Legend International Holdings Inc Announces Positive and Robust Results from the Expanded Feasibility Study for Legend′s Paradise Phosphate Project
Legend International Holdings, Inc (OTCBB:LGDI) is pleased to
announce positive and robust results from the expanded feasibility study
(1.2 million tonnes per annum of mono-ammonium phosphate (MAP) and
di-ammonium phosphate (DAP)) for Legend′s Paradise Phosphate Project
conducted by Wengfu Group Ltd of China ('Wengfu?). The results of the
feasibility study have confirmed that an expanded development scenario
of the project is technically and economically viable and reports a
stronger internal rate of return and significantly higher net present
value than the base case (600,000 MAP/DAP tonnes per annum as reported
in July 2010). The financial model is robust across a number of market
scenarios.
Legend has also updated the base case financial model with the ten year
MAP/DAP, Aluminum Fluoride (AlF3), Sulphur and Ammonia
forecasts as estimated by CRU Group in April 2011, an independent
commodity analyst based in London, U.K. The DAP/MAP price forecasts are
significantly higher than those used in the July 2010 base case
feasibility study. In July 2010 the ten year (2010 ? 2019) forecast
average was within 2% of US$445 per tonne FOB Tampa, Florida; the April
2011 ten year forecast average has been updated to within 2% of US$512
per tonne DAP FOB Tampa. These forecasts have also been incorporated in
the expanded case financial model.
DAP is currently trading at approximately US$620 per tonne FOB Tampa.
Highlights of the expanded study and updated base case study include:
- Significantly higher forecast DAP prices out to 2019.
- Based on the above forecasts the base case pre-tax NPV%
8.0 has increased from US$1.5 billion (July 2010) to
US$2.2 billion. - The expanded case feasibility study financial results are:
- A pre tax NPV%8.0 of US$4.8 billion.
- A pre tax IRR of 27.9%
- Average annual EBITDA of US$475 million.
- Average annual free cash flow after tax of US$329 million.
- Capital payback period of 5.3 years.
These positive financial results and the quality of Legend′s phosphate
reserves are generating high levels of interest from international
fertilizer buyers and producers. Positive discussions are still
progressing with interested industry corporations for a potential
strategic transaction relating to the development and financing of the
phosphate assets. The process, being conducted by Nomura, has progressed
to a stage whereby a shortlist of the key interested parties are
conducting due diligence and site visits. Legend expects successful
completion of this process, resulting in the partnering with a major
fertilizer industry corporation, in the coming months. A number of
global aluminium producers have also expressed interest in securing the
off-take of Legend′s future aluminium fluoride production and
discussions between these groups have commenced.
The feasibility study, as summarized in Table 1 below, outlines the
financial results of the updated base case for the project and the
expanded case. The financial summary below is based on a 100% project
basis (ungeared).
| Table 1. SUMMARY OF THE PARADISE FEASIBILITY STUDY RESULTS | ||||
| Item | Base Case | Expanded Case | ||
Mineral Reserve1 | 55.5Mt @ 33% P2O5 | |||
Annual Production (DAP/MAP/AlF3) |
|
| ||
Mine Life | 59 yrs | 29 yrs | ||
Total MAP Production ? Assumed 30 yr project | 12Mt | 12Mt | ||
Total DAP Production ? Assumed 30 yr project | 6Mt | 24Mt | ||
Total DAP/MAP/AlF3Revenue Generated (30 yrs)2 | US$14,316M | US$26,900M | ||
Total Free Cash Flow (after tax and capital, 30 yrs) 2 | US$4,111M | US$8,781M | ||
Average Annual EBITDA2 | US$221M | US$475M | ||
Average Annual Free Cash after tax2 | US$158M | US$329M | ||
Development Capital | US$808M | US$1,775M | ||
Capital Payback 2 | 5.1 yrs | 5.3 yrs | ||
Average 2013 ? 2019 Forecast MAP Price (fob Townsville) | US$544/t | |||
Average 2013 ? 2019 Forecast DAP Price (fob Townsville) | US$549/t | |||
MAP Average Cash Operating Margin3 | US$220/t | US$220/t | ||
DAP Average Cash Operating Margin3 | US$225/t | US$226/t | ||
Pre Tax IRR4 | 26.9% | 27.9% | ||
Pre Tax NPV 48.0% | US$2,229M | US$4,790M | ||
After Tax IRR | 22.7% | 23.3% | ||
After Tax NPV 48.0% | US$1,456M | US$3,125M | ||
Notes: |
| 1 As reported in press release dated February 24, 2011 these US SEC Industry Guide 7 compliant Mineral Reserves are defined as the recoverable rock concentrate post screening and processing of the ore through the proposed flotation beneficiation plant to be located at Paradise South. These reserves are in areas that are fully accessible for mining; free of surface or subsurface encumbrance, legal setbacks, environmental reserves and other legal restrictions that preclude permittable access for mining; believed by us to be permittable within a reasonable timeframe; and meet specified minimum physical, economic and chemical criteria related to current mining and production practices of the industry. |
| 2 Excludes inflation (2.5% p.a) and discount rate (8% p.a). |
| 3 Average operating margins are calculated for the forecast window period (2013 to 2019). Excludes inflation and discount rate. Includes AlF3 revenue credit. |
| 4 Includes inflation (2.5% p.a), discount rate (8% p.a), and commodities′ growth factor (4.2% p.a inclusive of 2.5% p.a inflation) as per CRU forecasts, extrapolated to year 2024, with no growth in prices assumed past 2024 except for inflation. |
Expanded Production Study
The Expanded Case project will consist of a:
2Mtpa Rock Concentrate Beneficiation Plant at Paradise South
140km Slurry Pipeline from Paradise South to Mount Isa
1600 ktpa Sulfuric Acid Plant
600 ktpa Phosphoric Acid Plant
240 ktpa Ammonia Plant
1200 ktpa DAP/MAP Plant
30ktpa Aluminium Fluoride (AlF3) Plant
The Expanded Case benefits from increased capacity and differs from the
base case in that a captive ammonia plant and a phosphate rock slurry
pipeline are proposed and included in the capital cost estimate. The
ammonia plant would utilise gas from the Carpentaria Gas Pipeline which
currently passes through the proposed plant site. A slurry pipeline will
be utilized to replace road transportation of phosphate rock between the
Paradise South deposit and Mount Isa. Both investments are justified at
a project of this scale and significantly reduce the operating costs.
Pricing Assumptions
All price assumptions for MAP, DAP, AlF3, Ammonia and Sulphur
reported below are within 2% of the CRU 10-Year Outlook forecasts. All
freight prices have been provided by Braemar Seascope Services. All
prices stated in the tables below are the forecast average between 2013
and 2019. The financial modelling in the feasibility study is based on
these forecasts.
DAP prices are based on a price parity mechanism assuming India as the
exclusive export market. The following formula has been applied:
DAP FOB Tampa, FLorida | US$512/t | ||||
Freight Tampa to East Coast India | US$62/t | ||||
| DAP India cfr | US$574/t | ||||
Freight Townsville to East Coast India | US$25/t | ||||
| DAP FOB Townsville | US$549/t | ||||
MAP prices are based on an import price parity assuming the Australian
market takes the entire demand. The following formula has been applied:
MAP FOB Black Sea | US$497/t | ||||
Freight Black Sea to Townsville | US$47/t | ||||
| MAP FOB Townsville | US$544/t | ||||
Aluminium Fluoride prices are based on an import price parity assuming
the Australian market takes the entire demand. The average forecast
price between 2013 to 2019 is US$1475 per tonne FOB Townsville.
Sulphur prices have been based on equivalent China CFR sulphur forecast
prices with an average price of US$64/tonne.
Ammonia prices have been based on equivalent Far East CFR ammonia
forecast prices with an average price of US$483/tonne. For the expanded
case all ammonia will be produced on site. Based on forecast gas costs
delivered to Mount Isa the average onsite ammonia forecast price is
US$283/tonne.
Forward-Looking Statements
Forward-looking statements in this press release are made pursuant to
the 'safe harbour? provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that such forward-looking
statements involve risks and uncertainties including, without
limitation, the risks of exploration and development stage projects,
risks associated with environmental and other regulatory matters, mining
risks and competition and the volatility of mineral prices. Actual
results and timetables could vary significantly. Additional information
about these and other factors that could affect the Company′s business
is set forth in the Company′s fiscal 2010 Annual Report on Form 10-K and
other filings with the Securities and Exchange Commission.
Legend International Holdings, Inc.
Mr. Joseph Gutnick, 011
613 8532 2866
Chief Executive Officer
Fax: 011 613 8532 2805
josephg@axisc.com.au
or
Legend
International Holdings, Inc.
General Manager Business
New
York Office, (212) 223-0018
Fax: (212) 223-1169
legendinfo@axisc.com.au