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The company applied to have the licences 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 licences for Udon North has no impact on our plans for the major Udon South deposit,” says Asia Pacific CEO 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 the mine is estimated at 22 years; total capital costs for the initial stage, at US$308 million; and costs for the second stage, at US$221 million.
Asia Pacific recently agreed in principle to form a joint venture with Chinese state-owned Enterprise Investment in order to develop Udon South. Asia Pacific owns a 90% interest in the project, and the deal includes long-term off-take commitments and US$300 million worth of financing required for initial capital costs.
Udon South (formerly known as Somboon) contains 330 million tonnes of sylvite ore grading 24% K2O. Some 7 km to the north, Udon North (formerly known as Udon) is home to 1 billion tonnes of sylvite ore.
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