Western Potash Corp. is pleased to announce that its wholly owned subsidiary Western Potash Corp. and the City of Regina (“the city”) have both agreed to the revised key commercial terms for the supply of treated wastewater from the city for the company’s proposed Milestone Potash Project located 35 kilometres southeast of Regina, Saskatchewan. Regina’s City Council voted in favour of the agreement at its meeting on October 31, 2017. The two parties are now in the process of finalizing the agreement.
In November 2012, the city and Western Potash Corp. entered into an agreement that allowed the city to provide Western with access to recycled wastewater for a 2.8 million tonne per year conventional potash solution mine. In response to the potash market, Western Potash adjusted the development plan and re-scoped the project to utilize the innovative “horizontal drilling + selective solution mining” techniques that will provide a significantly reduced UNIT CAPEX and competitive OPEX. To secure the most favourable data, Western will use this innovative technology to develop a 146,000 tonne per year capacity Phase I project. Once the technique is tested, Western will develop the previous 2.8 million capacity project in two phases, each at a 1.4 million tonnes potash production per year. The Phase I project will use groundwater from the mine site and Phase II and III projects will use treated water from the city. The selective solution mining technology uses substantially less water than conventional solution mining techniques, and the renegotiated agreement therefore reduces the volume of water correspondingly.
Negotiating teams worked very hard over the past six months and came up with a mutually beneficial agreement that extends the right to access 25,000 cubic metres per day of treated wastewater until 2025, and a further 40 years access once wastewater is drawn.
Included in the terms of the new agreement, Western has agreed to pay a commitment fee of $200,000 when the final agreement is signed, and an annual ‘standby’ fee of $100,000 for every year that water is not drawn. When Western begins to draw water, 50 per cent of the standby and commitment fees paid to the city will be refunded in the form of a credit against water usage charges.
This unique agreement provides the city with an economic opportunity for revenue during the 40-year life of the agreement and standby fees if the project does not proceed by 2025. In addition, the re-use of wastewater is beneficial in both the reduction of use of fresh water, and eliminating wastewater from local rivers and creeks. It will also mean that the Milestone Potash Mine will essentially use no fresh water (aside from minor potable and process requirements). Worthy of mention is that this new technology, in addition to the reduction of water consumption, is very environmental friendly, with no more salt tailings above ground, energy usage significantly reduced and minor subsidence.
Mr. Bill Xue, chairman of Western Potash, commented, “we are very pleased with the terms of the new agreement with the city of Regina and appreciate all the hard work that went into the negotiations. This agreement benefits all parties involved and has substantial environmental benefits. We are continuing with the development of the Milestone Phase I project through the innovative technology and will actively advance the 2.8 million tonne full-scale project. We look forward to a long-term relationship with the city.”by