Itafós Phosphate Project

Itafόs

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 operated a small-scale mine and processing facility which had a production capacity of approximately 100ktpa. This operation was closed down as the company transitions to the Itafós Arraias SSP operations.

The Itafós Arraias SSP Project

MBAC is now focused on the production of a higher volume and much larger mining operation, which started operations mid year 2013. 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.

Resource Estimates

In March 2013, the Itafós Arraias SSP Project Mineral Resources were updated by Andes Mining Services with a NI-43-101 Updated Technical Report. The resource estimated a deposit containing 79.0 million tonnes of measured and indicated mineral resources and 12.7 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.

Reserves Estimates

Ore Source K tonnes P2O5 %
Proven Reserve 15,954 5.09%
Probable Reserve 48,857 5.07%

All the Mineral Reserves Estimates are contained in the Mineral Resource Estimates.

The Definite Feasibility Study (“DFS”) and Project Economics

MBAC has updated its DFS for the Itafós Arraias SSP Project. The Updated Technical Report states increased proved and probable mineral reserves bringing the life of mine to 19 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 following is a summary of the key operating parameters and economics for the Project:

Mine Life 19 years
Average ROM grade 5.56% P2O5 in first 10 years (5.08% P2O5 over the mine life)
Strip Ratio 2.9 over the mine life
Operating Cost (SSP) US$139 in first 5 years (US$162 per tonne over the mine life (granulated LOM))
Internal Rate of Return (IRR) 21%
Net Present Value @ 10% US$ 254.1 million
Payback 4.5 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 700 tpd, approximately 240,000 t per annum (used in SSP production)
6 MW of electricity production

Qualified Person

Unless otherwise indicated, the responsible qualified person, within the meaning of NI 43-101, who has reviewed and approved the scientific and technical information in relation to the “Itafós Phosphate Project”, contained above is Carlos Guzmán, FAusIMM (229036), Mining Engineer, RM (Chilean Mining Commission).