Australian Potash goes into administration after failing to get funding for Lake Wells project

Administrators of Australian Potash will aim to sell the company’s business and assets, and possibly also seek a recapitalisation via a deed of company arrangement. The administrators were called in on Wednesday after a prolonged effort failed to get Australian Potash’s Lake Wells sulphate of potash project north of Laverton up and running, with negative investor sentiment stymieing the raising of capital. Australian Potash’s collapse continues the run of bad news for the industry, following Salt Lake Potash — which had the Lake Way project near Wiluna — folding in 2021, and Kalium Lakes’ Beyondie operation south-east of Newman going under in August. Another northern Goldfields potash hopeful, Trigg Minerals, has put its Lake Throssell project east of Laverton on hold and embarked on gold and copper investments in Queensland. Hayden White and Daniel Woodhouse of FTI Consulting are the administrators but have not been appointed to subsidiary companies, including the Laverton Training Centre, which will continue to operate as normal under the guidance of its independent board of directors. A first creditors’ meeting is expected to take place on December 15. Australian Potash on Wednesday said following the continued and exhaustive engagement with shareholders and creditors during the past several weeks in an endeavour to maintain the company as a going concern, the directors were now of the view that a formal restructuring process should be allowed to take its course. The company said directors intended to submit a recapitalisation proposal to the administrators for consideration, which would seek to restructure the balance sheet, avoid liquidation, and allow all existing shareholders to participate in future capital raises. “It is the view of the board that the company’s assets represent an opportunity to create value for shareholders,” the company said. “For example, the reassessment of the exploration model and drill assay results from the work conducted at the Lake Wells gold project by former joint venture partner St Barbara has identified several ‘walk-up’ infill drill targets. “With a reconstructed balance sheet, the company will be able to pursue these and other exploration opportunities across its existing project areas. “The company retains the database for the development of the Lake Wells SOP project, and the tenure comprising the Nexus project in the emerging West Arunta region of WA.” However, the company noted it was ultimately the creditors who would make a final decision on a recapitalisation proposal. “Creditors rank above shareholders for any returns,” the company said. “The administrators also report to creditors, not shareholders. “As such, there can be no guarantee that any recapitalisation proposal will be accepted.” Australian Potash non-executive chair Natalia Streltsova said the calling in of the administrators was a disappointing outcome for the company’s employees and shareholders. “I can assure you that no stone remained unturned in our pursuit of funding for the LSOP development because we believe the project has considerable value for all stakeholders, both economic and social,” she said. “We still maintain the project information and know-how, and will be ready to deploy them should a new opportunity emerge for this project. “More recently, due to strong negativity in the market towards solar evaporation potash projects in Western Australia, we turned our efforts to refocusing the company on our other existing project opportunities, where we believe we have project targets that have the potential to create significant shareholder value.”