TORONTO, Sept. 20, 2017 /CNW/ - Potash Ridge
Corporation. (the "Company" and "PRK") (TSX:PRK) a near term
producer of premium fertilizer in North
America is pleased to provide the following corporate update
to its shareholders.
PRK is in the fortunate position of having two highly de-risked
and advanced development stage potassium sulphate ("SOP")
projects with its significant Blawn Mountain assets in Utah and its strategically located
Valleyfield project in
Quebec. Both projects are well
received in their respective jurisdictions and have garnered strong
support from the various levels of government, agencies, financial
groups, and stakeholders in their province or state.
While both projects produce SOP - they are fundamentally
different in size and scope as the Blawn Mountain project is a
large scale mining operation and the Valleyfield project is a smaller scale
manufacturing plant. The variances between the projects makes
them appeal to different investor groups on a regional, national,
and international level.
After a thorough review of its assets and operations in both
Utah and Quebec, the Company has determined the value
of PRK does not reflect the combined value of its two assets and
that it is in the best interest of its shareholders that the
Valleyfield Fertilizer Corporation be spun out from PRK into a
separate publically traded vehicle, a change which management
feels would better reflect the value of the Company's assets moving
forward. By separating Valleyfield
from Blawn Mountain, both projects will be given the priority and
the valuation they deserve.
The Company has unlocked tremendous value in Valleyfield by advancing the project's
engineering, regulatory approval and permitting process to a high
level of completion and have further de-risked the project by
arranging several successful commercial agreements. Valleyfield is now at an advanced stage of
development awaiting financing for site acquisition, final
permitting and construction.
The Company has observed a very high level of local interest for
its Valleyfield project in
Quebec and in order to capitalize
on this strong regional support, management believes that the
project will be best served as a stand alone entity based in and
focused on the Quebec market.
The format and mechanics of spinning the Valleyfield project out as a separately traded
vehicle may take many forms and the Company is reviewing several
options including an equity spin out in favor of the shareholders
of PRK, a sale for cash and equity, or a joint venture. The Company
is currently in discussions regarding each of these options.
This separation of projects will allow PRK to focus all its
resources and effort on advancing its world class Blawn Mountain
project in Utah. The development
plan for the proposed 255,000 tons per year, $482MM NPV(after tax)
project is in its final stages of completion with all major
environmental and regulatory permits in place. Blawn Mountain has
the potential to become a significant and lowest cost producer of
potassium sulphate ("SOP") in North
America.
Andrew Squires, President and CEO
of Potash Ridge Corporation stated, "We will be looking to
solidify the deal that has the best possible upside and return on
investment for all our stakeholders. We are focused on full
execution of the above over the next 60-120 days."
Mr. Squires goes on to state: "Recent changes to the Board of
Directors and Management has vastly strengthened the Corporation
and better positions PRK to advance the Blawn project. Blawn
Mountain is a world-class SOP fertilizer project, with large
production capacity, long project life and very low operating
costs. The project design and engineering is essentially complete
and one of our final undertakings is to perform some additional
metallurgical testing to develop the large alumina content
contained in our tailings. The alumina has the potential to provide
significant value upside potential and diversity to our
revenue stream. The project has been satisfactorily de-risked to
actively start securing offtakes and other commercial agreements
and PRK has already begun preliminary discussions as such with an
international State Owned Enterprise."
PRK intends to target its SOP production primarily at the US
market. According to USGS USA, SOP imports were 144,000 tons in 2015.
USA SOP imports have been steadily
increasing in the last seven years, growing on average 9% a year.
Studies undertaken by PRK, based on utilization rates for certain
key crops, indicates that there is potential incremental SOP demand
of up to 533,000 tons per year in the
United States.
PRK intends to focus its marketing efforts on the economic value
of SOP to growers of premium value crops. California will be a key market given its
large agricultural base of premium crops. Florida, Georgia, South
Carolina, Texas,
New Mexico and the Great Lakes
region will be other key targets. We believe the Blawn Mountain
project's realized SOP price will be closely tied to the crop
(fruits, nuts and vegetables) markets in California, which continue to show a robust
growth and are forecast to grow between 4% and 6% globally. The
State's growers tripled their budget allocated to fertilizers and
soil amendments. California farm
inputs (fertilizers and lime) purchases grew to over $2.3 billion in 2014.
