SHP have released their quarterly report and it appears that many areas of this proposed project are progressing well, the report highlights are as follows:

MARCH 2024 QUARTERLY ACTIVITIES REPORT

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) reports on its activities for the quarter ended 31 March 2024.”

ASX ANNOUNCEMENT

30 April 2024

Highlights

• Ohmgebirge Development Pre-Feasibility Study (PFS) at an advanced stage of completion and on track for delivery in coming weeks.

• Commercial discussions with Ohmgebirge neighbour, DEUSA International GmbH (Deusa), at an advanced stage to enable implementation of proposed brownfield development pathway.

• Non-binding Memorandum of Understanding (MoU) executed with Euroports Germany GmbH & Co. KG and Euroports Belgium NV (collectively, Euroports) relating to the storage, handling and export of potash through a transport facility in Rostock (Germany) and/or Antwerp (Belgium).

• Spatial Planning Application for Ohmgebirge in progress with regulatory authority, Thüringer Landesverwaltungsamt (TLVwA), with decision expected in Q2 CY2024.

• South Harz to enter a lower cost, internal project optimisation phase following completion of the PFS, in line with current potash market conditions.

• Due diligence granted and discussions commenced with another party in respect of a potential commercial transaction.

• Appointment of Non-Executive Director, Len Jubber, to the role of Non-Executive Chairman, following retirement of previous Chairman, Ian Farmer.

• Non-Executive Director, Seamus Cornelius, resigned from the Board to avoid potential conflicts.

South Hartz Potash latest announcement relating to progress of PFS and corporate interest

OHMGEBIRGE PROJECT AND CORPORATE UPDATE

• PFS on track for early Q2 CY2024 completion; commercial partnership discussions with Ohmgebirge neighbour, Deusa, continue to advance.
• Company to implement a lower cost structure following PFS completion with focus on internal project optimisation
• Development permitting to be advanced in parallel with expected strengthening of global potash market conditions.
• South Harz has granted due diligence access and entered discussions with another party on a potential commercial transaction.
• Non-Executive Director, Seamus Cornelius, has stepped down from the South Harz Board in order to avoid potential conflicts.

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) provides a corporate and project update on its flagship Ohmgebirge Potash Development (Ohmgebirge), located in central Germany.

The Ohmgebirge Pre-Feasibility Study (PFS) remains on track for completion and market release during early Q2 CY2024. In parallel, commercial partnership discussions with adjoining project and infrastructure owner, NDH-E/DEUSA International GmbH (Deusa), are progressing well. Successful delivery of a definitive agreement with Deusa for long-term shaft access and utilisation will enable implementation of the targeted brownfield development pathway for Ohmgebirge. This pathway offers substantial time, capital cost and footprint advantages versus greenfield shaft construction.

The process of developing this project is slowly moving ahead which is good news and with the note that there is corporate interest in the company/mine improves the prospect that this will eventually go ahead,

The latest announcement from SHP relates to a MOU signed with Euroports

Highlights

• Non-binding MoU signed to advance long-term export access with major European ports operator, Euroports.
• Delivers multiple potential export infrastructure options for Ohmgebirge and emphasises overland transport advantages possessed by South Harz relative to key suppliers into potash export markets.

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to advise that it has executed a non-binding Memorandum of Understanding (MoU) with Euroports Germany GmbH & Co. KG and Euroports Belgium NV (collectively, Euroports).

The MoU contemplates South Harz and Euroports advancing commercial discussions towards a potential longterm agreement for the storage, handling and export of potash product from South Harz’s flagship Ohmgebirge Potash Development (Ohmgebirge), located in central Germany, through one of Euroports’ operated facilities in Rostock (Germany) and/or Antwerp (Belgium). Figure 1 depicts the location of these export facilities along with the key overland transport routes linking them to Ohmgebirge.

Another step closer to delivering the project

Latest announcement from SHP in relation to the Ohmgebirge development

PROGRESS UPDATE ON OHMGEBIRGE PFS AND DISCUSSIONS WITH DEUSA

• Detailed technical and commercial discussions advancing with Ohmgebirge neighbour and owner of Bernterode shafts, NDH-E/DEUSA.

• Key PFS workstreams continue to progress on schedule; now achieved 90% overall completion level.

• Final PFS delivery on track for completion in early Q2 CY2024, inclusive of brownfield Bernterode shaft and infrastructure utilization as base case development pathway.

• Spatial Planning Application proceeding through regulatory evaluation process; targeted receipt of spatial planning approval on track for Q2 CY2024.

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to provide an update on progress of the Pre-Feasibility Study (PFS) and associated activities for its flagship Ohmgebirge Potash Development (Ohmgebirge) located in central Germany.

Long-term shaft access and infrastructure utilisation

Detailed technical and commercial discussions with NDH-E/DEUSA International GmbH (Deusa), the owner of the neighbouring property to Ohmgebirge, continue to advance following execution of the non-binding Memorandum of Understanding (MoU) between the parties during November 2023 (refer South Harz ASX release dated 2 November 2023, MOU executed for existing shaft and infrastructure utilization).

