Perth-based Australian Potash has prepared a draft environmental scoping document for its Lake Wells potash project as a precursor to the preparation of a more fulsome Environmental Review Document.
The Lake Wells project is 180km northeast of Laverton in Western Australia’s Goldfields region.
The company has now completed a Level 2 short range endemic species field program and a Level 2 stygofauna field program
Additionally, the final seasonal fauna, flora and Tecticornia field program is now planned to start in the third quarter of the year.
Lake Wells has low environmental hurdles with the EPA determining in January 2018 that the project’s proposal will be assessed by way of an Environmental Review Document with no public consultation.
The final document will address the project background and characteristics, assess preliminary key environmental factors such as flora and vegetation, other environmental factors including water and social surroundings, stakeholder consultation and decision making authorities.
Australian Potash is aiming to complete and submit the document in the second half of 2018 with the EPA’s final assessment report and recommendations expected in the first quarter of 2019.
Lake Wells potash project is a brine-hosted, high-quality sulphate of potash project with a JORC-compliant resource of 14.7 million tonnes of sulphate of potash, with 12.7 million tonnes in the indicated category.
It has a clear pathway to development now with MOU’s in place with two of China’s largest agricultural companies for up to 200,000 tpa of its premium potash product.
It also has no native title considerations and a clear route to market via transportation of product to a rail-head, 280km away at Leonora.
Executive Chairman Matt Shackleton said, “APC’s environmental consultants, MBS Environmental, have significant experience working through the Western Australian regulatory framework, and more particularly with respect to project developments in the Yamarna region where the Lake Wells SOP project is located.”
“Our project schedule currently plans for final development approval being granted through H1 2019, which will allow us to meet our goal of development through 2019/2020. We continue to work closely with the EPA to ensure their information requirements are met in the most efficient way, in preparation for lodging the final ERD in the second half of this year.”
A low level Scoping Study of Lake Wells was announced to the ASX early in 2017 and whilst the results are yet to be confirmed by a more robust analysis and the provision of finance, it found the project could potentially produce 150,000 tonnes per annum of premium potash for the first 5 years and 300,000 tpa for the following 15 years in a two stage capex strategy.
Stage 1 is expected to generate $61m per annum in pre-tax cashflow for the first 5 years with a payback of the A$175m capital in just under 3 years at an assumed sales price of $795 per tonne of potash.
Pre-tax cashflow is projected to jump to $137m per annum for the remaining 15 year life of mine with a pay-back of the stage 2 capital requirement of A$163m in under 2 years.
The scoping study predicts a pre-tax NPV of $500m and a pre-tax IRR of 33% for Lake Wells.
By Matt Birney
