The company completed a positive Scoping Study in early 2017, which outlined a long life, low capital, Sulphate of Potash operation, initial production 150,000tpa, before doubling production to 300,000tpa in the future. The Company is currently working towards a Feasibility Study which will be released in early 2018, with project financing and development to commence later that year. First production from Lake Wells is targeted for 2020.
Analyst comment: Less than 5 years ago it was thought there was no significant potash deposits in Australia. Since that time a number of highly prospective regions were identified, which subsequently resulted in the discovery and early stage development of a number of Sulphate of Potash Projects, including Australian Potash's lake Wells Project.
Unfortunately, due to limited global demand for SOP, we believe it's unlikely all of the current Australian developers will commence production in the near term.
However due to a number of unique and critical aspects, we believe Australian Potash's Lake Wells Project is potentially ahead of their peers in the race towards production. Firstly, they have the lowest initial capital cost of the peer group, due to the significant existing infrastructure that Lake Wells can utilise. Secondly, it will be the only project to extract potash exclusively via bore field pumps (proven and tested method), whilst finally, it's the only project not subject to a native title claim, which is potentially a significant advantage given lake can be culturally sensitive areas.
The information in this email should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.
Valuation: We initiate coverage on Australian Potash with a valuation of $0.37 / share (SP - $0.10 / share).
As always, we present our analysis differently as it is shown through a series of videos. This allows us to explain:
- Our investment, risk, peer and valuation analysis which allows us to highlight both upside and downside factors investors should be aware of;
- Review of the Potash industry, highlighting its uses, supply and demand factors as well as pricing;
- A virtual site trip to the Australian Potash's Lake Wells Project; and
- A series of management interviews where we discuss the processing method, native title and Non-binding off-take agreements with two Chinese parties.
To view the video, please visit:
About Australian Potash Ltd
About The Sophisticated Investor
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Australian Potash Ltd