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Tony Swiericzuk Chief Executive Officer of Salt Lake Potash (S04) talks about the results of their Scoping Study for their Lake Way Project on the Vox Podcast

Tony Swiericzuk Chief Executive Officer of Salt Lake Potash (S04) talks about the results of their Scoping Study for their Lake Way Sulphate of Potash Project in Western Australia.

Salt Lake Potash plans to build the most sustainable, most rewarding fertiliser project in the world by developing organic Sulphate of Potash (SOP) from the Goldfields Salt Lakes which are nine lakes totalling over 3,300km² of playa surface ideal for trench extractions in Western Australia.

(Interview starts at 26 minutes 55 seconds)

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.

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%

 

 

Salt Lake Potash (SO4) Strategic Placement to Fund Lake Way Development

This Announcement does not constitute a prospectus or offering memorandum or an offer in respect of any securities and is not intended to provide the basis for any investment decision in respect of Salt Lake Potash Limited or other evaluation of any securities of Salt Lake Potash Limited or any other entity and should not be considered as a recommendation that any investor should subscribe for or purchase any such securities.

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.

 

SALT LAKE POTASH LIMITED

STRATEGIC PLACEMENT OF A$20.25M TO FUND LAKE WAY CONSTRUCTION

 

Salt Lake Potash Limited (Salt Lake Potash or the Company) is pleased to announce that it has received binding commitments from investors for 37.5 million Salt Lake Potash ordinary shares of no par value (“Ordinary Shares”) at A$0.54 (29.8p) each to raise a total of A$20.25 million before costs (Placement).  The placement was led by a consortium of cornerstone investors, including the founders of LionOre Mining International (LionOre) as well as the key investors in Mantra Resources at its inception, who will collectively subscribe for 26.4 million shares to raise A$14.25 million. LionOre was bought by Norilsk Nickel for US$6.3 billion in 2007, whilst Mantra Resources was sold to Rosatom in 2010 for A$1.02 billion.

Salt Lake Potash is delighted to have attracted a consortium of highly experienced and successful natural resources investors at a pivotal time in the rapid development of its Lake Way Project. The Company expects to benefit from advice and collaboration with the consortium, including substantial management, global finance and project development expertise, as well as access to their commodities marketing networks.

The Company is also pleased that the largest shareholder, Lombard Odier Asset Management (Europe) Limited, has agreed to subscribe for 11.1 million shares to raise A$6.0 million, further confirming its continued support for Salt Lake Potash and the Lake Way Project.

Subject to Shareholder approval being obtained for the issue of the Options, subscribers in the Placement will also receive one unlisted option exercisable at A$0.85 on or before 30 June 2023 (Option) for every four shares subscribed for in the Placement.

The Placement will fund ongoing development 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.  

Related party transaction

The participation in the Placement by Lombard Odier, a substantial shareholder in the Company, constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The directors of Salt Lake Potash, having consulted the Company’s nominated adviser, Grant Thornton UK LLP, consider that the terms of the transaction are fair and reasonable insofar as the Company’s shareholders are concerned.

Settlement and dealings

Application will be made to the AIM Market of the London Stock Exchange (“AIM”) for 37.5 million Ordinary Shares, which rank pari passu with the Company’s existing issued Ordinary Shares, to be admitted to trading. Dealings on AIM are expected to commence at 8:00am on or around 14 June 2019 (“Admission”).

 

The Options will be issued following Shareholder approval being obtained at a general meeting of the Company, which is expected to be held in late July 2019.

Total Voting Rights

For the purposes of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules (“DTRs”), following Admission, Salt Lake will have 244,520,581 Ordinary Shares in issue with voting rights attached. Salt Lake holds no shares in treasury. This figure of 244,520,581 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.

The voluntary halt of trading of the Company’s shares on ASX was lifted prior to the opening of trade on 6 June 2019, following an announcement to the market regarding the above.

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

 

About Salt Lake Potash

Salt Lake Potash is the owner of nine large salt lakes in the Northern Goldfields Region of Western Australia. This outstanding portfolio of assets has a number of important, favourable characteristics:

·    Over 3,300km2 of playa surface, with in-situ clays suitable for low cost on-lake pond construction;

·    Very large paleochannel hosted brine aquifers, with chemistry amenable to evaporation of salts for SOP production, extractable from both low-cost trenches and deeper bores;

·    Excellent evaporation conditions;

·    Excellent access to transport, energy and other infrastructure in the Goldfields mining district;

·    Clear opportunity to reduce transport costs by developing lakes closer to infrastructure and by capturing economies of scale; and

·    Potential for multi-lake production offers optionality and significant scale potential, operational flexibility, cost advantages and risk mitigation from localised weather events.

Salt Lake Potash’s immediate focus is on the rapid development of the Lake Way Project. Lake Way’s location and logistical advantages make it the ideal location for the Company’s first SOP operation. Construction has commenced on Australia’s first commercial scale on-lake evaporation ponds.

The Company’s long-term plan is to develop an integrated SOP operation, producing from a number (or all) of the lakes.  Salt Lake Potash will progressively explore each of the lakes with a view to estimating resources for each Lake, and determining the development potential. Exploration of the lakes will be prioritised based on likely transport costs, scale, permitting pathway and brine chemistry.

 

Important Information

This announcement may include forward-looking statements. These forward-looking statements are based on Salt Lake Potash Limited’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 Limited, which could cause actual results to differ materially from such statements. Salt Lake Potash Limited 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.

 

Cenkos is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is acting as joint broker to the Company for the purposes of the AIM Rules for Companies. Cenkos is acting exclusively for the Company and no one else and will not be responsible to any other person for providing protections afforded to its customers nor for providing advice in relation to the contents of this announcement. No representation, warranty, express or implied, is made by Cenkos for the accuracy of any information or opinions contained in this announcement or the omission of any material information, nor has Cenkos authorised the contents of this announcement for any purpose and no liability whatsoever is accepted by it. Cenkos expressly disclaims all and any responsibility or liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

Salt Lake Potash Ltd (SO4) – Significant High-Grade SOP Resource Delineated at Lake Way

The version of this announcement including diagrams can be viewed at www.saltlakepotash.com.au/asx-announcements/

 

Highlights:

– Initial Mineral Resource Estimate for the whole of Lake Way contains 73 million tonnes of SOP, including:

  • Measured Resource – Lake Way Playa 6.9Mt @ 15.4kg/m3
  • Measured Resource – Williamson Pit 32Kt @ 25.5kg/m3
  • Indicated Resource – Paleochannel 3.7Mt @ 13.6kg/m3
  • Inferred Resource – Lake Way Playa & Paleovalley Sediment 62Mt @ 15.2kg/m3

– Lake Way confirmed as very high-grade with consistent brine chemistry both laterally and at depth, with an average grade of 14.5kg of SOP per cubic metre of brine across the Lake Way tenements (Measured and Indicated)

– The Company has successfully delineated a Paleochannel in excess of 30km in length along the eastern boundary of Lake Way, which supports the ability and optionality to produce brine from two separate sources (lake playa and paleochannel)

– Test pumping of historical bores at Lake Way has provided important data that supports efficient production by pumping from the paleochannel resource

– The Mineral Resource Estimate for the ‘whole of lake’ will enable the Company to finalise technical studies for a larger production scenario with an anticipated release date towards the end of Q2 2019

Salt Lake Potash Limited (the Company or Salt Lake Potash) (ASX/AIM:SO4) is pleased to advise of a significant extension of the Mineral Resource Estimate at Lake Way following completion of an exploration program across the ‘whole of the lake’. The estimated total Mineral Resource Estimate at Lake Way has increased to 73 million tonnes (Mt) of SOP calculated using Total Porosity and 8.2Mt of SOP calculated using Drainable Porosity. Thirdly, the model is now being further refined by establishing a site evaporation trial, where a scaled down version of an evaporation pond system is established on site and brine is evaporated under actual field conditions. Both brine chemistry and salt production are closely monitored.

Table 1: Resource Table

Classification

Bulk Volume

(Million m3)

Porosity (%)

Brine Volume

(Million m3)

Average SOP (K2SO4) Concentration (kg/m3)

SOP Tonnage – Total Porosity

(Mt)

SOP Tonnage – Drainable Porosity1

(Mt)

Measured (Lake)

1,060

43

456

15.4

6.9

1.8

Measured (Williamson Pit)

1.26

25.5

0.03

0.03

Indicated

(Paleochannel)

686

40

274

13.6

3.7

1.4

Inferred

10,216

40

4,096

15.2

62.2

5.0

Total

11,963

4,826

72.83

8.2

1.     An average Drainable Porosity ranging from 3-15% has been applied

 

Salt Lake Potash’s Chief Executive Officer, Mr Tony Swiericzuk said:

“It is extremely pleasing to present the Lake Way Mineral Resource Estimate for the ‘whole of lake” that confirms the significant size and very high-grade resource at Lake Way.

It reinforces our current review process to consider a larger scale scenario at Lake Way and we anticipate releasing the technical results of the larger scale scenario towards  the end of Q2 2019.”

Lake Way Project

Salt Lake Potash is focussed on the rapid development of the Lake Way Project, being a high grade salt-lake brine Sulphate of Potash (SOP) operation. Lake Way’s location and logistical advantages make it the ideal Lake for the Company’s first SOP operation.

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. The northern end of the Lake is largely covered by a number of Mining Leases, held by Blackham Resources Limited (Blackham), the owner of the Wiluna Gold Mine. The Company’s Memorandum of Understanding with Blackham (see ASX Announcement dated 12 March 2018) allows for an expedited path to development at Lake Way.

Introduction

The maiden Mineral Resource Estimate reported in July 2018 was limited to the area within the Blackham Tenement boundary. Subsequent to this, the Company has undertaken an extensive exploration program covering the remaining areas of Lake Way including the delineation of the Paleochannel which runs along the eastern boundary of the Lake Way Project. 

