WPX is now engaged in an integrated Feasibility study process. The estimated expenditure in 2011 is estimated to be approximately 21 Million CAD. This will include costs for land , environmental, drilling ,project management and engineering.
CEO Corner
How much will WPX spend in 2011?
How soon will Western Potash be in production?
We anticipate potash production in 2015.
How do you see Potash pricing performing over the next 12 months?
We see no let up in most agricultural commodities in the coming months. As a result we expect potash prices to increase from current levels but not break $500/t CFR. The merger of Uralkali and Silvinit will further increase supplier pricing power.
What is your strategy for the Milestone, Saskatchewan project?
Our strategy is simple. We have a Tier 1 deposit and recognize that the most value we can create for all stakeholders is by building the Milestone Potash Solution Mine in SK, Canada. We will require a partner to finance the construction at Milestone but our intention is to remain involved with the project.
What are the benefits of Solution Mining?
Solution Mining has many benefits.
It is less expensive to drill a series of production wells than to construct a pair of conventional shafts, undertake the initial underground development work and install mining machinery.
Conventional potash operations yield large amount s of waste salt that is usually piled at the mine site, as back filling of the salt is costly and difficult to undertake. Solution mines can avoid this problem by pumping back underground any solid waste in the form of a slurry. As the environmental regulations begin to tighten up this is a clear advantage for solution mines.
Solution mines do not have the specific problem of water inflow that threatens conventional underground mines.
Solution mines are able to mine irregular deposits, access deep reserves and have the option of making a high grade of its final product.
What are the benefits of traditional mining?
Traditional mining has the advantage of utilizing established technologies and therefore standardized economic models.
While the Capex may be higher than solution mine, operating cost may actually be lower in many situations as the primary source of energy would be electrical.
How much will it cost to reach production?
That answer lies in the results of an order of magnitude study/pre-feasibility phase, which basically gives the economic parameters for various size operations contemplated. Depending on market conditions, and a combination of equity and debt financing a project like this can cost in the order of $500 Million to a couple of billion dollars, and that depends much on who is constructing the mine. For the multinationals, a 2.0 million tonne per year mine is totally within their financial scope and would have a price tag of a couple billion. Because development of a solution mine can be scalable, current estimates of the cost to develop are running between $900-1000 per MT.
