Aspiring producer Australian Potash (ASX: APC) has signed its first binding term sheet with chemicals company Redox Pty Ltd for the supply of 20,000 tonnes per annum of premium K-Brite sulphate of potash from its flagship Lake Wells project in WA’s eastern goldfields region.
The 10-year take-or-pay term sheet will give Redox exclusive sales and distribution rights for K-Brite throughout Australia and New Zealand.
Pricing will be based on market averages minus traditional ‘net back’ costs including a marketing fee and ‘flow through’ shipping, storage and handling costs (net realised price).
The agreement signals Australian Potash’s first step in its offtake program, which will see a large proportion of the planned 150,000tpa output from Lake Wells locked in to offtake agreements.
Managing director Matt Shackleton welcomed the partnership with a long-established Australian company.
“From its Sydney base, Redox has built broad trade relationships and an extensive global distribution network [and will help us] deliver the first step in [our] larger offtake program,” he said.
“The emerging Australian sulphate of potash sector is gaining credibility on the international stage, and it is pleasing to see [our] rigorous approach to the technical and commercial aspects of [Lake Wells] being recognised.”
Lake Wells project
Australian Potash holds 100% interest in the Lake Wells project, located approximately 500km north-east of Kalgoorlie.
Following the release of the project’s definitive feasibility study in August, the company has focused on completing a front-end engineering design study, finalising offtake discussions and securing project development financing.
The feasibility study was underpinned by extensive and rigorous test work, data, and modelling and confirmed Lake Wells to be low capital, high margin development with a 30-year mine life and a production capacity of 150,000tpa premium grade sulphate of potash utilising 21% of a total measured resource estimate of 18.1Mt.