Potash West improves Dinner Hill economics

THE DRILL SERGEANT: Potash West (ASX: PWN) has updated the economic model for the production of single superphosphate (SSP) at the company’s wholly-owned Dandaragan Trough project north of Perth Western Australia.

The latest results update a Scoping Study the company completed on the project last year and follow on from a re-estimation of the Dinner Hill phosphate resource, which the company achieved after improvements to the metallurgical flowsheet, enabling the processing of the chalk.

 

Process Flowsheet. Source: Company announcement

 

In February Potash West announced a breakthrough in the metallurgical testwork program, which it claimed demonstrated the potential to recover phosphate from the chalk by implementing a selective flotation regime.

Based on these results the Dinner Hill phosphate deposit was re-estimated to contain an Indicated Mineral Resource of 120 million tonnes at 2.8 per cent phosphate, 3.1 per cent potassium, and 8.2 per cent calcium above a lower cut-off grade of 2.15 per cent phosphate.

The company explained the updated results take into account the ability to process the chalk seam.

A mine production rate of 3.8 million tonnes per annum to produce an average of 340,000 tonnes per annum SSP has been considered.

The project is based on the current JORC compliant resource outlined at Dinner Hill, which the company emphasised is only a small part of the Dandaragan Trough project area, where it considers potential exists to expand the resource to the north and northeast.

Key outcomes from the updated study are:

Processing rate of 3.8 million tonnes per annum;

Mine life 20 years;

Average revenue per year $124 million;

Operating cash costs per year (inclusive of royalties) $82.1 million ($241 / tonne of SSP);

IRR 29.5 per cent;

NPV   $331 million; and

Payback period of less than four years.

“The ability to process the chalk has resulted in a significant improvement in the economic modelling outcomes for the project,” Potash West managing director Patrick McManus said in the company’s announcement to the Australian Securities Exchange.

“The fact that the chalk can be processed simplifies the mining and significantly reduces those costs.

“Excitingly, this recent work has made a very robust project, with good payback, IRR and NPVs even stronger.

“Our studies have also identified that the phosphate mineralisation can be significantly upgraded relatively simply and cheaply, which allows for relatively small downstream processing units and significantly reduced start-up costs.

“Importantly, the positive outcomes of the study provide Potash West with the confidence to move forward towards a Definitive Feasibility Study.”

Email: info@potashwest.com.au

Website: www.potashwest.com.au