UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 AND 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Period May 2016 File No. 0-55349
Focus Ventures Ltd.
(Name of Registrant)
200 Burrard Street, Suite 650, Vancouver, British Columbia, Canada V6C 3L6
(Address of principal executive offices)
1.
News Release dated May 16, 2016
Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
FORM 20-F x
FORM 40-F ¨
Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨
No x
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 6-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Focus Ventures Ltd.
(Registrant)
Dated: May 16, 2016 | By: /s/ David Cass David Cass President |
Focus Delivers Pre-Feasibility Update for Bayovar 12 Phosphate Project, Peru
After-Tax NPV $458M IRR 26.4% Payback 3.9 Years Mine Life 20 Years
May 16, 2016. Vancouver, BC Focus Ventures Ltd. (TSX-V. FCV; FCV or the Company) is pleased to announce results for its National Instrument 43-101 Updated Pre-Feasibility Study (Updated PFS) for its 70%-owned Bayovar 12 phosphate project in northern Peru. The Updated PFS was prepared by M3 Engineering & Technology Corp. (M3) and Independent Mining Consultants Inc. (IMC), both based in Tucson, Arizona and is a change-in-scope study that replaces an earlier M3 Pre-Feasibility Study (PFS) dated February 8, 2016. Key changes-in-scope include:
§
one large processing plant instead of the staged commissioning of two smaller ones
§
owner-operated instead of contractor-operated overburden stripping
§
doubling of pre-production overburden stripping
§
a simplified mine plan and production schedule
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larger and more efficient loading and hauling equipment
§
a more logical and staged buildout of the tailings storage facility
These changes-in-scope increased capital cost, decreased operating cost and in turn significantly improved the financial performance of the project.
Simon Ridgway, Chairman and CEO of Focus, said, In sedimentary phosphate deposits there are no starter pits. As a result, payback of capital is dependent upon achieving name plate process plant capacity and low operating costs early in the mines life. With payback in 3.9 years and an after-tax NPV7.5 $458 million, the Updated PFS clearly demonstrates that large-scale open pit development at Bayovar 12 has the potential to deliver impressive cash margins over an initial 20 year mine life. It is Focus goal to become the long-term supplier of choice for the direct application fertilizer market.
Except where otherwise noted, all currency amounts are stated in Q1-2016 United States dollars. All production volumes are stated on a 100% basis and all mined tonnages are stated on a dry basis. The Company will file the Updated PFS with Canadian securities regulators within 45 days of this release. It will be available at SEDAR and also on the Companys website.
The Company will host a Conference Call and Webcast on Tuesday, May 17, 2016 at 8am Pacific Time (11am Eastern, 4pm UK) to discuss the Updated PFS. Call-in details can be found at the end of this release.
Table I Life-of-Mine Highlights and Comparison with PFS
Item | Updated PFS | PFS | Variance % |
|
|
|
|
Financial Model |
|
|
|
After-Tax NPV7.5, $M | 458.3 | 252.9 | + 81.2 |
IRR, % | 26.4 | 17.2 | + 53.5 |
Payback, years | 3.9 | 6.6 | - 40.9 |
Capital Cost, $M | 167.7 | 127.3 | + 31.7 |
Sustaining Capital, $M | 193.6 | 230.3 | - 15.9 |
Undiscounted Cash Flow, $M | 1,150.9 | 846.9 | + 35.9 |
Product Price Deck, $/t | $145/$185 | $145/$185 | - |
Open Pit Mine |
|
|
|
Life, years | 20 | 20 | - |
Waste, Mt | 422.5 | 367.6 | + 14.6 |
Ore, Mt | 58.8 | 52.3 | + 12.4 |
Waste/Ore | 7.2 | 7.1 | - |
Pre-Production Waste, Mt | 23.9 | 12.4 | + 92.7 |
Cash Cost Ore, $/t mined | 14.69 | 19.51 | - 24.7 |
Cash Cost Product, $/t | 39.35 | 52.28 | - 24.7 |
Process Plant |
|
|
|
Tonnage Processed, M | 58.8 | 52.3 | + 12.4 |
Tonnage Product, M | 20.8 | 18.5 | + 12.4 |
Tonnage Product Years 1-5, M | 4.75 | 3.50 | + 35.7 |
Cash Cost Product, $/t | 7.99 | 10.49 | - 23.8 |
Total Project |
|
|
|
Cash Cost Product, $/t | 59.79 | 75.44 | - 20.7 |
Cash Margin Product, $/t | 105.20 | 89.56 | + 17.5 |
PROJECT DESCRIPTION
The Bayovar 12 project is a conventional truck-loader open pit mine and a process plant that is designed to produce 24% and 28% P2O5 direct application phosphate rock fertilizer (DAPR) products. Phosphate ore will be mined at a rate of 8,000 tonnes per day from 13 overburden-covered and laterally-continuous sedimentary phosphate beds, interlayered with diatomite waste or interburden. Overburden, interburden and phosphate ore are free-digging and do not require drilling or blasting. Ongoing back-filling of the open pit is an integral part of a mine plan that is designed for progressive closure. The average Waste/Ore (W/O) ratio is 7.2/1.