Salt Lake Potash has now finalised the exploration program that has supported a ‘whole of lake’ Mineral Resource Estimate, covering the playa surface and the Paleochannel aquifers of Lake Way.

The Mineral Resource Estimate for the ‘whole of lake’ will enable Salt Lake Potash to finalise technical studies for a larger production scenario with an anticipated release date towards the end of Q2 2019. 

Mineral Resource Estimate

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.  A small portion of the resource is contained in the Williamson  Pit Lake.

The Mineral Resource Estimate of 73Mt 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 below.  An overview of each resource classification is provided in the subsequent paragraphs.  Details of the estimation methodology are provided in the body of this report.

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.

Table 2: 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

0.42

445

6.8

0.11

117

1.8

Williamson Pit

1.26

11.4

14.7

48.0

1.26

0.03

Total

6.8

1.83

Table 3: Indicated 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)

Basal Sands

(Paleochannel)

686

6.1

8.2

25.0

0.40

274

3.7

15

103

1.4

Table 4: 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

0.42

133

2.0

0.11

35

0.5

Lakebed

(8m to Base)

9,900

6.8

8.0

27.6

0.40

3,960

60.0

0.03

297

4.5

Total

62.0

5.0

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

The northern section of Mineral Resource Estimate (including the Blackham tenements) has been classified into a Measured category for the upper 8m of lakebed sediments. The resources contained within the lakebed sediments below 8m, and the southern section of the lake at all depths, are all classified in the Inferred category. The Paleochannel running along the eastern boundary of the lake has been classified in the Indicated category.

The Company will continue the exploration program as it looks to increase the resource definition in the southern section of the lake and ultimately convert the Mineral Resource Estimate into Ore Reserves following further technical studies.

2018 Resource Estimate for Lake Way

In July 2018, the Company completed a scoping study for a 50,000tpa demonstration plant supported by an indicated resource for the 55.4km2 area of the Blackham tenements on Lake Way totaling 1.9Mt of SOP with an excellent brine chemistry of 15.49Kg/m3 K2SO4 and a measured resource from the Williamson pit of 32kt with a highly concentrated chemistry of 25.5Kg/m3 K2SO4.

The Resource was calculated on the shallow (6m average depth) Playa Lake Sediment only. This resource has now been extended to 8m depth and to include 87km2 of Salt Lake Potash’s tenement covering the open playa area of Lake Way and upgraded to measured.  The Williamson Pit resource remains unchanged.

Williamson Pit – Measured Resource Estimate

The Measured Resource dissolved in the Williamson Pit Lake Comprises 32Kt SOP dissolved in 1.26Mm3 brine at an average grade of 24.4kg/m3 SOP.

Lakebed Sediment (North) – Measured Resource Estimate

The Measured Resource is hosted in the Lake Bed Sediments in the northern part of the lake where data density is sufficient to support the Measured Resource classification.

The resource comprises 6.9Mt SOP hosted in the total porosity of the sediment which includes 1.8Mt SOP within the drainable porosity of the sediment. 

The resource is contained within the top 8m of sediment, which can reasonably be drained by pumping from trenches and occupies an area of 139.5km2 of the Lake Way playa surface.  Islands and a zone of dewatered sediment have been removed from the area used to calculate the resource.

Brine chemistry was defined by assay of brine samples taken from 9 hand dug pits, 13 Auger drillholes, and 49 excavated test pits.  The average brine grade is 15.2kg/m3 SOP.

Total Porosity was defined by laboratory determination of 16 intact samples obtained by hollow core auger drilling and 24 Shelby Tubes advanced during excavation of test pits. Total porosity averages 42%.

Drainable porosity was defined by laboratory determination of 24 intact samples obtained by hollow core auger drilling and Shelby Tubes advanced during excavation of test pits.  Extended duration pumping trials were undertaken to provide field estimates of drainable porosity to validate the laboratory determination.  Drainable porosity by all methods averaged 11%.

Lakebed Sediment (South) – Inferred Resource Estimate

The Inferred Resource is hosted in the Lake Bed Sediments in the southern part of the lake where data density is insufficient to support a higher classification.  In this area continuity of brine grade and sediment porosity is assumed which constrains the resource classification to Inferred. 

The resource comprises 2.1Mt SOP hosted in the total porosity of the sediment which includes 0.5Mt SOP within the drainable porosity of the sediment. 

The resource is contained within the top 8m of sediment, which can reasonably be drained by pumping from trenches and occupies the 41.6km2 area of the Lake Way playa surface.  Islands on the Playa surface have been removed from the area used to calculate the resource.

Brine chemistry and sediment porosity was assumed to be equivalent to the average of the northern part of the lake.

Paleochannel Basal Sand – Indicated Resource Estimate

The Indicated Resource is hosted in the Basal Sands that infill the deepest 20m of the paleochannel. 

The resource comprises 3.7Mt SOP hosted in the total porosity of the sediment which includes 1.4Mt SOP hosted in the drainable porosity of the sediment. 

The geometry and volume of the basal sand was defined by detailed gravity and passive seismic geophysical survey, validated against the extensive historical drilling data set. The total sediment volume is 686 million cubic meters.

Total porosity and drainable porosity were benchmarked against comparable paleochannel sands and a value of 40% total porosity and 15% drainable porosity was applied. 

Brine chemistry was defined by assay of multiple brine samples taken from two historic test bores that were pumped for 24 hours. The average brine grade is 13.6kg/m3 SOP.

Paleovalley Sediment – Inferred Resource Estimate

The Inferred Resource is hosted in the predominately silt and clay sediments that infill the paleovalley from the base of the Lake Bed Sediments to basement or the Basal Sands. 

The resource comprises 60Mt SOP hosted in the total porosity of the sediment which includes 4.5Mt SOP within the drainable porosity of the sediment.  The proportion of the brine held in drainable porosity is much lower in this unit due to the fine-grained lithology.

The geometry and volume of the Paleovalley Sediment was defined by detailed gravity and passive seismic geophysical survey, validated against the extensive historical drilling data set. The total sediment volume is 9,900 million cubic meters.

Brine chemistry is assumed to be continuous from the surface of the playa to the base of the Paleovalley Sediment based on comparable assay results from the lake bed sediments and the paleochannel sands.

Porosity was estimated against comparable sediments, and 40% total porosity and 3% drainable porosity has been applied in the resource estimation.

Future Work

The Mineral Resource Estimate for the ‘whole of lake’ will enable Salt Lake Potash to finalise technical studies for a larger production scenario with an anticipated release date towards the end of Q2 2019.

The Company will continue the exploration program at Lake Way as it looks to increase the resource definition in the southern section of the lake and ultimately convert the Mineral Resource Estimate into Ore Reserves following further technical studies.

Construction of the first phase of the Lake Way Evaporation Ponds is progressing well. The first phase will enable de-watering of the Williamson Pit. The utilisation of the Williamson Pit brine will accelerate Salt Lake Potash’s pathway to first production of SOP at Lake Way.

For further information please visit www.saltlakepotash.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 (0) 20 7478 3900

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

Jerry Keen/Toby Gibbs

Shore Capital (Joint broker)

Tel: +44 (0) 20 7468 7967

 

 

Summary of Resource Estimate and Reporting Criteria

This ASX Announcement has been prepared in compliance with JORC Code 2012 Edition and the ASX Listing Rules.  The following is a summary of the pertinent information used in the Mineral Resource Estimate with full details provided in the JORC Code Table 1 included as Appendix 4.

Geology and Geological Interpretation

The investigation area 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. This unit hosts the Measured and Inferred Resource.

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. 

Hydrological Setting

 

Surface Water

Lake Way receives episodic surface water inflow from West and East Creeks which lie to the north of the playa and other smaller creek lines to the west. The Playa is a terminal feature in the surface water system, i.e. there are no drainage lines that exit the playa.

Surface water recharge is a significant part of the water balance for salt-lake playa brine potash operations as described in Turk’s (1972) description of the Bonneville Salt Flats (now Wendover Potash Mine) and EPM’s (2013) proposed potash operation at Sevier Lake.

The morphology of the playa shape and surface is consistent with the classification system described by Bowler (1986).  The northern part of the Playa exhibits morphology typical of significant surface water influence and periodic inundation (smooth playa edges, one island). The southern part of the playa exhibits morphology consistent with a groundwater dominated playa with rare inundation (irregular shoreline, numerous islands). The frequency of inundation across the lake may be influenced by prevailing south-easterly winds driving water to the north eastern end of the Lake.

The Lake Way catchment area is 3,767km2. The catchment was defined using Geoscience Australia’s 1 second DEM and MapInfo Discover Hydrology Package.

A runoff model was developed for the Lake Way Catchment using the WaterCress software package (Groundwater Science 2018b). The model was constructed and calibrated to the adjacent and analogous Gascoyne River catchment, and then run using the catchment area defined for Lake Way and historic rainfall data from the Wiluna BOM station from 1907 to 2017.

The average annual rainfall for the Lake Way Catchment is 260mm/year.  The run-off model estimates that on average 3.9% of rainfall runs off to the Lake. Most of the heavy rainfall occurs in December to March and as such 71% of significant runoff events (runoff depth >5mm) occur during this period. The average annual modelled run-off to the Playa is 38GL/year but this is highly variable and ranges from zero in years 1910 and 1936, up to a maximum of 314GL in 1936 and more recently 283GL in 1995.

Groundwater

The Lake is inferred to be a terminal groundwater sink on the basis of the large area of the lake and the shallow water table observed at all sites beneath the lake which will facilitate evaporative loss. Groundwater beneath the lake is hypersaline and comprises the brine potash resource.

The drilling undertaken at Lake Way has identified 2 aquifer units:

·      Cainozoic Playa Lake Sediments exhibit variable lithology comprising sand, silt and clay. Permeability is higher in the surface gypsiferous sands from which brine flows freely.  The lake sediments beneath the surface sands are higher in clay content and rely on flow from macro and micro remnant structures.

