Karnalyte updating cost estimate for Saskatchewan potash project
The Wynyard potash project has ticked all the boxes necessary for development, but the central Saskatchewan carnallite/sylvanite project lacks one ingredient – a potash price that makes it economically viable.
TSX-listed Karnalyte Resources said on Friday that although the potash price remained too low to trigger an investment decision, it had witnessed “encouraging signs” in 2018 and that the timing was right for a new capital cost estimate.
The last capital cost estimate for Phase 1 was completed in 2016.
“The completion of the Phase 1 capital cost estimate will set the stage for a potential investment decision if, when combined with an improving potash price environment, the Wynyard potash project becomes an economic and financeable project,” Karnalyte noted.
The Wynyard project is a proposed 2.125-million-tonne-a-year potash mine that Karnalyte plans to develop in phases, the first of which will be a 625 000 t/y facility.
Karnalyte has completed a final feasibility study, basic engineering, obtained all necessary environmental approvals and entered into an offtake agreement with Gujarat State Fertilizers and Chemicals (GSFC). The Indian firm has committed to buying 50% of Phase 1 production and is also Karnalyte’s largest shareholder with a 38.7% stake. GSFC invested in the TSX-listed business in 2013 with the intention of developing Wynyard as an independent source of potash for export to India.
Meanwhile, Karnalyte noted that it had insufficient working capital to advance the development of Wynyard and its Proteos nitrogen project and that it would require funding to take both projects to a stage where an investment decision could be made.
Last year, the company raised about $2.3-million in working capital.
The junior’s share price rose 8.7% on Friday to close at C$0.25 a share, giving it a market capitalisation of C$10.54-million.
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