The beneficiation process is simple and chemical-free using sea-water washing, scrubbing and de-sliming. Solid tailings and waste water will be stored in an adjacent tailings-evaporation pond (TSF). Fertilizer product will be trucked 40 km to a dedicated seaborne loading facility.
Figure 1 General Arrangement Drawing
The project is in an established phosphate mining district. At full capacity it will produce 1 million tonnes of fertilizer product per year over an initial mine life of 20 years and will supply a rapidly-growing market for natural and plant-ready DAPR products.
MINERAL RESOURCE AND RESERVE ESTIMATES
A systematic and wide-spaced 62-hole, 5,971m diamond drilling program delineated a continuous 34 km2 near-surface diatomite sequence containing 13 flat-lying sedimentary phosphate beds. These beds are open to extension over the remaining 91 km2 of the concession.
In order to support the PFS Mineral Resource Estimate, IMC completed a review of the geology and resource block models. IMC then developed an independent Reserve Estimate through the construction of a 20-year open pit shell contained within the Mineral Resource model and based on DAPR prices of $145/t and $185/t for 24% and 28% P2O5 products, respectively. The reader is cautioned that Mineral Resources that are not mineral reserves do not have demonstrated economic viability. In addition, the reader is reminded that the reported Mineral Resource is inclusive of the open pit-constrained Mineral Reserve.
Table II Bayovar 12 Mineral Resources and Reserves Estimates
Resources* | Tonnes, M | % P2O5 |
Measured | 17.7 | 13.16 |
Indicated | 209.5 | 13.04 |
Inferred | 102.2 | 13.11 |
Reserves | Tonnes, M | % P2O5 |
Proven | 14.4 | 12.74 |
Probable | 44.4 | 13.00 |
Total Reserves | 58.8 | 12.94 |
* Minimum thickness, grade cut-off and other mining parameters were not applied. Resource Estimation includes 16 phosphate beds. Reserve Estimation considers the uppermost 13 phosphate beds. |
MINING SCHEDULE
The Bayovar 12 phosphate deposit is ideally suited for large-scale open pit development. It consists of a 40m thick, laterally continuous and near-surface mineralized zone overlain by 30m of overburden. All volumes in the open pit are free-digging; drilling and blasting are not required.
The planned open pit shape is that of a progressively larger hand-fan and is divided into 13 mining phases. Each phase has multiple working faces in order to efficiently sequence overburden stripping, ore and interburden mining to ensure regular delivery of ore to the process plant. Haulage profiles and cycle times were optimized for each of the 13 mining phases. Waste volumes account for 89% of mine production tonnes. By continuously placing waste as backfill in mined-out phases of the open pit, haulage distances are minimized and the ex-open pit waste storage footprint is reduced. Excluding backfill, the open pit at its deepest point will be 76m below surface.
Figure 2 Isometric Open Pit Arrangement Year 7
The open pit will feed the process plant at a nominal rate of 8,000 tonnes per day or 2.7 million tonnes per year. An accelerated program of pre-production and Year 1 waste stripping, totaling 46.8 million tonnes, is designed to maintain a balanced Life-of-Mine (LOM) W/O ratio at 7.2/1. Low specific gravity of the mined volumes allows for the use of over-sized loading and hauling equipment of the kind often used in coal mining. Overburden and thicker interburden beds will be mined with 31 m3 front-end loaders and loaded into 110 m3 capacity haul trucks. Individual phosphate beds and thin interburden layers will be mined with GPS-controlled continuous surface miners. Over the initial 20 year mine life the open pit will deliver 58.8 million tonnes of ore to the process plant and 424 million tonnes of waste, of which 111 million tonnes will be placed in surface storage, 308 million tonnes as in-pit backfill and 5 million tonnes as construction material for the TSF embankments.
