Plant Capex of US$ 113.6
million and NPV of US$ 145.7
million
TORONTO, April 1, 2014 /CNW/ - Verde Potash (TSX: "NPK") ("Verde" or the
"Company") is pleased to announce the positive results of a
Pre-Feasibility Study ("PFS") for the production of ThermoPotash
("TK"). The PFS was prepared by AMEC plc ("AMEC"), Andes Mining
Services Ltd. ("AMS") and NCL Ingeniería y Construcción SpA ("NCL")
on Verde's Cerrado Verde Project ("Cerrado Verde" or the "Project")
located in Minas Gerais State, Brazil.
Key Economic Highlights for 1,000 tonnes per
day ("tpd") of TK Production:
- Estimated Project Capital Cost of US$113.6 million, including US$14.7 million in contingency.
- Estimated Operating Cost (including production, work force, and
variable costs) of US$47.12 per tonne
plus estimated administrative, marketing and other costs of
US$8.18 per tonne for a total cost of
US$55.29 per tonne of TK.
- Estimated after-tax Net Present Value ("NPV"), using a 10%
discount rate, of US$145.7
million.
- Estimated after-tax Internal Rate of Return ("IRR") of
23.5%.
- Estimated payback of the initial Capital Expenditure: 5
years.
- Estimated Life of Mine sustaining capital: US$31.5 million.
The PFS is based on the following
assumptions:
- 100% equity.
- Phase 1 production of 330,000 tonnes per year ("tpy") of
TK.
- A projected mine life of 31 years.
- US Dollar-Brazilian Real exchange rate of $1USD = $2.30
BRL.
- The PFS assumes an average FOB TK price of US$187.74 per tonne, based on market research
done by Agris Consultoria (2014).
"A US$113M Capex
is a realistic business proposition for the current market. Verde
expects to continue working with the Brazilian government through
Inova Agro, the government's special
financing program, in order to reduce Brazil's debilitating dependency on Russian
and Canadian potash" commented Cristiano
Veloso, President & CEO.
The PFS evaluated the technical and financial
aspects of a plant to produce 1,000 tpd of TK. The same plant will
be operated to process KCl in order to obtain the necessary
performance guarantees for an eventual dedicated KCl plant. The PFS
assumed open pit mining and a pyrometallurgical process for the
production of TK.
The PFS supports Verde's positive outlook on
Cerrado Verde's value and represents a significant milestone
towards the development of the Project. Verde took a conservative
approach to the PFS, limiting the production rate to 330,000 tpy of
TK. The mineral reserve estimate for the TK project has been
prepared by NCL based on resources determined by AMS. Because of
Cerrado Verde's vast mineral resource, only a necessary fraction of
its total mineral potential was established as proven and probable
reserves, for a total of 7,020 kt at 10.8% K2O (table 1
below), which is enough for a projected mine life of 31 years.
Table 1
Mineral Reserve Summary |
| Ore Reserves |
Mass
(kt) |
K2O
(%) |
| Proven Reserve |
5,381 |
10.8 |
| Probable Reserve |
1,639 |
10.7 |
| Total Reserve |
7,020 |
10.8 |
| (1) |
As of 31 March 2014. |
| (2) |
A variable cutoff grade, between 10.2% and 10.6%
K2O, was used to report reserves. |
| (3) |
Numbers may not add up due to rounding. |
| (4) |
Overall strip ratio of 0.34 to 1. |
| (5) |
Waste contains inferred resources, which have potential for
upgrading to higher category resources, and possibly reserves after
sufficient definition work has been completed. |
| (6) |
Based on 100% mining recovery. |
TK Pricing
Agris Consultoria, a specialist Agronomic Market
Consulting group in Brazil,
prepared a market study reviewing TK as a source of premium potash
fertilizer. A conservative methodology was applied to establish the
TK price, considering just its potassium nutrient value and
comparing it against the potassium nutrient prices of other premium
potash fertilizers. The other beneficial nutrients found in TK such
as Silicon, Calcium and Magnesium, were not factored into the
estimated TK price.
Four sources of premium potash fertilizers
available in the Brazilian market were considered for the
comparative analysis: Potassium Sulfate, Potassium Nitrate,
Potassium Magnesium Sulfate and Potassium Sodium Nitrate. Also, the
main consumption areas of premium potash in Brazil, which are closer to the project, were
selected to represent TK's market potential.
An average price per potassium nutrient was
estimated per consumption area and multiplied by TK's potassium
concentration to come up with a TK delivered price per consumption
area. From the TK delivered price, estimated freight and sales
taxes were deducted to reach a net sales price (FOB price) measured
per consumption area. The average net sales price over the life of
mine is estimated at US$187.74.
Next Steps
On April 17, 2014,
the Brazilian Development Bank (BNDES) and the Financing Agency for
Studies and Projects (FINEP), both of which are branches of the
Brazilian government that operate Inova
Agro, will send the selected companies a "Plano de Suporte
Conjunto" (a joint support plan) where the funding structure will
be defined.
Technical Report
A copy of the PFS is available on SEDAR at
www.sedar.com.
