• Appraisal

    Activity immediately following successful exploration drilling, e.g. the drilling of a delineation well to determine the size and characteristics of the discovered mineral body.

  • Area Rental

    The cost of renting a mineral licence area for a defined period of time.

  • Assay

    A description of the yield/quality characteristics of a mineral sample. The term also refers to the procedure for determining the quality of the potash bearing ore such as carnallitite or sylvinite.

  • Basement

    Layer in the earth’s crust below which hydrocarbon accumulations are not expected to be found. Often the base of the sedimentary sequence and usually composed of relatively old, igneous or metamorphic rocks, which tend to have distinctive geophysical characteristics (e.g. seismic response, density and magnetism) from the overlying sedimentary rocks.

  • Beneficiation

    A process whereby extracted ore from mining is reduced to particles that can be separated into mineral and waste, the mineral would be suitable for further processing or direct use.

  • Booked reserves

    Reserves which a company recognises in its Financial Statements, according to the rules set out by the relevant market regulator. Commonly these are the proven reserves as defined by the SEC.

  • Brine

    A mixed rich solution of a solvent and salt minerals produced by pumping water or any other solvent in order to dissolve the mineral-rich salts formation. A brine will be produced for solution mining of carnallitite deposits in the Manenga permit. The brine is sent to surface for the separation of sylvite (KCl), NaCl and MgCl through hot leaching and crystallization.

  • British Thermal Unit (btu)

    A unit of heat energy defined as the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit. One btu equals 1,055 joules or 252 calories.

  • Canpotex Limited

    Is the major export company owned by all Saskatchewan potash producers. Sales through Canpotex are generally allocated pro rata to each producer on the basis of production capacity. PotashCorp controlled 56% of Canpotex in 2006.

  • Capital costs (or Capex)

    Expenditure by companies on capital equipment. Capital equipment can be considered to be equipment with a material value and a significant lifespan. Typical items of capital expenditure are Mine shafts, pipelines, machinery, equipment and buildings.

  • Carnallite (KMgCl3 6H2O)

    is an evaporite mineral a hydrated potassium magnesium chloride, formed in specific conditions and mainly a sedimentary environment consisting of evaporating sea water. Its specific gravity is 1.66.

  • Carnallitite

    is a rock consisting of interlayering carnallite-rich layers, some Halite (NaCl) and anhydrite (CaSO4). In the Congo coastal basin area, carnallitite layers are 10 to 20 m thick with carnallite content of 40 to 90%. KCl content of canallite in the onshore Congo Coastal basin is 8 to 24%.

  • Carried interest (or carry)

    An agreement where one or more members of a consortium is financed by other members during the exploration and/or development phase. Repayment of this financing usually takes place out of the cash flow generated by future production. The financing can be between any of the parties however it is usually between an international mining company (IMC) and a host government. This effectively transfers the risk of the exploration and development to the IMC, and ensures that the Government does not have to outlay any costs. A carry often, but not always attracts an interest on the outstanding balance.

  • Cash flow

    The physical flow of cash into and out of a business. It usually refers to a table showing each element of cash inflows (sales of hydrocarbons, tariff receipts) and cash outflows (capital expenditure, operating expenditure, taxation) resulting in a Net Cash Flow which is the sum of inflows less outflows.

  • Casing

    The steel lining which supports the sides of the well and prevents the flow of fluid both from and into the well bore. In addition it provides a means of controlling well pressures and oil production.

  • Cavern losses

    A quantity of potash remaining in the brine in the cavern.

  • Compartmentalisation

    Division by natural processes (e.g. faulting) of a mineral formation into separate segments with possibly differing petrophysical or geomechanical characteristics.

  • Completion (of a well)

    The final process in drilling a well. If a well is successful, it means the process of providing a permanent means of production. If a well is unsuccessful, completion means the process of plugging and abandoning.

  • Concession

    A licence awarded to a company for a defined area and time which generally gives the company the right to explore, develop, produce and sell a mineral resource that it finds. In return for this concession, the host Government receives an area rental and taxation, which may comprise Royalty, Income Tax and additional mining-specific taxations.

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  • Contractor

    Company that provides services in the mining industry e.g. the provision of mining facilities or operation/maintenance support.

  • Core

    A cylindrical rock sample cut from the well during drilling. These samples are examined to obtain geological or petrophysical information.

  • Cost pool

    The splitting of costs incurred into separate cost areas which is used under the full cost method of accounting and reported in the financial statements of a company. These pools will be used for performing ceiling tests. The split of costs needs to be done to ensure costs from a common basis are collected together, normally done on a geographical basis.

  • Cut-off grade

    A grade of mineral resource determined by the mining company to be the minimum grade required for economic production of the mineral deposit.

