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Potash
nipper
post Posted: Jun 7 2021, 11:42 AM
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In Reply To: mullokintyre's post @ Feb 21 2019, 08:46 AM

A new dawn for Australia's potash pioneers

Australia's first sulphate of potash mine will start production this week and five local mines could be producing the specialty fertiliser inside four years.

His biggest customers are in Russia, Mexico, Peru and Belgium, but Tony Swiericzuk hopes local farmers knock on the door when Australia's nascent potash industry comes to life this week.We are happy for farmer Joe to turn up to the mine gate with his truck or trailer and take a load, he says of the crop nutrients he is now extracting from Western Australia's outback salt lakes.

A new export industry will be born on Monday when Swiericzuk's company Salt Lake Potash declares first production and claims pioneer status ahead of the flock of rivals building sulphate of potash (SOP) mines on Australia's ephemeral lakes.

If all of them deliver to schedule, Australia will go from zero to five SOP mines in the next four years.

They hope to snatch a piece of a small but growing industry that is now worth just over $US4 billion ($5.2 billion) a year globally and is distinct from the $US20 billion plus muriate of potash (MOP) industry that BHP is likely to enter this year when it is expected to build a new $US5.7 billion Canadian mine.

Though SOP is the small end of the potash industry, it is also the premium end with farmers typically paying 50 per cent to 100 per cent more for SOP, which is ideal for fertilising crops such as berries, nuts and citrus.

Salt Lake Potash enters production after a six-month period of rising prices for many agricultural commodities and Swiericzuk is convinced that from a small industry today, big things will grow.

SOP is produced at WA's remote Lake Way when briny water is extracted from 85 metres below the salt pan and is allowed to interact with the potassium-rich surface of the lake.

Stored in giant evaporation ponds for weeks at a time, the sun does much of the work and a final processing stage spits out a product that Swiericzuk says is ready to "throw on your tomatoes".

Close to 90 per cent of the SOP that Swiericzuk's team produces will be shipped to foreign customers via Fremantle or Geraldton ports, but the company will hold back about 21,000 tonnes a year in a bid to forge direct relationships with local farmers.

We have purposefully retained the [marketing] rights to Australia, he says. All around the world we have given [distribution] exclusivity to different offtake partners, but Australia we have kept for ourselves so we can look after the domestic farmers in a way that we see fit.

Being first to market is always a good thing in the commodities game, but Swiericzuk hopes other ASX listed aspirants such as Kalium Lakes, Agrimin, Australian Potash and BCI Minerals can also enter the SOP market and build a strong local industry in the decade ahead.

I think it is terrible to be an orphan, he says. You want to have multiple companies that analysts can follow and investors can compare against each other. This is a new industry that is going to put WA on the fertiliser map.

If the wave of new, local SOP mines do make it into production, Swiericzuk is confident they won't trigger the sort of supply surge that crushed lithium prices after six new WA mines started exporting the battery mineral in 2017 and 2018.

He says new SOP supply from WA will arrive more gradually than was the case in lithium and that the demand for food, which is the ultimate driver of fertiliser demand, is far less discretionary than the digital devices and electric cars that consume lithium.

Janus Henderson investors said earlier this year that they expected global demand for SOP will grow faster than the global economy, creating room for new entrants.

Advisory firm BDO reported in March that only the ASX-listed gold sector attracted more financial support in 2020 than ASX-listed SOP aspirants, with local investors pumping more than $528 million into the unproven industry.

The data also suggests that both debt and equity capital markets are bullish towards the sector and recognise the industry's potential for growth.

Swiericzuk admits that Salt Lake Potash tapped shareholders for funds more frequently than he had hoped as the company set about building the Lake Way project.

Having been a key member of the Fortescue Metals team that borrowed heavily a decade ago to build the world's fourth biggest iron ore business, he had been keen to adopt a similar, debt-fuelled model that would avoid diluting shareholders.

But with SOP a largely unknown commodity in Australian lending circles, debt tended to come with requests for matching equity contributions.

It is a new industry for this country and that brings with it an element of caution ; that is what has caught us going forward and for us to access the debt we have had to balance that risk, Swiericzuk says.

