Terry L. Roberts Potash & Phosphate Institute Potash & Phosphate Institute of Canada
Potash Ridge April 2016 web -...
Transcript of Potash Ridge April 2016 web -...
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April2016
InvestorPresenta4on
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FORWARD LOOKING STATEMENTS
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Certain statements in this presentation may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Potash Ridge Corporation (the "Corporation"), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this presentation, such statements use such words as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate" and other similar terminology. These statements reflect the Corporation's current expectations regarding future events and operating performance and speak only as of the date of this presentation. Forward-looking statements involve significant risks and uncertainties, which include, but are not limited to the factors discussed under “A Cautionary Note Regarding Forward Looking Statements” and "Risk Factors" in the Corporation’s Annual Information Form dated March 28, 2016, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. Although the forward-looking statements contained in this presentation are based upon what management of the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Corporation assumes no obligation to update or revise them to reflect new events or circumstances.
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Potash Ridge is a near term producer
of premium fertilizer with world class
development assets in Utah and
Quebec.
The Company is uniquely positioned to
take advantage of strong markets for
Sulphate of Potash
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HIGHLIGHTS
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SulphateofPotash(“SOP”)isapremium
potashwithasignificantsupplydeficit
§ Domes&csellingprice3xversusregularpotash(“MOP”)§ Globalconsump&onis~5milliontonnesperyear(“tpy”)§ Demandpoten&alis10milliontpy§ Exis&ngproducersunabletoexpandtomeetsupplydeficit
Strategy§ BecomethefirstSOPproducerusingMannheimprocessin
NorthAmericaand,longerterm,thelargestNorthAmericanSOPproducer
Valleyfield(Quebec)
§ 40,000tpyofSOP;CDN$48.8millioncapex§ 32.5%aUertaxIRR§ ProvenprocessusedthroughoutEuropeandAsia§ Produc&onscheduledtocommenceinQ42017§ Strategicloca&onnearby-producthydrochloricaciddemand§ Expansionpoten&alatsite§ Poten&alforover$13minaverageannualcashflows(Y1-Y5)
BlawnMountain(Utah)
§ Upto585,000tpyofSOP;poten&altophase-inproduc&ontoreducefrontendcapex
§ Prefeasibilitycomplete:20.5%aUertaxIRR§ Largesurfacemineraldeposit;over40-yearreservelife§ Majorpermitsandwaterrightssecured;infrastructurenearby§ Poten&alupsidefromaluminaresidueintailings§ Poten&alforoverUS$250Minaverageannualcashflow
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SOP:SUPERIORPRODUCTWITHATTRACTIVEMARKET
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SOP(K2SO4) MOP(KCI)
US$887/tonneinNorthAmerica US$238/tonneinNorthAmerica
Globalmarket5milliontpy,withpoten&almarketdemandof10milliontonnes(1)
Globalmarket55milliontpy
Fundamentalsupplydeficit–limitedabilitytosignificantlygrowproduc&onusingexis&ngproduc&onprocesses
Marketisinoversupply,withidlecapacityandmul&pleprojectsinpipeline
Lowchloride,highsulphur–providingbenefitstocropsnotavailablewithMOP
Containschloride–nonutrientvalue;inmanyinstancesdetrimentaltoplants
Improvesyield,taste,appearanceandshelflife;idealforsaltyorsandysoilsoraridclimates
Chloridecanleachintogroundwaterorbuild-upinaridsoilcondi&ons,impac&ngyieldsandcropquality
SignificantbenefitsoverMOPforfruits,vegetables,nuts,potatoes,tobacco–manyotherhighvaluecrops
Primarilyforcornandgraincropsthatcanwithstandchloride
(1)PerCRU
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SOP: A TOP PERFORMING COMMODITY IN LAST 5 YEARS
6 1CompassMineralsQ42015Report,2PotashCorpQ42015Report
SERVINGANUNDERSERVEDMARKET
CompassQ4/15realizedSOPpriceU.S.$887/tonne1
PotashCorpQ4/15realizedMOPpriceU.S.$238/tonne2
SOP
MOP
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DEVELOPMENTSTRATEGY
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Valleyfield(Quebec) BlawnMountain(Utah)
Bringini&al40,000tpySOPintoproduc&oninQ42017
Poten&alforupto585,000tpySOPproduc&onEvaluatescalingdevelopment,withtargetedini&alproduc&oninlate2019
Completepermihngandbreakgroundin2016
CompletescalingstudyinQ3,2016
FinalizeSOPokakeandothercommercialarrangements
Leveragemanagementteams’strongprojectdevelopmentandfinancingexper&se
DevelopEPCorsimilarconstruc&onarrangementstominimizeexecu&onrisk
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VALLEYFIELDPROJECT
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VALLEYFIELDPROJECT(QUEBEC)
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• ProvenMannheimtechnology• ConvertsMOP+sulphuricacidto
SOP+by-producthydrochloricacid
• EngineeringstudycompletedbySNConMarch29,2016
• PlantobuildunderEPCcontract• Basedon40,000tpyofSOP
• Poten&altobuildaddi&onalunits• CDN$13.3millionaverageannualcash
flowforfirst5years• Permihngexpectedtotakethree
