TORONTO (miningweekly.com) – Phosphate project developer Stonegate Agricom has temporarily halted permitting activities at its Paris Hills project, in Idaho, citing financial constraints.

The TSX-listed firm noted on Monday that third-party consultants appointed to finalise the groundwater model for permitting applications, had provided a range of estimates of expected groundwater flow rates into the planned underground mining area.

As a consequence, the company would need to undertake more testing and analysis that might include additional engineering work.

As at December 31, cash and cash equivalents were about $1.4-million and working capital was $1-million.

Agricom said that given its current financial position, it could not undertake the extra work at this time, and it no longer expected to submit the groundwater model and report in the current quarter as planned.

The company pointed out that it was reviewing its options regarding its next steps and was exploring alternatives to raise funds early in the second quarter to cover working capital and fund further work on the project.

PREFEASIBILITY
Agricom in December 2012 published results of a feasibility study for developing an underground mine in the Lower Phosphate zone of its fully owned Paris Hills phosphate project, placing a $477.5-million net present value on the project.

The Lower Phosphate zone's high grade was 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 did not include the potential of the upturned limb, which was regarded as an exploration target.

The project, which could be constructed for $121-million, was 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) were stated to be 16.7-million tons of direct-ship, concentrate-quality phosphate rock with an average LoM grade of 29.5% phosphorus pentoxide.

Production was 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 t 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 was expected to achieve a pretax internal rate of return of 45.9%.

According to the feasibility study, initial production was expected to start late in 2014.

The TSX-listed stock fell a third on Monday to C$0.03 apiece.