Aguia’s Três Estradas Phosphate Project (TEPP) is a low capital expenditure (CAPEX) and low operating expenditure (OPEX) project that will produce a natural phosphate fertiliser product which has achieved yields of up to 98% of those returned using significantly more expensive conventional phosphate fertilisers.

Aguia is aiming to have the TEPP in production by Q4 2021.

PROJECT HIGHLIGHTS

LOW CAPEX

Low CAPEX (A$9.72 million, A$10.57 million with contingency).

LOW OPEX

Low OPEX (A$11.87 per tonne) natural phosphate fertiliser product.

PRODUCTION BY Q4 2021

Aiming to be in production by Q4 2021.

POST-TAX NPV A$69.3 MILLION

Post-tax NPV of A$69.3 million at an 8% discount rate.

PROJECTED IRR OF 51%

A project IRR of 51% and a quick 3.3-year payback period.

A$14.8 MILLION PA

EBITDA (average for years 1 to 18) of A$14.8 million per year.

300,000 TONNES PA PRODUCTION

Aguia is planning to produce 300,000 tonnes of Pampafos (our natural phosphate fertiliser) per annum from the TEPP site.

DEMAND FOR 2,440,000 TONNES PA IN A 300KM RADIUS

There is demand for 2,440,000 tonnes of phosphate fertiliser per annum (10% P₂O₅) within a 300km radius of the TEPP site.

18 YEAR MINE LIFE

18 year life of mine (without expansion).

PAMPAFOS – $72 PER TONNE

Aguia expects to sell Pampafos for A$72 per tonne. This is very competitive compared to Aguia’s competitors who are selling imported and more expensive conventional fertiliser products.

TEPP PAMPAFOS YIELDS 98%

Agronomic testing on soybean and corn (maize) (the state’s two biggest crops) has confirmed the high quality of Pampafos. Yields have been returned that are up to 98% of those achieved using conventional phosphate fertilisers.

PROJECT EXPANSION

Aguia holds claims over other phosphate targets (totalling 12,812 hectares) that are in close proximity and display similar geophysical characteristics to the TEPP deposit. Potential to add resource upside to the project.

TIMELINE & KEY MILESTONES

KEY ACTIVITIES

Blue boxes – key activities, Green boxes – company actions completed, Grey boxes – ongoing actions, Yellow boxes – planned actions, Orange boxes – milestones

FINANCIAL METRICS

On 12 February 2020, Aguia released an independent Scoping Study compliant with JORC (2012) for the Três Estradas Phosphate Project (TEPP) that confirmed excellent economics.

The Study was conducted by independent consulting firm GE21 Consultoria Mineral Ltda (GE21) in Brazil and included estimates of:

  • Pit optimisation and design
  • Mine scheduling
  • Capital expenditure (CAPEX)
  • Operating expenditure (OPEX)

The economic analysis of the Study is based on a Mineral Resource of 5.1Mt at 8.79% P2O5. This represents the oxidised portion (Saprolite) of the Três Estradas phosphate deposit.

The Study returned the following financial metrics:

  • A post-tax NPV (at an 8% discount rate) of A$69.3 million
  • A post-tax internal rate of return (IRR) of 51%
  • A very low CAPEX of A$10.57 million with contingency (including land acquisition)
  • A very low OPEX of A$11.87/tonne of Pampafos
  • An average EBITDA for years 1 to 18 of A$14.8 million/year
  • There are currently 277,365,126 shares on issue. This EBITDA equates to annual earnings per share of 5.33 cents

PROJECT FINANCE

The independent Scoping Study released on 12 February 2020 confirmed that the Três Estradas Phosphate Project (TEPP) will have a very low capital expenditure (CAPEX) of A$10.57 million (with contingency).

Aguia plans to fund this CAPEX through a mix of debt and equity.

On 6 April 2020, Aguia announced that the Development Bank of Southern Brazil (Banco Regional de Desenvolvimento do Extremo Sul) (BRDE) has provided a letter of support to provide a development loan to fund up to 50% of the CAPEX for the TEPP.

BRDE is a recognised and well-respected Brazilian institution that promotes economic and sustainable development in southern Brazil. Following an extensive review of the project, BRDE has confirmed that the TEPP meets its investment criteria.

Aguia is now negotiating the detailed terms and conditions of the BRDE development loan and will provide an update once a definitive agreement is reached.

Aguia continues to speak with prospective investors and is pursuing options to fund the remaining 50% of the required CAPEX (approximately A$5.3 million).

