PERTH (miningweekly.com) – Potash developer Elemental Minerals on Thursday announced a new capital estimate of $908-million for the development of its Sintoukola sylvinite (Kola) project, in the Republic of Congo.
This compares with an initial capital estimate of $1.85-billion in the 2012 prefeasiblity study (PFS), which sets out a plan for a two-million-tonne-a-year operation over 23 years.
However, following the PFS, the ASX-listed junior initiated a phased implementation for the Kola project, which considered alternatives to the project configuration in order to reduce the capital requirements, and rescheduled the mine planning to start with a one-million-tonne-a-year operation, known as Phase 1, which would run for four years.
The Phase 2 operation, which would take mining rates to two-million tonnes a year, would be introduced following Phase 1.
The phased implementation also considered a revised shaft configuration, an overland conveyor for run-of-mine transport in place of a dedicated mine haul road, the construction of a process plant in two separate phases, a dedicated natural gas pipeline and conversion of the construction camp into an operational accommodation camp for Phase 1 workers.
The updated study resulted in a 51% capital expenditure (capex) reduction for the Phase 1 project, while the Phase 2 capex would be financed from free cash flows flowing from Phase 1.
Phase 1 production was earmarked to start in 2018, while Phase 2 would ramp up by 2020.
“We are extremely pleased with the outcomes of the phased implementation study, as it significantly reduces the start-up capital requirements for the project,” said Elemental CEO John Sanders.
“The project’s excellent fundamentals are underscored by the potential for Phase 1 free cash flow to fund the Phase 2 capital requirements. Initial project equity requirements will be further reduced through the appropriate mix of debt and equity, and the company is in advanced discussions with potential partners in relation to the funding of the equity component.”
Sanders noted that phasing was a tried and tested strategy which had been successfully implemented on a number of other large projects, adding that the operating costs of this approach would also position Kola as potentially the lowest cost producer of potash, globally.
The life-of-mine (LoM) average operating costs for Kola have been estimated at $91/t.
“Ongoing work will build further on the opportunities afforded by the low operating costs of the project and will enhance the already low capital intensity, reinforcing the ability of the company to develop the project on its aggressive completion schedule for a two-million tonne a year production.”
Meanwhile, Sanders noted that Elemental had received expressions of interest from potential partners to build, own, operate and maintain components of the project, which could reduce LoM capex by some $418-million through contract mining, material handling and transshipment.
The company was undertaking ongoing discussion with other potential partners to further reduce capex at Kola.