months• StronginterestinSOPokake
EconomicSummary(CDN$)
Ini&alcapitalcost(1) $48.8million
IRR(unleveredaUertax)
32.5%
NPV(aUertaxat10%) $66.9million
SOPprice/tonne $1,000(U.S.$760)
MOPprice/tonne(2) $500(U.S.$380)
Opex/tonne(3) $590
(1)$9.5millionofthisamountisacidsupportinfrastructureexpectedtobeincurredby3rdpar&es(2)Equatesto$430/tonneofSOP(3)Netofacidcredit
• MOUnego&atedwiththirdpartyforofftakeofhydrochloricacid• Poten&altotakeadvantageofaprac&vefinancingsupportinQuebec• Expecttostartconstruc&onin2016,with12-monthconstruc&onschedule
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VALLEYFIELD:STRATEGICALLYLOCATED
• LocatednearMontreal,Quebec
• Propertysecured• Stronglocalsupport• Railaccessatsite• Portwithin2km,allowing
accessintokeyU.S.markets• Within2kmofsulphuric
acidsupplier–discussionsini&atedwithsuppliers
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• Locatednearhydrochloricacidcustomers• MOUsignedforokakeofini&alproduc&on• Discussionsunderwayforsecondphaseofhydrochloricacidokake
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PROVENMANNHEIMPROCESS
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MannheimFurnace
PotassiumSulphate(“SOP”)
HydrochloricAcid(“HCL”)
PotassiumChloride(“MOP”)
SulphuricAcid
Energy
• ConvertsMOPtoSOP• Provenproduc&onprocess(over100yearhistory),withnumerousopera&ng
facili&esinEuropeandChina(about40%ofcurrentSOPproduc&onisfromMannheim)
• Highquality,consistentproduc&onprocess• Scaleallowsforconstruc&on&meof12-months
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VALLEYFIELDNEXTSTEPS
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Task Comments
EngineeringStudy • CompletedbySNConMarch29,2016• FinalizeEPCarrangements
Permihng • Expectedtotakethreemonths
AcidCommercialArrangements
• Plantohaveathirdpartytobuild,own,operatehydrochloricacidandsulphuricacidinfrastructure
• Thirdpartywillalsoberesponsibleforacidlogis&cs
SOPOkake• Mul&pleexpressionsofinterestinokake.• Nego&a&onssettocommencenowengineeringstudycomplete
Financing• Discussionssettocommencewithpreliminaryengineering
studycomplete• Quebecgovernmentfinancialsupportprogramsavailable
Construc&on• Expectedtocommenceinlate2016• An&cipate12-monthconstruc&on&metable
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BLAWNMOUNTAINPROJECT
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BLAWNMOUNTAINPROJECT(UTAH)
• Surfaceminingwithadjacentprocessingfacility
• KnownprocesstoconvertaluniteoreintoSOP,by-productsulphuricacidandanalumina-richmaterial
• PrefeasibilityStudycompletedbyNorwestinDecember2013
• P+Preservessupport40yearminelife,• Poten&altoincreaselifeof
opera&onsthroughaddi&onalexplora&on
• Projectpermiped;waterrightssecured
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PFSEconomicSummary(US$)
Ini&alcapitalcost
$1,124million
IRR(unleveredaUertax)
20.5%
NPV(aUertax,at10%) $1.0billion
SOPprice/ton $649
Opex/ton(1) $173
(1)Netofacidcreditandexcludingroyal&es.
• MOUnego&atedwiththirdpartyforokakeofsulphuricacid• Currentlyassessingthepoten&altophaseproject(withphase1poten&allyaround200,000
tpy)tosignificantlyreduceupfrontcapex• Poten&altofasttracknextstageofdevelopment
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UTAH–ANATTRACTIVEPLACEFORMINING
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• Majorresourceproducingstate• Over100yearsofpotashproduc&on• Beststateforbusinessandtopquar&leminingjurisdic&on(1)• 100%state-ownedland• Strongstategovernmentandlocalsupport• Allnecessaryinfrastructurenearby
(1)ForbesMagazine,2015RankingandFraserIns&tute,April,2013
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THEBLAWNMOUNTAINPROPERTY
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AREA1MININGZONE
PROCESSINGPLANTLOCATION
AREA2MININGZONE
ACCESSROAD
ORETESTPITNotethatoreisatsurface
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RESERVESANDMINELIFE
Drillingworktodatehasestablished40yearsofreserves–calculatedbyindependentengineer(Norwest)
Drillingtodatehasfocusedonlyontwoofthefourareaswithinthe15,400acrelandposi&on
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ReserveCategory
TotalProven
('000tons)Probable('000tons)
AluniteOre(ROMtons) 136,254 289,540 425,794
Ore(averageK2O(%)grade) 3.56 3.49 3.51
Ore(averageK2SO4(%)grade) 6.59 6.46 6.49
SOP(tons) 8,457 17,970 26,427
SulphuricAcid(tons)@98%Purity 18,888 40,136 59,024
MineralReservesbyCategoryNovember6,2013
DRILLED
NOTYET DRILLED
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PERMITTINGESSENTIALLYCOMPLETED
Thefollowingtableiden&fiesthemajorpermitsandapprovalsthattheCorpora&onhasors&llneedstoobtainpriortoconstruc&on:
Permit/Approval IssuingAgency Completed
Explora&onPermit UtahDivisionofOil,GasandMining October,2011
USArmyCorpsofEngineersJurisdic&onalWatersConcurrence USArmyCorpsofEngineers March,2014
GroundwaterPermits UtahDivisionofWaterQuality July,2014
LargeMineOpera&onApproval UtahDivisionofOil,GasandMining August,2014
AirQualityEmissionStandard UtahDivisionofAirQuality
AirQualityEmissionStandardrequirestheengineeringtobepar&allycompletedbeforetheapplica&onisfiled.Itistechnicallynotapermit,butmoreanagreeduponemissiontargetthattheProjectmustbedesignedtomeet.
