Fundraising & Lifting of ASX Voluntary Suspension

Institutional Placement to achieve Financial Close

Salt Lake Potash Limited (SO4 or the Company) is pleased to announce that it has received binding commitments for a successful share placement to institutional shareholders and other investors to raise up to A$52.0 million to enable first drawdown of US$105 million under the Taurus/CEFC US$138 million Syndicated Facility Agreement in December 2020.

Equity Placement

· The Company has received binding commitments from institutional shareholders, sophisticated investors and directors to subscribe for 130 million new ordinary shares at A$0.40 each to raise up to A$52m (before costs) (Placement), including 5 million shares to directors subject to shareholder approval.

Debt Financial Close and first draw

· As announced on 5 August 2020, the Company has executed the US$138m Syndicated Facility Agreement (SFA) with Taurus Mining Finance Fund No.2 L.P (Taurus) and the Clean Energy Finance Corporation (CEFC). The lending group has confirmed all conditions precedent to first drawdown under the SFA have been either satisfied or waived, save for the completion of an equity raise of at least A$30m, a transfer of US$8m into the Debt Service Reserve Account, payment of transaction fees and repayment of the existing US$45m bridge loan (Remaining Conditions). The completion of Tranche 1 of the Placement (as described below) will result in each of the Remaining Conditions being satisfied, with the first US$105m tranche of the SFA to then be drawn down in December 2020.

Share Purchase Plan

· The Company plans to undertake a non-underwritten Share Purchase Plan (SPP) to raise up to a further A$5 million from eligible shareholders at an issue price of A$0.40 per new share.

Uses of capital raising proceeds

· The proceeds from the Placement and SPP will be used to cash back a bank guarantee for the APA gas pipeline (A$18m), cover variations to ramp up vs. bank model (A$15m), to offset recent AUD strength (A$10m), transaction fees (A$2m) and up to A$12m for additional working capital.

Lake Way construction on schedule & budget

· The Lake Way Project remains on track for first sulphate of potash (SOP) production in March 2021 and first SOP sales in April, with the project capital budget unchanged at A$264m.

TONY SWIERICZUK, Chief Executive Officer

"SO4 is pleased to have completed this placement of up to A$52m to enable financial close on the US$138m Taurus/CEFC debt facility. In combination, these funds will ensure the Company is well financed to deliver the Lake Way Project. I would like to extend my sincere thanks to our shareholders for their continued support of the project, our Company and the development of a new export industry for Australia."

Debt Financial Close and First Draw

As announced on 5 August 2020, SO4 has executed the US$138m SFA with Taurus and CEFC, with the first US$105m expected to be drawn in December 2020.

The lending group has now confirmed to the Company that all conditions precedent to the first drawdown have been satisfied or waived, save for:

· Completion of equity raise of at least A$30m (net) - expected to be satisfied by Tranche 1 of the Placement (as described below);

· US$8m moved into Debt Service Reserve Account - to be completed following the completion of Tranche 1 of the Placement;

· The payment of transaction fees; and

· Repayment of the US$45m Bridge - to be funded from the first drawdown under the SFA.

The balance of the debt is expected to be drawn down in Q2'21 subject to market standard conditions. The material terms of the SFA remain unchanged and are summarised in Table 1 below.

Table 1: Syndicated Facility Agreement Key Terms

Equity financing

SO4 is raising up to A$57 million in equity financing including a placement of up to A$52 million and a Share Purchase Plan to be offered to eligible shareholders for up to A$5 million, at A$0.40 per new share in order to satisfy the remaining conditions precedent and achieve financial close on the SFA, and to be used as follows:

· A$15m to cover variations to ramp up vs. bank model;

· A$18m to cash back bank guarantee for APA gas pipeline;

· A$10m due to recent AUD strength (spot 0.743 vs. 0.68 in the BFS);

· A$2m financing transaction fees; and

· Up to a further A$12m for additional working capital.

Placement details

The Company has received firm commitments to raise gross proceeds of A$50 million via a private placement to sophisticated, professional and institutional investors. The private placement will comprise the issue of up to 125 million new fully paid ordinary shares (Placement Shares) at an issue price of A$0.40 per share (Placement).

In addition, SO4 Directors have committed to subscribe for up to 5.0 million Placement Shares, including 3.0 million shares by Chairman, Mr Ian Middlemas and 0.5 million shares by Managing Director and CEO, Mr Tony Swiericzuk, subject to shareholder approval. If approved by shareholders, this would raise an additional A$2 million

The Placement is comprised of two tranches:

· Tranche 1, comprising the issue of 66,593,631 Placement Shares under Listing Rule 7.1, and 58,406,369 Placement Shares under Listing Rule 7.1A. The Tranche 1 Placement Shares are expected to be issued on or around 18 December 2020

· Tranche 2, comprising the issue of 5,025,000 Placement Shares to Directors, subject to the receipt of prior approval of the Company's shareholders. A general meeting to seek the requisite approval will be convened shortly, with the meeting expected to be held in late January 2021.

The issue price of A$0.40 per share represented a 16.7% discount to the last traded share price on ASX of A$0.48 and 21% to the 5-day volume weighted average share price on ASX of A$0.51.

Euroz Hartleys Securities Limited and Canaccord Genuity Group Inc. were appointed as joint lead managers and bookrunners to the Placement. Cenkos Securities plc acted as Co-manager.

