Post on 03-Jun-2015
Premium Potash Project Driven by a
Proven Management Team TSX : PRK OTCQX : POTRF June 2014
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 27, 2013, 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.
Focused on near term sulphate of potash (“SOP”) production at its Blawn Mountain property in Utah
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SOP 645,000 tons average per annum
40 year Project Life backed by reserves
EXPERIENCED AND PROVEN MANAGEMENT
OVER 80 YEARS COMBINED EXPERIENCE
Guy Bentinck President & CEO Chartered Accountant; 20 years mining/resource experience Sherritt: CFO and SVP Capital Projects
Ross Phillips Chief Operating Officer 10 years experience in large resource and energy sector projects Sherritt, Capital Power
Jeff Hillis Chief Financial Officer Chartered Accountant; 10 years mining sector finance, including CFO of several public mining companies Iberian Minerals, Excellon, Falconbridge
Paul Hampton VP, Project Management Geologist and Metallurgical Engineer; ~30 years experience in design, construction, start-up and management of mineral processing facilities SNC, Washington Group, Outotec
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COMPETITIVE ADVANTAGES
Premium potash product with supply deficit that cannot be met by existing production processes
Large surface mineral deposit - low cost and low risk mining, with easy access to ore for test work. Known process – existing production facility in Azerbaijan
645,000 tons of SOP per annum over 40 year mine life plus probable resources
Mining friendly jurisdiction, established infrastructure nearby, designated development lands and efficient state permitting
PFS completed November 2013: $1.0 billion NPV at 10%; 20.5% after tax IRR; excludes potential revenue from alumina rich material
Advanced stage permitting, no federal permits required for plant site.
Mining friendly jurisdiction with strong state and municipal government support.
Discussions advancing on offtake, project financing and commercial activities
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POTASH OVERVIEW
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No known substitute
Increasing world population
Growing per capita income
Decreasing arable land
Increasing use of biofuels
POTASH WORLD DEMAND +5% EXPECTED ANNUAL DEMAND TO 2016; SOP HIGHER GROWTH POTENTIAL
POTASH: ESSENTIAL TO THE WORLD’S FOOD SUPPLY
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POTASSIUM AND SULPHUR ARE ESSENTIAL NUTRIENTS
SOP: PREMIUM FERTILIZER
Sulphate of Potash (SOP)
Muriate of Potash (MOP)
50% K2O Equivalent 60% K2O Equivalent
17% S 0% S
<1.0% Cl 45% Cl
4.8 million tonnes sold in 20131 50 million tonnes sold in 20131
Improves yield, quality, taste and enhances shelf life1
Crop quality/yield diminish as chloride builds up1
1 CRU 2013 8 Chemical makeup assumes 92.5% K2SO4 and 95% KCl product * Within target market
Consumption of SOP restricted by limited production capacity, with little expansion potential
SOP share of potash market: Current: 5 Mt Potential: 10-12 Mt*
Trend toward high nutrient fertilizers
Trend towards pricing of SOP based on incremental revenue through yield/quantity improvements vs. premiums over MOP
SOP – A DISTINCT & VALUABLE POTASH PRODUCT
Fruits Vegetables Nuts Horticultural Plants
Tobacco Tea Coffee Dry/Salty soil
Especially valued for chloride sensitive crops, SOP improves yields on high value crops such as:
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SOP MARKET DYNAMICS
1CRU 2013 10
Europe 24%
N. America
7%
C & S America
6%
China 49%
Africa 5% RoW
9%
SOP Consumption by Region
Region Process Method
World Capacity Process Inputs Products
Avg Cost / Ton1
Future Outlook
China/ Europe
Mannheim 2.3Mt 43%
¡ MOP ¡ SOP
$453
High Cost/by-product
limits growth
¡ Sulfuric Acid ¡ Hydrochloric Acid
¡ Energy
Europe MOP and Kieserite
1.2Mt 22%
¡ MOP ¡ SOP
$440 No
additional deposits
¡ Kieserite ¡ Magnesium Chloride
¡ Energy
China/ USA/ Chile
Salt Lakes 1.9Mt 35%
¡ Lake Brines ¡ SOP
$381
No additional suitable
lakes
¡ Energy ¡ Magnesium Chloride
¡ Sodium Chloride
Existing SOP Production by Process
New sources of SOP from these existing processes are unlikely due to lack of primary sources and difficulties surrounding secondary source production.
