Milestone, Saskatchewan
The Milestone property is located approximately 30 km southeast of Regina and 80 km Southeast of Mosaic’s Belle Plaine Mining Lease. The Belle Plaine mine is home to one of the largest producing potash solution mines in the world.
The land acquisition program has now successfully secured over 2,550 acres at the Company’s preferred plant site location.
Securing the plant site location is an important aspect of the Milestone feasibility process as the environmental and regulatory approval processes and project schedules are dependent on it.
The site is large enough to house all intended plant site facilities for the contemplated life of the mine.
On December 16th, 2011 the Company confirmed the receipt of an updated NI 43-101 Technical Report titled “NI 43-101 Technical Report Summarizing the Preliminary Feasibility Study for a Potash Solution Mine on the Milestone Project (Subsurface Mineral Lease KLSA 008), Saskatchewan.” The Technical Report includes an updated resource estimate, and a summary of the Company’s Pre-Feasibility Study announced via news release dated October 31, 2011.
The updated resource estimate slightly increases the Milestone recoverable Potash Resource (Patience Lake, Belle Plaine, and Esterhazy Members including the upper halite interbed) to 66.6 million tonnes of Measured Resource (contained KCl), 186.9 million tonnes of Indicated Resource, and 708.2 million tonnes of Inferred Resource. Inferred Resource around the Milestone Project plant site land and associated infrastructure have been removed from the estimate.
A detailed summary of the Measured, Indicated and Inferred Mineral Resource within Crown and Leased Freehold Areas is presented in Table 1, 2 and 3 respectively.
Table 1. Measured Mineral Resource within Crown and Leased Freehold Areas Only*
|
Bed |
Average KCL |
In-Place |
In-Place KCL |
KCL |
|---|---|---|---|---|
|
Patience Lake |
28.68 |
320.37 |
91.87 |
30.2 |
|
Halite Interbed |
4.72 |
144.20 |
6.81 |
2.24 |
|
Belle Plaine |
30.16 |
131.52 |
39.67 |
13.04 |
|
Esterhazy |
33.70 |
190.71 |
64.27 |
21.13 |
|
Total |
25.75 |
786.80 |
202.63 |
66.60 |
* Search Radius of 800 m used; Mt = million tonnes; K2O grade > 15%; Density = 2.08 t/m3, KCl = 1.58303 K2O.
** Resource accounts for geologic anomalies (5%), and extraction ratio (34.6%).
Table 2. Indicated Mineral Resource within Crown and Leased Freehold Areas Only*
|
Bed |
Average KCL |
In-P lace |
In-Place KCL |
KCL |
|---|---|---|---|---|
|
Patience Lake |
28.60 |
935.65 |
267.58 |
84.25 |
|
Halite Interbed |
4.76 |
385.38 |
18.33 |
5.77 |
|
Belle Plaine |
30.00 |
392.59 |
117.79 |
37.09 |
|
Esterhazy |
33.64 |
538.76 |
181.23 |
59.57 |
|
Total |
25.97 |
2,252,38 |
584.93 |
186.68 |
* Search Radius of 1.6 km outside radius and 2.5 km inner radius (between drill holes) used; Mt = million tonnes; K2O grade > 15%; Specific Gravity = 2.08 t/m3, KCl = 1.58303 K2O.
** Resource accounts for geologic anomalies (9%), extraction ratio (34.6%).
Table 3. Inferred Mineral Resource within Crown and Leased Freehold Areas Only*
|
Bed |
Average KCL |
In-Place |
In-Place KCL |
KCL |
|---|---|---|---|---|
|
Patience Lake |
28.63 |
4,261.37 |
1,220.01 |
316.59 |
|
Halite Interbed |
4.66 |
1,793.31 |
83.59 |
21.69 |
|
Belle Plaine |
30.07 |
1,972.32 |
593.02 |
153.89 |
|
Esterhazy |
33.48 |
2,486.17 |
832.38 |
216.00 |
|
Total |
25.96 |
10,513.16 |
2,729.00 |
708.18 |
* 8.0 km radius used; Mt = million tonnes; K2O grade > 15%; Density = 2.08 t/m3, KCl = 1.58303 K2O.
** Resource accounts for geologic anomalies (25%), extraction ratio (34.6%).
The Prefeasibility Study (the “Study”) was completed by AMEC Americas Limited (“AMEC”). AMEC is a leading international engineering and project management company that currently manages multiple potash expansion projects in Saskatchewan with a capital value of several billion dollars.
The Prefeasibility Study confirms that the Milestone Project shows significant positive economics and that the asset is of sufficient size and grade to support primary and secondary solution mining for more than forty years at a production rate of 2.8Mt/yr. The study concluded that there are no known limitations that may prevent a successful and profitable project outcome.
A summary of the assumptions and results of the Prefeasibility Study appears below:
| Target Annual Production Rate | 2.8Mt/year |
|---|---|
| Life of Mine | >40 Years |
| Years to Construction | 3 |
| Construction Start-up | 2013 |
| Production Start-up | 2016 |
| Years to Full Secondary Production | 6 |
| Long Term Potash Price (FOB Gate) | $511 US/Tonne |
| Assumed Exchange Rate | US$/CAD $1.00 |
| Taxes and Royalties | $28.90/tonne CAD |
| Sustaining CAPEX Rate % | 2.0% |
| Base Case | 100% Equity |
| Initial CAPEX | $2.458 Billion CAD |
| Port CAPEX | $300 Million CAD |
| Total Initial CAPEX | $2.758 Billion CAD |
| NPV (10) | $4.14 Billion CAD |
| IRR | 22.7% |
| Payback Period | 5 Years |
Subsurface Mineral Lease
The Company was granted a Subsurface Mineral Lease on the Milestone Property as expressed in the Nov. 1, 2010 Company News Release. This includes more than 87, 500 acres of Crown held Mineral Leases. The renewable 21 year lease was granted by ministerial order and provides the company with full and exclusive power and right to mine Crown owned subsurface minerals, including potash, within the lease area, subject to the provisions outlined by The Saskatchewan Subsurface Mineral Regulations, 1960.
