great quest-tilemsi-phosphate-project-pea-(06 feb13)
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TRANSCRIPT
2012 Prepared for
Great Quest Metals Ltd.
TILEMSI PHOSPHATE PROJECT
MALI
PRELIMINARY ECONOMIC ASSESSMENT
Effective Date: December 20, 2012
Qualified Person: Jed Diner M.Sc., P.Geol.
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COMPILED BY: Roy Movsowitz, Gaya Resources Development Ltd. – Project Manager M.Sc., B.Sc. Chemical Engineering, B.Com. – Registered Professional Engineer, Israel (37938)
CONTRIBUTIONS BY: GEOLOGY Jed Diner, Principal Consultant – Resource Geology– Independent Qualified Person M.Sc., P.Geol. – Registered Association of Professional Geoscientists of Ontario (registration. Nr. 1560)
MINING Kathleen Body, Coffey Mining – Principal Consultant – Resource Geology B.Sc. (Geology), GDE (Mining), Pr.Sci.Nat. Steven Rupprecht, Coffey Mining – Principal Mining Engineer B.Sc. (Mining Engineering), PhD (Mech. Engineering), Pr. Eng., FSAIMM
GRANULATION/NPK BLENDING Julien Cryspen, CFIh – Chemical Engineer Ecole Nationale Supérieure Des Industries Chimiques (Ensic), France Process and Chemical Engineer, University Of Twente, Enschede, Netherlands DEA in Chemical Engineering, Institut d’Administration des Entreprises (IAE), Paris 1, La Sorbonne, France MBA in Company Administration, IAE – Institut d’Administration des Entreprises (Paris X), France (completed 2005)
BENEFICIATION
Christopher Stinton, GBM – Minerals Engineer B.Sc. (Hons) Minerals Engineering Birmingham University Chartered Engineer – Member of the Institution of Materials, Metals and Mining Colin Powers, GBM – Mechanical Engineer Bachelor of Mechanical Engineering (Hons) MIEAust – Chartered Professional Engineer of Engineers Australia (2742841)
MARKETING
Balu Bumb, Policy and Trade Specialist, BLB Associates, Florence, Alabama, USA – Marketing PhD Economics (University of Maryland, USA), MA Economics University of Udaipur (India), and B.Com. University of Rajahsthan (India) Uzo Mokwunye, Development Strategy Consultant – Marketing B.Sc. Agronomy and M.Sc. in Soil Chemistry from Ohio State University (USA) and PhD in Soil Chemistry from the University of Illinois (USA) Member of the Soil Science Society of America and American Society of Agronomy
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TABLE OF CONTENTS 1 SUMMARY ........................................................................................................................................................... 1
1.1 PURPOSE .......................................................................................................................................... 1 1.2 THE TILEMSI PHOSPHATE PROJECT ......................................................................................................... 1 1.3 GEOLOGY AND MINERALIZATION ........................................................................................................... 2 1.4 MINING ............................................................................................................................................ 3 1.5 BENEFICIATION ................................................................................................................................... 3 1.6 GRANULATION ................................................................................................................................... 4 1.7 NPK BLENDING .................................................................................................................................. 4 1.8 PROJECT INFRASTRUCTURE ................................................................................................................... 4 1.9 MARKETING ...................................................................................................................................... 5 1.10 LOGISTICS ......................................................................................................................................... 5 1.11 FERTILIZER PRICES ............................................................................................................................... 6 1.12 ECONOMICS ...................................................................................................................................... 6 1.13 MAJOR CONCLUSIONS AND RECOMMENDATIONS ..................................................................................... 7
2 INTRODUCTION .................................................................................................................................................... 9
3 RELIANCE ON OTHER EXPERTS ........................................................................................................................... 14
4 PROPERTY DESCRIPTION AND LOCATION ........................................................................................................... 15
4.1 THE TILEMSI LICENSE ......................................................................................................................... 16 4.2 THE TARKINT EST LICENSE .................................................................................................................. 16 4.3 THE ADERFOUL LICENSE ..................................................................................................................... 16
5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ..................................... 17
6 HISTORY ............................................................................................................................................................. 18
7 GEOLOGICAL SETTING AND MINERALIZATION .................................................................................................... 19
8 DEPOSIT TYPE ..................................................................................................................................................... 20
9 EXPLORATION .................................................................................................................................................... 21
10 DRILLING ............................................................................................................................................................ 22
11 SAMPLE PREPARATION, ANALYSES, AND SECURITY ........................................................................................... 24
12 DATA VERIFICATION ........................................................................................................................................... 25
13 MINERAL PROCESSING AND METALLURGICAL TESTING ...................................................................................... 27
13.1 INTRODUCTION ................................................................................................................................ 27 13.2 PROCESS SUMMARY .......................................................................................................................... 27 13.3 OVERALL EXPECTED RECOVERIES ......................................................................................................... 27 13.4 MINERALOGY ................................................................................................................................... 29 13.5 ASSAY BY SIZE ANALYSIS .................................................................................................................... 31 13.6 FINES REMOVAL BY SCREENING ........................................................................................................... 34 13.7 DRY MAGNETIC SEPARATION OF BLENDED COMPOSITE SAMPLE ................................................................ 35 13.8 GRANULATION TEST WORK ................................................................................................................ 36
Granulation Test on Blended Composite Sample ................................................................................ 36 Solubility Test on -4 mm +1 mm and -1 mm Granules ....................................................................... 37
13.9 FUTURE TEST WORK ......................................................................................................................... 38
14 MINERAL RESOURCE ESTIMATE .......................................................................................................................... 39
Additional Potential ............................................................................................................................ 40
15 MINERAL RESERVE ESTIMATES ........................................................................................................................... 41
16 MINING METHODS ............................................................................................................................................. 42
16.1 INTRODUCTION ................................................................................................................................ 42
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16.2 GEOHYDROLOGY AND DEWATERING ..................................................................................................... 42 16.3 GEOTECHNICAL ................................................................................................................................ 42 16.4 MINING METHOD AND EQUIPMENT SELECTION ...................................................................................... 42 16.5 DRILL AND BLAST .............................................................................................................................. 43 16.6 LOAD AND HAUL .............................................................................................................................. 43 16.7 MINING EQUIPMENT UTILIZATION AND PRODUCTIVITY ............................................................................ 43 16.8 PRODUCTION PROFILE ....................................................................................................................... 47
17 RECOVERY METHODS ......................................................................................................................................... 50
17.1 MINERAL PROCESSING (BENEFICIATION) ............................................................................................... 50 Process Overview ................................................................................................................................ 50 Material Handling ............................................................................................................................... 52 Coarse Classification ........................................................................................................................... 52 Hydraulic Classification ....................................................................................................................... 52 Attrition and Classification ................................................................................................................. 53 Milling and Classification .................................................................................................................... 53 Magnetic Separation .......................................................................................................................... 53 Concentrate Dewatering ..................................................................................................................... 53 Filtration and Drying ........................................................................................................................... 53 Tailings Management ......................................................................................................................... 54 Reagents ............................................................................................................................................. 54 Industrial Operations .......................................................................................................................... 54
17.2 GRANULATION PLANT ........................................................................................................................ 56 Design Criteria .................................................................................................................................... 56 Process Description ............................................................................................................................. 57 Plant Performance ............................................................................................................................. 59 Product Quality ................................................................................................................................... 60 Raw material consumptions ............................................................................................................... 60 Utilities ................................................................................................................................................ 60 Industrial Operation .......................................................................................................................... 60
17.3 NPK PLANTS ................................................................................................................................... 60 Design Criteria .................................................................................................................................... 60 Process Description ............................................................................................................................. 61 Description (see flowsheet in Appendix D) .......................................................................................... 61
17.4 NPK PLANT PERFORMANCE ................................................................................................................ 62 Process ................................................................................................................................................ 62
18 PROJECT INFRASTRUCTURE ................................................................................................................................ 64
18.1 MINE ............................................................................................................................................. 64 Coffey Mining reviewed the infrastructure required at the Tilemsi mine site and the beneficiation plant in Bourem. .............................................................................................................................................. 64 Mine Workshop ................................................................................................................................... 64 Haul Road Construction ...................................................................................................................... 64 Explosive Storage ................................................................................................................................ 64 Off-Mine Transportation ..................................................................................................................... 64 Light Vehicles ...................................................................................................................................... 64 Software and Hardware ...................................................................................................................... 64 Consumables First Fill ......................................................................................................................... 65 Diesel Generator and Diesel Storage .................................................................................................. 65 Mining Village ..................................................................................................................................... 65
18.2 BENEFICIATION AND GRANULATION PLANTS – BOUREM ........................................................................... 66 Site Access ........................................................................................................................................... 66 Power .................................................................................................................................................. 66 Water .................................................................................................................................................. 67 Sewage Treatment .............................................................................................................................. 67 Reverse Osmosis Plant ........................................................................................................................ 67 Plant and Instrument Air ..................................................................................................................... 68
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Fuel ..................................................................................................................................................... 68 Communication ................................................................................................................................... 68 Warehouse and Workshop ................................................................................................................. 68 Laboratory .......................................................................................................................................... 69 Administration Office .......................................................................................................................... 69 Security Building ................................................................................................................................. 69 Emergency Services Building ............................................................................................................... 69 Accommodation Village ...................................................................................................................... 69 Community Development ................................................................................................................... 70 Tailings Storage Facility ...................................................................................................................... 70 TSF Configuration ................................................................................................................................ 71
18.3 LOGISTICS .................................................................................................................................... 73 Technical Issues ................................................................................................................................... 74 Selected Equipment ............................................................................................................................ 74 Mining Haulage Manning ................................................................................................................... 75
19 MARKET STUDIES AND CONTRACTS ................................................................................................................... 76
19.1 BACKGROUND .................................................................................................................................. 76 19.2 OBJECTIVES OF THE MARKET STUDY ..................................................................................................... 78 19.3 AGRICULTURAL BACKGROUND ............................................................................................................. 78
Area, Production, and Yield................................................................................................................. 78 Main Crops Grown in West Africa ....................................................................................................... 81 Main Fertilizer Products Used on Crops .............................................................................................. 82
19.4 FERTILIZER MARKETS: STRUCTURE, PERFORMANCE, AND PLAYERS ............................................................. 83 Trends in fertilizer Use ........................................................................................................................ 83 Structure and Players .......................................................................................................................... 85 Fertilizer Product Use by Country ........................................................................................................ 89 Fertilizer Pricing .................................................................................................................................. 90 Phosphate Rock Price .......................................................................................................................... 93
19.5 AGRONOMIC ISSUES .......................................................................................................................... 96 Agronomic Potential of Tilemsi Phosphate Rock (TPR) ....................................................................... 96 Internal factors: .................................................................................................................................. 97 Soil Properties: .................................................................................................................................... 98 Climate Factors: .................................................................................................................................. 99 Effects of Plant: ................................................................................................................................... 99 Management Practices: ...................................................................................................................... 99 What happens to the P from PR after it has been released to the soil? ........................................... 100
19.6 DEMAND PROJECTIONS .................................................................................................................... 105 Effective Demand .............................................................................................................................. 106 Potential Demand under Abuja Declaration ..................................................................................... 107 Nutrient Replenishment Requirements ............................................................................................. 107 Agronomic Requirements ................................................................................................................. 108
19.7 PRODUCT DEMAND ......................................................................................................................... 108 19.8 INTERNATIONAL EXPERIENCES ........................................................................................................... 108 19.9 OPPORTUNITIES AND CHALLENGES ..................................................................................................... 109
Opportunities .................................................................................................................................... 109 Challenges: ........................................................................................................................................ 111
19.10 THE WAY FORWARD ....................................................................................................................... 112 GQ Market Share in P2O5 Demand .................................................................................................... 112 Marketing Domains .......................................................................................................................... 112 Marketing Strategy ........................................................................................................................... 113 Phasing of Marketing and Production Plans ..................................................................................... 113
20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ........................................... 115
21 CAPITAL AND OPERATING COSTS ..................................................................................................................... 116
21.1 MINE ........................................................................................................................................... 116 Operating Costs ................................................................................................................................ 116
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Capital Expenditure ........................................................................................................................... 120 21.2 BENEFICIATION PLANT ..................................................................................................................... 122
Basis of Cost Estimate ....................................................................................................................... 122 Design Basis ...................................................................................................................................... 122 Project Basis ...................................................................................................................................... 122 Methodology ..................................................................................................................................... 124 Estimate Classification ...................................................................................................................... 124 Assumptions ...................................................................................................................................... 124 Currency and Exchange Rates ........................................................................................................... 124 Base Date and Reporting Currency ................................................................................................... 124 Exceptions ......................................................................................................................................... 125 Inclusions .......................................................................................................................................... 125 Exclusions .......................................................................................................................................... 125 Risks and Opportunities .................................................................................................................... 126 Management Reserve ....................................................................................................................... 126 Estimate Quality Assurance .............................................................................................................. 126 Contingency ...................................................................................................................................... 126
21.2.1 CAPITAL COST DEVELOPMENT ........................................................................................................... 126 Direct Cost Development .................................................................................................................. 127 Sustaining Capital ............................................................................................................................. 128 Indirect Cost Development ................................................................................................................ 129
21.2.2 OPERATING COST DEVELOPMENT ...................................................................................................... 129 Reagent Consumption ....................................................................................................................... 129 Operating Personnel ......................................................................................................................... 130 General Administration ..................................................................................................................... 130 Site Road Maintenance ..................................................................................................................... 131 Electricity .......................................................................................................................................... 131 Utilities .............................................................................................................................................. 132 Operating Spares, Lubricants, and Wear Items ................................................................................ 132
21.2.3 COSTING REPORT ........................................................................................................................... 132 Capital Cost Estimate ........................................................................................................................ 132 Operating Cost Estimate ................................................................................................................... 139
21.3 GRANULATION PLANT ...................................................................................................................... 142 OPEX ................................................................................................................................................. 142
21.4 CAPEX ........................................................................................................................................ 143 21.5 NPK PLANTS ................................................................................................................................. 146
OPEX ................................................................................................................................................. 146 CAPEX ................................................................................................................................................ 147
21.6 LOGISTICS OPEX ............................................................................................................................ 150
22 ECONOMIC ANALYSIS ....................................................................................................................................... 151
22.1 GENERAL ...................................................................................................................................... 151 22.2 USE OF FUNDS ............................................................................................................................... 152
Capital Costs ..................................................................................................................................... 153 Financing Terms, Conditions, & Costs ............................................................................................... 153
22.3 SOURCE OF FUNDS .......................................................................................................................... 154 Equity ................................................................................................................................................ 154 Debt During Construction Phase ....................................................................................................... 154
22.4 ECONOMIC MODEL ASSUMPTIONS..................................................................................................... 155 Key Dates .......................................................................................................................................... 155 Production ......................................................................................................................................... 155 Revenues ........................................................................................................................................... 156 Operating Costs ................................................................................................................................ 157 General and Administration .............................................................................................................. 157 Income Tax, Royalties, and other Taxes ............................................................................................ 158 Other Assumptions............................................................................................................................ 158
22.5 PROJECT PRO-FORMA PROFIT & LOSS ................................................................................................ 158
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22.6 CASH FLOW ................................................................................................................................... 161 22.7 ECONOMIC RESULTS ........................................................................................................................ 163 22.8 SENSITIVITY ................................................................................................................................... 163
Equity Sensitivity Analysis ................................................................................................................. 164 Project Sensitivity Analysis ................................................................................................................ 167
22.9 ECONOMIC CONCLUSIONS ................................................................................................................ 170
23 ADJACENT PROPERTIES .................................................................................................................................... 171
24 OTHER RELEVANT DATA AND INFORMATION ................................................................................................... 172
25 INTERPRETATION AND CONCLUSIONS .............................................................................................................. 173
25.1 RESOURCE ESTIMATE ....................................................................................................................... 173 25.2 MARKET ....................................................................................................................................... 173
Socio-economic Context and Resource Endowment ......................................................................... 173 West Africa Phosphate Fertilizer Market: Structure and Potential ................................................... 174
25.3 PROCESS PLANTS ............................................................................................................................ 175
26 RECOMMENDATIONS ....................................................................................................................................... 176
26.1 RESOURCE ESTIMATE ....................................................................................................................... 176 26.2 MARKET ....................................................................................................................................... 176
Strategy for Market Penetration and Development ......................................................................... 176 Phasing of Investment and Marketing Plans .................................................................................... 177
26.3 PROCESS PLANTS ............................................................................................................................ 177 26.4 ENVIRONMENTAL ........................................................................................................................... 177
27 REFERENCES ..................................................................................................................................................... 178
27.1 GEOLOGY ...................................................................................................................................... 178 27.2 MARKET ....................................................................................................................................... 178 27.3 MINERAL PROCESSING AND METALLURGICAL TESTING ........................................................................... 180
APPENDIX A - DATE AND SIGNATURES ...................................................................................................................... 183
APPENDIX B - BENEFICIATION FLOWSHEET ............................................................................................................... 190
APPENDIX C - GRANULATION FLOWSHEET ................................................................................................................ 191
APPENDIX D - NPK FLOWSHEET ................................................................................................................................ 192
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LIST OF ABBREVIATIONS
Abbreviation Description
AAS atomic absorption spectroscopy
ADT articulated dump truck
Al2O3 aluminium (iii) oxide
AN ammonium nitrate
AS ammonium sulphate
bcm billion cubic metres
cc cotton complex
Cd cadmium
CaO calcium oxide
CAPEX capital cost estimate
CFIh CFI holding (France)
CIF Cost Insurance and Freight
CIM Canadian Institute of Mining, Metallurgy, and Petroleum
DAP di-ammonium phosphate
EPCM Engineering, Procurement, and Construction Management
ERT emergency response team
FAO Food and Agriculture Organization of the United Nations
Fe2O3 iron (iii) oxide
FOB Free on Board
g gramme
GBM GBM Mineral Engineering Consultancy Ltd.
GQ Great Quest
GQM Great Quest Metals Ltd.
GTPR granulated Tilemsi phosphate rock
HDPE high-density polyethylene
HGP high-grade phosphate (P2O5 > 35%)
HV high voltage
ICP inductively coupled plasma
IFDC International Fertilizer Development Center
IRR internal rate of return
ISE ion selective electrode
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Abbreviation Description
KCl potassium chloride (sylvite)
km2 square kilometres
kPa kilo Pascal
kt/a kilo tonnes per annum
kV kilovolts
kW kilowatt
kWh/t kilowatt hour per tonne
LDV light duty vehicle
LOI loss on ignition
LOM life of mine
LV low voltage
m metre
MAP mono-ammonium phosphate
MgO magnesium oxide
MGP medium-grade phosphate (P2O5 > 27%)
mm millimetre
MM Minjingu Mazao
MMFL Minjingu Mines and Fertilizer Ltd.
MOP muriate of potash
MPR Minjingu phosphate rock
Mt/a million tonnes per annum
MVA mega-Volt ampere
µm micron
NAC neutral ammonium acetate
NFPA National Fire Protection Authority
NPV net present value
OEM original equipment manufacturer
OPEX operating cost estimate
P phosphorus
pa per annum
PEA preliminary economic assessment
P2O5 phosphorus oxide
ppm parts per million
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Abbreviation Description
PR phosphate rock
PSD particle size distribution
QA/QC Quality Assurance / Quality Control
QP qualified person
RAB rotary air blast
RM raw material
RO reverse osmosis
ROI return on investment
ROM run-of-mine
SEM scanning electron microscope
SiO2 silicon dioxide
SSP single superphosphate
TCOE total cost of employment
t/h tonnes per hour
TPP Tilemsi Phosphate Project
TPR Tilemsi phosphate rock
TSF tailings storage facility
TSP triple superphosphate
UEMOA Union économique et monétaire ouest-africaine
USD United States dollar
USD/t United States dollars per tonne
VAC volts alternating current
WHIMS wet high-intensity magnetic separator
wt weight
w/w weight by weight
XRD X-ray diffraction
XRF X-ray fluorescence
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LIST OF FIGURES
Figure 4-1: Map Showing Different Permits of the Tilemsi Phosphate Project on Topographic Map................................. 16 Figure 6-1: Geological map of the TPP area (from Van Kauwenbergh et.al 1991) ............................................................. 18 Figure 6-2: Geological cross section in the TPP area (from Van Kauwenbergh et.al 1991) ................................................ 18 Figure 10-1: Overview of the TPP area, with drillholes as dots, resource polygons in magenta and blue, and the outline of license areas for Tilemsi, Aderfoul and Tarkint Est. ........................................................................................................ 23 Figure 16-1: Annual ROM Tonnage .................................................................................................................................... 48 Figure 16-2: Annual Phosphate Grade ................................................................................................................................ 48 Figure 16-3: Annual Strip Ratio ........................................................................................................................................... 49 Figure 16-4: Annual Waste Tonnage .................................................................................................................................. 49 Figure 17-1: Block Flow Diagram ........................................................................................................................................ 51 Figure 17-2: Site Plan .......................................................................................................................................................... 52 Figure 17-3: Personnel Schedule Beneficiation and Granulation ........................................................................................ 55 Figure 18-1: TPP Logistics ................................................................................................................................................... 73 Figure 18-2: Proposed Haulage Routes............................................................................................................................... 74 Figure 19-1: Contribution of area and yield growth to cereal production in West Africa, 1980–2009 ............................... 80 Figure 19-2: Contribution of area and yield growth to cassava production in West Africa, 1980–2009 ............................ 80 Figure 19-3: Crop yields by major region (maize, rice, and cassava) .................................................................................. 81 Figure 19-4: Total fertilizer (NPK) consumption trends in Sub-Saharan Africa, 1990-2008 ................................................ 83 Figure 19-5: Performance of supply chain in Ghana ........................................................................................................... 85 Figure 19-6: Performance of supply chain in Mali .............................................................................................................. 86 Figure 19-7: Supply chain cost components by fertilizer products in select countries in 2009 (USD/metric tonne) .......... 91 Figure 19-8: Supply chain cost components—domestic marketing costs (averaged across all four countries in the sample), (USD/metric tonne) in 2009 ................................................................................................................................. 91 Figure 19-9: Fertilizer Prices (FOB, bulk) Monthly averages January 2000 – May 2012 ..................................................... 93 Figure 19-10: PR prices, 1990-2011 .................................................................................................................................... 94 Figure 19-11: UREA Prices and Price Projections (1960 – 2020) ......................................................................................... 95 Figure 19-12: Schematic diagram of the behavior of PR in the soil .................................................................................... 97 Figure 19-13: Effect of granulation on solubility of PR ..................................................................................................... 102 Figure 21-1: Annual Mining Operating Cost ..................................................................................................................... 118 Figure 21-2: Capital Expenditure ...................................................................................................................................... 120 Figure 22-1: Factors with Greatest Influence on IRR ........................................................................................................ 163 Figure 22-2: Effect of Oil Price on IRR ............................................................................................................................... 164 Figure 22-3: Equity Cash Flow ........................................................................................................................................... 169
LIST OF MAPS
Map 2-1: Map showing the Tilemsi mine site, the Bourem beneficiation site, and four propsed NPK Blending Facilities . 10 Map 4-1: Location of Tilemsi Phosphate Project, West Afica ............................................................................................. 15
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LIST OF TABLES
Table 10-1: Number of drillholes and metres drilled .......................................................................................................... 22 Table 12-1:Major oxides in drillholes/pit phosphates samples (% per wt) ......................................................................... 25 Table 12-2: Trace elements in Tin Hina phosphates (ppm) ................................................................................................. 25 Table 12-3: Comparison of Geochemistry of phosphate seams in Alfatchafa, Tin Hina and Tarkint Est (% per wt)........... 25 Table 13-1: Summary of Wet and Dry Screening on Blended Composite ........................................................................... 28 Table 13-2: Summary of Magnetic Separation Results ....................................................................................................... 29 Table 13-3: Quantitative Mineralogical Analysis of Composite Sample ............................................................................. 30 Table 13-4: Quantitative Mineralogical Analysis of Composite Sample ............................................................................. 31 Table 13-5: Summary of Assay by Size of Low Grade Feed Head Samples ......................................................................... 32 Table 13-6: Summary of Assay by Size of High Grade Feed Head Samples ........................................................................ 33 Table 13-7: Results of Fines Removal by Screening ............................................................................................................ 35 Table 13-8: Masses of Granules Produced after Curing ...................................................................................................... 36 Table 13-9: Summary of Abrasion Strength on -4mm+1mm Granules Test Results ........................................................... 37 Table 13-10: Summary of Solubility Results on Granules and Un-granulated Samples ...................................................... 38 Table 14-1: Inferred Resources in Tarkint Est ..................................................................................................................... 39 Table 14-2: Inferred Resources in Tin Hina ......................................................................................................................... 39 Table 14-3: Inferred Resources, Alfatchafa ......................................................................................................................... 39 Table 16-1: Tilemsi Phosphate Project Tilemsi “Pitable Tonnage” Based on Selected Mining Areas ................................. 42 Table 16-2: Tilemsi Phosphate Project Mining Shifts and Annual Production Hours .......................................................... 44 Table 16-3: Tilemsi Phosphate Project Excavator Productivity ........................................................................................... 45 Table 16-4: Tilemsi Phosphate Project Excavator Productivity ........................................................................................... 46 Table 16-5: Tilemsi Phosphate Project Equipment Replacement Schedule ........................................................................ 47 Table 17-1: Phosphate rock specification ........................................................................................................................... 56 Table 17-2: NPK Grades ...................................................................................................................................................... 62 Table 17-3: NPK 15-15-15 ................................................................................................................................................... 63 Table 18-1: Tilemsi Phosphate Project Software and Hardware Costs ............................................................................... 64 Table 18-2: Plant Load Requirements Summary ................................................................................................................. 67 Table 18-3: Haulage Manning (Road Train Type A) ............................................................................................................ 75 Table 19-1: Population Projections (all variants) for West African Countries (2010-2050) ................................................ 77 Table 19-2: West Africa _Total agricultural area; area harvested; and area under permanent crops ............................... 79 Table 19-3: Average annual growth in cereal production in West Africa, 1980–2009 (%) ................................................. 79 Table 19-4: Main Crops Grown in West Africa, 2010 .......................................................................................................... 82 Table 19-5: West Africa Fertilizer Products Used on Various Crops .................................................................................... 82 Table 19-6: West Africa: Fertilizer Consumption, 2010 (nutrient tonnes) .......................................................................... 83 Table 19-7: West Africa: Main Fertilizer Products .............................................................................................................. 84 Table 19-8: Cotton Complex Formula in West Africa .......................................................................................................... 84 Table 19-9: Key actors and constraints in the fertilizer markets in West Africa ................................................................. 87 Table 19-10: Installed Fertilizer Production Units in Nigeria .............................................................................................. 88 Table 19-11: Major suppliers of fertilizer during 2008 and their market in Nigeria ........................................................... 89 Table 19-12: Phosphate Fertilizer Imports in West Africa, 2010 ........................................................................................ 90 Table 19-13: Monthly National Fertilizer Prices by Western African Countries (USD/tonne) ............................................. 92 Table 19-14: Fertilizer Prices (Retail) in Mali, JUNE 2012 (FCFA per 50-kg bag)................................................................. 93 Table 19-15: The Molar Ratio of Some West African PRs ................................................................................................... 98 Table 19-16: NAC Solubility................................................................................................................................................. 98 Table 19-17: Chemical Properties of Soils in Food Producing zones of Mali ..................................................................... 100 Table 19-18: Response of TPR in Different Locations and on Different Crops (yield kg/ha) ............................................. 103 Table 19-19: Compacted fertilizers made from TPR, KCl and Urea (1988) ....................................................................... 104 Table 19-20: Evaluation of annual effects of compacted fertilizers made from phosphate rock (1988) .......................... 104 Table 19-21: Effects of compaction .................................................................................................................................. 104 Table 19-22: Evaluation of annual effects compacted fertilizer (1989) ............................................................................ 105 Table 19-23: Agronomic effects of compacted materials ................................................................................................. 105 Table 19-24: West Africa P2O5 Demand Projections to 2020 and 2030 ............................................................................ 106 Table 19-25: Project Demand Projections to 2020 and 2030 ........................................................................................... 107 Table 19-26: Tanzania: Performance of Minjingu Mazao (MM) and DAP on Maize Grain Yield ...................................... 109 Table 19-27: GQ Market ................................................................................................................................................... 112
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Table 21-1: Tilemsi Phosphate Project - Mining Skilled Labour Costs at Peak Production ............................................... 116 Table 21-2: Tilemsi Phosphate Project - Mining Salaried Labour Costs at Steady State ................................................... 117 Table 21-3: Annual Operating Cost USD per ROM Tonne ................................................................................................. 119 Table 21-4: Tilemsi Phosphate Project - Tilemsi Project Forecast Capital Expenditure for Mining Operations (USD ‘000) .......................................................................................................................................................................................... 121 Table 21-5: Process Plant Operating Inputs ...................................................................................................................... 122 Table 21-6: Supporting Documents .................................................................................................................................. 122 Table 21-7: Project Area Breakdown ................................................................................................................................ 123 Table 21-8: Currency Exchange Rate ................................................................................................................................ 124 Table 21-9: Cost Type Definitions ..................................................................................................................................... 127 Table 21-10: Capital Cost Breakdown Structure ............................................................................................................... 127 Table 21-11: CAPEX Cost Centre Factors........................................................................................................................... 128 Table 21-12: Indirect Cost Centre Definitions ................................................................................................................... 129 Table 21-13: Reagent Consumption Rate ......................................................................................................................... 130 Table 21-14: Reagent Cost ................................................................................................................................................ 130 Table 21-15: Labour Quantity ........................................................................................................................................... 130 Table 21-16: Labour Rates ................................................................................................................................................ 130 Table 21-17: General Administration Costs ...................................................................................................................... 131 Table 21-18: Road Maintenance Costs ............................................................................................................................. 131 Table 21-19: Road Maintenance Quantity ........................................................................................................................ 131 Table 21-20: Power Consumption ..................................................................................................................................... 131 Table 21-21: Power Costs ................................................................................................................................................. 131 Table 21-22: Utility Consumption ..................................................................................................................................... 132 Table 21-23: Utility Rates ................................................................................................................................................. 132 Table 21-24: Operating Spares, Lubricants and Wear Rates ............................................................................................ 132 Table 21-25: Capital Cost Estimate Breakdown ................................................................................................................ 132 Table 21-26: CAPEX Report ............................................................................................................................................... 134 Table 21-27: Phased Capital Costs (USD) .......................................................................................................................... 136 Table 21-28: Operating Cost Breakdown (USD/a) ............................................................................................................ 140 Table 21-29: Operating Cost Breakdown (USD/t) ............................................................................................................. 141 Table 21-30: Granulation OPEX ........................................................................................................................................ 142 Table 21-31: Granulation Plant and Storage Capex ......................................................................................................... 143 Table 21-32: Equipment 1 ................................................................................................................................................. 144 Table 21-33: Equipment 2 ................................................................................................................................................. 145 Table 21-34: Equipment 3 ................................................................................................................................................. 146 Table 21-35: Bulk Blending Opex ...................................................................................................................................... 147 Table 21-36: NPK Blending Plant and Storage Capex ....................................................................................................... 148 Table 21-37: Equipment 1 ................................................................................................................................................. 149 Table 21-38: Typical Logistics Costs per Ton ..................................................................................................................... 150 Table 22-1: TPP Capital Expenditure ................................................................................................................................. 151 Table 22-2: Economic Results ........................................................................................................................................... 152 Table 22-3: Investment Requirements for TPP ................................................................................................................. 152 Table 22-4: Capital Investment Breakdown (Thousand USD) ........................................................................................... 153 Table 22-5: Financing Terms & Conditions ....................................................................................................................... 153 Table 22-6: Production Volume ........................................................................................................................................ 156 Table 22-7: Operating Costs ............................................................................................................................................. 157 Table 22-8: Advertising and Promotion ............................................................................................................................ 158 Table 22-9: Profit and Loss Statement .............................................................................................................................. 159 Table 22-10: Cash Flow ..................................................................................................................................................... 162 Table 22-11: Economic Results ......................................................................................................................................... 163 Table 22-12: Equity Sensitivity .......................................................................................................................................... 165 Table 22-13: Project Sensitivity ......................................................................................................................................... 167 Table 22-14: NPV versus Revenues ................................................................................................................................... 168 Table 22-15: NPV versus Discount Rate ............................................................................................................................ 169
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1 SUMMARY
1.1 Purpose
The purpose of this Preliminary Economic Assessment (“PEA”) report dated December 20, 2012, is to validate the Tilemsi Phosphate Project (“Project” or “TPP”), Mali, and to demonstrate its potential economic viability. The PEA is being filed by Great Quest Metals Ltd (“GQ”), a TSX Venture–listed company, in compliance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“N.I. 43-101”). The PEA has been completed in support of a Press Release dated December 18, 2012.
The PEA study considers the phosphate mine drilling program (2011), as well as the construction of phosphate beneficiation and granulation plants and their associated infrastructure and utilities. Test work was completed to prove two saleable medium- and high-grade phosphate products. In addition, the study looked at the construction of four NPK blending plants in West Africa. As part of the study on mining, beneficiation, granulation, and NPK blending, the investment costs (CAPEX) and operating costs (OPEX) were prepared. This Technical Report incorporates all applicable data, interpretations, and conclusions that were in hand at the time of preparing this report.
1.2 The Tilemsi Phosphate Project
The proposed TPP is a vertically integrated phosphate mining, beneficiation, granulation, and NPK fertilizer blending project.
Tilemsi Phosphate Project Mine Location in Northeastern Mali
The mine is located some 120 km north of Gao in northeastern Mali. It is planned to mine 200 kt/a phosphates Run-of-Mine (ROM) from Year 1, increasing to 500 kt/a in Year 4 (Phase 1) and finally to 1 Mt/a from Year 8 onwards (Phase 2). Based on the Inferred Resources, a life-of-mine (LOM) of at least 20 years is assumed and projected in the proposed mining program prepared for this study. The deposit covers three concessions, namely Tilemsi, Tarkint Est, and Aderfoul over a total area of 1,206 km2. GQ, through its
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subsidiaries, has an option to earn a 94% interest in the Tilemsi license (417 km2), an option to earn 97% of the Tarkint Est license (589 km2), and wholly owns the Aderfoul license (200 km2).
As part of the TPP, GQ plans to construct phosphate beneficiation and granulation plants, along with their associated infrastructure and utilities, near the city of Bourem on the Niger River in Mali, 95 km northwest of Gao. Two saleable products—Hyperphosphate High Grade and Hyperphosphate Medium Grade—are considered.
Further processing will be achieved at four planned bulk blending plants for manufacturing NPK fertilizers of various grades. The proposed locations of these plants are Sikasso city, Mali; Cotonou Port, Benin; Dosso city, Niger; and Tamale city, Ghana.
GQ’s head office is located in Vancouver, BC. The operations in Mali are coordinated from GQ’s wholly owned subsidiary, Great Quest (Barbados) Ltd. The latter owns 100% of Great Quest Mali SA, which carries out the exploration work in Mali. Great Quest Mali SA, owns 94% of Engrais Phosphates du Mali (“EPM”) SA. The concessions Tarkint Est and Aderfoul are held in Great Quest Mali SA, whilst the Tilemsi concession is held in EPM.
1.3 Geology and Mineralization
The geology, exploration, and mineral resource on which this PEA has been based is a 50 Mt Inferred Resource at an average P2O5 grade of 24.3% and cutoff grade of 10%, which have been reported in full in the NI 43-101 Technical Reports on the Tilemsi Phosphate Project authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The resources are currently defined as Inferred due mainly to the large spacing of drillholes (about 500 m separation).
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
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that are not Mineral Reserves do not demonstrate economic viability. As such, the information on which the PEA work is based, and the accuracy of the PEA work itself, does not support the declaration of Mineral Reserves. Therefore, no Mineral Reserves have been declared.
1.4 Mining
The mining study investigated extracting high-grade material, greater than 27% P205, for feed to a beneficiation plant to upgrade the ROM phosphate material. An open pit resource of 15.8 Mt is conceptually planned for the TPP based on mining the Tilemsi and Tarkint Est mining areas only. Waste stripping will coincide with phosphate production with a strip ratio of 6.8:1. The open-pit design will be mined through conventional truck and shovel mining methods applying a rollover technique, with phosphate removal being followed by backfilling of overburden material and topsoil. No drilling or blasting activities are envisaged.
Tilemsi Phosphate Project
Open Pit Mineral Inventory”
Area
Resource Tonnage
Grade % P2O5
Mining Losses
% Dilution
% “Pitable
Tonnage” Grade % P2O5
SR
Tilemsi 8,367,000 27.3 2.5 2.5 8,362,000 26.6 6.4:1
Tarkint Est 7,444,000 29.1 2.5 2.5 7,440,000 28.4 7.24:1
Total 15,811,000 28.1 2.5 2.5 15,803,000 27.5 6.8:1
Initial mining capital expenditure for the TPP is estimated at USD23.4 million, which includes mine equipment, fuel storage, generators, and a small village for mine workers. A further USD14.4 million is required between Year 2 and Year 8 for further capital purchase to bring mining at Tilemsi to a steady state rate of 1 Mt/a. In Year 13, USD15.9 million is required for the replacement of mining equipment and will be used to mine the Tarkint Est area from Year 13 to Year 20.
The operating cost for TPP is between USD4.22 and USD12.72 per tonne phosphate material mined for mining operations producing between 0.2 Mt/a and 1 Mt/a. Coffey Mining associates a low to moderate risk to the mining activities pertaining to TPP. Many of the risks associated with the TPP should be mitigated as the TPP advances to the next stage of advancement, i.e. Prefeasibility or Feasibility Study.
1.5 Beneficiation
A beneficiation study was prepared, based on laboratory mineral processing and metallurgy on the Tilemsi rock, for the construction of a phosphate beneficiation plant and its associated infrastructure and utilities along the Niger River, near Bourem in northeastern Mali. The plant will initially process 200 kt/a in the first year and ramp up to 500 kt/a ROM from Years 4–7 and then increase to 1 Mt/a for the remainder of the LOM. Two grades of phosphate rock (PR) concentrate will be produced—Medium Grade (MG) with >27% P2O5 and High Grade (HG) with >35% P2O5.
The beneficiation capital expenditure, including contingency, has been estimated at USD72.2 million to an accuracy of ±50% (Class 4 estimate). Sustaining capital is required over the 20-year project life and has been estimated at USD37.4 million, of which USD12.2 million is required in Year 7 for the expansion to increase throughput to 1 Mt/a.
Beneficiation operating costs have been estimated to level at USD44.15/t in Phase 1 (Years 1–7) and USD31.27/t in Phase 2 (Year 8 onwards). The operating costs are largely influenced by the price at which diesel can be sourced and a value of USD1.10 per litre has been used in this PEA.
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1.6 Granulation
A study was done on the granulation of the Hyperphosphate Medium Grade (>27% P2O5) and Hyperphosphate High Grade (>35% P2O5) products. The granulation project at Bourem consists of 300 kt/a of phosphate granulation as a first stage, with an additional two lines of 300 kt/a each to be installed in Year 3 and Year 7, respectively, to meet the increased production requirements.
The operating cost for granulating one tonne of phosphate rock is estimated at approximately USD37.70/t and the investment for the first granulation plant and related storage facilities is approximately USD37.8 million. The power and drying costs required for granulating the phosphate rock contribute approximately 70% of the total operating costs.
Each additional 300 kt/a capacity plant will cost approximately USD19.9 million.
1.7 NPK Blending
A study was done on constructing bulk blending plants to manufacture NPK fertilizers of various grades, using raw materials like granulated phosphate rock, urea, potassium chloride (KCl), and micronutrients.
Four plants are foreseen, with 125 kt/a of blended NPK nominal capacity (design capacity of up to 300 kt/a) for each. In Year 3, two plants will be constructed in Sikasso (south Mali) and in Cotonou Port on the sea coast of Benin. In Year 7, two additional NPK plants will be constructed—one in Tamale in the north of Ghana and the other in Dosso City, south of Niamey in Niger.
The operating cost for bulk blending one tonne of NPK (excluding raw materials) is estimated at approximately USD1.92/t and the investment for the each NPK bulk blending plant and related storage facilities is approximately USD5.3 million.
1.8 Project Infrastructure
A mining camp near the mine has been included for mine operations personnel. In addition, all utilities for the camp and mine (power, water, and associated infrastructure) have been included.
The infrastructure required to support the beneficiation and granulation plants has been specified to suit the 20-year project life. Infrastructure includes the required offices such as the mill office and administration building, warehouse, workshops, laboratory, emergency services, and security. Access roads and perimeter fencing have also been included. Due to the remote nature of TPP, an accommodation village has been allowed for on the outskirts of Bourem. The village includes a kitchen, dining hall, and sporting and recreational facilities.
Utilities including power, water, compressed air, and fuel will be provided to service the beneficiation and granulation plants and their associated infrastructure. Diesel generating units will be installed to provide power, and diesel storage tanks will supply diesel to the generators, rotary driers, and heavy vehicles. Light vehicles will be refueled from a petrol storage tank. All water for the beneficiation and granulation plants will be supplied from the Niger River, with a reverse osmosis (RO) plant installed to treat the raw water from the river for use as potable water. A compressed air station will provide plant air and instrument air as required.
As part of community development, the construction of a school and clinic in Bourem has been provided for, along with supply of the necessary power and potable water for these buildings with an allowance for public services within the village.
A tailings storage facility (TSF) will be constructed in a phased approach to minimize the upfront capital investment. It has been proposed that six cells are constructed over the 20-year life of the plant to accommodate the 1.5 million cubic meters of tailings from the beneficiation plant.
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1.9 Marketing
United Nations population medium variant projection indicates that West Africa’s population will increase at an annual rate of 2.5% from 304 million in 2010 to 442 million in 2025 and at 2% per annum thereafter to 744 million in 2050. This growth requires that food and fibre production be increased at an annual rate of 4-6%.
Such population growth, along with increased per capita income and global and local commitments to reduce poverty and hunger, is driving governments and other stakeholders to seek key strategies that will ensure food security while supporting sustainable agriculture. Members of the Economic Community of West African States (ECOWAS) have committed under the Abuja Declaration to increase fertilizer use to 50 kg/ha from current levels of less than 2 kg/ha.
P205 demand is projected to increase from 184,000 t in 2010 to 287,000 t in 2020 and 430,000 t in 2030. However, based on Abuja Declaration targets, potential but realizable requirements of phosphate fertilizers will be approximately 537,000 t of P2O5 in 2020 and over one million tonnes of P2O5 in 2030. Recognizing that increased fertilizer use is essential for preventing nutrient depletion and soil degradation, many West African governments already promote fertilizer use, including through the use of subsidies.
GG should be able to capture 30% (in 2020) and 40% (in 2030) of the market share. Assuming that 20% of the market will be targeted with granulated Tilemsi Hyperphosphate product and 80% with NPKs (15-15-15 is taken as a base) based on this granulated product and imported urea and potash, then the size of the market for GQ will be as follows:
Projected GQ Market Size for Mali PEA
Realizable Market (tonne P2O5)
GQ Total share
(tonne P2O5)
GTPR - avg. 30% P2O5
(20% share)
NPKs 15% P2O5
(80% share)
2020 537,000 161,100 107,400 859,200
2030 1,040,000 416,000 277,300 2,218,700
GQ’s marketing strategy will be based on the production of a local phosphate product that is suitable as a direct application fertilizer or as a component of blended NPK fertilizers at a price that can displace more costly imported fertilizers. Additionally, a local source of phosphate reduces foreign exchange and offers timely delivery to farmers.
An appropriate strategy will be based on agro-dealer-based extension and promotional efforts and will include agronomic trials, seeding programs, partnerships with stakeholders (i.e regulation), and investments in downstream distribution opportunities.
1.10 Logistics
Logistics is one of the most critical issues for TPP, due to the large distances from the mine and beneficiation/granulation plants to the various West African markets and sea ports.
Haulage costs vary between approximately USD70/t for distances of 800 km to approximately USD180/t for distances up to 2,000 km. These costs include added costs of approximately 40% for customs, taxes, insurance etc. The average haulage costs calculated for granulated product to market are approximately USD82/t and for delivery to NPK blending plants approximately USD92/t. Taking into account the tonnage and distances to the market and to the NPK blending plants, the calculated haulage cost corresponds to an average price per tonne per kilometre of USD0.083. The Malian Ministry of Equipment and Transport reported in its 2010 Transport Statistical Yearbook that the average price per ton per kilometre is between 32 and 36F CFA/t/km, which corresponds to 0.064 and 0.072 USD/t/km.
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1.11 Fertilizer Prices
As most countries depend on imported fertilizers, fluctuations in global fertilizer prices are reflected in domestic prices, which are also impacted by fluctuations in exchange rates. In addition, transportation costs, port handling charges, and domestic marketing costs contribute significantly to retail prices.
The prices (KCl & Urea) shown in the table below are the current world prices adjusted for West Africa and current sales prices in West Africa. The model uses current prices, while the sensitivity to potential lower world prices is reflected in the economic sensitivity analysis. The price for granulated rock is adjusted for the grade of P2O5.
Fertilizer Prices for Mali PEA
DESCRIPTION PRICE (USD FOB)
ADD-ON COSTS (USD)
ESTIMATED TOTAL (USD)
KCl 465 210 675
Urea 367 147 514
MG Granulated Hyperphosphate (27% P2O5) 262
HG Granulated Hyperphosphate (35% P2O5) 350
NPK Bulk Blend 661
1.12 Economics
An economic analysis on the conceptual engineering design and costing was performed by generating a basic discounted cash flow. This cash flow used costs in current terms (fourth quarter 2012); no escalations to costs over time, taxes, or royalties were applied. This approach was considered appropriate for the conceptual levels of work undertaken. The purpose of undertaking this evaluation was to determine the economic potential of the TPP and to motivate further work if appropriate.
The total Capital Expenditure (CAPEX) required for the first two years of Project construction is approximately USD155.7 million (USD143 million in construction costs and USD13 million for feasibility studies and initial project development). It is assumed that a mix of debt and equity on a 60/40 debt/equity ratio shall be used to fund the total financing requirement for the construction phase and that project operating cash will fund the additional investments.
CAPEX during construction (initial CAPEX) and operation (development and maintenance CAPEX) are shown in the table below.