The MoU contemplates ongoing collaboration between the parties to advance towards a definitive commercial agreement allowing South Harz long-term access and utilization rights for Deusa’s Bernterode shaft and associated infrastructure. It also grants South Harz binding exclusivity until 31 March 2024 to reach definitive commercial agreement.

Following signing of the MoU, South Harz and Deusa have been working constructively in seeking the optimal engineering, environmental and economic outcome for Ohmgebirge. Successful delivery of a definitive agreement for long-term access and utilization will enable implementation of the targeted brownfield development pathway for Ohmgebirge offering substantial time, capital cost and footprint advantages versus greenfield shaft construction.

The current preliminary layout contemplates the raw ore storage in the area adjacent to the shafts along with the purification. The solution will then be transported via a pipeline the short 1.5km distance to the site by the Bernterode railway siding. The evaporators, crystallisers and product storage will be adjacent to the railway and loadout facility.

Ohmgebirge PFS approaching final phase

The Ohmgebirge PFS is now approximately 90% complete overall and remains on track for completion in early Q2 CY2024. All key PFS workstreams continue to progress well, with the overarching focus now moving to more advanced levels of engineering thoroughness, estimate accuracy, and robust contingency planning.

Capital and operating cost estimations are in the process of being conclusively assembled by leading global engineering consultant and study manager, Hatch plc. This is a function of staged finalization of expected utility requirements (water, power, gas) as well as receipt of final estimations for major equipment sizing, installation costs, project delivery schedules and ‘hard dollar’ supplier quotations.

Progressive cost estimate finalization is inclusive of fulsome purchase versus lease trade-off analysis on key items across relevant construction phases. Quality risk analysis is also a major focus as various workstreams approach close-out.

Spatial Planning approval process progressing

Having been submitted in early December 2023 (refer South Harz ASX release dated 8 December 2023, Spatial Planning Application submitted), South Harz’s Spatial Planning Application for Ohmgebirge is now proceeding through the regulatory evaluation process. As announced last month, this includes public review of the documentation and undertaking of scheduled consultation meetings and other endeavours (refer South Harz ASX release dated 11 January 2024, Spatial Planning Application achieves important milestone).

Photographs copyright: Paul-Philipp Braun

This permitting process remains on track for targeted receipt of a spatial planning decision during Q2 CY2024. The overall permitting approach and regulatory schedule for Ohmgebirge is being led by highly experienced South Harz Regional Director, Dr Babette Winter.

NEW CHAIR APPOINTMENT

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) advises that existing non-executive director, Mr Len Jubber, has been appointed to the role of Non-Executive Chairman, effective from 1 February 2024. Len’s elevation to the Chair role follows the decision of incumbent South Harz Chairman, Mr Ian Farmer, to retire from the Board for personal reasons.

Len was appointed to the South Harz Board in March 2021 and is a civil engineering by training. With a professional mining and executive career spanning more than 30 years, he possesses a wealth of technical, commercial, and listed company leadership experience.

A good decision by SHP as the continuity of appointing an existing non-executive directorshows that SHP has confidence it its team to deliver this project,

SPATIAL PLANNING APPLICATION ACHIEVES IMPORTANT MILESTONE

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to advise that Spatial Planning Application (Application) documentation submitted for its flagship Ohmgebirge Potash Development (Ohmgebirge) has been made available to the public. Release of the Application documentation allows for the next phase of public consultation and signals another important step in the advancement of the Ohmgebirge approval process.

The Application documentation was prepared in conjunction with experienced environmental and permitting consultant, ERM, and includes an explanatory report, an environmental impact study, a preliminary species protection assessment and a spatial impact assessment document (refer SHP ASX release dated 8 December 2023, Spatial Planning Application Submitted). It is based on a brownfield development of Ohmgebirge which includes utilisation of the neighbouring Bernterode shaft infrastructure owned by NDH-E/DEUSA International GmbH (refer SHP ASX release dated 2 November 2023, MOU Executed for Existing Shaft and Infrastructure Utilisation).

As previously announced, a successful initial consultation meeting for South Harz’s Ohmgebirge Spatial Planning impact assessment was held during September 2023 (refer SHP ASX release dated 21 September 2023, Ohmgebirge Permitting Process on Track). No significant concerns or objections to the proposed development of Ohmgebirge were raised through that initial hearing process.

The Spatial Planning procedure is a fundamental approval process for infrastructure and industrial projects in Germany which occupy more than 10 hectares surface area. It involves assessing the impact of a project on the landscape, environment, economy, and broader social aspects. The process is designed to ensure the balancing of interests between the project proponent and all local stakeholders.

Following targeted receipt of Spatial Planning approval and post completion of the Ohmgebirge Environmental Impact Assessment (both expected H1 2024), South Harz is set to proceed with submission of a General Operating Permit for build approval. The overall permitting process for Ohmgebirge is being led by highly experienced South Harz Regional Director, Dr Babette Winter.

