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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Salt Lake Potash Limited | LSE:SO4 | London | Ordinary Share | AU000000SO44 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.45 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMSO4
RNS Number : 2997W
Salt Lake Potash Limited
31 July 2018
Hot Features
Premium
31 July 2018 AIM/ASX Code: SO4
SALT LAKE POTASH LIMITED
Scoping Study For Low Capex, High Margin Demonstration Plant At Lake Way
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Salt Lake Potash Limited (SLP or the Company) is pleased to announce that a Scoping Study on development of a 50,000tpa sulphate of potash (SOP) Demonstration Plant at Lake Way supports a low capex, highly profitable, staged development model, with total capital costs of approximately A$49m and average cash operating costs (FOB) of approximately A$387/t.
Cautionary Statement
The Scoping Study referred to in this announcement has been undertaken to determine the potential viability of a Demonstration Plant constructed at the Lake Way Project (Project) and to reach a decision to provide a basis for proceeding with more definitive studies. The Scoping Study has been prepared to an accuracy level of +/-30%. The results should not be considered a profit forecast or production forecast.
The Scoping Study is a preliminary technical and economic study of the potential viability of the Lake Way Project. In accordance with the ASX Listing Rules, the Company advises it is based on low-level technical and economic assessments that are not sufficient to support the estimation of ore reserves. Further evaluation work including infill drilling and appropriate studies are required before Salt Lake Potash will be able to estimate any ore reserves or to provide any assurance of an economic development case.
100% of the total production target is in the Indicated and Measured resource category.
The Scoping Study is based on the material assumptions outlined elsewhere in this announcement. These include assumptions about the availability of funding. While Salt Lake Potash considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved.
To achieve the range outcomes indicated in the Scoping Study, additional funding will likely be required. Investors should note that there is no certainty that Salt Lake Potash will be able to raise funding when needed. It is also possible that such funding may only be available on terms that dilute or otherwise affect the value of the Salt Lake Potash's existing shares. It is also possible that Salt Lake Potash could pursue other 'value realisation' strategies such as sale, partial sale, or joint venture of the Project. If it does, this could materially reduce Salt Lake Potash's proportionate ownership of the Project.
The Company has concluded it has a reasonable basis for providing the forward looking statements included in this announcement and believes that it has a reasonable basis to expect it will be able to fund the development of the Project. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.
.
SCOPING STUDY OUTCOMES
Capital Costs (-10% & +30%)
Total Capital Costs A$49m
Including:
- Temporary facilities A$0.4m
- EPCM A$4.8m
- Growth allowance (contingency) A$6.3m
----------------------------------------------------------------------------
Average Total Cash Cost (FOB) (+/- 30%)
---------------------------------------- ----------------------------------------------------------------------------
Average Total Cash Cost (FOB) A$387/t
Comprising: A$251/t
- Mine Gate Opex A$96/t
- Transport and handling A$40/t
* Royalties
----------------------------------------------------------------------------
Forecast SOP Price: A$667/t (US$500/t)
----------------------------------------------------------------------------
Study Manager: Wood (formerly Amec Foster Wheeler)
----------------------------------------------------------------------------
Average Annual Production: 50,000 tonnes of SOP
----------------------------------------------------------------------------
Product Specifications: Industry Standard Sulphate of Potash (K(2) SO(4) ):
K(2) O: min. 52%
SO(4) : min.54%
Cl: <1%
----------------------------------------------------------------------------
Mineral Resource: The Demonstration Plant is 100% supported by an Indicated and Measured
Mineral Resource (drainable)
within the Blackham mining lease area totalling 0.5Mt (Stored Resource -
2Mt), a multiple
of the resource required to support a 50,000tpa Demonstration Plant for 2-3
years.
----------------------------------------------------------------------------
Evaporation Pond Construction: On-lake, unlined halite ponds
On-lake, partially (wall) lined harvest ponds
----------------------------------------------------------------------------
Transport Route (export): Quad road train haulage to Geraldton
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Tenure: The Demonstration Plant will initially be based on Mining Leases owned by
Blackham Resources
Limited, under the Memorandum of Understanding (MOU) described in the ASX
Announcement dated
12 March 2018.
Longer term and larger volume production will be based on SLP's Lake Way
exploration permits.
----------------------------------------------------------------------------
Timeline: The Company's objective is to produce initial harvest salts in mid-late
2019 for initial SOP
production in early 2020, subject to permitting, weather and other
parameters.
There are potentially considerable time savings from utilising the
super-saturated brines
in the Williamson Pit at Lake Way and testwork continues to define these
parameters.
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DEVELOPMENT PROCESS
The Demonstration Plant is intended to validate the technical and commercial viability of brine SOP production from the Company's Goldfields Salt Lakes Project (GSLP), providing the basis to build a world class, low cost, long life SOP operation across the 9 lakes in the GSLP.
The Company has previously established that larger production volumes (400,000tpa) can result in operating costs in the lowest cost quartile for SOP production globally*. This is principally a result of the economies of scale inherent in the GSLP's advantageous location in the Northern Goldfields mining district, mostly in the main cost centres of transport, labour and power.
The Company will pursue a fast track, staged approach to the development of a Demonstration Plant at Lake Way, taking advantage of the unique circumstances of the Williamson Pit to accelerate the development timeline, while also de-risking the project at each stage.
Pursuant to the MOU with Blackham Resources Ltd (Blackham), the Company will construct an initial pond system to dewater the Williamson Pit, which contains approximately 1.2GL of super-saturated brine, with a very high average SOP content of 25kg/m(3) . These Williamson Ponds will comprise approximately 1/3 of the total Demonstration Plant pond area, and early dewatering of the Williamson Pit offers a much shorter development time due to its very high grade and saturation.
SLP plans to construct the Williamson Ponds by the end of 2018, in parallel with completing a Feasibility Study for the Demonstration Plant, followed by initial kainite salt harvesting in mid-late 2019.
After the Feasibility Study, the Company anticipates completing the balance of the on-lake infrastructure - evaporation ponds and trenches - while the fabrication of the process plant is completed offsite. Stockpiled kainite harvest salt will be used for commissioning when the plant is installed, also on existing Mining Leases, with the Company planning for initial SOP production in early 2020, subject to weather, permitting and other factors.
LONGER TERM OUTLOOK
The excellent economic parameters support the development of a Demonstration Plant on the Blackham Mining Leases at Lake Way, which would likely be followed by expanded production onto SLP's current Exploration Permits, covering most of the Lake and including the paleochannel identified by previous exploration.
Expansion of production beyond the Demonstration Plant would capture substantial economies of scale inherent in bulk transport, reduced royalties and spreading the fixed cost base, amongst other things.
The Company has previously estimated Exploration Targets for the whole of Lake Way ranging from 28-54Mt of SOP (stored) and 3-19Mt (drainable), indicating potential for the Lake to support a much larger SOP operation. [The potential quantity and grade of this Exploration Target is conceptual in nature. There has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource].
Following demonstration of the viability of SOP production in the GSLP the Company plans to expand production to the other lakes, which have broadly similar salt production potential and transport solutions in some cases superior to Lake Way. The company is investigating integrated production scenarios across a number of lakes, ranging from centralised processing of intermediate concentrates to centralised stockpiling, transport staging, packaging and logistics.
As production volumes increase, particularly to the lakes south of Lake Way, the optimal transport solution is likely to be based on bulk rail haulage from Leonora or Malcolm sidings, through Kalgoorlie to port. Transport and handling is the largest cost centre for SOP production, and there is substantial potential to capture economies of scale from this logistics solution.
The Company has been in discussion with a range of parties about potential financing structures for a Demonstration Plant on the GSLP, including debt, equity, off-take, royalty and joint venture structures. The Company is well funded to continue Feasibility Study work while these discussions continue.
The Company is in the process of drafting a formal agreement with Blackham, in accordance with the MOU. Both parties currently anticipate dewatering of the Williamson Pit in late 2018/early 2019.
CEO Matt Syme said "This Scoping Study confirms our expectations that a Demonstration Plant at Lake Way is the ideal model for starting development of the broader SOP project across our extensive salt lake portfolio. The advantages inherent in our location and the cost benefits associated with low cost trench extraction and on-lake ponds are apparent, and these advantages will increase significantly with scale. The low capex, excellent operating margins and ability to de-risk the Project through staged development also give us the opportunity to optimise the numerous financing alternatives before us. We are excited to be at the leading edge of a whole new industry in Australia and we are looking forward to developing the most sustainable and rewarding fertiliser project in the world."
BACKGROUND
SLP is the owner of the Goldfields Salt Lakes Project (GSLP), which comprises nine large salt lakes in the Northern Goldfields Region of Western Australia.
The GSLP has a number of important, favourable characteristics:
Ø Very large paleochannel hosted brine aquifers, with chemistry amenable to evaporation of salts for SOP production, extractable from both low-cost trenches and deeper bores;
Ø Over 3,300km(2) of playa surface, with in-situ clays suitable for low cost on-lake pond construction;
Ø The total "stored" Exploration Target for the GSLP is 290Mt - 458Mt of contained Sulphate of Potash (SOP) with an average SOP grade of 4.4 - 7.1kg/m(3) (including Lake Wells' Mineral Resource of 80-85Mt). On a "drainable" basis the total Exploration Target ranges from 26Mt - 153Mt of SOP. [The potential quantity and grade of this Exploration Target is conceptual in nature. There has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource].
Ø Excellent evaporation conditions;
Ø Excellent access to transport, energy and other infrastructure in the Goldfields mining district;
Ø Lowest quartile capex and opex potential based on the Lake Wells Scoping Study;
Ø Clear opportunity to reduce transport costs by developing lakes closer to infrastructure and by capturing economies of scale;
Ø Multi-lake production offers operational flexibility, cost advantages and risk mitigation from localised weather events;
Ø The very high level of technical validation already undertaken at Lake Wells substantially applies to the other lakes in the GSLP; and
Ø Potential co-product revenues, particularly where transport costs are lowest.
The Company's long term plan is to develop an integrated SOP operation of global scale producing high quality organic SOP from a number (or all) of the lakes within the GSLP, after confirming the technical and commercial elements of the Project through construction and operation of a Demonstration Plant producing up to 50,000tpa of SOP.
DEMONSTRATION PLANT
The Company believes the advantages of the Demonstration Plant approach are:
-- 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.
-- Proof of concept for SOP production from salt-lake brines in Australia will substantially de-risk the full-scale project, with commensurate improvement in financing costs and alternatives. While the Demonstration Plant does not benefit from economies of scale, it will provide financiers and partners a very reliable cost basis for larger scale, longer term operations, while still being low capex and high margin in its own right.
-- Refinement of design and costing of engineering elements at Demonstration Plant scale should result in considerable time and 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 SLP's product(s) as premium, sustainable nutrients in the key long-term markets, and staged production increments are the best way to achieve this objective.
-- A Demonstration Plant offers an accelerated pathway to initial production, with limited infrastructure requirements and a faster, simpler approval process. The Demonstration Plant is intended to operate for 12-24 months to establish parameters for larger scale production, and then be integrated into a larger operation. The Company's objective is to commence construction in 2018, harvesting first salts in 2019, and producing first SOP in early 2020.
LAKE WAY
The Company's recent Memorandum of Understanding with Blackham Resources Limited (see ASX Announcement dated 12 March 2018) offers the potential for an expedited path to development at Lake Way, possibly the best site for a 50,000tpa Demonstration Plant in Australia.
