Metals

Project Highlights


  • NI43-101 Technical Report including CIM compliant Inferred Mineral Resource of 441 million tonnes at average grades of 29.4% Fe, 41.0% SiO2, 6.1% Al2O3 and 0.3% P for Block 1 of the XIF
  • Average Davis Tube Recovery (DTR) magnetic concentrate mass recoveries of 33.2% at P80 grind size of 80 microns.
  • Iron ore grade DTR magnetic concentrate at 67.2% Fe, 4.2% SiO2, 0.5% Al2O3, 0.07% P at P80 grind size of 80 microns, although higher grades are possible at finer P80's see the press release from December 17, 2013.
  • Significant potential to increase the Mineral Resource though ongoing exploration. The reported Mineral Resource represents only a fraction of the potential XIF mineralization delimited by the ground magnetics. Tsodilo has reported an Exploration Target* for the XIF of 5 to 7 billion tonnes with grades ranging between 15-40% Fe, see the press release from January 22, 2014.
  • Tsodilo is currently drilling the next exploration area referred to as Block 2a, where the company expects to define a significant Inferred Mineral Resource in due course which will significantly increase the Xaudum Iron Project total Mineral Resource.
* The XIF exploration target was generated using inversion modelling of the ground magnetic signal which was compared to a local drill-hole model to create inversion model volume conversion factors (see below). It is important to note that the tonnages and grade quoted in this exploration target is conceptual in nature, there has been insufficient exploration to define this fully as a mineral resource and that it is uncertain if further exploration will result in the full target being delineated as a mineral resource.

Introduction


The Xaudum Iron Formation (XIF) Project is a Neoproterozoic, banded magnetite iron ore prospect. It takes its name from the Xaudum River that runs through the northern portion of the Ngamiland region in the North-West District of Botswana.

The XIF Project is located within two base metal prospecting licenses (PL386/2008 and PL387/2008) and stretches over 37km (see Figure 1). The area has good infrastructure, with good road connections, water and telecommunications. The Neoproterozoic rocks (including the XIF) in this area are overlain by Kalahari sedimentary cover, which is variable in thickness (generally 20-30m thick, but can be up to 80m in some areas). This Kalahari cover is made up of predominantly lose unconsolidated sand as well as some calcrete. The XIF generally does not outcrop (one small outcropping area in the old calcrete quarry area in Shakawe) and is considered a buried prospect. The XIF has been delineated for exploration drilling using detailed ground magnetic surveys conducted by the Company over the area. The ground magnetic survey comprises 23,000 line kilometers ("km") on lines 50 meters apart and covers 1800km². This cover makes exploration in the area difficult, due to the lack of outcrop requiring drilling driven by geophysics to get to the bed rock below.

Exploration History


Exploration began in the southern part of the Ngamiland region as Diamond target exploration around the end of 2008. The area was essentially unknown and the rocks in the area had been undefined prior to the exploration by the company. Various targets were identified from aerial magnetics surveys conducted by the Botswana government. This drilling began to intersect some Cu sulphide mineralization within schist's in the area. Drilling then moved north in 2010 and identified further potential Cu mineralization in skarns and also near the Xaudum Iron magnetic anomaly. During this time a ground magnetic surveys was commissioned and to date has covered over 16,500 line km and 480 km2, see Figure 1. This helped to delineate further the major magnetic anomaly that was the Xaudum magnetite BIF.


Figure 1. Map showing the ground magnetic signature of the Xaudum Iron Formation and the location of holes drilled. Block 1 where the majority of the drilling has focused and a Resource has been defined is shown.

Further drilling in 2011 and 2012 showed that that the BIF itself was a potential source of significant tones of magnetite Fe mineralization. This along with the excellent potential for Cu mineralization in the area made the region look very attractive. In April 2013 Tsodilo Resources Ltd. ('Tsodilo') announced that it had entered into a strategic partnership with First Quantum Minerals Ltd. for the exploration of the Cu targets in the Ngamiland Prospecting Licenses held by Tsodilo. This partnership enabled Tsodilo to concentrate further on exploration and resource delineation drilling of the XIF, which is continuing at the present time.

