Champion boosts phosphate production

With demand for phosphate growing in international markets, Champion Resources (CHL-V) has decided to double planned production at its Farim deposit in Guinea Bissau, a small independent state in West Africa, bounded by Senegal, Guinea and the Atlantic Ocean.

Annual production at Farim is now projected at 1.5 million tonnes of phosphate concentrate. Reserves are pegged at 105 million tonnes grading 29.8% phosphate.

Mine construction is to begin in the first half of 2000, with startup planned for the third quarter of the following year.

The proposed processing plant is expected to be producing 1.5 million tonnes within one year of initial commercial production. The mine plan envisages strip mining, with the phosphate sold at US$47.50 per tonne. The cash operating cost is pegged at US$20 per tonne.

Ore will be upgraded to 34% from 29.8% P2O5 by means of screening, washing and drying.

The change in production design has increased the estimated construction cost to US$112 million from US$84 million.

Champion has agreed to the terms of a non-recourse US$112-million project loan put forward by a group of South African banks. Drawdown of this financing is contingent on completion of due diligence and requires that at least 70% of goods and services for Farim be supplied from South Africa. Toward this end, the company has completed private placements amounting to $2 million. The funds are being applied to a due diligence program that includes 15-20 diamond drill holes and metallurgical tests.

Grasim Industries of New Delhi, India, has agreed to buy 750,000 tonnes of phosphate rock concentrate annually over five years. Grasim is part of the Aditya Birla Group, a huge importer of phosphate rock. India currently imports 2.8 million tonnes of phosphate concentrate annually, and this is projected to increase to 6 million tonnes by 2002.

Meanwhile, Champion is negotiating with other major players in the fertilizer business for additional sales agreements.

The Farim deposit is hosted in an Eocene-aged sedimentary sequence that was deposited in a large basin that covered West Africa more than 50 million years ago. The flat-lying phosphate horizon extends over 40 sq. km and ranges from 1 to 6 metres thick. The deposit, which is covered by an average of 30 metres of weathered overburden, was enriched by the chemical weathering of phosphate-rich limestone — a process that boosted the average P2O5 content to almost 30% from 17%.

Phosphate is formed through the evaporation of phosphorous-rich brine contained in shallow saltwater basins. Subsequently, salts precipitate and are deposited on the sea floor, where they form an evaporite. More than 90% of all phosphate mined is used to produce fertilizer.

Phosphate was first noted in the Farim area in the 1950s, when it was intersected by geotechnical and oil-and-gas drill programs. A United Nations-sponsored program carried out some drilling in the 1970s, but most of the exploration work was performed by the French agencies Bureau de recherches gologiques et minires (BRGM) and Sofremines in the early 1980s.

BRGM drilled 102 holes (5,600 metres) and identified a large near-surface phosphate resource, and Sofremines later defined reserves while conducting a prefeasibility study. However, the combination of poor market conditions and political instability forced the French to abandon the project.

Years later, in August 1997, Champion acquired the project from the government of Guinea-Bissau.

The country survived an attempted coup d’etat in 1998 and is now preparing for democratic elections.

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