EPM Mining to develop cost effective SOP potash in Utah with backing from Tata Group
EPM Mining Ventures Inc. (EPM, TSXV: EPK | OTCQX: EPKMF), is a Canadian owned potash company developing the sulfate of potash (SOP) Sevier Dry Lake Project in Utah. Toward the end of 2012, EPM presented an NI 43-101 report for the Project, outlining the results of the Preliminary Economic Assessment (“PEA”) for the production of SOP. SOP is a more ‘adaptable’ fertilizer, suitable for use for soils needed to grow fruits, tobacco, potatoes and vegetables. SOP is also a rarer kind of potash, commanding a higher market premium, or as much as 30-50% higher prices compared to the more common muriate of potash (MOP). EPM’s drilling program was completed in 2012 and its in-situ brine resource has about 29.5 million tons of Measured and Indicated Potash Resources with an additional nine million tons in the Inferred Category.
Last April, EPM (TSXV: EPK –) announced that the Interior Board of Land Appeals (“IBLA”) confirmed the Bureau of Land Management’s (“BLM”) Decision Record and Finding of “No Significant Impact on the Sevier Playa Potash Exploratory Testing Proposal and Environmental Assessment and denying the appeal by Southern Utah Wilderness Alliance (“SUWA”) of said Decision Record and Finding of No Significant Impact,” concluding SUWA’s final appeal toward the BLM’s decisions regarding leasing and exploration.
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In mid May, EPM announced its 2013 Q1 financials, reporting, as expected after the conclusion of the exploration phase, a net loss of $0.69 million comparable to the net loss of $0.64 million for the first quarter of 2012. EPM said that during the Quarter it expanded the 2012 drilling program, “prefeasibility study engineering, bench scale test work, and environmental permitting” in preparation for the next, feasibility study, phase of the Project. It should be noted that EPM’s project can rely on strong support from Tata Chemicals (‘Tata’), part of the huge Tata Industrial Group which holds a large stake (about 30%) in the Project. Tata Chemicals owns interests in soil nutrients, fertilizers and chemicals, having large operations, and access to markets, in India and Africa. EPM intends to use Tata’s investment to further develop its Utah property.
EPM’s project offers some important environmental and project economics advantages, making it very sustainable because of its lower risk profile and lower operational and production costs. This is because the resource consists of a pool rich in potassium brine, which will enable EPM to save on energy costs as solar evaporation will be sufficient in extracting SOP from the brine at Sevier Lake.
Solar Evaporation is an industry-proven method most commonly associated with salt mining. All the extraction work is effectively performed by the wind and sun, evaporating the water from shallow pools, leaving the SOP behind ready to be harvested, washed, drained and refined for the market. Utah is well known for evaporation mining, facilitated by favorable sunshine intense weather and the technique has been used to great success by Intrepid Potash.
SOP is used in crops that are sensitive to chloride such as tobacco, pineapple or avocado, adapting well to soils presenting high salinity levels. It is also suitable for crops such as fruits, tobacco, potatoes and vegetables or where sulfur is deficient. Its nutrient composition is approximately: Potassium: 41% and Sulfur: 18%. SOP does not contain chlorides and helps to fill in the gap left by soils that react badly to MOP. SOP. In contrast, the more common MOP variety of potash does not tolerate high soil salinity, which reduces its potential range of applications.
Tata’s interest in EPM started in 2010 when the price of potash and other mineral fertilizers was growing worldwide; the fact that it has doubled its stake at a time of greater market uncertainty suggests that one of the biggest companies in the world from one of the fastest growing potash consuming nations in the world has continued confidence in the value of potash. Tata Chemicals considers EPM a strategic acquisition that will give it further strength in the fertilizer space. India has become the world’s second most important market for potash after China and the input from Tata Chemicals will give EPM a strategic advantage in gaining access to Indian and other international buyers. After some concerns of delayed potash contracts for the Indian market by such potash majors as Potash Corp, the Indian purchase agreement for February 2013 was signed at around USD$$ 425/ton, higher than the USD$ 400/ton paid by China at the end of December 2012. Bill Doyle of Potash Corp expects third-quarter prices of around $ 470/ton in Southeast Asia while Brazil is expected to push through at USD$ 450/ton, suggesting that the bottom for potash prices was reached and that prospects are trending upward.