CRU predicts SOP consumption of 9,500,000 tonnes per annum by 2019 – where will this production come from?
-‐
200.0
400.0
600.0
800.0
1,000.0
1,200.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2007 2008 2009 2010 2011 2012 2013 2014
POT -‐ North America (MOP)
CMP -‐ (SOP)
CURRENT PREMIUM 145% FOR SOP IN US
SOP PREMIUM PRICE TRENDS
U.S. $/tonne
11 1 Compass Minerals Q1 2014 Report, 2 Potash Corp Q1 2014 Report
Compass Q1/14 realized price $670/tonne1
Potash Corp Q1/14 realized price $250/tonne2
Recent quotes from blenders in Uberaba, Brazil $1,110/tonne
SIGNIFICANT GROWTH POTENTIAL EASY ACCESS TO LOCAL MARKETS
SOP MARKET TARGETS
12 1 CRU 2013
2 From PRK Study August 2013, based on crops that are best suited for SOP
United States
SOP consumption: 385,000 tons1 Potential consumption: 920,000 tons2
Large scale production of chloride intolerant crops such as nuts in California and citrus fruits in Florida drive a large part of US SOP demand. Consumption of these crops continues – e.g. Almond crops have grown by 7% per year since the mid 1990s.
Brazil
SOP consumption: 42,000 tons per year2 (0.4% of total potash consumption) Potential consumption: 2.1 million tons2 Brazil is the world’s largest grower of coffee, soybeans and citrus fruits, all SOP crops. Low consumption is entirely due to lack of SOP availability.
China
SOP consumption 2.5 million tons per year1 Potential consumption: 5.5 million tons per year2 China produces close to half of the world’s fruits and vegetables, and nearly one-third of the world’s tobacco and tea. SOP consumption almost doubled between 2007 and 20121, with large untapped growth potential.
THE BLAWN MOUNTAIN PROJECT
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ANTICIPATED INITIAL PRODUCTION IN 2017
PROJECT OVERVIEW
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Large alunite deposit, which is expected to be processed into SOP, and possible alumina rich material
Average 645,000 tons of SOP per annum
Historical work expedites project development
Mineral deposit to be surface mined
Proven process backed by extensive metallurgical testing
ORE TEST PIT
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ALMOST 100 YEARS OF POTASH PRODUCTION
UTAH: AN ATTRACTIVE MINING JURISDICTION
1Forbes Magazine, December, 2012 2Fraser Institute, April, 2013
Major resource producer
Existing potash production
Best state for business1
Top quartile mining jurisdiction2
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OUR LAND ADVANTAGE State-owned land designated for development
Efficient permitting process
Leasehold and royalty agreements negotiated
No known adverse environmental or social issues
Sufficient water nearby – water rights granted May 2014
Roads, rail, transmission and natural gas nearby
Construction materials, equipment suppliers and skilled labour force
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MUNICIPAL AND STATE SUPPORT OF PROJECT
PREVIOUS WORK ACCELERATES PROJECT DEVELOPMENT
EXTENSIVE DEVELOPMENT COMPLETED IN 1970’s
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• Approximately $25 million spent (~$100 million in today’s dollars).
• Programs included:
Drilling, Resource estimate, Feasibility Study, mine plan, Engineering, Permitting and 3-year operation of a pilot plant processing up to 11 tons per day.
