Australian Potash says work at its $208 million Lake Wells sulphate of potash project in Western Australia’s north-eastern Goldfields could kick off within weeks as the company confirmed it was on track for a final investment decision in the March quarter.
Releasing a project update on Friday that highlighted significant progress across offtake talks as well as tenders for engineering, procurement and construction (EPC) packages for Lake Wells, Australian Potash (ASX: APC) said it expected front-end engineering and design work to be finalised next quarter and “optimised results” to then be reported.
Also next quarter, early stage works would begin at Lake Wells – 160km north-east of Laverton – ahead of the FID target in the first quarter of next year.
Investors are lapping up the positive run of results and announcements from Australian Potash about the long-life Lake Wells project, pushing the Perth company’s share price up 133 per cent over the past two months.
Australian Potash’s 17c close on Friday night is the stock’s highest since 2012 and gives the company an equity value of almost $80 million as talks with debt financiers enter the home straight.
“Notwithstanding the operating restrictions caused by the COVID pandemic, it is very pleasing to report that Australian Potash remains on track to complete (its) work programs and make a final investment decision on developing Lake Wells in early 2021,” managing director Matt 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.
“The competitive tendering process we are running for all packages of (EPC) work is drawing to a close with several bids having already been received. Bid review is underway and recommendations for award being prepared.
“The various approvals and permits required for us to commence works under the minor and preliminary works approval previously granted by the Environmental Protection Authority are now being finalised, with site activities scheduled for Q4 2020.”
Yesterday’s project update followed news on Wednesday that Australian Potash was pushing ahead with a high-penetration, renewable power solution at Lake Wells – an Australian first at a sulphate of potash project. The proposed capital investment will be underpinned by Lake Wells’ long mine life and significantly cut the project’s carbon footprint.
It intends to use solar and wind power generation for at least 53% and up to 87% of baseload requirements, and battery storage and LNG as back-up.
Mr Shackleton has made clear that solar-powered sulphate production was highly competitive compared with the traditional Mannheim process, which involves heating potassium chloride in a furnace to produce potassium sulphate and a hydrochloric acid by-product, and would deliver a massive reduction in carbon emissions.
Australian Potash has secured offtake for 85% of Lake Wells’ 150,000tpa nameplate capacity. The latest deal, announced last month, was with German powerhouse HELM.
The approvals process is also progressing well, with the EPA recommending that the WA Government gives Lake Wells the green tick, while the Northern Australia Infrastructure Facility (NAIF) is advancing due diligence as a potential key debt financier.
