TORONTO (miningweekly.com) – Karnalyte Resources, which debuted on the TSX in December, aims on producing 500 000 t/y of potash at its Wynyard project in Saskatchewan, but CEO Robin Phinney said on Thursday this could eventually climb as high as six-million tons a year.
The plan is to construct the first phase at a capital cost of around $410-million by the end of 2013, and build this up in 500 000 t/y increments to two-million tons a year by 2016/17.
The two-million ton figure comes at a price tag of around $1,5-billion.
Phinney said in an interview that he believed the Wynyard project contained enough resources to consider building an additional two operations there of two-million tons yearly potash production, and Karnalyte would consider bringing on joint-venture (JV) partners to do so.
"If we bring in a JV partner, we could be producing six-million tons a year, or more,” he told Mining Weekly Online.
The Wynyard project is a carnallite orebody, which the company aims to extract using a solution-mining process, meaning it will pump a salt solution down into the rock about 1 000 m below the earth's surface, which dissolves the potash, to be pumped back to the surface for processing in a plant.
Most of the potash mined in Saskatchewan, which accounts for around one-fifth of global supplies, is extracted using conventional underground mining methods.
Phinney said Karnalyte’s proposed solution-mining method carries a lower capital and operating cost than traditional mining methods, and can be brought into production quicker too.
Why aren’t all the Saskatchewan potash producers focusing on carnallite orebodies?
Accoring to Phinney, Wynyard is quite unique in its size and geological setting.
“It’s not supposed to be there, in a geological sense. This is a geological anomaly,” the chemical engineer, and former Potash Corp hand, said.
He believes the geology was formed by a comet striking the earth’s surface in the area.
The next step for the company is to complete a feasibility study, which it says it will do by the end of the year.
Results in hand, Karnalyte will then seek traditional debt funding to pay for the $410-million first phase.
CFO Ron Love said the company would be able to fund the majority of the expansion beyond the first 500 000 t/y through internal cash flows from that production.
It could also bring JV partners in beyond that.
Asked whether Karnalyte has attracted much interest from potential suitors, management is coy.
Said corporate development VP Julius Brinkman: “Suffice to say, our story is very good and it getting around, we talk to a lot of people.”
“And we’re being solicited a lot,” Phinney jumped in.
“But it’s still very early, and I really don’t want to talk to anybody yet.”