Announcement PDF Parkway Minerals NL ASX ACN 147 346 334 Announcement 05 November 2020 ASX: FSE: Level 1, 675 Murray Street West Perth WA 6005 PO Box 1088 West Perth WA 6872 Australia T +61 8 9479 5386 parkwayminerals.com.au PWN 4IP COMPLETION OF KARINGA LAKES POTASH PROJECT PRE-FEASIBILITY STUDY (KLPP-PFS) Highlights PRE-FEASIBILITY STUDY • The KLPP-PFS confirms the KLPP as a potentially attractive producer of high-quality, soluble grade, sulphate of potash (SOP) targeting key horticulture markets. • Innovative aMES™ based flow sheet demonstrates potential (major improvement over scoping study), even for a relatively small-scale operation targeting annual SOP production of 40,000 tonnes, over an initial mine life of 20 years. • aMES™ based development concept demonstrates highly efficient use of water. • KEY FINANCIAL METRICS o Initial capital cost (CAPEX) of $80.0 million, inclusive of all non-process infrastructure and indirect costs (which includes a contingency of $6.7 million). o Production cost (OPEX) of $293/tonne of SOP, ex-mine gate. o Strong cash generation potential, with estimated EBITDA margin of 54.4%, resulting in annual EBITDA of $18.6 million. o Ungeared development of the KLPP would result in: Project payback in approximately 5.5 years from first SOP production. Post-Tax NPV8% of $80.15 million with an IRR of 20.4%. • Significant additional opportunities to improve the financial performance of the project were identified, particularly in relation to non-process infrastructure. • KLPP-PFS prepared by owners’ team, supported by leading industry consultants, with Worley as study manager, through existing Global Strategic Cooperation Agreement. MINERAL RESOURCE ESTIMATE • Reporting Indicated Mineral Resource of 1,000,000 tonnes of potassium, with 580,000 tonnes of potassium hosted within eight lakes that are incorporated into the mine plan. • The mine plan includes production of 430,000 tonnes of potassium, which is sufficient to underpin an initial mine life of 20 years, based on a scheduled production rate of 40,000 tonnes per annum of SOP. Parkway Minerals NL (ASX: PWN) (“Parkway Minerals” or the “Company”) is pleased to provide the following update, incorporating the release of two major reports: 1. The Karinga Lakes Potash Project – Pre-Feasibility Study (KLPP-PFS), Summary Report, which incorporates the below report, as Appendix A; 2. The Karinga Lakes Potash Project – Sulphate of Potash Resource and Production Plan (KLPP-SOPRPP). 1. Karinga Lakes Potash Project – Pre-Feasibility Study (KLPP-PFS) Summary Report The generalised development concept for the KLPP is outlined in Figure 1. Figure 1: Generalised Development Concept Outlined in the KLPP-PFS UPSTREAM OPERATIONS DOWNSTREAM OPERATIONS The attached KLPP-PFS Summary Report should be read in conjunction with the rest of this announcement, with particular attention given to the Important Information. 05 November 2020 | KLPP Pre-Feasibility Study Completion - ASX Announcement | 2 Karinga Lakes Potash Project – Sulphate of Potash Resource and Production Plan (KLPP-SOPRPP) 2. The resource utilisation plan for the KLPP underpinning the KLPP-PFS is outlined in Figure 2. Figure 2: KLPP Mineral Resource Estimate - Resource Utilisation in Mine Plan Mineralisation Contained in Drainable Porosity Indicated Mineral Resource contained in Total Porosity that meets reasonable prospects of economic extraction Production Potassium Tonnage Potassium Tonnage Potassium Tonnage (kt) (kt) (kT) 300 580 430 Sub total 220 430 Totals 520 1000 Lake Lakes included in the mine plan (x8) Sub Total Remaining Lakes (x16) 430 The attached KLPP - Sulphate of Potash Resource and Production Plan should be read in conjunction with the rest of this announcement, with particular attention given to the Important Information. The Mineral Resource estimate underpinning the production targets in this announcement were prepared by a competent person in accordance with the requirements of the JORC Code 2012. Important Information This announcement, including the, (1) KLPP-PFS Summary Report and the, (2) KLPPSOPRPP, should be read in its entirety, with particularly consideration given to each of the following sections: • Important Note • Cautionary Statements, Risk Factors and Disclaimer • Competent Persons Statement • Forward Looking Statements 05 November 2020 | KLPP Pre-Feasibility Study Completion - ASX Announcement | 3 Commentary Parkway Minerals – Managing Director, Bahay Ozcakmak commented: “Completion of the KLPP-PFS represents a significant milestone for Parkway Minerals, as this study confirms our long-held belief, that our aMES™ technology, has the potential to transform the high-grade, but relatively small-scale potash resource at the KLPP, into a viable project. Notwithstanding the inherent challenges of developing a small-scale greenfield project in Central Australia, including the development of necessary non-process infrastructure (NPI) such as an access road and power station, the KLPP-PFS also highlights the many advantages of the aMES™ technology. The ability of the aMES™ based flow sheet to produce the intermediate product sylvite (MOP), in order to synthesise SOP, is an inherent advantage over SOP projects that need (or plan) to, purchase MOP as a process input. The KLPP-PFS also highlights the merits of our highly water efficient development concept, as a result of the aMES™ based process plant. Additionally, it also achieves very high potassium recoveries, representing a significant improvement over conventional technologies.” “With these outstanding PFS results in hand, we will continue to engage with our JV partner, to determine the appropriate next steps for the KLPP. In addition to the