Brazilian fertiliser developer Aguia Resources Limited (ASX: AGR) (“Aguia” or “Company”) is pleased to announce the results of the Preliminary Economic Assessment2 for the Company’s flagship Três Estradas deposit (“TE”) in Rio Grande do Sul, Brazil. The PEA results are based on the 70.1 Mt JORC compliant mineral resource (comprising 15.2 Mt Indicated and 59.2 Mt Inferred) with an average grade of 4.20% P2O5 previously announced on 27 April 2015. The results of the PEA suggest the potential economic and technical viability of the proposed project. This represents a major milestone for the Company to advance to the next phase of development for Três Estradas which will involve environmental base-line studies, infill drilling, additional metallurgical testing, optimization, and completion of a feasibility study.
Justin Reid, Chairman and Managing Director of Aguia commented, “The completion of the PEA for TE indicates that the deposit will generate a robust economic return through the production of 500,000 tonnes of SSP per annum. The PEA results suggest that the existing apatite mineral resource can generate a pre-tax IRR of 25% and NPV5% of US$273 million with payback in only 3.2 years, a great base case for initial development that is expected to be driven materially higher when results of ongoing exploration are incorporated into the business plan”.
“There are numerous opportunities to further enhance these initial financial results. We plan to initiate drilling at the nearby Joca Tavares deposit that has the potential to contribute additional high-grade oxide material which will substantially improve the Project’s economics. Otherwise we are considering options to optimize production scale and mine-life, as well as, a 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”.
“The Company’s next step will be to proceed with environmental base-line studies and Bankable Feasibility for TE Project, while continuing to develop its other phosphate projects in the Rio Grande region”.
Aguia’s Tres Estradas project is located in the state of Rio Grande do Sul. Southern Brazil is a major farming region which currently imports 100% of its phosrock requirements. There are currently no phosphate mines in the region and none scheduled to be built in the foreseeable future other than Aguia’s planned development of Três Estradas. Aguia’s landholding in Rio Grande do Sul currently totals about 38,289 hectares. Três Estradas is the most advanced of Aguia’s holdings in the region which also includes the carbonatite-hosted Joca Tavares and Porteira Projects, and recently discovered sedimentary Cerro Preto Project.
Summary of PEA Economics
The PEA was prepared by SRK Consulting Canada (Inc.) with contributions by Kemworks Technology Inc., other consultants and Aguia employees. For the purposes of the PEA, Aguia has forecast production of 500,000 tonnes of SSP per annum. This production will require 330,000 tonnes of
phosphate concentrate grading 28% P2O5. There is an opportunity to produce 630,000 tonnes per year of calcitic aglime as a by-product. The study was based on the mineral resources audited by SRK and effective 27 April 2015.
The proposed project includes an open pit, truck-excavator operation. Phosphate mineralization will involve drilling and blasting, with phosphate bearing rocks and waste rock hauled to an on-site concentrator and waste dump. The phosphate rock concentrate will be produced by flotation and will be transported by truck from the mine site to the port city of Rio Grande, where it will be upgraded to a granulated SSP at a plant located in the industrial area of the port. It is anticipated that the final SSP product will be sold and distributed in the local market in southern Brazil.
The project will involve moving approximately 138 million tonnes of material, of which 40 million tonnes will be processed at the concentrator and subsequently upgraded at the SSP plant. The concentrator is planned for feed capacity of 7,500 tonnes per day with an estimated average P2O5 feed grade of 4.3%. Metallurgical testwork indicates an average process recovery of 67% yielding phosphate rock grading at 28% P2O5. The PEA assumes a long term SSP price of US$280 per tonne as defined by respected Brazilian agribusiness specialists Agroconsult and BRL/USD foreign exchange of 3.5. Based on the current JORC compliant mineral resource (comprising 15.2 Mt Indicated and 59.2 Mt Inferred) the Três Estradas project will have a 15.5 year mine life and will require CAPEX of US$184 million to build (US$209 million including contingency). The project has a low OPEX of US$160.7 per tonne of SSP. Based on these assumptions, the preliminary financial model indicates pre-tax NPV5% of US$273 million (A$372 million) and IRR of 25%.
Future Programme and Development Potential
The Board and management are pleased with the results of the PEA and will be moving forward to an environmental baseline and Bankable Feasibility for the Três Estradas Project. As part of this program an infill drilling program at TE will be designed to convert the current Inferred mineral resources into Indicated resources for the BFS. Whilst the current Mineral Resource for Três Estradas forms the foundation of the PEA and will be the starting point for the BFS, the Board and management are of the view that there is strong potential for the project to deliver even higher returns based on the exploration potential of Três Estradas, Joca Tavares and Porteira. As such, Aguia will continue to work on expanding its mineral resource base in the region while concurrently advancing Três Estrada towards a production decision.
For further information, please contact:
Justin Reid, Executive Chairman and Managing Director
T: +1 416-216-5446
Catherine Stretch, Chief Commercial Officer
T: +1 416-309-2695
Dr. Fernando Tallarico Technical Director
The preliminary economic assessment discussed herein is partly based on Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment based on these mineral resources will be realized. The results of the economic analyses discussed herein represent forward-looking information as defined under Australian securities law. The results depend on inputs that are subject to a number of known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those presented here. The accuracy of the results is in the range of the industry-wide commonly accepted scoping study level of accuracy.[/box]