Investor Presentation FEBRUARY 2017

Transcription

1 Investor Presentation FEBRUARY 2017

2 FORWARD LOOKING STATEMENTS Certain statements in this presentation may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Potash Ridge Corporation (the "Corporation"), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this presentation, such statements use such words as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate" and other similar terminology. These statements reflect the Corporation's current expectations regarding future events and operating performance and speak only as of the date of this presentation. Forward-looking statements involve significant risks and uncertainties, which include, but are not limited to the factors discussed under A Cautionary Note Regarding Forward Looking Statements and "Risk Factors" in the Corporation s Annual Information Form dated March 28, 2016, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. Although the forward-looking statements contained in this presentation are based upon what management of the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. These forwardlooking statements are made as of the date of this presentation and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Corporation assumes no obligation to update or revise them to reflect new events or circumstances. 2

3 ABOUT US Potash Ridge is a near term producer of potassium sulphate (SOP) fertilizer using two different processes; one in Utah and one in Quebec. 3

4 OUR VISION IS TO BECOME THE SOP MARKET LEADER IN NORTH AMERICA Potassium Sulphate (SOP) Strategy Valleyfield (Quebec) Blawn Mountain (Utah) Low-chloride fertilizer required for fruits, vegetables, nuts Domestic selling price 3x potash ( MOP ) Global consumption ~7 million tonnes per year ( tpy ) Demand potential is 10 million tpy 400k t current production in North America versus projected demand of 1M t demand One other North American producer Qualifies as organic Become lowest cost North American SOP producer Become first producer using Mannheim process in North America Acquired in ,000 tpy of SOP CDN$50 million capex 30% after tax IRR Proven process Production targeted in H Scalable Potential for $14m in average annual cash flows NPV (after tax 10%) $82 million Original SOP project 230,000 tpy of SOP US $458 million capex 20.1% after tax IRR Lowest cost producer in North America (US$ 172/ton) Major permits and water rights secured; infrastructure nearby Potential for US$100M in average annual cash flow NPV (after tax 10%) $482 million 4

5 POTASSIUM SULPHATE: Two Macronutrients in One In fertilizers, there are 6 macro nutrients required for a plant s life cycle. No substitutes ALUNITE Nitrogen Sulphur CRUSHING & GRINDING CALCINATION Phosphate Potassium Calcium Magnesium SO2 ACID PLANT SUPHURIC ACID Potassium Chloride (MOP) Contains chloride detrimental to plants and soil WATER Global market LEACH 55 million tpy Market is in over supply, with idle capacity and multiple projects in pipeline US$150/tonne in North America Chloride can leach into groundwater or build-up in arid soil conditions, impacting yields and crop quality Potassium Sulphate (SOP) Low chloride, high sulphur providing benefits to crops not available with MOP Global potential market demand of 10 million tpy Capacity growth limited in current North American process US$630/tonne in North America Improves yield, taste, appearance and shelf life Primarily for corn and grain crops that can withstand chloride Significant benefits for fruits, vegetables, nuts, tobacco 5

6 POTASSIUM APPLICATION IMPROVES YIELD AND QUALITY IMPACT ON TOMATOES 100lb/acre 200lb/acre 300lb/acre University of Florida: Comparison of Potassium Sources and Rates For Tomato Production in Florida 6

7 POTASSIUM SULPHATE ELIMINATES CHLORIDE DAMAGE Clemson University, The Australian and New Zealand Field Guide to Diseases, Pests and Disorders of Grapes Peach and grape leaves suffering salt (chloride) damage 7

8 SOP: SUPERIOR PRODUCT WITH ATTRACTIVE MARKET DYNAMICS $US/ton 1, ,000.0 SOP: A top performing commodity in last 5 years SOP 1 MOP SOP price influenced by high-value crop economics not MOP price SERVING AN UNDERSERVED MARKET Compass Minerals Q Report, 2 Potash Corp Q Report 8

9 SOURCES OF POTASSIUM SULPHATE SOP CHEMICAL REACTION: Mannheim Process 50% of all SOP produced uses Mannheim Process Used in Asia, Middle East and Europe Soluble and granular form POTASH RIDGE S TWO SOP PROJECTS VALLEYFIELD FERTILIZER CORP. (Quebec) SOP MINERAL PROCESSING: Alunite Proven process Soluble and granular form BLAWN MOUNTAIN (Utah) SOP EVAPORATION: Salt Lake Finite resource Found in USA, Chile, China, Europe Granular form 9

