ASX-listed Australian Potash has successfully rattled the tin for $10 million in a heavily oversubscribed equity placement as it continues to reel off key milestones on the way to kicking off construction at its Lake Wells sulphate of potash project in WA’s Eastern Goldfields. The Perth-based company says it will issue 71.42 million new Australian Potash shares across two tranches to a strong cast of institutional and sophisticated investors.
Major shareholder, Mark Creasy’s investment vehicle Yandal Investments, will also participate in the capital raise and maintain its 7.83 per cent stake.
Australian Potash’s issued capital structure will expand to a total of 635.6 million shares once the two tranches have been squared away on May 31 and July this year, the latter subject to shareholder approval.
Funds raised from the placement will largely go towards commencement of early capital works at Lake Wells ahead of an imminent final investment decision and the main project construction stage slated to begin in the second half of next year.
The pre-development phase includes in-ground services, water treatment plant and power supply for the Lake Wells village and drilling of brine bores and freshwater production wells.
The heavy institutional and sophisticated investor demand for the offer reflects well on the Lake Wells sulphate of potash project’s very robust financial metrics and supports our transition into development.
The (project) still carries the largest 100 per cent measured JORC-compliant sulphate of potash resource across the space, which speaks to the technically de-risked nature of the development.
Australian Potash last month released a sterling front-end engineering and design study that envisages Lake Wells averaging annual free cash flows of $119 million a year before tax across a whopping, initial 30-year mine life.
Annual production has been predicted to average 170,000 tonnes of “premium-priced” fertiliser per annum based on 3.6 million tonnes of probable ore reserves within an estimated measured resource of 18.1 million tonnes.
The FEED study puts Lake Wells’ pre-production capital cost at $292 million, with debt funding of $185 million locked in via a 17-year loan facility totalling $140 million with the Federal Government’s Northern Australia Infrastructure Facility and a 10-year debt facility with Export Finance Australia conditionally approved for $45 million.
Australian Potash says the $10 million capital raise will also help it finalise the additional, syndicated debt component of the project development cost with foreign and domestic banks.
The company, which hopes to start commercial production at Lake Wells in the second half of 2023, has already nailed down 90 per cent of the forecast fertiliser production courtesy of five binding take-or-pay offtake contracts.
Projected cash operating costs averaging $251 per tonne place Lake Wells in the lowest quartile of the sulphate of potash global industry cost curve, according to Australian Potash.
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