Millennial Potash Corp (TSX-V:MLP, OTCQB:MLPNF) earlier this week announced that it has earned a 70% interest in its potash project in Gabon. The company started the project in March 2023 and has quickly developed it by building a camp, initiating drilling, and releasing a maiden resource estimate in January. The resource estimate includes 1.7 billion tonnes of indicated and inferred resource.
Farhad Abasov, chairman of Millennial Potash, explained that the next steps include additional drilling to increase the resource base and convert some of the existing resources into measured categories. The company plans to start a bankable feasibility study later this year and aims to complete it by the end of 2025, which would allow it to earn a 100% interest in the project.
Proactive: The company put out a pretty significant news release about a key milestone being met, now earning a total of 70% interest in your project. Can you tell me a little bit about reaching this point?
Farhad Abasov: We've been developing this project in record time. We started in March 2023, and since then, we've built a camp, started drilling, and released our maiden resource estimate in January, which showed a very large resource of 1.7 billion tonnes of indicated and inferred resources. In April, we completed our preliminary economic assessment. Based on all these milestones, we've earned 70% of the project, which is our biannual potash project in Gabon. We plan to earn up to 100% in the next few months by completing a bankable feasibility study as well.
Tell us about the PGA, because you mentioned it needed to be completed. The numbers inside it seem quite strong, in fact, very good, which I assume is what you were hoping for.
We were definitely hoping for strong numbers, but these results far exceeded our expectations. Our drill program extended the potash horizons by nearly 30 to 35 meters, reaching a total thickness of 70 meters. This expansion has allowed for a much lower cost structure as well.
The Preliminary Economic Assessment (PEA) was based on an 800,000-tonne-per-year operation. Our Net Present Value (NPV) after tax exceeded $1 billion USD, with an Internal Rate of Return (IRR) after tax of over 32%. Both our capital expenditure (CapEx) and operational expenditure (OpEx) requirements were among the lowest in the industry. These factors have firmly established us on the potash map.
Could you share your thoughts on the next stages moving forward?
If we look back at our drill program, we've drilled only two holes so far. Despite this, we've identified a very large resource, covering less than 1% of our extensive property spread across over 1,200 square kilometers. The recommendation now is to expand beyond those initial holes and drill two more. This step aims to significantly increase our indicated and inferred resources and potentially convert some into measured resources. That's our immediate plan following the completion of the PEA. Looking ahead, once we've expanded our resource base further, we intend to commence a bankable feasibility study later this year, alongside environmental permitting. This trajectory should ideally lead us to achieving 100% ownership of the project by the end of 2025.
People are accustomed to hearing about projects with hundreds of drill holes, but here we're discussing significant progress with just two drill holes and the potential for two more. Can you explain why this approach makes sense for your project in potash, given the broader industry context?
Absolutely. Potash basins, in general, are known for their uniformity and continuity. Additionally, we benefit from extensive historical exploration data on this project, spanning previous drill programs dating back to the 1970s, as well as more recent data from 2017 and 2018. We also have seismic data that aligns well with our current findings. This allows us to accelerate our progress. Similar efficiency can be seen in other potash basins like those in Saskatchewan and Russia, where a dozen drill holes at most are often sufficient to delineate a substantial resource.
Quotes have been edited for style and clarity