore since fresh ore has already a 

good number of measurements; 

Improve the current surface topography using total station, or leaser; 

Improve current internal quality control procedures to enhance the methodology for 

utilization of sample blanks and standards; 

Additional drilling (core drilling) should be completed to improve confidence in grade 

continuity within the weathered and un-weathered zones and to enhance the control of 

these zone boundaries. The spacing of the drilling should conform to the size of the 

block model used for resource estimation, giving both down dip information as well as 

vertical constraints on the “ore” horizons; and 

Structural interpretations from the core holes will help in detailed mine planning as well 

as defining grade boundaries and controls within the deposit. 

22.1.2 Metallurgical 

It has to be confirmed at what level, if any, will contamination of the Thermo-K product by 

residual fuel components, particularly petroleum hydrocarbons, make the product unusable or 

limited in application across the agricultural industry. If this is the case, then a gas- or indirect 

dead roaster-fired solution is possible, the latter having the advantage of giving flexibility for 

low cost alternative fuel utilization. Due to the high temperatures (above 1100 o C) it is unlikely 

that any residual fuel will be present. 

The rate of water solubilization of nutrients from the calcined product needs to be established 

through rinse tests simulating the quench step post calcining and long term exposure to meteoric 

rinsing. 

22.1.3 Mining 

To accurately predict grade and quality of plant feedstock provided by the mine, a more 

complete understanding of the resource is required. In particular, the effect of K 2 O grade and 

mass yield calculations will effect what part of the mine is mined when and in what quantities. 

With a detailed infill drill program, continuation of metallurgical testing and further engineering 

studies SRK recommends additional work be dedicated to the effect of mine dilution, possible 

effect of deleterious elements, construction of mining costs from first principles, RoM 

production targets, waste dump design and haul profiles for contractor estimation. This can be 

included as part prefeasibility study and will be required for any reserve generation in the future. 

Given the course nature of the resource model, the ability to sensitize or understand potential 

challenges to future mining operations is difficult to quantify. With a more refined and detailed 






block model containing lithology, grade and product distribution, the confirmation that the mine 

will produce the appropriate process plant feedstock can be verified and accurately estimate. 

22.1.4 Costs 

SRK recommends that the Project be advanced in one phase of work to the prefeasibility level of 

evaluation and design. The cost estimate for the recommended work program is shown in Table 

22.1.4.1. 

Table 22.1.4.1: Recommended Prefeasibility Work Program Cost Estimate (US$000’s) 

Description 

Cost 

Infill Drilling 300 

Metallurgical Testwork 800 

Engineering Studies 500 

Environmental Baseline 150 

Other 250 

Total 2,000 






23 

References (Item 27) 

Agroconsult (2010). Price and competitiveness survey for introducing ThermoPotash on the 

Brazilian fertilizer market Verde Fertilizantes. Agroconsult Industry Surveys November 

2010. 198p. 

Coffey Mining, (2010). Cerrado Verde Potash Project, Brazil, Technical Report to Amazon 

Mining Holding Plc, March 2010. 

COSTA-FILHO, P. L. D. R., (2007). Estudo preliminar da vegetação da parte do médio curso 

do Rio Indaiá (MG) utilizando imagem ASTER. Anais XIII Simpósio Brasileiro de 

Sensoriamento Remoto, Florianópolis, Brasil, 21-26 abril 2007, INPE, p. 1631-1638. 

ECM (2010). General Project Description for Scoping Study. Report to AMAZON PESQUISA 

MINERAL E MINERAÇÃO LTDA. 59p. 

http://en.wikipedia.org/wiki/Kriging#Ordinary kriging. 

Jose Valarelli et al, (1992). Ardosias "Verdete" de CEdro do Abaete na Producao de 

Termofosfato Potassico Fundido e sua Eficiencia Agronomica. 

KING, L.C. 1956. A geomorfologia do Brasil oriental. Rev. Bras. Geogr.,18(2): 147-265. 

LIMA, O. N. B., (2005). Grupo Bambuí: Estratigrafia regional no Alto Rio São Francisco e 

geologia dos depósitos fosfáticos da Serra da Saudade - MG. Dissertação de Mestrado, 

Instituto de Geociências, Universidade Federal de Minas Gerais, 142 p. 

Luis A.M Da Costa et al, (2008). Potential of Potassium-Bearing Rock of the Cedro do Abaete 

Region, State of Minas Gerais, Brazil, Sept 2008. 