·      Tertiary Palaeochannel basal sands comprising fine to coarse grained, well sorted sand. The extent of the paleochannel has been defined through the passive seismic geophysical survey and can be seen to be several hundred metres wide throughout. 

Geological Interpretation

 

The geological model of the deposit was developed in Leapfrog by Zephyr Professional Ltd.

The basement topography model is based on interpretation of the passive seismic survey data tied to the historic drilling data set. The Basal Sand is then modelled to infill the channel to a depth of 20m above the channel thalweg.

The geological model provides the volumes that were then used to estimate dissolved mineral tonnage contained in the pore space of the host rock.

Drilling and Sampling Techniques

Auger Drilling

Thirteen auger holes were drilled to a maximum depth of 7m.  The hollow stem auger method was applied, this enables a continuous core to be captured.

Drilling the top 1.5m was achieved with little difficulty however, as the hole got deeper the denser, stiffer clays made progress difficult leading to refusal at around 5m for most holes.

Once the holes were drilled the bores were completed with slotted PVC to just below the water table, gravel packed to 0.5mbgl and a bentonite seal to the surface.  Before the installation of the Bentonite seal each piezometer was developed using a hand held Wattera development system. 

Excavator Test Pits

Test pits were dug using an amphibious digger to a depth of approximately 4m or refusal.

Excavator Test Trenches

Test trenches were dug using an amphibious digger to a depth of approximately 4m or refusal.  The trenches were nominally 100m long and the slopes were battered for stability.

Historic Production Bores

Two historic investigation bores were used to obtain brine samples and test the hydraulic parameters of the aquifer. These bores were installed by AGC Woodward Clyde in 1992 on behalf of WMC Engineering to identify a mine water supply.

Prior to testing, the integrity of the bores was checked by downhole camera survey of the bore holes.

Historic Drilling

An extensive historic drillhole dataset was obtained from WAMEX.  Drill logs were re-interpreted to provide stratigraphic intersections to inform the geological model and provide control to the geophysical model described below.

Geophysics

A Horizontal to Vertical Spectral Ratio (HVSR) passive seismic survey was completed over 20 survey transects on the Salt Lake Potash tenements. The aim of the survey was to determine depth to bedrock, identify paleochannels and estimate their volumes.

The final HVSR passive seismic data has been processed and velocity analysis completed with amplitude-depth cross-sections generated for each survey transect. The data highlighted an interpreted fresh bedrock interface below Lake Way as an acoustic impedance contrast layer, as well as highlighting shallower layering within the unconsolidated sedimentary cover deposits (paleochannel sands). This is interpreted as the upper and lower extents of the paleochannel sands.

Brine samples

Brine samples were obtained from all test pits, test trenches, water bores and auger holes completed as piezometers.  In all instances the brine sample represents a bulk average sample of the open interval of each drillhole and excavation.

Geological Samples

Geological samples were taken from each drilling and excavation method and geologically logged.

Porosity Samples

Porosity samples were obtained from test pit excavation by pushing Shelby Tubes into the sediment and nominally 1m depth intervals.  These samples were sealed to prevent moisture loss and submitted to the laboratory for total and drainable porosity determination.

Hollow core auger samples were taken at nominally 1m depth intervals.  These samples were sealed to prevent moisture loss and submitted to the laboratory for total and drainable porosity determination.

Hydraulic Testing

Trench Pumping Trials

Test Trenches were pumped for between 5 and 90 days. The brine drawdown around the trench was measured using piezometer areas extending 100m from the trench.  This data was used to determine drainable porosity and aquifer hydraulic conductivity.

Brine samples were taken at regular intervals during pumping to assess the stability of brine composition over time.

Test Pit Recharge tests

The aquifer hydraulic conductivity at each test pit was tested by pumping brine out of the pits and then measuring the rate of water level recovery with a pressure transducer as the pits were refilled by brine inflow from the surrounding aquifer. 

Auger Piezometer Slug Tests

Auger drillholes completed as piezometers were hydraulically tested by slug tests that comprise instantaneously introducing, then removing a slug (cylinder) of know volume from the piezometer.  The rate of water level recovery following slug insertion and withdrawal is measured with a pressure transducer and the rate of recovery is analysed to determine hydraulic conductivity.

Historic Production Bores

Two historic investigation bores were test pumped to determine aquifer parameters.  The bores were pumped by Global Groundwater Pty Ltd at a constant rate for 24 hours.  Water level drawdown in the pumped bore, and in nearby observation bores was monitored manually and by data logger.  The data was analysed to determine aquifer properties of transmissivity (Product of bulk average hydraulic conductivity and aquifer thickness), Storage coefficient and boundary conditions.

Sample Analysis Method

Brine Chemistry Determination

The Primary Laboratory was Bureau Veritas Minerals Laboratory in Perth. Duplicate samples were sent to the secondary laboratory; Intertek, Perth.

Porosity

Porosity determination was undertaken by Core Laboratories Australia Pty Ltd, Perth.

Total Porosity was determined gravimetrically by weighing before and after drying at 60 degrees to stable final weight.

Drainable Porosity was determined gravimetrically by re-saturating samples with formation brine and spinning in a centrifuge at 3,700 rpm until brine production stopped. The samples were weighed before and after re-saturation and centrifuge.

Verification and QA/QC

QA/QC of brine chemistry determination comprised

·      Duplicate samples send to a secondary laboratory

·      Ionic ratio checks to identify outliers

·      Charge Balance Check

Resource Estimation Methodology

The resource is calculated as the tonnage of minerals dissolved in the liquid brine contained in porewithin the hostrock. Tonnages are calculated as dissolved minerals in brine on a dry weight by volume basis e.g. kilograms potassium per cubic meter of brine. The potassium tonnage of the resource is then calculated as:

Rock volume x volumetric porosity brine volume

Brine volume x concentration = tonnage.

Williamson Pit

The mineralisation contained within the Williamson Pit was previously reported in the Company’s ASX Announcement dated 31 July 2018.  That estimate remains unchanged and comprises 0.032Mt SOP dissolved in 1.26Mm3 brine at an average grade of 24.4kg/m3 SOP.

Lake Bed Sediment

Area

The lateral extent of the resource is defined by the tenement boundaries and the playa boundary as defined in Geoscience Australia’s 1:250K topographic dataset.

The islands in the north and south of the playa have been removed from the resource.

The Williamson pit has resulted in a zone of dewatered material extending out some 500m from the mine pit.  This area has been removed from the resource estimate.

The lake was then split into 2 areas, the north portion where almost all test work has been completed, and the south portion where little test work has been completed due to accessibility and the only very recent granting of the final Exploration lease on the lake. The North end of the lake is being reported here as a measured resource and the south as an inferred resource.

The total area of the North and South of the lake are 139.5 and 41.6km2 respectively.

Thickness

The thickness of the resource estimate has been constrained to 8 m below ground surface on the basis that production trenches are unlikely to exceed that depth.

Porosity

Drainable porosity determined from field pumping trials averages 11% by volume.  Drainable porosity determined from laboratory analysis of intact samples averages 10% by volume.

Total porosity determined from laboratory analysis of intact samples averages 42% by volume.

Table 5: Total Porosity and Drainable Porosity

Test Pit or Trench ID

Sample Depth (m)

Total Porosity (%)

Drainable Porosity (%)

Test Pit or Trench ID

Sample Depth (m)

Total Porosity (%)

Drainable Porosity (%)

LYAG01

2.0 – 3.0

45

10.3

LYTT010

0.5 – 4.0

38

3

LYAG01

3.0 – 4.0

35

8

LYTT014

0.3 – 0.8

52

LYAG01

5.0 – 6.0

39

7.4

LYTT014

0.3 – 0.6

46

11

LYAG02

1.0 – 2.0

29

9.3

LYTT015

1.5 – 2.0

41

5

LYAG02

4.0 – 5.0

53

11.1

LYTT017

0.6 – 1.1

50

LYAG06

1.0 – 2.0

45

14.6

LYTT019

0.6 – 1.1

48

LYAG06

2.0 – 3.0

42

10.4

LYTT019

0.3 – 0.6

26

16

LYAG06

3.0 – 4.0

42

11.5

LYTT019

1.5 – 2.0

47

13

LYAG06

5.0 – 6.0

42

10

LYTT019

3.0 – 4.0

35

8

LYAG07

1.0 – 2.0

43

14

LYTT020

0.5 – 1.0

54

LYAG07

3.0 – 4.0

41

8

LYTT020

3.0 – 4.0

50

6

LYAG08

1.0 – 2.0

35

9.4

LYTT021

0.6 – 1.1

50

LYAG08

2.0 – 3.0

32

10

LYTT024

0.5 – 0.9

50

LYAG08

3.0 – 4.0

26

8

LYTT026

0.3 – 0.6

39

10

LYAG15

2.0 – 3.0

33

7.4

LYTT026

3.0 – 4.0

47

24

LYAG15

4.0 – 5.0

36

8.8

LYTT029

4.0 – 5.0

38

5.2

LYTR01

0.5 – 1.5

48

14.2

LYTT029

1.0 – 4.0

47

3

LYTR01

1.0 – 1.2

37

26

LYTT032

0 – 0.5

38

13.8

LYTR01

1.5 – 3.0

48

1.5

LYTT035

3.0 – 3.5

43

5

LYTR01

3.0 – 4.0

36

5

LYTT035

0 – 0.5

39

12

Average

42

10

 

Solute Concentration

Brine chemistry has been interpolated using Ordinary Kriging with a grid size of 100m x 100m, a search distance of 6,000m and 2 search passes. Average concentrations have been calculated from the grid for the Measured Resource (North portion of the lake), this average has been used to calculate the Resource for the southern, inferred resource.

