CHOUSTON (ICIS)--IC Potash (ICP) has completed the feasibility study for the Ochoa SOP Project in New Mexico, which demonstrates the ability to produce approximately 714,400 tons (648,000 tonnes) of the specialised crop nutrient, the Canadian fertilizer producer said on Thursday.
Located in southeastern New Mexico, the Ochoa project encompasses approximately 90,000 acres (36,000 hectares) and will consist of an underground mine with surface processing facilities. Toronto-based ICP said that the company is focused on the mining of polyhalite to process into sulphate of potash (SOP).
SOP is a non-chloride-based fertilizer and is considered a premium potash product that is primarily utilised in the growth of fruits and vegetables, especially in soil that is considered salt sensitive. It typically earns producers a rate of return 30% higher than conventional potash prices and has shown stability even during the downturns in the potash sector. The global market is estimated at 5.5m tons/year.
The study calculates that there will be approximately $1bn start-up capital costs, with operating costs of $195/ton. The report recommends that ICP begin moving to the engineering, procurement and construction management phase; complete the remaining environmental permitting; and arrange financing.
A decision on the project’s environmental impact statement is expected in early April, and the air quality permit application is expected to be completed by June. In December 2013, ICP announced the closing of a $5m private placement intended to finance the next steps for the company.
ICP said that there will be approximately three years of construction and commissioning beginning in Q2 2014 and continuing through Q2 2017. Production in 2017 is estimated at 48% of annual capacity, with full capacity expected in 2018. The company said that mineral reserves are projected to be 182.4m tons.
Once full production is achieved, the company anticipates the product mix will be an estimated 229,400 tons of standard SOP, with another 385,000 tons of granular SOP and 100,000 tons of soluble SOP. The producer has an existing 30% off-take deal with fertilizer titan Yara.
The study stated that the life of the mine is expected to be 50 years, but testing has shown mineral resources exist outside of the mine plan boundary, which gives expectation that those resources will be economically mineable for much longer.
The SOP products are planned to be moved through ICP's rail loading and truck distribution facility, which will give the producer the ability to reach domestic markets as well as any international dry bulk port facility in the Americas.
Company officials view the Ochoa facility as having the resources necessary for ICP to become the lowest cost producer of the crop nutrient outside of China.
“We are pleased with the technical validation of the mining and processing design, and the resulting economic characteristics. The Ochoa Project positions ICP to become a world leader in SOP production and a bottom-quartile cost SOP producer. We intend to begin immediately with the next phases of engineering and financing,” said Sidney Himmel, ICP CEO.