EPM Mining Issues Summary of 2013 Results and 2014 Projections for Its Sevier Lake Playa Sulphate of Potash Project
January 16, 2014 (Source: Marketwired) — 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 $629 million (after tax, inflated, 8% discount rate) and an estimated Internal Rate of Return (“IRR”) of 20% (after tax, inflated).
- The PFS includes an updated Mineral Resource Estimate that includes 31.486 million tonnes of SOP in the Measured and Indicated categories, a 7% increase from previously published estimates, due primarily to results of recent drilling.
- Economic Highlights:
|NPV (pretax, 8%)||$ 957 M|
|NPV (after tax, 8%)||$ 629 M|
|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:”
- 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.
- 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.
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