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16 April 2020
ABR COMPLETES ENHANCED FORT CADY BORATE MINE DFS
WITH SUBSTANTIAL INCREASE IN SOP PRODUCTION
HIGHLIGHTS
• Fort Cady Borate Mine Definitive Feasibility Study (DFS) enhanced to include significantly increased SOP
production to 362k tonnes pa in full production (an increase of 233%)
• Full Project presents outstanding metrics including:
o NPV8 of US$1.97 bn (A$3.078 bn*);
o IRR of 39.4%; and
o EBITDA of US$438.4m (A$685.0 m*) in first year of full production
• An accelerated phase option included, where Phases 1B & 2 would be built concurrently. This scenario
would lift financial metrics to:
o NPV8 to US$2.084 billion (A$3.256 bn*), and
o IRR to 39.6%
• Targeted opex in full production of negative US$19.96 per tonne of boric acid after by-product credits
• Multiple revenue streams with revenue split in full production estimated to be:
o 54.0% boric acid;
o 43.2% SOP; and
o 2.8% gypsum
• Key selling price assumptions revised from Dec 2018 DFS reflective of market pricing with boric acid now
US$750 tonne (from US$800), and SOP now US$675 tonne (from US$725)
• Potential upside with focus on high value specialty fertiliser mix of boron and SOP
• Operation expected to directly employ around 250 people in full production
• Detailed engineering advancing with targeted first production Q3 CY2021
• Financing discussions ongoing
2
American Pacific Borates Limited (ASX:ABR) (“ABR” or the “Company”) is pleased to announce it has enhanced the
Fort Cady Borate Mine DFS (the “Project”) released on 17 December 2018 to incorporate process improvements.
The enhanced DFS has substantially increased the production of SOP.
* Exchange Rate assumed of 0.64USD:1.00AUD (as at 15 April 2020)
SOP, potassium sulfate or K2SO4, is a high value speciality fertiliser that combines potash and sulfur that is used as
a substitute for potassium chloride, MOP or KCl in high value crops that are either sensitive to chloride or grown in
areas with minimal rainfall where the build-up of chloride in the soil is problematic.
American Pacific Borates Limited, CEO, Michael Schlumpberger commented,
“We have built on an exceptional Fort Cady Borate Mine DFS that was initially completed in December 2018 and
modified in January 2019. This enhanced DFS now delivers a better mix of product revenue with SOP now making
up around 43% of our projected revenue. Our ambition of becoming a substantial global specialty fertiliser
producer now presents with a more complete value proposition given our location in one of the world’s largest
agricultural markets.
The enhanced DFS continues to deliver very low upfront capex, very high margins and relatively low technical risk
given the ore body has produced borates historically. The scale of the financial metrics really set us apart from
other projects, with an NPV8 of over A$3bn (US$2bn) and an expected A$685m (US$438m) EBITDA in the first year
of full production.
We are now targeting first production in Q3 CY21, subject to permitting and financing.”
Background
ABR is developing its 100% owned Fort Cady Borate Mine Project (the “Project”) located in the southeastern desert
region of San Bernardino County, California. The Project is located near the town of Newberry Springs,
approximately 50 km east of the city of Barstow and 4 km south of Interstate 40 (I-40). The Project area occurs
approximately 200 km from Los Angeles (California) and Las Vegas (Nevada) in the Barstow Trough of the central
Mojave. The Project and proposed operation is situated in an area with existing sealed roads, a gas pipeline, rail
line and power lines.
The Project sees the production of boric acid via solution mining of an ore body that is around 450m beneath
surface. SOP is produced as a by-product of the production of HCl that is used in the solution mining process for
boric acid. A simplified flowsheet for the Project is presented below:
3
Figure 1 | Fort Cady Simplified Flowsheet
The initial DFS was completed in December 2018 (refer ASX announcement dated 17 December 2018). In January
2019, the initial DFS was then modified to include a low capex starter project (refer ASX announcement dated 31
January 2019).
Fort Cady Borate Mine Enhanced DFS
The initial DFS completed in December 2018 for the Project contemplated a three phase Project which, in full
production, would produce 408ktpa boric acid (“BA”) and 109ktpa sulphate of potash (“SOP”).
