THE BOURSE WHISPERER: Potash West (ASX: PWN) has received the results of a recently-completed Scoping Study carried out on the company’s wholly-owned Dandaragan Trough potash project, located 150 kilometres north of Perth in Western Australia.
According to the company the study has produced positive results, demonstrating the potential of Dandaragan Trough to be a viable, very long term project.
The Scoping Study also demonstrated the robust nature of Potash West’s proprietary K-Max processing process and provides Potash West with the confidence to move forward towards a Definitive Feasibility Study (DFS).
The study considered two production rates: 4 million tonnes per annum and a smaller start-up case of 2.4Mtpa.
The latter rate was identified during the study to be more suited to the immediate market demand for products in the local region.
The project is based on the JORC compliant resource outlined at Dinner Hill, which is only a small part of the Dandaragan Trough project area.
Land tenure Dandaragan Trough project. Source: Company announcement
The key outcomes for each production rate are:
2.4 Million tonnes per annum
Mine life +60 years
Average revenues per year $365 million
Operating cash costs per year $137 million
IRR 21 per cent
NPV10 $808 million
Capital cost $650 million
4 Million tonnes per annum
Mine life 39 years
Average revenues per year $547 million
Operating cash costs per year $234 million
IRR 20.7 per cent
NPV10 $1,163 million
Capital cost $880 million
Other outcome identified included:
– Opportunities for capital and operating cost reduction by continued process improvements; and
– Glauconite mineralisation is extensive and opportunity exists to increase scale significantly and relatively easily as operations are established and markets grow in region.
“This is a significant study for Potash West and its shareholders,” Potash West managing director Patrick McManus said in the company’s announcement to the Australian Securities Exchange.
“The study brings together many months of work, carried out by our partners and external consultants, all highly qualified in their fields.
“The study shows that the Dandaragan Trough has capacity to be a technically and financially viable project, with strong operating margins, and has the potential to be expanded significantly, as markets are developed.
“The project benefits from its location in Western Australia, with high quality infrastructure and a ready market for fertiliser products.
“We believe we are in a position to capitalise on the long-term dynamic of increasing demand for high-quality materials feeding the food supply and agricultural industries.”