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MBAC reports 2012 results, provides corporate update and announces bought private placement


MBAC reports 2012 results, provides corporate update and announces bought private placement

TSX:MBC OTCQX:MBCFF Shares Outstanding:128,550,364 Fully Diluted:137,773,780

TORONTO, April 1, 2013 /CNW/ - MBAC Fertilizer Corp. ("MBAC" or the "Company") (TSX:MBC and OTCQX:MBCFF) announces highlights of its year-end results for the financial year ended December 31, 2012, provides a general corporate update including an update on the Itafós Arraias Single Super Phosphate ("SSP") Project ("Itafós" or "Itafós Project").  The Company also announces that it has entered into an agreement with Canaccord Genuity Corp. ("Canaccord"), pursuant to which Canaccord, as underwriter, has agreed to purchase, on a bought private placement basis, 20,500,000 common shares of the Company (the "Common Shares") at a price of $2.20 per Common Share for gross proceeds of C$45,100,000 (the "Bought Private Placement"). The Corporation has granted Canaccord an option (the "Underwriter's Option") to purchase an additional 4,550,000 Common Shares at the offer price and on the same terms as the offering (see "Bought Private Placement" below).

The Company is today filing its Financial Statements, Management Discussion and Analysis ("MD&A") and Annual Information Form for the year ended December 31, 2012, as well as an updated technical report for the Itafós Project entitled "Updated Technical Report Itafós Arraias SSP Project", dated and effective as at March 27, 2013 (the "Updated Itafós Technical Report"), on www.sedar.com.

Highlights for the year ended December 31, 2012 include:


    --  Achieved approximately 80% completion for the Itafós Project
        which has continued to be advanced since year end;
    --  Received the operating licenses for the mining operations at
        the Itafόs Project;
    --  Commenced ore extraction at the Itafόs Project;
    --  Completed a positive Pre-Feasibility Study ("PFS") for the
        Santana Phosphate Project;
    --  Completed a positive Preliminary Economic Assessment ("PEA")
        for the Araxá Project;
    --  Continued to advance manpower needs as the Company transitions
        to operations, hiring 85% of workforce necessary for the
        operation at the Itafós Project;
    --  Continued exploration and development on all projects;
    --  Invested $242 million in property plant and equipment and
        exploration activities; and
    --  Demonstrated continued access to capital by executing a loan
        with Banco Votorantim for $22 million.

Highlights Subsequent to Year End

-- Completed the Updated Itafós Technical Report which provides: o 47% increase in proven and probable reserves, an increase in mine

life to approximately 19 years, current project economics and other

updates; o Total estimated capital costs of the Project of $323 million, which


    represents a 17% increase from the Company's previous estimate;
    --  Received operating licenses for the water dam, the tailings
        dam, pipelines and the beneficiation plant for the Itafós
        Project;
    --  The Company sold its interest in a non-material area of
        exploration ground 35 kilometres from its Santana Phosphate
        Project for a price of $10 million; and
    --  Received a working capital loan from Banco Itaú BBA for $10
        million.

ITAFÓS PROJECT UPDATE

Physical progress of the construction at the Itafόs Project to date is 
approximately 90% completed.  Highlights of recent progress include:
    --  Beneficiation plant commissioning has commenced which is a
        critical path item for the start-up of operations;
    --  Mine construction has been completed and is operational;
    --  Approximately 225,000 tonnes of phosphate ore have been
        stockpiled with an average grade of 8% P(2)O(5);
    --  Powerline has been completed and is operational;
    --  Water dam has reached the water level necessary for water
        supply to the plants;
    --  Water and tailings pipelines are being commissioned;
    --  All major equipment has been delivered to site;
    --  The General Manager for the Itafós Project has been appointed
        and now all key management personnel needed to operate the
        plants is in place.

The Company expects the Itafós Project to be fully licensed and in operation 
by the end of Q2 2013.

