Salt Lake Potash : December 2016 Quarterly Report

ASX ANNOUNCEMENT‌

31 January 2017‌ DECEMBER 2016 QUARTERLY REPORT

The Board of Salt Lake Potash Limited (the Company or Salt Lake) is pleased to present its quarterly report for the period ending 31 December 2016.‌

Highlights:

Surface Aquifer Exploration Program

• An 8.5 tonne amphibious excavator completed 127 shallow test pits and 7 trial trenches in the shallow aquifer at the Lake Wells Project. Sustained pump tests were completed on two 4.5m deep trenches in the southern part of the Lake. Highlights include:

  • Modelled annual flow rates of 1.1 - 1.3 Litres per second (L/s) based on a 1 year simulated model of the results recorded during the 50m trial trench pump test.

  • Modelled annual flow rates of 0.23 - 0.28L/s based on a 1 year simulated model of the results recorded during the 25m trial trench pump test.

    Deeper Paleochannel Aquifer

• The off-lake aircore drilling program, targeting the Lake Wells paleochannel, continued to successfully intersect Basal Paleochannel Sediments along the entire length of the paleochannel unit, which will comprise the main productive aquifer in the deeper part of Lake Wells brine resource.

• A second off-lake bore in the deep basal sand aquifer in the northern part of Lake Wells was test pumped at a constant rate of 8L/s for 4 days. The drawdown data exhibited boundary conditions consistent with the paleochannel setting.

  Process Development Testwork

• The Company conducted a range of process development testwork to significantly enhance the Lake Wells process model. Substantial volumes of brine from Lake Wells were concentrated into harvest salts (Potassium and Sulphate mixed salts) in three separate trials under simulated and actual site conditions.

• The conversion and crystallisation of harvest salts at Hazen Research in Colorado then produced the first Sulphate of Potash (SOP) samples from Lake Wells brine.

• An extensive Site Evaporation Trial (SET) was established at Lake Wells. The SET has to date processed approximately 125 tonnes of brine and producing harvest salts on a continuous basis. The SET will continue to operate for up to 12 months generating site specific evaporation data and producing sufficient harvest salts for bulk production of SOP samples for distribution to potential partners and customers.‌

  Regional Lakes

• Geophysical surveys were performed at Lake Irwin and Lake Ballard to resolve the geometry of the paleovalley, and to define the position and depth of the paleochannel at each Lake.

• Initial evaporation testwork on Lake Irwin brine confirmed the suitability of harvest salts for SOP production.

Enquiries: Matthew Syme

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LAKE WELLS EXPLORATION

Surface Aquifer Exploration Program

In November 2016, the Company mobilised an 8.5 tonne amphibious excavator to gather further geological and hydrological data about the shallow brine aquifer hosted by the Quaternary Alluvium stratigraphic sequence in the upper 20 meters of Lake Wells.

The aim of the program is to evaluate the geology of the shallow Lake Bed Sediments, and to undertake pumping trials to provide estimates of the potential brine yield from trenches in the shallow sediment.

The excavator program is also providing important geological and geotechnical information for potential siting and construction of trenches and on-lake brine evaporation ponds.

The program to the end of 2016 included the excavation of 127 test pits in three tranches over the lake playa (refer to Figure 1). The test pits were generally excavated to an area of 1 meter x 1.5 meters and a depth of 4 meters and are representative of the shallow stratigraphy of the Lake playa.

Trench P3a

Trench P2a TrenchP2b

Trench P1d

Trench P1c

Trench P1e

Trench P1a

Figure 1: Map of Lake Wells Trench Locations

The test pits were logged for geology, hydrology and brine chemistry during the excavation process. Particle Size Distribution (PSD) samples and brine samples were taken from each pit.

The test pits were also subject to short duration pumping tests in order to analyse the recovery of the brine levels in the test pits.

Based on the geology and hydrological information from the test pits, a number of sites for excavation of larger test trenches were chosen, reflecting the variability of the geology and hydrogeology encountered in the lake playa sediments.

A total of seven trenches were excavated on the chosen sites, each approximately 4.5 meters deep and between 25 meters to 50 meters long. Benching was used to provide geotechnical stability for the trench sidewalls and the resulting trenches are approximately 5m wide at the surface and 1m wide at the base.

Five of the trenches were located in the southern end of the Lake Wells, in close proximity to the Evaporation Trial Site (see Figure 3).

To date two trenches have been test pumped (P1a and P1c in Figure 3).

Figure 2: Test Trench Excavation at Lake Wells

ASX ANNOUNCEMENT | 31 January 2017

Evaporation Trial Site

Figure 3: Trench and Test Pits in the Southern part of Lake Wells

Geology of the shallow sediments

Based on the widespread test pits the shallow aquifer geology is reasonably uniform across the Lake. The shallow sediment is generally composed of Cenozoic (Quaternary - Holocene) brown to white to red, unconsolidated, gypsiferous sand, silt and clay with a strong overprint of ferric oxides from 0.5 to around 3 - 8m depth. Dominated by sub-angular, well sorted, very fine to medium quartz sand, the sand commonly grades progressively to a more silt and clay dominated sediment with depth, with occasional interbedded sand lenses. Authigenic prismatic and tabular gypsum is common, growing in discontinuous, vein-like structures throughout the unit, with a large variety of crystal sizes. Minor, medium-grained lithic fragments can be found throughout this gypsum.

Trench P1a (25m)

The geological sequence in P1a consisted of a 0.7m layer of surficial coarse grained evaporate sand overlying silt and clay with evaporate clasts to 3m depth. Plasticine clays were encountered from 3m to the base of the trench. The trench appears to have average brine flows in visual comparison to other trenches and test pits.