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Premium Potash Project Driven by a
Proven Management Team TSX : PRK OTCQX : POTRF November 2013
FORWARD LOOKING STATEMENTS
2
Certain statements in this presentation may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Potash Ridge Corporation (the "Corporation"), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this presentation, such statements use such words as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate" and other similar terminology. These statements reflect the Corporation's current expectations regarding future events and operating performance and speak only as of the date of this presentation. Forward-looking statements involve significant risks and uncertainties, which include, but are not limited to the factors discussed under “A Cautionary Note Regarding Forward Looking Statements” and "Risk Factors" in the Corporation’s Annual Information Form dated March 27, 2013, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. Although the forward-looking statements contained in this presentation are based upon what management of the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Corporation assumes no obligation to update or revise them to reflect new events or circumstances.
Focused on near term sulphate of potash (“SOP”) production at its Blawn Mountain property in Utah
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SOP 645,000 tons average per annum
40 year Project Life backed by reserves
EXPERIENCED AND PROVEN MANAGEMENT
OVER 80 YEARS COMBINED EXPERIENCE
Guy Bentinck President & CEO Chartered Accountant; 20 years mining/resource experience Sherritt: CFO and SVP Capital Projects
Ross Phillips Chief Operating Officer 10 years experience in large resource and energy sector projects Sherritt, Capital Power
Jeff Hillis Chief Financial Officer Chartered Accountant; 10 years mining sector finance, including CFO of several public mining companies Iberian Minerals, Excellon, Falconbridge
Paul Hampton VP, Project Management Geologist and Metallurgical Engineer; ~30 years experience in design, construction, start-up and management of mineral processing facilities SNC, Washington Group, Outotec
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Laura Nelson VP, Government and Regulatory Affairs Extensive experience in government relations, permitting and power planning, including the successful permitting a large mine in Utah Red Leaf Resources, Utah Government
COMPETITIVE ADVANTAGES
Large mineral deposit containing premium-quality potash and alumina rich material
Average of 770,000 tons SOP per annum during first 10 years, 645,000 tons per annum over life of mine
40 year mine life, with mineral reserves of 426 million tons of ore
PFS completed November 2013: $1.0 billion NPV at 10%; 20.5% after tax IRR; excludes potential revenue from alumina rich material
Historical work expedites project development; proven production process
Mining friendly jurisdiction, established infrastructure nearby, designated development lands and efficient state permitting
Lower risk surface mining deposit; expected low cost producer
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POTASH OVERVIEW
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No known substitute
Increasing world population
Growing per capita income
Decreasing arable land
Increasing use of biofuels
POTASH WORLD DEMAND +5% EXPECTED ANNUAL DEMAND TO 2016; SOP HIGHER GROWTH POTENTIAL
POTASH: ESSENTIAL TO THE WORLD’S FOOD SUPPLY
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POTASSIUM AND SULPHUR ARE ESSENTIAL NUTRIENTS
SOP: PREMIUM FERTILIZER
Sulphate of Potash (SOP) Muriate of Potash (MOP)
50% K2O Equivalent 60% K2O Equivalent
17% S 0% S
<1.0% Cl 45% Cl
5.4 million tons sold in 20111 50 million tons sold in 20112
Improves yield, quality, taste and enhances shelf life2
Crop quality/yield diminish as chloride builds up2
1Source: Fertecon 2Source: CRU 8 Chemical makeup assumes 92.5% K2SO4 and 95% KCl product
SOP – A DISTINCT & VALUABLE POTASH PRODUCT
Fruits Vegetables Nuts Horticultural Plants
Tobacco Tea Dry soils Salty soil
Especially valued for chloride sensitive crops, SOP improves yields on high value crops such as:
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-‐
200.0
400.0
600.0
800.0
1,000.0
1,200.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2007 2008 2009 2010 2011 2012 2013
Average Realized MOP and SOP Price in North America
