The Board of Salt Lake Potash Limited (the Company or Salt Lake Potash) is pleased to present its Quarterly Report for the period ending 31 December 2018.

The Company is focussed on rapidly progressing the development of its Lake Way Project, intended to be the first salt-lake brine Sulphate of Potash (SOP) production operation in Australia.

Highlights for the quarter and subsequently include:

Native Title Land Access and Exploration Agreement Executed for Lake Way

Ø Salt Lake Potash and Tarlka Matuwa Piarku (Aboriginal Corporation) RNTBC (TMPAC) have entered into a Native Title Land Access and Exploration Agreement for Lake Way

Ø TMPAC consent has been received for the on-lake construction of the pond system for the dewatering of the Williamson Pit at Lake Way (Williamson Ponds)

Key Approval Obtained and Construction of Williamson Ponds Imminent

Ø Mining Proposal and Project Management Plans for the Williamson Ponds approved by the Department of Mines, Industry Regulation and Safety (DMIRS)

Ø Initial fleet of construction equipment mobilised to Lake Way and site preparation works being undertaken in preparation for imminent construction of the Williamson Ponds

Ø Detailed design of Williamson Ponds completed

‘Whole of Lake’ Resource Program for Lake Way Advancing

Ø Work well advanced to enable the Company to report:

• o   a Mineral Resource Estimate for the lake bed brine and the paleochannel aquifer for the 100% owned Salt Lake tenements
• o   upgraded Mineral Resource Estimate for the Blackham tenements

Ø ‘Whole of Lake’ Mineral Resource Estimate will enable the Company to examine larger production scenarios

Field Trials at Lake Way Confirm Salt Production Process

Ø Comprehensive field evaporation trials at Lake Way are successfully producing substantial volumes of potassium Harvest Salts validating the modelled salt production process. 

Ø Field evaporation trials have produced over 2 tonnes of high grade Harvest Salts at Lake Way.

Ø Over 100,000l of brine from both high grade Lake Way playa brine and the super high-grade Williamson Pit brine have been extracted for the field trial and evaporated separately. Both brines have rapidly produced quality harvest salts amenable for conversion to Sulphate of Potash (SOP).

Ø Potassium Harvest Salts produced from the field trial will be processed at Saskatchewan Research Council (SRC), where a pilot plant will duplicate and refine the Lake Way process flow sheet, as well as producing further product samples for offtake partners.

Key Appointments Enhance Senior Project Development Team

Ø Highly regarded mining executive Tony Swiericzuk commenced as Managing Director and Chief Executive Officer of Salt Lake Potash effective 5 November 2018

Ø Three proven mining executives join Salt Lake Potash as leaders in the project development team:

o   Peter Cardillo as Project Director – Processing and NPI

o   Lloyd Edmunds as Project Director – Civil

o   Stephen Cathcart as Project Director – Technical

Ø These appointments, along with other recent additions to the project execution team, bring diversified technical/studies, approvals, construction, operations, process infrastructure experience to the Company as it moves into rapid project development phase

Completion of A$13.0 Million Placement to Fund Activities at Lake Way

Ø The Company completed placement of 31.0 million new shares to raise gross proceeds of $13.0 million

Ø The Placement included 950,000 shares subscribed for by CEO, Mr Tony Swiericzuk, and 750,000 shares subscribed for by the Company’s Chairman, Mr Ian Middlemas

Ø The proceeds have enabled the Company to accelerate planned development activities at Lake Way, including mobilisation of construction equipment for the imminent construction of the Williamson Ponds and dewatering of the Williamson Pit

OVERVIEW

Salt Lake Potash is the owner of nine large salt lakes in the Northern Goldfields Region of Western Australia.  This outstanding portfolio of assets has a number of important, favourable characteristics:

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

·    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;

·    Excellent evaporation conditions;

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

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

·    Potential for multi-lake production offers optionality and significant scale potential, operational flexibility, cost advantages and risk mitigation from localised weather events.

Salt Lake Potash’s immediate focus is on the rapid development of the Lake Way Project, intended to be the first salt-lake brine Sulphate of Potash (SOP) production operation in Australia. Lake Way’s location and logistical advantages make it the ideal location for the Company’s first SOP operation.

The Company’s long term plan is to develop an integrated SOP operation, producing from a number (or all) of the lakes.  Salt Lake Potash will progressively explore each of the lakes with a view to estimating resources for each Lake, and determining the development potential. Exploration of the lakes will be prioritised based on likely transport costs, scale, permitting pathway and brine chemistry.

