Deal signed to mine lake for fertiliser

BC Iron Ltd and Kalium Lakes Ltd last week announced an unincorporated joint venture to explore the potential of Lake Carnegie, a salt lake about 220 kilometres north-east of Wiluna in the Little Sandy Desert, for solar evaporation sulphate of potash (SoP) fertiliser production.

Kalium Lakes, which listed on the Australian Securities Exchange in December after raising $6 million in an over-subscribed share issue, has an exploration licence and two exploration licence applications covering about 1700km2 of the lake.

Known as the Carnegie project, the joint venture is about 110km from the eastern end of Kalium Lakes' further advanced Beyondie SoP fertiliser project some 160km south east of Newman covering a chain of salt lakes between the Great Northern Highway and Canning Stock Route.

It is close to similar prospective SoP projects on Lake Wells to the south-east of Lake Carnegie.

In December Salt Lake Potash Ltd reported brine concentrations of potassium and sulphate mixed salts from shallow pit and trench trials at Lake Wells and through the second half of last year Australian Potash Ltd installed and tested three bore sites and began an evaporation trial at Lake Wells.

Under the joint venture agreement Kalium Lakes will manage the Carnegie project and BC Iron can earn up to a half share by predominantly funding exploration and development expenditure across several stages.

In the first stage scoping study phase, BC Iron can earn a 30 per cent interest by donating use of its mobile camp facilities and funding the first $1.5m expenditure.

Funding a further $3.5m in a stage two pre-feasibility study phase and $5.5m for a stage three feasibility study will boost its interest.

In return Kalium Lakes has been offered rights to acquire a half share of BC Iron's prospective Mardie solar salt production project 100 kilometres south-west of Karratha.

Up until last October BC Iron was in a joint venture agreement with Fortescue Metals Group in the Nullagine iron ore project, which operated for five years and generated almost $100m for BC shareholders until falling iron ore prices forced the mine into care and maintenance in 2015.

It also has a producing Central Pilbara iron ore mine operated by Mineral Resources Ltd and a proposed East Pilbara iron ore mine called the Buckland project, as well as other exploration-stage projects in a range of commodities.

The iron ore junior changed direction last year with a focus on becoming a diversified minerals portfolio manager.

BC Iron managing director Alwyn Vorster acknowledged his company's previous contact with key members of the Kalium Lakes team through the Buckland project was part of the attraction of the joint venture.

Some of the Kalium Lakes team had worked for Iron Ore Holdings - which BC Iron took over in 2014 - and were instrumental in completing the Buckland project feasibility study.

"BC Iron expects the Kalium team will rigorously and rapidly progress the Carnegie project through the exploration and development phases," Mr Vorster said.

"Through this agreement with Kalium, BC Iron has gained exposure to a highly prospective project in an agricultural commodity with attractive long-term dynamics.

"Becoming involved in an agricultural commodity has been a clearly articulated objective of BC Iron and this joint venture agreement with an expert potash company in Kalium provides us with the required exposure at low risk," he said.

Late last month Kalium Lakes announced it was working with German potash expert K-UTEC and other specialised consultants on a pre-feasibility assessment of potential production scenarios for Beyondie.

It said it hoped to complete pre-feasibility by the middle of the year.

Meanwhile, construction of a 78km access road in from Kumarina Roadhouse on the Great Northern Highway and installation of a 12-person accommodation village and basic work site infrastructure was expected to be completed in coming weeks, the company said.

Further pump testing using a trailer-based test rig is then expected to further prove up the potassium rich brine resource beneath the salt lakes.

As previously reported, Kalium Lakes is the front runner among companies looking to exploit ancient waterways beneath salt lakes stretching across remote areas of WA's Little Sandy, Great Sandy and Gibson Deserts for SoP fertiliser.

Kalium's plan is to pump brine from below the salt crust up through 40 metres of sand, evaporate the moisture off in shallow ponds leaving behind potassium, sulphur and sodium, and then separate and stockpile the sodium for sale and produce a granular fertiliser product from the potassium and sulphur.

It plans to produce 150,000 tonnes of SoP a year and export more than 100,000t of it through Geraldton port.

Australia imports between 30,000t and 40,000t of SoP a year.

The project stemmed from research by Pilbara cattleman, Newman businessman and helicopter pilot Brent Smoothy who is Kalium Lakes' founder and major shareholder.

He holds the Kumarina pastoral lease on which the Beyondie project is located.

Although it has the lowest salinity index of all potassium fertilisers, SoP's limited availability and premium price has made it a niche product in Australia, generally reserved for high-value leaf crops and fruit and vegetables or for use where sodium in other potassium fertilisers might burn sensitive crops.