OTC Bulletin Board : SPVEF


March 30, 2011 13:52 ET

Spur Ventures Announces Fast Tracking of its Fertilizer Phosphate Project in China

New Partnership with Hubei Xingfa Chemicals Group

Fertilizer Production to Commence in the Second Quarter of 2012

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 30, 2011) - Spur Ventures Inc. (TSX:SVU)(OTCBB:SPVEF) -

All amounts are expressed in U.S. dollars, unless otherwise stated

Spur Ventures Inc. ("Spur" or the "Company") announces that agreement has been reached between its joint venture ("JV") partner, Hubei Yichang Phosphate Chemical Company ("YPCC"), and YPPC's intended future majority shareholder, Hubei Xingfa Chemical Fertilizer Group ("Xingfa") to first combine the NPK production assets of Yichang Spur Chemicals ("YSC") and the MAP project of Yichang Maple Leaf Chemicals ("YMC") into one entity, YMC. Xingfa has proposed to then vend into YMC its world scale fertilizer phosphate plant currently under construction in order to achieve commercial fertilizer production at YMC by the second quarter of 2012, thus making up for time lost during the complex mining license transfer process, and eliminating the risks associated with YMC building its own plant while still fulfilling the obligations of the original YMC JV agreement. Spur will have minimum 20.02% ownership in the restructured YMC with no additional investment required and a potential for up to 25% equity in YMC once the YSC-YMC merger has been completed.

Xingfa Is A Strong and Capable New JV Partner

The takeover of YPCC by Xingfa announced in Spur's October 19, 2010 press release resulted in Spur having a financially strong and politically well connected new partner with extensive experience in phosphate mining and production of phosphoric acid and high value added feed and industrial phosphates. Upon completion of the takeover of YPCC, Xingfa's subsidiary which trades on the Shanghai Stock Exchange will be the majority shareholder in YPCC. Although the takeover has not yet received all required government approvals, the Xingfa team working with Spur has achieved greater progress on the YMC project since November of 2010than has been achieved in the last four years.

Two Modified Joint Venture Agreements Signed

To achieve these results, two separate but sequential modifications to the YMC Joint Venture agreement have been signed by Spur and YPCC.

The first modification, approved on March 23, 2011 by the Hubei Province Department of Commerce ("Hubei DC"), confirmed an extension to the deadline for the Registered Capital contributions of both JV partners from August 31, 2010 to December 31st, 2011. This simple JV agreement modification was purely an administrative procedure with the objective to ensure that YMC's Business License could be renewed by Hubei Province Administration for Industry and Commerce ("Hubei AIC") thus restoring YMC to the status of a legally operating entity. YMC's Business License had expired on October 31, 2010 and the next renewal will now occur on December 31, 2011.

In the second, more significant modification to the YMC JV agreement, Spur has received a special exemption from the Chinese authorities to receive full credit for its Registered Capital contributions of RMB 159 million or $24.6 million to date, with no requirement for further investment. Spur can thus retain the flexibility to invest in either the future feed and industrial phosphate developments planned by Xingfa ("Phase 2" and "Phase 3" described below), or in other natural resource opportunities while still participating at a significant level in the YMC project.

The second modification also includes strengthened minority protections for Spur (some already embodied in Chinese law) including the requirement for unanimous board approval for financings, corporate transactions, material asset disposals and deviations from annual profit distributions of less than 80% of profits. The new YMC Board will have 7 directors, five appointed by YPCC, including the Chairman, and 2 appointed by Spur, including the Vice Chairman. In addition, each of Spur and YPCC will appoint a supervisor (the "Supervisor") to YMC. The Supervisor role is common for foreign JV companies based in China. Each Supervisor will focus on overseeing the day to day operational and financial matters of the JV on behalf of each JV partner and will attend board meetings as a non-voting participant.

Spur, YPCC and Xingfa have agreed to submit the second modification to Hubei DC for approval once Xingfa has received final approval from Hubei Province State Owned Assets Supervision and Administration Commission ("SASAC") for its acquisition of YPCC. Xingfa has already received approval from Yichang SASAC and has indicated that it expects to receive Hubei SASAC's approval during the second quarter of 2011.

"Corporate governance and disclosure in China is evolving and our JV partners and the Chinese authorities have strengthened protection for Spur in its minority position" Steven Dean, Spur's Chairman noted. "Further, the Supervisor appointed by Spur will ensure the Company has unlimited access and full investigative powers related to the operations and finances of YMC."

Mining License Transfers Receive Hubei Province Approval

The restoration of YMC's legal status cited above has allowed Hubei Province Land and Resources ("Hubei L&R") to formally approve the transfer of the Dianziping and Shukongping mining licenses from YPCC to YMC and to send the mining license transfer file for final approval by the central Ministry of Land and Resources ("MOLAR") in Beijing. It is anticipated that MOLAR will require one to two months to reach its final decision on whether to approve the transfer of the mining licenses.

