Dear Fellow Shareholder
On behalf of the Board of Directors it is my pleasure to present the 2012 annual report for Aguia Resources Limited.
In what was a very active year the Company made significant progress towards its goal of establishing itself as a fertilizer company in the expanding agriculture sector in Brazil. The year’s highlight is the discovery of a significant new phosphate deposit at Três Estradas in the state of Rio Grande do Sul in southern Brazil.
Drilling at Três Estradas commenced in October 2011 and the company announced an initial JORC compliant inferred mineral resource in June 2012. Significantly, the deposit has characteristics similar to existing phosphate producers in Brazil. The resource estimate and first stage metallurgical test work has shown that the grade and mineralogy is similar to that of other open-cut operating mines globally including Yara’s Siilinjärvi mine in Finland and Vale’s Cajati mine in Brazil, both of which are hosted by carbonatite rocks and produce a high quality phosphate concentrate that is used in the production of fertilisers.
At the time of writing, the second stage drilling program at Três Estradas was progressing well. The objective of this program is two-fold; to expand the resource at depth and at the same time better define the higher grade oxide zone that starts at surface. On completion of this program and the ongoing metallurgical test work, Aguia intends to upgrade the JORC resource and commence a project scoping exercise with a view to developing this exciting new project.
The new discovery has highlighted the potential of Rio Grande do Sul to host significant phosphate deposits and the company eagerly awaits the grant of its Joca Tavares project some 40 kilometres to the east where surface sampling has returned values of up to 11% P2O5 across a broad carbonatite target. No drilling has been completed on Joca Tavares and the company has also applied for exploration licences on an additional 13 prospects in the region.
Turning to potash, the Company completed the acquisition of Potássio do Atlantico Ltda (PALTDA) and through this subsidiary now holds a 100 per cent interest in a significant land position totalling approximately 178,000 hectares (1,780 km2) in the highly prospective Sergipe-Alagoas basin that comprises the Atlantic Potash Project. The initial drilling program on the Atlantic Potash Project did not yield positive results, however the macro-story for the area has not changed and remains highly prospective as it is host to Brazil’s only producing potash mine, Taquri-Vassouras – operated by Vale. Vale is also developing its Carnallita Potash Project in the Sergipe Basin which is at pilot stage but has planned production of 1.2Mt pa of KCl from solution mined carnalite. Both of these projects demonstrate the potential of this basin to meet ongoing potash demand in Brazil that currently imports over 90% of its potash requirements.
In January 2012 Aguia further continued to consolidate its holdings in the region entering an option agreement with Lara Exploration to acquire an interest in 5 new tenements with excellent discovery potential.
With a strong project portfolio and an excellent in-country team, Aguia is well positioned to capitalize on the growing demand for phosphate and potash based fertilisers in Brazil.
In closing, I would like to thank the management and staff of Aguia for their work over the past year. There is much work to do to follow up on the past year’s activities and achievements, as we look to establish ourselves as a leading fertiliser developer in Brazil.