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Yearly Production By Resource Classification (Graphic: Business Wire)

Stocks in this article: PGRX

Damon Barber, President and Chief Executive Officer of Prospect Global Resources Inc. (NASDAQ: PGRX) (“Prospect Global” or the “Company”), is pleased to announce that a team of internationally-respected engineering and consulting firms has completed work on a Pre-Feasibility Study (“PFS”) for the Company’s potash project in the Holbrook Basin of Eastern Arizona. The study was performed by Tetra Tech Inc. (“Tetra Tech”), a leading provider of consulting, engineering, construction management and technical services worldwide.

Highlights Include: (1)

  • 1.42 million tons per year operation (2)
  • $825 million estimated capital cost
  • $1.4 billion NPV at an 8% discount rate (3)
  • 27% after-tax IRR (3)
  • Initial mine life of 26 years
  • Life of mine operating costs of $115 per ton
  • Peak production of 1.55 million tons (4)
  • 33 million tons of total MOP production over initial 26 year mine life
  • Approximately 1.3 million tons per annum of production over life of mine
(1)   The Pre-Feasibility Study contains two cases, a “Base Case” which economically evaluates only Measured and Indicated Resources and a “Development Case” which includes the anticipated conversion of Inferred Resources into Measured and Indicated Resources from the Company’s upcoming infill drilling program. The Company intends to develop the Project in accordance with the Development Case, which it believes is the optimal approach and realistic given the Company’s historic and anticipated conversion of Inferred Resources to Measured and Indicated Resources. The results in this press release are based on the Development Case which contemplates a mining schedule that contains 57.7% Measured and Indicated Resources and 42.3% Inferred Resources being mined over an initial 26 year mine life. The term “Resource” does not equate to the term “Reserve.” Under U.S. standards, mineralization may not be classified as a “Reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.
(2) Nameplate operation based on average production from years 6 through 10.
(3) Based on prices of $430 per tonne FOB Vancouver for standard product, $450 per tonne FOB Vancouver for granular product and $480 per ton delivered U.S. Midwest for granular product. Assumes 100% equity.
(4) Year 7

“The completion of the Pre-Feasibility Study represents a significant milestone in the development of our Holbrook Project,” said Mr. Barber. “The goal of our work was to lower the risks of financing, development, construction and mining operations while simultaneously increasing returns on capital. The PFS shows the results of that effort. We have optimized the operation for the current resource and significantly reduced the risks of the project for investors. The PFS estimates confirm our view that the Holbrook Project has the potential to become a high quality, long-life, conventional potash mine with robust economics. We look forward to completing our Definitive Feasibility Study as soon as possible and developing a scalable, low-risk, mining operation.”

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