The independent Scoping Study released on 12 February 2020 confirmed that the TEPP will have a very low capital expenditure (CAPEX) of A$10.57 million (with contingency)
On 6 April 2020, the Development Bank of Southern Brazil provided Aguia with a letter of support to fund up to 50% of the CAPEX for the TEPP

PERMITTING

Preliminary Licence (LP) – granted on 15 October 2019

The Preliminary Licence (LP) for the Três Estradas Phosphate Project (TEPP) was granted on 15 October 2019. The LP is seen as a key milestone in mine permitting as it requires approval of the Environmental Impact Assessment (EIA) by the Rio Grande do Sul State Environmental Agency (FEPAM). For this reason, it is considered to be the most challenging mining permit to obtain. The granting of the LP represented a substantial de-risking event on the path to construction of the TEPP and production. It is at this stage that all technical data relating to the EIA was presented and community consultations were completed to provide the social licence to proceed to the installation and operating permits.

Installation Licence (LI) – expected Q1 2021

Aguia is currently undertaking works to obtain the Installation Licence (LI) for the TEPP with all requirements expected to be lodged with the relevant agencies by the end of November 2020. The LI is the permit that authorises the construction of the project in accordance with detailed plans and specifications, including the programs and control measures detailed in the LP.

The LI is the only major outstanding permit required to commence construction. Once the Company receives the LI from FEPAM; earthworks, civil works and installation of the processing unit can begin.

The decision to produce a natural phosphate fertiliser product from the TEPP, as announced in the Scoping Study released on 12 February 2020, delivered an approximate 77% reduction in the environmental footprint of the project compared to the initial design. Aguia has been able to substantially reduce and in some cases eliminate potential environmental risks. This has led to a reduction in the expected timeframe of the LI permitting process.

To complete all the requirements for the granting of the LI, Aguia’s team is actively progressing four key initiatives:

Mining projects in Brazil require the granting of three licences:
  • Preliminary Licence (LP) – granted on 15 October 2019
  • Installation Licence (LI) – expected Q1 2021
  • Operating Licence (LO) – anticipated Q4 2021

1. Environmental Plans and Programs

Work on the archaeological field survey has been completed. Reporting and filing of required documentation is now being finalised.

Golder Associates, a world-renowned environmental services company, have been appointed to conduct the major work on the mandatory environmental programs and to prepare the Basic Environmental Plan (PBA) which is required to obtain the LI.

The PBA includes general environmental management and environmental risk management programs, safety protocols, the environment and health program, environmental monitoring, the environmental audit and compensation plan, and the construction and mine closure plan.

The PBA is scheduled to be filed with FEPAM during Q4 2020.

2. Engineering

Preparation of the detailed engineering plans for the TEPP is advancing. These include detailed executive projects with construction plans and descriptive memorials in accordance with the LP conditions. This work is mandatory for the granting of the LI and will be concluded and presented to FEPAM in Q4 2020 together with the PBA. The plans will follow the optimisation and design, mine scheduling, and processing plant designs that were presented in the Scoping Study.

The executive engineering project, which includes the mine pit and waste dumps for the TEPP is being conducted by GE21 Consultoria Mineral Ltda (who undertook the Scoping Study).

The electrical, architectural and engineering plan which includes the administrative facilities is being undertaken by Grupar Soluções Integradas em Gestão de Utilidade e Energia Sustentável Ltda. (Grupar) and will have a focus on the implementation of ecofriendly solutions to the buildings and surrounding areas.

3. National Mining Agency

The Final Exploration Report (RFP) regarding the two mineral rights covering the TEPP was approved by the Brazilian Mining Agency (ANM) during August 2020. Following approval, Aguia immediately commenced the preparation of the Economic Assessment Plan (PAE) for the mineral properties 810.090/1991 and 810.325/2012, which cover the TEPP. The PAE was filed with the ANM on 26 October 2020 and approval is expected during Q1 2021. The PAE is an essential part of the mining permitting application process and its evaluation and approval by ANM is mandatory for the issuing of the LI.

4. Land Acquisition

Proof of ownership or possession of the land that covers the mine site is required for the granting of the LI. Aguia must present all supporting documentation of land for the area planned for the project, together with the mapping of all areas already acquired or leased for a time equal to or greater than the expected duration of the project.

Aguia has already completed a detailed evaluation and report of all properties covering the project. The report includes a valuation of all properties in the project area totalling approximately A$2.5 million, and was completed by Vaz de Melo Consultoria Ltda, a well-regarded independent property valuer in the Brazilian mining sector. The cost of land acquisition is included in CAPEX for the project.

