Date post: | 21-Apr-2017 |
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Potash Ridge is a near term producer
of premium fertilizer with world class
development assets in Utah and
Quebec.
The Company is uniquely positioned to
take advantage of strong markets for
Sulphate of Potash
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HIGHLIGHTS
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SulphateofPotash(“SOP”)isapremium
potashwithasignificantsupplydeficit
§ Domes&csellingprice3xversusregularpotash(“MOP”)§ Globalconsump&onis~5milliontonnesperyear(“tpy”)§ Demandpoten&alis10milliontpy§ Exis&ngproducersunabletoexpandtomeetsupplydeficit
Strategy§ BecomethefirstSOPproducerusingMannheimprocessin
NorthAmericaand,longerterm,thelargestNorthAmericanSOPproducer
Valleyfield(Quebec)
§ 40,000tpyofSOP;CDN$48.8millioncapex§ 32.5%aUertaxIRR§ ProvenprocessusedthroughoutEuropeandAsia§ Produc&onscheduledtocommenceinQ42017§ Strategicloca&onnearby-producthydrochloricaciddemand§ Expansionpoten&alatsite§ Poten&alforover$13minaverageannualcashflows(Y1-Y5)
BlawnMountain(Utah)
§ Upto585,000tpyofSOP;poten&altophase-inproduc&ontoreducefrontendcapex
§ Prefeasibilitycomplete:20.5%aUertaxIRR§ Largesurfacemineraldeposit;over40-yearreservelife§ Majorpermitsandwaterrightssecured;infrastructurenearby§ Poten&alupsidefromaluminaresidueintailings§ Poten&alforoverUS$250Minaverageannualcashflow
SOP:SUPERIORPRODUCTWITHATTRACTIVEMARKET
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SOP(K2SO4) MOP(KCI)
US$887/tonneinNorthAmerica US$238/tonneinNorthAmerica
Globalmarket5milliontpy,withpoten&almarketdemandof10milliontonnes(1)
Globalmarket55milliontpy
Fundamentalsupplydeficit–limitedabilitytosignificantlygrowproduc&onusingexis&ngproduc&onprocesses
Marketisinoversupply,withidlecapacityandmul&pleprojectsinpipeline
Lowchloride,highsulphur–providingbenefitstocropsnotavailablewithMOP
Containschloride–nonutrientvalue;inmanyinstancesdetrimentaltoplants
Improvesyield,taste,appearanceandshelflife;idealforsaltyorsandysoilsoraridclimates
Chloridecanleachintogroundwaterorbuild-upinaridsoilcondi&ons,impac&ngyieldsandcropquality
SignificantbenefitsoverMOPforfruits,vegetables,nuts,potatoes,tobacco–manyotherhighvaluecrops
Primarilyforcornandgraincropsthatcanwithstandchloride
(1)PerCRU
SOP: A TOP PERFORMING COMMODITY IN LAST 5 YEARS
5 1CompassMineralsQ42015Report,2PotashCorpQ42015Report
SERVINGANUNDERSERVEDMARKET
CompassQ4/15realizedSOPpriceU.S.$887/tonne1
PotashCorpQ4/15realizedMOPpriceU.S.$238/tonne2
SOP
MOP
DEVELOPMENTSTRATEGY
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Valleyfield(Quebec) BlawnMountain(Utah)
Bringini&al40,000tpySOPintoproduc&oninQ42017
Poten&alforupto585,000tpySOPproduc&onEvaluatescalingdevelopment,withtargetedini&alproduc&oninlate2019
Completepermihngandbreakgroundin2016
CompletescalingstudyinQ3,2016
FinalizeSOPokakeandothercommercialarrangements
Leveragemanagementteams’strongprojectdevelopmentandfinancingexper&se
DevelopEPCorsimilarconstruc&onarrangementstominimizeexecu&onrisk
VALLEYFIELDPROJECT(QUEBEC)
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• ProvenMannheimtechnology• ConvertsMOP+sulphuricacidto
SOP+by-producthydrochloricacid
• EngineeringstudycompletedbySNConMarch29,2016
• PlantobuildunderEPCcontract• Basedon40,000tpyofSOP
• Poten&altobuildaddi&onalunits• CDN$13.3millionaverageannualcash
flowforfirst5years• Permihngexpectedtotakethree
months• StronginterestinSOPokake
EconomicSummary(CDN$)
Ini&alcapitalcost(1) $48.8million
IRR(unleveredaUertax)
32.5%
NPV(aUertaxat10%) $66.9million
SOPprice/tonne $1,000(U.S.$760)
MOPprice/tonne(2) $500(U.S.$380)
Opex/tonne(3) $590
(1)$9.5millionofthisamountisacidsupportinfrastructureexpectedtobeincurredby3rdpar&es(2)Equatesto$430/tonneofSOP(3)Netofacidcredit
• MOUnego&atedwiththirdpartyforofftakeofhydrochloricacid• Poten&altotakeadvantageofaprac&vefinancingsupportinQuebec• Expecttostartconstruc&onin2016,with12-monthconstruc&onschedule
VALLEYFIELD:STRATEGICALLYLOCATED
• LocatednearMontreal,Quebec
• Propertysecured• Stronglocalsupport• Railaccessatsite• Portwithin2km,allowing
