Great Quest PEA Presentation


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Great Quest PEA Presentation

  1. 1. TSX-V: GQClick to edit Master title style Tilemsi Integrated Phosphate Fertilizer Project PEA Overview Positive PEA Results Estimated 20-year Mine Life with NPV US$ 635m (at 10% DR) and Project IRR 33% February 2013
  2. 2. DisclaimerThis presentation contains forward-looking statements or forward-looking information within the meaning of applicablesecurities legislation (hereinafter collectively referred to as "forward-looking statements") concerning the Companys plansfor its properties, projects, operations, subsidiaries and other matters. These statements relate to analyses and otherinformation that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions ofmanagement regarding operations of the Company which are subject to a variety of business and market risks, includingpolitical and regulatory risks associated with mining and exploration in Mali.Great Quest Metals Ltd. cautions that the PEA is preliminary in nature, as it includes “Inferred Mineral Resources” which areconsidered too speculative geologically, to have the economic considerations applied to them that would enable them to becategorized as "Mineral Reserves". There is no certainty that the PEA will be realized as Mineral Resources do notdemonstrate economic viability.Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections,objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or"does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating thatcertain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are notstatements 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 importantrisks and uncertainties that could affect forward-looking statements are also described in the Companys continuousdisclosure filings made with Canadian securities regulatory authorities, which are available at the SEDAR website and on theCompany’s website. Should one or more of these risks and uncertainties materialize, or should underlying assumptions proveincorrect, they may adversely affect the Company’s business and prospects and actual results may vary materially fromthose described in forward-looking statements. Forward-looking statements are made based on managements 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 byapplicable laws. Investors are therefore cautioned against placing undue reliance on forward-looking statements.The technical information in this presentation has been reviewed by Jed Diner, MSc. P.Geol., a qualified person as defined byNational Instrument 43-101. 2
  3. 3. Great Quest - A Unique Value Proposition Our Vision: To unlock West Africa’s fertilizer market by providing cost effective and adapted solutions to meet growing agricultural needs Our Key Strengths: Proven Solid Mineral Discovery Management & Board PEA Results Track Record Significant Project Stock 52-Week High: Support from Exploration Upside C$ 3.71 Key Stakeholders 3
  4. 4. GQ Flagship Tilemsi Phosphate PROJECT BACKGROUND 50 million tonnes (Mt) inferred resource on 26 km² drilled surface High natural grade 24.3% P₂O₅ Significant upside potential, project covers 1,206 km² (3 licenses) Strategic source of reactive & soluble phosphate for direct application, low cost fertilizer or as a NPK component Experienced management team with track record in project development and mineral discovery in West Africa 4
  5. 5. Investment Highlights Project positive attributes • Naturally effective fertilizer product with low OPEX and CAPEX expectations • Strip minable – Near surface deposit (<10 meters on average) • Simple production process as per characterization tests Upside potential • 3 phosphate concessions with total surface of 1,206km² • To date only 2% of total area has been drilled (26 km²) Market potential • Fast growing population (>2% pa) drive food demand in West Africa • Large agribusiness investments and commercial farming projects in West Africa Logistical advantage • Proximity to key agricultural markets in West Africa (<1,000 km radius) • Ability to offer low farm-gate price thanks to market proximity Expertise • Strong combined management and board expertise in mineral exploration in Africa and the global phosphate and fertilizer industry 5
