SASKATOON, SASKATCHEWAN – Buffalo Potash Corp. (“Buffalo”) is pleased to announce the completion of a Prefeasibility Study (the “Study”) that was commissioned by the City of Estevan along with the Southeast Sask Economic Partnership (“SSEP”), to undertake an internal study to examine the economic and regional benefits of creating a potash mining and processing business based upon Buffalo’s decentralized “Hub and Spoke” model, which is based on the production and processing model used in heavy oil production in west-central Saskatchewan. Buffalo is also pleased to announce that it is launching Private Placement # 3 to raise funds to continue project development.
The report, named the “Prefeasibility Study of Buffalo Potash’s Proof of Concept (“PoC”), Mine One and Estevan Fertilizer Processing Facility (EFPF)” and dated January 31, 2022 was prepared by members of Buffalo’s management and a team of independent experts that provided third party due diligence and specialized analysis and design services.
The PoC is intended to demonstrate the viability of Buffalo’s patented (US 11,073,008 & CDN 3,038,390) Horizontal Line-Drive Selective Solution (“HLD”) mining system. Implementation of the PoC process consists of three phases, the first being the “Confirmation” phase intended to prove favorable resource and site conditions, the second being the “Downhole” phase intended to create a saturated potash brine, and the third being the “Processing” phase to process sales-grade Muriate of Potash (“MOP”).
At the December 2021 auction of Provincial Crown Subsurface Mineral Permits (“SMPs”) Buffalo purchased two Permits (the “Disley” and the “Odessa” prospects) that have the potential for over 40 years of mining at targeted production levels. Both locations are near historical wells that show the potential for some four million tonnes of recoverable potash per square mile. Buffalo will evaluate each prospect by undertaking a Confirmation phase costing $10 million (MM) that includes 3D seismic, core holes, environmental and FEED engineering design for each.
Work will then begin on the Downhole phase for at least one of the SMP’s. The Downhole phase, costing some $50 MM, is intended to demonstrate the ability to make a “strong brine” of consistent KCl concentration from the HLD mining process. Three horizontal wells will be drilled into the selected mining bed and then each will be equipped with multi-point (25+) injection or production packers to allow maximum contact with the potash zone. A fourth vertical well will be drilled to provide solvent brine. Surface facilities will consist of a series of knock-down and storage tanks to receive the KCl-saturated production brine, a pumping system to connect the wells and transfer brine and a boiler to heat the solvent brine to the required temperature. A field crystallizer may be added to the process to crystallize KCl on-site.
The Downhole phase is followed by the Processing phase costing some $215MM. It will consist of building and operating a modular processing system that will turn the produced KCl brine into a sellable MOP product at a production capacity of 250,000 tpy. The design of the facility is based on known processes already used in the potash industry; however, Buffalo will use a smaller and more efficient design because of the high concentration of KCl brine produced by the HLD system. The facility will produce 85% granular MOP and 15% fine MOP.
These phases will demonstrate that the Buffalo system, comprising the HLD mining process and the modular crystallization circuit, will require minimal fresh water for mining and processing, make product at a smaller carbon intensity per tonne as compared to more traditional producers, and require a smaller surface footprint. It will also not require surface tailings management. The product produced using HLD mining will be a new brand of sustainable MOP known as HLD GreenPotashTM.
The economic model presented in the PFS shows that an HLD mine can be built for $275MM for 250,000 tpy HLD GreenPotashTM. By investing another $175MM, HLD GreenPotashTM production can be increased to 500,000 tpy. HLD mines are projected to have 30-year lifespan with an 8% NPV of $562MM and a 30% IRR.
The Estevan Fertilizer Processing Facility (EFPF) is designed to operate as a stand-alone facility; however, given Buffalo’s “Hub-and-Spoke” business model it is integral to the development of the individual HLD mines. The development of the EFPF will coincide with the HLD demonstration phases so it can accelerate the achievement of early cash flow, including early production of Sulfate of Potash (“SOP”). The EFPF will cost some $342MM and estimates show it can be built in two years. The Economic Model forecasts a 30-year, 8% NPV of $329MM and a 20% IRR.
When the PoC, Mine One, and the EFPF are combined into the Hub-and-Spoke business structure, a unique green potash business is created. It has the potential to produce and sell 850,000 tpy MOP, 160,000 tpy SOP, 315,000 tpy CaCl2 and 46,000 tpy CO2 to North American buyers. Total investment required is $1,244 MM over the next six years, with the business forecast to have a 30-year, 8% NPV of $1.1 Billion and a 30% IRR.
“We are very happy to continue to have the support of the community of Estevan, the rural municipalities of Estevan and Coalfields, and outlier communities such as Bienfait (SSEP), all of whom will benefit from the success of Buffalo’s planned fertilizer business “, reported Steve Halabura, Buffalo’s CEO. “The PFS estimated that the full business would require more than 2,000 workers during all construction phases and create 170 full time jobs once built and in operation, which will certainly be of significant impact to the economy of the southeast”.
About Buffalo Potash Corp. (“Buffalo” or the “Company”)
Buffalo is a private Saskatchewan corporation seeking to produce potash and associated fertilizer products using its Horizontal Line-Drive Selective Solution Mining (HLD) mining technology. The Company believes its HLD-equipped mine has the potential to produce high
quality, environmentally conscious, Muriate of Potash (“MOP”) product called HLD GreenPotashTM. The facility is designed to minimize the use of fresh water and minimized energy requirements, and with a small surface footprint to further reduce the environmental impact.
For more information, please contact:
Steve Halabura, P.Geo.
CEO & Director
1 306 220 7715
Steve@BuffaloPotash.ca
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