Salt Lake Potash #SO4 June 2018 Quarterly Report

The Board of Salt Lake Potash Limited (the Company or SLP) is pleased to present its Quarterly Report for the period ending 30 June 2018.

The Company’s primary focus is progressing the development of a Demonstration Plant at the Goldfields Salt Lakes Project (GSLP), intended to be the first salt-lake brine Sulphate of Potash (SOP) production operation in Australia.

Highlights for the quarter and subsequently include:

LAKE WAY

Demonstration Plant Scoping Study

Ø The Company and its consultants have substantially advanced the Scoping Study for a 50,000tpa Demonstration Plant at Lake Way, with completion expected shortly. 

Process Testwork

Ø A range of process development testwork is continuing, including process pathway modelling by international experts and a bulk sample evaporation trial processing both Lake Way representative brine and Williamson Pit brine. 

Geotechnical Investigations

Ø An initial geological and geotechnical investigation by the Company and Knight Piesold confirmed the availability of in-situ clays amenable for on-lake evaporation pond construction.

LAKE WELLS

Process Testwork

Ø The Company completed pilot scale crystalliser validation testwork at a leading crystalliser vendor in the United States, processing approximately 400 kg of crystalliser feed salt (schoenite concentrate), produced from previous Lake Wells development work at Saskatchewan Research Council (SRC). The testwork successfully produced high quality SOP crystals, representative of a full scale plant product.

LAKE BALLARD

Ø The Company’s Section 18 application over the Lake Ballard and Lake Marmion projects was granted, and the Company mobilised an amphibious excavator to complete the surface aquifer exploration program.

LAKE IRWIN

Ø A surface aquifer exploration program was completed at Lake Irwin, comprising of 56 shallow test pits and 5 test trenches. This work provides preliminary data for the geological and hydrological models of the surface aquifer of the Lake, as well as brine, geological and geotechnical samples. 

The Goldfields Salt Lakes Project

The Company’s long term plan is to develop an integrated SOP operation, producing from a number (or all) of the lakes within the GSLP, after confirming the technical and commercial elements of the Project through construction and operation of a Demonstration Plant producing up to 50,000tpa of SOP.

The GSLP has a number of important, favourable characteristics:

Ø Very large paleochannel hosted brine aquifers, with chemistry amenable to evaporation of salts for SOP production, extractable from both  low cost trenches and deeper bores;

Ø Over 3,300km² of playa surface, with in-situ clays suitable for low cost on-lake pond construction;

Ø Excellent evaporation conditions;

Ø Excellent access to transport, energy and other infrastructure in the major Goldfields mining district;

Ø Lowest quartile capex and opex potential based on the Lake Wells Scoping Study;

Ø Clear opportunity to reduce transport costs by developing lakes closer to infrastructure and by capturing economies of scale;

Ø Multi-lake production offers operational flexibility and protection from localised weather events;

Ø The very high level of technical validation already undertaken at Lake Wells substantially applies to the other lakes in the GSLP; and

Ø Potential co-product revenues, particularly where transport costs are lowest.

Salt Lake Potash will progressively explore the lakes in the GSLP with a view to estimating resources for each Lake, in parallel with the development of the Demonstration Plant. Exploration of the lakes will be prioritised based on likely transport costs, scale, permitting pathway and brine chemistry.

The Company’s recent Memorandum of Understanding with Blackham Resources Limited (see Announcement dated 12 March 2018) offers the potential for an expedited path to development at Lake Way, possibly the best site for a 50,000tpa Demonstration Plant in Australia.

The Company and its consultants have substantially advanced the Lake Way Project Scoping Study, with completion expected in the coming weeks. 

LAKE WAY

Lake Way is located in the Goldfields region of Western Australia, less than 15km south of Wiluna. The surface area of the Lake is over 270km².

SLP holds two Exploration Licences (one granted and one under application) covering most of the Lake, including the paleochannel defined by previous exploration. The Northern end of the Lake is largely covered by a number of Mining Leases (MLs), held by Blackham Resources Limited, the owner of the Wiluna Gold Mine.

The Wiluna region is an historic mining precinct dating back to the late 19th century. It has been a prolific nickel and gold mining region and therefore has well developed, high quality infrastructure in place.

The Goldfields Highway is a high quality sealed road permitted to carry quad road trains and passes 2km from the Lake. The Goldfields Gas Pipeline is adjacent to SLP’s tenements, running past the eastern side of the Lake.

SLP’s MOU with Blackham provides the basis to investigate the development of an SOP operation on Blackham’s existing Mining Leases at Lake Way, including initially a 50,000tpa Demonstration Plant.

Lake Way has some compelling advantages which make it potentially an ideal site for an SOP operation, including:

Ø Substantial likely capital and operating savings from sharing overheads and infrastructure with the Wiluna Gold Mine, including the accommodation camp, flights, power, maintenance, infrastructure and other costs.

Ø The site has excellent potential freight solutions, adjacent to the Goldfields Highway, which is permitted for heavy haulage, 4 trailer road trains to the railhead at Leonora, or via other heavy haulage roads to Geraldton Port.

