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Great Quest Metals Ltd.: PEA for Tilemsi Phosphate Indicates US$ 649m NPV at 10% Discount Rate
Published : December 18, 2012
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Keywords :   Angola | Crisis | Debt | France | Gold | Growth | Israel | Libor | Mali | Market | Peru | Phosphate |

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 18, 2012) - Great Quest Metals Ltd. (News - Market indicators)(FRANKFURT:GQM) ("Great Quest" or the "Company") announces the results of an initial NI 43-101 compliant Preliminary Economic Assessment ("PEA" or the "Report"), the first step in the development of its Tilemsi Phosphate Project, located in Mali, West Africa. The Report was prepared by Gaya Resources Development Ltd and will be available on SEDAR within 45 days.

Tilemsi Project Background

The PEA is a scoping-level study on the development of the Tilemsi phosphate resource and is based on an initial Inferred Mineral Resource of 50 million tonnes ("Mt"), grading at 24.3% P2O5, over a surface area of 25.62 km², as reported on October 23, 2012. Given historical results, remote sensing work and the company's total claim area (1,206 km²), there is evidence Tilemsi offers significant upside potential that can be determined by further exploration.

PEA Development Description

The development plans of the Company encompass the production of two granulated phosphate products: a high grade (35% P2O5) for mixture into standard NPK blends, and a medium grade (27% P2O5) for simple direct application. Initial production is assumed to begin in 2016, with staged production ramp-up from 200,000 tonnes to 1 million tonnes, based on conservative expectations for market uptake. The Company targets landlocked markets in West Africa for product delivery, displacing high cost imported fertilizers, and servicing emerging commercial farming projects in the region.

PEA Highlights

The proposed project, mine and processing facility, would produce an annual average of 700,000 tonnes of P2O5 concentrate over 20 years, at a Life of Mine ("LOM") strip ratio of 6.8 to 1 (overburden to process feed). This would generate an NPV of US$ 649 million, at a discount rate of 10%, and a project IRR of 34%. The PEA assumes the plant will be built to a 500,000 tonnes per year capacity at start-up to take advantage of equipment sizing benefits, but will slowly build to full capacity, assuming modest market penetration initially. Pricing used in the study incorporates a 20% discount to equivalent products currently available in the region. Given these pragmatic assumptions the project generates a very respectable rate of return. It should be noted that continued geological work indicates that drilling techniques in the preparation of the resource estimate may have underestimated the resource grade. Any increase in the resource grade will further enhance the profitability of the project.

Table 1: PEA Highlights

Project Parameters Value
Life of Mine ("LOM") based on the current Inferred Mineral Resource estimate 20 years
Maximum Rock Mined (at full capacity) 1 million tonnes per annum
Pre-Operational Cost US$ 13 million
Initial Capital Cost US$ 143 million
OPEX Phosphate Rock (powder average ex plant) @35% P2O5 US$ 59 per tonne
OPEX Hyper Phosphate (granulated avg. ex plant) @35% P2O5 US$ 95 per tonne
Fertilizer Products Supplied at Full Capacity 1.18 million tonnes per annum
Sales Mix: NPK / Direct Application 78% / 22%

Table 2: Summary of the Project Economics

Project Economics Value
Project Net Present Value ("NPV") US$ 649 million
Discount Rate 10%
Project Internal Rate of Return ("IRR") 34%
Equity Holder IRR (40% equity / 60% debt) 42%
Payback Period 4 years

Table 3: PEA Assumptions

Assumptions Value
Product Discount Rate against Cost of Moroccan Phosphate in Bamako, Mali 20%
Average Transport Cost Ratio US$ 0.082 per tonne per kilometre
Delivered Price of Diesel for Energy Production US$ 1.10 per litre
Equity to Government on Mining 20%
Royalties on Mine Production 3%
Contingency in Initial Capital Cost (12%) US$ 14 million
Political Risk Insurance Premium (12%) (incl. in CAPEX) US$ 11 million
Interest Rate (LIBOR + Premium) 7.8% per annum

Table 4: NPV Sensitivity to Discount Rate

Discount Rate NPV
6% US$ 1,123 million
8% US$ 851 million
12% US$ 497 million

CEO Comments

Commenting on the Technical Report, Great Quest's President and CEO, Joel Jeangrand, said, "We are encouraged by the positive results of the PEA. Given the results of the study, we are confident that this project can generate robust economic and social returns. We have put together a full business strategy quantifying costs and risks for transportation, market penetration and product attributes. Developing this high quality resource to the benefit of the region could revolutionize West African agriculture and help stimulate growth of globally competitive commercial agriculture in the region."

