Fertilizer and HCl Plant from Potash and MgO
Project • Construction of a 55 000 TPY fertilizer plant (SOP & SOPM) • Location : Thetford Mines, Quebec • EBITDA : 17 M$/yr • Capital Cost : 34 M $CDN • IRR : 38%
Project • KSM is developing a project to build a high-end fertilizer plant (SOP & SOPM) using MgO tailings from Thetford Mines area • Technology is based on patented process with KSM owning 100% of Intellectual Property • Brownfield project with lower Capex • Opex 30% lower than Mannheim Process
Technology Potash SOP SOPM MgO Tailings KSM Process HCl Sulfuric Acid
Chemistry Hydrochloric Acid Potash Sulfuric Acid Methanol SOP 2 KCl + 3 H 2 SO 4 + MeOH K 2 SO 4 + 2 HCl + 2 H 2 SO 4 Tailings 40% Sulfuric Acid 2 H 2 SO 4 + 2 MgO 2 MgSO 4 + K 2 SO 4 K 2 SO 4 *2 MgSO 4 Cavitation SOPM
Market Overview - Historical 250 US$/T Margin
Market Overview - Current SOP: A top performing commodity in last 15 years 500 US$/T Margin 1 Compass Minerals Q1 2016 Report, 2 Potash Corp Q1 2016 Report
Market Overview • SOP – 6 000 000 TPY • SOPM – 500 000 TPY • Hydrochloric acid – 408 000 T/yr export to USA All products are targeting <10 % of the existing market
Plant Overview Inputs Outputs Potash SOP -32 000 TPY -25 000 TPY Sulfuric Acid SOPM - 40 000 TPY -30 000 TPY MgO Tailings Hydrochloric acid - 35 000 T per year -43 000 T per year
Off-Take Agreement • Strategic Partner and Collaboration Agreement in place with fertilizer distributor for an off-take agreement – Market study completed and delivered as part of this agreement – On going tests of KSM’s SOP and SOPM • On going discussions with other Strategic Partner for off-take agreement for the HCl
Fertiliser Product Advantages • Lower chloride content • Adjustable Chemical Composition versus fixed composition of mined products • Strategic location for North-East American market • Strategic location for exportation (120km from deep sea harbor)
Product Positioning
Brownfield project • Access to 40 000 000 tons of MgO tailings – Owner already shareholder of KSM • Industrial facility already in place – Part of on-going faisibility study
Financials – Summary SUMMARY - FINANCIALS DCF Financial Measures Plant CAPEX $ 34 000 000 Payback Period (PP) 3,5 Discount Rate 7,0% Net Present Value (NPV) $ 87 509 193 Internal Rate of Return (IRR) 38% SUMMARY - ANNUALS Vitrification Plant - Revenues and Costs $/Year Revenues 49 364 184 $ Costs 30 683 606 $ Gross Profits 18 680 578 $ Gross Profits Margin 38% EBITDA 16 933 590 $
Conclusion • High margin between KCl and SOP/SOPM • Huge resources of magnesium oxide tailings • Project with high IRR and low Capex • KSM is seeking financing partner to support industrial implementation
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