Cadence Minerals Plc (KDNC) – European Metals (AIM: EMH) PFS Update Confirms Potential of Low Cost Lithium Hydroxide Production at Cinovec

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the results published today by European Metals Holdings Limited (“European Metals” or “EMH”) from the successful update of the process flowsheet previously developed to enable the production of lithium hydroxide (LiOH.H2O).  This work has been completed in conjunction with test-work confirming the production of battery grade lithium hydroxide from Cinovec ore. EMH states that the results significantly enhance the forecast economics of the Cinovec Project.

Highlights:

  • Net estimated overall cost of production post credits:  $3,435 / tonne LiOH.H2O
  • Project Net Present Value (“NPV”) increases 105% to:  $1.108B (post tax, 8%)
  • Internal Rate of Return (“IRR”) increased 37% to 28.8% (post tax)
  • Total Capital Cost:  $482.6M
  • Annual production of Battery Grade Lithium Hydroxide: 25,267 tonnes
  • Studies are based on only 9.3% of reported Indicated Mineral Resource and a mine life of 21 years processing an average of 1.68 Mtpa ore
  • The process used to produce lithium hydroxide allows for the staging of lithium carbonate and then lithium hydroxide production to minimize capital and startup risk and enables the production of either battery grade lithium hydroxide or carbonate as markets demand

Cadence holds approximately 19.1 percent of the equity in European Metals, which, through its wholly owned Subsidiary, Geomet s.r.o., controls the mineral exploration licenses awarded by the Czech State over Cinovec.

The full release can be found at:  

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EMH/14112338.html

Cadence Minerals CEO Kiran Morzaria commented: “Great work from Keith Coughlan and the EMH team. This important update to the PFS has increased the project NPV and once again highlighted the strategic importance of the Cinovec project for the European lithium market.”

– Ends –

 

For further information:

Cadence Minerals plc +44 (0) 207 440 0647
Andrew Suckling  
Kiran Morzaria  
   
WH Ireland Limited (NOMAD & Broker) +44 (0) 207 220 1666
James Joyce  
James Sinclair-Ford  
   
Novum Securities Limited (Joint Broker) +44 (0) 207 399 9400
Jon Belliss

 

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.

 

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be forward-looking statements. Forward-looking statements are identified by their use of terms and phrases such as ‘‘believe’’ ‘‘could’’ “should” ‘‘envisage’’ ‘‘estimate’’ ‘‘intend’’ ‘‘may’’ ‘‘plan’’ ‘‘will’’ or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward-looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors.  Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward-looking statements.

Gold Keeps Climbing – Mining Beacon

Mining Beacon April 17 2019

Recent research reports from S&P Global Market Intelligence highlight record gold production in 2018, and outline some of the reasons for the increased appetite for gold mergers and acquisitions.

Global gold production increased in 2018 for the 10th consecutive year to reach a total of 107.3 Moz, according to a recent report from S&P Global Market Intelligence (SPGMI). As signaled in the recent HindeSight bog, although the year-over-year increase of just under 1% was the smallest in the past decade, output of the precious metal has now risen 40% since 2008.

SPGMI forecasts further growth, of 2.3 Moz, this year. If so, it will be the strongest growth of the past three years. As the report’s author, Chris Galbraith, wrote; it will debunk the commentary of “peak gold”.

Looking at the current project pipeline, and without large-scale moves in the gold price or any speculative estimates on additions through exploration activity, SPGMI expects gold output to stay steady until 2022 and decline thereafter. Indeed, more than 15% of gold production by 2024 will be coming from mines that are not yet producing.

More than half of this year’s increase is projected to come from mines that are expected to come on stream in 2019. Examples of those include the Gruyere JV in Western Australia (Gold Fields Ltd and Gold Road Resources Ltd), Meliadine in Nunavut (Agnico Eagle Mines Ltd), Sigma-Lamaque in Quebec (Eldorado Gold Corp.), and the restarted operations at Obuasi in Ghana (AngloGold Ashanti Ltd) and Aurizona in Brazil (Equinox Gold Corp.), both of which have been idle since 2015.

SPGMI notes that the ramp-up at PJSC Polyus’s Natalka operation and commissioning at Nord Gold SE’s Gross mine are significant contributors to a continued increase in Russia’s gold production. The country’s production is expected to equal Australia’s gold output in 2020, and then surpass it. In Canada, the startup of Meliadine and continued ramp-up of Rainy River, Eleonore and Hope Bay, among others, will drive amongst the fastest national growth over the next few years. This year, Canada is projected to pass the US in national gold production to become the fourth-largest gold producing country.

Although SPGMI expects global production to start declining after 2022, not all jurisdictions will have shrinking production. Of the 99 gold-producing countries monitored, 49 are expected to produce less in 2024 compared with 2018, 27 to produce more and 23 are expected to maintain production.

Australia’s production is expected to fall the most. The current second-largest gold producing nation, behind China, is expected to fall to fourth place globally by 2024. The underlying reason for Australia’s fall is the depletion of several long-lived assets, such as St Ives, Paddington, Telfer, Edna May, Southern Cross and Agnew/Lawlers. The expected commissioning of Mt Todd and reactivation of Union Reefs Operations Centre will only partly mitigate the loss from existing operations.

Although Indonesia’s gold production will be substantially lower in 2024 than it was last year, the country’s production in 2018 was anomalously high primarily due to the unusually large output at Grasberg. Peru’s production, however, is clearly trending downward, with Orcopampa, La Zanja and Tambomayo all facing depletion before 2024. With closure only a few years further out, SPGMI notes that Lagunas Norte and Yanacocha will also be producing far less gold in 2024 than they have historically.

Grades are Key

From 2014 through 2018, ore throughput at primary gold mines rose 1.2% but the weighted-average gold grade increased 4.5%. As a result, gold production from primary gold mines increased by 6% during the period.

The increase in grade is projected to continue through 2020 but in 2021 SPGMI expects ore throughput to remain steady and grade to fall by 2% year over year. These two factors are expected to account for around 1.6 Moz in reduced production. By 2024, around 241 Mt less ore is expected to be fed through gold mills compared with 2019, while the gold grade will be almost 2% higher overall. Owing to that drop in throughput, the related drop in production from primary gold mines will be almost 9 Moz.

SPGMI estimates that 11% of global gold production came from polymetallic base metal mines in 2018. Gold production from those mines will fall this year and in 2020 but the share from polymetallic mines is expected to increase gradually thereafter. With falling production from primary gold mines after 2020, and minor increases from polymetallic mines, a growing share of the world’s gold production will come from sources where gold is a byproduct. Less than 10% of the world’s production is expected to come from secondary sources in 2020, but this amount is expected to grow to more than 11% again by 2024.

Reason for Gold M&A

In a separate SPGMI article on April 3, Richard Foy commented that the market capitalisation of gold-mining companies has halved since 2012. This devaluation, and a recent push for consolidation, has increased M&A activity, with majors capitalising on the reduction in enterprise value (EV) in 2018.

Recent M&A deals have reflected this theme as companies look to unlock synergistic cost savings. This has seen gold production remain relatively constant among the top 30 listed gold-mining equities between 2014 and 2018, at about 43 Moz/y, with a 3% increase expected in 2019. The consensus earnings margin outlook of 30% for gold-mining equities is supported by SPGMI’s view on 2019 all-in sustaining cost margins at 33%.

In 2019, the ratio of the EV to EBITDA of the 30 largest gold miners is expected to go below 7.0 for the first time in six years, according to SPGMI. This is the result of a modest decline in EV (due to declining net debt offsetting a rise in market capitalisation) along with an expected increase in earnings. This drop in the ratio could explain the heightened M&A activity among the gold majors.

Andrew Hore Quoted Micro 17 June 2019

NEX EXCHANGE

Renewable energy supplier Good Energy (GOOD) says that holding back on operating expenditure has offset the downturn in demand due to warmer weather. Profit will be weighted to the first half. Good is investing in electric vehicle platform Zap-Map.

Brewer Daniel Thwaites (THW) reported a more than halved pre-tax profit from £9.8m to £4.5m. Turnover improved from £92.2m to £96.9m and the profit decline was mainly due to a non-cash swing from gain to loss on swaps and a pension adjustment. Operating profit was flat at £12.9m. The Inns business improved its profit and individual pubs are making a higher profit contribution, but hotels profit declined. The total dividend was maintained at 3.36p a share. Net debt was £69.7m at the end of March 2019, while NAV was £180.7m. The pension liability has fallen from £34.9m to £24.8m.

KR1 (KR1) has sold 70,079 tokens in the Cosmos Network for $361,000. The average cost of the tokens was $0.10 each and they were sold for $5.14 each. KR1 has also generate a further 7,008 tokens from staking activities and these were sold for $6.93 each.

There was a sharp rise in the share price of TechFinancials Inc (TECH) but much of this gain was lost by the end of the week. There does not appear to be a reason for the rise. Full year results should be published this week. There will be an operating loss. There was $1.1m in the bank at the end of May 2019. The company is still waiting for approval from the Seychelles authorities for the €100,000 disposal of MarketFinancials. There will be write-downs of the value of diamond trading blockchain developer CEDEX and MarketFinancials.

EPE Special Opportunities Ltd (ESO) had a NAV of 272.02p a share at the end of May 2019. The company intends to start buying back shares and these purchases could exceed 25% of the average daily volume of ordinary shares.

Shareholders have approved the plan of Oyster Oil and Gas to distribute the shares of its main subsidiary to settle indebtedness and certain creditors. These include Gunsynd (GUN) although the exact shareholding has yet to be announced. Production sharing contracts in Madagascar and Djibouti are owned by the subsidiary. Gunsynd has raised £500,000 at 0.037p a share.

Trading in Via Developments (VIA1) debentures has recommenced following the publication of figures for 18 months to September 2018. The company has net liabilities of £329,000 with long-term debt of £5.68m offset by cash of £91,000. A subsidiary is securing debt and equity for a project that will generate management fees fir Via, but that won’t happen until September.

Clean Invest Africa (CIA) is holding a general meeting on 3 July in order to gain shareholder approval for the acquisition of the 97.5% of Coal Tech and its related business that it does not own for £27.2m in shares at 2.75p each. CoalTech transforms discarded coal into coal pellets.

Lombard Odier sold 1.65 million shares in Chapel Down Group (CDGP) at 75p a share, reducing its stake to 11.5%. Chief executive Frazer Thompson exercised 2.39 million options at 12.5p a share and finance director Richard Woodhouse exercised 200,000 options at 10p a share and all these shares were sold at 75p each.

AIM 

Frontier Smart Technologies (FST) has received another bid approach. Previous potential bidder Science Group (SAG) has built up a 28.3% stake in Frontier so it is in a strong position. It says that it does not intend to sell the shares to another bidder and could block any move to cancel the AIM quotation.

Park Group (PARK) increased investment in the business last year and this knocked underlying pre-tax profit progress which was flat at £12.5m, before asset write-downs. The dividend was increased by 5% to 3.2p a share. There was a smaller contribution from Christmas savings, but growth from corporate promotions and incentives offset that. Increasingly, business is card-based. There was £36.9m of the company’s own cash at the end of March 2019. There will be a dip in profit this year due to higher overheads and profit growth should resume in 2020-21. Chief executive Ian O’Doherty has bought 30,000 shares at 69.5p each.

Stanley Gibbons (SGB) has resolved claims against former management at antique dealer Mallett and this will result in a cash inflow of £850,000 over 12 months.

Safestyle (SSTY) has acquired the freehold of a 161 bed hostel in Pisa for €3.25m. This takes the company’s portfolio to 14 hostels, including the Paris site that is under construction.

Last year was about OnTheMarket (OTMP) building up the number of agencies on its property portal and increasing the number of homebuyers looking at the properties advertised. The rival to Rightmove and Zoopla needs to convert these agencies into fee payers and that process has just started. OnTheMarket will continue to be loss-making this year with higher marketing spending likely to offset higher revenues. Cash is expected to fall from £15.7m to £6.6m at the end of January 2019.

NWF (NWF) did better than expected in the year to May 2019. The feeds business was slightly behind the previous year, but new business helped the food warehouse business to significantly improve its performance and fuels did better than expected despite the milder winter, although behind the previous year. The results will be published on 30 July.

Industrial equipment distributor HC Slingsby (SLNG) says that pressure on margin means that operating profit in the four months to April 2019 is lower, even though revenues are slightly higher. Uncertainty over Brexit is affecting levels of demand in the first half of 2019. Net debt was £1.3m at the end of May 2019.

The actuarial deficit on the Molins UK Pension Fund has been cut from £69.9m to £35.2m over a three-year period. Mpac (MPAC) believes the deficit should be eliminated by July 2024. That is based on maintained payments into the scheme.

Filta (FLTA) says that its figures will be more skewed towards the second half. This is partly down to the integration of the Watbio grease management business. There has been growth in the FiltaSeal business and the North American FiltaFry fryer management franchise business.

Avingtrans (AVG) has acquired the Booth Industries specialist door manufacturing business from the administrator of Redhall (RHL) for £1.8m in cash. Booth made a pre-tax profit of £300,000 last year.

