Lake Chandler Potash Project

Summary

The Lake Chandler potash project consists of a granted Mining Lease (M77/22) and a Prospecting Licence application (P77/3977) covering two salt lake deposits located 48km north of the Western Australian wheat-belt town of Merredin, 300km east of Perth.

Potash was produced from the deposit in the post war period from 1943 to 1947 but the operations have been idle since.

Lake Chandler is a salt lake with accumulations of potassium rich alunitic clay up to 6 metres thick which the Company is investigating with a view to proving the commercial extraction of potash as potassium sulphate (SOP) and other fertiliser products such as ammonium sulphate (SOA) with possible alumina by-products.
Studies by ActivEX have shown that the Australian potash market currently relies completely on imports, principally from Canada, Taiwan and Germany. The lack of domestic production means that potash prices in Australia are at a significant premium to world prices. This premium is related to the lack of local production, tightness of world and local supplies and transportation costs.

Potassium sulphate (SOP), the likely product from the project, also demands a significant premium to the more readily available potassium chloride (MOP). SOP is better suited to Australian soil conditions where high salinities prevail and the Company believes that when established as a reliable local producer it can substitute SOP into the chloride market. Much of the SOP consumption in Australia is related to crop and pasture application and the Western Australian wheat belt is a significant consumer. Thus, transport of fertiliser product to market will also be at a significant cost advantage. Click here for more information on Potash markets.

Lake Chandler drill section 00mN

Extensive drilling of the lake in the 1980s has outlined the deposit and shows that the potassium content of the clays is consistent over the deposit. This drilling has been used to estimate a JORC compliant inferred resource of 5.8 million tonnes of 5.7% K2O, click here for details of this resource estimate. Limited drill testing is required to improve this estimate to measured and indicated status. The resources study also identified the potential for additional mineralisation peripheral to the current resource but within the confines of the Lake Chandler. No drilling has been carried out on Reward Lake but records show potash contents at the surface similar in grade to Lake Chandler.

Following the definition of a JORC resource for the project in 2009, ActivEX has carried out extensive washing and settling tests, large scale leach tests, filtration and centrifuge tests to collect sufficient data to carry out a scoping study of the project. The initial scoping study was completed in July 2010 by engineering consultants Lycopodium Minerals.

The scoping study was carried out on a nominal throughput of 200,000 tonnes per annum. At this rate of production the project would have a mine life of 25 years. Mining would take place on a campaign basis during the drier months and stockpiled for year round processing.

The processing plant, which would operate continuously, consists of two stage scrubbing, five stage counter current decantation (CCD), washed ore filtration, high pressure ammonia leaching, leach discharge and filtration, ammonia stripping and recycling and potassium sulphate and ammonium sulphate crystallisation and bagging units. Click here for more information on Processing options.

The Study shows that operating and capital cost estimates for the project were shown to be between 20 and 30% higher than previous estimates. This, combined with the softness of the Potash market, means the project would be marginal under the current economic conditions.

The Company is continuing its investigations, striving towards establishing a viable operation by looking at areas for potential cost savings such as good quality second hand plant items and sources of low cost reagents such as ammonia, in addition to looking at ways to simplify the process flow sheet, in an effort to cut capital and operating costs.