Potash Basics Mark Arundell IMEx Consulting All data in this - - PowerPoint PPT Presentation

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Potash Basics Mark Arundell IMEx Consulting All data in this - - PowerPoint PPT Presentation

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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

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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

  • What is Potash?
  • What is it used for & why its important
  • Supply demand metrics
  • Current operations globally
  • Known projects coming on stream
  • Key Project metrics
  • what grade is good/bad, capex etc

Proactive Investor Forum ‐ July 16th

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The IMEx Group - Experience

Exploration Projects and Regional Studies

Congo Danakil Nagaur (India & Pakistan) Carlsbad Michigan Elk Point Basin Paradox Basin Neuquen Udon Thani Canning Carnarvon Adavale Oman Afghanistan Sicily Khemiset North Caspian Catalonia Maritimes Atacama Sergipe Zechstein Belarus Uralian

IMEx Office

Amazon Gabon 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)

  • Potash helps

 improve a plant's disease resistance  crop quality  increases yields

  • Only potassium fertilizer source

 No practical substitutes

Proactive Investor Forum - July 16th

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Why Potash?

It’s a Growth Story!!

Proactive Investor Forum - July 16th

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Why Potash?

Proactive Investor Forum - July 16th

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Why Potash?

Rio Tinto 2015

Proactive Investor Forum - July 16th

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Why Potash? Potash Corp

2008 US$4.9Billion

Jul 15 US$29.18 2010 : BHP US$43.33

2011 US$2.7Billion

2011 9.3 MMT

2013 US$2.8 Billion

2013 7.8 MMT

18.1 MMT

Proactive Investor Forum - July 16th

PCS 2007, 2014 $US

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Supply Demand Metrics

  • Demand
  • Global Development
  • Rising income  better diets; demand for

high quality fruit, vegetables & meat

  • Increase production
  • Fertiliser has a key role

Proactive Investor Forum - July 16th

PCS 2014

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Supply Demand Metrics

  • Shift to Urban in Dev

countries

  • + 80M people per year

Asia & Africa

  • 2014 : ½ ; 2050 : 2/3
  • Econ Grow, inc Food
  • Fruit, veg + protein
  • Brazil, China, Indo - now
  • India, Africa - begin

Proactive Investor Forum - July 16th 10

PCS 2014

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Supply Demand Metrics

  • Pressure to inc. prod on

existing land

  • Less arable land
  • Fertiliser essential to

crop yield

  • Yield growth

Proactive Investor Forum - July 16th 11

PCS 2014

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Supply - Where Potash?

PCS 2014

Proactive Investor Forum - July 16th

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Production and Demand

PCS 2014

Proactive 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 market
  • Brazil  USA  China  India
  • An aside….
  • Producers are “Industrials” on NYSE not “Miners”
  • PCS, IPI, MOS
  • Dividend Yield

Proactive Investor Forum - July 16th

Bloomberg + 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 Chemicals

  • Two marketing conglomerates did control > 68%

exports.

Canpotex - Potash Corp, Mosaic and Agrium Belarussian Potash Co - Uralkali and Belaruskali.

Proactive Investor Forum - July 16th

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Supply/Demand Balance

Proactive Investor Forum - July 16th

Fertecon, CRU, IFA, PCS

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Potash Mining

  • Solar : Dead Sea, Utah, China
  • Underground : Conventional & Solution

Conventional : Room & Pillar < 1200m

  • Saskatoon, SK, Canada

Solution: 300 - ~ 2,000m

  • Regina, SK, Canada

Proactive Investor Forum - July 16th

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Southern Saskatchewan Potash Mines & Depth to Potash

Solution Conventional

Saskatoon Regina

Proactive Investor Forum - July 16th

BHPB

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Conventional Mining

  • Depth : 300m - 1200m
  • Thick Salt : 120m - > 150m
  • Room & 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 Evaporite

Strong impermeable rock 10-15m above Not shale, sand, etc.

