Plains Creek receives Preliminary Economic Assessment for Direct Shipping Option Project for Farim Phosphate Project, Guinea Bissau, West Africa
VANCOUVER, July 30, 2012 /PRNewswire/ – Plains Creek Phosphate Corporation (“Plains Creek“, the “Company“) (TSX V: PCP) is pleased to announce the results of a Preliminary Economic Assessment
(“PEA”) for the Direct Shipping Option (“DSO”) Project, the first step
in the development of the GB Minerals AG Farim Phosphate Project
located in Guinea Bissau, West Africa. The PEA was prepared by GBM
Minerals Engineering Consultants Limited (“GBMMEC”) in conjunction with
Golder Associates Limited (“Golder”), GEEEM Consultants and Tropica
Environmental, all of whom are independent of the Company.
Summary of the DSO Project PEA
The Farim Phosphate Project consists of a high grade sedimentary
phosphate deposit of one continuous phosphate bed, known as the FPA
layer, which extends over a known surface area of approximately 40 km(2).
A Measured and Indicated Resource of 32.60 million tonnes (“Mt”) of DSO
phosphate has been identified within the Farim Phosphate Project for
the DSO Project with a P(2)O(5) grade in excess of 30.7 % and an average R(2)O(3) content of 6.01%.
A 25 year mine life is planned for a total of 12.5 Mt of DSO phosphate
(500,000 tonnes per annum), at an average grade of 30.7% P(2)O(5) and less than 6% R(2)O(3). Based on the current Measured and Indicated Resources the potential
mine life for the DSO Project can be extended to in excess of 50 years
at this production rate, based on the model and assumptions contained
in the PEA.
The average strip ratio over the 25 year mine plan is 7.4:1 (bank cubic
meters waste: tonne phosphate). The average thickness of phosphate
deposit is approximately 4 meters over the life of the DSO Project.
Average annual waste production is 3.6 Mm(3). The mine plan grade has been optimized to remain above 30% P(2)O(5) for each of the 25 years of mine life.
The current financial model assumes the mining of 12.5 million tonnes
which is less than 38% of the recently announced Indicated and Measured
DSO Resources. There is also potential to improve the Project economics
by increasing the production rate and the life of mine, capital and
The Farim Phosphate Project has been granted a Mining Lease and a
Production License by the Guinea-Bissau Government. This is valuable to
optimizing the timetable for development and production.
The DSO Project encompasses the following general process flow:
-- Contractor mining; -- Removal of overburden by a combination of excavators and trucks; -- Run of Mine("ROM") phosphate removed by excavators and trucks and stockpiled for loading and blending close to a barge loading system located some 1.5 km from the open pit mine; -- A number of barges moored to a floating pontoon will be loaded and taken to a bulk carrier vessel (of 25,000 tonnes capacity) moored to a floating ship loading facility off the Rio Casheu estuary for dispatch to customers and off takers; -- The river transport distance from the planned barge loading site at the mine site to the Rio Cacheu estuary ship loading facility on the Atlantic Ocean is approximately 150 kilometres; and -- ROM phosphate will also be available for supply to the in-country market as a direct application fertilizer.
PRELIMINARY ECONOMIC ASSESSMENT HIGHLIGHTS
All amounts in US dollars
Table 1: Summary of Physical Parameters of the DSO Project
_____________________________________________________________________ | Physical Parameter | Value | |_____________________________|_______________________________________| |Mine Life |25 Years | |_____________________________|_______________________________________| |Construction Period |1 Year | |_____________________________|_______________________________________| |Operation |300 days per year | |_____________________________|_______________________________________| |Total Life of Mine Production|12.5 million tonnes @ 30.7% P2O5 and | | |<= 6 % FeAl phosphate | |_____________________________|_______________________________________| |Annual Sales |500,000 tonnes @ 30% P2O5 phosphate | |_____________________________|_______________________________________| |Revenue Guidance Estimate |US$150 per tonne of phosphate FOB | |_____________________________|_______________________________________|
The mine plan and financial outputs are based on a mining cutoff grade
of 29% P(2)O(5) that utilizes approximately 38% of the currently identified Direct
Shipping Option Measured and Indicated phosphate mineral resources.
