Harnessing the World s Growing Appetite

Transcription

1 Harnessing the World s Growing Appetite February 10, 2011 TSX: ST

2 Disclaimer The contents of this presentation are not to be reproduced or distributed to any third party, including the general public or the media, without the express written consent of Stonegate Agricom Ltd. ( Stonegate or the Corporation ). The information contained herein, while obtained from available sources which the Corporation believes are reliable, is not guaranteed as to its accuracy or completeness. Stonegate is engaged in the business of acquiring, exploring and developing agricultural nutrient projects and is currently focused on the exploration and development of the Mantaro phosphate project located in Peru (the Mantaro Project ) and the Paris Hills phosphate project located in Bear Lake County, Idaho (the Paris Hills Project ). Cautionary Note Regarding Forward-Looking Information This presentation contains forward-looking statements and forward-looking information within the meaning of applicable law. Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, believes, 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. All forward-looking statements and forward-looking information are based on reasonable assumptions that have been made by the Corporation as at the date of such information. Forward-looking statements and forward-looking information are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Corporation to be materially different from those expressed or implied by such forward-looking statements and forward-looking information, including but not limited to: the general risks associated with the speculative nature of the Corporation s business, commodity prices, current global financial conditions, uncertainty of additional capital, the Mantaro Project and the Paris Hills Project are early stage projects, limited operating history, no history of earnings, government regulation, environmental risks and hazards associated with applicable climate change legislation, required approvals and permits, Peruvian mining law requirements, foreign operations, political and economic risk and uncertainty in Peru, risks relating to the acquisition of the Mantaro Project, risks relating to the acquisition of the Paris Hills Project, expiration of leases and permits for the Paris Hills Project and other land title matters, conversion of concessions, water rights, exploration, development and operating risks, uncertainty in the estimation of mineral resources, uncertainty of inferred mineral resources, reliability of historical exploration work, absence of public trading market, risks associated with having a controlling shareholder, dependence on key personnel, currency fluctuations, uninsured risks, competition, legal proceedings, conflicts of interest and lack of dividends. Although the Corporation has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements and 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 information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or forward-looking information. Stonegate does not undertake to update any forward-looking statement or forward-looking information that is included herein, except in accordance with applicable securities laws. Cautionary Note to United States Investors Concerning Estimates of Mineral Resources This presentation uses the terms Measured Mineral Resources, Indicated Mineral Resources and Inferred Mineral Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations to be disclosed, the United States Securities and Exchange Commission generally does not permit disclosure of mineral resources of any kind in documents filed with the United States Securities and Exchange Commission. Inferred Mineral Resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured Mineral Resources or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. Cautionary Note Regarding Conceptual Mineral Deposit at the Mantaro Project This presentation contains a potential tonnage of phosphate rock at the Mantaro Project on zones which are considered exploration targets at this stage. The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource. The target zones have been geologically mapped and exhibit surface mineralization widths similar to the zone on which Measured, Indicated and Inferred Mineral Resources have been estimated. The contents of this presentation are for informational purposes only and do not constitute an offer to sell or a solicitation to purchase any securities referred to herein. TSX: ST 2

3 Highlights - Stonegate Agricom (TSX: ST) Two world-class phosphate deposits (Peru, Idaho) Fully funded for definition drilling and feasibility studies Potential strategic sources of supply for fertilizer companies Top-quality and experienced Management team and Board of Directors Phosphate an essential ingredient in fertilizers Fertilizer demand rising to meet global food needs TSX: ST 3

4 Stonegate s Strong Financial Position and Sponsorship Completed IPO in April 2010 and raised C$51.75 million gross proceeds Sufficient funds to take both projects through feasibility Sophisticated major shareholder, Board of Directors and management committed to seeing the projects through to completion and realizing full value for shareholders Sprott Resource Corporation owns 54% of outstanding shares Co-Chairmen are Ian McDonald and Kerry Knoll, co-founders of: Blue Pearl (now Thompson Creek) Wheaton River (merged with Goldcorp) Glencairn Gold (acquired by B2Gold) TSX: ST 4

