Friday 29th August 2014

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Milestone attained

Feasibility approaches for Western Potash’s southern Saskatchewan Milestone project

by Greg Klein

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A 45-year deal to buy treated effluent? At first glance, that hardly seems the kind of news to excite investor interest. But it’s essential to Western Potash’s TSX:WPX plan to use solution mining, one of the distinguishing features of the company’s Milestone potash project in southern Saskatchewan.

“If you compare the ramp-up period for a solution mine with a conventional mine, it’s staggering,” says Western Potash VP of corporate development John Costigan. “From construction to production takes about three years. For a conventional mine, that can take up to nine years. Consider the capital costs. Consider the cash flow. The payback comes an awful lot sooner.”

Feasibility approaches for Western Potash’s southern Saskatchewan Milestone project

About 95% of potash is used to make fertilizer,
helping to feed the world.

So last November’s water deal with the city of Regina marked another step forward for Milestone. The company expects a decision on its environmental impact statement in Q1 2013. Even sooner, Milestone’s feasibility study will hit the market.

The water plan calls for Western Potash to build a 30-kilometre pipeline from city to site. There, treated water will be injected into the mine and pumped out as potash-bearing brine. Evaporation, separation of salt and potash, and further refining will lead to the finished product. The deal gives Regina more than $200 million over 45 years. There’s a dual environmental benefit, too. Solution mining extracts less salt than conventional methods, resulting in a smaller surface footprint. And Regina won’t dump as much waste into its watershed. The plan would be more than sufficient to meet Milestone’s PEA-projected target of 2.8 million tonnes per annum for over 40 years.

The location is hardly obscure. Rival railways Canadian Pacific and Canadian National both cut through Milestone, offering access to ports and North American markets. Some of the world’s heavyweights live right next door. Milestone’s 35,400 hectares are bordered to the north and east by licences held by German fertilizer company K+S, BHP Billiton, Vale and a JV shared by Rio Tinto and North Atlantic Potash.

Two of those companies, however, might have cast a pall on potash. Last August Vale postponed construction of its $3-billion Kronau project to focus on the Carajas Mine in Brazil, the world’s largest iron ore mine. But Vale continues to work on Kronau’s environmental impact study. The same month BHP directors decided to review their $12-billion Jansen project, about 200 kilometres northwest of Milestone, even though work continues on the site. BHP has spent about $2 billion so far on Jansen, which would be the world’s largest potash mine.

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