PROJECT UPDATE: Arianne Phosphate Bankable Feasibility Study Points to World-class Potential

Canadian phosphate junior Arianne Phosphate (TSXV:DAN) took a big step in its development this week with the release of its bankable feasibility study (BFS). The BFS points to a world-class, high-quality project with a long life and very robust economics.

Unlike the company’s 2012 prefeasibility study, which points at a $1-billion NPV and a 17-year mine life, factoring in both the Paul zone and Manouane deposit, the BFS shows a $1.9-billion NPV with an 8-percent discount rate and a 25.75-year mine life, only factoring the Paul zone into the equation. The Paul zone alone holds a measured and indicated mineral resource of 590 million tonnes with an average grade of 7.1-percent P2O5 at a 4-percent cut-off grade. Manouane, which was not included in this study, holds a mineral resource of 164 million tonnes and would add roughly an additional eight years to the project’s mine life.

The study also shows an internal rate of return of 20.7 percent, with capital payback expected in 4.4 years (before taxes and duties). Arianne is looking at an intitial capital cost of US$1.2 billion, including a $982.5-million (with 73.9 million in contingency) cost for the mine and $232.2 dedicated to transportation, which will deliver the product to the Port of Saguenay.

As far as the company’s all-in cost on the ship is concerned, it is one of the most promising results from the study. Arianne has managed to come back with an all-in cost onboard the ship of US$93.7 per tonne for the life of mine. That gives the company an operating margin of 56 percent, as well as an average selling price of $213 per tonne. Arianne has 75.7 million tonnes of saleable concentrate at 38.6-percent P2O5 in proven and probable reserves, which it will be able to ship 365 days a year for a competitive price of $93.7 per tonne. If compared to those who have to pay closer to $150 per tonne, it’s quite a bargain.

Arianne Phosphate could very well be a case of the right time, the right place and the right project. With the results of the BFS now on the table for all to see, the company is poised to take advantage of a market in great need of phosphate.

Commenting on the study was Brian Kenny, CEO of Arianne, who said, “[t]he FS study conclusively demonstrates an excellent long life project with high margins and low operating costs that will produce a low-contaminant, high-quality phosphate concentrate. Additionally, our optimised transport solution provides a low all-in cost on the ship in the deep-water Port of Saguenay for export 365 days per year to the global market making the product commercially competitive with its peers. Today’s announcement is a significant step forward in the development of our Lac-a-Paul Project, the world’s largest greenfield phosphate rock project.”

The company is currently waiting on approvals for its environmental impact assessment, which was submitted in late June. From here, Arianne will be focusing on the next steps in the development of the Lac a Paul project, including sourcing offtakers and strategic partners as well as working on further exploration at Lac a Paul.

Arianne is current trading at $1.38, a climb of 10.4 percent so far on the day.

Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned in this article. 

Editorial Disclosure: Arianne Phosphate is a client of the Investing News Network. This article is not paid-for content.