Treatment of Islands

The islands have been removed from the Lake Bed Sediment Resource.  Experience at other lakes has consistently shown that shallow brine beneath islands is diluted, likely by infiltrating rainfall.  Furthermore, brine harvesting by trenches is unlikely to be practical through the sand dunes and elevated topography of the islands.

Paleovalley Sediment

Area

The lateral extent of the resource is defined by the tenement boundaries and the playa edge. The total area is 181.1km2.

Volume

The volume of sediment infilling the paleovalley has been exported from the geological model. The Volume is 9,900Mm3. This yields an average sediment thickness of 54m for the sediment extending from 8m depth (base of lake bed sediment) to the top of basement or Paleochannel Basal Sand.

Porosity

The Total Porosity and Drainable Porosity has been estimated from lithology and benchmarking against other studies completed in comparable geological settings. Total porosity is applied as 40%.  Drainable porosity is applied as a low value of 3% based on the fine-grained lithology of the host sediment which will retain much of the contained brine.

Solute Concentration

Solute concentration is inferred to be continuous from the Playa Surface to the base of the Paleovalley Sediment.  The average value is 15.2kg/m3 SOP.

Paleochannel Basal Sand

Area

The extent and thickness of the Paleochannel Basal Sand Resource is defined by the geological model. The total volume of the unit is estimated to be 686Mm3.

Porosity

The Total Porosity and Drainable Porosity has been estimated from lithology and benchmarking against other studies completed in comparable geological settings.  Total porosity is applied as 40%.  Drainable porosity is applied as 15%. 

Solute Concentration

Solute concentration is derived as the average value of the two pumping test bores completed in the basal sand unit, LW5-7 and LW3-4. Multiple samples were taken from each bore during the 24 hour constant rate pumping test undertaken at each bore. The average SOP concentration is 13.6kg/m3 SOP. No spatial interpolation was undertaken.

Classification Criteria

Williamson pit

The estimated resource hosted in the Williamson Pit mine lake has a very high degree of confidence, since the geometry of the mine pit was accurately surveyed and the concentration of the brine was samples at numerous locations and depths and is quite consistent. 

The resource is reported as a Measured Resource on the basis that the estimate is adequate to support a mine plan (in this case pumping infrastructure and pumping rate).

Lake Bed Sediments (North)

The estimated resource in the northern part of the lake has a high degree of confidence.

The resource estimate and associated hydrological data set are considered adequate to support a mine plan.  In this case the mine plan comprises design of a production trench network and construction of a groundwater flow simulation model to estimate and plan brine production rates. The resource is reported as a Measured Resource.

The thickness of the geological unit is well defined, being simply 8m; the assumed limit of excavation. The area is well defined by the extent of the playa surface.

Brine concentration is defined by a high density or data points and is quite consistent spatially.  There is a high degree of confidence that the brine concentration is accurately defined.

Aquifer total porosity and drainable porosity are well defined by a large number of samples at a range of depths, and drainable porosity values are validated by extended pumping field trials that comprise the drainage of very large volumes of sediment.

Aquifer properties of hydraulic conductivity are well defined by a well distributed data set of test pits and extended duration pumping trials.

The lake water balance due to rainfall and inundation is understood from a reasonably constrained catchment run-off model.

The Measured Resource estimate is based on 49 test pits, 5 trench tests and 13 auger holes. Data points are distributed on an approximate 500m by 500m grid in the northwest and on a 5km x 5km grid for the remainder of the lake.  There is irregularity due to greater density of pits around the proposed pond locations, the causeway, the Williamson Pit dewatered zone and tenure access constraints to the immediate east of the playa.

Lake Bed Sediments (South)

The estimated resource in the southern part of the lake has a low degree of confidence. 

The resource estimate is based on assumed continuity of grade and porosity and is not adequate to support a mine plan.  The resource is reported as an Inferred Resource.

The thickness of the geological unit is well defined, being simply 8m; the assumed limit of excavation.

The area is well defined by the extent of the playa surface.

Brine grade is assumed to be continuous and consistent from the north to the south of the lake.  This assumption is not yet confirmed by test work.

Total Porosity and Drainable Porosity are assumed to be continuous and consistent from the north to the south of the lake.  This assumption is based on lithology logged in historic drilling but is not yet confirmed by test work.

Hydraulic properties are assumed to are assumed to be continuous and consistent from the north to the south of the lake.  This assumption is based on lithology logged in historic drilling but is not yet confirmed by test work.

The Inferred Resource Estimate is based on a very limited number of drillholes. The geology is defined by 10 historic drillholes oriented on a transect across the southern end of the Lake, and the geophysical survey. Brine Grade is assumed to be continuous from the data in the northern part of the Lake.  

Potash Brine projects typically exhibit low spatial variability in brine grade since the brine resource is generated in-situ by evaporation of a fairly consistent groundwater source which is subject to sporadic mixing and dilution due to infiltration of rainwater, and subsequent re-concentration by evaporation. Drill spacing in the range of 2.5km  to 10km is typical (Houston et al 2011).

Paleovalley Sediment

The estimated resource in Paleovalley sediment has a low degree of confidence.  The Resource estimate is based on assumed continuity of grade and porosity and is not adequate to support a mine plan. The resource is reported as an Inferred Resource.

The volume of the geological unit is well defined by a geological model based on detailed geophysical survey validated to an extensive drilling data set.

The area is well defined by the extent of the playa surface.

Brine grade is assumed to be continuous and consistent from the Playa surface to the base of the geological unit.  This assumption is supported by only a limited number of data points where brine chemistry at surface and at depth are available.

Total Porosity and Drainable Porosity values are based on lithology logged in historic drilling and on benchmarking of comparable projects in Tertiary paleochannels in Western Australia. The values are not yet confirmed by test work.

Hydraulic properties of the units inferred from the lithology of the unit, and the response to pumping of two test bores.

For this unit a mine plan comprises design of a production bore array to depressurise the underlying basal sand and induce downward vertical leakage from the paleovalley sediment. A groundwater flow simulation model calibrated to long term pumping trials will be needed to estimate and plan the rate at which vertical leakage of brine can be induced.

The Inferred Resource Estimate is based on a limited number of drillholes. The 49 test pits, 5 trench tests and 13 auger holes terminate above the top of the unit, and continuity of brine grade with depth is assumed based on consistent experience at other salt lake playas, and data demonstrating continuous brine grade in the underlying Basal Sand unit.  The geological model that defines the volume is based on 224 historic drillholes and the geophysical survey.

Paleochannel Basal Sand

The estimated resource in Paleochannel Basal Sand has a moderate degree of confidence. 

The data is adequate to allow confident interpretation of the geological framework which is based on a good density of drilling and geophysical data.  The continuity of brine concentration between very widely spaced samples is however assumed.   The estimate is adequate to apply modifying factors in a Feasibility Study but is not adequate to support a detailed mine plan. The resource is reported as an Indicated Resource.

Total Porosity and Drainable Porosity values are based on lithology logged in historic drilling and on benchmarking of comparable projects in Tertiary paleochannels in Western Australia. The values are not yet confirmed by test work.

Hydraulic properties of the units inferred from the lithology of the unit, and the response to pumping of two test bores.

The Indicated Resource Estimate is based on two data points that inform brine grade and hydrogeological properties.  The geological model is based on a larger number of drillholes (23 of 224 drillholes are within the paleochannel extent) and the geophysical survey.

Results

The results of the Mineral Resource Estimate are summarised in the tables below.

 

Table 6: Measured Resource

Total Volume

Brine Concentration

Mineral Tonnage Calculated from
Total 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)

North Lakebed

(0.4-8.0m)

1,060

6.8

8.0

27.6

0.42

445

6.8

0.11

117

1.8

Williamson Pit

1.26

11.4

14.7

48.0

1.26

0.032

Total

6.8

1.832

Table 7: Indicated Resource

Total Volume

Mineral Tonnage Calculated from Total 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)

(Mt)

(Mm3)

Basal Sands

686

6.1

8.2

25.0

0.40

274

3.7

15

103

1.4

Table 8: Inferred Resource

Total Volume

Mineral Tonnage Calculated from Total 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

(0.4-8.0m)

316

6.8

8.0

27.6

0.42

133

2.0

0.11

35

0.5

Lakebed

(8m to Base)

9,900

6.8

8.0

27.6

0.40

3,960

60.0

0.03

297

4.5

Total

62.0

5.0

 

  Note:              1) Conversion factor of K to SOP (K2SO4 equivalent) is 2.23

                   2) Williamson Pit and Lakebed Sediment (North – Blackham tenements only) resource estimate reported previously as maiden resource 31 July 2018.

 

Cut-off Grades

Within the salt-lake extent no low-grade cut-off or high-grade capping has been implemented due to the consistent nature of the brine assay data. No aggregate intercepts have been calculated.

Mining and Metallurgical Methods and Parameters

It is assumed that the Brine resource will be mined by gravity drainage to a network of trenches excavated into the Playa Surface and an array of production bores completed in the paleochannel basal sand. 

Validation test work has been completed to confirm the process flowsheet to be used at the Lake Way Project to recovery SOP from the Lake Brine (refer ASX Announcement 31 October 2018).

Environmental impacts are expected to be; localized reduction in saline groundwater level, surface disturbance associated with trench, bore, and pond construction and accumulation of salt tails. The project is in a remote area and these impacts are not expected to prevent project development.

The project is located with the Goldfields Groundwater Proclamation Area. A license to take groundwater will be required under the Rights in Water and Irrigation Act 1914.  This Act is administered by the Government of Western Australia Department of Water and Environmental Regulation.

