MBAC Reports Initial NI 43-101 Preliminary Economic Assessment and Resource Estimate for Santana Phosphate Project, Brazil

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TORONTO , Sept. 12, 2011 /CNW/ - MBAC Fertilizer Corp. ("MBAC" or the "Company") (TSX:MBC and OTCQX:MBCFF) is very pleased to announce the results of an initial National Instrument 43-101 ("NI 43-101") compliant Preliminary Economic Assessment ("PEA") for the Company's 100% owned Santana Phosphate Project (the "Project") located in the southeast of Pará State, Brazil. The PEA is based on an initial inferred mineral resource estimate determined by drilling completed up to July 31, 2011 . The PEA is preliminary in nature. It includes inferred mineral resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic assessment will be realized. The Company will file on SEDAR a NI 43-101 technical report containing the mineral resource estimate and PEA within the next 45 days.

Highlights of the NI 43-101 Technical Report:

• The initial resource estimate for the Santana deposit is inferred resources of 33. 5Mt with an average P2O5 content of 12.4% (using a 3% P2O5 Cut-off)
• This grade deposit makes Santana one of the highest grade phosphate mines in Brazil

Highlights of the PEA:

• Estimated production of 500,000 tonnes per annum of Single Superphosphate ("SSP") production starting in Q3, 2015, using 300,000 tonnes of P2O5 34% concentrate
• A robust NPV of $423 million (at a discount rate of 10%) and an IRR of 26.3%
• Operating cash costs of $127 per tonne SSP (includes a10% contingency)
• Capital costs of $385 million
• Mine life of 22 years (based on initial resource estimate)
• Production target Q3, 2015
• Significant resource expansion potential
• Opportunities to increase value by production of other higher-content phosphate fertilizers and animal nutrient products. A review of which will be finalized before completion of the feasibility study
• The initial lab tests with concentrates resulted in high quality SSP and phosphoric acid suitable for Triple Superphosphate ("TSP") and Di-calcium Phosphate ("DCP") production

Antenor Silva, President and CEO, stated "the Santana phosphate project is the next step in realizing our vision to be a significant integrated fertilizer producer in Brazil . Santana has many competitive advantages including the high grade phosphate which could potentially make it one of the lower cost phosphate mines in Brazil. Proximity of the Santana project to the largest fertilizer and animal feed markets and the fact that there are no other significant producers in the region provides a very compelling opportunity for MBAC. The high grade deposit will also permit the Company to consider higher concentrate phosphate fertilizer products such as Triple Superphosphate and Di-calcium Phosphate which is used as an animal supplement."

Mr. Silva further noted; "The preliminary economic assessment results show the Project producing an NPV of $423 million and an Internal Rate of Return ("IRR") of 26.3% and a discounted payback of 4 years using conservative assumptions. Our goal is to have the Santana project in production by the third quarter of 2015. "

Project Background

MBAC, through its subsidiary is the sole registered and beneficial holder of eight exploration properties with an additional three exploration permits under application for a total of 97,949 hectares. The Santana Project is located in the southeast of Pará State, Brazil (see map below). The target Phosphate markets for the Project are the northern and eastern regions of Mato Grosso State and southern region of Pará State. Mato Grosso State is the largest soybean producer in Brazil , while Pará State is the largest beef producer in Brazil (which is the largest market for the animal supplement DCP). SSP demand in Mato Grosso State alone is approximately 1.7 million tonnes per annum. This demand is expected to grow at least 25% by 2015, with an estimated demand of SSP in 2015/16 in the range of 2.1 and 2.2 million tonnes of SSP per year.

Competitive Advantage

The Project will have significant competitive advantage as its target market is located far from the main phosphate fertilizer producers. Currently most of the fertilizer brought into the region is imported and comes through Paranaguá Port, located approximately 2,150 km. away. Other potential suppliers are located in southern Minas Gerais State which is approximately 1,000 km. away. Phosphate products can also be imported from the Itaquí Port in the northern part of Brazil which is approximately 1,400 km. away, but the inland logistics to reach the region are poor.

Summary of the Resource Estimate

The Santana inferred resource estimate is based on 53 diamond drill holes (2,386m) and 6 reverse circulation ("RC") holes (238m) drilled at a spacing of approximately 200m by 200m. Only data received as at July 31, 2011 has been used in this estimate. MBAC has an ongoing infill drilling and extensional drill hole program underway.

Santana is defined by flat lying phosphate rich metavolcaniclastic and carbonate rocks belonging to the Iriri group of Precambrian age. The main mineralization is located within a supergene enriched saprolite zone and is between 10m and 80 m thick. Additional large widths of fresh hydrothermally altered carbonate rocks have been intercepted in three deeper drill holes down to 200m depth, but this has not been estimated due to lack of data

The resource estimate has focused on this main oxide mineralization with 2 flat lying mineralized domains defined using the saprolite and fresh geological boundary along with a 3% P2O5 grade cut-off to guide the wireframing process. The inferred mineral resource estimate, comprising 33. 5Mt with an average P2O5 grade of 12.39% (using a 3% P2O5 cut-off) is summarized in Table 1 below.

Note: Appropriate rounding has been applied
*Mineral resources that are not mineral reserves do not have demonstrated economic viability.

As of the end of August the Company had completed drilling of over 170 holes and only 59 of these drill holes have been used for the current inferred mineral resource estimate. The ongoing extensional drilling found mineralized holes at 400m on the east and the west of the current block model showing the mineralization remains open in both sides.

Other regional investigation is being carried on and other drilling targets are yet to be defined. The geology setting found at the current drilling targets are present in other areas of the MBAC claims and the aim of the regional investigation is to define new drilling targets.

Summary of the Project Economics

The PEA indicates that the Project is expected to generate robust returns. The assumptions for the economic analysis are as follows:

Note: (1) The SSP price through 2020 was based on TSP prices furnished by a leading independent authority in fertilizer industry. For the period after 2020, the price was escalated at a rate of 2% per annum

Products

For the purposes of the PEA, MBAC has forecasted production of 500,000 tonnes of SSP. This production will require 300,000 tonnes of phosphate concentrate (averaging 34% P2O5) and 200,000 tonnes of sulphuric acid. Lab tests have shown that the ore can be easily concentrated to 34% P2O5 or up to 38% P2O5 with good metallurgical recoveries. A recovery of 55% was used in this assessment which the Company believes to be conservative. Also the solubilisation tests showed very positive results, and the SSP produced have in average 20% P2O5 soluble in Citrate plus water, and 19% P2O5 soluble in water, on a dry basis.

Initial lab tests for Phosphoric Acid production showed promising results, producing an acid with very low impurities and low grade of fluorine. The Phosphoric Acid produced is suitable for production of high grade phosphate products, such as TSP and DCP. The economic feasibility of the production of such high grade material shall be investigated during the feasibility study process.