Mr. Farhad Abasov reports

MILLENNIAL POTASH COMPLETES POSITIVE PEA WITH AFTER-TAX NPV(10) OF $1.07B AND IRR OF 32.6% FOR ITS BANIO POTASH PROJECT

Millennial Potash Corp. has completed a preliminary economic assessment (PEA) on its Banio potash project. The PEA was completed by Micon International in partnership with Agapito Associates Inc. and yielded the following highlights:

• Optimal annual production rate of 800,000 tonnes per year (tpy) of primarily granular K60 muriate of potash (gMOP);
• $1.07-billion after-tax net present value (10 per cent) and 32.6-per-cent internal rate of return;
• $480-million initial capital expense estimate, including $62-million in contingency;
• Estimated $61/t gMOP operating expense.

Positive evaluations also modelled for 400,000 tpy and 600,000 tpy were also completed as part of the PEA. All dollar amounts are in U.S. dollars unless stated otherwise. Highlights of the PEA are presented herein.

Farhad Abasov, Millennial's chair, commented: "We are extremely pleased with the results of the PEA on the Banio potash project and it has confirmed our belief that the project is very robust and has significant economic potential. The capex for the 800,000 tpy optimal case is a very competitive $480-million and the opex at approximately $61/tonne MOP reflects an expected overall low-cost structure which would make Millennial's Banio potash project competitive with the lowest-cost producers in the sector. Moving forward the company plans to complete a[n] MRE update in H2 2024 followed by the completion of early engineering studies and the initiation of a feasibility study and environmental impact assessment."

PEA outline

The Banio potash project PEA is based on the mineral resource estimate completed by ERCOSPLAN early in 2024 (see press release dated Jan. 16, 2024). The MRE comprises an indicated mineral resource estimate of 657 million tonnes grading 15.9 per cent KCl (potassium chloride), and an inferred mineral resource of 1,159 million tonnes grading 16 per cent KCl. The indicated mineral resource equates to approximately 104.6 million tonnes of KCl and the inferred mineral resource equates to approximately 185.3 million tonnes of KCl.

The PEA utilizes both the indicated and inferred mineral resources in its mining production scenario. The PEA is preliminary in nature, and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA will be realized.

The inferred and indicated resources include up to 10 evaporite seams rich in carnallite, sylvite and halite where the cumulative thickness of the potentially exploitable potash-rich seams is in excess of 70 metres.

The mining method deemed most appropriate for the potential of an economic project at Banio is solution mining. The mining scenario includes the development of solution mining caverns at a wellfield at the North target with enriched brine pumped via pipeline to a processing plant facility at the town of Mayumba 50 kilometres north of the project area. Processing via evaporation and crystallization followed by drying and compaction producing K60 (greater than 95 per cent KCl), as well as 99 per cent pure NaCl (sodium chloride), and shipped to market from a deepwater port at Mayumba. At a production rate of 800,000 tpy gMOP the estimated life of mine (LOM) is 56 years.

Capital and operating expenses

Capex and opex cost parameters have been based on benchmark data and are order of magnitude estimates with an accuracy of plus or minus 30 per cent. The initial capex estimate is summarized herein.

Mine/wellfield initial capex is dominated by the 68 wells/caverns to be developed in the first two years of construction, development of brine pipelines and the rehabilitation of a road from the mining site to Mayumba. Replacement well/cavern development has been allocated to sustaining capex and total LOM planned caverns is 370.

The processing plant forms the bulk of the initial capex at $190-million. Main process plant components include evaporators, crystallizers, compaction plant units, dryers, tanks and clarifiers, as well as plant buildings and infrastructure. The initial capex for infrastructure includes the project power requirements, mobile equipment, conveyors, screens, salt storage and bagging, and a ship loader as well as MOP product storage. General and administrative and an escalation factor (5 per cent of initial capex) for years 1 and 2 of construction to compensate for cost inflation during the construction stage are included. The total estimated capex for a production rate of 800,000 tpy of K60 granular MOP is approximately $480-million.

The sustaining capex estimate is dominated by expenditures in the wellfield/caverns. The initial caverns are projected to have a production life of approximately 11 years and replacements will be required every seven to 10 years. Every seven to 10 years an additional 51 wells/cavern will be developed to maintain the 800,000 tpy production rate. Additional sustaining capex items include piping for the wellfield as well as freshwater infrastructure expansions at the wellfield and road extensions have been accounted for. The sustaining capex is estimated at $180-million for the first 25 years of production.

A summary of opex costs for the 800,000 tpy production scenario is presented herein. The main opex items are natural gas which will feed a combined heat and power plant for the processing plant and the wellfield, and maintenance costs for both the wellfield and the processing plant. Labour is also a significant cost and comprises 22 non-Gabonese and 388 Gabonese nationals for a total of 410 employees.

Economic analysis

The economic analysis considered the optimal case production rate of 800,000 tpy of MOP as well as two alternative scenarios at 600,000 tpy and 400,000 tpy. A discounted cash flow model (DCFM) was constructed with the following assumptions:

• All values, both revenue and costs, are in real terms, flat lined during the project time frame, with no inflation. The cash flow is then discounted for the NPV calculation.
• The model assumes a two-year construction phase followed by one-year ramp-up production phase.
• Commercial production is taken as 60 per cent of nameplate capacity and it is assumed that this occurs after a 12-month ramp-up period.
• Payback period is taken as the period to transition from cumulative cash flow negative to cumulative cash flow positive after the date of commercial production.
• As a consequence, initial capex is regarded as the first two years of construction in addition to the mine cavern construction and ramp-up period.
• Once production hits full capacity capex turns into sustaining capex and opex begins, everything previously being classed as initial capex.
• Although the mine life or LOM continues beyond a 25-year time frame in each of the cases, the NPV and IRR calculations only include the first 25 years of the project.
• All effects of stockpiles and lagging sales have been ignored and simplified to production equals sales.
• Brazil is the assumed market. The assumption is that Brazil would absorb the production, which derisks this parameter in the assumption.

The main input parameters for the DCFM are outlined herein.

The DCFM indicates that at a production rate of 800,000 tpy of granular MOP the Banio potash project has the potential to be a compelling project. A summary of the DCFM conclusions is outlined herein indicating a robust posttax NPV (10 per cent) of $1.07-billion and a sound IRR of 32.6 per cent.

Micon has recommended additional drilling on the project to add to the existing resources and to hopefully upgrade indicated and inferred mineral resources to the measured and indicated designations in preparation for a feasibility study. Additional engineering studies such as dissolution test work, geotechnical studies, a high-purity NaCl market study, as well as an updated standard and granular MOP study to determine demand in Africa for either product. Millennial continues to work with local communities and the Gabonese government on infrastructure initiatives including the construction of a deepwater port and the gas-powered plant at Mayumba.

The information in this news release has been reviewed and approved by Liz de Klerk, PriSciNat, FIMM, and Dr. Peter J. MacLean, PhD, PGeo, director of the company, both of whom are qualified persons as that term is defined in National Instrument 43-101.

We seek Safe Harbor.