Announcement PDF ASX Announcement 28 January 2016 _____________________________________________________________________________________ DECEMBER 2015 QUARTERLY REPORT COMPANY DETAILS ABN: 62 147 346 334 HIGHLIGHTS PRINCIPAL REGISTERED OFFICE Potash West NL Suite 3 23 Belgravia Street Belmont WA 6104 POSTAL ADDRESS PO Box 588 Belmont WA 6984 AND Dandaragan Trough • Pre-Feasibility work in progress. • Phosphate prices remain strong. W www.potashwest.com.au South Harz Project, Germany • EGM for Davenport demerger from Arunta Resources scheduled for 19 February. • Davenport listing forecast for March-April 2016 E info@potashwest.com.au Dandaragan Trough Project P +61 8 9479 5386 Potash West NL (“Potash West” or “the Company”) has continued to advance the Dinner Hill Potash and Phosphate Deposit, located some 200km north of Perth in Western Australia, Figure 1. Dinner Hill forms part of the larger Dandaragan Trough landholding, where Potash West holds over 2,600km2 of exploration tenure. Sedimentary rocks within the trough contain glauconite, a potash rich mica, and phosphate nodules. The objective is to produce phosphate and potash fertilisers and a range of valuable by-products from the phosphate and glauconite present within the sediments of the Dandaragan Trough. F +61 8 9475 0847 ASX CODE PWN FRANKFURT CODE A1JH27 OTC PINK CODE PWNNY CORPORATE INFORMATION 28 January 2016 232M Ordinary shares 36M Partly paid shares 18M Listed Options 3M Unlisted options BOARD OF DIRECTORS Adrian Griffin (Non-Executive Chairman) Patrick McManus (Managing Director) Chew Wai Chuen (Non-Executive Director) Natalia Streltsova (Non-Executive Director) 1 Potash West NL – Quarterly Report December 2015 Figure 1: Location plan, Dandaragan Trough Project 2 Potash West NL – Quarterly Report December 2015 Mineral Resource The Dinner Hill Resource now covers an area of some 18km2. The resource is shown below. Dinner Hill Deposit Resource Summary 1 Resource Category Phosphate Potash Potash resources included within the phosphate resource area Indicated Tonnes (Mt) 250 Indicated Inferred Totals 155 20 175 4.1 2 3.8 Indicated 18 3.8 175 20 195 4.0 2 3.8 Potash resource outside the phosphate resource area Total Potash Resources Indicated Inferred Totals Note: Totals may differ from sum of individual items due to rounding P2O5 (%) 2.9 K 2O (%) 1 – ASX release 03 June 2015. The Dandaragan Trough project has unique advantages of excellent connectivity to transport facilities, infrastructure and proximity to local and regional markets. The Dinner Hill resource is located less than 200km from two major bulk export ports, Kwinana and Geraldton and is well situated in relation to major project infrastructure. Dinner Hill PreFeasibility Study Based on the new phosphate Indicated Mineral Resource of 250 Mt at 2.9% P2O5 , a new mining plan was developed. The scoping study completed in 2013 (refer ASX announcement: 19 Sept 2013) has been updated. Major changes have been: • • • • • • • Mining inventory increased from 80 Mt @ 2.8% to 237 Mt @ 2.9% P2O5. Mine life, for modelling purposes, increased from 20 years to forty years ( 150Mt of ore, 63 % of inventory). Selling price of single superphosphate, dropped from US$ 350 to US$227/t. Exchange rate dropped from $A/$US 90c to 70c. Average selling price dropped from $A370 to $A 320/t. Capital cost estimate increased from $A136 to $A205 M, due to inclusion of a sulphuric acid plant. Operating cost estimate reduced by 10%, due to reduction in mining and oil costs. The update was reported to the ASX on 30 September 2015. Key metrics are: • Project NPV $378 million • Capital Costs $205 million • EBITDA, pa $52 million • Revenue, pa $128 million • Cash costs, pa $76 million • Ore grade, o first 10 years 4.9% P2O5 o 40 years 3.5% P2O5 3 Potash West NL – Quarterly Report December 2015 These results indicate the possibility of a long-lifed, significant scale project. This will underpin the longterm development of Dinner Hill as a supplier of fertilisers to the region, with the cashflow from phosphate production financing the progression of the K-Max project. Metallurgical testwork on a range of samples from Dinner Hill is in progress. Prices for phosphate products remain steady, with phosphate rock $US123/tonne (FOB Morocco) and single superphosphate $US 298/tonne (CPT Brazil) (CRU-Fertiliser Week). Technology The K-Max process has been developed by our technology partners, Strategic Metallurgy (SM). The development was financed by the Company and the IP is 100% owned by Potash West. SM have built upon the K-Max technology and developed an innovative process to extract Lithium from micas such as Lepidolite and Zinnwaldite. In recognition of the importance of the K-Max process as a base for Lithium extraction, SM agreed to vest 25% ownership of the Lithium technology to Potash West, this takes the form of shares in a public unlisted company, Lepidico. Lepidico’s activities are reported on its website: www.lepidico.com.au. As the Lepidico project has advanced PWN has been diluted and the current shareholding is 13%. PWN and SM will work together to maximize the value of this IP to the benefit of both parties. SM has issued licences to use the technology to Lithium Australia (formerly Cobre Montana) (ASX:LIT) (refer CXB announcement 26 September 2014). Lithium Australia is pursuing opportunities to meet the demands of a rapidly growing Lithium market. South Harz Project The Company has earned a 55% interest in a company, East Exploration Pty Ltd (EE), which holds exploration licences in the South Harz region of Germany, (Figure 2). The South Harz region has a long history of potash