Revised scoping study for $205 million phosphate mine doubles expected mine life Tuesday, 13 October 2015

Potash West has started a Pre-Feasibility Study for the $205 million Dinner Hill phosphate mine in Western Australia, encouraged by the results of a revised scoping study which doubles the expected mine life from 20 years to 40 years.

The Scoping Study also estimated an improved net present value (NPV) of $378 million, up 14% compared to the previous NPV estimate of $331 million.

As a result, the expected capital expenditure for the building and engineering of this mine is expected to be $205 million, up from $136 million. The revised CAPEX includes the building of a new acid plant, and includes $66 million for a process plant.

The new estimates by the Scoping Study are based on a single superphosphate (SSP) output of 400,000 tpa. SSP is a versatile and widely marketable fertiliser which Potash West says will help it tap into the global fertiliser market, which is estimated to be worth US$172 billion in 2015.

According to Potash West managing director, Patrick McManus, new drilling programs led the company to define a new resource inventory estimate in June 2015, some 108% higher than previously thought, to 250 million tonnes grading 2.9% phosphorous pentoxide. This prompted an update of the scoping study findings for Dinner Hill.

The study found a significant high grade section of the deposit, which delivers 5.5% phosphorus pentoxide ore for the first five years, which is 90% higher than the resource average.

“These factors drove a number of changes to the project plan, most notably installing a sulphur burning acid plant, which, while increasing the initial capital cost, substantially reduces operating cost – and for a mine life now double that of earlier estimates,” McManus pointed out.

Other improvements to the metrics at the project include a 10% drop in operating costs, to $190 per tonne of product.

Potash West noted that the Dinner Hill phosphate project is just Stage 1 of a wider plan to produce potash, phosphates and alum from the greensand deposits at the site, meaning greater opportunities down the line for contractors and engineers who secure a role in the first Dinner Hill project.

“The new 40-year project mine life uses only 64% of the current mine plan resource defined to date at Dinner Hill, indicating that there are expansion options available,” McManus said.

Dinner Hill is part of the larger Dandaragan Trough project, situated to the north of Perth. It has already  demonstrated positive metallurgical and processing results, with an overall recovery of 61.3%.

In terms of the processes used, flotation and magnetic separation recovers 88 percent of the phosphate from the flotation feed to the phosphate concentrate and acidulation recovers 100 percent of the phosphate from the phosphate concentrate to the SSP product.