Your challenge is also to understand and research this project for yourself. My notes and the summary of announcements below will give you a helping hand.
Also do your own research – for that google is your friend … I also encourage you to look up peers for yourself (use the ASX website or https://www.marketindex.com.au/ which I find easier for fast research ).
Andromeda’s Poochera Project is a Tier 1 and World-class kaolin-halloysite asset (due to the size, very high grade and very low impurities). It's the Halloysite component of their resource that makes it particularly unique.
Once developed the project will be able to supply high quality and importantly high purity feedstock for a wide range of high-tech and industrial applications including for future 4N and 5N HPA production.
They are pursuing the low-capex low-hanging fruit first – that is production of a unique premium feedstock that should allow for nice cashflows and they will use this as a stepping-stone to grow their business to higher-value products including high-grade forms of Halloysite and HPA. More on that here …
At the time of this post they have demand (via Letters of Intent) for over 500 kt pa of product with more letters of intent expected next week. See list of announcements related to this further down in this post.
The Project is the largest and highest-grade Kaolin project in Australia. The resource has a very unique combination of size, grade and purity. In particular the Halloysite component of the resource is unique and allows them to pursue a unique high margin and low capital intensity business strategy that peers are unable to apply. This is also discussed in the link just above, however my later calculations include comparison with PLL - See https://hotcopper.com.au/posts/39899404/single .
Importantly the company has completed significant test work based 0n bulk-sampling conducted last year. Over 200 tonnes of samples were extracted. 40 tonnes was used for testing in Australia. The remainder was supplied to numerous potential customers overseas so they can conduct their own evaluation. The results of customer test work are obviously compelling due to the overwhelming customer demand that has been confirmed from test work (via letters of intent for offtakes). A number of us were invested in this company from last year and our expectations were perhaps 100 kt to 200 kt of product but we are now looking at a business that could scale to 500 kt to 750 kt of premium feedstock and a down-stream wet-processed product.
4N HPA and 5N HPA as well as other premium products will come ... but that will be after the company has established very robust high-demand business with high cashflows that give the company the financial capacity to pursue blue-sky opportunities later ( and without heavily diluting shareholders ).
We all wait for the Scoping Study to confirm prices, margins and cashflows and well as CAPEX (which is expected to be low due to the very simple flowsheet - see below). The company may also start with a DSO business for a short time, but this would only be to satisfy early customer demand (if they are really eager for DSO). Otherwise ADN will push on and develop the Dry-Processing operation ( which is brilliant in the simplicity ... but this is only made possible by the unique and high-grade, high purity halloysite-kaolin resource ADN have at Poochera ).
The company MD James Marsh is an Industrial Chemist with over 30 years experience specifically focused on Kaolin. He has worked in key Technical and Business Development roles, including over 10 years with a major European Industrial Minerals firm.
The wide range of test work and customer test work essentially progresses the project well into feasibility. Whilst it is a scoping study we are waiting for now ... the company has a large Measured & Indicated resource which they are in the process of upgrading after drilling this year. That resource will be used as the basis for determining a mineral reserve, a pit shell and hence a mine plane. This allows the generation of key background data necessary for a mineral lease and approvals such as environmental permitting. As part of the drilling earlier this year they drilled additional holes for water monitoring but also for planning the location of a waste dump. Waste incidentally is basically just sand. There are no nasty tailings to manage which should also aid progress of permitting and then a decision to mine.
I have categorised all the company announcements relevant to their Kaolin-Halloysite business strategy. You can follow the links to the announcements below and you can read them for yourself. The important ones have been highlighted and I have provided some commentary (in italics).
That’s my summary and thoughts on the project and the company. For understanding of potential I recommend you also read this post by @Megagene79 where he gives a report from a site visit …
In 2018 the company completed important bulk sampling and test work to progress development of the project and these support the strong marketing/offtake outcomes they have achieved in 2018 and 2019.
They laid out a clear plan to progress the development of the project. They key outcome will be a Scoping Study expected to be completed by the end of September.
In background they have been working on Mine Design and Logistics concepts that should support rapid permitting of the project.
Unique approach of Dry-processing at the mine site will allow a premium product to be produced and sold at low OPEX and with low capital intensity. Simplicity of the project makes it low risk.
Repeat analysis has proven that Carey’s Well Halloysite-Kaolin is a premium feedstock for HPA production They have important relationships with CSIRO and the University of Newcastle.
MD James Marsh is an Industrial Chemist and was appointed to lead development of the project. Has over 3 decades of experience in Kaolin/Halloysite in Business Development and Technical Roles
Project is the largest and highest grade Kaolin project in Australia. The resource has a unique combination of size, grade and purity. In particular the Halloysite component of the resource allows them to pursue business strategies peers are unable to apply.
See peer comparison table and exploration targets in the resource section.
Halloysite is a rare derivative of kaolin and commands a significant premium above the average Kaolin price.
Offtakes and Marketing including Customer Test Work
Strong demand for both dry-processed (307 kt) and wet-processed products (208 kt). They have a large number of potential customers expressing interest and the demand will allow for a robust business based purely on a low capital-intensity and low-risk development strategy.
Discussions with a Chinese company that is interested in collaborating on production of a premium productin China, as well as potential HPA production in China.
Dry-processing test work in the USA with a USA-leader in Kaolin plant design reduces risk.
Dry-processing of the unique very high-purity, very high grade resource allows for significant upgrade in the value of a shipped product compared to a DSO operation.
Dry-processing allows sand impurities to be reduced from an approximate 50% content down to less than 1%.
Bulk sample test work with a large number of potential end users ... i.e customers.
4N HPA (99.99%) purity can be achieved from Poochera feedstock with only a single purification stage. This compares favourably to peers that require multiple purification stages. This should allow HPA production with a simpler plant and with lower opex.
Discussions underway with a Chinese company for production of HPA in China.
Dry-processing at commercial-scale using 40 tonnes of bulk-sample establishes viability of producing a higher-value and hence higher-margin refined product. This also reduces tonnage that needs to be shipped (by a factor of 50%).
4N HPA (99.99%) purity can be achieved from Poochera feedstock with only a single purification stage. This will reduce complexity, CAPEX and OPEX associated with a HPA production strategy.
Drilling campaign will support a resource upgrade (expected soon).
Parts of the resource have grades of up to 85% Halloysite (Halloysite is a rare derivative of kaolin and commands a significant premium above the average Kaolin price).
New JV will allow Andromeda to pursue further high-value applications for Halloysite Nanotubes from the Poochera Project.
There is exciting potential in battery technology development, water purification and carbon capture and storage. Other applications include medical, agriculture and construction.
ADN Price at posting:
5.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
