exploring saskatchewan for world-class potash deposits
DESCRIPTION
Objective Capital's Industrial Metals, Minerals & Investment Summit 2010 London Chamber of Commerce and Industry 3 November 2010 Speaker: John Costigan, Western PotashTRANSCRIPT
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INDUSTRIAL METALS, MINERALS
AND MINEABLE ENERGY
INVESTMENT SUMMIT 2010
LONDON CHAMBER OF COMMERCE & INDUSTRY ● WEDNESDAY, 30 NOV 2010
www.ObjectiveCapitalConferences.com
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Exploring Saskatchewan for
world-class potash deposits
John Costigan – VP Corp Dev’t, Western Potash
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The views expressed here contain information derived from publicly available
sources and have not been independently verified.
No representation or warranty is made as to the accuracy, completeness or
reliability of the information.
Any forward looking information in this presentation has been prepared on the
basis of a number of assumptions which may prove to be incorrect. For additional
information on these or other factors, please see the Company’s filings on SEDAR.
This presentation should not be relied upon as a recommendation or forecast by
Western Potash Corp.
Nothing in this presentation should be constructed as either an offer to sell or a
solicitation of an offer to buy or sell shares in any jurisdiction.
Disclaimer
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WPX Milestones
10 Month IPO, Raised over $45M
Potash discovery at Russell South +8 Km, 21.1– 26% K2O / 3m thick
Seismic & Drilling (9 wells) in Milestone, Saskatchewan
Milestone Potash Discovery+15.8 Km, Avg. 18.6% K2O 22.8m thick
Milestone NI 43-101 Resource
Measured: 41 MMTIndicated: 133 MMT Inferred: 560 MMT
Feasibility
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Scoping Study
Delivered
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Cash
TSX.V: WPX, FSE: AHE
$6.45 M
104, 300, 383
$85M
40, 228, 600 ($0.75)
$Nil
$0.36 – 0.97
760,000
19%
Oct 29, 2010
Financial Overview
Expiry April 15, 2011
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Why Invest in WPX?
Experienced in Exploration
and Discovery
Experience in Project
Development
Technical Professionals
Supply / Demand Issues in
World Fertilizers
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Management and Directors
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Comparative Consolidation Rates
18%
27% 29%32%
42% 44%48%
56%61%
65%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
CarbonSteel
Copper(refined)
Zinc(refined)
Gold Aluminium(refined)
StainlessSteel (slab)
Automotive CookingCoal
(traded)
Nickel(refined)
Potash Iron Ore(traded)
More Competitive
Low Pricing Power
Less Competitive
High Pricing Power
Share of the total production which is attributed to the top 5 companies in the industry.
Source: CRU Strategies
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Arable Land Per Person Declining Per Capita Water Use
Resources Strained
Agriculture is the largest user of water.
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Corn (CBOT) Soybeans (CBOT)
Commodity Rally- Grains
•June – Oct 2010
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Potash Demand Outlook
0
10
20
30
40
50
60
70
80
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Historical Operational Capability Projected Potash Capability Historical Shipments Shipment Senerio 1 Shipment Senerio 2
Source: Potash Corp Estimates, 2010
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0
100
200
300
400
500
600
700
800
Global potash gate price range forecast, US$/tonne Low
Global potash gate price range forecast, US$/tonne Average
Global potash gate price range forecast, US$/tonne High
Global Potash Gate Price Range Forecast, US$/tonne
Price Range Forecast
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Source: CRU Strategies
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WPX- 3 Month Stock Chart
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Impact of Jansen?
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Why Invest in WPX?
Significant NI 43-101 resource
Only New potash deposit in North
America
>40 year mine life at 2.5Mt/yr
Tier 1 deposit in Sk. Canada
High Grades (30%+ KCL)
High formation temperatures
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Elk Point Basin
WPX Milestone Project
WPX ManitobaProject
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WPX Project Areas
Russell South Property+8 Km, 21.1– 26% K2O / 3m thick
St Lazare Deposit510 Mt @ 18% K2O
Russell Deposit165 Mt @ 24.5% K2O
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Project Infrastructure
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NI 43-101Recoverable Resource 41 Mt Measured + 133 Mt Indicated
560 Mt Inferred
•
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Resource Characteristics
Thickness K2O Grade x Thickness
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Prairie Evaporite, Saskatchewan
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Geothermal Gradients
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Temperature Benefits
Higher formation Temperature yields 9% more
KCl/l by mass dissolved salts from 40-60C
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Temperature Benefits
Higher formation T
reduces OPEX by 8.5%
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Why Invest in WPX?
Solution Mining Advantages
Low CAPEX vs Dry Shaft
Political stability
Significant untested land
Positive Scoping Study
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Solution Mining Method
Sump Connection
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Solution Mining Method
Roof Development
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Solution Mining Method
Primary Mining
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Solution Mining Method
Primary Mining Esterhazy Complete
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Solution Mining Method
Primary Mining Complete
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Solution Mining Method
Secondary Mining
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Why Solution Mining?
Reduced CAPEX
Shorter payback period, higher IRR
Faster timeline to production
Scalability
Ability to mine deep or irregularly shaped
deposits
Lower technical risk
Reduced environmental footprint and safety
risk
Absence of flooding risk
Lower manpower demands
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Project is technically
feasible and financially positive.
40 YR LOM based on NI 43-101 resources
CAPEX CAD$ 2.51 Bn
OPEX
$CAD 62.9/t
Production rate of 2.5 MTY K2O
AMEC Recommends proceeding to
PFS
1.CRU Projected annual prices
2. Flat price ($340 USD FOB Mine Gate)
Scoping Study Highlights
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AMEC’s EPCM experience with five
Potash Corp mines adds credibility to
the CAPEX estimates for this project.
•(NPV10) 5.22 Bn1 USD: IRR 27.3%
•(NPV10) 2.19 Bn2 USD: IRR 19.2%
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NPV (10%) and IRR vs. Potash Pricing
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$250 $300 $350 $400
NP
V(1
0)
Billio
n C
AD
Potash Price ($/Tonne)
3.5 MTpA 2 MTpA
0%
5%
10%
15%
20%
25%
30%
$250 $300 $350 $400
IRR
Potash Price ($/Tonne)
2 MTpA 3.5 MTpA
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Water
Evaporator
Primary Mining
Salt Centrifuge
Salt Storage
Crystallizer
Secondary Mining
Crystallization Pond
Granular Product
Potash Centrifuge
Compaction
Screening
Condenser
Drying
Standard Product
Simplified Flow Diagram
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Preliminary Cavern Layout
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Indicated Area
Class 1 Anomoly
Aquifer
KP 409
Potash Disposition
Notes:
-1.6 km buffer placed on the six Riceton
holes only.
-606 caverns are possible within this area,
with unacquired freehold and class 1
anomolies removed from resources.
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Deposit Comparables
* Gate Price excludes shipping to market ( $360/T KCl f.o.b.Vancouver)
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Internal Transport
0%
Sustaining & Working Capital
4%
G&A Costs3%
Fuel36%
Consumables20%
Diesel0%
Electricity16%
Labour21%
Milestone’s Expected Conversion Costs
Source: CRU Strategies
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Potash Site Costs, 2015
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WPX Timeline
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Thank you