5 Project Off-Take / Joint Venture Strategy Stonegate to Target Vertically Integrated Segment: Large fertilizer producers Trading companies End-user groups seeking secure supply Projects Meet Industry Need for Strategic Sources of Supply Size Grade Location GLOBAL PHOSPHATE ROCK CONCENTRATE MARKET Vertically Integrated Segment not sold in open market 70% 176 million tonnes/annum Merchant Market 30% TSX: ST 5

6 Key Factors Impacting World Fertilizer Demand Long-term Trends: World population growth Changing diet in emerging economies Constraints on arable land Government policies to enhance farm yields Biofuels 2011 Drivers: Global grain inventories near all time low Farmers can afford to pay more for nutrients Source: International Plant Nutrition Institute. Example of extreme phosphate (phosphorus) deficiency in a research field in Storrs, Connecticut. Tall rows of corn on the right received phosphate fertilizer while the short rows of corn on the left did not. TSX: ST 6

7 Thousands of KCal per Capita per Day Hectars of Arable Land per Person Fertilizer Demand Driven by Demographics Food Consumption per Capita Calories consumed per person globally expected to increase by some 30% ( ) Arable Land per Person Arable land per person is expected to decrease approximately 47% ( ) Increasing population and consumption per capita are straining global food supply Source: U.S. Geological Survey and International Fertilizer Industry Association TSX: ST 7

8 KCal / Person / Day Relationship Between Per Capita GDP and Caloric Intake Income Levels Impact Food Consumption USA Canada Brazil China India Rapid growth in caloric consumption as developing countries experience real economic growth Source: FAO, IMF, Potash Corp. $US GDP per Capita TSX: ST 8

9 All Basic Drivers Are in Place to Support Long-term Growth in Fertilizers GLOBAL DRIVERS Population Growth Income Growth Biofuels Grain Required to Produce Proteins 2.3 kg grain = 1 kg chicken 5.9 kg grain = 1 kg pork 13 kg grain = 1 kg beef Fertilizer Consumption Meat Consumption 21 kg grain = 1 kg lamb Population Source: USDA, IFA, U.S. Census Bureau, ICL TSX: ST 9

10 Global Fertilizer Consumption 39.3% Other 30% China 5% Brazil 12.7% USA 13% India Global fertilizer consumption forecast to grow by 45% between 2005 and 2030* *Source: Forecasting Long-Term Global Fertilizer Demand, Food and Agriculture Organization (FAO) of the United Nations, Rome, TSX: ST 10

11 World Phosphate Rock Reserves 65,000 million tonnes* * Source: 2010 Reserves, Millions of Metric Tonnes, U.S. Geological Survey, Mineral Commodity Summaries, January 2011 TSX: ST 11

12 North Africa Phosphate Production and Reserves Four countries in North Africa account for: 23% of world production 80% of world reserves Source: 2010 Estimate, U.S. Geological Survey, Mineral Commodity Summaries, January Phosphate rock concentrate production (% of world total): Morocco and Western Sahara (14.8%); Algeria (1.1%); Tunisia (4.3%); Egypt (2.8%). Phosphate rock reserves (% of world total): Morocco and Western Sahara (76.9%); Algeria (3.4%); Tunisia (0.2%); and Egypt (0.2%). TSX: ST 12

13 Phosphate Crucial for Food Production Global Fertilizer Consumption 40% of world food production is directly linked to fertilizer applications Phosphate fertilizers facilitate Root development Water-use efficiency 23% Phosphate 16% Potash 61% Nitrogen Early plant maturity Higher yields No substitutes/recycling exist for phosphate in agricultural uses Source: FAO, USGS (2008 statistics) and International Plant Nutrition Institute. Percentages based on average annual tonnes of fertilizer applied. TSX: ST 13

