Select Sands Corp. completed an independent Preliminary Economic Assessment (PEA) for the company's permitted Sandtown Project located in Northeast Arkansas. Tetra Tech of Golden, Colo., and Vancouver, BC, Canada, completed the PEA. The current study comprises approximately 40 percent of the property (200 acres).
"The pre-tax internal rate of return (IRR) of 45 percent and the pre-tax net present value of $160 million on 40 percent of the property demonstrates a good economic potential," commented Select Sands CEO Rasool Mohammad. "Our high purity, white silica sand project's closer proximity to major markets in the U.S. is one of its desirable attributes. The project economics can be enhanced further with testing on the potential on the remaining 60 percent of the project and improved oil and gas prices."
Highlights of PEA:
- Indicated silica sand resources of 22 million tons, grading 13 percent of 30/50 mesh, 32 percent 40/70 mesh and 58 percent of 100 mesh.
- Strong potential to increase the tonnage on the remaining 60 percent of the property.
- Total life-of-mine revenue $767 million.
- Pre-tax Net Present Value (NPV) at 8 percent of $160 million (after-tax NPV at 8 percent is $92 million).
- Pre-tax Internal Rate of Return (IRR) of 45 percent (after-tax IRR is 34 percent)
- Pre-production capital costs of $42 million including $3.7 million contingency.
- At an average revenue of $49 ton product (granular and powder silica).
- 2.5-year payback period.
- Operating cost $19/ton processed.