Feasibility Study

In July 2015, the Definitive Feasibility Study (“DFS”) was completed to the standard of a NI 43-101 Canadian securities code compliant Feasibility Study under the overall supervision of Senet (Pty) Ltd of South Africa (“Senet”). K-UTEC AG Salt Technologies of Germany (“K-UTEC”) provided resource definition and wellfield and plant design. Umvoto Africa (Pty) Ltd. provided water resource modeling and Environmental Resource Management (ERM) conducted the Environmental and Social Impact Assessment.

In February 2016, Circum, together with its independent consultants Senet and K-UTEC, reviewed the costs in the DFS. Through their analysis, development capital costs were reduced by US$276 million and operating costs were reduced by approximately US$3 per tonne.

Circum is targeting production of 2.0 million tonnes per annum of Muriate of Potash (“MOP”), the most common form of potash fertilizer, and 0.75 million tonnes per annum of Sulfate of Potash (“SOP”), a premium fertilizer product, with production anticipated to start in 2022.

Due to the shallow nature of the deposit, the Danakil Potash Project will be amenable to low-cost, low-risk, in-situ leaching. Also, the extremely hot surface temperatures and high evaporation rates will allow the use of solar evaporation all year round. As a result, mine gate cash costs are projected to be among the lowest in the potash industry, estimated at US$38 per tonne MOP and US$112 per tonne SOP. Total operating costs (FOB Tadjoura Port, Djibouti) are forecast at US$81 per tonne of MOP and US$156 per tonne of SOP (before the inclusion of royalties payable to the Ethiopian government which are levied at 4% of the Djibouti FOB price minus transport costs from mine gate to port).

The Danakil Potash Project has a low capital intensity due to its shallow potash horizons and proximity to planned infrastructure. Total initial development capital is estimated at US$2.3 billion, including contingencies. Due to revenue from the ramp up in initial production (estimated at close to US$500 million), peak funding is currently planned at just over US$1.8 billion. Given the scale of the Project, at an implied capital intensity of US$838 per tonne, Circum’s Danakil Project will be one of the most capital efficient potash projects in the world.

The optimized DFS reported a pre-tax net present value (NPV) for the Danakil Project of US$2.8 billion and a pre-tax nominal internal rate of return (IRR) of 29%. The after-tax NPV and nominal IRR were US$2.1 billion and 26%, respectively.