Potash ridge august 2015

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August 2015

Transcript of Potash ridge august 2015

August  2015  

Potash  Ridge’s  intends  to  capitalize  on  the  

worldwide  shortages  in  sulphate  of  potash  

through  developing  low  capital  cost,  quick  

to  produc@on  opportuni@es,  along  with  a  

longer-­‐term,  larger  scale  development  

project.

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HIGHLIGHTS  

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SOP  is  a  premium  potash  with  a  significant  supply  

deficit  

§  Current  worldwide  consump1on  is  ~5  million  tonnes  per  annum;  demand  poten1al  is  10-­‐12  million  tonnes  per  annum  

§  Exis1ng  producers  unable  to  expand  to  meet  supply  deficit  §  In  North  America,  SOP  price  is  almost  3x  price  for  regular  potash  

Potash  Ridge’s  Strategy   §  To  become  the  premier  producer  of  SOP  in  North  America    

Valleyfield  

§  Low  capex,  quick  to  produc1on  opportunity  in  Quebec  –  immediate  focus  

§  Widely  used  proven  process  §  Strategic  loca1on  near  by-­‐product  hydrochloric  acid  demand  §  Close  to  rail  and  ports  §  Cash  flow  genera1ng  poten1al  in  18  months  §  Robust  economics  with  expansion  poten1al  

Blawn  Mountain  

§  Larger  scale,  longer  term,  lowest  quar1le  opera1ng  cost  project  in  Utah  

§  Large  surface  mineral  deposit;  over  40-­‐year  reserve  life  §  Major  permits  and  water  rights  secured;  infrastructure  nearby  §  Known  produc1on  process  §  Commercial  arrangements  well  advanced;  robust  economics  

exclude  upside  from  sale  of  alumina  rich  by-­‐product  

SULPHATE OF POTASH (“SOP”) OVERVIEW

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POTASSIUM AND SULPHUR ARE ESSENTIAL NUTRIENTS

SULPHATE  OF  POTASH:  A  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  2013   50  million  tonnes  sold  in  2013  

Improves  yield,  quality,  taste  and  enhances  shelf  life  

Crop  quality/yield  diminish  as  chloride  builds  up  

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§  Sulphate  of  Potash  (“SOP”)  is  a  high  grade  potash  fer1lizer  containing  two  nutrients  (potassium  and  sulphur)  

§  Yield  benefits  of  applying  SOP  and  significant  supply  shortages  result  in  high  SOP  prices  

SOP  MARKET  DYNAMICS  

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Europe 24%

N. America

7%

C & S America

6%

China 49%

Africa 5% RoW

9%

SOP  Consump@on  by  Region  

Region   Process  Method  

World  Capacity   Process  Inputs   Products   Avg  Cost  /  

Ton1  Future  Outlook  

China/  Europe      

Mannheim   2.3Mt  43%  

•  MOP  •  Sulfuric  Acid  •  Energy  

•  SOP  •  Hydrochloric    •  Acid  (“HCL”)      

$453    

HCL  demand  limits  growth  

Europe   MOP  and  Kieserite  

1.2Mt  22%  

•  MOP  •  Kieserite  •  Energy  

•  SOP  •  Magnesium    

Chloride      

$440    No  

addi1onal  deposits  

China/  USA/  Chile  

Salt  Lakes   1.9Mt  35%  

•  Lake  Brines  •  Energy      

•  SOP  •  Magnesium  

Chloride  •  Sodium  Chloride  

$381    

No  addi1onal  suitable  lakes  

Exis@ng  SOP  Produc@on  by  Process  

Limited  new  produc1on  of  SOP  from  these  exis1ng  processes  due  to  absence  of  new  salt  lakes  sources  and  dealing  with  hydrochloric  acid  from  MOP  conversion  

CRU  predicts  a  doubling  of  SOP  consump1on  to  9,500,000  tonnes  per  annum  by  2019  –  uncertain  where  will  this  produc1on  come  from  

SOP  PREMIUM  PRICE  TRENDS  

7 1  Compass  Minerals  Q1  2015  Report,  2  Potash  Corp  Q1  2015  Report  

TREND  TOWARDS  PRICING  OF  SOP  BASED  ON  INCREMENTAL  REVENUE  THROUGH  YIELD/QUANTITY  IMPROVEMENTS  VS.  PREMIUMS  OVER  MOP  

