Gq corporate presentation (25 march2014)

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Click to edit Master title style GQ FERTILIZER TSX-V FOR AFRICA BUILDING FOR GROWTH WHERE THE WORLD IS GROWING

Transcript of Gq corporate presentation (25 march2014)

Page 1: Gq corporate presentation (25 march2014)

Click to edit Master title style

GQ FERTILIZER

TSX-VFOR

AFRICABUILDING FOR GROWTH WHERE THE WORLD IS GROWING

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Disclaimer

This presentation contains forward-looking statements or forward-looking information within the meaning of applicable securities legislation (hereinafter collectively referred to as "forward-looking statements") concerning the Company's plans for its properties, projects, operations, subsidiaries and other matters. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management regarding operations of the Company which are subject to a variety of business and market risks, including political and regulatory risks associated with mining and exploration in Mali.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.

These forward-looking statements are based on certain assumptions which the Company believes are reasonable, however, forward-looking statements are subject to a variety of business and political risks and uncertainties. Some of the important risks and uncertainties that could affect forward-looking statements are also described in the Company's continuous disclosure filings made with Canadian securities regulatory authorities, which are available at the SEDAR website and on the Company’s website. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, they may adversely affect the Company’s business and prospects and actual results may vary materially from those described in forward-looking statements. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required by applicable laws. Investors are therefore cautioned against placing undue reliance on forward-looking statements.

The Company cautions that the PEA is preliminary in nature, as it includes “Inferred Mineral Resources” which are considered too speculative geologically, to have the economic considerations applied to them that would enable them to be categorized as "Mineral Reserves". There is no certainty that the PEA will be realized, as Mineral Resources do not demonstrate economic viability.

The technical information in this presentation has been reviewed by Jed Diner, MSc. P.Geol., a qualified person as defined by National Instrument 43-101.

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Stock Information

As of March 6, 2014

STOCK INFORMATION TSX-V: GQ

SHARES OUTSTANDING 48,817,941

-OPTIONS 3,815,000

-WARRANTS 2,114,813

FULLY DILUTED 54,747,754

52-WEEK LOW/HIGH $0.45/$2.54

3-MONTH AVG. VOL. 77,780

MARKET CAP. $91.8M

Le Main de Fatima – Northern Mali

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Our Goal

• Building a Pan African Fertilizer Manufacturer– Developing agricultural mineral projects

for local production of field ready fertilizers

– For regional delivery

• Targeting– Phosphate Direct Application and SSP,

At Surface Potash Brines, Sulfur and Lime Projects

– Establishing centers in areas of rapid agricultural growth West, East and Southern Africa

IER Sotuba Test Plot (Cotton)

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Our Strategy

Follow strict development criteria

• Must reach field ready product with compelling investment returns on capital

expenditure of less than $200MM

• Existing market sufficient to absorb planned production within cost effective

transport radius– Does not include growth potential

– Does not include out of Africa export potential

Africa’s history as exclusively an exporter of resources means many projects that fit

our criteria have been ignored for logistical reasons

This strategy also insulates our proposed business from the ups and downs of the

world fertilizer market, hinging its success to the revolution in African Agriculture

already underway and growth in global food demand

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Source: EBG Capital

60% OF THE WORLD’S ARABLE LAND IS IN AFRICA

According to Zürich-based advisory firm, EBG Capital, sub-Saharan Africa offers 590m hectares of available cropland, while the rest of the world offers just 380m hectares.• Only 23-30% of arable

land in W. Africa is currently cultivated

• Low fertilizer usage (9kg/ha vs. 101kg/ha in the rest of the world)

Why Africa

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7Source: GRAIN, AGRA Alliance, McKinsey

Agribusiness project sizes – January 2012 (investment underway or completed in ‘000s USD)

“Africa has the potential to create a trillion-dollar food market” (World Bank)

• 62% of all large-scale land acquisitions since 2000 have occurred in Africa.

• Agriculture in Africa will grow from its current $280 billion a year to $500 billion in 2020, and $880 billion by 2030.

• Nigeria’s agricultural sector could grow by a colossal 160% by 2030, rising from $99 billion in 2010 to $256 billion two decades later.

AFRICA IS ATTRACTING LARGE AGRIBUSINESS INVESTMENTS

Why Africa

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Why Fertilizer

• Fertilizer offers a unique conjuncture of business opportunities– Agriculture’s predictable

demand and strengthening growth profile

– Mining’s expected rates of return

• An ideal way to profit from two widely expected market trends– Increasing global food demand– African development

Irrigation Canal – Niono, Mali

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• World population projection 10 billion people by 2100

• Africa’s population is expected to double to 2 billion by 2050.