The independent PEA was written and compiled by Gaya Resources Development Ltd (Israel), a full-spectrum engineering management company, specialising in fertilizer projects. The PEA includes sections provided by various international consulting firms such as Coffey Mining (South Africa) for the mining, GBM Engineering (UK) for the beneficiation process, CFI Holding (France) for the granulation/NPK study, Bolloré Africa Logistics (France) for the transportation analysis, Balu & Associates (USA) for the West Africa fertilizer market research and Mintek (South Africa) for the metallurgical testing.

Capital and operating cost estimates were prepared in mixed currencies and converted to US dollars (USD). All revenues were estimated in various currencies and converted to USD.

Great Quest 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.

Great Quest will file a NI 43-101 compliant Technical Report, which will include the results of the PEA on SEDAR within 45 days, and investors are urged to review the Report in its entirety.

Upcoming Milestones

The next steps for the project will be to increase the resource confidence and estimates. The Company intends to complete the Pre-Feasibility Study, including an extensive market study by early 2013 and a Feasibility Study during the second half of 2013. Great Quest intends to take the following actions in order to advance the project and create value for its shareholders:

  • Resume the drilling program, with a view to expand the resource and upgrade the existing Inferred Resources into the measured or indicated category, as soon as it is safe for its personnel to return to site,
  • Advance product development with pre-production and agronomical tests with existing and new partnerships,
  • Develop distribution channels, ahead of the future production ramp up,
  • Develop partnerships to secure competitive sources of sulphur, nitrogen and potash from the region, in order to produce in-house high quality NPK fertilizers,
  • Secure the required capital to finance the Company's growth, from traditional sources as well as from development agencies whose mandate aligns with the goals of the Tilemsi project.

Qualified Person

The technical information in this press release has been reviewed and approved by Jed Diner, M.Sc., P.Geol., a Qualified Person as defined by National Instrument 43-101. Mr. Diner completed his M.Sc. in Applied Earth Science at Stanford University in 1983 and works internationally on mineral exploration and resource development projects. He has consulted on other phosphate projects in Uzbekistan, Peru and Angola.

Mali Situation

While the current geo-political situation in Mali continues to be a concern, Great Quest remains committed to its high grade phosphate project. "All of our licenses are in good standing and we plan to go back to site as soon as the situation permits. In the meantime, we continue to closely monitor the developments, move the project forward and look forward to an early and peaceful resolution to the crisis," says Joel Jeangrand, President and CEO of the Company.

About Great Quest

Great Quest Metals Ltd. is a Canadian mineral exploration company with assets in Mali, West Africa. The Company is focused on developing the Tilemsi Phosphate Project, encompassing 1,206 km² in eastern Mali. The Company also holds several gold concessions in the productive Birimian gold belt, in western Mali. Great Quest is listed on the TSX Venture Exchange under the symbol GQ, and the Frankfurt Stock Exchange under the symbol GQM.


Joel Jeangrand, President, CEO & Director

The statements that are not historical facts and are forward-looking statements involving known and unknown risks and uncertainties could cause actual results to vary materially from the targeted results. We seek safe harbor.

Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

Great Quest Metals Ltd.
Candice Font
Investor Relations
604-689-2882 or Toll Free: 1-877-325-3838
604-684-5854 (FAX)
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Great Quest Metals Ltd

ISIN : CA3909121038
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Great Quest Metals is a gold and copper development stage company based in Canada.

Great Quest Metals holds various exploration projects in Mali.

Its main exploration properties are KENIETI, BOURDALA, KENIEBA, TIN HINA and SANOULOU in Mali and TASEKO in Canada.

Great Quest Metals is listed in Canada, in Germany and in United States of America. Its market capitalisation is CA$ 8.6 millions as of today (US$ 6.6 millions, € 5.9 millions).

Its stock quote reached its lowest recent point on December 12, 2008 at CA$ 0.01, and its highest recent level on May 27, 2011 at CA$ 4.88.

Great Quest Metals has 53 717 267 shares outstanding.

