gq pea-presentation-feb-2013
TRANSCRIPT
Click to edit Master title style
Tilemsi Integrated Phosphate Fertilizer
Project
PEA Overview
Positive PEA Results
Estimated 20-year Mine Life with NPV US$ 649m (at 10% DR)
and Project IRR 33%
February 2013
TSX-V: GQ
www.greatquest.com
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. Great Quest Metals Ltd. 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.
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 technical information in this presentation has been reviewed by Jed Diner, MSc. P.Geol., a qualified person as defined by National Instrument 43-101.
2
Our Vision:
Our Key Strengths:
3
To unlock West Africa’s fertilizer market by providing cost effective and adapted
solutions to meet growing agricultural needs
Proven
Management & Board
Solid
PEA Results
Mineral Discovery
Track Record
Significant Project
Exploration Upside
Stock 52-Week High:
C$ 3.71
Support from
Key Stakeholders
Great Quest - A Unique Value Proposition
4
PROJECT BACKGROUND
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 or as a NPK component
Experienced management team with track record in project development and mineral discovery in West Africa
GQ Flagship Tilemsi Phosphate
5
Project positive attributes
• Naturally effective fertilizer product with low OPEX and CAPEX expectations • Strip minable – Near surface deposit (<10 meters on average) • Simple production process as per characterization tests
Upside potential
• 3 phosphate concessions with total surface of 1,206km² • To date only 2% of total area has been drilled (26 km²)
Market potential
• Fast growing population (>2% pa) drive food demand in West Africa • Large agribusiness investments and commercial farming projects in West Africa
Logistical advantage • Proximity to key agricultural markets in West Africa (<1,000 km radius) • Ability to offer low farm-gate price thanks to market proximity
Expertise
• Strong combined management and board expertise in mineral exploration in Africa and the global phosphate and fertilizer industry
Investment Highlights
PEA Consulting Team
6
The independent PEA was written and compiled by Gaya Resources Development Ltd, a full-spectrum engineering management company, specialising in fertilizer projects. The PEA includes sections provided by highly respected international consulting firms:
Coffey Mining (South Africa) for the mining process
GBM Engineering (UK) for the beneficiation process
CFI Holding (France/Singapore) for the granulation/NPK study
Bolloré Africa Logistics (France) for the transportation analysis
Balu & Associates (USA) for the West Africa fertilizer market study
Mintek (South Africa) for the metallurgical testing
8
PEA Project Description
Plants Construction: The project will include a beneficiation and phosphate granulation plant near the Niger River at Bourem, which is situated 95 km from the mine.
Initial Production: To begin in 2016, with staged production ramp-up from 200,000 tonnes to 1 million tonnes, based on conservative expectations for market uptake.
Target Markets: Landlocked markets in West Africa for product delivery, displacing high cost imported fertilizers, and servicing emerging commercial farming projects in the region.
Product Development: Two granulated Hyperphosphate products:
a high grade (>35% P₂O₅) for mixture into standard NPK blends
a medium grade (>27% P₂O₅) for simple direct application.
Planned Project: A vertically-integrated phosphate mining, beneficiation, granulation and NPK blending project in West Africa.
10
PEA Highlights ¹
¹ Great Quest 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.
Project Parameters Value
Life of Mine (“LOM”) based on the current Inferred Mineral Resource estimate
20 years
Maximum Rock Mined (at full capacity) 1 million tonnes per annum
Pre-Operational Cost US$ 13 million
Initial Capital Cost US$ 143 million
OPEX Phosphate Rock (powder average ex plant) @35% P₂O₅ US$ 49 per tonne
OPEX Hyper Phosphate (granulated avg. ex plant) @35% P₂O₅ US$ 91 per tonne
Fertilizer Products Supplied at Full Capacity 1.18 million tonnes per annum
Sales Mix: NPK / Direct Application 78% / 22%
11
Summary of the Project Economics
Project Economics Value
Project Net Present Value (“NPV”) US$ 649 million
Discount Rate 10%
Project Internal Rate of Return (“IRR”) 33%
Equity Holder IRR (40% equity /60% debt) 43%
Payback Period 4 years
12
Financial Model Assumptions
Assumptions Value
Product Discount Rate against Cost of Moroccan Phosphate in Bamako, Mali
20%
Average Transport Cost Ratio US$ 0.083 per tonne per kilometre
Delivered Price of Diesel for Energy Production US$ 1.10 per litre
Equity to Government on Mining 20%
Royalties on Mine Production 3%
Contingency in Initial Capital Cost (12%) US$ 14 million
Political Risk Insurance Premium (12%) (incl. in CAPEX) US$ 11 million
Interest Rate (LIBOR + Premium) 7.8% per annum
13
Basic Data – Production Capacity
* Four NPK plants are planned, each producing 125,000T/y of Blended NPK. In year 3, two plants will be built in Sikasso (south Mali) and in Cotonou in Benin. In Year 7 , two other plants will be constructed in Tamale in northern Ghana and in Dosso, south of Niamey in Niger.