Persio Mandetta, (2009). Planejamento de Sondagem Exploratoria. 






24 

Glossary 

24.1 Mineral Resources 

The mineral resources and mineral reserves have been classified according to the “CIM 

Standards on Mineral Resources and Reserves: Definitions and Guidelines” (November 27, 

2010). Accordingly, the Resources have been classified as Measured, Indicated or Inferred, the 

Reserves have been classified as Proven, and Probable based on the Measured and Indicated 

Resources as defined below. 

A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized 

organic material in or on the Earth’s crust in such form and quantity and of such a grade or 

quality that it has reasonable prospects for economic extraction. The location, quantity, grade, 

geological characteristics and continuity of a Mineral Resource are known, estimated or 

interpreted from specific geological evidence and knowledge. 

An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade 

or quality can be estimated on the basis of geological evidence and limited sampling and 

reasonably assumed, but not verified, geological and grade continuity. The estimate is based on 

limited information and sampling gathered through appropriate techniques from locations such 

as outcrops, trenches, pits, workings and drillholes. 

An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or 

quality, densities, shape and physical characteristics can be estimated with a level of confidence 

sufficient to allow the appropriate application of technical and economic parameters, to support 

mine planning and evaluation of the economic viability of the deposit. The estimate is based on 

detailed and reliable exploration and testing information gathered through appropriate techniques 

from locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely 

enough for geological and grade continuity to be reasonably assumed. 

A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or 

quality, densities, shape, physical characteristics are so well established that they can be 

estimated with confidence sufficient to allow the appropriate application of technical and 

economic parameters, to support production planning and evaluation of the economic viability of 

the deposit. The estimate is based on detailed and reliable exploration, sampling and testing 

information gathered through appropriate techniques from locations such as outcrops, trenches, 

pits, workings and drillholes that are spaced closely enough to confirm both geological and grade 

continuity. 

24.2 Mineral Reserves 

A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral 

Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include 

adequate information on mining, processing, metallurgical, economic and other relevant factors 

that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral 

Reserve includes diluting materials and allowances for losses that may occur when the material 

is mined. 

A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated, and in some 

circumstances a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility 

Study. This Study must include adequate information on mining, processing, metallurgical, 






economic, and other relevant factors that demonstrate, at the time of reporting, that economic 

extraction can be justified. 

A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource 

demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate 

information on mining, processing, metallurgical, economic, and other relevant factors that 

demonstrate, at the time of reporting, that economic extraction is justified. 

24.3 Glossary 

The following general mining terms may be used in this report. 

Table 24.3.1: Glossary 

Term 

Assay: 

Capital Expenditure: 

Composite: 

Concentrate: 

Crushing: 

Cutoff Grade 

(CoG): 

Dilution: 

Dip: 

Fault: 

Footwall: 

Gangue: 

Grade: 

Hangingwall: 

Haulage: 

Hydrocyclone: 

Igneous: 

Kriging: 

Level: 

Lithological: 

LoM Plans: 

LRP: 

Material Properties: 

Milling: 

Mineral/Mining 

Lease: 

Mining Assets: 

Ongoing Capital: 

Ore Reserve: 

Pillar: 

RoM: 

Sedimentary: 

Shaft: 

Definition 

The chemical analysis of mineral samples to determine the metal content. 

All other expenditures not classified as operating costs. 

Combining more than one sample result to give an average result over a larger distance. 

A metal-rich product resulting from a mineral enrichment process such as gravity 

concentration or flotation, in which most of the desired mineral has been separated from 

the waste material in the ore. 

Initial process of reducing ore particle size to render it more amenable for further 

processing. 

The grade of mineralized rock, which determines as to whether or not it is economic to 

recover its gold content by further concentration. 

Waste, which is unavoidably mined with ore. 

Angle of inclination of a geological feature/rock from the horizontal. 

The surface of a fracture along which movement has occurred. 

The underlying side of an orebody or stope. 

Non-valuable components of the ore. 

The measure of concentration of gold within mineralized rock. 

The overlying side of an orebody or slope. 

A horizontal underground excavation which is used to transport mined ore. 

A process whereby material is graded according to size by exploiting centrifugal forces of 

particulate materials. 

Primary crystalline rock formed by the solidification of magma. 

An interpolation method of assigning values from samples to blocks that minimizes the 

estimation error. 

Horizontal tunnel the primary purpose is the transportation of personnel and materials. 

Geological description pertaining to different rock types. 

Life-of-Mine plans. 

Long Range Plan. 

