AGRICULTURE investor-backed front runner in a race to produce high-value Sulphate of Potash (SoP) fertiliser in WA, Kalium Lakes Ltd, plans to start trialling a purification plant early next year.
It estimates more than 3000 tonnes of potassium-rich salts – equivalent to about 170 tonnes of processed SoP – have already precipitated in evaporation ponds at its Beyondie project in the Little Sandy Desert, 160 kilometres south-east of Newman.
The company, which claims “agricultural investors” hold 51 per cent of its shares, started filling its pilot large-scale gravity-flow system of 11 evaporation ponds less than three months ago.
Brine is pumped from beneath a chain of salt lakes between the Great Northern Highway and Wiluna into the first of the ponds and water is evaporated off as the brine flows through the graded pondage system, leaving harvest salts behind.
In a statement to the Australian Securities Exchange (ASX) last week, Kalium Lakes (ASX designation KLL) reported salts to a depth of between 20 and 80 millimetres had accumulated in its plastic-lined evaporation ponds.
It said the salts had formed at the expected brine concentrations and salt crystallisation sequence predicted by consultants DSB International, K-UTEC AG Salt Technologies and DRA Global.
A small salt harvester, similar to a grain harvester but with a much stronger front, has been purchased to trial collection methods, KLL said.
It is preparing to send harvest salt samples from Beyondie to K-UTEC in Germany during the next quarter to start trials of its purification plant, it said.
KLL has been working with K-UTEC, the privatised successor to the Central German potash industry’s potash research institute, on design and construction of a modular gas-fired SoP processing plant for Beyondie.
Also expected to start in the first quarter next year, KLL said, was a pilot trial with EcoMag Ltd to recover Hydrated Magnesium Carbonate (HMC) from waste bitterns remaining after salts harvest at Beyondie.
EcoMag has built a transportable pilot plant to test a new process being trialled in South Korea which could see magnesium products developed from the waste left behind after solar evaporation for large-scale SoP or salt production.
KLL has started on a bankable feasibility study (BFS) – the final stage of determining whether the Beyondie SoP project should proceed to full-scale commercial production – and on Friday completed an over-subscribed share placement raising $14.2 million in working capital.
It also announced a share purchase plan offer, opening today and closing on December 14, for existing shareholders which is expected to raise a further $2m.
KLL said money raised would fund completion of the BFS and preliminary site preparation for further works at Beyondie.
Beyondie project initiator and KLL’s major shareholder with 39pc, pastoralist and Newman helicopter charter and earthmoving business owner Brent Smoothy, personally committed to subscribe for up to $2m of the share placement.
Because of interest in the issue from “institutional and sophisticated retail investors in Australia and internationally”, Mr Smoothy’s commitment had been scaled back to $1.6m and the issue of 3.8m new shares to him would need to be approved by shareholders at an extraordinary general meeting, KLL told the ASX.
Earlier this month, KLL announced it had appointed Frederick Kotzee as chief financial officer and consultant BurnVoir Corporate Finance to begin arranging project financing for Beyondie to be developed to commercial production.
“With the completion of a robust pre-feasibility study, the establishment of a maiden probable reserve and the large-scale pilot ponds producing the anticipated volume of salts in the planned sequence, Kalium Lakes is set to move rapidly through the next development phases of the project and deliver its near-term goal of becoming the first Australian SoP producer,” said managing director Brett Hazelden.
“The pilot scale activities are providing vital information that will be incorporated into the bankable feasibility study and we will also be able to expand those activities for the full scale development requirements.
“We continue to gain momentum and accumulate the support of investors and brokers who appreciate and understand the level of detail we are able to provide on every aspect of the project.
“The company looks forward to completing the pilot scale works, bankable feasibility study and project financing during the course of next year.”
KLL’s pre-feasibility study established it has a maiden probable reserve of 2.66 million tonnes of SoP above a “cut-off grade” of 3500mg/l potassium, within its stage-one approval footprint which represents about 21pc of lake surface area in its tenement package.
The BFS is developing a “base case” for 150,000 tonnes of SoP per annum production, with the option of an incremental start-up of 75,000t/pa to minimise cost and risk.
A pre-production capital cost of $220m – which includes building a 78 kilometre gas pipeline – for the base case or $124m for a phased ramp-up, is anticipated.
A 21-year life-of-mine operating cash cost of $244-253/t for SoP loaded and ready for export at Geraldton or Fremantle ports is predicted.
Australia imports all of its SoP fertiliser, about 40,000t/pa which sells bulk for up to $950/t.
It is used mainly on high-value fruit, vegetable and flower crops because of its price premium over more readily available Muriate of Potassium (MoP) which is less suited for many areas because of its higher salt index.
KLL also has a SoP joint venture with BC Iron Ltd further east at Lake Carnegie, 220km north east of Wiluna, where recent approvals have enabled exploration work to start.
As previously reported in Farm Weekly, KLL is one of five Perth-based companies looking to exploit remote salt lake brine to supply growing domestic and global demand for SoP, which its proponents claim can help “drought-proof” crops against climate change.
Also last week, another SoP production race competitor, Australian Potash Ltd (ASX designation APC), reported positive long-term pumping test results at its Lake Wells project in the northern Goldfields, about 500km north east of Kalgoorlie.
It said pumping tests and monitoring bores had confirmed brine would drain out of a surface clay sedimentary layer at Lake Wells to recharge a lower permeable sand layer which it anticipated would become its production aquifer supplying brine for SoP via an on-lake bore field through the clay.
APC estimates 32pc of its indicated 12.7mt contained SoP resource is in the clay layer.
Based on the results of a scoping study, APC is predicting a production rate of 150,000tpa of SoP for the first five years of commercial operation, ramping up to 300,000tpa out to 20 years.