On behalf of the Board of Directors it is our pleasure to present the 2015 annual report for Aguia Resources Limited (“Aguia” or “Company”).
The past 12 months have been a transformational year for Aguia with major progress achieved in developing our Brazilian asset base, strengthening our management team and ensuring the Company is well funded to advance to the next level. We believe this year’s achievements provide a solid foundation for the Company to evolve into a major fertiliser supplier to the Brazilian agriculture sector in the next few years.
In the first quarter of this year, Aguia completed a Conceptual Mining Study on the Três Estradas deposit, the results of which indicated highly competitive operating and capital costs for a 350,000 tpa SSP facility, with OPEX that would make it a lowest quartile producer. These results were based on the JORC Compliant Mineral Resource at the time of 30.5M tonnes at 4.30% P2O5 (9.9M tonnes Indicated at 5.03% P2O5 and 30.5M tonnes Inferred at 3.94 P2O5. These initial positive results gave the Company the green light to further develop and expand the opportunity at Três Estradas with the secondary nearby target of Joca Tavares providing the potential for future development. In the second quarter, the Company commenced a reverse circulation and diamond drilling programme at Três Estradas south.
Our major achievement for the year was announced in April, when the results of the Três Estradas drilling programme were analysed and resulted in a 130% increase in the total JORC compliant Indicated and Inferred resource from 30.5 Mt to 70.1 Mt (comprising 15.2 Mt Indicated and 54.9 MT Inferred) with an average grade of 4.20% P2O5. Higher grade oxide zone from surface more than doubled to 3.9 Mt averaging 10.25% P2O5 (comprised of 2.4 Mt at 9.98% P2O5 indicated and 1.5 Mt at 10.69% P2O5 Infeerred). The strike length of the Três Estradas project also increased considerably following completion of reverse circulation (1,153 metres) and diamond drilling (3,273 metres) programs in with an an additional 1.3 km of strike length of the deposit discovered, resulting in a total strike length of 2.5 km of mineralisation.
Subsequent to year end Aguia announced positive results from beneficiation test work at Três Estradas reporting phosphate recovery from the fresh carbonatite of 65%. Flotation tests also successfully resulted in phosphate recovery of 80% from the oxidized mineralization. Phosrock, or flotation concentrates, grading up to 39% P2O5 were produced from fresh carbonatite with no impurity issues. Another significant outcome of the program was the opportunity to produce a commercial quality calcite concentrate from the phosphate flotation tailings stream. Calcitic aglime (<5% MgO) product with 48% CaO was produced, indicating the potential for an additional revenue stream in the future. During the year, the Company also commenced reconnaissance work over a number of targets within the Rio Grande project area. This early stage work which concentrated on the Arroio Marmeleiro Formation resulted in the discovery of Cerro Preto, sediment hosted phosphate which has returned rock chip assays of up to 20.4% P2O5 and channel sampling up to 55m grading 6.99% P2O5. Since the discovery of this highly prospective sedimentary target in the Rio Grande region, Aguia has expanded its land holding to 35,415 hectares in the Rio Grande region of which Cerro Preto makes up 18,800 hectares. The main phosphorite beds at Cerro Preto now extend over approximately 12.5 km.
The Arroio Marmeleiro Formation, a Proterozoic shelf sequence extends over an area of about 30 km along strike and 5 km wide. These types of sequences host several giant phosphate deposits around the world, including Morocco and Northern Africa, Florida, South Carolina, Idaho and Utah, and account for over 80% of the global phosrock production. In the first half of the year, the Company secured a $2 million private placement from strategic investor Sulliden Mining Capital Inc. This investment provided the funds needed to advance the drilling at Três Estradas, which has provided the Company with a significant milestone to develop the phosphate deposits at Rio Grande. Sulliden indicated to the Company that it intends to maintain its pro rata shareholding in the future and has actively been buying shares on the ASX since the time of its investment. In early 2015, the Company raised an additional $1.8 million through a combination of Rights Issue, Shortfall Placement and Additional Share Placement which provided the funding needed to continue work at Três Estradas and complete a Preliminary Economic Assessment (“PEA”).
Subsequent to the Company’s year end we published the results of the PEA of Três Estradas conducted by SRK Consulting (Canada) Inc. The results of the PEA confirm the technical and economic viability of the Três Estradas project as a low cost producer of 500,000 tonnes of SSP per annum in Southern Brazil, indicating attractive potential project returns. Our next step will be to proceed with environmental baseline studies and Bankable Feasibility for Três Estradas Project, while continuing to develop its other phosphate projects in the Rio Grande region. We plan to initiate drilling at the nearby Joca Tavares deposit that has the potential to controbute high grade oxide material which will substantially improve the Project’s economics. Otherwise we are considering options to optimize production scale and minelife, as well as, lower capital cost option to produce phosrock. The production of calcitic aglime will also be evaluated in detail as it has the potential to bring huge economic benefits for the project by reducing operational costs of waste management and contribute additional revenue.
We are also pleased to report that subsequent to year end we closed a private placement of $9.5 million which provides the funding we need to advance our Rio Grande assets over the next 18 months and build shareholder value. I would like to thank our management and staff for their hard work and dedication over the past year, and to our shareholders for their continued support. The upcoming year will be exciting as we move Três Estradas towards bankable feasibility and continue to explore and develop phosphate deposits in Rio Grande at Joca Tavares, Porteira and Cerro Preto.
Managing Director and Chairman