Eagle Star's High Grade Phosphate Findings Change Brazilian Landscape
Wed, 13 Feb, 2013 10:15 AM EST
EGE.V
RECENT DEVELOPMENTS FROM BOMFIM
Located in the state of Tocantins, one state over from where its two other agromineral projects – Ruth and Samba are located, Eagle Star’s Bomfim Project is now the company’s flagship. Nestled amongst the extremely large agricultural districts of West Bahia and NE Goiás, the Bomfim project could become a godsend for farmers in the area who rely heavily on fertilizer use to compensate for the insufficient levels of nutrients found in the soil of the gigantic Cerrado agricultural region they sow.
In the world of agrominerals, having certain grades of phosphate gives you the luxury of being able to sell various products as direct application fertilizer. This means that if the composition of minerals in the rock is optimal then very little processing is needed to bring the product to market. Since last fall, the Bomfim property has put Eagle Star on the radar of investors across the globe after the company announced it has intersected sizable mineralization of high-grade phosphate over an area of 550,000 sq. meters with consistent repeatability while remaining open in all directions.
The first pit, a 5m interval discovered in late November, returned a very high-grade level of P2O5 that if converted into natural fertilizer would yield at a very low cost a high margin product
Over the next couple of months, evidence gathered from continuous pit opening helped expand the high-grade phosphate mineralized zone. With most recent results published during mid-January, Pit-09 returned 17.75% P2O5 over a 4 meter intersection (open at depth), and Pit-10 returned 1m of 14.33% P2O5 (again, open at depth). High-grade mineralization now appears to cover in length a 1.5km strike over an average width of 400 meters.
Eagle Star will most likely continue to dig pits as they work towards their NI 43-101 resource report. Each pit to date has intersected mineralization at or close to surface making future extraction very attractive from an economic point of view. In addition, it should be noted that the team limits the depth of pit opening to around 5 meters (a safety precaution) where mineralization is still open in depth; hence there is plenty of blue sky beneath, that could increase the resource quite significantly.
So far much of the development across the 30,922-hectares‘ claims has focused on the eastern portion of the Bomfim Hill. The company’s technical team is convinced that they have just begun to scratch the surface in terms of potential as they have identified additional 5 targets to the north, east and west of Bomfim Hill which share the same high-grade outcropping characteristics.
THE RIO VERDE CASE STUDY
Back in December 2012, Rio Verde has released the news that it was being taken over by B&A, for approximately $48.6 million. A deal that looked much like a hostile takeover, had involved a resource of 1.9 million tons of phosphate at an average grade of 19%. This has later been regarded as a bargain for the soon to be mining giant B&A Mineração S.A.
Currently, Eagle Star is sitting at a valuation of ~$20 million, with a phosphate deposit capable of being at least three times the size of Rio Verde’s on just a small portion of its eastern claims. Opening up the west, east and the north of the property could possibly add more to the volume of the project, as a larger resource gets compiled.
The buyer in the Rio Verde deal, B&A, has been very active in the past six months with acquisitions taking place predominantly in the fertilizers’ space. Led by former Vale Chairman, Roger Agnelli, B&A has teamed with a large Brazilian investment bank with roughly $500 million slotted to invest over the next few years in both fertilizers and iron ore. We believe that with a vested stake in 20% of their neighbor MbAC Fertilizer’s Itafos mine, Eagle Star and its high-grade discovery, is presenting a compelling investment case that will be tough to ignore in the long run.
As for the analysts that were covering Rio Verde prior to the takeover, Eagle Star is a natural progression to move on to. With Rio Verde now completely taken over, Eagle Star stands alone as the only public entity solely focused on phosphate in Brazil that is still in an early enough stage to offer significant upside potential.
