16 April 2020 ABR COMPLETES ENHANCED FORT CADY BORATE MINE DFS WITH SUBSTANTIAL INCREASE IN SOP PRODUCTION HIGHLIGHTS • Fort Cady Borate Mine Definitive Feasibility Study (DFS) enhanced to include significantly increased SOP production to 362k tonnes pa in full production (an increase of 233%) • Full Project presents outstanding metrics including: o NPV8 of US$1.97 bn (A$3.078 bn*); o IRR of 39.4%; and o EBITDA of US$438.4m (A$685.0 m*) in first year of full production • An accelerated phase option included, where Phases 1B & 2 would be built concurrently. This scenario would lift financial metrics to: o NPV8 to US$2.084 billion (A$3.256 bn*), and o IRR to 39.6% • Targeted opex in full production of negative US$19.96 per tonne of boric acid after by-product credits • Multiple revenue streams with revenue split in full production estimated to be: o 54.0% boric acid; o 43.2% SOP; and o 2.8% gypsum • Key selling price assumptions revised from Dec 2018 DFS reflective of market pricing with boric acid now US$750 tonne (from US$800), and SOP now US$675 tonne (from US$725) • Potential upside with focus on high value specialty fertiliser mix of boron and SOP • Operation expected to directly employ around 250 people in full production • Detailed engineering advancing with targeted first production Q3 CY2021 • Financing discussions ongoing
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ABR COMPLETES ENHANCED FORT CADY BORATE MINE DFS …€¦ · SOP Price US$675/tonne US$725/tonne US$50/tonne Capex US$737.9 million US$526.2 million US$211.7m NPV 8 US$1.965 billion
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16 April 2020
ABR COMPLETES ENHANCED FORT CADY BORATE MINE DFS
WITH SUBSTANTIAL INCREASE IN SOP PRODUCTION
HIGHLIGHTS
• Fort Cady Borate Mine Definitive Feasibility Study (DFS) enhanced to include significantly increased SOP
production to 362k tonnes pa in full production (an increase of 233%)
• Full Project presents outstanding metrics including:
o NPV8 of US$1.97 bn (A$3.078 bn*);
o IRR of 39.4%; and
o EBITDA of US$438.4m (A$685.0 m*) in first year of full production
• An accelerated phase option included, where Phases 1B & 2 would be built concurrently. This scenario
would lift financial metrics to:
o NPV8 to US$2.084 billion (A$3.256 bn*), and
o IRR to 39.6%
• Targeted opex in full production of negative US$19.96 per tonne of boric acid after by-product credits
• Multiple revenue streams with revenue split in full production estimated to be:
o 54.0% boric acid;
o 43.2% SOP; and
o 2.8% gypsum
• Key selling price assumptions revised from Dec 2018 DFS reflective of market pricing with boric acid now
US$750 tonne (from US$800), and SOP now US$675 tonne (from US$725)
• Potential upside with focus on high value specialty fertiliser mix of boron and SOP
• Operation expected to directly employ around 250 people in full production
• Detailed engineering advancing with targeted first production Q3 CY2021
• Financing discussions ongoing
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American Pacific Borates Limited (ASX:ABR) (“ABR” or the “Company”) is pleased to announce it has enhanced the
Fort Cady Borate Mine DFS (the “Project”) released on 17 December 2018 to incorporate process improvements.
The enhanced DFS has substantially increased the production of SOP.
* Exchange Rate assumed of 0.64USD:1.00AUD (as at 15 April 2020)
SOP, potassium sulfate or K2SO4, is a high value speciality fertiliser that combines potash and sulfur that is used as
a substitute for potassium chloride, MOP or KCl in high value crops that are either sensitive to chloride or grown in
areas with minimal rainfall where the build-up of chloride in the soil is problematic.
American Pacific Borates Limited, CEO, Michael Schlumpberger commented,
“We have built on an exceptional Fort Cady Borate Mine DFS that was initially completed in December 2018 and
modified in January 2019. This enhanced DFS now delivers a better mix of product revenue with SOP now making
up around 43% of our projected revenue. Our ambition of becoming a substantial global specialty fertiliser
producer now presents with a more complete value proposition given our location in one of the world’s largest
agricultural markets.
The enhanced DFS continues to deliver very low upfront capex, very high margins and relatively low technical risk
given the ore body has produced borates historically. The scale of the financial metrics really set us apart from
other projects, with an NPV8 of over A$3bn (US$2bn) and an expected A$685m (US$438m) EBITDA in the first year
of full production.
We are now targeting first production in Q3 CY21, subject to permitting and financing.”
