Creating Wealth, Opportunities & Investments

Guadalupito Andalusite and Mineral Sands Project - Northern Peru

 

Introduction

 

Latin Resources Limited (“Latin”) seeks interested Joint Venture Partners to develop their Guadalupito Andalusite and Mineral Sands Project situated in Northern Peru. This has the potential to be a world class project with current JORC resources of 1.3 Billion tonnes and an exploration upside of 4 Billion tonnes.  Aside from the main value from the andalusite mineral content, magnetite, Ilmenite, rutile, zircon, monazite, garnets and apatite all offer additional economic upside, reducing unit costs for andalusite production.

The opportunity for the investor is to be a large shareholder of an advanced project in one of the world’s largest growth regions of Latin America.

 

Project Description

 

Latin Resources acquired Guadalupito in February 2011 and it is the company’s most advanced project, with ready potential to be a world-class mine.  Established infrastructure, easy access to water and power and located just 25km from the port city of Chimbote and one of Peru’s largest steel smelters gives the project considerable strategic advantages.

The completion of a successful scoping study on the project in by Ausenco, a world renowned engineering firm, marked a significant milestone and the opportunity to take this project to the production phase. This study adds to the 1.3Bt JORC inferred resources and highlights the excellent access to local infrastructure that will be used in the next pre-feasibility phase of the development of the project.  The pre-feasibility phase will focus on a 15 million tonne per annum conventional dredge mining operation over a minimum 15 year mine life but with resource potential for in excess of 50 years.  Mineral processing of dredged material will produce Andalusite and Magnetite Products for market, and a further mixed concentrate which will be stockpiled for future expanded operations.

The Mineral processing is extremely environmentally friendly and uses basic gravity and magnetic separation as well as an electrostatic process, all of which are chemical free.  The Peruvian authorities have approved two environmental permits for exploration to date, valid into 2016.

 

Development Plan Concept

 

Latin plans to fast track the development of Guadalupito by moving rapidly through Pre-feasibility and Detailed Feasibility of a modest scale 15 Million tonne per annum startup and into construction and operation by using proven technology and available off-the-shelf components like the cutter suction dredge at left.

The metallurgical principles to process the ore are similar to those used in mineral sands plants worldwide. A heavy mineral concentrate (“HMC”) is produced in a wet concentrator plant (‘WCP’) and then the HMC is further processed in a mineral separation plant (‘MSP’) to produce distinct mineral products. The project is to be developed in two phases: Stage 1 will comprise a 15 Mtpa Dredge with a WCP and MSP producing Andalusite and magnetite for market and a combined HMC hosting remaining valuable minerals.  Stage 2 will follow three years later and will comprise a 25 Mtpa Dredge with a WCP and MSP producing all of the valuable product streams separately.

 

Mine and Production Plan Concept

 

The start-up mine plan contemplates dredge mining of 15Mtpa at “Los Conchales” and a WCP/MSP producing Andalusite, Magnetite and a Heavy Mineral Concentrate containing Ilmenite, Rutile and Zircon.  Conceptual annual production rates of minerals from this operation are listed in Table 1 and are based on average grades of an initial 240Mt dredge mine plan optimized for grade within the overall 1,073Mt “Los Conchales” resource.  Indicative long term prices are shown in Table 2.

 

  

 

 

 

JORC Resources and Project Potential

 

Guadalupito currently has JORC compliant inferred resources of 1,329Mt at 5.7% HM (Heavy Mineral).  These resources are split between two areas called “Los Conchales” (1,350 hectares) and “Tres Chosas” (1,070 hectares), and were estimated from 189 sonic drill holes up to 66 m deep, 44 cased shafts up to 2 m deep and 888 pits to 1 m deep.  The resources were also split into those above and below the shallow saline water table at both areas.

”Los Conchales” is in the eastern (inland) part of the coastal plain and has significantly more resource and much higher grade than “Tres Chosas” because the mineralization is much thicker, extending to more than 45 m down from the surface.  The geological model supporting this difference has been backed up by a further 85 Sonic drill holes, 431 cased shafts and more than 2,700 pits.  Together with detailed geological mapping this work has allowed for the development of a conceptual exploration target for the overall Guadalupito Project of up to 5 billion tonnes of mineralized sediments extending along 28 km of the coastal plain and reaching up to 8 km inland.

