Transcription of Finance News Network Interview with Minbos Resources Limited (ASX:MNB) Managing Director, Scott SullivanLelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from Minbos Resources
(ASX:MNB) is its Managing Director, Scott Sullivan. Scott welcome to the Africa Down Under Conference here in Perth.
Scott Sullivan: Thank you Lelde, it’s lovely to be here.
Lelde Smits: Minbos Resources is a phosphate rock exploration and development company focused on two projects, in West Africa’s Congo Basin. At what stage is development now and which project is the most advanced?
Scott Sullivan: We’ve completed scoping studies for both projects. Both projects have indicated resources. We are at the stage of commencing the bankable feasibilities for both projects. I think Cacata will be our priority there, we’ll move into that first, that’s imminent now. In Kanzi, we’re just waiting on the transfer of our exploration licences into the joint venture vehicle, before we commit to the BFS there.
Lelde Smits: The Company’s goal is to become Africa’s next phosphate rock producer. What timeline have you put on reaching production?
Scott Sullivan: In Cacata, I think the feasibility will take the next 12 to 13 months. And then in the scoping study, we identified that we’d take around 20 months for execution. But I think we can probably bring that timeline forward and I think the earliest we’ll be looking at, late 2015 for production in Cacata.
In Kanzi, we’re looking at a smaller operation first as one option. If we go down that route, we’ve probably got a three month logistic study and then maybe a six or seven month feasibility study. So somewhere around nine to 10 months before we get into execution there. I think we’ll be in production, probably early 2015 there for a smaller operation. If we go down the full nine route, it’ll be a similar timeline to Cacata.
Lelde Smits: Looking closer at the Cabinda project in Angola, what is your stake in the project and what resource has been defined so far?
Scott Sullivan: We’ve got 50 per cent of the project there. Our joint venture partner has got 50 per cent and they’re the operator. And we’ve got 30.4 million tonnes at 17.2 per cent P2O5 indicated resource.
Lelde Smits: And Scott, could you run us through the project’s economics. Why could Cabinda be a game changer for the Company?
Scott Sullivan: First thing that is favourable with Cabinda is we expect to produce an above Moroccan grade benchmark product, about 34 percent. So it should attract a premium. The economics are very strong; we’ve got low operating costs of around $54 a tonne, capital costs of $180 million at the top end. And we expect that we should be able to reduce that by 30 or 40 million tonnes, if we don’t invest initially in port infrastructure which is certainly an option. Strong MPV - $311 million MPV and an IRR of 40.2 per cent, so very very robust economics there.
Lelde Smits: Now in the Democratic Republic of Congo, you have the Kanzi project. What is your stake in that project and how does it compare to Cabinda in terms of project economics, and the size of the resource?
Scott Sullivan: We’ve got 49 per cent economic interest in Kanzi. The resource is bigger at 58.5 million tonnes; the economics are very good there as well. We’ve got an MPV of gradient 600 million, IRR of greater than 50 per cent. Low cost as well, very similar cost structure to Cabinda. Capital will be lower; I think $125 million there will see the construction of Kanzi through. We don’t have to invest as much in port capital.
Lelde Smits: Now Minbos is developing phosphate assets. What factors do you anticipate will fuel future demand?
Scott Sullivan: The drivers for phosphate are excellent because they’re linked to rising world population. It goes up by about 70 million people per annum. The growing middle class demands more food and better quality food. There’s less arable land as we go forward and government policy driving the use of biofuel. So it all comes back to increased productivity of agriculture, and that’s where the fertiliser products come into it. So phosphate rock is a key element to produce phosphate fertilisers, one of the three main fertiliser’s base. So the fundamentals are excellent and they’re not really going to change going forward.
Lelde Smits: Now Scott you’ve outlined your path to production by 2015. In order to get there, what are the Company’s next priorities?
Scott Sullivan: So in Cacata, we’re seeking the immediate renewal of our exploration licences there and that is in process. We expect that within the next four to six weeks. We’ll then commence our BFS, we should complete that in 12 to 13 months and then, you know construction of the project for production in late 2015. In Kanzi we’re transferring, in the process of transferring our licences from our joint venture partner’s company Allamanda, into the joint venture vehicle Phosphalux. Then we can commence the bankable feasibility confidently.
Lelde Smits: Scott Sullivan, thank you for the update to Minbos Resources.
Scott Sullivan: Pleasure, thank you Lelde.
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