VANCOUVER, BRITISH COLUMBIA--(Marketwired - Mar
23, 2017) - DuSolo Fertilizers Inc. (TSX
VENTURE:DSF) ("DuSolo" or "the Company") is very pleased to
announce the completion of a positive Preliminary Economic
Assessment ("PEA") of the Company's Direct
Application Natural Fertilizer ("DANF")
Santiago Project (the "DANF PEA"). The DANF PEA was prepared by the
independent consultants GE21 Ltda.
Giles Baynham, CEO of DuSolo,
noted "We are very pleased to complete this
DANF PEA and announce the results. Whilst we have been producing
and selling DANF since 2015, this is the first Technical Report
which demonstrates the positive economic potential of Santiago, and
the Company believes it is the start of demonstrating the
longer-term and higher value potential of the Company's assets in
Brazil which will be the Company's aim throughout the course of
2017. We are now working on a separate PEA for the acid granulated
DANF product (the "AG DANF PEA"), as well as exploration of the
Amaury Concession. Market and product development is underway, as
recommended by our market consultants, to achieve the DANF prices
in the Upside Case."
The DANF PEA is the first stage of the Company's
strategy to demonstrate the economic potential of the Company's
mineral resources based on the phosphate ("P2O5")
deposits at its BonFim Project in Brazil. The Santiago deposit
within the Bonfim area currently extracts phosphate rock which is
processed into two DANF products grading 12% and 15% P2O5
at the Campos Belos Plant. The second stage of this strategy is to
further improve its economic viability through the potential
production of an Acid Granulated Phosphate Fertilizer, which
combines 15% DANF with sulphuric acid to improve the agronomic
performance of the DANF. This granulated product is expected to
increase the market available to the Company, and yield higher
selling prices due to improved solubility and agronomic performance
based on a market study completed by Agroconsult. With the positive
results of the DANF PEA, the Company has commenced the second stage
of the strategy to produce the AG DANF PEA which is targeted for
completion in the second half of 2017.
DANF PEA HIGHLIGHTS
- Indicated Resources of 1.16Mt at 8.23%
P2O5, including
0.29Mt at 14.78% P2O5
- Inferred Resources of 2.70Mt at 8.58%
P2O5, including
0.82Mt at 14.72% P2O5
- Life of Mine ("LOM") 12.5 years
- LOM Production of 543Kt of 12% DANF and 635Kt of
15% DANF
- Post-tax NPV (10%) of US$13.0m
- Zero Initial Capital (already operating)
- Operating Costs (Mine, Plant, G&A) of
US$18.47/t
- Upside Case NPV(10%) of US$30.3m based on
Agroconsult Consultoria e Projetos ("Agroconsult") DANF Prices
Note that the DANF PEA is preliminary in nature as
it includes 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. Mineral resources that are not mineral reserves do not
have demonstrated economic viability, and as such there is no
certainty that the preliminary assessment and economics will be
realized. A NI43-101 technical report for the DANF PEA will be
filed on SEDAR (www.sedar.com) and posted on DuSolo's website
(www.dusolo.com) within 45 days.
The Company is not basing its production decision
on a feasibility study of mineral reserves demonstrating economic
and technical viability, as a result there is increased uncertainty
and economic and technical risks of failure associated with its
production decision.
GEOLOGY & MINERAL
RESOURCES
The Bonfim Project, within which the Santiago
Project lies, is within a large package of rocks along the western
edge of the São Francisco craton and immediately east of the
Brasilia fold belt in central Brazil (Mendonça and Campos, 2012; Da
Rocha Araujo et al., 1992).
Within this area, rocks of the base of the Bambuí
Group can be found that are associated with the Sete Lagoas
Formation, which is host to the phosphate mineralization. It
includes the pelitic, carbonatic and phosphatic rocks that overlie
the granitic rocks of the Aurumina Suite. The Sete Lagoas Formation
can be found in the majority of the area and is distributed to the
east of the granitic basement.
Mineral exploration work and exploratory drilling
was intensified since the March 7, 2014 Technical Report which
included the Amaury and Bonfim Concessions. Re-interpretations were
undertaken and - because of the various types of mineralization
present, which display a large range of phosphate concentrations -
the mineralization was separated into two principal groups: high
grade (HG) and low grade (LG).
The Mineral Resource Estimate for the Santiago
Project was updated for this DANF PEA utilising recent drilling and
exploration results, including a better understanding of the
mineralization types and zoning, and of the continuity of grades
and mineralization based on the extraction of around 100,000 tonnes
since late 2014 from the Santiago Project.
