Elemental Minerals review of operations for the quarter ended 30 June 2013

PERTH, Australia, July 31, 2013 /CNW/ - Elemental Minerals Ltd. (ASX, TSX: ELM) ("Elemental" or "the Company") is pleased to provide the following quarterly update for activities at its Sintoukola Potash Project located in the Republic of Congo ("RoC").

Highlights:

• Dingyi Group Investment Limited ("Dingyi") to make an all cash off-market takeover offer for 100% of the fully paid ordinary shares of Elemental at A$0.66 per share.
  
  
• Dingyi to subscribe for A$5 million of Elemental shares and provide Elemental with additional financing of up to A$15 million through a secured convertible loan facility (subject to shareholder approval).

Operational Activities:

• Receipt of a large database of historic mining and exploration data for the RoC
  
  
• Land rezoning and compensation process underway
  
  
• Continued modularisation studies with AMEC in preparation of the start of the Bankable Feasibility Study
  
  
• Completed brine dispersion modeling which confirmed the feasibility of the proposed solution from an environmental impact perspective
  
  
• A 12-month metocean survey was completed
  
  
• A geotechnical report on the process plant foundation design was completed by AMEC.

Post-quarter Operational Activities:

• Continued land rezoning and compensation process
  
  
• Engagement with regulators in support of the Congolese Environmental and Social Impact Assessment (ESIA)

• Preparation of submission of the International Environmental and Social Impact Assessment (ESIA)

Dingyi Offer

On 1 July 2013, Elemental announced that it had executed a bid implementation agreement with Dingyi ("Bid Implementation Agreement") under which Dingyi will make an off-market takeover offer for 100% of the fully paid ordinary shares of Elemental ("Dingyi Offer").

The Dingyi Offer price is A$0.66 per Elemental share, valuing Elemental at approximately A$190 million and represents a 126% premium to the volume weighted average price per Elemental share over the 20 trading days prior to the announcement in relation to the Dingyi Offer made on 12 April 2013.

A majority of Elemental directors have recommended that shareholders accept the Dingyi Offer unless a superior proposal emerges or the Dingyi shareholder approval condition has not been satisfied by the prescribed date.

The Dingyi Offer is subject to a number of conditions (including Dingyi acquiring at least 50.1% of Elemental's shares and Dingyi shareholder approval requiring certain confirmations from the Hong Kong Stock Exchange ("SEHK")) but importantly is not conditional upon finance, or Chinese regulatory or Foreign Investment Review Board approvals.

The independent expert engaged by Elemental, BDO Corporate Finance ("Independent Expert"), has confirmed that in its view the Dingyi Offer is fair and reasonable to Elemental shareholders in the absence of a superior offer.

Further details of the Dingyi Offer and the Bid Implementation Agreement are outlined in Elemental's announcement on 1 July 2013. Further information supporting the Independent Expert's conclusions are set out in the Independent Expert's Report also released by Elemental on 1 July 2013.

Interim Funding from Dingyi

In connection with the announcement of the Dingyi Offer, Elemental announced on 1 July 2013 that Dingyi had agreed to subscribe for A$5 million of Elemental shares at an issue price of A$0.3407 per share ("Subscription Shares") and also provide Elemental with additional financing of up to A$15 million through a secured convertible loan facility to provide working capital during the bid period (the "Convertible Note Facility").

The issue of the Subscription Shares is subject to the satisfaction of certain conditions including shareholder approval under the ASX Listing Rules. On 10 July 2013, Elemental released and despatched to shareholders notice of an Extraordinary General Meeting of shareholders to be held on 14 August 2013 to seek (amongst other things) shareholder approval to issue the Subscription Shares.

Drawdown under the Convertible Note Facility is also subject to a number of conditions, including Elemental shareholder approval as well as agreeing final security documentation and a budget for use of funds advanced. The Board will convene a shareholders meeting at a later date to approve the Convertible Note Facility if it is considered likely to need to draw on the facility.

Further details of the interim funding provided by Dingyi in connection with the Dingyi Offer is outlined in Elemental's announcement on 1 July 2013 and Elemental's Notice of General Meeting and Explanatory Statement announced on 10 July 2013.

Geology and Mineral Resources

Elemental has secured a large historic database detailing exploration and mining activities in RoC by Potasse d'Alsace from the 1960's to the late 1980's. Elemental now has significant volume of data for historic boreholes within the Sintoukola Permit including additional data at Kola and at the Dougou Prospect. The dataset also includes a further 310 line kilometres of 2D seismic data from both oil and potash exploration in the late 1980's over Kola and Dougou (Figure 1)

This data will assist with target generation and future exploration across the Sintoukola licence including resource delineation on and around the Kola deposit.

Bankable Feasibility Study (BFS)

Field Programme:

A 12-month metocean survey was completed during this quarter. The data will define meteorological and oceanographic conditions to be used in the brine discharge modeling and design of the marine facilities and will be included in the ESIA submission.

Technical Studies:

A plant modularisation study is currently being conducted by AMEC and is expected to be completed in July 2013. The purpose of this study is to investigate opportunities to apply a modularised construction strategy on the process plant to optimize the construction schedule.

A geotechnical foundation report was finalized by AMEC for the process plant buildings. The report identified a number of foundation design options based on the results of the geotechnical campaign completed at the end of 2012. These alternatives will be economically evaluated early in the BFS to make a final recommendation for the detailed designs.