In February 2013, senior management became aware of additional delays 
impacting the forecasted start-up date for the beneficiation plant.  This led 
senior management to initiate a detailed investigation focusing on scope 
changes, cost to complete and timelines for the construction project.  Based 
on this investigation, the Company estimates the current capital cost will now 
be $323.1 million, which represents an increase of $47.1 million or 17% from 
its latest estimate provided in the January 2013 prospectus.  Management has 
concluded that the primary reasons for the additional estimated capital costs 
are as follows:
    --  Renegotiation with the primary electro-mechanical erection
        contractor caused increased amounts payable above originally
        established costs due to the extended timeline and
        significantly increased labour costs.  Given the advanced stage
        of construction, management determined that the prudent course
        of action was to renegotiate the contract rather than to
        replace this key contractor, which would have generated further
        significant delays and cost increases.
    --  Poor engineering work and planning deficiencies, led the
        Company to retain additional engineering contractors to
        reassess engineering work for the Project. Following this
        re-assessment, management was informed that significant
        additional parts and supplies and scope changes were required
        for the completion of the Project.
    --  Numerous unexpected issues, delays and costs related to the
        logistics of moving the equipment to site as a result of poor
        port infrastructure and delays at customs. Although all major
        equipment required for start-up had been purchased and arrived
        in Brazil by early February 2013, certain large equipment
        required special arrangements to be transported to site.
    --  In February 2013, the civil works contractor was terminated and
        replaced due to poor performance.  This change in contractors
        added to cost and time due to the demobilization of the former
        contractor and the mobilization of the new contractor.

The Company believes that the following factors will assist in mitigating the 
risk of further capital cost increases to completion of the construction 
project:
    --  All detailed engineering including scope changes has now been
        completed;
    --  All major equipment has now been delivered to the construction
        site;
    --  Since the renegotiation of the electro-mechanical contract, the
        Company has seen significant improvements in the pace of the
        electro-mechanical erection works;
    --  The Company has firm quotes and delivery dates for the parts
        and supplies required for completion of construction (such as
        pipes, cables, hoists and steel platforms); and
    --  The balance of work left is minimal given the Project is 90%
        completed.

Notwithstanding the Company's efforts and the mitigating factors above, there 
can be no guarantee that the Company will not face additional unforeseen 
delays or cost increases.

Given the advanced stage of the Itafós construction and in the importance of 
completing the Project on a timely and cost effective basis, the Board of 
Directors has appointed an Executive Committee whose role is to provide direct 
oversight of all aspects of the Itafós Project, including cash flow 
management and progress of construction. The Executive Committee will be 
composed of three independent directors Peter Marrone, Alexander Davidson and 
David Nierenberg, a newly appointed Director (see "Corporate Update" below). 
Peter Marrone will chair the Executive Committee. Also, Antenor Silva, Vice 
Chairman and CEO, will dedicate all his time and efforts to the completion and 
ramp-up of the Itafós Project.

SSP Market Update and Sales

Fertilizer product deliveries in the Company's target region have lagged year 
to date compared to last year due to unusually dry conditions experienced in 
the first quarter of 2013. Fertilizer product purchases in the target region 
are now expected to occur later in the year.  Brazilian soybean production is 
forecast to hit record levels in 2013 leading the Company to believe the 
market for fertilizer will continue to strengthen over the next several 
months.  As a result, the Company is expecting slightly lower SSP prices in 
2013 but expects prices to rise into 2014 (please refer to the Itafós Updated 
Technical Report.)

The Company expects to reach nominal capacity by the end of the year.  The 
Company expects to produce at full capacity starting in 2014.

The result of delays in the startup of operations and the sales season has led 
to an increase in working capital requirements which has been funded through 
internal resources and available credit facilities. With a delay in the season 
and various other factors the Company expects to sell 175,000 to 225,000 
tonnes in 2013.  Sales are expected to increase significantly towards full 
capacity in 2014.  In March 2013, the Company received its first orders for 
35,000 tonnes of SSP which is expected to be delivered in July of 2013.

Project Economics

The Updated Itafós Technical Report includes updated resource and reserve 
estimates, production estimates, pricing assumptions, sales volume estimates, 
operating cost estimates and capital expenditure estimates. Based on the 
updated information, the Itafós Project is estimated to provide an NPV of 
$254.2 million, an Internal Rate of Return of 21% and a payback period of 4.5 
years. The proven reserves have increased to 15.9 million tonnes and probable 
reserves have increased to 48.9 million tonnes representing a total of 47% 
increase from the previously published proven reserves of 13.0 million tonnes 
and probable reserves of 31.2 million tonnes. Based on this updated technical 
report, the Itafós Project has an expected mine life of approximately 19 
years with an average ore grade 5.08% P(2)O(5) and expected annual output of 
approximately 500,000 tonnes per year of SSP. The capex for the Itafós 
Project is now estimated at approximately $323.1 million.

The total amount of capital costs invested in the Itafós Project, on an 
accrual basis, as at December 31, 2012 was $262.4 million. In addition, 
borrowing costs of $10.6 million were capitalized to construction costs.

Funding Requirements

As a result of the recent construction capital costs review, and based on the 
Company's current cash balances, MBAC has determined that its current funding 
requirement in connection with its Itafós Project is estimated to be 
approximately $45 million.  This figure includes capital costs, working 
capital and G&A required until the start of production, expected in late Q2 
2013.

