Stonegate Agricom (ST.TO) has announced the results of the feasibility study on their 100% owned Paris Hills phosphate project in Idaho, USA. The definitive feasibility study is much better than the pre-feasibility study they released earlier this year, and we think the Paris Hills Phosphate project might even be the best phosphate project in North America.
The feasibility study has outlined a 900ktpa operation at an average cash cost of $70/tonne. If we rely on their base case price estimate of $165/t, the after-tax NPV8% is $360M with an IRR of 40%. If we apply a very conservative pricing of $140/tonne, the after-tax NPV drops to $240M. Should the phosphate price rise to $200/tonne, the NPV exceeds half a billion dollars.
The expected capex is a little bit over $120M, and there’s another $135M needed in sustaining capital (averaging $7M per operating year). As the initial capex is relatively low, we don’t expect any difficulty to get this project financed.
The company expects to have all necessary permits in place by the end of 2014 and should be able to start production in early 2015 as they don’t have to build a processing plant.
Download the press relese here (pdf)
Disclosure: The author holds no shares in Stonegate Agricom Ltd. yet, but plans to initiate a position within the next 48 hours. Please see our disclaimer for current positions.