On 31 July 2020, Aguia announced the appointment of a realtor specialised in land negotiation and acquisition to initiate and mediate negotiations for the acquisition of properties that are required for the installation of the TEPP.

Aguia expects to complete land acquisition in Q1 2021.

Aguia expects to complete the land acquisition in Q1 2021
Aguia reminds shareholders that milestones which depend on approval from government agencies, such as ANM and FEPAM, are uncertain, as management does not have any control over the government agencies and can not anticipate with certainty, the timing or the outcome of their decisions. Notwithstanding, dialogue with government continues to be regular, engaging, and indeed positive.

Operating Licence (LO) – anticipated Q4 2021

The Operating Licence (LO) is granted by the Rio Grande do Sul State Environmental Agency (FEPAM) and together with the mining concession from the Mining & Energy Ministry allows the Company to initiate the mining and processing of phosphate.

The granting of the LO occurs once all aspects of the approved project design are implemented in accordance with the LP and LI. An inspection of the constructed mine and plant is undertaken to ensure compliance with codes.

An LO is valid in increments of four to ten years and can be renewed as necessary until the end of the mine life.

Aguia anticipates that construction of the TEPP site following LI approval will take approximately eight months, with the granting of the LO to occur shortly after completion, during Q4 2021.

Aguia anticipates that construction of the TEPP site following LI approval will take approximately eight months, with the granting of the LO to occur shortly after completion, during Q4 2021

INFRASTRUCTURE & CONSTRUCTION

The decision to produce a natural phosphate fertiliser product from the Três Estradas Phosphate Project (TEPP) drastically reduced the infrastructure and CAPEX required to commence production.

The TEPP is an open pit and shovel operation with a very low strip ration of 0.49:1 for an 18-year life of mine (LOM). The processing required to produce a natural phosphate fertiliser product is very simple, consisting of only crushing and milling. There is no need for a tailings dam.

Preparation of the detailed engineering plans for the TEPP are advancing, these include a detailed Executive Project with construction plans in accordance with the Preliminary Licence (LP) conditions.

The executive engineering plans for the mine pit and waste dumps for the TEPP is being undertaken by GE21 Consultoria Mineral Ltda. These works include a geotechnical study for the pit slopes, pit geometry definition to operational slopes final slopes, review of geotechnical studies regarding waste dumps and dikes and the executive project for waste dumps in accordance with the current technical standard, including constructive sequencing of the waste dumps.

The electrical, architectural and engineering plans for the administrative facilities is being undertaken by Grupar Soluções Integradas em Gestão de Utilidade e Energia Sustentável Ltda. (Grupar), with a focus on the implementation of ecofriendly solutions to the buildings and surrounding areas.

The processing plant layout will include a primary crusher and six secondary hammer mills. After milling, the product will be transported to the warehouse through a conveyor belt and tripper car system as shown in the image below.

The State Electric Power Company (CEEE), which was formally consulted on the capacity to supply power to the TEPP has officially confirmed the available capacity to provide power from a transmission line located approximately 9km from the planned production unit. The detailed project to connect the production unit was formally filed with CEEE during June 2020. CEEE has requested complementary documents which are being provided by Aguia. Once all documents are received. CEEE will evaluate the electrical project prior to the authorisation for production.

PRODUCT TESTING

Agronomic Tests

Aguia has engaged Integrar Gestão e Inovação Agropecuária (Integrar), a renowned agronomic consulting firm located in southern Brazil to conduct a series of agronomic efficiency tests on the Três Estradas Phosphate Project (TEPP) natural phosphate fertiliser product as a source of phosphorus (P) for crops. The tests are being conducted at Integrar’s Agronomic Station located in Capivari do Sul, Rio Grande do Sul. Two types of processed ore are being tested, carbonatite saprolite (CBTSAP) and amphibolite saprolite (AMPSAP).

CBTSAP is our higher-grade natural phosphate fertiliser grading about 10% P2O5. CBTSAP is our main product as it represents more than 80% of the resource. The AMPSAP is a relatively lower-grade natural phosphate fertiliser grading on average 4.5% P2Oand represents about 17% of the resource.

Results that have been released to date have confirmed the high quality and productivity of the TEPP natural phosphate fertiliser product and have demonstrated high potential for its application and ability to replace conventional phosphate fertilisers.