accessintokeyU.S.markets• Within2kmofsulphuric
acidsupplier–discussionsini&atedwithsuppliers
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• Locatednearhydrochloricacidcustomers• MOUsignedforokakeofini&alproduc&on• Discussionsunderwayforsecondphaseofhydrochloricacidokake
PROVENMANNHEIMPROCESS
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MannheimFurnace
PotassiumSulphate(“SOP”)
HydrochloricAcid(“HCL”)
PotassiumChloride(“MOP”)
SulphuricAcid
Energy
• ConvertsMOPtoSOP• Provenproduc&onprocess(over100yearhistory),withnumerousopera&ng
facili&esinEuropeandChina(about40%ofcurrentSOPproduc&onisfromMannheim)
• Highquality,consistentproduc&onprocess• Scaleallowsforconstruc&on&meof12-months
VALLEYFIELDNEXTSTEPS
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Task Comments
EngineeringStudy • CompletedbySNConMarch29,2016• FinalizeEPCarrangements
Permihng • Expectedtotakethreemonths
AcidCommercialArrangements
• Plantohaveathirdpartytobuild,own,operatehydrochloricacidandsulphuricacidinfrastructure
• Thirdpartywillalsoberesponsibleforacidlogis&cs
SOPOkake• Mul&pleexpressionsofinterestinokake.• Nego&a&onssettocommencenowengineeringstudycomplete
Financing• Discussionssettocommencewithpreliminaryengineering
studycomplete• Quebecgovernmentfinancialsupportprogramsavailable
Construc&on• Expectedtocommenceinlate2016• An&cipate12-monthconstruc&on&metable
BLAWNMOUNTAINPROJECT(UTAH)
• Surfaceminingwithadjacentprocessingfacility
• KnownprocesstoconvertaluniteoreintoSOP,by-productsulphuricacidandanalumina-richmaterial
• PrefeasibilityStudycompletedbyNorwestinDecember2013
• P+Preservessupport40yearminelife,• Poten&altoincreaselifeof
opera&onsthroughaddi&onalexplora&on
• Projectpermiped;waterrightssecured
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PFSEconomicSummary(US$)
Ini&alcapitalcost
$1,124million
IRR(unleveredaUertax)
20.5%
NPV(aUertax,at10%) $1.0billion
SOPprice/ton $649
Opex/ton(1) $173
(1)Netofacidcreditandexcludingroyal&es.
• MOUnego&atedwiththirdpartyforokakeofsulphuricacid• Currentlyassessingthepoten&altophaseproject(withphase1poten&allyaround200,000
tpy)tosignificantlyreduceupfrontcapex• Poten&altofasttracknextstageofdevelopment
UTAH–ANATTRACTIVEPLACEFORMINING
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• Majorresourceproducingstate• Over100yearsofpotashproduc&on• Beststateforbusinessandtopquar&leminingjurisdic&on(1)• 100%state-ownedland• Strongstategovernmentandlocalsupport• Allnecessaryinfrastructurenearby
(1)ForbesMagazine,2015RankingandFraserIns&tute,April,2013
THEBLAWNMOUNTAINPROPERTY
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AREA1MININGZONE
PROCESSINGPLANTLOCATION
AREA2MININGZONE
ACCESSROAD
ORETESTPITNotethatoreisatsurface
RESERVESANDMINELIFE
Drillingworktodatehasestablished40yearsofreserves–calculatedbyindependentengineer(Norwest)
Drillingtodatehasfocusedonlyontwoofthefourareaswithinthe15,400acrelandposi&on
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ReserveCategory
TotalProven
('000tons)Probable('000tons)
AluniteOre(ROMtons) 136,254 289,540 425,794
Ore(averageK2O(%)grade) 3.56 3.49 3.51
Ore(averageK2SO4(%)grade) 6.59 6.46 6.49
SOP(tons) 8,457 17,970 26,427
SulphuricAcid(tons)@98%Purity 18,888 40,136 59,024
MineralReservesbyCategoryNovember6,2013
DRILLED
NOTYET DRILLED
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PERMITTINGESSENTIALLYCOMPLETED
Thefollowingtableiden&fiesthemajorpermitsandapprovalsthattheCorpora&onhasors&llneedstoobtainpriortoconstruc&on:
Permit/Approval IssuingAgency Completed
Explora&onPermit UtahDivisionofOil,GasandMining October,2011
USArmyCorpsofEngineersJurisdic&onalWatersConcurrence USArmyCorpsofEngineers March,2014
GroundwaterPermits UtahDivisionofWaterQuality July,2014
LargeMineOpera&onApproval UtahDivisionofOil,GasandMining August,2014
AirQualityEmissionStandard UtahDivisionofAirQuality
AirQualityEmissionStandardrequirestheengineeringtobepar&allycompletedbeforetheapplica&onisfiled.Itistechnicallynotapermit,butmoreanagreeduponemissiontargetthattheProjectmustbedesignedtomeet.
