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PERTH (miningweekly.com) – A scoping study into a proposed slimes crystallisation plant at the Muga potash project, in Spain, has proven the opportunity to generate production and revenue from by-products, ASX-listed Highfield Resources said on Friday.
The scoping study was done in addition to a definitive feasibility study completed on the Muga project in March this year, which estimated that the project could deliver 1.123-million tonnes a year of granular potash, over a mine life of 24 years.
The scoping study into the slimes crystallisation plant, dubbed the K62 plant, estimated that the project could deliver a yearly 135 000 t of granular K62 potash and a by-product of around 260 000 t of high-purity vacuum salt, over a mine life of 24 years.
The K62 potash plant would have a post-tax net present value of some $222-million, an unlevered internal rate of return of 33%, and would deliver earnings before interest, taxes, depreciation and amortisation of some $56-million in the first full year of production.
“This scoping study presents and opportunity for us to benefit from the by-product of the Muga mine. It is an option that will ultimately deliver additional production volumes and revenues to the Muga operation once the initial operations are able to support its development from free cash flow,” said Highfield MD Anthony Hall.
“We have deliberately focused on the primary by-product, which contains a significant percentage of the potash inevitably lost in flotation processing.”
The K62 project would require a capital investment of some $124-million, but Hall noted that the construction of the crystallisation processing plant would not occur until the Muga mine was in production, to enable detailed testwork to be completed on the slime tailings, and to ensure that the capital expenditure for the project could be funded from free cash flow.
Initial production from Muga was planned for the second quarter of 2017, with full production targeted for January 2019.