MAIN MARKET 

Full year results from fasteners supplier Trifast (TRI) were slightly better than expected. Revenues were 6% ahead at £209m, while re-tax profit was a similar percentage higher at £23.5m. The dividend was increased by 10% to 4.25p a share. Trading remains tough.

Aquila Services (AQSG) has acquired education and sports consultancy Oaks Consultancy for up to £1.7m in cash and shares. In the year to March 2019, Oaks made a pre-tax profit of £254,000 on revenues of £909,000.

Bluebird Merchant Ventures Ltd (BMV) is converting $2.89m of loans into 121.5 million shares. Management made most of the loans and chief executive Colin Patterson will end up with 19.1% of Bluebird. Bluebird is debt-free.

Standard list shell Safe Harbour Holdings (SHH) lost £2.3m in 2018 due to overheads and due diligence costs. There is still £26.9m in the bank.

Andrew Hore

Salt Lake Potash #SO4 – Appendix 3B and Issue of Placement Shares

Salt Lake Potash Limited (the Company) has today released the following information on the Australian Securities Exchange (ASX), in accordance with the ASX Listing Rules.

The 25,476,000 ordinary shares of no par value (Ordinary Shares) represent the first tranche of the placement of 37.5 million Ordinary Shares (Placement) that was announced on 6 June 2019.

The balance of 12,024,000 Ordinary Shares are expected to be admitted to ASX and the full number of the Placement shares admitted to AIM on 18 June 2019.

Total Voting Rights

For the purposes of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules (DTRs), following issue of the 25,476,000 Ordinary Shares, the Company will have 232,496,581 Ordinary Shares in issue with voting rights attached. The Company holds no shares in treasury. This figure of 232,496,581 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company, under the ASX Listing Rules or the DTRs.

 

For further information please visit www.so4.com.au or contact:

Tony Swiericzuk / Clint McGhie

Salt Lake Potash Limited

Tel: +61 8 6559 5800

Jo Battershill

Salt Lake Potash Limited

Tel: +44 7540 366000

Colin Aaronson / Richard Tonthat / Ben Roberts

Grant Thornton UK LLP

(Nominated Adviser)

Tel: +44 (0) 20 7383 5100

Derrick Lee / Beth McKiernan

Cenkos Securities plc (Joint Broker)

Tel: +44 (0) 131 220 6939

Rupert Fane / Ingo Hofmaier / Ernest Bell

Hannam & Partners (Joint Broker)

Tel: +44 (0) 20 7907 8500

 

Important Information 

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available.  Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96  Origin: Appendix 5  Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

 SALT LAKE POTASH LIMITED

ABN

 98 117 085 748

We (the entity) give ASX the following information.

Part 1 ‑ All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1

+Class of +securities issued or to be issued

Ordinary Shares

2

Number of +securities issued or to be issued (if known) or maximum number which may be issued

25,476,000

3

Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

Fully paid ordinary shares

 

4

Do the +securities rank equally in all respects from the +issue date with an existing +class of quoted +securities?

If the additional +securities do not rank equally, please state:

·    the date from which they do

·    the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

·    the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

Yes

 

5

Issue price or consideration

$0.54

6

Purpose of the issue

(If issued as consideration for the acquisition of assets, clearly identify those assets)

Proceeds from the issue will be used to fund ongoing construction of the Lake Way Project, including the development of on-lake infrastructure, the payment of deposits on certain process plant long-lead items, completion of feasibility studies, and general working capital. 

6a

Is the entity an +eligible entity that has obtained security holder approval under rule 7.1A?

If Yes, complete sections 6b – 6h in relation to the+securities the subject of this Appendix 3B, and comply with section 6i

Yes

6b

The date the security holder resolution under rule 7.1A was passed

30 November 2018

6c

Number of +securities issued without security holder approval under rule 7.1

4,822,231

 

6d

Number of +securities issued with security holder approval under rule 7.1A

20,653,769

6e

Number of +securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting)

Nil

 

6f

Number of +securities issued under an exception in rule 7.2

Nil

6g

If +securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3?  Include the +issue date and both values.  Include the source of the VWAP calculation.

Yes

 

Issue date: 14 June 2019

Issue price: $0.54

15 day VWAP: $0.6144

 

 

6h

If +securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements

Not Applicable

6i

Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements

7.1 – 11,201,537

7.1A – Nil

 

7

+Issue dates

Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12).  For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A.

Cross reference: item 33 of Appendix 3B.

14 June 2019

Number

+Class

8

Number and +class of all +securities quoted on ASX (including the +securities in section 2 if applicable)

232,496,581

Ordinary Shares

Number

+Class

9

Number and +class of all +securities not quoted on ASX (including the +securities in section 2 if applicable)

 

 

 

7,500,000

 

10,000,000

 

750,000

 

 

1,000,000

 

 

250,000

 

 

500,000

 

 

750,000

 

 

400,000

 

 

1,700,000

 

 

 

2,750,000

 

 

 

3,000,000

 

 

 

21,095,016

 

Class B Performance Shares

 

Class C Performance Shares

 

Incentive Options exercise price $0.50, expiry date 29 April 2020

 

Incentive Options exercise price $0.60, expiry date 29 April 2021

 

Incentive Options exercise price $0.40, expiry date 30 June 2021

 

Incentive Options exercise price $0.50, expiry date 30 June 2021

 

Incentive Options exercise price $0.60, expiry date 30 June 2021

 

Incentive Options exercise price $0.70, expiry date 30 June 2021

 

Incentive Options exercise price $0.60, expiry date 1 November 2023

 

Incentive Options exercise price $1.00, expiry date 1 November 2023

 

Incentive Options exercise price $1.20, expiry date 1 November 2023

 

Performance rights which are subject to various performance conditions to be satisfied prior to the relevant expiry dates between 31 December 2018 and 1 November 2023

10

Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

Not Applicable

Part 2 ‑ Pro rata issue

11

Is security holder approval required?

Not Applicable

12

Is the issue renounceable or non-renounceable?

Not Applicable

13

Ratio in which the +securities will be offered

Not Applicable

14

+Class of +securities to which the offer relates

Not Applicable

15

+Record date to determine entitlements

Not Applicable

 

16

Will holdings on different registers (or subregisters) be aggregated for calculating entitlements?

Not Applicable

17

Policy for deciding entitlements in relation to fractions

Not Applicable

18

Names of countries in which the entity has security holders who will not be sent new offer documents

Note: Security holders must be told how their entitlements are to be dealt with.

Cross reference: rule 7.7.

Not Applicable

19

Closing date for receipt of acceptances or renunciations

Not Applicable

 

20

Names of any underwriters

Not Applicable

21

Amount of any underwriting fee or commission

Not Applicable

22

Names of any brokers to the issue

Not Applicable

23

Fee or commission payable to the broker to the issue

Not Applicable

24

Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders

Not Applicable

25

If the issue is contingent on security holders’ approval, the date of the meeting

Not Applicable

26

Date entitlement and acceptance form and offer documents will be sent to persons entitled

Not Applicable

27

If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders

Not Applicable

28

Date rights trading will begin (if applicable)

Not Applicable

29

Date rights trading will end (if applicable)

Not Applicable

30

How do security holders sell their entitlements in full through a broker?

Not Applicable

31

How do security holders sell part of their entitlements through a broker and accept for the balance?

Not Applicable

32

How do security holders dispose of their entitlements (except by sale through a broker)?

Not Applicable

33

+Issue date

Not Applicable

Part 3 ‑ Quotation of securities

You need only complete this section if you are applying for quotation of securities

34

Type of +securities

(tick one)

(a)

+Securities described in Part 1

(b)

All other +securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

 

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35

If the +securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional +securities held by those holders

36

If the +securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

37

A copy of any trust deed for the additional +securities

 Entities that have ticked box 34(b) 

38

Number of +securities for which +quotation is sought

Not Applicable

39

+Class of +securities for which quotation is sought

Not Applicable

40

Do the +securities rank equally in all respects from the +issue date with an existing +class of quoted +securities?

If the additional +securities do not rank equally, please state:

·    the date from which they do

·    the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

·    the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

Not Applicable

41

Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

(if issued upon conversion of another +security, clearly identify that other +security)

Not Applicable

Number

+Class

42

Number and +class of all +securities quoted on ASX (including the +securities in clause 38)

  

Quotation agreement

1           +Quotation of our additional +securities is in ASX’s absolute discretion.  ASX may quote the +securities on any conditions it decides. 

2          We warrant the following to ASX.

·          The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.

·          There is no reason why those +securities should not be granted +quotation.

·          An offer of the +securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

·          Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no-one has any right to return any +securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the +securities be quoted.

·          If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.

3          We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

4          We give ASX the information and documents required by this form.  If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins.  We acknowledge that ASX is relying on the information and documents.  We warrant that they are (will be) true and complete.

Sign here:            …………………………………………………..            Date: 14 June 2019

                             (Director/Company secretary)

Print name:         Clint McGhie

== == == == ==

Notice Under Section 708A

Salt Lake Potash Limited (the Company) has today issued 25,476,000 fully paid ordinary shares. The issued shares are part of a class of securities quoted on Australian Securities Exchange (“ASX”). 

The Company hereby notifies ASX under paragraph 708A(5)(e) of the Corporations Act 2001 (Cwth) (the “Act”) that:

1.            the Company issued the securities without disclosure to investors under Part 6D.2 of the Act;

2.            as at the date of this notice, the Company has complied with the provisions of Chapter 2M of the Corporations Act as they apply to the Company, and section 674 of the Act; and

3.            as at the date of this notice, there is no information that is “excluded information” within the meaning of sections 708A(7) and (8) of the Act.

Treasure hunting in Nevada with Tertiary Minerals (TYM): Walker Lane marks the spot for gold.

By Harry Dacres-Dixon

  • Treasure hunting in Nevada
  • Walker Lane: The treasure chest you’ve been looking for
  • Tertiary Minerals kick start their hunt for gold
  • Gold in Walker Lane not drying up anytime soon

Treasure hunting in Nevada

Ahoy, me hearties! If you’re planning on going hunting for hidden treasures anytime soon, Nevada might be a good place to start. The state ranked as the top jurisdiction in the world for investment according to the Fraser Institute Investment Attractiveness Index. An outcome of both it’s geological attractiveness and the effects of government policy on attitudes toward exploration investment.

It’s no surprise either. The area has world class infrastructure and has been a prolific producer of key metals including copper, cobalt, lithium silver and gold. When it comes to gold, Nevada is up there with the best of them. In fact, if Nevada were a country, it would be the world’s fourth-largest gold producer, behind only China, Australia and Russia. 

Walker Lane: The treasure chest you’ve been looking for

Its success lies significantly in three regions Carlin, Cortez and Walker Lane. Whilst the Carlin region has previously taken the headlines, it’s the Walker Lane trend which looks capable of delivering the next big pot of gold. 

The Walker Lane is a geologic trough than runs roughly in line with the border between California and Nevada, where the North American Plate meets the Pacific Plate. As well as a significant producer of silver and copper, the mineral belt is host to a number of past and current multi-million-ounce epithermal gold deposits.

Its history stretches back to the late 1850s with the discovery of the famous Comstock Lode. The gold belt holds some of North America’s most crucial mining districts including Comstock, Tonopah, Goldfield, Bullfrog and Aurora.

It’s currently being explored by the likes of Kinross and Barrick at the producing Round Mountain Mine, Gryphon Gold at the Borealis Mine, Newcrest Mining at the Redlich project and Coeur Mining at their Sterling Mine which holds a total inferred resources of 709,000 ounces.

A study by data mining and mineral exploration specialists BW Mining found that, to date, approximately 50 million ounces of gold had been discovered in an area covering roughly 140,000 square kilometres.

For junior gold hunters in Nevada, the Walker Lane Gold Belt offers miners a significantly cheaper exploration target than in Carlin, where sites not already snatched up by the big players are typically deep and out of financial reach for newcomers.  

In contrast, Walker Lane remains underexplored offering substantial potential upside. The area is also already known to hold outstanding high-grade gold zones such as at Newrange Golds Pamlico gold project, compared to the Carlin Trend which is generally mining ore less than a gram per tonne.

Tertiary Minerals kick start their hunt for gold

Sounds like an ideal location to go hunting for gold I’d say. And so Tertiary Minerals (TYM) feel too. The AIM-traded mineral exploration and development company announced at the end of May that it was joining the party in Walker Lane, securing a 20-year lease (with the option to buy) over a group of nine patented claims in the area.

The acquisition falls “in line with our strategy to build a new project portfolio which will enable the Company to reduce its future geographical, technical, permitting and commodity risk exposure and provide long-term shareholder value” said MD Richard Clemmey.

Their sites situated in the Pyramid Mining District lies at the Northwest end of the Walker Lane, 40km away from Reno. The company reported that the area has undergone limited exploration in 1989-90.

As part of their announcement, TYM revealed that drilling at hole PYR9 had intersected visible gold and assayed 1.52m grading 17.8 g/t Au from 94.5m down hole. Shiver me timbers!

Mr Clemmey as would be expected was rather happy to deliver the news, commenting: “We are delighted to have acquired an interest in the Pyramid Project. Projects with high-grade gold results in drilling that have not already been followed up are hard to find in Nevada.

