PRELIMINARY INFORMATION MEMORANDUM IS OUT

   04.02.2011

SUNKAR RESOURCES PLC
("Sunkar" or the "Company")

 
PRELIMINARY INFORMATION ON FEASIBILITY STUDY FOR CHILISAI PHOSPHATE PROJECT
 
Sunkar Resources plc (AIM:SKR) is pleased to announce the preliminary results of the Feasibility Study for the Chilisai Phosphate Project (the "Project").
The Company's aim is to build a large scale integrated fertilizer manufacturing complex in Kazakhstan, consisting of a mine based on the wholly owned Chilisai phosphate resource in the Aktobe region of Kazakhstan, and a chemical complex to convert the phosphate minerals into international grade fertilizers - DAP (di-ammonium phosphate) and MAP (mono-ammonium phosphate).
The Feasibility Study is being performed by the international engineering company SNC Lavalin ("SNCL") and is expected to be completed in H1 2011. On 3 February 2011, SNCL delivered a Preliminary Information Memorandum ("PIM"), which presents the preliminary results of the Feasibility Study with an accuracy level on cost estimates at +/- 30%.
Highlights of the PIM:
-     The PIM covers the first phase of the project which has a capacity of 430 thousand tonnes ("Phase One") per annum of P2O5 nutrient in the form of MAP/DAP, half of the Project's target capacity;
-     The PIM addresses most of the issues normally found in feasibility studies for mining and manufacturing projects;
-     The PIM by SNCL includes a detailed mining plan and basic design for the chemical complex including actual terrain layouts for all facilities and external infrastructure;
-     The material balances and throughputs of mine and plants in Phase One have been estimated by SNCL as follows:

• Mine throughput - 5 million tonnes of ore per annum with output of 2.55 million tonnes of phosphate rock per annum at 17% P2O5;
• Sulphuric acid plant output - 1.5 million tonnes with feed of 0.5 million tonnes of molten and crushed sulphur per annum;
• Phosphoric acid plant throughput - 430 thousand tonnes of P2O5;
• Fertilizer plant with a planned output of 389 thousand tonnes of MAP and 439 thousand tonnes of DAP per annum; the balance between DAP and MAP can be varied depending on market conditions;

-     For the purposes of the Feasibility Study, SNCL prepared a mining plan based on the Measured and Indicated Resources model reported in the 2009 resource report issued by Wardell Armstrong International Limited, a prominent UK based mining consultancy. The resource report covers 40% of the licence area. For the purposes of developing a mining plan, 266 million tonnes of ore at an average grade of 10.4% P2O5 has been assumed as mineable out of the total Measured and Indicated Resources. A formal reserve estimation should be based on the mining plan proposed in the Feasibility Study and will be signed by a third party geologist/mining engineer, who is qualified as a Competent Person. A reserve update is expected by the end of March 2011.
-     The study of the Project's economics and current value is based on capital and operating costs estimates by SNCL, fertilizer price forecasts prepared by CRU Strategies Limited combined with a project timeline consisting of a four year development and construction phase in 2011-2015 and followed by 20 years of production starting in 2015. The results of this study was as follows:

• The total Phase One revenue over 20 years production is estimated at US$8.4 billion;
• The capital cost of Phase One is estimated at US$880 million (before working capital) including the mine, the chemical complex and all necessary infrastructure and waste handling facilities;
• Nominal cash cost of DAP production of US$186 per tonne in 2016 and  US$221 per tonne in 2025;
• Estimated revenue of US$324 million in 2016 increasing to US$394 million in 2025;
• Estimated EBITDA of US$171 million in 2016 increasing to US$212 million in 2025;
• Estimated Project IRR of 16.52% before tax and 13.82% after tax on a 100% equity finance basis

-     The economics study is based on the conservative trading scenario where all exports (75% of output) are directed FOB to the Black Sea, which has higher transportation costs compared to other target markets (Kazakhstan, China and other CIS countries);
The final Feasibility Study is expected to be completed by end of H1 2011 and will cover the Project's full capacity at 860 thousand tonnes of P2O5 nutrient per annum. Additionally, the final Feasibility Study will incorporate:
-     A detailed market study prepared by CRU Strategies Limited;
-     Trading scenarios analysis for all target markets;
-     Environmental and social impact assessments suitable for this stage of the Project;
-     A construction plan; and
-     Other items critical for the raising of project finance.
The PIM also points to further improvements to be analyzed in the final Feasibility Study which may positively impact the economic assessment of the project.
 
A summary of the Preliminary Report is available on the Company website www.sunkarresources.com
Serik Utegen, CEO, Sunkar Resources plc commented:
"The PIM is a major milestone for the Chilisai Project. Our contractor, SNC-Lavalin, has accomplished a world class job by quality and volume.
We are pleased with the value shown for the first half of the Project's capacity. We expect the final Feasibility Study to provide us with an assessment of the full potential of the Project at 100% capacity, which will more than double the overall value compared to the PIM and take into account certain improvements related to economies of scale."
 
For further information please contact:

Sunkar Resources plc    
Serikjan Utegen, CEO    Tel: +44 20 7930 8678
Donald Sinclair, CFO    
    
Canaccord Genuity Limited    
Andrew Chubb    Tel: +44 20 7050 6500
Bhavesh Patel    
    
GMP Securities Europe LLP    
Andrew Young     Tel: +44 20 7647 2800
    
Bankside Consultants    
Simon Rothschild    Tel: +44 20 7367 8888
Louise Mason