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NeWs

APC delivers DFS

Australian Potash is banking on the
superior capital intensity figures for
ven before the ink had dried on Aus- million capex required to develop Lake
Etralian Potash Ltd’s (APC) Lake Wells Wells. Lake Wells to attract financing for the
SoP DFS, the company had started tight- “For somebody so young, Scott has an potash project. APC recently signed
ening aspects of the project as a final in- incredible track record of being able to an agreement with the Mid West Port
vestment decision looms. raise large amounts of cash for project Authority for the export of SoP and
APC managing director Matt Shackle- developments. Scott and I will endeav- import of MoP through Geraldton port,
ton told Paydirt the “lowest hanging fruit” our to finalise the project development with the company advancing findings
ripe to deliver improvements to the DFS finance. Traditionally, that is going to utilising a road haul solution from Lake
was around bore field design and power. be a 60:40 debt-to-equity finance ratio,” Wells to Geraldton
Due diligence on power options at Shackleton said.
Lake Wells, 160km north-east of Laver- Earlier this year, Shackleton told Pay- Lake Wells are “extremely competitive”.
ton, Western Australia, included energy dirt securing an off-take agreement The DFS highlighted potential for a 30-
generation via solar, wind, hybrid and would be an integral part of the funding year mine life at Lake Wells producing
diesel, with the company arriving at a mix, which may include export credit- 4.5mt of premium high-grade SoP at life
trucked LNG gas-fired power station as sponsored plant procurement. of mine cash costs of $US262/t, placing
the best fit to date. “A lot of the gold mines do that and the project in the first quartile of the SoP
“We probably won’t move away from get a company from China to build the cost curve.
that [LNG]. One piece of our processing components for you and, depending on A pre-tax NPV of $665 million, annual
plant uses about one-third of the pow- how much you spend, you can often get pre-tax free cash flows of $100 million
er that we generate, it is a big piece of financing from the same entity,” he said. and life-of-mine pre-tax free cash flows
equipment, so we are working on how we “Those sorts of things are backed up of $3.1 billion were guided in the Lake
can make it more efficient. Optimisation by the credit export agencies in China. Wells DFS, which also included a pre-
around power consumption, bore field That is a well-worn path and we are on tax IRR of 25% on robust operational
design and marketing, which is going to that path. Offtake will also be part of the and capital efficiencies based on a rate
be around an off-take agreement conver- funding, while a traditional equity and of 150,000 tpa SoP production.
sation, [is in progress],” Shackleton said. debt component, which we will endeav- “We are a small team, but we have our
“There are 78 bores that we will de- our to minimise, will be the blend of fi- skates on, and we will build that team out
velop in the bore field, according to the nancing.” as more and more professionals get in-
DFS, which are spaced at about 800m Players in the fertiliser space were fla- volved to manage the FEED programme
apart. One of the things with a bore field vour of the month in August. Danakali that we are about to go through. We be-
is that the shorter the distance you have Ltd was provided with a $US200 mil- lieve we have a pretty straightforward de-
between the bores, the more of the re- lion senior credit facility with the Africa velopment in the bore field method that
serve ore you can potentially pump out Finance Corporation and African Export we are using to extract the brine. We will
over the same period of time. So that is Import Bank for construction of its Colluli be on the ground starting the preliminary
an opportunity for optimisation in there project, Eritrea, while Salt Lake Potash work for that in part of our development
for us.” Ltd signed two finance facilities worth a [in the first week of September],” Shack-
Shackleton said a bore field at Lake combined $US180 million with private leton said.
Wells would be used to abstract brine, equity group Taurus Funds Management With the FEED programme under way
mitigating the geotechnical challenges for Lake Way, part of the wider Goldfields and financing and offtake discussions
and decline in grade and production over Salt Lakes project, WA. advancing, a final investment decision on
time, evident in trenching systems. APC can capitalise on the current in- Lake Wells may not be far way.
Having completed the DFS, FEED ac- terest in the fertiliser space and Shack- APC is confident of delivering produc-
tivities are under way and Shackleton leton believes the sector-leading capex tion from Lake Wells within 24 months of
and chief financial officer Scott Nicholas and capital intensity ($1,387/t SoP com- a final investment decision.
have embarked on organising the $208 pared to peer average of $2,400/t) at
– Mark Andrews

Page 6 OCTOBeR 2019 aUSTRaLIa’S PaYDIRT