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Independent Study Indicates ThermoPotash Potential Sales Price of US$182.31/t for Minas Gerais State
Potential Market Size of 4.4Mtpy
TORONTO, ONTARIO, Oct. 26, 2010 (Marketwire) -- Amazon Mining Holding Plc (TSX VENTURE:AMZ) ("Amazon" or the "Company"), is pleased to report the results of an independent market study ("The Study") conducted by Agroconsult Consultoria & Marketing ("Agroconsult") for Amazon's wholly-owned Cerrado Verde project ("Cerrado Verde" or the "Project") in Minas Gerais State, Brazil. The Study determined a potential sales price of US$182.31/t for ThermoPotash in Minas Gerais State, and a potential weighted average price of US$152.49/t for the targeted markets in the surrounding states detailed in Table 1. The potential market in the area analyzed is estimated to be 4.4 million tonnes per year. After adjusting for delivery costs, net sales price for Amazon is estimated to be US$160.04/t for Minas Gerais State and US$100.61/t for the targeted markets in the surrounding states. The results of this study will form the basis of an upcoming preliminary economic assessment examining the viability of this project for the first time.
The Study focused on ThermoPotash being used as raw material for NPK formulations and being sold directly to blenders. The recommended sales price is based exclusively on how blenders can optimize NPK formulas by using a wide range of raw materials as sources of Nitrogen, Phosphate and Potash. Therefore the Study does not take into account ThermoPotash's slow-release, non-chloride and multi-nutrient characteristics.
Table 1: ThermoPotash Targeted Markets and prices (US$ in tonnes)
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Delivery-
Market Blenders' Amazon adjusted
Potential Breakeven Potential Sales
State (tonnes) Price Sales Price Price(1)
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Minas Gerais 896,051 $ 190.22 $ 182.31 $ 160.04
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Mato Grosso 895,043 $ 196.61 $ 189.85 $ 130.13
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Goias 495,687 $ 156.68 $ 142.64 $ 112.98
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Parana 778,171 $ 132.45 $ 131.01 $ 63.68
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Mato Grosso do Sul 246,621 $ 181.45 $ 179.47 $ 122.20
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Bahia 325,181 $ 155.58 $ 141.61 $ 93.98
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Sao Paulo 722,513 $ 134.02 $ 131.77 $ 90.92
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Total Market
Potential 4,359,267
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Weighted Average $ 165.01 $ 158.62 $ 112.82
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NOTE
(1) The delivered price takes into account interstate shipping taxes.
Agroconsult analyzed the feasibility of incorporating ThermoPotash as the source of potash in the most common NPK formulations used in the markets of the above mentioned states. The following methodology was used to determine sales price and market potential:
1. An Evaluation of the 2010 fertilizer market in Minas Gerais was
completed considering the demand by crop and by nutrient (N, P2O5 and
K2O) and specific fertilizer blend.
2. The costs of traditional NPK formulations using currently available raw
materials were compared to the cost of the same formulations using
ThermoPotash.
3. The price of ThermoPotash was derived presuming that the total raw
material cost of NPK formulations using ThermoPotash as a partial
replacement for KCl ("Optimized Formulation") was the same as original
formulation, for which a weighted average was determined.
Table 2: Fertilizer Elements and Prices used for Analysis:
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Am. Sulphate Urea Am. Nitrate SSP STP
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N 20.0% 46.0% 34.5%
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P 20.0% 46.0%
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K
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US$ Price(1) 258.52 366.42 348.67 253.07 410.81
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Table 2: Fertilizer Elements and Prices used for Analysis:
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Thermo-
MAP DAP Phosphate KCl Thermo-Potash
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N 10.5% 16.0%
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P 54.0% 45.0% 17.0%
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K 60.0% 8.0%
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US$ Price(1) 514.06 560.82 265.00 515.55 182.31(2)
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NOTE
(1) Price currently paid by blenders for fertilizers delivered at Uberaba
fertilizer complex, Minas Gerais state.
