Asia Pacific Resources: Consultants Report Confirms Technical and Economic Feasibility of Somboon Potash Mine.

VANCOUVER--(BUSINESS WIRE)--Aug. 17, 1998--Asia Pacific(NASDAQ:APQCF) (VSE:APQ.) (TSE:APQ.) (FRANKFURT:APQ.F) Asia Pacific Potash Corp. (APPC) has now completed its review of the recently received Feasibility Study for the proposed Somboon potash mine, near Udon Thani in northeast Thailand. The report which confirms the technical and economic feasibility of the project, includes studies performed by Kilborn Western Inc. (Kilborn), Golder Associates, Sandwell, CRU and TEAM Consultants (Thailand), as well as previous project studies by H.A. Simons, and represents a comprehensive assessment of all technical, economic, environmental and marketing issues for the project.

The initial mine has been designed for a production capacity of two million tonnes of potash per annum, with about 80 percent of production destined for export to southeast Asian markets, including China. Potash will be transported via the existing and adequate State Railroad of Thailand system which connects the project location to the deep water export terminals at the Gulf of Thailand. The project location enjoys excellent infrastructure which provides substantial capital cost savings for the project. The Somboon deposit will be the first of two proven high grade potash deposits with gross in-situ resources of some 1,400 million tonnes to be developed.

PROJECT ECONOMICS

Using an exchange rate of Baht 36 to US$1.00 for local cost components, on-site capital costs for the mine and processing facilities have been estimated, by Kilborn, at US$456 million. This estimate includes some scope additions to the previous design, as well as US$20 million of costs which were reallocated from project sustaining capital. Life-of-mine sustaining capital has been reduced from the previous estimate of US$170 million to US$140 million.

Sandwell has estimated the direct capital costs of constructing a new port and warehousing facility at the Gulf of Thailand at some US$46 million. Use of an existing port facility could substantially reduce this estimate.

The overall direct capital costs for the project are estimated to be $502 million; or about US$250 per annual product tonne, a figure which APPC believes to be unequalled by any other "greenfield" potash project elsewhere in the world. Including allowances for owner's costs, interest during construction and working capital, the total investment in the project will be about US$600 million.

If an exchange rate of Baht 40 to US$1.00 was used (the present exchange rate is approximately Baht 42 to US$1.00), direct capital costs would be reduced by approximately US$20 million.

The estimated life-of-mine cash production costs including minesite, general and administration costs, and a 10 percent contingency, is US$29.80 per tonne. This is among the lowest cash costs in the potash industry. The unit cash cost of production, rail transportation, handling and ship loading is estimated at less than US$45.00 per tonne. By industry standards, this cost is extremely competitive, especially when the project's substantial ocean freight advantages, due to its strategic location, are taken into account.

Initial capital cost, sustaining capital and operating costs were estimated to an accuracy of plus or minus 15 percent; a level considered suitable for basing major development and financial decisions upon. All costs are based upon First Quarter 1998 price levels, and an overall contingency of 13.5 percent has been included.

Using the capital, sustaining and operating costs from the Feasibility Study, APPC has completed a Base Case financial projection for the proposed mine. Assuming a 70/30 debt-equity ratio, exchange rate of Baht 40 to US$1.00, a gross potash price for south-Asian port deliveries of US$135.00 per tonne, and repayment of project debt within six years of mine commissioning, the Base Case model indicates an IRR of 26.5 percent and a Net Present Value of US$606 million, at an 8 percent Discount Factor.

PROPOSED MINE PLAN

Kilborn has prepared a conventional mine plan for the Somboon deposit designed to extract about 65 percent of the presently estimated mineable resource of 180 million tonnes of sylvinite ore. This reserve may be revised upward as additional exploration and development is completed during ongoing underground operations. The mine plan equates to a presently estimated mine life of 23 years at a capacity of 2 million tonnes of potash per annum.

Due to the shallow depth of the ore body, generally less than 350 m, access to the mine will be by twin declines about 2.5 km in length, 4.5 m high and 6.0 m wide and driven at an angle of 13 degrees to the horizontal. The declines will be used for transportation of both ore and waste, ventilation and access to the mine by the workforce. An underground service area will be created in the thick middle salt horizon and used for servicing and maintenance of all underground equipment.

From the main underground haulage ways mining areas will be developed using a chevron room and pillar technique. Continuous mining machines, a total of ten when the mine is operating at full capacity, will cut ore from the mining faces. Panels will be mined in a retreat fashion with extraction ratios of between 64 percent and 70 percent. Ore will be transported to the surface and the processing mill by a series of conveyor belts from the mining faces.

The mine will deliver between 5.5 and 6.0 million tonnes ore per annum to the mill when operating at its design capacity. The mine plan uses conventional methods and well proven mining equipment.

The overlying geology comprises a series of claystones and evaporites which form effective aquacludes and aquatards which prevent the movement of surficial water to the orebody. Extensive fieldwork has indicated that there is little prospect of water ingress to the potash mine.

PROCESSING FACILITIES

The mill design has been based upon the results of extensive metallurgical testing which has shown the ore to be of high grade, low in insolubles and magnesium and amenable to conventional flotation processes. The mill also uses conventional and well proven potash industry technology and processing equipment. Design recovery is estimated at 90 percent, with a typical product grade of 60.3 percent K2O.

An evaporator/crystallizer circuit will recover high grade "white" potash, approximately 180,000 tonnes per annum, and the balance of production will be divided equally between Standard and Fine grade potash. Additionally, 200,000 tonnes of industrial grade salt will be produced and sold primarily to the local chemical industry. On-site storage capacity includes 180,000 tonnes for potash and 30,000 tonnes for salt, and the port terminal has storage facilities of 180,000 tonnes for potash.

Design parameters for the project have been based upon World Bank guidelines and the specific regulations and requirements of Thailand. When specific regulations for any particular project aspect have not been identified, "best industry practice", which generally reflects North American standards, have been adopted.

PROJECT PERMITTING

Following completion of the study, applications are being prepared to obtain the necessary mining licences and environmental permits. APPC has already applied for the "special achayabats" or special prospecting licences (SPL's) which are the initial stage of the mining licence process. These are expected shortly and it is estimated that the permitting process will be completed within six months.

NORSK HYDRO (ASIA) M.O.U

Asia Pacific Resources Ltd. continues to develop its dialogue on the recently signed Memorandum of Understanding with Norsk Hydro (Asia) Pte. Ltd., reported in the Company's News Release dated June 22,1998. The parties are developing a strategic alliance aimed at their joint participation in the development of the Somboon deposit and the timely development of the larger Udon ore body to meet the increasing Asian demand.

The proposed Somboon mine will be one of the largest potash mines in the world. The results from the Feasibility Study confirm APPC's belief that the strategic location of the project, combined with the ore body characteristics and shallow depth to the deposit, make the Somboon project the most economically attractive greenfield project in the potash industry. Asia Pacific Resources presently maintains a direct and indirect project interest of 90 percent, the balance being held by the Thai Government.

Dr. Gerald D. Wright, Executive Chairman

   CONTACT:  Asia Pacific Resources Ltd.
              Dr. Gerald D. Wright, 604/ 681-8003
              604/ 662-3180  (FAX)
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