More extensive mineralogical work is ongoing to classify target minerals both along the entire mineralized strike of the deposit, and at depth, focusing on minerals that have been identified to date including andalusite, magnetite, ilmenite, rutile, zircon, Rare Earth Element (REE) bearing monazite, garnets and apatite.

 

Guadalupito currently has JORC compliant inferred resources in excess of 1.3 Billion Tonnes at 5.7% HM (Heavy Mineral), as shown in Table 3.

TABLE 1 NOTES:

Based on drill, pit and shaft samples excavated below DTM generated from LIDAR survey.  A 1% HM cut-off has been applied to modeled HM grades.

1.      The Resource has been split above and below logged and modeled water table.

2.      A density of 2.5 for Gravel and 1.6 for Sand domains was used at Tres Chosas and measured density of drill samples at Los Conchales.

3.      Sand is the sample -1mm +53µm size fraction and reflects a screened, de-slimed ROM plant feed.

4.      Oversize is the sample +1mm size fraction.

5.      Fines is the sample -53µm size fraction.

 

Mineralization

 

The mineral sands include well liberated and very pure Andalusite, magnetite with low titanium content, and discrete mineral grains of recoverable size of Ilmenite, Rutile, Zircon, Monazite, Garnets and Apatite.  Recoverable Andalusite is more than 80% liberated, grading 60% Al2O3 and 0.2% Fe2O3.  A Magnetite Product provided recently to potential buyers contained 61.4% Iron (Fe) and 2.2% titanium oxide (TiO2).  At “Los Conchales”, mineralogical analyses of Heavy Mineral (HM) composites show Andalusite and magnetite dominate the assemblage with average mineral contents in the HM composites listed in Table 4 which also includes a conceptual estimate of total contained minerals in the 1,073Mt “Los Conchales” resource based on the mineral assemblage.

 

With such enormous resource potential, Guadalupito could conceptually support a large operation spanning generations.

 

Environmental and Social Responsibility

 

The Guadalupito Project is located in uninhabited coastal desert unsuitable for agriculture because of the saline nature of the soils.  Environmental Permits for exploration were obtained without difficulty, and the permitting process for the start-up operation will accompany the pre-feasibility study.  Provisional surface rights have been obtained over more than 11,000 ha including the principle resource area and are in the process of being granted definitively.

Latin enjoys full support of nearby communities for the development of the project and has advanced relationships with local authorities and civil society built up through a policy of transparent communication, rotational formal employment schemes and social development projects designed to promote local economic activity.

 

Nearby Infrastructure & Resource Projects

 

The Guadalupito project is located in close proximity to high quality infrastructure, being 25 km by paved highway from the port town of Chimbote.  Chimbote is host to Peru’s largest steel smelter which is owned by the Brazilian group Gerdau, the America’s leading long steel producer.

The Guadalupito project is situated in an area surrounded by all major international resource sector players including Rio Tinto (La Granja project), BHP Billiton and Xstrata Copper (Antamina).

 

Andalusite at Los Conchales

Andalusite is one of the key value drivers at Guadalupito.

The Andalusite in the 1,073 million tonne “Los Conchales” resource at Guadalupito is “highly liberated” meaning that there is a high proportion of the Andalusite that has already been cleaned of deleterious gangue and associated minerals by nature in the process of deposition and concentration in the shoreline deposits at Los Conchales.

Through QEMSCAN analysis, which uses sophisticated computer software and a scanning electron microprobe to determine the characteristics of thousands of mineral grains in a sample, conceptual specifications of an Andalusite product from Guadalupito have been developed, being called “Guadalusite” for marketing purposes.

This conceptual product considers only the Andalusite particles that are each estimated by QEMSCAN to have more than 80% sectional area Andalusite, but these account for more than 80% of the Andalusite mass found in the Los Conchales composite.

