Growth Portfolio: Salt Lake Potash Ltd (ASX: SO4)
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Overview: Salt Lake Potash Ltd ("SO4", "the Company") is an Australian minerals company with operations in WA. Its most advanced asset is the Lake Wells Sulphate of Potash Project ("Lake Wells"), approximately 200km north of Laverton. SO4 has delineated a Sulphate of Potash ("SOP") resource of 80- 85Million tonnes ("Mt") at Lake Wells, classified as Measured, Indicated, and Inferred. A Scoping Study into an initial 200,000tpa operation was completed in August 2016, which estimated capital costs of $223million and operating costs of $241/t.
Catalysts: The Scoping Study highlighted the potential for Lake Wells to rank amongst the world’s lowest-cost sources of SOP in terms of operating cost and capital intensity. Delivery of a Pre Feasibility Study ("PFS") now underway, may reinforce its economic potential and address technical risks. In an industry with a tightly held supply base, procurement of offtake partners stands as a major value driver.
Hurdles: There are no guarantee existing resources at Lake Wells can be converted into reserves, or the potash resource economically mined. SO4 is reliant on external capital and is likely to require further funding prior to completion of its PFS. There is no guarantee it can procure the funds necessary to develop a mining operation at Lake Wells. The Scoping Study assumed SO4 can secure a circa 10% share of the SOP market without negatively impacting prices, neither of which is assured.
Investment View: SO4 offers speculative exposure to the potash mining industry. We are attracted to the Company's management team, resources delineated at Lake Wells, and its potential to deliver new low-cost SOP supply into domestic and international markets. With Australia yet to develop a commercial potash mine, principal risks include the Company’s technical capability and entry barriers imposed by existing producers in the SOP market. With the delivery of the PFS and offtake partnerships as the primary catalysts, we initiate coverage on SO4 as a ‘speculative buy’.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.