Phosphoric Acid, Phosphates & Fertilizers Experts

BAOBAB EXPANSION AND UPGRADE PROJECT UPDATE

Avenira Limited (“Avenira” or the “Company”) is pleased to advise it has received positive conceptual engineering study (FEL1 Level) results, paving the way for a major expansion and upgrade of the processing plant at its 80%-owned Baobab Phosphate Project (“Baobab” or the “Project”) in the Republic of Senegal.

The engineering study, conducted by leading engineering firm, Hatch, concluded that upgrading the processing plant, and increasing its nameplate capacity to 1 Mtpa of high-grade phosphate rock concentrate, could be undertaken for a total upfront capital expenditure of approximately US$53.4 million (to ± 30% accuracy). This expansion should significantly improve product specifications and place the Project in a globally competitive unit operating cost position, on a quality adjusted basis.

Key benefits from the expanded and upgraded plant are expected to include:
• Year-round production with nameplate capacity doubled to approximately 1 Mtpa of phosphate rock product, at a controlled 3% moisture level;
• A plant capable of producing a higher grade product (~ 35% P2O5) with low CaO:P2O5 ratio (< 1.4), delivering lower sulfuric acid consumption and lower gypsum by-production to phosphoric acid manufacturers, expected to attract a premium price to the benchmark;
• The product should also have a competitive silica assay and continue to feature low organic carbon and carbonate content, thereby minimizing detrimental foaming in phosphoric acid reaction systems;
• Reduced unit operating costs expected from increased phosphate recovery at approximately 70% (versus approximately 50% currently), in addition to economies of scale;
• Before quality adjustments, projected post-investment unit cash operating costs are estimated at approximately US$56/t, FOB vessel in a contract-mining scenario. Owner-mining could further reduce unit cash operating costs by approximately US$10/t, at an estimated upfront mobile fleet capital cost of approximately US$40 million;
• Expected quality specifications may add a further at least US$10/t premium to cash operating margins, based on CRU’s quality adjustment methodology, leading to a “business cost” (as defined by CRU, i.e. including quality adjustments) of approximately US$46/t for contract-mining and approximately US$36/t for owner-mining, placing Baobab well into the bottom half (and potentially in the lowest quartile in an owner-mining scenario) of CRU’s 2017 “business cost” curve (see further below); and
• Potential cash operating margins (before capital, financing and tax), based on the current down-cycle price of benchmark phosphate rock (31% P2O5) of approximately US$80/t, would therefore be approximately US$34/t for contract-mining and approximately US$44/t for owner-mining.

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