14 Phosphate Basics Phosphate Rock Converted into Fertilizer Phosphate from mineral deposits is the only source of phosphate used in fertilizers. Phosphate Fertilizers Single superphosphate (SSP) Triple superphosphate (TSP) Diammonium phosphate (DAP) Monoammonium phosphate (MAP) SSP Phosphate Ore (Deposit) Typical in situ grades: 4-35% P 2 O 5 Phosphate Rock (PhosRock) (Concentrate) > 28% P 2 O 5 Phosphoric Acid (Intermediate Feedstock) TSP DAP/MAP TSX: ST 14

15 Price (US$ per tonne) Price of Phosphate Rock Concentrate 32 33% P 2 O 5 FOB Morocco Average Annual Price over 50-year Period Current Price: $150 - $160/tonne Price is up 24% since Stonegate s IPO in April 2010 New Development: Phosphate Rock Concentrate pricing changed to 31-33% P in Q Source for historical data: Fertilizer Week and other research publications, British Sulphur Consultants, a division of CRU International Ltd. TSX: ST 15

16 Mantaro: Project Overview World-class phosphate deposit in Peru 250 km east of Lima 10 km from highway and rail Electrical grid crosses the property Strategic location Rail/truck access to Pacific ports near Lima for shipment to Asia and North America Mantaro Property TSX: ST 16

17 Mantaro: What Is It? Mantaro is an ancient seabed that has been folded in a syncline structure Typical syncline is U shape with limbs at the surface (West and Far East) Phosphate Fault activity pushed lower mineralization to the surface (East), allowing for more costefficient methods of accessing the deposit TSX: ST 17

18 Mantaro: Three Parallel Phosphate Zones 22 kilometres (mapped) #3 Far East #2 East #1 West 66 km total mapped strike length Surface expression of phosphate zone TSX: ST 18

19 Mantaro: World-class Resource Potential Mineral Resource Estimate: NI compliant Resource Category 1 Tonnes (millions) Grade (% P 2 O 5 ) Contained P 2 O 5 (millions of tonnes) West: Measured West: Indicated West: M & I West: Inferred Potential (Conceptual) Tonnage Estimates 3 East Far East Mineral resources are estimated by Michelle Stone, PhD., P.Geo., as described in a Technical Report by Hains and Stone dated February 21, Michelle Stone, PhD., P.Geo. is the qualified person as defined in National Instrument for the resource estimates. 2 Measured and Indicated Mineral Resources are reported using a 4% P2O5 cut-off. Inferred Mineral Resources are reported with an assumed grade of 9% and no cut-off. 3 The potential conceptual tonnage estimates of phosphate rock are on zones that are considered exploration targets at this stage. The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource. The target zones have been geologically mapped and exhibit surface mineralization widths similar to the zone on which Measured, Indicated and Inferred Mineral Resources have been estimated. TSX: ST 19

20 Mantaro: Development Milestones TSX: ST 20

21 Paris Hills: Overview High-grade phosphate deposit in Idaho Located 72 km south of active phosphate mining in Idaho: Monsanto (South Rasmussen) Agrium (Dry Valley) Paris Hills Property Simplot (Smoky Canyon) Close to processing facilities Extensive infrastructure available 3 Historic mines on the property TSX: ST 21

22 Paris Hills: Phosphate Mineralization North-South Long Section, Looking West Lower Zone metres Upper Zone 3-5 metres TSX: ST 22

23 Paris Hills: Drill-tested Mineralization Drill Hole Status Map Feb. 8, 2011 Strike length of over 3.2 km Deposit is uniform and predictable Definition diamond drilling commenced in September 2010 Initial assays on core samples confirm early 1970s drilling results Approx. 30 holes planned in 2010/2011 Pre-Feasibility Study expected to be completed by end-2011 TSX: ST 23

24 Paris Hills: Drilling Results Drill Hole Status Map February 8, 2011 Hole Upper Lower Hole Upper Lower PA PA ~ PA PA PA PA011A PA PA016A ~ PA PA PA ~ PA These results have been reviewed and approved by Michelle Stone, Ph.D., P.Geo., Vice President Exploration of Stonegate Agricom, who is a qualified person as defined in National Instrument See details, in the Appendix. TSX: ST 24

