South Harz Potash Ltd (ASX:SHP) has signed a non-binding memorandum of understanding (MoU) with NDH-E/DEUSA International GmbH (Deusa), which gives it access to Deusa’s Bernterode shaft infrastructure to advance the Ohmgebirge pre-feasibility study (PFS) and spatial planning application on a brownfield pathway basis.
Deusa is the owner of the neighbouring property to South Harz’s Ohmgebirge Potash Development in Thuringia, Germany. The flagship Ohmgebirge project is in the South Harz Potash District of Germany, midway between Frankfurt and Berlin.
Bernterode’s existing shafts are just 1,500 metres from the Ohmgebirge tenement boundary and contiguous with the Ohmgebirge deposit.
Signing of MoU confirms Bernterode as preferred brownfield site.
Multiple benefits
The MoU has multiple benefits, not least the delivery of a brownfield development pathway that offers substantial time, capital cost and footprint advantages versus greenfield shaft construction, reducing timeline to first production.
South Harz has been given exclusive rights until March 31, 2024, to progress talks with Deusa to reach a definitive commercial agreement concerning long-term access and use of shafts and infrastructure.
This would provide SHP with substantial capital cost advantages, which should offset potential inflationary capital cost escalation when compared to a greenfield project development.
Put simply, in the last 18 months, the global industry has faced escalating costs. The agreement with Deusa is anticipated to mitigate this impact.
The key benefits to the collaboration include:
“The execution of this partnership MoU with Deusa continues to demonstrate the strong capacity of the world- class Ohmgebirge project to leverage existing regional infrastructure and a genuine brownfield development pathway,” said South Harz managing director and CEO, Luis da Silva.
“The Bernterode infrastructure is located close to the Ohmgebirge tenement boundary and proximal to some of the thickest sections of the Ohmgebirge deposit. Its utilisation in the development of Ohmgebirge offers substantial physical, cost and time benefits to South Harz and its shareholders.
MoU in detail
The MoU and the prospective long-term access deal with Deusa permit South Harz to advance a development plan for Ohmgebirge. This plan relies on the use of the existing Bernterode #2 shaft, which will be widened and fitted with a Pocketlift conveyor and a personnel/material cage.
While the PFS will proceed without interruption, the company's focus remains on collaborating with Deusa to achieve the best engineering, environmental, and economic results for the project. To ensure a comprehensive and optimised inclusion of the targeted Bernterode brownfield development in all planning activities, the Ohmgebirge PFS is slated for release in early Q2 CY2024. This timeline aligns with the expected approval of the Spatial Planning permit.
Preliminary layout and view from shaft area through to processing facility showing proximity to rail infrastructure.
SHP is focused on working with Deusa to achieve the project's optimal engineering, environmental and economic outcome, while also focusing on its PFS.
The signing of the MoU enables South Harz to complete and submit the comprehensive spatial planning application for Bernterode, designating it as the favoured site, to the principal regulatory body, Thüringer Landesverwaltungsamt (TLVwA). The submission is expected to occur in November. According to regulatory guidelines, a decision on spatial permitting must be made within six months following the application's submission.
The MoU also opens avenues for further business development that may lead to enhanced technical and commercial collaborations between the two entities.
“The signing of this MoU is a landmark milestone for both parties. We look forward to building on this collaboration with Deusa and its people in advancing towards definitive commercial arrangements and delivering superior environmental, social and financial outcomes for both parties,” da Silva said.
“I also look forward to providing further updates as key Ohmgebirge milestones are progressively delivered in coming months, including submission of the Spatial Planning Application and completion of the PFS.”