(2) Expected sale price for Minas Gerais State
Table 3: Optimized Formulation vs. Standard Formulation in 4-20-20
Fertilizer
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Standard - w/o TK
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Weight (kg) Price (US$) N P K
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Am. Sulphate
(US$258.52/t) 74.2 19.18 1.48% 0.00% 0.00%
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SSP (US$253.07/t) 352.8 89.28 0.00% 7.06% 0.00%
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MAP (US$514.06/t) 239.7 123.22 2.52% 12.94% 0.00%
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KCl (US$515.55/t) 333.3 171.83 0.00% 0.00% 20.00%
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ThermoPotash
($182.31/t) 0 0 0.00% 0.00% 0.00%
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Total Weight 1000 403.53 4.00% 20.00% 20.00%
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Optimized Formulation - w/ TK
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Weight (kg) Price (US$) N P K
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Am. Sulphate
(US$258.52/t) 5.6 1.45 0.11% 0.00% 0.00%
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SSP (US$253.07/t) 0 0.00 0.00% 0.00% 0.00%
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MAP (US$514.06/t) 370.4 190.41 3.89% 20.00% 0.00%
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KCl (US$515.55/t) 288.6 148.79 0.00% 0.00% 17.32%
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ThermoPotash
($182.31/t) 335.5 61.16 0.00% 0.00% 2.68%
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Total Weight 1000 401.81 4.00% 20.00% 20.00%
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Benefits of ThermoPotash blended formulas to farmers
-- Provides 13.4% of the potash in a slow release form;
-- Allows farmers to reduce their use of limestone for pH correction by 164
kg per tonne applied;
-- Provides substantial doses of other macronutrients (calcium, magnesium
and bio available silicon);
-- No change in application method or cost.
Benefits of adopting ThermoPotash to the fertilizer blenders
-- There are virtually no losses to fines in ThermoPotash (up to 10% of KCl
delivered in Brazil as granules ends up as powder due to
transportation);
-- Lowers inventory risk due to long lead times (Brazilian blenders have to
wait approximately 60 days to receive KCl bought from Russia or Canada);
-- Increased profit margins (Blenders' margins average less than 5%).
The Optimized Formulations provide the same levels of NPK as the original formulation. By contrast the ThermoPotash Optimized Formulations substitute different secondary nutrients (see below Table 4). The calculated weighted average sales price is based on the successful development of product 3. The Company is also working on developing other products.
Table 4: Different product formulations for ThermoPotash
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Contents (%)
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Elements Product 1 Product 2 Product 3
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K2O 8.0% 8.0% 8.0%
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CaO 30.0% 19.5% 30.0%
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SiO2 40.0% 32.7% 30.0%
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MgO 2.3% 8.6% 2.3%
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S 0.0% 0.0% 10.0%
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Status Pilot scale Lab scale
production production Under development
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Market Potential
Agroconsult estimates that, by incorporating ThermoPotash into fertilizer blends in this manner, the total market would be approximately 4.4 million tonnes per annum (see Table 1 above for details), with the potential to reduce KCl consumption by farmers in the region by 12.7%, or approximately 581,236 tonnes. Overall, the states mentioned account for approximately 76% of Brazil's potash consumption.
Transport Cost
The price of US$182.31/t is a Cost & Freight price for Minas Gerais State blenders, Amazon would have to absorb ThermoPotash's delivery costs to the two main blender complexes in the state: to Uberaba at an estimated US$17.77/t and to the Minas South Complex at an estimated US$32.77/t. Considering that the initial expectation is to sell 70% to Uberaba and 30% to Minas South Complex, the average FOB (Freight on Board) price estimate for Minas Gerais State is US$160.04/t.
Price Sensitivity Analysis
Pricing is sensitive to moves in all three components. Agroconsult estimates a 10% increase in prices of Nitrogen, Phosphorus and Potash would increase the ThermoPotash's price potential by US$12.01, US$5.74 and US$6.87, per tonne respectively. Conversely, a 10% decrease in the prices of Nitrogen, Phosphorus and Potash would decrease ThermoPotash's price potential by US$6.44, US$5.75, and US$6.88 per tonne. Table 5 illustrates the results of the sensitivity analysis.
Table 5: Sensitivity Analysis Results
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Change in Element Prices +10% -10%
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Nitrogen +US$12.01 -US$6.44
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Phosphorus +US$5.74 -US$5.75
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Potash +US$6.87 -US$6.88
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Commenting President and CEO, Cristiano Veloso said, "We congratulate Agroconsult and our VP Operations Mauricio Sampaio for developing this ingenious strategy to introduce ThermoPotash to the Brazilian market, which will create a true win-win-win for farmers, blenders, and Amazon and our shareholders. The incorporation of ThermoPotash into NPK formulations will virtually eliminate adoption risk for farmers, and will reduce costs and increase flexibility for blenders, therefore securing strong prices for our proposed product. This strategy takes advantage of longstanding price inequalities in component prices for both nitrogen and phosphate, providing blenders with a new potash product that allows them to optimize use of the most economical nitrogen and phosphate components. Delivery-adjusted sales price will become the basis of our upcoming Preliminary Economic Assessment."
