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Potash ridge april 2016 web
- 2. FORWARD LOOKING STATEMENTS 2 Certain statements in this presentation may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Potash Ridge Corporation (the "Corporation"), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this presentation, such statements use such words as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate" and other similar terminology. These statements reflect the Corporation's current expectations regarding future events and operating performance and speak only as of the date of this presentation. Forward-looking statements involve significant risks and uncertainties, which include, but are not limited to the factors discussed under “A Cautionary Note Regarding Forward Looking Statements” and "Risk Factors" in the Corporation’s Annual Information Form dated March 28, 2016, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. Although the forward-looking statements contained in this presentation are based upon what management of the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Corporation assumes no obligation to update or revise them to reflect new events or circumstances.
- 3. Potash Ridge is a near term producer of premium fertilizer with world class development assets in Utah and Quebec. The Company is uniquely positioned to take advantage of strong markets for Sulphate of Potash 3
- 4. HIGHLIGHTS 4 Sulphate of Potash (“SOP”) is a premium potash with a significant supply deficit § Domes&c selling price 3x versus regular potash (“MOP”) § Global consump&on is ~5 million tonnes per year (“tpy”) § Demand poten&al is 10 million tpy § Exis&ng producers unable to expand to meet supply deficit Strategy § Become the first SOP producer using Mannheim process in North America and, longer term, the largest North American SOP producer Valleyfield (Quebec) § 40,000 tpy of SOP; CDN$48.8 million capex § 32.5% aUer tax IRR § Proven process used throughout Europe and Asia § Produc&on scheduled to commence in Q4 2017 § Strategic loca&on near by-product hydrochloric acid demand § Expansion poten&al at site § Poten&al for over $13m in average annual cash flows (Y1-Y5) Blawn Mountain (Utah) § Up to 585,000 tpy of SOP; poten&al to phase-in produc&on to reduce front end capex § Prefeasibility complete: 20.5% aUer tax IRR § Large surface mineral deposit; over 40-year reserve life § Major permits and water rights secured; infrastructure nearby § Poten&al upside from alumina residue in tailings § Poten&al for over US$250M in average annual cash flow
- 6. SOP: A TOP PERFORMING COMMODITY IN LAST 5 YEARS 6 1 Compass Minerals Q4 2015 Report, 2 Potash Corp Q4 2015 Report SERVING AN UNDERSERVED MARKET Compass Q4/15 realized SOP price U.S.$887/tonne1 Potash Corp Q4/15 realized MOP price U.S.$238/tonne2 SOP MOP
- 9. VALLEYFIELD PROJECT (QUEBEC) 9 • Proven Mannheim technology • Converts MOP + sulphuric acid to SOP + by-product hydrochloric acid • Engineering study completed by SNC on March 29, 2016 • Plan to build under EPC contract • Based on 40,000 tpy of SOP • Poten&al to build addi&onal units • CDN$13.3 million average annual cash flow for first 5 years • Permihng expected to take three months • Strong interest in SOP okake Economic Summary (CDN$) Ini&al capital cost(1) $48.8 million IRR (unlevered aUer tax) 32.5% NPV (aUer tax at 10%) $66.9 million SOP price/tonne $1,000 (U.S.$760 ) MOP price/tonne(2) $500 (U.S.$380) Opex/tonne(3) $590 (1) $9.5 million of this amount is acid support infrastructure expected to be incurred by 3rd par&es (2) Equates to $430 / tonne of SOP (3) Net of acid credit • MOU nego&ated with third party for off take of hydrochloric acid • Poten&al to take advantage of aprac&ve financing support in Quebec • Expect to start construc&on in 2016, with 12-month construc&on schedule