Bulk processing currently underway has been designed to recover the more liberated Andalusite into a clean concentrate using scalable processing technology determined by earlier testing reported by Latin.  Once produced, samples of the concentrate will be used to undertake a series of product testing evaluations that will allow for initial product marketing activities to begin.

Andalusite from “Los Conchales” is highly liberated and free from deleterious impurities. The Chiastolite variety with its characteristic graphite cross is commonly seen in Andalusite from Guadalupito.

Reflux classifiers, proven in the coal and iron ore sectors will be the technological edge for recovering clean Andalusite at Guadalupito.

 

 

Andalusite Uses and Market

The steel industry is the single largest user of Andalusite accounting for more than 50% of world-wide Andalusite consumption.  Traditional markets are refractory manufacturers who produce refractory materials for industries such as steel, aluminium, foundry, glass etc., and hence developed countries with significant steel, aluminium, foundry and glass industries are all markets for, and current users of, Andalusite

Less traditional markets tend to favour finer grained and cleaner (lower iron) Andalusite for use in Foundry coatings (200# material); Foundry sands (0-1mm material); Abrasion resistant tiles;  “low iron” Andalusite for use in fine ceramics, hotel-ware and technical ceramics.

Super fine, or micronized Andalusite has the advantage of gaining the mineral’s revered refractory properties at a lower firing temperature, meaning lower energy cost.

Markets in fine and technical ceramics which currently use expensive calcined and/or reactive alumina may also be particularly receptive to Andalusite of the quality promised from Guadalupito.

Andalusite prices have climbed steadily since 2000 with high range pricing for higher Al2O3 content.  Al2O3 content is sought to be as high as possible, commonly in the range of 55-59%, and Iron (Fe2O3) content is sought to be as low as possible, commonly in the range of 0.5-1%.  At Los Conchales the potential exists for achieving an Andalusite product of greater than 60% Al2O3 and less than 0.2% Fe2O3 and thus a premium product.

 

Proppants, Petroleum and Bauxite Replacement

Andalusite has also been used by Imerys in the development of new hydraulic fracturing or fracking agents (proppants) used to increase hydrocarbon production from oil and gas wells.

Spherical ceramic proppants are injected into the well with water under pressure, opening up tiny fissures that are held open by the proppant, increasing conductivity of the well, and thus production. Andalusite is highly suited for the production of high strength, low density proppants, demand for which has exploded in recent times.

Andalusite Resources of South Africa have increased their market share from Imerys in South Africa by making inroads into substitution of refractory bauxite in certain applications. It should be noted that refractory grade bauxite supply, (priced higher than bauxite used to make aluminium), which has been dominated by China in the last two decades, has become less reliable and pricing has increased as the Chinese government has clamped down on exports.

At Guadalupito, the planned dredge mining method, gravity concentration using classifiers (not dense media) and magnetic separation to produce other commodities simultaneously, will allow for very low unit costs for a very high purity Andalusite product, characteristics that will undoubtedly have significant market impact.

Guadalupito is primarily an Andalusite project with the potential to redefine the market for this important industrial mineral.

Project Upside

 

With Guadalupito’s enormous resource potential, modular expansions to the mining and processing operations allow for potential up-scaling of production to several times the proposed start-up.  Even from startup, Guadalupito has the potential to significantly redefine the Andalusite market worldwide, with significant production and very low unit costs thanks to credits from other product sales.  Such low unit costs potentially allows for the development of a proppant supply base for the petroleum sector throughout the Americas. 

 

Joint Venture Partner

 

Latin seeks a Joint Venture Partner for this Project.  The partner would be expected to buy into the project and invest in its development.

 

Next Steps

 

Latin is seeking interested Joint venture partners to develop the Guadalupito Andalusite Project.  Latin encourages potentially interested parties to review the information on the Latin Website (www.latinresources.com.au) and to sign an NDA to obtain further information.

Once an NDA is signed, Latin will provide access to technical information in an electronic data room and facilitate dialogue with the Latin management team.  Upon receipt of a written expression of Interest, details on structure and valuation for the project will be discussed with interested parties.