viewAustralian Potash Ltd

Australian Potash on path to development of flagship Lake Wells SOP Project


The company is focused on the Front-end Engineering Design (FEED) Study, finalising offtake discussions and securing financing to develop its SOP project.

Australian Potash Ltd - Australian Potash on the path to development of its flagship Lake Wells SOP Project

Quick facts: Australian Potash Ltd

Price: 0.165 AUD

Market: ASX
Market Cap: $91.3 m

Australian Potash Ltd (ASX:APC) is progressing with the development of its Lake Wells Sulphate of Potash (SOP) Project (LSOP) in Western Australia, having recently finalised offtake agreements for 85% of the definitive feasibility study projected output.

To date, the company has secured 130,000 tonnes per annum under binding offtake agreements to:

  • Redox (20,000 tonnes per annum);
  • Migao (50,000 tonnes per annum);
  • Mitsui (30,000 tonnes per annum); and
  • HELM (30,000 tonnes per annum).

The focus for quarters three and four is on the FEED program to prioritise output volume.

Renewable focus

The project is expected to have a low carbon footprint being powered by 60% renewable wind, solar and battery storage.

This is expected to have a material impact on OPEX, saving 30% compared to the DFS OPEX, and will also future proof the project against fiscal penalty regimes and broaden market appeal.

LSOP expected timeline to development

Environmental approval pending

The company is progressing along the environmental approvals pathway, with the LSOP environmental review document being finalised with EPA.

Once endorsed the company will have a six-week window to prepare a report for the Minister.

To date, the minor and preliminary works approval and water licenses have been approved.

The native vegetation clearance permits and mining proposal are all pending EPA recommendation and Ministerial Statement of Consent, which is expected in September 2020.

Funding development

The project financing is now moving into the due diligence stage and includes:

  • 35% of total funding requirement via the Northern Australia Infrastructure Facility (NAIF);
  • 30% via commercial debt; and
  • 35% via equity.

Newly appointed non-executive director Cathy Moises is expected to bring her extensive equity capital markets background and network into play as the company aims to close out financing in quarter four.

SOP market potential

Sulphate of Potash is the premium form of an essential non-substitutable plant fertiliser and accounts for around 10% of the global demand for potassic fertilisers and is worth around US$3.5 billion.

The total market size is an estimated 7 million tonnes per annum.

The Lake Wells SOP Project’s proposed 170,000 tonnes per annum output would cater for around 2.4% of global demand at a high margin of around US$450/tonne.

In addition, the project’s passive solar evaporation (low carbon) process from brine is low cost and the company’s registered trademark brand K-Brite represents the premium sulphate of potash to be produced from the flagship Lake Wells project.

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