Announcement PDF ASX Announcement 25 July 2014 _____________________________________________________________________________________ QUARTERLY REPORT COMPANY DETAILS ABN: 62 147 346 334 PRINCIPAL REGISTERED OFFICE Potash West NL Suite 3 23 Belgravia Street Belmont WA 6104 POSTAL ADDRESS PO Box 588 Belmont WA 6984 Highlights • Phosphate Project Scoping Study updated, key points (Note 1): o EBITDA $48m per annum o NPV +$300m o IRR 30% o +20 year life AND The significant phosphate potential contained within the Dandaragan Trough Project in Western Australia continued to be a major area of focus for Potash West NL (ASX: PWN) during the June 2014 quarter. W www.potashwest.com.au F +61 8 9475 0847 Building on the metallurgical breakthroughs announced in the March quarter PWN updated the scoping study for the production of single superphosphate. Effective recovery of phosphate mineralisation from the Gingin Chalk has allowed lower cost bulk mining and reduced the overburden:ore ratio This has significantly lowered the operating costs and improved overall project economics. ASX CODE PWN Subsequent to the end of the quarter the Company undertook a capital raising, raising a total of $826,275 before costs. E info@potashwest.com.au P +61 8 9479 5386 OTC PINK CODE PWNNY CORPORATE INFORMATION (25 July 2014) 128M Ordinary shares 36M Partly paid shares 5M Unlisted options 8M Listed options (1) The Scoping Study referred to in this report is based on low-level technical and economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised. Unless otherwise stated all cashflows are in Australian dollars and are not subject to inflation/escalation factors. The Company has concluded that it has reasonable basis for providing the forward looking statements included in this announcement. The detailed reasons for that conclusion are outlined in the end paragraph headed “Forward Looking and Cautionary Statements”. BOARD OF DIRECTORS Adrian Griffin (Non-Executive Chairman) Patrick McManus (Managing Director) George Sakalidis (Non-Executive Director) Gary Johnson (Non-Executive Director) 1 Potash West NL – Quarterly Report July 2014 Dandaragan Trough Project Potash West has continued to consolidate its holdings associated with its flagship Dandaragan Trough project. It now holds exploration licenses and applications in the Dandaragan Trough, covering an area of +2,600km2. This project is focused on exploiting the large greensands deposits present in the Dandaragan Trough, which commences less than 100km to the north of Perth, Western Australia. The objective is to produce potash and single superphosphate fertilisers and a range of valuable by-products from the glauconite and phosphate present within the greensands. The greensands within the Dandaragan Trough are widespread. The Dinner Hill project area covers approximately 60 km2 in the north-west of the Trough. Within the project area PWN has established an exploration target of 1000Mt to 1500Mt of fresh greensand at a grade of between 4.0% and 4.8% K2O, 8% and 10% Al2O3, 12% and 14% Fe2O3, and 2.0% and 2.4% MgO. Included within the Exploration Target is 300-600Mt of phosphate mineralisation at a grade of between 1.5% and 3% P2O5. (refer ASX announcement 7 May 2013). The potential quantity and grade of the target is conceptual in nature, as there has been insufficient exploration to estimate a Mineral Resource over its area and as it is uncertain if further exploration will result in the estimation of a Mineral Resource. An area of approximately 9 km2 within Dinner Hill has been drilled to establish Indicated and Inferred Mineral Resources for potash (K-Max) and phosphate. The higher grade portion of the K-Max resource occurs in the Molecap Greensand. Nodular phosphate mineralisation at Dinner Hill occurs within a chalk unit, the Gingin Chalk and in upper and lower greensand units, the Poison Hill Greensand and the Molecap Greensand. Current resource figures are shown in table 1: (1) Phosphate Resource (All Indicated) Lower Cut-off Million Grade Grade Grade Tonnes (% P2O5) (% K2O) (% P2O5) 2.15 120 2.79 3.10 (2) K-Max Resource Unit Molecap Greensand Category Indicated Inferred Total Grade (% CaO) 8.17 Tonnes (Mt) K2 O % P 2O5 % 120 4.6 1.8 2 122 4.4 4.6 2.2 1.8 Table 1 Dinner Hill Resources (1) Refer ASX release 20 March 2014) (2) Refer ASX release 11 October 2012) The updated Scoping Study (ASX release 15 April 2014) shows a reduction in operating costs from $285/tonne of product, to $241/t, increasing EBITDA from $33 to 48 M per annum. This increases the project NPV from $218M to $331M. 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. 