mining, dating back to the late 1890s. Extensive exploration work and R&D was carried out in the period from the 1960s to the 1980s. This confirmed that substantial potash deposits in the form of sylvinite (KCl/NaCl) and carnallite (KCl/MgCl) still remain in this region. A review of some the archived exploration data relating to historical drilling on Küllstedt has been completed and an Exploration Target estimated. This work confirmed the potential of the project to host thick sequences of sylvinite and carnallitite mineralisation over wide areas. A summary report is contained within the ASX announcement of 4 March 2015 and the full documentation provided by the Company’s geological consultants is available on the Potash West website. Planning is in progress for a verification drilling program which is expected to consist of a 3 to 4 confirmatory holes which could allow reporting of a JORC compliant Inferred Mineral Resource. The Company, and the other owners of EE, commenced negotiations with Arunta Resources (ASX:AJR), as reported to the ASX on 18th August 2015. The objective is to vend 100% of East Exploration into Davenport Resources (Davenport), in return for shares. The vending of the Company’s shareholding in EE was approved by shareholders at the AGM on 30 November 2015. The Arunta EGM, required to approve the demerger of Davenport Resources, is scheduled to be held on 19 Feb 2016. Davenport intends to list onto the ASX via a Prospectus offering to raise a minimum $4M with over subscriptions of a further $1M, sufficient for the verification drilling programme. On completion of a successful IPO, EE will be sold to Davenport, in return for shares. 4 Potash West NL – Quarterly Report December 2015 Post listing Potash West will own approximately 20 million Davenport shares (approximately 29% of the issued capital), plus performance shares to be issued on achieving certain project milestones. As part of the transaction Arunta has advanced $100,000 to East Exploration, and will forward a further $150,000, to fund work on planning the proposed drilling programme. 5 Potash West NL – Quarterly Report December 2015 Figure 2: South Harz Project Location 6 Potash West NL – Quarterly Report December 2015 CORPORATE Announcements The following ASX announcements were made during the quarter: • • • • • • • • • • • • • December 23, 2015 December 23, 2015 December 17, 2015 December 14, 2015 November 30, 2015 November 30, 2015 November 18, 2015 November 16, 2015 October 29, 2015 October 26, 2015 October 21, 2015 October 13, 2015 October 07, 2015 Response to ASX price query Question and Answer Session Listed Options ASX Code Appendix 3B Results of Meeting AGM Presentation s708A Notice, Appendix 3B and 3Y’s Option Expiry and Appendix 3Y’s Notice of Annual General Meeting/Proxy Form Expiry of Options Quarterly Activities and Cashflow Reports s708A Notice, LR3.10.5A Notice and Appendix 3B Amended Potash West Presentation October The following announcements were made subsequent to 31 December 2015: • January 15, 2016 Response to ASX price query • January 22, 2016 PWN Investor Briefings Cash on Hand At 31 December 2015, $1.4 million cash was available. Tenement Summary The following information is provided in accordance with ASX Listing Rule 5.4.3: Country Tenement Tenement Interest held at 1 July 2015 Interest acquired / disposed of during quarter Tenement Interest held at 30 September 2015 WA WA WA WA WA WA WA WA WA WA WA E70/3418 E70/3987 E70/3988 E70/3989 E70/4124 E70/4137 E70/4138 E70/4139 E70/4471 E70/4609 E70/4687 100% (1) 100% (1) 100% (1) 100% (1) Pending 100% 100% 100% 100% 0% Pending N/A N/A N/A N/A N/A N/A N/A N/A N/A 100% N/A 100% 100% 100% 100% Pending 100% 100% 100% 100% 100% Pending (1) Denotes Beneficial holding of the Mineral Rights to Glauconite & Phosphate, and any byproducts resulting 7 Potash West NL – Quarterly Report December 2015 For further information contact: Potash West NL: Patrick McManus Managing Director Tel: +61 (08) 9479 5386 Email: info@potashwest.com.au Web: www.potashwest.com.au About Potash West Potash West (ASX:PWN) is an exploration company focused on developing large greensand deposits in West Australia’s Perth Basin. The Company aims to define a substantial resource base and investigate how best to recover phosphate, potash and other minerals from the Dandaragan Trough. The project is well situated in relation to infrastructure, with close access to rail, power and gas. A successful commercial outcome will allow the Company to become a major contributor to the potash and phosphate markets at a time of heightened regional demand. The Company has a major land holding over one of the world’s largest known glauconite deposits, with exploration licenses and applications covering an area of over 2,600km2. Previous exploration indicates glauconite sediments are widespread for more than 150km along strike and 30km in width. Current JORC compliant Indicated Mineral Resources stand at 250Mt at 2.9% P2O5 of phosphate mineralisation and 175Mt at 4.2% K2O, amenable to processing by the K-Max process. A pre-feasibility is in progress for stage 1, production of phosphate fertilisers. The company has 55% of a potash exploration project in the South Harz region of Thuringia, in Central Germany. The region has been a potash producing area for over 100 years. Competent Person’s Statement: Dandaragan Trough Project The production targets and other information in this announcement that relate to Mineral Resources, are based on, and fairly represent, the Mineral Resource and supporting documentation extracted from the reports which have been prepared by a Competent Person in compliance with the JORC Code (2012) and released to ASX by the Company on 03 June 2015 and 22 July 2015. Potash West confirms that it is not aware of any new information or data that materially affect the information included in the original announcements. All material assumptions and technical parameters underpinning the Mineral Resource estimate in those previous ASX releases continue to apply and have not materially changed. The Company further confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. 