Two agronomic tests are being undertaken; each test will evaluate three crops over three harvests to determine the reactivity and availability of the phosphate nutrient from CBTSAP and AMPSAP to the plants, and to determine its agronomic value:

Test #1:

  • Soybean (2019/2020 summer crop) (completed)
  • Ryegrass (2020 winter crop) (results expected November 2020)
  • Rice (2020/2021 summer crop) (results expected May 2021)

Test #2:

  • Corn (maize) (2019/2020 summer crop) (completed)
  • Wheat (2020 winter crop) (results expected November 2020)
  • Soybean (2020/2021 summer crop) (results expected May 2021)

Test #1 and Test #2 consist of 16 distinct agronomic treatments shown in the table below. Each treatment consists of different sources of phosphate for comparison purposes including conventional phosphate fertilisers such as; Super-simple Phosphate (SSP), Triple Superphosphate (TSP), Monoammonium Phosphate (MAP), and Natural Phosphate from Morocco (NP). Treatments with distinct quantities of our natural phosphate fertiliser products (CBTSAP and AMPSAP), a combination of CBTSAP and AMPSAP with MAP, and a phosphate solubilizer known as BiomaPhos are also tested. The test is replicated four times with the sequence of blocks randomised for each treatment.

The application rate of the nutrients in each treatment is as follows:

  • Nitrogen (N): 20 kg/ha of N in treatments T2 to T16. In treatments T12 to T16, the content of N in MAP was discounted from this amount;
  • Potassium (K): 200 kg/ha of KCl (Potassium chloride) in treatments T2 to T16;
  • Phosphate dosage P1: 50 kg/ha of P2O5;
  • Phosphate dosage P2: 100 kg/ha of P2O5.
Treatment Dosage Sources of Phosphorus
T1 Control No source of N, P and K applied
T2 N+K No source of P applied
T3 N+K+P1 CBTSAP
T4 N+K+P1 CBTSAP + BiomaPhos (phosphorus solubilizer)
T5 N+K+P2 CBTSAP
T6 N+K+P1 AMPSAP
T7 N+K+P1 AMPSAP+ BiomaPhos (phosphorus solubilizer)
T8 N+K+P2 AMPSAP
T9 N+K+P1 Natural Phosphate Morocco (NP)
T10 N+K+P1 Triple Super Phosphate (TSP)
T11 N+K+P1 Simple Super Phosphate (SSP)
T12 N+K+P1 MAP
T13 N+K+P2 ¼ via CBTSAP + ¾ via MAP
T14 N+K+P2 ½ via CBTSAP + ½ via MAP
T15 N+K+P2 ¼ via AMPSAP + ¾ via MAP
T16 N+K+P2 ½ via AMPSAP + ½ via MAP
The purpose of this testing is to determine how effective the TEPP natural phosphate fertiliser product is when compared to other sources of phosphate, including conventional phosphate fertilisers, with regards to crop yields and residual phosphate in the soil post-harvest.

Test #1 Results – Soybean

Results of Test #1 on soybean crops were announced on 16 June 2020 and demonstrated that saprolites from both the carbonatite (CBTSAP) and the amphibolite (AMPSAP) are very effective sources of phosphate for the soybean crops. Soybean that was treated with CBTSAP and AMPSAP returned yields that exceeded expectations for a first production cycle.

Treatment T3, CBTSAP in a P2O5 dosage of 50 kg/ha resulted in a yield of 3.91 t/ha, which equates to 98% of the yield achieved using the conventional fertilizer TSP (3.99 t/ha) (T10), 97% of the NP yield (4.03 t/ha) (T9), 95% of the SSP yield (4.10 t/ha) (T11), and 92% of the MAP yield (4.25 t/ha) (T12).

The expectation is that in a short time period, the differences in productivity between the conventional phosphate fertilisers and CBTSAP and AMPSAP will be further reduced or be negligible. This is because of the cumulative effect of the fertiliser in the soil over time, which favours Natural Phosphates as they are slower release products.

With regards to residual phosphate in the soil, the P grades in the soils that received CBTSAP and AMPSAP treatments are significantly higher that the P grade in the soils with control treatment (T1), where there is no addition of P. The CBTSAP in a dosage of 50 kg/ha resulted in 11.8 mg/dm3 of P in the soils (T3), grading similarly to treatments with TSP (12.3 mg/dm3) (T10) and SSP (13.2 mg/dm3) (T11). The higher dosage of CBTSAP (100 kg/ha) reached 15.1 mg/dm3 of P in the soils (T5) and the combination of CBTSAP (50%) and MAP (50%) in the dosage of 100kg/ha resulted in the highest level of P in the soils (19.6 mg/dm3) (T14).

The application of CBTSAP and AMPSAP was effective in improving the P rates in the soil after the soybean harvest and demonstrated good residual content which should increase through successive crop cycles.

