South Harz Potash Ltd (ASX:SHP) will soon turn the soil on its flagship Ohmgebirge Potash Project in Germany after securing a key drilling permit.
A German regulatory body, known as TLUBN, has given the nod for the potash exploration and development company to drill the first of two planned confirmatory holes.
South Harz has since reached out to its drilling contractor and asked it to begin work on drill hole OHM-02, and it anticipates it will receive approval for the second hole shortly.
Drilling should take between eight and 10 weeks to conclude, with work scheduled to finalise early in the coming quarter and cost EUR2.3 million to complete.
Ultimately, the permit brings South Harz a step closer to its overarching goal: becoming a world-class producer and supplier in central Germany, which has been a prolific potash hub for more than a century.
“An important juncture”
Speaking to the approval, South Harz managing director Dr Chris Gilchrist said securing the drilling permit was a major milestone for the company.
“Drilling at OHM-02, and eventually OHM-01, provides us with a clear path forward, allowing South Harz to fully evaluate Ohmgebirge and secure the necessary information required to complete a preliminary technical and economic viability assessment.
“I would like to extend my congratulations to the executive team who brought us to this important juncture and look forward to providing updates on the progress made in the coming months.”
Let the drilling commence
In mid-July, South Harz locked in landowner and tenant approval to execute the second of two planned confirmatory drill holes at the project.
Drilling contractor H Anger’s Sohne Bohr – und Brunnenbaugesellschaft, also known as Angers, was selected earlier that month to drill the pioneer hole.
With approval now received, OHM-02 is planned to reach 665 metres in depth, fully penetrating the known potash horizon in the area.
From here, South Harz will recover potash core from depth to provide a better picture of historical drilling.
What’s more, OHM-02 will twin with a historical drill hole that returned as much as 5.5 metres at 14.4% potassium oxide from 651.7 metres.
However, the drilling permit remains conditional on SHP remediating the drill site, grouting the drill hole after exploration and ensuring the surrounding soil and water is not contaminated.
Meanwhile, an application for the second confirmatory drillhole at Ohmgebirge, OHM-01, was submitted to the TLUBN in early July 2021.
Once confirmation is received, SHP expects drilling to commence immediately after OHM-02 is complete.
Resource upgrade and scoping study
With the permit under its belt, SHP is a step closer to proving up the existing mineral resource estimate (MRE) at Ohmgebirge.
SHP’s existing inferred resource stands at 5.3 billion tonnes, with its flagship project making up 325 million tonnes of that resource, grading 13.1% potassium oxide.
The Ohmgebirge mineral resource, reported in December 2019.
It’s hoped results from both of the confirmatory holes will allow South Harz to upgrade the current Ohmgebirge inferred resource to the indicated category.
Beyond that, the revised MRE will allow South Harz to report technical and economic information about Ohmgebirge for the first time in a scoping study.
Essentially, the study will include a detailed resource assessment by Micon International Co Ltd and results from the twin drill holes.
Once a revised MRE is complete, K-Utec Salt Technologies GmbH will review the scoping study’s mining and processing sections and update both capital and operating costs.
The study will also include an expert appraisal of the potash and industrial salt markets and provide guidance price forecasts for a financial model.
South Harz anticipates it can complete the scoping study in 2022’s first quarter.
