Três Estradas sits in the agricultural heartland of Rio Grande do Sul, Brazil, three hours’ drive from the capital, Porto Alegre and hosts a 105 million-tonne phosphate resource.

A 2023 bankable feasibility study (BFS) - backed by strong economics - concluded that by producing 300,000 tonnes per annum across an 18-year mine life, with capital expenditure of $26 million, the project would spit out $22 million a year in EBITDA. The payback period is anticipated to be just 2.9 years on the back of a significant 54.7 per cent internal rate of return.

The company told the market in July it was in advanced discussions to lease or buy an existing processing plant that sits about 100km from Três Estradas. The plant has been used for processing limestone, but with the exhaustion of a local supply of ore, the owners decided to sell.

Aguia has identified only minor upgrades required for it to repurpose the plant, including the addition of a rotary kiln and a bagging facility to the existing circuit.

Its organic phosphate product, Pampafos, is proving popular among local farmers after being exhaustively assessed on different crops around the world during the past four years. The company says the product is both more effective on crops and also substantially cheaper than chemical fertilisers.

Southern Brazil currently imports all its phosphate—mainly from Morocco—at around $400 per tonne under long-term contracts.

Aguia plans to sell Pampafos at $140 per tonne, a fraction of the current import prices. Even if Aguia decided to use the repurposed limestone plant and added $15 per tonne to compensate for trucking rates, the total cost of production would still be just $50 per tonne, potentially leaving plenty of profit margin.

With production covering 15 per cent of local demand, Aguia is confident it can easily sell its 300,000 tonnes per year within a 300km radius.

The company’s phosphate operations are also complemented by its Santa Barbara gold project and the polymetallic gold-copper-silver-zinc El Dovio play in Colombia which it picked up after successfully taking over Andean Mining earlier in the year.

The court decision to overturn the emergency injunction on Aguia’s license represents a critical milestone for the company, allowing it to push forward with a key project central to its strategic focus in Brazil. With all regulatory hurdles cleared, the company is positioned to move rapidly towards production and all important cashflows in the coming months.

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