Proactive Investor Forum - July 16th

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Conventional Mining

Proactive Investor Forum - July 16th

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Room & Pillar

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Natural Sciences Grade 9, SA

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Conventional Mining

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Vanscoy, Sk Room & Pillar

Agrium

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Solution Mining

  • Steam or Hot water injected
  • Salt saturate inc. Potash recovery
  • Single well (concentric casing)
  • 150-1500m deep (Barradeel, NL : 2800m)
  • One well - 100,000 tonnes

Proactive Investor Forum - July 16th

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Solution Mining

  • Major cost

Evaporation Ponds

  • plastic liner

Drying Kilns - Canada

  • Production

Sol : 4.5Mt, Belle Plaine, SK (Mosaic) Con : 3.0Mt, Colonsay, SK (Mosaic)

Proactive Investor Forum - July 16th

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Solution Mining

Proactive Investor Forum - July 16th

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Solution Mining

100m

Proactive Investor Forum - July 16th

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Zechstein Style

28 Proactive Investor Forum - July 16th

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Belle Plaine - Mosaic

Cluster House Salt Tailings Plant – Crystalliser, Compactor Cooling Ponds

3 km

Proactive Investor Forum - July 16th

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Belle Plain Potash

Proactive Investor Forum - July 16th

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Potash Milling

31 Proactive Investor Forum - July 16th

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Know n New Projects

  • 2015 : Prod 60Mt; Capacity 70Mt
  • Committed new projects + 10Mt
  • Eurochem (Russia) – 4.6-8.3Mt
  • Rocanville (NA) – 3.0Mt (2015)
  • Legacy (NA) – 2.0Mt (2017); 2.9Mt (2023)
  • Esterhazy K3 (NA) – 1.0Mt (2017); + $1.7B

Proactive Investor Forum - July 16th

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Know n New Projects

  • Potential new projects ~ 20Mt
  • BHP : Jansen (NA) 8-10Mt
  • Sirius : York (E) 2.0-5.0Mt PH
  • Am Potash : Holbrook (NA) – 2.5Mt
  • ROC (A) Elemental 0.4-1.2Mt; MagInd – 1.2Mt
  • Vale : Carnalita (SA) 0.5-1.7Mt
  • HFR : Muga (E) 1.1Mt
  • ICL/Allana : Ethiopia (A) 1.0Mt
  • SBM : Eritrea (A) 0.4Mt; SO4

Proactive Investor Forum - July 16th

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Key Project Metrics

  • Market
  • Mineralisation inc. Grade
  • Capex
  • Opex
  • “Realised price”

Proactive Investor Forum - July 16th

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Key Project Metrics

  • “Success in potash is about Capex & Margin (not

grade & scale)”

  • Market

Potash is an industrial mineral Where are the buyers? Contracts not spot Transport can be a killer

  • SK : US$50-60/ton
  • AU : US$80/ton

Proactive Investor Forum - July 16th

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Key Project Metrics

  • Mineralisation

Grade, Product, Depth, Insolubles Mining method  Resource recovery K2SO4 > KCl

  • Crystallisation

Drying Kilns - Canada Evaporation Ponds

  • Intrepid : solar > $110 less than conventional

Proactive Investor Forum - July 16th

US$ Dom

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Key Metrics - Minerals

  • Mineral

Formula % K2O

Sylvite KCl 63 Carnallite

MgCl2.KCl.6H2O 17

Kainite

MgSO4.KCl.3H2O 19

“Sylvinite”

KCl.NaCl ~ 20

Polyhalite

2CaSO4.K2SO4.MgSO4.2H2O 16

Langbeinite

MgSO4.K2SO4 23

Anhydrite

CaSO4 Chlorides Sulphates

Proactive Investor Forum - July 16th

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Key Project Metrics

  • Capex
  • Why spend US$4B?
  • Mine life - + 50 yrs
  • Old 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 substitute

  • Potash is an industrial not a metal
  • Market is the important key metric
  • Supply/demand balance – excess supply
  • The old way is dying – volume will
  • vertake price control

Proactive Investor Forum - July 16th

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Interested in Potash?

  • Potash Investing News
  • http://www.potashinvestingnews.com/
  • Potash News
  • http://www.mining.com/potash/
  • Potash | Industrial Minerals
  • http://www.indm.in/tag/potash/
  • Potash Works
  • http://www.potashworks.com/

Proactive Investor Forum - July 16th