Resource World Magazine

36 www.resourceworld.com A P R I L / M A Y 2 0 1 4 Potash Ridge Corp. [PRK-TSX; POTRF-OTCQX], following the release of its positive prefeasibility study (PFS) in late Decem- ber 2013, has filed its Notice of Intention to Commence Large Mining Operations at its Blawn Mountain potash project 30 miles southwest of Milford, southwest Utah. There are several different kinds of potash minerals that are used for crop fertilizer. Mineralization at the Blawn Mountain potash deposit is called sulphate of potash (SOP), which offers advantages over the more common muriate of potash (MOP). MOP does not work as well as SOP for growing high value crops such as fruits, vegetables, nuts, berries, tea and coffee as it contains chloride. In addition to containing sulphur, a key nutrient for plants, using SOP as opposed to MOP results in higher yields, better quality crops and a longer shelf life for the produce. Consequently, in North America, the price for SOP is significantly higher than MOP. The current North American price of SOP is approximately US $690 per tonne while MOP is selling for $282 per tonne. With the growing world population, demand for SOP is increasing on a global scale. The Blawn Mountain alunite mineralization is rich in both SOP and alumina. While alumina was originally the focus at Blawn Mountain, escalating potash prices has lead to SOP be- ing the primary product, with a byproduct of sulphuric acid and possibly alumina. Guy Bentinck, President and CEO, told Resource World that the company is evaluating the alumina market potential. As stated in the PFS, the open pit mining operation will pro- duce 770,000 tons of SOP per year for the first 10 years, av- eraging 645,000 tons per year over the life of the mine at an average production cost of $173 per ton. Reserves are pegged at 426 million tons. The project has a NPV (at a 10% discount rate) of $1 billion and an after-tax IRR of 20.5% that does not include potential revenue from alumina-rich material. Payback of capital costs is anticipated to be five years. Cash flow from operations has been estimated at $234 million per year, exclud- ing the two-year ramp-up period. Capital costs to construct the mining operation are expected to be $1.1 billion. Worldwide, MOP production is about 51 million tonnes with SOP only 4.8 million tonnes. This is not due to a lack of demand for SOP; consumption is constrained by an inability to eco- nomically expand supply with existing production processes. Bearing in mind the advantages of SOP, Potash Ridge manage- ment is of the view that the SOP market could be as high as 34 million tonnes. The company is expecting that California could account for the majority of the Blawn Mountain production. There is also a potential to develop markets on the east coast of the US as they are currently importing SOP from Europe. In addition, markets for the company's SOP product could be developed in Brazil and China. The Blawn Mountain Project is not a new discovery. Some $25 million was spent on the project in the 1970s which would equal about $100 million in today's currency. That work in- cluded the three-year operation of a pilot plant. The project was shelved due to the prevailing poor economics in the early 1980s. Utah is a mining-friendly state and the 15,404-acre Blawn Mountain potash project is located near roads, railway, power lines and natural gas. There are no known adverse environmen- tal or social issues. The project is located on state-owned land designated for development. Bentinck said that to raise the required capital costs to build the mine, the company would like to find joint venture part- ners. He envisions capital costs would be financed as to 40% by equity and 60% through debt. n Potash Ridge advancing 40-year sulphate of potash project By Ellsworth Dickson Guy Bentinck, centre, President and CEO, with some consultants in the Blawn Mountain test pit. Photo courtesy Potash Ridge Corp. MINING

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