Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) has revealed a significant extension to the resource at Lake Way in Western Australia following completion of an exploration program across the whole of the lake.
The estimated total resource at Lake Way has increased to 73 million tonnes (Mt) of SOP (sulphate of potash) calculated using total porosity and 8.2Mt of SOP calculated using drainable porosity.
Salt Lake chief executive officer Tony Swiericzuk said: “It is extremely pleasing to present the Lake Way mineral resource estimate for the ‘whole of lake” that confirms the significant size and very high-grade resource at Lake Way.
“It reinforces our current review process to consider a larger scale scenario at Lake Way and we anticipate releasing the technical results of the larger scale scenario towards the end of Q2 2019.”
Lake Way has been confirmed as having high-grade consistent brine chemistry both laterally and at depth, with an average grade of 14.5 kilogram of SOP per cubic metre of brine across the tenements.
Salt Lake has successfully delineated a paleochannel in excess of 30 kilometres in length along the eastern boundary of Lake Way, which supports the ability and optionality to produce brine from two separate sources (lake playa and paleochannel).
Bore test pumping at lake way
Furthermore, test pumping of historical bores at Lake Way has provided important data that supports efficient production by pumping from the paleochannel resource.
The new resource will enable Salt Lake Potash to finalise technical studies for a larger production scenario with an anticipated release date towards the end of Q2 2019.
The company will continue the exploration program at Lake Way as it looks to increase the resource definition in the southern section of the lake and ultimately convert the resource estimate into ore reserves following further technical studies.
Meanwhile, construction of the first phase of the Lake Way Evaporation Ponds is progressing well.
READ: Salt Lake Potash begins constructing Australia’s first commercial on-lake SOP evaporation ponds
The first phase will enable de-watering of the Williamson Pit. The utilisation of the Williamson Pit brine will accelerate Salt Lake Potash’s pathway to first production of SOP at Lake Way.
In a note to clients, analysts at ‘house’ broker Shore Capital in London said: “Today’s ‘whole of lake’ estimates compare well with Lake Way’s exploration targets from March 2018 of 28-54Mt SOP TP or 2.7-19Mt DP.
“More importantly, from our point of view, our conservative NPV10% valuation of £120mln for an illustrative Lake Way 200ktpa production scenario was predicated on drainable lakebed sediment and palaoechannel SOP resources of at least 2.5Mt and 1.5Mt being delineated.”
In afternoon trading in London, shares in Salt Lake Potash were 7% higher at 30.50p.