Dusolo Releases Positive Results from Santiago Project Preliminary Economic Assessment
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DUSOLO RELEASES POSITIVE RESULTS FROM SANTIAGO
PROJECT PRELIMINARY ECONOMIC ASSESSMENT
MARCH 23rd, 2017 - VANCOUVER, BRITISH COLUMBIA: DuSolo Fertilizers Inc.
(TSX-V:DSF) (“DuSolo” or “the Company”) is very pleased to announce the completion
of a positive Preliminary Economic Assessment (“PEA”) of the Company’s Direct
Application Natural Fertilizer (“DANF”) Santiago Project (the “DANF PEA”). The DANF
PEA was prepared by the independent consultants GE21 Ltda.
Giles Baynham, CEO of DuSolo, noted “We are very pleased to complete this DANF PEA
and announce the results. Whilst we have been producing and selling DANF since 2015,
this is the first Technical Report which demonstrates the positive economic potential of
Santiago, and the Company believes it is the start of demonstrating the longer-term and
higher value potential of the Company’s assets in Brazil which will be the Company’s aim
throughout the course of 2017. We are now working on a separate PEA for the acid
granulated DANF product (the “AG DANF PEA”), as well as exploration of the Amaury
Concession. Market and product development is underway, as recommended by our
market consultants, to achieve the DANF prices in the Upside Case.”
The DANF PEA is the first stage of the Company’s strategy to demonstrate the economic
potential of the Company’s mineral resources based on the phosphate (“P2O5”) deposits at
its BonFim Project in Brazil. The Santiago deposit within the Bonfim area currently extracts
phosphate rock which is processed into two DANF products grading 12% and 15% P2O5 at
the Campos Belos Plant. The second stage of this strategy is to further improve its
economic viability through the potential production of an Acid Granulated Phosphate
Fertilizer, which combines 15% DANF with sulphuric acid to imp rove the agronomic
performance of the DANF. This granulated product is expected to increase the market
available to the Company, and yield higher selling prices due to improved solubility and
agronomic performance based on a market study completed by Agroc onsult. With the
positive results of the DANF PEA, the Company has commenced the second stage of the
strategy to produce the AG DANF PEA which is targeted for completion in the second half
of 2017.
DANF PEA HIGHLIGHTS
• Indicated Resources of 1.16Mt at 8.23% P2O5, including 0.29Mt at 14.78% P2O5
• Inferred Resources of 2.70Mt at 8.58% P2O5, including 0.82Mt at 14.72% P2O5
• Life of Mine (“LOM”) 12.5 years
• LOM Production of 543Kt of 12% DANF and 635Kt of 15% DANF
• Post-tax NPV (10%) of US$13.0m
• Zero Initial Capital (already operating)
• Operating Costs (Mine, Plant, G&A) of US$18.47/t
• Upside Case NPV(10%) of US$30 .3m based on Agroconsult Consultoria e
Projetos (“Agroconsult”) DANF Prices
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Note that the DANF PEA is preliminary in nature as it includes inferred mineral resources
that are considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral reserves. Mineral
resources that are not mineral reserves do not have demonstrated economic viability, and
as such there is no certainty that the preliminary assessment and economics will be
realized. A NI43-101 technical report for the DANF PEA will be filed on SEDAR
(www.sedar.com) and posted on DuSolo’s website (www.dusolo.com) within 45 days.
The Company is not basing its production decision on a feasibility study of mineral
reserves demonstrating economic and technical viability, as a result there is increased
uncertainty and economic and technical risks of failure associated with its production
decision.
GEOLOGY & MINERAL RESOURCES
The Bonfim Project, within which the Santiago Project lies, is within a large package of
rocks along the western edge of the São Francisco craton and immediately east of the
Brasilia fold belt in central Brazil (Mendonça and Campos, 2012; Da Rocha Araujo et al.,
1992).
Within this area, rocks of the base of the Bambuí Group can be found that are associated
with the Sete Lagoas Formation, which is host to the phosphate mineralization. It includes
the pelitic, carbonatic and phosphatic rocks that overlie the granitic rocks of the Aurumina
Suite. The Sete Lagoas Formation can be found in the majority of the area and is
distributed to the east of the granitic basement.
Mineral exploration work and exploratory drilling was intensified since the March 7, 2014
Technical Report which included the Amaury and Bonfim Concessions. Re-interpretations
were undertaken and - because of the various types of mineralization present, which
display a large range of phosphate concentrations - the mineralization was separated into
two principal groups: high grade (HG) and low grade (LG).