Full ASX Announcement

Treatment T3, CBTSAP in a P2O5 dosage of 50 kg/ha resulted in a yield of 3.91 t/ha, which equates to 98% of the yield achieved using the conventional fertilizer TSP (3.99 t/ha) (T10), 97% of the NP yield (4.03 t/ha) (T9), 95% of the SSP yield (4.10 t/ha) (T11), and 92% of the MAP yield (4.25 t/ha) (T12).

Test #2 Results – Corn

Results of Test #2 on corn (maize) crops were announced on 9 July 2020 and again demonstrated that saprolites from both the carbonatite (CBTSAP) and the amphibolite (AMPSAP) have a positive agronomic efficiency in providing phosphate to corn plants and were very effective in increasing the residual phosphate content of the soils.

The corn yield in Treatment T8, the exclusive application of AMPSAP in the same dosage resulted in a yield of 63.2 g/pot, equivalent to 88% of the highest corn yield and higher than the yields obtained from the conventional fertilisers NP (Treatment T9) 57.5 g/pot, TSP (Treatment T10) 60.3 g/pot, SSP (Treatment T11) 59.9 g/pot, and MAP (Treatment T12) 62.9 g/pot) in dosages of 50 kg/ha. Treatment T13, the application of 100 kg/ha of P2O5 (25% CBTSAP and 75% MAP) resulted in a yield of 65.3 g/pot, which represents 91% of the highest yield.

The green mass productivity of CBTSAP in a dosage of 50 kg/ha resulted 95.2 g/pot, reaching a similar productivity level registered by NP (Treatment T9) 97.8 g/pot, and TSP (Treatment T10) 96.7 g/pot. The productivity of CBTSAP is equivalent to 95% of the productivity reached by MAP (Treatment T12) 100.2 g/pot, and surpassed the productivity registered using SSP (Treatment T11) 88.4 g/pot.

With regards to residual phosphate in the soil, the highest grade of P in the soil was found in Treatment T8 when AMPSAP was applied in a dosage of 100 kg/ha of P2O5, resulting in 30.6 mg/dm3 of P, followed by CBTSAP in the same dosage (Treatment T5) that returned 21 mg/dm3.

The P grades in the soil after the application of CBTSAP and AMPSAP are significantly higher than the P grades found in soils with control treatment where there is no addition of P, and in some cases exceeded the P levels of treatments with conventional fertilisers. The P grade in the soil after the application of AMPSAP in Treatment T8 was much higher than all other treatments, followed by CBTSAP in Treatment T5, which illustrates the potential of the TEPP DANF products.

Full ASX Announcement

Treatment T8, the exclusive application of AMPSAP in the same dosage resulted in a yield of 63.2 g/pot, equivalent to 88% of the highest corn yield and higher than the yields obtained from the conventional fertilisers NP (Treatment T9) 57.5 g/pot, TSP (Treatment T10) 60.3 g/pot, SSP (Treatment T11) 59.9 g/pot, and MAP (Treatment T12) 62.9 g/pot) in dosages of 50 kg/ha.

Processing Tests

The first milling tests with hammer mills have been conducted at Mecming do Brasil facilities in Vespasiano-MG. Two bulk samples of saprolite phosphate ore, approximately 900kg each, returned results completely within the expected granulometry for a natural phosphate product.

On 18 August 2020, Aguia announced the purchase of a crusher from Mecmining do Brasil LTDA. (model MMB6560) (pictured) that will allow for the preparation of bulk-test samples of our natural phosphate fertiliser from the TEPP.

The bulk-size test samples produced will be employed in field trials on selected farms within a 300km radius of the TEPP site. Following permitting, the crusher will continue to be used in the processing plant facilities for the TEPP.

Aguia has identified several well-known surrounding farming properties which have agreed to perform field tests with our TEPP natural phosphate fertiliser product. These tests will be conducted on different agricultural commodities including soybean, corn (maize), rice, ryegrass and native pasture across areas ranging from 1 to 5 hectares, and will be overseen by the technical staff of Aguia.

COMMERCIAL & MARKETING

Aguia has engaged NANO BizTools (NANO) to assist with developing the initial marketing strategy for the Três Estradas Phosphate Project (TEPP) natural phosphate fertiliser product. NANO have completed a study which defined two brands of the product. Both brands are currently in the process of being officially registered with the National Institute of Industrial Property (INPI).

Aguia has engaged Integrar Gestão e Inovação Agropecuária (Integrar), a renowned agronomic consulting firm located in southern Brazil to conduct a series of agronomic efficiency tests on the TEPP natural phosphate fertiliser product as a source of phosphorus (P) for crops. The tests are being conducted at Integrar’s Agronomic Station located in Capivari do Sul, RS. Two types of processed ore are being tested, carbonatite saprolite (CBTSAP) and amphibolite saprolite (AMPSAP).