Table 1
Mineral Resource Table - Phosphate
Indicated and Inferred Resources |
Resource |
Type |
Tonnes (Mt) |
P2O5% |
CaO% |
MgO% |
SiO2% |
Al2O3% |
LOI% |
Indicated |
HG* |
0.29 |
14.78 |
20.49 |
1.02 |
41.53 |
8.44 |
4.08 |
LG* |
0.87 |
6.08 |
7.92 |
1.22 |
58.79 |
9.96 |
3.90 |
Total Indicated |
1.16 |
8.23 |
11.03 |
1.17 |
54.52 |
9.59 |
3.94 |
Inferred |
HG* |
0.82 |
14.72 |
20.92 |
0.97 |
42.62 |
7.95 |
4.22 |
LG* |
1.88 |
5.89 |
7.83 |
1.48 |
58.39 |
10.73 |
4.43 |
Total Inferred |
2.70 |
8.58 |
11.82 |
1.32 |
53.59 |
9.88 |
4.37 |
· High Grade Mineralization (HG): P2O5
>= 10%, Low Grade Mineralization (LG): P2O5 >=
3% and <10%
· Mineral Resources are based on dry tonnes. |
EXPLORATION POTENTIAL
Mineralization at Santiago remains open along the
NW-SE trend, with a number of samples of outcropping phosphorite
grading between 7.5% to 23.3% P2O5. The
potential area is some 3 times the size of the current area
considered in this DANF PEA and GE21 estimated an exploratory
potential of 5 million tonnes to 14 million tonnes with the
P2O5
grade varying between 4% and 18%. The potential quantity and grade
is conceptual in nature, there has been insufficient exploration to
define a mineral resource and that it is uncertain if further
exploration will result in the target being delineated as a mineral
resource in the future.
MINERAL PROCESSING &
METALLURGICAL TESTING
The material is placed in the run-of-mine ("ROM")
patio area, stockpiled and blended in such a way so as to guarantee
a constant feed grade for the beneficiation process. The processing
route consists of crushing, screening and grinding, as shown in
figure 1.
To view Figure 1, please visit the following link:
http://media3.marketwire.com/docs/DuSolo-Fig1.pdf.
All of the material that is obtained from mining
is transformed into the final product, which generates products
that have greater or lesser value, depending on the phosphate
concentration. Therefore, tailings are not produced during ore
processing, and the recovery of material during the process is
100%.
For internal quality control purposes, the company
maintains its own laboratory, with equipment that serves to analyze
certain characteristics of the product such as particle size,
comminution, sample preparation and a spectrophotometer for
determining the concentration of P2O5.
Table 2
Summary of Production |
Material |
Mass wet basis(Kt)1 |
P2O5(%) |
|
|
|
Mining products |
Type |
P2O512% |
543 |
11.90 |
P2O515% |
635 |
15.24 |
Total |
1 178 |
13.70 |
|
|
|
|
|
Waste Rock |
865 |
n/a |
|
|
|
|
|
Material Stockpiled for Potential Future
Beneficiation |
1 080 |
7.15 |
|
|
|
|
|
Strip Ratio2 |
1.56 |
|
Strip Ratio3 |
0.37 |
|
|
|
1Wet tonnes contain 12% moisture, both as ROM and as
product; |
|
2Considers the material stockpiled for Potential Future
Beneficiation as waste rock; |
|
3Considers the material stockpiled for Potential Future
Beneficiation as product.; |
|
Note that the DANF PEA is preliminary in
nature as it includes 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. Mineral resources that are not
mineral reserves do not have demonstrated economic viability, and
as such there is no certainty that the preliminary assessment and
economics will be realized. |
|
CAPITAL & OPERATING COSTS
As the Santiago Project and the Campos Belos plant
are already extracting and processing phosphate rock, there is no
additional capital requirement for the Project. Sustaining capital
over the LOM is minimal and included in the maintenance costs. The
Company estimates the existing capital equipment (primary crusher,
hammer mills) have a capacity of c.280,000 tonnes per annum and the
projected DANF PEA production of 100,000 tonnes per annum is
approximately 35% of the actual installed capacity, resulting in
reduced operating hours and general wear. Mobile equipment such as
trucks, water trucks and front-end loader and excavator are all
supplied on a contract basis. The Company maintains insurance for
its assets which includes the Campos Belos plant.
Operating costs are based on actual costs incurred
by the Company, using the 2016 actual mining and processing costs.
Fixed costs have been adjusted for the increase to 100,000 tonnes
per annum.
