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Australian Potash on schedule for final investment decision for Lake Wells Project in Q1 2021

Project finance due diligence processes are underway, including Northern Australia Infrastructure Fund and domestic and international institutions, and on track to be complete in early quarter-four 2020.

Australian Potash Ltd - Australian Potash on schedule for final investment decision for Lake Wells Project in Q1 2021
The minor and preliminary works approval is in place with scheduled works expected to begin in quarter four of 2020

Australian Potash Ltd (ASX:APC) is on schedule to make a final investment decision (FID) for the Lake Wells Sulphate of Potash Project (LSOP) in Western Australia in the first quarter of 2021 as work programs progress.

Tender documentation for all five engineering, procurement and construction (EPC) packages has been issued and bids received for three packages are being evaluated for award recommendations.

The company is also making progress with its offtake program and positions have been secured for 130,000 tonnes, equal to more than 86% of forecast DFS output.

Managing director and CEO Matt Shackleton said: “Our highly experienced team has made great progress across the work programs we are finalising to bring the FEED program to a close and report optimised results through quarter four of 2020.”

EPC contracts

Several bids have been received for EPC tendered packages, with optimised capital and operating expenditure in the FEED model reflecting these contracted positions.

The tendered EPC contracts include the SOP process plant, borefield fit out and high-voltage reticulated power network, high penetration hybrid renewable power station, communications network and accommodation village.

Reimburseable/schedule of rates contracts have been tendered for the borefield drilling and civil earthworks (including pond developments).

Shackleton said: “The competitive tendering process we are running for all packages of work is drawing to a close with several bids having already been received.

“Bid review is underway and recommendations for award being prepared.”

Marketing discussions continue with Tier 1 International partners with strong market positions and financial capacity.

Approvals program

In early September 2020, the EPA submitted its report and recommended to the Minister for the Environment that the Lake Wells SOP Project be approved for development.

Following an appeals period, which expired Monday, September 21, the EPA and APC have been advised that an appeal against the EPA Report and recommendation has been made, and APC understands that the Appeals Convenor will consider the appeal in the normal course of their processes and determine what further action, if any, is required.

The company does not consider that the conclusion of those processes will affect the critical path of the LSOP development as the minor and preliminary works approval is in place.

Shackleton said: “The various approvals and permits required for us to commence works under the minor and preliminary works approval previously granted by the EPA are now being finalised, with site activities being scheduled for Q4 2020.”

Marketing program

The offtake program continues with positions secured for 130,000 tonnes or +86% of forecast DFS output on take or pay volume commitments with tier one international partners.

 Shackleton said: “Our marketing program continues apace, with active discussions around several lucrative jurisdictions.

“Marketing leads directly into the project financing program, where due diligence has been underway through September.“

A final investment decision is schedule for quarter one 2021.

Project financing

Project finance due diligence processes are underway, including Northern Australia Infrastructure Fund (NAIF) and domestic and international institutions, and on track to complete in early quarter four 2020.

Shackleton said: “Notwithstanding the operating restrictions caused by the COVID pandemic, it is very pleasing to report that APC remains on track to complete all of the above work programs and make a final investment decision on developing the LSOP in early 2021.”

Quick facts: Australian Potash Ltd

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ASX:APC
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Australian Potash CEO says key work programs are looking 'very positive' at...

Australian Potash Ltd's (ASX:APC) Matt Shackleton says they're on schedule to make a final investment decision (FID) for the Lake Wells Sulphate of Potash Project (LSOP) in Western Australia in the first quarter of 2021 as work programs progress. The company's making good progress with its...

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