TORONTO, ONTARIO--(Marketwired - Feb. 4, 2015) - Potash Ridge Corporation ("Potash Ridge" or the "Corporation") (TSX:PRK)(OTCQX:POTRF) today provided an update on the Corporation and its Blawn Mountain sulphate of potash ("SOP") project (the "Project").
Recap of 2014
Following completion of a National Instrument 43-101 compliant Prefeasibility Study in November 2013, the Corporation focused its efforts during the first half of 2014 on advancing permitting requirements. As a consequence, the Project is now largely permitted, including receipt of water rights in May 2014 and the Large Mine Permit in August 2014. The only major permit remaining is the air permit. Air monitoring data was collected over a one-year period that ended in late-2013 and modeling for the air permit application will continue in parallel with the feasibility study.
The Corporation completed market studies for the three commodities that are planned to be produced by the Project, namely SOP, sulphuric acid and potentially an alumina-rich material that could be used as a substitute for bauxite in Bayer Plants to produce alumina. These studies confirmed strong fundamental supply/demand dynamics for each of these commodities.
A number of non-binding commercial arrangements were announced during 2014. These included an offtake and marketing arrangement with a third party marketer for the Project's sulphuric acid production and a Memorandum of Understanding ("MOU") with Tetra Tech to participate in build-own-operate arrangements for various infrastructure assets, which may include (but is not limited to) the water treatment plant and sulphuric acid plant. Under the terms of this MOU, Tetra Tech has the right to undertake the development, operation and financing of these infrastructure assets. Tetra Tech was also engaged to perform the upcoming feasibility study for the Project.
On the construction financing side, during 2014, the Corporation initiated discussions with several international banks and an Export Credit Agency that are actively lending into construction of resource projects, and has received preliminary indications of interest. It is the Corporation's desire to engage an advisor on project financing once the feasibility study has commenced.
In addition, the Utah Permanent Community Impact Board ("CIB") is a Utah state fund that oversees the distribution of a portion of the U.S. federal share of mineral taxes to impacted counties throughout the State of Utah. Recently, CIB has taken formal steps and has proposed rules to set aside portions of the fund to help finance larger regional infrastructure assets. Under these proposed new rules, such infrastructure must be revenue producing, and also helpful in the advancement of economic and job development. The participating counties would own the new infrastructure. The Project requires several key items of infrastructure such as a rail spur, access road, water treatment plant, power transmission line and natural gas line (aggregating $300 million) that fully meets the CIB's contemplated financing criteria. The Corporation has been in discussions with the local Utah counties and the CIB with respect to the mechanics of participating in this new financing program.
Lastly, in late 2014, Louis Berger, an international professional services company, completed an economic impact analysis for the Project. This analysis concluded that the Project is expected to generate approximately 7,300 jobs in Utah, an estimated total Gross Regional Product ("GRP") exceeding US$1.1 billion per annum during the construction phase, and estimated GRP of US$375 million per annum throughout the operations stage. Following finalization of this analysis, various expressions of support for the Project were received from key stakeholders within Utah, including the Governor's office.
2015 Initiatives and Outlook
The supply/demand outlook for each of the Corporation's commodities is expected to remain robust. SOP in particular shows very favourable market fundamentals. Shortages in SOP supply are being reported worldwide, with robust demand growth anticipated in key markets. The ability for these current and increasing supply shortages to be met using existing production processes appears to be limited, meaning that supply shortfalls will need to be met from new methods of production.
The Corporation recently announced the signing of a MOU with Watco Companies LLC ("Watco") for activities related to the build-own-operate of a loading facility and short line railroad to service the Project. Under the terms of this MOU, Watco will undertake the development, operation and financing of a short line railroad connecting the Project to the Union Pacific railroad main line near Milford, Utah, and a loading facility for its sulphate of potash, sulphuric acid and alumina rich material saleable products. The Corporation now has MOUs in place with third parties to finance and develop most of its infrastructure requirements, which is a key element of the Corporation's overall project financing strategy.
In connection with the planned feasibility study, the Corporation recently completed a preliminary internal evaluation on a phased construction scenario that could allow for a decrease in the initial capital cost to bring the Project into commercial production. It is expected that a phased construction scenario will be independently reviewed as part of the feasibility study report. The Corporation also intends performing additional test work as part of the feasibility study to determine the viability of potential revenue from the sale of the Project's alumina-rich material, which was assumed to be stockpiled in the Prefeasibility Study.
