trending Market Intelligence /marketintelligence/en/news-insights/trending/hmYbNpW9VvH4ButGQCaUtg2 content esgSubNav
In This List

Encanto's Muskowekwan mine has net present value of C$860M at 3.4 Mt/y rate


Japan M&A By the Numbers: Q4 2023


Infographic: The Big Picture 2024 – Energy Transition Outlook

Case Study

An Oil and Gas Company's Roadmap for Strategic Insights in a Quickly Evolving Regulatory Landscape


Essential IR Insights Newsletter Fall - 2023

Encanto's Muskowekwan mine has net present value of C$860M at 3.4 Mt/y rate

Encanto Potash Corp. updated the mine plan for its Muskowekwan potash property in Saskatchewan, with a preliminary economic assessment indicating a posttax net present value of C$860 million, using a 10% discount rate, with a 17.9% internal rate of return.

Encanto and Muskowekwan Resources Ltd., its joint venture company with Muskowekwan First Nation, are jointly developing the project.

The company said June 12 that the 2013 pre-feasibility study mine plan was based on production of 2.8 million tonnes per year of muriate of potash, or MOP, while the PEA is based on production of 3.4 Mt/y of MOP.

The approximate 20% production increase can be maintained for more than 48 years, according to the recent analysis.

Initial CapEx is estimated at C$3.73 billion, which includes contingency, as compared to initial CapEx of C$2.86 billion outlined in the pre-feasibility study.

Operating costs are pegged at C$42.86 per tonne of MOP produced, at full production capacity, while sustaining capital is pegged at C$35.98 per tonne and logistics costs are pegged at C$50.05 per tonne.

Encanto is planning further, more detailed economic studies on the Muskowekwan project as a result of the PEA findings.

The company signed a memorandum of understanding with an Indian farming cooperative in January for a 20-year off-take agreement comprising at least 5 Mt/y of potash from the Muskowekwan property, after previously signing an MOU for 2 Mt/y.

Encanto said it will now work on securing additional capacity to supply the 5 Mt/y of potash established under the 20-year contract.

The company also recently formed a trading company, which is in negotiations to supply potash to India in a bid to provide revenue while further funding is sought to build the mine and plant.

Under its operating agreement with Muskowekwan First Nation, Encanto is contractually obligated to deliver potash within 36 months from its Dec. 30, 2016, off-take agreement with the Indian farming cooperative.