LAKE WAY PROJECT

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

Salt Lake Potash holds five Exploration Licences (one granted and four under application) covering most of Lake Way and select areas off-lake, including the paleochannel defined by previous exploration. The northern end of the Lake is largely covered by a number of Mining Leases, held by Blackham Resources Limited (Blackham), the owner of the Wiluna Gold Mine.

The Company’s Memorandum of Understanding with Blackham (see ASX Announcement dated 12 March 2018) allows for an expedited path to development at Lake Way.

Lake Way has a number of compelling advantages which make it an ideal site for Salt Lake Potash’s initial SOP operation, including:

Ø     Utilisation of Blackham’s existing infrastructure (including camps, power and maintenance) to accelerate development.

Ø     The site has excellent freight solutions, being adjacent to the Goldfields Highway, which is permitted for heavy haulage, quad trailer road trains to the railhead at Leonora and then direct rail access to both Esperance and Fremantle Ports, or via other heavy haulage roads to Geraldton Port.

Ø       The Goldfields Gas Pipeline is adjacent to Salt Lake Potash’s tenements, running past the eastern side of the Lake.

Ø        Access to Blackham’s existing Mining Leases provides advanced permitting pathway for early development activity, including the construction of the Williamson Ponds.

Ø        Salt Lake Potash will construct the Williamson Ponds and dewater the existing Williamson Pit on Lake Way. The pit contains an estimated 1.2GL of brine at the exceptional grade of 25kg/m³ of SOP. This brine is 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      The presence of clays in the upper levels of the lake which are amenable to low cost, on-lake evaporation pond construction.

The Company is concurrently progressing the imminent construction of the Williamson Ponds, whilst also rapidly advancing a ‘whole of lake’ scenario, including mineral resource estimates, permitting and approvals, pilot plant process testwork and assessment of infrastructure and logistical options.

A number of key appointments have been made during the Quarter that support the rapid development of the Lake Way Project, bringing diversified technical, construction, operations, process infrastructure experience to the Company, including:

·    Peter Cardillo as Project Director – Processing and NPI

·    Lloyd Edmunds as Project Director – Civil

·    Stephen Cathcart as Project Director – Technical

Salt Lake Potash has also engaged industry leading consultants to work alongside the Company’s internal experts for works related to the larger ‘whole of lake’ development of the Lake Way Project, including:

·    WOOD – technical studies for a full scale commercial project  

·    Pendragon – environmental consultant

·    Ad-Infinitum – pond process design

·    Knight Piesold – Williamson Pond detailed design

·    Cardno – on playa trench hydraulics  

·    SRC – process testwork and pilot plant

·    Global groundwater – bore test pumping

·    Hydrogeoenviro – bore water licensing

Having completed a placement to raise $13.0 million during the quarter and built a team with capability and track record of successfully developing and constructing numerous resource projects, the Company is well placed to take advantage of the benefits of the Lake Way Project and its broader portfolio of nine salt lakes.

Discussions are also ongoing with a number of offtake partners and the testwork currently underway at SRC will provide high-grade SOP product samples for testing by these partners.

Native Title Land Access and Exploration Agreement

In December 2018, the Company signed a Native Title Land Access and Brine Minerals Exploration Agreement (the Agreement) with Tarlka Matuwa Piarku (Aboriginal Corporation) RNTBC (TMPAC) covering the Lake Way Project area.

TMPAC entered into the Agreement with Salt Lake Potash on behalf of the Wiluna People who are the recognised Native Title Holders of the land covering the Lake Way Project area. TMPAC also provided consent for the total area required for the construction and operation of the Williamson Ponds.

The signing of the Agreement with TMPAC and receipt of TMPAC’s consent for the Williamson Ponds is a major milestone in the development of the Lake Way Project and positions Salt Lake Potash to accelerate the works program for the Williamson Ponds.

Approvals Advancing

The Company’s Mining Proposal and Project Management Plans for the Williamson Ponds were approved by Department of Mines, Industry Regulation and Safety (DMIRS) during the quarter, and a Works Approval licence was also submitted to the Department of Water and Environmental Regulation (DWER). These works include the construction of operational scale evaporation ponds and associated infrastructure including pond trenching to provide brine conditioning to manage the brine extracted from the Williamson Pit.

Salt Lake Potash has previously received environmental approval from the DMIRS to construct ponds totalling up to 133Ha (the Williamson Ponds), as well as ancillary infrastructure.