Background
ABR is developing its 100% owned Fort Cady Borate Mine Project (the “Project”) located in the southeastern desert
region of San Bernardino County, California. The Project is located near the town of Newberry Springs,
approximately 50 km east of the city of Barstow and 4 km south of Interstate 40 (I-40). The Project area occurs
approximately 200 km from Los Angeles (California) and Las Vegas (Nevada) in the Barstow Trough of the central
Mojave. The Project and proposed operation is situated in an area with existing sealed roads, a gas pipeline, rail
line and power lines.
The Project sees the production of boric acid via solution mining of an ore body that is around 450m beneath
surface. SOP is produced as a by-product of the production of HCl that is used in the solution mining process for
boric acid. A simplified flowsheet for the Project is presented below:
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Figure 1 | Fort Cady Simplified Flowsheet
The initial DFS was completed in December 2018 (refer ASX announcement dated 17 December 2018). In January
2019, the initial DFS was then modified to include a low capex starter project (refer ASX announcement dated 31
January 2019).
Fort Cady Borate Mine Enhanced DFS
The initial DFS completed in December 2018 for the Project contemplated a three phase Project which, in full
production, would produce 408ktpa boric acid (“BA”) and 109ktpa sulphate of potash (“SOP”).
The Company subsequently modified the Project in January 2019 by allowing for a low capex starter project, that
split the previously announced phase 1 into phases 1A and 1B, which provided a lower upfront capital requirement
to assist financing flexibility. Full production metrics remained unchanged from the initial DFS.
The Enhanced DFS which is now complete builds on the starter project as announced in January 2019, by
incorporating further engineering work completed, as well as value engineering that has seen a substantial increase
in proposed SOP production. SOP production (in full production) has increased to 363ktpa from 109ktpa, an
increase of 233%. Boric acid production remains unchanged at 408ktpa in full production, but importantly phase
1A production has increased by 50 percent to 8.2ktpa from 5.4ktpa
The starter project has been achieved by splitting Phase 1 into Phase 1A and Phase 1B. Phase 1A (starter project)
will target the production of 40kstpa of SOP and 9kstpa of boric acid. Phase 1B will then increase boric acid
production to 90kstpa and SOP production to 80kstpa.
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Key changes from January 2019 to the April 2020 enhanced DFS are:
Table 1 | Key changes from the 2019 Modified DFS
Enhanced DFS
(April 2020)
Modified DFS
(January 2019) Change
BA Production
(in full production)
408,233
tonnes/year
408,233
tonnes/year No change ➔
SOP Production
(in full production)
362,874
tonnes/year
108,862
tonnes/year
254,012
tonnes/year
BA Price US$750/tonne US$800/tonne US$50/tonne
SOP Price US$675/tonne US$725/tonne US$50/tonne
Capex US$737.9 million US$526.2 million US$211.7m
NPV8 US$1.965 billion US$1.428 billion US$537m
IRR 39.4% 40.5% 1.1%
EBITDA in first year
full production US$438.4 million US$345.4 million US$98.0m
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Table 2 | Key Financial Metrics for the Fort Cady Borate Mine on a Phase by Phase Basis
Fort Cady Project (Boric Acid and SOP Production) Phase 1A Only
Capex US$50.3 million
NPV8 US$224.3 million
IRR 35.9%
EBITDA in first full year of production US$19.6 million
Phase 1A & 1B Only
Capex (Phase 1B only) US$156.0 million
NPV8 US$773.8 million
IRR 32.4%
EBITDA in first full year of production US$73.2 million
Phase 1 & 2 Only
Capex (Phase 2 only) US$268.3 million
NPV8 US$1.709 billion
IRR 37.8%
EBITDA in first full year of production US$242.2 million
Full Project (Phases 1, 2, & 3) Capex (Phase 3 only) US$263.2 million
NPV8 US$1.965 billion IRR 39.4% EBITDA in first full year of production US$438.4 million
The Project is forecast to directly employ around 250 people in full production. The Company is in the process of
contracting economists to determine a sensible number of indirect employment that the 250 direct employees will
create. The direct employment and indirect employment is expected to be meaningful to the local area.
The strength of standalone Phase 1A financial metrics means the Company can continue to target financing this
project in isolation. It also creates a modest starting point for development of the Project through the phases, with
the ultimate goal of reaching full production and the forecast EBITDA for the first full year of production of US$438.4
million. The table below presents a summary of the production targets by each Phase of construction.
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Table 3 | Summary of Production by Phase for the Fort Cady Borate Mine