Synterra Energy

Synterra have entered into partnership with Proper Technologies and Fusion Excel 9Nig) Ltd to establish small scale mining operations under leases they currently own

  _{A DEVELOPMENT PROPOSAL}

 It is our intention to raise funds for the further development of our mining exploration licences. We seek to achieve this by attracting investors that have a requirement for a secure and steady offtake of either zinc or lead. We have a number of exploration leases for zinc and lead and it is our intention ultimately to mine these assets collectively. Preference is given to a strategic investor that would be willing to partner us on other exploration and mining leases that we own. Cost recovery for investment will be met by discounted product supply under a volumetric payment program secured by production and reserves.

 EXPLORATION LICENSE 10764 - EBONYI STATE LEAD AND ZINC

41 CADASTRAL UNITS CU41 - ISHIAGU

 Nigeria’s Benue Trough is recognised as a major lead/zinc province – the most prospective in West Africa. It remains largely unexplored with modern methods. There are known large deposits in the Lower and Middle Benue regions at Ishiagu, Abakaliki and Akwana. The Abakaliki deposit is already known to contain over one million tonnes at 15% combined lead/zinc

 Lead-Zinc    occurrences   in Nigeria    are associated    with   saline   water   intrusion     in the   sedimentary    basins    or   fractured/ shear    zones    in   crystalline      rocks.    The mineralisation      is  often    associated    with minor    to  significant      amounts    of  copper and  silver,    occurring     in  lodes   filing    the fractures     within    the   sedimentary    rocks in  the   Benue  Trough    as well   as  in  crystalline      basement     rocks     as   shown     in recent    studies     by   Nigerian     Geological Survey  Agency.The  Trough,   which   is  believed    to  have originated     as a failed   arm  of  an  aulaco­ gen   at  the   time   of   the   opening    of   the South   Atlantic     oceans   during    the   separation   of  the  African    plate   and  the  South American     plate,    is  partitioned      into   the Lower,    Middle    and   Upper    region    with Lead-Zinc      mineralization       occurring      in almost   the  entire   800km   Length.  The  Lead-Zinc    are  localized    along   the Northeast-Southwest       trending      belt     of slightly    deformed    volcanic   and  sedimentary Cretaceous     sequences    (Albian     Asu River  Group)  which   is  about   5m thick, and  they  occur   in  the  form   of  veins   and veinlets    associated    with   the  host  rock.

 EBONYI STATE

 Ebonyi state is one of the states located in the south-eastern part of Nigeria with Igbo indigenes making up over 90 percent of the population. The state was carved out of the former Enugu and Abia states on October 1st 1996 and has its' capital in Abakaliki. It has an estimated population of 2,173,501 people with female preponderance.

 The state has thirteen local government areas and shares boundaries with Benue state to the north, Cross River state to the east, Enugu state to the northwest, and Abia state to the southeast.

 The Ishiagu lead-zinc deposits of south eastern Nigeria are associated with folded shales of the Asu River Group. The Pb-Zn mineralization is restricted to a series of closely spaced, steeply dipping sub parallel fractures which trend NW-SE and typically form en-echelon patterns. Along a second set of fissures, oriented NE-SW and of an earlier generation than the NW-SE system, only the gangue minerals (siderite and quartz) are characteristic. The style of mineralization is exclusively fissure-filling, whereas the distinctive pattern of mineralization—ore plus gangue minerals in the NW-SE fractures and gangue minerals in the NE-SW fissures—suggests two separate phases of epigenetic hydrothermal emplacement.

 THE EXPLORATION LEASE

Mining lease No 10764 covers a land area of about 41 cadastral Units.   It is situated in Ishiagu in Ivo LGA of Ebonyi State.

 CLIMATE

 It is located approximately in 5o60’N and 7035’E.  The area experiences the wet and dry seasons climate regimes.   The rainy season is experienced between April to October while the dry season becomes evident from October to  March.   Maximum temperature of 320C is experienced in March with a minimum of 240C in July.   Population of the area is estimated to be 17,250 people by 2006 (NPC Ebonyi State Office, 20011) .Socio-economically the people of Ishiagu are mainly farmers.  The crops cultivated include yams, cassava and rice.  Cassava and yam are commercially produced and therefore form the economic base of the area.

 GEOLOGY

 Geologically, the Ishaiagu Lead – Zinc deposits form part of the Abakaliki Lead – Zinc field (BESL. 2004). This field occurs within a substantial part of the largest cretaceous sedimentary basis in Nigeria known as the Benue trough.  The Ishiagu mineral belt is part of the tectonic – mineralization zone forming the lower Benue field.The mineral assemblage and associations in the area comprise both primary and secondary mineralization(Offordile  2001).  The  primary  metalliferons  deposits  in  the  area  include  Galena, Sphalerite, Chaleopyrite, Marcasite Cerrurite and Pyromorphite while the gangue minerals associated with the metallic ores include siderite, calcite, fluorite, barite and quartz.  

 

THE  PROPOSAL

 We are actively sourcing financial investment to partner in the development of our lead and zinc assets in South East Nigeria. The asset as it exists is currently being exploited by direct labour and low-level mechanisation and would greatly benefit from the introduction of modern mining methods.

We currently have two exploration licences in Ebonyi state. Both leases are in close proximity to the railway which is capable of delivering haulage to Port Harcourt. Our primary interest is to raise funds to mechanise the operation, thus significantly  increasing potential output. With the application of modern mining methods we believe we will be able to increase production from both our assets in that neighbourhood to about 6000 metric tons per month of lead and zinc in the medium-term.

We are also seeking to execute a buying programme which will provide us access to many other artisanal producers  in the state, for the purchase of their material. It is our intention to develop a robust supply chain in conjunction with our buyers. Investment will substantially be in the form of debt against the forward sale of either zinc or  lead or both commodities. The objective is to increase the volume mined through the application of modern mining methods, techniques and expertise. We would look to enter into an offtake agreement with the buyer which would provide the name commodities at a discount until cash recovery. Then beyond that and off taker contract based on market pricing.

The property will be in a position to produce circa 50,000 metric tons of zinc and lead in the medium-term. Once consolidated we would look to increase production by further developing our assets and conducting a buying operation. We currently possess a warehouse facility for beneficiation and medium-term storage for the ores in Enugu.

 ORE BODY

 whilst  we have undertaken detailed geological surveys of the licensed territory, we still require formal JORC or N34-101 certification qualifying the geological resource. However, the location of the lease, coupled with the amount of all already extracted provides us with a firm belief, that the ore body is so large it presents an undeniable opportunity. We have undertaken to consider more all geological exploration, however, such is the magnitude of the mining sites and the prospectivity of the area . It is clear that the assets are exceptional.

 FINANCE.

 In order for us to meet our first stage of mechanisation and increase the volume of both lead and zinc to circa 6000 t per month, we require mining equipment estimated at $4-$5 million. The attached spreadsheet provides an indication of the upside to such an investment where the sites would reasonably produce 50,000 metric tons a year with a Conservative revenue of over $40 million per annum.

We have discounted the value of the ore and worked on the assumption that the capex subsequent to the initial outlay of the $4.5 million will be covered, along with the Opex and  will not account for more than 20% of the value of the Ore..

The NPV has been calculated with a discount rate of 15%, which more than covers any premium for risk, or time value (please see attached) We can be reached on the contact details contend here in for further discussion regarding the property.