Focus is building a portfolio of quality Latin American phosphate projects. Phosphate is one of the three primary nutrients used in the manufacture of fertilizers. Along with potash (KCl) and nitrogen, it helps to ensure long term food production security across the globe. Widespread population growth, and the decreasing availability of arable land for farming, means that increasing crop yields by the application of fertilizer will become an increasing priority for many countries. Globally, demand for rock phosphate growing at 2 - 3% annually.
Focused recently acquired a number of phosphate projects in Peru and Colombia. With the rapid growth in the agricultural economy of Latin America, fertilizer consumption on the continent is forecast to expand. New phosphate deposits will become increasingly important to the fertilizer manufacturers on rising long term demand and pricing.
In Peru, agricultural exports reached $900 million in the first quarter of 2012, a 16% increase on the previous year. The country currently consumes almost 350,000 tonnes of fertilizer per year and demand is increasing. But, despite production from the large-scale Bayóvar phosphate mine in the Sechura desert, which has been in operation since 2010, Peru is still reliant on phosphate imports to satisfy demand.
Focus has 4 phosphate projects in Peru: Machay, Mantaro, Bayovar 12 and Quebranta. In Colombia the company has an option on the Maria Luisa phosphate property in Boyacá and a strategic agreement with a local company to acquire additional projects throughout the country.
Bayovar 12, Peru
The Bayovar 12 project is located 70 km south of the city of Piura in the Sechura region in northern Peru, some 800km north of Lima. The Bayovar area is one of the world's premier phosphate producing regions and benefits from excellent operational logistics and infrastructure, with two world-class deposits found there to date including Vale's Bayovar Mine, in production since 2010.
The Bayovar 12 claim covers 12,575 hectares and is located 40km by road from tidewater and port amenities owned by Focus' partner, Juan Paulo Quay S.A.C., who utilized the port previously to export gypsum mined from the Bayovar 12 concession and phosphates from the Bayovar mine area prior to its acquisition by Vale. The Pan-American Highway crosses the property at its eastern end and the Chiclayo-Bayovar road transects the property and Bayovar Mine powerline both transects the property. The Bayovar Mine and Fosfatos del Pacifico deposit are located approximately 20km to the west of the concession.
Focus is planning a systematic grid-based drill program which will commence as soon as exploration permits are received. An initial 20 holes are planned on a 2km grid which will explore the general potential of the western half of the claim over an area approximately 50km2
. A second phase of detailed grid drilling at =/< 1km2
spacing's will test the property for an inferred resource.
The Bayovar region lies in the Sechura Desert, a north-south trending basin approximately 22,000 km2
in area comprising Miocene-aged rocks covered by recent sand deposits. Phosphate was discovered in the 1950's during drilling for petroleum in the Zapallal Formation within a sequence of diatomites and sandstones (diatomite is a sedimentary rock composed of fossilized algal shells and is of sufficient purity and mined locally for cement manufacture). The phosphorite layers are remarkably regular in P2
content over long distances, a typical characteristic of marine phosphate deposits. The soft and friable nature of the phosphate rock and diatomite means that quarrying occurs using conventional truck and shovel and generally does not require the use of explosives.
Exploration and Mining in Bayovar
Phosphates have been known in the Bayovar region since the 1950's when they were discovered during exploration for petroleum. The Bayovar 12 claim was one many non-metallic concessions formerly owned by the Peruvian State and sold by tender in the mid 2000's. In 2003 Juan Paulo Quay began exploiting bulk gypsum from the claim which was stockpiled exported at its port facilities to Ecuador, Colombia, Panama and Costa Rica. The company also provided mining, trucking and loading operations for the State-owned Minera Grau for phosphate mined from the concessions that now belong to Vale, and transported phosrock as far as New Zealand. Scout exploration holes drilled around their gypsum operations discovered multiple flat-lying phosphate beds from 36.5m depth and assayed from 10% to 22% P205. The phosphate intervals were broadly correlated from hole to hole into at least 6 main units within a sequence of diatomite some 30 -- 40 m in thickness.
