Aguia Resources can move forward with confidence after winning a long-running court case that paves the way for first production and cash flow in 2025 at its Três Estradas organic phosphate project in southern Brazil.
In June 2021, the Federal Public Prosecutors Office (FPPO), backed by five civil associations, sought to block a preliminary license granted to Aguia in 2019, which allowed phosphate processing at Três Estradas. This license followed a comprehensive three-year environmental impact assessment approved by the Rio Grande do Sul State environmental agency (FEPAM).
The Federal Court in Bagé recently dismissed the FPPO’s demand to annul the license, ruling that the family ranchers who complained were not a “traditional community” and did not require the “free, prior and informed consultation” mandated for indigenous groups. The court also rejected claims regarding the legitimacy of public meetings held prior to the license approval, affirming that they complied with legal standards.
Warwick Grigor, executive chairman of Aguia Resources, stated, “We already have the granted Installation and Environmental Licenses. There is now no regulatory impediment to developing and commissioning the Três Estradas rock phosphate mine in 2025, once we receive the final approvals for the Operating License.”
With the legal obstacles cleared, Aguia is set to begin site preparations under existing environmental licenses. The final operational license from the environmental authority is expected within three to six months, allowing Aguia to start commercial mining operations next year. Located in the agricultural heartland of Rio Grande do Sul, Três Estradas has an estimated 105 million-tonne phosphate resource.
A 2023 bankable feasibility study revealed strong project economics, projecting annual production of 300,000 tonnes over an 18-year mine life, with a capital expenditure of $26 million and an anticipated EBITDA of $22 million per year. The payback period is estimated at just 2.9 years, with an impressive internal rate of return of 54.7%.
In July, Aguia indicated it was in advanced discussions to lease or purchase an existing processing plant about 100 km from Três Estradas, previously used for limestone processing. Minor upgrades will allow the plant to be repurposed for phosphate production, including the addition of a rotary kiln and bagging facility.
Aguia’s organic phosphate product, Pampafos, has gained popularity among local farmers due to its effectiveness and lower cost compared to chemical fertilizers. While southern Brazil currently imports all its phosphate, mainly from Morocco at around $400 per tonne, Aguia plans to sell Pampafos at just $140 per tonne, potentially yielding significant profit margins.
With production covering 15% of local demand, Aguia is confident it can easily sell its annual output of 300,000 tonnes within a 300 km radius.
The court ruling to lift the emergency injunction on Aguia’s license marks a crucial milestone for the company, enabling it to advance a key project central to its strategic goals in Brazil. With all regulatory hurdles now cleared, Aguia is positioned to move swiftly toward production and vital cash flows in the coming months.
