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Western Potash Corp. Delivers Robust Preliminary Economic Assessment at Milestone

20.09.2010  |  Business Wire
  • NPV10 = CAD$ 5.22 Billion and IRR = 27.3%
  • Annual Production of 2.5 MTY for >40 years.


WESTERN POTASH CORP. , (the 'Company?) (TSX Venture: WPX) is pleased to
announce the receipt of a positive Scoping Study (the 'Study?) from AMEC
Americas Limited ('AMEC?) on its 100% owned Milestone property in
southern Saskatchewan. The Milestone property hosts a potash resource
which consists of 41 million tonnes of Measured Resource (contained
KCl), 133 million tonnes of Indicated Resource, and 560 million tonnes
of Inferred Resource. The Scoping Study was based on, and supported by,
the NI43-101 Technical Report titled 'Technical Report Concerning
Mineral Resource Estimate, Subsurface Mineral Permit KP 408 and KP 409,
Saskatchewan?, dated July 12, 2010 and filed on SEDAR on July 16, 2010
(the 'Report?). The Report was prepared by Agapito Associates Inc. and
reported via news release dated June 3, 2010. The Qualified persons for
the Report were Dr. Michael P. Hardy, P.E, P.Eng., P.G., Dr. Douglas F.
Hambley, P.E., P.Eng., P.G. and Dean Pekeski, P.Geo.


This Study confirms that the Milestone resource shows significant
positive economics and that the asset is of sufficient size and grade to
support solution mining for more than forty years at a production rate
of 2.5Mt/yr. The annual production rate can be expanded to a higher
annual production rate, achievable through a higher level of capital
expenditure. The Company cautions that mineral resources that are not
mineral reserves do not have demonstrated economic viability.


Highlights of the Study include:


  

  

  

  • Initial Mine Life

  

  • 40 years

  • Annual Potash Production (primary and secondary)

  

  • 2.5 million tonnes per year KCl

  • Total Estimated Project Capital Cost

  

  • CAD$2.51 Bn

  • Project Unit Operating Costs

  

  • CAD$ 62.90/t

  • Estimated Net Present Value (NPV10)

  

  • CAD$5.22 Bn

  • Estimated after-tax and royalty Internal Rate of Return (IRR)

  

  • 27.3%

  • After-tax payback period

  

  • 7.3 years

  • High formation temperatures at Milestone (60 to 65 0C)
    reduce operating costs by 8.5% when compared with other solution
    mining projects in Saskatchewan accessing lower (50 to 55 0C)
    formation temperatures

  • Long Term Potash Gate Price: The CRU Group provided average yearly
    potash price estimates for the period from 2015 through 2025. The
    average for those years, equating to $US 511/t, was used for the 2025
    to 2055 period.

  • Other assumptions: Assumes a flat US$ exchange rate. Construction is
    assumed to take place over a two year period, production beginning in
    project year three. CAPEX based on 100% equity. Tax and royalties were
    calculated using a flat rate of CAD$28.90/t.

  • Since the analysis is based on a cash flow estimate, it should be
    expected that actual financial results may vary from these
    predictions. An accuracy assessment of the cost estimates was
    completed as part of this study and is estimated to be  ±35%.


The Study recommends immediate commencement of a pre-feasibility study
based on the attractive economic assessment presented in this report.
Management is now studying the possibility of consolidating the pre and
final feasibility processes, and producing and publishing only a final
feasibility suitable for reaching a production decision and for
attracting project debt finance. Management will be making
recommendations to the board as to the scope of the formal studies yet
to be completed.


AMEC is a leading engineering firm that currently manages multiple
potash expansion projects in Saskatchewan with a capital value of
several billion dollars. AMEC was chosen to carry out Milestone′s
preliminary economic assessment because of their technical expertise as
engineers and EPCM contractors, as well as their experience in potash
mine construction, potash processing and their expertise in producing
potash feasibility studies. The AMEC Study was authored by Ryan Leyland,
P. Eng. from AMEC.