Blawn Mountain, Utah
Potash Ridge achieved significant
milestones in advancing its wholly-owned Blawn Mountain SOP
Project during the first half of 2017. The Company secured
unencumbered mining lease rights for the Blawn Mountain project
with the final instalment of US$0.7
million being made in June
2017 to the Utah School and Institutional Trust
Lands Administration pursuant to the terms of converting its
Exploration and Option Agreement for the Blawn
Mountain property into a Mining Lease.
The Company also published an updated NI 43-101 compliant
pre-feasibility report in April 2017.
The report included the following highlights:
- Expected to be the lowest cost producer of SOP in North America with average net cash operating
costs after by-product sulphuric acid credits of $177/ton of SOP (exclusive of royalties), which
includes approximately $40/ton in
transportation costs;
- Projected after-tax net present value of $482
million using a 10% discount rate, with no terminal value
added to the NPV, which assumes no extension to life of
operations;
- Unlevered after-tax internal rate of return of 20.1%, based on
assumed price of $675/ton for SOP and
$115/ton for sulphuric acid in 2020
and 2% inflation;
- Installed potassium sulphate capital cost of $456 million;
- Proven and probable mineral reserves of 153 million tons which
support a 46-year project life;
- 19.4 million tons of measured and indicated alumina resources,
which represents potential upside for the project as these
resources are not currently incorporated in the project
economics;
- An average of 255,000 tons of SOP per annum during first 10
years of operation after ramp-upwith life of mine average of
232,000 tons of SOP per annum;
- Flexible process capable of producing both crystalline soluble
and granular potassium sulphate to meet market conditions; and
- Potential economic upside with the expansion of
the initial production rate and the possible monetization of the
residual waste material given its high concentrations of
alumina.
Valleyfield, Quebec
The Company also made significant progress this year in
developing its wholly-owned Valleyfield SOP project, including:
- Secured a lump-sum EPC (engineering, procurement and
construction) contract with SNC-Lavalin for the construction of
Valleyfield;
- Obtained a letter of intent with a leading integrated
agricultural organization for up to 25% of the annual production of
SOP;
- Signed off-take and funding arrangement with Jones-Hamilton
Co., a leading U.S.-based chemicals company, whereby Jones-Hamilton will fund the hydrochloric acid
equipment for Valleyfield and
exclusively sell 100% of the hydrochloric acid production from
Valleyfield;
- Signed a five-year contract with a major North American
chemical company for 100% of Valleyfield's sulphuric acid requirements;
and
- Engaged Novopro Projects Inc. to act as lead Owner's Engineer
to advance the project through final engineering and construction
completion.
Focus for the remainder of 2017
For the remainder of 2017 , Potash Ridge will focus on:
Valleyfield
- Pursue and evaluate potential opportunities for the spin out of
the Valleyfield project into a
separate publically traded vehicle ;
- Continuing to advance discussions with SOP off-take
partners;
Blawn Mountain
- Continuing to advance discussions with SOP off-take and
investment partners;
- Initiating discussions on commercial agreements with parties
interested in Blawn Mountain's alumina resource;
- Performing additional metallurgical testing on the Alumina
resource;
- Advancing the technical and commercial aspects of the alumina
resource to incorporate the alumina in the economics of a NI 43-101
compliant report; and
- Commencing discussions for a fixed price EPC contract for the
development of Blawn Mountain.
On behalf of the Board of Directors
POTASH RIDGE CORPORATION
Andrew Squires
President & CEO
About Potash Ridge
Potash
Ridge's strategy is to become a premier producer of sulphate
of potash ("SOP") in North America. The Corporation owns
two SOP projects: the Valleyfield project that plans to
produce SOP through the Mannheim Process; and the Blawn
Mountain project in Utah that plans to produce SOP
by processing an alunite material. Potash Ridge has a
highly qualified and proven management team in place with
significant financial, project management and operational
experience and the ability to take projects into production.
FORWARD LOOKING STATEMENTS: This news release contains
forward-looking statements, which relate to future events or future
performance and reflect management's current expectations and
assumptions. Such forward-looking statements reflect management's
current beliefs and are based on assumptions made by and
information currently available to the Company. Investors are
cautioned that these forward looking statements are neither
promises nor guarantees, and are subject to risks and uncertainties
that may cause future results to differ materially from those
expected. These forward-looking statements are made as of the date
hereof and, except as required under applicable securities
legislation, the Company does not assume any obligation to update
or revise them to reflect new events or circumstances.All of the
forward-looking statements made in this press release are qualified
by these cautionary statements and by those made in our filings
with SEDAR in Canada (available at
www.sedar.com).
SOURCE Potash Ridge Corporation