Gold in Walker Lane not drying up anytime soon

The move looks an intelligent one for TYM. Whilst Nevada is famous for its droughts, gold supplies in Walker Lane don’t look like they’ll be drying up anytime soon.

This acquisition is just the first step though. Let’s hope that X marks the spot for Tertiary and their next series of announcements reveal some serious treasures. 

 

References

BW Mining Walker Lane

Coeur Mining Sterling, Nevada

Fraser Institute Annual Survey of Mining Companies, 2018

Investing News Nevada’s Walker Lane Gold Trend Ripe for Discovery

TSX Media Nevada Gold Explorer’s Big Exploration Plans Paying Off

321 Gold Treasures of the Walker Lane

Mining Journal – Iron ore price to incentivise swing production, says BMO

Current iron ore prices of US$100/tonne should be enough to spark activation of about 60 million tonnes of swing production to “balance the market”, according to BMO, with perhaps 40Mt of that coming from China.

BMO director, equity research, metals & mining – international, Edward Sterck, said a restart of Vale’s stalled 30Mtpa Brucutu mine in Brazil could restore 15Mt of production in the second half of this year. But there was no sign of a restart yet.

Global iron ore production has been impacted in the first half of 2019 by Vale’s dam failure at Brumadinho in Brazil, and the continuing legal issues around Brucutu, as well as weather and fire disruptions affecting Rio Tinto and BHP in Western Australia. BMO says shipping data suggests Rio Tinto and BHP are back on track, but Vale continues to struggle.

A need for 60Mt of swing production – US$6 billion of iron ore sales – could open up opportunities for Australian and other producers, though Sterck suggested to Mining Journal that higher production and earnings were “already baked in” to valuations.

“The iron ore price remains above our forecasts, suggesting upside potential to estimates,” he said.

“The high price should outweigh the supply disruption/shortfall [in the first half].”

Salt Lake Potash (SO4) Exceptional Economics of Commercial Scale Development and Lake Way

Salt Lake Potash Limited (Salt Lake Potash or Company) is pleased to report the results of the Company’s Scoping Study for a commercial scale Sulphate of Potash (SOP) development at Lake Way (Lake Way Project or Project) in Western Australia.

Based on the Scoping Study results, the Project generates exceptional economic returns due to its low capital intensity, bottom quartile operating costs and sustainable operating life.

Cautionary Statement

The Scoping Study referred to in this announcement has been undertaken to determine the potential viability of a Sulphate of Potash (SOP) development at the Lake Way Project. The Scoping Study has been prepared to an accuracy level of ±30%. The results should not be considered a profit forecast or production forecast.

The Scoping Study is a preliminary technical and economic study of the potential viability of the Lake Way Project. In accordance with the ASX Listing Rules, the Company advises it is based on low-level technical and economic assessments that are not sufficient to support the estimation of ore reserves. Further evaluation work including infill drilling and appropriate studies are required before Salt Lake Potash will be able to estimate any ore reserves or to provide any assurance of an economic development case.

Approximately 80% of the total production target is in the Measured resource category, 16% in the Indicated resource category and 4% is in the Inferred resource category. The Inferred resource included in the total production target is located at the southern end of Lake Way and is expected to be the last of the brine extraction system constructed. It does not feature as a significant portion of production either during the payback period or during the life of mine. Accordingly, the Company has concluded that it has reasonable grounds for disclosing a production target which includes a small amount of Inferred material. However, there is a low level of geological confidence associated with Inferred mineral resources and there is no certainty that further exploration work will result in the determination of Indicated mineral resources or that the production target itself will be realised.

The Scoping Study is based on the material assumptions outlined elsewhere in this announcement. These include assumptions about the availability of funding. While Salt Lake Potash considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved.

To achieve the range outcomes indicated in the Scoping Study, additional funding will likely be required. Investors should note that there is no certainty that Salt Lake Potash will be able to raise funding when needed. It is also possible that such funding may only be available on terms that dilute or otherwise affect the value of the Salt Lake Potash’s existing shares. It is also possible that Salt Lake Potash could pursue other ‘value realisation’ strategies such as sale, partial sale, or joint venture of the Project. If it does, this could materially reduce Salt Lake Potash’s proportionate ownership of the Project.

The Company has concluded it has a reasonable basis for providing the forward looking statements included in this announcement and believes that it has a reasonable basis to expect it will be able to fund the development of the Project. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.

EXECUTIVE SUMMARY

Salt Lake Potash is pleased to report the results of the Scoping Study for the commercial scale development of its SOP project at Lake Way. The Scoping Study demonstrates the potential for the Lake Way Project to support a low capital and operating cost operation with annual production of approximately 200,000 tonne of premium grade SOP.

The Scoping Study demonstrates the compelling economics of the commercial scale development of Lake Way with the ability to support a long mine life:

  • Lake Way Project to produce an estimated 200,000 tonnes per year of premium grade SOP (>52% K2O)
  • High-grade SOP resource underpins long Mine Life of 20 years
  • Lowest operating cost for global SOP producers with an FOB operating cost estimate of $264/t (US$185/t)
  • Low development capital requirements of approximately A$237m (US$166m) including a growth allowance of ~13% ($32m) supported by the close proximity to infrastructure
  • Exceptional economics with estimated project post-tax NPV8 of A$381m (pre-tax NPV8 of A$580m) and post-tax IRR of 27% (pre-tax IRR 33%)
  • Steady state EBITDA of A$90m annually and average annual after tax cashflow of A$64m
  • Strong cashflow and low capital cost result in early payback period of 3.2 years
  • Construction underway on the first phase of Evaporation Ponds (the Williamson Ponds) which will support the dewatering of the Williamson Pit’s super saturated brine with an SOP grade of 25kg/m3
  • Plant commissioning expected Q4 2020 utilising salts from the Williamson Pit brine
  • BFS currently underway with completion expected in Q3 2019 to support project financing

Salt Lake Potash has already significantly de-risked the commercial scale project through the early construction works on the first phase of the Evaporation Ponds (the Williamson Ponds). The de-watering of the Williamson Pit and commencement of evaporation will provide additional insight into the critical evaporation processes which in turn will further de-risk the project.

Lowest Operating Costs

The results of the study demonstrate the potential for very low operating costs. It is estimated that the Lake Way Project will have the lowest operating costs of any SOP operation globally with an FOB operating cost of $264/t (US$185/t).

Short Payback period

The low development capital requirements and significant margins received for the Lake Way Project provides a short payback period of just 3.2 years from first production. This will result in full repayment of development capital by 2024.

KCl Addition Opportunity

The resource at Lake Way contains a significant excess of sulphate (SO4) which provides the opportunity for the Company to explore value adding measures including a potassium chloride (KCl) reaction phase to the processing stage. Preliminary work has shown significant benefits to the Lake Way Project through the inclusion of the KCl reaction phase in the process, including a potential increase in annual production of SOP and subsequent improvements in financial returns to shareholders. The Company will explore this opportunity as part of the BFS for the Lake Way Project.

Robust Economics

The Study demonstrates that the Lake Way Project provides exceptional economics even under the most extreme downside pricing scenarios. The breakeven pricing scenario is a significant 40+% decrease in price at US$323/t.

Table 1: Pricing Scenarios

SOP Price

Breakeven

US$323/t

US$400/t

US$450/t

US$500/t

Base

US$550/t

US$600/t

US$650/t

NPV
(post tax)

A$130m

A$214m

A$298m

A$381m

A$465m

A$548m

Project Funding Advanced

On 6 June 2019, the Company announced that it had received binding commitments for a placement to raise A$20.25m from strategic investors.

In addition, the Company is in advanced discussions with a debt provider for a debt funding package which will support funding for the Lake Way Project.

Next Steps

Having completed the successful Scoping Study, Salt Lake Potash has subsequently commenced a Bankable Feasibility Study (BFS) targeted for completion in Q3 2019. The Company has appointed GR Engineering Services Limited (GRES, ASX:GNG) as lead engineer for the BFS. GRES will work with a number of industry experts including Wood Saskatoon.

The BFS will include the following:

  • Further drilling and trenching programs to increase resource definition and confidence levels for the Lake Way Resource including lake playa and paleochannel
  • Additional test work at Saskatchewan Research Council (SRC) on the process flow sheet, including completion of two pilot plant test runs
  • Review KCl opportunity and determine the options for the possible inclusion of a KCl reaction within the SOP Plant Process
  • Refinement of logistics solution and identification of preferred constructors
  • Update the trench hydraulic analysis and optimisation of trench design in partnership with Cardno
  • Incorporate findings from the first phase of Evaporation Pond construction into the design and construction methodology for the commercial scale project
  • On-going design and refinement of the Process Plant including partnering with vendors for major equipment including crystallisers to conduct testwork relevant to their equipment

SCOPING STUDY RESULTS

The Scoping Study is based on the Mineral Resource Estimate for the Lake Way Project reported in March 2019, comprising 8.2Mt of SOP calculated using Drainable Porosity (73 million tonnes of SOP using Total Porosity).

The Scoping Study assumes a mine life of 20 years with plant commissioning in Q4 2020. The study mine plan, comprising a network of trenches and paleochannel bores, provides for a 200,000tpa production run rate. Table 2 provides a summary of production and cost figures for the Project.

Table 2: Lake Way Project Overview

Lake Way Project

Unit

Estimated Value

PHYSICAL

Mine life

years

20

Annual Production of SOP

tpa

200,000

Mineral Mine Plan

Measured Resource (Lake Way Playa)1.8Mt @ 15.2kg/m3 SOP

%

80

Indicated Resource (Paleochannel) 1.4Mt @ 13.6kg/m3 SOP

%

16

Inferred Resource (Lake Way Playa & Paleovalley) 5Mt @ 15.2kg/m3 SOP

%

4

MINING METHOD

Trenches (production and transport) – average depth 5m

km

130

Bores – average depth 120m

number

14

Brine Chemistry (average Lake Brine SOP grade)

Kg/m3

15.2

EVAPORATION PONDS

Area

ha

1,325

Halite Ponds

ha

1,020

Harvest Ponds

ha

291

Recovery of Potassium from feed brine

%

78

PLANT

Operating time

hpa

7,600

Recovery of Potassium from feed salt

%

80

OPERATING AND CAPITAL COSTS

LOM Cash Operating Costs FOB ex-Geraldton port

A$/t

$264

Mine Gate Operating Costs

A$/t

$184

Transport and handling

A$/t

$80

Capital Costs

A$m

$237

Direct Costs

A$m

$177

Indirect Costs & Growth

A$m

$60

FINANCIAL PERFORMANCE – LIFE OF PROJECT

Price (FOB)

US$/t

$550

Exchange Rate

US$/AUD

0.70

Discount Rate

%

8

EBITDA

A$m

$90

Average Annual after-tax cash flow

A$m

$64

Post tax Internal Rate of Return (IRR)

%

27

Post tax Net Present Value (NPV) @ 8% discount rate

A$m

$381

Pre-tax Internal Rate of Return (IRR)

%

33

Pre-tax Net Present Value (NPV) @ 8% discount rate

A$m

$580

PROJECT OVERVIEW

Lake Way is located in the Northern Goldfields Region of Western Australia, less than 15km south of Wiluna. The surface area of the Lake is over 270km2.

Salt Lake Potash holds five Exploration Licences (two granted and three under application) covering most of Lake Way and select areas off-lake, including the paleochannel defined by previous exploration. The northern end of the Lake is largely covered by a number of Mining Leases, held by Blackham Resources Limited (Blackham Resources), the owner of the Wiluna Gold Mine.

In April 2019, the Company entered into a binding Split Commodity and Access Agreement (Access Agreement) with Blackham Resources in relation to the development of the Lake Way Project on terms in line with the previously executed MOU announced on 12 March 2018.

Lake Way has a number of compelling advantages which make it an ideal site for Salt Lake Potash’s initial SOP operation, including:

  • Access to Blackham Resources’ existing infrastructure (including camps, power and maintenance) to accelerate development.
  • The site has excellent freight solutions, being adjacent to the Goldfields Highway, which is permitted for heavy haulage, quad trailer road trains to the railhead at Leonora and then direct rail access to both Esperance and Fremantle Ports, or via other heavy haulage roads to Geraldton Port.
  • The Goldfields Gas Pipeline is adjacent to Salt Lake Potash’s tenements, running past the eastern side of the Lake.
  • Access to Blackham Resources’ existing Mining Leases provides advanced permitting pathway for early development activity, including the construction of the first phase of Evaporation Ponds (the Williamson Ponds).
  • Salt Lake Potash is constructing the first phase of the Evaporation Ponds to enable the Company to commence dewatering from the existing Williamson Pit. The pit contains an estimated 1.2GL of brine at the exceptional grade of 25kg/m3 of SOP. This brine is the ideal starter feed for evaporation ponds, having already evaporated from the normal Lake Way brine grade, which averages over 15kg/m3.
  • The high grade brines at Lake Way will result in lower capital and operating costs due to lower extraction and evaporation requirements.
  • The presence of clays in the upper levels of the lake which are amenable to low cost, on-lake evaporation pond construction.