 

Forward Looking Statements

This announcement may include forward-looking statements. These forward-looking statements are based on Salt Lake’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, which could cause actual results to differ materially from such statements. Salt Lake 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 Person Statement

The information in this report that relates to Mineral Resources and Exploration Results for Lake Way is based on information compiled by Mr Ben Jeuken, who is a member Australian Institute of Mining and Metallurgy 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’. Mr Jeuken consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Production Target

The Lake Way Demonstration Plant Production Target stated in this report is based on the Company’s Scoping Study as released to the ASX on 31 July 2018. The information in relation to the Production Target that the Company is required to include in a public report in accordance with ASX Listing Rule 5.16 and 5.17 was included in the Company’s ASX Announcement released on 31 July 2018. The Company confirms that the material assumptions underpinning the Production Target referenced in the 31 July 2018 release continue to apply and have not materially changed.

 

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

 

Appendix 1: Extraction Method and Implication for Resource Estimate

Overview

Mining methods employed for brines is different to those required for mining solid minerals. The typical mining method for brines is to pump the brine resource from trenches or bores that are installed in the geological unit that hosts the brine.  The rate that the brine can be pumped is controlled by the hydraulic conductivity (permeability) of the host rock.  For the Lake Way Project, the mining methods for each host geological unit are summarised in the table below.

Table 9: Mining Method

Host Unit

Mining Method

Controls on the mining rate and resource

Williamson Pit Lake

Pumping from Pit Lake

None

Lake Bed Sediment

Pumping from trenches

Hydraulic conductivity of lake sediment,

Recharge via rainfall and inundation

Total Porosity

Paleovalley Fill

Vertical drainage to Basal Sand

Vertical hydraulic conductivity

Drainable porosity, and compressible storage.

Basal Sand

Pumping from bores

Hydraulic conductivity,

Total porosity

Aquifer Boundary conditions (vertical and lateral inflow under pumping)

 

Williamson Pit Lake

Brine from the Williamson Pit Lake will be pumped directly from the pit into the evaporation pond for processing.  The mining rate is controlled only by the capacity of the pumping infrastructure.

Lake Bed Sediment

The shallow Lake Bed Sediments aquifer will be mined by pumping brine from a network of trenches excavated into the playa surface to a depth of nominally 6m, though trenches may be deepened over time.

The production of brine is cyclic as described below.

Stage 1 – Initial Resource

The initial brine resource comprises:

·      Brine dissolved in water held in Drainable Porosity, (5% of the total aquifer volume).

·      Brine dissolved in water held in Retained Porosity, (35% of total aquifer volume).

The remaining volume is occupied by solid material (sand, silt and clay grains comprising 60% of the aquifer volume).

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

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 some water input from rainfall and 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 Playa.  This water infiltrates the 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.

Paleovalley Sediment

The paleovalley sediment is predominately fine grain and exhibits low permeability.  The brine held in these sediments cannot be drained directly to bores because the permeability is too low to allow useful bore yields.

A proportion of the brine held in these sediments can be removed by underdrainage to the underlying Basal Sand unit.

Brine is removed from the Basal Sand unit by pumping from bores.  This depressurises the Basal Sand unit and induces downward brine leakage from the overlying sediment.  The rate of leakage will be very low; however, the areal extent is very large and significant volumes can be abstracted in this way.

Only a relatively small fraction of the total porosity can be removed from a fine-grained unit by this method.

Paleochannel Basal Sand

The brine will be produced by pumping from bores constructed into the Paleochannel Basal Sand. Pumping from a deep, confined aquifer results in reduced pressure in the aquifer and this induces brine flow toward the bores.  Brine flow is sourced via downward vertical leakage from the overlying fine-grained silts and clays, and by lateral flow from the adjacent basement aquifer that surrounds the channel.

It is important to understand that the aquifer is not dewatered.  This means that the pore spaces are not drained under gravity to be filled with air. The aquifer is only depressurised, and this results in flow through fully saturated pores toward the pumped bore.

 

Appendix 2: Location Details for Drill Holes / Test Pits

HOLE_ID

EAST

NORTH

Hole Type

HA003

235863

7032512

Hand Auger

HA006

235652

7033571

Hand Auger

HA008

234918

7033057

Hand Auger

HA010

235063

7034408

Hand Auger

HA012

234299

7033837

Hand Auger

HA013

234890

7035481

Hand Auger

HA014

234458

7035223

Hand Auger

HA017

234302

7035685

Hand Auger

HA019

234752

7036712

Hand Auger

HA021

233742

7036709

Hand Auger

HA022

234734

7037719

Hand Auger

HA024

233715

7039225

Hand Auger

HA025

233868

7032968

Hand Auger

HA029

231655

7036814

Hand Auger

HA031

231874

7037525

Hand Auger

LYTR001

233590

7036757

Test Trench

LYTR002

235090

7035280

Test Trench

LYTR003

230650

7041000

Test Trench

LYTR004

232330

7035720

Test Trench

LYTR005

238875

7035948

Test Trench

LYTT002

229968

7036837

Test Pit

LYTT003

230702

7036399

Test Pit

LYTT004

231815

7035595

Test Pit

LYTT005

232341

7035793

Test Pit

LYTT006

232183

7035073

Test Pit

LYTT007

231817

7034412

Test Pit

LYTT012

233601

7037586

Test Pit

LYTT013

233600

7034800

Test Pit

LYTT014

233600

7034000

Test Pit

LYTT015

233600

7033200

Test Pit

LYTT016

234600

7032000

Test Pit

LYTT017

235300

7032400

Test Pit

LYTT018

235300

7033200

Test Pit

LYTT019

236300

7033200

Test Pit

LYTT020

234600

7033200

Test Pit

LYTT021

234600

7034000

Test Pit

LYTT022

235650

7034000

Test Pit

LYTT023

235300

7034800

Test Pit

LYTT024

234600

7034800

Test Pit

LYTT025

234600

7035600

Test Pit

LYTT026

234600

7036800

Test Pit

LYTT027

235511

7040910

Test Pit

LYTT028

237073

7040940

Test Pit

LYTT028

237073

7040940

Test Pit

LYTT030

230700

7041600

Test Pit

LYTT031

229531

7041686

Test Pit

LYTT032

229551

7040432

Test Pit

LYTT033

230700

7040400

Test Pit

LYTT034

230700

7039200

Test Pit

LYTT035

230700

7037600

Test Pit

LYTT036

231800

7037200

Test Pit

LYTT037

238858

7037915

Test Pit

LYTT039

240934

7032003

Test Pit

LYTT041

242068

7026888

Test Pit

LYTT042

244658

7026362

Test Pit

LYTT043

243355

7028717

Test Pit

LYTT045

241951

7033872

Test Pit

LYTT048

235845

7038688

Test Pit

LYTT049

236788

7034678

Test Pit

LYPIEZ01

236853

7032051

Auger

LYPIEZ03

238851

7037911

Auger

LYPIEZ04

239481

7030505

Auger

LYPIEZ06

238854

7035878

Auger

LYPIEZ07

238747

7034697

Auger

LYPIEZ08

235865

7038720

Auger

LYPIEZ09

240944

7031987

Auger

LYPIEZ11

243089

7032074

Auger

LYPIEZ13

238602

7039558

Auger

LW3-4

247448

7031876

Historic Pumped bore

LW5-7

242593

7034360

Historic Pumped bore

Note: All holes are vertical, with an RL of approximately 492m

 

Appendix 3: Brine Assay Results

Lake Bed Sediment

HOLE_ID

K

mg/L

Cl

mg/L

Na

mg/L

Ca

mg/L

Mg

mg/L

SO4

mg/L

pH

 

SG

 

