September 2017 Quarterly Report

The Board of Salt Lake Potash Limited (the Company or SLP) is pleased to present its Quarterly Report for the period ending 30 September 2017.

During the quarter, the Company achieved a very important milestone of completing successful validation of the final major technical foundations for production of Sulphate of Potash (SOP) from the Goldfields Salt Lake Potash Project (GSLP).

Highlights for the quarter and subsequently include:

LAKE WELLS

Evaporation Pond Testwork

Ø The Company successfully completed field trials testing its on-lake, unlined evaporation pond model, which will result in significant capital cost advantages for the GSLP.

Ø Comprehensive geological and geotechnical investigation confirms the widespread availability of ideal in-situ clay materials ideal for use in evaporation pond construction. Modelling based on geotechnical properties of the clays confirms the potential to build unlined, on-lake ponds with negligible seepage inefficiency.

Ø Amec Foster Wheeler estimate that comparative costs for 400ha of on-lake ponds are $1.6m (unlined) and $42.2m (HDPE lined), highlighting a significant capex advantage for the Project.

Process Testwork

Ø The Company completed a comprehensive testwork program at globally recognised potash process consultants, Saskatchewan Research Council (SRC) that validated and refined the parameters used in the process plant flowsheet for the GSLP. Importantly, the testwork was conducted on a 60kg representative sample of kainite harvest salt produced on site at Lake Wells.

Ø SRC will conduct further optimisation tests followed by a continuous locked cycle operation, to produce significant quantities of flotation product and SOP for further testing and marketing.

Ø The Site Evaporation Trial (SET) at Lake Wells has now processed approximately 243 tonnes of brine and produced over 5 tonnes of harvest salts.

Surface Aquifer Characterisation and Deep Aquifer Exploration

Ø The Company continued sustained pump tests on test trenches across Lake Wells, providing reliable data for the surface aquifer hydrogeological model for Lake Wells.

Ø The Company mobilised an on-lake drill rig to test deep aquifer characteristics and identify potential high yield portions of the basal aquifer.

Demonstration Plant

Ø The Company and its consultants have substantially advanced the Demonstration Plant study for the GSLP.

LAKE BALLARD

Ø An initial surface aquifer exploration program was completed at Lake Ballard, comprising a total of 160 shallow test pits and 10 test trenches. This work provides preliminary data for the geological and hydrological models for the surface aquifer of the Lake, as well as brine, geological and geotechnical samples.

LAKE IRWIN

Ø A surface aquifer exploration program has commenced at Lake Irwin with the mobilisation of an excavator to undertake an initial campaign of test pit and trench installation. The Company also collected further bulk brine samples for evaporation and process testwork.

The Company's primary focus is to construct a Demonstration Plant at the GSLP, intended to be the first salt-lake brine SOP production operation in Australia. While proceeding with the analysis of options to construct a 20,000-40,000tpa SOP Demonstration Plant at Lake Wells, the Company is also exploring the other lakes in the Goldfields Salt Lakes Project, starting with Lake Ballard and Lake Irwin.

LAKE WELLS

Evaporation Ponds Construction Trial

The Company completed an evaporation pond trial under site conditions at Lake Wells. The field trial involved construction and testing of four test ponds on the Lake Wells Playa, built solely from in-situ clay materials, using a standard 30t excavator, which operated efficiently and effectively on the lake playa. The trial achieved levels of brine seepage from the evaporation ponds well below the threshold for successful operation of halite evaporation ponds, and potentially also for the smaller potassium salt harvest ponds. (for complete details see Stock Exchange announcement dated 16 October 2017)

The capex savings from this construction method are substantial, compared to the alternative of plastic lined ponds. SLP's engineering consultant, Amec Foster Wheeler, estimates the cost of lined ponds to be approximately $10.50 per m2, up to 25 times higher than construction costs for unlined ponds.

The 25m x 25m test ponds were designed by SLP's geotechnical consultant, MHA Geotechnical (MHA), to test the constructability and operating performance of a number of pond wall designs and to provide reliable seepage data under site conditions. The observed brine loss in the test ponds was well within the parameters of the hydrodynamic model, indicating losses for a 400ha pond will be below 0.125mm/day.

The Company has identified several opportunities to improve the construction of commercial scale ponds using excavators, along with ancillary equipment to optimize drying and compaction of the clays utilized in pond wall construction. This should result in further improvements in the already very low seepage observed in the trial sized ponds.

SLP plans to now construct an 18ha Pilot scale pond system to further improve the pond design and construction model.