The Australian government's Clean Energy Finance Corporation lent $US39 million to the project.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Feb 21 2019, 09:16 AM
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In Reply To: mullokintyre's post @ Feb 21 2019, 08:46 AM

Yes, I got excited.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Feb 21 2019, 08:46 AM
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In Reply To: nipper's post @ Feb 21 2019, 12:35 AM

I remember doing my dough along with BHP about 15 or 20 years ago on Potash.
It was going to be bigger than Ben Hur.
Still waiting.
Mick



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nipper
post Posted: Feb 21 2019, 12:35 AM
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Still a hard one to get across the line... maybe some NAIF money helps. And German.
QUOTE
Pilbara resources junior Kalium Lakes appears to have jumped to the front of the queue in the race to build Australia’s first potash project with a $74 million federal government grant to help speed up development.

The miner will be given the cash under the Northern Australia Infrastructure Facility program and the funds will be used for the construction of a 78km gas pipeline and a gas-fired power station.

Under the terms of the deal, $48m is to be used for infrastructure development and $26m on project development. The pipeline will cost about $29m and some of the funds will be used to build an airstrip as well as upgrading an unsealed road from the Great Northern Highway to the project site.

Kalium Lakes has been working on the Beyondie project for the past few years and the fresh funding will help the site become the first potash producer in Australia.

The Australian Potash Company, Salt Lake Potash, Reward Minerals and Agrimin are also working to develop projects in Western Australia.

Beyondie is expected to cost about $200m to get up to production with about $160m to be spent on a processing plant and ponds and the rest on the pipeline and power station.

Taking into account the $74m from the government, Kalium Lakes’ remaining funding task will be about $120m.

The company, along with its advisers from BurnVoir Corporate Finance, are in Europe meeting with potential debt investors ahead of a transaction in the next few weeks.

The remaining funding will be 65 per cent debt, mainly from international investors, and 35 per cent equity from capital-raising. Beyondie’s final investment decision is due to be made in the middle of the year and the project is expected to start late next year.

The initial potash production is forecast to be about 80,000 tonnes and a phase one offtake agreement has been agreed with K+S, the German fertiliser and salt supplier. The first year’s amount is thought to be enough to meet the Australian demand for potash each year.

The German company will process the potash into fertiliser that will be sold in Australia.
https://beta.theaustralian.com.au/business/...bc54a0a17fdfe79



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Jun 24 2018, 05:08 PM
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Lake Mackay potash .... ' million dollar opportunity' .... http://mobile.abc.net.au/news/2018-06-24/l...932?pfmredir=sm
Also on Landline (ABC)

QUOTE
Joining Agrimin in the SOP rush are the likes of Kalium Lakes, Reward Minerals, Salt Lake Potash and Australian Potash, all of which have put their feet on various salt lakes around
from a long time ago post.... Potash is one of those 'eternal bridesmaids'



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: triage  mullokintyre  
 
triage
post Posted: Dec 4 2017, 09:43 PM
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In Reply To: wolverine's post @ Dec 4 2017, 09:26 PM

Okay, that arrangement with the revenue makes more sense. The way I was reading it made the deal with the Eritrean government seem overly generous. And yeah, so the big hurdle to get over is to line some customers up. The potash market looks a right mess at the moment, a buyer's market.



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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wolverine
post Posted: Dec 4 2017, 09:26 PM
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In Reply To: triage's post @ Dec 4 2017, 08:59 PM

ffs my reply was deleted.

Grrr.

Off-takes are the key the rest will fall into place when they secure them. The optimised FEED is probably a prerequisite for signing the offtakes but that is my understanding from what I have read...not necessarily a fact.

The DNK pay for the govt stake but get dibs on the first revenues until paid back as I understand it.



