SO4.L Regulatory News (SO4)

December 2020 Quarterly Report

Salt Lake Potash Limited (SO4 or the Company) is pleased to present its Quarterly Report for the period ending 31 December 2020.

The Company is focussed on transitioning from developer to producer at the Lake Way SOP Project in Wiluna, Western Australia, as it looks to complete construction and commence commissioning the Process Plant in the current quarter.

Quarterly Report Highlights

Project Financial Close delivered

· Financial Close for the Lake Way Project was achieved in December with an equity financing including a A$52m share placement and A$5m Share Purchase Plan (subsequently upsized to A$8m on strong demand), priced at A$0.40 per new share. Following completion of the placement the Company drew the first US$105m tranche of the US$138m Taurus/CEFC debt facility with US$45m used to repay the Taurus Bridge Facility.

Salt harvesting commenced

· Harvesting of potassium rich kainite and schoenite salts from Train 1 commenced with approximately 27kt of salts stockpiled ahead of plant commissioning. Harvest trials in a section of the cells were successful using an efficient tractor and scraper methodology. Assays from the harvest salt stockpiles have returned grades in-line with the system curve and planning models.

Process Plant reaches 88% completion

· At December 31st, 2020 the Process Plant was 88% complete on an earned value basis with site concrete work (including additional NPI and bagging infrastructure) 94% complete, structural steel 80% complete and tanks/vessels 81% complete.

Logistics routes confirmed

· A preferred logistics provider has been selected and contractual arrangements are expected to be finalised shortly. As part of optimising the logistics and sales/marketing platform SO4 expects to have the flexibility to sell up to 82% of its SOP via Fremantle.

Board Strengthened

· In October Phil Montgomery and Peter Thomas were appointed to the board as Non-Executive Directors. Mark Pearce stepped down from his position as a Non-Executive Director.

Community contribution recognised

· SO4 received the Community Contribution Award at the 2020 Association of Mining and Exploration Company (AMEC) annual awards. The award recognised the Company's efforts to deliver sustainable and long-lasting social and economic benefits to the Wiluna region through strategic partnerships, community investment and opportunities in employment and training.

Tony Swiericzuk Chief Executive Officer

"Significant progress was made in the December quarter in financing, operations and construction as well as at the corporate level with the strengthening of our board. We look forward to commissioning the plant in the March 2021 quarter, shortly followed by premium quality sop sales to the domestic and global markets."

Project Financial Close

Equity Financing

In December, the Company achieved project Financial Close on the Lake Way Project with an equity financing including a A$52m share placement and a Share Purchase Plan (SPP), priced at A$0.40 per new share. Directors applied for A$2m of shares in the placing including 3.0 million shares by Chairman, Mr Ian Middlemas and 0.5 million shares by Managing Director and CEO, Mr Tony Swiericzuk.

The SPP, originally intended to raise A$5 million, was heavily oversubscribed with applications received for A$10.0 million. Given the strong support from existing Shareholders, the Board exercised its discretion under the terms of the SPP to increase the size of the offer to A$8 million in recognition of the ongoing support of its retail investors.

The funds were raised partially to satisfy the remaining conditions precedent in the US$138m debt facility with Taurus and CEFC. The funds are to be used as follows:

· A$18m to cash back a bank guarantee for the APA gas pipeline;

· A$15m to cover possible variations to ramp up schedule vs. bank model;

· A$10m due to recent AUD strength;

· A$2m financing transaction fees; and

· Up to a further A$15m for additional working capital.

Debt Financing

On December 22nd the Company drew the first US$105m tranche of the US$138m Taurus/CEFC debt facility with US$45m used to repay the Taurus Bridge Facility.

The remaining US$33m is expected to be drawn in Q2'21, subject to market standard conditions. The material terms of the SFA are outlined in the table below.

Table 1 - Key loan terms

On-lake Operations

Plant feed salt harvesting commenced

Harvesting of potassium rich kainite and schoenite salts from Train 1 commenced in the quarter with approximately 27kt of salts now stockpiled ahead of plant commissioning. Harvest trials in a section of the cells were successful using an efficient tractor and scraper methodology. Assays from the harvest salt stockpiles have returned grades in-line with the system curve and planning models.

Paleochannel drilling

The paleochannel drilling programme continues with bores at pads 12, 14 and 23 now completed and undergoing test-pumping.

Off-Lake Operations

Process Plant construction

At December 31st, 2020 the Process Plant was 88% complete on a value earned basis with site concrete work (including additional NPI and bagging infrastructure) 94% complete, structural steel 80% complete and tanks/vessels 81% complete.

Major items now installed include the SOP and schoenite crystallisers, attritioners, drag feeder, conveyors, lump breaker, various tanks and agitators, chillers, transformers, utilities switch room and various pumps, hoppers and launders. Associated piping, cabling and valves installation now comprise most of the remaining work on an earned value basis.

The Company expects Process Plant commissioning to commence in February with the introduction of first feed salts to the plant occurring in March.

Non-process Infrastructure

The raw water pond has been lined and commissioned, and both the Southern and West Creek Raw Water Borefields supplying the plant and village have been commissioned.

Work on of the 27km APA gas pipeline that connects with the Goldfields Gas Pipeline commenced in November 2020. At the end of December, the pipeline was 99% welded and 67% placed and backfilled. Full installation is expected to be completed in late January.

Procurement

Total procurement for the Process Plant reached 96% on December 31st, 2020. Recently a small number of items have experienced minor delays due to dynamics in the COVID effected global shipping markets. Specifically, consignments including flooring grid mesh, cage crusher, and some valves and pumps have been delayed by a few weeks. The Company is working closely with GRES and its suppliers to minimise the impact of any potential delays caused by shipping. At this stage, the delays in shipping are not expected to impact commissioning.