POT -‐ North America (MOP) CMP -‐ (SOP)
CURRENT PREMIUM 90% FOR SOP IN US
SOP PREMIUM PRICE TRENDS
U.S. $/ton
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1 From Verde Potash PresentaPon, November 2013, 2 From Compass Minerals Q3 2013 Report, 3 From Potash Corp Q3 2013 Report
Compass Q3/13 realized price $712/ton2
Potash Corp Q3/13 realized price $360/ton3
Recent quotes from blenders in Uberaba, Brazil $1,110/ton1
SOP MARKET CHARACTERISTICS
1Source: Fertecon, CRU 11
Global SOP Consumption and Commodity Price1
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
0
2,000
4,000
6,000
8,000
10,000
12,000
2000 2004 2008 2012 2016 2020
(US
$/tonne)
Tonn
es (
000s
)
Global SOP Consumption
Historical Standard FOB NW Europe (US$/tonne SOP)
Estimated Standard FOB NW Europe (US$/tonne SOP)
Europe 23.3%
N. America 8.6%
China 44.3%
Rest of the World
14.9% Africa 4.6%
Central and South America
4.3%
SIGNIFICANT GROWTH POTENTIAL EASY ACCESS TO LOCAL MARKETS
SOP MARKET DYNAMICS Limited production and premium price has restricted demand
SOP share of potash market: Current: ~10% Potential: >28%1
Trend toward high nutrient fertilizers
Trend towards pricing of SOP based on incremental revenue through yield/quantity improvements vs. premiums over MOP
United States SOP consumption: 385,000 tons Potential consumption 920,000 tons2
China & India SOP consumption: China (pop. 1.3 billion): 1.9 million tons per year India: (pop. 1.2 billion) 50,000 tons per year (<1% of country’s potash consumption)
Brazil SOP consumption = 32,000 tons per year (0.4% of total potash consumption) Premium crops grown on 20% of planted land
12 1Based on crops that are best suited for SOP 2 From PRK Study August 2013
THE BLAWN MOUNTAIN PROJECT
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ANTICIPATED INITIAL PRODUCTION IN 2017
PROJECT OVERVIEW
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Large alunite deposit, which is expected to be processed into SOP, and possible alumina rich material
Average 645,000 SOP tons per annum
Historical work expedites project development
Mineral deposit to be surface mined
Proven process backed by extensive metallurgical testing
ALMOST 100 YEARS OF POTASH PRODUCTION
UTAH: AN ATTRACTIVE MINING JURISDICTION
1Forbes Magazine, December, 2012 2Fraser Institute, April, 2013
Major resource producer
Existing potash production
Best state for business1
Top quartile mining jurisdiction2
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OUR LAND ADVANTAGE State-owned land designated for development
Efficient permitting process
Leasehold and royalty agreements negotiated
No known adverse environmental or social issues
Sufficient water nearby – rights application made
Roads, rail, transmission and natural gas nearby
Construction materials, equipment suppliers and skilled labour force
16
MUNICIPAL AND STATE SUPPORT OF PROJECT
PREVIOUS WORK ACCELERATES PROJECT DEVELOPMENT
EXTENSIVE DEVELOPMENT ON BLAWN MOUNTAIN COMPLETED IN 1970’s
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Approx. $25 million spent (~ $100 million in today’s dollars)
Drilling
Resource estimate
Feasibility study
Mine plan
Engineering
Permitting
Pilot plant: 3-year operation processing up to 11 tons/day
• Project ultimately shelved due to poor economic conditions in early 1980s • Potash Ridge owns all historical data
PREFEASIBILITY STUDY – KEY HIGHLIGHTS
• Surface mine with conventional crushing, roasting, leaching and crystallization processes; • Life of mine average of 645,000 tons of SOP per annum; • Proven & Probable mineral reserves of 426 million tons; • Reserves support 40 year mine life, with potential to increase life of operations through
exploration of two additional zones of known mineralization; • Project after tax Net Present Value (“NPV”) of $1.0 billion using a 10% discount rate:
• Total sales of 26 million tons of SOP over life of mine; • Unlevered after tax internal rate of return (“IRR”) of 20.5%; payback period of 5 years
after commencement of operations; • Installed SOP capital cost of $1.1 billion; • Strong cash flow generation with cash flow from operations of $234 million per annum
excluding the two year ramp up period; • Approximately 28% of direct capital costs are supported by packaged quotes; • Expect to be a low cost producer: $173 per ton of SOP (inclusive of by-product acid
revenues and exclusive of royalties); no credit assumed for potential revenue from the sale of alumina rich material.
