A SECOND private share placement within a month by Perth-based companies jockeying to be first to produce potassium fertiliser from remote WA salt lake brine, will help fund a pilot production plant.
On Thursday last week Salt Lake Potash Ltd announced it had completed the first tranche of a placement to raise $17.63 million to fund planning and initial construction of a $47.19m Sulphate of Potash (SoP) pilot plant in the northern Goldfields.
It issued 30.7 million new ordinary shares at a 10.4 per cent discounted price of 43 cents to what it described as “institutional and sophisticated investors” in the United Kingdom and Australia.
It proposes a further 10.3m shares issue in a second tranche placement on Friday, June 16.
In a notice to the Australian Securities Exchange (ASX) on Thursday during a requested trading halt of its shares, Salt Lake said its UK bookrunner Cenkos Securities had placed 30m shares at 25 pence – equivalent to A43c – and 11m had been placed in Australia.
It said shareholders were expected to approve the second tranche issue at an imminent general meeting.
As well as a pilot plant “to demonstrate the technical and commercial viability of brine SoP production”, the capital raising will fund on-going resource investigation and process test work, Salt Lake told the ASX.
The company believes construction of the pilot plant could start later this year with salts harvested next year in the first on-site “proof of concept” for SoP fertiliser production from WA salt lake brine.
It said the plant will be “cashflow positive” and operate for 12 to 24 months as an “accelerated pathway” to large scale commercial production.
Salt Lake chief executive officer Matt Syme said: “We are pleased to have successfully put in place the next stage of funding for our exciting (SoP) projects.
“We are working hard to become the first producer (in Australia) in a sector with outstanding potential.
“The excellent support we have received from our shareholders and advisers in the UK and Australia is a great help in our pursuit of that goal and we look forward to continued success together.”
Last month Salt Lake appointed the Australian branch of global oil, gas, mining, energy, process, infrastructure and environment consultant Amec Foster Wheeler to prepare options for the 20,000 to 40,000 tonnes per annum granulated SoP fertiliser pilot plant.
The modular-design plant could become the basis of a 10 times
larger – 200,000tpa first stage to 400,000tpa second stage – $230m production facility expected to be at the southern end of Lake Wells, 190 kilometres north east of Laverton.
As previously reported in Farm Weekly, Salt Lake has SoP interests in nine salt lakes around Laverton, Leonora and Menzies in the northern Goldfields, including lakes Irwin, Ballard and Marmion, but Lake Wells is its most advanced prospect.
It believes it can produce SoP for $241 a tonne in stage one there, dropping to $185/t in stage two.
SoP sells for almost $1000/t in Australia which imports 30,000-40,000tpa, and for more than US$500/t around the world.
The global SoP market is estimated at 7mtpa with annual growth of five per week.
Bulk fertiliser from Lake Wells would be trucked 320km to Malcolm Siding on the Kalgoorlie-Leonora line then railed 648km to Esperance.
In a quarterly report on April 20 Salt Lake told shareholders a Lake Wells site evaporation trial had processed 189t of brine and continuously produced harvest salts.
Some of those salts had been processed at SGS Laboratories, Perth, into 5.5 kilograms of SoP at 98pc purity, Salt Lake said.
After discussions with “a range of international industry SoP and specialist fertiliser producers and distributors”, it said a pre-feasibility study pilot plant was “the best path forward” for its project.
“While substantial salt lake brine production of SoP is undertaken in China, Chile and the United States, it is new in Australia and overseas production models need to be tested and adapted for Australian conditions,” Salt Lake told shareholders.
A pilot plant would “substantially de-risk the full-scale project”, it said.
The plant would also help establish wider market acceptance of SoP fertiliser which, because of a price premium over other potassium fertilisers, is generally only used on high-yield horticulture crops or where a low salt index is essential.
“Market acceptance of a new product in conservative agricultural markets is best achieved progressively and in conjunction with existing, established partners,” Salt Lake said.
“It is important to establish Salt Lake’s products as premium, sustainable nutrients in the key long-term markets and staged production increases are the best way to achieve this objective.”
When completed, the $17.63m capital raising will leapfrog Salt Lake ahead of Agrimin Ltd as cashed-up leader of five companies vying to be first to produce SoP fertiliser from WA salt lake brine.
Agrimin last week notified the ASX it had completed a pro-rata one-for-nine entitlement issue to existing shareholders, raising $6.2m to add to the $7m it raised last month with a private share placement.
Australia’s largest industry superannuation fund AustralianSuper increased its stake in Agrimin by a further $2.98m, buying 7.45m 40c shares not taken up by shareholders in the entitlement issue.
AustralianSuper, which manages retirement savings of more than 2.1m Australians, underwrote half the value of the issue.
Agrimin told the ASX 158 existing shareholders had accepted 8.1m shares, raising $3.24m.
On April 6 AustralianSuper became the first major institutional investor to put significant equity into the fledgling SoP industry when it paid $4m to take up more than 9.5m 42c shares as a “cornerstone” investor in Agrimin’s private placement.
Agrimin has said it will use the $13.2m in new capital to complete a pre-feasibility study in October; on-going tenure, native title and environment approvals negotiations; further on-site and process investigations and a definitive feasibility study on its Lake Mackay project in the Gibson Desert on the WA/Northern Territory border.
Its fertiliser would be trucked 590km to Alice Springs then railed to Darwin or Adelaide.
A scoping study last August indicated 20-plus years of production starting third quarter of 2020 was possible, with a SoP port delivery cost estimate of $342/t and a free on board (FOB) export cost in Darwin of US$256/t.
Also last week, Kalium Lakes Ltd told the ASX a drilling program at its Beyondie SoP project in the Little Sandy Desert, 160km south-east of Newman, had produced “outstanding” potassium grades up to 11,500 milligrams a litre of brine.
It indicated “consistently low impurity levels” in the proposed stage one start-up area with sodium to potassium ratios of between 7.2 and 8.3.
Kalium Lakes managing director Brett Hazelden said the results “continue to demonstrate the Beyondie Sulphate of Potassium project has the highest grade potassium brine resource in Australia”.
“Grade is an absolutely vital factor,” Mr Hazelden said.
“This, in turn, leads to lower capital and operating costs as a direct result of requiring fewer bores, less trenches, lower power demand and a smaller evaporation pond area.
“The low impurity levels, along with the higher grade, ensures a smaller environmental footprint, including significantly less NaCl (sodium chloride) waste disposal requirements.”
Extra production bores were being installed, pump testing was continuing and evaporation pond construction verification, including leak testing, was about to begin, Kalium Lakes told the ASX.
The Beyondie project aims to exploit potassium rich brine pumped from beneath a chain of lakes between the Great Northern Highway and Canning Stock Route, starting at the western end and working east.
Kalium Lakes proposes to produce 150,000tpa of SoP with more than 100,000tpa exported through Geraldton at a hoped for price of about $300/t.