Potash Investing

Kalium Lakes has released a prefeasibility study and maiden ore reserve for its Beyondie sulfate of potash project in Western Australia.

Kalium Lakes (ASX:KLL) has released a prefeasibility study (PFS) and maiden ore reserve for its Beyondie sulfate of potash (SOP) project in Western Australia.
The Perth-based company said on Tuesday (October 3) that under the base-case scenario laid out in the PFS, Beyondie will produce 150 kilotons per annum (ktpa) of SOP. The study also considers a phased ramp up where production would start at 75 ktpa before increasing to 150 ktpa.
The project has a development base case pre-tax NPV of AU$388 million at a 10-percent discount, an IRR of 28.7 percent and a payback period of 3.7 years. Beyondie is estimated to have free cash flows of more than $1 billion based on an initial mine life of 21 years and a SOP price of US$500 SOP at an exchange rate of AU$1/US$0.75.

The base-case scenario calls for pre-production CAPEX of AU$220 million, which includes a 78-kilometer gas pipeline; pre-production CAPEX drops to AU$124 million under if the phased ramp up is used. Kalium Lakes’ share price was up over 4 percent on the news on Tuesday, at AU$0.45.
“The project, hosting Australia’s highest grade potash brine resource, has the potential to be a low cost, long life and high margin producer based on the industry’s lowest assumed forward looking SOP price among current project developers,” Managing Director Brett Hazelden said. He added, “Kalium Lakes is particularly proud to be the first potash developer to announce a Pre-Feasibility Study and Maiden Ore Reserve for an Australian deposit which allows for an initial mine life of more than 20 years.”
The project has a maiden probable ore reserve of 2.66 million tons at 14,210 mg/l SOP at a cut-off grade of 3,500 mg/l potassium. The maiden probable ore reserve is based solely within the Stage 1 approval footprint, and represents 21 percent of the total lake surface area within the tenement package. The company believes further growth at Beyondie may be possible in the future.
Kalium has entered into two non-binding offtake memorandums of understanding (MOUs) for material from Beyondie. In June, the company announced a non-binding MOU with WITTRACO Düngmittel for 20 percent of annual SOP production during the project’s first five years of operation. More recently, it announced that Yunnan Jingyifeng Supply Chain Management is considering the purchase of 50,000 to 80,000 tonnes of SOP per year.
The company listed on the ASX in December, and said its next step will be work on a bankable feasibility study (BFS) for Beyondie. Beyondie also has the potential to produce magnesium by-products, including epsomite, magnesium hydroxide, bischofite and hydrated magnesium carbonate. Kalium Lakes is considering “investigations into the addition of magnesium by-product capability be progressed further to a level sufficient for incorporation into the BFS.”
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.


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