TSX-V: EPO OTCQX: ENCTF

Transcription

1 . TSX-V: EPO OTCQX: ENCTF

2 SAFE HARBOUR STATEMENT This presentation contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. For this purpose, any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements made pursuant to the safe harbour provisions of the applicable securities laws. Without limiting the foregoing, the words believes, anticipates, plans, intends, will, should, expects, projects and similar expressions are intended to identify forward-looking statements. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, those associated with the success of research and development programs, the regulatory approval process, competition, securing and maintaining corporate alliances, market acceptance of the Company s products, the availability of government and insurance reimbursements for the Company s products, the strength of intellectual property, financing capability, the potential dilutive effects of any financing, reliance on subcontractors and key personnel. The forward-looking statements are made as of the date hereof and the Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 2

3 WHO IS ENCANTO POTASH CORP? Encanto and its Muskowekwan First Nations Partner ( MFN ) in Saskatchewan have developed Proven & Probable KCI Reserves of MMt JV with MFN signed Q4, 2011to grant 100% Mineral Rights on the Muskowekwan Project The Pre-Feasibility Study released February 4, 2013 confirmed a resource that will support mining for over 50 years at an annual production rate of 2.8 million tonnes and was updated again on June 4, 2013 to include data from the latest 3D seismic program and finally in March, Reserve tonnage alone now represents a 58 year mine life based on full 2.8M tonnes per year production. Encanto is currently close to a landmark offtake agreement with a consortium of potash distributors from India with several of the signatories being partially owned or controlled by the Indian government. It would be the largest offtake ever signed by a junior potash developer and the largest ever signed by India. Encanto is currently conducting its Feasibility Study on the project 3

4 PROVEN MANAGEMENT TEAM James Walchuck - President & CEO Gordon Keep - Chairman Extensive background in corporate finance & investment banking and creating public natural resource companies including: Wheaton River (now Goldcorp), Silver Wheaton, Pacific Rubiales Energy, Northern Orion Resources (now Yamana Gold), Bema Gold (now Kinross Gold) Bolivar Goldfields, Oriel Resources (acquired by OAO Mechel), Peak Gold (now New Gold) Rod Hope - Consultant of Saskatchewan First Nations Business Development 34 Years in mining industry including diverse background in operations, feasibility, construction & finance Significant legal & relationship experience with First Nations Dr. Simon Desjardins - V.P. Technical Services & Project Management 24 Years in Engineering and Construction. Extensive experience in Feasibility Studies and Project Management. Darren Svedahl Manager Lands & Government Relations 20 years experience working with the Canadian Federal Government in the Departments of Natural Resources Canada (NRCan) and Aboriginal Affairs and Northern Development Canada (AANDC) 4

5 EXPERIENCED CONSULTANCY TEAM Novopro Projects Inc. A project-based company providing a full range of services, specializing in Feasibility, Engineering, Management and Mine Development SNC-Lavalin Global leader in engineering and construction Founded in 1911 with offices across Canada and in over 40 countries around the world Major owner of infrastructure and significant player in the provision of operations and maintenance services North Rim Exploration In business since 1984, renowned top geological consultants specializing in Potash and Uranium Well respected in the potash industry worked on over 100 potash & evaporite projects. Agapito 25+ years of experience in Potash Solution Mining Completed multiple feasibility studies and Technical Reports for potash projects globally Completed Encanto s Pre Feasibility Study for the solution mine design and mine plan and co-authored the NI Technical Report 5

6 FIRST NATIONS PARTNERSHIP Solid Alliance Muskowekwan Chief Reg Bellerose with Encanto CEO Jim Walchuck Chief Reginald Bellerose Extensive experience within the public domain and corporate environment Currently serving his fourth consecutive term as Chief of the Muskowekwan First Nation Completed his Masters in Project Management, University of Saskatchewan and Bachelor of Arts in History & Political Science, Concordia University Fast Track Development 6

7 ENCANTO & MUSKOWEKWAN JOINT VENTURE AGREEMENT 3% Gross Overriding Royalty to MFN 5% Gross Overriding Royalty held in trust by government in trust MFN Taxes and Royalties not to exceed those on Provincial lands (above royalties are capped) Muskowekwan First Nation owns 13.3 million common shares, million warrants and actively invested in prior financing Strong Support Direct and Indirect Jobs Immediate & Long Term Training & Education Mutual Interests 2.8 Mtpy of production to generate tens of millions of dollars in royalties to Muskowekwan First Nation Joint Management Committee supervises the business affairs of the Joint Venture (3 board seats EPO, 2 board seats MFN) 7