SCOPING STUDY CONSULTANTS

The Scoping Study was managed by Wood (formerly Amec Foster Wheeler) and is based on information and assumptions provided by a range of leading independent consultants, including the following consultants who have contributed to key components of the Scoping Study.

Table 3: Lake Way Project Scoping Study Consultants

Area

Responsibility

Study Manager

Wood

Resource Estimate

Groundwater Science

Brine Evaporation

Ad-Infinitum/ Knight Piesold

Brine Transfer Hydraulics 

Cardno

Process Plant:

–     Design basis/criteria

–     Process Test Work

–     Process Plant Design

 

Carlos Perucca Process Consulting

Saskatchewan Research Council

Wood

Plant Infrastructure

Wood

Area Infrastructure

Wood/Salt Lake Potash

Environmental & Heritage

Pendragon Environmental Solutions

Capital Estimate Compilation

Wood

Operating Estimate Compilation (Mine Gate)

Wood

Marketing

CRU International/Argus Media

Economics

Salt Lake Potash

PROJECT GEOLOGY AND MINERAL RESOURCE

Geological Setting

Lake Way is in the Northern Goldfields Province on the Archaean Yilgarn Craton. The province is characterised by granite-greenstone rocks that exhibit a prominent northwest tectonic trend and low to medium-grade metamorphism. The Archaean rocks are intruded by east-west dolerite dykes of Proterozoic age, and in the eastern area there are small, flat-lying outliers of Proterozoic and Permian sedimentary rocks. The basement rocks are generally poorly exposed owing to low relief, extensive superficial cover, and widespread deep weathering.

A key characteristic of the goldfields is the occurrence of paleochannel aquifers. These palaeodrainages are incised into the Archean basement and in-filled with a mixed Tertiary and Quaternary sedimentary sequence.

The paleochannel sediments of Lake Way are characterised by a mixed sedimentary sequence including sand, silts and clays of lacustrine, aeolian, fluvial and colluvial depositional origins. These near-surface deposits also include chemically-derived sediments of calcrete, silcrete and ferricrete. Beneath eastern parts of the playa, there is a deep paleochannel that is infilled with Tertiary-aged palaeochannel clay and basal sands in the deepest portion.

The Sediments infilling the paleochannel are described below:

Lake Bed Sediment

Recent (Cainozoic), unconsolidated silt, sand and clay sediment containing variable abundance of evaporite minerals, particularly gypsum. The unit is ubiquitous across the salt lake surface. The thickness of the unit ranges from approximately 3 to 20m.

The upper part of the unit comprises unconsolidated, gypsiferous sand and silt from surface to around 1.5m depth. The unit is widespread, homogeneous and continuous with the thickest parts in the centre and southern portion of the lake. This is underlain by well sorted, lacustrine silt and clay.

Palaeovalley Sediment

The Paleovalley sediment consists of Tertiary clay and silt that overlies basement or the Basal Sand.

Paleochannel Basal Sand

Tertiary, unconsolidated fine, medium to coarse grained sand interbedded with silt, clay and some lignite horizons.

Mineral Resource

The Mineral Resource Estimate underpinning the production target, classified as Measured, Indicated and Inferred, was prepared by a competent person and was reported in accordance with the JORC Code (2012 Edition) on 18 March 2019.

The Company engaged an independent hydrogeological consultant with substantial salt lake brine expertise, Groundwater Science Pty Ltd, to complete the Mineral Resource Estimate for the Lake Way Project.

The Lake Way Mineral Resource Estimate describes a brine hosted resource. The minerals are dissolved in brine, and the brine is contained within pore spaces of the host sediment.

The Mineral Resource Estimate of 73Mt of SOP calculated using Total Porosity and 8.2Mt of SOP calculated using Drainable Porosity is hosted within approximately 15 billion cubic metres of sediment ranging in thickness from a few metres to over 100m, beneath 189km2 of playa lake surface including the paleochannel basal sand unit of 20m thickness and 30km length.

The Mineral Resource Estimate for Lake Way is divided into resource classifications that are controlled by the host geological units:

  • Lake Bed Sediment
  • Paleovalley Sediment
  • Paleochannel Basal Sands

The mineral resource estimate is summarised in the Tables 4 – 6.

The estimated SOP tonnage represents the SOP within the in-situ contained brine with no recovery factor applied. The amount of contained brine which can be extracted depends on many factors including the permeability of the sediments, the drainable porosity, and the recharge dynamics of the aquifers.

Brines by their nature are not a static resource as they are subject to groundwater movement, dilution and concentration over time. Reporting both total and drainable porosity allows the reflection of this dynamic resource environment, including the consideration of the recharge and physical diffusion impacts on the mine plan and production output.

The impact of the recharge and physical diffusion in the development and long term abstraction of a brine resource is discussed in subsequent sections.

Table 4: Measured Resource

Total Volume

Brine Concentration

Mineral Tonnage Calculated from Total Porosity

Mineral Tonnage Calculated from Drainable Porosity

K

Mg

So4

Total Porosity

Brine Volume

SOP Tonnage

Drainable Porosity1

Brine Volume

SOP Tonnage

(Mm3)

(kg/m3)

(kg/m3)

(Kg/m3)

%

(Mm3)

(Mt)

%

(Mm3)

(Mt)

North Lakebed

(0.4-8.0 m)

1,060

6.8

8.0

27.6

43

456

6.9

11

117

1.8

Williamson Pit

1.26

11.4

14.7

48.0

1.26

0.03

Total

6.9

1.83

Table 5: Indicated Resource

Total Volume

Brine Concentration

Mineral Tonnage Calculated from Total Porosity

Mineral Tonnage Calculated from Drainable Porosity

K

Mg

So4

Brine Volume

SOP Tonnage

Brine Volume

SOP Tonnage

(Mm3)

(kg/m3)

(kg/m3)

(Kg/m3)

(Mm3)

(Mt)

(Mm3)

(Mt)

Basal Sands

(Paleochannel)

686

6.1

8.2

25.0

40

274

3.7

15

103

1.4

Table 6: Inferred Resource

Total Volume

Brine Concentration

Mineral Tonnage Calculated from Total Porosity

Mineral Tonnage Calculated from Drainable Porosity

K

Mg

So4

Total Porosity

Brine Volume

SOP Tonnage

Drainable Porosity

Brine Volume

SOP Tonnage

(Mm3)

(kg/m3)

(kg/m3)

(Kg/m3)

%

(Mm3)

(Mt)

%

(Mm3)

(Mt)

South Lakebed

(0.4-8.0 m)

316

6.8

8.0

27.6

43

135

2.0

11

35

0.5

Lakebed

(8m to Base)

9,900

6.8

8.0

27.6

40

3,960

60.0

3

297

4.5

Total

62.0

5.0

1 The Drainable Porosity does not include the significant resource potentially available through the recharge cycle.

Mineral Brine Resource Cycle

The production of brine within the lakebed sediment is cyclic and described below.

Stage 1 – Initial Resource

The initial brine resource comprises of two distinct porosity categories:

  • Brine dissolved in water held in Drainable Porosity, (11% of the total aquifer volume).
  • Brine dissolved in water held in Retained Porosity, (32% of total aquifer volume).

The combined porosity (Total Porosity) then comprises the total SOP brine resource held in the Lake Bed Sediments aquifer.

The remaining volume is occupied by solid material (sand, silt and clay grains comprising approximately 57% of the aquifer volume).

Stage 2 – Production Cycle

During production the brine drains under gravity toward the trench and is subsequently removed by pumping. This creates a hydraulic gradient toward the trench and brine is drawn some distance through the aquifer toward the trench (typically hundreds of meters depending on aquifer permeability).

Over time the aquifer immediately surrounding the trench is partially dewatered. This means that the drainable brine has been removed from the sediment, but the retained brine is still held in place by surface tension.

Stage 3 – Recharge Cycle

Western Australian Salt Lake playas receive water supply from both direct rainfall and surface run-off annually. Direct rainfall lands on the playa each year, and most years, heavy, cyclonic rain events cause run-off from the surrounding catchment onto the lake playa. This water infiltrates the lake playa surface and re-fills the drainable pores in the aquifer. The larger rainfall events usually occur from January through to March.

Stage 4 – Mixing Cycle

The water that has infiltrated and refilled the drainable porosity then mixes (by physical diffusion) with the brine held in retained porosity.

Through repeated production cycles the total brine resource is mined. The concentration of brine pumped from the production trenches will decline over time as the total resource is depleted over repeated production cycles.

The pumping rate is controlled by the hydraulic conductivity of the host sediment. The concentration of produced brine will change over time and will be controlled by the tonnage contained in total porosity and the mechanism of mixing between repeated production cycles.

MINING AND PRODUCTION TARGET

The estimated production target of 200,000tpa of SOP is supported by the total brine production volume of 23GL/year. A numerical groundwater model was developed to predict water level drawdowns due to brine production from trenches in the superficial lake sediments at Lake Way. The model simulates brine abstraction of 19.3GL/year from a trench network. This is supplemented by an assumed volume of 3.7GL/year of brine from the paleochannel delivering a total brine volume of 23GL/year sufficient to support the production target of 200,000tpa of SOP.

Recharge is a key element of the mining strategy, as it refills the drainable porosity and activates salts contained within the retained porosity by physical diffusion. Direct rainfall recharge has been estimated from water level fluctuations due to rainfall and specific yield (Groundwater Science, 2017). Evaporation from water ponded in the Lake was set to 0.7 x (pan evaporation).

Recharge calculations used in the abstraction model were based on historic (1971 – 1990) precipitation at Wiluna and estimated surface inflows (Groundwater Science, 2018) into the lake for a 20-year production period.

Over the life of mine, 80% of the total brine production volume is sourced from the Measured Mineral Resource (Lake Bed Sediment), 16% from the Indicated Mineral Resource (Paleochannel) and 4% from the Inferred Mineral Resource (Lake Bed Sediment – South). The trenches for abstraction of the Inferred component of brine production is expected to be the last of the brine extraction system constructed. Whilst the Company has a reasonable expectation that the portion of the Inferred Mineral Resource included in total brine production will be capable of upgrade, it does not feature as a significant portion of production either during the payback period or during the life of mine.

Brine Extraction

The brine extraction methodology and requirements for the Scoping Study are supported by hydrogeological modelling and hydraulic design work undertaken by Cardno Engineering.

The Scoping Study has assumed brine will be extracted from Lake Way using two methods:

  • Surface trenching provides access to brine contained within the playa lake sediments;
  • Vertical bores provide access to brine from the paleochannel aquifer.

The design requirements assumed an average brine demand of 730L/s to be supplied to the halite ponds for the extraction network concept design. The contribution to brine production is approximately 84% from trenching and 16% from bores. The current basis is:

  • Bore production rate of 8.4L/s/bore
  • Trench yield rate (flow) minimum of 4L/s/km
  • Trench yield rate (flow) maximum of 8L/s/km

The hydraulic analysis used a conceptual brine extraction network layout and the proposed evaporation pond locations to determine the likely requirements of the on-lake brine transfer pumping scheme.

Brine extracted from paleochannel bores will be fed directly into nearby trenches. Bore pumps have been sized for a flowrate of approximately 8L/s and a pumping head at 90m.

The location and geometry of the paleochannel has been identified from a passive seismic survey. Bores will be drilled using the mud rotary method through the lake bed sediments and the Tertiary clays into the basal sand terminating in the weathered bedrock horizon.

The bores will be screened across the basal sands section. Gravel pack will be installed across the screened section with a bentonite seal at the top, the annulus will be backfilled to surface.

Trench Layout

The trench network designed as part of the Scoping Study stretches a total of 130km across the lake surface and includes two types of trench systems required to maintain the feed brine into the Halite Ponds:

·    Extraction trenches provide a low pressure zone for brine contained in the surrounding playa lake sediments to drain into.

·    Transport trenches to convey brine into distinct areas as required, and capture brine pumped from the paleochannel bores into the trench network.

Trench Flow

The brine extraction pumping systems must provide sufficient brine to meet seasonal pond demand, which is at a peak during the summer months due to solar evaporation.

A hydraulic analysis was undertaken on a conceptual network layout to calculate flowrates, flow velocities, pump requirements and power demand. Typical industry norms for pumped open channels were adopted, maintaining a minimal trench base gradient of 1:5000 and a maximum flow velocity of 0.3m/s.

Pump stations are located on-lake between trench segments, and at entry points into each halite pond. In total, the trench network includes 12 transfer pump stations.

Trench Design

The trench design provides for approximately a 5m wide trench, with additional width to batter back any surficial loose soils, and from 5m to 6m deep. The trenches will likely be stepped to avoid wall collapse and to assist with constructability. The Scoping Study has assumed a construction methodology using an amphibious excavator.

Trench spoil will be used to create a light vehicle access berm on one side of the trench and include windrows if required. Bunding on the opposite side will be designed with gaps to allow surface water recharge.

The height and layout of the bunds will depend on hydrogeology requirements (i) to ensure regular groundwater recharge from surface water and (ii) to maintain surface water flow of the lake.

Regular trench maintenance will be required and allowance is made in the maintenance equipment fleet for purchase of excavators and constant coverage of personnel on-site to maintain the trench network.

