EPM Mining Issues Summary of 2013 Results and 2014 Projections for Its Sevier Lake Playa Sulphate of Potash Project
January 16 2014 - 7:00AM
Marketwired
EPM Mining Issues Summary of 2013 Results and 2014 Projections for
Its Sevier Lake Playa Sulphate of Potash Project
TORONTO, ONTARIO--(Marketwired - Jan 16, 2014) - EPM Mining
Ventures Inc. (TSX-VENTURE:EPK)(OTCQX:EPKMF) ("EPM" or the
"Company"), today issued a review of advancements accomplished
during 2013 at its Sevier Lake Playa Sulphate of Potash Project
located in southwestern Utah and offered guidance about what is
planned for 2014.
"As C.E.O., I am very pleased with everything we achieved this
past year and look forward to all that we will accomplish this
year," said Lance D'Ambrosio, Chief Executive Officer of EPM.
"Looking back, I have to say that without a doubt, our biggest
success was completing our Preliminary Feasibility Study. So let me
start by sharing a few highlights from that."
Preliminary Feasibility
Study Highlights
- The PFS forecasts average annual SOP production of 300,000
metric tonnes (t) with an estimated Net Present Value ("NPV") of
$629 million (after tax, inflated, 8% discount rate) and an
estimated Internal Rate of Return ("IRR") of 20% (after tax,
inflated).
- The PFS includes an updated Mineral Resource Estimate that
includes 31.486 million tonnes of SOP in the Measured and Indicated
categories, a 7% increase from previously published estimates, due
primarily to results of recent drilling.
- Economic Highlights:
Economic Indicators |
|
NPV (pretax, 8%) |
$ 957 M |
NPV (after tax, 8%) |
$ 629 M |
IRR (pretax) |
24% |
IRR (after tax) |
20% |
Average Annual SOP Production |
300,000 t |
Mine Life |
30 years |
Initial Direct Capital Costs |
$ 292 M |
Initial Indirect Capital Costs |
$ 50 M |
Initial Capital Contingency |
$ 36 M |
Operating Cost |
$ 180.91/t |
Production Royalties (% of gross revenues) |
5.61% |
Year 3 EBITDA (nameplate production) |
$ 143 M |
Payback Period (from commencement of production) |
5.5 years |
Measured & Indicated SOP Resource |
31.486 Mt |
- The economic analysis in the PFS is based upon the following
assumptions:
- 100% Equity
- Production Ramp-Up over two years, reaching full production in
Year 3
- 50,000 tonnes in Year 1; 100,000 tonnes in Year 2; and 300,000
tonnes in Year 3
- Construction on playa beginning in Preproduction Year 3
("PP-3")
- Effective tax rate of approximately 29%
- The economic analysis was based upon Measured and Indicated
Mineral Resources only. No Inferred Resources were included in the
analysis. Mineral Resources that are not Mineral Reserves do not
have demonstrated economic viability.
- Capital Costs - the total direct capital costs of the Project
are estimated to be $292 M, not including indirect costs and
contingency, as of 2013. All capital costs in the economic model
are inflated by 2% annually beginning in year PP-3. Contingency is
12% of direct capital costs. The capital cost estimate has an
accuracy of +25%/-20%.
- Operating Costs - the total cash operating costs of the Project
are estimated to be $180.91/t as of 2013. All operating costs in
the economic model are inflated by 2% annually beginning in year
PP-3.
"In 2013 as part of the PFS, we conducted a comprehensive study
of the playa and made significant progress with our engineering,"
said Lance. "These efforts provided us with important insights and
a detailed path forward. The highlights include:"
Hydrology
Highlights
- A comprehensive groundwater modeling effort was completed that
included two- and three-dimensional models of the playa system. The
models incorporated layer elevations derived from intercepts logged
from over 400 boreholes and wells drilled during the exploration
programs.
- Field data incorporated into the models included estimates of
hydraulic conductivity and storage coefficients based on
hydrophysical and aquifer stress tests employing both wells and
trenches. Site-specific estimates of the vertical infiltration rate
and evapotranspiration were also obtained.
- In the latest program, five single-hole pump tests were
performed; four well-to-trench tests; nine well-to-well tests; and
one trench-to-trench test. These studies yielded substantial new
data that significantly improved our understanding of playa
hydrology.
- Initial modeling determined that the target production rate of
300,000 tpy could be achieved based upon the hydro-physical
characteristics of the deposit. Multiple simulations incorporating
trench spacing, well layouts, and flow rates were carried out to
prototype designs.
- Results showed that acceptable brine production could be
extracted from two trench phases, based on 1,000 meter spacing,
followed by well extraction with individual shafts set about 400
meters.
Engineering
Highlights
- Developed an optimized process flow sheet anticipated to
provide improved operating benefits and flexibility while
maintaining a balance between production, expense, and potential
additional mineral production.
- Completed thermodynamic modeling and pilot-plant testing of
pond crystallization. In addition, conducted bench-scale testing
with Hazen Research and Swenson Technologies for the flotation and
multiple effect crystallizer circuits. The thermodynamic modeling
and subsequent bench-scale test-work confirmed projected plant
recoveries of 78%.