Current resource


Mineralization
The XIF mineralization occurs within an assumed 'Grand Conglomerate' equivalent diamictite horizon, which is referred to as a diamictite schist (geodomain DIA). These diamictites, which are interpreted as the Grand Conglomerate equivalent of the Neoproterozoic Nguba Groub (as described in the Katangan Basin area of the Zambian Copper belt). These are a glacial origin marker horizon within the Neoproterozoic of the region.

Drilling to date has confirmed that the XIF is comprised of two major materials and a third minor material, See Figure 2:

  • Magnetite banded (banded iron formation ("BIF")) material (Figure 2 A). This material is Geodomained as MBA (for Magnetite Banded) when fresh, or Geodomained MBW (for Magnetite Banded Weathered) when weathered near surface (just below the Kalahari cover). MBA is generally well banded with dark (magnetite rich) bands and light (quartz and silicate rich) bands. It is suggested that the MBA geodomain generally formed from a cherty-shaley BIF which was subsequently regionally metamorphosed and recrystallized to amphibolite facies.
  • Magnetite Schist material, also termed Magnetite Diamictite Schist (Figure 2 B). This unit is Geodomained as DIM (for Diamictite Magnetic) when fresh, or Geodomained DMW (for Diamictite Magnetic Weathered) when weathered near surface. DIM has a very similar appearance to the waste Geodomain DIA (Figure 2D) however DIM has a significant proportion of magnetite and is hence magnetic, whereas and DIA does not and is non-magnetic. DIM is generally a well-foliated schist with a high percentage of magnetite. There is no obvious segregation of magnetite as seen in MBA, so whilst it does not have a classic BIF form, it is still an iron formation material. The genetic origin is suggested as a ferruginous, silty to sandy shale or semi-pelitic sediment with varying contents of Ca and Mg, which has been metamorphosed to amphibolite facies. The leucocratic felsic clasts are believed to represent pebbles, indicating a glacial origin and so have been termed diamictites.
  • Minor unit -- Magnetite Garnet Schist material (Figure 2 C), is Geodomained as MGS (for Magnetite Garnet Schist). Magnetite and Garnet are the dominant minerals, however, abundance is quite variable. MGS can have a sub-banded to sub-foliated nature, and can appear similar to MBA when magnetite is dominant. The genetic origin is suggested as an iron-rich calcareous (±Mg) shaly semi-pelagic sediment, which has been metamorphosed to amphibolite facies.


Figure 2. A. MBA (Magnetite Banded BIF) Geodomain. B. DIM (Diamictite Magnetic) Geodomain. C. MGS (Magnetite Garnet Schist)Geodomain. D. DIA (Diamictite -- non-magnetic, waste material) Geodomain.

Geodomains MBA, DIM, and MGS are significantly magnetic, although MBA is more magnetic and can be considered a high grade magnetite domain, whereas DIM and MGS are less magnetic. DIM however appears to have a widespread distribution in certain areas but is rare and not seen in other areas where MBA is more dominant. DIM can also be interlayered with both MBA and MGS.

In some locations the MBA and MGS appear to alternate within larger zones of DIM. This interlayering is suggested to represent original sedimentary layering within the mineralization zone. However in some areas this interlayering is less evident and DIM less common and MBA more dominant. This variation is tentatively postulated to be possible local facies changes within the depositional basin. Deformation, folding and potential thrusting add to the variable nature of mineralization distribution. Defining detailed stratigraphy at a local scale and true thicknesses of the XIF mineralization is therefore complicated particularly at this relatively early stage of resource drilling. The course grain-size nature within the MBA, and DIM make this material very favorable for magnetic separation and concentration.

The XIF has been identified as a Rapitan style BIF of Neoproterozoic age. Neoproterozoic BIF formations have been proposed to have formed during or in the immediate aftermath of the so called Neoproterozoic "Snowball Earth" state at that time (considered to be around 0.6-0.8 Ga in age). Other examples of Neoproterozoic BIF include the Rapitan Group in northwest Canada (18.6 billion tonnes at 47% Fe); the Yudnamutara Subgroup, Braemar Iron Formation, Australia (1.4 billion tonnes at 15.5% Fe); the Chuos Formation, Namibia (~2-3 billion tonnes at 20-28% Fe); and the Jacadigo Group, Brazil, Urucum district (~30 billion tonnes at 20-25% Fe).