Qualified Person
The "qualified person", within the meaning of
National Instrument 43-101, with respect to the technical
information in this press release are: Bradley Ackroyd (MAIG (C.P.)), who is a
principle consulting geologist with AMS, Carlos Guzman (B.Sc. (P. Eng), FAusIMM), who is
a principle consulting Mining Engineer with NCL, and Wilson Chow (P. Eng., Member of the Association
of Professional Engineers of Ontario), who is the Technical Process Lead
with AMEC.
About AMEC plc ("AMEC")
AMEC is one of the world's leading engineering,
project management and consultancy companies. It serves customers
in the world's oil and gas, mining, clean
energy, environment and infrastructure markets.
About Andes Mining Services Ltd.
("AMS")
AMS is a Geoservices company with extensive
experience in mining and exploration geology, resource estimation
and project evaluations. AMS undertakes consulting assignments
throughout South America on all
types of projects, from grass-roots exploration to producing
mines.
About NCL Ingeniería y Construcción SpA
("NCL")
NCL is a mining engineering consulting company,
providing services related to all aspects of mining exploration.
NCL has consulted on projects in more than18 countries on five
continents.
About Verde
Potash
Verde Potash, a
Brazilian fertilizer development company, is focused on advancing
the Cerrado Verde project located in the heart of Brazil's largest agriculture market. Cerrado
Verde is the source of a potash-rich deposit from which the Company
intends to produce both ThermoPotash (TK) and potassium chloride
(KCl). ThermoPotash is a controlled-release, non-chloride,
multi-nutrient fertilizer that is ideally suited for Brazilian
soils. In addition, the Company is developing its Calcario
limestone project, limestone being a key raw material in the
Company's process to produce both TK and KCl.
About the Cerrado Verde Potash
Project
Cerrado Verde is a unique project: 1) its high
grade potash rock outcrops and is amenable to strip mining,
allowing fast construction of a scalable operation; 2) it is
located in the midst of the world's third largest and fastest
growing fertilizer market; 3) it connects to Brazil's largest fertilizer distribution
districts via existing and high quality infrastructure; 4) it has
the potential to supply TK and KCl to Brazil's local agriculture market from its
large potash-rich deposit.
Cautionary Language and Forward Looking
Statements
NEITHER THE TSX EXCHANGE NOR ITS REGULATION SERVICES PROVIDER
(AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX EXCHANGE)
ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS
RELEASE. THIS PRESS RELEASE CONTAINS CERTAIN "FORWARD LOOKING
STATEMENTS", WHICH INCLUDE BUT IS NOT LIMITED TO, STATEMENTS WITH
RESPECT TO THE RESULTS OF THE PFS FOR THE PRODUCTION OF
THERMOPOTASH, ANTICIPATED PRODUCTION LEVELS AND TIMING OF
COMMENCEMENT OF PRODUCTION, ESTIMATED TK PRICES, PRODUCTION LIFE,
COSTS AND COMPLETION OF A FEASIBILITY STUDY FOR TK, STATEMENTS WITH
RESPECT TO THE FUTURE FINANCIAL OR OPERATING PERFORMANCE OF THE
COMPANY, ITS SUBSIDIARIES AND ITS PROJECTS, AND STATEMENTS
REGARDING USE OF PROCEEDS. FORWARD LOOKING STATEMENTS CAN GENERALLY
BE IDENTIFIED BY THE USE OF WORDS SUCH AS "PLANS", "EXPECTS", OR
"DOES NOT EXPECT" OR "IS EXPECTED", "ANTICIPATES" OR "DOES NOT
ANTICIPATE", OR "BELIEVES", "INTENDS", "FORECASTS", "BUDGET",
"SCHEDULED", "ESTIMATES" OR VARIATIONS OF SUCH WORDS OR PHRASES OR
STATE THAT CERTAIN ACTIONS, EVENT, OR RESULTS "MAY", "COULD",
"WOULD", "MIGHT", OR "WILL BE TAKEN", "OCCUR" OR "BE ACHIEVED".
FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SAID STATEMENTS.SUCH FACTORS INCLUDE A
MATERIAL CHANGE IN BRAZIL'S POTASH CONSUMPTION, GOVERNMENT
REGULATIONS OF MINING OPERATIONS, ENVIRONMENTAL RISKS, RECLAMATION
EXPENSES, TITLE DISPUTES OR CLAIMS, LIMITATIONS OF INSURANCE
COVERAGE, FLUCTUATION LAB AND CONSULTANT AVAILABILITY, MATERIAL
CHANGE IN COMPANY FINANCES AND OTHER FACTORS DISCLOSED UNDER THE
HEADING "RISK FACTORS" IN THE COMPANY'S CURRENT ANNUAL INFORMATION
FORM AVAILABLE ON SEDAR AT WWW.SEDAR.COM.THERE CAN BE NO ASSURANCES
THAT FORWARD-LOOKING STATEMENTS WILL PROVE TO BE ACCURATE, AS
ACTUAL RESULTS AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN SAID STATEMENTS. ACCORDINGLY, READERS SHOULD NOT
PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS.
Readers are cautioned not to rely solely on the summary of such
information contained in this release and are directed to the
complete set of drill results posted on Verde's website
(www.verdepotash.com) and filed on SEDAR (www.sedar.com) and any
future amendments to such. Readers are also directed to the
cautionary notices and disclaimers contained herein. |
SOURCE Verde Potash Plc