The purpose of this testing is to determine how effective the TEPP natural phosphate fertiliser product is compared to other sources of phosphate, including conventional phosphate fertilisers, with regards to crop yields and residual phosphate levels in the soil post-harvest.

The results of the agronomic tests are very important in supporting future marketing efforts and to demonstrate the appeal of Aguia’s natural phosphate fertiliser product to local fertiliser consumers. The market for Aguia’s natural phosphate fertiliser product is expected to be entirely within the state of Rio Grande do Sul in southern Brazil.

Within a 300km radius of the TEPP site, there are over 4.78 million hectares of crops planted annually and there is existing demand for almost 245,000 tonnes of P2O5 nutrient annually. Aguia is planning to produce 300,000 tonnes of our natural phosphate fertiliser product annually from the TEPP with a grading of 10% P2O5. This equates to 30,000 tonnes of P2O5 nutrient per annum, or approximately 12% of the existing annual demand within a 300km radius of the TEPP site.

With local producers being a major future sales channel, Aguia is now ramping up marketing and promotional efforts to build product awareness well ahead of production. However, it is recognised that our market certainly extends beyond national borders and we have expectations of selling Pampafos into the adjoining markets of Paraguay, Uruguay and northern Argentina.

Within a 300km radius of the TEPP site, there are over 4.78 million hectares of crops planted annually with demand for almost 245,000 tonnes of P2O5 nutrient annually which equates to almost 2,450,000 tonnes of Aguia's Pampafos natural phosphate fertiliser grading 10% P2O5.

ENVIRONMENT

Aguia is committed to identifying and adopting practical and sustainable solutions that will minimise the impact of Três Estradas Phosphate Project (TEPP) mining activities on the environment and the local community.

As announced in the Scoping Study released on 12 February 2020, the decision to produce a natural phosphate fertiliser product from the TEPP delivered an approximate 77% reduction in the environmental footprint of the project when compared to the initial design. This decision was made after the granting of the Preliminary Licence (LP) and approval of the Environmental Impact Assessment (EIA) by the Rio Grande do Sul State Environmental Agency (FEPAM).

Aguia has been able to substantially reduce and in some cases eliminate potential environmental risks, including a low impact mining operation (open pit and shovel) with a very low strip ratio of 0.49:1. The processing required to produce a natural phosphate fertiliser product is very simple, consisting of only crushing and milling, and significantly, no use of water resources and no generation of tailings (and therefore no need for a tailings dam).

A requirement for the granting of the Installation Licence (LI) are mandatory environmental programs and the submission of a Basic Environmental Plan (PBA). Golder Associates, a world-renowned environmental services company have been appointed to conduct the major work necessary to fulfil this requirement.

The PBA includes general environmental management and environmental risk management programs, safety protocols, the environment and health program, environmental monitoring, the environmental audit and compensation plan, and the construction and mine closure plan.

Aguia has engaged Grupar Soluções Integradas em Gestão de Utilidade e Energia Sustentável Ltda. (Grupar), a firm specialised in sustainable construction, energy efficiency and renewable energy, to design viable solutions for the TEPP production unit and facilities. These solutions include:

  • The use of solar power;
  • Sustainability of corporate buildings and modular architecture design;
  • Hydro-sanitary, water reuse and waste disposal;
  • Landscaping, vegetation and seedling nursery.

Aguia is seeking to have our natural phosphate fertiliser product classified as a “Natural Phosphate” and an organic product in accordance in accordance with the guidelines of the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA). Results from agronomic tests on the TEPP product have been well within the required specifications to produce a natural phosphate product and have exceeded expectations.

COMMUNITY

As part of the Preliminary Licence (LP) permitting process, Aguia was required to engage in community consultation. The final community consultation meeting was held on 20 March 2019 and was attended by an estimated 1,500 people. The overall response throughout the evening was exceptionally positive. The meeting was also streamed live on Facebook which was accessed by a further 2,000 viewers. No further community consultation is required as part of the permitting process however Aguia continues to work closely with the Rio Grande do Sul community.

Community relations work is being conducted with communications support from NANO BizTools (NANO). The conceptual changes to the Três Estradas Phosphate Project (TEPP) were initially presented to the community through social media channels, our Projeto Fosfato website and Facebook page, as well as through formal presentations. A second round of presentations that were planned for late March 2020 have been postponed due to the COVID-19 pandemic.

