Quarterly Activities Report June 15
Perth, July 31, 2015 AEST (ABN Newswire) - Fertoz Ltd (
ASX:FTZ) is a phosphate exploration and development company which is developing the Wapiti and Fernie phosphate deposits in Canada, trialling phosphate products developed from those deposits on Canadian farms and progressing a phosphate exploration program at the Dry Ridge project in Idaho USA.
Highlights:
Canada
Wapiti inferred resource of 1.54mt upgraded to include an Indicated resource of 806kt at 22.3% P2O5;
- Wapiti Scoping study completed with NPV of $20.1m, IRR of 82.4% over 20 year project life;
- Wapiti project is low capex. (C$2.7m) with simple mining and low strip ratio of 1.6 to 1 for first 7 years;
- Product trials underway in Canada.
USA
- Dry Ridge project approved for exploration by US Government authorities.
Australia
- Sales of FertAg products up 66% for the quarter giving sales revenue for the year of A$94,000;
- A reduction in costs, utilisation of current inventory and encouraging sales delivered FertAg's first cash flow positive month in June
- Landmark, E.E. Muirs and Sons, Farmers National Warehouse appointed as a distributors of FertAg products in addition to Ruralco Holdings;
- Local stockpiles established in country areas in NSW, Queensland, Victoria and Tasmania.
Corporate
- Stephen Keith, based in Toronto, appointed as Managing Director, to drive the North American business;
- Les Szonyi steps down as Managing Director and will continue to assist the Company as a Director and as a consultant on an as needed basis.
Planned Activities - SEPTEMBER Quarter 2015
- Proof of concept and sales
* Purchase equipment to process phosphate rock at Stettler for product sales;
* Continue blending and product trials with phosphate rock;
- Move phosphate projects towards cash flow
* Progress mine application and new road at Wapiti;
- Grow project pipeline and cash flow
* Seek JV partner for Dry Ridge project;
* Continue to grow FertAg sales.
OVERVIEW
The Company's main focus is on production in Canada, servicing the local organic farming market as well as conventional farmers looking for alternatives to standard, high leaching fertilisers. The Company also sells imported phosphate products to Australian organic and conventional farmers but the Board has recently elected to concentrate efforts on the Company's North American projects which offer higher returns (refer Wapiti Scoping Study press release 14 May 2015).
In the last 12 months the Company has confirmed the mining method at Wapiti and Fernie through collection of approximately 2,700 t of bulk samples, submitted a small mine application for Wapiti for a 75ktpa mine, upgraded part of the Wapiti resource to Indicated and completed a Wapiti Scoping Study. In the USA, the Company has been granted exploration approval for the Dry Ridge project in Idaho by the Government.
The Company plans to keep capital requirements low by running with a contract mining model to start Wapiti, and just produce bulk rock phosphate. Later development will entail bagging operations and blending the rock phosphate with other resources to make additional fertiliser products, and also moving to an owner-operator model; but this will only occur once cash flow from our operations is sustainable.
Fertoz management are in discussions with other groups in Canada that could also assist with the development of Wapiti and Fernie, from road contractors to equipment suppliers and even large multi-farm companies that could partner with the Company at the project level. Rock phosphate samples have already been provided to other fertiliser groups with the aim of mixing the Wapiti and Fernie phosphate with other resources to make different types of fertilisers.
In North America the USA and Canada are both net importers of phosphate rock and are two of the largest agricultural economies in the world. The Company aims to supply direct application phosphate rock with minimal processing to both the lucrative organic and conventional fertiliser markets in North America. The USA is the largest organic food market in the world while Canada is the fourth largest. Organic farmers in the USA and Canada need to use natural fertilisers in order to retain their organic certification, which is critical as organic crops command significantly higher prices than crops from conventional farms. The Wapiti and Fernie rock phosphates are particularly suited to acidic soils, which cover much of Canada and the lower parts of the USA.
The FertAg venture in Australia has proven to be more challenging than envisaged and has not generated cash as quickly as expected. However the FertAg business has been restructured to be cash neutral and it is staring to generating some upside as sales continue to grow.
As previously advised, Stephen Keith, a specialist Canada-based phosphate executive, who has been on the Fertoz Board for the last year, has taken on the role of Managing Director ("MD") and Les Szonyi has stepped down as MD.
I would like to take this opportunity to thank Les for leading us through the IPO, the exploration of both Wapiti and Fernie, the submission of the small scale mine for Wapiti, the completion of the Wapiti Scoping Study and the bulk samples and trials associated with the two Canadian projects, and finally, the progress of the Dry Ridge exploration permit. With so much work going on in Canada, Les decided it was time to appoint an MD who was in-country, and has stepped down from the role of MD, to focus instead on progressing the Australian FertAg joint venture. He will assist Stephen with the handover of our North American activities and the many phosphate trials and relationships that have been developed over the last two years.
It has been a challenging time in the junior exploration and development space over the last few months and the Board has taken the view that the Canadian operations present a great opportunity for the Company, especially now that a Scoping Study has been completed and farm trials are underway. Early results look encouraging and the demand for organic fertilisers and produce continues unabated. Thank you for all your support over the last year. We look forward to updating shareholders in the near future about progress in Canada and Australia.
Board Changes
Given the significant progress made with the Wapiti and Fernie projects over the last six months, the farm trials and offtake discussions with major farming groups now underway, Les Szonyi has stepped down as Managing Director to facilitate the appointment of Stephen Keith as the Company's Managing Director.
Stephen lives in Toronto and is well known to the fertiliser and investment community in Canada, having led TSX listed Rio Verde Minerals Development Corp. to a sale in 2013. Rio Verde was progressing the development of a direct application rock phosphate project in Brazil at the time of the acquisition. Stephen holds a BSC in Applied Science, an MBA, and has been involved in numerous feasibility studies and resource projects developments in his career over the last twenty years.
Stephen's focus will be on developing the Company's Wapiti and Fernie projects, securing off-take agreements for the rock phosphate that will be produced from those resources and engaging with local contractors and suppliers to establish mining operations. As part of the focus on the Company's North American assets, the head office will be relocating to Canada, although the registered office will remain in Australia.
Cash
The Company has A$0.08 million in cash as at 30 June 2015 and access to a A$1.25 million debt facility through its Chairman, James Chisholm, and a working capital facility for its Australian business of A$1.0 million.
Issue of shares
During the quarter Vesparum Capital were issued 96,238 shares at 30 cents per share for fees incurred from December 2014 to May 2015 and Vast Resources were issued 40,000 shares at 22.5 cents per share for fees incurred in the quarter ending May 2015.
To view the full report, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-FTZ-869979.pdf
About Fertoz Ltd
Fertoz (ASX:FTZ) is an Australian-based phosphate exploration and development company with a range of projects in British Columbia, Canada as well as Queensland and the Northern Territory. The Company is focused on becoming a fertiliser producer as quickly as possible, initially focusing on the Canadian/USA markets.
Fertoz plans to develop its exploration assets in Canada in order to identify any potential Direct Shipping Ore (DSO) projects. It intends to seek joint venture partners to assist in funding the exploration projects in Australia.
Phosphate is a commodity necessary for feeding the world, and Fertoz is ready to capitalise on this growing demand.
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