CAPEX for TPP
(IN $000) MINING BENEFICIATION GRANULATION NPK
FACILITIES OTHER TOTAL
Initial CAPEX 23,455 72,731 37,832 - 21,683 155,701
Development CAPEX 5,648 16,344 39,869 21,090 - 82,951
Maintenance CAPEX 27,902 21,038 - - 2,900 51,840
The results of the basic economic analysis undertaken are shown below:
TPP PROJECT IRR: 33.1%
NPV @10%: USD635 M PAYBACK @10%: 4.23 years
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Debt and equity financing costs including political risk insurance premium are estimated at USD28.3 M.
EQUITY 40 % Equity Financing - Total required equity of USD71.3 M (See Table 22-3 below)
EQUITY IRR: 42.9% NPV @10%: USD635 M PAYBACK @10%: 3.93 years
The cash flow pro-forma statement starts with two years of construction followed by 20 years of operation. During the first year of construction (2014), 40% of the equity and debt is spent and the balance of 60% is spent during the second construction year. The TPP is cash positive from the first year of operation and accumulates over the project life more than USD2.8 billion.
In the case of using a 60% financing package, the TPP is consecutively cash positive from the fourth year of operation and accumulates over the project life more than USD2.6 billion.
Additionally, the statement clearly shows that the TPP is profitable from the third operating year, with the gross margin after the first three years being more than 29% and remaining at approximately 35% gross margin for the following years.
1.13 Major Conclusions and Recommendations
Based on the work undertaken, the following strongly support the potential viability for the TPP:
(i) The economic results for TPP are excellent, especially for a large mining infrastructure project, indicating an economically significant resource.
(ii) The sensitivity analysis also shows good results, even when making extreme assumptions.
(iii) The results of the PEA strongly support the potential of a viable mine at Tilemsi, commencing production of 200 kt/a phosphates building to 500 kt/a by Year 4 and to 1 Mt/a by Year 8 with a 20-year LOM.
(iv) Landlocked countries like Mali and other West African countries pay large sums for supply chain components, such as in-transit transportation from port to national markets, port handling charges, production, and financing. Facilities like those proposed for TPP, near these markets, offer added advantages in reducing prices and promoting timely delivery of quality fertilizers to farmers.
(v) The current level of fertilizer use in West Africa is very low. With the population set to double over the next four decades, a several-fold increase in fertilizer use will be needed to secure future food requirements. Under the Abuja Declaration target, phosphate fertilizer use will have to be increased from 184,000 t of P2O5 in 2010 to 1,792,000 t in 2020 and 2,079,000 t in 2030 according to demand projections. The realizable potential will still be 537,000 t in 2020 and over one million tonnes in 2030.
(vi) An appropriate strategy for marketing the TPP future production will be required. An appropriate strategy will be based on agro-dealer-based extension and promotional efforts and will include agronomic trials, seeding programs, partnerships with stakeholders (i.e. regulation), and investments in downstream distribution opportunities.
(vii) Further exploration drilling to both indicated and measured levels should be done with aircore drills.
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(viii) Power costs (the PEA assumes the use of diesel generators) are a major factor in the operating costs; alternative, cheaper sources should be investigated.
(ix) Logistics is one of the most critical issues for TPP due to the large distances from the mine and beneficiation/granulation plants to the various West African markets and sea ports.
(x) A detailed feasibility study is required to bring TPP to bankable level.
(xi) A social and environmental impact study is required.
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2 INTRODUCTION
Gaya Resources Development Ltd (“Gaya”), a team of experts specializing in the phosphate, mining, and minerals industries, and Jed Diner M.Sc., P.Geol. were retained by Great Quest Metals Ltd. to prepare a PEA and Resource Estimate, respectively, for the Tilemsi Phosphate Project (TPP) in Mali. Jed Diner is identified as the Qualified Person for this PEA.
The PEA study considers mine development; the construction of phosphate beneficiation and granulation plants and their associated infrastructure and utilities in the city of Bourem on the Niger River in Mali, 95 km north of Gao; the production of two saleable products—Hyperphosphate High Grade and Hyperphosphate Medium Grade; and the construction of four NPK blending plants in West Africa as illustrated in Map 2-1. As part of the study on mining, beneficiation, granulation, and NPK blending, the investment costs (CAPEX) and operating costs (OPEX) were prepared. No site visits took place during the PEA study and all the work was done as a desktop study only, based on the various consultants’ experience in designing and building similar plants. Similarly, the logistics and marketing of the various products in West Africa were investigated.
The purpose of the PEA is to demonstrate the economic potential of the TPP and to motivate, if appropriate, further detailed work. The PEA has been completed in support of a Press Release dated December 18, 2012. The report has been prepared in accordance with the guidelines of the NI 43-101 and complies with the NI 43-101.
The TPP covers three licenses—Tilemsi, Tarkint Est, and Aderfoul. GQ is a publicly traded company on the TSX-Venture and, through its subsidiaries in Mali, has an option to earn a 94% interest in the Tilemsi license, has an option to earn 97% of the Tarkint Est, and owns the Aderfoul license. All three licenses together make up the TPP, which is situated around 120 km north of Gao, a city located on the Niger River in northeastern Mali.
The proposed TPP is a vertically integrated phosphate mining, beneficiation, granulation, and NPK blending project. The mine is located some 120 km north of Gao in northeastern Mali. It is planned to mine 200 kt/a phosphates ROM from Year 1, increasing production annually by 100 kt to meet a goal of 500 kt/a by Year 4 (Phase 1) and finally to 1 Mt/a from Year 8 onwards (Phase 2). Currently a life-of-mine (LOM) of at least 20 years has been assumed based on this mining program.
The phosphate rock (PR) will be beneficiated in a new facility for the processing of sedimentary phosphate ore for the production of:
Hyperphosphate Medium Grade >27% P2O5
Hyperphosphate High Grade >35% P2O5
The phosphate concentrate will then be granulated and sold either as a direct application fertilizer to existing NPK blenders or for use in four new NPK blending plants to be constructed in West Africa by GQ.
The beneficiation and phosphate granulation plants will be situated near the Niger River at Bourem, which is some 95 km from the mine. Bourem was chosen for three main reasons: it is the closest large town to the mine; its proximity to the Niger River provides water access for the plants; and it offers infrastructure such as paved roads and electricity supply from the national grid.
The granulated phosphate rock will be sold in West Africa, either for use as a direct application fertilizer or as input to existing independent NPK bulk blenders. GQ plans to establish four new NPK bulk blending plants at Sikasso in Mali, Cotonou Port on the coast of Benin, Tamale in northern Ghana, and Dosso City south of Niamey in Niger.
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Map 2-1: Map showing the Tilemsi mine site, the Bourem beneficiation site, and four propsed NPK Blending Facilities
The proposed structure for the various phases of the TPP is shown in Figures 2-1, 2-2, and 2-3.
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Figure 2.1: TPP Production Plan—Initial Development Phase
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Figure 2.2: TPP Production Plan—Intermediate Development Phase
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Figure 2.3: TPP Production Plan—Final Development Phase
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3 RELIANCE ON OTHER EXPERTS
The mining study was subcontracted to Coffey Mining, RSA, an international mining consultancy firm with over 50 years’ experience in the business; the beneficiation to GBM Minerals Engineering Consultants, UK, an independent engineering consultancy providing engineering services to the mining and minerals industry; and the granulation and NPK blending to CFI holding (CFIh), France, an engineering company specializing in the fields of fertilizers, explosives, chemicals, and crystallization/evaporation processes. The market report was prepared by policy and trade specialist Dr. Balu Bumb of BLB Associates, Florence, Alabama, USA, formerly Program Leader of the Policy, Trade and Markets Program at the International Fertilizer Development Center (IFDC). A West African logistics study was also carried out by Bolloré Africa Logistics, and Mintek of South Africa carried out the laboratory and metallurgy tests.
The Qualified Person (QP) has relied upon experts, as listed in section 2, and upon GQ for information pertaining to ownership and status of the Property, the relevant permitting requirements, and the legal and financial liabilities pertaining to the Property and potential sites for the various plants. The writer has not independently verified the accuracy of this information.
Gaya and the PEA Consultants have followed standard professional procedures in preparing the contents of this report. Data used in this report have been verified where possible and the writers have no reason to believe that the data were not collected in a professional manner.
Technical data provided by GQ for use in this report are the result of work conducted by GQ professional staff.
Other sources of information used in this report are listed in the References or elsewhere in the text of the report.
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4 PROPERTY DESCRIPTION AND LOCATION
The information in this section has been obtained from the NI 43-101 Technical Reports on the Tilemsi Phosphate Project authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The information has not been reproduced in full and the reader is referred to the above reports for full details.
The TPP comprises the contiguous Tilemsi , Tarkint Est, and Aderfoul licenses and covers a land package of around 1,206 km2. The Tilemsi license hosts the two target areas of the 2011 drilling campaign namely Tin Hina and Alfatchafa, while the Tarkint Est license hosts the three target areas of the late 2011 drilling campaign.
Map 4-1: Location of Tilemsi Phosphate Project, West Afica
Source: Google Earth
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Figure 4-1: Map Showing Different Permits of the Tilemsi Phosphate Project on Topographic Map
4.1 The Tilemsi License
The Tilemsi license (ARRETE No 2011 – 0352/MM-SG DU) covers an area of 417 km2 according to the license document but measures only 400.7 km2 when measured in MapInfo.
4.2 The Tarkint Est License
The license covers an area of 589 km2 and corners are located at 17o33’17”N and 0o10’00”E; 17o33’17”N and 0o23’52”E; 17o26’30”N and 0o23’52”E; and 17o26’30”N and 0o10’00”E. Review of the license area in Mapinfo shows the area as 576.2 km2.
4.3 The Aderfoul License
The Aderfoul license is contiguous to the east of the Tilemsi and covers an area of 200 km2 and the corners are located at 17o26’30”N and 0o24’35”E; 17o26’30”N and 0o31’40”E; 17o18’07”N and 0o31’40”E; and 17o18’07”N and 0o24’35”E.
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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY
The information on Accessibility, Climate, Local Resources, Infrastructure and Physiography has been obtained from the NI 43-101 Technical Reports on the Tilemsi Phosphate Project authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The information has not been reproduced in full and the reader is referred to the above reports for full details.
The mining property is located about 120 km to the NNE of Gao, the regional centre and a city of about 90,000 inhabitants on the Niger River, and 90 km to the NE of Bourem, a small town on the Niger River. Access to both towns is provided by good dirt tracks that are open most of the year but closed in the wet season after flash floods. The closest village is Almoustarat, about 5 km to the westernmost edge of the license and about 20 km west of the Tin Hina hill (Tilemsi license). There are a few hundred inhabitants in Almoustarat and the Company’s field camp is located there on 3 ha of purchased land.
Gao has a good airport where flights land irregularly. There have been sporadic attempts at providing a regular flight service to Gao. Charter flights can be taken from Bamako. The distance to Bamako by road is about 1,100 km and the trip takes two days. During the high water season—August to January—Gao is also serviced by barges on the Niger River from Koulikoro, located approximately 60 km from Bamako.
All supplies and services, including heavy equipment and fuel, can be obtained in Gao. Electricity, produced by generator sets, is sporadic.
Morphologically, the area is a broad plateau that has been cut by wide washes, leaving residual flat-topped hills and plateaus. The phosphate usually outcrops along the edges of these plateaus. Most areas are accessible using a 4X4 vehicle. Elevation differences between valleys and plateau rims are 30–40 m. Valley elevation is about 300 m above sea level.
The climate is arid. The dry season extends from September to May and the rainy season from June to August. The average annual temperature is 28°C but varies between 27°C and 43°C. Annual precipitation is 200 mm.
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6 HISTORY
The information on the history of the Tilemsi Phosphate Project has been obtained from the NI 43-101 Technical Reports authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The information has not been reproduced in full and the reader is referred to the above reports for full details.
Detailed exploration work was carried out in the Tilemsi Valley between 1958 and 1959 by BUFIFOM (Allon 1959) as a result of reconnaissance exploration in the entire Tilemsi Valley. Most of the work was centred on the Tamaguélelt Plateau where 131 pits were dug. From 1979 to 1980 the Bureau de Recherches Géologiques et Minières (BRGM) performed geological reconnaissance in the area. This study confirmed the earlier one and expanded on it (Alabouvette and Pascal 1980). Japan’s Power Reactor and Nuclear Fuel Development Corporation (PNC) drilled the area in search of uranium associated with the phosphate deposits (Hirono et al. 1987) and techno-economic studies have been performed by various organizations: Klockner Industries (1969), IFDC (1976, 1989), and ALG (1989).
Figure 6-1: Geological map of the TPP area (from Van Kauwenbergh et.al 1991)
Figure 6-2: Geological cross section in the TPP area (from Van Kauwenbergh et.al 1991)
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7 GEOLOGICAL SETTING AND MINERALIZATION
The information in this section has been obtained from the NI 43-101 Technical Reports on the Tilemsi Phosphate Project authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The information has not been reproduced in full and the reader is referred to the above reports for full details.
Geology was mostly defined in the Tamaguélelt deposit, located about 3 km to the north of Tarkint Est northern boundary and having the same geology. The phosphates are hosted within Middle Eocene laminated clays and silts (called “paper schists” by the local geologists) within a seam that varies from 0.5 m to 2.2 m in thickness.
Work on the Chanamaguel area within the Tarkint Est license indicated phosphate beds that outcrop on the flanks of plateaus and hills separated by wide valleys. Thickness variations are more complex than in Tamaguélelt, with a maximum of 1 m. Work on the Tin Hina area in the Tilemsi license demonstrated presence of outcrops of phosphate for a few kilometres along the strike, with lateritic cover to the south. Thickness varied from 0.2 m to 1.6 m, with an average grade of 21.6% P2O5. BRGM estimated 3-5 Mt of ore in this area.
Various facies can be distinguished in the phosphates:
• Fine grained to clayey phosphate, mostly of peloids.
• Coarse grained beds contain peloids, nodules, coprolites, phosphatized shells, teeth, and bones up to 10 cm. The coarser beds are usually of higher grades.
• The gangue is usually quartz grains (20–50 microns) palygorskite, montmorillonite, and kaolinite clays and is typically stained by goethite-limonite.
• The apatite is usually carbonate-fluorapatite (francolite) with hydroxil substitution that causes deviation from predicted crystallographic parameters of classical francolite.
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8 DEPOSIT TYPE
The deposit type of the Tilemsi Phosphate Project has been reported in full in the NI 43-101 Technical Reports authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively.
As the report has been relied upon and accepted in its entirety, the information related to the deposit types for the TPP has not been reproduced here and the above reports should be referred to for this information.
In brief, phosphate deposits in the TPP area are sedimentary in origin, having been deposited in a marine environment. The deposits are similar to those found in Florida, USA, and in Morocco.
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9 EXPLORATION
The full description of the nature and extent of all relevant exploration work, other than drilling, has been obtained from the NI 43-101 Technical Reports on the Tilemsi Phosphate Project authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The information has not been reproduced in full and the reader is referred to the above reports for full details.
Preliminary mapping and sampling were completed during June and July 2009, focusing on the Alfatchafa hill in the centre of the TPP area. Company geologists took 26 grab samples from a 0.4-1.7 m thick bed of phosphate rock over a length of 6,870 m along the south and southeast sides of the hill. Results of analysis for phosphate in the 26 samples ranged from 5.11% to 33.05% P2O5 and averaged 24.50%. The P2O5 is contained in the mineral francolite (carbonate fluorapatite).
Additional pitting took place in November 2011, when 11 shallow rotary RAB (rotary air blast) holes were twinned by pit sampling, which demonstrated that drill results were about 4% lower than pit samples, while the thickness was about 30% higher in the drillholes. Both features are likely results of contamination of the samples in the RAB drill.
Additional 48 pit samples were taken in the Tarkint Est area from outcrops and subcrops and were used in the resource estimation of this area.
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10 DRILLING
The description of drilling work carried out on Tilemsi Phosphate Project has been reported in full in the NI 43-101 Technical Reports authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The information has not been reproduced in full and the reader is referred to the above reports for full details.
First phase drilling (Phase I) on TPP took place between May and July 2011. Altogether 269 holes were drilled during drill programs at Tin Hina and Alfatchafa in the Tilemsi license area for a total of 4,883 m (Table 10-1). Following the positive results, an additional phase of drilling, Phase ll, was conducted during November 2011 at Tarkint Est (see Figures 10-1 and 10-2). Phase II included 48 RAB drillholes for a total of 608 m and 48 pit samples on phosphate outcrops and sub-crops.
Table 10-1: Number of drillholes and metres drilled
Area No Holes Metres Phosphate
bearing holes
Tin Hina 142 1,727 104
Alfatchafa 127 3,156 73
Tarkint Est 48 608 29
Total 317 5,491 206
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Figure 10-1: Overview of the TPP area, with drillholes as dots, resource polygons in magenta and blue, and the outline of license areas for Tilemsi, Aderfoul and Tarkint Est.
Figure 10-2: Location of drillholes (green) and pits (magenta) in Tarkint Est.
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11 SAMPLE PREPARATION, ANALYSES, AND SECURITY
The description of sample preparation, analysis, quality control measures and procedures as well as opinion of the adequacy thereof have been reported in the NI 43-101 Technical Reports on the Tilemsi Phosphate Project authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The information has not been reproduced in full and the reader is referred to the above reports for full details.
The drill sampling protocol required the drill to proceed down the mineralized horizon in 25 cm increments. Samples coming out of the drill were caught in 20-litre buckets. Each 25 cm sample was caught separately. After logging, the geologist combined similar-looking samples into 0.5–1 m samples, based on the visual estimation of the grade of material and geological similarity. The samples were then bagged in calico bags, weighed, and taken to the camp in Almoustarat, under the supervision of GQ geologists and stored under lock. The samples were trucked and delivered to the ALS Bamako Minerals Lab. In the laboratory, the samples were air-dried and then weighed. After drying, the samples were crushed to 90% 2 mm size and then split in a Jones splitter, producing even splits of 200 g. The sample was then milled to produce –80 mesh material that was further split to produce sachets of 10 g of material for each sample, which were sent via DHL from Bamako to ALS Vancouver Minerals Lab for final analysis. Both the Bamako laboratory where sample preparation took place and the Vancouver laboratory where the analysis took place are subject to the ALS Labs Quality Management System and subject to constant audit of SOP (Standard Operating Procedures). The Vancouver lab is ISO 9001:2008 accredited. The Company Quality Assurance and Quality Control procedures included analysis of two company QA—a standard and a blank—for every 20 samples.
X-ray fluorescence (XRF) was performed on all samples to analyze for SiO2, Al2O3, Fe2O3, CaO, MgO, K2O, Na2O, P2O5, MnO, Cr2O3, TiO2, V2O5, and for loss on ignition (LOI). The trace elements Cd, As, Cu, Pb, Zn, and U were analyzed by inductively coupled plasma (ICP), which was performed on every 10th sample. In addition, every 10th sample was analyzed for Cl by H2SO₄ ion electrode, for F by fusion ISE (ion-selective electrode), and for solids and organic carbon and total carbon by Leco method.
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12 DATA VERIFICATION
The description of the steps taken by Mr. Jed Diner as the Qualified Person to verify the data has been reported in the NI 43-101 Technical Reports on the Tilemsi Phosphate Project authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively. The information has not been reproduced in full and the reader is referred to the above reports for full details.
As part of the Quality Assurance and Quality Control (QA/QC) program, the following steps were taken. For every 20 exploration samples, one standard and one blank were introduced by GQ personnel. Due to the absence of a splitter, no duplicates were introduced and the duplicate data were derived from internal determinations at ALS Bamako Minerals Lab. ALS introduced and analyzed one standard, one blank, and one duplicate for every 30 exploration samples and these data were also reviewed.
Prior to drilling, the drillhole locations were surveyed in the field using a handheld Garmin GPS. Roads and pads were opened by a bulldozer where needed. The geologists measured the actual collar at the beginning of each drillhole with a GPS and entered it into a log book.
In the first phase, a total of 311 samples were sent to ALS Bamako Minerals Lab. Out of these, 260 samples were of mineralized drill samples, and the remaining 51 samples included 21 regional samples (blanks) and 30 QA/QC samples (standards).
During the second phase, a total of 309 samples were sent to ALS Bamako. Out of these, 260 samples were of mineralized drill samples, and the remaining 49 samples included 21 regional samples (blanks) and 30 QA/QC samples (standards).
The geochemical results for each interval were calculated as weighted averages and the statistics for the results of 37 drill samples with P₂O₅ >10% are presented in Table 12-1 (Tarkint Est drillholes), while the statistics for 51 pit samples are presented in Tables 12-1 and 12-2.
Table 12-1:Major oxides in drillholes/pit phosphates samples (% per wt)
Drillholes >10% P2O5 SiO2 Al2O3 Fe2O3 CaO MgO Na2O K2O TiO2 MnO P2O5 BaO LOI
Tarkint Est drillholes 16.526 3.992 7.049 35.009 0.986 0.365 0.206 0.286 1.100 24.686 8.138
Tarkint Est pit samples 11.403 2.749 6.405 38.244 0.709 0.323 0.182 0.244 1.978 28.437 7.949
Tin Hina 17.43 4.55 6.99 33.36 1.00 0.23 0.25 0.39 1.15 22.76 0.11 9.98
Table 12-2: Trace elements in Tin Hina phosphates (ppm)
C organic C F As Ba Cd Hg
Mean 0.05 0.65 1.89 11.00 642.00 0.87 0.64
Table 12-3: Comparison of Geochemistry of phosphate seams in Alfatchafa, Tin Hina and Tarkint Est (% per wt)
Area No of
drillholes thickness
(m) SiO2 Al2O3 Fe2O3 CaO MgO Na2O K2O TiO2 MnO P2O5 LOI CaO/P2O5
Alfa. 72 0.9 17.44 4.71 6.76 33.42 1.15 0.23 0.24 0.36 0.93 22.69 10.14 1.47
Tin Hina 105 1.36 16.08 4.22 7.13 34.65 0.85 0.23 0.24 0.38 1.35 23.73 9.73 1.46
Tarkint E. 29 1.07 16.53 3.99 7.05 35.01 0.99 0.36 0.21 0.29 1.10 24.69 8.14 1.42
The following observations can be made:
The geochemistry of the main phosphate layer is nearly identical in all three areas (Table 12-3).
The phosphates in all the other areas are clean of any deleterious elements. Cadmium (Cd) is less than 1 ppm. There is very little organic material and the material is highly oxidized. All uranium (U) results except five (up to 40 ppm) were at, or under, the level of detection of 10 ppm.
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One potential problem is the presence of high Fe2O3 and Al2O3. The combined levels of these oxides in pit samples exceed 9%. These oxides can cause problems in downstream processing, possibly causing the suppression of ammoniation of phosphoric acid (in the production of di-ammonium phosphate / mono-ammonium phosphate (DAP/MAP) or the creation of sludge problems in storage of phosphoric acid).
The CaO/P2O5 ratio ranges between 1.42 and 1.46, suggesting the presence of little or no calcite.
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13 MINERAL PROCESSING AND METALLURGICAL TESTING
13.1 Introduction
GBM Minerals Engineering Consultants explored whether the test work results demonstrate that the product specifications for MGP product (P2O5 >27%) and HGP product (P2O5 >35%, Fe2O3 <5.0%, and Al2O3 <1.0%) can be achieved without compromising the phosphate recovery and obtain acceptable mass recovery.
13.2 Process Summary
Eleven head samples were made available to Mintek for the test work, and a blended composite of the 11 samples was made by Mintek as part of the test work program. The grades of the composite sample were P2O5 26.97%, Fe2O3 6.69%, and Al2O3 3.03%. The following summarizes the results that were obtained through the test work:
Wet screening to remove fine fractions (-212 µm) shows potential to upgrade the P2O5 grade to >30% across all the individual and composite samples. However, removal of fines could not achieve the P2O5 grade for HGP of >35%.
Results suggest that wet screening followed by dry magnetic separation has the potential to upgrade the P2O5 content of the composite sample from 26.97% to >31%, with a coarse size fractions product of >35% P2O5 grade. The P2O5 recovery was 97.94% for the coarse size fractions and 95.20% for the fine fractions. Wet screening and magnetic separation has the potential to achieve the Fe2O3 and Al2O3
specification of <5% and <1% for HGP.
The solubility of P2O5 depends on the chemical and mineralogical characteristics of the phosphate mineral in the phosphate rock. The high P2O5 solubility of the samples in acid suggests that the solubility of the phosphate mineral is high.
Granulation tests conducted on the composite sample suggest that competent granules at a desired size fraction of -4 mm +1 mm both with and without a binding medium can be produced. Granules produced using 15% peat and 2.5% M4 bacteria as a binding medium possess the greatest physical strength compared with other granules.
The test results suggest that granules with greatest physical strength exhibited low P2O5 solubility compared with other granules. It was also observed that the solubility of P2O5 in acids decreases due to granulation, as P2O5 solubility was higher in the un-granulated sample compared with the granules produced.
13.3 Overall Expected Recoveries
The size by assays results of lower P2O5 grade samples (6003, 6005, 6006, and 6063) and higher grade samples (6001, 6002, 6004, 6028, 6029, 6030, and 6066) show that the fine fractions (-212 µm) have significantly lower P2O5 compared with the coarse fractions (+212 µm). The fine fractions also have higher Fe2O3 and Al2O3 across all the samples. The lower P2O5 grade samples also exhibit a greater amount of fines than the higher grade samples.
Testing results show potential to achieve a P2O5 grade of >30% across each sample by wet screening and removal of the fines (-212 µm) and that the mass recovery after the removal of -212 µm size fractions of the lower and higher P2O5 grade samples was >65% and >75%, respectively. Lower P2O5 grade samples tend to have greater amount of fines fractions compared with higher grade samples, resulting in lower mass recovery.
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With regard to the blended composite sample, testing results show that wet screening was more efficient than dry screening for the removal of fine size fractions (-212 µm). Table 13-1 is a summary of the results of wet and dry screening of the blended composite.
Table 13-1: Summary of Wet and Dry Screening on Blended Composite
Size Fraction [µm]
Mass Recovery [% ] P2O5 [%] Fe2O3 [%] Al2O3 [%]
Wet Dry Wet Dry Wet Dry Wet Dry
+212 80.20 91.90 32.48 27.41 4.77 5.63 0.90 2.98
-212 19.80 8.10 15.87 19.52 10.53 8.48 4.58 5.26
The results in Table 13-1 show that screening by wet methods to remove size fractions <212 µm has the potential to achieve a P2O5 grade of >31%. The dry screening method does not yield such an enriched P2O5 grade. The Al2O3 grades are higher in the coarse fractions (+212 µm) produced by dry screening (2.98%) compared with coarse fractions produced by wet screening (0.98%). This suggests that dry screening is not sufficient to disintegrate the clay minerals which tend to depart in the fines fractions or remove the clay coatings covering the P2O5 particles.
The results show that screening by wet methods to remove fine size fractions can be used to upgrade the P2O5 and downgrade the Al2O3 in the composite sample. However, this technique is not sufficient to meet the product specification for phosphate rock for use in phosphoric acid production, due to the high Fe2O3. The P2O5 grade obtained from wet screening was 32.48%. It is noted that the removal of the fines fraction had minimal effect on the Fe2O3 grade of the coarse size fractions.
Dry magnetic separation was also considered as a method of achieving the desired product specifications. The blended composite sample was wet screened to remove size fractions <106 µm and the following size fractions were used for magnetic separation:
-12 mm +850 µm
-850 µm +106 µm
A summary of the magnetic separation results are shown in Table 13-2.
Dry magnetic separation, rather than wet, was selected taking into consideration that the deposit is situated in a predominantly water-scarce area.
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Table 13-2: Summary of Magnetic Separation Results
Size Fraction Mass [%] P2O5 [%] Fe2O3 [%] Al2O3 [%] Overall P2O5
Recovery [%]
Mass Recovery
[%]
Head Composite Sample Analysis (wet screened)
-12 mm +850 µm 47.1 33.48 4.76 1.23 - -
-850 µm +106 µm 40.8 28.35 6.15 3.14 - -
-106 µm 12.10 6.21 16.16 11.76 - -
Head Analysis 100.00 28.09 6.71 3.28 - -
Magnetic Separation Non-magnetic Products
-12 mm +850 µm 44.79 35.09 4.19 0.68 97.94 95.10
850 µm +106 µm 28.80 31.00 3.25 0.91 95.20 70.60
Head Analysis 73.60 33.49 3.82 0.77 91.19 73.60
Tailings Streams
Magnetic Products 14.30 14.17 13.96 8.74 - -
-106 µm 12.10 6.21 16.16 11.76 - -
Head Analysis 26.40 10.52 14.97 10.12 8.81 26.40
The results in Table 13-2 suggest that magnetic separation after wet screening has the potential to upgrade the P2O5 and downgrade the Fe2O3 and Al2O3 in the non-magnetic products. The results show that the non-magnetic product of the coarse size fractions (-12 mm +850 µm) achieved the P2O5 >35% with 97.94% P2O5 recovery for HGP product and the non-magnetic product of the fine size fractions (-850 µm +106 µm) achieved P2O5 >27% with 95.20% P2O5 recovery for MGP product.
The results suggest that wet screening followed by magnetic separation yields the product specification for Fe2O3 and Al2O3 specification of <5.0% and <1.0% for the HGP product. The results in Table 13-2 show that approximately 12.0% of the Fe2O3 in the coarse fractions was removed by magnetic separation compared with approximately 42.0% for the fine fractions. This suggests that the coarse fractions have less liberated iron-bearing contaminants compared with the fine fractions.
13.4 Mineralogy
A pulverized sub-sample of each sample was analyzed using qualitative X-ray diffraction (XRD) to obtain the bulk mineralogy. Polished section mineralogical assessment using scanning electron microscopy (SEM) was conducted on the blended composite of the eleven feed samples to establish the texture and liberation characteristics of the phosphate-bearing minerals and their associated gangue minerals. Three sub-samples of the composite sample were used for the mineralogical assessment and are listed below.
unscreened feed
medium grade (-850 µm +106 µm)
high grade (-12 mm +850 µm)
The qualitative mineralogical analysis results of the blended composite sample are tabulated in Table 13-3.
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Table 13-3: Quantitative Mineralogical Analysis of Composite Sample
Phase Composite Feed
[%] Composite +850 µm
[%]
Composite -850 µm+106 µm
[%]
Fluorapatite 69.7 80.6 65.2
Goethite 4.2 3.5 4.5
Montmorillonite (clay) 9.3 4.2 11.5
Quartz 2.5 2.5 3.7
Feldspar 8.4 8.0 10.4
Clinochlore 2.5 1.3 0.2
Muscovite (mica) 3.4 n.d 4.5
The phosphate deposit in the TPP area is regarded as sedimentary in origin. In all three samples the main phosphate bearing phase was determined to be apatite (as fluorapatite). In general, the particles of apatite are well liberated, with particles occurring as homogeneous grains or as grains containing fine goethite inclusions (6). Smaller grains of apatite are partially bound together by gangue minerals. In all three samples, over 90% of the apatite is reported to be liberated, with the ultimate liberation size estimated at around 100 µm, although a large proportion of the sample is already well liberated at a coarser particle size.
The main gangue minerals include goethite, quartz, clinochlore, mica, clay, and neotite. Additional minerals include pyrite, titanite, rutile, zircon, and barite.
It was identified that some of the gangue minerals such as montmorillonite, clinochlore, and muscovite exhibit needle-like structures and this phenomenon may exaggerate the proportion of these particles present in the samples. Further analysis by XRD and SEM is recommended to ensure a more accurate estimate of the proportion of gangue minerals present.
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13.5 Assay by Size Analysis
A representative sub-sample was removed from each homogenized feed sample and subjected to particle size distribution (PSD) analysis. A summary of the results is shown in Table 13-4.
Table 13-4: Quantitative Mineralogical Analysis of Composite Sample
Size Fract-
ion
Passing Size [%]
6001 6002 6003 6004 6005 6006 6028 6029 6030 6063 6066
14 mm 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12 mm 100.00 100.00 99.94 100.00 100.00 100.00 99.63 99.70 99.88 100.00 98.53
6 mm 99.74 99.62 99.72 99.28 99.56 99.68 96.63 97.38 99.07 99.25 92.68
1 mm 59.63 53.46 64.92 50.43 67.36 63.23 34.33 32.87 38.97 51.30 35.71
212 µm 20.45 16.88 30.91 19.24 33.74 27.31 11.91 13.92 17.19 21.74 11.36
20 µm 4.66 2.05 9.72 3.36 9.89 11.96 1.79 4.19 7.80 8.30 3.56
The fines (-1,000 µm) content varies across the samples. Results suggest that samples (6028, 6029, 6030, and 6066) with high content of P2O5 generally have fewer fines than lower grade samples. This suggests that higher P2O5 contents are in the coarse size fractions.
PSD analysis was followed by grade analysis for each sample per size fraction. Table 13-5 and Table 13-6 present a summary of the results. Table 13-5 presents the summary of results for head samples with lower grade P2O5 content (<28%), and Table 13-6 presents a summary of results for head samples with a higher P2O5 content (>28%).
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Table 13-5: Summary of Assay by Size of Low Grade Feed Head Samples
Sample ID Mass [%] P2O5 [%] Fe2O3 [%] Al2O3 [%]
6003
+12 mm 0.06 12.37 8.40 8.29
-12 mm +6 mm 0.28 19.38 10.01 5.46
-6 mm +1 mm 34.80 35.94 4.64 0.56
-1 mm +212 µm 34.01 32.06 5.88 1.99
-212 µm +20 µm 21.17 19.13 9.84 5.89
-20 µm 9.72 1.82 16.16 15.63
Head Analysis (calculated) 100.00 27.69 7.30 3.66
6005
+12 mm 0.00 0.00 0.00 0.00
-12 mm +6 mm 0.44 36.15 3.60 0.37
-6 mm +1 mm 32.2 36.56 3.93 0.23
-1 mm +212 µm 33.61 28.80 6.88 3.36
-212 µm +20 µm 23.84 19.15 9.94 5.78
-20 µm 9.89 2.06 16.3 14.52
Head Analysis (calculated) 100.00 26.39 7.58 4.03
6006
+12 mm 0.00 0.00 0.00 0.00
-12 mm +6 mm 0.32 33.84 5.18 0.68
-6 mm +1 mm 36.45 34.59 4.88 0.60
-1 mm +212 µm 35.92 33.55 5.88 1.43
-212 µm +20 µm 15.35 18.10 10.74 5.23
-20 µm 11.96 2.05 20.31 14.36
Head Analysis (calculated) 100.00 27.79 7.98 3.25
6063
+12 mm 0.00 0.00 0.00 0.00
-12 mm +6 mm 0.75 34.78 6.88 0.51
-6 mm +1 mm 47.95 36.16 4.03 0.13
-1 mm +212 µm 29.56 29.77 5.79 2.22
-212 µm +20 µm 13.44 18.11 10.17 5.47
-20 µm 8.30 1.36 18.80 12.97
Head Analysis (calculated) 100.00 28.95 6.62 2.53
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Table 13-6: Summary of Assay by Size of High Grade Feed Head Samples
Sample ID Mass [%] P2O5 [%] Fe2O3 [%] Al2O3 [%]
6001
+12 mm 0.00 0.00 0.00 0.00
-12 mm +6 mm 0.26 31.86 6.96 0.57
-6 mm +1 mm 40.11 34.28 3.76 0.15
-1 mm +212 µm 39.18 26.08 6.00 3.95
-212 µm +20 µm 15.79 16.14 11.58 6.22
-20 µm 4.66 2.43 20.45 13.23
Head Analysis (calculated) 100.00 26.71 6.66 3.24
6002
+12 mm 0.00 0.00 0.00 0.00
-12 mm +6 mm 0.38 34.49 4.85 0.83
-6 mm +1 mm 46.17 35.22 4.63 0.28
-1 mm +212 µm 36.58 25.52 8.97 4.32
-212 µm +20 µm 14.83 17.39 10.16 6.48
-20 µm 2.05 1.86 18.95 14.08
Head Analysis (calculated) 100.00 28.34 7.33 2.96
6004
+12 mm 0.00 0.00 0.00 0.00
-12 mm +6 mm 0.72 36.77 4.35 0.23
-6 mm +1 mm 48.85 35.27 4.74 0.39
-1 mm +212 µm 31.19 27.52 5.34 3.30
-212 µm +20 µm 15.89 16.23 9.06 6.95
-20 µm 3.36 2.09 17.8 13.34
Head Analysis (calculated) 100.00 28.73 6.05 2.77
6028
+12 mm 0.38 36.82 3.90 0.38
-12 mm +6 mm 3.38 36.39 4.53 0.43
-6 mm +1 mm 62.3 35.10 5.08 0.36
-1 mm +212 µm 22.42 28.19 6.86 3.44
-212 µm +20 µm 10.12 20.08 9.51 5.86
-20 µm 1.79 2.00 18.45 13.42
Head Analysis (calculated) 100 31.48 6.14 1.85
6029
+12 mm 0.30 35.05 2.67 0.60
-12 mm +6 mm 2.62 34.60 3.50 0.30
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Sample ID Mass [%] P2O5 [%] Fe2O3 [%] Al2O3 [%]
-6 mm +1 mm 64.51 36.24 4.04 0.48
-1 mm +212 µm-1mm+212µm 18.95 32.69 6.05 2.07
-212µm+20µm 9.74 19.43 11.43 5.97
-20µm 4.19 3.13 22.02 13.61
Head Analysis (calculated) 100.00 32.52 5.88 1.85
6030
+12mm 0.12 36.58 4.1 0.47
-12mm+6mm 0.93 36.97 3.30 0.26
-6mm+1mm 60.1 37.23 3.86 0.34
-1mm+212µm 21.78 31.43 6.22 2.20
-212µm+20µm 9.4 21.63 9.77 4.81
-20µm 7.8 2.05 22.09 13.14
Head Analysis (calculated) 100.00 31.75 6.35 2.17
6066
+12mm 1.47 36.31 3.17 0.92
-12mm+6mm 7.31 34.65 5.25 0.72
-6mm+1mm 56.97 35.67 4.42 0.64
-1mm+212µm 24.35 24.71 8.77 6.20
-212µm+20µm 7.79 17.76 9.89 8.81
-20µm 3.56 14.18 12.46 13.24
Head Analysis (calculated) 100.00 30.79 6.22 3.09
The SBA analysis of the low and high grade samples suggests that generally the coarse (+212 µm) size fractions contain higher grades of P2O5 and lower Fe2O3 and Al2O3 content. This suggests that P2O5 content can be upgraded by screening to remove fine fractions (-212 µm), which can also lower the Fe2O3 and Al2O3 content.
13.6 Fines Removal by Screening
From the results shown in Table 13-7, P2O5 grade can be upgraded by removal of fine fractions (-212 µm). From the results available in the Mintek test work, as reported in GQ’s Press Release of March 21, 2012, the grades of the samples (obtained from SBA) were reconstituted to take into account the removal of the fine size fractions (-212 µm). The results compared with the calculated grade of the feed samples. The summary of results is illustrated in Table 13-7.
From the results in Table 13-7 an upgrade in P2O5 content is observed, with all samples having a P2O5 content >30% after screening to remove fine size fractions (-212 µm). A noticeable reduction in Fe2O3 and Al2O3 content is also observed. As a result, the product specifications for MGP product of P2O5 >27.0% is achieved. Another important criterion to consider with screening to remove the fine size fractions is mass recovery. From Table 13-7 the mass recovery was generally >80%, except for low grade samples. As stated earlier, low grade samples generally have more fine particles, hence the lower mass recovery.
Screening for the removal of fines does not meet the product specification for HGP product. This means that further beneficiation is required, with screening likely to be part of the overall process.
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Table 13-7: Results of Fines Removal by Screening
Sample ID
P2O5 [%] Fe2O3 [%] Al2O3 [%] Mass Recovery (+212 µm) [%] Head Reconstituted Head Reconstituted Head Reconstituted
6001 26.71 30.23 6.66 4.87 3.21 2.02 79.55
6002 28.34 30.95 7.33 6.54 2.96 2.06 83.13
6003 27.69 33.94 7.30 5.28 3.66 1.29 69.15
6004 28.73 32.29 6.05 4.97 2.77 1.51 80.76
6005 26.39 32.62 7.58 5.42 4.02 1.82 66.25
6006 27.79 34.07 7.98 5.37 3.25 1.01 72.69
6028 31.48 33.41 6.14 5.50 1.85 1.15 88.48
6029 32.52 35.41 5.88 4.46 1.86 0.83 86.48
6030 31.75 35.70 6.35 4.47 2.17 0.83 82.93
6063 28.95 33.73 6.62 4.72 2.53 0.92 78.26
6066 30.79 32.63 6.22 5.64 3.07 2.15 90.10
13.7 Dry Magnetic Separation of Blended Composite Sample
Dry magnetic separation was conducted on two sub-samples of the composite sample:
high-grade fraction (-12 mm +850 µm) of the composite sample
medium-grade fraction (-850 µm +106 µm) of the composite sample
The high-grade and medium-grade fractions were obtained by wet screening as this has been observed to be more efficient, as stated previously. A permanent magnetic roller (Perm Roll) was used for the test work. It was noted that the samples did not respond well to low intensity magnet separation; therefore, medium- and high-intensity magnets were used. It must be noted that the magnetic intensity used for the test work has not been recorded in the test work report. A summary of the results of the magnetic separation test work is shown in Table 13-2.
The results in Table 13-2 show that magnetic separation after wet screening can be an effective technique to upgrade P2O5 content and downgrade Fe2O3 and Al2O3 contents. For the coarse size fractions (-12 mm + 850 µm) the P2O5 content was upgraded from 33.48% to 35.09% with 97.94% P2O5 recovery. For the fine size fractions (-850 µm + 106 µm) the P2O5 content was upgraded from 28.35% to 31.00% with 95.20% P2O5 recovery. The calculated combined non-magnetic product indicates 33.49% grade of P2O5 and 91.19% P2O5 recovery. This suggests that blending the non-magnetic products will not achieve the minimum of 35% P2O5 required for the HGP product. This indicates that the coarse and fine fractions should be processed and stored separately. The results in Table 13-2 show that the non-magnetic product from the coarse size fractions achieved the P2O5 grade of >35% required for HGP product and the non-magnetic product from the fine size fractions achieved the grade of >27% P2O5 for the MGP product.
The results in Table 13-2 show that the Fe2O3 and Al2O3 contents of the coarse size fractions were downgraded from 4.76% to 4.19% and 1.23% to 0.68%, respectively. This yields the Fe2O3 specification of <5.0% for HGP product. The Al2O3 specification of <1.0% was also achieved from wet screening and magnetic separation for HGP product. The results of the fine size fractions show that the Fe2O3 and Al2O3 contents were downgraded from 6.15% to 3.25% and 3.14% to 0.91%, respectively.
The mass recovery of the coarse size fraction from magnetic separation was 95.10%, whereas for the fine fractions the mass recovery was 70.60%. The results show that approximately 12.0% of the Fe2O3 in the
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coarse fractions was removed by magnetic separation compared with approximately 42.0% for the fine fractions. This suggests that the coarse fractions have less liberated iron-bearing contaminants compared with the fine fractions. The results suggest that mass recovery for the final non-magnetic products was 73.60% of the head sample, with 26.40% of the head mass rejected as -106 µm material and magnetic tailings.
13.8 Granulation Test Work
Granulation Test on Blended Composite Sample
Granulation test work was carried out on the blended composite sample milled to 95% passing 150 µm. The aim of the test work was to obtain competent granules with good physical strength properties resulting in minimal disintegration during handling and transportation. The tests were carried out using KCl and peat binders with four tests carried out using varying binder dosages and M4 bacteria. One granulation test was carried out without the use of a binding medium.
The test work involved mixing each sample with the required binder content and placing the material onto an inclined rotating disk where water was added as the granules are formed. From the Mintek test work report (2012), the optimum point was reached when the granules were in the size range -4 mm +1 mm and possessed good physical strength properties. A summary of the masses of granules produced from the test work are presented in Table 13-8.
Solubility of P2O5 was conducted on the -4 mm +1 mm and -1 mm granules produced from the granulation test, using 2% citric acid and 2% formic acid. A summary of the test work results is presented in Table 13-10.
Table 13-8: Masses of Granules Produced after Curing
Size Fraction [mm]
Test 1 5 % KCl
[%]
Test 2 15 % peat
[%]
Test 3 10 % KCl &
2.5 % bacteria [%]
Test 4 15 % peat &
2.5 % bacteria [%]
Test 5 Binderless
[%]
+4 2.00 4.80 17.90 17.80 11.80
-4+1 41.00 40.80 69.80 71.90 46.80
-1 56.90 54.40 12.30 10.40 41.40
Total 100.00 100.00 100.00 100.00 100.00
The results in Table 13-8 show that the highest yield of the desired size range (-4 mm +1 mm) was achieved using 15% peat and 2.5% M4 bacteria (Test 4). From Test 4, the mass distribution of -4 mm +1 mm granules produced was 71.90%, and 10.40 % of -1 mm granules.
Abrasion strength tests were conducted on the -4 mm +1 mm granules produced by the various binder dosages to determine the percentage of fines generated over time. The feed samples were initially screened at 2 mm and 1 mm to determine the mass distribution at time 0 minutes. The sample was then fed into an abrasion machine that runs at 25 revolutions per minute. The abrasion tests were conducted at time intervals of 1 minute, 3 minutes, and 5 minutes. After every interval the material was re-screened using the same screens as the feed material to determine the amount of fines generated. The results of the abrasion strength tests are summarized in Table 13-9.
Generally the results in Table 13-9 show that the pellets reported abrasion indices of <10%. The granules are considered to possess good physical strength properties for handling and transportation, as this is highlighted by the low amount of fines generated from the tumbling tests.
The results in Table 13-9 show that the granules produced using 15% peat and 2.5% M4 bacteria (Test 4) as a binding medium yielded the lowest abrasion index of 1.10% and generated the lowest amount of fines, 1.7%, after 5 minutes. This indicates that granules produced using 15% peat and 2.5% M4 bacteria binding
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medium possess the greatest physical strength compared with other granules produced using other binding medium and dosage.
