Lorry Hughes of Reward Minerals Ltd (ASX:RWD) today unveiled pivotal results from a six-month-long engineering scoping study on the Reward Process for SOP potash production, heralding what he termed as the "cheapest in the world" production costs.
Hughes sat down with Proactive to discuss the findings, saying the company has determined a capital expenditure (capex) of about $200 million to build 100,000 tonnes per annum of SOP potash. The production costs at close to $300 a tonne SOP delivered Free on Board (FOB) to Geraldton, is the cheapest in the world.
“We're very pleased with the result," Hughes said.
When asked about the study's impact on strategic investment discussions, Hughes stated, "This is critical. We've been speaking to strategic investors for a couple of years through the development phase and they've been waiting for the results.
“So, for the first time, they'll have some numbers to go off in terms of assessing our value and the value of the process to them as well. These include other sulphate of potash companies, fertilizer companies, and importantly, solar seawater salt companies, such as the ones that we've seen in Western Australia where we've based the study on.
“This process is tailor-made to be tacked on to the back end of an existing solar salt operation.”
Hughes says everything is in place from the power and infrastructure to transport facilities.
“And then you tack on our process for approximately $200 million. You can make $70 million a year on current prices forever. That's the beauty about these sorts of operations and the appeal to big strategic investors.
Securing a strategic investor
Reward is focused on securing a strategic investor in the near future.
“It is absolutely critical for us now,” Hughes said.
“The air is completely out of the SOP potash market in Australia, if not the world. We've seen companies before us burn close to a billion dollars of value, debt funds and equity funds which has caused the retail sector and other financial investors to run for the hills.
“We understand why, but we also understand what we're doing and we think it is the strategic investors who are going to lead the market on this one.”
With that in mind, the study's release comes at a significant time for the company, as Hughes pointed out the market's downturn.
Reward Minerals will now focus on escalating strategic discussions and developing plans for pilot-scale evaporation and processing tests. This twin focus aims to secure necessary investments and propel the Reward Process into its next operational phase.