13th Jun 2019 14:09
(Alliance News) - Salt Lake Potash Ltd is hoping to commission a plant at the Lake Way project within 18 month, it said Thursday, after completing a "compelling" scoping study.
The Lake Way potash project is located in the Northern Goldfields region of Western Australia, less than 15 kilometres from the town of Wiluna. The surface area of the asset is over 270 kilometres, and Salt Lake Potash, or SLP, holds five exploration licences at the site.
The scoping study suggests a life-of-mine of 20 years, with Lake Way producing around 200,000 tonnes of sulphate-of-potash a year.
The post-tax net present value of the project is AUD381 million, with an internal rate of return of 27%.
Lake Way will provide SLP with earnings before interest, tax, depreciation, and amortisation of around AUD90 million a year, and average yearly post-tax cash flow of AUD64 million.
The low capital cost and strong cash flow, SLP said, will result in an early payback of 3.2 years.
The project has "very low" operating costs, SLP said, requiring development capital of AUD237 million and an operating cost of around AUD264 per tonne of sulphate-of-potash.
SLP has begun building the first phase of evaporation ponds at the site, and it hopes to complete a feasibility study by the third quarter of 2019. It is aiming to commission a plant, using salts from the first ponds, in the last quarter of 2020.
Shares were up 3.6% on Thursday at a price of 37.00 pence each in London.
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