INFORMATION TO THE PUBLIC ON LIGANGA IRON ORE TO STEEL AND MCHUCHUMA POWER

INTEGRATED PROJECT

Background

Following some information released to the public on integrated Liganga-Mchuchuma Project, The Joint Venture Agreement signed between Sichuan Hongda, NDC and TCIMRL clearly
Sichuan Hongda (Group) Limited (Sichuan Hongda), in itself and on behalf of Tanzania China states that the project will start with production of steel followed by extraction of vanadium
International Mineral Resources Limited (TCIMRL), wishes to clarify certain aspects as relating and titanium. Production of Titanium from tailings to be stored at Liganga will be considered
to integrated Liganga-Mchuchuma Project which have recently been put into public domain so that once economic feasibility allows and supporting chemical industry is available locally. The
all stakeholders and the general public are made aware of the facts on the various elements of the Agreement further states that, all other elements of value other than iron, vanadium and
project. titanium which would be discovered following exploration, will remain the property of the
Government and their exploitation will be negotiated separately by the Government and
Sichuan Hongda was awarded the tender to develop and implement the Project following an Sichuan Hongda.
international competitive tendering process which involved more than 48 international companies.
Sichuan Hongda was the only Company willing to invest in both Liganga and Mchuchuma Integrated Contracting Matters
and had technology to separate titanium and vanadium from iron in the Liganga titano-magnetite
ore. It is from this point of strength that Sichuan Hongda was selected by the Government to invest Sichuan Hongda was invited for negotiation with the Government Negotiation Team (GNT)
in developing and implementing the integrated Liganga-Mchuchuma Project. as a Preferred Bidder in December 2010. The negotiations culminated with signing of the
Joint Venture Agreement and Subscription and Shareholders Agreement on 21st September
Mineralogy of Liganga Iron Ore 2011, meaning that the contractual negotiations took about one (1) year. Thereafter, TCIMRL
engaged in mineral exploration which culminated into production of the Geological Report
According to geological exploration made by Hongdi International Mineral Resources Exploration and Environmental and Social Impact Assessment (ESIA) Study, precursors to being issued the
Co. Ltd, Liganga Iron Ore is the type of dense massive Vanadium Titano-Magnetite, composed Special Mining License (SML) in October 2014.
mainly of V-Titanomagnetite (50%-80%), Ilmenite (10%-25%), Spinel (5%-15) and Chlorites (0-
5%). The major metallic mineral of the ore bodies at liganga concessions are Magnetite and Ilmenite Following issuance of SML, TCIMRL engaged the Government of Tanzania through National
also associated with Vanadium. Investment Steering Committee (NISC) for consideration of being granted the Special
Strategic Investor Status. TCIMRL signed the Performance Contract with Tanzania Investment
Content Mineral % Content Elements Centre (TIC), on behalf of the Government on 30th day of June 2014 and the Addendum to the
Major Vanadium 50 – 80 Fe3O4, TiO2 & V2O5 Performance Contract on 21st September 2015. The signing of these Agreements was preceded
Metallic Magnetite, by negotiations with the Government of Tanzania at all levels and after considering the benefits
Mineral Titanomagnetite of the Project to the local economy.
Ilmenite 10 – 25 Fe+2TiO3
Accordingly, all contracts were negotiated transparently and involved the Government
Major Chlorites 0–5 Ripidolites & Penninites
Gangue Institutions and Ministries. TCIMRL and Sichuan Hongda have always followed Tanzanian
(Mg,Al)6(Si,Al)4O10(OH)8
Mineral law in their pursuit to developing the Integrated Liganga-Mchuchuma Project.
Spinel (Gahnite) 5 – 25 MgAl2O4
Taxation Matters
KMg3(Si3Al)O10(OH)2
There is misconception on matters of taxation that TCIMRL intends to be the collector and
The Main Geological Report clearly indicates that the main minerals which will be involved in beneficiary of taxes as regards to this Project. This is not the case and never the intention of
extraction and processing economically within the Liganga Project are iron, vanadium and titanium. TCIMRL. To the contrary, even before project commencement TCIMRL has to date paid more
The Report also clearly indicated about 126 million tons of Vanadium Titanomagnetite were detected than US$ 2 million in various fees, duties and taxes to the Government. At the end of the day,
in the initial mining area; and the average grade of TFe is 51.24%. About 16.51 million tons of therefore, the beneficiaries of the Project will be the Government and the people of Tanzania.
TiO2 have been detected with the average grade of 13.13%. About 630,000 tons of V2O5 have been
detected with the average grade of 0.498%. We wish to categorically state that, it is well known that heavy industry such as steel, which
in nature is for supporting development, rely very much on Government support in the form
Development of Vanadium Titanomagnetite especially the separation of Vanadium and Titanium of subsidies and other concessions for sustenance especially in the initial development phase.
from the ore has been a very difficult process, much more complicated than the conversional iron This project is located in remote south-west Tanzania, about 900km from Dar es Salaam Port,
smelting processes known to the public. For that reason Sichuan Hongda has established a special where there is short of infrastructure and supporting industry thus making the investment and
laboratory and worked on the separation technology for many years with big expenditure and operational costs to be much higher than normal.
extraordinary success and developed unique technologies for beneficiation and Direct Reduction of
Coal Base Shaft Furnace for Liganga Ore. TCIMRL applied to the Government through NISC for a package of investment incentives.
Taking into consideration of the above factors, the Government approved the Special Strategic
The Table below, extracted from the Main Geological Report, which was accredited by the Investor Status to TCIMRL with an accompanying package of incentives which up to this
Geological Survey of Tanzania (GST), shows all the chemical composition of the Ore at various moment are still waiting for issuing of Government Notice (GN) for its operation. This has
sampling location of the Liganga concession. resulted into delay in implementation of the Project.