Ø A Demonstration Plant would likely be built on Blackham’s existing Mining Licences.

Ø SLP would dewater the existing Williamson Pit on Lake Way, prior to Blackham mining, planned for early 2019. The pit contains an estimated 1.2GL of brine at the exceptional grade of 25kg/m³ of SOP. This brine is potentially the ideal starter feed for evaporation ponds, having already evaporated from the normal Lake Way brine grade, which averages over 14kg/m³_.

Ø The high grade brines at Lake Way will result in lower capital and operating costs due to lower extraction and evaporation requirements.

Ø There would be substantial savings to both parties from co-operating on exploration activities on each other’s ground.

Ø The presence of clays in the upper levels of the lake which should be amenable to low cost, on-lake evaporation pond construction.

Geological Interpretation

Significant historical exploration work has been undertaken in the Lake Way area focusing on nickel, gold and uranium. The Company has reviewed multiple publicly available documents including relevant information on the Lake Way’s hydrogeology and geology. 

The Department of Mines and Petroleum’s WAMEX database. The database contains more than 6,200 mineral exploration drill holes across the Lake Way area, about 1,000 of which are on the Blackham area.

Groundwater exploration was undertaken at Lake Way in the early 1990s by AGC Woodward Clyde to locate and secure a process water supply for WMC Resources Limited’s Mt Keith nickel operation.  There was a wide and extensive program of exploration over 40km of paleodrainage that focused on both the shallow alluvium and deeper paleochannel aquifers.

The comprehensive drilling program comprised 64 air-core drill holes totalling 4,336m and five test production bores (two of which were within SLP’s exploration licences). The aquifers identified were a deep paleochannel sand unit encountered down the length of the Lake Way investigation area and a shallow mixed alluvial aquifer from surface to a depth of approximately 30m.

Geology

The Lake Way drainage is incised into the Archean basement and now in-filled with a mixed sedimentary sequence, the paleochannel sands occurring only in the deepest portion. The mixed sediments include sand, silts and clays of lacustrine, aeolin, fluvial and colluvial depositional origins. The surficial deposits also include chemical sediments comprising calcrete, silcrete and ferricrete. These sediments provide a potential reservoir for large quantities of groundwater.

The deep paleochannel sand aquifer is confined beneath plasticine clay up to 70m thick. The sand comprises medium to coarse grained quartz grains with little clay – it is approximately 30m thick and from 400m to 900m in width.

Hydrogeology

The shallow aquifer comprises a mixture of alluvium, colluvium and lake sediments extending beyond the lake playa and continuing downstream. Five test production bores were developed by AGC Woodward Clyde, of which two are within SLP’s tenements. Constant Rate Tests (CRT) bore yields ranged from 520 kL/day up to 840 kL/day in permeable coarse-grained sand.

Mineral Resource

The Scoping Study will include the estimate of an initial Mineral Resource on Blackham’s MLs, to support the Demonstration Plant’s brine extraction model. The work includes the collation of extensive historical geological and hydrogeological data.

Process Testwork

The Company has continued a range of process development testwork to provide and validate inputs to the Lake Way Scoping Study production model. The testwork incorporates brines from the Lake itself, as well as the super-concentrated brines from the Williamson Pit.

Initial brine evaporation modelling, conducted by international solar pond experts, Ad Infinitum, indicates the salts produced at Lake Way will be comparable to those produced at Lake Wells and therefore suitable for conversion into SOP. 

International laboratory and testing company, Bureau Veritas (BV), has completed a series of laboratory-scale brine evaporation trials at their Perth facility, under simulated average Lake Way climate conditions. The aim of the BV trials is to monitor the chemical composition of the brine and salts produced through the evaporation process to confirm:

·        Concentration thresholds in the brine chemistry which can be used to maximise the recovery of potassium in the harvest salts and minimise the quantity of dilutive salts fed to a process plant;

·        The quantity and composition of harvest salts which will form the plant feed in commercial production; and

·        The potential for any internal evaporation pond recycle streams that may improve harvest salt recovery.

The laboratory testwork confirmed the modelled brine evaporation pathways. The Williamson pit brine follows a similar evaporation pathway to Lake Way lake brine with similar brine chemistry and salts produced.

The strongly correlated evaporation pathway of the Williamson Pit brine and the Lake Way brine provides an advantage incorporating the Williamson Pit brine into a long-term development model.

LAKE WELLS

Process Testwork

The Company continues a range of process development testwork to enhance the Lake Wells process model.

A large scale, continuous Site Evaporation Trial (SET) at Lake Wells was successfully completed over 18 months of operation under site conditions and through all seasons.

The results of the SET are Australian first and have provided significant knowledge to the Company on the salt crystallisation pathway under site conditions in Australia. 

The SET processed approximately 412 tonnes of Lake Wells brine and produced 10.3 tonnes of harvest salts. Site-produced harvest salts have been used in a range of subsequent process development testwork programs.

