gq corporate presentation (25 march2014)
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GQ FERTILIZER
TSX-VFOR
AFRICABUILDING FOR GROWTH WHERE THE WORLD IS GROWING
Disclaimer
This presentation contains forward-looking statements or forward-looking information within the meaning of applicable securities legislation (hereinafter collectively referred to as "forward-looking statements") concerning the Company's plans for its properties, projects, operations, subsidiaries and other matters. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management regarding operations of the Company which are subject to a variety of business and market risks, including political and regulatory risks associated with mining and exploration in Mali.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.
These forward-looking statements are based on certain assumptions which the Company believes are reasonable, however, forward-looking statements are subject to a variety of business and political risks and uncertainties. Some of the important risks and uncertainties that could affect forward-looking statements are also described in the Company's continuous disclosure filings made with Canadian securities regulatory authorities, which are available at the SEDAR website and on the Company’s website. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, they may adversely affect the Company’s business and prospects and actual results may vary materially from those described in forward-looking statements. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required by applicable laws. Investors are therefore cautioned against placing undue reliance on forward-looking statements.
The Company cautions that the PEA is preliminary in nature, as it includes “Inferred Mineral Resources” which are considered too speculative geologically, to have the economic considerations applied to them that would enable them to be categorized as "Mineral Reserves". There is no certainty that the PEA will be realized, as Mineral Resources do not demonstrate economic viability.
The technical information in this presentation has been reviewed by Jed Diner, MSc. P.Geol., a qualified person as defined by National Instrument 43-101.
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Stock Information
As of March 6, 2014
STOCK INFORMATION TSX-V: GQ
SHARES OUTSTANDING 48,817,941
-OPTIONS 3,815,000
-WARRANTS 2,114,813
FULLY DILUTED 54,747,754
52-WEEK LOW/HIGH $0.45/$2.54
3-MONTH AVG. VOL. 77,780
MARKET CAP. $91.8M
Le Main de Fatima – Northern Mali
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Our Goal
• Building a Pan African Fertilizer Manufacturer– Developing agricultural mineral projects
for local production of field ready fertilizers
– For regional delivery
• Targeting– Phosphate Direct Application and SSP,
At Surface Potash Brines, Sulfur and Lime Projects
– Establishing centers in areas of rapid agricultural growth West, East and Southern Africa
IER Sotuba Test Plot (Cotton)
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Our Strategy
Follow strict development criteria
• Must reach field ready product with compelling investment returns on capital
expenditure of less than $200MM
• Existing market sufficient to absorb planned production within cost effective
transport radius– Does not include growth potential
– Does not include out of Africa export potential
Africa’s history as exclusively an exporter of resources means many projects that fit
our criteria have been ignored for logistical reasons
This strategy also insulates our proposed business from the ups and downs of the
world fertilizer market, hinging its success to the revolution in African Agriculture
already underway and growth in global food demand
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Source: EBG Capital
60% OF THE WORLD’S ARABLE LAND IS IN AFRICA
According to Zürich-based advisory firm, EBG Capital, sub-Saharan Africa offers 590m hectares of available cropland, while the rest of the world offers just 380m hectares.• Only 23-30% of arable
land in W. Africa is currently cultivated
• Low fertilizer usage (9kg/ha vs. 101kg/ha in the rest of the world)
Why Africa
7Source: GRAIN, AGRA Alliance, McKinsey
Agribusiness project sizes – January 2012 (investment underway or completed in ‘000s USD)
“Africa has the potential to create a trillion-dollar food market” (World Bank)
• 62% of all large-scale land acquisitions since 2000 have occurred in Africa.
• Agriculture in Africa will grow from its current $280 billion a year to $500 billion in 2020, and $880 billion by 2030.
• Nigeria’s agricultural sector could grow by a colossal 160% by 2030, rising from $99 billion in 2010 to $256 billion two decades later.
AFRICA IS ATTRACTING LARGE AGRIBUSINESS INVESTMENTS
Why Africa
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Why Fertilizer
• Fertilizer offers a unique conjuncture of business opportunities– Agriculture’s predictable
demand and strengthening growth profile
– Mining’s expected rates of return
• An ideal way to profit from two widely expected market trends– Increasing global food demand– African development
Irrigation Canal – Niono, Mali
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• World population projection 10 billion people by 2100
• Africa’s population is expected to double to 2 billion by 2050.
• A more affluent world will consume more food
Grain required to produce 1kg of meat (Sources: Sprott)
World population growth Arable land per capita
• The amount of arable land per capita is shrinking
World population projection
Why Fertilizer in Africa
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OUR GROWTH
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Botswana Potash
• Exclusive right to develop potash
present at Sua Pan operation of
Botswana Ash Corporation
• Historical work published by the World
Bank suggests that the Sua Pan salar
was capable of producing 163,000 tons
per year, including potential to produce
21,000 tpy of K2SO4
• KCl concentrations in bitterns are
reported to exceed 10.9 grams per litre
(g/L), which is more than a 100%
improvement over the native brine
concentration of 4.3 g/L as measured
by Botswana Ash. This compares
favorably with potash concentration in
the brine from the Dead Sea of 6.2 g/L,
Sua Pan Potash Brine Project
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Brownfield Brine
• Existing operation produces Soda
Ash (NaCO3) and Salt (NaCl) from
the natural brine
• Brine projects have some of the
lowest operating and capital costs in
the world
• Potential plant would function as
additional circuit on existing
operation
• Leverages existing infrastructure
reducing potential capital
expenditure
• Advancing to definitive agreement
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OUR OPPORTUNITY
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Tilemsi Phosphate
• 50 million tonnes (Mt) inferred
resource on 26 km² drilled
surface
• High natural grade 24.3%
P₂O₅
• Significant upside potential,
project covers 1,206 km² (3
licenses)
• Strategic source of reactive &
soluble phosphate for direct
application, low cost fertilizer
as an NPK component
Segou PilotPlant
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A Growing Resource
TILEMSI PHOSPHATE PROJECT
INITIAL INFERRED RESOURCE 50 million tonnes
AVERAGE PHOSPHATE GRADE 24.3% P₂O₅
CONCENTRATE GRADE 25-38% P₂O₅
CONCENTRATE QUALITY Low levels of contaminants(ie. cadmium)
BENEFICIATION Easy separation and treatment
DEPOSIT DEPTH Near surface Open pittable resource
With a high natural P₂O₅ grade and significant exploration upside, the Tilemsi deposit is developing into
a world-class phosphate resource.
Tilemsi Valley
Phosphate Rock Characterisation
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Test Results Impact
BENEFICIATIONScreening at 850 microns to
achieve P2O5 grades of 36.8%
Via simple screening process, the product can easily beneficiated to up to 36.8% P₂O₅
SOLUBILITY71.1% soluble P2O5
in citric acid62.5% soluble P2O5
in formic acid
The rock solubility shows that it is able to compete with other chemical fertilizers, as fertilizers’ effectiveness is based on immediate
availability of the nutrients
GRANULATION Successfully produced granules sized 1-4mm
The product can easily be granulated, allowing the product to withstand transportation and be used as a component of NPK
blended fertilizer
Characterization tests indicate:
Tilemsi natural phosphate (TNP) meets or exceeds market specifications for beneficiation, solubility and granulation.
TNP can be used as either as very low cost phosphate component for blended NPK fertilizer or as a direct application fertilizer.
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Exploration Program
5 km•Phases 1 + 2 completed•Oct 2013: GQ exploration
program to resume
Map of Tilemsi Phosphate Project showing our concessions on remote sensing and drilling program (completed and planned)
589 sq.km
417 sq.km 200 sq.km
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PEA Highlights (1/2)Project Economics Value
Project Net Present Value US$635 million
Discount Rate 10%
Project Internal Rate of Return 33%
Equity Holder IRR (40% Equity/60% Debt) 42%
Payback Period 3.7 Years
CEO Jed Richardson discussing life in Gao with Tuareg merchant
Project has powerful potential social
impacts alongside obvious economic
benefits
• Directly addresses soil poverty
issues in Sahel soils
– Cotton production has fallen
50%/ha planted in last 10
years
• Increased crop yields reduce food
security concerns in West Africa
• Provides new export product for
gold dependent Malian economy
• Brings industrial development to
Mali’s troubled north
– Necessary step in ensuring a
lasting peace in the region
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PEA Highlights (2/2)
Project Parameters Value
Life of Mine based on the Inferred Mineral Resource estimate 20 years
Maximum Rock Mined (at full capacity) 1 M tonnes/year
Pre-Operational Cost US$13 M
Initial Capital Cost US$ 143 M
OPEX Phosphate Rock @36% P₂O₅(powder average ex plant) US$ 59 per tonne
OPEX Hyper Phosphate @36% P₂O₅(granulated avg ex plant) US$ 95 per tonne
Fertilizer Products Supplied at Full Capacity 1.18 M tonnes/year
Sales Mix: NPK / Direct Application 78% / 22%
Assumptions Value
Product Price Discount to imported phosphate cost in Malii 20%
Average transport cost ratio per tonne per km US$ 0.082
Delivered Price of Diesel for Energy Production US$1.10/litre
Equity to Government on Mining 20%
Royalties on Mine Production 3%
Contingency in Initial Capital Cost (12%) US$ 14 M
Political Risk Insurance Premium (@ 12%) incl. in CAPEX US$ 11 M
Interest Rate per annum (LIBOR + Premium) 7.8%
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OUR PLAN
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Agronomy
• Great Quest has developed a low cost phosphate fertilizer alternative for the West African Market
• We have completed initial field agronomic testing– Conducted with IER (Institute of Rural
Economics), administered by Dr. Lamine Traore– 11 Test plots in major agricultural zones of Mali– Cotton, rice, corn, millet, sorghum, ground nut,
cow pea– Currently running first season of multi-stage test
program– 1st Quantitative results December 2013
• Replicate trials in neighbouring West African marketsGranulated Tilemsi Phosphate – 35% high grade,
27% medium grade
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Agronomy
• Extraordinary Results
Corn from the Sikasso Region
Popular crop in a significant growing region, powerful yield response.
