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Australian Potash finalises fourth agreement in global offtake program for premium SOP product

The company has signed a binding 10-year take-or-pay term sheet with HELM AG for 30,000 tonnes per annum of K-Brite potash from its Lake Wells project.

Australian Potash Ltd - Australian Potash finalises fourth agreement in global offtake program
85% of the Lake Wells DFS projected output is now under offtake agreements

Australian Potash Ltd (ASX:APC) has signed a fourth binding term sheet for offtake from its Lake Wells Sulphate of Potash (SOP) Project with HELM AG for the supply of 30,000 tonnes per annum of K-Brite SOP to the European market.

This agreement will result in 85% of planned DFS output from the Lake Wells project in Western Australia being committed to offtake arrangements.

Shares in the company have been up as much as 15% on the news to 8.7 cents.

"Defining moment"

Managing director and CEO Matt Shackleton said: “This agreement with Tier-1 international chemicals and fertiliser distributor HELM AG is a defining moment for Australian Potash and the K-Brite brand.

“Our Lake Wells product will be distributed into the lucrative and expanding European fertiliser market through HELM’s dominant brand and market-leading position.

“HELM’s clear strategic direction is to expand their value in brand across the world’s major fertiliser markets, and the marketing and distributorship of SOP forms an integral piece in their offering.

"It is enormously gratifying that APC’s K-Brite brand will be central to that program on the European continent.”

Key terms

The HELM offtake agreement includes the following key terms:

  • Binding agreement to take-or-pay 30,000 tonnes per annum of K-Brite over an initial 10-year term;
  • K-Brite sales and distribution rights on an exclusive basis to European jurisdictions;
  • Pricing based on the market price minus traditional ‘net back’ costs including a marketing fee and ‘flow-through’ shipping, storage and handling costs (net realised price); and
  • Subject to the finalisation of long-form documentation by September 15, 2020, and the board of APC making a final investment decision by March 31, 2021.

APC's offtake agreements globally to date

Looking forwards

Total offtake under binding term sheet agreements including Redoxi, Migaoii, Mitsuiiii and HELM, equal 130,000 tonnes per annum, which represents 85% of the DFS projected output of 150,000 tonnes per annum.

Shackleton said: “The APC team is progressing rapidly along the approvals pathway, with firm dates now agreed with the EPA, and the financing program, with parties, including NAIF, moving into due diligence.

“To that point, and notably, more than 85% of the DFS projected output is now under contracted sale.

“This quarter will be a very active period for the company and we look forward to providing updates presently on the development of the Lake Wells SOP project.”

Quick facts: Australian Potash Ltd

Price: 0.17 AUD

ASX:APC
Market: ASX
Market Cap: $82.72 m
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