Goldphyre fires up WA potash project as maiden resource beckons
Goldphyre Resources (ASX: GPH) is set to emerge from a trading halt on Monday with the cash to drive the next phase of its highly promising WA potash project.
With the market eager to find the next Highfield Resources, the Spanish potash producer which has soared from 40c two years ago to $1.66 today, Goldphyre’s progress at its Lake Wells project is being watched keenly.
Goldphyre revealed this week that its strategy to produce 75,000-100,000 tonnes a year of sulphate of potash was on track following the calculation of a substantial exploration target at Lake Wells, located 500km north-east of Kalgoorlie.
Using extensive seismic and sampling programs, Goldphyre estimates that Lake Wells contains 79-123 million tonnes of sulphate of potash.
However, Goldphyre considers that it is more relevant to quote an exploration target which reflects the recoverable amount of potash, which in turn is the key figure for use in calculating potential production rates and economic returns.
On this basis, Lake Wells is estimated to contain 6 -37 million tonnes of recoverable potash.
Goldphyre’s strong potential was the subject of extensive commentary by The Australian’s highly respected resources editor Barry FitzGerald in his recent column.
“Previous work by Goldphyre established the presence of good potash grades, while more recent seismic surveys have outlined the buried ancient valley system in which the brine-hosted potash is hosted to more than 20km,” FitzGerald wrote.
“Goldphyre says it has a couple of key points of difference: Lake Wells’ capital cost is expected to be less than $100m — well under half that of most potash projects — and it will supply the Australian agricultural sector, including the WA wheatbelt, rather than targeting the export markets sought after by its peers.
“The low cost reflects the simple production method, which essentially involves drilling bores into the valley channel and pumping the brine containing the potash to the surface.”
Goldphyre Executive Chairman Matt Shackleton said the exploration target provided more strong evidence that Lake Wells has the potential to host a substantial potash resource, which could create significant shareholder value.
“This exploration target provides further evidence that Lake Wells is on track to meet our objective of producing 75,000 - 100,000tpa of sulphate of potash over 15 years or more,” Mr Shackleton said.
“This would underpin a substantial project given that sulphate of potash currently sells for ~A$1000 a tonne at the farm gate.
“Our preliminary studies also show that Lake Wells can be developed at a low capital cost of less than $100 million and due to the simple process of extraction and evaporation, the project is favourably positioned for a rapid low cost development, providing a direct path to positive cash flows and shareholder returns.
“These factors are consistent with our strategy of maximising economic returns, not merely establishing a major in-situ resource.”
Goldphyre has already started the next drilling program, which is aimed at calculating a maiden JORC resource estimate in the June quarter.
It will also move to complete its recent deal with prospector Mark Creasy. Under this arrangement, Goldphyre will triple the size of Lake Wells by acquiring the potash rights on Creasy’s ground immediately next to its existing tenements.
In return, Creasy will emerge with a 19.9 per cent stake in Goldphyre.
Goldphyre Resources (ASX: GPH) is set to emerge from a trading halt on Monday with the cash to drive the next phase of its highly promising WA potash project.
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