The Company subsequently modified the Project in January 2019 by allowing for a low capex starter project, that
split the previously announced phase 1 into phases 1A and 1B, which provided a lower upfront capital requirement
to assist financing flexibility. Full production metrics remained unchanged from the initial DFS.
The Enhanced DFS which is now complete builds on the starter project as announced in January 2019, by
incorporating further engineering work completed, as well as value engineering that has seen a substantial increase
in proposed SOP production. SOP production (in full production) has increased to 363ktpa from 109ktpa, an
increase of 233%. Boric acid production remains unchanged at 408ktpa in full production, but importantly phase
1A production has increased by 50 percent to 8.2ktpa from 5.4ktpa
The starter project has been achieved by splitting Phase 1 into Phase 1A and Phase 1B. Phase 1A (starter project)
will target the production of 40kstpa of SOP and 9kstpa of boric acid. Phase 1B will then increase boric acid
production to 90kstpa and SOP production to 80kstpa.
4
Key changes from January 2019 to the April 2020 enhanced DFS are:
Table 1 | Key changes from the 2019 Modified DFS
Enhanced DFS
(April 2020)
Modified DFS
(January 2019) Change
BA Production
(in full production)
408,233
tonnes/year
408,233
tonnes/year No change ➔
SOP Production
(in full production)
362,874
tonnes/year
108,862
tonnes/year
254,012
tonnes/year
BA Price US$750/tonne US$800/tonne US$50/tonne
SOP Price US$675/tonne US$725/tonne US$50/tonne
Capex US$737.9 million US$526.2 million US$211.7m
NPV8 US$1.965 billion US$1.428 billion US$537m
IRR 39.4% 40.5% 1.1%
EBITDA in first year
full production US$438.4 million US$345.4 million US$98.0m
5
Table 2 | Key Financial Metrics for the Fort Cady Borate Mine on a Phase by Phase Basis
Fort Cady Project (Boric Acid and SOP Production) Phase 1A Only
Capex US$50.3 million
NPV8 US$224.3 million
IRR 35.9%
EBITDA in first full year of production US$19.6 million
Phase 1A & 1B Only
Capex (Phase 1B only) US$156.0 million
NPV8 US$773.8 million
IRR 32.4%
EBITDA in first full year of production US$73.2 million
Phase 1 & 2 Only
Capex (Phase 2 only) US$268.3 million
NPV8 US$1.709 billion
IRR 37.8%
EBITDA in first full year of production US$242.2 million
Full Project (Phases 1, 2, & 3) Capex (Phase 3 only) US$263.2 million
NPV8 US$1.965 billion IRR 39.4% EBITDA in first full year of production US$438.4 million
The Project is forecast to directly employ around 250 people in full production. The Company is in the process of
contracting economists to determine a sensible number of indirect employment that the 250 direct employees will
create. The direct employment and indirect employment is expected to be meaningful to the local area.
The strength of standalone Phase 1A financial metrics means the Company can continue to target financing this
project in isolation. It also creates a modest starting point for development of the Project through the phases, with
the ultimate goal of reaching full production and the forecast EBITDA for the first full year of production of US$438.4
million. The table below presents a summary of the production targets by each Phase of construction.
6
Table 3 | Summary of Production by Phase for the Fort Cady Borate Mine
Enhanced DFS
(April 2020)
Modified DFS
(January 2019)
Capex
(US$m)
Boric Acid
(metric tonnes)
SOP
(metric tonnes)
Capex
(US$m)
Boric Acid
(metric tonnes)
SOP
(metric tonnes)
Phase 1A 50.3 8,165 36,287 36.8 5,443 36,287
Phase 1B 156.0 73,482 36,287 111.4 76,204 -
Phase 2 268.3 163,293 145,150 191.4 163,293 36,287
Phase 3 263.2 163,293 145,150 186.6 163,293 36,287
Total
(3 Phases) 737.9 408,233 362,874 526.2 408,233 108,862
Pre-production capex has increased, primarily due to increased production output. Other improvements as
outlined later in this document have had relatively minor impacts on capital investment required.
With significant revenues being generated from both BA and SOP, opex has been presented below in Tables 4 & 5
on a per tonne basis for each product, in full production. When looking at either BA or SOP in isolation, the by-
product credits from the other product are so significant which results in a negative C3 opex.