Mine properties. 

A general term used to describe the process in which the ore is crushed and ground and 

subjected to physical or chemical treatment to extract the valuable metals to a concentrate 

or finished product. 

A lease area for which mineral rights are held. 

The Material Properties and Significant Exploration Properties. 

Capital estimates of a routine nature, which is necessary for sustaining operations. 

See Mineral Reserve. 

Rock left behind to help support the excavations in an underground mine. 

Run-of-Mine. 

Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of 

other rocks. 

An opening cut downwards from the surface for transporting personnel, equipment, 






Term 

Sill: 

Smelting: 

Stope: 

Stratigraphy: 

Strike: 

Sulfide: 

Tailings: 

Thickening: 

Total Expenditure: 

Unweathered 

Variogram 

Weathered 

Definition 

supplies, ore and waste. 

A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the injection 

of magma into planar zones of weakness. 

A high temperature pyrometallurgical operation conducted in a furnace, in which the 

valuable metal is collected to a molten matte or doré phase and separated from the gangue 

components that accumulate in a less dense molten slag phase. 

Underground void created by mining. 

The study of stratified rocks in terms of time and space. 

Direction of line formed by the intersection of strata surfaces with the horizontal plane, 

always perpendicular to the dip direction. 

A sulfur bearing mineral. 

Finely ground waste rock from which valuable minerals or metals have been extracted. 

The process of concentrating solid particles in suspension. 

All expenditures including those of an operating and capital nature. 

Fresh rock or protolith that has not been subject to physical or chemical changes as a 

result of surface processes. 

A statistical representation of the characteristics (usually grade). 

Material has been influenced by surface geochemical and physical processes that have 

resulted in removal of some potassium and other leachable salts. 

24.4 Abbreviations 

Metric units are used throughout this report, unless otherwise specified. The following 

abbreviations are typical to the mining industry and may be used in this report. 

Table 24.4.1: Abbreviations 

Abbreviation 

Unit or Term 

A 

ampere 

AA 

atomic absorption 

A/m 2 

amperes per square meter 

ANFO 

ammonium nitrate fuel oil 

Ag 

silver 

Au 

gold 

AuEq 

gold equivalent grade 

°C degrees Centigrade 

CCD 

counter-current decantation 

CIL 

carbon-in-leach 

CoG 

cutoff grade 

cm 

centimeter 

cm 2 

square centimeter 

cm 3 

cubic centimeter 

cfm 

cubic feet per minute 

ConfC 

confidence code 

CRec 

core recovery 

CSS 

closed-side setting 

CTW 

calculated true width 

° degree (degrees) 

dia. 

diameter 

EIS 

Environmental Impact Statement 

EMP 

Environmental Management Plan 

FA 

fire assay 

ft 

foot (feet) 






Abbreviation 

ft 2 

ft 3 

g 

gal 

g/L 

g-mol 

gpm 

g/t 

ha 

HDPE 

hp 

HTW 

ICP 

ID2 

ID3 

IFC 

ILS 

K 

kA 

KCl 

kg 

km 

km 2 

koz 

kt 

kt/d 

kt/y 

kV 

kW 

kWh 

kWh/t 

L 

L/sec 

L/sec/m 

lb 

LHD 

LLDDP 

LOI 

LoM 

m 

m 2 

m 3 

masl 

MARN 

MDA 

mg/L 

Mm 

mm 2 

mm 3 

MME 

Moz 

Mt 

Mtpa 

MTW 

MW 

Unit or Term 

square foot (feet) 

cubic foot (feet) 

gram 

gallon 

gram per liter 

gram-mole 

gallons per minute 

grams per tonne 

hectares 

Height Density Polyethylene 

horsepower 

horizontal true width 

induced couple plasma 

inverse-distance squared 

inverse-distance cubed 

International Finance Corporation 

Intermediate Leach Solution 

Potassium 

kiloamperes 

potassium chloride, also known as muriate of potash 

kilograms 

kilometer 

square kilometer 

thousand troy ounce 

thousand tonnes 

thousand tonnes per day 

thousand tonnes per year 

kilovolt 

kilowatt 

kilowatt-hour 

kilowatt-hour per metric tonne 

liter 

liters per second 

liters per second per meter 

pound 

Long-Haul Dump truck 

Linear Low Density Polyethylene Plastic 

Loss On Ignition 

Life-of-Mine 

meter 

square meter 

cubic meter 

meters above sea level 

Ministry of the Environment and Natural Resources 

Mine Development Associates 

milligrams/liter 

millimeter 

square millimeter 

cubic millimeter 

Mine & Mill Engineering 

million troy ounces 

million tonnes 

million tonnes per annum 

measured true width 

million watts 






Abbreviation 

Unit or Term 

m.y. 

