Salt Lake Potash : Work Accelerates at the Goldfields Salt Lakes Project

ASX ANNOUNCEMENT

20 June 2017 WORK ACCELERATES AT THE GOLDFIELDS SALT LAKES PROJECT

The Board of Salt Lake Potash Limited (the Company or SLP) is pleased to provide an update on the Company's Goldfields Salt Lakes Project (GSLP), where work has accelerated substantially after the end of the summer wet season.

The Company's primary focus is to construct a Pilot Plant at the Goldfields Salt Lakes Project, intended to be the first salt-lake brine Sulphate of Potash (SOP) production operation in Australia. While proceeding with the analysis of options to construct a 20-40,000 tpa SOP Pilot Plant at Lake Wells, the Company has also begun exploring the other lakes in the Goldfields Salt Lakes Project, starting with Lake Ballard and Lake Marmion.

Highlights since the March Quarterly Report include:

LAKE WELLS

Surface Aquifer

• The Lake Wells surface aquifer exploration program was completed, comprising a total of 250 shallow test pits and 10 test trenches. This work provides very high quality data for the hydrogeological model for the surface aquifer of the Lake, giving the Company a high level of confidence about the potential brine production from low cost surface trenching.

• The first trench test pumped in the Northern part of the Lake demonstrated very high brine flows and consistent brine chemistry.

  Evaporation Pond Testwork

• The Company commenced construction of a number of test evaporation ponds of different designs to support the Company's model for cost-effective on-lake evaporation pond construction. The Lake Wells playa includes a pervasive brown silt with a high clay content averaging 55cm below surface, which potentially offers a major advantage for construction of low cost unlined evaporation ponds on the Lake.

  Process Testwork

• The Site Evaporation Trial (SET) at Lake Wells has now processed approximately 215 tonnes of brine and produced 3.4 tonnes of harvest salts.

• The Company continues a range of process development testwork to enhance the Lake Wells process model. Raw brine or Lake Wells harvest salts have already produced substantial samples of SOP. Ongoing work at SGS (Perth), Bureau Veritas (Perth) and Saskatchewan Research Council (Canada) continues to enhance the process flowsheet and also produce further customer and testwork samples.

  Pilot Plant

• The Company and its consultants have substantially advanced the Pilot Plant study for the GSLP.

  LAKE BALLARD

• A surface aquifer exploration program has commenced at Lake Ballard with the mobilisation of an amphibious excavator. The Company also completed further surface brine sampling and reconnaissance work at Lake Ballard and Lake Marmion.

  Process Testwork

• Initial evaporation testwork on Lake Ballard brine also indicates excellent potential to produce Sulphate of Potash (SOP) and additional co-products.

Enquiries: Matthew Syme Telephone: [phone]

LAKE WELLS

Surface Aquifer Exploration Program

The Company has completed a substantial program of work investigating the geological and hydrogeological attributes of the Shallow Lake Bed Sediment hosted brine resource at Lake Wells. The information and data generated will be utilised in the Pilot Plant.

Figure 1: Map of Lake Wells Trench Locations

The total program includes 250 test pits and 10 trenches over the lake playa (refer to Figure 1). The test pits are generally 1m wide x 1.5m long and 4.5m deep and confirm lithology and permeability of upper lake bed sediments and demonstrate spatial continuity of the surface aquifer.

Geological setting of the Shallow Aquifer

The general setting for the lake consists of Cenozoic (Quaternary - Holocene) brown to white to red, unconsolidated, gypsiferous sands, silts and clay units. These units have varying silt and clay compositions.

Two distinct domains of geological deposition for the shallow aquifer were identified in the recent assessments. This is roughly correlated to the southern half of the lake playa and the northern half of the lake playa. The transition between the two domains does not occur at a hard boundary but rather a wide transition zone that may be correlated to the frequency of surface water inundation of the lake. Satellite imagery analysis by Geoscience Australia indicates that the northern part of the lake is inundated with surface water more frequently than in the south. This is supported by anecdotal discussions with the local landowners and experience during exploration activities.

Long Term Pumping Test - Test Trench P3b

A 50m long trench (P3b) was constructed and test pumped over a 7 day period. This is the first trench pump test conducted in the Northern part of the Lake. The brine yield into the trench was very high and a 6L/s pump could not dewater the trench sufficiently to stress the surrounding aquifer. Adding an additional 3L/s pump to the system was only able to draw down the brine level temporarily in the trench.

During the full duration of the pumping test an average flow rate of 6.3 litres per second (L/s) was achieved, demonstrating very high inflows from the Lake Bed Aquifer, substantially higher than achieved in other trench pumping tests at Lake Wells. Note that the brine yield from this trench is not representative of the whole shallow aquifer in this area.

The geological logs for the trench recorded a coarse grained (massive) evaporative sand horizon that occurs from 1m to 1.5m below surface. This unit is the main contributor to the high permeability encountered at the trench.

This layer contains a crystalline zone with large crystals visually yielding very large volumes of brine during trench dewatering. This zone was also encountered in two adjacent test pits (LWTT209 and 211) located 200m either side of the trench.

Figure 2: Images of the Evaporite Horizon

A video showing the high flow rate out of the trench is available on the Company's website (http://www.saltlakepotash.com.au/projects/video)

Results from the trench testing are summarised as follows:

• The pumping rate averaged 545m3/day (6.3 L/s) and remained relatively constant for the duration of the test.

• The cumulative pumping volume during the test was 3,800m3 (or 3.8 megalitres ML).

• Drawdown was observed at all observation bores and after 7 days ranged from 0.6m at an observation point 10m from the trench to 0.2m at an observation point 50m from the trench.

• The relatively high flow rate and extensive cone of drawdown indicate that the trench is excavated into a highly permeable part of the lake.

• This local geological setting is not representative of the whole shallow aquifer.

Brine was sampled daily over the duration of the test. The brine chemistry remained consistent over the test period with an average grade of potassium of 4,311 Mg/L, ranging from 4,000 to 4,800 Mg/L.

The P3b trench pump test will be repeated shortly, when pumping equipment is available to adequately stress the aquifer.

Evaporation Ponds Testwork

The Lake Wells geological setting typically includes a pervasive brown silt layer with a high clay content around 55cm below the surface. An initial assessment by MHA Geotechnical Engineers indicates that this clay material appears to be suitable for on lake pond base and embankment construction.

In conjunction with international consultants and geotechnical specialists, SLP has developed a series of on lake pond designs suitable for the stratigraphy at Lake Wells, which are expected to minimise brine losses and optimize capital costs.

During May, a 30 tonne excavator was mobilised to Lake Wells to commence construction of the different pond designs, as well as a control pond to support infiltration measurement analysis. Each of the trial ponds are 25m by 25m and the ultimate berm height will be 1.5m. To date, the 30 tonne excavator is operating efficiently on the Lake and has excavated the first berm lift for all of the trial ponds. Upon completion of construction of the ponds, test work will be performed to determine the optimal pond design to contain brine leakage.

Figure 3: Construction of Evaporation Ponds on Lake Wells