PERTH (miningweekly.com) – An optimised feasibility study into the Muga potash project, in Spain, has increased the project capital cost requirements, ASX-listed Highfield Resources reported on Monday.
A 2015 definitive feasibility study estimated a capital investment of $256-million would be required to deliver 1.12-million tonnes a year of granular potash over 24 years.
In November the same year, an optimisation study increased the mine life to 47 years at a production rate of just over one-million tonnes of granular potash a year. The project’s net present value (NPV) also increased from $1.42-billion to $1.46-billion, while the Phase 1 capital expenditure increased slightly from €249-million to €267-million.
The optimisation work included altering the mine plan to include an additional sylvinite stream, resulting in the increased mine life, as well as electing to use a combination of continuous miners and road headers to increase productivity in production and infrastructure development.
Highfield on Monday told shareholders that the optimised feasibility study had considered a two-phase mine development, with the first phase averaging production of about 500 000 t/y muriate of potash, with the second phase expanding output to one-million tonnes a year.
Capital costs for Phase 1 have been estimated at €342-million, with the Phase 2 project requiring additional capital of €199-million.
The two-phase project would have a NPV of €1.1-billion and an internal rate of return of 23%, with a mine life of 27 years. Earnings before interest, taxes, depreciation and amortisation have been estimated at about €300-million a year, at full production, with C1 cash costs estimated at €104/t, including salt by-product credits.
The revised mine plan is based on the measured, indicated and inferred resources for the Muga deposit, as well as a portion of the exploration target for the Vipasca deposit.
Highfield said that the revised mine plan also incorporated the anticipated requirements of the environmental permitting process, particularly related to subsidence controls and exclusion zones around towns, infrastructure and objects of significant cultural importance.
The company reported that permitting for the project was ongoing.