TSODILO RESOURCES LIMITED COMMENCES PRELIMINARY ECONOMIC ASSESSMENT AT ITS HIGH-GRADE XAUDUM IRON PROJECT IN BOTSWANA

Tsodilo Resources Ltd. has provided an update on its wholly owned Xaudum iron project.

Iron ore increased in price by 74 per cent in 2020, outperforming all other metals by a significant margin, as iron ore reached close to $180 (U.S.) per tonne (62 per cent iron, CFR China) in December, 2020, a level not seen for almost a decade, and the price continues today in the range of $170 (U.S.) per tonne.

Two thousand twenty may have been the start of a new supercycle for iron ore wherein supply is so inadequate to demand growth that prices rise for years, even a decade or more. The fundamentals for iron ore are strong, and with this as a background, the company is moving forward with plans to further assess the potential of its Xaudum iron formation (XIF) project by undertaking a preliminary economic assessment (PEA) of the project. The primary objective of the PEA is to conduct an economic analysis of the potential viability of the deposit, assessing the development options for the XIF resource and generating a road map for progress through feasibility and mine development.

Metallurgical results show that the XIF magnetite product is expected to be a premium product, containing around 67 per cent Fe, which is preferable over lower-grade iron ores (see press release of Dec. 17, 2013, on the company's website). These high-grade ores and products currently command larger price premiums over standard ores (62 per cent Fe), resulting in higher margins for suppliers of high-grade products. Further to this, cleaner iron ores with an Fe content equal to or greater than 65 per cent use less coal per unit of steel and, as such, produce lower emissions. The current global drive for lower-emission steel production results in steel producers dramatically increasing their demand for these high-grade cleaner ores.

Tsodilo's chairman and chief executive officer, James M. Bruchs, commented: "We are pleased to be progressing the PEA for the Xaudum iron project. The iron ore market may be entering a new supercycle based on improving fundamentals and a healthy market. This, coupled with quantitative easing by banks, and likely fiscal stimuli are expected to be the key to economic recovery in a postpandemic world. Our objective is to position the XIF magnetite project to participate in these developments."

About the Xaudum iron formation project:

• The project is located in the North-West district of Botswana and is proximate to the Namibian border and lies 30 miles from the town of Divundu in Namibia. The Trans Caprivi Railway (TCR) line linking Zambia and Namibia is planned to pass through Divundu, providing access to Walvis Bay, Namibia's deep-sea port. The project is also located within 43 miles of the proposed Mucusso line to Angola's Namibe port.
• Preliminary work on the Xaudum iron project has defined a CIM (Canadian Institute of Mining, Metallurgy and Petroleum)-compliant inferred mineral resource estimate of 441 million tonnes (Mt) with an average grade of 29.4 per cent Fe, 41.0 per cent SiO2, 6.1 per cent Al2O3 and 0.3 per cent phosphorus for the block 1 magnetite XIF.
• Block 1 is a fraction of the potential XIF magnetite resource. An extrapolated exploration target has defined the XIF to be in the order of five billion to seven billion tonnes at 15 to 40 per cent Fe. This exploration target was generated by inversion modelling of ground magnetic geophysical data, which were compared and moderated with volumes from drilling data within block 1, and its potential quantity and grade are conceptual in nature. To date, there has been insufficient exploration to define a mineral resource other than in block 1, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
• Metallurgical magnetic separation results (Davis Tube recovery) show an average concentrate of 67.2 per cent Fe, 4.2 per cent SiO2, 0.5 per cent Al2O3 and 0.07 per cent P is obtained at P80 grind size of 80 microns, although higher grades are possible at finer P80s. See press release of Dec. 17, 2013, on the company's website.
• Further exploration will be focused on block 2, where the company expects an increase in the resource.
• The XIF project is a potential large and long-life Tier 1 mining project.
• The PEA will evaluate a number of options for development of the project at a variety of scales, including:
• Non-traditional, but potentially profitable, small-scale start-up mining production options such as ferrosilicon (FeSi) production from a magnetite concentrate;
• Mid-size scenarios, whereby magnetite concentrate would be processed through a concentrator and transported to railhead and onto port facilities;
• Large-scale mining options where full-scale mining would produce a magnetite concentrate processed by a concentrator plant with further potential modification to a pellet, which would then be transported to port facilities.
• Botswana has significant coal reserves, which can be a major advantage for the Xaudum iron project, allowing for coal to be used in the beneficiation process to generate iron products such as iron pellets, sponge iron, pig iron and also steel.
• The project would represent the first iron deposit to be considered for development in Botswana. Gcwihaba has identified the project as having the potential to positively impact the future economy of Botswana as the country looks to diversify its economy and help Botswana to reach its goal of moving away from a dependence on diamond revenues.

For more information, refer to the technical report prepared by SRK Consulting (U.K.) Ltd. for Gcwihaba Resources Pty. Ltd. titled "Mineral Resource Estimate for the Xaudum Iron Project (Block 1), Republic of Botswana," with an effective date of Aug. 29, 2014, and filed on SEDAR under the company's profile at SEDAR.

An informational presentation of the project can be found on the company's website.

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