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PREFEASIBILITY – ECONOMIC SUMMARY
Economic Indicators NPV (aRer tax, at 10%) $1.0 billion IRR (aRer tax) 20.5% Payback period (from commencement of operaPons) 5 years Average annual SOP producPon 645,000 tons Average annual sulphuric acid producPon 1,440,000 tons SOP price (average) $649/ton Sulphuric acid price (average) $135/ton Project life 40 years IniPal capital cost (including 15% conPngency) $1,124 million OperaPng cost (excluding royalPes) $173/ton SOP
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The economic evaluation is based on the following assumptions: • Site construction commences
late 2015; • Production ramp-up over 2
years (2017-2018), reaching full production in 2019;
• SOP pricing from CRU forecast below current North American SOP prices;
• Average tax rate of 35%.
SIMPLE PROVEN FLOWSHEET
Alunite
Calcination
Water Leach
Alumina Rich Material
SOP Solution Crystallizing Drying, Compacting & Sizing SOP
SO2 Acid Plant Sulphuric Acid
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Flowsheet similar to historical production processes
RECENT EXTENSIVE TEST WORK CONFIRMS FLOWSHEET
• Plant to process 10.4 million tons per annum • Metallurgical testing on-going for Feasibility Study
Crushing & Grinding
ORE TEST PIT
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PREFEASIBILITY STUDY – RESERVES ESTABLISHED
Drilling to date has focused only on two of the four areas within the 15,400 acre land parcel
Supports 40 years of operations
Reserves demonstrate the economic and technical viability of the Project
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Reserve Category
Total Proven
('000 tons) Probable
('000 tons)
Alunite Ore (ROM tons) 136,254 289,540 425,794
Ore (average K2O (%) grade) 3.56 3.49 3.51
Ore (average K2SO4 (%) grade) 6.59 6.46 6.49
SOP (tons) 8,457 17,970 26,427
Sulphuric Acid (tons) @ 98% Purity 18,888 40,136 59,024
Mineral Reserves by Category November 6, 2013
SOP CAPITAL COST BREAKDOWN1
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CAPITAL COST: $1.124 billion (15% con@ngency)
14% SOP Leaching, CrystallizaPon and Drying
42% CalcinaPon
13% Crushing & Grinding
31% ConPngency, Indirects and Infrastructure
1 Excludes utilities and other infrastructure ($641 million): Acid Plant ($280 million) Mine Capital ($89 million)
Build-own-operate arrangements under negotiation. Natural Gas Line ($83 million) Rail Spur ($76 million) Water Treatment Plant ($60 million) Access road ($53 million)
OPERATING COSTS: $173/TON OF SOP
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79% Direct Plant and Mine ProducPon Costs
($188M)
7% Other ($14M)
14% RoyalPes ($33M)
Excludes potenPal alumina rich material credit. Includes 15% conPngency (excluding non-‐energy and labour costs).