  • Decommission

    Technical work undertaken at the end of mine life to prepare the facilities for safe removal e.g. plugging and abandoning production wells, removal of mine production facilities and cleaning the area of toxic substances.

  • Development

    The phase of mining operations that brings a new mine deposit or an existing mine into full-scale production.

  • Development costs

    Costs incurred after a decision has been taken to develop a mine, including the costs of drilling, earthmoving, excavations, sinking shafts, conveyor belts, and other capital equipment.

  • Entitlement production

    The production that the contractor or concession holder is entitled to physically receive. In a concession, this equates to concessionaire’s working interest production excluding any royalty payments.

  • EPCM contract

    Engineering, Procurement, Construction and Management (sometimes Maintenance) contract. A contract where the contractor is responsible for the design, procurement, construction and management (maintenance) phases of a project.

  • Equity interest

    A company’s percentage interest in an asset or project. This normally determines what percentage of costs and revenues that the company pays/receives.

  • Evaporite

    A sedimentary rock or deposit that result from the evaporation of water. Evaporites often deposit in cycles as sea water level fluctuates. Gypsum, halite and carnallite are evaporates.

  • Expected Monetary Value (EMV)

    The expected value from performing an action. It is calculated by assigning a probability and a value to each possible outcome and multiplying together. The results are then added together to obtain a value.

  • Extraction ratio

    The fraction of a mineral resource extracted from a mining area based upon the extraction method used. For solution mining operations of sylvite, the extraction ratio is about 40% (60% is left in place).

  • Extractable potash

    The amount of extractable potash net of 25% deduction for unidentified mining level anomalies and a 40% extraction ratio.

  • Farm-in

    The process whereby a company joins another company or joint venture participating in a block or field. The company farming in is granted a working interest in the field or block in return for cash and/or a carry through an exploration programme.

  • Farm-out

    The process whereby a company reduces or disposes of its interest in a block or year.

  • Fiscal regime

    A representation of a fiscal system governed by tax law and/or specific contracts such as Mining Contract.

  • Free On Board (FOB)

    Describes the pricing point of a commodity (e.g. potash) at an origin port. An FOB price includes delivery, inspection and loading costs involved in putting the commodity on a ship at the origin port. In an FOB contract, the buyer takes ownership of the commodity at the origin port – the buyer is required to pay all additional costs to transport the cargo to the destination port.

  • Front End Engineering Design (FEED)

    The stage of a project beyond conceptual design, but before detailed design. The objective of the FEED study is to define the project’s scope to a degree such that uncertainty and hence cost increases are minimised during the execution phase. A FEED study typically involves preparation of preliminary design documentation, cost estimates, procurement requirements, a project schedule and risk assessment.

  • G&A Costs

    Costs incurred by the entity that are not related directly to the exploration for and production of potash, such as costs of running Finance, HR and IT departments.

  • Halite (NaCl)

    A naturally occurring sodium chloride common or rock salt. Halite is present on all continents in beds ranging from a few meters to more than 300 m. Halite is also called evaporites because they form by evaporation of saline water in patially enclosed basins. They can be associated with beds of limestone, dolomite and shale.

  • Horizon

    A consistent package of layered bedded rocks or formation containing interbeds of different minerals or ores.

  • K2O

    Potassium oxide, a term used in the fertilizer industry to define potassium content. To convert KCl product tonnes to K2O, multiply by 0.632.

  • K2O tonnes

    Units of measurement of the nutrient value of potassium-containing fertilizers produced by varying facilities. A K60 product is for example guaranteed to contain a minimum of 60% K2O. K2O content of sylvinite in the Holle Mine area (Tchitondi permit) can reach 38% in average in layer 3 IX.

  • KCl

    Potassium chloride; also used interchangeably for potash. A tonne of KCl contains an equivalent of 0.632 tonnes of K2O. KCl content of carnallite in the Congo Coastal basin area is between 8 to 24% whereas KCl content of sylvinite is on average 20 to 38%.

  • Loeme Formation

    The salt deposit of Aptian age, containing the sylvinite and carnallitite deposits found onshore Congo coastal basin. The Loeme formation has a thickness of 400 to 900 m onshore. Its top is at about 270 m in the Holle mine area down to some 550 m near the city of Pointe-Noire.

  • Metric Tonnes (MT)

    Equal 2,204.6 pounds or 1,000 kilograms. Most offshore sales are made in metric tones and US Dollars. To convert to short tons, multiply by 1.1023.

  • Mscf

    Volumetric unit of measurement used for natural gas. One Mscf equals one thousand standard cubic feet which is equivalent to 28.32 cubic metres.

