2012 has been a challenging year for the mining industry, yet despite all difficulties, along with your support, Eagle Star has continued to position itself as a rising force within the thriving fertilizer sector of Brazil. While some companies have chosen the route of easing on exploration, we have decided to push forward as hard as possible, convinced that even in these difficult times we have a compelling business opportunity worth developing. By adding strong technical expertise to our team, strategically increasing our land interests and meeting all of our exploration goals, Eagle Star is now set for significant achievements and ultimately a successful 2013.
The greatest credit to our progress this past year goes to our team of geologists headed by Dr. Jose Guimaraes Campos - Director and Chief Operating Officer (COO) of the company. A professor of geology from the University of Brasilia, Dr. Campos is widely known in Brazil for his expertise in sedimentary phosphate deposits. On top of bringing with him a wealth of technical knowledge necessary to explore for phosphate in Brazil, Dr. Campos was able to utilize his past experience with phosphate projects such as Itafos (now owned and operated by MbAC) to develop a genetic model that is the core of our exploration program. It''s on the basis of this model that we have been successful in discovering significant phosphate mineralization at our Bomfim project area. Dr. Campos has now taken a leave of absence from the University of Brasilia to oversee, full time, the development of our Bomfim project.
To insure continued progress and success in the coming year we have recently enlisted the help of two metallurgic engineers with specific knowledge of phosphate: Dr. Lino Freitas - a metallurgic engineer with over 35 years work experience, 25 of which was spent in the Vale Center of Technology developing beneficiation processes, and Carlos Perucca - a mineral processing engineer with wealth of experience gained through years of employment by the likes of Agrium and AMEC. Both Dr. Freitas and Mr. Perucca are expected to greatly benefit Eagle Star as it looks to move Bomfim into production as soon as possible.
Our Bomfim Agro-Mineral Project, which we acquired in late June of 2012, seems to possess all the technical merits that could turn it into a very valuable phosphate deposit. In just a short six months of operation and with only few of our numerous high potential targets explored by way of drilling and/or pit opening, we have already discovered significant phosphate mineralization.
At Bomfim Hill, initial mapping has exposed an area of 1500m x 600m in size covered in high-grade phosphorite outcrops. It was then decided to open a series of systematic test pits as this method enables our team to get the best possible sense of the extent of the high-grade mineralization at depth. What followed next is extremely rare within Brazil as we have intercepted in multiple pits high-grade material (in some pits higher than 19% P2O5) at or close to surface and this mineralization still remains open at depth (meaning that in certain pits we know mineralization is more than 5 meters thick). The discovery of a high-grade zone within Bomfim adds significant value to our portfolio. High-grade phosphorite could be easily transformed into fertilizer for direct application at a very low cost. Our team is already exploring for the fastest and financially most attractive avenue to take this into production. With Bomfim located right at the center of the "Cerrado" region of Brazil, an enormous fertilizer market is right here at our doorstep and Eagle Star is now positioned to take advantage of it to the great benefit of our shareholders. In parallel, we will continue with our pit and trench opening work towards a goal of delineating a NI 43-101 resource report within Q1 of 2013 at the D1 target (Bomfim Hill).
From day one, Eagle Star had envisioned a strategy of developing a portfolio of highly potential phosphate opportunities across the fertilizer deficient nation of Brazil. Results in the Ruth Agro-mineral Project demonstrate that we have achieved just that this year. Located in probably one of the best jurisdictions in terms of fertilizer production - the state of Piaui (the fastest growing agricultural state in Brazil yet having no local supply of phosphate). With power, water and transportation all readily available, Ruth has all the ingredients necessary for the development of a successful mining operation. At the Canabrava Block, large exposures of a mineralized sub surface by way of outcrops, erosion and a very limited overburden attracted us to pursue further exploration that led to the discovery of a substantial phosphate package averaging 7 meters in thickness with a strike in excess of 30 kilometers. The package itself is unique in its make up: a highly mineralized hard dense sandstone (8-12% P2O5) is intercalated with a lower grade soft pliable siltstone (1-3% P2O5) These very distinguished physical attributes make separation of the sandstone from the siltstone simple, cost effective and financially beneficial since post separation, both materials will have commercial use. The low-grade phosphate material (rich in many nutrients beneficial to the soil) is currently being tested in a live environment as a natural fertilizer for direct application. The high-grade material, through beneficiation would be sold as standard fertilizer material. Because the volume is so apparent at Canabrava, the focus is now on developing the metallurgic flowsheet with the help of our two metallurgic engineers. Preliminary solubility, separation and beneficiation tests have already returned positive and once a process for concentration is reached, we believe Canabrava will become one of the largest sedimentary phosphate deposits within Brazil in arguably its most strategic location.
An exciting year remains ahead of us with many analysts forecasting 2013 to be the year for phosphate investment. This commodity, traditionally overlooked by investors, has been gaining increased attention lately. Being part of a very limited group of publicly trading phosphate companies with focus on the largest agrarian country in the world - Brazil, Eagle Star is well positioned to take advantage of increased interest in this sector. Already now, with M&A activity gripping our sector at valuations much higher than share prices would otherwise suggest (for example the recent acquisition of Rio Verde by B&A at significant premium to market price) it becomes increasingly apparent to professional investors that our company is extremely undervalued. By continuing with the aggressive exploration program planned for Bomfim in 2013, while advancing additional chemical and metallurgical testing at Canabrava, the company will be able to reach important milestones and unveil significant value throughout the coming year. This will ultimately benefit you, our shareholder, whose investments, patience and belief allowed the company to develop thus far.
I wish you a happy, healthy and prosperous 2013.
Eran Friedlander, President & CEO
Eagle Star Minerals Corp.