KLPP, the KLPP-PFS provides Parkway Minerals with a strong foundation from which to progress commercial opportunities with other project developers/operators. In particular, those with existing operations which would benefit from the strategic application of the aMES™ technology. We have previously investigated the potential application of aMES™ technology for a range of projects, predominantly, in the energy and mining sectors. With the completion of the KLPPPFS, we look forward to providing further details, as evaluations of these projects progress. On behalf of Parkway Minerals, I’d like to take this opportunity to thank the entire project team for delivering this breakthrough study, particularly our colleagues at Worley, for their continued support in assisting us unlock significant value from our innovative aMES™ technology.” On behalf of Parkway Minerals NL. Bahay Ozcakmak Managing Director This announcement and the attached reports have been authorised for release by Bahay Ozcakmak (MD) on behalf of the Board of Parkway Minerals NL. Additional Information For further information contact: Bahay Ozcakmak Managing Director T: +61 414 596 007 E: bahay@parkwayminerals.com.au 05 November 2020 | KLPP Pre-Feasibility Study Completion - ASX Announcement | 4 Important Information This announcement, including the, (1) KLPP-PFS Summary Report and the, (2) KLPPSOPRPP, should be read in its entirety, with particularly consideration given to each of the following sections: • Important Note • Cautionary Statements, Risk Factors and Disclaimer • Competent Persons Statement • Forward Looking Statements Important Note Please refer to the assumptions, sensitivities, cautionary statements, risk factors and disclaimer in this announcement, as well as the relevant details in each of the KLPP-PFS Summary Report and KLPP-SOPRPP, as these may adversely impact upon the information, conclusions and forecasts outlined in this announcement. Cautionary Statements, Risk Factors and Disclaimer Certain statements in this study include estimates or future events that are forward-looking statements. They include indications of, and guidance on, future earnings, cash flow, costs and financial performance. Such forward-looking statements are provided as a general guide only and should not be relied on as a guarantee of future performance. When used in this report, words such as, but are not limited to, “could”, “planned”, “estimated”, “expect”, “intend”, “may”, “potential”, “should”, “projected”, “scheduled”, “anticipates”, “believes”, "predict", "foresee", "proposed", "aim", "target", "opportunity”, “nominal”, “conceptual” and similar expressions are forward-looking statements. Although the expectations reflected in these forward-looking statements are believed to be reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements. Forward-looking statements are provided as a general guide only and should not be relied on as a guarantee of future performance as they may be affected by a range of variables that could cause actual results to differ from estimated results and may cause actual performance and financial results in future periods to materially differ from any projections of future performance or results expressed or implied by such forward-looking statements. There can be no assurance that actual outcomes will not materially differ from these forward-looking statements. The contents of this study are also subject to significant risks and uncertainties that include but are not limited those inherent in technology commercialisation, mine development and production, geological, mining, metallurgical and processing technical problems, the inability to obtain and maintain mine licenses, permits and other regulatory approvals required in connection with mining and processing operations, competition for among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel, incorrect assessments of the value of projects and acquisitions, changes in commodity prices and exchange rate, currency and interest rate fluctuations and other adverse economic conditions, the potential inability to market and sell products, various events which could disrupt 05 November 2020 | KLPP Pre-Feasibility Study Completion - ASX Announcement | 5 operations and/or the transportation of mineral products, including labour stoppages and severe weather conditions, the demand for and availability of transportation services, environmental, native title, heritage, taxation and other legal problems, the potential inability to secure adequate financing and management's potential inability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be correct. Where the KLPP-JV partners, directors, officers, employees and/or consultants express or imply an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and on a reasonable basis. No representation or warranty, express or implied, is made that the matters stated in this study will in fact be achieved or prove to be correct. Competent Persons Statement The information in this announcement that relates to Exploration Results and Mineral Resources for the Karinga Lakes Potash Project is based on, and fairly represents, information compiled by Mr Ben Jeuken, who is a member of the Australian Institute of Mining and Metallurgy and a member of the International Association of Hydrogeologists. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company. Mr Jeuken has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which they are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Jeuken consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Forward Looking Statements As outlined above in the Cautionary Statements, Risk Factors and Disclaimer section, and on page 8 of this ASX announcement. 