Australian Potash Ltd.'s definitive feasibility study for its Lake Wells sulfate of potash project in Western Australia outlined a posttax net present value, discounted at 8%, of A$441 million, a 21% internal rate of return, and a 4.75-year payback period.
The capital cost was estimated at A$208 million, including a A$20 million contingency, to develop an operation with a production capacity of 150,000 tonnes of SOP per annum.
The average posttax free cash flow from the project was estimated at A$70 million per annum, with average EBITDA of A$114 million per annum.
During its 30-year mine life, the project will produce 95% of output from a reserve of 3.6 million tonnes, and 5% from the measured resource.
The company said Aug. 28 that the JORC 2012-compliant measured mineral resource of 18.1 million tonnes also provides strong upside potential for extension of the mine life.
Lake Wells covers 2,100 square kilometers and comprises three granted mining leases and 17 exploration licenses.
The project will be developed in 24 months after the final investment decision, and first production is expected six months before the processing plant output achieves nameplate capacity.
Australian Potash plans to immediately kick off a program of front end engineering design at Lake Wells, it noted.