PROJECT TEAM

Aguia has built an in-country team with extensive experience to bring the Três Estradas Phosphate Project (TEPP) into production.

Dr. Fernando Tallarico – Managing Director

Bachelor of Science (Geology) – University of Brasília
Master of Science (Economic Geology) – University of Brasília
Ph.D in Economic Geology and P.Geo. – University of Campinas

Dr. Fernando Tallarico has been with Aguia Resources since 2010 when the Company acquired its first phosphate assets and has been the head of the Company’s Brazilian management team, running operations for over 10 years. In October 2019, Fernando was appointed to the position of Managing Director.

Fernando graduated from the University of Brasilia with a Bachelor of Science (Geology) and a Master of Science (Economic Geology). In 2003 he completed a Ph.D. in Economic Geology at the University of Campinas, Brazil. Fernando undertook part of his Ph.D. work at the University of Western Australia, undertaking courses in preparation for a series of SHRIMP (Sensitive High Resolution Ion MicroProbe) sessions in the Curtin University SHRIMP laboratory.

A resident of Porto Alegre, Brazil (around 400km from the Três Estradas Phosphate Project site), and a geologist with over 30 years international experience, Fernando has been responsible for grass roots discoveries for Vale, Falconbridge/Noranda and BHP in Brazil. Fernando has been instrumental in assembling Aguia’s extensive phosphate and copper portfolio. In addition, over this period, Fernando has established an extensive commercial network throughout the state of Rio Grande do Sul.

Mr. Lucas Galinari – General Manager of Exploration

Bachelor of Science (Geology) – Federal University of Minas Gerais

Mr. Lucas Galinari has been a core member of Aguia’s team for over nine years having joined the company in September 2011. He was part of the team that discovered the Três Estradas phosphate deposit, and conducted an extensive drilling program that resulted in the mineral resource. Lucas is now Aguia’s General Manager of Exploration and has intimate knowledge of Aguia’s exploration assets (both phosphate and copper/gold) along with the expertise necessary to undertake the appropriate Quality Assurance/Quality Control (QA/QC) required to turn data collected in the field into a valuable data resource suitable to underpin investment decisions.

Lucas is a Senior Geologist with over 12 years’ experience having graduated from the Federal University of Minas Gerais with a Bachelor of Science (Geology) in 2008. Prior to joining Aguia, Lucas commenced his career as a mine geologist, before moving to mineral exploration with Aguia.

Lucas is a Brazilian national originally from Minas Gerais in South East Brazil. He met his wife while working for Aguia in Lavras do Sul and is now based with his growing family in Caçapava do Sul overseeing both phosphate and copper/gold exploration as well as supporting the Três Estradas Phosphate Project implementation.

Mr. Luiz Carlos Clerot – General Manager of Phosphate Development

Bachelor of Science (Geology) (Honours) – Federal University of Rio Grande do Sul

Mr. Luiz Carlos Clerot joined Aguia in March 2020 as General Manager of Phosphate Development, focussed on advancing the Três Estradas Phosphate Project through the final stages of permitting, construction, and the implementation of the mining and processing of the natural phosphate fertiliser product.

Luiz has 16 years’ experience in exploration, project development and implementation, and mining across a broad range of commodities and brings with him a track record of success in developing natural phosphate fertiliser projects in Brazil. He graduated with Honours in Science (Geology) from the Federal University of Rio Grande do Sul in 2003 and is a registered professional with the Brazilian Federal Council of Engineering & Agronomy (CONFEA). He has specific and extensive experience working on phosphate and potash projects.

Prior to joining Aguia, Luiz was the Country Manager of Harvest Minerals (LON:HMI), an AIM-listed fertiliser company in the State of Minas Gerais in the southeast of Brazil. Luiz was instrumental in discovering and growing the Arapuá Phosphate-Potash Project to a 13.7Mt resource grading 2.49% P2O5 and 3.10% K2O. Here he facilitated a natural phosphate fertiliser development strategy and was responsible for commissioning, construction, ramp-up, and subsequent operation of the open pit mine and processing plant.

The Arapuá Project was originally conceived as a high CAPEX conventional phosphate project before Luiz identified the potential to develop a natural phosphate fertiliser project resulting in the asset being transformed from grassroots exploration into production and cash flow in two and a half years.

PROJECT EXPANSION - ADJACENT PHOSPHATE ASSETS

In addition to the Três Estradas phosphate deposit, Aguia holds claims over a number of other phosphate targets totalling 12,812 hectares that are within close proximity of the Três Estradas Phosphate Project (TEPP) site and exhibit similar geophysical signatures to those of the Três Estradas phosphate deposit. These targets have the potential to add resource upside to the project and push the life of mine well beyond its current 18 years, turning the TEPP into a multi-generational project.

