Dear Fellow Shareholder,
On behalf of the Board of Directors it is my pleasure to present the 2013 annual report for Aguia Resources Limited (“Aguia” or “Company”).
The past 12 months have been very active as Aguia further establishes itself as a fertilizer company in the expanding agriculture sector in Brazil. The year’s highlights centre around our Rio Grande do Sul phosphate project where the company expanded on the initial JORC resource at Três Estradas and demonstrated considerable upside with a new exciting discovery at Joca Tavares.
In February 2013, the Company announced a resource tonnage increase of 34% from an updated JORC indicated and inferred mineral resource at Tres Estradas and with the grant of the southern exploration license that hosts the likely extension of that deposit there is considerable room for further resource increases. This is demonstrated by the recently completed shallow auger drilling on this new license that has intersected high grade phosphate mineralization from surface indicating the strong potential for a further resource upgrades in the year ahead.
Elsewhere at Rio Grande the discovery success continues and early results from Joca Tavares are equally exciting to those from Tre?s Estradas. Initial auger drilling completed over an area of outcropping carbonatite at Joca Tavares has returned excellent results from surface which are detailed in the main body of the report. The results to date confirm our belief that Rio Grande do Sul has the potential to be a significant source of phosphate for the growing fertilizer market in southern Brazil.
Significantly, the deposits at Rio Grande have characteristics similar to existing phosphate producers in Brazil. The resource estimate and metallurgical test work completed to date demonstrates that the grade and mineralogy is similar to that of other open-cut operating mines globally including Vale’s Cajati mine in Brazil, that is also hosted by carbonatite rocks and produces a high quality phosphate concentrate that is used in the production of fertilisers.
During the year, the Company announced an initial JORC compliant Inferred Mineral Resource for the Lucena Phosphate Project located in the state of Paraiba in north eastern Brazil. The Company is currently planning the next steps for Lucena that will likely include beneficiation test work and further technical studies.
Aguia also holds a significant land position (totalling approximately 1,300 km2) in the highly prospective Sergipe-Alagoas basin that comprises the Atlantic Potash Project. The initial drilling program on the Atlantic Potash Project in 2012 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, Taquari-Vassouras – operated by Vale. As the near term focus will be advancing the Rio Grande Phosphate assets towards development the Company is presently considering how best to progress the Lucena Phosphate and Atlantic Potash projects.
During the year the company also took steps to significantly improve its capital structure through the early termination of the Potash performance shares. This transaction was completed to provide investors, existing shareholders and the broader capital markets with increased clarity over the Company’s capital structure by removing the overhang of these performance shares and was strongly supported by shareholders at the meeting held on 31 May 2013.
The results of our exploration and corporate activities during the past year has demonstrated that Aguia is moving in the right direction to become a major supplier of fertiliser products into the Brazilian domestic market. While this is encouraging, the market/investment side of the business has not been as positive, in fact I would describe it as a year of uncertainty and a difficult environment for many investors and directors alike. Many listed exploration companies are struggling with low cash reserves and market capitalisations. At the current share price, the market is giving little value to the quality projects of the Company and has not yet recognized the recent significant discoveries. Market conditions aside, Aguia will continue to execute sound exploration and development programs and deliver on our growth strategy for shareholders.
I would like to thank our management and staff for their exceptional hard work and dedication over the past year, and to our shareholders for their loyalty and support. The upcoming year will undoubtedly be busy and challenging for our team and we look forward to seeing the results of their efforts rewarded in the market place. 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.