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DuSolo Fertilizers on fast track to Brazilian phosphate sales

24th May 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – In pursuing its strategic objective of transitioning from fertiliser explorer to producer, TSX-V-listed Brazil-focused DuSolo Fertilizers is on a fast track to production, expecting the first product to leave its flagship 75%-owned Bomfim project’s mine gate before the year is out.

Located in the heart of the massive agricultural Cerrado area of Brazil, DuSolo president and CEO Eran Friedlander told Mining Weekly Online that there is a critical demand for locally sourced fertilisers – be it potash or phosphates – in the country, highlighting the significant opportunity DuSolo and other development companies such as Verde Potash and MBAC Fertilizer are seizing. 

With its three projects – Bomfim, Ruth and Samba – strategically located in the fast-growing Cerrado, the company believes it is ideally positioned to supply the nutrients the large swathes of arable, yet malnourished lands require.

Coupled to this are the Brazilian government’s incentives to foster a growing local fertiliser industry, in an effort to reduce the country’s dependence on importing phosphates and potash. The potential of Brazil’s shallow fertiliser deposits contrasts with the deep and costly Canadian and Russian fertiliser extraction industries, with the added benefit of significantly reduced transport and handling costs.

GAPING OPPORTUNITY

Representing the company’s first phase of operations, which would vault it into the all-important realm of free cash-flow generation, Friedlander said that DuSolo intends to produce direct application natural fertiliser (DANF) at Bomfim during 2014.

He explained that Bomfim has a remarkable geological likeness to neighbouring MBAC’s Itafόs Arraias single super phosphate (SSP) operation, which lends a great deal of confidence to DuSolo’s technical team and their ability to execute the same strategy of producing DANF in the short term, while continuing to expand the resource through further exploration drilling to justify a second phase of development.

DANF production requires a simple and cost-effective process of crushing high-grade outcrops of phosphorite. “MBAC has recently moved into producing high-volume, higher-priced SSP, with the help of their newly completed processing facility, and had, therefore, stopped manufacturing DANF, which left a gaping opportunity in the local DANF market for DuSolo,” Friedlander said.

It is DuSolo’s ambition to fill the void left in the marketplace by manufacturing the same product through the same process, and catering to the local farmers in close proximity. To this end, the company had recently recruited some of MBAC’s senior management team involved in producing and selling DANF, hoping to leverage off the experience, knowledge and network of contacts these individuals brought with them, which would also help mitigate some of the risks inherent to any mining project.

Vancouver-based DuSolo recently closed a C$3-million private placement that would see it through to first production. As soon as the Bomfim project starts generating cash, the revenues would be injected back into exploring the property in order to prove a larger-tonnage operation for Stage 2 of development, while reducing dilution to shareholders.

Friedlander said the company is looking at acquiring or leasing a plant that has the capacity to produce 100 000 t/y, which the company intends to expand in the future.

The project benefits from local roads, dams, communication, power lines and a local airport under construction serving domestic flights nearby. Most recently, the Brazilian government had approved a new rail line to pass just 100 km to the north of the project area.

The company’s focus on producing DANF first is also the reason why exploration to date has only been focused on some abundant high-grade outcrops found throughout the Bomfim property.

DuSolo in January published an initial resource estimate for the Bomfim project. Using a 3% phosphorus pentoxide (P2O5) cutoff grade, the initial inferred resource for three assessed targets was estimated at 18.2-million tonnes grading 6.32% P2O5, and 462 600 t grading 11.88% P2O5 of measured and indicated resources at the Bomfim Hill-PZE target.

The inferred resource consists of several high-grade outcrops, including 419 500 t grading 10.82% P2O5 at Bomfim Hill-PZE, eight-million tonnes grading 4.59% P2O5 at Amaury and 9.8-million tonnes grading 7.53% P2O5 at Santiago.

LATENT RUTH

Much the same as with the Bomfim project, Friedlander said that the company was also searching for ways to bring the Ruth project on line as soon as possible.

“DuSolo is confident that the Ruth project, especially within the Canabrava block, has the potential to be developed into one of the most important phosphate deposits in Brazil,” he said.

Systematic channel sampling on exposed sub-surface mineralisation suggested that the project also had the potential for a quick route to production. Geologists had found a seven-metre-thick mineralised package along a 30 km strike, outlining a large potential phosphate target.

Within the mineralised package that was discovered at the Canabrava target, the company’s technical team had identified a material that in addition to phosphate, possesses many other micronutrients essential for soil correction and plant growth, which the company believes could be easily be processed and sold as a direct application micronutrient blend.

DuSolo is currently in the second phase of testing the results of this process by applying the micronutrient-based material in a live environment at one of the local agricultural centres.

If the tests prove successful, it could enable another fast track to cash flow for the company, by performing a simple extraction and processing method in preparation for selling a micronutrient-based direct application natural fertiliser to local agricultural centres near to the project.

VALUE-ADDED PRODUCTION

Meanwhile, DuSolo is currently investigating the possibility of producing high-volume, higher-priced and value-added fertiliser products from both the Bomfim and Ruth projects as part of its second-phase development strategy.

While it had not yet made a firm decision on what value-added product it would produce, Friedlander said that among the products it is investigating are thermal phosphate, SSP, phosrock, monoammonium phosphate and diammonium phosphate.

“This two-stage approach makes DuSolo’s production development strategy clear: the company is committed to explore quick routes to cash flow while developing additional fertiliser products that could inevitably cater to an even larger Brazilian fertiliser marketplace, translating to further growth and a fantastic opportunity for its shareholders,” Friedlander said.

DuSolo’s TSX-V-listed stock had appreciated by 35% since the start of the year, and on Friday closed at C$0.20 apiece.

Edited by Creamer Media Reporter

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