ORE PROCESSING
The process plant, operating at 85% of nominal capacity and without the use of chemical additives, will process on an annual basis 2.7 million tonnes of ore and produce 1 million tonnes of natural DAPR fertilizer products. The beneficiation process is simple and consists of drum washing with seawater and recycled process water, size classification, attrition scrubbing, hydraulic classification, filtering and rotary drying. By adjusting the cut point for fines in the tertiary classifying hydrosizer, the process plant is designed to produce, on a batch basis, either a 24% or a 28% P2O5 product. Phosphate recoveries are forecast at 81.1% and 72.3% for each product, respectively. Infrastructure required for the process plant includes a 16 km - 138 kV transmission line and a 45 km 32 seawater supply pipeline.
Figure 3 Open Pit Annual Production Schedule
Figure 4 Ore Processing Flow Sheet - Annual Tonnages
CAPITAL COST ESTIMATE
The Capital Cost to design, permit, pre-strip, construct and commission the open pit mine, process plant and ancillary facilities and utilities is estimated at $167.7 million. Some 90% of total equipment costs were derived from vendor quotes. Working capital of $40 million is estimated separately and carried in the financial analysis.
Table III Capital Cost Estimate
Area | $M |
Direct Costs |
|
Pre-stripping | 41.2 |
Lease Mining Equipment Deposit | 18.2 |
Tailings Storage Facility | 10.3 |
General Site Costs | 2.5 |
Process Plant | 20.6 |
Seawater Supply Pipeline | 18.1 |
138kV Transmission Line | 5.2 |
Tailings Line | 2.2 |
Ancillaries | 12.2 |
Total Direct Costs | 130.5 |
Indirect Costs |
|
Contractor Indirects | 7.7 |
EPCM Services & Commissioning | 4.6 |
Vendor Reps | 0.7 |
Freight / Duties | 4.6 |
Spare Parts and Initial Fills | 1.5 |
Owners Costs | 2.5 |
Total Direct Costs | 21.6 |
Subtotal | 152.1 |
Contingency 20%* | 15.6 |
Total Project | $167.7 |
| |
*Contingency was not applied to Pre-stripping, Primary Mine Equipment, Tailings Storage Facility, Spare Parts and Owner's Costs |
OPERATING COST ESTIMATE
LOM operating costs have been developed for mining, processing, G&A and transportation in First Quarter 2016 U.S. dollars. At a W/O ratio of 7.2/1 the LOM cost to mine 1 tonne of ore is $14.69. Improved cash mining costs and product costs are the direct result of a larger capital investment in the project and increased productivity. These in turn provide the opportunity for consistently strong cash operating margins over the initial 20 year mine life.
Table IV Average LOM Cash Mining Cost per Tonne of Ore Mined
Area | Tonnes | $ / tonne | $ / ore tonne |
Ore | 1.0 | 1.79 | 1.79 |
Overburden | 3.5 | 1.79 | 6.29 |
Interburden | 3.7 | 1.79 | 6.61 |
Total Cash Cost Ore |
|
| $14.69 |
Table V Average LOM Cash Operating Cost per Tonne of Product
Area | $ / tonne product |
Mining | 39.34 |
Processing | 7.99 |
G&A | 2.36 |
Transportation | 10.09 |
Total Cash Cost Product | $59.79 |
FINANCIAL ANALYSIS
After-Tax Undiscounted Annual and Cumulative Cash Flows, based on operational plans presented in the Updated PFS, are summarized in Figure 5. Working Capital of $40 million, interest payments, royalties and closure and reclamation costs have been included in the financial analysis. Key After-Tax metrics include a NPV7.5 $458.5 million, IRR 26.4% and Payback 3.9 years.
Figure 5 Undiscounted After-Tax Annual and Cumulative Cash Flows
SENSITIVITY
Sensitivity analyses as measured against a systematic range of 50/50 product pricing scenarios are presented graphically as financial outcomes in terms of forecast After-Tax Undiscounted Cash Flow, NPV7.5 and Payback Period.
Figure 6 Project Sensitivity to Average Product Price
PROJECT EXECUTION PLAN
The forecast Project Schedule to complete a Bankable Feasibility Study, engineer, permit, pre-strip, construct and commission an open pit mine and process plant at Bayovar 12 is presented in Figure 7.
Figure 7 Forecast Project Execution Schedule
QUALIFIED PERSONS
The scientific and technical information in this release was prepared under the supervision of David Cass, Focus President, who is a member of the Association of Professional Engineers and Geoscientists of British Columbia, and a Qualified Person in accordance with National Instrument 43-101. Mr. Cass is responsible for ensuring that the technical information contained in this news release is an accurate summary of the original reports and data provided to or developed by Focus. The Bayovar 12 Mineral Resource estimate was prepared by Golder Associates under the supervision of Jerry DeWolfe, MSc, PGeo, and the Mineral Reserve estimate was prepared by Herb Welhener, Vice President of Independent Mining Consultants Inc. Both are Independent Qualified Persons under National Instrument 43-101.
