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LD Project

The LD Project is located in the Little Sandy Desert, Western Australia, approximately 340km east of Newman and accessed via the Talawana Track.  The Project currently has a JORC (2012) compliant Mineral Resource of 564Mt of SOP grading 13.7kg/m3

The Project is made up of over 5,000km2 of granted tenements covering the Lake Disappointment playa and surrounding Palaeovalleys. On 23 December 2011, Reward reached an agreement with the Traditional Owners of the land on terms and conditions of a Mining and Indigenous Land Use Agreement (ILUA) which resulted in the grant of key mining tenements required for the development of the LD Project. In March 2012 the required Heritage Surveys were completed and the ILUA was officially registered with the Native Title Tribunal on 21 December 2012.

Exploration

In 2015 exploration was carried out over LD using a purpose built rig, transported over the lake by helicopter.  The core retrieved from the lake was collected in sealed tubes that recover the lake sediments as well as the entrained brine for the interval. Drilling was carried out over the entire lake surface area (accommodating the Traditional Owners restricted areas) at drill spacings required for a JORC (2012) compliant resource carried out by Pendragon Environmental Solutions Pty Ltd.

New LD Full Map with resource holes

All holes were cased following core recovery to enable follow-up pumping trials to evaluate the brine flow characteristics of the lakebed sediments.

3D map PS

A result of the program was a JORC (2012) compliant Mineral Resource of 564Mt of SOP grading 13.7kg/m3

LD 2015 Resource Table

 The Company intends to drill on the lake in the coming months to test the extent of the basin below the lake with the objective of defining a substantially increased resource at the LD Project.

Development

During 2013 the Company upgraded the Talawana Track, completed the LD access track and established a Project camp at LD providing a base for regional activities.

Completion of the access track and base camp assisted the progress of environmental survey studies of which stages one and two have been completed.

A Scoping Study for the LD Project which outlined capital and operating costs as well as a detailed plant design was completed by the Company based on a proposed 400,000tpa operation in April 2015 and provided excellent results.  Refer to the announcement dated 2 April 2015 for full details.

Key Project Economics

Results of the Scoping Study have been assessed for economic viability using a Discounted Cashflow Model developed by the Company and key outcomes are presented below including a sensitivity to the SOP price.  Recent SOP sales have been in the range of approximately A$630/t to A$1,012/t (sources: EU445/t to US735/st, US Gulf, Argus FMB, Fertecon).

                                                      Table 1: LD Scoping Study Capital Cost Estimates

Scoping Study Key Economics

                                                               Notes: 1) Excludes contingencies  
                                                                           2) Operating cost includes mining, processing, general administration and haulage and port costs  
                                                                           3) LOM calculated based on existing 24.4Mt Indicated JORC (2004) resource at 20% specific yield  
                                                                           4) Exchange rate assumption: USD0.80:AUD1.00

Reward is currently undertaking a drilling program at the LD Project which has the potential to signficiantly expand the existing 24.4Mt JORC (2004) Indicated SOP resource (at depth) and thereby substantially extend the mine life.

Processing & Metallurgy

Recovery of SOP will be via the solar evaporation of the entrained brines and substantial testing has been conducted. A 10,000 litre pilot evaporation trial using lake brine was conducted with highly encouraging evaporation, recovery and harvest grade parameters resulting. The trial ran for 180 days averaging 7-8mm of evaporation per day, 87.5% Potassium recovery and provided 983kg of harvest product for ongoing metallurgical testwork programs.

Further evaporation trials during the period were performed in a laboratory environment and demonstrated that K recoveries of 80+% can be achieved producing a crude harvest grading around 9% K. Comprehensive trials focussing on fine tuning the evaporation pond system operation have accomplished harvest material containing approximately 15% Sodium Chloride (NaCl) removing the need for complicated flotation processes during the SOP recovery process.

Independent evaluation of the flowsheet and mass balance was undertaken by AMEC. This included the utilisation of AMEC’s considerable experience from its work with a number of North American operations.

The proposed process takes salts harvested from the evaporation ponds, leaches contaminants from the salts before the crystallisation of SOP which is ultimately recovered in solid form (44+% Potassium).

Reward is undertaking further testwork on simplification of the conversion process which has the potential to provide significantly reduced capital and operating costs.

Capital Cost Estimate

Capital cost estimates for a 400,000tpa SOP operation are estimated to be A$320M (US$256M).  This capital cost marks the LD Project as one of the most attractive greenfield SOP projects with capital and capital intensity costs among the lowest in the world.

A breakdown of the capital cost estimate is presented in Table 2 below.

                                                                Table 2: LD Scoping Study Capital Cost Estimate
Capital cost estimate table

                                                           Note: Estimates exclude provisions

Operating Cost Estimate

Approximately 60% of operating cost estimates utilise quoted prices or are estimates based on preliminary design.  The Company believes there are considerable cost savings available relating to processing and haulage.  As a result Reward is undertaking additional work focussed on these cost components.

                                                               Table 3: LD Scoping Study Operating Cost Estimate (per tonne of SOP)

Operating cost estimate table