RCS - South Harz Potash Ld - December 2022 Quarterly Activities Report

South Harz PotashAnnouncement

25/01/2023 08:30

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RNS Number : 8101N  South Harz Potash Ltd  25 January 2023

ASX ANNOUNCEMENT

25 January 2023

 
DECEMBER 2022 QUARTERLY ACTIVITIES REPORT

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) reports on its
activities for the quarter ended 31 December 2022.

 

Highlights

 

 ·           Quarter marked by consolidation and project readiness ahead of commencing the
             Ohmgebirge Pre-Feasibility Study (PFS)
 ·           PFS progressing in line with overall schedule with key workstreams including:
             ·     Site selection dovetailing with permitting and preparation for
             baseline studies of the Environmental Impact Assessment (EIA).
             ·     Work included options on greenfield sites versus brownfield to
             utilise existing infrastructure where available.
             ·     Request for quotations from tendering parties to participate in the
             PFS and EIA.
             ·     Selection of preferred bidders and consultant consortium.
 ·           Metallurgical test work results performed by K-UTEC confirmed the suitability
             of Ohmgebirge processing route outlined in Scoping Study in order to achieve
             production of K60 (agriculture sales grade) MOP.
 ·           Küllstedt and Gräfentonna exploration licenses granted three-year extensions
             by the Thuringian mining authority Thüringer Landesamt für Umwelt, Bergbau
             und Naturschutz (TLUBN).
 ·           Proven natural resources business leader and executive, Mr Luis da Silva,
             appointed as Managing Director and CEO in November 2022.
 ·           Deeply experienced potash industry executive and non-executive director, Mr
             Lawrence Berthelet, appointed Chief Operating Officer (COO), effective 1
             January 2023.
 ·           Completion of A$3.0 million Placement with strong support from all Directors
             for the advancement of Ohmgebirge near-term value-adding initiatives and PFS
             workstreams.
 ·           Cash balance of A$5.8 million at 31 December 2022 (with a further A$625,000 to
             be received from Directors following shareholder approval, and zero debt.
 ·           Board renewal and right-sizing initiatives continued delivering significant
             skills matrix enhancement.

 

South Harz Managing Director, Luis da Silva, commented:

"The team has made strong and consistent progress in the December quarter in
preparing for the year ahead.  With the foundation of the Mineral Resource
upgrade and the Ohmgebirge Scoping Study completed in the previous quarter,
the focus has been on ensuring project readiness for the PFS we will
imminently embark on. Our Board renewal and optimisation initiatives also
continued, including the recent key executive appointment of Lawrence
Berthelet to the role of COO, further enhancing the collective skills and
experience across the team who are focussed on realising the latent value held
by the South Harz Project."

"Ohmgebirge is a globally significant and highly cost-competitive potash
asset. It deserves the attention of medium to long term, like-minded investors
sharing in the development of a critical mineral in the heart of the European
Union and the end market. I look forward to updating shareholders regularly as
we progress through the next key phase of project development delivering a
robust PFS that will unlock the full potential in this historic potash
region."

 

PROJECT DEVELOPMENT

Site selection, EIA and PFS

The team established in Erfurt during 2022 has provided for knowledge and
timely actions to deliver on multiple workstreams ensuring a solid foundation
for the next two years of studies focused on the delivery of a robust PFS that
will enable a seamless transition into a full definitive feasibility study
(DFS) during 2024.

The permitting requirements and site selection process have dovetailed to
allow environmental baseline studies to begin imminently which will capture
the required twelve months of seasonality.  Local stakeholders including
mayoral authorities and landowners have been consulted in preparation for site
selection and optionality exists on the potential use of existing
infrastructure.  During the PFS period, the full extent of these efficiencies
will be further developed in an iterative manner.  Determining greenfield
versus brownfield optionality, or a hybrid model, will allow the Company to
arrive at the most viable option to enhance project economics.

Following the response to RFQs being received from interested parties, the
Company has exhaustively assembled what it believes to be the strongest study
team.  The Company is in the final stages of internal approvals to sign off
on the study team and the lead consultant.  Similarly, the consultant for the
EIA will be announced imminently.

Metallurgical test work confirms Ohmgebirge processing route

On 21 December 2022, the Company reported confirmatory results from the
metallurgical test work completed by K-UTEC AG Salt Technologies (K-UTEC). The
Company engaged K-UTEC to carry out initial bench scale metallurgical test
work to confirm the selected process route and to evaluate recoveries. Test
work was conducted on core samples collected from drillholes OHM-01 and OHM-02
completed during 2022 within the Ohmgebirge Mining Licence.

