Australian Potash hits the ground at Lake Wells Sulphate of Potash Project
Insight
24 April
Australian Potash (ASX: APC) has awarded the bore-field drilling contract for the development of the Lake Wells Sulphate of Potash Project near Laverton as it progresses the project to an anticipated production start date of mid-2023.
The contract was awarded to Pentium Hydro Pty Ltd and comes just days after APC released the results of its Front End Engineering and Design (FEED) study for Lake Wells.
The FEED program identified an optimised bore-field design comprising 79 brine bores. In addition to the brine bore-field, the FEED program identified the development of two raw (or fresh) water bore fields comprising approximately 13 bores.
Australian Potash Managing Director and CEO, Matt Shackleton, said: “Following the release of the FEED Summary results we are focused on maintaining the momentum towards development.
“Securing drill rigs in the current climate is an important step towards us achieving our mid-2023 targeted production start date.”
The FEED results for Lake Wells were positive, confirming the project will be low-cost and long life.
With a pre-production capital expenditure of $292 million, the project is forecast to generate an annual EBITDA of $124 million based on annual production of 170,000 tonnes of premium sulphate of potash.
The project is estimated to have an NPV of $614 million, a healthy IRR of 21% and a payback period of just 4.5 years.
APC has awarded more than 75%, by value, of Project construction contracts on an Engineering, Procurement and Construction (EPC) lump sum basis which will give the company schedule, cost and performance guarantees and should give investors comfort.
Earlier this week, APC said Export Finance Australia (EFA) had provided conditional approval for a A$45 million, 10-year loan facility, adding to a previously announced $140 million 17-year tenor loan from Northern Australian Infrastructure Facility (NAIF).
APC’s total debt facility for the development of Lake Wells is likely to be completed in coming weeks with the company negotiating the final commercial tranche of debt.
The good news seemingly prompted by prominent Western Australian mining figure Mark Creasy to exercise 100% of the unlisted options he holds in APC through Yandal Pty Ltd, resulting in a cash inflow of $857,500 to the company.
Mr Shackleton welcomed the move and said: “Mr Creasy, with his deep experience across the industry including several commercialised minerals deposits, and a long history of value accretive corporate transactions, has consistently been a supportive shareholder through our development processes.
“It is again pleasing to see a strong sign of support for our continued work on the 100% owned Lake Wells Sulphate of Potash Project.”
Communicating your story to all stakeholders, including shareholders and prospective investors, is key. To discuss your strategic communications needs, contact Cannings Purple’s Director of Investor Relations Peter Klinger.