• A more affluent world will consume more food

Grain required to produce 1kg of meat (Sources: Sprott)

World population growth Arable land per capita

• The amount of arable land per capita is shrinking

World population projection

Why Fertilizer in Africa

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OUR GROWTH

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Botswana Potash

• Exclusive right to develop potash

present at Sua Pan operation of

Botswana Ash Corporation

• Historical work published by the World

Bank suggests that the Sua Pan salar

was capable of producing 163,000 tons

per year, including potential to produce

21,000 tpy of K2SO4

• KCl concentrations in bitterns are

reported to exceed 10.9 grams per litre

(g/L), which is more than a 100%

improvement over the native brine

concentration of 4.3 g/L as measured

by Botswana Ash. This compares

favorably with potash concentration in

the brine from the Dead Sea of 6.2 g/L,

Sua Pan Potash Brine Project

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Brownfield Brine

• Existing operation produces Soda

Ash (NaCO3) and Salt (NaCl) from

the natural brine

• Brine projects have some of the

lowest operating and capital costs in

the world

• Potential plant would function as

additional circuit on existing

operation

• Leverages existing infrastructure

reducing potential capital

expenditure

• Advancing to definitive agreement

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OUR OPPORTUNITY

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Tilemsi Phosphate

• 50 million tonnes (Mt) inferred

resource on 26 km² drilled

surface

• High natural grade 24.3%

P₂O₅

• Significant upside potential,

project covers 1,206 km² (3

licenses)

• Strategic source of reactive &

soluble phosphate for direct

application, low cost fertilizer

as an NPK component

Segou PilotPlant

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A Growing Resource

TILEMSI PHOSPHATE PROJECT

INITIAL INFERRED RESOURCE 50 million tonnes

AVERAGE PHOSPHATE GRADE 24.3% P₂O₅

CONCENTRATE GRADE 25-38% P₂O₅

CONCENTRATE QUALITY Low levels of contaminants(ie. cadmium)

BENEFICIATION Easy separation and treatment

DEPOSIT DEPTH Near surface Open pittable resource

With a high natural P₂O₅ grade and significant exploration upside, the Tilemsi deposit is developing into

a world-class phosphate resource.

Tilemsi Valley

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Phosphate Rock Characterisation

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Test Results Impact

BENEFICIATIONScreening at 850 microns to

achieve P2O5 grades of 36.8%

Via simple screening process, the product can easily beneficiated to up to 36.8% P₂O₅

SOLUBILITY71.1% soluble P2O5

in citric acid62.5% soluble P2O5

in formic acid

The rock solubility shows that it is able to compete with other chemical fertilizers, as fertilizers’ effectiveness is based on immediate

availability of the nutrients

GRANULATION Successfully produced granules sized 1-4mm

The product can easily be granulated, allowing the product to withstand transportation and be used as a component of NPK

blended fertilizer

Characterization tests indicate:

Tilemsi natural phosphate (TNP) meets or exceeds market specifications for beneficiation, solubility and granulation.

TNP can be used as either as very low cost phosphate component for blended NPK fertilizer or as a direct application fertilizer.

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Exploration Program

5 km•Phases 1 + 2 completed•Oct 2013: GQ exploration

program to resume

Map of Tilemsi Phosphate Project showing our concessions on remote sensing and drilling program (completed and planned)

589 sq.km

417 sq.km 200 sq.km

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PEA Highlights (1/2)Project Economics Value

Project Net Present Value US$635 million

Discount Rate 10%

Project Internal Rate of Return 33%

Equity Holder IRR (40% Equity/60% Debt) 42%

Payback Period 3.7 Years

CEO Jed Richardson discussing life in Gao with Tuareg merchant

Project has powerful potential social

impacts alongside obvious economic

benefits

• Directly addresses soil poverty

issues in Sahel soils

– Cotton production has fallen

50%/ha planted in last 10

years

• Increased crop yields reduce food

security concerns in West Africa

• Provides new export product for

gold dependent Malian economy

• Brings industrial development to

Mali’s troubled north

– Necessary step in ensuring a

lasting peace in the region

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PEA Highlights (2/2)

Project Parameters Value

Life of Mine based on the Inferred Mineral Resource estimate 20 years

Maximum Rock Mined (at full capacity) 1 M tonnes/year

Pre-Operational Cost US$13 M

Initial Capital Cost US$ 143 M

OPEX Phosphate Rock @36% P₂O₅(powder average ex plant) US$ 59 per tonne

OPEX Hyper Phosphate @36% P₂O₅(granulated avg ex plant) US$ 95 per tonne

Fertilizer Products Supplied at Full Capacity 1.18 M tonnes/year

Sales Mix: NPK / Direct Application 78% / 22%

Assumptions Value

Product Price Discount to imported phosphate cost in Malii 20%

Average transport cost ratio per tonne per km US$ 0.082

Delivered Price of Diesel for Energy Production US$1.10/litre

Equity to Government on Mining 20%

Royalties on Mine Production 3%

Contingency in Initial Capital Cost (12%) US$ 14 M

Political Risk Insurance Premium (@ 12%) incl. in CAPEX US$ 11 M

Interest Rate per annum (LIBOR + Premium) 7.8%

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OUR PLAN

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Agronomy

• Great Quest has developed a low cost phosphate fertilizer alternative for the West African Market

