What do you want first, the good news or the bad news?
Well! The list of the good news is too long: the bad news I can't remember So, will start with a little background and how I came to be involved with Canmin Resources in Uganda.
I emigrated to Kenya, in the area known as East Africa, from Denmark, with my parents in 1956. I spent my teenage years and twenties in Kenya, not far from the vermiculite mining area. Therefore I culturally understand the local people and speak Swahili - the Esperanto language of East Africa.
Throughout the ‘70s and ‘80s, I operated a number of successful businesses in various parts of Africa.
SHAWA Mine in Zimbabwe and Vermiculite…
My involvement in vermiculite commenced in 1988. At the time I had an engineering company near Durban in South Africa.
The Zimbabwe Shawa Vermiculite Mine owners, Dave Mitchell and Conrad Upshon, were at the time mining on a tribute basis - meaning they leased the mine. I knew them through other business and they asked me to check rail transportation and ship loading of their vermiculite from Zimbabwe. After writing a few reports to them on packaging and so on, they asked if I would travel to the mine in Zimbabwe to see if I could make some very necessary improvements. That happened and eventually led me into a full time commitment in Zimbabwe. They were living in Cape Town, so I assumed sole responsibility for the mine operations.
It was a small mine with few machines, some of them hand driven. I am not blowing my own trumpet here, but shortly after my arrival in Zimbabwe the vermiculite quality improved, sales increased, and a new and bigger plant became a necessity.
We had to find funds to pay for the new plant and to actually buy the deposit. One of our customers from France came to see the mine and liked what they saw. After negotiation, they lent us one million US dollars. In record time we put Shawa on the international vermiculite map. It took us only four months to build the new plant and get it into production. The plant was designed and built by myself and a team of unskilled African workers. Some of the machines came from an old salt plant, but of course had to be adapted to their new functions.
At the time I did not go into quantity and quality details of the deposit, as outside experts had done that before my time and I relied on their reports. Most of Shawa ore material is of fine grade vermiculite and therefore we could not produce a large quantity of medium and large grade.
In contrast, Uganda Namekara vermiculite is mainly MEDIUM and LARGE grade - the grades that command the HIGHEST PRICE.
Shawa Mine, as with many other mines around the world, had an asbestos problem. Shawa had tremolite asbestos contamination - even a very small quantity is not acceptable in countries like Denmark. Just one fibre in a sample and that is it. They don't want it. Our Uganda Namekara vermiculite has been tested by IOM and a lab in Denmark and they found NO fibres, not even one.
Shawa's French investor connection did buy our vermiculite, although contaminated. As a matter of fact, they bought one third of our annual production -- 6000 tons a year. They are exfoliators in France and can therefore get away with it by warning their workers of the potential danger. The exfoliated material is not hazardous.
The Shawa deposit in Zimbabwe lies within a carbonatite complex and is similar in appearance to the Namekara deposit in Uganda. The origin of vermiculite is not my specialty. Some say it all started some 65 million years ago and since I cannot remember that far back, I will leave that riddle to the experts.
The export railway from Zimbabwe runs through Mozambique to the coast. From Uganda the railway goes through Kenya to the harbour of Mombasa on the Indian ocean. That rail link was built back in 1905 and called the Uganda Railway. Books have been written about that project and the battle with lions in those days.
Meeting Peter Van Straaten…
Where were we? Yes, while working SHAWA Mine in Zimbabwe in 1995, Peter Van Straaten came and joined our Christmas party. He had not been specifically invited, because I did not know him then. He was in Zimbabwe looking at phosphate and carbonatite complexes, in his capacity as a professor in agriology - that is mining for agriculture. In casual conversation, we talked about Uganda, but nothing specific.
The following year he returned. I showed him our entire vermiculite mine operation and explained all the details to him; that is typical African hospitality. You just can't help being nice to visitors.
Peter visited the mine again in 1997 and found that I had left Shawa Mine for Cornwall in Southern England where I was busy writing a book. If any of you want to know more about me and my earlier life, you can read about it in the book. Then, one evening in December 1997, Peter phoned me in Cornwall and asked if I would be interested in going to Uganda to investigate a vermiculite deposit there - near Mount Elgon. I said Yes.
A few days later, Mark Doidge, Peter's partner, contacted me and asked me for a report on Namekara vermiculite. Mark Doidge is, as you probably know, a medical doctor (his patients can talk). My task was to write a report about something I had not even seen, let alone talked to. I could not just phone the deposit!
Anyway, Peter and Mark became financially and contractually involved with you - IBI - and the next thing I was on my way to Uganda to plan and arrange a visit for Mr Lai, Mr Jensen, Ulrich Kretschmar, Peter and Mark.
