Name and Location
Chandler salt mine project, Northern Territory, Australia.

Client
Tellus Holdings.

Project Description
A prefeasibility study (PFS), based on $6.5-million of historic oil and gas, as well as seismic drilling, has confirmed a Joint Ore Reserves Committee-compliant high-grade multimineral salt exploration target of 4.5-billion to 5-billion tons. The PFS has also confirmed a commercially viable 25-year salt mine project. The salt bed could be Australia’s largest and shallowest deposit and possibly Australia’s longest-life mine.

Salt production will start at 300 000 t/y and increase to an initial one-million tons a year, with increased production dependent on market demand for the proposed initial mine life of 25 years. Given the indicated size of the target resource, it is expected that the mine life may be extended over 25-year rolling terms for generations.

Access to the target salt formation will be provided by a 3.5 km decline to a PFS assumed depth of 550 m. This depth may change once confirmation drilling has been undertaken to further delineate the resource. The mine will also have a vertical ventilation shaft and associated ventilation equipment and fans. The ventilation shaft also provides a second egress for safety purposes. It is expected to take 22 months at a rate of 8 m a day to reach the underground salt deposit production level, situated within the Chandler salt formation.
Once the decline has reached a sufficient depth within the salt bed, Tellus will start a room-and-pillar mine design, which involves the mechanical excavation of horizontal chambers, or rooms, in the salt deposit, leaving supporting pillars of material in place between the rooms and drives for structural stability. Rooms are 10 m to 15 m wide, 6 m high and 120 m to 140 m long. Each room is separated by a 10 m pillar. The room-and-pillar layout is in a uniform rectangular pattern.

Rock salt will be extracted using traditional drill-and-blast mining methods, chosen for being tried and tested and the ready availability of equipment and personnel with the required skill and experience to use these extraction methods.

Currently, Tellus assumes a single-layer mine; however, after new drilling and detailed core analysis have been carried out at 1 m intervals at the next study stage, additional levels may be incorporated.

Value
Not stated.

Duration
First salt sales are expected in 2015.

Latest Developments
Tellus has awarded the first drilling contract as part of the mine planning – or definitive feasibility study (DFS) Stage 1 – activities at the Chandler salt mine project.

The DFS will be completed in two stages.

Stage 1 will include:
• three cored salt wells,
• front-end loading (FEL) Stage 2 engineering,
• a resource statement,
• a conceptual mine-design update, and
• a go/no-go decision step.

Stage 2 will include:
• additional cored salt wells and decline wells,
• three-dimensional seismic drilling,
• FEL Stage 3 engineering,
• a resource and reserve statement,
• a detailed mine design, and
• a final investment decision.

Mitchell Services has been awarded the 2 000 m diamond coring contract as part of the DFS Stage 1 mine planning activity.
Rig mobilisation was to have started in mid-November, with drilling results expected in early 2014. Resource modelling and product assessment studies were scheduled to start soon thereafter.

The drilling programme will target the 700-m-deep, 200-m-thick Chandler salt formation to gather more information required for mine planning and to confirm the volume and grade of halite (edible and industrial salts) and associated high-value minerals (fertilisers).
Endeavour Geophysics will conduct the wire-line logging for the project, which is a vital step in the resource appraisal stage of the project.
Tellus has awarded drilling support service contracts to several local Alice Springs firms, including NT Link, Hirex and Central Car Rentals.

Key Contracts and Suppliers
Mitchell Services (diamond coring contract); Endeavour Physics (wire-line logging); NT Link, Hirex and Central Car Rentals (drilling support service contracts).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Tellus Holdings investor relations, Brett Boynton, tel +61 2 9241 7678 or email brett@tellusholdings.com.au.