Definitive Feasibility Study Economic Outcomes
The DFS utilises a modular development approach which mitigates risk while enhancing fundability and economic return. Module I is expected to produce approximately 425ktpa of premium SOP product with commissioning currently targeted for Q4 2018. Module II, commencing production in year 6, will increase total SOP production to 850ktpa at an additional capital cost of US$175m. Modules I and II are designed to create a platform for growth and generate cash flows to fund subsequent expansions which have not been included in the DFS.
Colluli Definitive Feasibility Study (DFS) results exceeded expectations and PFS results and are summarised below:
- DFS confirms low capex, high margin, long life project
- Module I development capital reduced from PFS by over 30% to US$298m
- Capital payback period of 3.5 years
- Project post tax NPV of US$860m and IRR of 29%
- Colluli in the bottom quartile of the mine gate cost curve
- 1.1 billion tonnes ore reserve, with expected 200+ year mine life
- DFS demonstrates Colluli is one of the most attractive potash projects in the world
The economic evaluation of Colluli has been completed using a discounted cash flow model. An external review of the model has been undertaken to ensure logistical and arithmetic integrity and in reference to the applicable fiscal regime.
Capital and operating costs are presented in real US dollars (September quarter 2015) to an accuracy of ±15%. Estimates have been compiled for the economic period of review (first 60 years of production).
The increase in the calculated Internal Rate of Return (IRR) from PFS to DFS is primarily due to the reduction in the Phase I development capital requirement by over 30%.
Capital costs are presented in real US dollars (September quarter 2015) to an accuracy of ±15%. Estimates have been compiled for the economic period of review (first 60 years of production).
Development capital estimates are summarised in the table below. Colluli development capital optimisation has resulted in industry leading capital intensity which enhances both the Project’s returns and fundability.
Sustaining capital has been allocated for further pond and tailings construction, minor mobile equipment, infrastructure upgrades and closure provisioning.
The table below shows the relevant sustaining capital over the economic period of review (first 60 years of operation).
Working capital, provided in reference to the delay from first production to cash receipt from product sales, is summarised in the table below:.
OPERATING COST ESTIMATES
Operating costs are presented in real US dollars (September quarter 2015) to an accuracy of ±15%. Estimates have been compiled for the economic period of review (first 60 years of production).
All costs have been prepared on an owner operated basis except for mining production (first 60 years), product logistics (first 60 years) and power (first 5 years).
The mine gate cash costs position Colluli in the bottom quartile of the SOP cost curve. Based on the estimated average composite sale price of US$572/t SOP, Colluli is expected to deliver a robust Phase I operating margin of US$317/t SOP, or 55%. The table below provides operating unit rates (US$/t SOP) across the period of economic assessment. These costs represent those necessary to deliver product to the point of sale (FOB at Massawa).