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Feasibility study indicates Mardie potash project could produce 120 000 tpy of SOP

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World Fertilizer,

BCI Minerals has released the key results of the definitive feasibility study (DFS) on its 100% owned Mardie salt and potash project in Western Australia.

The DFS confirms Mardie can become a globally significant Tier 1 salt and sulfate of potash (SOP) project offering attractive financial returns for more than 60 years.

Based on the positive DFS results, the BCI Board has approved the company advancing the project towards a final investment decision (FID) by early 2021.

Key results of the DFS include:

  • Positive business case established for production of 4.4 million tpy of high purity salt and 120 000 tpy of premium SOP fertilizer.
  • DFS demonstrates NPV7 of AUS$1197 million (pre-tax real), annual steady state EBITDA of AUS$197 million, total revenue of AUS$22 billion and total net cash flow of AUS$10 billion over 60 years.
  • Direct capital cost estimate of AUS$580 million for all production and port infrastructure. Additional capital cost provision for detailed design, owner’s costs, project management, growth allowances and contingencies of AUS$199 million, resulting in total capital cost of AUS$779 million. Additional working capital and funding costs to be incurred during construction.
  • Operating cost estimates show competitive salt costs with other Western Australian operations, and SOP operating costs in the lowest quartile globally.
  • Project funding initiatives well progressed, including negotiation of indicative debt term sheets with the Australian Federal Government’s Northern Australia Infrastructure Facility (NAIF) and a number of Australian and international banks. Discussions with potential cornerstone equity investors are underway and expected to gain further momentum upon completion of the DFS.
  • Experts forecast attractive long-term salt and SOP prices based on strong demand growth in the Asian region.
  • Thirteen non-binding salt offtake memoranda of understanding (MOUs) and two SOP non-binding offtake MOUs secured with credible Asian buyers, accounting for 100% of Mardie’s three-year salt production and 75% of five-year SOP production.
  • Regulatory approvals and tenure well advanced. Mardie’s Environmental Review Document (ERD) endorsed by the WA Environmental Protection Agency (EPA) for public review. Native Title agreements including compensation arrangements in place, and port lease documentation being negotiated with the Pilbara Ports Authority (PPA).
  • Development schedule targeting FID in 1Q21, construction commencement in 2Q21, first salt sales by mid-2024, and first SOP sales by mid-2025.
  • DFS workstreams covering engineering, technical, commercial and approvals were managed by BCI with support from consultants including GR Engineering, Preston Consulting, RPS, Roskill, Argus, Braemar, KPMG and others.

As optimisation potential to the DFS base case, BCI will consider relocation of crystallisers to the recently acquired tenements north of Mardie, which will allow for increased production and lower operating costs.

The new tenements also offer sufficient area for additional evaporation ponds which could increase production capacity to 6 million tpy salt and 160 000 tpy SOP production, making Mardie one of the largest solar evaporation operations globally.

Mardie’s green credentials and sustainability are evidenced by its utilisation of an inexhaustible seawater resource, 99.9% of the energy requirements being derived from natural sun and wind energy, and secondary processing of excess salt brine into a high-quality SOP fertiliser.

BCI has ~AUS$42 million cash (as at 31 May 2020) and is well positioned to reach FID without requiring any new capital.

BCI’s Managing Director, Alwyn Vorster, said:

“The DFS delivered positive outcomes in all key project areas and indicates Mardie is technically robust and financially attractive with a potential net present value of more than one billion dollars. An investment of AUS$20 million has been made over the past 18 months to deliver the high-quality DFS and we will continue to derisk and add value to the project over the next few months. This should further increase lender and investor confidence, supporting funding solutions.”

BCI’s Chairman, Brian O’Donnell, said:

“Completion of the positive DFS gives BCI the green light to progress confidently towards a final investment decision. The Board views the DFS results as confirmation that the Mardie project is a compelling value proposition with an attractive market opportunity, green credentials and no insurmountable obstacles to development. Attractive financial returns over many decades, and expansion potential from the new tenements, should result in substantial long-term value and dividends being created for shareholders. We believe Mardie will be a multi-generational asset for northern Australia, delivering new multi-user export infrastructure, tax and royalty revenues, jobs and indigenous engagement.”

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