Lake Way is located less than 15km south of Wiluna. The Wiluna region is an historic mining precinct dating back to the late 19th century. It has been a prolific nickel and gold mining region with well developed, high quality infrastructure in place.
The Goldfields Highway is a high quality sealed road permitted to carry quad road trains and passes 2km from the Lake. The Goldfields Gas Pipeline is adjacent to SLP's tenements, running past the eastern side of the Lake.
Lake Way has some compelling advantages which make it potentially an ideal site for an SOP operation, including:
-- Substantial capital and operating savings potential from sharing overheads and infrastructure with the Wiluna Gold Mine. This includes the accommodation camp, flights, power, maintenance, infrastructure and other costs.
-- The site has an excellent freight solution, located 2km from the Goldfields Highway, which is permitted for heavy haulage 4 trailer road trains to the railhead at Leonora or by road to Geraldton. It is also adjacent to the Goldfields Gas Pipeline.
-- A Demonstration Plant would likely be built on Blackham's existing Mining Licences.
-- SLP would dewater the Williamson Pit, prior to Blackham mining, planned for early-mid 2019. The pit contains an estimated 1.2GL of brine at the exceptional grade of 25kg/m(3) of SOP. This brine is potentially the ideal starter feed for evaporation ponds, having already evaporated from the normal Lake Way brine grade, which averages around 14kg/m(3) (.)
-- The high grade brines at Lake Way will result in lower capital and operating costs due to lower extraction and evaporation requirements.
-- Historical exploration and initial sampling indicate the presence of clays in the upper levels of the lake which should be amenable to low cost, on-lake evaporation pond construction.
PROJECT OVERVIEW
The Demonstration Plant will produce up to 50,000tpa of high quality, standard SOP from hypersaline brine extracted from Lake Way via a system of shallow trenches.
The extracted brine will be transported to a series of solar evaporation ponds built on the Lake where selective evapo-concentration will precipitate potassium double salts in the final evaporation stage. These potassium-rich salts will be mechanically harvested and processed into SOP in a separation and crystallisation plant. The final product will then be transported for sale to the domestic and international markets.
The Company has previously tested and verified at Lake Wells all the major technical foundations for production of SOP from salt lake brine under actual site conditions and across all seasons. These technical achievements are broadly applicable across all the lakes in the GSLP and form part of the inputs into the Scoping Study.
The Study has established the indicative costs of the Demonstration Plant to +/- 30% accuracy for Operating Costs and -10%/+30% for Capital Expenditure.
MAJOR STUDY PARAMETERS
Table 1: Key Assumptions and Inputs
Maximum Study Accuracy Variation +/- 30%
--------------------
Annual Production (steady state) 50,000tpa
--------------------
Proportion of Production Target - Measured & Indicated 100%
--------------------
Mineral Resource (Blackham Mining Leases)
--------------------
SOP Stored Resource (Indicated) 2Mt
--------------------
SOP Drainable Resource (Indicated) 490,000t
--------------------
Williamson Pit (Measured) 32,000t
--------------------
Mining Method (Extraction)
--------------------
Trenches - Average 5m deep 30km
--------------------
Brine Delivery 595m(3) /h
--------------------
Brine Chemistry (SOP Lake Brine only) 15kg/m(3)
--------------------
Evaporation Ponds
--------------------
Area 389ha
--------------------
Halite Ponds (unlined) 308ha
--------------------
Harvest Ponds (partially lined) 81ha
--------------------
Recovery of Potassium from feed brine 63%
--------------------
Recovery of Sulphate from feed brine 21%
--------------------
Plant
--------------------
Operating time (h/a) 7,950
--------------------
Total Staffing 20
--------------------
Operating Costs (+/-30%)
--------------------
Minegate A$251/t
--------------------
Transport and Handling A$96/t
--------------------
Royalties (1) A$40/t
--------------------
Total Cash Costs (FOB) A$387/t
--------------------
Capital Costs (-10%/+30%)
--------------------
Direct A$37.3m
--------------------
Indirect A$5.2m
--------------------
Growth Allowance A$6.3m
--------------------
Total Capital A$48.9m
--------------------
(1) Royalties (State Government 2.5% and Other 4.5%)
* Operating costs do not include deprecation or sustaining capital. The Demonstration Plant is intended to operate for 2-3 years to validate the production model, and a successful Demonstration Plant will naturally then be intregrated into a larger production operation.
STUDY CONSULTANTS
The Scoping Study was managed by Wood (formerly Amec Foster Wheeler). Wood is a recognised leader in potash mining and processing with capabilities extending to detailed engineering, procurement and construction management. Wood also managed the Company's Scoping Study for Lake Wells released in August 2016.
In addition to Wood, the Company engaged international brine-processing experts Carlos Perucca Processing Consulting Ltd (CPPC) and AD Infinitum Ltd (AD Infinitum) and their principals Mr Perucca and Mr Bravo, who are highly regarded experts in the potash industry. Mr Bravo previously worked as Process Manager Engineer at SQM, the third largest salt lake SOP producer globally. He specialises in the front end of brine processing from feed brine through to the crystallisation of harvest salts. Mr Perucca has over 25 years of experience in mineral process engineering and provided high-level expertise with respect to plant operations for the processing of harvest salts through to final SOP product. AD Infinitum and CPPC were responsible for the brine evaporation and salt processing components in the Scoping Study.
The Company engaged Bis Consulting (Bis) to provide an independent transport study on the logistics options for SOP from Lake Way. Bis is a leading provider of resources logistics in Australia, offering bulk logistics and materials handling.
Independent expert potash market forecasts and assessments were provided by CRU International Limited and Fertiliser Sales Development Ltd.
Area Responsibility
Study Manager Wood
Resource Estimation Groundwater Science
Hydrogeology SLP
Brine Extraction SLP
Brine Evaporation Ad-Infinitum/Knight Piésold
Geotechnical Knight Piésold
Process Plant
CPPC/SLP
* Design basis/criteria
Wood
* Process plant design
---------------------------------
Plant Infrastructure Wood
---------------------------------
Area Infrastructure Wood/SLP
---------------------------------
Product Transport and Logistics Bis Consulting
---------------------------------
Environmental and Heritage Pendragon
---------------------------------
Capex Estimate Compilation Wood
---------------------------------
Opex Estimate Compilation (mine-gate) Wood
---------------------------------
Economic Analysis Wood
---------------------------------
Recommendations Wood/SLP
---------------------------------
CAPITAL EXPITURE
The initial capital cost to develop from the Demonstration Plant has been estimated at A$43 million (before growth allowance). Capital expenditure was estimated at an accuracy of -10% to +30%.
Area $Am
Brine Extraction 1.6
-----
Evaporation 7.8
-----
Process Plant 20.3
-----
Plant Infrastructure 3.0
-----
Area Infrastructure 0.1
-----
Regional Infrastructure 2.6
-----
Miscellaneous 1.9
-----
Total Direct 37.3
-----
Temporary Facilities 0.4
-----
EPCM 4.8
-----
Total Indirect 5.2
-----
Total Bare 42.5
-----
Growth Allowance 6.3
-----
Total Initial Capital 48.9
-----
* Errors due to rounding
The benefits of Lake Way's location are evident in the low area and regional infrastructure costs. The availability of a wide flat playa area amenable in-situ clays offers the opportunity to construct low capex evaporation ponds on the Lake.
OPERATING COSTS
The operating cost estimates are based on an accuracy of +/-30%.
Area Cost per tonne ($A)
Labour $ 57
--------------------
Power $ 24
--------------------
Maintenance $ 22
--------------------
Reagents $ 14
--------------------
Consumables $ 81
--------------------
Miscellaneous $ 32
--------------------
General and Administration $ 21
--------------------
Total (Operating Costs per tonne) Mine Gate $ 251
--------------------
Transportation $ 96
--------------------
Total (Operating Costs per tonne) $ 347
--------------------
Royalties (2.5% State Government and 4.5% Others) $ 40
--------------------
Total Operating Cost per tonne $ 387
--------------------
* Errors due to rounding
PROJECT GEOLOGY AND RESOURCE
Geological Setting
The investigation area is in the Northern Goldfields Province on the Archaean Yilgarn Craton. The province is characterised by granite-greenstone rocks that exhibit a prominent northwest tectonic trend and low to medium-grade metamorphism. The Archaean rocks are intruded by east-west dolerite dykes of Proterozoic age, and in the eastern area there are small, flat-lying outliers of Proterozoic and Permian sedimentary rocks. The basement rocks are generally poorly exposed owing to low relief, extensive superficial cover, and widespread deep weathering.
A key feature of the Goldfields is the presence of paleochannel aquifers. Palaeochannels are former deep river valleys that eroded into the bedrock within the broad palaeodrainages the sedimentary sequence in the northern goldfields is approximately 130m thick comprising basal Eocene sand overlain by plastic clay, which is in turn concealed by the lakebed sediments and surface alluvial cover.
The stratigraphy of the lake and paleochannel system is described below
Lake Bed Sediments
The hydrogeology of Lake Way is that of a terminal groundwater sink. The large area of the playa and the shallow water table observed at all sites beneath the playa will facilitate evaporative loss. The brine potash resource extends the full depth of the lakebed sediments, with higher permeability noted at the weathered bedrock contact.
The Lake bed sediments are dominated by red-brown lacustrine clays. Logging and observation of the stratigraphy from the test pits indicated that multiple paleosurfaces are evident within the lake sediments, with characteristics very similar to the current lacustrine and fringing environments.
Moving east from the lake edge the sedimentary sequence consists of clean, evaporitic sands, beneath the surface sands there is evidence of vegetated type paleosurfaces. These surfaces are characterised by thin beds of dark brown to black (organic enriched) evaporitic sands overlying lacustrine clays with abundant remnant root channels.
Beneath these the sandy silty clays are firm to hard and notably competent.
The lakebed sediments in the vicinity of the Williamson pit are approximately 3 - 4m thick, they were initially dewatered prior to mining and have remained dry since. Test pits excavated within the dewatered zone had a water level 2.5mbgl after 24 hours.
Paleochannel Sediments
The paleochannel sediments are overlain by the brine rich Lacustrine sequence. The paleochannel sediments are dominated by dense grey and redbrown clays. These clays have a low permeability and are not considered a principal source of brine. At the base of the clays there is a high permeability basal sand aquifer.
Paleochannel Basal Sand Aquifer
Drilling conducted by AGC Woodward Clyde (1992)(1) on behalf of WMC Ltd in the early 1990's located a Tertiary paleochannel beneath the eastern margins of the lakebed outside Blackham's Mining Leases, the basal sands within the paleochannel were observed to be 20 - 40m thick. The hydrochemistry of the paleochannel water is high in Potassium, Magnesium sulphate and therefore represents a prospective exploration target and future source of brine, it is not included within the current resource estimate.
(1) Woodward Clyde, 1992, Mt Keith Project Process Water Supply Study, Lake Way Area, Prepared for WMC Engineering Services Ltd.
Basement
The shallowness of sediments, particular to the west of the WIllaimson pit and the island, means that the weathered basement is at excavatable depths. Further to the east the lakebed sequence thickens to depth approaching 15 - 20m. Basement geology is complex with mafic, felsic and metasedimentary rocks existing in multiple, thin, NNW-SSE trending lineations along with an abundance of (often, recently activated) faults. Brine flows from basement contacts is highly variable but, in places, can be very rapid.