The Corporation is continuing efforts to raise additional financing to fund its feasibility study and for nearer term working capital requirements, essentially to bring development of the Project to the beginning of the execution phase and the commencement of detailed engineering, assuming receipt of a positive feasibility study. There is no guarantee that the Corporation will be successful in its fund raising initiatives and an inability to raise additional financing may materially impact the future assessment of the Corporation to continue as a going concern.
In light of the challenging capital markets for junior resource issuers, the Corporation has implemented various cost reduction initiatives, with the objective of significantly reducing its cash outgoings and managing its cash position. These initiatives include a reduction in headcount, salary reductions for all of senior management, and an elimination of all non-critical expenditures. The Corporation will also pursue strategic alternatives with respect to the Project.
The Corporation also announces that Mr. Phillip Williams, Mr. Rocco Rossi and Mr. Navin Dave have resigned from the Board of Directors. The Corporation expresses its gratitude to these individuals for their contributions to Potash Ridge and wishes them well in their future endeavours. In line with the Corporation's cost reduction initiatives, there is no current intention to replace these directors. In addition, Mr. Robert C. Gross will replace Mr. Rahoul Sharan as Chairman of the Board. Mr. Gross is currently Chair of the Corporation's Governance, Compensation and Nominating Committee and a prominent lawyer and businessman in Utah. Mr. Sharan will continue to serve as a director of the Corporation and has been appointed Chairman of the Audit Committee.
About Potash Ridge
Potash Ridge is a Canadian based exploration and development company focused on developing a surface alunite deposit in southern Utah called the Blawn Mountain Project. It is expected to produce a premium fertilizer called sulphate of potash and a possible alumina rich material.
Located in Utah, a mining friendly jurisdiction with established infrastructure nearby, the Project is expected to produce an average of 645,000 tons of SOP per annum over a 40-year proven and probable reserve life. A NI 43-101 compliant Prefeasibility Study completed in November 2013 by Norwest Corporation demonstrated that the Project is both technically and economically viable. The Prefeasibility Study, entitled "NI 43-101 Technical Report Resources and Reserves of the Blawn Mountain Project, Beaver County, Utah" dated November 6, 2013 is available on SEDAR.
Potash Ridge has a highly qualified and proven management team with significant financial, project management and operational experience and the proven ability to take projects into production.
Forward-Looking Statements
This press release contains forward-looking statements, which reflect the Corporation's expectations regarding future growth, results of operations, performance and business prospects. These forward-looking statements may include statements that are predictive in nature, or that depend upon or refer to future events or conditions, and can generally be identified by words such as "may", "will", "expects", "anticipates", "intends", "plans", "believes", "estimates", "guidance" or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These statements are not historical facts but instead represent the Corporation's expectations, estimates and projections regarding future events. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Corporation, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: the future financial or operating performance of the Corporation and its subsidiaries and its mineral projects; the impact of the cost reduction initiatives discussed above; the anticipated results of exploration activities; the estimation of mineral resources; the realization of mineral resource estimates; capital, development, operating and exploration expenditures; costs and timing of the development of the Corporation's mineral projects; timing of future exploration; requirements for additional capital; climate conditions; government regulation of mining operations; anticipated results of economic and technical studies; environmental matters; receipt of the necessary permits, approvals and licenses in connection with exploration and development activities; appropriation of the necessary water rights and water sources; changes in commodity prices; recruiting and retaining key employees; construction delays; litigation; competition in the mining industry; reclamation expenses; reliability of historical exploration work; reliance on historical information acquired by the Corporation; optimization of technology to be employed by the Corporation; title disputes or claims and other similar matters.
If any of the assumptions or estimates made by management prove to be incorrect, actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained herein. Such assumptions include, but are not limited to, the following: that general business, economic, competitive, political and social uncertainties remain favorable; that agriculture fertilizers are expected to be a major driver in increasing yields to address demand for premium produce, such as fruits and vegetables, as well as diversified protein rich diets necessitating grains and other animal feed; that actual results of exploration activities justify further studies and development of the Corporation's mineral projects; that the future prices of minerals remain at levels that justify the exploration and future development and operation of the Corporation's mineral projects; that there is no failure of plant, equipment or processes to operate as anticipated; that accidents, labour disputes and other risks of the mining industry do not occur; that there are no unanticipated delays in obtaining governmental approvals or financing or in the completion of future studies, development or construction activities; that the actual costs of exploration and studies remain within budgeted amounts; that regulatory and legal requirements required for exploration or development activities do not change in any adverse manner; that input cost assumptions do not change in any adverse manner, as well as those factors discussed in the section entitled "Risk Factors" in the Corporation's Annual Information Form (AIF) for the year-ended December 31, 2013 available at sedar.com. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.