EAST AFRICAN VERMICULITE OPERATION
Following the completion of small scale production run of vermiculite concentrate, work started on upgrading and re-commissioning the plant. Full scale production is scheduled to start at the end of the first quarter of 2010.
A 20t bulk sample of vermiculite has been received by Grace Specialty Vermiculite, part of large US industrial corporation, W R Grace. It will be assessed early in the New Year. Initial discussions on the potential to distribute our East African Vermiculite product have been very positive. W R Grace’s Specialty Vermiculite division is one of the largest vermiculite exfoliators and distributors in the US accounting for at least one third of vermiculite sales in North America.
Off take agreements are in place for 5,000 tonnes per annum and negotiation are close to concluding with various parties for off take agreements covering a further 10,000 tonnes per year.
Agreement has also been reached with East African based freight and logistics company SDV Transami, for the management and logistics of all concentrate production to and from the East African Vermiculite operation in Uganda. The SDV Transami is part of the Bollorè African Logistics Group, the largest transport and logistics operator in Africa (www.bollore.com). Given the size and reach of this logistics group we are jointly investigating options to reduce freight costs for our operation. The group also offers sea freight management for potential customers enabling a fully integrated freight solution from mine to any customer in the world.
The East Africa Vermiculite tenement package, including the East African Vermiculite mining lease, covers a large portion of the Bukusu Carbonatite Complex, one of Africa’s largest carbonatite complexes with a diameter in excess of 13km. During recent data review the Gulf exploration team identified historical information relating to a phosphate mine operated on the Bukusu Carbonatite Complex from 1944 to 1963. Further investigation has revealed the mine was located only 3km from our existing vermiculite operations. Gulf has conducted preliminary assessment of the phosphate location and found a large excavation and some remnants of concrete footings from old mine and plant buildings.
Independent assessment has been commissioned and results are pending, however, early indications from historical documents suggest phosphate grades were economic, supporting a profitable operation for nearly 20 years. Gulf’s exploration team will be following up the potential for this project in the first quarter 2010.
The Bukusu Carbonite Complex also has potential for a number of other commodities including Rare Earth Elements (REES) and plans are being made to re-process a recent Rio Tinto geochemical survey and collect new data to assess the complex for other mineral potential.
Background – Gulf’s East African Vermiculite Operation and Project
The East African Vermiculite Project is situated in eastern Uganda near the towns of Mbale and Tororo close to the Kenyan border. The project comprises the East African Vermiculite operation and the regional exploration program.
An Independent SRK review commissioned by Gulf in mid 2009 has verified that the East African Vermiculite Project contains a JORC inferred resource of 54.9million tonnes @ 26.7% vermiculite in the +180 micron fraction (V_180), and 18.8% vermiculite in the +425 micron fraction (V_425). This resource calculation has a surface extent of 1km by 1km (location of existing mine/pit). Additional exploration work indicates vermiculite is present over an area of 1km by 5km (pit tested) of which the 1km x 1km area is a part. The EAV resource is one of the largest high grade (large crystal size) vermiculite resources in the world.
The mineralisation in the project area was first documented in the 1950s, but it wasn’t until 2002 that initial test production commenced with a small scale operation that produced 16,000t of ore between 2002 and 2006. Under Rio Tinto’s stewardship a substantial amount of work was completed including drilling of 64 holes for resource definition, pit optimisation and design, plant redesign, transport and infrastructure studies and market research. The vermiculite deposit extends from near surface to a depth of between 45m and 55m and is excavated using off the shelf mechanical excavating equipment in a standard shallow open pit operation.
EAV is currently refurbishing the existing plant with production expected to recommence towards the end of Q1 2010. Anticipated production for the first year of steady state operations will be 10,000 tonnes, building up to 16,000 tonnes per annum.
World Vermiculite Market
The global vermiculite market is estimated by the United States Geological Survey (USGS) to be 500,000 tonnes, however other market analysts (Roskill) believe the production to be higher. Production from Southern Africa accounting for approximately 35% of this amount.
Uganda Country Profile
Stable democratic government - Uganda, an independent republic with a democratic government, has been largely under utilised in terms of its mineral potential compared with neighbouring countries such as Tanzania.
Right geology, underexplored - The geology of Uganda is dominated by crystalline basement complex of Precambrian age that underlies over ninety percent of the country. The western part of the country is bounded by the East African Rift Valley.
Supportive mineral policy - Interest in Uganda’s mineral potential has increased substantially in the recent past since the country made efforts to improve its mining and investment code. In May 2004 the Uganda Government announced its intention to invest US$4,200,000 in restructuring and development of the mineral sector through a comprehensive five year Mineral Sector Development Program.
Good investment opportunity for mineral wealth - Uganda presents a good investment opportunity in terms of mineral wealth for three main reasons: lack of investment in the past has left most of Uganda under explored and large areas of virgin ground untouched; the diversity of Uganda’s geology presents the opportunity for a wide range of potential metallic and non-metallic deposits to be developed; and recent active steps taken recently by the Uganda Government to encourage investment in the country’s mineral sector.
Uganda has a well developed road and rail network connecting it to all surrounding countries, most importantly to the Indian Ocean ports of Mombasa in Kenya and Dar es Salaam in Tanzania. The country has a pleasant climate despite its equatorial position largely due to its higher altitude. Uganda receives adequate annual rain fall for its needs.
According to the census of 2002 the population of Uganda was just over 24 million people of which 84% were Christians. School in Uganda is free, and Uganda has one of the highest attendance rates in Africa with over 70% of all children attending classes.
For further information on the country of Uganda:
Wikipedia: http://en.wikipedia.org/wiki/Uganda
World Fact Book: https://www.cia.gov/library/publications/the-world-factbook/geos/ug.html
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East African Vermiculite Project 