• Alumina originally primary product; SOP was by-product
• Project ultimately shelved due to poor economic conditions in early 1980s
• Potash Ridge owns all historical data
SIMPLE PROVEN FLOWSHEET
Alunite
Calcination
Water Leach
Alumina Rich Material
SOP Solution Crystallizing Drying, Compacting & Sizing SOP
SO2 Acid Plant Sulphuric Acid
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• Plant currently operating in Azerbaijan. (Ganja Refinery)
• Flowsheet similar to commercial-scale production processes historically used in US and Australia.
RECENT EXTENSIVE TEST WORK CONFIRMS FLOWSHEET
• Plant to process 10.4 million tons per annum • Metallurgical testing on-going for Feasibility Study
Crushing & Grinding
PREFEASIBILITY STUDY – SUMMARY
• Proven & Probable mineral reserves of 426 million tons; • Reserves support 40 year mine life, with potential to increase life of operations through
exploration of two additional zones of known mineralization; • Project after tax Net Present Value (“NPV”) of $1.0 billion using a 10% discount rate:
• Total sales of 26 million tons of SOP over life of mine; • Unlevered after tax internal rate of return (“IRR”) of 20.5%; payback period of 5 years
after commencement of operations; • Strong cash flow generation with cash flow from operations of $234 million per annum
excluding the two year ramp up period; • Approximately 28% of direct capital costs are supported by packaged quotes 1Inclusive of by-product acid revenues and exclusive of royalties; no credit assumed for potential revenue from the sale of alumina rich material.
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Economic Indicators
NPV (after tax, at 10%) $1.0 billion
IRR (after tax) 20.5% Payback period (from commencement of operations) 5 years Average annual SOP production 645,000 tons Average annual sulphuric acid production 1,440,000 tons SOP price (average) $649/ton Sulphuric acid price (average) $135/ton Project life 40 years Initial capital cost (including 15% contingency) $1,124 million Operating cost (excluding royalties) $173/ton SOP
The economic evaluation is based on the following assumptions: • Site construction commences late
2015; • Production ramp-up over 2 years
(2017-2018), reaching full production in 2019;
• SOP pricing from CRU forecast below current North American SOP prices;
• Average tax rate of 35%.
SOP CAPITAL COST BREAKDOWN1
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CAPITAL COST: $1.124 billion (15% con9ngency)
14% SOP Leaching, CrystallizaRon and Drying
42% CalcinaRon 13%
Crushing & Grinding
31% ConRngency, Indirects and Infrastructure
1 Excludes utilities and other infrastructure not incurred by Potash Ridge ($641 million):
Build-own-operate arrangements under negotiation.
Acid Plant ($280 million) Natural Gas Line ($83 million) Water Treatment Plant ($60 million)
Expect to access government funding programs
Rail Spur ($76 million) Access road ($53 million)
To be incurred by Mine Contractor Mine Capital ($89 million)
OPERATING COSTS: $173/TON OF SOP
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7% Other ($14M)
14% RoyalRes ($33M)
Excludes credit for potenRal alumina rich material revenue. Includes 15% conRngency (excluding non-‐energy and labour costs).