The Williamson Ponds will be the first operational scale SOP evaporation ponds built on a salt lake in Australia – an important part of the staged de-risking and development at Lake Way and across the Company’s portfolio of salt lakes in the Northern Goldfields Region.

A series of studies commenced during the quarter in support of the ongoing environmental approvals. These include flora and fauna surveys, climatology and hydrologic assessment, flood modelling and geotechnical investigations.

Mineral Resource Program

The Company has previously reported a Mineral Resource Estimate for Lake Way (Blackham tenements only). Work progressed during the quarter to enable the Company to estimate a ‘whole of lake’ Mineral Resource Estimate, including the remaining playa surface covered by Salt Lake Potash’s tenements and the paleochannel aquifer, which were not considered as part of the initial Mineral Resource estimate and provide significant short term upside to increase resources at Lake Way.

Estimation of a ‘whole of lake’ resources will enable the Company to consider larger production scenarios for Lake Way.

A program of 19 auger holes, test pits, trench testing, recovery testing, brine sampling and laboratory determination of hydraulic parameters has commenced and is expected to be completed in the current quarter. Results of these activities will provide inputs to the Mineral Resource Estimate for the playa surface.

Planning and initial works also commenced on defining the paleochannel resource under Lake Way. 

By taking advantage of previous works in the area, the Company was able to identify and inspect three existing production bores drilled into the paleochannel.  Each of the holes was inspected by downhole camera which showed that all three remain intact and, with some minor cleaning and redevelopment, are expected to be suitable for test pumping.  Rehabilitation and test pumping is planned for the current quarter, and the results of this activity are expected to confirm the hydraulic parameters of the productive zone of the paleochannel and the brine grade.  The data produced from the test pumping will be used as an input to the Mineral Resource Estimate for the paleochannel.

A gravity and passive seismic geophysical survey consisting of 22 lines and a total coverage of greater than 110 km was commissioned to define the location and form of the Lake Way paleochannel within the Salt Lake Potash and Blackham tenements.  The work consists of a number of cross sections which are then combined to provide a 3D representation of the paleochannel.  This work will be completed in the current quarter.  When combined with the geological logs from previous work it is expected to be possible to define the extent of the brine hosting sediments and develop a volumetric understanding of the paleochannel, which in turn will inform the resource model.

Civil Construction – On-Lake Infrastructure

During the quarter, the Company progressed the first phase of on-lake development with completion of the detailed design of the Williamson Ponds to dewater the high grade Williamson Pit brine. This early works program will allow the fast-tracking of harvest salts in readiness for process plant commissioning.

Detailed engineering works during the quarter for the Williamson Ponds included further analysis of strength and permeability characteristics of lakebed sediments, and geotechnical parameters for final pond analysis and design. Other geotechnical design work undertaken included Cone Penetration Test (CPT) data analysis, trafficability assessment, access road analysis, seepage models, borrow pit assessments and development of the pond construction methodology. The geotechnical investigation and engineering works will expand in the current quarter for the larger ‘whole of lake’ scenario at Lake Way.

Surveying contractor, AAM Group set out the Williamson Pond design in readiness for construction commencement in the current quarter, and also commenced the Light Detection and Ranging (LiDAR) topographical survey flyover for the larger ‘whole of lake’ scenario.

Given the unique design and site conditions, the Company is now engaging with the specialist civil contracting market to select our contracting partners to build the on lake Williamson Ponds and dewater the Williamson Pit. In late December 2018, the Company mobilised initial construction equipment to Lake Way, with site preparation works being undertaken in preparation of the imminent construction of the Williamson Ponds.

The Company has also sort Expressions of Interest (EOI) from key civil contractors to participate in an Early Contractor Involvement (ECI) process for the larger ‘whole of lake’ development. To date, the Company has received positive feedback and acceptance from a number of major civil contractors.

Process Testwork

Comprehensive field evaporation trials at Lake Way are continuing to successfully produce substantial volumes of potassium Harvest Salts validating the modelled salt production process.

A major component of the feasibility study process for the Lake Way Project is to develop a brine evaporation and salt production model based on the brine chemistry of both Lake Way playa and Williamson Pit brines under local environmental (evaporation) conditions.

Initially, this model was based on a computer simulation generated by international brine processing experts Ad Infinitum, from known brine chemistry (from assays) and comprehensive public weather datasets. In this case the model was also informed by the Company’s unique database of more than 18 months of field evaporation trials at Lake Wells, reflecting similar chemistry and environmental inputs.

