(from the magazine...you can read it above or text below.)
I think it was released "about" 6 months ago.
ANDROMEDA METALS
On the path to industrial metals production in South Australia
At the start of 2017, ASX-listed Australian mining company Adelaide Resources announced it would be changing its name to Andromeda Metals in preparation for a dramatic shift in direction for the company, which had operated as a base and precious metals explorer for the past 20 years. Following the name change, Andromeda has transitioned from an exploration company to a developer and producer of industrial minerals, particularly halloysite-kaolin and high purity alumina (HPA).
Industrial minerals can be defined as minerals mined and processed for the value of their non-metallurgical properties, which provides for their use across a wide range of industrial and domestic applications.
“An industrial mineral is used in large volume, typically at a lower value, but in everyday applications such as cars, houses, rubber, plastics, paint and general industrial uses,” explains Andromeda’s managing director James Marsh.
Historically speaking, production of industrial minerals in Andromeda’s home market of Australia has been negligible compared to the European market. However, Australia has some of the world’s biggest and highest purity resources of some industrial minerals, according to Marsh.
“In the Eyre Peninsula of South Australia, we identified a very large resource of halloysite-kaolin, which is a typical industrial mineral. Kaolin is one of the biggest industrial minerals, with over 30 million tonnes a year mined, produced and sold around the world.
A unique resource
“But at the Poochera project, we have halloysite-kaolin, which is more of a specialised and unique type of kaolin. It’s quite rare, and as a result has much higher value.”
The project is being advanced in conjunction with Andromeda’s JV partner Minotaur Exploration, with whom Marsh did some consultancy work for around nine years ago on the same project. Therefore, his knowledge of the project and his vast experience in the kaolin industry made Marsh the perfect candidate to lead Andromeda’s team at Poochera.
“The management of Andromeda went through all the information and saw my name on some reports I had written at the time, and they approached me to head up the project. I was chosen because I have 30 years of experience in kaolins, and I’ve been involved from the mining side of the business right through to marketing these products.”
The rest of the board at Andromeda contains a perfect blend of individuals specialising in different areas of project management. “Company secretary Nick Harding is a very experienced commercial man and excellent on the financial modelling side of things,” Marsh reveals.
“Our chairman Rhoderick Grivas has no direct kaolin experience but he’s taken projects from greenfields right through to production in Australia, and Andy Shearer is our corporate money man. He has been very useful when it comes to raising funds for the company.
“We have a very robust team, I am the kaolin specialist but we also have got financial specialists, project management specialists and a fundraising specialist.”
Halloysite is a rare ‘tubular shaped’ derivative of kaolin which can carry a commercial value of up to $3,000 per tonne for pure halloysite and up to $1,000 per tonne for a halloysite-kaolin hybrid product, compared to $200 per tonne for pure kaolin.
At the Poochera project, Marsh believes that Andromeda has probably the world’s biggest resource of this rare, high value resource. But, the company’s initial attraction to the project was based on the potential for the halloysite-kaolin to be used as premium material feed for HPA production.
Emerging applications
HPA is a processed premium non-metallurgical alumina product that is characterised by its purity level and used across a range of emerging high-tech markets, including artificial sapphire glass (for mobile phone and television screens) and certain battery storage components, as well as having aeronautical and medical applications.
“We are looking at HPA and a third round of tests have confirmed we have a premium for that material and are the only company in that area that’s managed to get 99.99% purity with only one stage of purification. That is because the halloysite-kaolin is a much higher purity naturally than standard kaolin.”
The company is also undertaking additional research into nanotubes and halloysite, particularly in the battery production space, and has already got test work back which proves that batteries can be made 3.5 times more efficiently using nanocarbon from halloysite.
Further research into halloysite-kaolin nanotubes has suggested that it could be use as a carrier of high value materials in fields such as medicine and agriculture. According to Marsh, there are around 7,000 research papers covering these blue-sky applications of halloysite-kaolin, which are being converted to patents at higher rates than any other mineral.
Rescoping the project
Returning to the Poochera project, Andromeda has revisited an unpublished scoping study that was previously undertaken by Minotaur, making key modifications to the production model.
“We plan to initially extract the material as a raw ore and export it overseas to China and possibly Japan, where there is a keen demand for the material at the moment,” says Marsh. “Then, as a second stage we are looking very closely at dry processing that material on-site.”
The managing director believes that moving to a dry process model will increase the project’s margins by up to four times and reduce shipping costs by half, which will give the company a big financial boost. Plus, there is also the option of wet processing overseas using a toll producer.
“The people we will sell the raw ore to have a very large capacity, so if they could take on our material, we would use them as a toll processor and then export the wet processed material round the rest of the world.”
**All three models resemble simple, low-capex options for Andromeda and none of them involve Minotaur’s initial plan to build a wet process plant on-site, which would’ve needed at least $70 million in capex.
Andromeda has already completed dry processing trials in Western Australia and received good results from a commercial operation there. The company also hopes to replicate those trials in China in the coming months and is in discussions for dry processing trials in the US and Germany.
Before dry processing trials were able to take place, Andromeda had to take a 215 tonnes bulk sample from the Poochera project, of which 40 tonnes were sent the dry process plant in WA, and some 140 tonnes sent to China in anticipation of dry and wet processing trials there.
“That bulk sampling was crucial because we wanted to get the wet and dry processing done on full commercial scale so we could prove up the process and get detailed costings for the scoping study.
“That process material from those commercial trials will then go to end customers who will do their own full–scale commercial trials in their end application. That will hopefully give us some legally binding offtake agreements with those customers.”
Offtake agreements
A significant number of Andromeda’s potential customers are situated in the global ceramics industry, particularly in the high quality end of the market where halloysite-kaolin is used to produce porcelain or fine detail bone china with very high whiteness.
Halloysite-kaolin is highly valued in this industry and is currently in short supply after a large number of Chinese mines have been forced to close amid an ongoing environmental crackdown on polluting mines by the Chinese government.
“Therefore, those companies from the ceramics sector are very keen to lock in long term supply of this material. Their perception of Australia is that of a high quality and consistent supplier of minerals.
“So far we’ve secured about 208,000 tonnes of indicated offtake agreements from customers,” reveals Marsh. “We will use at least that amount of fully processed material, not the raw ore. It’s probably a lot more now because demand is increasing as China has lost its domestic supply.”
Andromeda is planning to finalise a scoping study for its Poochera project in the first half of 2019 which would then lead into a pre-feasibility study (PFS), although Marsh believes some of the scoping study figures have been done to PFS standard, which should accelerate the process.
The company will also complete dry and wet processing in China before sending the products to its end customers, in order to hopefully sign further offtake agreements. Then, Andromeda will quickly move on to the mining lease application in the second half of the year.
Securing environmental and permitting approval would cap off a busy 12-month timeline for this company which has entered the brave and exciting new world of industrial minerals production.
ADN Price at posting:
5.6¢ Sentiment: Buy Disclosure: Held
(20min delay)