8 FLAGSHIP MUSKOWEKWAN PROPERTY 8

9 ENCANTO S DEVELOPMENT Encanto has been working with MFN for the past 5 years to establish significant potash reserves / resources and build a potash mine Mutual economic interests aligned with Muskowekwan First Nation with major support for jobs and training Encanto releases positive Preliminary Economic Assessment ( PEA ) for Muskowekwan Project August 2011 JV with MFN signed Q4/2011 NI Resource Filed May 2012 Positive independent Pre-Feasibility Study ( PFS ) February 2013 Encanto announced improved resource, results of 3D seismic and creep / core dissolution testing June 2013 Environmental Assessment filed August 2013 Successful Surface Designation vote April 2014 Encanto receives expression of interest to develop, construct and finance $250M co-generation plant Final Feasibility Study expected early 2016 EPO is currently exploring domestic and international strategic partnerships for the financing, development and sale of potash production from its Muskowekwan JV Property. Major MOU signed with India s government owned MMTC Oct/,

10 PRE-FEASIBILITY STUDY HIGHLIGHTS SOLUTION MINE IRR (after-tax) * 18% NPV (after-tax) * $2.84 billion Payback Period * 5 years OPEX at Full Capacity $54.32 / tonne Initial CAPEX $2.86 billion Deferred CAPEX $130 million Production Rate (K62 grade potash, 98% KCI) 2.8 MMt / Year Construction Start Date Q Mine Start Up Q Lifespan of Project 50 years + Proven & Probable KCI Reserves MMt Indicated Resource (% KCl) % Inferred Resource (%KCl) % For full disclosure regarding Encanto and its projects, including detailed technical information and all applicable risk factors and cautionary statements, investors are directed to review Encanto's filings on and on its website at * Assumes 460 FOB $ / tonne Standard KCI, 485 FOB $ / tonne Granular KCI 10

11 RESOURCE HOLES AREA OF INFLUENCE 11

12 MUSKOWEKWAN PROJECT POTASH RESERVE & RESOURCE ESTIMATE Proven & Probable KCI Reserves: MMt grading 28% Measured & Indicated Resource: 35.4 MMt Net KCI recoverable resource grading 28% Inferred Resource: MMt recoverable resource grading 30% Existing reserve / resource supports extremely long life operation together with production expansion opportunities 12

13 MUSKOWEKWAN MINERAL RESERVE ESTIMATE The Mineral Reserve estimate was prepared by Agapito Associates Inc. ( AAI ) of Grand Junction, under the direction of Qualified Person Dr. Michael P. Hardy P.E., P. Eng. 13

14 MUSKOWEKWAN MINERAL RESOURCE ESTIMATE The resource estimate was provided by Saskatchewan-based North Rim Exploration Limited, qualified person Tabetha Stirrett, P.Geo. 14

15 MAJOR INFRASTRUCTURE Prime rail line runs directly through the property and very near the approved mine processing site. Water (Rights License received March 2013) power and natural gas nearby and available Major highway close by Encanto received expression of interest to develop, construct and finance $250M co-generation plant (March 2015) Access to ready and skilled workforce (140 km NE of Regina), could also easily draw from Saskatoon. 15

16 GOV T SUPPORT AT ALL LEVELS Proven Government Support Government of India: India s Ministry of Fertilizers formed a consortium of at least six Indian companies that have committed to purchase 1.8 million tonnes of potash annually on a long term basis. The off-take agreement is now signed off on by key Indian officials and has been presented to the Indian cabinet for final approval New business-friendly BJP government reviewing and expected to approve off-take agreement in the near term Government of Canada: Federal government declared support for the project, both domestically and in India. Project has deep political support and is heralded as a new model to develop Canadians resources with First Nations/aboriginals. Regulatory moves have been made to provide certainty or access to the resource and ensure its development Government of Saskatchewan Water license already granted, Province is carrying out final environmental assessment Premier and Ministers have declared their support for the project and offer high-level meeting to ensure the project is built 16

17 BOTH PROVINCIAL AND FEDERAL GOVERNMENT SUPPORT March Honourable Bernard Valcourt, Minister of Aboriginal Affairs and Northern Development accepts the Encanto Muskowekwan potash mine project under the First Nations Commercial and Industrial Development Act (FNCIDA). The Act will enable the federal government to enact regulations that incorporate a provincial regulatory regime to govern commercial and industrial activities within a province. "I am pleased to announce that the Muskowekwan First Nation potash project is a step closer to becoming a reality," said Minister Valcourt. "The development of the first on-reserve potash mine in Canada will create employment and economic growth as well as other long-term benefits for the First Nation and surrounding communities. I applaud the community and its leaders for their vision and commitment to the long-term prosperity of the Muskowekwan First Nation. "Acceptance of the Muskowekwan Project under FNCIDA is a prime example of the cooperation we have observed between both Governments for this project," commented Encanto President & CEO Jim Walchuck. "This is a crucial milestone and brings us one step closer to the day we construct the first mine on First Nation land." 17

