18:00 Mon 18 Nov 2019
Salt Lake Potash Ltd - Production Offtake Term Sheets for Lake Way SOP
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AIM/ASX Code: SO4
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PRODUCTION OFFTAKES SECURED FOR 170ktpa OF LAKE WAY PREMIUM SOP PRODUCT
HIGHLIGHTS
§ Binding term sheets signed with three leading fertiliser distributors for the sale of premium grade Lake Way SOP with a total volume commitment of up to 170,000t per annum:
o Unifert - 60,000t per annum in the Middle East and Africa
o Indagro - 50,000t per annum in North America and Europe
o Fertisur - 60,000t per annum in South America
§ 70% of total planned production committed for a five year term from commencement of shipping in 2021 with take or pay arrangement on product resale
§ Discussions substantially advanced with an additional Tier-1 fertiliser group for sale of material quantity of production from the
§ Binding agreements support SO4's strategy of diversifying distribution across key global premium SOP seabourne markets
TONY SWIERICZUK
SO4 Chief Executive Officer
"We are delighted to have finalised these offtakes for the sale and distribution of premium SOP product that will be produced at our Lake Way Project . Binding agreements with industry leaders, Unifert, Indagro and Fertisur support SO4's marketing strategy of targeting geographical markets with strong growth in crops that benefit most from SOP fertilisers. SO4 continues to progress discussions with other leading fertiliser companies for the sale of our remaining SOP production"
Lake Way Project
Lake Way is located in the
The Company is rapidly progressing the development of the
SO4 has demonstrated that it can produce a premium SOP product that is highly water soluble with a >53% K2O grade (Standard Grade 50% K20).
Table 1: Lake Way Pilot Plant 2 Specifications
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Specification |
Potassium |
K2O |
>53% |
Sulphate |
SO4 |
>55% |
Chloride |
Cl |
<0.1% |
Insolubles |
|
<0.1% |
Total Solubility |
(g/100g H2O) |
11.8 |
Dissolution Rate |
% in 1 minute |
>95% |
These outstanding test results indicate that the product is comparable with other premium grade water soluble products on the market and supports SO4's marketing strategy to supply into the premium SOP markets. The price achievable for soluble grade SOP can be up to 20% above the standard SOP pricing.
Marketing Strategy
Supported by the extensive test work and samples produced to date from Lake Way harvested salts, SO4 is planning to deliver a high quality, premium grade SOP to the market. Initially the Project will produce two products, (i) a high potassium content standard powder SOP (SSOP) and (ii) fertigation grade water soluble SOP (WSSOP). SO4 intends to increase the product offering to include a granular grade after production has commenced.
SO4's marketing strategy for the sale and distribution of its premium grade SOP is to work with selected industry leading partners targeting high growth markets and focussing on geographical areas with the highest concentration of crops which benefit from SOP fertilisers.
OFFTAKE TERM SHEETS
SO4 has signed three binding agreements with industry leading partners for the sale of up to 170,000t per annum into key geographical markets, as follows:
§ Unifert - 60,000t per annum in the Middle East and Africa
§ Indagro - 50,000t per annum in North America and Europe
§ Fertisur - 60,000t per annum in South America
Each have global distribution networks and established logistics infrastructure to support the efficient delivery of SO4's premium quality SOP to end customers. These agreements are an important step in derisking the Project in the years following commissioning of the
SO4 is now progressing to execution of final purchase agreements, based upon the binding terms sheets, with each of these offtake counterparties.
Unifert
Unifert has been a leader in its field for over 50 years, providing comprehensive solutions to the agricultural industry in Europe, the Middle East and Africa by distributing a broad range of agricultural inputs such as seeds, crop protection chemicals, specialty and traditional fertilizers. Unifert participates in the international trading and European distribution of traditional fertilizers sold either through public tenders or directly to wholesalers.