Management is slowly de-risking the project and with the PFS due out in a few months this should give the SP momentum to move higher

SHP have announced a capital raise to fund the finalisation of the PFS, with current cash at $2.4 Million at 30/9 so would be around $2.0 Million now plus the $2.4 Million for the raise gives SHP around $4.4 Million in cash with no debt which should fund the company for around 18 months so no further CR on the horizon, Announcement as follows:

A$2.4 MILLION CAPITAL RAISING TO FUND EXTENDED OHMGEBIRGE PROJECT PRE-FEASIBILITY STUDY

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to announce that it has received binding commitments for a placement to sophisticated and professional investors to raise approximately A$1.25 million (before costs) at an issue price of A$0.023 per share (Placement). Up to A$1.2 million in additional funds is also set to be raised via a 1-for-15 pro-rata non-renounceable rights issue to eligible shareholders (Rights Issue). The Company has engaged Morgans Corporate Limited (ACN 453 414 852) (AFSL 235407) (Morgans) to act as lead manager and bookrunner to the Placement and Rights Issue.

• Up to approximately A$2.4 million in new funding to be raised via Placement and Rights Issue.

• Funds raised to finalise delivery of Ohmgebirge Pre-Feasibility Study (PFS) targeting utilisation of the brownfield Bernterode shaft infrastructure as the base case development pathway.

• Well supported by existing institutional and retail shareholders including Australian and European investors.

• Directors to take up their full rights and partially underwrite a combined total of $170,000 of the Rights Issue.

• Ongoing cost efficiency initiatives delivering streamlined organizational presence and activities.

South Harz Managing Director and CEO, Luis da Silva, commented,

South Harz Board and management continue to minimise expenditure unrelated to completion of the PFS and appreciate the support of the existing shareholder base, who have demonstrated an unwavering belief in the immense potential value inherent in our flagship Ohmgebirge Potash Project. The team are dedicated to advancing this world-class development opportunity and committed to becoming the sustainable European MOP supplier of choice.

We look forward to sharing these outcomes with our current and potential future investors in early CY2024.”

My edited notes of the latest Hannam & Partners valuation is as follows:

Spatial Planning Application submitted,

PFS 85% complete South Harz Potash (“SHP”) has announced that the pre-feasibility study (PFS) for the company’s Ohmgebirge potash project in Germany remains on track for completion in Q2 2024 and is 85% complete. In addition, several workstreams have been completed to a level that are approaching definitive feasibility study (DFS) standard that should expedite the upcoming definitive feasibility study. SHP has also submitted the Spatial Planning Application for the project that is one of the key permitting documents. This is in line with guidance with the regulator having a six month period to evaluate the document. We maintain a valuation of A$0.44/share. We expect the shares to rerate as the planning, permitting, and pre-feasibility processes advance.

Spatial planning application submitted in line with guidance SHP has submitted the spatial planning application for Ohmgebirge based on the brownfield development of the project. The documentation includes an explanatory report, environmental impact study, preliminary species protection assessment and a spatial impact assessment document. The document was submitted to the Thüringer Landesverwaltungsamt (TLVwA) that now has a period of six months to consider the application that should be made available to the public in January 2024. We note no material concerns were raised during the initial consultation meeting that was held in September 2023. Once Spatial Planning approval is granted and the environmental baseline study is completed, the company will submit the application for the General Operating Permit. 

PFS workstreams now 85% complete, on track for Q2 2024 SHP has confirmed the PFS for Ohmgebirge is now 85% complete with the mine plan at near definitive levels of accuracy and the process flowsheet is at 90% of definitive study levels. The resource and maiden reserve are also approaching completion. Preliminary connection estimates have been provided by the suppliers of power, water, and gas. Technical discussions are ongoing with the owner of the neighbouring Bernterode shaft infrastructure (NDH-E/DEUSA) that should reduce both the timeline to production and initial capex for Ohmgebirge. SHP is evaluating a number of scenarios for development including a phased approach. This timeline is in line with management’s guidance from early November and will allow for the inclusion of Bernterode’s infrastructure.

Valuation: A$0.44/sh target price; significant debt funding likely available Given the early stage of development, future funding requirements, and uncertain nature of our modelling assumptions, we apply a 0.2x target P/NPV to our June 2024E A$1.6bn valuation to derive a valuation of A$0.44. The shares are clearly not currently trading in line with the underlying value of the project, in our view. The two releases demonstrate clear progress through the permitting and design process that should ultimately unlock the value of the project. The submission of the Environmental Impact Assessment (Q1’24) and completion of the PFS (Q2’24), should be the main upcoming catalysts, resulting in SHP’s share price reconnecting with the NAV of Ohmgebirge. The major catalysts beyond this are the DFS that should be completed by YE 2024 with final permitting and project development potentially commencing by the end of 2025.

I am still a believer in this company and look forward to the next 12 months

SHP have submitted the planning application for the Ohmgebirge development as the the ASX announcement:

SPATIAL PLANNING APPLICATION SUBMITTED

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to announce that its wholly owned subsidiary, Südharz Kali GmbH, has achieved an important milestone and submitted the comprehensive Spatial Planning Application (Application) for its flagship Ohmgebirge Potash Development to the responsible regulatory authority, Thüringer Landesverwaltungsamt (TLVwA).