Test Pond Results

Test Pond 3 (TP3) represents the as-modelled embankment construction and is the most likely design for commercial scale embankments. A total of 32 piezometric standpipes and 12 water data loggers were installed in and around all four walls of TP3, along with water level measuring devices on the floor of the pond and in the surrounding trenches, to accurately measure the water levels both in the pond and within the embankments.

The embankment and key are constructed from clay which has been air-dried prior to compaction to ensure target compaction and permeability are achieved. After the embankment and key material is saturated, the seepage from the pond, net of brine evaporation (data from the control pond) represents seepage losses through and below the pond walls. Net seepage losses of less than 3mm per day at test pond scale will substantially validate the shallow lake lithology, geotechnical characteristics and pond construction model for production scale, clay lined, on-lake halite evaporation ponds.

TP3 was initially filled with lake brine to approximately 500mm on 29 August 2017. The small, plastic lined, control pond was also filled to provide an accurate measure of evaporation rates.

Water level and piezometer readings were taken twice daily since and on 18 September 2017 the ponds were topped up, TP3 to approximately 1,000mm in this case, to accelerate wall saturation.

Since initial brine fill, the average net seepage at TP3 equated to approximately 2.4mm per day. This figure includes "losses" to wall saturation as well as to seepage, indicating that steady state seepage losses are comfortably below the 3mm per day threshold modelled for this scale of pond.

Capital Cost Comparison

The Company's engineering consultants, Amec Foster Wheeler, have generated scoping level cost estimates comparing two pond construction options for a 400ha halite pond. For ponds built on-lake on a relatively flat playa, with no provision for salt harvesting, and a 2.0m high wall, Amec Foster Wheeler estimate direct capital costs (accuracy of -10%/+30%) of:

· Unlined - A$1.6m

· Lined - A$42.2m

The main costs of the lined ponds are the supply and installation of HDPE lining and placement and compaction of a sand bedding layer. If similar ponds were constructed off lake then clearing and levelling costs would be additional.

For either lined or unlined ponds, if salt harvesting is required a layer of halite must first be deposited and compacted, to provide a support base for harvesting equipment. As the Company does not plan to harvest halite from its ponds, these costs are not included in the Amec Foster Wheeler analysis.

Process Testwork

The Company continues a range of process development testwork to enhance the Lake Wells process model.

Site Evaporation Trial

A large scale, continuous Site Evaporation Trial (SET) at Lake Wells successfully completed 12 months of operation under site conditions and through all seasons, confirming the solar evaporation pathway for production of potassium rich harvest salts for processing into SOP. The objective of the SET was to refine process design criteria for the halite evaporation ponds and subsequent harvest salt ponds.

The SET has processed approximately 243 tonnes of Lake Wells brine and produced 5.3 tonnes of harvest salts.

The results of the SET are Australian first and have provided significant knowledge to the Company on the salt crystallisation pathway under site conditions in Australia.

During the quarter, approximately 54t of Lake Wells brine was processed through both trains of the SET, producing approximately 2,100kg of harvest salt at average potassium grades within target parameters. Production levels increased as the temperature (evaporation rates) increased transitioning out of winter into spring.

The large quantity of salt produced via the SET is available for larger scale production of commercial samples for potential customers and partners around the world.

Process Testwork - Saskatchewan Research Council (SRC)

The Company completed testwork at Saskatchewan Research Council (SRC) in Saskatchewan, Canada. SRC is a recognized global leader in potash process metallurgical testing. SRC's Minerals team has the facilities and expertise to design and perform potash processing and metallurgical testing work for the potash industry worldwide. (for complete details see Stock Exchange announcement dated 14 September 2017)

The objective of the SRC testwork was to validate and refine the process parameters used in the production model and process flowsheet at the Company's GSLP. These process parameters were designed by the Company's metallurgical consultants, based on experience overseas and results for GSLP lab testwork in the USA and Australia.

The testwork program was designed to improve the Company's understanding of the processing plant component of the operation using actual Harvest Salts produced from Lake Wells brines under site conditions. These Harvest Salts differ from salts produced in laboratory evaporation trials and provide a much more representative basis from which to develop an economic process route.

The testwork program was designed and managed by the Company and international brine-processing expert Mr Carlos Perucca of Carlos Perucca Processing Consulting Ltd (CPPC).

Overall Potassium Recovery

Single pass SOP conversion from schoenite, including recovery of schoenite from the conversion brine, was calculated as 39.7% in the SRC lab, with the remaining schoenite recycling to the kainite decomposition reactors to recover potassium.

Tests were carried out on recovery of residual potassium from excess flotation brine as kainite, with a 98.2% recovery of potassium from this stream achievable, which is recycled to the plant feed.

