Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) shares rose in Sydney and London on Friday after the firm said it has completed civil earthworks at the process plant and non-process infrastructure site of the Lake Way Project in Western Australia's Goldfields region.
Non-process infrastructure includes accommodation, power, raw water storage and buildings. Early process plant construction work is underway and the project remains on schedule for December 2020 commissioning.
In Australia, shares in the company were more than 11% higher, hitting an intra-day peak of A39.5 cents. In London trading, the stock was up 5.6% to 19p.
SO4 has implemented plans to minimise potential impact from COVID-19 at its site operations and has to date seen no material impact to suppliers.
The Lake Way Village construction is 60% complete and will be housing workers from the middle of this month.
Process plant and site map.
"On time and on budget"
Chief executive officer Tony Swiericzuk said: “The current volatile economic environment and a relatively unchanged SOP price highlight the resilience of the global agricultural sector.
“Our Lake Way Project continues to rapidly progress and remains on time and on budget with the achievement of another significant milestone.”
Completed work includes pad preparation for construction of the process plant, power plant, warehouse, workshop, administration and site village, as well as construction of the raw water pond, run-off settlement ponds and site access roads.
First revenue delivery Q1 2021
SO4 has engaged with its suppliers and is not aware of any impact from the COVID-19 shut-down as it plans the delivery of key components within the project schedule.
The company expects to be delivering first revenues in Q1 2021 and notes that in face of the current economic volatility, SOP markets have remained very resilient with no material changes to the published benchmark indexes.
Cenkos repeats 'buy'
In a note to clients on Friday, analysts at City of London-based broker Cenkos Securities repeated a 'buy' rating on Salt Lake shares with a target price of 53p.
They said: "Our valuation is underpinned by the Lake Way 245ktpa feasibility study, but we have discounted this by 25% giving A$359m NPV8% due to permitting, financing and execution risk. In addition, our estimated working capital requirement adds further contingency resulting in our valuation for SO4 of A$316m or 53p per share.
"We feel the fall in the share price is overdone given the fact the Lake Way is one of the most advanced SOP development projects globally with aquifer brine being supplied to ponds for commissioning, early process plant construction work now commenced, and first sales expected in 2021. While a delay to financing is a risk, having Harvest salts precipitating as planned to commission and feed the process plant from late Q4/20 is a big step to pass."
-- Adds London share price, Cenkos comment --