Moreover, TCIMRL was informed of the Government’s intention to renegotiate one incentive
item. The Company has been ready for such negotiation with the hope that the issues surrounding
The Results tabe of Combinatory Analysis
taxes will be resolved amicably for the sake of the project.
Useful components
Conclusion
Sample
TFe TiO2 V2O5 Co Ni Au Ag Pd Pt
No.
The Geological Report transparently stated all minerals, their tonnage and/or percentage within
% % % ppm ppm ppm ppm ppm ppm
the mineralogy of Liganga and Mchuchuma. The Geological Report was accredited by the
ZH1 50.77 12.24 0.516 176.5 550 0.011 0.02 0.001 <0.005 Geological Survey of Tanzania and was submitted to the then Ministry of Energy and Minerals
as a condition for issuance of the Special Mining License. TCIMRL and Sichuan Hongda have
ZH2 51.18 12.18 0.527 171.5 566 0.011 0.01 0.002 <0.005
always been transparent in their dealings with the Government of Tanzania and NDC through
ZH3 49.94 12.18 0.480 179.0 546 0.005 0.02 <0.001 <0.005 all stages of development and implementation of this Project. All mineral content explored was
disclosed.
ZH4 50.34 12.48 0.450 180.0 558 <0.001 0.01 0.001 <0.005

ZH5 51.10 12.49 0.527 186.5 608 <0.001 0.01 0.001 <0.005 It is important to note the following issues as relates to the integrated Liganga-Mchuchuma
Project:
ZH6 49.46 11.91 0.516 163.5 560 <0.001 0.03 0.002 <0.005
(1) All the value chain for the iron and other minerals will be done in Tanzania as opposed
ZH7 50.74 11.38 0.556 190.5 834 <0.001 0.03 0.001 <0.005
to exporting mineral concentrates outside Tanzania for processing;
Main harful components Other harful components
(2) It is estimated to generate 5,000 direct employment and over 30,000 indirect
Sample
No.
SiO2 S P Cu Pb Zn Sn As employment;
% % ppm ppm ppm ppm ppm ppm
(3) Anticipated Social and Economic benefits of the project to the local communities and
ZH1 0.9 0.02 40 18.3 <0.5 278 3 0.4 the national at large cannot be overemphasized.
ZH2 0.9 0.05 50 34.8 0.8 262 2 0.3 As a serious investor and having spent considerable resources in development and
ZH3 1.7 0.06 30 31.9 1.2 247 2 0.2 implementation of the Project, Sichuan Hongda is still committed to implementing this Project
despite recurring challenges both locally and globally.
ZH4 1.1 0.07 30 28.7 <0.5 279 2 0.2

ZH5 0.4 0.02 50 8.3 1.1 294 2 0.3

ZH6 1.6 0.01 50 26.6 0.6 347 2 0.2

Issued by:

ZH7 1.2 0.01 40 5.3 <0.5 299 2 0.7 SICHUAN HONGDA BOARD