Minbos Resources (ASX: MNB) is progressing Stage 1 of the Cacata deposit Bankable Feasibility Study, with two beneficiation routes being considered. Stage 1 is expected to be presented to the JV partners by early March, with Stage 2 to commence immediately. The proposed merger with Petril Projects is also continuing, with key reports being prepared ahead of a shareholder vote.
Minbos Resources Limited (Minbos or the Company) is pleased to present its quarterly report for the period ended 31 December 2016.
HIGHLIGHTS
- Merger with Angolan JV Partner. On completion of the merger with Petril, Minbos will own 100% of the Cabinda Project and also two other phosphate projects in Angola- a majority interest in the Lucunga project which is a joint venture with Haifa Chemicals and Pedro de Feitico (100%). Since announcing the transaction in early December the Company has substantially advanced the binding definitive agreement, due diligence and the independent export report and will provide further updates to shareholders in February.
- Exercise of options raises $3.85 million. Minbos’ largest shareholder Green Services Innovation exercised their 385 million options in December, leading to proceeds of $3.85 million. Exercise option price represented a 61% premium to the 20 day VWAP.at time of exercise. In terms of the merger agreement, Petril shareholders can match these exercised options by subscribing for new share at an issue price of 1 cent per share.
- BFS update. Metallurgical testwork has been completed for both Dry and Wet beneficiation and quotes for major equipment have been provided to Ausenco for capital costing. GMining has commenced mine optimisation studies for each beneficiation option and will feed the results into an economic evaluation of the options to be presented in late February. Early indications confirm that either option will deliver substantial capex and performance improvement over the 2012 Desktop Study.
- Appointment of Mike Erwin as General Manager Marketing and Sales- Mr Erwin has an in-depth knowledge and understanding of the global phosphates industry with more than 30 years’ global experience in senior management roles including positons with Minemakers (now Avenira) and fertiliser trading companies in the Middle East.
- Market study on the Cabinda Project- CRU has been appointed to do a market appraisal of the Cabinda Project. Their report using the material from the recently completed bulk sampling is expected to be completed in Q1, 2017.
PLANNED ACTIVITIES FOR CABINDA PROJECT – MARCH 2017 QUARTER
Stage 1 of the BFS is on schedule to complete the selection of the preferred beneficiation route and shipping logistics in the last week of February to feed into stage 2 of the BFS. Critical path activities for Stage 2 of the BFS are also underway including, ESIA, hydrological and geotechnical studies.
Beneficiation Testwork and Process Design
The BFS scope was divided into two stages. Stage 1 is the completion a Trade-Off study to select the beneficiation route that will optimise the whole of resource outcome for the Cacata deposit. The Trade-Off study will compare the following 800,000tpa production scenarios:
- 5 years of drying and sizing followed by 10 years of scrub screen and flotation,
- 10 years of scrub and screen followed by 5 years of scrub screen and flotation.
During the quarter bulk samples were tested by two equipment suppliers in the USA for beneficiation by drying and sizing. Another bulk sample was tested by Mintek in South Africa for beneficiation by wet scrubbing and screening. The testwork results for both streams have been very encouraging and initial quotes for major equipment items have been provided to Ausenco who will prepare a comparison of the beneficiation alternatives for presentation to the Cabinda JV in February. The mass yields and recoveries for both processes have been provided to the mining consultant GMining and optimised mine plans for both flow sheets will be compared.
Dry Beneficiation Testwork Results
Both equipment suppliers were provided a high grade sample grading 34%P2O5 and a medium grade sample with a higher clay content grading 30%P2O5. The equipment suppliers elected to size the material through roll crushers before drying the material and passing it through an air classifier to remove particles below fine dust to meet shipping requirements.
Both suppliers were able to beneficiate the samples to 33.5%-34.5%P2O5 which is much better than expected. The flowsheets were particularly successful at upgrading the higher clay samples. The testwork showed that P2O5 recoveries of 90%-95% are achievable and the final number will be determined in conjunction with the mine optimisation study.
Major equipment lists and quotes have been provided by the equipment suppliers and Ausenco is preparing a cost performance comparison of the two process flowsheets.
Wet Beneficiation Testwork
Mintek was provided 7 individual bulk samples grading between 28%-31% P2O5 with an average grade of 29.9%P2O5. The testwork involved sizing through a roll crusher, wet scrubbing, and wet screening to size the product between 106 microns and 12mm. The tests all achieved a recovery of 95% or better and the average product grade was 31.5%P2O5.
It is expected that the final run of mine (ROM) head grade supplied to the wet beneficiation will be a little lower than the testwork average. This will lead to the recovery also being lower than the testwork results in order to maintain the same average product grade. The final numbers will be determined in conjunction with the mine optimisation study.
