Fertiliser plans get super fund backing

Fertiliser plans get super fund backing


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Workers drilling test bores at Lake Mackay, straddling the WA and Northern Territory border, to prove up the potassium-rich brine resource Agrimin Ltd plans to process into high-value Sulphate of Potash fertiliser. AustralianSuper, Australia's biggest industry superannuation fund, has invested in the project.

Workers drilling test bores at Lake Mackay, straddling the WA and Northern Territory border, to prove up the potassium-rich brine resource Agrimin Ltd plans to process into high-value Sulphate of Potash fertiliser. AustralianSuper, Australia's biggest industry superannuation fund, has invested in the project.

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RETIREMENT savings from more than 2.1 million Australians are contributing to the development of a potential global export fertiliser industry in remote WA.

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RETIREMENT savings from more than 2.1 million Australians are contributing to the development of a potential global export fertiliser industry in remote WA.

Australia’s biggest industry superannuation fund AustralianSuper paid $4 million on April 6 to take up shares in Agrimin Ltd, becoming the first major institutional investor to put significant equity into the fledgling fertiliser industry.

Nedlands headquartered Agrimin is one of five Perth-based Australian Securities Exchange (ASX) listed companies vying to be first to produce high-value granular Sulphate of Potash (SoP) fertiliser from brine beneath WA salt lakes.

Exploration, bore drilling, brine sampling and scoping studies to establish resource size and production volume potential by the five companies has, up until this month, been funded primarily by private speculators, private superannuation funds and smaller investment banks.

Melbourne-based Australian- Super’s entry signals major recognition and endorsement of the SoP market potential touted by the five companies aiming to produce it.

AustralianSuper manages retirement savings totalling more than $100.25 billion.

Former Reserve Bank and Infrastructure Australia board member Heather Ridout is chairwoman, Australian Council of Trade Unions secretary Dave Oliver is deputy chairman and chief executive of the Australian Industry Group and former foreign affairs advisor Innes Willox is a director.

Its investment committee is headed by former Macquarie Group senior executive Jim Craig.

Major investments include a $1.1b stake in Hawaii’s premier Ala Moana shopping centre; a $1.3b share of the 27 hectare Kings Cross residential, retail and commercial redevelopment in London; a $5b stake in Port Botany and Port Kembla as a member of the NSW Ports consortium and a $7b investment in Queensland motorways, as part of the Transurban consortium.

By comparison, taking up more than 9.5 million, 42 cent shares as “cornerstone” investor in Agrimin’s $7 million fundraising private share issue seems insignificant.

But it may have momentous ramifications in the next three years for WA as an export commodity producer and for Australian horticulture and agriculture as end-product users.

The $7m private share issue, coupled with a one-for-nine pro-rata entitlement offer to existing shareholders, could propel Agrimin and its Lake Mackay SoP project, in the Gibson Desert on the WA/Northern Territory border, into the lead in the SoP production race.

The pro-rata offer of 15.6m shares at 40c a share closes tomorrow, Friday.

It aims to raise a further $6.2m and AustralianSuper has also conditionally underwritten half the value of that offer.

The combined $13.2m capital injection will make Agrimin easily the most cashed up of the five in the race.

Agrimin has said it will “bring forward” completion of a pre-feasibility study (PFS) to October, on-going tenure, native title and environment approvals negotiations, further on site and process investigations and a definitive feasibility study (DFS).

Its competitors are also working on PFSs and while some are further advanced on the ground with bore, trenching and evaporation pond trials, Agrimin is the only one so far to have announced it has produced a commercial grade SoP sample from solar-evaporated concentrated brine.

In the second half of last year it sent salt samples harvested from its Lake Mackay brine evaporation trial to Saskatchewan Research Council, Canada, and using its proposed process produced a 53.8 per cent potassium oxide SoP sample.

The test confirmed liberated leonite – a hydrated double sulfate of magnesium and potassium – can be readily concentrated by flotation and converted to SoP by adding heated water, it said.

It has previously announced an agreement with a Danish renewable energy company to develop a solar system to heat water to 55 degrees Celsius for this part of the production process.

Agrimin proposes to collect brine seeping into trenches in the salt surface of Lake Mackay, evaporate off the liquid in ponds, dry harvest crystallised potassium salts and produce commercial SoP through conventional milling, flotation, crystallisation, drying and sizing.

The fertiliser would be trucked 590 kilometres to Alice Springs then railed to Darwin or Adelaide ports.

A scoping study completed last August indicated 20 plus years production, starting the third quarter of 2020, with a SoP port delivery cost estimate of $342 a tonne and a free on board (FOB) export cost in Darwin of US$256/t ($339/t).

AustralianSuper’s investment made it Agrimin’s second largest shareholder with a 6.8pc interest.

The share issue prospectus listed Hillboi Nominees Pty Ltd and associates – a private investment company operated by a Claremont stockbroking family – as Agrimin’s largest shareholder with 13. 47pc.