Williamson Pit
There is a significant brine resource within the Williamson Pit. The top of the brine sits approximately 30m below ground level (bgl). There is only minor evidence of inflow from above the standing brine level from either the bedrock or the lakebed sediments.
The annual sequence of seepage and rainfall followed by evaporation has, over the past 10 years since the pits closure, concentrated the salts to the point where they are almost twice the concentration than the brine contained within the lakebed sediments.
MINERAL RESOURCE
The Lake Way Mineral Resource (Blackham tenements only) was estimated by Groundwater Science Pty Ltd, an independent hydrogeological consultant with substantial salt lake brine expertise.
The Mineral Resource Estimate (MRE) underpinning the production target, classified as Indicated and Measured, was prepared by a Competent Person and is reported in accordance with the JORC Code (2012 Edition) in this announcement.
Total Mineral Resource Estimate
(Blackham tenements only)
Sediment Hosted Brine - Indicated (94%)
Playa Lakebed Brine Concentration Mineral Tonnage Calculated Mineral Tonnage Calculated
Area Sediment from Total Porosity from Drainable Porosity
Volume
K Mg SO(4) Total Brine SOP Drainable Brine SOP
Porosity Volume Tonnage Porosity Volume Tonnage
(km(2) (Mm(3) (kg/m(3) (kg/m(3) (Kg/m(3) (Mm(3) (kt) (Mm(3) (kt)
) ) ) ) ) ) )
---------- --------- --------- --------- ---------- -------- --------- ---------- -------- ---------
55.4 290 6.9 7.6 28.3 0.43 125 1,900 0.11 31.9 490
---------- --------- --------- --------- ---------- -------- --------- ---------- -------- ---------
Williamson Pit Brine - Measured (6%)
Brine Volume (Mm(3) ) Potassium Conc. (kg/m(3) ) Magnesium Conc. (kg/m(3) ) Sulphate Conc. SOP Tonnage (kt)
(kg/m(3) )
1.26 11.4 14.47 48 32
--------------------------- --------------------------- --------------- -----------------
Table 3: Lake Way Project - Mineral Resource Estimate (JORC 2012)
Hydrology Summary
The Lake Way catchment as defined using Geoscience Australia's 1 second DEM and MapInfo Discover Hydrology Package, the catchment area is 3,767 km(2) .
A runoff model was developed for the Lake Way Catchment using the WaterCress software package. The model was constructed and calibrated to the adjacent and analogous Gascoyne River catchment, and then run using the catchment area defined for Lake Way and rainfall data from the Wiluna BOM station. Average calculated annual run-off is 3.9% of annual rainfall but is highly variable.
The morphology of the playa shape and surface is consistent with the classification system described by Bowler, (1986). The Northern part of the Playa exhibits morphology typical of significant surface water influence and periodic inundation (smooth playa edges, one island). The southern part of the playa exhibits morphology consistent with a groundwater dominated playa with rare inundation (irregular shoreline, numerous islands).
Exploration History
Significant historical exploration work has been completed in the Lake Way area focusing on nickel, gold and uranium. The Company has reviewed multiple publicly available documents including relevant information on the Lake Way's hydrogeology and geology.
A review of the Department of Mines and Petroleum's WAMEX database was undertaken. The database contains more than 6,200 mineral exploration drill holes across the Lake Way region, with about 1,000 drill holes within the Blackham Mining Lease area above.
Recent Exploration Activities
A comprehensive surface aquifer exploration program was completed on the Blackham Mining Leases, comprising a total of 36 shallow test pits and 2 test trenches. This work provides preliminary data for the geological and hydrological models of the surface aquifer of the Lake and was used in the establishment of the Mineral Resource for Lake Way's surface aquifer.
Estimation and Modelling Techniques
Area
The lateral extent of the indicated resource is defined by the tenement boundary and the Playa edge. Within the tenement area there are two significant features that reduce the total area, namely the island in the central north of the tenement (3.2km(2) ) and the Williamson pit and associated dewatered zone (4km(2) ). The total area of the resource is 55.4 km(2) . The resource is open to the east and south of the Blackham Resources tenements.
Thickness
The top of the indicated resource is defined by the water table. The average water table depth beneath the playa surface noted in the piezometers and test pits ranged 0.3 to 0.5m averaging 0.4m.
The base of the indicated resource is defined by the depth to the base of the lakebed sediments within the Blackham Mining Leases as determined from the test pits, piezometers, air core drilling and previous work. Test pits to the west terminated in weathered basement at around 3mbgl whilst some air core holes to the east didn't encounter base of the lakebed sediments until 9mbgl. All air core holes and test pits terminated in saturated material.
The base of the lakebed sediments was interpolated from recent and historic drill hole information and the recent data using the Leapfrog software. The interpolation provided an average thickness of 5.3m.
Porosity
Total porosity (Pt) relates to the volume of brine filled pores contained within a unit volume of aquifer material. A fraction of this pore volume can by drained under gravity, this is described as the drainable porosity (or specific yield). The remaining fraction of the brine, which is held by surface tension and cannot be drained under gravity, is described as the un-drainable porosity (or specific retention). The resource estimate is reported for both total porosity and drainable porosity to assess the Lake Way resource.
Twenty four (24) samples were selected from push tube locations next to test pit locations and from test pit excavations and LYTR01 (Trench 1) across the playa. The push tube samples were analysed by E-Precision Laboratories in Perth and the remaining samples by Core Laboratories in Perth. Samples were selected on the basis of spatial variability across the playa and being representative of the lakebed stratigraphy. Eighteen (18) of the samples were also tested for drainable porosity (Specific Yield). The samples selected, and the results are shown in Table.
The results show a broad concentration into two layers with the upper layer 0 - 1.5m having a porosity in the region of 50% and the lower layer having a porosity of around 40%. Drainable porosity is generally lower towards the base of the lakebed sediments. This differentiation is consistent with the geology, the upper layer being more friable and sandy and the lower layers being more dense clay.
Test pit or Trench name Depth Total Porosity (%) Drainable porosity Comments
(%)
LYTT024 0.45 - 0.9 50 n/a
----------- ------------------- ------------------- ------------------------------------
LYTT021 0.6 - 1.1 50 n/a
----------- ------------------- ------------------- ------------------------------------
LYTT020 0.5 - 1.0 54 n/a
----------- ------------------- ------------------- ------------------------------------
LYTT017 0.6 - 1.1 50 n/a
----------- ------------------- ------------------- ------------------------------------
LYTT019 0.6 - 1.1 48 n/a
----------- ------------------- ------------------- ------------------------------------
LYTT014 0.3 - 0.8 52 n/a
----------- ------------------- ------------------- ------------------------------------
LYTT026 0.3 - 0.6 39 10
----------- ------------------- ------------------- ------------------------------------
LYTT019 0.3 - 0.6 26 16
----------- ------------------- ------------------- ------------------------------------
LYTT019 1.5 - 2.0 47 13
----------- ------------------- ------------------- ------------------------------------
LYTT019 3.0 - 4.0 35 8
----------- ------------------- ------------------- ------------------------------------
LYTT014 0.3 - 0.6 46 11
----------- ------------------- ------------------- ------------------------------------
LYTT015 1.5 - 2.0 41 5
----------- ------------------- ------------------- ------------------------------------
LYTT026 3.0 - 4.0 47 24 Outlier
----------- ------------------- ------------------- ------------------------------------
LYTT035 3.0 - 3.5 43 5
----------- ------------------- ------------------- ------------------------------------
LYTT035 0 - 0.5 39 12
----------- ------------------- ------------------- ------------------------------------
LYTT032 0 - 0.5 38 13.8
----------- ------------------- ------------------- ------------------------------------
LYTT029 4.0 - 5.0 38 5.2 Northernmost zone, stiff compact
clay content
----------- ------------------- ------------------- ------------------------------------
LYTT029 1.0 - 4.0 47 3 Northernmost zone, clay dominant
throughout
----------- ------------------- ------------------- ------------------------------------
LYTT010 0.5 - 4.0 38 3 Potentially dewatered sediment
----------- ------------------- ------------------- ------------------------------------
Low Sy value compared to total
LYTT020 3.0 - 4.0 50 6 porosity
----------- ------------------- ------------------- ------------------------------------
LYTR01 0.5 - 1.5 48 14.2
----------- ------------------- ------------------- ------------------------------------
LYTR01 1 - 1.2 37 26 Clean Sand
----------- ------------------- ------------------- ------------------------------------
LYTR01 1.5 - 3 48 1.5 Outlier
----------- ------------------- ------------------- ------------------------------------
LYTR01 3 - 4 36 5
----------- ------------------- ------------------- ------------------------------------
Table 4: Laboratory Derived Parameters - Total Porosity and Drainable Porosity
Long Term Test Pumping
Sustained pump tests on two test trenches provided reliable data for the preparation of a surface aquifer hydrogeological model for Lake Way.
The testing was conducted as a "constant head test" whereby flow rate was adjusted to maintain a constant trench water level. Drawdown was observed at nearby observation bores placed at distances of 10m, 20m and 50m from the trench.
Trench dimensions and pumping test results are presented in Table 5.
Average flow rates over the duration of testing ranged from 94 to 110m(3) /day. Higher flow rates are associated with evaporite deposits in the Playa Sediments.
These results are encouraging and continue to support the design of the SOP operation at Lake Way.
Hole Id Depth Trench Length Test Duration Total Volume Pumped Average Pumping Rate
(m) (m) (days) (m(3) ) (m(3) /day)
------ -------------- -------------- -------------------- ---------------------
Trench 1 4.0 112 9.8 1,074 110
------ -------------- -------------- -------------------- ---------------------
Trench 2 4.0 100 9.0 858 94
------ -------------- -------------- -------------------- ---------------------
Table 5: Summary of Trench Test Pumping
Brine chemistry was consistent throughout the duration of the test.
Analysis of the data from trench pumping trials at test trenches LYTR01 and LYTR02 yields estimates of drainable porosity of 13% and 15% respectively. These values are consistent with literature values for clastic sediment and are consistent with estimates of playa sediment drainable porosity reported by other Salt Lake Brine evaluation studies.
Williamson Pit
The Measured Resource is calculated as the tonnage of minerals dissolved in the liquid brine contained within the Williamson Pit shell.
The potassium tonnage of the resource is then calculated as: Brine volume times average concentration = tonnage
The Williamson pit was mined during 2005 and 2006. At the end of mining a detailed survey was undertaken (2006) prior to the open cut operation being allowed to fill with water.
This data represents the most recent information available on the pit shell.
A drone survey of the pit in 2016 established that the water level was at RL1462 (Referenced to Blackham mine grid). Using this RL and the pit shell the volume was calculated in Surpac to be 1,150,495m(3) .
Brine Chemistry
Lake Way
All brine samples are considered to be composite samples representing the whole excavated or drilled depth at each location. Given that the proposed abstraction techniques will involve trenches excavated to at least 4m across a large portion of the playa the use of composite samples is representative of the resource that will be extracted.