Bought Private Placement

The Company has entered into an agreement with Canaccord, pursuant to which 
the underwriter has agreed to purchase, on a bought private placement basis, 
20,500,000 Common Shares of the Company at a price of $2.20 per Common Share 
for gross proceeds of C$45,100,000 which is expected to close on or around 
April 18, 2013. The Corporation has granted Canaccord the Underwriter's Option 
to purchase an additional 4,550,000 Common Shares at the offer price and on 
the same terms as the offering, exercisable 48 hours prior to the closing date 
of the offering. If the Underwriter's Option is exercised in full, an 
additional C$10,010,000 will be raised pursuant to the Bought Private 
Placement, for total aggregate gross proceeds of C$55,110,000.

The Common Shares will be offered by way of the "accredited investor" and 
"minimum amount investment" exemptions under National Instrument 45-106 in all 
Canadian provinces and territories as agreed upon by the Company and Canaccord 
and offshore, and in the United States on a private placement basis pursuant 
to an exemption from the registration requirements of the United States 
Securities Act of 1933, as amended. The funds are expected to be used for 
completion of the Itafós Project and for general corporate purposes. 
Completion of the private placement is subject to execution and delivery of 
standard documentation and receipt of all required regulatory approvals and 
consents, including the approval of the Toronto Stock Exchange. The shares 
issued under the above private placement will be subject to a four month hold 
period under applicable Canadian securities legislation.

The CEO and associates will participate in the amount of approximately C$5.5 
million in the Bought Private Placement. The Board of Directors and other 
members of senior management have also agreed to participate in the amount of 
approximately C$4.0 million.

In addition, the Company is actively pursuing additional debt financing 
alternatives and the sale of non-core assets to ensure that any unforeseen 
contingencies are properly financed.

The Company is confident that it will be able to meet its funding requirements 
for the Itafós Project.

CORPORATE UPDATE

The Board of Directors is pleased to announce the appointment of David 
Nierenberg and Eduardo Ledsham to its Board of Directors, effective 
immediately.

David Nierenberg is the founder of The D3 Family Funds. He is a summa cum 
laude graduate of Yale College and a graduate of Yale Law School.  He brings 
several complementary disciplines: lawyer, strategic management consultant, 
corporate director, asset allocator, and venture capitalist. David worked 
seven years at Bain & Company, a large consulting firm, where he was a 
partner. He has been a full time investor for 27 years, 10 as a venture 
capitalist, principally with Trinity Ventures, and 17 at D3.  Currently, he 
serves on the Washington State Investment Board, which oversees public 
employee retirement funds; chairs the board investment committee for Whitman 
College; and serves on the boards of Electro Scientific Industries (ESIO) and 
RadiSys Corporation (RSYS), which are D3 portfolio companies. From 2008 - 2012 
he chaired the advisory board of the Millstein Center for Corporate Governance 
and Performance at the Yale School of Management.

Eduardo Ledsham has over 28 years of experience in mineral exploration project 
development and in implementation of greenfield projects. Mr. Ledsham joined 
Vale in 1986, working initially on copper, gold, manganese and nickel 
exploration and development projects in Carajas, Brazil. From 2005 to 2008, he 
served as Exploration and Development Director; in 2008, he was appointed 
Director of Global Exploration and Project Development, Energy and 
Fertilizers; and, in May 2010, he took on the role of Executive Director for 
Exploration, Energy and Project Implementation. Mr. Ledsham was a Board Member 
of Fosfertil S.A and was the Chairman of two energy companies, Vale Soluções 
em Energia and Vale Energia Limpa. He is currently the CEO of B&A Mineração 
Ltda., a Brazilian mining company which was created as a joint venture between 
AGN Participações, a Brazilian holding company whose main shareholder is 
Roger Agnelli, Vale's former CEO, and BTG Pactual, a Brazilian investment 
bank. Mr. Ledsham holds an undergraduate degree in Geology (Federal University 
of Minas Gerais), and a postgraduate degree in Valuation of Companies and 
Projects (Getulio Vargas Foundation). He also holds two MBAs (Dom Cabral 
Foundation, and IBMEC).

David is an entrepreneur who brings considerable experience in strategic 
oversight and efficiencies on capital projects.  Eduardo has a very strong 
technical background and is very experienced in the management of mine 
development and in the fertilizer sector in Brazil.

The Company believes that the addition of the two new board members, the 
formation of the Executive Committee and the focus of the Vice-Chairman and 
Chief Executive Officer on the completion of the Itafόs Project will better 
align the Company with its objective of completing the Itafόs Project in a 
timely and cost efficient manner.