The Mineral Resource Estimate for the Santiago Project was updated for this DANF PEA
utilising recent drilling and exploration results, including a better understanding of the
mineralization types and zoning, and of the continuity of grades and mineralization based
on the extraction of around 100,000 tonnes since late 2014 from the Santiago Project.
Table 1
Mineral Resource Table - Phosphate
Indicated and Inferred Resources
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Resource Type Tonnes (Mt) P2O5% CaO% MgO% SiO2% Al2O3% LOI%
Indicated
HG* 0.29 14.78 20.49 1.02 41.53 8.44 4.08
LG* 0.87 6.08 7.92 1.22 58.79 9.96 3.90
Total Indicated 1.16 8.23 11.03 1.17 54.52 9.59 3.94
Inferred
HG* 0.82 14.72 20.92 0.97 42.62 7.95 4.22
LG* 1.88 5.89 7.83 1.48 58.39 10.73 4.43
Total Inferred 2.70 8.58 11.82 1.32 53.59 9.88 4.37
• High Grade Mineralization (HG): P2O5 ≥ 10%, Low Grade Mineralization (LG): P2O5 ≥ 3%
and <10%
• Mineral Resources are based on dry tonnes.
EXPLORATION POTENTIAL
Mineralization at Santiago remains open along the NW-SE trend, with a number of
samples of outcropping phosphorite grading between 7.5% to 23.3% P2O5. The potential
area is some 3 times the size of the current area considered in this DANF PEA and GE21
estimated an exploratory potential of 5 million tonnes to 14 million tonnes with the P2O5
grade varying between 4% and 18%. The potential quantity and grade is conceptual in
nature, there has been insufficient exploration to define a mineral resource and that it is
uncertain if further exploration will result in the target being delineated as a mineral
resource in the future.
MINERAL PROCESSING & METALLURGICAL TESTING
The material is placed in the run-of-mine (“ROM”) patio area, stockpiled and blended in
such a way so as to guarantee a constant feed grade for the beneficiation process. The
processing route consists of crushing, screening and grinding, as shown in figure 1.
Figure 1
Natural Phosphate Processing Flowchart
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All of the material that is obtained from mining is transformed into the final product, which
generates products that have greater or lesser value, depending on the phosphate
concentration. Therefore, tailings are not produced during ore processing, and the
recovery of material during the process is 100%.
For internal quality control purposes, the company maintains its own laboratory, with
equipment that serves to analyze certain characteristics of the product such as particle
size, comminution, sample preparation and a spectrophotometer for determining the
concentration of P2O5.
Table 2
Summary of Production
Material Mass wet basis (Kt)1 P2O5 (%)
Mining products Type P2O5 12% 543 11.90
P2O5 15% 635 15.24
Total 1 178 13.70
Waste Rock 865 n/a
Material Stockpiled for Potential Future
Beneficiation 1 080 7.15
Strip Ratio2 1.56
Strip Ratio3 0.37
1Wet tonnes contain 12% moisture, both as ROM and as product; 2Considers the material stockpiled for Potential Future Beneficiation as waste rock; 3Considers the material stockpiled for Potential Future Beneficiation as product.;
Note that the DANF PEA is preliminary in nature as it includes inferred mineral resources that are
considered too speculative geologically to have the economic considerations applied to them that would
Final Product F12
Final Product F15
Reprocessing F15
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enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do not
have demonstrated economic viability, and as such there is no certainty that the preliminary a ssessment
and economics will be realized.
CAPITAL & OPERATING COSTS
As the Santiago Project and the Campos Belos plant are already extracting and
processing phosphate rock, there is no additional capital requirement for the Project.
Sustaining capital over the LOM is minimal and included in the maintenance costs. The
Company estimates the existing capital equipment (primary crusher, hammer mills) have
a capacity of c.280,000 tonnes per annum and the projected DANF PEA production of
100,000 tonnes per annum is approximately 35% of the actual installed capacity, resulting
in reduced operating hours and general wear. Mobile equipment such as trucks, water
trucks and front-end loader and excavator are all supplied on a contract basis. T he
Company maintains insurance for its assets which includes the Campos Belos pPlant.
Operating costs are based on actual costs incurred by the Company, using the 2016
actual mining and processing costs. Fixed costs have been adjusted for the increase to
100,000 tonnes per annum .
Table 3
Operating Costs
Item Cost Unit
Mine Ore 2.88
US$/t ROM
Waste Rock 0.97
Transport & Road Maintenance 6.17
Plant 5.11
G&A 3.34
Total 18.47
A trade-off study to assess the impact of relocating the Campos Belos Plant to the
Santiago Project and significantly reducing transport costs is currently being prepared.
