A SERIES of on-farm visits in recent weeks has the Australian Potash Company (APC) a step closer to determining a price for the Sulphate of Potash (SoP) product to be produced at its Lake Wells project.
APC managing director Matt Shackleton said in recent weeks he had visited farmers hosting trials on SoP and was encouraged by the feedback when the discussion turned to pricing of the product.
"We are getting a lot of traction in the market with farmers and probably more than anticipated at this stage," Mr Shackleton said.
"These farm visits were principally to find out everyone's thoughts on SoP versus Muriate of Potash (MoP) and it pretty much confirmed what we thought, that they are keen to use SoP over MoP.
"We also wanted to talk to them about how much they can afford to pay for it and I think they recognise there is a cost benefit to them as they can get more units of potassium into the ground in one application with SoP.
"If it can reduce the input costs overall, then these farmers are indicating that perhaps they are prepared to extend themselves on the potassium side of things and move to the SoP realm.
"All of that filters into the conversation about how much farmers want to pay and the feedback we are getting so far and the broad range of numbers they have provided is pretty suitable to us."
Mr Shackleton said APC was not in the position yet to go public with any pricing information but said it looked as though their assumptions of pricing and what growers may be prepared to pay would work "within our financial model".
"The other interesting feedback we are getting is that farmers are welcoming of a centralised storage unit, where they can come and pick up the product themselves," he said.
"Most farmers these days have their own trucks and we had always been thinking of setting up a storage facility on the broad gauge rail line, somewhere between Kalgoorlie and Kwinana, where farmers could travel and collect product.
"The three main drivers of cost on this project are energy, logistics and labour, so whatever we can save on logistics we are willing to share that cost if we can develop a market."
Mr Shackleton said discussions with Chinese partners was also ongoing in terms of an export market opportunity.
"The Chinese market, because of its size, is pretty important to our development plan and we have got to have that big offtake partner if we are going to get the finance we need to develop this project," he said.
"There is not a lot changing in the Chinese market at the moment, if anything there is an inflationary environment for MoP and so SoP is priced pretty keenly there and if we can get the pricing into our pending offtake agreement around those market prices in China, we would be happy campers."
Mr Shackleton also announced that APC had welcomed Scott Nicholas on board as its new chief financial officer.
Mr Nicholas has worked for various mining companies over the past 10 years across Australian assets.
He said he had been involved in taking greenfield resource assets through to production, including feasibility studies, construction, operations and offtake and marketing.
"More recently I was CFO of a company that developed a thermal coal mine in the Hunter Valley and we raised in excess of $600 million to develop that asset," Mr Nicholas said.
"Prior to that I was involved in a listed company here in Perth to develop the Windimurra vanadium project near Mt Magnet and $500m was raised to take that from a greenfield asset into production."