Salt Lake Potash : Plans SOP Pilot Plant

ASX ANNOUNCEMENT

21 April 2017 SALT LAKE POTASH PLANS SOP PILOT PLANT AT GOLDFIELDS SALT LAKES PROJECT. ONGOING DISCUSSIONS WITH PROSPECTIVE GLOBAL INDUSTRY PARTNERS.

The Directors of Salt Lake Potash Ltd (Salt Lake or the Company) are pleased to advise that Amec Foster Wheeler (AMEC) have been appointed to prepare an analysis of the alternatives for the Company to construct a Pilot Plant at the Goldfields Salt Lakes Project, intended to be the first salt-lake brine Sulphate of Potash (SOP) production operation in Australia.

A Pre-Feasibility Study (PFS) on the full-scale production model is continuing and the Pilot Plant will form a part of the feasibility study process.

Salt Lake has been in discussions since last year with a range of international industry SOP and specialist fertiliser producers and distributors, including several global market leaders, about the optimal way to realise Salt Lake's outstanding potential in the global SOP market.

Based on those discussions, the Company has formed the view that the appropriate path forward is to initially construct a Pilot Plant to demonstrate the technical and commercial viability of brine SOP production from the Goldfields Salt Lakes Project, before expanding the plant to long term optimal production levels on a staged, modular basis. AMEC have been engaged to initially consider a 20,000-40,000tpa Pilot Plant processing only brine feed drawn from the near surface Measured Resource.

The Company believes the advantages of the Pilot Plant approach are:

• Proof of concept for SOP production from salt-lake brines in Australia. This will substantially de-risk the full- scale project, with commensurate improvement in financing costs and alternatives. While substantial salt-lake brine production of SOP is undertaken in China, Chile and the USA, it is new in Australia and overseas production models need to be tested and adapted for Australian conditions.

• Refinement of design and costing of engineering elements at Pilot Plant scale may result in considerable cost savings at larger scale.

• Market acceptance of a new product in conservative agricultural markets is best achieved progressively and in conjunction with existing, established partner(s). It is important to establish Salt Lake's product(s) as premium, sustainable nutrients in the key long term markets and staged production increases are the best way to achieve this objective.

• A Pilot Plant offers an accelerated pathway to initial production, with limited infrastructure requirements and a faster, simpler approval process. The Pilot Plant is intended to operate for 12-24 months to establish parameters for larger scale production, and the Company's objective is to commence construction in 2017, harvesting first salts in 2018.

• Relative ease of financing a Pilot scale plant. Initial indications are that a Pilot Plant of this scale (40,000tpa) would cost up to US$35m. While the Pilot Plant's principal objective is to prove the technical concept, the Company intends for it to still be cashflow positive. While economies of scale for a Pilot Plant are limited, the Goldfields Salt Lakes Project's considerable location and infrastructure advantages will be important in sustaining its economic parameters.

Several of the global SOP industry parties have expressed a keen interest in partnering with Salt Lake to market and distribute Pilot Plant production, as well as to provide technical and financial assistance in design and construction of the Plant. Those discussions are ongoing however, Salt Lake notes that the discussions are incomplete and there is no guarantee the discussions will result in any firm offtake, technical or other arrangements.

Enquiries: Matthew Syme

Telephone: [phone]

Background to the Goldfields Salt Lakes Project

Amec Foster Wheeler, in conjunction with international brine and salt processing experts, previously completed a Scoping Study for the Lake Wells Project (a component of the Goldfields Salt Lakes Project) in 2016 which concluded a 2-stage development producing up to 400,000tpa of SOP with estimated capital costs1 of A$230m and C1 operating costs2 of $185/t, both amongst the lowest in the world. See ASX announcement dated 29 August 2016, viewable on the Company's website: http://www.saltlakepotash.com.au

Likely Pilot Plant

Location

Figure 1: Lake Wells Project Area

1 Capital Costs based on an accuracy of -10%/+30% before contingencies and growth allowance but including EPCM.

2 C1 Operating Costs based on an accuracy of ±30% excluding transportation & handling (FOB Esperance), royalties and depreciation

Subsequent to the Lake Wells Scoping Study, Salt Lake has focussed comprehensive exploration at the Southern end of Lake Wells, a likely site for a Pilot Plant. This work has substantially advanced the hydrogeological model for the surface aquifer of the Lake in this area, giving the Company a high level of confidence about the quality of brine production from low cost surface trenching. This work has included sustained pumping of a range of surface trenches up to 125m long and 4.5m deep, for up to 31 days.

Figure 2: Test Trench Excavation and Trench Pumping at Lake Wells

Exploration and trenching work has also provided substantial stratigraphic and geotechnical information, to support the Company's model for cost-effective on-lake evaporation pond construction, as well as brine extraction.

Figure 3: Examples of Evaporation Ponds and Harvesting

Parallel with the on-lake exploration work, Salt Lake has also been running a large site evaporation trial since October 2016. As this trial, which is designed to represent the likely salt production model at Lake Wells, has settled into equilibrium, it has provided substantial and important data for the long term seasonal, brine evaporation and salt crystallisation model which will form a critical part of the Mass Balance model for the Pilot Plant study.