Andromeda Metals study improves economics of South Australia kaolin project

Andromeda Metals (ASX: ADN) has completed a pre-feasibility study on it Poochera halloysite-kaolin deposit in South Australia that shows further “substantial” improvement to the economics of the project.

Inclusion of wet-processing has delivered the economics boost.

The new figures represent a 35% increase from those produced in the scoping study in terms of net present value to $736 million.

The study shows an all-in sustaining cost of an average $354 per tonne of refined premium halloysite-kaolin product with an expected selling price of $700/t.

The forecast cash flow pre-tax is $1.97 billion, and $1.39 billion after tax. The payback period is 15 months from the beginning of mining operations through direct-shipping ore, shipping and toll-refining.

Potential Chinese customers have already inspected the project as the product is in short supply due to the exhaustion of existing global reserves and the closing of environmentally damaging mines in China.

Halloysite is a rare derivative of kaolin where the mineral occurs as nanotubes. The size of the halloysite particles varies within 1-15 microns in length.

Halloysite has a wide variety of industrial uses beyond simple kaolin and commands a significant premium above the average kaolin price.

Its main applications are in ceramics, where it is used in the manufacture of high-quality porcelain by adding whiteness, transparency and exceptional strength to the final fired product, and as a petroleum cracking catalyst.

Trial processing in China and Japan

The mine life estimate has been extended to 26 years.

Commercial trial quantities of products are currently being produced in China and Japan as a step toward customer offtake agreements.

In addition, marketing efforts have been expanded throughout Asia and in Europe with potential customers and distributors. Testing is underway for a range of applications.

The Poochera halloysite-kaolin project covers two main geographic areas in South Australia. The current area of focus is the Carey’s Well deposit, which is located near Poochera on the western part of the Eyre Peninsula approximately 635km west by road from Adelaide and 130km south-east of Ceduna.

Joint venture with Minotaur Exploration

The Poochera halloysite‐kaolin project is a joint venture between Andromeda and Minotaur Exploration (ASX: MEP) executed in April 2018.

Under the terms of the joint venture, Andromeda can earn up to a 75% equity interest in the project by either sole funding $6 million over five years or alternatively a decision to mine is made by the joint venture partners.

Andromeda said its present focus is on environmental impact assessments and a mining lease application ahead of the definitive feasibility study.

Project development is being targeted for early 2022.