In the second stage of the model development the computer simulation was calibrated against and updated for the results of wind tunnel evaporation tests of Lake Way brines under laboratory conditions.

Thirdly, the model is now being further refined by establishing a site evaporation trial, where a scaled down version of an evaporation pond system is established on site and brine is evaporated under actual field conditions. Both brine chemistry and salt production are closely monitored.

The Lake Way Site Evaporation Trial (SET) was established in May/June 2018 and initial brine feed was gradually introduced from both the Williamson Pit (SOP resource grade 25kg/m³) and the Lake Way playa (SOP resource grade 14kg/m³) (refer to Note 1 for mineral resource estimate on Blackham tenements). 

Over 100,000 litres of Williamson Pit and the Lake Way Playa brine has been fed into the SET pond system to date. Brine is sourced from a surface trench, for the Lake Way Playa brine, or direct from the Williamson Pit and introduced into a Halite Pond. As solar evaporation concentrates the brine, it progresses through a series of 5 ponds: two halite salt ponds, and then schoenite, kainite and carnallite salt ponds.

Harvested salt and brine samples are analysed at regular intervals through the evaporation process to gather data for model correlation. To date over 400 samples have been extracted and assayed at Bureau Veritas in Perth.

The results from the Lake Way SET to date demonstrate an excellent correlation to the salt production model.

This provides the Company with a very strong basis to continue development of the mass balance model and process flow sheet for the Lake Way Project.

It was found that halite salts begin to form almost immediately upon initial evaporation. This will shorten the overall salt production timeframe for the Williamson Pit brine. It may also offer the opportunity for faster construction of harvest pond infrastructure, utilising harvested halite salts for pavement. 

The Lake Way SET has already produced over 2 tonnes of Potassium Harvest Salts (1.8 tonnes Lake Way Playa and 0.4 tonnes of Williamson Pit) and a further 5 tonnes are forecast to be harvested during ongoing evaporation trials.

From the test work to date, the Williamson Pit and the Lake Way Playa brines have produced excellent high grade Harvest Potassium Salts with an exceptional K grade of up to 10% and an overall high average K grade of 6.8%. This aligns very well with the grades that were observed during the Lake Wells SET’s.

This provides the Company with confidence that the Lake Way production model, process flowsheet and Harvest Salt product will produce a final high grade SOP product in line with the world leading SOP product of 53% K₂O produced at Lake Wells.

The Company has engaged the world’s leading potash processing laboratory, Saskatchewan Research Council (SRC), to establish a pilot plant based on the process flow sheet for the Lake Way Project. The initial batch of harvest salts from Lake Way has been delivered to SRC and testwork is underway.

The pilot plant will validate and refine the Lake Way process flowsheet and also produce high-grade SOP product samples for offtake partners.

LAKE BALLARD

The Lake Ballard Project is located about 15 km north of Menzies. The playa is a significant regional landform with a surface area of 698km². The geology of Lake Ballard is similar to that encountered at other lakes in the Company’s portfolio.   

Surface Aquifer Exploration Program

Final elements of fieldwork undertaken to enable the estimation of a resource were completed at Lake Ballard during the quarter. 

The Company commenced an auger drilling program in September 2018 to obtain insitu samples for geological logging, porosity measurement, specific yield testing and brine sampling. The holes were drilled using a track mounted auger rig, capable of drilling to between 15 – 20m depth depending on ground conditions.

Drilling was completed, with a total of 15 auger holes, from which 47 insitu samples from depths varying from 1m to 15m.

The core samples were collected and sent to Core Laboratories WA for analysis of hydraulic conductivity, total porosity and drainable porosity (Specific yield).

The Company also test pumped two trenches for 15 days and analysed data from the test pumping of 44 trial pits.

Results of the auger program and insitu sampling are in accordance with expectation and reported in full in Appendix 2.

The test pumping and trial pit data were analysed using known methodologies with the AQTESOLV analysis programme. This data will ultimately feed into a mineral resource estimate for the majority of the lake.

LAKE MINIGWAL

The Lake Minigwal Project is located in the Northern Goldfields Region of Western Australia approximately 80km south east of Laverton. 

During the quarter extensive gravity geophysics was run over the various branches of Lake Minigwal as a preliminary investigation into the depth to basement and location of the paleochannel.

The purpose of the gravity survey was twofold, to identify the depth to basement across the lake and to identify the thalweg of the paleochannel as a precurser to the development of a drilling programme.