2 Potash West NL – Quarterly Report July 2014 The current time frame for commercialisation of the Dandaragan Project is: • Upgrade a significant portion of the current Indicated and Inferred Mineral Resources to the Measured category by April 2015 • Completion of a Feasibility Study by Dec 2015 • Completion of construction in Q4 2017 • Start-up of full scale production in Mid-2018. Corporate The Company continued its marketing programme. In the quarter it presented at the AMEC Conference in Perth. It has also engaged with a number of investors who are potential strategic partners to assist in progressing development activities on both the phosphate and K-Max projects. To preserve funds the Company has significantly reduced all discretionary expenditure, including salaries and director fees. These measures will stay in place until project activity increases. Announcements The following ASX announcements were made during the quarter: • S708A Notice, Appendix 3B & Appendix 3Y(10 April2014) • Strong Improvements to Phosphate Scoping Study (15 April 2014) • Change of Company Secretary (16 April 2014) • Change of Share Registry Address ( 23 April 2014) • Quarterly Activities and Cashflow Report (30 April 2014) • Barclay Wells Research Report (4 June 2014) • Change of Directors interest notice ( X 2) ( 10 June 2014) • Change of Directors interest notice ( 18 June 2014) • S708A Notice & Appendix 3B (20 June 2014) The following announcements were made subsequent to 31 June, 2014: • Trading Halt (07 July 2014) • Completion of $800,000 Placement (9 July 2014) • S708A Notice & Appendix 3B (14 July 2014) • Information Required Under ASX Listing Rule 3.10.5A ( 14 July 2014) • Cash on Hand At 30 June 2014, $0.164 million cash was available. $ 826,275 before costs was raised subsequent to period end 3 Potash West NL – Quarterly Report July 2014 Tenement Summary The following information is provided in accordance with ASX Listing Rule 5.4.3: Country Tenement Tenement Interest held at 31 March 2014 WA E70/3100 100% WA E70/3360 100% WA E70/3418 100% WA WA E70/3987 E70/3988 WA E70/3989 WA WA WA WA WA WA E70/4124 E70/4137 E70/4138 E70/4139 E70/4471 E70/4609 100% 100% Interest acquired / disposed of during quarter Tenement Interest held at 31 June 2014 (1) N/A 100% (1) N/A 100% (1) N/A 100% (1) N/A 100% (1) N/A 100% (1) N/A 100% N/A N/A N/A N/A N/A N/A Pending 100% 100% 100% Pending Pending 100% Pending 100% 100% 100% Pending Pending (1) Denotes Beneficial holding of the Mineral Rights to Glauconite & Phosphate, and any byproducts resulting For further information contact: Potash West NL: Media: Patrick McManus Managing Director Tel: +61 (08) 9479 5386 Web: www.potashwest.com.au Professional Public Relations Colin Hay Tel: +61 (08) 9388 0944 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 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 241Mt at 3.0% K2O, including 120Mt at 4.6% K2O amenable to processing by the K-Max process and 120Mt at 2.8% P2O5 of phosphate mineralisation. Forward Looking and Cautionary Statement: The scoping study referred to in this report is based on low-level technical and economic assessments and is insufficient to support any estimation of Ore Reserves or to provide assurance of an economic 4 Potash West NL – Quarterly Report July 2014 development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised. The use of the word “ore” in the context of this report does not support the definition of “Ore Reserves” as defined by the 2012 Edition of the ‘Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves. The word ‘ore’ is used in this report to give an indication of quality and quantity of mineralized material that would be fed to the processing plant and it is not to be assumed that ‘ore ‘will provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the scoping study will be realized. Certain statements contained in this announcement, including information as to the future financial or operating performance of Potash West and its projects, are forward-looking statements. Such forwardlooking statements are necessarily based upon a number of estimates and assumptions that, whilst considered reasonable by Potash West, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies; involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements; and may include, among other things, statements regarding targets, estimates and assumptions in respect of potash and phosphate production and prices, operating costs and results, capital expenditures, ore reserves and mineral resources and anticipated grades and recovery rates, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions. Forward-looking statements are necessarily based upon a number of estimates and assumptions related to future business, economic, market, political, social and other conditions that, while considered reasonable by Potash West, are inherently subject to significant uncertainties and