Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) has entered an MOU with a Chinese fertiliser distribution company setting out the basis for an offtake agreement for the Goldfields Salt Lakes Project in Western Australia.
The agreement with Sinofert Holdings Limited will provide sales and offtake rights for up to 50% of all sulphate of potash (SOP) production from the project.
Eight-year initial term
Product will be distributed into China and the initial term of the agreement is for eight years from January 1, 2020.
It is the second offtake agreement for the Goldfields project following a similar deal with Mitsubishi Australia Limited and Mitsubishi Corporation for sales and offtake rights of up to 50% of SOP production.
The company’s CEO Matt Syme said, “We are very pleased to have taken this important step to partner with Sinofert in further establishing distribution channels for the Goldfields Salt Lakes Project.”
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Salt Lake Potash plans to shortly begin initial construction of a demonstration plant at the project annually producing up to 50,000 tonnes of high-quality SOP.
The company plans to distribute production through a small number of global distribution partnerships.
Subsequent to the demonstration plant, the company plans to progressively expand production across a number of lakes in the project area.
Salt Lake Potash tenements across the Goldfields region of WA.
Distribution partnerships model
The Sinofert MOU is non-binding and sets out the key terms for a subsequent formal offtake agreement expected to be completed before the start of the initial term on January 1, 2020.
Syme said, “Our model of distribution partnerships is vital for what is essentially an export project and Sinofert is the leading participant in the world’s largest fertiliser market, where more than half of the world’s SOP is both produced and consumed.”
Sinofert covers the whole industry chain of resource, R&D, production, distribution and agrochemical services.
It annually handles 13 million tonnes of fertilisers and has more than 60 years’ experience in fertiliser production and distribution.