Total Cash Production Costs Annual Average Cost($)/Ton SOP
(Constant 2013 $US) Direct Plant and Mine Cash Production Cost $414
Credit for Value of Acid $(302) Subtotal of Direct Plant and Mine Cash Production Cost $112
Site G&A, Property Taxes & Corporate Overhead $27
3rd Party Facility Charges $34
Total before royalty $173
Royalties $45
Total Cash Production Cost $218
Potash Ridge Salt Lakes MOP/ Sulphate Salts
Mannheim Process
Cash Production Costs Avg Cost/Ton
$381 $440
$453
$173
Potash Ridge
Expected In Production
1 CRU 2013
1 1 1
PREFEASIBILITY STUDY – RESERVES ESTABLISHED
Drilling to date has focused only on two of the four areas within the 15,400 acre land parcel
Supports 40 years of operations
Reserves demonstrate the economic and technical viability of the Project
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Reserve Category
Total Proven
('000 tons) Probable
('000 tons)
Alunite Ore (ROM tons) 136,254 289,540 425,794
Ore (average K2O (%) grade) 3.56 3.49 3.51
Ore (average K2SO4 (%) grade) 6.59 6.46 6.49
SOP (tons) 8,457 17,970 26,427
Sulphuric Acid (tons) @ 98% Purity 18,888 40,136 59,024
Mineral Reserves by Category November 6, 2013
SULPHURIC ACID
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Driven by local US Market – prices dependent on supply and proximity
Mountain West US market approximately 5.6 million tons per annum
Expected increase in this market from mine expansions and new mine development
Potash Ridge will provide stable supply to consumers
MOU in place for 20% of acid production
• Leaching process leaves alumina rich material which, with beneficiation, may be used as a substitute to bauxite as a feedstock into a Bayer alumina production facility.
• Metallurgical testing confirmed the alumina in this material is soluble in high temperature caustic solutions
• May also be acceptable as a raw material feed for low temperature refineries
• Further testing is underway to determine whether the alumina rich material could meet specifications for feed material in the production of ceramic proppants in North America.
• PFS economics do not include revenue from the sale of alumina rich material
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UPSIDE POTENTIAL FROM LEACH RESIDUE
SOURCES OF SMELTER FEED TO CHINA
Blawn Mountain,
Utah Boke,
Guinea Trombetas,
Brazil Kingston, Jamaica
Distance to Shandong Province, China (nm) 5,744 11,128 10,815 9,051
Port Long Beach Conakry Aratu Jamaica
MILESTONES
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43-101 Measured and Indicated Resource to support 30-year mine life issued a
Preliminary Economic Assessment issued a
Metallurgical test program initiated a
Pilot Plant Test work initiated & SOP from test work produced a
Prefeasibility Study supporting 40-year mine life issued a
Large Mining Permit Application submitted a
Water Rights Granted a
Ground Water Permit – Notice of Intent to Issue received a
Large Mining Permit approval Mid 2014
Air Quality Permit Mid 2015
Issue Feasibility Study Mid 2015
Complete metallurgical test program End 2015
Receive final permits End 2015
Construction start up End 2015
Ramp up 2017
Note: Timelines are based on obtaining sufficient financing to advance Feasibility Study
Expected
CAPITAL STRUCTURE
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Millions
Common Shares 81.7
Non-voting Common Shares 5.0
Total Shares Outstanding 86.7
Warrants – $ 0.50 10.7
Warrants – $1.00 5.0
Broker options/warrants 3.4
Stock options 7.0
Total Fully Diluted Shares 112.9
As at December 31, 2013
INSIDERS HOLD 5%, 10% FULLY DILUTED
COMPETITIVE ADVANTAGES
Premium potash product with supply deficit that cannot be met by existing production processes
Large surface mineral deposit - low cost and low risk mining, with easy access to ore for test work. Known process – existing production facility in Azerbaijan
645,000 tons of SOP per annum over 40 year mine life plus probable resources
Mining friendly jurisdiction, established infrastructure nearby, designated development lands and efficient state permitting
PFS completed November 2013: $1.0 billion NPV at 10%; 20.5% after tax IRR; excludes potential revenue from alumina rich material
Advanced stage permitting, no federal permits required for plant site.
Mining friendly jurisdiction with strong state and municipal government support.
Discussions advancing on offtake, project financing and commercial activities
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CONTACT US
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Toronto office: 3 Church Street, Suite 600 Toronto, Ontario M5E 1M2 Phone: 416-362-8640 ext 101
Salt Lake City office: 170 S. Main Street, Suite 500 Salt Lake City, UT 80101 Phone: 801-433-6027
www.potashridge.com info@potashridge.com