Australian Potash (APC) has signed a second memorandum of understanding (MoU) to sell up to 100,000tpa of sulphate of potash (SoP) to China’s Hubei Agricultural Means of Production Group from its Lake Wells project in Western Australia.
The latest development comes after the first offtake MoU was signed with Sino-Agri Holdings Company in connection with Lake Wells.
According to APC, the second MoU strengthens its position as it seeks to position itself in regional markets to supplement primary sales into the domestic Australian market.
APC executive chairman Matt Shackleton said: “Through the network that APC is beginning to develop within the mainland China potash industry, we have again been successful in executing an MoU with Hubei-Agri around supply of Lake Wells SoP.
“We have also begun expanding our network in China to consider areas such as equipment design and procurement.”
A feasibility programme is scheduled to begin soon and the company intends to optimise capital expenditure estimates through engagement with potential suppliers.
The execution of the MoUs is consistent with the strategy of establishing early customer engagement in parallel with the advancement of Lake Wells.
Under the two MoUs, APC will proportionally weigh sales between stage 1 (150,000tpa) and the full 300,000tpa production rate, which allows for the potential to capture a significant share of prevailing domestic Australian demand.
A scoping study on the project completed in March this year took into consideration a two-stage development programme.
Stage 1 of the project is expected to yield 150,000tpa SoP, while Stage 2 production rate is projected to be 300,000tpa.
The company expects an operating expenditure of A$368 a tonne SoP in the first five years and A$343 per tonne SoP over the mine-life.