Oct 242012

By Nick Worth
Potash mining in the Holbrook Basin seems to be on track and moving ahead following an announcement on Oct. 22 by Prospect Global Resources, Inc. The parent company for the American West Potash project in Holbrook and Sichuan Chemical announced a more than $2 billion agreement over a 10-year period under which Sichuan will purchase at least 500,000 metric tons of potash annually, or 25 percent of the projected output of Prospect Global’s Holbrook Basin project.
Sichaun chemical is a state-owned enterprise that is one of China’s largest fertilizer manufacturers and its third largest chemical company.
According to a statement by the company, this is the largest ever purchase and sales contract in price and volume for a potash mine under development in the U.S. It is also believed to be one of the largest potash ex-port contracts in U.S. history. The current timetable calls for the American West site to be in production by late 2015 or early 2016.
Prior to that announcement Prospect Global also announced the results of a cost feasibility study by Tetra Tech, Inc., an international engineering firm based in Pasadena, Calif.
In a press release issued last Thursday, Prospect Global announced the company is “on track to meet key targets within previous expectations as to capital and operating expenses, infrastructure, permitting, and site plan” for the project.
According to the report, “key capital expense elements are in line with 2012 expectations, and operating expenses are comfortably within confidence levels set by the December 2011 preliminary economic assessment.
“The changes to capital expense and operating expense include more focus on potash recovery, reliability and optimization,” the report stated.
Prospect Global officials believe that the bankable feasibility study for the Holbrook area project, due out in the first half of 2013, will increase resources and optimize the mine plan.
According to the news release, the company has hit several operational targets, including the completion of the 2012 drilling program.
Pat Avery, CEO of Prospect Global, said the company drilled 12 test wells over the course of three months from May through July 2012.
He said the company would be drilling 12 more test wells starting in November and running through January 2013.
“We’re moving so quickly we decided to do another series,” said Avery. “We drill with two rigs at a time so we can move quickly.”
Avery said each well takes about 12 to 13 days to drill because core samples need to be taken and the hole needs to have casing installed at certain points in order to control the flow of water from the water table.
“Potash is a salt,” Avery explained. “If you don’t control that water flow, it will dissolve your core sample before you can get it up to the surface.”
According to the press release, Prospect Global has also conducted detailed mine planning on the KR-2 bed using Vulcan software, a specialized 3D mine planning program.
The KR-2 bed is one of the two seams identified on the American West Potash holdings in 2011 by North Rim Exploration Ltd. of Canada.
The company has established design parameters and process flow diagrams. Detailed engineering has begun and drawings have been prepared for the mine facility.
They have also completed lists of needed equipment and final vendor selection is underway.
According to the press release, the cost feasibility study is “another milestone on Prospect Global’s path” to demonstrate the Holbrook Basin project will be globally competitive.
“This full interim report, focusing on capital and operating expenses, is a welcome confirmation of our progress,” Avery said. “We are meeting key technical and operational milestones to build a world-class project. We also have made great advances in our site plan, permitting and infrastructure.”