FCV-V on move to acquire 70% of Stonegate's Mantaro
Focus Ventures Ltd. and Stonegate Agricom Ltd. have signed a letter of intent pursuant to which Focus has the right to acquire, subject to successful due diligence, a 70-per-cent interest in the Mantaro phosphate deposit, located 250 kilometres east of Lima in the district of Junin, central Peru. Phosphate is a key nutrient used in the manufacture of fertilizers and is an integral part of the food supply chain.
Mantaro, one of only a small number of phosphate deposits known in the Andes, is also one of the world's largest undeveloped phosphate deposits. Phosphate mineralization is hosted in the Aramachay formation, a moderately dipping sequence of Jurassic-aged marine sedimentary unit that has been folded and faulted, resulting in three parallel mineralized zones termed the West, East and Far East zones. Each zone has been mapped on surface over a strike length of over 20 kilometres with a total of over 60 kilometres of phosphate-bearing units defined by surface mapping and trenching, averaging approximately 25 metres in width.
Drilling and trenching in the West zone during 2009 by Stonegate resulted in the definition of measured, indicated and inferred mineral resources, described in the associated table. To the best of Focus's and Stonegate's knowledge, information and belief, there is no new material scientific or technical information that would make the disclosure of these mineral resource estimates inaccurate or misleading
MINERAL RESOURCE ESTIMATES
Resource category (West zone) Million tonnes P2O5 %
Measured 5.5 10.8
Indicated 33.9 9.9
Measured plus indicated 39.5 10.0
Inferred 376.3 9.0
Refer to National Instrument 43-101 technical report titled "Technical report on the Mantaro phosphate deposit, Junin district, Peru," Feb. 21, 2010, filed by Stonegate. The Mantaro technical report was prepared by Donald H. Hains, PGeo, and Dr. Michelle Stone, PhD, PGeo, on behalf of Stonegate. Measured and indicated mineral resources are reported using a cut-off of 4 per cent P2O5. Inferred mineral resources are reported with no cut-off as a grade of 9 per cent is assumed.
Similar mineralized widths and strike lengths are observed on surface in the East and Far East zones and considerable potential exists to expand the resource base by further trenching and drilling. The conceptual mineral deposits in the East and Far East zones were estimated in Stonegate's 2010 technical report as follows:
- East zone -- 425 million to 435 million tonnes at 9 to 9.5 per cent P205;
- Far East zone -- 280 million to 290 million tonnes at 9 to 9.5 per cent P205.
These potential quantities and grades are conceptual in nature and there has been insufficient exploration to define a mineral resource in the East and Far East zones and it is uncertain if further exploration will result in these targets being delineated as a mineral resource.
"We are pleased to have Focus Ventures as a partner on the Mantaro phosphate project," said Mark Ashcroft, president and chief executive officer of Stonegate. "We believe that Mantaro is a world-class deposit. This transaction will permit further work on the Mantaro deposit to proceed while Stonegate concentrates on its Paris Hills phosphate project in Idaho."
David Cass, president of Focus, commented: "South America is dependent on the import of fertilizers for its growing agricultural industry. Subject to successful due diligence, the acquisition of a majority interest in the Mantaro deposit will be a catalyst in the development of our phosphate assets and will put Focus firmly on the map as perhaps the only junior exploration company with a diverse portfolio of phosphate assets in Andean South America. The exploration and development of phosphate rock quarries to provide the source material for fertilizers and nutrient products, is a unique opportunity for Focus. Management of Focus intends to establish sustainable and ethical operations that would directly contribute to the domestic and international agronomic economies of Latin America."
Agreement
Stonegate has granted Focus an exclusive right and option to acquire a 70-per-cent interest in the Mantaro property by investing a total of $25-million (U.S.) over four years in exploration, including permitting and drilling, and including the completion of a feasibility study and an updated NI 43-101 measured and indicated resource calculation.
Focus will have 90 days from the signing of the letter of intent to conduct due diligence and raise a minimum of $2-million to spend on the property. If Focus decides to proceed, it will implement a community relations and stakeholder engagement program during the first six to 12 months of the option to obtain the necessary land access agreements and drill permits required to commence exploration and drilling.
During the first year Focus will decide whether: the option will form a key project in a newly created phosphate company (with the potential addition of Focus's other phosphate assets in Peru and Colombia, including the 18,000-hectare Machay phosphate property located approximately 30 kilometres to the north of Mantaro), or the option will be held 100 per cent by Focus. As applicable, Stonegate will receive either a right to a board seat on Newco and 5.0 per cent of the postfinancing issued common shares of Newco, or three million common shares of Focus.
Finders' fees will be payable if Focus proceeds with this transaction.
Background
The 26,000-hectare Mantaro property is located in the Peruvian altiplano in the southern end of the historic Central Peru mining district at an elevation of 3,600 metres to 4,000 metres altitude above sea level. The potential for a significant phosphate resource was recognized in the 1960s by Cerro de Pasco Mining Corp. Mineralization is hosted within Aramachay formation, a Jurassic-aged sandstone-shale unit that extends for hundreds of kilometres along the length of the belt. The Mantaro property is strategically located adjacent to asphalt highways, rail and electricity grids.
Exploration by Stonegate in 2009 included mapping, trenching and drilling of 3,414 metres in 23 holes. The work tested mainly the West zone and resulted in an NI 43-101 resource calculation. Six historic trenches with high-grade phosphate intersections occur in the same area and to the north along trend and indicate that the mineralization is continuous over very long distances. In 2011 a further 29 holes were drilled at closer drill spacings for a total of 6,386 metres; however, no updated resource estimation was performed.
Mineralogy, processing and beneficiation studies in 2010 concluded that both oxide and unoxidized phosphatic ores at Mantaro could be successfully treated by conventional grinding and flotation techniques to produce a marketable phosphate concentrate of similar quality to that of Moroccan phosrock (about 30 per cent P205). Morocco controls a one-third of the world's seaborne-traded phosphate rock sold on international markets. Similar results were also obtained in previous bench work studies undertaken in 2006 and 2001.
Phosphates
Focus is acquiring phosphate projects in Latin America through its subsidiary, Agrifos. Projects acquired to date include the Machay and Quebranta phosphate properties in Peru, and in Colombia, Focus has optioned the Maria Luisa phosphate project and signed a strategic agreement with a local landholder.
Approximately 75 per cent of global phosphate resources are from marine sedimentary phosphate deposits which are typically amenable to beneficiation to produce marketable phosphate rock concentrate or chemical-grade fertilizers. Given the current global food crisis owing to the world's growing population and economic development, crop yields need to increase and demand for worldwide fertilizers is expected to grow, particularly in new markets such as Brazil, India and Indonesia.
Qualified persons
The scientific and technical information in this release was prepared for Focus under the supervision of David Cass, Focus's president, who is a member of the Association of Professional Engineers and Geoscientists of British Columbia, and a qualified person in accordance with NI 43-101. Mr. Cass reviewed and approved this release.
The Mantaro technical disclosure in this news release has been reviewed and approved for Stonegate by David Brownrigg, PEng, general manager, Mantaro phosphate project, who is a qualified person as defined in National Instrument 43-101. Mr. Brownrigg has reviewed and approved this release.
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