INDUSTRYPROVENFLOWSHEET
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
• Extensivetestworkconfirmsflowsheet;• Plannedaddi&onaltestworkwillincludebulksamplesat
equipmentvendorfacili&es–willresultinvendorsprovidingproduc&onguarantees
Crushing & Grinding
• Exis&ngplantinAzerbaijancurrentlymothballed(GanjaRefinery)
• Flowsheetsimilartocommercial-scaleproduc&onprocesseshistoricallyusedinUSandAustralia
BLAWNMOUNTAINDEVELOPMENTTIMELINE
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Late 1970’s $25 million invested
developing Project
2011 Project Acquired
April 2012 Initial resource
estimate*
November 2012 Preliminary Economic
Assessment *
December 2013 Prefeasibility
Study* establishes 40
years of reserves
*43-101CompliantTechnicalReport
December 2012 IPO
$80M market cap
August 2014 Large Mine Operating
Permit issued
March 2014 US ACOE confirms
no US federal permits required; Exploration lease
converted to mining lease
July 2014 Groundwater
Discharge Permit issued
October 2014 Enter into offtake
and marketing arrangement for
by-product sulphuric acid
BLAWNMOUNTAINNEXTSTEPS
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Task Comments
Maintainvaluecreatedtodatewhileraisingpre-construc&oncapital
• MiningleasemodifiedinJune2015todeferleasepayments• Permitsremainintact• Commercialarrangementsalreadynego&atedforsupport
infrastructureremaininplace
Furtherevaluatereducedscalealterna&ve
• Engageengineeringfirmtoevaluatephaseddevelopmentofproject,atapoten&alini&alproduc&onrateofaround200,000tpy
• Ul&mategoalwillbetoobtainEPCquoteonreducedscalealterna&ve
Okake • Ini&atediscussionswithpoten&alokakepartnersaUercomple&onofreducedscalealterna&veevalua&on
Financing• Stronginterestinconstruc&onfinancing–con&nuedialogue
withpoten&alfinanciers
EXPERIENCEDANDPROVENMANAGEMENT
OVER 70 YEARS COMBINED EXPERIENCE 22
GuyBen4nckPresidentandChiefExecu4veOfficer
CharteredProfessionalAccountant20yearsmining/resourceexperienceSherripCFOandSVPCapitalProjects
RossPhillipsChiefOpera4ngOfficerandChiefFinancialOfficer
MA(Econ)/MBA/CFA/CPA10yearsexperienceinlargeresourceandenergysectorprojectsSherrip,CapitalPower
JayHusseyVPCorporateFinanceandPresident,ValleyfieldFer4lizer
20yearscapitalmarketsconsul&ng9yearsSOPexperiencewithMigaoCorpora&on
PaulHamptonProjectManager
GeologistandMetallurgicalEngineer30yearsindesign,construc&onandmanagementofmineralprocessingfacili&esSNC,WashingtonGroup,Outotec
CAPITALRAISESANDCAPITALIZEDCOSTS
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Date/Price Price Proceeds$mm
February2011 $0.05 $1.1
August2011 $0.25 5.4
November2011 $0.25 1.5
December2011 $0.25 0.5
December2011 $0.75 10.5
December2012 $1.00 20.0
November2015 $0.03 0.6
Total $39.6
Ac4vity $mm
Variousengineeringstudies $10.4
Drilling 6.8
Employeecosts 6.3
Engineeringandpermihngconsul&ngcosts 5.4
Mineralleases 2.5
Other 1.2
Total $32.6
CapitalRaises CapitalizedCosts
CAPITAL STRUCTURE
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Millions
Total Common Shares Outstanding 106.9
Warrants – $ 0.08 (exp. Nov 2017) 11.3
Stock options 9.4
Total Fully Diluted Shares 127.6
As at February 29, 2016