Potassium Chloride Sodium Calcium Magnesium Sulphate
K Cl Na Ca Mg SO(4)
(kg/m(3) (kg/m(3) (kg/m(3) (kg/m(3) (kg/m(3) (kg/m(3)
) ) ) ) ) )
Average 6.8 125 76 0.518 7.7 28
---------- ---------- ---------- ---------- ---------- -----------
Table 6: Lake Way Average Brine Chemistry
The spatial distribution of Potassium Concentration is quite consistent ranging from 5,910 to 8,760mg/L averaging 6,769mg/L.
Williamson Pit
A total of 9 brine samples were taken at different water levels in three locations in the Pit. Brine concentration was consistent laterally and vertically within the Pit and average of the nine (9) samples in estimating the Measured Resource is:
Potassium Chloride Sodium Calcium Magnesium Sulphate
K Cl Na Ca Mg SO(4)
(kg/m(3) (kg/m(3) (kg/m(3) (kg/m(3) (kg/m(3) (kg/m(3)
) ) ) ) ) )
Average 11.4 180 107 0.176 14.5 48
---------- ---------- ---------- ---------- ---------- -----------
Table 7: Williamson Pit Average Brine Chemistry
Mining Factors or Assumptions
The measured resource will be pumped directly from the pit into a holding pond for processing. Mining of the indicated resource will be undertaken by gravity drainage of the brine by pumping from trenches.
Metallurgical Factors or Assumptions
No metallurgical factors or assumptions have been applied.
The brine is characterised by elevated concentration of potassium, magnesium and sulphate elements and distinctly low in calcium ion. Such a chemical makeup is considered highly favourable for efficient recovery of potassium double salts from the playa brines (the main feedstock for SOP fertiliser production), using conventional evaporation methods.
Environmental Factors or Assumptions
Environmental impacts are expected to be; localized reduction in saline groundwater level, surface disturbance associated with trench and pond construction and accumulation of salt tails. The project is in a remote area and these impacts are not expected to prevent project development.
The project is located with the Goldfields Groundwater Proclamation Area. A license to take groundwater will be required under the Rights in Water and Irrigation Act 1914. This act is administered by the Government of Western Australia, Department of Water and Environmental Regulation.
MINING AND SCHEDULING
Brine Extraction
Brine will be extracted from the Lake using a network of surface trenches. A trenching system comprising of 30 km of trenches up to 5m deep will be installed.
The trench system will feed the evaporation ponds at an average annual demand of 163 L/s. The trenches will be excavated at a nominal gradient, with a single transfer point into the halite pond system.
Brine Evaporation
The extracted brine is concentrated in a series of solar ponds to induce the sequential precipitation of salts and eventually producing potassium double salts in the harvest ponds. Evaporation modelling, pond sizing and design was completed by international experts, Ad Infinitum and CPPC.
Evaporation Ponds
The operational area of the evaporation ponds required for the final 50,000 t/a SOP production rate is 350ha.
A comprehensive geotechnical investigation by the Company and Knight Piesold confirmed the availability of in-situ clays ideal for on-lake evaporation pond construction.
On-lake harvest ponds have considerable environmental and commercial advantages, as any seepage from the ponds simply return to the brine pool in the Lake.
The Demonstration Plant Scoping Study considers low cost, un-lined ponds for the evaporation and crystallisation of halite (NaCl) and small quantities of other rejected salts such as gypsum (Ca.SO(4) .2H(2) O).
The kainite and carnallite harvest ponds will be partially lined, with a HDPE liner around the inside walls (berms). Knight Piésold's modelling confirm that the high clay content and low soil permeability of the Lake Way playa sediments mean seepage of unlined evaporation ponds is very low.
Ongoing testwork will determine whether the harvest ponds can also be constructed without partial lining as indicated by preliminary modelling, which would result in further capital savings.
The pond systems will produce, on average 326Kt per annum of harvest salts, with an average Potassium (K) content of 8.76%. The Company has developed a high level of understanding of salt harvest parameters through computer simulations, laboratory evaporation trials and SLP's unique experience in operating evaporation trials in the field at Lake Wells. The combination of this experience has been used to build and refine the mass balance model for the Demonstration Plant.
The harvest salts will be drained, windrowed and harvested using conventional equipment, a cost-effective and reliable harvesting method in Australia.
PROCESSING PLANT
Salts harvested form the evaporation ponds are then treated in a processing plant to first purify and then convert these salts into SOP, while minimising deportment of sodium chloride (the principal contaminant) to the product.
Key design parameters for the process plant are presented in Table 8, below.
Operating Time
Brine extraction; evaporation ponds and 8,200 h/a
harvesting
Process plant 7,950 h/a
-----------------------
Feed Brine Composition
Potassium content 6.8 g/L
Sulphate content 26 g/L
-----------------------
Pond feed brine flow rate (for 50,000t/a 595m(3) /h @ 8,760 h/a
case)
-----------------------
Overall potassium recovery 63%
-----------------------
Overall sulphate recovery 21%
-----------------------
Table 8: Process Plant Parameters
Overall potassium recoveries are lower in the Demonstration Plant as potassium reporting to the carnallite ponds is not processed at this scale. Carnallite salt will be stockpiled for Stage II processing.
The scale of the process plant is designed around the largest scale of standard road transportable modules that can be constructed off-site and transported to site, minimising site based construction costs. The majority of the process plant components are readily available, off the shelf items. There are several long lead-time items, such as the atmospheric draft tube baffle crystalliser, which will be sourced from international specialist vendors.
The Scoping Study anticipates production of 50,000tpa of high quality, organic standard SOP with the following specifications:
Potassium (K(2) Min. 52%
O)
Sulphate (SO(4) Min. 54%
)
Chloride (Cl) < 1%
SLP's research indicates that, once in production, organic certification for the product should be obtainable if desired.
Discussions with partners and end users around the optimal product preparation for the Demonstration Plant are ongoing, including the possibility of agglomerated or and compacted of a granular products.
WATER AND POWER
A raw water requirement of around 45m(3) /h is estimated, of which 7m(3) /h is treated in a reverse osmosis unit for potable and boiler feed water. A number of potential sources have been identified, as a consequence of the long exploration and mining history in the area, including from existing mining voids and known subterranean aquifers.
The operating power requirement for the plant is 0.8MW. There is substantial surplus capacity available from the Wiluna Gold Mine power station. The Company is also investigating stand-alone renewable energy alternatives.
TRANSPORT
The lakes of the GSLP are located close to the major regional transport and energy infrastructure corridors. Transport from site to port is the single largest cost for (export oriented) Australian salt lake SOP projects and the GSLP 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 transport proposition, with major economies of scale to be achieved as the production volume increases.
The Lake Way development has been fast-tracked due to its significant infrastructure and transport advantages.
The Company engaged Bis Consulting to undertake a transport study for production from the Demonstration Plant. Bis is a leading provider of resources logistics in Australia, offering bulk logistics and materials handling processes.
Transport cost estimates were undertaken by Bis based on market data, industry databases, industry contacts and Bis' existing knowledge of the Western Australian infrastructure market.
The outcome of the transport study provided a number of alternatives, however for Demonstration Plant production volumes, the most efficient route to international markets was via Geraldton port.
Total transport and handling costs have been estimated at $95/t of SOP product, packed in 2 tonne bags and loaded on flat bed trailers. The main road routes for Wiluna to Geraldton are currently permitted for quad road trains.
Geraldton Port is capable of handling fully loaded Panamax size vessels up to 70,000 tonnes and 225m in length. The Port handles approximately 19mt per annum of trade per year with significant excess capacity available for handling and storage.
At a slightly higher cost, a bimodal solution is available based on containerised product road hauled to Leonora and then by rail to Fremantle, Esperance or elsewhere from Kalgoorlie.
MINING INFRASTRUCTURE
Lake Way was identified due to its strategic location and significant infrastructure advantages. The Wiluna region is an historic mining precinct dating back to the late 19th century. It has been a prolific nickel and gold mining region and therefore has well developed, high quality infrastructure in place.
Lake Way has some compelling advantages which makes it an ideal site for an SOP operation, including the substantial capital and operating savings from sharing overheads and infrastructure with the Wiluna Gold Mine. This includes potentially the accommodation camp, flights, power, maintenance, infrastructure and other costs. There is also a large mining camp and sealed airstrip at the nearby Mount Keith Nickel Mine.
This proximity to existing infrastructure requires relatively minor area infrastructure upgrades and modifications for the Demonstration Plant development. The site has an excellent freight solution, located 2km from Goldfields Highway, which is permitted for heavy haulage 4 trailer road trains (refer to Transport section). It is also adjacent to the Goldfields Gas Pipeline.
PRODUCT QUALITY AND MARKETING
Fertilisers consist of essential plant nutrients that are applied to farmed crops in order to achieve favourable quality and yield. They replace the nutrients that crops remove from the soil, thereby sustaining the quality of crops, and are considered the most effective means for growers to increase yields.
The key components of agricultural fertilisers are nitrogen (ammonia and urea), phosphates (ammonium phosphates), and potassium (muriate of potash and sulphate of potash). In addition, sulphate has gained increased attention over the past several years due to soils becoming deficient in sulphur (the 'fourth macronutrient').
Global fertiliser demand is expected to increase significantly in the coming years due to the world population growth accompanied by decreasing arable land per capita, changes in diet and growth in income. These increases will provide an incentive for farmers to increase fertiliser use for improved yields and quality.
The most widely available source of potassium used by growers is Muriate of Potash (MOP or KCl), with around 65 million tonnes consumed annually. SOP is a speciality type of potassium fertilisers that is produced and consumed on a smaller scale.
MOP is widely used in all types of farming, however it can be detrimental to some plants, especially fruits and vegetables, due to its chloride content. SOP is primarily used as a source of potassium for crops intolerant to chloride. SOP is priced at a premium to MOP, due to supply constraints, high production costs and because of its ability to be used on chloride intolerant crops (such as fruits, vegetables, beans, nuts, potatoes, tea, tobacco and turf grass), which typically sell at sufficiently higher prices to absorb the premium cost.
SOP can be used in most applications where MOP is used and is preferred in many circumstances as it enhances yield and quality, shelf life and improves taste. SOP generally outperforms MOP in terms of crop quality and yield. SOP performs particularly well with crops that have a low tolerance to the chloride in MOP and in arid, saline and heavily cultivated soils. The low volume of SOP consumption relative to market demand is partly a result of the scarcity of reliable SOP supply.
SOP's premium to the MOP price is correlated to the conversion costs from MOP to SOP (Mannheim Process) where MOP is used as an input in the process. The premium has been around 60% for the past decade. In recent years, this premium has expanded significantly, as decreases in the MOP price have not translated to similar declines in the price of SOP, indicating that the SOP market is supply constrained.
SOP can be sold as a standard powder or as a premium granular or soluble grade product. Granular and coarse SOP is generally priced at a premium. Salt Lake Potash plans to sell at a premium to the market price as a certified organic producer, similar to Compass Minerals. The primary production of SOP from salt lakes allows for organic certification.
The current spot price for SOP ranges from US$580-US$635 per tonne in the main North American markets, with different (and less visible) prices in other global markets.
The Company's Fertiliser marketing consultant, Fertiliser Sales Development (FSD) has over 25 years experience in the sales, marketing and distribution of various fertiliser products. FSD expects the long-term price for SOP FOB ex-Western Australia to be at least US$500/t for standard grade.
The Company's main initial target market is the Asia-Pacific and East-Asia, a region forecasting significant increases in the demand for SOP. SOP production is not easily substitutable and is in supply deficit, therefore the Company is confident in the current and forecasted levels of demand.
