SAGUENAY, QUEBEC - (December 14, 2016) - Arianne Phosphate (the “Company” or “Arianne”) (TSX VENTURE: DAN; OTC: DRRSF; FRANKFURT: JE9N), a development-stage phosphate mining company, advancing the Lac à Paul project in Quebec’s Saguenay-Lac-Saint-Jean region, is pleased to provide a corporate update for the year. “This year has been a very involved and productive year,” said Brian Ostroff, CEO of Arianne Phosphate. “Bringing the Lac à Paul project into production requires many aspects to come together. Having received our permit almost a year ago, we have been busy discussing and planning the integration of the many aspects required. The successful implementation of this work requires the selection of key suppliers, finalizing the engineering, finding customers and, of course, raising the necessary funding, all of which we believe we have made significant progress towards. As 2016 comes to an end, we want to keep our investors, First Nations, stakeholders and followers appraised of our activities to date and set some milestones for the New Year.”
Selection of Key Suppliers
Throughout the year, Arianne has worked very closely with key potential suppliers for both technologies and services that will be required to construct the Lac à Paul mine. This process is well advanced and the Company believes that it will be in a position to make some of these announcements early in the coming year. These discussions have been very detailed and, aside from providing an assessment of potential suppliers, Arianne believes that it should provide for both cost and scheduling certainty for the project. As well, aside from the technical aspects, discussions with potential suppliers also focused on the necessity of chosen suppliers to have a workable financing plan in place, either through themselves or financial institutions.
Continued Project Optimization
Since Arianne released its Bankable Feasibility Study back in 2013, the Company has systematically been able to advance and improve its Lac à Paul project, bringing down its anticipated operating costs. One of the many major benefits to the process undertaken with suppliers over the past year has been the generation of many new concepts on how to better optimize the project. The detailed look through every aspect of the project; construction, mining, processing, transport and financing has yielded many ideas on how the project can continue to improve well beyond what has been accomplished to date. Arianne believes that it can be one of the lowest cash cost producers of high purity phosphate concentrate.
Providing Cost and Scheduling Certainty
As mentioned, the process of reviewing and selecting preferred suppliers has allowed for a full review of the project which moves us towards greater certainty. The competitive process which is being undertaken by potential suppliers has resulted in refreshed quotes having been received and will provide greater clarity around the full costs and scheduling associated with the project. As part of the early services to be received, detailed engineering will be advanced. The greater certainty around process, scheduling and cost will provide an increased comfort on the part of financial institutions which should, in turn, diminish the amounts required to be raised as part of a contingency. In the end, Arianne believes that greater certainty provides greater likelihood of financing on better terms.
Permitting of the port
As part of the operating plan to ship Arianne’s high purity concentrate to customers around the world, the Company is looking to have a maritime facility built on the north shore of the Saguenay River, several kilometers away from the already existing facilities operated by the Port of Saguenay. The permitting activities are in the domain of the Port of Saguenay and, with the support of Arianne, are steadily moving forward. The process has been ongoing for some time now and the public hearings concluded in early October 2016 with follow up questions from both the public and regulators currently being responded to. The Port of Saguenay is anticipating receiving its permit towards the end of the second quarter of 2017 and, in anticipation of this; Arianne announced several weeks ago (see Press Release dated November 1, 2016) that it had exercised options to purchase the land where the maritime terminal will be.
In summer of 2015, Arianne signed a Cooperation Agreement with the three Innu First Nations groups; the Pessamit, Mastheuiatsh and Essipit. Since the signing of the agreement, there have been several meetings with the First Nations groups providing ongoing information on the project and seeing how, as a group, we can continue to work in a prudent and progressive manner to the betterment of all involved. Issues such as jobs and business opportunities for First Nation’s owned business are at the forefront of these conversations and there is a strong commitment on the part of all to see the Lac à Paul project benefits all communities. High-level meetings will continue on an ongoing basis to keep all the parties informed as the project progresses.
Throughout the year, the Arianne team has been involved in many activities; meetings, information sessions and round tables with the region’s stakeholders keeping them up to date on the progress of the project. There continues to be very strong support for the project on many levels as it is anticipated to bring substantial social and economic benefits to the region. A Raymond Chabot Grant Thornton study released in 2014 (see Press Release dated February 25, 2014) projected $12.5B in economic benefit to the Saguenay-Lac-Saint-Jean region, comprised of employment revenue and payroll taxes through the construction, operation, closure and reclamation of the mine. Given the size and scope of the project, Arianne is well situated to become a major employer in the region as development begins. The ability to diversify the region’s employment base as well as reduce the area’s unemployment rate are strong motivators for the project as well over 3,000 resumes were received within weeks of Arianne having received its Ministerial Decree (permit) at the end of 2015.
All activities necessary to move Lac à Paul towards receiving project financing are currently well underway. In July, Arianne engaged UK-based project finance advisor Endeavour Financial to structure and review a financing plan and interface with potential financing partners comprised of Banks, Export Credits Agencies, Sovereigns and Equipment Financiers. As well, Arianne continues to receive strong support from the Quebec Government and continues to work closely with the Government on various aspects of the financing.
In order to help secure financing, the independent review of most aspects of the project and business has been underway so as to answer and provide all necessary details to the financial institutions and to remove as much uncertainty as possible. This work, along with the work provided by potential suppliers, has brought about some new ideas on structure that may remove some of the amounts and burden on the project and its shareholders. It is anticipated that financing will be comprised of various tranches of debt, suppliers and equipment financing, off-takers and equity. Discussions are ongoing with all of these parties and Arianne continues to work towards putting a final plan financing in place.
