Perth, Jan 14, 2015 AEST (ABN Newswire) - Australian minerals explorer Potash West (ASX:PWN) (PWNNY:OTCMKTS) is aiming to move to the Definite Feasibility Study (DFS) for its Dinner Hill project after new studies revealed significant economic improvements through a phased super phosphate and potash development of the world class fertiliser producing project located just 150 km north of Perth in Western Australia.
The new study assessed the potential to produce single superphosphate (SSP) in a standalone plant for the first 5 years of operation, prior to the integration of a joint facility (Integrated K-Max plant) to produce potash and other mineral products.
Potash West had previously completed two high level scoping studies, firstly looking at the production of potash, alum and phosphates through its patented, K-Max process, while the second evaluated the production of single superphosphate. Both of these studies looked at the projects as stand-alone operations.
Now, for the first time, the company has undertaken an in-depth study looking at the integration of both projects into one staged development. And the results have been very pleasing, with very positive economics benefiting from the fact that the phosphate resource lies directly above the K-Max resource.
The new Scoping Study has also demonstrated that the Dinner Hill project can achieve major benefits through new economies of scale. The Stage 1 capital requirement is greatly reduced to $136 million, while a significant amount of the stage 2 equity requirements of $590 million could be funded from Phase one operating cashflows.
Some of the key outcomes of the new study include a processing rate for the project at 4.2 million tonnes per annum for a mine life of over 20 years and achieving EBITDA, or free cashflow, of $212 million per year, with an NPV of $652 million.
Significantly, the resources underpinning the current model are based on 10 sq km of the Dinner Hill project area, a mere fraction of the 60 sq km Dinner Hill project area where an exploration target of between 1 and 1.5 Billion tonnes has been reported, providing a very real and valuable opportunity to increase the scale of the operation.
Managing Director Patrick McManus said that the potential for a staged, intergraeted development hasd been recognised during the earlier Scoping Studies, with an integrated project benefiting from the utilization of the same mining and beneficiation plant.
"This Scoping Study has demonstrated the major benefits of new economies of scale. The Stage 1 Capital requirement is $136 million and a significant amount of the stage 2 Equity financing could be funded from operating cashflows.
"And due to the trememendous exploration upside, the optionality to increase the scale of the operation is very valuable.
"Dinner Hill also benefits from its location close to major power, road, rail and port infrastructure."