Off-take
In April 2018, SLP executed a Memorandum of Understanding (MOU) with Mitsubishi Australia Limited and Mitsubishi Corporation (Mitsubishi). The Offtake Agreement will provide Mitsubishi with sales and offtake rights for up to 50% of the SOP production from the Demonstration Plant, for distribution into Asia and Oceania and potentially other markets.
Discussions are ongoing with various parties for the balance of the Demonstration Plant production.
ENVIRONMENTAL & SOCIAL IMPACT ASSESSMENT
SLP's consultants Pendragon Environmental under took a gap analysis to identify gaps in historical environmental knowledge, potential issues arising from the approval process, identify statutory approval requirements for the Demonstration Plant and provide a time frame for the environmental approvals.
As the proposed activities are to take place on active mining leases SLP has access to previous completed detailed environmental reports. The key findings for areas that required additional work:
-- Native Terrestrial Flora and Fauna - Ground truthing of specific infrastructure prior to submission of mining proposal.
-- Ground water - water balance and water quality requirements for plant operations.
-- Surface water - drainage study to be incorporated in to final location of trenches and pond layout.
-- Heritage - No registered Aboriginal sites were found within the impact area. Continuing engagement with the Aboriginal Community is required.
PERMITTING AND FISCAL REGIME
The Demonstration Plant will initially be based on Mining Leases held by Blackham Resources Limited, under the Memorandum of Understanding (MOU) described in the ASX Announcement dated 12 March 2018.
For supporting infrastructure or areas not included under Blackham's ground, the Company will obtain Miscellaneous Licences.
The Company has agreed to extend the MOU timeline with Blackham Resources Ltd to 31 August 2018 as drafting of formal Spilt Commodity Agreement progresses.
The Company is also in ongoing discussions with the Native Title holders at Wiluna regarding an Exploration Agreement covering SLP's exploration permits. We continue to work toward a mutually beneficial relationship with the Wiluna community.
Royalties
Potash has not been produced in Western Australia since 1950. The current royalty legislation does not include any specific rate for potash produced in WA. The ad valorem or value-based rate of royalty, which applies under the Mining Regulations 1981, is applied to a commodity based on the extent to which the commodity has been processed. As the SOP is sold in its final form (not subject to any further refinement or processing before sale to consumers) a royalty rate of 2.5% is expected.
Other royalties provided for in the Scoping Study estimates include to the holder of Blackham tenements.
PROJECT TIMING
The Company will pursue a staged approach to development of a Demonstration Plant at Lake Way, taking advantage of the unique circumstances of the Williamson Pit to accelerate the production timeline, while also de-risking the project at each stage.
Completion of the Scoping Study provides the basis to now proceed with a Feasibility Study, to be completed in late 2018 or early 2019.
In parallel, SLP and Blackham have applied for a permit to construct the Williamson Ponds, to allow dewatering of the Williamson Pit in time to meet Blackham's mine plan. Both companies aim to complete the construction and dewatering by late 2018/early 2019, subject to permitting, weather and other constraints.
The Williamson Ponds comprise approximately one third of the total Demonstration Plant pond area and will provide the opportunity to resolve design and construction processes and costs to a very high standard for the Feasibility Study. In order to manage the chemistry of the Williamson brines, ancillary brine trenches will also be required, which will similarly provide a high standard of hydrogeological and construction data.
Williamson brines are the highest grade brine resource in Australia, containing approximately 25kg/m(3) of SOP. They are also super-saturated with other salts, boasting an average Total Dissolved Salt content of approximately 30%. This means that the brines will precipitate halite and gypsum salts almost immediately they are pumped from the Pit.
This offers the opportunity to use the Williamson brines to lay down a salt base in the harvest ponds much more quickly than would normally be the case for less concentrated brines. A salt base is an important element of evaporation pond construction, providing a platform or pavement for harvest equipment, and can take many months to develop depending on requirements, brine chemistry and weather.
The very high grade of the Williamson brines also reduces the evaporation time required for precipitation of kainite harvest salts.
Construction of the Williamson ponds, dewatering of the Williamson Pit and the initial evaporation and salt precipitation, will provide a very high level of information and understanding of the parameters for brine extraction and evaporation in an Australian context, at a scale directly representative of the complete operation. For a very modest capital expenditure, this information will substantially reduce the perceived risk, and improve the financing parameters, for the balance of the project.
[Note that the capital expenditure estimated in the Scoping Study for the full Demonstration Plant evaporation pond system totals $7.8m, and the Williamson Ponds are one third of that area.]
Subject to permitting, performance, weather and other factors, the construction of the balance of the on-lake infrastructure - mainly the remaining ponds and brine trenches - will ideally follow on directly from completion of the Williamson Ponds and the Feasibility Study.
The Study estimates the extraction trench network capital expenditure is a further $1.6m, meaning the total capital expenditure for on-lake infrastructure is $9.4m, slightly less than 20% of the total capex. If the construction and operation of the Williamson Ponds validates the modelled performance of unlined harvest ponds, then the potential savings from not using partial HDPE liners, will significantly reduce capex for the balance of the pond system.
The longest lead time for the main plant components is 36 weeks, for the crystalliser, which will be fabricated off-shore. The Scoping Study estimates total fabrication and installation time for the process plant at approximately 9-12 months, meaning a decision taken at the anticipated time of completion of the Feasibility Study would result in plant commissioning in early 2020, utilising stockpiled kainite harvest salts.
The Company will continue to investigate opportunities to reduce the development schedule by early ordering of long-lead time items and modular delivery and installation of plant components, an option available for a small scale, skid mounted plant.
The Company's anticipated delivery schedule is naturally provisional at this stage, subject to permitting, performance, financing, weather and other factors.
SENSITIVITY ANALYSIS
The Scoping Study was prepared at a +/-30% accuracy to investigate the technical and economic parameters of a SOP production operation at Lake Way, exploiting the identified brine resources.
Key inputs into the economic assessment of the Project were based on the following sensitivities:
Operating Cost Analysis
Operating Cost (A$/t)
-30% 20% -10% Base +10% +20% +30%
--------------------------- -----
Mine Gate $176 $201 $226 $251 $276 $301 $326
----- ----- ----- ----- ----- ----- -----
Transportation & Handling $67 $77 $86 $96 $106 $115 $125
----- ----- ----- ----- ----- ----- -----
Royalties $28 $32 $36 $40 $44 $48 $52
----- ----- ----- ----- ----- ----- -----
Total $271 $310 $348 $387 $426 $464 $503
----- ----- ----- ----- ----- ----- -----
Capital Cost (A$m) *
-10% Base +10% +20% +30%
------------------ -------
Direct A$33.6 A$37.3 A$41.0 A$44.8 A$48.5
------- ------- ------- ------- -------
Indirect A$4.7 A$5.2 A$5.7 A$6.2 A$6.8
------- ------- ------- ------- -------
Growth Allowance A$5.7 A$6.3 A$6.9 A$7.6 A$8.2
------- ------- ------- ------- -------
Total A$43.9 A$48.8 A$53.7 A$58.6 A$63.4
------- ------- ------- ------- -------
Table 8: Sensitivity Analysis
SUMMARY OF MODIFYING FACTORS
The Modifying Factors included in the JORC Code have been assessed as part of the Scoping Study, including mining (brine extraction), processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and government factors. The Company has received advice from appropriate experts when assessing each Modifying Factor.
A summary assessment of each relevant Modifying Factor is provided below.
Mining (Brine Extraction) - refer to section entitled 'Mining and Scheduling' in the Announcement.
The Company engaged an independent hydrogeological consultant with substantial salt lake brine expertise, Groundwater Science Pty Ltd, to complete the Mineral Resource Estimate for the Lake Way project. The Principal Hydrogeologist of Groundwater Science, Mr Jeuken, has over 10 years of experience in groundwater resources assessment and management for mining. He has experience in salt lake brine potash evaluation, aquifer testing, wellfield planning and installation for mining, and the development of conceptual hydrogeological models
The hydrological model was produced by the Company in consultation with independent experts. The two methods of extraction outlined in the Announcement are common practice for brine extraction. These extraction methods are used by the three main current operations which include Great Salt Lake in the US, Lop Nur Salt Lake (Luobupo) and SQM in Chile.
Processing (including Metallurgical) - refer to sections entitled 'Mining and Scheduling' and 'Processing Plant' in the Announcement.
The Company engaged brine-processing experts Carlos Perucca Processing Consulting Ltd (CPPC) and AD Infinitum Ltd (AD Infinitum) and their principals Mr Perucca and Mr Bravo, who are highly regarded international experts in the potash industry. Mr Bravo previously worked as Process Manager Engineer at SQM, the third largest salt lake SOP producer globally. He specialises in the front end of brine processing from feed brine through to the crystallisation of harvest salts. Mr Perucca has over 25 years of experience in mineral process engineering and will provide high-level expertise with respect to plant operations for the processing of harvest salts through to final SOP product. AD Infinitum and CPPC were responsible for the brine evaporation and salt processing components in the Scoping Study.
Lake Way's process development relied heavily on experience applied by Wood and specialist consultants (CPPC and Ad Infinitum) who are well experienced from working on similar operations. Production of SOP from lake brines is well understood and a well-established process.
Infrastructure - refer to section entitled 'Mining Infrastructure' in the Announcement.
Lake Way's proximity to the West Australian goldfields means relatively minor area infrastructure upgrades and modifications are required.
The Scoping Study was managed by Wood. Wood is a recognised global leader in potash mining and processing with capabilities extending to detailed engineering, procurement and construction management. Wood are able to leverage an international network, including access to its Centre of Potash Excellence located in Saskatoon, Canada. All capital and operating costs were estimated by Wood.
Transport cost estimates were undertaken by Bis Consulting based on market data, industry databases, industry contacts and Bis' existing knowledge of the Western Australian infrastructure market.
Marketing - refer to section entitled 'Product Quality and Marketing' in the Announcement.
Independent potash market forecasts and assessments were provided by experts FSD, Greenmarkets, CRU International.
FSD's scoping level assessment of local and regional markets indicates that various markets around the world and particularly in the Asia-Pacific region would absorb the planned production output of the Demonstration Plant either to fill new demand or to substitute lower quality or higher cost supply.
Salt Lake has undertaken initial market discussions with local and international fertiliser industry participants, which have indicated substantive interest in a new and stable supplier of high quality organic SOP from an Australian salt lake project.
The execution of an initial non-binding MoU with Mitsubishi confirmed there is a reasonable expectation the Company will be able to execute off-take agreements with customers.
The current spot price for SOP is around US$625 (FOB Northwest America).
The Company's target market is the Asia-Pacific, a region forecasting significant increases in the demand for SOP. SOP production is not easily substitutable and is in supply deficit, therefore the Company is confident in the current and forecasted levels of demand.
Salt Lake will continue to focus on developing marketing relationships and discussions with potential additional off-take and trade partners.
Economic - refer to sections entitled 'Product Quality and Marketing' in the Announcement.
A detailed financial model and discounted cash flow (DCF) analysis has been prepared in order to demonstrate the economic viability of the Project. The financial model and DCF were modelled with conservative inputs to provide management with a baseline valuation of the Project. Sensitivity analysis was performed on all key assumptions used. Key inputs and assumptions are outlined in Table 1 to allow analysts and investors to calculate Project valuations based on their own revenue assumptions.