The Application documentation was prepared in conjunction with international environmental and permitting consultancy, ERM, and includes an explanatory report, an environmental impact study, a preliminary species protection assessment and a spatial impact assessment document. It is based on a brownfield development of Ohmgebirge which includes utilisation of the neigbouring Bernterode shaft infrastructure owned by NDHE/DEUSA International GmbH (refer SHP ASX release dated 2 November 2023, MOU Executed For Existing Shaft and Infrastructure Utilisation).

Under the German Spatial Planning Act, the TLVwA now has a regulated period of six (6) months to consider and decide on the Application. During this time, the Application documentation will be made available to the public (expected to occur from January 2024) and further consultation facilitated.

As previously announced, a successful initial consultation meeting for South Harz’s Ohmgebirge Spatial Planning impact assessment was held during September 2023 (refer SHP ASX release dated 21 September 2023, Ohmgebirge Permitting Process On Track). No significant concerns or objections to the proposed development of Ohmgebirge were raised through that initial hearing process.

The Spatial Planning procedure is a fundamental step in the approval process for all infrastructure and industrial projects in Germany which occupy more than 10 hectares surface area. It involves assessing the impact of a project on the landscape, environment, economy, and broader social aspects. The process is designed to ensure the balancing of interests between the project proponent and all local stakeholders.

Following targeted receipt of Spatial Planning approval in mid-2024, and post completion of the Ohmgebirge environmental baseline studies (expected Q1 CY 2024), South Harz is set to proceed with submission of a General Operating Permit application for build approval. The overall permitting process for Ohmgebirge is being led by highly experienced South Harz Regional Director, Dr Babette Winter. 

South Harz Managing Director and CEO, Luis da Silva, stated, "The German permitting process is streamlined and offers the benefit of one leading authority regulating each project development approval. This approach delivers a high degree of predictability in respect of the overall process and provides us with a strong degree of confidence with respect to the timely securement of these approvals.”

South Harz Regional Director, Babette Winter, commented, "The submission of the Spatial Planning Application documentation is a significant day for South Harz and the Ohmgebirge Development. Our consultation with local stakeholders has been consistent, purposeful and constructive. It has also demonstrated the strong community support for development of Ohmgebirge and our commitment to world-class environmental and social practices.” 

SHP have released an announcement to the market as follows:

OHMGEBIRGE PRE-FEASIBILITY STUDY UPDATE

• Key PFS workstreams advancing on schedule, with overall progress now past 85% completion.

• Technical and commercial discussions advancing with neighbouring Bernterode owner, NDH-E/DEUSA, for long-term utilization of existing shaft and associated infrastructure in developing Ohmgebirge.

• Final PFS delivery on track for scheduled completion in early Q2 CY2024, inclusive of Bernterode shaft and infrastructure utilization as base case development pathway.

• Comprehensive Ohmgebirge Spatial Planning application to be submitted imminently to key regulator.

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) provides an update on the progress of the Pre-Feasibility Study (PFS) for its flagship Ohmgebirge Potash Development (Ohmgebirge) in central Germany. The PFS process is being led by highly experienced South Harz Chief Operating Officer (COO), Lawrence Berthelet, in conjunction with global potash development leader, Hatch.

Recent key milestones achieved by the combined engineering team (Hatch, K-UTEC, ERCOSPLAN and Micon), include:

• Mine plan nearing definitive-level accuracy, with ongoing optimizations driving further efficiencies.

• Updated Ohmgebirge Mineral Resource estimate and maiden Ore Reserve declaration approaching completion.

• Baseline process flow sheet, including mass balance, following bulk sample optimization evaluations, at 90% definitive feasibility study level. 

• Surface water containment design finalised including 100-year run-off event capture capacity.

• Power, water and gas supplies have been identified and a preliminary estimate for connection has been provided by each of the local utility supplier. All equipment and contract work required has been included in the estimate.

• Product storage and loadout strategy optimized to maximize rail freight utlisation, thereby reducing truck traffic and minimizing GHG emissions.

 • Ongoing value engineering activities driving capital and operating cost efficiencies for a brownfield development. 

Technical and commercial discussions advancing with neighbouring Bernterode shafts owner, NDH-E/DEUSA, focused on achieving the optimal engineering, environmental and economic outcomes for Ohmgebirge under a brownfield development route. Further business development opportunities that may give rise to increased technical and commercial synergies between the two operations are also being explored.

With the development now being brownfield rather than greenfield this should reduce the Capex significantly, all in all SHP is definitely moving in the right direction and give it 6 months the SP should re-rate.

SHP have released an announcement re their MOU for the use of existing infrastructure

MOU EXECUTED FOR EXISTING SHAFT AND INFRASTRUCTURE UTILISATION

• Non-binding MoU executed with Ohmgebirge neighbour, Deusa, for long-term utilisation of existing Bernterode shaft and associated infrastructure to deliver accelerated access to the Ohmgebirge deposit.

• Binding exclusivity granted to South Harz until 31 March 2024 to reach definitive commercial agreement.