05 November 2020 | KLPP Pre-Feasibility Study Completion - ASX Announcement | 6 aMES™ Technology The activated Mineral Extraction System, or aMES™ is an innovative process technology that enables the treatment of concentrated brine solutions to recover a range of valuable compounds, reagents and fresh water. The technology utilises a proprietary multistaged process incorporating novel membrane technology and is based on proprietary IP, incorporating patents, expertise and know-how acquired over more than a decade of intense process development. Advantages of the aMES™ technology include: • improvements in mineral recovery and product quality, • opportunity for substantial project capex & opex savings, • efficient use of energy and produces pure water as a by-product, and • improved project footprint and environmental sustainability. Ongoing collaboration with a number of brine project developers and operators has confirmed there are many applications where the aMES™ technology has the potential to deliver substantial value by enhancing existing flowsheets, in order to improve overall project performance. aMES™ Brine Processing Technology Key Industries (Applications) • Mining natural brine (salt lakes) • Solution mining brine (potash) • Refinery & industrial waste brine • Wastewater treatment brine Target Products (Produced) • Potash (MOP/SOP/KMS) • Lithium and magnesium salts • Range of byproducts (B, Br, Ca, Co, Cu, I, Na, Ni, REE, Si, Sr) • Reagents • Water Additional Information www.parkwayminerals.com.au/ames-technology iBC™ Technology The integrated Brine Causticization, or iBC™ is a patented process technology that simultaneously removes common impurities from waste brine streams and converts sodium carbonates and bicarbonates commonly found in coal seam gas (CSG) brines, into more soluble sodium hydroxide. As a result of the causticization step, the iBC™ technology produces a purified brine suitable for downstream processing, including with the aMES™ technology, for the production of various salt products and industrial-grade sodium hydroxide. iBC™ Brine Pre-Treatment Technology Key Industries (Applications) • Oil & gas waste brine (CSG) • Wastewater treatment brine Target Products (Produced) • Sodium hydroxide concentrate Additional Information • Sodium chloride https://www.parkwayminerals.com.au/ibc-technology • Byproducts (Ca, Mg, Si) 05 November 2020 | KLPP Pre-Feasibility Study Completion - ASX Announcement | 7 About Parkway Minerals In October 2019, Parkway Minerals (ASX: PWN) completed a transformational transaction by acquiring an Australian unlisted public company, Consolidated Potash Corporation (CPC). Through CPC, Parkway Minerals acquired a minority interest in the Karinga Lakes Potash Project (KLPP) in NT Australia. The CPC transaction, also resulted in Parkway Minerals acquiring the innovative aMES™ technology, which has been developed to process a range of challenging brine streams from the mining industry, in order to recover valuable minerals, reagents as well as produce fresh water. Given the significant market opportunities, Parkway Minerals is focused on commercialising a worldclass technology portfolio to provide long-term sustainable solutions for processing complex brines, in the energy, mining and wastewater industries. In order to achieve this objective, Parkway Minerals is partnering with leading industry participants to provide, BPaaS – Brine Processing as a Solution™. Strategic Investment Parkway Minerals holds a strategic investment in Davenport Resources (ASX: DAV), which has successfully delineated a globally significant in-situ potash resource (in excess of 550 million tonnes of contained potash), at its South Harz project in Central Germany. Recently completed scoping studies have delivered excellent technical and economic results and provide Davenport Resources with an attractive opportunity to create and unlock substantial value. Parkway Minerals is commercialising a world-class technology portfolio to provide long-term sustainable solutions for processing complex brines, in the energy, mining and wastewater industries. Our mission is to collaborate with leading strategic partners to deliver: BPaaS – Brine Processing as a Solution™. Forward-Looking Statements This ASX Release may contain certain “forward-looking statements” which may be based on forward-looking information that are subject to a number of known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those presented here. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. Forward-looking information includes exchange rates; proposed or projected project or transaction timelines; uncertainties and risks associated with the advantages and/or performance of the Company’s projects and/or technologies; uncertainties and risks regarding the estimated capital and operating costs; uncertainties and risks regarding any envisaged timelines in relations to any results, milestones, partnerships, including but not limited to any milestones which may require obtaining approvals from third parties. For a more detailed discussion of such risks and other factors, see the Company’s other ASX Releases. Readers should not place undue reliance on forward-looking information. The Company does not undertake any obligation to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this ASX Release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. 