The phosphate business is very integrated with over 85% of all phosphate rock production (mines) owned by vertically integrated companies. This trend looks set to continue over the coming years resulting in fewer independent operations. As finished phosphate producers look to try and compete and streamline operations, we believe that ways to become vertically integrated become more important. Discussions have been underway with numerous potential partners who are assessing the strategic benefit of Arianne’s Lac à Paul deposit. These conversations are geared towards understanding who may have an interest directly on a project or corporate level and off-takers whose interest would be more around the output from the mine in exchange for financial commitments. Ultimately, it is from these discussions that Arianne can make its final decisions on financing and next corporate steps.
Arianne continues to believe that the overall macro environment should continue to drive interest in the project and a willingness to be part of it in some capacity, be it financial or strategic. The demand for phosphate continues to increase year over year and is projected to continue to do so at roughly 2% per year and, although the price of phosphate fertilizer (MAP & DAP) has come down this year, the price of phosphate rock has held relatively stable. The deficit of phosphate rock that exists in most areas around the world, including North America, is projected to continue growing adding to the reliance of these populations on the stability of supply coming out of the Middle East and North Africa.
Another aspect that has grown in awareness over the last couple of years is the nature of the phosphate rock that is used in producing finished products such as fertilizer and food ingredients. The attention surrounding the environmental aspects of phosphate through both legislation and negative environmental events has led to a greater scrutiny of the actual phosphate rock that is used. With this backdrop, deposits such as Arianne’s, capable of producing a concentrate higher in purity with lower contaminants, will be sought and the premium pricing received should be maintained. This is especially true in considering the growing use of phosphate in human applications such as food ingredients.
Lastly, after four difficult years in the fertilizer markets in which many fertilizer companies had slowed down their corporate activities, there has been a recent resurgence in deal activity. The current year has seen several large and high-profile deals in both the fertilizer and agricultural space. With many of the larger companies seeing 2016 as a cycle bottom, assets will continue to be under review and companies will make determinations on what is core or non-core. With these determinations in place, we should see continued interest in deal activity in the space.
Catalysts & Milestones
Arianne over the years has consistently set and met milestones that have been within the Company’s control as it seeks to develop its Lac à Paul project. In 2017, major milestones include; project financing and/or a strategic transaction, advancement of detailed engineering resulting in continued optimization of the project providing for “cost & scheduling certainty” to the highest degree possible, contract with end users of our product and begin the development of our Lac à Paul project.
“We believe that much of our hard work through this past year will prove to be the reason that this project moves forward and receives its financing and/or outside corporate involvement,” said Brian Ostroff, CEO of Arianne Phosphate. “Over the years, Arianne has had a long history of setting and meeting its milestones and the Company takes seriously its responsibility to its stakeholders, First Nations and shareholders to advance the project in order to provide strong social and economic returns. I want to thank the staff of Arianne for their hard work and commitment to advancing the project and of course to our stakeholders, First Nations and investors for being so supportive. Our hope is to finalize some of what has been talked about here early in the coming year and provide updates as soon as possible.”
About Arianne Phosphate
Arianne Phosphate (“Arianne Phosphate Inc.”) (www.arianne-inc.com) is developing the Lac à Paul phosphate deposits located approximately 200 km north of the Saguenay/Lac St. Jean area of Quebec, Canada. These deposits will produce a high quality igneous apatite concentrate grading 39% P2O5 with little or no contaminants. The Company has 97,648,080 million shares outstanding.
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.
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Cautionary Statements Regarding Forward Looking Information
This news release contains “forward-looking statements” and “forward-looking information” within the meaning of applicable securities regulations in Canada and the United States (collectively, “forward-looking information”). Forward-looking information includes, but is not limited to, anticipated quality and production of the apatite concentrate at the Lac à Paul project. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects, “is expected”, “budget”, “scheduled”, “estimates”, forecasts”, “intends”, “anticipates”, or “believes”, or the negatives thereof or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, or “will” be taken, occur or be achieved. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: volatile stock price; risks related to changes in commodity prices; sources and cost of power facilities; the estimation of initial and sustaining capital requirements; the estimation of labour and operating costs; the general global markets and economic conditions; the risk associated with exploration, development and operations of mineral deposits; the estimation of mineral reserves and resources; the risks associated with uninsurable risks arising during the course of exploration, development and production; risks associated with currency fluctuations; environmental risks; competition faced in securing experienced personnel; access to adequate infrastructure to support mining, processing, development and exploration activities; the risks associated with changes in the mining regulatory regime governing the Company; completion of the environmental assessment process; risks related to regulatory and permitting delays; risks related to potential conflicts of interest; the reliance on key personnel; financing, capitalization and liquidity risks including the risk that the financing necessary to fund continued exploration and development activities at Lac à Paul project may not be available on satisfactory terms, or at all; the risk of potential dilution through the issue of common shares; the risk of litigation. Forward-looking information is based on assumptions management believes to be reasonable at the time such statements are made, including but not limited to, continued exploration activities, no material adverse change in commodity prices, exploration and development plans proceeding in accordance with plans and such plans achieving their stated expected outcomes, receipt of required regulatory approvals, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. Forward-looking information is made as of the date of this press release, and the Company does not undertake to update such forward-looking information except in accordance with applicable securities laws.