Aguia’s adjacent phosphate targets, all within the state of Rio Grande do Sul consist of:

Santa Clara:

  • Immediately adjacent to the TEPP site.
  • Option Agreement signed on 8 June 2016 to secure exploration permits over 3,553 hectares (2 claims) of prospective ground.
  • Outcropping carbonatite grading up to 6.37% P2O5 has been mapped along a strike-length of about 400m.
  • Initial scouting along this north-east trending 2.2km long and 900m wide target identified outcropping and mineralised carbonatite. Rock grab samples at surface have returned up to 6.38% P2O5.
  • Further mapping, sampling and subsequent drilling is required to test the merit of the target, but it has the potential to add additional phosphate resource to the TEPP with minimal transport cost as it is located only 4km to the northwest of the planned mine site.

Terra Santa:

  • Immediately adjacent to the TEPP site.
  • Option Agreement signed on 26 November 2015 to secure exploration permits over 4,502 hectares (3 claims) of prospective ground.
  • Initial due diligence and field reconnaissance along the claims identified amphibolite and carbonatite samples grading up to 12.42% P2O5 distributed along a 500-metre trend.
  • Rock grab samples at surface have returned up to 11.57% P2O5.
  • These mineralised samples occur approximately 2.5km northwest of the Três Estradas phosphate deposit and have the potential to contribute additional phosphate resource to the TEPP.

Joca Tavares:

  • Located approximately 35km east of the TEPP mine site.
  • Drilling program undertaken during 2016.
  • Maiden JORC compliant resource of 2.75mt (oxide plus hard rock):
    • 430,000 tonnes of soft ore to be trucked to the TEPP for blending and mine life extension;
    • 2.32mt of hard ore may be mined in a more favourable phosphate environment
  • Shows similar carbonatite characteristics to the TEPP.

Porteira:

  • Adjacent to the Joca Tavares carbonatite target and identified using airborne geophysics.
  • Follow-up analysis has identified a series of breccias, carbonatites and altered host sedimentary rocks that returned assays of up to 14.57% P2O5.
  • Shallow auger drilling during 2015 intercepted a high-grade oxidised zone at surface with samples grading up to 18.5% P2O5. Twenty-two holes were drilled and returned encouraging results including:
    • 3.0m at 9.44% P2O5 from 2.0m and ending in mineralization;
    • 4.0m at 16.34% P2O5 from surface and ending in mineralization; and
    • 2.0m at 12.53% P2O5 from surface and ending in mineralization.
  • The depth of this high-grade oxidised zone is yet to be determined, as many of the auger holes from the 2015 drill program ended in mineralisation.
  • The target is approximately 2km long and 600m wide.

Santa Ines:

  • Adjacent to the Joca Tavares carbonatite target and identified using airborne geophysics.
  • Follow-up analysis has identified a series of breccias, carbonatites and altered host sedimentary rocks that returned assays of up to 16.32% P2O5.
  • The target is approximately 3.8km long and 800m wide.

Mato Grande:

  • Located 80km to the northeast of the TEPP mine site, close to the city of Cacapava.
  • Historical data on this carbonatite has reported up to 8.38% P2O5 in fresh carbonatite samples.
  • The carbonatite target is a 700m long and 200m wide intrusion in a structural setting similar to the mineralised carbonatite at the Tres Estradas phosphate deposit.
  • An auger drilling program along this carbonatite was undertaken during 2017, very encouraging results from 35 auger holes totalling 110 assays were received.
  • Two objectives of the auger drilling program:
    • Outline the extent of the carbonatite body;
    • Test for oxidised phosphate mineralisation at surface
  • The auger program returned positive results including individual auger samples grading up to 11.71% P2O5, significant intercepts including 9m from surface grading 7.37% P2O5 and ending in mineralisation and shallow saprolite mineralisation.
  • Of the 35 auger holes, 28 holes encountered phosphate mineralisation and 25 ended in mineralisation at depths of up to 9m, which is the extent of the auger drilling.
  • The auger drilling program has provided very specific targeting to undertake an efficient reverse circulation drilling program in the future that will precisely define the depth of the oxidised zone on top of the Mato Grande carbonatite and provide an initial resource estimate.
  • The asset is located within 500m of a limestone mine operated by FIDA (a large Ag Lime producer in Southern Brazil). There is local demand for the product which can be serviced by existing infrastructure.
  • Ground magnetics and gamma survey were undertaken during 2019.