The Company has used the harvest salts produced by the SET to perform comprehensive process development testwork at Saskatchewan Research Council (SRC). Most recently, SRC completed locked cycle testwork utilising 1,000kg of harvest salts from Lake Wells SET to produce 400kg of flotation concentrate. Approximately 350kg of the flotation concentrate (crystalliser feed salt) was provided to a globally recognized crystalliser vendor for crystalliser equipment and design testwork.

Table 1: Crystalliser Feed Salts

Solubility software modelling was performed to confirm the crystalliser process conditions and expected outcomes prior to any testwork being performed. The testwork consisted of two main phases; an initial glassware test to validate the conditions and a subsequent small scale pilot test to produce a larger product sample.

In both tests parameters such as temperature, slurry composition and brine chemistry were monitored to validate the modelled process.

The glassware and continuous pilot crystalliser tests have confirmed the production of high quality potassium sulphate via the crystallisation process.

Table 2: Continuous Pilot Crystalliser 

LAKE BALLARD

The Company mobilised an amphibious excavator on the Lake to complete a surface aquifer exploration program. The Company received confirmation from the Minister for Finance, Energy and Aboriginal Affairs that the Company’s Section 18 application over the Lake Ballard and Lake Marmion projects had been granted.

The objective of the program is to gather geological and hydrological data about the shallow brine aquifer hosted by the Quaternary Alluvium stratigraphic sequence in the upper levels of the Lake. The program is to evaluate the geology of the shallow Lake Bed Sediments, and to undertake pumping trials to provide estimates of the potential brine yield from trenches in the shallow sediment. The excavator program will also provide important geological and geotechnical information for potential construction of trenches and on-lake brine evaporation ponds.

LAKE IRWIN

Surface Aquifer Exploration Program

Following the initial trench development in 2017, the Company returned to Lake Irwin with the amphibious excavator to undertake a program of test pits and additional trench excavation.

The completed program included 56 test pits and 5 trenches across the lake surface covering both the northern and southern lobes, to provide geological information. Twelve of these pits were slug tested to obtain bulk hydraulic conductivity parameters for the lakebed sediments. The Company plans to run long-term pump tests across the Lake to determine hydraulic conductivity and specific yield.

Geological Interpretation

Lake Irwin (LI) is made up of two distinct areas, Lake Irwin North and South, linked by a very narrow channel. The geology of lake Irwin south comprises a variable thickness of evaporitic (gypsum) sand overlying lacustrine clays to maximum excavation depth.

Based on work completed to date, the thickness of the evaporitic sand layer tended to be greatest in open lake areas and around the margins of islands. Thick evaporitic beds in open lake areas extend from surface to well below the static brine level. The underlying clay is generally red-brown in colour and relatively firm.

Inflow into test pits at Lake Irwin south was generally moderate to high and primarily originating from the surface evaporite sands and some deeper granular/pebble gypsum beds.

The shallow geology of the majority of LI North was similar to that in the narrow channels of LI South. A thin surface crust of halite dominated salt overlying a bed of dark brown clay to sandy clay which, in turn, overlies a red-brown lacustrine clay to maximum excavation depth.  The upper red-brown clay unit often contained a significant portion of large (50-150mm), matrix supported gypsum crystals.

The absence of a significant evaporite sand layer in the northern sediment resulted in slower fill rates in the pits and trenches.

At the northwestern corner of the lake the sedimentary sequence contained fluvial sediments characterised by very soft, unstable, weakly bedded, upward fining clayey sands to sandy clays with intervening beds of pure clay. This material was interpreted to be ox-bow and floodplain sediments marginal to the main river channel. Initial flow into the pits from this looser, sandy material was high.

Underlying these fluvial sediments is a sequence of hard, very dense, clayey coarse sands with occasional beds of rounded pebbles. This coarse-grained material represents the main river channel where it entered the lake. Brine flow in these areas was medium to low.

Competent Persons Statement

The information in this report that relates to Process Testwork Results is based on, and fairly represents, information compiled by Mr Bryn Jones, BAppSc (Chem), MEng (Mining) who is a Fellow of the AusIMM, a ‘Recognised Professional Organisation’ (RPO) included in a list promulgated by the ASX from time to time. Mr Jones is a Director of Salt Potash Limited. Mr Jones has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Jones consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this Announcement that relates to Exploration Results for Lake Way is extracted from the report entitled ‘Initial Results Confirm Lake Way Potential’ dated 26 April 2018 and ‘Emerging World Class SOP Potential Supported by Lake Way’ dated 12 December 2017. The information in the original ASX Announcement that related to Exploration Results, for Lake Way is based on information compiled by Mr Ben Jeuken, who is a member Australian Institute of Mining and Metallurgy. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company. Mr Jeuken has sufficient experience, which is relevant to the style of  mineralisation and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Jeuken consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement

Table 3 – Summary of Exploration and Mining Tenements

As at 30 June 2018, the Company holds interests in the following tenements:

Australian Projects:

For further information please visit www.saltlakepotash.com.au or contact: