Attended the recent site and port visit and confirmed to me the major potential upside for ADN. I see ADN has the best investment opportunity I have ever seen in my 20 or so years of investing on the ASX. Reason for this are:
1: RESOURCE DEMAND AND GROWTH OPPORTUNITY.
The fact they have a unique resource that is in very hot demand both in traditional uses like ceramics, paints and petrochemical refining but many other uses that the end users are finding it difficult to get product and want supply asap. ADN's Poochera resource doesn't just fit the bill of the needs but the high quality makes it a significant asset not only in them traditional uses but in high end and new age uses such as potential HPA production plus nanotech with potential in carbon capture, water purification amongst many others. There is a massive gap in supply and ADN has significant customers wanting supply.
2. MANAGEMENT
1: I have previously met James Marsh at presentations and Andrew Shearer but on the site visit in attendance was also Nick Harding plus other project staff. When I invest 1 of the major things I invest in is people and what I believe are management that are real deal that both have the strong desire but also the ability to deliver and execute. First and foremost James Marsh our MD has the lot in both the skill set, experience. knowledge and contacts in the halloysite/kaolin industry through 30 years experience to execute on this project potential. He also has the drive and passion to take this project into not only production but I believe multiple roads through the new age uses such as nanotech. He also is not a spruiker and I see a guy who just wants to get the job done and is very excited by the opportunity to be involved here with his past experience at Poochera where he back then pushed for a halloysite/kaolin blend target rather than a focus on bright white kaolin. He explained how past focus was to build a 80 mill plant for kaolin production which needed a water desalination plant which meant he moved on.. So here and now being back after many years and having the opportunity to now focus on the in high demand halloysite/kaolin blend opportunity has him very excited.
The other members including Andrew Shearer, Nick Harding and other project team really had a great mix with individuals who I believe are more than capable of delivering on project execution. We had the opportunity to sit down over a meal and beers to really get to know the team and they gave me the impression of a genuine board that have shareholders interests and project execution at the top of the list unlike many management I have met over the years who I believe are there for high salaries and lifestyle. Integrity and drive are my major wants in a board and they fit the bill.
3: ROJECT LOCATION AND TIME TO PRODUCTION
This is one of the major reasons I see ADN as the best opportunity I have ever seen on the ASX. ADN's in demand halloysite kaolin resource has the ability to move into production faster then I have ever seen with any exploration/mining company I have ever seen in the past. For a company capped so low I believe the market still does not understand that we have a jorc resource that James marsh believes has a 20 year mine life but current drilling will see extend that significantly. I have seen companies just drilling with no jorc at multiples of ADN's market cap with years and years to production. ADN has a jorc and is fast tracking to production.
The important part of what I believe the market does not understand that this is farm land with no heritage issues with SA rules having mining as number priority. We have yes farmers who own land but mining takes preference and ADN have a very good relationship with the farm owners who have had exploration take place over many years here knowing potentially 1 day a mine may be built. ADN are in talks with them on moving forward and they see a major opportunity for jobs to be created in their community. I would like to dispel the rumour that the farmers are not happy as we are mining 40 metres from their kitchen window. The house is not 40 metres away and there is not only distance but a tree line plus the house is down below a hill drop. I believe key project staff and the board have good relationships with the farmers.
Now back to the site visit and we flew out from Adelaide to Wyhalla with a group of board, project staff, holders, brokers and fund managers who were all very interested and excited by both the project and the team. There was a mix of long term holders who had been invested here for 10 or so years and newer ones. What struck me was the long termers who had been through a long journey here of up to 10 years were very excited and stated this is the best they had every felt about ADN and its potential to project execute and move to production even though in the past they had seen major copper drill hits and stock price spikes. But here and now they see real opportunity and a board mix that will deliver.
Our first stop was after a 1 or so hour drive to Lucky Bay and port that I believe even though it is much further from Poochera has many boxes ticked to be the port of choice for ADN. In end stages of construction with 3 months to finish and with them keen to lock in ADN export they have set up a new port that is a perfect fit. It has storage ready set up and environmental permitting for storage of material. A big plus as with some of the other ports ADN are looking at there would be environmental permitting needed to store product at port. Lucky Bay has the permits in place and storage facility so even though the distance is further the positives are major. Other ports also have no storage facility so ADN would burden the cost of that. The difference in truck haulage costs over the further distance they believe would be made more than made up for by reduction in other costs at closer ports with Lucky Bay also offering good prices in comparison to lock in.
Luck Bay port storage
Lucky Bay port
We then drove around 3 1/2 hours to Poochera to site and the road from port at Lucky Bay to Poochera gave us the exact route trucks would take from site to port. Roads were good and the area is a big wheat growing area so roads are used by trucks through wheat export time so the route is capable of taking truck haulage. We drove onto the farm land and inspected the site. On site is was plain to see what an easy operation this will be with James and project staff explaining the shallow nature of the resource and how easily a dig up and back fill operation it will be. We are looking at about 10 metres overburden and 20 metres of resource below. Straight onto trucks to port for DSO or more significantly a dry processed plant built on site with sand removed and back filled in as we go. Questions were asked about potential cost of dry processing plant and price of sale of dry processed ore. James gave rough estimations of price of dry processed ore selling for $350>$450 going rate and that a dry processing plant cost we are looking at 2>5 mill for 1st module of input of 500k tonne with 250k ore produced after sand removal. I ill leave the addition to you guy but I see massive profit numbers for a company capped so low. Questions were asked of truck haulage and mining costs and shipping costs. My rough estimation is that we are looking at around $30>$40 for haulage and adding mining and shipping costs i say we are looking at dry processed ore looking at a profit of around $200 a tonne. These are rough estimations I have come up with and the scoping study will deliver. Dry processing plant costs are low with them being off the shelf parts and not specific engineered. James also stated he was in contact with a plant seller looking to sell a whole plant ready made that could be shipped over.
We got to see some raw ore that had been left around from drill holes that had been refilled. james showed us some of this ore and bellows picture of him holding some on site just shows the smile on his face that shows his excitement of what is in the ground out there and his passion and belief he can deliver this to the numerous customers who want it.
MD James Marss with raw halloysite/kaolin ore in hand.
Other questions asked on site included environmental approval that lays ahead with it being a big talking point amongst posters here. it was stated the permitting process started in May so we are well ahead and the water testing was also already happening with them showing us the water testing spots on site. So they do anticipate the environmental clearance should be in by early next year give or take. The new project manager who came on recently has been working on that full steam and has the experience in the area with him working on many in the past through to approval. The board has put a team in place that is working well and has its individual and joint tasks that have experience and knowledge across the areas needed.
leaving site we then drove to Streaky bay another port potential site plus pilot plant site and a look at DSO sent over to China for testing plus a sample of ore that had been wet processed and then heated at very high temperatures, This type of treated ore is used in high end paints. James spoke of the unfolding potential and work with Newcastle university in its JV with Minatour Resources. The nanotech potential is a massive opportunity with product selling for prices of around 5k a kg. Uses are numerous with Newcastle uni working on potential in water purification, carbon capture and the adding of it to lithium batteries that see a 5 fold battery capacity. Left field potential also exists in the pure halloysite end with drilling recently to prove up pure halloysite areas within the site. This product has a going price of around 5k a tonne and there is demand with already customers enquiring about the potential for supply.
Wet Processed the high temp heated ore
DSO
In summary the site trip confirmed to me what an opportunity exists here with the potential for life changing gains for this small capped company. Some may think I am over enthusiastic but I see this company as a potential ASX top 200 1 day with serious production numbers and high end tech patents and production in nanotech. I suggest anyone with doubts to 1 day make contact with James Marsh our MD and have a chat. We have a board I believe and project staff that will execute here and see ADN in production and at multiples of todays cap. For now this is what I can remember from the trip but may add as more comes to me. I am holding tight to this one.
(20min delay)
