Potash Ridge's (TSX: PRK) Ross Phillips Discusses Improved Economics for It Blawn Mountain Sulphate of Potash Project and Upcoming Milestones for the Company
Gerardo Del Real: This is Gerardo del Real with Resource Stock Digest. Joining me today is CFO and COO for Potash Ridge (TSX-V: PRK)(OTC: POTRF) Mr. Ross Phillips. Ross thank you for joining me today.
Ross Phillips: Thank you very much for having me.
Gerardo Del Real: Well I wanted to have you on because the company released some news yesterday that I think is an important milestone for the company. In a important news release the headline reads, potash ridge announces updated 43-101 prefeasibility technical report for Blawn Mountain. I know there's a lot of good information in there to cover. A lot of cost reductions. I'd love to get your opinion on those and then also talk about what you see here for the rest of 2017 for Potash Ridge. But first things first. Congrats on the milestone. What can you share as far as details go?
Ross Phillips: Great. Thank you very much. This is an exciting development for our company. One of our main targets from when we relaunched the company mid last year was to resize the Blawn project to better meet North American demand for high grade sulphate of potash and to focus on what is a financeable scale for that project. I think we've accomplished that with some really attractive economics here. We've taken the capital cost to US$458 million. We're still a world class facility. We're still at a production cost of US$178 per ton for the potassium sulfate or SOP. When the market price right is about $650 dollars a ton. Really attractive margin that results in an unlevered after tax return of 21.1 percent and average cash flow at about $100 million a year over the first ten years of operation. We've got the project sized specifically to serve the California market and there's been some really interesting developments there. With the drought conditions and some of the challenges they've got in California they're moving the kind of sulphate of potash that they use, SOP, to a soluble brand that they can't get from most domestic producers.
This gives us an opportunity to sell a sought after higher value form of SOP into the California market that the producers are seeking. Our production volume at about 255,000 tons per year over the first ten years really meets the California demand. Especially when you consider about 170,000 tons a year is coming in in the form of import. We can easily displace the imports, be more cross competitive, and serve a growing market for soluble SOP into California. Great milestone for the company. Really exciting news for us.
Gerardo Del Real: Absolutely. I think it's really exciting. You have just to give new listeners and readers an update and some context. There's two projects. The Valleyfield and then you have Blawn Mountain. The net present value after tax now with this new study it's approximately $482 million using a ten percent discount rate. Is that correct?
Ross Phillips: That's correct. That's really nice and it's higher than the Cap X. Really great value to the product especially when you consider that $482 million is in US dollars and our shares outstanding right now at about 125, 126 million. Really great value fundamentals for the company.
Gerardo Del Real: Excellent. The current cap of the market company stands at approximately?
Ross Phillips: $30 million Canadian.
Gerardo Del Real: Excellent. Excellent. Talk to me a little bit about what we can expect here in 2017. There was talk about fixed price engineering procurement and construction contracts and maybe making arrangements on that front. Can you share some details as to what the approach will be for the rest of the year here?
Ross Phillips: Near term we're really focused on getting Valleyfield financed and started with production coming about 12 months after financing. Remember Valleyfield's about $50 million dollars Canadian to build. Produces the same high grade form of SOP but selling it more into the east coast out of Quebec. What we're looking to do is get offtake and finance that. We're working very hard on those two and trying to have that wrapped up in the first quarter so we can get shovels into the ground and get that fixed price contract we have for the majority of it already. It's a really great opportunity to get that and move the company into a going concern with cash flow within the next 12 months or so. In the meantime we're continue to get a fixed price contract for Blawn Mountain obviously in a much greater scale and move forward with offtake on it so we can get financing for it. We started in the first quarter, we've reached this milestone with Blawn. Let's get Valleyfield financed and moving forward and construction started, and then get the next steps done on Blawn, which would be getting that fixed price construction contract and offtake arrangements there. Lots of great exciting things happening with the company. This is just the start.
Gerardo Del Real: That definitely provides a lot of catalyst for 2017. Again, especially considering that the market cap is at $30 million Canadian. Mr. Phillips I want to thank you very much for coming on. Is there anything else that you'd like to add?
Ross Phillips: Nope. I think we've covered it all. Again, really exciting time for the company. This is just the first step in a lot of really good activity for the company for this year real.
Gerardo Del Real: It sounds like there's going to be a lot of boxes to check off this year. Hopefully we can have you back on as we get updates on those milestones.
Ross Phillips: Great. Thank you very much.
Gerardo Del Real: Thank you.