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German potash play

readies for partner

avenport Resources Ltd managing viously ran the Boulby potash
Ddirector Chris Gilchrist is under no illu- mine in north-east England
sions; his company needs to find a strategic for Cleveland Potash when
partner if it is to fulfil its German potash am- it was under Anglo Ameri-
bitions in the next few years. can plc’s ownership. He said
Davenport boasts Western Europe’s the Boulby experience and
largest potash inventory with 5.3bt of JORC the permitting successes of
2012-compliant inferred resources across neighbour Sirius Minerals dis-
four licences which make up its South Harz pelled the notion Europe was
project. opposed to mining.
However, with a market cap of just $8 mil- “People are looking at Highfield [Re- radar and got the licences for €1.5 million.
lion, it will need some funding help if it is to sources Ltd, see page 32] and saying that “We not only got the licenses – which
finance development of the 150mt resource is typical of Europe but they are completely have no royalties or rents attached to them
on the Ohmgebirge licence, its proposed wrong,” he said. “You can build mine here. – but also the historical exploration data.
first mine. We’ve got assets in Thüringen, a state with Davenport converted the East German re-
“We need to find a strategic partner for the lowest GDP per capita in Germany. serves into JORC standards and defined
a JV,” Gilchrist told Paydirt. “We have vari- That has the politicians begging us to de- 5.3bt of inferred resources.”
ous non-disclosure agreements in place velop this project.” Across that 5.3bt, Davenport has a num-
and will appoint a London-based advisor to The key to successful European mining ber of product options. While Ohmgebirge
help in that regard in the coming months. developments, according to Gilchrist, is to has been chosen for its low-cost start-up
We have put together a data room and we minimise the footprint. requirements to produce MoP, the other
have already had some discussions with “Getting approvals in Europe is to have a licences hold potential for magnesium sul-
potential partners. sustainable tailings solution and we’re well phate, SoP and polyhalite, all of which Gil-
The potash market is tightly controlled by placed to do that,” he said. “Our licences christ is confident of finding a market for.
a handful of major players and while several are in an area with a long history of mining “The scoping studies showed the projects
of them would likely show interest, Gilchrist and there are many abandoned industrial were well placed for the European market,”
said Davenport was willing to start discus- sites for us to build a plant without disturb- he said. “It is quite a mature market, about
sions with several parties. ing houses or habitats. And, because the 5.5 mtpa but it only produces 3.5 mtpa do-
“There are a number of groups who could area has a long history of mining, there is mestically. The rest is coming from Israel,
be interested; from potash miners, to chem- a massive amount of underground voiding Jordan, Canada, etc. at high costs. So, we
ical companies and fertiliser producers,” he we can use for tailings storage so we will could put potash into Europe cheaper than
said. “We have seen some of the Australian not need any surface tailings.” is currently being bought.
juniors sign offtake agreements with vari- Thüringen – part of the former East Ger- “Potash is very market driven so you
ous fertiliser companies.” many – was a prolific potash producing have to look at the market and then work
The arrival of the West Australian salt province from the 1890s onwards. Potash back to your process. You must also look
lake developers has added greater compe- mining was the largest generator of foreign at value because SoP and magnesium sul-
tition to the potash development space but exchange during communist rule but the phate are more valuable but you can’t just
Gilchrist is confident Davenport has sev- operations were abandoned after reunifica- drop 300,000 tpa of SoP on the European
eral advantages which outweigh those of tion. market because it isn’t big enough. There is
the WA upstarts. “The licences are adjacent to old mines, a much bigger equation in play.
“I would argue we are more advantaged not mines themselves but were areas the “There can be some challenges in pro-
than the West Australian projects thanks to East German state mining company were cessing but we are very fortunate to have
the infrastructure we have,” he said. going to push into,” Gilchrist said. “Explo- all the building blocks to produce most pot-
“We completed preliminary scoping ration and drilling were undertaken by the ash products. We are working with a pot-
studies on the licence areas and we have state mining company just before reunifi- ash processing specialist which has a pilot
shown they can build a project for less than cation but then the new unified Govern- plant facility in Germany. I’ve worked with
the average capex of new potash projects ment tried to sell these assets; when they them for many years and they always get it
because of the infrastructure advantages; couldn’t, they parked them on the shelf.” right and eventually work with the process
access to power, water and transport in- Gilchrist’s industry contacts brought design engineers to ensure the design is
frastructure, and we will produce a sweeter them to Davenport’s attention. translated into a plant.”
product. “We were made aware of them about two There may be few examples of potash
“The studies also showed we would have years ago by a German potash consultan- developments in Europe, or anywhere for
direct access to the European potash mar- cy. We approached the Government which Davenport to draw from but given Gilchrist
ket; that puts us ahead of the WA projects in said we would have to bid for them in an has experience with most of them, it could
our estimations.” open tender. Kalium Salts wasn’t in a posi- find itself having all the right partnerships in
Gilchrist is familiar with European and tion to bid and it wasn’t a strategic fit for the the years ahead.
indeed global potash markets, having pre- other potash players, so we crept under the - Dominic Piper

aUSTRaLIa’S PaYDIRT MaY 2020 Page 31