: IC Potash courts partners for New Mexico project
TORONTO (miningweekly.com) ? TSX-listed IC Potash is in talks with ?quite a few? companies to partner on its Ochoa project in New Mexico, and hopes to have an agreement penned within the next 12 months, CEO Sidney Himmel told Mining Weekly Online.
The company aim to complete a prefeasibility study on the potential mine in early November this year, and a full feasibility study by the first quarter of 2013, with first production anticipated for the end of 2015.
?We?re definitively going to bring in partners, that?s the plan,? Himmel said in a Tuesday telephone interview, declining to name which companies IC was talking to, or say which countries they were from, citing sensitivities in the negotiations.
The rationale behind partnering was to gain access to marketing expertise, and the company was talking to fertiliser distributors, as well as mining firms familiar with the market for sulphate of potash, the type of crop nutrient IC will produce at Ochoa.
Himmel said that the company was considering partnering at the project and corporate level, or could even consider a combination of both.
?It?s really a financial decision in terms of not giving away too much of the project, stock dilution ? what the stock price is, what the project valuation would be,? he explained, adding that IC would want to keep majority control of Ochoa.
One thing Himmel was also cognisant of was keeping the door open for an acquirer to step in, ?if it should come to that?.
IC plans on producing 600 000 t/y of sulphate of potash (SOP), a less common form of the crop nutrient, but one which fetches a price premium to muriate of potash (MOP).
The SOP market is around six-million tons a year, while MOP stands at some 50-million tons a year.
Himmel said that because SOP doesn?t contain chloride, it is better for saltier soils, and its use leads to better colour, aroma, and distribution of mass in crops that have it added to their fields.
It also allows for better transportability for crops that last longer and store better, he noted.
SOP is mainly used to grow fruits, vegetables, tobacco and potatoes, and its price currently fetches a $125/t to $150/t premium to MOP, nearly one third of which the world?s production comes from Saskatchewan.
On Wednesday, Scotiabank said the spot price for potash free-on-board at Vancouver Port stood at $490/t in July and remained at that level in August, a 43% year-one-year rise.
The bank added prices were likely to climb a further $30/t to $40/t for South East Asian buyers in the fourth quarter.
The major SOP producers include Belgium?s Tessenderlo Group and Germany-based K+S. China is also a big producer of the crop nutrient, but it consumes it all internally.
IC raised $20-million in March and this will last the company through to the completion of Ochoa?s feasibility study, Himmel said.
A preliminary economic assessment earlier this year estimated the capital costs of the mine to be around $662-million.
Shares in IC were trading down slightly at C$1.11 apiece by 10:22 in Toronto