Western Potash Corp. releases updated mineral resource estimate for Milestone Phase I Project

The National Instrument (NI) 43-101 Standards of Disclosure for Mineral Projects Technical Report was prepared by Agapito Associates, Inc. (AAI) and SNC-Lavalin (SNCL) with an effective date 24 September 2019. The report presents the results of the engineering design studies prepared by SNCL and AAI for a pilot-plant scale, selective solution mining operation located in Sections 19, 20, 29 and 30, Township 14, Range 17 West of the Second Meridian within Saskatchewan Subsurface Mineral Lease KLSA 008. The Phase I Project has been advanced through the Feasibility Stage to Engineering Design and then to cavern construction which was completed by October 23 and followed by injection of water at ambient temperature from the crystal pond into the underground caverns for circulation and mineral dissolution (Cold Mining).

The technical report summarises information obtained from exploration drilling conducted between January 2009 and March 2011, and details the results from the latest production drilling in July 2019. During the 2009–2011 exploration programme, 11 cored exploration wells were completed on the KP408 and KP409 Subsurface Mineral Permits that were converted to Subsurface Mineral Lease KLSA 008 in 2010. Also in 2009, 474.5 line km of two-dimensional (2D) and 98 square km² of three-dimensional (3D) seismic surveys were run, processed, and interpreted for WPC by Boyd PetroSearch (now part of the RPS Group) of Calgary, Alberta. In 2019, the production well drilling program cored 1 of the 6 wells drilled for the Phase I Project to provide additional geologic information in that part of the Lease. Measured, Indicated, and Inferred Mineral Resources have been classified based on the volume of potash in cylinders centered on the cored and assayed drillholes on the Lease. Based on the economics for the Phase-I Project, Proven and Probable Mineral Reserves have been declared for the production portion of the Phase I Project, which consists of horizontal caverns sited in either the Belle Plaine or Esterhazy Members of the Prairie Evaporite.

The Phase-I Project is based on Mineral Resources in the Belle Plaine and Esterhazy Members in the Unitized Area. Because in future, mining could also occur in the Patience Lake Member, tonnages in that member have also been included in the mineral resources for the Unitized Area, which consists of:

• A Measured Resource of 154.5 million t (Mt), grading 29% KCl.
• An Indicated Resource of 222.5 Mt, grading 29% KCl.
• An Inferred Resource of 93.6 Mt, grading 29% KCl.

The Measured and Indicated Resources outside the Unitized Area were estimated to be mineral resources as follows (using a cutoff grade of 15.0% K2O or 23.7% KCl):

• Measured Mineral Resource: 580-Mt in-place sylvinite, grading 30.0% KCl, or 19.0% K₂O.
• Indicated Mineral Resource: 1630-Mt in-place sylvinite, grading 30.0% KCl, or 19.0% K₂O.

Inferred Resources on the KLSA 008 Lease are estimated to be (using a cutoff grade of 15.0% K₂O or 23.8% KCl) 10 040-Mt in-place sylvinite, grading 29.0% KCl, or 18.3% K₂O.

The total CAPEX for the Phase I Project using a crystallisation pond was estimated (in Canadian dollars) to be CAN$128.7 million (M) with an accuracy of ±10%, which corresponds to AACE International (Association for the Advancement of Cost Engineering) Class 3. The total annual OPEX for the Phase-I Project was estimated at CAN$11.7 million per year (excluding logistics and royalties) or CAN$80/t MOP for 146 000 tpy. Sustaining CAPEX consists mainly of drilling of new caverns and reclamation of mined-out caverns at CAN$17.5 million in 2025, CAN$10.1 million in 2030, and CAN$7.5 million in 2032. Assuming a nominal discount rate of 8%, the economic analysis yielded an after-tax project Net Present Value (NPV) of CAN$55.2 million, with an Internal Rate of Return (IRR) of 17.2%, based on the assumption of full-equity investment and potash price of US$241/t (CAN$321/t). Costs are given in Canadian dollars (CAN$) and prices are given in United States dollars (US$), with an assumed exchange rate of $US 1 = CAN$1.33.

Read the article online at: https://www.worldfertilizer.com/project-news/08012020/western-potash-corp-releases-updated-mineral-resource-estimate-for-milestone-phase-i-project/