AVENIRA DELIVERS STRONG FEASIBILITY STUDY FOR EXPANSION OF BAOBAB PHOSPHATE PROJECT
ASX Announcement 18 March 2019
Avenira Limited ('Avenira' or the 'Company') (ASX: AEV) is pleased to announce the completion of the Feasibility Study (‘FS’, ‘Feasibility Study’ or the ‘Study’) (Class 4 estimate) for the expansion of its 80%-owned Baobab Phosphate Project (‘Project’) in the Republic of Senegal to a projected high-grade phosphate rock mine with a concentrate product capacity of 1 Mtpa. The FS confirms the technical and financial robustness of a long-life operation for the Company’s Baobab Phosphate Project.
This Feasibility Study is classified as an AACE Class 4 estimate with a ± 20% estimated accuracy. The “Bankable” or “Definitive” Feasibility Study (‘BFS’) phase intended to follow will target an AACE Class 3 estimate with a ±10% accuracy.
HIGHLIGHTS
- Baobab Project expansion feasible at targeted 1 Mtpa phosphate rock concentrate capacity
- Very high-grade 36.4% P2O5 phosphate rock concentrate product
- Maiden Probable Ore Reserve of 39.3 Mt at 18.9% P2O5
- Strong Project economics
- Unlevered, post-tax NPV8% of US$212M (A$294M)1 and IRR of 25.5%
- Free cashflow (post all capital expenditures and tax) of US544$M (A$756M)1 and EBITDA of US$1,020M (A$1,417M)1
- Pre-production capital expenditure of US$183M (A$254M) 1
- Payback period of 3.3 years from first production, 5.3 years from detailed engineering start
- Estimated average direct operating costs of US$56/t of 36.4% P2O5 concentrate produced
- Initial 13.4-year mine life, based just on the Project’s Indicated Mineral Resource
- A Value-Engineering Study is the next step, to be followed by Bankable Feasibility Study
- Encouraging Project Finance discussions underway with potential partners
Avenira’s Managing Director and CEO Louis Calvarin said: “The just-completed Baobab Phosphate Project Feasibility Study clearly demonstrates the Project's strong technical foundation and compelling financial returns, with cost-effective strip-mining and processing techniques delivering a high-grade premium quality product. As we are about to embark on the next phase of engineering activities, I would like to thank the entire Study team, who have put considerable effort into completing this work.”
The FS is based on an open-pit strip-mining design and conventional flotation and magnetic separation ore processing plant operating at an ore throughput of 2.9Mtpa and a phosphate rock concentrate post ramp-up production rate of 1Mtpa. It determined that the Project’s Probable Ore Reserve is 39.3Mt at 18.9% P2O5.
The Study indicates a technically sound and financially robust project, delivering post-tax unlevered NPV of US$212M and IRR of 25.5% over a 13.4-year mine life based on the Project’s Indicated Resource.
Finalisation of the FS represents a key milestone in the evolution of the Project. The Company intends to initiate the BFS phase (Class 3 estimate) once the final project configuration has been confirmed as part of a planned value-engineering study. Concurrently, the Company intends to undertake more advanced and detailed discussions with potential funding parties. BFS completion is projected to take place during the December 2019 Quarter.
KEY PROJECT METRICS
Table 1: Production Parameters
Table 2: Key Financial Outcomes
Key assumptions in the economic evaluation of the Project are: no inflation, real discount rate of 8% and no terminal value assumed (see Economic Analysis section and Table 9). Unless otherwise stated, all financial numbers are in US$ and are based on 100% of the Project. All tonne (‘t’) references are to dry metric tonnes. Base date for estimated capital expenditures is August 1, 2018.
`Table 3: Projected Typical Analysis, Gadde Bissik Phosphate Rock Concentrate
