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PotashCorp Announces New Potash Mine and Mill Expansion at New Brunswick

Friday, July 20th, 2007

Potash Corporation of Saskatchewan Inc. announce plans for a new 2-million-tonne potash mine and expanded milling operations in New Brunswick, which will raise the company’s projected total annual potash capacity to 14.9 million tonnes by 2011. The four-year construction project will begin once necessary regulatory approvals are obtained and has an estimated cost of US $1.6 billion, which includes US $100 million for additional upgraded granular production capability.
“This major expansion prepares us for the next step in the growth of our company,” said PotashCorp President and CEO Bill Doyle. “By continuing to invest in our Potash First strategy, we will be well positioned to meet the expected growth in potash demand around the world.”
Expansion at New Brunswick is strategically and logistically important, as this PotashCorp facility is located close to the company’s existing terminal at the Port of Saint John, with the shortest shipping times to key Latin American markets like Brazil, where substantial long-term growth in demand for upgraded potash products is expected. New Brunswick’s existing milling, distribution and port facilities can be leveraged to maximize the benefit of the company’s investment. Additionally, as the company experiences higher but stable brine inflows at the existing mine, mitigation costs there are expected to remain high over the long term. Water inflow is not expected to be an issue in the new mine. Substantially increasing production in Eastern Canada also further diversifies the sources of PotashCorp’s growing potash capacity.
Using conventional underground methods, the new mine will draw on the company’s large, high-quality Picadilly deposit, which contains potash ore grades similar to those found in Saskatchewan deposits. This relatively flat deposit contains two potash seams, each varying in thickness to a maximum of 60 feet, and will allow for a stable, long-term, low-cost source of potash. Once fully developed, the new mine will replace the existing underground operation, while the current milling facility will be expanded by 1.2 million tonnes, including 750,000 tonnes of additional compaction capacity.
Because this new mine will be built adjacent to the company’s existing New Brunswick property and use some of its facilities, construction can be completed in less time than the five to seven years typically projected for a greenfield potash operation, at a per-tonne-cost 33 percent below the current estimate of $2.22 billion needed for 2 million tonnes of new production in Saskatchewan. Plans are to keep the existing mine and mill fully operational throughout the construction and new mine development process. The construction phase is expected to generate the equivalent of 2,500 person-years of employment, and 140 new full-time positions will be created upon completion. The project will be financed out of free cash flow and existing credit facilities.
The New Brunswick development is in addition to previously announced debottlenecking and expansion initiatives underway at the company’s Lanigan, Patience Lake and Cory operations in Saskatchewan, which are expected to increase PotashCorp’s productive annual capacity from 10.7 million tonnes today to 13.7 million tonnes by the end of 2010.
“Our goal is to be the lowest-cost supplier on a delivered basis to all key world markets,” Doyle said. “By expanding our existing operations in New Brunswick, we are capitalizing on the logistical advantages there, further strengthening our leadership position in potash for the benefit of our customers, investors and other stakeholders over the long term.”

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