Australian Potash has received positive feedback from the EPA who found no material issues or fatal flaws with its over-arching environmental review document for the Lake Wells sulphate of potash project near Laverton in Western Australia. The ASX-listed company will now address issues raised under the staged assessment process and resubmit its environmental document for final approvals with a view to finally green-lighting the project environmentally.
The latest finding by the EPA and its relevant respondents is an important milestone in the approvals process for Australian Potash to take its Lake Wells liquid sulphate of potash, or ‘LSOP’ project through to development. The company said it expects a final decision on the environmental plan for Lake Wells during the third quarter of this year.
The EPA advised that no material issues or fatal flaws were raised by the relevant assessing authorities that were invited to provide formal responses to the environmental review document. Australian Potash will now address issues raised under the staged assessment process and resubmit the document for final approvals by the EPA.
The EPA assessment protocol requires a staged process whereby the project is referred to the EPA and a level of assessment is set and published for comment under stages one and two. Australian Potash says that the process is now in stage three where it addresses the formal responses and updates its review document ahead of the final approvals process.
The company announced back in August 2019 the results of its definitive feasibility study for the project that shows a 150,000 tonne per annum sulphate of potash operation.
The extraction method adopted by Australian Potash at lake Wells has a competitive operating cost profile that delivers some outstanding economics and exceptional financial returns, according to the company’s DFS.
The DFS for Lake Wells shows a pre-tax NPV of A$665m with annual pre-tax cash flows as high as A$100m and life-of-mine pre-tax cash flows of a staggering A$3.1 billion over a 30-year mine life for 4.5Mt of premium grade sulphate of potash.
Lake Wells has an internal rate of return of 25% based on an annual production rate of 150,000tpa SOP with a LOM cash cost of US$262/t, delivering top quartile cost of production metrics in the SOP space.
Management said that historical SOP prices in northwest Europe ranged between US$450-650/t over the last decade, offering a healthy margin if these prices can be sustained through the current decade.
The probable reserve at lake Wells is 3.6Mt with a measured resource of 18.1Mt of drainable SOP.
Australian Potash is on the home straight now and looks to be getting towards the pointy end of the approvals process.
With a relatively manageable capex figure to build the operations of around A$208m and an extraordinarily long 30-year mine life, market interest in the Australian Potash has been renewed recently with its shares running from a low of 7.5c in December up to 11c in late January before closing at 9.4c today.
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