A final phase of brine dispersion modeling using a three-dimensional time-varying hydrodynamic model and realistic time-varying ambient metocean scenarios was completed. The results, which improve on the accuracy of the two-dimensional modeling conducted during the PFS, highlighted the need for additional on-shore dilution of the brine as well as an increase in the discharge pipe length. The modeling results confirmed that, given these proposed changes to the outfall design, the required volumes of brine will be discharged within the agreed design limits.

Investigations are ongoing to optimise the gas off-take location to reduce initial capital requirements associated with the gas pipeline.

Land acquisition:

A land commission was established in cooperation with the Ministry of Land Affaires. This commission facilitated the successful survey of the land corridor required by the project by the cadastral office of the Republic of Congo. A DUP (Dècret d'Utilité Publique) was gazetted on 21st February 2013 for phase 1 (process plant, employee facilities, residue storage facility, mine site, and transport corridor). The plot enquiry process to determine compensation values was completed by the commission and Elemental is currently awaiting the results thereof.

ESIA:

The review of the national ESIA by the Congolese Authorities was completed and all comments incorporated. Elemental is currently in the process of resubmitting the final version for approval.

About Elemental Minerals

Elemental Minerals Ltd. (ASX/TSX: ELM) is an advanced mineral exploration and development company that aims to grow shareholder value through its 93%-owned Sintoukola Potash Project. The Sintoukola project has the potential to be among the world's lowest-cost potash producers and its strategic location near the coast of central Africa offers a transport cost advantage to key Brazilian and Asian fertilizer markets. For more information, visit www.elementalminerals.com

Mineral Resource Summary - Kola Deposit of Sintoukola Project¹

• The Sintoukola Project's Kola deposit contains 1.32 billion tonnes Measured and Indicated mineral resources with an average grade of 15.65% K₂O (24.78% KCl), and Inferred Mineral Resources of 948 Mt grading 16.20% K₂O (25.64% KCl), at a 10.0% K₂O cut-off grade.
• Within the Mineral Resources, the sylvinite portion contains 573Mt with an average grade of 20.92% K₂O (33.13% KCl) within the Measured and Indicated category and 475Mt of Inferred Mineral Resources grading 20.39% K₂O (32.27% KCl).
• Four main potash mineralised seams are present within the Kola deposit and are identified in stratigraphic and chronological order as: Hangingwall Seam (HWS), Upper Seam (US), Lower Seam (LS), and the Footwall Seam (FWS). The depth to the top of the Upper Seam is within 250 to 320 metres from surface.
• Exploration at Kola has focused on the Upper Seam and Lower Seams which contain the bulk of the Mineral Resources defined to date. The Hangingwall Seam was discovered in September 2012 and contributes 47Mt at an average grade of 34.75% K₂O (55.01% KCl) to the Inferred Mineral Resources, and the Footwall Seam 225Mt grading 17.63% K₂O (27.92% KCl) also in the Inferred category.
• The Mineral Resources are reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 Edition (The JORC Code), which is consistent with Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards 2005 and hence complies with NI 43-101.

Competent Person / Qualified Person Statement:

Information in this report that relates to Exploration Results or Mineral Resources is based on information compiled by Dr. Simon Dorling, Mr. Jeff Elliott and Dr. Andrew Scogings of CSA Global Pty Ltd, the Company's geological consultants. Dr. Dorling, Mr. Elliott and Dr. Scogings are members of the Australian Institute of Geoscientists (MAIG) and have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code). Dr. Dorling, Mr. Elliott and Dr. Scogings are also Qualified Persons for the purposes of Canadian National Instrument 43-101 and they consent to the inclusion in this report of the information, in the form and context in which it appears. Mr. Elliott and Dr. Dorling have verified the exploration data disclosed in this news release.

Further information with respect to Elemental's Sintoukola Project is contained in a technical report entitled ''NI 43-101 Technical Report, Sintoukola Potash Project, Republic of Congo'' prepared for the Company by SRK Consulting (U.S.), Inc., CSA Global Pty Ltd., EGIS International and AMEC Americas, dated September 17, 2012 with an effective date of September 17, 2012 (the "Technical Report"). The Technical Report can be accessed on the Company's profile on SEDAR.

Forward-Looking Statements

This report contains statements that are "forward-looking". Generally, the words "expect," "potential", "intend," "estimate," "will" and similar expressions identify forward-looking statements. By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results, performance or achievements, to differ materially from those expressed or implied in any of our forward-looking statements, which are not guarantees of future performance. Statements in this news release regarding the Company's business or proposed business, which are not historical facts, are "forward looking" statements that involve risks and uncertainties, such as resource estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made.

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¹ For a full description of the resource refer to the NI 43-101 Technical Report, 17 September 2012 available on SEDAR, www.sedar.com

SOURCE Elemental Minerals Ltd.

Image with caption: "Figure 1. Map showing Kola and Dougou and all boreholes and seismic data. The lines marked in blue are part of the recently acquired historic dataset. The historic boreholes are marked in red. (CNW Group/Elemental Minerals Ltd.)". Image available at: http://photos.newswire.ca/images/download/20130731_C2732_PHOTO_EN_29423.jpg