• Delivers a brownfield development pathway that offers substantial time, capital cost and footprint advantages versus greenfield shaft construction, reducing timeline to first production.

• Bernterode’s existing shafts are located only 1,500m from the Ohmgebirge tenement boundary, contiguous with the Ohmgebirge deposit.

• Ohmgebirge’s Spatial Planning Application, incorporating utilisation of Bernterode infrastructure as the base case development pathway, is on track for submission during Q4 CY2023.

• Ohmgebirge Pre-Feasibility Study now targeted to be delivered in early Q2 CY2024, allowing optimised and fulsome inclusion of Bernterode brownfield development pathway.

The use of the existing shaft should save approx $80-$100Million US from the initial capital cost so is a good initiative from the company, the only downside is the pushing out of the PFS by 4 months to Q2 CY2024 which I am sure dissapoints some shareholders

SHP have released an update regarding the Ohmgebirge development as follows:

OHMGEBIRGE PRE-FEASIBILITY STUDY UPDATE

• All key PFS workstreams on time and budget, with overall progress now past 75% completion.

• Potential brownfield development pathway utilising existing regional shaft infrastructure delivers substantial time and capital cost advantages.

• Final PFS report on track for scheduled completion during December 2023.

• Initial spatial planning consultation and hearing process successfully completed.

South Harz Potash Limited (ASX: SHP) (South Harz or the Company) is pleased to provide an update on the progress of the Pre-Feasibility Study (PFS) being undertaken on its flagship Ohmgebirge Potash Development (Ohmgebirge) in central Germany. The PFS process is being led by highly experienced South Harz COO, Lawrence Berthelet, in conjunction with global potash development leader, Hatch.

All key PFS workstreams are running on time and budget, with overall progress now having achieved the 75% completion level. The final PFS report remains on track for scheduled completion during December 2023.

Recent key milestones achieved by the combined engineering team, including Hatch, K-UTEC, ERCOSPLAN and Micon, include:

• Engineering studies progressing on brownfield and greenfield development options.

• Preferred base case layout option is installation of PocketLift conveyor and personnel/material cage in an existing shaft, thus optimizing existing infrastructure utilization and capital efficiency.

• Mine plan completed in September, optimizing both drill and blast and continuous mining methods.

• Planned utilization of underground crushing to accommodate PocketLift conveyor haulage; ventilation and haulage optimizations complete.

• Bulk sample testing completed confirming grade and recovery predictions; further opportunities discovered on leach residue and brine purification to optimize tank and clarifier layouts.

• Plant process flow diagrams and equipment list complete; 3D plant model to be finalised shortly.

• Dynamic modelling for both raw ore and product storage facilities finalised.

• Multiple Effect Evaporator (MEE – steam) versus Mechanical Vapour Recompression (MVR – electrical) trade-off evaluation completed; decision to take advantage of stabilizing power prices and adopt MVR.

• Total utilities estimates (power, water and gas) finalised from final mass balance.

• Loadout and rail engineering advanced to estimates stage; storage, load-out and rail facilities designed to dynamic shipping model based on optimised potash and salt marketing studies.

• Intermediate Tails Pile (ITP) optimised to mine plan to minimize size and existence timeframe of ITP.

The PFS scope also includes the analysis of options to limit peak capital requirements of the project, while retaining attractive overall economics. This includes not only brownfield options but also alternative approaches to capacity design, including a potential phased approach to capacity build-up.

This update follows confirmation last week that the initial spatial planning consultation and hearing process for Ohmgebirge was successfully completed with key local, NGO and regulatory stakeholders (refer South Harz ASX release dated 21 September 2023, Ohmgebirge Permitting Process On Track). Pleasingly, this process saw no significant concerns or objections raised on the application for Ohmgebirge.

South Harz continues to compile the full Spatial Planning Application for Ohmgebirge, which remains on track for submission to the regulator in early Q4 CY2023. Under the regulatory framework, the decision on spatial permitting is required within six (6) months of submission of the Spatial Planning Application.

SHP have released an announcement regarding their permitting process

OHMGEBIRGE PERMITTING PROCESS ON TRACK

Initial consultation and hearing process successfully completed with key local, NGO and regulatory stakeholders for Ohmgebirge Development.

• Positive, constructive dialogue with no significant concerns or objections raised on the application.

• Full Spatial Planning Application for Ohmgebirge remains on track for submission in early Q4 CY2023. 

South Harz Potash Limited (ASX: SHP) (South Harz or the Company) is pleased to advise that the consultation hearing for its Ohmgebirge Potash Development (Ohmgebirge) Spatial Planning Scoping Paper was successfully held on 16 September 2023 in Thuringia, Germany. 

My edited notes of the Hannam & Partners valuation is as follows and is worth a read as I believe that the market has not woken up to the true value of SHP. There is some concern in relation to funding but with the expected reduced capex then this should be feasible.

South Harz Potash (“SHP”) announced a capital raise of A$2.4m through a placement at A$0.03/share with an attached 1 for 4 option with an exercise price of A$0.08/share and a three year term. Board members committed A$0.245m to the issue and a further A$0.99m was raised as part of a Share Purchase Plan.

