TORONTO, Oct. 15, 2012 /CNW/ - EPM Mining Ventures Inc. (EPK.V) ("EPM" or the "Company") today announced the economic results of a National Instrument 43-101 ("NI 43-101") Preliminary Economic Assessment ("PEA") for the production of Sulfate of Potash ("SOP") from its Sevier Dry Lake Potash project located in southwestern Utah. The PEA was prepared by March Consulting Associates Inc. ("March") and CH2M HILL in association with Norwest Corporation ("Norwest").
Lance D'Ambrosio, Chief Executive Officer of EPM, said; "This is a major milestone for our company and we are very pleased with the results of the PEA. With CapEx of $310 million and OpEx of $155 per metric tonne for nameplate production, we have demonstrated the economic potential of our project."
The PEA forecasts SOP Production of 300,000 metric tonnes ("MT") with an estimated Net Present Value of $956.5 million (pre-tax, inflated, 8% discount rate) and an estimated Net Present Value of $629.7 million (after tax, inflated, 8% discount rate); and with an estimated Internal Rate of Return of 30% (pre-tax, inflated) and an estimated Internal Rate of Return of 24% (after tax, inflated).
The PEA considered technical and economic aspects of the Sevier Dry Lake project while evaluating two distinct process flow-sheets, each of which sought to optimize extraction of the approximately 29.5 million metric tonnes of measured & indicated K2SO4 resource (on a mineral equivalent basis) found at the Sevier Dry Lake as described later in this document. Based on these data, the process flow-sheet selected provides the best balance between production, project expense, and future ancillary mineral potential. PEA calculations were based upon Measured and Indicated Mineral Resources. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
A more complete summary of the PEA conclusions is contained below. All figures are estimates expressed in non-inflated US dollars unless otherwise noted.
- SOP Production of 300,000 MT per year at full production
- Initial Capital Cost Estimate of $235.4 million in direct and indirect costs to achieve first year production. In production years 2 through 3, additional Capital Cost Estimate of $74.8 million to achieve nameplate production for a total of $310.2 million in direct and indirect costs
- Includes a 25% contingency totaling $56.6 million
- Includes Engineering, Procurement, & Construction Management; and Freight and Taxes estimates of $29.4 million (about 16% of direct costs)
- Deferred Capital Cost Estimate of $209.1 million
- Includes $194.9 million in sustaining capital, $150.5 million of which is incurred over 9 years from 2024 to 2032 to access additional resource below 20 feet
- Includes Decommissioning and Reclamation capital totaling $14.2 million
- Operating Cost of $155/MT comprising:
- Mine - $48.30/MT
- Mill - $82.85/MT
- General & Administrative - $23.85/MT
- Production Royalties of 5.61% of gross revenue
- Net Present Value of $956.5 million (pre-tax, inflated, 8% discount rate)
- Net Present Value of $629.7 million (after tax, inflated, 8% discount rate)
- Internal Rate of Return of 30% (pre-tax, inflated)
- Internal Rate of Return of 24% (after tax, inflated)
- Mine Life of 30 years
Since the analysis is based on a cash flow estimate, it should be expected that actual financial results might vary from these predictions. The capital cost estimate has an accuracy +30%/-20%. The PEA is based upon the following assumptions:
- 100% Equity
- Production Ramp-Up over three years
- 35,000 MT in 2017; 100,000 MT in 2018; 210,000 MT in 2019; Full Production in 2020
- The Discounted Cash Flow Model used to evaluate project economics incorporated inflated costs and revenues
- Forecasted SOP Sales Price estimates through 2020 by CRU/British Sulphur
- SOP Price forecasted at $618/MT in 2013, escalating to $721/MT in 2020
- SOP Price inflated thereafter by 2% per annum, which is less than the 2.23% CAGR projected in CRU's 2013 to 2020 forecast period
- Forecasted Costs inflated at 2% per annum from the base estimates shown above
- Effective tax rate of 29.5%
Upon submission of the PEA, the company will be well positioned to continue permitting efforts. All necessary environmental approval work is either underway or is in the advanced planning stages including preparations required for an Environmental Impact Statement.
EPM anticipates completing a Feasibility Study by late-2013 that will consider production scalability as well as ancillary minerals extraction, including products such as Sulfate of Potash Magnesia (SOPM) and Magnesium Sulfate. The PEA only considered SOP when valuing the project. Ancillary mineral extraction may provide the Company with a source of additional value for the Project if such minerals prove to be economic.
The PEA is based on the current Mineral Resource Estimate for the Sevier Lake project contained in the Technical Report 'Mineral Brine Resources of the Sevier Lake Playa, Millard County Utah' with an effective date of May 1, 2012. (Please refer to that document on the SEDAR website (www.sedar.com) for complete information.) In summary, Peak Minerals Inc. ("Peak"), an indirect wholly-owned subsidiary of EPM, owns a 100% leasehold interest in federal potassium leases comprising about 95,802 acres. The leases grant full rights of access and rights to utilize the surface for leasehold mining activities. The term of the leases is 20 years from the date of issuance, April 5, 2011, and for so long thereafter as Peak complies with certain rental, minimum royalty, and minimum annual production requirements, as well as other terms and conditions of the leases.
The same lease terms described above apply to the approximately 22,010 acres of federal potassium leases in which record title is held by LUMA Resources Inc. ("LUMA"). Peak will have development and operational control of these leases under the terms of its Cooperative Development Agreement dated July 15, 2011.