million years 

NGO 

non-governmental organization 

NI 43-101 Canadian National Instrument 43-101 

OSC 

Ontario Securities Commission 

oz 

troy ounce 

% percent 

PLC 

Programmable Logic Controller 

PLS 

Pregnant Leach Solution 

PMF 

probable maximum flood 

ppb 

parts per billion 

ppm 

parts per million 

QA/QC 

Quality Assurance/Quality Control 

RC 

rotary circulation drilling 

RoM 

Run-of-Mine 

RQD 

Rock Quality Description 

SEC 

U.S. Securities & Exchange Commission 

sec 

second 

SG 

specific gravity 

SOP 

sulphate of potash 

SPT 

standard penetration testing 

st 

short ton (2,000 pounds) 

t 

tonne (metric ton) (2,204.6 pounds) 

t/h 

tonnes per hour 

t/d 

tonnes per day 

t/y 

tonnes per year 

TSF 

tailings storage facility 

TSP 

total suspended particulates 

µm micron or microns 

V 

volts 

VFD 

variable frequency drive 

W 

watt 

wt 

weight 

XRD 

x-ray diffraction 

y 

year 



Appendix A 

Certificate of Author Forms

SRK Consulting (U.S.), Inc. 

7175 West Jefferson Avenue, Suite 3000 

Lakewood, CO 

USA 80235 

denver@srk.com 

www.srk.com 

Tel: 303.985.1333 

Fax: 303.985.9947 

CERTIFICATE OF AUTHOR 

I, Neal Rigby, CEng, MIMMM, PhD, do hereby certify that: 

1. I am Corporate Mining Engineer of: 

SRK Consulting (U.S.), Inc. 

7175 W. Jefferson Ave, Suite 3000 

Denver, CO, USA, 80235 

2. I graduated with a BSc degree in Mineral Exploitation with first class honors in 1974 and a PhD in 

Mining Engineering in 1977 both from the University of Wales, UK. 

3. I am a member of the Institute of Materials, Mining and Metallurgy. 

4. I have worked as a Mining Engineer for a total of 36 years since my graduation from university. My 

relevant work experience includes underground and open pit potash, phosphate and trona projects, 

open pit mines and quarries, project design and evaluation and cash flow modeling. 

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and 

certify that by reason of my education, affiliation with a professional association (as defined in NI 43- 

101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the 

purposes of NI 43-101. 

6. I am responsible for the Sections 1-4, 10 and 13-24 of the Preliminary Economic Assessment titled NI 

43-101 Preliminary Economic Assessment, Cerrado Verde Potash Project, Minas Gerais, Brazil, 

August 3, 2011, and dated September 16, 2011 (the “Preliminary Economic Assessment”) relating to 

the Cerrado Verde property. I have not visited the Cerrado Verde property. 

7. I have had prior involvement with the Cerrado Verde property that is the subject of the Preliminary 

Economic Assessment. The nature of my prior involvement was as the qualified responsible for the 

preparation of Sections 5 through 12, 15, and 18 of the report titled, “NI 43-101 Preliminary 

Economic Assessment, Cerrado Verde Potash Project, Minas Gerais, Brazil”, December 13, 2010. 

8. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument 43-101. 

9. I have read NI 43-101 and Form 43-101F1, and the Preliminary Economic Assessment has been 

prepared in compliance with that instrument and form. 

Group Offices: 

Africa 

Asia 

Australia 

Europe 

North America 

South America 

Canadian Offices: 

Saskatoon 306.955.4778 

Sudbury 705.682.3270 

Toronto 416.601.1445 

Vancouver 604.681.4196 

Yellowknife 867.445.8670 

U.S. Offices: 

Anchorage 907.677.3520 

Denver 303.985.1333 

Elko 775.753.4151 

Fort Collins 970.407.8302 

Reno 775.828.6800 

Tucson 520.544.3688

SRK Consulting (U.S.), Inc. Page 2 of 2 

10. I consent to the filing of the Preliminary Economic Assessment with any stock exchange and other 

regulatory authority and any publication by them for regulatory purposes, including electronic 

publication in the public company files on their websites accessible by the public, of the Preliminary 

Economic Assessment. 

