TIDMSO4
RNS Number : 7036T
Salt Lake Potash Limited
18 November 2019
18 November 2019 AIM/ASX Code: SO4
SALT LAKE POTASH LIMITED
-------------------------
PRODUCTION OFFTAKES SECURED FOR 170ktpa OF LAKE WAY PREMIUM SOP
PRODUCT
Salt Lake Potash Limited (SO4 or Company) is pleased to advise
that it has signed three binding term sheets for the sale of
premium Sulphate of Potash (SOP) from the Lake Way Project. SO4 has
implemented a diversified marketing strategy using multiple
strategic counterparties to undertake sales and distribution across
a mix of geographical regions.
HIGHLIGHTS
-- Binding term sheets signed with three leading fertiliser
distributors for the sale of premium grade Lake Way SOP with a
total volume commitment of up to 170,000t per annum:
o Unifert - 60,000t per annum in the Middle East and Africa
o Indagro - 50,000t per annum in North America and Europe
o Fertisur - 60,000t per annum in South America
-- 70% of total planned production committed for a five year
term from commencement of shipping in 2021 with take or pay
arrangement on product resale
-- Discussions substantially advanced with an additional Tier-1
fertiliser group for sale of material quantity of production from
the Lake Way Project
-- Binding agreements support SO4's strategy of diversifying
distribution across key global premium SOP seabourne markets
TONY SWIERICZUK
SO4 Chief Executive Officer
"We are delighted to have finalised these offtakes for the sale
and distribution of premium SOP product that will be produced at
our Lake Way Project. Binding agreements with industry leaders,
Unifert, Indagro and Fertisur support SO4's marketing strategy of
targeting geographical markets with strong growth in crops that
benefit most from SOP fertilisers. SO4 continues to progress
discussions with other leading fertiliser companies for the sale of
our remaining SOP production"
Lake Way Project
Lake Way is located in the Northern Goldfields Region of Western
Australia, less than 15km south of the Wiluna township. In October
2019, the Company reported the results of its Bankable Feasibility
Study (BFS) for the commercial scale development of its 245,000t
per annum SOP project at Lake Way (Project).
The Company is rapidly progressing the development of the Lake
Way Project with Stage 2 civils construction of additional
evaporation ponds and brine extraction infrastructure commencing
imminently. The Company is targeting first SOP production in Q4,
2020.
SO4 has demonstrated that it can produce a premium SOP product
that is highly water soluble with a >53% K(2) O grade (Standard
Grade 50% K(2) 0).
Table 1: Lake Way Pilot Plant 2 Specifications
Specification
Potassium K(2) O >53%
----------------- --------------
Sulphate SO(4) >55%
----------------- --------------
Chloride Cl <0.1%
----------------- --------------
Insolubles <0.1%
----------------- --------------
Total Solubility (g/100g H(2) O) 11.8
----------------- --------------
Dissolution Rate % in 1 minute >95%
----------------- --------------
These outstanding test results indicate that the product is
comparable with other premium grade water soluble products on the
market and supports SO4's marketing strategy to supply into the
premium SOP markets. The price achievable for soluble grade SOP can
be up to 20% above the standard SOP pricing.
Marketing Strategy
Supported by the extensive test work and samples produced to
date from Lake Way harvested salts, SO4 is planning to deliver a
high quality, premium grade SOP to the market. Initially the
Project will produce two products, (i) a high potassium content
standard powder SOP (SSOP) and (ii) fertigation grade water soluble
SOP (WSSOP). SO4 intends to increase the product offering to
include a granular grade after production has commenced.
SO4's marketing strategy for the sale and distribution of its
premium grade SOP is to work with selected industry leading
partners targeting high growth markets and focussing on
geographical areas with the highest concentration of crops which
benefit from SOP fertilisers.
OFFTAKE TERM SHEETS
SO4 has signed three binding agreements with industry leading
partners for the sale of up to 170,000t per annum into key
geographical markets, as follows:
-- Unifert - 60,000t per annum in the Middle East and Africa
-- Indagro - 50,000t per annum in North America and Europe
-- Fertisur - 60,000t per annum in South America
Each have global distribution networks and established logistics
infrastructure to support the efficient delivery of SO4's premium
quality SOP to end customers. These agreements are an important
step in derisking the Project in the years following commissioning
of the Lake Way Project.
