CROPS Inc., Vancouver, formerly Focus Ventures (GM April 13, p. 31; March 9, p. 28), told shareholders this month that it is studying the feasibility of building an elemental phosphorus (P4) plant to utilize phosphate rock from its Bayovar 12 concession in Sechura, in northern Peru. It noted that the product is an essential ingredient for the production of glyphosate-herbicide such as Roundup, engine oil additives such as phosphorus pentasulphide (P2S5), and fire and flame retardants.
CROPS notes that the producers of these products in Europe and North America are large global chemical groups, which import the high majority of their P4 requirements primarily from North Vietnam, Kasakhstan, and to a much lesser extent China. Monsanto’s (now Bayer’s) Idaho P4 facility is for captive use.
CROPS said that in April it hired one of the industry’s foremost P4 consultants to look at the rational and economic potential of building a P4 production facility at Bayovar. In addition, it said talks are ongoing with large P4 consumers to gauge their interest. It said this could result in a joint venture, fixed offtake agreement, and/or equity participation in the concession.
The company touts the Bayovar location as being strategically located, with developed infrastructure, access to cheap power and plentiful labor, paved highways to container ports, and no social or environmental issues. The company said a P4 plant would be in addition to marketing product to traditional agriculture and specialty fertilizer markets.
CROPS also noted that the Bayovar site has natural gypsum deposits near to surface, and that the company annually produces 80,000 mt. It said depending on the individual quarter, it can generate enough revenue to cover the entire operational cost on a yearly basis. It said it has been working with the government to attain the necessary environmental permits to open the northeastern part of the Bayovar concession, which will enable it to continue mining and commercializing gypsum going forward.
CROPS said a recent milestone was reaching an agreement with Sprott Resource Lending Corp., Toronto. They will convert the entire remaining amount of their US$3.0 million (C$4 million) debt facility to equity through a convertible debenture. The agreement furthermore limits Sprott to not owning more than 20 percent of issued shares of CROPS. The company said this enables it to work with potential financiers and strategic partners with a debt-free ownership structure on the project. CROPS owns 70 percent of the Bayovar 12 concession, and it said the new deal with Sprott makes a straightforward investment case to present to financial institutions.
To further support its ongoing development activities, CROPS announced a convertible debenture private placement financing to raise C$6 million. Of this, Sprott will convert C$4 million and the balance will go to continue developing business models for P4 production, generating potential jv relationships, and marketing.