Mar 152013

By Nick Worth
Passport Potash officials announced the results of their Preliminary Economic Assessment (PEA) for the Holbrook Basin potash project, calling the report “positive.” The independent PEA was prepared by ERCOSPLAN, a German consulting and engineering firm, specializing in the potash and salt industry.
According to a summary of the key findings of the PEA the mine will cost $1.949 billion to build and operating costs are expected to run $114 per tonne (2,204.6 pounds). The payback period from the start of production is expected to be eight years assuming a $430 per tonne potash price, and the life of the mine is projected at 26 years.
The measured mineral resource for Passport and Hopi lands is 34.77 million tonnes of KCI grade 14.38 percent potash. The report sets the indicated mineral resource figure at 363.17 million tonnes of 14.68 percent KCI potash.
The mine will be a conventional underground room and pillar mine, and the processing method will be a hot leach method with a recovery rate of 89.8 percent.
The report also estimates 1,770 employees will be needed in the mining, production and management phases of the operation. Production is expected to yield around 2.5 million tonnes per year.
“We are extraordinarily pleased with this robust report for our Holbrook Basin potash project,” Passport President and CEO Joshua Bleak commented in a press release. “We feel that the strong fundamentals of this report validate everything we have believed about this project, and are confident that the strength of this report will allow us to gain traction, even in the face of a moribund resource market.”
He noted the capital expenditure of $1.95 billion for a 2.5 million tons per annum mine makes this one of the best values in the potash industry.
“A good metric for judging the value of a potash project is the capital expenditure cost per tonne of finished production,” Bleak said. “Using this metric, the Holbrook project is one of the lowest cost projects of all the greenfield (new mine) potash projects currently being developed. When you couple these factors with the estimated operating expenses of $114 per tonne, the Holbrook project has potential to be one of the highest return potash projects in the world.”
Passport Director of Corporate Development Ken Bond agrees.
“Not only is it possible, or feasible, but it is the most economically competitive project, compared to other greenfield projects around the world,” said Bond.
He said the Holbrook Basin potash deposits are in relatively thin seams of lower KCI grade than the deposits found in Canada. He said the deposits near Holbrook are similar to the potash mine near Carlsbad, N.M., which has been in operation since 1931.
John Eckersley, executive vice president and director for Passport, added the Holbrook Basin project also has the advantage of being in the United States.
“One of the things we look at as a positive is the stability of the government,” said Eckersley. He explained that in some other countries, potash mining projects have been called off entirely after local governments made increasing demands upon the mining companies, expecting them to shoulder more and more expense in developing their mines, and often demanding more and more of the profits.
“The political stability of the area is a positive we promote,” Eckersley said.
In the press release, Bleak said that based upon the recommendation of ERCOSPLAN, Passport will move forward with its pre-feasibility study which the company plans to release at the end of 2013, and the feasibility study, which is planned for release at the end of 2014.
“We are excited to take this report to the strategic partners with whom we have had discussions over the past year, and be able to show them the value that is in this project,” Bleak said.