I found those first meetings very interesting, and yet also strange, because everybody spoke as if the deposit was an already proven viable fact. Now it was just a case of getting funds to develop it. I had in the meantime collected some surface vermiculite material from an old pit and that material did not exfoliate enough, or rather it was crumbly after exfoliation. However, I accepted that surface material is often problematic.
Initial Exploration of Namekara…
After a series of meetings, I was asked to do more exploration work and to find out where in the general area to commence mining. I engaged a contractor and we dug 17 deep holes. Wilson Ongom, a local Ugandan from the Geological Survey, was hired to assist me. Finding very large flaked vermiculite in nearly all of the holes, it was necessary to mill these samples. There is no market for such large flakes, hence no value. We managed to find a small hammer mill in Kampala with a 8mm screen and put it up on a friend's industrial site using his electric power. We milled a few bags. In the process of milling, the vermiculite was also delaminated. We then discovered that the milling, in turn, improved the exfoliation rate to recommended international standards - if not better.
So, after all, here we had something REALLY WORTHWHILE. We could decide what vermiculite grades to produce, something other mines would be envious of. We could produce what the market wants. Other mines have to produce grades nature has decided for them.
As for quantity, we became convinced after digging 17 holes that the deposit was enormous. But Peter and I decided that it was better to do some drilling to establish the depth of the ore body. That was done with the expected results. A proven reserve with 5 million tons of saleable vermiculite had been discovered. It really turned out to be a WORLD CLASS vermiculite deposit. Your then President, Tom Smeenk, was pleased and enthusiastic about the result, but informed me that a funding problem existed, but that it would be resolved shortly.
The Relationship with IMD…
Then, in July 1999, I heard that IBI, the sole investor and IMD's partner, had been unilaterally expelled from the project by Mark because of lack of funding, and that Mark had decided to 'go it alone'. I knew that Mark had no funds of his own - what was he doing? I tried to mediate and persuade Peter and Mark not to follow this self destructive policy, as Tom had indicated that funds would be available again shortly. But sadly, no - Mark would not even talk. Sometimes I wonder about the time factor here. IBI was a good and useful financier of the project. IBI's finance was welcome until the words 'world class vermiculite' mine were used. Then, suddenly, IMD led by Mark, your partner through thick and thin, wanted to go it alone - why? You tell me!
Developing a mine is not really a job for a medical doctor or a professor, especially if they want to be actively involved. I would certainly never perform a brain operation or be in charge of one.
The Steps Forward…
In March 2000, GARY FITCHETT, your President and I had contact. He came to England and we exchanged ideas. I was very pleased that the project could continue. I had made many contacts in Uganda and felt that the project was far too good to abandon, and that ultimately, the mining rights equitably belonged to the investor and developer. IBI had invested money in the project and morally and legally had a right to protect that investment.
Conditions in Africa…
Africa is a huge continent. Drought also comes to California. Wars and upheaval come to Colombia and Nicaragua. Does that affect Canada? No! Likewise, Uganda is not affected by Mugabe's behaviour or by war in Angola. Mozambique's flood is not near Uganda.
OK, Uganda has had a fair share of upheavals, but has for the past 12 years or so gone from strength to strength. The Ugandan government is trying very hard to get overseas investors, especially in the mining industry. They are going out of their way to be helpful and welcoming, and are presently in the process of streamlining the bureaucratic processes, as third world countries tend to be maze-like in that respect.
Unfortunately, some smaller Canadian and other western exploration companies abuse that goodwill. They come to Uganda and obtain exploration permits for large tracts of land, but eventually disappear into the same mist as Bre-X.
IBI Investment in Uganda…
Looking at it in another way, you did invest in Uganda. Let us now make SUCCESS of it. Not only for short term share profit, but also for long term real operating profit and expansion.
Canmin Resources is the only real mining developer apart from the Canadian cobalt mine near Kasese in western Uganda. We are in the LIMELIGHT of the Ugandan government. They watch us: they want us to succed. The Mining Commissioner is behind us ALL THE WAY. And as soon as the mine is up and working, there is not reason why we should not expand into other mining activities; for example, dimension stone, limestone, etc. As a matter of interest, Uganda will be drilling for oil shortly.
The Ugandan government has a plan called 'FAST TRACK DEVELOPMENT' and here they feel that the mining sector can play a big role. Recently a consultative workshop meeting was held at the Sheraton Hotel in Kampala. Your company, Canmin Resources, put up a great exhibition.. It was extremely well received by the organisers - namely the Commissioner of Geological Survey and Mines. Ministers attended the meeting and they were introduced to all the uses of vermiculite by our Wilson Ongom, who did a superb job.
