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Great Quest is Granted the Right to Acquire a Majority Interest in the Tilemsi Phosphate Project in Mali

Last updated: 15:00 07 Nov 2008 AEDT, First published: 16:00 07 Nov 2008 AEDT

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Companies diversify their activities both during good times and bad times. Endeavours undertaken at bad times however generally result in the acquisition of attractive projects at bargain prices. Canadian Venture listed Great Quest Metals Ltd. (TSXV: GQ; Frankfurt: GQM) has just completed the acquisition of a phosphate project in Mali (Tilemsi phosphate project).

The Tilemsi project consists of three phosphate deposits, which include the Tamaguilelt, Chanamaguel and Tin Hina.  The Tamaguilelt is located 105 kilometres northeast of the town of Bouram which is on the east side of the Niger River, 95 km north of the regional centre of Gao.  The project also includes a former producing plant in Bouram consisting of a pulverizer and 2 bagging devices along with ancillary equipment, a building housing the operation, 2 office buildings, sheds and storage buildings.

Mali is not alien territory to GQ. The company already has promising gold projects in its Kenieba-Baroya and Bourdala projects in Mali. In addition, GQ holds 2,149 sq km Kenieti diamond concession in Mali, which covers three known kimberlite pipes. Tilemsi phosphate project will however transform GQ into a producing entity supporting a key sector of the Malian economy.  On completion of the agreements, GQ intends to finance the reactivation of the Tilemsi phosphate project and to carry out exploration in order to upgrade the present resource and the known deposits.

Most of the exploration to date has been concentrated on the Tamaguilelt deposit and has a historical resource (predates NI 43-101) of 11,302,000 tonnes average of 27% of P2 O5.  The Tamaguilelt occurrence consists of a flat-topped hill of 2,200 by 4,000 metres with the phosphate bed outcropping around the entire hill.  It is estimated that a total of some 100,000 tonnes have been mined from the early 1970’s to 2000.  In addition there is much exploration potential for the discovery of additional phosphate resources in the area of the three deposits and to the west.

The production of saleable Tilemsi phosphate requires a basic mining operation, the pulverizing and bagging of the material and shipment to the local market.  The project already has a 36,000 tonnes per year capacity processing plant. Merit Consultants International Inc., the independent consultants hired by GQ for initial due diligence work has estimated the plant could be operational in 8 months after necessary repairs and restoration work. Merit Consulting estimates that to revive the entire operation would require approximately $1,400,000.

Coincident with preparation to advance the plant and mine to operational state, GQ will begin a drill program for phosphate to increase the mineral resource at the Tamaguilelt Phosphate deposit and complete a NI 43-101 compliant report on the resource.  Following the complete definition of the Tamaguilelt deposit, the Company will proceed to define the mineral resources on the Chanamaguel and Tin Hina occurrences.
 
Phosphate is in demand all over the world and is indeed the case in Mali as well. The potential market for fertilizer estimated by the Malian Department of Agriculture is 180,000 tonnes per year.  Currently, no fertilizer is being produced in Mali. Although it is subject to local market conditions at the time, the price received for agriculture grade phosphate is estimated to be approximately $250 per tonne.  

Having acquired over 70% interest in the project, GQ is expected to be the operator, with the remainder held by GQ’s local partner, Mali Mining House SA. After extensive discussions and negotiations, GQ is required to pay approximately $1,500,000.  GQ is also required to pay Mali Mining House approximately $500,000 over 27 months and to issue 420,000 shares.

The management of Great Quest recognizes that the acquisition of the project represents not only an opportunity to transform the Company into a mineral producing entity, but also an important responsibility to the agricultural industry in Mali. Project management plans and negotiations will now continue on an exclusive basis towards the establishment of this important new phosphate mine.

GQ’s entry into agriculture sector through this acquisition bodes well for the company. Demand for agriculture stocks remains high and the fertilizer is one of the most effective ways of gaining exposure to the sector. Tilemsi acquisition therefore further strengthens GQ’s investment case.

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