Table 13-9: Summary of Abrasion Strength on -4mm+1mm Granules Test Results
Binder Dosage Moisture
Content [%]
Abrasion Index [%] Fines (-1mm) [% w/w]
1 min 3 min 5 min 0 min 1 min 3 min 5 min
Test 1 – 5 % KCl 15.60 1.50 3.00 4.50 1.80 3.30 4.80 6.30
Test 2 – 15 % peat 14.40 5.00 6.40 7.60 1.20 6.10 7.60 8.80
Test 3 – 10 % KCl & 2.5 % M4 bacteria
14.80 0.70 2.00 2.60 0.80 1.50 2.80 3.40
Test 4 – 15 % Peat & 2.5 % M4 bacteria
15.30 0.10 0.50 1.10 0.60 0.70 1.00 1.70
Test 5 – Binderless 15.70 0.60 2.80 5.00 1.50 2.10 4.30 6.50
Solubility Test on -4 mm +1 mm and -1 mm Granules
Solubility tests were conducted on the -4 mm +1 mm and -1 mm granules to determine the solubility of P2O5 in 2% citric acid and 2% formic acid. The solubility tests were also conducted on the un-granulated sample at ambient temperature and at 30°C. The solubility test work results are summarized in Table 13-10.
From the results in Table 13-10, it was observed that the solubility of P2O5 in citric acid is higher than in formic acid. The solubility in citric acid ranged from 64% to 72%, whereas the solubility in formic acid ranged from 53% to 62%. The granules -4 mm +1 mm and -1mm formed using 10% KCl and 2.5% bacteria had the highest citric acid solubility of 72%. Generally the solubility does not seem to be affected by the size of the granules regardless of the binding medium used. Granules produced using peat binder, with or without the bacteria, exhibit the lowest acid solubility of P2O5 compared with granules produced using KCl. The results in Table 13-9 and Table 13-10 suggest that the binding medium of 10% KCl and 2.5% M4 bacteria produced granules with good physical strength and relatively good P2O5 solubility in acid. The granules with the greatest physical strength (Table 13-9, test 4) exhibited relatively low P2O5 solubility compared with other granules.
The results indicate that granulating the sample decreases the solubility. This could be due to decreasing the surface area by granulating. Temperature had an effect on the solubility of P2O5 in both citric and formic acid. The solubility of P2O5 in citric acid at ambient temperature and at 30°C was 71% and 76%, respectively. The solubility of P2O5 in formic acid at ambient temperature and at 30°C was 63% and 65%, respectively.
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Table 13-10: Summary of Solubility Results on Granules and Un-granulated Samples
Sample ID Particle
Size/Temperature
Soluble P2O5 [%] Head Sample Analysis, [%] 2 % citric acid
2 % formic acid
Granulated 5 % KCl
-4mm +1mm 68 59 26.97
-1mm 67 56 26.97
Granulated 10 % KCl + 2.5 % bacteria
-4mm +1mm 72 57 26.97
-1mm 72 62 26.97
Granulated 15 % peat
-4mm +1mm 64 56 26.97
-1mm 65 53 26.97
Granulated 15 % peat + 2.5 % bacteria
-4mm +1mm 64 55 26.97
-1mm 68 55 26.97
Un-granulated sample
Ambient Temp. 71 63 26.97
30 °C 76 65 26.97
13.9 Future Test Work
From the test work data available, the product specification of P2O5 >35.0%, Fe2O3 <5.0% and Al2O3 <1% for the HGP product were achieved by wet screening and magnetic separation of the coarse size fractions (-12 mm +850 µm).
GBM recommends further mineralogical investigation to determine the optimal liberation characteristics of the phosphate minerals and the gangue minerals. All the iron species are reported as iron oxide in the test work results; however, it is reported that the deposit in the TPP contains pyrite. Mineralogical analysis will identify and quantify the various iron-bearing minerals and provide an indication of the likely extraction processes required.
Pilot tests would also be required at the next stage to confirm the process flowsheet and operating consumptions.
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14 MINERAL RESOURCE ESTIMATE
The description of the mineral resources estimated for the Tilemsi Phosphate Project has been reported in full in the NI 43-101 Technical Reports authored by Jed Diner on behalf of GQ. These reports have effective dates of October 25, 2011, and October 17, 2012, and were filed on SEDAR on August 23, 2012, and October 23, 2012, respectively.
Since the Inferred Resource Estimate is the basis of this PEA and since the above technical reports have been accepted in their entirety, the information related to the resource estimate has not been reproduced in full and the reader is referred to the above reports for full details.
The resource in TPP is currently classified as Inferred, based on various factors, including
Drillhole spacing
No surveyed elevation for drillhole collars
No density data available for the material
Drilling method allows for contamination
A summary of the geological resources at various cutoff grades is shown in Tables 14-1, 14-2, and 14-3.
Table 14-1: Inferred Resources in Tarkint Est
Cutoff grade % Tonnes (000's)
Average grade P2O5 %
20 17,194 25.98
15 17,436 25.87
10 17,436 25.87
Table 14-2: Inferred Resources in Tin Hina
Cut-off grade % Tonnes, (000's)
Average grade P2O5 %
15 19,280 24.66
12 19,995 24.25
10 20,000 24.24
5 20,000 24.24
Table 14-3: Inferred Resources, Alfatchafa
IDP2 Kriging
Cut-off grade % Tonnes (000's) Average grade P2O5 %
Tonnes (000's) Average grade P2O5 %
15 11,476 22.96 11,639 22.8
12 12,511 22.19 12,497 22.19
10 12,538 22.16 12,550 22.14
5 12,627 22.06 12,664 22.01
As can be seen from the tables above the results are insensitive to raising of the cutoff grade and are identical for cutoffs of 10% and 15% and nearly identical for a cutoff of 20%, showing very little quantities of low grade and most of the resources assaying above 20%, which bodes well for future beneficiation.
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Additional Potential
The presence of phosphate outcrops and sub-crops all around the hills of In Tassit, Chanamaguel, and Tagit N’Ouerane suggest, by simple stratigraphic interpolation, that additional drilling and pitting will, with high certainty, encounter additional resources of similar grades and thicknesses to those estimated in this report. The presence of phosphate outcrops points to abundance of resources with very low strip ratio.
The readers are cautioned that
Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
The quantity and grade of reported Inferred Resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.
The mineral resources 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 adopted by CIM Council.
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15 MINERAL RESERVE ESTIMATES
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, which are not Mineral Reserves, do not have demonstrated economic viability.
As such, the information on which the PEA study is based and the accuracy of the PEA itself do not support the declaration of Mineral Reserves.
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16 MINING METHODS
16.1 Introduction
In this section, Coffey Mining reviews items typically required for project development.
Coffey Mining has identified within the TPP area, 15.8 Mt at a grade of 27.5% P2O5 pitable mineral inventory, for development in the northeastern region of Mali based on mining from the Tin Hina and Tarkint Est areas. This includes approximately 8.4 Mt located in the Tin Hina mining area and a further 7.4 Mt of pitable high-grade material sourced from the Tarkint Est mining area (Table 16-1). Additional low-grade (<27% P205) phosphate resources are available in the TPP area but have not been considered for extraction at this time.
Coffey Mining has applied a 2.5% mining loss to the mineral resources as well as a 2.5% dilution factor for the mining areas within the targeted mineralized areas. Coffey Mining has assumed all dilution to have zero P2O5 content, albeit some of the dilution will contain P2O5.
Table 16-1: Tilemsi Phosphate Project Tilemsi “Pitable Tonnage” Based on Selected Mining Areas
Area
Resource
Tonnage
Grade
% P2O5
Mining Losses
%
Dilution
% “Pitable
Tonnage”
Grade
% P2O5 Strip Ratio
Tilemsi 8,367,000 27.3 2.5 2.5 8,362,000 26.6 6.4:1
Tarkint Est 7,444,000 29.1 2.5 2.5 7,440,000 28.4 7.24:1
Total 15,811,000 28.1 2.5 2.5 15,803,000 27.5 6.8:1
16.2 Geohydrology and Dewatering
The mining costs include an allowance to pump out rainwater and low volumes of groundwater from pit sumps. Little information is available on the groundwater regime in the vicinity of the TPP, as geohydrology studies have not been completed. Further detailed geohydrology work will be required for an environmental base study and for future dewatering estimations required for mine planning purposes. The geohydrology aspects of the TPP will be better understood once the geohydrology studies are complete.
16.3 Geotechnical
At this stage no geotechnical work has been conducted on the deposits. Mining will proceed below the current surface topography to a maximum depth of 22 m below the general elevation with the average overburden thickness of 5.9 m. For most situations sidewalls are assumed to be at 90 degrees.
Future geotechnical engineering will be required to determine the appropriate slope design parameters and the final pit design will require geotechnical drilling for better characterization of overburden and phosphate material.
16.4 Mining Method and Equipment Selection
A first pass owner-operator mining cost model was developed based on first principles, using Coffey Mining’s inhouse cost database and recent experience in West Africa. Coffey Mining believes that the first principles cost model has ±50% accuracy, with no allowance for additional contingency.
The mining operations and maintenance will be undertaken as an owner-operator mine. Waste stripping is envisaged for all of the mining areas (SR 6.8:1) and will coincide with phosphate production. The designed pit will be mined through conventional truck and shovel mining methods applying a rollover technique, with phosphate removal being followed by backfilling of overburden material and topsoil. It is envisaged that this
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will be a free dig operation where no drilling and blasting activities are required. Topsoil is stripped and placed on an initial topsoil dump which will be used for backfilling as mined out areas are rehabilitated.
The phosphate material will be loaded in pit with excavators with 5.2 m³ buckets and transported by 24 t articulated dump trucks (ADTs) to the stockpile estimated to be on average within 1,000 m from the pit ramp. Waste material is planned to be mined utilizing an excavator with 8.4 m³ buckets and transported by 63 t rigid trucks. A 3.7 m bench height is planned for phosphate material and 5.0 m bench height for overburden material. These heights are considered appropriate for the selected loading equipment and will give reasonable economies of scale for the loading and haulage equipment.
16.5 Drill and Blast
It is envisaged that this will be a free dig operation where no drilling and blasting activities are required.
16.6 Load and Haul
The availability of the shovels and trucks has been set at 90%. Excavator fill factor is set between 55% and 95%, while the truck fill factor is set at 95%. A lower fill factor has been assumed for areas where the phosphate thickness is less than 1.0 m. A seam thickness cut-off of 0.25 m has also been applied. Areas with thin seam thickness are associated with higher grade areas (>30% P2O5) and therefore these areas have been scheduled for extraction. It is envisaged that dozers will be used to assist with the loading of the thin seam phosphate material. The availability of the equipment has been set at 90%. Local labour has been assumed for running of all mining equipment.
Peak requirements for the machinery are as follows. The 5.2 m³ excavator operating on phosphate material will be utilized for approximately 3,360 hours per year giving a peak annual production of between 0.87 Mt/a and 1.27 Mt/a based on the fill factor utilized. Two excavators are scheduled for the extraction of the phosphate material as well as a dozer to assist with the extraction of thin seam material. For waste (overburden) loading, an 8.4 m³ excavator will be utilized for approximately 4,200 hours per year, giving a peak annual production of 2.75 Mt/a. Three excavators are scheduled for overburden removal. For peak waste periods either pre-stripping or the underutilized smaller excavator (phosphate material) will need to be scheduled. It should be noted that the above excavator productivities do not take into account bulldozer activities that may be used to assist with overburden removal, especially removal of any clay material.
16.7 Mining Equipment Utilization and Productivity
Realistic and achievable performance in terms of productivity, mechanical availability, and utilization have been determined from best practice, and cost buildups from input from equipment suppliers and Coffey Mining’s inhouse database. Equipment utilization is effectively the time the equipment has the engine running. This is influenced by work requirements, mechanical availability, the shift operating times, and operational delays.
The work roster used for the TPP is based on a double 10-hour shift 11-day a fortnight schedule operating over an eight-month period. During four months of the year, mining operations will be halted due to extreme wet conditions. Table 16-2 indicates the mining shifts and annual production hours while Table 16-3 shows the excavator shift details that were assumed for TPP.
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Table 16-2: Tilemsi Phosphate Project Mining Shifts and Annual Production Hours
Shift # 2
Shifts Working # 2
Total Time days/yr 210
Note:
4 months of the year production will be stopped due to weather days/yr
Net Worked days/yr 210
Effective hours per day
Dayshift
Total hours hr/shift 10.00
Less:
Mobilise & Start-up checks hr/shift 0.50
Lunch including stop/start hr/shift 0.50
Moving hr/shift 0.50
End of shift blast & demobilise hr/shift 0.50
Net hours hr/shift 8.00
Effective Daily Working Hours hr/day 16.00
Available Production Hours hr/year 3,360
The effective available operating hours for the dump trucks were set at 3,360–4,200 hours, based on a double 10-hour-shift operation. The modelled truck excavator match and excavator productivity are summarized in Table 16-3. Equipment requirements are shown in Table 16-4.
The equipment life adopted for this exercise is set out in Table 16-5, although after nine years of use most major mining equipment is replaced regardless of the hours in use. Mine equipment replacements are done after two major overhauls.
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Table 16-3: Tilemsi Phosphate Project Excavator Productivity
Item Unit 5.2m3 8.4m3
Bulk density (dry) t/bcm* 2.0 1.65 Swell factor % 0.35 0.35
Loose density (dry) t/bcm 1.3 1.07
Moisture content % 5% 5%
Loose density (wet in bucket) t/m3 1.37 1.13
Bucket size m3 5.2 8.4 Bucket fill factor % 0.90 0.95
Bucket capacity m3 4.68 7.98 Wet tonnes per pass t 6.39 8.99
TRUCK TYPE Komatsu 24t ADT Komatsu 63t ADT
Truck Capacity t 24 63
m3 14.7 40
SWING CYCLE
Spot min 3.14 0.50 No of passes per truck 3 7 Cycle time sec 29.0 29.0
Loading time min 1.45 3,38 TOTAL LOADING TIME 1.95 3.88 Effective minutes per hour 50 50
Wait, Moving & clean-up (mins/hr) 14 3
No of truck loads/50min hour 18.46 12.10
Average truck fill factor (by weight) % 80% 100% Average truck fill factor (by volume) % 96% 140%
Truck Payload t 19.16 62.91
m3 12.9 55.86 Tonnes per hour (Wet) t 324 761 Tonnes per hour (Dry) t 309 725
Average availability % 90% 90%
Effective Dig Rate (Wet) bcm/h 233 608 Tonnes per hour (Wet) t/h 318 685
Tonnes per hour (Dry) t/h 303 653 Effective operating hours per day h/day 16 20 Tonnes per day (Dry) t 5,391 14,502 Effective daily production (Dry) t 4,852 13,052
Working days per year 210 210
Annual production (Dry ) t 1,020,000 2,740,000
*bcm: billion cubic metres
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Table 16-4: Tilemsi Phosphate Project Excavator Productivity
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12 Yr 13 Yr 14 Yr 15 Yr 16 Yr 17 Yr 18 Yr 19 Yr 20
Hydraulic shovel - Ore
1 1 1 1
ADT 24t Trucks - Ore
2 1 2 3
Hydraulic shovel - Waste
1 1 1 1
63t Trucks - Waste
3 1 3 3 1
Dozer 2 1 3
Grader 1 1
Water Truck
1 1 1
Service Truck
1 1 1
Grid Roller 1 1
Light Duty Vehicles
7 4 7 4 7 4
Lighting Plant
4 4 4 8 4
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Table 16-5: Tilemsi Phosphate Project Equipment Replacement Schedule
Equipment Interval Between Replacement
Hydraulic Shovel - Ore 75,000 hours
Rear Dump Truck - Ore 35,000 hours
Hydraulic Shovel - Overburden 75,000 hours
Rear Dump Truck - Overburden 45,000 hours
Bulldozer 27,500 hours
Graders 30,000 hours
Water Tankers 33,000 hours
Tire Service Trucks 44,000 hours
Bulk Explosive Truck 40,000 hours
Lighting Plants 17,500 hours
Pumps 20,000 hours
Pick-up Trucks 65,000 hours
16.8 Production Profile
The production profile (annual ROM tonnage) for the study is shown in Figure 16-1. The phosphate grade is illustrated in Figure 16-2. The stripping ratio over the life of the Project is displayed in Figure 16-3 and waste tonnage in Figure 16-4.
Mining will commence from the Tin Hina area and will operate for 13 years. Mining will continue from the Tarkint Est pits until Year 20. Mining has been scheduled to start at 200,000 t in Year 1, increase by 100,000 t a year until Year 4 to reach 500,000 t/a. Production is then increased in Year 8 to a steady state rate of 1 Mt/a, which continues to Year 20 (Figure 16-1). Over the life of the Project, some 15.8 Mt will be mined at an overall grade of 27.5% P2O5 and a stripping ratio of 6.8:1.
The LOM annual production is depicted in Figure 16-1 with the associated phosphate grade shown in Figure 16-2 and the stripping ratio displayed in Figure 16-3.
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Figure 16-1: Annual ROM Tonnage
Figure 16-2: Annual Phosphate Grade
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Figure 16-3: Annual Strip Ratio
Figure 16-4: Annual Waste Tonnage
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17 RECOVERY METHODS
17.1 Mineral Processing (Beneficiation)
GBM designed the beneficiation process.
Process Overview
The phosphates are hosted within Middle Eocene laminated clays and silts within a seam that varies from 0.5 m to 2.2 m in thickness and is below an estimated overburden of 4.0 m consisting mostly of ferruginous sands and sandy clays.
The total Inferred Resource for the TPP is estimated to be 50.0 Mt at an average grade of 24.3% P2O5 (at cut-off of 5–10% P2O5). The apatite is usually carbonate-fluorapatite, Ca5(PO4)3F (francolite). Geochemical analyses show that the phosphate ore is low in deleterious elements (Cd <1 ppm and U <40 ppm) but rich in Fe2O3 and Al2O3 (about 11 % combined).
The gangue is usually quartz grains (20 –50 µm), montmorillonite, and kaolinite clays and is typically stained by goethite-limonite.
Figure 17-1 shows the block flow diagram for the proposed beneficiation process of the phosphate ore (see Appendix B for detailed flowsheet). The proposed beneficiation process as described in the Process Description includes coarse classification, hydraulic classification, attritioning, milling, wet magnetic separation, filtration, and drying.
The beneficiation plant will be located approximately 3 km south of the town of Bourem and 1 km from the Niger River (Figure 17-2).
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Figure 17-1: Block Flow Diagram
Scrubbing (with Trommel)
Primary Desliming
Wet Attritioning
Secondary Desliming
Screening
Filtering 1
Phosphate Ore
+12 mm
Tailings Thickening TSF
+850 µm
-106 µm
Wet Magnetic
Separation
Concentrate
Thickening 2
Drying 2 Drying 1
Granulating
-106 µm
+106
µm
Filtering 2
MGP Product
Storage HGP Product
Storage 1 HGP Product
Storage 2
Concentrate
Thickening 1
-850 µm
Waste Dump
Milling -850 µm
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Figure 17-2: Site Plan
Material Handling
ROM ore will be trucked and dumped on the ROM pad by haulage trucks. The ROM ore will then be fed into a feed hopper by a front-end loader. The ore passes through the ROM feed hopper by gravity onto a belt feeder before being transferred onto a feed conveyor and then transported for coarse classification.
Coarse Classification
Coarse classification is required to remove material greater than 12 mm that is low in phosphate. Material will be conveyed at a rate of 61 t/h in Phase 1 and 122 t/h in Phase 2, directly from the feed hopper into a 90 kW, 2.1 m diameter X 5 m long drum scrubber via a conveyor, with process water added directly into the drum scrubber chute. The undersize (-12 mm) discharges through the trommel screen and pumped to the primary desliming cyclone cluster for hydraulic classification. The trommel oversize (+12 mm) will be stockpiled for transportation to a waste dump at the mine.
Hydraulic Classification
This area has been sized for the first phase of production of 0.5 Mt/a. Upon progression to the second phase of production, 1 Mt/a, this area will be duplicated to accommodate the increased throughput.
The undersize (-12 mm) material from the drum scrubber trommel will be pumped to the primary desliming hydrocyclones cluster by means of two 45 kW pumps (one duty and one standby). Material less than -106 µm, which is low in phosphate but high in iron oxide and aluminium oxide, will be removed as overflow from the hydrocyclones. The primary desliming hydrocyclones underflow (+106 µm) will be transferred by launder directly into an attrition scrubber.
Overflow from the primary desliming hydrocyclones will be pumped via two 18.5 kW pumps (one duty and one standby) to the 22 kW, 8 m diameter X 2.5 m tailings thickener for thickening prior to disposal. Tailings thickener overflow will be recirculated for reuse as process water.
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Attrition and Classification
This area has been sized for the first phase of production of 0.5 Mt/a. Upon progression to the second phase of production, 1 Mt/a, this area will be duplicated to accommodate the increased throughput.
The underflow from the primary desliming hydrocyclones will be gently scrubbed to prevent altering the particle size distribution of the material in the attrition scrubber, while liberating the phosphate minerals bound by any remaining clay agglomerate. The 37 kW wet attrition unit comprises three 0.65 m3 cells. The attrition scrubber discharge will be pumped via two 37 kW pumps (one duty and one standby) to a cluster of secondary desliming hydrocyclones to remove any material less than 106 µm.
The underflow (+106 µm) from the secondary desliming hydrocyclones will be pumped to a primary vibrating screen with screen aperture of 850 µm and a duty of 15 kW. The oversize (+850 µm) from the primary vibrating screen will feed a ball mill by gravity. The undersize (-850 µm) from the primary vibrating screen will be pumped via two 4 kW pumps (one duty and one standby) to one of two 2 kW, 8 m diameter X 2.5 m concentrate thickeners (concentrate thickener 1). Overflow from the secondary desliming hydrocyclones will be pumped via two 18.5 kW pumps (one duty and one standby) to the tailings thickener.
Milling and Classification
This area has been sized for the first phase of production of 0.5 Mt/a. Upon progression to the second phase of production, 1 Mt/a, this area will be duplicated to accommodate the increased throughput.
The oversize from the primary vibrating screen will feed the 165 kW, 2.1 m X 2.3 m ball mill by gravity. The ball mill will be in a closed circuit with a secondary vibrating screen with screen aperture of 850 µm. The ball mill discharge will be pumped via two 15 kW pumps (one duty and one standby) to the secondary vibrating screen. The oversize (+850 µm) from the secondary vibrating screen will be recirculated through the ball mill by gravity and the undersize (-850 µm) will be pumped to the wet high-intensity magnetic separator (WHIMS) stage. This area will be under cover.
Magnetic Separation
This area has been sized for the first phase of production of 0.5 Mt/a. Upon progression to the second phase of production, 1 Mt/a, this area will be duplicated to accommodate the increased throughput.
The undersize from the secondary vibrating screen in the ball mill circuit will be pumped to the WHIMS stage via two 5.5 kW pumps (one duty and one standby). Magnetic material from the magnetic separation will be pumped to the tailings thickener via two 5.5 kW pumps (one duty and one standby). The non-magnetic material will be pumped by two 5.5 kW pumps (one duty and one standby) to the concentrate thickener for dewatering prior to filtration. Middlings material produced will be recycled to the feed box feeding the WHIMS stage. The magnetic separation area will be under cover.
Concentrate Dewatering
The undersize from the vibrating screen will be pumped to concentrate thickener 1, and the non-magnetic material from the WHIMS stage will be pumped to the second of the two 2 kW, 8 m diameter X 2.5 m concentrate thickeners (concentrate thickener 2), where flocculant (Magnafloc 1011) will be added at a dose rate of 20 g/t to aid in the settling of solids and clarification of the overflow water in both concentrate thickeners. The overflow water from the concentrate thickeners will launder to the process water dam and the underflow will be pumped to the filtration units 1 and 2.
Filtration and Drying
The underflow from concentrate thickener 1 will be pumped to the filter feed tank via two 4 kW pumps (one duty and one standby) and then on to filtration unit 1 by means of two 7.5 kW pumps (one duty and one standby). Upon progression to the second phase of production these pumps will be replaced with pumps capable of handling the increased throughput. The filtration unit will remove as much water as is practical and the material will discharge onto a conveyor which will transport it into rotary dryer 1, which is 110 kW,
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diameter 2.4 m X 18.3 m long, where all the remaining moisture will be removed prior to granulation. Granulated product will be stored as MGP product.
The underflow from concentrate thickener 2 will be pumped to the filter feed tank via two 4 kW pumps (one duty and one standby) and then on to filtration unit 2 by means of two 7.5 kW pumps (one duty and one standby). Upon progression to the second phase of production these pumps will be replaced with pumps capable of handling the increased throughput. The filtration unit will remove as much water as is practical and the material will discharge onto a conveyor that will transport it into rotary dryer 1, which is 110 kW, diameter 2.4 m x 18.3 m long, where all the remaining moisture will be removed. The discharge from dryer 2 will either be transferred to silos for storage as ungranulated HGP product or it will be conveyed to the granulating plant for granulation and the product from granulation stored as granulated HGP product.
Tailings Management
The underflow from the primary and secondary desliming cyclones will be pumped to the tailings thickener. Magnetic material from the WHIMS 1 stage will also be pumped to the tailings thickener.
Flocculant (Magnafloc 1011) will be added to the tailings thickener at a dose rate of 50 g/t to aid in settling of the solids and clarification of the overflow water.
The underflow from the tailings thickener will be pumped to the tailings storage facility (TSF) and the overflow will launder to the process water dam.
There are two tailings streams to be stored in the tailings storage facility
• fine tailings (-106 µm) • magnetic tailings (-850 µm)
Reagents
The flocculant (Magnafloc 1011) will be supplied to the site as a dry powder in bags. The stores will hold 3 months’ supply of packaged flocculant. A flocculant mixing, storage, and dosing facility will supply the concentrate and tailings thickeners.
Industrial Operations
The personnel schedule envisioned at the Bourem beneficiation and granulation plants is presented in Figure 17-3.
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Figure 17-3: Personnel Schedule Beneficiation and Granulation
General ManagerManager (Western)
1
Camp ManagerManager
1
CookOperator
4
JanitorLabourer
2
CleanerLabourer
6
HSE ManagerManager
1
Environmental OfficerOperator 1
Safety OfficerOperator
2
Community Liaison OfficerOperator 1
Administration Manager
Manager 1
Warehouse Supervisor
Supervisor 1
StorekeeperOperator
3
Security SupervisorSupervisor
1
Security GuardLabourer
16
Procurement OfficerOperator 3
IT SupervisorSupervisor
1
Payroll ClerkOperator
1
SecretaryLabourer
1
Accountant ClerkOperator
1
Laboratory Manager
Manager 1
Laboratory Technicians
Operator 4
QA ManagerManager
1
Laboratory Assistants
Operator 4
Senior ChemistSupervisor
1
Operations Manager
Manager (Western) 1
Logistics ManagerManager
1
Process EngineerManager (Western)
2
Shift SupervisorSupervisor
4
Operator – Granulation
Operator 30
Operator – PackingOperator
20
Operator – Mag SepOperator
10
Operator – Dewatering
Operator 15
Operator – Product Dispatch
Operator 10
Operator – AttritonOperator
10
Operator – Utilities & Reagents
Operator 5
Operator – Material Handling
Operator 10
Administration Assistant
Labourer 1
MetallurgistSupervisor (Western)
1
Personal AssistantLabourer
1
Maintenance Manager
Supervisor (Western) 1
Administration Assistant
Labourer 1
C&I EngineerSupervisor
1
Maintenance ForemanSupervisor 1
Mechanical Labourer
Labourer 20
C&I TechnicianOperator
1
Electrical LabourerLabourer
4
Electrical EngineerSupervisor (Western)
1
Maintenance Engineer
Supervisor (Western) 1
Maintenance PlannerSupervisor 2
Mine Manager (Others)
Manager (Western) 1
GeologistSupervisor
1
Grade ControlOperator
1
Engineering FormanSupervisor
1
EngineerManager
1
Mine PlanningSupervisor
1
Mine SuperintendentManager (Western) 1
Administration Assistant
Labourer 1
Mine ForemanSupervisor
2
SurveyorSupervisor
1
HR ManagerManager (Western)
1
NurseOperator
2
DriverLabourer
2
Training SupervisorSupervisor
1
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17.2 Granulation Plant
CFIh prepared the processes and assessed the potential performance of the granulation and NPK blending plants.
Design Criteria
RAW MATERIALS
Table 17-1: Phosphate rock specification
High Grade Medium Grade
Origin Mali Mali
Granulometry 95% between 100 and 850 µm
95% between 100 and 850 µm
Temperature 30.0–40.0°C 30.0–40.0°C
Composition % (w/w) % (w/w)
H2O 1.0 max 1.0 max
P2O5 36.2 27.5
CaO 44.4 39.2
MgO 0.2 0.7
Al2O3 0.5 3.6
Fe2O3 4.4 7
SiO2 1.1 12.4
Na 2.2 2.3
K 0.157 1.143
S 0.23 0.23
F 2.97 2.22
Cl 0.103 0.098
CO3 4.21 3.48
Ti 0.05 0.07
Cr 0.05 0.05
Ni 0.05 0.05
Cu 0.05 0.05
Zn 0.05 0.05
Pb 0.05 0.05
Total C 0.93 0.77
Organic C 0.09 0.08
Sr 1.396 1.1
Hg 0.00133 0.00027
Th 0.00202 0.016
U 0.055 0.06
Cd 0.00194 0.00217
LOI (% dw) Hold Hold
Notes:
Both grades of phosphate rock (PR) are processed simultaneously but at different capacities o High grade: 63% of capacity o Medium grade: 26% of capacity o Waste: 11% of capacity
Ground rock will be below 850 µm
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Process Description
BASIS OF DESIGN
The industrial complex will include the following infrastructure:
Intermediate storage (20,000 t) to store both grades of PR
Final product storage (20,000 t) divided in 2 sections: o 15,000 t for bulk product o 5,000 t for big bags
The granulation control room will be local, in front of the granulator, with replication of screens in the main control room located in the beneficiation plant.
DESCRIPTION (SEE FLOWSHEET IN APPENDIX C)
Section 1: Solid raw material storage
Both HGP and MGP will leave the beneficiation plant for the intermediate storage complex (capacity of 20,000 t) via feed hoppers (1-F-001A/B), feeding conveyors (1-U-001A/B), and distributing conveyors (1-U-002A/B).
PR is fed to the granulation plant by a front-end loader (1-W-001A/B) via PR distributing hoppers (1-F-002A/B), PR conveyor 1 (1-U-003), PR conveyor 2 (1-U-004), PR diverter 1 (1-Z-001), and PR diverter 2 (1-Z-002) to split the feeding between the different silos.
As an option, peat binder and M4 bacteria (if required) are stored in a building (capacity for 6 months) and fed to the plant using one of the same front-end loaders (1-W-001A/B) and the same feeding system. A KCl solution will be prepared by KCl solution dosing package (1-P-006).
Section 2: Raw material dosing system
As the various raw materials are received, they are proportioned and conveyed to the granulation section. Each of the solid raw materials has dedicated hoppers i.e. first hopper (1-F-003A) for KCl, second hopper (1-F-003B) for MGP, third hopper (1-F-003C) for HGP, fourth hopper (1-F-003D) for filler or other raw material, fifth hopper (1-F-003E) for peat binder/micronutrient 1 and sixth hopper (1-F-003F) for M4 bacteria/micronutrient 2.
Belt weigh feeders—first feeder (1-U-005A), second feeder (1-U-005B), third feeder (1-U-005C), and fourth feeder (1-U-005D)—are provided below each of the main raw material hoppers. Screw feeders—fifth feeder (1-U-005E) and sixth feeder (1-U-005F)—with variable speed drives are provided below the hoppers for peat binder, bacteria, and micronutrients.
Proportioned quantities of raw materials (RM) are transferred to the granulator by RM collecting conveyor (1-U-006) and RM feeding conveyor (1-U-007). The recycle from the plant is weighed and fed to the same conveyor to maintain required recycle ratio and then transferred with the help of RM elevator (1-U-008). RM magnet (1-Z-003) is installed for collecting iron pieces that may come from raw material handling.
Dust generated in conveyors and elevators are sent to cyclones (1-S-002).
Section 3: Granulation and drying
The granulator (1-D-001) is fed with solid raw materials, filter cake from press filter (1-S-010), scrubbing liquor from the air treatment section, process water from battery limits, and LP steam from battery limits. Steam is introduced through granulator sparger (1-R-001). Scrubber liquor, process water, and steam ensure the granulation process.
Granules leaving the granulator (1-D-001) enter the dryer (1-D-002). Wet granules are dried with hot air supplied by a hot air generator unit (1-E-001) using fuel oil; this equipment comprises an air filter, burner, combustion chamber, and air blower.
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Dry granules from the dryer (1-D-002) are transferred to the screening and crushing section via a dryer outlet conveyor (1-U-009) and screen elevator (1-U-010). The dryer outlet conveyor (1-U-009) is fitted with a dryer magnet (1-Z-004) to remove the tramp iron.
The air from the granulator (1-D-001) is extracted to the air treatment section. Air leaving the dryer (1-D-002) contains dust, the majority of which is separated in dryer cyclones (1-S-001). The dust is conveyed by a dust conveyor (1-U-011) as recycle. Air from the cyclone discharge is transferred to the air treatment section for further treatment.
Section 4: Screening and crushing
Phosphate granules from the screen elevator (1-U-010) enter consecutive screens (1-S-003A/B). On the first screen, the fines are separated from the oversize and the fines are recycled. On the second screen, the oversize is separated from the on-spec product. Oversize granules are sent to two crushers (1-S-004A/B) with the help of diverter 1 (1-Z-005). Crushed granules are then discharged to the recycle conveyor (1-U-013) with the main recycle stream.
Part of the on-spec product may be recycled with the help of diverter 2 (1-Z-006) for maintaining the recycle ratio for difficult formulae.
Dusty air from screens (1-S-003A/B), crushers (1-S-004A/B), recycle conveyor (1-U-013), and cooler elevator (1-U-012) are de-dusted by cyclones (1-S-002). The cyclone exhauster (1-B-001) sends the cyclone outlet to the air treatment section. The dust collected from these cyclones (1-S-002) is recovered in the granulation section with the recycles.
Section 5: Cooling
Coming from the cooler elevator (1-U-012), the good product enters the cooler (1-D-003) to be cooled below 45.0°C.
Atmospheric air is filtered by the cooler filter (1-S-005) and blown by the cooler blower (1-B-002). The cooled air goes through the cooler (1-D-003) to decrease the temperature of the phosphate granules. The dusty air is extracted by the cooler exhauster (1-B-003) and then sent to the cooler cyclones (1-S-006) to separate the dust from air. The air is sent to the air treatment section for further de-dusting and the dust is collected on the dust conveyor (1-U-011) for recycle.
Leaving the cooler (1-D-003), phosphate granules are sent to the coating drum (1-D-004) via the cooler outlet conveyor (1-U-014). Diverter 3 (1-Z-007) permits granules that do not require coating to be sent directly to storage.
Section 6: Coating (Optional)
The final granular product enters the coating drum (1-D-004).. Coating agent from the battery limit is stored in the coating agent tank (1-TK-001), which is heated by a steam coil and in which mixing is achieved via the coating agent agitator (1-A-001). The coating agent pumps (1-P-001A/B) are used to transfer and spray the coating agent into the coating drum (1-D-004).
Any material that accumulates in the trenches and gutters of the coating section is collected in the coating pit (1-PT-001) and separated from the main effluent network. The coated product is extracted by the coating outlet conveyor (1-U-015).
Section 7: Air treatment
Air is collected from the granulation, drying, crushing and screening, conveying, and cooling sections for further treatment to remove dust.
The air treatment section comprises two venturi scrubbers. Dusty air is introduced into the venturi where the washing solution is sprayed by scrubber pumps (1-P-002A/B) from the scrubber tank (1-TK-002), allowing the coalescence of the liquid and the particles. Make-up water from battery limit is added.
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Dusty air from granulation and drying sections is treated in the first scrubber (1-S-007). Dusty air from the screening, crushing, and cooling sections as well as from de-dusting from conveyors and elevators is treated in the second scrubber (1-S-008).
The scrubbing water is recycled to the granulator (1-D-001). In the event of low water consumption in the granulator (1-D-001), scrubbing water is stored in the scrubbing pool (1-TK-003) and could be recirculated to the air treatment section as dirty effluent. The scrubbing water can be used in the granulator (1-D-001) should more water be required. Particles may settle and accumulate at the bottom of the scrubber tank (1-TK-002) to form a sludge, which is then transferred to the liquid effluent collection section.
After leaving the first scrubber (1-S-007) and second scrubber (1-S-008), air is extracted by the first exhauster (1-B-004) and second exhauster (1-B-005) and expelled into the stack (1-Z-008) where it is released to the atmosphere.
Section 8: Liquid effluent collecting
The liquid effluent collecting system is equipped with a scrubbing pool (1-TK-003), which collects effluents from the plant and excess scrubbing water from scrubber pumps (1-P-001A/B).
Sludge from the sludge pumps (1-P-003A/B) is treated in the decanter (1-S-009), from which water is sent to the scrubbing pool (1-TK-003) while concentrated sludge is pumped by filter pumps (1-P-004A/B) to the press filter (1-S-010). The filter cake is recycled to the granulation section, while water flows to the scrubbing pool (1-TK-003). Some of the clean liquor from the decanter (1-S-009) and press filter (1-S-010) is recycled to the scrubber tank (1-TK-002).
The air agitator (1-A-002) homogenizes the effluent to minimize the quantity of sludge deposits. The pool is designed with a slope to allow a wheel loader vehicle to enter for recovering sludge. Sludge can also be recovered in the granulation section. The recycle pumps (1-P-005A/B) are used for intermittently recycling of the solution back to the scrubber tank (1-TK-002).
Section 9: Storage, packing and loading
The two different grades of rock phosphate granules are stored in storage boxes. The final product leaving the coating outlet conveyor (1-U-015) is sent to bulk storage by the final product conveyor (1-U-016). From this bulk storage, front-end loaders (1-W-001C/D) are used to feed the packing section via the feeding packing hopper (1-F-004), packing elevator (1-U-017), packing conveyor (1-U-018), and diverter 4 (1-Z-009) to feed the truck loading system (1-Z-010) or the big-bag packing system (1-Z-011).
To avoid buildup in silos, atmospheric air is filtered by the packing air filter (1-S-011), heated by the packing air heater (1-E-002), and blown into the silos feeding loading or packing sections by the packing blower (1-B-006).
Section 10: Boiler package (Optional/Future)
A package (1-E-003) including boiler, water treatment, condensate collecting tank, and pumps is installed to feed the equipment requiring steam.
Plant Performance
CAPACITY (EACH PLANT)
Daily capacity 900 Mt/day Yearly operation 330 days Daily operation 24h/day
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Product Quality
This product will be manufactured in the phosphate and fertilizer granulation plant located at Bourem, Mali.
Product formula Hyperphosphate Medium-grade 0-27-0 Hyperphosphate High-grade 0-35-0
Form Solid, Granules
Raw material consumptions
For Hyperphosphate - High Grade Product (~35% P2O5)
Rock Phosphate 850 kg/t of product wet KCl solution @ 10% concentration 150 kg/t of product
For Hyperphosphate - Medium Grade Product (27% P2O5)
Rock Phosphate 850 kg/t of product wet KCl solution @ 10% concentration 150 kg/t of product
Utilities
FOR PROCESS ONLY:
Electricity <75 kWh/t of final product Fuel oil <12 l/t of final product Water <0.8 m3/t of final product
Industrial Operation
PRODUCTION TEAM
See Figure 17-3.
MAINTENANCE TEAM
The same team as for the beneficiation plant will be used.
17.3 NPK Plants
Design Criteria
RAW MATERIALS
Urea Formula CO(NH2)2 Type prills N total (wt.% on dry basis) 46% minimum Biuret (wt. %) 1.0% maximum Moisture (wt. %) 1.0% maximum Particle size 90% minimum between 1.0 and 4.0 mm Density 760–890 kg/m3 Temperature ambient
Phosphate Granules Formula 0-35-0 Hyper Granulated High-Grade Phosphate
0-27-0 Hyper Granulated Medium-Grade Phosphate Form Solid Humidity 0.5% Granulometry 1.0–4.0 mm Temperature Ambient
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Potassium chloride Form solid, free flowing, compacted or granulated without lumps Formula KCl K2O 60% minimum by wt. Moisture 2% maximum by wt. (1% normal) Density 1 020–1 080 kg/m3 Particle size 90% minimum between 1.0 and 4.0 mm
Micronutrient All micronutrients will be sourced through phosphate granules.
Process Description
BASIS OF DESIGN
NPK products of various formulae, specific to the country, will be produced in this plant by bulk blending. Continuous blending via modern technologies is planned with the entire proportioning and blending operation achieved using the latest automatic control system.
The design provides for high- and medium-grade rock phosphate granules, urea, and KCl (muriate of potash; MOP), as well as other future raw materials like di-ammonium phosphate (DAP), mono-ammonium phosphate (MAP), and ammonium nitrate (AN). The micronutrients will be available through phosphate granules.
Two main storage facilities are foreseen: a raw material storage facility with a capacity of 5,000 t to store raw materials in big bags and a final product storage facility with a 5,000 t capacity for storing product in 50 kg bags.
The planned storage area is consistent with practices in West Africa where 25/50 kg bags are stored in giant piles as shown on the photo below (storage in Togo bulk blending plant).
Description (see flowsheet in Appendix D)
SECTION 1: RAW MATERIAL AND PRODUCT STORAGE The raw materials will be transported in big bags or in bulk to the blending plants by trucks and shall be unloaded and stored inside the in-plant storage facility. Product bags and pallets from packing units will be stored separately in the in-plant product storage facility with the help of fork lift (1-W-001C/D). The raw materials from the in-plant storage will be transported with the help of fork lift (1-W-001A/B) and will be manually fed to the proportioning unit (1-Z-001).
SECTION 2: PROPORTIONING The proportioning unit (1-Z-001) comprises six load cell mounted feed hoppers each fitted with stainless steel (SS) weigh feeder and a common primary mixer conveyor. Based on product formula, requisite proportions of raw materials will be continuously fed with the help of weigh feeders. A common mixer conveyor below the weigh feeder will transport the materials to a big lump screen (1-S-001) with the help of
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an elevator (1-U-001). The oversize lumps will be collected in a reject hopper (1-F001) for subsequent manual bagging with the help of a manual bag loader (1-Z-002).
SECTION 3: BLENDING AND BAGGING The on-spec granules from the big lump screen (1-S-001) will be discharged to a screw blender (1-MX-001). Blended product will be taken to a fine screen (1-S-002). The fines generated in the blender will get separated in the fine screen (1-S-002) and the final product will be taken to the respective small bag machine (1-Z-005A/B/C) through diverters (1-Z-003/004). Fines will be transported to the reject hopper (1-F-001). The product bags will be transported to storage after palletizing. The bags are transported to the palletizer (1-W-006A/B) with the help of bagging conveyors 1 and 2 (1-U-003 / 1-U-004). The palletizer (1-W-006A/B) will prepare cartons that will be transported to product storage by forklifts (1-W-001C/D). Truck loading of bags also may be done with the help of flat incline conveyor (1-U-002).
17.4 NPK Plant Performance
Process
CAPACITY (EACH PLANT)
Capacity (design) 300,000 Mt/a NPK Capacity (nominal) 125,000 Mt/a NPK Grades NPK 15-15-15 NPK 10-10-20
NPK 6-20-10 NPK 10-15-2 NPK 15-10-1
Yearly basis 330 days Daily operation 24h/24h
PRODUCT QUALITY
The bulk blending plant will manufacture NPK fertilizer of desired grades as shown in Table 17-2 below, using raw materials like granulated phosphate rock, urea, and KCl (MOP). Micronutrients will be available through the phosphate granules.
Table 17-2: NPK Grades
NPK Grades N P K Mg Zn
15-15-15 15 15 15 0 0
10-10-20 10 10 20 0 0
6-20-10 6 20 10 0 0
10-15-20 10 15 20 0 0
15-10-10 15 10 10 0 0
23-10-5-4-2 23 10 5 4 2
20-10-10 20 10 10 0 0
12-12-17-2 12 12 17 2 0
20-10-8 20 10 8 0 0
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Form solid Humidity >1% Granulometry 1.0–4.0 mm Temperature ambient
EXPECTED CONSUMPTIONS
Raw material consumptions
The raw material consumption will depend on product formula. For example, the requirements for a 15-15-15 NPK using high-grade granulated phosphate rock as the raw material is illustrated in Table 17-3.
Table 17-3: NPK 15-15-15
Raw N P2O5 K2O Other
Material 15 % 15 % 15% --
Urea 0.326 -- -- --
HPR -- 0.417 -- --
KCl -- -- 0.250 --
Filler -- -- -- 0.007
It should be noted that 15-15-15 cannot be produced using medium-grade granulated phosphate rock.
UTILITIES
For process only:
Electricity 2.55 kWh/t of final product
PRODUCTION TEAM
Each plant will have one manager and five supervisors—one for each shift.
Operating the plant requires five teams of 12 people each (six in raw materials, one in bulk blending, one in the control room, four in packing of whom two will also deal with final storage). Three teams work each day (3 X 8 hours), providing time off for the other two teams.
MAINTENANCE TEAM
The maintenance team will consist of one maintenance engineer for each mechanical, electrical, and instrumentation discipline with three support technicians for each discipline.
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18 PROJECT INFRASTRUCTURE
18.1 Mine
Coffey Mining reviewed the infrastructure required at the Tilemsi mine site and the beneficiation plant in Bourem.
Mine Workshop
It is envisaged that a four-bay workshop (487 m2) would be required to adequately service the mining fleet for both the Tin Hina and Tarkint Est Project areas. The workshop will be inclusive of wash-down pad, tire change pad, workshop offices, tool storage, and warehousing. Provision has been made for workshops at both the Tin Hina and Tarkint Estsites.
Haul Road Construction
The haul road construction costs are based on a nominal haul road length of 9.95 km for the TPP area, based on a haul road width of 10 m and 16 m for phosphate material and waste, respectively. The construction of site-access roads, culverts, or causeways has not been allowed for.
Explosive Storage
As mining will not require drilling and blasting, no provision has been made for explosive storage.
Off-Mine Transportation
All ROM material mined from the TPP area will be transported some 95 km to the beneficiation plant at Bourem.
Light Vehicles
Seven light duty vehicles (LDV) have been allocated upon commencement of the Tin Hani area with a further four LDVs required to support steady state mining operations.
Software and Hardware
Table 18-1 provides a summary of the minimum software and hardware required for the mining operations. Coffey Mining has made provision to replace software and hardware every five years.
