By Dr. Michael Green.This morning brought plenty of good news concerning Kore Potash’s move towards potentially becoming the lowest cost potash supplier to the giant Brazilian market. This latest announcement concerns an update on the Dougou Extension (DX) Pre-feasibility Study (PFS) which follows the completion of a review of the production target by independent consultants Agapito. The Updated PFS materially enhances the results of the PFS published about six months ago and makes for really good reading. The PFS mine schedule involved the declared Sylvinite Ore Reserves of 17.7Mt at a grade of 41.7% KCl. The Ore Reserve estimate for the DX Project remains unchanged and all key assumptions and modifying factors are still valid. However, with an improved understanding it is now deemed likely that the production schedule for this Updated PFS includes 2.43Mt of Muriate of Potash (MoP) from Indicated Mineral Resources and 2.31Mt MoP from Inferred Mineral Resources. The end result is a far longer mine life and a 29% higher NPV. With more resources added to the mining plan, the updated Production Target extends the project life from 18.4 years to 30 years. This is based on an annual production rate of 400,000 ktpa MOP. This upgraded mining schedule includes 34.5% of the Inferred Mineral Resources which provides 20% of the life of project MoP production. As such, to us this seems to open the door to future upward revisions as the understanding of the mineral resource further improves. The updated PFS determined an attributed NPV 10 of US$412 million and 23.4% IRR on a real post tax basis at a life of project average granular MoP price of US$422/t (which is Argus Media’s price forecast CFR for DX Project’s target markets). This is 29% higher than the real ungeared post tax and NPV10 (real) of approximately US$319 million (where the IRR was approximately 22.9%) on an attributable basis using exactly the same MoP price. The post-tax payback period from first production remains unchanged at 4.3 years.
Add to My Watchlist
What is My Watchlist?
