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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Thermo-
MAP DAP Phosphate KCl Thermo-Potash
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
-----------------------------------------------------
-----------------------------------------------------
Standard - w/o TK
-----------------------------------------------------
-----------------------------------------------------
Weight (kg) Price (US$) N P K
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Am. Sulphate
(US$258.52/t) 74.2 19.18 1.48% 0.00% 0.00%
-------------------------------------------------
SSP (US$253.07/t) 352.8 89.28 0.00% 7.06% 0.00%
-------------------------------------------------
MAP (US$514.06/t) 239.7 123.22 2.52% 12.94% 0.00%
-------------------------------------------------
KCl (US$515.55/t) 333.3 171.83 0.00% 0.00% 20.00%
-------------------------------------------------
ThermoPotash
($182.31/t) 0 0 0.00% 0.00% 0.00%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Weight 1000 403.53 4.00% 20.00% 20.00%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Optimized Formulation - w/ TK
-----------------------------------------------------
-----------------------------------------------------
Weight (kg) Price (US$) N P K
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Am. Sulphate
(US$258.52/t) 5.6 1.45 0.11% 0.00% 0.00%
-------------------------------------------------
SSP (US$253.07/t) 0 0.00 0.00% 0.00% 0.00%
-------------------------------------------------
MAP (US$514.06/t) 370.4 190.41 3.89% 20.00% 0.00%
-------------------------------------------------
KCl (US$515.55/t) 288.6 148.79 0.00% 0.00% 17.32%
-------------------------------------------------
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
----------------------------------------------------------------------------
Contents (%)
----------------------------------------------------------------------------
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%
----------------------------------------------------------------------------
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%
------------------------------------------------------------
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.
Contacts: Amazon Mining Holding Pl Cristiano Veloso President
& Chief Executive Officer +44 (0) 20 8133 7607 +44(0)20 7405
7773 (FAX) cv@amazonplc.com Amazon Mining Holding Pl Jed Richardson
VP Corporate Development +1(416)866-2966 +1(416)866-8829 (FAX)
jed@amazonplc.com www.amazonplc.com
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