BRINE EVAPORATION

Extracted brine is concentrated in a series of solar ponds to induce the sequential precipitation of salts and eventually potassium-containing salts in the harvest ponds. Based on modelling using historical data obtained from nearby weather stations at Wiluna Township and Wiluna Airport, the Lake Way region in Western Australia has an average rainfall of 260mm/a and an average water evaporation rate of 3,504mm/a, making conditions ideal for evaporation processes.

The operational area of the evaporation ponds required for the final 200,000tpa SOP production rate is 13.08km2, with area distribution between the various ponds based on mass balance modelling output.

The pond sizing is developed from a simulation using a combination of mathematical and thermodynamic models and is based on the average brine chemistry from the lake and paleochannel. The simulation uses average annual weather conditions to calculate the required brine flow and pond area (size) to meet the targeted 200,000tpa production scenario.

Salt Lake Potash engaged Ad-Infinitum to conduct meteorological modelling, evaporation modelling, pond sizing and design for the Lake Way Project. Geotechnical consulting services were provided by Knight Piésold.

Evaporation Pond Chemistry and Configuration

Brine evaporite chemistry is very complex due to the multitude of ions present in brine, however, in an effort to simplify the evaporation pathway representation, a three-component system of the major constituents (Mg-SO4-K) is commonly assumed. Sodium and chloride ions are not shown, for simplicity, as they are generally present in abundance in all salt lake brines and form halite in preference to all other salts.

The extraction brine composition used for the Scoping Study evaporation modelling is based on Lake Way sample data and is detailed below. The average brine composition below is based on an assumed 80% brine extracted from the lake playa and 20% brine extracted from the Paleochannel.

Table 7: Brine Extraction Composition

Element

Unit

Value

Na

g/L

74.3

K

g/L

6.5

Mg

g/L

7.4

Ca

g/L

0.5

SO4

g/L

26.7

Cl

g/L

122.8

 

Experience from numerous evaporation trials for Lake Way and Lake Wells has shown that astrakanite does not form, most likely because the kinetics of the formation are too slow for a dynamic pond system. Accordingly, the Scoping Study process has adopted this view and assumed that astrakanite will not form within the pond system. Instead, the composition of the solution will move directly towards the leonite-schoenite field to produce potassium sulphate salts, followed by the epsomite-kainite field where these salts precipitate. Finally, the carnallite field is reached.

Harvest salts from the kainite pond and carnallite pond are used for SOP production. Concentrated brine from the carnallite pond is sent to the bittern pond for additional concentration and store as a waste by-product.

Evaporation Pond Layout

The specific site conditions were reviewed to assess the most suitable evaporation pond locations:

  • Halite ponds (1020ha) are located on-lake, to make use of the in situ low permeability clays and avoid the need for HDPE lining.
  • Bitterns Pond (14ha) is located on-lake and unlined.
  • Kainite (200ha), Carnallite (11ha) and Recovery Ponds (80ha) are located on-lake.

On-Lake Ponds

All ponds are located on-lake providing significant benefits for both cost and operational efficiency. The on-lake evaporation pond system has been located to:

  • Avoid locating ponds in areas of high brine yield, to minimise pond footprints sterilising the available brine resource.
  • Where possible, avoid low lying areas subject to long periods of inundation resulting from surface water flow. Some ponds that span inundated areas will require specific design considerations.
  • Ensure availability of in situ clays beneath the pond footprint, proven to be of low permeability and will limit seepage of unlined ponds.
  • Ensure availability of good quality lake clays that are a potential source of embankment construction materials to allow a cut-to-fill method for pond construction.
  • Avoid disturbance of the lake edge due to environmental and heritage requirements.

The pond sizes are detailed in Table 8.

Table 8: On-lake Ponds

 

Halite

Bitterns

Kainite

Carnallite

Recovery

Area (ha)

1,020

14

200

11

80

Evaporation Pond Construction

On-lake construction requires specialist equipment given the challenges trafficking and placing fill on the soft lake surface. Construction material will either be clay sourced from borrow pits immediately adjacent to the embankments, or imported materials source from existing mining waste materials or planned mine pre-stripping.

The general construction methodology is currently being trialled and proven up as part of the first phase of the Evaporation Pond construction currently underway at Lake Way. This will provide important information to ensure an efficient construction methodology is implemented for the remaining pond construction operations at Lake Way.

Salt Harvesting

The harvest ponds have been designed to allow for up to 12 months of salt growth before harvest. Harvests may be made more frequently in the kainite ponds during plant start-up and operation. The carnallite and recovery ponds will also be harvested and salt processed through the plant.

Sulphate salts are to be recovered from the harvest ponds (kainite, carnallite and recovery) by grader and front end loader. Dump trucks are loaded to transport the salt to the process plant, where it is stockpiled in separate areas to allow for a blended feed to the process plant.

PROCESS PLANT

The potassium salts harvested from the solar evaporation ponds will be treated in a processing plant to convert these salts into sulphate of potash (SOP or K2SO4), while minimising deportment of chlorides to the product.

Salt Lake Potash has conducted extensive testing of lake brines and harvest salts from its salt lake projects, predominantly Lake Way and Lake Wells, in order to confirm the evaporation and associated harvested salt processing operations. The testing thus far has proven that lake brine can be concentrated economically, via solar evaporation, to produce mixed potassium sulphate double salts. It has also been shown that these salts, when harvested, can be economically converted into a valuable, high purity SOP fertiliser product.

The SOP production process consists of:

·    Attrition to break up crystals

·    Conversion of the mixed sulphate salts to schoenite in a sulphate solution at ambient temperatures

·    Reverse Flotation to remove chlorides

·    Conversion of the schoenite to SOP (in a schoenite solution at around 50°C)

·    Filtering, drying and packaging

The key design parameters are shown in Table 9.

Table 9: Design Basis

Parameter

Value

Flowsheet configuration

Feed preparation, conversion, reverse flotation and SOP crystallisation.

SOP production

200,000tpa

Process plant potassium recovery

80%

Operating Time

 

Brine extraction; evaporation ponds and harvesting

8200h/a

Process plant

7600h/a

Product Composition

 

SOP Grade

>96%

%K2O equivalent

>52%

Target Cl Content

<0.5%

Target Mg Content

<0.2%

The harvested salt is crushed in a roll mill to break up lump material and is further broken down and scrubbed in attritioning cells. The resulting slurry is pumped to the conversion circuit where the potassium harvest salts are converted to schoenite prior to flotation.

The conversion tanks’ discharge slurry is transferred to the conversion thickener, an inclined plate unit. The conversion thickener underflow slurry, now predominantly schoenite, reports to the reverse flotation circuit.

The converted harvest salts still contain an appreciable amount of halite which needs to be removed to minimise chloride and sodium reporting to the product. Therefore a reverse flotation configuration is used employing self-aspirated columns to remove the halite. The resulting halite slurry is filtered, then stockpiled for disposal back on the lake. The flotation product is a Schoenite slurry which is filtered, to remove excess flotation brine, and is presented to the crystalliser circuit. The filtered flotation brine, which is saturated in potassium, is internally recycled with any excess brine sent to the recovery pond.

The purified schoenite salt from flotation is re-slurried with a calculated amount of dilution water and then pumped into the SOP crystalliser which is maintained at 50°C to convert to the schoenite to SOP by dissolving the magnesium sulphate from the double salt. The SOP crystalliser mother liquor reports to a cooling crystalliser where schoenite is precipitated from the liquor by cooling the liquor to 20°C with a chiller system. The secondary schoenite produced by the cooling crystalliser is recycled to the SOP crystalliser along with the primary schoenite from flotation.

The SOP crystalliser produces fine SOP crystals which are first dewatered, then the SOP cake is dried in a rotary drier and then conveyed to the product storage shelter. Product is periodically reclaimed by an FEL and transferred into a loadout hopper for transportation to port.

MAJOR INFRASTRUCTURE

The Lake Way Project is located in the Goldfields region of Western Australia approximately 15km south of Wiluna. The Project is located in close proximity to the Goldfields Highway which is a state highway that extends 800km from south of Kambalda in the Goldfields to Meekatharra in the Mid-West. Given the proximity to the Goldfields Highway which supports quad road trains, road haulage options include either travelling south toward Leonora or west to Geraldton.

The process plant is located 5km from the evaporation ponds and connected by an existing haul road that services the Williamson Pit. A 1.4km haul road from the Williamson pit causeway to the Williamson pond has been constructed as part of the first phase of Evaporation Pond construction. Unsealed access roads will be required for access to the Goldfield Gas Pipeline, raw water borefield and paleochannel bores.

The Project power requirements will be provided by a standalone natural gas power station located near the process plant under a build, own, operate (BOO) arrangement and local diesel generators at remote locations. 

The Project requires natural gas for the power station and for process requirements such as the boiler. Natural gas will be supplied from the Goldfields Gas Pipeline which runs along the eastern side of Lake Way. The distance from the process plant to the gas pipeline is approximately 27km.

Water required for the Project will be sourced from a nearby borefield. Raw water will be extracted from the borefield by bore pumps. The total raw water requirement for the Project is 2.0GL/a.

A fly in/fly out (FIFO) workforce has been adopted for the Lake Way Project using the Wiluna Airport which is located 5km south of the main township. A permanent accommodation village with a capacity for 100 workers has been assumed. The village will be expanded to include 180 construction workers during the construction phase.

PRODUCT TRANSPORT AND LOGISTICS

Salt Lake Potash engaged several highly qualified transport logistic companies to assist with defining the optimal logistics solution for transportation of 200,000tpa of SOP from Lake Way to port. An assessment of numerous haulage options was undertaken, applying a fixed origin and modelling multiple potential destinations including Geraldton, Fremantle and Esperance. This assessment has included a road direct assessment, rail direct assessment, and intermodal hub and spoke solution incorporating both road and rail.

The road direct solution to Geraldton has been established as the most cost-effective option to use for the product transport logistics for the standalone 200,000tpa SOP project from Lake Way to underpin the overall economic assessment for the Scoping Study.

The relatively close proximity to the Geraldton Port facilities (780km) and the ability to leverage off the established sealed highway network from Lake Way to Geraldton provides cost effective access into the Geraldton port facility.

The transportation solution will consist of truck loading at Lake Way site via Front End Loader. The transport from Lake Way to Geraldton will be undertaken by trucks suitable for quad combinations. The Mainroads Restricted Access Vehicles (RAV) approvals for quad combination transport covers the entire route from Lake Way all the way into Geraldton Port.

Geraldton Port is capable of handling fully loaded Panamax size vessels up to 70,000 tonnes and 225m in length. The Port handles approximately 19 million tonnes per annum of trade per year with significant excess capacity available for handling and storage.

PRODUCT QUALITY AND MARKETING

Fertilisers consist of essential plant nutrients that are applied to farmed crops in order to achieve favourable quality and yield. They replace the nutrients that crops remove from the soil, thereby sustaining the quality of crops, and are considered the most effective means for growers to increase yields.

The key components of agricultural fertilisers are nitrogen (ammonia and urea), phosphates (ammonium phosphates), and potassium (muriate of potash and sulphate of potash). In addition, sulphate has gained increased attention over the past several years due to soils becoming deficient in sulphur (the ‘fourth macronutrient’).

Global fertiliser demand is expected to increase significantly in the coming years due to the world population growth accompanied by decreasing arable land per capita, changes in diet and growth in income. These increases will provide an incentive for farmers to increase fertiliser use for improved yields and quality.

The most widely available source of potassium used by growers is Muriate of Potash (MOP or KCl), with around 65 million tonnes consumed annually. SOP is a speciality type of potassium fertilisers that is produced and consumed on a smaller scale.

MOP is widely used in all types of farming, however it can be detrimental to some plants, especially fruits and vegetables, due to its chloride content. SOP is primarily used as a source of potassium for crops intolerant to chloride. SOP is priced at a premium to MOP, due to supply constraints, high production costs and because of its ability to be used on chloride intolerant crops (such as fruits, vegetables, beans, nuts, potatoes, tea, tobacco and turf grass), which typically sell at sufficiently higher prices to absorb the premium cost.

SOP can be used in most applications where MOP is used and is preferred in many circumstances as it enhances yield and quality, shelf life and improves taste. SOP generally outperforms MOP in terms of crop quality and yield. SOP performs particularly well with crops that have a low tolerance to the chloride in MOP and in arid, saline and heavily cultivated soils. The low volume of SOP consumption relative to market demand is partly a result of the scarcity of reliable SOP supply.

SOP’s premium to the MOP price is correlated to the conversion costs from MOP to SOP (Mannheim Process) where MOP is used as an input in the process. The premium has been around 60% for the past decade. In recent years, this premium has expanded significantly, as decreases in the MOP price have not translated to similar declines in the price of SOP, indicating that the SOP market is supply constrained.

SOP can be sold as a standard powder, premium granular or soluble product. Granular and soluable SOP generally attracts a price premium. Salt Lake Potash plans to sell at a premium to the market price as a certified organic producer and also with a soluable product offering. The premium achievable for a soluable product can be upwards of 20% (CRU SOP Market Study May 2019).