Actual total funds raised with SPP and placement strengthens treasury with an additional amount of A$3.6m million

So SHP is well-funded to facilitate ongoing advancement of the Ohmgebirge potash development, including completion of the PFS currently in progress, targeted for completion later this year

The main near term catalysts for the stock should be the submission of the spatial planning application for the project and the completion of the PFS, both of which should occur before the end of the year.

The company also announced the appointment of Seamus Cornelius as a NED. Mr Cornelius is an experienced entrepreneur and executive who is currently executive chair of Danakali, which sold the Colluli potash project in Eritrea for US$166m of cash in 2023.

The Hannam & Partners target for SHP is A$0.44/share, suggesting ~1,000% upside. Brownfield development would cut capex and enhance NPV SHP’s preferred option is for a brownfield development route for Ohmgebirge that would utilise the existing nearby shaft infrastructure at Bernterode, 1,500m from the deposit, and a non-binding consent order has been signed with the shaft’s owner, NDH-E/Deucalion. 

The previous scoping study returned a NPV8% of US$1,279m with a 26.6% IRR and US$620m initial capex (capital intensity of US$620/t MOP vs. US$800-1200/t greenfield peers). Construction could start in 2025 with first production in 2028.

1Mtpa of Muriate of Potash (MOP) and 2Mtpa of salt (NaCl) will be produced (1Mtpa sold with remaining backfilled) over a 21-year mine-life. All-in costs were estimated at US$92.6/t of MOP, net of US$79/t salt by-product credits (salt accounts for 17% of life of mine sales). The project offers good access to western European markets through the German road, rail, barge, and port network.

MOP prices have pulled back but demographics should drive higher MOP prices initially surged in the wake of the Russian invasion of Ukraine with FOB Vancouver prices peaking at US$1,202/t in April 2022 driven by concerns about supply, with Russia accounting for 19% of supply and its close ally Belarus accounting for 17%. These have since faded with prices pulling back and currently trading at US$341/t.

Over the longer term we expect prices to be driven by global demographics and the need to optimise the world’s capacity to sustain a population that the UN forecasts to increase from 8 billion at present to 10.4 billion by 2100.

Valuation: A$0.44/sh target price; significant debt funding likely available Given the early stage of development, future funding requirements and uncertain nature of our modelling assumptions, we apply a 0.2x target P/NPV to our June 2024E A$1.6bn valuation to derive a target price per share of A$0.44, ~1,000% above the current share price.

The shares are not currently trading in line with the underlying value of the project, in our view. We believe that the completion of the PFS should be a material catalyst that should result in SHP share price reconnecting with the NAV of Ohmgebirge.

In our view, Ohmgebirge is a world class project in a low risk jurisdiction. In addition, the brownfield development route should cut the time to production and initial capex. No further drilling is required to reach Feasibility Study stage, allowing SHP to keep a lean cost structure ahead of project financing if just focusing on Ohmgebirge. 

SHP have appointed a new director as follows:

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to advise that Mr Seamus Cornelius has been appointed as a non-executive director with effect from 21st August.

Mr Cornelius is the current Executive Chairman of Danakali Limited (ASX:DNK) (Danakali), a role he has held since July 2013. Over that time he led the advancement of Danakali’s 50% interest in the Colluli Potash Project in Eritrea including the completion of progressive feasibility studies, environmental impact assessments and regulatory approvals, to its eventual sale to Sichuan Road and Bridge Group Co Ltd in early 2023 for US$166 million in total cash consideration.

Mr Cornelius is a corporate lawyer and former partner of one of Australia’s leading international law firms. He brings extensive legal and commercial experience in the execution of cross-border transactions, particularly in the resources and finance sectors.

Mr Cornelius is currently also the Non-Executive Chairman of Buxton Resources Limited (ASX:BUX), Element 25 Limited (ASX:E25), Duketon Mining Limited (ASX:DKM) and he is a Non-Executive Director of First Tin PLC (LON:1SN). 

SHP have announced a Capital raising to advance Ohmgebirge project

• Firm commitments received to raise approximately A$2.6 million via an equity placement undertaken at A$0.03 per share (with a 1-for-4 attaching option at a strike price of A$0.08 and 3-year expiry).

• Well supported by existing shareholders and other investors (including new institutional participants), and inclusive of an approximate A$0.2 million total commitment from South Harz Board members.

• Share Purchase Plan offer to all eligible shareholders to raise up to an additional A$0.5 million on the same terms as the placement; expected to open next week.

• Funds raised to drive the delivery of the Ohmgebirge Pre-Feasibility Study (PFS) (led by South Harz COO, Lawrence Berthelet, in conjunction with HATCH), permitting and environmental baseline study work, as well as early commencement of select Definitive Feasibility Study (DFS) workstreams and general working capital.

Proceeds from the Placement and SPP are planned to be directed towards:

• Progression and completion of the PFS on South Harz’s flagship Ohmgebirge Potash Development;

• Environmental baseline study work and permitting process advancement;

• Early commencement of select Ohmgebirge DFS workstreams; and

• General working capital.