Table 3 |
Operating
Costs |
Item |
Cost |
Unit |
Mine |
Ore |
2.88 |
US$/t ROM |
Waste Rock |
0.97 |
Transport & Road Maintenance |
6.17 |
Plant |
5.11 |
G&A |
3.34 |
Total |
18.47 |
A trade-off study to assess the impact of relocating the Campos
Belos Plant to the Santiago Project and significantly reducing
transport costs is currently being prepared.
Taxes are included in the PEA cashflow analysis as
follows:
Royalties |
- |
3.0% of
revenue |
Taxes |
- |
29.8% of
EBIT |
The Company has significant tax losses available
to be applied to future income in Brazil which have not been
included in the DANF PEA analysis.
DANF MARKET REPORT &
PRICES
This DANF PEA has assumed the following prices for
the DANF products, based on the prices in 2016 and currently being
received for the following products:
DANF 12%
P2O5 |
- |
US$31/t |
DANF 15%
P2O5 |
- |
US$56/t |
Agroconsult provided a market study for the DANF
products that DuSolo intends to produce. Assuming an average LOM
production of 50,000tonnes per year for each product, Agroconsult's
analysis suggests the following prices can be achieved:
DANF 12%
P2O5 |
- |
US$76.4/t |
DANF 15%
P2O5 |
- |
US$93.7/t |
These prices are higher than currently achieved,
but Agroconsult notes that with the correct strategy of market and
price development and branding these higher prices could be
achieved. GE21 have prepared an upside case model using the higher
Agroconsult prices, and assuming an increase in marketing and
selling costs of US$1,11 per tonne (approximately 50% increase in
G&A). This results in an increase of the net present value to
US$30,28million. GE21 recommends that management maintain its focus
on marketing and sales prices, as this could provide significant
improvements in the Santiago Project returns for limited increases
in operating costs.
QUALIFIED PERSONS
The technical content of this news release has
been reviewed and approved by Mr. Porfirio Cabaleiro Rodriguez and
Mr. Bernardo Viana, both Managing Partners of GE21 Consultoria
Mineral, in compliance with the standards of disclosure as set out
in NI43-101. Mr. Rodriguez and Mr. Viana are "independent qualified
persons" for the purposes of NI43-101 Standards of Disclosure for
Mineral Projects of the Canadian Securities Administrators.
On behalf of DuSolo Fertilizers
Inc.
Giles Baynham, Chief Executive
Officer and Director
FORWARD LOOKING
STATEMENTS
Certain information contained in
this press release constitutes "forward-looking information",
within the meaning of Canadian legislation. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur", "be achieved" or "has the
potential to". Forward looking statements contained in this press
release may include statements regarding the future operating or
financial performance of DuSolo which involve known and unknown
risks and uncertainties which may not prove to be accurate. Actual
results and outcomes may differ materially from what is expressed
or forecasted in these forward-looking statements. Such statements
are qualified in their entirety by the inherent risks and
uncertainties surrounding future expectations. Among those factors
which could cause actual results to differ materially are the
following: market conditions and other risk factors listed from
time to time in our reports filed with Canadian securities
regulators on SEDAR at www.sedar.com. The
forward-looking statements included in this press release are made
as of the date of this press release and DuSolo disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by applicable securities
legislation.
For more information please refer
to the technical report filed on SEDAR and titled "Bomfim
Agro-Mineral Phosphate Project, Technical Report and Initial
Resource Estimate Tocabtins and Goiás States, Brazil," filed on
March 5, 2014, effective December 31, 2013, and amended on February
6, 2015. The resource estimate was signed off by Mr. Porfirio
Cabaleiro Rodriguez an Associate Consultant of Coffey Consultoria e
Serviços Ltda., and was prepared in compliance with the standards
of disclosure as set out in NI43-101. Mr. Rodriguez is an
"independent qualified person" for the purposes of NI43-101
Standards of Disclosure for Mineral Projects of the Canadian
Securities Administrators.
Disclosure - The Company's
decision to produce DANF, its DANF production targets and cash flow
projections were not based on a feasibility study of mineral
reserves demonstrating economic and technical viability. Without a
technical report demonstrating economic and technical viability,
there is uncertainty as to whether the Company will be able to
economically produce DANF in a long run and as to whether the
Company will be confronted with any unforeseen technical
impediments. Similarly, the Company has not completed a preliminary
economic assessment before making production and project expansion
decisions.
Neither the TSX
Venture Exchange Inc. nor its Regulation Service Provider (as that
term is defined in the policies of the TSX Venture Exchange Inc.)
accepts responsibility for the adequacy or accuracy of this press
release.
DuSolo Fertilizers Inc.
(604) 484 7122
ir@dusolo.com
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: DuSolo Fertilizers via Globenewswire
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