Australian Potash Ltd (ASX:APC) is making progress on its Lake Wells Sulphate of Potash Project (LSOP), with 17 of 79 planned bores operational.
In October the company started its bore performance verification program, which is critical to ensure the ongoing success of the project.
Real-time testing of pump flow rates is giving the company its clearest indication that LSOP will deliver on its promise.
“The LSOP carries Australia’s largest JORC-compliant measured resource of sulphate of potash (SOP) precisely because it is data rich,” managing director and CEO Matt Shackleton said.
“The current focus of our approach to developing this resource, in addition to continued bore development, is the bore performance verification program.”
“Lake Wells will be a 100% borefield brine extraction project. We will not rely on trenching for brine supply. The pre-production pumping program will confirm the metrics at each bore, primarily grade and flow rates. These are key measures of our method.”
The company has recruited experienced SOP plant personnel to prepare for operational readiness through construction.
“Potash production is an emerging industry in Australia, so we are taking a global approach to sourcing the required operational expertise, just as we have successfully done throughout the evaluation and planning phases of the project," said Shackleton.
“We believe placing the right people into vital positions early in the development program will help ensure the LSOP achieves its operational goals.”
Pump test program
Where bore pumps are used it is critical that each newly constructed bore is pump tested to assess efficiency, determine the maximum flow rate from the bore and provide critical input in the flow model that ultimately determines the long-term pumping rate.
The company is conducting pump testing to reconcile the modelled early-time flow rate at each bore with the actual early-time flow rate likely to be recorded in operations.
Evidence from short-term testing is consistent with the currently modelled flow rates, which is good news.
A critical concentration of potassium is required to make a sulphate of potash (SOP) product. At levels below that concentration, the costs of abstraction make the process unviable in most pricing environments.
Reconciliation to the hydro model
At an earlier stage of engineering and design, external consultants AQ2 developed a hydrogeological model for the proposed development of the plant. This model is constantly being updated with additional data as it is generated in the field.
Short-term pump testing has been promising so far.
“Flow rates observed in initial testing are consistent with the LSOP’s hydrogeological model," Shackleton said. “This is a very encouraging start and reflects the level of understanding our team has of the 18.1 million-tonne resource.”
Short-term pump testing is set to continue for the next few weeks, with a transition to extended testing scheduled to start towards the end of this year.
Lenders are on board
Commercial lenders, who form part of the company’s syndicated debt facility, have been provided with an independent technical expert’s report on the project and are now progressing credit approvals.
The company is focusing on optimising its capital estimates ahead of a final investment decision.
“Those banks are now progressing those credit applications and we look forward to providing shareholders with an update on those processes presently.”
“We are pleased to report that the bore development program is now well ahead of the project schedule’s critical path," Shackleton said. “In line with that schedule, the field team will now revert to single shift drilling until March 2022. This allows the allocation of resources to other critical path items such as detailed vessel design.”
What's next
- Commercial banks’ credit approvals process finalisation; documentary close on syndicated debt facility
- Bore drilling and development to continue with a target of between 30% and 50% of the borefield by volume developed through Q1 2022
- Short term pumping testing to continue, with a transition to extended testing towards the end of Q4 2021/beginning of Q1 2022
- Processing test-work program to be accelerated to facilitate detailed vessel sizing and design
- Capital estimates being optimised ahead of final investment decision.