TSX-V-listed Sage Potash has delivered a positive preliminary economic assessment (PEA) for its Sage Plain potash project, in Utah’s Paradox basin, outlining an after-tax net present value (NPV) of $502-million and an internal rate of return (IRR) of 39%.

The PEA considers a 300 000 t/y potash operation, producing through solution mining from seven caverns, expanding to 15 caverns over the first five years. Initial capital expenditure is estimated at $155-million, including contingencies and indirect costs, with a projected payback of five years. Cumulative free cash flow over the 20-year mine life is estimated at $1.26-billion.

“This PEA reinforces our conviction that our proposed approach of incremental potash production using solution mining is a cost effective and low risk strategy to bring in-market potash production on-line in the US,” said CEO Peter Hogendoorn.

“We expect this approach would allow us to scale up production with cash flow to eventually become the largest domestic potash supplier in the US market. Currently, the US market imports more than 95% of its potash requirements and Sage Potash’s goal is to become a supplier of choice in the United States. The possibility of high margins and scalable expansion suggested by the PEA makes for a robust asset with stability through a wide range of market conditions.”

President and COO Tim Mizuno added that the project was "an exceptionally accretive potash project with a high grade and expansive potash resource". "Sage Plain is one of the best potash projects I have seen in the decades I’ve spent in the industry and foundational to me joining the company earlier this year. As we advance toward production, we expect to further de-risk the project and build strong partnerships with farmers and the broader agricultural industry.”

The Sage Plain project has an inferred resource of 298-million tonnes grading 42.1% potassium chloride, supporting multiple phases of expansion. The deposit benefits from proximity to domestic demand centres in the US, with transportation advantages relative to imports.