contingencies Potash West disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. The words “believe”, “expect”, “anticipate”, “indicate”, “contemplate”, “target”, “plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and other similar expressions identify forward-looking statements. All forward-looking statements made in this announcement are qualified by the foregoing cautionary statements. Investors are cautioned that forward looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein. The Company is of the opinion that it has reasonable basis for providing the forward looking statements included in this announcement, including with respect to production targets, based on the information contained in this announcement and in particular the JORC 2012 Mineral Resource for Dinner Hill as of March 2014. This estimate was compiled by Continental Resource Management Pty Ltd. Additional independent metallurgical studies, determination of mining inventory, mine design and scheduling, external commodity price and operating cost data were undertaken by industry consultants. Competent Person’s Statement: The production targets and other information in this announcement that relate to Mineral Resources are based on, and fairly represent, the Mineral Resource and information and supporting documentation extracted from the report which was prepared by a Competent Person in compliance with the JORC Code (2012) and released to ASX by the Company on 20 March 2014. Potash West confirms that it is not aware of any new information or data that materially affect the information included in the original announcement. All material assumptions and technical parameters underpinning the Mineral Resource estimate in that previous ASX release continue to apply and have not materially changed. 5 Appendix 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 30 June 2014 Consolidated statement of cash flows Current quarter $A’000 Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 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 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 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 Page 6 Year to date (12 months) $A’000 (210) (897) (332) (1,590) 2 10 (540) 558 (1,919) (100) (540) (100) (2,019) Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 1.13 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 (540) (2,019) 5 1,146 (15) (10) (120) 1,026 (550) (993) 714 1,157 164 164 Net increase (decrease) in cash held 1.20 1.21 Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter 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 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 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 + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Page 7 77 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 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 300 4.2 Development 4.3 Production 4.4 Administration 200 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) Current quarter $A’000 Total: cash at end of quarter (item 1.22) + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Page 8 Previous quarter $A’000 164 714 164 714 Appendix 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 nil nil nil E70/4609 Application 26/05/2014 0% 100% 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 7.5 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 +Convertible debt securities (description) Number quoted 113,806,148 35,960,024 113,806,148 35,960,024 960,871 960,871 + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Page 9 Issue price per security (see note 3) (cents) $0.001 Amount paid up per security (see note 3) (cents) $0.049 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 7.6 7.7 7.8 7.9 7.10 7.11 7.12 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted Options (description and conversion factor) 100,000 100,000 500,000 1,250,000 1,350,000 8,221,457 1,000,000 500,000 8,221,457 - Exercise price $0.400 $0.600 $0.300 $0.280 $0.355 $0.300 $0.130 $0.150 Expiry date 8 September 2016 8 September 2016 8 September 2014 30 November 2014 13 November 2015 15 March 2015 25 October 2015 7 February 2017 Issued during quarter Exercised during quarter Expired during quarter Debentures (totals only) Unsecured notes (totals only) 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 /does not* (delete one) give a true and fair view of the matters disclosed. Sign here: Patrick McManus ............................................................ (Director/Company secretary) Print name: Patrick McManus ......................................................... 25 July 2014 Date: ............................ + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Page 10 Appendix 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 Page 11