Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) has consolidated its strategic tenement package at Lake Way Sulphate of Potash (SOP) Project in WA through a sales agreement with Blackham Resources Ltd (ASX:BLK).
This will result in Salt Lake Potash acquiring a package of tenements and securing access to power and process water rights, providing synergies for the project, including capital and operating cost savings.
To help fund the acquisition, the company will place 10.58 million shares to Fidelity International to raise A$7.4 million before costs.
Salt Lake Potash’s CEO Tony Swiericzuk said: “This is an exceptional transaction for Salt Lake Potash that will provide significant benefits to the Lake Way project and further support the rapid progress towards first production.
“The acquisition will provide material value through capital and operating savings to Salt Lake Potash and also significantly de-risk the Lake Way project by providing ownership of tenements and further access to key infrastructure assets including water and power.”
Blackham and Salt Lake Potash have been cooperating on their respective projects in the Wiluna/Lake Way region for the past 18 months.
Salt Lake Potash is progressing a Bankable Feasibility Study for the Lake Way project and has identified specific Blackham assets which provide synergies for the project and material value to the company.
These new tenements sit on the northern end of Lake Way and to the east of the Gold Fields Highway.
Rights to process water
The agreement also provides the company with access and rights to process water from Blackham with an option to acquire a key borefield which will support the Lake Way project.
Blackham has agreed to the immediate access to process water and consent to the grant of new tenure over its tenements to enable Salt Lake Potash to advance early work including camps and water infrastructure.
A brine royalty granted to Blackham as part of a Split Commodity Agreement will be extinguished effective June 30, 2020.
The company will pay total consideration of A$10 million, which includes A$500,000 payable under the commodity agreement.
Rehabilitation obligation for all existing disturbance on Lake Way will also be assumed by Salt Lake Potash while Blackham will retain gold rights across the transferred tenements.
The companies have also identified a mutual opportunity for Salt Lake Potash to utilise part of the pre-strip material from Blackham’s proposed Williamson Pit development to construct on-lake evaporation ponds.
This will see Salt Lake Potash contribute up to A$10 million towards the performance of the pre-strip of the Williamson Pit.
Pre-strip material will be directly applied towards the construction of the bund walls of the on-lake evaporation ponds.
Swiericzuk added: “Salt Lake Potash is delighted to continue the strong relationship we have built with Blackham and look forward to further developing the mutual opportunities that exist with our adjacent operations.”
The placement to Fidelity International, which will be made under the company’s existing Listing Rule 7.1 placement capacity, will fund most of the acquisition costs and is expected to complete on or around August 5, 2019.
Meantime, company directors have thanked Matthew Syme upon his retirement as a non-executive director of the company to pursue his other business interests.
“The directors thank Mr Syme for the outstanding job leading the company in its early years and establishing the foundations we are building on today and wish him every success in his future endeavours.”