07:01:09 EDT Thu 20 Jun 2019
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Arianne Phosphate Inc
Symbol C : DAN
Shares Issued 105,803,943
Close 2018-08-01 C$ 0.485
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Arianne Phosphate signs MOU for sulphuric acid supply

2018-08-01 09:59 ET - News Release

Mr. Jean-Sebastien David reports

ARIANNE FURTHERS ITS REVIEW OF A DOWNSTREAM PHOSPHORIC ACID FACILITY

Arianne Phosphate Inc. is continuing its initial in-house review regarding the construction of a downstream phosphoric acid facility and, in conjunction with this review, the company has entered into a memorandum of understanding (MOU) for the supply of sulphuric acid.

Since first announced (see press release dated June 8, 2017), Arianne and potential partners have completed a preliminary look at the opportunity of constructing a phosphoric acid facility capable of producing high-purity phosphoric acid for domestic and international markets. Several potential sites have been reviewed and further work is currently being done to try to finalize on a potential location before doing greater work around the opportunity, namely, getting a better understanding around the logistics, economics and end-product specifics.

The decision on whether to move forward on this project comes down to several factors. Arianne believes that the most important component for a successful venture would be having access to a steady phosphate rock supply. With roughly 85 per cent of all global downstream facilities vertically integrated, the ability to source phosphate rock is key and it is the biggest challenge to the operations that do not have their own supply. An Arianne facility would be well positioned as it would have access to its own rock supply and would derive the economic benefits of vertical integration.

Aside from phosphate rock, a phosphoric acid plant would also require a supply of sulphuric acid that could be consistently delivered in timely fashion. It is on this basis that Arianne has entered into an MOU with a large marketer of sulphuric acid. This agreement will allow the company to work with a strong industry player that can provide the venture continuing guidance on pricing, logistics and industry supply/demand trends; all necessary aspects in determining the project's viability.

Additionally, over the last year as Arianne has been studying the possibility of a downstream facility, the phosphate industry has started to improve, with demand for both phosphate rock and its byproducts, such as acid, continuing to grow.

"The cure to a low commodity price is a low commodity price," said Brian Ostroff, chief executive officer of Arianne Phosphate. "Demand for phosphate grows every single year, yet consistently lower prices for phosphate over the last five years affected supply growth with expansion plans curtailed and new projects being shelved. After a prolonged period of time, a lot of what was believed to be excess supply gets taken up and you go from excess supply to tightness and the price correspondingly starts to increase, sometimes quite dramatically. Since the beginning of the year, phosphate prices are already up by 25 per cent and most industry watchers believe there is more to come. Arianne, with its world-class Lac a Paul project, should be in a position to take advantage of the industry revival."

Arianne over the next few months will continue to move forward its due diligence and discussions with potential partners regarding the viability of constructing a phosphoric acid plant. With the overall environment of the phosphoric acid industry improving, Arianne is increasing its pace of due diligence and has an expanded list of potential partners. It will be from these results that the full extent of the opportunity can be assessed.

About Arianne Phosphate Inc.

Arianne Phosphate is developing the Lac a Paul phosphate deposits located approximately 200 kilometres north of the Saguenay/Lac St. Jean area of Quebec, Canada. These deposits will produce a high-quality igneous apatite concentrate grading 39 per cent phosphorus pentoxide with little or no contaminants (feasibility study released in 2013).

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