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Australian Potash poised for a robust year ahead following steps taken in December quarter

Snapshot

Driven by key initiatives such as the signing of offtake agreements and beginning of drilling activities to support the growth of Lake Wells Sulphate of Potash Project (LSOP), the March quarter is shaping as one of the most important in the company’s development.

Australian Potash Ltd -

Quick facts: Australian Potash Ltd

Price: 0.17 AUD

ASX:APC
Market: ASX
Market Cap: $94.07 m
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Australian Potash Ltd (ASX:APC) is poised for a robust year ahead banking on the numbers of steps taken by the company in the December quarter for the development of its 100%-owned Lake Wells Sulphate of Potash Project (LSOP) in Western Australia.

During the quarter, the company executed a funding strategy, signed offtake agreement and applied for the minister for environment consent for the project - all these steps are likely to push company’s growth in the March Quarter.

March quarter to be "one of the most important" 

Australian Potash managing director and CEO Matt Shackleton said: “The March quarter is shaping as one of the most important in the company’s development.

“With the LSOP moving to final investment decision, the LWGP showing strong signs of continuing the rich history that north-eastern Goldfield's greenstone belts are globally famous for and early exploration commencing on two new project areas we anticipate a pipeline of strong and steady updates.”

“Addressing the independent technical expert’s investigations “

Shackleton added: “The December 2020 quarter was focussed towards addressing the independent technical expert’s investigations into the LSOP development models, assisting lending institutions including EFA, NAIF and commercial banks with their due diligence programs, and engaging contractors with Early Works programs and plans.

 “Discussions continued with Indigenous stakeholders in the Laverton region, as plans progressed to develop the Laverton Vocational & Education Training facility."

Approvals Pathway

During the quarter, the company received notice from the office of the appeals convenor that the Minister for Environment had issued an Appeal Determination to an appeal lodged against the EPA Board’s recommendation that the LSOP be approved for development.

Shackleton said: “The Minister for Environment considered the Appeals Convenor’s report into the appeal lodged against the EPA’s report into the LSOP. Notwithstanding the concerns raised by the appellant, the Minister concluded that APC’s consultation with Indigenous stakeholders throughout the exploration and development planning for the LSOP was highly appropriate and comprehensive.

“We look forward to continuing these consultations and remain committed to a long and mutually beneficial relationship with traditional knowledge holders.

“The Minister has commenced the final approvals process, which is consulting with the Ministers of the relevant decision-making authorities within the State government.”

Lake Wells Gold Project (LWGP) – WA, Joint Venture with St Barbara (SBM)

The company’s earn-in joint venture (EIJV) partner St Barbara has continued to expand the footprint and tenor of gold mineralisation at the Lake Wells Gold Project, with aircore results confirming the strong potential for the project to host a large gold deposit.

A diamond core drill program is underway with two holes of a three-hole program completed and assays expected from March 2021.

Further, a 19-holes for 3,400-metre Reverse Circulation (RC) drill program is underway, with assays expected from March 2021.

Shackleton said: “Our JV partner at the LWGP, St Barbara Limited, continued execution of their exploration program through the quarter. Following the return of impressive Air-Core results which delineated a mineralised corridor exceeding 9 kilometres, a diamond rig and an RC rig were mobilised to site.

“Post-quarter-end the diamond rig completed the third of three holes designed to follow up the AC program results and test a previously untested EM anomaly.

“We very much look forward to updating shareholders through the March quarter with assay results from both the diamond and the 19-hole RC programs.”

Offtake agreement

In November 2020, the company signed a binding 10-year take-or-pay term sheet with HELM AG (HELM) for 20,000 tonnes per annum of K-BriteTM sulphate of potash from Lake Wells for distribution into the United States of America.

Pricing is based on a net realised price basis, incentivising HELM to achieve the highest sales price in the market jurisdictions covered by the agreement.

With the signing of the agreement, 100% of the company’s DFS projected output of 150,000 tonnes per annum is now under offtake.

Fundraising initiative

During the quarter, the company completed a placement to institutional and sophisticated investors to raise $7 million at 11.1 cents per share following which it issued 63.06 million new ordinary shares to the participants.

The placement shares were issued on the same terms as, and rank equally in all respects with, the existing fully paid ordinary shares in the company.

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