Potash Basics Mark Arundell IMEx Consulting All data in this presentation are the intellectual property of IMEx Consulting (except where obtained from public domain) and must not be reproduced, copied, shared or forwarded in any form without the express permission of IMEx Consulting
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Potash Basics
Mark ArundellIMEx Consulting
All data in this presentation are the intellectual property of IMEx Consulting (except where obtained from public domain) and must not be reproduced, copied, shared or forwarded in any form without the express permission of IMEx Consulting
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Potash
What is Potash?What is it used for & why its important Supply demand metricsCurrent operations globallyKnown projects coming on streamKey Project metricswhat grade is good/bad, capex etc
Proactive Investor Forum ‐ July 16th
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The IMEx Group - ExperienceExploration Projects and Regional Studies
Congo
Danakil
Nagaur (India & Pakistan)Carlsbad
MichiganElk Point BasinParadox Basin
Neuquen
Udon Thani
CanningCarnarvon Adavale
Oman
Afghanistan
Sicily
Khemiset
North CaspianCatalonia
Maritimes
Atacama
Sergipe
ZechsteinBelarus
Uralian
IMEx Office
AmazonGabon
Timaru
Proactive Investor Forum - July 16th
Lake Auld
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What’s Potash?
The mineral (K) is one of the three main macro nutrients required by plants, along with nitrogen (N) & phosphate (P)
Proactive Investor Forum - July 16th PCS 2007, 2014
$US
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Supply Demand Metrics
DemandGlobal DevelopmentRising income better diets; demand for
high quality fruit, vegetables & meatIncrease productionFertiliser has a key role
Proactive Investor Forum - July 16th
PCS 2014
Supply Demand Metrics
Shift to Urban in Dev countries+80M people per year
Asia & Africa2014 : ½; 2050 : 2/3
Econ Grow, inc FoodFruit, veg + protein
Brazil, China, Indo - nowIndia, Africa - begin
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PCS 2014
Supply Demand Metrics
Pressure to inc. prod on existing landLess arable land
Fertiliser essential to crop yieldYield growth
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PCS 2014
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Supply - Where Potash?
PCS 2014Proactive Investor Forum - July 16th
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Production and Demand
PCS 2014Proactive Investor Forum - July 16th
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PCS offer for K+S
BHP poison pill? Gain control over undisciplined tonnes Regulators will prevent Volume over price is inevitable
Market : K&S Brazil PCS – New Brunswick (non Canpotex) Brazil
Proactive Investor Forum - July 16th
ScotiaBank 2015
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PCS offer for K+S
Largest export marketBrazil USA China India
An aside…. Producers are “Industrials” on NYSE not “Miners”PCS, IPI, MOSDividend Yield
Proactive Investor Forum - July 16thBloomberg + Capital IQ
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Supply
Only 12 countries produce potash. Canada, Russia, Belarus & Germany - +75%
Seven companies control >80% of global supply: Potash Corp of Saskatchewan, Mosaic Co, Agrium Inc,
K+S, Uralkali, Belaruskali & Israel ChemicalsTwo marketing conglomerates did control >68%
exports. Canpotex - Potash Corp, Mosaic and AgriumBelarussian Potash Co - Uralkali and Belaruskali.
Proactive Investor Forum - July 16th
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Supply/Demand Balance
Proactive Investor Forum - July 16thFertecon, CRU, IFA, PCS
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Potash Mining
Solar : Dead Sea, Utah, ChinaUnderground : Conventional & SolutionConventional : Room & Pillar <1200m Saskatoon, SK, Canada
Solution: 300 - ~2,000m Regina, SK, Canada
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Southern SaskatchewanPotash Mines & Depth to Potash
Solution
ConventionalSaskatoon
Regina
Proactive Investor Forum - July 16thBHPB
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Conventional Mining
Depth : 300m - 1200mThick Salt : 120m - >150mRoom & Pillar - 5-12m high; 10-20m wide; 70% recovery (30% pillar)Drill & Blast, road headers or continuous miners Salt : 30cm bottom; 1-2m roof Prairie EvaporiteStrong impermeable rock 10-15m aboveNot shale, sand, etc.
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ConventionalMining
Proactive Investor Forum - July 16th
Room & Pillar
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Natural Sciences Grade 9, SA
Conventional Mining
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Vanscoy, Sk
Room & Pillar
Agrium
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Solution Mining
Steam or Hot water injectedSalt saturate inc. Potash recovery Single well (concentric casing)150-1500m deep (Barradeel, NL : 2800m)One well - 100,000 tonnes
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Solution Mining
Major costEvaporation Pondsplastic liner
Drying Kilns - CanadaProduction Sol : 4.5Mt, Belle Plaine, SK (Mosaic)Con : 3.0Mt, Colonsay, SK (Mosaic)
MarketMineralisation inc. GradeCapexOpex“Realised price”
Proactive Investor Forum - July 16th
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Key Project Metrics
“Success in potash is about Capex & Margin (not grade & scale)”MarketPotash is an industrial mineralWhere are the buyers? Contracts not spotTransport can be a killer SK : US$50-60/ton AU : US$80/ton
CapexWhy spend US$4B?Mine life - +50 yrsOld mines dying –
K+S
Proactive Investor Forum - July 16th
PCS, K+S
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Summary
Potash is necessary to increased crop production – no practical substitutePotash is an industrial not a metalMarket is the important key metricSupply/demand balance – excess supply The old way is dying – volume will