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GQ Fertilizer builds for growth in Africa
- 1. Click to edit Master title style GQ FERTILIZER TSX-V AFRICA BUILDING FOR GROWTH WHERE THE WORLD IS GROWING
- 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. Stock Informa-on 3 As of March 6, 2014 STOCK INFORMATION TSX-‐V: GQ SHARES OUTSTANDING 48,817,941 -‐OPTIONS 3,815,000 -‐WARRANTS 2,114,813 FULLY DILUTED 54,747,754 52-‐WEEK LOW/HIGH $0.45/$2.54 3-‐MONTH AVG. VOL. 77,780 MARKET CAP. $91.8M Le Main de Fa7ma – Northern Mali
- 4. Our Goal • Building a Pan African Fertilizer Manufacturer – Developing agricultural mineral projects for local production of field ready fertilizers – For regional delivery • Targeting – Phosphate Direct Application and SSP, At Surface Potash Brines, Sulfur and Lime Projects – Establishing centers in areas of rapid agricultural growth West, East and Southern Africa 4 IER Sotuba Test Plot (CoGon)
- 5. Our Strategy Follow strict development criteria • Must reach field ready product with compelling investment returns on capital expenditure of less than $200MM • Existing market sufficient to absorb planned production within cost effective transport radius – Does not include growth potential – Does not include out of Africa export potential Africa’s history as exclusively an exporter of resources means many projects that fit our criteria have been ignored for logistical reasons This strategy also insulates our proposed business from the ups and downs of the world fertilizer market, hinging its success to the revolution in African Agriculture already underway and growth in global food demand 5
- 6. 6 Source: EBG Capital 60% OF THE WORLD’S ARABLE LAND IS IN AFRICA According to Zürich-‐based advisory firm, EBG Capital, sub-‐Saharan Africa offers 590m hectares of available cropland, while the rest of the world offers just 380m hectares. • Only 23-‐30% of arable land in W. Africa is currently culUvated • Low ferUlizer usage (9kg/ ha vs. 101kg/ha in the rest of the world) Why Africa
- 7. 7Source: GRAIN, AGRA Alliance, McKinsey Agribusiness project sizes – January 2012 (investment underway or completed in ‘000s USD) “Africa has the poten-al to create a trillion-‐dollar food market” (World Bank) • 62% of all large-‐scale land acquisiUons 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 two decades later. AFRICA IS ATTRACTING LARGE AGRIBUSINESS INVESTMENTS Why Africa
- 8. Why Fertilizer • Fertilizer offers a unique conjuncture of business opportunities – Agriculture’s predictable demand and strengthening growth profile – Mining’s expected rates of return • An ideal way to profit from two widely expected market trends – Increasing global food demand – African development 8 Irriga7on Canal – Niono, Mali
- 9. 9 • World popula-on projec-on 10 billion people by 2100 • Africa’s populaUon is expected to double to 2 billion by 2050. • A more affluent world will consume more food Grain required to produce 1kg of meat (Sources: SproG) World popula@on growth Arable land per capita • The amount of arable land per capita is shrinking World popula@on projec@on Why Fer-lizer in Africa
- 10. 10 OUR GROWTH
- 11. Botswana Potash • Exclusive right to develop potash present at Sua Pan operation of Botswana Ash Corporation • Historical work published by the World Bank suggests that the Sua Pan salar was capable of producing 163,000 tons per year, including potential to produce 21,000 tpy of K2SO4 • 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. This compares favorably with potash concentration in the brine from the Dead Sea of 6.2 g/L, 11 Sua Pan Potash Brine Project
- 12. Brownfield Brine • Existing operation produces Soda Ash (NaCO3) and Salt (NaCl) from the natural brine • Brine projects have some of the lowest operating and capital costs in the world • Potential plant would function as additional circuit on existing operation • Leverages existing infrastructure reducing potential capital expenditure • Advancing to definitive agreement 12
- 14. Tilemsi Phosphate • 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 as an NPK component 14 Segou Pilot Plant
- 15. A Growing Resource 15 TILEMSI PHOSPHATE PROJECT INITIAL INFERRED RESOURCE 50 million tonnes AVERAGE PHOSPHATE GRADE 24.3% P₂O₅ CONCENTRATE GRADE 25-‐38% P₂O₅ CONCENTRATE QUALITY Low levels of contaminants (ie. cadmium) BENEFICIATION Easy separaUon and treatment DEPOSIT DEPTH Near surface Open pifable resource With a high natural P₂O₅ grade and significant exploraUon upside, the Tilemsi deposit is developing into a world-‐class phosphate resource. Tilemsi Valley
- 16. Phosphate Rock Characterisa-on 16 Test Results Impact BENEFICIATION Screening at 850 microns to achieve P2O5 grades of 36.8% Via simple screening process, the product can easily beneficiated to up to 36.8% P₂O₅ SOLUBILITY 71.1% soluble P2O5 in citric acid 62.5% soluble P2O5 in formic acid The rock solubility shows that it is able to compete with other chemical ferUlizers, as ferUlizers’ effecUveness is based on immediate availability of the nutrients GRANULATION Successfully produced granules sized 1-‐4mm The product can easily be granulated, allowing the product to withstand transportaUon and be used as a component of NPK blended ferUlizer Characteriza-on tests indicate: Tilemsi natural phosphate (TNP) meets or exceeds market specificaUons for beneficiaUon, solubility and granulaUon. TNP can be used as either as very low cost phosphate component for blended NPK ferUlizer or as a direct applicaUon ferUlizer.
