Project developer Keras Resources is acquiring a 51% interest in the Diamond Creek phosphate mine, in Utah, in the US, from phosphate miner Falcon Isle Holdings on the basis that Keras provides a $2.5-million loan facility to Falcon Isle.
The loan agreement will be paid in four tranches and comprise incremental equity increases, with Keras having already paid over the first $700 000 tranche. Keras announced on July 30 that it had raised £1.73-million to fund the remaining tranches.
Three further tranches of $600 000 each will be paid over, starting next week.
The Diamond Creek mine is an established, fully permitted mine with a high margin and grade and low capital expenditure (just shy of $470 000).
Keras CEO Russell Lamming tells Mining Weekly that the mine will be campaign contract mined during spring, summer and early autumn, as snowfall on the mountainous region will inhibit operations during the winter months.
The mining contractor appointed by Keras is Utah-based quarrying and logistics company Burningham Enterprises.
The Diamond Creek deposit is based on historical workings, with the first 30 months of production being pre-stripped in the 1980s and thereby enabling Keras access to the mineralised horizon.
Based on a 1980 estimate, the deposit holds historical “surface mineable” resources of 5.06-million tonnes of phosphate and underground potential resources of an additional 7.85-million tonnes.
Although not yet classified according to any international reporting standard, Lamming says this is a significant resource from an openpit perspective.
He expects the surface resource will be sufficient to sustain the mine for the foreseeable future.
In terms of processing the ore, Lamming says this will be undertaken throughout the year, with Keras aiming to stockpile ore in an indoor facility at Spanish Fork, about 30 km from the mine and south of Salt Lake City. This facility is of sufficient size to cater for the first two years of production and associated ramp-up, with Keras considering expanding the facility with modular solutions, as and when required.
“Processing is very simple with the mined ore only needing to be crushed and milled, after which it is ready for delivery,” he says.
To date, Keras has extracted and processed a 300 t bulk sample which was completed in November 2019 and has now started commercial operations at the mine with a throughput of 5 000 t/y, commencing on July 29. Currently, the miner is using toll processing as it has yet to order the plant, but Lamming envisages being able to order the plant now that funds are available, after which he expects to have it on site within five months.
Keras plans to ramp up from the current 5 000 t/y capacity, doubling this to 10 000 t/y in year two, 16 000 t/y in year three, 32 000 t/y in year four, and ultimately 48 000 t/y at full production.
However, Lamming says this is a modest projection and that the ramp up will be driven by demand. “If we get additional orders we will increase output.”
At the moment, Keras is focusing on marketing the product into the North American market, with an initial market share of 2%, and an ultimate market share of 14% in the fifth year of development.
Lamming says the US organic fertiliser market is small from a number of competitors perspective, with the major stakeholders being Tennessee Brown, Soda Springs Phosphate of Idaho; and CalFos, of Florida.
However, he notes that an advantage of the Diamond Creek product will be its high available phosphorous content, which is guaranteed at 14%.
“The organic market looks at available phosphate in a product, rather than the in-situ total phosphate grade. We are looking to market a minimum 14% of available phosphate, where most of the competitor products are around the 3% to 6% grade.”