Mineral Resource Estimate
The majority of the resource drilling for the XIF has been in Block 1 (see Figure 1), in this area there has a high enough density of drilling to define a resource. The Inferred Mineral Resource for Block 1 (Table 1) comprising 441 Mt grading 29.4% Fe, 41.0% SiO2, 6.1% Al2O3 and 0.3% P (see Table 1 for breakdown), was prepared under the direction of Howard Baker (of SRK Consulting (UK) Ltd) the Qualified Person (QP) as such term is defined by National Instrument 43-101 and the companion policy 43-101 CP. The definitions of Inferred Resources in this Mineral Resource statement conform to the definitions and guidelines of the CIM Definition Standards for Mineral Resource and Mineral Reserves, May 2014. For more details please see the XIF NI 43-101 Mineral Resource Estimate (MRE) report that can be downloaded at
http://www.tsodiloresources.com/s/Metals.asp?ReportID=671051 and also from the SEDAR website, www.sedar.com.

Table 1. Mineral Resource Statement for XIF Block 1.

Table 1. Mineral Resource Statement for XIF Block 1.
Geodomain Zone Resource Category Tonnes (Mt) Fe % SiO2 % Al2O3 % P %
MBA Inferred 236 35.6 34.0 4.0 0.3
DIM Inferred 148 20.9 51.0 9.1 0.2
MBW Inferred 21 34.3 35.4 4.4 0.2
DMW Inferred 29 20.5 49.5 8.2 0.2
MGS Inferred 7 22.1 50.8 8.9 0.2
TOTAL Inferred 441 29.4 41.0 6.1 0.3
Notes:

(1) Geodomains MBA = Magnetite Banded (BIF), DIM = Magnetic Diamictite, MBW = Weathered Banded Magnetite (oxidized MBA), DMW = Weathered Magnetic Diamictite (oxidised DIM), and MGS = Magnetic Garnet Schist.

(2) The Mineral Resource is not a Mineral Reserve and has no demonstrated economic viability.

(3) The effective date of the Mineral Resource is 29th August 2014.

(4) The Mineral Resource estimate for Xaudum was constrained within lithological and grade based solids and within a Lerchs-Grossman optimized pit shell defined by the following assumptions; metal price of USD 1.5 / dmtu; slope angles of 26º, 45º and 50° in the sand, calcrete / oxide and fresh material; a mining recovery of 95.0%; a mining dilution of 5.0%; a base case mining cost of USD 2.20 / t ore and an incremental mine operating costs of USD 0.05 / t / 10 m; process operating costs of USD 5.00 / t ore; iron processing recoveries of 78.1% (MBA); 54.0% (DIM); 46.3% (MBW); 53.6% (DMW); 23.7% (MGS); G&A costs of USD 5.00 / t / ore; transport costs of USD 5 / t concentrate.

(5) The Mineral Resource is reported using a 12% Fe cut-off grade.

(6) Mineral Resources at Xaudum have been classified according to the "CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines (May 2014)" by Howard Baker (FAusIMM(CP)), an independent Qualified Person as defined in NI 43-101.

(7) The quantity and grade of reported Inferred Mineral Resource is uncertain in nature and there has been insufficient exploration to report this as an Indicated or Measured Mineral Resource; and it is uncertain if further exploration will result in upgrading it, or a portion of it, to an Indicated or Measured Mineral Resource category.


The Block 1 Mineral Resource estimate above is based on the in-house XIF geological wireframe modelling of Block 1 which was verified by SRK (See Figure 3). A block model was then coded using the geological wireframes, block grades interpolated, and Mineral Resources defined and reported using a pit shell optimization in conjunction with a 12% Fe cut-off grade. The XIF geological (wireframe) model can be seen in Figure 3 but can also be seen as an animation video on our website by following this link, http://player.vimeo.com/video/104426385. For more details on the process of modelling, resource estimation and resource reporting using pit shell optimization techniques by SRK please see the XIF NI 43-101 MRE report.

The MRE is based on 157 holes totaling 31,149 meters drilled by Tsodilo within the Block 1 area, containing 9,221 assays from 13,824 meters of samples.

