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NAIF is conducting due diligence on providing
potential support for Lake Wells

Aussie-made potash

for the taking

roject financing can be a challenge in Wells’ opex of $US262/t to sit inside the first larger, volume driven markets. To a degree
Pthe best of times, so any opportunity to quartile of industry costs, with just a fifth of it may ultimately help us move into the Euro-
ease that burden must be taken, particularly the measured resource estimate featuring pean markets which is where we have been
now. in APC’s plans to date. focusing a fair bit of attention and I think it
That is exactly what Australian Potash The company is also hoping that access will give us an opportunity to distinguish
Ltd (APC) is successfully doing to give its to the Northern Australia Infrastructure Fa- ourselves there, too,” Shackleton said.
Lake Wells SoP project, 500km east of cility (NAIF) can be included in the project Creating an identity in what is still a niche
Kalgoorlie, a good chance of being among financing structure. market in Australia is a neat idea and one
the emerging pack of potash players in After a carefully considered process, APC hopes will give it the upper hand.
Western Australia. NAIF made the decision in April to proceed There are few primary SoP deposits
Last month, Migao International (Singa- with formal due diligence on APC’s request globally and while the current world market
pore) Pte Ltd signed a binding 10-year take- for funding in relation to Lake Wells. for SoP is about 7 mtpa (70,000-90,000 tpa
or-pay term sheet for 50,000 tpa of APC’s Shackleton applauded NAIF’s proactiv- in Australia), there are a number of Man-
K-BriteTM premium SoP from Lake Wells to ity in engaging with APC, which has so far heim producers filling the void and a small
be distributed through China. spawned a strategic positioning paper on number of low-cost solar salt players also
Migao’s commitment follows Redox Pty what infrastructure NAIF could potentially contributing to SoP demand.
Ltd’s declared interest in March to distribute fund to complement Lake Wells. Therefore, Shackleton sees potential for
20,000 tpa of K-Brite in Australia and New Discussions between the two parties are the band of WA SoP hopefuls to coexist
Zealand over a 10-year period also. confidential. in the sector, however, converting proof of
Two off-take agreements in place with “At the conclusion of the due diligence concept to reality remains key.
top tier distributors means APC has almost phase we would have developed a formal “Is there enough demand for all the SoP
half of its 150,000 tpa SoP production from loan application to NAIF, which is then sub- projects being promoted in WA to get up?
Lake Wells accounted for in the market. ject to NAIF credit control and the approvals Technically yes. If they are willing to sell it
APC managing director Matt Shackle- process. That is the first step in our funding for less than the Manheim producers then
ton told Paydirt the off-take arrangements pathway. At the same time, we have been in they will take over the market. I think the re-
were essential in securing project financing. consultation with various project financing ality is that there probably isn’t the capital
“These are bulk projects and it would be banks, both domestically and overseas,” appetite to develop all those projects in WA.
impossible to imagine getting traditional Shackleton said. There is only a finite amount of capital that
project debt financing without off-take. “There is only a very small component will get located to one particular sector and
Private equity money potentially wouldn’t of field work to do, so we are not being I think those that get in the market first and
require off-take positions, but that would delayed by travel restrictions imposed on get their hands on it first will probably be the
perhaps come in slightly more expensive,” us. In terms of us being able to continue ones that produce,” Shackleton said.
Shackleton said. to advance [financing] conversations we While the flow of capital into the Austral-
In pursuit of $208 million development have been having all along we can con- ian market is at early stages, there is no
capex for the 30-year Lake Wells project, tinue with that in addition to offtakes, NAIF doubting the heat building within the broad-
Shackleton said having 125,000-135,000 funding and EPA approvals process. We er fertiliser space.
tpa in the hands of off-takers was the strat- are very confident of completing those, but “Anglo [American plc] taking over Sirius is
egy. where the market is going; that is anybody’s a fairly solid piece of support for the fertiliser
“The conversations with those tradi- guess.” thematic, as is BHP’s [Ltd] continued dis-
tional debt financiers have been ongoing One thing Shackleton is banking on is cussions about Jansen in Canada. BHP’s
for some time and we’ll conclude those having the K-Brite™ brand to distinguish investment in that is somewhat delayed, but
once we have got our off-take programme Lake Wells SoP in markets such as China, the fact that it is still part of their portfolio
completed. We’d be looking at getting to an where visibility of domestic and imported and it hasn’t been hived off speaks volumes
indicative term sheet stage of those conver- products is important. for that fertiliser thematic,” Shackleton said.
sations with debt financiers in the second “That was the genesis behind the idea of – Mark Andrews
quarter of this year,” Shackleton said. developing our own brand, which is to po-
The 2019 DFS metrics outlined Lake tentially give us that little extra edge in those

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