The Company engaged the services of a funding and debt advisory firm, Argonaut. Argonaut is a financial advisory and investment banking firm which specialises in the metals, oil & gas and agri-business sectors. Argonaut is well regarded as a specialist capital markets service provider and have raised project development funding (including debt, equity, hybrid instruments and strategic capital/partners) for companies across a range of commodities including substantial experience in the industrial and speciality minerals sector. Following the assessment of a number of key criteria, Argonaut has confirmed in writing that, provided a definitive feasibility study arrives at a result not materially worse than the Scoping Study, the Company should be able to raise sufficient funding to develop the Project.
An assessment of various funding alternatives available to Salt Lake has been made based on precedent transactions that have occurred in the mining industry, including an assessment of alternatives available to companies that operate in industrial and specialty minerals sector. The assessment and advice from Argonaut (referred to above) indicates that financing for industrial mineral companies often involves a broader mix of funding sources than just traditional debt and equity, and the potential funding alternatives available to the Company including, but not limited to: royalty financing; mezzanine finance; prepaid off-take agreements; equity; joint venture participates; strategic partners/investors at project or company; senior secured debt/project finance; secondary secured debt; and equipment leasing. It is important to note that no funding arrangements have yet been put in place, as these discussions will usually commence upon completion of a Feasibility Study with results not worse than this Scoping Study. The composition of the funding arrangements ultimately put in place may also vary, so it is not possible at this stage to provide any further information about the composition of potential funding arrangement.
Since the acquisition of the Project in June 2015, the Company has completed comprehensive exploration programs across the GSLP, with the delineation of Mineral Resources at both Lake Wells and Lake Way, and the successful completion of positive Scoping Studies on Lake Wells and now for the Demonstration Plant for Lake Way. Over the last six months, the Company's market capitalisation has ranged between A$75m and A$110m.
Salt Lake has a high quality Board and management team comprising highly respected resource executives with extensive finance, commercial and capital markets experience. The Company's Chairman has previously raised over A$1 billion from capital markets for a number of exploration and development companies.
As a result, the Board has a high level of confidence that the Project will be able to secure funding in due course, having particular regard to:
- Required capital expenditure; - Salt Lake Potash's market capitalisation; - Recent funding activities by Directors in respect of other resource projects; - Recently completed funding agreements for similar or larger scale development projects; - The range of potential funding options available; - The favourable key metrics generated by the Project and GSLP; and - Investor interest.
Environmental - refer to section entitled 'Environmental & Social Impact Assessment' in the Announcement.
An opportunities and constraints assessment was completed for the Project by Pendragon Environmental, a leading Western Australian environmental management consultancy. Based on the Project's stage of development, Pendragon Environmental confirmed there are no current impediments on the Project.
To date, SO4 has only undertaken preliminary desktop studies for the purposes of identifying potential environmental opportunities and constraints. Extensive data is available across the Scoping Project area from work undertaken historically by Blackham Resources. The further development of the Project may require additional detailed flora, fauna and other studies; this is dependent on the final design criteria.
Social, Legal and Governmental - refer to section entitled 'Permitting and Fiscal Regime' in the Announcement.
The Company has taken legal advice in relation to relevant Modifying Factors.
Based on the legal advice received the Company considers there is presently no reason to believe that the development of the Demonstration Plant is not able to be developed, constructed and operated on Blackham Resources Limited's current Mining Leases, subject to obtaining necessary regulatory approvals.
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 PERSONS STATEMENTS
The information in this report that relates to Mineral Resources and Exploration Results for Lake Way is based on information compiled by Mr Ben Jeuken, who is a member Australian Institute of Mining and Metallurgy and a member of the International Association of Hydrogeologists. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company. Mr Jeuken 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 Jeuken consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Exploration Targets is extracted from the report entitled 'Exploration Targets Reveal World Class Scale Potential' dated 28 March 2018 The information in the original ASX Announcement that related to Exploration Targets or Mineral Resources is based on information compiled by Mr Ben Jeuken, who is a member Australian Institute of Mining and Metallurgy. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company. Mr Jeuken 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 Jeuken consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.
APPIX 1 - LAKE WAY BRINE CHEMISTRY ANALYSIS
HOLE ID East North K Cl Na Ca Mg SO(4) TDS
(mg/L) (mg/L) (mg/L) (mg/L) (mg/L) (mg/L) (g/L)
HA016 234302 7035685 6,130 110,400 66,300 581 6,300 23,600 219
------- -------- -------- -------- -------- -------- -------- -------- -------
HA013 234890 7035481 6,070 108,500 65,900 623 6,070 24,000 216
------- -------- -------- -------- -------- -------- -------- -------- -------
HA031 233697 7037711 5,910 117,600 70,200 615 6,940 23,400 227
------- -------- -------- -------- -------- -------- -------- -------- -------
HA022 234734 7037719 6,550 111,400 68,500 636 6,050 23,600 217
------- -------- -------- -------- -------- -------- -------- -------- -------
HA017 234302 7035685 6,090 101,600 63,100 664 5,450 24,200 202
------- -------- -------- -------- -------- -------- -------- -------- -------
HA014 234458 7035223 6,050 104,250 63,900 666 5,620 23,700 206
------- -------- -------- -------- -------- -------- -------- -------- -------
HA010 235063 7034408 6,350 112,150 68,100 621 6,180 23,900 221
------- -------- -------- -------- -------- -------- -------- -------- -------
HA012 234299 7033837 6,550 115,700 68,600 574 6,690 25,300 228
------- -------- -------- -------- -------- -------- -------- -------- -------
HA008 234918 7033057 7,280 121,350 73,900 537 6,530 28,200 241
------- -------- -------- -------- -------- -------- -------- -------- -------
HA006 235652 7033571 6,910 128,050 78,600 528 7,000 25,500 249
------- -------- -------- -------- -------- -------- -------- -------- -------
HA003 235863 7032512 7,210 131,450 77,200 499 7,510 26,200 259
------- -------- -------- -------- -------- -------- -------- -------- -------
HA019 234752 7036712 6,030 113,600 67,600 591 7,010 25,700 225
------- -------- -------- -------- -------- -------- -------- -------- -------
HA029 231655 7036814 6,730 131,200 79,500 447 8,070 33,000 263
------- -------- -------- -------- -------- -------- -------- -------- -------
HA024 233715 7039225 6,100 130,850 75,000 536 8,650 25,300 253
------- -------- -------- -------- -------- -------- -------- -------- -------
HA031 233697 7037711 6,690 117,300 71,100 563 6,220 27,100 232
------- -------- -------- -------- -------- -------- -------- -------- -------
HA021 233742 7036709 5,960 110,250 65,000 610 6,150 23,300 216
------- -------- -------- -------- -------- -------- -------- -------- -------
HA002 236273 7032823 7,180 134,900 79,200 482 7,410 26,900 262
------- -------- -------- -------- -------- -------- -------- -------- -------
HA025 233868 7032968 6,810 126,800 76,500 519 7,160 26,300 248
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT002 229968 7036837 7,350 145,050 90,000 367 10,900 38,700 307
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT003 230702 7036399 8,160 151,150 91,400 305 12,200 42,600 324
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT004 231815 7035595 6,700 126,350 76,200 441 8,090 29,400 261
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT005 232341 7035793 6,760 122,700 74,500 553 7,100 25,100 248
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT006 232183 7035073 6,970 129,000 78,700 514 7,500 26,600 260
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT007 231817 7034412 6,600 130,400 78,100 484 8,010 28,900 266
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT012 233601 7037586 6,470 120,100 74,300 575 7,240 25,800 243
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT026 234600 7036800 7,060 125,450 77,700 519 7,030 26,200 250
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT025 234600 7035600 6,330 115,700 71,500 559 6,960 27,300 235
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT024 234600 7034800 6,240 113,400 70,100 581 6,850 26,300 229
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT021 234600 7034000 6,390 117,100 71,600 571 6,890 26,000 237
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT020 234600 7033200 6,840 124,050 74,900 549 7,020 26,100 249
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT016 234600 7032000 6,990 137,650 86,000 458 8,290 29,300 278
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT023 235300 7034800 6,510 123,700 72,000 556 6,790 25,100 238
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT019 236300 7033200 6,800 121,600 73,500 532 7,040 26,600 246
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT017 235300 7032400 7,150 129,450 80,300 498 7,400 27,200 260
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT022 235650 7034000 6,630 119,150 74,600 543 7,010 26,700 241
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT018 235300 7033200 7,270 128,050 78,500 492 7,340 28,800 261
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT013 234890 7035481 6,510 117,750 72,500 562 7,000 25,400 237
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT014 234458 7035223 6,840 123,700 76,000 586 7,020 26,100 248
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT015 233600 7033200 7,150 128,750 78,900 517 7,300 28,000 259
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT027 235511 7040910 7,080 133,850 83,300 390 9,930 37,800 282
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT028 237073 7040940 6,360 130,350 80,800 410 10,200 36,900 276
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT028 237073 7040940 7,210 145,150 87,000 358 11,600 37,800 304
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT030 230700 7041600 7,300 133,500 81,200 362 9,150 33,000 278
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT031 229531 7041686 8,760 147,100 89,700 347 11,300 41,100 314
------- -------- -------- -------- -------- -------- -------- -------- -------
LYTT032 229551 7040432 7,030 137,850 81,900 408 10,400 29,900 281
------- -------- -------- -------- -------- -------- -------- -------- -------
APPIX 2 - JORC TABLE ONE
Section 1: Sampling Techniques and Data
Criteria JORC Code explanation Commentary
Sampling techniques Nature and quality of sampling (eg Lake Way
cut channels, random chips, or Sampling involved the excavation of
specific specialised industry 36 test pits over the tenement area
standard measurement tools to a depth of 4mbgl
appropriate to the minerals under or weathered basement whichever was
investigation, such as down hole encountered first. Two trenches were
gamma sondes, or handheld XRF also dug to 4m depth,
instruments, etc). These examples Trench 1 112m long in a north south
should not be taken as limiting orientation and Trench 2 100m long in
the broad meaning of sampling. an east west orientation.
Include reference to measures taken
to ensure sample representivity and A brine sample and duplicate were
the appropriate calibration taken from each test pit and trench
of any measurement tools or systems for analysis.
used.
Aspects of the determination of Samples were taken manually by
mineralisation that are Material to initially rinsing out the bottle with
the Public Report. brine from the pit or
In cases where 'industry standard' trench and then placing the bottle in
work has been done this would be the test pit or trench and allowing
relatively simple (eg it to fill.
'reverse circulation drilling was Samples were analysed for K, Mg, Ca,
used to obtain 1 m samples from which Na, Cl, SO4, HCO3, NO3, pH, TDS and
3 kg was pulverised specific gravity.
to produce a 30 g charge for fire
assay'). In other cases more Each test pit was geologically logged
explanation may be required, and a sample taken each 1m depth.
such as where there is coarse gold
that has inherent sampling problems. Williamson Pit
Unusual commodities Samples were taken manually at three
or mineralisation types (eg submarine locations along the pit lake and at
nodules) may warrant disclosure of three depths at each
detailed information. location giving a total of 9 sampling
locations in total.
At each location a brine sample and
duplicate were taken for analysis.
