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IC Potash Announces Successful Ochoa Potash Project Preliminary Economic Assessment

January 5, 2011

TORONTO, Jan. 5 /PRNewswire/ – IC Potash Corp. (“ICP” or the “Company”) (TSXV: ICP) announced today the successful conclusion of the updated Preliminary
Economic Assessment of the Company’s 100%-owned Ochoa Sulphate of
Potash (“SOP”) Project (the “Preliminary Economic Assessment” or “PEA”)
located in south east New Mexico, and prepared by Gustavson Associates
of Lakewood, Colorado (“Gustavson”).

“This independent report is a major achievement for IC Potash,” Mr.

Sidney Himmel stated. “The updated PEA attributes an estimated net
present value to the Ochoa Project of US$1.4 Billion using a pre-tax
discount rate of 10%, and $2.1 billion using a rate of 8%.  The
projected values are based on the estimated capital cost of $662
million
and projected production cost of $164 per ton of SOP.  The PEA
provides robust economics for the  Ochoa Project with operations
producing 660,000 tons of SOP per year. Our mission is to develop a 
long-life, low cost mine, which will produce Sulphate of Potash, the
premium quality potash of the world,  and the PEA indicates that the
Company’s New Mexico Ochoa potash asset is positioned to become one of
the world’s lowest cost producers of Sulphate of Potash.”

Recommendations and Conclusions

This Preliminary Economic Assessment indicates that the Ochoa Sulphate
of Potash project is economically viable and Gustavon recommends
continued development of the project  including:

  • The completion of a prefeasibility study;

  • The commencement of environmental and permitting work; and

  • The obtaining of a sufficient bulk sample of ore for pilot scale
    metallurgical testing and process optimization.

Dr. George Poling, Chairman of the Board of Directors of IC Potash
Corp., stated: “My compliments to our world class team for the timely
execution of this critical milestone.  We are now well financed to
carry out all recommended work, and prepared to evaluate strategic
development opportunities moving forward with the Ochoa Project,
including the possibility of establishing marketing partnerships with
international fertilizer companies.” 

Economic Analysis

The National Instrument 43-101 Compliant Preliminary Economic Assessment
projects a base case production level of 660,000 tons per year of
Sulphate Potash (“SOP”), a mine life of 40 years with a capital cost of
$662 million, and operating cost per ton of $164.  All dollars are
expressed in United States currency.  The base case production level
data is summarized as follows:

  • Internal rate of Return of 25% on a pre-tax basis based on a 100% equity
    case;

  • Net Present Value of US $1.4 billion using a pre-tax discount rate of
    10% and no debt;

  • Net Present Value of US$2.1 billion using a pre-tax discount rate of 8%
    and no debt;

  • Operating production cost of US$164 per ton of SOP;

  • Capital cost of $662 million which includes a general contingency of $97
    million
    and engineering and procurement and management costs of $48
    million
    ;

  • Underground mining at a rate sufficient to produce 3.29 million tons of
    ore per year;

  • Average mining extraction rate of 85%;

  • Average metallurgical recovery of 85%

  • Mine life of 40 years;

  • The Sulphate of Potash sales price forecasts were provided by CRU,
    formerly known as British Sulphur Consultants.  CRU is the leading
    business consultancy for the fertilizer industries;

  • SOP prices for 2015 were forecast at $508 per short ton and subsequently
    varied for projected macroeconomic trends and anticipated changes in
    Sulphate of Potash supply and demand;

  • While the project has the potential to produce Sulphate of Potash and
    other fertilizer minerals such as Magnesium Sulphate, the study
    included only Sulphate of Potash as this fertilizer mineral is readily
    marketable in a very robust market. 

Economic Impact of Resource Expansion

As provided in the press release of December 15, 2010, there is now 700
million tons of potash resource in the measured and indicated resource
category.  The detailed potash resource is provided in the table
below.  In addition, there is a further resource of 300 million tons of
potash in the inferred resource category.