Table 2: Summary of DSO Project Costs
________________________________________________________________ | Item | Cost (USD) | |___________________________________|____________________________| |Operating Costs | | |___________________________________|____________________________| |Mining |US$ 31.39 per tonne | |___________________________________|____________________________| |Power and Electricity |US$ 8.17 per tonne | |___________________________________|____________________________| |General & Admin expenses |US$ 5 per tonne | |___________________________________|____________________________| |Marine Logistics |US$ 9.12 per tonne | |___________________________________|____________________________| |Total |US$ 53.68 per tonne | |___________________________________|____________________________| | | | |___________________________________|____________________________| |Capital costs (life of mine) | | |___________________________________|____________________________| |Pre-production stripping (incl |US$ 19.27 million | |mobilisation) | | |___________________________________|____________________________| |Mine, Marine & Infrastructure (incl|US$ 58.51 million | |contingency) | | |___________________________________|____________________________| |Sustaining |US$ 64.75 million | |___________________________________|____________________________| |Closure |US$ 5 million | |___________________________________|____________________________| |Total Life of Mine capital costs |US$ 147.53 million including| | |contingency | |___________________________________|____________________________| |Contingencies |25 % | |___________________________________|____________________________| |Royalties 2 % |2 % | |___________________________________|____________________________|
Capital costs have been further estimated as follows:
Table 3: DSO Project CAPEX Estimate (Area Breakdown)
_____________________________________________________________________ |Area #| Area Name |Total |Contingency|Total Capital|Percent Total| | | |Capital| | | | | | | | [M USD] | [M USD] | | | | |[M USD]| | | | |______|______________|_______|___________|_____________|_____________| |000 |Project |11.60 |1.47 |13.07 |16.8% | | |General | | | | | |______|______________|_______|___________|_____________|_____________| |100 |Mine |21.91 |8.03 |34.43 |44.3 % | |______|______________|_______|___________|_____________|_____________| |200 |Marine |13.93 |8.23 |24.97 |32.1 % | | |Logistics | | | | | |______|______________|_______|___________|_____________|_____________| |300 |Marine |3.70 |1.70 |5.40 |6.8 % | | |Infrastructure| | | | | |______|______________|_______|___________|_____________|_____________| | |Total |58.44 |19.43 |77.87 |100 % | |______|______________|_______|___________|_____________|_____________|
Capital estimates include mine facilities and infrastructure, mining
equipment, dewatering wells, stockpile loader, dyke construction,
stockpile area, and ex-pit haul road construction.
Table 4: Cash Flow Analysis
_______________________________________________________________________ | Units | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |2020-2039| |__________|________|______|______|______|______|______|______|_________| |Production| | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |Phosphate |100 |400 |501 |500 |500 |500 |500 |9,500 | |'000 dry | | | | | | | | | |tonne - | | | | | | | | | |Sales | | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |Price |150 |150 |150 |150 |150 |150 |150 |150 | |Phosphate | | | | | | | | | |US$/tonne | | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |Sales US$ |15,000 |60,450|75,150|75,000|75,000|75,000|75,000|1,425,000| |'000 | | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |Cost of | | | | | | | | | |Sales | | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |Operating |22 |58.07 |59.39 |59.75 |57.13 |56.93 |55.92 |52 | |cost | | | | | | | | | |US$/tonne | | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |Total |2,200 |23,286|29,754|29,875|28,565|28,465|27,960|494,000 | |operating | | | | | | | | | |cost US$ | | | | | | | | | |'000 | | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |EBITDA US$|12,800 |37,164|45,396|45,125|46,435|46,435|47,040|931,000 | |'000 | | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |CAPEX US$ |77,780 |2,590 |2,590 |2,590 |2,590 |2,590 |2,590 |49,210 | |'000 | | | | | | | | | |__________|________|______|______|______|______|______|______|_________| |Net cash |(64,980)|34,574|42,806|42,535|43,845|43,945|44,450|881,790 | |flow | | | | | | | | | |before tax| | | | | | | | | |and | | | | | | | | | |royalties | | | | | | | | | |US$ '000 | | | | | | | | | |__________|________|______|______|______|______|______|______|_________|
Considering the DSO Project on a stand-alone basis, the undiscounted
pre-tax cash flow totals US$ 1,082 million over the 25 year mine life.
Operating cash flow averages US$ 45.36 million per year and simple payback of preproduction capital is achieved after
approximately 2 years of operation.
EBITDA as disclosed in the table above is a non-GAAP financial measure
and does not have a standardized meaning and is therefore unlikely to
be comparable to similar measures presented by other issuers.