Another step in developing this project

OHMGEBIRGE PFS ON TIME AND ON BUDGET

• Ohmgebirge Pre-Feasibility Study (PFS) 50% complete, on time and on budget with final report due in December 2023

• Final site selection in progress including brownfield optionality with neighboring Bernterode shafts offering substantial potential savings to overall capital expenditure

• Bernterode shafts are located 1,500m from Ohmgebirge tenement boundary and proximal to the thickest sections of Ohmgebirge deposit

• South Harz PFS team is led by South Harz COO, Lawrence Berthelet, in conjunction with global potash development leader, HATCH

• Ohmgebirge 3D geological resource model complete reinforcing the world-class nature and scale of the South Harz potash mineralisation

The PFS which has been confirmed as due later this year looks to have a reduced capital expenditure with the option of a brownfield site.

SHP have just released research by Hannam & Partners

Most of the discussion was around the various opinions as per my previous post, but the valuation is interesting, which is as follows:

Valuation: A$0.42/sh target price; significant debt funding likely available

Given the early stage of development, future funding requirements and uncertain nature of our modelling assumptions, we apply a 0.2x target P/NPV to our June 2023E US$1.1bn valuation to derive a fully diluted target price per share of A$0.42, >14x the current share price. No further drilling is required to reach FS stage, allowing SHP to keep a lean cost structure ahead of project financing if just focusing on Ohmgebirge.

The above valuation is a 1305% premium to the current price of $0.03 so there is certainly some upside to this stock

Scoping Paper submitted to Thuringian state regulatory authority outlining two development pathways for Ohmgebirge

: • Brownfield at Bernterode - utilising existing shaft infrastructure historically used for potash mining

• Greenfield at Haynrode - new shaft construction

• Preferred brownfield option provides potential savings to overall capital expenditure

. • Non-binding consent received from owner of Bernterode shafts (NDH-E/Deusa) to submit Scoping Paper with brownfield pathway option

. • Bernterode shaft is located only 1,500m from Ohmgebirge tenement boundary and is contiguous with Ohmgebirge deposit

. • Full Spatial Planning Application submission targeted by Q4 2023

. • Process requires a regulatory decision on the spatial permitting of the Project within six months of Spatial Planning Application submission. 

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to announce that its whollyowned subsidiary, Südharz Kali GmbH, has commenced the planning approval process for the Ohmgebirge Potash Development (Ohmgebirge or the Project) by submitting the requisite Scoping Paper to the state regulatory body, Thüringer Landesverwaltungsamt (TLVwA).

Pleasingly the permitting process will include brownfield optionality utilizing existing shaft infrastructure at Bernterode. 

The spatial planning approval process has two main steps as outlined below.

Step 1 – Scoping Paper (submitted) The submission of the Scoping Paper is a preliminary step in commencing the spatial planning procedure. The Scoping Paper provides the TLVwA with an overview of the scope of work and supporting documentation planned for inclusion in the full Spatial Planning Application. The Spatial Planning approval process is designed to ensure that the land use planned by a particular development is compatible with the objectives and principles of regional planning and spatial development. Following the submission of the full Spatial Planning Application, as the Project moves towards development, the Company will then apply for General Operations Permit.

The Scoping Paper for the Project incorporates two potential development pathways (inclusive of two suboptions) with respect to underground and surface infrastructure:

 Option 1: Bernterode (brownfield; existing shaft) A) Bernterode shaft and Bernterode railway station B) Bernterode shaft and Leinefelde

Option 2: Haynrode (greenfield; new shaft) A) Haynrode and Leinefelde   B) Haynrode and Bernterode railway station

Step 2 – Spatial Planning Application (to be submitted in Q4 2023) Based on feedback and consultations with various stakeholders, the final Spatial Planning Application will be based on a single proposed development pathway. The regulatory timeframe from submission of the Spatial Planning Application to a decision from the TLVwA is a maximum of six months. South Harz has received the non-binding consent of the existing owner of the Bernterode shafts, NDH-E/Deusa, to submit the Scoping Paper inclusive of Option 1. The Company is advancing constructive discussions with NDH-E/Deusa with respect to the potential of such a highly capital-efficient development pathway which has the potential to realise significant capital savings. South Harz notes that the Ohmgebirge Scoping Study (August 2022) was based on a higher capital cost greenfield shaft development pathway (Option 2). 

OHMGEBIRGE SITE SELECTION REFINED AND ENVIRONMENTAL BASELINE STUDIES COMMENCED

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to advise that its initial site selection process has delivered three leading areas for locating the planned Ohmgebirge potash mine infrastructure and process plant. Baseline environmental mapping of these three potential sites, including fauna and flora surveying, has commenced in order to advance more detailed evaluation and final site selection.

South Harz Chief Operating Officer, Lawrence Berthelet, commented, "After an intensive initial evaluation process of potential sites, we have narrowed the list of focus locations to three areas, including one brownfield site. The three areas were selected on the basis of a number of factors including geological attributes, existing infrastructure (including underground), and minimization of social and environmental impacts.”