The geological modelling of Block 1 was carried out in-house by the company using Paradigm GOCAD geological modelling software, which was completed by geo-referencing interpreted cross sections into GOCAD and digitizing these sectional interpretations. These formed the basis of further interpretation and detailed geological modelling of wireframe surfaces of both mineralization and waste zones (geodomains).

The geodomains delineated in the model comprise: three separate magnetite-banded (MBA) zones (along with associated weathered MBW), three separate magnetic diamictite (DIM) zones (along with associated weathered DMW), seven MBA pods, one DIM pod, three magnetite schist (MGS) pods, eight garnet schist (GST) waste pods, one diamictite (DIA) waste pod, along with other waste lithology units. Mineralization has been delineated over a strike length of 8.5 kilometers within Block 1 which is based on diamond drilling and geophysical magnetic interpretation.

Using the geological wireframes, a single block model was created using block sizes 100 mY by 25 mX and 10 mZ. Grades of Fe, Al2O3, SiO2, Mn, P, S, CaO, LOI, MgO, K2O, and TiO2, were interpolated into the model using Ordinary Kriging (OK) for major geodomains and Inverse Distance Weighting to the power of 3 (IDW3) for minor geodomains using assay data from the diamond drilling completed by Tsodilo. This interpolated block model was run through a pit optimization process using reasonable operating and processing cost parameters along with a long-term commodity price to ensure the reported Mineral Resource comprises only material with reasonable potential for eventual economic extraction. The resulting reported Mineral Resource is therefore restricted to material falling within the optimized pit shell, and above a cut-off grade of 12% Fe. Details of these pit optimization parameters can be found in the XIF MRE resource report. Table 1 shows the resulting Mineral Resource statement for the Block 1.


Figure 3. MBA, MBW, DIM and DMW wireframe units and drill holes -- looking NE.

Exploration Target


A conservative exploration target of 5 to 7 billion tonnes of Iron Ore at grades ranging between 15-40% Fe has been calculated for the entire strike length (36.8km) of the Xaudum Iron Ore project, Botswana. This includes both major units of the Xaudum Iron Formation consisting of a Magnetite Banded Iron Formation "BIF" (ranging between 25-40 % Fe) and a Magnetic Schist (ranging between 15-25% Fe).

Tsodilo calculated this exploration target by extrapolating results from current drill hole data to the far larger area covered by the ground magnetic geophysical data by utilizing a ground magnetics inversion model.

This exploration target was generated by inversion modelling of ground magnetic geophysical data (created in GOCAD using VPmg) creating volumes representing the potential Iron Ore distribution. The constrained block model inversion, based on the Xaudum Iron Formation (XIF) ground magnetic footprint, provides the starting point. This model overestimates the volumes of the XIF and a calibration to a known reference volume is required. To do this the inversion model is initially volume reduced laterally by using the highest magnetic susceptibility value iso-surface derived from the unconstrained model. It is further volume reduced by a base of mineralization offset, which is applied as a base cut-off across the entire model. This volume reduced unconstrained inversion model, is subsequently compared to local drill hole derived models in very localised areas where closely spaced drill hole data was available. From this a set of volume reduction / offset factors are created for each local model. This conservative volume range is then converted to a tonnage range by using an average XIF density value of 3.3 g/cm3. A video describing the steps entailed in creating this exploration target is viewable at http://www.tsodiloresources.com/s/Metals.asp?ReportID=619797. The methodology described above can be summarized as follows:

STEP 1: Create the inversion model from the ground magnetic data using VPmg GOCAD.


STEP 2: Smaller volumes are created using high magnetic susceptibility iso-surfaces to create volumes closer to reality due to volume over-sizing in the initial inversion model.


STEP 3: The volumes are further reduced using the drilling data and creation of section models based on this drilling data.


STEP 4: The reduced model volume is compared to the local model volume and offset factors are applied to the whole model to bring the inversion model closer to a reality approximation.


STEP 5: The most conservative volumes are then converted to tonnes by using the average density to create the exploration target tonnage range.

It is important to note that the tonnages and grade quoted in this exploration target is conceptual in nature, there has been insufficient exploration to define this fully as a mineral resource and that it is uncertain if further exploration will result in the full target being delineated as a mineral resource.