Mine Development to Date…
Let us now get to the present mine development position:
A mining PIT has been opened and will be enlarged as soon as commercial mining commences.
An all-weather access ROAD has been constructed.
A BOREHOLE for water has been drilled.
The mining area has been SURVEYED.
COMPENSATION will be paid to landowners on my return. Your company will then effectively own 12 acres of land rich with vermiculite!
A written GO-AHEAD has been given to Canmin Resources by the Mining Commissioner to construct buildings and processing equipment, to mine, and to export vermiculite.
Vermiculite SAMPLES have been sent to numerous users around the world. Follow-up supply discussions are taking place with companies in Germany, Japan, Italy, Libya, Iran, Palestine, Israel, Oman and Denmark. It is, however, not easy to sign supply contracts for something that is not being produced yet.
Some MACHINERY - that is screening table, mills, de-stoner and elevators have been assembled in Mbale, the nearest town with an engineering workshop, and a winnower is under construction. The contractor constructing the machinery is English.
The main mine BUILDING, 1400 square metres under roof, can be put up within 6 to 8 weeks after the land has been paid for. That will be done by an Indian contractor on my return to Uganda.
You see, WE ARE NEARLY THERE.
The Process…
After extracting the vermiculite ore from the pit, it will be SUN DRIED. Here larger stones will be removed by hand, by women who beg for work. The material will be MILLED and WINNOWED. Then SCREENED into various grades and BAGGED or BLOWN into a container. All vermiculite will be constantly tested for PARTICLE DISTRIBUTION and EXFOLIATION potential.
A market for exfoliated vermiculite does exist in Uganda, but let us get the mine up and working and generating cash flow before we get into secondary activity.
Most vermiculite will be exported. It will be loaded at the mine site into standard 20 foot containers, then taken to the railhead at the Kenya border. A local shipping agent will ensure that the containers are loaded in Mombasa. Letters of Credit will then be released for payment.
Impact of the Mine…
The impact of the mine in eastern Uganda will be phenomenal - economically and culturally. Most of you probably do not fully understand a near money-less society. But that is how most Ugandans live. They produce their own food and exchange it with neighbours - money has to come from somewhere else. The mine will be that source of extra income they are all looking for. It will create STABILITY, it will create a SENSE OF COMMUNITY, belonging to something greater than just the village, where in many cases nothing happens except growing and eating the food, drinking dirty water, having plenty of babies and eventually death at an early age. It will give the people HOPE, DIGNITY, the feeling that life is WORTH LIVING. With no money, life becomes a treadmill, and the locals see it that way. The local and district authorities see us as the catalyst, helping to propel them into the 21st century and can't wait to see us in production. The African poverty trap dilemma is not entirely of their own making. Western NGOs with lots of money and good intentions often create poverty instead of eliminating it.
The Canmin Team…
The SITE FOREMEN at Namekara are already working and earning, and we have dozens of general workers waiting to be recruited.
WILSON ONGOM, now full time with Canmin is a rare human. He is a fantastic negotiator, sensitive and a good psychologist, and of course, knows his minerals. He gives freely of himself and works long hours, and never complains. He has been exposed to hardship and the muzzle of the gun and survived.
GIZAW, who is working with us in the office part-time is well known in Kampala and will get things done when others see a wall in front of them. His motto is 'CONSIDER IT DONE'. He is dynamic and honourable. A pleasure to work with. His life philosophy is beautiful and holistic. At the moment his main activity is with Cpar, a Canadian aid organisation, but he would like to join Canmin full time. Recently he lent me a book called The Lords of Poverty. He feels that aid is all very well, but that it does not address the cause of poverty. He is an avid reader and has great insight into human nature and philosophy.
NATHAN, our chemist is another expert and knows his field well. He is presently working (part-time) on the phosphate solubility potential - that is turning a 30% P2O5 phosphate ore into a fertilizer, and is making good progress.
CHRISTOPHER, our accountant is honest, conscientious, and also a pleasure to work with.
We Can Do It…
You may ask why I am pursuing the development and staying with Canmin. The answer is quite simple. I believe in it!
I see the mine up and working with a RELATIVELY SMALL INVESTMENT. It will therefore make a very GOOD PROFIT in relation to invested capital and in a fairly short time. I like development work - have done it before and have had no failures.
On a longer term I would like to see Canmin involved in OTHER projects too. I like working with African people. I love Africa, especially Uganda, AND I KNOW WE CAN DO IT!