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Annual reports of Great Quest Metals Ltd
2007 Annual Report
Financings of Great Quest Metals Ltd
5/19/2015Closes Non-Brokered Private Placement of $688,250
6/14/2013Closes Non-Brokered Private Placement of C$908,000
5/24/2013Announces Private Placement
9/14/2012Agrees to a Private Placement of $1=2C152=2C850
4/7/2009Announces a $200,000 Loan and a $120,000 Private Placement
1/1/2009Announces $120,000 Private Placement
7/9/2008AGM and Private Placement Closes
Option Grants of Great Quest Metals Ltd
11/25/2009Grant of Stock Options
12/30/2008Grant of New Stock Options, Cancellation and Re-Issuance of ...
Nominations of Great Quest Metals Ltd
5/13/2013Announces AGM Results-Appoints Jed Richardson CEO
10/4/2010Appoints Interim President and Focus on Mali Phosphate Proje...
7/23/2010Appointment of New Director Signals Focus on Malian Phosphat...
4/8/2010Appoints New Director and Grants Options
Project news of Great Quest Metals Ltd
2/3/2015Files Updated PEA for Multi-Phased Phosphate Production
3/25/2011(Sanoulou)Mobilizes for Gold Drilling
2/21/2011Remote Sensing Identifies Phosphate Targets
8/26/2010(Taseko)Options its Taseko Project to Granite Creek Gold Ltd.
4/21/2010(Kenieba)Defines Gold Soil Anomaly on Dabia Ouest Concession
6/5/2009(Tilemsi Phsophate)Update on Tilemsi Phosphate Project
4/21/2009(Kenieba-baroya)Letter of Intent for the Acquisition of a 75% Interest in it...
12/24/2008(Tilemsi Phsophate)Granted Extension to January 31, 2009 on the Exercise of Til...
7/2/2008(Taseko)2008 Drill Program on the Taseko Property to Start by July 7...
6/4/2008(Taseko)Start Drill Program on Taseko Property in early July
Corporate news of Great Quest Metals Ltd
7/11/2016Commercial Farmers Plant First Crops With GQ Fertilizers
7/6/2016Work With Northern Community Leaders Furthers Project Develo...
6/6/2016Great Quest Announces AGM Results and Grants Share Options
4/18/2016Great Quest Receives Third and Final Tranche of Convertible ...
3/16/2016Great Quest Receives Second Tranche of Convertible Loan
2/16/2016$3 Million Capital Infusion via Social Impact Driven Convert...
2/9/2016Great Quest Increases Cost Saving and Issues Shares to Pay D...
11/4/2015Tests Conclude the GQ Blends Are a Recommended Replacement f...
10/1/2015Nevada Sunrise Appoints David Shaw to Advisory Board
9/17/2015Preparation Laboratory: On Time, On Budget
9/17/2015Great Quest Closes Non-Brokered Private Placement of $204,60...
9/9/2015Great Quest Fertilizer Ltd. Earnings Q2, 2015
9/8/2015Great Quest Announces $200,000 Private Placement
6/22/2015Great Quest Announces AGM Results
6/4/2015Great Quest Receives Environmental Permit
5/19/2015Great Quest Closes Non-Brokered Private Placement of $688,25...
5/1/2015Great Quest Announces $500,000 Private Placement
4/30/2015Great Quest Files Amended Technical Report
3/2/2015Great Quest Clarifies Its Technical Disclosure, and Northern...
2/3/2015Great Quest Files Updated PEA for Multi-Phased Phosphate Pro...
9/22/2014IIROC Trading Resumption - GQ
9/19/2014IIROC Trading Halt - GQ
7/23/2014Great Quest Announces a New Partnership With the Aga Khan De...
3/26/2014Tilemsi Bulk Samples Average Above 24% Drilled Inferred Reso...
9/30/2013.: Sanoukou Gold Program Reports Chip Samples of Up to 24.9 ...
9/18/2013to Resume Exploration Program at the Tilemsi Phosphate Proje...
6/20/2013Congratulates Mali on the 'Historic' Kidal Agreement
4/29/2013Corporate Update-Pursuing Routes to Restoring Value
3/18/2013Adopts Advance Notice Policy for Future Shareholder Meetings
2/27/2013Granted Permit for Tarkint Est Concession, Tilemsi Phosphate...
2/7/2013Files PEA and Confirms Robust Economic Results on Tilemsi Ph...
1/22/2013Granted Permit for Aderfoul Concession, Tilemsi Phosphate Pr...
1/16/2013Comments on Market Activity and Provides Corporate Update
12/18/2012.: PEA for Tilemsi Phosphate Indicates US$ 649m NPV at 10% D...
10/10/2012Grants Stock Options
9/17/2012Completes $1=2C152=2C850 Private Placement and Appoints Inve...
7/9/2012=2D News Alert
3/7/2012- news release
9/26/2011GQ - NEWS RELEASE SEPTEMBER 26, 2011
5/11/2011.: Tilemsi Phosphate Drilling Commences
3/8/2011Initiates Phosphate Studies
2/22/2011Receives Escrowed Shares
2/18/2011.: Arrete de la Miniere Permits Received for the Tilemsi Pho...
2/16/2011Retransmission-Great Quest Metals Ltd.: Remote Sensing Ident...
12/9/2010Retains Javelin Partners as Corporate Development Advisors
7/29/2010Sanoukou Gold Concession Advanced to Drill-Ready Status
6/23/2010Expands Phosphate Concession Areas in Mali to 737 sq km
4/13/2010Acquires the Sanoukou Gold Concession in Western Mali
12/4/2008Amends Warrant Terms
11/3/2008is Granted the Right to Acquire a Majority Interest in the T...
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