GCISalt Lake Potash raises A$28 million to ramp up Lake Way Project
(SO4 ) said it has received binding commitments enabling it to raise A$28m which will enable final debt drawdown under the Syndicated Facility Agreement (SFA).
Investors will recall SO4 executed the $138m Syndicated Facility Agreement with Taurus Mining Finance Fund No.2 L.P and the Clean Energy Finance Corporation in August 2020 to support the development of the Company’s Lake Way SOP Project in Western Australia.
The sulphate of potash (SOP) developer said the funds, which were raised via a share placement to institutional shareholders, sophisticated investors and directors at 35 cents per share, will enable final debt drawdown and access to additional funding through a bank guarantee provided by Sequoia and ramp-up of the Lake Way Project in Western Australia.
The placing is a key condition to enable SO4 to undertake the final US$33m drawdown under the SFA, as well as providing for the implementation of an A$18m guarantee facility to be provided by SEQI in support of the gas pipeline constructed by APA Operations Pty Ltd.
The funds from the placement will be used for general operating expenses during the ramp up of the Lake Way Project where the first SOP product is expected in the June quarter. Specifically, the guarantee facility provided by SEQI will release A$18m in equity that will be used for general operating expenses during the ramp up of the project, the company noted.
Following the placing and final debt drawdown, Lake Way is now ‘significantly de-risked’ with Part IV EPA approvals now received and first SOP production expected ‘in the coming weeks.’
SO4 is pleased to have completed this placement of A$28 million to enable final drawdown under the SFA. The Company can now focus on ramping up production as we move to first revenues from the Lake Way Project in the very near-term,” said CEO, Tony Swiericzuk.
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 long-term export industry for Australia."
To date, Lake Way is on schedule for first SOP production this June and first SOP sales very shortly thereafter. Commissioning has ‘substantially progressed’ at the site with 26 of the 34 plant process units initiated and 17 of those Process Units finalised to practical completion.
In addition, overall plant commissioning is more than 50% complete. The group is targeting full scale production of 245ktpa for the 2020 June quarter which it said remains on target.
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Last month, the company released a quarterly report stating that it has made “significant progress” at the Lake Way Project, setting it up for the first SOP sales in the June quarter.
The Lake Way Project, which remains SO4’s primary focus, forms part of a long-term plan to develop an integrated SOP operation producing from several Western Australian salt lakes.
Shares in the company have shed 15% in value since the beginning of 2021. However, following a strong quarterly report released back in January, SO4’s focus now remains on looking forward to the first SOP product at the Lake Way project during the June quarter.
The stock was trading 0.51% higher this morning at 19.7p following the announcement.
Reasons to SO4
Dual-listed Salt Lake Potash operates as a mineral exploration company in Australia and the company plans to build the most sustainable, most rewarding fertiliser project in the world.
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 is now 81% complete on a value earned basis as at 31 December 2020.
CEO of SO4, Tony Swiericzuk described achieving financial close on the debt facility as “a substantial milestone in the development of the company and the Lake Way Project.”
Western Australian farming publication, Farm Weekly, said potassium-rich brine processors, SO4 and the other WA companies will be among the world's lowest cost SoP producers.
It outlined that the company’s cash production cost per tonne is expected to be US$205 at an annual production rate from the end of next year of 245,000 tonnes per annum (tpa).
There is no current SOP local production in Australia, and so SOP projects like Lake Way will enable the country to transition from a net importer of potassium fertilisers to an exporter.
Yesterday, the mineral explorer successfully completed its share purchase plan (“SPP”) after the group increased the offer size to A$8.0m following strong demand from retail investors.
Swiericzuk stated that, “The funds raised through the placement and SPP have enabled the Company to achieve financial close on the US$138m Taurus/CEFC debt facility and draw the initial tranche of US$105m and to finalise development of the Lake Way Project."
In a previous Q&A video with Vox Markets, Salt Lake Potash’s Chief Executive Officer, Tony Swiericzuk, discusses with us the positive progress at their developing Lake Way Project.
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