South Harz Potash Accelerates Dual-Asset Strategy with A$2.39M Capital Raise

Dual-Asset Strategy Takes Centre Stage

South Harz Potash Limited (ASX – SHP) has unveiled a strategic pivot with the adoption of a dual-asset approach, aiming to complement its existing Ohmgebirge potash development in Germany with a new critical minerals asset. This move reflects the company’s ambition to leverage its established foothold in Europe and Australia, diversifying its portfolio amid a challenging potash price environment.

The company plans to advance this strategy over the next 9 to 12 months, focusing on identifying and acquiring a second mining project that aligns with its core competencies. Concurrently, South Harz is committed to preserving and enhancing the long-term value of its Ohmgebirge project by exploring alternative funding avenues, including German government grants and strategic asset-level investments.

Capital Raising Strengthens Financial Position

To underpin this strategic shift, South Harz successfully raised A$1.83 million through a two-tranche placement during the quarter, with a further A$0.56 million secured via a rights issue that closed post-quarter. A shortfall offer remains open, targeting an additional A$0.72 million in unsubscribed entitlements. Notably, K-Utec AG Salt Technologies, a key technical adviser and creditor, converted A$0.46 million of debt into equity, signaling strong confidence in the company’s prospects.

The company’s directors also demonstrated robust support, committing approximately A$0.40 million in new equity. These capital injections have improved South Harz’s cash position to A$0.547 million at quarter-end, with further inflows expected upon completion of the remaining equity raises.

Corporate Developments and Governance

In a significant board enhancement, South Harz appointed Richard Pearce as a Non-Executive Director. Pearce brings over 30 years of experience across critical and industrial minerals, with a track record spanning exploration, development, and commercialisation. His expertise is expected to be instrumental as South Harz pursues new critical minerals opportunities while safeguarding its potash assets.

Additionally, the exclusivity period to acquire the Sollstedt mine property, adjacent to the Ohmgebirge project, has been extended to 31 December 2025. Sollstedt offers substantial existing infrastructure and could provide strategic synergies if acquired.

Funding and Financial Management

South Harz continues to manage its financial obligations prudently. The company has negotiated deferred payment terms with key creditors K-Utec and Ercosplan, including partial debt-to-equity conversions and mortgage-backed deferrals. These arrangements, coupled with a planned 1-for-15 share consolidation pending shareholder approval, aim to streamline the capital structure and reduce holding costs.

On the funding front, South Harz received first stage certification for its German R&D tax rebate application, potentially unlocking a cash refund between A$400,000 and A$500,000. While an application for EU critical raw material funding was unsuccessful due to potash’s current classification, the company remains engaged with European agencies to secure alternative support.

Outlook Amid Market Challenges

South Harz’s Executive Chairman, Len Jubber, emphasised the company’s commitment to strategic patience, citing the depressed potash price as a factor in the current market valuation. The company aims to maintain minimal holding costs for its potash assets while actively pursuing new growth avenues through its dual-asset strategy.

With a strengthened balance sheet, enhanced board expertise, and a clear strategic roadmap, South Harz is positioning itself to navigate the evolving critical minerals landscape while preserving the value of its core potash projects.