Struggling potash play Kalium Lakes is rattling the tin for as much as $27 million in a deeply-discounted placement in a bid to restructure its debt as it looks to ramp-up its Beyondie project near Newman.
Kalium is seeking $22m with the ability to accept $5m in oversubscriptions after its senior lenders insisted on the raising to extend the terms of the company’s existing debt, defer repayments and allow the drawdown of a $20m liquidity facility.
The proposed raising is priced at 4¢ representing a 56 per cent discount to the company’s last traded price of 9.2¢ before it called a trading halt on Tuesday last week.
Kalium has struggled with delays and commissioning problems with Beyondie but last month announced it had delivered the first shipment of sulphate of potash from the project to Wesfarmers-owned CSBP Fertilisers.
The company is telling potential investors it expects to begin commercial scale production ramp-up in September, an 80,000tpa run rate by the first quarter of next year, increasing to 120,000tpa by the third quarter of next year.
It has already sunk about $300m into Beyondie which is expected to have a 50-year minelife.
While prices for the high-value fertiliser are near-record highs of $1400/t, the fledgling WA industry, which comprises a handful of small players, has struggled to get traction with investors and battled with the complexity of extracting and processing product.
Sentiment towards the sector has not improved since one of its leading players, Salt Lake Potash, collapsed in October last year after failing to raise nearly $100 million to fix major problems at its Lake Way project near Wiluna.
The process involves extraction hypersaline brine using bores and trenches, using lined or unlined evaporation ponds to dry the liquid and processing it into sulphate of potash.
SOP, as it is popularly known, is used as a fertiliser in high-value, chloride-sensitive crops such as fruit, vegetables, nuts, cocoa, tea and tobacco.