Andromeda Metals Demonstrates Strong Economics Of HPA Process with New Scoping Study

Andromeda Metals (ASX: ADN) has demonstrated market-leading economics from a scoping study evaluating the use of its patented high purity alumina (HPA) process using kaolin feedstock from the Great White project in South Australia.

The company commissioned the study after recent test work confirmed the low-carbon process could produce HPA to 99.9985% purity from Great White’s kaolin ore reserve of 15.1 million tonnes.

The study based its findings on the construction and operation of a plant capable of producing a nominal 10,000 dry tonnes per annum of HPA using 30,000tpa of kaolin, starting with 2,500dtpa in the first year and increasing by 2,500dtpa each year to reach production capacity by the fourth year.

Project Cost Estimations

The HPA project offers a net present value of approximately $1.48 billion (pre-tax) and $1.01b (post-tax), with estimated pre-production capital costs of $155 million including a market-leading capital intensity of $15,459 (US$9,894) per tonne of HPA capacity.

Andromeda expects operating costs to sit at approximately $4,718 (US$3,020) per tonne (excluding sales of amorphous silicate by-products), significantly lower than other globally-reported processes.

A high product margin of 85% equates to approximately $26,532 (US$16,980) per tonne using conservative pricing assumptions of $31,250 (US$20,000) per tonne.

Global HPA Leader

Andromeda acting chief executive officer Sarah Clarke said the project could transform the company into a global leader in low-carbon HPA production.

“The production of HPA is a high-value growth opportunity which will be complementary to the high-quality kaolin products produced from the Great White project and would see our product range extend into critical minerals,” she said.

“This scoping study supports progressing the HPA project to the next stage and demonstrates the potential for unlocking significant value for Andromeda and our shareholders.”

Debt-Equity Funding

Ms Clarke said Andromeda would target a combination of debt and equity to fund the HPA project’s development including available government grants and incentives.

“Our board and management team have a strong track record in developing resources projects and a proven ability to attract new capital following the $75m project financing facility secured for Great White’s development,” she said.

“HPA is a high-value critical mineral with a significant supply shortfall predicted by 2030 and this scoping study demonstrates the potential of our HPA project to deliver strong economic results.”

Andromeda will seek offtake partners for HPA product once it has started producing commercial samples.