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PEA demonstrates potential for 20% production increase at Encanto potash project

PEA demonstrates potential for 20% production increase at Encanto potash project

Photo by Bloomberg

13th June 2017

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

     

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JOHANNESBURG (miningweekly.com) – TSX-V-listed miner Encanto Potash will have the capacity to produce and export 3.4-million tonnes of potash a year, a preliminary economic assessment (PEA) undertaken by Amec Foster Wheeler has shown.

The estimated 20% increase in production potential, based on the adoption of greater plant capacity, can be maintained for more than 48 years, according to the study.

It also concluded the project has a net present value of C$1.13-billion, with an internal rate of return of 18.9% after taxes, using a 10% discount rate.

Encanto is, in partnership with the Muskowekwan First Nation (MFN), developing Canada's first potash mine on a First Nation reserve in south-east Saskatchewan. It also recently signed a contract to supply the National Federation of Farmers' Procurement, Processing and Retailing Cooperatives of India (Nacof) with five-million tonnes of potash a year for 20 years.

"We are confident that we will continue to succeed in building Encanto into a global industrial company and deliver to the First Nations in Canada and to India a food security contract through long-term supply," said Encanto president and CEO Stavros Daskos.

Encanto’s next steps will be to secure the additional capacity, above the 3.4-million-tonne estimated mine capacity, to supply the five-million tonnes of potash as expected under the Nacof contract.

To do so, Encanto has formed a trading company that is in negotiations to supply potash to India, which, if successful, would create a positive revenue stream while the company continues to seek further investment to build the C$3.7-billion mine and plant.

"Our next steps are now focused on negotiating a long-term supply agreement or merger with an existing producer, which will trigger potash exports before opening on site mining operations at MFN, allowing immediate revenues for Encanto,” said Daskos.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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