Western Potash's Milestone pre-feasibility study confirms "significant positive economics"

Junior miner Western Potash (TSE:WPX) Tuesday said an independent prefeasibility study (PFS) confirmed its 100%-owned Milestone potash property in Saskatchewan showed significant positive economics.
The study, carried out by AMEC Americas, showed that the asset was of sufficient size and grade to support mining for more than forty years at a production rate of 2.8 million tonnes per year. The annual production rate can also be expanded through a higher level of capital expenditure, the company said.
Western Potash chief executive and president, Patricio Varas, said: "The PFS confirms the compelling opportunity that the Milestone project represents for the company and the province of Saskatchewan to develop a world class potash mining operation."
"In addition to the 40 year scope of mining contemplated in the PFS, the known resource is sufficient to support ongoing mining for an additional 40 years and beyond."
The company said it will file an updated NI 43-101 report within the next 45 days.
Western Potash said the Milestone project remains economically very strong, with no known limitations that may prevent a successful and profitable project outcome. An assessment of project economics, aassuming a discount rate of 10 percent, showed the resulting project net present value is C$4.14 billion, while the internal rate of return is 22.7 percent.
The initial capital expenditure estimate for the plant is $2.76 billion, including allowances for port infrastructure, a water supply pipeline, and off site railway. . An allowance of $300 million for port infrastructure was excluded from the company’s scoping study completed in 2010. Unit operating costs were estimated to be $62.35 per tonne at full production capacity.
The study gave a time frame of three years for construction, six years to full secondary production and a payback period of five years. AMEC's report also recommended immediate commencement of a feasibility study.
In June, Western Potash defined NI 43-101-compliant resources at Milestone that consisted of a measured potash resource of 64 million tonnes, 180 million tonnes of indicated resource and 701 million tonnes of inferred resource.
Milestone is located approximately 30 kilometres southeast of Regina and 80 kilometres southeast of Mosaic's (NYSE:MOS) Belle Plaine Mining Lease, home to one of the largest producing potash solution mines in the world.