Table 18-1: Tilemsi Phosphate Project Software and Hardware Costs
Type Item Cost (USD)
Hardware
Printer/Plotter 100,000
Computers 80,000
Server & Systems Setup 40,000
Software
Surpac or similar 100,000
Grade Control / Planning Software 40,000
Other 40,000
Total USD 400,000
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Consumables First Fill
A provision has been assumed for first fill consumables for the start of the TPP, which includes the following:
Diesel
Lubricants
Spare tires
Spare GET
Diesel Generator and Diesel Storage
DIESEL GENERATOR
The costs for generating power contribute to the operating expenses of the mining operation. The base case used for design purposes is the use of diesel-powered generator sets (i.e. two 1-MVA generators). This option gives the lowest initial capital expenditure, but has the highest operating costs.
DIESEL STORAGE
The conceptual design of the bulk fuel storage and dispensing systems to distribute diesel to the mine will include the following elements:
Bulk fuel storage
Diesel pumps and filling station at the mine site
Dispensing of lubricants
Filling stations for small vehicles
Spill containment structures at all storage facilities
Mining Village
The remote location of the TPP requires that adequate housing is provided to the workforce for mining operations. The provision of a mining village with ample amenities and recreational facilities will contribute to the well-being of the workforce.
The village will provide housing, amenities, and recreational facilities for 100 people. The village will be self-sufficient, and electrical power will be produced by a diesel generator plant located at the village.
The proposed village will have the following facilities provided:
Accommodation units o 20 units single quarters (20 m2) o 80 shared quarters (20 m2)
Administration offices
Training centre
Kitchen, dining room with recreation facilities
Refrigerated and dry bulk storage
Ablution facilities
Clinic
Laundry
Maintenance workshops
Laboratories
Fuel storage and filling station
Electrical power generation and distribution network
Potable water storage and treatment plant
Sewer treatment plant
The village power requirements are estimated at 100 kVA capacity and water consumption at 20 m3 per day.
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18.2 Beneficiation and Granulation Plants – Bourem
Site Access
The site is accessed via the RN8 highway, which runs between Gao and Bourem. A new road approximately 500 m in length is to be constructed from the existing highway to the proposed beneficiation plant. Similarly, a road approximately 200 m in length is to be constructed from the highway to access the accommodation village to be constructed on the outskirts of Bourem. Main roads accessing the site and within the site will be 8 m wide to allow two-way traffic for heavy vehicles. Minor roads around the site for single-way traffic will be 4.6 m wide. Patrol roads formed with graded earth will follow the inside line of the outer perimeter fence of both the beneficiation plant and accommodation village. The roads are to be compacted fill sub-base with a compacted aggregate base course, an asphalt bonded base course and a bitumen wearing course. The road construction methods are to match preferred local construction techniques and requirements.
Power
As well as supplying power for the beneficiation plant, its associated infrastructure, utilities, and the accommodation village, the diesel generating sets will provide excess supply to the town of Bourem.
The generators and transformers that form part of the plant power station will be supplied in containerized units. The design has been based on 1.6 MW diesel generating units with seven installed for Phase 1 of operation and an additional four units installed for Phase 2. The units will be supported on a reinforced concrete ground bearing slab. A bund wall and sump pit will be provided to contain any diesel or oil spillages. The high voltage / low voltage (HV/LV) cables from the transformers will run through recesses within the concrete slab. The power generation area will be enclosed by a chain link fence with a steel entrance gate.
A summary of the plant power load is listed in Table 18-2. The power station has been sized to ensure that there is enough capacity to start the largest motor in the process plant while all other equipment is under normal operating conditions.
Two 1,800 m³ diesel storage tanks will be required to hold four weeks’ worth of diesel to supply the diesel generators as well as site vehicles and the rotary driers. The tanks will be located within a bunded area to contain all spillages. A concrete hardstand with a drainage sump will be in place for filling the diesel storage tanks and for vehicle re-fueling. A water separator will collect all diesel that collects in the sump.
Power will be distributed throughout the process plant from the plant main multi-voltge (MV) switchgear assembly, which will be located in an air-conditioned, containerized building adjacent to the power station. Reticulation throughout the plant will be via radial circuits at 6.6 kV.
MV cabling throughout the processing site will be direct buried to reduce access restrictions and to reduce the safety risk of aerial cables in areas where vehicles and mobile equipment are expected on a regular basis. MV cables will have steel wire armor protection.
The power to all remote areas, including the town of Bourem, will be supplied via overhead power lines.
Distribution transformers and LV switchgear will be used to provide power to low voltage loads throughout the site. Three phase LV supply to motors and other services will be 400 VAC (volts alternating current).
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Table 18-2: Plant Load Requirements Summary
Description Phase 1 Phase 2
Maximum Demand 9 MW 14.5 MW
Average Power Demand 7.6 MW 12.5 MW
Estimated site power factor 0.85 0.85
Largest motors to be started 185 kW - 400 V Ball Mill
motor with VSD 185 kW - 400 V Ball Mill motor with VSD
Distribution Voltages on site 6.6 kV 11 kV
6.6 kV 11 kV
Generator Capacity 1600 kW 1600 kW
Gensets required for max demand 7 (with gensets
operating at 100 %) 11 (with gensets
operating at 100 %)
Gensets required for average power demand 6 (with gensets
operating at 80 %) 10 (with gensets
operating at 80 %)
Water
WATER STORAGE TANKS
Water will be stored in tanks for potable water supply, fire services, and gland water supply. These water services will be stored in flat-bottom, cylindrical, steel tanks. Tanks will be internally lined to prevent contamination and leakages. Reinforced concrete ring beams will form the foundations for each tank. The requirements for the fire services are based on National Fire Protection Authority (NFPA) standards and the potable water tank has been sized based on seven days of storage.
WATER STORAGE PONDS
Ponds will be used for the following services:
Process water
River (raw) water
Tailings return water
RO plant waste water
The ponds will be formed by constructing embankments on all four sides. Compacted fill material will be used to form the embankments and a high-density polyethylene (HDPE) liner will be placed on top of a layer of fill to form the waterproof layer.
Sewage Treatment
Two sewage treatment plants will be required, one at the beneficiation plant and the other at the accommodation village. The sewage treatment plant will handle all waste waters generated at the processing facility, administration area, and accommodation village. The wastewater will be reused as irrigation water after it has been treated. The untreatable solids will be collected and disposed of offsite by a licensed waste transporter. Construction will be as per supplier’s specifications with a reinforced concrete ground floor slab and a chain-link fence with steel entrance gate.
Reverse Osmosis Plant
A reverse osmosis (RO) plant is required to provide potable water that will be stored in a potable water tank and distributed around the site and the accommodation village. The wastewater from the RO plant will be
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pumped into an evaporation pond. The potable water will be used for safety showers, amenities, and drinking water. The RO plant is based on a consumption of 300 L per person, per day. Excess capacity of up to 200 m³ will be available for supplying potable water to the town of Bourem. The RO plant will be a prefabricated containerized unit with a reinforced concrete ground floor.
Plant and Instrument Air
Compressed air is to be provided for the beneficiation plant, granulation plant, and workshop for maintenance activities, equipment, control, and instrumentation. Two 160 kW air compressors will be installed under a covered building to protect the units from direct sunlight. Both air systems will have air receivers incorporated, and the instrument air system will incorporate a drier to ensure there is no moisture buildup in the system.
Fuel
Both diesel and petroleum will be stored onsite. Diesel is to be used for power generation, beneficiation plant driers, and heavy vehicle refueling. Petroleum will be used for light vehicle refueling. Due to the remoteness of the site, all fuel tanks will be sized for four weeks’ supply. Subsequently, two 1,800 m³ diesel storage tanks will be required to hold the diesel to supply the diesel generators, site vehicles, and the rotary driers. The tanks will be located within a bunded area to contain all spillages. A concrete hardstand with a drainage sump will be in place for filling the diesel storage tanks and vehicle refueling. A water separator will collect all diesel that collects in the sump.
The petroleum storage tank for the light vehicle refueling will be an above-ground, horizontal, cylindrical, steel tank mounted on plinths. The fuel storage bund areas will be enclosed by a chain-link fence with steel entrance gate. A reinforced concrete hardstand will be adjacent to the fuel storage areas for road tanker unloading. The fuel storage tanks are to be designed to API 650.
Communication
Communications will be required both internally and externally to support the operations of the plant. Telephone network connection and network infrastructure (PABX) will be required across all buildings within Project boundaries. There will also be external Internet connection and internal network connection points at each telephone point. Television connection points and associated infrastructure will also be required across all buildings.
Warehouse and Workshop
WAREHOUSE
A 2,000 m2 warehouse will be required for storage of materials and spare parts required for continued operation of the plant. The warehouse is located near the site entrance so that it is easily accessible by vehicles for deliveries. The warehouse will include storage space for spare parts, consumables, consignments, items requiring humidity/temperature-controlled storage, rotables, tires, and recyclables, as well as unpacking areas, work order processing areas, material handling areas, vehicle storage zones, and vehicle delivery areas. A service counter will be required at the entrance area to the warehouse. An administration and amenities area will provide offices, WCs, kitchen, crib room, and meeting room for supervising staff. An area in the external service yard will be designated for reagent storage, which will have a canopy cover and gated access.
A 2,000 m2 workshop will also be required onsite and is to be located near to the stores and plant area. The workshops will need to include mobile shops and repair stations for heavy, medium, and light equipment. The workshop will also need to accommodate a machine shop; mechanical repair shop; instrument, electrical, and telecommunications shop; valve repair shop; welding and fabrication shop; lifting equipment storage and inspection area; receipt and dispatch lay down area; tool and consumables area; scaffold and rigging area; external lay down area; HVAC repair shop; utilities and building maintenance; undercover
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vehicle parking; parts wash down area; muster point; waste management facility; hand wash area; safety shop; IT/telecoms interface room; waste skip bins; and gas, lubricant, and coolant storage. The workshop will also include an overhead crane for maintenance activities.
Both the warehouse and workshop will be constructed with a concrete ground floor slab with steel portal frame and blockwork infill panels up to door lintel height. Galvanized steel cladding will be used above door lintel level. The roof is to be formed with steel purlins and galvanized steel roof sheeting.
Laboratory
A laboratory will be required as part of the operations to assess the mined material and final products. The laboratory will include equipment such as an XRF analyzer, atomic absorption spectroscopy (AAS) instruments, and particle size analysis equipment. The building will include a sample delivery area where the samples are received and logged, a sample preparation area, a sample storage room, a storage room for hazardous materials and waste, laboratories for processing and analysis, offices with telecommunications to export the data, and amenities for management and technicians including toilets, kitchenette, locker rooms, and cleaning storage.
Administration Office
The administration office will be located close to the entrance of the site so that it is distanced from the noise and possible dust generated from the beneficiation plant while providing easy access for visitors. The building will be required to contain office space for managers, administration staff, and support services as well as lunch rooms, WCs, telecommunications and electronics rooms, a meeting room, wash/changing room, kitchen, and printing/copying rooms.
Security Building
The security building is located at the site entrance point to provide office accommodation for security personnel. The building will provide desk space, a WC, and a small kitchenette facility. All people entering and exiting the site will have to pass via this building.
Emergency Services Building
The building will house the emergency response team (ERT), fire services, medical centre and security staff. The facility will also provide weather protection for a fire response vehicle and ambulance, storage for firefighting clothing and equipment, air conditioned room with compressor and cooling tanks for re-filling of breathing apparatus, equipment storage, equipment testing area, a fire system command centre, offices, dispatch area, training room, vehicle washing area, WCs, kitchenette, and locker rooms.
Accommodation Village
The accommodation village is located approximately 3 km from the beneficiation plant and positioned on the outskirts of Bourem. The accommodation village will be the place of residence for managers, supervisors, and engineers and is sized for up to 80 people. Two different accommodation room types have been allowed for: one for managers and the other for supervisors and engineers. The village will be self-sufficient and will include the following:
A dining hall and kitchen including stores
Recreation building including a gymnasium, tv room, library, swimming pool, and sports hall
Mosque consisting of an ablution block, entrance, and prayer hall
Rooms for 80 people including showers, WCs, bedding, desk, and cupboards
Outdoor courts suitable for soccer, tennis, and basketball
Security building at the entrance to the village area
Ablution blocks
Sewage treatment plant
Potable water storage tanks
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Firefighting services
Community Development
BUILDINGS
As part of the community development, a school and clinic will be provided and located in Bourem along with power and potable water supply. The school will have four classrooms suitable for primary education and will contain a playground, undercover assembly area, ablution block, a library, computer room, kitchen, lunch room, and offices for staff.
The clinic will provide medical services to the local community and will contain a reception, waiting room, two doctors’ examination rooms, an operating room, two patient recovery rooms, pharmacy, store, a kitchen, WCs, and a washroom. The clinic will be fully equipped with required furniture and medical equipment.
POWER
Power will be provided to Bourem via an overhead power line from the diesel generator power station located adjacent to the TPP processing facility. Sufficient capacity will be allowed for supply of power to the clinic, school, and street lighting in the central area of the village. The 11 kV overhead power line from the TPP processing facility will connect to a 11/0.4 kV kiosk-style step down transformer in the town of Bourem. Power to the various loads shall be distributed through underground conductors at 400 V. The transformer and conductors will be sized for the loads described with an additional 50% spare capacity to allow for future loads. Protection of people and equipment from electrical faults will be provided by earthing and suitably selected switchgear devices. Street and area lighting will be weatherproof with yellow-coloured high-pressure sodium (HPS) bulbs to minimize insect attraction.
POTABLE WATER
Potable water will be provided to the town of Bourem as produced from the RO plant in the TPP processing facility. An elevated water storage tank will be installed in the village to supply water via steel underground piping to buildings and public taps. The plant has been sized to provide up to 200 m³ of potable water per day to the town.
The potable water will be stored in a horizontal, cylindrical, steel tank. The tank will be internally lined to prevent contamination and leakages. A steel structure will elevate the tank to provide water at pressure. A reinforced concrete pad will form the foundations for the tank.
Tailings Storage Facility
The design of the Tailings Storage Facility (TSF) was overseen by GBM Consultants.
SITE SELECTION
Available satellite topographic survey information is too inaccurate to use as a base plan for the TSF design but does indicate that the site is relatively flat lying. The topography of the TSF site is therefore assumed to be level for the purpose of preliminary design.
The selected site and layout of the TSF is based on the proximity to the beneficiation plant. The location of the TSF will ideally avoid sand dunes and tributary dry stream beds to the Niger River. Following a site visit and site investigation work, the preferred location of the TSF site will be more accurately defined. The shape of the TSF has been determined by the proposed combined cell layout, making it rectangular.
The plant site is located about 100 km away from the open pit mine, and waste rock from the mining operation will not be available for TSF construction. There is no information on the type of soils or rocks available locally, but it is assumed that embankment and natural lining or sub-base fill materials can be sourced onsite and that the ground can support a series of relatively low embankments. Due to the possible poor consolidation characteristics of phosphate tailings, an upstream embankment raise strategy has not been followed.
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TSF Configuration
The TSF will comprise a lined ring dyke impoundment to contain tailings and limit surface water runoff inflows. It will comprise six individual cells each measuring about 210 m X 275 m. The cells will be constructed in a progressive manner. Once operating at 1.0 Mt/a, a new cell will need to be constructed approximately every 2–3 years.
The cell embankments are proposed to be constructed using locally sourced material. The design includes a 1 mm geomembrane liner placed on a 300 mm low permeability sub-base layer. This composite lining system provides containment and limits seepages.
The configuration of the cells means that they will share embankments. The outer embankments are proposed to be about 6 m high with a crest width of 6 m to allow for maintenance and access. The internal embankments are also proposed to be 6 m high, but with a crest width of 8 m wide to allow for maintenance, access, and deployment of the geomembrane liner. Embankment slope gradients are proposed to be 1:2.5 (vertical:horizontal).
The proposed configuration allows for
Construction costs to be spread over the LOM rather than a single upfront cost at the beginning of the TPP
Reduced earthworks requirements due to embankments being shared between cells
Progressive rehabilitation of cells
The design also includes a clarification pond for recirculating supernatant water to the plant site. The geomembrane liner will be 1.5 mm because the material will remain exposed to degradation by UV light, but otherwise the configuration of the pond is the same as for the TSF cells.
TSF WATER BALANCE AND HYDROLOGY
Due to the low rainfall and high evapotranspiration, there is a moisture deficit at the site. The low amount of rainfall is likely to mean that the site water balance is largely determined by the slurry water balance. Preliminary studies based on available records suggest that water would be available for recirculation or could be left to evaporate from the TSF cell areas.
GEOTECHNICAL AND GEOMORPHOLOGY
The region is defined by a broad plateau cut by wide drainage channels or washes, leaving residual flat topped hills and plateaus. The site itself is situated on the northeastern banks of the Niger River. Investigations of the geotechnical and hydrogeological conditions on site have not been undertaken at the proposed TSF location as part of the conceptual TSF design.
PRELIMINARY SEISMICITY ASSESSMENT
A preliminary assessment of the potential impacts of seismicity on the TSF has been carried out for the conceptual design. According to the Global Seismic Hazard Assessment Programme map, this site is located in an area of low seismic risk. The predicated peak ground acceleration is 0.04 g, corresponding to an earthquake with a 10% probability of exceeding in a 50-year period, or an annual probability of one in 475.
SEEPAGE AND SLOPE STABILITY ASSESSMENT
Information on ground conditions, material properties of earthworks materials, and groundwater is not yet available for the site. A seepage and slope stability assessment should be carried out when this information is available, following a site investigation.
Fill materials used in the construction of the embankments are likely to comprise superficial soils of alluvial origin or to comprise saprolite or laterite excavated from within the cells and from the immediate locality. Embankment loadings should not exceed the bearing capacity of typical foundation soils of this kind. The preliminary TSF design includes embankments slopes of 1:2.5 and slope heights of about 6 m. The slope angle is considered to be stable in most soil types and is suitable for geomembrane liner placement. The
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design also includes shallow excavations to create the platform base in order to reduce the risk of encountering a shallow groundwater table.
REHABILITATION, CLOSURE, AND AFTERCARE
Rehabilitation of the cells can be carried out in a progressive manner, covering the exposed tailings and protecting the external slopes from erosion if necessary. It is envisaged that fill would be placed over the tailings to allow a nominal one in 100 fall towards the outside of the embankment structures at each cell location, with ditching to shed water off the internal berms. Program rehabilitation in this manner would mitigate possible dust blow impact during the operational life of the cells and would limit infiltration and prevent erosion at closure. The closure plan should be developed during the early stages of operation, making use of monitoring information and the results of regular audits.
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18.3 LOGISTICS
Logistics is one of the most critical issues for TPP due to the large distances from the mine and beneficiation/granulation plants to the various West African markets and sea ports.
Bolloré Africa Logistics (France) studied the various logistics options for GQ for the routes shown in Figure 18-2. Their findings are shown in Figure 18-1.
Figure 18-1: TPP Logistics
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Figure 18-2: Proposed Haulage Routes
The following estimates were made by Bollore Africa Logistics based on these routes and the study production requirements.
Technical Issues
Mali is a member of the UEMOA (union économique et monétaire ouest-africaine) and therefore applies its road regulations:
Authorized maximum axle load 12 t
Authorized total operational weight
51 t
HSE (health, safety, environment) policy which contains some driving rules used for this study:
Night driving on public roads No
HSE break 30 min every 4 hours
Maximum driving hours per day 8 hours per driver
Selected Equipment
Two types of trucks are considered for haulage, respectively called type A and type B. Considering that the trucks are predicted to drive 500,000 km over five years, new equipment should be used with trailers provided by a reputable and experienced supplier. Trucks will be of reputable and experienced heavy duty type such as Renault Kerax or equivalent. The expected lifetime of tractors can exceed 700,000 km and the expected lifetime of trailers is over 1,000,000 km.
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Trucks Type A Type B
GW (t) 49 70
Payload (t) 30 44
Tipper trucks type “A”:
This tipper trailer is fitted with a 30 bcm dumper body and a 6X4 tractor with a 380 hp engine and has a 33 t maximum payload. This truck is easy to offload.
Road train type “B”
The train displays a 20 bcm tipper trailer + 20 bcm tipper trailer with a dumper body and a 6X4 tractor with a 440 hp engine. The max payload is 44 t. This truck has a very high volume loading capacity.
Mining Haulage Manning
The following personnel schedule (Table 18-3) is estimated for the two phases of the TPP (i.e. 500 kt/a and 1,000 kt/a production).
Table 18-3: Haulage Manning (Road Train Type A)
FUNCTION PHASE 1 PHASE 2
Head Office - Management 14 15
HSE 4 5
Drivers – trucks + minibuses 121 219
Maintenance 42 54
Other 9 9
TOTAL 190 302
Note: Should it be possible to use type B road trains, the personnel may be reduced by up to 20%.
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19 MARKET STUDIES AND CONTRACTS
Phosphate demands and trends were reviewed by Balu Bumb & Associates, who also outlined appropriate marketing strategies for GQ going forward.
19.1 Background
United Nations population medium variant projection indicates that West Africa’s population will increase at an annual rate of 2.5% from 304 million in 2010 to 442 million in 2025 and at 2% per annum thereafter to 744 million in 2050 (Map 19-1 and Table 19-1). Over 40% of the projected population is expected to reside in urban areas. Population growth coupled with growth in per capita income (targeted to be 6% under CAADP (Comprehensive Africa Agriculture Development Programme)) will mandate that food production be increased to meet the growing demand. Members of the Economic Community of West African States (ECOWAS ) have also committed to reduce hunger and poverty by one-half by 2015 and increase fertilizer use to 50 kg/ha under the Abuja Declaration. All these efforts require that food and fibre production be increased at an annual rate of 4–6% per annum.
In the past, countries have relied on area expansion and subsistence agricultural practices. Although there is scope for area expansion in many countries, extensive cultivation will not suffice to satisfy growing demand; promoting growth in crop yield will be essential (Johnson et al. 2008). However, crop yields cannot be increased without the use of modern technologies based on improved seeds, mineral fertilizers, and other improved agronomic practices. As the current farming practices do not supply enough nutrients to replenish nutrients removed in harvested crops (60–80 kg/ha), increased fertilizer use is necessary to prevent nutrient depletion and soil degradation. Political commitment through CAADP Compacts and the Abuja Declaration has alerted policymakers to create an enabling environment to promote fertilizer use. Many countries have taken steps to promote fertilizer use through subsidies and other measures (FAO 2012). Moreover, many soils have been depleted of plant nutrients and need replenishment.
Given that current fertilizer use (less that 8 kg/ha of NPK and less than 2 kg/ha of P2O5) does not replenish the removed nutrients in harvested crops, several-fold increase in fertilizer use will be needed to ensure food security and sustainable agriculture. Thus demand for P2O5 fertilizers will continue to grow in West Africa, though at different rates in different countries.
West Africa is well-endowed with phosphate rock reserves, potentially suitable for P2O5 production. Tilemsi phosphate rock (TPR) deposits are estimated to be over 50 million tonnes—suitable for producing 15 million tonnes of P2O5—sufficient to supply needed phosphate fertilizer in West Africa for several years. TPR, being a medium reactive PR, is suitable for direct application as well as for producing phosphate fertilizers. When growing phosphate fertilizer requirements are juxtaposed with available PR resources, one can safely conclude that there are attractive options for investing in the fertilizer production in the region.
Using TPR for fertilizer production offers three distinct advantages over imported fertilizers. First, being close to markets, using TPR for production saves in transportation costs, especially for landlocked countries. Second, using local PR for fertilizer production saves foreign exchange used in importing phosphate fertilizers. Third, production facilities, being closer to the consuming areas, can ensure timely supply of fertilizer products.
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Map 19-1: West Africa—ECOWAS member states
Table 19-1: Population Projections (all variants) for West African Countries (2010-2050)
Country Year Medium variant (000’s)
High variant (000’s)
Low variant (000’s)
Constant – fertility variant (000’s)
Benin 2010 8,850 8,850 8,850 8,850
2025 13,025 13,470 12,579 13,926
2050 21,734 24,340 19,284 30,943
Burkina Faso 2010 16,469 16,469 16,469 16,469
2025 25,475 26,281 24,670 26,454
2050 46,721 51,832 41,885 61,293
Cape Verde 2010 496 496 496 496
2025 568 594 541 601
2050 632 736 540 799
Cote d’Ivoire 2010 19,738 19,738 19,738 19,738
2025 27,122 28,137 26,107 29,131
2050 40,674 46,056 35,655 57,731
Gambia 2010 1,728 1,728 1,728 1,728
2025 2,524 2,617 2,431 2,700
2050 4,036 4,557 3,548 5,745
Ghana 2010 24,392 24,392 24,392 24,392
2025 33,399 34,631 32,167 35,377
2050 49,107 55,488 43,149 65,206
Guinea 2010 9,982 9,982 9,982 9,982
2025 14,312 14,799 13,826 15,345
2050 23,006 25,782 20,398 33,319
Guinea Bissau 2010 1,515 1,515 1,515 1,515
2025 2,057 2,126 1,988 2,175
2050 3,185 3,561 2,831 4,269
Liberia 2010 3,994 3,994 3,994 3,994
2025 5,824 6,023 5,625 6,206
2050 9,660 10,833 8,558 13,579
Mali 2010 15,370 15,370 15,370 15,370
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Country Year Medium variant (000’s)
High variant (000’s)
Low variant (000’s)
Constant – fertility variant (000’s)
2025 23,519 24,251 22,787 24,952
2050 42,130 46,794 37,719 61,255
Niger 2010 15,512 15,512 15,512 15,512
2025 26,171 26,928 25,414 27,357
2050 55,435 60,956 50,183 76,394
Nigeria 2010 158,423 158,423 158,423 158,423
2025 229,796 237,115 222,477 238,118
2050 389,615 433,229 348,396 504,278
Senegal 2010 12,434 12,434 12,434 12,434
2025 17,931 18,589 17,272 19,253
2050 28,607 32,298 25,150 40,830
Sierra Leone 2010 5,868 5,868 5,868 5,868
2025 7,849 8,128 7,570 8,586
2050 11,088 12,553 9,716 17,472
Togo 2010 6,028 6,028 6,028 6,028
2025 8,016 8,327 7,705 8,620
2050 11,130 12,665 9,703 15,726
Whole of West Africa
2010 304,261 304,261 304,261 304,261
2025 442,334 456,929 427,739 463,815
2050 743,850 829,657 662,971 998,254
Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision, http://esa.un.org/unpd/wpp/index.htm Accessed September 5, 2012.
19.2 Objectives of the Market Study
In summary, the company will be mining one million tonnes of PR for beneficiation and granulation. Assuming an average 30% P2O5 in the TPR, the company is looking for a market that can absorb 280,000 to 300,000 tonnes per year of P2O5 for direct application and the balance as raw material for manufacturing NPK fertilizers.
The main objectives of this report are:
To conduct an assessment of phosphate fertilizer markets in West Africa
To provide background information for launching the above mentioned projects
To estimate the size of future P2O5 markets in different countries; more specifically countries to the south of Mali
19.3 Agricultural Background
Area, Production, and Yield
The agricultural sector is a dominant sector in most West African countries, providing income and employment to people in rural areas, supplying raw materials for agro-industries, and earning foreign exchange for balance of payment support. The UN’s Food and Agriculture Organization (FAO) has estimated that West Africa has 286 million hectares of agricultural land (see Table 19-2). Of this 95 million hectares were harvested in 2010 and another 12 million hectares were under permanent crops. Thus more than 60% of the agricultural land is still uncultivated and would be available for further cultivation. While estimating fertilizer demand, this fact should be kept in mind that farmers may choose to practice extensive agriculture rather than fertilizer-intensive agriculture because expanding cultivation on existing land is much less costly than purchasing external inputs like improved seed and fertilizers. However, to minimize the cultivation of marginal and impoverished lands and to prevent soil degradation due to nutrient depletion, national governments should make every effort to promote the use of fertilizers among smallholder farmers.
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Table 19-2: West Africa _Total agricultural area; area harvested; and area under permanent crops Country Agricultural area
(ha) in 2009
Flag Area harvested (ha) in 2010
Flag Area under permanent crops (ha) in 2009
Flag
Burkina Faso 11,965,000 Fm 6,825,150 A 65,000 Fm
Benin 3,300,000 Fm 2,481,701 A 300,000 Fm
Cape Verde 88,000 Fm 57,524 A 3,000 Fm
Cote d’Ivoire 20,300,000 Fm 7,219,634 A 4,300,000 Fm
Gambia 665,000 Fm 48,7720 A 5,000 Fm
Ghana 15,500,000 Fm 6,638,600 A 280,000 Fm
Guinea 14,240,000 Fm 341,097 A 690,000 Fm
Guinea Bissau 1,630,000 Fm 521,277 A 25,000 Fm
Liberia 2,610,000 Fm 563,080 A 210,000 Fm
Mali 41,101,000 Fm 4,894,039 A 100,000 Fm
Niger 43,782,000 Q 17,520,592 A 60,000 Fm
Nigeria 74,500,000 Fm 37,634,872 A 3,000,000 Fm
Senegal 9,505,000 Fm 3,013,853 A 55,000 Fm
Sierra Leona 3,415,000 Fm 1,152,853 A 13,000 Fm
Togo 3,380,000 Fm 1,709,478 A 180,000 Fm
West African Totals
285,644,000 A 94,568,470 A 12,159,000 A
Source: FAOSTAT (2012) (http://faostat.fao.org/site/377/DesktopDefault.aspx?PageID=377#ancor) accessed on August 26, 2012.
A= May include official, semi-official, or estimated data; Fm = Manual Estimation; Q = Official data reported on FAO Questionnaires from countries
Between 2000 and 2010, area harvested has increased at an annual rate of over 2%. Nearly two-thirds to four-fifths of annual growth in cereal and cassava production was achieved by area expansion (see Table 19-3 and Figures 19-1 and 19-2). The fact that farmers have access to additional land has kept fertilizer use low in West Africa. Other factors that discourage farmers from using fertilizers include non-conducive policy environment, inefficient input and output markets leading to high fertilizer prices and low crop prices and limited access to inputs, high transportation cost for land-locked countries, and limited access to finance, information, and knowledge. Artificial product differentiation and regulation leading to restricted movement of fertilizers also contributes to low fertilizer use (Bumb et al. 2011).
Table 19-3: Average annual growth in cereal production in West Africa, 1980–2009 (%)
Cereals Cassava
Period Area Yield Production Area Yield Production
1980–1990 5.8 0.6 6.4 3.1 1.5 4.6
1990–2000 0.9 1.0 1.9 6.3 (0.2) 6.1
2000–2009 2.1 3.0 5.1 2.1 2.0 4.1
1980–2009 2.9 1.5 4.4 4.0 1.0 5.0
Source: Authors’ calculations based on data in FAO 2010
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Figure 19-1: Contribution of area and yield growth to cereal production in West Africa, 1980–2009
Source: Bumb et al. (2011) Note: Index Numbers with 1980 = 100.
Figure 19-2: Contribution of area and yield growth to cassava production in West Africa, 1980–2009
Source: Bumb et al. (2011) Note: Index Numbers with 1980 = 100.
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Figure 19-3: Crop yields by major region (maize, rice, and cassava)
Source: Bumb et al (2011) Note: Mt = metric tonnes.
Nevertheless, it must be stressed that extensive agriculture alone will not suffice to confront the challenge of food security and sustainable agriculture for two reasons. First, as population pressures are increasing, length of fallow is being reduced and nutrient depletion is increasing. Second, when farmers cultivate marginal lands (low in organic matter and soil fertility), crop productivity decreases and nutrient depletion increases. As continuous cultivation increases, the need for replenishing removed nutrients from external sources will increase. Additionally, without fertilizer use, crop yields are very low—about one-third of world average (Figure 19-3). With low yields, area expansion alone cannot produce the needed food and fibre for targeted agricultural growth of 6% under CAADP.
Main Crops Grown in West Africa
Table 19-4 provides data on the main crops grown in West Africa: cereals and legumes, roots and tubers, and cash/export crops. Cereal crops include maize, sorghum, millet, and rice as dominant crops, accounting for nearly 60% of the area harvested, with wheat and barley among others. Cassava, yam, and potatoes are main root crops. There are several cash crops but groundnut, cotton, cocoa, oil palm, and sugarcane dominate.
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Table 19-4: Main Crops Grown in West Africa, 2010
Crops Area Production Yield
‘000 ha ‘000 tonnes Kg/ha
A. Cereals All 42,088 49,418 1,174
Sorghum 12,430 10,489 844
Millet 15,748 12,095 768
Maize (corn) 8,128 15,046 1,851
Rice, Paddy 5,101 11,156 2,187
Wheat 54 86 1,601
Legumes* 11,189 5,597 500
Roots and Tubers 11,490 113,000 9,819
Cassava 5,078 60,141 11,842
Yam 4,229 43,836 10,365
Potato 260 1,053 4,042
S. Potato 1,149 3,606 3,137
Cash Crops
Seed Cotton 1,835 1,580 1,161
Groundnut (peanut) 6,510 6,368 978
Cocoa beans 5,340 2,361 442
Sugarcane 158 5,802 36,791
Note: Only selected crops are included so totals may not add under each group. Country specific data for these crops are available in Annex II. *Dominant crops are dry beans, cowpeas, and pulses.
Main Fertilizer Products Used on Crops
Among dominant fertilizer-using crops are maize, sorghum, rice, wheat, cotton, groundnut, cocoa, soybean, and cassava. Fruits and vegetable crops are also fertilized. No data are available to indicate what quantity of total fertilizer use goes to each crop. However, Table 19-5 indicates what products are mainly used on key crops.
Table 19-5: West Africa Fertilizer Products Used on Various Crops
S.No. Fertilizer Grade Crops
1 NPK 15-15-15, 20-10-10 Vegetables
2 NPK 10-10-20 Horticultural crops
3 NPK15-10-10, 15-15-15 Maize, millet, sorghum
4 NPKSB 14-23-14+5S+1B, 14-18-18+6S+1B, 15-15-15+S+B, 14-22-12+7S+1B, 12-20-18+5S+1.5B
Cotton
5 NPK Zn 15-15-15+0.3 Zinc Rice
6 NPK Mg 15-20-15+3.5Mg Rice
7 NPK Zn Mg 15-15-15+0.3 Zn + 3.5Mg Maize
8 NPK S Mg 15-15-15+4S+3.5Mg Maize
9 Urea 46% N All crops except groundnut
10 DAP Rice
11 NPK 6-20-10 Sesame, cowpea, groundnut
12 NPK Mg S Zn 12-11-18+2.7Mg, 2.7S and 0.2Zn (N=50%, NH4 + 50% NO3)
Special grade
13 NPK 0-22-18 plus micronutrients Cocoa (Ghana)
Source: MIR Plus Report
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19.4 Fertilizer Markets: Structure, Performance, and Players
Trends in fertilizer Use
During 2010, West African countries used 287,000 t of N, 130,000 t of P2O5, and 97,000 t of K2O, giving a total of 514,000 t of nutrients (Table 19-6), or approximately 1.5 million tonnes of products (assuming a nutrient to product ratio of 0.35). From 2000 to 2010, total fertilizer use increased slowly (Figure 19-4) and P2O5 use at 2.3% pa (FAO data). As there were inconsistencies in the data reported by FAO and the information received from country sources, phosphate fertilizer consumption data were adjusted for Mali, Burkina Faso, Nigeria, and Senegal. The modified data yielded total phosphate fertilizer consumption of 184,000 t of P2O5.
Table 19-6: West Africa: Fertilizer Consumption, 2010 (nutrient tonnes)
Country
Nitrogen Fertilizers (N
total nutrients) Flag
Potash Fertilizers (K20 total nutrients) Flag
Phosphate Fertilizers (P205 total nutrients) Flag
Benin 19 P 19 P 19 P
Burkina Faso 41,122 Fb 7,723 Fb 7726 Fb
Cote d'Ivoire 27,037 Fb 43,818 Fb 22,536 Fb
Gambia 1,785 Qm 750 Qm 750 Qm
Ghana 12,433 Fb 4,783 Fb 28,558 Fb
Guinea 2,457 Fb 78 Fb 76 Fb
Mali 89,259 Fb 27,199 Fb 57,029 Fb
Niger 4,829 Qm 692 Qm 1,969 Qm
Nigeria 80,140 Fb 9,756 Fb 10,802 Fb
Senegal 26,845 Fb 2,134 Fb 219 Fb
Togo 1,070 Fb 0 NR 0 NR
West Africa 286,996 A 96,952 A 129,684 A
Source: FAOSTAT (2012): (http://faostat.fao.org/site/575/DesktopDefault.aspx?PageID=575#ancor) accessed August 26, 2012. A = May include official, semi-official, or estimated data; Fb = Data obtained as a balance; NR = Not reported by country; P = Provisional official data; Qm = Official data from questionnaires and/or national sources and/or COMTRADE (reporters)
Figure 19-4: Total fertilizer (NPK) consumption trends in Sub-Saharan Africa, 1990-2008
Source: Derived from FAO 2010.
Notes: NPK is Nitrogen, Phosphates and Potash. Tonnes are metric tonnes.
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The main fertilizer products used in West African countries are listed in Table 19-7. Urea, NPK 15-15-15, and cotton complex dominate the product slate in these countries. Di-ammonium phosphate (DAP), single superphosphate (SSP), ammonium sulphate (AS), NPK 20-10-10, and NPK 10-10-20 are other products. There are several specialty products used on flowers and vegetables as well as plantation crops like cocoa and pineapple. In Ghana, blended 0-22-18 with micronutrients (called Asase Wara; introduced by Yara) is used for coco crop; this product is highly subsidized by the Ghana Cocoa Board. Many NPKs are blended as several companies have established blended plants (see below).
Table 19-7: West Africa: Main Fertilizer Products
Country
Urea AS DAP SSP NPK
15-15-15
NPK
20-10-10
NPK
10-10-20
NPK
Cotton
NPK
Others
Mali X X X X XX XX
BF X X X X X
Niger X X X X X
Senegal X X X X X
Cote d’Ivore X X* XX X
Benin X X* X XX
Ghana X X X X
Nigeria X X X X X* X X
Togo X X
*ALSO 16-16-16 OR 17-17-17 Source: Prepared by authors
Another dominant product being used in most cotton-growing countries of West Africa is cotton complex formula (Table 19-8). It is noteworthy that this product reveals artificial product differentiation, not supported by agronomic needs of cotton grown in Mali, Burkina Faso, and other neighbouring countries. Harmonization of cotton complex formula may offer economies of scale in production and procurement and reduce prices for farmers. ECOWAS can play an important role in harmonizing this product across countries.
Table 19-8: Cotton Complex Formula in West Africa
Country Company N:P2O5:K2O:S:B Quantity 1998/99 (tonnes)
Mali CMDT 14-22-12-7-1 63,900
Burkina Faso SOFITEX 14-23-14-6-1 30,000
Niger 14-24-14-5-1 4,000
Benin SONAPRA 14-23-14-5-1 22,700
Senegal
Togo SOTOCO 12-20-185-1 20,000
Cote d’Ivoire CIDT 15-15-15-6-1
Source: Gregory and Bumb (2006)
Note: During the feasibility study, these data should be updated for 2009/10.
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Structure and Players
The structure of fertilizer markets at the country level resembles a pyramid: At the top are a few importers, importing from global or regional markets, followed by more wholesalers and a large number of retailers. At the base of the pyramid are farmers, large- and smallholders. Bankers, transporters, port authorities, and policymakers provide support to various actors in the supply chain. Figures 19-5 and 19-6 describe the structure of markets in Ghana and Mali.
Since the size of the market is small at the country level, difference between importers and wholesalers is blurred as many importers also act as wholesalers. Likewise, differentiating between wholesalers and retailers is impossible as many wholesalers also act retailers.
The main importers in Ghana, Mali, Senegal, and Nigeria are listed in Table 19-9.
Figure 19-5: Performance of supply chain in Ghana
Environment Fertilizer Supply Chain Performance a
International procurement and processing/blending
Three importers and blenders negotiate retail price with government. Estimated
importer marketing cost and margin average 20%
(USD3.1/50 kg bag) of domestic cost.
Port services and stevedores
(for unloading and bagging services)
Port charges average 18% (USD2.67/50 kg bag) of
domestic cost.
Credit for procurement
Up to 30% interest rate with 100% or more collateral. Finance costs along the domestic supply chain,
average 32% (USD4.6/50 kg bag) of domestic cost.
Movement of product from
Port to domestic markets
Transportation costs along the domestic supply chain (from port to retailer) average 21%
(USD3.16/50 kg bag) of domestic cost.
Distribution of product
through domestic
retail (or other) outlets
Estimated distribution margins of the domestic distribution
network average 7% (USD1.08/50 kg bag) of
domestic cost.
Demand and access
to product
Fertilizer cost to farmers at retail doubles (USD15.17/50 kg bag) relative to CIF cost.
b
Source: Fuentes et al. 2010a. Reproduced here from Bumb et al. (2011)
Notes: a
Performance indicators are average percentages and monetary values across different products on a 50 kilogram bag.
b Government charges account for 3.8% (USD0.62/50kg bag) of domestic cost.
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Figure 19-6: Performance of supply chain in Mali
Environment Fertilizer Supply Chain Performance a
International procurement and processing/blending
Apparently competitive tender with imports dominated by two
providers. Estimated marketing cost and margin average 26.8%
(USD3.09/50 kg bag) of domestic cost. Importers share of this cost is not well known but believed to be
a large proportion.
Port services and stevedores
(for unloading and bagging services)
Port charges average 11.8% (USD1.34/50 kg bag) of
domestic cost.
Credit for procurement and consumption
Interest rate of 8.5% if subsidized and Up to 13%
non-subsidized with collateral. Cumulative finance cost along
the domestic supply chain, average 27.1% (USD3.13/50
kg bag) of domestic cost.
Movement of product from
port to domestic markets
Transportation costs along the domestic supply chain average 25.1% (USD2.87/50 kg bag). If considering all transportation costs from port (outside Mali) to retail, it increases to about 44% (USD6.84) of domestic
cost.
Distribution of product
through domestic
retail (or other) outlets
Small private dist. network, not well developed. Estimated
marketing costs and margins average 26.8% (USD3.09/50 kg bag) of domestic cost. Share of
distribution network not well known but believed to be a
smaller proportion than importers.
Demand and access
to product
Fertilizer cost to farmers at delivery point increases by an
average of 31.7% (USD12.3/50 kg bag) of domestic cost; [or 42.7% (USD15.46) relative to CIF cost including in transit
transport outside Mali.] b
Source: Fuentes et al. 2010b. Reproduced here from Bumb et al (2011)
Notes: a Performance indicators are average percentages and monetary values across different products on a 50 kilogram bag.
b Government charges account for 9.2% of domestic cost.
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Table 19-9: Key actors and constraints in the fertilizer markets in West Africa Country/Actors Ghana Mali Senegal Nigeria
Key importers Blending Plants
Yara/Wienco, Chemico, Golden Stork, and Dizengoff Yara/Wienco, Chemico, and Golden Stork
Yara/Hydrochem, Toguna Agro Industries, and La Cigogne/SCPA-SSI Toguna and Hydrochem (Abidjan)
La Cigogne, Boltonne, TSE, and AGROPHYTEX Old ICS plant owned by GOS/IFFCO has NPK plant
Golden Fertilizers, Notore, and Tak Continental; plus 10–12 small importers Several blending Plants
Main ports
Tema and Takoradi Dakar (Senegal) and Abidjan (Cote d’Ivoire)
Dakar Lagos
Wholesalers 15–20 10–15 5–7 20–30
Retailers/stockists 2 700 300 co-ops/producer orgs. (POs) Small number 4,000
Market size (2008/09) 218 000 product tonnes 150,000 product tonnes 73,000 product tonnes 600,000–800,000 product tons
Fertilizer use intensity (kg/ha) 4 7 7 12
Market structure Oligopolistic at import level, and competitive at wholesale and retail levels
Oligopolistic at import level; tendering by apex POs and distribution by co-ops in cotton/maize and rice sectors; a few retailers for farmers not served by POs
Tender-controlled oligopolistic; supplier-managed warehouse-based distribution; 85% government/SOE controlled for cereals and cotton smallholders; 15% private sector based for commercial crops
Tender-controlled, subsidy oriented—80% of the market; 20% private sector/large-scale farms. Policy-constrained at all levels—import, wholesale, and retail levels; state-controlled organizations like ADPs do distribution at the retail levels
Urea price (USD/tonne)
Import price (CIF)
Retail price
Marketing margins
366.42 685.96 84.20
404.20
a
620.112 52.20
391.12 612.52 52.80
371.30 648.30 56.00
Key constraints Poor implementation of subsidy policy
Limited access to finance; interest rates 30%–35%
Ineffective enforcement of quality regulation
Inefficient port operations
Limited human capital
Outdated fertilizer recommendations
Long, overdrawn tendering system
Limited access to finance; interest rates 8%–15%
No labs for product testing and quality enforcement
In-transit transport cost and taxes
Underdeveloped retail networks
Outdated fertilizer recommendations
Subsidized government- controlled market
Limited access to finance; interest rates 12%–20%
No quality control system
Underdeveloped retail networks
Uncertain and inconsistent policy environment
Different subsidy regimes at federal, state, and local government levels
Ineffective regulatory system
Inefficiencies at the port
Underdeveloped agrodealer system
Notes: CIF = cost, insurance, and freight; ADPs = agricultural development projects; aIncludes USD 79.40 for in-land transportation from the port of entry in Dakar or Abidjan to Bamako.
Source: Bumb et al. (2011).
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Tables 19-10 and 19-11 provide the names of blenders and manufacturers in Nigeria. Nigeria has over 30 blending plants but many of them do not operate at full capacity. It should be noted that Nigeria has only two manufacturing plants: an ammonia-urea plant owned by Notore and SSP plant owned by Tak Continental. During feasibility study, the operating status of all these plants and capacities should be re-confirmed. GQ’s planned blending plant in Maradi, Niger (nearby Kano), if established, may face competition from other plants. However, as many plants are operating below full capacity, there are opportunities for GQ to sell products and develop joint ventures for fertilizer production in Nigeria.
