When we think of the ASX’s top commodities, fertiliser and clay don’t necessarily spring to mind.
Nevertheless, ASX-listed potash and kaolin stocks have been hard at work developing their projects over 2022’s June quarter.
From funding arrangements to drilling programs, the last three months have been a hive of activity for companies in these niche resource sectors.
But before we look at what they got up to, how did the commodity markets fare?
Demand for kaolin and potash remains high
In late June, Valuates Reports forecast the global kaolin market would reach US$8.4 billion in value by 2028, representing a compound annual growth rate (CAGR) of 4% between now and then.
That’s because kaolin’s versatility and appeal to end markets make it a mineral on the rise — from paper to plastics and cosmetics to pharmaceuticals, kaolin has many applications.
And thanks to its status as an industrial chameleon, demand across the ceramics, paint and rubber industries is set to help the kaolin market grow.
Demand is also high among the potash markets — a phenomenon only exacerbated as major suppliers like Belarus and Russia are cut off from the larger market.
Source: S&P Global Market Intelligence.
Amid the resulting supply disruptions, the broader industry — previously expected to reach US$21.62 billion in value by 2026 — is expected to fall short of that prediction.
But with the supply squeeze comes a price hike and agriculture company Mosaic’s president and CEO James O’Rouke said it best: "Consumption will be forced to adjust to available supply.”
So, what does this all mean for ASX-listers in the business? We break down their quarterly performance below.
In the spotlight: ASX potash stocks
Australian Potash
Australian Potash Ltd (ASX:APC) kept the meter running at its Lake Wells Sulphate of Potash Project over the June quarter.
The company worked on an updated hydrogeological flow model for the project, which indicates it can achieve a higher SOP production rate than what was originally forecast in a front-end engineering and design study.
The company also bolstered its expertise, with Tony Dominkovich joining the APC team as project manager.
Speaking to the company’s next steps, APC managing director Matt Shackleton said the rest of 2022 was about bringing Lake Wells into its next chapter.
“We continue to engage with debt and potential equity partners and anticipate being able to update shareholders further on this work through the balance of quarter three and into quarter four,” Shackleton explained.
Danakali
Potash project developer Danakali Ltd (ASX:DNK, LSE:DNK, OTC:SBMSF) also had its heart set on advancing financing discussions over the June quarter.
SOP from the Colluli project. Source: Danakali.
Together with CMSC, which is on track to become a leading SOP producer and exporter, the ASX-lister is developing the Colluli Potash Project in Eritrea, East Africa.
Colluli is home to the world’s largest JORC-compliant solid salt SOP reserve and Danakali hopes to be the world’s first zero-carbon SOP producer.
As it progresses this vision, Danakali capped off the June quarter with just shy of $18 million in the bank.
Highfield Resources
Spanish potash developer Highfield Resources Ltd (ASX:HFR) used the June quarter to kick off initial construction work at its Muga potash mine.
Artist’s impression of the Muga project’s processing plant. Source: Highfield Resources.
The ASX-lister also executed a financing mandate letter with a group of experienced European mining finance lenders, resulting in a €312.5 million senior secured project financing package.
Beyond this agreement, Highfield inked a non-binding, indicative, term sheet with a division of Macquarie Group, setting up a €23.3 million equipment operating lease facility.
Speaking to the quarter’s achievements, CEO Ignacio Salazar said: We feel proud of the milestones achieved, and our focus is now to move Muga forward through construction …
“[We feel] a great sense of responsibility and gratitude to our shareholders, our staff and support teams, the banks, the community, the authorities and all stakeholders who have helped us to get to this point.”
South Harz Potash
South Harz Potash Ltd (ASX:SHP) met a key milestone this quarter, completing its confirmatory, two-hole drilling program at the Ohmgebirge project in Germany.
Ohmgebirge mining licence and confirmatory drill holes. Source: South Harz Potash.
This led to a key mineral resource update, which brought the Ohmgebirge resource up to 338 million tonnes at 12.9% potassium oxide.
Now, South Harz is onto the scoping study phase, with the key document slated for release later this month.
In the spotlight: ASX kaolin stocks
Latin Resources
In tandem with its Brazilian lithium endeavours, Latin Resources Ltd (ASX:LRS) spent the June quarter developing its Cloud Nine Halloysite-Kaolin deposit in WA.
An infill drilling campaign netted “significant thicknesses” of exceptionally bright kaolinised granite, while geotechnical drilling brought the company one step closer to updating the Cloud Nine JORC resource.
A diamond drill rig setting up on-site at Cloud Nine.
Now, Latin is focused on the permitting and approvals process, which will give it the green light to excavate a trial mining test pit — the next chapter in the Cloud Nine story.
Suvo Strategic Minerals
Suvo Strategic Minerals Ltd (ASX:SUV) netted $3.86 million in revenue from its Pittong hydrous kaolin operations over the June quarter, leading to $217,000 in net cash flow.
But the company has grander plans in mind, and it’s undertaking research and development trials to expand its conversion of kaolin into value-adding metakaolin and high reactivity metakaolin (HRM).
Australia is largely considered an import market for HRM, fetching between US$530 and US$840 a tonne, so a local player is poised to make waves.
Suvo also plans to grow its earnings by increasing the weighted average value of its products and diversifying into premium end markets like the cosmeceutical and pharmaceutical sectors.
Post-quarter-end, Suvo’s Pittong mining licence renewal application was also approved.
Andromeda Metals
Andromeda Metals Ltd (ASX:ADN) used the June quarter to cut the ribbon on a definitive feasibility study for its Great White Kaolin Project.
The company also brought new expertise on board, appointing Mick Wilkes and Austen Perrin as independent non-executive directors.
Beyond the boardroom, Andromeda inked a letter of intent with a global leader in the distribution of specialty chemicals and ingredients, and discussions are underway to progress a binding offtake agreement.
Andromeda also signed a binding halloysite-kaolin offtake term sheet with Asia Minerals Resources (AMR) after the quarter ended.
Outside of Great White, Andromeda spent the quarter drilling at its Chairlift and Halfpipe kaolin assets.
Aircore drilling in progress. Source: Andromeda Metals.