ASX-listed Aguia Resources is primarily focused on advancing its phosphate assets in Southern Brazil, along with a copper exploration portfolio in the same region. The company’s corporate office is in Sydney but its highly experienced in-country team in Porto Alegre is intent on delivering high quality phosphate mines that will supply Brazil’s colossal agriculture sector with the key fertiliser product.
Since Dr Fernando Tallarico was promoted from technical director to managing director last October, Aguia has made significant technical progress at its flagship Três Estradas phosphate deposit, obtaining a preliminary licence (LP) and redesigning the entire project in a new scoping study. “On the corporate level we have restructured the company in many ways resulting in a much leaner structure that will help us be more cost-efficient,” Tallarico tells RGN. “My primary task now is to work towards the granting of the LI and installation license, which will allow us to start construction of our phosphate mine and processing plant.”
The Três Estradas project is located in Rio Grande do Sul – Brazil’s Southernmost state with an area of about 292,000 km², of which 203,000 km² is arable and active in the production of soybean and rice crops.
In fact, Rio Grande is the third largest agricultural producer in the country having produced about 35 million tonnes (Mt) of grains in the 2018/2019 harvest, and it is the second biggest producer of grains per hectare in Brazil.
Despite possessing a thriving farming industry, there are no active phosphate mines in Rio Grande and it is 100% reliant on imports of fertiliser products which are so crucial to the high level of agricultural output in the state.
Aguia plans to change this on the way to becoming the only local producer in the region after making a series of greenfield phosphate discoveries in Rio Grande over the last decade.
“Our flagship project Três Estradas is in the central zone of the state and is surrounded by very productive farms and crops. Within a 300 km radius from the project there is a demand of 245 thousand tonnes per year of P2O5 nutrient, which is equivalent to 2.5 million tonnes of fertiliser grading 10% P2O5.”
Aguia drilled the first exploration hole in the Três Estradas carbonatite in September 2011 and since then around 30,000 metres of diamond, reverse circulation and auger driller has been conducted, mostly by Rede Engenharia e Sondagen – an extremely well–known company in the Brazilian mining industry.
This work has resulted in the delineation of a JORC-compliant resource of 105 Mt, of which 83 Mt at 4.11% P2O5 is in the measured and indicated categories. “Following this, we went through a sequence of metallurgical testing followed by economic assessments of the project.
“Then we conducted all the baseline studies and environmental assessment of the project area and this resulted in the granting of the LP in October,” says Tallarico. While the environmental permit applications were being prepared, Aguia was also busy redesigning the downstream elements of the project.
Overhauling the project
The company overhauled its existing bankable feasibility study, which called for a column flotation circuit that would have involved the construction of a water dam and a tailings dam, opting instead for a direct application natural fertiliser (DANF) product.
“When we decided to produce DANF, the processing became extremely simple as it only includes a comminution plant with no water used in the process and no tailings being generated. Thus, we were able to eliminate both the water dam and the tailings dam.”
This single move succeeded in bringing down the project’s capex from US$75 million to around $7 million and will reduce the size of the processing plant and other facilities of the mine by 77% to an optimised area of 93 hectares, with 60 hectares of open pit area.
The new DANF plan informed a new scoping study for Três Estradas conducted by independent Brazilian consulting firm GE21 Consultoria Mineral. The study was published in February and highlighted the strong economics of the project.
The first phase of the study will deliver a post-tax NPV of around $45 million with an IRR of 51% and a quick payback period of 3.3. years. Aguia envisages a three-phase development for the long-life project, with the DANF Phase 1 focused on mining high-grade oxidised material from surface down to a depth of 30-40 metres.
“After 18 years of mining and exhausting the oxidised material, the fresh carbonatite will be exposed and can be then mined in Phase 2, depending on the economic constraints at that time.”
Tallarico explains that mining fresh carbonatite will require a column flotation plant that will produce a phosrock concentrate grading at least 30% P2O5. This will generate tailings composed essentially of carbonate minerals that were characterised as a high quality agricultural lime (aglime), used to correct the acidity of the soils.
“Because the volume of aglime tailings produced in Phase 2 is very high, we expect that about two thirds of these tailings will have to be stored in the tailings dam and then progressively be reclaimed and sold to the market over time in Phase 3.”
The copper opportunity
When Aguia first started working in the central area of Rio Grande its focus was on the yet-to-be explored phosphate opportunities in the region, but after establishing first mover advantage in the fledgling phosphate sector, the company began to consider exploration for other commodities, particularly copper.
The prolific Rio Grande Copper Belt is a well-known geological trend with many projects in development along with existing mines and one depleted copper mine that happened to be in the same area that Aguia was exploring for phosphate.
Already with two exploration field offices in the region, Aguia subsequently took advantage of its position and staked 52 tenements, acquiring eight for a total of 86,187 hectares within the Rio Grande Copper Belt.
“Over the past three years we were able to consolidate a district scale position with 860 km2 of granted exploration permits, that include six extremely prospective targets with copper mineralisation at surface,” says Tallarico.
From these targets, Aguia has defined an inferred mineral resource of 10.8 Mt with an average copper grade of 0.56% and 2.56 g/t of silver for the Andrade project, and proven a high grade zone surrounded by a lower grade envelope through modelling and recent drilling.
More recently, the company has looked into the option of producing copper sulphate as the main copper mineral in Andrade is chalcocite, which carries about 80% copper and offers the possibility of developing a low capital cost project of open pit mining and processing via heap leach, followed by the crystallisation of copper sulfate.
In addition, copper sulphate is widely used in Rio Grande by farmers as a pesticide and for treating copper deficient soils, so copper sulphate production could open up another revenue stream for Aguia in the regional agriculture sector.
“For the next year at Andrade, we need to continue drilling and expanding the high-grade core zone. By doing this we will improve the overall grade and tonnage of the resource. In parallel we want to run the initial leaching tests with our material to understand how exactly it will perform. This information should inform an initial economic assessment.”
At Três Estradas, Aguia will push towards the next stage of permitting in the next 12 months, which is the granting of the LI and the installation licence – the permit that will allow the company to start construction of the mine site.
“To achieve this we have to work in four different areas along the year: 1: Environmental plans and programmes, 2: Detailed engineering of Phase 1 – DANF, 3: Permitting with the National Mining Agency and 4: Secure the use of the land, via acquisition or possession agreements.”
In parallel, agronomic efficiency tests are ongoing with the DANF product applied to key crops as soybean, rice, maize and ryegrass. On the financing side, Aguia received a letter of support in April from the Development Bank of Southern Brazil for a development loan to fund up to 50% of the capex for Três Estradas.
All the stepping stones are in place for Aguia to progress its long-term phosphate project in the next few years, underpinned by open attitudes to mining in Brazil and its position as a global agricultural powerhouse.
“Projections for 2028/29 are for a grain harvest of around 300 Mt in Brazil – an increase of about 27% from the current production, at a growth rate of 2.4% per year. To support this growing production without encouraging deforestation, the only solution is the intensive use of fertilisers.”
With a strong portfolio of phosphate projects in Rio Grande and 10 years of in-country operation under its belt, Aguia is well-positioned to take advantage of these favourable conditions for fertiliser production in Brazil.