TIDMSO4
RNS Number : 8423C
Salt Lake Potash Limited
20 April 2017
20 April 2017 AIM/ASX Code: SO4
SALT LAKE POTASH LIMITED
Salt Lake Potash Plans SOP Pilot Plant
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Salt Lake Potash Plans SOP Pilot Plant at Goldfields Salt Lakes
Project.
Ongoing Discussions with Prospective Global Industry
Partners.
The Directors of Salt Lake Potash Ltd (Salt Lake or the Company)
are pleased to advise that Amec Foster Wheeler (AMEC) have been
appointed to prepare an analysis of the alternatives for the
Company to construct a Pilot Plant at the Goldfields Salt Lakes
Project, intended to be the first salt-lake brine Sulphate of
Potash (SOP) production operation in Australia.
A Pre-Feasibility Study (PFS) on the full-scale production model
is continuing and the Pilot Plant will form a part of the
feasibility study process.
Salt Lake has been in discussions since last year with a range
of international industry SOP and specialist fertiliser producers
and distributors, including several global market leaders, about
the optimal way to realise Salt Lake's outstanding potential in the
global SOP market.
Based on those discussions, the Company has formed the view that
the appropriate path forward is to initially construct a Pilot
Plant to demonstrate the technical and commercial viability of
brine SOP production from the Goldfields Salt Lakes Project, before
expanding the plant to long term optimal production levels on a
staged, modular basis. AMEC have been engaged to initially consider
a 20,000-40,000tpa Pilot Plant processing only brine feed drawn
from the near surface Measured Resource.
The Company believes the advantages of the Pilot Plant approach
are:
-- Proof of concept for SOP production from salt-lake brines in
Australia. This will substantially de-risk the full-scale project,
with commensurate improvement in financing costs and alternatives.
While substantial salt-lake brine production of SOP is undertaken
in China, Chile and the USA, it is new in Australia and overseas
production models need to be tested and adapted for Australian
conditions.
-- Refinement of design and costing of engineering elements at
Pilot Plant scale may result in considerable cost savings at larger
scale.
-- Market acceptance of a new product in conservative
agricultural markets is best achieved progressively and in
conjunction with existing, established partner(s). It is important
to establish Salt Lake's product(s) as premium, sustainable
nutrients in the key long term markets and staged production
increases are the best way to achieve this objective.
-- A Pilot Plant offers an accelerated pathway to initial
production, with limited infrastructure requirements and a faster,
simpler approval process. The Pilot Plant is intended to operate
for 12-24 months to establish parameters for larger scale
production, and the Company's objective is to commence construction
in 2017, harvesting first salts in 2018.
-- Relative ease of financing a Pilot scale plant. Initial
indications are that a Pilot Plant of this scale (40,000tpa) would
cost up to US$35m. While the Pilot Plant's principal objective is
to prove the technical concept, the Company intends for it to still
be cashflow positive. While economies of scale for a Pilot Plant
are limited, the Goldfields Salt Lakes Project's considerable
location and infrastructure advantages will be important in
sustaining its economic parameters.
Several of the global SOP industry parties have expressed a keen
interest in partnering with Salt Lake to market and distribute
Pilot Plant production, as well as to provide technical and
financial assistance in design and construction of the Plant. Those
discussions are ongoing however, Salt Lake notes that the
discussions are incomplete and there is no guarantee the
discussions will result in any firm offtake, technical or other
arrangements.
Background to the Goldfields Salt Lakes Project
Amec Foster Wheeler, in conjunction with international brine and
salt processing experts, previously completed a Scoping Study for
the Lake Wells Project (a component of the Goldfields Salt Lakes
Project) in 2016 which concluded a 2-stage development producing up
to 400,000tpa of SOP with estimated capital costs of A$230m and C1
operating costs of $185/t, both amongst the lowest in the world.
See ASX announcement dated 29 August 2016, viewable on the
Company's website: http://www.saltlakepotash.com.au
Subsequent to the Lake Wells Scoping Study, Salt Lake has
focussed comprehensive exploration at the Southern end of Lake
Wells, a likely site for a Pilot Plant. This work has substantially
advanced the hydrogeological model for the surface aquifer of the
Lake in this area, giving the Company a high level of confidence
about the quality of brine production from low cost surface
trenching. This work has included sustained pumping of a range of
surface trenches up to 125m long and 4.5m deep, for up to 31
days.
Exploration and trenching work has also provided substantial
stratigraphic and geotechnical information, to support the
Company's model for cost-effective on-lake evaporation pond
construction, as well as brine extraction.
