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Avenira values Baobab phosphate expansion project at US$212M

Avenira Ltd. said March 18 that a feasibility study for the expansion of its 80%-owned Baobab phosphate project in Senegal projected an unlevered posttax net present value, discounted at 8%, of US$212 million and a 25.5% internal rate of return.

Payback period is pegged at 3.3 years from first production, or 5.3 years from the start of detailed engineering. The expansion will increase concentrate product capacity to 1 million tonnes per anum.

The study for the open pit strip mining operation, with a processing plant rated for a 2.9 million tonnes per annum throughput, was based on a freight on board phosphate rock concentrate price ranging from US$138 per tonne to US$164 per tonne.

An indicated resource of 42.1 million tonnes at 19.4% phosphorous pentoxide, or P2O5, supports an initial 13.4-year mine life, the company said. The Australian explorer also declared a maiden probable ore reserve of 7.45 Mt contained in 39.31 Mt grading 18.9% P2O5.

Preproduction capital expenditure is projected at US$183.1 million, with US$24.7 million pegged for contingency. A further US$61.2 million was earmarked for postproduction capital, which includes sustaining mining and processing capital, additional mine development costs, relocation and rehabilitation costs.

Baobab's operating cost, meanwhile, was assessed at US$56.3 per tonne of phosphate rock concentrate.

Meanwhile, Avenira secured about A$1.3 million in convertible bridge loans, maturing in 12 months, from major shareholders Agrifos Partners LLC, Tablo Corp. and Agrifields DMCC in preparation for fundraising discussions with potential financing partners, according to a separate same day release.

The explorer aims to secure approximately A$11 million to A$14 million in order to complete a value engineering study, which is pegged to start this month. A bankable feasibility study, which will begin in the June quarter and subsequently completed by the December quarter, will be used towards reaching a final investment decision by the first half of 2020.