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Potash Ridge: Updated study pegs annual cash flow of US$128M for Utah project

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Potash Ridge: Updated study pegs annual cash flow of US$128M for Utah project

An updated pre-feasibility study for Potash Ridge Corp.'s Blawn Mountain potash project in Utah estimated average after-tax life-of-mine cash flow of US$128 million per annum for a surface mining operation that will produce 232,000 tons of potassium sulfate per year.

The project will produce an average of 255,000 tons of potassium sulfate per annum during the first 10 years after ramp-up. It hosts proven and probable mineral reserves of 153 million tons, with reserves supporting a 46-year project life.

The project will require an installed potassium sulfate capital cost of US$458 million.

Assuming a price of US$675 per ton for potassium sulfate and US$115 per ton for sulfuric acid in 2020 and 2% inflation, the project has the potential to generate an unlevered after-tax internal rate of return of 20.1% and a life-of-mine average operating margin of US$172 million per annum.

The after-tax net present value of the project is pegged at US$482 million, using a 10% discount, and there is potential upside for project economics through the expansion of the initial production rate and the possible monetization of the residual waste material given its high concentrations of alumina.

The company intends to conduct further metallurgical testing to determine the most economic extraction method for alumina from the residual waste material.

According to a Jan. 18 release, the latest study considers about 40% of the annual production rate envisaged in the December 2013 technical report.

Potash Ridge CEO Guy Bentinck said the company's next step will be to secure a fixed-price engineering, procurement and construction contract, raise construction capital and finalize commercial arrangements, with a view to kick off project execution this year.