8 Appendxi 5B Mining exploration entity and oil and gas exploration entity quarterly report Rule 5.5 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/2013 Name of entity Potash West NL ABN Quarter ended (“current quarter”) 62 147 346 334 31 December 2015 Consolidated statement of cash flows Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for 1.3 1.4 Dividends received Interest and other items of a similar nature received Interest and other costs of finance paid Income taxes paid Other (Government grant and R&D refund) Net Operating Cash Flows 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 (a) exploration & evaluation (b) development (c) production (d) administration Cash flows related to investing activities Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets Loans to other entities Loans repaid by other entities Other (provide details if material) Net investing cash flows Total operating and investing cash flows (carried forward) + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Current quarter $A’000 Year to date (3 months) $A’000 (161) (294) (340) (692) 5 11 (496) 179 (796) - (3) (496) (3) (799) 9 Appendxi 5B Mining exploration entity and oil and gas exploration entity quarterly report 1.13 (496) (799) - 761 - (90) 671 Net increase (decrease) in cash held (496) (128) 1.20 1.21 Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20 1,910 1,542 1.22 Cash at end of quarter 1,414 1,414 1.14 1.15 1.16 1.17 1.18 1.19 Total operating and investing cash flows (brought forward) Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other (Equity Raising Costs) Net financing cash flows Payments to directors of the entity, associates of the directors, related entities of the entity and associates of the related entities Current quarter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 1.24 Aggregate amount of loans to the parties included in item 1.10 1.25 Explanation necessary for an understanding of the transactions 109 Item 1.23 relates to Directors Remuneration, Directors Fees and Superannuation Contributions. Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows + See chapter 19 for defined terms. 01/05/2013 Appendix 5B 10 Appendxi 5B Mining exploration entity and oil and gas exploration entity quarterly report 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest Financing facilities available Add notes as necessary for an understanding of the position. Amount available $A’000 3.1 Loan facilities 3.2 Credit standby arrangements Amount used $A’000 Estimated cash outflows for next quarter $A’000 4.1 Exploration and evaluation 200 4.2 Development 4.3 Production 4.4 Administration 300 Total 500 Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. 5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter (item 1.22) + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Current quarter $A’000 Previous quarter $A’000 1,414 1,910 1,414 1,910 11 Appendxi 5B Mining exploration entity and oil and gas exploration entity quarterly report Changes in interests in mining tenements and petroleum tenements Tenement reference and location 6.1 6.2 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed Interests in mining tenements and petroleum tenements acquired or increased Nature of interest (note (2)) Interest at beginning of quarter Interest at end of quarter NIL N/A N/A NIL NIL N/A N/A NIL Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates. Total number 7.1 7.2 7.3 7.4 Preference +securities (description) Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions +Ordinary securities Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) 232,326,236 35,960,024 232,326,236 35,960,024 Fully paid $0.001 Fully paid $0.049 1,471,355 110,903 64,363 1,471,355 110,903 64,363 $0.039 $0.031 $0.053 $0.039 $0.031 $0.053 12 Appendxi 5B Mining exploration entity and oil and gas exploration entity quarterly report 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 +Convertible debt securities (description) Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted Options (description and conversion factor) Issued during quarter Exercised during quarter Expired during quarter Debentures (totals only) Unsecured notes (totals only) 100,000 100,000 500,000 1,992,188 17,750,000 17,750,000 17,750,000 17,750,000 Exercise price $0.400 $0.600 $0.150 $0.087 $0.070 $0.070 Expiry date 8 September 2016 8 September 2016 7 February 2017 6 November 2017 30 November 2018 30 November 2018 1,000,000 1,350,000 - $0.130 $0.355 25 October 2015 13 November 2015 Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5). 2 This statement does give a true and fair view of the matters disclosed. Sign here: Patrick McManus (Director) Print name: Patrick McManus + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Date: 28 January 2016 13 Appendxi 5B Mining exploration entity and oil and gas exploration entity quarterly report Notes 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements and petroleum tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement or petroleum tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. == == == == == + See chapter 19 for defined terms. 01/05/2013 Appendix 5B 14