11. As of the date of this certificate, to the best of my knowledge, information and belief, the Preliminary 

Economic Assessment contains all scientific and technical information that is required to be disclosed 

to make the Preliminary Economic Assessment not misleading. 

Dated this 16 th day of September, 2011. 

“Signed” 

________________________________ 

Dr. Neal Rigby, CEng, MIMMM, PhD 

Certificate_of_Author_NealRigby_CerradoVerdePEA_20101213.docx

SRK Cardiff 

5th Floor 

Churchill House 

17 Churchill Way 

Cardiff, UK 

CF10 2HH 

Tel: +44 29 2034 8150 

Fax: +44 29 2034 8199 

CERTIFICATE OF AUTHOR 

I, Rob Bowell, Ph.D, C.Chem MRSC, C. Geol FGS, do hereby certify that: 

1. I am Corporate Consultant, (Geochemistry) of: 

SRK Consulting (UK) Ltd. 

Churchill House 

17 Churchill Way 

Cardiff, CF102HH 

UK 

2. I graduated with a degree in Geochemistry/Geology, with Class 1 Honours from the University of 

Manchester in 1987. In addition, I have obtained a Doctor of Philosophy from University of 

Southampton in 1991. 

3. I am a past President of the International Association of Applied Geochemists (2005-2009), VP 

(2003-2004). Member of the International Mine Water Association, Geological Society of London, 

Society of Economic Geology, Royal Society of Chemistry, Chartered Chemist, RSC (1997), 

Chartered Geologist, GSL (2001), Chartered Professional European Geologist (2002), Accreditation 

auditor, Cyanide code (2005), Visiting Research Associate, Division of materials and Minerals, 

Cardiff University 1998 – present, Aberystwyth University 2000-2006. 

4. I have worked as a Geochemist for a total of 23 years since my graduation from university. My 

relevant project work experience includes geochemistry of basement rocks identical to those in the 

project area, I have worked on potash deposits in the United Kingdom, Poland and the Congo, and 

other industrial mineral deposits in Brazil, United States, South Africa and Argentina. 

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and 

certify that by reason of my education, affiliation with a professional association (as defined in NI 43- 

101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the 

purposes of NI 43-101. 

6. I am responsible for the preparation of Section 11 of the Preliminary Economic Assessment titled “NI 

43-101 Preliminary Economic Assessment, Cerrado Verde Project, Minas Gerais, Brazil, Verde 

Potash Plc”, August 03, 2011, and dated September 16, 2011 (the “Preliminary Economic 

Assessment”) relating to the Cerrado Verde Property. I have not visited the Cerrado Verde property. 

7. I have had prior involvement with the Cerrado Verde property that is the subject of the Preliminary 

Economic Assessment. The nature of my prior involvement was as qualified person for Sections 14 

Group Offices: 

Africa 

Asia 

Australia 

Europe 

North America 

South America 

Canadian Offices: 

Saskatoon 306.955.4778 

Sudbury 705.682.3270 

Toronto 416.601.1445 

Vancouver 604.681.4196 

Yellowknife 867.445.8670 

U.S. Offices: 

Anchorage 907.677.3520 

Denver 303.985.1333 

Elko 775.753.4151 

Fort Collins 970.407.8302 

Reno 775.828.6800 

Tucson 520.544.3688

SRK Consulting (U.S.), Inc. Page 2 of 2 

and 19 of the report titled, “NI 43-101 Preliminary Economic Assessment, Cerrado Verde Potash 

Project, Minas Gerais, Brazil”, dated December 13, 2010. 

8. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument 43-101. 

9. I have read NI 43-101 and Form 43-101F1, and the Preliminary Economic Assessment has been 

prepared in compliance with that instrument and form. 

10. I consent to the filing of the Preliminary Economic Assessment with any stock exchange and other 

regulatory authority and any publication by them for regulatory purposes, including electronic 

publication in the public company files on their websites accessible by the public, of the Preliminary 

Economic Assessment. 

11. As of the date of this certificate, to the best of my knowledge, information and belief, the Preliminary 

Economic Assessment contains all scientific and technical information that is required to be disclosed 

to make the Preliminary Economic Assessment not misleading. 

Dated this 16 th day of September, 2011. 

“Signed” 

________________________________ 

Rob Bowell, PhD, C.Chem MRSC, C. Geol FGS 

Certificate_of_Author_RobBowell_CerradoVerdePEA_20101213.docx

NI 43-101 Preliminary Economic Assessment - Verde Potash

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