Itafόs – Current Operations
In October 2008, MBAC Fertilizer Corp. purchased 100% of the shares of Itafós Mineração
Ltda, located in central Brazil, near the border of Goiás and Tocantins states.
The Company presently operates this small-scale mine and processing facility which
has a production capacity of approximately 100ktpa. The current operation processes
rock phosphate which is sold to local farmers for direct application.
The Itafós Arraias SSP Project
MBAC is now focused on the development of a higher volume and much larger mining
operation, which is expected to be in place by mid 2012. The Itafós Arraias SSP Project
will include a new mine and mill facility, a sulphuric acid plant, an SSP plant
and a granulation plant. At full capacity, the proposed beneficiation plant is expected
to generate 330 ktpa of phosphate rock concentrate at 28% P2O5.
This phosphate concentrate will be used to produce 500 ktpa of SSP. Beyond this
proposed first phase of development, the Company is also actively investigating
the potential for a second phase of development which could double production and
potentially be in place as early as 2015.
Project Milestones Completed
43-101 Technical reports significantly increased resources
at Itafόs
- April: increased M&I resource base from 12.9 Mt to 28.3 Mt @ 4.3%
- July: increased M&I resource base to 58.8 Mt @ 5.01%
- Exceeded 2011 target of 45 Mt Proven and Probable
APRIL 2010: Report confirms robust project (AMEC)
- Validation of production process → Itafós Arraias SSP Project is viable
- Economic analysis with technical report capex and opex numbers confirm a robust
project
SEPT 2010: Itafós Arraias SSP Project Positive Definitive Feasibility Study
- 14.5 year mine life with 3.1 year payback
- Improvement in grade, stripping ratio and operating cost
- Significant increase in overall economics
SEPT 2010: Indicative Term Sheet for project finance debt from Itaύ BBA
DEC 2010: Received preliminary environmental license (Licença Prévia), which confirms
the understanding of the Environemntal Agency that the project is feasible from
the environmental standpoint
MAR 2011: Received the construction license (Licença de Instalação)
Resource Estimates
In July 2010, the current Itafós Arraias SSP Project Mineral Resources were updated
by Wardrop Consultants with a NI-43-101 compliant report. The resource estimated a deposit
containing 58.8 million tonnes of measured and indicated mineral resources and 14.0
Mt of Inferred Resources. Current drilling has been focused in the Near Mine Area,
which represents less than 20% of MBAC’s total land package.
In addition, inferred mineral resources totalling 23.9 million tonnes have been
estimated for the Near Mine Project Area at a similar 2.8% P2O5
cut-off grade.
The Definite Feasibility Study (“DFS”) and Project Economics
MBAC has updated its mine plan for the Project based on the NI-43-101 compliant Updated Mineral Resource Estimate prepared
by Wardrop for the Itafós Arraias SSP Project in Brazil which supported a positive
DFS. With these increased resources the Company was able to optimize the current
mine plan and reduce the pre-stripping volume to 4.7 Mt as well as reduce the stripping
ratio, and increase the plant feed grade especially in the early years.
The Report supports an open pit mining operation, crushing, grinding and flotation
concentration of the phosphate ore. The concentrate will be further reacted with
sulphuric acid.
The Itafós Arraias SSP Project is estimated to produce on average 500,000 tonnes
of SSP annually. The DFS details a total cost (including working capital) of approximately US$200
million (this amount includes $25 million in taxes, part of which is expected to
be refunded, $20 million of expenditures in respect of pre-stripping and mining
fleet and $16 million in contingencies).
The following is a summary of the key operating parameters and economics for the
Project:
|
Mine Life
|
14.5 years
|
|
Average ROM grade
|
5.94% P2O5 in first 10 years (5.4% P2O5
over the mine life)
|
|
Strip Ratio
|
1.85 for the first 10 years (2.3 over the mine life)
|
|
Operating Cost (SSP)
|
US$94.95 in first 4 years (US$104.32 per tonne over the mine life (granulated LOM))
|
|
Internal Rate of Return (IRR)
|
26.8%
|
|
Net Present Value @ 10%
|
US$ 252.5 million
|
|
Payback
|
3.1 years after start-up
|
|
SSP Production
|
Capacity to produce 1,750 tpd, approximately 500,000 t per annum
|
|
Concentrate Product
|
330,000 t per year of 28% P2O5 concentrate (used in SSP production)
94,000 t of 15% P2O5
|
|
Sulphuric Acid
|
Capacity to produce 600 tpd, approximately 220,000 t per annum (used in SSP production)
10 MW of electricity production
|
The Report was prepared to an accuracy of ±10% for operating costs.