CONFERENCE CALL
A conference call to discuss the updated PFS results will be held on Tuesday, May 17, 2016, at 8am PT / 11am ET / 4pm UK time. Hosting the call will be David Cass, President of Focus and Ralph Rushton, Director.
Conference call details:
Date: Tuesday, May 17, 2016
Time: 8am PT / 11am ET / 4pm UK
Dial-in number (Toll-free): 1-877-407-9124
Dial-in number (International): 201-689-8584
Conference ID# 13637827
Replay number (Toll-free): 1-877-660-6853
Replay number (International): 1-201-612-7415
Playback of the teleconference will be available until June 17, 2016.
About Focus
Focus is developing the Bayovar 12 phosphate deposit located 40 km from the coast in the Sechura District of northern Peru. Bayovar 12 hosts a large resource of highly-reactive sedimentary phosphate rock - a key raw material input for fertilizers and vital to world food production. Reactive phosphate rock from Sechura is a natural, slow-release source of phosphorus that can be applied directly to crops. Focus goal is to become the long-term supplier of choice for rapidly growing direct application fertilizer market.
For further information, please call 604-630-5544 or visit our web site www.focusventuresltd.com.
ON BEHALF OF THE BOARD
David Cass,
President
Symbol: TSXV-FCV
Shares Issued: 120.4-million
Contact: Ralph Rushton
Tel: (604) 630-5544; Fax: (604) 682-1514
Email: info@focusventuresltd.com
Website: www.focusventuresltd.com
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking statements within the meaning of Canadian securities legislation. All statements included herein, other than statements of historical fact, are forward-looking statements and include, without limitation, statements about the Companys plans for its Bayovar 12 Project. Often, but not always, these forward looking statements can be identified by the use of words such as estimate, estimates, estimated, potential, open, future, assumed, projected, used, detailed, has been, gain, upgraded, offset, limited, contained, reflecting, containing, remaining, to be, periodically, or statements that events, could or should occur or be achieved and similar expressions, including negative variations.
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 results, performance or achievements expressed or implied by forward-looking statements. Such uncertainties and factors include, among others, the Companys plans for its Bayovar 12 Project will proceed as intended; changes in general economic conditions and financial markets; the Company or any joint venture partner not having the financial ability to meet its exploration and development goals; risks associated with the results of exploration and development activities, estimation of mineral resources and the geology, grade and continuity of mineral deposits; unanticipated costs and expenses; and such other risks detailed from time to time in the Companys quarterly and annual filings with securities regulators and available under the Companys profile on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are based on the assumptions, beliefs, expectations and opinions of management, including but not limited to: that the Companys plans for the Bayovar 12 Project will proceed as intended; and that there will be no material adverse change affecting the Company or its properties; and such other assumptions as set out herein. Forward-looking statements are made as of the date hereof and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by law. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on forward-looking statements.
Cautionary Note to United States Investors Concerning Estimates of Reserves and Resources
Reserve and resource estimates included in this news release have been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards on Mineral Resources and Mineral Reserves. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for public disclosure by a Canadian company of scientific and technical information concerning mineral projects. Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission ("SEC"), and reserve and resource information contained in this news release may not be comparable to similar information disclosed by U.S. companies. In particular, the term "resource" does not equate to the term "reserves". Under U.S. standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.
The SEC's disclosure standards normally do not permit the inclusion of information concerning "measured mineral resources", "indicated mineral resources" or "inferred mineral resources" or other descriptions of the amount of mineralization in mineral deposits that do not constitute "reserves" by U.S. standards in documents filed with the SEC. You are cautioned not to assume that resources will ever be converted into reserves. You should also understand that "inferred mineral resources" have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. You should also not assume that all or any part of an "inferred mineral resource" will ever be upgraded to a higher category. Under Canadian rules, estimated "inferred mineral resources" may not form the basis of feasibility or pre-feasibility studies except in rare cases. You are cautioned not to assume that all or any part of an "inferred mineral resource" exists or is economically or legally mineable. Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC standards as in-place tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of "reserves" are also not the same as those of the SEC, and reserves reported in compliance with NI 43-101 may not qualify as "reserves" under SEC standards. Accordingly, information concerning mineral deposits set forth in this news release may not be comparable with information made public by companies that report in accordance with U.S. standards.
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