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Align Research – New Salt Lake Potash #SO4 MoU with Sinofert highlights potential upside
Investors woke up to a cracking announcement from Salt Lake Potash (AIM:SO4) this morning concerning a Memorandum of Understanding (MOU) for an Offtake Agreement with the Chinese fertiliser giant Sinofert Holdings Limited. The MOU sets out the basis for the second Offtake Agreement for SO4’s potentially vast Goldfields Salt Lakes Project (GSLP) for an initial 8 year term, beginning in January 2020.
This latest Offtake Agreement will provide Sinofert with sales and offtake rights for up to 50% of ALL Sulphate of Potash (SOP) production from across all the nine vast lakes in Western Australia which comprise the GSLP. In all, GSLP hosts a drainable exploration target of over 150Mt of SOP.
Soon, SO4 is planning to begin the 
construction of the Demonstration Plant at GSLP to produce 50,000 tpa of high-quality SOP, with the production being distributed by a handful of global distribution partners. Once the Demonstration Plant is up and running, the team has well-developed plans to progressively expand production across a number of the lakes within the GSLP. This is SO4’s second offtake agreement, having already entered into an agreement with Mitsubishi Corp for sales and offtake rights to 50% of the SOP production from the 50,000 tpa Demonstration Plant.
It worth taking a closer look at Sinofert which is the largest fertiliser company in China, with businesses encompassing the complete fertiliser industry chain. In all, this well-established fertiliser giant handles something like 13Mtpa of fertilisers as well as being the biggest fertiliser importer into China. Hong Kong-listed Sinofert is capitalised at over US$1 billion and is majority-owned by Sinochem Corporation, a Chinese State Owned Enterprise.
This deal serves to underline the viability and the economics of SO4’s vast high-grade SOP brine projects in Western Australia. Investors should realise that SOP represents a premium sustainable potash fertiliser which currently sells at more than double the price of the more commonly used MOP. With SOP being a high value fertiliser which is increasing being favoured by global demographics and in the shift to high value speciality crops such as citrus, potatoes, nuts, strawberries, mangoes, tomatoes, coffee, tobacco, spinach and peas.
Read the full Align research article here
Salt Lake Potash #SO4 and Chinese Fertiliser company Sinofert enter MOU for Long Term Offtake Arrangement
Salt Lake Potash (the Company) is pleased to announce that the Company has executed a Memorandum of Understanding (MOU) with the leading fertiliser distribution company in China, Sinofert Holdings Limited (Sinofert), setting out the basis for the second Offtake Agreement for the Goldfields Salt Lakes Project (GSLP).
The Offtake Agreement will provide Sinofert with sales and offtake rights for up to 50% of all Sulphate of Potash (SOP) production from the GSLP, for distribution into China. The initial term is for 8 years, from 1 January 2020.
Salt Lake Potash plans to shortly commence initial construction of a Demonstration Plant at the GSLP producing up to 50,000tpa of high quality SOP, with plans to distribute production through a small number of global distribution partnerships. Subsequent to the Demonstration Plant, the Company plans to progressively expand production across a number of lakes in the GSLP.
The Sinofert MOU is non-binding and sets out the key terms for a subsequent formal Offtake Agreement expected to be completed before the commencement of the initial term on 1 January 2020. As well as quantities and target markets, the MOU’s other terms include:
• Market pricing and commission mechanisms;
• Specifications and delivery parameters; and
• Sinochem to provide strategic advice on marketing within China.
About Sinofert
Sinofert is China’s leading fertiliser supplier and distributor, covering the whole industry chain of resource, R&D, production, distribution, and agrochemical services. Sinofert handles 13 mt of fertilisers each year and has over 60 years experience in fertiliser production and distribution. Sinofert is listed on the Hong Kong Stock Exchange and is majority owned by Sinochem Corporation, a key Chinese State Owned Corporation.
The Company has previously entered into an Offtake Agreement with Mitsubishi Australia Limited and Mitsubishi Corporation, with sales and offtake rights for up to 50% of the SOP production from a Demonstration Plant at the GSLP.
Salt Lake Potash CEO Matt Syme said: “We are very pleased to have taken this important step to partner with Sinofert in further establishing distribution channels for the Goldfields Salt Lakes Project. Our model of distribution partnerships is vital for what is essentially an export Project and Sinofert is the leading participant in the world’s largest fertiliser market, where more than half of the world’s SOP is both produced and consumed.”
For further information please visit www.saltlakepotash.com.au or contact:
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Matt Syme/Clint McGhie |
Salt Lake Potash Limited |
Tel: +61 8 9322 6322 |
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Jo Battershill |
Salt Lake Potash Limited |
Tel: +44 (0) 20 7478 3900 |
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Colin Aaronson/Richard Tonthat/Ben Roberts |
Grant Thornton UK LLP |
Tel: +44 (0) 20 7383 5100 |
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Derrick Lee/Beth McKiernan |
Cenkos Securities plc (Joint Broker) |
Tel: +44 (0) 131 220 6939 |
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Jerry Keen/Toby Gibbs
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Shore Capital (Joint broker) |
Tel: +44 (0) 20 7468 7967
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Production Target
The Lake Way Demonstration Plant Production Target stated in this announcement is based on the Company’s Scoping Study as released to ASX and AIM on 31 July 2018. The information in relation to the Production Target that the Company is required to include in a public report in accordance with ASX Listing Rule 5.16 and 5.17 was included in the Company’s Announcement released on 31 July 2018. The Company confirms that the material assumptions underpinning the Production Target referenced in the 31 July 2018 release continue to apply and have not materially changed.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.