PERTH (miningweekly.com) – ASX-listed Australian Potash has signed a memorandum of understanding (MoU) with China’s Hubei Agricultural Means of Production Group (Hubei-Agri) for the sale of up to 100 000 t/y of sulphate of potash (SoP) from the Lake Wells project, in Western Australia.
Under the terms of the MoU, Australian Potash will proportionally weigh sales between the Stage 1 and the full-scale production rate, allowing for the potential to capture a significant share of prevailing domestic Australian demand.
“Through the network that Australian Potash is beginning to develop within the mainland China potash industry, we have again been successful in executing an MoU with Hubei-Agri around supply of Lake Wells SoP,” executive chairperson Matt Shackleton said on Monday.
He noted that Australian Potash would soon start feasibility work at Lake Wells and was aiming to optimise capital expenditure estimates through engagement with suppliers.
The scoping study considered the development of a two-staged operation at Lake Wells, with Stage 1 producing some 150 000 t/y SoP. Stage 2 will see production double to 300 000 t/y SoP, with production to double by the sixth year of operation.
Over its 20-year mine life, the project is expected to generate average yearly operating pre-tax cash flow of some A$118-million, with the scoping study estimating a pre-tax net present value of A$500-million and a pre-tax internal rate of return of 33%.
The Stage 1 development will require a capital investment of A$175-million, while the Stage 2 development will require a further A$163-million investment.