South Harz Potash Advances Sollstedt Acquisition, Raises A$500K Amid Funding Push
South Harz Potash Limited has progressed its Ohmgebirge project with key steps including advancing the Sollstedt mine acquisition, securing A$500,000 in new equity, and pursuing strategic funding avenues such as German R&D rebates and European Union grants.
- Negotiations and due diligence ongoing for Sollstedt mine acquisition with exclusivity extended to July 2025
- A$500,000 raised through equity placement, including significant director participation
- Engagement of Cutfield Freeman & Co to explore project funding and strategic partnerships
- Applications lodged for German R&D tax rebates and European Raw Materials Alliance funding
- Agreements reached to defer €784,772 in engineering invoice payments with interest and security arrangements
Project Advancement and Strategic Funding
South Harz Potash Limited (ASX:SHP) has reported steady progress on its flagship Ohmgebirge Potash Development in Thuringia, Germany, during the March 2025 quarter. Central to this advancement is the ongoing due diligence and negotiation for the acquisition of the neighbouring Sollstedt mine property from Deusa International GmbH. The exclusivity period for this transaction has been extended to 31 July 2025, signaling the company’s commitment to securing this strategic asset, which includes substantial existing shaft infrastructure and underground workings.
To support project advancement and funding, South Harz engaged specialist mining finance advisor Cutfield Freeman & Co. Their mandate includes assessing development funding pathways and identifying potential strategic partners, a critical step given the capital-intensive nature of potash mining projects.
Capital Raising and Financial Position
During the quarter, South Harz successfully raised A$500,000 through an equity placement priced at A$0.01 per share. Notably, the company’s directors demonstrated strong confidence by subscribing to a significant portion of the placement shares, which was subsequently approved by shareholders. This capital injection is earmarked for advancing the Sollstedt acquisition, engaging with strategic investors, and continuing value engineering initiatives aimed at optimising project costs.
Despite these efforts, the company’s cash balance at quarter-end stood at a modest A$124,000, excluding forthcoming subscription proceeds. South Harz has adopted a lower cost structure focusing on internal optimisation and cost containment to extend its runway while pursuing additional funding avenues.
Optimisation and Funding Applications
South Harz has engaged Valleyspring Pty Ltd to conduct a desktop review of value engineering opportunities, including a staged development approach leveraging existing Sollstedt shafts, mining optimisation, and power consumption efficiencies. These efforts align with the company’s strategy to unlock additional value and reduce capital and operating expenditures amid challenging global potash market conditions.
In parallel, South Harz lodged applications for German R&D tax incentive rebates, which could provide supplementary working capital if approved. The applications, submitted with the assistance of Thierhoff Consulting, cover technical work conducted over the past four years within the European Union. The outcome is expected around the end of the September 2025 quarter but remains uncertain.
Additionally, the company applied to the European Raw Materials Alliance (ERMA) for potential investment funding of up to EUR 2.5 million. This funding, managed by EIT RawMaterials on behalf of the European Union, targets advanced mining projects at or beyond the pre-feasibility stage. South Harz’s application focuses on supporting the ongoing value engineering programme at Ohmgebirge.
Managing Creditors and Financial Obligations
South Harz has negotiated deferrals on engineering invoices totaling €784,772 related to the Ohmgebirge pre-feasibility study. Binding terms with K-Utec defer €309,861 until December 2026 with 5% annual interest, while non-binding terms with Ercosplan defer €474,911 under similar conditions, secured by a first-ranking mortgage over the Ebeleben mining lease. These arrangements provide critical financial flexibility as the company advances its development plans.
Looking ahead, discretionary project expenditure will depend heavily on the success of funding initiatives and strategic partnerships. The company’s low-cost operational approach and ongoing capital raising efforts will be pivotal in sustaining momentum toward the definitive feasibility stage.
Bottom Line?
South Harz’s ability to secure funding and finalise the Sollstedt acquisition will be decisive in shaping the next phase of its potash development journey.
Questions in the middle?
- Will South Harz secure the Sollstedt mine acquisition by the extended July 2025 deadline?
- What is the likelihood and potential impact of the German R&D tax rebate and ERMA funding approvals?
- How will South Harz manage its cash runway and creditor obligations if funding initiatives face delays?
