Aspiring producer Trigg Mining (ASX: TMG) has reported a positive three months to end March marked by a $4 million capital raising and exploration success at its Lake Throssell sulphate of potash (SOP) project in Western Australia.
A renounceable rights issue and follow-on placement raised sufficient funds (before costs) to underpin the next stages of a pre-feasibility study at the project as well as initial exploration activities at Lake Yeo, 35 kilometres south of Lake Throssell.
It allowed Trigg to log a bank balance for the period of $6.1 million in cash and equivalents, compared to $2.3m in the previous quarter.
Strong growth trajectory
Managing director Keren Paterson said the financial results place the company on a strong growth trajectory against a backdrop of rapidly-rising potash prices.
“We are in our strongest funding position since the initial public offering in 2019, and we have a clear pathway to execute the next key stages of development at Lake Throssell,” she said.
“Given current and potential geopolitical disruptions to global fertiliser supply chains, the opportunity for [us] to develop a new long-life, environment-friendly SOP production hub in WA and play a pivotal role in helping meet the challenges of global food security has never looked more compelling.”
Tenement grants
During the quarter, Trigg was granted the remaining tenement applications for Lake Throssell, doubling the potential strike length available for exploration to approximately 70 kilometres and providing significant upside to add to the project’s existing resource of 14.4 million tonnes grading 10.4 kilograms per cubic metre of drainable SOP.
An infill gravity survey contributed an additional 216 line-kilometres to the existing 182 line-kilometres and enabled the company to establish a high-resolution dataset, increasing the accuracy of palaeovalley interpretation and future drillhole targeting.
COVID-19 delays impacted access to land for planned heritage surveys during the period, which postponed the start of the season’s field activities to the current quarter.
Ms Paterson said once the surveys had been completed, earthworks would commence in preparation for aircore drilling to refine the locations for test production bores and provide additional geological and brine chemistry data.
Supply disruptions
Unprecedented supply disruptions have impacted the global potash market in recent months, in particular muriate of potash (MOP) which is a key input in the Mannheim process for the synthetic production of SOP.
In December, previously announced sanctions on potash from Belarus came into effect and in February, financial sanctions were placed on Russia following its invasion of Ukraine.
Collectively, these sanctions have affected up to 40% of global MOP supply.
Ms Paterson said the market had responded with a dramatic price appreciation for MOP and SOP, which typically trades at a premium over MOP.
“In the lead-up to the Belarusian sanctions , the northwest European granular SOP benchmark price rose from approximately $750 per tonne to $1158/t, or around 50% in under six months,” she said.
“Prices accelerated again following Russian sanctions, taking the benchmark SOP price $1545/t, amd the 12-month price appreciation to 120% year-on-year.”
Positive impact
Ms Paterson said a sustained price environment would positively impact the economics of the Lake Throssell project.
“Our scoping study assumed a SOP price of $772/t and showed the project was most sensitive to price, meaning for every 10% increase in the SOP price, approximately $200 million may be added to the net present value,” she explained.
“With the [SOP] price now more than double that assumed in the scoping study, the new price regime for SOP makes a compelling case for this project’s development.”
