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Additional study area
For Scenarios I and IT both the 4th and lOth ore zones were found to well exceed
the economic criteria placed on their development. For Scenario III, the 10th ore zone
was not econom but the 4th would be viable even for Case 1 type mining, which
would return in·nents at just a fraction below 10%.
Combined study area
The 4th ore zone is viable for all cases and scenarios. The lOth ore zone met the
criteria except for Scenario m.
The effect of changes of mining and processing costs
The profit margin was determined as a function of ore grade. Profit margin is
simply defmed as the percentage by which the product sales exceed the mining and
processing costs. The results of these calculations are given in Taule 18. The profit
margin was used to determine cut-off.7--ades. For the 4th ore zone 6.25% K 2 0was
,,:lected as the cut-off, and for 10th or~ :.:one 12.25% K 2 0 was selected. The same
calculations were done assuming that the mining and processing costs were 10% higher
and lower than the "base case." As expected, the cut-off grade became higher for the
higher cost and lower for the lower costs.
Table 19 combines information from Table 18 with the cash flow calculations
given in Tables 5 through 16. The mining life for all the cases and scenarios are long
except for those reserves within the WIPP boundary.; r example, the mining life for the
4th ore zone that lies in the "Additional Area" ranges from 26 to as much as 70 years
depending on which condition would prevail. For the 10th ore zone the mining life ranges
from 27 to 58 years.
Therefore, direct engineering case flow calculations are not well suited to
determining the actual value of the large and potentially profitable in-p ;;:ce resources at
WIPP. Even using the modest discount rate of 10% means that $1.00 of earnings 10
years into the future has a present day value of $0.39, $1.00 in 20 years is worth $0.15,
$1.00 in 30 years is worth $0.06, and bV 40 years the present value almost disappears
being worth only $0.02. Caution should be used with using the engineering economic
evaluations given above.
Instead, actual exploitation of the potash resources will depend on factors such as
future markets, the ability to actually acquire the mining leases in competition with those
who also wish to the exploit known C" .md gas resources, and when the potash would be
needed te replace ore now being pro