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Enlarged Fort Cady a winner for ABR

17th April 2020

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – An enhanced definitive feasibility study (DFS) into the Fort Cady borate mine, in Southern California, has established an increased production capacity, ASX-listed American Pacific Borates (ABR) said on Friday.

The initial DFS, completed in late 2018, was modified in 2019 to include a low capital starter project, thus breaking the project into three phases.

The starter project would target a production rate of 40 000 t/y sulphate of potash (SoP) and 9 000 t/y of boric acid, increasing to 90 000 t/y SoP and 80 000 t/y boric acid during Phase 1B.

The Phase 2 project would ultimately increase production to 109 000 t/y SoP and 408 000 t/y boric acid.

The enhanced DFS built on the starter project, incorporating further engineering work as well as value engineering that has seen a substantial increase in proposed SoP production.

At full production, Fort Cady now has the potential to produce 362 874 t/y SoP, while boric acid production will remain at 408 000 t/y.

The increased SoP production has resulted in an increased net present value, from $1.42-billion to $1.96-billion, while the internal rate of return has dropped from 40.5% to 38.4%. The project’s expected earnings before interest, taxes, depreciation and amortization in the first full year of production have also increased from $345.4-million to $438.4-million.

The increased production will require a greater capital spend, with ABR predicting a capital spend of $739.9-million for the enlarged project, compared with the original cost of $526.2-million.

“We have built on an exceptional Fort Cady borate mine DFS that was initially completed in December 2018 and modified in January 2019. This enhanced DFS now delivers a better mix of product revenue with SoP now making up around 43% of our projected revenue,” said ABR CEO Michael Schlumpberger.

“Our ambition of becoming a substantial global speciality fertilizer producer now presents with a more complete value proposition given our location in one of the world’s largest agricultural markets.

“The enhanced DFS continues to deliver very low upfront capital costs, very high margins and relatively low technical risk given the orebody has produced borates historically. The scale of the financial metrics really sets us apart from other projects,” he added.

ABR is targeting first production at Fort Cady in the third quarter of 2021, subject to permitting and financing.

The Phase 1A starter project is expected to require a capital investment of only $50.3-million, with ABR saying that the strength of the financial metrics of this phase of development meant that the company could continue to target financing this stage of the project in isolation.

Phase 1B would require a capital investment of a further $156-million, while the Phase 2 capital has been estimated at $268.3-million.

Edited by Creamer Media Reporter

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