HA003

7210

131450

77200

499

7510

26200

6.87

1.16

HA006

6910

128050

78600

528

7000

25500

6.9

1.16

HA008

7280

121350

73900

537

6530

28200

6.91

1.16

HA010

6350

112150

68100

621

6180

23900

6.99

1.14

HA012

6550

115700

68600

574

6690

25300

6.95

1.14

HA013

6070

108500

65900

623

6070

24000

7

1.14

HA014

6050

104250

63900

666

5620

23700

7.03

1.13

HA017

3320

52500

33000

804

2790

14800

7.31

1.07

HA017

6090

101600

63100

664

5450

24200

7.04

1.13

HA019

6030

113600

67600

591

7010

25700

6.96

1.15

HA021

5960

110250

65000

610

6150

23300

7.03

1.14

HA022

6550

111400

68500

636

6050

23600

7.02

1.14

HA024

6100

130850

75000

536

8650

25300

6.89

1.17

HA025

6810

126800

76500

519

7160

26300

6.96

1.16

HA029

6730

131200

79500

447

8070

33000

6.94

1.17

HA031

5910

117600

70200

615

6940

23400

6.98

1.15

LYTR001

6300

125550

74000

534

7410

26300

6.19

1.17

LYTR002

6270

118300

73600

526

7280

27300

6.23

1.16

LYTR003

7060

130450

83900

476

7670

29700

6.57

1.18

LYTR004

7115

129675

83050

502

7660

28900

6.62

1.18

LYTR005

6620

144550

82500

411

9930

32400

6.54

1.19

LYTT002

7350

145050

90000

367

10900

38700

6.36

1.20

LYTT003

8160

151150

91400

305

12200

42600

6.5

1.21

LYTT004

6700

126350

76200

441

8090

29400

6.74

1.17

LYTT005

6760

122700

74500

553

7100

25100

6.79

1.16

LYTT006

6970

129000

78700

514

7500

26600

6.69

1.17

LYTT007

6600

130400

78100

484

8010

28900

6.53

1.17

LYTT012

6470

120100

74300

575

7240

25800

6.65

1.16

LYTT013

6510

117750

72500

562

7000

25400

6.92

1.15

LYTT014

6840

123700

76000

586

7020

26100

6.9

1.16

LYTT015

7150

128750

78900

517

7300

28000

6.88

1.17

LYTT016

6990

137650

86000

458

8290

29300

6.71

1.18

LYTT017

7150

129450

80300

498

7400

27200

6.88

1.17

LYTT018

7270

128050

78500

492

7340

28800

6.88

1.17

LYTT019

6800

121600

73500

532

7040

26600

6.88

1.16

LYTT020

6840

124050

74900

549

7020

26100

6.83

1.16

LYTT021

6390

117100

71600

571

6890

26000

6.86

1.16

LYTT022

6630

119150

74600

543

7010

26700

6.93

1.16

LYTT023

6510

123700

72000

556

6790

25100

6.85

1.16

LYTT024

6240

113400

70100

581

6850

26300

6.88

1.15

LYTT025

6330

115700

71500

559

6960

27300

6.85

1.16

LYTT026

7060

125450

77700

519

7030

26200

6.79

1.16

LYTT027

7080

133850

83300

390

9930

37800

6.89

1.18

LYTT028

6360

130350

80800

410

10200

36900

6.95

1.18

LYTT028

7210

145150

87000

358

11600

37800

6.83

1.20

LYTT030

7300

133500

81200

362

9150

33000

6.86

1.19

LYTT031

8760

147100

89700

347

11300

41100

6.82

1.21

LYTT032

7030

137850

81900

408

10400

29900

6.88

1.18

LYTT033

6930

131750

81300

444

10300

33600

6.79

1.13

LYTT034

7190

127750

78200

526

7630

26100

6.74

1.17

LYTT035

6740

134050

80600

418

11000

35400

6.75

1.19

LYTT036

6570

137350

81400

369

12700

38100

6.82

1.20

LYTT037

6780

150000

86100

371

10300

35400

6.7

1.20

LYTT039

7390

133450

78700

563

6670

23900

6.68

1.16

LYTT041

7660

135300

80700

577

6730

24400

6.79

1.17

LYTT042

7520

149250

86000

522

8340

23900

6.62

1.19

LYTT043

5980

110400

65200

726

5820

19700

6.59

1.14

LYTT045

7600

139300

79400

502

6740

24200

6.57

1.18

LYTT048

6910

131100

77300

501

7600

26500

6.55

1.17

LYTT049

7160

139850

82000

485

7850

27600

6.57

1.18

LYPIEZ01

6000

139715

82900

446

10100

26000

6.42

1.18

LYPIEZ03

4560

97584

63400

439

7580

24700

6.97

1.14

LYPIEZ04

6450

145100

82500

478

9340

26200

6.57

1.18

LYPIEZ06

6140

137254

82900

416

9810

31500

6.59

1.18

LYPIEZ07

6660

130087

82800

504

7710

27100

6.73

1.18

LYPIEZ08

7030

136000

77400

473

8040

27800

6.48

1.18

LYPIEZ09

6950

131300

75500

552

7420

24100

6.52

1.16

LYPIEZ11

6590

115300

68200

679

5350

19400

6.7

1.15

LYPIEZ13

7000

138485

85800

453

8800

31200

6.63

1.19

 

Paleochannel Basal Sand

HOLE_ID

K

mg/L

Cl

mg/L

Na

mg/L

Ca

mg/L

Mg

mg/L

SO4

mg/L

pH

 

SG

 

LW3-4

6160

149053.85

83000

455

8290

25600

6.5

1.18

LW3-4

5880

145796.24

78300

435

7900

23400

6.54

1.18

LW5-7

6080

151515.16

78600

397

8360

26100

6.38

1.19

LW5-7

6270

150501.68

84400

402

8520

26600

6.41

1.18

 

 

 

Appendix 4: JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

Criteria

JORC Code explanation

Commentary

Sampling techniques

·     Nature and quality of sampling (e.g.  cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as downhole gamma sondes, or handheld XRF instruments, etc.).  These examples should not be taken as limiting the broad meaning of sampling.

·     Include reference to measures taken to ensure sample presentively and the appropriate calibration of any measurement tools or systems used.

·     Aspects of the determination of mineralisation that are Material to the Public Report.

·     In cases where ‘industry standard’ work has been done, this would be relatively simple (e.g.  ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’).  In other cases, more explanation may be required, such as where there is coarse gold that has inherent sampling problems.  Unusual commodities or mineralisation types (e.g.  submarine nodules) may warrant disclosure of detailed information.

Sampling involved the excavation of test pits over the tenement area to a depth of 4mbgl or weathered basement whichever was encountered first.  Five trenches were also dug to 4m depth,

 

A brine sample and duplicate were taken from each test pit and trench for analysis.

 

Samples were taken manually by initially rinsing out the bottle with brine from the pit or trench and then placing the bottle in the test pit or trench and allowing it to fill.

 

Samples were analysed for K, Mg, Ca, Na, Cl, SO4, HCO3, NO3, pH, TDS and specific gravity.

 

Each test pit was geologically logged and a sample taken each 1m depth.

 

Shelby Tubes were pushed into the sediment during test pit excavation to obtain intact samples for porosity determination.

 

Test pumping entailed pumping from the trenches and test pits using a diesel driven submersible pump coupled to a level switch.

 

Water levels in the piezometer, test pits and trenches were logged manually and by pressure transducer with barometric pressure and brine density correction.

 

Auger drilling comprised hollow core augers. Samples were taken from the recovered core.

Drilling techniques

·     Drill type (e.g.  core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc.) and details (e.g.  core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc.).

Test pits and trenches were dug with an excavator.

 

Drillholes were drilled by hollow core auger.  Auger holes were cased with 50mm PVC slotted liner to allow hydraulic testing and repeated sampling.

 

 

Drill sample recovery

·     Method of recording and assessing core and chip sample recoveries and results assessed.

·     Measures taken to maximise sample recovery and ensure representative nature of the samples.

·     Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

Samples from the test pits were logged each bucket and a representative sample bagged.

 

100% of excavated sample was available for sampling.  The ability to see the bulk sample facilitated the selection of a representative sample.

 

There is no relationship between sample recovery and grade and no loss of material as a result of excavation.

 

Logging

·     Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

·     Whether logging is qualitative or quantitative in nature.  Core (or costean, channel, etc.) photography.

·     The total length and percentage of the relevant intersections logged.

The geological logging is sufficient for the purposes of identifying variations in sand/ clay and silt fraction within the top 4m.  For a brine abstraction project, the key parameters are the hydraulic conductivity and storage of the host rock.

The logging is qualitative.

The entire pit depth was logged in every case.

 

 

Sub-sampling techniques and sample preparation

·     If core, whether cut or sawn and whether quarter, half or all core taken.

·     If non-core, whether riffled, tube sampled, rotary split, etc.  and whether sampled wet or dry.

·     For all sample types, the nature, quality and appropriateness of the sample preparation technique.

·     Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

·     Measures taken to ensure that the sampling is representative of the insitu material collected, including for instance results for field duplicate/second-half sampling.

·     Whether sample sizes are appropriate to the grain size of the material being sampled.

Full core was used for porosity determination.

 

Not applicable, core drilling.

 

At all test pits brine samples were taken from the pit after 24hours or once the pit had filled with brine.  The brine samples taken from the pits are bulk samples which is an appropriate approach given the long-term abstraction technique of using many kilometres of trenches to abstract brine from the upper 4m.

 

All the samples taken were incorporated into a rigorous QA / QC program in which Standards and Duplicates were taken. The samples were taken in sterile plastic bottles of 250ml capacity.

 

Excavated lake bed samples were sealed in plastic bags.  For all brine samples (original or check samples) the samples were labelled with the alphanumeric code Y8001, Y80002 …

 

Lake bed samples were labelled with the test pit locator LYTT01, LYTT02 etc. and the depth from which they were taken.

 

 

Quality of assay data and laboratory tests

·     The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

·     For geophysical tools, spectrometers, handheld XRF instruments, etc., the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

·     Nature of quality control procedures adopted (e.g.  standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e.  lack of bias) and precision have been established.

The brine samples were sent to Bureau Veritas Laboratories in Perth, WA with the duplicates being held by Salt Lake Potash.  Every 10th duplicate was sent to Intertek, an alternate laboratory for comparison purposes.

 

No laboratory analysis was undertaken with geophysical tools.

 

Soil samples and laboratory derived hydraulic conductivity, total porosity and drainable porosity samples were analysed by Core Laboratories in Perth WA.  All laboratories used are NATA certified.

 

Verification of sampling and assaying

·     The verification of significant intersections by either independent or alternative company personnel.

·     The use of twinned holes.

·     Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

·     Discuss any adjustment to assay data.

Not applicable due to consistent brine concentration.

 

No twin holes drilled.

 

All sampling and assaying is well documented and contained on Salt Lake Potash’s internal database.

 

No adjustments have been made to assay data.

Location of data points

·     Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

·     Specification of the grid system used.

·     Quality and adequacy of topographic control.

All coordinates were collected by handheld GPS.

 

The grid system is the Australian National Grid Zone MGA 51 (GDA 94).

 

The is no specific topographic control as the lake surface can essentially be considered flat.

 

Data spacing and distribution

·     Data spacing for reporting of Exploration Results.

·     Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

·     Whether sample compositing has been applied.

 

Data spacing is addressed in the body of the Announcement.

 

Sample compositing not applied.

 

Orientation of data in relation to geological structure

·     Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

·     If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

The orientation of sampling was suited to the geological structure.

 

Geological influence on the brine is limited to the aquifer parameters of the host rock, namely the hydraulic conductivity, Total Porosity and drainable porosity.

 

Sample security

·     The measures taken to ensure sample security.

Salt Lake Potash field geologists were responsible for bagging and tagging samples prior to shipping to the BV lab in Perth and the Salt Lake Potash offices.  The security measures for the material and type of sampling at hand was appropriate.

Audits or reviews

·     The results of any audits or reviews of sampling techniques and data.

Data review is summarised in the report and included an assessment of the quality of assay data and laboratory tests and verification of sampling and assaying.  No audits of sampling techniques and data have been undertaken.