Taxes are included in the PEA cashflow analysis as follows:
Royalties - 3.0% of revenue
Taxes - 29.8% of EBIT
The Company has significant tax losses available to be applied to future income in Brazil
which have not been included in the DANF PEA analysis.
DANF MARKET REPORT & PRICES
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This DANF PEA has assumed the following prices for the DANF products, based on the
prices in 2016 and currently being received for the following products:
DANF 12% P2O5 - US$31/t
DANF 15% P2O5 - US$56/t
Agroconsult provided a market study for the DANF products that DuSolo intends to
produce. Assuming an average LOM production of 50,000tonnes per year for each
product, Agroconsult’s analysis suggests the following prices can be achieved:
DANF 12% P2O5 - US$76.4/t
DANF 15% P2O5 - US$93.7/t
These prices are higher than currently achieved, but Agroconsult notes that with the
correct strategy of market and price development and branding these higher prices could
be achieved. GE21 have prepared an upside case model using the higher Agroconsult
prices, and assuming an increase in marketing and selling costs of US$1,11 per tonne
(approximately 50% increase in G&A). This results in an increase of the net present value
to US$30,28million. GE21 recommends that management maintain its focus on marketing
and sales prices, as this could provide significant improvements in the Santiago Project
returns for limited increases in operating costs.
QUALIFIED PERSONS
The technical content of this news release has been reviewed and approved by Mr.
Porfirio Cabaleiro Rodriguez and Mr. Bernardo Viana, both Managing Partners of GE21
Consultoria Mineral, in compliance with the standards of disclosure as set out in NI43-101.
Mr. Rodriguez and Mr. Viana are “independent qualified persons” for the purposes of NI43-
101 Standards of Disclosure for Mineral Projects of the Canadian Securities
Administrators.
On behalf of DuSolo Fertilizers Inc.
Giles Baynham, Chief Executive Officer and Director
For more information contact:
Email: [email protected]
(604) 484 7122
Suite 1100 – 1111 Melville Street, Vancouver, B.C., Canada, V6E 3V6
FORWARD LOOKING STATEMENTS
Certain information contained in this press release constitutes “forward-looking information”, within
the meaning of Canadian legislation. Generally, these forward-looking statements can be identified
by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not
anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions,
events or results “may”, “could”, “would”, “might” or “will be taken”, “occur”, “be achieved” or “has
the potential to”. Forward looking statements contained in this press release may include
statements regarding the future operating or financial performance of DuSolo which involve known
and unknown risks and uncertainties which may not prove to be accurate. Actua l results and
outcomes may differ materially from what is expressed or forecasted in these forward -looking
statements. Such statements are qualified in their entirety by the inherent risks and uncertainties
surrounding future expectations. Among those factors which could cause actual results to differ
materially are the following: market conditions and other risk factors listed from time to time in our
reports filed with Canadian securities regulators on SEDAR at www.sedar.com. The forward-looking
statements included in this press release are made as of the date of this press release and DuSolo
disclaims any intention or obligation to update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise, except as expressly required by applicable
securities legislation.
For more information please refer to the technical report filed on SEDAR and titled “Bomfim Agro-
Mineral Phosphate Project, Technical Report and Initial Resource Estimate Tocabtins and Goiás
States, Brazil,” filed on March 5, 2014, effective December 31, 2013, and amended on February 6,
2015. The resource estimate was signed off by Mr. Porfirio Cabaleiro Rodriguez an Associate
Consultant of Coffey Consultoria e Serviços Ltda., and was prepared in compliance with the
standards of disclosure as set out in NI43-101. Mr. Rodriguez is an “independent qualified person”
for the purposes of NI43-101 Standards of Disclosure for Mineral Projects of the Canadian
Securities Administrators.
Disclosure - The Company’s decision to produce DANF, its DANF production targets and cash flow
projections were not based on a feasibility study of mineral reserves demonstrating economic and
technical viability. Without a technical report demonstrating economic and technical viability, there is
uncertainty as to whether the Company will be able to economically produce DANF in a long run
and as to whether the Company will be confronted with any unforeseen technical impediments.
Similarly, the Company has not completed a preli minary economic assessment before making
production and project expansion decisions.
Neither the TSX Venture Exchange Inc. nor its Regulation Service Provider (as that term is
defined in the policies of the TSX Venture Exchange Inc.) accepts responsibilit y for the
adequacy or accuracy of this press release.