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TOO MANY CHIEFS

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triage
post Posted: Dec 4 2017, 08:59 PM
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In Reply To: triage's post @ Dec 3 2017, 06:01 PM

I'm still trying to get a handle on Danakali and its Colluli SOP project ... but the announcement today that Paul Donaldson, the current CEO and MD, who has led the company through all the development stages, is being benched and the head of marketing, an ex-Rio Tinto ex-DeBeers diamond salesman, Danny Goeman, is being installed as CEO. Given that they announced today that finalisation of the offtake agreeements is now put back to the March quarter of 2018 (back earlier this year the company was expecting to have nailed the offtake agreements months before now), and I can only guess that Mr Donaldson, who is a chemical engineer by training, has failed to close the offtake deals. That Mr Donaldson has taken the company from nothing to where it is now, and that he apparently holds 1.1% of DNK shares, probably means he has still a lot to contribute as a non-executive director (as long as he accepts that he no longer runs the show).

The problem with no confirmed offtake agreements is that without the offtake agreements in place it seems that they will not be able to organise a debt package, and it may also dampen any interest in investing in Danakali via the LSE, which will mean that they cannot begin construction of the project. But with MOP prices continuing to crash maybe customers are simply unwilling to make long term committments to a startup like Danakali.

I noticed that the Chinese investor, Well Efficient, has decreased their holding in DNK from just shy of 14% earlier this year to just shy of 8% currently. I also noticed that the Danakali website can be viewed english in english or in mandarin and that one of the non-executive directors is a Chinese national, presumably associated with Well Efficient though I can only find her linked to HK listed Yin He Holdings. It would appear that at least at one stage Danakali saw its future very much in the Chinese sphere. So I am curious whether the Chinese are coming or going with regards this project, and whether the company was looking towards Chinese money to get the project underway. That they are now looking to the LSE to raise some capital suggests that they have turned their attention perhaps away from China and more towards Europe (is the UK still part of Europe?).

Interesting that Mr Goeman has some significant form in negotiating with the Chinese. He was put up as Rio Tinto's lead iron ore negotiator with China after all the kerfuffle of Rio pulling out of a major deal with Chinalco and the arrests by China of Stern Hu and other Rio executives.

http://www.smh.com.au/business/rio-brings-...91211-koob.html



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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triage
post Posted: Dec 3 2017, 06:01 PM
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There are a number of Aussie tiddlers talking the talk about going into potash production, I'm not up to speed enough yet to work out whether any of them have a realistic shot or not.

But in the meantime, I came across this article about the Danakil project that is under development by Circum Minerals, a private company registered in Bermuda (but appears to have US links), just over the border in northern Ethiopia from Danakali's Colluli project, which is in southern Eritrea. It can get a little confusing: the name of the Australian company is Danakali (DNK) (with an "a" in the middle and a "i" at the end), their project is called Colluli and it is on the Eritrean / northern side of the border whilst there is a private company called Circum Minerals which has their own project called Danakil (no "i" at the end) which is over the border in Ethiopia just to the south of the Colluli project. Apparently the whole basin which contains these two projects is the Danakil Basin.

http://www.mining-technology.com/projects/...potash-project/

http://circumminerals.com/

http://www.danakali.com.au/

Circum's project may be a little further advanced towards development than the Colluli project, with Circum saying that it should be in production by 2021. I still cannot find anywhere where Danakali has given an estimate of when the Colluli project should start operating from: in a company video promo it says that once financing is bedded down the construction phase should take about 2 years, and elsewhere they say that financing is dependent in part on them bedding down the offtake agreements. Back earlier in 2017 Danakali management seemed to be suggesting that the offtake agreements should have been signed off on in the latter part of 2017 but in the latest presentation they seem to be shooting for the first half of 2018. My initial impression is that they are having some problems with the offtake agreements even though they say the interest that's been registered is for far more SOP than the project will be able to produce. I notice that in the DFS they use a SOP price of US$572 per tonne but I am not sure whether that is in the money or not, given how much MOP prices have plunged in recent years and SOP prices tend to track MOP prices (??).