Table 19-10: Installed Fertilizer Production Units in Nigeria
Fertilizer production units Year of
establishment Products
Installed capacity
Location
1. Federal Super phosphate Fertilizer Company (FSFC)**
1973 N-P-K, SSP 100,000 Kaduna
2. NOTORE, former National Fertilizer Company of Nigeria (NAFCON) **
1986 Ammonia Urea N-P-K
200,000 550,000 250,000
Onne, Port-Harcourt
3. Fertilizers & Chemicals Co N-P-K 200,000 Kaduna
4. Morris Nigeria Ltd. 1989 N-P-K 200,000 Minna
5. Agro-Nutrients & Chemicals Co. Ltd. 1993 N-P-K 300,000 Kano
6. Kano Agricultural Supply Cie (KASCO) 1993 N-P-K 100,000 Kano
7. Golden Fertilizer Company Ltd. 1997 N-P-K 200,000 Lagos
8. Zungeru Fertilizer Company* na 20,000 Niger State
9. Funtua Fertilizer Company* 1999 Na 100,000 Katsina
10. Bauchi Fertilizer Company* 1999 N-P-K 121,000 Bauchi
11. Gombe Fertilizer Company* 1999 N-P-K 96,000 Gombe
12. Borno Fertilizer company* 1999 na 120,000 Borno
13. Edo Blending Plant* 2001 na 40,000 Edo
14. Zamfara Blending Plant* 1998 N-P-K 84,000 Gusau
15. Samrock Blending Plant* 2000 na 30,000 Sokoto
16. Kebbi Blending Plant* na NA Kebbi
17. Adamawa Blending Plant* na NA Yola
18. Crystal Fertilizer Blending Plan* na 100,000 Kagara
19. Scentum Al fertilizers* na NA Enugu
20. Gaskiya Fertilizer Co* 1999 N-P-K 54,000 Kano
21. Sasisa Fertilizer Co* 1999 N-P-K 20,000 Kano
22. Morgan Int. Ltd. N-P-K 60,000 Lagos
23. Jimco Nig. Ltd. N-P-K Lagos
24. Yobe Fertilizer Co. 2002 Damatoro
25. Pacesetter Organic Fertilizer Co. Ltd. Organic Fertilizer
Na Ibadan
26. Cybernetics Nig. Ltd. 1986 Micro Nutrients
Kaduna
27. Albarka Agro Allied & Chemical Nig. Ltd. Kano
28. Aweba (Nassarawa) Fertilizer Co. 2003 Nasarrawa
29. Plateau Fertilizer & chemicals Co. 2003 Jos/ Bocos
30. Ebonyi State Fertilizer & Chemicals Co. 2002 Abakaliki
31. West African Fertilizer Co. Okpella
32. Bauchi Kaolin Industry 1999 Bauchi
Total installed (potential) capacity 2,945,000
* Details are not available ** Manufacturing plants- SSP and ammonia-urea.
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Table 19-11: Major suppliers of fertilizer during 2008 and their market in Nigeria
Major actors Market share Products
Quantity (Mt)
% total
TAK Continental Ltd 335,162 39.3 Urea, 15-15-15, SSP and MOP
Golden Fertilizers Co 36,675 4.3 DAP, Ammonium Sulphate, 16-16-16
Elephant Group 52,000 6.1 Urea
Sambooka Fertilizer Cie 20,766 2.4 Urea
Fertilizer & Chemical Cie 34,858 4.1 Urea, MOP+N-P-K
MBS Merchants 45,000 5.3 Urea
Gentech Nig. Ltd 47,000 5.5 N-P-K 15-15-15, Urea
Touton Nig. Ltd 24,440 2.9 N-P-K 15-15-15, Urea
Stallion Group 66,000 7.7 Urea
Afcot Nig 33,000 3.9 Urea
ACT/Helm 23,000 2.7 Urea
Afro Asian Impex 43,469 5.1 Urea
EVR Nigeria Ltd 40,500 4.8 N-P-K 15-15-15, Urea
Barbedoes Vent. 50,000 5.9 Urea
Total 851,870
Source: FFD: Assessment of Nigeria Seed and Fertilizer Market, 2008
Fertilizer Product Use by Country
No time-series data are available on the use of different fertilizer products in African countries. Such data are compiled through country visits and discussions with various stakeholders in the supply chain. Therefore information in this area is limited and sporadic. Based on the work done by Traore (2012) and personal correspondence, products used in various countries are detailed below.
Nigeria: In 2010, the Federal Government of Nigeria procured 586,145 t of products as follows:
Product Quantity (tonnes)
Urea 311,600
NPK 15-15-15 162,810
NPK 20-10-10 96,744
NPK 12-12-17 14,991
Total 586,145
These data provide an incomplete picture because fertilizer sold by the private sector to large and small farmers and procured and distributed by state and local governments are not reflected. Some companies import DAP and MOP for bulk blending plants and also use SSP, locally produced.
Ghana: In 2010, Ghana imported the following products:
Product Quantity (tonnes)
NPK* (15-15-15/23-10-5) 30,560
Urea 11,521
MOP 7,216
AS 12,077
SSP/TSP* 52,117
Nitrates* (AN and PN) 23,655
Total 137,146
*Details by products not available.
Under the subsidy program, the Government of Ghana distributed 91,244 t in 2010 and 176,000 t in 2011. NPK 15-15-15, NPK 23-10-05, AS, and urea were the main products. Additionally, the Ghana Cocoa Board distributed 100,000–130,000 t of NPK 0-22-18. For 2012, the target is to finance 150,000 t under the subsidy
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program: 100,000 t (NPK 15-15-15 and NPK 25-10-5), 20,000 t of urea, and 30,000 t of AS. The subsidy rate averages 44%. For maize crops, Yara has developed a product called Activa—23-10-5-3S-2MgO0.3Zn.
Mali: Dr Lamine Traore (personal communication) has provided the following product requirements in Mali 2012:
Product Quantity (tonnes)
Urea 141,318
DAP 58,284
NPK (cereals) 66,570
NPK cotton 70,858
Total 407,888
It should be noted that during the 1990s and early 2000s, cotton and rice were the most fertilized crops; after the introduction of a subsidy program in 2009, a significant increase in fertilizers used for cereals—maize, sorghum, millet, and wheat—occurred. In 2012, fertilizer products for cereals accounted for over 70% of the total fertilizer requirements in Mali, representing a 67% increase in fertilizer requirements compared with the previous year. However fulfillment of this target depends on the availability of subsidy funds.
Fertilizer products imported in Mali, Burkina Faso, Niger, and Senegal during 2010 are listed in Table 19-12.
Table 19-12: Phosphate Fertilizer Imports in West Africa, 2010
Country Mali BF Niger Senegal*
Product --quantity (tonnes)--
SSP 4,542 11,137 0 27
DAP 110 6,325 384 3,586
NPK 9,985 34,282 750 10,388
NPKSB 4,992 17,141 375 2,194
MAP 64,383 259 0 514
Total 83,992 69,144 1,509 16,709
*Data for 2009 Source: Traore (2012)
Thus total fertilizer products imported in these countries were 171,354 t.
Fertilizer Pricing1
As most countries depend on imported fertilizers,2 fluctuations in global fertilizer prices are reflected in domestic prices. In addition to global prices, fluctuations in exchange rate affect local prices. For example, appreciation of the euro against the US dollar in 2010 made imported fertilizers cheaper in UEMOA countries because the FCFA was tied to the euro. On the other hand, depreciation of Ghana’s new cedi in 2010 made fertilizer 40% costlier in the local currency.
1 As prices in this section are taken from different sources and for different time periods, they may not be consistent.
2 Nigeria’s Notore plant has started producing urea at full capacity in 2012, so its dependence on imported
urea will be reduced in the future.
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In addition to these factors, transportation costs, port handling charges, and domestic marketing costs contributed significantly to retail prices. These charges accounted for 30% in Senegal to over 40% in Mali. Domestic distribution costs varied between over USD200/t to over USD300/t in selected countries (Figures 19-7 and 19-8). Finance, in-country transportation, and marketing margins accounted for the majority of distribution costs.
Figure 19-7: Supply chain cost components by fertilizer products in select countries in 2009 (USD/metric tonne)
Source: Bumb et al. (2011)
Figure 19-8: Supply chain cost components—domestic marketing costs (averaged across all four countries in the sample), (USD/metric tonne) in 2009
Source: Bumb et al. (2011)
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Prevailing prices of different products in West African countries are indicated in Table 19-9. This table provides price data for urea and NPK 15-15-15 over a 12-month period. NPK prices in Burkina Faso and Mali (USD722–USD727/t) reflect transportation costs involved for a landlocked country and compare reasonably well with those in Senegal (USD656/t). In Ghana, fertilizer prices are subsidized.
Table 19-13: Monthly National Fertilizer Prices by Western African Countries (USD/tonne)
Country Product Months
Jun 2011 Dec 2011 Jun 2012
Benin NPK 15-15-15 661 645 469**
UREA 46-0-0 709 650 520
Burkina Faso
DAP 18-46-0 836 M M
NPK 15-15-15 853 695 722
UREA 46-0-0 788 752 765
Cote d Ivoire
NPK 15-15-15 M M 775
UREA 46-0-0 M M 720
Ghana* NPK 15-15-15 419 381 481
UREA 46-0-0 394 349 699
Mali DAP 18-46-0 M 668 769
NPK 15-15-15 1 008 780 727
UREA 46-0-0 M 726 675
Niger DAP 18-46-0 717 M M
NPK 15-15-15 677 601 634
UREA 46-0-0 636 645 604
Nigeria NPK 15-15-15 680 M M
UREA 46-0-0 521 427 512
Senegal DAP 18-46-0 637 712 675
NPK 10-10-20 670 626 661
NPK 15-15-15 773 649 656
UREA 46-0-0 520 708 688
Togo NPK 15-15-15 M M 619
UREA 46-0-0 M M 755 Source: AMITSA & MIR+ Projects, IFDC; (http://213.193.193.214/IFDC_ReportServer/Pages/ReportViewer.aspx?/IFDC_Reports/Monthly+National+Prices&rs:Command=Render M = Data Non available *subsidized prices; average subsidy 44% **may include subsidy.
Table 19-14 provides price data (in local currency) in Mali at different locations. Transportation cost seems to explain the variation in local prices in different regions. Price of NPK 15-15-15 varied between FCFA14,500/50 kg bag (USD574/t; @FCFA505/$) in Gao to FCFA22,500/bag (USD891/t) in Kayes. For TPR, the price was FCFA10,000/bag in Gao (USD396/t) and FCFA6,500/bag in Bamako. These prices may be for leftover stock, because due to security problems in northern Mali, little production and use of TPR for direct application has taken place in recent months. However, an in-country survey will be needed to get firm estimates of prices in different regions in Mali.
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Table 19-14: Fertilizer Prices (Retail) in Mali, JUNE 2012 (FCFA per 50-kg bag)
Product Kayes Niono Se’gou Sikasso Bamako Koutiala Gao
NPK-10-10-20 22,500 22,500
NPK 15-15-15 22,500 22,500 22,500 13,500* 20,000 22,500 14,500*
NPKSZn 16-26-12-5S-0.3Zn 20,000
NPKSB 14-18-18-5S-1B 22,500 13,500* 22,500 20,000
Urea (46% N) 20,000 17,500 20,000 16,000 20,000 17,500 17,500
Tilemsi PR Natural 10,000
Source: MIR Plus Data Base (Personal communication) * Subsidized prices. Market prices were FCFA23,500 and 24,500 per bag, respectively.
Global procurement price, transportation costs (including shipping), and domestic marketing costs are three key components of retail price in any country. The type of product such as granulated or blended NPKs can also make a difference. Finally, as there is price volatility in the global fertilizer market (Figure 19-9), the time of procurement and exchange rate at the time can also contribute to variations in retail prices. More in-country surveys will be needed.
Figure 19-9: Fertilizer Prices (FOB, bulk) Monthly averages January 2000 – May 2012
Source: International Fertilizer Development Center, 2012
Phosphate Rock Price
Figure 19-10 provides trends in PR prices (FOB Morocco) in the global market. PR prices were stable for a long time and averaged USD40–60/t but experienced a steep increase in 2008, the year of fertilizer crisis. This increase was in response to an increase in DAP prices and also due to panic in the market. Thereafter, prices dropped suddenly in 2009 but have remained higher than their long term trend. In June 2012, PR price (FOB Morocco) averaged USD187.50/t. As the supply of PR and phosphate fertilizer increases due to additional investment, PR prices may decrease in the long-run (Blanco 2011).
The price of imported PR from Morocco is approximately USD336.50/t CIF Bamako and over USD430/t in the domestic market (assuming conservatively 30% marketing costs) as shown below. The GQ average assumed
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sales price for granulated Hyperphosphate Medium Grade (~27% P2O5) in West Africa would therefore be ~USD 262/t and for granulated Hyperphosphate High Grade (>35%P2O5) ~USD350/t.
Figure 19-10: PR prices, 1990-2011
Price of Imported PR in Mali (USD/t), June 2012
FOB Morocco Price 187.50
Shipping and Insurance 30.00
Port handling and clearance 20.00
CIF Dakar 237.50
In-transit Transport cost (Dakar-Bamako) 99.00
CIF Bamako 336.50
Domestic Distribution Cost 100.95
Retail Price 437.45
Source: Authors’ calculation. FOB price source: ICIS News Bulletin
MOP (KCl) Price
Figure 19-9 earlier provides trends in the MOP (muriate of potash) FOB prices for the last 12 years. The current average world price for MOP is USD465/t, with a delivered West African price of USD675/t.
One potential source in the future for KCl is from the MAG Industries Mengo 600Kt/a potash project in the Republic of Congo (ROC), which is currently under construction.
Urea Price
Global urea prices (see Figure 19-12) are mainly determined by the supply/demand trends in two main trade markets: the Black Sea and the Arab (or Persian) Gulf. To a large extent, the Black Sea supplies European and Latin American countries, while the Arab Gulf is geared to export to North America and Asia/Oceania.
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One potential source for urea will be the Indorama fertilizer plant in Nigeria, which will produce 4,000 Mtpd granulated urea. Current prices FOB Nigeria are USD367/t, with a delivered price of USD514/t.
Figure 19-11: UREA Prices and Price Projections (1960 – 2020)
NPK Perspectives Vol. V – No. 6 – June 2012
NPK Prices
The NPK bulk blended price is dependent on the individual fertilizer prices and based on the blended formulation, with additional costs for blending and packaging. The calculated average NPK price, based on current prices in West Africa (see Table 19-13) and the estimated market share for GQ, is USD661/t Ex factory.
FACTORS CONSTRAINING FERTILIZER USE IN AFRICA
Both demand-side and supply-side factors have kept the size of fertilizer markets small in Africa. Bumb et al. (2011), Gregory and Bumb (2006), Morris et al. (2007), and Crawford et al. (2006) have identified key factors affecting demand and supply.
DEMAND-SIDE CONSTRAINTS:
Limited access to input and output markets, leading to high input price and low output price, resulting in low profitability of fertilizer use.
Limited access to finance for investing in inputs due to high interest rates and stringent collateral requirements.
Limited purchasing power with resource-poor smallholder farmers practicing subsistence farming.
Limited access to technology transfer and extension support.
Limited availability of inputs in rural areas.
SUPPLY-SIDE CONSTRAINTS:
High transportation costs due to poor infrastructure, especially for landlocked countries, accounting for one-third to one-half of retail price.
High procurement prices due to small size of procurement lots.
Limited access to finance for importers and agro-dealers.
Non-conducive policy environment creating risk and uncertainty for market development.
Inadequate human capital—limited marketing skills with agro-dealers.
Ineffective quality control systems.
Fragmentation of the fertilizer market into specialty products leading to high cost of procurement.
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All these factors have kept the fertilizer use at low levels in Africa in general and West Africa in particular and will also affect the use of granulated phosphate products or granulated phosphate–based NPKs. However, as transportation costs from port to the national border account for a significant portion of retail price, production of TPP granulated phosphate–based products in the country may generate competitive advantage in reducing retail price. Sound marketing strategy and timely supply of products will also work to the advantage of GQ products.
19.5 Agronomic Issues
Agronomic Potential of Tilemsi Phosphate Rock (TPR)
Phosphorus (P) is one of the essential elements for plant growth and performance. It provides the source of energy for most of the chemical transformations in all cells whether plant or animal. In West Africa most of the soils are deficient in plant available P even though there are deposits of phosphate rock in just about every country (Van Kauwenbergh 2006). The phosphate raw materials of interest to agronomists and the fertilizer industry are the complex assemblage of minerals collectively called phosphate rock (PR). PR is therefore a trade name used by the fertilizer industry. The importance of PR lies in the fact that it contains phosphate minerals belonging to the apatite family. The apatite mineral in PR can be of primarily two origins: igneous or sedimentary. A third group that is much less common is of metamorphic origin. These are usually of igneous origin but have undergone heat transformation to become metamorphic. Thus for both igneous and metamorphic PR, the principal mineral is fluorapatite {Ca10(PO4)6F2}.
On the other hand, sedimentary PR contains carbonate and is commonly called francolite which can be represented by the following formula:
Ca10NaaMgb(PO4)6-x(CO3)xF2+0.4x
TPR, as mentioned earlier, is located in northeastern Mali, 95 kilometers from Bourem, where it is estimated there are over 50 million tonnes. The P2O5 content of the rocks varies from 23% to 32%, averaging 24.3%.
Most of the PRs in West Africa, including the TPR, are sedimentary in origin and are therefore francolites. Because of their chemical composition, francolites are the most favourable apatite sources for direct application. The empirical formula for TPR is as follows:
Ca9.84Na0.11Mg0.04(PO4)5.55(CO3)0.45F2.18
P deficiency is common in West Africa. Several scientists have conducted research on the extent of P deficiency, the P requirements of the principal crops and cropping systems, and the effectiveness of various P sources including the native sources of P such as TPR.
Diamond (1979) proposed a classification of PRs based on their solubility in ammonium citrate. In his classification, citrate solubility of over 5% is considered high, 3.2–5% is medium, and less than 2.6% is low. By this classification TPR, with citrate solubility of 4.2%, is medium reactive. This classification is in agreement with the findings of Truong et al. (1978) who compared the effectiveness of several of the West African PRs and concluded that only Tahoua (Niger) and Tilemsi are suitable for direct application.
The work done by IFDC and IER (Institut d’Economie Rurale) in the 1980s used mainly ground PR and partially acidulated TPR (30%). Because farmers did not react very enthusiastically to the powdered TPR, IFDC tried other forms in the late 1980s and early 1990s. These trials will be discussed later.
FACTORS AFFECTING USE OF PR FOR DIRECT APPLICATION
Several factors affect the dissolution of PR and hence uptake of the P by plants. These factors include
The chemical composition of the rock
Soil properties
The nature of the plant
Size of the particle
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Climate
Management practice
CHEMICAL COMPOSITION:
As was shown in the empirical equation, the presence of Ca, F, Na, Mg, CO3, and F is important. The major difference between PRs of sedimentary origin and PRs of igneous origin is that while the sedimentary version has carbonate, the igneous does not. This property becomes critical when measuring their reactivity and hence the possibilities of use for direct application. Thus, from the empirical equation also shown, TPR is a francolite because it has carbonate substituting for some of the phosphate in the apatite crystal. Several geologists (Lehr and McClellan 1972, McClellan and Van Kauwenbergh, 1990) have shown that carbonate substitution for phosphate in the apatite is the primary reason for reactivity between the two classes of PR. The most common method for determining chemical reactivity is the use of neutral ammonium acetate (NAC) to extract the phosphorus in the apatite. Using this procedure, TPR has been classified as medium reactive (Lehr and McClellan 1972, McClellan and Van Kauwenbergh 1990). This means that other properties such as soil and plant properties would determine its effectiveness for direct application.
Internal factors:
When PR dissolves in soils, it releases the nutrient P that the plant needs. The factors that affect the release of P from PR to plants and the ability of the plant to absorb the P into its cells are schematically represented as follows:
Figure 19-12: Schematic diagram of the behavior of PR in the soil
K1 is the rate constant for the dissolution of the PR and K2 is the rate constant for the uptake of the P by the plant. Therefore the effectiveness of the PR to supply adequate amounts of P to a growing crop is determined by the extent to which the P uptake required for satisfactory growth of the plant (governed by K2) is maintained by the dissolution (governed by K1) of the PR (Sale and Mokwunye 1993). The size of the PR particle and the mineral composition of the PR affect the rates of release K1. The type of plant or crop affects K2, the rate at which the plant takes up the P from the soil solution. A plant with a good rooting system in a soil that has sufficient moisture will take up more P than a plant in dry soil with a poor rooting system.
Having recognized the fact that within the crystal lattice of the apatite, carbonate can substitute for phosphate it becomes clear why Smith and Lehr (1966) concluded that the level of isomorphic substitution of carbonate for phosphate in the apatite lattice not only influences the reactivity of the PR but also controls the amount of P that is released into the soil when the PR is utilized for direct application. Thus the molar PO4/CO3 ratio is critical. Usually the most reactive PRs have a molar ratio less than 5. The molar ratios for some of the PR deposits in West Africa are shown in Table 19-15:
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Table 19-15: The Molar Ratio of Some West African PRs
Phosphate Rock Molar Ratio (PO4/CO3)
Kodjari (Burkina Faso) 23.0
Tahoua (Niger) 11.22
Sokoto (Nigeria) 11.5
Hahotoe (Togo) 12.3
Tilemsi Valley (Mali) 4.88
The data in Table 19-16 suggest that TPR would be the most reactive PR in West Africa while Tahoua is medium. Matam PR which is mainly located in western Senegal is the closest relative to Tilemsi and it is also of relatively high reactivity.
The reactivity of TPR is also validated by the data in Table 19-16 showing the solubility of different West African PRs as measured using the NAC dissolution.
Table 19-16: NAC Solubility
Phosphate Rock Measured NAC solubility
Kodjari (Burkina Faso) 1.9-2.7
Tahoua (Niger) 1.9-3.6
Sokoto (Nigeria) 3.2-3.7
Hahotoe (Togo) 2.5-3.2
Tilemsi Valley (Mali) 4.1-4.6
FAO provides higher molar and NAC ratios for these PRs (FAO 2004).
In addition to the chemical properties, the physical properties of phosphate rock affect the solubility and hence its use for direct application. According to Barrow (1990), the dissolution of PR is a reaction that occurs on the surface of the PR particle. The smaller the particle, the more surface is exposed for chemical reaction. Grinding the PR reduces the size of each particle and hence most PR trials have used the very fine particle sizes. It should be noted that grinding to very fine sizes does not transform an un-reactive to a reactive PR. However, grinding a reactive PR enhances its solubility in the soil. Experts have concluded that it is not worth the energy expenditure to grind PR to more than 100 mesh (150 mm) (Van Kauwenbergh 2006).
The next major groups of factors affecting solubility are the external factors such as the soil properties, effect of climate, effect of the plant type, and management practices by the farmer.
Soil Properties:
The dissolution of PR involves the release of its constituent ions into the soil. As shown by Mokwunye (1994), the dissolution of TPR can be represented as follows:
(Ca9.85Na0.11Mg0.04(PO4) 5.55(CO3)0.45F2.18 +Soil
9.85Ca+2 +0.11Na+0.04Mg++ +5.55PO43- +0.45CO3
2- +2.18F
The presence of H+ ions in the soil results in the rapid conversion of the PO43- to H2PO4
- and HPO42-
(Khasawneh and Doll 1978). The plant uses these phosphate anions for nutrition. It has to be recognized that the reaction with the soil is a neutralization reaction that caused the release of the phosphate anions. In other words, the soil provided the H+ ions needed for the reaction. The property of the soil to provide the hydrogen ions for such a reaction is measured as the pH of the soil and this property is essential to
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determine the solubility of PR in any soil. Thus, acid soils (more hydrogen ions) are better for PR solubility. The lower the pH of the soil, the higher the amount of H+ ions that will be available for the reaction. Neutral to alkaline soils are not suitable for PR dissolution.
In Mali, most of the soils especially those in the more humid zones of the southern part of the country are acid in reaction (see Table 19-17). They are thus good soils for the use of PR. Results of many trials (IFDC 1987–1990) over the years have demonstrated that these soils do indeed respond to the application of PR.
In addition to the soil reaction (pH), the behavior of PR in the soil also obeys the law of mass action. This law indicates that there is increased dissolution with smaller amounts of P and Ca in the soil solution. Fortunately, most acid soils are low in both nutrients.
Climate Factors:
Plants take up P from soil solution. Therefore, the P has to be in soil solution first and that requires that there is soil moisture. Dry soils are therefore not ideal for the dissolution of PR. Rainfall is thus critical for PR to be used to feed crops. The moisture particles that surround the apatite particle supply the H+ required in the process of PR dissolution. As dissolution commences, the moisture causes the Ca ions to diffuse away from the particle thereby causing a gradient that leads to further dissolution of the PR. As the Ca ions diffuse away, the H+ diffuse towards the PR particle. Field studies in Senegal (Hammond et al. 1986) showed that crop yield was related linearly to the mean annual rainfall between 500 mm and 1,300 mm. In the sandy soils of West Africa such as in Mali, high rates of leaching would promote the use of PR for direct application.
Temperature does not appear to have any effects on PR dissolution (Chien et al. 1980). Because the dissolution of PR is dependent only on the H+ present, this observation is not surprising. However, it should be noted that reactions involving the products of the dissolution of PR are chemically controlled and are therefore dependent on temperature. Apart from P uptake by crops, temperature also affects the rate and quantity of P that is adsorbed onto soil particles.
Effects of Plant:
The effects of actively growing roots are varied. For example, some roots acidify the soil around them (the rhyzosphere effect) and the presence of more H-ions increases the possibility of the solubilization of PR (Kirk and Nye 1986). The crop type also has an influence. Legumes fix atmospheric nitrogen in their roots but when plants such as rape take up and assimilate predominantly ammonium N, the excess uptake of cations over anions leads to exudation of H-ions. Therefore, crops such as rape are more efficient users of PR (Hedley et al. 1982).
It has also been observed that high root density around the PR particles promote PR dissolution. Sale and Mokwunye (1993) suggested that this could be the result of the rapid removal of Ca+2 ions and H2PO4
2- ions by the thick cluster of roots and leads to an intensification of the gradient which leads to increased dissolution of the PR. A number of workers (Deist et al. 1971, Flach et al. 1987) have suggested that crops that utilize more Ca such as the legumes are more likely to show greater uptake of P from PR.
Perennial crops such as pastures benefit more from PR application because of the length of time they stay on the ground. Short duration crops such as cereals do not have this advantage and perform better with more soluble P sources such as single superphosphate (SSP) or triple superphosphate (TSP) and di-ammonium phosphate (DAP). It is interesting to note that P is very much needed for root establishment. Therefore, even for cereals, the use of PR is often advised if that is the most readily available source of P. Also root infection with mycorrhizae, which increases root density, also increases the potential for greater uptake of P from PR.
Management Practices:
The effectiveness of PR is influenced by both crop and soil management practices. Hammond et al. (1986) noticed that rice performed very well when PR was applied even though flooding causes the pH of the soil to
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rise, a situation that is opposite to what we have stated earlier. However, the explanation was provided by Kirk et al. (1991). The explanation is that rice roots in the course of normal nutrition will acidify the surrounding soil. This causes the chelation of dissolved Ca and organic matter. There is usually a lag period after flooding before the pH of the soil rises. Significant quantities of P become dissolved from PR during this lag period.
There is also the question of broadcasting the PR versus banding it. Broadcasting has been recommended because this management system exposes the PR to a larger volume of soil. Banding does the exact opposite. Banding of PR will reduce K1 which is the rate constant for the dissolution of the PR. Barrow (1990) observed that banding causes an overlap of diffusion spheres of the products of dissolution and hence lowers the rate. When this happens, there is saturation of P in the system making further dissolution impossible.
What happens to the P from PR after it has been released to the soil?
SOIL PROPERTIES:
Although high phosphorus retention (fixation) by soils helps the solubility of PR, several trials have shown that PR effectiveness is lower in soils with such properties (Mokwunye and Hammond 1992). This phenomenon was explained (Hammond et al. 1986) by the fact that soils with high P retention capacity restrict root formation during the early stages of plant growth. For soils that have high P retention capacity, soil P from any source is subject to retention. The advantage that PR has is that at no time is much available P released into the soil. So there is usually not much P in soil solution to be retained unlike water-soluble P sources. The situation may sound very promising for PR. However, as was noted by Mokwunye and Hammond (1992) it is a myth to think that PR is more available to crops in soils high in retention capacity. Fortunately, most of the soils in West Africa especially those in the savanna parts do not have high P retention capacity. Therefore, a greater portion of the P released from PR is available for the crop.
PLANT AND MANAGEMENT EFFECTS:
As was observed earlier, the crop type helps with the performance of PR. Thus, perennial/plantation crops perform better than annual crops. Leguminous crops perform better than non-legumes. Plants with high root density absorb more P readily and PR is more effective. Localized placement or banding is not encouraged because of the reasons already presented.
The Table 19-17 below shows the average chemical characteristics of some of the food-producing soils in Mali. It shows that the soils are acid and are low in organic matter and P. These are some of the conditions that are ideal for the use of PR.
Table 19-17: Chemical Properties of Soils in Food Producing zones of Mali
Tafla Sogoumba Tinfoug
Organic Matter (%) 0.41 0.71 1.31
Total Nitrogen (mg/kg1) 204 307 522
Available P (Bray 1; mg/kg1) 3.2 5.3 5.48
Soil pH (KCl) 4.85 4.83 4.89
GRANULATION OF PR AND AGRONOMIC POTENTIAL
Apart from the extensive work done by IFDC and IER in the 1980s and 1990s (IFDC 1989, IFDC 1991), earlier work by several authors (Pieri 1971a, Pieri 1971b, Poulain 1976, Pichot and Roche 1972) have shown the excellent agronomic effectiveness of TPR. The summary of their findings is that TPR is as effective as the commercially available fertilizers especially when applied in powder form, broadcast, and buried. In an on-station work on food and oil seed crops, Thibout et al (1980) found that TPR was as efficient as commercial sources of P. However, the results that are readily available are from the testing of powdered TPR. As has already been noted, efforts were made to satisfy the demands of the farmers by granulating TPR. On average, agronomic effectiveness was reduced by as much as 25%.
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Traore3 reviewed some of the work that was done using granulated TPR. He found that when the binder was a product such as water, sugar cane treatment residues or molasses 2%, gypsum, urea nitrogen and/or potassium chloride the agronomic effectiveness was maintained. The granulated TPR performed effectively when applied to cotton, sorghum, millet, and rice. There was no statistically significant difference between the granulated products and the powdered version. In fact, Traore observed that relative agronomic effectiveness (RAE) of the granulated TPR was 81 as opposed to 91 when the powdered product was used. The statistical analysis did not show any significant difference between the non-granulated and the majority of granulated forms of TPR. All the granulated forms gave better results on the different crops except the TPR granulated with gypsum or plaster as the binder. This is not surprising knowing that both of these materials contain Ca and would decrease the solubility of the PR.
In addition to the slight reduction in agronomic effectiveness, Traore also noted the increased cost of granulation, which can be as high as 75% because of the energy required for the process. He therefore recommended that the increased cost of granulation should be considered when working with TPR.
In Africa, the Minjingu PR (located near Arusha, Tanzania) has received as much (if not more) attention as TPR. It is currently mined and granulated by the Minjingu Mines and Fertilizer Limited (MMFL). Field trials show an RAE of 74% in the first year, rising to 104% by the third year. The company produces blends and granulated versions for special crops and locations. Szilas et al. (2007) obtained very good results using both powdered and granulated Minjingu PR. However, the granules were used in blends including KCl and other nutrients. IFDC tested “mini-granules” in the early 80s but the cost of production prevented the popular use of the method. MMFL has conducted several trials and is producing NPS with micronutrients.
Rajan et al. (1991) tested powdered and granulated reactive PRs in New Zealand. They found that at very low rates of P (60kg P2O5/ha), there was no difference between products. However at higher rates (up to 360 kgP2O5/ha), the ground North Carolina PR performed better than the granulated variety. In this instance, they also used mini-granules. Kumar et al. (1993) tested different P fertilizer sources on Triticale and found that granulated North Carolina PR (one of the most reactive PRs on earth) was the least effective. Chien and Hammond (1978) developed a method for measuring the solubility of granulated PR. The data in Figure 19-14 confirms that the solubility of PR decreases with granulation.
3 Lamine Traore, Consultant to the Government of Mali
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Figure 19-13: Effect of granulation on solubility of PR
Source: Chien and Hammond (1978)
Standard granules for commercial water-soluble phosphate fertilizers such as TSP or SSP are usually -6 to +12 mesh (1.4–3.35 mm). Mini-granules are much smaller than that. The advantage for the mini-granules is that they are more free-flowing and they are no longer dusty. But they are not cheap to produce.
Bulk blending using granulated TPR granular urea and granular KCl is another approach. However, there is no guarantee that the components will be sufficiently close to influence the solubility of the granulated TPR. As already noted, bulk blending of Minjingu PR is done at the moment but it has been difficult to locate data to support its effectiveness after granulation. Semoka (personal communication) found that farmers in Tanzania using the product for direct application complained about the product’s dustiness. Tests at IFDC showed that fine soft Minjingu ore mixed with urea and granulated or compacted gave a product that handles well and that contains not only P but also N.
A summary of work done with TPR was put forward by Truong (1989) at an international symposium and it pointed to a decline in the RAE of the granulated TPR compared with the powdered source from 83% to 70% on maize.
The following summarizes the work done by IFDC and IER across more than 10 locations in Mali using powdered TPR:
When applied in powdered form along with other nutrients—nitrogen and potassium—TPR is at least 78% as effective as TSP.
In soils with pH of 5.0, broadcasting of TPR was more efficient than banding by at least 25%.
In very acid soils (pH less than 5), banding of TPR (even though not recommended) improved yields of all crops.
With rice, broadcasting and incorporating improved yields by at least 20%.
In on-farm trials especially in the more humid parts of Mali, TPR combined with potassium sulphate and urea performed as well as the commercial complex fertilizers.
The results reported by Bationo et al. (1997) are presented in the Table 19-18 below.
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Table 19-18: Response of TPR in Different Locations and on Different Crops (yield kg/ha)
Location Absolute Control
Farmers’ Practice
Recommended Practice
TPR Annual
Sougounba (800mm rainfall)
Sorghum 1989 993 979 1,275 1,325
1990 955 1,103 1,240 1,365
1991 866 1,134 1,264 1,165
1992 1,036 1,289 1,923 2,207
Cotton 1989 1,121 1,351 1,645 1,610
1990 731 1,013 1,223 1,044
1991 1,245 1,428 1,544 1,614
1992 931 1,120 1,307 1,354
Tafla (600 mm rainfall)
Millet 1989 718 746 894 960
1990 742 995 969 774
1991 535 664 788 859
1992 254 360 411 349
Tinfounga (1,200 mm rainfall)
Maize 1989 1,014 1,818 2,296 1,877
1990 723 723 2,725 2,069
1991 1,043 2,193 2,725 2,865
1992 670 2,087 2,712 2,190
The data tell us that yields are very variable. The major governing factor is climate or in particular rainfall. In good years, there is good harvest even where no fertilizer was added. At the same time, in poor years, even when fertilizers are applied, the yields are miserable. All that said, the last column shows us that no matter what happened, under three rainfall regimes in Mali, TPR was a good product and could compete with the imported commercial fertilizers.
COMPACTION OF TPR AND RELATIVE AGRONOMIC EFFICIENCY
Banding is the closest agronomic practice to the use of granulation of the powdered TPR. As has been stated, banding reduces the performance of TPR by at least 25%. It should be noted that the powdered form of TPR was used in most of the trials including those done by other scientists apart from IFDC and IER. The reluctance by farmers to use powdered TPR arises from two facts: Firstly, they are aware that their soils and crops need elements other than P to perform well; secondly, at the beginning of the rainy season when the TPR is applied, it is normally hot and windy. As a result, they felt more comfortable with products that behaved and looked more like the commercial products they were used to. To resolve this issue, IFDC and IER tried many forms of NPK fertilizers using TPR as the sole source of P. Urea, potash, and TPR were compacted. Various ratios of these three materials were produced and tested. Table 19-19 below shows the ratios of the N, P, and K products produced at the pilot plant of IFDC in Muscle Shoals, Alabama, USA.
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Table 19-19: Compacted fertilizers made from TPR, KCl and Urea (1988)
N P205 K2O S
A (1 1 1) 15.3 12.6 13.6 0
B (1 2 0) 11.2 21.7 0 0
C (1 3 0) 8.4 22.9 0 0
D (1 3 0) 7.0 18.1 0 25.9
Product A is the typical NPK compound or the Maize Complex in Mali. B and C have no potassium and these were to test the philosophy that in the very sandy soils of Mali, the use of potassium might not be immediately very necessary. Product D is the same product but with sulfur added.
Table 19-20: Evaluation of annual effects of compacted fertilizers made from phosphate rock (1988)
Product Cotton kg/ha1) % of CC Maize (kg/ha1) % of CC
Absolute Check 1,995 74 2,344 56
Cotton Complex (base) 2,673 100 4,147 100
A 2,422 91 3,326 80
B 2,476 93 2,617 63
C 2,533 95 3,528 85
D 2,522 94 3,203 77
CV 11.9 CV 16.9
The data showed that product A to D were over 90% as effective as the cotton complex (CC) for cotton at N’Tarla (rainfall of 900 mm average). However, only products A and D were 77%–80% as good as the cotton complex for maize.
At another location, the results are as illustrated in Table 19-21 below.
Table 19-21: Effects of compaction
Product Cotton kg/ha1) % of CC Maize (kg/ha1) % of CC
Absolute Check 1,596 75 1,569 40
Cotton Complex (CC)(base) 2,137 100 3,880 100
A 1,840 86 2,773 71
B 2,040 95 2,858 74
C 2,017 94 2,969 77
D 1,922 90 2,649 68
The data would suggest that while cotton did reasonably well with B, C, and D (over 90%), maize lagged behind (with 71%–77% effectiveness), even though it still performed better than the absolute check, where no fertilizer was applied.
During 1989, new materials were made and tested. This time, product E which is an imitation of the commercial CC, was in the mix to be tested. Table 19-22 below gives details of the formulations produced for agronomic trials.
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Table 19-22: Evaluation of annual effects compacted fertilizer (1989)
N P205 K2O S B
A (1 1 1) 15.3 12.6 13.6 0 -
B (1 2 0) 11.2 21.7 0 0 -
C (1 3 0) 8.4 22.9 0 0 -
D (1 3 0) 7.0 18.1 0 25.9 -
E (1 1 1S and B) 10.3 10.3 11.1 11.6 2.2
Table 19-23 shows the agronomic results.
Table 19-23: Agronomic effects of compacted materials
Product Cotton kg/ha1) % of CC Maize (kg/ha1) % of CC
Absolute Check 1,601 64 3,059 66
Cotton Complex (CC) base 2,486 100 4,642 100
A 2,232 90 4,201 91
B 2,321 93 4,179 90
C 1,983 80 3,965 85
D 2,226 90 3,964 85
E 2,333 94 4,145 89
Again, both cotton and maize responded to the compacted NPK products. As would be expected, product E was more responsive than the others as it contains both S and B; S and B helped cotton much more than maize; for maize Product A and B were relatively more efficient.
It would appear that the over-riding factor determining which materials to produce would be determined by the cost of production. Farmers in Mali have shown their reluctance to apply the powdered TPR and then subsequently separately purchase and apply urea and potash. Therefore, the compacted product, if it can be produced cheaply would be the recommended product.
There are possibilities for the extensive use of TPR and its products not just in Mali but all over West Africa. A few steps must first be taken. One important step is that one of the products should be compacted NPK using TPR. It is essential that more agronomic trials be conducted and an extension system set up to popularize the product. This is one product that can easily compete with the presently available suite of commercial sources of P.
19.6 Demand Projections
As no historical data are available by products and crops at the country level, demand projections for phosphate fertilizers are developed using FAO’s historical data on nutrient use.
Table 19-24 provides demand projections for P2O5 in West Africa for 2020 and 2030. Data for demand projections are mostly from FAOSTAT, except for Burkina Faso, Mali, Senegal, and Nigeria. For these
countries, FAO data were replaced by the data available from local sources, resulting in modified data. For calculating phosphate requirements under various assumptions, area harvested data for 2010 provided by FAO were used as base data. Projections for area harvested were made for 2020 and 2030 by using country-specific expected growth rates.
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Table 19-24: West Africa P2O5 Demand Projections to 2020 and 2030
Scenario
Demand Projections
(tonnes) Comment
Actual P2O5 Use, 2010 (FAO data) 129,675 Annual Growth 2.3% (2000/2002 to 2008/10)
Modified P2O5 Use 2010 184,329 Data adjusted for Mali and Nigeria
Demand Projections to 2015- Effective Demand 231,746
Annual Growth 4.6% (2020–15)
Demand Projections to 2020- Effective Demand 287,065
Annual Growth 4.3% (2015–2020)
Demand Projections to 2030 Effective demand 430,060
Annual Growth 4% 2020–2030
2010 potential Demand if Abuja Declaration target of 15 kg/ha P2O5 if fulfilled 1,418,520
Ratio of Actual use to potential demand 14.3%
2010 Nutrient Replenish Requirements 591,463 Ratio of actual use to Requirements: 31%
2020 Nutrient Replenish Requirements 748,737
2020 Potential Demand based on Abuja Declaration target (15 kg/ha P2O5) 1,791,585
Realizable potential 537,476 tonnes (30%)
2020 Agronomic potential (25 kg/ha) 2,985,975 Realizable potential 895,800 tonnes (30%)
2030 Potential Demand based on Abuja Declaration target (15 kg/ha P2O5) 2,079,000
Realizable potential 1,040,000 tonnes (50%)
Source: Excel Spread Sheet/ Authors Calculations.
Four different scenarios are developed:
1) Effective phosphate demand 2) Potential demand under Abuja Declaration target 3) Potential demand under nutrient replenishment scenario 4) Potential demand under agronomic requirements
Effective Demand
West Africa region used 130,000 t of P2O5 in 2010, compared with 105,000 t P2O5 in 2000. Because of significant annual fluctuations in phosphate use both at the regional level and the country level, a three-year average was used to calculate annual growth in consumption. Thus between 2000/2002 and 2008/10, phosphate use increased at 2.3% per annum. Per hectare phosphate use was less than 2 kg/ha. Policy reforms (liberalization and privatization), uncertain weather, and high fertilizer prices coupled with limited access to finance and output markets seem to have contributed to slow growth. As most countries depend on imported fertilizers, an increase in global fertilizer prices during 2004–07 and a sudden jump in 2008 affected fertilizer use negatively. In 2008, global fertilizer prices increased by 3-4 fold. To prevent a drastic reduction in fertilizer use, many countries such as Mali, Ghana, and Burkina Faso introduced fertilizer subsidies, while others like Nigeria and Senegal strengthened their ongoing subsidy programs (Druilhe and Barreiro-Hurlé 2012). Therefore fertilizer use increased in 2010. Modified data indicate that phosphate fertilizer use was 184,000 t in 2010. For making effective demand projections, these later data for countries were used.
Unlike normative requirements based on a specific target, effective demand projections imply what quantity of phosphate fertilizers farmers will use, given crop and fertilizer prices, limited access to finance and markets, and other socioeconomic conditions. Effective demand is lower than what is needed to satisfy crop
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requirements because of financial and profitability and other constraints and because the majority of smallholder farmers do not use recommended doses, and more significantly, do not fertilize all of their crop lands. If farmers were to use 25 kg P2O5/ha on cultivated (harvested) area, total P2O5 use would be 2.4 million tonnes of P2O5 in 2010. However actual use was only 8% of this amount because many farmers still do not use fertilizers in West Africa.
Based on effective demand projections, P2O5 use is projected to increase to 232,000 t in 2015 and 287,000 t in 2020 at an annual rate of 4.6% during the 2010–2015 period and at 4.3% pa thereafter. One uncertainty is the sustainability of subsidy programs in the future as fiscal costs increase over time. Therefore it was assumed that demand will grow at a slower pace. During 2020–2030, it is assumed that demand will grow at 4% per annum to 430,000 t. Based on this approach, projected demand in 2020 and 2030 will be as follows for selected countries (see Table 19-25):
Table 19-25: Project Demand Projections to 2020 and 2030
Country P2O5 Demand (tonnes)
2020 2030
Mali 80,435 113,462
Burkina Faso 30,200 38,659
Niger 3,057 4,980
Nigeria 67,696 95,492
Ghana 44,736 66,220
Total 226,124 318,813
TPR 30%- Equivalent 753,747 1,062,710
Because of the scope for extensive agriculture (area expansion) and limited government support, P2O5 use would remain low in Niger. Mali’s relatively high level is a reflection of increased demand due to subsidy programs. If subsidy cannot be sustained, then actual phosphate use would be lower in 2020 and 2030. The amount of TPR 30% required would be 753,747 t in 2020 and 1,062,710 t in 2030 to satisfy demand if all products are produced in Mali.
Potential Demand under Abuja Declaration
In 2006, the African Union organized the Africa Fertilizer Summit to discuss issues related to low fertilizer use in Africa and made a commitment to increase fertilizer use from 8 kg/ha to 50 kg/ha by 2015. All the Heads of State endorsed this declaration. This target of 50 kg/ha was divided into N, P2O5, and K2O use per hectare by using N:P2O5:K2O (NPK) ratios for Sub-Saharan Africa. For 2010, this ratio was 5:3:2. Using this ratio, it was assumed that national governments will make every effort to promote 15 kg/ha of P2O5 use, at least by 2020. (In 2010, per hectare NPK fertilizer use was still less than 10 kg/ha.) By using this target and area harvested, phosphate requirements were estimated for each country. Based on these assumptions, phosphate fertilizer requirements would be 1.8 million tonnes in 2020. In 2010, only 14% of this target was achieved for West Africa region. Given this situation and scope for area expansion, it was further assumed that only 30% of the harvested area will satisfy Abuja Declaration target. Thus, phosphate demand under this scenario would be approximately 537,000 t. Assuming that 50% of the potential demand will be realized by 2030, P2O5 demand will be 1,040,000 t. Yet, the potential demand is 87% to 142% higher than that under effective demand scenarios. What is true for the region is also true for various countries in the region.
Nutrient Replenishment Requirements
Harvested crops remove nutrients from the soil. To maintain soil fertility and crop productivity, removed nutrients should be replenished; otherwise, soil fertility declines and over time soils get degraded. To estimate how much P2O5 will be needed to maintain P stocks in the soils at 2004–06 level, P2O5 removed by various crops was used as an indicator of P requirements. In 2006, Henao and Baanante estimated total P2O5 removed by harvested crops in each country in Africa. Using P2O5/ha removed as an index, calculations were made about P2O5 requirements. Using area harvested in 2020, P2O5 requirements were estimated to be 749,000 t. Actual P2O5 use in 2010 replenished only 31% of the phosphate removed from West African soils.