05 November 2020 | KLPP Pre-Feasibility Study Completion - ASX Announcement | 8 Report 1 Karinga Lakes Potash Project Pre-Feasibility Study (KLPP-PFS) Summary Report 05 November 2020 | KLPP Pre-Feasibility Study Completion - ASX Announcement | 9 Karinga Lakes Potash Project PRE-FEASIBILITY STUDY KLPP-PFS KLPP – JOINT VENTURE SUMMARY REPORT 4 November 2020 SUMMARY REPORT Synopsis The Karinga Lakes Potash Project (KLPP) located in Central Australia (N.T.), is owned through an unincorporated joint venture (KLPP-JV) between Verdant Minerals Ltd and Parkway Minerals NL (ASX: PWN). The KLPP has undergone extensive resource exploration and appraisal over a number of years, which has resulted in the delineation of a potassium resource potentially suitable for potash production. This pre-feasibility study (KLPP-PFS) outlines an innovative (aMES™ based) processing route which may be suitable for developing the KLPP. The KLPP development concept involves the processing of naturally occurring hypersaline brines from a series of salt lakes, in order to produce 40,000 tonnes per annum (tpa) of high-purity sulphate of potash (SOP), over an initial mine life of 20 years. The aMES™ technology is owned by Parkway Minerals NL, which also holds a 1% royalty (NSR) interest over the KLPP. KLPP-PFS Basis of Preparation On 8 May 2020, Parkway Minerals signed a Global Strategic Cooperation Agreement with Worley Services Pty Ltd (hereafter “Worley”) to commercialise the aMES™ technology. On 11 May 2020, Parkway Minerals announced the commencement of the KLPP-PFS, through collaboration with Worley as study manager and supported by leading industry consultants and a range of key equipment vendors. ROLE IN KLPP-PFS Study Manager Preparation of Summary Report KLPP – Joint Venture Partner Mineral Resource Estimate and Production Plan Review of Land Tenure and Environmental Studies, Social Impact & Permitting KLPP-PFS – Summary Report This report represents a summary of the KLPP-PFS Disclaimer This report is provided on the basis that neither Parkway Minerals NL (the “Company) nor its respective directors, officers, employees, representatives, partners, consultants and advisers, and its related bodies corporate, make any representation or warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in this report. Nothing contained in this report is, or may be relied upon, as a promise, representation or warranty, whether as to the past or the future. Except for statutory liability, the Company hereby excludes, to the full extent of the law, all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this announcement or any error or omission there from. This report should be read in conjunction with Chapter 15 (Risks - Cautionary Statements, Risk Factors and Disclaimer). KLPP Pre-Feasibility Study (KLPP-PFS) | Summary Report ii SUMMARY REPORT Table of Contents 1. Executive Summary ...................................................................................................................... 11 1.1 Introduction ................................................................................................................................. 11 1.2 Mineral Resource Estimate.......................................................................................................... 11 1.3 Development Concept ................................................................................................................. 13 1.4 Key Financial Metrics ................................................................................................................... 14 2. Introduction ................................................................................................................................. 16 2.1 History .......................................................................................................................................... 16 2.2 Project Description ...................................................................................................................... 16 2.3 Reliance on Other Experts ........................................................................................................... 18 3. Climate, Weather and Site Conditions ........................................................................................... 19 3.1 Climate Data ................................................................................................................................ 19 3.2 Rainfall ......................................................................................................................................... 20 3.3 Evaporation.................................................................................................................................. 20 3.4 Geotechnical Assessment ............................................................................................................ 21 4. Mineral Resource Estimate ........................................................................................................... 23 4.1 Project Description ...................................................................................................................... 23 4.2 Sampling Techniques and Data ................................................................................................... 24 4.3 Estimation and Reporting of Mineral Resources ......................................................................... 26 5. Production Plan ............................................................................................................................ 34 5.1 Production Trench Design ........................................................................................................... 34 5.2 Brine Production Simulation ........................................................................................................ 34 5.3 Production Plan and Schedule ..................................................................................................... 