- 10. VALLEYFIELD: STRATEGICALLY LOCATED • Located near Montreal, Quebec • Property secured • Strong local support • Rail access at site • Port within 2 km, allowing access into key U.S. markets • Within 2 km of sulphuric acid supplier – discussions ini&ated with suppliers 10 • Located near hydrochloric acid customers • MOU signed for okake of ini&al produc&on • Discussions underway for second phase of hydrochloric acid okake
- 11. PROVEN MANNHEIM PROCESS 11 Mannheim Furnace Potassium Sulphate (“SOP”) Hydrochloric Acid (“HCL”) Potassium Chloride (“MOP”) Sulphuric Acid Energy • Converts MOP to SOP • Proven produc&on process (over 100 year history), with numerous opera&ng facili&es in Europe and China (about 40% of current SOP produc&on is from Mannheim) • High quality, consistent produc&on process • Scale allows for construc&on &me of 12-months
- 12. VALLEYFIELD NEXT STEPS 12 Task Comments Engineering Study • Completed by SNC on March 29, 2016 • Finalize EPC arrangements Permihng • Expected to take three months Acid Commercial Arrangements • Plan to have a third party to build, own, operate hydrochloric acid and sulphuric acid infrastructure • Third party will also be responsible for acid logis&cs SOP Okake • Mul&ple expressions of interest in okake. • Nego&a&ons set to commence now engineering study complete Financing • Discussions set to commence with preliminary engineering study complete • Quebec government financial support programs available Construc&on • Expected to commence in late 2016 • An&cipate 12-month construc&on &metable
- 14. BLAWN MOUNTAIN PROJECT (UTAH) • Surface mining with adjacent processing facility • Known process to convert alunite ore into SOP, by-product sulphuric acid and an alumina-rich material • Prefeasibility Study completed by Norwest in December 2013 • P+P reserves support 40 year mine life, • Poten&al to increase life of opera&ons through addi&onal explora&on • Project permiped; water rights secured 14 PFS Economic Summary (US$) Ini&al capital cost $1,124 million IRR (unlevered aUer tax) 20.5% NPV (aUer tax, at 10%) $1.0 billion SOP price/ton $649 Opex/ton (1) $173 (1) Net of acid credit and excluding royal&es. • MOU nego&ated with third party for okake of sulphuric acid • Currently assessing the poten&al to phase project (with phase 1 poten&ally around 200,000 tpy) to significantly reduce up front capex • Poten&al to fast track next stage of development
- 15. UTAH – AN ATTRACTIVE PLACE FOR MINING 15 • Major resource producing state • Over 100 years of potash produc&on • Best state for business and top quar&le mining jurisdic&on(1) • 100% state-owned land • Strong state government and local support • All necessary infrastructure nearby (1) Forbes Magazine, 2015 Ranking and Fraser Ins&tute, April, 2013
- 17. RESERVES AND MINE LIFE Drilling work to date has established 40 years of reserves – calculated by independent engineer (Norwest) Drilling to date has focused only on two of the four areas within the 15,400 acre land posi&on 17 Reserve Category Total Proven ('000 tons) Probable ('000 tons) Alunite Ore (ROM tons) 136,254 289,540 425,794 Ore (average K2O (%) grade) 3.56 3.49 3.51 Ore (average K2SO4 (%) grade) 6.59 6.46 6.49 SOP (tons) 8,457 17,970 26,427 Sulphuric Acid (tons) @ 98% Purity 18,888 40,136 59,024 Mineral Reserves by Category November 6, 2013 DRILLED NOT YET DRILLED
- 18. 18 PERMITTING ESSENTIALLY COMPLETED The following table iden&fies the major permits and approvals that the Corpora&on has or s&ll needs to obtain prior to construc&on: Permit/Approval Issuing Agency Completed Explora&on Permit Utah Division of Oil, Gas and Mining October, 2011 US Army Corps of Engineers Jurisdic&onal Waters Concurrence US Army Corps of Engineers March, 2014 Groundwater Permits Utah Division of Water Quality July, 2014 Large Mine Opera&on Approval Utah Division of Oil, Gas and Mining August, 2014 Air Quality Emission Standard Utah Division of Air Quality Air Quality Emission Standard requires the engineering to be par&ally completed before the applica&on is filed. It is technically not a permit, but more an agreed upon emission target that the Project must be designed to meet.