Vale's Bayovar Mine located on the Bayovar 1 & 2 concessions is one of the biggest phosphate deposits in South America. Operations began in 2010 with 239.2 million tonnes of Proven and Probable Reserves* grading 17.2% P205 and a mine life of 27 years. In 2012, the mine produced 3.21 Mt of phosphate concentrate grading a minimum of 29% P205 and production is expected to reach 3.9 Mt per annum in 2014**. Processing of ore has minimum environmental impact and involves a series of washing and gravimetric separations using seawater, followed by rinsing and drying before being loaded on ships and exported to the Americas, Asia and Oceania. Use of sea water ensures that local water sources are preserved and chemical reagents are not used in any stage of the processing. Vale sold minority stakes in the project to Mosaic (35%) and Mitsui (25%) for $660 million in 2010.
Located approximately 10km north of Vale, Cementos Pacasmayo with partners Mitusibishi / Zuari are investing at least $300 million to develop the Fosfatos del Pacifico deposit on the Bayovar 9 concession, located 15km west of Bayovar 12 and immediately north of Vale's mine. Phosphate was discovered in 2010. Resources are quoted as 541 MT of 18.5% P205***. In 2011 a JV between Mitsubishi and Zuari purchased 30% of the project for $46 million.
Under the terms of the LOI, Focus will have 30 days to complete legal and technical due diligence, after which it will have the right to acquire a 70% interest in the property by investing up to $15 million in exploration and drilling, including spending $1 million within 12 months from the date that it receives its exploration permit from the Peruvian authorities. Focus must complete a positive Pre-feasibility study by the fourth anniversary and pay the owners a sum of US$4 million in the following instalments:
- $50,000 on signing of the LOI (paid)
- $200,000 on signing of the formal Option Agreement
- $750,000 6 months after receiving the exploration permits
- $3,000,000 on the first anniversary of receiving the permits
Focus must also pay the owners US$1,000,000 on the second anniversary of receiving the permits and on each subsequent anniversary until it completes the Pre-feasibility study. Should the owners decide to sell their 30% interest, Focus will have the first right of refusal to purchase.
* Vale 2010 Annual Report
** Vale 2012 Annual Report
**Wet Density. Source: Pacasmayo IPO Prospectus Feb 2012
Mantaro Project, Peru
Focus recently signed an agreement to acquire a 70% interest in the Mantaro phosphate deposit subject to due diligence. Mantaro is located in central Peru near the city of Huancayo, close to Focus' Machay project. Mantaro is one of only a small number of phosphate deposits known in the Andes, and one of the largest undeveloped phosphate deposits in the world.
The 26,000 hectare property is located in the Peruvian altiplano in the southern end of the historic Central Peru Mining District at an elevation of 3,600m -- 4,000m a.s.l. Drilling and trenching in the West Zone during 2009 by Stonegate resulted in the Measured, Indicated and Inferred Mineral Resources, shown in the table below*. The property is strategically located adjacent to asphalt highways, rail and electricity grids.
* Refer to NI 43-101 Technical Report titled "Technical Report on the Mantaro Phosphate Deposit, Junin District, Peru", February 21, 2010, filed by Stonegate (the "Mantaro Technical Report"). The Mantaro Technical Report was prepared by Donald H. Hains, P. Geo., and Michelle Stone, Ph. D., P. Geo. on behalf of Stonegate. Measured and Indicated Mineral Resources are reported using a 4% P2O5 cut-off. Inferred Mineral Resources are reported with no cut-off as a grade of 9% is assumed.
|Resource Category (West Zone)
|Measured + Indicated
Phosphate mineralization is hosted in the Aramachay Formation, a moderately dipping sequence of Jurassic-aged marine sedimentary unit that has been folded and faulted, resulting in three parallel mineralized zones termed the West, East and Far East Zones. Each Zone has been mapped on surface over a strike length of over 20 km with a total of over 60 km of phosphate-bearing units defined to date, averaging approximately 25m in width.
Mineralogy, processing and beneficiation studies in 2010 concluded that both oxide and unoxidized phosphatic ores at Mantaro could be successfully treated by conventional grinding and flotation techniques to produce a marketable phosphate concentrate of similar quality to that of Moroccan Phosrock (~30% P2
Stonegate Agricom Ltd. has granted Focus an exclusive right and option to acquire a 70% interest in the Mantaro property by investing a total of US$25 million over 4 years in exploration, including permitting and drilling, and including the completion of a feasibility study and an updated NI 43-101 Measured and Indicated Resource calculation. Focus will have 90 days to conduct due diligence and raise a minimum of $2 million to spend on the property. The due diligence period was extended by a further 42 days on August 2, 2013.
In 2011 during the course of ongoing property evaluations for precious and base metals, the Company identified an opportunity to acquire a land position in central Peru by direct staking, covering the trend of the phosphate--bearing Aramachay Formation, a Jurassic-aged sedimentary unit. A number of old geological reports written in the early 1960's for the Cerro de Pasco Corporation, highlighted numerous phosphate occurrences in the Tarma-La Oroya region hosted within the Aramachay Formation. The Mantaro deposit. hosted by the same geological unit, is located approximately 30km to the south-east.
Reconnaissance exploration by Focus confirmed the presence of phosphate-bearing sandstone units on its claims, where pellets of francolite (Ca5
, a variety of the phosphorous mineral, apatite) were observed. Grades of up to 11.4% P2
were sampled on the eastern claims from a sub-cropping phosphatic sandy limestone unit exposed in a road cut. A work program is planned that includes mapping, trenching and drilling.
Quebranta Project, Peru
The Quebranta phosphate project is located in the Ocucaje region approximately 300km south of Lima along the coastal desert some 30km from tidewater.
The project consists of 27,000 hectares acquired by direct staking. An additional 450 hectares were acquired under an option agreement signed with a local company and Agrifos Peru S.A.C (a subsidiary of Focus) where Agrifos can acquire 100% of the property by paying $200,000 over 3 years and granting a 1% Nets Profit Royalty on future production to the vendor.
The phosphate mineralization at Quebranta is of marine sedimentary origin and is hosted within a sequence of Miocene sediments (Pisco Formation) comprising predominately diatomite with tuff and mudstone intercalations. Sampling of phosphatic sandstone units assayed from trace up to 16.5% P2
. The geological setting and stratigraphy is analogous to the Sechura region, northern Peru that hosts Vale's Bayovar Mine, an operating open pit mine and one of the biggest phosphate rock mines in the Americas with a reserve base of 247 MT and capable of producing 3.9Mt of phosphate concentrate per annum.
The Ocucaje region is poorly explored for phosphates although several old reports from the 1950's and 60's note the presence of phosphate mineralization with assays of up to 31.8% P2
. The planned work program includes regional and local scale mapping, trenching and drilling.
Maria Luisa, Colombia
In January 17, 2013 Focus signed an option agreement with a private Colombian company for the Maria Luisa Phosphate property located in the Department of Boyaca, Colombia, and a strategic agreement to acquire additional phosphate concessions in Colombia.
The Maria Luisa property comprises approximately 1,651 hectares of titled mining concessions located in the Department of Boyaca, some 3 hours drive by asphalt highway from the Colombian capital, Bogota. Sampling by Focus has identified at least 2 high grade phosphorite beds. Sampling has shown grades from 7.9% P2
to 29.2 P2
(10 samples averaged 19.4 % P2
) with the phosphatic units mapped over at least 12 km. The beds are between 1 -- 3 m thick, with widths up to 7m locally occurring in calcareous mudstones and siltstones belonging to the Cretaceous Guadalupe Group.
Under the terms of the Agreement, Focus can earn a 70% interest in the property by investing a total of $750,000 in exploration and development 5 over years, including a payment of $50,000 on signing (paid). Focus must spend $100,000 during the first 18 months from the signing of the Agreement and $300,000 in cumulative expenditures during the first 36 months of the agreement. Focus can purchase the outstanding 30% interest by paying the owner 1% of the value of each tonne of phosphatic rock defined in Measured and Indicated Resource categories and averaging 20% P2
or more based on the price of Bayovar FOB* rock phosphate.
Focus has also signed a strategic alliance with the titleholder to acquire additional phosphate claims in Colombia, under the same terms, for areas currently under application with the Colombian National Mining Agency (NMA). The NMA declared a moratorium on new claim applications in February 2011 in order to overhaul its cadastral system and deal with a large backlog of new claims applications. The new system is expected to be operative by mid-2013.
* Free on Board