Australian Potash Ltd (ASX:APC) has secured its first major financing for the development of Lake Wells Sulphate of Potash (SOP) Project in Western Australia, with a $140 million debt financing facility from the Northern Australia Infrastructure Facility (NAIF).
Its shares were up almost 10% to 18 cents in early trade while the market cap sits at approximately $91.3 million.
The NAIF facility is one tranche of a multi-tranche debt facility, with Export Finance Australia progressing its due diligence and credit assessment to potentially provide a tranche of the senior debt facility.
A club structure of commercial banks is being formalised with an investment decision on providing the final tranche of the senior debt facility expected through the balance of the second half of the financial year 2021.
First major step in financing
Australian Potash managing director and chief executive officer Matt Shackleton said: “We are very pleased to advise the first major step in financing the development of Lake Wells, with the board of NAIF resolving to support this regionally important project that returns strong social and economic benefits.
“Approximately 30% by value of the construction EPC contracts will be awarded to companies in Northern Australia, and 20% by value to Indigenous companies and joint ventures.
“We continue to enjoy strong relationships with stakeholders in the local community of Laverton, most importantly with senior traditional owners.
“Through our initiatives including the Laverton STEM Program, the Laverton VTEC Program, and our local and indigenous employment commitments, we are able to tangibly demonstrate our commitment to improving economic and social values in the region.
Move into pre-mobilisation phase
“Financially, the NAIF facility offers a long tenor of 17 years and an interest rate that improves the opportunity for attractive returns to equity invested in the Project.
“We now turn our attention to closing out the balance of the development financing pathway, and to moving into the pre-mobilisation phase for the development of the Lake Wells Sulphate of Potash Project.
“Lake Wells is a substantially de-risked, technically sound, low-cost and socially responsible project that will deliver a premium product for at least 30 years.
“We now look forward to delivering the results of the FEED study and announcing a FID.”
NAIF facility
The NAIF 17-year facility is subject to commercial and project conditions precedent, including conclusion of the responsible Federal Minister’s consideration period as outlined in the NAIF Act 2016 and the State having notified NAIF that it agrees to the investment decision.
NAIF’s decision follows a comprehensive process of due diligence involving the project’s independent technical and market experts.
Lake Wells SOP
Australian Potash holds a 100% interest in the Lake Wells SOP Project, about 500 kilometres northeast of Kalgoorlie, in Western Australia's Eastern Goldfields.
The project will be a long-life, low capital and high margin SOP producer.