2015 Pilot Study
A Pilot Study was completed on the Milestone Project. The Pilot Study outlines how the Company can utilize the Milestone asset through reduced levels of potential production using innovative selective solution mining techniques. Reducing the CAPEX and maintaining a competitive OPEX were key goals throughout the process. The Milestone plant facilities incorporated in the Pilot Study include: a cavern well field, a wet processing plant, a dry processing plant, product storage, loadout, and all other necessary site infrastructure.
Key Highlights of the Pilot Study:
Projected Production Capacity
|146,000 tonnes per year|
|Capital Cost||$80.6M CAD|
|Operating Cost||$80 CAD per tonne
(excluding logisticsand royalties)
|Transportation Cost||$70 CAD per tonne|
|Sustaining Capital||$12M CAD
(in year 5)
|Potash Price||$315 USD per tonne
|CAD/USD exchange rate||1.22|
|Operating life of mine||12 years|
|After-Tax/Royalties NPV||$56.7M CAD|
Included in the Pilot Study is an analysis of a selective mining method relying on horizontally drilled wells selectively mining the Esterhazy potash member. This method of selective solution mining has been proven in industry; however, the exact mining method has not been proven in Saskatchewan potash mining.
The Pilot Study envisions the simultaneous operation of three pilot production caverns. The horizontally drilled wells inject a Sodium Chloride (NaCl) saturated brine having a temperature higher than the in-situ rock formation temperatures. Potassium Chloride (KCl) is then selectively dissolved within the potash formation, leaving a lattice of NaCl behind. KCl rich brines are then brought to surface through each production well. KCl recovery is achieved through delivery of the resultant KCl rich brine to a surface crystallization facility, producing 146,000 tonnes of standard grade MOP per year.
The Pilot Study is based on a Mineral Resource in the Esterhazy Member (the target mining horizon) in Section 20, Township 14, Range 17 west of the Second Meridian, consisting of:
- A Measured Resource of 7.17 million tonnes (Mt) grading 39.5% potassium chloride (KCl)
- An Indicated Resource of 11.56 Mt grading 39% KCl
- An Inferred Resource of 1.77 Mt grading 39% KCl
A cutoff grade of 15.8% KCl (10% potassium oxide K2O) was used to define the top and bottom of the target member in a given well. An overall cutoff grade of 23.8% KCl (15% K2O) is used for the target member. Because it is unknown at present whether the Belle Plaine and Patience Lake Members in the Pilot Study area can or will be mined later, no mineral resources have been estimated for the latter two members.
Measured and Indicated Resources surrounding wells M 001, M 002 and M 002A are estimated to be as follows (using a cutoff grade of 15.0% K2O or 23.8% potassium chloride KCl):
- Measured Mineral Resource: 231-Mt in-place sylvinite grading 20.9% KCl, or 13.2% K2O
- Indicated Mineral Resource: 539-Mt in-place sylvinite grading 21.8% KCl, or 13.8% K2O
Inferred Resources on the KLSA 008 Lease are estimated to be (using a cutoff grade of 15.0% K2O or 23.8% KCl) 10,706-Mt in-place sylvinite grading 25.8% KCl, or 16.3% K2O.
Read more about the Pilot Study.
The Pilot Study produced preliminary process flow diagrams, site layout drawings, mining cavern and drill pad layouts, along with equipment lists and other engineering data. Estimates of capital and operating costs were developed to AACE Class 4 +/- 25% capital and operating cost estimate standards.
CAPEX and OPEX were generated with a target accuracy of +25%, typical for an AACE International Class 4 study. Costs are given in Canadian dollars (Cdn$) and prices are given in United States (US) dollars ($), with an assumed exchange rate of $US 1 = Cdn$ 1.22. The initial CAPEX estimate for the plant is Cdn$80.6 million, including allowances for the raw water supply pipelines, with an additional deferred CAPEX of Cdn$12 million in Year 5. The plant unit OPEX was estimated to be Cdn$80/t of product at a production rate of 146 ktpy. The economic analysis yielded an after-tax project NPV of Cdn$56.7 million using a discount rate of 10% and an IRR of 25.2%, based on a potash price of $US 315/t (Cdn$384/t at the assumed exchanged rate).
The Pilot Study is a preliminary economic assessment, is preliminary in nature and includes inferred mineral resources, which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that inferred resources will be converted to the measured and indicated categories, that the measured and indicated resources will be converted to the proven and probable mineral reserve categories, and there is no certainty that the Pilot Study will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability; the estimate of mineral resources in the Pilot Study may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
The projected mining method, potential production profile and plan and mine plan referred to in the Pilot Study and this release are conceptual in nature and additional technical studies will be required in order to fully assess their viability. There is no certainty that a potential mine will be realized or that a production decision will be made. A mine production decision that is made without a feasibility study carries additional potential risks that include, but are not limited to, the inclusion of inferred mineral resources, which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mine design and mining schedules, metallurgical flow sheets, and process plant designs will require additional detailed work and economic analysis and internal studies to ensure satisfactory operational conditions and decisions regarding future targeted production.
To the extent that the use of the terms “ore,” “mineable” “production,” and “mining” occurs on this website or in the Pilot Study, its use is intended solely to differentiate between mineralized material (including dilution) above an economic cut-off grade and waste rock; there is no inference of mineral reserves.
Measured, Indicated, and Inferred Mineral Resources have been classified based on the volume of potash in cylinders centered on the cored and assayed drill holes on the property. The radius of influence (ROI) for each level of resource reflects the level of confidence in the continuity of the mineralization, with the ROI decreasing as the required level of confidence (Inferred < Indicated < Measured) increases.
The ROIs are 0.8 km (0.5 mile) for Measured, 1.6 km (1 mile) (on the outside of wells) and 2.5 km (1.55 mile) (between closely spaced wells with seismic coverage) for Indicated and 8 km (5 mile) for Inferred categories.