Samples were analysed for K, Mg, Ca,
Na, Cl, HCO(3) , SO(4) and NO(3)
======================================
Drilling techniques Drill type (eg core, reverse Lake Way
circulation, open-hole hammer, rotary No drilling was undertaken.
air blast, auger, Bangka,
sonic, etc) and details (eg core Test pits were dug with an excavator
diameter, triple or standard tube, approximately 2m long x 1m wide x 4m
depth of diamond tails, deep.
face-sampling bit or other type,
whether core is oriented and if so, Williamson Pit
by what method, etc). No drilling was undertaken.
Drill sample recovery Method of recording and assessing Lake Way
core and chip sample recoveries and Samples from the test pits were
results assessed. logged each bucket and a
Measures taken to maximise sample representative sample bagged.
recovery and ensure representative
nature of the samples. 100% of excavated sample was
Whether a relationship exists between available for sampling. The ability
sample recovery and grade and whether to see the bulk sample facilitated
sample bias may the selection of a representative
have occurred due to preferential sample.
loss/gain of fine/coarse material.
There is no relationship between
sample recovery and grade and no loss
of material as a result
of excavation.
Williamson Pit
Not Applicable
======================================
Logging Whether core and chip samples have Lake Way
been geologically and geotechnically The geological logging is sufficient
logged to a level for the purposes of identifying
of detail to support appropriate variations in sand/ clay
Mineral Resource estimation, mining and silt fraction within the top 4m.
studies and metallurgical For a brine abstraction project, the
studies. key parameters are
Whether logging is qualitative or the hydraulic conductivity and
quantitative in nature. Core (or storativity of the host rock, which
costean, channel, etc) will be determined during
photography. test pumping of the trenches.
The total length and percentage of The logging is qualitative.
the relevant intersections logged. The entire pit depth was logged in
every case.
Williamson Pit
Not Applicable
Sub-sampling techniques and sample If core, whether cut or sawn and Lake Way
preparation whether quarter, half or all core Not applicable
taken. Not applicable
If non-core, whether riffled, tube At all test pits brine samples were
sampled, rotary split, etc and taken from the pit after 24hours or
whether sampled wet or dry. once the pit had filled
For all sample types, the nature, with brine. The brine samples taken
quality and appropriateness of the from the pits are bulk samples which
sample preparation technique. is an appropriate
Quality control procedures adopted approach given the long-term
for all sub-sampling stages to abstraction technique of using many
maximise representivity kilometres of trenches to
of samples. abstract brine from the upper 4m.
Measures taken to ensure that the All the samples taken were
sampling is representative of the in incorporated into a rigorous QA / QC
situ material collected, program in which Standards
including for instance results for and Duplicates were taken. The
field duplicate/second-half sampling. samples were taken in sterile plastic
Whether sample sizes are appropriate bottles of 250ml capacity.
to the grain size of the material Excavated lake bed samples were
being sampled. sealed in plastic bags. For all brine
samples (original or
check samples) the samples were
labelled with the alphanumeric code
Y8001, Y80002 ...
Lake bed samples were labelled with
the test pit locator LYTT01, LYTT02
etc. and the depth
from which they were taken.
Williamson Pit
All the samples taken were
incorporated into a rigorous QA / QC
program in which duplicates
were taken. The samples were taken in
sterile plastic bottles of 250ml
capacity.
For all brine samples (original or
check samples) the samples were
labelled with the alphanumeric
code Y8001, Y80002.
======================================
Quality of assay data and laboratory The nature, quality and Lake Way
tests appropriateness of the assaying and The brine samples were sent to Bureau
laboratory procedures used and Veritas Laboratories in Perth, WA
whether the technique is considered with the duplicates
partial or total. being held by SLP. Every 10th
For geophysical tools, spectrometers, duplicate was sent to Intertek, an
handheld XRF instruments, etc, the alternate laboratory for
parameters used in comparison purposes.
determining the analysis including
instrument make and model, reading No laboratory analysis was undertaken
times, calibrations with geophysical tools.
factors applied and their derivation,
etc. Soil samples and laboratory derived
Nature of quality control procedures hydraulic conductivity, total
adopted (eg standards, blanks, porosity and drainable porosity
duplicates, external laboratory samples were analysed by Core
checks) and whether acceptable levels Laboratories in Perth WA. All
of accuracy (ie lack of bias) and laboratories used are NATA certified.
precision have been
established. Williamson Pit
The brine samples were sent to Bureau
Veritas Laboratories in Perth, WA a
NATA registered
laboratory with the duplicates being
held by SLP.
Verification of sampling and assaying The verification of significant Lake Way
intersections by either independent Not applicable
or alternative company
personnel. Not applicable
The use of twinned holes.
Documentation of primary data, data All sampling and assaying is well
entry procedures, data verification, documented and contained on SLP's
data storage (physical internal database
and electronic) protocols.
Discuss any adjustment to assay data. No adjustments have been made to
assay data
Williamson Pit
Not applicable, no adjustments were
made to the data
======================================
Location of data points Accuracy and quality of surveys used Lake Way
to locate drill holes (collar and All coordinates were collected by
down-hole surveys), handheld GPS.
trenches, mine workings and other The grid system is the Australian
locations used in Mineral Resource National Grid Zone MGA 51 (GDA 94)
estimation. There is no specific topographic
Specification of the grid system control as the lake surface can
used. essentially be considered
Quality and adequacy of topographic flat.
control.
Williamson Pit
The pit lake sampling locations were
located with a GPS. Whilst the
samples were taken from
a boat in the lake, movement was
limited as far as possible.
The depth from the pit lake surface
to the ground surface was measured
from calibrated drone
survey footage
When the samples were being taken the
depth to the base of the pit was also
measured and recorded
at each of the three sampling
locations.
All coordinates were collected by
handheld GPS.
The grid system is the Australian
National Grid Zone MGA 51 (GDA 94)
The is no specific topographic
control as the pit lake surface can
essentially be considered
flat.
Data spacing and distribution Data spacing for reporting of Lake Way
Exploration Results. The lake area contained within the
Whether the data spacing and Blackham tenement was calculated by
distribution is sufficient to digitising the lake
establish the degree of geological surface and removing the area covered
and grade continuity appropriate for by the islands and the dewatered area
the Mineral Resource and Ore Reserve of the Williamson
estimation procedure(s) pit, the approximate area is
and classifications applied. 55.4km(2) . 36 test pits and 2
Whether sample compositing has been trenches were excavated over the
applied. BRT surface resulting in 1 excavation
per 1.5Km(2) . Which is a high
density of investigation
for a salt-lake and sufficient to
establish variations in depth to
basement, sedimentology
and local hydraulic conductivity.
Sample compositing not applicable
Williamson Pit
The Williamson pit is orientated
north south and is approximately 600m
long, 100m wide with
a calculated brine volume of
1,150,495m3. Nine samples were taken
giving a sample density
of 1 per 128,000/m3 given the limited
size of the pit and no observed
inflows the sample density
was deemed appropriate for this
resource.
======================================
Orientation of data in relation to Whether the orientation of sampling Lake Way
geological structure achieves unbiased sampling of There are no structural or geological
possible structures and controls with respect to sampling the
the extent to which this is known, lake bed sediments.
considering the deposit type. The variation in depth to basement
If the relationship between the does control the potential depth of
drilling orientation and the future trench systems
orientation of key mineralised to the west of Williamson pit and the
structures is considered to have main island.
introduced a sampling bias, this
should be assessed and reported Geological influence on the brine is
if material. limited to the aquifer parameters of
the host rock, namely
the hydraulic conductivity, drainable
porosity and storativity.
Williamson Pit
Not Applicable.
Sample security The measures taken to ensure sample SLP field geologists were responsible
security. for taking the samples and
transporting them to the
BV lab.
The security measures for the
material and type of sampling at hand
was appropriate
======================================
Audits or reviews The results of any audits or reviews Data review is summarised in the
of sampling techniques and data. report and included an assessment of
the quality of assay
data and laboratory tests and
verification of sampling and
assaying. No audits of sampling
techniques and data have been
undertaken.
====================================== ====================================== ======================================
Section 2: Reporting of Exploration Results
Criteria JORC Code explanation Commentary
Mineral tenement and land tenure Type, reference name/number, location On the 9(th) March 2018 Salt Lake
status and ownership including agreements or Potash Ltd. and Blackham Resources
material issues Ltd. signed a gold and
with third parties such as joint brine minerals memorandum of
ventures, partnerships, overriding understanding. Under this MOU
royalties, native title Blackham has granted the brine
interests, historical sites, rights on its Lake Way tenement free
wilderness or national park and from encumbrances to SLP.
environmental settings. The tenements referred to in the MOU
The security of the tenure held at are; Exploration licences E53/1288,
the time of reporting along with any E53/1862, E53/1905,
known impediments E53/1952, Mining Licences, M53/121,
to obtaining a licence to operate in M53/122, M53/123, M53/147, M53/253,
the area. M53/796, M53/797,
M53/798, M53/910, and Prospecting
Licences P53/1642, P53/1646,
P53/1666, P53/1667, P53/1668.
All tenure is granted to Blackham
Resources Ltd.
======================================
Exploration done by other parties Acknowledgment and appraisal of There is a database of approximately
exploration by other parties. 6200 boreholes across Lake Way of
which some 1000 are
within the Blackham tenement. The
primary source for the information is
the publicly available
Western Australian Mineral
Exploration (WAMEX) report data base.
Recent sterilisation drilling has
also been undertaken by Blackham
resources to the south
and east of the BRT area.
The majority of previous work has
been concerned with investigating the
bedrock and calcrete
for gold and Uranium, it is of
limited value in defining the
stratigraphy of the lakebed
sediments.
The data has been shown to be useful
in the determination of the depth to
base of lakebed
sediments and has been used to
develop an overall estimate of the
volume of lake bed sediments
that has been applied to the mineral
resource calculations.
Geology Deposit type, geological setting and The deposit is a salt-lake brine
style of mineralisation. deposit.
The lake setting is typical of a
Western Australian palaeovalley
environment. Ancient hydrological
systems have incised palaeovalleys
into Archaean basement rocks, which
were then infilled
by Tertiary-aged sediments typically
comprising a coarse-grained fluvial
basal sand overlaid
by palaeovalley clay with some
coarser grained interbeds. The clay
is overlaid by recent Cainozoic
material including lacustrine
sediment, calcrete, evaporite and
aeolian deposits.
======================================
Drill hole Information A summary of all information No drilling was undertaken.
material to the understanding of 36 test pits and 2 trenches were
the exploration results including excavated on the lake surface.
a tabulation of the following All test pit and trench details and
information for all Material locations of all data points are
drill holes: presented in the report.
o easting and northing of the
drill hole collar
o elevation or RL (Reduced Level
- elevation above sea level in
metres) of the drill hole
collar
o dip and azimuth of the hole
o down hole length and
interception depth
o hole length.
If the exclusion of this
information is justified on the
basis that the information is not
Material and this exclusion does
not detract from the
understanding of the report, the
Competent
Person should clearly explain why
this is the case.
