South Harz Potash well-positioned to become a leading European supplier of choice

South Harz Potash Ltd (ASX:SHP) is well-positioned to become a leading European supplier of choice as it progresses its large potash resource in the South Harz region of Germany.  The company is building Western Europe’s largest potash inventory and aims to become a world-class potash producer through the development of all or some of its projects.  SHP managing director Dr Chris Gilchrist said: “The company is on track to complete a short drilling program in advance of issuing an updated mineral resource estimate and technical and economic study by the end of 2021."  Significant potash resource The company's portfolio of licences represents Western Europe’s most significant potash resource, comprised of high-grade Muriate of Potash (MOP) inferred mineral resources (JORC 2012) and valuable potassium and magnesium sulphate minerals at relatively shallow depths. SHP holds three perpetual mining licences - Ohmgebirge, Ebelebenand Mühlhausen-Nohra - and two exploration licences - Küllstedt and Gräfentonna - covering a total of around 659 square kilometres in the South Harz Potash District in north-western Thüringia, central Germany. The three perpetual mining licences have no attaching rent or royalty conditions and these are in a region with an ingrained potash mining history and established infrastructure. It has identified at least four potential project areas across its licences, with Ohmgebirge its flagship project due to its relative shallowness, high level of capital efficiency and potential to use existing proximate vertical shafts during construction. With perpetual mining licences already secured, SHP enters the process at an advanced stage, with its permitting process running in parallel with other project activities. Permitting is already well advanced and the proposed mining and processing methods for Ohmgebirge and Nohra-Elende are environmentally conscious. SHP controls over 5.25 billion tonnes (grading 10.8% potassium oxide) of JORC inferred resource, including 1.85 billion tonnes of sylvinite grading 13.2% potassium oxide. Total contained potassium oxide for the Ebeleben, Mühlhausen-Nohra and Ohmgebirge mining licences and the Küllstedt exploration licence now exceeds 566 million tonnes. Change in name Davenport Resources officially changed its name to South Harz Potash Ltd after receiving shareholder approval at its general meeting in May 2021.  It also launched its new website: http://www.southharzpotash.com. The board believes that a name associated with the region in Germany, where the company’s assets are situated, together with the intended end-product, will better represent the company.  SHP’s Gilchrist said: ”This represents the first of many milestone events we anticipate in the coming months as we re-shape our company to build a stable platform from which to develop our outstanding assets in Germany. Its 100%-owned German subsidiary already changed its name to SüdHarzKali GmbH. Ohmgebirge – the starter project The Ohmgebirge scoping study supports the potential for low-cost, low mining and processing risk, long-life project. With shallow depth of resource, access to bulk samples and proximity of infrastructure, it has low capital expenditure requirements. It has high-grade sylvinite and is suitable for fast-trace implementation. The company completed its highly successful regional media campaign in the first quarter of 2021 and is targeting drilling in the summer of 2021, with scoping study by the year-end. SHP plans to prepare Ohmgebirge this year for the definitive feasibility study (DFS) in 2022. New CFO SHP has added another building block in the development of its world-class portfolio with the appointment of Andrew Robertson as chief financial officer. Based in Sussex, UK, Robertson is an experienced CFO, who has previously been instrumental in company restructuring, stock exchange listings, equity and debt raising and numerous systems developments and business efficiency projects. SHP’s Dr Gilchrist said: “The augmentation of Andrew’s skill set to the executive team will be hugely complimentary as we work to deliver our top-tier growth program.” The company also appointed Len Jubber to the board as a non-executive director. Jubber was chief executive of Bannerman Resources Limited (ASX:BMN) (OTCMKTS:BNNLF) (FRA:BH6), a uranium development company, for eight years with prior roles including chief executive of Perilya Ltd, a zinc and lead producer, and chief operating officer of OceanaGold Ltd. In a mining career spanning more than 30 years, he brings a wealth of technical, commercial and corporate experience which will complement the current board composition.  Transformational share placement In November 2020, the company completed a transformational A$10 million placement, putting it in a strong financial position to advance its portfolio of projects. Dr Gilchrist said the capital raising was “transformational” for the company, representing the top end of the directors’ target of A$8-10 million. Funds raised will allow the company to move forward with a confirmatory drilling program at the first of the projects, Ohmgebirge, to upgrade the classification of the 325 million tonnes at 13.14% potassium oxide for 43 million tonnes of potassium oxide resource from the inferred category to measured and indicated and facilitate the release of its encouraging economic study. Work will also commence on Ohmgebirge’s DFS, with the balance of funds raised to be used for working capital purposes. New European supplier The gap between demand and production is growing and Europe will need new capacity, but with a strong environmental, social and governance (ESG) presence. Future potash sales will rely increasingly on local sources, with low cost and superior ESG credentials. SHP intends to grow quickly into a multi-project company by initiating projects sequentially. It noted that it is operating in a low-risk jurisdiction in Germany where the regional government is supportive of job creation projects. Further, it is in close proximity to European markets with the lowest carbon supply capability. Market forecast Prices are expected to recover in 2021 to $270- $330/tonne as post-COVID food security is prioritised. It sees a short-term price dip forecast in 2027 if new proposed projects come to fruition. However, low-cost producers are often located remotely, adding to logistic costs and high delivery carbon footprint. Demand will be driven by China and Brazil, with the dramatic crop price increases in 2021 seen as bullish for potash demand. Long-term prices of $260-$320 are predicted. The SHP strategy presents a compelling investment opportunity as the growing world population demands an increasing amount of high-quality food products