Table 4 | Operating Cost Estimates for the Fort Cady Borate Mine in Full Production, per tonne of BA
Phase 3
US$ per metric tonne of BA
C1 Costs
Utilities 56.49
Consumables 349.57
Labour 59.64
Equipment Lease 2.11
Maintenance 13.10
Sustaining Capex 15.68
Wellfield Development 11.02
(SOP by-product credit) -600.00
(HCl by-product credit) -0.55
(Gypsum by-product credit) -38.98
Total C1 Costs -131.93
C2 Costs
Licensing and Royalties 6.90
Depreciation 90.37
Total C2 Costs 97.27
C3 Costs
G&A 14.70
Total C3 Costs 14.70
Total Opex -19.96
7
Table 5 | Operating Cost Estimates for the Fort Cady Borate Mine in Full Production, per tonne of SOP
Phase 3
US$ per metric tonne of SOP
C1 Costs
Utilities 63.55
Consumables 393.27
Labour 67.09
Equipment Lease 2.37
Maintenance 14.73
Sustaining Capex 17.64
Wellfield Development 12.40
(BA by-product credit) -843.75
(HCl by-product credit) -0.62
(Gypsum by-product credit) -43.86
Total C1 Costs -317.17
C2 Costs
Licensing and Royalties 7.76
Depreciation 101.67
Total C2 Costs 109.43
C3 Costs
G&A 16.54
Total C3 Costs 16.54
Total Opex -191.21
Product Demand and Pricing Assumptions
SOP
SOP is primarily used as a specialty fertiliser globally.
After reviewing various reports on the SOP market, the Company has formed the view that SOP is, and will continue
to be, in high demand in the Company’s target markets of California, broader United States and Mexico. As a result
the Company has elected to increase planned SOP production to the levels outlined in this enhanced DFS, to
contribute to the satisfaction of this demand in the long term.
The US market is currently a net importer of SOP with the only existing United States producer being Compass
Minerals. The Company believes it is well positioned to compete in the US market with Compass Minerals and
alternate sources of supply based on the fact SOP is a by-product of boric acid production after Phase 1A and the
mine is located on the West Coast of the United States where the agricultural market is the largest consumer of
SOP.
The Company considers the deepest and most transparent SOP pricing point is that received by Compass Minerals,
and therefore this is the basis of the SOP price assumptions used by the Company for the purposes of this study.
In Q4 CY2019 Compass Minerals’ average received price for SOP was US$645/tonne. It is understood that the
Californian price is higher than this price due to the location, and the difference is equal to the freight cost from
Compass’ production facilities. This freight cost is estimated at US$30/tonne.
8
Figure 2: Graph showing predicted California, broader US and Mexico demand growth to 2030 and ABR
proposed supply based on US Based Context Analysis
Context is forecasting demand growth of 4.4% CAGR. The graph above assumes 4% CAGR. Given the Californian
demand profile, ABR believes it will be able to sell the majority of its SOP from early phases into this market.
California’s demand comes primarily from chloride sensitive crops like citrus, berries and avocadoes.
Figure 3: Graphic showing major crops for SOP application in the United States
9
Boric Acid
Borates have more than 400 uses globally. The main uses are ceramics, fibreglass and fertilisers (micro nutrients).
Boric acid demand remains strong, with existing supply being highly concentrated. Consumers would welcome
new sources of supply, and outside of Fort Cady there are very few, if any, additional potential sources being
developed. The Company sees this as a large opportunity, and continues to be encouraged by discussions with
boric acid consumers.
Importantly, ABR’s targeted production profile is less than 50% of the forecast global growth over the next 10 years,
which sees the market dominated by Turkey with around 70% of global supply per the graph below.
Figure 4: Graph showing predicted global supply curve based on Roskill, Eti Maden and Rio Tinto analysis
Boric Acid prices are set by periodically renewed contracts. Market intelligence suggests that current prices are
approximately US$750/tonne, a view supported by conversations with market participants.
ABR’s focus is the micro nutrient market which currently accounts for around 20% of all global demand. According
to Compass Minerals, the micro nutrient market is forecast to grow at over 8% per annum through to 2023.
Figure 5: Compass Minerals’ market growth assumptions from its May 2019 Farm to Market Conference
presentation
10
Boron SOP Specialty Fertiliser
The Company has commenced work on a specialty SOP, boron fertiliser that it believes will attract an additional
premium price. This price premium is not factored into the enhanced DFS economics.