Compass Q1/15 realized price U.S.$815/tonne1

Potash Corp Q1/15 realized price U.S.$284/tonne2

VALLEYFIELD PROJECT

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MANNHEIM PROCESS

§  Converts  regular  potash  (MOP)  to  SOP  §  Proven  produc1on  process,  with  numerous  opera1ng  facili1es  in  Europe  and  China  §  Management  includes  individual  with  almost  a  decade  of  experience  with  Mannheim  

Processes  §  Scale  allows  for  produc1on  within  18  months  of  iden1fying  suitable  loca1on  

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Mannheim  Furnace  

Potassium  Sulphate  (“SOP”)  

Hydrochloric  Acid  (“HCL”)  

Potassium  Chloride  (“MOP”)  

Sulphuric  Acid    

Energy  

VALLEYFIELD: LOCATION

•  Located  near  Montreal,  Quebec  

•  Strong  local  support  •  Land  posi1on  in  place  •  Rail  access  at  site  •  Port  within  600  metres,  

allowing  access  into  key  U.S.  markets  

•  Located  near  iden1fied  hydrochloric  acid  customers  •  MOU  signed  for  ojake  

of  ini1al  produc1on  

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•  Within  1  km  of  sulphuric  acid  supply  •  Ini1al  planned  produc1on  of  40,000  tonnes  per  annum  of  SOP  •  Ability  scale  up  to  130,000  tonne  per  annum  at  site    

VALLEYFIELD: PRELIMINARY ECONOMICS

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§  Economics  based  on  one  unit    §  40,000  tonnes  per  year  §  Poten1al  expansion  to  three  units  

at  site      §  SOP  price  currently  Cdn$1,010/tonne  (US

$815/tonne)    §  MOP  price  currently  US$284/tonne  (Cdn

$350/tonne)  

§  Acid  pricing  based  on  trader  quotes  

§  $8.2  million  average  annual  cash  flow  for  first  5  years  

§  Economics  based  on  industry  standards  and  internal  management  es1mates.    

Note:  Amounts  in  Canadian  Dollars  

Ini1al  capital  cost  

$25    million  

IRR  (aker  tax)  

31.9%  

NPV  (10%)   $40.8  million  

Payback  Period   3.0  years  

SOP  price  /  tonne   $750    

HCL  price  /  tonne   $70    

MOP  price  /  tonne   $450    

Sulphuric  Acid  price  /  tonne   $100    

BLAWN MOUNTAIN PROJECT

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ALMOST 100 YEARS OF POTASH PRODUCTION

UTAH:  AN  ATTRACTIVE  MINING  JURISDICTION  

1Forbes  Magazine,  November,  2014              2Fraser  Ins1tute,  April,  2013  

Major  resource  producing  state  

Exis1ng  potash  produc1on  

Best  state  for  business1  

Top  quar1le  mining  jurisdic1on2  

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OUR  LAND  ADVANTAGE  

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Very  strong  state  and  local  support  from:    §  Utah  Governor  and  Lieutenant  Governor  

§  Both  local  county  commissions  

§  Key  local  stakeholders  

State-­‐owned  land  designated  for  development:    §  Property  is  in  very  remote  loca1on  

§  No  objec1ons  when  mine  permit  applica1on  was  made  

§  No  environmental,  aboriginal  or  social  issues  

All  necessary  support  infrastructure  nearby:  §  Close  to  highway,  rail,  natural  gas  and  

power  transmission  

§  Close  to  construc1on  materials,  skilled  workforce  and  equipment  suppliers  

§  Water  available  in  nearby  valley  –  water  right  already  obtained  

RESERVES  AND  MINE  LIFE  

Drilling  work  to  date  has  established  40  years  of  reserves  –  calculated  by  independent  engineer  (Norwest)  

Drilling  to  date  has  focused  only  on  two  of  the  four  areas  within  the  15,400  acre  land  posi1on

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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  