  6. 6. PEA Consulting TeamThe independent PEA was written and compiled by Gaya Resources Development Ltd,a full-spectrum engineering management company, specialising in fertilizer projects.The PEA includes sections provided by highly respected international consulting firms: Coffey Mining (South Africa) for the mining process GBM Engineering (UK) for the beneficiation process CFI Holding (France/Singapore) for the granulation/NPK study Bolloré Africa Logistics (France) for the transportation analysis Balu & Associates (USA) for the West Africa fertilizer market study Mintek (South Africa) for the metallurgical testing 6
  7. 7. Tilemsi Phosphate Project Summary 7
  8. 8. PEA Project DescriptionPlanned Project: A vertically-integrated phosphate mining, beneficiation,granulation and NPK blending project in West Africa. Plants Construction: The project will include a beneficiation and phosphate granulation plant near the Niger River at Bourem, which is situated 95 km from the mine. Initial Production: To begin in 2016, with staged production ramp-up from 200,000 tonnes to 1 million tonnes, based on conservative expectations for market uptake. Target Markets: Landlocked markets in West Africa for product delivery, displacing high cost imported fertilizers, and servicing emerging commercial farming projects in the region. Product Development: Two granulated Hyperphosphate products:  a high grade (>35% P₂O₅) for mixture into standard NPK blends  a medium grade (>27% P₂O₅) for simple direct application. 8
  9. 9. Regional Market Penetration Objectives 9
  10. 10. PEA Highlights ¹ Project Parameters Value Life of Mine (“LOM”) 20 years based on the current Inferred Mineral Resource estimate Maximum Rock Mined (at full capacity) 1 million tonnes per annum Pre-Operational Cost US$ 13 million Initial Capital Cost US$ 143 million OPEX Phosphate Rock (powder average ex plant) @35% P₂O₅ US$ 49 per tonne OPEX Hyper Phosphate (granulated avg. ex plant) @35% P₂O₅ US$ 91 per tonne Fertilizer Products Supplied at Full Capacity 1.18 million tonnes per annum Sales Mix: NPK / Direct Application 78% / 22%¹ Great Quest cautions that the PEA is preliminary in nature, as it includes Inferred Mineral Resources which are considered toospeculative geologically, to have the economic considerations applied to them that would enable them to be categorized as "MineralReserves". There is no certainty that the PEA will be realized as Mineral Resources do not demonstrate economic viability. 10
  11. 11. Summary of the Project Economics Project Economics ValueProject Net Present Value (“NPV”) US$ 635 millionDiscount Rate 10%Project Internal Rate of Return (“IRR”) 33%Equity Holder IRR (40% equity /60% debt) 43%Payback Period 4 years 11
  12. 12. Financial Model Assumptions Assumptions ValueProduct Discount Rate against 20%Cost of Moroccan Phosphate in Bamako, MaliAverage Transport Cost Ratio US$ 0.083 per tonne per kilometreDelivered Price of Diesel for Energy Production US$ 1.10 per litreEquity to Government on Mining 20%Royalties on Mine Production 3%Contingency in Initial Capital Cost (12%) US$ 14 millionPolitical Risk Insurance Premium (12%) (incl. in CAPEX) US$ 11 millionInterest Rate (LIBOR + Premium) 7.8% per annum 12
  13. 13. Basic Data – Production Capacity Intermediary Stage Final StageProduction (tonnes) Years (LOM) * Four NPK plants are planned, each producing 125,000T/y of Blended NPK. In year 3, two plants will be built in Sikasso (south Mali) and in Cotonou in Benin. In Year 7 , two other plants will be constructed in Tamale in northern Ghana and in Dosso, south of Niamey in Niger. 13
  14. 14. NPV Sensitivity Analysis NPV DR (US$ ‘000) 6% 1,085Internal Rate of Return (%) 8% 828 12% 492 15% 339 14
  15. 15. Project Financials over 20-Year Run of Mine