ABR is ideally positioned to produce such a fertiliser as it will have internal supply of all requisite components, in
the form of existing boric acid and SOP production. The Company has already engaged an East Coast US University
to conduct crop trials and studies on boron containing SOP speciality fertilisers (see ASX announcement dated 9
April 2019 for additional detail). A West Coast US University is expected to be engaged for similar crop trials.
North American Markets
When assessing downside scenarios for both BA and SOP prices, the Company has identified that both products
have a single dominant supplier into ABR’s target markets within North America. The presence of such a dominant
supplier, being Rio Tinto Borates for BA and Compass Minerals for SOP, sets a theoretical price floor at the
operating cost for these respective companies. ABR is comforted by the reality that if prices would fall to this break-
even point, the two suppliers would likely limit supply, therefore driving prices upwards.
Table 6 outlines the operating costs and annual production for these suppliers over the previous five years.
Table 7 presents a downside sensitivity analysis using these operating costs as received product prices for both
the base and accelerated DFS cases.
Table 6 | Operating Costs and Annual Production of Rio Tinto Borates (BA equivalent)
and Compass Minerals (SOP) for previous five years
2015 2016 2017 2018 2019 AVERAGE
(US$/tonne)
Rio Tinto Borates
Operating
Cost/tonne BA
equiv
Annual
Production/tonne BA
equiv
(source: Rio Tinto
Annual Reports)
634
822
568
886
565
893
551
884
526
898
569
877
Compass Minerals
Operating
Cost/tonne SOP*
Annual Production/tonne
SOP
(source: Compass
Annual Reports)
638
282
640
284
614
297
634
328
639
288
633
296
* Compass Minerals reports operating costs for all North American fertilisers. The significant majority of specialty fertiliser production
is SOP. As a result, it is assumed that the reported operating costs are a reasonable proxy for SOP production
11
Table 7 | Fort Cady Financial Metrics with Competitor Costs as Received Prices
Fort Cady
BA Received Price Assumption
(based on Rio Tinto 5 year average operating costs) US$569/metric tonne
SOP Received Price Assumption
(based on Compass 5 year average operating costs) US$633/metric tonne
Base Case Enhanced DFS
NPV8 US$1.368 billion
IRR 31.7%
Accelerated Case DFS
NPV8 US$1.454 billion
IRR 31.9%
Process Improvements
Two major technical improvements have been incorporated into the Project design since the completion of the DFS
in December 2018. Both have increased the consumption of hydrochloric acid (HCl). These changes are:
1. a decision to operate the mine at higher ionic strength (250 g/l calcium chloride - CaCl2); and
2. an increased attack on gangue minerals in the colemanite ore zone.
Since the source of HCl for the Project is a by-product of SOP production in the Mannheim furnace, this means the
Project’s ratio of SOP production to BA production has increased significantly to maintain a balance of HCL
produced and consumed. In full production, this impact is an increase of SOP produced from 108,862 tonnes/year
to 362,874 tonnes/year, while BA production remains unchanged at 408,233 tonnes/year.
The decision to increase mine liquor (PLS) ionic strength was based on ongoing laboratory test results during the
solvent extraction (SX) testing that occurred at Hazen in 2019. The initial tests confirmed the ability to purify the
incoming boric acid from the Project wellfield through solvent extraction. In SX, boric acid is “extracted” from the
PLS (aqueous phase) to the organic phase while substantially rejecting water and the aqueous impurities. The boric
acid is separated from the remaining aqueous portion that contains the impurities and water from the wellfield
(similar to oil and water). The boric acid is then recovered from the organic and further purified and separated
through the crystallisation process. During this initial round of testing, the grade did not however improve, and
additional water would need to be evaporated during the crystallisation phase, which would have the effect of
increasing boric acid opex.
Further testing was then conducted, and the extraction was improved by increasing the ionic strength of the PLS
through a “salting out” effect. This is accomplished through increasing the ionic strength of the PLS by increasing
the cations which cause more of the water in the solution to be associated with these ions and reducing the “free
water” available in the solution. This reduction in “free water” effectively increases the concentration of the boric
acid present (as the boric acid is a neutral non-polar molecule) which allows the organic used, to not only remove
impurities but also to improve the extraction by upgrading the solution.