Parallel with the on-lake exploration work, Salt Lake has also
been running a large site evaporation trial since October 2016. As
this trial, which is designed to represent the likely salt
production model at Lake Wells, has settled into equilibrium, it
has provided substantial and important data for the long term
seasonal, brine evaporation and salt crystallisation model which
will form a critical part of the Mass Balance model for the Pilot
Plant study.
The site evaporation trial has processed approximately 185t of
Lake Wells brine to date. Through the natural evaporation process
the trial is producing over 100kg of harvest salts per week, with
an average K grade of between 5 and 10%, for conversion to SOP.
The Company has also been undertaking ongoing process
optimisation work at SGS Laboratories in Perth to improve the
attrition, flotation, conversion and crystallisation process for
production of SOP from harvest salts. The input of SLP's key
technical advisers, world leading experts in this field, is
critical. See Company's website:
http://www.saltlakepotash.com.au
Transport from site to port is the single largest cost factor
for (export oriented) Australian salt lake SOP projects and the
Goldfields Salt Lakes Project has a considerable advantage in this
regard, with excellent proximity to the Kalgoorlie-Leonora rail
line and the Goldfields Highway. The Company has made substantial
progress in understanding and optimising its advantage in this
regard, with major economies of scale to be achieved as the
transport volume increases in subsequent stages of the Project.
A substantial part of both the exploration and production
testwork which the Company is undertaking for Lake Wells, also has
application for the Company's eight other lakes in the Goldfields
Salt Lakes Project, which means progress on the other lakes will be
substantially accelerated and also considerably cheaper.
Already, initial evaporation testwork has demonstrated that both
Lake Irwin and Lake Ballard can produce potassium and magnesium
salts amenable to conversion to SOP and potentially other valuable
co-products. These two large lakes, as well as others in the
Goldfields Salt Lakes Project, have similar brine chemistry and
evaporation characteristics to Lake Wells and even better transport
logistics, with Lake Ballard and Lake Marmion in particular located
either side of the Goldfields Highway, the Leonora rail line and
the gas pipeline, just 140km north of the major mining centre of
Kalgoorlie.
Forward Looking Statements
This announcement may include forward-looking statements. These
forward-looking statements are based on Salt Lake'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, which could
cause actual results to differ materially from such statements.
Salt Lake 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.
Competent Person Statements
The information in this report that relates to Process Testwork
Results is based on, and fairly represents, information compiled by
Mr Bryn Jones, BAppSc (Chem), MEng (Mining) who is a Fellow of the
AusIMM, a 'Recognised Professional Organisation' (RPO) included in
a list promulgated by the ASX from time to time. Mr Jones is a
consultant of Inception Consulting Engineers Pty Ltd.
("Inception"). Inception is engaged as a consultant by 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'. Mr Jones consents to the inclusion in
the report of the matters based on his information in the form and
context in which it appears.
Production Target
The Production Target stated in this Report is based on the
Company's Scoping Study for the Lake Wells Project as released to
the ASX on 29 August 2016. 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 was included
in the Company's ASX Announcement released on 29 August 2016. The
Company confirms that: a) it is not aware of any new information or
data that materially affects the information included in the
original announcement; b) all material assumptions and technical
parameters underpinning the Production Target, and related forecast
financial information derived from the Production Target included
in the original announcement continue to apply and have not
materially changed; and c) the form and context in which the
relevant Competent Persons' findings are presented in this report
have not been materially modified from the original
announcement.
The Production Target referred to in this Report and the Scoping
Study Announcement is based on 100% Measured Mineral Resources for
Stage 1 and 70% Measured Mineral Resources and 30% Inferred Mineral
Resources for Stage 2. There is a low level of geological
confidence associated with Inferred Mineral Resources and there is
no certainty that further exploration work will result in the
determination of Measured or Indicated Mineral Resources or that
the production target or preliminary economic assessment will be
realised.
For further information please visit www.saltlakepotash.com.au
or contact:
Matt Syme/Sam Cordin Salt Lake Potash Limited Tel: +61 8 9322 6322
Colin Aaronson/Richard Tonthat/Daniel Bush Grant Thornton UK LLP (Nominated Adviser) Tel: +44 (0)207 383 5100
Nick Tulloch/Beth McKiernan Cenkos Securities plc (Broker) Tel: +44 (0) 131 220 6939
This information is provided by RNS
The company news service from the London Stock Exchange
END
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