Elemental Minerals (ASX: ELM, TSX: ELM) has received some positive results from a Pre-Feasibility Study conducted by SRK Consulting on the company's Sintoukola Potash Project, which is located in the Republic of Congo.
The PFS highlights include:
- Project after-tax NPV10 of US$ 2.97bn, IRR of 29.3%;
- Project pre-tax NPV10 of US$ 3.90bn, IRR of 31.3%;
- Production cash costs of US$ 79.71/t, FOB - in the lowest quartile of global production cost;
- Total initial capital costs of US$ 1.85bn, (includes a weighted average contingency of 18%, includes infrastructure of US$580m);
- Pay-back from production start-up of 3 years; and
- Production of 2Mt per annum of Muriate of Potash from a conventional underground mine with a 23 year life of mine.
Iain Macpherson, chief executive officer, commented on the results: "The Pre-Feasibility study confirms excellent economics and highlights the Project's key competitive advantages of a high-grade orebody suited to conventional mining and processing using proven technologies.
"The scalability and location of the project reinforces its global significance and the potential for the Congo basin to become a major potash producing region.
"These results confirm our strategy of a fast track approach, allowing us to remain on track to deliver an independent potash operation to the market in the near future."
The good news doesn't stop there for Elemental, with expressions of interest signed with major international infrastructure groups. There is also the potential to reduce up-front capital costs by up to US$580m, but with an operating cost increase
Resource and mining opportunities
Another plus is the recent discovery of a high grade (30 to 38% K2O) Hangingwall Seam - which may further enhance project economics. Elemental plans to continue exploration of the high grade Hangingwall Seam at Dougou, while the 475 Mt of Inferred Sylvinite Mineral Resource at 20.39% K2O was not considered for the PFS.
The potential of Elemental to to become a scalable, near-term, low cost independent potash producer has not been lost on the broader broker community.
Recently Canadian investment bank Northern Securities placed a buy rating on the stock and a 12-month share price target of $2.70 - which is four times the last traded price in the mid $0.65 range.
Northern Securities said at the time: "Investors seeking the best of potash projects are well served by buying shares of Elemental".
Adding further support, Patersons Securities recently placed a price target of $1.35 on the stock, with Canada's National Bank Financial placing a C$1.10 price target.
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