- 17. Explora-on Program 17 5 km • Phases 1 + 2 completed • Oct 2013: GQ explora-on program to resume Map of Tilemsi Phosphate Project showing our concessions on remote sensing and drilling program (completed and planned) 589 sq.km 417 sq.km 200 sq.km
- 18. PEA Highlights (1/2) 18 Project Economics Value Project Net Present Value US$635 million Discount Rate 10% Project Internal Rate of Return 33% Equity Holder IRR (40% Equity/60% Debt) 42% Payback Period 3.7 Years CEO Jed Richardson discussing life in Gao with Tuareg merchant Project has powerful potential social impacts alongside obvious economic benefits • Directly addresses soil poverty issues in Sahel soils – Cotton production has fallen 50%/ha planted in last 10 years • Increased crop yields reduce food security concerns in West Africa • Provides new export product for gold dependent Malian economy • Brings industrial development to Mali’s troubled north – Necessary step in ensuring a lasting peace in the region
- 19. PEA Highlights (2/2) 19 Project Parameters Value Life of Mine based on the Inferred Mineral Resource esUmate 20 years Maximum Rock Mined (at full capacity) 1 M tonnes/year Pre-‐OperaUonal Cost US$13 M IniUal Capital Cost US$ 143 M OPEX Phosphate Rock @36% P₂O₅ (powder average ex plant) US$ 59 per tonne OPEX Hyper Phosphate @36% P₂O₅ (granulated avg ex plant) US$ 95 per tonne FerUlizer Products Supplied at Full Capacity 1.18 M tonnes/year Sales Mix: NPK / Direct ApplicaUon 78% / 22% Assump-ons Value Product Price Discount to imported phosphate cost in Malii 20% Average transport cost raUo per tonne per km US$ 0.082 Delivered Price of Diesel for Energy ProducUon US$1.10/litre Equity to Government on Mining 20% RoyalUes on Mine ProducUon 3% ConUngency in IniUal Capital Cost (12%) US$ 14 M PoliUcal Risk Insurance Premium (@ 12%) incl. in CAPEX US$ 11 M Interest Rate per annum (LIBOR + Premium) 7.8%
- 20. 20 OUR PLAN
- 21. Agronomy • Great Quest has developed a low cost phosphate fertilizer alternative for the West African Market • We have completed initial field agronomic testing – Conducted with IER (Institute of Rural Economics), administered by Dr. Lamine Traore – 11 Test plots in major agricultural zones of Mali – Cotton, rice, corn, millet, sorghum, ground nut, cow pea – Currently running first season of multi-stage test program – 1st Quantitative results December 2013 • Replicate trials in neighbouring West African markets 21 Granulated Tilemsi Phosphate – 35% high grade, 27% medium grade
- 22. Agronomy • Extraordinary Results Corn from the Sikasso Region Popular crop in a significant growing region, powerful yield response. 22 Phosphate type Quan-ty (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 Quan-ty (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 Quan-ty (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 Non irrigated Rice from Bamako Region Challenging crop given variable water availability, benefiting from whole nutrient nature of GQ product Peanuts from Kita Region Medium grade product was tested with solubility aids, an ultra low cost option for subsistence crops
- 23. Small Scale Production • Markala Production Facility – 40,000 tonnes of product annually – Proposed commissioning late 2014 – Expected cost $15 million • Market Building Step – For manufacture and sale of product for Malian market – Will also provide material for commercial testing by future large consumers – Will be used to establish product pricing and off take agreements for larger planned facility • Will continue to be used to test and develop new products once large facility is built 23 Birkenmayer Granulator – Johannesburg, South Africa
- 24. Full Commercial Phosphate Facility • Located in Gao / Bourem • Construction 2016 • Initial capital expenditure $143 million • Construction employment – Potentially 300 direct and indirect new jobs during plant construction • Operation employment – 200+ Full time jobs in the plant, plus drivers, miners and support staff – Mine life 50+ years with potential to grow with more exploration • 1 million tonnes of annual production • Consumption in Mali and export through out West Africa 24 Trucks in Gao, moving good to and from Bamako, Algieria and Niger
- 25. Our People 25 Interna-onal Board of Directors John A. Clarke – Chairman Former CEO of Nevsun Resources and ExecuUve Director of AshanU Goldfields Victor Jones – Director 30 years of experience in senior execuUve and board posiUons in public mineral exploraUon and technology companies Ehud Levy – Director Phosphate manufacturing industry consultant with a 30-‐year career with Bateman Engineering and Rotem Gordon Peeling – Director Former President of Mining AssociaUon 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 SecuriUes; iniUated and developed Resource Research Group at Charlton SecuriUes Mali Board of Directors Abdoulaye Pona-‐ Director President Mali Chamber of Mines, Founding director Mali Mining House SA Mama Tapo-‐ Director Managing Director Societe InternaUonale de Services et de representaUon. Former Manager AshanU Goldfields
- 26. Our Team 26 Interna-onal Board of Directors Jed Richardson – President and CEO Former VP Corporate Development at Verde Potash and InsUtuUonal Equity Research Analyst at Cormark SecuriUes. Mohammed Bouhsane -‐ COO Former Project Engineer in the Moroccan mining and metallurgy industries working for the ONA Group and OCP. Jayram Hosanee -‐ Chief Financial Officer Former CFO at Mineral Hill and Golden Dawn Minerals. Mr Hosanee holds a CGA. 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 – Mali Manager Former Senior ExploraUon Geologist at Randgold Mali, Geological consultant for Nevsun and AdministraUve Manager for Iamgold Mali.