The Internal Rate of Return (IRR) is 63%. Pre-tax Net Present Value (NPV) at various discount rates is shown in
Table 5: Pre-tax NPV Sensitivity to Discount Rate
_________________________________ | Rate | NPV | |__________________|______________| |0 % (Undiscounted)|$ 1,117million| |__________________|______________| |5 % |$ 552 million | |__________________|______________| |10 % |$ 338 million | |__________________|______________| |15 % |$ 179 million | |__________________|______________| |20 % |$ 106. million| |__________________|______________| |25 % |$ 67 million | |__________________|______________|
The economic analysis contained in PEA is based, in part, on Measured
and Indicated Resources, and is preliminary in nature. There is no
certainty that the resources development, production and economic
forecasts on which this PEA is based will be realized.
Mineral Resource Estimates
The Mineral Resource Estimate for the Farim Phosphate Project was
completed by the Qualified Person, Dr. Marcelo Godoy of Golder in
Santiago, Chile. Dr. Godoy meets the requirements of a Qualified
Person for the purposes of NI 43-101 reporting and is independent from
The Mineral Resource estimate defines a Measured Resource of 64.6 Mt at
an average grade of 29.11% P(2)O(5), an Indicated Resource of 28.1 Mt at an average grade of 27.68% P(2)O(5) and an Inferred Resource of 18.3 Mt at an average grade of 28.66% P(2)O(5). No recoveries or dilution factors have been considered in this
estimate and the estimate is strictly in situ, in accordance with NI
43-101 reporting guidelines for resources.
The mineral resources reported in this PEA were estimated using the
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards
on Mineral Resources and Reserves, Definitions and Guidelines prepared
by the CIM Standing Committee on Reserve Definitions and are presented
in the Table below.
Table 6: Mineral Resource Statement, Farim Phosphate Deposit, 16 May,
_______________________________________________________________________ |Resource | |Tonnage|P2O5 |FPA |Al2O3| CaO |Fe2O3|SiO2 | Over | | | Class |Block| (Mt) | (%) |(m) | (%) | (%) | (%) | (%) |burden| S/R | | | | | | | | | | | (m) | | |_________|_____|_______|_____|____|_____|_____|_____|_____|______|_____| | |North| | | | | | | | | | |Measured |Of |64.6 |29.11|3.65|2.78 |39.44|5.60 |11.39|43.40 |12.43| | |River| | | | | | | | | | |_________|_____|_______|_____|____|_____|_____|_____|_____|______|_____| | |North| | | | | | | | | | | |of |17.7 |26.93|3.15|2.62 |40.14|5.19 |10.64|39.50 |13.18| | |River| | | | | | | | | | | |_____|_______|_____|____|_____|_____|_____|_____|______|_____| |Indicated|South| | | | | | | | | | | |Of |10.3 |28.96|2.61|5.36 |36.37|4.59 |11.68|29.05 |12.11| | |River| | | | | | | | | | | |_____|_______|_____|____|_____|_____|_____|_____|______|_____| | |Sub |28.1 |27.68|2.95|3.63 |38.75|4.97 |11.02|35.65 |12.79| | |total| | | | | | | | | | |_________|_____|_______|_____|____|_____|_____|_____|_____|______|_____| | |North| | | | | | | | | | | |of |82.3 |28.64|3.54|2.75 |39.59|5.51 |11.23|42.56 |12.59| | |River| | | | | | | | | | |Measured |_____|_______|_____|____|_____|_____|_____|_____|______|_____| |+ |South| | | | | | | | | | |Indicated|Of |10.3 |28.96|2.61|5.36 |36.37|4.59 |11.68|29.05 |12.11| | |River| | | | | | | | | | | |_____|_______|_____|____|_____|_____|_____|_____|______|_____| | |Sub |92.6 |28.68|3.44|3.04 |39.23|5.41 |11.28|41.05 |12.54| | |total| | | | | | | | | | |_________|_____|_______|_____|____|_____|_____|_____|_____|______|_____| | |North| | | | | | | | | | | |of |3.4 |27.36|2.75|2.75 |39.30|5.21 |11.05|42.70 |15.81| | |River| | | | | | | | | | | |_____|_______|_____|____|_____|_____|_____|_____|______|_____| |Inferred |South| | | | | | | | | | | |Of |14.9 |28.96|2.35|6.30 |35.78|4.57 |11.64|29.45 |13.19| | |River| | | | | | | | | | | |_____|_______|_____|____|_____|_____|_____|_____|______|_____| | |Sub |18.3 |28.66|2.42|5.64 |36.43|4.69 |11.53|31.90 |13.67| | |total| | | | | | | | | | |_________|_____|_______|_____|____|_____|_____|_____|_____|______|_____|
Phosphate mineralization is still currently open to the west and poorly
drilled to the south of the River Cacheu.
