MagMinerals Inc., a unit of MagIndustries Corp., Toronto, has received a resource report for its Kouilou Potash Project in the Congo. The report identifies measured, indicated, and inferred carnallite resources within MagMinerals’ 2200 square kilometer Makola license that compliment the final feasibility study currently nearing completion.
Carnallite is a mineral best described as a magnesium-potassium-chloride, or a double-salt with the chemical formula KMgCl36H2O. The carnallite occurs in multiple, horizontal horizons ranging in thickness from 0.5 metres to 24 metres, with an average content of about 70 percent carnallite. Four horizons, located between 400m and 800m below the surface, have been considered for commercial development.
MagMinerals intends to build, own, and operate a stand-alone potash plant 16 kilometers east of the Atlantic port city of Pointe-Noire, Republic of Congo.
The company says the measured resources amount to 104.6 million mt of carnallitite with an average grade of 17.5 percent KCl, representing 18.3 million mt of KCl. The indicated resources amount to 17.4 million mt of carnallitite at an average of 19.5 percent KCl, representing 3.4 million mt of KCl. The inferred resources amount to 1.07 billion mt of carnallitite at an average of 17.3 percent KCl, representing 185.9 million mt of KCl.
Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau mbH (Ercosplan), formerly the East German Potash Consortium, authored the report.
The measured and indicated resources are sufficient for over 36 years worth of production for the first phase of the Kouilou project, which has been designed as a 580,000 mt/y, single train potash plant, according to the company. The plant is based on a modular design. It is the intention of MagMinerals to double the first phase capacity to reach a total of 1,200,000 mt/y in order to more fully utilize the extensive resource base available. A copy of the full Report may be obtained under MagIndustries’ profile on www.sedar.com, or on its website at www.magindustries.com.
The company expects the product output will be mostly granular KCl, which will be directed primarily to target markets in South Africa, Brazil, and Europe. The Kouilou Plant is expected to be commissioned by late 2010, with first shipments in early 2011.
It should be noted that the feasibility study has not yet been completed, and there is therefore no certainty the proposed operations will be economically viable.
MagMinerals intends to build the plant with the support of several leading international companies. SNC-Lavalin International Inc. is actively working toward the completion of the overall feasibility study, which is expected to be delivered to MagMinerals in the first quarter of 2008.
Consolidated Contractors International Company S.A.L. has been retained as general contractors for the construction of the project and to assist SNC with the completion of detailed capital cost estimates.
HPD LLC has been selected to design and provide key equipment for a brine concentration system and a multi-stage crystallization system to produce potassium chloride.
MagMinerals has entered into a preliminary agreement with Ameropa AG, who has indicated their ability to market 100 percent of the potash production. A definitive marketing agreement is in the final stages of negotiation. The marketing agreement will also support a debt finance package proposed to cover 70 percent of the plant’s capital costs.
BNP Paribas are advisors to MagMinerals with respect to this debt financing, which is expected to include a number of international financial institutions.
MagMinerals expects its project to be the only green-field potash supplier to come into production in the next five years. Factors contributing to MagMinerals’ expected cost competitiveness include low-cost solution mining methods (generally estimated at 25-40 percent lower capital costs than conventional underground mining), abundant low-cost natural gas, and existing infrastructure such as rail lines and proximity to existing port facilities.
The company notes that from Pointe Noire the shipping time to Brazil, one of the world’s largest importers of potash, is less than half that of other major suppliers. MagMinerals should also be the lowest cost supplier to West Africa and South Africa, and have very competitive rates to Southern Europe and North Africa. Current potash prices in Brazil are in the range of US$350/mt. Spot prices worldwide have recently been quoted at $400/mt.