About Agroconsult
Agroconsult Consultoria & Marketing is a leading consulting company focused on agribusiness founded in 2000. Clients include: BHP Billiton, Bunge, Fosfertil, Petrobras, Heringer, Bayer, Santander, Citibank, John Deere, Bando do Brasil and Syngenta. Agroconsult's team is comprised of a multi-disciplinary group of professionals who follow the market closely, prepare in depth analyses on the various agribusiness segments with a view to formulating short, medium and long term market trend reports on the main agricultural commodities as well as to developing customized studies and projects. http://www.agroconsult.com.br
About Amazon
Amazon Mining is a mineral exploration and development company founded by Brazilians in 2005. The company is focused on the development of Cerrado Verde project. Cerrado Verde is source of a potash rich rock from which Amazon plans to produce a slow-release, non-chloride, multi-nutrient, fertilizer product. Amazon Mining is a UK public company with shares listed on the TSX Venture Exchange since November 2007.
On behalf of the Board of Directors of Amazon Mining Holding Plc, Jed Richardson, Vice President of Corporate Development.
Cautionary Language and Forward Looking Statements
THIS PRESS RELEASE CONTAINS CERTAIN "FORWARD LOOKING STATEMENTS", WHICH INCLUDE BUT IS NOT LIMITED TO, STATEMENTS WITH RESPECT TO THE FUTURE FINANCIAL OR OPERATING PERFORMANCE OF THE COMPANY, ITS SUBSIDIARIES AND ITS PROJECTS, STATEMENTS REGARDING USE OF PROCEEDS, EXPLORATION PROSPECTS, IDENTIFICATION OF MINERAL RESERVES, COSTS OF AND CAPITAL FOR EXPLORATION PROJECTS, EXPLORATION EXPENDITURES, TIMING OF FUTURE EXPLORATION AND PERMITTING, REQUIREMENTS FOR ADDITIONAL CAPITAL, GOVERNMENT REGULATIONS OF MINING OPERATIONS, ENVIRONMENTAL RISKS, RECLAMATION EXPENSES, TITLE DISPUTES OR CLAIMS, AND LIMITATIONS OF INSURANCE COVERAGE. FORWARD LOOKING STATEMENTS CAN GENERALLY BE IDENTIFIED BY THE USE OF WORDS SUCH AS "PLANS", "EXPECTS", OR "DOES NOT EXPECT" OR "IS EXPECTED", "ANTICIPATES" OR "DOES NOT ANTICIPATE", OR "BELIEVES", "INTENDS", "FORECASTS", "BUDGET", "SCHEDULED", "ESTIMATES" OR VARIATIONS OF SUCH WORDS OR PHRASES OR STATE THAT CERTAIN ACTIONS, EVENT, OR RESULTS "MAY", "COULD", "WOULD", "MIGHT", OR "WILL BE TAKEN", "OCCUR" OR "BE ACHIEVED". FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SAID STATEMENTS. THERE CAN BE NO ASSURANCES THAT FORWARD-LOOKING STATEMENTS WILL PROVE TO BE ACCURATE, AS ACTUAL RESULTS AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SAID STATEMENTS. ACCORDINGLY, READERS SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS.
The potential grades detailed in this release are conceptual in nature. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the targets being delineated as a mineral resource.
Readers are cautioned not to rely solely on the summary of such information contained in this release and are directed to the complete set of drill results posted on Amazon's website (www.amazonplc.com) and filed on SEDAR (www.sedar.com) and any future amendments to such. Readers are also directed to the cautionary notices and disclaimers contained herein.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Amazon Mining Holding Pl President & Chief Executive Officer +44 (0) 20 8133 7607 +44(0)20 7405 7773 (FAX) cv@amazonplc.com Amazon Mining Holding Pl VP Corporate Development +1(416)866-2966 +1(416)866-8829 (FAX) jed@amazonplc.com www.amazonplc.com
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