MBAC Announces Positive Definitive Feasibility Study for Itafos Phosphate Project, Brazil
07 Septiembre 2010 - 5:30AM
Marketwired Canada
MBAC Fertilizer Corp. ("MBAC" or the "Company") (TSX:MBC) is pleased to announce
the completion of the Definitive Feasibility Study (the "DFS" or the "Report"),
the result of which strongly supports its decision to proceed with its 100%
owned Itafos Phosphate Project (the "Itafos Project" or the "Project") located
near the city of Arraias, Tocantins in Brazil.
The results of the Report are National Instrument 43-101 (NI 43-101) compliant
and provide a detailed analysis of the technical, operating and capital cost
considerations. The Report will be available on SEDAR (www.sedar.com) and on
MBAC's website under "Technical Reports".
Project Economics
The following is a summary of the key operating parameters and economics for the
Project:
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Mine Life 14.5 years
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Average ROM grade 5.94% P2O5 in first 10 years (5.4% P2O5 over
the mine life)
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Strip Ratio 1.85 for the first 10 years (2.3 over the
mine life)
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Operating Cost (SSP) US$94.95 in first 4 years (US$104.32 per
tonne over the mine life (granulated LOM))
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Internal Rate of Return (IRR) 26.8%
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Net Present Value @ 10% US$ 252.5 million (US$3.47 per share(i))
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Payback 3.1 years after start-up.
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(i) based on 72.7 million shares outstanding
The Report was prepared to an accuracy of +/-10% for operating costs.
The Report indicates the Itafos Project will produce robust economics and shows
significant improvement in reserves, grade, strip ratio, operating costs and
project economics over the Technical Study released in April 2010.
Antenor Silva, President and CEO, stated: "We are extremely pleased that the
report confirms the project will generate robust returns. The growth in measured
and indicated resources and the improvement in grades over those reported in the
most recent 43-101 report have increased the mine life to 15 years and result in
a significant increase in the value of the Project. Moreover, these
improvements, along with the optimization of the plant feed grade over the mine
life, have resulted in a reduction in the strip ratio and lower projected
operating costs, while the projected capital expenditures remain relatively
unchanged from those previously reported in the Technical Study released in
April 2010. We continue to advance the Project and remain committed to our
mid-2012 production target."
Financing
The Company is also pleased to announce that after an extensive period of
evaluation and negotiation of several financing alternatives, it has received an
Indicative Term Sheet from Banco Itau BBA S.A. ("Itau BBA"), a subsidiary of
Itau Unibanco Group, which is presently the largest financial conglomerate in
Latin America and the 10th largest bank in the world by market value, in
connection with the arrangement of a syndicated project financing ("PF")
facility for up to US$130 million. The Indicative Term Sheet outlines the
general terms and conditions for the PF facility during the construction phase
and the post-completion phase, conditions precedent to closing and drawdown as
well as general covenants and other customary terms and conditions that can be
expected for a financing of this nature. Until a definitive term sheet is
issued, the terms are indicative and may be amended. The proceeds from the
facility together with cash on hand and other equipment financing facilities
available to the Company are expected to fund substantially all of the projected
capital expenditures. The projected cash flows from the Project are expected to
support borrowing under such facilities.
Environmental Impact Assessment
The Company would also like to announce that it has formally submitted an
environmental impact assessment and report ("EIS") for the Itafos Project to the
Tocantins State Environmental Agency ("Naturatins"). A public hearing is
expected to be scheduled in September, 2010. The EIS is a condition precedent to
obtaining the environmental license for construction. The submission has been
made on a timely basis as the Company continues to advance the Project on
schedule and expects to receive the construction license by December 2010.
Highlights of the Report
MBAC has updated its mine plan for the Project based on the recently completed
NI 43-101 compliant Updated Mineral Resource Estimate for the Arraias Phosphate
Project in Brazil filed on Sedar (www.sedar.com) on Aug 6, 2010 ("Updated
Resource Estimate"). With the increased resources the Company was able to
optimize the mine plan and reduce the pre-stripping volume to 4.7 million tonnes
as well as reduce the stripping ratio, and increase the plant feed grade
especially in the early years.