10 SOP CONSUMPTION MATCHES LOCAL AVAILABLE PRODUCTION 000 s tonnes 5000 North America is Underserved North A. South A. Europe Asia Middle East Current Production Existing Consumption Estimated Demand Green Markets, Northern Shoreline, company reports 10

11 TWO PROJECTS STRATEGICALLY LOCATED TO SERVE SOP-DEMANDING CROPS Valleyfield Almonds Grapes Apples Lettuce Blawn Mountain Citrus Vegetables Potatoes Tobacco 11

12 Quebec Valleyfield Project

13 VALLEYFIELD PROJECT (QUEBEC) Low capex with fixed price contract (CAD$50 million) Short build time: 9-12 months 40,000 tpy of SOP (scalable) Phase 1 - Economic Summary (CDN$) Initial capital cost $50.0 million IRR (unlevered after tax) 30% Other locations in North America being for expansion opportunities Utilities and logistics infrastructure well-established NPV (after tax at 10%) $82.0 million Technology and commercial relationships create barrier to entry Land use approved by local city council enthusiastic government support Long term offtake for hydrochloric acid by product secured SOP price/tonne $820 Opex/tonne Long term supply of sulphuric acid secured Margin/tonne $450 (1) Net of acid credit. 13

14 VALLEYFIELD: STRATEGICALLY LOCATED Located in industrial area near Montreal, Quebec Property secured in industrial zone Strong local support Rail access at site Port within 2 km, allowing access into key U.S. markets Within 5 km of sulphuric acid supplier Located near hydrochloric acid customers Quebec Government highly supportive of new investments that create employment (including providing financial support) 14

15 PROVEN MANNHEIM PROCESS Converts MOP to SOP Raw Material 2-Stage Process Finished Products Proven production process (150 year history), with numerous operating facilities in Europe and China (50% of current SOP production is from Mannheim) High quality, consistent production process Scale allows for construction time of 12-months Migao Corp. (long-term SOP producer) engaged to provide procurement and technical services POTASSIUM CHLORIDE SULPHURIC ACID HEAT.84t.56t 550 o C MANNHEIM FURNACE 1.0t 1.2t POTASSIUM SULPHATE (SOP) HYDRO- CHLORIC ACID (HCl) 15

16 VALLEYFIELD MILESTONES Engineering Preliminary engineering completed Q Phase I near completion Partnered with Migao Corp. to leverage 20-year Mannheim experience Expected to proceed with execution in Q1, 2017 Permitting Applications being submitted Q City has passed resolution for use of land Commercial Arrangements Negotiating long term supply of MOP Long term supply of sulphuric acid secured Lock in natural gas contract HCl offtake with Jones Hamilton secured SOP Offtake Negotiating long term offtake agreements Direct sales to local growers Financing Debt and Equity negotiations ongoing at Valleyfield level Quebec & Federal government financial programs available Construction Milestones Break ground Q Complete construction Q Ramp up to full production H

17 Utah Blawn Mountain Project

18 BLAWN MOUNTAIN PROJECT (UTAH) Will be lowest cost producer in north America 45+ years proven + probable reserves Initial production rate of 255,000 tons per year Can expand to 645,000 tons per year PFS Economic Summary (US$) Initial capital cost $458 million IRR (unlevered after tax) 20.1% All infrastructure within 30 miles Processing technology optimized by Potash Ridge over last 3 years NPV (after tax at 10%) $482 million Commercial arrangements well advanced Permits and water rights secured Offtake for sulphuric acid byproduct secured Upside potential through monetization of tailings rich in alumina SOP price/ton $673 Opex/ton (1) $172 Margin/ton $501 (1) Net of acid credit and excluding royalties. 18

19 BLAWN MOUNTAIN PROJECT (UTAH) 1 Area 2 Mining Zone 2 Processing Plant Location 3 Access Road 4 Area 1 Mining Zone 5 4 Ore Test Pit 5 3 Drilling work to date has established 45+ years of reserves Over 100 years of potential potash production Ranked #2 state for business and top 10 mining jurisdiction globally(1) 100% state-owned land Strong state government and local support All necessary infrastructure nearby (1) Forbes Magazine, 2015 Ranking 2 1 and Fraser Institute,

20 PERMITTING ESSENTIALLY COMPLETED The following table identifies the major permits and approvals that the Corporation has or still needs to obtain prior to construction: PERMIT/APPROVAL ISSUING AGENCY COMPLETED Exploration Permit Utah Division of Oil, Gas and Mining October, 2011 US Army Corps of Engineers Jurisdictional Waters Concurrence US Army Corps of Engineers March, 2014 Groundwater Permits Utah Division of Water Quality July, 2014 Large Mine Operation Approval Utah Division of Oil, Gas and Mining August, 2014 Air Quality Emission Standard Utah Division of Air Quality Air Quality Emission Standard requires the engineering to be partially completed before the application is filed. It is technically not a permit, but more an agreed upon emission target that the Project must be designed to meet. 20

21 INDUSTRY PROVEN FLOWSHEET ALUNITE CRUSHING & GRINDING Existing plant in Azerbaijan currently mothballed (Ganja Refinery) Flowsheet similar to commercial-scale production processes historically used in US and Australia Extensive test work optimizes proven technology of SOP process Planned additional test work will include bulk samples at equipment vendor facilities will result in vendors providing production guarantees CALCINATION SO2 ACID PLANT SUPHURIC ACID WATER LEACH SOP SOLUTION CRYSTALLIZING DRYING, COMPACTING & SIZING SOP ALUMINA RICH TAILINGS PFS economics exclude revenue from alumina rich material 21

22 BLAWN MOUNTAIN DEVELOPMENT TIMELINE Late 1970 s $25 million invested developing Project April 2012 Initial resource estimate December 2012 IPO $80M market cap March 2014 US ACOE confirms no US federal permits required; exploration lease converted to mining lease August 2014 Large Mine Operating Permit issued January 2017 Updated PFS issued showing reduced capex and maintaining strong economics 2011 Project Acquired November 2012 Preliminary Economic Assessment December 2013 Prefeasibility Study established 40 years of reserves July 2014 Groundwater Discharge Permit issued October 2014 Entered into offtake and marketing arrangement for byproduct sulphuric acid 22

23 BLAWN MOUNTAIN MILESTONES Maintain Value Created to Date While Raising Pre-Construction Capital Mining lease modified in June 2015 to defer lease payments Permits remain intact Evaluated Reduced Scale Alternative Completed updated PFS in Q Next step to obtain EPC quote Offtake MOU signed for sale of by-product sulphuric acid In discussions with potential offtake of SOP partners Financing Strong interest in construction financing continue dialogue with potential financiers Commercial arrangements already negotiated for support infrastructure remain in place Ongoing discussions with potential partners to assess the upside for the alumina 23

24 EXPERIENCED AND PROVEN MANAGEMENT GUY BENTINCK President & Chief Executive Officer Chartered Professional Accountant 20 years mining/resource experience Sherritt CFO and SVP Capital Projects JAY HUSSEY President, Valleyfield Fertilizer & VP Corporate Finance 20 years capital markets consulting 9 years SOP operational experience with Migao Corporation (TSX-listed, China-based, Mannheim SOP producer) ROSS PHILLIPS Chief Operating Officer & Chief Financial Officer MA (Econ)/MBA/CFA/CPA 15 years experience in large resource and energy sector projects Sherritt, Capital Power OVER 55 YEARS COMBINED EXPERIENCE 24

25 CAPITAL STRUCTURE 25.2M Warrants CAPITAL RAISES Date/Price Price Proceeds $mm February 2011 $0.05 $1.1 August 2011 $ MARKET FIGURES As of February 13, 2017 Shares outstanding 126 million 52 week range $ $ M Total Fully Diluted Shares 10.6M Stock Options November 2011 $ December 2011 $ December 2011 $ February 13, 2017 share price Market Cap Management and Board $0.25 $31 million 2.2 million shares 126.4M Total Common Shares Outstanding December 2012 $ November 2015 $ April 2016 $ May 2016 $0.25 $1.4 January 2017 Convertible Debenture $3.4 Total $

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