DRILLED  

NOT  YET  DRILLED  

THE  BLAWN  MOUNTAIN  PROPERTY  

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AREA  1  MINING  ZONE  

PROCESSING  PLANT  LOCATION  

AREA  2  MINING  ZONE  

ACCESS  ROAD  

ORE  TEST  PIT  Note  that  ore  is  at  surface  

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PERMITTING  ESSENTIALLY  COMPLETED  

The  following  table  iden1fies  the  major  permits  and  approvals  that  the  Corpora1on  has  or  s1ll  needs  to  obtain  prior  to  construc1on:  

Permit/Approval   Issuing  Agency   Completed  

Explora1on  Permit     Utah  Division  of  Oil,  Gas  and  Mining   October,  2011  

US  Army  Corps  of  Engineers  Jurisdic1onal  Waters  Concurrence   US  Army  Corps  of  Engineers   March,  2014  

Groundwater  Permits   Utah  Division  of  Water  Quality   July,  2014  

Large  Mine  Opera1on  Approval   Utah  Division  of  Oil,  Gas  and  Mining   August,  2014  

Air  Quality  Emission  Standard  (1)   Utah  Division  of  Air  Quality  

Air  Quality  Emission  Standard  requires  the  feasibility  study  to  be  par1ally  completed  before  the  applica1on  is  filed.  It  is  not  a  permit,  but  more  an  agreed  upon  emission  target  that  the  Project  must  be  designed  to  meet.      

(1)  

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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WELL UNDERSTOOD FLOWSHEET USING COMMONLY USED EQUIPMENT

§  Extensive  test  work  confirms  flowsheet;    §  Test  work  during  feasibility  study  will  include  bulk  

samples  at  equipment  vendor  facili1es  –  will  result  in  vendors  providing  produc1on  guarantees  

Crushing & Grinding

§  Exis1ng  plant  in  Azerbaijan  currently  mothballed  (Ganja  Refinery)  

§  Flowsheet  similar  to  commercial-­‐scale  produc1on  processes  historically  used  in  US  and  Australia  

PREFEASIBILITY  STUDY  –  SUMMARY  

§  Reserves  support  40  year  mine  life,  with  poten1al  to  increase  life  of  opera1ons  through  explora1on  of  two  addi1onal  zones  of  known  mineraliza1on  

§  Project  aker  tax  Net  Present  Value  (“NPV”)  of  $1.0  billion  using  a  10%  discount  rate:  

§  Unlevered  aker  tax  internal  rate  of  return  (“IRR”)  of  20.5%  §  Excludes  credit  for  poten1al  alumina  rich  material  revenue.  

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NPV  (aker  tax,  at  10%)(1)   $1.0  billion  

IRR  (aker  tax)(1)  

20.5%  

Average  annual  SOP  produc1on   645,000  tons  

Average  annual  sulphuric  acid  produc1on   1,440,000  tons  

SOP  price  (average)   $649/ton  

Sulphuric  acid  price  (average)   $135/ton  

Project  life   40  years  

Ini1al  capital  cost  (including  15%  con1ngency)  

$1,124  million  

Opera1ng  cost  (excluding  royal1es)   $173/ton  SOP  1Inclusive  of  by-­‐product  acid  revenues  and    royal1es;  no  credit  assumed  for  poten1al  revenue  from  the  sale  of  alumina  rich  material.    

CAPEX/OPEX  SUMMARY  

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7%    Other    ($14M)  

14%  Royal1es  ($33M)  

Potash Ridge Salt Lakes MOP/ Sulphate Salts

Mannheim Process

Produc@on  Cost  per  Ton  by  Produc@on  Method  (1)  

$381 $440

$453

$173(2)

Potash Ridge

Expected In Production 1 CRU/Company Information 2 Includes acid by-product credit (assumes $135/ton price), excludes potential revenue from alumina rich material

1 1 1

§  Approximately  28%  of  direct  capital  costs  are  supported  by  fixed-­‐price  quotes  §  Op1on  exist  to  phase  construc1on  to  reduce  upfront  capex  requirements  

Capital  Cost  Breakdown  

MILESTONES  

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Preliminary  Economic  Assessment  issued   November,  2012  

Metallurgical  test  program  ini1ated   January,  2012  

Pilot  Plant  Test  work  ini1ated  &  SOP  from  test  work  produced     May,  2013  

