PERTH (miningweekly.com) – A scoping study by ASX-listed Potash West into its proposed Dinner Hill phosphate project, in Western Australia, has again improved the project economics.
A previous economic model of the Dinner Hill project had estimated the project’s net present value (NPV) to be around A$331-million, with the internal rate of return projected at 30%.
The economic model projected a capital cost estimate of A$144-million, to deliver a project capable of processing at a rate of 3.8-million tonnes a year, over a 20-year mine life, to deliver 340 000 t/y of superphosphate.
Potash West said on Tuesday that the new scoping study had assumed the production of a single superphosphate in a standalone plant for the first five years of operation. Subsequently, the glauconite concentrate and phosphate rock would be processed in a joint facility to produce potash products, potassium sulfate, potassium magnesium sulfate and merchant grade phosphoric acid, as well as iron-oxide and aluminium sulfite for the remaining life of the project.
The study estimated that the Stage 1 development would require a capital investment of A$136-million, with the staged development allowing for initial cash flow to assist with the expansion capital.
Based on the new production model, the Dinner Hill project was estimated to have a NPV of A$652-million, with the internal rate of return remaining steady at 30%.
Dinner Hill was further expected to generate average life-of-mine revenue of some A$380-million a year, at an average operating cost of A$168-million a year.
“When conducting the earlier phosphate only scoping study, we recognised that synergies existed for the staged production of phosphate, potash and other commodities with the implementation of phosphate and K-Max plants, using the same mining and beneficiation plant,” said Potash West MD Patrick McManus.
“The scoping study has demonstrated the major benefits of new economies of scale.”
McManus noted that the resource on which the scoping study was based covered only 10 km2 of the Dinner Hill project, with the entire 60 km2 project holding an exploration target of between 1-billion and 1.5-billion tonnes.
“The optionality to increase the scale of the operation is very valuable,” he added.