By Nick Worth
Passport Potash is moving forward on its Preliminary Economic Analysis (PEA), according to company spokesman Ken Bond, who was manning a booth at the Navajo County Fair in Holbrook last week.
“We expect to have it finished by the end of the year,” said Bond.
He said the PEA is the first step in completing the three main studies needed in order to attract investors, with the other two being the pre-feasibility study and the feasibility study.
A pre-feasibility study gives a rough estimate of mining costs and methods using a model made up from other potash mining operations and industry standards. This would determine the answers to questions such as should the mine use a decline road or a shaft to move material to the surface.
According to Bond, though, Passport will most likely move straight to the feasibility study after completion of the PEA, since they have been so thorough in the preparation of their PEA.
“We’ve already gotten commitments from our engineering firm in Germany,” said Bond. He described the firm, ERCOSPLAN, as “very conservative … sometimes painfully conservative.”
The feasibility study by ERCOSPLAN should be finished in 18 months, Bond said. He said this study would break down the methods and costs of the proposed operation in detail, and would be the document that would then allow Passport to compete for funding from banks and private investment companies.
“Our competition for funding is global,” Bond said. “It’s not just our peers here in Arizona we’re competing against for funding, it’s also projects in places like Africa.”
Bond said ERCOSPLAN prepared the initial resource estimate for Passport’s holdings that included analysis of the potash deposits on about 25 percent of Passport’s land. The firm is now nearing completion of an updated estimate that will include all of Passport’s land and mineral rights holdings.
He said Passport based its PEA on 45 wells it has drilled, in addition to over 100 historic wells that were drilled in the 1960s and ‘70s.
Economic conditions at the time made it unrealistic to pursue mining the resource and the core samples had been lost by the state, but by drilling new wells in the proximity of some of the historic wells, they were able to change the designation of “inferred” deposits to “indicated” deposits.
Looking ahead to the expected feasibility study results, Bond said, “I want to stress the fact that Passport has no interest whatsoever in solution mining methods.
“Solution mining is the wrong idea for several reasons,” he said.
He said solution mining involves pumping hot water into the potash deposits, where the mineral is then dis-solved and pumped back out of the ground. From there, the potash is separated out from the water.
It is most often used in mining operations like those in Canada where the potash deposits are 4,000 to 5,000 feet underground, making them difficult to reach by conventional mining methods. According to Bond, the technique can only recover up to a maximum of 30 percent of the available potash and the life of the mine is shortened to only 15 to 20 years, depending on the size of the deposit.
He said conventional mining methods can recover up to 80 percent of the mineral in the deposits and the life of the mine might be 40 to 50 years.
Speaking of the local Passport project, Bond said, “We believe it will be done with conventional mining processes.”
He said the deposits in the Holbrook Basin are from 900 to 1,000 feet underground.
“For potash, that’s actually fairly shallow,” Bond said.
Asked about a timeline on the mine project, Bond said Passport expects to begin actual construction of a mine in early 2015.
“We’re trying to expedite the process,” he said.
By Nick Worth