Now, JV partner Verdant Minerals Pty Ltd has officially notified Parkway that the project interest of Parkway Ventures Pty Ltd, a subsidiary of Parkway Corporate, has increased from 15% to 40%. Parkway thus becomes the owner of an economically significant potash resource at a time of high fertilizer prices. Since the closing of the PFS, the price of potassium sulfate (SOP), a high-value specialty fertilizer product, has roughly doubled. However, even at the price level at that time, the PFS was extremely robust with an annual SOP production of 40,000 tons over an initial mine life of 20 years.
Initial capital costs (CAPEX) were estimated at A$80.0 million, including all non-process infrastructure and indirect costs (including A$6.7 million for contingencies). Production costs (OPEX) should be AUD 293/tonne SOP ex-mine. Strong cash generation potential with an estimated EBITDA margin of 54.4%, resulting in annual EBITDA of $18.6 million. KLPP development at the time should result in project payback in approximately 5.5 years from first SOP production. NPV8% after tax of $80.15 million with an IRR of 20.4%. The Indicated Mineral Resource is 1,000,000 tonnes of potassium with 580,000 tonnes of potassium contained in eight lakes included in the mine plan. The mine plan calls for production of 430,000 tonnes of potassium, sufficient for an initial mine life of 20 years, based on a planned production rate of 40,000 tonnes SOP per year.
Figure 1: Sketch for the development concept in the KLPP-PFS.
Bahay Ozcakmak, Group Managing Director & CEO of Parkway, comments as follows:
"The acquisition of this additional 25% interest in KLPP, particularly at a time of high fertilizer prices, represents another important milestone for Parkway. KLPP's planned main output, potassium sulfate (SOP), a high-value specialty fertilizer product, is currently trading at a price approximately twice that assumed in the KLPP PFS. Emerging long-term supply chain challenges, particularly at a time of increasing demand for fertilizer, create exciting opportunities for new fertilizer projects, especially those with ESG-related benefits, to take advantage of strong market fundamentals.
In terms of the KLPP site, we are encouraged by the favorable operating environment in the Northern Territory, where several significant mineral resource projects have recently moved towards key project development milestones. Through our established PPS Darwin business, we are increasingly supporting several major global mining companies to expand their mining operations in the Northern Territory, across a range of commodities. In addition to our engagement with the Northern Territory Government, we were recently informed that the KLPP was listed as a priority mineral project in the Northern Territory Government's Investment Territory publication.
Notwithstanding the merits of KLPP, our participation in KLPP was always focused on the opportunity to showcase our patented next-generation aMES® technology. When we entered into the KLPP JV agreement in 2017, we simultaneously entered into a technology license agreement for the project, which allowed us to leverage our technology to create value at KLPP. In terms of technology, the KLPP PFS we entered into with our global engineering partner Worley in November 2020 highlighted the benefits of our novel aMES®-based flowsheet. Being one of the first potash projects in Australia, we were fortunate to be able to review historical studies on the KLPP from the 1980s that highlighted not only the opportunities but also the challenges associated with extracting valuable minerals from concentrated brines. Through a patient and methodical approach, we systematically developed a project development approach through the KLPP PFS that we felt was appropriate and avoided some of the more problematic challenges associated with the complex process chemistry. Unfortunately, some of the more advanced Australian SOP companies have recently encountered a number of process-related challenges, particularly related to salt variability in flotation-related processes. The aMES®-based flowsheet developed by Parkway for the KLPP eliminates the need for flotation and offers a number of operational and sustainability benefits. Parkway continues to be contacted by California companies seeking SOP-related process expertise.
We are currently assisting an Australian SOP company in developing a novel flowsheet that could potentially incorporate aMES® technology, depending on project development."
Summary: The original involvement in the Karinga Lakes potash project dates back to when Parkway was primarily an exploration company in the potash sector. But even then, the focus was on aMES® technology. The PFS for KLPP was intended to provide a showcase for the efficiency of the technology, and it did. Parkway earned its 40 percent stake. Still, the stake feels like a delayed bonus - especially at a time of strained fertilizer supply chains. Given the high prices, that should make the Karinga Lakes project more economically attractive now than ever. It could still be very valuable for Parkway to have such an asset up its sleeve.
According to §34b WpHG and according to paragraph 48f paragraph 5 BörseG (Austria) we would like to point out that principals, partners, authors and employees of GOLDINVEST Consulting GmbH hold or may hold shares of Parkway Minerals and therefore a possible conflict of interest exists. We cannot exclude that other stock letters, media or research firms discuss the stocks we recommend during the same period. Therefore, symmetrical information and opinion generation is likely to occur during this period. Furthermore, there is a consulting or other service contract between Parkway Minerals and GOLDINVEST Consulting GmbH, with which a conflict of interest exists, since this contract includes that Parkway Minerals remunerates GOLDINVEST Consulting GmbH for the preparation of reports on Parkway Minerals.