TSX-V : GBL
Resource Hunter Capital Corp. Phosphate Mining in West Africa

Farim Phosphate

Summary

  • The project is a world class, high quality, development phosphate project containing Measured and Indicated Resources of 105.6 million dry tonnes at a grade of 28.4% P2O5 and additional Inferred Resources of 37.6 million dry tonnes at 27.7% P2O5.   The Measured and Indicated Resources include 44.0 million dry tonnes of Reserves based on a 25 year mine plan at 1.75 million tonnes per annum (“Mtpa”) of mine production at the following Run of Mine (“ROM”) grades: 30.0% P2O5, 2.6% Al2O3, 41.0% CaO, 4.7% Fe2O3, 10.6% SiO2.  The phosphate ore will be beneficiated for a final phosphate rock concentrate production of 1.32 Mtpa at a 34.0% P2Oat 3% moisture.
  • The Company’s most current NI 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) Report is entitled “NI 43-101 Technical Report on the Farim Phosphate Project” and dated effective September 14, 2015.
  • Production license granted. Current plan is for final phosphate rock production of 1.32 million tonnes per annum (“Mtpa”) for minimum 25 years.
  • Mine Design - The current mine plan will excavate 1.75 Mtpa of phosphate ore for 25 years.  Two pits will be mined – the South Pit which will be operating up to year eight and the North Pit which will be mined thereafter.  As a result of increased production, the pit shells will cover a larger area.  The study also assumes production occurs 12 months per annum. 
  • Process Plant – The current process plant design includes beneficiation of the ore by scrubbing (both drum and horizontal) followed by particle sizing to remove the fraction under 20 µm.  This new beneficiation process will result in a 34.0% P2O5 mass recovery of 75.5%, and 78.4% P2O5 recovery, as confirmed by a pilot scale test on a one tonne sample that took place in May 2015.  After passing through the process plant, the final production of phosphate concentrate, based on 1.75 mpta of ROM feed, will be 1.32 mtpa.
  • Logistics - Beneficiated product will be trucked approximately 75 km from the mine-site to a port that the project will construct where the ore will be directly loaded onto ships of up to 35,000 dead weight tonnes.  The product will also be further dried at the port area for a final moisture content of 3%.
  • Initial Capex estimated at US$193.8 million and LOM operating costs at US$52.13 per tonne of final concentrate.
  • Attractive economics - The resulting NPV10% for the project is estimated at US$437 million after tax and the after tax internal project rate of return is estimated at 34.5%.  The current projected payback period has been estimated at 4.3 years.
  • The phosphate rock price assumptions have been provided by the CRU Group with a long-term price of US$123/t for Moroccan FOB K10 phosphate rock concentrate from 2019 onward.  The Company has assumed a premium over Morocco FOB K10 of 9.7% for the first eight years of production and a premium of 4.7% thereafter.  The lower premium will be used until bench scale tests for the material from year 8 onward have been completed and confirm that a higher premium is achievable.

Location

The Project is located in the northern part of central Guinea-Bissau, West Africa, approximately 25 km south of the Senegal border, approximately 5 km west of the town of Farim and some 120 km North of Bissau, the capital of Guinea-Bissau. The Project consists of a high grade sedimentary phosphate deposit of one continuous phosphate bed, which extends over a known surface area of approximately 40 km2.

Ownership

GB Minerals has entered into a Share Purchase Agreement to acquire 100% of the shareholding of GB Minerals AG of Switzerland which in turn owns 100% of the mineral rights to the Farim Phosphate project. GB Minerals acquired a 50.1% interest in the Farim Project in March 2011 and acquired the remaining 49.9% interest through staged acquisition in April 2013.  GB Minerals has now acquired 100% interest in the Farim Project.

Production Agreement

In May 2009, a comprehensive production agreement was signed with the Guinea Bissau Government. A summary of the production agreement is provided below:

  • Includes production license, mining lease and incentive agreement
  • 100% ownership with no government participation.
  • Agreement is for 25 years, renewable for successive period of 25 years
  • Port, roads, pipelines are at sole discretion of company.
  • No Government taxes, license fees or other costs

Resources

The Farim Phosphate Project contains Measured and Indicated Resources of 105.6 million dry tonnes at a grade of 28.4% P2O5 and additional Inferred Resources of 37.6 million dry tonnes at 27.7% P2O5.   The Measured and Indicated Resources include 44.0 million dry tonnes of Reserves based on a 25 year mine plan at 1.75 million tonnes per annum (“Mtpa”) of mine production at the following Run of Mine (“ROM”) grades: 30.0% P2O5, 2.6% Al2O3, 41.0% CaO, 4.7% Fe2O3, 10.6% SiO2.

Deposit

The Farim phosphate deposit occurs within the Middle Eocene Lutetien Formation in a Cenozoic sedimentary basin that extends from Morocco in the north through Mauritania, Senegal, Guinea-Bissau and into Guinea to the south. The basin hosts a number of important phosphate deposits and accounts for almost 25% of world production. Two main phosphate-bearing horizons have been identified at the Farim phosphate deposit and are referred to as the FPA and FPB Zones. 

The Current NI 43-101 Technical Report

Key Highlights

  • Process improvements resulted in reduced process plant operating and capital costs
    • Final product grade of 34.0%1
    • Overall mass recovery of 75.5%1
    • Final P2O5 recovery of 78.4%1
  • Pilot plant test performed on  1 tonne sample, representative for the first 7 years of mining
  • Initial 25 year mine life based solely on reserves
  • Mine production of 1.75 million tonnes per annum1 (“Mtpa”)
  • Final phosphate rock production of 1.32 Mtpa1
  • Initial capital costs of US$193.8m
  • Cumulative net cashflow, post tax, US$1.9 billion
  • Net Present Value10 , post tax, US$437 million
  • Tax effected Internal rate of return of 34.5% based on long term phosphate rock price of $123/tonne with a 4.3 year pay-back period
  • Low cost position with an average life of mine cash operating costs of US$52/tonne1 of final concentrate
  • Average cash cost for first seven years of production of US$46/tonne1 of final concentrate
  • Average EBITDA for first seven years of production of US$110 million per year
  • Royalties and income taxes to the Government of Guinea Bissau exceeding US$550M
  • Improved logistics including the construction of a new port and use of existing local highway
  • 19 months from detailed engineering to production; longest lead item of 11 months from ordering
  • Updated IFC Performance Standards / Equator Principles Environmental and Social Impact Assessment (“ESIA”) to be completed in 2015

1 All tonnages and quality data in this report refer to dry tonnes.  Per tonne data refers to final concentrate tonnage.

Farim Phosphate1