Morocco-focused potash development company Emmerson has completed the feasibility study on the company’s 100%-owned Khemisset potash project, which has confirmed a post-tax net present value of $1.4-billion and an internal rate of return of 38.5% over an initial 19-year mine life.
Total pre-production capital cost is estimated at $387-million, $19-million lower than that estimated in an earlier scoping study.
Meanwhile, the study also considers a potential salt plant, at an estimated additional capital cost of $24-million. The plant is designed to produce de-icing specification salt for sale into the US east coast de-icing salt market.
Peak production for the overall project is expected to reach about 810 000 t/y of K60 mine operations plan and one-million tonnes a year of de-icing salt.
There are top-quartile projected cash margins according to analysis conducted by Argus FMB.
The study indicates an average, steady-state post-tax cash margin of 47.1%; and average, steady-state earnings before interest, taxes, depreciation and amortisation (Ebitda) margins of 61.5%.
“The study has confirmed the findings from the scoping study, which showed that Khemisset has the potential to be a world class, low capital cost, high margin potash mine, which is a very rare asset in the global fertiliser industry.
"The strong agricultural investment thematic remains firmly in place, driven by ever increasing global population and shrinking arable land, which necessitates the need for fertiliser and, in particular, potash.
“We are particularly pleased that the total pre-production capital cost has come down by approximately $19-million from the scoping study, which is unusual when moving to higher levels of engineering, and is a testament to the focus of our engineering team on delivering fit for purpose, disciplined designs for the project,” comments Emmerson CEO Hayden Locke.
He points out that, as expected, the forecast all-in-sustaining cash costs, delivered to customer, place this project in the bottom quartile of all potash projects to Emmerson’s target markets.
Locke indicates that the objectives for Emmerson for the rest of this year will be to move the project through the various permitting requirements, including an environmental- and social-impact assessment which incorporates a formal stakeholder engagement programme, while concurrently moving forward its financing discussions for the next phase of development at Khemisset.