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INDUSTRYPROVENFLOWSHEET
Alunite
Calcination
Water Leach
Alumina Rich Material
SOP Solution Crystallizing Drying, Compacting & Sizing SOP
SO2 Acid Plant Sulphuric Acid
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WELL UNDERSTOOD FLOWSHEET USING COMMONLY USED EQUIPMENT
• Extensivetestworkconfirmsflowsheet;• Plannedaddi&onaltestworkwillincludebulksamplesat
equipmentvendorfacili&es–willresultinvendorsprovidingproduc&onguarantees
Crushing & Grinding
• Exis&ngplantinAzerbaijancurrentlymothballed(GanjaRefinery)
• Flowsheetsimilartocommercial-scaleproduc&onprocesseshistoricallyusedinUSandAustralia
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BLAWNMOUNTAINDEVELOPMENTTIMELINE
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Late 1970’s $25 million invested
developing Project
2011 Project Acquired
April 2012 Initial resource
estimate*
November 2012 Preliminary Economic
Assessment *
December 2013 Prefeasibility
Study* establishes 40
years of reserves
*43-101CompliantTechnicalReport
December 2012 IPO
$80M market cap
August 2014 Large Mine Operating
Permit issued
March 2014 US ACOE confirms
no US federal permits required; Exploration lease
converted to mining lease
July 2014 Groundwater
Discharge Permit issued
October 2014 Enter into offtake
and marketing arrangement for
by-product sulphuric acid
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BLAWNMOUNTAINNEXTSTEPS
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Task Comments
Maintainvaluecreatedtodatewhileraisingpre-construc&oncapital
• MiningleasemodifiedinJune2015todeferleasepayments• Permitsremainintact• Commercialarrangementsalreadynego&atedforsupport
infrastructureremaininplace
Furtherevaluatereducedscalealterna&ve
• Engageengineeringfirmtoevaluatephaseddevelopmentofproject,atapoten&alini&alproduc&onrateofaround200,000tpy
• Ul&mategoalwillbetoobtainEPCquoteonreducedscalealterna&ve
Okake • Ini&atediscussionswithpoten&alokakepartnersaUercomple&onofreducedscalealterna&veevalua&on
Financing• Stronginterestinconstruc&onfinancing–con&nuedialogue
withpoten&alfinanciers
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CORPORATEINFORMATION
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EXPERIENCEDANDPROVENMANAGEMENT
OVER 70 YEARS COMBINED EXPERIENCE 23
GuyBen4nckPresidentandChiefExecu4veOfficer
CharteredProfessionalAccountant20yearsmining/resourceexperienceSherripCFOandSVPCapitalProjects
RossPhillipsChiefOpera4ngOfficerandChiefFinancialOfficer
MA(Econ)/MBA/CFA/CPA10yearsexperienceinlargeresourceandenergysectorprojectsSherrip,CapitalPower
JayHusseyVPCorporateFinanceandPresident,ValleyfieldFer4lizer
20yearscapitalmarketsconsul&ng9yearsSOPexperiencewithMigaoCorpora&on
PaulHamptonProjectManager
GeologistandMetallurgicalEngineer30yearsindesign,construc&onandmanagementofmineralprocessingfacili&esSNC,WashingtonGroup,Outotec
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CAPITALRAISESANDCAPITALIZEDCOSTS
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Date/Price Price Proceeds$mm
February2011 $0.05 $1.1
August2011 $0.25 5.4
November2011 $0.25 1.5
December2011 $0.25 0.5
December2011 $0.75 10.5
December2012 $1.00 20.0
November2015 $0.03 0.6
Total $39.6
Ac4vity $mm
Variousengineeringstudies $10.4
Drilling 6.8
Employeecosts 6.3
Engineeringandpermihngconsul&ngcosts 5.4
Mineralleases 2.5
Other 1.2
Total $32.6
CapitalRaises CapitalizedCosts
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CAPITAL STRUCTURE
25
Millions
Total Common Shares Outstanding 106.9
Warrants – $ 0.08 (exp. Nov 2017) 11.3
Stock options 9.4
Total Fully Diluted Shares 127.6
As at February 29, 2016
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April2016