Key Assumptions and Methods
Golder prepared the Resource Estimate by modeling the Farim resource
based on a two dimensional (2D) block model with 125 m x 125 m cells
and 25 internal discrete nodes covering the extents of the FPA layer.
The extents of the FPA layer were estimated based on the presence or
absence of the FPA layer in the drill holes.
Exploratory data analysis and variography were carried out and variables
were estimated using a three pass strategy, whereby each successive
pass had an increased search radius and less restrictive sample
selection criteria. This approach ensures all blocks received a value
for each variable. Values were assigned using a combination of Ordinary
Kriging and Inverse Distance Weighted methods for the following
variables: P(2)O(5); Al(2)O(3); CaO; Fe(2)O(3); SiO(2); FPA Thickness; and Overburden Thickness.
The stripping ratio was derived from the estimated overburden and FPA
thicknesses. Classification was assigned to each block in the model
based on a drilling spacing as follows:
-- Measured Resource: Areas with drilling coverage of up to 500 m by 500 m and a P O slope of regression greater or equal 0.65; -- Indicated Resource: Areas with drilling coverage of up to 1000 m by 1000 m and a P O slope of regression greater or equal 0.4; and -- Inferred Resource: Areas within the extents of the FPA and not classified as Measured or Indicated.
A corridor following the Rio Cacheu was excluded and set to
“unclassified” due to the uncertainty related to the extraction of
material in this area. In addition, the resource estimate was divided
into blocks corresponding to the location relative to the Rio Cacheu;
“north” or “south”.
After applying the above criteria and the for the purpose of public
reporting the resources where restricted to a minimum FPA thickness of
1.5 m and a stripping ratio no greater than 20:1. By applying these
mining restrictions it is considered that the disclosed mineral
resource estimates fulfill the requirement of “reasonable prospects for
economic extraction”. Due to the consistent grade continuity, with
grades above 27% P O , a phosphate cut-off grade was not applied to
report the Mineral Resource estimates.
Data verification was carried out by Golder and included independent
sampling, a core logging check, drill hole collar survey checks and
database integrity checks. No material issues were noted. Golder
reviewed the quality assurance and quality control (QAQC) procedures
reported from previous exploration campaigns. QAQC procedures and data
from GB Minerals AG (which is the subsidiary of the Company that holds
the title to Farim Phosphate Project) were reviewed by Golder. GB
Minerals AG submitted a total of eight field duplicates and six
standards samples in a total of 156 samples. No blanks were submitted.
There is no process design involved in the direct shipping of phosphate
by sea transportation. During a site visit in May 2011, Golder
reviewed the drilling, logging and sampling procedures employed by GB
Minerals AG. A laboratory audit of both the sample preparation and
assaying facilities was also carried out by Golder.
Data verification for resources was also extensively covered in the
previously filed Technical Report of the Company dated February 10,
2011 filed on SEDAR under the Company’s profile at www.sedar.com.
The majority of the annual rainfall over the DSO Project area is
concentrated in the period from July through September, and the DSO
Project mine plan will carry out mining activities for 10 months out of
the year to avoid the inefficiencies of mining during the higher
rainfall months. Installed mining equipment capacity has been designed
to produce the annual plan phosphate requirements and associated waste
stripping within the 10 drier months of the year.
Key design elements of the DSO mining plan are water management and haul
road maintenance. All mining areas must be fully dewatered in advance
of mining activities. The proximity of the mine to the Rio Cacheu will
require the construction of a protection dyke to prevent in-pit
Contractor mining has been selected, for the excavator / truck mining
method for the DSO mining plan based on flexibility, lower initial
capital, lower investment risk, grade control, and the ability to blend
quality for required product specifications. Contractor mining has been
proposed to minimize capital investment and to shorten the period to
production which could arise from the availability of mining capital
equipment and the shortage of in country manpower skills.
The remote nature of the Project, with limited power supply, precludes
the use of electric mining equipment and all mining equipment selected
for the DSO Project is diesel mobile equipment.
This mining method uses excavators and trucks to handle 100% of the
overburden and DSO phosphate. Waste will be stripped and removed with
11 m(3 )to 12 m(3) bucket front-end loaders or small hydraulic excavators matched with
50 ton haul trucks. The DSO phosphate will be mined with 3 m(3 )to 4 m(3 )bucket class backhoes matched with 35 t trucks.
