Risk on is back IC Potash ( ICP:TSX ) focusses on Sulphate of Potash, or “SOP” – what is it? Pre-feasibility study in-hand, IC Potash CEO Sid Himmel explains, on BNN: https://shar.es/o0Jzy
One of the most uncorrelated asset classes to invest in this year is food. A growing population and an expanding middle class in emerging countries will increase a demand for nutrient rich protein diets. Potash fertilizers will become top of mind for governments where food productivity is imperative. Responding to attractive agricultural commodity prices, world fertilizer demand is anticipated to rise steadily and there is an urgent need to boost crop yields. This will position potash companies favorably.
IC Potash Corp. (TSX: ICP; OTCQX: ICPTF) is positioning itself as a key player in the broader agrifood supply chain and a key factor in providing the inputs farmers need to grow more food sustainably. ICP is developing a world class, long life and low cost potash mine and production facility in Lea Country, southeast New Mexico, a stable and well-known mining jurisdiction where both the Mosaic Co. and Intrepid Potash are currently producing potash with excellent infrastructure with access to railways, ports, natural gas, roads and water. IC Potash Corp. intends to become a primary producer of Sulphate of Potash ("SOP") and Sulphate of Potash Magnesia ("SOPM") by mining its 100% owned potash Ochoa property in southeast New Mexico.
The property consists of +100,000 acres of federal subsurface potassium prospecting permits and State of New Mexico potassium mining leases. The deposit is highly advanced containing total proven and probable reserves of +400 million tons of ore within the proposed mine plan. IC Potash is focused on being one of the lowest cost producers of SOP in the world, a market that is 6 million tonnes per year and growing. SOP is a non-chloride based potash fertilizer that sells at a substantial premium over the price of Muriate of Potash ("MOP"). SOP is a significant fertilizer in the fruit, vegetable, tobacco, potato, and horticultural industries, and for agriculture in saline and dry soils. IC Potash also intends to produce SOPM, which is a highly desirable product for soils with magnesium deficiency, including those found in Europe and Southeast Asia. This specialty product has a total global market size of approximately 1.2 million tonnes.
Analysts prefer SOP over MOP juniors, and as one of only two players in the space, ICP is a favorable story.
Why IC Potash?
- Highly defined NI43-101 compliant deposit with +400 million tons of reserves that support upwards of a 100 year mine life.
- Developing SOP and SOPM mining and processing operation in southeast New Mexico. ICP intends to mine polyhalite ore as feedstock to produce these premium priced products. SOP sells for a 30% premium to MOP and currently sells for US$700 in the US.
- Focused on being the lowest cost producer of SOP in the world with a forecasted operating cost of $147 per ton (lowest globally).
- Highly skill team of professionals with decades of managerial, technical, and financial expertise – dedicated team of leading potash mining engineers, process engineers, fertilizer marketers, and financial managers to advance the Ochoa project.
- Extremely well positioned for joint venture and off take partners.
Pre-feasibility Study (PFS) dated November 2011
- Internal rate of Return of 26% after tax
- NPV of US$1.3 billion after tax with discount rate of 10%
- NPV of US$1.8 billion after tax with discount rate of 8%
- Operating production cost of US$147 per ton SOP and SOPM
- Capital cost of $706 million
- Payback of 3.9 years after tax
- Production of 568,000 tons of SOP and 275,000 tons of SOPM
- Mine life of 40 years
- The SOP and SOMP sales price forecasts were provided by CRU
The PFS provides for improved economics in almost all of the relevant metrics including lower opex and capex, and higher total production. ICP plans to produce Langbeinite, which introduces an incremental revenue stream, and intends to process the product with lower cost thermal evaporation. ICP's asset is huge, potentially providing multi-million MT's of product into a market where 60% of capacity comes from players with over triple the op-costs.
With the PFS complete, negotiations with potential marketing equity partners, distributers and/or end users can set in motion potential term sheets which are the pathway to monetizing the plan and create credit enhancement facilities to finance this massive resource into production. ICP is well positioned for strategic partnerships with global trading, fertilizer and mining companies.