As promised.
From the previous announcement : HPA (High Purity Alumina) test work results on a 25kg composite (-45µm) sample
on behalf of Potential offtake partner has confirmed Tampu can achieve 5N+
(99.99957%) Al2O3 purity.
The Devil is in the detail. Or rather the complete lack of it. Yes CR9 achieves 99.999% purity. Of course they did. Who hasn't?
Question 1; How much of the 25Kg indicative sample did the "Potential" (very important word in the context of this announcement) Off-take Partner process, and for what quantity (not quality!)) of High Purity Alumina. Very important question for any DSO business case.
Question 2; How many Leachate and Calcining processes were required to achieve said purity? Equates to commerciality!
But before considering these Two questions, let's take a long hard look at the word "Potential" that prefixes the Offtake Partner in the above announcement. Who could that possibly be. It could be anyone, or it could be no-one at all. Let's say I'm a Six month old child that crawls along the floor. I have the potential to walk. I have the Potential to run. Potential to be a Pro Footballer. Potential to to do just about anything. But will I ever achieve anything? I also have the "Potential" to fail
Lets say I'm a science buff in a suburban garage with a Bunsen Burner and a bundle of Test Tubes and Beakers. I've been handed a sample of Tampu Ore. I add a quantity of Acid. Apply some Heat. Swish it around x amount of times. Rinse/Repeat, Rinse/Repeat, and so on until I achieve the Purity stated above. No "Potential" here. It's not quite that easily doable, but I guarantee all that I will eventually achieve that level of Purity!
So does that make me a "Potential" Offtake Partner. Well yes. "Potentially" I might be able to convince a Backer to put up $5Mill for me to prove up my processes over a period of a year or so at a Pilot Plant stage.
Then I could "Potentially" further convince said Backer or another, to stump up a further $50Mill to prove up the commerciality of my processes at a Demonstration Plant scale. Build and Trial, say Two years.
"Potentially", if successful, I would have the "Potential" to raise a further $150Mill and build a Processing Plant over a period of a further Two or more years to produce say 5-10Mtpa of product. to sell to the plethora of HPA end users and make a "Potential" fortune.
If all this "Potentiality" was to unfold? , Where would that leave little CR9? Back to question 1 & 2.
CR9's Ore, once it has been Mined, Crushed (-45um) Beneficiated, Bagged. DSO ready. How many tonne of Ore will it take to produce 1 Tonne of 4N HPA?
It's so pure it may be a case of 1 for 1. But lets say it's better than the industry standard. So 4 for 1.
The Business case for CR9 then becomes something like this this. Assuming the "Potential" Off-taker is going to produce 10Ktpa of 4N HPA., CR9 will need to send 40Ktpa of their Pure White Ore as a DSO to Fremantle? For a FOB of "Potentially" Twice what it costs them to get it there (Hope you're not dealing with the Chinese). Say $500 per Tonne, for a margin of $250., Equating to an EBITDA $10Mill per annum. The Mine will go forever, so a P/E 10., equates to a "Potential" Market Cap of $100Mill., 10 years down the track.
Provided all those "Potentials" eventuate, because at present I assure you all, there is currently no Company anywhere on this Planet that is producing HPA at a commercial level from Kaolin in any of it's forms. '
Alas I hear you say. Now, according to this most recent announcement we're going to build our own Plant. For say., Half that which Peers have claimed. So $150Mill.
Well good luck with that, because all that "Potential" will have long flown the Coop.
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