18 ECONOMICS 18

19 APPENDIX 19

20 SOLUTION MINING Can be used to mine deeper potash beds Ability to mine multiple potash layers which are predominantly flat and consistent over many miles No underground access is required, no personnel go underground Lower cost to build a new mine since shafts are not required No risk of mine flooding and losing the entire project Faster to put a project into full production Lower Capex needs Higher energy costs 20

21 SOLUTION MINING SYSTEM Two wells are drilled to work together Step 1 Step 2 21 From Potash One

22 SOLUTION MINING SYSTEM Step 3 Step 4 22 (From Potash One)

23 CONSTRUCTION CAPITAL COSTS Description DIRECT COSTS Total Installed Cost CAD Initial CAPEX Deferred CAPEX Civil Works Including Rails $67,322,143 $22,444,347 Tailing Management Area (Stage 1 Construction) $52,688,821 - Well Drilling $91,628,024 - Concrete works $67,634,635 - Structural Steel works $114,206,169 - Architectural works $94,969,701 $937,500 Mechanical works $468,261,021 $34,007,148 Piping & Ducting works $244,835,304 $10,951,083 Electrical works $136,990,892 $3,694,373 Instrumentation works $35,287,965 $2,224,585 Insulation & Painting (Allowance) $30,591,532 $2,058,468 Co-Generation Plant $252,112,000 - TransGas Works $96,500,000 - SasksWater Works $165,000,000 - $5,755,000 - $1,923,783,207 $76,317,504 Mobile Equipment Total Direct Costs: INDIRECT COSTS Construction Indirects (7% of direct costs) $135,000,000 $6,000,000 Freight and Handling (4% of equipment & Bulks costs) $31,000,000 $2,000,000 Spare Parts (1.5% of equipment costs) $6,000,000 $1,000,000 First Fill (Allowance c/w fuel) $25,000,000 - Heavy Lift Equipment (Allowance) $20,000,000 - Vendor Representative (2% of Equipment Cost) $7,500,000 $1,500,000 EPCM (10% of direct costs) $193,000,000 $8,000,000 Contingency $352,000,000 $24,000,000 Owner s costs (3% of direct costs) $58,000,000 $3,000,000 Taxes and Duties EXCLUDED EXCLUDED Escalation 2.5 years construction Risk Total Indirect Costs: CAPEX SUMMARY Sub-Totals: Grand Total: $110,000,000 $8,000,000 EXCLUDED EXCLUDED $935,500,000 $53,500,000 $2,860,000,000 $130,000,000 $2,990,000,000 23

24 OPERATING COSTS TOTAL 2,8 Mtpa 2,0 Mtpa DESCRIPTION % of cost Notes Years 0-3 costs per ton Years 4-25 costs per ton 2.8 Mtpa Blanketing Oil $4,883,000 $2.44 $1,190,000 $ % Natural Gas Gasoline Diesel Chemicals and reagents Water $48,920,688 $637,685 $1,169,079 $2,520,000 $5,186,430 $24.46 $0.32 $0.58 $ 1.26 $ 2.59 $54,356,320 $661,015 $1,211,850 $5,144,560 $ 5,186,430 $19.41 $0.24 $0.43 $1.84 $ % 0.4% 0.8% 3.4% 3.4% 1.3 Other Variable Costs Waste Management $1,850,000 $0.93 $2,625,000 $ % 1.4 Operating Labour Direct Labour $27,147,200 $13.57 $28,576,000 $ % Maintenance Maintenance Materials Plant Maintenance wellfield $11,542,699 $8,717,436 $2,000,000 $5.77 $4.36 $1.00 $12,000,604 $13,173,297 $2,105,263 $4.29 $4.70 $ % 8.7% 1.4% 3 $114,574,217 $57.29 $126,230,339 $ % Administrative Salaried Staff Insurance, premiums Municipal taxes $9,776,000 $10,000,000 $2,500,000 $4.89 $5.00 $1.25 $9,776,000 $10,000,000 $2,500,000 $3.49 $3.57 $ % 6.6% 1.6% 1.3% 1 Direct Production Cost 1.1 Cavern Development / Feedstock prep Utilities 1.6 Manpower Consumables (Catering, Safety, PPE, etc.) TOTAL - Direct Production Cost Indirect Production Cost 2.4 Plant Optimization & Project Development $2,000,000 $1.00 $2,000,000 $ Environmental monitoring and community benefits $1,000,000 $0.50 $1,000,000 $ % 2.6 Marketing $500,000 $0.25 $600,000 $ % TOTAL - Indirect Production Costs $25,776,000 $12.89 $25,876,000 $ % TOTAL - Operating Cash costs $140,350,217 $70.18 $152,106,339 $ % 3 1 Transportation and Port Charges Rail transportation costs $64,650,469 $32.33 $91,640,000 $ Port Charges $35,477,077 $17.74 $49,667,908 $17.74 TOTAL -Transportation and Port 100,127, ,307,908 TOTAL - OPEX including Transport $ $ Notes: 1. Gas price assumed at $4/GJ. 2. Secondary mining is estimated to add 5% to the workforce. 3. Maintenance materials assumed to be 0.6% of direct capital for first 5 years, increasing by $1 million per year thereafter fo 20 years. 24