Related Party transactions

The proposed participation in the Placement by Mr Ian Middlemas (3.0m shares), Mr Tony Swiericzuk (0.5m shares), Mr Philip Montgomery (1.25m shares), Mr Matthew Bungey (150,000 shares), Mr Peter Thomas (125,000 shares), and the subscription for 13.75m shares in the Placement by Lombard Odier Asset Management (Europe) Limited, a substantial shareholder in the Company, constitute related party transactions under Rule 13 of the AIM Rules for Companies. The independent director, Mr Bryn Jones, having consulted with the Company's nominated adviser, Grant Thornton UK LLP, considers that the terms of the transactions are fair and reasonable insofar as the Company's shareholders are concerned.

Settlement and dealings

Application will be made to the AIM Market of the London Stock Exchange ("AIM") for 125,000,000 Ordinary Shares, pursuant to the Placement, which rank pari passu with the Company's existing issued Ordinary Shares, to be admitted to trading. Dealings on AIM are expected to commence at 8:00am on or around 18 December 2020 (Admission).

Total Voting Rights

For the purposes of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (DTRs), following Admission of the first tranche of shares, SO4 will have 710,312,487 Ordinary Shares on issue with voting rights attached. SO4 holds no shares in treasury. This figure of 710,312,487 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company, under the ASX Listing Rules or the DTRs.

Share Purchase Plan

The Company plans to undertake a non-underwritten SPP to raise up to A$5 million (before costs) via the issue of shares at an issue price of A$0.40 per new share.

The SPP will enable existing eligible shareholders and depositary interest holders, irrespective of the size of their holding, to participate in the capital raising at the same issue price as the Placement, and not incur any brokerage or transaction costs.

Eligible shareholders, being those holders of shares with an address in Australia, New Zealand or the United Kingdom as at 1.00pm (AEDT) on 10 December 2020, will have the opportunity to apply for up to A$30,000 worth of new shares in the Company. The shares issued under the SPP will rank equally with existing ordinary shares of the Company.

Eligible depositary interest holders, being those holders of depositary interests with an address in Australia, New Zealand or the United Kingdom as at 10 December 2020, will have the opportunity to apply for the GBP equivalent of up to A$30,000 worth of new shares in the Company. The depositary interests issued under the SPP will rank equally with existing depositary interests of the Company.

At this stage, the maximum gross amount raised under the SPP will be capped at a total of A$5 million. Should participation in the SPP be scaled back, each applicant's allocation will be scaled back in accordance with the policy to be described in the terms and conditions of the SPP. The terms and conditions of the SPP will be contained in an offer document and application form which will be made available to eligible shareholders and lodged on the ASX on 18 December 2020. A letter will be made available to eligible depositary interest holders on or about 18 December 2020.

The shares proposed to be issued under the SPP will be issued pursuant to the Company's placement capacity under Listing Rule 7.1.

Table 2: Indicative Timetable 

The above dates are indicative only and are subject to change, subject to compliance with the ASX Listing Rules and Corporations Act.

In particular, the Company may close the SPP offer early, depending on demand. Accordingly, eligible shareholders who wish to participate are encouraged to apply as soon as possible after the offer opens.

Lake Way Project construction on schedule & budget

The Lake Way Project remains on schedule for first SOP production in March 2021 and first SOP sales in April 2021. The project capital budget remains unchanged at A$264m and the overall project was 77% complete on a value earned basis as at 30 November 2020.

Key project workstreams continue to progress with engineering now 99% complete, plant and non-process infrastructure contract awards 99% committed, structural steel 65% complete and the APA gas pipeline now 25% complete.

In November 2020 the Company commenced harvesting first plant feed salts from the Train 1 pond network in preparation for plant commissioning, which is expected to commence in February 2021.

Presentation

The Company has also released a presentation on ASX which is available for download at https://www.so4.com.au/company-presentations/ 

Voluntary Suspension on ASX

The voluntary suspension of the Company's shares on ASX was lifted prior to the opening of trade on 11 August 2020, following an announcement to the ASX market regarding the above.

For further information please visit www.so4.com.au or contact:

This announcement has been authorised for release by the Board of Directors.

Additional Disclosures

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Key Risks

Refer to pages 25 to 29 (inclusive) of the Presentation released to ASX on 11 December 2020 and available for download https://www.so4.com.au/company-presentations/

Selling Restrictions

This announcement is for information purposes only and shall not constitute ‎an offer to sell or issue or the solicitation of an offer to buy, subscribe for ‎or otherwise acquire any new shares of the Company ‎in any jurisdiction in which any such offer or solicitation would be unlawful.‎

Refer to pages 30 to 32 (inclusive) of the Presentation released to ASX on 11 December 2020 and available for download https://www.so4.com.au/company-presentations/

Forward Looking Statements

This announcement includes forward-looking statements. These forward-looking statements are based on the Company's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements. Although the Company believes that its forward-looking statements have reasonable grounds, can give no assurance that they will be achieved. They may be affected by a variety of variables and changes in underlying assumptions that are subject to risk factors associated with the nature of the Company's business (including those described in pages 25 to 29 (inclusive) of the Presentation released to ASX on 11 December 2020), which cause actual results to differ materially from those expressed herein. The Company makes no undertaking to subsequently update or revise the forward-looking statements made in this announcement, save where required by law or regulation, to reflect the circumstances or events after the date of this announcement.

Not for release to US wire services or distribution in the United States

This announcement has been prepared for publication in Australia and may not be released to US wire services or distributed in the United States. This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction. Any securities described in this announcement have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, the registration requirements of the US Securities Act and applicable US state securities laws.