Phosphate type Quantity(Kg/ha)
N(%)
P(%)
K(%)
Yield(kg/ha)
Diammonium Chemical
100 15 15 15 2,156
GQ 35% Granulated 100 11 18 2 3,858Tilemsi Powder 300 - 24 - 2,597
Phosphate type Quantity(Kg/ha)
N(%)
P(%)
K(%)
Yield(kg/ha)
Diammonium Chemical
100 15 15 15 1,751
GQ 35% Granulated 100 11 18 2 2,192Tilemsi Powder 300 - 24 - 1,728
Phosphate type Quantity(Kg/ha)
N(%)
P(%)
K(%)
Yield(kg/ha)
Diammonium Chemical
65 18 46 - 904
GQ 27% Granule + M4 100 - 27 - 1013Tilemsi Powder 300 - 24 - 794
Non irrigated Rice from Bamako RegionChallenging crop given variable water availability, benefiting from whole nutrient nature of GQ product
Peanuts from Kita RegionMedium grade product was tested with solubility aids, an ultra low cost option for subsistence crops
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Small Scale Production
• Markala Production Facility– 40,000 tonnes of product annually
– Proposed commissioning late 2014
– Expected cost $15 million
• Market Building Step– For manufacture and sale of product for Malian
market
– Will also provide material for commercial testing by
future large consumers
– Will be used to establish product pricing and off
take agreements for larger planned facility
• Will continue to be used to test and develop
new products once large facility is builtBirkenmayer Granulator – Johannesburg, South Africa
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Full Commercial Phosphate Facility
• Located in Gao / Bourem
• Construction 2016
• Initial capital expenditure $143 million
• Construction employment– Potentially 300 direct and indirect new jobs
during plant construction
• Operation employment– 200+ Full time jobs in the plant, plus drivers,
miners and support staff
– Mine life 50+ years with potential to grow with
more exploration
• 1 million tonnes of annual production
• Consumption in Mali and export through
out West AfricaTrucks in Gao, moving good to and from Bamako, Algieria and Niger
Our People
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International Board of Directors
John A. Clarke – Chairman Former CEO of Nevsun Resources and
Executive Director of Ashanti Goldfields
Victor Jones – Director 30 years of experience in senior executive and board positions in
public mineral exploration and technology companies
Ehud Levy – Director Phosphate manufacturing industry consultant with a 30-year
career with Bateman Engineering and Rotem
Gordon Peeling – Director Former President of Mining Association of Canada (MAC) with 30
years of mining experience in the public and private sectors
David Shaw – DirectorWorked as Senior Mining Analyst at Yorkton Securities; initiated and developed Resource Research Group at Charlton Securities
Mali Board of Directors
Abdoulaye Pona- DirectorPresident Mali Chamber of Mines, Founding director Mali Mining
House SA
Mama Tapo- DirectorManaging Director Societe Internationale de Services et de
representation. Former Manager Ashanti Goldfields
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Our Team
International Board of Directors
Jed Richardson – President and CEOFormer VP Corporate Development at Verde Potash and Institutional
Equity Research Analyst at Cormark Securities.
Mohammed Bouhsane - COOFormer Project Engineer in the Moroccan mining and metallurgy
industries working for the ONA Group and OCP.
Jayram Hosanee - Chief Financial OfficerFormer CFO at Mineral Hill and Golden Dawn Minerals.
Mr Hosanee holds a CGA.
Thomas Guillot – VP Corp. DevelopmentFormer CFO of NewGen Asset Management investment fund, and Management Consultant, Ministère de l’Enfant et la Famille, Mali.
Marie-France Dikizeyeko – Mali ManagerFormer Senior Exploration Geologist at Randgold Mali, Geological
consultant for Nevsun and Administrative Manager for Iamgold Mali.
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Great Quest Metals LtdTSX-V: GQ
Suite 303, 95 King Street East, Toronto, ON M5C 1G4+1 416 849 9203 [email protected]
WWW.GREATQUEST.COM