Carlos Guzmán, FAusIMM, RM (Chilean Mining Commission), of NCL, is the 
qualified person who has approved the scientific and technical information 
contained in this press release.

About MBAC
MBAC is focused on becoming a significant integrated producer of phosphate and 
potash fertilizers and related products in the Brazilian and Latin American 
markets. MBAC has an experienced team with significant experience in the 
business of fertilizer operations, management, marketing and finance within 
Brazil. In October 2008, MBAC acquired Itafós Mineração Ltda., which 
consisted of a phosphate mine, a mill and plant and related infrastructure, 
all located in central Brazil. MBAC's exploration portfolio includes a number 
of additional exciting phosphate and potash projects, which are also located 
in Brazil. The Santana Phosphate project is a high grade phosphate deposit 
located in close proximity to the largest fertilizer market of Mato Grosso 
State and animal feed market of Pará State. The Company continues to search 
for additional fertilizer opportunities in the Brazilian and other 
Latin-American markets, where strong agricultural fundamentals and unique 
opportunities are expected to provide attractive growth opportunities in the 
near future. Further information on MBAC can be found on the Company's website 
at www.mbacfert.com and on SEDAR at www.sedar.com.

Antenor Silva 
Vice Chairman & Chief Executive Officer

FORWARD LOOKING STATEMENTS

This press release contains "forward-looking statements" within the meaning of 
applicable Canadian securities legislation. Forward-looking statements 
include, but are not limited to, statements related to activities, events or 
developments that the Company expects or anticipates will or may occur in the 
future, including, without limitation, statements related to the Company's 
business strategy, objectives and goals; the completion of Itafós Project 
within a timely and costly manner, that the Bought Deal will be closed on or 
around April 18, 2013, the expectation that the Underwriter's Option will be 
exercised, the expectation that the funds of the offer will be used for 
completion of the Itafós project and for general corporate purposes. 
Forward-looking statements are often identified by the use of words such as 
"plans", "planning", "planned", "expects" or "looking forward", "does not 
expect", "continues", "scheduled", "estimates", "forecasts", "intends", 
"potential", "anticipates", "does not anticipate", or "belief", or describes a 
"goal", or variation of such words and phrases or state that certain actions, 
events or results "may", "could", "would", "might" or "will" be taken, occur 
or be achieved. Forward-looking statements are based on a number of factors 
and assumptions made by management and considered reasonable at the time such 
statements are made, and forward-looking statements involve known and unknown 
risks, uncertainties and other factors may cause the actual results, 
performance or achievements to be materially different from those expressed or 
implied by the forward-looking statements. Such factors include, among others, 
completion of commissioning of the beneficiation plant at the Itafós Project, 
the expectation that Itafós will be fully licensed and in operation by the 
end of Q2 2013, the belief that the detailed engineering and scope changes 
made to the project are sufficient to ensure completion of the Itafós 
Project, the belief that there will be no further delays on the expected 
timeline for the completion of Itafós Project and start-up, the Company's 
forecasts related to capital expenditures, costs to complete, working capital 
and funding requirements to complete the Itafós Project and other funding 
requirements, the expectation that the Itafós Project will reach nominal 
capacity by the end of the year and will produce at full capacity starting in 
2014, the expectation that the company will sell 175,000 to 225,000 tonnes in 
2013 and that sales will increase towards full capacity in 2014, the 
expectation that product will be delivered in July 2013, the expectation that 
the Bought Private Placement will close on April 18, 2013, as well as those 
factors disclosed in the Company's current Annual Information Form and 
Management's Discussion and Analysis, as well as other public disclosure 
documents, available on SEDAR at www.sedar.com. Although MBAC has attempted to 
identify important factors that could cause actual actions, events or results 
to differ materially from those described in forward-looking statements, there 
may be other factors that cause actions, events or results not to be as 
anticipated, estimated or intended. There can be no assurance that 
forward-looking statements will prove to be accurate. The forward-looking 
statements contained herein are presented for the purposes of assisting 
investors in understanding the Company's plan, objectives and goals and may 
not be appropriate for other purposes. Accordingly, readers should not place 
undue reliance on forward-looking statements.

Steve Burleton, Vice President Corporate Development, at 
416-367-2200, investor@mbacfert.com or visit our website at: www.mbacfert.com

SOURCE: MBAC Fertilizer Corp.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/April2013/01/c9544.html

CO: MBAC Fertilizer Corp.
ST: Ontario
NI: MNG AGR PVT ERN 2575 WNEWS 

-0- Apr/01/2013 11:39 GMT

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