Data aggregation methods In reporting Exploration Results, Within the salt-lake extent no
weighting averaging techniques, low-grade cut-off or high-grade
maximum and/or minimum grade capping has been implemented
truncations (eg cutting of high due to the consistent nature of the
grades) and cut-off grades are brine assay data.
usually Material and should Test pit and trench data aggregation
be stated. comprised calculation of a hydraulic
Where aggregate intercepts conductivity for
incorporate short lengths of high the whole sequence using the Hvorslev
grade results and longer lengths (1951) recovery analysis technique.
of low grade results, the procedure
used for such aggregation should be
stated and some typical
examples of such aggregations should
be shown in detail.
The assumptions used for any
reporting of metal equivalent values
should be clearly stated.
======================================
Relationship between mineralisation These relationships are particularly The chemical analysis from each of
widths and intercept lengths important in the reporting of the test pits has shown the that the
Exploration Results. brine resource is
If the geometry of the mineralisation consistent and continuous through the
with respect to the drill hole angle full thickness of the Lake Playa
is known, its nature sediments unit. The
should be reported. unit is flat lying all test pits were
If it is not known and only the down excavated into the lake sediments to
hole lengths are reported, there a depth of 4m or
should be a clear statement basement, the intersected depth is
to this effect (eg 'down hole length, equivalent to the vertical depth and
true width not known'). the thickness of mineralisation.
Diagrams Appropriate maps and sections (with Addressed in the announcement.
scales) and tabulations of intercepts
should be included
for any significant discovery being
reported These should include, but
not be limited to a
plan view of drill hole collar
locations and appropriate sectional
views.
======================================
Balanced reporting Where comprehensive reporting of all All results have been included.
Exploration Results is not
practicable, representative
reporting of both low and high grades
and/or widths should be practiced to
avoid misleading
reporting of Exploration Results.
Other substantive exploration data Other exploration data, if meaningful All material exploration data has
and material, should be reported been reported.
including (but not
limited to): geological observations;
geophysical survey results;
geochemical survey results;
bulk samples - size and method of
treatment; metallurgical test
results; bulk density, groundwater,
geotechnical and rock
characteristics; potential
deleterious or contaminating
substances.
======================================
Further work The nature and scale of planned Further trench testing and numerical
further work (eg tests for lateral hydrogeological modelling to be
extensions or depth extensions completed that incorporates
or large-scale step-out drilling). the results of the test pumping. The
Diagrams clearly highlighting the model will be the basis of the annual
areas of possible extensions, brine abstraction
including the main geological rate and mine life.
interpretations and future drilling
areas, provided this information is
not commercially sensitive.
====================================== ====================================== ======================================
Section 3: Estimation and Reporting of Mineral Resources (Williamson Pit and Lake Way)
Criteria JORC Code explanation Commentary
Database Measures taken to ensure Cross-check of laboratory assay
integrity that data has not been reports and database.
corrupted by, for example,
transcription or keying Extensive QA/QC as described in
errors, between its initial Section 3 Sampling Techniques and
collection and its use Data
for Mineral Resource estimation
purposes.
Data validation procedures
used.
=====================================
Site visits Comment on any site visits A site visit was undertaken by
undertaken by the Competent the Competent Person (CP) from
Person and the outcome 29th to 30th April 2018. The CP
of those visits. visit was documented in Letter
Report SLP-18-1-L001 (Groundwater
If no site visits have Science, 2018).
been undertaken indicate
why this is the cases.
Geological Confidence in (or conversely, The shallow geological profile
interpretation the uncertainty of) the beneath the lake is relatively
geological interpretation homogenous. The porosity of the
of the mineral deposit. material is consistent with depth;
hence the geological interpretation
Nature of the data used has little impact on the resource
and of any assumptions except to define its thickness.
made.
The island is excluded from the
The effect, if any, of resource estimate as access is
alternative interpretations not permitted. Mining the Williamson
on Mineral Resource estimation. Pit has resulted in an area of
approximately 4km(2) being dewatered,
The use of geology in guiding this areas has also been excluded
and controlling Mineral from the resource estimate.
Resource estimation.
The factors affecting continuity
both of grade and geology.
=====================================
Dimensions The extent and variability The resource extends beneath 55.4km(2)
of the Mineral Resource of the Blackham Resources Tenements
expressed as length (along on Lake Way. The top of the resource
strike or otherwise), plan is defined by the water table surface;
width, and depth below on average 0.3m below ground surface.
surface to the upper and The average thickness of the resource
lower limits of the Mineral is 5.3m as determined from the
Resource. leapfrog model.
The Williamson Pit volume has been
estimated as 1.26million m(3) .
Estimation The nature and appropriateness Brine concentration was interpolated
and modelling of the estimation technique(s) using both Ordinary kriging and
techniques applied and key assumptions, Voronoi polygons
including treatment of
extreme grade values, domaining, The thickness of the lakebed sediments
interpolation parameters was developed using the Leapfrog
and maximum distance of software package and an inverse
extrapolation from data distance weighted calculation applied
points. If a computer assisted to the WAMEX boreholes database
estimation method was chosen covering Lake Way.
include a description of Average test pit spacing was 500m.
computer software and parameters No check estimates were available
used. No recovery of by-products was
considered
The availability of check Deleterious elements were not considered
estimates, previous estimates Selective mining units were not
and/or mine production modelled.
records and whether the Correlation between variables was
Mineral Resource estimate not assumed.
takes appropriate account The geological interpretation from
of such data. the WAMEX database was used to
inform the Leapfrog model which
The assumptions made regarding was used to define the thickness
recovery of by-products. of the orebody.
Grade cutting or capping was not
Estimation of deleterious employed due to the homogenous
elements or other non-grade nature of the orebody.
variables of economic significance
(eg sulphur for acid mine
drainage characterisation).
In the case of block model
interpolation, the block
size in relation to the
average sample spacing
and the search employed.
Any assumptions behind
modelling of selective
mining units.
Any assumptions about correlation
between variables.
Description of how the
geological interpretation
was used to control the
resource estimates.
Discussion of basis for
using or not using grade
cutting or capping.
The process of validation,
the checking process used,
the comparison of model
data to drill hole data,
and use of reconciliation
data if available.
=====================================
Moisture Whether the tonnages are Not applicable to brine resources.
estimated on a dry basis See discussion of moisture content
or with natural moisture, under Bulk Density
and the method of determination
of the moisture content.
Cut-off The basis of the adopted No cut-off parameters were used
parameters cut-off grade(s) or quality
parameters applied.
=====================================
Mining Assumptions made regarding Mining will be undertaken by gravity
factors possible mining methods, drainage of brine from trenches.
or assumptions minimum mining dimensions Test pumping of two trenches was
and internal (or, if applicable, undertaken to obtain preliminary
external) mining dilution. aquifer characteristics.
It is always necessary
as part of the process
of determining reasonable
prospects for eventual
economic extraction to
consider potential mining
methods, but the assumptions
made regarding mining methods
and parameters when estimating
Mineral Resources may not
always be rigorous. Where
this is the case, this
should be reported with
an explanation of the basis
of the mining assumptions
made.
Metallurgical The basis for assumptions The brine is characterised by elevated
factors or predictions regarding concentration of potassium, magnesium
or assumptions metallurgical amenability. and sulphate elements and distinctly
It is always necessary deficient in calcium ions. Such
as part of the process a chemical makeup is considered
of determining reasonable highly favorable for efficient
prospects for eventual recovery of Schoenite from the
economic extraction to lake brines (the main feedstock
consider potential metallurgical for Sulphate of Potash production),
methods, but the assumptions using conventional evaporation
regarding metallurgical methods
treatment processes and
parameters made when reporting
Mineral Resources may not
always be rigorous. Where
this is the case, this
should be reported with
an explanation of the basis
of the metallurgical assumptions
made.
=====================================
Environmen-tal Assumptions made regarding Environmental impacts are expected
factors possible waste and process to be; localized reduction in saline
or assumptions residue disposal options. groundwater level, surface disturbance
It is always necessary associated with trench and pond
as part of the process construction and accumulation of
of determining reasonable salt tails. The project is in a
prospects for eventual remote area and these impacts are
economic extraction to not expected to prevent project
consider the potential development.
environmental impacts of
the mining and processing
operation. While at this
stage the determination
of potential environmental
impacts, particularly for
a greenfields project,
may not always be well
advanced, the status of
early consideration of
these potential environmental
impacts should be reported.
Where these aspects have
not been considered this
should be reported with
an explanation of the environmental
assumptions made.
Bulk density Whether assumed or determined. Bulk density is not relevant to
If assumed, the basis for brine resource estimation.
the assumptions. If determined, Volumetric moisture content or
the method used, whether volumetric porosity was measured
wet or dry, the frequency based on determination of 19 samples
of the measurements, the (average sample spacing 1.5m) to
nature, size and representativeness yield an average value of 43% v/v.
of the samples.
The bulk density for bulk
material must have been
measured by methods that
adequately account for
void spaces (vugs, porosity,
etc), moisture and differences
between rock and alteration
zones within the deposit.
Discuss assumptions for
bulk density estimates
used in the evaluation
process of the different
materials.
=====================================
Classification The basis for the classification The data is considered sufficient
of the Mineral Resources to assign a measured resource classification
into varying confidence to brine within the Williamson
categories. Pit shell.
Whether appropriate account The data is considered sufficient
has been taken of all relevant to assign an indicated resource
factors (ie relative confidence classification to brine within
in tonnage/grade estimations, the lakebed sediments within the
reliability of input data, Blackham Resources tenements excluding
confidence in continuity the Williamson Pit dewatered area
of geology and metal values, and the area of the island.
quality, quantity and distribution The result reflects the view of
of the data). the Competent Person
Whether the result appropriately
reflects the Competent
Person's view of the deposit.
Audits The results of any audits No audit or reviews were undertaken.
or reviews or reviews of Mineral Resource
estimates.
=====================================
Discussion Where appropriate a statement It is expected that all the Williamson
of relative of the relative accuracy Pit brine will be extracted.
accuracy/ and confidence level in For the lakebed sediments the estimated
confidence the Mineral Resource estimate tonnage represents the in-situ
using an approach or procedure brine with no recovery factor applied.
deemed appropriate by the It will not be possible to extract
Competent Person. For example, all of the contained brine by pumping
the application of statistical from trenches. The amount which
or geostatistical procedures can be extracted depends on many
to quantify the relative factors including the permeability
accuracy of the resource of the sediments, the drainable
within stated confidence porosity, and the recharge dynamics
limits, or, if such an of the aquifers.
approach is not deemed No production data are available
appropriate, a qualitative for comparison
discussion of the factors
that could affect the relative
accuracy and confidence
of the estimate.
The statement should specify
whether it relates to global
or local estimates, and,
if local, state the relevant
tonnages, which should
be relevant to technical
and economic evaluation.
Documentation should include
assumptions made and the
procedures used.
These statements of relative
accuracy and confidence
of the estimate should
be compared with production
data, where available.
================ ===================================== ==============================================
For further information please visit www.saltlakepotash.com.au or contact:
Matt Syme/Sam Cordin Salt Lake Potash Limited Tel: +61 8 9322 6322 Jo Battershill Salt Lake Potash Limited Tel: +44 (0) 20 7478 3900 Colin Aaronson/Richard Tonthat Grant Thornton UK LLP (Nominated Adviser) Tel: +44 (0) 20 7383 5100 Derrick Lee/Beth McKiernan Cenkos Securities plc (Joint Broker) Tel: +44 (0) 131 220 6939 Jerry Keen/Toby Gibbs Shore Capital (Joint broker) Tel: +44 (0) 20 7468 7967
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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