TORONTO (miningweekly.com) – Phosphate project developer Stonegate Agricom has successfully converted exploration permits for its Paris Hills phosphate project, in Idaho, to mineral leases, the first in a series of state permitting approvals required before the company could underground phosphate mining at the property.

Agricom CEO Mark Ashcroft said the permitting process, which began last fall, was proceeding as planned.

“We have finished the drilling of wells related to the collection of baseline water information and we will be submitting formal applications to the appropriate Idaho departments concerning water use and other permitting matters in the months ahead. We expect to complete the permitting process and commence construction and production by the fourth quarter of 2014,” he said on Thursday.

The mineral leases were issued by the Idaho Department of Lands and granted Paris Hills the right to mine phosphate where the state owns the surface and mineral rights.

Earnings from the leases would go to state endowment funds that benefit Idaho's public schools and universities. The company already had the right to mine in mineral lease areas owned by individuals, which include most of the remainder of the property.

Agricom in December published results of a feasibility study for developing an underground mine in the Lower Phosphate zone of its fully owned project, in Idaho, placing a $477.5-million net present value on the project.

The feasibility study built on the prefeasibility study (PFS) completed on March 26, and confirmed the technical and economic viability of mining the Lower Phosphate zone. The study incorporated drilling results obtained after the publication of the PFS, resulting in a 67% increase in mineral reserves and extending the mine life from 14 to 19 years.

The Lower Phosphate zone's high grade is an important advantage for the project, owing to the fact that the mined material would be concentrate-quality and could be shipped directly without incurring the capital or operating costs associated with a processing plant.

The feasibility study focused only on the horizontal limb of the Lower Phosphate zone and the results did not include the potential of the Upper Phosphate zone horizontal limb, for which an estimate of mineral resources was published in August. It also does not include the potential of the upturned limb, which is regarded as an exploration target.

The project, which could be constructed for $121-million, is expected to produce phosphate concentrate at a rate of 904 000 t/y, requiring no beneficiation.

Production and reserves over the expected 19 year life-of-mine (LOM) are stated to total 16.7-million tons of direct-ship, concentrate-quality phosphate rock with an average LOM grade of 29.5% phosphorus pentoxide.

Production is expected to be about 320 000 t in the first year and ramp up to commercial production levels of 740 000 t in the second year and 885 000 in the third year.

The study also found the mine would produce phosphate at a cash operating cost of $69.49/t of concentrate free-on-board and that the expected sale price of $165/t could be achieved.

The mine is expected to achieve a pretax internal rate of return of 45.9%.

The required permits are expected during 2013 and 2014 and initial production is expected to start late in 2014.

The company is also concurrently developing the Mantaro phosphate project, in Peru.

The company's TSX-listed stock lost almost 2% of its value on Thursday to trade at C$0.50 apiece.