Asia Pacific dives on Udon license newsShares in Asia Pacific Resources (APQ-T) were off 3.5, or about 16%, at 18.5 by midday on Dec. 23, after the junior announced that Thailand’s Department of Primary Industry and Mines has some reservations about extending the junior’s special prospecting license on the Udon North deposit.
The company applied to have the licenses extended on Nov. 5, 2003, and figures it is “fully entitled” to the extension under the provisions of the concession agreement. Asia Pacific and its advisers are in the process of trying to resolve the matter with the relevant government authorities.
“The discussion regarding the special prospecting licenses for Udon North has no impact on our plans for the major Udon South deposit” said Asia Pac’s chief executive John Bovard. “Asia Pacific plans to develop the Udon South deposit based on an initial production rate of 1 million tonnes of potash per annum, increasing to 2 million tonnes through a plant expansion as market share grows.”
This summer, an updated technical and economic review at Udon indicated internal after-tax rates of return of between 16% and 20% for a range of potash prices, shipping costs and bank debt. The anticipated life-of-mine is pegged at around 22 years. Total capital cost for the initial stage is estimated at US$308 million, with the second stage figured at US$221 million.
Asia Pacific recently agreed, in principle, to form a joint venture with Chinese state-owned Enterprise Investment aimed at developing the Udon South. Asia Pacific owns a 90% interest in the project, and the deal includes long-term offtake commitments and US$300 million worth of financing required for initial capital costs.
Udon South (formerly known as Somboon) contains 330 million tonnes of sylvinite ore grading 24% K2O. Some 7 km to the north, Udon North (formerly known as Udon) is home to 1 billion tonnes of sylvinite ore.
An application for a mining lease at Udon South was applied for in May 2003; the application is under consideration.
The company’s issue finished Tuesday’s trading session in Toronto off 1.5, or about 7%, at 20.5.