Total Cash Production Costs Annual Average Cost($)/Ton SOP (Constant 2013 $US)
Direct Plant and Mine Cash Production Cost $414
Credit for Value of Acid $(302)
Subtotal of Direct Plant and Mine Cash Production Cost $112
Site G&A, Property Taxes & Corporate Overhead $27
3rd Party Facility Charges $34
Total before royalty $173
Royalties $45
Total Cash Production Cost $218
EXPECTED TO BE LOWEST COST SOP PRODUCER
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Alunite Leach Salt Lakes MOP/ Sulphate Salts
Mannheim Process
Process Method
World Capacity Process Inputs Products
Avg Cost / Ton
Mannheim 60% ! MOP ! Sulfuric Acid ! Energy
! SOP ! HCI
$495
MOP and Kieserite
25% ! MOP ! Kieserite ! Energy
! SOP ! Magnesium
Chloride
$347
Salt Lakes 15% ! Lake Brines ! Energy
! SOP ! Magnesium
Chloride ! NaCI
$340
Alunite Leach
– ! Alunite ! Energy
! SOP ! H2SO4
$173
Cash Cost by Production Method Avg Cost/Ton
Process Method and Cost Comparisons
POTASH RIDGE
Expected In Production
1 Includes acid by-product credit, excludes potential revenue from alumina rich material
$340 $347
$495
$1731
BY-PRODUCT OVERVIEW
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SULPHURIC ACID
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Driven by local US Market
Mountain West US market approximately 5.6 million tons per annum
Expected increase in this market from mine expansions and new mine development
Potash Ridge will provide stable supply to consumers
MOU in place for 20% of acid production
• Leaching process leaves alumina rich material which, with beneficiation, may be used as a substitute to bauxite as a feedstock into a Bayer alumina production facility.
• Metallurgical testing confirmed the alumina in this material is soluble in high temperature caustic solutions
• May also be acceptable as a raw material feed for low temperature refineries
• Further testing is underway to determine whether the alumina rich material could meet specifications for feed material in the production of ceramic proppants in North America.
• PFS economics do not include revenue from the sale of alumina rich material
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UPSIDE POTENTIAL FROM LEACH RESIDUE
SOURCES OF SMELTER FEED TO CHINA
Blawn Mountain,
Utah Boke,
Guinea Trombetas,
Brazil Kingston, Jamaica
Distance to Shandong Province, China (nm) 5,744 11,128 10,815 9,051
Port Long Beach Conakry Aratu Jamaica
MILESTONES
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a43-101 Measured and Indicated Resource to support 30-year mine life
aIssue Preliminary Economics Assessment
aCommence metallurgical test program
aCommence Pilot Plant test work & produce SOP from test work
aComplete baseline environmental surveys
aIssue Prefeasibility Study supporting 40-year mine life (pending filing)
Complete metallurgical test program
Submit Large Mining Permit Application
Issue Feasibility Study
Final permits obtained
End 2015
End 2013
Mid-2015
Mid-2014 to End 2015
EXPECTED
Construction Start up
Ramp up
End 2015
2017
CAPITAL STRUCTURE
30
Millions
Common Shares 81.7
Non-voting Common Shares 5.0
Total Shares Outstanding 86.7
Warrants – $ 0.50 10.7
Warrants – $1.00 5.0
Broker options/warrants 3.4
Stock options 6.3
Total Fully Diluted Shares 112.1 As at September 30, 2013
INSIDERS HOLD 5%, 10% FULLY DILUTED
COMPETITIVE ADVANTAGES
Large mineral deposit containing premium-quality potash and alumina rich material
Average of 770,000 tons SOP per annum during first 10 years, 645,000 tons per annum life of mine
40 year mine life, with mineral reserves of 426 million tons of ore
PFS completed November 2013: $1.0 billion NPV at 10%; 20.5% after tax IRR; excludes potential revenue from alumina rich material
Historical work expedites project development; proven production process
Mining friendly jurisdiction, established infrastructure nearby, state lands and efficient permitting
Lower risk surface mining deposit; expected low cost producer
31
CONTACT US
32
Toronto office: 3 Church Street, Suite 600 Toronto, Ontario M5E 1M2 Phone: 416-362-8640 ext 101
Salt Lake City office: 170 S. Main Street, Suite 500 Salt Lake City, UT 80101 Phone: 801-433-6027
www.potashridge.com [email protected]
www.potashridge.com