The three selected areas (see Figure 1) are located:

• near the village of Bernterode-Schacht;

• on the north-western edge of the Haynrode district; and

• within the Regional Planning industrial area "RIG 2" on the outskirts of Leinefelde.

South Harz has engaged leading specialist consultant, ERM, to carry out the Environmental Impact Assessment for the Ohmgebirge project . This engagement includes the baseline environmental survey work outlined above.

BULK SAMPLING AND PROCESS DESIGN TEST WORK

• Five-tonne bulk sample taken at 790m depth from historic Bernterode potash area.

• Bernterode shaft located approximately 1500m from South Harz’s flagship Ohmgebirge tenement boundary, sampling area zone only 700m.

• Hartsalz potash seam which produced MOP in historic mining at Bernterode is contiguous with Ohmgebirge deposit.

• Delivers valuable large-scale sample for ongoing Ohmgebirge process design test work and de-risking.

• Demonstrates potential effective ‘brownfield’ status of Ohmgebirge development given proximity toneighbouring shaft and underground infrastructure.

Another step in bringing this resource to the market

Hannam & Partners have released a report giving a target price of $0.42 per share by 30th June,  they have applied a 0.2x target P/NPV to their June 2023E of US$1.1bn valuation to derive a fully diluted target price per share of A$0.42.

South Harz Appoints Leading Industry Specialists & Commences Ohmgebirge Potash Project PFS

• Preliminary Feasibility Study (PFS) on the Ohmgebirge potash project underway with the appointment of specialist team of consultants to deliver the PFS

• Hatch to lead the team including German engineering consultants ERCOSPLAN in the role of mining specialist, K-UTEC as process consultant, and Micon for Resource Geology

• South Harz PFS project team led by Chief Operating Officer Lawrence Berthelet

South Harz Potash Limited (ASX:SHP) (South Harz or the Company) is pleased to announce that it has appointed its specialist team to deliver the PFS for its 100%-owned Ohmgebirge potash development project in Thuringia, Germany.

Hatch is a recognised leader in the development and implementation of potash projects globally and has worked on projects in Europe, North America and beyond. ERCOSPLAN and K-UTEC have a long tradition in the development of potash projects in many parts of the world, and both are particularly experienced in the Thuringian “hartsalz” typical of the region. Micon will continue to provide geological support and will be responsible for the Mineral Resource Estimate.

The PFS is set to further refine the engineering, design and cost estimates (to +/-20%) for the Ohmgebirge Development, following the Scoping Study completed in August 2022. Key workstreams have already commenced with overall PFS completion scheduled for January 2024.

Another step in the process of getting this mine up and running

SHP have released their quarterly activities report , with the main points as follows:

• Quarter marked by consolidation and project readiness ahead of commencing the Ohmgebirge Pre-Feasibility Study (PFS)

• PFS progressing in line with overall schedule with key workstreams including:

o Site selection dovetailing with permitting and preparation for baseline studies of the Environmental Impact Assessment (EIA).

o Work included options on greenfield sites versus brownfield to utilise existing infrastructure where available.

o Request for quotations from tendering parties to participate in the PFS and EIA.

o Selection of preferred bidders and consultant consortium.

• Metallurgical test work results performed by K-UTEC confirmed the suitability of Ohmgebirge processing route outlined in Scoping Study in order to achieve production of K60 (agriculture sales grade) MOP.

• Küllstedt and Gräfentonna exploration licenses granted three-year extensions by the Thuringian mining authority Thüringer Landesamt für Umwelt, Bergbau und Naturschutz (TLUBN)

• Proven natural resources business leader and executive, Mr Luis da Silva, appointed as Managing Director and CEO in November 2022.

• Deeply experienced potash industry executive and non-executive director, Mr Lawrence Berthelet, appointed Chief Operating Officer (COO), effective 1 January 2023.

• Completion of A$3.0 million Placement with strong support from all Directors for the advancement of Ohmgebirge near-term value-adding initiatives and PFS workstreams.

• Cash balance of A$5.8 million at 31 December 2022 (with a further A$625,000 to be received from Directors following shareholder approval, and zero debt.

SHP are in a good position and are certainly worth a lot more than their current share price suggests

METALLURGICAL TEST WORK CONFIRMS OHMGEBIRGE PROCESSING ROUTE

SHP have released a report confirming their processing process for their first development,

• Metallurgical test work validates scoping study process flow design

• Targeted K60 grade MOP product confirmed

• Byproduct NaCl produced as chemical grade vacuum salt with a purity of >99%

• Potential Mg(OH)2 and CaCO3 process byproducts identified

• Feasibility Study level metallurgical test work scheduled to commence Q1 CY23

South Harz Potash Limited (ASX:SHP) is pleased to report that it has received encouraging results from metallurgical test work completed by K-UTEC AG Salt Technologies (K-UTEC). Test work was performed on core samples collected from drillholes OHM-01 and OHM-02 completed during 2022 within the Ohmgebirge Mining Licence1.

Results of the metallurgical test work confirm the process route selected for the Ohmgebirge Scoping Study is suitable for processing the ore type expected to be delivered to the mill.

This is a positive and one of the many hurdles the company need to overcome to get its first project up and running