Crocodile River Mine (“CRM”)

Crocodile River Mine

Property Description and Location

CRM is a PGM mine located 70 km north-northwest of Johannesburg in the North West Province and 7 km south of the town of Brits and situated on the western limb of the Bushveld complex in an area of known structural complexity, the Brits Graben. The current mine lease area includes two operating mining sections (the Zandfontein and Maroelabult** sections – in care and maintenance) and two development sections (the Crocette and Kareespruit sections).

Historically, mining at CRM re-commenced in April 2005 at Zandfontein and Maroelabult** and until 2013, the mine has treated up to 120,000 tpm of underground hardrock which is supplemented with tailings. All ore was treated using conventional crushing, milling and flotation processes. A new chromite circuit was commissioned in 2008 which minimizes chrome penalties. An additional benefit was the production of up to 25,000 tpm of saleable chemical and metallurgical grade chromite for which a sale and marketing agreement is in place. PGM concentrate was sold to Impala Refining Services (“IRS”) for smelting, refining and sale.

Certain development activities at CRM ceased in mid 2012 and mining operations ceased by the end of July 2013 due to the continuing stagnant outlook in the global economic environment, the sustained weakness in PGM pricing and the labour and operating environment in South Africa at the time. Production will not resume until it is clear that these factors have improved.

** On October 24, 2019 the Company and its subsidiary Barplats entered into a sales agreement (the “Sale Agreement”) with Eland Platinum (Pty) Limited (“Eland”). The Sales Agreement provides for sale of the mining rights, immovable property, infrastructure and equipment of the Maroelabult resource property located near Brits in South Africa. The consideration to be received is ZAR 20,000,000, the assumption of the rehabilitation obligation and immediate assumption of the care and maintenance costs (the “Purchase Price”) subject to representations and warranties by both parties. The Purchase Price is payable and enforceable on closing the transaction following the transfer of legal title and the completion of the various legal and regulatory obligations required in South Africa which may take up to or over 1 year.

                                                          Zandfontein Tailing Retreatment Project

 

On March 1, 2018 Eastplats and its subsidiary Barplats Mines (Pty) Limited entered into an agreement (the “UG Agreement”) with Union Goal Offshore Solution Limited (“Union Goal”).  The UG Agreement provides for construction, mining and processing of the tailings resource, and the subsequent offtake of chrome concentrate from the Retreatment Project located at the CRM.

Union Goal has financed and sourced for Barplats the chrome processing circuit, related technology and knowhow (the “Chrome Circuit”) while Barplats will develop, mine and operate the Retreatment Project. The Chrome Circuit is designed to improve on recoveries of chrome concentrate compared to traditional technology which could expand available resources for mining and processing.

Operations of the Retreatment Project began in December 2018 and expanded to PGM recovery testing in Q2 2019 and continued during Q3 2019 as the Company continues providing material from the tailings resource, processing and producing chrome concentrate.

Union Goal’s business partners include major direct mine operators and traders of chrome ores and concentres. Union Goal also deals directly with downstream consumers through trading, direct and technological investments into ferro-chrome producers and has other interests directly with the stainless-steel industry.  Union Goal has been in business for over 10 years and has traded more than one million tons of chrome ores and concentrates on average during the past four years with average annual sales reaching approximately US$200 million.

Management entered into the UG Agreement with the expectation of increased overall returns on the Retreatment Project due to the Chrome Circuit insulation compared to the traditional technology modeled in the Sound Mining Feasibility Study.

Sound Mining

Sound Mining Solution Pty Ltd (Sound Mining) was engaged during August 2017 to prepare an Independent Technical Report (ITR) on the Company’s plans to re-mine and retreat the Zandfontein Tailings Storage Facility (TSF) to recover chrome (the Project), which resulted from mining of the UG2 at the Crocodile River Mine (CRM).

A technical review of the data used in the Mineral Resource estimation has shown the quality of the data to be adequate for the intended purpose. The historical drill results have limited QAQC monitoring as does the database in which the data is stored.

Sound Mining found no fatal flaws in the modifying factors applied in the Feasibility Study, and accordingly this ITR presents a Mineral Reserve of 6.42 Mt at 22.4 % Cr2O3 which is based on robust modifying factors.