- 19. INDUSTRY PROVEN FLOWSHEET Alunite Calcination Water Leach Alumina Rich Material SOP Solution Crystallizing Drying, Compacting & Sizing SOP SO2 Acid Plant Sulphuric Acid 19 WELL UNDERSTOOD FLOWSHEET USING COMMONLY USED EQUIPMENT • Extensive test work confirms flowsheet; • Planned addi&onal test work will include bulk samples at equipment vendor facili&es – will result in vendors providing produc&on guarantees Crushing & Grinding • Exis&ng plant in Azerbaijan currently mothballed (Ganja Refinery) • Flowsheet similar to commercial-scale produc&on processes historically used in US and Australia
- 20. BLAWN MOUNTAIN DEVELOPMENT TIMELINE 20 Late 1970’s $25 million invested developing Project 2011 Project Acquired April 2012 Initial resource estimate* November 2012 Preliminary Economic Assessment * December 2013 Prefeasibility Study* establishes 40 years of reserves * 43-101 Compliant Technical Report December 2012 IPO $80M market cap August 2014 Large Mine Operating Permit issued March 2014 US ACOE confirms no US federal permits required; Exploration lease converted to mining lease July 2014 Groundwater Discharge Permit issued October 2014 Enter into offtake and marketing arrangement for by-product sulphuric acid
- 21. BLAWN MOUNTAIN NEXT STEPS 21 Task Comments Maintain value created to date while raising pre- construc&on capital • Mining lease modified in June 2015 to defer lease payments • Permits remain intact • Commercial arrangements already nego&ated for support infrastructure remain in place Further evaluate reduced scale alterna&ve • Engage engineering firm to evaluate phased development of project, at a poten&al ini&al produc&on rate of around 200,000 tpy • Ul&mate goal will be to obtain EPC quote on reduced scale alterna&ve Okake • Ini&ate discussions with poten&al okake partners aUer comple&on of reduced scale alterna&ve evalua&on Financing • Strong interest in construc&on financing – con&nue dialogue with poten&al financiers
- 23. EXPERIENCED AND PROVEN MANAGEMENT OVER 70 YEARS COMBINED EXPERIENCE 23 Guy Ben4nck President and Chief Execu4ve Officer Chartered Professional Accountant 20 years mining/resource experience Sherrip CFO and SVP Capital Projects Ross Phillips Chief Opera4ng Officer and Chief Financial Officer MA (Econ)/MBA/CFA/CPA 10 years experience in large resource and energy sector projects Sherrip, Capital Power Jay Hussey VP Corporate Finance and President, Valleyfield Fer4lizer 20 years capital markets consul&ng 9 years SOP experience with Migao Corpora&on Paul Hampton Project Manager Geologist and Metallurgical Engineer 30 years in design, construc&on and management of mineral processing facili&es SNC, Washington Group, Outotec
- 24. CAPITAL RAISES AND CAPITALIZED COSTS 24 Date/Price Price Proceeds $mm February 2011 $0.05 $1.1 August 2011 $0.25 5.4 November 2011 $0.25 1.5 December 2011 $0.25 0.5 December 2011 $0.75 10.5 December 2012 $1.00 20.0 November 2015 $0.03 0.6 Total $39.6 Ac4vity $mm Various engineering studies $10.4 Drilling 6.8 Employee costs 6.3 Engineering and permihng consul&ng costs 5.4 Mineral leases 2.5 Other 1.2 Total $32.6 Capital Raises Capitalized Costs
- 25. CAPITAL STRUCTURE 25 Millions Total Common Shares Outstanding 106.9 Warrants – $ 0.08 (exp. Nov 2017) 11.3 Stock options 9.4 Total Fully Diluted Shares 127.6 As at February 29, 2016
- 26. April 2016