Seeing how relatively close the two projects are to each other and in the same geological basin it is a tad surprising how different they seem to be. From 2021, Circum's project will not only produce 750,000 tonnes of SOP per year but also 2 million tonnes of MOP per year (you pay a hefty premium for SOP over MOP [SOP does not contain chloride whereas MOP does and not all plants react well to being fed chloride]). In contrast the Colluli project will for the first six years of production churn out about 472,000 tonnes per year of SOP but no MOP and after the second stage of the project kicks in total SOP production of about 944,000 tonnes per year of SOP (and again, no MOP). There are some fairly massive MOP projects coming on stream in Russia, and in Canada they are shuttering a number of existing MOP projects so bringing on additional MOP production is maybe not such an attractive idea but bringing a new SOP only project into production may be a different proposition.

A second difference between the two projects is that the potash from the Colluli project will be dry mined using open cut processes whereas the Circum project will work by pumping brine into the ore and dissolving the potash product ("solution mining techniques") and then using evaporation ponds to recover the raw material (seeing the Danikil Depression which is where these two projects are is rated as the hottest place on earth evaporation techniques make sense I suppose). Danakili reckon that the dry mining technique will be low cost whilst Circum say that the solution ming technique is low risk. Circum say they expect operating costs for their Danakil project to be US$112 per tonne of SOP but I see one investment sheet reckons that the opeating costs at Colluli wil be around US$200 per tonne so it would appear Colluli is at a sizeable disadvantage to Circum's project.

http://www.proactiveinvestors.com.au/compa...ion-182569.html

A third difference is a significant one I think. Danakali says that the capital intensity of module one (stage one) of the Colluli project is US$702 per tonne and that will drop to US$412 per tonne when they double up production levels with module two (stage 2). In comparison Circum claims the capital intensity of their Danakil project will be US$838 per tonne so on a project basis module one of Colluli gives slightly better bang per buck than Circum's project and six years later, when module 2 of Colluli goes into production, the capital intensity of Colluli as a project will twice that of Circum's project. But there is a catch. To get the Eritrean authorities to agree to the Colluli project going ahead Danakali agreed to hand over half the project to the Eritrean government but to still put up all of the project's capital expenditure (a similar arrangement was used in the two other major mining projects in Eritrea that have gone ahead of Colluli though the split in the other two was that the Eritrean government got 40%, not 50%, of each of the two other projects). So from the perspective of Danakili it effectively gets only half of what is produced even though it paid all of the capital expenditure, in other words for Danakali the capital intensity for module one would be US$1404 per tonne and even when module two comes on stream the capital intensity for Danakali would be US$824, which works out to be similar to the capital intensity of Circum's project (I think that is right but happy to be corrected???).

And just to finish up, another local SOP hopeful, Agrium, has this page on their website which gives some info about SOP. Apparently in 2015 60m tonnes of MOP was consumed and 5m tonnes of SOP was consumed, so when the Colluli project is in full production it will be providing a sizeable percentage of global SOP production (over 900k tonnes but in perhaps 8 or 8 years from now).

http://agrimin.com.au/what-is-sop/



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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triage
post Posted: Nov 29 2017, 04:53 PM
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In Reply To: wolverine's post @ Oct 10 2017, 08:07 PM

wolvie - I see you posted on hc about Danakali's latest presentation. Just a couple of basic questions for you:

Lots seem to be happening in the next 7 months but I cannot see that they give any indication of the timing for phase one of the Colluli project to go into production. They talk about mining, debt and power providers but no talk about who is going to build the processing plant. I guess they have some well credentialled managers on board so they might be intending to do the work inhouse but they still would need to start ordering the plant and equipment and I cannot find any indication of the timelines in that regard.

Also they talk about listing on the LSE in the next six months and to have bedded down debt arrangements in that timeframe but not their preferred debt to equity mix for the capex (which they give as about US$332m). Of course if they raise much / most of that money through the London listing that could be seen as a dilution of existing ASX shares (sort of).

They say they used conservative inputs for their IRR analysis, I wonder what SOP price they used (seeing Blacksheep's link suggests that SOP prices are currently under pressure). Perseus (PRU) recently put out a DFS report on a proposed gold mine in west Africa and using gold at US$1200 the IRR was 23% but using gold at US$1300 gave them an IRR of 30%. So an increase of US$100 or 8% in the product price improved the IRR by 30%. (as with most of these things garbage in garbage out).



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
 


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