Years (LOM)
Pro
du
ctio
n (
ton
ne
s)
Intermediary Stage Final Stage
14
NPV Sensitivity Analysis
DR NPV
(US$ ‘000)
6% 1,085
8% 828
12% 492
Inte
rnal
Rat
e o
f R
etu
rn (
%)
Tilemsi Geology - Unique Deposit Attributes
16
TILEMSI PHOSPHATE ROCK
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
Strip-minable potential
With a high average phosphate grade and significant exploration upside, the Tilemsi deposit has the potential to become a world-class phosphate resource .
Mining Considerations
17
15.8 Mt at an average grade of 28.1% P₂O₅ mineral inventory have been identified
Tilemsi phosphate mine is a pitable resource
Mining will commence on the Tin Hina mining concession and will operate for 13 years
Mining will continue on the Tarkint Est concession until Year 20.
Mining has been scheduled to comment at approx. 200,000 tpa, increasing by 100,000 tpa to reach 500,000 by year 4.
Production will plateau in Year 8 at 1 million tpa for until Year 20.
Waste stripping (strip ratio) 6.8:1
Exploration Program
18
5 km
Phases 1 and 2 of Drilling Program
completed
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
Tilemsi Phosphate Rock Characterisation
19
Test Results Impact
BENEFICIATION Screening 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 % P₂O₅
SOLUBILITY
71.1% soluble P2O5 in citric acid
62.5% 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.
Beneficiation Process
21
Beneficiation and granulation plants will be situated near the Niger River in Bourem, approx. 95 km south of planned mine
Proposed beneficiation process includes:
Coarse classification Hydraulic classification Attritioning Milling Wet magnetic separation Filtration Drying
Production plans:
High-grade Hyperphosphate (>35% P₂O₅ ) granulated for NPK blends Medium-grade Hyperphosphate (>27% P₂O₅) granulated for simple direct
application GQ’s own NPK blending plants to produce in-house high quality fertilizers
Granulation Plant
23
Steam granulation process with optional coating
Granulation plant in Bourem consists of 300,000 tpa during the 1st stage of development
Additional 2 lines of 300,000 tpa each to be installed in Year 3 and Year 7 to meet increased production requirements
Granulated phosphate product can be used as:
A low cost direct application fertilizer In NPK bulk blending
Existing Infrastructure
24
Figure 1: Map of West Africa showing
the Tilemsi deposit and the main logistical infrastructure in the
sub-region
Figure 2: One of the 2 types of truck
considered for ore transportation (70-tonne truck)
Milestones and Catalysts
25
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Prospecting license of Tilemsi phosphate concession granted
Sale of Kenieba gold concession to Avion Gold (now Endeavour)
Phosphate exploration permit granted for Tilemsi & Tarkint Est
Phase I of Exploration Program completed on Tilemsi & Tin Hina
Phase II of Exploration Program completed on Tarkint Est
Tilemsi Phosphate project receives 32.6Mt initial resource estimate
Project area extended to 1,206km² with new concession of Aderfoul
Characterisation tests indicate high grade & reactivity of the rock
Increase of 17Mt of inferred mineral, totalling 50Mt
Complete PEA
Pre-Feasibility Study
Feasibility Study
Project Financing
Construction of Mine Site and Beneficiation Plant
Launch Hyper Phosphate Production
2015 20162010 2011 2012 2013 2014
26
Great Quest Metals Ltd
TSX-V: GQ
Suite 515, 475 Howe Street Vancouver, BC, V6C 2B3
WWW.GREATQUEST.COM
IR Candice Font Tel +1 604.689.2882 Toll Free 1.877.325.3838 Fax +1 604.684.5854 Email [email protected]