Race is on to mine lakes for fertilisers

Competitors Kalium Lakes Ltd and Australian Potash Ltd announced progress on their Beyondie and Lake Wells SoP projects to the Australian Securities Exchange (ASX) a day apart.

On Thursday, Australian Potash said a scoping study had "exceeded expectation" confirming the strength of "economic, financial and technical aspects" of its project at Lake Wells, 190 kilometres north east of Laverton.

Lake Wells is the south eastern end of a chain of salt lakes arcing north-west through the Little Sandy Desert north of Wiluna to the Great Northern Highway between Meekatharra and Newman.

On the strength of the scoping study Australian Potash said it intended to immediately start "optimisation studies" and site works, including building pilot solar evaporation harvest ponds, as a basis for a feasibility study planned in the second quarter this year.

Executive chairman Matt Shackleton said the study showed the Lake Wells project "will enjoy considerable production scale, low capital expenditure, high margins and a long mine life".

"The project has the right location, the right brine chemistry and the right extraction method for the resource," Mr Shackleton said.

The study projected a SoP production rate of 150,000 tonnes per annum in stage one over five years then 300,000t/a in stage two out to 20 years' mine life, the report to the ASX said.

Mine start up cost was projected to be $175 million with a stage one payback of 2.9 years, a stage one annual operating pre-tax cash flow of $61m and a stage one operating cost of $386 a tonne of SoP, dropping to $339/t in stage two.

Australian Potash said its calculations assumed a life-of-mine SoP sale price of $795/t.

On Friday race front runner Kalium Lakes told the ASX it had completed installation of "supporting infrastructure" – a work camp base – under budget at its Beyondie project, 160 kilometres south-east of Newman, and at the opposite end of the salt lake chain to Lake Wells.

The completed works included 16 air-conditioned accommodation units with ensuites, a solar pump fresh water bore with reverse osmosis treatment plant and storage tanks, diesel power generators, dome shelter workshop area with sea-container storage, a helicopter landing area and a refuse facility.

As well, 78 kilometres of access road in from the Great Northern Highway had been constructed and about 120 kilometres of access tracks and pads graded for the projected drilling program.

"We are able to push ahead with our planned works (including) current drilling activities, additional geophysical investigations, further pump testing of production bores, and pond verification construction trials, all of which feed into the current pre-feasibility study works," said managing director Brett Hazelden.

Kalium Lakes also proposes to produce 150,000t/a of SoP from its Beyondie project and export more than 100,000t/a through Geraldton port.

Also on Friday, Kalium Lakes' joint venture associate at its neighbouring Lake Carnegie SoP exploration project, Pilbara junior iron ore miner BC Iron announced it had earned a 15 per cent stake in the project.

It had contributed a mobile exploration camp and the first $500,000 expenditure to the Carnegie project and planned to boost its stake to 30pc by contributing the next $1m to a scoping study, BC Iron said.

Lake Carnegie is between the Beyondie project lakes and Lake Wells.

On March 14, Salt Lake Potash Ltd announced testing of samples from Lake Ballard, near Menzies, had indicated "excellent potential" to produce SoP and "associated products".

Salt Lake Potash has SoP interests in nine northern Goldfields salt lakes, including Lake Wells where it is conducting a feasibility study and long-term evaporation trial, processing more than 125 tonnes of brine and producing potassium and sulphate mixed salts and SoP samples in a laboratory.

Chief executive officer Matthew Syme said chemical composition of Lake Ballard brine was different to Lake Wells brine but similar potassium concentrations could be achieved after about 10 days of evaporation.

As well as SoP potential, the higher magnesium content of Lake Ballard brine indicated a possibility of producing magnesium sulphate or kieserite as a by-product, Mr Syme said.

There was a "substantial market" for kieserite – a slow-dissolving plant food promoting chlorophyll production and increased photosynthesis in fruit and vegetable plants – in South East Asia, he said.

As previously reported, a number of companies are looking to exploit ancient waterways beneath salt lakes across remote areas of WA's Little Sandy, Great Sandy and Gibson Deserts for SoP fertiliser.

They plan to pump brine from beneath the salt crusts, evaporate off the moisture leaving behind potassium, sulphur and sodium, separate and stockpile the sodium for sale and process the potassium and sulphur into a commercial fertiliser product.

North America, Chile and China are the only places SoP fertiliser is produced from brine and Australia imports about 30,000t a year.

Although it has the lowest salt index of any potassium fertiliser, its limited availability and price premium has generally restricted its use to high-value leafy vegetable and fruit crops or crops which will not tolerate higher salt content of other fertilisers.

More readily available and much cheaper Murate of Potassium (MOP) is generally used on broadacre cereal crops but leaves a higher salt residue.

Advertised prices for SoP range from about $600/t for a minimum 25t online order from a Chinese supplier to $13.20 for a 2.5 kilogram bag – equivalent to $5280/t – at a Perth garden supplies chain.