The Company has engaged Argus Media (Argus) and CRU International Group to provide market analysis on both the broader SOP market and also specifically the Lake Way Project. The current SOP price averages between US$525/t (NW Europe – Standard bulk) (Argus Media 6 June 2019) and US$625 (California) (Greenmarkets 31 May 2019) with Salt Lake Potash utilising a life of mine SOP price of US$550/t (FOB) for the Scoping Study.

The Company will initially be targeting both global and domestic markets for its premium grade SOP product. SOP production is not easily substitutable and is in supply deficit, therefore the Company is confident in the current and forecasted levels of demand.

MINING TENURE

The Lake Way Project site has been secured with a mixture of contractual rights with Blackham Resources under the Access Agreement and Salt Lake Potash’s own exploration and mining tenements and applications. The Company’s and Blackham Resources mineral exploration and mining tenement locations are detailed in Table 10.

Salt Lake Potash is optimising the tenure approval process by staging the required approvals to ensure construction will be undertaken in line with the project schedule.

In addition to the exploration and mining tenements the Company is progressing the approval for various miscellaneous licences for non-process infrastructure, including water and power.

Table 10: Tenure Summary

Tenement

Status

Holding Name

E53/1878

Live

Piper Preston Pty Ltd

E53/1897

Live

Piper Preston Pty Ltd

E53/2057

Pending

Piper Preston Pty Ltd

E53/2059

Pending

Piper Preston Pty Ltd

E53/2060

Pending

Piper Preston Pty Ltd

L53/208

Pending

Piper Preston Pty Ltd

M53/1102

Pending

Piper Preston Pty Ltd

E53/1862

Live

Kimba Resources Pty Ltd

E53/1905

Pending

Matilda Operations Pty Ltd

E53/1952

Pending

Kimba Resources Pty Ltd

M53/121

Live

Kimba Resources Pty Ltd

M53/122

Live

Kimba Resources Pty Ltd

M53/123

Live

Kimba Resources Pty Ltd

M53/147

Live

Kimba Resources Pty Ltd

M53/253

Live

Kimba Resources Pty Ltd

M53/796

Live

Kimba Resources Pty Ltd

M53/797

Live

Kimba Resources Pty Ltd

M53/798

Live

Kimba Resources Pty Ltd

M53/910

Live

Kimba Resources Pty Ltd

P53/1642

Live

Kimba Resources Pty Ltd

P53/1646

Live

Kimba Resources Pty Ltd

P53/1666

Live

Matilda Operations Pty Ltd

P53/1667

Live

Matilda Operations Pty Ltd

P53/1668

Live

Matilda Operations Pty Ltd

ENVIRONMENTAL

Salt Lake Potash has engaged Pendragon Environmental Solutions (Pendragon) and a number of specialist ecological consultants to provide assistance with the necessary approvals for the Lake Way Project.

The Company has identified the key environmental risks for Lake Way Project and has commenced and completed its own studies to obtain the necessary information for the Company to complete environmental impact assessment/referral documentation as required under the Environmental Protection Act 1986 (EPA Act). In addition to the studies commissioned by the Company, the arrangement Salt Lake Potash has established with Blackham Resources has afforded the Company access to an extensive range of environmental studies completed by Blackham Resources across the Lake Way region. Refer Table 11 below for a summary of the key relevant studies completed by the Company and Blackham Resources to date.

The early environmental study information available, has greatly improved the Company’s understanding of the local and regional environment. This has allowed the Company to optimise and de-risk the development to minimise environmental impacts and constraints.

Table 11: Surveys Completed

Report Title

Area

Date

Study Description

Flora and Vegetation Assessment Lake Way Demonstration Plant Project

Lake Way and Surrounds

2019

Level 1 and Field Survey

Demonstration Plant Flood study

Lake Way

2019

Flood study

Lake Way Acid Sulphate Soil investigation

Lake Way

2019

Acid Sulphate investigation

Lake Way Fauna assessment of proposed project area

Lake Way and Surrounds

2019

Level 1 and Field Survey

Fauna Survey

Lake Way and Surrounds

2019

Targeted Night Parrot Survey

Lake Way Potash Project Subterranean Fauna Baseline Survey

Lake Way and Surrounds

2017

Level 1 Baseline survey

Detailed Flora and Vegetation Survey Lake Way Potash Project

West of Lake Way

2017

Level 1

Lake Way Potash Project Wetland Ecology Baseline Survey

Lake Way and Surrounds

2017

Level 1 Base line Survey

Fauna Survey Lake Way Potash

Lake Way and Surrounds

2017

Level 2

Fauna Assessment Lake Way Project Area

Lake Way and Surrounds

2016

Level 1

Flora & Vegetation Survey Lake Way

Lake and Surrounds

2015

Level 1

Matilda Gold Project Murchison Western Australia

Williamson Pit, Matilda Operations and Wiluna

2015

Level 1 Biological Survey

Matilda Gold Project Murchison Western Australia

Williamson Pit, Matilda Operations and Wiluna

2015

Field survey for Landscape Function Analysis Survey

Biological Assessment of Lake Way 2009

Lake Way and Surrounds and E53/1897

2010

Field Investigation of Lake Way discharge environment

NATIVE TITLE AND HERITAGE

The Lake Way Project is located in the Wiluna Peoples’ native title determination area (WCD2013/004). The Determination first took effect 23 January 2015, covering an area of approximately 40,665 km2. The determination area includes a number of pastoral leases, parts of the township of Wiluna, parts of the Canning Stock Route, areas of unallocated Crown Land and the Lake Way Project area.

Tarlka Matuwa Piarku Aboriginal Corporation RNTBC (TMPAC) manage the Wiluna Peoples native title rights over their determined area.

In December 2018, the Company signed a Native Title Land Access and Brine Minerals Exploration Agreement (the Agreement) with TMPAC, on behalf of the Wiluna People, covering the Lake Way Project area and providing consent to the grant of its exploration licences and for the area required for the construction and operation of the first phase of Evaporation Ponds.

The Company is continuing extensive consultation with TMPAC to achieve a Native Title Mining Agreement to provide consent to the grant of its mining lease and for the ongoing mining operation. The Native Title Mining Agreement negotiations are advanced and the Native Title Mining Agreement is expected to be finalised and signed in the near future.

The Aboriginal Cultural Material Committee (ACMC) is of the view that Lake Way is an Aboriginal Site for the purposes for the Aboriginal Heritage Act 1972. The Company’s full and ongoing consultation with TMPAC, will enable the Project to take into consideration TMPAC’s heritage requirements. The Company has, with the support of TMPAC, established a framework for obtaining consents under the Aboriginal Heritage Act 1972 necessary to ensure continuity of works on the Lake.

ECONOMICS

Operating Costs

Operating costs have been estimated for the Lake Way Project based on the production rate of 200,000tpa to an accuracy of ±30%.

The estimated cash operating costs were built up by creating cost schedules for the following categories:

Table 12: Operating Costs

Area

Cost per tonne ($A)

Labour

 $    49

Power

 $    33

Maintenance

 $    17

Reagents

 $      3

Consumables

 $    37

Miscellaneous

 $    27

General and Administration

 $    18

Total (Operating Costs per tonne) Mine Gate

 $  184

Transportation

 $    80

Total (Operating Costs per tonne)

 $  264

The total operating cash cost estimate of $264/t places the Lake Way Project as the lowest cost producer globally for SOP projects.

Capital Costs

Salt Lake Potash estimates the total capital cost to construct the brine extraction, evaporation and process plant and associated infrastructure to produce 200,000tpa SOP at $237 million.

Table 13: Capital Costs

Area

$Am

Brine Extraction

22

Evaporation

36

Process Plant

75

Plant Infrastructure

20

Area Infrastructure

12

Regional Infrastructure

1

Miscellaneous

11

Total Direct

177

Temporary Facilities

7

EPCM

21

Total Indirect

28

Total Bare

205

Growth Allowance

32

Total Initial Capital

237

Royalties, Taxes, Depreciation, and Depletion

The Scoping Study project economics include the following key parameters related to royalties, tax, depreciation, and depletion allowances:

·    State Government Royalties are 2.5% of Gross Revenue

·    Other Royalties up to 4.9% of Gross Revenue

·    Tax rate of 30% is applied

·    Depreciation is assumed on a diminishing basis over the life of the assets

Financial Modelling

An economic model has been prepared which reflects the proposed mine life for the Lake Way Project of 20 years. The Scoping Study assumes first production to occur in Q4 2020 with a gradual ramp up to full name plate capacity of 200,000tpa over the year 2021. This assumes completion of the BFS in Q3 2019 and a development timeframe of 12-15 months subject to availability of funding and in accordance with required approvals.

Financial modelling of the Lake Way Project highlights exceptional economic returns with a post tax NPV8 of $381m (pre-tax NPV8A$580m) and a post tax IRR of 27% (pre-tax IRR of 33%). Table 2 provides a summary of production and cost figures for the Lake Way Project.

Payback Period

Payback period for the initial development capital for the Lake Way Project is 3.2 years. The payback period is based on free-cash flow, after taxes.

Sensitivity Analysis

The Scoping Study was prepared at a ±30% accuracy to investigate the technical and economic parameters of a SOP production operation at Lake Way.

The Company has modelled numerous scenarios during the study process to evaluate the impact of key inputs to the Lake Way Project economics. The modelling has highlighted the robustness of the project with the findings detailed in Table 14 and 15 below.

Table 14: Scenario Analysis – NPV

Sensitivities (NPV)

-20%

-15%

-10%

-5%

Base

5%

10%

15%

20%

Price

197

243

289

335

381

427

473

519

565

FX

611

543

483

430

381

338

298

261

228

Operating Costs

449

432

415

398

381

364

347

331

314

Capital Costs

420

410

401

391

381

372

362

352

343

Table 15: Scenario Analysis – IRR

Sensitivities (IRR)

-20%

-15%

-10%

-5%

Base

5%

10%

15%

20%

Price

19%

21%

23%

25%

27%

29%

31%

32%

34%

FX

36%

33%

31%

29%

27%

25%

23%

22%

20%

Operating Costs

30%

29%

28%

28%

27%

26%

25%

25%

24%

Capital Costs

33%

31%

30%

28%

27%

26%

25%

24%

23%

NEXT STEPS

On the back of the outstanding results from the Scoping Study, the Company has commenced a Bankable Feasibility Study (BFS). Due to the advanced nature of the Scoping Study the Company expects to deliver the BFS within Q3 2019.

Salt Lake Potash is in advanced discussions with a debt provider for a debt funding package which will support funding for the Lake Way Project.

In parallel with work being undertaken on the BFS and utilising experience gained from the construction of the initial Evaporation Ponds, the Company is moving into a Front End Engineering Design (FEED).

For further information please visit www.so4.com.au or contact:

 

Tony Swiericzuk / Clint McGhie

Salt Lake Potash Limited

Tel: +61 8 6559 5800

Jo Battershill

Salt Lake Potash Limited

Tel: +44 7540 366000

Colin Aaronson / Richard Tonthat / Ben Roberts

Grant Thornton UK LLP (Nominated Adviser)

Tel: +44 (0) 20 7383 5100

Derrick Lee / Beth McKiernan

Cenkos Securities plc (Joint Broker)

Tel: +44 (0) 131 220 6939

Rupert Fane / Ingo Hofmaier / Ernest Bell

Hannam & Partners (Joint Broker)

Tel: +44 (0) 20 7907 8500

 

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Forward Looking Statements

This announcement may include forward-looking statements. These forward-looking statements are based on Salt Lake Potash’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Salt Lake Potash, which could cause actual results to differ materially from such statements. Salt Lake Potash makes no undertaking to subsequently update or revise the forward-looking statements made in this announcement, to reflect the circumstances or events after the date of that announcement.

 

Competent Persons Statement

The information in this Announcement that relates to Mineral Resources is extracted from the report entitled ‘Significant High-Grade SOP Resource Delineated at Lake Way’ dated 18 March 2019. This announcement is available to view on www.so4.com.au. The information in the original ASX Announcement that related to Mineral Resources was based on, and fairly represents, information compiled by Mr Ben Jeuken, who is a member Australasian Institute of Mining and Metallurgy (AusIMM) and a member of the International Association of Hydrogeologists. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company. Mr Jeuken has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Salt Lake Potash Limited confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. Salt Lake Potash Limited confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.

The information in this announcement that relates to Process Testwork Results is extracted from the report entitled ‘Field Trials at Lake Way Confirm Salt Production Process’ dated 29 January 2019. This announcement is available to view on www.so4.com.au. The information in the original ASX Announcement that related to Process Testwork Results was based on, and fairly represents, information compiled by Mr Bryn Jones, BAppSc (Chem), MEng (Mining) who is a Fellow of the AusIMM. Mr Jones is a Director of Salt Lake Potash Limited. Mr Jones has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Salt Lake Potash Limited confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. Salt Lake Potash Limited confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.

