Salt Lake Potash (AIM:SO4)  revealed that the Lake Way project is now fully funded after executing an A$203m debt financing package and A$98.5m fully underwritten equity raising.

 

The funds will enable the dual-listed group to finalise funding and deliver the Sulphate of Potash (SOP) project on schedule with first production expected in the March quarter 2021. 

 

The financing package includes a A$203m Syndicated Facility Agreement (SFA) with Taurus Mining Finance Fund No2 LP and the Clean Energy Finance Corporation (CEFC) and a $98.5m placement and accelerated non-renounceable entitlement offer (ANREO) at 50 cents per share, an 18% discount to the last closing price, and 16% discount to the 5-day VWAP.

 

The SFA incorporates no refinancing restrictions after 18 months, giving SO4 the flexibility to utilise non-dilutive financing options for early works at its next lake development. Currently, a trade-off study is underway with the next lake development decision expected in 1H 2021.

 

SO4 said incorporating the CEFC into the Taurus SFA provides ‘a strong endorsement’ of its contribution to reducing carbon emissions from the fertiliser and agriculture industries. It follows the recent grant of 'Green' label certification for debt issued to develop Lake Way.

 

CEFC’s Chief Executive Officer, Ian Learmonth commented, "SO4 will sustainably produce SOP, helping to decarbonise agriculture while meeting the growing demand for food.”

 

Shares in Salt Lake Potash have increased from lows of 22p in the past three months to recent highs of 35p. This morning, shares were trading 9.29% lower at 31.75p.

 

“At the same time, the CEFC is supporting the development of a new export industry for WA, providing another great example of the economic benefits of transitioning to lower emissions.”

 

Working with the CEFC, SO4 said it aims to set new sustainable benchmarks for Australian industry and demonstrate how resources projects can be decarbonised economically.

 

At full production of 245 kilotons per annum of SOP, the Lake Way project is expected to generate EBITDA of A$111m and an average annual after tax free cash flow of A$78m.

 

"Completion of this financing package is a major milestone in SO4's evolution,” said Tony Swiericzuk, Chief Executive Officer of Salt Lake Potash.

 

He added, “It enables the Company to deliver the Lake Way Project on schedule and sets up the business for growth into the future as we pursue our vision of a multiple lake SOP Province in Western Australia.”

 

In addition, and to conclude financing for the Lake Way project, the Company is conducting a fully underwritten A$98.5m equity raise by way of a Placement and ANREO.

 

This will issue 197,074,523 new ordinary shares, which represents around 56% of existing ordinary shares on issue, to be issued at a fixed offer price of A$0.50 per share.

 

SO4 said Euroz Securities Limited and Canaccord Genuity (Australia) Limited have been appointed as joint lead managers and joint underwriters and bookrunners to the equity raising.

 

Eligible institutional shareholders are invited to participate in the accelerated institutional component of the Entitlement Offer, which is being conducted from today, the group said.

 

SO4 is now in a trading halt on ASX until the results of the Institutional Entitlement Offer and placement are released to ASX, which is anticipated to occur on 11 August 2020.

 

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