Table 2: Unifert Term Sheet - Key Terms
Terms |
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Counterparty |
Unifert International SAL |
Conditions Precedent |
Effective upon Entry into detailed purchase agreement before |
Product |
Lake Way SOP representative of the typical values in the following specifications: - High grade potassium o K 44% o K2O 53% o Cl <1.0% - Fertigation Grade - Water soluble SOP o K 44% o K2O 53% o Cl <0.1% o Insolubles <0.09% o Solubility 11.9g/100gH2O o Dissolution >95% in 1 minute |
Term |
5 years from commencement of production |
Territory |
Middle East and Africa (specified by country) |
Quantity |
20% of production during CY2021 and 60,000t per annum 2022-2025 with effective take or pay arrangement on product resale |
Price |
Quarterly negotiation with resolution mechanism |
Indagro
Indagro is an international trading firm established in Geneva, Switzerland in the early 1980's. The company specializes in the global marketing of chemical fertilizers and their raw materials. Through its network of 16 representative offices around the globe, Indagro adds value to the fertilizer supply chain by offering proprietary risk management services to producers, distributors and importers alike.
worldTable 3: Indagro Term Sheet - Key Terms
Terms |
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Counterparty |
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Conditions Precedent |
Effective upon |
Product |
Lake Way SOP representative of the typical values in the following specifications: - High grade potassium o K 44% o K2O 53% o Cl <1.0% - Fertigation Grade - Water soluble SOP o K 44% o K2O 53% o Cl <0.1% o Insolubles <0.09% o Solubility 11.9g/100gH2O o Dissolution >95% |
Term |
5 years from first production |
Territory |
North America, Europe and Africa (specified by country) |
Quantity |
50,000t per annum with effective take or pay arrangement on product resale |
Price |
Quarterly negotiation on market basis with resolution mechanism |
Fertisur
Fertisur is a Peruvian company distributing fertilizers throughout South America, focussing on products designed to offer crop solutions through drip fertilization, fertigation and foliar feeding for greenhouses. The market for SOP in Latin America is forecast to grow with significant agricultural areas dedicated to high-value crops and historical low application rates.
worldTable 4: Fertisur Term Sheet - Key Terms
Terms |
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Counterparty |
Fertilizantes Del Sur S.A.C. (Fertisur) |
Conditions Precedent |
Effective upon |
Product |
Lake Way SOP in the following specifications: - Fertigation Grade - Water soluble SOP o K 44% o K2O 53% o Cl <0.1% o Insolubles <0.09% o Solubility 11.9g/100gH2O o Dissolution >95% |
Term |
5 years from first production |
Territory |
South America |
Quantity |
30,000t of production during CY2021 and 60,000t per annum 2022-2025 with effective take or pay arrangement on product resale |
Price |
Quarterly negotiation on market basis with resolution mechanism |
Ongoing discussions
Discussions are substantially advanced with an additional Tier-1 fertiliser company for the sale of premium SOP from the
For further information please visit www.so4.com.au or contact:
Tony Swiericzuk / Clint McGhie |
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Tel: +61 8 6559 5800 |
Colin Aaronson / Richard Tonthat / Ben Roberts |
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Tel: +44 (0) 20 7383 5100 |
Derrick Lee / Peter Lynch |
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Tel: +44 (0) 131 220 6939 |
Rupert Fane / Ernest Bell |
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Tel: +44 (0) 20 7907 8500 |
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Appendix A - Competent Person Statement and Disclaimer
Competent Persons Statement
The information in this announcement that relates to Production Targets and Ore Reserves for Lake Way is extracted from the announcement entitled 'Outstanding Bankable Feasibility Results for Lake Way' dated
The information in this announcement that relates to Process Testwork Results is extracted from the announcement entitled 'Premium Grade Water Soluble Sulphate of Potash Produced from Lake Way Salts' dated
Production Target
Forward Looking Statements
This announcement may include forward-looking statements. These forward-looking statements are based on
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