37 6. Metallurgical Test Work Program .................................................................................................. 41 6.1 Metallurgical Test Work Program................................................................................................ 41 6.2 Validation of the aMES™ Model .................................................................................................. 48 6.3 Validation of the Process Model ................................................................................................. 50 7. Pond Design ................................................................................................................................. 51 7.1 Design Standards ......................................................................................................................... 51 7.2 Pond Design Parameters ............................................................................................................. 51 7.3 Pond Walls Design ....................................................................................................................... 52 7.4 Construction Materials ................................................................................................................ 55 8. Process Plant Design ..................................................................................................................... 56 8.1 Overview & Basis of Design (BOD)............................................................................................... 56 8.2 Process Flow Diagram .................................................................................................................. 59 8.3 Mass Balance ............................................................................................................................... 60 8.4 Energy Balance............................................................................................................................. 61 8.5 Water Balance ............................................................................................................................. 62 9. Non-Process Infrastructure (NPI)................................................................................................... 63 9.1 Buildings, Amenities and Accommodation .................................................................................. 63 KLPP Pre-Feasibility Study (KLPP-PFS) | Summary Report iii SUMMARY REPORT 9.2 9.3 9.4 9.5 9.6 9.7 9.8 General Site Layout...................................................................................................................... 67 Transport and Site Services ......................................................................................................... 69 Mobile Plant and Equipment ....................................................................................................... 70 Power ........................................................................................................................................... 75 Fuel .............................................................................................................................................. 76 Water ........................................................................................................................................... 77 Wastewater Treatment and Reticulation .................................................................................... 77 10. Marketing Studies ........................................................................................................................ 79 10.1 Product Specification ................................................................................................................... 79 10.2 General Marketing Strategy ........................................................................................................ 79 11. Economic Evaluation .................................................................................................................... 83 11.1 Capital Cost Estimate ................................................................................................................... 83 11.2 Operating Cost Estimate .............................................................................................................. 85 11.3 Financial Analysis ......................................................................................................................... 86 11.4 Next Steps & Funding .................................................................................................................. 89 12. Land Tenure ................................................................................................................................. 90 12.1 Overview ...................................................................................................................................... 90 12.2 Tenement Consolidation Process ................................................................................................ 90 12.3 Tenement Status in Relation to Mine Plan .................................................................................. 91 13. Environmental Studies, Social Impact and Permitting .................................................................... 93 13.1 Introduction ................................................................................................................................. 93 13.2 Environmental Impact Assessment Requirements ..................................................................... 93 13.3 Heritage & Exclusion Areas .......................................................................................................... 94 13.4 Licence & Permits