25 SASKATCHEWAN, THE PLACE TO BE In the Heart of Highly Active Potash Country Encanto s potash properties are located in Saskatchewan the Potash capital with more than 46% of the world s reserves World s established potash producers; Potash Corp, Mosaic & Agrium are located here Infrastructure and utilities well developed & skilled human resources accessible This leaves Encanto as one of only 2 advanced junior potash companies active in the area and in their own control. 25

26 GLOBAL POTASH RESERVES SASKATCHEWAN IS POTASH CAPITAL Brazil 3% Other 6% Germany 2% Belarus 8% Canada 46% Saskatchewan is the potash capital of Canada with 46% of the world s potash. Russia 35% Source: USGS, January 25,

27 UNDERSTANDING POTASH FUNDAMENTALS Fertilizer Demand Drivers: Increased grain consumption - world grain consumption highly correlated with overall population growth and increased middle class with higher protein diet The human population is headed to 9.3 billion by 2050, with the middle class expanding from 1.8 billion to 4.9 billion consumers (UN & OECD estimates) Potash is a key source of potassium, which is a natural component of fertilizer that increases crop yields and there is no known substitute Global farm output must rise 70 percent by 2050 on less arable land to nourish everyone according to the FAO Decreasing arable land per capita requires increasingly higher crop yields to keep pace with demand 27

28 UNDERSTANDING POTASH FUNDAMENTALS China, India and Brazil leading importers of potash with little domestic production * China (11M tonnes / year of demand, 63% imported) India (4M tonnes/ year, 100% imported) Latin America incl. Brazil (10M tonnes / year, 80% imported) China made overtures and then India unsuccessfully tried to buy 20% of Belaruskali ($6-7B) India s farmers budget for fertilizer is heavily subsidized The last three potash juniors to approach final Feasibility stage were bought out before they could make it to production while one other has recently sold control. Encanto looks to be among the first new potash mines in Canada in over 40 years 28

29 HUNGER FOR ALTERNATIVE POTASH SOURCES 2015 global shipments expected to be a record 58 million tonnes Canpotex (marketing arm for PotashCorp, Mosaic and Agrium) accounts for 35% of global exports Belarusian Potash Co (export arm of potash producers Uralkali and Belaruskali) account for 31% of global exports. BPC widely expected to reform or cooperate. Threats to delay potash buying being met with production slowdowns by the world s top producers: PotashCorp: We ve long had a history of matching supply to demand Uralkali: Our strategy is that price is much more important than volumes. The desire for an alternative supply source has never been higher in both China/India 29

30 CURRENT CAPITALIZATION Issued & Outstanding 354,285,909 Options Warrants 33,995,000 40,910,850 Convertible Debenture 28,000,000 Put Option Fully Diluted Symbol 7,352, ,544,700 TSX-V: EPO 30

31 SUMMARY: THE ENCANTO ADVANTAGE Partnerships Multiple First Nations Properties Global contacts looking for Alternative Potash Supply Time Property Expansion Complete Updated Major Resource Estimate Complete Pre-Feasibility Complete Feasibility Underway Active on Multiple Projects Close to landmark offtake agreement Resource Developing a New Saskatchewan Potash Mine Preferred jurisdiction with major infrastructure nearby Management Very Strong Financial and Technical Team 31

32 CORPORATE CONTACT Vancouver Office W. Pender Street Vancouver, British Columbia Canada, V6C 2V6 Telephone: Corporate Development, Toronto Office (647) Regina Office Suite 304, th Ave Regina, SK, S4P 0K6 Telephone: