Arianne has been working to advance the Lac à Paul phosphate project since 2013.
Canadian phosphate developer Arianne Phosphate (TSXV:DAN,OTC Pink:DRRSF) has penned a formal agreement for financing and future offtake with Chinese construction firm SINOCONST.
The memorandum of understanding (MOU) between Arianne and Chinese state-owned enterprise SINOCONST will include full project financing for the Lac à Paul project, located in Quebec’s Saguenay—Lac-Saint-Jean region.
Arianne has been working to advance the phosphate project since 2013.
Shares of the Quebec-focused phosphate explorer were up 12 percent Tuesday (June 4) following the release of the announcement.
In addition to project funding, SINOCONST has also signed on to help Arianne secure offtake agreements and contracts for the phosphate that will be produced at Lac à Paul once the project is in full production.
Demand for phosphate has steadily grown over the last five years and is expected to continue its upward momentum well into the next decade. In 2018, global consumption was approximately 47 million tonnes, and that is expected to grow to 50.5 million tonnes by 2022.
“This is a very exciting development for Arianne and the advancement of its Lac à Paul project,” Brian Ostroff, CEO of Arianne, said in the announcement. “Where China used to be self-sufficient in phosphate, many industry analysts now see the country heading for a deficit in phosphate rock concentrate, joining the likes of India, another country of over 1 billion people.”
Phosphate is a crucial crop nutrient because it ensures crop yield, making it ever important to the global agricultural sector, especially as climate changes leave weather patterns precarious.
“Arianne believes that concluding definitive financing agreements would be mutually beneficial; it would allow Arianne the financing necessary to develop its mine and allow China, through SINOCONST, an opportunity to access high-quality phosphate concentrate,” added Ostroff.
The phosphate company estimates that once Lac à Paul is in full operation output of phosphate concentrate will reach 3 million tonnes per year with a 26 year life of mine.
Shares of Arianne were up 13.41 percent on Tuesday, trading at C$0.46.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.