ROM phosphate will be removed by excavators and trucks to a 20,000 tonne
ROM pad for storage and blending. The ROM pad is located some 1.5km
from the open pit and adjacent to the barge loading facility.
The DSO operation will mine 0.5 Mtpa of phosphate and will require a
waste storage facility capable of holding 34 Mm(3). The facility will be approximately 25 m high with a footprint of
1000 meters by 1500 meters.
The ROM phosphate will be mined, blended if necessary and will be
directly shipped with limited treatment or processing (if any).
Project Infrastructure and Product
The infrastructure requirements associated with the DSO project include
the mine infrastructure, mine camp, offices, workshops, water treatment
facilities, power generation and water supply.
River Transport and Loading
Transfer of phosphate from the ROM pad to the feed hopper of the barge
loading facility will be by front end loader. The hopper will feed a
conveyor system to load 2,700 t non-propelled barges. Sets of barges
will then transport with the aid of a pusher tug down the Rio Cacheu to
a seagoing vessel.
The barges will be unloaded by the seagoing vessel anchored to a
floating ship loading facility beyond the shallow waters (+ 12 meter
deep) using clam shell unloaders. Possible mooring points accessible
to vessels of capacity up to 25,000t have been identified in the
estuary of the Rio Cacheu.
The results of the Preliminary Economic Assessment show that the DSO
Project is robust from a technical and economic standpoint at the
selected long term phosphate prices, and GBMMEC has recommended that
the DSO Project continues to be advanced to the Feasibility Stage and
that a production rate of 1 Mt per annum be investigated.
Dr. Marcelo Godoy, MAusIMM (CP) of Golder in Santiago, Chile, who is a
Qualified Person as defined in NI 43-101, prepared and is responsible
for the Mineral Resource Estimate for the Farim Phosphate Project as
disclosed in this news release. In addition, the following other
Qualified Persons prepared (or supervised and approved the preparation
thereof) and are responsible for other parts of the PEA, which are
referred to in this news release: Michael Short, FIMMM, C.Eng. of
GBMMEC, Ian Jackson, B.Eng, ACSM, C.Eng., MIMMM (CP) of GBMMEC, Richard
Elmer, C.Eng., MIMMM (CP) of Golder, and Terry Kremmel, PE (MO and NC),
SME (CP) of Golder. All of these Qualified Persons are independent from
About Plains Creek Phosphate Corporation
Plains Creek Phosphate Corporation is a Canadian mining and exploration
company focused on advancing the Farim Phosphate Project located in
Guinea Bissau, West Africa. The Farim Project currently comprises a
phosphate deposit consisting of one continuous flat lying phosphate bed
with a NI 43 101 compliant Mineral Resource estimate that defines a
Measured Resource of 64.6 MT at an average grade of 29.11% P2O5, an
Indicated Resource of 28.1 Mt at an average grade of 27.68 % P(2)O(5) and an Inferred Resource of 18.3 Mt at an average grade of 28.66 % P(2)O(5). A two phased development is planned for the Farim Phosphate Project as
an open pit mining operation. Phase One consists of a Direct Shipping
Option Project with an annual phosphate production of 0.5 Mt per annum
and Phase Two which consists of the production of 2 Mt per annum of
phosphate rock concentrate and includes a beneficiation plant and
associated infrastructure, pipeline and port.
The Company’s shares are listed on the TSX Venture Exchange under the
trading symbol “PCP”. For additional information, please visit us at www.plainscreek.com.
ON BEHALF OF THE BOARD
(Signed) “Carson Phillips”
Vice President, Corporate Development and Director
Statements in this release may be viewed as forward-looking statements.
Such statements involve risks and uncertainties that could cause actual
results to differ materially from those projected. There are no
assurances the Company can fulfill such forward-statements and the
Company undertakes no obligation to update statements. Such forward
looking statements are only predictions; actual events or results may
differ materially as a result of risks facing the Company, some of
which are beyond the Company’s control. In addition, pursuant to
National Instrument 43-101, the Company cautions that mineral resources
that are not mineral reserves do not have demonstrated economic
The reader should be cautioned that there are risks that could affect
the potential development of the Project’s mineral resources, which
include: the political instability in Africa and Guinea Bissau in
particular, which is where the Project is located; and that additional
financing will be required to ultimately develop the Project and the
ability to obtain such financing on favorable terms will be affected by
prevailing market conditions. A more detailed discussion of such risks
are outlined in the Company’s Filing Statement dated February 22, 2011
which is filed under the Company’s profile on SEDAR at www.sedar.com.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS
THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE)
ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE Plains Creek Phosphate Corp.