About Crystal Peak Minerals
The History, Meet the Team and more
In the 1970's, a Utah geologist, Murray Godbe, began the first known systematic study of the Sevier Playa with the intention to produce valuable minerals. Godbe and his team found indications of a vast pool of brine containing potassium and other important chemicals. Supported by a Texas financier, W. D. Hayden, Godbe leased the majority of the dry lake's surface securing land from the BLM as well as from SITLA, a Utah state land agency.
The team drilled hundreds of wells taking brine samples across the vast lake surface and from many depths. After several years of study, and shortly before the project was set to enter full development and production, W. D. Hayden suddenly died. Not long afterward, Murray Godbe died. The heirs briefly tried to market the project but ultimately gave up. After a period, the leases returned to their respective government agencies.
In 2008, Emerald Peak Minerals LLC formed to resurrect the project. After securing SITLA leases from the State of Utah, Emerald Peak Minerals partnered with Crystal Peak Minerals Inc. to secure the financing necessary to obtain the federal leases from the Bureau of Land Management. Crystal Peak Minerals Inc. raised about $30 million dollars (CAD$) and won the federal acreage needed to define the project. Through subsequent negotiations, Crystal Peak Minerals Inc. increased its holdings. Today, it directly controls almost 96,000 acres through its wholly-owned U.S. subsidiary Crystal Peak Minerals Inc. and has agreements to operate more than 28,000 additional contiguous acres.
On February 21, 2018, Crystal Peak Minerals Inc. announced the filing on SEDAR of a National Instrument 43-101 technical report entitled “NI 43-101 Technical Report Summarizing the Feasibility Study for the Sevier Playa Potash Project, Millard County, Utah” dated effective January 11, 2018, and prepared by Novopro Projects Inc. (Novopro), and Norwest Corporation (Norwest) (the “Technical Report”). The Technical Report outlines the results of the Feasibility Study (“FS”) of Crystal Peak Minerals Inc. Sevier Lake Playa Sulfate of Potash Project located in southwestern Utah.
Crystal Peak Minerals Inc. first reported the economic results of the FS in a press release dated January 11, 2018. The FS forecasts average annual SOP production over the 30-year life of the Project of approximately 298,000 metric tonnes (t) with an estimated Net Present Value (NPV) of $730 million (after tax, inflated, 8% discount rate) and an estimated Internal Rate of Return (IRR) of 21% (after tax, inflated).
The financial model outputs indicate a strong project that is commercially viable and delivers robust Project metrics. The FS includes a proven and probable produced mineral reserve of 6.171 million tonnes (Mt) of potassium sulfate (K2SO4). Produced reserves include reductions due to evaporation pond and processing losses and are net of all recovery factors.
|NPV (pretax, 8%)||$900 M|
|NPV (after tax, 8%)||$730 M|
|IRR (after tax)||21%|
|Mine Life||30 years|
|Initial Direct Capital Costs||$288 M|
|Initial Indirect Capital Costs||$70 M|
|Contingency (@P50)||$32 M|
|Risk (@P50)||$8 M|
|Total Capital Costs||$412 M|
|Deferred Capital Costs||$9 M|
|Sustaining Capital Costs (LoM)||$248 M|
|Average Operating Cost (over LoM)||$222/t|
|SOP Price @ Rail Loadout Facility||$630/t|
|Production Royalties (% of gross revenues)||5.61%|
|After- tax Payback Period (from initial production)||4.5 years|
|Proven & Probable K2SO4 Produced Reserves||6.171 Mt|
The Economic Analysis
The economic analysis in the FS is based upon the following assumptions:
- 100% Equity
- Construction beginning January 2019 completed 2022
- SOP production ramp-up over three years; from first production of 27,500 t in 2022 to full capacity of at least 337,500 t in 2025
- Production continues at full capacity until 2040
- Production declines annually to 223,110 t by 2050
- Operating costs and revenues are based on product delivery to (e.g., MOP) or shipment from (SOP) CPM’s Rail Loadout Facility
- Effective tax rate of approximately 15.6%
- Annual production royalties estimated at 5.61% of gross revenue, less allowable reagent costs
- Post-performance tax credit from the State of Utah of approximately $112.5 million
The total capital costs of the Project, including contingency, risk, and inflation, are estimated to be $412 million. Initial capital costs in the economic model are inflated by 1.27% annually beginning in year 2019. Contingency is 9.0% of the total project capital cost. To calculate contingency, an uncertainty profile for the Project was designed and a Monte Carlo simulation was run using “@Risk,” a commercial risk evaluation program. The capital cost estimate has an accuracy of +/-15%.
The total uninflated average cash operating costs, including risk and contingency, are estimated to be $222/t. Operating expenditures vary during the life of mine (LoM); therefore, an expenditure model was developed to capture these variations in the financial model. All operating costs in the economic model are inflated by 2% annually beginning in 2019 and include costs for reagents and consumables such as the purchase of MOP for reaction with excess sulfate in the playa brine for additional SOP production. The operating cost estimate has an accuracy of +/-10%.
The total direct capital costs of the Project are estimated to be $292 M, not including indirect costs and contingency, as of 2013. All capital costs in the economic model are inflated by 2% annually beginning in year PP-3. Contingency is 12% of direct capital costs. The capital cost estimate has an accuracy of +25%/-20%.
Initial Capital Costs
|Playa Infrastructure||$49 M|
|Utility Infrastructure||$45 M|
|Plant Facilities [&] Equipment||$167 M|
|Rail Load-out Facility||$31 M|
|Direct Costs||$292 M|
|Indirect Costs||$50 M|
|Total Initial Capital Costs||$378 M|
|Sustaining Capital Costs (LoM)||$199 M|
The total cash operating costs of the Project are estimated to be $180.91/t
as of 2013. All operating costs in the economic model are inflated by 2%
annually beginning in year PP-3.
|Description||Unit Cost||% of Total|
|Reagents, Consumables [&] Maintenance||$40.34/t||22%|
|Salt Harvest [&] Haul to Rail||$37.57/t||21%|
|General [&] Administrative||$16.70/t||9%|
The full Technical Report is available on Crystal Peak Minerals Inc. SEDAR profile at www.sedar.com as well as on this website under the 'Technical Reports' link on our 'Investors' tab.