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It’s interesting to note that phosphate requirements under this scenario are lower—only 43% of that under the Abuja Declaration target. That means that the 15 kg/ha target may be too high.
Agronomic Requirements
Under this scenario, it is assumed that on average crops need 25 kg/ha of P2O5 fertilizers. This is based on agronomic experiments for higher crop yields. Using harvested area as a base, P2O5 requirements are estimated to be three million tonnes in 2020. Again assuming that 30% of the cultivated area will be fertilized with 25 kg/ha of P2O5, potential demand will be 896,000 tonnes—the highest of all scenarios.
Thus the potential phosphate demand in 2020 under various scenarios will be as follows:
1) Effective demand 287,000 tonnes 2) Potential demand under Abuja Declaration 537,000 tonnes 3) Potential demand under nutrient replenishment 749,000 tonnes 4) Potential demand under agronomic requirements 896,000 tonnes
Under the first two scenarios, namely effective demand and potential demand under the Abuja Declaration, projected demand will be approximately 430,000 and 1,040,000 t of P2O5 in 2030, respectively.
19.7 Product Demand
As there are no reliable time-series data on fertilizer products consumed at the country level, nutrient data were used to develop various scenarios for potential demand. Of the four scenarios and given the historical knowledge of growth in phosphate use in West Africa over 2000–2010, Scenarios 1 and 2 were selected for estimating demand for products. Scenario 1 reflects the effective demand and provides a lower bound. Given that until 2010, limited progress has been made in achieving the Abuja Declaration target at the Africa level (though some countries, like Ghana and Mali, may have made more progress towards that goal), Scenario 2 is considered to be an optimistic scenario, providing the upper bound for actual demand. Thus 2020 phosphate demand may fall between 287,000 t and 537,000 t. These two projections are converted to product demand by further assuming that 20% of the demand would be supplied through granulated PR and 80% through NPK 15-15-15. As noted earlier, NPK 15-15-15 is generally used in all countries so it can be used as a basis to estimate P2O5 demand through NPKs. To estimate demand for other NPKs (20-10-10, 10-10-20, 23-10-5, and others with micronutrients) at the country level, country-specific feasibility studies should be conducted. Until then, these estimates should be treated as indicative.
2020 Scenario GTPR/TPR (30% P2O5) NPK 15-15-15
---Tonnes---
Scenario 1: Effective Demand 191,400 1.53 million
Scenario 2: Potential Demand 358,300 2.87 million
Under the same assumptions, product demands will be as follows for 2030: 2030 Scenario GTPR/TPR (30% P2O5) NPK 15-15-15
---Tonnes---
Scenario 1: Effective Demand 286,700 2.29 million
Scenario 2: Potential Demand 693,300 5.55 million
19.8 International Experiences
During the last quarter of the 20th Century, especially after the first energy and fertilizer crisis in 1974, considerable research effort has been devoted to promote the direct application of PR, a natural resource with which West Africa is well endowed. Although not all PR resources are suitable for direct application, many reactive PRs such as Minjingu PR (MPR) in Tanzania and TPR in Mali are well-suited for direct application. In spite of agronomic and economic viability of PR, direct application of PR has not been popular with smallholder and large farmers in West Africa.
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Malaysia, Indonesia, and New Zealand have used PR for direct application on a large scale (FAO 2004). In Malaysia and Indonesia, it is used on oil palm plantations and in New Zealand it is used on grasslands. In both cases, large scale mechanical applications have avoided the problem associated with the dusty (finely ground) nature of PR. Recently, Ghana and Cote d’Ivoire have started using imported PR (from Morocco) on oil palm plantations. To overcome the dusty nature of PR, a key factor that discourages its use for direct application, Minjingu Mines and Fertilizer Ltd (MMFL), a private company mining MPR, installed a plant with a capacity of 100 kt/a for beneficiation and granulation of MPR. The company promoted granulated MPR during 2007 and 2008 at the height of the second fertilizer crisis with limited success. Thereafter, on the recommendation of the President and the Prime Minister of Tanzania, the company developed a new product (see Table 19-26) called Minjingu Mazao (MM) as a possible substitute for DAP (Modha 2012). MM includes N and P2O5 and secondary and micro nutrients as follows:
N 10%, P2O5 20%, K 20 % S 5%
Zn 0.5%, B 0.1%, CaO 25%, and MgO 1.5%
In collaboration with the Ministry of Agriculture, national universities, and NGOs like FISP (Farm Input Supply Program) and CNFA, the company has conducted over 25,000 small (baby) and medium scale trials and found that MM is on average over 90% as effective as DAP (Table 19-26). Also during the period 2008/09–2011/12, all fertilizers including MPR were subsidized by the Government of Tanzania, to minimize the adverse impact of high global fertilizer prices resulting from the 2008 fertilizer crisis. In spite of 50% subsidies, the company experienced low sales of MPR, suggesting that farmers are reluctant to use PR-based (even when PR is granulated) products. Limited marketing efforts may have prevented the adoption of granulated MPR. No data are available on what quantity of MPR was sold under subsidy program and outside subsidy program.
In 2012, the Government of Tanzania decided to subsidize only MM—not DAP, TSP, or urea (personal communications)—to promote its use. The impact of this move on the product’s popularity will indicate what price advantage will be needed to promote a new product in the market. MMFL is expecting to sell 60,000 t of MM in 2012/13.
In developing the marketing strategy, GQ should keep this experience in mind and draw on the lessons learned from MPR. A strong marketing strategy based on agro-dealer-based extension and promotional efforts should be implemented.
Table 19-26: Tanzania: Performance of Minjingu Mazao (MM) and DAP on Maize Grain Yield
District Yield (tonnes/ha) Yield (tonnes/ha) Yield (tonnes/ha) Ratio (%)
Control Plot MM DAP (MM/DAP)
Karatu 1.30 3.86 4.00 96
Babati 0.84 2.98 3.68 82
Moshi Urban 1.18 4.72 4.52 104
Moshi rural 1.30 4.62 4.9 94
Hai 0.89 3.20 3.40 94
Average 1.05 3.83 4.07 94
Source: Modha (2011).
19.9 Opportunities and Challenges
Opportunities
1. Growing Demand: Growing population, coupled with rising income and political commitment to reduce hunger and poverty will lead to increased use of all fertilizers, as extensive agriculture will not suffice to confront food security and sustainable agriculture challenges. Phosphate fertilizer
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(P2O5) demand is expected to increase from 184,000 t in 2010 to 287,000 t in 2020 to 430,000 t in 2030. Under the Abuja Declaration commitments, potential phosphate demand would be 537,000 t in 2020 and over one million tonnes in 2030. This translates into 1.8 million tonnes to 3.3 million tonnes of TPR (30% P2O5 content) and offers marketing opportunities for supplying phosphate fertilizers.
2. Product Profile: Most countries in West Africa use NPKs fertilizers. NPK 15-15-15 and cotton complex formulae dominate the product slate. High demand for these products offers opportunity for local production. Moreover, all countries (except Senegal) depend on imported phosphate fertilizer products. Substituting locally produced products for imported products offers opportunity for production.
3. Resource Endowment: West Africa is well-endowed with PR resources. TPR deposits are estimated to contain 50 million tonnes of PR having 26%–28% P2O5. Being medium reactive, TPR is suitable for direct application. Various agronomic trials have shown that TPR is as effective as water-soluble phosphate fertilizers in the medium term (3–4 years). TPR has not been popular with smallholder farmers due to its dusty nature. Granulation of TPR may offer an attractive opportunity.
4. Local Production and Price Advantage: Producing granulated TPR for direct application and NPK products in Mali and other countries in West Africa offers several advantages:
Saving in transportation cost: For landlocked countries, such as Mali and Burkina Faso, transportation cost (shipping, port handling, and in-transit) can account for 30%–40% of delivered price of imported fertilizers. Local production will result in considerable savings in the price farmers pay.
Savings in foreign exchange: The use of TPR for local production will save foreign exchange used in importing products and generate local development and employment.
5. Time Delivery: Frequently, delays in getting fertilizer products from foreign markets lead to delays in the supply of products at the farm level. Fertilizer has a seasonal demand; therefore, ‘fertilizer delayed is fertilizer denied’ because when fertilizers arrive after rains or the planting season, farmers cannot use them, especially products designed for basal application. Having a local or regional supplier can respond to changing demands more timely.
6. Regional Markets: There are ongoing efforts by ECOWAS, UEMOA, and development partners about harmonizing seed and fertilizers to create large-scale regional markets so that economies of scale in production and procurement could be realized and thereby farm-level price could be reduced. The fact that many countries use several identical or near-identical products offers opportunity in realizing scale and scope economies in production and marketing.
7. Potential for Large Size Markets: Fertilizer prices are high in African countries because, at the country level, the size of the market is small and even the small market is fragmented into many products. Consequently, importers pay high prices for small lots. Harmonizing products across national borders with contiguous agro-ecology and soils can result in large markets. As there are no restrictions on cross-border trade among ECOWAS member states, planning production for regional market can justify large scale investments in production and procurement for realizing economies of scale.
8. Plantation Crops: Oil palm plantation owners in Ghana and Cote d’Ivoire have started using imported PR (from Morocco) on oil palm plantations. As cocoa yields are getting lower, the Ghana Cocoa Board has started promoting the use of phosphate and potash fertilizers. These crops offer opportunity for promoting TPR for direct application on plantation crops.
9. Political Commitment: Under the CAADP Compacts of the African Union’s New Partnership for Africa’s Development (NEPAD), many countries have committed to 6% agricultural growth and accepted the agricultural sector as a lead sector for economic development and poverty reduction.
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Moreover, under the Maputo Declaration, national governments have committed to devote 10% of the national budget for agricultural development and under the Abuja Declaration, a commitment has been made to increase fertilizer nutrient use to 50 kg/ha. All these developments have generated a renewed interest in agriculture and a stronger political commitment to agricultural development in recent years. These efforts are leading to greater support for smallholder farmers and are encouraging them to adopt fertilizer-intensive technologies.
Challenges:
The West African landscape offers many opportunities for making investment in fertilizer production, exploiting available abundant local resources like TPR. The need and potential for increased phosphate and other fertilizer use is there; potential for local production is there; and the size of the regional market is large enough to justify investment. While many conditions are favorable for local production as mentioned above, there are many challenges in realizing that potential and converting it into profitable market opportunities. Some of these challenges are elaborated below.
1. Agronomic Issues: There is considerable research evidence that direct application of TPR or GTPR leads to significant increases in crop yields compared with no fertilizer. Compared with highly water-soluble phosphate fertilizers like TSP or DAP, TPR’s RAE is lower by 10%–30%, at least in the short-run, but over a four-year period TPR’s performance was as good as TSP in experimental trials (FAO 2004). Even with subsidies in Mali, CMDT, the country’s textile development agency, was not successful in promoting widespread adoption of TPR. The dusty nature of TPR may have prevented the widespread adoption of TPR in Mali and MPR in Tanzania as a phosphate fertilizer. Granulation helps to reduce the dustiness of TPR, or any other PR, but experience of MPR suggests that smallholder farmers did not adopt granulated MPR during the 2008–10 period even when there was 50% subsidy on the use of GMPR in Tanzania. Two possible reasons are the reduced efficiency of granulated PR and the slow release of P from GMPR, potentially convincing farmers that MPR is not as effective as other phosphate products. Other possibilities are that GMPR was not promoted and marketed adequately and that farmers were not properly educated and convinced about its benefits. It is possible that GTPR for direct application may face a similar fate as GMPR unless actions are taken to market it properly and pro-actively.
2. Farmer Acceptance of GPR-based NPKs: When granulated MPR was believed to be unpopular with farmers (in spite of 50% subsidy in 2008/09 and 2009/10), MMFL produced a new product called Minjingu Mazao (NP 10-20 with sulfur and micronutrients) as a substitute for DAP but the product has not been popular with farmers. In 2012, the Government of Tanzania has provided subsidies for MM only; there are no subsidies on DAP or TSP. This has distorted the market. The company plans to sell 60,000 t of products during the 2012/13 cropping season at a highly subsidized price. At fair market price, MM was not able to compete with TSP or DAP. At this early stage, it is difficult to tell whether the product per se was non-acceptable or whether it was a marketing failure, as opposed to a market failure, in 2011/12. By 2015, there will be more evidence about the fate of MM or PR-based NPKs in the next two years.
3. Water Solubility: Most countries in West Africa do not have regulations dealing with the water-solubility of phosphate fertilizers (imported or domestically produced). However farmers are accustomed to using water soluble fertilizers. Traore (2012) reports that 90% of fertilizers used in Mali are water-soluble. Changing farmers’ mindset about using non–water soluble products will be a challenging task, as farmers are generally risk-averse and reluctant to use new products. If low solubility and slow release of P from GTPR-based NPKs become a hindrance in the widespread adoption of new products, GQ should look into compactions or other methods to enhance the solubility of new products. In IFDC/IER trials, compacted materials were 90% as efficient at cotton complex formula.
4. Living Organisms: Fertilizer products are abiotic so trade between different countries is simple. In fact, fertilizer is one of the most homogenous products traded internationally. If bacteria are
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introduced in GTPR to make it more soluble, its export to neighboring countries may be governed by phyto-sanitory rules (dealing with seed trade) and may face difficulties. ECOWAS should be approached to harmonize such regulations.
5. Perception About the New Product: Although GTPR-based products supply P for plant growth, GTPR-based products will be perceived as new products based on TPR. Farmers’ perception and risk-averse nature may prevent the acceptance of new product in spite of its profitability (due to reduced price) and easy availability as well as good quality. Proactive marketing and promotional efforts will be needed to convince farmers about the usefulness of the GTPR-based products.
6. Crop Specific Products: Key products traded and used in West Africa include DAP; TSP; SSP; and NPKs of different grades such as 15-15-15, 20-10-10, 10-10-20, and 23-10-5; and several other specialty products like cocoa, pineapple, and cotton fertilizers. Key crops receiving fertilizers are maize, sorghum/millet, rice, cotton, groundnut, cocoa, beans, and other cash and food crops. To penetrate into specialty product markets, special formulations may be needed.
19.10 The Way Forward
GQ Market Share in P2O5 Demand
There is a strong need and potential for increasing phosphate fertilizer demand in West Africa. P205 demand is projected to increase from 184,000 t in 2010 to 287,000 t in 2020 and 430,000 t in 2030. However, based on Abuja Declaration targets, potential requirements of phosphate fertilizers will be approximately 537,000 t of P2O5 in 2020 and over one million tonnes of P2O5 in 2030. If all of the potential requirements under the Declaration are satisfied through GTPR (30% P2O5), West Africa will need 1.8 million tonnes of TPR in 2020 and 3.3 million tonnes in 2030. Of the potential requirements, Great Quest should be able to capture 30% in 2020 to 40% in 2030 of the market share. In capturing the market share, GQ should confront the challenges mentioned above and develop a strong marketing strategy as outlined below.
Assuming that 20% of the market will be targeted with GTPR and 80% with NPKs (15-15-15 is taken as a base) based on GTPR and imported urea and potash, then the size of the market for Great Quest will be as outlined in Table 19-27.
Table 19-27: GQ Market
Realizable Market (tonne P2O5)
GQ Total share
(tonne P2O5)
GTPR - avg. 30% P2O5
(20% share)
NPKs 15% P2O5
(80% share)
2020 537,000 161,100 107,400 859,200
2030 1,040,000 416,000 277,300 2,218,700
Source: Authors calculation.
Marketing Domains
To realize the above-mentioned market targets, GQ should focus on the following domains:
Concentrate on market development efforts in Mali, Burkina Faso, Ghana and Nigeria; these are relatively large phosphate markets. Niger, Senegal, and Cote d’Ivoire may provide small market opportunities.
Focus on NPK 15-15-15 in the first round. Add other NPKs based on country market assessments later on.
Explore the possibility of capturing the cotton fertilizer market by changing product mix; this segment is more assured and could offer a more promising market if cotton complex formulae could be harmonized for contiguous agro-ecological areas across country boundaries.
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Focus on promoting TPR on plantation crops like cocoa and oil palm.
Marketing Strategy
To promote new GTPR-based products, Great Quest should focus on promotional and educational efforts to create a demand for new products based on GTPR. One lesson from the limited Minjingu experience is that the company should develop a sound marketing strategy and devote resources in creating demand for the new product by education and demonstration. In this respect, the company should work closely with existing extension workers and agro-dealers, develop its own supply chain, and train agro-dealers about technology transfer functions. A sound marketing strategy should emphasize the four Ps of marketing—price, product, place, and promotion. GQ should offer the product at competitive prices and convenient places (closer to farmer) and make the product acceptable to farmers. Finally, promotion of the product stressing its advantages compared with existing products will be crucial. Additionally, Great Quest should also focus efforts in the following domains:
1. Agronomic Trials: In collaboration with IER and other national agronomic institutions in neighboring countries, GQ should fund agronomic trials with key products and determine relative agronomic and economic efficiency of GTPR-based products. Agronomic trials should focus on both short-term and longterm benefits of TPR-based products, as TPR application provides significant residual benefits over 5–7 years.
2. Seeding Programs: Smallholder farmers are generally risk-averse and reluctant to adopt a new fertilizer product. After agronomic trials, as a part of marketing strategy, large scale seeding programs should be implemented to convince farmers about viability and profitability of such products. The ‘seeing is believing’ principle requires that large areas are covered to create a strong demonstration effect. Another issue is that TPR has a very good residual effectiveness. In fact, several trials have shown that this effectiveness makes the product as good as the water-soluble products within three seasons. Therefore the agronomic trials should also look at the critical cropping systems that would benefit from residual P from TPR (the rotation of crops that would be ideal).
3. Discussion with National Stakeholders: Almost all fertilizers are imported in West Africa. Discussion with local importers, wholesalers, extension workers, and policymakers should be conducted. As many countries have product-specific subsidy programs, discussion with policymakers will be essential to allow the inclusion of GTPR-products in the subsidy program. NPK 15-15-15 is subsidized in all countries having a subsidy program. This will be more challenging as existing importers will try to block such efforts to maintain their market share but advantages related to price, quality, and timely delivery of new products should be stressed to win policymakers and farmers.
4. Regulation: Currently national markets are separated by artificial product differentiation (e.g. cotton complex formula). Efforts should be made to harmonize these regulations to create multi-country markets. This effort has to be through UEMOA and ECOWAS and existing commodity-based companies.
5. Water Solubility: Although water-solubility is not a legal requirement in West Africa, a strong promotional program should be launched to educate extension workers, agro-dealers and famers about the effectiveness of new products. Product should not be given to national governments or extension departments for marketing and distribution. A pro-active approach in promoting the new product should be pursued through existing marketing channels of agro-dealers—wholesalers and retailers.
Phasing of Marketing and Production Plans
Keeping these points in mind, it would be prudent for GQ to move slowly in its investment and production plans. Such plans should be divided into three phases:
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Phase I: 2013–2014: Conduct agronomic trials and seeding programs to generate agronomic and economic data about new products. Include compacted products in the field trials.
Phase II: 2015–2020: Target production of 500,000 t of TPR for beneficiation and granulation. Use 80% of GTPR for producing NPKs. Since NPK 15-15-15 is the most commonly used fertilizer for cereal and other crops in West African countries, it would be prudent to first target this market. Once NPK 15-15-15 is well accepted by agro-dealers and farmers, produce and introduce other NPKs suited to local needs. Marketing, promotional, and educational efforts should be intensified. To succeed, take the product to the farmer, not the other way round.
During Phase II, GQ should consider testing the market for compacted fertilizers, cotton complex fertilizers, and direct application of TPR for plantation crops like oil palm and cocoa.
Before the end of Phase II in 2020, conduct another market assessment study to firm up targets for the next phase.
Phase III: 2021–2030: Based on the experience acquired during Phase II, expand the production of TPR to one million tonnes for beneficiation and granulation and determine the product mix for production to achieve the targeted market share mentioned above.
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20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR
COMMUNITY IMPACT
GQ has not as yet carried out any environmental studies, permitting, or social or community impact studies.
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21 CAPITAL AND OPERATING COSTS
This section compiles the various capital and operating costs prepared by external experts namely Coffey, GBM, CFIh and Bollore/SDV Logistics.
21.1 Mine
Operating Costs
DEWATERING
For TPP, Coffey Mining has assumed a ground water influx of 100 litres (L) per minute for both areas—Tin Hina (within the Tilemsi license) and Tarkint Est. It has also been assumed that all water collected from the pit will be pumped some 1,000 m to settling ponds. Water will then be reused for pit and road dust suppression. Water generated from seasonal rainfall will be collected before entering the pit and diverted to the nearby stream.
No allowance has been made in the mining costs for the external pit dewatering bores installation, operation, or maintenance.
POWER, WATER, AND FUEL
The predicted operating costs is based on the assumptions that power will be generated by diesel fuel oil and that the mine plant and village will draw power of 100 kVA respectively with a mine substation capacity of 0.5 MVA generated at a cost of USD0.297 per kWh. Diesel fuel has been costed at USD1.10/L.
ORGANIZATIONAL REQUIREMENTS
The organizational structure of TPP reflects the proposed mining operations, serviced by senior technical and administrative staff. The total cost of employment (TCOE) for expatriates is based on Coffey Mining’s inhouse database and reflects rates used for other West African projects. Local labour rates have been supplied by GQ.
Table 21-1 depicts the skilled labour requirements for the proposed operation. The mine supervision workforce consists of 11 personnel and is estimated at USD1,018,713 pa.
Table 21-1: Tilemsi Phosphate Project - Mining Skilled Labour Costs at Peak Production
Job Function Base Salary
USD per Annum Number
Total Cost of Employment
USD per annum
Mine Manager 180,000 1 246,600
*Mine Superintendent 16,170 1 21,021
Mine Foreman 90,000 2 251,460
Engineer 70,000 1 97,790
Geologist 70,000 1 97,790
Technician 70,000 3 293,370
*Secretary/Administration 4,544 1 5,907
*Warehouse /stores 3,673 1 4,775
Total 11 1,018,713
*Denotes locally sourced labour
Table 21-2 reflects the mining and associated engineering (maintenance) costs associated with TPP for salaried labour.
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Table 21-2: Tilemsi Phosphate Project - Mining Salaried Labour Costs at Steady State
Category Patterson
Grade Hourly
Rate (USD) Hourly Rate Including
Loading Rate (USD)
Excavator Operator B4 3.26 4.53
Truck Operator B4 3.26 4.53
Heavy Equipment Operator
B4 3.26 4.53
Utility Operator B3 3.04 4.23
Mechanic B4 3.26 4.53
Electrician B4 3.26 4.53
Equipment Maintenance B3 3.04 4.23
General Labourer A 5.21 7.24
Operator efficiency 83%
Shift allowance USD1.25 Nightshift. Loading includes additional employment cost not included in gross salary
MINE VILLAGE
Operating costs to manage the mining village are estimated at USD1.19 per ROM tonne during steady state mining operations. The cost to operate the mine village is estimated at USD1.42 per ROM tonne.
Operating costs of the mine village are based Coffey Mining’s inhouse database and founded on a recently proposed mine village in West Africa. Operating costs have been estimated using the 6/10th rule and are considered appropriate for the level of study undertaken. Detailed cost estimates will be required at the next level of project development i.e. Prefeasibility or Feasibility Studies.
OPERATING COSTS SUMMARY
Operating cost for TPP range between USD4.22 and USD12.72 per tonne phosphate material mined for mining operations producing between 0.2 Mt/a and 1.0 Mt/a. The highest costs are associated with the start of mining operations as the mining rate is low and hence an increase in the unit rate. Operating costs also spike in Year 7 when the stripping rate increases to over 9:1. Coffey Mining has not applied a contingency to the estimated operating costs.
Operating costs are divided into four cost categories: hourly or semi-skilled labour, supervision or skilled labour, equipment operational and maintenance costs, and miscellaneous costs. Operating costs for annual ROM production on a USD per tonne basis are depicted in Figure 21-1 and Table 21-3.
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Figure 21-1: Annual Mining Operating Cost
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Table 21-3: Annual Operating Cost USD per ROM Tonne
Descrip-tion
Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Labour 1.35 0.89 0.76 0.61 0.63 0.63 0.88 0.43 0.43 0.43 0.46 0.46 0.42 0.47 0.47 0.47 0.47 0.47 0.52 0.53
Super-vision
4.85 3.23 2.42 1.94 1.94 1.94 2.53 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.11
Equip. Ops. & Main-tenance
5.36 3.89 3.68 3.14 4.48 4.48 7.42 3.95 3.95 3.95 3.44 3.44 2.33 3.79 3.79 3.79 3.79 3.79 6.60 6.60
Misc. 1.16 0.80 0.69 0.57 0.71 0.71 1.08 0.55 0.55 0.55 0.50 0.50 0.38 0.54 0.54 0.54 0.54 0.54 0.82 0.82
Total 12.72 8.81 7.55 6.26 7.76 7.76 11.91 6.03 6.03 6.03 5.50 5.50 4.23 5.90 5.90 5.90 5.90 5.90 9.04 9.06
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Capital Expenditure
Capital expenditure for TPP mine is shown in Figure 21-2 and Table 21-4. Initial capital expenditure is estimated at USD23.4 million, which includes mine equipment, fuel storage, generators, and a small village for mine workers. A further USD14.4 million is required between Year 2 and Year 8 for further capital purchase to bring mining to a steady state rate of 1 Mt/a. In Year 13, USD15.9 million is required for the replacement of mining equipment and will be used to mine the Tarkint Est area from Year 13 to Year 20. A total capital expenditure of USD57.0 million is estimated for mining over the 20-year LOM.
Figure 21-2: Capital Expenditure
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Table 21-4: Tilemsi Phosphate Project - Tilemsi Project Forecast Capital Expenditure for Mining Operations (USD ‘000)
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12 Yr 13 Yr 14 Yr 15 Yr 16 Yr 17 Yr 18 Yr 19 Yr 20
Hydraulic shovel - Ore
1,130 1,130 1,130
ADT 24t Trucks - Ore
880 440 880 1,320
Hydraulic shovel - Waste
1,920 1,920 1,920 1,920
63t Rigid Body Trucks - Waste
3,000 1,000 3,000 3,000 1,000
Dozer 2,100 1,050 3,150
Grader 312 312
Water Truck 410 410 410
Service Truck 160 160 160
Grid Roller 300 300
Light Duty Vehicles
350 200 350 200 350 200
Lighting Plant 68 68 68 136 68
Pumps 30 30 30 30 30 30 30 30 30
Haulage Road 700 500 772 560
Workshop, offices, electrical, etc
4,770 3,500
Computer Hard/software
400 400 400 400
First Fill 600
Diesel generators 525 525
Fuel storage & dispense
2,000
Village 3,800
Total 23,455 4,300 268 1,080 400 30 8,280 30 1,155 15,928 350 30 1,400 298
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21.2 Beneficiation Plant
Basis of Cost Estimate
This section serves to provide information pertaining to the preparation by GBM of the capital cost estimate (CAPEX) and operating cost estimate (OPEX) for the beneficiation plant as outlined in Sections 17.1 and 18.2. This includes the assumptions, exclusions, methods, and data sources for the various aspects of the cost engineering exercise.
Design Basis
The CAPEX and OPEX have been estimated based on the following project specifications, determined through the ore resource study and test work.
Table 21-5: Process Plant Operating Inputs
Description Phase 1 Phase 2 Units
Design dry tonnage 0.5 1 Mt/a
Plant Availability 94 % 94 %
Plant Throughput 61 122 t/h
MGP Product Recovery 97.94 % 97.94 %
HGP Product Recovery 95.20 % 95.20 %
The level of engineering detail and confidence has a direct effect on the precision and accuracy of the final estimate. To ensure the required level of confidence is achieved in the preparation of the cost estimate, several engineering design inputs are required that form part of the overall basis. The cost estimate for the TPP is based on preliminary engineering aimed at assessing TPP. The engineering documents that have been used to develop the CAPEX and OPEX are listed in Table 21-6.
Table 21-6: Supporting Documents
Title
Process Design Criteria
Project Design Basis
Mass and Water Balance
Capital Expenditure (CAPEX) Cost Database
Operational Expenditure (OPEX) Cost Calculation
Mechanical Equipment List
Electrical Load List
Process Flow Diagrams
Site layouts and GA Drawings
Project Basis
The Project has been divided up into project areas (detailed in Table 21-7), each with an area number and brief description.
This structure forms the basis for the capital expenditure reporting for each line item.
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Table 21-7: Project Area Breakdown
Area Sub-area Description
0 0 General
1 0 Mining General
10 Mining Infrastructure
20 Mine Vehicles and Equipment
30 Stripping, Blasting & Haulage
2 0 Processing Plant General
10 Feed Preparation
20 Classification
30 De-sliming
40 Product Screening
50 Magnetic Separation
60 Product De-watering
61 Product Granulation
70 Tailings De-watering
80 Reagents
90 Utilities
91 Infrastructure
3 0 Tailings Management
10 Tailings Materials Handling
20 Tailings Civils General
30 Tailings Lining & Leak Detection
40 Tailings De-watering
4 0 Product Handling
5 0 Infrastructure and Utilities
10 Water Supply & Distribution
20 Fire Services
30 Site Power General
40 Fuel Depot General
50 Waste Handling & Treatment
60 Infrastructure
70 Buildings and Stores
6 0 Accommodation Village
10 Buildings
20 Utilities
30 Facilities
40 Infrastructure
7 0 Bulk Blending Facilities
8 0 Environmental
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Methodology
The cost estimate is based on the current level of engineering design and has been generated from supporting engineering quantities and cost information. Cost information has been derived from the following sources:
Historical cost information sourced from inhouse and commercial databases. InfoMine is a commercial database containing extensive mining and process plant costing information to which GBM has access.
Factors have been applied to the mechanical equipment. Factors are derived from the inhouse database and from estimating publications.
Estimate Classification
The prepared estimate is classified as a Class 4.
This classification comes with an accuracy range of ±50%.
Assumptions
The following assumptions have been made during the preparation of this estimate:
New equipment is used for the operation.
Equipment costs are based on GBM-selected suppliers that may not be the final equipment supplier for the plant.
All required earthwork materials such as fill, sand, gravel, crushed rock, etc. can be sourced within 4 km of the plant site.
Equipment costs are based on GBM-selected equipment based on information and test work available at the time of design.
Permits will be granted for all water to be sourced from the Niger River for TPP.
Construction for Phase 2 upgrade will occur in Year 7.
Currency and Exchange Rates
Capital and operating cost estimates are prepared in mixed currencies and reported in United States dollars (USD). The exchange rates used in calculations are shown in Table 21-8.
Table 21-8: Currency Exchange Rate
Currency Code Rate
Australian dollar AUD 0.9570
Canadian dollar CAD 0.9780
Euro EUR 0.7406
Pound sterling GBP 0.6250
Kazakhstani Tenge KZT 92.9380
Russian ruble RUB 31.2326
Saudi Riyal SAR 3.7977
Singapore Dollar SGD 1.2369
Turkish lira TRY 1.8168
United States dollar USD 1.0000
Note: exchange rates are taken from http://www.xe.com as of 14 September 2012.
Base Date and Reporting Currency
The cost estimate has a base date of the third quarter of 2012.
The estimate is reported in USD.
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Exceptions
There are no exceptions to the Cost Engineering Procedure during the preparation of this estimate.
Inclusions
The following describes the make-up of the OPEX and CAPEX for the project:
CAPEX
Mechanical equipment costs
Allowances have been made for piping, platework, earthworks, civil, structural, control and instrumentation, electrical, installation, and freight forwarding as factors of the mechanical equipment costs
Provision of a construction camp and utilities during construction, including water, fuel, and electricity
Infrastructure including roads, security, and fencing
Utilities including power generation, raw water supply, potable water, compressed air, fuel depot, and sewage treatment
Buildings associated with the beneficiation plant such as the laboratory, mill office, warehouse, workshop, emergency services building, and administration office
Accommodation village including all utilities, buildings, infrastructure, and facilities
Socially useful infrastructure for the town of Bourem, including potable water and power, and buildings, including a clinic and school
Mobile equipment for the operations of the beneficiation plant, support services, and personal use
EPCM (engineering, procurement, and construction management) cost for the delivery of the plant and infrastructure as per the battery limits
OPEX
Provision of water, fuel, and electricity
Manpower for the operation of the process plant and associated infrastructure
General administration costs
Provision of appropriate operating spares
Necessary maintenance costs (equipment, vehicles, roads, pipelines etc.)
Exclusions
Demolition works or removal of existing infrastructure
Cost escalation or for currency fluctuations
The granulation plant and product storage
Mining associated infrastructure, equipment, and haul roads
Consumption tax, discount rate, finance rate, or royalty rate
Allowance for future scope changes
Land acquisition
Environmental studies and permitting
Additional consultants
Operational insurances
Community relations and services
Removal of unexploded ordinance
Labour stand-down costs
Demurrage costs
Any geotechnical work or test work
Insurance costs
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Risks and Opportunities
Several risks and opportunities have been identified in the preparation of this estimate:
The use of database costs may introduce errors or omissions in failing to allow for site specific requirements.
The remoteness of the site may result in some delivery delays and commensurate demurrage costs.
No allowances have been made for the event of a labour stand-down or other significant interruptions to work.
As this is only a PEA-level study, the level of engineering is only enough to estimate the costs to within ±50%.
Management Reserve
No management reserve has been allowed for as part of this cost estimate.
Estimate Quality Assurance
No third party quality reviews have been undertaken as part of this estimate.
Contingency
Inclusion of contingency aims to cover the costs associated with unknown risks. This includes allowance for items, conditions, or events for which there are uncertainties and that experience indicates will potentially result in additional costs.
The contingency estimate for this aspect of the TPP is broken down into the risk drivers identified as follows:
Project definition
Estimating methods and estimating data
Engineering design efforts
Supplier quotations or database costs
Site data and test work
Contingency is estimated using a factored method that is suitable for a Class 4 cost estimate. As part of this Class 4 estimate, a 25% contingency is to be used.
21.2.1 Capital Cost Development
The purpose of the capital cost estimate is to provide substantiated costs that can be utilized to assess the economics of the Beneficiation Plant. The exchange rates are shown in Table 21-8 and can easily be updated in the source estimate if required.
Wherever possible, GBM has obtained supplier quotations for major items of plant equipment. Where a quotation was not available a commercial or internal database was used to estimate the cost. If neither of the above was available, GBM has estimated the cost based on experience.
The cost types in the CAPEX have been broken down into the sections shown in Table 21-9. The capital cost estimate is broken down into direct, indirect, and working capital costs shown in Table 21-10. The capital cost breakdown structure is reported on a project area basis using the structure shown in Table 21-10.
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Table 21-9: Cost Type Definitions
Cost Type Definition
Labour Costs directly associated with labour
Materials Permanent plant and equipment used during capital works
Equipment Temporary plant and equipment used during capital works
Contracts Used when a contract is raised and there is no means to break down the costs into discrete elements. Vendor packages delivered on a Lump Sum Turn Key (LSTK) basis are included in this cost centre
Cost Indirect costs such as insurance, permitting, licences, and contingency
Freight and Logistics Covers costs associated with the logistics, handling, and freight of materials to site
Expense Flights, accommodation and per diem for Client, Engineering, Procurement and Construction (EPC) and Original Equipment Manufacturer (OEM) teams
Table 21-10: Capital Cost Breakdown Structure
Cost Centre
Total Capital Investment
Fixed Capital
100 – Direct
101 – Earthwork
102 – Civil
103 – Structural
104 – Mechanical
105 - Mobile Equipment
106 – Electrical
107 - Control and Instrumentation
108 – Piping
109 – Platework
200 – Indirect
201 – EPC
202 - Owner's Costs
203 – Consultants
204 - Field Indirect
205 – Insurance
206 – Contingency
300 - Working Capital
301 – Consumables
302 - Initial and Commissioning Spares
Direct Cost Development
The direct costs for the Project include
All labour required for Project construction and management activities
All material and equipment required for construction
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Mechanical, electrical, control, instrumentation, civil works, earthworks, and piping installation services
Transport and freighting services
PRE-PRODUCTION COSTS
No pre-production costs are included in this estimate.
MECHANICAL EQUIPMENT COSTS
The mechanical engineering costs have been sourced using commercial databases and inhouse historical data.
FACTORED COST ESTIMATES
The remaining cost centres have been estimated by applying a factor to the mechanical equipment costs. These cost centres and their associated factors are listed in Table 21-11. The factors are based on an estimating resource with modifications based on comparison with inhouse database estimates for which more detailed level costing exercises have been conducted.
Table 21-11: CAPEX Cost Centre Factors
Cost Centre Factor
Earthwork 3%
Civil 24%
Structural 10%
Mechanical 100%
Electrical 25%
Control and Instrumentation 4%
Piping 9%
Platework 8%
Initial and Commissioning Spares 15%
Construction Camp 12%
Consumables 4%
Freight Forwarding 10%
Installation 9%
Sustaining Capital
The sustaining capital investment (capital investment required to maintain levels of production) includes any repurchase of equipment over the mine life and expansion of facilities expected at current production. The sustaining capital required includes
Year 6 o Tailings management–USD1,169,443
Year 7 o Second phase processing plant–USD7,720,565 o Second phase expansions of infrastructure and utilities–USD4,457,700
Year 8 o Replacement of mobile equipment–USD3,350,933
Year 9 o Tailings management–USD1,143,931
Year 10 o Power Generation–Replace phase 1 power generation–USD7,546,875
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Year 11 o Tailings management–USD1,110,524
Year 14 o Tailings management–USD1,024,516
Year 16 o Replacement of mobile equipment–USD3,350,933 o Tailings management–USD1,024,516
Year 17 o Power Generation–Replace phase 2 power generation–USD4,457,700
Year 19 o Tailings management–USD1,024,516
Indirect Cost Development
Definitions of the Project indirect costs are given below in Table 21-12:
Table 21-12: Indirect Cost Centre Definitions
Indirect Cost Centre
Definition
EPCM Costs for engineering, procurement activities, construction management, project management, site mobilization, site establishment, and services during construction. EPCM costs are calculated as 15% of all direct costs.
Contingency
A cost element of the estimate which covers the uncertainty and variability associated with the estimate. As per the GBM Class 4 cost estimate definition, the overall contingency for the CAPEX shall be 25%. The method of defining the contingency is described in Section18.2.
21.2.2 Operating Cost Development
The operational costs are those incurred during the full operation of the process plant and surrounding infrastructure for the duration of the operation. OPEX costs have been based on the process plant operating inputs seen in Table 21-5.
Costs for each area have been established per year and include the following:
Reagent consumption
Personnel
Electricity
Fuel
Operating spares, lubricants, and wear items
Road maintenance
General administration
Reagent Consumption
Reagent consumption rates for the process plant are taken from the mass balance which has been calculated using available test work or industry norms for a plant of this type and size. The annual reagent consumption costs have been determined using the calculated consumption rates and prices per tonne of reagent based on historical prices.
The reagent consumption rates per tonne of ore for the process plant are shown in Table 21-13.
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Table 21-13: Reagent Consumption Rate
Reagent Consumption Units
Flocculant 50 g/t
Reagent costs are shown in Table 21-14.
Table 21-14: Reagent Cost
Reagent Price Units
Flocculant 3,910 USD/t
Reagent costs will be expressed as a USD/tonne value and applied against the plant feed tonnage and will remain consistent in rate over the LOM.
Operating Personnel
The annual required personnel has been estimated by GBM, and these requirements have been reviewed by GQ. The manpower requirements are outlined below.
A summary of the manning by category is contained in Table 21-15.
Table 21-15: Labour Quantity
Personnel Phase 1 Phase 2
Manager (Western) 6 6
Supervisor (Western) 4 4
Manager 6 6
Supervisor 13 13
Operator 137 137
Labourer 55 55
The rates for the various categories are contained in Table 21-16.
Table 21-16: Labour Rates
Personnel Rate (USD) Unit
Manager (Western) 250,000 USD/a
Supervisor (Western) 180,000 USD/a
Manager 5,600 USD/a
Supervisor 4,200 USD/a
Operator 3,800 USD/a
Labourer 1,800 USD/a
The yearly total of these rates has been included in the OPEX. Rates are inclusive of all benefits.
Labour costs will be expressed as a USD/year value and broken into plant divisions. Costs should be applied against the operating period.
General Administration
The yearly general administration costs including the process plant, mine, and ancillaries were based on inhouse experience gained from a detailed study of a similar sized operation to the Phase 2 plant. Costs were scaled down according to a scale factor derived by comparing cost models in a commercial database that had a similar variance in throughput. The general administration values provided can be seen in Table 21-17.
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Table 21-17: General Administration Costs
Area Phase 1 Phase 2 Unit
000 - General 1,575,000 2,300,000 USD
The GA cost should be applied at a fixed rate (USD/a), regardless of the feed tonnage of the plant, or amount of product produced.
Site Road Maintenance
The yearly maintenance costs for the site roads have been calculated using the road lengths and a rate based on previous projects from the inhouse database, as seen in Table 21-18 and Table 21-19:
Table 21-18: Road Maintenance Costs
Area Cost Unit
Site road maintenance 3,000 USD/(km/a)
Table 21-19: Road Maintenance Quantity
Area Qty Unit
Site roads 2.8 km
The length of roads and cost of maintenance will remain constant for the duration of the operation.
Electricity
The electrical power operating costs have been estimated from the average power consumption expected during normal plant operation. The average power consumption is determined by load calculations at all Project sites including the process plant, village, and all infrastructure facilities. The load calculation is based on estimated loads for the major equipment, high demand additional items such as the camp, and allowances for lighting and small power. Reduced loads from duty/standby and intermittent motors are taken into account and maximum demand diversity calculations are used to allow for the intermittent nature of the lighting and small power loads. These loads are summarized by Project area in Table 21-20.
Table 21-20: Power Consumption
Area Phase 1 Phase 2 Unit
000 - General - - kW/a
100 - Mine By Others By Others kW/a
200 - Processing 55,424,192 97,744,847 kW/a
300 - Waste Management 438,000 438,000 kW/a
400 - Product Handling By others By others kW/a
500 - Infrastructure and Utilities 5,835,535 5,835,535 kW/a
600 – Accommodation Village 4,999,930 4,999,930 kW/a
700 - Bulk Blending Facilities By Others By Others kW/a
The price per electrical unit has been calculated by GBM, with the major contributing input rate of diesel price. This rate can be seen in Table 21-21. The rate includes fuel, lubricants, and maintenance and is expressed on a per kilowatt consumed basis. As an owner operated plant is assumed, the rate does not include a capital recovery component.
Table 21-21: Power Costs
Area Cost Unit
Power Cost 0.297 USD/kWh
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Utilities
Fuel consumption is broken into several categories (Table 21-22). Vehicles are based on GBM experience of a typical plant operating fleet and its estimated operating rates and consumptions. Fuel for the process plant equipment is based on catalogue data for the process criteria nominated.
Table 21-22: Utility Consumption
Area Phase 1 Phase 2 Unit
Vehicles - Diesel 1,000,000 1,000,000 L/a diesel
Vehicles - Petrol 252,000 252,000 L/a diesel
Process Equipment 827 1,653 L/h diesel
The utility rates are assumed and are shown in Table 21-23.
Table 21-23: Utility Rates
Area Cost Unit
Diesel 1.10 USD/L
Petrol 1.10 USD/L
Operating Spares, Lubricants, and Wear Items
Operating spares, lubricants, and maintenance costs are based on rates derived from InfoMine published rates. Costs are categorized by equipment type and expressed on a cost per hour basis. When calculated against the operating schedule and capital cost of the equipment, a percentage value can be derived. In order to account for upkeep of the other plant equipment, a percentage allowance has been assumed for maintenance on a yearly basis.
These rates are presented in Table 21-24.
Table 21-24: Operating Spares, Lubricants and Wear Rates
Area Rate (annual)
Mechanical Equipment 13.9%
Piping 10%
Instrumentation 5%
Electrical 10%
Mobile Equipment 10%
Structural 2%
21.2.3 Costing Report
Capital Cost Estimate
INITIAL INVESTMENT CAPITAL
The total initial investment capital cost estimate is USD72,731,580 and includes a contingency of USD11,651,091.
The capital cost estimate breakdown for the entire project can be seen in Table 21-25.
Table 21-25: Capital Cost Estimate Breakdown
Cost Centre Currency Total
Total Capital Investment USD 72,731,580
Fixed Capital USD 66,242,511
100 - Direct USD 46,604,365
200 - Indirect USD 19,638,145
300 - Working Capital USD 6,489,070
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The breakdown of the capital expenditure by area is detailed in Table 21-26.
The “fraction of total” is the fraction of the total capital investment that each cost centre represents.
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Table 21-26: CAPEX Report
Cost Centre Total 000 General 100 Mining
General
200 Processing
Plant General
300 Tailings Management
400 Product Handling
500 Infrastructure and Utilities
600 Accomm. Village
Fraction
Total Capital Investment 72,731,580 23,393,490 - 18,468,057 1,719,822 - 19,475,078 9,675,133 1.00
Fixed Capital 66,242,511 23,393,490 - 16,865,987 1,719,822 - 14,588,078 9,675,133 0.91
100 - Direct 46,604,365 3,755,345 - 16,865,987 1,719,822 - 14,588,078 9,675,133 0.64
101 - Earthwork & Civils 6,106,533 260,296 - 2,335,165 1,679,822 - 150,424 1,680,825 0.08
102 - Structural 830,333 - - 830,333 - - - - 0.01
103 - Buildings 8,888,206 - - - - - 3,943,845 4,944,361 0.12
104 - Mechanical 11,729,442 144,115 - 9,880,959 40,000 - 1,412,368 252,000 0.16
105 - Mobile Equipment 3,350,933 3,350,933 - - - - - - 0.05
106 - Electrical 12,122,707 - - 2,075,832 - - 7,546,875 2,500,000 0.17
107 - Control and Instrumentation 355,133 - - 332,133 - - 23,000 0 0.00
108 - Piping 2,406,813 - - 747,299 - - 1,391,566 267,947 0.03
109 - Platework 814,266 - - 664,266 - - 120,000 30,000 0.01
200 - Indirect 19,638,145 19,638,145 - - - - - - 0.27
201 - EPCM 6,990,655 6,990,655 - - - - - - 0.10
202 - Owner's Costs - - - - - - - - 0.00
203 - Consultants - - - - - - - - 0.00
204 - Field Indirect 996,399 996,399 - - - - - - 0.01
205 - Insurance - - - - - - - - 0.00
206 - Contingency 11,651,091 11,651,091 - - - - - - 0.16
300 - Working Capital 6,489,070 - - 1,602,070 - - 4,887,000 - 0.09
301 - Consumables 5,243,571 - - 356,571 - - 4,887,000 - 0.07
302 - Initial and Commissioning Spares
1,245,499 - -
1,245,499 - - - -
0.02
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PHASED COSTING AND SUSTAINING CAPITAL
The sustaining capital necessary throughout the life of the Project has been incorporated into a Project capital cost estimate. This includes the capital necessary to expand operations from Phase 1 to Phase 2 and to replace or upgrade necessary equipment. The phased costing for the Project can be seen in Table 21-27.
