Premier African Minerals Ltd (LON:PREM) shares advanced on Thursday as it revealed the Danakil potash project in Ethiopia could become the globe's lowest cost producer.
It comes after Circum Minerals Ltd, to which Premier sold the project in 2014, unveiled an optimised definitive feasibility study on the site. Premier African still retains around a 2% interest.
The optimised report reduced development capital costs by US$276 million and operating costs were reduced by around US$3 per tonne, compared to the 2015 DFS.
The study shows the project has a post-tax NPV (net present value) of US$2.1bn and post-tax IRR (internal rate of return) of 25.8%.
The proven and probable reserves are put at 107.8 million tonnes of KCl equivalent (potassium chloride) supporting a 26 year mine life for phase 1, with a three year ramp-up.
The expected annual production is put at 2 million tonnes of MOP (muriate of potash) and 750,000 tonnes of SOP (sulfate of potash) for phase I.
The development capital required for the first phase is US$2.3 billion (including contingency) with peak funding of US$1.8 billion due to early revenue from initial production.
There is low capital intensity per tonne of annual production at US$838 per tonne, Circum added.
Premier African shares rose 3.45% to 0.75p each.