 

Section 2 Reporting of Exploration Results

Criteria

JORC Code explanation

Commentary

Mineral tenement and land tenure status

·     Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

·     The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

The Lake Way Project comprises tenements held by Salt Lake Potash and Blackham Resources Limited (Blackham).

Salt Lake Potash holds tenements covering the south east of the lake, including granted Exploration licences E53/1878, E53/1897 and Exploration Licence Applications E53/2057, E53/2059 and E53/2060.

On the 9th March 2018 Salt Lake Potash and Blackham Resources Ltd signed a gold and brine minerals memorandum of understanding.  Under this MOU Blackham has granted the brine rights on its Lake Way tenement free from encumbrances to Salt Lake Potash.

Tenure granted to Blackham Resources Ltd. and its subsidiaries that is covered by the MOU includes:

Exploration licences E53/1288, E53/1862, E53/1905, E53/1952,

Mining Licences, M53/121, M53/122, M53/123, M53/147, M53/253, M53/796, M53/797, M53/798, M53/910, and

Prospecting Licences P53/1642, P53/1646, P53/1666, P53/1667, P53/1668.

Exploration done by other parties

·     Acknowledgment and appraisal of exploration by other parties.

There is a database of approximately 6200 boreholes across Lake Way, of which some 1000 are within the Blackham tenement area.  The primary source for the information is the publicly available Western Australian Mineral Exploration (WAMEX) report data base.

Recent sterilisation drilling has also been undertaken by Blackham to the south and east of the Blackham tenement area.

The majority of previous work has been concerned with investigating the bedrock and calcrete for gold and Uranium, it is of limited value in defining the stratigraphy of the lakebed sediments. 

The data has been shown to be useful in the determination of the depth to base of lakebed sediments and has been used to develop an overall estimate of the volume of lake bed sediments that has been applied to the mineral resource calculations.

Geology

·     Deposit type, geological setting and style of mineralisation.

The deposit is a salt-lake brine deposit.

 

The lake setting is typical of a Western Australian palaeovalley environment. Ancient hydrological systems have incised palaeovalleys into Archaean basement rocks, which were then infilled by Tertiary-aged sediments typically comprising a coarse-grained fluvial basal sand overlaid by palaeovalley clay with some coarser grained interbeds. The clay is overlaid by recent Cainozoic material including lacustrine sediment, calcrete, evaporite and aeolian deposits. 

Drill hole Information

·     A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes:

·     easting and northing of the drill hole collar

·     elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar

·     dip and azimuth of the hole

·     downhole length and interception depth

·     hole length.

·     If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

All drillhole test pit and trench details and locations of all data points are presented in Appendices 2 and 3.

 

All holes and test pits are vertical.

Data aggregation methods

·     In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g.  cutting of high grades) and cut-off grades are usually Material and should be stated.

·     Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

·     The assumptions used for any reporting of metal equivalent values should be clearly stated.

Within the salt-lake extent no low-grade cut-off or high-grade capping has been implemented due to the consistent nature of the brine assay data.

 

No aggregate intercepts have been calculated.

 

 

Relationship between mineralisation widths and intercept lengths

·     These relationships are particularly important in the reporting of Exploration Results.

·     If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

·     If it is not known and only the downhole lengths are reported, there should be a clear statement to this effect (e.g.  ‘down hole length, true width not known’).

The chemical analysis from each of the test pits has shown the that the brine resource is consistent and continuous through the full thickness of the Lake Playa sediments unit. The unit is flat lying. 

The intersected depth is equivalent to the vertical depth and the thickness of mineralisation.

 

Diagrams

·     Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

All location maps and sections are contained within the body of the ASX version of this Announcement.

Balanced reporting

·     Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.

All results have been included in the body of the Announcement.

 

Other substantive exploration data

·     Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

All material exploration data has been reported.

Further work

·     The nature and scale of planned further work (e.g.  tests for lateral extensions or depth extensions or large-scale step-out drilling).

·     Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

Field trials of brine harvesting will be undertaken.

Additional drilling and testing will be undertaken to upgrade the Inferred and Indicated portions of the resource.

 

 

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

Criteria

JORC Code explanation

Commentary

Database integrity

·     Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

·     Data validation procedures used.

Cross-check of laboratory assay reports and database.

 

Extensive QA/QC as described in the report

Site visits

·     Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

·     If no site visits have been undertaken indicate why this is the case.

A site visit was undertaken by the Competent Person (CP) from 29th to 30th April 2018. The CP visit was documented in Letter Report Salt Lake Potash-18-1-L001 (Groundwater Science, 2018).

 

Geological interpretation

·     Confidence in (or conversely, the uncertainty of ) the geological interpretation of the mineral deposit.

·     Nature of the data used and of any assumptions made.

·     The effect, if any, of alternative interpretations on Mineral Resource estimation.

·     The use of geology in guiding and controlling Mineral Resource estimation.

·     The factors affecting continuity both of grade and geology.

The shallow geological profile beneath the lake is relatively homogenous.  The porosity of the material is consistent with depth; hence the geological interpretation has little impact on the resource except to define its thickness.

The islands are is excluded from the shallow resource estimate as access is not permitted.  Mining the Williamson Pit has resulted in an area of approximately 4km2 being dewatered, this area has also been excluded from the resource estimate.

Confidence in the geological model and the assumptions are described in the Announcement.

Dimensions

·     The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

Addressed in the body of the Announcement.

Estimation and modelling techniques

·     The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.

·     The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

·     The assumptions made regarding recovery of by-products.

·     Estimation of deleterious elements or other non-grade variables of economic significance (eg sulphur for acid mine drainage characterisation).

·     In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

·     Any assumptions behind modelling of selective mining units.

·     Any assumptions about correlation between variables.

·     Description of how the geological interpretation was used to control the resource estimates.

·     Discussion of basis for using or not using grade cutting or capping.

·     The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.

Addressed in the body of the Announcement.

There are no production records for reconciliation.

There are no assumptions made regarding recovery of by-products.

Deleterious elements are Salt (NaCl) waste.  NaCl tonnage has not been estimated.

 

Moisture

·     Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

Not applicable to brine resources. See discussion of moisture content under Bulk Density.

Cut-off parameters

·     The basis of the adopted cut-off grade(s) or quality parameters applied.

No cut-off parameters were used.

Mining factors or assumptions

·     Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

The Brine resource will be mined by gravity drainage to a network of trenches excavated into the Playa Surface and an array bore bores completed in the paleochannel basal sand. 

 

Validation test work has been completed to confirm the process flowsheet to be used at the Lake Way Project to recovery SOP from the Lake Brine (refer ASX Announcement 31 October 2018).

 

Metallurgical factors or assumptions

·     The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.

Validation test work has been completed to confirm the process flowsheet to be used at the Lake Way Project to recovery SOP from the Lake Brine (Refer ASX Announcement 31 October 2018).

 

Environmental factors or assumptions

·     Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

Environmental impacts are expected to be; localized reduction in saline groundwater level, surface disturbance associated with trench, bore, and pond construction and accumulation of salt tails. The project is in a remote area and these impacts are not expected to prevent project development.

The project is located with the Goldfields Groundwater Proclamation Area. A license to take groundwater will be required under the Rights in Water and Irrigation Act 1914.  This Act is administered by the Government of Western Australia Department of Water and Environmental Regulation.

 

Bulk density

·     Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

·     The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit.

·     Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.

Bulk density is not relevant to brine resource estimation.

Volumetric moisture content or volumetric porosity was applied in the resource estimate as follows:

Lake Bed Sediment: determined

Paleovalley Sediment: Assumed

Paleochannel Basal Sand: Assumed

Classification

·     The basis for the classification of the Mineral Resources into varying confidence categories.

·     Whether appropriate account has been taken of all relevant factors (ie relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).

·     Whether the result appropriately reflects the Competent Person’s view of the deposit.

Classification of the mineral resources into varying confidence categories is described in detail in the report.

The result reflects the view of the Competent Person.

Audits or reviews

·     The results of any audits or reviews of Mineral Resource estimates.

No audit or reviews were undertaken.

Discussion of relative accuracy/ confidence

·     Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

·     The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

·     These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

Relative accuracy and confidence of the estimate is described in detail in the body of the Announcement.

The estimated tonnage represents the in-situ brine with no recovery factor applied. It will not be possible to extract all of the contained brine by pumping from trenches. The amount which can be extracted depends on many factors including the permeability of the sediments, the drainable porosity, and the recharge dynamics of the aquifers.

No production data are available for comparison.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

Salt Lake Potash #SO4 – Holdings in Company

TR-1: Standard form for notification of major holdings

NOTIFICATION OF MAJOR HOLDINGS (to be sent to the relevant issuer and to the FCA in Microsoft Word format if possible)i

1a. Identity of the issuer or the underlying issuer of existing shares to which voting rights are attachedii:

Salt Lake Potash Ltd

1b. Please indicate if the issuer is a non-UK issuer  (please mark with an “X” if appropriate)

Non-UK issuer

x

2. Reason for the notification (please mark the appropriate box or boxes with an “X”)

An acquisition or disposal of voting rights

x

An acquisition or disposal of financial instruments

An event changing the breakdown of voting rights

Other (please specify)iii:

3. Details of person subject to the notification obligationiv

Name

Lombard Odier Asset Management (Europe) Limited

City and country of registered office (if applicable)

London, United Kingdom

4. Full name of shareholder(s) (if different from 3.)v

Name

Disclosure on behalf of accounts managed on a discretionary basis by Lombard Odier Investment Managers group.

