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Salt Lake Potash Ltd: DEEP DIVE
OVERVIEW

Salt Lake Potash to direct share of $12 million cash toward Lake Way in Goldfields

The company expects to spend up to $5.5 million this quarter as it advances a sulphate of potash agenda.
Lake Way in Western Australia's Goldfields
OVERVIEW: SO4 The Big Picture
A whole-of-lake resource estimate is expected for Lake Way

Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (FRA:W1D) (OTCMKTS:WHELF) increased cash reserves by 305% in the December quarter to support a resource update and feasibility study work for its Lake Way Sulphate of Potash (SOP) Project in the Western Australian Goldfields.

The Perth-based company added $9.1 million to its cash reserves in December quarter 2018 after a $13 million capital raising from high-quality investors who included its new managing director & CEO Tony Swiericzuk and chairman Ian Middlemas.

READ: Salt Lake Potash hails initial success in evaporation trials at Lake Way SOP project

The multi-listed company shared its December 2018 quarterly report with markets this week after spending $1.7 million on exploration and evaluation during the period.

Salt Lake directed $3.1 million to operating activities and $138,000 to investing activities while netting $12.3 million from financing activities.

The company ended the year with $12 million in cash and cash equivalents.

Speaking at the time of the placement announcement, Swiericzuk said: “We are very pleased to have received such strong support from new and existing shareholders to fund the construction of the initial on-lake infrastructure at Lake Way.

“These activities are on the critical path to enabling SO4 to become the first Australian commercial producer of SOP in a global sector with outstanding potential.

“This strong support from investors endorses our view that the Goldfields Salt Lakes Project (now the Lake Way project) has enormous potential for value creation and we now look forward to rapidly delivering on this potential for all shareholders and stakeholders.”

The company tipped $5.5 million in cash outflows for March quarter 2019 in its quarterly report on Thursday.

 

The company will utilise the funds it raised from high-quality investors as it pursues a busy work program at Lake Way and two other lake projects.

Salt Lake’s flagship project Lake Way is in WA’s Northern Goldfields area near Wiluna, a town featured in Phillip Noyce’s award-winning film Rabbit-Proof Fence.

Lake Way has a mix of tenements — its own Salt Lake tenements which it 100%-owns and the old Williamson open pit ground at Lake Way held by Wiluna gold miner Blackham Resources Ltd (ASX:BLK) (FRA:NZ3) (OTCMKTS:BKHRF).

Well-funded Salt Lake and developer-producer Blackham have an agreement that lets the SOP explorer access the old Williamson pit and ground and the site’s high-quality brine.

READ: Salt Lake Potash to benefit from WA government initiative for development of potash industry

Writing its quarterly report this week, Salt Lake said: “Access to Blackham’s existing mining leases provides advanced permitting pathway for early development activity, including the construction of the Williamson ponds.

“The company is concurrently progressing the imminent construction of the Williamson ponds, whilst also rapidly advancing a whole-of-lake scenario, including mineral resource estimates, permitting and approvals, pilot-plant process test work and assessment of infrastructure and logistical options.

“The Williamson ponds will be the first operational-scale SOP evaporation ponds built on a salt lake in Australia — an important part of the staged de-risking and development at Lake Way and across the company’s portfolio of salt lakes in the Northern Goldfields region.”

The collaborators have been working cooperatively together at Lake Way project and Blackham’s restarted Matilda-Wiluna gold-mining operation.

Their collaboration means they have the potential to share costs, facilities and infrastructure for their projects going forward.

Salt Lake and Blackham's tenements at Lake Way, a brine-lake project once part of the company's wider Goldfields Salt Lakes Project

Resource estimate

In the December quarter, Salt Lake and its contractors wrapped up field work to support an upcoming whole-of-lake resource estimate for Lake Way.

The current estimate only includes Blackham’s tenements.

Six per cent of published resources for the project fall into the measured category and are found in Williamson open pit brine at the old pit owned by Blackham and accessed by Salt Lake.

Brine volume is 1.26 million cubic metres with 11.4 kilograms potassium concentrate per cubic metre, 14.47 kilogram magnesium concentrate per cubic metre and 48 kilograms sulphate concentrate per cubic metre for 32,000 tonnes of SOP.

READ: Salt Lake Potash crosses a milestone towards developing ground-breaking Australian sulphate of potash project

The remaining ninety-four per cent of the company’s current resource estimate is in the indicated category and comes from sediment-hosted brine at Blackham’s Lake Way tenements.

