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Mackay DFS to arrive in June

he fertiliser sector is poised for an in- “We have probably collected the most “We used to get questions on whether
Tteresting few years and Agrimin Ltd is comprehensive long-term database other there was a going to be a potash industry
primed to be a key player. than an operating mine, definitely in terms in Australia and I think that has moved to
Anglo American plc’s £405 million take- of any development projects. The trial has when the first production will occur, how
over of Sirius Minerals for the Woodsmith validated the data used in the DFS, which much and what is the timeline,” he said.
polyhalite (POLY4) fertiliser project in was the whole purpose of running the trial.” “I believe investors view the industry
North Yorkshire now means that the larg- Agrimin has been a frontrunner in Aus- completely differently to three years ago,
est undeveloped SoP or chloride-free pot- tralia’s potash sector and an indication of but as we have seen, starting a new in-
ash project in the western world belongs Savich’s long-term outlook for SoP is the dustry is difficult. Companies are going
to Agrimin. build-up of ground accumulated by the through pretty tough times at the moment,
A DFS on Agrimin’s McKay SoP project, company. but I am confident this industry will emerge
about 785km from the West Australian Agrimin’s most recent acquisition of the quite strongly in the next decade for WA.”
north-west port of Wyndham, will be com- Lake Auld potash project gives the com- Just how the fertiliser space evolves has
pleted in Q2 with financing possibilities pany a substantial holding of land covering taken quite an interesting turn of late with
then to be explored. the broader Canning Palaeovalley system Anglo American’s foray into the sector.
“Everything is on the table,” Agrimin and “associated chain of lakes that in- “It is the first time we have seen a min-
chief executive Mark Savich told Paydirt cludes the southern half of Lake Auld and ing company as such come into the ferti-
about what structure the development of Percival Lakes,” Savich said. liser space. The space has predominantly
Mackay may take. “We have been looking at those projects been occupied by fertiliser and chemical
Off-take discussions will also ramp up
post DFS release, as Savich prepares for
the reality of entering a downbeat market
for funding.
“We are adjusting our expectations and
we need to recognise that the market and
business environments have shifted and
are softer than they were,” Savich said.
“We will continue to connect with all the
groups we have been talking to for a long
period of time and hopefully we will be able
to bring them on the journey with us when
the DFS is completed.”
The Mackay SoP DFS has been two
years in the making, with a May 2018 PFS
highlighting potential for a 426,000 tpa pro-
ject over an initial 20-year mine life.
EBITDA over the life-of-mine was esti- Agrimin’s McKay SoP project is about 785km from the
mated at $2.7 billion based on cash costs West Australian north-west port of Wyndham
of $US222/t FOB from Wyndham.
A post-tax NPV of $US453 million and for the best part of seven years and it has companies within the industry. I think it is
post-tax IRR of 20%, based on an average been through patience that we have been a great sign overall and what Anglo has
$US555/t SoP price, with capital costs of able to consolidate that full tenement pack- done makes Agrimin the largest undevel-
$US409 million estimated. age,” he said. oped SoP or chloride-free potash project
A key part of the DFS has been running “They have been pretty low-cost acqui- in the Western world,” Savich said.
a year-long pilot evaporation trial on Lake sitions and we see the potential there. We “There are a couple of big projects in
Mackay. are excited to add some exploration po- Ethiopia and Eritrea, but the next one
Agrimin recently confirmed that the DFS tential to the mix as we move through the down is really us and we think that places
process design targeting SoP and SoPM approvals and development phase of Lake us pretty well to be an interesting proposi-
(magnesium oxide) product specifications McKay.” tion for bigger players. Bringing Lake Auld
achieved an overall 80% process recovery It was probably unthinkable three years into the mix demonstrates that we do have
(brine extraction to product). ago for an ASX company to be talking a lot more growth than just Lake McKay.
The positive outcomes serve as another about project development and potential “Hopefully the initial 426,000 tpa pro-
major de-risking milestone for the Mackay expansion in the fertiliser space and while duction in our PFS is just the beginning for
project, with samples making their way to the ribbon is some way from being cut at us. We hope to show that we can get much
potential off-takers and project partners. Mackay, it is companies like Agrimin which larger over time and that will be important.
“We will have well over 12 months of have been integral in pioneering a new in- It will be interesting to see if there is any
data collection; that means we will have dustry in Australia. further interest from mining companies in
collected data from all seasons, which Savich said there were several projects the sector outside of the traditional ferti-
is critical because brine chemistries and at different stages of development in Aus- liser players,” he said.
salts that form do change through different tralia, which had helped the industry ma-
seasons,” Savich said. ture. – Mark Andrews

aUSTRaLIa’S PaYDIRT MaY 2020 Page 33