Ann: Jaylon Awarded Liner Supply and Install Contract, page-4

Equities | AustraliaKalium Lakes (KLL AU) - Pond liner contract locked down for A$15m09 July 2019 FlashnoteRecommendation: OutperformError! Filename not specified. Price targetA$1.00 12-month TSR+63.9% EventKLL has awarded a A$15m contract to Jaylon Environmental Systems Pty Ltd for the supply, transport and instillation of a 1mm liner for the evaporation ponds at the Beyondie Sulphate of Potash Project (Beyondie).ImpactA$15m Liner contract awarded: KLL has awarded a A$15m contract to Jaylon Environmental Systems Pty Ltd for the supply, transport and instillation of the 1mm thick liner for Beyondie’s evaporation ponds. The contract is to line 100% of the 400ha of evaporation ponds that are planned for Stage 1. Jaylon is the same supplier and installer of the 1mm liner that was successfully used for the 10ha piolet scale ponds that were completed at Beyondie in 2011.7% of capex lifts recoveries by 15%: The use of pond liners is a key differentiator between KLL’s production strategy compared to other prospective Australian SOP developers. While unlined on-lake ponds may be suitable for other situations, KLL has opted to spend ~7% more project capital to line 100% of the evaporation ponds. Lined ponds are expected to improve Beyondie’s overall SOP recoveries by +15% due to a dramatic reduction in brine leakage. KLL Ponds will be engineered to be trafficable by heavy salt harvesting machinery, over a relatively thin layer of precipitated salt, sooner than most on-lake pond designs. Action and recommendationMaintain Outperform. An important update from KLL with the awarding of the pond liner contract confirming the capital cost benefit from lining 100% of the evaporation pond surface by improved recoveries. Minimising leakage from lining ponds has allowed KLL to reduce the overall evaporation pond area and brine pumping requirements while also minimising the loss of the high-value concentrated brines. The engineered pond design will also allow harvesting from heavy machinery earlier than most on-lake pond configurations with a thinner layer of salt precipitate required to support machinery.