This results in an overall potassium recovery of up to 92%, depending on the flotation option and brine handling methods employed in the process development. This compares favourably with performance parameters included in the mass balance models which the Company has generated for its feasibility studies. Future mass balance models will be refined to reflect the SRC results.

The results achieved at SRC compare very favourably to the specifications of products marketed as SOP for agricultural use worldwide where average potassium assays range from 50% to 52% as K2O and sulphate assays range from 52% to 54% as SO4.

Carlos Perucca of CPPC commented on the SRC results "I am extremely pleased with the results of the SRC testwork and the implied potential for an efficient SOP production process at the Goldfields Salt Lake Project. In my experience the potential recovery indicated by this work is at the high end of recoveries of other SOP operations worldwide."

Next Steps and Process Validation

The work completed by SRC has highlighted several opportunities for further refinement and development of the GSLP SOP process.

SRC has commenced further optimisation tests to validate and duplicate the results achieved to date, followed by a locked-cycle continuous production test to test brine recycle assumptions and obtain product purity information on a continuous basis.

The locked-cycle test will also provide a significant quantity of flotation product to allow crystalliser vendor testing and design work, and also SOP product for product testing and commercial purposes.

Conclusions

The work completed at SRC to date has shown:

· Minimal comminution is required to liberate salts for flotation;

· Kainite destruction achieves high conversion to schoenite in 2 hours at ambient conditions;

· Both direct and reverse flotation provide viable flow sheet options for further investigation;

· Potassium recovery in flotation is high with up to 97.1% achieved in reverse flotation;

· Both reverse and direct flotation options present the opportunity to make a second saleable MgSO4 product with minimal additional processing;

· SOP conversion produces high purity (>98%) SOP with a 1.5 hour residence time; and

· Global potassium recovery for the process plant may be as high as 92% depending on the flotation option and brine recycle philosophy selected.

Further work is underway to further refine parameters to feed into Pre-Feasibility Study level studies on both the commercial operation and the Demonstration Plant.

Surface Aquifer Exploration Program

The Company has completed a substantial program of work investigating the geological and hydrogeological attributes of the Shallow Lake Bed Sediment hosted brine resource at Lake Wells. The information and data generated will be utilised in the design of the brine extraction system for the GSLP Pilot Plant.

The total program includes 250 test pits and 10 trenches over the lake playa. The test pits are generally 1m wide x 1.5m long and 4.5m deep and confirm lithology and permeability of upper lake bed sediments and demonstrate spatial continuity of the surface aquifer.

Long Term Test Pumping

The Company continued sustained pump tests on three test trenches across Lake Wells. This work provides reliable data for the preparation of a surface aquifer hydrogeological model for Lake Wells. 

The testing was conducted as a "constant head test" whereby flow rate was adjusted to maintain a constant trench water level. Drawdown was observed at nearby observation bores placed at distances of 10m, 20m and 50m from the trench.

Trench dimensions and pumping test results are presented in Table 1. Trench length varied from 25m to 50m length. Trench depth was constrained by the capacity of the excavator and the stability of the ground conditions and ranged from 2.2m to 4m below ground surface.

Average flow rates over the duration of testing ranged from 28 to 64m3/day. Higher flow rates are associated with evaporite deposits in the Playa Sediments.

These results are very encouraging and continue to support the design of the SOP operation at Lake Wells.

Table 1: Summary of Trench Test Pumping

Brine chemistry was consistent throughout the duration of the test with the potassium concentrations.

Deep Aquifer Exploration Program

During the quarter, the Company mobilised to Lake Wells a dual mud rotary/diamond drill rig with the capacity to operate on-lake, to complete a drill program on selected on-lake drill targets generated from modelled gravimetric and passive seismic geophysics and a review of existing drilling data. The focus of the on-lake drilling scope is to expand the current geological and aquifer knowledge of the deeper brine aquifer located in the thalweg of the Lake Wells paleochannel.

Process Water

The Company completed an Electromagnetic (EM) geophysical survey to delineate low-salinity groundwater resource for process water at Lake Wells at four prospective areas associated with the upper or shallow aquifer comprised of alluvium, colluvium and calcrete. This geophysical survey targeted the upper 20 to 30 m, in contrast with previous surveys targeting the deeper palaeochannel (deep aquifer).

The EM survey successfully identified a number of drill locations which the Company plans to test in due course.

Aboriginal Heritage and Native Title

Subsequent to the end of the quarter the Company conducted a third aboriginal heritage survey with senior heritage consultants and anthropologists, focussed on the southern area of Lake Wells, where an SOP operation is likely to be located. The survey cleared the Company's current working areas and also highlighted a number of areas of potential heritage value, which it was agreed the Company would avoid in its future operations and work programs.

