Salt Lake Potash has secured further project funding with a $10 million strategic investment from Perth-based Equatorial Resources, as part of a broader $15 million raising.
The aspiring potash producer is seeking to develop its Lake Way project, located in Western Australia’s Goldfields region, about 15 kilometres south of Wiluna.
Salt Lake has already moved into the construction stage for Lake Way, which is expected to cost $284 million.
The company will issue unsecured zero-coupon convertible notes at 45 cents per share – or a 5 per cent discount to any future capital raising of at least $10 million – to raise $15 million.
Salt Lake will use the funds to ramp-up construction activities at Lake Way planned for July, with plant completion scheduled for the March 2021 quarter.
First sulphate of potash (SOP) production and sales are also due in Q1 FY21.
Chief executive Tony Swiericzuk said significant progress had been made on debt financing, with a final agreement expected in the coming weeks.
Fellow ASX-listed company Equatorial Resources will subscribe for $10 million of unsecured convertible notes, and will be issued ordinary shares in Salt Lake.
Equatorial, which had been pursuing opportunities in the resources sector, said it would consider a future in-specie distribution of Salt Lake shares to shareholders.
Salt Lake Potash is one of few explorers in the state seeking to develop its potash operations, with Nedlands-based Agrimin recently awarded major project status from the federal government for its Mackay project near Wyndham, and Kalium Lakes looking to develop its Beyondie project, south-east of Newman.
It is the second equity raising by Salt Lake this year, with the company having launched a $20 million placement in April.
Shares in Salt Lake were up 0.9 per cent at 3:15pm AEST to trade at 54 cents, while Equatorial was trading 3.7 per cent higher to 28 cents.