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Dear Shareholder:
I am making a brief report of my recent trip (Feb. 27 to Mar. 6) to Guyana. This was our first visit and was primarily intended for the negotiation and possible acquisition of a large privately owned timber concession and sawmill operations. The owner was most receptive and cooperative, and gave us a three day tour by plane of the operations. During our brief visit, we called on the Canadian High Commission, heads of various banks and Government officials. We were impressed by a number of saw mill operations with large timber concessions, who also expressed interest in either selling out or to enter into some joint venture with IBI Corporation. The Government was most supportive as it encouraged a number of these operators to make contact with us during our stay.
There is no doubt that IBI Corporation could easily have signed at least one large substantial agreement involving over 1 million acre concession. However it was decided to obtain more information on the other large concessions and operations before making the initial choice. Because of the Government's support and the various options we have, we feel confident that our next visit we will have the choice of taking over two or possibly three large timber operations with valuable concessions.
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It is now with great pride and joy that on this our third anniversary I am able to advise shareholders of IBI Corporation that our company has made a historic and significant achievement. We have entered into an agreement with IFMD for a 70% interest in a large phosphate-vermiculite mining deposit in Uganda, East Africa. The property has proven reserves of 8.5 million tonnes of high quality phosphate ore. Published reports have indicated additional probable reserves to be in excess of 30 million tonnes. Present price of phosphate range from US $145-$150/tonne. Therefore the value of the proven reserves, 8.5 million tonnes is worth approximately US $1.275 billion. This discovery was due to the direct efforts of Dr. Mark Doidge and Professor Peter van Straaten with the help of the Uganda Department of Geological Survey and Mines supported by the technical and financial help of the United Nations Development Fund.
Phosphate is an important fertilizer which is in high demand, particularly in African and developing countries. This deposit is situated at Busumbu within the Bukusu Carbonatite Complex, which at 13 km in diameter is probably the largest carbonatite complex in Africa and certainly the best phosphate deposits in East Africa.
On the same property, adjacent to the phosphate is found 350,000 tonnes of vermiculite including 125,000 tonnes of high grade coarse material. This deposit is easily mined from the surface. It has been sampled to a depth of only 50 ft. The quality improved with deeper drilling. There are definitely additional reserves beneath 50 ft. A more likely depth is 150 ft; and the more likely figures for the reserve would be 1 million tonnes of vermiculite. Very large flakes have been discovered, which is a positive development. International prices per tonne of unexfoliated vermiculite ranges from about $100 all the way up to $500 for very high grade.
IFMD represents the 30% partner of IBI Corporation and will administer and develop the project. Dr. Mark Doidge, President of IFMD assisted by Professor Peter van Straaten and Mr. Hans Hansen are well experienced and as a team will manage and carry out the administration, mining and sale of the products. Both Dr. Doidge and Professor van Straaten have spent several years in Africa working in association with the World Bank and the United Nations.
Professor van Straaten is a professor at the University of Guelph, Ontario and he did Ph.D. work in Uganda. He has a deep understanding of the country and its people. He is a leading authority on fertilizers with special interest in phosphate. He has 15 years experience in Africa.
Hans Hansen has extensive knowledge and working experience in Africa. From 1991 to 1996 he developed extensive knowledge of vermiculite and acted as mine manager for a successful vermiculite mine in Zimbabwe. Dr. Mark Doidge will act as overall manager and coordinator of the project. IBI Corporation for its part will provide all the necessary equipment tools, tractors, trucks, excavators, generators, storage, office facilities, vehicles, etc. including working capital up to $3 million.
A recent letter to Dr. Doidge from the International Finance Corporation, a division of the World Bank, has concurred and confirmed the viability of the deposit and the potential to supply the region and sub-region with the product.
Estimated revenues for the first year operation is $7.1 million increasing to $12.1 million in the second year and onward. The proven reserves of the phosphate mine has a minimum of 15 years expectancy.
Your faith and confidence as a shareholder of IBI Corporation over the years has finally proved rewarding. Yet we feel that this is just the beginning as we have a number of excellent projects to follow.
Yours Sincerely,
IBI CORPORATION
Edward A. Lai
Chairman, CEO |
