LONDON: Salt Lake Potash Limited has entered into a Sales Agreement with Blackham Resources Limited to acquire a package of tenements and other key assets for the Lake Way Project, a notice sent to London Stock Exchange said.
Salt Lake Potash will pay total consideration of A$10 million, inclusive of A$500,000 payable under the Split Commodity Agreement.
The transaction is another important step in providing the Salt Lake with certainty over the timing and capital expenditure required to bring the Lake Way Project into production.
Blackham and Salt Lake Potash have been cooperating on their respective projects in the Wiluna/Lake Way region for the past 18 months. Salt Lake Potash is progressing its Bankable Feasibility Study (BFS) for the Lake Way Project, and has identified specific Blackham assets which provide synergies for the Lake Way Project and material value to Salt Lake Potash.
Salt Lake Potash has agreed to acquire outright the tenements owned by Blackham that sit on the Northern end of Lake Way and to the East of the Gold Fields highway; access and rights to process water from Blackham with an option to acquire a key borefield which will support the Lake Way Project.
With effect from execution, Blackham has agreed to the immediate access to process water, and consent to the grant of new tenure over its tenements to enable Salt Lake Potash to advance early works including camps and water infrastructure.
The Brine Royalty granted to Blackham as part of the Split Commodity Agreement will be extinguished effective 30 June 2020.
Salt Lake Potash and Blackham have identified a mutual opportunity for Salt Lake Potash to utilise part of the pre-strip material from Blackham’s proposed Williamson Pit development for the construction of the Company’s on-lake evaporation ponds.
Under the arrangement, when Blackham recommission the Williamson Pit operation, Salt Lake Potash will contribute up to $10m towards the performance of the pre-strip of the Williamson Pit, with pre-strip material directly applied towards the construction of the bund walls of the on-lake evaporation ponds. This contribution forms part of the Project’s existing construction capex and will be funded as part of project financing.
Salt Lake Potash’s Chief Executive Office, Tony Swiericzuk, said: “This is an exceptional transaction for Salt Lake Potash that will provide significant benefits to the Lake Way Project and further support the rapid progress towards first production. The acquisition will provide material value through capital and operating savings to Salt Lake Potash and also significantly de-risk the Lake Way Project by providing ownership of tenements and further access to key infrastructure assets including water and power.
Salt Lake Potash is delighted to continue the strong relationship we have built with Blackham and look forward to further developing the mutual opportunities that exist with our adjacent operations.”