  • MMscf

    Volumetric unit of measurement used for natural gas. One MMscf equals one million standard cubic feet .

  • Mineral resource inferred

    A measured quantity of potash resource after accounting for an economic cut-off within 1 mile (1.60 km) minimum and 5 miles (8.05 km) maximum radius of a cored and assayed drill hole.

  • Mineral resource indicated

  • A measured quantity of potash resource after accounting for an economic cut-off within 1 mile (1.60 km) radius of a cored and assayed drill hole.

  • Mineral resource indicated and measured

    A measured quantity of potash resource at a higher level of confidence, after accounting for an economic cut-off, the areal extent surrounding a drill hole for which it is reasonable to infer geological conditions being generally 1 to 2 miles (1.60 km to 3.2 km).

  • Operating costs (Opex)

    The day-to-day costs incurred in producing oil and gas. These include for example, costs of personnel, materials, supplies etc.

  • Operating profit

    Turnover and other income less operating costs, DD&A, exploration expense, impairment charges and G&A costs.

  • Operator

    The lead mining company in the joint venture which owns the field. The operator’s role is to co-ordinate a programme of oil exploration and development of its licensed area(s) on behalf of its co-licensees (if any).

  • Plan of Development (POD)

    The formal plan for developing and operating a field. The government or regulator need to approve the plan before the development may proceed. The field has to be developed within the time period of the production licence and under the plan stipulated under the POD.

  • Potash (KCl)

    Potash fertilizer is muriate of potash (KCl, potassium chloride). Potassium also combines with other materials in special fertilizers such as potassium sulfate (K2SO4), potassium magnesium sulfate (K2Mg2 (SO4)3) or potassium nitrate (KNO3).

  • Potassium (K)

    Potassium is a metal and is the seventh most abundant in the world. Potassium is an essential element for plant growth and is found in most soils. Potassium is also a vital element in human diet.

  • Prospect

    A potential drilling target, as determined by a set of geological circumstances having potentially combined to create the conditions necessary for the concentration of a mineral resource.

  • Royalty

    Payments that may be made to the government or licence owner in return for the producer having access to the mineral resource. Royalty is generally paid as the first use of any revenue, and is usually quoted as a percentage of gross revenues, (or gross revenues less transportation costs). Royalty is often levied at a flat rate however there are a number of fiscal regimes where a sliding scale royalty rate exists, i.e. as the production rate increases so does the royalty rate.

  • Seismic survey (2D or 3D)

    The collection of stratigraphic data obtained by creating shockwaves through the rock layers. Reflection of these waves from anomalies within the rock layers are electronically recorded at surface. These recordings are then analysed to produce a stratigraphic representation of the surveyed area, which helps to deduce the structure of the underlying rock layers. These surveys could be two-dimensional (2D) or three-dimensional (3D).

  • Solution mining

    The production of ore material by dissolution using a solvent. For salt rocks such as sylvinite or carnallitite water or weak brine is an excellent solvent. For underground solution mining such as the one being planned in the Manenga permit, wells are drilled down to the carnallitite deposit and the solvent injected dissolves the ore and the resulting brine is pumped to surface for further processing. In this way a cavern develops underground that can be used for gas storage or mine waste backfilling.

  • Sylvite

    Sylvite is potassium chloride (KCl) in natural mineral crystalline form with a specific gravity of 1.99. sylvite is often found in evaporite deposits in the world and can be formed by alteration of carnallite.

  • Sylvinite

    Sylvinite is a potassium chloride (KCl) ore. It is a mixture of potassium chloride (KCl), Halite (NaCl) and shales. Sylvinite layers with thicknesses of 2 to 5 m are present in cycles II and IX around the Tchitondi permit area, and derived from the alteration of carnallitite by water. This sylvinite has KCl content of 20 to 38%. Only layer 3 IX was mined at the Holle mine until flooding stopped operations.

  • Tie-back

    The act of connecting a well to the manifold and production system.

  • Total Depth (TD)

    Total depth of a well. See Total Measured Depth.

  • Total Measured Depth (TMD)

    The full linear distance of a well measured along its drilled projection. Unless a well is drilled in a strictly vertical fashion, this is typically a higher figure than the true vertical depth (TVD).

  • Wireline logs

    Electrical devices run down a well on a steel cable. The equipment’s response is used to determine rock lithology, permeability, porosity. In potash wells wireline measurements often include Gamma Ray and Neutron Density logs.

  • Working interest

    A company’s percentage interest in an asset or project. This normally determines what percentage of costs and revenues that the company pays/receives from the asset/project.

  • Workover

    Any operation performed on a well subsequent to its completion to repair and improve its performance.