As expected, Focus Ventures (FCV.V) has released the updated pre-feasibility study on its Bayovar 12 phosphate project in Peru. About two weeks ago, we said we were expecting the updated PFS to be released within the next few weeks, and we’re glad to see the company has indeed been able to push this updated study out.
We were expecting to see the capex increase to $175-200M and the IRR to come in ‘between 22% and 27%’. Well, the results are definitely meeting our expectations as the initial capex is now estimated to be less than $170M whilst the after-tax IRR increases to 26.4%, at the higher end of our previous expectations. The new mine plan is incorporating one larger processing plant, capable to produce 1 million tonnes of end-product per year, rather than a modular mode. This does indeed increase the initial capital expenditures but it’s totally worth it as the after-tax NPV gets boosted to US$458M (which is 81% higher compared to the first PFS), and even if we would use a diluted share count of 250 million shares (an additional 100% dilution), the after-tax NPV7.5% would be north of C$1.5/share, emphasizing the true value of Bayovar 12.
We are very pleased with the updated economics of Bayovar 12 and we’re glad our initial impression of the first PFS was correct. This fine-tuned PFS will open more doors for Focus Ventures which will now move towards completing a feasibility study at Bayovar 12. But first, it will have to find a solution for the Sprott-loan which will be due later this year.
Once the full technical report will have been filed on SEDAR, we will obviously provide you with an in-depth report on the pre-feasibility study.