YMC and YSC Restructuring

As Xingfa becomes Spur's new formal partner in YMC, Spur and YPCC are now able to implement their long-term strategy to merge YSC and YMC. YSC, with its existing 100,000 tonne per annum NPK plant, has always been recognized as an integral part of the YMC Integrated Phosphate Project. The YSC site in Yidu City is also home to YMC's partly developed 200,000 tonne per annum MAP facility.

Because both YSC and YMC are Sino-foreign JV's and the Chinese partner (YPCC) in both JV's is a State Owned Enterprise, the merger will be completed under the provisions of applicable Chinese law and will be subject to a process based on government guidelines. Legal counsel has advised Spur that an independent valuation firm accredited to Yichang SASAC will determine the value of both JV's after which YSC will cease to exist and the final JV partners' equity positions in YMC will be adjusted according to the approved values of both JV's.

The merger process cannot legally begin until YMC's Registered Capital contributions have been completed but is expected to be completed by December 31, 2011.

Fulfilling the YMC JV Obligations by Partnering with Xingfa

Based on the original JV Agreement for YMC approved by the National Development Reform Commission and the central Ministry of Commerce in 2004, YMC must develop the Shukongping and Dianziping mines for the sole purpose of supplying phosphate rock to a world-scale phosphate fertilizer plant to be built by YMC.

To make up for time lost over the last years, Xingfa has proposed to vend into YMC (on terms to be settled) a fertilizer plant (the "Xingfa Plant") currently under construction near Yidu City in Hubei Province which is where YSC is located. The combination of YMC's two mines and the Xingfa Plant is expected to fulfill the obligation from the original YMC JV Agreement cited above. The process to determine both the acceptability of the vend-in transaction and the terms and mechanics on which the vend-in would occur is expected to be initiated with the government authorities once Xingfa's acquisition of YPCC (noted above) has been finalized.

The Xingfa Plant is expected to enter plant commissioning in the first quarter of 2012. According to Xingfa's design plans, the Xingfa Plant will have annual production capacity of 300,000 tonnes of DAP, 200,000 tonnes of MAP, 300,000 tonnes of SSP and 100,000 of MDCP (a feed phosphate product) supported by a one million tonne per annum phosphate rock beneficiation plant, 800,000 tonne per annum sulphuric acid plant and a 300,000 tonne per annum phosphoric acid plant. The site on which the Xingfa Plant is being developed occupies 100 hectares and Xingfa has estimated the capital cost of the plant to be approximately $150 million.

The Company believes that the vending in of Xingfa's newly constructed fertilizer plant would remove the risks inherent in permitting and building a new facility. Xingfa's five mines would immediately provide raw material phosphate rock to the plant ensuring both security of supply and lower costs relative to sourcing on the open market while the Dianziping and Shukonping mines are brought into production. In addition, the Xingfa Plant is expected to be operational by the second quarter of 2012 which is three to five years before YMC could realistically build its own plant.

The Xingfa Plant represents the first phase of a three phase, integrated phosphate project planned for development by Xingfa where the second phase will be 500,000 tonnes of various types of feed phosphates and the third phase will be over 1 million tonnes of high value industrial phosphates.

The entire three phase facility is designed to be fully integrated such that products from one phase become the feedstock for another phase, thus potentially increasing profitability, reducing environmental losses and, most importantly, ensuring that the phosphate rock from YMC's two and Xingfa's five phosphate mines can be fully optimized regardless of the grade and quality of the specific phosphate rock.

Xingfa have commenced the development of a port site on the Yangtze River to support the three phase facility with annual handling capacity of 4 million tonnes. Xingfa has also secured extensive rail and road links and land for all ancillary plant facilities and a phosphogypsum pond.

"There have been a tremendous number of moving pieces which needed to be solved according to Chinese business and government practices" Dr. Rob Rennie, Spur's President & CEO explained "but the end result is that Spur's patience and determination to implement the Sino-Canadian JV phosphate project is finally yielding results."

More information can be found in the audited financial statements and the related notes and the management discussions and analysis of the period filed with Canadian regulators on SEDAR at www.sedar.com and on the company's website: www.spur-ventures.com

This news release contains "forward-looking statements". Forward-looking statements include, but are not limited to, statements with respect to the estimation of mineral resources, the timing and content of upcoming programs, the realization of mineral resource estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to international operations; actual results of planned expansion activities; changes in project parameters as plans continue to be refined; future prices of resources; exchange rates for Canadian, U.S. and Chinese currencies; possible variations in grade or recovery rates, accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; Chinese government policies on fertilizer and agriculture; general economic, market or business conditions as well as those factors discussed under "Description of the Business – Risk Factors" in the Annual Information Form. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements or information made in this press release, except as required under applicable securities legislation.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information