The information in this report that relates to the Process Plant, Non-Process Infrastructure and Capital and Operating Costs are based on information compiled by Mr Peter Nofal, who is a fellow of AusIMM. Mr Nofal is employed by Wood, an independent consulting company. Mr Nofal has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Nofal consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

 

SUMMARY OF MODIFYING FACTORS AND MATERIAL ASSUMPTIONS

The Modifying Factors included in the JORC Code have been assessed as part of the Scoping Study, including mining (brine extraction), processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and government factors. The Company has received advice from appropriate experts when assessing each Modifying Factor.

A summary assessment of each relevant Modifying Factor is provided below.

Mining (Brine Extraction) – refer to sections entitled ‘Project Geology and Mineral Resource’ and ‘Mining and Production Target’ in the Announcement.

Salt Lake Potash has conducted extensive exploration programs across Lake Way involving numerous evaluation methods.

To evaluate the lake bed sediments, sampling and data collation for the exploration field programme comprised extended pumping trials at 5 trenches across the lake for hydraulic parameter determination of drainable porosity and hydraulic conductivity (permeability). Separately, 49 test pits were developed and evaluated to assess variations in geology, brine grade and hydraulic parameters (determined from recovery testing and laboratory testing of in situ samples) across the Lake and 13 auger holes were developed to assess the deeper layers of the lake bed sediments validating the variations in geology and hydraulic parameters.

Salt Lake Potash undertook work in relation to the paleochannel which comprised a volumetric calculation from the geophysics and aquifer parameters and brine grade from the test pumping.

The Company engaged an independent hydrogeological consultant with substantial salt lake brine expertise, Groundwater Science Pty Ltd, to complete the Mineral Resource Estimate for the Lake Way Project. The Principal Hydrogeologist of Groundwater Science, Mr Jeuken, has over 10 years of experience in groundwater resources assessment and management for mining. He has experience in salt lake brine potash evaluation, aquifer testing, wellfield planning and installation for mining, and the development of conceptual hydrogeological models.

Refer to ASX Announcement dated 18 March 2019 for further details on the Mineral Resource Estimate upon which the production target is based.

The hydrological model was produced by the Company in consultation with independent experts. The two methods of extraction outlined in the Announcement are common practice for brine extraction. These extraction methods are used by the three main current operations which include Great Salt Lake in the US, Lop Nur Salt Lake (Luobupo) and SQM in Chile.

Recharge is a key element of the mining strategy, as it refills the drainable porosity and activates salts contained within the retained porosity by physical diffusion. Direct rainfall recharge has been estimated from water level fluctuations due to rainfall and specific yield (Groundwater Science, 2017). Evaporation from water ponded in the Lake was set to 0.7 x (pan evaporation).

Recharge calculations used in the abstraction model were based on historic (1971 – 1990) precipitation at Wiluna and estimated surface inflows (Groundwater Science, 2018) into the lake for a 20-year production period.

Importantly, over the life of mine, 96% of the total production target is in the Measured and Indicated resource categories:

·    Lake Bed Sediment (84% of the total production target)

o  80% Measured resource category

o  4% Inferred resources category

·    Paleochannel Basel Sands

o  16% Indicated resource category

The Inferred resource included in the total production target is located at the southern end of Lake Way and is expected to be the last of the brine extraction system constructed. Whilst the Company has a reasonable expectation that this portion of the Inferred Mineral Resource will be capable of resource category upgrade, it does not feature as a significant portion of production either during the payback period or during the life of mine.

Processing (including Metallurgical) – refer to sections entitled ‘Brine Evaporation’ and ‘Process Plant’ in the Announcement.

The Company engaged brine-processing experts Carlos Perucca Processing Consulting Ltd (CPPC) and AD Infinitum Ltd (AD Infinitum) and their principals Mr Perucca and Mr Bravo, who are highly regarded international experts in the potash industry. Mr Bravo previously worked as Process Manager Engineer at SQM, the third largest salt lake SOP producer globally. He specialises in the front end of brine processing from feed brine through to the crystallisation of harvest salts. Mr Perucca has over 25 years of experience in mineral process engineering and will provide high-level expertise with respect to plant operations for the processing of harvest salts through to final SOP product. AD Infinitum and CPPC were responsible for the brine evaporation and salt processing components in the Scoping Study.

Lake Way’s process development relied heavily on experience applied by Wood, SRC and specialist consultants (CPPC and Ad Infinitum) who are well experienced from working on similar operations. Production of SOP from lake brines is well understood and a well-established process.

Salt Lake Potash has conducted extensive testing of lake brines and harvest salts from its salt lake projects, predominantly Lake Way and Lake Wells. The testing conducted to date supports that lake brine can be concentrated economically, via solar evaporation, to produce mixed potassium sulphate double salts. It has also been shown that these salts, when harvested, can be economically converted into a valuable, high purity SOP fertiliser product.

In early 2018, modelling of the Lake Way evaporation pathway was completed by solar evaporation experts, Ad-Infinitum. The modelling revealed that the salts produced by solar evaporation were suitable for processing into SOP. The potassium harvest salts were predicted to include leonite (K2SO4·MgSO4·4H2O), schoenite (K2SO4·MgSO4·6H2O) and kainite (KCl·MgSO4·2.75H2O), which are all amenable to the conversion to SOP via the process developed for Lake Wells.

In March 2018, laboratory scale (wind tunnel) evaporation tests were initiated on brine from both the Williamson Pit and Lake Way brine. These tests were compared to the brine evaporation chemistry predicted by Ad-Infinitum showing an excellent correlation to the model. The tests also confirmed the Williamson Pit brine to be a pre-concentrated form of Lake Way brine with similar evaporation brine chemistry.

In April 2018, field evaporation tests were initiated at Lake Way as part of the Lake Way Site Evaporation Trials. These tests consisted of small batch tests designed to duplicate wind tunnel tests at site conditions, and larger batch tests including a specific evaporation rate trial to validate the Ad-Infinitum evaporation modelling.

Three small batch tests were completed in December 2018 using Lake Way playa brine and Williamson pit brine (INT-LY, INT-WP and INT-WP2). Each batch began with a single fill of brine and was subject to evaporation until the brine was exhausted of economic levels of potassium. The volume of brine was moved into progressively smaller ponds throughout the trial and the residual salts were harvested. The harvest salts were homogenised and sampled for analysis and characterisation.

A number of larger batch evaporation tests using larger evaporation ponds were conducted in parallel, and further batch evaporation testing has been continued throughout 2019.

These large batches began with over 100 tonnes of Lake Way playa brine and were operated in a similar manner to the smaller trials. Over 5 tonnes have been harvested from these batch trials. Throughout the trial, brine concentration was monitored and a portion was removed at various concentrations for use in an evaporation rate trial, consisting of multiple class “A” evaporation pans of varying brine concentrations.

The nearby weather station at Wiluna Airport, operated and maintained by the Bureau of Meteorology, provides meteorological conditions to correlate brine evaporation performance for the test work.

Harvest salts from laboratory evaporation tests have been sent to Saskatchewan Research Council (SRC) in Canada to perform a flowsheet testing program for the Lake Way Project. The program’s objective was to verify the suitability of the previous process flowsheet conditions developed for the Lake Wells project. The testing program involved:

·    Mineralogical characterisation

·    Conversion of mixed harvest salts to schoenite

·    Reverse flotation of halite from converted salts

·    Crystallisation tests to produce high purity SOP.

It was found that the type of potassium salts present in the Lake Way harvests were similar to Lake Wells (Kainite, Leonite and Schoenite) albeit in different ratios and therefore the process flowsheet remains very similar to Lake Wells. It was also found that potassium was present in both fine and coarse size fractions in the laboratory produced harvest salt sample, therefore finer crushing was required to achieve similar flotation results to Lake Wells. On-going tests are being undertaken on the site generated harvest salt to confirm mineralogy, size fraction and hence crushing size.

The program demonstrated that Lake Way harvest salt can be successfully converted to SOP using the identified process flowsheet, including; attritioning, crushing, conversion, flotation and crystallisation to produce an SOP product of very good chemical quality (>52% K2O equivalent).

Infrastructure – refer to sections entitled ‘Major Infrastructure’ and ‘Product Transport and Logistics’ in the Announcement.

Lake Way’s proximity to the West Australian goldfields means relatively minor area infrastructure upgrades and modifications are required.

The Scoping Study was managed by Wood. Wood is a recognised global leader in potash projects with capabilities extending to detailed engineering, procurement and construction management. Wood are able to leverage an international network, including access to its Centre of Potash Excellence located in Saskatoon, Canada.

Salt Lake Potash engaged several highly qualified transport logistic companies to assist with defining the optimal logistics solution for transportation of SOP to port facilities. The transport cost estimates have been derived directly from transport providers who have extensive knowledge of the Western Australian logistics market.

Marketing – refer to section entitled ‘Product Quality and Marketing’ in the Announcement.

Independent potash market forecasts and assessments were provided by experts CRU International and Argus Media.

These reports emphasised that the specifications proposed by Salt Lake Potash of a K2O content of >52% and Chloride content of <0.1% placed the product into the premium range. The reports confirmed that it would be feasible for Salt Lake Potash to monetise the high level of K2O content in its product relative to the more commonly traded specifications of 50-51% K2O. There is also a market for premium pricing for low chloride content where the chloride content can consistently be produced at levels below 0.5%.

The Company has previously entered MOUs with Mitsubishi Australia Limited and Sinofert Holdings Limited setting out the basis for binding offtake agreements. The Company continues to progress discussions with these parties and others with a view to signing binding offtake and marketing agreements for the future sale of its product.

Economic – refer to sections entitled ‘Economics’ in the Announcement.

Capital Estimates have been prepared by Salt Lake Potash and Wood, a global expert in engineering, using a combination of cost estimates from suppliers, historical data, reference to recent comparable projects, and benchmarked construction costs for Western Australia. Costs are presented in real 2019 terms and are exclusive of escalation. The overall accuracy is deemed to be ± 30%.

Capital costs include the cost of all services, direct costs, contractor indirects, EPCM expenses, non-process infrastructure, area infrastructure, sustaining capital and other facilities used for the operation of the Mine and Process Plant.

Operating costs have been estimated by Salt Lake Potash and Wood. Operating costs are based on a combination of first principles build-up, direct supplier quotes, and experience on similar projects with unit rates benchmarked to costs attributable to Western Australia.

Labour costs have been developed based on a first-principles build-up of staffing requirements with labour rates from bench marks for the Western Australian region.

Government royalties have been assumed at a 2.5% FOB gross revenue basis for the life of the project. Private royalties associated with Blackham Resources and Native Title are up to 4.9% gross revenue depending on the level of brine derived from Blackham Resources tenure.

Royalties account for an average life of mine cost of A$20/t per annum.

Rehabilitation and mine closure costs are included within the discounted cash flow modelling based on 10% of initial development capital and incurred at the end of mine life.

A detailed financial model and discounted cash flow (DCF) analysis has been prepared in order to demonstrate the economic viability of the Project. The DCF analysis demonstrated compelling economics of the Lake Way Project, with an NPV (ungeared, after-tax, at an 8% discount rate) of A$382 million, assuming a LOM Sulphate of Potash price of US$550/t and an (ungeared) IRR of 27%.

The Scoping Study assumes first production to occur in Q4 2020 with a gradual ramp up to full name plate capacity of 200,000tpa over the year 2021. This assumes completion of the BFS in Q3 2019 and a development timeframe of 12-15 months subject to availability of funding and in accordance with required approvals.

Sensitivity analysis was performed on all key assumptions used including price operating and capital costs and exchange rate. The sensitivity analysis highlighted the robustness of the project with the breakeven pricing calculated at US$323/t being a greater than 40% discount to central pricing assumptions.

Payback period for the Lake Way Project is 3.2 years. The payback period is based on free-cash flow, after taxes.

Salt Lake Potash is confident in being able to secure the required funding to develop the Lake Way Project.  The Company is in advanced discussions with a debt provider for a debt funding package which will support funding for the Lake Way Project. This is also supported by the recent capital raising of A$20.25m (ASX announcement 6 June 2019).

Environmental – refer to section entitled ‘Environmental’ in the Announcement.

An opportunities and constraints assessment was completed for the Project by Pendragon Environmental, a leading Western Australian environmental management consultancy. Based on the Project’s stage of development, Pendragon Environmental confirmed there are no current impediments on the Project.

To date, Salt Lake Potash has only undertaken preliminary desktop studies for the purposes of identifying potential environmental opportunities and constraints. Extensive data is available across the Scoping Project area from work undertaken historically by Blackham Resources. The further development of the Project may require additional detailed flora, fauna and other studies; this is dependent on the final design criteria.

Social, Legal and Governmental – refer to sections entitled ‘Mining Tenure’ and ‘Native Title and Heritage’ in the Announcement.

The Company has taken legal advice in relation to relevant Modifying Factors.