25 Paris Hills: Previous Estimates of Phosphate Mineral Resources Category Resources * Cutoff (% P 2 O 5 ) Zone Tonnes (millions) Grade (% P 2 O 5 ) Contained P 2 O 5 (millions of tonnes) Inferred 20% Upper Zone Inferred 20% Lower Zone Total % Total Includes Historical (Non Compliant)* Resources Upper Zone Resources Lower Zone * Note: Inferred mineral resources estimates are by AMEC as of February 1, Edward J.C. Orbock III, M.AusIMM is the qualified person as defined in National Instrument The Historical mineral resources estimates were reported in 1976 by Earth Sciences, Inc. (ESI), based on exploration work between 1973 and This estimate does not conform to the mineral resource and mineral reserve estimation and reporting requirements as defined in NI and should not be relied upon. The historical estimate is being presented for information purposes only. Stonegate is not treating this estimate as a current mineral resource or mineral reserve as defined in sections 1.2 and 1.3 of NI TSX: ST 25

26 Paris Hills: Development Milestones TSX: ST 26

27 Management Team Mark N.J. Ashcroft, P.Eng. President and CEO Involved in various capacities in the global mining industry and the North American and European debt and equity markets since 1990 Former investment banker at Versant Partners, Toll Cross Securities, Standard Bank and Barclays Capital From 1990 to 1998, he worked in various mining production and technical roles and qualified as a Professional Engineer in Ontario Kenneth Norris, P.Eng. VP Project Development 23 years of experience managing gold and base metal mines Recently COO of Minas de Aguas Tenidas, S.A.U., where he was responsible for the initial development of a new underground polymetallic mine in southern Spain James Geyer VP North America 35 years of experience constructing and managing open-pit and underground gold and base metal mines in the Americas and Australia, recently as Senior Vice President of Gold Reserve Inc. Currently a Director of Gold Reserve Inc. and Thompson Creek Metals Company Inc. Michelle Stone, PhD., P.Geo. VP Exploration Professional Geologist with more than 16 years of exploration and mining experience. Member of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Previously held geologist positions with WMC Resources, Capstone Mining and Silverstone Resources Germaine Coombs VP and CFO More than 15 years of financial and management experience, mainly in the mining industry Former Corporate Controller, FNX Mining Company Inc. from 2004 until May 2010 when it merged with Quadra Mining Ltd. Previously held senior accounting roles in operations and finance at Iron Ore Company of Canada (owned by Rio Tinto) Graham Speirs, P.Eng. VPSouth America and General Manager, Mantaro Project Recently COO of B2Gold/Central Sun Mining Inc. Resident of Peru since 1997, constructed three mines in Peru with Milpo. Has worked with J.S. Redpath, SNC Lavalin and AMEC International William Napier VP Sustainability Extensive experience in environmental monitoring, management and permitting Former VP, Environment, Health & Safety, Inco Ltd. Managed the permitting of Voisey s Bay (Canada) and Goro Nickel (New Caledonia) TSX: ST 27