The 6,409 acres of State of Utah SITLA potash leases owned 100% by Emerald Peak Minerals, LLC ("Emerald Peak") grant full rights of access and rights to use the surface and subsurface for uses "reasonably incident to the mining of leased substances".
Peak Minerals owns 40% of the membership interest in Emerald Peak and also has the contractual commitment from Emerald Peak to enter into a Unit Agreement or similar agreement and a Unit Operating Agreement that will be entered into by Peak, LUMA, and Emerald Peak. It is anticipated that these agreements will name Peak as Unit Operator and give Peak the sole right to develop and operate the SITLA Leases along with the Federal Leases.
A total of 414 holes were drilled on the Sevier Lake property using a variety of drilling methods. The following brine resource parameters were acquired from drill hole sampling of brine and host sediments:
- Gravimetric moisture content in weight percent
- Specific Gravity of brine and solid host sediments
- Cation in mg/l brine for Mg2+, Na+, and K+
- Anion in mg/l brine for Cl- and SO42-
The geometry of the brine aquifer was determined from the correlations of drill hole lithogic descriptions, penetrometer results, and moisture content measurements. The estimations of moisture content and brine grade (cations and anions) and specific gravity inputs into the 3D block model were influenced by the results of geostatistical analyses of the source drill-hole sample data.
The estimated brine resource and associated major dissolved cations and anions for the brine aquifer are listed below. Given that sufficient sulfate is present in the brine to utilize all potassium ions, the mineral equivalent tonnages of K2SO4 and other salt compounds that could be created using the available cations and anions within the Sevier Lake brine resource are also listed below:
Brine Mineral Resource Summary and Major Dissolved Cations and Anions
|Sulfate (SO4)||Chlorine (Cl)||Sodium (Na)|| Magnesium
|Measured plus Indicated||4,938||0.268||13.228||2.060||101.709||7.775||383.940||6.802||335.874||0.337||16.617|
A summary of the in-situ Measured, Indicated, and Inferred Mineral Resource within the Sevier Lake is presented in the table below:
Mineral Equivalent Compounds from Brine Resource
|Classification||Tonnes Mt (Million metric tonnes)|
|Measured plus Indicated||1.156||1.287||1.626||1.033||22.798|
|Measured plus Indicated||25.366||27.335||34.534||69.182||513.635|
|Measured plus Indicated||2.962||3.963||5.007||7.554||56.253|
|Measured plus Indicated||29.485||32.585||41.167||77.769||592.686|
Barry W. Schmitke, P. Eng., Senior Vice President with March Consulting Associates Inc., is the Qualified Person in accordance with NI 43-101 responsible for the technical content of this release and has reviewed and approved it accordingly. Mr. Schmitke is an independent consultant contracted by the Company.
Lawrence D. Henchel PG, Vice President Geological Services with Norwest Corporation, is the Qualified Person in accordance with NI 43-101 responsible for the resource estimate of this release and has reviewed and approved it accordingly. Mr. Henchel is an independent consultant contracted by the Company.
About EPM Mining Ventures
EPM, through its wholly owned subsidiary Peak Minerals Inc., controls directly or through agreement, mineral leases on more than 124,000 acres on the Sevier Dry Lake property in Millard County, Utah. EPM is targeting the future development and production of Sulfate of Potash (SOP), a premium priced fertilizer used with special crops and soil types, through a cost-effective solar evaporation methodology. The Company is currently engaged in engineering and chemical analysis designed to support the completion of a feasibility study.
For more information on the Company, please visit our web site at www.epmmining.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements related to activities, events or developments that the Company expects or anticipates will or may occur in the future, including, without limitation; statements related to the Company's release of the PEA Technical Report; the economic analysis; the Feasibility Study; the permitting process; environmental assessments; business strategy; objectives and goals; and exploration of the Sevier Lake project. Forward-looking information is often identified by the use of words such as "plans", "planning", "planned", "expects" or "looking forward", "does not expect", "continues", "scheduled", "estimates", "forecasts", "intends", "potential", "anticipates", "does not anticipate", or "belief", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information is based on a number of factors and assumptions made by management and considered reasonable at the time such information is provided. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking information. The PEA is, by definition, preliminary in nature and should be considered speculative. It is based upon a flow-sheet that may change, which would impact all costs and estimates. Operating Costs for the project were based upon assumptions including energy cost, water cost, labor, and other variables that are likely to change. Capital Costs were based upon a list of equipment thought to be necessary for production. Changes in estimated costs to acquire, construct, install, or operate the equipment may adversely impact project economics. Among other factors, the Company's inability to complete further NI 43-101 resource estimates; the inability to complete the PEA or Feasibility Study; changes to the economic analysis; the failure to obtain necessary permits to explore and develop the Sevier Lake project; environmental issues or delays; inability to successfully complete additional drilling at the Sevier Lake project; factors disclosed in the Company's current Management's Discussion and Analysis; as well as information contained in other public disclosure documents available on SEDAR at www.sedar.com may adversely impact the project. Although EPM has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in the forward-looking information, there may be other factors that cause actions, events, or results not to be as anticipated, estimated, or intended. There can be no assurance that forward-looking information will prove to be accurate. The forward-looking information contained herein is presented for the purposes of assisting investors in understanding the Company's plan, objectives, and goals and may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking information. EPM does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
SOURCE: EPM Mining Ventures Inc.
For further information:
Chief Executive Officer
(416) 815-0700 ext. 267