SO4 is now progressing to execution of final purchase
agreements, based upon the binding terms sheets, with each of these
offtake counterparties.
Unifert
Unifert has been a leader in its field for over 50 years,
providing comprehensive solutions to the agricultural industry in
Europe, the Middle East and Africa by distributing a broad range of
agricultural inputs such as seeds, crop protection chemicals,
specialty and traditional fertilizers. Unifert participates in the
international trading and European distribution of traditional
fertilizers sold either through public tenders or directly to
wholesalers.
Table 2: Unifert Term Sheet - Key Terms
Terms
===================== ==============================================================
Counterparty Unifert International SAL
===================== ==============================================================
Conditions Precedent Effective upon Lake Way Project becoming operational
on or before 31 December 2021
Entry into detailed purchase agreement before
31 December 2020
===================== ==============================================================
Product Lake Way SOP representative of the typical
values in the following specifications:
* High grade potassium
o K 44%
o K(2) O 53%
o Cl <1.0%
* Fertigation Grade - Water soluble SOP
o K 44%
o K(2) O 53%
o Cl <0.1%
o Insolubles <0.09%
o Solubility 11.9g/100gH(2) O
o Dissolution >95% in 1 minute
===================== ==============================================================
Term 5 years from commencement of production
===================== ==============================================================
Territory Middle East and Africa (specified by country)
===================== ==============================================================
Quantity 20% of production during CY2021 and 60,000t
per annum 2022-2025 with effective take or
pay arrangement on product resale
===================== ==============================================================
Price Quarterly negotiation with resolution mechanism
===================== ==============================================================
Indagro
Indagro is an international trading firm established in Geneva,
Switzerland in the early 1980's. The company specializes in the
global marketing of chemical fertilizers and their raw materials.
Through its network of 16 representative offices around the globe,
Indagro adds value to the fertilizer supply chain by offering
proprietary risk management services to producers, distributors and
importers alike.
worldTable 3: Indagro Term Sheet - Key Terms
Terms
===================== ==============================================================
Counterparty Indagro SA
===================== ==============================================================
Conditions Precedent Effective upon Lake Way Project becoming operational
===================== ==============================================================
Product Lake Way SOP representative of the typical
values in the following specifications:
* High grade potassium
o K 44%
o K(2) O 53%
o Cl <1.0%
* Fertigation Grade - Water soluble SOP
o K 44%
o K(2) O 53%
o Cl <0.1%
o Insolubles <0.09%
o Solubility 11.9g/100gH(2) O
o Dissolution >95%
===================== ==============================================================
Term 5 years from first production
===================== ==============================================================
Territory North America, Europe and Africa (specified
by country)
===================== ==============================================================
Quantity 50,000t per annum with effective take or pay
arrangement on product resale
===================== ==============================================================
Price Quarterly negotiation on market basis with
resolution mechanism
===================== ==============================================================
Fertisur
Fertisur is a Peruvian company distributing fertilizers
throughout South America, focussing on products designed to offer
crop solutions through drip fertilization, fertigation and foliar
feeding for greenhouses. The market for SOP in Latin America is
forecast to grow with significant agricultural areas dedicated to
high-value crops and historical low application rates.
worldTable 4: Fertisur Term Sheet - Key Terms
Terms
===================== ===============================================================
Counterparty Fertilizantes Del Sur S.A.C. (Fertisur)
===================== ===============================================================
Conditions Precedent Effective upon Lake Way Project becoming operational
===================== ===============================================================
Product Lake Way SOP in the following specifications:
* Fertigation Grade - Water soluble SOP
o K 44%
o K(2) O 53%
o Cl <0.1%
o Insolubles <0.09%
o Solubility 11.9g/100gH(2) O
o Dissolution >95%
===================== ===============================================================
Term 5 years from first production
===================== ===============================================================
Territory South America
===================== ===============================================================
Quantity 30,000t of production during CY2021 and 60,000t
per annum 2022-2025 with effective take or
pay arrangement on product resale
===================== ===============================================================
Price Quarterly negotiation on market basis with
resolution mechanism
===================== ===============================================================
Ongoing discussions
Discussions are substantially advanced with an additional Tier-1
fertiliser company for the sale of premium SOP from the Lake Way
Project. In addition, the Company continues to engage with a number
of other potential customers.
