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Gq presentation-feb2015

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Gq presentation-feb2015

  1. 1. Click to edit Master title style FERTILIZER TSX-V AFRICA BUILDING FOR GROWTH WHERE T H E W O R L D I S G R O W I N G
  2. 2. Disclaimer This presentation contains forward-looking statements or forward-looking information within the meaning of applicable securities legislation (hereinafter collectively referred to as "forward-looking statements") concerning the Company's plans for its properties, projects, operations, subsidiaries and other matters. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management regarding operations of the Company which are subject to a variety of business and market risks, including political and regulatory risks associated with mining and exploration in Mali. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. These forward-looking statements are based on certain assumptions which the Company believes are reasonable, however, forward-looking statements are subject to a variety of business and political risks and uncertainties. Some of the important risks and uncertainties that could affect forward-looking statements are also described in the Company's continuous disclosure filings made with Canadian securities regulatory authorities, which are available at the SEDAR website and on the Company’s website. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, they may adversely affect the Company’s business and prospects and actual results may vary materially from those described in forward-looking statements. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward- looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required by applicable laws. Investors are therefore cautioned against placing undue reliance on forward-looking statements. The Company cautions that the PEA is preliminary in nature, as it includes “Inferred Mineral Resources” which are considered too speculative geologically, to have the economic considerations applied to them that would enable them to be categorized as "Mineral Reserves". There is no certainty that the PEA will be realized, as Mineral Resources do not demonstrate economic viability. The technical information in this presentation has been reviewed by Jed Diner, MSc. P.Geol., a qualified person as defined by National Instrument 43-101. 2
  3. 3. African Fertilizer for African Markets • Tilemsi Phosphate – Mali – 50 Mt, 24.3% P2O5 inferred resource – Product: Direct application granulated phosphate (35% P2O5 and 27% P2O5) – After-Tax NPV10% $423M, IRR 55%. Initial capital investment $157.9M (PEA) – Currently financing a profitable pilot plant with signed local off-take • Sua Pan Potash – Botswana – Brownfield development – Process tailings recovery from Soda Ash production – Product: Potential for 70,000t K2SO4 (SOP) annually – Currently structuring JV, and completing scoping engineering 3 Tilemsi Phosphate Deposit Tilemsi Phosphate Deposit Sua Pan Potash Brine Project Sua Pan Potash Brine Project
  4. 4. “Africa has the potential to create a trillion-dollar food market” (World Bank) • 62% of all large-scale land acquisitions since 2000 have occurred in Africa. • Agriculture in Africa will grow from its current $280 billion a year to $500 billion in 2020, and $880 billion by 2030. • Nigeria’s agricultural sector could grow by a colossal 160% by 2030, rising from $99 billion in 2010 to $256 billion 4Source: GRAIN, AGRA Alliance, McKinsey, IMF, FAO SSA Annual GDP Growth 2013 2014 2015 2018 World +2.9 +3.6 +4.0 +4.1 Sub‐Saharan Africa +5.0 +6.0 +5.7 +5.7 Africa is Where the Growth is …
  5. 5. Under Served and Wide Open • Africa is largely ignored by international fertilizer players • Infrastructure and logistic challenges insulate the markets from price reductions in the international market • Manufacturing finished products in the regions of agricultural growth creates excellent opportunities for enviable margins 5 252 229 165 31 32 0.2 20 8 45 14 0 100 200 300 400 500 600 Mali Thailand Average Cost of Fertilizer (US$/tonne) Product Cost Transportation Taxes & Levies Finance Costs Overheads $53.2/t $282/t Source: National Geographic (The Next Bread Basket, July 2014)
  6. 6. Mine to Field Ready Products • Its not enough to have a good concentrate – Concentrates to 36.8%, very low Cd, U and other common contaminants, meets industry standard Fe and Al oxides – Unusually high natural solubility, 71.1% in citric acid – All mechanically concentrated, screens and magnetic separation – Easily granulated alone or with nitrogen and potash for complex and simple blending • Field tested with competitive results – We have completed 2 years of field agronomic testing – Conducted with IER (Institute of Rural Economics), and international development agencies – 11 Test plots in major agricultural zones of Mali – Cotton, rice, corn, millet, sorghum, peanuts, black eyed peas 6 Dr. Lamine Traore, corn planted and fertilized with GQ phosphate
  7. 7. Agronomy • Extraordinary Results Corn in Sikasso Popular crop in a significant growing region, powerful yield response. 7 Phosphate type Quantity (kg/ha) N (%) P (%) K (%) Yield (kg/ha) Diammonium Chemical 100 15 15 15  2,156 GQ 35% Granulated  100 11 18 2 3,858 Tilemsi Powder 300 ‐ 24 ‐ 2,597 Phosphate type Quantity (kg/ha) N (%) P (%) K (%) Yield (kg/ha) Diammonium Chemical 100 15 15 15  1,751 GQ 35% Granulated  100 11 18 2 2,192 Tilemsi Powder 300 ‐ 24 ‐ 1,728 Phosphate type Quantity (kg/ha) N (%) P (%) K (%) Yield (kg/ha) Diammonium Chemical 65 18 46 ‐ 904 GQ 27% Granule + M4 100 ‐ 27 ‐ 1013 Tilemsi Powder 300 ‐ 24 ‐ 794 Un-Irrigated Rice in Bamako Challenging crop given variable water availability, benefiting from whole nutrient nature of GQ product Peanuts in Kita Medium grade product was tested with solubility aids, an ultra low cost option for subsistence crops
  8. 8. Starting Small – Production in Mali Established Malian Partnership (Oct 17, 2014) GQ 67% / SADA 33% Funds part of Construction  and reduces country risk Off‐take agreement (Sept 22, 2014) SADA local blending  consortium Will purchase 95% of planned  production Established Product in Mali (June 13, 2014) Product demonstrations with  Ministry of Agriculture (IER) Excellent results shared with  major purchasers Developed Product for West African Market Process to beneficiate and  granulate Worked with Mintek and DRA 8 Pilot Plant Economics (US$) After Tax NPV10% $17.3M Projected IRR 29.5% GQ Initial Cap Ex $16.3M Prices (Off‐Take) ‐ High Grade (35% P2O5) $450/t ‐ Medium Grade (27% P2O5) $330/t ‐ Toll Blending/Granulating $45/t Operating Cost $124/t • Market building phase • Low capital hurdle to production • Secure production while Mali continues to stabilize
  9. 9. The Opportunity is not limited to Mali 9 324.8 371.3 174.8 112.2 16 59 52.2 56 52.2 49.8 0 200 400 600 800 1000 Mali Nigeria UREA Cost (US$/tonne) Product Cost Transportation Taxes & Levies Finance Costs Distribution Cost $277/t $295/t 543.8 463.1 159.8 149.6 28 24.2 76.6 78.6 75 71.6 0 200 400 600 800 1000 Mali Nigeria NPK Blend Cost (US$/tonne) Product Cost Transportation Taxes & Levies Finance Costs Distribution Cost $324/t $339/t Source: IFDC, West African Fertilizer Report 2012 
  10. 10. Full Scale Production • 500,000t of production growing to 1Mt • Sold through out West Africa • The region consumes approximately 2.5Mt 10 Full Scale Economics (US$) After Tax NPV10% $432.1M Projected IRR 55.0% Pay Back Period 2.4 years GQ Initial Cap Ex $157.9M Prices (Projected) ‐ High Grade (35% P2O5) $350/t ‐ Medium Grade (27% P2O5) $262/t Operating Cost $ 92/tTrucks in Gao, moving goods to and from Bamako, Algieria and Niger
  11. 11. This can be replicated across Africa 11 502 546 215 234 43 47 0 200 400 600 800 1000 Zambia Mozambique NPK Blend Cost (US$/tonne) Product Cost Transportation Distribution Cost $281/t $258/t Solar evaporation ponds at Sua Pan brine project in Botswana  • West Africa does not have a monopoly on high logistic costs, in spite of this Zambia and Mozambique have been among the fastest growing and most productive agriculture on the continent • Potash supply has been serious problem for Zambian farmers
  12. 12. Botswana Potash • Exclusive right to develop potash present at Sua Pan operation of Botswana Ash Corporation • KCl concentrations in bitterns are reported to exceed 10.9 grams per litre (g/L), which is more than a 100% improvement over the native brine concentration of 4.3 g/L as measured by Botswana Ash. By comparison the brine from the Dead Sea are 6.2 g/L • Brine (salaar / salt pan) potash projects usually have lower capital cost than underground projects • Would function as additional circuit on existing plant, leveraging existing infrastructure 12 Sua Pan Potash  Brine Project
  13. 13. Brownfield Brine • Proven Process – Existing Facility in Austria using this process successfully on a similar brine with 7 years production history • Potential Saleable Products – K2SO4 71,000 tpy – Na2SO4 252,000 tpy – NaCl 1,450,000 tpy • All fruit crops, tobacco, high value vegetables and any foods certified as organic by the US FDA, require K2SO4 as potash source • K2SO4 typically sells for 50% more than KCl (the most common form of potash) 13 Botash Sua Pan soda ash production facility 
  14. 14. 14 WHO WE ARE
  15. 15. Stock Information 15 Le Main de Fatima – Northern Mali As of February 3, 2015 STOCK INFORMATION  TSX‐V: GQ SHARES OUTSTANDING 49,693,088 ‐OPTIONS 4,355,000 ‐WARRANTS 1,396,666 FULLY DILUTED 55,444,754 52‐WEEK LOW/HIGH $0.41/$1.97 3‐MONTH AVG. VOL. 23,990 MARKET CAP. $22.4M
  16. 16. Board of Directors 16 John A. Clarke – Chairman  Former CEO of Nevsun Resources and  Executive Director of Ashanti  Goldfields  John A. Clarke – Chairman  Former CEO of Nevsun Resources and  Executive Director of Ashanti  Goldfields  Jed Richardson – CEO, Director  Former Director at Verde Potash and  Equity Research Analyst at Cormark Securities, and RBC Capital Market. Jed Richardson – CEO, Director  Former Director at Verde Potash and  Equity Research Analyst at Cormark Securities, and RBC Capital Market. Ehud Levy – Director  Phosphate manufacturing industry  consultant with a 30‐year career with  Bateman Engineering and Rotem Ehud Levy – Director  Phosphate manufacturing industry  consultant with a 30‐year career with  Bateman Engineering and Rotem Gordon Peeling – Director  Former President of Mining  Association of Canada (MAC) with  30 years of mining experience in the  public and private sectors Gordon Peeling – Director  Former President of Mining  Association of Canada (MAC) with  30 years of mining experience in the  public and private sectors David Shaw – Director Worked as Senior Mining Analyst at  Yorkton Securities; initiated and  developed Resource Research Group  at Charlton Securities David Shaw – Director Worked as Senior Mining Analyst at  Yorkton Securities; initiated and  developed Resource Research Group  at Charlton Securities Dogofry brownfield location for pilot plant
  17. 17. Senior Management 17 Mohammed Bouhsane – COO  Former Project Engineer in the  Moroccan mining and metallurgy  industries working for the ONA Group  and OCP. Mohammed Bouhsane – COO  Former Project Engineer in the  Moroccan mining and metallurgy  industries working for the ONA Group  and OCP. Jay Hosanee – CFO Structured finance specialist Loita Group, SA & Mauritius. Former CFO at  Mineral Hill and Golden Dawn Minerals Jay Hosanee – CFO Structured finance specialist Loita Group, SA & Mauritius. Former CFO at  Mineral Hill and Golden Dawn Minerals Thomas Guillot – VP Corp Development  Former CFO of NewGen Asset  Management investment fund, and  Management Consultant, Ministère de  l’Enfant et la Famille, Mali. Thomas Guillot – VP Corp Development  Former CFO of NewGen Asset  Management investment fund, and  Management Consultant, Ministère de  l’Enfant et la Famille, Mali. Marie‐France Dikizeyeko – Chief Geo. Country Manager. Former Senior  Exploration Geologist at Randgold Mali,  Geological consultant for Nevsun and  Administrative Manager, Iamgold Mali Marie‐France Dikizeyeko – Chief Geo. Country Manager. Former Senior  Exploration Geologist at Randgold Mali,  Geological consultant for Nevsun and  Administrative Manager, Iamgold Mali CEO Jed Richardson discusses life in Gao with Toureg merchant
  18. 18. 18 APPENDIX
  19. 19. Tilemsi Phosphate • The Phase I (pilot plant) project development includes pilot-scale mining, beneficiation, NPK blending and the granulation of 40,000 tons of phosphate rock per annum for twelve years. The pilot plant will be located in the agricultural area of Dogofry, 1,024 km south west of the Tilemsi mining property. • The Phase II (full-scale) project development would proceed upon determination of the success of Phase I results over a complete year of full operation. The Phase II operations will be located in Bourem, 95 km from the Tilemsi mining property. Initially 500,000t of phosphate product growing to 1Mt. 19 Tilemsi Phosphate Deposit Segou Pilot Plant
  20. 20. Small Scale Production Mine • 88% GQ • 10% Mali, 2%  Local Partners • Sales Price $40/t • Operating Cost  $23/t • Contract Mining • 42,600 tpy Mine • 88% GQ • 10% Mali, 2%  Local Partners • Sales Price $40/t • Operating Cost  $23/t • Contract Mining • 42,600 tpy Beneficiation • 67% GQ • 33% SADA • Sales Price • 35% P2O5  $450/t • 27% P2O5  $330/t • 35,000 tpy Beneficiation • 67% GQ • 33% SADA • Sales Price • 35% P2O5  $450/t • 27% P2O5  $330/t • 35,000 tpy Granulation • 67% GQ • 33% SADA • $45/t  • Beneficiated  phosphate (P)  mixed with  imported urea (N)  and potash (K)  • 60,000 tpy Granulation • 67% GQ • 33% SADA • $45/t  • Beneficiated  phosphate (P)  mixed with  imported urea (N)  and potash (K)  • 60,000 tpy 20 • Approximately $23M total capital investment could yield $11M EBITDA annually
  21. 21. Exploration Potential 21 5 km •Phases 1 + 2 completed •Oct 2013: GQ exploration  program to resume Map of Tilemsi Phosphate Project showing our concessions  on remote sensing and drilling program (completed and planned) 589 sq.km589 sq.km 417 sq.km417 sq.km 200 sq.km200 sq.km
  22. 22. 22 Great Quest Fertilizer Ltd TSX‐V: GQ Suite 303, 95 King Street East, Toronto, ON M5C 1G4 +1 416 849 9203 info@greatquest.com WWW.GREATQUEST.COM

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