This “salting out” is accomplished through maintaining a higher calcium chloride (CaCl2) content in the PLS. In the
original DFS, all of the CaCl2 was removed through the precipitation of gypsum by adding sulfuric acid. This reaction
also regenerated HCl which was then returned to process as a lixiviant, which in effect reduced the addition of HCl
to the boric acid process. The PLS is now maintaining a 250 g/l concentration of CaCl2 to accomplish the “salting
out”. While this reduces the overall production of gypsum, and the regeneration of HCl, it effectively doubles the
12
concentration of boric acid that is delivered to the crystalliser, which reduces the opex by reducing the amount of
water that must be evaporated. Any level of liquid added to or lost to the wellfield leaching process must also be
brought up to a 250 g/l concentration of CaCl2, again this reduces the amount of HCl regenerated which in effect
increases the amount of HCl that will be consumed from the Mannheim process.
This reduction of regenerated HCl also has the effect of increasing the capacity of the SOP produced when the HCl
consumption is matched to the HCl production associated with the Mannheim process.
The boric acid process has also been modified from the December 2018 DFS in that a greater portion of the lixiviant
is also reacted with existing gangue minerals in the mineral formation. While maintaining a higher pH in the lixiviant
will result in preferential dissolution of the colemanite matrix, the testing and further review with process experts
indicated that there could be some attack to the non-colemanite minerals in the formation, most notably the calcite
in the mineral horizon. As such, there is also now modelling of some dissolution of the calcite in the orebody as
well as some dissolution of sodium and potassium minerals in the resource.
Again, this additional attack in the non-colemanite horizon has the effect of consuming additional hydrochloric acid
as part of the leaching process. This additional consumption of acid, and then aligning the production of SOP and
the resultant by-product HCl to more fully match the HCl needs of the boric acid operation, have resulted in the
ability to increase the production of sulfate of potash for the Fort Cady Mine operation. This also includes reducing
the existing mismatch that was present in the previous study as management has been encouraged by the
discussions with potential users of SOP that have indicated that the low cost production associated with the Project
and enviable location make the additional SOP production desirable.
Since releasing the initial DFS, the Company’s engineering team has made a number of additional improvements
to the Project, including:
• Alternation of Mannheim systems to allow production of 35% hydrochloric acid (previously 31%), which better
align to greater market demand for surplus acid,
• Addition of advanced drying controls to further satisfy best practice environmental requirements, specifically
low nitrous oxide burners and additional dust control equipment,
• Re-engineered zero liquid discharge (“ZLD”) systems, with additional evaporation capacity to ensure greater
flexibility for water handling and also has the potential for sales of mixed salts, and
• Allowances for high alloy materials for crystalliser systems, to result in lower maintenance requirements and
better system performance.
These Project improvements have resulted in an increased capital requirement for Phase 1A. A comparison since
the starter project released in January 2019, showing the source of the capital increase, is demonstrated below in
Figure 6.
The 3D rendering for Phase 1A is shown in Figure 7.
13
Figure 6 | Increases to Capex due to Project Improvements, from January 2019
Figure 7 | 3D Rendering of Fort Cady Phase 1A
14
Key Assumptions
A table of key assumptions is presented in Table 8 below.
Table 8 | Key Assumptions
Key Assumptions
Assumption Value
Mine Life: Phase 1 Only 93 Years
Mine Life: Phase 1 & 2 Only 33 Years
Mine Life: Phase 1, 2, and 3 22 Years
Boric Acid Price $750.00/metric tonne
(decrease of US$50/tonne from DFS)
SOP Price $675.00/metric tonne
(decrease of US$50/tonne from DFS)
Hydrochloric Acid Price $165.35/metric tonne
(decrease of US$100/short ton from DFS)
Gypsum Production 118% of Boric Acid, by weight
Gypsum Price $33.00/metric tonne
(no change from DFS)
Sulphuric Acid Price $82.67/metric tonne
(decrease of US$75/short ton from DFS)
Muriate of Potash (MoP) Price $265.00/metric tonne
(decrease of US$32.62 from DFS)
Escalation (revenues and costs) 3.0%
Remediation Expense 10.0% of initial capex at end of mine life
Federal Tax Rate 22.0%
State Tax Rate 9.0%
Accelerated Scenario
The Company is also considering an accelerated scenario whereby the Project would be built in shorter timelines.