The Report supports an open pit mining operation, crushing of the ore on-site,
grinding and flotation concentration of the phosphate ore. The flotation
concentrate will be further reacted with sulphuric acid located adjacent to the
mining facility in Tocantins State.
The Project is estimated to produce on average 500,000 tonnes of Single Super
Phosphate ("SSP") annually. The Report details a total capital cost of US$195
million (this amount includes $25 million in taxes, part of which is expected to
be refunded, $20.1 million for pre-stripping and mining fleet and $16 million in
contingencies) including G&A, start-up and reclamation. This estimate is very
consistent with the initial capital expenditure estimate of US$189 million
(including pre-stripping costs) included in the April Technical Study. The
Report has been prepared to +/-15% accuracy for capital expenditures.
The current mine plan anticipates a significantly higher head feed grade
(starting with an average 6.77% P2O5 in the first year) with a lower stripping
ratio during the early years.
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Ore Waste Total
Period ktonnes (%)P2O5 ktonnes ktonnes Strip Ratio
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Y-1 4,700
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Y01 1,171 6.77 2,349 3,520 2.01
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Y02 2,239 6.37 3,683 5,923 1.64
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Y03 2,768 6.30 6,329 9,096 2.29
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The SSP price of US$249 per tonne was used in the model as a Base Case and
increased by inflation of 2% on a yearly basis during the life of mine. It is
estimated that the current price for SSP in the Central-North region of Brazil
is approximately US$262 - US$281 per tonne.
Based on the Report, the Company believes that the fundamentals of the Itafos
Project are robust and will result in a 3.1 year payback period.
Mineral Resources
Wardrop recently updated the mineral resources estimate for the Arraias Property
with an estimated Near Mine Block regions deposit containing 58.8 million tonnes
of measured and indicated mineral resources averaging 5.01% P2O5 at a 2.8% P2O5
cut-off grade as of July 16, 2010, as per the table below:
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Tonnage
Density (Mt) P2O5 (%)
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Measured and Indicated 1.53 58.81 5.01
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Inferred 1.54 24.02 5.27
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In addition, Wardrop stated in its NI 43-101 Report that it is reasonable to
assume that MBAC will experience additional exploration success in other areas
with similar favourable lithology. Those areas have not been fully explored as
of yet. Several of the high-potential areas yet to be drilled are near to the
plant site and should positively impact on the project returns during the early
years of operation.
Mineral Reserve
A mine production schedule was developed to show the ore tonnages, grades, total
material and waste material by year over the life of the mine. The distribution
of ore and waste contained in each of the mining sectors was used to develop the
schedule, ensuring that criteria such as continuous ore exposure (down to the
bottom of the pit), mining accessibility, and consistent material movements were
met.
The mineral reserve based on the production schedule used for the Report is as
follows:
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Ore Source Ktonnes P2O5(%)
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Proven Reserve 13,021 4.53
Probable Reserve 31,223 5.47
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Total Reserve 44,244 5.39
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Total Material 151,004 Strip ratio 2.41(i)
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(i) includes pre-stripping
Metallurgical Testwork
Several bench and pilot plant tests were performed over the past two years using
material from the main defined resource targets of the Arraias Property deposit.
A consistent and reproducible processing flotation flow-sheet was developed to
treat the various sources from the deposit. This process allows the
beneficiation of phosphate ore containing 4.5% to 6.0% P2O5 to concentrates
containing 28% P2O5 while recovering 55% to 58% of the contained P2O5.
The Report concludes that the production of ammoniated SSP with 1% nitrogen and
17% soluble P2O5 in neutral ammonium citrate ("NAC") utilizing Itafos' rock with
27-28% of P2O5 is feasible and is the most suitable solution for the specific
acidulation process being contemplated for the Project.
Qualified Persons
The Technical Report was prepared by David Frost of AMEC Minproc and
incorporated the results of the Updated Resource Estimate prepared by Callum
Grant, P.Eng of Wardrop and a mine plan prepared by Carlos Guzman of NCL. All
persons are Qualified Persons, independent of MBAC within the meaning of section
1.4 of NI 43-101, and they have each reviewed and approved the technical
information within this news release.
