NI 43-101 Preliminary Economic Assessment - Verde Potash

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Verde Potash Plc 16-2 Cerrado Verde Project NI 43-101 Preliminary Economic Assessment 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. SRK Consulting (U.S.), Inc. September 16, 2011 Cerrado Verde_NI 43-101 PEA_343500.020_007_KG
Verde Potash Plc 17-1 Cerrado Verde Project NI 43-101 Preliminary Economic Assessment 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 SRK Consulting (U.S.), Inc. September 16, 2011 Cerrado Verde_NI 43-101 PEA_343500.020_007_KG
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NI 43-101 Preliminary Economic Assessment - Verde Potash

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