Patricio Varas, CEO and President commented 'We are pleased that the
Scoping Study confirms that the Milestone Potash project is an
economically robust, stand alone project capable of delivering
significant value for our shareholders. Not only does the Study show
that the project is technically feasible and economically positive, it
also shows that our favorable formation temperatures contribute to
reduce our production costs by approximately 10%. We believe these
features identify Milestone as one of the largest and best Tier 1
potash, greenfield, solution deposits, still available in the world
today, that are ready for development. Our team has already started
planning further studies that will further 'de-risk? the project and
allow for the construction of a mine at Milestone. The receipt of this
positive Scoping Study is a significant milestone on the path towards
building Saskatchewan′s most efficient potash solution mine.?


The Company will file an executive summary of the Study on the Milestone
potash solution mining project with Canadian securities regulators
within 45 days of this release. The Summary will be available on SEDAR
at www.sedar.com,
and also on the Company's website at www.westernpotash.com.


The 100% owned Milestone property, comprising 500 square kilometers, is
located 30 kilometers southeast of Regina, and southeast of Mosaic′s
Belle Plaine Mine, one of the largest producing potash solution mines in
the world.


Western Potash Corp. is a mineral exploration company engaged in the
evaluation, exploration and development of potash mineral properties in
Western Canada. The Company intends to define and develop a world-class
potash deposit in an ecologically sustainable, economically efficient
and socially responsible manner.


The in-house qualified persons for the purposes of NI 43-101 guidelines
are J. Patricio Varas, P. Geo and Dean Pekeski, P. Geo, both of whom
have reviewed and approved the contents of this news release.


For more information on Western Potash Corp.′s projects, please visit
the Company′s website at: www.westernpotash.com


ON BEHALF OF THE BOARD OF DIRECTORS

'J. Patricio Varas?

J.
Patricio Varas

President and CEO


This news release contains Forward Looking Statements regarding our
intentions and plans. Forward looking statements in this news release
include that this Preliminary Economic Assessment confirms that the
Milestone resource shows significant positive economics and that the
asset is of sufficient size and grade to support solution mining for
more than forty years at a production rate of 2.5Mt/yr; mineral
resources that are not mineral reserves do not have demonstrated
economic viability until they are upgraded; that the annual production
rate can be expanded to a higher annual production rate given a higher
level of capital expenditure; that the Scoping Study recommends
immediate commencement of a pre-feasibility study; that Management is
studying the possibility of consolidating the pre and final feasibility
processes, and producing and publishing only a final feasibility
suitable for reaching a production decision and for attracting project
debt finance; that management will be making recommendations to the
board as to the scope of the formal studies yet to be completed; that
since the analysis is based on a cash flow estimate, it should be
expected that actual financial results would vary from these
predictions; that an accuracy assessment of the cost estimates was
completed as part of this study and is estimated to be  ±35%; that
Patricio Varas, CEO and President commented 'We are pleased that the
Scoping Study confirms that the Milestone Potash project is an
economically robust, stand alone project capable of delivering
significant value for our shareholders. Not only does the Study show
that the project is technically feasible and economically positive, it
also shows that our favorable formation temperatures contribute to
reduce our production costs by approximately 10%. We believe these
features identify Milestone as one of the largest and best Tier 1 potash
greenfield deposits, still available in the world today, that are ready
for development. Our team has already initiated the definition and
execution of a feasibility study plan that will further de-risk and
allow for the construction of a mine at Milestone. The receipt of this
positive Scoping Study is a significant milestone on the path towards
building Saskatchewan′s most efficient potash solution mine?; that the
Company will file an executive summary of the Scoping Study on the
Milestone potash solution mining project with Canadian securities
regulators on or before 45 days from the date of this news release. That
the Summary will be available on SEDAR at www.sedar.com,
and also on the Company's website. It is the Company′s policy not to
update forward-looking statements other than as required by applicable
securities laws and regulations. Various factors may prevent or delay
our plans, including but not limited to, contractor availability and
performance, weather, access, mineral prices and success and failure of
the exploration and development carried out at various stages of the
program. Readers should review risk factors applicable to junior mining
exploration companies generally to understand the variety of risks that
can affect the Company.

The TSX Venture Exchange has not reviewed and does not accept
responsibility for


the adequacy or accuracy of this
release.


Western Potash Corp.

Patrick Power, 604-689-9378



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