Tilemsi Phosphate Project – PEA Page | 136
Table 21-27: Phased Capital Costs (USD)
Item Total Yr 0
Yr1
Yr2
Yr3
Yr4
Yr5
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Yr12
Yr13
Yr 14
Yr 15
Yr 16
Yr 17
Yr18
Yr 19
Yr20
General 30,095,356 23,393,490 - - - - - - - 3,350,933 - - - - - - - 3,350,933 - - - -
000 General
30,095,356 23,393,490 - - - - - - - 3,350,933 - - - - - - - 3,350,933 - - - -
Mining - - - - - - - - - - - - - - - - - - - - - -
100 Mining General
- - - - - - - - - - - - - - - - - - - - - -
110 Mining Infra-structure
- - - - - - - - - - - - - - - - - - - - - -
120 Mine Vehicles & Equipment
- - - - - - - - - - - - - - - - - - - - - -
130 Stripping, Blasting & Haulage
- - - - - - - - - - - - - - - - - - - - - -
Process-ing Plant
26,188,621 18,468,057 - - - - - - 7,720,565 - - - - - - - - - - - - -
200 Processing Plant General
15,671,109 9,797,925 - - - - - - 5,873,183 - - - - - - - - - - - - -
210 Feed Prep-aration
328,060 328,060 - - - - - - - - - - - - - - - - - - - -
220 Classifi-cation
1,113,781 1,039,221 - - - - - - 74,560 - - - - - - - - - - - - -
230 De-sliming
898,131 449,065 - - - - - - 449,065 - - - - - - - - - - - - -
240 Product Screening
1,716,421 864,460 - - - - - - 851,960 - - - - - - - - - - - - -
250 Magnetic Separation
956,654 484,858 - - - - - - 471,796 - - - - - - - - - - - - -
260 Product De-watering
4,186,943 4,186,943 - - - - - - - - - - - - - - - - - - - -
261 Product Granul-ation
- - - - - - - - - - - - - - - - - - - - - -
270 Tailings De-watering
147,246 147,246 - - - - - - - - - - - - - - - - - - - -
280 Reagents
273,020 273,020 - - - - - - - - - - - - - - - - - - - -
290 Utilities
578,016 578,016 - - - - - - - - - - - - - - - - - - - -
291 Infra-structure
319,242 319,242 - - - - - - - - - - - - - - - - - - - -
Tilemsi Phosphate Project – PEA Page | 137
Tailings Manage-ment
8,217,268 1,719,822 - - - - - 1,169,443 - - 1,143,931 - 1,110,524 - - 1,024,516 - 1,024,516 - - 1,024,516 -
300 Tailings Manage-ment
- - - - - - - - - - - - - - - - - - - - - -
310 Tailings Materials Handling
- - - - - - - - - - - - - - - - - - - - - -
320 Tailings Civils General
3,630,663 749,140 - - - - - 566,789 - - 541,278 - 507,871 - - 421,862 - 421,862 - - 421,862 -
330 Tailings Lining & Leak Detection
4,546,605 930,682 - - - - - 602,654 - - 602,654 - 602,654 - - 602,654 - 602,654 - - 602,654 -
340 Tailings De-watering
40,000 40,000 - - - - - - - - - - - - - - - - - - - -
Product Handling
- - - - - - - - - - - - - - - - - - - - - -
400 Product Handling
- - - - - - - - - - - - - - - - - - - - - -
Infra-structure and Utilities
35,937,353 19,475,078 - - - - - - 4,457,700 - - 7,546,875 - - - - - - 4,457,700 - - -
500 Infra-structure & Utilities
- - - - - - - - - - - - - - - - - - - - - -
510 Water Supply & Distrib-ution
223,126 223,126 - - - - - - - - - - - - - - - - - - - -
520 Fire Services
889,077 889,077 - - - - - - - - - - - - - - - - - - - -
530 Site Power General
24,009,150 7,546,875 - - - - - - 4,457,700 - - 7,546,875 - - - - - - 4,457,700 - - -
540 Fuel Depot General
5,307,000 5,307,000 - - - - - - - - - - - - - - - - - - - -
550 Waste Handling & Treatment
1,217,889 1,217,889 - - - - - - - - - - - - - - - - - - - -
560 Infra-structure
- - - - - - - - - - - - - - - - - - - - - -
570 Buildings & Stores
4,291,112 4,291,112 - - - - - - - - - - - - - - - - - - - -
Tilemsi Phosphate Project – PEA Page | 138
Accom-modation Village
9,675,133 9,675,133 - - - - - - - - - - - - - - - - - - - -
600 Accom-modation Village
- - - - - - - - - - - - - - - - - - - - - -
610 Buildings
3,419,167 3,419,167 - - - - - - - - - - - - - - - - - - - -
620 Utilities
3,177,245 3,177,245 - - - - - - - - - - - - - - - - - - - -
630 Facilities
1,525,194 1,525,194 - - - - - - - - - - - - - - - - - - - -
640 Infra-structure
1,553,527 1,553,527 - - - - - - - - - - - - - - - - - - - -
Bulk Blending Facilities
- - - - - - - - - - - - - - - - - - - - - -
700 Bulk Blending Facilities
- - - - - - - - - - - - - - - - - - - - - -
Total 110,113,73
2 72,731,580 - - - - - 1,169,443 12,178,265 3,350,933 1,143,931 7,546,875 1,110,524 - - 1,024,516 - 4,375,449 4,457,700 - 1,024,516 -
Tilemsi Phosphate Project – PEA Page | 139
Operating Cost Estimate
This OPEX breakdown for the processing plant is based upon both a 0.5 Mt/a and 1 Mt/a throughput and estimated yield based on test work results. There has been no allowance for any royalty or tax payments for operation.
The annual operating costs can be seen in Tables 21-28 and 21-29 outlining the major cost areas for operations and their associated annual costs and costs per tonne of ore.
Note: The operating costs for area 261 are not included under the Beneficiation OPEX, as they are part of the Granulation OPEX.
Tilemsi Phosphate Project – PEA Page | 140
Table 21-28: Operating Cost Breakdown (USD/a)
OPEX (USD/a)
Reagents Labour Power Wear and Maintenance General and Admin Utilities
Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2
000 General - - 1,115,200 1,115,200 - - 8,400 8,400 1,575,000 2,300,000 1,377,200 1,377,200
100 Mining General - - - - - - - - - - - -
200 Processing Plant General 97,750 195,500 1,617,600 1,617,600 4,917 153 5,965,972 1,550,818 1,629,961 - - 7,964,154 15,928,308
261 Product Granulation - - 114,000 114,000 11,543,832 23,064,248 - - - - - -
300 Tailings Management - - - - 130,086 130,086 - - - - - -
400 Product Handling - - - - - - - - - - - -
500 Infrastructure and Utilities - - 45,800 45,800 1,733,154 1,733,154 - - - - - -
600 Accommodation Village - - 35,200 35,200 1,484,979 1,484,979 - - - - - -
700 Bulk Blending Facilities - - - - - - - - - - - -
TOTAL 97,750 195,500 2,927,800 2,927,800 19,809,204 32,378,439 1,559,218 1,638,361 1,575,000 2,300,000 9,341,354 17,305,508
Tilemsi Phosphate Project – PEA Page | 141
Table 21-29: Operating Cost Breakdown (USD/t)
OPEX (USD/t)
Reagents Labour Power Wear and Maintenance General and Admin Utilities
Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2
000 General - - 2.23 1.12 - - 0.02 0.01 3.15 2.30 2.75 1.38
100 Mining General - - - - - - - - - - - -
200 Processing Plant General 0.20 0.20 3.24 1.62 9.83 5.97 3.10 1.63 - - 15.93 15.93
261 Product Granulation - - 0.23 0.11 23.09 23.06 - - - - - -
300 Tailings Management - - - - 0.26 0.13 - - - - - -
400 Product Handling - - - - - - - - - - - -
500 Infrastructure and Utilities - - 0.09 0.05 3.47 1.73 - - - - - -
600 Accommodation Village - - 0.07 0.04 2.97 1.48 - - - - - -
700 Bulk Blending Facilities - - - - - - - - - - - -
TOTAL 0.20 0.20 5.86 2.93 39.62 32.38 3.12 1.64 3.15 2.30 18.68 17.31
Tilemsi Phosphate Project – PEA Page | 142
21.3 Granulation Plant
OPEX
The operating costs as estimated by CFIh for granulating one tonne of phosphate rock is USD37.69 per tonne product, excluding phosphate rock concentrate cost (see Table 21-30). The estimates have a ~50% accuracy.
Table 21-30: Granulation OPEX
Classification Input Unit Value
General Plant feed rate t/a 297,000
General Plant operating hours h/a 7,920
Labour Granulation Plant Manager USD/a 180,000
Labour
Supervisor
USD/a 21,000
Labour
Operator
USD/a 209,000
Labour
Labourer
USD/a 9,000
Labour
Total manpower cost
USD/a 419,000
Labour Manpower cost per ton USD/t 1.41
Phosphate rock conc. (1) Raw material cost per ton USD/t
Utilities Power rate average USD/kWh 0.297
Utilities
Power consumption
kWh/t 75
Utilities Power cost USD/t 22.28
Utilities
Diesel cost per liter
USD/l 1.10
Utilities
Diesel consumption
l/t 12
Utilities Diesel cost USD/t 13.20
Utilities
Water cost per m3
USD/m3 1.00
Utilities
Water consumption
m3/t 0.8
Utilities Water cost USD/t 0.80
Wear and Maintenance Plant maintenance - annual cost USD/a 50,000
Wear and Maintenance (2)
Plant maintenance cost USD/t
Total cost USD/t 37.69
NOTES: (1) Included economic model, see Section 22
(2) Included in Beneficiation Plant OPEX
Tilemsi Phosphate Project – PEA Page | 143
21.4 CAPEX
The capital investment as estimated by CFIh for constructing the first granulation plant for 300 kt/a and related raw material and product storage areas for the entire Project scope (refer to Section 18.2 is ~USD37.83 million (see Table 21-31). Based on these estimates the cost of each additional 300 kt/a granulation plant, excluding storage is ~USD19.9 million. The estimates have a ~50% accuracy.
Table 21-31: Granulation Plant and Storage Capex
ITEMS
Initial Investment
Each Additional
Plant
USD USD
1 ENGINEERING 2,315,000 330,000
Full Eng. Pack. (excluding structure, civils and foundation definition) (a) 1 935 000
Civil engineering and foundation definition
380 000
2 ITEMIZED EQUIPMENT (b)
8,905,130 8,237,838
(see Equipment 1)
6 045 677
(see Equipment 2)
2 414 177
(see Equipment 3)
445 277
3 NON ITEMIZED EQUIPMENT (c)
7,885,000 5,578,000
1 Instrumentation
2 885 000
2 Electric power
2 975 000
3a Piping, valves
746 000
3b Ducting & dampers
835 000
4 Insulating
55 000
5 Painting
52 000
6 Process supervision (DCS and PLC)
185 000
7 Safety
87 000
8 Utilities
65 000
4 PROCUREMENT
303,000 120,000
For itemized equipment
185 000.00
For non-itemized equipment
118 000.00
5 BUILDING & CIVIL WORKS
13,326,074 2,057,647
6 CONSTRUCTION AND ON SITE ACTIVITIES
3,125,000 3,125,000
125 000 Hrs. at rate of 25 USD/h
7 OTHERS
1,972,256 486,213
Project management, administrative costs and contingency
8 TOTAL ESTIMATED COST 37,831,460 19,934,698
Notes:
(a) Full Engineering Package includes all detailed engineering and technical documentation for erecting the plant,
buildings and utilities. (b) Equipment having a cost of more than 30 000 Euro have been estimated from quotations especially obtained
for this project or based on recent projects (less than 6 months). Others have been estimates by experience or as per their weight and material price
Equipment includes spare parts. (c) Instrumentation based on Yokogawa quote from last project.
Tilemsi Phosphate Project – PEA Page | 144
Table 21-32: Equipment 1
Item Designation Number Unit price Cost
Remarks (USD) (USD)
1-A-001 COATING AGENT AGITATOR
(option) 1 (9,820) 0
1-A-002 AIR AGITATOR 1 2,890 2,890
1-B-001 MISC. CYCLONES EXHAUSTER 1 30,800 24,000
1-B-002 COOLER BLOWER 1 23,600 23,600
1-B-003 COOLER EXHAUSTER 1 45,800 45,800
1-B-004 FIRST EXHAUSTER 1 84,100 84,100
1-B-005 SECOND EXHAUSTER 1 86,700 86,700
1-B-006 PACKING BLOWER 1 10,900 10,900
1-D-001 GRANULATOR 1 674,000 674,000
1-D-002 DRYER 1 1,055,000 1,055,000
1-D-003 COOLER DRUM 1 946,000 946,000
1-D-004 COATING DRUM (option) 1 (291,000) 0
1-E-001 HOT GENERATOR PACKAGE 1 744,000 744,000 Package
1-E-002 PACKING HEATER 1 8,600 8,600
1-E-003 BOILER PACKAGE (option) 1 (485,000) 0 Package
1-F-001A/B PR FEED HOPPERS 2 5,900 11,800
1-F-002A/B PR DISTRIBUTING HOPPERS 2 12,800 25,600
1-F-003A FIRST HOPPER 1 28,700 28,700
1-F-003B SECOND HOPPER 1 28,700 28,700
1-F-003C THIRD HOPPER 1 28,700 28,700
1-F-003D FOURTH HOPPER 1 28,700 28,700
1-F-003E FIFTH HOPPER 1 7,700 7,700
1-F-003F SIXTH HOPPER 1 7,700 7,700
1-F-004 FEEDING PACKING HOPPER 1 15,326 15,326
1-P-001A/B COATING AGENT PUMPS (option) 2 (10,500) 0
1-P-002A/B SCRUBBER PUMPS 2 35,500 71,000
1-P-003A/B SLUDGE PUMPS 2 14,800 29,600
1-P-004A/B FILTER PUMPS 2 17,600 35,200
1-P-005A/B RECYCLE PUMPS 2 9,500 19,000
1-P-006 KCl SOLUTION DOSING PACKAGE 1 12,000 12,000
1-PT-001 COATING PIT (option) 1 (5,400) 0
1-R-001 GRANULATOR SPARGER 1 28,000 28,000
1-S-001 DRYER CYCLONES 1 295,000 295,000
1-S-002 MISC. CYCLONES 1 325,000 325,000
1-S-003A/B SCREENS 2 95,000 190,000
1-S-004A/B CRUSHERS 2 284,000 568,000
Subtotal 5,461,316
Packing 4.5 245,759
Transportation 6.2 338,602
TOTAL 6,045,677
Tilemsi Phosphate Project – PEA Page | 145
Table 21-33: Equipment 2
Item Designation Number Unit price Cost
(USD) (USD)
1-S-005 COOLER FILTER 1 7,600 7,600
1-S-006 COOLER CYCLONES 1 155,000 155,000
1-S-007 FIRST SCRUBBER 1 275,000 275,000
1-S-008 SECOND SCRUBBER 1 275,000 275,000
1-S-009 DECANTER 2 17,910 35,820
1-S-010 PRESS FILTER 2 30,000 60,000
1-S-011 PACKING FILTER 1 4,800 4,800
1-TK-001 COATING AGENT TANK (option) 1 (7,500) 0
1-TK-002 SCRUBBER TANK 1 18,000 18,000
1-TK-003 SCRUBBING POOL 1 11,800 11,800
1-U-001A/B PR FEEDING CONVEYOR 2 35,800 71,600
1-U-002A/B PR DISTRIBUTING CONVEYOR 2 43,900 87,800
1-U-003 PR CONVEYOR 1 1 17,400 17,400
1-U-004 PR CONVEYOR 2 1 6,800 6,800
1-U-005A FIRST FEEDER 1 25,500 25,500
1-U-005B SECOND FEEDER 1 25,500 25,500
1-U-005C THIRD FEEDER 1 25,500 25,500
1-U-005D FOURTH FEEDER 1 25,500 25,500
1-U-005E FIFTH FEEDER 1 8,500 8,500
1-U-005F SIXTH FEEDER 1 8,500 8,500
1-U-006 RM COLLECTING CONVEYOR 1 28,600 28,600
1-U-007 RM FEEDING CONVEYOR 1 35,400 35,400
1-U-008 RM ELEVATOR 1 83,600 83,600
1-U-009 DRYER OUTLET CONVEYOR 1 37,313 37,313
1-U-010 SCREEN ELEVATOR 1 148,000 148,000
1-U-011 DUST CONVEYOR 1 18,600 18,600
1-U-012 COOLER ELEVATOR 1 85,700 85,700
1-U-013 RECYCLE CONVEYOR 1 32,300 32,300
1-U-014 COOLER OUTLET CONVEYOR 1 22,600 22,600
1-U-015 COATING OUTLET CONVEYOR (option) 1 (22,600) 0
1-U-016 FINAL PRODUCT CONVEYOR 1 37,500 37,500
1-U-017 PACKING ELEVATOR 1 67,000 67,000
1-U-018 PACKING CONVEYOR 1 19,600 19,600
1-W-001A/B/C/D FRONT-END LOADERS 4 110,000 440,000
1-W-002 FORKLIFT 1 65,000 65,000
Subtotal 2,266,833
Packing 2.5 56,671
Transportation 4.0 90,673
TOTAL 2,414,177
Tilemsi Phosphate Project – PEA Page | 146
Table 21-34: Equipment 3
Item Designation Number Unit price Cost
Remarks (USD) (USD)
1-Z-001 PR DIVERTER 1 1 14,500 14,500 1-Z-002 PR DIVERTER 2 1 14,500 14,500 1-Z-003 RM MAGNET 1 8,900 8,900
1-Z-004 DRYER MAGNET 1 8,900 8,900
1-Z-005 DIVERTER 1 1 8,500 8,500
1-Z-006 DIVERTER 2 1 14,800 14,800
1-Z-007 DIVERTER 3 1 10,700 10 700
1-Z-008 STACK 1 120,000 120,000
1-Z-009 DIVERTER 4 1 7,300 7,300
1-Z-010 TRUCK LOADING SYSTEM 1 85,000 85,000 Package
1-Z-011 BIG-BAG PACKING SYSTEM 1 125,000 125,000 Package
Subtotal 418,100
Packing 2.5 10,453
Transportation 4.0 16,724
TOTAL 445,277
21.5 NPK Plants
OPEX
The operating costs as estimated by CFIh for bulk blending one tonne of NPK fertilizer is USD1.92 per tonne product, excluding raw materials (see Table 21-35). The estimates have a ~50% accuracy.
Tilemsi Phosphate Project – PEA Page | 147
Table 21-35: Bulk Blending Opex
Classification Input Unit Value
General Plant feed rate t/a 297,000
General Plant operating hours h/a 7,920
Labour Granulation Plant Manager USD/a 80,000
Labour
Supervisor
USD/a 21,000
Labour
Operator
USD/a 209,000
Labour
Labourer
USD/a 9,000
Labour
Total manpower cost
USD/a 319,000
Labour Manpower cost per ton USD/t 1.07
NPK cost (1) Raw material cost per ton USD/t
Utilities Power rate average USD/kWh 0.297
Utilities
Power consumption
kWh/t 2.55
Utilities Power cost USD/t 0.76
Wear and Maintenance Plant maintenance - annual cost USD/a 25,000
Wear and Maintenance Plant maintenance cost USD/t 0.08
Total cost USD/t 1.92
NOTES: (1) Included separately see Economic Section 22 for NPK costs
CAPEX
The Capital investment as estimated by CFIh for constructing a single NPK bulk blending plant and related raw material and product storage areas is ~USD5.272 million (see Table 21-36). The estimates have a ~50% accuracy.
Tilemsi Phosphate Project – PEA Page | 148
Table 21-36: NPK Blending Plant and Storage Capex
ITEMS COST
1 ENGINEERING
211,000
Full Eng. Pack. (excluding structure, civils and foundation definition) (a) 135,000
Civil engineering and foundation definition
76,000
2 ITEMIZED EQUIPMENT (b)
1,374,451
(see Equipment 1)
1,374,451
3 NON ITEMIZED EQUIPMENT (c)
450,500
1 Instrumentation
37,000
2 Electric power
280,000
3a Piping, valves
12,000
3b Ducting & dampers
-
4 Insulating
7,500
5 Painting
22,000
6 Process supervision (DCS and PLC)
58,000
7 Safety
16,000
8 Utilities
18,000
4 PROCUREMENT
59,000
For itemized equipment
35,000
For non itemized equipment
24,000
5 BUILDING & CIVIL WORKS
2,498,936
6 CONSTRUCTION AND ON SITE ACTIVITIES
550,000
22 000 Hrs. at rate
of 25 USD/h
7 OTHERS
128,597
Project management, administrative costs, contingency
8 TOTAL ESTIMATED COST 5,272,484
Notes: (a) Full Engineering Package includes all the engineering and technical documentation for erecting the plant,
buildings and utilities. (b) Equipment having a cost of more than 30 000 Euro have been estimated using quotations especially
obtained for this project or based on recent projects (less than 6 months). Others have been estimated by experience or as per their weight and material price.
Equipment includes spare parts. (c) Instrumentation based on Yokogawa quote from last project.
Tilemsi Phosphate Project – PEA Page | 149
Table 21-37: Equipment 1
Item Designation Number Unit price Cost
(USD) (USD)
1-F-001 REJECT HOPPER 1 7,400 7,400
1-MX-001 SCREW BLENDER 1 16,000 16,000
1-S-001 BIG LUMP SCREEN 1 56,000 56,000
1-S-002 FINE SCREEN 1 73,000 73,000
1-U-001 ELEVATOR 1 39,000 39,000
1-U-002 FINES CONVEYOR 1 13,000 13,000
1-U-003 FLAT INCLINE CONVEYOR 1 22,000 22,000
1-U-004 BAGGING CONVEYOR 1 1 9,600 9,600
1-U-005 BAGGING CONVEYOR 2 1 9,600 9,600
1-W-001A/B/C/D FORKLIFT 4 65,000 260,000
1-Z-001 PROPORTIONING UNIT 1 182,000 182,000
1-Z-002 MANUAL BAG LOADER 1 45,000 45,000
1-Z-003 DIVERTER 1 1 14,500 14,500
1-Z-004 DIVERTER 2 1 14,500 14,500
1-Z-005A/B/C SMALL BAGGING MACHINE 3 122,000 366,000
1-Z-006A/B PALLETIZER 1 2 57,000 114,000
Subtotal 1,241,600
Packing 4.5 55,872
Transportation 6.2 76,979
TOTAL 1,374,451
Tilemsi Phosphate Project – PEA Page | 150
21.6 Logistics OPEX
The following Table 21-38 gives a summary of typical haulage costs and associated additional costs for transport in West Africa. These costs represent an addition of approximately 40% of the haulage cost.
Table 21-38: Typical Logistics Costs per Ton
ROUTE Distance [km]
Haulage [USD/ton]
Added Costs 1
[USD/ton] TOTAL
[USD/ton]
Mine to Bourem 95 8.63 8.63
Bourem to Bamako, Mali 1287 84.35 33.74 118.09
Bourem to Sikassou, Mali 1190 78.00 31.2 109.2
Bourem to Bobo-Dioulasso, Burkina Faso
1126
73.88 29.55 103.43
Bourem to Dosso, Niger 773 50.67 20.3 70.97
Bourem to Tamale, Ghana 1710 112.09 44.8 156.89
Bourem to Cotonou, Benin 1680 110.12 44 154.12
Bourem to Abidjan, Ivory Coast
1990 130.44 52 182.44
(1) Added costs are:
• Customs formalities for Export and for Import (fixed cost per truck, varying with the countries and with the destinations)
• Customs taxes for Import (% of cargo value CIF, varying with the countries and the cargoes) • Border crossing taxes (fixed cost per truck, varying with the countries) • Guarantee fund and/or Transit bond (% of cargo value CIF, varying with the countries) • Insurance costs (% of cargo value FOB, varying with the countries) • Logistics Management Fee
Calculation of the average transport costs, based on the proposed GQ markets and market share for sale of granulated phosphate rock for direct application and/or to existing NPK blenders is USD81.89/t.
A similar calculation done for the average transport cost of granulated phosphate rock for use in the proposed four new GQ NPK blending plants is USD92.1/t.
Tilemsi Phosphate Project – PEA Page | 151
22 ECONOMIC ANALYSIS
22.1 General
An economic analysis was undertaken on the conceptual engineering design and costing as described in the previous sections. The economic evaluation was undertaken by generating a basic discounted cash flow. This cash flow used costs in current terms (fourth quarter 2012) and applied no escalations to costs over time; taxes and royalties were not applied. This approach was considered appropriate for the conceptual levels of work undertaken. The purpose of undertaking this evaluation was to determine the economic potential of the TPP and to motivate further work, if appropriate.
The mineral resources used in the generation of mining schedules and for the purposes of this analysis are from the Inferred category only. Mineral resources have not been converted to mineral reserves as they are not in a high enough confidence category. In addition, it is considered that the study work undertaken (concept study) is not detailed enough to support the declaration of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the PEA will be realized.
The financing structure has been developed for the Equity Investor’s (Great Quest Metals Ltd. and Great Quest Mali SA (“GQ”)) part of the TPP on the basis of capital cost, borrowing costs, and accrued interest, operating cost, and revenue assumptions as described in this section.
The total capital expenditure (CAPEX) required for the first two years of TPP construction is USD155.7 million and over the life of the TPP a total CAPEX of USD290.49 million. Table 22-1 presents the CAPEX of the TPP.
Table 22-1: TPP Capital Expenditure Description Construction
(USD) Years 1-5
(USD) Years 6-10
(USD) Years 11-15
(USD) Years 16-20
(USD) Years 16-20
(USD) Total
Mining 23,455,000, 6,048,000 9,495,000 17,708,000 298,000 0 57,004,000
Beneficiation + Utilities + Infrastructure + Tailings 72,731,580 0 25,389,447 2,135,040 9,857,665 0 110,113,732
NPK 0 10,544,970 10,544,970 0 0 0 21,089,940
Granulation 37,831,461 19,934,699 19,934,699 0 0 0 77,700,859
Social investment 1,500,000 0 0 0 0 0 1,500,000
Project Management (Client) 5,990,500
15,390,500
0 0 0 0 0 15,390,500
Pre Feasibility study 4,050,000 0
Feasibility study 4,900,000 0
Finance Facilitation 450,000 0
EIA 1,193,025 0 0 0 0 0 1,193,025
Market Development 3,600,000 3,600,000
Mine Closure & Rehabilitation 0 0 0 0 0 2,900,000 2,900,000
0
Total 155,701,566 36 527 669 65 364 116 19 843 040 10,155,665 2,900,000 290,492,056
It is assumed that a mix of debt and equity shall be used to fund the total financing requirement for the construction phase, and an additional small loan to finance the negative cash flow for the first three years of operation and project operating cash for the additional investments.
Requirements for capital costs, financing costs, and working capital during the construction period are explained in Section 22.2.
The proposed finance plan has been devised on the basis of drawing down debt and equity on a 60/40 debt/equity ratio.
The economic results are shown in Table 22-2; it presents the results for the equity investment, taking into account 60% debt financing.
Equity Economic Results—The net present value (NPV) at a discount rate of 10% is equal to USD635.0 million with an internal rate of return (IRR) of 42.9%.
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Project (100% Equity) Economic Results—The NPV at a discount rate of 10% is equal to USD635.8 million with an IRR of 33.1%.
Table 22-2: Economic Results
Economic Results Equity IRR 42.9% Equity NPV (,000) 635,039 Equity ROI 3.93 100% Equity IRR 33.1% 100% Equity NPV (,000) 635,812 100% Equity ROI 4.23
22.2 Use of Funds
The total initial investment required for the TPP construction is estimated at USD162.83 million. This comprises approximately USD13.0 million of pre-project expenses and approximately USD143 million in capital costs that will be financed on the basis of a 40% equity and 60% debt financing. In addition, amounts of USD11.6 million in political risk insurance and USD9.6 million in interest during construction will be financed by debt; USD4.7 million in additional working capital will be financed through debt and equity and USD7.16 million in finders’ fees and commissions with respect to equity financing will be financed through equity. Consequently, the 40% equity is equal to USD71.3 million and the 60% debt is equal to USD96.2 million. A further debt of USD15.0 million (inclusive of debt raising costs) will be required in Years 1 and 3, respectively.
Table 22-3: Investment Requirements for TPP
Subject Amount Remarks (Financed by)
Capital Costs USD 155.70 million Equity (40%) and Debt (60%)
Additional Working Capital USD 4.7 million1 Equity and Debt
Finder’s costs (part of the capital cost) USD 7.16 million Equity
Political Risk Insurance USD 11.6 million Debt
Interest and fees During Construction USD 9.6 million Debt
Total Financed USD 188.7 million2
Equity USD 71.3 million
Debt USD 117.4 million
Note: 1. USD5.84 million is included in the capital costs
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Capital Costs
The breakdown of the capital cost of USD155.7 million is shown in Table 22-4 below.
Table 22-4: Capital Investment Breakdown (Thousand USD)
Item Construction Phase Investment Amount
Operation Phase Investment Amount
Mining 23,445 33,549
Beneficiation, Utilities, Infrastructure, and Tailings 72,732 37,382
NPK 21,090
Granulation 37,831 39,869
Social Investment 1,500
Project Management 5,991
Environmental Impact Assessment 1,192
Mine Closure & Rehabilitation 2,900
Project Development & Commissioning 13,000
Total 155,701 134,789
Financing Terms, Conditions, & Costs
The model takes into account the following financing terms and conditions:
Table 22-5: Financing Terms & Conditions
Item Terms & Conditions
Debt / Equity 60%/40%
Loan Amount USD96.24 million +PRI + IDC
Interest Rate LIBOR (USD0.5%) + 7%
Repayment Period 10 Years (20 semi-annual payments)
Political Risk Insurance 12% Flat
Management Fee 1% Flat
Commitment fee 0.75% per annum on undrawn amount
Discount Rate 10%
Finders’ fee USD7.16 million
Interest Rate of LIBOR (i.e. USD0.5%) + 7% is typically the funding cost of high risk projects for countries like Mali, although those risks can and should be mitigated during the Project development and eventually reduce the overall financing cost. At this stage it was decided to leave this cost at the highest possible rate.
Political Risk insurance of 12% flat is the average cost of such insurance at the leading export agencies for similar projects in Mali or other countries at the same country risk.
The projected financing costs included in the construction costs are USD21.2 million. This includes accrued interest during construction for the debt facilities of USD7.6 million, upfront management fee of USD1.0 million, political risk insurance of USD11.6 million, and commitment fees paid on the undrawn amount of the debt facility of USD1.1 million.
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22.3 Source of Funds
The total financing required for the construction phase of the TPP is USD188.73 million, including capital investment, interest and fees during construction, political risk insurance, and working capital. It is proposed to meet the construction costs with a mix of debt and equity.
Equity
Equity contributions will fund 40% of the capital investment and working capital and 100% of the finder’s fee. The total proposed equity commitment is USD71.3 million—40% of the total required financing of USD188.7 million less political risk insurance, interest during construction, and fees that are accrued and financed as part of the Project loan for the entire loan duration—is not part of the equity contribution.
Debt During Construction Phase
It is proposed to raise the debt facilities for the TPP from an international bank or a consortium of banks off-shore from Mali. The total debt financing required is USD117.4 million, representing 62% of the total required financing of USD188.7 million.
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22.4 Economic Model Assumptions
The plant design will be to industry accepted standards with an expected LOM of up to 20 years. Plant equipment costs are based on new equipment and the plant design on current best industry practices and proven technology.
Key Dates
The key dates assumed within the model are shown below:
Engineering Start Date January 2014
Construction Start Date June 2014
Construction Completion Date December 2015
First Drawdown January 2014
Operation Start January 2016
Production Period 20 Years
Production
The plant shall produce and sell a number of products; the production volumes over 20 years of operation are presented in Table 22-6.
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Table 22-6: Production Volume
ROM (Tons)
Production
Medium Grade (MG)
Sales
High Grade (HG)
Sales (*)
NPK
Sales
YEAR 1 200,000 52,000 126,000 -
YEAR 2 300,000 78,000 189,000 -
YEAR 3 400,000 104,000 252,000 -
YEAR 4 500,000 130,000 208,865 250,000
YEAR 5 500,000 130,000 208,865 250,000
YEAR 6 500,000 130,000 208,865 250,000
YEAR 7 500,000 130,000 208,865 250,000
YEAR 8 1,000,000 260,000 417,731 500,000
YEAR 9 1,000,000 260,000 417,731 500,000
YEAR 10 1,000,000 260,000 417,731 500,000
YEAR 11 1,000,000 260,000 417,731 500,000
YEAR 12 1,000000 260,000 417,731 500,000
YEAR 13 1,000,000 260,000 417,730 500,000
YEAR 14 1,000,000 260,000 417,731 500,000
YEAR 15 1,000,000 260,000 417,731 500,000
YEAR 16 1,000,000 260,000 417,731 500,000
YEAR 17 1,000,000 260,000 417,731 500,000
YEAR 18 1,000,000 260,000 417,731 500,000
YEAR 19 1,000,000 260,000 417,731 500,000
YEAR 20 1,000,000 260,000 417,731 500,000
(*) Excluding HG used for NPK production/sales
Revenues
The model takes into account the following selling prices for the proposed products.
Products Initial Selling
Prices ($) Price
escalation
Hyperphosphate - Medium Grade (MG) 262 1%
Hyperphosphate - High Grade (HG) 350 1%
NPK (15:15:15) 661 1%
The assumed price will increase by 1% per annum over the 20-year-life of the TPP.
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Operating Costs
The operating costs shown below in Table 22-7 are based on assumptions discussed in this section.
Table 22-7: Operating Costs
Description YEAR
1 YEAR
2 YEAR
3 YEAR
4 YEAR
5 YEAR
6 YEAR
7 YEAR
8 YEAR
9 YEAR
10
USD USD USD USD USD USD USD USD USD USD
Mining
12.72
8.81
7.55
6.26
7.76
7.76
11.91
6.03
6.03
6.03
Beneficiation
52.59
47.90
45.56
44.15
44.15
44.15
44.15
31.27
31.27
31.27
Transport (from mine)
8.63
8.63
8.63
8.63
8.63
8.63
8.63
8.63
8.63
8.63
Total OPEX per ton ROM
73.94
65.34
61.74
59.04
60.54
60.54
64.69
45.93
45.93
45.93
Total OPEX per ton of beneficiated
83.08
73.42
69.37
66.34
68.03
68.03
72.69
51.60
51.60
51.60
Granulation
37.69
37.69
37.69
37.69
37.69
37.69
37.69
37.69
37.69
37.69
OPEX per ton granulated products
118.69
109.27
105.32
102.37
104.01
104.01
108.56
88.00
88.00
88.00
Transport of granulated products
81.89
81.89
81.89
81.89
81.89
81.89
81.89
81.89
81.89
81.89
OPEX per ton granulated products - FOB
200.58
191.16
187.21
184.26
185.90
185.90
190.45
169.89
169.89
169.89
OPEX - NPK
-
-
-
435.47
436.16
436.16
438.09
429.37
429.37
429.37
Description YEAR
11 YEAR
12 YEAR
13 YEAR
14 YEAR
15 YEAR
16 YEAR
17 YEAR
18 YEAR
19 YEAR
20
Mining
5.50
5.50
4.23
5.90
5.90
5.90
5.90
5.90
9.04
9.06
Beneficiation
31.27
31.27
31.27
31.27
31.27
31.27
31.27
31.27
31.27
31.27
Transport (from mine)
8.63
8.63
8.63
8.63
8.63
8.63
8.63
8.63
8.63
8.63
Total OPEX per ton ROM
45.40
45.40
44.13
45.80
45.80
45.80
45.80
45.80
48.94
48.96
Total OPEX per ton of beneficiated
51.01
51.01
49.58
51.46
51.46
51.46
51.46
51.46
54.98
55.01
Granulation
37.69
37.69
37.69
37.69
37.69
37.69
37.69
37.69
37.69
37.69
OPEX per ton granulated products
87.42
87.42
86.03
87.86
87.86
87.86
87.86
87.86
91.30
91.32
Transport of granulated products
81.89
81.89
81.89
81.89
81.89
81.89
81.89
81.89
81.89
81.89
OPEX per ton granulated products - FOB
169.31
169.31
167.92
169.75
169.75
169.75
169.75
169.75
173.19
173.21
OPEX - NPK
429.12
429.12
428.53
429.30
429.30
429.30
429.30
429.30
430.77
430.77
General and Administration
General and administration costs are calculated as follows:
Sales Persons: From the first operating year, the TPP will hire 10 sales persons, 20 from the second year, 30 from the third, and so on up until the eighth operating year with 80 sales persons. From the eighth year onward the number of sales person remains constant. The model assumes an average salary of USD50,000 per person.
Head Office: The model takes into account a fixed cost of USD3 million to cover head office expenses for the first operating year. These costs will be increased by 20% every year up to a maximum amount of USD6 million.
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Advertising and Promotion: Table 22-8 presents the suggested percentage taken into account for advertising and promotion over the life of the TPP. This variable cost is calculated as a percentage of the TPP revenues as shown in Table 22-9.
Table 22-8: Advertising and Promotion
Advertising and promotion
From Year To Year Rate
1 2 5.0% 3 5 2.5% 6 10 1.5%
11 20 1.0%
Income Tax, Royalties, and other Taxes
The TPP will benefit from tax exemption on profits for the first nine years of operation and thereafter will pay 35% income tax on Project profits from the 10th operating year onwards. In addition, the model assumes custom duties of 0% on all import of capital goods and services.
The TPP is also liable for 3% royalties on all mining revenues, which are calculated as follows:
Royalty 3% = (Cost of mining ROM + 30% gross profit) x 0.03.
Other Assumptions
The model assumes investors will be responsible for 100% of the equity required, but benefit only from 80% of the TPP’s cash flows. The Mali government, as per local regulations, will receive 20% free equity on the mining segment.
22.5 Project Pro-forma Profit & Loss
Table 22-9 below presents the pro-forma Profit & Loss statement of the TPP, showing the economic results of the Project over the 20 years of operation. The statement clearly shows that the TPP is profitable from the third operating year. The gross margin after the first three years is more than 29%, remaining at approximately 35% gross margin for the following years.
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Table 22-9: Profit and Loss Statement
1st Operating
Year
2nd Operating
Year
3rd Operating
Year
4th Operating
Year
5th Operating
Year
6th Operating
Year
7th Operating
Year
8th Operating
Year
9th Operating
Year
10th Operating
Year
Revenues
Granulated Medium Grade 52,000 78,000 104,000 130,000 130,000 130,000 130,000 260,000 260,000 260,000
Selling Price 262 265 267 270 273 275 278 281 284 287
Granulated High Grade 126,000 189,000 252 000 208 865 208 865 208,865 208,865 417,731 417,731 417,731
Selling Price 350 354 357 361 364 368 372 375 379 383
NPK (15:15:15 - for sale) 0 0 0 250,000 250,000 250,000 250,000 500,000 500,000 500,000
Selling Price 661 668 674 681 688 695 702 709 716 723
Total Revenues 57,724,000 87,451,860 117,768,505 280,667,129 283,473, 800 286,308, 538 289,171,623 584,127,055 589,968,325 595,868,008
Operating Expenses
Royalties 99,216 103,194 117,780 122,070 151,320 151,320 232,245 234,780 234,780 234,780
General & Administration 6,386,200 8,972,593 8,764,213 14,200,678 15,586,845 13,294,628 13,837,574 18,761,906 18,849,525 18,938,020
Granulated Medium Grade 10,429,885 14,911,031 19,469,651 23,953,786 24,167,409 24,167,409 24,758,435 44,168,410 44,168,410 44,168,410
Granulated High Grade 25,272,415 36,130,576 47,176,462 38,485,442 38,828,661 38,828,661 39,778,234 70,963,516 70,963,516 70,963,516
NPK (15:15:15 - for sale) - - - 108,865,288 109,039,695 109,039,695 109,522,220 214,677,849 214,677,849 214,677,849
Total Operating Expenses 42,187,716 60,117,394 75,528,106 185,627,264 187,773,930 185,481,714 188,128,708 348,806,461 348,894,080 348,982,575
EBIDTA 15,536,284 27,334,466 42,240,399 95,039,864 95,699,870 100,826,825 101,042,915 235,320,594 241,074,246 246,885,434
Interest Expenses 9,719,655 8,867,209 8,014,764 7,162,318 6,309,872 5,457,426 4,604,980 3,752,534 2,900,088 2,047,642
Depreciation 18,293,566 18,293,566 19,153,566 22,721,293 22,937,293 9,481,249 9,630,924 15,808,386 13,758,034 13,695,945
Profit before Tax (12,476,938) 173 691 15,072,069 65,156,254 66,452,705 85,888,149 86,807,012 215,759,674 224,416,123 231,141,847
Tax - - - - - - - - - 80,899,646
Profit after Tax (12,476,938) 173,691 15,072,069 65,156,254 66,452,705 85,888,149 86,807,012 215,759,674 224,416,123 150,242,200
Tilemsi Phosphate Project – PEA Page | 160
11th Operating
Year
12th Operating
Year
13th Operating
Year
14th Operating
Year
15th Operating
Year
16th Operating
Year
17th Operating
Year
18th Operating
Year
19th Operating
Year
20th Operating
Year
Revenues
Granulated Medium Grade 260,000 260,000 260,000 260,000 260,000 260,000 260,000 260,000 260,000 260,000
Selling Price 289 292 295 298 301 304 307 310 313 317
Granulated High Grade 417,731 417,731 417,730 417,731 417,731 417,731 417,731 417,731 417,731 417,731
Selling Price 387 390 394 398 402 406 410 415 419 423
NPK (15:15:15 - for sale) 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
Selling Price 730 737 745 752 760 767 775 783 791 799
Total Revenues 601,826,688 607,844,955 613,923,010 620,062,639 626,263,265 632,525,898 638,851,157 645,239,668 651,692,065 658,208,986
Operating Expenses
Royalties 214,500 214,500 164,580 229,710 229,710 229,710 229,710 229,710 353,340 353,340
General & Administration 16,018,267 16,078,450 16,139,230 16,200,626 16,262,633 16,325,259 16,388,512 16,452,397 16,516,921 16,582,090
Granulated Medium Grade 44,020,298 44,020,298 43,655,713 44,131,382 44,131,382 44,131,382 44,131,382 44,131,382 45,034,298 45,034,298
Granulated High Grade 70,725,550 70,725,550 70,139,620 70,904,024 70,904,024 70,904,024 70,904,024 70,904,024 72,354,701 72,354,701
NPK (15:15:15 - for sale) 214,556,927 214,556,927 214,259,273 214,647,618 214,647,618 214,647,618 214,647,618 214,647,618 215,384,777 215,384,777
Total Operating Expenses 345,535,541 345,595,724 344,358,416 346,113,361 346,175,367 346,237,994 346,301,246 346,365,131 349,644,036 349,709,205
EBIDTA 256,291,147 262,249,231 269,564,594 273,949,278 280,087,898 286,287,904 292,549,911 298,874,537 302,048,029 308,499,780
Interest Expenses - - - - - - - - - -
Depreciation 14,903,507 14,966,829 13,083,794 12,879,719 12,978,618 12,423,868 13,415,879 11,567,589 11,497,589 12,229,241
Profit before Tax 241,387,640 247,282,402 256,480,800 261,069,558 267,109,280 273,864,037 279,134,032 287,306,948 290,550,440 296,270,540
Tax 84,485,674 86,548,841 89,768,280 91,374,345 93,488,248 95,852,413 97,696,911 100,557,432 101,692,654 103,694,689
Profit after Tax 156,901,966 160,733,562 166,712,520 169,695,213 173,621,032 178,011,624 181,437,121 186,749,516 188,857,786 192,575,851
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22.6 Cash Flow
Table 22-10 below presents the pro-forma cash flow statement of the TPP.
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Table 22-10: Cash Flow
1st Construction
Year
2nd Construction
Year
1st Operating
Year
2nd Operating
Year
3rd Operating
Year
4th Operating
Year
5th Operating
Year
6th Operating
Year
7th Operating
Year
8th Operating
Year
9th Operating
Year
10th Operating
Year
Profit after Tax (12,476,938) 173,691 15,072,069 65,156,254 66,452,705 85,888,149 86,807,012 215,759,674 224,416,123 150,242,200
+ Depreciation 18,293,566 18,293,566 19,153,566 22,721,293 22,937,293 9,481,249 9,630,924 15,808,386 13,758,034 13,695,945
- Principle Payments 11,365,945 11,365,945 11,365,945 11,365,945 11,365,945 11,365,945 11,365,945 11,365,945 11,365,945 11,365,945
Operating Cash Flow (5,549,317) 7,101,311 22,859,690 76,511,601 78,024,052 84,003,453 85,071,990 220,202,115 226,808,212 152,572,200
Equity 28,516,431 42,774,646
Loan 38,497,182 57,745,773 15,000,000
Project Investment 65,132,270 97,698,404 - 4,300,000 30,747,669 1,080,000 400,000 1,199,443 50,937,934 3,380,933 1,143,931 8,701,875
Equity Cash Flow (28,516,431) (42,774,646) 8,789,243 2,113,351 (8,673,179) 74,617,801 76,615,252 81,795,210 32,585,756 215,255,982 224,099,081 142,305,125
100% Equity Cash Flow (65,132,270) (97,698,404) 14,874,844 22,346,506 10,707,530 93,146,064 94,291,070 98,618,582 48,556,682 230,374,461 238,365,114 155,002,037
11th Operating
Year
12th Operating
Year
13th Operating
Year
14th Operating
Year
15th Operating
Year
16th Operating
Year
17th Operating
Year
18th Operating
Year
19th Operating
Year
20th Operating
Year
21st Operating
Year
Profit after Tax 156,901,966 160,733,562 166,712,520 169,695,213 173,621,032 178,011,624 181,437,121 186,749,516 188,857,786 192,575,851 -
+ Depreciation 14,903,507 14,966,829 13,083,794 12,879,719 12,978,618 12,423,868 13,415,879 11,567,589 11,497,589 12,229,241 -
- Principle Payments - - - - - - - - - - -
Operating Cash Flow 171,805,473 175,700,390 179,796,314 182,574,932 186,599,650 190,435,492 194,853,000 198,317,105 200,355,375 204,805,091 -
Equity
Loan
Project Investment 1,110,524 15,928,000 350,000 1,054,516 1,400,000 4,673,449 4,457,700 - 1,024,516 - 2,900,000
DSRA - - - - - - - - - - -
Equity Cash Flow 169,264,949 158,342,390 178,349,114 179,989,017 183,668,250 184,230,643 188,863,900 196,785,705 196,975,259 202,449,491 (2,900,000)
100% Equity Cash Flow 169,264,949 158,342,390 178,349,114 179,989,017 183,668,250 184,230,643 188,863,900 196,785,705 196,975,259 202,449,491 (2,900,000)
Tilemsi Phosphate Project – PEA Page | 163
The cash flow pro forma statement starts with two years of construction followed by 20 years of operation. During the first year of construction, 40% of the equity and debt is spent and the balance of 60% is spent during the second construction year. The TPP is cash positive from the first year of operation and accumulates over the Project life more than USD2.8 billion.
