Elemental Minerals (ASX:ELM) as announced an updated resource estimate on its Dougou potash project in the Republic of Congo (not to be confused with the DRC). This resource is contained within 4 different seams with an average thickness of 35 meters each, which obviously makes this project amenable for bulk tonnage mining.
Roughly 1.1 billion tonnes (at an average grade of 20.6%) are in the measured and indicated resource categories whilst an additional 2 billion tonnes are part of an inferred resource estimate. Elemental was expecting Dougou to be a low-cost solution mine, and indeed, a scoping study has confirmed the expectations as a staged approach from 400,000 tonnes per year to 1.2 million tonnes per year of MOP results in an after-tax NPV10% of $880M based on a potash price of $380/t FOB Vancouver. The initial capital expenditure of $430M is reasonable as the 400ktpa operation at a very AISC of just over $100/t should result in a payback period of less than 5 years. Unfortunately the subsequent production increases to 800ktpa and 1.2Mtpa will also cost in excess of $400M so it will be tough for Elemental Minerals to increase the production rate without additional external financing.
K2P Price at posting:
20.0¢ Sentiment: None Disclosure: Not Held