Comparison of Exploration Target to Block 1 Resources
The NI 43-101 tonnage estimated by SRK for the material inside the optimized pit shell of the geological model for Block 1 (Figure 5), based on the modeled geodomains is 441 Mt (Table 4). Figure 4 shows the geological modelled (based on drilling) geodomains, MBA (red) and DIM (green), similar to Figure 3. Figure 4 also shows the Exploration Target inversion model (pale blue) and its location relative to the geological model.


Figure 4. The geological model domains (based on drilling of Block 1), MBA (red), DIM (green), relative to the Exploration Target inversion model (pale blue).

The volumes of the Exploration Target inversion model inside the optimized SRK pit shells (yellow areas in Figure 5) used to create the 441Mt from the geological model were converted to a range of tonnages using the same exploration factorings described above. Figure 5 shows the results for the tonnages inside the pit shells are 273 -- 388 Mt respectively and represent the higher and lower tonnage estimates from the Exploration Target methodology inside the SRK pit shell. These are both slightly less than the CIM compliant resource tonnages for Block reported in the NI 43-101 MRE report. However, the results are very close and indicate that the Exploration Target is as we anticipated, a conservative tonnage estimate for the entire XIF region.


Geodomain Min Max Actual SRK MRE
(All) (Mt) (Mt) 441 Mt
TOTAL 273 388

Figure 5. Tonnage range for the Exploration Target inside the (yellow) SRK pit shells vs the tonnage for the NI 43-101 MRE report CIM compliant tonnages, defined as the material from the geological model inside the (yellow) pit shells.

Next Phase


The company is now moving into its next phase of exploration and is targeting a significant increase in the Mineral Resource by drilling out the Block 2 area which is split into Block 2a and Block 2b areas, see Figure 2. Significant tonnages of material are expected from these areas based on our exploration target mentioned above. We are anticipating a NI 43-101 MRE report following exploration at both Block 2a and Block 2b. The exploration priority is targeting MBA type material which is the higher grade material over 25% Fe and in Block 1 averaged 35.6% Fe. We are currently reviewing the ground magnetic signature intensity and inversion model to locate areas of higher grade potential MBA type material. We will use this to priorities the drilling order in Block 2a and Block 2b drill plans, and could modify the drill plans around the outcomes of this review. The drill holes in Block 2 is on a general spacing of around 800 meters along strike (North-South) and 100 meters across strike (East-West). This drill spacing aims to delineate an Inferred Mineral Resource, providing the mineralization is simple and continuous along strike and down-dip. If there are areas in Block 2 which are more geologically complex, in a similar manner to some complicated areas in Block 1; then extra holes may have to be drilled at a closer spacing.


Figure 6. Map showing ground magnetic interpreted first derivative outline of the XIF. The figure shows the Block 1 area for which the MRE resource presented in this report applies and the holes drilled in Block 1. Also shown are the Block 2a and Block 2b areas and drill plan (yellow and green dots respectively). The ground magnetic intensity and the ground magnetic inversion model used to make the Exploration Target (see above) are being used to help prioritize areas of potential MBA type material, and due to this the drill plans may be modified to fit with the best target results.

The company will maintain its on-going metallurgical testwork program and will also look to invite structural expertise to enhance our knowledge of the XIF. Ground magnetics work is on-going and is focusing on a more detailed spacing of 20 meters (normally 50 meters) along drill lines to give us higher resolution data on drill hole section/fence lines and help with refining drill hole locations to maximize the drill plan efficiency.


3D Deposit Model



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Figure 4. Corebox visualization of drilled intersections within the Xaudum Iron Formation

Disclosure

The Fe data presented here was created using a 15% Fe cutoff and a 4m of contiguous waste rule applied. The data presented in this 3D model is for visualization purposes only and may vary from those that are finalized and used for any mineral resource modelling purposes or that which may be detailed in the Company's news releases.

All references contained herein with respect to the potential quantity and grade derived by any method is at this stage of development conceptual in nature. At the present time, there has been insufficient exploration to define a mineral resource outside of Block 1 and it is uncertain if further exploration outside of Block 1 will result in the target being delineated as a mineral resource.
 
COREBOX
Tsodilo Resources Limited
Canada Trust Tower, BCE Place
161 Bay Street, P.O. Box 508
Toronto, ON Canada M5J 2S1
Telephone: (416) 572-2033
Fax: (416) 987-4369
Website: www.TsodiloResources.com/
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