Agrimin chief executive officer Mark Savich, through investment vehicle Gugalanna Holdings Pty Ltd, is the third biggest with 6.77pc, followed by Victorian family-owned investment fund Walloon Securities Pty Ltd with 6.62pc.

HSBC Custody Nominees (Australia) Ltd, a subsidiary of HSBC Bank Australia, is next biggest with 6.17pc then Sydney-based investment advisor UBS Nominees Pty Ltd with 5.24pc.

AustralianSuper last week declined to comment on its investment in Agrimin and the WA fertiliser industry.

A spokesman said it “didn’t comment on specific equity investments”.

But Agrimin, through Mr Savich, was happy to comment.

“We are delighted to have support from AustralianSuper as a cornerstone shareholder of Agrimin,” Mr Savich said.

“With AustralianSuper being the country’s largest super fund, it can focus on large assets that will provide long-term growth.

“In respect to Lake Mackay’s scale, it is the only undeveloped SoP-bearing salt lake in the world that compares to existing operations in the US, China and Chile.

“We are targeting the production of 370,000 tonnes per year of SoP, which today sells for more than US$500 ($662) a tonne around the world, and for close to $1000/t here in Australia.

“So this is potentially a very significant and strategic new resources project for WA,” he said.

Agrimin competitor, West Perth-based Australian Potash Ltd, last year gained support of a significant private investor.

Legendary Perth prospector and mining tenement wheeler and dealer Mark Creasy, his Yandal Investments Pty Ltd and Australian Gold Resources Pty Ltd investment vehicles and an associated trust and private superannuation fund, became a major shareholder.

The multi-millionaire accepted 29m ordinary shares in what was then Goldphyre Resources – it changed its name to Australian Potash last November – in return for potash rights on two exploration licences adjacent to the company’s Lake Wells potash project.

At the time Goldphyre’s share price was about 10c, but Australian Potash’s current share price of 12c puts the value of that deal at almost $3.5m.

At the same time Mr Creasy and his investment vehicles purchased an additional 50,000, 5c shares, taking his holding to 13.13pc.

In January, Perth Select Seafoods Pty Ltd notified the ASX it had purchased 12.6m Australian Potash shares at a cost of $534,000, making sole director Hendricus Indrisie, Burswood, a significant shareholder with 5.69pc.

Australian Potash is proposing a $175m start-up two-stage project producing SoP at Lake Wells, 190 kilometres north east of Laverton, and plans to have completed a DFS in the first quarter next year.

It proposes to pump brine from a bore field and produce up to 150,000 tonnes per annum in stage one over five years then 300,000tpa in stage two out to 20 years.

With a stage-one SoP production cost estimate of $368/t dropping to $339/t in stage two, bulk and bulka-bagged fertiliser would be road and rail transported about 900 kilometres to Esperance port.

Its Lake Wells neighbour, Salt Lake Potash, on Tuesday last week announced it has SoP interests extending over nine salt lakes around Laverton, Leonora and Menzies in the Goldfields region, including lakes Irwin, Ballard and Marmion.

The Perth-based company’s main focus is southern Lake Wells and on Friday it announced plans for a pilot “proof of concept” plant there to process brine into SoP as part of its PFS.

Ultimately it proposes trenching and a shallow bore field for a $230m two-stage ramp up to 200,000tpa at a production cost of $241/t of SoP in stage one, and 400,000tpa at $185/t for stage two.

Stage two would only proceed once earnings had paid off stage one’s capital cost, Salt Lake has said.

Bulk fertiliser would be trucked 320km to Malcolm Siding on the Kalgoorlie-Leonora line, then railed 648 kilometres to Esperance.

The other companies in the SoP race are Nedlands-based Reward Minerals Pty Ltd and Balcatta headquartered Kalium Lakes Ltd – the latest entrant, floated with a $6m over-subscribed public share issue in December.

Reward is working on a SoP project at Lake Disappointment in the Little Sandy Desert near the junction of the Canning Stock Route and Talawana Track.

It proposes a bore field, evaporative ponds, then standard milling, crystalising and drying processes to produce 400,000tpa of SoP over 13 years, with an estimated production cost of $204/t ex works and indicative FOB price at Port Hedland of $328/t.

While Reward’s initial resource was first identified in 2007, the project was delayed by native title issues until December 2011.

It is also exploring for SoP potential at lakes Winifred and Dora to the north, between Lake Disappointment and Telfer and Lake Waukarlycarly north west of Telfer, in the Great Sandy Desert.

As previously reported, Kalium Lakes’ Beyondie project plans to exploit potassium rich brine pumped from beneath a chain of lakes between the Great Northern Highway and Canning Stock Route, 160km south-east of Newman in the Little Sandy Desert.

It proposes to produce 150,000tpa of SoP with more than 100,000tpa exported through Geraldton port at a hoped for price of about $300/t.

It also has a joint venture agreement with Pilbara junior iron ore miner BC Iron to explore the SoP potential of Lake Carnegie which lies between its Beyondie project and Lake Wells.

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