Subsequent to the end of the quarter the Company was notified of a potential Native Title Claim which includes part of the northern end of Lake Wells. The claim has not yet been registered and the Company will be advised of further details if and when registration occurs, after which the Company would enter discussions with the claimants. However, the Company has completed its major exploration programs in the area and has no current intention of working in the northern part of the Lake, so the claim has no impact on the Company's operations for the time being.

A Heritage Information Submission Form pertaining to the Lake Ballard and Lake Marmion area was lodged with the department of Aboriginal Affairs by a third party. The Company has previously completed two heritage surveys with senior heritage consultants and anthropologists experienced in the area. Accordingly, SLP responded with a Notice under Section 18 of the Aboriginal Heritage Act 1973 in order to have the 'proposed site' assessed by the Aboriginal Cultural Material Committee.

Demonstration Plant

As announced on 20 April 2017, Amec Foster Wheeler have been engaged to prepare an analysis of the alternatives for the Company to construct a Demonstration Plant at the GSLP.

International brine and salt processing experts Carlos Perucca Processing Consulting Ltd (CPPC) and AD Infinitum Ltd (AD Infinitum) are also engaged for the Study.

Substantial progress continues on pond and trench design, mass balance modelling, process flowsheet design, major equipment quotations, costings and transportation alternative studies.

LAKE BALLARD

Surface Aquifer Exploration Program

An initial surface aquifer exploration program was undertaken at Lake Ballard, comprising a total of 160 shallow test pits and 10 test trenches. This work provides preliminary data for the hydrogeological model for the surface aquifer of the Lake, geological and geotechnical information for the upper strata of the Lake and deeper brine samples than previously available.

From the 160 test pits completed in the eastern portion of Lake Ballard revealed a varied (but typical) salt lake playa stratigraphy. The first three test pit transects on the eastern most part of the Lake, to a depth of 3.5m, encountered clayey lacustrine sediments with minor groundwater inflows; however, a number of test pits also encountered higher groundwater inflow associated with zones of indurated and laminated clayey sediments and karstic hardpan. Short-term groundwater inflows associated with test pits in the hardpan are between 10 to 15 L/sec.

Deeper test pits to a depth of 6m were subsequently completed on two transects further east on Lake Ballard, with similar variability in stratigraphy and distribution of the high-yielding hardpan. Despite considerable efforts, the hardpan could not be fully penetrated with excavations being limited to its upper 0.5m, however, groundwater inflows were still significant resulting in rapid inundation of test pits. The stratigraphy is dominated by low-yielding laminated clayey sediments that become indurated with depth; however, there is moderate groundwater inflow associated with evaporative sand horizons that are distributed through the clayey sequence.

Further test pit investigations are proposed to better resolve the distribution of the hardpan and assess the long-term yield potential of the upper stratigraphy for trench development.

Brine was sampled during the excavation process. Brine concentrations from 59 assays from test pits ranged from 1,300 to 2,200 mg/L. The data are presented as Appendix 3.

The Company will now interpret the lithological logs from the test pits and trenches to provide a standardised stratigraphy continuing its assessment of brine extraction potential via trenching, as well as assessing the suitability of the clay lithologies for pond construction. Initial visual interpretation during the excavation process indicated excellent stratigraphy and geotechnical potential similar to results at Lake Wells.

LAKE IRWIN

Surface Aquifer Exploration Program

After completion of the initial surface aquifer exploration program at Lake Ballard, the Company mobilised the excavator to Lake Irwin to gather geological and hydrological data about the shallow brine aquifer hosted by the Quaternary Alluvium stratigraphic sequence in the upper levels of that Lake.

Competent Persons Statement

The information in this report that relates to Exploration Results, or Mineral Resources for Lake Wells and Lake Ballard is based on information compiled by Mr Ben Jeuken, who is a member Australian Institute of Mining and Metallurgy. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company. Mr Jeuken has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Jeuken consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Process Testwork Results is based on, and fairly represents, information compiled by Mr Bryn Jones, BAppSc (Chem), MEng (Mining) who is a Fellow of the AusIMM, a 'Recognised Professional Organisation' (RPO) included in a list promulgated by the ASX from time to time. Mr Jones is a Director of Salt Potash Limited. Mr Jones has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Jones consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Table 2 - Summary of Exploration and Mining Tenements

As at 30 September 2017, the Company holds interests in the following tenements:

Australian Projects:

APPENDIX 1 - LAKE BALLARD TEST PIT LOCATION DATA

APPENDIX 2 - LAKE BALLARD BRINE CHEMISTRY ANALYSIS

A0PPENDIX 3 - LAKE WELLS BRINE CHEMISTRY ANALYSIS