Plains Creek Phosphate Corp (PCP.V) - West African phosphate project with prefeasibility and mining licence in hand

Full Report by Will Purcell , Jun 14, 2011 download full report
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Key Points:

• Farim hosts a substantial measured and indicated resource
  The Farim deposit contains a measured and indicated resource of 84 million tonnes, averaging 29.9 percent phosphorous pentoxide (P2O5), with a further inferred resource of 44 million tonnes, averaging 29.6 percent P2O5.

• Farim has cleared prefeasibility and a mining licence is in hand
  The Farim project is fully permitted and Plains Creek has a Production Agreement, obtained in 2009 by GB Minerals AG, now a Plains Creek subsidiary, from the Guinea-Bissau Government. The project has received favourable terms from the government, including 100 percent ownership, a ten-year tax holiday and a production royalty of just 2 percent. Plains Creek is currently conducting work leading to a bankable feasibility study to be completed late this year.

• Plains Creek envisages a long-term profitable mining operation at Farim
  The current mining plan calls for mining operations to extract 2 million tons of phosphate rock per year over the next 25 years using a conventional and simple method. Dredging will remove an average of 39 metres of unconsolidated clay-sand overburden, followed by further dredging of the phosphate ore. A phosphate slurry will be pumped from the dredge to a processing plant. No drilling or blasting will be required. A simple and efficient three stage beneficiation process has been designed. Following processing, the material will be transported to port via an 80-kilometre slurry pipeline.

• Farim lies in northeast Guinea-Bissau in West African
  Although the Farim Phosphate Project offers considerable economic potential, its location in West Africa carries considerable political and sovereign risk. Although Plains Creek currently enjoys favourable royalty and taxation rates, there is a likelihood these may be renegotiated, and even a possibility of the government or its agents acquiring a stake in the project once profitable mining ensues.

• The Farim project offers considerable blue-sky potential
  Plains Creek believes the Farim project offers strong potential for a substantial increase in available phosphate resources, to the north, west and south of the main area. Drilling is under way to increase tonnage and upgrade the resource classifications. As well, more of the delineated resource may be included in the mine plan by increasing the stripping ratio beyond the current plan. Further, exploitation of a lower zone, which contains an estimated 450 million tonnes of material that averages between 10 percent and 15 percent P2O5 is an option.

• Our valuation of Plains Creek yields a valuation of C$0.35 per share
  Based on our valuation of the Farim phosphate project, we arrive at a basecase valuation of C$0.35 per share, with an optimistic valuation, based on higher probabilities of success, of C$0.50 per share.