Whilst there is confidence that the main trunk drainage of the paleochannel passes beneath the Company’s tenements and that a large paleo-tributary that enters from the north and merges with the main trunk drainage beneath the eastern third of Lake Minigwal, the exact location is currently unknown.

The results are currently being processed, however preliminary analysis has identified the Thalweg of the paleochannel.  Further modelling will be undertaken to refine the data response and to identify future areas for greater density of surveys.

SOP SAMPLE PRODUCTION

During the quarter, the Company completed confirmatory testwork at Fremantle Metallurgy’s mineral processing laboratory. The testwork, conducted by the Company’s process engineers, began the process of converting several tonnes of harvest salts collected from the Lake Wells SET into SOP samples.  The process and equipment used was based upon the flowsheet previously tested by SRC.

The in-house work successfully tested some of the discrete unit operations in the flowsheet and generated a small amount of lake-derived SOP product for assessment of quality. The testwork has provided valuable inputs into the process flowsheet development and equipment selection for the Lake Way harvest salt testwork now underway at SRC. Importantly, the operation also provided the Company’s process team valuable hands-on experience in dealing with the subtle complexities in the operation of a saturated salt-brine process.    

CORPORATE

During the quarter, the Company completed a placement to existing and new institutional and sophisticated investors in Australia and overseas for 31.0 million new ordinary shares of the Company, to raise gross proceeds of $13,000,000 (Placement). There was very strong demand for the Placement, an endorsement of the recent appointment of Tony Swiericzuk as CEO and also of the Company’s world class Sulphate of Potash project.

The cornerstone investor for the Placement was a significant international investment fund. Directors and senior management subscribed for a total of 2.4 million shares in the Placement, including 950,000 shares by the CEO, Mr Tony Swiericzuk, and 750,000 shares by the Company’s Chairman, Mr Ian Middlemas, which were issued in January 2019 following shareholder approval.

Proceeds from the Placement are being used to fund construction of the Williamson Ponds and dewatering of the Williamson Pit, as well as ongoing development of on-lake infrastructure, exploration and feasibility studies, and general working capital.

Having successfully raised the funds for project development at Lake Way, the Company significantly accelerated its activity and expenditure during the December quarter.

Note 1: Lake Way Mineral Resource Estimate (Blackham tenements only) 

Sediment Hosted Brine – Indicated (94%)

Williamson Pit Brine – Measured (6%)

Work is currently underway to enable the Company to report a Mineral Resource Estimate for the lake bed brine and the paleochannel aquifer for the ‘whole of lake’, which will enable the Company to examine larger production scenarios.

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

Competent Persons Statement

The information in this announcement that relates to Exploration Results for Lake Ballard is based on information compiled by Mr Ben Jeuken, who is a member Australian Institute of Mining and Metallurgy and a member of the International Association of Hydrogeologists. 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 information in this announcement that relates to Process Testwork Results is extracted from the report entitled ‘Field Trials at Lake Way Confirm Salt Production Process’ dated 29 January 2019. This announcement is available to view on www.saltlakepotash.com.au. The information in the original ASX Announcement that related to Process Testwork Results was based on, and fairly represents, information compiled by Mr Bryn Jones, BAppSc (Chem), MEng (Mining) who is a Fellow of the AusIMM. Mr Jones is a Director of Salt Lake 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’. Salt Lake Potash Limited confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. Salt Lake Potash Limited 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.

The information in this Announcement that relates to Mineral Resources is extracted from the report entitled ‘Scoping Study for Low Capex, High Margin Demonstration Plant at Lake Way’ dated 31 July 2018. This announcement is available to view on www.saltlakepotash.com.au. The information in the original ASX Announcement that related to Mineral Resources was based on, and fairly represents, information compiled by Mr Ben Jeuken, who is a member Australian Institute of Mining and Metallurgy and a member of the International Association of Hydrogeologists. 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’. Salt Lake Potash Limited confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. Salt Lake Potash Limited 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.

Appendix 1 – Summary of Exploration and Mining Tenements

As at 31 December 2018, the Company holds interests in the following tenements:

Appendix 2 – Lake Ballard Auger and Test Pit Results

Table 1: Auger Hole and Shelby Tube Porosity and Effective Porosity Results

Table 2: Location Details for Auger Holes

Note: All holes are vertical, with an RL of approximately 370m.  Depth indicates end of hole.

Table 3: Location Details for Test Pits

APPENDIX 3 – JORC TABLE ONE

Section 1: Sampling Techniques and Data

Section 2: Reporting of Exploration Results