  16. 16. Tilemsi Geology - Unique Deposit Attributes With a high average phosphate grade and significant exploration upside, the Tilemsi deposit has the potential to become a world-class phosphate resource . TILEMSI PHOSPHATE ROCK INITIAL INFERRED 50 million tonnes RESOURCE AVERAGE PHOSPHATE 24.3% P₂O₅ GRADE CONCENTRATE GRADE 25-38% P₂O₅ Low levels of CONCENTRATE contaminants QUALITY (ie. cadmium) Easy separation and BENEFICIATION treatment Near surface DEPOSIT DEPTH Strip-minable potential 16
  17. 17. Mining Considerations 15.8 Mt at an average grade of 28.1% P₂O₅ mineral inventory have been identified Tilemsi phosphate mine is a pitable resource Mining will commence on the Tin Hina mining concession and will operate for 13 years Mining will continue on the Tarkint Est concession until Year 20. Mining has been scheduled to comment at approx. 200,000 tpa, increasing by 100,000 tpa to reach 500,000 by year 4. Production will plateau in Year 8 at 1 million tpa for until Year 20. Waste stripping (strip ratio) 6.8:1 17
  18. 18. Exploration Program 589 5 km Phases 1 and 2 of Drilling Program completed 417 200 Map of Tilemsi Phosphate Project showing our concessionson remote sensing and drilling program (completed and planned) 18
  19. 19. Tilemsi Phosphate Rock Characterisation Tilemsi Natural Phosphate (TNP) meets or exceeds market specifications forCharacterization beneficiation, solubility and granulation.tests indicate: TNP can be used as either as very low cost phosphate component for blended NPK fertilizer or as a direct application fertilizer. Test Results Impact Screening at 850 microns to Via simple screening process, the product can easily beneficiated toBENEFICIATION achieve P2O5 grades up to 36.8% P2O5 % P₂O₅ of 36.8% 71.1% soluble P2O5 The rock solubility shows that it is able to compete with other in citric acid SOLUBILITY 62.5% soluble P2O5 chemical fertilizers, as fertilizers’ effectiveness is based on immediate availability of the nutrients in formic acid The product can easily be granulated, allowing the product to Successfully produced granulesGRANULATION sized 1-4mm withstand transportation and be used as a component of NPK blended fertilizer 19
  20. 20. Planned Beneficiation & Granulation Plant in Bourem 20
  21. 21. Beneficiation and Granulation Process Beneficiation and granulation plants will be situated near the Niger River in Bourem, approx. 95 km south of planned mine Proposed beneficiation process includes: Coarse classification, Hydraulic classification, Attritioning, Milling, Wet magnetic separation, Filtration, Drying. Granulation plant in Bourem consists of 300,000 tpa during the 1st stage of development Additional 2 lines of 300,000 tpa each to be installed in Year 3 and Year 7 to meet increased production requirements Production plans:  High-grade Hyperphosphate (>35% P₂O₅ ) granulated for NPK blends  Medium-grade Hyperphosphate (>27% P₂O₅) granulated for simple direct application  GQ’s own NPK blending plants to produce in-house high quality fertilizers 21
  22. 22. Simplified Beneficiation and Granulation Flow SheetPhosphate Rock 22
  23. 23. Existing Infrastructure Figure 1: Map of West Africa showingthe Tilemsi deposit and the main logistical infrastructure in the sub-region Figure 2: One of the 2 types of truck considered for ore transportation (70-tonne truck) 23
  24. 24. Milestones and Catalysts 2010 2011 2012 2013 2014 2015 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Prospecting license of Tilemsi phosphate concession grantedSale of Kenieba gold concession to Avion Gold (now Endeavour)Phosphate exploration permit granted for Tilemsi & Tarkint EstPhase I of Exploration Program completed on Tilemsi & Tin HinaPhase II of Exploration Program completed on Tarkint EstTilemsi Phosphate project receives 32.6Mt initial resource estimateProject area extended to 1,206km² with new concession of AderfoulCharacterisation tests indicate high grade & reactivity of the rockIncrease of 17Mt of inferred mineral, totalling 50MtComplete PEAPre-Feasibility StudyFeasibility StudyProject FinancingConstruction of Mine Site and Beneficiation PlantLaunch Hyper Phosphate Production 24
  25. 25. Great Quest Metals Ltd IR Candice Font TSX-V: GQ Tel +1 604.689.2882 Suite 515, 475 Howe Street Toll Free 1.877.325.3838 Vancouver, BC, V6C 2B3 Fax +1 604.684.5854 WWW.GREATQUEST.COM Email 25