Under this scenario, the overall scale of the Project would remain the same, but Phases 1B and 2 would be built
concurrently. This would allow the Project to reach full production faster. This scenario would require increased
external funding (rather than funding from cashflow) and therefore would only be built if financing conditions
allowed. There would be a reduction in overall capex under this scenario. Opex would not be impacted, and all
other assumptions including pricing remain the same.
Details of the accelerated scenario are shown in the table below.
15
Table 9 | Accelerated Scenario Metrics
Key Assumptions
Category Item Value
Capex Phase 1A US$50.3 million
Phase 1B and 2
(Built concurrently,
construction time 18
months)
US$420.5 million
Phase 3 US$263.2 million
Total Capex US$734.0 million
Production Phase 1A BA: 8,165 tonnes/year
SOP: 36,287 tonnes/year
Phase 1B & 2 BA: 236,775 tonnes/year
SOP: 181,437 tonnes/year
Phase 3 BA: 163,293 tonnes/year
SOP: 145,150 tonnes/year
Total Production BA: 408,233 tonnes/year
SOP: 362,874 tonnes/year
Financial Metrics NPV8 US$2.084 billion
IRR 39.6%
JORC Mineral Resource Estimate and Reserve
JORC Mineral Resources and Reserves remain unchanged from those previously announced. Resources and
Reserves are summarised in Table 10 below.
Table 10 | JORC compliant Mineral Resource Estimate and Reserve
JORC compliant Mineral Resource Estimate and Reserve
Reserves MMT B2O3
%
H3BO3
%
Li
ppm
B2O3
MT
H3BO3
MT
- Proven 27.21 6.70 11.91 379 1.82 3.24
- Probable 13.80 6.40 11.36 343 0.88 1.57
Total
Reserves
41.01 6.60 11.72 367 2.71 4.81
Resources
- Measured 38.87 6.70 11.91 379 2.61 4.63
- Indicated 19.72 6.40 11.36 343 1.26 2.24
Total M&I 58.59 6.60 11.72 367 3.87 6.87
- Inferred 61.85 6.43 11.42 322 3.98 7.07
Total M,I&I 120.44 6.51 11.57 344 7.84 13.93
-ENDS-
Authorised for release by: Michael X. Schlumpberger, Managing Director.
16
For further information contact:
Michael X. Schlumpberger
Managing Director
Ph: +1 442 292 2120
Anthony Hall
Executive Director
Ph: +61 417 466 039
Elvis Jurcevic
Investor Relations
Ph: +61 408 268 271
Competent Persons Statement
Fort Cady
The information in this release that relates to Exploration Targets, Exploration Results and Mineral Resources is based on
information prepared by Mr Louis Fourie, P.Geo of Terra Modelling Services. Mr Fourie is a licensed Professional
Geoscientist registered with APEGS (Association of Professional Engineers and Geoscientists of Saskatchewan) in the
Province of Saskatchewan, Canada and a Professional Natural Scientist (Geological Science) with SACNASP (South African
Council for Natural Scientific Professions). APEGS and SACNASP are a Joint Ore Reserves Committee (JORC) Code
‘Recognized Professional Organization’ (RPO). An RPO is an accredited organization to which the Competent Person (CP)
under JORC Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, or Ore
Reserves through the ASX. Mr Fourie has sufficient experience which is relevant to the style of mineralisation and type
of deposit under consideration and to the activity which they are undertaking to qualify as a CP as defined in the 2012
Edition of the JORC Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr
Fourie consents to the inclusion in the release of the matters based on their information in the form and context in which
it appears.
The information in this release that relates to the conversion of Mineral Resources to Ore Reserves has been prepared
by Tabetha A. Stirrett of RESPEC Consulting Inc. Mrs. Tabetha A. Stirrett, P. Geo of RESPEC Consulting Inc. is a member in
good standing of the Association of Professional Engineers and Geoscientists of Saskatchewan (Member #10699) and a
member of the American Institute of Professional Geologists (CPG) (#11581). APEGS and CPG are a Joint Ore Reserves
Committee (JORC) ‘Recognised Professional Organization’ (RPO). Mrs. Stirrett has sufficient Experience which is relevant
to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to
qualify as a CP as defined in the 2012 Edition of the JORC Australasian Code for Reporting of Exploration Results, Mineral
Resource and Ore Reserves. Mrs. Stirrett consents to the inclusion in the release of the matters based on their
information in the form and context in which it appears.
