ThermoPotash
Photo by: Verde Potash
TORONTO (miningweekly.com) – TSX-listed Verde Potash on Tuesday revealed robust metrics for its proprietary ThermoPotash (TK) project, in Brazil, saying a prefeasibility study (PFS) had pinned an estimated after-tax net present value of $145.7-million (at a 10% discount rate) to the project.
The 1 000 t/d plant would cost about $113.6-million to build, including a $14.7-million contingency, and would have an internal rate of return of 23.5%, with an estimated payback of the initial capital after five years.
Over the 31-year mine life, sustaining capital would total $31.5-million.
According to the PFS, the estimated operating costs, which include production, workforce and variable costs would be $47.12/t, in addition to the estimated administrative, marketing and other costs of $8.18/t, for a total cost of $55.29/t of TK.
Verde expects to sell its TK free on board for about $187.74/t, based on market research done by Agris Consultoria.
"A $113-million capex [capital expenditure] is a realistic business proposition for the current market. Verde expects to continue working with the Brazilian government through Inova Agro, the government's special financing programme, in order to reduce Brazil's debilitating dependency on Russian and Canadian potash," president and CEO Cristiano Veloso said.
The PFS evaluated the technical and financial aspects of a plant to produce 1 000 t/d of TK. The same plant would be operated to process potassium chloride (KCl) in order to obtain the necessary performance guarantees for an eventual dedicated KCl plant.
The PFS assumed openpit mining and a pyrometallurgical process for the production of TK.
Owing to Cerrado Verde's enormous mineral resource, only a necessary fraction of its total mineral potential was established as proven and probable reserves, for a total of 7.02-million tonnes grading 10.8% potassium oxide.
Last month, Verde announced that about $105-million in government funding for its Cerrado Verde project, located within the country’s largest agriculture market, had been confirmed after an appeals period had ended.
Brazil is the world’s third-largest agricultural exporter. Potash is a critical fertiliser for agriculture, yet the country currently has to import about 90% of its potash from distant locations such as Canada's Saskatchewan and Belarus.
Brazil was the largest importer of potash globally in 2012 at 7.5-million tonnes of KCl. Potash consumption in Brazil has posted a ten-year compound annual growth rate of 4.7%, much stronger than 2.3% potash consumption growth globally. Vale currently operates the only potash mine in Brazil, which met only 7% of the country’s needs and is expected to be depleted in 2016.