Perth-based Accelerate Resources (ASX: AX8) will take ownership of the Tambellup kaolin project and associated intellectual property rights for the processing of kaolin to high purity alumina (HPA) when it acquires Australian private minerals explorer Halcyon Resources Pty Ltd this month.
Under the terms of the acquisition, Accelerate will issue 15 million fully-paid ordinary shares to Halcyon’s vendors in two tranches and upon the achievement of pre-determined milestones.
Tranche once consideration will be for 7 million Accelerate shares based on a 30-day volume weighted average price.
It will be payable to Halcyon on announcement of an inferred (or greater) JORC mineral resource of a minimum 5 million tonnes kaolin clay containing 45% -45 micron clay with an 82% ISO brightness, or a minimum 5Mt kaolin clay containing no less than 29% aluminium oxide at an optimal fraction size.
Tranche two will be for the remaining 8 million shares and will be payable upon an announcement of a minimum shipment of 50,000t of kaolin clay or derived product from Tambellup.
In the event that either tranche is required to be paid in cash, Accelerate will fund the payments from existing cash reserves at the relevant payment dates.
Following completion of the acquisition, Accelerate said it would conduct a capital raising for exploration funding and working capital via an entitlement offer to eligible shareholders.
A recent review of historical data for the project commissioned by Accelerate indicated the Tambellup area contains identified kaolin prospects with an existing estimated mineral resource, which may be suitable for a bulk tonnage, direct-shipping operation.
On completion of the acquisition, Accelerate said it would carry out an aircore drilling and bulk sampling program to define Tambellup’s mineral resources.
It would also plan a project-wide prospectivity evaluation with surface sampling and mapping to identify further exploration targets.
Located 280 kilometres south of Perth, the Tambellup project package comprises granted exploration licence E70/4969 and protected IP rights for the Griffin process which covers the processing of kaolin into specialty aluminas, including HPA.
HPA is a specialty product of at least 99.99% pure aluminium oxide and is a key component used to produce LEDs, semiconductors and scratchproof artificial sapphire glass.
The global HPA market is reported to be worth more than $880 million per annum and doubling every five to seven years.
At midday, shares in Accelerate were down 13.95% to $0.037.