Junior sulfate of potash (SOP) producer Salt Lake Potash Ltd. (SO4), Perth, Western Australia, released a Bankable Feasibility Study (BFS) Oct. 11, which moves expected SOP production to 245,000 mt/y, up from the earlier 200,000 mt/y from a previous Scoping Study. The company said the product will be high-grade premium SOP, with a high margin, with a mine life 20 years. It puts the Probable Ore Reserve at 5.4 million mt of SOP.
The company has completed the first stage of on-lake construction at its Lake Way Project in the Northern Goldfields Region of Western Australia and will continue with progressive development of the remaining commercial scale evaporation ponds planned from fourth-quarter 2019. The company says it has already completed 125 hectare evaporation ponds which are now filled with high grade brine. Plant commissioning is forecast for fourth-quarter 2020.
SO4 projects first quartile operating costs for global SOP produces with a cash cost estimate of A$302/mt or US$205/mt. The company used a modeled sales price of $550/mt.
Development requirements are put at A$254 million or US$173 million. The company notes that it has already reached an agreement with Taurus Funds Management for financing up to US$150 million for the project (GM Aug. 9, p. 33). SO4 has commenced drawdown of the initial US$30 million tranche and is working with Taurus to finalize documentation of the full facility and access the remaining funding.
As for the next steps, SO4 says it will accelerate development of the full commercial scope of the facility. Detailed design and documentation has started with the appointment of GR Engineering Services for the process plant and Coffey Tetra Tech, Tetra Tech Proteus and Cardno for on-lake infrastructure. The company with continue construction for the next stage of evaporation ponds and brine extraction infrastructure. It will also be involved in the procurement of long lead time items as well as execute key offtake agreements.
SO4 says the project has post-tax Net Present Value (NPV) of A$479 million with a pre-tax NPV of A$696 million, with a post-tax internal rate of return (IRR) of 28 percent and pre-tax of 38 percent.
Steady state Project EBITDA is put at A$111 million annually and an average annual after-tax free cash flow of A$78 million (A$83 million during the first five years).
SO4 said strong cash flow and low capital costs will result in an early payback period of 3.5 years.