City and country of registered office (if applicable)

5. Date on which the threshold was crossed or reachedvi:

04/03/2019

6. Date on which issuer notified (DD/MM/YYYY):

05/03/2019

7. Total positions of person(s) subject to the notification obligation

% of voting rights attached to shares (total of 8. A)

% of voting rights through financial instruments
(total of 8.B 1 + 8.B 2)

Total of both in % (8.A + 8.B)

Total number of voting rights of issuervii

Resulting situation on the date on which threshold was crossed or reached

11.55%

11.55%

206,270,581

Position of previous notification (if

applicable)

8.83%

8.83%

 

8. Notified details of the resulting situation on the date on which the threshold was crossed or reachedviii

A: Voting rights attached to shares

Class/type of
shares

ISIN code (if possible)

Number of voting rightsix

% of voting rights

Direct

(Art 9 of Directive 2004/109/EC) (DTR5.1)

Indirect

(Art 10 of Directive 2004/109/EC) (DTR5.2.1)

Direct

(Art 9 of Directive 2004/109/EC) (DTR5.1)

Indirect

(Art 10 of Directive 2004/109/EC) (DTR5.2.1)

AU000000SO44

23,833,501

11.55%

SUBTOTAL 8. A

23,833,501

11.55%

 

 

B 1: Financial Instruments according to Art. 13(1)(a) of Directive 2004/109/EC (DTR5.3.1.1 (a))

Type of financial instrument

Expiration
date
x

Exercise/
Conversion Period
xi

Number of voting rights that may be acquired if the instrument is

exercised/converted.

% of voting rights

SUBTOTAL 8. B 1

 

 

B 2: Financial Instruments with similar economic effect according to Art. 13(1)(b) of Directive 2004/109/EC (DTR5.3.1.1 (b))

Type of financial instrument

Expiration
date
x

Exercise/
Conversion Period
xi

Physical or cash

settlementxii

Number of voting rights

% of voting rights

SUBTOTAL 8.B.2

9. Information in relation to the person subject to the notification obligation (please mark the

applicable box with an “X”)

Person subject to the notification obligation is not controlled by any natural person or legal entity and does not control any other undertaking(s) holding directly or indirectly an interest in the (underlying) issuerxiii

X

Full chain of controlled undertakings through which the voting rights and/or the
financial instruments are effectively held starting with the ultimate controlling natural person or legal entity
xiv (please add additional rows as necessary)

Namexv

% of voting rights if it equals or is higher than the notifiable threshold

% of voting rights through financial instruments if it equals or is higher than the notifiable threshold

Total of both if it equals or is higher than the notifiable threshold

10. In case of proxy voting, please identify:

Name of the proxy holder

The number and % of voting rights held

The date until which the voting rights will be held

11. Additional informationxvi

Place of completion

London, United Kingdom

Date of completion

05/03/2019

Hayden Locke, CEO of Emmerson Plc #EML – Core Finance Interview with Zak Mir

Core Finance TV Channel – Hayden Locke, CEO of Emmerson Plc #EML and Zak Mir discuss the most recent corporate update on the company’s flagship Khemisset Potash Project, including a recent scoping study, financing and project de-risking.

Vanguard – US seeks to boost local production of 35 minerals, including Fluorspar

Africa’s mineral export will be hit very soon as the United States plans to boost domestic production of 35 critical minerals including uranium, cobalt and lithium, in pursuance of President Donald Trump’s America First policy.

The US said the 35 minerals are critical materials used in basic manufacturing, batteries and electronics.

In the full list are: Aluminum (bauxite), antimony, arsenic, barite, beryllium, bismuth, cesium, chromium, cobalt, fluorspar, gallium, germanium, graphite (natural), hafnium, helium, indium, lithium, magnesium, manganese, niobium, platinum group metals, potash, rare earth elements group, rhenium, rubidium, scandium, strontium, tantalum, tellurium, tin, titanium, tungsten, uranium, vanadium, and zirconium.

In trying to boost domestic production, America’s aim is to reduce its reliance on foreign suppliers, the Interior Department said on Friday.

The move echoes America’s ramping up of shale oil production during Barack Obama’s era that broke OPEC’s control of the crude oil market and depressed prices.

It was the department’s first step to carry out a December presidential order to break U.S. dependence on foreign minerals.

Lithium and cobalt are vital components of the rechargeable batteries that power electric vehicles. Battery makers and auto companies such as Tesla Inc and Volkswagen AG have been hunting for long-term supplies of the minerals.

“Any shortage of these resources constitutes a strategic vulnerability for the security and prosperity of the United States,” said Tim Petty, assistant secretary of the Interior for water and science.

The administration wants to identify new domestic sources of critical minerals; increase domestic exploration, mining and recycling; give miners and producers electronic access to better mapping and geological data; and streamline leasing and permitting for new mines.

It will be challenging to boost U.S. production of potash, used to make fertilizer for farmers, said Canada’s Nutrien Ltd, North America’s largest potash producer.

“There’s just not reserves that are economic in the United States, but there are lots in Canada,” said spokesman Richard Downey. “I think that the U.S. recognises that it’s a critical nutrient for corn and grain farmers, in particular, and they need access to the Canadian potash.”

The department seeks public comment until March 19.

Raising U.S. output of non-fuel minerals and fossil fuel resources is part of the Trump administration’s America First policy, aimed at boosting U.S. exports while curbing imports using tariffs and other protectionist measures.

Read more at: https://www.vanguardngr.com/2018/02/us-seeks-boost-local-production-35-minerals/

British Fluorspar in UK mining revival. Fluorspar market upturn projected for 2018 – Tertiary Minerals #TYM

In the wake of Tertiary Minerals #TYM landmark deal with German commodities giant Possehl Erzkontor, an article on Industrial Minerals forum Imformed.com provides further evidence of an upturn in the global Fluorspar market.

Excerpt from Imformed.com

British Fluorspar’s rejuvenation of the Milldam Mine in Derbyshire, UK is one of several industrial mineral developments which have galvanised a perceived revival of UK mining opportunities in recent years.

UK developments in evaluating and mining fluorspar, barite, salt, gypsum, potash, polyhalite, and lithium were highlighted at the recent IOM3 conference “Current Developments in the UK Mining Industry”, held 4-5 October in London.

Milldam mine is situated in the Peak District National Park and was established in 1951. Operations ceased in 2010 and then restarted in 2013, following British Fluorspar’s acquisition of the mine and Cavendish Mill in 2012.

British Fluorspar, which is owned by leading fluorochemicals manufacturer Fluorsid SpA, Italy, has developed the mine into a modern trackless underground mining operation using a sub-level open stoping system with an underground decline from the surface to mine the narrow vein sub-vertical orebody.

Robinson reported that the operation was coming to the end of its modernisation of equipment phase after a period of dewatering. The resource hosts fluorspar, but also lead and barite mineralisation, and is planned to be mined for 20 years.

barytes

Key to the success of Milldam has been the switch from open pit mining to mostly underground operations, clearly reducing its environmental footprint on the surface. Up to 2010, >90% of operations were open pit; by 2016 this had been reduced to a mere 15%.

“There is a future for underground mining in the UK and in Europe. We have to make underground mining in the UK more efficient, that is the future. The challenge is to remain self-sufficient in this highly regulated environment.” said Robinson.

Robinson acknowledged the recently published European Commission (EC) reassessment of its List of Critical Raw Materials (CRM), in which fluorspar is again listed as a CRM.

According to the EC, the EU has an overall import reliance of 70% for its fluorspar requirements. While China accounts for some 64% of world fluorspar supply, Mexico is the EU’s main source of fluorspar, accounting for 27% of demand (China accounts for 17%).

Interestingly, the 2017 EC CRM Review included barite for the first time, with an EU import reliance of 80% (China, 44%, India, 18%). British Fluorspar produces around 10,000 tpa barite, as well as 65,000 tpa processed fluorspar.

……Further to IMFORMED’s earlier report on fluorspar developments in South Africa, SepFluor Ltd appears to be progressing well, if a little ahead of schedule, with its Nokeng project with the plant expected to be completed by August 2018, with final handover expected by February 2019 (180,000 tpa acidspar, 30,000 tpa metspar).

In a recent interview with South Africa’s Mining Weekly, SepFluor CEO Rob Wagner considered that the fluorspar market has survived the bottoming out of prices from mid- to end-2016 and that 2017 was representing an upturn.

Robinson of British Fluorspar concurred to IMFORMED with this view, although Wagner went on to forecast “…a rising market over the next five to eight years.”

Certainly, prices have recovered during the year, hitting four-year highs and rising towards $400/t acidspar FOB China in September. According to Roskill Information Services, “The price of fluorspar generally is on a long-term upward trend.” Roskill’s take on the influence of China on the world fluorspar market will be presented at Fluorine Forum 2017.

Rising domestic demand from China’s fluorochemicals market has impacted supply for exports, although it must be noted that all mining and processing of Chinese minerals are being squeezed by antipollution inspections and the dynamite ban.

According to research by SepFluor, there will be a shortfall of fluorspar of 600,000-800,000 tonnes in global markets by 2026.

Link here to full Imformed.com article

The Decimation Of The Mining Industry

The shares of Goldcorp, the worlds most valuable mining company, have fallen by 75% since 2011 and are now worth a miserly $13.10 compared to $55, four and a half years ago. Yesterday alone they fell over 10% following publication of the company’s third quarter results.

The hopes of only a few weeks ago that gold would begin to lead the mining industry as a whole back on the road to recovery, have been dashed by the Feds recent announcement that it is leaving interest rates untouched, at least for now. Since the announcement, hedge funds have been bailing out of gold futures, big time, with the result that gold is only just holding its head above $1140 per oz. A break below that would indicate a reversal of the rising trend seen over the past few weeks.

Even potash which was seen as the answer to enabling the worlds ever burgeoning population to be fed, has not escaped the mayhem. Potash corporation, the worlds biggest fertiliser producer, has slashed its current  year forecasts and will sell less than expected due to a mixture of weak demand and weak prices.

Mining finance has virtually come to a stop with only 12 deals of over $12 m.announced in September,  to companies worth less than $500m.

The result of the devastation is that the worlds 2,684 listed mining companies are now worth less than the combined value of Apple and Google.

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