• We have completed initial field agronomic testing– Conducted with IER (Institute of Rural

Economics), administered by Dr. Lamine Traore– 11 Test plots in major agricultural zones of Mali– Cotton, rice, corn, millet, sorghum, ground nut,

cow pea– Currently running first season of multi-stage test

program– 1st Quantitative results December 2013

• Replicate trials in neighbouring West African marketsGranulated Tilemsi Phosphate – 35% high grade,

27% medium grade

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Agronomy

• Extraordinary Results

Corn from the Sikasso Region

Popular crop in a significant growing region, powerful yield response.

Phosphate type Quantity(Kg/ha)

N(%)

P(%)

K(%)

Yield(kg/ha)

Diammonium Chemical

100 15 15 15 2,156

GQ 35% Granulated 100 11 18 2 3,858Tilemsi Powder 300 - 24 - 2,597

Phosphate type Quantity(Kg/ha)

N(%)

P(%)

K(%)

Yield(kg/ha)

Diammonium Chemical

100 15 15 15 1,751

GQ 35% Granulated 100 11 18 2 2,192Tilemsi Powder 300 - 24 - 1,728

Phosphate type Quantity(Kg/ha)

N(%)

P(%)

K(%)

Yield(kg/ha)

Diammonium Chemical

65 18 46 - 904

GQ 27% Granule + M4 100 - 27 - 1013Tilemsi Powder 300 - 24 - 794

Non irrigated Rice from Bamako RegionChallenging crop given variable water availability, benefiting from whole nutrient nature of GQ product

Peanuts from Kita RegionMedium grade product was tested with solubility aids, an ultra low cost option for subsistence crops

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Small Scale Production

• Markala Production Facility– 40,000 tonnes of product annually

– Proposed commissioning late 2014

– Expected cost $15 million

• Market Building Step– For manufacture and sale of product for Malian

market

– Will also provide material for commercial testing by

future large consumers

– Will be used to establish product pricing and off

take agreements for larger planned facility

• Will continue to be used to test and develop

new products once large facility is builtBirkenmayer Granulator – Johannesburg, South Africa

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Full Commercial Phosphate Facility

• Located in Gao / Bourem

• Construction 2016

• Initial capital expenditure $143 million

• Construction employment– Potentially 300 direct and indirect new jobs

during plant construction

• Operation employment– 200+ Full time jobs in the plant, plus drivers,

miners and support staff

– Mine life 50+ years with potential to grow with

more exploration

• 1 million tonnes of annual production

• Consumption in Mali and export through

out West AfricaTrucks in Gao, moving good to and from Bamako, Algieria and Niger

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Our People

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International Board of Directors

John A. Clarke – Chairman Former CEO of Nevsun Resources and

Executive Director of Ashanti Goldfields

Victor Jones – Director 30 years of experience in senior executive and board positions in

public mineral exploration and technology companies

Ehud Levy – Director Phosphate manufacturing industry consultant with a 30-year

career with Bateman Engineering and Rotem

Gordon Peeling – Director Former President of Mining Association of Canada (MAC) with 30

years of mining experience in the public and private sectors

David Shaw – DirectorWorked as Senior Mining Analyst at Yorkton Securities; initiated and developed Resource Research Group at Charlton Securities

Mali Board of Directors

Abdoulaye Pona- DirectorPresident Mali Chamber of Mines, Founding director Mali Mining

House SA

Mama Tapo- DirectorManaging Director Societe Internationale de Services et de

representation. Former Manager Ashanti Goldfields

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Our Team

International Board of Directors

Jed Richardson – President and CEOFormer VP Corporate Development at Verde Potash and Institutional

Equity Research Analyst at Cormark Securities.

Mohammed Bouhsane - COOFormer Project Engineer in the Moroccan mining and metallurgy

industries working for the ONA Group and OCP.

Jayram Hosanee - Chief Financial OfficerFormer CFO at Mineral Hill and Golden Dawn Minerals.

Mr Hosanee holds a CGA.

Thomas Guillot – VP Corp. DevelopmentFormer CFO of NewGen Asset Management investment fund, and Management Consultant, Ministère de l’Enfant et la Famille, Mali.

Marie-France Dikizeyeko – Mali ManagerFormer Senior Exploration Geologist at Randgold Mali, Geological

consultant for Nevsun and Administrative Manager for Iamgold Mali.

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Great Quest Metals LtdTSX-V: GQ

Suite 303, 95 King Street East, Toronto, ON M5C 1G4+1 416 849 9203 [email protected]

WWW.GREATQUEST.COM