As part of the testwork it was determined that the fine discards would require thickening before disposal in a tailings dam. Ausenco has already prepared a Wet Beneficiation equipment list and is obtaining costings for the plant. Golder has prepared options and costings for the tailings dam which will be included in the Trade- Off Study.
Mine Optimisation
GMining has commenced work on the mine optimisation for each beneficiation route to determine the tonnes and grade that are available for the respective flowsheets to produce the target product specifications. This is an iterative process but it is expected the target head grades will be 30.5%- 31.5%P2O5 for dry beneficiation and 29%-30%P2O5. The available tonnage for each beneficiation routes will be estimated early in February and fed into the Trade-Off-Study comparison.
GMining has prepared an infill drill program for Cacata which will commence in the June quarter. The drill program will be designed to bring the resource up to measured status to support the BFS reserve estimate. It will also provide the necessary data to design the ongoing grade control drilling regime for the mining operation. It is estimated that a program of around 2000m will be sufficient to meet these objectives.
Transportation Logistics
Quotations from local contractors have been sought for the road haulage of rock phosphate product from the mine site to Port de Caio a distance of 60km on well-formed bitumen roads. An internal estimate for an owner operator costing has been completed to evaluate the contractor proposals and resulted in a tariff comfortably below $US10/t which will be used in the Trade-Off-Study.
Port logistics evaluation
In the December quarter Ausenco completed its evaluation of Porto de Caio and concluded that a rotating container system offers the most economic and flexible solution for Cacata. Porto de Caio continue to target the first quay availability before the end of 2017.
A visit to Pointe Noire was conducted during the December quarter and with a view to using it as an interim solution if Porto de Caio is delayed. Given the strong progress at Porto de Caio it was decided to defer further investigation of this option.
Geotechnical and Hydrogeology
Engineers from Golder Associates have completed and costed alternative tailings impoundment designs for the Wet Beneficiation. They have also designed geotechnical and hydrogeological drilling for the Bankable Feasibility Study to be incorporated in the infill.
It was hoped a Lidar survey could be completed before the summer rains but it was not possible to coordinate plane availability and permitting in time. Planning is now underway to fly the survey after the summer rains.
Bankable Feasibility(BFS)- Stage 2
Ausenco is still scheduling to present the results of the BFS to the joint venture partners in late February although any delays could push this date out into early March.
Whilst the Trade-Off-Study is not complete the early indications are that either beneficiation option will deliver significant capex and performance enhancements over the Desktop Study completed in 2012.
The preferred beneficiation route from the Trade-Off-Study will be taken forward into Stage 2 of the BFS. The completion of the BFS will be dependent on the chosen beneficiation route. It is expected the inclusion of a tailings dam and process water supply in the wet beneficiation flowsheet would extend the time to complete the BFS.
MERGER WITH ANGOLAN JV PARTNER
In December Minbos signed a non-binding term sheet with the shareholders of Petril Phosphate Limited (Petril), whereby Minbos will acquire all of the outstanding shares in Petril (Transaction), the value of the Transaction is ~A$20 million.
On completion of the Transaction Minbos will own 100% of the Cabinda Project. Petril also owns two other phosphate projects in the Zaire Province of Angola (the Lucunga Project and the Pedra de Feitico Project), which will be acquired as part of the Transaction. The Lucunga Project, a joint venture with minority partner Haifa Chemicals Ltd (international speciality fertilizer producer), is located near Mucula in the Zaire Province and has had more than US$9 million spent on it to date. The Pedra de Feitico Project is 100% owned by Petril.
Current Minbos and Petril shareholders will each own 50% of Minbos and the Board will consist of two current Minbos directors and two Petril nominees plus an independent Chairman. The Company has also agreed to pay the Petril shareholders a structured royalty on any future production solely from the Lucunga Project.
Since announcing the Transaction Minbos has made substantial progress in finalizing due diligence, the independent expert report and executing a definitive agreement. Minbos is expecting to be able to provide a further update to shareholders in February. The shareholder meeting to approve the transaction is now expected to be held in the 2nd quarter of 2017.
EXERCISE OF OPTIONS RAISES $3.85 MILLION
Green Service Innovations Ltd exercised their 385 million unlisted options at 1cent per option in December. The exercise of the options at a 61% premium to the 20 day VWAP led to a cash inflow of $3.85 million, increasing the cash position of the Company to more than $4.32million at the end of December.
If all Petril shareholders exercise their right to match the exercise of the options (following completion of the merger), it will raise a further $3.85 million. On 30 December 2016 311.6 million unlisted options at 1cent per option expired. Minbos do not have any remaining options on issue.