Prospect Global Resources Inc. (NASDAQ: PGRX) (“Prospect Global” or the
“Company”) announced the signing of an agreement that enables the
Company to extinguish its senior secured debt and issues the following
statement regarding recent developments.
Prospect Global has entered into definitive documentation that provides
for the extinguishment of all the Company’s senior secured obligations,
totaling approximately $148 million, for $25 million, or at
approximately 17 cents on the dollar.
Reaching agreement on a buyout of the Company’s debt culminates a year
of significant achievements for Prospect Global and its Holbrook
Project. The extinguishment of Prospect Global’s large debt burden will
significantly strengthen the Company’s balance sheet and provide PGRX
with more flexibility and options for raising the financing required to
complete a definitive feasibility study in 2014 and begin construction
in 2015.
A recap of the major project developments and progress made towards
production during 2013.
Regulatory Approvals
The Company significantly advanced the permitting for its Holbrook
Project in 2013. In February 2013, the Company submitted its application
for an air permit with the Arizona Department of Environmental Quality
(“ADEQ”) and submitted its application to convert its state mineral
exploration permits to mineral leases with the Arizona State Land
Department (“ASLD”). A major component of the submission to the ASLD was
a Mineral Development Report (“MDR”) covering a geologic assessment,
economic feasibility, environmental assessment, mine operation plans,
and reclamation and closure plans.
In September 2013, the Company received an air permit to construct and
operate a 2.2 million ton per annum mine and processing plant.
During the course of 2013, the Company and its representatives have had
numerous discussions with the ASLD as they progressed the Company’s
application for a mineral lease and expect to receive a mineral lease in
the first half of 2014
Engineering
Prospect Global completed a major engineering milestone in July of 2013
when a team of internationally-known and respected engineering and
consulting firms completed a pre-feasibility study for the Holbrook
Project. Highlights included
-
1.42 million ton per year operation
-
$825 million estimated capital cost
-
$1.4 billion NPV @ 8% and a 27% after-tax IRR
-
33 million tons of MOP production over the initial 26 year mine life
Drilling
The Company completed a 17 hole, primarily infill drilling, drilling
program in October 2013. The drilling program was designed to maximize
the potential conversion of inferred resources to the measured and
indicated categories in order to support the completion of a definitive
feasibility study. In addition, the Company completed the sampling and
assaying of 6 holes from its phase III drilling program, thereby adding
in total 23 holes to the 22 holes the Company had previously drilled
which formed the basis for previous resource estimates.
Resources
An updated geologic model and resource estimate will be completed in
2014 on which the definitive feasibility study will be predicated.
Offtake and Strategic Partnership Talks
The Company continues to advance talks on both offtake and strategic
investment with a number of strategic and financial companies. Interest
in Prospect Global’s low-risk, low-cost potash project remains strong
and management is working with various potential partners with a view to
maximize value for shareholders.
Outlook for 2014
The Company believes it is well positioned to raise the financing to
repurchase its debt in the first quarter of 2014, receive its mineral
lease from the ASLD by mid-year and complete a definitive feasibility
study for its Holbrook Project by the end of 2014. Significant work is
underway in both regards. The completion of these three major milestones
in 2014 will position the Company to begin construction in 2015.
Regarding Forward-Looking Statements
With the exception of historical matters, the matters discussed in
this press release include forward-looking statements that involve risks
and uncertainties that could cause actual results to differ materially
from projections or estimates contained herein. Such forward-looking
statements include statements regarding current and future
classification of Prospect Global’s potash resources, development of its
potash resources and potash mining facility and the Pre-Feasibility
Study. Factors that could cause actual results to differ
materially from projections or estimates include, among others, potash
prices, economic and market conditions, and the additional risks
described in Prospect Global's filings with the SEC, including Prospect
Global's Annual Report on Form 10-K/A for the year ended March 31, 2013.
Most of these factors are beyond Prospect Global's ability to predict or
control. The forward-looking statements are made as of the date hereof
and, except as required under applicable securities legislation,
Prospect Global does not assume any obligation to update any
forward-looking statements. Readers are cautioned not to put undue
reliance on forward-looking statements.
About Prospect Global Resources Inc.
Prospect Global Resources Inc. is a Denver-based company engaged in
the exploration and development of a potash mine located in the Holbrook
Basin of eastern Arizona. Prospect Global’s stock is traded on the
NASDAQ Capital Market under the ticker symbol PGRX.
Additional details about Prospect Global Resources Inc. can be viewed
at the Company’s website,
www.prospectgri.com.
Copyright Business Wire 2013