Brazil: The Itafos Phosphate Project Advances

Technical reports significantly increased resources at Itafόs, a phosphate project located in central Brazil, near the border of Goiás and Tocantins states. It belongs to MBAC Fertilizer Corp. and currently operates this small-scale mine and processing facility which has a production capacity of approximately 100,000 tpa. The present operation processes rock phosphate which is sold to local farmers for direct application.

MBAC focuses now on the development of a higher volume and much larger mining operation, which is expected to be in place by mid-2012. The Itafós Arraias SSP Project will include a new mine and mill facility, a sulphuric acid plant, a SSP plant and a granulation plant. At full capacity, the proposed beneficiation plant is expected to generate 330,000 tpa of phosphate rock concentrate at 28% P2O5. This phosphate concentrate will be used to produce 500,000 tpa of SSP. Beyond this proposed first phase of development, the Company is also actively investigating the potential for a second phase of development which could double production and potentially be in place as early as 2015. The project plans to produce 220,000 tpa of sulphuric acid for secondary attack in the SSP manufacturing. It will also produce 10 MW of electricity. The mine life is expected to last 14.5 years. Its strip ratio is expected to be 1.85 for the first 10 years.

MBAC Fertilizer Corp. has three other phosphate projects, namely the Santana Project, the Carmo Project, and the Araxá Phosphate/REE/Nb Project.

The Santana Project is located in the South-eastern most portion of the Para State, in Northern Brazil. The property has good prospects for phosphate and is ideally located to serve important Brazilian markets in Mato Grosso state.

The Carmo Project is located in the central Minas Gerais State of Brazil. Good infra-structure and close proximity to extensive farm land and to several bulk fertilizer blenders imply in lower minimum size requirements for standalone operations when compared to other exploration projects elsewhere in Brazil.

The Araxá Phosphate/REE/Nb Project consists of four tenements covering 214 hectares of a carbonatite in close proximity to the Municipality of Araxá in Minas Gerais State, and contains also Rare Earth Elements (REE) and Niobium mineralization. The inferred mineral resource estimate comprises of 2.7M tonnes with an average TREO content of 8.39% (using a 6% TREO cut-off) and an average of 1.41% Nb2O5 and 9.91% P2O5. But there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the determination of a mineral resource.

Last year, MBAC Fertilizer Corp. has entered into an agreement with IFC, a member of the World Bank Group, pursuant to which IFC has agreed to provide funds by which IFC will hold an interest representing approximately 11.1% on a non-diluted basis and 10.3% on a fully-diluted basis of the common shares outstanding. The proceeds from the IFC investment will be used by MBAC for the development of the Itafós-Arraias SSP project.

Forecasts indicate Brazil will outpace the USA production of many key commodities by 2020/21 including cotton, soybean, corn and wheat because of burgeoning yield gains.

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