(Asx: KLL) | Kalium Lakes Limited

Nov 3, 2021

Sentiment: Sideways

Type of Trade: Speculative

Industry: Other Industrial Materials & Maining - Potash

Sector: Materials

KLL is a minerals company focused on developing the 100% Owned Beyondie Sulphate of Potash Project  in Western Australia, on the cusp of commencing steady state production of least 100ktpa of  Sulphate of Potash (SOP) for domestic and international sale. Potash comes in a variety of forms including the premium Sulphate of Potash (SOP). SOP contains potassium, one of three essential nutrients for plant growth.

The Company has also identified the potential to increase throughput up to 120ktpa through some short term, low capital intensity improvements.

An initial mine life of between 30-50 years is anticipated for a project designed to be a low cost, long life and high margin producer. The company has an experienced project development team and Board of Directors.

A$50 Million Capital Raising to fund expansion at Beyondie following successful achievement of first production. This CR will be in two tranche placement at an offer price of A$0.18 per share, with Kalium Lakes’s largest shareholder, Greenstone Resources, committed to subscribe for up to A$11.3 million.

Favourable Macro Environment

✅ Attractive SOP price Outlook driven by demand from farmers – crop prices are at eight-years highs and are anticipated to remain elevated until H1 2022. The Chinese Mannnheim SOP production has reduced by 5% due the high MOP prices and environmental regulations, resulting in lower SOP export volumes from China.

✅ Coordinated global sanction against Belarus – 20% of global potash supply affected.

✅ Strong positive trend in SOP price forecast supports immediate expansion to 120ktpa.

✅ The COVID-19 pandemic continue to put pressure on shipping cost, hence offering a great opportunity for Kalium to supply the local market.

Byondie Sop Project

This project is strategically located (2 hours flight North West of Perth, on the boarder of the Little Sandy. The SOP Production at Beyondie a liquid brine operation, a well-known process, that uses the sun and wind to naturally evaporate fresh water from the brine, causing the production of potassium mixed salts which is then processed to premium SOP fertiliser. Brine is sourced from underground aquifers, using pumps stations at tranches and production bores.

✅ The construction is substantially completed and commissioning is underway with first SOP produced in October 2021 – the total cost project cost of $280m to 90ktpa included construction of trenches, pumping stations, ponds, processing plants, gas power station, camp, airstrip, access road and 80km gas pipeline.

The SOP process plan designed is based on a proven technology from SOP process experts, Ebtec, complete with process and throughput guarantees.

✅ Low resources intensity on site – 30 people on site are required to run operations for steady state SOP production at 90 and 120ktpa product levels.

✅ SOP Product is trucked to Perth for collection by end users on the West Coast, or taken to port for distribution to the east coast of Australia and New Zealand with excess product to be shipped to South East Asian markets.

Project expansion to 120ktpa – to take advantage of strong SOP pricing, project team on site and expansion of 100% or pay offtake.

Low Energy Footprint.

Company is looking at the possibility to replace all diesel power generation with renewable power supply for bore fields over time.

Strong Indigenous Engagement.

Expected Time Table for the Expansion

Managing the Risk

Technical Analysis

SP is currently trading in the very same level that it was 52 weeks ago, which means any investor leaving the money in this company would have made 1% profit. According to the chart formation (Asx: KLL) is a trading stock, during the last 12 months the stock price moved over 20% several times, therefore enhance the applicability of BGS 20 Strategy. The stock is trading under SMA just sitting above a its support level 18c in which was the share placement for the expansion of the project.

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