ENCANTO POTASH CORP (EPO-TSXV) UPDATE
The Bottom Is In
- Current resource of 79 million tonnes (Mt) indicated potassium chloride (KCl)
- Potential to increase resource to 151 Mt KCl with addition of TLE lands in September
- Average annual production on comparables 2.5 million tonnes per year
- Life of mine (LOM) current = 30 years; Potential = 50+ years
- $5 billion NPV10 on comparable solution mine with 47 year mine life and approximately 151Mt
Encanto, along with its partners the Muskowekwan First Nations, released its National Instrument 43-101-compliant initial resource calculation on its Muskowekwan project in Saskatchewan in March.
It is important to understand that this initial resource estimate is based on only 5 holes covering an initial 16,831 acre land position. Encanto is adding an additional 15,500 acres to this resource calculation, which will effectively double their land position. We'll return to how this works further down.
These potash beds have confirmed their consistency through drilling and 3D seismic. Unlike most metals exploration, drill-spacing can be very wide given that Saskatchewan potash beds are typically flat and consistent over many kilometers. The area is also blessed with well-developed infrastructure and accessibility. This allows rapid confirmation and resource building.
Encanto's NI 43-101 initial resource calculation was prepared using two different mining scenarios. Given the seismic data and consistency, we previously extrapolated the data to derive an implied potential resource given the expected added acreage. This was the subject of our last Update Report released on March 22.
What has apparently been most confusing to the market is the process involved to add those additional 15,500 acres to their resource calculation. We address that issue below. We consider the extreme sell-off and current bottoming efforts as an opportunity to re-position for those who took profits off the table, as we did with our several email Alerts over the course of the winter.
The Process
Muskowekwan First Nation Chief Reginald Bellerose will be holding open sessions in Regina, Calgary, Winnipeg, Saskatoon and Edmonton to ensure that all band members are fully aware of the benefits offered through the partnership with Encanto, leading up to a late September vote to include the Treaty Land Entitlement property into the existing joint venture agreement.
Chief Reginald Bellerose explains the voting process: "We have approximately 1,050 eligible voters, many of whom don't live on the Home Reserve. For the vote to be considered a legal vote at least 51% of the eligible voters must cast a vote. For the vote to be successful at least 51% of those voting must cast in favour. In the unlikely event that a sufficient number of voters don't participate in the first vote, a second vote will be held on the Home Reserve 35 days after the first vote. For the second vote to be successful a simple majority is required from those who vote. I am optimistic that the vote will be successful on the first vote. I say that as I ran on a pro potash forum in our recent elections for Chief and Council. The majority of candidates also ran on a pro potash forum as did all 8 successful councilors. This is obviously a very strong mandate from our citizens to aggressively pursue our Joint Venture agreement with Encanto."
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For further information please contact:Vanguard Shareholder Solutions
Ph: 604.608.0824
Toll free: 866.918.0824
ir@vanguardsolutions.ca www.encantopotash.com