- Developed civil construction designs for the plant and rail
load-out facility as well as all playa infrastructure. The capital
cost estimate in the PFS included budgetary quotes on 93% of all
plant mechanical equipment costs.
"As I briefly mentioned before, we successfully expanded our
resource estimates by about seven percent," Lance added. "While we
expect to release mineral reserves with our feasibility study, we
are very pleased to provide a summary of the basis for the resource
estimate expansion."
Resource Estimate
Expansion Highlights
- Norwest completed an updated Mineral Resource Estimate based
upon data collected from the original drilling and exploration
program conducted in 2011-2012 as well as a second drilling and
exploration program conducted in 2013.
- The total Measured and Indicated Resource for SOP increased
from 29.485 Mt in the May 2012 Technical Report, to 31.486 Mt in
the PFS, an increase of approximately 7%, primarily due to the
results of the 2013 drilling program.
- No claim for Mineral Reserves has been made at this time
pending further verification of the hydrologic models via
longer-term pilot testing planned during the Feasibility Study
phase.
"We received several important approvals this past year," Lance
stated. "And our environmental and permitting programs continue to
progress. Highlights from these include:"
Environmental,
Permitting, & Regulatory Highlights
- The Company met with the Utah Division of Air Quality ("UDAQ")
in August 2013. In that meeting, UDAQ determined that the company
could proceed along a "dual permit" approach. This means that a
Minor Source permit is all that is required for initial work on the
playa to begin while a Major Source Permit could be added later
when construction of the processing plant is required.
- An Air Approval order for the Minor Source Permit was submitted
to UDAQ in October 2013. An approval is expected shortly.
- In July of 2013, the company started an on-site monitoring
program for Prevention of Significant Deterioration (PSD), or the
Major Source Permit.
- The BLM's Fillmore Field Office continued progress with the EIS
and selected a third-party contractor to write the EIS document in
August 2013. Technical resource reports were prepared by CH2M Hill
and submitted to BLM for their review and approval in November
2013. BLM selection of the third-party contractor is an important
step to moving the EIS process forward.
- The BLM Plan of Operations and DOGM Large Mine Permit,
historically two separate documents, are being consolidated into a
single mine plan document (the "Mine Plan") agreed to by both
agencies. The BLM has reviewed the Mine Plan and determined it was
"Sufficiently Complete" in July 2013. A consolidated Mine Plan will
allow for the Company to have one all-encompassing document that
meets the requirement for the two agencies.
- A key decision in June 2013 by the Environmental Protection
Agency and the United States Army Corps of Engineers ("USACE")
determined that there are no Waters of the United States on the
Sevier Lake Playa.
- USACE determined that the Sevier Lake Playa is not a regulated
feature under Section 404 of the Clean Water Act ("Act") and as
such is exempt from permitting requirements under the Act.
- Therefore, certain federal permits relating to water will not
be required. This decision simplifies the permitting process and
results in significant savings of time and money.
- In 2013, the Company submitted all water rights applications to
the State Engineer, for which there were only four protestants.
- In August 2013, the Company along with Holland and Hart and
CH2M Hill discussed EPM's water rights presentation with the State
Engineer in Delta, Utah. The hearing went very well and the Company
anticipates that all water right applications will be approved by
the third quarter 2014.
Outlook for
2014
"2014 should be a banner year for us. We expect to complete most
of the pre-construction milestones, nearly complete our EIS, and
conclude all other necessary permitting," Lance indicated. "And
soon, we will be kicking-off our Feasibility Study. While the PFS
only considered SOP production, we anticipate that the Feasibility
Study will consider the production of specialty products in
addition to SOP including, magnesium sulphate, magnesium chloride,
sodium sulphate, and possibly lithium," Lance said. "Given the
presence of the other known constituents in our brine resource, we
expect these minerals to provide the Company with a significant
source of additional value if such minerals prove to be economic as
the result of further studies."
About EPM Mining
Ventures
EPM Mining Ventures Inc. is a development-stage company focused
on specialty fertilizers. Through Peak Minerals Inc., its indirect
wholly-owned subsidiary, EPM controls directly or through agreement
mineral leases on more than 124,000 acres on its Sevier Lake Playa
property in Millard County, Utah. With a brine resource known to
contain potassium, magnesium, sulphate, lithium and a suite of
other beneficial minerals, EPM is targeting the development and
production of specialty fertilizers, including SOP, through the use
of a cost-effective solar evaporation process. SOP and other
specialty fertilizers are used in the production of high value,
chloride-sensitive crops such as fruits, vegetables, and tree nuts.
With the recent completion of a Preliminary Feasibility Study, the
Company is currently engaged in engineering and analysis designed
to support a feasibility study, environmental permitting, and
ultimately mineral production.
For more information, 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.
EPM Mining Ventures Inc.Lance D'AmbrosioChief Executive
Officer(801) 485-0223www.epmmining.com