28 Board of Directors Ian McDonald, Co-Chairman Co-founder of Blue Pearl Mining Inc., Glencairn Gold Corporation and Wheaton River Minerals Ltd. Former Vice-Chairman, Thompson Creek Metals Company Laurence Curtis Over 35 years of international experience in the natural resource sector with global experience Founder of Intrepid Minerals in 1996 and was President and CEO until 2008 and former President of Curtis & Associates, a mineral resource consulting firm, from 1980 to 1996 Mark N.J. Ashcroft, P.Eng. President and Chief Executive Officer of Stonegate Agricom Ltd. More than 20 years of experience in mining and investment banking Former investment banker at Versant Partners, Toll Cross Securities, Standard Bank and Barclays Capital. Worked from 1990 to 1998 in various mining production and technical roles in Canada and Australia. Denis Arsenault Former CFO of Central Sun Mining Inc. (formerly Glencairn Gold Corporation) Director of a number of public companies including Thompson Creek Metals Company Inc., MBAC Fertilizer Corp. and Alliance Grain Traders Inc. Kerry Knoll, Co-Chairman Co-founder of Blue Pearl Mining Inc., Glencairn Gold Corporation and Wheaton River Minerals Ltd. Former editor of both The Northern Miner Magazine and the Canadian Mining Journal Paul Dimitriadis Chief Operating Officer, General Counsel and Corporate Secretary of Sprott Resource Corp. Legal counsel for Sprott Consulting L.P. and a former lawyer at Blake, Cassels & Graydon LLP Ronald P. Gagel Former Senior Vice President and Chief Financial Officer of FNX Mining Company Inc. from 2006 to 2010 Former director of FNX Mining Company Inc., HudBay Minerals Inc. and Central Sun Mining Inc. William Roscoe Principal Geologist with Scott Wilson Roscoe Postle Associates Inc., an international firm of Geological and Mining Consultants. Co-founder of predecessor company Roscoe Postle Associates Inc. Expertise: Mineral resource and reserve work, valuation of mineral properties, mineral exploration TSX: ST 28

29 Valuation Metrics - Vale Bayovar Annual Operating Capacity: 3.9 million tonnes per annum 30% P 2 O Resources*: ~ % P 2 O 5 (48-56 Mt contained P 2 O 5 ) 2010 Resources: ~ % P 2 O 5 (40.4 Mt contained P 2 O 5 ) Vale Vale Vale Mosaic/ Mitsui * Vale s resources and reserves are estimates and not compliant TSX: ST 29

30 Stonegate s Strategy for Building Shareholder Value World-Class Phosphate Projects Mantaro Phosphate, Peru Paris Hills, Idaho Project Valuation Drilling to Confirm Reserves Feasibility Studies to Confirm Profitability Construction of Processing Facilities Phosphate Production Commences TSX: ST Five-year Time Frame 30

31 Capital Structure* Common Shares Basic issued and outstanding 140,095,218 Warrants $0.50 expiring June 15, 2011 $0.75 expiring June 15, 2011 $0.75 expiring August 18, ,577,500 **@ $1.00 expiring October 28, 2011 $1.50 expiring April 28, 2013 Options Fully diluted 193,624,484 C$0.67 $1.05 Cash Balance Cash balance (September 30, 2010) Additional cash if all warrants/options exercised Total Market Capitalization (based on $1.70/share price) $45.2 million $63 million $112 million Float (issued and outstanding): 55,201,260 (39.4%) Basic shares Fully diluted $238 million $330 million Principal Shareholders Outstanding Fully Diluted Sprott Resource Corp. 75,662,000 (54.0%) 81,662,000 (42.2%) Management 9,231,958 (6.6%) 27,256,416 (14.1%) *As of Dec. 31, TSX listings: ST (common shares) and ST.WT (warrants exercisable at $1.50 per share expiring April 28, 2013). **Includes 1,192,500 shares to be issued upon exercise of underlying share purchase warrants exercisable at $1.50 expiring April 28, TSX: ST 31

32 Thank You Questions? 401 Bay Street, Suite 2010, P.O. Box 118, Toronto, Ontario Canada M5H 2Y4 Phone: (416) Fax: (416)

33 Harnessing the World s Growing Appetite APPENDIX

34 World Phosphate Rock Concentrate Production: 176 million tonnes/annum Canada Brazil Australia Algeria China 37% USA 15% Egypt Other Tunisia Togo Syria South Africa Senegal * Source: 2010 Production Estimate, U.S. Geological Survey, Mineral Commodity Summaries, January 2011 Russia Israel Jordan Morocco / Western Sahara 15% TSX: ST 34

35 Price (US$ per tonne) Price of Diammonium Phosphate (DAP) Bulk FOB US Gulf Current Price: $590 - $600/tonne DAP price is up 28% since Stonegate's IPO in April 2010 Source: FMB Weekly Phosphates Report. Updated December 31, DAP is a downstream fertilizer product manufactured from phosphate rock concentrate. TSX: ST 35

