First Phosphate Corp. (CSE:PHOS, OTCQB:FRSPF) said that a newly released preliminary economic assessment on the Begin-Lamarche property outlines a “potentially viable case” for open pit mining of phosphate concentrate.
The market welcomed the update, sending First Phosphate's Toronto-listed shares up 7.5% at C$0.22.
According to the PEA, the project would produce an average of 900,000 tonnes of phosphate concentrate annually, with a 40% P2O5 content, along with 380,000 tonnes of magnetite, at a 92% Fe2O3 content, over a 23-year mine life.
The project’s pre-tax internal rate of return (IRR) is estimated at 37.1%, with a net present value (NPV) of $2.1 billion at an 8% discount rate, based on a three-year average phosphate price and a two-year average magnetite price, both adjusted for purity and supply security.
After tax, the project is expected to generate an IRR of 33% and an NPV of $1.59 billion at an 8% discount rate.
It would generate an after-tax cash flow of $700 million in the first three years, leading to a 2.9-year payback period.
The pre-tax cash flow for the same period is projected at $783 million, resulting in a 2.6-year payback period.
The project benefits from nearby infrastructure, including access to a paved provincial road, an electrical power line, and the Port of Saguenay, located 85 kilometres from the site, the company highlighted. As such, initial capital expenditures are estimated at $675 million.
The PEA was based on Indicated and Inferred Mineral Resources and the project is free of any outstanding royalties or financing obligations.
"We are pleased with the results and timely completion of this PEA. Existing local infrastructure keeps our capex low, our mine size controlled and our mine economics robust," First Phosphate CEO John Passalacqua.
"Our internal Pre-Feasibility work is also near completion and we are now in a position to determine the timing on our Feasibility Study."
- Updated with share price movement -