South Harz Potash Ltd (ASX:SHP) has locked in landowner and tenant approval to execute the second of two planned confirmatory drill holes within its Ohmgebirge mining licence in Germany.

Now it has received the regulatory green light, the potash exploration and development company intends to push ahead with a formal application to drill the site.

South Harz will prepare final, supplementary information for regulatory authority Thüringer Landesamt für Umwelt, Bergbau und Naturschutz (TLUBN), while detailed drill planning is now underway.

The ASX-lister has already appointed a drilling specialist to work at the first of the twin drill holes — now, SHP hopes to transition the contractor to the second drill site once work completes at the first hole.

Ultimately, drilling the two confirmatory holes will allow South Harz to upgrade the Ohmgebirge mineral resource to indicated status.

Map of the two planned drill holes at Ohmgebirge

“A clear path”

South Harz Potash managing director Dr Chris Gilchrist said: “I am pleased to have now secured landowner and tenant permission to drill the second of two holes in the Ohmgebirge mining licence area, enabling the team to focus on drilling and completing the scoping study.

“Our efforts to secure these sites have been hampered by COVID travel restrictions, but our senior personnel are now able to go to Germany and have engaged with stakeholders on a face-to-face basis to achieve this.

“We are also fortunate to have secured drillers during this post-pandemic surge in demand for contract services and we can now see a clear path to the delivery of our objectives.”

Twin drill holes

Today’s announcement comes just over a week after South Harz appointed a specialist driller to explore at its pioneer potash asset.

Colloquially known as Angers, the drilling contractor is set to drill the first of two confirmatory holes at the potash play in 2021’s final quarter.

Speaking to the appointment, Gilchrist said: “I am pleased that we have agreed on the first of the drill sites at Ohmgebirge and importantly secured a specialist drilling contractor, which are currently in short supply as a result of the post-COVID resources and materials rush in Europe.

“The team in Germany has worked hard to navigate the communications challenges caused by the COVID pandemic and will continue to do so to mitigate any further delays.

“The potash market has picked up significantly over the past few weeks as post-COVID food security fears have fuelled substantial crop price increases which, in turn, has driven fertiliser sales and prices upwards providing a favourable backdrop to develop the first of our exciting potash projects within the heart of Europe.”

Resource upgrade and scoping study

SHP’s existing inferred resource stands at 5.3 billion tonnes, with the flagship Ohmgebirge project making up 325 million tonnes of that resource, grading 13.1% potassium oxide.

It’s hoped results from both confirmatory holes will allow South Harz to upgrade the current Ohmgebirge resource to the indicated category.

Beyond that, the revised mineral resource estimate will allow South Harz to report technical and economic information about Ohmgebirge for the first time in a scoping study.

Essentially, the study will include a detailed resource assessment by Micon International Co Ltd and results from the twin drill holes.

Once a revised estimate is complete, K-Utec Salt Technologies GmbH will review the scoping study’s mining and processing sections and update both capital and operating costs.

The study will also include an expert appraisal of the potash and industrial salt markets and provide guidance price forecasts for a financial model.

South Harz anticipates it can complete the scoping study in 2022’s first quarter.