Results of the metallurgical test work confirm the process route selected for
the Ohmgebirge Scoping Study is suitable for processing the ore type expected
to be delivered to the mill. Results confirm a preliminary crushing size of
<4mm and will enable KCl extraction from the cold leach stage of the
process flow design. The selected processing route is expected to achieve
production of K60 (agriculture sales grade) MOP that is the standard of the
global potash industry.

Test work carried out by K-UTEC in their Sondershausen laboratories, located
close to the project area, considered the quantity and quality of NaCl (salt)
by-product expected to be produced from future operations. Results verified
the selected process route and can produce chemical grade vacuum salt with a
purity exceeding 99%. K-UTEC further reported that additional Mg(OH)(2) and
CaCO(3) by-products can be extracted via the selected processing route. A
well-established market for chemical grade NaCl, Mg(OH)(2) and CaCO(3) exists
in the NW European area. Test work informed the composition and character of
the resultant waste products and additionally confirmed that process waste is
suitable for use as mine backfill material. Further metallurgical and backfill
testing is planned during the PFS.

Next steps

The Company expects to achieve the following important milestones in the near
term:

·     Key site selection determinations are culminating, with a selection
decision to be advised in accordance with the established permitting
timetable.

·     Following completion of the detailed CEO and COO-led workplan and
PFS optimisation activities, South Harz also expects to make several key study
consultant appointments.

Extension of exploration licences granted

The Thuringian mining authority Thüringer Landesamt für Umwelt, Bergbau und
Naturschutz (TLUBN) granted three-year extensions to both the Küllstedt and
Gräfentonna exploration licenses to January 2026.

Following the submission of an application in October 2022, the TLUBN provided
the three-year extension for the Küllstedt exploration license in November
2022 (see SHP ASX release dated 21 November 2022).

The Küllstedt exploration licence covers an area of 242 km(2) and contains a
JORC Inferred Mineral Resource of 1,538 million tonnes grading 10.2% K(2)O.
The Küllstedt licence has been held by the Company's wholly owned German
subsidiary, Südharz Kali GmbH, since January 2015 and contains a substantial
potash resource adjoining the high-grade Mühlhausen mining licence area.

The approval of a three-year extension to the Gräfentonna exploration licence
was announced in December 2022, following submission of an application in
November 2022 (see SHP ASX release dated 30 December 2022). The Gräfentonna
exploration licence lies immediately south of the Company's Ebeleben mining
licence and would form the natural extension of any future mine at Ebeleben.
The licence covers over 216 km(2) of known potash territory and encloses the
eastern portion of the known South Harz potash basin. Results from historical
drilling campaigns facilitated South Harz's estimation of an Exploration
Target on the Gräfentonna licence of between 2.678 and 3.396 billion metric
tonnes at a potash grade between 4.3% and 25% K(2)O.

 

CORPORATE

Key executive appointments and Board renewal

Over the quarter, South Harz made significant changes to the Board as part of
ongoing renewal and optimisation initiatives.

On 24 October 2022, the Company announced the appointment of Mr Luis da Silva
as Managing Director and CEO. Mr da Silva is a proven natural resources
business leader and executive with close to 30 years' experience in the mining
industry. Previous roles include President and CEO of Andean Precious Metals
(TSXV:APM), a leading Latin American silver producer, and President and CEO of
phosphate developer, GB Minerals, leading the company through to its eventual
acquisition by Canadian phosphate producer, Itafos (TSXV: IFOS). Mr da Silva
officially commenced his role on 1 November 2022, with Executive Chairman Mr
Ian Farmer resuming his role as Non-Executive Chairman.

On 31 December 2022, Mr Hansjorg Plaggemars resigned from his non-executive
director role with the Company and Mr Jason Wilkinson resigned from his role
as COO.

 Mr Lawrence Berthelet assumed the role of COO from 1 January 2023,
relinquishing his role as a non-executive director. Mr Berthelet is a deeply
experienced potash executive who was appointed to the South Harz Board as a
non-executive director and as a member of its Technical Committee in October
2022 (see SHP ASX release dated 10 October 2022). Mr Berthelet brings more
than 35 years operational and executive experience with major global potash
and fertilizer firms including the Mosaic Company (leading the US$2.9B K3 mine
expansion project, completed on budget and ahead of time), SNC-Lavalin and
Agrium (now Nutrien).  He was most recently Head of the Mining Division at
global agriculture and chemicals business, EuroChem.

