Salt Lake Potash Ltd (ASX:SO4) has received a major boost to its finances with a A$10 million strategic investment from Equatorial Resources Ltd (ASX:EQX) as part of a A$15 million placement of convertible notes to corporate and institutional investors.
Equatorial has subscribed for A$10 million of unsecured convertible notes in the company following a detailed review by Equatorial focused on investigating opportunities related to Salt Lakes current financing requirements and operational progress.
Salt Lake Potash is in the final stages of completing a significant project financing that will support the development of its Lake Way Sulphate of Potash (SOP) Project in the Goldfields region of Western Australia.
The convertible note funds will allow the company to continue the rapid development of Lake Way as construction activities ramp-up through July 2020.
“Funding rapid development”
The Lake Way project could produce 245,000 tonnes of SOP for capital expenditure of A$264 million and with operating costs of A$302 per tonne, placing it in the first quartile of global SOP operations.
Construction of the Lake Way evaporation pond network and brine abstraction trenches began in quarter one 2019 and the project is now substantially progressed with plant practical completion and first revenues expected in quarter one 2021.
Salt Lake chief executive officer Tony Swiericzuk said: “We are pleased to complete this financing with the support of existing and new shareholders.
“These funds will enable the company to continue the rapid development of the Lake Way project on schedule, as site construction activity accelerates through July.
“Significant progress has been made on the debt financing in recent weeks and we expect to be in a position to deliver full project financial close in the weeks ahead.”
Equatorial believes Salt Lake Potash is undervalued and considers the timing of its investment in Salt Lake opportunistic.
The convertible notes provide Equatorial with a discounted investment entry price at a time when a number of near-term value catalysts have the potential to drive a significant re-rating of Salt Lake Potashs share price.
These catalysts include completion of project funding, completion of process plant construction, and commencement of production in quarter one 2021.
Convertible note placement
Salt Lake Potash has received commitments to raise A$15 million through the placement of unsecured and uRead More – Source