Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (FRA:W1D) (OTCMKTS:WHELF) has inked a milestone native title agreement with representatives of the Tarlka Matuwa Piarku people for the Wiluna area that includes the company’s flagship sulphate of potash project in Western Australia

The company produced a bankable feasibility study for Lake Way project in October 2019 and considers the agreement with Tarlka Matuwa Piarku (Aboriginal Corporation) RNTBC (TMPAC) a milestone towards project development.

Salt Lake said today the 20-year mining project and agreement would bring “significant benefits to TMPAC and the broader community” and allow continuing development of Lake Way project.

Perth-based Salt Lake tipped the agreement would allow for rapid development of the high-grade low-cost Lake Way project.

The company said the agreement for the Northern Goldfields project would also provide employment and community participation involvement opportunities for people in Wiluna.

“Significantly positive”

Salt Lake Potash managing director and chief executive officer Tony Swiericzuk said, “We are excited to enter into this landmark agreement with TMPAC who we have a very strong relationship with.

“The agreement lays the foundations for the Lake Way project to have a significantly positive impact on the local community through direct employment and business opportunities as well as a project royalty stream.”

Swiericzuk said the agreement gave the project certainty and would allow it to proceed while respecting the heritage and culture of the area and sharing benefits with the community.

He said, “The Lake Way project has the ability to provide on-going benefits for the local community for multiple generations.”

Royalty payments will be shared with the community organisation which will grant indigenous heritage consents.

Employment and training programs will be among the outcomes of the agreement and heritage protection and land management opportunities.

A viable project

Salt Lake has three binding offtake agreements for 170,000 tonnes of potash a year or 70% of expected production of 245,000 tonnes a year once the company becomes a commercial operation.

When developed, Lake Way could have one of the lowest operating costs of any sulphate of potash operation globally with a C1 cash cost of A$302/tonne (US$205/tonne).

The company’s October 2019 BFS valued the project at A$479mln using a net present value calculated at an 8% discount, giving the project a post-tax IRR of 28%.

A pre-tax NPV8 was A$696mln while the accompanying IRR was 38%.

Steady-state project EBITDA was A$111mln annually with average annual after tax-free cash flow of A$78mln and A$83mln during the first five years.

Strong cash flow and low capital costs put the project’s payback period at an early 3.5 years.