IC Potash prefeas outlines low cost operation at Ochoa

16th November 2011 By: Matthew Hill

TORONTO (miningweekly.com) – Toronto-based IC Potash on Tuesday announced the positive results of a prefeasibility study for its Ochoa project in New Mexico, which described an 843 000 t/y operation that will cost $706-million to build.

The study gave Ochoa a $1.3-billion after-tax net present value, pegging operating costs at $147/t, IC said in a statement.

CEO Sidney Himmel said the operating costs were in the lowest quartile for the industry.

According to the study, which Gustavson Associates prepared, Ochoa would produce 568 000 t/y of sulfate of potash (SOP), and 275 000 t/y of sulfate of potash magnesia.

SOP is a less common form of the crop nutrient, but one which fetches a price premium to muriate of potash (MOP).

The SOP market is around six-million tons a year, around one-tenth as large as the MOP market. Because SOP does not contain chloride, it is better for saltier soils, and its use leads to better colour, aroma, and distribution of mass in crops that have it added to their fields.

Production at Ochoa is set to start in 2015.

The study gave the project a before-tax 32% internal rate of return, with a is 3.9 year after-tax payback period.

Shares in IC rose just under 1% on the TSX to close at C$1.18.