5 foot minimum thickness Measured Indicated Measured and Indicated

Tons 239,000,000 462,000, 000 700,000,000

Grade Polyhalite 82.7% 82.4% 82.5%

Equivalent  Grade K2SO4 23.4% 23.4% 23.4%

6 foot minimum thickness Measured Indicated Measured and Indicated

Tons 41,000,000 47,000,000 88,000,000

Grade Polyhalite 86.1% 84.1% 85.0%

Equivalent Grade K2SO4 24.4% 23.8% 24.1%

Mineral resources that are not mineral reserves do not have demonstrated
economic viability.  The objective of the upcoming pre-feasibility
study is to demonstrated economic viability. 

Base Case of 660,000 tons per year production, operating costs: 

Area of Operations  Cost Per Ton Of

Feedstock

(US$)

Cost Per ton of SOP

Product

(US$)

Mining $12.36 $61.39

Processing $19.76 $98.11

G&A $ 0.95 $ 4.72

Total $33.07 $164.22

Chief Operating Officer Randy Foote commented, “We recently reported a
NI-43-101 compliant mineral resource which included, at a five foot
minimum thickness cut-off, 239 million tons of measured resource of
polyhalite, and 462 million tons of indicated resource.  It is this
resource which we intend to convert to Sulphate of Potash at a very low
cost of production.  Thus this project has the potential to have a life
far in excess of the forty year mine life which was used in the
financial economic model.  The Company is intent on moving quickly to
develop this project.”

The Preliminary Economic Assessment also considered a production
scenario of 1,000,000 tons of annual Sulphate of Potash production. 
The capital cost for such a production level would be $813 million
Assuming a 40 year mine life and the same projected SOP prices as for
the base case, the Internal Rate of Return would be 30% and the Net
Present Value would be $2.5 billion using a pre-tax discount rate of
10% and US$3.6 billion using a pre-tax discount rate of 8%.

The NI-43-101 Technical Report for Preliminary Economic Assessment and
the resource will be published on the System for Electronic Document
Analysis and Retrieval (“SEDAR”) no later than January 28, 2011. SEDAR
is the mandatory document filing and retrieval system for Canadian
public companies.  SEDAR is operated by the Canadian Securities
Administrators, a coordinating body comprising the 13 Canadian
provincial and territorial securities commissions.

Qualified Persons Report

All scientific and technical disclosures in this press release have been
prepared under the supervision of William J Crowl, a consultant to IC
Potash who is a Qualified Person within the meaning of National
Instrument 43-101.

The Qualified Persons in respect of the Preliminary Economic Assessment
were William J. Crowl, R.G., Donald E. Hulse, P.E., Terre A. Lane,
MAusIMM, Deepak Malhotra, MAusIMM.  Consulting geologists, chemical
engineers, and chemists in respect of the work included Dr. Patrick
Okita
Donial Felton, B.Sc., Richard Chastain, B.Sc., and Thomas
Neuman
, M.Sc. 

About IC Potash Corp.

IC Potash intends to become a primary producer of Sulphate of Potash
(“SOP”) by mining its 100%-owned Polyhalite Ochoa property in New
Mexico
. SOP is a non-chloride based potash fertilizer that sells at a
substantial premium over the price of Muriate of Potash (“MOP”), the
most widely used fertilizer in the world. Typically SOP sells at a
premium of 50% to MOP. ICP is focused on being the lowest cost producer
of SOP in the world. The SOP market is six million tonnes per year and
is a significant fertilizer in the fruit, vegetable, tobacco, potato,
and horticultural industries, and for agriculture in saline and dry
soils.  SOP is also applicable in soils where there is substantial
agriculture activity with varieties of crops.  ICP’s Ochoa property
consists of over 100,000 acres of federal subsurface potassium
prospecting permits and State of New Mexico Potassium mining leases.

Forward-Looking Statements  

Certain information set forth in this news release may contain
forward-looking statements that involve substantial known and unknown
risks and uncertainties. These forward-looking statements are subject
to numerous risks and uncertainties, certain of which are beyond the
control of ICP, including, but not limited to, risks associated with
mineral exploration and mining activities, the impact of general
economic conditions, industry conditions, dependence upon regulatory
approvals, and the uncertainty of obtaining additional financing.
Readers are cautioned that the assumptions used in the preparation of
such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. 

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER
(AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE)
ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.  

SOURCE IC Potash Corp.


Source: newswire



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