Diamond Creek Phosphate Project
Keras owns a controlling 51% interest in Falcon Isle Holdings LLC (Falcon Isle) which is the 100% owner of the Diamond Creek mine located in in Utah (USA).
The project at a glance
- Permitted 340ha high grade, direct shipping, organic certified phosphate project in mining friendly State of Utah, USA
- Located ~70km SSE of Salt Lake City
- Premium Product – one of the highest in-situ grade phosphate projects in the US, with 14% available phosphorous compared to average of 3% of competitors
- Cashflow generative with operating costs of US$229/ton reducing to US$92/ton as production and market share increases
- Long resource life – at a peak production rate of 48ktpa, the opencast resources* alone represent in excess of 60 years of production
- Significant resource upside potential – historic reports of “surface mineable resources” 5.06m tons* and underground potential resources of an additional 7.85m tons*
* All tonnages are short tons (907kg) Mineral resources have not been classified according to International Reporting Standards
Approximately 70km SSE of Salt Lake City, Utah, the Diamond Creek Phosphate Project is ideally located to take advantage of Salt Lake City’s rich history in mining and Utah’s mining friendly jurisdiction.
The Project has a significant historical mineral resource with the first 2.5 years of production already pre-stripped. The phosphate mineralisation comprises shale beds in the Meade Peak Member of the Phosphoria Formation. The mineralised zone is c.3m thick and averages 28% P2O5 with average available phosphorous of 16%. Historic reports of “surface mineable resources” 5.06m tons* and underground potential resources of an additional 7.85m tons*. At a peak production rate of 48ktpa, the opencast resources alone represent in excess of 60 years of premium grade ore production. The construction of access roads for the 2019 bulk sample provided key infrastructure thus reducing time to production.
Diamond Creek’s most recent mineral resource estimate in 1980 quotes 3.53Mt and 1.07Mt of “surface mineable” phosphate ore in the southern and northern sections of the Project area respectively. Approximately 22Kt of premium ore (~28% P2O5 & 16.2% available P) and 15Kt of medium grade ore (~18% P2O5 & 10.1% available P) has already been pre-stripped, representing the first 2.5 years of production. Furthermore, an infill drilling campaign planned for Q2 2021 is expected to delineate an additional 100Kt representing five years of ore reserves.
PRODUCTION AND MARKET SHARE
The Project has received Organic Certification by all three key certification agencies: Organic Materials Review Institute (OMRI), California Department of Food & Agriculture (CDFA) and Washington State Department of Agriculture (WSDA). With organic certifications, and as a direct shipping ore (DSO) requiring no chemical upgrade process, with in-situ grade of ~28% P2O5, low heavy metal impurities and significantly higher available phosphate than any other organic rock phosphate in North America, the Project’s premium product can be priced at a competitive level to gain market share. Falcon Isle has a modest target of 14% of the North American market in five years.
The Project’s production profile increases to 48Ktpa by Year 5 and is based on a combination of increased market share with a well-priced premium product and the sustained growth expected in the organic market over the next decade.
Diamond Creek currently has operating costs of US$229/ton reducing to US$92/ton in Year 5 as production and market share increases. The premium product is being marketed at a price below its competitors with respect to price per available phosphorus unit to ensure market share is gained. The Project economics are currently based on a 10-year life of mine or 400kt of resource, however, the 1980 “surface-mineable” resource estimate is in excess of 4.5Mt.
Construction of a new processing plant expected to be commissioned in Q2 2021 will increase capacity and expected associated economies of scale will reduce the unit cost and bolster margins going forward.