Previous Page 1 | 2
K+S, on the other hand, began construction last June on its $3.25-billion Legacy mine, 60 kilometres northwest of Regina.
“Currently there is a bit of a pullback,” says Costigan. “But we take that as a very advantageous sign. It frees up a lot of resources in the form of skilled workers. Moreover BHP’s project is fantastically ambitious. I think their shareholders want to see an earlier return. BHP’s Jansen project doesn’t see any returns until maybe 2023. Again, a solution mine can show returns within three years. If we start construction next year, we could be in production by 2016.”
In addition to tonnage and grade, the project’s resource estimate provides a recoverable potassium chloride resource that deducts 5% for unknown geologic anomalies, accounts for a 34.6% extraction ratio and removes a 0.8-kilometre buffer around towns. Accordingly, Milestone’s potash beds have resources showing:
- a measured category totalling 786.8 million tonnes averaging 25.75% potassium chloride (KCl) for 202.63 million tonnes KCl, with a recoverable resource of 66.6 million tonnes KCl
- an indicated category totalling 2.25 billion tonnes averaging 25.97% for 584.93 million tonnes KCl, with a recoverable resource of 186.68 million tonnes KCl
- an inferred category totalling 10.51 billion tonnes averaging 25.96% for 2,729 million tonnes KCl, with a recoverable resource of 708.18 million tonnes KCl.
Milestone’s upcoming feasibility will upgrade some resources into reserves.
If you compare the ramp-up period for a solution mine with a conventional mine, it’s staggering. 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.—Western Potash VP of corporate development John Costigan
Having closed a $9.6-million private placement in late October, the company’s well funded through the environmental assessment approval expected early next year. As for building the mine, Costigan says the company could take on a joint venture partner.
“For shareholders, the ultimate value isn’t in selling the project. It’s in building the mine. We believe it will be a substantial cash generator and the best value for shareholders,” he says.
Both China and India consider potash a strategic commodity, he points out. That’s not surprising, given that something like 95% of potash goes into fertilizer. Rising populations with rising expectations need more food. But even though potassium is the seventh-most abundant element in the earth’s crust, “economic potash deposits are very rare,” Costigan says. “Some otherwise economic deposits are in places with geopolitical problems that make them unviable. Saskatchewan really is the address for potash development.”
Ranked by the Fraser Institute as #6 among worldwide mining jurisdictions, the province currently produces about 30% of global potash supply.
“I think we’ve got one of the lowest-risk projects in the world,” says Costigan. “When you consider the geology, type of deposit, grade and access to infrastructure, we’re in an enviable position. And our upcoming feasibility will show how we’ve de-risked the project.”
Previous Page 1 | 2
Pages: 1 2