Infrastructure

The Danakil Property is located approximately 600 kilometers from the Tadjoura port of Djibouti. This port will have low ocean freight transport costs to the fast-growing Southeast Asian market, a key competitive advantage to comparable assets in Russia and North America. A new bulk terminal at the port is expected to be completed in 2017 with the port easily expandable.

Product transportation to Djibouti will initially be by trucking. The government of Ethiopia has approved the construction of a new road between Ahmed Ela to Afdera which will reduce the total distance from the mine site to the new port of Tadjoura by over 200 kilometers. The contractor for road construction was announced in December 2016 and the road is expected to be completed in 2018.

Rail transport is also being evaluated by Circum with the intention of incorporating it into the project economics once production in the Danakil Basin exceeds 5 million tonnes per annum. A prefeasibility study for the design and construction of a railway from the Danakil Basin to the national rail network was completed in June 2016.

The maximum electrical power demand for proposed operations is estimated at 77MW. Ethiopia is investing in a US$45-50 million power transmission line and construction of a substation that will deliver ample power to the Danakil Basin. The aim is to transmit 180 MW to a new Dallol sub-station through a double circuit 230 kV line from an existing sub-station in Mekele, which has the required excess capacity to do so. The Ethiopian Electric Power Company completed a feasibility study and in August 2016, the African Development Bank approved financing for the power line with 20% anticipated to be funded by the government and the remaining 80% financed. The Circum DFS includes design and cost of a 10km, 100MVA line from the Dallol sub-station to the mine site.

The total water requirement for the Danakil Potash Project is estimated at c.30 gigalitres per annum (c.80 million litres per day) given the solution mining techniques to be utilized. Umvoto Africa (Pty) Ltd (“Umvoto”) constructed hydrogeological studies that show Circum has access to sufficient water for its operations from the nearest three alluvial fan complexes, all within its license area. In 2016, three new water production wells were drilled (two were drilled in 2015), as well as five smaller diameter monitoring holes. Water pumped from the five production wells over 22 days totalled 600 million litres without any significant impact observed in the monitoring wells. Based upon this work, Umvoto concluded that the alluvial fans are excellent aquifers, of sufficient storage and yield to supply the required volume of water to meet the mine demand scenarios of the Project.