Prefeasibility  Study  suppor1ng  40-­‐year  mine  life  issued   December,  2013  

Large  Mining  Permit  Applica1on  submiued   December,  2013  

Water  Rights  Granted   May,  2014  

Ground  Water  Permit  approved   July,  2014  

Large  Mining  Permit  approved   August,  2014  

Strategic  Partnership  with  Tetra  Tech  announced   August,  2014  

Complete  metallurgical  test  program   6  months  

Obtain  Air  Quality  Permit   12  months  

Issue  Feasibility  Study   12  months  

Receive  final  permits   16  months  

Mine  construc1on  start  up   18  months  

Ramp  up  of  mining   2.5  years  

(1)  From  commencement  of  feasibility  study  

Expected (1) Achieved

MANAGEMENT AND BOARD

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EXPERIENCED  AND  PROVEN  MANAGEMENT  

OVER 60 YEARS COMBINED EXPERIENCE 23

Guy  Ben@nck  President  and  Chief  Execu@ve  Officer  

Chartered  Professional  Accountant  20  years  mining/resource  experience  Sherriu  CFO  and  SVP  Capital  Projects  

Ross  Phillips  Chief  Opera@ng  Officer  and  Chief  Financial  Officer  

MA  (Econ)/MBA/CFA/CPA  10  years  experience  in  large  resource  and  energy  sector  projects  Sherriu,  Capital  Power  

Paul  Hampton  VP  Project  Management  

Geologist  and  Metallurgical  Engineer  30  years  in  design,  construc1on  and  management  of  mineral  processing  facili1es  SNC,  Washington  Group,  Outotec  

Jay  Hussey  VP  Corporate  Finance  

20  years  capital  markets  consul1ng  9  years  SOP  experience  with  Migao  Corpora1on.      

DIVERSE  BOARD  WITH  COMPLEMENTARY  SKILLS    

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Robert  Gross  Chairman    Governance  Commijee  Chair  

Lawyer  based  in  Salt  Lake  City,  Utah  Former  President,  First  Interstate  Bank  of  Utah  and  Blue  Healthcare  Bank  Recognized  authority  on  corporate  governance  

Steve  Harapiak  Technical  Commijee  Chair  

Engineer  Former  President,  Potash  Corpora1on  of  Saskatchewan  Significant  experience  in  engineering,  construc1ng  and  project  management  

Rahoul  Sharan  Audit  Commijee  Chair    

Chartered  Accountant.  founder  of  Potash  Ridge  Has  led  the  successful  financing  efforts  for  over  15  companies  in  several  industries  totaling  several  hundred  million  dollars  worth  of  transac1ons  

Guy  Ben@nck  President  and  Chief  Execu@ve  Officer  

Chartered  Accountant  20  years  mining/resource  experience  Sherriu  CFO  and  SVP  Capital  Projects  

HIGHLIGHTS  

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SOP  is  a  premium  potash  with  a  significant  supply  

deficit  

§  Current  worldwide  consump1on  is  ~5  million  tonnes  per  annum;  demand  poten1al  is  10-­‐12  million  tonnes  per  annum  

§  Exis1ng  producers  unable  to  expand  to  meet  supply  deficit  §  In  North  America,  SOP  price  is  almost  3x  price  for  regular  potash  

Potash  Ridge’s  Strategy   §  To  become  the  premier  producer  of  SOP  in  North  America    

Valleyfield  

§  Low  capex,  quick  to  produc1on  opportunity  in  Quebec  –  immediate  focus  

§  Widely  used  proven  process  §  Strategic  loca1on  near  by-­‐product  hydrochloric  acid  demand  §  Close  to  rail  and  ports  §  Cash  flow  genera1ng  poten1al  in  18  months  §  Robust  economics  with  expansion  poten1al  

Blawn  Mountain  

•  Larger  scale,  longer  term,  lowest  quar1le  opera1ng  cost  project  in  Utah  

•  Large  surface  mineral  deposit;  over  40-­‐year  reserve  life  •  Major  permits  and  water  rights  secured;  infrastructure  nearby  •  Known  produc1on  process  •  Commercial  arrangements  well  advanced;  robust  economics  

exclude  upside  from  sale  of  alumina  rich  by-­‐product  

August  2015