The enhancement incorporates additional engineering and testwork resulting in a staged development modification providing a lower initial capital investment and robust economics in addition to boosting the product mix of the project.

"The feasibility was 18 months old and as we continued to do engineering and testing we found we had a mismatch between the HCL [hydrochloric acid] and SOP [sulphate of potash] production. Emboldened by discussions in the market about SOP sales, especially in California, we made changes so the SOP plant serves as the acid plant, which also produces SOP that we can now sell," American Pacific managing director Michael Schlumpberger told Mining Journal.

The initial December 2018 study contemplated a three-phase project which, in full production, would produce 408,000 tonnes per year of boric acid and 109,000tpy of SOP. This was modified in January 2019 to allow for a low-capex starter project which split the previously announced phase 1 into phases 1A and 1B, giving a lower upfront capital requirement.

The enhanced feasibility study builds on the starter project with an increase in proposed SOP production to 363,000tpy. Boric acid production remains unchanged but phase 1A production has increased 50% to 8,200tpy from 5,400tpy. Phase 1B will increase boric acid production to 90,000tpy.

Fort Cady hosts proven and probable reserves of 41 million tonnes grading 6.6% boron oxide (B2O3), and 11.72 parts per million boric acid (H3BO3) in colmanite.

The project is almost fully permitted, just needing a final federal permit, with the company targeting first production in the second semester of 2021 subject to permitting and financing.

Phase 1A has a capex of $50.3 million, phase 1B $156 million, phase 2 $268.3 million and phase 3 $263.2 million. The company said the strength of standalone Phase 1A financial metrics, with an IRR of 35.9% and NPV of $224.3 million, means it can continue to target financing this project in isolation.

"A $50 million initial capex means we have a myriad of financing options from debt-equity, maybe something more equity driven if we get a significant rerate in our share price. We are also looking at strategies such as an integrated chemical producer or an agricultural products company," Schlumpberger said.

The development is likely to be welcomed by a market largely supplied by a duopoly of Rio Tinto from the Boron operation some 100km north of Fort Cady, and by Eti Maden in Turkey.

"There are few projects of this scale that are not Rio Tinto or Eti Maden. It was fully-permitted in the 1990s and produced at a small scale for five years, which means the risk of being able to produce boric acid is not there," Schlumpberger said.

American Pacific is also considering an accelerated scenario whereby the overall scale of the project would remain the same, but phases 1B and 2 would be built concurrently allowing it to reach full production faster. This scenario would reduce overall capex but require increased external funding.

The changes to the phased approach result in a 40.2% increase in overall capital investment to US$737.9 million from $526.2 million in the January 2019 FS and a 1.1% fall in internal rate of return (IRR) to 39.4% from 40.5%. The net present value (NPV) increases 37.6% to $1.97 billion from $1.43 billion at an 8% discount rate.

Shares in American Pacific Borates are trading at A26c, valuing the company at $61 million.