Material Assumptions

Project Start Date

Q4 2020

 

Cost and Pricing Basis

2019 Dollars

 

Currency

Australian Dollars (unless otherwise stated)

 

Cost Escalation

0%

 

Revenue Escalation

0%

 

Scoping Study Accuracy

±30%

 

Capex Growth and Allowance

13%

 

Mining & Processing

Mineral Resource (Drainable Porosity)

8.2Mt

 

Portion of Production Target – Measured

80%

 

Portion of Production Target – Indicated

16%

 

Portion of Production Target – Inferred

4%

 

Trenches (production and transport) – average depth 5m

130km

 

Bores – average depth 120m

14

 

Bore Production rate

8.4L/s/bore

 

Trench yield rate (flow) – minimum

4L/s/km

 

Trench yield rate (flow) – maximum

8L/s/km

 

Brine Chemistry (average Lake Brine SOP grade)

15.2Kg/m3

 

Annual Production (steady state)

200ktpa

 

Life of mine

20 Years

 

Pond Recovery

78%

 

Plant Recovery

80%

 

Pricing

Sulphate of Potash (FOB)

US$550/t

 

Operating Costs

   

Brine Extraction

A$23/t

 

Brine Evaporation & Harvesting

A$23/t

 

Process Plant

A$104/t

 

Plant Infrastructure

A$4/t

 

Area Infrastructure

A$7/t

 

General & Administration

A$22/t

 

Transportation

A$80/t

 

Capital

   

Brine Extraction

A$22 million

 

Evaporation

A$36 million

 

Process Plant

A$75 million

 

Plant Infrastructure

A$20 million

 

Area Infrastructure

A$12 million

 

Regional Infrastructure

A$1 million

 

Miscellaneous

A$11 million

 

Indirect Costs & Growth

A$60 million

 

Other

   

Royalties

Govt – 2.5%

Other – 4.9%

 

Corporate tax rate

30%

 

Discount rate

8%

 

 

LocoSoco’s Alex Mark talks to The Oblique Life pages podcast

LocoSoco’s CMO Alex Mark joins a discussion themed on  Mother Nature featuring Justin Lennon, a marine biologist and entrepreneur of company Conservation Guide, and Julia Koskella who works at SYSTEMIQ, a company that helps global corporations, NGOs and policy-makers to solve today’s sustainability challenges. Alex talks about our plans for refill models and enabling the values of sustainability to work economically.

ECR Minerals #ECR – Progress Update – Gold Nugget Test Programme Creswick Gold Project – Australia

ECR Minerals plc (LON:ECR), the precious metals exploration and development company, is pleased to provide an update in respect of the Company’s follow on gold nugget test programme at the Company’s Creswick Project in Victoria, Australia. The test programme has been designed by ECR, in conjunction with its advisers.

Readers are also advised to review the Company’s previous announcement dated 8 May 2019 which outlined the presence of a nuggetty gold system at Creswick, and this may be viewed through the following link:

https://polaris.brighterir.com/public/ecr_minerals_plc/news/rns/story/wk5e8vw

Highlights:

  • ECR’s technical team, in conjunction with advice from tendering laboratories, have devised a structured approach to systematically test zones in and around the 640 sample bags (each close to 30 kg) containing quartz collected from the recent reverse circulation drilling campaign at the Creswick Gold Project;
  • An initial trial selection process will utilise a metal detector to prioritise bags with a metallic signal. This is anticipated to expedite the sample selection from the large number of bags to send for full testing;
  • Metal detecting is now underway and a number of bags have tested positive for metal content and have been removed from site for “whole-of-bag” testing. A testing process is being finalised with a preferred laboratory;
  • Full laboratory analysis will require multiple steps including sieving, detecting, gold particle analysis, gravity concentration and assaying to determine the size distribution and grade of the coarse and fine gold within the sample;
  • ECR will communicate the results of the testing process within an initial update expected in the near term and further interim updates as the whole of bag testing process continues.

Craig Brown, Chief Executive Officer commented: “I am extremely pleased with the professionalism of the Company’s technical team in devising the structured approach to bag testing that has been developed. Creswick is a unique project and the assessment of in-situ gold mineralisation requires bespoke project management and technical application.

I am delighted that our first metal detecting of bags has already highlighted metal content, which we expect is reflective of nugget gold mineralisation as samples from depth are unlikely to contain other detectable metals.

Our internal modelling suggests the Dimocks Main Shale is large enough to potentially host a multi-million ounce gold deposit at Creswick and therefore ECR are allocating resources to this project in a prioritised manner whilst continuing to develop our other Australian gold projects in parallel.”

Background:

Within its previous exploration work and as announced by the Company on 8 May 2019 ECR hypothesised an extreme nuggetty distribution of gold based on observations and results, including capturing a small 0.27 g nugget in gravity tests conducted on a single sample bag. This means that gold is not evenly distributed in bags of drilling samples.

The Company previously assayed 2 kg samples from a 30 kg bag which is industry practice but too small a sample for extreme nuggetty distribution. There was a significant likelihood that coarse gold could be excluded from the sample.

This meant that assays samples could be understated for gold and this was demonstrated in one bag test where the assay from a 2 kg sample reported gold of 1.88g/t whereas the 30kg whole of bag sample test showed the bag actually contained a substantially higher 11.8g/t. Alternatively, a single assayed nugget will overstate the average from a 2 kg sample.

Based on the size of the previously recovered 0.27 g nugget, an ideal sample size could be approximately 5,000 kg. A 30 kg bag is 0.6% of this size and not large enough to be considered a representative sample, but a fifteen-fold improvement on 2 kg samples. There remains a high chance the full bag tests will not capture the nuggets. However, the greater number of full bag tests will increase the likelihood of including nuggets.

“Whole-of-bag” testing methodology

Following discussions with its technical team ECR concluded it should move into a process of “whole-of-bag” testing to determine the full extent of the gold within the reverse circulation samples. This is a sizeable exercise. Of the 1687 m drilled, 640 bags of close to 30 kg each contain quartz and these bags plus the surrounding bags will be tested.

In order to achieve the above objectives the Company’s technical team, in association with external consultants including laboratories capable of undertaking the whole of bag sample work, have considered numerous approaches to the testing process. This involved visits by ECR to the laboratories and consideration of various testing pathways and associated record keeping and process validation.

Analysis will test the primary hypothesis that gold is coarse but a program is being designed to additionally check for fine gold within the bags to assess the size distribution of the particles.

After due consideration of all factors and a range of practical tests, the Company is finalising a testing procedure at a suitable laboratory which is likely to follow the steps below:

1. Initial metal detector scanning of bags to prioritise bags to send to the lab for full testing. The Company considers that nuggets large enough to significantly impact the nugget effect will be able to be located with a metal detector. This will save the company the cost of testing all bags. A series of bags with no signal will be collected for analysis of the finer gold fraction, especially if the main set of bags show a significant fine gold component;

2. Secure transfer of bags testing positive for metal content to the laboratory for whole of bag testing;

3. Under laboratory conditions sensitive metal detector scanning of the coarse sieved (>0.85 mm) fraction of the bags is undertaken and the source of the signal removed, examined, logged, photographed and weighed. The entire coarse sample will then be assayed to calculate the total coarse gold from the bag;

4. The fine sieved fraction (<0.85 mm) will be gravity concentrated and this concentrate plus all of tails assayed for gravity recoverable and total gold. Following this step, all of the contents of the original bag would have been assayed;

5. The total gold content for each size fraction of each whole tested bag is calculated.

Initial findings from first batch of bags tested

After establishing the above testing protocol, the Company’s technical team have commenced initial metal detection of the bags as outlined by step one above

During the first phase of metal detection work a number of bags have generated a positive signal from the metal detector. These bags have been secured for transport to the laboratory for whole of bag testing under laboratory conditions.

Further metal detection tests are continuing and additional bags testing positive for metal will be securely transferred to the laboratory for whole of bag examination.

Whilst it is not certain that the tested bags contain gold, or as to what grade of mineralisation exists, and whether this is elevated grade against previous bag assay samples, the Company’s technical team consider the number of bags responding to date is very positive and the Company looks forward to receiving the “whole-of-bag” gold data from the early bags selected for laboratory analysis.

COMPETENT PERSON STATEMENT

The information in this announcement that relates to Exploration Results is based on information compiled by Dr Rodney Boucher of Linex Pty Ltd. Linex Pty Ltd provides geological services to Mercator Gold Australia Pty Ltd, including the services of Dr Boucher, who has a PhD in geology, is a Member and RPGeo of the Australian Institute of Geoscientists and is a Member of the Australasian Institute of Mining and Metallurgy. Dr Boucher has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Boucher consents to the inclusion in the announcement of the material based on his information in the form and context in which it appears.

MARKET ABUSE REGULATIONS (EU) No. 596/2014

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR). Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information is now considered to be in the public domain.

FOR FURTHER INFORMATION, PLEASE CONTACT:

ECR Minerals plc Tel: +44 (0)20 7929 1010
David Tang, Non-Executive Chairman
Craig Brown, Director & CEO
Email:

info@ecrminerals.com

Website: www.ecrminerals.com
WH Ireland Ltd Tel: +44 (0)161 832 2174
Nominated Adviser
Katy Mitchell/James Sinclair-Ford
SI Capital Ltd Tel: +44 (0)1483 413500
Broker
Nick Emerson

ABOUT ECR MINERALS PLC

ECR is a mineral exploration and development company. ECR’s wholly owned Australian subsidiary Mercator Gold Australia Pty Limited has 100% ownership of the Avoca, Bailieston, Creswick, Moormbool and Timor gold exploration licences in central Victoria, Australia and the Windidda Gold Project in the Yilgarn Region, Western Australia.

ECR has earned a 25% interest in the Danglay epithermal gold project, an advanced exploration project located in a prolific gold and copper mining district in the north of the Philippines. An NI43-101 technical report was completed in respect of the Danglay project in December 2015 and is available for download from ECR’s website.

ECR’s wholly owned Argentine subsidiary Ochre Mining has 100% ownership of the SLM gold project in La Rioja, Argentina. Exploration at SLM has focused on identifying small tonnage mesothermal gold deposits which may be suitable for relatively near-term production.

Cadence Minerals #KDNC – Yangibana Rare Earth Joint Venture Partner signs Second Offtake MOU Agreement with Schaeffler AG

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to announce Hastings Technology Metals (ASX:HAS) (“Hastings”), Cadence’s joint venture partner at the Yangibana Rare Earth Project in the Gascoyne region of Western Australia (“Yangibana Project”), has signed a Second Offtake MOU Agreement with Schaeffler AG (“Schaeffler”).

Cadence owns 30% of the Yangibana North., Gossan, Hook, Kanes Gossan, Lions Ear and Bald Hill North Rare Earth Deposit which form part of the Yangibana Rare Earth Deposit. Probable Ore Reserves of some 2.1 million tonnes at 1.66% total rare earth elements are contained within 30% owned joint venture tenements. Further details of these reserves and pre-feasibility study can be found at: http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=2688632.

Hastings Announcement Highlights:

  • Hastings announces its second German offtake MOU and investment with Schaeffler for the future supply of Mixed Rare Earth Carbonate (MREC) from the Yangibana Project.
  • Schaeffler supported Hastings in its eligibility for the Euler Hermes German Government UFK loan scheme.

Schaeffler is a global automotive and industrial supplier of high-precision components and systems in engine, transmission, and chassis applications, as well as rolling and plain bearing solutions for a large number of industrial applications, primarily focussed on the automotive industry.  In 2018 it generated sales of approximately Euro 14.2 billion with around 92,500 employees, Schaeffler is one of the world’s largest family companies and, with approximately 170 locations in over 50 countries, has a worldwide network of manufacturing locations, research and development facilities, and sales offices.

Under the MOU, the parties have outlined their intent to enter into a binding commercial offtake agreement within the next 6 months for the sale and purchase of MREC, which will be produced from Yangibana, Western Australia. The framework for the commercial offtake agreement is set out in the MOU, and the final terms and conditions will be formalised in a contract. Schaeffler’s intention in entering into an offtake agreement is to ensure reliable supplies of rare earth material in the future.

The Parties have undertaken to negotiate in good faith to reach agreement for a 10 year commercial offtake contract to supply MREC which contains the critical raw materials of neodymium (Nd) and praseodymium (Pr).  NdPr is a critical raw material used in the manufacture of permanent magnets, the key component in electric motors.

Schaeffler is also supporting Hastings in its eligibility for the German government’s untied loan guarantee scheme (known as UFK) in its project financing for the construction of its mine and processing plant in the Upper Gascoyne of Western Australia.

The full release can be found at: https://www.asx.com.au/asxpdf/20190611/pdf/445qzvlt14cb9w.pdf

Cadence Minerals CEO Kiran Morzaria commented: “This second offtake agreement announced with Schaeffler provides further validation of the Yangibana Project potential and our joint venture strategy with Hastings Technology Metals. We look forward to further developments.”

– Ends –

 

For further information:

Cadence Minerals plc +44 (0) 207 440 0647
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker) +44 (0) 207 220 1666
James Joyce
James Sinclair-Ford
Novum Securities Limited (Joint Broker) +44 (0) 207 399 9400
Jon Belliss

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to beforward-lookingstatements. Forward-lookingstatements are identified by their use of terms and phrases such as ‘‘believe’’ ‘‘could’’ “should” ‘‘envisage’’ ‘‘estimate’’ ‘‘intend’’ ‘‘may’’ ‘‘plan’’ ‘‘will’’ or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward-lookingstatements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors. Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on keypersonnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions.The Company cannot assure investors that actual results will be consistent with such forward-lookingstatements.

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