Project Background
Itafos is located in the municipality of Arraias Tocantins, in the southeast of
Tocantins state, just a few kilometers away from Campos Belos, a town in the
Goias state in central Brazil. The existing small-scale phosphate mining
operation is based on high grade (+18% P2O5) mineralization. However, MBAC is
currently focused on the development of a higher volume and much larger mining
operation which is expected to be in place by second quarter of 2012. At full
capacity, the proposed beneficiation plant is expected to generate 330 ktpa of
phosphate rock concentrate at 28% P2O5. This phosphate concentrate will be used
to produce 500 ktpa of SSP.
Beyond this proposed first phase of development (the "First Phase"), the Company
is also actively investigating the potential for a larger scale ("Second Phase")
development within the Arraias area which could potentially be in place as early
as 2015.
About MBAC
MBAC is focused on becoming a significant integrated producer of phosphate and
potash fertilizers in the Brazilian and Latin American markets. MBAC has an
experienced team with over 125 years of experience combined in the business of
fertilizer operations, management, marketing and finance within Brazil. In
October 2008, MBAC acquired the Itafos phosphate mine and related
infrastructure, located in central Brazil. MBAC's exploration portfolio includes
a number of additional phosphate and potash projects, which are also located in
Brazil. MBAC is well funded with approximately C$60 million, which will be used
to develop the Itafos Phosphate project. The Company continues to search for
additional fertilizer opportunities in the Brazilian and other Latin-American
markets, where strong agricultural fundamentals and unique opportunities are
expected to provide attractive growth opportunities in the near future. All
material information on MBAC can be found on the Company's website at
www.mbacfert.com or at SEDAR at www.sedar.com.
Antenor Silva, President & Chief Executive Officer
Shares Outstanding: 72,689,336
Fully Diluted: 79,812,886
FORWARD LOOKING STATEMENTS
This release contains "forward-looking statements" within the meaning of
applicable Canadian securities legislation, including predictions, projections
and forecasts. Forward-looking statements include, but are not limited to,
statements that address activities, events or developments that the Company
expects or anticipates will or may occur in the future, including such things as
future business strategy, competitive strengths, goals, expansion, growth of the
Company's businesses, operations, plans and with respect to exploration results,
the timing and success of exploration activities generally, permitting time
lines, government regulation of exploration and mining operations, environmental
risks, title disputes or claims, limitations on insurance coverage, timing and
possible outcome of any pending litigation and timing and results of future
resource estimates or future economic studies.
Often, but not always, forward-looking statements can be identified by the use
of words such as "plans", "planning", "planned", "expects" or "looking forward",
"does not expect", "continues", "scheduled", "estimates", "forecasts",
"intends", "potential", "anticipates", "does not anticipate", or "belief", or
describes a "goal", or variation of such words and phrases or state that certain
actions, events or results "may", "could", "would", "might" or "will" be taken,
occur or be achieved.
Forward-looking statements are based on a number of material factors and
assumptions, including, the result of drilling and exploration activities, that
contracted parties provide goods and/or services on the agreed timeframes, that
equipment necessary for exploration is available as scheduled and does not incur
unforeseen break downs, that no labour shortages or delays are incurred, that
plant and equipment function as specified, that no unusual geological or
technical problems occur, and that laboratory and other related services are
available and perform as contracted. Forward-looking statements involve known
and unknown risks, future events, conditions, uncertainties and other factors
which may cause the actual results, performance or achievements to be materially
different from any future results, prediction, projection, forecast, performance
or achievements expressed or implied by the forward-looking statements. Such
factors include, among others, the interpretation and actual results of current
exploration activities; changes in project parameters as plans continue to be
refined; future commodities' price; possible variations in grade or recovery
rates; failure of equipment or processes to operate as anticipated; the failure
of contracted parties to perform; labour disputes and other risks of the mining
industry; delays in obtaining governmental approvals or financing or in the
completion of exploration, as well as those factors disclosed in the company's
publicly filed documents. Although MBAC has attempted to identify important
factors that could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements will prove
to be accurate, as actual results and future events could differ materially from
those anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements.
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