Agrimin Opts to Withdraw from Mackay Potash Project in WA after Strategic Review

Agrimin (ASX: AMN) has commenced plans to withdraw from the Mackay potash project in Western Australia after a strategic review found the development to be uneconomic in light of current market conditions for evaporative sulphate-of-potash (SOP) projects.

The board of directors initiated the review in February to assess the project’s potential under various existing and foreseeable medium-term challenges, deciding ultimately that continued allocation of capital to the project would not be in the best interests of shareholders.

The withdrawal process will involve a full or partial surrender of exploration licences covering the majority of the brine-hosted potash minerals, plus the cancellation of existing mineral ore and ore reserve statements.

Strategic Review Outcomes

The Mackay strategic review found that a protracted government approvals process and considerable inflation associated with new mining projects had greatly hindered the project’s development.

The failure of several Western Australian SOP developments in recent years had also dramatically eroded the appetite of potential conventional and strategic funders for such projects.

Significant tenement rents and shire rates associated with a large brine-hosted mineral deposit such as Mackay, which covers more than 3,000 square kilometres, present a uniquely prohibitive holding cost that further impacted the review’s outcome.

Agrimin has failed to attract any third party offers to purchase or fund Mackay’s development and therefore had no suitable exit pathway from the project.

The company will maintain full compliance with its environmental and rehabilitation obligations, and initiate discussions with native title holders to responsibly conclude the Mackay native title mining agreement.

Non-Potash Minerals Focus

Agrimin will turn its focus to the exploration for non-potash minerals in the West Arunta region of WA, along trend from the Luni niobium deposit owned by WA1 Resources (ASX: WA1).

The Geological Survey of Western Australia recently began detailed airborne magnetic and radiometric geophysical surveys across the broader West Arunta region and the results will be provided to Agrimin at no cost.

The survey is expected to significantly improve the quality of available magnetic data for Agrimin’s remaining exploration licences.

The company said it may also consider acquiring tenure in other highly prospective mineral provinces across Australia, funded by a $2.3 million cash balance.