36 India Phosphate Imports Millions of metric tonnes 2011 Forecast % World imports Phosphate Rock Concentrate % Diammonium Phosphate (DAP) % Phosphoric Acid (P 2 O 5 ) % Source: 2008 data from International Fertilizer Industry Association (IFA), Production and Trade Statistics data and 2011 forecast from FMB Monthly Phosphates Forecast, January TSX: ST 36

37 China Phosphate Exports millions of metric tonnes Diammonium phosphate (DAP) Monoammonium phosphate (MAP) Export Taxes 110% for 8 months 7% for 4 months Triple superphosphate (TSP) % Phosphate rock concentrate % Source: Fertilizer Week., January 25, 2011 Export Restrictions: DAP/MAP: China applied a 110% export tax rate for 6.5 months in For 2011, China has announced it would apply the 110% export tax rate for 8 months (all months except June, July, August and September). Phosphate rock concentrate: China introduced a 35% export tax and an annual export quota of 1.5 million metric tonnes in January TSX: ST 37

38 Paris Hills: Phosphate Project Assay Results, January 17, 2011 Zone Hole From To Interval % P 2 O 5 CaO:P 2 O 5 % Al 2 O 3 % Fe 2 O 3 % MgO MER Upper PA m (450 ft) m (466 ft) 4.88m (16 ft) PA m (476 ft) m (488 ft) 3.66m (12 ft) PA m (426.5 ft) m (431.5 ft) 1.52m (5 ft) PA m (163.5 ft) 55.08m (180.7 ft) 5.25m (17.2 ft) PA m (359 ft) m (367 ft) 2.44m (8 ft*) PA m (179 ft) 58.52m (192 ft) 3.96m (13 ft) Lower PA m (573 ft) m (582.3 ft) 2.84m (9.3 ft) PA m (680 ft) 209.4m (687 ft) 2.14m (7 ft) PA m (614 ft) m (622 ft) 2.44m (8 ft) PA m (347 ft) m (356 ft) 2.74m (9 ft) PA m (538 ft) m (544 ft) 1.83m (6 ft) includes 0.75 feet of no sample recovery (0% P2O5). MER = minor element ratio These results have been reviewed and approved by Michelle Stone, Ph.D., P.Geo., Vice President Exploration of Stonegate Agricom, who is a qualified person as defined in National Instrument For additional details, see Stonegate news release dated January 17, TSX: ST 38

39 Paris Hills: Phosphate Project Assay Results, February 8, 2011 Zone Hole From To Interval % P 2 O 5 CaO:P 2 O 5 % Al 2 O 3 % Fe 2 O 3 % MgO MER Upper PA m (474 ft) m (493 ft) 5.79m (19 ft) PA m (782 ft) m (795.5 ft) 4.11m (13.5 ft) PA m (244 ft) 78.64m (258 ft) 4.27m (14 ft) PA011A m (580 ft) m (597 ft) 5.18m (17 ft) PA m (1034 ft) m (1055 ft) 6.40m (21 ft) including m ( ft) m (1055 ft) 4.11m (13.5 ft) Lower PA m (703 ft) m (712.3 ft) 2.83m (9.3 ft) PA m (981.5 ft) m (990.5 ft) 2.74m (9 ft) PA m (390 ft) m (396 ft) 1.83m (6 ft) PA011A m (815 ft) m (822.5 ft) 2.29m (7.5 ft) PA016A m (425 ft) m (436 ft) 3.35m (11 ft) These results have been reviewed and approved by Michelle Stone, Ph.D., P.Geo., Vice President Exploration of Stonegate Agricom, who is a qualified person as defined in National Instrument MER = minor element ratio. For additional details, see Stonegate news release dated February 8, TSX: ST 39

40 Extreme phosphate (phosphorus) deficiency in a research field in Storrs, Connecticut. The two tall rows of corn on the right received 30 lb P 2 O 5 /Acre in a band 2 inches below and to the side of the seed row. The six rows on the left and center did not receive any phosphate fertilizer. Source: International Plant Nutrition Institute TSX: ST 40