September 7th 2010, Arianne Resources created a subsidiary company , Phosphate Canada inc., in which all the interests of the Lac à Paul phosphorus-titanium project were transferred.
See details - Canada Phosphate Inc.
Why Phosphate
Worldwide population growth is leading to increased demand for food and energy. Agricultural crops used to supply this demand require fertilizer to enrich the soil with complementary nutrients such as nitrogen (N), phosporus (P) and potassium (K). The Lac à Paul deposits are a source of one of these elements needed for plant growth—phosphorus. More than 85% of worldwide production is used in agriculture as fertilizer. In its natural state, phosphorus concentrations are either sedimentary or igneous in origin. Those of Lac à Paul are part of the latter category.
The price of phosphate concentrate has increased dramatically over the past few years, rising from CAN$55/t in 2007 to CAN$440/t in 2008. Following the fall 2008 economic crisis, concentrate price stabilized at about CAN$130/t. The increase was due to tighter supply in the main phosphorus producing countries (China, Middle East and North Africa).
In Canada, only the Kapuskasing mine (Agrium Inc.) produces phosphorus. However, its reserves are expected to be depleted in the near future, around 2015. New sites for mining this resource are therefore needed to ensure that Canada retains its autonomy in terms of fertilizer. The Lac à Paul project is a very interesting alternative to meet anticipated phosphorus needs.
Scoping Study
An economic study conducted by IOS Services Géoscientifiques inc. was released in early 2010. The study covered only part of the resources of the Lac à Paul deposits—the Paul Zone indicated resources at 78.34 Mt grading 7.24% P2O5 and inferred resources at 58.25 Mt grading 6.97% P2O5. Titanium resources were not considered in the scoping study even though they could have added 20-40% in revenue. The Company is currently conducting metallurgical tests to evaluate the titanium’s economic impact on the Lac à Paul deposit.
Highlights included:
1) Profitability: The Lac à Paul project is profitable assuming annual production of 2 Mt per year of apatite concentrate. The concentrate must be sold for more than CAN$100/t. The economic model shows that at a selling price of CAN$118/t of concentrate (FOB Dolbeau), the internal rate of return (IRR) would be 20.80%.
2) Economic parameters: The capital needed for infrastructure and operations (CAPEX) is estimated at CAN$439 million (Table 1). The production cost of the Lac à Paul concentrate is estimated to be CAN$62.53/ton (FOB Dolbeau) including transportation cost CAN$13.60 to the Dolbeau train station.
3) Market: Two markets are primarily being targeted. First, the North American market, where production of apatite concentrate is insufficient to meet demand for the coming years and where procurement is by ground shipment. Two phosphoric acid production plants owned by Agrium Inc. (Redwater in Alberta and Conda in Idaho) will be short of concentrate in the next few years.
Secondly, the European market by seaway is being targeted. The phosphoric acid production plants in northern Europe are supplied with concentrate from Russia, which is currently selling for CAN$182/ton (FOB northern Europe). The Lac à Paul apatite concentrate could sell for CAN$160/ton, delivered to Belgium.
