02/03/2021 - 11:00

NAIF backs third potash development

02/03/2021 - 11:00

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Australian Potash has secured $140 million in federal government funding to cover more than two thirds of the development costs associated with its Lake Wells project in WA.

NAIF backs third potash development
The Lake Wells SOP project is expected to begin production in mid-2023. Photo: Australian Potash

Australian Potash has secured $140 million in federal government funding to cover more than two thirds of the development costs associated with its Lake Wells project in Western Australia.

The Subiaco business is the third potash developer to receive support from the Northern Australia Infrastructure Facility, which has granted $524 million in other potash loans, with the lion's share awarded to BCI Minerals for its Mardie project on the Pilbara Coast.

Fellow developer Kalium Lakes was granted a $74 million loan for its Beyondie project.

NAIF has now granted a 17-year, low-interest loan to Australian Potash, almost two years after commencing due diligence on the company's Lake Wells project. It is enough to cover almost 70 per cent of Lake Wells’ initial development costs.

The project, located in WA’s Goldfields-Esperance region, is expected to produce 150,000 tonnes of sulphate of potash (SOP) per annum from about mid-2023.

A final investment decision and results from a front-end engineering design study are expected before March 30.

Australian Potash chief executive Matthew Shackleton recently told Business News a NAIF loan would give more confidence in the project to other lenders.

“We now turn out attention to closing out the balance of the development financing pathway, and to moving into the pre-mobilisation phase for the development of the Lake Wells SOP project,” he said in an ASX announcement today.

“Lake Wells is a substantially de-risked, technically sound, low-cost and socially responsible project that will deliver a premium product for at least thirty years.”

Mr Shackleton said about 30 per cent of Lake Wells’ construction contracts would be given to Northern Australian companies and about 20 per cent to Indigenous businesses and joint ventures.

“We continue to enjoy strong relationships with stakeholders in the local community of Laverton, most importantly with senior traditional owners,” he said.

In January, Australian Potash received full environmental approval to develop Lake Wells, following a settled dispute with indigenous artist and activist Kado Muir.

The business was trading 3 per cent higher at 1pm AEDT to 17 cents.

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