For further information please visit www.so4.com.au or
contact:
Tony Swiericzuk / Clint McGhie Salt Lake Potash Limited Tel: +61 8 6559 5800
Colin Aaronson / Richard Tonthat / Ben Grant Thornton UK LLP (Nominated Adviser) Tel: +44 (0) 20 7383 5100
Roberts
Derrick Lee / Peter Lynch Cenkos Securities plc (Joint Broker) Tel: +44 (0) 131 220 6939
Rupert Fane / Ernest Bell Hannam & Partners (Joint Broker) Tel: +44 (0) 20 7907 8500
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Appendix A - Competent Person Statement and Disclaimer
Competent Persons Statement
The information in this announcement that relates to Production
Targets and Ore Reserves for Lake Way is extracted from the
announcement entitled 'Outstanding Bankable Feasibility Results for
Lake Way' dated 11 October 2019. This announcement is available to
view on www.so4.com.au. The information in the original ASX
Announcement that related to Production Targets and Ore Reserves
was based on, and fairly represents, information compiled by Mr Ben
Jeuken, who is a member of the Australasian Institute of Mining and
Metallurgy and a member of the International Association of
Hydrogeologists, and Mr Robert Kinnell, who is a member of the
Australasian Institute of Mining and Metallurgy and a Fellow of the
Geological Society of London. Mr Jeuken is employed by Groundwater
Science Pty Ltd, an independent consulting company. Mr Kinnell is a
full time employee of Salt Lake Potash Limited. Mr Jeuken and Mr
Kinnell have sufficient experience, which is relevant to the style
of mineralisation and type of deposit under consideration and to
the activity, which they are undertaking to qualify as a Competent
Person as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Salt Lake Potash Limited confirms that it is not aware
of any new information or data that materially affects the
information included in the original market announcement. Salt Lake
Potash Limited confirms that the form and context in which the
Competent Person's findings are presented have not been materially
modified from the original market announcement.
The information in this announcement that relates to Process
Testwork Results is extracted from the announcement entitled
'Premium Grade Water Soluble Sulphate of Potash Produced from Lake
Way Salts' dated 18 September 2019. This announcement is available
to view on www.so4.com.au. The information in the original ASX
Announcement that related to Process Testwork Results was based on,
and fairly represents, information compiled by Mr Bryn Jones,
BAppSc (Chem), MEng (Mining) who is a Fellow of the AusIMM. Mr
Jones is a Director of Salt Lake Potash Limited. Mr Jones has
sufficient experience, which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking, to qualify as a Competent Person
as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Salt Lake Potash Limited confirms that it is not aware
of any new information or data that materially affects the
information included in the original market announcement. Salt Lake
Potash Limited confirms that the form and context in which the
Competent Person's findings are presented have not been materially
modified from the original market announcement.
Production Target
The Lake Way 245ktpa Production Target stated in this
presentation is based on the Company's Bankable Feasibility Study
as released to the ASX on 11 October 2019. The information in
relation to the Production Target that the Company is required to
include in a public report in accordance with ASX Listing Rule 5.16
and 5.17 was included in the Company's ASX Announcement released on
11 October 2019. The Company confirms that the material assumptions
underpinning the Production Target referenced in the 11 October
2019 release continue to apply and have not materially changed.
Forward Looking Statements
This announcement may include forward-looking statements. These
forward-looking statements are based on Salt Lake Potash Limited's
expectations and beliefs concerning future events. Forward looking
statements are necessarily subject to risks, uncertainties and
other factors, many of which are outside the control of Salt Lake
Potash Limited, which could cause actual results to differ
materially from such statements. Salt Lake Potash Limited makes no
undertaking to subsequently update or revise the forward-looking
statements made in this announcement, to reflect the circumstances
or events after the date of that announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCMMMMMKRKGLZG
(END) Dow Jones Newswires
November 18, 2019 02:00 ET (07:00 GMT)
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