This report contains historical exploration results from exploration activities conducted by Duval Corp (“historical
estimates”). The historical estimates and are not reported in accordance with the JORC Code. A competent person has
not done sufficient work to classify the historical estimates as mineral resources or ore reserves in accordance with the
JORC Code. It is uncertain that following evaluation and/or further exploration work that the historical estimates will be
able to be reported as mineral resources or ore reserves in accordance with the JORC Code. The Company confirms it is
not in possession of any new information or data relating to the historical estimates that materially impacts on the
reliability of the historical estimates or the Company’s ability to verify the historical estimates.
Forward Looking Statements
Some of the statements contained in this report are forward looking statements. Forward looking statements include
but are not limited to, statements concerning estimates of tonnages, expected costs, statements relating to the continued
advancement of ABR’s projects and other statements which are not historical facts. When used in this report, and on
other published information of ABR, the words such as “aim”, “could”, “estimate”, “expect”, “intend”, “may”, “potential”,
“should” and similar expressions are forward-looking statements. Although ABR believes that its expectations reflected
in the forward-looking statements are reasonable, such statements involve risk and uncertainties and no assurance can
be given that actual results will be consistent with these forward-looking statements. Various factors could cause actual
results to differ from these forward-looking statements include the potential that ABR’s projects may experience technical,
geological, metallurgical and mechanical problems, changes in product prices and other risks not anticipated by ABR.
ABR is pleased to report this summary of the Study and believe that it has a reasonable basis for making the forward-
looking statements in this announcement, including with respect to any mining of mineralised material, modifying factors,
production targets and operating cost estimates. This announcement has been compiled by ABR from the information
provided by the various contributors to the Study.
17
APPENDICES
Table 11 | Capex Detail for Fort Cady Project
Summary of Capex: Fort Cady Borate Project
Phase 1A Phase 1B Phase 2 Phase 3
Direct Capital Expenditure - Equipment (US$'000) (US$'000) (US$'000) (US$'000)
Wellfield 150 24,112 37,639 35,072
Gypsum storage - 2,601 - -
Drill Rig - 700 - -
Injection 2,498 525 796 796
PLS Recovery and Clarification 1,518 2,177 3,299 3,299
Solvent Extraction 1,991 8,243 12,631 12,631
Crystallization 5,750 22,165 33,596 33,596
Gypsum 2,066 2,958 4,484 4,484
Drying 903 8,116 11,681 11,681
Loadout 1,645 1,531 2,321 2,321
Utilities 2,867 2,402 3,641 3,641
Reagents 1,675 1,465 2,220 2,220
Gypsum Storage Facility 580 90 136 136
Zero Liquid Discharge 3,710 20,000 28,314 28,314
Mannheim Facility 16,287 16,174 52,944 52,944
Cogeneration Facility 558 10,022 15,191 15,191
Total Equipment Costs 42,199 123,281 208,893 206,326
Other Direct Costs
Infrastructure - 60 3,560 60
Site Costs 1,163 1,612 2,211 2,211
Plant Structures 1,745 8,319 12,609 12,609
Ancillary Buildings - - 625 -
Freight - 783 1,188 1,188
Total Other Direct Costs 2,907 10,774 20,192 16,068
Total Direct Costs 45,106 134,055 229,086 222,394
Indirect Costs
Engineering 800 6,698 7,288 5,342
Owner's Costs 1,251 977 1,257 1,257
Construction 580 580 665 635
Commissioning 255 255 255 255
Total Indirect Costs 2,886 8,510 9,465 7,489
Contingency 2,330 13,406 29,781 33,359
Total Capex 50,322 155,971 268,332 263,241
18
Sensitivity Analysis
Sensitivities are shown below:
Table 12 | Capex Sensitivity for full Project (Phases 1, 2, and 3)
Capex Sensitivity
Capex Sensitivity -30% -15% 0% 15% 30%
Total Capex (US$ million) 516.5 627.2 737.9 848.5 959.2
NPV8 (US$ million) 2,152.1 2,058.7 1,965.4 1,872.0 1,778.7
Table 13 | BA Price Sensitivity for full Project (Phases 1, 2, and 3)
BA Price Sensitivity
BA Price Sensitivity -30% -15% 0% 15% 30%
BA Price
(US$/tonne) 525.00 637.50 750.00 862.50 975.00
NPV8 (US$ million) 1,351.4 1,658.4 1,965.4 2,272.4 2,579.4
Table 14 | SOP Price Sensitivity for full Project (Phases 1, 2, and 3)
SOP Price Sensitivity
SOP Price
Sensitivity -30% -15% 0% 15% 30%
SOP Price
(US$/tonne) 472.50 573.75 675.00 776.25 877.50
NPV8 (US$ million) 1,465.9 1,715.6 1,965.4 2,215.1 2,464.9
As noted above in Product Demand and Pricing Assumptions, a sensitivity has been run using the operating
costs of Rio Tinto Borates (for BA) and Compass Minerals (for SOP) to assess financial metrics of Fort Cady in a
theoretical downside scenario.
