SPUR YICHANG (YMC)

Sino-Canada Yichang Integrated Phosphate Project

Activity: Through a joint venture set up between Spur and its local Chinese partner are working on the development of an integrated fertilizer complex including a 1.2 million tonnes/year phosphate mining operation near Yichang city.

View of a Phosphate mine in Yichang District

History:

• Spur YMC was set up Dec 2002
• Mining licenses were issued in Feb and Oct 2004 for each main deposit

Staff: 10 (mostly project engineers)

Deposit Location:
The Yichang Phosphate District, roughly centered at 111°20’E. and 31°20’N., is located approximately 100 km NNW of the city of Yichang, Hubei Province, People’s Republic of China. Two primary deposits and three supplemental deposits are dedicated to the Yichang project for Spur Ventures Inc. This group of five deposits is more-or-less contiguous and stretches about 11 km in the north-south direction and about 17 km in the east-west direction. These individual deposits cover an area of about 45 km 2. The relative locations of these deposits are show in the figure below:

Relative locations of Yichang phosphate deposits
(1. Dianziping, 2. Shukongping, 3. Lixi-Shan, 4.Yinjiaping, 5. Dingjiahe)

Type of deposit:
The phosphate ore is of sedimentary origin and contained in the Doushantuo Formation of Upper Sinian age (Upper Precambrian). The Doushantuo Formation is characterized as the oldest phosphatic sedimentary sequence in southern China deposited about 650 to 700 million years ago. In the five deposits under study, phosphate bed Ph1 3 is of primary economic importance. The floor material below this relatively flat laying phosphate bed is shale and the roof material is a competent dolomite. The phosphate bed is divided into three distinctly different layers, the combination of which determines the characteristics of the total ore section at any given location. The bottom layer is described as the “lower lean layer” and is composed of banded phosphorite and black potassic shale. The next layer is the high-grade section described as the “middle rich layer.” It is composed of alternating bands of coarse and fine phosphorite. The upper-most layer is called the “upper lean layer” and is composed of alternating bands of phosphorite and dolomite. The thickness of each layer ranges from 0 to as much as 4 meters. There are locations where only a single layer is present (generally lower or upper lean) and other locations where only two layers are present.

Reserves for the two primary deposits:
The two primary deposits, Dianziping and Shukongping, have been adequately explored (121 and 46 drill sample sites respectively) and contain a total of 60.90 million tonnes of proven and probable ore reserves at 24.% P2O5. These in-situ tonnages were established with an ore grade cut-off of 12% P2O5 and an ore thickness cut-off of 1.5 metres.

View of Shukongping deposit

The two primary deposits have sufficient reserves to justify about 30 year project life depending upon the mining recovery rate. Reserves were defined by data from sample sites at Dianziping and at Shukongping.

Resources on three subsidiary deposits:
Spur has a Right of First Refusal with Yichang City on the remaining three deposits which are currently viewed as subsidiary deposits. They will serve as replacement “ore bodies” for the primary ore bodies which are currently scheduled for depletion approximately 30 years after initial large-scale operations are begun. The current level of exploration and development on the three properties can best be described as preliminary. Much work remains to be completed to fully characterize each of the deposits in preparation for exploitation design. The total measured and indicated resources of the three subsidiary deposits are 396.1 million tonnes with 20.8% P2O5.

Mining method:
Room-and-pillar mining method will be used.

Phosphate rich ore will be extracted by a combination of first- and second-pass mining operations that recover approximately 72% of the Dianziping in-situ reserves. First-pass mining will advance development and production panels from the main mine portals to the limits of the deposit. Second-pass mining will recover reserves from the pillars remaining from first-pass mining immediately following completion of first-pass mining.

The maximum overburden thickness at Dianziping is about 220 meters. Mine room widths will be 8 meters (m), allowing efficient high productivity extraction. Production panel pillars will be 15 x 15 m, providing sufficient support to accommodate the abutment loads anticipated during second-pass mining operations. Second-pass mining will remove an 8 x 15 m slot through the center of each panel pillar, leaving two 3.5 x 15 m pillar segments. Mine ventilation will be accomplished utilizing a negative pressure system employing two main fans located at the south portals adjacent to the concentrator and mine surface facilities.

Drilling and blasting the ore is essential. Blast holes will be prepared and loaded using four electric powered drill jumbos and three explosive chargers. After blasting, the fragmented ore will moved to the main haulage ways and transferred into haul train in the adit below the ore body. The train will deliver the ROM ore to the primary crusher located within 250 m of the mine portal. The primary crushing plant reduces the ore to 80% passing 200 mm and delivers the crushed ore to the beneficiation plant’s ore supply conveyor.

The ore will be beneficiated by crushing, washing, and heavy media separation to remove shale and dolomite impurities prior to the manufacture of phosphoric acid by the wet process. A 200,000-t/a heavy media demonstration plant proved the process on local phosphate ore. Heavy media separation is widely used on coal and a variety of ores including phosphate, and potash. In this process, the ore is crushed to pass 15 mm to liberate phosphate particles from the waste. The crushed ore is washed to remove deleterious fines and then sent to heavy media cyclones, in which solids having different specific gravities are placed in a fluid having an intermediate specific gravity, causing the less dense solids particles to float and the heavier particles to sink. Magnetite and ferrosilicon are used to prepare the medium. Particles of dolomite and shale, which are less dense than phosphate, are removed as cyclone overflow, dewatered, and conveyed to the waste disposal site. The denser phosphate particles are recovered as cyclone underflow, dewatered, and then transported to chemical plant site.

Processing phosphate rock:

Mining Life:
The following table outlines some of the key mine design data for Dianziping and Shukongping mines.

Mining Rights:
Spur signed a sino-foreign joint venture agreement with YPCC on June 25th of 2003 which was approved by Yichang City, Hubei Province and Central NDRC and Ministry of Commerce.

On the basis of that JV Agreement, Central Land and Resources issued the two mining licenses to Spur’s JV partner, YPCC. IT is YPCC’s obligation to travel those two mining licenses to Yichang Maple Leaf Chemcials as part of YPCC’s contribution of Registered Capital to the Project.

The transfer process is progressing slowly.:

Dianziping deposit:

• Certificate Number:4200000411546
• Mining right owner: Hubei Yichang Phosphorus Chemicals Ltd (YPCC)
• Mine name: Hubei Yichang Phosphorus Chemicals Ltd Dianziping Phosphorite Mine
• Type of Company: State Owned
• Expiry dates: Ten years From Feb. 2004 To Feb.2014
• Mining method: Underground
• Production Scale: 1,250,000 ton/year
• Digging area: 4.58 sq.km.

Shukongping deposit:

• Certificate Number:4200000411548
• Mining right owner: Hubei Yichang Phosphorus Chemicals Ltd (YPCC)
• Mine name: Hubei Yichang Phosphorus Chemicals Ltd Shukongping Phosphorite Mine
• Type of Company: State Owned
• Expiry dates: Five years From Oct. 2004 To Oct.2009
• Mining method: Underground
• Production Scale: 800,000 mt /year
• Digging Area: 4.65 sq.km.