Logistics & Marketing

A preferred logistics provider was identified in the quarter and contractual arrangements are currently being finalised. The Company has been working with short-listed providers throughout 2020 to optimise its logistics and sales/marketing platform, exploring various routes to market and product packaging solutions.

As part of this optimisation process SO4 plans to have the flexibility to sell up to 82% of its SOP via Fremantle port in sea containers loaded with product in loose bulk, 1 to 1.5t bulk bags and 25kg bags. Product exported from Fremantle will be transported to Leonora by road where it will be transferred to rail for the remaining journey to Fremantle.

Shipping through Fremantle is expected to provide access to broader global markets at no additional net cost. Bagging and container premiums (verified by Argus) are expected to offset incremental domestic logistics costs. Additional benefits of using Fremantle are a reduction in inventory working capital and a significant reduction in the logistics carbon footprint.

Bulk shipment sales will remain out of Geraldton port.

A further logistics update will be provided upon finalisation of all contractual arrangements.

Board & Management changes

In October Phil Montgomery and Peter Thomas were appointed to the board as Non-Executive Directors. Mark Pearce stepped down from his position as a Non-Executive Director.

Phil Montgomery is a highly experienced mining industry executive who was most recently Vice President - Projects at BHP, responsible for the development of BHP's Potash business through its Jansen project in Saskatchewan, Canada. Mr Montgomery brings significant experience in project development and operations having held senior project development positions at BHP and Billiton for over 20 years working across several commodities and geographies, including leadership of BHP's Iron Ore growth program (2002-12). He holds a BSc (Mechanical Engineering) from Oxford Brookes University in the UK and completed the Executive Leadership Programme at INSEAD.

Peter Thomas is a senior executive with significant experience in project operations, construction, finance and strategy. Mr Thomas held senior executive positions at Fortescue between 2004-2014 including Project Director in charge of the A$4.7bn T155 port and rail infrastructure investment and Director of Corporate Services. He has previously worked for McKinsey and Lehman Brothers in the USA and more recently held the position of CEO of the Balla Balla Infrastructure Group (Todd Corporation). He is currently CFO of Decmil, the ASX listed construction and engineering group with c.A$500m in revenues. Mr Thomas holds an MBA from Harvard Business School, a BEc and BSc from Macquarie University and is a graduate of the Australian Institute of Company Directors.

In December, Shaun Day resigned as CFO. Grant Coyle has subsequently been appointed interim CFO.

Grant is an experienced corporate finance executive having been appointed as SO4's Head of Corporate Development in July 2018 and playing a lead role in delivering the US$138m Taurus / CEFC funding package. Prior to SO4 Grant held an executive position at Rio Tinto working across the business analysis and business development areas within the Iron Ore division. He is a former investment banker at Macquarie Bank and corporate tax accountant for an international accounting firm. Grant has extensive experience in finance, budgeting, project evaluation, commercial negotiations and strategic planning.

The Company is undertaking an external search ahead of the appointment of a permanent CFO.

AMEC community contribution award

In December 2020 SO4 received the Community Contribution Award at the 2020 Association of Mining and Exploration Company (AMEC) annual awards.

The award recognised the Company's efforts to deliver sustainable and long-lasting social and economic benefits to the Wiluna region through strategic partnerships, community investment and opportunities in employment and training.

Approvals

The Company continued the advancement of the remaining permitting required to support full-scale operations.

A revised Environmental Review Document (ERD) was submitted during the quarter, with the EPA confirming acceptance and completing their draft assessment report. SO4 presented the project to the EPA board and the board assessed the project in their December monthly meeting. The board agreed to adopt the draft assessment report and the EPA have commenced the final assessment report, to be issued to the Minister.

The EPA has determined that the full project scope requires formal assessment with no public review.

In addition to the EPA submission, the Company continues to seek other project approvals as required.

For further information or to view a full version of this announcement, including diagrams, please visit https://www.so4.com.au/asx-announcements/ or contact:

This announcement has been authorised for release by the Board of Directors.

The information contained within this announcement is deemed to constitute inside information as stipulated under the UK Market Abuse Regulation. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

APPENDIX A -DISCLAIMER

Forward Looking Statements

This announcement includes forward-looking statements. These forward-looking statements are based on the Company's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements. Although the Company believes that its forward-looking statements have reasonable grounds, can give no assurance that they will be achieved. They may be affected by a variety of variables and changes in underlying assumptions that are subject to risk factors associated with the nature of the Company's business (including those described in pages 25 to 29 (inclusive) of the Presentation released to ASX on 11 December 2020), which cause actual results to differ materially from those expressed herein. The Company makes no undertaking to subsequently update or revise the forward-looking statements made in this announcement, save where required by law or regulation, to reflect the circumstances or events after the date of this announcement.

APPENDIX B - DISCLOSURES IN ACCORDANCE WITH ASX LISTING RULE 5.3

Summary of Mining Tenements

Related Party Payments

During the quarter ended 31 December 2020, the Company made payments of $96,000 to related parties and their associates. These payments relate to existing remuneration arrangements (executive salaries, non-executive director fees and superannuation).

APPENDIX C -

Appendix 5B

Mining exploration entity or oil and gas exploration entityquarterly cash flow report

Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2 This statement gives a true and fair view of the matters disclosed.

Date: 29 January 2021

Authorised by: By the Board

(Name of body or officer authorising release - see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee - eg Audit and Risk Committee]". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee".

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.