Junior sulfate of potash (SOP) producer Australian Potash Ltd. (APC) has been placed into administration, making the company the third aspiring Australian SOP producer in just over two years to collapse amid growing negative investment sentiment in the developing Western Australia solar evaporation sector.
APC’s directors on Dec. 6 appointed voluntary administrators Hayden White and Daniel Woodhouse of FTI Consulting to the company, APC said in a Dec. 6 ASX release. APC’s subsidiary companies, which include the Laverton Training Centre corporate trustee, are not affected by this appointment and will continue to operate in their normal way, the company said.
“Following the continued and exhaustive engagement with shareholders and creditors over the past several weeks in an endeavor to maintain the company as a going concern, the directors are now of the view that a formal restructuring process should be allowed to take its course,” APC said.
The company announced in mid-June that it was putting its Lake Wells SOP project (LSOP), located some 500 kilometers northeast of Kalgoorlie in Western Australia, on ice “to preserve its inherent value” as APC weighed the next steps for the project (GM June 16, p. 29).
Then, in mid-August, it announced that it was surrendering LSOP’s mining leases after it had not been able to secure further funding after conducting “an exhaustive search” and providing several parties with access to due diligence material to enable them to invest in the development (GM Aug. 18, p. 1).
APC was targeting potential production of 150,000 mt/y of SOP at LSOP (GM May 25, 2021) and had binding offtake agreements for 100% of the project’s output with Germany’s Helm AG (GM Nov. 25, 2020), Australia’s Redox Pty Ltd. (GM March 20, 2020), Migao International (Singapore) Pte. Ltd. (GM April 17, 2020), and Mitsui & Co. (GM July 24, p. 28).
In this week’s ASX statement, APC said its directors are working with existing shareholders and third-party investors and intend to submit a recapitalization proposal to the administrators, which will seek to restructure the balance sheet, avoid liquidation, and allow all existing shareholders to participate in future capital raises.
APC said it is the view of its board that the company’s assets represent “an opportunity to create value for shareholders.” The company retains the database for the development of the Lake Wells SOP project, as well as its interest in the exploration license tenure it holds for Lake Wells, where it also has been pursuing a gold project.
APC said it believes the Lake Wells SOP project has considerable value for all stakeholders, and the company will be ready to deploy the project information and know-how should a new opportunity emerge for the project, said APC non-executive Chair Natalie Streltsova.
“Due to strong negativity in the market towards solar evaporation projects in Western Australia, we have turned our efforts to refocusing the company on our other existing project opportunities where we believe we have project targets that have the potential to create significant shareholder value,” she said.
In recent months, APC has been turning its focus to the upside of critical minerals, which include the Nexus REE and lithium projects in Western Australia, as well as the Lake Wells Gold project.
The other casualties in Western Australia’s nascent solar evaporation sector include Kalium Lakes Ltd., which collapsed into receivership in early August (GM Aug. 18, p. 1) after the aspiring SOP producer failed to find further financial support for its lower-than-expected development of the Beyondie SOP project.
Salt Lake Potash Ltd., another aspiring Australian SOP junior producer that had been jockeying for first producer position, went into administration in October 2021 (GM Oct. 22, 2021). Salt Lake had been targeting production of up to 245,000 mt/y of SOP at the Lake Way potash project in Western Australia
Salt Lake was subsequently sold to Prague-based Sev.en Global Investments in October last year (GM Oct. 14, 2020) after Sev.en reached a deal with Salt Lake’s receivers and senior creditors on the purchase of its subsidiaries.