A feasibility study for the Wynyard Carnallite potash project in central Saskatchewan sent shares of Karnalyte Resources (KRN-T) up to a new fifty-two week high yesterday of $17.50 apiece before closing at $17.15, a gain of 71¢ or 4.3%.
The positive feasibility study brings Karnalyte’s 100%-owned solution potash project one step closer to becoming the first new potash mine to be built in Saskatchewan since the 1970s, the company’s management says.
The deposit–175 km east of Saskatoon and 175 km north of Regina–will be developed in stages. The initial facility will have an annual capacity of 625,000 tonnes per year of potash product that then increases to 2.125 million tonnes per year in two additional phases over a five- to six-year period.
The staged approach to construction “reduces project risk by shortening the timeline to production and lowering the upfront capital commitment,” Robin Phinney, Karnalyte’s president and chief executive, noted in a prepared statement.
Construction of the initial facility will start early next year and production is expected to get underway in early 2014. Capex for the 625,000 tonne per year facility will be about $593 million with annual operating expenses of about $133 per tonne potassium chloride or KCl.
Capex for the full 2.125 million tonne per year operation is forecast at about $1.97 billion (including the initial $593 million) with operating expenses of $129 per tonne KCl.
According to the feasibility study, the project yields an after-tax internal rate of return of about 22% and an after-tax net present value, using a 10% discount rate, of about $1.86 billion for the 2.135 million tonne per year operation.
The feasibility study envisions a 60-year production life based on proven reserves of 62.9 million tonnes KCl and probable reserves of 92 million tonnes KCl.
Based on the technical report, 144 million tonnes of potash product may be extracted and produced from the reserves at 97% KCl and 90% plant efficiency.
The project consists of subsurface mineral permit KP 360A (68,301 acres) and exploration lease KSLA 010 (16,825 acres).
Shares of Karnalyte Resources closed today at $16.87, a drop of 29¢ or 1.69%.
Be the first to comment on "Karnalyte Resources receives positive feasibility"