ASX ANNOUNCEMENT

29 August 2016

SCOPING STUDY CONFIRMS LAKE WELLS' POTENTIAL AS A MAJOR LOW COST SOP PROJECT

Salt Lake Potash Limited (Salt Lake, SO4 or the Company) is pleased to announce the results of a Scoping Study on the Company's Lake Wells Sulphate of Potash (SOP) Project (the Project) in Western Australia. The Project's economics are highly encouraging, highlighting its potential to produce low cost SOP by solar evaporation of lake brines for domestic and international fertiliser markets.

Highlights:

• The Scoping Study (accuracy ±30%) prepared by global engineering firm, Amec Foster Wheeler, and other international experts, demonstrates excellent project fundamentals based on well-established solar evaporation and salt processing techniques. Based on the positive results of the Scoping Study, the Company will now proceed to a Pre-Feasibility Study (PFS).

• Lake Wells has the potential to be one of only five large scale salt lake SOP producers around the world and the Project's estimated cash production costs of A$185 per tonne (Stage 2) would be amongst the lowest in the world.

• The Scoping Study is based on a two stage development plan for Lake Wells:

  • Stage 1 is based on shallow trenching and bore production with 100% of brine feed drawn from the near surface Measured Resource.

  • Stage 2 also includes pumping additional brine from the deeper Inferred Resource, to increase production to 400,000 tpa of SOP.

• Key Scoping Study results for Stage 1 and Stage 2 (refer to Sensitivity Analysis):

* Capital Costs based on an accuracy of -10%/+30% before contingencies and growth allowance but including EPCM.

** Operating Costs based on an accuracy of ±30% including transportation & handling (FOB Esperance) but before royalties and depreciation.

Cautionary Statement

As discussed below, the primary purpose of the Scoping Study is to establish whether or not to proceed to a Pre-Feasibility Study ("PFS") and has been prepared to an accuracy level of ±30%. The Scoping Study results should not be considered a profit forecast or production forecast.

In accordance with the ASX listing rules, the Company advises the Scoping Study referred to in this announcement is based on lower-level technical and preliminary economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised.

The Production Target referred to in this announcement is based on 100% Measured Mineral Resources for Stage 1 and 70% Measured Mineral Resources and 30% Inferred Mineral Resources for Stage 2. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Measured or Indicated Mineral Resources or that the production target or preliminary economic assessment will be realised.

• The Scoping Study results highlight the benefits of Lake Wells' location in the Northern Goldfields, with excellent access to gas and transportation infrastructure.

• Opportunities have been identified to further optimise capital and operating costs through equipment lease financing, further operational refinements and partnerships. The Company will also continue to investigate potential additional revenue streams for the project.

Commenting on the completion of the Scoping Study, CEO Matt Syme: "We are very pleased with the Scoping Study results, which confirm Lake Wells' as a potential lowest cost quartile SOP producer. This Study highlights Lake Wells relative advantages based on a large consistent resource, potential for brine extraction by both surface trenching and pumping the deeper paleochannel aquifer, and of course the locational advantages of access to the gas pipeline and transportation infrastructure."

Enquiries: Matthew Syme

Telephone: +61 417 906 717

Important Information for this Announcement

The Scoping Study has been prepared and reported in accordance with the requirements of the JORC Code (2012) and relevant ASX Listing Rules.

The primary purpose of the Scoping Study is to establish whether or not to proceed to a Pre-Feasibility Study ("PFS") and has been prepared to an accuracy level of ±30%, the Scoping Study results should not be considered a profit forecast or production forecast. As defined by the JORC Code, a "Scoping Study is an order of magnitude technical and economic study of the potential viability of Mineral Resources. It includes appropriate assessments of realistic assumed Modifying Factors together with any other relevant operational factors that are necessary to demonstrate at the time of reporting that progress to a Pre-Feasibility Study can be justified." (Emphasis added)

The Modifying Factors included in the JORC Code have been assessed as part of the Scoping Study, including mining (brine extraction), processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and government factors. The Company has received advice from appropriate experts when assessing each Modifying Factor.

Following an assessment of the results of the Scoping Study, the Company has formed the view that a PFS is justified for the Lake Wells project, which it will now commence. The PFS will provide the Company with a more comprehensive assessment of a range of options for the technical and economic viability of the Lake Wells project.

The Company has concluded it has a reasonable basis for providing any of the forward looking statements included in this announcement and believes that it has a reasonable basis to expect that the Company will be able to fund its stated objective of completing a PFS for the Lake Wells project. All material assumptions on which the forecast financial information is based are set out in this announcement.

This release contains 'forward-looking information' that is based on the Company's expectations, estimates and projections as of the date on which the statements were made. This forward-looking information includes, among other things, statements with respect to pre-feasibility and definitive feasibility studies, the Company's business strategy, plans, development, objectives, performance, outlook, growth, cash flow, projections, targets and expectations, mineral reserves and resources, results of exploration and related expenses. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as 'outlook', 'anticipate', 'project', 'target', 'potential', 'likely', 'believe', 'estimate', 'expect', 'intend', 'may', 'would', 'could', 'should', 'scheduled', 'will', 'plan', 'forecast', 'evolve' and similar expressions. Persons reading this news release are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to the risk factors set out in Schedule 2 of the Company's Notice of General Meeting and Explanatory Memorandum dated 8 May 2015.

INTRODUCTION

The Lake Wells Project is located in the Northern Goldfields of Western Australia approximately 200 km north of Laverton. The area is well served by existing infrastructure, including the Great Central Road, the Goldfields Highway, the Goldfields Gas Pipeline and the railway sidings at Malcolm and Leonora.

Figure 1: Location of Lake Wells

The Lake Wells Project comprises 1,126 km2 of Exploration Licences covering the Lake Wells Playa, and the area immediately contiguous to Lake Wells.

Salt Lake has undertaken extensive drilling, sampling and geophysical surveys at Lake Wells since acquisition in mid-2015, to understand the geological setting and define brine resources within the Lake Wells Playa. A Scoping Study was initiated in early 2016 to investigate the technical and economic parameters of a SOP production operation at Lake Wells, exploiting the identified brine resources.

The Scoping Study is based on the Project's Mineral Resource Estimate of 80-85 Mt of SOP in 9,691GL of brine at an average of 8.7 kg/m3 ofK2SO4.The Mineral Resource Estimate includes Measured and Indicated Resources of 26 Mt of SOP in the shallowest 20m of the Lake.

The Study has established the indicative costs of a two stage production operation, initially producing 200,000 tonnes per annum (tpa) and then 400,000 tpa of dried organic 99.9% pure SOP. Stage 1 produces 200,000 tpa but includes most of the capital works required for a 400,000 tpa operation. Stage 2 will commence after initial capex is repaid by cashflow generated from the shallow Measured and Indicated Resource.

The Project will produce SOP from hypersaline brine extracted from Lake Wells via trenches and a combination of shallow and deep production bores. The extracted brine will be transported to a series of solar evaporation ponds built on the Lake where selective evapo-concentration will precipitate potassium double salts in the final evaporation stage. These potassium-rich salts will be mechanically harvested and processed into SOP in a crystallisation plant. The final product will then be transported for sale to the domestic and international markets.

Figure 2: Examples of Production Process Cycle