Atlas Salt TSXV:SALT has drilled 305.5 metres of a massive salt deposit which sits in an eastern step-out at its Great Atlantic project. This is grading at 95.56% of sodium chloride. The drill hole is being hailed as “truly extraordinary” by CEO Roland Howe, both in terms of shallowness, thickness and grade profile. There is very high purity salt near the bottom of the drill hole.
Atlas Salt owns 100% of the Great Atlantic salt deposit strategically located in western Newfoundland in the middle of the robust eastern North America road salt market, a market which STILL amazingly imports expensive salt from South America for winter road gritting.
The project features a large homogeneous high-grade resource located immediately next to a deep-water port. Atlas is also the largest shareholder in Triple Point Resources as it pursues development of the Fischell’s Brook Salt Dome approximately 15 kilometres south of Great Atlantic in the heart of an emerging clean energy hub.
At the end of January Atlas Salt released a PEA which includes a pre-tax internal rate of return (IRR) of 22%; NPV of $909 million and payback in 4.2 years after commencement of operations. The base case is for a 2.5 million tonnes per year (Mtpa) production for a 30-year mine life with a mine and processing design to accommodate expansion up to 4 million tonnes per year and capable of extending the mine life beyond the 30-year standard production model.
The stock has already been one of the best-performing picks in The Armchair Trader’s small cap venture portfolio.
The Great Atlantic project is recognised already for its low-cost production – utilising a Q4 2022 cost basis of $23.81 per tonne FOB. The project’s Expansion of Mineral Resource estimate includes a first-time declaration of Indicated Mineral resources (187 million tonnes @ 96.4% salt) with an Inferred Mineral resources of 999 million tonnes @ 95.6% salt. The project features a state-of-the-art, environmentally friendly design featuring the first major salt mine in North America accessible through declines, providing all the attendant benefits of scalability and economic efficiencies.
“In my 30+ years in this industry I have not come across a salt project as unique as Great Atlantic given its combination of size, shallowness, and logistical advantages,” said Howe. “This robust PEA confirms our vision for the project.”
Howe, who met with The Armchair Trader’s team in London late last year, reckons that even assuming a conservative flat production rate at 2.5 million tonnes over only 30 years, the cash flow model provides a base case evaluation that is quite compelling. Significant additional value can be attributed to the project given that mine infrastructure is designed for up to 4 million tonnes production with ample resources to extend production beyond 30 years. Future additional infrastructure could push annual production even higher. “Long life cash flow comes at a premium,” he says.
The thickness of the deposit should allow for multiple mining levels while the shallowness will enable it to become the first major salt mine in North America which can be accessed through inclined ramps rather than vertical shafts. This should have a major impact on its overall profitability. “The low cost producer always wins,” Howe said.