The brine’s playa area is 55.4 square metres and lakebed sentiment volume is 290 million cubic metres while its brine concentration is 6.9 kilograms potassium per cubic metre, 4.6 kilograms magnesium per cubic metre and 28.3 kilograms sulfate.

Totally porosity is 0.43 for a 125 million cubic metre brine to achieve 1.9 million tonnes SOP.

Drainable porosity is 0.11 for 31.9 million cubic metres brine volume of 490,000 tonnes of SOP.

The project’s new resource estimate is expected to be used in future feasibility studies for the Lake Way project which had been the subject of a July 31 scoping study.

Salt Lake Potash's tenements north of Kalgoorlie-Boulder which had collectively formed the Goldfields Salt Lakes Project

Beefed up senior executive and project execution teams

Former Fortescue Metals Group Limited (ASX:FMG) (FRA:FVJ) (OTCMKTS:FSUGY) (OTCMKTS:FSUMF) executive of nine years Swiericzuk joined Salt Lake as its MD-CEO on November 5.

The respected mining engineer has a reputation for building and operating projects and was the general manager of Christmas Creek iron ore mine in the Pilbara region for the major Australian producer FMG chaired by high-profile Australian entrepreneur Andrew Forrest.

During Swiericzuk’s early years at FMG he oversaw the group’s port operations at a key port in the Pilbara region, Port Hedland, as it ramped up from 20 to 80 million tonnes a year.

READ: Salt Lake Potash secures $13 million to advance sulphate of potash project

Swiericzuk took a close look at the company before joining it, saying in October: “A deep dive into Salt Lake Potash’s high-quality technical work, business model and relationships has convinced me that it is easily the best company to lead the development of the sector in Australia.

“Its multi-lake holdings in proximity to the Goldfields infrastructure is paramount and offers great potential to achieve cost savings and economies of scale, as we did in the iron ore sector.”

Processing and NPI director Peter Cardillo, civil project director Lloyd Edmunds and technical project director Stephen Cathcart were also hired in the December quarter and bring with them a wealth of technical, operations, process infrastructure and construction expertise.

Other projects in Salt Lake’s portfolio

Salt Lake’s other two projects are also found in the Goldfields-Menzies region and are Lake Ballard and Lake Minigwal.

A mineral resource estimate is underway for Lake Ballard, 15 kilometres north of Menzies, which has a playa with a 698 square kilometre surface area.

READ: Salt Lake Potash enters MOU for long-term supply of sulphate of potash

Lake Minigwal in the Northern Goldfields is about 80 kilometres southeast of Laverton, the town once known as the British Flag.

During the December quarter Salt Lake commissioned extensive gravity geophysics over Lake Minigwal’s various branches, as part of a preliminary investigation into the location of the paleochannel and its depth to basement.

The company also has tenements, granted and under application, at Lake Wells, Lake Marmion, Lake Irwin, Lake Noondie, Lake Barlee, Lake Raeside, Lake Austin and Lake Moore in Western Australia.

In the Northern Territory, Salt Lake has the granted Lake Lewis tenement.

Major shareholders

Multi-listed Salt Lake has a market capitalisation of $91.1 million (£50.54 million).

Salt Lake had 175,049,596 shares on issue and 2,123 shareholders on August 31, at the time it put together its annual report for the financial year ended June 30.

The company’s top 20 shareholders had 64.6% of the company at the time.

Among the major shareholdings was the 24.81% stake represented by Salt Lake’s UK share registry Computershare Clearing Pty Ltd.

Significant shareholder Lombard Odier Asset Management Europe Limited (LOAME)’s was the top holder of ordinary shares with a declared holding of 17,071,000 shares registered to UBS.

READ: Salt Lake Potash reveals positive scoping study results for sulphate of potash plant

Major shareholder Arredo Pty Ltd had the second largest holding with 6.28% while third-largest shareholder Citicorp Nominees Pty Limited had 5.03%.

Rounding out the top five were Pershing Australia Nominees Pty Ltd, with 4.58% minor stake, and Howitt Mgmt Pty Ltd, on 2.64%.

Salt Lake sUBSequently raised $13 million from institutional and sophisticated investors in the December quarter, including MD & CEO Swiericzuk and chairman Ian Middlemas.

After the raising FIL Limited declared it had become a sUBStantial holder in the company on December 5, with a 5.04% stake.

LOAME’s stake later declined to 8.73% of shares on issue by January 9 although the wealth manager had increased the number of shares in its holding.

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