Placement

During the quarter, the Company received firm commitments for A$3 million via
a placement of 66,666,666 ordinary shares at an issue price of A$0.045 per
share representing a discount of approximately 5.3% to last close (see SHP ASX
release dated 16 November 2022). The placement includes 13,888,888 shares
raising A$625,000 to be issued to South Harz Directors (or their respective
nominees). The issue of shares to Directors is subject to shareholder approval
at a General Meeting to be held on 23 February 2023.

The new equity places the Company in a strong position from which to conduct
strategic partnership discussions for long term investment, JV partnerships,
royalty funding, offtake streams and the continued progression of PFS
activities. The raised funds are to be applied directly to the delivery of the
Ohmgebirge project's value-adding initiatives.

South Harz's cash balance at 31 December 2022 was A$5.8 million with a further
$625,000 to be received from Directors following shareholder approval.

ASX additional information

South Harz provides the following information pursuant to ASX Listing Rule
requirements:

1.   ASX Listing Rule 5.3.1: Exploration and Evaluation Expenditure spend
during the quarter was A$667k.

2.   ASX Listing Rule 5.3.2: No mining production or development.

3.   ASX Listing Rule 5.3.5: Payments to related parties during the quarter
totalled A$150k.

 

Summary of tenement holdings as at 31 December 2022

 Tenement Name/Number  Location             Licence      Beneficial Holding
 Küllstedt             Thüringen, Germany   Exploration  100%
 Gräfentonna           Thüringen, Germany   Exploration  100%
 Mühlhausen-Nohra      Thüringen, Germany   Mining       100%
 Ebeleben              Thüringen, Germany   Mining       100%
 Ohmgebirge            Thüringen, Germany   Mining       100%

 

This ASX release has been approved by the Board of Directors.

 
Investor and media enquiries
 
 Luis da Silva              Michael Vaughan                   Justine James / Matthew Young

 Managing Director          Fivemark Partners                 Alma PR

 South Harz Potash Ltd      +61 422 602 720                   +44 203 405 0205

 info@southharzpotash.com   michael.vaughan@fivemark.com.au   shp@almapr.co.uk

 

 

END NOTES

The information contained in this Quarterly Activities Report, including
detail related to the Company's past exploration results is extracted from, or
was set out in, the following ASX announcements:

·     The report released 10 October 2022, "Non-Executive Director
Appointment"

·     The report released 24 October 2022, "Managing Director & CEO
Appointment"

·     The report released 16 November 2022, "A$3M Equity Raised for
Ohmgebirge Advancement"

·     The report released 21 November 2022, "Küllstedt Exploration
Licence Extension Granted"

·     The report released 29 November 2022, "Ongoing Board Renewal"

·     The report released 20 December 2022, "Appointment of Chief
Operating Officer"

·     The report released 21 December 2022, "Metallurgical Test Work
Confirms Ohmgebirge Processing Route"

·     The report released 30 December 2022, "Gräfentonna Exploration
Licence Extension Granted"

 

About South Harz
South Harz Potash (ASX: SHP) (South Harz) is a potash exploration and development company with its flagship project located in the South Harz Potash District region of Germany, midway between Frankfurt and Berlin.
The South Harz Project hosts a globally large-scale potash JORC (2012) Mineral Resource estimate of 5 billion tonnes at 10.6% K(2)O of Inferred resources and 258 million tonnes at 13.5% K(2)O of Indicated Resources across four wholly-owned project areas located favourably within central Europe.(1) This comprises three perpetual potash mining licences, Ohmgebirge, Ebeleben and Mühlhausen-Nohra, and two potash exploration licences, Küllstedt and Gräfentonna, covering a total area of approximately 659km².
With strong established infrastructure proximate to the key European market, the South Harz Project is well positioned to enable rapid economic development across multiple deposits.
South Harz Potash: Growing a responsible potash business in the heart of Germany

www.southharzpotash.com (http://www.southharzpotash.com)

1.  Refer to South Harz ASX release dated 12 July 2022 for full Mineral Resource estimate details. In accordance with ASX Listing Rule 5.23, the Company is not aware of any new information or data that materially affects the information included in this release and the Company confirms that, to the best of its knowledge, all material assumptions and technical parameters underpinning the estimates in this release continue to apply and have not materially changed.

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