* Expects to upgrade 60-70 pct of its inferred resource
* Sees capital expenditures well below industry average
(Adds details from interview, background)
TORONTO, April 1 Potash exploration company
Karnalyte Resources (KRN.TO) expects to report a large jump
this fall in the size of its potash resource at Wynyard,
Saskatchewan, Chief Executive Robin Phinney says.
"We are expecting that we will get a very, very large
increase in resource tonnage later this fall," Phinney said in
an interview with Reuters late on Thursday.
Phinney, who was formerly a long-time process chemist at
Potash Corp (POT.TO), said Karnalyte fully expects to transfer
about 60 to 70 percent of its 186 million tonne inferred
resource of potash, a crop nutrient, into the firmer
"indicated" category by this fall.
"I'm expecting the project feasibility to be completed by
the end of the year," Phinney said, adding that the company now
has 56 million tonnes of potash in the indicated resource
Initially, the company plans to build a C$410 million ($427
million) facility that can produce 500,000 tonnes of potash
annually through a technique know as solution mining.
Eventually, it plans to expand annual capacity to 2 million
In terms of capital cost, Phinney said the Wynyard project
is one of the world's most viable new potash projects. The
project is located slightly east of Potash Corp's Lanigan mine
and is in the vicinity of BHP Billiton's (BHP.AX) (BLT.L)
Capital costs for conventional potash projects run into
billions of dollars. Although the alternative solution-mining
technique is cheaper to build, operating costs are typically
higher due to bigger energy requirements.
Phinney said, however, he is confident that Karnalyte can
keep operating costs in line with those of industry peers.
"Right now our operating cost projections are at about
C$150 a tonne," said Phinney, who sees the potential to bring
those costs lower once the company completes its feasibility
study on the project.
(Reporting by Euan Rocha; editing by Peter Galloway)