Table 15 | Fort Cady Financial Metrics with Competitor Costs as Received Prices
Fort Cady
BA Received Price Assumption (based on Rio Tinto 5 year average operating costs)
US$569/metric tonne
SOP Received Price Assumption (based on Compass Minerals 5 year average operating costs)
US$633/metric tonne
Base Case Enhanced DFS
NPV8 US$1.368 billion
IRR 31.7%
Accelerated Case DFS
NPV8 US$1.454 billion
IRR 31.9%
19
About American Pacific Borates Limited
American Pacific Borates Limited is focused on advancing its 100% owned Fort Cady Borate Mine Project located in
Southern California, USA. Fort Cady is a highly rare and large colemanite deposit and is the largest known contained
borate occurrence in the world not owned by the two major borate producers Rio Tinto and Eti Maden. The JORC
compliant Mineral Resource Estimate and Reserve is presented below. Importantly, it comprises 13.93Mt of
contained boric acid.
In excess of US$60m has been spent at Fort Cady, including resource drilling, metallurgical test works, well injection
tests, permitting activities and substantial small-scale commercial operations and test works.
A Definitive Feasibility Study (“DFS”) was completed in December 2018 (ASX release dated 17 December 2018). An
enhanced DFS was completed in April 2020 (ASX release dated 16 April 2020). The enhanced DFS increased
production of SOP to 363ktpa in full production. This complemented boric acid production of 409ktpa.
The enhanced DFS delivered exceptional financial metrics, including an unlevered post tax NPV8 of US$1.97bn, an
unlevered post tax IRR of 39% and an EBITDA in the first full year of production of US$438m.
JORC compliant Mineral Resource Estimate and Reserve (ASX release dated 3 December 20181)
JORC compliant Mineral Resource Estimate and Reserve
Reserves MMT B2O3
%
H3BO3
%
Li
ppm
B2O3
MT
H3BO3
MT
- Proven 27.21 6.70 11.91 379 1.82 3.24
- Probable 13.80 6.40 11.36 343 0.88 1.57
Total
Reserves
41.01 6.60 11.72 367 2.71 4.81
Resources
- Measured 38.87 6.70 11.91 379 2.61 4.63
- Indicated 19.72 6.40 11.36 343 1.26 2.24
Total M&I 58.59 6.60 11.72 367 3.87 6.87
- Inferred 61.85 6.43 11.42 322 3.98 7.07
Total M,I&I 120.44 6.51 11.57 344 7.84 13.93
In 1994 the Plan of Operations (mining permit) was authorised along with the Mining and Land Reclamation Plan.
These permits are in good standing and contain a full Environmental Impact Report and water rights for initial
operations of 82ktpa of boric acid. The Company is currently working through a permitting process to gain the final
permit required to commence operations.
In addition to the flagship Fort Cady Project, the Company also has an earn in agreement to acquire a 100% interest
in the Salt Wells North and Salt Wells South Projects in Nevada, USA on the incurrence of US$3m of Project
expenditures. The Projects cover an area of 36km2 and are considered prospective for borates and lithium in the
sediments and lithium in the brines within the project area. Surface salt samples from the Salt Wells North project
area were assayed in April 2018 and showed elevated levels of both lithium and boron with several results of over
500ppm lithium and over 1% boron.
1 ABR confirms all material assumptions and technical parameters underpinning the Resource Estimate and Reserve continue to apply and
have not materially changed as per Listing Rule 5.23.2
20
Figure 8 | Location of the Fort Cady and Salt Wells Projects in the USA