In the case of using a 60% financing package, the TPP is consecutively cash positive from the fourth year of operation and accumulates over the Project life more than USD2.6 billion.
22.7 Economic Results
The project economics are summarized in the following table:
Table 22-11: Economic Results
Economic Results
Equity IRR 42.9% Equity NPV (,000) 635,040 Equity ROI 3.93 100% Equity IRR 33.1% 100% Equity NPV (,000) 635,812 100% Equity ROI 4.23
22.8 Sensitivity
The sensitivities of the financial model results are based upon the base case assumptions as shown by the numbers in the squares in the sensitivity tables below. The model examines the equity and Project economic results for several sensitivity analyses, the aim of which is to find out which factors have the greatest influence on the economic results. The factors with the greatest influence on the IRR are summarized in Figures 22-1 and 22-2 below.
Figure 22-1: Factors with Greatest Influence on IRR
Tilemsi Phosphate Project – PEA Page | 164
Figure 22-2: Effect of Oil Price on IRR
Equity Sensitivity Analysis
Table 22-12 presents the economic sensitivities for equity to various changes in the model assumptions.
Tilemsi Phosphate Project – PEA Page | 165
Table 22-12: Equity Sensitivity
Investment
0.429 -15% -10% -5% 0% 5% 10% 15%
Op
erat
ing
Exp
ense
s
-25% 58.0% 57.8% 57.6% 57.4% 57.2% 57.0% 56.8%
-20% 55.2% 55.0% 54.8% 54.6% 54.4% 54.2% 54.0%
-15% 52.4% 52.2% 52.0% 51.7% 51.5% 51.3% 51.1%
-10% 49.5% 49.3% 49.1% 48.9% 48.7% 48.5% 48.2%
-5% 46.6% 46.4% 46.1% 45.9% 45.7% 45.5% 45.3%
0% 43.6% 43.4% 43.2% 42.9% 42.7% 42.5% 42.3%
5% 40.5% 40.3% 40.1% 39.9% 39.7% 39.5% 39.3%
10% 37.4% 37.2% 37.0% 36.8% 36.6% 36.4% 36.2%
15% 34.3% 34.1% 33.8% 33.6% 33.4% 33.2% 33.0%
20% 31.0% 30.8% 30.6% 30.4% 30.2% 30.0% 29.8%
25% 27.8% 27.6% 27.3% 27.1% 26.9% 26.7% 26.5%
Revenues
-0.25 -15% -10% -5% 0% 5% 10% 15%
Op
erat
ing
Exp
ense
s
-25% 44.8% 49.2% 53.4% 57.4% 61.2% 64.9% 68.4%
-20% 41.7% 46.2% 50.5% 54.6% 58.5% 62.2% 65.9%
-15% 38.6% 43.2% 47.6% 51.7% 55.7% 59.6% 63.3%
-10% 35.3% 40.1% 44.6% 48.9% 52.9% 56.9% 60.6%
-5% 32.0% 36.9% 41.6% 45.9% 50.1% 54.1% 57.9%
0% 28.7% 33.7% 38.4% 42.9% 47.2% 51.3% 55.2%
5% 25.2% 30.4% 35.3% 39.9% 44.3% 48.5% 52.5%
10% 21.6% 27.0% 32.1% 36.8% 41.3% 45.6% 49.7%
15% 17.8% 23.6% 28.8% 33.6% 38.3% 42.6% 46.8%
20% 13.6% 20.0% 25.4% 30.4% 35.2% 39.6% 43.9%
25% 7.3% 16.1% 22.0% 27.1% 32.0% 36.6% 41.0%
Financing Costs
-0.2 -30% -20% -10% 0% 10% 20% 30%
Inve
stm
ent
-25% 45.7% 45.2% 44.6% 44.0% 43.4% 42.8% 42.2%
-20% 45.5% 45.0% 44.4% 43.8% 43.2% 42.6% 42.0%
-15% 45.3% 44.7% 44.2% 43.6% 43.0% 42.4% 41.8%
-10% 45.1% 44.5% 44.0% 43.4% 42.8% 42.2% 41.6%
-5% 44.9% 44.3% 43.7% 43.2% 42.6% 42.0% 41.4%
0% 44.7% 44.1% 43.5% 42.9% 42.4% 41.8% 41.2%
5% 44.5% 43.9% 43.3% 42.7% 42.2% 41.6% 41.0%
10% 44.2% 43.7% 43.1% 42.5% 41.9% 41.4% 40.8%
15% 44.0% 43.5% 42.9% 42.3% 41.7% 41.1% 40.6%
20% 43.8% 43.3% 42.7% 42.1% 41.5% 40.9% 40.4%
25% 43.6% 43.0% 42.5% 41.9% 41.3% 40.7% 40.2%
Tilemsi Phosphate Project – PEA Page | 166
Oil Price
43% 0.90 1.00 1.10 1.20 1.30 1.40 1.50
Ure
a P
rice
-20% 45.9% 45.3% 44.7% 44.1% 43.4% 42.8% 42.2%
-10% 45.1% 44.5% 43.8% 43.2% 42.6% 41.9% 41.3%
0% 44.2% 43.6% 42.9% 42.3% 41.7% 41.0% 40.4%
10% 43.4% 42.7% 42.0% 41.4% 40.7% 40.1% 39.4%
20% 42.4% 41.8% 41.1% 40.4% 39.8% 39.1% 38.5%
30% 41.5% 40.8% 40.1% 39.5% 38.8% 38.1% 37.5%
40% 40.5% 39.8% 39.2% 38.5% 37.8% 37.1% 36.4%
50% 39.5% 38.8% 38.1% 37.5% 36.8% 36.1% 35.4%
60% 38.5% 37.8% 37.1% 36.4% 35.7% 35.0% 34.3%
70% 37.4% 36.7% 36.0% 35.3% 34.6% 33.9% 33.2%
80% 36.3% 35.6% 34.9% 34.1% 33.4% 32.7% 32.0%
NPK Price
43% -20% -10% 0% 10% 20% 30% 40%
Po
tash
KC
L P
rice
-20% 36.8% 41.0% 44.7% 48.0% 51.0% 53.7% 56.2%
-15% 36.3% 40.5% 44.3% 47.6% 50.6% 53.4% 55.9%
-10% 35.7% 40.1% 43.8% 47.2% 50.3% 53.0% 55.6%
-5% 35.2% 39.6% 43.4% 46.8% 49.9% 52.7% 55.3%
0% 34.6% 39.0% 42.9% 46.4% 49.5% 52.4% 55.0%
5% 34.0% 38.5% 42.5% 46.0% 49.2% 52.0% 54.7%
10% 33.4% 38.0% 42.0% 45.6% 48.8% 51.7% 54.4%
15% 32.8% 37.5% 41.6% 45.2% 48.4% 51.4% 54.0%
20% 32.1% 36.9% 41.1% 44.8% 48.0% 51.0% 53.7%
25% 31.5% 36.4% 40.6% 44.3% 47.6% 50.7% 53.4%
30% 30.9% 35.8% 40.1% 43.9% 47.3% 50.3% 53.1%
Reserve Grade (% P2O5)
43% 33.0% 33.5% 34.0% 34.5% 35.0% 35.5% 36.0%
Inve
stm
ent
-20% 39.5% 40.2% 41.0% 41.7% 42.4% 43.1% 43.8%
-15% 39.3% 40.0% 40.7% 41.4% 42.2% 42.9% 43.6%
-10% 39.1% 39.8% 40.5% 41.2% 41.9% 42.7% 43.4%
-5% 38.9% 39.6% 40.3% 41.0% 41.7% 42.4% 43.2%
0% 38.7% 39.4% 40.1% 40.8% 41.5% 42.2% 42.9%
5% 38.5% 39.2% 39.9% 40.6% 41.3% 42.0% 42.7%
10% 38.3% 39.0% 39.7% 40.4% 41.1% 41.8% 42.5%
15% 38.1% 38.8% 39.5% 40.2% 40.9% 41.6% 42.3%
20% 37.9% 38.6% 39.3% 40.0% 40.7% 41.4% 42.1%
25% 37.7% 38.4% 39.1% 39.8% 40.5% 41.2% 41.9%
30% 37.5% 38.2% 38.9% 39.6% 40.3% 41.0% 41.7%
Tilemsi Phosphate Project – PEA Page | 167
Granulated Rock MG
43% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0%
Gra
nu
late
d R
ock
HG
10% 48.1% 46.7% 45.3% 43.9% 42.4% 41.0% 39.6%
5% 46.2% 44.8% 43.4% 42.0% 40.6% 39.2% 37.8%
0% 44.3% 42.9% 41.5% 40.1% 38.7% 37.3% 35.9%
-5% 42.5% 41.1% 39.7% 38.3% 36.9% 35.5% 34.1%
-10% 40.7% 39.3% 37.9% 36.5% 35.1% 33.7% 32.3%
-15% 38.9% 37.5% 36.1% 34.7% 33.3% 31.9% 30.6%
-20% 37.1% 35.7% 34.3% 32.9% 31.6% 30.2% 28.8%
-25% 35.3% 33.9% 32.6% 31.2% 29.8% 28.5% 27.1%
-30% 33.6% 32.2% 30.8% 29.5% 28.1% 26.8% 25.4%
-35% 31.8% 30.5% 29.1% 27.8% 26.4% 25.1% 23.7%
-40% 30.1% 28.8% 27.5% 26.1% 24.8% 23.4% 22.0%
Project Sensitivity Analysis
Table 22-13 presents the economic sensitivities for the TPP to various changes in the model assumptions.
Table 22-13: Project Sensitivity
Investment
-0.1 -15% -10% -5% 0% 5% 10% 15%
Op
erat
ing
Exp
ense
s
-25% 45.8% 44.3% 42.9% 41.6% 40.4% 39.2% 38.2%
-20% 44.1% 42.6% 41.2% 40.0% 38.8% 37.7% 36.7%
-15% 42.3% 40.8% 39.5% 38.3% 37.2% 36.1% 35.2%
-10% 40.4% 39.0% 37.8% 36.6% 35.5% 34.5% 33.6%
-5% 38.5% 37.2% 36.0% 34.9% 33.8% 32.8% 31.9%
0% 36.5% 35.3% 34.1% 33.1% 32.1% 31.1% 30.3%
5% 34.5% 33.3% 32.2% 31.2% 30.2% 29.4% 28.5%
10% 32.4% 31.3% 30.2% 29.3% 28.4% 27.5% 26.7%
15% 30.2% 29.1% 28.2% 27.3% 26.4% 25.6% 24.9%
20% 27.9% 26.9% 26.0% 25.2% 24.4% 23.6% 22.9%
25% 25.6% 24.6% 23.8% 23.0% 22.3% 21.6% 20.9%
Revenues
-0.1 -15% -10% -5% 0% 5% 10% 15%
Op
erat
ing
Exp
ense
s
-25% 33.8% 36.5% 39.1% 41.6% 43.9% 46.2% 48.4%
-20% 31.9% 34.8% 37.4% 40.0% 42.4% 44.7% 46.9%
-15% 30.0% 32.9% 35.7% 38.3% 40.8% 43.2% 45.5%
-10% 28.0% 31.0% 33.9% 36.6% 39.2% 41.6% 43.9%
-5% 25.9% 29.1% 32.1% 34.9% 37.5% 40.0% 42.4%
0% 23.7% 27.0% 30.2% 33.1% 35.8% 38.4% 40.8%
5% 21.4% 24.9% 28.2% 31.2% 34.0% 36.7% 39.2%
10% 19.0% 22.7% 26.1% 29.3% 32.2% 34.9% 37.5%
15% 16.4% 20.4% 24.0% 27.3% 30.3% 33.1% 35.8%
20% 13.7% 17.9% 21.7% 25.2% 28.3% 31.3% 34.1%
25% 10.7% 15.3% 19.4% 23.0% 26.3% 29.4% 32.2%
The above results can be summarized as follows:
Tilemsi Phosphate Project – PEA Page | 168
Operating Expenses (Equity)—Relatively low impact on the economic results. A 10% increase in the operating expenses reduces by the less than 6% the IRR of the Project. In the event that the operating costs increase by more than 50%, NPV reduces to zero i.e. the TPP will not be economical.
Investment—Very low impact on the economic results. Even an unrealistic increase of 1,000% in the TPP capital expenditure does not generate a negative NPV.
Financing Terms and Conditions—The model examines the terms of the loan and the interest rate charged by the bank and both have no significant impact on the economic results. When the analysis pushes the overall financing costs by 50%, the results stay almost the same for investors.
Oil Price—Relatively low impact on the economic results. The model examines oil prices ranging from USD0.9/L to USD1.5/L. At the maximum price of USD1.5/L the IRR drops from 42.9% to 40.4%.
Urea and Potash Price—A marginal influence on the economical results. At the maximum, when urea and
potash prices increase by 80%, the IRR drops to around 34.9% which is approximately 20% lower than the economic base case results.
Phosphate Rock (ROM) Grade—As can been seen in the sensitivity analysis tables, reserve grade (% P2O5), does not have a great impact on the economic results.
MG and HG Granulated Rock—The economic sensitivity for HG granulated rock are more significant than that for MG granulated rock, as the quantity of HG material for sale is much greater than the MG material.
Selling Price (Equity)—A high impact on the economic results. As long as the average selling price stays above 70% of the base price per tonne, the TPP is economically viable. If the selling price trades below 67% of the base price per tonne, the model shows that the TPP will be uneconomical (see Table 22-14).
Table 22-14: NPV versus Revenues
Revenues NPV
100% 635,041
97% 573,496
94% 511,951
91% 450,405
88% 388,860
85% 327,315
82% 265,770
79% 204,225
76% 142,680
73% 81,135
70% 19,590
67% -41,955
64% -103,501
61% -165,046
Figure 22-3 illustrates the investor cash flow over the TPP construction and operation phases. It clearly shows negative cash flow during the first two years of construction and a fast cash recovery as of the beginning of the fourth operating year. When operations start the accumulated cash flow is almost linear and as such presents fast and robust return to the investors.
Tilemsi Phosphate Project – PEA Page | 169
Figure 22-3: Equity Cash Flow
Discount Rate—A high impact on the economic results as can be seen in Table 22-15 below.
Table 22-15: NPV versus Discount Rate
Discount Rate NPV
5% 1,248,032
6% 1,085,295
7% 946,073
8% 826,607
9% 723,788
10% 635,040
11% 558,219
12% 491,540
13% 433,507
14% 382,866
15% 338,565
16% 299,712
17% 265,557
18% 235,461
-500,000,000
-
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
-2 -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Equity Cash Flow
Tilemsi Phosphate Project – PEA Page | 170
22.9 Economic Conclusions
Based on realistic Project assumptions, the economic results are considered to be robust.
An IRR of close to 42.9%
An NPV of over USD635 million
A return on investment (ROI) within 3.93 years
All of these results are conducive for a large mining infrastructure project, even when making extreme assumptions as reflected by the sensitivity analysis.
In the case that 100% of the TPP will be equity financed, the economic results will be as follows:
An IRR of close to 33.1%
An NPV of over USD635 million
An ROI within 4.23 years
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23 ADJACENT PROPERTIES
The best known deposit in the Tilemsi area is the Tamaguélelt deposit, located immediately to the north of the Tarkint Est license. There are various historical estimates of the resources in Tamaguélelt. The Klockner Industries report (1969) estimate mentions 1.84 Mt with less than 1 m overburden and 9.52 Mt with more than 2 m overburden. Phosphate (P2O5) content averages 27%. Chemical analysis on a few samples showed SiO2 = 7.6%–11.5%, Fe2O3 = 5.6%–6.3%, and Al2O3 = 1.4%–2.5%. Mineralogical studies indicate mineralogy is francolite. A report by Sehimi (2002) mentions 11.5 Mt of phosphate rock at an average grade 28.5%–29% P2O5, with U = 242 ppm and Cd = 5 ppm.
An attempt to mine the deposit was made between 1980 and 2000 by various state-owned companies. The crushing plant was established in Bourem, 120 km away. Plant capacity was 44,000 t/a (Yiriwa Consulting, 2009). In practice, production rates never exceeded 19,000 t/a, and the last year of production (2000) had only 6,000 t. Presently the plant and mine are idle.
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24 OTHER RELEVANT DATA AND INFORMATION
The compiler is not aware of other relevant information pertaining to this PEA study.
Tilemsi Phosphate Project – PEA Page | 173
25 INTERPRETATION AND CONCLUSIONS
The following conclusions can be made from the Inferred Resource Estimate and PEA Study:
25.1 Resource Estimate
1) The 2011 drilling in Tarkint Est points to Inferred Resources of 17.4 Mt of phosphate material at an average grade of 25.9% P2O5. Together with the previously estimated resources in Alfatchafa and Tin Hina, the Inferred Resources in the TPP stand at 50 Mt at an average grade of 24.27% P2O5.
2) Drilling points to excellent stratigraphic continuity of phosphate within the Tilemsi phosphate field.
3) Reasonable projections from extrapolations to known outcrops suggest additional significant potential in the Tarkint Est area.
4) The average thickness of the phosphate bed in Tarkint Est, based on drillholes, is 1.07 m. The thickness based on pit samples is 0.38 m, but this value comes from outcrops that were partially eroded and therefore cannot be taken as representative.
5) Average overburden in Tarkint Est is about 7.6 m, which will result in a strip ratio of 5.7:1 (t/t). About 20%–30% of the Tarkint Est resources occur along the edges of the plateaus and can be mined without any stripping.
6) The resource estimate obtained here gives an average P2O5% grade that is lower than the actual values. In all likelihood, the grades in Tarkint Est are closer to 29%. On the other hand, the thickness values in the drillholes are probably higher than the true thickness due to contamination. There is probably less tonnage but at significantly higher grades.
25.2 Market
Socio-economic Context and Resource Endowment
• A growing West African population (from 304 million in 2010 to 442 million in 2025 and 744 million in 2050), coupled with increasing urbanization and rising incomes, will put pressure on the agriculture sector to produce food, fibre, and fuel to satisfy growing demand. Both cultivated area and crop yield will have to be increased to promote food security and sustainable agriculture. This will mandate increased use of fertilizers and other improved practices.
• Large amounts of prime land suitable for farming are located to the south of the TPR deposit. That means most of the market for TPR-based products will be away from the TPR deposit and therefore transportation costs will play an important role in supplying products to these markets.
• The main crops grown in West Africa are cereals (maize, sorghum, millet, and rice), legumes (beans, cowpeas, and pulses), roots and tubers (cassava, yam, and potatoes), and cash crops (sugarcane, cotton, groundnut, cocoa, and oil palm). According to FAO, total cultivated area (under annual crops and tree crops) account for only 37% of the total agricultural area. Thus there is considerable scope for expanding cultivated area, especially in the smallholder sector. Resource-constrained smallholder farmers may prefer to expand cultivated area rather than adopt yield-enhancing technologies for increasing crop production.
• Given that current West African fertilizer use levels are very low, a several fold increase in fertilizer use will be needed. Under the Abuja Declaration target, phosphate fertilizer use will have to be increased from 184,000 t of P2O5 in 2010 to 1,792,000 t in 2020 and 2,079,000 t in 2030. The efforts of development partners to build a “green wall” against the encroaching Sahara Desert may enhance these potential requirements even further (UNEP).
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• These opportunities offer a huge potential market for GQ and other suppliers. However, given that West Africa’s actual fertilizer use in 2010 was only 14% of the potential requirement, converting the potential requirement into effective demand and vibrant market may need macro and micro efforts by all stakeholders, including policymakers, the private sector, development partners, and the farming community.
• West Africa is well endowed with phosphate deposits but limited use has been made of them for fertilizer production. The Tilemsi phosphate deposit in northeastern Mali (near Bourem) is estimated to have reserves of over 50 million tonnes. Tilemsi phosphate rock (TPR) is of medium reactivity, containing 24%–30% P2O5 and is suitable for direct application; crop yields with TPR application are much higher than those without it. However due to its dusty nature and slow release quality, as well as the lack of an industry player to promote it, it has not been adopted by smallholder farmers for increasing crop yields and replenishing removed nutrients even when it was subsidized.
• GQ will apply for a mining permit to mine the deposit in order to produce phosphate fertilizers. The company plans to produce one million tonnes of TPR per year for beneficiation and granulation. Granulated TPR will be marketed for direct application as well for production of blended NPK fertilizers (with imported urea and potash).
• Although granulation will reduce the dustiness of TPR, the relative agronomic efficiency of TPR, compared with water soluble phosphate fertilizers like TSP, is lower by 10%–15% and that of granulated TPR is even lower—15–30%. IFDC/IER trials of the early 1990s show that compacted products are 90% as effective as cotton complex products.
• Given that landlocked countries like Mali and Burkina Faso pay large sums for in-transit transportation from port to national markets (USD90–100/t) and port handling charges (USD20-30/t), production facilities near these markets may offer added advantage in reducing prices and promoting timely delivery of fertilizers to farmers.
West Africa Phosphate Fertilizer Market: Structure and Potential
• In 2010, West Africa used 184,000 tonnes of P2O5. Nigeria, Ghana, Mali, Cote d’Ivoire and Burkina Faso are major fertilizer consuming markets, accounting for over 80% of the fertilizer use in the region. Granulated and blended NPKs such as NPK 15-15-15, NPK 20-10-10, and cotton complex (NPKSB) are dominant products used by farmers.
• The market structure is like a pyramid. On the top are 3–4 major importers (and blenders), followed by wholesalers and retailers. At the base of the pyramid are small and large farmers. At the retail level, markets are competitive whereas at the import level, they are oligopolistic. In the rural areas, retail networks are limited so that farmers may have to walk 30–40 km to get a bag of fertilizer. Such long distances act as a disincentive to use fertilizers.
• Several factors, including depreciation of local currency, limited purchasing power with farmers, limited access to finance by farmers and agro-dealers, incomplete knowledge, inadequate extension support, and limited access to fertilizers (due to poor agro-dealer networks in remote rural areas), constrain fertilizer use in West Africa. Unless special attention is paid to alleviating these constraints, they may also restrict the market for new products likely to be produced based on granulated TPR (GTPR).
• Because of these macro and micro constraints, only 30%–40% of the potential requirements of 1.8-2.1 million t may be realized. GQ should be able to capture 30%–40% of the realizable potential market: 161,100 t in 2020 to 416,000 t of P2O5 in 2030. This will be equal to 537,000 t to 1,040,000 t of GTPR having 30% P2O5.
Tilemsi Phosphate Project – PEA Page | 175
• Assuming that 20% of the market share will be captured through direct application of GTPR and 80% through blended NPKs, total size of the market will be as follows:
Realizable Market (tonne P2O5)
GQ Total share
(tonne P2O5)
GTPR - avg. 30% P2O5
(20% share)
NPKs 15% P2O5
(80% share)
2020 537,000 161,100 107,400 859,200
2030 1,040,000 416,000 277,300 2,218,700
In capturing these potential markets, GQ has to confront many challenges related to promotion of a new product based on GTPR, the slow release nature of GTPR, the risk-averse nature of farmers, and the prevalence of crop-specific specialty products.
25.3 Process Plants
As is a usual course for project development, an improved understanding of the local conditions is required through site investigations. This will improve the accuracy of the beneficiation plant design and subsequently the accuracy of the Project costing. The operating costs are largely influenced by the price that diesel can be sourced, as this is currently the single source of energy for power generation and fuel for the rotary driers. It is recommended that accurate prices are obtained for diesel supplied to the site as part of the next phase of the Project. Also, the feasibility of alternative energy sources should be assessed such as solar or hydro.
The current design has been based on sourcing all water for the beneficiation and granulation plants from the Niger River. Future investigations are required to assess the reliability of the Niger River as a water source and the environmental impact of drawing the required amount of water from the river.
The largest influence on the operating costs is the diesel price and the largest contributor to the costs is the operation of the granulation plant and drying of the product to meet the granulation plants requirements.
The results of the PEA strongly support the potential of a viable mine at Tilemsi, with a production of 1 Mt/a of ROM.
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26 RECOMMENDATIONS
26.1 Resource Estimate
1) Future drilling for indicated and measured resources in the Tin Hina project should be done with Aircore or RC (reverse circulation) drills. RAB drilling can be done for exploration and definition of Inferred Resources but, due to downhole contamination, cannot be used for definition of Indicated Resources.
2) Careful recording of recoveries (as manifested by total sample weight) should be exercised. Drilling should be properly parameterized (torque, rpm speed etc.) in order to obtain proper recoveries.
3) Re-drilling by Aircore or RC should be done in areas now classified as Inferred and drilled by RAB rig. We recommend re-drilling of at least 50% of the drillholes and comparing the two sets of data. If results are significantly different, all the RAB holes used for resource estimation will have to be re-drilled at an estimated cost of USD250,000.
4) Digging of at least 25 pits on a semi-regular grid of 250 m X 250 m in areas where the phosphate seam is shallow and/or crops out. We recommend doing the pitting on the eastern side of Tin Hina (in Aderfoul area) where there are many phosphate outcrops, and on the south eastern side of Alfatchafa hill, where the same situation prevails.
26.2 Market
Strategy for Market Penetration and Development
• To create a strong presence in the market, GQ should concentrate first on potential markets in Mali, Ghana, Nigeria, Burkina Faso, and Cote d’Ivoire because these are relatively large markets. Senegal and Niger offer small market opportunities.
• NPK 15-15-15 and cotton complex products are dominant products used in these countries. Cash crops like coffee, oil palm, and cotton offer better opportunities as farmers have a captive market for the product and can get inputs on loan from product companies, thereby reducing both price risk in production and the need for finance for inputs. Maize, rice, sorghum, and beans are other crops that should be targeted. Oil palm production in Ghana and Cote d’Ivoire offers opportunities for direct application of PR.
• Although granulated TPR (GTPR) and GTPR-based NPKs will supply phosphorus for plant growth, these products will have to compete with water soluble products in the market and will be perceived by farmers as new products. Moreover, lower relative agronomic efficiency of these products will mandate that resources be devoted to convince farmers that these products are suitable and profitable in both short-term and longterm as PR provides residual benefits for 5–7 years. Thus to create awareness among farmers and to change their mindset, extensive agronomic trials, seeding programs, and educational and promotional campaigns should be conducted. Agro-dealers and extension workers should be included in such programs.
• Enhancing efficiency of NPKs through compaction and other methods should be explored so that new products can compete with existing products in the market. However, lower efficiency of GTPR could be over-compensated by reduced cost of production, timely supply, proximity of markets, and good quality products.
• In addition to agronomic trials, the company should focus on the four Ps of marketing—price, product, place, and promotion. For a new product, promotion of the product and education of farmers should receive greater emphasis. Price of the product should be competitive. More significantly, the product should be taken to the farmer, not the other way round. That is, improve access to inputs by farmers in rural areas.
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• Many countries have subsidy programs in place. GQ should work with policymakers to get its product accepted in the subsidy programs. Nevertheless, the company should offer a significant price advantage in contrast to other products for the product to succeed.
• As many countries have weak technology transfer (extension) programs, GQ should take a pro-active approach in technology transfer efforts through agro-dealers and subject matter specialists. Given the limited resources with local governments, agro-dealers should be trained to do both input supply and extension advice.
• In June 2012, imported PR from Morocco would have cost USD336/t (CIF) in Bamako. To this must be added domestic marketing cost, averaging 30%. Thus average retail price will be approximately USD437.45/t in Mali. Retail prices of NPK 15-15-15 varied between USD656/t in Senegal and USD727/t in Mali. These prices provide the benchmark for new products to be competitive. However, during the feasibility study, various costs related to import and marketing of products should be reconfirmed.
Phasing of Investment and Marketing Plans
Market development efforts should proceed in three phases:
Phase I: 2013–2014: Conduct agronomic trials and seeding program to generate agronomic and economic data about new products. Include compacted products as well as field trials.
Phase II: 2015–2020: Target production of 500,000 t of TPR for beneficiation and granulation. Use 80% of GTPR for producing NPKs. Since NPK 15-15-15 is the most commonly used fertilizers for cereal and other crops in West African countries, it would be prudent to first target this market segment. Once NPK 15-15-15 is well accepted by agro-dealers and farmers, produce and introduce other NPKs suitable to local needs. Consider testing the market for compacted fertilizers and cotton complex formula and explore direct application of PR on cash crops like oil palm and cocoa. Intensify market promotion efforts.
In 2020, conduct a market assessment study reflecting the experience of the past and plans for the future.
Phase III: 2021–2030: Based on the experience acquired during Phase II, expand the production of TPR to one million tonnes for beneficiation and granulation and determine the product mix for production at the country level. Continue market development and product promotion efforts.
26.3 Process Plants
All the estimates for the PEA were done on a desktop level (~50% accuracy). In addition, due to civil unrest the site could not be visited. In order to firm up the cost estimates a detailed feasibility study will have to be done, including visiting the various TPP sites.
Metallurgy
Additional metallurgical work is required to optimize, refine, and validate the data and the proposed flow sheet used in the Preliminary Assessment. Samples of the products from the various stages of the flow sheet should be collected and dispatched to potential customers for the PR products.
Mining
Geotechnical studies are needed to establish manageable slope angles in the unconsolidated overburden and define appropriate ground control requirements.
26.4 Environmental
An environmental impact study needs to be prepared to incorporate the operating parameters defined in the feasibility study.
Options for tailings disposal should be examined in greater detail.
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27 REFERENCES
27.1 Geology
Alabouvette,B and M. Pascal, 1980: Phosphates du Tilemsi (Mali) Mise au point à l’issue de la campagne 1979 Bamako, Dir. National geol. Mines.
ALG (Autorité de Développement Intégré de la Région du Lipatko Gourma) 1988: projet régional d’industrie d’engrais phosphates pour les pays membres de l’ALG: Rapport Définitif, Phase 1, vol2, pp.275-402.
ALG 1989: projet régional d’industrie d’engrais phosphates pour les pays membres de l’ALG: Rapport Définitif, Phase 1, vol.4 112p.
Allon A. 1959 Phosphates du Tilemsi, rapport de fin de campagne 1958-1959, Dakar BUMIFOM (unpublished).
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.
Hirono S., Hirkawa and K. Hanada, 1987 “Uranium bearing Phosphates from Mali, West Africa,” Chemical Geology vol. 60, p. 281-286.
IFDC 1976: Etude sur les engrais en Afrique de L’ouest, Vol. 3 Mali.
IFDC 1989: “Final Summary Report to the IDRC, Phosphates fertilizers (IDFC/West Africa Project) IDRC phase I 3-P-80-0011-0282” Unpublished document IFDC Muscle Shoals, Alabama 55p.
Klockner Industrie, 1969: Etude économique et technique en vue de l’explotation d’un gisement de phosphates dans la région de Bourem (Mali) Rapport final 4 vols 66 p Diusburg: Klockner Industrie.
Riggs, S.R. (1980). Tectonic model of phosphate genesis. Phosphates deposits of the world, Fertilizer Mineral Potential in Asia and the Pacific, ed. R.P. Sheldon & W.C. Burnett, pp. 159-90.
Sehimi A. 2002: “Rapport de Mission au Mali”, Compagnie des Phosphates de Gafsa.
Van Kauwenbergh S.J., Johnson K.C.A, McClellan G.H, Muller H.W. 1991 : « Evaluation of the underdeveloped Phosphate deposits of the Volta Basin and West Africa » :.
Yiriwa consulting, 2009: Project of rehabilitation of Phosphate factory of Tilemsi in Bourem, feasibility study.
27.2 Market
Baanante, C. A. and Henao, J. 1990. The economics of using indigenous agrominerals on maize-based cropping systems in Mali. Paper presented at the second workshop on West Africa Agrominerals, Feb. 27- March 1. Lome, Togo.
Bationo, A., Ayuk, E., Ballo, D. and Kone, M. 1997. Agronomic and economic evaluation of Tilemsi phosphate rock in different agro-ecological zones of Mali. Nutrient Cycling in Agroecosystems 48: 179-189.
Barrow, N.J. 1990: Relating chemical processes to management systems; In Phosphorus Requirements for Sustainable Agriculture in Asia and Oceana; Symposium Proceedings pp 200-209. IRRI, Philippines
Blanco, M. 2011: Supply of and access to key nutrients NPK for fertilizers for feeding the world in 2050.
Paper presented at EU/JRC Anticipation Study Workshop on “NPK: Will there be enough plant nutrients to feed a population of 9 billion? Brussels, December.
Bumb, B. L., Johnson, M. E. and Fuentes, P. A. 2011. Policy Options for Improving Regional Fertilizer Markets in West Africa, IFPRI Discussion Paper 1084, IFPRI and IFC.
Chien, S. H. and Hammond, L. L. 1978. “A Simple Method for Evaluating the Agronomic Potential of Granulted Phosphate Rock”, SSSA Journal, 42: 615-617.
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Chien, S.H., Leon, L.A., and Tejeda, H.R. 1980. Dissolution of North Carolina Phosphate Rock in acid Colombian soils as related to soil properties. Soil Sci. Soc. Am. J. 44: 1267-1271.
Crawford, E., Jayne, T., and Kelly, V. 2006: Alternative Approaches for Promoting Fertilizer Use in Africa, ARD Discussion Paper 22. The World Bank, Washington DC.
Deist, J., Morais, P.G., Harry, R.B. and Heyns, C.F.G. 1971. Relative availability of rock phosphate to different plant species. Agrochimo. Physica. 3: 35-40.
Diamond, R. B. 1979. Views on marketing phosphate rock for direct application: In Seminar on phosphate rock for direct application. IFDC –SP 1: pp 448-463. International Fertilizer Development Center, Muscle Shoals, Alabama.
Druilhe, Z. and Barreiro-Hurle’, J. 2012. Fertilizer Subsidies in Sub-Saharan Africa. FAO, Rome.
Flach, E., Quak, N. W. and Van Deist, A. 1987. A comparison of phosphate mobilizing capacities of various crop species. Trop Agric (Trinidad)64: 347-352.
FAO. 2004. Use of Phosphate Rocks for Sustainable Agriculture, Fertilizer and Plant Nutrition Bulletin 13, Joint Publication of IAEA and FAO. FAO Rome, Italy.
FOASTAT (2012): http://faostat.fao.org/site/575/DesktopDefault.aspx?PageID=575#ancor, accessed August 26, 2012.
Fuentes, P. A, Bumb, B. L. and Johnson, M. E. 2010a. “Improving Fertilizer Markets in West Africa: The Fertilizer Supply Chain in Ghana”, Forthcoming. IFDC and IFPRI Paper.
Fuentes, P. A, Bumb, B. L. and Johnson, M. E. 2010b. “Improving Fertilizer Markets in West Africa: The Fertilizer Supply Chain in Mali”, Forthcoming. IFDC and IFPRI Paper.
Gregory, D. I. and Bumb, B. L. 2006: Factors Affecting Supply of Fertilizer in Sub-Saharan Africa. ARD Discussion Paper 24. The World Bank, Washington DC.
Hammond, L., Chien, S.H. and Mokwunye, U. 1986. Agronomic value of un-acidulated and partially acidulated phosphate rocks indigenous to the tropics. Adv Agron. 40: 89-140.
Hedley, M. J., Nye, P.H. and White, R.E. 1982. Plant-induced changes in the rhizosphere of rape (Brassica napus var. Emerald) seedlings. II. Origin of pH changes. New Phy. 91: 31-44.
International Fertilizer Development Center. 1989. Final summary report to IDRC. IFDC/West Africa. IDRC phase 1-3-P 80-001. IDRC phase 2 -3-P-83-0282.
International Fertilizer Development Center. 1991. Progress report to IDRC: On-Farm Fertilizer Evaluation and Adoption Project. IFDC/West Africa.
Johnson, Birner, M. R., Chamberlin, J., Diao, X., Fan, S., Nin-Pratt, A., Resnick, D., You, L., and Yu, B. 2008. Regional Strategic Alternative for Agricultural-Led Growth and Poverty Reduction in West Africa. ReSAKSS Working Paper 22. IFPRI, Washington DC.
Khasawneh, F.E. and Doll, E.C. 1978. The use of phosphate rock for direct application. Adv. Agron. 30: 159-206.
Kirk, G. D.H. and Nye, P.H. 1986. A simple model for predicting the dissolution of sparingly soluble calcium phosphate I soil: I. The basic model. J. Soil Sci. 37:529-540.
Kirk, G.J.D, Tian-ren, Y. and Choudhury, F. 1991. Phosphorus chemistry in relation to water regime. In Phosphorus requirements for sustainable agriculture in Asia and Oceana. Symposium Proceedings pp. 211-223. IRRI. Philippines.
Lehr, J.R. and McCllelan, G.H. 1972. A revised reactivity scale for evaluating phosphate rocks for direct application. Bull Y-43. National Fertilider Development Center, Tennessee Valley Authority, Muscle Shoals, Alabama.
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McClellan, G.H. and Van Kauwenbergh, S. 1990. Relationship of mineralogy to sedimentary phosphate rock reactivity. In: Proceedings of workshop on phosphate sources for acid soils in the humid tropics of Asia. Malaysian Rubber Research Institute and Malaysian Society of Soil Science, Kuala Lumpur, Malaysia.
Modha, A. 2012. Developing Indigenous Resources for Fertilizer Production in Africa: The Case of Miningu Mine, Presentation Given at IFDC Training Program in Nairobi, Kenya, July.
Mokwunye, A.U. 1994: Reactions in soil involving phosphate rock. In H.Gerner and A.Uzo Mokwunye, Use of phosphate rock for sustainable agriculture in West Africa. Miscellaneous Fertilizer Studies No. 11. International Fertilizer Development Center, Muscle Shoals, Alabama.
Mokwunye, A. U. and Hammond, L.L. 1992. Myths and science of the use of phosphorus fertilizers in the tropics. SSSA Special Publications No. 29. Soil Science Society of America, American Society of Agronomy, Madison, Wisconsin.
Morris M., Kelly, V., Kopicki, R., and Byerlee, D. 2007: Fertilizer use in African Agriculture: Lessons Learned and Good Practice Guidelines. The World Bank, Washington DC.
Pichot, J. and Roche, P. 1972: Le phosphate dans les sols tropicaux. Agron. Trop. 27: 939-965.
Pieri C,, 1971a. Bilan des recherché s sur la fumure phosphate du Mali. CR Collo. Fertilite des sols tropicaux, Tananarive: 1139-1148.
Pieri, C., 1971b. Le point les essais de fertilization des cereales de culture seches realisees au Mali de 1954 a 1990. Doc. Roneo IRAT Mali. Section d’Etude des sols 50p
Poulain, J.F., 1976. Amelioration de la fertilite sols agricoles du Mali. Bilan de treize annees de travaux (1967-1974), Agron Trop. 31: 403-416.
Rajan, S. S. S., R.L. Fox, W.M.H. Sauders and M.P Usdell 1991. Influence of pH time and rate of application of phosphate rock on dissolution and availability to crops. Fert. Res. 28: 85-93.
Sale, P.W.G. and Mokwunye, U., 1993, Use of phosphate rocks in the topics. Fert. Res. 35: 33–45
Smith, J.P. and Lehr, J.R., 1966, An X-ray investigation of carbonate apatites. J. Agric. Food Chem. 14:342–349.
Szilas B., J.M.R Semoka and O.K. Borggard. 2007. Can local Minjingu phosphate rock replace superphosphate on acid soils in Tanzania? Nutrient Cyling in Agroecosystems 77 (3): 257-268
Thibaut, F. , M.F.C. Traore and J. Pichot. 1980. L’utilisation agricole des phosphates naturels de Tilemsi (Mali) . Synthese des resultatsde la recherché agronomique sur les cultures vivriere et oleagineuses. Agron. Trop. 35: 240-249.
Traore L (2012): Utilization of Phosphate Rocks and Other Fertilizers in Mali and in the West African Sub-Region, Unpublished Report, Instut d’Economy Rurale (IER) and Great Quest Metals (GQ)Truong, B., Pichot, J., and Bernard, P., 1978, Caracterisation et comparaison des phosphates naturel trcalcique d’Afrique de l’Ouest en vue de leur utilization directe en agriculture. Agron. Trop. 33: 136–145.
Truong B. 1989. Evaluation de l’efficacite agronomique des phosphates naturels de l’Afriqui l’Ouest. These Doctorat INPL
NPK Perspectives, Vol. V – No. 6 – June 2012.
Van Kauwenbergh, S. 2006. Fertilizer Raw Materials of Africa, IFDC, Muscle Shoals, Al. USA
27.3 Mineral Processing and Metallurgical Testing
InfoMine USA, Inc. Mining Cost Service. Spokane Valley, WA : s.n., 2011.
Peters, Max and Timmerhaus, Klaus. Plant Design and Economics for Chemical Engineers. Singapore : McGraw Hill, 1991.
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Sandi Gcanga: Mali Phosphate Study, MINTEK, 17 May, 2012
Sandi Gcanga: Additional Chemical Analysis and Mineralogical Evaluation of phosphate samples from Mali, MINTEK, 03 August, 2012.
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A. Date and Signatures B. Beneficiation Flowsheet C. Granulation Flowsheet D. NPK Flowsheet
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APPENDIX A - DATE AND SIGNATURES
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CERTIFICATE of AUTHOR
As the co-author of a portion of this Technical Report on the Preliminary Economic Assessment of the Tilemsi Phosphate Project, Mali, an NI 43-101 Report, I, Jed Diner, do hereby certify that:
1. I carried out this assignment for: Great Quest Metals Ltd.
2. I hold the following academic qualifications: B.Sc. Geology from Hebrew University (1979), M.Sc. Applied Earth Science, Stanford University (1983)
3. I am a registered professional member of the Association of Professional Geoscientists of Ontario (nr. 1560)
4. I have over 30 years’ experience in the appraisal of mineral projects, resource and reserve estimation and management of multiple technical disciplines that affect the exploration and mining potential of projects. I have undertaken such work on several similar sedimentary mineral deposit projects in Africa. I have a very extensive knowledge of exploration and mining projects in phosphates, gold, copper, tungsten and molybdenum through my employment as a Consulting Geologist for multinational mining and exploration corporations, private exploration companies and government and United Nations funded activities.
5. I do, by reason of education, experience and professional registration, fulfill the requirements of a Qualified Person as defined in National Instrument 43-101. My work experience includes the management and performance of numerous technical studies relating to the audit, evaluation and valuation of projects and operating mines in many parts of the world. This includes discovery and evaluation of the Chaarat gold deposit, Kyrgyzstan (3 MOZ Au) and the Perekatnoe gold deposit in Magadan, Russia (10 MOZ). The largest project I took responsibility of for the resources statement was the audit of the Cabinda phosphate Project. This was a project spanning over several months and involving a dozen experts.
6. My most recent current inspection of the Mali Phosphate Project was on May 14-15, 2011.
7. I am responsible for supervising the preparation of Sections 4-12,14 and have contributed jointly on other sections on the technical report (the “Technical Report”) dated November 2012, entitled “Technical Report on the Preliminary Economic Assessment of the Tilemsi Phosphate Project, Mali, an NI 43-101 Report”.
8. I was granted 200,000 share purchase options, exercisable at the price of 90 cents before May 13, 2015, therefore I may not be independent of the issuer applying all of the tests in section 1.5 of NI 43-101
9. I have no prior involvement with the property that is subject of the Technical report.
10. I have read NI 43-101 and the portions of this report for which I am responsible have been prepared in compliance with the instrument.
11. As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make this report not misleading.
Dated this day 24 November, 2012.
Jed Diner
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CERTIFICATE of AUTHOR
As the co-author of a portion of this Technical Report on the Preliminary Economic Assessment of the Tilemsi Phosphate Project, Mali, an NI 43-101 Report, I, Balu Bumb do hereby certify that:
1. I carried out this assignment for: Great Quest Metals Ltd.
2. I hold the following academic qualifications:
PhD Economics (University of Maryland, USA), MA Economics University of Udaipur (India), and B.Com., University of Rajasthan (India).
3. I have over 25 years of experience in the preparation of market studies for the fertilizer industry in
developing countries, including West Africa and have been following the development of Tilemsi Phosphate Rock for fertilizer use since 1991..
4. I do, by reason of education, experience and professional registration, fulfill the requirements of a
Qualified Person as defined in National Instrument 43-101. My work experience includes the management and performance of numerous market development projects and studies relating to the audit, evaluation and valuation of projects in many parts of the world.
5. My most recent current inspection of the Mali Phosphate Project was during August to November, 2012.
6. I am responsible for supervising the preparation of Section 19 and have contributed jointly on other
sections on the technical report (the “Technical Report”) dated December 20, 2012, entitled “Technical Report on the Preliminary Economic Assessment of the Tilemsi Phosphate Project, Mali, an NI 43-101 Report”.
7. I am independent of the parties involved in the transaction for which this report is required, as defined in
Section 1.4 of NI 43-101.
8. I have no prior involvement with the property that is subject of the Technical report.
9. I have read NI 43-101 and the portions of this report for which I am responsible have been prepared in
compliance with the instrument.
10. As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make this report not misleading.
Date: November 24, 2012
B. L. BUMB, BLB Associates, Florence AL USA 35630
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APPENDIX B - BENEFICIATION FLOWSHEET
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APPENDIX C - GRANULATION FLOWSHEET
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APPENDIX D - NPK FLOWSHEET