A bankable feasibility study (BFS) for the Três Estradas organic phosphate project in southern Brazil has confirmed robust economics for owner Aguia Resources (ASX: AGR).
The estimated capital expenditure to get the project off the ground is $26.2 million.
This is based on the production of an organic phosphate fertiliser by the open pit mining of high-grade saprolitic ore to produce 316,000 tonnes per year of phosphate concentrate over an 18 year mine life.
The BFS was completed by independent consulting firm GE21 Consultoria Mineral in Brazil and shows the project could have a post-tax net present value of $110.8 million and a 54.7% internal rate of return with a payback period of 2.9 years.
Earnings before interest, taxation, depreciation and amortisation are expected to sit at around $22.1 million per year over the life of mine.
Economic assessment
The BFS is an update of an economic assessment completed prior to the global pandemic and impacts to supply chain stability and the availability of materials and equipment.
It focused mostly on updating capital and operating expenditure estimates, market studies and economic analyses.
The remainder of the project’s structure — including pit optimisation and design, mine scheduling, project infrastructure, and metallurgical tests — is based on a mineral resource of 5.02 million tonnes grading 8.8% phosphorus pentoxide (which represents the oxidised ore portion of the deposit).
Positive change
Managing director Dr Fernando Tallarico said the updated document had a positive change on the cost structure for Três Estradas.
“It reaffirms the superior project economics we can achieve by mining the high-grade oxidised ore from surface to produce a unique organic phosphate fertiliser,” he said.
“We believe our investment in agronomical testing in recent years has established the efficacy of our phosphate fertiliser as a truly unique organic product … its potential market reach in these times holds significant value for shareholders.”
Line of credit
Dr Tallarico said Aguia was in the process of reviewing its line of credit with the regional development bank in southern Brazil and hopes to commence construction work following settlement of a local civil lawsuit launched by members of the public.
While the exact details of the lawsuit are unclear, the company is believed to be inching closer to a resolution but noted an ongoing injunction request preventing it from moving ahead with construction.
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