Mining vast salt lakes in Australia to provide premium fertiliser to help feed the world’s rapidly growing population

ASX-listed Salt Lake Potash dual-listed on AIM in 2011 as the uranium play Wildhorse Energy. In 2015, post a restructuring, Australia Salt Lake Potash was acquired, a company which owned two large-scale high-grade Sulphate of Potash (SOP) brine projects in Western Australia. Rapid progress has seen a Mineral Resource Estimate, a positive Scoping Study and validation of the technical viability which has culminated in an MOU for an offtake agreement with Mitsubishi which de-risks the project.

• Powerful agriculture megatrends see increasing demand for SOP

  Not only is the world’s population growing fast, but rising incomes mean increasing demand for higher value food crops. At the same time, urban growth means that there is less land left over for farming. So, fertilisers are becoming increasingly important to improve the efficiency of farming.

• World class SOP project that comes from a good stable

  The Goldfields Salt Lake Project covers a vast area with both very low operating costs and capital intensity in a safe jurisdiction. This is the hallmark of Apollo Group, which are also behind Prairie Mining and enjoy quite a following after successes with Mantra Resources, Papillon Resources and Berkeley Energia.

• First cash flow expected in 2020 & A$288m annual revenue from 2024

  Investors won’t have to wait too long until the project begins generating cash flow from SOP sales, unlike shareholders in £1.4bn market cap Sirius Minerals who seem to have been remarkably patient for many years now.

• Risked conservative NPV suggests an upside of 333%

  Our conservative valuation shows the potential of the company. We initiate coverage of Salt Lake Potash with a target price of 132p and Conviction Buy stance.

  Link here to view the article on the Align Research website

• RISK WARNING & DISCLAIMER

  Salt Lake Potash is a research client of Align Research. For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.

Table: financial overview

Year to June	2016A	2017A	2018E	2019E
Revenue (A$,000)	73	727	1,100	1,300
Pre-Tax (A$’000)	(4,645)	(9,201(	(9,800)	(4,800)
EPS	(4.13)	(6.61)	(5.65)	(2.64)