Buffalo Potash (TSXV: BUFF; US-OTC: BLPTF) has secured Saskatchewan approval to complete construction and operate its Disley potash facility, with first production still targeted for early 2027.
The initial production module, or IPM, about 50 km northwest of Regina, is designed to produce 125,000 tonnes annually. An April preliminary economic assessment estimated its capital cost at C$41.5 million ($29.2 million), including contingency.
“With our drilling program and completions program complete and equipping underway, this approval allows us to advance surface construction at the IPM site in parallel with our preparations for phase three of our development plan: brine circulation,” President and Chief Operating Officer Quinton Hardage said in a Friday news release.
The module is Buffalo’s commercial test of a patented mining method it hopes to expand into a much larger operation. The company intends to use early production to generate revenue and operating data for a feasibility study of two additional facilities. Financing and demonstrating that the method works commercially remain key tests.
Shares rose 2.6% to C80¢ by late Friday morning in Toronto, valuing Buffalo at about C$87.7 million. They’ve traded between C25¢ and C$1.07 over the past year.
Process innovation
Buffalo’s horizontal line-drive method uses parallel horizontal wells to circulate brine saturated with sodium chloride through potash-bearing rock. The brine selectively dissolves potassium chloride underground and carries it to the surface for processing into potash, used primarily in fertilizer.
The company has completed its source and disposal wells and horizontal drilling. Site development is underway, while brine circulation and installation of surface processing equipment remain steps toward startup, according to the release.
Buffalo plans to sell the initial facility’s soluble-grade potash locally for agricultural uses and as a drilling-fluid additive, according to its July update. The company intends to build local sales before the proposed larger facilities begin producing granular fertilizer for broader distribution. The April study also envisages producing potassium-chloride brine for regional oilfield customers.
Funding needs
Buffalo reported C$15.1 million in cash at June 30, following a C$14.85-million private placement. Its financial filing, dated Aug. 28, said it would need additional financing to advance Disley through a production decision and meet other commitments. Friday’s announcement didn’t provide an updated cash balance or remaining funding requirement.
The company is proceeding with the initial module without a feasibility study establishing mineral reserves and demonstrating economic and technical viability. Buffalo cautions that such production decisions carry a higher risk of economic and technical failure.
The provincial approval follows a Sept. 17 determination that the initial module didn’t require an environmental impact assessment. Conditions include approval of a site characterization and groundwater monitoring plan, meeting air-quality requirements before processing equipment operates and maintaining financial assurance acceptable to the ministry.
The permit runs until April 30, with provision for an extension. It covers only the initial module.
Expansion plans
Buffalo’s longer-term plan adds Disley East and Disley West, each designed to produce 500,000 tonnes annually, lifting combined capacity to about 1.13 million tonnes. The preliminary assessment estimated capital costs of $639 million across all three facilities.
That study assumed average prices of $374 per tonne for soluble-grade potash and $394 for granular product over its 25-year economic evaluation.
The larger facilities would require separate regulatory approvals and positive construction decisions following a feasibility study. Buffalo’s August financial filing said granular potash production and sales weren’t expected before 2029.
